IN THE uncertain days ahead, after Hong Kong becomes a self governing city inside China, a number of key legal questions will arise. In particular, will justice in the final resort be a matter for the courts or the political rulers in Beijing?

Much hinges on China's Communist Party controlled National People's Congress (NPC). It has the final say in matters concerning defence and national security, and foreign affairs.

We know that after China assumes sovereignty of the territory, calls for independence for Taiwan will be banned in the interests of national security.

But what if someone raises a placard with the slogan "Down with Li Peng" at a rally in posthandover Hong Kong? Will this verbal assault on the Chinese Prime Minister be permitted as free speech, or as a threat to national security, causing Beijing to demand action?

The incoming chief executive, Mr Tung Cheehwa, describes the question as hypothetical, but it goes to the heart of the matter regarding the future of Hong Kong's civil liberties. The legal" profession has expressed unease at an erosion of basic rights if China comes down heavy on such cases.

In these circumstances the appointment last week, by a legal panel of an independent minded Chinese barrister, to the post of most senior, judge after July 1st has come as a major boost for confidence in the future of the rule of law in Asia's richest city.

Mr Andrew Li Kwoknang (49) is a Cambridge educated adviser to the British administration with a high reputation for fairness. His confirmation as first Chief Justice of Hong Kong's new Court of Final Appeal (CFA), which will take over from Britain's Privy Council as the territory's ultimate legal arbiter, was welcomed by all parties, including Governor Patten and, more crucially, Mr Tung. On Saturday the appointment was also approved by the pro Beijing Provisional Legislature.

The way is now clear for the setting up after July 1st of Hong Kong's first ever Court of Final Appeal, which will consist of three permanent judges and one nonpermanent.

Mr Li may, however, soon find himself at the centre of a legal wrangle over whether the CFA or the NPC ultimately interprets key aspects of the Basic Law, the constitution for Hong Kong drawn up by China and based on the body of law in existence.

The NPC has already done some early interpreting. It voted in February to amend the territory's public order and societies ordinances, on the grounds that these were matters for national security.

Mr Tung attracted widespread criticism around the world for endorsing the move. But his supporters say it would be wrong to conclude that he and the Chinese government are going down the road of repression. They point out that Beijing could have used the colonial precedent and insisted on its legislature having final jurisdiction in everything, and that the existence of the CFA will actually enhance autonomy.

Despite his frequent trips to Beijing for consultations, Mr Tung has been given a free hand in making his biggest two decisions, the civil service transition - all the top British era officials will stay in place - and the civil liberties amendments, Chinese leaders say.

It would, however, have been too great a slap in the face to Beijing for Mr Tung to reject the NPC vote, so his hands were tied on this issue. But lie consulted public opinion in the territory and eased the new curbs on civil liberties after vigorous representations from democrats and others. He eased the application procedure for holding protest rallies and on the rights of local political parties to make foreign contacts.

This shows where Mr Tung is heading. The rhetoric used by the shipping tycoon turned politician is also eroding the scepticism of those who call him a tool of Beijing. Recently he pledged that there would be no brutal suppression of demonstrations in the territory like the bloody 1989 crackdown in Tianainmen Square, saying: "I will not allow it to happen here. Demonstration is part of our culture, demonstration is part of life."

In welcoming Mr Li's appointment he declared that the people had "high expectations of their judiciary in upholding the rule of law, ensuring the fair and efficient administration of justice and safeguarding freedoms of the individual."

And in a speech last week he insisted: "Our rights and freedoms can only be safeguarded by the fair and efficient administration of justice by an independent judiciary."

ANYONE looking for further assurances of Hong Kong's autonomy under the one country two systems policy can find them in the official Chinese newspapers, where a campaign is going on every day to prepare the people the fact that the Hong Kong Special Administration Region will not take its orders from Beijing.

On Monday, for example, the China Daily pointed out that the promise to maintain the social system and lifestyle of Hong Kong means that horseracing and the betting culture surrounding it (banned in mainland China) will continue, and that even to ask if Marxist Leninist courses would be introduced to Hong Kong schools showed a lack of understanding of the two systems policy.

"The Basic Law specifically provides that educational institutions of all types may all retain their autonomy and shall enjoy academic freedom," it said, and they could "continue recruiting staff and using teaching materials from abroad."

It is ironic that Communist China has to constantly protest that it will not interfere in a city over which it is assuming sovereignty. Mr Tung, who complained at a private lunch yesterday that he has got a raw deal from the US media in particular over civil liberties, said: "We must constantly remind ourselves we are part of China."

Mr Li and the Hong Kong judges and barristers, who will keep their British style wigs and gowns, will have the task now of helping Mr Tung to prove to the world that the China to which they belong genuinely has two systems. {CORRECTION} 97052800004