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Property-Protection Provisions in United States Commercial Treaties

Published online by Cambridge University Press:  20 April 2017

Robert R. Wilson
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Extract

The matter of public international rules for the protection of private property rights has frequently received the attention of publicists, courts and treaty-makers. Some recent developments, bearing upon different aspects of the general subject, seem to attest its current and continuing importance. For example, the presentation to Congress of President Truman’s Point Four plan occasioned questions as to the guaranteeing of overseas investments of United States citizens. A few weeks later, at a meeting of the Economic and Social Council of the United Nations, a Belgian speaker and a representative of the International Chamber of Commerce emphasized the need for treating lenders according to certain standards of decency and fair play, and expressed the view that an economic climate encouraging to foreign investment was as far away as ever. On a somewhat broader plane, the appearance in the Universal Declaration of Human Rights (1948), but not in the more recently evolved International Covenant on Human Rights (1950), of provisions looking to the right of individuals to own property (“alone as well as in association with others”) and to be free from being arbitrarily deprived of it, raises questions as to whether the right of private property is not a basic “human” right.

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Research Article
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American Journal of International Law , Volume 45 , Issue 1 , January 1951 , pp. 83 - 107
Copyright
Copyright © American Society of International Law 1951

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References

1 Cong. Rec., Vol. 96, No. 102 (May 23, 1950), Senate, pp. 7603, 7604. See also note 106, infra.

2 New York Times, July 11, 1950, p. 19.

3 U. S. Department of State Bulletin, Vol. XIX, No. 494 (Dee. 19, 1948), pp. 752-754; this Journal, Supp., Vol. 43 (1949), p. 127. The relevant part of the Declaration is Art. XVII.

With this may be compared Art. VIII of the Draft Declaration of the Eights and Duties of Man, presented to the Ninth International Conference of American States by the Inter-American Juridical Committee, and Art. XXIII of the American Declaration of the Eights and Duties of Man, as approved by the Conference (Report cited in note 103, infra, pp. 118, 264), this Journal, Supp., Vol. 43 (1949), p. 137.

4 Dept. of State Bulletin, Vol. XXII, No. 571 (June 12, 1950), pp. 949-954.

5 See statement by James Simsarian of the Department of State (ibid., at p. 949) : “The Commission decided not to include economic and social articles in the Covenant but, instead, to postpone the consideration of these articles until its 1950 session. It will consider at its 1950 session whether these articles should be contained in additional conventions on human rights or whether other measures should be proposed with respect to them. Consideration will particularly be given to the extent to which other organs and specialized agencies within the framework of the United Nations are already taking action with respect to these rights.”

6 See, for example, Lowie, Robert H., “Incorporeal Property in Primitive Society,” Yale Law Journal, Vol. 37 (1927-28), pp. 551-563CrossRefGoogle Scholar; Lurye, John, “The Evolution and Philosophy of Property,” Mes Judicatae, Vol. 3 (1946-47), pp. 181–186 Google Scholar; Hallowell, A. Irving, “The Nature and Function of Property as a Social Institution,” Journal of Legal and Political Sociology, Vol. I (1943), Nos. 3-4, pp. 115–138 Google Scholar; Herbert W. Schneider, “Pragmatism and Property,” ibid., pp. 5-9; Boscoe Pound, “The New Feudalism,” American Bar Association Journal, Vol. 16 (1930), pp. 553-558; Philbrick, Francis S., “Changing Conceptions of Property in Law,” University of Pennsylvania Law Review, Vol. 86 (1938), pp. 691–732 CrossRefGoogle Scholar; Maclver, Robert E., “Government and Property,” Journal of Legal and Political Sociology, Vol. IV (1945-46), pp. 5–18 Google Scholar; Mary Thomasine Cusack, The Significance of a Changing Concept of Ownership in Social and Economic Planning (1940); James H. Gilbert, “The Changing Concept of Property,” Papers of the Pacific Coast Economic Association, 1942, pp. 5-14; Viner, Jacob, “International Relations between State-Controlled Economies,” Amer. Economic Rev., Supp. (Papers and Proceedings), Vol. 34 (1944), pp. 315–329 Google Scholar.

