TNAG-2662-FCO40-3858-Future-of-Hong-Kong-British-Consulate-General-1992 — Page 105

Mr Morris

Hong Kong Department

cc. Aur Jarvis, BTC HK (150)

der

From:

Miss S Brooks Legal Counsellor

Date: 15 September 1992

FUTURE CONSULATE-GENERAL:

DRAFT PRIVATE TREATY GRANT

I

1. I spoke on Friday to Mr Savage, OED about the problem to do with the compensation provision in Special Condition 14. agree with the points that Johnson, Stokes and Masters have made on this provision and indeed I made similar points myself previously.

2. Special Condition 14 provides for the payment of compensation in the event that the Hong Kong SARG Government resumes, re-enters upon or retakes possession of all or any of the Consulate-General. The compensation payable in respect of any building or buildings or parts of any buildings is "such sum as the Director shall, at his sole discretion, certify to be the depreciated current replacement cost or costs of the building or buildings or parts thereof as at the date of resumption". The problems are that the sum is to be certified by the Director at his sole discretion and it is to be the depreciated current replacement costs (s) of the buildings (s). Special Condition 44 would not help in this case, as I explained to Mr Savage. If there were no provision for compensation in the Grant, HMG could argue that in accordance to the rules of international law, payment of compensation should be prompt, adequate and effective. However, if Special Condition 14 remains, there would be specific provisions in the Grant on payment of compensation in the event of expropriation and HMG would have freely accepted them. Special Condition 14 would apply. Mr Savage and I agreed that given the very disadvantageous provisions of Special Condition 14, HMG would be better off without it and it should be deleted. But the HKG is likely to insist on retaining the parts on expropriation and if we can obtain a satisfactory compensation provision, this might be preferable.

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