27 August 1952

 

General List No. 11

 
     

international Court of Justice

     
 

Rights of Nationals of the United States of America in Morocco

 
     

France

 

v. 

United States

     
     
 

Judgment

 
     
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BEFORE: President: Sir Arnold McNair;
Judges: Basdevant, Hackworth, Zoricic, Klaestad, Badawi, Read, Hsu Mo, Levi Carneiro, Sir Benegal Rau, Armand-Ugon
   
PermaLink: http://www.worldcourts.com/icj/eng/decisions/1952.08.27_rights_of_nationals.htm
   
Citation: Rights of Nationals of the United States of America in Morocco, Judgment, France v. U.S., 1952 I.C.J. 176 (Aug. 27)
   
Represented By:

France: M. André Gros, Professor of the Faculties of Law, Legal Adviser to the Ministry for Foreign Affairs, as Agent; assisted by M. Paul Reuter, Professor of the Faculty of Law of Aix-en-Provence, Assistant Legal Adviser to the Ministry for Foreign Affairs, as Assistant Agent; M. Henry Marchat, Minister Plenipotentiary, as Counsel; M. de Lavergne, inspecteutr des finances; M. Fougère, maitre des requêtes au Conseil d'État; M. de Laubadère, Professor of the Faculties of Law, as Expert Advisers;

United States: Mr. Adrian S. Fisher, the Legal Adviser, Department of State, as Agent; assisted by Mr. Joseph M. Sweeney, Assistant to the Legal Adviser, Department of State; Mr. Seymour J. Rubin, member of the Bar of the District of Columbia, as Counsel; Mr. John A. Bovey Jr., Consul, United States Consulate-General, Casablanca; Mr. Edwin L. Smith, Legal Adviser, United States Legation, Tangier; Mr. John E. Utter, First Secretary, United States Embassy, Paris, as Expert Advisers.

 
     
 
 
     
 

[p176]

The Court,

composed as above,

delivers the following Judgment:

On October 28th, 1950, the Chargé d'affaires a.i. of France to the Netherlands filed in the Registry, on behalf of the Government of the French Republic, an Application instituting proceedings before the Court against the United States of America, concerning the rights of nationals of the United States of America in Morocco. The Application referred to the Declarations by which the Government of the United States of America and the French Government accepted the compulsory jurisdiction of the Court in accordance with Article 36, paragraph 2, of the Court's Statute. It also referred to the Economic Co-operation Agreement of June 28th, 1948, between the United States and France, and to the Treaty for the Organization of the French Protectorate in the Shereefian Empire, signed at Fez on March 3oth, 1912, between France and the Shereefian Empire. It mentioned the Treaty of Peace and Friendship of September 16th, 1836, between the United States and the Shereefian Empire, as well as the General Act of the International Conference of Algeciras of April 7th, 1906.

Pursuant to Article 40, paragraphs 2 and 3, of the Statute, the Application was communicated to the Government of the United States as well as to the States entitled to appear before the Court. It was also transmitted to the Secretary-General of the United Nations.

The time-Iimits for the deposit of the Pleadings were fixed by Order of November 22nd, 1950. The Memorial of the French Government, which was filed on the appointed date, quoted several provisions of the General Act of Algeciras and drew conclusions therefrom as to the rights of the United States. The construction of a convention to which States other than those concerned in the case were parties being thus in question, such States were notified in accordance with Article 63, paragraph 1, of the Statute : for this purpose notes were addressed on April 6th, 1951, to the Governments of Belgium, Spain, Italy, the Netherlands, Portugal, the United Kingdom of Great Britain and Northern Ireland and Sweden.

On June 21st, 1951, within the time-limit fixed for the deposit of its Counter-Memorial, the Government of the United States of [p179] America filed a document entitled "Preliminary Objection". The proceedings on the merits were thereby suspended. The Preliminary Objection was communicated to the States entitled to appear before the Court as well as to the States which had been notified of the deposit of the Application pursuant to Article 63 of the Statute. The proceedings thus instituted by the Preliminary Objection were terminated following a declaration by the Government of the United States that it was prepared to withdraw its objection, having regard to the explanations and clarifications given on behalf of the French Government, and following a declaration by the French Government that it did not oppose the withdrawal. An Order of October 31st, 1951, placed on record the discontinuance, recorded that the proceedings on the merits were resumed, and fixed new time-limits for the filing of the Counter-Memorial, Reply and Rejoinder.

The Counter-Memorial and Reply were filed within the time-limits thus fixed. As regard the Rejoinder, the time-limit was extended at the request of the Government of the United States from April 11th to April 18th, 1952, by Order of March 31st, 1952. On April 18th, 1952, the Rejoinder was filed and the case was ready for hearing. Public hearings were held on July 15th, 16th, 17th, 21st, 22nd, 23rd, 24th and 26th, 1952, during which the Court heard : MM. André Gros and Paul Reuter on behalf of the French Government; and Mr. Adrian S. Fisher and Mr. Joseph M. Sweeney on behalf of the Government of the United States.

At the conclusion of the argument before the Court, the Submissions of the Parties were presented as follows :

On behalf of the French Government :

"May it please the Court,
To adjudge and declare
That the privileges of the nationals of the United States of America in Morocco are only those which result from the text of Articles 20 and 21 of the Treaty of September 16th, 1836, and that since the most-favoured-nation clause contained in Article 24 of the said treaty can no longer be invoked by the United States in the present state of the international obligations of the Shereefian Empire, there is nothing to justify the granting to the nationals of the United States of preferential treatment which would be contrary to the provisions of the treaties ;
That the Government of the United States of America is not entitled to claim that the application of all laws and regulations to its nationals in Morocco requires its express consent;
That the nationals of the United States of America in Morocco are subject to the laws and regulations in force in the Shereefian Empire and in particular the regulation of December 3oth, 1948, on imports not involving an allocation of currency, without the prior consent of the United States Government;[p180]
That the decree of December 3oth, 1948, concerning the regulation of imports not involving an allocation of currency, is in conformity with the economic system which is applicable to Morocco, according to the conventions which bind France and the United States;
That Article 95 of the Act of Algeciras defines value for customs purposes as the value of the merchandise at the time and at the place where it is presented for customs clearance;
That no treaty has conferred on the United States fiscal immunity for its nationals in Morocco, either directly or through the effect of the most-favoured-nation clause ;
That the laws and regulations on fiscal matters which have been put into force in the Shereefian Empire are applicable to the nationals of the United States without the prior consent of the Government of the United States ;
That, consequently, consumption taxes provided by the Dahir of February 28th, 1948, have been legally collected from the nationals of the United States, and should not be refunded to them."

On behalf of the Government of the United States :

"1. The Submissions and Conclusions presented by the French Government in this case should be rejected on the ground that the French Government has failed to maintain the burden of proof which it assumed as party plaintiff and by reason of the nature of the legal issues involved.
2. The treaty rights of the United States in Morocco forbid Morocco to impose prohibitions on American imports, Save those specified by the treaties, and these rights are still in full force and effect.
The Dahir of December 30, 1948, imposing a prohibition on imports is in direct contravention of the treaty rights of the United States forbidding prohibitions on American imports and the French Government by applying the Dahir of December 30, 1948, to American nationals, without the consent of the United States, from December 31, 1948, to May II, 1949, violated the treaty rights of the United States and was guilty of a breach of international law.
American nationals can not legally be submitted to the Dahir of December 30, 1948, without the prior consent of the United States which operates to waive temporarily its treaty rights.
3. The jurisdiction conferred upon the United States by the Treaties of 1787 and 1836 was jurisdiction, civil and criminal, in all cases arising between American citizens.
In addition, the United States acquired in Morocco jurisdiction in all cases in which an American citizen or protégé was defendant through the effect of the most-favoured-nation clause and through custom and usage.
Such jurisdiction was not affected by the surrender by Great Britain in 1937 of its rights of jurisdiction in the French Zone of Morocco. [p181]
Such jurisdiction has never been renounced, expressly or impliedly, by the United States.
4. Under the regime of extraterritorial jurisdiction now exercised by the United States in Morocco, United States citizens are not subject, in principle, to the application of Moroccan laws.
Such laws become applicable to the United States citizens only if they are submitted to the prior assent of the United States Government and if this Government agrees to make them applicable to its citizens. The Dahir of December 30, 1948, not having been submitted to the prior assent of the United States Government, cannot be made applicable to United States citizens.
As a counter-claim :
1. Under Article 95 of the Act of Algeciras, the value of imports from the United States must be determined for the purpose of customs assessments by adding to the purchase value of the imported merchandise in the United States the expenses incidental to its transportation to the custom-house in Morocco, exclusive of all expenses following its delivery to the custom-house, such as customs duties and storage fees.
It is a violation of the Act of Algeciras and a breach of international law for the customs authorities to depart from the method of valuation so defined and to determine the value of imported merchandise for customs purposes by relying on the value of the imported merchandise on the local Moroccan market.
2. The treaties exempt American nationals from taxes, except as specifically provided by the same treaties ; to collect taxes from American nationals in violation of the terms of the treaties is a breach of international law.
Such taxes can legally be collected from American nationals only with the previous consent of the United States which operates to waive temporarily its treaty right, and from the date upon which such consent is given, unless otherwise specified by the terms of the consent.
Consumption taxes provided by the Dahir of February 28, 1948, which were collected from American nationals up to August 15, 1950, the date on which the United States consented to these taxes, were illegally collected and should be refunded to them.
3. Since Moroccan laws do not become applicable to American citizens until they have received the prior assent of the United States Government, the lack of assent of the United States Government to the Dahir of February 28, 1948, rendered illegal the collection of the consumption taxes provided by that Dahir."

***

The Court will first deal with the dispute relating to the Decree issued by the Resident General of the French Republic in Morocco, dated December 3oth, 1948, concerning the regulation of imports [p182] into the French Zone of Morocco. The following Submissions are presented :

On behalf of the Government of France :

"That the Decree of December 3oth, 1948, concerning the regulation of imports not involving an allocation of currency, is in conformity with the economic system which is applicable to Morocco, according to the conventions which bind France and the United States."

On behalf of the Government of the United States of America :

"The treaty rights of the United States in Morocco forbid Morocco to impose prohibitions on American imports, save those specified by the treaties, and these rights are still in full force and effect.

The Dahir of December 30, 1945, imposing a prohibition on imports is in direct contravention of the treaty rights of the United States forbidding prohibitions on American imports...."

The French Government contends that the Decree of December 3oth, 1948, is in conformity with the treaty provisions which are applicable to Morocco and binding on France and the United States. This contention is disputed by the United States Government for various reasons. The Court will first consider the claim that the Decree involves a discrimination in favour of France which contravenes the treaty rights of the United States.

By a Dahir of September 9th, 1939, His Shereefian Majesty decided 3s follows :

"Article I.—It is prohibited to import into the French Zone of the Shereefian Empire, whatever may be the customs regulations in force, goods other than gold in any form.

Article 2.—The Director General of Communications may, however, waive this prohibition on entry as regards combustible solid mineral matter and petroleum products, and the Director of Economic Affairs may do likewise as regards any other products.

Article 3.—It is left to the decision of the Resident General to determine the measures whereby the provisions herein contained shall be put into effect."
A Residential Decree of the same date laid down the terms of application of the Dahir, including provisions relating to requests for a waiver of the prohibition of imports. Article 4 provided :

"Goods of French or Algerian origin shipped from France or Algeria, shall for the time being be admitted without any special formalities."

Further regulations were prescribed by a Residential Decrec of September 10th, 1939, subjecting imports without official allocation [p183] of currency to special authorization. Article 7 provided in its first paragraph :

"Commercial arrangements with France, Algeria, French Colonies, African territories under French Mandate, and Tunisia, are not subject to the provisions herein contained."

By a Residential Decree of March 11th, 1948, a new Article 5 was added to the Decree of September 9th, 1939 :

"Article 5.—Save for such exceptions as may be specified by the appropriate heads of departments, the prohibition on entry shall hereafter be generally waived as regards goods imported from any origin or source, when import does not entail any financial settlement between the French zone of the Shereefian Empire, France, or any territory of the French Union on the one part and foreign territory on the other part."

Finally, this new Article 5 was revoked by the Decree of December 30th, 1948, which is the subject-matter of the present dispute. After having referred to the Dahir of September 9th, 1939, and to the Decrees of that date and of March 11th, 1948, the Resident General of the French Republic decreed :

"Article I.—The provisions of Article 5 of the aforesaid Residential Decree of September 9th, 1939, will cease to apply as from January 15th, 1949, Save for the exception set out in Article 2 hereof.

Article 2.—Goods which are proved to have been shipped directly to the French Zone of the Shereefian Empire before January 15th, 1949, shall still fall within the provisions of Article 5 of the aforesaid Residential Decree of September 9th, 1939.

……………………………………………………………………………………………”

The effect of this Decree was to restore the import regulations introduced in September 1939. Imports without official allocation of currency were again subjected to a system of licensing control. But these import regulations did not apply to France or other parts of the French Union. From France and other parts of the French Union imports into the French zone of Morocco were free. The Decree of December 3oth, 1948, involved consequently a discrimination in favour of France, and the Government of the United States contends that this discrimination contravenes its treaty rights.

It is common ground between the Parties that the characteristic of the status of Morocco, as resulting from the General Act of Algeciras of April 7th, 1906, is respect for the three principles stated in the Preamble of the Act, namely : "the sovereignty and independence of His Majesty the Sultan, the integrity of his domains, and economic liberty without any inequality". The last-mentioned principle of economic liberty without any inequality must, in its [p184] application to Morocco, be considered against the background of the treaty provisions relating to trade and equality of treatment in economic matters existing at that time.

