11. A decision on whether HIG should accept a share of third party liability is essentially one of tactics. If an unwillingness to accept a share appeared likely to prejudice the project, it might be necessary to reach some compromise. One possible approach could be to propose that the operating company should be resconsible for meeting claims for nuclear damage wherever it occured, subject to an insurable limit, but that the PRC should be relieved of any residual liability above that limit in respect of damage in Hong Kong. In return, the PRC should accept that no claims could be made against the Hong Kong or UK Governments in respect of damage in the PRC. It would of course be necessary to provide in Hong Kong and/or UK legislation that claims for compensation for damages in Hong Kong which could not be met by the operating company, would be met (subject to an overall limit) by the Hong Kong and/or UK
Governments.
12.
The above approach would have the following advantages:
(a)
As it is planned to site the nuclear power station 30 miles from Hong Kong (with a range of hills between), the chances of damage to Hong Kong would be considerably less than to the PRC. The contingent liability, if shared on a territorial basis, would thus also be less than if shared in proportion to the prospective PRC
and western holdings in the operating company;
(b) Hong Kong would have a reliable guarantee of compensation
which would not be dependent upon PRC acceptance of their valuation of property and expectation of life; also HMG's confidence in the project implied by their assumption of liability, could help overcome public resistance in Hong Kong;
(c) by placing strict liability on the operating company,
with the PRC, Hong Kong and UK Governments standing
behind it, it might be possible to exempt UK suppliers
from their normal liability for damages arising from design, equipment or operation faults, although such exemption should not be extended to non UK suppliers
-4-