COUNSEL:

 

SOLICITORS: For appellants: Lawrence Jones & Co.

For respondents: Constant & Constant.

 

JUDGES: Viscount Simon L.C., Lord Atkin, Lord Thankerton, Lord Wright, and Lord Porter.

 

DATES: 1942 July 24, 27, 28, 29, 30; Dec. 3.

 

 

Alien – Enemy – Company incorporated in allied State occupied by enemy – Right to take proceedings in English courts – Effect of occupation of allied State – Solicitor – Retainer – Termination – Client acquiring enemy status.

 

Before the outbreak of war between Great Britain and Germany in September, 1939, the respondents, a shipowning company incorporated under the law of the Netherlands and having their principal place of business in Rotterdam, chartered one of their vessels to the appellants. Disputes having arisen between them, the respondents sought arbitration in London in accordance with a provision in the charterparty, and in April, 1940, each party appointed an arbitrator. In May, 1940, the Germans invaded the Netherlands and brought the country entirely under their control. The appellants refused to proceed with the arbitration:–

 

Held, that the respondents, being resident in the Netherlands, were in the position of alien enemies at common law and had ceased to enjoy the right of resort to the King’s courts save by permission given by royal licence.

 

Invasion of territory, resulting in the enemy being in effective control, at the material time, and exercising some kind of government or administration over it, as distinct from occupation of a slighter character merely for military purposes, gives the area an enemy character and disqualifies local residents from suing in the King’s courts.

 

Cremidi v. Powell (The Gerasimo) (1857) 11 Moo. P. C. 88, criticized.

 

Per Lord Porter. The authority of the respondents’ solicitors to continue to represent them terminated when the respondents themselves became technical enemies.

 

Decision of Court of Appeal (sub nom. N.V. Gebr. Van Udens Scheepvaart en Agentuur Maatschappij v. Sovfracht) [1942] 1 K. B. 222, reversed.

 

APPEAL from the Court of Appeal.

 

The facts, stated by VISCOUNT SIMON L.C., LORD WRIGHT, and LORD PORTER, were as follows: The respondents were [*204] a shipowning company incorporated under the law of the Kingdom of the Netherlands with their principal place of business at Rotterdam. By a charterparty dated August 11, 1939, they chartered one of their vessels, the Waalhaven, to the appellants who were a Russian company. Disputes arose between the parties and the respondents sought arbitration under a clause in the charterparty which provided for arbitration in London. In April, 1940, the respondents and the appellants appointed their arbitrators, but on May 10, before the matter could proceed further, Germany, which had been at war with Great Britain since September, 1939, invaded the Netherlands and in a short time the whole country, including Rotterdam, was completely occupied by the enemy and under enemy control. The Royal Netherlands government retired to England. All the respondents’ vessels save one were brought beyond enemy control, but there was no evidence that the respondents had either altered the place of their activities or had ceased to carry on business, nor of the where-abouts of their directors. There was no evidence of the constitution of the respondent company, the character of its membership, its regulations, or the exact nature of its business. On May 20, the solicitors who had been acting for the respondents in the arbitration applied to the Custodian of Enemy Property for his “formal approval to the arbitration being proceeded with in the normal course” on the understanding that any sums recovered from the appellants would be accounted for to him “in accordance with the Trading with the Enemy Regulations.” On May 22, the Custodian replied: “There will be no objection so far as the Trading with the Enemy legislation is concerned to your proceeding with the arbitration ….” On September 24 and October 4, the appellants’ arbitrator and their solicitors refused to proceed with the arbitration, the arbitrator subsequently stating, in a letter dated April 21, 1941, that when the respondents “became enemy aliens the retainer to their solicitors was terminated.” On June 24, 1941, the respondents took out a summons asking for the appointment of an umpire. Master Ball, after hearing argument from both sides, made the order which was confirmed by the judge in chambers, Asquith J., who gave the appellants leave to appeal to the Court of Appeal. The hearing before the Court of Appeal (Lord Greene M.R., Goddard and du Parcq L.JJ.) began on October 13, 1941. It was not contended that the Custodian’s letter had any legal validity as [*205] a licence to the respondents or their solicitors to proceed, but, while the case was being argued, an adjournment was granted to enable an application to be made to the Trading with the Enemy Branch (Treasury and Board of Trade) which gave an authority, dated October 15, 1941, to the solicitors purporting to act for the respondents “to continue to represent and act on behalf of” them. The authority, which was given under the Trading with the Enemy Act, 1939, s. 1, sub-s. 2 (i.), further stated: “This authority will operate retrospectively to cover your actions since May 22, 1940. It is for the court or the arbitrator to decide whether the [respondents], being in enemy-occupied territory, are entitled to proceed with the dispute in the circumstances.” On November 5, 1941, the Court of Appeal dismissed the appeal and held that the respondents were not in the position of enemy aliens at common law and thus still enjoyed the right of resort to the King’s courts. It held, however, that they were an “enemy” corporation for the purposes of the Trading with the Enemy Act, 1939, and the Defence (Trading with the Enemy) Regulations, 1940(1), and, accordingly, that it was illegal for the solicitors to act for them in this country without a licence. It was further held that, although the authority given to them could not operate retrospectively to legalize acts which at the time they were done were unlawful as being in breach of the Act and the regulations, the difficulty was overcome by the concession on the part of the appellants’ counsel that all the proceedings should be deemed to have taken place before October 13, 1941. The appellants appealed to the House of Lords.

 

Pritt K.C. and Gerald Gardiner for the appellants. The respondents are enemy aliens at common law and are, therefore, debarred from taking proceedings before the English courts. It would be contrary to the established principles of the

 

(1) By s. 2, sub-s. 1, of the Trading with the Enemy Act, 1939, as amended by reg. 3 of the Defence (Trading with the Enemy) Regulations, 1940 (St. R. & O., 1940, No. 1092): “…. the expression ‘enemy’ for the purposes of this Act means …. (e) as respects any business carried on in enemy territory, any individual or body of persons (whether corporate or unincorporate) carrying on that business.” By s. 15, sub-s. 1, of the Act: “…. ‘enemy territory’ means any area which is under the sovereignty of, or in the occupation of, a power with whom His Majesty is at war.” [*206] common law that traders carrying on, in territory occupied and controlled by the enemy, a business of assistance to the enemy and detrimental to this country, should be allowed to take such proceedings. The answer to the question: Who is an alien enemy? rests on public policy. When territory is effectively in the occupation of the enemy the requirements of public policy must prevail, wherever the abstract sovereignty of that territory may lie. In the case of a company, its commercial domicil determines whether it is to be classed as an enemy alien. Nationality and allegiance are not material, save as regards the temporary allegiance, if any, depending on the place where a person happens to be. There can be no distinction for present purposes between German territory proper and territory effectively occupied by the Germans. The Hoop (1), which turned on facts similar to those of the present case, is an authority for prohibiting trade with citizens of a country which, although not at war with England, is in hostile occupation. The reasoning in Porter v. Freudenberg (2) covers this case. [They referred to M’Connell v. Hector (3); Procedural Capacity of Alien Enemies, by Professor McNair, Law Quarterly Review, (1942) vol. lviii., pp. 191, 201, n. 48; Société Anonyme Belge des Mines d’Aljustrel (Portugal) v. Anglo-Belgian Agency, Ld. (4); In re Deutsche Bank (London Agency) (5); Donaldson v. Thompson (6); Hagedorn v. Bell (7); Tingley v. Müller (8); Bentzon v. Boyle (Thirty Hogsheads of Sugar) (9); and United States v. Rice (10).] Further, the retainer of the solicitors was dissolved or suspended as soon as the respondents became alien enemies. A retainer is a contract of agency, and in this case it has lapsed and nothing has revived it. Accordingly, the solicitors have no authority to act: see Robson v. Premier Oil and Pipe Line Co., Ld. (11).

 

Sir Robert Aske K.C. and A. J. Hodgson for the respondents. The respondents are not in the position of enemies since they do not fall within any of the following classes: (1.) enemy nationals resident in their own country; (2.) enemy nationals in other countries engaged in acts hostile to England; (3.) neutrals or allies voluntarily residing or carrying on business

 

(1) (1799) 1 C. Rob. 196.

 

(2) [1915] 1 K. B. 857.

 

(3) (1802) 3 Bos. & P. 113.

 

(4) [1915] 2 Ch. 409.

 

(5) [1921] 2 Ch. 291.

 

(6) (1808) 1 Camp. 429.

 

(7) (1813) 1 M. & S. 450.

 

(8) [1917] 2 Ch. 144.

 

(9) (1815) 9 Cranch, 190.

 

(10) (1819) 4 Wheat. 246.

 

(11) [1915] 2 Ch. 124. [*207]

 

in the enemy’s country; (4.) British subjects voluntarily resident or carrying on business in the enemy’s country and thereby subjecting themselves to his rule and giving him allegiance. Enemy character does not extend beyond these classes so far as regards persons, although the property of neutrals or allies may be subject to seizure and confiscation in other countries. Thus, when a neutral has a house of trade in an enemy’s country, he does not himself become an enemy but his assets there are liable to confiscation. The grand test of enemy character to determine the right to sue is allegiance, permanent or temporary, to the King’s enemies: The Hoop (1); O’Mealey v. Wilson (2); M’Connell v. Hector ( 3). The relevant considerations are not altogether the same as those relating to questions of trading with the enemy. The authorities confine the definition of enemy aliens to the subject of allegiance to the enemy sovereign. To turn a neutral into an enemy it must be shown that he owes allegiance to a state at war with this country. Territory which is merely occupied by the enemy is not enemy territory, for the inhabitants of an invaded country owe no duty to the invader. The rule debarring enemy aliens from suing in the King’s courts is based on the idea that they are adhering to the King’s enemies, and inhabitants of occupied territory do not fall within that rule. There is no such thing as temporary allegiance to an invader. The inhabitants of the invaded country owe allegiance to the same sovereign as before the invasion. To alter the position there must be a formal annexation of the invaded country or its incorporation into the territory of the invading power: Cremidi v. Powell (The Gerasimo) (4). There is nothing to establish that the inhabitants of the Netherlands are enemies of England. They neither owe nor profess allegiance to Germany. They are merely the subject of overpowering force: Sparenburgh v. Bannatyne (5). Their courts continue to function, and this can only be under the authority of the Queen. So, too, with the civil administration and business life. The appellants’ proposition involves the conclusion that, if a State is invaded and occupied and England goes to war to protect it, all its inhabitants become enemies and their property is liable to confiscation. The rule that enemy aliens cannot sue in the

 

(1) 1 C. Rob. 196.

 

(2) (1808) 1 Camp. 482.

 

(3) 3 Bos. & P. 113.

 

(4) (1857) 11 Moo. P. C. 88, 96.

 

(5) (1797) 1 Bos. & P. 163. [*208]

 

King’s courts is based on public policy, and it is contrary to public policy that subjects of an allied state should be liable to have their goods confiscated for that would jeopardize the alliance. It is not an inflexible principle that enemy aliens cannot in any circumstances be plaintiffs: Rodriguez v. Speyer Brothers (1). In Fibrosa Spolka Akcyjna v. Fairbairn, Lawson, Combe, Barbour, Ld. (2), a Polish company was plaintiff. [VISCOUNT SIMON L.C. In that case the House had expected the plaintiffs to obtain the licence of the Crown. Instead, they obtained the licence of the Board of Trade. I doubt whether that was regular. The House treated it as sufficient, but it must not be taken that the House has laid it down that a company domiciled in territory occupied by the enemy can litigate to its heart’s content provided it obtains the consent of the Board of Trade.] The right to sue is not the same as the right to receive the proceeds of the action, and there is no chance of the proceeds of this action going into enemy hands since there is an undertaking to pay them to the Custodian of Enemy Property. Money and goods can always be prevented from reaching territory occupied by the enemy. Even if the respondents are now enemy aliens the authority of the solicitors to act for them in this matter continues: Tingley v. Müller (3). [They referred to The Anglo-Mexican (4); De Jager v. Attorney-General of Natal (5); Janson v. Driefontein Consolidated Mines, Ld. (6); Schaffenius v. Goldberg (7); The Gutenfels (8); Daimler Co., Ld. v. Continental Tyre and Rubber Co. (Great Britain), Ld. (9); Casseres v. Bell (10); Openheim on International Law, 5th ed., vol. ii., pp. 349 et seq., paras. 169, 170; Stroud’s Judicial Dictionary, 2nd ed., vol. i., p. 70.]

