THE McGILL
LAW JOURNAL
VOLUME 6
1959.
NUMBE
1
CONFISCATION IN ENGLISH PRIVATE
INTERNATIONAL LAWt
by Jacob S. Ziegel*
It is an unfortunate fact of this 20th century of ours that situations involving
the unilateral confiscation of the property of foreign nationals by the government
in whose territory the property is situated are of increasing frequency, as
recent events in Egypt, Iran, and Indonesia only too clearly show. When
such confiscation is followed or accompanied by adequate compensation to
the expropriated owners, no problems arise. When compen~sation is refused,
or is inadequate, the owneri is forced to seek redress elsewhere. He may turn
to his government for diplomatic intervention, but in the absence of the
voluntary submission of the dispute by the confiscating state to the jurisdiction
of the International Court of- Justice or some other international tribunal,
its protests are likely to meet with as little response as those of its aggrieved
national. The owner, in those circumstances, may feel himself engaged in a
losing battle, if not a hopeless one; but sometimes and as a last resort he
may decide to enlist the aid of his own municipal courts in an effort to
vindicate his rights and to uphold the rule of law. This possibility arises when
have
confiscated goods –
been sold by the foreign government and have now been brought by the buyer
into the expropriated owner’s country. How far, if at all, will the courts
assist him?
let us assume that they are of a moveable nature –
It is the concern of this paper to endeavour to answer this question. But
since an English court has never, so far as we can discover, been confronted
with a clear case involving the assumed set of facts, it may be convenient to
use a recent colonial decision, The Anglo-Iranian Oil Co. Ltd. v. affrate
(The Rose Mary),1 as a handy peg on which to hang the tale.
tThis paper was originally read at a meeting of the British Columbia section of
in
the Canadian branch of the International Law Association held in Vancouver
March 1958.
*LL.M. Mr. Ziegel is a member of the firm of Andrews, Swinton, Smith & Ziegel,
of Vancouver, B. C.
1[1953] 1 W.L.R. 246.
McGILL LAW JOURNAL
(Vol. 6
The facts in this case were that after its confiscation of the property of The
Anglo-Iranian Oil Company at Abadan, the Iranian government sold some
of the oil stored at Abadan to an Italian company. The ship “The Rose Mary”
was carryng a cargo of this oil when, as the learned judge of the Supreme
Court of Aden found, it put in of its own volition to the harbour of Aden.
The Anglo-Iranian Oil Company
in detinue
claiming delivery up to them of the oil, or alternatively a declaration that it
was their property.
issued a writ
thereupon
The plaintiffs claimed the property in, or the immediate right to possession
of, the ‘oil by virtue of an agreement between them and the government
of Iran concluded on April 29, 1933, -by the terms of which they were granted
an exclusive right, within the territory of a specified concession,
to search
for and extract petroleum for a period ending in 1993. Article 21 of the
agreement provided that it should not be altered by any legislation of ,the
Iranian government, and article 22 stipulated that any disputes concerning the
agreement were to be referred to arbitration.
The charterers admitted that the oil carried in their ship came from the
plaintiffs’ plant at Abadan, but they relied, by way of their principal defence,
on the Iranian laws of March and May, 1951, which purported to nationalize
and expropriate the property vested in the plaintiffs by the concession of 1933.
The learned judge of the Supreme Court of Aden found in favour of The
Anglo-Iranian Oil’Company. He based his decision, in so far as this paper
is concerned, on the syllogism propounded to him by counsel for the Company,
Sir Hartley Shawcross, which was to the following effect: (1) international law
is part of the law of England; (II) confiscation of the property of an alien
subject without “adequate, prompt and effective” compensation
is contrary
to public international law; hence follows the conclusion (III) that since no
compensation had been paid to the Company, a British court will not recognize
the act of expropriation by the Iranian government. The learned judge also
distinguished the leading case of Luther v. Sagor,2 followed in Princess Paley
Olga v. Weisz,3 on the ground that the property there involved belonged to
a subject of the confiscating government’s own country. He also apparently
adopted the plaintiffs’ contention (IV) that, apart from any question of its
validity under international law, a British court will not “give effect” to the
Iranian expropriation laws on the ground that they were “contrary to (the
court’s) own public policy or essential principles of morality.” Each of these
four points raises difficult questions of law and will now have to be more
fully examined.
2[-1921] 3 K.B. 532. The full style of cause is very much longer, but the abbreviated
form used above is in common use and will therefore be followed’ throughout in this
paper.
8[1929] 1 KB. 718.
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The learned judge quoted4 from the judgment of the Privy Council in
Chung Chi Cheung v. Rex,5 in which Lord Atkin stated:
I
“The courts acknowledge the existence of a body of rules which nations accept
amongst themselves. On any judicial issue they seek to ascertain what the relevant
rule is, and having found it, they will treat it as incorporated into the domestic
law, so far as it is not inconsistent with rules enacted by statutes or finally
declared by their tribunals.”8
The principle that public international law is part of the law of England is,
of course, of much greater antiquity. Its first enunciation is usually attributed
to Lord Talbot speaking in Barbuit’s Case7 in 1737, and adopted by Lord
Mansfield in Triquet v. Bath8 in 1764. Granted that the English courts have
applied principles of the law of nations in many subsequent decisions, can it
be said, however, that they will apply international law to its full extent
and on every possible occasion? The early judgments apparently held so. Lord
Talbot is reported as saying in Barbuit’s Case that “the law of nations, to its
full extent, was part of the law of England.”
In a similar vein Blackstone
wrote that “the law of nations (whenever any question arises which is properly
the object of its jurisdiction) is here adopted in its full extent by the common
law, and is held to he part of the law of the land.”‘1 At the beginning
of this century Westlake, in a celebrated essay,”
sought to sum up the
position as follows:
4[1953] 1 W.LR. 246, at p. 253.
5[1939] A.C. 160.
8 bid., at p. 168.
7Cases. T. Talbot 281; 25 E.RL 777. Lord Mansfield in Triquet v. Bath (see next
footnote)
refers to this case sub. noma. Buvot v. Barbut, but as Barbuit’s Case in
Heathfield v. Chilton, 4 Burr. 2015. It is reported as Barbuit’s Case in Cases. T. Talbot.
83 Burr. 1478; 97 E.L 936.
93 Burr. 1478, at pp. 1480-81.
‘OCommentaries, Bk. IV, ch. V. para. 67.
11(1906), 22 Law. Quar. Rev. 14: Is International Law a Part of the Law of
England? Westlake also considers the question (at p. 16) why problems of inter-
national law should ever be relevant before an English court, since international law
is primarily the law between nations and municipal courts are not competent to resolve
disputes between states, and he shows that many questions could not be solved
satisfactorily without recourse to the law of nations, e.g., duties and obligations of
neutrals, prize jurisdiction, jurisdiction over territorial waters, etc. But his explanation
is not entirely satisfactory. If State A fails to observe the minimum standards of
international law and expropriates the property of a subject of State B, the wrong (if
any)
the right to complain about it,
since individuals have no status in customary international
law: they are regarded
as mere objects. Therefore, a municipal court which allows the aggrieved individual
to set up the breach of international law by State A
is, strictly speaking, doing
more than merely applying international law. (Cf. Article 34(1) of the Statute of the
International Court of Justice).
is committed against State B. Only B has
McGILL LAW JOURNAL
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“The English courts,” he wrote, “must enforce rights given by international
law as well as those given by the law of the land in its narrower sense,
so far as they fall within their jurisdiction in respect of parties, or places,
subject to the rules that the king cannot divest or modify private rights by
treaty (with the possible exception 6f treaties of peace or treaties equivalent
to those of peace), and that the courts cannot question acts of state (or, in the
present state of the -authorities, draw consequences from them against the
Crown) “.12 Professor (now judge) Lauterpacht, in a more recent article, 13
agrees with Westlake’s views.
Nevertheless, notwithstanding the long line of authorities which support the
proposition that international law is part of the law of England, there are
substantial reasons for doubting whether the doctrine is really as all-embracing
as would at first sight appear. Even its most ardent proponents admit of some
limitations to its application by the courts. The courts will not, thus, enfQrce
inconsistent with rules “enacted by
a rule of international
Statutes or finally declared by their tribunals”, 14 or enforce a treaty or
law which is
Suppose in the instant case the British government had acquiesced in the Iranian
confiscation. Would the Aden Court in such circumstances still have been willing to
entertain the Company’s claim? Surely not. Must it be said then that the individual is
impliedly presenting his claim with his government’s consent, or, quaere, even as its
agent? Counsel for the plaintiff in Carr v. Fracis Times & Co. 11902] A.C. 176 seems
to have taken the position, however, that international law confers a personal right
on thd injured subject of which even his own government cannot divest him. Per Lord
Lindley, ibid., at page 186: “Mr. Walton contended that the Sultan (of Muscat) had
no jurisdiction to give any one leave to search and take arms out of a British ship
passing through his territorial waters in time of peace, and that the seizure, although
sanctioned by the governments of Muscat, Russia and the United Kingdom, was
unlawful by the law of nations, and ought to be so treated by an English court of law.”
(Italics added). His Lordship appears to have dismissed the argument on the wider
ground that no such rule of international law as was alleged existed. Even Professor
Lauterpacht who argues that because, under the doctrine of adoption, municipal courts
allow individuals to sue in their own name that therefore “the individual as the ultimate
unit of international law .. .is recognized to a subtantial degree” admits that “such
is conceded by the State and is revocable at. its
independence
instance”: (1939), XXV Trans. Grotius Soc. 51, at p. 64. And see also (1947), 63 Law
Quar. Rev. 438, at pp. 440-1.
(of the right to sue)
12lbid., at p. 26. The cases discussed by Westlake make it clear that he was only
considering English acts of state.
23(1939), XXV Trans. Grotius Soc. 51.
