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Compensation for Dutch property nationalized in East European countries

Published online by Cambridge University Press:  07 July 2009

G.N.J. van Wees
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Extract

Since the end of the Second World War the Governments of several States have taken a series of measures designed to expropriate or nationalize private property of diverse kinds belonging to nationals as well as to foreigners. In Eastern Europe, particularly, entire sectors of the nationalizing States' economies were affected by such measures.

Type
Section A: Articles
Information
Netherlands Yearbook of International Law , Volume 3 , December 1972 , pp. 62 - 96
Copyright
Copyright © T.M.C. Asser Press 1972

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References

1. “La réclamation internationale n'appartient pourtant pas au particulier lui-même, mais à I'Etat dont il est ressortissant. Le droit international réglant en principe les relations des Etats entre eux, c'est en effet ce dernier qui est légitimé à faire valoir la réclamation en question. C'est lui qui apparaît sur le plan international comme ayant été lesé dans la personne de son ressortissant”. Bindschedler, R.L., “La protection de la propriété privée en droit international public”, 90 Hague Recueil (1956-II), p. 183.Google Scholar

2. François, J.P.A., Handboek voor het Volkenrecht, vol. II (1950) p. 198Google Scholar. G.A. Christenson describes such international or mixed claims commissions as follows: “A mixed claims commission is an international arbitral tribunal comprised of members of different nationalities and established by an agreement or compromis for the purpose of adjudicating certain international claims generally presented on behalf of nationals by the state or states concerned”, 55 AJIL (1961) p. 618.Google Scholar

3. A.H. Feller, as cited in the preface of Lillich, R.B. and Christenson, G.A., International Claims, their preparation and presentation (New York, 1962).Google Scholar

4. See e.g. Viénot, G., Nationalisations étrangères et intérêts français (Paris, 1953)Google Scholar, White, G., Nationalisation of foreign property (London, 1961)Google Scholar, and Foighel, I., Nationalization (Copenhagen, 1957).Google Scholar

5. The work of the British Foreign Compensation Commission has now been described in detail by Lillich, R.B. in his book, International Claims, Postwar British Practice (New York, 1967)Google Scholar. As for France, see Weston, B.H., International Claims: Postwar French Practice (New York, 1971)Google Scholar. In this book the editor's foreword announces a forthcoming study by Foighel, I., International Claims: Postwar Danish Practice.Google Scholar

6. Op.cit. p. 179.

7. G. White, Op.cit. p. 4, refers in this context to a note dated 21 July 1938 of Mr. Cordell Hull, U.S. Secretary of State, to the Mexican Ambassador at Washington. With regard to the Mexican land expropriation, it was stated: “My Government has frequently asserted the right of all countries freely to determine their own social, agrarian and industrial problems. This right includes the sovereign right of any government to expropriate private property within its borders in furtherance of public purposes”.

8. G. White, Op.cit. pp. 13–16.

9. 44 Annuaire p. 283.

10. See Domke, M., “Foreign Nationalizations”, 55 AJIL (1961) pp. 585–616 at p. 588CrossRefGoogle Scholar, and Kollewijn, R.D., “‘Nationalisation’ without compensation and the transfer of property”. 6 NTIR (1959) pp. 140–173 at p. 141.Google Scholar

11. Oppenheim (Lauterpacht, ed.), International Law. vol. 1 (8th ed. 1955) p. 352.Google Scholar

12. Trb. 1964 No. 99; 556 UNTS p. 89.

13. Op.cit. p. 235. In addition to Dr. White's analysis it is submitted that when the actual awards, based on the value at the date of loss were finally paid out they did not correspond to that value any more. One of the reasons was the enormous rise of the general price-level that had taken place in the Western countries during the years between the expropriation and the actual payment of compensation. This applies in particular to Dutch owners since the Netherlands agreements were only concluded in the years 1958, 1961, 1963, 1964, 1965, and 1967.

