CAB38-23 — Page 21

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SECRET.

OPINION OF THE LAW OFFICERS OF THE CROWN IN REGARD TO THE PAYMENT BY BRITISH UNDERWRITERS OF LOSSES DUE TO BRITISH BELLIGERENT ACTION.

I.

MARINE INSURANCE AGAINST RISKS OF BRITISH CAPTURE. CASE FOR THE OPINION OF THE LAW OFFICERS OF THE CROWN AND MR. Rowlatt.

THE opinion of the Law Officers and Mr. Rowlatt is desired on behalf of the Standing Sub-Committee of the Committee of Imperial Defence, to whom has been referred, inter alia, the question of the subject of trade between British subjects and the enemy in time of war, the extent to which it should be allowed, and the means and method of carrying out the policy recommended.

The question on which the Sub-Committee desire the opinion of Counsel arises under the following circumstances :——

A very large amount of German shipping in insured with Underwriters or Marine Insurance Companies in this country. The Policies are of three kinds: (a) Policies insuring against only the ordinary commercial risks, as to which no question arises for the purpose of this reference: (b) Policies which insure against the risks of war. The Sub-Committee are not able to supply Counsel with an actual specimen of such a Policy, but it may be presumed that the ordinary form of a Lloyd's Policy would be followed, which includes in the perils insured against "men-of-war " and "enemies." The latter term has been held to apply to those who cause loss of damage jure belli. The Policy would be extended to these risks merely by omitting the warranty against risks by capture or seizure which would be in Policies falling under head (a), and (c). There may be Policies which expressly include the risk of capture by the British fleet in case of a war in which England was engaged as a belligerent.

In the year 1905 a newspaper agitation was raised in Germany, suggesting that all these English insurances of German ships would be useless in case of a war between the two countries, because under the existing British law the performance of the obligations imposed by the policies would be illegal on the general ground that it constituted trading with the enemy. The English underwriters and insurance companies published an advertisement in the German newspapers of a formal character, intimating that they would, in war as well as in peace, punctually fulfil the liabilities arising from their insurance contracts, and stating that there were no laws existing in England which prevented the fulfilment of such liabilities. A copy of a printed paper, No. 14, Memorandum by the Foreign Office, laid before the Sub-Committee, is with Counsel's papers should they desire to have fuller information as to this episode, but probably the statement contained in this case will be sufficient for present purposes.

The Sub-Committee are now concerned with the question of the course to be recommended or licensed by the Government with regard to the action to be taken by British underwriters and insurance companies in the case of the loss of a German ship during a war between England and Germany; but the present reference is concerned only with the case of a loss occurring in consequence of the belligerent action of Great Britain, whether by capture, destruction, or otherwise, and for the purpose of making any recommendation they may think fit to make on this subject the Sub-Committee desire to have an authoritative opinion from the Law Officers and Mr. Rowlatt as to the law of this country on the material points involved.

Counsel may be conveniently referred to the print of Paper No. 9, beginning at p. 4, which contains a complete statement by Professor Oppenheim, prepared for the use of the Committee, of the English law with regard to trading with the enemy, and attention is particularly called to paragraphs 85, &c., on p. 11, where the particular question now under consideration is dealt with. It would seem that Policies falling

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