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PUBLIC RECORD OFFICE

Reference :-

C.O.885

14 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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No. 218.

(WEST INDIES.)

OPINION BY THE LORD CHANCELLOR.*

(Confidential.)

I ENTERTAIN a very clear opinion that the imposition of countervailing duties where the only objection to them arises from the operation of the most-favoured- nation clause is no breach whatever of that clause in any of the Treaties.

I think it is comparatively immaterial to consider the exact language of any Treaty wherein the most-favoured-nation clause is either expressly or impliedly contained in such Treaty. I think the opinions of the Law Officers, with which I am unable to agree, have been founded on the mere language of the Treaties submitted to them without sufficiently considering the international understanding upon which those Treaties have been basel.

But I think, also, without reference to this consideration, that if I were simply considering the instruments themselves, apart from the considerations to which I will advert presently, I should, nevertheless, be unable to concur with the views which those opinions support. Wherever either the substance or the words of the Treaty involve an agreement for equality of treatment, and the substance, of course, of all agreements which I have been describing involved that no undue favour shall be given to one nation in preference to another, and to no one part of the commerce of one nation in preference to that of another nation, there is, to my mind, no undue preference in making the circumstances under which such commerce is admitted equal in respect of treatment by the nation whose obligation is to treat all foreign commerce alike.

I think it would be true to say, even in an ordinary contract, that a wilful effort by one of the Contracting Parties to render more difficult or, indeed, impossible the performance of his contractual obligation by the other party to the contract would both excuse the non-performance, and give a right to compensation to the party against whom such international obstruction was presented.

The mere difference of circumstances will justify differential treatment—a principle which is very familiar to the administration of the law, and has been repeatedly affirmed by Judges of great eminence in the Court of Common Pleas when they had judicially to decide whether a Railway Company was guilty of undue preference under the provisions of the Railways and Canal Traffic Act. becomes more conclusive when one is dealing, not with an unintended, and, in that And this observation, of course, sense, accidental difference of circumstance, but with acts deliberately intended to defeat the operation of the contract.

Now, it cannot be doubted that giving the bounty to a particular produce (say, sugar) will enable it to come into this country under very different circumstances from produce to which no bounty is given by the country of its export, and I think that upon the mere language of the contract such a preference could properly be defeated by countervailing duties.

But I think in respect of international relations a far wider question arises. has to look not only at the language of the particular instrument.

One country to another involves a consideration not only of the particular words of the The relation of one Treaty, but the relation in which one country stands to the other in respect of that Treaty, and I think it would be true to say that there is an overriding understanding between all countries in respect of the most-favoured-nation clause, that nothing shall be done to interfere with the substance and effect of that clause, which is to provide

equality of treatment all round.

for

think the bounties are themselves a breach of that understanding, and I entertain no doubt that countervailing duties may properly be imposed as a defence against that inequality of treatment which the bounties are intended to procure.

*This opinion was given in reply to a letter from the Marquess of Salisbury in similar terms to the letter to the Solicitor-General. See No. 215A.

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