TNAG-0752-FCO40-956-Future-of-Hong-Kong-1979 — Page 31

RUSHFORD

Mr Rushford

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040/1

HKK 04

MAY KO. 51

14 AUG 1978

BELSTRY FA [Action Taken

84

INDEX

No

FUTURE OF HONG KONG : NEW TERRITORIES' LEASES

1.

64

Thank you for your minute of 9 August (I have kept the top copy) commenting on Sir D Roberts' Letter to me of 6 July. As you disagree with the Hong Kong Law Officers' contention that it would not be possible for the Hong Kong Government to grant leases extending beyond 1997 I should be grateful if you would attend the meeting with the Governor which Mr Murray is to chair at 09.30 on 17 August.

•

2. In the meantime I should be grateful for your advice on the proposal to grant "indetermined leases" Paragraph 3 of Annex a of Sir D Roberts letter says, quite rightly, that "unless within the next few years the term of these New Territories'7 leases can either be extended or made indeterminate, confidence will start to fall due to erosion of land values and reluctance to invest." Although the arguments are not fully spelt out, I suspect that Hong Kong regard the "åndetermined" solution as the better choice for essential, political reasons. A device of this kind would get rid of the legal significance of 1997 in relation to land tenure without requiring the Chinese govern- ment to approve, tacitly or otherwise, an arrangement which would effectively inyolve an extension of the Lease for a specific period, as will be the case if leases were granted for fixed terms beyond 1997.

won

вишили

10 August 1978

R JT McLaren

Hong Kong and General Department

So far I can see the question of indeterminate leases is a red herring created by the Hong Kong Law Officers in consequence of their erroneous belief that the relationship between the UK and China under the Convention of 1898 is one of landlord and tenant governed by the municipal law of leasehold property. Paragraphs 1 to 5 of their Opinion are no doubt correct as a statement of that law but paragraphs 7 to 11, and much of what follows, are misconceived for

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/the reasons