PUBLIC RECORD OFFICE
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16 PUBLIC RECORD OFFICE, LONDON
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arisen either in 1902, when the Republics were annexed, or, except as to the claim of the Hamburg underwriters, in 1903, when the mining plans which the claimants had prepared were rejected.
9. Sir E. Grey is advised, however, that it is open to question whether this argument is relevant. It will be noticed that the "différences" which are, under the Agreement, to be referred to arbitration are differences of a particular type, namely, which it may not have been possible to settle by diplomacy"; and it may well be argued that it is not until diplomatic negotiations with regard to a particular question have failed to achieve a settlement that any obligation is imposed upon the parties to the 1904 Agreement to refer it to arbitration. The diplomatic negotiations with regard to the claims under consideration did not finish until after the making of the 1901 Agreement, as will be seen from the précis contained in Paper (E).
10. It is true the German Government had suggested arbitration on South African war claims generally in 1904. This proposal, however, had reference more particularly to claims which had been disallowed on the grounds that the claimants had been guilty of breaches of neutrality. Even assuming therefore, that the Agreement of 1904 is not retrospective in character, it is not clear that His Majesty's' Government would be justified thereby in maintaining that they were under no obligation to refer these claims to arbitration.
11. As to the question whether the Agreement is or is not retrospective, it will be noticed that the English text-" differences which may arise of a legal nature, or relating to the interpretation of Treaties existing between the two Contracting Parties, and which it may not have been possible to settle by diplomacy, shall be referred to the Permanent Court of Arbitration established at the Hague by the Cop. vention of the 29th July, 1899; provided, nevertheless that they do not affect the vital interests, the independence, or the honour of the two Contracting States, and do not concern the interests of third Parties "--lends itself more readily to the interpretation that it is not retrospective than the German, which may be translated literally as follows: "Contentious questions of law and contentions which relate to the interpre- tation of Treaties existing between the two Contracting Parties shall, in so far as it may not have been possible to settle them by diplomatic means, be referred to the Permanent Court of Arbitration established at the Hague by the Convention of the 29th July, 1899. It is, however, at the same time to be understood that such conten- tions do not affect the vital interests, the independence, or the honour of the two That is, the Contracting States, and do not concern the interests of third Parties." words" which may arise" have no counterpart in the German.
12. It has also been suggested that if His Majesty's Government rely only on the argument that the Agreement of 1904 is not retrospective, the German Govern ment may contend that the question is itself a difference of a legal nature which it would be proper to refer to arbitration under the Agreement. It seems improbable that the Agreement was meant to bind the parties to refer to arbitration differences as
to the interpretation of the very instrument creating the obligation, but it is difficult to point to any words in Article 1 which specifically exclude this contention.
13. A further difficulty in relying upon the argument that these Arbitration Agreements are not to be construed retrospectively is that, on the 4th April, 1908, an Agreement in similar terms was signed with the United States Government. Under that Agreement the Newfoundland fisheries disputes between this country and the United States, which have continued intermittently since 1818, are now being referred to arbitration; yet these disputes had certainly passed out of the category of disputes which diplomacy could settle before the making of the 1908 Agreement, as the two The Powers had agreed in 1907 that the disputes should be settled by arbitration.
compromis," however, Parliamentary Papers, United States, No. 1, 1909 (Paper (F)) is headed "Special Agreement for the submission of Questions relating to Fisheries on the North Atlantic Coast under the General Convention of Arbitration concluded between Great Britain and the United States on the 4th April, 1908," so that, in fact, His Majesty's Government have acquiesced in giving a retrospective effect to the 1908 Agreement with the United States Government.
14. On the other hand, Lord Crewe has repeatedly impressed upon Sir E. Grey the grave inconvenience which would ensue from arbitration of these claims if the award were adverse.
