[Enclosure]
The British Secretary of State for Foreign
Affairs (Chamberlain) to the
American Ambassador (Houghton)
London, 15 April,
1926.
No. C 4421/1310/37
Your Excellency: In a memorandum
communicated by Your Excellency’s predecessor on February 16th last
year, the United States Government renewed the claim put forward on
behalf of the
[Page 323]
Standard Oil
Company of New Jersey in respect of loss and damage done to the
property in Roumania of the Romano-Americana Company (a Roumanian
corporation in which the Standard Oil Company is a large
share-holder) by belligerent operations during the war. The claim is
put forward against the Government of this country on the ground of
the destruction of the properties of the company caused by or
directly resulting from the acts of British authorities, and it is
upon this ground maintained that the Government of His Britannic
Majesty are burdened with an obligation under international law to
make full compensation. It is stated in the earlier part of the
memorandum that the claim is framed upon a legal basis and it is
there made clear that the Standard Oil Company does not rest its
claim upon a moral liability on the part of the Allied Governments
to make compensation for the war losses of which the oil properties
in Roumania were the victims. At the close of the memorandum a
reference of the dispute to arbitration is proposed.
2. As the claim is put forward on a strictly legal basis, it has been
necessary for His Majesty’s Government to consider the claim in all
its bearings upon that basis and to arrive at their conclusions
under the advice of the highest legal authorities of the country. It
is to this cause that the delay in returning an answer to the
memorandum of February 16th 1925 is due.
3. His Majesty’s Government do not admit that any international
responsibility for the destruction of this property rests upon or
can be undertaken by this country. The memorandum based the claim on
the destruction of property by a belligerent and maintained that the
belligerent is under an obligation, imposed by the law of nations,
to make reparation. His Majesty’s Government agree that the
destruction was an act of war. It arose out of acts of war committed
in Roumania when Roumania was an active belligerent. The question of
the nationality of the individuals who carried out the acts
complained of is immaterial. The acts were carried out on Roumanian
soil by individuals acting on behalf of and in co-operation with the
military authorities of the country, and by the authority of the
Roumanian Government. That Government approved of the steps which
were taken and if and so far as there was need for them to do so
they have ratified the acts in question in the most unequivocal
manner. It follows, ‘therefore, that if the acts complained of give
rise to any claim for compensation on the part of those whose
property was injured or destroyed, the party responsible is the
Roumanian Government and it is against that Government that the
claim must be brought.
4. There can be no doubt that this is also the view of the Roumanian
Government. Roumania has openly proclaimed her responsibility
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in this matter. In this
connection I venture to quote an extract from a speech of the
Roumanian Minister of Finance before the Chamber of Deputies,
delivered on February 11th, 1925.
[Translation]
“From the very beginning we laid down the rule that we did the
destruction in our territory and that we make compensation. We
pledged ourselves to those who suffered damages and hence, the
sums that become due under that head you must deliver to us.
“We cannot admit that those compensations be made directly as
some States tried to do with their people.
“We have taken a pledge with the whole petroleum industry, and
what is due to it must be given to us and it will be distributed
by us to the sufferers”.
and a further extract from an official Roumanian
Government memorandum published in the Official Press of September
24th, 1925:—
[Translation]
“As a result of the pressure exerted and steps taken by the
Allied Powers in November 1916, the Roumanian Government
ordered the destruction of all plants for the extraction,
transformation and transportation of petroleum, and also the
destruction by fire of all the stores of crude oil and
derivatives found in the yards, refineries and warehouses
throughout the Muntenia and Dobrudja territory.
“The sole purpose of the destruction was to deprive the enemy
of one of its best implements of war. It turns out that it
was fully accomplished”.
Your Excellency will note from these declarations
that not only did the Roumanian Government declare that the work of
destruction was undertaken by the orders of the Roumanian
Government, but also that Roumania cannot admit the right of Great
Britain or France or any other Power to negotiate directly with
respect to compensation with the persons or companies whose
properties were injured, and that they would regard any such action
as a violation of Roumania’s sovereign rights.
5. As such responsibility rests solely with Roumania, it is
unnecessary for me to set out at length the other considerations
upon which His Majesty’s Government would be in a position to rely
if a legal claim could properly be formulated against them.
Nevertheless, I would invite Your Excellency’s attention to a brief
enumeration of some of the considerations of this character, though
in so doing it must not be assumed that I waive any other objections
which His Majesty’s Government would be in a position to put
forward.
6. In the first place, the destruction of this property, being, as
your memorandum admits, an act of war, gives rise to no legal right
to compensation. The principle that “war losses” do not give rise to
a legal right to compensation is not limited to war losses in the
sense
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of loss or damage
inflicted by the enemy, but covers also loss and damage which the
commander in the field is himself obliged to inflict upon the owners
of property in the area under his authority: see the decision of the
Tribunal in the “Hardman” case in the arbitration between the
British and United States Governments (American
Journal of International Law, Vol. 7, p. 879). Secondly,
His Majesty’s Government would, if necessary, maintain that the
claim, being in respect of damage to the property of a company
incorporated in and still carrying on business in Roumania, must be
regarded as a claim on behalf of a company which is a Roumanian
national. The ownership of the shares, even if it extended to the
totality of the shares, by an American corporation would not in the
opinion of this Government justify the diplomatic protection of the
Roumanian company by the Government of the United States on the
footing that it was an American national.
7. The view of His Majesty’s Government being that it is the
Roumanian Government alone which can deal with a claim for
compensation for the destruction of the property of the
Romano-Americana Company, I would repeat what I think is already
known to your government that the British, French and Russian
Governments when inviting the Roumanian authorities to destroy the
oil properties in Roumania to prevent them from falling into the
hands of the enemy, agreed to compensate that Government for any
loss which the latter might sustain as the result of their
destruction and they have always been and still are willing to
reduce their claims in respect of sums due to them by the Roumanian
Government on this account. So far as His Majesty’s Government are
concerned the above arrangement has been carried out by a reduction
of the Roumanian debt to this country. I would add, however, that
the question of compensation is one to be arranged between the
Roumanian Government and the various owners of the oil properties
concerned, and the conclusion of any agreement between the Roumanian
and the Allied Governments on the question cannot, in my view, be
taken to prejudice the right of the Roumanian Government to maintain
that if compensation is claimed on a strictly legal basis, the
belligerent acts of destruction were not such as to give rise to any
claims for compensation as of right.
8. If for one moment I may depart from the strictly legal
considerations applicable to the case, I would ask you also to
reflect how impossible it is for His Majesty’s Government to admit
that a claim can rightly be brought against them alone in respect of
the destruction of these oil properties in Roumania, when their sole
interest in the case is the undertaking which they gave jointly with
France and Russia, and which is certainly, so far as France is
concerned, a subsisting undertaking, to reimburse to the Roumanian
Government any compensation which might be given to the owners of
the oil properties.
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9. In view of the preceding considerations, I trust that Your
Excellency will agree with me that the claim of the Standard Oil
Company is not one which lends itself to arbitration between the
British and United States Governments.
I have [etc.]
