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this seems to be the sense in which the second paragraph of Article 3 of The Hague Convention should be regarded.
As to the Berlin, I am of opinion that she is not within the category of coast fishing vessels entitled to freedom from capture. On the contrary, I hold that by reason of her size, equipment, and voyage she was a deep-sea fishing vessel engaged in a commercial enterprise which formed part of the trade of the enemy country, and as such could, and was properly captured as prize of war.
As regards the cargo of enemy prizes captured at sea, two rules are now definitely formulated in the Declaration of London (Articles 59 and 60): that, in the absence of proof of neutral ownership, all goods on enemy vessels are presumed to be enemy goods, and that enemy goods on board an enemy vessel retain their enemy character till they reach their destination, notwithstanding any transfer effected after the outbreak of hostilities while the goods are being forwarded. In the case of all goods shipped before the outbreak of war, the ordinary provisions of the mercantile law may be applied to determine whether the property during the voyage is in the sellers or the buyers. (See the Packet de Bilboa, 2 C. Rob. 133.) And similarly transfers of property in transitu made bona fide before the outbreak of war will be. recognized by an English prize court. The new English prize court rules which were brought into operation at the commencement of the war provide a simple and expeditious procedure of release of property which is not liable to condemnation, and under this procedure a large amount of the cargo on the captured German vessels has been released to British and neutral claimants upon their production of the bills of lading in respect of the goods or other sufficient evidence of ownership according to the mercantile law. Several broad principles have been applied to the question of ownership at the moment of capture. Goods shipped f. o. b. are deemed the property of the buyer from the time of the shipment, and, therefore, if consigned to the enemy country in an enemy or British vessel, are seizable as enemy property. On the other hand, goods shipped c. i. f. may remain the property of the shipper when he has reserved the power of disposition by taking the bill of lading, or by some special provisions in the contract. But ordinarily, they become the property of the consignee on shipment and the tender of the shipping documents to him. And it depends on the enemy or neutral character of the owner at the moment of capture whether the goods are prize. The President of the Prize Court held in an important test case, The Miramichi, that goods shipped from America c. i. f. to German buyers in Germany were not to be condemned as enemy property where the contract provides for payment against documents and the buyers had rejected the documents on tender. The shipper retained the bill of lading and the jus disponendi and was therefore to be treated as the American owner. When, moreover, goods have been consigned from a neutral or friendly country to a port in the enemy country to the order of the shipper, and there is nothing further to show in whom the property would have lain on delivery, the representative of the Crown, the Procurator-General, has usually been willing to resign the cargo to a claimant who could produce a bill of lading. But when no claimant has appeared or when the claimant has failed to prove a title, cargo on an enemy vessel consigned to the enemy country has been condemned as enemy property.
In determining the enemy or neutral character of the owner of cargo, the English court has followed the traditional practice of making commercial domicile the criterion. The Declaration of London, it is well known, leaves the question open between the English rule of following domicile or the Continental rule of following nationality. But the English rule, it is believed, is being adopted in the present war by the allies. Cargo has therefore enemy character if its owner is established in the enemy territory, though he be the subject of a neutral or an allied country, or even a British subject. The principle is clear for the individual trader; but, in the case of a firm which has its principal seat in a friendly country and possesses a branch establishment in the enemy territory, the question is more difficult. The matter has not yet come before the prize court for judicial determination, but it is submitted that if the branch has the powers of an independent house, which can deal with the goods on its own authority and has received the documents respecting the goods, it must be treated as the owner; while, if it is merely a receiving agent for the goods, which are at the disposition of the principal house, and, if that principal house can produce the shipping documents, the property is treated as in its ownership, and has, therefore, neutral character, in spite of its destination to the enemy country.
While British-owned and neutral-owned cargo on board an enemy vessel is protected by the Declaration of Paris, British and neutral property in the vessel itself, and encumbrances upon the vessel owned by friendly and neutral persons, in accordance with the rules of the old English prize law, have been disregarded. The capture operates in law upon the gross property in the ship, and likewise upon the gross property in the cargo, without taking account of any equitable claims. This principle, which was clearly enunciated at the beginning of the last century in several of the judgments of Lord Stowell and has been adopted by the American prize judges, was reaffirmed in one of the earliest prize decisions arising out of the present war, given by Sir Samuel Evans. (The Marie Glaeser.) The short effect of that judgment may be appreciated in the following summary. It covers the difficult claim of part ownership, liens and mortgages, but the learned judge dwelt at special length with the question of the recognition of neutral mortgages upon an enemy vessel which it was sought to distinguish from other charges. He cited decisions of the French and Japanese prize courts to show that the Declaration of Paris had not affected the old rule against disregarding liens and charges on captured property and rejected all the claims as of no effect in the prize court.
