TNAG-2335-FCO40-3399-Extradition-agreement-between-Hong-Kong-and-the-Netherlands-1991 — Page 7

CONFIDENTIAL

147453

MDLIAN 2724

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FREE FLOW OF CAPITAL.

SUBROGATION

5.

THE NETHERLANDS FELT THAT A PROVISION ON SUBROGATION WAS ESSENTIAL. ALTHOUGH NOT IN THE HONG KONG MODEL, SUCH PROVISIONS ARE COMMON FEATURES OF IPPAS. WE AGREED TO INCLUDE TEXT ALONG THE LINES OF THAT IN THE NETHERLANDS/PRC IPPA.

DURATION

6. THE HONG KONG MODEL PROVIDES FOR THE AGREEMENT TO REMAIN IN FORCE INDEFINITELY SUBJECT TO 12 MONTHS NOTICE OF TERMINATION FROM EITHER CONTRACTING PARTY. THE NETHERLANDS SIDE ARGUED STRONGLY AND PERSUASIVELY THAT THIS WOULD NOT PROVIDE SUFFICIENT ASSURANCES TO INVESTORS. WE BELIEVE THAT OUR OTHER NEGOTIATING PARTNERS ARE LIKELY TO TAKE A SIMILAR POSITION. WE THEREFORE AGREED TO AMEND THE TEXT TO PROVIDE FOR THE AGREEMENT TO REMAIN IN FORCE FOR 15 YEARS, WITH TACIT EXTENSION FOR 10 YEAR PERIODS UNLESS NOTICE IS GIVEN TWELVE MONTHS BEFORE THE EXPIRY OF EACH PERIOD. WE ALSO AGREED TO ADD A 'GRANDFATHER' CLAUSE PROVIDING THAT, FOR INVESTMENTS MADE BEFORE TERMINATION, PROTECTION UNDER THE AGREEMENT WOULD CONTINUE TO APPLY FOR 15 YEARS.

7. THE TEXT OF THE INITIALLED AGREEMENT IS BEING SENT BY BAG

FOR INFORMATION.

8.

WE WILL REPORT THE AGREEMENT TO EXCO AND THEREAFTER PASS IT TO THE CHINESE SIDE UNDER COVER OF A SUITABLE EXPLANATORY PAPER.

WILSON

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DISTRIBUTION

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ΜΑΙΝ

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LIMITED

HKD

PUSD

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NEWS D

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SIR J COLES

MR BURNS

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CONFIDENTIAL