 

Pritt K.C., in reply, referred to The Manilla (11), where The Dart (12) and The Happy Couple (12) are noted.

 

[VISCOUNT SIMON L.C. referred to Schmitz v. Van der Veen & Co. (13) and Weiner v. Central Fund for German Jewry (14).]

 

The House took time for consideration.

 

(1) [1919] A. C. 59.

 

(2) [1942] A. C. 33.

 

(3) [1917] 2 Ch. 144.

 

(4) [1918] A. C. 422.

 

(5) [1907] A. C. 326.

 

(6) [1902] A. C. 484.

 

(7) [1916] 1 K. B. 284.

 

(8) [1916] 2 A. C. 112.

 

(9) [1916] 2 A. C. 307.

 

(10) (1799) 8 Term Rep. 166.

 

(11) (1808) Edwards 1.

 

(12) (1808) Unrep.

 

(13) (1915) 84 L. J. (K. B.) 861.

 

(14) [1941] 2 All E. R. 29. [*209]

 

1942. Dec. 3. VISCOUNT SIMON L.C. My Lords, the principal question to be decided in the present appeal is whether the Court of Appeal was right in holding that the respondents were not in the position of alien enemies at common law and thus still enjoy the right to resort to the King’s courts. A subsidiary question as to the validity of the retainer of the solicitors for the respondents becomes irrelevant if the appeal on the main point were to succeed.

 

On the main question, it is, of course, common ground that an “alien enemy” cannot sue in the King’s courts or otherwise take up the position of an actor in British litigation save under royal licence. An alien enemy, in this connexion, does not mean a subject of a state at war with this country, but a person, of whatever nationality, who is carrying on business in, or is voluntarily resident in, the enemy’s country: Porter v. Freudenberg (1). That case was the decision of a specially constituted Court of Appeal at the beginning of the last war. It confirmed the view which was taken by our courts during the Napoleonic wars, e.g., in the King’s Bench in O’Mealey v. Wilson (2), where Lord Ellenborough C.J. said: “If a British subject resides in an enemy’s country without being detained as a prisoner of war, he is precluded from suing here,” and by the Court of Common Pleas in M’Connell v. Hector (3) when the court declined to support a commission of bankruptcy granted at the suit of three partners, all British subjects, on the ground that two of them resided and traded at an enemy port. (The port was the Dutch port of Flushing described(4) as “a port belonging to the enemies of this country.” As Professor McNair points out in a learned article on the “Procedural Capacity of Alien Enemies” in the Law Quarterly Review (1942), vol. lviii., p. 191, at p. 201, n. 48: “The relevant date is not given but was probably during the period when Holland under a Franco-phile puppet government was at war with Great Britain.”) In that case Lord Alvanley C.J. said: “I do not wish to hear it argued that a person who lives and carries on trade under the protection and for the benefit of an hostile state, and who is so far a merchant settled in that state that his goods would be liable to confiscation in a court of prize, is yet to be considered as entitled to sue as an English subject in an English court of justice.” This decision was approved by this

 

(1) [1915] 1 K. B. 857, 869.

 

(2) 1 Camp. 482, 483.

 

(3) 3 Bos. & P. 113, 114.

 

(4) Ibid. 113. [*210]

 

House in Rodriguez v. Speyer Brothers (1), when Lord Finlay L.C. said of it: “All that was decided by the court was that enemy character results from residence in the enemy country, and there is no doubt as to the correctness of this proposition.”

 

There can be no doubt that the respondent company must be treated as “resident” in Rotterdam. Their commercial domicil was there, and there is no indication that it has changed. The case must be dealt with as though they were an individual subject of the Queen of Holland living there. I share to the full the feeling of distaste, expressed by the Master of the Rolls, at the idea that loyal Dutch subjects, who have suffered so cruelly at the hands of a brutal enemy and whose fellow countrymen are none the less maintaining from this country all the resistance they can to the invaders of their native land, should be regarded by English law, for any purpose, as alien enemies, but for the purposes of the statute law prohibiting trading with the enemy they would plainly be so regarded, for “enemy territory” is defined, by s. 15, sub-s. 1, of the Trading with the Enemy Act, 1939, so as to include “any area which is …. in the occupation of a Power with whom His Majesty is at war.” Here, however, we are concerned with the common law. Even a British subject, if voluntarily resident in enemy territory, would be treated at common law as unable to sue: see, for example, Lord Parker’s speech in Daimler Co., Ld. v. Continental Tyre and Rubber Co. (Great Britain), Ld. (2), for the denial of persona standi in judicio does not turn on allegiance, but on locality. The question is, therefore, simply whether residence in territory which has been invaded and is forcibly occupied by the enemy disqualifies (apart from royal licence) from bringing or pursuing a suit in the King’s courts.

 

I have had the advantage of perusing the opinions prepared by my noble and learned friends Lord Wright and Lord Porter, in which most of the relevant earlier decisions, both in this country and in the United States, are collected and analytically examined, and this relieves me from lengthening my own opinion by attempting any elaborate citation of authorities. To the cases cited by my noble and learned friends, I will add a reference to a Scottish decision given during the last war: Gebruder Van Uden v. Burrell (3). There the Court of Session (Lord President Strathclyde, Lord

 

(1) [1919] A. C. 59, 73.

 

(2) [1916] 2 A. C. 307, 339.

 

(3) 1916 S. C. 391. [*211]

 

Skerrington and Lord Anderson) held that a Dutch firm (I do not know whether the firm was the precursor of the respondent company, but the name is the same and it was a firm of steamship owners in Rotterdam), which was an enemy within the meaning of the Trading with the Enemy Act, 1914, because the partners also carried on business in Germany, could be defeated as pursuers by the plea of alien enemy.

 

My own conclusions, deduced from the authorities, are in general accord with those of Lord Wright and Lord Porter and may be summarized as follows:–

 

1. The test of “enemy character” is fundamentally the same whether the question arises over a claim to sue in our courts, or over issues raised in a court of prize, or over a charge of trading with the enemy at common law.

 

2. The test is an objective test, turning on the relation of the enemy Power to the territory where the individual voluntarily resides or the company is commercially domiciled or controlled. It is not a question of nationality or of patriotic sentiment.

 

3. If the enemy Power invades and forcibly occupies territory outside his own boundaries, residence in that territory may disqualify from bringing or maintaining suit in the King’s courts in the like manner as residence in the enemy Power’s own territory would. The same applies to a company commercially domiciled or controlled in occupied territory.

 

4. But this is not always or absolutely so. It depends on the nature of the occupation and on the facts of each case. If, as a result of the occupation, the enemy is provisionally in effective control of an area at the material time and is exercising some kind of government or administration over it, the area acquires “enemy character.” Local residents cannot sue in our courts and goods shipped from such an area have enemy origin: see Marshall C.J. in the Thirty Hogsheads of Sugar. Bentzon v. Boyle (1). If, on the other hand, the occupation is of a slighter character – for instance, if it is incidental to military operations and does not result in effective control – the case is different, as in Cremidi v. Powell (The Gerasimo) (2). I would adopt the observations of my noble and learned friend Lord Wright on this decision, for I agree that, while Dr. Lushington’s statement of the law went too far in one direction, Lord Kingsdown (then the Right Hon. Thomas Pemberton Leigh) in delivering the judgment of the

 

(1) 9 Cranch, 191, 195.

 

(2) 11 Moo. P. C. 88. [*212]

 

Privy Council reversing the decision of the Prize Court, in one passage went unnecessarily far in the other. In the present case, the occupation of Holland by Germany is plainly, as things stand, of the more absolute kind.

 

5. It is not irrelevant to bear in mind the reason why a resident in enemy-occupied territory is in certain circumstances subject to the same disability as a resident in enemy territory. “This law,” said Lord Reading C.J. in Porter v. Freudenberg (1), referring to the denial to alien enemies of a right to sue, “was founded in earlier days upon the conception that all subjects owing allegiance to the Crown were at war with subjects of the state at war with the Crown, and later it was grounded upon public policy, which forbids the doing of acts which will be or may be, to the advantage of the enemy state by increasing its capacity for prolonging hostilities in adding to the credit, money or goods, or other resources available to individuals in the enemy state.” This consideration equally applies to a claim sought to be established in our courts by a resident in enemy-occupied territory, for if the claimant succeeds an asset in the form of an award or a judgment is created which the occupying power can appropriate and which is calculated to increase the enemy’s resources.

 

6. The common law disability to sue in such cases cannot be regarded as got rid of because Emergency Regulations would prevent the transmission abroad of the sum recovered. The asset would be created, even though it necessarily remained here till the end of the war. Such an asset might well operate as security for an advance to the enemy from a neutral lender.

 

7. The operation of the rule refusing persona standi in judicio is always subject to permission being given by royal licence. In the present case, no application for a royal licence has been made.

 

For these reasons, I find myself obliged to differ from the Court of Appeal and to move that the appeal be allowed with costs here and below. As I have said, this conclusion makes it unnecessary to deal at length with the other ground of appeal touching the retainer of the respondent’s solicitor. On this point also I agree with the view expressed by my noble and learned friend Lord Porter.

 

LORD ATKIN(read by LORD THANKERTON). My Lords,

 

(1) [1915] 1 K. B. 857, 867. [*213]

 

having had the opportunity of reading in advance the opinions about to be delivered by my noble and learned friends, Lord Wright and Lord Porter, and agreeing with them as I do, I add but a few words. The rule precluding an alien enemy from the right of suit is based on public policy – the protection of the state in time of war – but the need of the state for protection varies with the increasing dangers of modern war as compared with the warfare of earlier days. The result is that earlier decisions have to be measured in the light of this consideration. “Total war” is a more or less modern development of civilization, but its practice and effects have an important bearing on the problem of the position of the resident in an occupied country. The question that is in dispute is the right of the resident in enemy occupied country to enforce by suit in this country civil rights whether by contract or otherwise, a question which will generally concern rights claimed to arise from commercial transactions. When a British court has to consider what is the nature and extent of the enemy occupation which makes the resident an enemy, I think that in these days one of the most important tests would be the extent to which the enemy, while in occupation, assumes to control the civil rights of the subjects of the occupied country. And if that control be for the material time effective I am inclined to think that it matters not that the enemy contemplate to withdraw that control at some future time or on some future event, whether distant or not. I have no doubt in this case that the enemy effectively control the commercial operations of the respondents in Holland, and that a successful judgment in this action would directly or indirectly enure to the enemy benefit, and that the respondents are precluded as enemy aliens from suing in these courts without the licence of the Crown.

 

I need only add a few words as to the decision of the Privy Council in prize in The Gerasimo (1), which has the great weight of the authority of Lord Kingsdown. The decision itself can plainly be supported on the facts, but the opinion goes further than was necessary, and it would appear that Lord Kingsdown took the view that to constitute an alien enemy it was necessary that the territory, either by cession or conquest or some other means, should, either permanently or temporarily, be incorporated with and form part of the dominions of the invader. My Lords, it seems to me quite inconsistent with

 

(1) 11 Moo. P. C. 88. [*214]

 

the public policy on which the rule is based that an invader should assume complete control of the government of a territory but, by disclaiming any intention to incorporate it or make it part of his dominions, free its residents from the disabilities of enemy character in these courts. I have no doubt that if Lord Kingsdown had had to appreciate the methods of modern warfare he would have framed his sentence differently. It is expressed more widely than was necessary for the particular case. It is inconsistent with the subsequent decision of the Privy Council, also in prize, in The Gutenfels (1). I doubt whether it would be followed in prize in these days. It certainly is not binding on this House and I cannot agree with it. I am of opinion that the appeal should be allowed.

