TNAG-2957-FCO40-4236-Future-of-Hong-Kong-British-Consulate-General-Colvin-House--1993 — Page 8

iHKD 406/1

інко

IN RECISTY

2 4 FEB 1993

DED with tile

1) ec Mr Saragen hecketts. 2; retufe quests

23/2 OBJ

27

JESK OFFICEF

ISTR

From:

Miss S Brooks

INDEX

un Takes

Legal Counsellor

128

Date:

23 February 1993

Ms Barnes Jones

HKD

COLVIN HOUSE: PRIVATE TREATY GRANT

1.

(20)

Special

The appeal to Michael Sze appears to have worked. Condition 14 as redrafted is very much better. There is however a problem with the drafting of paragraph 1(b).

2.

In paragraph 1(b) the compensation payable would be "fair and equitable and meet the requirement of the Government to act in compliance with the international legal obligation to pay prompt, adequate and effective compensation, in accordance with Special Condition 44 hereof." This combines two principles, the obligation to pay "fair and equitable" compensation and at the same time to pay "prompt, adequate and effective

•

compensation". It could be argued that the principle of payment of "fair and equitable" compensation somehow cuts down the requirement to comply with the obligation to pay "prompt, adequate and effective compensation". It is in any case confusing to combine the two principles and I would prefer therefore to delete the words "be fair and equitable and" which in other circumstances would be acceptable to us, but are not, I believe, as good as the principle of "prompt, adequate and effective compensation" standing alone. The principle of payment of "prompt, adequate and effective compensation" is the one which appears in the Vienna Convention on Consular Relations, Article 31(4), on expropriation. It is also a principle of customary international law.

3. I would also like to replace in paragraph 1(b) the words "and would" by "which shall". The effect of this change is to make the sum agreed by the Director and Grantee one which must meet the requirement to pay prompt, adequate and effective compensation. I would also wish to drop the phrase "taking into account the relevant circumstances" which qualifies the requirement to pay prompt, adequate and effective compensation. The redrafted sub-paragraph (b) would then read "... such sum as the Director shall agree with the Grantee which shall meet the requirement of the Government to act in compliance with the international legal obligation to pay prompt, adequate and effective compensation in accordance with Special Condition 14 thereof".

(26)

4. Mr Sze in his letter of 23 February to Mr Ricketts makes the point that the principle that we had requested earlier of "full cost of reinstatement in alternative accommodation might conflict with JD86 and BL105 which provide only for

/compensation

1

compensation corresponding to the "real value of the property concerned". The Chinese might use a similar argument here to argue that the principle of payment of prompt, adequate and effective compensation conflicts with the obligation under the JD to pay a compensation amounting only to the real value of the property concerned. (In some circumstances the real value of a property might not be considered by HMG to be adequate). However I believe that this can be met with the argument that the principle in the JD applies only if there is no provision on compensation in the Private Treaty Grant.

5. I was interested to see that Michael Sze has suggested that the Hong Kong Institute for Chartered Surveyors might well be subject to influence or control by pro Peking elements after 1997 and that therefore it might not be possible to obtain an independent chartered surveyor nominated by the Institute for the purposes of adjudicating disputes about the level of compensation. That is certainly a point worth bearing in mind. I believe that the suggestion that the dispute for arbitration should instead be referred to three arbitrators, including a sitting or retired judge from a common law jurisdiction, is helpful.

6. In conclusion I think we can go snap on the proposed Special Condition 14 as attached to Mr Sze's letter provided paragraph 1(b) is revised to read as revised in paragraph 3

above.

Shelagh Brooks.

2

Shelagh Brooks

塞制事務司

布

司署

香港下亞厘迅道

Mr P F Ricketts

Head

CONFIDENTIAL for transmission only

HILD 406/1

HONG KON

Secretary for Constitutional Affairs

GOVERNMENT SECRETARIAT,

LOWER ALBERT ROAD,

HONG KONG.

RF

+

BY FAX

2 2 FEE 1993

Hong Kong Department

IN

Foreign and Commonwealth office

London

England

Dear Peter,

(26

Good. We need to why more about the

Chinese Thean Exco...

NIST 23/2

23 February 1993

This Barnes Jones

Grateful for Your views ASAP.

{

cc Aar Seway, GED

Private Treaty Grant for Colvin House Site

Miss Brooke, Legal

Conseller

I believe this is ak

as we're likely to get. Cam we go snap

regos

good

CC to BTC H.KE

/23/2 HKC / 23/2

I have considered carefully with my colleagues the revisions proposed in your recent letter of 4 February 1993 with a view to finding the best means to resolve a.s.a.p. the remaining differences over the resumption condition in the private treaty grant.

Let

begin by assuring you that we appreciate fully the need to provide HMG with appropriate protection in the event of future expropriation and why the normal arrangements are not considered adequate at your end. considered views are set out in the following paragraphs.

First, we could not adopt the FCO's

proposed

to

compensation formula without consulting ExCo, as it would constitute a significant departure from approved policy. While EXCO is aware of the special circumstances which led to the approval of a nominal premium land grant, we are less than confident there are sufficient grounds convince ExCo that BCG deserves more favourable resumption terms than other grantees. When the BCG land grant was last discussed in ExCo (October 1991), the Administration to remind HMG that this had been a very generous move on the part of HKG in terms of revenue from land sales forgone. While We cannot pre-empt the views of Exco, think it would be unsafe for us to assume that ExCo would readily endorse the FCO's proposed variations. We need to look for other alternatives to meet your legitimate requirements without taking the matter back to ExCo.

was

I

therefore

confidential fax.

CONFIDENTIAL for transmission only.

HONG KONG