General List No. 45

Advisory Opinion No. 24

8 March 1932

 

PERMANENT COURT OF INTERNATIONAL JUSTICE

Twenty Fourth Session

 

Interpretation of the Greco-Bulgarian Agreement of December 9th, 1927 (Caphandaris-Molloff Agreement)

 

Advisory Opinion

 
BEFORE: President: Adatci
Vice-President: Guerrero
Judges: Baron Rolin-Jaequemyns, Count Rostworowski, Fromageot, Altamira, Anzilotti, Urrutia, Sir Cecil Hurst, Schücking, Jhr. Van Eysinga, Wang
Judge(s) ad hoc: Caloyanni, Papazoff
 
    
Perm. Link: http://www.worldcourts.com/pcij/eng/decisions/1932.03.08_greco_bulgarian.htm
  
Citation: Interpretation of Greco-Bulgarian Agreement of Dec. 9th, 1927, Advisory Opinion, 1932 P.C.I.J. (ser. A/B) No. 45 (Mar. 8)
Publication: Publications of the Permanent Court of International Justice Series A./B. No. 45; Collection of Judgments, Orders and Advisory Opinions A.W. Sijthoff’s Publishing Company, Leyden, 1932
  
 

  

[p68]
THE COURT,
composed as above,
gives the following opinion: [p69]

[1] On September 19th, 1931, the Council of the League of Nations adopted the following Resolution:

"The Council,
Having noted the points of view stated by the representatives of Bulgaria and Greece;
Considering that the Bulgarian Government has raised the question whether the Greek Government was entitled to establish a connection between, and set off one against the other, its debt to the Bulgarian refugees under the Molloff-Caphandaris Agreement and the Bulgarian Government's reparation debt;
Considering that the Bulgarian Government maintains that these two debts are totally different in nature;
Considering that, in the Greek Government's opinion, no dispute as to the interpretation of the Molloff-Caphandaris Agreement is involved;
Noting that the respective financial obligations of the two Governments, in regard to which the difficulties thus submitted to the Council have arisen, were incurred in virtue of international instruments which are equally binding on both Governments and the execution of which can in no case be suspended except by agreement between all the signatory Parties;
Being convinced that such an agreement must be sought with extreme urgency on a practical basis in respect of the payments of the current year, all questions of law being reserved,
Invites the two Governments to confer together in order to attain this result as soon as possible, the service of their above-mentioned debts being carried on in the interval;

Subject to the foregoing, decides to request the Perm-anent Court of International Justice to consider, from the legal point of view, whether there is, in fact, a dispute between Greece and Bulgaria under Article 8 of the Caphandaris-Molloff Agreement, and, if so, to give an advisory opinion on the nature of the obligations arising out of the said Agreement;
Notes with great satisfaction the declarations of the two Governments with regard to their mutual desire to effect a general settlement of the other difficulties subsisting between them;
Makes an urgent appeal to their spirit of conciliation and invites them to open negotiations as soon as possible with a view to achieving this result." [p70]

[2] On the same day, and in accordance with the decision contained in the above Resolution, the Council adopted a second Resolution as follows:

"The Council,
In view of the statements made at its meeting on September 7th, 1931, by the representatives of Bulgaria and of Greece,
In view of the notes submitted by the Bulgarian Government on August 7th and on September 3rd, 14th and 17th, 1931, and the notes submitted by the Greek Government on September 2nd, 5th, 8th, nth, 15th, 18th and 19th, 1931,
Requests the Permanent Court of International Justice to give an advisory opinion on the following points:

'In the case at issue, is there a dispute between Greece and Bulgaria within the meaning of Article 8 of the Caphandaris-Molloff Agreement concluded at Geneva on December 9th, 1927 ?
If so, what is the nature of the pecuniary obligations arising out of this Agreement ?'

Invites the Governments of Bulgaria and Greece to hold themselves at the disposal of the Court for the purpose of supplying any relevant documentation and explanations.
The Secretary-General is authorized to submit this request to the Court, to give any assistance necessary for the examination of the question, and, should need arise, to take steps to be represented before the Court."

[3] In pursuance of this latter Resolution, the Secretary-General, on September 26th, 1931, transmitted to the Court a request for an advisory opinion in the following terms:

"The Secretary-General of the League of Nations, in pursuance of the Council Resolution of September 19th, 1931, and in virtue of the authorization given by the Council,
has the honour to submit to the Permanent Court of International Justice an application requesting the Court, in accordance with Article 14 of the Covenant, to give an advisory opinion to the Council on the questions which are referred to the Court by the Resolution of September 19th, 1931. [p71]
The Secretary-General will be prepared to furnish any assistance which the Court may require in the examination of this matter, and will, if necessary, arrange to . be represented before the Court."

[4] The request was registered in the records of the Registry of the Court on September 28th, 1931. To the request were appended the texts of the international agreements cited before the Council, the notes exchanged on the question by the two interested Governments and the minutes recording the statements by the representatives of those Governments at the Council meeting.

[5] Under cover of a letter dated October 1st, 1931, the Secretary-General also sent to the Registrar a copy of the minutes of the meeting of the Council of the League of Nations on September 19th, 1931, when the resolutions above mentioned were discussed and adopted.

