Foreign Relations of the United States, 1947, The Far East: China, Volume VII

893.51/9–2647

The Secretary of State to the Chinese Ambassador (Koo)

The Secretary of State presents his compliments to His Excellency the Chinese Ambassador and has the honor to refer to the Ambassador’s note of September 26, 1947 with regard to the claim of the Chinese Government against assets in the United States of the Russo-Asiatic Bank.

The Supreme Court of the United States on October 27, 1947,⁸⁹ denied the petition for a review of the determination in the lower Federal courts that the United States Government by virtue of the Litvinov assignment is entitled to the assets of the Russo-Asiatic Bank in the United States to the exclusion of all other claimants, including the Chinese Government. The decision of the Supreme Court expresses the position of the United States Government on the question of international law which the Chinese Government has raised. The position of the United States Government is that a government is under no obligation to condition its recognition of another government upon the preservation of interests in property within the jurisdiction of the recognizing government which a third government claims to have acquired during the period prior to recognition when it was assumed that the laws of the unrecognized government had no extraterritorial effect.

The position of the United States Government is similar to that taken by the Chinese Government in 1924 when the issue was the obligation of the Chinese Government to condition its recognition of the Government of the Union of Soviet Socialist Republics upon the preservation of interests which the United States Government claimed to have acquired in the Chinese Eastern Railway during the period prior to the recognition of the Soviet Government by China when it was assumed that Soviet nationalization laws had no extraterritorial effect. The Chinese Government maintained that it was under no obligation to insist upon the preservation of the interests of the United States. The position of the Chinese Government is expressed in a note of June 16, 1924 from the Chinese Minister of Foreign Affairs to the United States Minister in China,⁹⁰ in an aide-mémoire of June 30, 1924⁹¹ from the Chinese Legation in Washington to the Department of State, and in the Sino-Soviet agreement of May 31, 1924⁹² by the terms of which China acknowledged Soviet ownership of the Chinese Eastern Railway retroactively to 1917 and the Soviet Government agreed to pay only those claims which arose prior to 1917.

The principle for which the Chinese Government now contends would require a government to place a condition upon its grant of recognition which is almost certain to be rejected by the government seeking recognition. The act of recognition is hardly compatible with an insistence that protection be extended to interests acquired prior to recognition on the basis of the assumed invalidity of the laws of the recognized government. On the contrary, it is believed to be a principle of international law that when a government which originates in revolution or revolt is recognized as the de jure government of the country in which it is established, such recognition is retroactive in effect and validates all the actions and conduct of the government so recognized from the commencement of its existence.

Washington, January 19, 1948.

89. Steingut et al, Receivers, v. Guaranty Trust Company et al, 332 U. S. Reports 807.
90. See telegram No. 184, June 17, 1924, 4 p.m., from the Minister in China (Schurraan), Foreign Relations, 1924, vol. i, p. 494.
91. Ibid., p. 503.
92. Signed at Peking, ibid., p. 495; or League of Nations Treaty Series, vol. xxxvii, p. 176.