Introduction to Legal System

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Introduction to Business Law (AF2504)

Lecture 1 : Introduction to Hong Kong Legal System (I & II)


1.To understand the historical origins and development of the legal system of the Hong Kong Special Administrative Region (‘HKSAR’). 2.To identify the roles and functions of the various institutions which make up the legal system of the HKSAR. 3.To recognize the legal foundation on which the commercial environment of the HKSAR is based.

Essential Reading:

V. Stott, An Introduction to Hong Kong Business Law, 4th ed., 2010,Ch 1 pp.10 - 42. K. Arjunan & A. Majid, Business Law In Hong Kong, 2009, ch 1 – 6, pp.1 – 63. ____________________________________________________________



In Hong Kong, many ‘new’ constitutional and political changes have taken place since 1 July 1997. Nevertheless, before studying these changes, understanding the relevant legal terms and the legal system as a whole is the first step towards understanding the implications and meanings of the law and rules imposed on each area of business activity by civil and criminal law.

Origins of Hong Kong’s Legal System

The Chinese Government formally ceded the island of Hong Kong to Great Britain by the Treaty of Nanking in 1842. The British wanted to control Hong Kong as a base for trade with China and as a base for its Royal Navy and a garrison. Kowloon was added to the territory ceded to the British in 1860, and the New Territories in 1898.

The British introduced the English legal system to Hong Kong. The approach of the British in relation to the establishment of the appropriate legal system followed the same approach as in the case of other colonies, that is, to import the English legal system, especially English commercial law and practices, into Hong Kong.

Section 3 of the Supreme Court Ordinance provided that such English laws as existed when the colony obtained a local legislature were to have effect in the colony, except where they were inapplicable to local circumstances or inhabitants, subject to any modification by the local legislature. Later, section 3(1) of the Application of English Law Ordinance provided that English common law and rules of equity should be in force in Hong Kong insofar as they were applicable to the circumstances of Hong Kong or its inhabitants.

Hence, insofar as commercial law was concerned, nothing less than English commercial law was acceptable, although the legislation specifically made provisions for the preservation of local customs, including Chinese customs and law. In reality however, local commercial customs and practices never gained much ground in the development of Hong Kong commercial law. This is because the commercial law and practice previously existing in China differed from province to province and hence, lacked consistency. In addition, diversity of language, culture and needs resulted in Chinese commercial customs and practice never attaining the same status as English commercial customs and practice.

However, Chinese customary law continued to play an important role in the colony’s Chinese community, for example: customs in respect of marriage, divorce, adoption, inheritance and land settlement.

The HKSAR Government

Prior to 1 July 1997, the Governor was the symbolic representative of the Queen’s sovereignty over Hong Kong and exercised the Queen’s powers by her authority. However, on 1 July 1997, the United Kingdom ceased to have sovereignty over the territory and Hong Kong was reunited with China under the “One Country Two Systems” concept.

Since 1 July 1997, the Chief Executive of the HKSAR has replaced the governor as the head of the HKSAR and is accountable to and appointed by the Central People’s Government. He makes appointments of councils, committees and the Civil Service. He may suspend, dismiss or discipline any public officer. He may also preside at the...
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