By the Treaty of Commerce with Great Britain of December 9th, 1856, as well as by Treaties with Spain of November 20th, 1861, and with Germany of June 1st, 1890, the Sultan of Morocco guaranteed certain rights in matters of trade, including imports into Morocco. These States, together with a number of other States, including the United States, were guaranteed equality of treatment by virtue of most-favoured-nation clauses in their treaties with Morocco. On the eve of the Algeciras Conference the three principles mentioned above, including the principle of "economic liberty without any inequality", were expressly accepted by France and Germany in an exchange of letters of July 8th, 1905, concerning their attitude with regard to Morocco. This principle, in its application to Morocco, was thus already well established, when it was reaffirmed by that Conference and inserted in the Preamble of the Act of 1906. Considered in the light of these circumstances, it seems clear that the principle was intended to be of a binding character and not merely an empty phrase. This was confirmed by Article 105, where the principle was expressly applied in relation to the public services in Morocco. It was also confirmed by declarations made at the Conference by the representative of Spain, who referred to "equality of treatment in commercial matters", as well as by the representative of France.

The establishment of the French Protectorate over Morocco by the Treaty of March 3oth, 1912, between France and Morocco, did not involve any modification in this respect. In the Convention between France and Germany of November 4th, 1911, concerning the establishment of this Protectorate, the Government of Germany made in Article I the reservation that "the action of France should secure in Morocco economic equality between the nations". On the other hand, the Government of France declared in Article 4 that it would use its good offices with the Moroccan Government "in order to prevent any differential treatment of the subjects of the various Powers."

The other States on behalf of which the Act of Algeciras was signed, with the exception of the United States, adhered later to the Franco-German Convention of 1911, thereby again accepting the principle of equality of treatment in economic matters in Morocco. France endeavoured to obtain also the adherence of the United States, and in a Note of November 3rd, 1911, from the French Ambassador in Washington to the United States Secretary of State, reference was made to the Franco-German Convention. It was declared that France would use her good offices with the Moroccan Government in order to prevent any differential treatment of the subjects of the Powers. In another Note from the French Ambassador to the Secretary of State, dated November 14th, 1918, [p185] it was declared that the benefit of commercial equality in Morocco results, not only from the most-favoured-nation clause, but also from the clause of economic equality which is inserted in the Act of Algeciras and reproduced in the Franco-German Convention of 1911.
These various facts show that commercial or economic equality in Morocco was assured to the United States, not only by Morocco, but also by France as the protecting State. It may be asked whether France, in spite of her position as the protector of Morocco, is herself subject to this principle of equality and can not enjoy commercial or economic privileges which are not equally enjoyed by the United States.

It is not disputed by the French Government that Morocco, even under the Protectorate, has retained its personality as a State in international law. The rights of France in Morocco are defined by the Protectorate Treaty of 1912. In economic matters France is accorded no privileged position in R4orocco. Such a privileged position would not be compatible with the principle of economic liberty without any inequality, on which the Act of Algeciras is based. This was confirmed by the above-mentioned Note from the French Ambassador in Washington of November 14th, 1918, where it is stated that, by virtue of the clause of economic equality inserted in the Act of Algeciras, other States have preserved their right to enjoy such equality, "même vis-à-vis de la Puissance protectrice", and that the United States can, therefore, not only recognize French courts in Morocco, but also give up, in the French Zone, the enjoyment of all privileges following from capitulations, without thereby losing this advantage.

It follows from the above-mentioned considerations that the provisions of the Decree of December 3oth, 1948, contravene the rights which the United States has acquired under the Act of Algeciras, because they discriminate between imports from France and other parts of the French Union, on the one hand, and imports from the United States on the other. France was exempted from control of imports without allocation of currency, while the United States was subjected to such control. This differential treatment was not compatible with the Act of Algeciras, by virtue of which the United States can claim to be treated as favourably as France, as far as economic matters in Morocco are concerned.

This conclusion can also be derived from the Treaty between the United States and Morocco of September r6th, 1836, Article 24, where it is "declared that whatever indulgence, in trade or otherwise, shall be granted to any of the Christian Powers, the citizens of the United States shall be equally entitled to them". Having regard to the conclusion already arrived at on the basis of the Act of Algeciras, the Court will limit itself to stating as its opinion that the United States, by virtue of this most-favoured-nation clause, [p186] has the right to object to any discrimination in favour of France, in the matter of imports into the French Zone of Morocco.

The Government of France has submitted various contentions purporting to demonstrate the legality of exchange control. The Court does not consider it necessary to pronounce upon these contentions. Even assuming the legality of exchange control, the fact nevertheless remains that the measures applied by virtue of the Decree of December 3oth, 1948, have involved a discrimination in favour of imports from France and other parts of the French Union. This discrimination can not be justified by considerations relating to exchange control.

For these reasons the Court has arrived at the conclusion that the French Submission relating to the Decree of December 3oth, 1948, must be rejected. It therefore becomes unnecessary to consider whether this Submission might be rejected also for other reasons invoked by the Government of the United States. In these circumstances, the Court is not called upon to consider and decide the general question of the extent of the control over importation that may be exercised by the Moroccan authorities.

***
The Court will now consider the extent of the consular jurisdiction of the United States of America in the French Zone of Morocco. The French Submission in this regard reads as follows :

"That the privileges of the nationals of the United States of America in Morocco are only those which result from the text of Articles 20 and 21 of the Treaty of September 16th, 1836, and that since the most-favoured-nation clause contained in Article 24 of the said Treaty can no longer be invoked by the United States in the present state of the international obligations of the Shereefian Empire, there is nothing to justify the granting to the nationals of the United States of preferential treatment which would be contrary to the provisions of the treaties."

The United States Submission concerning consular jurisdiction reads as follows :

"3. The jurisdiction conferred upon the United States by the Treaties of 1787 and 1836 was jurisdiction, civil and criminal, in all cases arising between American citizens.

In addition, the United States acquired in Morocco jurisdiction in all cases in which an American citizen or protégé was defendant through the effect of the most-favoured-nation clause and through custom and usage.

Such jurisdiction was not affected by the surrender by Great Britain in 1937 of its rights of jurisdiction in the French Zone of Morocco.

Such jurisdiction has never been renounced, expressly or impliedly, by the United States."

It is common ground between the Parties that the present dispute is limited to the French Zone of Morocco. It is an this ground that[p187] it has been argued. The Court cannot, therefore, pronounce upon the legal situation in other parts of Morocco.

In order to consider the extent of the rights of the United States relating to consular jurisdiction, it has been necessary to examine three groups of treaties.

The first group includes the bilateral treaties of Morocco with France, the Netherlands, Great Britain, Denmark, Spain, the United States, Sardinia, Austria, Belgium and Germany, which cover the period from 1631 to 1892.

These treaties, which were largely concerned with commerce, including the rights and privileges of foreign traders in Morocco, dealt with the question of consular jurisdiction in three different ways :
(1) Certain of the treaties included specific and comprehensive grants of rights of consular jurisdiction to the Powers concerned, e.g., the Treaties with Great Britain of 1856 and with Spain of 1799 and 1861.

(2) Certain of the treaties made strictly limited grants of privileges with regard to consular jurisdiction, e.g., the Treaties with the United States of 1787 and 1836.

(3) There were other treaties, which did not define in specific terms the treaty rights granted by Morocco, but, instead, granted to the foreign nations through the device of most-favoured-nation clauses, the advantages and privileges already granted, or to be granted, to other nations.

There is a common element to be found in the most-favoured-nation clauses which have brought about and maintained a situation in which there could be no discrimination as between any of the Powers in Morocco, regardless of specific grants of treaty rights. When the most extensive privileges as regards consular jurisdiction were granted by Morocco to Great Britain in 1856 and to Spain in 1861, these enured automatically and immediately to the benefit of the other Powers by virtue of the operation of the most-favoured-nation clauses.

The second group consisted of multilateral treaties, the Madrid Convention of 1880 and the Act of Algeciras of 1906. The method of relying on individual action by interested Powers, equalized by the operation of the most-favoured-nation clauses, had led to abuse and it had become necessary not merely to ensure economic liberty without discrimination, but also to impose an element of restraint upon the Powers and to take steps to render possible the development of Morocco into a modern State. Accordingly, the rights of protection were restricted, and some of the limitations on the powers of the Sultan as regards foreigners, which had resulted from the provisions of the earlier bilateral treaties, were abated. The possi-[p188]bility of abuse in the exercise by Morocco of the powers thus extended, \vas taken care of by reserving an element of supervision and control in the Diplomatic Body at Tangier.

The third group of treaties concerned the establishment of the Protectorate. It included the agreements which preceded the assumption by France of a protectorate over Morocco, and the Treaty of Fez of 1912. Under this Treaty, Morocco remained a sovereign State but it made an arrangement of a contractual character whereby France undertook to exercise certain sovereign powers in the name and on behalf of Morocco, and, in principle, all of the international relations of Morocco. France, in the exercise of this function, is bound not only by the provisions of the Treaty of Fez, but also by all treaty obligations to which Morocco had been subject before the Protectorate and which have not since been terminated or suspended by arrangement with the interested States.

The establishment of the Protectorate, and the organization of the tribunals of the Protectorate which guaranteed judicial equality to foreigners, brought about a situation essentially different from that which had led to the establishment of consular jurisdiction under the earlier treaties. Accordingly, France initiated negotiations designed to bring about the renunciation of the regime of capitulations by the Powers exercising consular jurisdiction in the French Zone. In the case of all the Powers except the United States, these negotiations led to a renunciation of capitulatory rights and privileges which, in the case of Great Britain, was embodied in the Convention of July 29th, 1937. In the case of the United States, there have been negotiations throughout which the United States had reserved its treaty rights.

The French Submission is based upon the Treaty between the United States and Morocco of September 16th, 1836, and it is common ground between the Parties that the United States is entitled to exercise consular jurisdiction in the case of disputes arising between its citizens or. protégés. There is therefore no doubt as to the existence of consular jurisdiction in this case. The only question to be decided is the extent of that jurisdiction in the year 1950, when the Application was filed.
***

The first point raised by the Submissions relates to the scope of the jurisdictional clauses of the Treaty of 1836, which read as follows:

"Article 20.-—If any of the citizens of the United States, or any persons under their protection, shall have any dispute with each [p189]other, the Consul shall decide between the parties ; and whenever the Consul shall require any aid, or assistance from Our government, to enforce his decisions, it shall be immediately granted to him.

Article 21.—If a citizen of the United States should kill or wound a Moor, or, on the contrary, if a Moor shall kill or wound a citizen of the United States, the law of the country shall take place, and equal justice shall be rendered, the Consul assisting at the trial; and if any delinquent shall make his escape, the Consul shall not be answerable for him in any manner whatever."

It is argued that Article 20 should be construed as giving consular jurisdiction over all disputes, civil and criminal, between United States citizens and protégés. France, on the other hand, contends that the word "dispute" is limited to civil cases. It has been argued that this word in its ordinary and natural sense would be confined to civil disputes, and that crimes are offences against the State and not disputes between private individuals.

The Treaty of 1836 replaced an earlier treaty between the United States and Morocco which was concluded in 1787. The two treaties were substantially identical in terms and Articles 20 and 21 are the same in both. Accordingly, in construing the provisions of Article 20 —and, in particular, the expression "shall have any dispute with each other”—it is necessary to take into account the meaning of the word "dispute” at the times when the two treaties were concluded. For this purpose it is possible to look at -the way in which the word "dispute" or its French counterpart was used in the different treaties concluded by Morocco : e.g., with France in 1631 and 1682, with Great Britain in 1721, 1750, 1751, 1760 and 1801. It is clear that in these instances the word was used to cover both civil and criminal disputes.

It is also necessary to take into account that, at the times of these two treaties, the clear-cut distinction between civil and criminal matters had not yet been developed in Morocco.

Accordingly, it is necessary to construe the word "dispute", as used in Article 20, as referring both to civil disputes and to criminal disputes, in so far as they relate to breaches of the criminal law committed by a United States citizen or protégé upon another United States citizen or protégé.
***

The second point arises out of the United States Submission that consular jurisdiction was acquired "in all cases in which an American citizen or protégé was defendant through the effect of the most-favoured-nation clause and through custom and usage" and that such jurisdiction was not affected by the surrender by Great Britain in 1937 of its rights of jurisdiction in the French Zone and has never been renounced expressly or impliedly by the United States. [p190]

It is necessary to give special attention to the most-favoured-nation clauses of the United States Treaty of 1836. There were two grants of most-favoured-nation treatment.

Article 14 provides :

"The commerce with the United States shall be on the same footing as is the commerce with Spain, or as that with the most favored nation for the time being ; and their citizens shall be res-pected and esteemed, and have full liberty to pass and repass our country and seaports whenever they please, without interruption."

Article 24 deals with the contingencies of war, but it contains a final sentence :

".... and it is further declared, that whatever indulgence, in trade or otherwise, shall be granted to any of the Christian Powers, the citizens of the United States shall be equally entitled to them."
These articles entitle the United States to invoke the provisions of other treaties relating to the capitulatory regime.

The most extensive privileges in the matter of consular jurisdiction granted by Morocco were those which were contained in the General Treaty with Great Britain of 1856 and in the Treaty of Commerce and Navigation with Spain of 1861. Under the provisions of Article IX of the British Treaty, there was a grant of consular jurisdiction in all cases, civil and criminal, when British nationals were defendants. Similarly, in Articles IX, X and XI of the Spanish Treaty of 1861, civil and criminal jurisdiction was established for cases in which Spanish nationals were defendants.

Accordingly, the United States acquired by virtue of the most-favoured-nation clauses, civil and criminal consular jurisdiction in all cases in which United States nationals were defendants.

The controversy between the Parties with regard to consular jurisdiction results from the renunciation of capitulatory rights and privileges by Spain in 1914 and by Great Britain in 1937. The renunciation by Spain in 1914 had no immediate effect upon the United States position because it was still possible to invoke the provisions of the General Treaty with Great Britain of 1856. After 1937, however, no Power other than the United States has exercised consular jurisdiction in the French Zone of Morocco and none has been entitled to exercise such jurisdiction.
France contends that, from the date of the renunciation of the right of consular jurisdiction by Great Britain, the United States has not been entitled, either through the operation of the most-favoured-nation clauses of the Treaty of 1836 or by virtue of the provisions of any other treaty, to exercise consular jurisdiction [p191] beyond those cases which are covered by the provisions of Articles 20 and 21 of the Treaty of 1836.

