China's top legislature on Friday ruled that sovereign states have immunity from prosecution in Hong Kong courts from paying debts in a commercial case, setting a legal precedent for the territory in dealings with other nations, according to Reuters. In a decision that some say may tarnish Hong Kong's reputation for judicial independence, the standing committee of the National People's Congress (NPC) unanimously ruled that "state immunity" also applies in Hong Kong for a commercial case seeking to recover more $100 million from the Democratic Republic of Congo. Hong Kong's laws must "be consistent with the rules or policies on state immunity that the central (Chinese) government has adopted," the official Xinhua news agency reported, citing the standing committee. Under Chinese law, nation states enjoy "absolute immunity" in all types of cases including commercial transactions. The case centred around attempts by foreign investors to recover around $100 million in debts owed by Congo for a string of energy projects that were built by a Yugoslav engineering firm in the 1980s. Hong Kong, a former British colony that returned to Chinese rule in 1997 amid promises of a high degree of autonomy is renowned for its pro-business landscape and solid rule of law. Its mini-constitution, the Basic Law, however, says Hong Kong "shall have no jurisdiction over acts of state such as defence and foreign affairs," which lies instead with China. Entrenched public fears of Beijing's meddling in Hong Kong's judicial affairs have made any legal interpretations by China highly sensitive and controversial matters. But Hong Kong's highest court took the unprecedented step in June to seek Beijing's final word on the Congo case to clarify constitutional ambiguities given the foreign dimension. Beijing's ruling means Hong Kong's position on sovereign immunity is now at odds with most other developed nations, which generally waive sovereign immunity in cases involving commercial transactions known as "restricted immunity". Prior to Hong Kong's 1997 handover commercial cases involving sovereign states had been permissible, but some lawmakers shrugged off any business impact from the ruling. "Hong Kong is a part of China," Rita Fan, a member of the standing committee told reporters after the decision. "The Basic Law is very clear that foreign affairs or defence are the responsibility of China."
