The restorations of Hong Kong by the United Kingdom of Great Britain and Northern Ireland in 1997 and of Macau by the Portuguese Republic in 1999 to the People's Republic of China (the PRC) were the least disruptive contemporary successions. In both transfers, international commercial obligations and arrangements were only affected minimally and investor confidence was preserved. Few, if any, inequitable outcomes were inflicted on direct and indi rect participants.
1. HONG KONG Hong Kong is 414 square miles with a population of about 5.7 million people. It comprises the Hong Kong and Lan Tau Islands, off the southern coast of the PRC, the Kowloon Peninsula, which is connected geographically to the PRC, and more than 200 other smaller islands. Hong Kong is a major commercial, trading and financial center.l In 1997, its total exports were HK$1,456 bn. and imports were HK$1,615 bn.2
Hong Kong was the sovereign territory of China for centuries. In the 19th century, Great Britain sold opium to the Chinese in an effort to reverse the trade imbalance that resulted from the high British demand for Chinese goods and the limited need for British goods in China. The government of Imperial China imposed a ban on the import of opium, which caused the British to start the First Opium War against China. This war ended with the Treaty of Nanking in 1842, in which China ceded Hong Kong Island to Great Britain. At the end of the Second Opium War, the Treaty of Peking
I See HURST HANNUM, AUTONOMY, SOVER)':IGNlY AND SELF-DETE~\1INATION 129 (1996).
2 See WORLD TRADE ORGANIZATION, TRADE POLICY REVIEW: HONG KONG, CHINA 95-100 (Nov. 11, 1998) [hereinafter HONG KONG TRADE REVIEW].
209 210 • State Succession and Commercial Obligations in 1860 was signed, pursuant to which China ceded a further four square miles in the southern tip of the Kowloon Peninsula. Britain subsequently took advantage of Japan's defeat of China in the war of 1894 to 1895 and concluded the Convention Respecting an Extension of the Hong Kong Territory 1898 (the Convention of Peking). Under the Convention of Peking, China granted Britain a 99-year lease of an additional 373 square miles adjacent to Kowloon, an area now called the "New Territories."3 These New Territories constitute more than 90 percent of the total land area of Hong Kong,4 and supply much of the water and electricity used by Kowloon and Hong Kong Island.5
Mter China underwent succession from the Qing Dynastic rule to a communist state, which was renamed the People's Republic of China, it began pressing the international law claim that the three treaties concluded with Great Britain were invalid because they were "unequal treaties." The PRC also claimed that the British only occu pied Hong Kong temporarily. Mter the PRC's accession to the United Nations in 1972, it notified the United Nations to remove Hong Kong from the list of territories that came under the supervi sion of the Special Committee on Colonialism, claiming that Hong Kong was part of the PRC.6
In spite of the protests of the PRC, the United Kingdom con tinued to govern Hong Kong. By the Charter of April 5, 1843, the Island of Hong Kong had been constituted as a colony under English law. The Order in Council of October 20, 1898, had added the New Territories to the colony and the Order in Council of December 27, 1898, had incorporated the Walled City of Kowloon
3 Convention Respecting an Extension of the Hong Kong Territory 1898, reprinted in PETER WESLEy-SMITH, UNEQUAL TREATY 1989-1997191-93 (1980).
4 See Order in Council Providing for the Government of Territories Adjacent to Hong Kong Leased Under the Convention of June 9, 1898, Oct. 20, 1898, reprinted in NORMAN MINERS, THE GOVERNMENT AND POLITICS OF HONG KONG 247 (1991) (declaring the New Territories to be part of Hong Kong).
5 See HANNUM, supra note 1, at 130; MINERS, supra note 4, at 3.
6 See MINERS, id. at 4-6; WESLEY-SMITH, supra note 3, at 164-90.