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THE NATIONAL ARCHIVES

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CO 537/1374

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THE NATIONAL ARCHIVES

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Memorandum on Debtor-Creditor Legislation

Appended in Part III below is the draft of an Ordinance which will be necessary to give effect to the common proposals for the solution of the "debtor-creditor" problem in the Far Eastern Dependencies. The Ordinance is, for convenience, drafted in terms applicable to the Malayan Union. Part I of the memorandum below contains general observations on the Ordinance and Part II observations concerning the application of the Malayan Union Ordinance to the other Far Eastem Dependencies and the modifications that will be necessary.

PART I

General notes on the draft Ordinance

1. Some Governments may prefer to exclude the special definition in Section 2 of "duress or coercion". Assuming that it is desirable to extend by this definition the nature of the duress or coercion to which Section 3(2)(a) applies, it will be necessary only to define "duress" where English Contract Law prevails, and "coercion" where the Indian Contract Act is followed, viz. "duress" in Hong Kong, Singapore, and Sarawak, both in Malayan Union and North Borneo and "coercion" only in Brunei. The decision whether to include this definition is left to each Government.

2. The definition of "occupation currency" will require consideration by Governments in the light of the actual currencies which were issued by the occupying power.

3.

Under Sections 3(2)(b) and 5, it is optional whether the revaluation scale should be included in a schedule of the Ordinance or should be fixed by rules under the Ordinance; Section 10 is necessary if by rules. It is not necessary that there should be only one scale and it may be appropriate to have at least two scales, one for pre-occupation debts purported to have been settled during the occupation period; and another for occupation period debts not settled during that period. It is suggested that insofar as repayments of pre-occupation capital debts were made during the occupation in order to take advantage of the circumstances there is a case for revaluing Japanese currency at a lower rate than the rate applicable to outstanding debts to be revalued under Section 5. The actual scales are however left for decision by each Government.

4. As regards Section 7, the Malayan Union and Singapore Governments have represented that no distinction should be made between payments in pre-occupation currencies and payments in Japanese currencies, on the ground that if distinction is made Courts may be required to adjudicate in many cases on the question whether payment was or was not made in whole or in part in pre-occupation currency. The reason for inserting Section 7 is however that it is felt desirable that where there is definite proof that payments were made in British currency such payments should be fully validated without question.

5. Section 8 does not make provision for relief in respect of arrears of rent, It is felt that in principle arrears of rent should not be excluded but it is understood that in the Malayan Union and in Singapore arrears of rent will be dealt with under Land legislation. The Governments of Hong Kong, North Borneo, Sarawak and Brunei may however wish to consider including rent in Section 8 unless a separate special tribunal is set up to deal with them.

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