This Document is the Property of His Britannic Majesty's Government)
AFFAIRS OF CHINA.
CONFIDENTIAL.
[26886]
No. 1.
[August 12.]
SECTION 5.
Sir J. Jordan to Sir Edward Grey.-(Received August 12.)
(No. 296.) Sir,
Peking, June 20, 1907. I DULY forwarded to His Majesty's Consul-General at Shanghae a copy of your despatch No. 108 of the 12th March, with its various inclosures, and requested him to obtain from His Majesty's Supreme Court a statement of the facts upon which the advice as to the registration of the steam-ship "Canton" was given, and also to ask the Judges whether, in the light of the documents now furnished, they saw any reason to modify or add to their original opinion.
Sir Pelham Warren's reply, copy of which, with its inclosures, I have the honour to transmit to you herewith, gives the views of both Judges on the point, and enters into a consideration of several other aspects of the question which deserve attention.
Mr. Bourne, the Assistant Judge, on whose advice His Majesty's Consul-General acted in the case of the steam-ship "Canton," held that the vessel was entitled to registration under section 1 of the Merchant Shipping Act. He explained that, protec- tion being given under the prerogative, its extent could be regulated by order of the Secretary of State. Mr. Bourne added that an Act of Parliament could not be over- ridden by an executive order given in virtue of that prerogative.
Sir Havilland de Sausmarez states that a Company formed under British law, of which no members are British, may own a British ship, flying the British flag, and evidently considers that protection under such circumstances should not be refused to the flag.
He doubts the legality of refusing registration on the ground that the main body of the shareholders and the majority of the Directorate are not British.
Under the instructions contained in Lord Salisbury's despatch No. 171 of the 13th October, 1898, a Consul, before according protection to any Company registered in Hong Kong, is to satisfy himself that a majority of the shareholders, as well as of the managing Board of Directors, are British subjects.
Compliance with these instructions, coupled with the enforcement of the views of Sir Havilland de Sausmarez, would apparently lead to the anomaly, ese plified in the case of the "Canton," of affording British protection to a ship belonging to a Company which is itself denied British protection.
In the only other case of the kind which seems to have arisen in recent years, that of a Chinese Steam-launch Company at Swatow, Lord Lansdowne, in his despatch No. 348 of the 30th December, 1904, decided that the Company was not entitled to protection or to the registration of its launches on the ground that "its principal place of business" was at Swatow, and not in Hong Kong, but no question of that kind arose in the instance of the steam-ship "Canton." The precedent established in this case, unless reversed, would apparently entitle Companies registered in Hong Kong and having their principal place of business there, although their composition and capital might be foreign, to registration of their ships at Shanghae under the Merchant Shipping
Act of 1894.
Another point of considerable practical importance has been raised in Sir Pelham Warren's despatch. It seems that British Companies registered in Hong Kong, having British Directors and a preponderance of British capital, but with their principal places of business at the Treaty ports in China, are not strictly entitled to recognition as the owners of British ships. If this point of view, which is alleged to be confirmed by the opinion of Sir Havilland de Sausmarez, is correct, some remedial legislation would seem to be required. In this connection the arguments used in the Memorandum forwarded in Sir Pelham Warren's despatch seem to me to have considerable weight in favour of construing Shanghae as part of the United Kingdom for the purposes of the Merchant Shipping Act.
I have, &c. (Signed)
J. N. JORDAN.
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