[6] In conformity with Article 73, paragraph 1, sub-paragraph 1, of the Rules of Court, the request was communicated to Members of the League of Nations and to States entitled to appear before the Court. Furthermore, the Registrar, by means of a special and direct communication, informed the Bulgarian and Greek Governments, which were regarded by the Court as likely, in accordance with Article 73, paragraph 1, sub-paragraph 2, of the Rules, to be able to furnish in-formation on the questions submitted to the Court for an advisory opinion, that the Court was prepared to receive from them written statements and, if they so desired, to hear oral arguments presented at a public hearing to be held for the purpose. The representatives of the interested Governments had already been consulted as to the length of the time-limits within which these Governments would be ready to file any written statements they might desire to submit.

[7] In these circumstances, and having due regard to the suggestions made by the above-mentioned representatives, the Court, by an Order made on October 3rd, 1931, fixed December 15th, 1931, as the date by which a written statement was to be filed with the Registry by each of the two Governments, and February 1st, 1932, as the date by which they were each to file a second statement. At the request of the Agent for the Greek Government and with the consent of [p72] the Agent for the Bulgarian Government, the first of these time-limits was subsequently extended to January 5th, 1932; similarly, at the request of the Agent for the Bulgarian Government and with the consent of the Agent for the Greek Government, the second time-limit was extended to February 10th, 1932. Before the expiration of these time-limits, as thus extended, memorials and counter-memorials had been filed on behalf of the Bulgarian and Greek Governments.

[8] Lastly, in the course of public sittings held on February 12th and 13th, 1932, the Court heard the oral arguments presented by M.Th. Theodoroff, Agent, on behalf of the Bulgarian Government, and by M. N. Politis, Counsel, on behalf of the Greek Government.

[9] In addition to the statements and observations of the interested Governments and the documents transmitted by the Secretary-General, as mentioned above, the Court has had before it a series of documents submitted either during the written proceedings or at the hearing, by the representatives of the two Governments [FN1].

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[FN1] See list in Annex
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[10] As neither of the States directly interested had on the Bench a judge of its nationality, the Bulgarian and Greek Governments availed themselves of their right, under Article 71 of the Rules of Court, each to choose a judge ad hoc to sit in the case. The Court, holding that the question submitted to it for an advisory opinion related to an existing dispute between Bulgaria and Greece, within the meaning of Article 71, paragraph 2, of the Rules of Court, approved these appointments.

[11] The submission of the case being in all respects regular, it is in these circumstances that the Court is now called upon to give its opinion.

***

[12] The first of the two questions upon which the Court is asked to advise is as follows:

"In the case at issue, is there a dispute between Greece and Bulgaria within the meaning of Article 8 of the Caphandaris-Molloff Agreement concluded at Geneva on December 9th, 1927?" [p73]

[13] The question before the Council had been submitted to it by the Bulgarian Government in a letter dated August 7th, 1931, from the Bulgarian Charge d'affaires at Berne to the Secretary-General of the League of Nations, in the following terms [FN1]:

"On July 31st last, the Greek Government was due to pay to the Bulgarian Government, in accordance with Article 4 of the Molloff-Caphandaris Agreement of December 9th, 1927, a sum amounting to some 63 million levas. This payment was not made.
The Greek Government states that it is entitled to connect its debt to the Bulgarian refugees with the Bulgarian Government's debt on reparation account and to set off one against the other. These debts are, however, entirely different in character, and it is legally inadmissible to set off one against the other.
As the Molloff-Caphandaris Agreement was concluded under the auspices of the League of Nations, I am instructed by my Government to request you to be good enough to bring the question referred to before the Council at its next session, with special reference to Article 8 of the Agreement."

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[FN1] Translation communicated by the Secretary-General of the League of Nations
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[14] The debt referred to in the second paragraph of the letter as the debt to the Bulgarian refugees is the same as that referred to in the first paragraph, where it is stated that on July 31st, 1931, the Greek Government was due to pay to the Bulgarian Government, in accordance with Article 4 of the Caphandaris-Molloff Agreement, a certain sum of money.

[15] When the Bulgarian Government asks in this letter that the "question referred to" may be brought before the Council, it is the claim of the Greek Government to connect (lier) with one another the Greek Emigration debt and the Bulgarian Reparation debt and to set off one against the other that is referred to. It is this claim that the Bulgarian Government alleges to be legally inadmissible upon the ground that the two debts are entirely different in character. The question is submitted to the Council because, under Article 8 of the Caphandaris-Molloff Agreement, "any differences as to the interpretation of this Agreement shall be settled by the Council of the League of Nations, which shall decide by majority vote". [p74]

[16] The reference which the Bulgarian Government's letter makes to Article 8 shows that in the view of that Government the claim is one which falls within the jurisdiction of the Council upon the ground that it depends on the interpretation of the Caphandaris-Molloff Agreement.

*

[17] It may be well, before proceeding further with a statement of the facts, to explain the origin of the two debts to which reference is made in the Bulgarian letter of August 7th.

