14
21. Now, applying Article 23 to this set of circumstances, we get the follow. ing result :--
First, looking at the unpaid call as an ordinary debt irrespective of any legal procedure taken to enforce it: it seems to me to full outside the provisions of the Article, for the debt is not a trade debt, and it is not, in many cases, incurred by a Chinaman who has repaired to Hongkong. Nor, secondly, can the Consil General's aid be invoked in respect of the "balance order"; for it is not. as shewn above, a judgment: and "the recovery of such debts" has not been “ arranged for by the English Courts". Therefore any attempt to recover calls from Chinese contributories must be preceded by judgment. Yet even here there is another difficulty. For, assuming that the Article includes judgments, it can only include them when they relate to trade debts incurred by natives of China who may have repaired to Hongkong: which brings me back to the original difficulty of the question. The problem to which I am endeavouring to get a solution here appears in its acutest form, for it has passed from the case of the individual to that of the community at large. For on companies much of the well-being of the Colony depends; and if the machinery for recovering calls from Chinese con- tributories is defective, it must re-act in the most prejudicial manner on all who are interested in the great public Companies started in the Colony, or who profit by their existence.
22. I am not in favour of any change in the Companies Law specially directed against Chinese, and therefore do not recommend the suggestion contained in the first recommendation made by the Deputy Registrar-that Chinese should only be allowed to register Companies where the shares are fully paid up-which would, I think, be very arbitrary and contrary to the spirit of the Companies Law.
23. In connection with this subject the Colonial Secretary refers to Article 4 of the McKay Treaty, which deals with Joint Stock Companies. It requires special attention. In the first place it recognizes, what I have above insisted on, the immense importance of the Anglo-Chinese Company question; and unless the Article itself deals satisfactorily with the matter, it does itself furnish a powerful argument in favour of the question now under discussion being put on a more satisfactory basis.
The Article then lays down the following principles :-
(a.) China recognizes the legality of all investments of Chinese subjects
in non-Chinese companies, past, present and future. (6.) China further appreciates the utmost importance of recognizing the perfect equality as far as mutual obligations are concerned, of all shareholders in such Companies, irrespective of nationality.
In order to arrive at this result, China agrees that Chinese shareholders in British Companies "shall be held to have accepted, by the very act of becoming share- holders, the Charter of Incorporation or Memorandum and Articles of Associa- tion", and also the regulations made thereunder as interpreted by the British Courts.
24. The exact meaning of this provision requires explanation. In paragraph 20 above, I referred to the fact that in the case of a foreigner a contributory to the Company being abroad, the "balance order" is not equivalent to a judgment, but action must be brought in the usual way. The procedure must be begun by service of a Writ out of the jurisdiction under Order XI (rule 42 of the Hongkong Code of Civil Procedure). The question has been discussed in England whether the case of the contributory falls within the scope of Order XI, for if it does not the action cannot be begun. The Court of Appeal has decided that it does: but for greater assurance this question is definitely settled in Article 4 of the McKay Treaty. The result is that when in Hongkong we have to deal with Chinese con- tributories the initial difficulty is disposed of, and judgment may be given by default if necessary. But then we are face to face with the old difficulty again, and recourse must be bad to the Consul-General and to the old-fashioned proce- dure of Article 23 of the Treaty of Tientsin in order to obtain execution on the judgment: and to this the Consul General may answer as pointed out above that there is here no trade debt, and no Chinainan repairing to Hongkong to trade.
15
14
25. It is much to be regretted that advantage was not taken of the negociation in connexion with the McKay Treaty to deal in Article IV exhaustively with the whole of the question of recovery of calls by the Hongkong Courts. Curiously enough it does however provide a remedy, which is by recourse to the Chinese Courts. The "Chinese Courts shall enforce compliance therewith [ie, with the articles and regulations] by such Chinese shareholders if a suit to that effect be entered. "
This however cannot be construed to oust the jurisdiction of the British Courts. But in the face of this provision in the McKay Treaty, what becomes of the Colonial Secretary's criticism that Chinese Magistrates are not only venal, but powerless to enforce their own orders in the face of hostile
oppo- sition of the population should the latter sympathize with the debtor; and the debtor has of course generally the sympathy of his fellow citizens"? Coming newly to an office which has to deal judicially with Anglo-Chinese commercial relations, I should be tempted to say that the old iden expressed in the above sentence, with which we were all familiar in bye-gone-days, had been deliberately swept away, and a new order of greater confidence in Chinese judicial methods had been inaugurated. I cannot otherwise understand the recognition in a Com- mercial Treaty concluded in 1902 of litigation conducted by a British Official (the Official Liquidator) in the Chinese Courts.
26. This Article of the McKay Treaty if it means anything, furnishes a power- fal argument in favour of the change of procedure in ordinary actions which I am advocating,
The Official Receiver's Memorandum.
27. This memorandum deals with the question as it affects Hongkong Bank- ruptcies.
Mr. WAKEMAN, in his official capacity, must necessarily have a large experi- ence of the question, and he has given an account of an interview he has had with Mr. Scorr, the present Consul General, The Colonial Secretary does not I gather challenge the accuracy of Mr. WAKEMAN'S statement, but wishes to have Mr. Scorr's version of the matter.
28. With this suggestion I cordially agree; no steps could possibly be taken without hearing what the Consul General has to say. I must point out however that Mr. WAKEMAN'S minute is of great importance as it brings out in a startling way these salient defects of the present system :-
(a.) That the Official Receiver representing the mass of the creditors of a bankrupt cannot get the benefit of Article 23 of the Tientsin Treaty.
(b.) That the interpretation put upon the Article by the Consul General is that it applies only to British subjects, and then only to individual creditors; that is to say, that each creditor must apply personally to the Consul General to get the benefit of the Article.
This I may point out he could not do under our Bankruptcy Law, as the individual rights are merged in those of the mass as represented by the Official Receiver, and the Supreme Court would at once issue an injunction to restrain him from acting in the manner suggested.
(c.) That the Consul-General considers himself empowered to administer
a sort of independent bankruptcy in Canton, distributing the Chinese assets among such British creditors as have, illegally as I think, put the Consul General in motion.
(d) Lastly, there is the statement that the German firms find greater facilities from the Chinese officials for attaching debtors' property in China, than can be obtained by British subjects.
29. Mr. WAKEMAN gives this information under reservation: and I think that his statement alone is sufficient to justify a searching enquiry into the whole question. It cannot be disposed of by merely indicating that foreigners' creditors are backed in all their actions by their Government, and that apparently British
281
No comments yet.
Private notes are available after approval.