14 Chung Chi Cheung v. Rex [1939] A.C. 160, at p. 168. What had Lord Atkin
in mind in referring to ‘rules finally declared by their tribunals’? Was he merely
thinking of the conventional exceptions enumerated above or was he also predicating
the future? Cf. his
the possibility of the courts adding to
observations in Commercial & Estates Co. v. The Board of Trade [1925] 1 K.B. 271,
at 295: “International law as such can confer no rights cognizable in the municipal
Courts. It is only in so far as the rules of international law are recognized as included
those exceptions
in
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international agreement which has not been ratified by Parliament and which
divests or modifies private rights.15 They will not also question acts of
state.16 Of these exceptions Dr. Lauterpacht states that “they do not affect
the nature and the significance of the doctrine of adoption in other spheres.’ 7
With respect, it may be doubted whether this is so. Once it is conceded that
the English courts enforce rules of international law not because of their
law
adherence to any natural law theory of the supremacy of international
over municipal law, or because an act of Parliament requires them to do so,
but only because they are prompted by a desire to promote comity between
nations or because there is no other applicable law, then it would always be
open to them to refuse to follow an otherwise applicable rule of international
law where for good and sufficient reason they deem it inexpedient to do so.
In fact, this appears to be the rationale behind the rule of what an eminent
legal scholar has aptly termed “the sacrosanctity of foreign acts of state.”‘ 8
That rule in its most extreme form says that whenever the acts of another
sovereign or his officials are material to the solution of a particular problem
the validity of those acts, whether under international law or even the law of
the sovereign’s own country, may not be put in issue before an Anglo-
American court. This doctrine of immunity ratione materiae seems to have
received its genesis in the well known nineteenth century decision of the
House of Lords in the Duke of Brunswzick v. The King of Hanover.9 There
the Duke of Brunswick sought to impugn certain acts of his uncle who was
a trustee over his property, and who, in addition to being King of Hanover,
was also a peer in his own right of the United Kingdom. The Lord Chancellor,
in rejecting the right of the court to question the acts of the King, said:
that a foreign Sovereign,
“The whole question seems to me to turn upon this ….
coming into this country, cannot be made responsible here for an act done in
his sovereign character in his own country; whether it be an act right or wrong,
whether according to the constitution of that country or not, the Courts of this
country cannot sit in judgement upon an act of a Sovereign, effected by virtue
in the rules of municipal law that they are allowed in the municipal Courts to give
rise to rights or obligations”, as to which Dr. Lauterpacht comments that “if he
(Lord Atkin) had meant that every rule of International Law, in order to be applied
judicial
by Courts, must have previously,
then it may be difficult to assent to the proposition.” (XXV Trans.
imprimatur –
Grotius Soc., at p. 83).
in some other case, have received
15Westlake, 22 Law Quar. Rev. 1, at p. 15. For a recent application of this exception,
the
see Republic of Italy v Hainbros Bank [1950] 1 All E.R. 430.
16E.g., Johnstone v Pedlar [1921] 2 A.C. 262; Halsbury (2nd ed’n), Vol. 26, p. 252.
The exception referred to by Westlake is as to English acts of state. The position
with respect to foreign acts of state is discussed below.
17 XXV Trans. Grotius Soc. 51, at p. 77.
1SF. A. Mann, The Sacrosanctity of the Foreign Act of State, 59 Law Quar. Rev.
42 & 155.
19(1848), 2 H.L.C. 1; 9 E.R. 993.
McGILL LAW JOURNAL
[Vol. 6
of his Sovereign authority abroad, an act not done as a British subject, but
supposed to be done in the exercise of his authority vested in him as Sovereign.” 20
In Johnstone v. Pedlar,21 an act of state case, Lord Sumner said, in what was
admittedly only a dictum, that “municipal courts do not take it upon themselves
to review the dealings of State with State or of Sovereign with Sovereign.
They do not control the acts of a foreign State done within its own territory,
in the execution of’sovereign powers, so as to criticize their legality or to
require their justification.”2 2 But the most striking application of the doctrine
has been given in the United States, where on more than one occasion the
courts have recognized a foreign act of state notwithstanding that the act in
question might have been in violation of the rules of international law. In the
oft dited case of Oetjen v. Central Leather Co., 23 for example, the Supreme
Court of the United States said, “To permit the validity of the acts of one
sovereign state to be re-examined and perhaps condemned by the courts of
in
their argument, did clearly distinguish between
that this case does not incontrovertably establish
209 E.R. at pp. 998-9. Dr. Mann is no doubt right is maintaining (59 Law Quar.
the doctrine of
Rev. at p. 48)
immunity ratione materiae, since the primary question with which both the Master
of the Rolls and the House of Lords was concerned was the personal immunity of
the wrongful acts with
the King of Hanover. In so far as the latter considered
which the King was being charged it was only to show that they were done in his
individual. On the other hand, defendant’s
sovereign capacity and not as a private
the King’s personal
counsel,
immunity and his immunity ratione materiae. Their fourth objection to the court’s
jurisdiction was based on the ground that “it appears by the bill that the matters
jurisdiction, being either
therein complained of are not the subject of municipal
matters of state or political transactions, which cannot be dealt with in the Courts
(9 E.R.’996, at p. 998). See also pleadings before Langdale M.R.
of this country.”
in 49 E.R. 724, at p. 730. And in the Circuit Court of Appeals in” the American
case of Underhill v Hernandez (1895), 65 Fed. 577. Judge Wallace contended
for
the wider interpretation of the House of Lords’ decision. He said: “The decision
was put, not upon the personal immunity of the sovereign from suit, but upon the
principle that no court in England could sit in judgment upon the act of a sovereign
effected by virtue of his sovereign authority abroad.” (Ibid., at p. 580).
21[1921] 2 A.C. 262.
22Ibid., at p. 290. Cf. Halsbury
(2nd ed’n), Vol. 26, pp. 248-9: “The transactions
of independent states with each other are governed by other laws than those wfiich
municipal Courts administer; such Courts have neither the means of deciding what
is right, nor the power of enforcing any decision which they may make. Hence, the
Courts of this country, whether of law or equity, have no jurisdiction to adjudge upon
acts committed by one sovereign state towards another in the exercise of its sovereign
. . “; Dicey, Conflict of Laws, (6th ed’n), p. 158: “As regards acts of state
power .
authorized by foreign Governments, the courts in England would doubtless apply the
(15th
same principle (as are applied to English acts of state)”, Pollock on Torts
the doctrine of our own courts, the
ed’n), p. 82: “If we may generalize from
result would seem to be that an act done by the authority, previous or subsequent,
of the government of a sovereign state in the exercise of de facto sovereignty is not
examinable at all in the courts of justice of any other state.”
23(1918), 246 U.S. 297.
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another would very certainly ‘imperil the amicable relations between govern-
ments and vex the peace of nations.'”24 The facts of this case and other
American cases are more fully considered below. 25
As to the scope of this rule of the immunity of foreign sovereign acts there
is a great deal of uncertainty, and the rule itself has been subjected to some
very trenchant criticism, 26 but that it is now well-established and has been
repeatedly applied in American jurisprudence to facts similar to those that were
in issue in The Rose Mary there can be little doubt. The views of Dr.
Lauterpacht in this connection have undergone a marked change. In the 5th
it is stated, apparently
edition of Oppenheim on International Law (1937),
as a principle of international law, that:
“the courts of one State must not be allowed to question the validity or legality
of the official acts of another sovereign state or the officially avowed acts. of
its agents, at any rate so far as those acts purport to take effect within the
sphere of the latter State’s own jurisdiction. If the need to question any such
act should arise, it should be done through the diplomatic channel.”’27
But in the 7th edition of this authoritative work, the earlier view has been
modified appreciably, and the position is now stated in the following terms:
“A fourth consequence of equality – or independence –
of States is that the
courts of one State do not, as a rule, question the validity or legality of the
official acts of another sovereign State or the official or officially avowed acts
of its agents, at any rate in so far as those acts purport to take effect within
the sphere of the latter State’s own jurisdiction. It is not clear whether the rule
in question can properly be regarded as a rule of Public International Law or
. . There is
whether it belongs to the province of Private International ‘Law. .
probably no international judicial authority in support of the proposition that
recoghition of foreign official acts is affirmatively prescribed by International
2 8
Law.”1
If, as is now suggested, the recognition of foreign sovereign acts is not
affirmatively prescribed by public international law, how can the prevailing’
practice be reconciled with the rule that international law is part of the law
of the land, at any rate in those cases where the foreign act is repugnant to
a rule of the law of nations? It must surely be, then, that a further exception,
beyond those generally conceded, must be added to the incorporation theory
an exception which is so far reaching that to an
of international law –
individual aggrieved by a foreign act of state it must almost seem to nullify
the major premise. Looking at the matter from another point of view, with
the possible exception of the cases that are discussed below, 29 there does not
24Ibid., at p. 304.
25See post, p. 14.
26See note
Soc. 157 et seq.
(18) above; also Dr. K. Lipstein in (1949), XXXV Trans. Grotius
27Vol. I, p. 224.
2 8Vol. I, p. 241. (Italics added). The footnote cites, inter alia, Underhill v Hernandez
(1897), 168 U.S. 250 and Luther v Sagor [1921] 3 K. B. 532.
29 Wolff v Oxholm (1817), 6 M. & S. 92; In re Fried Krupp. 4. G. [1917] 2 Ch.
188; Republic of Peru v Dreyfus Bros., 78 Ch. D. 348.
McGILL LAW JOURNAL
(Vol. 6
appear to be any reported decision30 in which an English court has refused to
recognize a foreign official act on the ground that it was illegal by inter-
national law. Indeed, a perusal of the leading cases on questions of public
international law will tend to show that the overwhelming majority of them
were personal immunity cases 3 ‘ in which a foreign state stood to benefit by
the application of the rules of international customary law, so that there was
no ostensible reason why the courts should refuse to adopt and apply them
as part of the law of the land.V 2
II.