Property measures taken by the Nazi rulers of Germany are usefully discussed in Albert T. Lauterbach, Economics in Uniform (1943), especially at pp. 37, 79, 110, 148, 215. See also Abel, Paul, “Foreign Confiscatory Legislation and Private International Law,” Modern Law Review, Vol. 6 (1943), pp. 166–167 Google Scholar; Domke, Martin, “International Aspects of European Expropriation Measures,” New Jersey Law Journal, Vol. 65 (1942), p. 37 Google Scholar; Vinding Kruse, The Bight of Property (tr. from the Danish by P. T. Federspiel, 1939), pp. 7-9; Wunderlich, Frieda, “Germany’s Defense Economy,” Quarterly Journal of Economics, Vol. 52 (1938), pp. 401-430CrossRefGoogle Scholar.

As examples of provisions in national constitutions on the subject of private property may be cited Art. 43 of the Constitution of Ireland (1937), and Arts. 38 and 39 of the Constitution of Argentina (1949); texts in Peaslee, Amos G. (ed.), Constitutions of Nations (1950), Vol. I, p. 71, Vol. II, pp. 260–261 Google Scholar.

On nationalization of property in the period since the close of hostilities in the second World War, see Eubin, Seymour J., “Nationalization and Private Foreign Investment: The Role of Government,” World Politics, Vol. II (1950), pp. 482–510 Google Scholar; Doman, Nicholas E., “Compensation for Nationalized Property in Post-War Europe,” International Law Quarterly, Vol. III (1950), pp. 323–342 Google Scholar.

7 Harriman, E. A., “The Eight of Property in International Law,” Boston University Law Review, Vol. 6 (1926), pp. 103–110, at pp. 104-105Google Scholar. The writer seemed to feel, however, that an “international right of property” might become a reality through the establishment and functioning of international organizations.

8 Williams, John Fischer, “International Law and the Property of Aliens,” British Year Book of International Law, Vol. IX (1928), pp. 1–30, at pp. 21-22Google Scholar.

9 Ibid., p. 17.

10 Wild, Payson Jr., “International Law and Mexican Oil,” Quarterly Journal of Inter-American Eelations, Vol. I, No. 2 (1939), pp. 9, 10 Google Scholar. What appears to be essentially the same conclusion is offered in Alf Boss, Textbook of International Law (1947), pp. 166-167.

Writing before the expropriations of the fourth decade of the twentieth century, Dunn, Frederick S. in “International Law and Private Rights,” Columbia Law Review, Vol. 28 (1928), pp. 166–180 CrossRefGoogle Scholar, observed (at p. 180) : “From a functional point of view a possible solution would be to retain the rule of intervention but to except from its operation all governmental acts infringing upon vested property rights which were the result of bona fide social or economic-reform, genuinely aimed to benefit the nation as a whole, and were not discriminatory against foreigners as such, nor liable to disturb to any substantial extent the existing methods of carrying on intercourse between nations.” The writer pointed out that the instances in which, up to that time, responsibility had been successfully invoked in protection of vested property interests had been confined to cases of particular, rather than general, expropriations of property, and that these cases had not involved a wholesale social reform or a general redistribution of property at the expense of the existing propertied classes. On the distinction between large nationalization programs and isolated, non-programmatic expropriations, see Seymour J. Bubin, loc. cit., pp. 484-485, 509-510. Cf. Oppenheim, International Law (7th ed.), Vol. I (1948), at p. 318, to the effect that, where fundamental changes in the political system and economic structure of a state, or far-reaching social reforms, entail interference on a large scale with private property, neither the principle of absolute respect for alien private property nor rigid equality with dispossessed nationals offers a satisfactory solution, and that, in such cases, it is probable that partial compensation will offer a solution consistent with legal principle.

11 Hyde, Charles Cheney, International Law (1945 ed.), Vol. I, pp. 710–722 Google Scholar; Oppenheim, op. cit., pp. 316, 627; A. V. Freeman, International Responsibility of States for Denial of Justice (1938), pp. 497-570; Fachiri, Alexander, “Expropriation and International Law,” British Year Book of International Law, Vol. VI (1925), pp. 159–171 Google Scholar; “International Law and the Property of Aliens,” ibid., Vol. X (1929), pp. 32-56; Kaeckenbeek, Georges, “La Protection Internationale des Droits Acquis,” Hague Academy of International Law, Eecueil des Cours, Vol. 59 (1937, I), pp. 321–415 Google Scholar; material cited by E. M. Borehard in Proceedings, American Society of International Law, 1939, p. 62, note.

