P L D 1969 Dacca 726 (PLP)

"The appellants, Messrs J. H. Schroeder & Co., are bankers carrying on business in London. The partners are Baron Bruno von Schroeder, a naturalised British subject, and Frank Tiarks, a natural‑born British subject. In the ordinary course of their business, the appellants had in March 1914 agreed with a German Company in Hamburg called the Rhederei Action Gesellschaft von 1996 to accept the drafts of Weber & Co., a firm carrying on its business in Chili, for the price of a quantity of nitrate of soda to be sold and shipped by Weber & Co. to the German Company. The drafts were to be drawn at ninety days' sight, and the appellants, upon acceptance of them, were to receive by way of security the bill of lading for the cargo, together with a policy of marine insurance. The consideration for this accommodation was to be a commission of one quarter per cent. payable by the German Company to the appellants. In due course Weber & Co., shipped a cargo of nitrate on board a sailing ship called the Odessa, belonging to the German Company and took from the captain a bill of lading dated the 8th May 1914, in which the voyage was described as from Mejillones (the port of shipment in Chili) to the `Channel for orders', and by which the cargo was made deliverable to the appellants or their assigns. This bill of lading incorporated the terms of a charter‑party (of which there is no copy), and made the chartered freight payable by the consignees upon delivery of the cargo. Drafts for a total amount of 41,153? Is. 5d. (said to be the full price of the cargo) were drawn by Weber & Co. upon the appellants, and accepted by them on the 9th June 1914, they receiving in exchange the bill of lading. War broke out between Great Britain and Germany on the 4th August 1914, the Odessa being then on her voyage to the Channel. On the 19th ship was captured on the high seas by H. M. S. Caronia and brought into Bantry Bay, and on the 31st a writ was issued against ship and cargo at the suit of the Procurator‑General claming condemnation of both as lawful prize. On the 10th September the draft of Weber & Co. fell due, and were paid by the appellants. The ship was duly condemned, and no question arises with reference to her condemnation, but in respect of the cargo the appellants intervened, and by their claim alleged it to be their property as holders, for full value of the bill of lading therefore and as British property not liable to condemnation. The case was heard by the learned President on the 7th and 14th December 1914, with the result that he condemned the cargo on the ground that the general property was in the Germany Company at the date of the seizure, and the appellants were merely pledges, and as such not entitled to any precedence over the Grown." Lord Mersey in his judgment observed as follows :‑ "As the right to seize is universally recognised so also is the title which the judgment of the Court creates. The judgment is of international force, and it is because of this circumstance that Courts of Prize have always been guided by general principles of law capable of universal acceptance rather than by considerations of special rules of municipal law. Thus it has come about that in determining the national character of the thing seized, the Courts in this Country have taken ownership as the criterion, meaning by ownership the property or dominium as opposed to any special rights created by contracts or dealings between individuals, without considering whether these special rights are or are not, according to the municipal law applicable to the case, proprietary rights or otherwise. The rule by which ownership is taken as the criterion is not a mere rule of practice or convenience ; it is not a rule of thumb. It lays down a test capable of universal application, and therefore peculiarly appropriate to questions with which a Court of Prize has to deal. It is a rule not complicated by considerations of the effect of the numerous interests which under different systems of jurisprudence may be acquired by individuals either in or in relation to chattels. All the world knows what ownership is, and that it is not lost by the creation of a security upon the thing owned. If in each case the Court of Prize had to investigate the municipal law of a foreign country in order to ascertain the various rights and interests of everyone who might claim to be directly or indirectly interested in the vessel or goods seized and if in addition it had to investigate the particular facts of each case (as to which it would have few, if any, means of learning the truth), the Court would be subject to a burthen which it could not well discharge." Mr. Jaffer has relied upon the above‑quoted passage and contended that as the cargoes claimed by his clients belong to Companies incorporated in the United Kingdom they are not lawful prize. In my view the cases relied on by Mr. Jaffer have no application to the present case. It is true that in ascertaining the enemy character of the property seized in prize, ownership is generally the determining factor. This general rule, however, as will be shown presently, has two clear exceptions, namely, if the property in question is the produce of enemy land or if it is owned by some one who carries on business in any enemy territory, it is enemy property. It has already been noticed that the tea claimed by the claimants is produce of Indian soil and it is the producers who are claiming the same. In this view of the matter they cannot urge that this is not enemy property. This view finds support from all the authorities on the subject cited by Mr. Huda. In this connection, it may be worthwhile to quote from Halsbury's Laws of England, 3rd Edition, Vol. 30, page 645, the following passage: ‑ "The produce of land in any enemy country, while in the possession or ownership of the person owing or holding such land, is liable to seizure and condemnation by a belligerent with whom the state where the land is situate is at war, even ‑though the person owing or holding such land is a neutral and resident in a neutral country." Similarly in Oppenheim's International Law, Vol. II (7th Edition) at page 281 we find the following passage: ‑ "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 as a rule, not enemy goods. For this reason, goods belonging to enemy subjects residing in neutral countries, do not, but goods belonging to subjects of neutral states residing in enemy country do, bear enemy character ; even when they are the goods of a foreign counsel appointed and residing in enemy country.