 

LORD THANKERTON. My Lords, I have had the privilege of considering the opinions about to be delivered by my noble and learned friends, Lord Wright and Lord Porter, and I agree with them and, in particular, with their careful review of the authorities and their comments on the dicta of Dr. Lushington and Lord Kingsdown in The Gerasimo (2). I should, however, like to add a reference to some of the few early Scottish cases, as I am satisfied that there is no difference on this matter between the law of England and the law of Scotland.

 

In Blomart v. Roxburgh (3), the defender alleged that the pursuer “could have no process, being of the United Provinces, who are declared enemies to His Majesty. It was answered, that there was no denunciation of war by His Majesty as King of Scotland, nor any proclamation in Scotland to that purpose. It was replied, that there was a warrant by the King and council to seize upon all the Dutch vessels in Scotland. The Lords found that this was but an embargo, and no denunciation of war in Scotland; and therefore found process.” This expresses the difference between a casus belli and a state of war, though recent history has at least obscured this distinction. In Arnauld and Gordon v. Boick (4), Arnauld, a merchant in Rouen, and his attorney in Edinburgh, Gordon, sued Boick, a merchant in Edinburgh, for the price of some hats and counterfeit pearl sent home to him. The report states: “Boick alleged, no process at Arnauld’s instance, because, being a subject of the French

 

(1) [1916] 2 A. C. 112.

 

(2) 11 Moo. P. C. 88.

 

(3) 1664 Mor. Dict. 16,091.

 

(4) 1704 Mor. Dict. 10,159. [*215]

 

King’s, with whom we are at war, they can pursue no action during the dependence and continuance of the war, for hostes publici, as they have not jura commerciorum, so neither have they leg(it)imam personam standi in judicio, nor jus persequendi actiones. And, if this were the cause of a Scotsman pursuing a Frenchman before the Parliament of Paris, he would not only be denied action, but the sum would be confiscated to the public; which is not here craved. Answered, whatever the authors of the war may deserve, or merchants may suffer by captures of their ships and goods at sea, yet it is hard to extend it to private persons craving their just debts, the denying whereof is against the faith of trade; and by the late Act of Parliament 1703, allowing an indirect trade with France for importation of wines, this rigour seems to be dispensed with. The Lords refused to sustain process at the French merchant’s instance.” Then Gordon produced a bill of exchange giving him right to the sum, which the Lords likewise repelled, because the summons was not pursued in his name on that proper right of his own, but only as factor for Arnauld, and would not let him transform his summons thus by way of reply. The reference to the Act of Anne, 1703, c. 2, is interesting as it appears to be an illustration of a statutory modification of the general rule, although it does not expressly mention importation from enemy countries. The War of the Spanish Succession had begun the previous year, and there can be little doubt that French wines were the popular ones in Scotland. It leaves it uncertain whether the exporting French merchant could have recovered his debt in the Scottish courts during the war. During the Napoleonic wars three cases are reported. In Carron v. Charles Cowan & Co. (1), a foreigner resident in Denmark charged on a bill and the Scottish debtor was ordained by the Lord Ordinary in a suspension of the charge to consign the amount. At the time of the charge war between Denmark and this country had broken out. On a reclaiming petition by the suspender the court remitted to the Lord Ordinary to sist procedure. In Wright v. Hutcheson (2), where the facts were similar to those in Carron’s case (1), the court, ex proprio motu, followed the same course, and, in both these cases, the court refused to allow the enemy alien the advantage of consignation or security during the dependence of hostilities. The third case was that of Burgess v.

 

(1) 28 Nov. 1809 Fac. Coll.

 

(2) 17 Jan. 1810 Fac. Coll. [*216]

 

Guild (1), in which Guild, owner of the Nimble, brought action in the Judge Admiral’s court against Burgess, American owner of the Hannibal, which, on entering Leith Harbour, had collided with the Nimble. The latter vessel sank in fifteen minutes, and the owner sued for the value of ship and cargo, and arrested the Hannibal in security. The Judge Admiral decided in favour of Burgess, who then raised a counteraction for damages for the detention of his ship, and the Judge Admiral again decided in his favour. Guild raised a reduction of both decrees in the Court of Session, and Burgess also raised a reduction in so far as he had not got enough damages. Then hostilities broke out between America and this country, and the Lord Ordinary reported the case to the court, who desired and obtained the opinion of His Majesty’s Advocate-General, Sir Christopher Robinson, and, in accordance with that advice, allowed Burgess to proceed in respect that his action was a counter-action. As regards recent cases in Scotland, I need only add a reference to Orenstein & Koppel v. Egyptian Phosphate Co., Ld. (2), and Gebruder Van Uden v. Burrell (3) and, in particular, to Lord Skerrington’s opinion in both cases. I agree with the comments of my noble and learned friend on the woolsack on Van Uden’s case (3).

 

There can be no doubt that the prohibition of intercourse with an alien enemy rests on public policy which requires that no act shall be done or permitted which may injure the interests of the state either directly or indirectly by benefiting the enemy state. The means by which such injury may arise will naturally vary to some extent from age to age, for instance, the effect of scientific discovery in the last century on means of communication in many differing forms has been revolutionary, and it is clear that the court is bound to consider these changes in applying the general doctrine. You can define the general doctrine, but you cannot stereotype the cases in which it is to be applied.

 

One other observation I desire to make. The question of an enemy-occupied country in relation to the doctrine must depend on the nature and extent of the occupation in the particular case. It may be said to be a question of degree. In the present case I have no doubt that the enemy occupation is of such a high degree as to place Holland – for the purposes

 

(1) 12 Jan. 1813 17 Fac. Coll.

 

(2) 1915 S. C. 55.

 

(3) 1916 S. C. 391. [*217]

 

of the doctrine – in the same position as enemy territory. The Dutch sovereign and government, in any effective sense, are outside Holland, and the enemy are fully in both civil and military control. I concur in the motion proposed by my noble and learned friend on the woolsack.

 

LORD WRIGHT. My Lords, the authority given to the respondents’ solicitors by the Trading with the Enemy Branch (Treasury and Board of Trade) distinguishes between the two main principles under English law which apply to the position of the enemy subject in time of war. These principles are separate, but they are closely related. One is that he is denied access to the English courts, the other is that British subjects are prohibited from trading with him and from all intercourse or communication across the line of war. Both principles depend on rules of English municipal law, and both have their foundation in the ancient common law. In the eighteenth century Lord Mansfield C.J. relaxed the latter principle in commercial matters, at least as regards insurances on enemy goods against British capture. He seems to have preferred business convenience to the national policy in war, although he records the view of the judges declared to Lord Somers and later reported by him to Lord Hardwicke that trading with the enemy was a misdemeanour at common law. So this is stated in his judgment in Gist v. Mason (1). But Lord Mansfield’s heresy was explicitly and finally rejected in 1794 by the Court of King’s Bench in Brandon v. Nesbitt (2), and in Bristow v. Towers (3), both actions on marine policies for loss by British capture. In the latter case, in particular, the elaborate arguments of counsel may still be read with profit, especially that of the defendant’s counsel, Mr. Park (afterwards Park J.), who quotes(4) Valin’s observation that by these insurances “one part of the nation rendered back to France what had been taken by the other by the right of war.” Lord Kenyon,in delivering the judgment of the King’s Bench in Brandon v. Nesbitt (5), said that “an action will not lie either by or in favour of an alien enemy.” The action there was brought by the broker for the enemy aliens who urged that, as he had a set-off greater in amount than the claim, no money would pass to the enemy, but that plea did

 

(1) (1786) 1 Term Rep. 88.

 

(2) (1794) 6 Term Rep. 23.

 

(3) (1794) 6 Term Rep. 35.

 

(4) Ibid. 46.

 

(5) 6 Term Rep. 23, 28. [*218]

 

not avail him. The enemy’s credit and resources would inevitably be increased by the judgment. The facts showed a trading with the enemy in that the voyage from London to France was prosecuted after the outbreak of war. In all cases of this character the fault may be cured by a licence or authority from the Crown. The authority given in the present case deals only with the matter of trading with the enemy, not with the inability of the enemy to proceed in court. The Court of Appeal rightly held that it was bad in that it could not operate retrospectively to legalize acts which at the time they were done were unlawful as being in breach of the Trading with the Enemy Act, 1939, and the Defence (Trading with the Enemy) Regulations, 1940, by which the special criminal offences are defined for the present war.

 

By reg. 3 of the Defence (Trading with the Enemy) Regulations, 1940, amending s. 2, sub-s. 1, of the Trading with the Enemy Act, 1939, “enemy” is defined as including as respects any business carried on in enemy territory, any individual or body of persons (whether corporate or unincorporate) carrying on that business.” “Enemy territory” is defined by s. 15, sub-s. 1, of the Act to include “any area which is …. in the occupation of a Power with whom His Majesty is at war.” It followed (so the court rightly held) that it was illegal for the solicitor to act for the respondents in this country without a licence, but, though the Court of Appeal held that the authority could not operate retrospectively, the court held that the difficulty was overcome by the concession on the part of the appellants’ counsel that all the proceedings should be deemed to have taken place before October 13, 1941. By this transparent fiction it was, it seems, held that the parties could by their agreement waive a breach of the public and criminal law of the nation so as to render lawful what was illegal. I cannot bring myself to think that this was a proper or permissible course for a court to take, but I need not pursue it further as I am prepared to decide the appeal against the respondents on the other ground, namely, that it is incompetent for the respondents, being an enemy corporation, to proceed in court.

 

I feel, I confess, a natural repugnance to describing as enemies of this country those loyal and patriotic subjects of Holland who have had the misfortune to be forced to reside there after the German occupation, but this distasteful appellation has already been attached to all residents in [*219] Holland, as the Court of Appeal have rightly and, indeed, inevitably held, by Parliament under the appropriate Act and regulations, and matters are not made worse if under the common law the respondent company is also to be deemed an enemy corporation. It is true that the statutory definitions dealing with trading with the enemy and the custody of enemy property are limited to the purposes of the Act and regulations and do not impinge on the common law in regard to the separate question of an enemy’s competence to sue. On the whole, however, I think that these definitions, at least in their latest form, do substantially agree with the definitions of enemy and enemy-occupied territory reached by the common law in the authorities which I shall cite.

 

The general question of law to be determined is whether enemy character as against one belligerent attaches to a person by reason of the fact that the previously neutral or friendly territory in which he resides or carries on business, that is, has his place of residence or commercial domicil, is subjugated and occupied by the other belligerent. Before examining the relevant authorities I should explain that the test which has been taken of enemy character in English law is not nationality, but domicil in the sense of settled residence or in the case of traders commercial domicil. Domicil in the strict legal sense is not necessarily relevant. Some of these cases were decided in the Prize Court, others in courts of common law. However, the right to sue or prosecute an action in court, the right to claim to be exempt from seizure and condemnation in prize, the liability to punishment for the offence of trading with the enemy, all depend alike on whether the person has enemy character in what has been called the technical or territorial sense. The test is objective and depends on facts, not on the person’s prejudices or passions, his patriotism, or his determination to free his country whenever he can.

 

It is, I think, clear both on principle and on authority that a person resident or domiciled in an enemy-occupied country is in English law to be deemed to be an enemy, and, as such, subject to the same disabilities as an enemy in the ordinary sense while the occupation continues. It is, however, necessary to define what is meant by an enemy-occupied country in this context, and determine whether the facts justify the description being applied in any particular case. It might be better if the epithet applied were “enemy-subjugated.” This would show that a mere temporary occupation, for instance, by a [*220] military force in the conduct of belligerent operations, is not enough. If the territory is to be deemed enemy territory, it must be subjugated, not merely occupied. It must be held under the dominion and control of the enemy for a period sufficient to give the occupation a settled and relatively permanent character and to show the intention to keep it. I do not think that the cases require that there should be formal acts, such as a cession by treaty or a public declaration of annexation. The matter must be decided as a question of fact with due regard to the character, purpose and intention of the occupation and the degree of dominion exercised. All acquisitions in war may be temporary. They may be abandoned on peace being declared, or surrendered or retaken under the pressure of superior force, but there is a sharp distinction between an occupation of territory by armed forces for strategical and temporary purposes and an occupation of territory as being a settled acquisition.