12 Charles Cheney Hyde, op. cit., Vol. I, p. 722.

13 is As suggested by a speaker before the International Law Association, Report of the 34th Conference (1926), p. 259 (cited after Herz, John H., “Expropriation of Private Property,” Social Besearch, Vol. VIII, No. 1 (1941), pp. 63-78Google Scholar).

14 Lorimer, Contrast, The Institutes of the Law of Nations (1883-1884), Vol. I, p. 99 Google Scholar.

15 Wild, loc. cit., note 10, supra, at p. 9.

16 Andreas H. Roth, The Minimum Standard of International Law Applied to Aliens (1949), p. 122; Oppenheim, op. oit. (7th ed.), Vol. I (1948), pp. 316, 627; E. M. Borehard, “The ‘Minimum Standard’ of the Protection of Aliens,” Proceedings, American Society of International Law, 1939, pp. 51-74; notes of July 21 and Aug. 22, 1938, from the Secretary of State to the Mexican Ambassador at Washington, concerning compensation for lands in Mexico expropriated by the Mexican Government (TJ. S. Department of State Publication No. 1288, Inter-American Series No. 16) ; Kaeckenbeeck, op cit., p. 412.

17 Doman, Nicholas B., “Postwar Nationalization of Foreign Property in Europe,” Columbia Law Review, Vol. 48 (1948), pp. 1125–1161 CrossRefGoogle Scholar, at pp. 1135-1136.

18 Ibid., p. 1130, referring particularly to the David Goldenberg case before the Mixed German-Bumanian Tribunal (Mix. Arb. Trib., Recueil des Décisions, Vol. VIII, pp. 694-697).

19 Schwarzenberger, Georg, International Law, Vol. I (1949), p. 102.Google Scholar

20 28 British and Foreign State Papers 1163.

21 Moore, J. B., Digest, Vol. VI, p. 263 Google Scholar.

22 Moore, J. B., International Arbitrations, Vol. II, p. 1865 Google Scholar.

23 Cf. discussion in Alexander Fachiri, second article cited in note 11, supra, at p. 34.

24 Sen. Doc. 9, 33rd Cong., 2nd Sess. (In the final settlement, Greece paid an indemnity of $25,000.)

25 Cf. Alexander Fachiri, second article cited in note 11, supra, at p. 37.

26 Cf. the statement by Austin to the effect that to speak of “vested” rights is either to use a term that is superfluous or to beg the question. Lectures on Jurisprudence (1863), Vol. III, pp. 69, 70.

27 Georg Schwarzenberger, op. cit., Vol. I (1949), p. 85.

28 P. C. I. J., Series A, No. 7, p. 22.

29 P. C. I. J., Series A, No. 17, pp. 46, 47.

A statement of the general principle, made by Arbitrator Huber in passing upon British claims against Spain, is reproduced in Jackson H. Balaton, Supplement to the Law and Procedure of International Tribunals (1936), pp. 51-52. See also the statement by Commissioner Bainbridge in the Budlofl* claim (Venezuelan Arbitrations, Balston’s Report (1903), pp. 182, 189) to the effect that the taking away of rights that have been acquired, transmitted and defined by a contract is as much a wrong, entitling the sufferer to redress, as the taking away or destruction of tangible property, and that such an act committed by a government against an alien gives, by established rules of international law, the right to such aliens’ government to demand and receive just compensation. In the George W. Upton claim (Report of Robert C. Morris, United States-Venezuelan Claims Commission, Sen. Doc. 317, 58th Cong., 2nd Sees., pp. 384-389), the Commission conceded the right of a state, under stress of necessity, to appropriate private property for public use, but always with the corresponding obligation to make just compensation to the owner.

30 Charles Cheney Hyde, op. cit., Vol. I, p. 713. In the Oscar Chinn Case, however, the Permanent Court of International Justice held that respect due to vested rights of an alien does not imply an obligation for a state to refrain from granting such special rights to its own nationals as might result incidentally in losses to an alien (P. С I. J., Series A/B, No. 63 (1934)). It would appear that protection against such losses to alien investors might be secured through national treatment provisions in treaties.

