TNAG-2879-FCO40-4151-Agreements-between-the-Hong-Kong-Special-Administrative-Regi-1993 — Page 28

RECE

37019

DEC 1993

OTRY

PISKC

REGISTRY

INDEX

PA Adion Taken

Mr Grainger

Assistant Legal Adviser

UK/HONG KONG IPPA

pa.370/9

78

From:

Miss S Brooks

Legal Counsellor

Date: 3 December 1993

CC: Ms Godwin, DTI

Mr Cumming, Joint

Directorate

Miss Wyver, HKD Mr Morris, NTCD

Mr Christie, Assistant

Legal Adviser

76

1. Thank you for your minute of 2 December. I have included British Overseas Citizens in the category of physical persons who are investors of the HKSAR, and I have included both British Overseas Citizens and British Dependent Territories Citizens connected with dependent territories other than Hong Kong in the corresponding definition for the UK.

2.

We discussed just now the problem to do with including Chinese nationals in the HKSAR definition of investors who are physical persons. I think the Hong Kong Government may well ask for the inclusion of such persons since the present text goes even wider and covers all physical persons irrespective of their nationality with the right of abode in Hong Kong. As I pointed out, inclusion of Chinese nationals leads to a lop-sided result in that, because the UK/China IPPA does not apply to Hong Kong, British investment in Hong Kong will only be protected under the UK/HKSAR IPPA. On the other hand, because the UK/China IPPA defines PRC nationals as all physical persons with Chinese nationality (see Article 1(c)) the effect of this, together with the inclusion of Chinese nationals in the definition of an HKSAR investor, would be that Chinese investment in the UK would be protected twice over, under both the Hong Kong and China IPPAS. Moreover, both IPPAs have different provisions. In theory, although this is unlikely, an investor could have a claim taken up under both IPPAS. This seems undesirable. On the other hand, the arguments for including Chinese nationals in the HKSAR definition of "investor" are that after 1997 the HKSAR will be part of China and it seems clear that Hong Kong will wish to include such nationals. Moreover, if we do not include Chinese nationals, the Hong Kong IPPA will cover relatively few persons: those who are mono-British nationals.

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