 

The Anglo-American authorities seem to confirm this view. I shall cite certain decisions which seem to me representative. I shall begin with The Hoop (1). In that case Lord Stowell (then Sir William Scott) condemned goods shipped in Rotterdam to merchants in Glasgow who had for many years been in the habit of procuring such goods from Holland before the irruption of the French into that country. The merchants had got the impression that, in virtue of 35 Geo. 3, c. 15, no licence was necessary, and had been so advised by the customs officials at Glasgow, and had not sought or obtained a licence. The goods were captured and were condemned by Lord Stowell in prize in 1799, though, as he confessed, with private regret. “But,” he said(2), “if there is a rule of law on the subject binding the court, I must follow where that rule leads me.” I particularly dwell on Lord Stowell’s judgment because he made an elaborate survey of earlier cases in prize out of which I select two as illustrating how he understood the rule extending to enemy-occupied countries. One is The Bella Guidita (3), decided by the Lords of Appeal in 1785, relating to a cargo of provisions shipped from Ireland to Grenada. Grenada had been captured from Britain by the French in 1779, and was not restored to the British until 1783. The shipment and capture took place while the island was held by the French. The single question was, according to

 

(1) 1 C. Rob. 196.

 

(2) Ibid. 198.

 

(3) (1785) unrep. (see 1 C. Rob. 207). [*221]

 

the record(1), “whether it was so unlawful for a British subject to send supplies to the British plantations in the Grenada islands [i.e. without a licence from the Crown] whilst under the misfortune of a temporary subjection to the French, as that a confiscation of the supplies so sent should be the just and legal consequence of his misconduct?” The proprietors were(2) “British in principle and affection.” Their position as British proprietors of the estates was so notorious that an Act was passed in 20 Geo. 3 to protect from British capture in prize shipments from Grenada of the produce of the island, but it did not apply to shipments to the island like the cargo in question which was of stores and the like necessary to work the plantation. The case was treated as one of trading with the enemy without a licence, and the condemnation of the cargo as French property (because of the enemy destination) was upheld by their Lordships. A similar decision was given in The William (3) (Lords of Appeal, December 19, 1795), which related to a shipment from Gaudelupe while in French occupation. I think it is clear from these citations that Lord Stowell treated the Lords of Appeal as drawing no distinction in this context between enemy territory in the ordinary sense and territory in the effective occupation of the enemy while that occupation lasted. In The Bolletta (4), the question was whether cargo, the property of merchants residing in the Ionian Islands, shipped in a Danish ship from Zante to Copenhagen was liable to capture on the ground that Zante was French territory. Lord Stowell(5) stated the issue to be whether the possession of the island by the French was “more than a mere temporary possession.” Lord Stowell(6) held that it was because it was not an hostile occupation by force of arms liable to be lost again the next day.” The capture of the cargo had taken place on August 31, 1807. Under the Treaty of Tilsit concluded in the previous July, it had been agreed between Russia and France that France should have possession of the Ionian Islands. Possession of the island under the treaty had been effectively taken by France before the cargo was seized. It was held that the cargo was properly confiscated as being French property. On the other hand, in The Fama (7), the

 

(1) 1 C. Rob. 209n.

 

(2) Ibid. 210n.

 

(3) (1795) unrep. (see 1 C. Rob. 214).

 

(4) (1809) Edwards 171.

 

(5) Ibid. 173.

 

(6) Ibid. 174.

 

(7) (1804) 5 C. Rob. 106. [*222]

 

goods had been shipped for Louisiana after the date of the Treaty of Idelfonso under which Spain transferred the settlement to France, but Lord Stowell held that the nationality of the colony did not change until the actual possession had been changed under the treaty, and that actual possession had not been taken by the French before the seizure of the cargo was effected. Spain at the material time was still neutral and the goods accordingly could not be condemned as French property.

 

It is, I think, clear that in these and other like cases Lord Stowell’s opinion was that a territory changed its national character and acquired that of the conqueror if there were effective subjugation and firm possession with the intention of keeping the conquest, even though in the event the dominion of the conqueror was temporary and even though there was not either formal annexation or cession. What had to be considered was the nature of the occupation. A mere occupation in the course of and for purposes of military operations did not change the national character. These were cases in prize in which the issue was enemy or not enemy, but the same test was applied in a different connexion in The Foltina (1). The question there was whether the ship and cargo which were captured in 1811 in a haven or roadstead in Heligoland (which had surrendered to the British in 1807), had been captured in a British port so as to be properly treated as droits of Admiralty. Lord Stowell said that the chief point to be considered was whether at the time when the capture was made Heligoland formed part of the dominions of the Crown of Great Britain. “The island, it appears,” he said(2), “had been conquered and taken possession of by British forces, but the conquest had not been confirmed to this country by a treaty of peace. It was a firm capture in war, but was still subject to a kind of latent title in the enemy, by which he might have recovered it at the conclusion of the war, provided this country would have consented to its restitution.” As he later observed, it might be re-acquired flagrante bello by the state from which it was taken. He held that the vessel was captured in a British port. This illustrates the principle on which national character, in Lord Stowell’s view, depends. In another place he requires for the change in national character, annexation or cession or possession for a sufficiently long time,

 

(1) (1814) 1 Dod. 450.

 

(2) Ibid. 451. [*223]

 

which, I presume, must depend on the facts, in particular, on the nature of the occupation.

 

The position of territory occupied by an enemy was discussed in the courts of the United States in connexion with the war between that country and England which lasted from 1812 to 1815, In one of these cases the question whether the nationality of the place had been changed was raised in order to determine whether the seizure of cargo was justified in prize. That was Bentzon v. Boyle (Thirty Hogsheads of Sugar) (1). The sugar was seized while on a voyage from Santa Cruz after the island had been captured by the English from Denmark and before it was restored to Denmark by the peace of 1815. The Supreme Court decided that the cargo was liable to confiscation on the ground that it had an enemy origin because it was shipped from British territory. Marshall C.J., giving the judgment of the court, thus stated the principle(2): Although acquisitions made during war are not considered as permanent until confirmed by treaty, yet to every commercial and belligerent purpose, they are considered as a part of the domain of the conqueror, so long as he retains the possession and government of them. The island of Santa Cruz, after its capitulation, remained a British island until it was restored to Denmark.” Another of the three cases was United States v. Rice (3), where the enemy character was raised in a different context. The question there was whether the acts of the British collector of customs at Castine during the occupation were invalidated by the subsequent restoration of the port. Castine, a port in the Penobscot district of Maine, had been taken from the United States during the war of 1812, and was held by the British until the peace of 1815. It was held by the Supreme Court that during the occupation Castine was a British port, subject to the British revenue taxes. Story J., delivering the judgment of the court, observed(4) that by the conquest and firm possession the fullest rights of sovereignty were vested in the British, the sovereignty of the United States was suspended, and their laws no longer ruled in Castine. The surrender of the port to the British created a temporary allegiance of its inhabitants, who were bound by such laws as the British chose to impose. There could be no allegiance where there was no protection of the laws. Castine was, therefore, a foreign port. To much

 

(1) 9 Cranch, 191.

 

(2) Ibid. 195.

 

(3) (1819) 4 Wheat. 246.

 

(4) Ibid. 254. [*224]

 

the same effect, Story J., in United States v. Hayward (1), held that Castine during the period of British occupation was no longer to be considered as a port of the United States with reference to their non-importation laws, and that, so far as respected the obligatory force of the laws of the United States, it was a port “extra ligeantiam reipublicae.” The learned justice(2) relied on what Lord Stowell said in The Foltina (3) in the passage which I have quoted, but he pointed out that the allegiance and sovereignty of the British were temporary and the territory could not be regarded as incorporated (that is, permanently incorporated) in the dominions of the British Sovereign. He did not, I think, question that while the temporary allegiance continued the territory was within the dominion of a foreign power and outside the dominion of the United States. He was, I apprehend, considering whether, having regard to the possibility of recovery, what Lord Stowell called a latent title, jus postliminii, whether according to international or municipal law, would apply.

 

In 1857 the Privy Council decided the appeal in The Gerasimo (4). It arose out of the Crimean war. The question was what was the national character of the principalities of Wallachia and Moldavia. The main issue was whether a cargo which had been seized belonged to firms who could be considered as alien enemies, and that question turned on the nature of the possession which the Russians held of these principalities when the cargo was shipped from Galatz. The vessel was sailing under Wallachian colours. The cargo was condemned in the Prize Court. Dr. Lushington stated that Galatz, in which port the claimants resided, was in Moldavia, and that Moldavia was in possession of the enemy, and went on(5): “So long as any territory is in possession of the enemy, I apprehend that the law declares that all the inhabitants thereof, and all the persons resident therein and carrying on trade are to be considered as enemies with respect to that trade.” I think that, on the authorities, this statement of law was too wide and unqualified. It is necessary to define the character of the possession. The condemnation was reversed in the Privy Council. Lord Kingsdown, who delivered the judgment of the Board, cited The Dart (6), The Happy

 

(1) (1815) 2 Gall. 485, 502.

 

(2) Ibid. 501.

 

(3) 1 Dod. 450.

 

(4) 11 Moo. P. C. 88.

 

(5) Ibid. 95.

 

(6) (1808) Unrep. [*225]

 

Couple (1), and The Manilla (2). These were cases dealing with the peculiar position of St. Domingo after the negro insurrection. He cited also The Santa Anna (3), which was a case in which Cadiz was held not to be an enemy port, though the French armies were dominant in Spain, but the Spaniards were engaging in guerilla warfare and the British were supporting the insurgent Spaniards. The Crown had made a public declaration of amity with Spain, and, therefore, it was held that property of persons resident in those parts of Spain which were then under French control could not be condemned save for breach of neutrality. These were special cases heard on their particular facts. Lord Kingsdown also cited(4) from the common law courts Donaldson v. Thompson (5), a case relating to Corfu at the time, anterior to the Treaty of Tilsit, when a Russian garrison was quartered on the island, a case to be contrasted with The Bolletta (6). Lord Ellenborough C.J.(7) gave the operations of Sir John Moore’s army as an instance of belligerent and temporary occupation, not changing the national character of the territory. Another case which he cited was Hagedorn v. Bell (8), in which there was an elaborate review of the orders and declarations of the government in respect of Hamburg which, it was held, prevented the court from treating that port as an enemy territory notwithstanding its occupation by the French. Lord Kingsdown did not, however, refer to the statements of the principle by Lord Stowell in the decisions cited, or by Marshall C.J. in the Thirty Hogsheads of Sugar (9). The conclusion at which Lord Kingsdown arrived was that the mere possession of a territory by an enemy’s force does not in itself necessarily convert the territory so occupied into hostile territory or its inhabitants into enemies, and the question which had to be decided became simply one of the nature of the Russian occupation of Moldavia. This I think is unexceptionable so far as it goes. The Privy Council, on the evidence, held that the occupation was not such as to change the national character of the country. It was, in effect, merely provisional, connected with strategical considerations and not with the object of conquest. The cargo was, accordingly, released. But the principle stated

 

(1) (1808) Unrep.

 

(2) Edwards 1.

 

(3) (1809) Edwards 180.

 

(4) 11 Moo. P. C. 88, 99.

 

(5) 1 Camp. 429.

 

(6) Edwards 171.

 

(7) 1 Camp. 429, 433.

 

(8) (1813) 1 M. & S. 450.