This is the case of a German ship captured at sea after the outbreak of hostilities, which is, therefore, a fit subject for condemnation; and I decree the condemnation, and order the vessel to be sold. Various claimants have appeared. The persons who have claimed are shareholders, mortgagees, and the people who have disbursed expenses on the vessel. With regard to the shareholders in a vessel, it is clear that their property must go with the capture of the vessel in which they have put their money, whether they are German, or neutral, or English subjects. If a shareholder invests his money by taking shares in a vessel which is liable to capture, he takes that risk; but if a British shareholder likes to present his case to the Crown as a case for lenient treatment, that is another matter. Similarly with regard to claimants who have advanced money to the vessel or have rendered services. Sitting as a judge of the Prize Court I cannot recognise their claims; if they are to be allowed it must be from the bounty of the Crown. With regard to the claim of the mortgagees, it has been attempted to distinguish a mortgage from a maritime lien, which it is clear cannot prevail against capture. (The Tobago, E. P. C, I 456, and The Marianna, 6 C. Rob. 25.) I can see no reason why in Prize Law that distinction should be admitted, and there is authority both in English and American cases for disregarding the claim of neutral mortgagees of an enemy vessel against the captors. (The Aina, No. 1, Spinks 8; and The Hampton, 5 Wall. 374.) See also The Frances, 8 Cranch 4 & 8, and the Carlos F. Roses, 177 U. S. 655. It has been argued that, on the analogy of the protection of neutral goods in enemy vessels which is afforded by the Declaration of Paris, neutral encumbrances on an enemy vessel should be protected. The Declaration of Paris, however, does not deal with ships but with goods, and the principles of capture are different in the two cases. It would make maritime capture a hazardous proceeding if the captors had to take account of such claims upon the captured property, and it would open the way to evasion of the belligerent rights. I reject the claims which have been presented, and decree that the vessel was properly seized as a prize, and that she is subject to condemnation.
But, while the legal claims of neutral and friendly encumbrancers are not recognized by the court, the Crown is prepared in proper cases to take account of them by way of grace. And by the side of the common law of prize administered by the court there is likely to grow up an equity of prize administered by the Crown's representative, the ProcuratorGeneral, and his agents. The Crown, though always in English prize law the fountain of all prize, is now in a stronger position to give effect to equitable claims against captors, because, in the first place, privateering has been abolished and all captures are now made by the public ships of the State; and, in the second place, captors are no longer entitled to the proceeds of their prizes. The former practice of distributing prize money has been abolished. No legislation was required upon the subject, but an Order in Council of August 28th established a prize fund, into which all the net proceeds of prizes will be paid; and, at the end of the war, this fund will be divided by way of bounties among the whole navy.
So far, we have been considering the treatment of German ships and cargoes, and though what has been said applies in part to Austrian vessels, there are certain important differences in the practices. War was not declared on Austria until August 12th, and Austrian vessels detained in English ports before that date for the carriage of contraband were treated somewhat indulgently as neutral vessels, and innocent German cargo on them was not seized. Moreover, as the British Government received satisfactory assurances from the Austrian Government that British vessels in Austrian ports would receive reciprocal treatment, the articles of the Order in Council of August 4th last, giving days of grace to enemy vessels taken in port at the outbreak of war, became fully operative in respect of Austrian ships. Cargo of a contraband character was discharged from them, but on payment of its value to the neutral or friendly owners, and the vessels themselves were allowed to depart with a pass for a named Austrian or neutral port. When the vessel was unable or unwilling to depart within the period of grace, she was detained on the same terms as the German ships. The question as to the treatment of Austrian vessels captured at sea while in ignorance of hostilities, was settled by a notice issued from the foreign office at the end of October. It might have afforded a subtle argument as to whether Austria was entitled in this war as against the allies to the benefit of Article 3 of the Hague convention, which provides that vessels taken in those circumstances shall not be confiscated, but only detained, seeing that Germany and Russia, two of the belligerents, are not parties to that article in the convention. Probably the strict answer is that Austrian vessels were not legally entitled to the indulgence; but as the official notice subjoined shows, reciprocal concessions were made by the two Governments concerned.
The Secretary of State for Foreign Affairs has received information to satisfy him that British merchant ships, which cleared from their last port of departure before the outbreak of hostilities with AustriaHungary, but have been, or may be, met with at sea by Austro-Hungarian ships of war after the outbreak of such hostilities, are to be detained during the war, or requisitioned in lieu of condemnation as prize, and he has accordingly addressed the undermentioned notification to the Lords Commissioners of the Admiralty.
October 31, 1914.
Sir Edward Grey to the Lords Commissioners of the Admiralty
October 31, 1914.
I have the honour to state that information has reached me of a nature to satisfy me that British merchant ships, which cleared from their last port before the outbreak of hostilities with Austria-Hungary, but have been, or may be, met with at sea by Austro-Hungarian ships of war after the outbreak of such hostilities, are to be detained during the war, or requisitioned in lieu of condemnation as prize.
Austro-Hungarian merchant vessels therefore, which cleared from