[18] The origin of the Bulgarian Reparation debt is to be found in Article 121 of the Peace Treaty of Neuilly. By that Article, Bulgaria agreed to pay a sum of 2 milliard gold francs under the head of reparation; the same Article laid down the way in which this sum must be paid.

[19] Subsequently, both the sum to be paid and the way in which it was to be paid underwent modifications, the final arrangement being embodied in the Agreement as to the payment of Bulgarian reparations concluded at The Hague on January 20th, 1930. This Agreement provided for the payment by Bulgaria of a certain number of annuities payable in two equal half-yearly instalments on the 30th September and the 31st March in each year. On March 5th, 1931, a "Trust Agreement" was entered into between the Governments which were the creditors of the payments for Bulgarian reparations and the Bank for International Settlements at Basle. By this agreement, the Bank became the Trustee of the Creditor Governments to receive, manage and distribute the reparation annuities payable by Bulgaria after the coming into force of the agreement. Under Article 5, paragraph 1, of this agreement, which was accepted by Bulgaria, the revenue set apart for the payment of the reparation annuities was to be paid in the manner laid down in the Regulations for the execution of the Protocols of March 21st and September 24th, 1928, to a special account of the Special Public Treasury of Bulgaria in the National Bank of Bulgaria (Account "A."). To this account, the National Bank was to debit on the 15th of each month the sum in levas which was required for the purpose of crediting in foreign [p75] currency an account open in its books in the name of the Trustee (Account "В.") with a number of gold francs equal to one-sixth part of the half-yearly payments falling due on March 31st and September 30th.

[20] The distribution among the Creditor Powers of the sum paid by Bulgaria is effected by the Bank for International Settlements. The Greek share is about 75 %.

[21] As regards the Greek Emigration debt, its origin is to be found in the Convention between Greece and Bulgaria signed at Neuilly on November 27th, 1919, in pursuance of Article 56 of the Peace Treaty of Neuilly which was concluded on the same day. This Convention was intended to facilitate the reciprocal and voluntary emigration of members of the racial, religious or linguistic minorities in Greece and Bulgaria to the country to which ethnically they were akin. The interpretation of some of the provisions of this Convention came under the consideration of the Court in its Advisory Opinion (Greco-Bulgarian Communities) No. 17, of July 31st, 1930.

[22] The Convention provided, among its other stipulations, that the real property of persons who emigrated was to be liquidated and the price was to be paid to the emigrant; the Government of the country from which the individual emigrated was to pay for this property and was to become its owner. A Mixed Commission with very extended powers was set up by. the Convention. Under Article 9, the Mixed Com-mission was to have the duties of supervising and facilitating the voluntary emigration referred to in the Convention and of liquidating the real property of emigrants; it was to fix the conditions of emigration and of liquidation of real property. In general it was to have full powers to take the measures rendered necessary by the execution of the Convention and to decide all questions to which the Convention might give rise. Under Article 10, the Government of the country where the liquidation takes place was to pay to the Mixed Commission, under conditions to be fixed by the latter and for transmission to the rightful Parties, the value of the real property liquidated, which was to remain the property of the said Government.

[23] The original intention of the framers of the Convention was apparently that emigrants should be paid for their liquidated [p76] property in cash, but it soon became clear that, owing to the embarrassed financial condition of the two countries concerned and to exchange difficulties, this course was not feasible. The financing of the scheme became in fact a considerable difficulty. It was not until March 6th, 1922, that the Mixed Com-mission was able to bring into force its Reglement. Articles 19, 20 and 21 of the Reglement dealt with payments for liquidated property. Article 19 provided that, in general, 10 % of the sum due to the emigrant should be paid in cash and the balance in interest-bearing bonds of the State to which the property had passed. These bonds were to be covered by supplementary guarantees so that the emigrant could realize the amount for which they had been issued and in this way obtain funds for his settlement in the country of his adoption.

[24] When the system was worked out in detail, it became necessary to make further changes. These were effected by what is known as the "Plan of Payments" introduced by the Mixed Commission with the concurrence of the two Governments in December 1922.

[25] Under this Plan, the bonds to be issued to an emigrant in payment for property liquidated by the Mixed Commission (so far as he was not paid in cash) were to be bonds of the State to which he had emigrated instead of bonds of the State which he had left and to which his property had passed. The properties liquidated were to constitute a "guarantee, fund" as additional security for the bonds, the Government of the country where the properties were situated not being allowed to alienate any of them unless it paid over the price of the property. As between the two States, each Government was to become the creditor of the other for the total amount of the debt it had contracted towards the emigrants who came and settled in its territory. The State which on balance owed the greater sum to the other was, unless otherwise agreed, to hand over bonds to Bearer calculated in dollars, paying interest at the rate of 6 %, payable half-yearly, the bonds being payable at par in six years by drawings. [p77]

[26] Five years later it became necessary to modify certain provisions of this Plan of Payments. Difficulties had arisen with regard to the guarantee fund. Under the auspices of the Council of the League of Nations and with the active assistance of the Financial Committee of the League, an agreement was concluded - known as the Caphandaris-Molloff Agreement-on December 9th, 1927.

