Economic Relationship between
the United Kingdom and Hong Kong
British and Hong Kong businesses have enjoyed a strong relationship for over 100 years. Based on data provided by the UK’s Department for Business and Trade, as at November, 2024, Hong Kong was the 18th largest trading partner of the UK in the four quarters ending in Q2 2024.
Total exports from the UK to Hong Kong amounted to £16.1 billion during that period and total imports into the UK from Hong Kong amounted to £9.1 billion.
In the latest data available from 2022, outward foreign direct investment from the UK into Hong Kong was £97.5 billion and inward bound investment from Hong Kong into the UK was £18.2 billion.
Some of the key reasons British companies have chosen to do business with and in Hong Kong include:
- The absence of capital controls
- Currency stability (the Hong Kong Dollar is pegged to the United States Dollar)
- A friendly territorially based tax regime with low rates of taxation
- Limited regulation with the consequent ease of doing business
- Access to capital given Hong Kong’s status as a global financial centre
- Strong connectivity to mainland China and the rest of the Asia Pacific region
comparison of
Legal Systems
Hong Kong is a Special Administrative Region of the People’s Republic of China (PRC). Under its constitution, the Basic Law, the laws in force in Hong Kong prior to the handover of Hong Kong back to the PRC on July 1, 1997, including the common law, continue unless and until modified.
As a result of the Basic Law, the legal systems in both the UK and Hong Kong continue to share a common law tradition. Judgments from the UK since July 1, 1997 remain highly persuasive in Hong Kong and for many years, judges from the UK Supreme Court and the House of Lords have sat as judges on the Court of Final Appeal, the highest appellate court in Hong Kong.
A significant number of statutes in Hong Kong, known as ordinances, are based on those originally enacted in England.
Judicial System
Like the UK, Hong Kong has both superior and inferior courts, with the former enjoying unlimited jurisdiction.
In Hong Kong, the High Court is a superior court, comprised of the Court of First Instance and the Court of Appeal. Appeals from the High Court go to the Court of Final Appeal, the highest appellate court in Hong Kong. The Court of Final Appeal is the equivalent of the UK Supreme Court.
Prior to the introduction of the Court of Final Appeal in 1997, appeals from the High Court in Hong Kong went to the Privy Council in the UK.
The inferior courts in Hong Kong include the District Court, whose jurisdiction in civil matters is limited to claims of 3 million Hong Kong Dollars (approximately £300,000).
The Hong Kong judicial system is separate from that in the mainland of the PRC.
Legal Profession
As is the case in the UK, the legal profession in Hong Kong is broadly split between solicitors and barristers. Solicitors work directly with clients in all legal matters. Barristers have the right of audience (i.e. the right to speak) in open court hearings of the High Court and work exclusively with solicitors.
Timothy Loh LLP is a firm of solicitors.
Legal Relations between
Hong Kong & the United Kingdom
Taxation
Hong Kong and the United Kingdom entered into a comprehensive double taxation treaty in 2010. The Agreement between the Government of the Hong Kong Special Administrative Region of the People’s Republic of China and the Government of the United Kingdom of Great Britain and Northern Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion signed on June 21, 2010 was modified by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting signed by the People’s Republic of China and the United Kingdom of Great Britain and Northern Ireland on June 7, 2017.
Enforcement of Judgments
Eligible judgments from the superior courts of the United Kingdom may be enforced in Hong Kong under the common law. The statutory mechanism for recognition of Commonwealth judgments under the Foreign Judgments (Reciprocal Enforcement) Ordinance [link to article on enforcement of foreign judgments] no longer applies to UK judgments.
Enforcement of Arbitral Awards
The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), known as the New York Convention, applies to both Hong Kong and the UK. The Arbitration Ordinance in Hong Kong provides for the enforcement of arbitral awards subject to the New York Convention.
Financial Markets Regulation
Financial market regulators in Hong Kong and the UK have entered into numerous memoranda of understanding (“MoU”). These include MoU between:
- the Securities and Futures Commission (“SFC”) in Hong Kong and the UK Financial Conduct Authority (“FCA”),
- the Hong Kong Monetary Authority and the UK FCA and UK Prudential Regulation Authority (“PRA”), and
- the Insurance Authority and the UK Financial Services Authority (now the UK FCA and UK PRA) and UK FCA.