agents; also on account of the fact that in some cases excessive claims have been made, based upon unjustified expenses of some of the present claimants or their assignors. V. THE AMOUNT OF COMPENSATION. It is common ground between the Parties that just compensation, as it is understood in the United States, should be liberally awarded, and that it should be based upon the net value of the property taken. It has been somewhat difficult to fix the real market value of some of these shipbuilding contracts. The value must be assessed ex aequo et bono. The Parties have obviously acted in a way which would not have been usual or even possible under ordinary circumstances, when peaceful shipping and shipbuilding were entirely free, and not hampered in their customary activities by the intervention of enemy or friendly Governments. The growing scarcity of ships in 1917, the risks and difficulties due to submarine warfare and to the extension of the field of hostilities, contributed to make speculative shipbuilding transactions possible and even unavoidable. Belligerents and neutrals alike were fearful for their existence. The hardships of neutrality were felt so deeply by the United States themselves that they declared war on Germany as the only means of defence against its "repeated acts of War against the Government and the people of the United States of America." All neutral Nations needed ships for their food, materials and other commodities. Some governments took measures to protect themselves against speculation in ships and other property; they imposed standard prices and requisitioned ships for use during the war, etc. As a rule, abnormal circumstances, speculative prices, etc., cannot form the legal basis of compensation in condemnation awards. While fair compensation cannot be artificially increased by such methods as were adopted by one of those interested in the case and which have been brought to the notice of this Tribunal, it would be equally unjust to attach much weight to artificial reduction of hire, chartering or purchase price of ships, as fixed under compulsion, requisition or other governmental action during the war. For the reasons already stated in chapter IV, the Tribunal is not bound by section 3477 of the Revised Statutes of the United States, 1878 (quoted in U. S. Case Appendix page 51); nor by section 24 of the Judicial code of the United States 1911; nor by section 4 of the Naval Emergency Fund Act of 4th March 1917; nor by any other municipal law, in so far as these provisions restricted the right of the claimants to receive immediate and full compensation, with interest from the day on which the compensation should have been fully paid ex aequo et bono. Just compensation should have been paid to the Claimants or arranged with them on the basis of the net value of the property taken: 1. On the 6th October, 1917, for use, during the war, (whenever such use was possible without destroying the property, according to the contract, state of completion of ship etc.) and 2. At the latest on the 1st July 1919, as damages for the unlawful retaining of the title and use of the ships after all emergency ceased; Or On the 6th October, 1917, as full compensation for the destruction of the Norwegian property. Liberal compensation should be allowed in each case, inasmuch as the United States "recognizes its liability to make just compensation for the value of the property taken on August 3rd 1917." (U.S. Counter-case, p. 69.) The amounts offered as compensation by the United States are shown in the table set out at the commencement of this award. After careful comparative examination of the results of the two systems above described, the Tribunal is of opinion that the compensation hereinafter awarded is the fair market value of the claimants' property. In assessing the net amount of compensation, the Tribunal has taken into consideration in each case all the circumstances pertaining to the net value of the property requisitioned or taken by the United States and especially the following: the date of each contract or sub-contract between shipbuilder and shipowner; the technical characteristics and qualities of each contract (type and dead weight tonnage of the ship; its speed etc.; the reputation, experience, technical and financial situation of the shipyard), the legal value of the contract, namely the liens, rights and interests in each original contract, etc.; the original contract (or sub-contract) price; the progress (and brokerage) payments made by each of the parties on the original contract price; the date of delivery promised in the contract; the date of delivery which was expected at or about the date of the general requisition order and about the date of the effective requisition of each contract as far as these can be ascertained; the various elements pertaining to the value and degree of completion of the tangible objects of completion, as: for instance, the percentage of materials ordered, and the percentage of materials on hand; the date at which the keel was laid, before or