 

(9) 9 Cranch, 191. [*226]

 

by Lord Kingsdown in one part of his judgment goes further than is necessary for the decision of the case, and is not, in my opinion, consistent on one construction with the authorities to which I have referred. What Lord Kingsdown said was(1): “What are the circumstances necessary to convert friendly or neutral territory into enemy’s territory? For this purpose, is it sufficient that the territory in question should be occupied by a hostile force, and subjected, during its occupation, to the control of the hostile Power, so far as such Power may think fit to exercise control; or is it necessary that, either by cession or conquest, or some other means, it should, either permanently or temporarily, be incorporated with, and form part of, the dominions of the invader at the time when the question of national character arises?” He accepts the latter alternative as correct. The former sentence may be taken to describe what has been called belligerent occupation, which would not generally be regarded as changing the national character of the territory, but one reading of the alternative contained in the second sentence would seem to exclude cases like the occupation by the British of Heligoland and the captures in the West Indian islands in the French war or the subjugation of European countries by the Germans in the present war. A conquest during war may in a sense be temporary, as was that of Demerara by the French, and may be reversed either by reconquest or by surrender, but if while it lasts there is what is called firm possession for a sufficient period with the intention of keeping it unless it is reconquered or surrendered the national character of the place will generally, at least for the time, be changed. Perhaps Lord Kingsdown’s language means no more than that when he speaks of a territory being temporarily incorporated with and forming part of the dominions of the invader at the material time. If it is so construed it is in harmony with the earlier decisions and is unexceptionable. It is clear on the facts that the Russian occupation of Moldavia was no more than a temporary military and strategical occupation. But if Lord Kingsdown makes the change in national character depend on formal acts or declarations it would not, in my opinion, be consistent with recognized authorities. The issue depends on fact, not on form.

 

In 1862 the same principle was again affirmed by a majority of the Supreme Court of the United States in The Amy Warwick (2).

 

(1) 11 Moo. P. C. 88, 96.

 

(2) (1862) 2 Black 635. [*227]

 

The case arose out of the civil war in America. A ship belonging to the Confederates had been seized by a Northern cruiser and was condemned in the Prize Court. The court differed on the question whether the principles of the belligerent rights of capture applicable to external wars applied to internal or civil wars. The majority of the court held that they did. The ship was condemned, the court saying that the seceding states should be regarded as being enemy and that all persons residing in the territory occupied by the insurgent government should be treated as enemies, though not foreigners.

 

Two authorities decided during the last war require to be noticed. In The Gutenfels (1), one issue was as to the national character of Port Said. It was there necessary to decide as one issue whether Port Said was, as regards Germany, an enemy port within art. 2 of the Hague Convention of 1907, Convention VI. The Judicial Committee held that it was, “having regard to the relations between Great Britain and Egypt, to the anomalous position of Turkey, and to the military occupation of Egypt by Great Britain.” The Board held that it was an enemy port vis-à-vis Germany by reason that it was a port under enemy control for purposes of the war. The German shipowners, accordingly, succeeded in claiming the benefit of the convention. The occupation there was not a mere temporary occupation for military purposes. The Board approved the language of Hall on International Law, 6th ed., p. 505: “When a place is militarily occupied by an enemy, the fact that it is under his control and that he consequently can use it for the purposes of his war, outweighs all considerations founded on the bare legal ownership of the soil.” This was said, no doubt, in reference to questions of public international law, but the same principle for determining enemy character would apply to questions of municipal law such as whether there is a right to claim a persona standi in judicio, whether there is a liability for the offence of trading with the enemy, and also whether property is subject to arrest or condemnation in a Prize Court. In The Leonora (2), one issue was whether a cargo of coal, mined from collieries in Belgian territory which was at the time in German occupation was of enemy origin within the meaning of the British retaliatory Orders in Council of 1915 and 1917. The coal was seized when being carried in a neutral ship from Rotterdam to Sweden, both places being neutral. The main issue was

 

(1) [1916] 2 A. C. 112.

 

(2) [1918] P. 182; [1919] A. C. 974. [*228]

 

whether the orders were valid according to international law. The evidence did not merely show German occupation of the Belgian territory, but that the whole enterprise of getting the coal and selling and shipping it to the neutrals was conducted by a comprehensive system for the exploitation of the occupied territory and its produce under the control and for the advantage of the Germans. This illustrates what may be meant by German occupation in this and like cases. The issue was, therefore, not the bare question whether the coal was of enemy origin in the sense of being the produce of enemy occupied territory. In the Privy Council Lord Sumner, delivering the judgment of the Board, observed(1): “It is not necessary to inquire whether, within the terms of the order, a Belgian origin could, as such, be regarded as an ‘enemy’ origin for this purpose, or what the effect, if any, of the German occupation might be on the view to be taken of the nationality of persons resident in Belgium.” The judgment emphasizes the nature of the German control and the exploitation of Belgium. Certain cases, in which the national character of Belgium during its occupation by the Germans came into question, do not seem to me to help towards the elucidation of the common law relevant in this case, because they were mainly devoted to considering the various Trading with the Enemy Acts and regulations which were in force during the last war. One was Société Anonyme Belge des Mines d’Aljustrel (Portugal) v. Anglo-Belgian Agency, Ld. (2). The company there was incorporated under the laws of Belgium and had its registered office in Antwerp, which was within the territory occupied by the Germans. But the office in Antwerp had been closed and the business, which was the operation of mines in Portugal, was carried on de facto in London by three out of the five directors. It seems that, as the company was not commercially domiciled in Belgium, the common law point was very slightly touched on. In re Deutsche Bank (London Agency) (3), does not seem to me to examine the relevant common law in any detail.

 

The principles which I deduce from these authorities are that the inhabitants of enemy occupied countries in the sense I have explained, who before the subjugation were neutral or were enemies of the occupying belligerent, become enemies of those to whom they previously stood in a relation of allegiance

 

(1) [1919] A. C. 974, 981.

 

(2) [1915] 2 Ch. 409.

 

(3) [1921] 2 Ch. 291. [*229]

 

or alliance so long as the occupation continues. This enemy character depends on objective facts, not on feeling, or sentiment, or birth, or nationality. They have been described as territorial or technical enemies. Their status is based on residence, or, if they are traders, on what has been called commercial domicil, which has the peculiarity that it may be attached to a trader who is not personally present in the occupied territory, but resides, for example, in a neutral country. He is an enemy vis-ö-vis the other belligerent in respect of the particular affairs of trade in the occupied or conquered territory which give him a commercial domicil there. The occupied territory may merely be part of a larger territory which, so far as unoccupied, retains its national character. Lord Stowell’s instance of the Isle of Wight which he gives in The Foltina (1), aptly illustrates the general rule. As to the actual status of Holland, no evidence was given. It might, perhaps, have been better if an application had been made for information to the Foreign Office, but the case proceeded up to this House on the footing of what was matter of common notoriety. It was accepted that metropolitan Holland had been occupied by and was under the dominion of the Germans. It is true that the Dutch government has been established in and recognized by Great Britain, and is the government to which, in theory, all Dutch subjects owe obedience, but in Holland itself that obedience cannot be enforced nor can that government protect its subjects resident there. Allegiance is generally dependent on reciprocal protection by the state. The Dutch government can give no such protection to its subjects in Holland. They are under the dominion and control of the Germans, who exploit them, plunder them, and tyrannize over them for the benefit of the German Reich. It is clear that the Germans do not intend to relinquish their possession unless forced to do so. However high may be the patriotic fervour of that loyal and valiant race and their devotion to the Allied cause, the Dutch, so far as they are in Holland, must, until the day of deliverance, submit to the German yoke and also accept the comparatively minor affliction of being described for limited purposes and occasions as being in law enemies vis-ö-vis Great Britain. Such is the effect of the common law of England. They cannot sue or appear as actors in the English courts, they cannot trade with England, their property in England is subject to the

 

(1) 1 Dod. 450, 452. [*230]

 

Trading with the Enemy Act and regulations. They are shut off from intercourse with Britain. The reason is that, while the occupation lasts, they are on the wrong side of the line of hostile demarcation, the line of war which shuts off those on that side of the line from communication and intercourse and commercial dealing with those on our side in substantially the same way as if they were originally enemies as nationals of, or resident in, the enemy state. This rule is only concerned with relations across the line of war. So far as concerns the internal commerce and ordinary activities of those in the occupied territory, such as those activities which the Master of the Rolls enumerates, the rule has no application, even though these activities go to promote the advantage of the German state and strengthen its war effort.

 

This may seem a harsh and irrational rule as against those of the Dutch, who are heart and soul in favour of the allied nations. But a general rule is necessary because, for one thing, there must be many traitors in Holland and many German nationals who have settled and taken up their residence and their commercial domicil in a great port like Rotterdam for business purposes before and since the war began. Such may be, in every sense of the word, enemies of the Allies, but there is the more fundamental reason which is explained by Lord Stowell. The harshness, however, is mitigated, because from early times it has always been the King’s prerogative to grant permits and safe conducts or licences to enemies to relieve them from disabilities which would attach to them in their capacity of territorial or technical enemies. As it is the Crown which declares war or makes peace, the Crown may exempt from the enemy status particular territories or classes of the enemy state, or exempt particular individuals. The former course was adopted in the cases decided by Lord Stowell in reference to St. Domingo, or Spain, or Hamburg, by means of various statutes or public declarations. The latter course is adopted whenever a safe conduct or licence or permit is granted by the executive to an individual or individuals. In all these cases the disabilities of enemy status are pro tanto removed. The classic statement of the rule and its justification is given by Lord Stowell in The Hoop (1): “He alone therefore” (i.e., the Sovereign, acting by his constitutional advisers) “who has the power of entirely removing the state of war, has the power of removing it in part, by

 

(1) 1 C. Rob. 196, 199. [*231]

 

permitting, where he sees proper, that commercial intercourse which is a partial suspension of the war. There may be occasions on which such an intercourse may be highly expedient. But it is not for individuals to determine on the expediency of such occasions on their own notions of commerce, and of commerce merely, and possibly on grounds of private advantage not very reconcileable with the general interests of the State. It is for the State alone, on more enlarged views of policy and on consideration of all circumstances that may be connected with such an intercourse, to determine when it shall be permitted, and under what regulations. In my opinion, no principle ought to be held more sacred than that this intercourse cannot subsist on any other footing than that of the direct permission of the State. Who can be insensible to the consequences that might follow, if every person in time of war bad a right to carry on a commercial intercourse with the enemy, and under colour of that had the means of carrying on any other species of intercourse he might think fit?” If this was true in Lord Stowell’s day it is enormously truer now when the radiations of the modern credit system and of international trade are world-wide and when the possibility of international intercourse has been indefinitely increased by wireless and air transport. What Lord Stowell said is equally pertinent to the case of a temporary or territorial enemy who is resident or trading in an occupied country and to the case of an enemy in the ordinary sense. Lord Stowell added(1): “Where is the inconvenience on the other side, that the merchant should be compelled, in such a situation of the two countries, to carry on his trade between them, if necessary under the eye and controul of the government, charged with the care of the public safety?” In the present case, it seems, no difficulty need have arisen if the respondent company had made a proper application for a licence to pursue their claim. Lord Stowell went on to consider the question whether an enemy had any right to appeal as an actor to the tribunals of this country, which is the primary matter in issue in this proceeding. He said: “In the law of almost every country, the character of alien enemy carries with it a disability to sue, or to sustain in the language of the civilians a persona standi in judicio. The peculiar law of our own country applies this principle with great rigour.” Lord Stowell met in advance the

 

(1) 1 C. Rob. 200. [*232]

 

contention of the respondents that this is a separate and less stringent rule than the rule as to trading with the enemy. He said(1): “A State in which contracts cannot be enforced cannot be a State of legal commerce.” Indeed, the rule that an alien enemy cannot sue in our courts seems to be more ancient and more stringent than the rule against trading with the enemy, though both rules are equally corollaries of the status of enemy. Pollock and Maitland’s History of English Law, 2nd ed., vol. i., p. 459, states the medi3Ú4val basis of the rule and also states how Littleton understood this disability. It also states the more limited rule accepted by Coke on Littleton, 129. b., which was “that no alien can bring a real action, that no alien enemy can bring a personal action, but that an alien whose sovereign is in league with our own may bring personal actions.” In 1697 Treby C.J., as reported in Wells v. Williams (2), laid down as settled law that “an alien enemy, who is here in protection, may sue his bond or contract; but an alien enemy abiding in his own country cannot sue here.” Bullen and Leake’s Precedents of Pleadings, 3rd ed., p. 475, give the stereotyped plea in abatement which was that the plaintiff was an alien enemy or became an alien enemy after the commencement of the action, quoting Le Bret v. Papillon (3). The court, it was held, was bound to take the objection even if it was not pleaded as soon as it came to the notice of the court.

