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The Hong Kong national security law: Five articles to know

Several provisions could impact multinational companies and organizations

HONG KONG -- A controversial new national security law for Hong Kong has prompted much discussion since Beijing put it into effect on June 30. The Office for Safeguarding National Security, a new organization created under the law and staffed by officials from mainland China, opened in a commandeered hotel in the territory this week.

In form, especially in its broad and vague language, the law differs from legislation in Hong Kong under the system established during British colonial rule. Many in the city and abroad are asking about how the law could affect them. While early sections of the law call for protection of fundamental civil rights, some have been alarmed by provisions for life imprisonment and trial of suspects in mainland China. 

These are sections of the law of particular pertinence to multinational companies and organizations:

Article 29

This article is among the most worrying for foreign businesses and banks in Hong Kong. It states that people or organizations "imposing sanctions or blockades, or engaging in other hostile activities against" against Hong Kong or mainland China could face penalties. 

Looming sanctions against China by the U.S. are stoking fear among foreign financial institutions that they could be forced to pick sides amid heightened tensions between the world's two largest economies. The U.S. Congress last week approved a bill that would penalize lenders doing business with Chinese officials involved with the Hong Kong security law.

U.S. sanctions could include cutting off certain companies or individuals from the American financial system and ready access to dollar financing. On the other hand, terminating relationships with clients would result not only in loss of revenue but also could make banks and fund managers fall afoul of Article 29. 

"Some business are finding themselves falling under the scope of rules being implemented by the two sides," said Benjamin Quinlan, chief executive of financial services consultancy Quinlan & Associates in Hong Kong. "In particular, financial institutions and technology companies appear to be getting caught in the crossfire and are increasingly being compelled to decide which side of the coin they place their bet on."

Workers place China's national emblem outside the Metropark Hotel Causeway Bay in Hong Kong on July 8. The building will be turned into the Office for Safeguarding National Security.   © Reuters

Article 31

The four crimes spelled out in the national security law -- separatism, subversion, terrorism, and collusion with foreign forces -- are also applicable to companies. Article 31 provides that any offending corporation and organization is liable to fines and that its activity "shall be suspended or its license or business permit shall be revoked."

Of equal concern are Articles 37 and 38, which bring individuals and companies outside of Hong Kong -- regardless of location and nationality -- under the scope of the law.

U.S. Consul General Hanscom Smith said on a local radio program on Monday that this extraterritorial reach is "the extremely troubling aspect of the law."

While acknowledging that the U.S. and other democratic countries have some laws with extraterritorial provisions, he said those were enacted and enforced by popularly elected governments and overseen by independent courts. "None of those things are true for Beijing," he said.

Since the law's adoption, Canada and Australia have suspended extradition agreements with Hong Kong. The U.S. and U.K. are also reviewing their agreements for sending criminal suspects to Hong Kong.

Article 43

This section provides for searching locations related to suspects, restricting them from leaving Hong Kong, freezing and confiscating their assets, and requiring foreign organizations to provide information on their activities and assets.

Implementation rules for this article, announced on July 6, allow police officers to conduct searches without a warrant. The rules state that "under exceptional circumstances" an officer "not below the rank of assistant commissioner of police may authorize his officers to enter the relevant place to search for evidence without a warrant."

The new power "lacks checks and balances," said Alvin Yeung, a barrister and member of the opposition Civic Party. "It is a departure from the usual practice and strengthens the power of the chief executive and security minister."

Noting that Chief Executive Carrie Lam and Secretary for Security John Lee are members of the Committee for Safeguarding National Security, which oversees implementation of the new national security law, Yeung added that "the same group of people created a new regulation to empower themselves."

Ultimately, he said, "It is the administration that calls the shots, namely the chief executive."

Article 55

The Office for Safeguarding National Security is able to "exercise jurisdiction" in Hong Kong under three circumstances. Specifically, when a case is "complex" due to foreign involvement, a situation so serious that Hong Kong authorities cannot effectively enforce the security law, and a "major and imminent threat to national security" has emerged.

The article does not further define the circumstances under which the clause could be invoked but the law's next section provides for trial of such special cases by mainland Chinese judges and prosecutors.

Like many other legal experts, Albert Ho Chun-yan, a lawyer and former lawmaker in Hong Kong, believes the national security law "is very broadly drafted and the language is loose."

Article 60

The security law grants special privileges to the Security Office. It "shall not be subject to the jurisdiction" of the Hong Kong government and its staff and vehicles "shall not be subject to inspection, search or detention" by the territory's law enforcement officials.

Even though the office is not bound by local authorities, the next article stipulates that the Hong Kong government is obliged to "provide necessary facilitation and support" and arrest anyone obstructing its work. Another clause, Article 52, says the Security Office will cooperatively work with other mainland representatives in the territory, including the Hong Kong garrison of the People's Liberation Army.

Security Office chief Zheng Yanxiong, who formerly oversaw the Communist Party propaganda office in Guangdong Province, stressed that the new institution will "accept supervision in conformity with the law and will not infringe on legal rights of any individual or organization" at the office's opening ceremony on July 8.

"I find it very ironic," said former lawmaker Emily Lau Wai-hing, referring to Zheng's comments. "If [his statement] is really true, Hong Kong people will not be so terrified."

Article 62 of the law, however, states that if there are any inconsistencies between the new law and existing local laws, the former "shall prevail."

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