Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 2, 1902
Mr. Buck to Mr. Hay.
Tokyo, June 26, 1902.
Sir: Referring to the matter of arbitration of the house-tax question, having obtained copies of the several notes of the British, German, and French ministers to the Japanese minister for foreign affairs of dates of the 21st, 22d, and 25th ultimo, respectively, the British and German ministers requesting that the scope of the arbitration be widened that the controversy might be settled in all its bearings, and the French minister suggesting a definition of the question to be submitted, I have the honor to inclose them herewith. Having also obtained copies of the replies of the minister for foreign affairs to each of the ministers respectively, of date of the 21st instant, I have the honor to inclose them attached to the copies of the notes of the three ministers.
I have, etc.,
The British minister to the Japanese minister for foreign affairs.
Tokyo, May 21, 1902.
Monsieur le Ministre: In your excellency’s dispatch No. 15, of March 15, 1902, dealing with the disputed interpretation of Article XVIII of the treaty of commerce and navigation of 1894, your excellency states that you are in accord with me in thinking that the question in dispute between the Governments of Great Britain and Japan depends upon treaty stipulations in the interpretation of which neither contracting party can claim any exclusive right, and that therefore the Imperial Government will in principle consent to submit the point at issue to impartial arbitration.
I have the honor to inform your excellency that I have submitted your dispatch to my Government, and have now received a reply stating that they are in accord with the Imperial Japanese Government in thinking that the matter in dispute being one of the interpretation of an article in a treaty should be submitted to impartial arbitration, and in order that the matter should be settled finally and completely, they are of opinion that the dispute should be referred in all its bearings for final settlement by the proposed arbitration. They have therefore directed me to put before you, for the consideration of the Imperial Japanese Government, the following as the point to be decided by the arbitrators:
“Whether or not perpetual leaseholders still enjoy in respect of their property, both land and buildings, the same right of exemption from taxes or other charges, imperial or otherwise, and the same rights as obtained prior to the revised treaties.”
The nature and extent of the rights and privileges possessed by perpetual leaseholders by virtue of their leases should be elaborated in due course and submitted to the arbitrators.
As your excellency will observe, this formula covers the entire question in dispute. His Majesty’s Government therefore hope that it will meet with the earnest and favorable consideration of the Japanese Government.
I avail, etc.,
The Japanese minister for foreign affairs to the British minister.
Tokyo, June 21, 1902.
Monsieur le Ministre: The note which your excellency did me the honor to address to me under date of the 21st ultimo, respecting the offer of the Imperial Government [Page 721] to refer the question of the house tax to impartial arbitration was duly received.
The Imperial Government find it impossible, I regret to say, to share the views of your excellency’s Government regarding the scope of the suggested reference.
In their estimation it would be both inadvisable and contrary to well-established practice to invoke an arbitral award touching matters which are not in actual controversy, or which have not been made the subject of diplomatic discussion and to the amicable adjustment of which the usual diplomatic processes have not been unsuccessfully applied. If your excellency will be good enough to refer to the correspondence which has passed between your legation and this Department, and more especially to your -notes of February 25 and March 13, 1902, and to mine of March 15 last, I believe your excellency will join me in the conclusion that the only question in the present case, which fulfills what the Imperial Government conceive to be the essential prerequisites to arbitration, is the one relating to the imposition of taxes on buildings standing on land held under governmental leases in perpetuity in the former foreign settlements.
While the Imperial Government are still ready to accept an arbitral solution of the actual point at issue, and while they will always be prepared to meet, as they arise, conCrête questions affecting their international relations, they are unwilling to enlarge their original proposition so as to embrace uncontroverted questions or hypothetical issues in anticipation of possible future disputes.
From what has been said your excellency will understand that the formula which your excellency has proposed is not acceptable to the Imperial Government. It may not, however, be out of place to point out specifically that the Imperial Government are not aware of the existence at this time of any dispute, in an international sense, either in respect of the land held under leases in perpetuity in the former settlements, or in respect of rights and privileges in such land or the buildings thereon other than the house tax; and equally the Imperial Government are unable to admit that the owners of the buildings in question enjoyed in respect of such buildings any right of exemption from taxes or other charges prior to the enforcement of the revised treaties.
The Imperial Government are not disposed strongly to insist upon any particular form in which to state the point at issue, but they believe it to be due to themselves as well as to the court of arbitration whose good offices are to be invoked, to ask that the actual issue be formulated with sufficient clearness and precision to exclude all doubt regarding the exact nature and scope of the reference. The desired end may, it is thought, be attained either by a recital of the actual facts of the case in the preamble of the arbitral agreement, or by a definite statement in the body of the agreement, of the point to which the arbitral tribunal is to be requested to address its decision.