In support of the proposition that confiscation of the property of an alien
without “prompt, adequate and effective compensation” is in violation of the
to rest
involved, but counsel seem generally to prefer
3OYet there must frequently have been cases where a breach of international
law
their case on other
was
grounds.. So, for example, in Bank of Ethiopia v National Bank of Egypt [1937] Ch.
513, which was a case where the Court refused to allow the claim of the Bank acting
on behalf of the exiled Emperor of Ethiopia on the grounds that H.M. government
had recognized the Italian invaders as the de facto government of Ethiopia, it could
have been argued that since Italy had committed an act of aggression contrary to the
Covenant of the League of Nations she could not validly be recognized as the new
is safe to predict, however, that had such a plea been
sovereign of Ethiopia. It
the court would not look behind
raised it would have been rejected, because (a)
that if there
H.M. recognition of the Italian regime as being an act of state;
was-a breach of international law the United Kingdom had condoned it by recognizing
that, in any event, the invasion was a foreign act of
the new government; and (c)
state into the legality of which the courts will not inquire.
(b)
3WAR1 states recognize the personal
immunity of a sovereign and his accredited
representatives, though even here, in view of the far flung activities of the modern
state, there is considerable agitation to restrict the immunity to certain well recognized
types. On the other hand, the doctrine that foreign official acts may not be inquired
into, even though no personal submission of the sovereign or his property to the
local court is involved, is not nearly as widely accepted: see
jurisdiction of the
Mann, supra, footnote (18).
32Cf. the submission of the Attorney-General
in West Rand Central Gold Mining
Co. v The King [1905] 2 K. B. 391, at p. 398:. “The cases cited for the Crown
establish beyond all doubt that international law is not part of the common law of
England, and that the claims of the suppliants cannot be enforced by petition of right.
they are
Decisions as to ambassadors and territorial waters are beside the question;
ex necessitate cases, for neither ambassadors’ privileges nor territorial waters could
in Courts of law.” The
be said to exist if they were not recognized and enforced
aigument is of interest because it shows to what extent the first law officer of
the realm thought the rules of international law had been adopted as part of the
common law, although the first part of his proposition must be deemed to have been
rejected by Lord Alverstone. It matters perhaps little, as a question of practical
effect, whether one says that international law is part of the law -of England but subject
to exceptions,, or whether it is said that international law is not part of the law of
England but that the courts will, in suitable circumstances, adopt certain rules of
the law of nations. It would, ho-vever, probably affect the burden of proof.
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rules of international law, Campbell J. relied3 on a number of well known
international arbitrations,3 4 ‘ several foreign municipal decisions of doubtful
value, and, in so far as English precedents were available, on Lord Ellenbo-
rough’s decision in Wolff v. O’cholm,35 which was followed by Younger J.
(as he then was) in In re Fried Krupp, A. G.3 6 In addition, counsel for The
to the dicta of the Permanent
Anglo-Iranian Oil Company also referred
Court of International Justice in -the Chorzow Factory case.3 7 The English
decisions, since they were relied upon by the learned judge as proving the
exception to the rule in Luther v. Sagor,38 will be more conveniently dealt
with when we come to discuss that case. Suffice it to say at this stage that on
this particular point Wolff v. Oxholm and In re Fried Krupp, A. G. can no
longer be regarded as good. law in the light of the Court of Appeal decision
in In re Ferdinand, Ex Tsar of Bulgaria.9 There is the further consideration
in Wolff v. Oxholm for
that the method adopted by. Lord Ellenborough
ascertaining the relevant rules of international law, namely by consulting the
writings of jurists, without reference to state practice, is now obsolete and
discredited. It was, in fact, his ignoring the English state practice with regard
to the confiscation of enemy property in time of war that led the Court of
Appeal, in effect, to overrule -his decision in In Re Ferdinand.40
Reverting, however, to the more authoritative expositions of the rules of
international law on the confiscation of foreign property, let it be admitted
at once that it is still a widely held view that such confiscations are illegal
33[1953] 1 W.L.R. 254-8. It is perhaps unfortunate that in this part of his discussion
the learned judge fails to distinguish between foreign laws that were held to be
contrary to English public policy (e.g., Kaufman v Gerson [1904] 1 KB. 591) and
foreign laws that were not recognized because they were said to be in violation of
international law, e.g., Wolff v Oxholm (1817), 6 M. & S. 92. The two problems
to international law
are of course quite distinct. A foreign law may be contrary
but not necessarily repugnant to English public policy, and vice versa.
34The Norwegian Claims Case (1922), Hague Court Reports (2nd Series), p. 39;
The De Sabla Claim (1933), Annual Digest of Int. Law, 1933-34, p. 241.
a5(1817), 6 M. & S. 92; 105 E.R. 1177.
36[1917] 2 Ch. 188.
37P.C.I.J., Series A, No. 17 (1928).
38[1921] 3 K.B. 532.
39[1921] 1 Ch. 107.
40See Article 38 of the Statute of the International Court of Justice for
the
hierarchy of the sources of international law there set forth. Quaere, is an English judge
bound by the previous decision of a higher English court on a question of international
law in an English court are questions of fact,
law? If questions of international
then the answer should be ‘no’, but if they are questions
(as is asserted by some),
of law (as is asserted by Dr. Lauterpacht in XXV Trans. Grotius Soc. at p. 59),
then presumeably the usual doctrine of stare decisis applies. The cases seem to show
that English courts do recognize the binding character of previous decisions, although
it has never been expressly decided whether international law must be specifically
pleaded or not. See also Brierly’s observations in 51 Law Quar. Rev at pp. 33-4.
MF4cGILL LAW JOURNAL
[Vol. 6
if not accompanied by compensation, although there is no direct decision on
the point by the highest international tribunal, apart from the few dicta of the
Permanent Court of International Justice already referred to. Where it is
difficult to agree with Campbell J., however, is in the impression he creates
that the rules of international law on the subject are settled beyond all
reasonable doubt.41 It would be beyond the scope of this paper to do more
than to touch lightly the surface of a topic that has been so frequently
discussed, 42 but it may perhaps be permissible to draw attention to two factors
throw doubt on the continuing validity of the rule
which, it is believed,
prohibiting confiscation, at least in the wider form in which the rule is
generally stated’ The first of these factors is, as Sir John Fischer-William
that all the disputes concerning the
pointed out in a notable article in 1925,4
confiscation of alien property that have been submitted to international arbitra-
tion involved cases in which it was only foreign property that was being
there was discrimination against stich
expropriated, and where, in effect,
property in favour of nationally-owned property. In the opinion of this learned
writer, therefore, apart from any questions of international policy –
and these
are weighty in themselves and have, so far as we know, never been refuted
that confiscation of foreign-owned
state practice warrants the conclusion
property without compensation is illegal only where nationally owned property
is exempt from the confiscatory measures. The position is otherwise, however,
where the confiscating state has granted a concession to the foreign national
and has expressly bound itself not to revoke it.
The second factor is that the economic doctrines of laissez-faire on which
the rules of international law relating to the inviolability of alien property
were evolved in the 19th century no longer obtain today, and both in the
inter-war period and especially since the end of World War II
there has
developed a general tendency, by no means confined to countries now behind
the Iron Curtain, to nationalize foreign property without paying its owners
adequate compensation. 4 4 It has been estimated that, in the case of British
41His Lordship concludes his judgment with the observation that “Dicey, Oppenheim,
Cheshire, Fachiri and Hackworth endorse the view that expropriation without com-
pensation is contrary to international law,” and he continues “I can find no opinion
to the contrary, though the defendants have referred me to Martin Wolff.” [1953]
1 W.L.R. 246, at p. 259. With respect, Dicey, Cheshire and Wolff are writers on
private and not public international law, and, so far from endorsing the view which
the learned judge attributes to them, with the possible exception of Dicey, they adopt
the opposite position.
42For some of the voluminous literature on the subject, see G. Schwarzenberger,
Manual of International Law, (lst ed’n), Study Outlines to ch. III, pp. 179-180, and
to ch. VI, pp. 266-8.
439 B.Y.I.L. p. 1.
44G. Schwarzenberger, Current Legal Problems 1952, p. 295; N.R. Doman, Post-war
Nationalisation of Foreign Property in Europe, (1948), 48 Col. Law Rev. 1125; A.
Drucker, The Nationalisation of U. N. Property in Europe, XXXVI Trans. Grotius
Soc. 75.
No. 1 ]
CONFISCATION
overseas investments that have been confiscated, compensation ranged from
one to two-thirds of their true value.45 This post-war phenomenon does, there-
fore, seriously raise the question whether the old rules in this branch of
law have not now” been materially modified, if they are not
international
altogether obsolete. The creation in international law of a custom of binding
force between nations does not require the unanimous consent of every state;
it suffices that there is a general consensus of opinion among states in its
favour. Conversely, an international custom may fall into desuetude if it is
consistently disregarded by at least a representative number of nations.46 It is
happily not our task here to decide whether that stage has yet been reached
in the international customary law relating to the confiscation of alien property,
nor to conjecture how an international court would reconcile the conflicting
interests at stake. Neither, it is respectfully submitted, was it necessary for
the learned judge of the Supreme Court of Aden to answer the question.
it
For the purpose of resolving the issue raised before him, it is believed,
to recognize
would have been sufficient for Campbell J. to have refused
the Iranian confiscatory law on the narrow ground that by the terms of its
agreement with The Anglo-Iranian Oil Company of 1933 the Iranian govern-
ment had specifically promised not to revoke the Company’s concession before
to
1993, and had also failed
arbitration as the agreement required it to do. In both respects, therefore,
the Iranian government was guilty of a serious breach of good faith.
its dispute with the Company
to submit
III.