15. The German claims raising this point number only three, but a number of other claims, both by foreigners and British subjects, some of them involving large sums, have been made at different times. The enclosed Memorandum (Paper (G)) drawn up in the Colonial Office in 1903, with opinions of Law Officers given on some
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of the cases, though not a complete list, will show that a number of claims have been made on the ground that His Majesty's Government, as successor to the South African Republic, has taken over its liabilities, whether arising from contract or tort, a view which His Majesty's Government and the Transvaal Government have steadily declined to recognize. In this connection I am to draw attention to the enclosed opinion of Professor Meili (Enclosure H) on the claims of the Netherlands South African Railway, in pp. 23 to 36 of which he argues against the disclaimer of obliga- tions for contractual debts of the late Republic. His Majesty's Government, after long correspondence, succeeded in settling the claims of the Company, without recog- nizing the concession or making any admission of liability for the obligations under- taken by the late Republic, but a decision, in which the general principles advocated, e.g., by V. Martens, quoted by Professor Meili (p. 31), were laid down, would very possibly result in re-opening this and other cases.
16. It is not possible, from the nature of the case, to estimate the amount which would be involved in such a decision, but it would undoubtedly be very large, and the inconvenience and disturbance of settled cases which would result in South Africa, despite the fact that His Majesty's Government is prepared to take all pecuniary liability, are in Lord Crewe's opinion much to be deprecated.
17. Sir E. Grey is fully alive to the extreme inconvenience of an adverse decision, but he is disposed to doubt whether in the long run it may not be more to the interest of this country to pay these claims, if it is just that they should be paid by His Majesty's Government, rather than to be the occasion of any set-back to the progress of the cause of International Arbitration.
18. Before arriving at any final conclusion, however, on this point, he is anxious to obtain your opinion as to the probability of an adverse decision if the claims are referred to arbitration.
19. To justify an award in favour of the claimants, it would be necessary for the Court to hold that a State annexing the territory of another State after conquest is bound to discharge unliquidated claims which had previously been brought against the latter. So far as Sir E. Grey is aware, there are no precedents to show that any State annexing the territory of a conquered State has ever admitted liability of this kind; to the extent to which the matter rests on international practice, therefore, Sir E. Grey knows of no authority which would justify the Court in imposing liability on His Majesty's Government to pay these claims. There are, it is true, certain passages in some of the text-book writers which appear to maintain that the annexing State succeeds to all the liabilities of the former State, but he has not been able to find any precedent exactly in point showing that a nation annexing the territory of another State after conquest has regarded itself as bound by international law and apart from any special agreement to render itself liable either for the executory contracts or the torts of the extinct State.
20. A certain amount of information on the subject, together with such authorities as there are, will be found collected or referred to on pp. 303-429 of Volume I. of " Moore's Digest of International Law." The case most in point seems to be that of the Hawaiian claims referred to on p. 337, where the opinion of the American Attorney-General Griggs is cited. This opinion will be found on pp. 583-8 of the accompanying volume of the "Opinions of Attorneys-General," Volume XXII. (Paper (I)). Further information with regard to the facts in some of the Hawaiian claims can be supplied if desired, as the claimants in many cases were British subjects.
21. It may perhaps be desirable to add that, in so far as international law does impose an obligation upon a conquering or annexing State, to take over liability for the funded debt of the annexed territory, it may be claimed that the obligation was fairly fulfilled after the annexation of the Republics. Information as to the exact action taken by His Majesty's Government (which did, however, involve some loss to the bondholders), will be found in the Colonial Office Memorandum already referred to.
22. The question of the liability of His Majesty's Government for debts and liabilities of the Boer Republics is dealt with or touched upon in the following references to your predecessors, and copies of those references and of their reports are enclosed for convenience of reference (Paper (J)).
23. In 1905 certain British underwriters with claims very similar to those of the German claim of the Hamburg underwriters brought a petition of right against the Crown, seeking to make the Crown liable for gold seized by the Government of the South African Republic on the eve of the outbreak of the Boer war. The Divisional
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