TNAG-2957-FCO40-4236-Future-of-Hong-Kong-British-Consulate-General-Colvin-House--1993 — Page 41

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Lands Division (BLD) of HKG over terms of the PTG. There is one

outstanding problem. We consider that the latest draft (copy attached of Special Condition 14 of the PTG) fails to provide us with adequate protection in the event of expropriation. OED advise that we have not accepted such provisions for new

projects anywhere else in the world.

4.

Our main sticking point is the reference in Special

Condition 14 (b) to "the depreciated current replacement cost"

as the basis for awarding compensation and the fact that the

Director of the BLD would have sole discretion to define this

sum. If at some future point our relations with the SAR

Government were bad, we could find this used against us. (We

also consider notice of 12 calender months for vacation of the

premises totally inadequate.)

5.

The Hong Kong Government have recently proposed that, in

arriving at the sum referred to in paragraph 4 above, the

Director shall ensure that he fully complies with the relevant

international obligations subsisting at the date of resumption. The Vienna Convention makes provision for "prompt, adequate and effective compensation" in the event of expropriation. (Should the Chinese fail to recognise the application to Hong Kong after

1997 of the Vienna Convention, customary international law would

afford us similar protection). The Joint Declaration and the

Basic Law also make provision for compensation in the event of

expropriation on the basis of the "real value" of the

property. The reference to obligations under international law

is therefore helpful. But we would prefer to see the formula for

assessing compensation (depreciated replacement cost to be

decided subject to applicable international obligations)

datar

replaced by a formula making clear that compensation would be

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