CAB129-53 — Page 229

Printed for the Cabinet. July 1952

MAJ Page 229 01 253

SECRET

C. (52) 243

16th July, 1952

CABINET

Copy No. 28

CHINESE

AIRCRAFT DETAINED IN HONG KONG

MEMORANDUM BY THE SECRETARY OF STATE FOR THE COLONIES

Seventy-one aircraft and spare parts, of which the Americans and the Chinese Communists both claim ownership, are at present detained in Hong Kong under a special Order in Council made on 10th May, 1950, which provides that their ownership should be decided by a court of law before they are permitted to leave the Colony.

2. The case relating to thirty-one of these aircraft, formerly belonging to the China National Aviation Corporation, is still in its early stages. The case relating to forty aircraft formerly belonging to the Central Air Transport Corporation, a Chinese concern, is now at the final stage. The Americans have appealed to the Privy Council against the ruling of the Hong Kong courts that these aircraft belong to the Chinese. The appeal is due to be heard by the Judicial Committee of the Privy Council on 21st July and a decision is expected to be announced before the end of the present law term.

3. When the Order in Council was issued in May 1950, it was the intention that the aircraft should be handed over to whichever party were found to be the legal owners. In view of Her Majesty's Government's obligation under the United Nations Resolution of May 1951, recommending an embargo on the shipment of strategic materials to China, the Foreign Secretary and I have decided after consultation with the Governor of Hong Kong that, if the appeal is dismissed and the forty C.A.T.C. aircraft are thus finally established as belonging to the Chinese, they should continue for the time being to be detained in Hong Kong. The necessary legal and administrative steps are being taken by the Hong Kong Government. If the Privy Council decide that the aircraft are Chinese property, there will be an immediate outcry in America unless we announce without delay that, notwithstanding the Privy Council's decision, the aircraft will not at present be handed over to the Chinese. A public statement to this effect will be made in London and Washington and probably also in Hong Kong as soon as the decision is known.

4. If the appeal is allowed and the aircraft are awarded to the Americans, they will be asked to remove them from Hong Kong as soon as practicable, but they will not be allowed to export them direct to Formosa from Hong Kong. Once the decision of the Privy Council, if favourable to the Americans, is known there will be grave danger of the aircraft being sabotaged by the Chinese Communist employees, numbering about 500, who are at present responsible for their main- tenance. Steps have therefore been taken to intensify police protection in Hong Kong and preparations are being made to remove the Communist employees, if need arises, as soon as judgment is given. The Governor expects that force may have to be used to evict and exclude these persons from Kai Tak aerodrome, to which they have been permitted access for the last two years while litigation has been in progress. It has been agreed, however, that no action should be taken to evict them until after the Privy Council's decision, since the Governor feels that if such action were taken the employees would resist and there might be wide- spread disturbances throughout the Colony. If the action taken is clearly seen to arise from the judgment of the Privy Council, these disturbances are, in the Governor's view, less likely to occur.

Colonial Office, S.W. 1,

16th July, 1952.

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O. L.

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THIS DOCUMENT IS THE PROPERTY OF HER BRITANNIC MAJESTY'S GOVERNMENT