As
the next step in his reasoning, Campbell, J. had to overcome
the
formidable hurdle presented by the well known decision of the English Court
of Appeal in Luther v. Sagor.47 In that case the government of the Soviet
45Schwarzenberger,
law. But that view, with respect,
ibid., at p. 306. The United Kingdom, for example, signed
compensation agreements with the Argentine, Mexico ,and Uruguay during the period
1947/48; with Poland in 1948; with Czechoslovakia and Yugoslavia in 1949; and with
France in 1951.
46Dr. Schwarzenberger maintains (ibid, p. 309) that nothing that has happened in
the sanctity of foreign property under
the inter-war period or since has abrogated
is difficult to reconcile
international customary
with his own recital of the frequent violations of the rule and the changed political
the
thinking about the status of private property
fact that international law, as much as any municipal system of law, is in a constant
state of flux and must adapt itself to new social values. Cf. Sir Samuel Evans in
in
“The Odessa” [1915] P. 52, at pp. 61-2: “In the domain of international law,
particular, there is room for the extension of old doctrines or the development of
new principles, where there is, or is even likely to be, a general acceptance of such
by civilized nations. Precedents handed down from earlier days should be treated
to bind. But the guides must not be lightly
as guides to lead, and not as shackles
deserted or cast aside.”
47[1921] 3 K.B. 532.
in modern society, and ignores
McGILL LAW JOURNAL
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Union had confiscated the plaintiff’s mill in Russia and certain manufactured
wood in it. The plaintiff was a company incorporated in Russia under Russian
law.48 Some of the wood was subsequently sold by the Soviet government to
the defehdants, a firm doing business in England, who imported it into the
the exterritorial validity of the
United Kingdom. The plaintiffs challenged
Soviet decree and claimed that they ‘were the true owners of the wood. Two
main points were at issue, but only the second concerns us here. The plaintiffs
argued that the Soviet confiscatory decree should not be recognized in England
because it was immoral and repugnant to British principles of justice. The
argument was rejected by all three members of the Court. The reasoning of
the Lord Justices was not identical, but basically they all appeared to agree
on the proposition that the Soviet decree must be accepted as conclusive and
binding in an English Court.
Bankes, L. J. said:
“The question before the Court is not one in which the assistance of the Court
is asked to enforce the law of some foreign country to which legitimate objection
might be taken, as in Hope v. Hofe 4sa and Kaufman v. Gerton.4 8b The question
before the Court is as to the title to goods lying in a foreign country which a
subject of that country, being the owner of them by the law of that country,
has sold under an f.ob. contract for export to this country. The Court is asked
to ignore the law of the foreign country under which the vendor acquired his
title, and to lend its assistance to prevent the purchaser dealing with the goods,
I do not think that any authority can be produced to support the contention.”140
He added that:
“Even if it was open to the Courts of this country to consider the morality or
justice of the decree of June, 1918, I do not see how the Courts could treat this
particular decree otherwise than as the expression by the de facto government
of a civilized country of a policy which it considered to be in the best interests
of that country.” 50
The first part of the learned judge’s reasoning really begs the question
because the plaintiffs did not deny the general principle of private international
law that the lex situs governs the transfer of title in goods. What they were
contending was that on grounds of public -policy the lex situs should be
ignored in the circumstances prevailing here. Bankes, L. J.’s assertion, therefore,
of the finality of the lex situs may have been based either on the “immunity
4 8 The Report states (ibid., at p. 532)
that the plaintiffs were a company incorpo-
rated in 1898 in the Empire of Russia, but Roche J. in the court below points out
that Venesta, Ltd., a British import company, were
([1921] 1 K.B. at p. 456)
by far the largest shareholders in A.M. Luther & Co. There is a conflict of opinion,
reflected in a varying state practice’, as to the nationality of a company, the majority
of whose shareholders are not nationals of the country of incorporation. See J. Merwyn
Jones, Claims on Behalf of Nationals Who are Shareholders in Foreign Companies,
(1949), 26 B.Y.I.L. 225.
48a(1857), 8 D.M. & G. 731.
48b[1904] 1 KB. 591.
49 Ibid., at p. 545.
50 Ibid., at p. 546.
No. 11
N.CONFISCATION
rule”, or on the inconvenience and the uncertainty in international trade which
would flow from a bona fide purchaser not being able to rely on the lex situs.
It is impossible to tell which of these two grounds he had in mind.
Warrington, L. J. stated:
is well settled that the validity of the acts of an independent sovereign
“It
government in relation to property and persons within its jurisdiction cannot be
questioned in the Courts of this country: “Every sovereign state is bound to respect
the independence of every other sovereign state, and the Courts of one country
will not sit in judgment on the acts of the Government of another done within
its own territory”: per Clarke J. delivering the judgment of the Supreme Court
in Oetjen v. Central Leather Co.51 The
the United States of America
of
the speeches of both Lord
in
is implicit
existence of this principle of law
Macnaghten and Lord Shaw in Lecouturier v. Rey,52 and is not disputed by
counsel for the respondents in the present case.”53
The third member of the court, Lord Justice Scrutton, referred to the
principle of the irikmunity of foreign states from local jurisdiction as enunciated
in The Parlement Belge 54 and other cases, and then continued in language
that is strikingly similar to that employed by Lord Denning in the recent
House of Lords decision in Rahimtoola v. Nizam of Hyderabad :55
“What the Court cannot do directly it cannot in my view do indirectly. If it
could not question the title of the Government of Russia to goods brought by
that Government to England, it cannot indirectly question it in the hands of a
purchaser from that Government by denying that the Government could confer
any good title to the property. This immunity follows from recognition as a
sovereign state. Should there be any government which appropriates other people’s
property without compensation, the remedy appears to be to refuse to recognize it
as a sovereign state. Then the Courts could investigate the title without infringing
the comity of nations. But it is impossible to recognize a government and yet
claim to exercise jurisdiction over its person or property against its will.” 56
Then, somewhat illogically, the learned judge goes on to consider
the
plaintiff’s argument that the English courts should refuse to recognize the
Soviet legislation and titles derived under it as confiscatory and unjust, and
he expresses the opinion that:
“Individuals must contribute to the welfare of the state, and at present British
citizens who may contribute to the state more than half their income in income
in death duties, can
tax and super tax and a large proportion of their capital
hardly declare a foreign state immoral which considers (though we may think
that to vest individual property in the state as representing all the
wrongly)
citizens is the best form of proprietary right.”57
Scutton L. J.’s judgment is puzzling. Once he decided that the immunity
principle applied, was not that the end of the matter? Why did it “remain (s)”
to consider the argument that the Soviet decree was repugnant to English
51246 U.S. 297, at p. 303.
52[1910] A.C. 262
53[1921] 3 K.B. 532, at pp. 548-9.
54(1880), 5 P.D. 197.
55[1957] 3 All E.R. 441, at pp. 463-4.
56[1921] 3 K.B. 532, at pp. 555-6.
57Ibid., at p. 559.
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public policy? Did not the immunity principle preclude this very enquiry, or
was the Lord Justice suggesting that there might be circumstances when such
an enquiry might be possible and legitimate? The answer possibly is that he
was merely endeavouring to reconcile the general principle with the reported
cases cited by him at page 558. If so, he overlooked the fact that they were
decisions in which it was sought to enforce in England, a right acquired under
foreign law, as distifict from merely recognizing it.
It is quite true, as Campbell J. argued in the instant case, that in Luther v.
Sagor -the English Court of Appeal was confronted with a situation where
the Soviet revolutionary government had confiscated the property of one
of its own nationals, but it is by no means clear that the judges there would
have arrived at a different conclusion if the aggrieved party had not awed
allegiance to the Soviet Union. All the available evidence supports the contrary
view. Counsel for the defendants in Luther v. Sagor, relied -upon two well known
in support of his contention that the courts of one
American authorities
country will not sit in judgement on the acts of another done within its own
territory: Underhill v. Hernandez58 and Oetjen v. Central Leather Co.59
In the first of these cases the plaintiff brought an action in the United
States against the defendant, a Mexican insurrectionist military commander,
who had ordered the plaintiff’s detention while he was resident in Mexico
in the course of one of the perennial revolutions in that country. The plaintiff
was an American national. The insurrectionist government was subsequently
recognized by the United States, and according to the lex loci commissi, i.e.
Mexican law, the defendant’s action was justified. Although the report itself
never mentions the word “international law”, it must, however, have been
Underhill’s contention that he was still entitled to damages because Mexican
law could not excuse a violation of the minimum standards of international
law. The Supreme Court of the United States, however, rejected his claim,
and Fuller C. J. in a short judgement that has since been often relied upon
in many subsequent American decisions said:
to respect
independence of every other
“Every sovereign state is bound
the
sovereign state, and the courts of one country will not sit in judgment on the
its own territory. Redress of
acts of the government of another done within
grievances by reason of such acts must be obtained through
the means open
to be availed of by the sovereign powers as between themselves.”6W’
In the second case, Oetjen v. Central Leather Co., goods belonging to an
American national were seized in Mexico by a revolutionary force, which was
subsequently recognized by the United States as the de jure government of
Mexico. The assignees from the former owner claimed title in the goods
against the defendarits, who had purchased
them from the revolutionary
government. The plaintiff contended that the seizure was illegal because it
58(1897), 168 U.S. 250.
59(1918), 246 U.S. 297.
60168 U.S. 250, at p. 252.
Xo. I]
CONFISCA TION
violated
the Fourth Hague Convention Respecting Laws and Customs of
War on Land. The question therefore arose, did the fact that the Mexican
law violated an international convention exclude the application of what was
otherwise admitted to be the lex .rei sitae governing the transmission of
the goods, viz. Mexican
law? The Supreme Court held that the Hague
Convention IV did not apply to civil wars, but preferred in any case to rest
its decision on the wider ground already explained in Underhill’s case. The
court said:
“The principle that the conduct of one independent government cannot be success-
involving
fully questioned in the courts of another is as applicable to a case
the title to property brought within the custody of the court . .
