CYIL vol. 11 (2020)

YLLI DAUTAJ CYIL 11 (2020) agreeing to arbitrate and that the payment at hand was not “commercial” in nature. 33 The decision was appealed and heard before the Court of Appeal, whereby a majority reversed the decision by concluding that the law is one of restrictive immunity. Moreover, it held that the Congo had waived its immunity, including from execution. 34 This was the law in place before 1997 and would remain applicable subsequently, unless, of course, inconsistent with Chinese Basic Law. “It went on to say that no later inconsistent legislation had been enacted [and nor] had the Central People’s Government applied any national law on state immunity to Hong Kong via Anex III of the Basic Law.” 35 The matter for final appeal before the HKSAR Court of Final Appeal was thus (a) whether HKSAR could adopt a restrictive theory of immunity, (b) whether such position was part of the Basic Law, and therefore indirectly (c) whether China adhered to absolute or restrictive immunity. The last question was especially interesting in light of China’s undertaking vis-á-vis the Convention in 2005. The main take away from the decision of the Court of Final Appeal can be summarized as follows: a) The HKSAR cannot, as a matter of legal and constitutional principle, adhere to a doctrine of state immunity which differs from that adopted by the PRC. The doctrine of state immunity practiced in the HKSAR, as in the rest of China, is accordingly a doctrine of absolute immunity. b) There is no basis in law for holding that the [the Congo] has waived its immunity before the courts of the HKSAR. Prior to rendering a final judgment in this matter, the court is under a duty pursuant to [the Basic Law] to refer, and does hereby refer, the questions set out [in this judgment] to the Standing Committee of [China], being questions relating to the interpretation of Arts 13 and 19 of the Basic Law […]. 36 In this light, a Chinese scholar described the continuing reluctance to accept the restrictive immunity as a result of primarily three reasons; namely: The first, and most technical, arises from the arbitrary and inconsistent approach to distinguishing between sovereign and nonsovereign practices. The second, historical reason is that for many years China endured the imposition of extraterritorial rules by the West, resulting in an array of “unequal treaties” concluded under duress. The third, and a more cogent, reason is the vast number of Chinese state-owned enterprises (some of which are among the Global Fortune 50022), which aggressively invest overseas and actively conduct a large number of cross-border commercial transactions. 37 33 This paper will not discuss whether and how an arbitration clause may constitute an implied waiver from immunity from jurisdiction as well as execution. For a good discussion, see GAILLARD, Emmanuel and YOUNAN, Jennifer (eds.) State Entities in International Arbitration (Juris Publishing 2008) 179-193. See also Hobér, (n 3) 511. 34 It should be added that a state can waive its immunity even if endorsing absolute immunity. This has always been the case. In the U.S., the doctrine was referred to as “virtually absolute immunity” for inter alia that reason. It could be added here, that the doctrine of absolute immunity would primarily hit small and medium enterprises and affect globalization and competition adversely. Multilateral corporation often demand waivers of immunity in their investor-state contracts. 35 Hobér, (n 3) 512. 36 Hobér, (n 3) 512-13 (quoting XXX). 37 Wei, (n 31) 780.

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