after the general requisition; and the date when the ship was launched; the contracts, settlements, etc. made by the United States and by Norwegian or other shipowners, or by third parties, whether governments or private persons, whether with shipowners or shipbuilders, for the construction or purchase or hire of ships; the statistics, reports and opinions of experts produced by the Parties; the Award of the United States Claims Committee on the present claims; the reports of the Ocean Advisory Committee on just compensation for certain American ships lost in the service of the government; etc. On the other hand the Tribunal has taken into consideration all the facts, which are exclusively or principally due to the United States' action, (whether before or after the requisition of the shipyards and the effective requisition of the claimants' property) and which therefore may be considered as res inter alios acta, or as being without or of negligible influence upon the net value of property lost by the claimants. VI. INTEREST ON SUMS AWARDED. The Tribunal is competent to allow interest as part of the compensation ex aequo et bono, if the circumstances are considered to justify it. So far as interest after the date of this award is concerned, the Parties decided in the Agreement of 30th June, 1921, that " any amount granted by the award rendered shall bear interest at the rate of six per centum per annum from the date of the rendition of the decision until the date of payment.' As this is a case of expropriation, the Tribunal is of opinion that interest should be paid. The Parties have cited before the Tribunal the work of NICHOLS on "The Law of Eminent Domain" (Albany, N. Y., 1917), in which is expressed the following opinion: The theory of the law is that, when land is taken by eminent domain, or when it is injured in such a way as to create a constitutional right to damages, payment for the land thus affected should be co-incident with the taking or injury, and, if for any reason payment is postponed, the right to interest from the time that payment ought to have been, until it is actually made, follows as a matter of strict constitutional right. When the owner is not paid the compensation until after the taking or injury is complete . . . it is well settled that he is entitled to interest, or at least to its equivalent in the form of damages for the detention of his money. (S. 216). Similar opinions are expressed in section 742 of LEWIS' " A Treatise on the Law of Eminent Domain" (Chicago 1909), which book was also cited before the Tribunal. In coming to the conclusion that interest should be awarded, the Tribunal has taken into consideration the facts that the United States have had the use and profits of the claimants' property since the requisition of five years ago, and especially that the sums awarded as compensation to the claimants by the American Requisition Claim Committee have not been paid; finally that the United States have had the benefit of the progress payments made by Norwegians with reference to these ships. The Tribunal is of opinion that the claimants are entitled to special compensation in respect of interest and that some of the claimants are, in view of the circumstances of their cases, entitled to higher rates of interest than others. The claimants have asked for compound interest with half-yearly adjustments, but compound interest has not been granted in previous arbitration cases, and the Tribunal is of opinion that the claimants have not advanced sufficient reasons why an award of compound interest, in this case, should be made. In view of all these circumstances, therefore, the Tribunal is of opinion that it is just to allow a lump sum to each claimant in respect of interest for a period of five years from 6th October 1917. Such lump sums have been included in the total amounts of compensation awarded in respect of each claim. As the Tribunal is of the opinion that full compensation should have been paid, including loss of progress payments etc., at the latest on the day of the effective taking, and as the Tribunal has assessed the net value of the property and has decided to award damages as on that date, interest should, contrary to the claim of Norway, not run before that date as previous interest is included in the estimate of the net value. VII. THE CLAIM OF PAGE BROTHERS. The Tribunal has been requested, by agreement between the Parties, to "examine any claim of PAGE BROTHERS, American citizens, against any Norwegian subject" and to "determine what portion of any sum that may be awarded to such claimant shall be paid to such American citizens in accordance with the principles of law and equity." This claim arose out of a contract, dated 30th March, 1916, between the Seattle Construction and Dry Dock Company of Seattle, Washington, shipbuilders, and Aktieselskabet Rederiet Odfjell, purchasers, whereunder the former were to construct for the latter a 7.500 ton steamship, known as hull No. 92. This contract was, according to the Case of the United States, effected by