The United States Submission is based upon a series of contentions which must be dealt with in turn.
*

The first contention is based upon Article 17 of the Madrid Convention of 1880, which reads as follows :

"The right to the treatment of the most favoured nation is recognized by Morocco as belonging to all the Powers represented at the Madrid Conference."

Even if it could be assumed that Article 17 operated as a general grant of most-favoured-nation rights to the United States and was not confined to the matters dealt with in the Madrid Convention, it would not follow that the United States is entitled to continue to invoke the provisions of the British and Spanish Treaties, after they have ceased to be operative as between Morocco and the two countries in question.

The contention of the United States is based upon the view that most-favoured-nation clauses contained in treaties with countries like Morocco must be given a different construction from that which is accorded to similar clauses in treaties with other countries. Two special considerations need to be taken into account.

The first consideration depends upon the principle of a personal law and the history of the old conflict between two concepts of law and jurisdiction : the one based upon persons and the other upon territory. The right of consular jurisdiction was designed to provide for a situation in which Moroccan law was essentially personal in character and could not be applied to foreigners.

The second consideration was based on the view that the most-favoured-nation clauses in treaties made with countries like Morocco should be regarded as a form of drafting by reference rather than as a method for the establishment and maintenance of equality of treatment without discrimination amongst the various countries concerned. According to this view, rights or privileges which a country was entitled to invoke by virtue of a most-favoured-nation clause, and which were in existence at the date of its coming into force, would be incorporated permanently by reference and enjoyed and exercised even after the abrogation of the treaty provisions from which they had been derived.

From either point of view, this contention is inconsistent with the intentions of the parties to the treaties now in question. This is shown both by the wording of the particular treaties, and by the [p192] general treaty pattern which emerges from an examination of the treaties made by Morocco with France, the Netherlands, Great Britain, Denmark, Spain, United States, Sardinia, Austria, Belgium and Germany over the period from 1631 to 1892. These treaties show that the intention of the most-favoured-nation clauses was to establish and to maintain at all times fundamental equality without discrimination among all of the countries concerned. Further, the provisions of Article 17 of the Madrid Convention, regardless of their scope, were clearly based on the maintenance of equality.

The contention would therefore run contrary to the principle of equality and it would perpetuate discrimination. It can not support the Submission of the United States regarding the extent of the consular jurisdiction in the French Zone.

The second contention of the united States is based upon the geographically limited character of the renunciation of consular jurisdiction by Great Britain. This was restricted in its scope to the French Zone.

It has been claimed on behalf of the United States that Great Britain retained its jurisdictional rights in the Spanish Zone and it has been argued that "the United States, which still treats Morocco as a single country, is entitled under the most-favoured-nation clause in Article 24 of its treaty to the same jurisdictional rights which Great Britain to-day exercises in a part of Morocco by virtue of the Treaty of 1856".

The Court is riot called upon to determine the existence or extent of the jurisdictional rights of Great Britain in the Spanish Zone. It is sufficient to reject this argument on the ground that it would lead to a position in which the United States was entitled to exercise consular jurisdiction in the French Zone notwithstanding the loss of this right by Great Britain. This result would be contrary to the intention of the most-favoured-nation clauses to establish and maintain at all times fundamental equality without discrimination as between the countries concerned.

Reliance has also been placed upon the position of France and French nationals as regards the new tribunals of the Protectorate, which have been established for the purpose of exercising jurisdiction over foreigners and applying Moroccan laws to them in the French Zone. These tribunals have been constituted with French aid and under French direction and supervision. It is suggested that these arc, in reality, consular courts and that the United States is entitled to be placed, in this regard, in a position of equality with France.

But the tribunals of the Protectorate in the French Zone are not in any sense consular courts. They are Moroccan courts, organized [p193] on French models and standards, affording guarantees of judicial equality to foreigners.

Accordingly the Court can not accept this contention.

*
The third contention of the United States is based upon the nature of the arrangements which led to the termination of Spanish consular jurisdiction in the French Zone. By a Convention between France and Spain of November 27th, 1912, provision was made for the exercise by Spain of special rights and privileges in the Spanish Zone. By a bilateral Declaration between France and Spain of March 7th, 1914, Spain surrendered its jurisdictional and other extraterritorial rights in the French Zone, and provision was made for the subsequent surrender by France of similar rights in the Spanish Zone. This was accomplished by a bilateral Declaration between France and Spain of November 17th of the same year.

The United States contends that, as both the Convention of 1912 and the Declarations of 1914 were agreements between France and Spain, and as Morocco was not named as a party to either agreement, the rights of Spain under the earlier provision still exist de jure, notwithstanding that there may be a de facto situation which temporarily prevents their exercise.

Even if this contention is accepted, the position is one in which Spain has been unable to insist on the right to exercise consular jurisdiction in the French Zone since 1914. The rights which the United States would be entitled to invoke by virtue of the most-favoured-nation clauses would therefore not include the right to exercise consular jurisdiction in the year 1950. They would be limited to the contingent right of re-establishing consular jurisdiction at some later date in the event of France and Spain abrogating the agreements made by the Convention of 1912 and the Declarations of 1914.

France contends that these agreements were concluded pursuant to the power which Morocco conferred on France by the provisions of the Treaty of Fez of 1912. The general terms of Articles V and VI were broad enough to give to France the conduct of the international relations of Morocco, including the exercise of the treaty-making power. The Convention and the Declarations must therefore be regarded as agreements made by a protecting Power, within the scope of its authority, touching the affairs of and intended to bind the protected State, as is made clear by the third paragraph of Article 1 of the Treaty of Fez of 1912 which provided that: "The Government of the Republic will come to an understanding with the Spanish Government regarding the interests which the latter Government has in virtue of its geographical position and territorial possessions on the Moroccan coast." In these circumstances, it is necessary to hold that these agreements bound and enured to [p194] the benefit of Morocco and that the Spanish rights as regards consular jurisdiction carne to an end de jure as well as de facto.

It is necessary to deal with another aspect of this question which arises out of the wording of the Declaration made by France and Spain on March 7th, l914. This Declaration contained the following provisions :

"Taking into consideration the guarantees of judicial equality offered to foreigners by the French Tribunals of the Protectorate, His Catholic Majesty's Government renounces claiming for its consuls, its subjects, and its establishments in the French Zone of the Shereefian Empire all the rights and privileges arising out of the regime of the Capitulations.

So far as the Government of the French Republic is concerned, it binds itself to renounce equally the rights and privileges existing in favour of its consuls, its subjects, and its establishments in the Spanish Zone as soon as the Spanish Tribunals are established in the said Zone.

……………………………………………………………………………………………”
The Declaration whereby France complied with the above undertaking was made on November 17th, 1914, and included the following paragraph :

"Taking into consideration the guarantees of judicial equality offered to foreigners by the Spanish Tribunals in the Protectorate, the Government of the French Republic hereby renounces claiming for its consuls, its subjects and its establishments in the Spanish Zone of the Shereefian Empire, all the rights and privileges arising out of the regime of the Capitulations."

It will be observed that both Declarations use the words "renonce a réclamer" (renounces claiming) and the question has arisen whether these words were intended as a surrender or renunciation of all the rights and privileges arising out of the capitulatory regime, or whether they must be considered as temporary undertakings not to claim those rights or privileges so long as the guarantees for judicial equality are maintained in the French Zone by the tribunals of the Protectorate and so long as the corresponding guarantees arc maintained in the Spanish Zone.

The question is academic rather than practical. Even if the words in question should be construed as meaning a temporary undertaking not to claim the rights and privileges, the fact remains that Spain, in 1950, as a result of these undertakings was not entitled to exercise, consular jurisdiction in the French Zone. It follows that the United States would be equally not entitled to exercise such jurisdiction in the French Zone in the year 1950. [p195]

Nevertheless. it is necessary for the Court to examine these Declarations in order to determine what the parties had in mind when they used the words in question.

The parties in both Declarations used the expression "taking into consideration the guarantees of judicial equality ....". These are words which, if given their ordinary and natural meaning, state the consideration which led to the making of the surrender, but they are not words which would normally be used if it was intended to make a conditional surrender.

The Court is of opinion that the words "renonce à réclamer" must be regarded as an out-and-out renunciation of the capitulatory rights and privileges. This view is confirmed by taking into account the declarations and other arrangements made by France with other interested Powers designed to bring about the surrender of their jurisdictional and other extraterritorial rights in the French Zone.

The two Declarations made by France and Spain in 1914 show that they both regarded the expression "renonce à réclamer" as equivalent to a renunciation of the rights in question. In the Declaration of March 7th, 1914, the French Government bound itself "to renounce equally the rights and privileges ....". In the later Declaration of November 17th, 1914, France gave effect to this obligation by using the expression "renonce à réclamer". It is clear, therefore, that both France and Spain regarded this expression as proper for bringing about a complete surrender or renunciation of the rights and privileges in question.

On July 31st, 1916, the French Ambassador at Washington sent to the Secretary of State of the United States "the text of the Declaration signed, with reference to the abrogation of capitula-tions in the French Zone of Morocco, by all the Powers signatory of the Algeciras Conference and by the South-American Republics". In the text, thus transmitted, the expression used in English was "relinquishes its claim to all the rights and privileges growing out of the Capitulation regime ....". It is thus clear that at that date, long before the present dispute had arisen, France regarded the expression "relinquishes its claim" (or, in other words, "renonce à réclamer") as bringing about the abrogation of the privileges in question.

The Declaration made by France and Spain of March 7th, 1914, was one of a series of agreements negotiated by France with more than twenty foreign States "for the surrender of their jurisdictional and other extraterritorial rights so far as concerned the French Zone of Morocco". At least seventeen of these agreements used the expression "renonce à réclamer" as a means of bringing about a complete abrogation of all rights and privileges arising out of the regime of Capitulations. They are referred to in the Counter-Memorial in the following words : "for the surrender of their juris-[p196]dictional and other extraterritorial rights", and again, "for the renunciation of extraterritorial rights". Further, all of the States which had signed these agreements abandoned forthwith the exercise of consular jurisdiction or other capitulatory rights or privileges in the French Zone.

III these circumstances, it is necessary to conclude that the Spanish Declaration of March 7th, 1914, brought about the surrender or renunciation of all Spanish jurisdictional or other extraterritorial rights in the French Zone, and an abrogation of those provisions of the Spanish Treaty of 1861 which concern "the rights and privileges arising out of the regime of Capitulations".

The Court, therefore, can not accept the contention that the United States is entitled, by virtue of the most-favoured-nation clauses, to invoke in respect of the French Zone those provisions of the Spanish Treaty of 186r which concern consular jurisdiction.

*

The fourth contention of the United States is that the extensive consular jurisdiction as it existed in Morocco in the year 1880 was recognized and confirmed by the provisions of the Madrid Convention, and that the United States, as a party to that Convention, thereby acquired an autonomous right to the exercise of such jurisdiction, independently of the operation of the most-favoured-nation clauses.

There can be no doubt that the exercise of consular jurisdiction in Morocco in the year 1880 was. general, or that the Convention presupposed the existence of such jurisdiction. It dealt with the special position of protégés and contained proovisions for the exercise of jurisdiction with regard to them.

On the other hand, it is equally clear that there were no provisions of the Convention which expressly brought about a confirmation of the then existing system of consular jurisdiction, or its establishment as an independent and autonomous right.

The purposes and objects of this Convention were stated in its Preamble in the following words : "the necessity of establishing, on fixed and uniform bases, the exercise of the right of protection in Morocco and of settling certain questions connected therewith....". In these circumstances, the Court can not adopt a construction by implication of the provisions of the Madrid Convention which would go beyond the scope of its declared purposes and objects. Further, this contention would involve radical changes and additions to the provisions of the Convention. The Court, in its Opinion— Interpretation of Peace Treaties (Second Phase) (I.C.J. Reports 1950, p. 229)—stated : "It is the duty of the Court to interpret the Treaties, not to revise them."

*
[p197]
The fifth contention of the United States is that the consular jurisdiction in Morocco was recognized and confirmed by various provisions of the Act of Algeciras, and that the United States acquired an autonomous right to exercise such jurisdiction independently of the operation of the most-favoured-nation clauses.

In 1906 the twelve Powers at Algeciras all exercised capitulatory rights and privileges to the extent that they were prescribed either by the General Treaty with Great Britain of 1856 or by the Spanish Treaty of 1861. They did so by virtue of direct treaty grant, as in the case of Great Britain or Spain ; or by virtue of most-favoured-nation clauses, as in the case of the United States ; or without treaty rights, but with the consent or acquiescence of Morocco, as in the case of certain other States. Accordingly, the Act of Algeciras pre-supposed the existence of the regime of Capitulations, including the rights of consular jurisdiction, and many of its provisions assigned particular functions to the then existing consular tribunals. Reference has been made in the course of the argument to Articles 19, 23, 24, 25, 29, 45, 59, 80, 81, 87, 91, 101, 102 and 119. For example, Chapter V, which deals with "the customs of the Empire and the repression of fraud and smuggling", contains Article 102, which provides :

"Every confiscation, fine or penalty must be imposed on foreigners by consular jurisdiction, and on Moorish subjects by Shereefian jurisdiction."

In the conditions which existed at the time, this Article made it necessary for the prosecution of nationals of the twelve Powers for fraud and smuggling to be dealt with in the consular courts.

Since 1937, the position has been one in which eleven of the Powers have abandoned their capitulatory privileges, and their consular jurisdiction has ceased to exist. Accordingly, Morocco has been able to make laws and to provide for the trial and punishment of offenders who are nationals of these eleven countries. The position of the United States is different, and must now be examined.