Responding to that idea I beg to inclose herewith for your excellency’s consideration alternative proposals on the subject, either of which, if it is fortunate enough to receive the approval of the Governments of Great Britain, Germany, and France, will be acceptable to the Imperial Government.
I should add that I am also communicating these same projects to the German and French representatives, and at the same time announcing to them, under a similar reservation, the willingness of the Imperial Government to agree to either formula.
I avail, etc.,
Statement which might be inserted in the preamble of the arbitral agreement and from which the actual point at issue would be clearly deducible.
Whereas the competent Japanese authorities have, since Japan’s revised treaties took effect in 1899, levied and collected in respect of buildings in the former foreign settlements of Japan standing on land held by persons other than Japanese subjects, under leases in perpetuity granted by or on behalf of the Japanese Government, the same municipal and local taxes as are imposed in Japan generally on buildings independently of the land on which they stand; and
Whereas the Governments of Germany, France, and Great Britain, in view of the provisions of their revised treaties with Japan, deny the right of said authorities to impose the taxes in question so far as the subjects and citizens of Germany, France, and Great Britain are concerned; and
[Page 722]Whereas the question in controversy which has thus arisen is not amenable to ordinary diplomatic methods; and
Whereas the powers at variance, cosignatories of the convention of The Hague for the peaceful adjustment of international differences, have resolved to terminate the disagreement by referring the question in controversy to impartial arbitration in accordance with the provisions of said convention.
Question at issue to which the arbitral tribunal might be requested to address its decision.
Whereas in view of the provisions of the revised treaties between Japan on the one hand and Germany, France, and Great Britain, respectively, on the other, which came into full force in August, 1899, the buildings in the former foreign settlements of Japan, standing on land held by subjects or citizens of Germany, France, and Great Britain under leases in perpetuity granted by or on behalf of the Japanese Government, are entitled to exemption from such municipal and local taxes as are generally imposed in Japan on buildings independently of the land on which they stand.
The German minister to the Japanese minister for foreign affairs.
Tokyo, May 22, 1902.
Monsieur le Ministre: In your note of the 18th of March last, on the subject of the interpretation of Article XVIII of the treaty of commerce and navigation of April 4, 1896, your excellency has been good enough to inform me that you recognize that the existing controversy rests upon an interpretation of a treaty in which neither of the contracting parties has an exclusive claim, and that therefore the Imperial Japanese Government will in principle agree to submit this controversy to an impartial arbitration.
I have the honor to inform your excellency that I have submitted your note to my Government, and that I am now authorized to declare that my Government, no less than the Imperial Japanese Government, is of the opinion that the controversy over the interpretation of this treaty stipulation should be submitted to an impartial arbitration. In order, however, that this question may in this manner be finally and completely settled, my Government considers it a matter of course that the controversy should be decided in all its parts through the proposed arbitration, and that more especially all those questions relating to the legal relation of the former foreign settlements which have formed the subject of the various representations and notes of this Imperial legation to the Imperial Japanese Government should be included in the arbitral proceedings. My Government, however, will no doubt willingly join in any proposal of your excellency or of other interested powers which responds to this consideration. (The meaning of these italicised words not being clear, Mr. Amano inquired of Dr. Ohrt, the secretaire-interpreter of the German legation, what they meant. Dr. Ohrt paraphrased them as follows: “Durch welchen dieser Gedanke erfuellt wird,”—i. e., through which this thought will be fulfilled.)
Accept, etc.,
The Japanese minister for foreign affairs to the German minister.
Tokyo, June 21, 1902.
Monsieur le Ministre: I have the honor to acknowledge the receipt of your excellency’s note of the 22d ultimo, in which, referring to the offer of the Imperial Government to submit the question of the house tax to impartial arbitration, your [Page 723] excellency states that the Imperial German Government are of opinion that all questions concerning the legal relation of the former foreign settlements which have formed the subject of the various representations and notes from your excellency’s legation to the Imperial Government should be included in the arbitral proceedings.
All the questions connected with the former foreign settlements which were brought into the field of discussion between our respective Governments in consequence of the new régime established by the revised treaties found, with two exceptions, I believe, a satisfactory solution in the measures adopted by the Imperial Government, to which I had the honor to attract your excellency’s attention in my communication of October 21 last.
Of those two exceptions, one relates to the imposition of taxes on buildings standing on land held under governmental leases in perpetuity in the former foreign settlements, and the other to the conversion of leasehold rights to actual ownership, when perpetual leases of settlement land pass into the hands of Japanese subjects.
The adjustment of the former of those points of difference is, it is believed, completely provided for by the arbitral proposals of the Imperial Government.
The second point may, perhaps, be said to have a remote and consequential relation of a problematical nature to the property interests of foreigners, but its immediate and direct bearing, it must be admitted, is exclusively upon the property rights of Japanese subjects, and besides there is involved in it the question of the sovereign power and authority of the State over the property rights of its nationals.
