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was a difference of opinion between the opposing counsel of the two Governments. Counsel for the United States contended that in respect to claims arising out of transactions occurring within the jurisdiction of the United States, such as those involved in the requisitioning of the Norwegian ships, the “principles of law and equity" to be applied were those recognised by the law and jurisprudence of that country. Counsel for the Government of Norway, on the other hand, maintained that in the absence of an express agreement to the contrary the law which must be applied by arbitration tribunals is international law and that such tribunals are not bound by the municipal law of one or the other of the parties. The Tribunal sustained, in the main, the contention of Norway and held that the principles of "law and equity" referred to in the special agreement must be understood to mean the "general principles of justice as distinguished from any particular system of jurisprudence or the municipal law of any State." This interpretation as to the law which is applicable in arbitral procedure is in accord with the opinions of the authorities.1 The Tribunal, however, admitted that it could not ignore the municipal law of the parties, "unless that law was contrary to the principle of the equality of the parties or to the principles of justice which are common to all civilised nations." It could not, therefore, agree with the Norwegian contention that it was entirely free to disregard the municipal law of the United States when that law had been accepted by Norwegian nationals in their dealings with American citizens, even though the law was less favourable to their claims than the law of certain other civilised countries.

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Another more or less preliminary question which the Tribunal had to decide was the contention of the United States that there was no requisitioning except of "physical property," and that the word "contract" referred to in a letter of the Shipping Board dated August 3, 1917, addressed to the shipyards, in which it was stated that not only ships and materials but also contracts, plans and specifications" were requisitioned, had reference only to "commitments for material." 2 The Tribunal rejected the American interpretation and held that the contracts under which the ships were being or were to be constructed had both in law and in fact been taken by the United States, whatever may have been the intentions of the Shipping Board. It also took occasion to criticise the action of the United States authorities in retaining, without restoring the ships, the two and a half million dollars that had been paid to the shipbuilders by the claimants. This was "not only contrary to international law, but also to the municipal law of the United States." This money should have been refunded to the claimants at the time of the requisitioning of the ships, and there was no excuse for waiting until 1919 to make an assessment thereof. The principal question which the Tribunal was called on to decide was the amount of compensation to which the claimants were entitled, and it was, of course, the most difficult. At the outset, it rejected the contention of the United States that no compensation should be allowed over and above the sum offered by the Shipping Board, that is, $2,679,220. Just compensation, it held, implies a complete restitution of the status quo ante based, not upon future gains of the United States or other Powers, but upon the loss of profits of the Nor

1 The Tribunal quoted Lammasch, Die Rechtskraft Internationaler Schiedsprüche (p. 37), and Scott: Hague Court Reports (p. xxi), in support of its opinion. 2 Case of the United States, Appendix, pp. 212 et seq.

wegian owners as compared with other owners of similar property. The contention of the United States that there could be no liability and consequently no right of compensation when the contract had been destroyed or rendered void in consequence of force majeure or the "restraint of princes," said the Tribunal, might be invoked in disputes between private persons, but it could not be invoked by the United States against Norway as a bar to the claim of Norway. International law and justice, the Tribunal added, are based upon the principle of equality between States, and no State could in the exercise of its power of eminent domain discriminate against the nationals of another State. This the United States had done in the present case. The Shipping Board by its neglect to settle accounts and return the ships to its original owners, at least after the end of June 1919, had rendered the United States liable for the "damaging action" of its officials and agents.


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As to the amount of compensation to which the claimants were entitled, the United States admitted that it should be 'just and that it should be based on the net value of the property taken, at the time it was requisitioned, but not upon any speculative values which shipping contracts may have acquired in consequence of the existing crisis produced by submarine warfare. This view of the matter the Tribunal does not, however, appear to have adopted. As to the allowance of interest, the special agreement had provided that any amount awarded should bear interest at the rate of six per cent. per annum from the date of the award until the date of payment. The Tribunal went further and allowed interest from October 6, 1917, on the ground that it was a case of expropriation and that the United States had enjoyed the use and profits of the claimants' property, including the progress payments made on the contracts, for a period of five years, though it rejected the claim of the owners for compound interest calculated every six months. The total amount of the award with interest was fixed at $12,239,852.47.