‑ Further, the goods ' of subjects of one belligerent domiciled on the territory of the other and allowed to remain there after the out‑break of war, acquire enemy character in the eyes of the former, but lose it (for the purposes of Prize Law) in the eyes of the latter. Again, the produce of an estate on enemy territory belonging to an absent neutral subject bears enemy character, for `nothing 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'. Further, the property of a house of trade established in an enemy country by a neutral subject resident elsewhere likewise bears enemy character, because the owner has a `commercial domicile' in enemy country. Lastly, and conversely, the enemy character of property of an enemy subject domiciled in enemy territory is unaffected by the fact that he has a house of trade in a neutral State." Reference may also be made to Westlake's International Law, Part II, Page 152, as well as Greens International Law through The cases wherein a judgment of the Supreme Court of the United States has been reproduced. The judgment begins at page 775 and at page 780 the following passage occurs: ‑ "Whether property be liable to capture as `enemy property'‑' does not in any manner depend on the personal allegiance o the owner . . . . . The produce of the soil of the hostile territory, as well as other property engaged in the commerce of the hostile power, as the source of its wealth and strength, are always regarded as legitimate prize, without regard to the domicile of the owner, and much more so if he reside and trade within their territory." In regard to the commercial domicile, the following passage appearing on page 648 in Halsbury's Laws of England, Vol. 30, may profitably be quoted: "A neutral, wherever resident, may, if he owns or is a' partner in a house of business trading in or from an enemy country or enemy occupied territory, be properly deemed an enemy in respect of his property or interest in such business, and his goods will be subject to capture at sea after hostilities although shipped before the war or before knowledge of war. He acquires by virtue of the business a commercial domicile in the country in or from which the business is carried on. A neutral, however, having such a commercial domicile in a country which becomes an enemy country on the outbreak of hostilities ought to be allowed a reasonable interval during which he may discontinue or disassociate himself from the business in question". (See A I R 1919 P C 260). It cannot be contended with any amount of seriousness that the claimants having regard to the nature of intervests that they Shave in India, could "discontinue" or "disassociate" themselves from the business in that country, if given some reasonable time, for the sake of a few chests of tea which they claim in this ‑case. In the British Year Book of International Law (1923‑24) on page 77, it has been stated in respect of the enemy character of Corporations: ‑‑ "Enemy character attaches to all enemy subjects wherever resident or carrying on business. It also attaches to all persons resident or carrying on business in any territory and territory under enemy occupation. In respect of Corporations, enemy character attaches to‑‑ (a) corporations incorporated in enemy territory ; (b) corporations incorporated elsewhere, if enemy subjects constitute the majority of the directing body, or hold the majority of the shares or voting themselves or by nominees, or control the corporation by any means whatsoever ; and (c) corporations carrying on business in enemy territory." Lord Parker of Waddington in the case of Daimler Company Ltd., v. Continental Tyre and Rubber Company (Great Britain) Limited ((1916) 2 A C 307, 346), observed as follows: ‑ "My Lords, the foregoing prepositions are not only consistent with the authorities cited in argument, and in particular with what was said in this House in Janson v. Driefontein Consalidated Mines (1902 A C 484) but they have, I think, the advantage of affording convenient had intelligible guidance to the public on questions of trading with the enemy. It would be a misfortune if the law were such that during war every one proposing to deal with a British Company had to examine the charter of its share‑holders and decide whether, the number of the enemy share‑holders coupled with the value of their holdings were such as to impose an enemy character on the company itself. It would be still more unfortunate if this question were a question for the jury in each particular case. No one could maintain that a company had assumed an enemy character merely because it had a few enemy share‑holders. It might possibly be contended that it assumed an enemy character when its enemy share‑holders amounted to (say) one‑half, three‑fifths, or five‑eights of the whole, but how if the one‑half, three‑fifths, or five‑eights held only one‑sixth, one‑fifth, or one‑fourth of the shares? The Legislature might, but no Court could possibly, lay down a hard and fast rule, and, if no such rule were laid down, how could any one proposing to deal with the company ascertain whether he was or was not proposing to deal with the enemy." The underlying principle deducible from the authorities referred to above appears to be that whatever goes to augment the revenues of a hostile country or serves as the source of its wealth and strength is enemy property. In view of the unanimity of opinion that I have found with regard to the above in all the treatises on International Law which I had occasion to go through in connection with this case, I find it unnecessary to refer to all of them. The claimants in my view have failed to make out that the goods in question are not enemy properties. Their claims are therefore rejected but I direct the parties to bear their own costs. The manifests found in the vessels clearly establish that all the cargoes were going from India to India and are enemy properties. In view of the conclusions thus reached by me, the vessels and the cargoes in question are condemned in favour of the Government of Pakistan. They will now be appraised and sold, if not already sold, by the Marshal by public auction or in such other manner as the Marshal thinks fit, subject to the sale price being approved by the Court. K. B. A. Suit decreed.