The fact that no reference to this issue has been made by your excellency since the promulgation of the laws and ordinances of September 20, 1901, has encouraged the belief that the Imperial German Government were satisfied with the legal treatment accorded by those laws and ordinances to the leases in perpetuity, and that looking at the matter in all its phases they had decided not to press the point.
I need scarcely assure your excellency that if your excellency’s government find it necessary to again approach the subject, the Imperial Government will be prepared to enter upon a careful examination of the matter, so far as it actually affects the interests of your excellency’s countrymen, but considering that the second point above alluded to is primarily a question of a domestic character, which chiefly concerns the relations between the Japanese Government and the subjects of his Imperial Majesty, the Imperial Government do not think that it can be said to be an issue which properly lends itself to international arbitration.
From what has been said, your excellency will understand that the Imperial Government do not see their way to enlarge the scope of their original proposition. They are not disposed strongly to insist upon any particular form in which to state the point at issue; but they believe it to be due to themselves as well as to the court of arbitration whose good offices are to be invoked to ask that the actual issue be formulated with sufficient clearness and precision to exclude all doubt regarding the exact nature and scope of the proposed reference. The desired end may, it is thought, be attained either by a recital of the actual facts of the case in the preamble of the arbitral agreement or by a definite statement in the body of the agreement of the point to which the arbitral tribunal is to be requested to address its decision.
Responding to that idea, I beg to inclose herewith for your excellency’s consideration alternative proposals on the subject, either of which, if it is fortunate enough to receive the approval of the Governments of Germany, France, and Great Britain, will be acceptable to the Imperial Government.
I should add that I am also communicating these same projects to the French and British representatives, and at the same time announcing to them, under a similar reservation, the willingness of the Imperial Government to agree to either formula.
I avail, etc.,
Minister for Foreign Affairs.
The French chargé d’affaires to the Japanese minister for foreign affairs.
Tokyo, May 23, 1902.
Monsieur le Baron: By my letter dated March 20 last I advised your excellency that the Government of the Republic gladly accepted the arbitration proposed by the Imperial Government with a view of solving the difficulties of interpretation of article 21 of the Franco-Japanese treaty in the matter of perpetual leases.
[Page 724]In continuation of this communication, I have the honor to suggest to your excellency the following position of the dispute to be submitted to the arbitral tribunal:
Interpretation of article 21 of the treaty: Does the word “propriété” include houses built on ground held by virtue of perpetual leases? If so, those houses as well as the grounds are not subject to any impost, taxes, charges, contributions, or conditions whatsoever other than those expressly stipulated in the perpetual leases.
The question put in those terms will find its natural solution by arbitration in all its bearings.
Be pleased, etc.,
The Japanese minister for foreign affairs to the French chargé d’affaires.
Tokyo, June 21, 1902.
Monsieur le Chargé d’Affaires: I have the honor to receive your note of the 23d ultimo, in which, after referring to your note of the 23d March last announcing the acceptance by your Government of the offer of the Imperial Government to refer the question of the house tax to arbitration, you were good enough to suggest a definition of the point to be submitted to the arbitral tribunal.
In the communication which I had the honor to address to you on this subject, under date of March 18, 1902, I endeavored to make it clear that the Imperial Government considered it essential that the common rights of all the powers taking part in the arbitration should be resolved by a single reference.
Since that time Her Netherlands Majesty’s Government has announced its intention not to take part in the arbitral process. The texts of the treaties between Japan and the three remaining powers in interest are in different languages, and the stipulations in those compacts, which may be said to have a bearing upon the present issue, lack identity in both form and substance.
Accordingly, while the formula which you have presented to me clearly addresses itself to the provisions of the Franco-Japanese treaty, it could not be adapted either to Japan’s treaty with Germany or Great Britain.
I am happy to believe from your note now under acknowledgment, as well as from your previous favor on this subject, that a practical coincidence of views exists between our Governments respecting the compass of the projected arbitration. The Imperial Government are not disposed strongly to insist upon any particular form in which to state the point at issue. But they believe the issue should be formulated with sufficient clearness and precision to definitely limit the reference to the question in actual controversy and at the same time it should be stated in such a manner as to make it equally applicable to all the powers in interest. The desired end may, it is thought, be attained either by a recital of the actual facts of the case in the preamble of the arbitral agreement, or by a definite statement in the body of the agreement of the point to which the arbitral tribunal is to be requested to address its decision.
Responding to that idea, I beg to inclose herewith for your consideration alternative proposals on the subject, either of which, if it is fortunate enough to receive the approval of the Governments of France, Germany, and Great Britain, will be acceptable to the Imperial Government.
I should add that I am also communicating these same projects to the German and British representatives and at the same time announcing to them, under a similar reservation, the willingness of the Imperial Government to agree to either formula.
Accept, etc.,