. . as . . . to
the cases . .
in which claims for damages were based upon acts done* in a
foreign country; for it rests at
last upon the highest considerations of inter-
national comity and expediency. To permit the validity of the acts of one sovereign
state to be re-examined and perhaps condemned ‘by the courts of another would
very certainly
‘imperil the amicable relations between governments and vex the
peace of nations.'”61
.
.
These decisions have been repeatedly followed in subsequent American cases. 62
In a third Supreme Court decision, Ricaud v. American Metal Co. Ltd., 3
also decided in 1918, the illegality of the seizure of the plaintiff’s property
under international law was directly in issue. The facts in that case were very
similar to those in Oetjen’s case, except that the property had been assigned
to an American national before its confiscation by the Mexican authorities.
The Court, however, was unimpressed by this difference in the nationality of
the owners at the crucial date and rejected the plaintiff’s contention in the
following words:
“The fact that the title to the property in controversy may have been in an
American citizen who was not in or a resident of Mexico at the time it was
seized for military purposes by the legitimate government of Mexico does not affect
the rule of law that the act within its own boundaries of one sovereign state
cannot become
in the courts of
another. Such action, when shown to have been taken, becomes, as we have said,
a rule of decision for the courts of this country.” 64
the subject of re-examination and modification
61246 U.S. 297, at pp. 303-4.
62Terra.-as v Holmes (1925), 115 Tex. 32; 275 S.W. 392; Annual Digest 1925-6,
Case No. 43; Terrazas v Donahue (1925), 115 Trex. 46; 275 S.W. 396; Monte Blanco
Real Estate Corp. v Wolvin Line (1920), 147 La.’563; 85 So. 242; O’Neill v Central
Leather Co. (1915), 94 Atl. 789; aff’d (1918), 246 U.S. 297; Wulfsohn v Russian
Socialist Fed. Soviet Rep. (1923), 234 N.Y. 372; 138 N.E. 24; Salimoff v Standard
Oil Co. (1933), 262 N.Y. 220; Dougherty v Equitable Life Assce Socy (1933), 266
N.Y. 71; Annual Digest 1933/34, Case No. 28; Holzer v Deutsche Reichsbahn-Gesell-
schaft (1938), 277 N.Y. 474; 14 N.E. (2nd) 798; Cheatham et al., Casebook on the
Conflict of Laws, (3rd ed’n), p. 355. For the facts of these cases, see Edward D. Re,
Foreign Confiscations (1951), ch. VII.
63(1918), 246 U.S. 304.
64Ibid., at p. 310. Cf. Prof. Re’s conclusion as to the effect of the American decisions
(op. cit., at p. 169): “The ‘rule of decision’ principle prevents a review of the
foreign act of seizure regardless of the nationality of the owner. The principle does
not bow or bend in relation to the nationality of its potential victim.”
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[Vol. 6
In Luther v. Sagor, Bankes and Scrutton, LJJ. referred to Underhill’s and
Oetjen’s cases with approval in so far as they were concerned with the past
acts of a de facto government, whereas Lord Justice Warrington went further
and adopited the judgment of Clarke J. in Oetjen’s case in its entirety, prefacing
his judgement with the observation that “it is well settled that the validity
of the acts of an independent sovereign government in relation to property
and persons within its jurisdiction cannot be questioned in the Courts of this
country.” 65 In Princess Paley Olga v. Weisz,16
in which similar acts of
confiscation by the Soviet regime were in question, and in which the Court
of Appeal followed its previous decision in Luther v. Sagor, both Scrutton
and Sankey LJJ. quoted extensively from Oetjen’s case. It would have been
sufficient, it may be thought, for the purposes of the issue before the Court
if their Lordships had confined themselves to reading only those extracts from
the Supreme Court decision which related to the effect of recognition on the
past acts of a revolutionary government before its recognition, but they went
further, and in each case their quotations include a reference to the general
principle re-stated in Oetjen’s case that “every sovereign State is bound to
respect the independance of every other sovereign State, and the Courts of
one country will not sit in judgment on the acts of another done within its
own territory.”6T It would seem, therefore, that they regarded the retroactive
effect given to the acts of a foreign revolutionary government as but an
application of the general principle that foreign acts of state must not be
questioned. Lord Justice Sankey, in effect, says as much in the concluding
words of his judgment: “In these circumstances, in my view, the Princess
was dispossessed of this property by an act of state behind which our Courts
will not go.” 68 On the other hand, it is only proper to add that the third
member of the Court in Paley Olga’s case read the act-of-state rule more
restrictively. In Russell J.’s opinion the court would not inquire “into the
legality of acts done by a foreign Government against its own subjects in
respect of property situate in its own territory.” 69
6511921] 3 KB. 532, at p. 548.
66[1929] 1 K.B. 718.
67[1929] 1 K.B. 718 at p. 725 (Scrutton L. J.) & p. 729 (Warrington L.J.).
Scrutton L. J. observes at p. 725: “This Court acted on the principles laid down in the
above cases in A.M. Luther Co. v James Sagor & Co..” the “above cases” being
Underhill, Oetjen, and Ricaud. He also states on p. 728: “The American case of
Oetien v Central Leather Co. which was mentioned with approval in the Court of
Appeal in A.M. Luther Co. v James Sagor & Co. states the American, which in my
view is the same as the English, law in such circumstances.”
68Ibid., at p. 730.
691bid., at p. 736 (Italics added). Unfortunately Russell J. does not elaborate on his
opinion,. and so -it is impossible to tell whether he was consciously drawing a distinction
between nationals of the confiscating state and non-nationals, or whether he was
simply adverting to the particular facts at bar.
No. 1 ]
CONFISCATION
Writers on the conflict of laws have placed the widest interpretation on
the scope of the decision in Luther v. Sagor. Dr. Cheshire states that:
“The English courts recognize without hesitation that the ownership of property
is conclusively and finally determined by the
terms of the foreign decree of
expropriation, if the property is situated within the jurisdiction of the sovereign
at the time of the decree, notwithstanding that it is later brought to England
and is still there at the time of action …..
”
And he adds that:
“It
is immaterial that the property previously belonged to a British subject.”70
Martin Wolff is of the same opimon. He writes that:
“In so far as the confiscation decree affects property situate within the territory
of the confiscating state its effect is the transfer of the title to the state, and
this has
things did not
belong to a national of that state.”’71
to be respected everywhere, even
the confiscated
if
Unfortunately, however, neither of these learned authors gives any reasons
for his opinion and neither quotes any authority apart from Luther v. Sagor.
Only Dr. Lipstein considers the American cases, and he maintains that the
rule in Luther v. Sagor reproduces in general terms the specific principles
which were developed by the Supreme Court of the United States, the third
of which is that:
“If the domestic rules of conflict of laws refer to the law of a foreign country,
the Court cannot examine whether the law of the foreign country conflicts with
international law.”72
Dicey, on the other hand, is unhappy with the decision and comments that:
“It may well be that the House of Lords will at some future date reconsider
the decision in Princess Paley Olga v. Weis–, in the light of international law
and foreign practice in the matter of confiscations.”7 3
Dr. Mann recognizes the existence of some kind of “rule of decision” principle
but is critical of it, and in particular he favours the non-recognition of foreign
acts of confiscation on the grounds of public policy. 74 It is perhaps surprising
70Private International Law (4th ed’n), p. 135.
71 Private International Law (1st ed’n), pp. 535-6.
72(1949), XXXV Trans. Grotius Soc. 157, at p. 187.
73Conflict of Laws (6th ed’n), p. 157, and see also p. 563. It is difficult to reconcile
the learned specialist editor’s disapproval of the rule in Luther v Sagor with his
subsequent comment that “as regards acts of State authorized by foreign Governments,
the courts in England would doubtless apply the same principle”, i.e., of immunity
from judicial review as they apply to English acts of state (op. cit. p. 158), unless
“acts of State” is given a very restrictive meaning here. In so far as the practice of
continental countries
is concerned, although far
from unanimous, it seems on the whole to coincide with the Anglo-American practice.
See G.A. van Hecke, (1951), 4 Int. Law Quar. 345, at p. 356; Beitzke, Enteignung
im Internazionalen Privat-Recht, in Festschrift fur Raape (1948), p. 93 et seq.
in matters of foreign confiscations
7459 Law Quar. Rev. 155, at pp. 168-171. Surely Dr. Mann is mistaken in thinking
that the New York court refused to recognize the Russian legislation in Dougherty
v Equitable Life Assce Socy
(266 N.Y. 71)? That was the decision of the trial
judge, but he was overruled on appeal.
McGILL LAW JOURNAL
[Vol. 6
that none of these writers considers the rule that international law is part
of the law of England, and, indeed, the views of Cheshire, Lipstein and Martin
Wolff would be irreconcilable with that rule unless it were true to say that
there is’an exception to it in the case of foreign acts of state.
Having satisfied himself, as he thought, that Luther v. Sagor could be
distinguished from the facts before him, Campbell J. then relied on Lord
Ellenborough’s decision in Wolff v. Oxholm,75 which was followed a hundred
years later by Younger, J. in In Re Fried Krupp,71 to prove his proposition
that a British court will not recognize the confiscation of the property of a
British national situated abroad. The facts in Wolff v. Oxholm, as stated in
the head-note to the Report, were as follows:
“An ordinance made by the Government of Denmark pending hostilities with
Great Britain, whereby all ships, goods, money, ….
to English
subjects were declared to be sequestrated and detained
in consequence of
which, a suit then depending in the Danish Court for recovering a debt due from
a Danish to a British subject was not further prosecuted, and
the debt was
afterwards paid by the Danish subject, at the rate specified by the ordinance,
to commissioners appointed in virtue of the ordinance to receive payment …
was held to be no answer to an action against the Danish subject . . . in this
country ….
belonging
.;
“77
.