 

It is, however, unnecessary to resurvey the law on this topic, because that has been done finally by Lord Sumner in Rodriguez v. Speyer Brothers (4). That was, indeed, in a dissenting judgment, but the matter of dissent does not go to his general statement of the law, which Sir William Holdsworth (History of English Law, vol. ix., p. 98, n. 5) has described as “the best modern account of the position of the alien enemy at common law.” I must, however, refer a little more fully to that case, because it was relied on by the respondents for the proposition that the ancient rule denying a persona standi to an alien enemy at common law had been reduced to a rule of public policy. A rule of public policy seems to be used in this connexion as meaning a rule which is one which can be moulded by the court to suit the facts of the particular case, and can be rejected if the instance discloses to the judge no mischief from the point of view of public policy as understood

 

(1) 1 C. Rob. 200, 201.

 

(2) (1697) 1 Lord Raym. 282, 283.

 

(3) (1804) 4 East, 502.

 

(4) [1919] A. C. 59, 115. [*233]

 

by the judge. This is quite contrary to Lord Stowell’s statement that the common law applies this principle with great rigour and to the whole tenor of authority as set out in the judgment of Lord Sumner and also that of Lord Atkinson. I cannot think that the majority of their Lordships in Rodriguez v. Speyer Brothers (1) intended so sweeping a departure from settled law. The case must, I think, be limited to its special facts which were that a partnership of six, of which five members were English and one German, had been dissolved in 1914 by the outbreak of war and in the winding-up of the firm it was necessary to sue to recover a debt. The action was brought in the names of all the partners, including the alien enemy. Peterson J. dismissed the action for defect of parties on the ground that the German partner could not sue. His decision was reversed(2) by a majority of the Court of Appeal, composed of Bankes L.J. and Sargant J., Pickford L.J. dissenting, and their decision was affirmed in this House by Lords Finlay, Haldane and Parmoor, Lords Atkinson and Sumner dissenting. Lord Sumner caustically protested(3) against the ancient and settled rule being impinged on to save the alien enemy from the extra cost due to his advisers not obtaining the necessary licence or vesting the claim in the Custodian of Enemy Property. I do not think the decision is an authority beyond its precise facts. Such I take to have been the view of Lord Finlay from his observations(4). Lord Finlay did not overrule M’Connell v. Hector (5) (in which there were three partners, all British by nationality but two domiciled in Flushing, described as “a port belonging to the enemies of this country” and an action by the firm was held to be incompetent) or Candilis & Sons v. Harold Victor & Co. (6). In any case, the decision is not one to be extended or treated as giving the court a general liberty to exercise the discretion which appertains to the Crown alone to give or refuse a licence in such cases. The discretion is for the executive and is not for the court. The observations of their Lordships in Janson v. Driefontein Consolidated Mines, Ld. (7) must not be ignored even though they have to some extent been qualified by subsequent pronouncements of their Lordships in this House. The precise limits of the doctrines of public policy have been

 

(1) [1919] A. C. 59, 115.

 

(2) (1917) 87 L. J. (K. B.) 171.

 

(3) [1919] A. C. 59, 131.

 

(4) [1919] A. C. 59, 76, 77.

 

(5) 3 Bos. & P. 113.

 

(6) (1916) 33 T. L. R. 20.

 

(7) [1902] A. C. 484. [*234]

 

much debated both before and since the speeches in Rodriguez’s case (1). The observations of any one Lord cannot be regarded as fixing the law. Indeed, on an examination of the opinions of the majority in Rodriguez’s case (1) considerable differences may be discerned. It would be impossible here to discuss these general questions, but I am tempted to ask whether the rule expounded by Lord Stowell does not differ from the familiar rules of public policy. These deal with internal affairs, contracts, dispositions of property, morality and the like. Lord Stowell’s statement deals with matters of national policy, of affairs of state in international and belligerent relations. These, in particular, should be regulated by a settled rule of law subject to the responsible organs of government only if a discretion is to be exercised at all, and should not be left to “the idiosyncratic inferences of a few judicial minds” (to borrow Lord Atkin’s phrase in Fender v. St. John-Mildmay (2)). I need do no more than refer to the authority of Porter v. Freudenberg (3). It may, indeed, be tempting to say that it is unjust that a Dutch company like the respondents should be debarred from prosecuting its proceeding to secure payment of a pre-war debt, but the answer is that, if it is debarred in fact in this action, it may be only because proper steps have not been taken to obtain a licence and that, if that is granted, as it may well be, a fresh proceeding can be initiated. The plea is not in bar, but in abatement.

 

But, whatever may be the view of the executive on consideration of a proper application, so far as concerns the court no particular reason appears on the evidence for distinguishing the respondents from any other Dutch company with a principal place of business at Rotterdam. The decision of the Court of Appeal would involve that any such company, and, indeed, any Dutch national resident in Holland, was free from any disability at common law and free to have intercourse and communication with and to trade with this country during the war except for the Trading with the Enemy Act and regulations. The same would be true of Northern France, Belgium, Norway and other occupied countries. The evils which might result from such untrammelled intercourse and trading are too serious and too obvious to need to be expatiated on. Information helping the enemy’s war effort, trading increasing his war resources, could go on unimpeded save in

 

(1) [1919] A. C. 59.

 

(2) [1938] A. C. 1, 12.

 

(3) [1915] 1 K. B. 857. [*235]

 

so far as touched by the statute. The common law existed before and irrespective of the statutory provisions now in force. I may, however, note that a corporation differs from an individual in that the latter can, in theory at least, withdraw himself from the enemy country, whereas a corporation formed under the laws of a foreign state depends for its functions and existence on the laws of the state under which it is incorporated. This makes it at least difficult to apply to such a corporation, as the test of enemy or other character, the character of its agents or the persons in de facto control of its affairs. This was the test proposed by Lord Parker in the Daimler case(1), and applied by the Privy Council to a Dutch shipping company during the last war in The Hamborn (2). Holland was then neutral. In Janson v. Driefontein Consolidated Mines, Ld. (3), the House treated a company incorporated under the laws of the Transvaal to work gold mines there and carry on business, though not exclusively, there, as a subject of the Transvaal, ignoring the nationality of almost all the shareholders, and held that it became an alien enemy of this country when the South African war broke out. In the present case the respondents are subject to the control of the effective government in Holland, that is the German government, which can liquidate the company, appoint a sequestrator or administrator, eject or dominate the directors, and determine what use it makes of its business organization so as to promote the German war effort. Whatever immediately or prospectively increases the respondents’ resources redounds to the benefit of the Germans. The services which they may be capable of rendering may be of great value to the coasting trade along the German occupied regions and to the trade up and down the Rhine. It is not in evidence where the directors are, or what is their nationality, or what business precisely the respondents carry on. But they remain vouched as still having their principal place of business at Rotterdam. In my opinion, the respondents became, when Holland was occupied and subjugated, technically alien enemies of this country. This is still so even though, as well may be the case, some of their vessels are being navigated by loyal and stout-hearted Dutch seamen in the service of the allied nations.

 

I ought finally, in passing, to note an observation of Holmes J. in Birge-Forbes Company v. Heye (4), that “there

 

(1) [1916] 2 A. C. 307.

 

(2) [1919] A. C. 993.

 

(3) [1902] A. C. 484.

 

(4) (1919) 251 U. S. 317, 323. [*236]

 

is nothing ‘mysteriously noxious’ …. in a judgment for an alien enemy.” But when the case is looked at, the facts are seen to be that the judgment had been obtained by the plaintiff before the war. The plaintiff became an alien enemy, but an appeal against the judgment was permitted on terms that the amount should be paid to the clerk of the local court to be turned over to the alien property custodian if the judgment were affirmed. The enemy was already on the record and all he needed was to defend the judgment which he had got. He was not an actor in the appeal. I venture, however, to think that the English law is correct in considering that the mere fact that any money received could not go out of the country until the end of the war does not exclude the rule forbidding to an enemy a right of suit. It is also clear that to an alien enemy a judgment is a more valuable security than a simple debt and may be valuable for purposes of increasing his credit even during the war. This is pointed out by Lord Sumner in Rodriguez’s case(1). It is even more obviously true to-day than in 1919. In my opinion the decision of the Court of Appeal is contrary to the common law and cannot be supported.

 

I ought in a few words to notice a further valid objection to the respondents’ suit which is that the solicitor has no retainer. It is assumed that he had a retainer when he began the proceedings, but a retainer, like any other contract or employment, is abrogated when the client who is the principal becomes an enemy. The respondents relied on Tingley v. Müller (2). Perhaps it is enough to say that there is no power of attorney here in question as there was in that case. I confess, however, that I feel it at least difficult to follow the reasoning of the Court of Appeal. Scrutton L.J. examines the authorities in a powerful dissenting judgment which as at present advised I think correctly states the law. The precise question does not, however, arise for decision in this appeal. I concur in the motion proposed.

 

LORD PORTER. My Lords, this case exhibits an economy of fact which is almost embarrassing, but is nevertheless, as I think, sufficient to form a foundation on which your Lordships’ conclusions may be grounded. The respondents are a Dutch company incorporated in Holland, which, at any rate, until Holland was invaded and overrun by the Germans,

 

(1) [1919] A. C. 59, 114.

 

(2) [1917] 2 Ch. 144. [*237]

 

carried on in Rotterdam the business of shipowners. How far that business continued to be carried on after the Royal Netherlands government had left Holland does not clearly appear, though the Court of Appeal were, on behalf, I believe, of the respondents, informed that all their vessels save one were now beyond enemy control. At least it is known that the business was carried on until the invasion of Holland and is still being carried on there by the company to the extent of suing for the sum claimed in this action, and there is no evidence either that it has altered the place of its activities, has ceased to carry on its business, is engaged in winding it up, or has made any changes other than those set out above. The result seems to be that the residence, or, as it has been called somewhat loosely but perhaps with sufficient accuracy, the “commercial domicil” of the company is still to be found in Holland. This, as I understand it, was the view of the Court of Appeal. “The question,” said the Master of the Rolls(1), “is whether or not a company incorporated under the laws of an allied country which has been occupied by the enemy is, by reason of the mere fact that it continues to carry on its business in that country, to be treated as an alien enemy to the extent that it is incapacitated from taking proceedings in the courts of this country with a view to recovering a business debt,” and du Parcq L.J.’s words were to the like effect.

 

No doubt, both in prize and at common law a person who is engaged in business in a country which becomes hostile but is not resident there is given a reasonable time to disassociate himself from that business if he wishes to avoid becoming an alien enemy, and even if he resides in such a country it may be that he will escape the imputation of hostility by removing himself from it as quickly as is reasonably possible (see The Anglo-Mexican (2)), but there is no suggestion that such a course has been taken on behalf of the respondents in the present case. The Dutch people and the Royal Netherlands government are our allies and friends, but Holland has been occupied by the German forces. Its lawful government and executive are to be found in this country, and there is no evidence that any other authority has replaced that driven out except German force and German executive decree, whether civil or military. I think enough is known to enable it to be said that Holland is now wholly controlled by Germany

 

(1) [1942] 1 K. B. 228.

 

(2) [1918] A. C. 422. [*238]

 

and its territory wholly occupied by that nation. It was contended on behalf of the respondents that business life and civil activities were still carried on under the protection of the Dutch, but no evidence was forthcoming of any Dutch substitute for the government which had been driven out and the only suggestion made was that the local authorities still remained and carried out their normal activities. I doubt whether, even if it were true, this would be enough, but, in any case, activities carried on under the dominating control of an occupying enemy force can hardly be said to follow their normal course. The inevitable conclusion must, I think, be drawn that Holland has been for some two years, and is at present, enemy-occupied territory, controlled and administered by the enemies of this country. If this conclusion be accepted, the question which your Lordships have to determine is whether a company incorporated and carrying on business in enemy-occupied territory is what is technically known as an enemy alien, and, if it be, whether it has any persona standi in judicio which would enable it to sue in this country. There were certain other questions raised in the case presented to your Lordships, but, if this question be answered in favour of the appellants, admittedly the decision must be against the respondents, and it is unnecessary to enter on any further inquiry. Before your Lordships no question arises as to the validity of the contract sued on. It was made with a company incorporated and carrying on business in a friendly state in time of peace. The only question is as to the procedural capacity of the respondents to sue at the present time. The distinction has been pointed out by Rowlatt J. in Schmitz v. Van der Veen & Co. (1), quoting from Lord Ellenborough’s judgment in Flindt v. Waters (2).

