|
[p7] The Court,
composed as above,
having heard the observations and conclusions of the Parties,
delivers the following judgment:
[1] The Government of the Greek Republic, by an application filed with the
Registry of the Court on May 13th, 1924, in accordance with Article 40 of
the Statute and Article 35 of the Rules of Court, has submitted to the
Permanent Court of International Justice a suit arising out of the alleged
refusal on the part of the Government of Palestine and consequently also on
the part of His Britannic Majesty's Government, in its capacity as Mandatory
Power for Palestine, since the year 1921, to recognize to their full extent
the rights acquired by M. Mavrommatis, a Greek subject, under contracts and
agreements concluded by him with the Ottoman authorities, in regard to
concessions for certain public works to be constructed in Palestine.
[2] This application concludes with a request that the Court may be pleased
to give judgment
to the effect that the Government of Palestine and consequently also the
Government of His Britannic Majesty have, since 1921, wrongfully refused to
recognize to their full extent the rights acquired by M. Mavrommatis under
the contracts and agreements concluded by him with the Ottoman authorities
in regard to the works specified above, and that the Government of His
Britannic Majesty shall make reparation for the consequent loss incurred by
the said Greek subject, a loss which is estimated at £234.339 together with
interest at six per cent, as from July
20th, 1923, the date on which this estimate was made.
[3] The considerations leading up to these conclusions have been developed
in the Case filed with the Court by the claimant on May 23rd, 1924. It is
therein specified that the Greek Government, abandoning a portion of its
original claim relating to the irrigation works in the Jordan Valley, asks
for judgment only in respect of two groups of concessions, namely :those
relating to the construction and working of an electric tramway system, the
supply of electric light and power and of drinking water in the city of
Jerusalem, and those relating to the construction and working of an electric
tramway system, the supply of electric light and power and of drinking water
in the city of Jaffa and the irrigation of its gardens from the waters of
El-Hodja. [p8]
[4] The application instituting proceedings was, in accordance with Article
40 of the Statute, communicated to the Government of His Britannic Majesty
on May 15th, 1924, and the Greek Case was transmitted to that Government on
May 31s on June 3rd, His Britannic Majesty's Government informed the Court
that it thought it necessary to take a preliminary objection as to the
competence of the Court to entertain the proceedings in question.
[5] On August 30th following, the Court gave judgment on the preliminary
objection.
[6] The conclusions of this judgment were as follows:
"The Court, having heard both Parties,
"Upholds the preliminary objection submitted by His Britannic Majesty's
Government in so far as it relates to the claim in respect of the works at
Jaffa and dismisses it in so far as it relates to the claim in respect of
the works at Jerusalem;
"Reserves this part of the suit for judgment on the merits; "And instructs
the President to fix, in accordance with Article 33 of the Rules of Court,
the times for the deposit of further documents of the written proceedings."
[7] Accordingly, the concessions for the construction and working of
electric tramways, the supply of electric light and power and of drinking
water in the city of Jaffa and the irrigation of its gardens from the waters
of El-Hodja were likewise eliminated from the proceedings on the merits.
[8] The Greek Government in the Case asks the Court, in regard to the
Jerusalem Concessions which are reserved by the Court for judgment on the
merits, to give judgment as follows:
"1) That, these concessions having begun to be put into operation, the
British Government, in its capacity as Mandatory for Palestine, is bound to
maintain them and to agree to their adaptation to the new economic
conditions of the country, or to redeem them by paying to the claimant
reasonable compensation;
"2) that, having in fact already made its choice, by rendering impossible,
directly or indirectly, the carrying out of the works for which the claimant
holds a concession, it must pay him compensation;
"3) that, taking into account all the various elements of the loss
occasioned to the claimant, he will receive just and equitable [p9]
compensation by a judgment in his favour for the sum of £121.045, together
with interest at six per cent, from July 20th, 1923, until the date on which
judgment is given."
[9] On the occasion of the delivery of the judgment of August 30th, the
representative of His Britannic Majesty's Government requested the Court to
fix January 1st, 1925, as the time for the filing of the British
Counter-Case on the merits of the suit in regard to the Jerusalem
concessions. Having heard the views of the Agent of the Greek Government,
the President, by virtue of the powers conferred upon him, under the terms
of the judgment of August 30th and under Article 33 of the Rules of Court,
fixed the time for the filing of the Counter-Case in accordance with the
wish expressed by the British Government. At the expiration of this time, he
fixed January 10th and 26th, 1925, as the dates for the filing of the Greek
Reply and British Rejoinder respectively.
[10] The documents of the written proceedings were duly submitted to the
Court at the prescribed times and were communicated as laid down in Article
43 of the Statute.
[11] His Britannic Majesty's Government, in the Counter-Case, asked the
Court to decide as follows:
1) "That M. Mavrommatis' Electricity Concession and Water Concession are
respectively invalid and not entitled to recognition under Protocol XII
annexed to the Treaty of Lausanne;"
and, in the event of the Court deciding against His Britannic Majesty's
Government on this point, to decide as follows:
"(2) That the British Government have not in regard either to M. Mavrommatis'
Electricity Concession or his Water Concession committed any breach of the
international obligations referred to in Article 11 of the Mandate for
Palestine.
"(3) That neither of the concessionary contracts in question has begun to be
put into operation within the meaning of Article 6 of Protocol XII annexed
to the Treaty of Lausanne. "(4) That, therefore, the provisions of Articles
4 and 5 of the Protocol relating to readaptation are inapplicable to either
of M. Mavrommatis'concessions.
"(5) That both the concessions must be maintained without [p10] readaptation
unless, within six months from the date of the Court's decision, M.
Mavrommatis requests that the concessionary contracts should be dissolved,
in which case he will be entitled, if there is ground for it, to such
indemnity in respect of survey and investigation work as in default of
agreement between him and His Majesty's Government shall be considered
equitable by the experts provided for in the Protocol.
"(6) That in any event the compensation claimed is unreasonable and
excessive."
[12] The Greek Government in the Reply submitted:
"(1) that the validity of the Mavrommatis concessions is established;
"(2) that they are entitled, under the terms of Article 4 of the Protocol,
to readaptation ;
"(3) that, nevertheless, even under these conditions, their execution is too
difficult to be regarded as adequate compensation for the breach of Article
11 of the Mandate;
"(4) that, having regard to the situation brought about in Palestine in this
respect, it is more practical and more just finally to cancel them and to
pay the beneficiary a lump sum by way of compensation";
and asked the Court to decide:
"(1) That, having begun to be put into operation, the concessions obtained
by M. Mavrommatis at Jerusalem must be readapted to the new conditions of
the country and that the British Government is under an obligation to allow
their readaptation or to buy them out by paying the beneficiary reasonable
compensation ;
"(2) that, having in fact exercised its choice, by directly or indirectly
rendering impossible the carrying out of the works conceded to the claimant,
it must pay him reasonable compensation;
"(3) that, having regard to all the elements of loss occasioned to the
claimant, fair and reasonable compensation, estimated at the sum of
£121.045, together with interest at 6% from July 20th, 1923, until the date
of judgment, shall be awarded him ;
"(4) that, furthermore, after due enquiry-if necessary-with respect to the
utilization by the British military authorities of his [p11] designs and
plans for the supply of water to the city of Jerusalem, he shall be granted
special compensation, the amount of which shall be fixed in accordance with
the provisions of Article 3 of the Protocol of Lausanne."
[13] The British Government in its Rejoinder confined itself to asking the
Court to decide in accordance with the submissions made in the Counter-Case.
[14] By a decision dated January 27th, 1925, which was duly communicated to
the Agents of the Parties, the Court included the case of the Mavrommatis
Jerusalem Concessions on the list for the Extraordinary Session which had
been convoked for January 12th, 1925, and fixed February 10th, 1925, as the
date for the commencement of the hearing of this suit.
[15] In the course of the hearing which lasted from February 10th to 14th
inclusive, the Court heard the statements and replies of Counsel for the
respective Parties, namely : H.E. M. Politis, Greek Minister at Paris, and
Mr. Purchase, barrister-at-law for the Greek Government, and Sir Douglas
Hogg, the Attorney-General, for His Britannic Majesty's Government.
[16] In support of their conclusions the Parties handed in various documents
either as annexes to the Case, Counter-Case, Reply and Rejoinder, or during
the oral proceedings.
FACTS.
[17] On January 27th, 1914, two agreements relating respectively to a
"concession for the public distribution of electric power and for electric
tramways" and to the "concession for the construction and exploitation of
the works necessary for the supply of drinking water", were signed between
the City of Jerusalem and M. Euripide Mavrommatis. In these agreements, of
which copies certified correct by the President of the Municipality of
Jerusalem have been submitted to the Court, M. Mavrommatis is described as
an "Ottoman subject residing at Constantinople". The first of these
concessions hereinafter referred to as the "electric concession" covers,
according to the first article of the Agreement:
"(I) the public distribution of electric power for all purposes other than
telegraphy, telephony and the motive power [p12] required for public
conveyance undertakings (save as stated in Article II), the tramways in the
City of Jerusalem and its suburbs within a radius of twenty kilometres
around the City;"
(II) a certain system of electric tramways including 'obligatory',
'contingent' and 'optional' lines.
[18] The second concession, hereinafter called the "water concession",
covers, according to Article I of the Agreement, "the construction and
exploitation of the works required for leading the water to Jerusalem and
supplying it throughout the city and its suburbs".
[19] By letters dated March 3rd of the same year, the banking firm Périer
and Company of Paris, hereinafter called the "Banque Périer", informed the
President of the Municipality of Jerusalem
(1) that it held at the disposal of the Municipality, on behalf of M.
Mavrommatis, the sum of seven thousand Turkish pounds, being the final
deposit for the obligations accepted by him under the Agreement relating to
the electric concession ;
(2) that similarly it also held at the disposal of the Municipality the sum
of one hundred thousand francs, being the final deposit provided for in the
Agreement regarding the water concession ;
(3) that it had promised M. Mavrommatis its financial support for the
carrying out of his schemes.
[20] This promise of support is contained in a letter sent by the Banque
Périer to M. Mavrommatis on November 13th, 1913. According to this letter,
M. Mavrommatis was to endeavour to obtain the two Jerusalem concessions and
the two Jaffa concessions in his own name. Should he be successful, the Bank
would place the sum of five million francs at his disposal; all expenses
incurred in obtaining the concessions to be met by the concessionnaire.