14. Op. cit. p. 237.

15. “… the goal of achieving full restitution for injury has virtually been abandoned in a realistic recognition that ‘half a loaf is better than none’ and that quick settlement is always preferable to long-deferred payment”. Clay, H.J., “Recent developments in the protection of American shareholders' interest in foreign corporations”, 45 Geo L.J. (1956) p. 12Google Scholar, as cited by Lillich, , International Claims, their adjudication by National Commissions (1962) p. 117.Google Scholar

16. An example of such a provision is provided by the abovementioned Polish Law No. 17 of 3 January 1946. Article 7 of this Law reads as follows:

(1) The owner of an undertaking taken over by the State (Article 3) will receive from the State Treasury compensation within the period of one year, calculated from the day of receipt by him of notification of the legal determination of the amount of compensation due.

(2) In principle this compensation will be paid in bonds (Papiery Wartsciowe) but in exceptional economically substantiated cases it may be paid also in cash or in other values.

(3) The amount of compensation due will be determined by special commissions. The interested parties will have the right to be present during the proceedings of the Commission. In case of need and in any case upon request of the interested parties the Commission will call competent experts.

(4) An Order of the Council of Ministers will determine the composition of the Commission, the method of appointing its members, the number of members constituting a quorum, the method of procedure and the method of appeal against its decision.

17. Foighel, Op.cit. p. 80, refers in this connection to the compensation agreements between Great Britain, Switzerland and Norway, on the one hand, and several East European countries, on the other. At the same time he says, however, that it will often be a question of comparatively small accounts, so that already the amount involved precludes any question of force or coercion on the part of the claimant State. An example of the latter, however, was the agreement of the United States with Yugoslavia of 7 July 1948, under which Yugoslavia paid $ 17 million to the US against release of the gold reserve of Yugoslavia deposited in the U.S. amounting to US $ 46.8 million!

18. Cf. also Art. 4 of the agreement between the Netherlands and Romania of 8 May 1967, which also provides for partial payment of the lump sum by means of blocked accounts.

19. In this context reference may be made to two compensation agreements of the Netherlands, namely with Czechoslovakia of 11 June 1964 and with the USSR of 20 October 1967, see infra pp. 73 and 75 respectively.

20. Dutch-Bulgarian agreement of 7 July 1961 and Dutch-Polish agreement of 20 December 1963.

21. Lillich, R.B., International Claims, their adjudication by national commissions (1962) p. 13.Google Scholar

22. R.L. Bindschedler, Op.cit. (Chapter VI: “Les méthodes d'indemnisation”) pp. 272–277; I. Foighel, Op.cit. (“Form of compensation”) pp. 88–98; G. White, Op.cit. (Chapter 11) pp. 193–243.

23. Op.cit. pp. 199–201.

24. The agreement has never been published. It was confidentially submitted to Parliament by the Minister for Foreign Affairs by letter of 20 February 1950, Bijl. Hand. II 1949/50–1557. Information about the agreement is to be found in the explanatory note to the 1964 agreement, Bijl.Hand.II 1964/65–7876 (R 445) No. 1.

25. This observation seems necessary since another author, B.H. Weston, has expressed the same expectation in respect of the Dutch-Czech agreement of 1949 in a more recent article: “Postwar French International Claims Practice, Czech Claims”, 10 Virg.J.I.L. (1970) p. 230, n. 30.Google Scholar

26. G. White, Op.cit. p. 226, n. 35.

27. Trb. 1961 No. 39; 453 UNTS p. 221.

28. This agreement is not published but mentioned in Article 1(2) of the later lump sum agreement of 2 July 1965, Trb. 1965 No. 181; 564 UNTS p. 49.

29. The words “biens, droits et intérêts”, were already used in the Peace Treaties concluded after the First World War dealing with indemnification for property, rights and interests of nationals of the Allied Powers, situated in the territories of the defeated States. See e.g. Treaty of Versailles of 28 June 1919, Article 297, and the treaties of St. Germain (with Austria) and Trianon (with Hungary).

30. Lillich, R.B., Postwar British Practice, op cit. p. 83Google Scholar who cites in this context Brooks, E.A.S., “Compensation Claims”, 63 Law Society's Gazette (1966) p. 216.Google Scholar

31. See e.g. Art. 1(2) of the Netherlands-Czech agreement of 11 June 1964.

32. Especially the agreement with Bulgaria, of 7 July 1961 and the agreement with Romania of 8 May 1967 comprised large number of such bonds.

