The Secretary of State to the Minister in China (Johnson)

No. 643

Sir: The Department refers to the Legation’s telegram No. 294 of May 23, 1931, and notes with gratification that the Legation’s conversations with the Chinese authorities in regard to the concluding of an arrangement for the adjudication of claims of the nationals of either Government against the other seem likely to produce definite results.

As a basis for further discussions of this matter with the Chinese authorities, there is enclosed for the use of the Legation a draft of a proposed convention between the two Governments. While it is hoped that the Chinese authorities may be willing to accept this draft in its entirety, the Department will be glad to give attentive consideration to any amendments which such authorities may have to offer.

With reference to the three points mentioned in your cable No. 294, you may, in presenting this draft convention for consideration, make the following observations:

The Commission should not prove unduly expensive. The Convention makes no provision for the payment of the claims adjudicated and consequently does not directly obligate the Chinese Government to any further immediate expenditures than those necessary to support the commission. It is believed that all claims could be adjudicated within the two year period provided by the Convention. If other countries ask like treatment they may be expected to accept conventions with similar provisions. The work of the commission in reducing the present outstanding claims against the Chinese Government to a definite amount would seem, in any event, to be an appropriate step in the direction of a sound financial re-organization of the Government and consequently of an improved national credit.
These objections are entirely overcome by the present draft of convention.
This Government believes there are a considerable number of eminent statesmen of non-extraterritorial countries any one of whom China could agree to accept as Presiding Commissioner with absolute confidence that its interests would be fully protected in accordance with the terms and intent of the Convention. This Government is willing to agree in advance that the Presiding Commissioner shall be of non-extraterritorial nationality.

Very truly yours,

Henry L. Stimson
[Page 1043]

Draft of Proposed Convention Between the United States and China for the Examination and Adjudication of Claims of Nationals of Each Country Against the Other*

The United States of America and the Republic of China desiring to settle and adjust amicably all unsettled claims of nationals of each country against the Government of the other have, with that object in view, decided to enter into this Convention and have, therefore, nominated as their Plenipotentiaries for that purpose:

The President of the United States of America,

The President of the National Government of the Republic of China,

Who, having communicated their full powers, found to be in good and due form, have agreed as follows:

Article I

The Commission established under the provisions of this Convention shall pass upon all claims against China of nationals of the United States, whether individuals, partnerships, companies, associations, societies, or corporations, resulting from acts or omissions of the Chinese Government or of agents, officials, or others acting for the Chinese Government, and all claims against the United States of nationals of China, of similar classes and originating under similar circumstances, except that with respect to contract claims against the Government of China this classification shall not include pecuniary obligations of the Chinese Government in respect of claims on which the Chinese Government shall have adopted a definitive adjustment program acceptable to the United States.

Article II

The Commission shall determine, in accordance with the principles of international law, justice and equity, whether awards shall be made on account of the claims asserted and in cases in which such awards are made, it shall determine the amounts thereof including the rate of interest to be allowed on any such adjudicated claim and the time from which the interest shall begin to run.

Article III

Such Commission shall be constituted as follows: one member shall be appointed by the President of the United States; one member shall be appointed by the President of the Chinese Republic; the third [Page 1044] member, who shall preside over the Commission, shall be selected by mutual agreement between the two Governments. If the two Governments shall not agree within six months from the exchange of ratifications of this convention in naming the third Commissioner, he shall be designated by the President of the Permanent Administrative Council of the Permanent Court of Arbitration at The Hague described in Article XLIX of the Convention for the pacific settlement of international disputes concluded at The Hague on October 18, 1907.17 In case of the death, absence or incapacity of any member of the Commission, or in the event of his omitting or ceasing to act as such, the same procedure shall be followed for filling the vacancy as was followed in appointing him.

Each member of the Commission, before entering upon his duties, shall make and subscribe a solemn declaration stating that he will carefully and impartially examine and decide according to the best of his judgment and in accordance with the principles of international law, justice and equity, all claims presented for decision, and such declaration shall be entered upon the record of the proceedings of the Commission.