[27] This Agreement made no fundamental alteration in the system adopted in the Plan of Payments, but it varied some of the details, particularly as to the form of the bonds and as to the period in which the bonds were to be paid off. It provided for the half-yearly fixation by the Mixed Commission in agreement with the Ministry of Finance in each country of the total face value of the bonds issued to emigrants during that period, and for the comparison of the totals thus issued in levas and drachmas respectively. Article 4 provided for the payment each half year, by the Government which had issued the smaller amount of bonds to the Government which had issued the greater amount of bonds, of the equivalent of the half-yearly interest on the amount of the bonds equivalent to its debt, together with the sinking fund, if any, due on such bonds.

[28] The financial system provided for in Article 4 was to be replaced by another system (Art. 5) as soon as the issue of bonds to emigrants was nearing completion, i.e. as soon as the work of the Mixed Commission was drawing to a close. A final total was then to be fixed of the balance due by the debtor State. The sum due was to be discharged by sixty half-yearly payments. The system provided for under Article 5 had not come into force in September 1931, and therefore it is not necessary to describe it in detail.

[29] Bulgaria is the State which has issued the larger amount of bonds to emigrants, and it was therefore Greece which under Article 4 was liable to pay half-yearly to Bulgaria, until such time as the final total was fixed under Article 5, [p78] the equivalent of the half-yearly interest on the amount of bonds equivalent to its debt, together with the sinking fund, if any, due on such bonds.

[30] It is the sum due by Greece to Bulgaria in respect of interest and sinking fund on these bonds which was described in the memoranda submitted to the London Committee of Experts, mentioned hereafter, and in the various documents submitted to the Council of the League of Nations as the "Caphandaris-Molloff debt". It is to one of these half-yearly payments under Article 4 that reference is made in the first paragraph of the Bulgarian letter of August 7th, 1931, submitting the dispute to the Council of the League.

*

[31] It is not disputed by the Bulgarian Government that the difference of opinions between it and the Greek Government which led to the proceedings before the Council and to the questions which are now submitted to the Court for an advisory opinion arose in connection with the proposal put forward on June 20th, 1931, by President Hoover for a year's moratorium on certain war debts, although it regards this difference of opinions as a dispute existing independently of the moratorium.

[32] The opening words of President Hoover's announcement were as follows:

"The American Government proposes the postponement during one year of all payments on inter-governmental debts, reparations; and relief debts, both principal and interest, of course, not including obligations of Governments held by private Parties."

[33] The Greek Government declared itself ready to accept the Hoover proposal on certain conditions. In a memorandum submitted on June 26th, 1931, to the Minister of the United States at Athens, it explained that the proposal, if it was to cover not only German Reparations but also what are known [p79] as Eastern Reparations, would place Greece in a very peculiar position on account of the particular nature of some of her claims and obligations. The Greek Government added that it could only accept the proposal if appropriate measures were taken to overcome the peculiar situation in which it would be placed. In this connection the Greek Government stated that "another Greek debt which it is fair to include in the moratorium if Bulgaria is to benefit by it is the debit balance for which we are liable resulting from the application of the Convention of Neuilly of 1919 on Greco-Bulgarian Emigration. This Convention, as also the Reparation agreements, is part of the inheritance from the war."

[34] In the course of an interview a few days later with the Minister of the United States, M. Vénizélos, speaking of the sum for which Bulgaria was a creditor of Greece under the heading of emigration, expressed himself as follows: "In the agreements which have regulated the payment .... it is entirely a question of debt owing by one Government to the other. Without doubt therefore the sum for which Bulgaria is a creditor comes within the scope of the Hoover proposal. Nevertheless the Greek Government would be glad to know whether the American Government regards its opinion on this question as well founded."

[35] The text of these statements was communicated to the Bulgarian Minister at Athens on July 7th, 1931, and instructions were sent to the Greek Charge d'affaires at Sofia to explain to the Bulgarian Government the Greek attitude towards Bulgaria with respect to the Hoover proposal and to say that the two debts were in reality of the same nature.

[36] On its side, the Bulgarian Government was from the outset desirous of accepting President Hoover's proposal, but the earliest document indicating the Bulgarian attitude of which the text is before the Court is a telegram which the Bulgarian Finance Minister sent to the Bank for International Settlements on July 14th, 1931. This telegram stated that the Bulgarian Government was convinced that the Hoover proposal applied also to Bulgaria and therefore considered that it should suspend the payment of the revenue assigned to the payment of reparations in Account "A." at the [p80] National Bank, as provided for in Article 5 of the Trust Agreement, and of the credit of July 15th, 1931, in Account "B." of the Bank for International Settlements at the National Bank. The telegram went on to say that the Bulgarian Government requested the permission of the Bank to liberate for the benefit of the Bulgarian Treasury the sums credited to the Bank's Account "B." on April 15th, May 15th and June 15th, 1931.

[37] Bulgaria ceased thenceforward to make the monthly provision of the sums necessary for the half-yearly payment of her Reparation instalment at the end of September.

[38] The Bulgarian telegram was communicated by the Bank in due course to Bulgaria's reparation creditors, including Greece. The answer of the Greek Government on July 30th, 1931, was a refusal to agree to the Bulgarian proposal. It stated that no international agreement had been concluded which entitled Bulgaria to suspend her reparation payments to Greece and that the Hoover proposal could not be invoked in the circumstances, as the proposal was in suspense and had not yet been accepted by the Greek Government.

