TNAG-2879-FCO40-4151-Agreements-between-the-Hong-Kong-Special-Administrative-Regi-1993 — Page 29

A

3.

There is a separate problem to do with dual nationals. person who is both a British and Chinese national and who has the right of abode in Hong Kong would be considered to be an investor of the SAR. This seems to achieve the right result. On the other hand, a dual national with both Chinese and British nationality who does not have the right of abode in Hong Kong would be an investor of the UK in respect of investments which he might have in Hong Kong. The UK might end up protecting such an investor on account of his British nationality even though that investor had made investments in the HKSAR, a region of the PRC which is the country of his other nationality. One would expect the master nationality rule to prevail. You tell me, however, that it is normal for dual nationals covered by UK IPPAS to be protected by the UK in respect of investments they have made in the country of their other nationality.

4.

Clearly, as we agreed, we will have to ask the Hong Kong Government to explain the reasons why they wish to include all physical persons who have the right to abode in Hong Kong.

It is appropriate that they should protect, for example, Indians living in Hong Kong who are not protected under any other IPPA. On the other hand, the definition of the HKSAR investor would enable them to protect investors of any foreign nationality, not just Chinese nationality, for example, Argentinian or French nationals. I would have thought that there was an objection to agreeing that the HKSAR would protect such persons in respect of their investments in the UK. As you point out in your minute of today's date, such persons would normally be protected by other IPPAS with the UK though, of course, we do not have IPPAS with other OECD countries.

5.

Whatever happens we are likely to end up with a lack of symmetry for the UK and HKSAR definitions of investors who are physical persons. If we confine both definitions to those persons who are British with or without the right of abode in Hong Kong, then certainly in respect of Hong Kong we are limiting it to relatively few people. On the other hand, the inclusion of the nationals of third countries in the Hong Kong definition equally leads to a lack of symmetry and would mean that the HKSAR could protect investments which such foreign nationals have made in the UK which seems undesirable: the inclusion of Chinese nationals only, leads to an equally asymmetric result.

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Shelagh Brooks.

Shelagh Brooks