Law and Politics in Colonial Hong Kong

'International Law as a Tool of Power Politics’

(the title of a book review by Meghana V. Nayak)

This article recounts two famous and important court cases involving international power politics in Colonial Hong Kong.

The Man from Saigon

In one cold evening of Jan 1933 at 3 Chatham Road, Kowloon, which was the private residence of Francis Henry Losby (1883–1967), a senior solicitor of Russ & Co. and President of the Law Society, (whose daughter, Patricia Losby was to become the first female solicitor in Hong Kong on 27 July 1953) hosted with extraordinary treatment and secrecy a fugitive from the French colony of Annam called Sung Man Cho. Sung went by the alias Nguyen Ai Quoc. Losby, disguised as a European architect, would meet Sung outside the YMCA, where Sung stayed, and pretend to be his contractor. He would then take Sung to his house for dinner. Sung would dress in a Chinese gown sewn by Mrs. Losby and wear a beard, looking like a Chinese professor. He would then be so seated that his back was to the mirror to avoid being seen by any of the Losby’s household helpers.

In fact, Sung was a client of Losby who had successfully defended him in an extradition proceeding in the Hong Kong Supreme Court and the Privy Council (see In the Matter of Sung Man Cho v. The Superintendent of Prisons of Hong Kong and Another[HKCAMP 30/1931]). On 29 October 1929, the Imperial Court in Annam sentenced Sung to death. He escaped to Hong Kong, but was arrested and imprisoned in the Victoria Gaol. Through International Communist, Losby was instructed to defend him as the French authority demanded his extradition without trial. There had been nine sessions of hearing under a writ of Habeas Corpus and Sung was represented by a newly-appointed King’s Counsel, Francis C. Jenkin. When the Full Court ruled Sung to be deported, it also granted him leave to appeal to the Privy Council. In the Privy Council proceedings, Sung was represented by Denis Noel Pritt, KC. Sir Stafford Cripps (the former Solicitor General) was for the British Colonial Office, taking silk together with Pritt previously. The parties arrived at a settlement whereby the Government of Hong Kong would undertake to use its best endeavours to secure that Sung should reach a place of his desire with costs awarded to Sung.

Still fearful for Sung’s safety (as both the French and the Kuomintang detectives were after him), his followers falsely announced that Sung had died. Losby then arranged for him to stay at the YMCA and also sought assistance from the Governor, Sir William Peel. On the dark and chilly night of 22 January 1933, Sung disguised as a wealthy Chinese merchant together with Losby, boarded a private launch organized by the Governor to reach the S.S. Anhui, which was waiting for them outside the Hong Kong Harbor. Sung departed Hong Kong for Amoy (escorted by Losby), then to Shanghai and Russia. Sung, the man from Saigon, was universally known by his Chinese name, Ho Chi Minh (1890–1969). He was said to have formed the Vietnamese Communist Party during his stay in Hong Kong.

When Ho Chi Minh told Francis Losby that he had no money to retain him as his lawyer, Losby said: “I’ll defend you because of honour, not for money.” (see The Legal Case of Nguyen Ai Quoc (Ho Chi Minh) in Hong Kong 1931-1933 (Documents and Photographs)(assembled by the National Political Publishers, the Ho Chi Minh Museum (2006)).

The Legal Battle in the Air

The change of the ruling party and government in China after World War II had caused a reshuffle of power and multiple claims for Chinese properties in Colonial Hong Kong, among which was the plight of some 40 aircrafts that had remained in the Kai Tak airfield. After the Central People’s Government of China proclaimed itself the Chinese Government on 1 October 1949, the general managers of Central Air Transport Corporation (‘CATC’) and China National Aviation Corporation (‘CNAC’), two major airlines in the Republic of China, defected to the new Government together with some 2000 employees. They first flew 12 and then 80 aircrafts to China, apparently on the order of Zhou Enlai, the first premier of the new Chinese Government dated 12 November 1949, to protect all the assets of the two airlines in Hong Kong. This is commonly known as ‘the two airline incident.’ The defection of employees and removal of aircrafts triggered a struggle for control of the remaining aircrafts in the British Colony whose embarrassed Government would like to see this controversial issue resolved by the court.