[39] Two days later, in a letter dated August 1st, 1931, Greece informed the President of the Mixed Commission that she was compelled to suspend the payment of the half-yearly amount of the Greek Emigration debt, saying that the question formed part of a series of problems raised by the Hoover proposal which were then the subject of discussions in London.

[40] The circumstances to which the Greek Finance Minister referred in these two letters of July 30th and August 1st as having occasioned delay as to bringing the Hoover Plan into force, had also led to the appointment of an International Committee of Experts to investigate the question and recommend what measures were necessary in order to give effect to the proposal.

[41] Greece addressed a memorandum to the Committee, in which she pointed out her objections from a general point of view to the extension of the Hoover proposal to the Eastern reparations, and set out the conditions on which she was prepared [p81] to accept the American proposal. So far as she was concerned, she said that she would not endeavour to derive any profit herself from the proposed moratorium; but she did not wish, on "the other hand, to suffer any loss. She could not agree to the principle of suspension except on the condition that her financial equilibrium was safeguarded. She then went on to indicate the manner in which this object could be achieved. A list of the sums which Greece should have received on account of reparations of which the payment would be suspended under the Hoover Plan, was set out and was followed by a list of the payments for which Greece was liable and which should be suspended. In this list of Greek debts comes the debt under the Caphandaris-Molloff Agreement, which is described in a footnote as follows: "The debt resulting from the Caphandaris-Molloff Agreement is a debt between Governments. It represents the settlement of an emigration and is the outcome of a convention forming an integral part of the Treaty of Neuilly which put an end to the war."

[42] The Bulgarian Government also submitted a memorandum to the Committee of Experts. The text of this memorandum has not been laid before the Court, but the substance of it is set out in the report of the Committee of Experts.

[43] This report stated that the Greek Government were prepared to accept the suspension of payments by Germany but had difficulty as regards the suspension of payments by Bulgaria. These difficulties were explained in the section of the report dealing with the Bulgarian reparation debt, in the following terms:

"15. Subject to the remarks in paragraph 13 as regards Fund 'A', we recognize that payments by Bulgaria should also be postponed on similar terms to those referred to in the preceding paragraph. But we have to report that, before the necessary agreement to this end can be concluded, the difficulty which has arisen in regard to the debt resulting from the Caphandaris-Molloff Agreement will have to be overcome.

This debt represents the debit balance which Greece has to pay to the Bulgarian Government as a result of balancing the [p82] accounts relating to properties left by Bulgarian refugees in Greece and by Greek refugees in Bulgaria. The Greek Government will have to pay about Ł190,000 to the Bulgarian Government on this account during the 'Hoover Year'.
The Bulgarian Government maintain that the payments are in respect of private properties, that they are for the benefit of private bondholders and that the arrangements made for the Governments to act as the channel for part of these payments do not alter their fundamental nature as private debts.
The Greek Government maintain that this debt is an inter-governmental debt, because it is due and paid by one Government to another, because it is nowhere stated in the relevant Agreement that the sums thus paid will be assigned to the service of any obligations held by private persons, and, finally, because there are no securities held by Bulgarian emigrants carrying the name of the Greek Government as debtor.
The Greek Government further emphasize the difficulties in which they will be placed if President Hoover's proposal is applied to non-German reparation, of which Greece receives 76.73 per cent., and they regard it as inadmissible that Bulgarian payments to Greece should be suspended while Greek payments to Bulgaria continue uninterrupted.
We do not feel that it is within our competence to decide the difference of opinion set forth above. In this as in other cases where doubt has been expressed as to whether debts are inter-governmental in nature, we consider that the matter must be settled by the two Governments concerned.
We must, however, record our emphatic view that it is desirable that a practical settlement should be reached, and we hope that the Bulgarian and Greek Governments will approach the matter in the most conciliatory spirit possible, so that this end may be achieved."

[44] The Greek attitude at this time is clear from the above documents. For financial reasons Greece was unable to agree to continue to pay the Emigration debt if she ceased to receive her share of the Bulgarian Reparation debt. She was convinced that the Greek Emigration debt was an inter-governmental debt which ought to be included in the scope of the Hoover moratorium, and unless this view was accepted by the other Governments concerned she was not prepared to become a Party to any agreements which would result in sums payable to her being suspended thereunder. [p83]

[45] The Bulgarian attitude is equally clear. Bulgaria objected to the Greek claim to bring the Caphandaris-Molloff debt within the scope of the Hoover proposal. If that were done, it would diminish the extent to which she felt she ought to benefit from the Hoover Plan.

[46] At the time of signing the Protocol relating to German Reparations on August nth, 1931, Greece made a declaration in the following terms:

"The undersigned Greek Delegate desires to declare that in signing the Protocol concerning the suspension of payments of German Reparations for the year 1931-1932, Greece has to define that she is accepting the proposal of the President of the United States as far as the German Reparations are concerned, and that she is prepared to concur to those proposals as far as Oriental Reparations are concerned on the following conditions, i.e.:
(a) As far as Hungarian Reparations are concerned, the payments referring to damages during the period by which Greece was neutral will be exempted from the suspension.
(b) As far as Bulgarian Reparations are concerned, the payments for the execution of the Agreement Caphandaris-Molloff win be included in the suspension of payments."

