TNAG-0849-FCO40-1059-Future-of-Hong-Kong-New-Territories-leases-1979 — Page 185

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power to legislate in the New Territories after 1997. As you may recall, it has always been Mr Rushford's view that this Clause is unnecessary at the present date, and that such a challenge, if made before 1997, would be bound to fail. Likewise a challenge to things done under existing powers before 1997 that would operate after that date would also fail, since a change of political circumstances does not invalidate existing contracts, leases, etc, unless the new regime takes specific action to do so. While accepting this advice, the Governor still wished to retain this clause since he felt that the mere fact of a challenge, even if unsuccessful, might be unsettling. But it would be impossible to amend Clause 3 so as to provide for the exercise of powers after 1997 without resorting to wording that referred expressly or by necessary implication to continuing British administration.

6. The choice therefore seems to be between a wording that will probably be unacceptable to the Chinese, or omitting the Clause altogether and risking a challenge in the Hong Kong courts. Given that the Clause is not directly relevant to the main purpose of enabling the Governor to issue indeterminate leases, that on strictly legal "grounds it is not necessary at all, and that even if there is a challenge (which seems improbable) it will almost certainly fail, the best choice is probably to omit the Clause altogether and to deal with the question of legislative and executive powers in 1997 when the expiry of the lease is imminent and the situation can be judged in comtemporary terms. 7. I attach a draft Savingram to the Governor, of which we should try to send off an advance text via the Skynet link on Friday morning, if it is to reach Hong Kong in time for the Governor's discussion with Mr McLaren and Mr Samuel at the beginning of

next week.

8.

This submission has been seen and approved in draft by

Mr Rushford. FED concur.

26 April 1979

cc Mr Cortazzi

FED

Mr Rushford

W.E. Quantill

WE Quantrill

Hong Kong and General Department

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