Volume 2 / Part 2 — CHAPTER I ON WAR IN GENERAL (continued 2)

Enemy Character of Goods.

§ 90. It is an old customary rule that all goods found on board an enemy merchantman are presumed to be enemy goods unless the contrary is proved by the neutral owners concerned. It is, further, generally recognised that the enemy character of goods depends upon the enemy character of their owners. As, however, no universally recognised rules exist as to the enemy character of individuals, there are likewise no universally recognised rules in existence as to the enemy character of goods.

(1) Since, according to British and American practice, domicile in enemy country makes an individual bear enemy character, all goods belonging to individuals domiciled in enemy country are enemy goods, and all goods belonging to individuals not resident in enemy country are not, as a rule, enemy goods. For this reason, goods belonging to enemy subjects residing in neutral countries[154] do not, but goods belonging to subjects of neutral States residing in enemy country[155] do bear enemy character, although they may be the goods of a foreign consul appointed and residing in enemy country.[156] Further, the goods of such subjects of the belligerents as are domiciled on each other's territory and are allowed to remain there after the outbreak of war, acquire enemy character in the eyes of the belligerent whose subjects they are, but lose their enemy character in the eyes of the belligerent on whose territory they are allowed to remain.[157] Again, the produce of an estate on enemy territory belonging to a subject of a neutral State who resides abroad, does bear enemy character, for "Nothing[158] can be more decided and fixed than the principle ... that the possession of the soil does impress upon the owner the character of the country, as far as the produce of that plantation is concerned ... whatever the local residence of the owner may be." Lastly, all such property of a subject of a neutral State residing abroad but having a house of trade within the enemy country as is concerned in the commercial transactions of such house of trade,[159] likewise bears enemy character, because the owner of these goods has a "commercial domicile" in enemy country.

(2) On the other hand, according to French practice, the nationality of the owner of the goods is exclusively the deciding factor, and it does not matter where he resides. Hence only such goods on enemy merchantmen bear enemy character as belong to subjects of the enemy, whether those subjects are residing on enemy or neutral territory; and all such goods on enemy merchantmen as belong to subjects of neutral States do not bear enemy character, whether those subjects reside on neutral or enemy country.[160]

(3) The Declaration of London does not purport to decide the controversy, since the Powers represented at the Naval Conference of London could not agree. Whereas Holland, Spain, and Japan approved of the British and American practice, Austria-Hungary, Italy, Germany, and Russia sided with France. For this reason, the Declaration, by articles 58 and 59, only enacts that the enemy character of goods on enemy vessels is determined by the enemy character of their owner, and that all goods on enemy vessels are presumed to be enemy goods unless the contrary is proved. But the chief question, namely, what is the factor that decides the enemy character of an owner, is deliberately left unanswered. It would, therefore, according to article 7 of Convention XII., be for the proposed International Prize Court to settle it.

Transfer of Enemy Vessels.

§ 91. The question of the transfer of enemy vessels to subjects of neutral States, either shortly before or during the war, must be regarded as forming part of the larger question of enemy character, for the point to be decided is whether such transfer[161] divests these vessels of their enemy character. It is obvious that, if this point is answered in the affirmative, the owners of enemy vessels can evade the danger of having their property seized and confiscated by selling their vessels to subjects of neutral States. Before the Declaration of London, which is, however, not yet ratified, the maritime Powers had not agreed upon common rules concerning this subject. According to French[162] practice no transfer of enemy vessels to neutrals could be recognised, and a vessel thus transferred retained enemy character; but this concerned only transfer after the outbreak of war, any legitimate transfer anterior to the outbreak of war did give neutral character to a vessel. According to British and American practice, on the other hand, neutral vessels could well be transferred to a neutral flag before or after the outbreak of war and lose thereby their enemy character, provided that the transfer took place bona fide,[163] was not effected either in a blockaded port[164] or while the vessel was in transitu,[165] the vendor did not retain an interest in the vessel or did not stipulate a right to recover or repurchase the vessel after the conclusion of the war,[166] and the transfer was not made in transitu in contemplation of war.[167]

The Declaration of London offers clear and decisive rules concerning the transfer of enemy vessels, making a distinction between the transfer to a neutral flag before and after the outbreak of hostilities:

(1) According to article 55 of the Declaration, the transfer of an enemy vessel to a neutral flag, if effected before the outbreak of hostilities, is valid, unless the captor is able to prove that the transfer was made in order to avoid capture. However, if the bill of sale is not on board the transferred vessel, and if the transfer was effected less than sixty days before the outbreak of hostilities, the transfer is presumed to be void, unless the vessel can prove that such transfer was not effected in order to avoid capture. To provide commerce with a guarantee that a transfer should not easily be treated as void on the ground that it was effected for the purpose of evading capture, it is stipulated that, in case the transfer was effected more than thirty days before the outbreak of hostilities, there is an absolute presumption of its validity, provided the transfer was unconditional, complete, and in conformity with the laws of the countries concerned, and further, provided that neither the control of, nor the profits arising from, the employment of the vessels remain in the same hands as before the transfer. But even in this case a vessel is suspect if the transfer took place less than sixty days before the outbreak of hostilities, and if her bill of sale is not on board. Hence she may be seized and brought into a port of a prize court for investigation, and she cannot claim damages for the capture, even if the Court releases her.

(2) According to article 56 of the Declaration, the transfer of an enemy vessel to a neutral flag, if effected after the outbreak of hostilities, is void unless the vessel can prove that the transfer was not made in order to avoid capture. And such proof is excluded, and an absolute presumption is established that the transfer is void, if the transfer has been made in a blockaded port or while the vessel was in transitu, further, if a right to repurchase or recover the vessel is reserved to the vendor, and lastly, if the requirements of the Municipal Law governing the right to fly the flag under which the vessel is sailing have not been fulfilled.

Transfer of Goods on Enemy Vessels.

§ 92. The subject of the transfer of enemy goods on enemy vessels must likewise be considered as forming part of the larger subject of enemy character, for the question is here also whether such a transfer divests these goods of their enemy character. And concerning this question[168] there was likewise no unanimous practice in existence among the maritime States before the agreement on the Declaration of London. British and American practice refused to recognise a sale in transitu under any circumstances or conditions, if the vessel concerned was captured before the neutral buyer had actually taken possession of the transferred goods.[169] On the other hand, French practice recognised such a sale in transitu, provided it could be proved that the transaction was made bona fide.[170]

The Declaration of London now stipulates, by article 60, that enemy goods on board an enemy vessel retain their enemy character until they reach their destination, notwithstanding any transfer effected after the outbreak of hostilities while the goods are in transitu. Hence if such enemy vessel is captured before having reached her destination, goods consigned to enemy subjects may be confiscated, although they have been sold in transitu to subjects of neutral States. A special rule is provided for the case of the enemy consignee of goods on board an enemy vessel becoming bankrupt while the goods are in transitu. In a number of countries[171] an unpaid vendor has, in the event of the bankruptcy of the buyer, a recognised legal right to recover such goods as have already become the property of the buyer, but have not yet reached him (right of stoppage in transitu). For this reason, article 60 of the Declaration stipulates in the second paragraph, that if, prior to the capture, the neutral consignor exercises, on the bankruptcy of the enemy consignee, his right of stoppage in transitu, the goods regain their neutral character and may not therefore be confiscated.