[47] The Bulgarian representatives in London must have understood that the Experts were not prepared to give effect to the Bulgarian claim, for the letter submitting the matter to the Council was dated four days before the signature of the report of the Experts Committee in London.

[48] This was the situation when the Council was seized by Bulgaria of the question whether Greece was entitled to connect (lier) the two debts and set off one against the other.

[49] The various memoranda submitted to the Council by the representatives of the two Governments and the arguments which they employed at the meeting of the Council when the subject was under discussion on September 7th, 1931, do not depart materially from the standpoint adopted and the arguments employed at the time of the meeting of the [p84] Committee of Experts in London, as shown by the report of that Committee. The Bulgarian representatives continue to lay stress upon the argument that Bulgaria should obtain a moratorium for her reparation payments without such suspension being linked up in any way with the question of the Caphandaris-Molloff debt, that debt not being inter-governmental in character but being a debt due to private persons, namely the emigrants, and not therefore a debt which can be set off against a reparation debt. The Greek representatives continue to lay stress on the argument that the Hoover Plan cannot be applied to Bulgarian Reparations without the consent of Bulgaria's creditors; that in their view the Caphandaris-Molloff debt was a debt owing by one Government to another, and that Greece was only prepared to agree to the suspension of Bulgarian Reparations on the terms of reciprocity, namely that if the Bulgarian Reparations were suspended the payment of the Caphandaris-Molloff debt should also be suspended.

[50] It was in these circumstances that the Council asked the Court for its opinion.

*

[51] The first of the two questions submitted to the Court asks whether there is in the case at issue a dispute between Greece and Bulgaria within the meaning of Article 8 of the Caphandaris-Molloff Agreement. By these words "in the case at issue", the Court understands that it is asked to deal with the question on the basis and in the circumstances in which the Council was seized of the dispute and to deal with it in the light of all the considerations laid before the Council up to the time when it decided to have recourse to the Court.

[52] The question which Bulgaria submitted to the Council, namely, whether Greece was entitled to connect (lier) the Bulgarian Reparation debt and the Greek Emigration debt and to set off one against the other, is only another way of raising the question of the legitimacy of the Greek attitude in insisting upon the acceptance of her point of view, that if she was to agree to the application of the Hoover Plan [p85] to Reparation payments by which she profited, payments under the Greek Emigration debt must also be included in the suspension. She was in effect insisting on the acceptance of her view that the Greek Emigration debt should be regarded as inter-governmental, and also insisting that only in case this point of view was accepted could she accept the Hoover Plan.

[53] At a later period, the Greek Government declared that the condition of its acceptance of the Hoover Plan was the suspension of its debt to Bulgaria, irrespective of the nature of that debt as compared with the nature of the Bulgarian debt.

[54] In this connection, the Court thinks it well to make the following observations.

[55] Greece's right to subject her acceptance of the Hoover Plan to a condition has nothing to do with the Caphandaris-Molloff Agreement.

[56] On the other hand, it must be admitted that to the extent that the Greek Government contended that the debt under the Caphandaris-Molloff Agreement was of the same nature as the Bulgarian Reparation debt, it raised a question which could not be decided without referring to the conventional stipulations in force between Bulgaria and Greece on the subject of the emigration of racial minorities, the liquidation of their property and the payment of the value of the property liquidated.

[57] It must be observed, however, in that case, that, assuming that it is the Caphandaris-Molloff Agreement which falls to be interpreted, this interpretation would be solely for the purpose of ascertaining whether the Greek debt could come within one or other of the categories covered by the Hoover Plan. That amounts to saying that the interpretation of this Agreement could come in only as a question incidental or preliminary to another question, itself depending solely on the Hoover Plan.

[58] The powers of the Council under Article 8 are restricted to interpreting the Caphandaris-Molloff Agreement. They do not extend to the Hoover Plan. The nature of the Emigration debt under the Caphandaris-Molloff Agreement, i.e. whether or not it was payable under that Agreement by one [p86] Government to another, would not necessarily determine whether or not it was an inter-governmental debt within the meaning and scope of the Hoover Plan.

[59] It follows that the dispute between the Parties as to whether Greece is entitled to connect (lier) the two debts with one another and to set off one against the other, i.e. whether Greece is entitled to insist on the suspension of the Greek debt if the Bulgarian debt is suspended, is one which cannot be decided by determining the nature of the Greek Emigration debt under the Caphandaris-Molloff Agreement, and, therefore, that in the case at issue there is no dispute between Greece and Bulgaria within the meaning of Article 8 of the Agreement.

*

[60] The relation between the Caphandaris-Molloff Agreement and the earlier conventional arrangements between Greece and Bulgaria on the subject of emigration will be apparent from what has been said above as to the origin of the Greek Emigration debt. In this connection another question arises: Must not the nature of the Greek Emigration debt be deter-mined in reality by reference to the agreements which pre-ceded the Caphandaris-Molloff Agreement, and, if so, can this question form the subject of a dispute within the meaning of Article 8 of that Agreement ?

