TNAG-0848-FCO40-1058-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 166

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SECRET

FM FCO 2116132 FEB 79

TO ROUTINE HONG KONG

TELEGRAM NUMBER 97 OF 1 FEB 79

INFO PEKING

YOUR TELEGRAM NO 68: NEW TERRITORIES LEASES

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1. WE HAVE GIVEN FURTHER THOUGHT TO THE .PROPOSED ORDER IN COUNCIL IN THE LIGHT OF THE ARGUMENTS IN YOUR LETTER OF 21 DECEMBER 1978 TO MCLAREN, YOUR TELEGRAM UNDER REFERENCE AND PEKING TELEGRAM NO 16. WE HAVE NOT BEEN ABLE TO ADOPT THE DRAFT AT ANNEX A TO YOUR LETTER OF 21 DECEMBER AS IT STANDS, BUT HAVE SOUGHT TO PRODUCE A NEW DRAFT WHICH COVERS ALL THE ESSENTIAL POINTS AS BRIEFLY AND AS CLEARLY

AS POSSIBLE.

2. THE TEXT OF OUR REVISED DRAFT IS IN MIFT.

3. MIFT PROPOSES TWO ALTERNATIVE VERSIONS OF ARTICLE 2. THE DEPARTMENTAL LEGAL ADVISER PREFERS ALTERNATIVE A BECAUSE LEASES WOULD NOT AUTOMATICALLY DETERMINE WHEN THE NEW TERRITORIES REVERT TO CHINA AND THE RIGHTS OF LESSEES WOULD THUS BE PROTECTED. ALTERNATIVE B DOES NOT HAVE THAT ADVANTAGE, BUT IS SIMPLER AND IS GENERALLY IN LINE WITH ANNEX A TO YOUR LETTER OF 21 DECEMBER.

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4. YOU WILL NOTE THAT IN ARTICLE 2 OF THE TEXT WE HAVE USED THE WORD QUOTE POSSESS UNQUOTE, WHICH IS ACCURATE SINCE THE NEW TERRITORIES ARE PART OF A BRITISH POSSESSION: QUOTE HOLD UNQUOTE IS MORE APPROPRIATE TO A LANDLORD/TENANT RELATIONSHIP. YOU MAY HOWEVER CONSIDER THAT THE CHINESE MIGHT TAKE OBJECTION TO QUOTE POSSESS UNQUOTE. IF SO, IT WOULD BE ACCEPTABLE TO AMEND THE OPENING CF ALTERNATIVE A TO READ QUOTE FOR SO LONG AS THE NEW TERRITORIES ARE ADMINISTERED AS PART OF HONG KONG, THE GOVERNOR SHALL HAVE POWER TO GRANT A LEASE.... UNQUOTE: AND TO AMEND THE SECOND HALF OF ALTERNATIVE S TO READ QUOTE AND SUCH A LEASE SHALL CONTINUE IN FORCE FOR SO LONG AS THE NEW TERRITORIES ARE ADMINISTERED AS PART OF HONG KONG....UNQUOTE. A SIMILAR AMENDMENT WOULD BE RE-

QUIRED IN ARTICLE 3.

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