cable through PAGE BROTHERS, as brokers. With PAGE BROTHERS other shipping and commission firms were associated. The contract was finally completed on 24th June, 1916, and provided for the payment by the purchasers of the brokerage charges of PAGE BROTHERS amounting to $38.000. From 21st April 1916 onwards, PAGE BROTHERS received from the purchasers certain instalments of the agreed brokerage, but in the autumn of 1917, Hull No. 92 was requisitioned by the Emergency Fleet Corporation of the United States. On 23rd August 1917 PAGE BROTHERS received the fourth instalment of this brokerage commission from the purchasers, making a total received of $15,200, but after that date no payments were made by the Fleet Corporation on the progress payments which it made to the shipbuilders in fulfilment of the requisitioned contract, PAGE BROTHERS have, therefore, claimed a further payment of $22,800 from the Vard II Steamship Company, who are the assignees of Aktieselskabet Rederiet Odfjell, the original purchasers. The United States have based this claim upon the law of California. The Tribunal has been informed by the United States that it would seem necessary to do no more than cite Section 1559 of the California Civil Code which has never been repealed nor amended since its enactment in 1872. This section reads as follows: When contract for benefit of third person may be enforced. A contract made expressly for the benefit of a third person may be enforced by him at any time before the parties thereto rescind it. The Tribunal is, however, of opinion that the application of this Statute obviously depends upon the contract in question remaining alive between "the parties thereto." This contention is not fulfilled in this case. The contract upon which PAGE BROTHERS claim commission was not alive, so far as Aktieselskabet Rederiet Odfjell and their assignees were concerned, after the requisition of the autumn of 1917. The claim of PAGE BROTHERS is one for the fulfilment of contractual obligations, but after the requisition there was no contractual relationship between PAGE BROTHERS and any Norwegian subject. The Tribunal has carefully examined the facts and documents submitted in this claim and has come to the decision that the non-receipt of the balance of their commission by PAGE BROTHERS on the further progress payments made by the Fleet Corporation after it requisitioned the contract, was due solely to the action of the United States. It is not within the jurisdiction of the Tribunal to decide the question whether PAGE BROTHERS have any claim against the United States or any of its citizens. But the Tribunal is of opinion that, as the evidence now stands, PAGE BROTHERS have no claim against the Kingdom of Norway or against any Norwegian subject. The legal position being thus stated, it must, however, be remembered, that if the Emergency Fleet Corporation had paid the balance of the commission to PAGE BROTHERS according to the contract, this amount of $22,800 would have been deducted from the fair market value of the contract, as fixed in the award by this Tribunal, just as the remaining instalments to the shipbuilders, paid by the Emergency Fleet Corporation according to the contract, have been deducted. In these circumstances it appears to be equitable, although the Emergency Fleet Corporation has not yet paid PAGE BROTHERS, to give the United States the right to retain the sum of $22,800 out of the amount awarded in claim 4, in order that this sum can be paid by them to PAGE BROTHERS. This conclusion of the Tribunal is supported by the fact that in the view of the contract owner, who will now receive just compensation for the loss of his ship, the broker's commission was part of the contract price to be paid for the ship. After the attitude taken up by the United States in this case with regard to the question here discussed, it is assumed that the amount thus to be retained by the United States will be paid by them to PAGE BROTHERS. The decision of the Tribunal is based on this condition. VIII. For these reasons the Tribunal of Arbitration decides and awards that: I. The United States of America shall pay to the Kingdom of Norway the following sums: In claim No. 1 by the Skibsaktieselskapet "Manitowoc " the sum of sum of In claim No. 4 by the Dampskibsaktieselskapet "Vard II" the sum of____ $845,000 845, 000 1,625,000 2, 065, 000 Out of this amount of $2,065,000 the United States are entitled to retain a sum of $22,800 in order that this sum be paid to PAGE BROTHERS: In claim No. 5 by the Aktieselskapet Sörlandske Lloyd the sum of $2,045, 000 2, 890, 000 160, 000 160, 000 175,000 175,000 190, 000 205, 000 205, 000 205, 000 205, 000 II. The claim made by the United States of America on behalf of PAGE BROTHERS is disallowed as against the Kingdom of Norway, but a sum of $22,800 may be retained by the United States as stated under claim No. 4 above. Done at The Hague, in the Permanent Court of Arbitration, October 13th, 1922. The President: JAMES VALLOTTON. The Secretary-General: MICHIELS VAN VERDUYNEN. О |