TENTH MEETING

FRIDAY, MAY 20, 1932

MORNING SESSION

The Arbitration was convened at 10 o'clock a.m., in Hearing Room No. 1 of the United States Board of Tax Appeals, Internal Revenue Building, Washington, D.C., pursuant to adjournment.

PRESENT: Honorable Eugene Borel, Arbitrator,

Robert Perret, Esq., Secretary General.

The American Government was represented by their Agent, Mr. J. A. Metzger, assisted by Messrs. Bert L. Hunt, James O. Murdock, Frederic A. Fisher, and Miss Ann O'Neill.

The Swedish Government was represented by their Agent, His Excellency W. Boström, Swedish Minister at Washington, assisted by Messrs. Edward B. Burling, Osten Unden, George Rublee, Dean G. Acheson, and H. Thomas Austern.

The ARBITRATOR: You may proceed.

ARGUMENT OF MR. HUNT-Continued

Mr. HUNT: Your Honor, the Government of the United States sometimes, not very often, but on very exceptional occasions, presents claims against foreign governments which on previous occasions it has rejected as unmeritorious. As I say, that does not happen very often, but it does occasionally happen. If I may, I should like to explain something of the circumstances as to how that is done, because I feel it has a bearing on this case.

We have, for example, large foreign American interests engaged, perhaps, in mining in foreign countries or

in manufacturing, or, perhaps, a large shipping concern engaged in the carriage of foreign commerce. Those concerns suffer what they consider to be injuries which would warrant the Government of the United States in presenting claims against foreign countries in their behalf.

They present their claims to the Department of State. In the ordinary course such a claim goes to the Office of the Legal Adviser and is examined with the greatest care from the standpoint of both the interests of the American citizen involved and his rights under international law; also the rights of the foreign government against which the complaint is made. The probabilities are that the claim will be rejected. I say "the probabilities are ", because in not more than one out of ten claims presented in this way are the facts found to be such as to make the claim meritorious, and it is therefore rejected.

But the claimant is not satisfied. He appeals to the Secretary of State. The Secretary of State is then compelled to review the case himself, and the probabilities are that the Secretary of State will agree with his Legal Adviser. The Secretary of State rules that the claim is not meritorious and not such a claim as should be made the subject of diplomatic negotiations.

But our influential claimant still is not satisfied. There is nothing much further he can do in the matter because the discretion in matters of that kind rests with the Secretary of State and he has had a very careful hearing. But our influential claimant bides his time and, in the course of events, the political wheel turns about and in a matter of two years or four years or more there may be a change in the administration of the Department of State; there may be a change in secretaries of state or there may be a change in some other officials of the Department of State. Our influential claimant bides his time until he finds in the Department of State some person with whom he has a particular relationship of friendship or perhaps some political relationship, and again he revives his claim.

Again his claim may be rejected as unmeritorious and again he may have to await the turn of the political wheel.

But these large interests do not live from one day to the other. These large interests do not forget claims running into millions of dollars; such claimants as that are persistent. Occasionally, after two or three turns of the political wheel, there may be such changes in the Department of State that some man who knows the claimant well or who is politically associated with him in some way, comes into office, and then our claimant revives his claim and brings the pressures of his own friendship, of his own political connections, and of his political friends to bear upon the new official of the Department of State and his claim is again reviewed. Friends and political associates are, of course, much more sympathetic to the merits of a claim in a situation of that kind than people who review them cold-bloodedly from the standpoint of justice and from the standpoint of strict diplomatic international relations.

Occasionally-I should say very occasionally-a case of that kind is taken up. Very exceptionally a case of that kind is taken up and presented diplomatically after having been rejected several times because of such circumstances.

I mention that, Your Honor, because it seems to me that those facts, those circumstances, are not entirely dissimilar from the circumstances which may exist in this case. You will recall in this case that we had the original presentation of the claim in 1917 and 1918. We had rejection of the claim by the United States, and then for ten years the claim was forgotten by the Swedish Government or, at least, the claim was not presented by the Swedish Government. Then the claim is revived. The claim is rejected by the United States again and then a demand is made for arbitration on the basis that the United States deliberately violated treaty obligations. That is a point on which perhaps governments would be most reluctant to submit to arbitration and would be most inclined to negotiate settle

ment without arbitration. That was the basis of the claim asserted. There was an acceptance of arbitration by the United States on the basis of alleged violation of the treaty obligations of the United States. Then eight months later, as I noted for the information of Your Honor yesterday morning, there was a suggestion from the Swedish Government that the two Governments should get together and adjust the matter of the claim without arbitration in order to avoid the expense of arbitration.

The ARBITRATOR: Since you are referring to the matter, I should call attention to the fact that, if I am not mistaken, the correspondence of 1928 has not been completely laid before me. I read in the Case of the United States, page 305, where appears a letter from the Legation of Sweden to the Secretary of State of June 1, 1928:

I venture to address you on the subject of the claim presented by my Government on behalf of the Johnson Line which was the subject of my note of June 16, 1917.

This note of June 16, 1917, I could not find either in the Appendix or in the Answer. I do not think it is in any document.

Mr. METZGER: It is in the Case. It appears at page 246, Case of the United States.

Mr. HUNT: I mention these circumstances, Your Honor, because it seems to me they have a very material bearing upon the case. These circumstances lead my mind to inquire whether or not the situation which I have just described as happening occasionally in the United States may have happened in Sweden in this case. I do not know.

Thirteen years ago, however, I had occasion to go to Stockholm to discuss with Mr. Axel Johnson a not entirely unimportant matter of business, and I know from firsthand information that Mr. Axel Johnson is a very influential man in Stockholm. I also know that Mr. Johnson is one of the leading shipping men in Sweden. That is another circumstance which leads me to mention this particular point.

Counsel for the Swedish Government undertook to depict for us the Dutch people as particularly stubborn and the Swedish people as particularly proud. But if that is a characteristic, Mr. Johnson apparently is one of the exceptions of that particular characteristic because I had occasion to know that Mr. Johnson is a man of very firm determination and I also know that the record in this case shows that to be a fact.

It was called to the attention of Your Honor by the Agent for the United States that, during the negotiations in Sweden for the final shipping arrangements of 1918 (mentioned on page 28, I believe, of the Additional Documents of the Swedish Government) a communication from a representative of the War Trade Board stated:

In reference to my telegram of April 6th from Stockholm, I wish to say that on that evening as I was leaving, I met Gunnar Carlsson. He had been attending a two days' meeting in Stockholm of Swedish shipowners. He informed me that during this meeting they had been able to get together about 70 percent of the tonnage necessary to carry out the permanent agreement. The principal objector seemed to be Axel Johnson, who would not even attend the meeting.

I suggest that Mr. Axel Johnson is not the kind of a man who would accept one rejection of a claim. I leave those thoughts with the Tribunal for such consideration as they may merit, if any.

Yesterday I mentioned several times the preamble of the treaty of 1783 and I said that, to me, the terms of the preamble are more important than the terms of the treaty itself. I fear I may not have made my point clear. May I explain?

When the representatives of the Government of Sweden and the Government of the United States began writing this treaty they began by stating the purposes for which they were going to write the treaty. Now, the Swedish Government takes a position with respect to this treaty which we say is not justified. They base their position upon what they term their broad juristic construction of the terms of the treaty. We take the treaty