33. Trb. 1958 No. 154; 386 UNTS p. 263.

34. Trb. 1961 No. 96; 489 UNTS p. 21.

35. Trb. 1964 No. 30; 514 UNTS p. 169.

36. Bijl.Hand.II 1963/64–7649 (R 143) No. 1.

37. Lillich and Christenson, Op.cit. p. 16. This means: “The Foreign Claims Settlement Commission will ‘pierce the veil’ and deny a claim if the stock, while legally owned by United States nationals, is in fact beneficially owned by aliens”. Ibid. p. 17.

38. Letter VII, attached to the agreement.

39. Trb. 1964 No. 99; 556 UNTS p. 89.

40. Bijl.Hand.II 1964/65–7876 (R. 445) No. 1. As these transactions caused a tremendous damage to the Dutch enonomy (the Reichmark being practically worthless after the war) they were declared null and void by virtue of the provisions of a special Netherlands Act of 18 July 1947 (Stb. 1947 No. H 251). For the application of this Act Czech crowns and Reichmarks were put on the same level. The ownership of the property so acquired ipso jure passed to the State of the Netherlands.

41. This agreement has never been published. It was confidentially submitted to Parliament by the Minister for Foreign Affairs by letter of 17 March 1953, Bijl.Hand.II 1952/53–2954. It was mentioned and referred to in the explanatory note to the 1964 agreement, Bijl.Hand.II 1964/65–7876 (R 445) No. 1.

42. Trb. 1965 No. 181; 564 UNTS p. 49.

43. See attached letter Nr. V and also the explanatory note from the Minister for Foreign Affairs to Parliament of 17 November 1965, Bijl.Hand.II 1965/66–8397 (R 508) No. 1.

44. Trb. 1967 No. 78.

45. Trb. 1960 No. 140; 479 UNTS p. 91.

46. Letter I, Trb. 1967 No. 78.

47. See the explanatory note of 16 June 1967 from the Minister for Foreign Affairs, Bijl.Hand.II 1967–9180 (R 598) No. 1.

48. Trb. 1967 No. 195.

49. See explanatory note of 27 August 1968 from the Minister for Foreign Affairs, Bijl.Hand.II 1967/68–9715 (R 661) No. 1.

50. See e.g. the agreement between Great Britain and the Soviet Union of 5 January 1968. British Treaty Series 1968 No. 12.

51. R.B. Lillich states that “the Foreign Claims Settlement Commission [is] designed to be a permanent agency”. See International Claims, their adjudication by national commissions, p. 41.Google Scholar

52. Cf. the “commissions spéciales de répartition” in France, Weston, op.cit. (Postwar French Practice) p. 41.

53. Stb. 1963 No. 203. For its parliamentary history, see Bijl.Hand.II 1961/62–6592 (R. 257).

54. Until some years ago the Government representative used to be an official of the Ministry for Foreign Affairs who, as secretary of the former Inter-departmental Commission which did the preparatory work for the conclusion of the treaties with the countries concerned (see infra), was fully informed about all questions discussed during the negotiations.

55. Since 1965, each Commission had a permanent secretary “for the entire course of its activities”. One and the same person has held this position in all commissions.

56. See the amendment bill and the explanatory note of 1 April 1963, Bijl.Hand.II 1962/63–6592 (R 257) Nos. 7 and 8.

57. A problem in practically all countries of Eastern Europe was the high degree of inflation of the local currencies and the resulting drastic monetary reforms. A survey of the history of all the world monetary systems can be found in René, Sédillot, Toutes les monnaies du Monde (Paris, 1955).Google Scholar

58. No such general provision on the transfer of ownership of abandoned property can be found in any of the nationalization laws of the other East European countries.

59. This Article reads:

“1. Any heir is deemed to have succeeded immediately (on the death of the decedent) to the property alloted to him.

2. No heir is thus considered ever to have had ownership over other portions of the estate”.

60. Decision of the Hague Court of Appeal, 18 February 1971. NJ 1971 No. 476, 3 NYIL (1972) p. 297 ff. The year of naturalization in Canada was in fact 1945, instead of the reported ‘1954’.

