793.003/562: Telegram
The Minister in China (Johnson) to the Secretary of State
Department’s 12, March 14, 4 p.m., to American Consul General, Nanking.
1. [Paraphrase.] Lampson read me the text of his instructions in accordance with which he entered into formal negotiations on March 8 with Dr. C. T. Wang (see my telegram of March 9, 3 p.m.73). Lampson has since then had two other meetings with Wang when he worked out the text of a possible article covering legal counsellors, omitting the function of a co-judge. This text has now been referred for approval to the British Government. I have been asked by Lamp-son to treat the texts of this article and others quoted in this telegram confidentially, as he feels if it becomes known to the Chinese Minister that the texts have been communicated to me, Wang might be diverted from the course he is now apparently willing to take. [End paraphrase.]
2. The text of the article mentioned above follows:
“Legal counsellors. To each of the Special Chambers provided in the preceding article there shall be attached foreign legal counsellors who shall be selected and appointed as officials of China by the Chinese Government from among foreign legal experts of high moral character who possess the training, qualifications, and practical experience necessary for appointment to judicial offices. The names, and the amount and conditions of payment of salaries, of the legal counsellors will be communicated by the Chinese Government to the Government of the United Kingdom, and their terms of service will be governed by contracts in accordance with the attached declaration by the Chinese Government. They shall remain in office for a specified term unless dismissed for cause duly shown and shall otherwise receive the consideration and respect due to the dignity of their office. A legal counsellor need not permanently reside at the place in which the Special Chamber of the court to which he is assigned is established and there shall be a flexibleness and practicable system of administration of assignments in order to ensure efficiency in the employment of the said legal counsellors.
The legal counsellors shall serve under the Minister of Justice and shall be deputed by the Ministry of Justice for service during the [Page 763] hearing of cases involving British subjects as defendants in the Special Chambers provided in the preceding article. It shall be the duty of the legal counsellors in these cases to observe the workings of the Special Chambers. They shall have access to the files of the proceedings and may present their views in writing to the judges who shall give due consideration to the views thus expressed by the legal counsellors. Adequate arrangements will be made for interpretation in order to enable the legal counsellors to follow and observe the proceedings in court. The legal counsellors shall forward to the Ministry of Justice such reports as they may consider necessary and copies of these reports in cases involving British subjects as defendants will immediately be furnished by them to His Britannic Majesty’s representative in China, upon request. The legal counsellors shall be authorized to receive directly observations regarding the administration of justice, the execution of judgments or the manner of the application of the law and at the request of any of the interested parties shall bring such observations to the notice of the Minister of Justice with a view to securing the observance of Chinese law. Copies of such observations in cases involving British subjects will likewise immediately be furnished by the legal counsellors to His Britannic Majesty’s representative in China upon request. Similarly the legal counsellors shall be authorized to receive any other observations or complaints, including such as may be caused by domiciliary visits, requisitions, or arrests, et cetera, which observations shall be similarly dealt with. Immediately following any domiciliary visits, search, or arrests, directly affecting British subjects in any judicial district, the local authorities shall notify the legal counsellors who shall be most accessible in point of time. In all cases in which British subjects are involved as defendants a foreign legal counsellor shall be present at the hearings of the cases in both the high and districts courts and no judgment shall be handed down until he has made such observations as he may desire to the judges in chambers, and, in the event of the judges failing to consider them, until his observations have been considered by the Ministry of Justice, which is empowered to take such action as, the case may require. As far as practicable a legal counsellor of British nationality shall officiate at the trial of cases involving British subjects.
The Special Chambers above referred to shall be established and the legal counsellors shall be appointed and installed in office before the exchange of ratifications of this agreement.”
3. [Paraphrase.] I am informed by Lampson that C. T. Wang desires the wording of the opening sentence in this article to be amended in order to provide that one member of the body of legal counsellors be Chinese who would be useful as liaison between the Chinese judiciary and the foreign counsellors. To this article will be attached a declaration covering the terms under which the foreign counsellors will be engaged, substantially as follows: [End paraphrase.]
“Substance of declaration attached to above article. The declaration should specify the details of the contracts under which the legal [Page 764] counsellors would be employed and employed by the Chinese Government, including a minimum salary of £3,000 a year, to be paid in quarterly installments, the said quarterly installments to be deposited in such bank or banks as the legal counsellor engaged may indicate 6 months ahead of the time when such installment falls due.”
[Paraphrase.] Comment: The amount of salary as mentioned in this declaration is only tentative, since C. T. Wang states that salaries of World Court judges at The Hague range from £1,800 to £2,400 sterling a year.