Unlike the Madrid Convention, the Act of Algeciras was general in its scope and was not confined to a limited problem such as that of protection. On the other hand, the interpretation of the provisions of the Act must take into account its purposes, which are set forth in the Preamble in the following words :

"Inspired by the interest attaching itself to the reign of order, peace, and prosperity in Morocco, and recognizing that the attainment thereof can only be effected by means of the introduction of reforms based upon the triple principle of the sovereignty and independence of His Majesty the Sultan, the integrity of his domains, and economic liberty without any inequality...." [p198]

Neither the Articles to which reference has been made above nor any other provisions of the Act of Algeciras purport to establish consular jurisdiction or to confirm the rights or privileges of the regime of Capitulations which were then in existence. The question, therefore, is whether the establishment or confirmation of such jurisdiction or privileges can be based upon the implied intentions of the parties to the Act as indicated by its provisions.

An interpretation, by implication from the provisions of the Act, establishing or confirming consular jurisdiction would involve a transformation of the then existing treaty rights of most of the twelve Powers into new and autonomous rights based upon the Act. It would change treaty rights of the Powers, some of them terminable at short notice, e.g., those of the United States which were terminable by twelve months' notice, into rights enjoyable for an unlimited period by the Powers and incapable of being terminated or modified by Morocco. Neither the preparatory work nor the Preamble gives the least indication of any such intention. The Court finds itself unable to imply so fundamental a change in the character of the then existing treaty rights as would be involved iii the acceptance of this contention.

There is, however, another aspect of this problem arising out of the particular Articles to which reference has been made above. These are the Articles which include provisions necessarily involving the exercise of consular jurisdiction. In this case, there is a clear indication of the intention of the parties to the effect that certain matters are to be dealt with by the consular tribunals and to this extent it is possible to interpret the provisions of the .Act as establishing or confirming the exercise of consular jurisdiction for these limited purposes. The maintenance of consular jurisdiction in so far as it may be necessary to give effect to these specific provisions can, therefore, be justified as based upon the necessary intendment of the provisions of the Act.

This result is confirmed by the provisions of Articles 10 and 16 of the Convention between Great Britain and France of July 29th, 1937. These Articles refer to the jurisdictional privileges "accorded or1 the basis of existing treaties" or "enjoyed by the United States of America under treaties at present in force". They presuppose, therefore, that the jurisdictional privileges of the United States, even after the surrender of British capitulatory rights, would not be limited to the jurisdiction provided by Articles 20 and 21 of the Treaty with Morocco of 1836. This view is also supported by the provisions of Article 4 of the Protocol of Signature to this Convention. This Article provided for the abrogation of certain provisions of the General Treaty of 1856 and, as regards the Act of Algeciras, for the renunciation "of the right to rely upon Articles I to 50, 54 to 65, 70, 71, all provisions of Article 72 after the word 'permit', [p199 ] 75, 76, 80, 97, 101, 102, 104, 113 to 119", and it also provided that "in Article 81 the words 'by the competent consular authority' must be deemed to be omitted and in Article 91, the word 'competent' must henceforth be substituted for the word 'consular' ".

It is clear that, in 1937, France (representing Morocco) and Great Britain were proceeding upon the assumption that certain of the provisions of the Act of Algeciras recognized a limited consular jurisdiction for the purposes of the judicial proceedings therein described.

The Court is not called upon to examine the particular articles of the Act of Algeciras which are involved. It considers it sufficient to state as its opinion that the consular jurisdiction of the United States continues to exist to the extent that may be necessary to render effective those provisions of the Act of Algeciras which depend on the existence of consular jurisdiction.

This interpretation of the Act, in some instances, leads to results which may not appear to be entirely satisfactory. But that is an unavoidable consequence of the manner in which the Algeciras Conference dealt with the question of consular jurisdiction. The Court can not, by way of interpretation, derive from the Act a general rule as to full consular jurisdiction which it does not contain. On the other hand, the Court can not disregard particular provisions involving a limited resort to consular jurisdiction, which are, in fact, contained in the Act, and which are still in force as far as the relations between the United States and Morocco are concerned.

*

The sixth contention of the United States is that its consular jurisdiction and other capitulatory rights in Morocco are founded upon "custom and usage".

This contention has been developed in two different ways. The first relates to custom and usage preceding the abandonment of capitulatory rights in the French Zone by Great Britain in 1937. The second relates to the practice since that date.

Dealing first with the period of 150 years, 1787 to 1937, there are two considerations which prevent the acceptance of this contention.

The first is that throughout this whole period, the United States consular jurisdiction was in fact based, not on custom or usage, but on treaty rights. At all stages, it was based on the provisions either of the Treaty of 1787 or of the Treaty of 1836, together with the provisions of treaties concluded by Morocco with other Powers, especially with Great Britain and Spain, invoked by virtue of the most-favoured-nation clauses. This was the case not merely of the United States but of most of the countries whose nationals were trading in Morocco. It is true that there were Powers represented at the Conference of Madrid in 1880 and at Algeciras in 1906 which had no treaty rights but were exercising consular jurisdiction with [p200] the consent or acquiescence of Morocco. It is also true that France, after the institution of the Protectorate, obtained declarations of renunciation from a large number of other States which were in a similar position. This is not enough to establish that the States exercising consular jurisdiction in pursuance of treaty rights enjoyed in addition an independent title thereto based on custom or usage.

The second consideration relates to the question of proof. This Court, in the Asylum Case (I. C. J. Reports 1950, pp. 276-277), when dealing with the question of the establishment of a local custom peculiar to Latin-American States, said :
"The Party which relies on a custom of this kind must prove that this custom is established in such a manner that it has become binding on the other Party. The Colombian Government must prove that the rule invoked by it is in accordance with a constant and uniform usage practised by the States in question, and that this usage is the expression of a right appertaining to the State granting asylum and a duty incumbent on the territorial State. This follows from Article 38 of the Statute of the Court, which refers to inter-national custom 'as evidence of a general practice accepted as law'."

In the present case there has not been sufficient evidence to enable the Court to reach a conclusion that a right to exercise consular jurisdiction founded upon custom or usage has been established in such a manner that it has become binding on Morocco.

This contention has also been based upon the practice since the date when the treaty right of the United States to exercise extended consular jurisdiction and derivative rights came to an end with the coming into operation of the Convention between France and Great Britain of 1937.

During this period France and the United States were in negotiation with regard to a number of questions, including t he renunciation of capitulatory rights. There are isolated expressions to be found in the diplomatic correspondence which, if considered without regard to their context, might be regarded as acknowledgments of United States claims to exercise consular jurisdiction and other capitulatory rights. On the other hand, the Court can not ignore the general tenor of the correspondence, which indicates that at all times France and the United States were looking for a solution based upon mutual agreement and that neither Party intended to concede its legal position. In these circumstance, the situation in which the United States continued after 1937 to exercise consular jurisdiction over all criminal and civil cases in which United States nationals were defendants, is one that must be regarded as in the [p201] nature of a provisional situation acquiesced in by the Moroccan authorities.

*

Accordingly, it is necessary to conclude that, apart from the special rights under Articles 20 and 21 of the Treaty of 1836 and those which arise from the provisions of the Act of Algeciras, to which reference has been made above, the United States claim to exercise and enjoy, as of right, consular jurisdiction and other capitulatory rights in the French Zone came to an end with the termination of "all rights and privileges of a capitulatory character in the French Zone of the Shereefian Empire" by Great Britain, in pursuance of the provisions of the Convention of 1937.

***

The Court will now consider the claim that United States nationals are not subject, in principle, to the application of Moroccan laws, unless they have first received the assent of the United States Government.

The French Submission is this regard reads as follows :

"That the Government of the United States of America is not entitled to claim that the application of all laws and regulations to its nationals in Morocco requires its express consent;
That the nationals of the United States of America in Morocco are subject to the laws and regulations in force in the Shereefian Empire and in particular the regulation of December 3oth, 1948, on imports not involving an allocation of currency, without the prior consent of the United States Government."

The United States Submission in this regard reads as follows :

"4. Under the regime of extraterritorial jurisdiction now exercised by the United States in Morocco, United States citizens are not subject, in principle, to the application of Moroccan laws.

Such laws become applicable to the United States citizens only if they are submitted to the prior assent of the United States Government and if this Government agrees to make them applicable to its citizens. The Dahir of December 30, 1948, not having been sub-mitted to the prior assent of the United States Government, cannot be made applicable to United States citizens."

The claim that Moroccan laws are not binding on United States nationals, unless assented to by the Government of the United [p202] States, is linked with the regime of Capitulations, and it will not be necessary to repeat the considerations which have already been discussed in dealing with consular jurisdiction.

There is no provision in any of the treaties which have been under consideration in this case conferring upon the United States any such right. The so-called "right of assent" is merely a corollary of the system of consular jurisdiction. The consular courts applied their own law and they were not bound in any way by Moroccan law or Moroccan legislation. Before a consular court could give effect to a Moroccan law it was necessary for the foreign Power concerned to provide for its adoption as a law binding on the consul in his judicial capacity. It was the usual practice to do this by embodying it either in the legislation of the foreign State or in ministerial or consular decrees of that State issued in pursuance of delegated powers. The foreign State could have this done or it could refuse to provide for the enforcement of the law. There was a "right of assent" only to the extent that the intervention of the consular court was necessary to secure the effective enforcement of a Moroccan law as against the foreign nationals.

In the absence of any treaty provisions dealing with this matter, it has been contended that a "right of assent" can be based on custom, usage or practice. It is unnecessary to repeat the reasons which have been given for rejecting custom, usage and practice as a basis for extended consular jurisdiction, and which are largely applicable to the "right of assent". It is, however, necessary to point out that the very large number of instances in which Moroccan laws were referred to the United States authorities can readily be explained as a convenient way of ensuring their incorporation in ministerial decrees binding upon the consular courts. In that way, and in that way only, could these laws be made enforceable as against United States nationals so long as the extended consular jurisdiction was being exercised.
The problem arises in three ways, which must be considered separately.

The first is in cases where the application of a Moroccan law to United States nationals would be contrary to the treaty rights of the United States. In such cases, the application of Moroccan laws, whether directly or indirectly to these nationals, unless assented to by the United States, would be contrary to international law, and the dispute which might arise therefrom would have to be dealt with according to the ordinary methods for the settlement of international disputes. These considerations apply to the Decree of December 30th, 1948, which the Court has found to be contrary to treaty rights of the United States. [p203]

The second way in which the problem arises is in cases in which the co-operation of the consular courts is required in order to enforce the Moroccan legislation. In such cases, regardless of whether the application of the legislation would contravene treaty rights, the assent of the United States would be essential to its enforcement by the consular courts.

The third way in which the problem arises is in cases where the application to United States nationals, otherwise than by enforcement through the consular courts, of Moroccan laws which do not violate any treaty rights of the United States is in question. In such cases the assent of the United States authorities is not required.

Accordingly, and subject to the foregoing qualifications, the Court holds that the United States is not entitled to claim that the application of laws and regulations to its nationals in. the French Zone requires its assent.

***

The Government of the United States of America has submitted a Counter-Claim, a part of which relates to the question of immunity from Moroccan taxes in general, and particularly from the consumption taxes provided by the Shereefian Dahir of February 28th, 1948. The following Submissions are presented with regard to these questions :

On behalf of the Government of the United States :

"2. The treaties exempt American nationals from taxes, except as specifically provided by the same treaties ; to collect taxes from American nationals in violation of the terms of the treaties is a breach of international law.

Such taxes can legally be collected from American nationals only with the previous consent of the United States which operates to waive temporarily its treaty right, and from the date upon which such consent is given, unless otherwise specified by the terms of the consent.

Consumption taxes provided by the Dahir of February 28, 1948, which were collected from American nationals up to August 15, 1950, the date on which the United States consented to these taxes, were illegally collected and should be refunded to them.

3. Since Moroccan laws do not become applicable to American citizens until they have received the prior assent of the United States Government, the lack of assent of the United States Government to the Dahir of February 28, 1948, rendered illegal the collec-tion of the consumption taxes provided by that Dahir."

On behalf of the Government of France :

"That no treaty has conferred on the United States fiscal immunity for its nationals in Morocco, either directly or through the effect of the most-favoured-nation clause ;[p204]

That the laws and regulations on fiscal matters which have been put into force in the Shereefian Empire are applicable to the nationals of the United States without the prior consent of the Government of the United States ;

That, consequently, consumption taxes provided by the Dahir of February 28th, 1948, have been legally collected from the nationals of the United States, and should not be refunded to them."

The Government of the United States contends that its treaty rights in Morocco confer upon United States nationals an immunity from taxes except the taxes specifically recognized and permitted by the treaties. This contention is based on certain bilateral treaties with Morocco as well as on the Madrid Convention of 1880 and the Act of Algeciras of 1906.

The Court will first consider the contention that the right to fiscal immunity can be derived from the most-favoured-nation clauses in Article 24 of the Treaty between the United States and Morocco of 1836 and in Article 17 of the Madrid Convention, in conjunction with certain provisions in treaties between Morocco and Great Rritain and Morocco and Spain.

The General Treaty between Great Britain and Morocco of 1856 provided in the second paragraph of Article IV that British subjects "shall not be obliged to pay, under any pretence whatever, any taxes or impositions". The Treaty between Morocco and Spain of 1861 provided in Article V that "Spanish subjects can not under any pretext be forced to pay taxes or contributions".

It is submitted on behalf of the United States that the most-favoured-nation clauses in treaties with countries like Morocco were not intended to create merely temporary or dependent rights, but were intended to incorporate permanently these rights and render them independent of the treaties by which they were originally accorded. It is consequently contended that the right to fiscal immunity accorded by the British General Treaty of 1856 and the Spanish Treaty of 1861, was incorporated in the treaties which guaranteed to the United States most-favoured-nation treatment, with the result that this right would continue even if the rights and privileges granted by the Treaties of 1856 and 1861 should come to an end.

For the reasons stated above in connection with consular jurisdiction, the Court is unable to accept this contention. It is not established that most-favoured-nation clauses in treaties with Morocco have a meaning and effect other than such clauses in other treaties or are governed by different rules of law. When provisions granting fiscal immunity in treaties between Morocco and third States have been abrogated or renounced, these provisions can no longer be relied upon by virtue of a most-favoured-nation clause. In such circumstances, it becomes necessary to examine [p205] whether the above-mentioned provisions in the Treaties of 1856 and 1861 are still in force.

