On Tuesday a Boston District Court judge refused to grant an extradition order for a suspect in a bribery and conspiracy case on grounds that the colony's legal system may not remain "sufficiently fair" following the end of British rule on 30 June.
Yesterday Chris Patten, the Governor of Hong Kong, said he was "literally amazed by the decision". The Government said it would mount "an urgent appeal" against the ruling. A statement issued by the colony's Legal Department said: "We are amazed that the district judge seems to have ignored completely the guarantees contained in the Sino-British Joint Declaration and the Basic Law [the territory's new mini-constitution] about the continuation of Hong Kong's common law system."
The American ruling opens the door to the so-called "1997 defence", now being used by a number of lawyers on behalf of fugitive Hong Kong clients who have argued that the independence of the judiciary would be diminished under Chinese rule.
Mr Patten maintained that the ruling was not a reflection of United States government policy but reflected the views of one judge. However it is far from clear whether the US will renew the existing extradition treaty with Britain once China takes over the colony.
The Boston case involves Jerry Lui, a former British- American Tobacco Company executive who faces 10 bribery and corruption charges. His lawyers have transformed the case into a human rights battle by gathering a mountain of evidence about the alleged end of Hong Kong's present judicial system after 30 June.
Sino-British agreements state that there will be no changes to the system. However, there are indications that these undertakings have been undermined. Nihal Jayawickrama, a professor of law at Hong Kong University, said controversy over breaches of these undertakings has created "fears about the independence of the judiciary".
He added that the American ruling "reflects a judge's perception that this accused person is not likely to get a fair trial if proceedings go beyond July 1". He believes that other judges might cite the American precedent in refusing to extradite suspects.
Dr Jayawickrama said few countries have extradition agreements with China because its legal system is "unacceptable to most countries".
Only a few Asian countries have concluded extradition agreements to come into force after 1 July. If more do not do so, Hong Kong is in danger of not securing the return of fugitives and becoming a haven for criminals wanted overseas.