The head-note also states that the decision was arrived at because the ordinance
“not being conformable to the usage of nations, was held to be void,” but it may
be questioned whether that was the true ratio decidendi. What the Chief Justice
actually said was this:
“If this ordinance is to be considered merely as a penal lar, it is clear that
the Courts of this country ought not to take notice of it, because no country
regards the penal laws of another: Folliott v. Ogden, I. H. Black 135. The penal
laws of foreign countries are strictly local, and affect nothing more than they
can reach and what can be seized by virtue of their authority: Lord Loughborough’s
judgment in Folliott v. Ogden.”78
From this passage it is practically impossible to tell what Lord Ellenborough
thought was the situs of the debt, a most important question, as we shall see.
Neither do his references to the old case’of Folliott v. Ogden”9 afford any
assistance, because it is even more difficult to deduce any single principle
from that decision than it is from Oxholi’s case. In Folliott v. Ogd
tft
plaintiff sued in England on a bond executed by the defendant in New York
and apparently payable there; then came the American revolution and while
the plaintiff was still living in New York all his property was declared to be
75(1817), 6 M. & S. 92; 105 E.R. 1177.
76[19171 2 Ch. 188.
77105 E.R. 1177. It may be noted in passing that it is usual for treaties of peace
to contain provisions dealing with the property of former enemy aliens that has been
impounded by the contracting parties. For an early example of such provisions being
given effect to in Chancery, see Weymberg v Touch (1669), 22 E.R. 724.
78105 E.R. 1177, at p. 1180.
791 H. BI. 123; 126 E.R. .75
(King’s Bench).
(Common Pleas); 3 T.R. 726; 100 E.R. 825
No. 11
CONFISCATION
forfeited by an act of attainder of the New York legislature. All the judges,
however, were agreed that that did not prevent the plaintiff from bringing his
action in England, although their reasons for disregarding the confiscatory
decree differ greatly. In the Court- of Common Pleas Lord Loughborough gave
as his reason the fact that it was sought to give extra-territorial effect to the
decree, and he enunciated the principle, quoted by Lord Ellenborough in the
passage above, that:
“The penal laws of foreign countries are strictly local, and affect nothing more
than they can reach and can be seized of by virtue of their authority; a fugitive
who passes hither, comes with all his transitory rights; he may recover money
held for his use, stock, obligations and the like; and cannot be effected
in this
country, by proceedings against him in that which he has left, beyond the limits
of which such proceedings do not extend.”‘ s
It is not clear why the learned judge thought it was sought to give the penal
law extra-territorial effect, since, as counsel pointed out, the contract was made
and was to be performed in New York,81 and the act of attainder did no more
than to vest the right of action accruing under the bond in the people of
New York, but it is possible that Lord Ellenborough was influenced by the
fact that the plaintiff was still in actual possession of the bond itself. On
appeal the King’s Bench upheld the decision, but on different grounds. Lord
Kenyon took the view that since the penal law was passed at a time when the
colonies were in rebellion against the mother country it must be regarded, on
constitutional grounds, as void ab initio.s2 Buller J., on the other hand, would
uphold the judgment of the Court of Common Pleas on the quite different
ground that “the penal laws of one country cannot be taken notice of
in
another.” He continues:
“Then apply that principle to the present case: this is an action on a bond, to
which the defendant has pleaded that by the penal laws of another country
the property of the plaintiff in the bond has been divested (sic) out of him: but
this Court cannot take notice of that defence; and then all the pleadings are
are a nullity and consequently
the action remains unanswered.”83
80126 E.R. 75, at p. 82.
8lCf. Maugham J. In re Russian Bank for Foreign Trade [1933] Ch. 745, at p. 767
(followed by Romer J. in Frankfurther v W. L. Exner, Ltd. [1947] Ch. 629):
“If the debt –
(that is to say, the petitioner’s debt) – was primarily recoverable
in London, I am of opinon that ‘it was not affected by the Soviet legislation, even
though it was due to a person who was a Russian subject at the date of the
nationalization decrees. Its locality must be taken to be the place where the debt
was in the ordinary course recoverable.” And in Employers’ Liability Assce Corp. v
Sedgwick Collins & Co. [1926] 1 K.B. 1, at p. 15 Sargant L. J. said in the Court
of Appeal: “Effective as such
limits
of Russian territory, it cannot determine
the ownership of property locally situate
in this country, such as debts owing from debtors here.” See also Martin Wolff,
op. cit., pp. 552-3.
legislation may be within the
(confiscatory)
82100 E.R. 825, at p. 829.
83Ibid., at pp. 829-30. Italics added.
McGILL LAW JOURNAL
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What was meant here by the phrase “cannot be taken notice of”? Was
Buller J. conscious of any difference between recognizing a foreign penal law
the boundaries of the confiscating
that has already been executed within
country and enforcing it in another jurisdiction? Did he consider the situs
of the debt to be in New York or in England, or was it immaterial from
his point of view, and, if so, did he intend to lay down a broader principle
than Lord Loughbo’rough attempted to do ?84
There being this apparent difference between Lord Loughborough’s and
Buller J.’s view of the law it becomes equally difficult to determine how Lord
Ellenborough construed it, since he appears to adopt both their judgments. If
he deemed the debt to be situated at the place of the creditor’s residence, that
is in England, then presumably he favoured Lord Loughborough’s view and
what is also the accepted principle today, that foreign penal laws will not be
enforced in England, 5 although the modern rule, generally speaking, is that a
debt is situated at the place of residence of the debtor; if, on the other hand,
Lord Ellenborough considered the situs of the debt to be in Denmark then
he must have accepted Buller J.’s interpretation of the law. But whichever
view he adopted it is at least clear that the Chief Justice thought the Danish
ordinance was contrary to English public policy. Why then was it necessary
for him to deal with the further point that it was also contrary to the law of
nations? The reason appears from the following -passage in his judgment:
“But, it was contended, that this ordinance was a proceeding founded upon and
conformable to the law of nations, and that as the defendant paid the debt to
the persons appointed by the ordinance to receive the confiscated debts, he has
a good discharge as to the debt itself according to the law of nations.”80
to rest his
840f the other members of the court, Ashhurst J. (at p. 829) seems to adopt Lord
Kenyon’s approach, while Grose J. appears
judgment on both Lord
Kenyon’s and Buller J’s views. He says (at page 830): “It has been correctly stated
by my brother Buller, that the penal laws of one country cannot affect the laws and
rights of citizens of another. Then if we were to determine that the plaintiff should
not recover on this bond, we must say that the treaty of independence was retrospective,
and that it had the effect of declaring that the property of the subject of America
resident in this country was forfeited by an Act, which at the time it was passed…
was an Act of Treason.” The words in italics were not those used by Buller J. It must
of course be borne in mind in reading both Folliotts and Wolff’s case that notions
about the conflict of laws were still very rudimentary at the beginning of the 19th
century and no series of connected principles governing even
the most elementary
branches of the subject had yet been evolved. Cf. Cheshire, op. cit., (4th ed’n), p. 34:
“We can affirm without exaggeration that to cite a decision upon private international
law of 150 years ago is little more helpful than to search for the law of landlord
and tenant in the medieval reports of the Common Pleas. In fact we can go further
and say that a decision no more than seventy or eighty years old is suspect.”
S5 e.g., Lecouturier v Rey [1910] A.C. 262; The Jupiter (No. 3)
[1927] P. 122;
Re Russian Bank for Foreign Trade [1933] 1 Ch. 745; Banco de Vizcaya v Don
Alfonso de Borbon y Austria 119351 1 K.B. 140; Frankfurther v W. L. Exner, Ltd.
[1947] Ch. 629; Novello & Co. v Hinricksen Edition [1951] 1 All E.R. 779.
86105 E.R. 1177, at p. 1180.
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CONFISCATION
Lord Ellenborough then examines this claim and arrives at the conclusion
that international law does not permit the confiscation of enemy property
in time of war. As already mentioned,
the Court of Appeal in In Re
Ferdinand, Ex Tsar of Bulgaria8 ” must be taken to have overruled this aspect
of his judgment. But the point that is sought to be made here is that in
Wolff v. Oxholm the rules of international law were apparently invoked not
to invalidate, as was done in the The Rose Mary, a foreign law that would
otherwise be applicable, but to validate a foreign law that would otherwise not
be applicable; not applicable, that is, because Lord Ellenborough apparently
held the view that any foreign penal law was not cognizable by an English
court eo nomine.
It must be admitted, however, that this is not the ratio decidendi that
Younger, J. deduced from the case when he was confronted with a similar
situation in In Re Fried Krupp, A. G.88 Here a German ordinance of 1914
forbade
the transmission of funds to creditors in Great Britain. Although
Younger J. regarded German law as the proper law of the contract he
refused to recognize the German decree, giving as the second of his reasons
for this refusal that:
“this ordinance, with its marked bias in favour of German nationals as against
British subjects, can, in my opinion, create in this country no disability upon a
person against whom
language of Lord
in Wolff v. Oxhoin, may, with the necessary modifications, justly
Ellenborough,
be applied to it . . . as being one which is not conformable to
the usage of
nations.”8 9
its provisions are directed, and
the
When, however, it was decided in In Re Ferdinand” that there was no such
usage among nations as alleged, Younger L. J. (as he had meanwhile become),
sought to justify his earlier decision on the wider ground that even if confisca-
tion in such circumstances was not prohibited by international law, still, “it
(His Majesty’s exercise of the right of forfeiture of the property of enemy
aliens) might well be regarded as a penal law of which no notice would
be taken in the Courts of another country.” 91 This observation, of course,
ignores the vital distinction, to which we have already adverted, between
recognizing a foreign penal law and giving effect to it in another country.
Failure to observe this distinction is responsible for the difficulty of deducing
the exact ratio decidendi in Folliott v. Ogden and Wolff v. Oxholn, but its
relevancy can now scarcely be doubted in the light of Luther v. Sagor and
later decisions. 92
87[1921] 1 Ch. 107.
