793.003/3–1546
The Counselor of Embassy in China (Smyth) to the Consul General at Shanghai (Josselyn)19
Sir: The receipt is acknowledged of your despatch no. 21 dated February 9, 194617 regarding the construction of Article IV of the Sino-American Treaty Relinquishing Extraterritorial Rights.
The construction of a treaty is a matter of law for the judicial, not the executive, authorities to determine, and the Embassy is, therefore, only able to express its informal opinion on this matter for your [Page 1324] confidential information, without prejudice to the views of the Department of State and the decisions of American and Chinese courts.
In answer to your first question as to whether or not the restrictions on alienation contained in Article IV of the treaty apply to new deeds of ownership issued in exchange for existing titles, a correct answer would appear to be predicated upon the meaning of the words “prior rights” as they are used in the last line of paragraph two of Article IV of the treaty. The general purpose of Article IV is to assure that American rights and titles to real property in China existing at the time of the conclusion of the treaty would be indefeasible, subject to the following qualifications: (1) that such rights and titles should be subject to Chinese laws concerning taxation, national defense, and the right of eminent domain; (2) that such rights or titles should not be alienated to the government or nationals (including corporations or associations) of any third country without the consent of the Government of China; and (3) that such rights and titles should be fully protected by new replacement deeds issued by the Chinese Government. In other words, rights and titles existing at the time of the conclusion of the 1943 treaty continue in force with the qualifications above mentioned. The words “prior rights” con-textually are understood to refer to the rights in existence upon the date of the issuance of the new deeds. Such a construction is confirmed when we consider that the “prior rights” which were in existence before the treaty was concluded have either been affirmed, extinguished or qualified by Article IV, and that the only rights now in existence are those specified in the treaty itself.
It follows, therefore, as a logical conclusion that the qualifications regarding taxation, national defense, eminent domain and the limitations on the right of alienation apply to new deeds of ownership issued in exchange for existing titles. The Chinese Government has declared in the supplementary exchange of notes to the treaty that the right of alienation of existing rights or titles to real property will be applied in an equitable manner. This means that, unless there is some good reason, the Chinese Government should not refuse American nationals, associations, or corporations the right and privilege of transferring existing titles to any person, corporation or government.
In answer to your second question, as to whether or not American nationals can acquire real property in China, it is pointed out that Article III of the Sino-American Commercial Treaty (1903)21 contains a most-favored-nation clause regarding persons and property. It is doubtful whether or not this most-favored-nation clause is still in force because the Sino-American Treaty (1943) contains provisions [Page 1325] which might be used to support two different views. Article VII, paragraph two, of the treaty (1943) seems to infer that Article III of the Sino-American Commercial Treaty (1903) might possibly still be in force, while the supplementary exchange of notes relinquishes rights in treaty ports which would seem to infer that Article III of the Sino-American treaty (1903) is no longer in force. Paragraph three of the Annex to the Sino-British Treaty Relinquishing Extraterritorial Rights (1943),22 inter alia, provides that the nationals of each High Contracting Party have the right to acquire and hold real estate in the territory of the other High Contracting Party according to the laws of that High Contracting Party. The Embassy expresses no opinion as to whether or not the treaties now in force grant to American nationals the right to acquire and hold property in China.
In answer to your third question as to whether or not the new commercial treaty will contain provisions regarding land, the Embassy wishes to point out that this treaty is now under negotiation. In view of the confidential character of the negotiations, the Embassy is not now in a position to give the American Association any information on the projected provisions of the new treaty.
Very truly yours,
- Copy transmitted to the Department in the Embassy’s despatch No. 1204, March 15; received April 2.↩
- Not printed.↩
- Signed October 8, 1903, Foreign Relations, 1903, p. 91.↩
- Signed January 11, 1943, British and Foreign State Papers, vol. 145, p. 129.↩