Common use of HSR Entrustment Agreement Clause in Contracts

HSR Entrustment Agreement. In 2009, the Government decided that the Company should be asked to proceed with the construction, testing and commissioning of the HSR on the understanding that the Company would subsequently be invited to undertake the operation of the HSR under the service concession approach. On 26th January 2010, the Government and the Company entered into another entrustment agreement for the construction, and commissioning of the HSR (the “HSR Entrustment Agreement”). Pursuant to the HSR Entrustment Agreement, the Company is responsible for carrying out or procuring the carrying out of the agreed activities for the planning, design, construction, testing and commissioning of the HSR and the Government, as owner of HSR, is responsible for bearing and financing the full amount of the total cost of such activities (the “Entrustment Cost”) and for paying to the Company a fee in accordance with an agreed payment schedule (the “HSR Project Management Fee”) (subsequent amendments to these arrangements are described below). As of 30th June 2020, the Company had received full payment of the HSR Project Management Fee from the Government. The Government has the right to claim against the Company if the Company breaches the HSR Entrustment Agreement (including, if the Company breaches the warranties it gave in respect of its project management services) and, under the HSR Entrustment Agreement, to be indemnified by the Company in relation to losses suffered by the Government as a result of any negligence of the Company in performing its obligations under the HSR Entrustment Agreement or any breach of the HSR Entrustment Agreement by the Company. Under the HSR Entrustment Agreement, the Company’s total aggregate liability to the Government arising out of or in connection with the HSR Preliminary Entrustment Agreement and the HSR Entrustment Agreement (other than for death or personal injury) is subject to a cap equal to the HSR Project Management Fee and any other fees that the Company receives under the HSR Entrustment Agreement and certain fees received by the Company under the HSR Preliminary Entrustment Agreement (the “Liability Cap”). In accordance with general principles of law, such Liability Cap could not be relied upon if the Company were found to be liable for the fraudulent or other dishonest conduct of its employees or agents, to the extent that the relevant loss had been caused by such fraudulent or other dishonest conduct. Although the Government has reserved the right to refer to arbitration the question of the Company’s liability for the Current Cost Overrun (as defined hereunder) (if any) under the HSR Preliminary Entrustment Agreement and HSR Entrustment Agreement (as more particularly described in paragraph (c)(iv) below), up to the date of the interim financial report, no claim has been received from the Government. In April 2014, the Company announced that the construction period for the HSR project needed to be extended, with the target opening of the line for passenger service revised to the end of 2017. On 30th June 2015, the Company reported to the Government that the Company estimated: • the HSR would be completed in the third quarter of 2018 (including programme contingency of six months) (the “HSR Revised Programme”); and • the total project cost of HK$85.3 billion (including contingency), based on the HSR Revised Programme. As a result of adjustments being made to certain elements of the Company’s estimated project cost of 30th June 2015, the Government and the Company reached agreement that the estimated project cost be reduced to HK$84.42 billion (the “Revised Cost Estimate”). Further particulars relating to the Revised Cost Estimate are set out in paragraphs (c) and (e) below.