In an effort to save the aircrafts remaining in the Hong Kong airfield, the Nationalist Government in Taiwan appointed a loyal CATC employee, Ango Tai, to be the acting president of CATC with full power to deal with all its affairs on 13 November 1949. Ango Tai then obtained an interim injunction to restrain defected employees from removing the assets, but it was disregarded and the physical control of the aircrafts were still in their control. On 5 December 1949 two US citizens, Claire Lee Chennault (formerly the US general, and leader of the ‘Flying Tigers’ and the Republic of China Air Force fighting for the Nationalist Government in World War II) and Whiting Willauer (a US diplomat) offered to purchase the physical assets of CATC for US$1.5 million. The offer was accepted by the Nationalist Government on 12 December 1949 with the condition that the assets sold would not be used to transport to or from the Communist areas of China. The new partnership was called Civil Aviation Transport Incorporated (‘CATI’), formed under the laws of the State of Delaware, USA.

On 5-6 January 1950, the British Government recognized the Central People’s Government as the de jure and de facto government of China. This was the political background leading to the legal battle for the ownership of the Chinese aircrafts in Hong Kong.

On 19 May 1950, CATI instituted proceedings in the Hong Kong court against CATC, claiming a declaration that ‘the 40 aircrafts now on the Government airfield at Kai Tak in the Colony of Hong Kong formerly the property of the defendants…are the property of the plaintiffs and/or that the plaintiffs have the sole right to possession thereof.’ [Civil Air Transport Incorporated v. Central Air Transport Corporation (OJ Action No. 269/1950)] The action was tried in March 1951 before Sir Gerald Howe, Chief Justice who dismissed the claim but allowed appeal to the Full Court. CATI’s main ground of claim was that ‘a change of government is by succession and not but title paramount and accordingly that Nationalist Government was empowered to enter into this transaction, being still recognized as the de jure government by the H.M.G. and the doctrine of retroactivity did not apply.’ The Trial Judge rejected this argument on two main grounds. The first ground was that the situation of the Nationalist Government on 12 December 1949 was such that it could not validly enter into such a sale and that the terms of the purported sale were not such as the Government could lawfully impose. The second ground was that the retroactive effect of the recognition by H.M.G. in the UK of the Communist Government as the de jure government of China was as from 5-6 January 1950. He concluded that ‘this was an act by members of the Nationalist Government done not in good faith as trustees but for an alien and improper purpose.’

CATI appealed to the Full Court (Gould and Scholes JJ) (Appeal No. 5/1951) which dismissed the appeal on 28 December 1951 adopting the first ground of the Chief Justice while Gould J dissenting on the second ground. In his dissenting judgement, Gould J said that ‘the Central People’s Government could not show any superior right or title to possession, nor can it rely upon any rights arising out of actual possession in the way it was; therefore it had no possession that could bring into effect of the doctrine of retroactivity…I hold that the ordinary principle of continuity was not displaced by any consideration of retroactivity and that it follows that the Nationalist Government was entitled to possession of and had jurisdiction over the aeroplanes.’ It was observed that a special Order in Council was made to give the Hong Kong Supreme Court jurisdiction to hear the action notwithstanding the Central People’s Government’s failure to appear. The US Government’s response was inimical as Republican Senator William F. Knowland termed the release of the aircrafts to Peking “one of the greatest blows to non-Communist world that has been delivered in that part of the world.” And the British Government was blamed for actually accelerating the spread of communism in Asia. [William M. Leary: Perilous Missions: Civil Air Transport and CIA Covert Operations in Asia 2006]

CATI appealed to the Privy Council of UK ([1952] UKPC 15) which adopted Gould J’s argument and allowed its appeal. It was also held that the Nationalist Government must be regarded as the sole de jure sovereign government of China up to midnight of 5–6 January 1950; that the Communist Government was not the de jure government until that time. On 12 December 1949, the Nationalist Government was the de jure government of China, of which the respondent was an organ and therefore the property in the 40 aeroplanes was in the Nationalist Government. It was open to the owners of the aeroplanes to sell them and thereby to pass property in them to the purchasers. Retroactivity of recognition primarily operated to validate acts of a de facto government which had subsequently become the new de jure government, and not to invalidate acts of the previous de jure government. The winning party immediately transported the remaining 71 aircrafts (hardly in flying condition) to Los Angeles by an American aircraft carrier.

The UK was one of the first countries to recognize the Central People’s Government as the de jure and de facto government of China and established diplomatic relation. But in June 1950, the Korean War broke out and the UK was in alliance with the US under a UN resolution fighting for South Korea against North Korea which was then supported by the PRC and the USSR. It was the overture to the Cold War that lasted until the disintegration of the USSR in 1991. The reversal of judgmemt by the English Privy Council in the legal battle between the two airline corporations would certainly please the US Government, but at the expense of further damaging the China-UK relation. 

Jurisdictions: 

Foo and Li, Solicitor

Jenkin is a solicitor, notary public and accredited general mediator. He is currently a consultant with the law firm of Foo and Li.