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A bay window of opportunity for lawyers

By Alex Liu

Hong Kong, 10 February 2021: Hong Kong lawyers have been lobbying for almost two decades for a unique entry mechanism that would allow them to practice in mainland China. Now, thanks to the impending legal requirements of the Greater Bay Area, a pilot scheme is in place.

Legal professionals in Hong Kong and Macao will be authorised to handle civil and commercial cases in the nine mainland GBA cities upon passing a new qualifying examination. Among other requirements, they must be permanent residents of either of the Special Administrative Regions, have five years’ experience, be able to write Chinese and have professional proficiency in Mandarin.

Before sitting the examination, candidates here must complete a training course run by our Ministry of Justice and will also be subject to an annual test.

The pilot scheme, which is running for three years, represents a huge boost to the Hong Kong legal profession as it gives experienced lawyers the chance to expand their services into the GBA, which is destined to become an economic powerhouse. The region, comprising Hong Kong, Macao and nine cities in Guangdong province – namely Guangzhou, Shenzhen, Zhuhai, Foshan, Huizhou, Dongguan, Zhongshan, Jiangmen and Zhaoqing – has a population in excess of 72 million and a GDP of US$1.7 trillion.

The vision for the GBA is to morph into a high-tech megalopolis and global innovation hub. However, while it undoubtedly has abundant business opportunities, it also poses myriad challenges – especially legal ones – given that it involves “one country, two systems and three jurisdictions”.

We can expect to see an increase in cross-border collaboration between law firms. Since 2019, liberalisation measures relating to partnership associations between Hong Kong and Guangdong law firms have been implemented, including the removal of the minimum capital injection ratio of 30% by Hong Kong partner firms and allowing lawyers from both jurisdictions to be employed directly in the partnership association’s own name.

There are currently 12 partnership associations in Guangdong province. Certainly, it is anticipated that more firms on both sides of the border, especially those that are small and medium sized, will consider establishing partnership associations to provide a one-stop shop for cross-jurisdictional legal services.

Hong Kong is clearly well positioned to play a major role in the GBA story, particularly with regards to the legal sector. With its common law system, strong rule of law and independent judiciary, our city can serve as the region’s international legal and dispute resolution services centre. It is worth noting that arbitral awards here are enforceable in more than 150 contracting states to the New York Convention and also in the mainland and Macao, with which Hong Kong has reciprocal arrangements.

Beyond legal services, our city has much to offer the GBA, being an international financial centre and the world’s leading hub for RMB business outside the mainland, as well as conforming to global standards for banking, accountancy, fund raising, investment and asset management. Add Hong Kong’s undoubted strength in business services, creative solutions, and innovation and technology, and the opportunities available over the border are clear.

Further, businesses seeking expansion into the GBA will not lack government support. In her recent annual policy address, Chief Executive Carrie Lam unveiled a raft of measures enhancing the city’s involvement, including the Greater Bay Area Youth Employment Scheme to encourage enterprises to recruit Hong Kong university graduates to work over the border. Hong Kong’s Airport Authority, which will commission a third runway in 2022, will acquire more shares in Zhuhai Airport to “deepen cooperation” in the aviation sector and build a “world-class aviation cluster”.

In a joint survey by KPMG, HSBC and the Hong Kong General Chamber of Commerce, the results of which were released a year ago, 52% of executives said they planned to expand geographically into the GBA by 2022. Four-fifths expected the GBA economy to grow faster than rest of mainland China within the next three years.

Gaining access to the GBA market was a key motivation for companies to invest there, according to the survey, while other attractions included getting closer to business partners or customers, access to talent, lower costs and better transport infrastructure.

The GBA has its critics, especially among government opponents here who argue it has as much to do with politics as business. But the benefits of being involved in an economic grouping that some have forecast will grow to be the 11th largest globally are obvious. Hong Kong’s legal professionals can now take those first steps.

A Partner in BC&C since 2000, Alex Liu’s key areas of practice include commercial and corporate litigation, investigations by governmental bodies such as the SFC, ICAC and Commercial Crime Bureau, insolvency and debt restructuring, intellectual property, defamation, property and commercial contract drafting. He can be contacted at alex@boasecohencollins.com.

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