[21] On July 30th (old style), 1914, M. Mavrommatis wrote to the Mayor of
Jerusalem: (1) to inform him of the despatch of a copy of the definitive
plans provided for in the Agreement concerning the electric concession ; (2)
to inform him that, as a precaution, having regard to the state of war and
the consequent insecurity of postal communications, he had kept by him, but
at the disposal of the City, the three other copies ; (3) to request,
alleging the war as a case of circumstances beyond his control, that the
times for the fulfilment of his obligations under the Agreement should cease
to run "for a [p13] period equivalent to the time elapsing between the day
of the declaration of war and the final conclusion of peace".
[22] M. Mavrommatis appears to have made a similar request as regards the
water concession. The reply of the Municipality deals, in fact, with the two
concessions.
The Municipal Council decided:
"to postpone execution for the whole of the period commencing on July 21st
(old style), the date of the declaration of the war in question, and ending
with the conclusion of peace."
[23] The Treaty of Versailles, signed on June 28th, 1919, came into force on
January 10th, 1920. Under Article 22 of the Covenant of the League of
Nations, which forms the first part of that Treaty, the Mandatory régime was
established for "certain communities formerly belonging to the Turkish
Empire", of which Palestine is one. The Treaty of Sévres, the purpose of
which was to settle the conditions of peace with Turkey, was signed on
August 10th, 1920. This Treaty contained the following clauses regarding
concessions granted by the Ottoman authorities, including those granted in
the territories detached from Turkey and placed under Mandate:
Article 311.
"In territories detached from Turkey to be placed under the authority or
tutelage of one of the Principal Allied Powers, Allied nationals and
companies controlled by Allied groups or nationals holding concessions
granted before October 29th, 1914, by the Turkish Government or by any
Turkish local authority shall continue in complete enjoyment of their duly
acquired rights, and the Power concerned shall maintain the guarantees
granted or shall assign equivalent ones.
"Nevertheless, any such Power, if it considers that the maintenance of any
of these concessions would be contrary to the public interest, shall be
entitled, within a period of six months from the date on which the territory
is placed under its authority or tutelage, to buy out such concession or to
[p14] propose modifications therein ; in that event it shall be bound to pay
to the concessionnaire equitable compensation in accordance with the
following provisions.
“If the Parties cannot agree on the amount of such compensation, it will be
determined by Arbitral Tribunals composed of three members, one designated
by the State of which the concessionnaire or the holders of the majority of
the capital in the case of a company is or are nationals, one by the
Government exercising authority in the territory in question, and the third
designated, failing agreement between the Parties, by the Council of the
League of Nations.
"The Tribunal shall take into account, from both the legal and equitable
standpoints, all relevant matters, on the basis of the maintenance of the
contract adapted as indicated in the following paragraph.
"The holder of a concession which is maintained in force shall have the
right, within a period of six months after the expiration of the period
specified in the second paragraph of this article, to demand the adaptation
of his contract to the new economic conditions, and in the absence of
agreement direct with the Government concerned the decision shall be
referred to the Arbitral Commission provided for above."
Article 312.
“In all territories detached from Turkey, either as a result of the Balkan
Wars in 1913, or under the present Treaty, other than those referred to in
Article 311, the State which definitely acquires the territory shall ipso
facto succeed to the duties and charges of Turkey towards concessionnaires
and holders of contracts, referred to in the first paragraph of Article 311,
and shall maintain the guarantees granted or assign equivalent ones.
"This succession shall take effect, in the case of each acquiring State, as
from the coming into force of the Treaty under which the cession was
effected. Such State shall take all necessary steps to ensure that the
concessions may be worked and the carrying out of the contracts proceeded
with without interruption. [p15]
"Nevertheless, as from the coming into force of the present Treaty,
negotiations may be entered into between the acquiring States and the
holders of contracts or concessions, with a view to a mutual agreement for
bringing such concessions and contracts into conformity with the legislation
of such States and the new economic conditions. Should agreement not have
been reached within six months, the State or the holders of the concessions
or contracts may submit the dispute to an Arbitral Tribunal constituted as
provided in Article 311."
[24] On May 20th, 1920, the Mandate for Palestine had been given to Great
Britain and on July 1st the British Government replaced its military
occupation of Palestine by a civil administration.
[25] On April 16th, 1921, M. Mavrommatis wrote to the new Government of
Palestine, in order, firstly, to accept the Treaty of Sévres as applicable
to the water and electric concessions; secondly to offer to submit the plans
provided for in the agreements concerning these concessions, and, thirdly,
to suggest the modifications, to be agreed upon with the City of Jerusalem,
required to bring the concessions into conformity with the new conditions of
the country.
[26] According to a letter sent to M. Mavrommatis by the Banque Périer on
February 14th, 1921, that Bank was at that time prepared to reopen
negotiations concerning the Jerusalem and Jaffa concessions on the bases of
the agreement of November 1913 but on condition that the new Palestine
authorities recognized and ratified the rights of the concessionnaire.
[27] It would seem that M. Mavrommatis' above-mentioned letter of April
16th, 1921, led to certain negotiations between the Palestine authorities
and M. Mavrommatis or his agents. From a letter signed on May 9th, 1921, by
the Legal Secretary of the Palestine Government, it appears (1) that these
negotiations concerned M. Mavrommatis' nationality, and (2) that this
question was referred to the authorities in London. It related more
particularly to the establishment of his Greek nationality, because, in the
agreements, he was described as an Ottoman subject. To this end, M.
Mavrommatis' London agent, on September 1st, 1921, presented to the Colonial
Office certain documents intended to prove M. Mavrommatis' Greek
nationality. [p16]
[28] It has been alleged by the claimant -and the respondent has not
disputed the contention-that during the negotiations which took place at
Jerusalem, M. Mavrommatis was recommended, on behalf of the Palestine
Government, to come to an understanding with a certain M. Rutenberg, with a
view to collaborating in the carrying out of the works contemplated in the
agreements under which M. Mavrommatis was the beneficiary. M. Rutenberg, for
his part, however, seems to have thought that any understanding would be
premature, pending recognition by the local authorities of the validity of
the concessions.
[29] While this was going on an agreement was concluded on September 21st,
1921, between the Crown Agents for the Colonies and M. Rutenberg regarding
the grant to the latter of a concession for the utilization of the waters of
the rivers Jordan and Yarmouk and their affluents for generating and
supplying electrical energy. It is laid down in the agreement that if M.
Rutenberg, within two years, fulfils certain conditions, the High
Commissioner of Palestine for the time being shall, on application, grant
him the concession in question. In the meantime he may not grant any
concession or licence conflicting with this concession. The draft
concessionary contract which is annexed to the agreement, and to which the
latter refers, contains amongst others a clause numbered 29 which runs as
follows :
"In the event of there being any valid pre-existing concession covering the
whole or any part of the present concession the High Commissioner if
requested in writing by the Company so to do shall take the necessary
measures for annulling such concession on payment of fair compensation
agreed by the Company or failing agreement determined by arbitration between
the owner of such concession and the High Commissioner and the Company shall
indemnify the High Commissioner against any compensation that may be due or
become payable in respect of any such annulled concession to the extent to
which it affects this present concession and shall be entitled to increase
the capital of the Company and the rates of charge to be made to consumers
of electrical energy correspondingly and the amount of any compensation to
become payable and to be paid in respect of any such annulled concession
shall be paid in agreement with the Company and in [p17] default of
agreement be determined by arbitration between the owner or owners of such
pre-existing concession and the High Commissioner or other appropriate
procedure."
[30] It is a fact that the application provided for in the agreement of
September 21st, was made in due time. The two Parties, however, wished to
make certain modifications in the concessionary contract above-mentioned and
consequently the concession has not yet actually been granted. Nevertheless
the Palestine Government recognized that it was bound to grant it as soon as
the terms of the contract should have been fixed. Meanwhile M. Rutenberg
formed the Company required to work the concession, the Palestine Electric
Corporation, Ltd.
[31] The nature of the relations existing between M. Rutenberg and the
Zionist Organization mentioned in Article 4 of the Palestine Mandate has
been discussed at length before the Court, who, however, sees no occasion to
express any view on this question of fact. Moreover, at the time in
question, the document entitled the "Mandate for Palestine" was not yet in
force. In point of fact the terms of that document were not definitely fixed
until July 24th, 1922, and it only came into force on September 29th, 1923.
[32] It has been asserted that the result of the granting of the Rutenberg
concessions was the withdrawal by the Banque Perier of its promise of
February 14th, 1921. On December 2nd, 1921, that Bank wrote to M.
Mavrommatis to say that in consequence of the grant of those concessions, it
could not undertake to finance M. Mavrommatis' concessions.
[33] From October 1921 onwards it began to become clear that the Treaty of
Sévres would never come into force. On October 20th, 1921, the separate
agreement between France and the Government of the Grand National Assembly
at Angora was concluded. In February and March, 1922, diplomatic conferences
took place between the delegates of the Allied Powers, in the course of
which modifications to be made in the Treaty were discussed. In the
following April, Italy concluded a separate agreement with the Kemalist
Government. The military operations in Asia Minor in September 1922,
resulted in the agreement of Moudania on October nth, 1922, which led to the
opening -in November – of [pl8] the Conference of Lausanne, the object of
which was the revision of the Treaty of Sévres and the settlement of the
conditions of peace in the Near East.
[34] In the meantime the negotiations between M. Mavrommatis or his agents
and the British or Palestine Authorities continued, as is demonstrated by
the correspondence contained in the dossier of the case. The claimant
contends, and the respondent does not deny, that at the request of the
Colonial Office, conversations also took place with M. Rutenberg and with
the president and other representatives of the Zionist Organization. The
Colonial Office was kept informed as to these conversations. There was,
however, no tangible result, and the matter was just as it stood in
September 1921, when on March 27th and May 3rd, 1922. M. Mavrommatis'
solicitors submitted to the Colonial Office fresh proofs of their client's
Greek nationality. On May 25th the Colonial Office asked for copies of the
documents on which M. Mavrommatis based his claims to concessionary rights
at Jerusalem ; on the 29th of that month this request was complied with. His
Greek nationality has not been disputed since that time and is now admitted
by the respondent.
