When a contract in Hong Kong is no longer a contract

According to one of the more suspicious interpretations of China’s intentions for Hong Kong, the future will look like this: decadent Western innovations like democracy, human rights and such will no longer be supplied. But the rule of law will continue as far as business is concerned.

Hong Kong Exchange stocks finance flags — Photo: Rhoda Kwan/HKFP.

This will preserve the city’s status as a place where foreign money can be sucked in, and the proceeds of success in the mainland can be transported out.

The implication of this is that some parts of the law will atrophy, and some will continue much as before. And that means, you might think, that contracts will continue to be enforced in the old way. Not so.

The government is now wheeling out provisions which make it clear that the sanctity of contract, like other kinds of sanctity, will get no protection if it conflicts with the current passion, which is national security.

Last September Ming Pao reported:

The Government Logistics Department added new terms and conditions for procurement and services last month, stating that for national security considerations, the government may disqualify individual bidders in procurement, and terminate the contract during the contract period. Projects being tendered by the Department include the procurement of toilet paper, creating maps of outlying islands, and pest control. A civil servants group said that the update clause meant that frontline government workers would conduct background checks on bidders, and hoped the government would provide clear guidelines.
Ming Pao

Having ensured that the supply of toilet paper would be free from subversive influences, we then went on to the supply of lands and works:

According to the department website, the new term allows the government to disqualify a bidder if it, its parent firm or the company it acts as an agent for “has engaged, is engaging, or is reasonably believed to have engaged or be engaging in any acts or activities that are likely to cause or constitute the occurrence of offences endangering national security.” The government can also reject bids “in the interest of national security” or for the protection of “the public interest of Hong Kong, public morals, public order or public safety.
HKFP

And on it went, last week, to new guidelines for aided schools entering into contracts for goods or services:

Schools should incorporate clauses into documents relating to quotations or tenders that would allow suppliers to be disqualified and contracts terminated “in the interest of national security,” the guidelines read. According to the clauses, schools may disqualify a supplier if it “has engaged, is engaging, or is reasonably believed to have engaged or be engaging in acts or activities that are likely to cause or constitute the occurrence of offences endangering national security” or to “protect the public interest of Hong Kong, public morals, public order or public safety.”
HKFP

National Security Education Day 2023 in Hong Kong. Photo: Kyle Lam/HKFP.

Reactions to all this were understandably mixed. Suppliers of toilet paper and pest exterminators held their counsel. On the other hand the lands and works announcement produced a swift swoon in the relevant stock prices. A legislator representing the education industry thought the new arrangement asked a lot of schools. Surely, he added, if a company or person had breached the law then the police would already have arrested them.

And this is a very good point. In our legal system it used to be said that guilt or innocence was a matter to be determined by the courts, and until a finding of guilt came along we were all entitled to be presumed innocent.

Nobody could object to a government department or aided school abrogating a contract with a person or entity who/which had been convicted of endangering national security. But is anyone really going to cancel a contract on the grounds that it is “not in the public interest of Hong Kong” to continue with that supplier?

We must also note that in the long run a miscreant who has paid his debt to society should not be subjected to impediments to his participation in the economy after his release. Those who have been convicted and done their time are entitled to the presumption that they have been rehabilitated. Those who have not been convicted have every right to compete for the right to supply government toilet paper.

toilet paper — Photo: Flickr/Marco Verch.

Cynical observers may discern in the new arrangements an attempt to create a “black list” of politically unreliable people who will not be able to do business with the government – or a “white list” of patriotic bidders which will have the same effect.

This is probably just a conspiracy theory. The fact is that the government has developed a consuming preoccupation with national security and every department is trying to score points by coming up with new measures to tick this box.

During the 20 years after the handover – and for that matter in the 20 years before it – national security was never mentioned in Hong Kong but seemed to manage just fine. Now our government has turned into the sort of over-protective parent who wants her kid to wear a cycling safety helmet when riding the school bus.

We have an obligation to protect national security. This does not require us to turn it into a paranoid preoccupation which poisons every aspect of life in the SAR.

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