Table Of ContentCONTRACTS AND PEACE TREATIES
N.V. VAN DE GARDE .. CO'S DRUKKERIJ,ZALTBOMMEL
CONTRACTS AND PEACE TREATIES
THE GENERAL CLAUSE ON CONTRACTS IN THE
PEACE TREATIES OF PARIS 1947 AND IN THE
PEACE TREATY OF VERSAILLES 1919.
A COMPARISON IN OUTLINE WITH SOME
SUGGESTIONS FOR THE FUTURE PEACE
TREATIES.
PROEFSCHRIFT
TER VERKRIJGING VAN DE GRAAD VAN DOCTOR
IN DE RECHTSGELEERDHEID AAN DE RIJKS
UNIVERSITEIT TE UTRECHT, OP GEZAG V AN DE
RECTOR MAGNIFICUS DR. U. G. BIJLSMA, HOOG
LERAAR IN DE FACULTEIT DER GENEESKUNDE,
TEGEN DE BEDENKINGEN VAN DE FACULTEIT
DER RECHTSGELEERDHEID 'IE VERDEDIGEN
OP WOENSDAG 30 JUNI 1948 DES NAMIDDAGS
TE 4 UUR
DOOR
PIETER NICOLAAS DROST
GEBOREN TE ROTTERDAM
, S-GRAVENHAGE
MARTINUS NI]HOFF
1948
ISBN 978-94-015-0036-4 ISBN 978-94-015-0507-9 (eBook)
DOl 10.1007/978-94-015-0507-9
AAN MIJN VADER,
die in zijn rechtspraktijk
steeds recht in praktijk bracht.
CONTENTS
INTRODUCTION . . . .
PART I. OPERATION RATIONE PERSONAE
Chapter I. Contracts between enemies in the national
sense .......... . 27
Chapter II. Nationality of Parties. . . . 40
Chapter III. Enemy character of Parties . 60
PART II. OPERATION RATIONE MATERlAE
Chapter IV. Pre-war Contracts 78
Chapter V. Intercourse 93
Chapter VI. Dissolution . 113
PART III. EFFECTS.
Chapter VII. Partly performed contracts 127
Chapter VIII. Debts and Pecuniary Obligations. 146
Chapter IX. Application of municipal law . 160
CONCLUSION . . . . . 207
SUMMARY OF CONTENTS. 211
LIST OF CASES. 217
BIBLIOGRAPHY . . . . 225
INTRODUCTION
Recent origin of s'ubject.
A study on Contracts and Peace Treaties does not require a
historical introduction because the problem is of a very recent
origin. With regard to its present day importance it is remarkable
that the subject found hardly ever expression in any Peace Treaty
before 1919. One has only to go back to the Peace Treaties of
World War I to find the first detailed provisions relating to
contracts between enemies.
The text of the relevant articles of the Treaties of the Versailles
group is identical. Art. 299 Treaty of Versailles corresponds
with art. 251 Treaty of St. Germain, with art. 180 Treaty of
Neuilly, with art. 234 Treaty of Trianon. The Treaty of Lausanne
of 1923 with Turkey which replaced the unratified Treaty of
Sevres, was similar in outline but differed in some material
aspects. Presently we shall see that the Treaty of Brest-Litowsk
and the other eastern Peace Treaties did not prescribe any
alterations in the municipal law of the Signatory Powers.
The Peace Treaties of World War II concluded at Paris in 1947
with Italy, Roumania, Bulgaria, Hungary and Finland contain
also a number of identical provisions on contracts. Annex XVI
of the Treaty with Italy corresponds with Annex V of the other
Treaties.
Anglo-Saxon origin of Treaty provisions.
It is generally agreed that the provisions of Versailles are of
Anglo-Saxon origin. Although the rules of the Satellite Treaties
differ considerably from the Versailles precedent - as we shall
have occasion to examine fully in the course of our inquiry - the
underlying principles are similar. Based on a British proposal the
provisions of the Satellite Treaties again breathe the English
spirit.
Contracts and Peace Treaties
2 INTRODUCTION
As in so many other regions of the legal domain the two worlds
of Roman law and of Common law were originally as far apart
as the poles. Before 1914 the common law - in the sense of
droit commttn - of the continental countries knew neither the
dissolution of pre-war contracts nor the nullity of war-time
contracts with alien enemies. On the other hand, these principles
form the two corner-stones on which the English common law
is built. However, soon after the outbreak of war in 1914 France,
Belgium and Italy followed British practice and before long
enacted war-time legislation directed to similar ends.
When the second world war commenced, the principal Allied
Powers issued their Trading with the Enemy prohibitions which
they had abandoned a quarter of a century before. The other
Allies followed the same pattern. In short, the Al.J,ied camp
accepted the general prohibition of intercourse with the enemy as
a well established practice of proven expediency and effect
iveness.