31 Claim of Costa Pendelion and George Andrew, in Fred K. Nielsen, American-Turkish Claims Settlement (1937), pp. 333, 336.

32 Héritiers Gény v. État allemand; Alfred et Pierre Gény v. État allemand, Mix. Arb. Trib., Recueil des Décisions, Vol. I, p. 394.

33 J. B. Moore, Digest, Vol. VI, p. 263.

34 Text in this Journal, Vol. 17 (1923), p. 362. As is well known, the United States, while paying the award, protested that it was based upon the speculative, rather than the actual, value of what had been taken.

Another case in which a tribunal said that the value of property should be determined ex aequo et bono involved scientific documents that were contained in boxes which were attached and sold (Barthélemy v. État allemand, Mix. Arb. Trib., Recueil des Décisions, Vol. II, p. 31).

35 Report of Bert L. Hunt, Agent for the United States (U. S. Dept. of State, Arbitration Series No. 6, 1934), p. 379.

36 Case cited in note 32, supra.

37 American and British Claims Arbitral Tribunal, Claim No. 20 (1914).

38 Charles Cheney Hyde, op. cit., Vol. I, p. 719.

39 Moore, J. B., International Arbitrations, Vol. IV, p. 3722 Google Scholar.

40 See note 23, supra.

41 44 Stat. 2132; this Journal, Supp., Vol. 20 (1926), p. 4.

42 On the scope of such treaties and their relation to economic foreign policy, see Wilson, Robert E., “Postwar Commercial Treaties of the United States,” this Journal, Vol. 43 (1949), pp. 262–287 Google Scholar.

43 18 Stat. (2) 269, Art. II. There were separate provisions on land (Art. IX) and on non-sequestration and non-confiscation of debts (Art. X). For an instance of the application of Art. II, see Magnani v. Harnett (1939), 14 N. T. S. (2d) 107.

44 18 Stat. (2) 320, Arts. III, IV.

45 18 Stat. (2) 322, Art. III.

46 34 Stat. 2905. By Art. 114, “Expropriation can only be effected on the ground of public utility and when necessity for the same shall have been ascertained by any administrative investigation, the formalities of which shall be determined by Shereefian regulations drawn up with the assistance of the Diplomatic Body.” In the case of foreign owners, where there was disagreement between the competent administration and the owner of the property to be expropriated, the indemnity was to be fixed by a special jury, or by arbitration, with the possibility of appeal from an arbitrator’s decision (Arts. 116-119).

47 33 Stat. 2234, Art. VI. By the same article, the appraisals and assessments of damages were to be based upon the value of the property “before the date of this convention.” On the application of this provision see Whiteman, Marjorie E., Damages in International Law, Vol. II (1937), pp. 1392–1402 Google Scholar.

48 See, for example, the statement in Art. Ill of the Treaty with Prance relating to Eights in the Cameroons, signed Feb. 13, 1923 (43 Stat. 1778-1789) : “Vested American property rights in the mandated territory shall be respected and in no way impaired.”

49 18 Stat. (2) 150, Art. 10.

50 25 Stat. 1444, Art. 15.

51 18 Stat. (2) 533, Art. 8.

52 33 Stat. (2) 2254, Art. 2.

53 18 Stat. (2) 648, Art. 16.

54 Cited in note 49, supra, Art. 5.

55 18 Stat. (2) 550, Art. 8.

56 10 Stat. 891, Art. 8.

57 18 Stat. (3) 725, Art. 8.

58 17 Stat. 845, Art. 4.

59 33 Stat. 2105, Art. 5.

60 18 Stat. (2) 476.

61 18 Stat. (2) 116.

62 Journals of the Continental Congress, Vol. V, pp. 768-779.

63 Ibid., p. 815.

64 See Arts. XXIX, XXXI, XXXIII and XXXIV of the treaty of 1667, also the special sanction provided for in Art. XXXVI (British and Foreign State Papers, Vol. I, Pt. I, pp. 573, 574, 575 and 623). On the extent to which principles of the plan of 1776 were taken from the Treaty of Utrecht and from other treaties, see S. F. Bemis, A Diplomatic History of the United States (1936), pp. 25-26.

