Papers relating to the foreign relations of the United States, 1931, The Far East, Volume III

793.003/521a

The Department of State to the Chinese Legation²⁵

Extraterritoriality

Statement to the Chinese Minister

Reference is made to:

(1) The proposals of the Department in regard to extraterritoriality handed to the Chinese Minister on October 28, 1930.²⁶

(2) The counter proposals of the Chinese Government handed to the Department by the Chinese Minister on December 7, 1930.²⁷

(3) The Memorandum communicated to the Department by the Chinese Legation on December 19, 1930.²⁸

(4) The Memorandum of the Department communicated to the Chinese Legation on December 27, 1930.²⁹

With a view to adjusting the differences between the American and the Chinese proposals referred to in (1) and (2) above, there are submitted for the consideration of the Chinese Minister and for informal discussion observations as follows: (Note: For convenience, the references to articles and pages will follow the numbering of articles and pages in the American draft of October 28, 1930.)

Preamble, Page 1.

We would be prepared to agree to the preparation, publication and placing on sale of an edition of the laws and regulations of China, with translations, by the Chinese Government instead of the arrangement provided in the American draft of October 28, 1930.

Preamble, Page 2.

We would be prepared to drop the proposal for temporary enforcement of Chinese laws in the American courts in China.

Preamble, Page 3.

We would be prepared to modify this paragraph to read as follows:

“The following agreement for the transfer of jurisdiction over nationals of the United States of America in China from the American to the Chinese courts shall come into effect upon the exchange of ratifications.”

Article 1. Transfer of Jurisdiction. Pages 4, 5, 6 & 7.

We would be prepared to assent to extension of the jurisdiction of the Police Courts to cases involving fines up to $15 and to agree to detention in such cases at the rate of one dollar per day when the fine imposed is not paid.

We would desire to make some changes in the phraseology of Article 1.

Article 3. Taxation. Pages 15 and 16.

We would desire to group in Article 3 all clauses relating to taxation and expropriation of property and to include a provision that fiscal legislation shall be enforced against American nationals by no other process than that of action in the competent courts.

Article 4. Rights of Evocation. Page 17.

We would be willing to drop the proposal with regard to evocation.

Article 5. Arrest, Detention and Trial. Page 18.

We would be prepared to make the slight change in phraseology of Article 5 which would be necessary to take care of the extension of the jurisdiction of the Police Courts to cases involving fines up to $15, as per Article 1.

Article 7. Arbitration of Civil or Commercial Controversies. Page 20.

We would be prepared to revise Article 7 to make it conform more nearly to Article VII of the Chinese proposals of December 7, 1930. This revision would involve deletion of the words “or is vitiated on other grounds recognized by the general principles of law” which are found in Article VII of the Chinese proposals, for the reason that these words give to the courts such wide powers in regard to arbitration cases as would practically nullify altogether the apparent intent of the article.

Article 8. Title to Real Property. Page 21.

We feel that Article 8 can be redrafted in a form more acceptable to the Chinese Government. As the Chinese Government is aware, the procedure and practices in China which govern the stamping of title deeds have varied from time to time and from place to place. For this reason, it is difficult to draft an article sufficiently comprehensive to cover all phases of the rights of American nationals in immovable property in China. We desire only, however, to have some pledge from the Chinese Government that the legitimate rights of Americans in immovable property in China will not be questioned on merely technical grounds and that such property will not be subject to any form of discriminatory taxation, to military levies of any kind, or to expropriation in any form except for reasons of public interest in accordance with some duly enacted and promulgated law and after adequate compensation has been paid in advance.

Article 9. Reservation. Page 22.

We would propose that Article 9 be redrafted.

Article 10. Immunity of Nationals of the United States of America and their Property and Shipping from Searches. Pages 23–27 inclusive.

As stated in the observations on Article 3, above, we would desire to transfer from Article 10 to Article 3 the provisions in regard to expropriation of property.

Article 11. Treatment to be Accorded American Business Organizations in China. Page 28.

We would suggest a few minor changes in the phraseology of Article 11 which will not materially alter the substance of the Article.

Article 12. Understanding Regarding Pending cases. Page 29.

We would desire to make a few minor changes in the phraseology of Article 12 and to add a provision which would prevent or limit the bringing of suits in regard to acts committed before the date on which the Chinese courts assume jurisdiction over American nationals.

Article 13. Rights of Residence and Trade. Page 30.

We would be prepared to discuss possible modification of Article 13.

Article 14. Non-discriminatory Treatment for Nationals of the United States of America in China. Page 31, and

Article 15. Provision of Existing Treaties to Remain in Force. Page 32.

We would desire to make a few minor changes in the phraseology of Articles 14 and 15 which will not materially alter the substance thereof.

Article 16. Definition of the Expression “Nationals, of the United States of America.” Page 33.

We would desire to add at the end of Article 16 a clause which will ensure that the expression “Nationals of the United States of America” shall be understood to include juridical persons.

Article 17. Ratification and Duration. Pages 34 and 35.

We would desire to make a few slight changes in the phraseology of Article 17 which will not materially alter the substance thereof.

In preparing a new set of proposals in consequence of careful study of the Chinese Government’s draft proposals of December 7, 1930, it is believed that it is warrantable to recall that, from the inception of the present negotiations in 1929, the Department has stated officially, on several occasions, to the Chinese Government that the American Government is willing to negotiate for the conclusion of an agreement providing for gradual relinquishment of the extraterritorial rights in China of the United States. It has been assumed that the Chinese Government, in entering into negotiations accepted that principle. In the light of all attendant circumstances, the Department is still of the opinion that there must be, for the mutual benefit and satisfaction of all parties concerned, in the agreement which is to be concluded, provision for the gradual relinquishment of the rights under discussion.

It is realized that the present system of extraterritoriality is a source of irritation as between the Chinese people and the nationals of those powers which possess extraterritorial rights. In view, however, of existing conditions, the Department is firmly convinced that the complete abolition of extraterritorial rights at this time or in the near future, without agreed-upon provisions for the gradual readjustment which must be effected, would be likely to create new sources of irritation between the Chinese people and American nationals residing in China, and add to the number and complexity of the problems that arise in the official relations between our two countries.

The Department is in sympathy with the desire of the Chinese people to bring to an end the extraterritorial system in China and is desirous of making every effort within its power in this regard. However, it cannot be blind to the fact that there have been built up in China under the extraterritorial system during the past 87 years large American (and associated Chinese) interests. The safeguarding of these interests requires that some transitional arrangement be provided to bring about by an evolutionary process the change from the existing system of extraterritorial jurisdiction to the new system under which these interests will be completely subject to the jurisdiction of the Chinese Government.

The Department feels that the project which it has in mind would provide such a transitional arrangement and would afford the Chinese Government an opportunity to demonstrate to American nationals residing in China that they need have no fear of submitting themselves to the jurisdiction of competent Chinese authorities.

It is hoped, therefore, that the Chinese Minister will be able to give his earnest and serious consideration to this project, in order that there may be a common basis for discussion with a view to the drafting, at an early date, of a treaty.

[ Washington ,] February 7, 1931.

25. Statement read and handed to the Chinese Minister by the Chief of the Division of Far Eastern Affairs on February 7, 1931.
26. Foreign Relations, 1930, vol. ii, p. 472.
27. Ibid., p.485.
28. Ibid., p. 497.
29. Ibid., p. 500.