It is to be noted that Germany during the course of the two
wars never passed such wide and rigorous measures. It did enact
prohibitions of payment to the enemy; d. the German decrees
of Sept. 30th 1914 and of Jan. 15th 1940. In German law a
general rule of dissolution and nullity of contracts with the
enemy is unknown. A prohibition of payment falls far short of
such a general proposition.
It is far beyond the scope of this study to review the Trading
with the Enemy legislations of the numerous belligerent Powers.
Anyhow, the general clause on contracts in the modern Peace
Treaties is our primary concern. The Treaties do not purport to
be more than a confirmation on an international level of the
domestic laws of the Allied States who forged their statutory
rules on the Anglo-Saxon common law mould.
For an understanding of the Treaty provisions a preliminary
inquiry into English law seems therefore appropriate and sufficient.
As the Treaty provisions on contracts do not apply to the U.S.A.,
American law which shows a great likeness to English law, will
not be considered; d. art. 299 (c.) Treaty of Versailles and Annex
XVI Part D sub 2 Italian Peace Treaty.
By confining ourselves to English law we do not attempt to
convey the idea that the laws of Britain's Allies do not differ
INTRODUCTION 3
materially from their British counterpart or from each other.
However, a further investigation in this direction cannot be pursued
here; it would lead us too far afield. Here it must suffice to state
simply one marked distinction between Anglo-Saxon and conti
nental thought which is also met with in another branch of legal
science closely related to our subject, i.e. in private international
law.
In continental private international law the personal status is
generally governed by the lex patriae; on the continent the test
of nationality prevails. According to Anglo-American conflict
of laws it is the lex domicilii which constitutes the statutum
personale; this is an application of a territorial test.
Political test of enemy character (continental law) .
Enemy character which forms an indispensable element in the
Trading with the Enemy legislation, can likewise be governed
either by the principle of nationality or by the principle of terri
torial presence. Continental law has in general adopted the po
litical test, i.e. nationality, as the main criterion whilst the
territorial test plays an important but, nevertheless, supplement
ary role. The Dutch Trading with the Enemy legislation may
serve as an example. The Dutch Decree A 6 of June 7th 1940
gives in art. 1 the following definition of "enemy" (in translation):
a. subjects of an enemy State;
b. natural persons domiciled in enemy territory who are not
shown to be Netherlands subjects or subjects of a non
enemy State;
c. legal persons,
1. who are established in, or whose business is established
in, enemy territory with the exception of territory of the
Kingdom occupied by the enemy, .
2. who are constituted or existing under, or are governed
by, the laws of an enemy State, or
3. the interests in whom are mainly held by an enemy
State or by enemy subjects.
Art. 6 of the same Decree contains a number of provisions which
together constitute a general prohibition of intercourse with "the
enemy, with enemy subjects and with persons domiciled or
resident in enemy territory" .
4 INTRODUCTION
Territorial test 01 enemy character (English law).
English law adheres to its own tenets and applies a territorial
criterion of enemy character. At common law neither domicil nor
nationality is the deciding factor. The character of alien enemy
depends on the place of residence or the place of business. A
natural person is an alien enemy if he voluntarily resides, or
carries on business, in enemy territory; d Porter v. Freudenberg
[1915J 1 K.B. 857 C.A .. A company registered in the United King
dom has enemy character if it carries on business in enemy
territory.
In respect of legal persons enemy control can be considered
analogous to residence. A corporation, wherever incorporated,
is considered an alien enemy, "when it has acquired enemy
character by reason of the hostile residence or activities of its
agents or other persons in de facto control of its activities"; cf.
Daimler Co. Ltd. v. Continental Tyre and Rubber Co. [1916J 2.
A.C. 344; d. McNair, Legal Effects of War, 1944, p. 217. As to
the people in de lacto control, it depends "whether these reside
in, adhere to, or take instructions from enemies". Although the
character of individual shareholders is not decisive, a majority of
enemy shareholders or of enemy directors will normally be consi
dered conclusive. Management of the company by an enemy con
trolled company should likewise be taken as a sufficient ground
for enemy character; d. Trotter, Law of Contract during and
after War, 1940. A company incorporated in Great Britain is
therefore to be considered an alien enemy if the seat of "its
brains" and the persons exercising "control" over its affairs
are in enemy territory. In all cases regard should be had to
the source of the control and to the allegiance of the controlling
persons. The place of registration or incorporation is in itself
irrelevant.
The principle of control which is really an application of the
territorial test with reference to corporations, is not always
adopted. In respect of companies incorporated or organised
under the laws of an enemy State the constitutional principle is
the determining factor. This must be considered an application
of the test of nationality. As we shall see further on, under
English law the nationality of a corporation depends on the
place of incorporation. Companies constituted under enemy
