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Japanese official assets represented in those countries.
Conclusion,
Minute 3.) This proposal became article 28 of the United Kingdom draft Peace Treaty (C.P. (31) 104, Annex A).
13. This article was discussed on 27th April at Washington. The United States Representatives considered it impractical for the following reasons:--
(a) The sum involved amounted to about 20 million dollars in six neutral countries and Siam. (In round figures, the amount is probably slightly under £7 million).
(b) The liquidation of these assets might be disproportionately expensive, which would leave only a small sum for division amongst the major treaty- making Powers.
(c) The division amongst the Allied Powers would give rise to prolonged argument (the Far Eastern Commission after two and a half years of discussion had failed to reach agreement on reparation shares.)
The United States Representatives were sympathetic towards His Majesty's Govern- ment's claim for restitution of about £300,000 worth of Swiss francs from these assets, which represent payments made by them to the Japanese Government during the war for the relief of civilians and prisoners of war in Japanese hands. The United States Representatives suggested, however, that this question might be settled by a separate bilateral Anglo-Japanese arrangement.
14.
The United States Representatives remained unwilling to accept the arguments put forward by His Majesty's Representatives that administrative diffi- culties should not be held to outweigh the principle that the Allies were entitled to these assets (which had been under Allied control since 1945), as reparations. The argument that His Majesty's Government would find it difficult to defend a Peace Treaty which allowed these assets to be returned to Japan was received with some sympathy but did not prove convincing.
15. It has thus become clear that the United States Government are unlikely to accept our view on this point. Since the United States argument is based mainly on the administrative difficulty of obtaining and liquidating the assets in question (these difficulties are not small owing to the fact that the agreement of the U.S.S.R. and China would be necessary to unfreeze the most valuable assets which are in Switzerland, Sweden, and Afghanistan), it is submitted that we should now propose a composition. The United States Representatives might be informed that His Majesty's Government would be prepared to agree to Japanese assets in neutral countries being left to Japan by the Peace Treaty, provided Japan were obliged to pay to the Allies a total sum of about 20 million dollars to cover their value. Out of this amount, His Majesty's Government would, of course, expect to receive immediately the value of the Swiss francs held by Japan in Switzerland in respect of payments for the relief of prisoners of war. The division of the rest of this sum amongst the Far Eastern Commission Powers might take some time, but it is not considered that these difficulties would be insuperable.
16. It is recommended that His Majesty's Representatives should be authorised to put this proposal to Mr. Dulles as an alternative to that contained in Article 28 of the United Kingdom draft treaty.
Machinery for the Settlement of Disputes
17.
On 2nd January the Cabinet approved a proposal (C.P. (50) 323, para- graph 8 (n)) that “ claims disputes arising out of the Peace Treaty should be settled by a special neutral tribunal to be set up by the President of the International Court of Justice, and other disputes arising out of the Treaty should be referred either to diplomatic settlement or to the International Court of Justice." This proposal was embodied in the United Kingdom draft treaty as Article 35 (C.P. (51) 104, Ànnex A).
18. During the recent conversations in Washington, the United States Repre- sentatives were opposed to providing in the Treaty for the reference of claims disputes to a special tribunal. The United Kingdom argument that provision for such a tribunal would be useful since cases arising out of the claims and restitution articles of the Treaty might not, in many cases, be susceptible of a purely judicial Pecision by the 18ternational Court, while not rejected agre500 yet 58en accepted by
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Psafes Hae7ec587 the United States Representatives. No further communication has seen re
from the United States Government as to their attitude on this question.
19. If nothing further is received before Mr. Dulles comes to London on 2nd June, it is suggested that an attempt should be made to convince the United States Government of the utility of the provision contained in Article 35 (1) of the United Kingdom draft. The United States Representatives may, however, be inclined to insist that the Treaty should contain provision only for reference to the International Court if other agreed means of settlement (e.g., reference to concilia- tion) prove ineffective.
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20. The first sentence of Article 21 of the draft Treaty at (Annex A) states if, in the opinion of any party to the present treaty, there has arisen a dispute concerning the interpretation or execution of the treaty which is not settled by other agreed means the dispute shall, at the request of any party thereto, be referred for decision to the International Court of Justice." This formula would not rule out the reference of claims disputes to a neutral tribunal by agreement between the States concerned, and Japan. If, therefore, the United States Representatives remain strongly averse to lengthening the treaty, by the inclusion of United Kingdom Article 35 (i), it is recommended that the form of words quoted above should be accepted.
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