THE Government intends to introduce the controversial bill setting up the Court of Final Appeal to the Legislative Council on January 18, 1995, inquiries by the Sunday Morning Post have revealed. The bill, a draft of which was passed to Beijing earlier this year, has yet to be discussed by the Sino-British Joint Liaison Group. But it has emerged that local and mainland legal experts are already at odds over a crucial clause in the bill, on the nationality of the Chief Justice. Although the Basic Law stated the Chief Justice should be a Chinese national and Hong Kong permanent resident with no right of abode overseas, it is understood the Government did not include this in the draft because it was unsure of how to define a Chinese national. But mainland legal expert Professor Wu Jianfan, a member of the Preliminary Working Committee's legal sub-group, warned that without such a restriction, there was little chance of the court achieving its stated aim of spanning the transition. ''If the Court of Final Appeal is going to operate across 1997, this restriction should be added to the bill, otherwise it's incompatible with the Basic Law,'' Professor Wu said. He was confident present ambiguities over who is a Chinese national would be resolved before 1997. ''The ambiguity in the nationality definition is only limited to some specific cases, it's very clear in general, so the bill should state the nationality [restriction] and it can be clarified later,'' he said. However, local legal expert and legislator Simon Ip Sik-on disagreed. He said there was no need to specify the nationality restriction in the bill. Mr Ip said the case was similar to that of newly appointed Secretary for Health and Welfare Katherine Fok Lo Shiu-ching. ''Mrs Fok is a British passport holder but she has promised giving up her foreign passport if she remains as a principal official after 1997. The same situation could apply to the Chief Justice of the Court of Final Appeal,'' Mr Ip said. ''Before 1997, Hong Kong is still British territory, there's no need for any nationality requirement to be imposed in the bill. It doesn't make sense to have a law before 1997 that somebody must be Chinese, it's only relevant after 1997,'' he added. A senior Chinese official warned yesterday that some people were using the issue of human rights to destroy the smooth transition of the territory. Despite Britain rejecting calls for a human rights commission, Xinhua (New China News Agency) deputy director, Zhu Yucheng, said those people who had been demanding a rights body would destroy the territory's smooth transition to mainland rule and also create conflicts that would divide Hong Kong people. But he refused to say whether Britain's rejection was a concession to Beijing, insisting the decision was strictly one for the British Government.