 

Had the respondents’ company been carrying on business in enemy territory I do not think that it could have been successfully argued that it was not in the position of an enemy alien and so disentitled to sue in the courts of this country. So long ago as 1802, in Hector v. M’Connell (3), Lord Alvanley C.J. said: “Every natural born subject of England has a right to the King’s protection so long as he entitles himself to it by his conduct, but if he live in an enemy’s country he forfeits that right. Though these persons may not have done that which would amount to treason yet there is an

 

(1) 84 L. J. (K. B.) 861, 864.

 

(2) (1812) 15 East, 260, 265.

 

(3) 3 Bos. & P. 113, 114. [*239]

 

hostile adherence and a commercial adherence; and I do not wish to hear it argued that a person who lives and carries on trade under the protection and for the benefit of an hostile State and who is so far a merchant settled in that State that his goods would be liable to confiscation in a court of prize, is yet to be considered as entitled to sue as an English subject in an English court of justice.” This language was expressly approved by both the majority and minority of your Lordships’ House which sat to hear the appeal in Rodriguez v. Speyer Brothers (1). So in O’Mealey v. Wilson (2), Lord Ellenborough C.J. said: “If a British subject resides in an enemy’s country without being detained as a prisoner of war, he is precluded from suing here.” But it is unnecessary to multiply references to cases inasmuch as the principle that even a British subject voluntarily resident or carrying on business in the territory of a hostile Power is to be treated as an alien enemy has generally been accepted since the decision in Porter v. Freudenberg (3) in the Court of Appeal. Indeed, that case only follows what was said by Lord Lindley in Janson v. Driefontein Consolidated Mines, Ld. (4), and has often been said both before and since that time: “But when considering questions arising with an alien enemy, it is not the nationality of a person, but his place of business during war that is important.”

 

The grounds on which access to the courts of this country has been denied to such a person and is denied at the present time are more difficult to ascertain. In 1797, in Sparenburgh v. Bannatyne (5), Eyre C.J. expressed the view that the true ground on which the plea of alien enemy has been allowed is that “a man, professing himself hostile to this country, and in a state of war with it, cannot be heard if he sue for the benefit and protection of our laws in the courts of this country.” The principle is there stated as stricti juris, and it is similarly treated in The Hoop (6), and later in Esposito v. Bowden (7), where Willes J. said: “It is now fully established that, the presumed object of war being as much to cripple the enemy’s commerce as to capture his property, a declaration of war imports a prohibition of commercial intercourse and correspondence with the inhabitants of the

 

(1) [1919] A. C. 59.

 

(2) 1 Camp. 482, 483.

 

(3) [1915] 1 K. B. 857.

 

(4) [1902] A. C. 484, 505.

 

(5) 1 Bos. & P. 163, 170.

 

(6) 1 C. Rob. 196.

 

(7) (1857) 7 E. & B. 763, 779. [*240]

 

enemy’s country, and that such intercourse, except with the licence of the Crown, is illegal.” In Porter v. Freudenberg (1), Lord Reading C.J. says that: “This law was founded in earlier days upon the conception that all subjects owing allegiance to the Crown were at war with subjects of the State at war with the Crown, and later it was grounded upon public policy, which forbids the doing of acts that will be or may be to the advantage of the enemy State by increasing its capacity for prolonging hostilities in adding to the credit, money or goods, or other resources available to individuals in the enemy State.”

 

Originally, I think, the view was taken that, sovereigns having declared war on one another, every subject of the one was the enemy of every subject of the other, but this outlook was gradually modified and altered. The development appears to have begun by a lessening of the stringency of view in favour of enemy subjects residing in and subjecting themselves to the protection of the Crown in this country as in Wells v. Williams (2), where it was held that an alien enemy commorant here by the King’s licence and under his protection may sue. “It was answered and resolved,” says the report, “that the necessity of trade has mollified the too rigorous rules of the old law in their restraint and discouragement of aliens,” and as another report(3) has it, “suing is but a consequential right of protection.” It is a tragic commentary that the first report should continue(2): “A Jew may sue at this day, but heretofore he could not, for then they were looked upon as enemies. But now commerce has taught the world more humanity.” This attitude was accompanied or followed by a corresponding increase in stringency towards nationals of friendly or neutral countries voluntarily residing in or carrying on business in hostile territory. If the meaning of “hostile territory” be confined to the soil of the enemy State, the rule is, I think, clear, but does “hostile” in this connexion include neutral or friendly territory occupied by the enemy?

 

To this question I do not think it possible to give a certain answer which will apply to all cases. The solution, in my view, depends on the quality of the occupation, to be judged by the time it endures, the amount of control exercised, and the extent to which the former government is superseded.

 

(1) [1915] 1 K. B. 857, 867.

 

(2) 1 Lord Raym. 282.

 

(3) I Salk. 46. [*241]

 

These considerations are, in my opinion, the solution of the apparent conflict between the cases in which the inhabitants of occupied territory have been held to be alien enemies and those in which the opposite view has been taken. Two propositions found in Hall’s International Law, 8th ed. (1924), on two consecutive pages, state the legal rule, I think accurately. On p. 603 it is said: “Although the national character of a place and its inhabitants is not altered by military occupation on the part of an enemy, yet for many belligerent purposes they are necessarily treated as hostile by their legitimate sovereign. They are in fact under the control of the enemy, and to treat them as friendly would be to relieve him from the pressure and losses of war.” The limitation put on this assertion is to be found in the note on on p. 604: “The temporary occupation of a territory by an enemy’s forces does not of itself necessarily convert such territory into hostile territory or its inhabitants into enemies.” For the former proposition he quotes the authority of an American case, Bentzon v. Boyle (Thirty Hogsheads of Sugar) (1), decided in 1815. The facts in that case were that the island of Santa Cruz had been captured from Denmark by the British and certain sugar, shipped thence on board an English ship, was captured by an American privateer. In condemning this cargo in prize as being British property, Marshall C.J. said(2): “Some doubt has been suggested whether Santa Cruz, while in the possession of Great Britain, could properly be considered as a British island. But for this doubt there can be no foundation. Although acquisitions made during war are not considered as permanent until confirmed by treaty, yet to every commercial and belligerent purpose, they are considered as part of the domain of the conqueror, so long as he retains the possession and government of them.” An English case promulgating the same doctrine is to be found in The Gutenfels (3). On August 5, 1914, a German ship had entered Port Said in ignorance that war had been declared between this country and Germany, and the question arose whether an Egyptian port was, in reference to a German ship, an enemy port so as to bring it within the ambit of Rule VI. of the Hague Convention of 1907. The Privy Council sitting in prize decided that it was, and Lord Wrenbury in delivering the opinion of their Lordships

 

(1) 9 Cranch, 191.

 

(2) Ibid. 195.

 

(3) [1916] 2 A. C. 112. [*242]

 

said(1): “Having regard to the relations between Great Britain and Egypt, to the anomalous position of Turkey, and to the military occupation of Egypt by Great Britain, their Lordships do not doubt that it was. In Hall’s International Law, 6th ed., p. 505, the learned author writes: ‘When a place is militarily occupied by an enemy the fact that it is under his control and that he consequently can use it for the purposes of his war, outweighs all considerations founded on the bare legal ownership of the soil.’ Their Lordships think this to be right.”

 

That these cases were decided in prize does not, in my view, prevent the application of the principle to questions involving the common law. In The Hoop (2), also a case in prize, Lord Stowell (then Sir William Scott) said: “What the common law of England may be, it is not necessary, nor perhaps proper for me to enquire; but it is difficult to conceive that it can by any possibility be otherwise, for the rule in no degree arises from the transaction being upon the water, but from principles of public policy and of public law which are just as weighty on the one element as on the other, and of which the cases have happened more frequently upon the water, merely in consequence of the insular situation of this country; but when an enemy existed in the other part of the island (the only instance in which it would occur upon the land) it appears, from the case referred to by that noble person” (Lord Mansfield) to have been deemed equally criminal in the jurisprudence of this country.” The words already quoted from M’Connell v. Hector (3) support this view, and in the European war of 1914 Bailhache J. in Mitsui v. Mumford (4) discussed the truth of the contention that Antwerp after seizure by the Germans on October 9, 1914, was enemy territory and that business intercourse with persons in it was forbidden by common law. Though it was not necessary for him to decide these points he thought both contentions sound – the latter in spite of the fact that, as he says(5): “It amounts to this, that a person, a subject of a friendly power, who at the beginning of the war traded here and at Antwerp, cannot write and send a business letter from this country giving instructions to his Antwerp agent, as to his business there.”

 

(1) [1916] 2 A. C. 112, 118.

 

(2) 1 C. Rob. 196, 217.

 

(3) 3 Bos. & P. 113.

 

(4) [1915] 2 K. B. 27.

 

(5) Ibid. 33. [*243]

 

As authorities he quotes an American case, The Rapid (1), and M’Connell v. Hector (2). Another American authority to the same effect, which also was not a prize case, United States v. Rice (3), was decided by Story J. in 1819. During the war of 1812 the British government were for a time in military occupation of part of the province of Maine, and exacted import duties from the inhabitants, who, it was held, could not be compelled to pay import duties over again to the United States government when it had recovered the territory. The headnote is as follows: “By the conquest and military occupation of a portion of the territory of the United States by a public enemy, that portion is to be deemed a foreign country, sa far as respects our revenue laws. Goods imported into it, are not imported into the United States: and are subject to such duties only as the conqueror may impose. The subsequent evacuation of the conquered territory by the enemy and resumption of authority by the United States, cannot change the character of past transactions. The jus postliminii does not apply to the case; and goods previously imported do not become liable to pay duty to the United States, by the resumption of their sovereignty over the conquered territory.” Story J. said(4): “During this period the British government exercised all civil and military authority over the place; and established a customhouse, and admitted goods to be imported, according to regulations prescribed by itself …. By the conquest and military occupation of Castine, the enemy acquired that firm possession which enabled him to exercise the fullest rights of sovereignty over that place. The sovereignty of the United States over the territory was, of course, suspended, and the laws of the United States could no longer be rightfully enforced there, or be obligatory upon the inhabitants who remained and submitted to the conquerors. By the surrender the inhabitants passed under a temporary allegiance to the British government and were bound by such laws, and such only, as it chose to recognize and impose. From the nature of the case, no other laws could be obligatory upon them, for where there is no protection or allegiance or sovereignty, there can be no claim to obedience.” These cases are, I think, sufficient to establish the truth of Hall’s first proposition.

 

The qualification placed on the doctrine which I have quoted

 

(1) (1815) 8 Cranch, 155.

 

(2) 3 Bos. & P. 113.

 

(3) 4 Wheat. 246.

 

(4) Ibid. 253. [*244]

 

is taken in terms from the opinion of their Lordships of the Privy Council delivered by Lord Kingsdown (then the Right Honourable T. Pemberton Leigh) in prize in The Gerasimo (1). One of the questions in that case was whether the owners of cargo were alien enemies at a time when the Crimean war was being waged between this country and Russia. The owners carried on business at Galatz in Moldavia, and Moldavia was militarily occupied by the Russians, but Moldavia and also Wallachia, though under the suzerainty of Turkey at the time of the occupation, yet enjoyed an independent administration and, notwithstanding that the Russian occupation amounted to a temporary suspension of the suzerainty of the Porte and a temporary assumption of that suzerainty by Russia, yet the national character of these countries remained unaltered and any intention to alter it was disclaimed by Russia. The Russian Minister, indeed, stated(2) that “the occupation of the principalities …. had been for Russia only a military position, the maintenance or abandonment of which was entirely a matter connected with strategical considerations.” “Our august master,” he continued, “…. has no desire …. either to prolong indefinitely the occupation of the principalities, or to establish himself there in a permanent manner, or to incorporate them with his dominions, still less to overthrow the Ottoman government.” As Lord Kingsdown pointed out(3): “Moldavia and Wallachia were not treated by the Porte as enemies, and it would be singular if these countries, though not held to be enemies by Turkey, should be held to be enemies of the Allies of Turkey.” I have set out these facts somewhat fully in order to mark the exact circumstances which led to the decision of the Judicial Committee whose spokesman pointed out(4) that it was “necessary to examine carefully both the principles of law which are to govern the case, and the nature of the possession which the Russians held of Moldavia at the time of this shipment.” It is in the light of these considerations that the statement of law, so much relied on by the respondents, must be read. Lord Kingsdown set out the legal principles applicable as follows(5): “Now the question is, what are the circumstances necessary to convert friendly or neutral territory into enemy’s territory? For this purpose, is it

 

(1) 11 Moo. P. C. 88, 101.