The second paragraph of Article IV in the General Treaty with Great Britain was abrogated by the Franco-British Convention of July 29th, 1937, Protocol of Signature, Article 4 (a). As from the coming into force of this Convention, that paragraph of Article IV of the General Treaty of 1856 could no longer he relied upon by the United States by virtue of a most-favoured-nation clause.

As already held above, the effect of the declaration made by France and Spain of March 7th, 1914, was an unconditional renunciation by Spain of all the rights and privileges arising out of the regime of Capitulations in the French Zone. This renunciation involved, in the opinion of the Court, a renunciation by Spain of the right of its nationals to immunity from taxes under Article V of its Treaty with Morocco of 1861, since such a general and complete immunity from taxes must be considered as an element of the regime of capitulations in Morocco. When Spain relinquished all the capitulatory rights, it must thereby be considered as having given up the rights to fiscal immunity.

This view is confirmed by the attitude taken by number of other States in this respect. Great Britain renounced all rights and privileges of a capitulatory character in the French Zone by Article I of its Convention with France of 1937. In the Protocol of Signature it was declared that the effect of this Article and of Article 16 is to abrogate a number of articles in the General Treaty of 1856, including, as has been stated above, the second paragraph of Article IV. This seems to show that France, representing Morocco, and Great Britain were proceeding on the assumption that the tax immunity accorded by that Article w-as a right of a capitulatory character. The other States, which, during the years 1914-1916, equally renounced all rights and privileges arising out of the regime of Capitulations in the French Zone, have acquiesced in the taxation of their nationals.

For these reasons, the Court holds that the right to tax immunity accorded by Article V of the Spanish Treaty of 1861, having been surrendered by Spain, can no longer be invoked by the United States by virtue of a most-favoured-nation clause.

The Government of the United States has further contended that it has an independent claim to tax immunity by virtue of being a party to the Convention of Madrid and the Act of Algeciras. It contends that by these instruments a regime as to taxes was set up, which continued the tax immunity in favour of the nationals of foreign States, thereby confirming and incorporating this preexisting regime, which therefore is still in force, except for the States which have agreed to give it up.

The Court is, however, of opinion that the Madrid Convention did not confirm and incorporate the then existing principle of tax [p206] immunity. It merely pre-supposed the existence of this principle and curtailed it by exceptions in Articles 12 and 13 without modifying its legal basis. It did not provide a new and independent ground for any claim of tax immunity.

Similar considerations apply to the Act of Algeciras, which further curtailed the regime of tax immunity by exceptions in Articles 59, 61, 64, and 65. It did not provide any new and independent legal basis for exemption from taxes.

The Government of the United States has invoked Articles 2 and 3 of the Madrid Convention, which grant exemption from taxes, other than those mentioned in Articles 12 and 13, to certain "protected persons". But the "protégés" mentioned in Articles 2 and 3 constituted only a limited class of persons in the service of diplomatic representatives and consuls of foreign States. No conclusion as to tax immunity for nationals of the United States in general can, in the opinion of the Court, be drawn from the privileges granted to this limited class of protected persons.

It is finally contended, on behalf of the Government of the United States, that the consumption taxes imposed by the Dahir of February 28th, 1948, are in contravention of special treaty rights. Reference is made to the Treaty of Commerce between Great Britain and Morocco of 1856, Articles III, VII, VIII and IX, and it is submitted that United States nationals are exempt from those consumption taxes by virtue of these Articles in conjunction with the most-favoured-nation clauses in the Treaty of 1836 between Morocco and the United States.

These four Articles in the British Commercial Treaty of 1856 relate to taxes and duties on goods exported from or imported into Morocco, or on goods conveyed from one Moroccan port to another. The consumption taxes provided by the Dahir of February 28th, 1948, are, according to its Article 8, payable on all products whether they are imported into the French Zone of Morocco or manufactured or produced there. They can not, therefore, be assimilated to the particular taxes mentioned in the articles of the British Commercial Treaty, invoked by the United States, nor can they be considered as a customs duty. The mere fact that it may be convenient in the case of imported goods to collect the consumption tax at the Customs Office does not alter its essential character as a tax levied upon all goods, whether imported into, or produced in, Morocco. It may be recalled in this connection that the Permanent Court of International Justice recognized that fiscal duties collected at the frontier on the entry of certain goods were not to be confused with customs duties ; in its Judgment of June 7th, 1932 in the Free Zones Case (P.C.I.J., Series A/B, No. 46, 11. 172), it laid down that "the withdrawal of the customs line does not affect the right [p207] of the French Government to collect at the political frontier fiscal duties not possessing the character of customs duties".

The Court is, consequently, unable to hold that the imposition of these consumption taxes contravenes any treaty rights of the United States. In such circumstances the question of a partial refund of consumption taxes paid by United States nationals does not arise.

It follows from the above-mentioned considerations that the Government of the United States is not entitled to claim that taxes, including consumption taxes, shall be submitted to the previous consent of that Government before they can legally be collected from nationals of the United States. Since they are, in the opinion of the Court, not exempt from the payment of any taxes in the French Zone, there is no legal basis for the claim that laws and regulations on fiscal matters shall be submitted to United States authorities for approval.

The conclusion which the Court has thus arrived at seems to be in accordance with the attitude which other States have taken with regard to this question. Sax immunity in the French Zone is not claimed either by the United Kingdom or by Spain or any other State which previously enjoyed such a privileged position. The only State now claiming this privilege is the United States, though no tax immunity is guaranteed by its Treaty with Morocco of 1836. To recognize tax immunity for United States nationals alone would not be compatible with the principle of equality of treatment in economic matters on which the Act of Algeciras is based.

***
The final Submission of the United States of America upon that part of its Counter-Claim which is based upon Article 95 of the General Act of Algeciras, is as follows :

"1. Under Article 95 of the Act of Algeciras, the value of imports from the United States must be determined for the purpose of customs assessments by adding to the purchase value of the imported merchandise in the United States the expenses incidental to its transportation to the custom-house in Morocco, exclusive of all expenses following its delivery to the custom-house, such as customs duties and storage fees.

It is a violation of the Act of Algeciras and a breach of international law for the customs authorities to depart from the method of valuation so defined and to determine the value of imported merchandise for customs purposes by relying on the value of the imported merchandise on the local Moroccan market." [p208]

The final Submission of the Government of France upon this part of the Counter-Claim is as follows :

"That Article 95 of the Act of Algeciras defines value for customs purposes as the value of the merchandise at the time and at the place where it is presented for customs clearance ;"

which, as was made clear in the oral argument, means the value in the local, i.e. Moroccan, market.

The necessity, evidenced by Articles 95, 96 and 97 of the Act of Algeciras, of creating some kind of machinery for securing a just valuation of goods by the Customs authorities would appear to follow, inter alia, (a) from the principle of economic equality which is one of the principles underlying the Act, and (b) from the fact that the import duties were fixed by the signatory Powers at 12½ %. Clearly, it would be easy, if it were desired to do so, to discriminate against particular importers by means of arbitrary valuations or to evade a fixed limitation of duties by means of inflated valuations. But while the signatory Powers realized the necessity for some such machinery, it does not appear that the machinery has given rise to a practice which has been consistently followed since the Act entered into force.

Article 95 specifies four factors in valuing merchandise :

(a) the valuation must be based upon its cash wholesale value ;

(b) the time and place of the valuation are fixed at the entry of the merchandise at the custom-house ;

(c) the merchandise must be valued "free from customs duties and storage dues", that is to say, the value must not include these charges ;

(d) the valuation must take account of depreciation resulting from damage, if any.

Article 96, which relates only to the principal goods taxed by the Moorish Customs Administration, contemplated an annual fixing of values by a "Committee on Customs Valuations" sitting at Tangier. The local character of this Committee, and of the persons whom it is directed to consult, should be noted. The schedule of values fixed by it was to be subject to revision at the end of six months if any considerable changes had taken place in the value of certain goods. Article 96 is procedural and is intended to operate within the ambit of Article 95.

Article 97 provided for the establishment of a permanent "Committee of Customs", intended to supervise the customs service on a high level and to watch over the application of Article 96 and 97, subject to the advice and consent of the Diplomatic Body at Tangier".

The Committee on Customs Valuations referred to in Article 96 appears to have lapsed in 1924 when the Convention of Decem-[p209]ber 18th, 1923, on the Tangier Zone came into force, and replaced it by a Committee representing the three Zones. The latter Committee has not met since 1936.

Articles 82 to 86 of the Act, which relate to declarations by importers, must also be noted. Article 82 requires an importer to file a declaration, which must contain a detailed statement setting forth the nature, quality, weight, number, measurement and value of the merchandise, as well as the nature, marks and numbers of the packages containing the same. A declaration of value made by the importer can clearly not be decisive, because he is an interested party, but at the same time he knows more about the goods than anybody else, and, unless fraud is suspected, it is right that the value appearing in the declaration should form an important element in the valuation about to be made.

It can not be said that the provisions of Article 95 alone, or of Chapter V of the Act considered as a whole, afford decisive evidence in support of either of the interpretations contended for by the Parties respectively. The four factors specified by Article 95 are consistent with either 'interpretation ; in particular, the expression "free from customs duties and storage dues" affords no clear indication, because, if the value in the country of origin, increased by the amount of insurance, freight, etc., is to be taken as the basis, this expression means "before entering the customs office and paying duties" ; whereas, if the value in the local market is to be accepted as the basis, some such expression is necessary (or at any rate prudent) in order to indicate that the duty of 12½ % must not be levied on a value which already contains the 12½ %.
The Court has examined the earlier practice, and the preparatory work of the Conference of Algeciras of 1906, but not much guidance is obtainable from these sources. The Commercial Agreement made between France and Morocco, dated October 4th, 1892, consists of two letters exchanged between the Foreign Minister of Morocco and the Minister of France in Morocco, the latter of which contains the expression :

"These goods shall be assessed on the basis of their cash wholesale market value in the port of discharge, in reals of vellon."

A preliminary draft of the Act (p. 97 of French Documents diplomatiques, 1906, fascicule 1, Affaires du Maroc, entitled "II. Protocoles et comptes rendus de la Conférence d'Algésiras”) contains the following article :

"Article XIX.—Import and export duties shall be paid forthwith in cash at the custom-house where clearance is effected. The ad valorenz duties shall be determined and paid on the basis of the cash wholesale value of the goods at the port of discharge or the custom-[p204]house in the case of imports. Merchandise can only be removed after the payment of customs duties and storage.

The holding of the goods or the collection of duty shall, in every case, be made the subject of a regular receipt delivered by the officer in charge."

Later (p. IOO), upon a British proposal, the second sentence was modified so as to read :

"The ad valorem duties shall be determined and paid on the basis of the cash wholesale value of the goods at the custom-house, free from customs duties."

At a later stage the German delegation made the following proposal (ibid., p. 232) :

"The ad valorem duties imposed on imports in Morocco shall be assessed on the value of the imported goods in the place of shipment or of purchase, to which shall be added the transport and insurance charges to the port of discharge in Morocco...."

That amendment was rejected, from which it may be inferred that the value in the country of origin was rejected as the conclusive test.

It is also necessary to examine the practice of the customs authorities since 1906, in so far as it appears from the materials made available to the Court by the Parties. It seems that there has been a reluctance to attribute a decisive effect to any single factor in valuing merchandise.

For instance, in a letter of July 16th, 1912, from the Controller of Moroccan Customs to the American Minister at Tangier, it is stated that the customs officers "apply for the appraisal of merchandise the rules established by the Act of Algeciras and by the Customs regulations. They use market prices, bills of sale and their professional knowledge."

The following excerpts occur later in the same letter :
"The bill of sale is an element of valuation, but it is not conclusive evidence.
………………………………………………………………………………………………
The customs has always proceeded as described above in regard to petroleum products imported from Fiume and from Trieste ; for which importers furnish means of appraisal by attaching to the declarations the original bills of sale, of which the prices are compared with the market prices of origin.
………………………………………………………………………………………………
This value [i.e. for customs purposes] includes the purchase price of the petroleum f.0.b. New York, increased by all expenses subsequent to the purchase, such as export duties paid to foreign customs, transportation, packing, freight, insurance, handling, [p211] unloading, etc.—in short, all that contributes to make up at the moment of presentation at the customs office the cash wholesale value of the product, according to which, under Article 95 of the Act of Algeciras, the duties must be paid.
……………………………………………………………………………………………”

It is also interesting to note from the Minutes of the meeting at Tangier of the Committee on Customs Valuations on June 7th, 1933, that the Director of Customs explained :

".... that his Department adopts as elements of valuation for the application of the duties concerned, the invoice of origin, transport costs to the port of importation, the value of the merchandise on the local market on arrival, general market price lists and any other information which may be useful to fix the value upon which the duty is based".

On the other hand, passages can be found in the Customs regulations and in circulars issued by the Moroccan Debt Control in which the emphasis is laid upon the value in the Moroccan market as the important factor. The latest "Tables of minimum and maximum values of the principal merchandise imported into Morocco", adopted by the Committee on Customs Valuations at their last meeting on March 11th, 1936, at Tangier, reveal a range so great that they could only afford the most general guidance as to the actual valuation of a particular cargo or piece of merchandise.

The general impression created by an examination of the relevant materials is that those responsible for the administration of the customs since the date of the Act of Algeciras have made use of all the various elements of valuation available to them, though perhaps not always in a consistent manner.

In these circumstances, the Court is of the opinion that Article 95 lays down no strict rule on the point in dispute. It requires an interpretation which is more flexible than either of those which are respectively contended for by the Parties in this case.

The Court is of the opinion that it is the duty of the Customs authorities in the French Zone, in fixing the valuation of imported goods for customs purposes, to have regard to the following factors :

(a) the four factors specified by Article 95 and mentioned above ;
(b) the contents of the declaration which the importer is required by the Act to file in the custom-house ;

(c) the wholesale cash value in the market of the French Zone ;

(d) the cost in the country of origin, increased by the cost of loading and unloading, insurance, freight, and other charges incurred before the goods are delivered at the custom-house ; [p212]

(e) the schedule of values, if any, which may have been prepared by the Committee on Customs Valuations referred to in Article 96 or by any committee which may have been substituted therefor by arrangements to which France and the United States have assented expressly or by implication ;

(f) any other factor which is required by the special circumstances of a particular consignment or kind of merchandise.