[35] In August 1922, M. Mavrommatis was indirectly informed that, in the
opinion of the Colonial Office, (1) his concessions endowed him with certain
rights; (2) these rights must be respected, and (3) he should come to an
understanding with M. Rutenberg or (4) lay before the Palestine Government
proposals transforming his concessions into a practical scheme for supplying
Jerusalem with tramways and water. M. Mavrommatis followed out this
suggestion and, on August 15th, 1922, submitted amongst others the same
designs and plans as he had sent to the Mayor of Jerusalem on July 30th (old
style), 1914, with the addition of new calculations based on the conditions
prevailing at the time. He also desired (1) to be informed within a limited
time whether M. Rutenberg, after due consideration of the Mavrommatis
concessions, intended to make use of the right of expropriation conferred
upon him under Article 29 of the annex to the Agreement of September 21st,
1921, and (2), if this was not the case, to hear that his plans and
proposals were approved, subject to possible alterations.
[36] The reply to this step was the Colonial Office's letter of October
21st, 1922, which, while refusing to recognize the Jaffa concessions,
confirmed the fact that M. Mavrommatis enjoyed certain rights [p19] under
his Jerusalem concessions, and that these rights in so far as they existed
would be respected. The Colonial Office added, however, that, as regards the
water concession, the establishment during the war of an efficient water
supply for the town of Jerusalem appeared to have divested M. Mavrommatis'
concession of any value.
[37] It has been contended on behalf of the applicant that this letter had
the effect of breaking off direct negotiations between M. Mavrommatis and
the Zionist Organization which were on the point of reaching a satisfactory
conclusion.
[38] M. Mavrommatis replied by drawing attention to the following points:
(1) the expenses which he had already incurred in connection with the water
concession ; (2) the fact that he should not be deprived of his rights under
the water concession because the Military Administration had been obliged to
carry out during the war a part of the works included in that concession;
(3) the provisions of Article 311 of the Treaty of Sévres concerning the
cancellation of concessions already in existence. The Colonial Office,
however, stated on November 14th, 1922, that these observations did not
modify the views in regard to the water concession, as expressed in its
letter of October 21st. It also became clear that the Colonial Office was
still taking its stand on the Treaty of Sévres.
[39] On November 16th, M. Mavrommatis replied as follows: (1) that he was
prepared to agree to the expropriation of his water concession in
consideration of the payment of fair compensation to be assessed by experts;
(2) that he desired to obtain the approval, with or without modification, of
his plans for the electric concession which he had submitted on August 15th,
1922, so that he could begin the projected works; (3) that he was, however,
prepared to agree to the expropriation of this concession also, on payment
of fair compensation.
[40] However, in a letter dated December 30th, 1922, the Colonial Office
informed the solicitors, (1) that as regards the water concession, M.
Mavrommatis had not put forward any proposals applicable to the changed
conditions of the country; (2) that as regards M. Mavrommatis' claim to
rights in respect of his electric concession, these rights would remain
undetermined until a treaty of peace with Turkey had come into operation. At
the same time, however, the Colonial Office, referring to its letters of
October 21st and November 14th, 1922, still in certain respects [p20] took
its stand on the Treaty of Sévres. Moreover, though it declared that M.
Mavrommatis'plans for the electric concession were financially impossible to
carry out, the Colonial Office nevertheless asked for a further set of
documents concerning it. M. Mavrommatis' solicitors complied with this
request on January 23rd, 1923, and sent the Colonial Office a series of
additional documents regarding both the water and electric concessions. They
also pointed out that in their opinion, (1) under Articles 311 and 312 of
the Treaty of Sévres, the Mandatory had no power to annul previously
existing concessions, but that this had been done in the case of the
Mavrommatis concessions by the grant of the Rutenberg concessions and that
consequently the matter could not be settled by the submission by M.
Mavrommatis of fresh plans but only by arbitration ; and (2) that the plans
submitted by M. Mavrommatis to the City of Jerusalem with his letter of July
30th (old style), 1914, which the City had duly acknowledged on September
30th following, should be regarded as approved, since the City had not
within the prescribed time, namely three months from the date of submission,
suggested any modification (Article 6 of the Electricity and Water
Agreements).
[41] Meanwhile M. Mavrommatis had put the matter before the Greek Legation
in London, requesting it to take the necessary steps with a view to
submitting the case to arbitration in accordance with Articles 311 and 312
of the Treaty of Sèvres. The Legation transmitted the letter to the Foreign
Office, together with the correspondence passed between the Colonial Office
and
M. Mavrommatis or his representatives between December 18th, 1922, and
January 27th, 1923. The Foreign Office however considered -as appears
particularly from the letter of February 2nd, 1923 -that M. Mavrommatis
should continue to deal direct with the Colonial Office. It should be added
that, by a letter dated January 9th, 1923 M. Mavrommatis' solicitors
informed the Colonial Office that the matter had been put before the
Legation.
[42] Private negotiations however were continued. It would appear that in
March 1923, it was in principle agreed that M. Mavrommatis' claims should be
referred to a Judge of the English High Court for arbitration, and draft
terms of reference were submitted to the Colonial Office on May 2nd, 1923.
This proposal was however set aside, as appears from a letter of the
Colonial Office dated July 14th, 1923. The reason given in this letter was
the uncertainty as to the [p21] conditions of peace with Turkey, which made
it impossible to fix the extent to which M. Mavrommatis could be held to
possess any claims which the Palestine Government would be bound to
recognize. At the same time, the Office suggested, without prejudice and
without making any admission, that M. Mavrommatis should state what sum of
money he would be prepared to accept in full and final settlement of any
claims against that: Government. In reply,
M. Mavrommatis' solicitors, in a letter dated July 20th, 1923, (1) accepted
on his behalf the suggestion of the payment of a lump sum in full settlement
and (2) fixed this sum at £234,339. It should be noted that this sum is the
same as that which subsequently appears in the application instituting
proceedings filed with the Registry of the Court on May 13th, 1924, and
already quoted in this Judgment. On August 2nd, however, the Colonial Office
stated that the figure named could not be entertained even as a basis for
discussion and advised M. Mavrommatis to examine the terms of the Protocol
concerning Concessions, signed at Lausanne at the same time as the Treaty of
Peace. It should be observed in this connection that in a letter dated July
20th, 1923, M. Mavrommatis' solicitors had stated that their client was
prepared to abide by the conditions of the future Treaty although unaware of
its terms.
[43] The Treaty and the supplementary instruments were actually signed on
July 23rd, 1923. Amongst the latter is to be found-No. XII-a "Protocol
relating to certain concessions granted in the Ottoman Empire", hereinafter
called Protocol XII. The Court has already observed, in Judgment No. 2
(August 30th, 1924), that Protocol XII was intended to replace those clauses
of the Treaty of Sévres relating to concessions and has indicated its
general structure. In the present Judgment, therefore, the Court confines
itself to quoting the relevant clauses:
Article 1.
"Concessionary contracts and subsequent agreements relating thereto, duly
entered into before the 29th October, 1924, between the Ottoman Government
or any local authority, on the one hand, and nationals (including Companies)
of the Contracting Powers, other than Turkey, on the other hand, are
maintained." [p22]
Article 3.
"The amount due, after settlement of accounts, to the State or to
beneficiaries under contracts and agreements referred to in Articles 1 and
2, in respect of the use by the State, on the territory which it now
possesses, of the property or the services of the said beneficiaries shall
be paid in accordance with existing contracts or agreements or, in default
of contracts or agreements, in accordance with the procedure of settlement
by experts provided for by the present Protocol."
Article 4.
"Subject to the provisions of Article 6, the provisions of the contracts and
subsequent agreements referred to in Article 1 shall, by agreement, and as
regards both Parties, be put into conformity with the new economic
conditions."
Article 5.
"In the absence of agreement within one year from the coming into force of
the Treaty of Peace signed this day, the Parties will adopt the provisions
regarding both the settlement of accounts and the readaptation of
concessions, which are considered suitable and equitable by two experts, to
be nominated by the Parties within two months from the expiration of the
period of one year mentioned above. In case of disagreement, these experts
will refer the question to a third expert selected within two months by the
Turkish Government from a list of three persons, nationals of countries not
having participated in the war of 1914-1918, prepared by the head of the
Swiss Federal Department of Public Works."
Article 6.
"Beneficiaries under concessionary contracts referred to in Article 1, which
have not, on the date of this Protocol, begun to be put into operation,
cannot avail themselves of the [p23] provisions of this Protocol relating to
readaptation. These contracts may be dissolved on the request of the
concessionnaire made within six months from the coming into force of the
Treaty of Peace signed this day. In such case the concessionnaire will be
entitled, if there is ground for it, to such indemnity in respect of the
survey and investigation work as, in default of agreement between the
Parties, shall be considered equitable by the experts provided for in this
Protocol."
Article 9.
"In the territories detached from Turkey under the Treaty of Peace signed
this day, the State which acquires the territory is fully subrogated as
regards the rights and obligations of Turkey towards the nationals of the
other Contracting Powers, and companies in which the capital of the
nationals of the said Powers is preponderant, who are beneficiaries under
concessionary contracts entered into before the 29th October, 1914, with the
Ottoman Government or any local Ottoman authority. The same provision will
apply in territories detached from Turkey after the Balkan Wars so far as
regards concessionary contracts entered into with the Ottoman Government or
any Ottoman local authority before the coming into force of the Treaty
providing for the transfer of the territory. This subrogation will have
effect as from the coming into force of the Treaty by which the transfer of
territory was effected except as regards territories detached by the Treaty
of Peace signed this day, in respect of which the subrogation will have
effect as from the 30th October, 1918."
Article 10.
"The provisions of Section I of this Protocol, except Articles 7 and 8, will
be applied to the contracts referred to in Article 9. Article 3 will only
have effect in detached territories where the property or the services of
the concessionnaires were utilized by the State exercising authority in such
territory." [p24]
[44] Protocol XII came into force, as regards the Parties to the dispute, on
August 6th, 1924, together with the Treaty of Lausanne.
[45] The period August to October, 1923, appears to have been taken up by a
resumption of verbal negotiations. In fact, on October 23rd, the Colonial
Office, referring to conversations which had taken place with a
representative of M. Mavrommatis, stated that they would not suggest any
figure for the full settlement previously contemplated and recommended M.
