EXPATRIATE civil servants have begun legal action against the Government over the localisation policy, prompting a hasty plea from the administration to stay cool. The Association of Expatriate Civil Servants yesterday sent out a memorandum calling on its members to contribute to a fund to finance court action against the Government for discrimination in their employment. It denounced the recent policy - suspended following a Legco vote - allowing expatriate officers to switch to local terms as a ''sham.'' But a government statement last night warned the association not to rush into legal action. ''To do so would only raise the temperature and complicate matters further,''a spokesman said. ''But, if they do go ahead we believe we have a defensible position and we will act accordingly. ''We do not accept that the change of policy introduced last July is a sham.'' The association passionately appealed to its members: ''Are we going to stand up for these rights or allow them to be systematically abused and ignored?'' As of this week, 108 overseas officers have applied for the switch. Four have been successful, 16 have been rejected and two have been withdrawn.