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HKC 10:
102/3
011405 MDHOAN 9483
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FM FCO
TO IMMEDIATE HONG KONG
TELNO 1734
OF 30111OZ JUNE 88
76
COPY ST ?
OUR TELNO 1374 AND YOUR FAXED LETTER REFERENCE LDT/607/00/0 OF 1 JUNE: RAINIER INTERNATIONAL BANK
1,
OUR LEGAL ADVISER HAS RECEIVED A FURTHER LETTER FROM LINKLATERS AND PAINES AND HAS SEEN YOUR LUR. HIS CONCERN ABOUT EXTRATERRITORIALITY REMAINS.
2.
THE PROBLEM IS THAT
IN ORDER TO AVOID LEGISLATION BY A COLONIAL LEGISLATURE COMING UNSTUCK BECAUSE IT PURPORTS TO HAVE EXTRATERRITORIAL APPLICATION, IT IS NECESSARY FOR THERE TO BE SOME QUOTE
TERRITORIAL CONNECTION UNQUOTE WITH THE MATTERS AFFECTED BY THE LEGISLATION. WE ARE QUITE PREPARED TO
ACCEPT THAT THAT PROVIDES A
FAIRLY WIDE FORM OF CONNECTION AND WE ACTED ON THIS BASIS IN THE DEUTSCHE BANK CASE. IN THAT CASE THE HONG KONG ORDINANCE PROVIDED FOR THE VESTING OF THAT QUOTE PART OF AN UNDERTAKING UNQUOTE OF A FOREIGN CORPORATION WHICH WAS GOVERNED BY HONG KONG LAW, THE TRANSFER OF WHICH WAS GOVERNED BY HONG KONG LAW OR QUOTE WAS DERIVED FROM THE HONG KONG BUSINESS UNQUOTE OF THE BANK. THE NEXUS UNDER THE FIRST TWO ELEMENTS IS CLEAR. THE THIRD ELEMENT (DERIVED FROM THE HONG KONG BUSINESS) COULD ENCOMPASS TRANSACTIONS WHICH WERE NOT COVERED BY THE FIRST TWO ELEMENTS AS LONG AS A COURT WAS PREPARED TO AGREE THAT THEY WERE PART OF THE HONG KONG BUSINESS.
3.
WHAT WE ARE BEING ASKED TO ACCEPT IN THIS CASE IS THAT ANYTHING DONE BY THE HONG KONG BRANCHES OF RAINIER (A FOREIGN CORPORATION) HAS A HONG KONG CONNECTION. NO DOUBT IT DOES HAVE SUCH A CONNECTION IN THE SENSE THAT IT IS RECORDED IN THE BOOKS OF A RELEVANT BRANCH. BUT IT IS CONCEIVABLE THAT THE HONG KONG BRANCH COULD HAVE BEEN USED TO DO BUSINESS SAY IN SINGAPORE WHICH IS, IN NO SENSE, CONNECTED WITH HONG KONG.
IN SHORT, THE BUSINESS OF A BRANCH IN HONG KONG OF A FOREIGN BANK IS NOT AUTOMATICALLY HONG KONG BUSINESS. WE HAVE NO MEANS OF JUDGING ON THE FACTS OF THE CASE, BUT ARE APPREHENSIVE THAT IF WE WERE TO AGREE TO THE PRESENT FORMULA, WE WOULD BE TAKING A CHANCE OR RATHER WE SHOULD BE AUTHORISING HONG KONG TO TAKE A CHANCE. WE WOULD THEREFORE PREFER IT IF THE DEFINITION OF
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