TNAG-2749-FCO40-3964-Economic-situation-in-Hong-Kong-1993 — Page 141

23

To:

Mr Meadway OT2

From:

David Hall

Hd/PEP

Room 256

Ashdown House

215 5462

23 March 1993

CONFIDENTIAL

IMPLICATIONS OF HONG KONG'S ECONOMIC AND FINANCIAL POSITION

I am sorry to be late in replying to your minute of 4 March and to send you a response which you may not find altogether helpful. I have also seen contributions from one or two colleagues.

2.

There are in my view too many imponderables to provide any sensible assessment in response to the request in the second indent of the second paragraph of Mr Gray's letter of 1 March to you. These include:

(a)

(b)

What is meant by "the cancellation of all existing contracts"? Presumably, but we do not know, the UK parties to major contracts (or indeed minor ones) have secured provisions in their contracts which protect them against cancellation by the other parties. One would have to look at the original contracts themselves to know whether such provisions covered them only against work already in progress or for the whole value of the contract. No doubt there are provisions for arbitration and, in the last resort, there is always a possibility of litigation. At least in Hong Kong, if not in China, British companies would have a fair crack of the whip in the courts, and the ability of the Hong Kong Government to satisfy any judgement against them is not in doubt. Where the Hong Kong contracting party is not the Hong Kong Government, we would need to do further research on the ability of that contracting party to pay.

The existence of, and the nature of, any ECGD cover;

dti

the department for Enterprise

112

888-273