C Priston Esq
CRE4
Department of Trade
1 Victoria Street
London
COMMERCIAL-IN-CONFIDENCE
| HKK 173/1
2 MAR 1978
WK OFFICER.
PA
Action Taken
ECO 173/1A
23 March 1978
HONGKONG MASS TRANSIT AND GAMMOM KIER LILLEY (GKL)
Would you please refer to telegraphic exchanges about the dispute between the Mass Transit Railway Corporation and Gammon Kier Lilley resting with my Credas 53 and 54 of 31 January.
2. John Mott, Chairman of French Kier, called at the beginning of last week prior to a round of discussions with Norman Thompson, Chairman of the MTR as foreshadowed in my Creda 53. Although he was accompanied by his legal representative, I encouraged him a) to adopt a less beligerent attitude towards Norman Thompson and b) not to base his strategy on the belief that a rift had opened between Norman Thompson, as Chairman, and the MTR Board. Mott said that provided he could have meaningful discussions he was prepared to have sensible talks even though it was essential to establish GKL's rights to compensation payments.
3.
Thompson told me yesterday at a private lunch that his talks with Mott had gone reasonably well although he felt that Mott had adopted an unnecessarily legalistic view of the contract conditions. I offered no comment except to remark that I was pleased to learn that the long distance sniping by letter had stopped.
24.
Livingstone, the local manager of the GKL joint venture, called this morning to apologise for the fact that Mott had been unable to call again following his talks with Thompson. He told me, in confidence that the lawyers appeared to have agreed that there were grounds for believing that some of the conditions covered by qualification 1.5 of the original tender letter were still valid and that as a result there had been some discussion with MTR about the value of compensation due to GKL. But the fact ramained that the MTR maximum offer at this point of time was HK dollars 70 million whereas Kier's demands were in the range of HK dollars 200 million. But Mr Mott had at least had a fair hearing
even though the basic dispute remains as set out in para 1 of my Creda 53.
5. I told Livingstone that I would take no further action unless requested by either side. My aim had been to keep the two sides talking rather than resort to court action which would be to neither's advantage. The objective appeared to have been achieved even though there was still a possibility of reference to the courts. I shall of course keep you informed of any further developments but I think we have succeeded in calming both sides down.
cc C C Birch Esq
ECGD
J A B Stewart Esq
D M March