Many people have expressed concern about the impact on our legal system of the interpretation of the Basic Law given by the Standing Committee of the National People's Congress (NPCSC) in June. These concerns cannot be lightly dismissed. But it is important to understand what are, and what are not, the effects of that interpretation.

2. First, the powers of the Court of Final Appeal (CFA) have not been diminished. The CFA retains its power of final adjudication. Contrary to what some have said, the NPCSC does not hear appeals from the CFA. It does not decide cases either. The interpretation of the Basic Law given by it did not affect the rights of the parties to the proceedings that were decided by the CFA in January this year. In other words, the CFA remains our supreme judicial body, and its adjudication of cases is not subject to appeal to any other body.

3. Secondly, since the decision of a court in favour of one or other party to a case is not affected by a subsequent NPCSC interpretation, there is no point in a losing party seeking to obtain such an interpretation. It would not change the outcome of the case.

4. Thirdly, the NPCSC's power of interpretation relates only to the Basic Law. Only a tiny minority of cases require an interpretation of the Basic Law. The vast majority of legal disputes, and legal proceedings, concern common law or statutory principles. The interpretation of those principles will remain exclusively with Hong Kong courts.

5. There has been much discussion about who has the 'right' to seek an interpretation and whether those with good connections will be given favourable treatment. It would seem that anyone could ask for an interpretation, in the same way that, before Reunification, anyone could ask Her Majesty in Council to amend the Letters Patent, or grant some Royal favour. However, I expect that private requests to the NPCSC would get short shrift. Private individuals and organisations who seek to protect their own interests are very different from the Chief Executive, who is under an express constitutional duty to implement the Basic Law and to account both to the Central People's Government and to the HKSAR. Even with that constitutional duty, the Chief Executive would not request an interpretation save in highly exceptional circumstances.

6. It has recently been asserted that, under the pre-Reunification system, the Governor would not have gone to the House of Commons to over-rule a Privy Council verdict. In fact, it was not necessary for him to do so. Legislation generally could be enacted in Hong Kong to reverse or modify the effect of a decision by the Privy Council, and it was occasionally enacted for that purpose. Moreover, the former Hong Kong Government arranged for the Letters Patent to be amended in 1991 in order to negative a court decision that it found unacceptable. A High Court judge had decided that magistrates appointed by the Chief Justice had not been validly appointed. Within a month, the British Queen had amended the Letters Patent to regularise what had happened, with retrospective effect.

7. On the subject of retrospectivity, the CFA ruled that the NPCSC's interpretation operates as from 1 July 1997. It has been alleged that, if another such interpretation is given 50 years from now, its backdating would cause chaos for the legal system. But that is not so. As the Bar Association has confirmed, under the common law system, all interpretations of statutory provisions relate back to the date the statute came into force. This has not caused problems. Previous judgments that may have been based on a different interpretation still stand.

8. Some people still regard an amendment of the Basic Law to have been the better option. They are entitled to hold that view. But the Administration firmly believes that, since what was in issue was the true legislative intent of two provisions in the Basic Law, interpretation was the appropriate route.

9. Looking to the future, some people would like the Administration to devise some criteria or mechanism to restrict the circumstances in which it may seek a further interpretation. There are, however, many factors that must be taken into account. We hope that we will not be faced again with the need to resolve problems of the magnitude that arose in respect of the right of abode issue. Moreover, it is very difficult to predict the circumstances that might cause such problems and might justify an NPCSC interpretation. And, since the Chief Executive is under a constitutional duty to implement the Basic Law and to account both to the Central People's Government and the HKSAR, could that duty be lawfully restricted by any criteria or mechanism? The Administration is seeking to resolve these issues, but it is only prudent, in these early days of our new constitution, to proceed cautiously.

10. For most purposes, our common law system operates exactly as it did before Reunification. In some respects, the core values of that system are better protected now. Fundamental principles such as the independence of the judiciary, the right to rely on precedents from other common law jurisdictions, and respect for human rights are now entrenched in the Basic Law.

11. Some concerns that have been expressed about the NPCSC's interpretation are understandable. But we must not over-react. I have no doubt that our common law system will endure and that the Basic Law - the constitutional document for the HKSAR - will prove to be a solid foundation for the continuity of our legal system under 'one country, two systems'.

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