(c)
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the Order in Council of 1898 providing for
the administration of the New Territories as
part of the colony of Hong Kong does not
confer power in municipal law to provide for
the grant of such leases and the municipal
law cannot be amended to make it possible.
4.
While propositions (a) and (c) are open to contrary
arguments as a matter of law, the Hong Kong Government
cannot rely on those arguments because of the risk of legal
challenge in the Hong Kong courts.
5.
Any attempt by the UK or the Hong Kong Government to
proceed 'unilaterally' might provoke the PRC into a severe
adverse reaction and it would not be safe to make it.
UK Requirement
6.
It is most important for the UK to remove the impediment
at an early date since the inability of the Hong Kong
Government to grant leases running beyond 30 June 1997 will
progressively hamper the economic development of the New
Territories, with a resultant loss of business confidence
and a diminution of investment and profitability. It is
understood that if a public company incorporated in the USA
invests in leasehold property for a term of less than fifteen
/years
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