711.4227/12–549: Telegram
The Secretary of State to the Embassy in Canada
night letter
180. Re tel conversations and Can Air Transport Board Order No. 530 to Colonial Airlines Emb should send note to Min External Affairs in substance as follows:
Order, No. 530 of Air Transport Board, issued December 1, 1949, after referring to Air Transport Agreement between Government of United States and Government of Canada which came into force on February 19, 1945, the amendment thereto which became effective April 12, 1947, and Air Transport Agreement between the two governments which became effective on June 4, 1949, alleges that the United States air carrier, Colonial Airlines, Inc., has by its acts prevented the granting of operating authority to Trans-Canada Air Lines to enable it to exercise privileges on the route from Montreal to New York. Therefore the order requires Colonial Airlines to appear before the Board on December 12, 1949 to show cause why its license No. ATB 9–46N should not be suspended.
Inasmuch as Government of United States does not believe any provision of Air Transport Agreement of 1949 contemplates suspension of a license, provided for under that agreement, for reasons given in Order No.530, there appears to exist a difference between the two governments with regard to interpretation of certain sections of the Agreement. In this regard reference is made to statements made in Order No. 530 that indicate a belief on part of Government of Canada that Section V of Annex of the air transport agreement has not been observed. Section V provides that there shall be fair and equal opportunity for airlines of contracting parties to operate between their respective territories the international air services covered by the Agreement. The Government of the United States believes that any action by the Goverment of Canada as a result of a failure of the United States to provide the opportunity contemplated by Section V should be taken after consultation with this Government. At same time Government of United States believes that there has been no violation of this Section. Section V is qualified by rest of Agreement, including Article 3 which contains proviso that the airline or airlines designated to serve the routes provided for in the Agreement “may be required to [Page 412] qualify before the competent aeronautical authorities of the contracting party granting the rights under the laws and regulations normally applied by those authorities before being permitted to engage in the operations contemplated by this Agreement.” Inasmuch as Trans-Canada Air Lines has made application to the Civil Aeronautics Board of the United States for a foreign air carrier permit and has been receiving a hearing in accordance with the laws and regulations normally applied by the Civil Aeronautics Board and inasmuch as that hearing has not yet been completed, notwithstanding the efforts of the Civil Aeronautics Board to Conduct such hearing as expeditiously as possible, Trans-Canada has not, in the view of the United States, been denied the fair and equal opportunity contemplated in Section V of the Annex, although the procedural steps required in connection with qualification under Article 3 of the Agreement have not yet been concluded.
The Order states that Colonial Airlines has by its actions in the courts of the United States prevented the granting of the operating authority required to enable Trans-Canada Air Lines to “exercise its privileges under the said Agreement.” While it is agreed that the Agreement grants the route applied for by Trans-Canada Air Lines to the Government of Canada, it is not agreed-that the Agreement grants the privilege of exercising that right to any specific carrier. Trans-Canada Air Lines can therefore have no privilege to operate the route until it has completed the steps necessary for qualification before the competent aeronautical authorities of the United States as provided by Article 3 as above noted.
Colonial Airlines in bringing an action before the courts of the United States to determine the validity of the Air Transport Agreement of June 1949 between the United States and Canada and the constitutionality of certain sections of the United States Civil Aeronautics Act of 1938 is exercising a right which it has under the laws and Constitution of the United States. It is believed that the Canadian Government, which shares with the United States a common heritage of similar basic laws, can appreciate the right of this citizen of the United States thus to defend in the courts rights which it believes have been threatened. It is also believed that the Canadian Government understands the legal procedures of the courts of the United States and will agree with the United States Government that neither the procedures of the courts nor the right of a citizen to invoke such procedures should be challenged. At the same time the Government of the United States wishes to assure the Government of Canada that in connection with the legal actions which have been brought by Colonial Airlines the Government of the United States is taking every [Page 413] step legally available to it to ensure that the prosecution of the case is as expeditious as possible.
While the Canadian Government no doubt recognizes the right of a United States citizen to appeal to the United States courts and while it should be recognized that the bilateral Air Transport Agreement between the United States and Canada is subject to such laws and constitutional provisions as are applicable to bringing of such actions in courts of United States, nevertheless the Government of the United States understands the desire of Government of Canada to see full implementation of all portions of the bilateral Air Transport Agreement accomplished as quickly as possible. If the Government of Canada believes that there has in fact been undue delay in this implementation, the Government of the United States believes that the Government of Canada should approach this Government and not take action against a citizen of the United States. Therefore, the Government of the United States will welcome an opportunity to discuss these matters with representatives of the Canadian Government.
In connection with the court action that has been taken in relation to these matters it should be pointed out that although the Civil Aeronautics Board has been enjoined from issuing a recommendation to the President of the United States with regard to the application of Trans-Canada Air Lines to operate the route between Montreal and New York, such injunction has not in practical effect prevented the Civil Aeronautics Board from proceeding with its hearing in regard to the application. As has been noted above such hearing has proceeded as expeditiously as possible. The Board could not in any event formulate its recommendations and forward them to the President before completion of the hearing procedure.
In Order No. 530 it is stated that it would appear to be inequitable to permit Colonial Airlines to continue to enjoy the privileges granted to it by License No. ATB 9–46N while at the same time Trans-Canada Air Lines has been prevented from “enjoying the privileges to which it is equally entitled under the same agreement.” In view of the fact that Trans-Canada Air Lines is being given full opportunity to qualify under the normal laws and regulations of the United States in accordance with Article 3 of the Air Transport Agreement of June 4, 1949 and in view of the provisions of Article 9 of that Agreement which state that existing rights and privileges relating to air transport services which may have been granted previously by either of the contracting parties to an airline of the other contracting party shall continue in force in accordance with the terms under which such rights and privileges were granted, this Government cannot agree with the statement of the Air Transport Board that it would [Page 414] appear to be inequitable to permit Colonial Airlines to continue to enjoy the privileges granted to it by license No. ATB 9–46N. In addition, in view of the statements made above with regard to the proceedings now pending before the Civil Aeronautics Board and the appplication of the laws of the United States to matters included in the bilateral Air Transport Agreement, this Government cannot agree with the conclusion of the Air Transport Board that the actions of the Colonial Airlines “have prevented and continue to prevent Trans-Canada Air Lines from enjoying the privileges to which it is equally entitled under the same Agreement.”
In view of the apparent differences between the Government of the United States and the Government of Canada in interpreting the Air Transport Agreement, it is requested that arrangements be made for consultation between the representatives of the two governments in order to compose these differences. The Government of the United States hopes that the Government of Canada may find it possible, pending the conclusion of such consultation, to avoid taking action to suspend the license of Colonial Airlines which this Government believes would be inconsistent with the terms of the Agreement.1
In presenting above note Emb should also advise Cand Govt that we feel substance of note must be made public immediately and request comment.
- The Ambassador In Canada, Laurence A. Steinhardt, transcribed the above message in the form of Note No. 294 dated December 6, 1949, and handed it to Secretary of State for External Affairs Lester Pearson on that date. In his telegram 822, December 7, not printed, Steinhardt described his conversation on that occasion. He informed the Department that Pearson, though amenable to the suggestion of inter-governmental consultation before taking any action on suspending the license of Colonial Airlines, wished to study the note and discuss it with the Prime Minister, Louis St Laurent, before committing himself on the timing of such talks (711.4227/12–749).↩