4. The distance which Lampson and Wang have been able to cover, represented above, in their discussion of the chief points at issue includes evocation, co-judges, the reservation of criminal jurisdiction, and reserved areas. Evocation is virtually eliminated from the discussion, while C. T. Wang seems willing to agree to foreign legal counsellors with powers as described in the Department’s January 19 proposals, article 2.
5. At the same time that Lampson has been holding discussions with Wang, Teichman and Hsu Mo have been working on the details of legal guarantees and by midnight of March 14 they had drawn up tentative drafts of articles on the following subjects: (a) Lawyers and interpreters; (b) Special Chambers; (c) taxation; (d) arbitration; (e) rights in immovable property and expropriation; (f) immunity of premises; (g) military service, forced loans, etc.; (h) treatment of companies; (i) pending cases; (j) nondiscriminatory treatment; and (k) British protected persons.
The texts of the above have been referred for consideration and approval to the British Government and are quoted, accompanied by comments, in the next paragraphs. [End paraphrase.]
6.
“Lawyers and interpreters. A British subject appearing before a Chinese court as part [party?] with regard to a civil or criminal suit may employ duly qualified British (or other foreign) or Chinese lawyers and interpreters, provided in the case of the lawyers that they are registered as such with the Chinese Government, and such lawyers, if of British (or any other foreign) nationality, shall have the same rights and privileges as Chinese lawyers appearing before the court, and shall be subject to the same laws and regulations governing Chinese lawyers. Hearings shall be in the Chinese language but the court shall take measures to ensure an understanding of the proceedings by all parties to the case and have the assistance of competent interpreters if necessary. British subjects parties to a suit or persons authorized by them shall upon payment of the usual official fees for such copy have the right to obtain certified copies of the evidence and judgment in such suit and arrangements will, if necessary and where possible, be made for supplying on application and on payment of appropriate fees translation of such documents.”
[Paraphrase.] Comment: Lampson informs me that Wang at first objected to the bracketed words “or other foreign” but afterward [Page 765] agreed to retaining them. While the Chinese apparently wish to limit the use by foreigners of lawyers of the nationality of the foreigner concerned, Lampson and I believe the right should be given our nationals to employ any foreign attorney who is recognized by the Chinese Government to practice before Chinese courts. [End paraphrase.]
7.
“Special Chambers. In the district courts in Harbin, Mukden, Tientsin, Tsingtau, Shanghai, Hankow, Chungking, Canton, Foochow, and Yunnanfu, and in the high courts having appellate jurisdiction over such district courts with the exception of the Supreme Court, Special Chambers shall be established for dealing with cases involving British subjects as defendants. All cases involving British subjects as, wherever resident, except when they may be taken to the Supreme Court on final appeal, or when a British subject concerned may elect, in writing, to submit himself to the jurisdiction of the local modern court having jurisdiction over purely Chinese affairs cases of a similar nature, shall be tried only before these Special Chambers. Any case involving a British subject as defendant, which originates within the ordinary jurisdiction of a court other than one of those mentioned above, will (unless the British subject concerned elects otherwise, as provided above) be transferred for trial to the Special Chamber most accessible to the court within whose jurisdiction the case originates.
Chief judges of Special Chamber. The chief judge of any Special Chambers provided in article (blank) of this treaty shall be the president of the court to which the chamber belongs. Other judges of the Special Chamber as well as its procurators shall be selected from among legal scholars with thorough training and practical experience and with a broad knowledge of general concepts of modern jurisprudence. Their names, ranks, and salaries, will be made known to the public and they will not be removed from office without cause.”
[Paraphrase.] Comment: Lampson is adverse to the above paragraph. The article may not appear in the text of the treaty itself but rather in an annex. [End paraphrase.]
8.
“Taxation, (a) British subjects shall be liable for the payment of such nondiscriminatory Chinese taxation only as is actually paid by all Chinese citizens who are liable therefor and is authorized under the legally enacted and duly promulgated laws, ordinances and regulations of the Central, Provincial and Municipal Governments of China.
(b) British subjects shall be protected against all illegal taxation; and such legal taxation as is properly payable by British subjects shall be enforced against them by no other process than that of action in the competent modern Chinese law courts.
(c) Municipal taxation shall be enforced against British subjects only in accordance with duly authorized municipal regulations sanctioned by the Central or Provincial Governments of China. The proceeds of such municipal taxation shall in general only be expended on relevant purposes within the municipal area in question. [Page 766] British subjects shall be protected against arbitrary or discriminatory methods of assessing or levying such taxation.
