Foreign Relations of the United States, 1946, The Far East, Volume VIII

740.00119 PW/3–446

The Secretary of State to the Chargé in the United Kingdom (Gallman)

secret
No. 6475

Washington, March 4, 1946.

The Secretary of State requests the officer in charge to discuss the following matter with the Foreign Office:

The United States Government is extremely anxious to commence proceedings for the settlement of Allied claims against Siam in order to secure prompt payment of proper American claims and to remove the uncertainty created by the existence of indefinite and unresolved claims which it considers detrimental to the rice program and the general restoration of the Siamese economy in which both the British and American Governments are vitally interested.

It is the understanding of the Department (Department aide-mémoire. November 29, 1945, British Embassy aide-mémoire, December 10, 1945, Department telegram 10783, December 13, 1945,¹⁵ paragraph 3 of proposed teletype conversation) that there is agreement between the British and American Governments that an Allied Claims Commission will be established on which this Government and the British Government will have equal voice. The function of the Commission is to pass on all Allied claims and to determine the method of settlement of such claims. The Department understands that the American and British Governments will consult as to the effect on the Siamese economy of the payment of such Allied claims and of the free contribution of rice required by the Singapore Agreement, and that if the total of such claims and the effect of such contribution is found to be overburdensome on the Siamese economy, there will be a reduction in the required rice contribution. The exact scope and functions of the Commission remain to be determined.

In order to implement the foregoing understanding the Department believes that it would be desirable to have agreement between the British and American Governments on the procedures to be followed. It offers, therefore, the following suggestions with which it hopes British views will be in accord:

1. The Department believes the objectives of the Claims Commission should be:

(a) to secure as rapidly as possible a complete statement of all Allied claims against Siam.

(b) to reach agreement on the categories of claims which are considered proper and the general principles to be applied to the evaluation of claims.

(c) to determine the methods of settling such claims.

2. It is suggested that the Commission should consist of representatives of the countries against which Siam declared war and the countries which declared war on Siam or which consider themselves in a state of war with Siam. Such countries would be UK, US, Australia, New Zealand, South Africa and France. It is thought that New Zealand and South Africa would not be interested in membership on the Commission and will submit any claims which they may have through the UK or Australia. Although it is aware that the membership of the Claims Commission was originally to be limited to Allied states, the Department believes that the inclusion of Siam on the Commission would facilitate its proceedings, expedite its work, and strengthen the Allied position in Southeast Asia.

3. A major objective of this Government is to secure a uniform policy regarding claims, so that those which, for example, the British and American Governments might consider improper would not be presented by other governments and paid by the Siamese. To achieve uniformity of treatment, it is thought all Allied claims should, in the first instance, be submitted to the Commission which could readily agree that certain categories of claims, such as loss or damage to tangible property, would be considered proper and that certain other categories, as, for example, hypothetical claims like loss of profits or goodwill would readily be considered improper. In-between categories might present some difficulties but the Department believes that agreement could be achieved with regard to those through preliminary oral conversations between the British and American Governments.

4. Although the Department would expect the general principles applicable to the evaluation of claims to be determined by the Commission, it is not suggested that the Commission itself should determine the exact amount of compensation to be paid for damage or losses. It believes that it would be preferable for each government concerned to determine directly with the Siamese Government the amount of compensation for each claim which the Commission approves as appropriate for presentation. The total compensation so agreed upon should be reported to the Commission.

5. The Department does not suggest that the Commission should pass on British claims under Article 2 of the Singapore Agreement but it would hope that the British Government would apply the same principles in connection with such claims as are adopted by the Claims Commission and that the total amount paid by Siam pursuant to that Article would be reported to the Commission for its information.

6. In order to ascertain the total compensation to be paid by Siam and to ensure uniform treatment for all claims, the Department believes that it might be advisable when the Commission is established for the Siamese Government to inform other Allied Governments with possible claims, such as China and the Netherlands, and possibly also such non-Allied Governments as Denmark and Sweden, that it would pay compensation for the damage or losses sustained by them in accordance with the same principles and procedures as are adopted by the Commission for damage or losses sustained by countries represented on the Commission and to notify the Commission of the amount of claims submitted by such Governments and the compensation agreed to paid in settlement of claims falling within categories approved as appropriate by the Commission.

7. The Department hopes that the preliminary filing of all claims may disclose that payment of compensation for all Allied claims will be within Siamese capacity to pay. When the total compensation agreed upon in accordance with paragraphs 4, 5 and 6 above have been reported to the Commission, the United States and the United Kingdom will be in a position to consult on the question of whether such payments together with the required rice contribution will overburden the Siamese economy. Since it is the understanding of the Department that any adjustment of the total burden would be by a reduction in the rice contribution rather than by a scaling down of approved claims, it should be practicable to arrange immediate payment in full of the compensation agreed upon for claims without a final statement of the total of all approved claims.

8. There will be numerous other problems to resolve, such as which categories of claims should be payable in foreign exchange and which in baht, and whether claims are to be paid to the Government concerned or directly to individual claimants.

It is the view of the Department that in so far as possible, settlement of claims should be made in Siamese currency and the Department noted with approval in the British aide-mémoire of November 12, 1945¹⁶ the statement in paragraph 4 relative to British claims that “compensation will for the most part fall to be met in Siamese currency”. The Department believes also that it would be desirable to have payments made by the Siamese Government directly to the claimants concerned.

The Department hopes that the British are in accord with the major objectives set forth in numbered paragraph 1 above and are agreeable to the procedure suggested. It suggests that if the major premises are acceptable, informal agreement on the details can be worked out in oral conversations and submitted to both Governments for approval.

The Department desires again to stress the importance which it attaches to prompt action looking to a settlement of Allied claims against Siam.

15. Foreign Relations, 1945, vol. vi, pp. 1377, 1385, and 1391, respectively.
16. Foreign Relations, 1945, vol. vi, p. 1367.