Hong Kong's Court of Final Appeal set aside on Tuesday the bail granted to local media tycoon Jimmy Lai Chee-ying by a lower court.

The founder of Apple Daily was charged with fraud and one count of "collusion with a foreign country or with external elements to endanger national security". He has been remanded in custody.

Lai was granted HK$10 million ($1.28 million) bail by the Court of First Instance on Dec 23 only for the Court of Final Appeal to bring him back into custody on Dec 31 for another hearing.

Lai's return to custody was related to Article 42 of the National Security Law for Hong Kong, which stipulates that "no bail shall be granted to a criminal suspect or defendant unless the judge has sufficient grounds for believing that the criminal suspect or defendant will not continue to commit acts endangering national security".

On Tuesday, the Court of Final Appeal said the lower court applied an "erroneous line of reasoning" and "misconstrued" Article 42. The decision was unanimous.

The Court of Final Appeal ruled that in applying Article 42(2) when dealing with bail applications in cases involving offenses endangering national security, the judge should regard the question of sufficient grounds for bail as a matter for the court's evaluation and judgment and not as involving the application of a burden of proof.

Barrister Lawrence Ma Yan-Kwok noted that the decision by the Court of Final Appeal, the city's highest court, is a binding precedent for all lower courts to follow. Thus its interpretation of Article 42 of the National Security Law for Hong Kong is of great significance for lower courts to deal with bail applications involving national security.

He also refuted accusations that the law's stringent threshold for granting bail is harmful to human rights, as Article 42 clearly sets out criteria for the granting of bail, as the court pointed out. He said that those who committed minor offenses under the law and undertook to desist from reoffending may still be granted bail.

Hong Kong lawmaker and solicitor Holden Chow Ho-ding said that by recognizing the bail threshold, the ruling sent a clear message to society that such offenses will lead to grave legal consequences and there is no way to escape punishment.