61. See e.g. Lillich, R.B., Postwar British PracticeGoogle Scholar, op.cit. p. 28: “Frequently a claimant, British at the time of loss, will die before a settlement is concluded, leaving a non-British spouse or non-British children. The traditional rule prevents an award being made to them when a settlement is reached, yet permits a non-national whose spouse or parent chanced to die the day after such a settlement to be compensated. Assuming that the original claimant was British at the time of loss, there seems little reason why the eventual allowance or denial of the claims should turn on the fortuitous factor of his longevity”.

62. 41 UNTS p. 135 ff. at p. 194. The paragraph reads: “(a) ‘United Nations nationals’ means individuals who are nationals of any of the United Nations, or corporations or associations organized under the laws of any of the United Nations, at the coming into force of the present Treaty, provided that the said individuals, corporations or associations also had this status at the date of the Armistice with Hungary”. The paragraph should be read in conjunction with the other paragraphs of Art. 26 dealing with compensation for war damages.

63. Op.cit. p. 15. She speaks of “Nationalisation in breach of a concession”, op.cit. p. 162 ff.

64. Op.cit. p. 178.

65. R.B. Lillich, op.cit., Postwar British Practice p. 121.

66. The Bill was introduced on 23 December 1961. Hand.II 1961/62–6592 (R 237). The explanatory memorandum said that no agency existed to handle matters of this kind. So experience in this field was lacking. In this connection it may be noted that although this and the later Distribution Acts include provisions allowing for more detailed inplementing regulations, such regulations have never been made.

67. See Art. 6 of the agreement with Czechoslovakia; Art. 8 of the agreement with Yugoslavia; Art. 6 of the agreement wit Bulgaria; Art. 7 of the agreement with Poland; Art. 5 of the agreement with Hungary; Art. 7 of the agreement with Romania; Art. 6 of the agreement with the USSR. About this assistance clause Dr. White remarked: “It will be appreciated that the operation of such clauses in a lump sum compensation agreement, while of considerable assistance to the municipal authorities of the recipient State entrusted with the distribution of the compensation, cannot help that State in assessing the original claims for the purpose of negotiation. The information has come too late, since the lump sum has already been accepted …”. Op.cit. p. 239.

68. See Weston, B.H., “Postwar French International Claims practice”, 10 Virg. J.I.L. (1969) pp. 236–237Google Scholar; id., International Claims: Postwar French Practice p. 49 and n. 178.Google Scholar

69. Postwar British Practice p. 14.Google Scholar

70. In comparison: the American Foreign Claims Settlement Commission in 1962 consisted of a staff of fourty-nine, see Lillich, R.B., International Claims: their adjudication by national commissions p. 44Google Scholar. According to the Foreign Claims Settlement Commission Annual Reports this number was reduced to thirty-eight in 1969 and to thirty-four in 1970. The British Foreign Compensation Commission had a staff of seventy-five in 1967, including the Chairman and eight commissioners. See Lillich, R.B., Postwar British Practice p. 7.Google Scholar

71. Trb. 1966 No. 199. Under the terms of this agreement the Netherlands received up to the end of 1967 Dfl. 36 million; further Indonesia will have to pay Dfl. 116 million (interest to the amount of Dfl. 22 million included) by the end of 1977 and Dfl. 531 million (interest to the amount of 61 million included) by 2003. Thus the total sum to be paid is Dfl. 683 million, Dfl. 36 million of which was paid almost immediately.

72. See n. 71.

73. Financial and Economic Agreement, 69 UNTS p. 36 ff. In the memorandum of reply concerning the bill on the transfer of sovereignty to Indonesia, Bijl.Hand.II 1949/50–1478 No. 18 p. 6, we find the following passage: “The Government fully recognizes that in these circumstances the civil servants of Dutch nationality may claim the necessary guarantees from the Netherlands…” Such guarantee was later given in the Act of 11 May 1950 (“Guarantee Act Civil Servants Indonesia”, Stb. K 178) and the Act of 22 June 1951 (“Guarantee Act Military Personnel Royal Netherlands Indies Army”, Stb. 1951 No. 239).

74. Trb. 1971 No. 96.

75. Bijl.Hand.II 1971–11383 (R 804) No. 1.