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25154.

:

SIR,

No. 94.

(STRAITS SETTLEMENTS: NATIVE States.)

LAW OFFICERS TO COLONIAL OFFICE.

Royal Courts of Justice, July 19, 1901.

WE were honoured with your commands signified in Mr. Lucas's letter of the 5th instant stating that he was directed by you to request the favour of our report on the question of the proper construction of a Concession for construction of a railway between Seramban and Port Dickson in Sungei Ujong, Malay peninsula, and for other purposes,' dated the 28th of July, 1888,

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That the Concession was granted for a period of 20 years, and that by clause 7 of the Agreement the Government undertook to guarantee an annual profit of four per cent, to the grantees "until the expiration of the said term of 20 years or until the railway shall be purchased by the Government as hereinafter provided.

That by clause 8 of the Agreement the Government was empowered to purchase and take possession of the railway compulsorily after the expiration of the 20th or any sub- sequent year from the date thereof on the terms therein stated.

That Mr. Lucas was, however, to point out that the Agreement would appear to con- template the possibility of a purchase by the Government by agreement with the grantees before the expiration of the term of 20 years, and that he was to direct our attention to the last four lines of clause 11 and the words "or otherwise in the second line of clause 29 in that connection.

That it appeared from paragraph 4 of Sir J. A. Swettenham's despatch that it was likely to be contended on behalf of the Company (to whom the grantees had assigned their interest under the Agreement) that unless and until the Government exercised its compulsory power of purchase under clause 8 it would continue liable to guarantee the Company an annual profit of four per cent, under clause 7.

That you were disposed to hold that, if it had been intended that the Government should be liable to guarantee such an-annual profit to the grantees and their assigns for an indefinite period until it purchased the railway, the words "until the expiration of the said term of 20 years" in clause 7 would have been meaningless and unnecessary; and that you were further of opinion that the Government's liability under clause 7 ought to be limited to the duration of the Concession.

That Mr. Lucas was to request us' to take the above matters into our consideration, and to report:-

1. Whether the "said term of 20 years" mentioned in clause 7 was a minimum term liable to be extended indefinitely until the Government took over the railway or a maximum term liable to be reduced by the railway being taken over by the Government before the expiration of 20 years,

2. What sum the Government would have to pay to the Company on taking over the railway if, for the five years preceding the date of such taking over, the railway had made an average annual profit of say S50,000 after paying all expenses?

We have taken the papers into our consideration, and, in obedience to your commands, have the honour to

Report→

1. That the construction of the Agreement of the 28th July, 1888, is not free from doubt, and it is difficult to say with certainty how it may be construed. Upon the one side the words in clause 7" until the expiration of the said term of 20 years, or until the railway shall be purchased as hereinafter provided” would apparently refer to clause 8, in which clause alone specific provision is made for the purchase of the railway, and, if that were so, the guarantee might be argued to continue for 20 years or until a purchase under that section was effected.

There are, however, on the other side provisions which seem inconsistent with this construction. In the first place, the Concession is only for 20 years and by clause 11, after that period, the Government might establish a competing line; besides after 20

years the Government are no longer to share in the excess profits under clause 13, provisions which seem incompatible with a contract to continue the payment of the guarantee after the 20 years.

9601-25-7/1901 Wt 352 DAS }

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PUBLIC RECORD OFFICE

Reference :-

C.O. 885

15 PUBLIC RECORD OFFICE, LONDON

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