65 18 Stat. (2) 224, Art. XI.

66 See, for example, Art. 2 of the Treaty of Commerce and Navigation with Liberia, signed Oct. 21, 1862, 12 Stat. 1245.

67 Illustrated in Art. VI of the treaty with the Two Sicilies, signed Dec. 1, 1845, 9 Stat. 833. An interpretation of such a formula, which would require that the recipient of the treatment be given the benefit of whichever standard (national or most-favored-nation treatment) was more favorable to him, would seem to be reasonable.

68 es These treaties provided for “constant protection and security” and for national treatment. For example, Art. III of the treaty with Italy, signed Feb. 26, 1871 (17 Stat. 845) contained the following: “The citizens of each of the high contracting parties shall receive, in the States and territories of the other, the most constant protection and security for their persons and property, and shall receive in this respect the same rights and privileges as are or shall be granted to the natives, on their submitting themselves to the conditions imposed upon the natives.” A treaty amending this one, signed with Italy on Feb. 25, 1913 (38 Stat. 1669, 1670), provided, in Art. I, for “the most constant security and protection for their persons and property and for their rights. ...” A treaty with Belgium, signed Nov. 10, 1845, had provided that “the same security and protection that is enjoyed by the citizens or subjects of each country shall be guaranteed on both sides” (18 Stat. (2) 48, Art. I). Similar wording is in Art. I of the treaty of March 18, 1875, with Belgium.

69 18 Stat. (2) 476, Art. 15. With this may be compared Art. 12 of the treaty with Honduras, signed July 4, 1864, which provides that citizens of each state “residing in any of the territories of the other party shall enjoy in their houses, persons, and properties the protection of the government, and shall continue in possession of the guarantees which they now enjoy” (13 Stat. 699); also Art. 12 of the treaty with Nicaragua, signed June 21, 1867 (18 Stat. (2) 566).

70 The first of these is cited in note 61, supra. The second is in 12 Stat. 1023; see Art. XI.

71 23 Stat. 720, Art. IV.

72 Hackworth, Digest, Vol. III, p. 654. On the point that the United States has not considered eminent domain as a practice that brought about confiscation, see Hearings before a Senate Sub-Committee, 80th Cong., 2nd Sess., Apr. 30, 1948, on the commercial treaty with Italy (signed Feb. 2, 1948), at p. 11.

73 25 Stat. 1444, Art. 2. In Art. 24 of the same treaty the parties, in a national treatment context relating to protection of persons and property, declare that “only in case that such protection should be denied, on account of the fact that the claims preferred have not been promptly attended to by the legal authorities, or that manifest injustice has been done by such authorities, and after all the legal means have been exhausted, then alone shall diplomatic intervention take place.”

74 29 Stat. 848, Art. I. By Art. III of a convention signed with the United States on June 23, 1850 (18 Stat. (2) 79), the Sultan of Borneo engaged that citizens of the United States within his territories should, so far as lay within his power, enjoy “full and complete protection and security” for themselves and for any property which they might have acquired before the date of the convention or might acquire in the future.

75 11 Stat. 587, Art. 1.

76 18 Stat (2) 580, Art. 1.

77 1867 treaty with Nicaragua, cited in note 69, supra, Art. IX, par. 3; 1870 treaty with Salvador, cited in note 57, supra, Art. XXIX, par. 4.

78 27 Stat. 926, Art. 3.

79 U. S. Foreign Relations, 1886, pp. 170, 172 (italics inserted). See also Marjorie E. Whiteman, op. cit., Vol. II, pp. 889-891.

80 42 Stat. 1928.

81 This does not overlook the fact of exceptional clauses appearing in particular treaties, as, for example, anti-monopoly clauses. See Art. 15 of the 1844 treaty with China (cited in note 61, supra); Art. 9 of the 1859 treaty with Paraguay (12 Stat. 1091); Art. 2 of the 1862 treaty with Turkey (12 Stat. 1213) ; and Art. 2 of the 1862 treaty with Liberia (12 Stat. 1245). See also Art. VII of the treaty of 1855 with the Two Sicilies (cited in note 67, supra).

Some treaties before 1923 had clauses on special types of property, as, for example, industrial property, or property in the form of commercial travelers’ samples.

