Historical context

Imperial Code was applicable to the whole empire.^[159] There were also customary laws or practices applicable particularly to the region.

In 1841, after defeating the Chinese in the Opium War, the British occupied Hong Kong Island.

A common law legal system was transplanted to Hong Kong to facilitate the colonial rule. This was done through various paths.^[164] First was constitutional. Under British constitutional law, all colonies were under the rule of the Queen of Great Britain in the exercise of her prerogative powers. The Queen in her Privy Council issued Orders in Council and other prerogative instruments to administer a colony. The constitutional instruments of the colony of Hong Kong^[165] were laws of such a nature.

The substantive laws applicable in Hong Kong came from various sources. Like other colonies, the colony of Hong Kong was headed by a governor appointed by the Queen. A colonial governor was vested with vast powers and had the power to make local ordinances �by and with the advice and consent'^[166] of the local legislature for the �peace, order and good government of the colony.'^[167] Without legislative experience at the beginning, it was natural that many Acts of Parliament were copied and enacted in the form of local ordinances in the colony.

Chinese law and customs were maintained to the extent theywere not changed or abrogated by local ordinances or court decisions.^[171]

In the late 1970s and early 1980, the British Government started negotiations with the Chinese Government^[172] on the future of Hong Kong. This was prompted by a practical concern arising from the uncertainty that the lease over the New Territories would expire in less than 30 years. In 1985, an agreement was signed between the British and the Chinese Governments.^[173] The Chinese Government declared that it would resume the exercise of sovereignty over Hong Kong with effect from 1 July 1997 and the British Government also declared that it would restore Hong Kong to the PRC with effect from 1 July 1997. Annexed to the agreement was also a detailed statement elaborating on China's basic policies on Hong Kong after the resumption of sovereignty.^[174] Although China practised a socialist system, the Chinese Government promised to allow Hong Kong continue its capitalist system and lifestyle unchanged for 50 years. The Hong Kong Special Administrative Region (HKSAR) would be established and enjoy a high degree of autonomy, vested with executive, legislative and independent judicial power, including that of final adjudication. The laws currently in force in Hong Kong would also remain basically unchanged.

These features underpin the �One Country, Two Systems' policy developed by the late Chinese leader Deng Xiaoping.

The state may establish special administrative regions when necessary. The systems to be instituted in special administrative regions shall be prescribed by law enacted by the National People's Congress in light of specific conditions.

On the basis of art 31, the Basic Law of the HKSAR was enacted and promulgated in 1990 by the National People's Congress (NPC), the highest law-making body in the PRC. When theBasicLaw came into effect on 1 July 1997, the law and legal institutions of Hong Kong had to be laid upon a new constitutional foundation, though they could �remain basically unchanged' as promised in the Sino-British agreement on the future of Hong Kong and by the Chinese leaders through the �One Country, Two Systems' policy. In other words, the common law legal sys­tem previously operating in the colony of Hong Kong under the British colonial Constitution would be maintained as far as possible but under a new constitu­tional order, one founded upon a legal culture of a very different nature.^[175] This has proved to be a great challenge. The following sections of this chapter will examine by what means and to what extent this challenge has been met.

3