TNAG-2879-FCO40-4151-Agreements-between-the-Hong-Kong-Special-Administrative-Regi-1993 — Page 105

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point. We will also need to include our usual customs union exception, to deal with EC membership (UK model text Article 7 : cf Hong Kong Article 7).

5.

The most complex aspect of the proposed Agreement in fact seems likely to be the definition of "investors" - Article 1(f) of the Hong Kong draft. The definition with respect to companies is straightforward, but the difficulty stems from the fact that, as Hong Kong is not a State, there are no physical persons who are, strictly speaking, its nationals. The proposed definition is therefore, rather obscurely, divided into two parts, the second part of which provides that "investors" includes, in respect of the other Party (ie, the UK) physical persons who are its nationals, but the first part of which provides that in respect of both Parties, investors are physical persons with the right of abode in their area.

6.

While this might be workable for other Hong Kong

bilaterals, it throws up several complexities in the UK-Hong Kong context. First, we would regard as UK nationals not only British citizens, British Dependent Territories citizens, British overseas citizens, British protected persons and British subjects, but also British Nationals (Overseas), i.e. (broadly speaking) Hong Kong BOTCs after 1997. These persons will also have the right of abode in Hong Kong, creating a huge overlap. Second, some British citizens, etc, will have the right of abode in Hong Kong, thus creating another overlap. Third, the application of the right of abode criteria to both sides will result in the inclusion of large categories of persons we would not expect to protect, and who may already be protected by other IPPAS. Depending on how "right of abode" is defined this could include, in respect of the UK, all EC nationals who have the right of residence in the UK subject only to limited exceptions.

7.

The overlaps may in fact not be undesirable, and it may be regarded as sound policy that, for example, BN (O)s should have their property protected both as British investors in Hong Kong and as Hong Kong investors in the United Kingdom, but the point will need to be thought through carefully with HKD and the Home Office. As for the right of abode criteria, while one sees its attractions in the Hong Kong context, I see little justification in the UK protecting under an IPPA persons of foreign nationality simply because they have the right of abode in the UK.

7.

The UK team for these talks will be led by Ms Brooks (Legal Counsellor) and so it would be sensible to address future papers on the subject to her, though I would wish to remain a copy recipient, and we will discuss the agreement as necessary.

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