The factors referred to above are not arranged in order of priority but should operate freely, within any limits that have been, or may be, prescribed under Article 96 of the Act ; and, in view of the governing principle of economic equality, the same methods must be applied without discrimination to all importations, regardless of the origin of the goods or the nationality of the importers. The power of making the valuation rests with the Customs authorities, but it is a power which must be exercised reasonably and in good faith.

***

For these reasons,

The Court,

on the Submissions of the Government of the French Republic,

unanimously,

Rejects its Submissions relating to the Decree of December 3oth, 1948, issued by the Resident General of the French Republic in Morocco ;

unanimously,

Finds that the United States of America is entitled, by virtue of the provisions of its Treaty with Morocco of September 16th, 1836, to exercise in the French Zone of Morocco consular jurisdiction in all disputes, civil or criminal, between citizens or protégés of the United States ;

by ten votes to one,

Finds that the United States of America is also entitled, by virtue of the General Act of Algeciras of April 7th, 1906, to exercise in the French Zone of Morocco consular jurisdiction in all cases, civil or criminal, brought against citizens or protégés of the United States, to the extent required by the provisions of the Act relating to consular jurisdiction ;

by six votes to five,

Rejects, except as aforesaid, the Submissions of the United States of America concerning consular jurisdiction ; [p213]

unanimously,

Finds that the United States of America is not entitled' to claim that the application to citizens of the United States of all laws and regulations in the French Zone of Morocco requires the assent of the Government of the United States, but that the consular courts of the United States may refuse to apply to United States citizens laws or regulations which have not been assented to bv the Government of the United States ;

on the Counter-Claim of the Government of the United States of America,

by six votes to five,

Rejects the Submissions of the United States of America relating to exemption from taxes ;

by seven votes to four,

Rejects the Submissions of the United States of America relating to the consumption taxes imposed by the Shereefian Dahir of February 28th, 1948 ;

by six votes to five,

Finds that, in applying Article 95 of the General Act of Algeciras, the value of merchandise in the country of origin and its value in the local Moroccan market are both elements in the appraisal of its cash wholesale value delivered at the customhouse.

Done in English and French, the English text being authoritative, at the Peace Palace, The Hague, this twenty-seventh day of August, one thousand nine hundred and fifty-two, in three copies, one of which will be placed in the archives of the Court and the others will be transmitted to the Government of the French Republic and to the Government of the United States of America, respectively.

(Signed) Arnold D. McNair,
President.

(Signed) E. Hambro,
Registrar.
[p214]Judge Hsu Mo declares that, in his opinion, the jurisdictional rights of the United States of America in the French Zone of Morocco are limited to those provided in Articles 20 and 21 of its Treaty with Morocco of September 16th, 1836, and that the United States is not entitled to exercise consular jurisdiction in cases involving the application to United States citizens of those provisions of the Act of Algeciras of 1906 which, for their enforcement, carried certain sanctions. The Act of Algeciras, as far as the jurisdictional clauses are concerned, was concluded on the basis of a kind of consular jurisdiction as it existed at that time in its full form and in complete uniformity among the Powers in Morocco. The various provisions, in referring to "consular jurisdiction", "competent consular authority", "consular court of the defendant", etc., clearly meant that jurisdiction which was being uniformly exercised by foreign States over their respective nationals as defendants in all cases. They did not mean such limited jurisdiction as might be exercised by the United States consular courts, in accordance with Article 20 of the Moroccan-United States Treaty of 1836, in cases involving United States citizens or protégés only. When, therefore, consular jurisdiction in its full form ceased to exist in respect of all the signatory States to the Act of Algeciras, the basis for the application by the various consular tribunals of the measures of sanction provided in that Act disappeared, and the ordinary rules of international law came into play. Consequently, such sanctions should thenceforth be applied by the territorial courts, in the case of United States citizens as well as in the case of all other foreign nationals. As regards reference in the Franco-British Convention of 1937 to the jurisdictional privileges enjoyed by the United States, it must be considered as a precautionary measure on the part of France against the possibility of the refusal of the United States to relinquish such privileges. In any case, the rights of the United States vis-à-vis Morocco in matters of jurisdiction must be determined by their own treaty relations, and could not derive from any admission made by France on Morocco's behalf to a third party.

Judges Hackworth, Badawi, Levi Carneiro and Sir Benegal Rau, availing themselves of the right conferred on them by Article 57 of the Statute, append to the Judgment the common statement of their dissentirig opinion.

(Initialled) A. D. McN

(Initialled) E. H. [p215]


DISSENTING OPINION OF JUDGES HACKWORTH, BADAWI, LEVI CARNEIRO AND SIR BENEGAL RAU

We feel bound to dissent from the Court on the conclusions relating to consular jurisdiction, fiscal immunity and the interpretation of Article 95 of the Act of Algeciras.

Consular jurisdiction

The Court has found that the United States is not entitled to exercise, as of right, consular jurisdiction in the French Zone of Morocco in cases other than those expressly provided for in the Treaty of 1836 (Articles 20 and 21) and in the Act of Algeciras.

There is hardly anyone to-day who will question the general proposition that what is known as the capitulatory regime is an anachronism which should be brought to a speedy end, wherever it exists. In fact the United States Government itself has at all times been ready to negotiate with both France and Morocco a new arrangement or agreement "to replace and recast in a form more properly adapted to present circumstances the treaty bounds originally contracted with the State of Morocco". (Rejoinder, page 43.)

The question in the present case is not whether the capitulatory regime is good or bad, but whether and to what extent it subsists on a legal basis in respect of United States nationals in Morocco. This is the issue raised in the first Submission of the French Government and the third Submission of the United States Government. In both Submissions the reference is to Morocco.

The judgment of the Court is concerned with consular jurisdiction only in the French Zone.

The Court holds that except for the limited consular jurisdiction aforesaid, the United States claim to such jurisdiction came to an end with the termination of the capitulatory rights and privileges of Great Britain in that Zone by virtue of the Anglo-French Convention of 1937. We cannot accept this view.

By Article 10 of the Anglo-French Convention of 1937, the United Kingdom agreed that henceforth it could not invoke that Article or Article 20 (a most-favoured-nation clause) of the Anglo-Moroccan General Treaty of 1856 for the purpose of claiming the "jurisdictional privileges accorded on the basis of existing treaties concluded by His Majesty the Sultan of Morocco and the United States of America". Article 16 of the same Convention contains a similar provision referring to "jurisdictional privileges enjoyed by the United States under treaties at present in force". It mentions [p216] Article 20 of the General Treaty of 1856 and also Article 13, another most-favoured-nation clause. From these provisions it appears that in the opinion of the parties to the Convention, that is to Say, in the opinion of the French Government and the British Govern-ment, the United States would continue to enjoy "jurisdictional privileges", as of right, in Morocco, even after the Anglo-French Convention of 1937 came into force.

After the signature of the Convention, the French Ambassador in Washington wrote to the Secretary of State on August 26th, 1937 : "The United States enjoys in Morocco the capitulatory regime by virtue of the Treaty concluded between the two Powers on September 16th, 1836." He then referred to Article 25 of the Treaty of 1836 and continued : "The above-mentioned Convention between the United States and Morocco not having been denounced, the United States continues to benefit by the capitulatory regime in Morocco. In fact, following the conclusion of the Franco-Britannic Agreement (of 1937), it remains to-day the last Power in a position to avail itself of that regime. In advising Your Excellency of the desire of my Government to conclude with the American Government an agreement which would put an end to this regime, I take the liberty of recalling to Your Excellency that during the Conference of Montreux, which ended the regime of the capitulations in Egypt, the representative of the American Government made declarations indicating the conciliatory spirit in which the American Government intended to settle this question .... These declarations have given my Government reason to think that, like the British Government, the American Government will be willing to consent to the abolition of the regime of capitulations in Morocco."

In the light of these statements, it seems clear that in 1937, the French Government regarded the United States as entitled to avail itself of the capitulatory regime even after the Anglo-French Convention of 1937. We concur in this view and consider that the "jurisdictional privileges" referred to in Articles IO and 16 of the Anglo-French Convention of 1937 can mean nothing else than full consular jurisdiction. According to those Articles, these jurisdictional privileges rested "on the basis of existing treaties". This brings us to the most important of these treaties, viz., the Act of Algeciras.

We regard the Act of Algeciras as so fundamental that "every article arid clause thereof must be observed and fulfilled with good faith". These were the words addressed to the United States and its citizens by President Theodore Roosevelt when causing the Act to be made public in 1907. The importance of the Act and of the principles which it embodies has been acknowledged by all. We [p217] therefore consider that in interpreting the Act due effect must be given not only to its express provisions but also to the underlying implications which lend coherence and meaning to the express provisions. Otherwise the entire structure of the Act may be undermined. So far as the United States is concerned, none of its provisions have been abrogated or renounced.

The Act of Algeciras is a great multilateral convention directly binding upon Morocco and the United States as well as the other signatory Powers. Its status in regard to the old bilateral treaties, as an independent and superior act, is formally expressed in its last Article 123. The scheme of rights and obligations which it established, whether expressly or by necessary implication, as between Morocco and the United States can not, therefore, be allowed to be impaired by any transactions concluded between any of the other signatories without the concurrence of both Morocco and the United States. This appears to us to be fundamental.

At the date of the Act of Algeciras, all the foreign signatory States had acquired, by usage or by treaty and usage, full consular jurisdiction in Morocco. The system in its entirety had been well established for at least fifty years, as shown by the Anglo-Moroccan General Treaty of 1856. The Act adopted the system as it stood and, far from seeking to end it or to modify it in any way, extended it to the new criminal prosecutions and civil suits that might arise under the Act. We need not enumerate all the articles of the Act in which this has been done, but shall mention only the salient ones. Article 29 extends the consular system to prosecutions for violations of the Regulations in Chapter II of the Act, and Articles IOI and 102 to those of the Regulations in Chapter V. Article 45 extends the system to actions instituted by the State Bank of Morocco against foreign nationals. The extent to which the capitulatory system, with all its implications, is embedded in the Act is indicated by the fact that when Great Britain renounced the system in the French Zone by the Convention of 1937, the effect was declared in the Protocol of Signature of the Convention to be "to involve the renunciation by His Majesty the King of the right to rely upon" no less than 78 articles out of the 123 articles of the Act.

We consider that the Act has adopted the system. It was the natural thing to do at that date and it was an obvious inducement to the foreign signatory Powers not only to assent to all the laws and regulations made by or under the Act, but to uphold what was of paramount importance to the ruler of Morocco at that time, namely, "the triple principle of the sovereignty and independence of H.M. the Sultan, the integrity of his domains and economic liberty without any inequality", which was declared in the Preamble of the Act to be the foundation of a new order. [p218]

The consular system has been adopted in the Act, not so much by express provision as by necessary implication. It would have occurred to no one to do so except by implication, because the system \vas part of the established order at that time. To give effect to the bare provisions of the Act and ignore this basic implication in respect of all other cases of the exercise of consular jurisdiction would result in curious anomalies. For example, it is admitted that actions against a United States national by the State Bank of Morocco must, under Article 45 of the Act, be brought before the United States consular court; but not any other civil action by a Moroccan or a foreigner. What is there peculiar to the Bank's actions that they and they alone should be tried by the consular court ? Similarly, what is the special feature of prosecutions for breach of customs and arms regulations that they and they alone should be dealt with by the consular court under Chapters II and V of the Act ? Furthermore, what is there peculiarly onerous about the taxes mentioned in Chapter IV of the Act that they and only they should be leviable from foreign nationals subject to the safeguards provided in that Chapter, while other and perhaps heavier taxes may be freely levied ? It is difficult to find a satisfactory answer to these questions.

It seems to us that if the Act of Algeciras is to be maintained as a logical and coherent structure, the full consular system embedded in it must be adopted.

There is no danger that this adoption would confer upon the system any longer lease of life than it would otherwise have had. For, even without the Act, the system, being based inter alia upon long-established usage, which is only another name for agreement by conduct, can only be terminated in the way in which international agreements can be terminated ; and its adoption in the Act makes no difference in this respect.

We now come to the implications of another important multilateral treaty, the Convention of Madrid. Article 5 of the Convention makes special provision for the trial of civil suits against protégés commenced before protection is granted arid against ex-protégés before protection is withdrawn ; it also provides that the right of protection shall not be exercised towards protégés under prosecution for a crime before they have been tried by the authorities of the country or before their sentence has been executed. These provisions necessarily imply that civil suits and prosecutions against the protégés of any foreign Power that signed the Convention are normally to be tried by the consular courts of that Power ; otherwise the Article, which prescribes special rules for pending cases, would be unintelligible. Amongst the protégés are not only [p219] Moorish subjects employed by the legation and the consular officers of the foreign Power, but also a certain number of Moorish factors, brokers, or agents employed by foreign merchants for their business affairs. Articles I and I0 of the Convention maintain the position of these factors, brokers and agents unchanged.

The Convention in still in force, so far as the United States is concerned, so that United States protégés are still entitled to its benefits. If such is the position of United States protégés, who are Moroccan subjects, a fortiori must it be the position of United States nationals, who are in some cases their employers in business. This was the view of the French Government itself in 1905, as evidenced by a despatch dated August 21st, 1905, addressed by the President of the French Cabinet to the French Diplomatic Representatives in London, Petrograd, Berlin, Rome, Vienna, Washington, Brussels, The Hague, Copenhagen, Stockholm and Lisbon.

"Our Minister at Tangier informs me that the Shereefian Government has imprisoned one of Our Algerian subjects .... and made known its intention to remove him from our jurisdiction.

