TNAG-1166-FCO40-1446-Future-of-Hong-Kong-1982 — Page 19

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SECRET

4.

of the New Territories, it can either adopt the leases or terminate them by legislation or otherwise;

g) it follows that the question of the Crown leases

does not raise any problem under international law.

So far as the administration of the New Territories by the UK are concerned, the position under international law seems clear: this can continue after 30 June 1997 only with the express or implied agreement, consent or acquiescence of the PRC.

Such agreement, consent or acquiescence could be signified in a bilateral arrangement, by a unilateral statement of the PRC or by the conduct of the PRC in the knowledge of its likely or actual continuance.

5. One may regret that the operation of the Order of 1898, which is the basic municipal law for the New Territories, is expressly limited to the term of the international lease: with hindsight, one could wish that its operation had been left unlimited or indefinite as to time, although of course this would not have made any difference to the position of the UK under international law.

6. So far as Crown leases in the New Territories are concerned, the Hong Kong Government seems to be in a straight jacket of its own manufacture: it is not restricted in international law but takes a restrictive view of its powers under municipal law.

7. HMG's problems over Hong Kong are essentially political, not legal. No amendment to the municipal law can alter the fact that the New Territories are held in pursuance of an international lease expressed to expire on 30 June 1997.

8.

HMG's position might however be improved if the municipal law were altered to indicate that

a) the Governor may grant Crown leases in the New

Territories for any term within a specified limit;

b) the powers of the Hong Kong Government and

legislature to administer the New Territories are of indefinite duration and are capable of operating for so long as the UK continues to be responsible for the government of the New Territories.

Both amendments are within the legal powers of Her Majesty in Council, acting under the Royal prerogative, and they could be effected either successively or simultaneously without any breach of international law.