Mavrommatis to present a claim under Protocol XII ; until he had done so the
Colonial Office were not prepared to make any further move.
[46] A detailed claim was therefore submitted on November 2nd, 1923, to the
Colonial Office on behalf of M. Mavrommatis. It appears from the covering
letter that the claim was submitted mainly in order to serve as a basis for
a friendly settlement. Since, as regards the water and electric concessions,
it is undoubtedly on this claim that the conclusions of the Greek Case
(quoted above) are based, it will be well to cite the relevant passage:
"(1) It is desired that these concessions be recognized and/or maintained
and that M. Mavrommatis be permitted to work the undertakings in accordance
with the concessions granted him. In the alternative he should receive:
"(a) Compensation for the expropriation of his concessionary rights to
reimburse him for the costs incurred in the acquisition of his rights and
for their necessary development including survey and general expenses,
commissions to agents, expenses in drawing up plans, together with the loss
of interest and exchange on his deposit, and
"(b) Loss of profit."
[47] The amount claimed is as follows:
Under (a) £53,256
Under (b) £67,789
£121,045
"(2) In so far as the water services and/or property have been [p25]
utilized by His Majesty's Government for the period of five years he claims
indemnity for such use."
[48] The Colonial Office's reply is dated December 15th, 1923. In this
reply, (1) note is taken of M. Mavrommatis' alleged admission that his
claims fell to be dealt with under the Protocol;
(2) it is stated that, subject to the production of the original copies of
the concessions and their being found in order, the British Government was
disposed to recognize the water and electric concessions ; (3) it is stated
that, not having begun to be put into operation, the concessions fell under
Article 6 of Protocol XII ; (4) it is asked whether, in this connection, M.
Mavrommatis desired to put them into execution or apply for their
dissolution ; (5) it is stated that in the former event, they would not be
readapted to the new economic conditions, in particular as regards the scale
of charges fixed in paper money and that in the latter event, a claim for an
indemnity for the survey and investigation work would be considered; and (6)
it is observed that the works connected with the water concession had not
been carried out and that therefore the British Authorities had not been
able to utilize them, and that, consequently, there was no valid claim for
an indemnity on this account.
[49] The reply made to this communication on behalf of M. Mavrommatis is
dated January 11th, 1924, and was to the following effect: (1) that it was
not admitted that the claims fell to be dealt with only under the provisions
of Protocol XII; (2) that M. Mavrommatis had the right to choose whether his
concessions should be recognized and put into execution or expropriated; (3)
that M. Mavrommatis was prepared to form the company or companies required
for carrying out the contracts; and (4) that he had the right, if he put
them into execution, to claim their readaptation but that he would be
content, in conformity with the agreements, to have the cost of the works
estimated at the actual amount on the day of their execution, it being
understood that the tariffs were fixed in gold piastres. The letter went on
to observe that an issue was clearly raised which could best be solved by
arbitration, failing friendly agreement. Finally, attention was drawn to the
loss occasioned to M. Mavrommatis by reason of the delay in the settlement
of the matter.
[50] Meanwhile M. Mavrommatis once more referred the question to the Greek
Legation in London. His solicitors informed the [p26] Colonial Office of
this, adding that the object was to have the Mavrommatis claims brought
before the Permanent Court of International Justice. The Colonial Office
therefore on February 19th, 1924, terminated the correspondence with the
solicitors. For the history of the case from the time when it was definitely
handed over to be dealt with through diplomatic channels, the Court refers
to Judgment No. 2 (August 30th, 1924). It should merely be observed at this
point that the argument of the Greek Government was the same as that
developed on behalf of M. Mavrommatis in the above-mentioned letters of
November 2nd, 1923, and January nth, 1924, whilst the British Government
adopted the attitude defined in the Colonial Office's letter of December
15th, 1923.
LAW.
[51] The Respondent submits that in the present suit three questions fall to
be answered by the Court, namely:
(1) Are the Mavrommatis concessions legally valid ?
(2) Has the British Government, by granting the Rutenberg concession,
violated the obligations devolving upon it under the Protocol; and
(3) Which Articles of the Protocol -No. 6 or Nos. 4 and 5 –are applicable to
the Mavrommatis concessions ?
[52] The Claimant, whilst not entirely disputing this way of formulating the
above questions and whilst agreeing to discuss them in the order proposed,
contends that the order of numbers (2) and (3) should be reversed. In his
opinion, when the question of the validity of the concessions and that of
the relevant clauses of Protocol XII have been dealt with, it remains to be
ascertained whether the system established by the Protocol has not been
rendered inapplicable as a result of the situation brought about in
Palestine by the grant of the Rutenberg concession.
[53] The Court, before dealing with the contentions put forward by the
Parties and before deciding upon their conclusions, feels it necessary to
state precisely the questions put before it for examination and the basis on
which rests its competence to deal with them.
[54] The Greek Government, in the application instituting proceedings dated
May 13th, 1924, resting itself on Articles 26 and 11 of the Mandate for
Palestine, has asked the Court for a decision. His [p27] Britannic Majesty's
Government raised an objection to the Court's jurisdiction; the Court
therefore had, in the first place, to give judgment on this preliminary
question and, in the judgment of August 30th, 1924, it reserved the suit in
so far as the Jerusalem concessions were concerned for judgment on the
merits.
[55] The Court based that judgment on the terms of Article 11 of the Mandate
and principally upon the first paragraph of that article.
[56] It laid down that the Rutenberg Concession was granted in the exercise
of the full power bestowed upon the Palestine Administration "to provide for
public ownership or control of any of the natural resources of the country
or of the public works, services and utilities established or to be
established therein." It is therefore in the exercise of this full power
that the Palestine Administration must, under Article 11, respect the
international obligations accepted by the Mandatory in regard to which that
article makes an express reservation. In the opinion of the Court these
international obligations there referred to are constituted solely by the
Protocol of Lausanne. For no other instrument creating international
obligations contracted by the Mandatory has been brought to the Court's
knowledge, and it does not appear that any such exist. It is true that the
Claimant has maintained that the provisions of the Protocol should be
supplemented by certain principles taken from general international law ;
the Court, however, considers that Protocol XII is complete in itself, for a
principle taken from general international law cannot be regarded as
constituting an obligation contracted by the Mandatory except in so far as
it has been expressly or implicitly incorporated in the Protocol.
[57] Since the Court's jurisdiction extends only to cases where M.
Mavrommatis' concessions have been affected by the acts contemplated by
Article 11 of the Mandate, in so far as such are contrary to the obligations
contracted under Protocol XII, it follows that this jurisdiction does not
extend to the works constructed by the British Troops in the summer of 1918,
nor to the alleged use made by them of M. Mavrommatis' plans regarding the
Water Concession. Those are circumstances entirely unconnected with the
concession promised to M. Rutenberg.
[58] It is not by reason of the jurisdiction conferred on the Court under
Article 26 of the Mandate, but in consequence of an agreement between the
Parties resulting from the written proceedings, that the Court has
jurisdiction (Article 36, first paragraph, of the [p28] Statute) to decide
whether M. Mavrommatis' Jerusalem Concessions fall to be dealt with under
Articles 4 and 5, of Article 6 of the Protocol. The Court's jurisdiction,
however, does not extend beyond giving a reply to this question. Only by
virtue: of a further agreement could other disputes, relating to the
application of the articles in question, be dealt with by the Court, unless,
of course, such disputes resulted out of the grant of the Rutenberg
Concession and to this extent fell within the scope of the jurisdiction
obtained, as indicated above, from Articles 26 and 11 of the Mandate.
[59] Finally, it appears from the oral statements of the Parties that they
are agreed in asking the Court, should the case arise, to decide whether the
tariffs laid down in the Jerusalem concessions are fixed on a gold basis or
in paper money. This agreement, however, is applicable only in the event of
the Court deciding that these concessions are valid and that Article 6 is
applicable to them and not Article 4.
[60] According to the above considerations, the Court will now proceed to
consider the following point :
Validity of the Mavrommatis Concessions (I);
Relation between these Concessions and the Rutenberg Concessions; violation
of
international obligations accepted by the Mandatory and damage to M.
Mavrommatis' interests resulting therefrom (II);
Question whether the Mavrommatis Concessions fall under Articles 4 and 5 or
Article 6 of Protocol XII (III).
I.
[61] Before the Court takes up the principal question, namely, whether M.
Mavrommatis is entitled to compensation in consequence of the concession
promised to M. Rutenberg, a preliminary point raised by the Respondent must
be decided.
[62] The British Government submits in the Counter-Case that M. Mavrommatis'
Jerusalem concessions are invalid. It bases this contention on the fact that
M. Mavrommatis is referred to in both concessions as an Ottoman subject,
whereas his real and only nationality is Greek and has been recognized to be
so by both Parties. In the contention of the British Government, it follows
that the concessions were granted in error and consequently that [p29] they
are not valid. In these circumstances - it is contented - Palestine cannot
be subrogated as regards the rights and obligations which Turkey would have
had in respect of these concessions, had they been valid. Furthermore, the
protection accorded by the Protocol to the nationals of Contracting Powers
other than Turkey cannot be invoked in respect of Ottoman concessions
granted to a beneficiary described as an Ottoman subject.
***
[63] It should in the first place be observed that the Court has to consider
the validity of the concessions only as a preliminary question, and not as a
point of law falling by its intrinsic nature properly within its
jurisdiction as an International Court. For these reasons the Court confines
itself to considering whether there are adequate reasons for regarding these
concessions as having been entered into according to the terms of Article 9
of the Protocol or as "duly entered into" according to the terms of Article
1.
[64] It is not contended by the Respondent that the Ottoman authorities ever
treated the Jerusalem concessions as null, or that they took any steps to
annul them; on the contrary, the validity of the contracts was taken for
granted in all that passed between the authorities and M. Mavrommatis after
the grant of the concessions.