(d) Tax agreements entered into with British subjects in their several capacities as merchants, firms, partnerships or companies, will be duly observed.”
[Paraphrase.] Comment: It will be noted by the Department that article 3, sections (e) and (f) of the October 28 draft have been dropped. The Chinese objected to each on the ground that it was derogatory to the dignity of their courts. I feel these provisions to be unnecessary in this article; if we desire them included in the treaty, they might be put either in the preamble or in an exchange of notes or an annex. [End paraphrase.]
9.
“Arbitration. The Chinese courts will recognize agreements entered into by British subjects between one another or with other foreign nationals or with Chinese citizens for the settlement of civil or commercial controversies by arbitration in accordance with Chinese law and will enforce awards made in pursuance thereof unless the award is contrary to public order or good morals or is vitiated on other grounds recognized by the general principles of law as understood in modern jurisprudence.”
[Paraphrase.] Comment: I do not like the phrase “in accordance with Chinese law”. It might be interpreted, from its present position in this article, to mean the conduct of arbitration proceedings by the arbitration sections of Chinese Chambers of Commerce “in accordance with Chinese law” governing the arbitration of commercial disputes. Lampson understood the Chinese wished to have arbitrators follow Chinese law when making an award. He and I agree on the need for clearing up this point before we accept the article. [End paraphrase.]
10.
“Rights in immovable property and expropriation. All rights in immovable property held by a person in China shall be recognized as valid and shall remain undisturbed subject to the exercise of the right of eminent domain by the Chinese Government.
The property of British subjects in China shall not be expropriated, except for reasons of projects insular [sic], recognized by the law as such, and only after adequate compensation has been paid. The use of the property of British subjects shall not be denied to them even temporarily except in case of grave emergency for reasons of public interest and in return for fair compensation where such compensation is paid in the case of Chinese citizens.
Exchange of notes: With reference to article (blank) of the treaty signed between us today, I have the honor to request Your Excellency’s confirmation of my understanding as follows:
All legal Chinese land transfer fees leviable under regular Chinese legislation as provided in article (blank) of the said treaty, where properly payable under such legislation, will be paid by British subjects on land transactions effected after the date of the signature of the said treaty. But no demands will be made by the Chinese authorities [Page 767] to payment of such land transfer fees on transfers of land to or from British subjects prior to the date of the signature of the said treaty and rights in immovable property held by British subjects shall not be called in question on account of nonpayment of such transfer fees in the past. All rights in immovable property now held by British subjects in China shall not be questioned unless they are invalidated on legal grounds as the result of a decision rendered by a modern Chinese law court, but British subjects will comply with laws of China in regard to such property. The existing rights of British subjects to acquire, hold, and freely dispose of and transfer their rights in immovable property will remain unimpaired”.
[Paraphrase.] Comment: The Department will note that the provision regarding transfer fees, etc., in article 8 of the October 28 draft has been transferred from a treaty article to an exchange of notes on the subject. I do not see any objection to this. As now worded the text seems to give a satisfactory guarantee of the right of disposal of land by owners of title thereof, whether by perpetual lease or otherwise. The text provides that “prior to the date of the signature” of the treaty the Chinese shall demand no transfer fees on land transfers to or from British subjects. I do not see any objection to this phraseology. Objection was made by the Chinese to our phraseology on the ground that, if our indefinite wording were adopted, there might be a flood of transfers between the time of signing and ratifying. Lampson and I interpret the phraseology regarding compensation where the Government takes over property to mean there will be no payment of compensation, since it is believed that in such eventualities the Chinese Government provides no compensation for its own citizens. I am not in a position to judge whether in international procedure this is customary or not. I understand the Chinese contention is that the Government should have the right in times of emergency to seize and to use private property without necessarily giving compensation. [End paraphrase.]
11.
“Immunities of premises, et cetera. The public buildings and private residences of British subjects in China and their warehouses and business premises and factories, together with all their accessories, articles and properties, shall be respected, and shall not be subjected to any requisition, search or inspection, and the books and correspondence relating to their commercial transactions shall not be examined except as specifically provided for in nondiscriminatory legislation legally enacted and duly promulgated. Except in cases of flagrante delicto premises occupied by British subjects shall not be forcibly entered, except upon a warrant formally issued by a modern law court specifically stating the legal grounds on which action is authorized”.