[61] This question has not been discussed either before the Council or before the Court. In these circumstances the Court will refrain from dealing with it and from expressing any opinion with regard to it.

***

[62] The second question upon which the Court is asked to advise is worded as follows:

"If so [i.e. if, in the case at issue, there is a dispute within the meaning of Article 8 of the Caphandaris-Molloff Agreement, what is the nature of the pecuniary obligations arising out of this Agreement ?" [p87]

[63] As the Court has arrived at the conclusion that the answer to the first question is not in the affirmative, the second question does not arise.

[64] Accordingly, nothing that has been said in this Opinion in dealing with the first question of the Council must be regarded as prejudging in any way the matters referred to in the second question.

[65] In the course of the written pleadings and also in the course of the oral arguments before the Court, the Agents and Counsel of each of the Governments concerned stated that they were anxious that the Court should give an opinion upon the second question whether the first question was answered in the affirmative or not. The Court feels unable to comply with this desire.

[66] By the terms of Article 14 of the Covenant, the right to submit a question to the advisory jurisdiction of the Court is given only to the Assembly and to the Council of the League; The Court is therefore bound by the terms of the questions as formulated in this case by the Council. The second question is so worded as to be put to the Court conditionally upon an affirmative answer being given to the first question. To ignore this condition at the request of the Parties would be in effect to allow the two interested Governments to submit a question for the advisory opinion of the Court.

[67] As the wishes expressed by the respective Agents and Counsel contemplated only an extension of the advisory procedure, there is no need for the Court to consider whether it is possible for an understanding between the representatives of the interested Governments, reached in the course of the proceedings, to serve as a kind of "special agreement", initiating a contentious proceeding before the Court. [p88]

[68] FOR THESE REASONS,
the Court,
by eight votes to six,
is of opinion
that, in the case at issue, there is no dispute between Greece and Bulgaria within the meaning of Article 8 of the Caphandaris-Molloff Agreement concluded at Geneva on December 9th, 1927.

[69] Done in English and French, the English text being authoritative, at the Peace Palace, The Hague, this eighth day of March, one thousand nine hundred arid thirty-two, in two copies, one of which is to be placed in the archives of the Court, and the other to be forwarded to the Council of the League of Nations.

(Signed) M. Adatci,
President.
(Signed) A. hammarskjöld,
Registrar.

[70] M. Adatci, Count Rostworowski, MM. Altamira and Schücking, Jonkheer van Eysinga, Judges, and M. Papazoff, Judge ad hoc, availing themselves, by the present declaration, of the right conferred on them by Article 71 of the Rules of Court, attach to the Opinion this statement of then: dissent.

(Initialled) M. A.
(Initialled) A. H.


[p89] Annex.

I. - Papers and Documents Transmitted by the Secretariat, of the League of Nations

1. - Caphandaris-Molloff Agreement, signed at Geneva December 9th, 1927 (Doc. С 641. 1927. II) (in French and English). Annex: Provisional certificate of the Bulgarian 6 % Loan of 1923 and provisional bond of the said loan.
2. - Plan of payments to be effected by Bulgaria and Greece (December 8th, 1922), and explanatory note concerning the said Plan (Doc. F. 428, and Addendum to F. 428).
3. - Letter dated August 7th, 1931, from the Bulgarian Government (Doc. C. 477. 1931. I) (in French and English).
4. - Letter dated September 2nd, 1931, from the Greek Government (Doc. C. 530. 1931. I) (in French and English). Annex: Observations by the Greek Government.
5. - Letter dated September 3rd, 1931, from the Bulgarian Government (Doc. С. 540. 1931. I), (in French and English). Annex: Memorandum by the Bulgarian Government concerning the interpretation of the Caphandaris-Molloff Agreement.
6. - Letter dated September 5th, 1931, from the Greek Government (Doc. C. 543. 1931. I) (in French and English). Annex: Supplementary Memorandum by the Greek Government.
7. - Minutes of the meeting of the Council on September 7th, 1931 (Doc. C./64th Session/P.-V. 3. I) (in French and English).
8. - Letter dated September 8th, 1931, from the Greek Government (Doc. С 553. 1931. I) (in French and English).
9. - Letter dated September nth, 1931, from the Greek Government (Doc. C. 559. 1931. I) (in French and English).
10. - Notes dated September 14th, 1931, by the Bulgarian Government (Doc. С 565. . I931. I) (in French and English). Annexes:

I. - Telegram from the Bulgarian Finance Minister to the В.-1. S. (July 14th, 1931), and telegram in reply from the B. I. S. (July 16th, 1931).

II. - Letter from the Greek Finance Minister to the President of the Mixed Commission (August 1st, 1931).
III. - Letter from the President of the Mixed Commission to the Greek Finance Minister (August 3rd, 1931).
IV. - Greek Memorial submitted to the Committee of Experts in London.
V. - Decision by the Committee of Experts in London (extract).

