File No. 341.115Am319/147
The Acting Secretary of State to the Ambassador in Great Britain (Page)
3052. You will present to the Foreign Office a note in the sense of that which follows:
For a clearer comprehension of the issues involved in the seizure by British authorities of the Hocking, Genesee and Kankakee, ships of the American Transatlantic Line, the chief circumstances respecting the status of the vessels when seized will be recited:
The ships were not of belligerent nationality at the time of their acquisition by the American Transatlantic Company, and Great Britain possessed no right in relation to them or their operation which was defeated or postponed by their transfer to the American company or their registry and operation as American ships; for they remained, as they had been, neutral owned.
The ships were transferred to the American Transatlantic Company, a corporation duly organized under the laws of the State of Delaware and legally competent to own and operate merchant ships, by regular bills of sale from their neutral owners.
The vessels were duly granted American register in precise accord with the applicable laws relating to the register of American ships, by the competent authorities of the United States charged with the duty of administration. From the time of the granting of such register the vessels were entitled by law, international as well as domestic, to fly the American flag and to engage in foreign commerce as American ships.
The laws of the United States contemplate the granting of American register to ships owned by American corporations, without regard to the ownership of shares in the corporations.
The act of August 18, 1914, provides specifically for the register of vessels, for foreign trade, when owned by corporations “organized and chartered under the laws of the United States or of any state thereof, the president and managing directors of which shall be citizens of the United States and no others”; while the act of June 24, 1902, provides that “registers for vessels owned by any incorporated company may be issued in the name of the president or the secretary of such company; and such register shall not be vacated or effected by sales of any shares of stock in such company.” The same act also provides that previous to granting registry for a vessel owned by an incorporated company, the president or secretary of such company shall swear to the ownership of the vessel “without designating the names of the persons composing the company.”
In this respect it is believed that the laws of the United States do not differ materially from those of Great Britain and other great maritime powers in such cases. Under the circumstances pointed out and the recognized principles of law in such cases, it seems to be settled that the American Transatlantic Steamship Company was the owner of the vessels at the time they were seized and, the corporation being a citizen of the United States, the ships are American owned.
[Page 358]Even if no other weight is to be attached to the ship’s register than that of indices of nationality, and even if belligerents may go behind the register arid inquire into the nationality of the owners, nevertheless where the ship is shown to belong to a corporation, her nationality will be that of the country in which the corporation has its corporate existence, regardless of the ownership of the shares of the company, or the source from which the moneys were obtained with which the project was financed or the ships acquired. Though the presence of an alien amongst the owners of a ship might be held to disqualify it for registration and to that extent constituted it an enemy-owned ship, yet where the ship is owned by an incorporated company the nationality of the shareholders will not determine that of the ship; and the Government of the United States cannot accede to the contention of the British Government that these vessels are owned, either wholly or in part by the enemies of Great Britain, since it seems clear that they belong to the American corporation.
The claim that a belligerent may seize a ship so owned and registered to reach an enemy interest involved does not appear to be supported by British decisions. If such a claim were admitted, probably all great shipping lines would be subjected to interminable and disastrous interference by belligerents in their endeavor to reach the taint of enemy ownership of shares or interest in the owning company—a taint in all likelihood to be found in all of them—while the immunity attaching to neutral vessels would hang on a slender thread and their status depend on trading in the shares of the companies which own them.
The position of the Department is corroborated by Article 57 of the London convention which stipulates that “the neutral or enemy character of a vessel is determined by the flag which she is entitled to fly.”
This article was adopted by the British Government without modification or amendment by the order in council of October 29, 1914, and remained the law of Great Britain regarding the nationality and status of merchant ships until its adoption was repealed by the subsequent order in council of October 20, 1915, The vessels of the American Transatlantic Company were acquired by it and were granted American register while Article 57 was yet in full force as the applicable British law and, as must be presumed, in view of its adoption and incorporation into the laws of Great Britain. The drafting committee of the convention commenting upon Article 57 remarked:
From more than one point of view ships may be said to possess an individuality; notably, they have a nationality, and national character. This attribute of nationality finds visible expression in the right to fly a flag. It has the effect of placing ships under the protection and control of the state to which they belong. It makes them amenable to the sovereignty and to the laws of that state and liable to requisition should the occasion arise. Here is the surest test of whether a vessel is really a unit in the merchant marine of a country, and here, therefore, the best test by which to decide whether her character is neutral or enemy. It is, moreover, preferable to rely exclusively upon this test and to discard all considerations connected with the personal status of the owner.
The text makes use of the words “the flag which the vessel is entitled to fly”; that expression means, of course, the flag under which, whether she is actually flying it or not, the vessel is entitled to sail according to the municipal laws which govern that right.
In view of these considerations, the Department is of the opinion that the seizures of the Hocking, the Genesee and the Kankakee were illegal in the first instance and that they should now be set free.