[Paraphrase.] Comment: It should be noted that the Chinese object to the American phraseology requiring that a warrant cite upon its face specifically “by title and section the law under which action [Page 768] is authorized”. To do this, the Chinese contend, would be contrary to Chinese law which requires only a statement in the warrant of “the legal grounds on which action is authorized”. An unwillingness of the Chinese Government to invalidate or to amend domestic law by treaty would thus appear to be indicated. I am still of opinion that we should contend for wording substantially like that written into the draft of October 28. Our position in this matter would be strengthened if I were informed that Federal practice at home provides for stipulations of this sort in a warrant for search and arrest. [End paraphrase.]
12.
“Military service, forced loans, et cetera. British subjects in China shall not be subjected to any form of military service or to any tax or levy imposed as a substitute for military service or to military requisitions or contributions of any kind, nor shall they be compelled to subscribe, directly or indirectly, to any public loan or to any other form of forced levy”.
13.
“Treatment of companies. Subject to reciprocity of treatment for Chinese companies, et cetera, in Great Britain, companies, firms, syndicates, and corporations incorporated or organized in accordance with the laws of His Britannic Majesty and operating in China shall, provided they complied with provisions of Chinese law, be entitled (then continue as in rest of article 11 of British draft).”
[Paraphrase.] Comment: The above, I am informed, represents an agreed version in principle, with alterations of phraseology possible, as stated previously. The idea underlying it is that foreign companies in China, having no right unless registered in accordance with Chinese law, are not juristic. I am not acquainted with United States practice regarding the subject of juristic capacities of foreign firms before American courts, but I am told that practices do differ in the several States. [End paraphrase.]
2. [14?]
“Pending cases. Cases terminated in the British courts in China before the coming into force of this treaty shall not be reopened and all final judgments or decisions rendered in such cases shall be executed in any part of China by the Chinese judicial authorities. Cases pending before the British courts in China at the time of the coming into force of this treaty shall continue until judgment is pronounced in the said courts, the jurisdiction of which shall remain in full force for this purpose; and the Chinese authorities undertake to lend any assistance requested by the British authorities in this connection. All such pending cases shall be finally disposed of and wound up within a period of 6 months from the date of the coming into force of this treaty, upon the expiration of which period any cases still pending shall be dismissed or turned over to the Chinese courts for adjudication. It is understood that after the coming into force of the present treaty no actions against British subjects will be entertained by the competent Chinese courts in respect [Page 769] of acts of [sic] which took place prior to that date for which they were not liable according to British law but for which they might be liable according to Chinese law.”
[Paraphrase.] Comment: It will be noted by the Department that this text sets a time limit for the disposal of all pending cases and that there has been added a final sentence to prevent retroactive proceedings against foreigners. [End paraphrase.]
15.
“Nondiscriminatory treatment. Subject to reciprocity of treatment for Chinese citizens in Great Britain, in all matters for which this treaty provides British subjects shall enjoy all exemptions from Chinese jurisdiction which may be enjoyed by the nationals of any other country and shall be subjected to no discriminatory treatment in regard to taxation, judicial, or any other matters for which this treaty provides, as compared with (nationals of China or) the nationals of any other country.”
[Paraphrase.] Comment: I understand that C. T. Wang will accept the foregoing provided the bracketed words “nationals of China or” are deleted. Apparently the Chinese Government does not desire to give foreigners national treatment in these matters. [End paraphrase.]
16.
“British protected persons. Article 16 of the British draft on this subject was acceptable to the Minister for Foreign Affairs”.
17. [Paraphrase.] It will be noted from the above that Lampson has succeeded in making considerable progress in the matter of legal guarantees. The British Minister has informed C. T. Wang that the Chinese attitude regarding these matters will go a long way to determine the British attitude respecting the main principles. Lampson expects us to stand upon open ground if and when there is a satisfactory ironing out of these questions of legal guarantees and that the main fight will concern the reservation of jurisdiction in criminal cases and the reserved areas. Confidentially, he does not agree with his Government regarding the giving up of everything save the reservation of jurisdiction in the Shanghai International Settlement, and I think he has informed his Government to this effect. Lampson favors sticking to what we seem to be ready to stand for, and he agrees with me that if jurisdiction cannot be retained within the entire area of Shanghai (meaning greater Shanghai) there would be little value to retain part. May I have the Department’s comments regarding the above-quoted texts to be used at my discretion when I discuss procedure with Lampson upon his return on March 23 to Nanking. Teichman will return here on March 18 or 19 to resume his discussions with Hsu Mo of the remaining legal guarantees. I shall try to keep the Department promptly informed. [End paraphrase.]