Article IV

The Commission shall hold a session in China, at a place selected by it, within six months after all members of the Commission have been designated unless, by consent of the two Governments, the Commission shall extend such time until a later date, which date, however, shall not be later than twelve months after all members of the Commission shall have been designated. The Commission may, with the consent of the two Governments, fix the time and place of subsequent sessions.

Article V

The Commission shall not have jurisdiction to hear and decide any claims notice of which shall not have been filed with the respective Governments within one year from the date of the first session of the Commission.

Article VI

The pleadings to be exchanged in preparing claims for the consideration of the Commission shall be as follows:

  • First. A Memorial containing a statement of the facts and evidence upon which the claim is based, a statement of the general principles of international law, justice and eqiiity upon which claimant relies and appropriate citations of authorities to support such principles.
  • Second. The Reply of the respondent Government containing the evidence upon which the defense of the case is made, a statement of the principles relied upon in defense of the case and appropriate citations of authorities supporting such principles. Such Replies shall be filed with the Commission within a period of sixty days following the receipt by the respondent Government of claimant’s Memorial unless such period shall be modified in individual cases by order of the Commission.
  • Third. Legal Briefs to be filed concurrently by both parties within a period of sixty days next after the date of the receipt by the claimant of the Reply of the respondent Government, unless such period shall be modified in particular cases by order of the Commission.

With the Briefs of claimants may be submitted any evidence deemed necessary in response to new issues raised by the respondent Government in its Reply.

The Commission shall formulate rules for the conduct of the trial of the cases after the completion of the written pleadings.

Article VII

The Commission shall cause to be kept an accurate record of the questions and cases submitted for its decision as well as complete and accurate minutes of all its proceedings. To this end each of the Governments may appoint a secretary, and these secretaries shall act together as joint secretaries and shall be subject to the direction of the Commission.

Article VIII

Claims may be presented to the Commission by the Agents of the respective Governments or, whenever the demandant Governments shall so indicate to the Commission and to the respondent Government, by the claimants themselves.

The two Governments, respectively, may designate such agents and counsel as they may desire to represent them in the conduct of the written and oral proceedings.

The Commission shall receive and consider the written memorial and briefs presented by or on behalf of the respective parties in support of or in answer to any claims presented.

The decisions of the Commission shall be accepted as final and binding upon the two Governments. The decision of a majority of the members of the Commission shall be accepted as the decision of the Commission.

The proceedings shall be conducted and recorded in the English language.

[Page 1046]

Article IX

The High Contracting Parties, being desirous of effecting an equitable settlement of the claims of their respective nationals thereby affording them just and adequate compensation for their losses or damages, agree that no claim shall be disallowed or rejected by the Commission by the application of the general principle of international law that the legal remedies afforded by the respondent Government must be exhausted as a condition precedent to the validity or allowance of such claim.

Article X

The assessment of damages by the Commission shall be made in United States currency and, where the damages have been calculated by the claimant in some other currency, the Commission shall, in making its award, convert the amount of the damages into United States currency at the average rate of exchange prevailing on the day or days on which the loss or damage occurred.

Article XI

The Commission shall be bound to hear, examine and decide, within two years from the date of its first meeting, all the claims filed, except however that this time may be extended by the two Governments by exchange of notes to that effect. The Commission shall be bound to decide any claim heard and examined, and to record its decision, within the six months following the conclusion of the hearing of such claim.

Article XII

Each Government shall pay its own expenses, including the compensation of officials and employees appointed by it. All other expenses which by their nature are a charge on the two Governments, including the compensation of the neutral Commissioner and such employees as he may require to assist him in the performance of his duties, shall be borne in equal proportions by the two Governments.

Article XIII

This Convention shall be ratified by the respective Contracting Parties and shall come into force on the date of the exchange of ratifications.

In faith whereof, the above named plenipotentiaries have signed the present Convention and have hereunto affixed their seals.

Done in duplicate at . . . . . this . . . . . day of . . . . . 19 . . .

seal ————
seal ————
  1. The above title is for purposes of reference during negotiations and should be omitted when instrument is signed. [Footnote in the original.]
  2. Foreign Relations, 1907, pt. 2, pp. 1181, 1191.