TNAG-0426-FCO40-472-Construction-of-an-underground-railway-system-in-Hong-Kong-1973 — Page 87

7

SECRET

Government's Requirement

4

Present Indications (se at 5th December 1973)

Japanese

(a) There should preferably be no

Yes

'unforeseen' circumstances' clause: if there has to be one, claims must be limited to a pre-agreed maximum (cf. II(f) above).

Anglo-Italian

Yes

H.K. Metro Constructors

Yes

(e) The consortium must state a ceiling

or maximum price for the project which will not be exceeded in any circumstances

Yes

Yes (but see (g)

Yes (but see (g) below)

(f) The ceiling contract price (adjusted and Yes

escalated) must be below $5,000 million (Otherwise, in the Steering Group's view, the project is not viable).

below

No

No

(g)

Cases of "force majeure" must be clearly defined and limited,

Yes

0003160 G.F. 316

SECRET

Yes cost escala- tion over 10% per annum to be regard- ed as "force majeurd'

Yes

cost escalation

over an undefined threshold to be regarded

as force majeure"

IV.

Payment Terms

(a) Exact payment terms required by the

Yes

Yes

Yes

consortium must be defined.

(b) Payments, once made, must not be

subject to further escalation

Yes

Yes

Yes