TNAG-1040-FCO40-1290-Future-of-Hong-Kong-1981 — Page 19

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P.S.

Since composing the foregoing I had a helpful talk with Mr Williamson on 13 November.

2. He tells me that the Chinese may not be willing to agree to anything very much next year, as it seems likely that they have not yet fully addressed their minds to possible solutions of the Hong Kong problem. He also said that, rather than let Hong Kong go, the United Kingdom would be willing to grasp the nettle of relinquishing sovereignty.

The

3. Both points seem to me, with respect, to make sense. first point would suggest that the United Kingdom should be cautious about proferring legalistic packages. The second point suggests to me that, while we should certainly not close our minds about the various concessions that could be made on sovereignty, the United Kingdom should not commit itself in advance on the notion of relinquishing sovereignty as if it were a panacea.

4. I am not sure that what I have said already deals adequately with your query about the possibility of an arrangement involving de facto extension of United Kingdom administration without a formal agreement.

5.

I should therefore perhaps add that one possibility might be that the United Kingdom might simply remain in possession of the New Territories without any formal agreement. Given that the Chinese did not object, one might see this as an extension of the terms of the lease by implication of conduct - in English real property law a tenant, by holding over when his lease expires, can in some circumstances remain lawfully in possession. We are not of course here concerned with English real property law, but an extension of the terms of the international lease granted in the Convention of 1898 beyond 30 June 1997) (under which the United Kingdom exercises sovereignty over the New Territories) might, I think, be implied in international law from the conduct of the parties when the lease was about to run out. The idea that Her Majesty might continue to exercise jurisdiction in the New Territories by "usage" or "sufferance" even if the New Territories were no longer formally leased to the United Kingdom is the same in character. The United Kingdom has in the past exercised jurisdiction over a number of foreign territories without the benefit of a treaty formally conceding jurisdiction in reliance on usage or sufferance, though I do not know of an instance when it did so after a lease granted by international treaty had expired.

6. The trouble with what I have just outlined is that it would depend on the course of events after 30 June 1997 - in other

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