11. - Letter dated , September 15th, 1931, from the Greek Government (Doc. С 576. I931. I).
12. - Letter dated September 17th, 1931, from the Bulgarian Government (Doc. С 581. 1931. I) (in French and English.
13. - Letter dated September l8th, 1931, from the Greek Government (Doc. C. 590. 1931. I), (in French and English).
14. - Letter dated September 19th, 1931, from the Greek Government (Doc. C. 595. .1931. I) (in French and English). Annex: Reply by the Greek Delegation to M. Malinoff's letter.
15. - Letter dated September 21st, 1931, from the Bulgarian Government (Doc. С 614. 1931. I).
16. - Extract from the Minutes of the 65th Session of the Council of the League of Nations (meeting on Saturday, September 19th, 1931, No. 2906). [p90]

The following documents were also before the Court:

(а) President Hoover's proposal, dated June 20th, 1931 (text extracted from the Publications of the Department of State. Press Releases. Saturday, June 27th, 1931).
(b) Report by the International Committee of Experts, signed in London on August 11th and 13th, 1931 (British State Papers, Miscellaneous. No. 19 (1931), Cmd. 3947).
(c) Circular concerning valuations and payments in respect of property to be liquidated in pursuance of the Greco-Bulgarian Convention for Reciprocal Emigration (Minutes of the Mixed Emigration Commission, 170th meeting, held on January 29th, 1924).
(d) Extract from the Minutes of the Council L. N. (meetings of September 19th, 1931, No. 2903, and January 28th, 1932, No. 2998).
(e) Convention of Neuilly of November 27th, 1919 (Publication of theCourt, Series C, No. 18 - I , pp. 369-373).
(f) Regulation for reciprocal and voluntary emigration, dated March 6th, 1922 (Publications of the Court, Series C, No. 18 - I, pp. 374-402).

II. - Papers and Documents Filed on Behalf of the Bulgarian Government:

1. - Letter dated September 4th, 1929, from the Bulgarian Finance Minister to the President of the Mixed Commission.
2. - Minutes of the 62nd meeting of the Greco-Bulgarian Mixed Emigration Commission, held on September 24th, 1921.
3. - Idem, 126th meeting, held on December 4th, 1922; with two annexes.
4. - Letter dated October 6th, 1922, from the Bulgarian Minister for Foreign Affairs to the Mixed Commission.
5. - Minutes of the 127th meeting of the Mixed Commission, held on December 6th and 8th, 1922.
6. - Letter dated February nth, 1924, from the Mixed Emigration Commission to the Secretary of the Inter-Allied Commission in Bulgaria.
7. - Letter dated January 16th, 1930, from the President of the Mixed-Emigration Commission to the President of the Financial Committee.
8. - Extract from the Minutes of the meeting held on March 8th, 1929, by the Council L. N.
9. - Agreement concerning the regulation of Bulgarian reparations concluded at The Hague on January 20th, 1930.

III. - Papers and Documents Filed on Behalf of the Greek Government:

A. - During the written procedure:

1. - Trust Agreement, dated March 5th, 1931.
2. - Memorandum dated June 26th, 1931, delivered by the Greek Government to the United States Minister at Athens.
3.-Declarations of M. Vénizélos, Prime Minister of Greece, to Mr. Skinner, United States Minister at Athens (July 1st, 1931).
4.-Letter from the Director-General of the Greek Foreign Office to the Bulgarian Minister at Athens (July 7th, 1931).
5. - Telegram from the Bulgarian Finance Minister to the Bank of International Settlements (July 14th, 1931).
6. - Letter from the B. I. S. to the Greek Finance Minister (July 15th, 1931). [p91]
7. - Letter from the Greek Finance Minister to the B. I. S. (July 30th, )
8. - Arrangement concluded between the Government of the Greek Republic and the Royal Bulgarian Government concerning the application of the Hoover proposal to Bulgarian reparations and execution of the Caphandaris-Molloff Agreement during the .Hoover Year (July 1st, 1931 - June 30th, 1932).
9. - Letter from the Greek Minister for Foreign Affairs to the Bulgarian Minister at Athens (November 11th, 1931).
10. - Convention between Greece and Bulgaria concerning the reciprocal and voluntary emigration of ethnical minorities, dated November 27th, 1919.
11. - Plan governing the payments to be effected by Bulgaria and Greece in execution of the Greco-Bulgarian Convention concerning the reciprocal and voluntary emigration of ethnical minorities, dated December 8th, 1922.
12. - Caphandaris-Mlloff Agreement, dated December 9th, 1927.
13. - Letter from Sir O. Niemayer, of the L. N. Financial Committee, to M. A. Carapanos, Greek Minister for Foreign Affairs, dated September 1st, 1928.

B. - During the oral procedure:

1. - Letter dated Sofia, August 9th, 1929, from the Finance Minister of the Kingdom of Bulgaria to the President of the Greco-Bulgarian Mixed Commission.
2. - Bearer bond (unnumbered), for 1000 leva, Series В., of the Bulgarian б % State Loan of 1923, with coupon sheet attached (each coupon being perforated).
3. - Bearer bond (No. 182.539) for 500 drachmas, of the Greek Republic 6 % Loan of 1923, with coupon sheet attached (each coupon being perforated).

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