88[1917] 2 Ch. 188.
89Ibid., at pp. 193-4.
90[1921] 1 Ch. 107.
911bid., at p. 144.
92 The learned specialist editors of the 6th edition of Dicey are also not agreed
as to the ground of decision in Ogden and Oxhoin. At pp. 17-18, under General
Principles No. 2, and at p. 152, under Rule 22, these cases are cited by Professor
McGILL LAW JOURNAL
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Plaintiff’s counsel in The Rose Mary alsa appears to have relied on the case
of Republic of Peru v. Dreyfus Bros.9 The facts in this case were somewhat
involved, but must be stated in order to put Kay J.’s judgment in its proper
perspective. Dreyfus Bros. had agreed to purchase a quantity of guano from
the government of Peru. Difficulties arose as to the state of accounts between
the parties, but before they could be resolved the government was overthrown
in a civil war and ieplaced by the dictatorship of one Pierola. Pierola and
Dreyfus Bros. agreed on a sum said to be owing to the bank, and in
settlement of the claim the dictator ordered certain bills of lading for cargoes
of guano to be endorsed to the bank. The latter, however, had to institute’
legal proceedings against another company before it could obtain hold ‘of the
cargoes. The English Court found in its favour and ordered the proceeds
from the sale of the guano to be paid into court. At this point, however,
Pierola resigned and the original government was reconstituted. It repudiated
Pierola’s settlement with Dreyfus Bros., and now moved for an injunction
to prevent the bank from-taking the money out of court. The motion was
refused by Kay, J. It will thus be seen that at the material time, that is, the
repudiation by the legitimate government of Pierola’s agreement with the
French concern, the res litigiosa, the money, was not subject to the Peruvian
government’s
territorial jurisdiction. It was situated in England, and its
disposition therefore governed by English law as being the lex situs. It comes
to this, therefore, that the Peruvian government was
trying to give an
exterritorial effect to this repudiatory decree and asking the English court
to enforce it.
Wortley and Dr. Lipstein respectively,
in conjunction with Hfntingdon v Atrill
[1893] A.C. 150, at pp. 1534; Lecouturier v Rey [1910] A.C. 262; and Banco de
I.’.veaya v Don Alf onso [1935] 1 K.B. 140, in support of the proposition
that an
English court will not enforce a foreign penal law. On the other hand, on p. 14,
Dr. Lipstein cites Oxholm for the proposition that “legislative measures during war
against private rights may be refused recognition in England;” while, on page 468,
Mr. Welsh refers to Ogden as an example of a foreign penal status which will not
be recognized in England. Finally, Professor Kahn-Freund suggests, at pp. 606 and
652, on the bases of the authority of both cases that “the principle of. public policy . . .
may . . . lead to the enforcement of a contract in an English court, although under
the law which governs the contract, it
is void.” Thus Wortle~y and Welsh appear
to construe Ogden and Oxholm on the ‘basis that it was sought to enforce the penal
laws ex-territorially
the debts to have been situated in
England), whereas Kahn-Freund places the situs in the territory of the confiscating
to attribute both an English and
state. Lipstein, somewhat
a foreign situs to the debts. In Luther v Sagor counsel for the appellants adopted the
view that the debt in Oxholm’s case was situated in England: “It was said in the
Court below that a confiscatory decree of a government . . . would not be enforced
here – Wolff v Oxholm, but that only applies where the property is situate in this
country.” (1921)
90 L.J.K.B. 1202, at p. 1209. Italics added. This passage does not
appear in the official Law Reports.
inconsistently appears
(whence
they must deem
9338 Ch.D. 348.
No. 1]
CONFISCATION
Unfortunately, however, this is not the way in which Kay J. approached the
matter. He refused the motion on the wider ground that where the revolutionary
government of a country has been recognized by the government of a foreign
state, a subject of such foreign state may safely contract with that de facto
government; and if, by subsequent revolution, the previously existing govern-
ment of the country is restored, the restored government is bound by inter-
national law to treat any such contract as valid, and “In a litigation with the
foreigner, party to the contract, they must adopt the contract, and merely take
such rights as the de facto Government of the rebel States might have had
under it.”’94 It is submitted, however, with respect, that these words are
too wide and are inconsistent with the doctrine by which the American and
English courts treat as conclusive the executive acts of another State –
whether legal by international law or not –
but that Mr. Justice Kay’s
limited ground already stated, namely,
decision can be justified on the more
that the Peruvian government was seeking to give exterritorial effect to its
decree.95
IV.
Campbell J. in The Rose Mary also refused to recognize the Iranian law
upon a second ground, namely, that “no state can be expected to give effect
within its territorial jurisdiction to a foreign law that is contrary to its own
public policy or essential principles of morality.” 96 The Report does not show
that this submission was ever made by plaintiff’s counsel, nor is it clear what
meaning the learned judge meant to be given to the phrase in the passage
just quoted that no state can be expected “to give effect” to a foreign penal
law. If what he meant was that no state can be expected “to enforce” a
foreign penal law, then, stated in the abstract, the proposition is unexceptionable
and Kaufman v. Gerson,9 7 which is the only English authority cited by
Campbell J., supports it. But it is surely correct to say that that principle
was not in question in the instant case, for here the court was not asked
941bid., at p. 362.
95 1n West Rand Central Gold Mining Co. v The King [1905] 2 K.B. 391, at p. 412,
plaintiff’s counsel referred to the Dreyfus Bros. case in support of his argument that
by international law a successor government was bound by the acts of its predecessor,
as to which Lord Alverstone observed: “The only principle, however which can be
deduced from these cases is that a Government claiming rights of property and rights
in our Courts without fulfilling the
under a contract cannot enforce those rights
it would appear that the Lord Chief
terms of the contract as a whole.” Hence
Justice also regarded the Dreyfus Bros. case as one in which the Peruvian government
sought to enforce its law exterritorially.
96[1953] 1 W.L.R. 246, at p. 253.
97[1904] 1 K.B. 591.
McGILL LAW JOURNAL
[Vol. 6
to enforce or give effect to the Iranian confiscatory
required merely to acknowledge what was already a fait accoinpli 8
legislation, but was
If, however, the right construction to be placed upon Campbell’s words is
that no state can be expected “to recognize” such foreign legislation, then
the learned judge may have had in mind one or the other of the following
propositions. He may have meant to say that a foreign law which was contrary
to international law Would not be recognized by the courts of England (and
ipso facto of Aden) on the grounds of public policy, quite apart from the
question whether international law was part of the law of the land or not.
This is perhaps an acceptable proposition, but it adds very
little to the
first ground upon which Campbell J. refused to recognize the Iranian decree.
In the alternative, he may have intended to say that an English court would
not recognize
the Iranian confiscation on the grounds of public policy,
irrespective of whether the action was sanctioned by international law or not.
This is a much more objectionable proposition. In the first place it would
have to be restricted to the confiscation of the property of foreign nationals
(or, quaere, of British nationals?) only, since Luther v. Sagor, and the many
cases which have followed the decision, show that confiscation of the property
of a state’s own nationals will be recognized. But if confiscation qua confisca-
tion is so objectionable, what difference does it make whether the confiscated
property belongs to an Iranian or a British subject? Secondly, by ignoring
international law and practice as the guiding post the proposition would lead
to confusion and uncertainty in practice and give unbridled scope to the
personal or national predilections of judges. But whichever way Campbell J.’s
words are interpreted they do not overcome the objection that they appear
to be in conflict with the “foreign act of state” rule.
V.
CONCLUSIONS
In order to reach the conclusion in The Rose Mary which it did, the Court
of Aden ought to have had to overcome two major obstacles. It should first
have had to dispose of the objection that there is a rule, well established
by several leading decisions of the United States Supreme Court referred
9 8Cf. Warrington L.J. in Luther v Sagor [1921] 3 K.B. 532, at p. 549: “Some
reliance was placed by the respondents upon the principle enunciated
in such cases as
Kaufman v Gerson, that the Courts of this country will not enforce a contract invalid
by our law as being in contravention of some essential principle of justice or morality,
notwithstanding that by the law of the country where it was made no such objection
could be raised to it. In my opinion the principle has no application. The appellants
are not seeking to enforce such a contract. They are resisting an endeavour on the
part of the respondents to induce the Court to ignore and override legislative and
executive acts of the Government of Russia and its agents affecting
the title to
property in that country; it is that, which in my opinion,.we are not at liberty to do.”
No. 11J
CONFISCATION
rule was not apparently drawn
to with approval in Luther v. Sagor and Princess Paley Olga v. Weisz, and
referred to in other weighty English dicta, that the international validity of
foreign acts of state will not be questioned in an Anglo-American court.
to Campbell J.’s attention, and
This
so he did not deal with it. It remains, nevertheless, a most formidable objection.
Secondly, the Aden Court had to distinguish Luther v. Sagor from the facts
in the instant case, and this the learned judge attempted to do, but, it is
respectfully submitted, quite unconvincingly. Campbell J. also relied heavily
on Folliott v. Ogden and Wolff v. Oxhoim as providing affirmative support
for his conclusion, but these old decisions, as we have attempted to show,
in their reasoning and therefore
are contradictory, ambiguous, and vague
constitute a most unsatisfactory guide in this unsettled branch of the law.