[65] In these circumstances, the Court considers that it is for the
Respondent to prove that the concessions are not valid, though it is
indisputable that the reference to the Ottoman nationality of the
beneficiary in the concessions is incorrect. The British Government does not
contend that, in Turkish law, the Ottoman nationality of the beneficiary was
a condition essential to the validity of concessions ; moreover, no law nor
any document in this sense regarding the practice of the courts or competent
authorities in Turkey has been produced. Nor has the Respondent tried to
show that, if the authorities had imposed such a condition, a failure to
observe it would, in Turkish law, have rendered the concessions null or
liable to annulment. For this reason the question does not, in the present
case, arise as to whether the Court should, if necessary, ascertain what
rule would actually have been applied by Turkish law to the situation under
consideration. The Respondent has confined himself to putting forward [p30]
arguments in favour of the contention that the Ottoman authorities might
have considered M. Mavrommatis' Ottoman nationality as a condition upon
which the grant of the concession was dependent, but no proof that such was
actually the standpoint of these authorities has been produced. The
contention of the Respondent in regard to this point therefore fails through
lack of evidence to support it.
[66] Even arguing -as does the British Government -from those principles
which seem to be generally accepted in regard to contracts, and from the
probable intentions of the Parties, the Court equally arrives at the
conclusion that the Mavrommatis concessions must be regarded as valid. Since
the identity of the person has never been in any doubt, the error can only
relate to one of the attributes of the concessionnaire. The absolute nullity
therefore of the concessions would appear to be excluded ; their liability
to annulment depends on the question whether Ottoman nationality was
considered as a condition of the grant of the concessions. The Respondent
has contended that certain circumstances militate in favour of this view
-inter alia the express mention of the Ottoman nationality of the
concessionnaire, the existence of clauses ensuring that the Company to be
formed shall be Ottoman. The following circumstances should however be noted
:
[67] The fact that the concessionnaire is under an. obligation to form
within a short period an Ottoman Company to work the concession renders his
nationality of practically no importance, his technical abilities and
financial connections being the essential points. Indeed, in the agreements
relating to the Jaffa concessions, which were granted even after Turkey's
entry into the war, M. Mavrommatis' nationality is not mentioned.
Furthermore, one important consequence of Ottoman nationality, namely the
jurisdiction of the Ottoman authorities and courts in the event of any
possible dispute, is expressly stipulated in all the concessions, in those
which mention M. Mavrommatis' nationality as well as in those that do not ;
this jurisdiction does not therefore depend upon the description of the
concessionnaire as an Ottoman subject.
[68] For these reasons the Court has come to the conclusion that the
reference to M. Mavrommatis as an Ottoman subject in the agreements
concerning the Jerusalem concessions, is not intended to represent a
condition on which the grant of the concession is [p31] dependent and that,
therefore, the fact that M. Mavrommatis is not an Ottoman subject cannot
involve the invalidity of the concession. The concessions must therefore be
regarded as valid and definitively acquired.
[69] The Respondent also reserved to himself the right to raise the question
whether the water concession had not lapsed because the obligations with
regard to the deposit to be made had not been fulfilled in accordance with
the provisions of the concession. As however this point appears to have been
subsequently abandoned, the Court need not deal with it. At all events the
Jerusalem authorities do not appear to have raised any objection to the
deposit made by the Banque Périer being regarded as fulfilling the
requirements of Article 18 of the agreements concerning the concession.
***
[70] The Mavrommatis concessions, having been recognized as valid, must, if
they are to hold good as against the successor State in accordance with
Article 9 of Protocol XII, be held by a subject of a contracting Power other
than Turkey. Now it is common ground that M. Mavrommatis is a Greek subject
and that Greece is one of the Contracting Powers in question. Nevertheless,
it remains to be considered whether the fact that M. Mavrommatis is
described in the concession as an Ottoman subject, though not invalidating
the concession itself, might deprive him of the right to benefit by the
terms of Article 9 of the Protocol. The Court declines to admit the
possibility of such a conclusion. It is of opinion -and no proof to the
contrary has been furnished -that Article 9 of Protocol XII contemplates the
real nationality of beneficiaries, and that it would be contrary to the
spirit and intention of this instrument to withhold its benefits because
another nationality was in error set down in the concessionary contrats.
There is an indication to this effect in Article 9 ; that article stipulates
that Ottoman Companies in which the capital of nationals of Contracting
Powers other than Turkey is preponderant, holding concessionary contracts,
may benefit by the terms of this article. It is therefore on the nationality
of the real beneficiaries and not on the mere legal national status of the
concessionnaire that the question of subrogation depends. Now the real
nationality of this concessionnaire, M. Mavrommatis, is Greek. [p32]
[71] The provision, therefore, contained in Article 9 of Protocol XII, to
the effect that Palestine is subrogated as regards the rights and
obligations of Turkey towards the nationals of contracting Powers other than
Turkey, who are beneficiaries under the concessionary contracts entered into
with the Ottoman authorities before October 29th, 1914, is applicable to M.
Mavrommatis' concessions.
II.
[72] The Court now passes to the question of the relation existing between
M. Mavrommatis' Jerusalem concessions and the agreement concluded on
September 21st, 1921, between M. Rutenberg and the Crown Agents for the
Colonies on behalf of the High Commissioner for Palestine.
[73] This is the only agreement which need be considered for it is common
ground that the concession granted on September 12th, 1921, to M. Rutenberg
for the supply of electiical energy and the irrigation of the District of
Jaffa does not affect the rights derived by M. Mavrommatis from his
above-mentioned concessions.
[74] The British Government recognizes that the. rights which the High
Commissioner undertook, by the agreement of September 21st, 1921, to grant
in certain circumstances to M. Rutenberg partly overlap the rights derived
by M. Mavrommatis from his concessions for the supply of electricity at
Jerusalem. That Government, however, contends that under Article 29 of the
conditions attached to that agreement, M. Rutenberg is under an obligation
to respect M. Mavrommatis' rights in so far as M. Rutenberg does not make
use of the option accorded him under that article to request the High
Commissioner to annul, on payment of compensation, any rights which may
conflict with those embodied in the concession promised to M. Rutenberg.
[75] Article 29 runs as follows:
"In the event of there being any valid pre-existing concession covering the
whole or any part of the present concession, the High Commissioner, if
requested in writing by the Company so to do, shall take the necessary
measures for annulling such concession on payment of fair compensation
agreed by the Company or, failing agreement, determined by arbitration [p33]
between the owner of such concession and the High Commissioner and the
Company shall indemnify the High Commissioner against any compensation that
may be due or become payable in respect of any such annulled concession to
the extent to which it affects this present concession and shall be entitled
to increase the capital of the Company and the rates of charge to be made to
consumers of electrical energy correspondingly and the amount of any
compensation to become payable and to be paid in respect of any such
annulled concession shall be paid in agreement with the Company and in
default of agreement be determined by arbitration between the owner or
owners of such pre-existing concession and the High Commissioner or other
appropriate procedure."
[76] Although the article does not expressly say that if M. Rutenberg does
not ask for the annulment of valid pre-existing concessions covering the
whole or any part of the concession granted him, he must respect them, it is
indeed hardly possible to construe the article in any other sense. Clearly,
by giving M. Rutenberg the right to ask for annulment, the article implies
that, should he not make a request to that effect, he will not have the
right to treat such concessions as null, and that, until annulled, in the
manner provided for, they must be maintained.
[77] The question whether, by giving M. Rutenberg the right to claim the
annulment of previous concessions covering the whole or any part of the
concession promised to him, the Palestine Administration failed to observe
the international obligations accepted by the Mandatory, will be considered
later. But the Court notes that, apart from this right, there is nothing in
the agreement of September 21st, 1921, which -on a reasonable interpretation
of Article 29 -can be regarded as contrary to the rights held by M.
Mavrommatis.
[78] As regards M. Mavrommatis water concession for the supply of water, the
British Government denies that this is affected either directly or
indirectly by the concession promised to
M. Rutenberg on September 21st, 1921.
[79] For this purpose, that Government relies on Article 4 of the water
concession, which contains the following:
[ Translation]
"For the exclusive purposes of his concession, the concesionnaire shall have
the right either himself to install a hydro-electric [p34] power-station
generating not more than 1000 (one thousand) kilowatts, or to procure power
from a central power-station not included in the present concession or to
install a steam power-station of force sufficient for the working of his
concession" ;
and again on Article 34 of the conditions drawn up for the Rutenberg
concession, which is as follows:
"Nothing herein contained shall prevent….any person or persons or any firm
or company generating electrical energy and using the same for his or their
own purposes within the concession area but so that no such electrical
energy shall be sold or otherwise disposed of within such area."
[80] On the other hand, the Greek Government considers that the latter
concession conflicts with the rights possessed by M. Mavrommatis under his
water concession. No weight, however, can be attached to this argument
having regard to Article 34 (above-quoted) of the Rutenberg concession.
[81] The right of any person to produce and employ electric power for his
own use is therefore expressly reserved and M. Mavrommatis can, according to
the actual terms of the concession promised to M. Rutenberg, himself install
a hydro-electric power-station for the working of his water concession.
[82] The Greek Government also contends that M. Mavrommatis only accepted
the water concession having regard to the special advantages which he would
derive from also possessing the electric concession, since the works
projected for the one could be used for the purposes of the other as well.
[83] The Court does not think it necessary to consider the weight of this
argument. It will suffice to observe that even if it had been proved that M.
Mavrommatis accepted the water concession exclusively on this understanding,
it would only be in the event of his being deprived of his electric
concession, or prevented from proceeding with it, that there would appear to
be any connection between his water concession and the Rutenberg concession
which might lead to
M. Mavrommatis also being prevented from proceeding with the water
concession or to his suffering loss in respect of it. [p35]
[84] The British Government has pointed out that, though M. Rutenberg has,
within the time fixed in the agreement of September 21st, 1921, claimed the
grant of the concession contemplated therein, the concession has not yet
been granted because the Palestine Administration and M. Rutenberg have not
yet agreed upon certain modifications to be introduced in the conditions
laid down.
[85] Furthermore, in the course of the proceedings -as an annex to the
Counter-Case, dated December 28th, 1924, -the British Government produced
the following letter, dated London, May 1st, 1924, and addressed to the
Colonial Office :
The Palestine Electric
Corporation, Limited.
"Our Ref. 3977. London, May 1st, 1924.
"Sir,
"re Jerusalem Installation. -Mavrommatis Concession.