The American arbitrator dissented, refused to attend the announcement of the award, and sent a letter to the Secretary-General of the Permanent Court of Arbitration saying that he had refused to be present because the other arbitrators had "disregarded the terms of submission and exceeded the authority conferred by the special agreement," and he did not wish to appear as acquiescing in the decision by his presence and silence.1 The dissent of the American arbitrator recalls the similar action of Sir Alexander Cockburn in the Alabama Claims case, of the Japanese arbitrator in the Japanese house tax case, of the two Canadian arbitrators in the Alaska boundary case, and of both the American and Mexican arbitrators in the Rio Grande boundary case of 1911. The dissent will doubtless strengthen the opinion of those who hold that no national of a litigating State should be appointed as an arbitrator in a case in which his own country is a party.2

1 Text of the letter in American Journal of International Law, April 1923, p. 399. Under an interpretation of the Hague Convention he was denied the right to file a dissenting opinion, the special agreement having made no express provision therefor. The American agent made a statement in open court that he deemed it his duty on behalf of the United States to reserve all its rights" arising out of the plain and manifest departure of the award from the terms of submission and from the essential error by which it is invalidated."

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2 Compare the observations of Ralston in American Journal of International Law, April 1923, p. 327.


The amount of compensation awarded was the subject of considerable dissatisfaction in the United States, where it was generally considered to be excessive, based, as it appears to have been, on values more or less artificial and speculative. Payment, however, was duly made in accordance with the terms of the special agreement, which provided that "the decision should be accepted as final and binding upon the two Governments." But the Secretary of State in his letter to the Norwegian Minister, transmitting a draft for the sum awarded, took occasion to say that the American Government could not accept certain apparent bases of the award as being declaratory of the principles of international law or as hereafter binding upon this Government as a precedent." He took exception particularly to the decision of the Tribunal which seemed to imply that the requisitioning power of a belligerent is limited and governed by a different test when the property taken belongs to the nationals of a neutral State. The nationality of the owners of private property situated in a belligerent State, when just compensation is made, he said, did not affect the power of requisition. Due process of law applied equally and without discrimination to nationals and neutrals alike. He also expressed regret that the award failed to give a satisfactory explanation of the manner in which the Tribunal had arrived at the amount awarded. While purporting to award compensation on the basis of the fair market value of the property taken, it had omitted discussion of the particular circumstance of the different claims or of the methods of calculation, or of the reasons for determining upon the amounts in each case. The failure to do this was inconsistent with Article 79 of the Hague Convention, which requires arbitral tribunals constituted in pursuance thereof to give the reasons on which their awards are based. Nevertheless, while considering it the duty of the United States to point out that it could not consider the award as possessing an authoritative character as a precedent," in executing the award it was giving proof of its respect for arbitral awards and again acknowledging its devotion to arbitral settlements, even in the face of a decision which proclaimed certain theories of law that it could not accept.1

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The agreement of the two Governments to settle the dispute by recourse to the machinery and processes created by the Hague Convention and the promptness with which the losing party executed an award, the justice, if not the validity, of which it denied, may be set down as another triumph for international arbitration. Nevertheless, the dissatisfaction and virtual protest to which it gave rise must be a matter of deep regret to the advocates of arbitration, regardless of the merits of the case. For this reason the cause of arbitration has undoubtedly been injured, though it is to be hoped that the injury will be neither serious nor permanent.




It may be of interest, in view of a statement by General Smuts which appeared in the British press on February 7, 1923, to consider from a purely


1 Text of the letter in American Journal of International Law, April 1923, pp. 287

legal point of view the question whether the Governments of the Entente and of the United States were justified in including a claim for war pensions and separation allowances in the amount of reparations to be paid by Germany under the Treaty of Versailles.

The point at issue, it will be remembered, is not whether the terms of the Armistice, which in this matter were perhaps rather ambiguously worded, justified the inclusion, but whether the inclusion was or was not justified under the reservation made by the Allied Powers shortly before the signature of the Armistice, as to the meaning of one of President Wilson's conditions for the cessation of hostilities. This reservation, which was accepted both by the Germans and by President Wilson, ran as follows:


Compensation will be made by Germany for all damages done to the civilian population of the Allies and to their property by the aggression of Germany by land, sea and from the air."

