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This delay would simply not be acceptable. We would be rightly criticised for not meeting our obligations under 1991 agreement. And we would already be in a situation where appeals going to Privy Council would not be heard before 30 June 1997. That is why, if the Chinese side do not tell us very soon that they are content with the draft Bill, we will have to face the difficult decision of whether to continue to wait for Chinese agreement, or whether to introduce it into this Council anyway in order to meet our obligations under the 1991 agreement and to set up the CFA as soon as possible before 1997, and to do what we believe best for the people of Hong Kong. We hope, naturally, that we do not have to make this decision. And we still believe that, although the time available is now very limited, it should be sufficient to allow us to complete our work in the expert group talks, provided that both sides are willing to work positively and quickly in a spirit of good-will and co-operation.

But the stakes are high. Delaying the Bill beyond the end of this session would mean losing the continuity that the 1991 agreement was meant to provide. We would then be facing the problem of a judicial vacuum that we have worked so hard to prevent. But that, to my considerable astonishment, seems to be what Mr Simon Ip is proposing.

Some have argued that it does not matter much if there is no CFA before 1997 because the number of cases likely to come before it is small and because the Chinese side have said that the SARG will set the CFA up on 1 July 1997. The Administration cannot agree. The fact is that I have said before, if the CFA is not set up before 1997, there will be a judicial vacuum at the apex of our judicial system. This would seriously undermine public and international confidence in Hong Kong. Honourable Members will be aware that the business community, both in Hong Kong and overseas, have expressed considerable concern about this problem. And this concern is being translated into action. It is clear that, as the Japanese Consul-General has pointed out this week, increasing numbers of investors are now insisting on disputes over their contracts being litigated outside Hong Kong or being subject to arbitration, so that they do not come within the jurisdiction of the Hong Kong courts. In other words, one of the key reasons for Hong Kong's success as a premier business location is being undermined.

Nor is that all. A failure to set the CFA up before 1997 would affect the people of Hong Kong in more direct ways. It would mean denying justice to the litigants involved. As a fundamental matter of principle, this would be wrong, no matter how few of them there may be. Test cases which need the most authoritative decisions from the highest court would also have to wait, and Hong Kong's legal system would be deprived of the important points of law that arises from these cases. And, of course, there would be complete uncertainty over when and on what basis the CFA would be established by the HKSAR after 1 July 1997.