"The Board of Directors of our Company have carefully considered the
position with regard to the supply of electricity to Jerusalem in connection
with the alleged rights of M. Mavrommatis under his pre-war Turkish
concession for Jerusalem and compensation of £125,000 demanded by him for
such rights.
"Whilst not admitting the validity of the above-mentioned concession
previously annulled by H.M. Government, our Board were prepared, in order to
satisfy the urgent requirements for electric energy of the Jerusalem
population, to pay reasonable compensation to M. Mavrommatis.
"In view, however, of the fact that the compensation of £125,000 demanded by
M. Mavrommatis is unreasonable and would prove an extremely heavy and
unproductive burden on the comparatively poor Jerusalem population in the
form of excessively high rates for electrical energy, our Company will not
expropriate M. Mavrommatis' concession and will raise no objection to M.
Mavrommatis being permitted to carry out the Jerusalem installation in
accordance with the terms of his concession.
"Provided, however, that should M. Mavrommatis fail to [p36] commence and
carry out the installation in the respective terms specified in his
concession, no obstacles will be placed in the way of the Palestine Electric
Corporation, Limited, to proceed with the works in Jerusalem and district in
accordance with the Jordan concession.
"We shall be glad if you will kindly let us know what steps H.M. Government
is taking in this regard.
"I am, etc.
"For the Palestine Electric Corp., Ltd.,
(Signed) Pinhas Rutenberg,
Director."
[86] The Greek Government questioned the value of this statement as evidence
that "The Palestine Electric Corporation, Limited", the Company formed by M.
Rutenberg to work his electric concession, has definitely and
unconditionally renounced the right to ask for the expropriation of M.
Mavrommatis and would not oppose his being allowed to proceed with his
concession. Whereupon the British Government, in the course of the hearing,
produced a further letter from M. Rutenberg dated Jerusalem, January 28th,
1925, in which M. Rutenberg, in reply to a telegraphic enquiry from the
Colonial Office, renewed his declaration as follows:
"I refer to my letter to the Colonial Office of 1st May, 1924. For the
reasons therein set out, neither the Palestine Electric Corporation Limited
nor myself will raise any objection to the carrying out by M. Mavrommatis of
his tramway and electricity concession for Jerusalem, and neither the
Palestine Electric Corporation Limited nor myself propose to exercise any
right under our concession to call for the annulment of M. Mavrommatis' said
concession."
[87] As regards M. Mavrommatis' water concession, M. Rutenberg adds:
"I say that neither I nor the Palestine Electric Corporation Limited object
or have ever objected to M. Mavrommatis carrying [p37] out the concession
for the supply of water to Jerusalem .."
[88] It is clear from these declarations of M. Rutenberg that his
renunciation is binding not only on himself as a contracting Party to the
agreement of September 21st, 1921, but also on the Company which he had
undertaken to form under the terms of that agreement and to which the rights
and obligations under the concession would accrue. The Court considers that,
similarly, the renunciation also holds good for any successors to M.
Rutenberg's rights other than the Company taking over the concession.
[89] The British Government, through its Representative, made the following
declaration :
"We have received from M. Rutenberg what we regard as an unequivocal
disclaimer of any intention to ask us to expropriate M. Mavrommatis. We have
accepted that unequivocal statement, and we have declared -it is to be found
on page 6 of the British Counter-Case -that His Majesty's Government are
ready and willing to carry out in regard to both M. Mavrommatis' Jerusalem
concessions, if, contrary to the British contention, they are held to be
valid, whatever obligations under the Lausanne Protocol the Court may decide
to be applicable now. That explicit declaration I, as such authorized
representative of H.M. Government, and a member of it, here repeat that we
intend to carry out whatever obligations, if any, the Court says are imposed
upon us by the terms of the Lausanne Protocol. That being so, there can be
no question of our acting on any request to expropriate M. Mavrommatis. If
M. Rutenberg was so -I do not like to use the term -dishonest, so
unreasonable, now as to ask to expropriate him after declaring that he has
no such intention, we should not act upon that request."
[90] After this statement, the binding character of which is beyond
question, the Court considers that henceforward it is quite impossible that
the British or Palestine Governments should consent to comply with a request
for the expropriation of M. Mavrommatis' Jerusalem concession. The clause in
Article 29 of the Rutenberg concession [p38] which gave him the right to
demand such expropriation must therefore be regarded as deleted and all that
remains of that article is an obligation on the part of M. Rutenberg and his
successors to respect M. Mavrommatis' concessions.
***
[91] Nevertheless the fact remains that, prior to that statement, the
article did exist and was to the effect indicated above, and the question is
whether this fact alone constituted a violation of the international
obligations contemplated in Article 11 of the Mandate.
[92] In this respect, it should be remembered that at the time when the
agreement with M. Rutenberg was concluded, that is on September 21st, 1921,
the Treaty of Sevres had been signed. According to Article 311 of that
Treaty, Mandatory States were entitled within a period of six months from
the date on which the territory affected had been placed under their
authority or tutelage, to buy out pre-existing concessions. The fact that
this right of expropriation was limited to a period of six months appears to
indicate that, apart from possible provision for a right of repurchase in
the actual conditions of a concession, contracting States, under the Treaty
of Sévres, renounced the right to expropriate concessions in their entirety.
According to this Treaty, the Palestine Administration would not -it would
seem -have been entitled to grant to a concessionnaire the right at any time
to require the annulment of a concession maintained by the Treaty.
[93] Subsequently, when the course of events made it clear that the Treaty
of Sévres would never come into force, the negotiations which resulted in
the adoption of Protocol XII were commenced. This Protocol, as is well
known, contains no right to expropriate pre-existing concessions, which,
according to its terms, are to be maintained. The Parties, however, are not
agreed as to the meaning to be attached to the provisions of this Protocol.
Whereas the British Government is of opinion that the fact that the
successor States are placed under an obligation to maintain the concessions
referred to in Article 9 of the Protocol, whilst no mention is made of a
right to expropriate them, is indicative of an intention to exclude such a
right, the Greek Government, on the other hand, considers that the existence
of such a right of expropriation is to be assumed.
[94] The Court does not feel it to be necessary to resolve this question.
[p39] It considers that, for the purposes of the present case, it will
suffice to observe that the British Government has stated that it does not
regard itself as authorized to expropriate concessions the maintenance of
which is assured under Protocol XII. It has produced in support of its views
notes exchanged on July 24th, 1924, between Sir Horace Rumbold and General
Pellé, from which correspondence it appears that it was at all events
considered desirable, in view of the provisions of the Protocol, to agree in
terms that France and Great Britain respectively did not intend to avail
themselves, as regards concessions for public works, of the provisions of
Section II of the Protocol, and that therefore it would be open to the
Governments of these countries to proceed to buy out the concessions.
[95] The Treaty of Sévres has never been ratified and Protocol XII only came
into force on August 6th, 1924. The Court will not examine the question
whether these international instruments might, before their ratification,
have produced certain legal effects as regards the contracting Parties. Nor
will it examine the bearing from a juridical point of view of the
negotiations which took place on the basis of these instruments between the
interested person and the authorities - negotiations the sole object of
which was, in any case, to arrive at a friendly agreement. In the present
case, the applicability of those clauses of Protocol XII which ensure the
maintenance of concessions, results from an express provision of the
Protocol itself, namely Article 9, which antedates the subrogation as
regards the rights and duties of Turkey to October 30th, 1918, in the case
of States succeeding to territory detached from Turkey as a result of the
Great War. The obligation accepted by the Mandatory to maintain concessions
covered by the Protocol is therefore to be regarded, by virtue of this
clause, as having existed at the time when the Rutenberg concession was
granted and it has never ceased to exist since that time.
[96] The insertion in clause 29 of the Annex to the Agreement of September
21st, 1921, of a right on the part of M. Rutenberg to require at any time
the expropriation of pre-existing concessions, until it was withdrawn,
interfered with the light of holders of pre-existing concessions to utilize
their concessions as such without being threatened with annulment before the
time at which, under their concessions, a right of repurchase would become
operative.
[97] The annulment which might have resulted from the application [p40] of
clause 29 of the Rutenberg concession, might moreover have taken place at
any moment during the existence of the concession and at the initiative of a
private individual, so that the safeguard against ill-considered
expropriation which exists when the initiative is in the hands of a State,
which can only expropriate for reasons of public utility, was seriously
impaired.
[98] The Court therefore holds that so long as M. Rutenberg possessed the
right to require the expropriation of the Mavrommatis concessions, the
clause in question was contrary to the obligations contracted by the
Mandatory when signing the Protocol. The question then arises whether, by
the Mandatory's failure to fulfill the obligations which he had contracted,
M. Mavrommatis has suffered loss entitling him to compensation.
***
[99] The Greek Government's main contention is that expropriation has
already taken place and that the compensation due therefore has not been
paid to M. Mavrommatis. It is this compensation which constitutes its
principal claim.
[100] It is however clear that the clause contained in Article 29 does not
in itself amount to expropriation. It merely gives M. Rutenberg the right to
require it, should he desire to do so, and there is nothing to show that he
had made any request to that effect. On the contrary, as has been seen, he
has now renounced his right.
[101] The Greek Government itself recognizes that the clause in itself does
not amount to expropriation. It contends however that subsequently the
British Government made its choice and decided not to allow M. Mavrommatis
to proceed with his concessions, or that, at least, it made the execution of
the concessions impossible or difficult in actual fact. The statements made
during the proceedings to the effect that neither the British Government nor
M. Rutenberg or the Palestine Electric Corporation Limited will oppose the
putting into execution of the Mavrommatis concessions, have in the opinion
of the Greek Government been made too late and cannot restore the situation
for M. Mavrommatis.
[102] The Court points out in the first place that, if the British
Government had in fact decided not to allow M. Mavrommatis to proceed with
his concessions, this decision not being the consequence of a request on the
part of M. Rutenberg, there might be some [p41] as to whether this would be
an act falling within the jurisdiction of the Court. For, according to the
judgment of August 30th, 1924, the Court's jurisdiction is confined to acts
against which the terms of Article 11 of the Mandate are directed. The Court
does not however think it necessary to labour this question of jurisdiction,
since the correspondence during the negotiations between M. Mavrommatis and
the Colonial Office shows that there is no foundation for such an assertion.
