341.1154L58/194
The Secretary of State to the Chargé in Great Britain (Atherton)
Sir: Referring to the correspondence which has heretofore passed between the Department and the Embassy with respect to the claims against Great Britain of the American stockholders of the Armes Automatiques Lewis,7 you are now instructed to address a note to the Foreign Office, which, after appropriate introductory remarks, should state:
“My Government has continued to give careful consideration to the matter of this claim notwithstanding the apparent disinclination of His Majesty’s Government to accord to it that consideration which it appears to merit, not alone because of the financial importance of the claim but also because of the peculiar circumstances out of which it arose.
“In this connection the following, which are among the more important of those peculiar circumstances, are worthy of note:
- “First, Before the developments out of which this claim arose the Armes Automatiques Lewis had, by virtue of certain contracts with the Birmingham Small Arms Company of Birmingham, England, granted the latter the exclusive right, in Europe, to manufacture the Lewis gun which grant was protected by a considerable number of patents registered in most of the countries of Europe.
- “Second, In consideration for that grant, the Company had, of course, acquired certain other definite contract rights, among which was the exclusive right of sale of this product of the Birmingham Small Arms Company.
- “Third, The exclusive right to receive and to sell the total output of the product was, at the beginning of the World War, destroyed by the British Government by ordering the Birmingham Small Arms Company to deliver its entire output of these guns, not to Armes Automatiques Lewis in accordance with its contract with the Birmingham Small Arms Company, but to the British Government. That is to say, the existing stock of guns and the future output were commandeered.
- “Fourth, From that date forward the Armes Automatiques Lewis was not at liberty to act or contract with respect to their patent, contract and other rights as free agents unaffected by a certain degree of influence or coercion on the part of the British authorities.
- Fifth, In the atmosphere of such influence or coercion certain agreements were subsequently concluded between the Armes Automatiques Lewis, on the one side, and the British Government on the other side which agreements, obviously, did not express clearly the full intent and understanding of both parties.
- “Sixth, Those agreements apparently left in doubt, through a peculiar circumstance, the most important element thereof, namely the consideration which the Armes Automatiques Lewis was to receive for the rights surrendered to the British Government. That is to say, the contracts did not clearly state whether Armes Automatiques Lewis was to receive, in consideration for the delivery of guns to the British Government the net amounts stipulated by the agreements to be paid by that Government, or whether, in fact, as subsequently contended by the British Government, those amounts were to become merely bases of calculation whereupon the British Government should determine other amounts to be deducted therefrom, in the form of war contributions, before the residue was to be paid to the company.
- “Seventh, The British Government, resolving all doubts in this connection in its own favor, appropriated to its own purposes, in the form of such war contributions, large sums deducted from the amounts stipulated in the agreements to be paid by it, which sums, under another interpretation of the circumstances of the contracts, would belong to the Armes Automatiques Lewis.
- “Eighth, This action of the British Government placed the claimant Company in a position in which it must forego what it considered to be its rights in the matter or institute litigation for the purpose of recovering the money thus appropriated.
- “Ninth, The Company therefore filed a Petition of Right asking a judicial determination of the questions involved. The resulting judgment of the court in this very important matter was, however, based upon a point which did not go to the fundamentals of the case, and upon which there was no dispute, and was rendered by a single judge in such a manner as to indicate, by the terms of the judgment itself, that it was hastily, if not casually, considered. In that judgment also all doubts appear again to have been resolved in favor of the Government of which the court was itself a part. A judicial review of that decision appears to have been impossible under existing law.
- “Tenth, The Company then brought the case before the Special Commissioners of Inland Revenue with a view to contesting the methods employed in computing such war contributions, even if they were proper in principle, and with a view also to carrying the issue to the court of last resort if necessary to have the rights involved definitely determined. Although the Special Commissioners again resolved all doubts and rendered a decision in favor of the Government of which they formed a part, they declined to make their decision “final”, as was necessary to constitute it the proper basis for an appeal to the courts, unless the claimants should, in advance, enter into certain stipulations by which their rights would at least be circumscribed, in the event that the appellate courts should subsequently determine the issues in favor of the claimants instead of the British Government. That the claimants steadfastly declined to do on the theory that full and impartial justice could not be brought about in that manner.
