TNAG-2311-FCO40-3355-Air-services-between-Hong-Kong-and-Indonesia-1991 — Page 77

RESTRICTED

FM FCO

TO PRIORITY JAKARTA

TELNO 301

OF 1809OOZ JULY 91

AND TO PRIORITY HONG KONG

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26)

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104434 MDLOAN 7802

MKC181/22

YOUR TELNOS 411 AND 441: UK/INDONESIA BILATERAL AGREEMENTS: TERRITORIAL CLAUSES

1. WE ARE NOW READY TO REPLY TO THE POINTS RAISED IN PARAS 7 OF YOUR TEL 411:

(I) WE AGREE THAT YOU SHOULD HOLD YOUR GROUND IN ARGUING FOR THE COMBINED US/FRG LANGUAGE IF AT ALL POSSIBLE. (II)

THE FALLBACK POSITIONS IN YOUR PARAGRAPH 7 BOTH HAVE A CERTAIN DIFFICULTY. THE POSITION IN 7(B) IS UNATTRACTIVE BECAUSE AS YOU RIGHTLY ARGUED WITH WIRYONO, THE PHRASE IN ACCORDANCE WITH INTERNATIONAL LAW' IS INTENDED TO GOVERN THE SECOND HALF OF THE PARAGRAPH. A COMMA IN THE PLACE SUGGESTED WOULD MAKE THE PARAGRAPH READ VERY AWKWARDLY AND ITS EFFECT WOULD BE TOO UNCLEAR.

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(III) THE POSITION IN 7 (A) IS NOT FAVOURED BY INLAND REVENUE WHO ARGUE THAT IT IS INAPPROPRIATE TO JUXTAPOSE REFERENCES TO TWO POTENTIALLY CONFLICTING REGIMES, I.E. DOMESTIC LAW AND INTERNATIONAL LAW. WE ALSO TAKE THE VIEW THAT ALTHOUGH THIS WAS ONE OF THE OPTIONS IN OUR TELNO 205 ON THE ASAS AND A SIMILAR FORMULA IS CONTAINED IN THE AS YET UNSIGNED NETHERLANDS/INDONESIA AIR TRANSPORT (NOT (LAST WORD UNDERLINED) DOUBLE TAXATION) AGREEMENT, IT SHOULD BE REGARDED AS A LAST RESORT.

(IV) WE WOULD PREFER EITHER OF THE TWO FOLLOWING FALLBACK POSITIONS WHICH ARE REVISIONS OF INDONESIA'S SUGGESTED WORDING REPORTED IN PARA 5 OF YOUR TELNO 380:

(A) 'INDONESIA' MEANS THE TERRITORY OVER WHICH THE REPUBLIC OF INDONESIA HAS SOVEREIGNTY.

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(B) INDONESIA' MEANS THE TERRITORY UNDER THE SOVEREIGNTY OF THE REPUBLIC OF INDONESIA.

IDEALLY, EACH OF THESE DEFINITIONS WOULD BE FOLLOWED BY THE PHRASE 'IN ACCORDANCE WITH INTERNATIONAL LAW'. HOWEVER, WE COULD ACCEPT THE LANGUAGE ABOVE EVEN WITHOUT THIS ADDITIONAL PHRASE IF NECESSARY.

IN

(V) WE AGREE THAT YOU SHOULD MAKE NO CONCESSION ON UNLOSC. THE MEANTIME, GRATEFUL TO KNOW IF YOU HAVE SUGGESTED FIRST AND SECOND PROPOSALS IN PARAGRAPHS 9 AND 10 OF PARKER'S MINUTE OF 20 JULY 1989 AND, IF SO, THE INDONESIANS' REACTION.

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