NOTE FOR THE RECORD
wn.
Multania
13.4.10 Der/his is £22
المنام
Denter 2F(FMSA)120/91/02
he 24/7
oo Mr Jones
83
✓Mra E Denza (FCO) Mr S W Payton (B/
HONG KONG : THE TOPPING UP PRO ELEM
In the light of Mr Jones' minute of 9 July, I discussed with Mra Denza (FCO Legal Adviser) the extent to which there was ambiguity in the modified settlement basis asset out in our telno 358 of 10 April.
asset
2. The crux is the phrase "plus the sterling which, in accordance with your interpretation of the accidental breach provision was purchased " The question is whether "your interpretation" was established sufficiently unequivocally by the time of this telegram as to leave no doubt as to precisely what the limits on this interpretation were.
3. Mrs Denza felt that this could be argued either way. It would certainly be open to Hong Kong to argue that, in the absence of specific restrictions or limits on this interpretation, they were acting in good faith in making what we would like to term "excess" topping up purchases. Mrs Denza said that, if HMG took a restrictive line, she could not be confident that we would (in the face of such arguments) be successful in defending our line before an impartial tribunal.
4.
This is different from the position we were in on the original breaches. At that stage, FCO legal advice (as recorded in my minute of 22 March) was that the original accidental breach provision was clear and unambiguous any doubt about interpretation arose from subsequent exchanges. In the present case, there is doubt about the interpretation of the relevant provision itself.
5. Mrs Denza has seen and is content that this minute incorporates the substance of her advice.
DAW
(D A WALKER)
22 July 1974