Foreign Relations of the United States, 1955–1957, Arab-Israeli Dispute, 1957, Volume XVII

255. Telegram From the Department of State to the Embassy in Egypt¹

Washington, March 29, 1957—7:30 p.m.

3238. Following are US views re Egyptian draft declaration on Suez Canal handed you by Fawzi on March 26.² Separate message will be sent tomorrow, instructing you re approach to GOE. Meanwhile ensure that GOE understands specific comments will be made promptly.

DRAFT MEMORANDUM DECLARATION

The GOE, desiring to give effect to the six principles approved by the SC of the UN, with the concurrence of Egypt, on October 13, 1956, makes the following Declaration:

4. 1. Re-affirmation of Convention

It remains the unaltered policy and firm purpose of theThe Government of Egypt to will respect the terms and the spirit of the Constantinople Convention of 1888 and the rights and obligations arising therefrom.

5.2. Observance of the Convention and of the Charter of the UN. While reaffirming their determination to respect the terms and the spirit of the Constantinople Convention of 1888, and to abide by the Charter and the principles and purposes of the UN, the Government of Egypt are confident that the other signatories of the said Convention and all others concerned will be guided by the same resolve.

6.3. Disputes, disagreements or differences arising out of the Convention or this Declaration.

(A) Disputes or disagreements arising between the parties toin respect of the Constantinople Convention of 1888 or this Declaration and in respect of it shall be settled in accordance with the Charter of the UN.

(B) Differences arising between the parties to the said Convention in respect of the interpretation or application of itsthe provisions of the Convention or this Declaration, if not otherwise resolved, will be referred to the International Court of Justice under Article 36 of its Statute, or, by agreement, to an appropriate organ of the UN. and Egypt and the other parties subscribing to this Declaration accept for this purpose the jurisdiction of the Court.

7. 4. Freedom of navigation, tolls and development of the Canal. The Government of Egypt, more particularly, undertakes—

(A) To afford and maintain free and uninterrupted navigation for all nations in accordance with the Constantinople Convention of 1888;

(B) That tolls shall continue to be levied in accordance with the last agreement concluded on the 28th of April 1936, between the Government of Egypt and the Suez Canal Maritime Company; and that any increase above in the current rate of tolls prevailing on July 26, 1956 within any 12 months, if they take place, shall be limited to 1 percent, and any increase beyond that level to be the result of negotiations agreed between Egypt and the users (the Representation of which shall be determined by the United Nations) or, failing agreement, by arbitration according to the procedures set forth in paragraph 8.

(C) That the Canal isshall be maintained and developed in accordance with the progressive requirements of modern navigation and that such maintenance and development shall include the 8th and 9th programs of the Suez Canal Maritime Company, with and that such improvements to the Canal will be made as are considered necessary by Egypt and the Representation of the users.

8. 5. Operation and management.

The Canal will be operated and managed by the autonomous Suez Canal Authority established by the Government of Egypt on the 26th of July, 1956. The Government of Egypt are looking forward with confidence to continued cooperation with the nations of the world in advancing the usefulness of the Canal.

9. 6. Financial arrangements.

(A) Tolls shall be payable in advance to the account of the Suez Canal Authority at any bank as may be authorized by it. In pursuance of this, the Suez Canal Authority has authorized the National Bank of Egypt and the Bank of International Settlement to accept on its behalf payment of the Canal tolls.

(B) The Suez Canal Authority shall pay to the Government of Egypt 5 percent of all the gross receipts as royalty.

(C) The Government of Egypt have decided to will establish a Suez Canal Capital Land Development Fund⁴ into which shall be paid 25 percent of all gross receipts. This fund will be deposited in the Bank of International Settlement, will assure that there shall be available to the Government of Egypt adequate resources and will be withdrawn for expenditures to meet the needs of development of the Canal and capital expenditure for the fulfillment of the responsibilities theywhich the Government of Egypt have assumed and are fully determined to discharge.

10. 7. Canal Code.

The regulations governing the Canal, including the details of its operation, are embodied in the Canal Code which is the law of the Canal and which shall not be altered without the agreement of the Representation of the users, or, failing agreement, by arbitration according to the procedures set forth in paragraph 8.

11. 8. Discrimination and complaints arising out of the Canal Code.

(A) In pursuance of the principles laid down in the Constantinople Convention of 1888, the Suez Canal Authority, by the terms of its statute, can in no case grant any vessel, company or other party any advantage or favour not accorded to other vessels, companies or parties on the same conditions.

(B) Complaints of discrimination or violation of the Canal Code shall be sought to be resolved by the complaining party by reference to the Suez Canal Authority. In the event of such a reference does not resolve the complaint, the matter may be referred, at the option of the complaining party or the Authority, to an arbitration tribunal composed of one nominee of the complaining party, one of the Authority and a third to be chosen by both. In case of disagreement lack of agreement, such third member will be chosen by the President of the International Court of Justice upon the application of either party.

(C) The decisions of the arbitration tribunal shall be made by a majority of its members. A majority shall constitute a quorum. The decisions shall be binding upon the parties when they are rendered and these must be carried out in good faith.

(D) The Representation of the users shall have the right of access to make the necessary verifications.

(E) The Government of Egypt will study, with the Representation of the users, the appropriate further arrangements that could be made for fact-finding, consultation, and arbitration on matters not otherwise covered in the present paragraph.

12. 9. Compensation and claims.

The question of compensation and claims in connection with the nationalization of the Suez Canal Maritime Company shall, unless otherwise agreed between Egypt and the Company and any other the parties who may be concerned, be referred to arbitration in accordance with the established international practice. In the event of lack of agreement on a submission to arbitration, the matter may be referred, at the option of Egypt or another party to this Declaration, to the International Court of Justice for adjudication, and Egypt and the other parties subscribing to this Declaration accept the jurisdiction of the Court for this purpose.

The Government of Egypt make this Declaration, reaffirming and supplementing the Constantinople Convention of 1888, as an expression of their desire and determination to enable the Suez Canal to be an efficient and adequate waterway linking the nations of the world and serving the causes of peace and prosperity. They do so in full confidence that it will meet with the goodwill and cooperation of the nations of the world.

This Declaration, with the obligations herein, constitutes an international instrument and will engagement of Egypt with and for the benefit of all states concerned with the use of the Suez Canal. It is and shall be open for subscription by all such states which deposit an instrument of accession with the Secretary-General of the United Nations, and they shall thereupon become bound by its provisions. This Declaration shall enter into force immediately, and may be altered by agreement between Egypt and the subscribing states. It shall be deposited and registered with the Secretariat of the UN in accordance with Article 102 of the Charter.

Dulles

1. Source: Department of State, Central Files, 974.7301/3–2957. Confidential. Drafted by Meeker and Metzger, approved by Dillon, and initialed by Meeker for Dulles.
2. See telegram 3032, Document 250.
4. See paragraph 3 of telegram 3253, Document 258.