This fact is a violation of treaties.
………………………………………………………………………………………………
All the Powers signatories with Morocco to the Madrid Convention of July 3, 1880, or having adhered to it, have an interest in the respect of the principles which are put in issue. By virtue of a rule recognized by this international instrument, Moroccan protégés are removed from Moroccan jurisdiction ; a fortiori the foreigners, subjects of the Powers, must benefit of the same advantage.

I would appreciate your indicating to the Government to which you are accredited the point of view of the Government of the [French] Republic...." (Rejoinder, p. 34.)

At the date of the Madrid Convention, the signatory Powers were, independently of the Convention, entitled to claim full consular jurisdiction for their nationals, and therefore it was not necessary to mention this right separately in the Convention itself. But even where the external sources of the right have ceased, the right continues to flow from the express provisions which have been inserted in the Convention itself in respect of protégés.

The Court has rejected the contention of the United States Government basing its claim to consular jurisdiction and other capitulatory rights in Morocco on "custom and usage". The rejection appears to proceed on the ground that sufficient evidence has [p220] not been produced in support of the claim. We consider that the evidence available is sufficient.

Usage is an established source of extraterritorial jurisdiction and has, for example, been enumerated as a lawful source in the Preamble to the British Foreign Jurisdiction Act, 1890, which recites that "by treaty, capitulation, grant, usage, sufferance and other lawful means, Her Majesty the Queen has jurisdiction within divers foreign countries". Usage and sufferance are only different names for agreement by prolonged conduct, which may be no less binding than agreement by the written word. The full consular jurisdiction which the United States in fact exercises in Morocco to this day has been in existence for nearly a hundred years, if not longer ; and during this long period both treaties and usage, in the broad sense of these terms, have contributed to the total result in varying measure. It is not possible, nor is it of any practical inter-est, at this distance of time, to isolate and assess separately the contribution made by each of these sources. Both were at work supplementing each other.

The first treaty in which full consular jurisdiction was conceded by the ruler of Morocco to a foreign Power appears to be the Anglo-Moroccan General Treaty of 1856. It is admitted in the French Government's Reply to the Counter-Memorial of the United States Government that this Treaty incorporated existing usages, which necessarily implies that usage was at work even before 1856. It is true that the admission has been made for the purpose of contending that after incorporation the usages shared the fate of the Treaty, a contention with which we do not agree ; nevertheless, there is the admission that the Treaty incorporated prior usage.

Article XIV of that Treaty and Article XVI of the Treaty of 1861 between Morocco and Spain are, equally, evidence that usage was at work before, as well as during, the period of these two Treaties. These Articles provide that litigation between British subjects or Spanish subjects and other foreigners shall be decided solely in the tribunal of the foreign consuls without the interference of the Moorish Government "according to the established usages which have hitherto been acted upon or may hereafter be arranged between such consuls", or "could according to established forms, or according to those which may be agreed upon among the said consuls". This shows that usage was operating and was supplementing treaties both before and after 1856 and 1861.

It is also significant that United States Congressional legislation has, ever since 1860, invested the consular courts in Morocco with jurisdiction in both criminal and civil matters "so far as the same is allowed by treaty, and in accordance with the usages of the countries in their intercourse with the Franks or other Christian nations". In other words, the United States has been openly relying [p221] on usage as one of the sources of its jurisdiction ever since 1860.

Even after 1937, when, according to the French Government, the benefits of the capitulatory provisions of the Treaties of 1856 and 1861 were no longer available to the United States, the French Government has been transmitting Moroccan taxation and other laws to the United States Government in order to have them made applicable to United States nationals in the French Zone. The assent of the United States to taxation laws was sought in this way some twenty-three times in the period 1938-1948. This could only be on the ground that jurisdiction to enforce these laws against United States nationals lay with the United States consular courts.

The conduct of the French Government was not due merely to what was described during the hearings as "gracious tolerance". As early as October 1937, the Secretary of State of the United States wrote as follows to the French Ambassador in Washington :

"I observe that in your Note [of August 26, 1937], reference is made to Article 25 of the American-Moroccan Treaty of September 16, 1836, which provides for the termination of the Treaty upon one year's notice given by either party. In order that there may be no misunderstanding, I think it is pertinent to point out that American capitulatory rights in Morocco are derived not only from the American-Moroccan Treaty of 1836, but also from other treaties, conventions, or agreements and confirmed by long-established custom and usage."

Thus the French Government knew in 1937 that the United States was asserting usage as at least one legal basis of its rights, and in spite of this knowledge, the French Government continued the old practice without any reservation. It \vas not, therefore, a case of mere "gracious tolerance". As we have shown, usage has been continuously at work, in varying measure, during a period of nearly a hundred years, if not longer, and, therefore, what has been happening since 1937 is evidence of a continuous process which began nearly a century before that date.

It is significant that during the years 1914-1916, France negotiated a series of agreements with foreign States by which they renounced claiming their "rights and privileges arising out of the regime of capitulations" in the French Zone. Some of these States, such as Switzerland, Greece and Japan, had never entered into treaty relations of any sort with Morocco. Only through usage could these States have acquired the rights which they undertook not to claim. The position of the United States can not be worse merely because it had treaties with Morocco containing most-favoured-nation clauses. [p222]

It has often been said in the course of this case that the United States is now the only Power that has not renounced its capitulatory rights in Morocco. This is hardly accurate. The renunciation by Great Britain in the Anglo-French Convention of 1937 is confined to the French Zone ; so too is the renunciation (such as it is) by Spain in the Franco-Spanish Declaration of 1914. Neither of these renunciations extends to the whole of 14orocco which the United States still treats as a single country. Moreover, there are still "French tribunals" in the French Zone and "Spanish tribunals" in the Spanish Zone. These, it may be noted, are the names used in the Franco-Spanish Declaration of 1914. Technically, the French tribunals are not consular courts ; but in fact they exercise, as part of their functions, the jurisdiction formerly exercised by the French consular courts. The United States is not therefore claiming a unique position. Such inequality as may appear to exist is the result, not of the claim of the United States, but of attempts to secure piecemeal renunciation, from each signatory Power, of rights which had accrued to all of them equally through usage and treaties, particularly the Convention of Madrid and the Act of Algeciras. This appears to be admitted in the Memorial of the French Government :

"Moreover, in Morocco especially, the disappearance of capitulatory privileges in general had logically to result from simultaneous action by all foreign Powers. Otherwise, inequalities of status would have resulted which would have been in contradiction with the general contractual principles governing the international status of the Shereefian Empire." (Memorial, 1). 47.)

Our conclusion, upon this part of the case, is that the third Submission of the Government of the United States, which relates to its jurisdictional privileges, must be accepted, even apart from the effect of the most-favoured-nation clauses in its Treaty of 1836 with Morocco.

Fiscal Immunity

The right to tax necessarily implies the right to take coercive measures in case of non-payment. It follows from what we have said on the issue of consular jurisdiction that no coercive measures can be taken against the person or property of nationals of the United States except with the aid of the consular courts of the United States, which, in the ultimate analysis, means the assent of the United States. In this sense, and to this extent, therefore, they enjoy a general immunity from Moroccan taxation, apart from the effect of any most-favoured-nation clause. [p223]

We need not repeat our arguments regarding consular jurisdiction based on the Convention of Madrid and the Act of Algeciras. But there are certain special provisions both in the Convention and the Act which relate to taxes on foreigners and to which we would invite attention.

The Convention of Madrid provides for the levy of two taxes on foreigners, the agricultural tax and the gate tax. Article 12 deals with the agricultural tax and is in the following terms :

"Foreigners and protected persons who are the owners or tenants of cultivated land, as well as brokers engaged in agriculture, shall pay the agricultural tax. They shall send to their Consul annually, an exact statement of what they possess delivering into his hands the amount of the tax.

He who shall make a false statement shall be fined double the amount of the tax that he would regularly have been obliged to pay for the property not declared. In case of repeated offense this fine shall be doubled.

The nature, method, date and apportionment of this tax shall form the subject of a special regulation between the Representatives of the Powers and the Minister of Foreign Affairs of His Shereefian Majesty."

Article 13 deals with the gate tax and runs thus :

"Foreigners, protected persons and brokers owning beasts of burden shall pay what is called the gate-tax. The apportionment and the manner of collecting this tax which is paid alike by foreigners and natives, shall likewise form the subject of a special regulation between the Representatives of the Powers and the Minister of Foreign Affairs of His Shereefian Majesty.

The said tax shall not be increased without a new agreement with the Representatives of the Powers."

Chapter IV of the Act of Algeciras provided for the levy of some additional taxes from foreigners. In the case of every one of these new taxes, as in the case of those provided for in the Convention of Madrid, special safeguards are prescribed. The "tertib" leviable under Article 59 is not to be applied to foreign subjects except under the conditions stipulated by the Regulations of the Diplomatic Body at Tangier on November 23rd, 1903. This Regulation provided, inter alia, that if a foreigner or protégé refused to pay the tax in time and coercive measures became necessary, these measures would be taken exclusively through the consular authorities. Safe-guards are provided under Article 61 in respect of the building taxes ; under Article 64 in respect of certain taxes on trades, industries, and professions ; under Article 65 in respect of the stamp tax, the transfer tax on the sale of real estate, the statistical and weighing tax and the wharfage and lighthouse dues ; under Article 70 in respect of harbour dues ; under Article 71 in respect of customs-storage dues.[p224]

We would invite particular attention to the second paragraph of Article 64 :

"If as the result of the collection of such taxes from Moorish subjects the Diplomatic Body at Tangier should deem it advisable to extend the same to those under foreign jurisdiction, it is hereby specified that the said taxes shall be municipal."

This should be read with Article 76, which implies that for the purposes of Article 64, the decision of even a majority of the Diplomatic Body would not suffice. Nothing could indicate more clearly that foreigners were not to be taxed except with the consent of their Government.

So long as the provisions of the Convention of Madrid and the Act of Algeciras to which we have referred are in force, as they undoubtedly are in force so far as the United States is concerned, a general immunity follows from those provisions by necessary implication. For it would be meaningless to enumerate certain special taxes and provide safeguards for their levy from foreign nationals, if the rest of the whole field of taxation were left open. At the time of the Convention of Madrid and the Act of Algeciras, foreign nationals enjoyed a general immunity from taxes. Therefore, the taxes enumerated in these treaties were exceptions to a prevailing general rule and they must now be read as if the general rule were embodied in the treaties.

Our conclusion on this subject is that United States nationals are entitled to a general immunity from taxes save those specifically recognized by the Convention of Madrid, the Act of Algeciras, and any other relevant treaty or agreement.

We are consequently of opinion that the consumption taxes provided for in the Dahir of February 28th, 1948, were wrongly levied from United States nationals up to August 15th, 1950, the date on which the United States consented to these taxes. But we have not sufficient data upon which to base a conclusion as to the refund of the taxes aheady paid.

Spanish Treaty of 1861

In view of the preceding considerations, the United States need not, in our opinion, rely on the Spanish Treaty of 1861 as one of "the existing treaties" of "the treaties at present in force" referred to in Articles 10 and 16 of the Anglo-French Convention of 1937, from which the United States derives its broader consular jurisdiction and fiscal immunity. (Articles 5 and 16.)

The United States having in its pleadings relied on this Treaty, the Court thought it necessary to adjudicate on the contention and reject it on the ground that the relevant part of the Treaty has [p225] been abrogated by the Declarations of 1914 made by Spain and France on behalf of Morocco.

In view of the fact that Spain was not represented before the Court during the hearings, we think it inadvisable to base any conclusion upon a definite finding that any part of the Treaty of 1861 with Spain has been abrogated or that it has not been abrogated. Without pronouncing any definite opinion one way or the other, we may point out that the abrogation of the Treaty is more than doubtful.

Article 63 provides :

"It is agreed that after 10 years have transpired from the day of the exchange of the ratifications of the present Treaty, either of the two contracting Parties shall have a right to demand the modification of the Treaty ; but until such modification shall have taken place by mutual agreement, or a new treaty shall have been concluded and ratified, the present one shall continue in full force and vigour,."

Neither the Convention of 1912 between France and Spain, nor the Declarations of 7th March and of 14th November 1914, seem to accomplish the modification of the Treaty by mutual agreement, since in neither of them did France purport to act on behalf of Morocco. The letter of the French Embassy of 10th January 1917 to the Department of State (see Annexes to Counter-Memorial, P. 277), referring to the Spanish rights mentioned in Article I of the Treaty of Fez, specifies expressly that they were defined "by an agreement between the Governments, not of Morocco, but of France and Spain".

On the other hand, these agreements do not seem to stipulate any renunciation by either of the two Governments of its capitulatory rights in the other zone, in the Ray the United Kingdom renounced its own rights by the 1937 Convention. The difference between the formula adopted in the Declarations of 1914 and that of the 1937 Convention is not without significance. To renounce claiming a right may be nothing more than the suspension of the exercise of that right.

The renunciation was made in view of the guarantees of judicial equality offered to foreigners by the French or Spanish tribunals respectively. It may therefore be considered as subject to a condi-tion. In this case, each of the two Governments would be entitled to re-open the question of its rights in the event of the guarantees proving to be ineffective, or the tribunals ceasing to exist or being substantially modified, or in the event of a change in the political position of either of them.

It has been contended that there is no difference between the two formulas, that the choice of the wording of the Declarations of 1914 is merely due to considerations of diplomatic convenience, and [p226]finally that it was the same formula which was used by France in more than 20 Declarations by which it obtained between 1914 and 1916 the renunciation of the Powers subscribing to these Declarations. It is asserted that France was entirely free to choose either of the two formulas, and that its choice must therefore be construed as evidence of their perfect equivalence.

In fact, these 20 Declarations which are posterior to the Spanish Declaration, have simply followed the pattern of that Declaration. They would not, by themselves, impair any conclusion which may be drawn from the wording of their model.

In these conditions, the most-favoured-nation clauses granted to the United States by the Treaty of 1836 FN1, when applied to the Treaty of 1861, viewed in the light of the 1914 Declarations, ma' have the effect of extending to the United States all the rights and favours granted by that Treaty, notwithstanding the suspension of their exercise by Spain.