82 This language appears in treaties with the following states (the date of signature being shown in each case): Germany, Dec. 8, 1923 (cited in note 41, supra); Hungary, June 24, 1925 (44 Stat. 2441) ; Estonia, Dec. 23, 1925 (44 Stat. 2379); Salvador, Feb. 22, 1926 (46 Stat. 2817) ; Honduras, Dee. 7, 1927 (45 Stat. (2) 2618); Latvia, Apr. 20, 1928 (45 Stat. 2641) ; Norway, June 5, 1928 (47 Stat. 2135) ; Austria, June 19, 1928 (47 Stat. 1876) ; Poland, June 15, 1931 (48 Stat. (2) 1507), Finland, Feb. 13, 1934 (49 Stat. 2659) ; Liberia, Aug. 8, 1938 (54 Stat. 1739).

Concerning what had been done in the draft treaty for protection of a treaty alien, the Secretary of State said, in an instruction of Aug. 3, 1923, to the American Ambassador in Germany: “In the last paragraph of Article I unusual steps are taken to provide for the protection and security of his person and property in accordance with the requirements of international law. Moreover, his property is not to be taken without due process of law and without payment of just compensation.” Dept. of State file 711.622/22A (National Archives).

In the negotiation of the treaty with Hungary, the Minister of that country said: “My Government feels confident that no controversy will ever arise as to the interpretation of the term ‘just compensation’ contained at the close of the fourth paragraph of Article I as far as the United States and Hungary are concerned. My Government is unable, however, to view with the same assurance questions that might arise with respect to the property of nationals of other countries which might avail themselves, by virtue of the most favored nation treatment clause of the provisions of the said paragraph. In order to forestall the possibility of this complication arising, it would be desirable to have the following interpretation embodied in the final protocol: ‘Whenever the property of nationals of one High Contracting Party within the territories of the other shall be expropriated after due process of law, the just amount of compensation to be paid shall be determined in accordance with the principal of equal treatment with the nationals of the latter party’” (Dept of State file 711.642/10, National Archives). The proposed language was not, however, substituted for what the United States had proposed. On a protest in 1950 which invoked this treaty, see note 104, infra.

83 53 Stat. 1731. As in the case of the earlier treaty with Siam (note 80, supra), an exchange of notes recorded the parties’ agreement that mission lands were held subject to the exercise of the right of eminent domain.

84 A memorandum of the Solicitor of the Department of State concerning the paragraph of the German treaty, as quoted above, observed that: “This stipulation will operate to secure protection against arbitrary and unjust treatment in any particular in which the Government of a country does not accord its own nationals as liberal treatment as that which is recognized by international law” (Department of State file 711.622/60, National Archives).

A letter from the Solicitor to the Under Secretary and the Secretary of State, Dec. 5, 1923, noted as “what was perhaps the major German proposal” one that was amendatory of that provision of Art. I which contemplated that property should not be taken without due process of law and without the payment of just compensation. “The German Ambassador,” the letter continued, “stated that the German Constitution permitted the taking of property without payment of just compensation and that the sentence quoted might be a violation of their fundamental law. While he intimated that it would be unlikely that the German legislature would avail itself of its constitutional right to take property of aliens without payment of just compensation, he stated there was a strong feeling in his country that the Constitution should not be interfered with. The reply in behalf of the Department was that the sentence in the American text did not contemplate a yielding of anything which the German Constitution forbade, and it was, therefore, in no sense a violation of that document; and that it merely marked an agreement by Germany not to exercise a constitutional right, and one which if exercised would cause immediate protest by this Government in so far as it applied to American citizens.” U. S. Foreign Relations, 1923, Vol. II, p. 28 (italics inserted).

On the meaning of “process of law” as used in a treaty (not a commercial treaty), see Ops. Atty. Gen., Vol. V, pp. 333, 338, and Vol. VI, p. 533.

85 Hearings before the Committee on Patents, House of Representatives, 77th Cong., 1st Sees., on H. J. Res. 32, 73, and 123, at pp. 59, 64, 69. Cf. the opinion of Georg Schwarzenberger, op. cit., pp. 99, 238, on the minimum standards of international law in relation to the “minimum requirements of the rule of law in the Anglo-American sense of the term.”

