OUTWARD TELEGRAM
FROM THE SECRETARY OF STATE FOR THE COLONIES
17
54510/51
Typex
IMMEDIATE
TO HONG KONG (Sir A. Grantham)
Sent 11th May, 1951. 15.45 hrs.
No. 601.
Secret.
A
Your telegram No. 537.
Netherlands Harbour Works.
Proposal in paragraph 1 of your telegram No. 516 is, of course, open to the objection that similar protection against losses in the event of war may be demanded by every expatriate contractor employed on Government work. Moreover for H.M.G. specifically to underwrite the proposal might be argued by interested parties as committing H.M.G. to 100% compensation for war damage and losses should such circumstances
nfortunately arise more especially if the damage or loss were due to denial action carried out either on Government orders or directly by Government servants. Paragraph 3 of your telegram No. 516 seems in fact to indicate that Government would be committed even more strictly to 100% compensation than if requisitions were carried out under defence regulations. are, of course, fully aware of the difficulties of this problem arising out of denial action taken in 1941 and H.M.G. is naturally anxious to avoid being committed in any way on this matter without full consideration of all its aspects.
You
the above circumstances this problem has far wider implica- tions than concern Hong Kong on this particular contract. H.M.G. is therefore bound to reserve its position and cannot (repeat cannot) accept that any liability will necessarily fall on H.M.G. in this matter.
2. Whilst the points made in paragraphs 1 and 2 of your telegram No. 537 are appreciated, we are nevertheless, for the reasons given above, reluctant to see the proposals implemented. Should you however decide that it is essential to proceed with the arrangements suggested in paragraph 3 of that telegram we must leave it to your discretion to do so but you will doubtless ensure as far as possible that arrangements are kept strictly confidential between the Hong Kong Government and the company, and that the company takes out a commercial insurance in respect of the plant so as at least to be covered to the extent stated in your telegram No. 418. Moreover you may feel it dastrable to build up a reserve fund in respect of the contingent Mability of the Hong Kong Government more rapidly than anggested in paragraph 3 of your telegram.