GPS 590 CYPHER/CAT A
CONFIDENTIAL
FA
Aterling
LAST
FM FCO 191635Z
REF.
167
NEXI
CONFIDENTIAL
REF
99
ORWELL
R1
(MF9/393/1) 23
TO ROUTINE HONG KONG TEL NO. 579 OF 19/6/74.
YOUR TEL NO 594: STERLING GUARANTEE.
RE:
24 J..1/4
HKK 5/10.
1. WE REGRET THAT MISUNDERSTANDING PERSISTS ABOUT THE PROVISION
RELATING TO ACCIDENTAL BREACHES.
2..
PART OF THE PROBLEM IS ASSOCIATED WITH YOUR VIEW THAT HMG HAS SOUGHT TO RESTRICT THE APPLICATION OF THE ACCIDENTAL
BREACH PROVISION CONTAINED IN PARA 2 OF OUR TEL NO 1209
OF 26 NOVEMBER 1973 (DESCRIBED IN WHAT FOLLOWS AS THE NOVEMBER FORMULA). WE CAN ASSURE YOU THAT THERE HAS BEEN NO INTENTION ON
OUR PART TO RESTRICT IT IN ANY WAY.
За
YOU SUGGEST IN PARA 5 OF YOUR TEL THAT THE NOVEMBER FORMULA WOULD HAVE ACCOMMODATED ANY BREACH (NOT INVOLVING A
DELIBERATE REDUCTION IN STERLING HOLDINGS) WHICH RESULTED FROM
A FALL IN MARKET PRICES. WE DO NOT ACCEPT THIS INTERPRETATION
BECAUSE IT FAILS TO TAKE INTO ACCOUNT THAT THE NOVEMBER FORMULA
EXPLICITLY EXTENDED ONLY TO BREACHES THAT ARE PURELY
ACCIDENTAL, NOT TO ANY BREACHES,
1. THERE THEN ARISES THE QUESTION OF WHAT BREACHES CAN BE
REGARDED AS PURELY ACCIDENTAL, ALTHOUGH YOU HAVE ASKED, RY IMPLICATION, FOR GREATER PRECISION, WE THINK IT HADVISABLE
TO TRY TO SET OUT A COMPREHENSIVE LIST OF POSSIBLE ACCIDENTAL
BREACHES. THIS WOULD, IN ANY CASE; HARDLY BE TO THE ADVANTAGE
OF PARTICIPANTS SINCE UNLISTED BREACHES WOULD THEN HAVE TO BE
TREATED AS INELIGIBLE, IN OUR VIEW, THE MOST SATISFACTORY COURSE IS TO AVOID BUILDING IN MFLEXIBILITY, AND WE ASSURE YOU THAT OUR
NITENTION TO AND REMAINS TO INTERPRET THE ACCIDENTAL BREACH
PROVISION IN A FAIR AND REASONABLE MANNER.
15.
CONFIDENTIAL
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