86 In the course of the hearings referred to in note 85, a witness expressed the opinion that Art. 12 of the treaty with Germany (concerning recognition of the juridical personality of limited liability and other corporations and associations) extended the protective provisions of Art. I to limited liability companies, corporations and associations (loc. cit., p. 64).

87 U. S. Treaties and Other International Acts Series, No. 1871, this Journal, Supp., Vol. 43 (1949), p. 27.

88 The part of Art. VI relating to exchange withdrawal is as follows: “The recipient of such compensation shall, in conformity with such applicable laws and regulations as are not inconsistent with paragraph 3 of Article XIX of this Treaty, be permitted without interference to withdraw the compensation by obtaining foreign exchange, in the currency of the High Contracting Party of which such recipient is a national, corporation or association, upon the most favorable terms applicable to such currency at the time application therefor is filed, provided application is made within one year after receipt of the compensation to which it relates. The High Contracting Party allowing such withdrawal reserves the right, if it deems necessary, to allow such withdrawal in reasonable instalments over a period not to exceed three years.” Art. XIX, par. 3, referred to in the foregoing quotation, states principles as to exchange control and includes, inter alia, national and most-favored-nation treatment provisions.

89 See note 98, infra.

90 U. S. Treaties and Other International Acts Series, No. 1965.

91 Sen. Ex. D, 81st Cong., 2nd Sess.

92 Sen. Ex. H, 81st Cong., 2nd Sess.

93 These refer to the most favorable terms applicable “at the time of taking of the property” rather than at the time application is filed. The same sentence contains the words “exempt from any transfer or remittance tax.” There is no specific provision for instalment withdrawals. It is, of course, to be noted that these and other provisions of the treaties are to be read in the light of the general exceptions provisions, e.g., on foreign exchange. Art. XXVI, par. I (c) of the treaty with China, and, in the case of the Italian treaty, Art. XXIV, par. I (f), and especially par. 6 of the Additional Protocol. The latter reads as follows: “Whenever a multiple exchange rate system is in effect in Italy, the rate of exchange which shall be applicable for the purposes of Article V, paragraph 2, need not be the most favorable of all rates applicable to international financial transactions of whatever nature; provided, however, that the rate applicable will in any event permit the recipient of compensation actually to realize the full economic value thereof in United States dollars. In case dispute arises as to the rate applicable, the rate shall be determined by agreement between the High Contracting Parties.”

94 Protocol, par. 1, with its cross-reference to Art. V, par. 2.

95 See Art. V, par. 3, final sentence.

96 Protocol, par. 2.

97 There is not in this paragraph a provision concerning exchange withdrawal privileges in the event of expropriation. This is covered, however, in Article XV of the treaty that relates to exchange control. Its paragraph 4 mentions, as one of the types of transfer to which the rule of the paragraph applies, “transfers of compensation for property referred to in paragraph 2 of Article VIII.” It should be noted that the same article, and comparable provisions in the treaties with Italy and Ireland, allow tolerances, in the matter of exchange withdrawals, in periods of financial stringency.

In the Minutes of Interpretation which were printed with the treaty as approved by the United States Senate (Cong. Kec, Senate, July 6, 1950, p. 9861) it is stated that the second sentence of Art. VIII, par. 2 is “not intended to require indemnification in eases such as confiscation of contraband and distraint for nonpayment of taxes or debt.”

98 The reservation (as in the treaties with China and Italy) of each party’s right to deny treaty advantages to companies in the ownership or direction of which nationals of a third country or countries have a controlling interest is repeated in the treaties with Uruguay and Ireland, but with an exception in respect to recognition of juridical status and access to courts. See Art. XVIII, par. 1 (e) of the treaty with Uruguay and Art. XX, par. 1 (f) of that with Ireland.

99 On the general utility of “equitable” treatment as a standard, in comparison with others, see Sehwarzenberger, Georg, “The Province and Standards of International Economic Law,” International Law Quarterly, Vol. II (1948), pp. 402, 411Google Scholar.

For an exceptional case of a treaty reference to “manifest injustice” and exhaustion of local remedies, see note 73, supra.

