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I confess that I have serious doubts whether
the view expressed in the first paragraph of this telegram is right, but I have met it in various quarters.
I assume that these Germans have a commercial domicile in Shanghai. We have been carefully explaining to everyone (see the back papers) that it is permissible for British subjects to trade with such persons, because they are "resident or carrying on business" in a neutral country viz., Chira. We must therefore take it that commercial domicile is not "modified by extraterritoriality"
so far as trading is concerned. Is it so modified in connection with the right to sue in a British Court? I cannot see why it should be; the British
Consular Court has to apply the principles of
nglish law; according to English law an enemy subject resident in a neutral country can sue in an
English Court. Therefore to justify Sir E.Fraser's
statement it is necessary to say that a German
resident at Shanghai is not resident in a neutral
country, and this seems to involve the proposition
that a German resident in Shanghai is, because of his
ex-territorial rights, really resident in German
territory. I cannot believe that this is right.
It might be possible to argue in support of the
proposition if the German were resident, e.g. at
Hankow, where I believe the Germans regard their
concession as German territory, but this does not
apply at Shanghai.
It seems to me that if Sir E.Fraser's view is
accepted it knocks a large hole in the permission to
trade