[103] In this respect, it will suffice to observe that, after M. Mavrommatis
had proved his Greek nationality, the Colonial Office stated on several
occasions that it recognized that M. Mavrommatis held certain rights under
his concessions at Jerusalem and that these rights, in so far as they
existed, would be respected. Again, in a letter to M. Mavrommatis'
solicitors dated December 15th, 1923, the Colonial Office asked whether M.
Mavrommatis wishes to proceed with his concessions, a fact which seems to
preclude the idea that it had at that time already decided to expropriate
them.
[104] As regards M. Mavrommatis, his solicitors did indeed, in a letter
dated January 23rd, 1923, express the opinion that the Palestine
Administration and the British Government had abrogated most of the rights
conceded to M. Mavrommatis and made them over to M. Rutenberg. But this
point of view was not maintained in the ensuing negotiations. In the
statement of his claims submitted on behalf of M. Mavrommatis on November
2nd, 1923, it is requested either that the Jerusalem concessions should be
recognized and maintained or that he should receive compensation for the
expropriation of his rights. And in a letter sent by M. Mavrommatis'
solicitors to the Colonial Office on January 11th, 1924, in reply to the
Colonial Office's letter of December 15th, 1923, it was stated that M.
Mavrommatis was prepared to form the company or companies required for the
working of his concessions, even if no right on his part to have the
concessions readapted to the new economic conditions were recognized.
[105] In short, the Court is of opinion that though, in the course of the
long negotiations, the possibility of expropriating M. Mavrommatis'
concessions or of ceding them to M. Rutenberg was considered, this was only
one suggestion amongst several made with a view to a friendly settlement of
the question. No decision appears to have been taken during the
negotiations.
Furthermore, as already [p42] stated, the British Government has now
definitively decided not to expropriate M. Mavrommatis' concessions.
[106] It is true that in its letter of May 1st, 1924, the Palestine Electric
Corporation Limited said that M. Mavrommatis' concessions had already been
annulled. The British Government however denied the accuracy of this
statement and, as has already been said, there is nothing to show that such
annulment had really taken place.
[107] There remains the question whether, as alleged by the Greek
Government, the execution of the concessions had already been rendered
impossible for M. Mavrommatis and whether this was by reason of the
concession promised to M. Rutenberg. The arguments relied on by the Greek
Government in regard to this point seem to be, on the one hand, the
withdrawal by the Banque Périer of its promise to undertake the financing of
the concessions and a statement to the same effect by a British banker -Mr.
C. B. Crisp -and, on the other hand, the influence of the Zionist
Organization which, in the contention of the Greek Government, is opposed to
allowing
M. Mavrommatis to proceed with his concessions.
[108] The Court will first consider the former of these arguments. The
Banque Périer had, it appears, in November 1913 concluded an agreement with
M. Mavrommatis to pay him under certain conditions five million francs for
the two concessions at Jerusalem and the concessions for tramways, electric
light and power, and for water supply at Jaffa, together with the right to
use the waters of the River El-Hodja for irrigation. And the same Bank had,
in letters addressed respectively to the Presidents of the Municipalities of
Jerusalem and Jaffa, stated that it had accorded M. Mavrommatis its
financial assistance for the carrying out of his schemes. In a letter to M.
Mavrommatis, dated February 14th, 1921, MM. Bauer, Marchal & Co., on behalf
of the Banque Périer, stated that they were prepared to reopen negotiations
regarding the Jerusalem and Jaffa concessions on the basis of the agreement
of November 1913, but only on condition that the new authorities of
Palestine recognized and ratified M. Mavrommatis' rights. On December 2nd,
1921, however, they wrote to M. Mavrommatis saying that, having learned that
the Colonial Office in London had just granted to M. Rutenberg an exclusive
monopoly for electric energy throughout Palestine, which would conflict with
M. Mavrommatis' concessions, they were compelled to inform him that, as a
result, financial [p43] circles had lost faith in the commercial value of
the undertakings, and the writers could not therefore undertake the
financing of them.
[109] As regards Mr. Crisp, a letter to M. Mavrommatis' Agent, dated May
3rd, 1923, has been produced in which Mr. Crisp noted that the validity of
the concessions was beyond all doubt, but stated that as the validity had
been questioned at a time when the concessions might have been financed and
the opportunity had been missed, he was no longer able to deal with them.
[110] It appears, however, clear that this does not prove that the financing
of M. Mavrommatis' concessions has become impossible, especially if it be
remembered that in the letter of January nth, 1924, already referred to
-much later in date than the letters of MM. Bauer, Marchal & Co. and of Mr.
Crisp -M. Mavrommatis' solicitors stated that he was prepared to form the
company required for the execution of the concessions. Even if there were no
justification for saying that, having regard to this statement, it would
have been incumbent on the Greek Government to prove that, since that time,
circumstances have changed and that that which would have been possible for
M. Mavrommatis at the beginning of 1924 subsequently became impossible, and,
moreover, did so in consequence of the concession promised to M. Rutenberg,
the statement in question proves that at that time M. Mavrommatis did not
consider the execution of his concessions as impossible.
[111] As regards the influence of the Zionist Organization in the affairs of
Palestine, this influence, for which provision is made in the Mandate
itself, existed already from the moment when the Mandate came into force,
and it seems hardly permissible to doubt that the British Government, which
has declared that it will allow M. Mavrommatis full liberty to put into
execution his Jerusalem concessions, will loyally take steps to ensure that
its promise is respected and, if necessary, protect M. Mavrommatis against
any attempt to prevent the execution of his concessions.
[112] But -it may be said -even if the execution of M. Mavrommatis'
concessions has not been rendered impossible, the Agreement of September
21st, 1921, with M .Rutenberg and the fact that the latter had hitherto had
the right to require the expropriation of those concessions, have
nevertheless inflicted loss upon M. Mavrommatis, because this agreement and
this right have prevented him [p44] from forming, at a period more
favourable than the present, the companies provided for in the concessions.
[113] The Court is however equally unable to admit that any loss of this
kind has been proved. The letter from MM. Bauer, Marchal & Co., dated
February 14th, 1921, proves that even if there had previously been a
definite contract between the Banque Périer and M. Mavrommatis, this
contract was at that time considered as no longer existing. According to
this letter, it was a question only of resuming negotiations and this on
condition that the new Palestine authorities recognized the validity of the
concessions. And when, by its letter of December 2nd of the same year, the
Banque Périer stated that it could no longer entertain the idea of financing
the concessions, such recognition had not yet been accorded and it could not
be definitively accorded until the principles which were to govern the
situation of successor States as regards concessions granted by the Ottoman
authorities had been finally fixed and came into force. There is moreover
nothing to prove that the Banque Périer had at that time complete knowledge
of the agreement with M. Rutenberg. As the negotiations contemplated
regarded also the Jaffa concessions, which undoubtedly conflicted with the
Rutenberg concessions and which could not claim to be recognized under the
Treaty of Sévres, which had then been signed, the statement of the Banque
Périer to the effect that they did not wish to undertake the financing, is
fully explained, even without assuming that the Bank would have been
prepared to undertake the financing of the Jerusalem concessions alone, had
it not been for the existence of the agreement of September 21st, 1921, with
M. Rutenberg. The Court therefore cannot consider either the letters of MM.
Bauer, Marchal & Co. or of Mr. Crisp as sufficient proof that circumstances
were more favourable for the financing of the concessions at some period or
other after the beginning of 1921 than they are at the present time. In the
first place, M. Mavrommatis, who in the concessions was described as an
Ottoman subject, would have had to prove his Greek nationality; and in the
second place, the conditions on which the maintenance of concessions granted
by the Ottoman Government or by local authorities was dependent would have
had to be definitively settled ; but this did not take place until the
coming into force of Protocol XII on August 6th, 1924. Moreover, the
question whether M. Mavrommatis was or was not entitled to have his
concessions readapted to the new economic conditions [p45] would also have
had to have been settled, and this question would have arisen just as much
if the Agreement of September 21st, 1921, with M. Rutenberg had never
existed. Nor must it be forgotten that M. Mavrommatis had himself asked for
and obtained a suspension of the execution of his concessions until the
conclusion of peace.
[114] In these circumstances, it appears to the Court most improbable that
so long as these questions were still unsettled, the financing of M.
Mavrommatis' concessions could have been arranged more easily and under more
favourable conditions than would be the case now.
[115] The Court therefore considers that even if the clause in Article 29 of
the conditions of M. Rutenberg's concession is to be regarded as contrary to
the Mandatory's international obligations, in so far as it gave M. Rutenberg
the right to require the expropriation of concessions conflicting with his
own, this clause has not in fact either led to the expropriation or
annulment of M. Mavrommatis' concessions, or caused him any loss which might
justify a claim on his behalf for compensation in the present proceedings.
III.
[116] By agreement the Parties have put to the Court the question whether M.
Mavrommatis' concessions should be readapted in accordance with the economic
conditions created by recent events.
[117] Are these concessions, the validity of which has been already
demonstrated and for which Great Britain, as Mandatory of the League of
Nations in Palestine, is bound to ensure respect under Article 11 of the
Mandate and Protocol XII, entitled to readaptation, or has the beneficiary
merely the right, should he be unable or unwilling to proceed with them as
they stand, to request that they may be dissolved ?
[118] The root of the difficulty is to be found in Articles 4 and 6 of
Protocol XII, which decide in favour of one or other of these solutions as
the case may be.
[119] Article 4, which provides for readaptation, runs as follows: [p46]
"Subject to the provisions Of Article 6, the provisions of the contracts and
subsequent agreements referred to in Article 1 shall, by agreement, and as
regards both Parties, be put into conformity with the new economic
conditions."
[120] As for Article 6, in respect of which Article 4 makes an express
reservation, it indicates the concessions to which readaptation does not
apply :
"Beneficiaries under concessionary contracts referred to in Article 1, which
have not, on the date of this Protocol [FN1], begun to be put into
operation, cannot avail themselves of the provisions of this Protocol
relating to readaptation. These contracts may be dissolved on the request of
the concessionnaire made within six months from the coming into force of the
Treaty of Peace signed this day. In such case the concessionnaire will be
entitled, if there is ground for it, to such indemnity in respect of the
survey and investigation works, as, in default of agreement between the
Parties, shall be considered equitable by the experts provided for in this
Protocol."
