DEFENSIVE

CLAUSE ONE

TERMINATION OF SOVEREIGNTY

CONFIDENT I AL

3 -

[IF THE WORDING OF CLAUSE ONE IS QUESTIONED]

The wording of Clause 1 is based on the precedent of the Cyprus Act

1960.

The reference to the termination of sovereignty and jurisdiction is

included because so far as our law is concerned we will be

terminating sovereignty over the ceded areas, and terminating

jurisdiction over both the ceded areas and the New Territories, the

latter being held on an international lease. The Chinese view of

the legal position is of course different.

CONFIDENTIAL

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DEFENSIVE

CLAUSE ONE

TERMINATION OF SOVEREIGNTY

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