100 For what is believed to be a sound view as to limitations upon the capacity of private concerns to contract away international legal remedies, see Lipstein, K., “The Place of the Calvo Clause in International Law,” British Year Book of International Law, Vol. XXII (1945), pp. 130–145 Google Scholar.

101 Treaty with Ireland, Protocol, par. 12.

102 See the Treaty of Commerce and Navigation between the United States and the Ottoman Empire, signed Peb. 25, 1862, concerning plain and fair construction of the terms. 12 Stat. 1213, Art. XXI.

103 Report of Ninth International Conference of American States (U. S. Department of State Publication 3263, American Republies Series No. 3), pp. 66, 67. The provision referred to was proposed for insertion in Art. 25 of the Economic Agreement. Art. 23 of that Agreement provides, inter alia, that foreign investments should be made with due regard not only for the legitimate profit of the investors, but also with a view to accelerating the sound economic development of the country in which they are made, and that, with respect to employment and the conditions thereof, just and equitable treatment should be accorded to all personnel, both national and foreign. By Art. 25 “Any expropriation shall be accompanied by payment of fair compensation in a prompt, adequate and effective manner.” On substantially the point involved in the Mexican proposal referred to above, the delegations of eight Latin American states made reservations to this article (document cited, pp. 214-216). See Domke, Martin, “Some Aspects of the Protection of American Property Interests Abroad,” Record of the Association of the Bar of the City of New York, Vol. 4, No. 7 (1949), p. 268 Google Scholar.

104 U. S. Dept. of State Bulletin, Vol. XXII, No. 558 (March 13, 1950), p. 399. The note, referring to the Treaty of Friendship, Commerce and Consular Bights signed in 1926 (cited in note 82, supra), said that the United States would hold the Government of Hungary “wholly responsible for the payment of adequate and effective compensation for the property rights of American nationals affected by the present edict as well as by previous laws and decrees,” and drew attention to the fact that interests of the Soviet Union had been exempted from nationalization under provisions of the edict, this discrimination being in clear violation of the treaty.

On the 1948 agreement with Yugoslavia, by which the United States obtained funds with which to pay the claims of Americans who had suffered by reason of nationalization measures, see Seymour J. Bubin, loc. cit. (note 6, supra), pp. 489-490. The International Claims Commission, created by Public Law 455, 81st Cong., 2nd Sess., is authorized to apply, in the decision of such claims, provisions of the applicable claims agreement and “the applicable principles of international law, justice and equity.”

105 The Act for International Development, approved June 5, 1950, sets forth the finding of Congress that “Technical assistance and capital investment can make maximum contribution to economic development only where there is understanding of the mutual advantages of such assistance and investment and where there is confidence of fair and reasonable treatment and due respect for the legitimate interests of the peoples of the countries to which the assistance is given and in which the investment is made and of the countries from which the assistance and investments are derived. In the case of investment this involves confidence on the part of the people of the underdeveloped areas that investors will conserve as well as develop local resources, will bear a fair share of local taxes and observe local laws, and will provide adequate wages and working conditions for local labor. It involves confidence on the part of investors, through intergovernmental agreements or otherwise, that they will not be deprived of their property without prompt, adequate, and effective compensation; that they will be given reasonable opportunity to remit their earnings and withdraw their capital; . . . that they will enjoy security in the protection of their persons and property....” Public Law 535, 81st Cong., 2nd Sess., Title IV.

106 See the statement of the Secretary of State concerning the negotiation of such treaties, in Hearings before the Committee on Foreign Eelations, U. S. Senate, 81st Cong., 2nd Sees., on the Act for International Development (March 30 and April 3, 1950) at pp. 6-7. On the relationship of the treaties to a plan for guaranties of private investments in the foreign field, see the statement of Norman M. Littell, ibid., pp. 75, 76. Reporting on H. E. 8083, the House Committee on Banking and Currency, referring to treaty assurances in relation to the statutory plan for guaranties of investments said that : “Treaties alone . . . cannot give an investor the assurances which he may legitimately require in order to risk his capital abroad.” It emphasized that in some circumstances, despite the good faith of foreign governments involved, expropriation might become unavoidable, there might be inability to pay promptly, and a guaranty plan might be needed to cover uncompensated expropriations or currency inconvertibility. House Report 1960, 81st Cong., 2nd Sess., pp. 2, 3-4.