Since The Rose Mary was decided an English court has had occasion
to review some of the same questions of law in Re Claim by Helbert Wagg &
Co. Ltd.9 9 The facts in the latter case were that by an agreement made in
1924 a British company loaned a substantial sum of money to a German
company, repayable over a period of years. Until 1933 the German debtor
met its obligations regularly. In that year Germany passed a Moratorium Law,
which provided for the creation of a Konversionskasse and enacted that debts
payable in foreign currency should be converted into Reichmarks and paid into
the debtor’s liability to -the creditor being discharged
the Konversionskasse,
thereby. The German company duly complied with the law and made regular
the
payments
company had paid .the full equivalent in Reichmarks of the outstanding portion
of the loan. On September 3rd, 1939, there was outstanding under the Joan
agreement the sum of 174,142 and the claimant claimed, under the provisions
of the Distribution of German Enemy Property Act, 1949, and the orders made
thereunder, to rank as creditor in respect of that amount.
the Konversionskasse, with
into
the result
that by 1945
On an appeal from the decision of the Administrator of German Enemy
Property, who had rejected the claim, Upjohn J. held that German law was
the proper law of the contract; that the Moratorium Law was a legitimate
foreign exchange control measure genuinely passed for the protection of the
the property of an
German economy and was not aimed at confiscating
individual or classes of individuals; and that it must therefore be recognized,
with the result that the appeal failed. From his approach to the problem it is
clear that Upjohn J. entertained the opinion that had the German law been
in intent it would
essentially of a confiscatory nature and discriminatory
not have been entitled to recognition.
The learned judge thought that the decisions justified the following rules:
(1) No state will enforce the fiscal laws, however proper, of another state,
nor penal statutes, using that phrase in the strict sense of meaning statutes
imposing penalties recoverable by the state for the infringement of some law.
99[1956] 1 All E.R. 129; [19561 Ch. 323.
McGILL LAW JOURNAL
[Vol. 6
(3) English courts will not recognize
Lord Loughborough’s judgment in Folliott v. Ogden was cited in support
of this proposition. (2) English law will not recognize the validity of foreign
legislation intended to discriminate against British nationals in time of war
by -legislation which purports to confiscate, wholly or in part, moveable
property situated in that State. Wolff v. Oxholm and In re Fried Krupp A. G.
the
were cited under this head.
validity of foreign legislation aimed at confiscating the property of particular
individuals or classes of individuals. The decisions referred to here were
Banco de Vizcaya v. Don Alfonso de Borbon y Austrid”1″ and The Rose Mary.
Upjohn J. did not challenge the correctness of the decision in the latter
the facts of that case, but he disagreed with Campbell, J.’s
case upon
proposition that confiscation per se is contrary to international law, or that an
English court would refuse to recognize all foreign legislation of such character.
He did not concur that Luther v. Sagor applied only to cases where the
to subjects of the confiscating country, but
property confiscated belonged
thought that it was intended to apply to confiscation of the property of nationals
and foreigners alike. Upjohn J. concluded:
“In my judgment the true limits of the principle that the courts of this country
will afford recognition to legislation of foreign States in so far as it affects title to
movables in that State at the time of the legislation or contracts governed by the
law of that State rests in considerations of international law or in the scarcely
less difficult considerations of public policy as understood in these courts. Ultimately
I believe the latter is the governing consideration. But, whatever be the true
view, the authorities I have reviewed do show that these courts have not on
either ground recognized any principle that confiscation without adequate com-
pensation is per se a ground for refusing recognition to foreign legislation.”‘1l
Time unfortunately does not permit a detailed examination of Upjohn J.’s
interesting judgment, but reference must be made to -three points arising out
of it which are germane to this paper. In the first place, the learned judge
makes no reference to the “foreign act of state” rule. -Secondly, by citing
Folliott v. Ogden only in support of the first of his three rules he appears
to regard it as authority only for the proposition that an English court will
not enforce foreign penal or fiscal legislation. Thirdly, and most important,
Upjohn J. appears to lay down, in his third rule, the wholly novel principle
that foreign confiscatory legislation which is discriminatory in its nature will
not be recognized whether it applies to nationals or non-nationals of the
confiscating country. The only authority, apart from The Rose Mary cited in
support of this proposition is Banco de Vizcaya v. Don Alfonso de Borbon
y Austria,10 2 which, with respect, does not support it. It was a case where
Russell J. refused to enforce a Spanish decree confiscating property of the
exiled king which was situated in England at the time of the passing of the
decree. Whatever may be the merits in principle of a policy of disregarding
100[1935] 1 KB. 140.
101[1956] Ch. 323,-at p. 349.
102[1935] 1 K.B. 140.
No. 11J
CONFISCATION
discriminatory foreign penal legislation on the grounds of public policy, it
cannot be seriously questioned that in practice the Anglo-American courts
have consistently recognized such legislation where it affected the property
as, for example, the
rights of nationals of
confiscation of German Jewish property by the Nazis –
and, in so far as
England is concerned, only a higher court could now reverse a trend which
is so well established.
the corifiscating country –
From the foregoing survey of the authorities, it must be confessed that the
law on confiscation in private international law is in a state of great uncertainty,
and it is much to be hoped that an early opportunity will present itself to
the House of Lords to lay down some definitive rules and to resolve the
important conflicting interests that compete for recognition in this branch
of the law.
In any such a forensic debate weighty arguments can be adduced by both
sides, and it may not be out of place here to indicate very briefly what form
these are likely to take. In favour of the traditional view that municipal courts
should not be allowed to question the validity of foreign acts of state, reliance
will be placed upon two basic doctrines of classical international law. The
first is the principle of the equality of all states and their juridical independance
from each other; the second, that only states (with certain limited exceptions
with which we are not concerned) are subjects of the law of nations. From
the former rule flows the well established consequence that municipal courts
are not competent to settle disputes between sovereign nations, this privileged
function being restricted to such specially designated tribunals as the parties
may generally or specifically agree upon. It is true, no doubt, that in The Rose
Mary and similar cases the state was not personally impleaded, but, it will
be argued, personal immunity is of little value if the foreign act of state
can be indirectly impugned, as Lord Justice Scrutton pointed out in Luther
v Sagor. Indirect impeachment is indeed worse than a frontal assault, for in
the former case the foreign state does not even have an opportunity to vindicate
its action. It is judged in absentia, as it were.
The second rule denies the right of an individual to complain of an inter-
national wrong, since ex hypothesi he is not a subject of the law of nations.
The wrong, if any, is committed against the state of which the aggrieved
individual is a citizen, and it alone has the right to complain about it. The
state alone has the ‘right of action, and, it will be strongly contended,
embarassing conflicts would arise if a concurrent right of action were to be
conceded to the citizens of the state.l dn Furthermore, counsel for the state
view might be expected to argue, once the floodgates of litigation are opened
the foreign state would be at the mercy of every individual who disliked
its policies or political orientation, and the state would be exposed to all
manner of suits in the local courts. True, the assault so far has been of an
103See ante, footnote
(11).
McGILL LAU’ JOURNAL
[Vol. 6
indirect nature and restricted, in the main, to cases of confiscation of property.
But why logically should it stop there? Would it not be simply a matter of time
before municipal courts assumed jurisdiction in other types of international
disputes’in which individuals had an interest, and would not every official in
to be a particeps cri-ninis
the employ of the foreign government alleged
to find
if he happened
to the delict be potentially exposed
courts? The mischief,
the jurisdiction of
himself within
moreover, would be compounded by the fact that municipal courts do not
always agree in their interpretation of the rules of international law, and the
result would be confusion and uncertainty, even if national courts could be
expected to eschew a natural bias in favour of their own citizens.
to an action
local
the
It will therefore’be concluded that disputes between states should continue
to be settled through the normal and well established channels, such as negotia-
tions, arbitration, the United Nations and the International Court of Justice.
‘The existing machinery may not always be adequate, but the remedy is not
to sabotage it but to strengthen and improve it.
The arguments in favour of the aggrieved individual are no less persuasive.
The classical doctrines of international law, he will boldly assert, are obsolete
and hopelessly inadequate to meet the exigencies of the 20th century. They may
have worked in the last century, but that was because all the principal powers
either shared certain basic principles of justice or found it politic to observe
the minimum standards of conduct
towards foreigners and their property
the waves and
required by international law. Besides, pax britannica ruled
the few minor states who proved recalcitrant from time to time were quickly
coerced into legality by the persuasive guns of the Royal Navy. ,Today, the
West no longer enjoys a monopoly of power –
even if its use as an instrument
of policy were still acceptable –
and nationalism, especially among the younger
peoples, is prevalent to an unprecedented degree. Violations of international
rights, often of the most flagrant kind, are much more common.
To continue in the light of these facts, so the argument will run, to deprive
municipal courts of the right to question the legality of foreign acts of state
is to put a premium on lawlessness and to permit states to flout the rules
of internati6nal law with impunity. A law that cannot be enforced is a contradic-
tibn in terms. The traditional machinery for settling international disputes is
largely useless because, in most of the recent cases, the confiscating state has
been unwilling to submit the dispute to arbitration and, unless it has signed the
optional clause, the International Court of Justice cannot assume jurisdiction.
is a
The United Nations is only a power camp; and
discredited and dangerous remedy in the atomic era.
the use of force
If, it will be reasoned, the assumption of jurisdiction by the local courts
promotes the recognition of the individual as a subject of international law
(at least for this limited purpose), so much the better. The courts can be
relied upon to exercise their power with discretion and good sense and to
No. 1]
CONFISCATION
29
avoid conflicts between the interests of the state and its aggrieved citizen.
Even if municipal courts are not the ideal forum for resolving international
disputes, the answer is not to deprive them of jurisdiction but to establish
an international appellate tribunal to review their decisions.
How is this conflict to be resolved? History and doctrine favours the state
view. A feeling for justice and the rule of law strongly supports the dis-
possessed individual’s claim. But his dilemma is only one aspect of the complex
problem of the settlement of international disputes of a justiciable nature.
The imperative long-term solution must be the establishment of an international
organ with compulsory jurisdiction, and it is questionable whether the unilateral
assumption of jurisdiction by municipal courts will genuinely advance the
cause of an international rule of law. One fears that the price of their inter-
vention in the comparatively few cases of this nature that come before them is
too high and that the orderly development of
law may be
hindered rather than helped. It is for these reasons that I incline to the
view that the refusal, in the past, by the Anglo-American courts to review
foreign acts of state was soundly based and should be maintained in the future.
international