- “Eleventh, With matters resting in that status, certain officers of the British Government entered into what purported to be a tentative compromise [Page 804] agreement with certain allegedly unauthorized officers of the company and, in pursuance of such tentative understanding, immediately transmitted to the Company a sum of money representing a small proportion of the amount deducted and appropriated. His Majesty’s Government now contends that the entire matter is put beyond the realm of discussion by that supposed compromise arrangement notwithstanding the fact that its legality has been the subject of serious doubt and has never been judicially determined. It has been contended that that supposed compromise arrangement was neither legally authorized in advance nor subsequently accepted in satisfaction of the obligation of the British Government.
- “Twelfth, His Majesty’s Government have in the past advanced the contention that my Government is precluded from interesting itself in this claim because of the Belgian nationality of the Armes Automatiques Lewis. It will not be overlooked, however, that a substantial proportion of the share capital of the Armes Automatiques Lewis was from the inception of this claim and still is American. It is not, therefore, believed that His Majesty’s Government will desire to depart, in this respect, from the very sound position adopted by it in the well known Delagoa Bay case. (Moore’s Arbitrations, pp. 1865 et seq.)
“It is the belief of my Government that the foregoing very general outline of some of the most important phases of the case, will service [serve?] to indicate to His Majesty’s Government why the manner of handling this matter, from its inception, appears to the United States to have been at variance in many respects with that high standard of impartial justice, and fair dealing which so uniformly characterizes the conduct of the British authorities in their relations with foreign nationals.
“It is not the purpose of my Government at this time to undertake to demonstrate that an international injustice has been perpetrated by the injury to American citizens whose rights are involved and wherein that injustice lies. The facts and law of the case are complicated and it is not believed that any good purpose would be served by a complete development thereof so long as the British Government remains of a disposition to reject the claim, in an ex parte manner.
“My Government believes, however, that His Majesty’s Government will agree that the circumstances of the case are of such a unique character and that the rights involved are of such importance as to warrant the expectation that His Majesty’s Government will, as a matter of simple justice, agree that the issues involved shall be developed in such a systematic and logical manner as to enable each of the Governments to understand and appreciate fully the viewpoint of the other in order that the differences, if any then remain, may be resolved by mutual agreement or, if that should be impossible, by the impartial decision of an arbiter to be mutually agreed upon in advance.
“To that end my Government proposes, as probably the most logical, most reasonable, most economical and, on the whole, the most satisfactory manner of disposing of the case the following procedure:
“The Government of the United States will prepare and transmit to the British Government a Memorial of claim in which the factual background of the case, as understood by the United States, will be fully developed and to which Memorial will be attached the pertinent evidence in support thereof.
[Page 805]“Two months after the receipt of such Memorial His Majesty’s Government will transmit to the United States its Answer thereto, in which it will set forth fully the factual basis upon which it rests its rejection of the claim, and to which will be attached any additional evidence considered material to the case.
“Three months after the receipt of such Answer, the United States will transmit to His Majesty’s Government a brief of law in which will be fully developed, on the basis of the facts then shown by the evidence, the law upon which the United States bases its case. With such brief may be attached only such evidence as goes to rebut any new evidence filed with the Answer.
“Three months after the receipt of the brief of the United States the British Government will transmit its final brief in reply, to which the United States may within one month file a counter brief, if deemed advisable.
“Upon the basis of these pleadings the two Governments will undertake to arrive at a mutual understanding with respect to the disposition of the matter. If such efforts should prove unsuccessful over a period of three months from the date of filing the last brief, the pleadings will then be referred for decision, which shall be final and binding upon the two parties, to an arbiter to be now agreed upon. The Government of the United States would be willing to consider the matter of referring the case to the Permanent Court of International Justice.
“My Government believes that His Majesty’s Government will welcome this method of disposing of this important and difficult matter in such a manner as will take full account of the rights of all parties concerned. To reject the proposal would be to refuse to the interested parties apparently the only possible opportunity to have their rights determined in an entirely impartial manner. My Government is confident therefore that His Majesty’s Government will find no just reason for refusing this proposal.”
You will please supplement the foregoing note by oral representations in which you will impress upon the Foreign Office the fact that the Department feels that this represents a very reasonable and proper manner of disposing of this troublesome case without the expense and inconvenience of formal arbitration.
You will please press for an acceptance of the above proposal and cable the Department the substance of the reply of the Foreign Office as soon as received.
Very truly yours,
- Previous correspondence not printed.↩