---------------------------------------------------------------------------------------------------------------------
[FN1] July 24th, 1923
---------------------------------------------------------------------------------------------------------------------
[121] A comparison between these two articles shows therefore that
concessions granted at an earlier period and for regions which have been
detached from Turkey as a result of the Great War, are to receive different
treatment according as they have or have not begun to be put into operation
before July 24th, 1923. In the former alternative, the successor State must
readapt the concessions to the new economic conditions ; in the latter, the
concessionaire is not entitled to readaptation, but may request that his
concession be dissolved and, if there is ground for it, may claim an
indemnity in respect of survey and investigation work which he had
undertaken.
[122] In order to determine M. Mavrommatis' position in relation to the
Palestine Administration, which is subrogated as regards the rights and
obligations of Turkey in respect of concessions granted by that country in
Palestine, one matter of fact must be verified : had the contracts concluded
between M. Mavrommatis and the Ottoman authorities begun to be put into
operation at the date of signature of Protocol XII ? If the answer to this
question is in the affirmative, [p47] it is clear that they fall under the
terms of Article 4, that is to say, are entitled to readaptation; otherwise,
Article 6, according to which they may be dissolved on payment of an
indemnity for survey and investigation work, must be applied.
[123] The Representative of the Respondent, arguing in favour of the latter
alternative, pointed out that, on July 24th, 1923, M. Mavrommatis had
certainly not begun to execute the works which he had undertaken. Now -he
argued -it is only the commencement of actual work which endows an
enterprise with value and which gives the person responsible for the works a
claim to continue and complete them in consideration of payment. If he has
not started work, the concessionnaire has not developed any real activity,
and the right to obtain, should he so desire, dissolution of the contract
and an indemnity, will sufficiently compensate him for any loss which he may
have suffered. There has been no beginning of operation of the contract; the
circumstances are those provided for in Article 6 of the Protocol.
[124] The Court does not feel able to accept this interpretation. The
distinction on which it is based between undertakings where there has
already been a commencement of the works of the concession and undertakings
the existence of which is not yet shown by any actual execution of the work,
reserving to the former alone the privilege of readaptation, may have been
contemplated at first by the negotiators of the Peace of Lausanne ; but, by
substituting for the words commencement d'exécution used in the original
draft [FN1] the expression commencement d'application in the text finally
approved, they have adopted a different train of thought. The authors of the
Protocol have made a commencement d'application des contrats de concession
the condition on which the readaptation of such contracts is dependent. By
speaking of contracts and not of works or even of concessions, they have
shown that in their view it was immaterial from this standpoint whether the
works covered by the concessions had already begun to be carried out ; they
have held strictly to the domain of the application of the contracts. No
doubt the execution of the works provided for in a concessionary contract is
peculiarly conclusive evidence that the contract is a real thing; it is a
form of application. [p48] But this form is not the only one possible, and
it may be said that a contract is applied every time that any act -even
unconnected with the carrying out of the works -is accomplished under the
terms of the contract. "Application" therefore is a wider, more elastic and
less rigid term than "execution ; and this may be the reason which led to
its insertion in the Protocol of Lausanne, in order to distinguish between
concessions which are entitled to readaptation and those that are not.
---------------------------------------------------------------------------------------------------------------------
[FN1] Conference of Lausanne, Recueil des Actes de la Conférence. Premiére
série, tome 1, p. 378 (Art. 74 of the Projet de traité de paix).
---------------------------------------------------------------------------------------------------------------------
[125] It is, however, beyond dispute that M. Mavrommatis has not simply kept
by him., without making any use of them, the concessions which he had
obtained at Jerusalem. Several of the obligations which he had undertaken
have been fulfilled within the times granted. Thus, in conformity with
Article 6 of the water concession and Article 6 of the electric concession,
he had submitted to the City of Jerusalem on August 12th, 1914 -that is to
say more than one month before the expiration of the time fixed -the plans
and designs of the works to be carried out; again, in accordance with
Article 18 of the first concession and Article 4 of the second, M.
Mavrommatis had arranged with the Banque Perier on March 3rd, 1914 -very
considerably before the expiration of the time laid down -for credits
constituting the final deposits which he had undertaken to make. Moreover,
though, in consequence of the war, he found himself compelled to make use of
the clause concerning circumstances beyond his control contained in Article
7 of the water concession and Article 6, paragraph 2, of the electric
concession, in order to obtain an extension of the time assigned to him for
the commencement of the works, he did not fail to inform the Ottoman
authorities in due time, as it was his duty to do. Furthermore, by a
decision dated September 30th, 1914, the Municipality of Jerusalem granted
his request and recognized the soundness of the reasons on which it was
based.
[126] The conclusion at which the Court arrives on the basis of the actual
wording of Article 6 is also supported by considerations of another kind.
[127] Article 4 of Protocol XII, which is closely connected with Article 1
which lays down the fundamental principles of the maintenance of contracts
and agreements duly entered into, is, as compared with Article 6, in the
nature of a rule, whereas the latter article is merely an exception.
[128] This is easy to understand if it be remembered that in practice [p49]
the only effective way of maintaining concessions granted before the war is
to readapt them to the new economic conditions. The right given under
Article 6 to the beneficiary to proceed with his concessions on the
conditions under which it was granted before October 29th, 1914, would
almost always be useless; in effect, the real advantage derived by
beneficiaries from Article 6 is the right to claim the dissolution of their
contract and an indemnity for survey and investigation work. It follows that
a strict interpretation of Article 6 is the only one which is in harmony
with the system of the Protocol. Were this article to be applied in every
case where there had been no beginning of actual work on the ground, the
consequence would be that, as the indemnity provided for would not be
sufficient compensation for the trouble taken and the expense incurred by
the concessionnaire -for instance in order to ensure the financing of his
future undertaking -rights validly acquired would be sacrificed.
[129] These remarks are enough to reduce to its true value the objection
made by the British Government to this interpretation, to the effect that if
it were correct it would deprive Article 6 of all practical value, as it
would hardly ever be applicable.
[130] The Court realizes that, if the making of deposits and the filing of
designs and plans is regarded as a beginning of operation giving a right to
readaptation, Article 6 will only cover exceptional cases ; but it is of
opinion, for the reasons given above, that Article 6 can only contemplate
cases of this kind.
[131] Again it has been said that it is not correct in law to regard the
payment of a deposit, or the deposit of plans or designs in the hands of
some particular authority, as acts constituting, within the meaning of
Article 6 of Protocol XII, a beginning to put into operation of the
contracts to which such acts relate. Before a contract can have a beginning
of operation, it must, in the first place, exist, it must be valid and the
conditions necessary to endow it with validity must all be present. All that
M. Mavrommatis has done -in arranging for security and in filing the plans
of the works -he has done in order to render his concessions unassailable,
to make quite certain of them and to save them from nullity or forfeiture,
which would have resulted from default or neglect on the part of their
holder. [p50] He has fulfilled the conditions constituting the contract, but
he has not applied the contract.
[132] The Court cannot accept this view. No doubt M. Mavrommatis was bound
to perform the acts which he actually did perform in order to preserve his
contracts from lapsing as they would otherwise have done. But that which
gives birth to a contract is the agreement between the parties to it, the
exchange of signatures denoting that agreement, and it is at that moment
that the conditions on which the agreement is based must exist. Everything
that happens subsequently, everything that is done outside the contract
itself, all the conditions with which the Parties must comply at a period
more or less remote from the conclusion of the contract, with a view to
preventing it from lapsing, may be regarded as a part of the fulfilment of
the contract. The fact, therefore, that Articles 4 and 13 of M. Mavrommatis'
electric concession and Article 18 of the water concession and Article 20 of
the Cahier des charges attached thereto, stipulate that in the event either
of the final deposit to be made by the concessionnaire not having taken
place, or of the plans and designs of the works to be carried out not having
been deposited within the times specified, the concessions will lapse, is no
argument in support of the view that these acts, though subsequent to the
contracts, may not be acts performed in fulfilment of them.
[133] The Court therefore is of opinion that the concessions granted to M.
Mavrommatis at Jerusalem come within the scope of Article 4 of Protocol XII
and that the beneficiary is entitled to claim that they should be brought
into conformity with the new economic conditions by means of readaptation.
[134] Nevertheless, the fact that the Court has been enabled to affirm the
concessionnaire's right to have his contracts readapted, cannot give it
power itself to determine the method of such readaptation ; only the Parties
themselves, and subsidiarily the experts appointed in accordance with
Article 5 of the Protocol, can proceed to undertake the various operations
of the process of readaptation.
[135] As has already been stated, the Parties have asked for the Court's
decision on the question whether the tariffs laid down in the concessions
are fixed on a gold basis or in paper money, only in the event of the Court
declaring Article 6 of the Protocol, and not Article 4, to be the applicable
provision. The Court, having decided in favour of the readaptation of the
Mavrommatis concessions, need not therefore consider this question. [p51]
[136] FOR THESE REASONS,
The Court, having heard both Parties,
gives judgment as follows:
1. That the concessions granted to M. Mavrommatis under the Agreements
signed on January 27th, 1914, between him and the City of Jerusalem,
regarding certain works to be carried out at Jerusalem, are valid;
That the existence, for a certain space of time, of a right on the part of
M. Rutenberg to require the annulment of the aforesaid concessions of M.
Mavrommatis was not in conformity with the international obligations
accepted by the Mandatory for Palestine;
That no loss to M. Mavrommatis, resulting from this circumstance, has been
proved;
That therefore the Greek Government's claim for an indemnity must be
dismissed;
2. That Article 4 of the Protocol signed at Lausanne on July 23rd, 1923,
concerning certain concessions granted in the Ottoman Empire, is applicable
to the above-mentioned concessions granted to M. Mavrommatis.
[137] Done in French and English, the French text being authoritative, at
the Peace Palace, The Hague, this twenty-sixth day of March nineteen hundred
and twenty-five, in three copies, one of which is to be placed in the
archives of the Court, and the others to be forwarded to the Agents of the
Applicant and Respondent Parties respectively.
(Signed) Max Hubek,
President.
(Signed) Å. Hammarskjöld,
Registrar.
[138] M. Altamira declares that he is unable to concur in the judgment
delivered by the Court,as regards paragraphs 3 and 4 of the operative part.
(Initialled) M. H.
(Initialled) A. H.
|
|