793.003/562: Telegram
The Acting Secretary of State to the Consul General at Nanking (Peck)
15. For Minister Johnson: Your March 17, noon, from Nanking.
(1) You may use at your discretion the following comments by the Department on the tentative texts which you quoted in your telegram.
(2) Legal counsellors. The Department believes that, in addition to the provision for legal counsellors being deputed by the Ministry of Justice to serve during hearings of cases, it is desirable to have a provision for these counsellors to be deputed by the said Ministry “either on its own initiative or upon request of the parties to such actions.”
As to the provision which empowers the Ministry of Justice to take action such as may be required as a result of recommendations made by the legal counsellors, phraseology somewhat as follows is suggested by the Department: “until these observations have been considered by the Ministry of Justice, which the Chinese Government undertakes shall be empowered to take such action as the case may require.”
Regarding the Chinese Government’s desire for a Chinese legal counsellor as a liaison officer between the Chinese judiciary and the foreign counsellors, the Department does not perceive any objection to the appointment of such a counsellor for that purpose on condition his function is understood to be primarily one of liaison.
For the moment the Department offers no other comment on the text as quoted in your telegram of the provisions regarding legal counsellors. It must be remembered, however, that no understanding has been reached yet with the Chinese as to the three major issues, that is, co-judges, criminal jurisdiction, and excluded areas. As reported, the text contemplates apparently the giving up of the principle of co-judges although no agreement has been obtained from the Chinese to exclude certain areas. Therefore, the Department believes it to be highly desirable for all the provisions regarding legal counsellors to [Page 773] be kept upon a strictly “noncommitment” basis for the purpose of avoiding the danger mentioned in paragraph (3) of the Department’s 12, March 14, 4 p.m., to Nanking.
(3) Lawyers and interpreters. It is agreed by the Department that there should be a provision entitling Americans to employ any foreign attorney, irrespective of nationality, whom the Chinese Government has recognized for practice before the Chinese courts.
(4) Special Chambers. For the convenience of the large number of foreigners, including Americans, who reside in Peiping, the Department would like to see this city added to the list of places where Special Chambers are to be established.
The Department would not object to this article being placed in an annex to the treaty rather than in the treaty itself.
(5) Taxation. The Department perceives no objection to having the provisions of the October 28 proposals, sections (e) and (f) of article 3 placed in either the preamble or an annex, or an exchange of notes, or the treaty article enumerating the rights of Americans in parts of China where there is a complete surrender of extraterritorial rights. In case of continued objection in this connection by the Chinese, because of such a provision being derogatory to the dignity of their courts, the wording might be altered to require “the Government of China” instead of “the Chinese courts” rendering protection and security to American persons and property in China, this being the customary treaty form of this provision.
(6) Arbitration. The Department concurs in the view that the ambiguous phrase “in accordance with Chinese law” should be clarified. It is believed also that the principle of rejecting awards because they are contrary to the general principles of law may be interpreted so broadly as to defeat the purpose of having this clause included in the treaty. The Department suggests as a possible solution to these two questions that the phrase “in accordance with Chinese law” be deleted and that the last part of this article be worded as follows: “unless the award is contrary to public order or good morals or is based on grounds which are contrary to specific provisions of Chinese law”.
(7) Rights in immovable property and expropriation. As to the expropriation of property, it is the feeling of the Department that agreement is imperative upon some formula providing for compensation, no matter whether Chinese law so provides or not in the case of Chinese citizens. The Department believes that, in view of the complex conditions in China, the plea of “grave emergencies” will occur with irritating frequency if there is no provision for payment of compensation. By reference to the Extraterritoriality Commission’s 1926 report, paragraph 106, it will be seen that in 1915 China had a law which provided for compensation, even if this law was not being enforced. [Page 774] The Commission, moreover, recommended, inter alia, that China promulgate a land expropriation law. After a hasty study of United States treaty relations, the Department believes American citizens to be entitled everywhere to compensation upon the expropriation of their property by foreign governments, whether resulting from laws in force in foreign countries with which the United States has treaties or resulting from specific treaty provision. As to the latter, since 1920 the United States has negotiated with Germany, Estonia, Hungary, Honduras, Latvia, and El Salvador treaties containing the following provision: “their property shall not be taken without due process of law and without payment of just compensation”. The provisions of article 14 of the United States Constitution assure Chinese in the United States that they cannot be deprived of property without due process of law, and this includes compensation.
The Department believes, regarding the provision which invalidates rights in immovable property on “legal grounds as a result of a decision rendered by a modern Chinese court”, that it would be desirable if possible to add a provision in the following sense: “in reaching their decisions these courts shall take into consideration the treaty provisions and laws, customs and practices in various parts of China which existed at the time when the property rights were acquired”.
(8) Immunities of premises, etc. Regarding the form of warrants for arrest or search, for Federal practice in the United States, see “the code of laws of the United States of America in force December 6, 1926” (a copy of which is known to be at the Shanghai Consulate General and another is believed to be at Nanking), paragraph 602, page 507, and paragraph 616, page 508.
(9) Treatment of companies. Although there prevails in the United States among the States thereof the general rule that by “the law of comity among nations, a corporation created by one sovereign is permitted to make contracts in another and to sue and be sued in its courts”, alien corporations must comply with both Federal and state laws, the latter varying in a number of respects, before these corporations have the right to carry on business with the same rights and privileges as domestic corporations. No objection is seen by the Department to the text of this article as telegraphed, except that as a result of the phrase “subject to reciprocity of treatment for Chinese companies”, some restrictions respecting matters in which the United States may be unable, under existing or future laws, to extend reciprocal treatment, may be imposed upon American companies which do business in China. See Moore’s Digest, volume 4, page 19.
(10) Pending cases. A provision is noted in the second sentence of the telegraphed text that pending cases “shall continue until judgment is pronounced”, while there is a provision in the third sentence [Page 775] that such cases “shall be finally disposed of and wound up within a period of 6 months”. It would seem that these two provisions may be subjected to conflicting interpretations, and the Department feels there should be a deletion of the provision in the third sentence requiring that all pending cases be wound up within a specified time. Unnecessary hardships might be imposed upon litigants by a time limit to wind up pending cases, especially by a short period of 6 months. Should the Chinese Government entertain a fear lest the docket be “padded”, it might be given an assurance on this point through agreement for the submission of a list of pending cases at the time jurisdiction is transferred.
(11) Nondiscriminatory treatment. For the purpose of the Sino-American negotiations, it is, in the Department’s opinion, practically imperative to avoid using in this article the phrase “subject to reciprocity of treatment for China” because it will be impossible, on account of some American state laws, to extend reciprocal treatment regarding rights in immovable property and perhaps regarding other matters, one such having been mentioned above in connection with the rights and privileges of alien juridical persons. Although the British cannot well be asked to eliminate this phrase, if the British Government is in fact prepared to extend reciprocity of treatment in all the matters the proposed treaty covers, the adoption in the Sino-British text of this phrase will make our negotiations more difficult. The phraseology appearing in the American draft of January 19 is preferred by the Department. Should the Chinese insist upon reciprocity of treatment, this point probably will require some very delicate discussion pending agreement upon a satisfactory formula.
- Quotations not paraphrased.↩