The question at issue is whether this reservation allows a claim to be made for:

(a) a wound or disablement pension granted to a soldier;

(b) a separation allowance allowed to the wife or dependent of a soldier, and

(c) the pension of a widow or dependent of a soldier whose death occurs on active service.

General Smuts' opinion will be found given in full in an appendix; and it is right to recall here, as on all other occasions on which this question is discussed, that it was his professional opinion as a lawyer which was sought and not his advice as a statesman.

Before proceeding to examine the claim in detail let us look at the language of the reservation itself--“ all damages done to the civilian population and their property," the word "damages" being, of course, used in the sense of harm, destruction or injury and not in the legal sense of compensation awarded for a wrong done; it will perhaps, therefore, conduce to clearness if we use the word "injury" instead of the word “damages."

The first point that strikes a reader is that we have here two heads of injury and not one; not simply injury to the civilian population but injury to the civilian population and to their property. This is important. If the reservation had spoken of injury to the civilian population without more, it would then have been possible to argue that you could include under the words "all damages done to the civilian population," injury of every kind whether to person, property or otherwise; but we have here two heads of injury and a distinction drawn between injury to the civilian population and injury to its property. What, therefore, must the first head ("damages done to the civilian population") mean? Surely it must be limited to injury done to their persons, "persons" being the natural antithesis of "property "; it clearly does not include injuries done to their property, as these are a separate head of claim, and it could hardly be suggested that the phrase includes injury of a "moral and intellectual" character such as an injury to reputation. The language taken by itself thus suggests forcibly that two classes of injuries, namely injuries to the person and injuries to property, and no others, are included.

Now, according to General Smuts' opinion, it would appear that the case for including claims for pensions and allowances depends on the following arguments: (a) that in the case of a pension for a soldier's wound or disablement that wound or disablement is ultimately damage done to the civilian population; (b) that in the case of a separation allowance the removal of the husband from the home is damage to the civilian population; and (c) that in the case of a pension to a widow or dependent the death of the soldier is a damage to the civilian population. Before examining these arguments in detail, it should be observed that the case is not put upon the fact that the British Government has assumed liability for pensions and allowances and that therefore the resulting charge upon the Budget, which has to be met by the taxpayer (i. e. speaking broadly, the civilian population), is damage done to the civilian population or its property; this, indeed, would be a dangerous argument, as it would lead to the conclusion that the whole of the costs of the war were a damage to the civilian population. The liability of the British Government for pensions and allowances is relevant only as supplying a rough measure of the amount of damages and for no other purpose.

Turning now to the contentions actually advanced, we find a radical difference between the basis of the argument in the case of disability pensions on the one hand and of separation allowances and dependents' pensions on the other. In the case of disability pensions it is the man himself who is considered as having suffered injury, while in the other cases the injury claimed for is that done to the dependent. In the case of the disability pensions it is argued that the soldier, after his discharge as unfit, rejoins the civilian population, and as he cannot in the future in whole or in part earn his own livelihood he is suffering damage as a member of the civilian population. It is then the ex-soldier himself who is regarded as having suffered damage. The answer to this line of argument would appear to be clear. The words to be construed are "damages done to the civilian population." But the injury which a soldier suffers is done to him while he is a soldier and (probably) qua soldier, and not while he is a civilian. The pension which he gets from the Government is given to him in respect of his claim as a soldier, and not of any supposed claim as a member of the civilian population. If his own Government recognised his claim as that of a civilian his pension would have to be nicely calculated with a view to his actual circumstances in civilian life.



Obviously, as a matter of common sense, the phrase "damages done to " persons who possess a particular quality, such as old age, or the status of a civilian, refers to injury inflicted on persons who at the time of the infliction possess that quality and, it may be, inflicted on them as possessing that quality. Otherwise, in the case we are considering, inasmuch as all soldiers, if they live long enough, end by being merged in the civilian population, the expression damages done to the civilian population" means damages done to all persons who do not die as soldiers." If I say "I will pay for damages done to old men and women," does that involve me in a liability for damage done to children, the effects of whose injury persists throughout life into old age? On the other hand, if the house in London of a soldier on active service were destroyed by an aerial bomb it might well be that the loss of the house would be properly included in the expression “damages done to the property of the civilian population."

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