Cross-boundary litigation proceedings arising from the liquidation of mainland-based developer Evergrande Group have reignited discussion of an issue that will increasingly shape the future of the Guangdong-Hong Kong-Macao Greater Bay Area. While the legal issues concern debt acknowledgments, corporate authority, and contractual validity, they also expose a deeper structural challenge. As economic integration accelerates across the region, differences between legal systems are becoming more consequential. The future success of regional integration will depend not only on the movement of capital, goods and people, but also on how different legal frameworks can interact with greater clarity and predictability.
The Evergrande case should therefore be viewed as more than an isolated corporate issue. It reflects a broader reality facing businesses operating across jurisdictions. Commercial arrangements considered routine and legally effective in one system may not produce the same legal consequences when tested in another. As cross-boundary commercial activity continues to expand, legal divergence is emerging as a significant source of operational uncertainty that companies can no longer afford to overlook.
At the heart of the issue lies a fundamental difference in legal culture. One of the clearest examples concerns how corporate documents are treated. In the mainland, the company seal has long been regarded as a powerful expression of corporate intent. In commercial practice, affixing an official seal often serves as persuasive evidence that a company has formally endorsed a decision, acknowledged an obligation, or undertaken a commitment. Over time, the company seal has evolved beyond a purely administrative function and has become an important symbol of corporate authority.
The common law approach adopted in Hong Kong places a different emphasis. Courts focus not only on the document’s existence but also on the authority and procedures behind it. Questions about who signed a document, whether the signatory had valid authority, whether the authority was properly conferred, and whether the relevant corporate processes were followed often play a decisive role in determining legal validity. In this framework, documentation derives its strength not merely from its formal appearance but from the legitimacy of the process that produced it.
As a result, the same document can be viewed differently under different legal systems. The risk is not necessarily a consequence of misconduct. Rather, it often arises because parties assume that commercial practices accepted in one jurisdiction will be interpreted in the same way elsewhere. Such assumptions may rarely create difficulties when transactions remain within a single legal environment. However, once transactions cross jurisdictional boundaries, these differences can directly affect how rights, obligations, and liabilities are interpreted.
Importantly, this should not be viewed as a contest between legal systems. The mainland legal framework and the common law tradition were shaped by different historical experiences, institutional structures and governance philosophies. Each operates according to its own internal logic. The challenge is not determining which system is superior, but understanding how businesses can function effectively when they operate across both simultaneously.
The divergence extends beyond questions of corporate authority. Equally significant are differences in evidentiary culture. Commercial activity in the mainland has historically emphasized practicality, flexibility, and long-term business relationships. Transactions often develop through ongoing cooperation and sustained commercial trust. Conversations, informal communications, and patterns of conduct may therefore play an important role in shaping parties’ expectations and understanding.
Hong Kong’s common law system takes a more document-centered approach. When disputes arise, courts focus primarily on evidence that can be independently verified and objectively assessed. Formal contracts, letters of authorization, board resolutions, meetings records, electronic correspondence and other documentary materials frequently carry significant weight. The critical issue is not whether parties believed an agreement existed, but whether the legal content of that agreement can be demonstrated through reliable evidence.
These differences are no longer purely academic. As economic activity within the Greater Bay Area becomes more sophisticated, commercial relationships increasingly involve multiple jurisdictions, layered ownership structures and complex financing arrangements. Cross-boundary investment, corporate restructuring, asset management and capital allocation now routinely transcend legal boundaries. In such circumstances, even relatively subtle differences in legal interpretation can generate substantial commercial consequences.
For businesses in general, the bigger concern is often uncertainty rather than legal liability itself. Commercial actors are accustomed to managing identifiable risks. They can price them, insure against them and incorporate them into strategic planning. When businesses cannot confidently anticipate how a transaction will be interpreted across jurisdictions, they have to devote additional resources to compliance, legal review, documentation and risk management. The economic cost of uncertainty therefore extends beyond litigation and could affect the allocation of corporate resources.
Addressing this challenge requires more than stronger internal corporate governance. Diverse legal frameworks can introduce significant operational complexities, even for well-resourced businesses. Legal certainty is ultimately a public institutional resource. Creating it requires coordination among legal systems. The objective, however, should not be legal uniformity. The Greater Bay Area’s strength lies in its diversity, including the coexistence of different legal traditions. The more realistic goal is to develop clearer rules governing how those traditions interact. Greater coordination in areas such as document recognition, corporate authority, evidentiary standards and dispute resolution would significantly reduce unnecessary uncertainty while preserving institutional distinctiveness.
From this perspective, Hong Kong occupies a particularly important position. Its value as an international legal and dispute resolution center lies not only in maintaining the advantages of the common law system but also in acting as a bridge between different legal traditions. The city has extensive experience in international commerce, arbitration, and cross-border legal practice, placing it in a unique position to facilitate greater legal connectivity across the region.
The author is a solicitor, a Guangdong-Hong Kong-Macao Greater Bay Area lawyer, and a China-appointed attesting officer.
The views do not necessarily reflect those of China Daily.