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FN1 The most-favoured-nation clause in Article 24 of the Treaty of 1930 runs as follows : " .... and it is further declared that whatever indulgence., in trade or otherwise, shall be granted to any of the Christian Powers, the citizens of the United States shall be equally entitled to them".
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It is recognized that the failure by a Power, to which a favour has been granted, to exercise that favour does not affect or prejudice, the right of any other Power entitled to that favour by virtue of a most-favoured-nation clause. For all useful purposes, suspending the exercise of a favour is equivalent to failure to exercise it. Therefore, nothing would or should preclude the United States from exercising the capitulatory rights granted by the Treaty of 1861.

This conclusion may be considered to be supported by a decision of 12th .July 1924, delivered by the Court of Appeal of Rabat, the highest French judicial authority in Morocco (see Dalloz, Recueil periodiquee, 1925, Part II, p. 35).

By this decision the Court granted an exequatur (executory title) for the execution of a judgment by one of the national Moroccan tribunals in a case relating to a matter of real property, a matter which had always been considered in the capitulatory regime to be within their exclusive jurisdiction. This regime had, however, developed an indirect control on the exercise of that jurisdiction, by subjecting the execution of such judgments to an exequatur to be granted by the consul.

According to the decision of the Court of Rabat, this right for the consul derives from Article 5 of the Treaty of 1861 between Morocco and Spain and has been extended to all the other capitul-atory Powers by virtue of the most-favoured-nation clause.

In exercising that right in 1924, the Court must therefore have held that at that period both the French and Spanish Capitulations were still in force in the French Zone of Morocco. The Spanish Capitulations continued then to be a source of that right in that [p227] Zone, while the French Capitulations, by virtue of the most-favoured nation clause, made it possible for the French Court of Rabat, successor of the French consular court, to receive and exercise that right.

Article 95

Both France and the United States agree that Article 95 of the Act of Algeciras defines the value on the basis of which the ad valorem duties of 12½ % are to be liquidated. Each of them gives an interpretation of this provision, as regards imported goods, different from the other's and each disputes the other's interpretation.

That the two Governments are justified in considering that Article 95 defines that value is borne out by Article 96, which, while setting up a committee on valuations, requires that committee to appraise the value of the chief articles of merchandise dutiable in the Moorish customs under the conditions specified in the foregoing article. Article 95 must therefore be considered to have laid down the definition of that value.

Which, then, of the two interpretations is the correct one ?

France interprets the value in question to be the local market value, while the United States interprets it to be the export value plus freight, insurance and similar expenses.

Both methods of valuation have been and are known in Morocco as well as in other countries, either as exclusive or as combined methods. In Morocco, the local market value had been adopted by the German Treaty of 1890 (Article 2). The greater number of countries adopt, however, the other method of valuation. Sometimes, the local market value is adopted when the export or foreign market value can not be ascertained, or when it is desired to adopt protectionist measures or to conceal a higher customs duty under the guise of a moderate one.

The point which concerns us here is what the framers of the Act of Algeciras intended to establish by Article 95, and how this provision was understood by the Moroccan authorities from 1906 to 1912 and has been understood by the Protectorate authorities since.

In Article 95 two phrases are the subject of contention between the Parties. In the following sentence they are underlined :

"The wholesale value of the merchandise delivered in the custom-house and free from customs duties and storage dues."

If the natural sense of these two phrases yields a coherent and reasonable proposition, then this proposition can only be set aside [p228] if sufficient evidence is adduced to prove that it could not have been contemplated.
The first phrase refers to transportation of merchandise from the place of origin to the custom-house and thereby conveys an indication of the two elements of the value inseparably connected, viz., export value and expenses of transportation.

The second phrase describes, in the technical language of customs, an article of merchandise without or before the levy of customs dues. This description excludes any connection with local market value, since the latter includes customs dues and can only be used as a basis for valuation after these dues have been deducted. The usual expression in this case would be "after deduction of customs duties" (see below Treaty of Commerce of 1938 between the United Kingdom and Morocco, signed but not ratified).

Both phrases, therefore, point to the export or foreign market value of country of origin plus freight and insurance.

It is true that Article 95 applies to exports and imports, but this double function must imply that the terms employed refer equally to both operations. In fact, local market value for exports would correspond perfectly to market value of the country of origin.

It must be noted that Article 95 does not provide for the whole procedure of valuation. To ascertain this procedure, Article 95 must be read in conjunction with Article 96. This last provision sets up a committee on customs valuations to appraise annually the chief articles of merchandise dutiable in the Moorish customs. This appraisal is, however, to be made under the conditions specified in Article 95. Article 96 does not prescribe the establishment of minimum and maximum values, but the schedule referred to in that Article has contained both, either to allow for the different qualities or for the different countries of origin of goods, or for any other reason.

In any case, two methods of valuation have been adopted in the execution of the Act of Algeciras, one for the chief articles of merchandise and another for others. Both these methods have a common basis.

In Our view, this common basis is the market value of the country of origin. Any necessary guidance for verifying declared values is provided for by the Schedule of Values fixed under Article 96.

This brings us to the provisions relating to declarations contained in Articles 82 to 86.

Article 82 of the Act requires importers to file in the customhouse a declaration stating, inter alia, the value of the merchandise.[p229]

Articles 83 to 86 provide penalties for inaccurate statements by the importer concerning the kind, quality or value of imported goods.

As to value, Article 85 states that if the declaration should be found to be inaccurate as to the "declared value" and the declarant should be unable to prove his good faith, certain results shall follow.

Now it would be reasonable to suppose that had it been intended that the market value in Morocco should be the basis for determining the customs duty, there could have been little purpose in attaching such importance to a declaration by the importer.

Moreover, the market value in Morocco would reflect many charges attaching to the goods after leaving the custom-house, such as transportation, warehousing, handling, commissions and other expenses incident to placing the goods on the market, and the profit realized by the importer and by any brokers or middlemen. Obviously, there is room for a wide difference between the local market value of goods and the value at the time of delivery to the custom-house. Local market values may fluctuate, depending upon the plenitude or scarcity of the goods at a given time.

In conclusion, the text of Article 95 presents no ambiguity, unless we do violence to the word "r endue" to find therein a reference to the local market or to the word "franche" by making it synonymous with "déduction faile".

Assuming that the text is ambiguous, the examination of the travaux préparatoires might throw some light on its interpretation.

The original draft (Art. 19) siibmittcd to the Conference of Algeciras provided :

"Les droits ad valorem seront liquidés et payés d'après la valeur en gros et au comptant de la marchandise au port de débarquement ou au bureau d'entree s'il s'agit d'importation."

[Translation]

"The ad valorem duties shall be liquidated and paid according to the wholesale value of the merchandise at the port of landing, or at the bureau of entry, in the case of imports."

The provision contrasts with that in the older treaties, especially the Treaty between Morocco and Germany (1890). It does not make the market value either of the port of landing or the bureau of entry the basis of liquidation of customs duties. The reference to the port or to the bureau relates simply to the destination of the merchandise and is clearly made with a view to including the expenses incurred in transporting the merchandise up to the port or to the bureau. This reference naturally implies the adoption of the market value of the country of origin.[p250]

To this draft an amendment was proposed by the delegate of Great Britain at the 8th sitting of the Conference and was accepted.

It simply replaced "at the port of landing or at the bureau of entry, in the case of imports," by the words "au bztreau de douane et franche des droits de douane". ([Translation]—"At the custom-house and free from customs duties".) Later, at the 15th sitting, the German and British delegates deposited amendments, not to Article 19 but to Article 20, which has become Article 96 of the Act of Algeciras.

The German amendment reads as follows :

[Translation]

"The duties ad valorem levied in Morocco on imports shall be calculated or the value which the imported article has in the place of loading or buying, increased by expenses for transportation and insurance to the port of unloading in Morocco.

In order to fix for a specified period the value in the port of entry of the more important articles which are taxed, the Moroccan Customs Administration will invite the principal merchants interested in the import trade to proceed in agreement with it, to the establishment of a tariff for a period not to exceed twelve months. The tariff so established shall be communicated by the Moroccan Customs to the Diplomatic Body and shall at the same time be officially published.

It will be considered officially recognized so far as concerns the products of the ressortissants of signatory States, in so far as no member of the Diplomatic Body will have formally opposed it during the two weeks which will follow the official publication arid the communication addressed to the Diplomatic Body."

The amendment not only provides for a procedure for establishing a tariff for a specified period, which was the subject-matter of the provisions of the original Article 20, but takes up again the question of fixation of value, which had already been decided at the 8th sitting.

This amendment raised the objection of the French delegate, not as regards the method of fixation of value, which no one opposed, but as regards the composition of the body or commission for the establishment of the tariff. The two amendments were referred to the Drafting Committee, which adopted a text based on the British amendment to the same Article (Art. 20). Therefore, all that can be said in respect of the first paragraph of the German amendment is that it was not maintained by the Drafting Committee. But the reason for this lies in the fact that the question raised in that paragraph had already been adopted as Article 19, which has become Article 95. It can not then be said that it has been rejected on the ground that it stated a rule which the Conference was unwilling to adopt. In fact, it repeated in more detailed form the purport of the British proposal presented at the 8th sitting. [p231]

In short, the German amendment was not adopted, not because it was controverted on the point with which we are now concerned, but because of its other unsatisfactory features.

In the final draft, Articles 19 and 20 of the draft of Customs regulations (which became in the final Act of Algeciras Articles 95 and 96) were slightly modified, the first by the addition of the word "rendue" before the words "au bureau" and the second by the addition of the phrase "dans les conditions specifiees a l'article précédent", thus linking the two provisions.

***

As regards the practice followed in the period subsequent to the Act of Algeciras, the evidence resulting from the documents filed by the Parties is in favour of the interpretation put forward by the United States in respect of the measures adopted during the period of 1908-1912. It is even decisive in respect of the period following the Protectorate up to 1928. The letter of 1912 of M. Luret, the chief representative in Morocco of French bondholders in control of the Moroccan Customs Administration, [FN1] as well as the Regulations published by the Customs Administration in 1928,[FN2] relevant extracts of which are reproduced below, can leave no doubt in this respect.

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[FN1] "Following a complaint from the American Minister concerning customs duties assessed against imports of the Vacuum Oil Company, he wrote to the American Minister that the Company had failed to furnish the original invoices which could be checked against quotations on the market of origin and defined the dutiable value of imported merchandise under Article 95 of the Act of Algeciras thus :
[Translation]
"This value comprises the purchase price of the petroleum f.0.b. New York increased by all expenses subsequent to the purchase, such as outgoing dues paid at foreign custom-houses, transportation, packing, freight, insurance, manipulation, landing, et cetera, in a word, everything that contributes to constitute, at the moment of presentation at the custom-house, the cash wholesale value of the product, on the basis of which, according to Article 95 of the Act of Algeciras, the duties must be paid." (Translation ; quoted in the Note dated November 13, 1947, from the American Consul General at Casablanca to the Diplomatic Counsellor of the French Residency ; Annex 59.)
[FN2] [Translation] "(81) Merchandise taxed on value :
By the terms of Article 95 of the Act of Algeciras, the duties ad valorem are liquidated according to the cash wholesale value of the merchandise delivered to the custom-house and free from customs duties and storage fees. The value of this merchandise for the application of the tariff is consequently that which it has in the place and at the moment it is presented for payment of duties. It comprises, therefore, in addition to the purchase price in the foreign country, the expenses following the purchase such as the export duties paid to foreign customs, the transportation or freight, insurance, expenses for unloading, in a word all which contributes to form upon arrival in Morocco the wholesale value of the merchandise (excepting customs duties and storage fees), that is the current price of the merchandise in the place where the customs duties are assessed."
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[p232]

However, since 1930 a new policy of valuation based, more or less, on the local market value has been asserted by draft regulations prepared by the Protectorate authorities. They have given rise to protests from various foreign Powers and bodies. As evidenced by the documents filed by the Parties, the same policy was equally asserted in the proceedings of the Committee on Valuation instituted by Article 50 of the Statute of Tangiers to replace that provided for by Article 96 of the Act of Algeciras. It gave rise to conflicting attitudes by the member representing the International Zone of Tangier and the two other members representing the French and Spanish Zones. The two sides sustained the two interpretations put forward in the present instance, without the issue being settled in one way or the other. The Committee had no authority to decide the issue, but the concrete decisions on valuation were generally taken by a majority vote of the French and Spanish members.

This part of the history of Article 95, revealed by the documents filed at the end of the oral proceedings, brings no contribution to the interpretation of that provision. It merely shows that the conflict goes as far back as 1930. However, a document referred to in the annexes of the Counter-Memorial throws great light on this matter of interpretation. It is the Treaty of Commerce of 1938 between Morocco and the United Kingdom, signed but not ratified. It had been communicated to the United States in order to be considered with the 1937 Anglo-French Convention as models for a double convention of the same nature between Morocco and the United States (Annexes to Counter-Memorial, p. 322).

There was an exchange of Notes between the French and British Governments at the time of the signature of the Convention on July 18th, 1938. In its Note (No. 5) of that date, the British Government states that it has been informed by the French Government that the provisions contained in Chapter V of the Act of Algeciras (which includes Article 95) are, in the opinion of that Government, incompatible with modern conditions and that the said Government has communicated to it certain provisions which it intends to incorporate in the customs legislation. It also states that the Government of the United Kingdom is prepared to give its consent to the abrogation of the provisions contained in the said Chapter. A new text is annexed to this Note which is intended to be substituted for the provision of Article 95 and which sets out [p233] the view now put forward by France. (Command 5823 (1938), pp. 49-54.)

All this shows that the view now put forward by France as an interpretation of Article 95 was described by France and the United Kingdom in 1938 as an abrogation of that Article.

Accordingly we find that, in applying Article 95 or the Act of Algeciras, the only value to be taken account of is the value in the country of origin plus expenses incident to transportation to the custom-house in Morocco.

(Signed) Green H. Hackworth.

(Signed) A. Badawi.

(Signed) LEVI Carneiro.

(Signed) B. N. Rau.

 
     

 

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