 

(2) Ibid. 104.

 

(3) Ibid. 105.

 

(4) Ibid. 95, 96.

 

(5) Ibid. 96. [*245]

 

sufficient that the territory in question should be occupied by a hostile force, and subjected, during its occupation, to the control of the hostile power, so far as such power may think fit to exercise control; or is it necessary that, either by cession or conquest, or some other means, it should either permanently or temporarily, be incorporated with, and form part of the dominions of the invader at the time when the question of national character arises? It appears to their Lordships that the first proposition cannot be maintained.”

 

In terms this statement would seem to require a formal cession or conquest followed by a permanent or temporary incorporation of the occupied territory with the enemy state to make the inhabitants of the occupied territory enemy aliens as regards a country at war with the occupying power, and would seem to assert that to bring about this result it is not enough that the territory is occupied and controlled by the enemy, however complete the occupation and unlimited the control. If this be the meaning of Lord Kingsdown’s words, I should not agree with them, but he was speaking with reference to the facts of the case under consideration in which it could not be said that there was even an attempt at civil control of the occupied provinces. It is enough, in my view, if it appears from the known circumstances, that the civil and military jurisdiction of the country is being exercised by the enemy to the exclusion of the former civilian rulers. Indeed, I can imagine a case where, though lip service was paid to the legal government of a country, yet in practice control was so exercised by an occupying power that in substance the territory formed part of the dominion of the enemy. At the present time when in international affairs formal acts have been largely dispensed with either as a preliminary to or during the course of a war, when declarations of war have ceased to be made and invasion follows immediately on declarations of friendship or neutrality, it is, in my view, essential to regard substance and not form.

 

There are a number of cases reported or mentioned in the reports which follow the same principle as The Gerasimo (1), most of which are referred to in that case. In Bromley v. Hesseltine (2), the question was whether a neutral resident in a place occupied by the enemy must on that account be regarded as an alien enemy. Lord Ellenborough C.J. held not,

 

(1) 11 Moo. P. C. 88.

 

(2) (1807) 1 Camp. 75. [*246]

 

saying(1): “I don’t know that merely because an alien happens to be resident in an enemy’s country, goods to be delivered for him at a neutral or friendly port are on that account uninsurable. Suppose a British merchant to be entrapped and confined in an enemy’s country, it can scarcely be said that all the trade he may still carry on is, in aid of the King’s enemies, illegal and incapable of being insured.” Whatever may be said of this doctrine to-day it, at least, goes no further than to deal with the case of a merchant who, for all the evidence shows, may have been detained against his will in occupied territory. In Donaldson v. Thompson (2) a Russian Prize Court sitting in Corfu purported to condemn an American ship for breach of blockade and the question was whether the sentence of that court sitting under a commission from the Czar was valid, Corfu being then occupied by Russian troops. Lord Ellenborough held that it was not. “That,” says the side-note, “is to be considered a neutral country for this purpose, in which the forms of an independent neutral government are preserved, although the belligerent may have such a body of troops stationed there as in reality to possess the sovereign authority.” In the course of his judgment, Lord Ellenborough observes(3): “It is impossible to say that the government of the Ionian Republic was superseded, at a time when its institutions subsisted, and its supremacy was recognized. How, then, was Corfu a co-belligerent? Only because it endured a hostile aggression. Will any one contend that a government which is obliged to yield in any quarter to a superior force, becomes a co-belligerent with the power to which it yields?” The case, however, deals only with the position of a prize court sitting in an occupied country in which the forms of an independent state were preserved, and it might well be held that the occupying country could not at the same time preserve the forms of neutrality and yet claim jurisdiction for a prize court in the country so treated. In Hagedorn v. Bell (4), Hamburg was in the military occupation of an overwhelming French force. Nevertheless, all the powers of civil government were administered in the same manner as they had formerly been before the arrival of the French. “I know of no case,” said Lord Ellenborough(5), “where a country, maintaining its civil

 

(1) 1 Camp. 75, 77.

 

(2) 1 Camp. 429.

 

(3) Ibid. 432.

 

(4) 1 M. & S. 450.

 

(5) Ibid. 458. [*247]

 

government proprio jure, has been considered as conquered. That Hamburg was, at the time when this insurance was effected, under French dominion, and had committed acts to warrant this country to consider her as hostile, there can be little doubt …. But …. still it belongs to every state to pronounce upon the continuance either of amity, hostility, or neutrality as between itself and any other state.” He then goes on to consider whether this country had elected to treat Hamburg as hostile and decided that she had not. The opinions of the other learned judges who heard the case were to the same effect. The decision primarily depends on the attitude of this country to the French domination. If, however, it be contended that the quality of French dominance comes in question, the case may even assist the appellants rather than the respondents as indicating that the control of an occupying power may, in circumstances other than those then in question, turn the inhabitants of the occupied territory into persons hostile to the enemies of the occupying power. Indeed, in the course of his judgment, Le Blanc J. said(1): “The principle, upon which the policy of the law interferes, is this, that all trading with an enemy tends to strengthen and assist the enemy, and is therefore calculated to defeat the object for which war is entered into.” Finally, in Société Anonyme Belge des Mines D’Aljustrel (Portugal) v. Anglo-Belgian Agency, Ld. (2), the Court of Appeal held that a company incorporated under the laws of Belgium and having its registered office at Antwerp was not an alien enemy at common law nor under the then subsisting Trading with the Enemy Acts and Proclamations. The company’s business at Antwerp was closed and the books were removed to London where the business was then wholly carried on, but the chairman of the company was still at Antwerp, and, although he might still have been acting there on the plaintiff company’s behalf, the business or some of the business of the company was de facto being carried on from London by three of the five directors of the company, all of them Belgians and resident in England. The plaintiff company owned mines in Portugal which were then being worked and the whole of the output was being sold in England and in France. Its managing director drew, as I understand, on its funds deposited with the defendants in respect of that business a cheque of which payment was refused on the

 

(1) 1 M. & S. 465.

 

(2) [1915] 2 Ch. 409. [*248]

 

ground that the company was an alien enemy. Younger J. in the court below expressed the view, afterwards supported in the Court of Appeal(1): “The plaintiff company is not in my opinion an enemy of the King at common law. Although the greater part of it” (i.e., Belgium) “is occupied by the German army, Belgium has not yet been, and we may hope never will be, annexed to the German Empire; and no Belgian is yet the subject of a state at war with His Majesty. No authority was adduced to show that the rule depriving an alien enemy of any right to maintain an action in these courts. extends to a person who is not either the subject of, or resident or carrying on business in, a state of war with His Majesty.” Lord Cozens-Hardy M.R. appears to have agreed with this view, and I think all the members of the court accepted the position that the plaintiffs were not enemies at common law, but the company was carrying on its business in England and the question really argued was whether it was incorporated in territory in hostile occupation and, therefore, an enemy alien under the then existing proclamations dealing with what constituted trading with the enemy. Younger J. thought it was, and Pickford L.J. had some doubts, but the other two members of the court held that it was incorporated, not in Antwerp, but in Belgium, and, as all Belgium was not in hostile occupation, the proclamation did not apply. The decision, so understood, is not contradictory of the propositions laid down by Hall.

 

I have ventured to detain your Lordships by a consideration of those cases most favourable to the arguments presented on behalf of the respondents because the principle at stake is of great importance and because a somewhat close analysis of the grounds on which they were decided seemed to be necessary if one was to arrive at what I believe to be their true effect. The result, as I think, of such consideration is to negative the contention that in no circumstances does the temporary occupation of a territory by an enemy’s forces convert such territory into hostile territory or its inhabitants into enemies, and not to disturb the principle that in a proper case such an occupation is sufficient to produce that effect. In this connexion it is not, I think, helpful to ask whether the occupied country is a co-belligerent with the enemy unless one is careful to remember what is meant by that expression. The will, and indeed in some instances the hands, of the inhabitants

 

(1) [1915] 2 Ch. 409, 413. [*249]

 

of the occupied country are opposed to the occupiers and the last thing which they or the Royal Netherlands government desire is to fight on behalf of or give allegiance to a power whose occupation they detest. Nevertheless, a country whose ports may be used to shelter and refit enemy ships, whose workshops may equip and supply them, and whose inhabitants may be compelled, at peril of their livelihood, liberties or even life, to assist the enemy, may to that extent be loosely described as co-belligerent with the occupying power. The very residence and carrying on business in such a country may well amount to giving allegiance to the enemy however unwillingly it may be given. It is true, as Goddard L.J. points out(1), that a national of that country, residing elsewhere (the italics are mine), may only be deemed an enemy in respect of the business carried on in the occupied country. He may be guilty of a crime, albeit only of a misdemeanour, if he continues to have intercourse by trading with the enemy or in some other way, but he is not necessarily an alien enemy. The position, however, appears to me to differ toto caelo in a case where he resides and carries on business in the occupied country. I do not stay to discuss the further contention that a debt due to a business carried on as well as controlled by the enemy is property or interest in such business. For the purpose of this opinion I am prepared to assume that it is not.

 

With much of the principles set out in the judgment of du Parcq L.J. I find myself in agreement, and, in particular, with the view(2) that the question whether an individual in occupied territory is an alien enemy or not “must always depend on the precise nature of the occupation …. on the quality of the control exercised by the occupying power and the obligations, if any, undertaken by, or imposed on, the person whose status is in dispute.” Where I differ is in the application of these principles to the facts of the present case. It is true that the Royal Netherlands government is still in existence, but it is in this country and is, as I think, prevented by force of arms from exercising its authority in Holland. I have no doubt that the inhabitants of that country as a whole are faithful to that government and would follow its commands if they could, but it is allegiance in fact, not willing allegiance, the fact of control, not the readiness of a country’s submission to it, which is in question. In my opinion, if de facto the Germans are in complete control of

 

(1) [1942] 1 K. B. 222, 234.

 

(2) Ibid. 239. [*250]

 

Holland, those who reside and carry on business there must from that very fact be held to have given allegiance to them despite the fact that such allegiance would gladly have been withheld.

 

In expressing this opinion I have not forgotten that in certain cases where alien enemies were interested as “actors” it has been held that they could be, or could be joined as, plaintiffs. Two examples of recent date may suffice, namely: Tingley v. Müller (1) and Rodriguez v. Speyer Brothers (2). Each case was decided by a majority, Scrutton L.J. dissenting in the former, and Lords Sumner and Atkinson in the latter. Each case was, I think, regarded as an exception to the general rule and followed a line of authorities according to which an alien enemy who was not personally interested or was a subsidiary party whose interest was slight was allowed to sue in the courts of this country. In the latter case Viscount Haldane propounded the question(3): “Is the rule which prevents an enemy alien from suing in the King’s courts a crystallized proposition which forms part of the ordinary common law, and is so definite that it must be applied without reference to whether a particular case involves the real mischief to guard against which the rule was originally introduced? Or is the rule one of what is called public policy, which does not apply to a particular instance if that instance discloses no mischief from the point of view of public policy?” After an exhaustive consideration of the authorities he answered the question thus(4): “While I think that the preponderance of authority down to this date has tended to this treatment of the rule as a rule of ordinary law and not as a mere case of applying policy, the courts have been …. by no means unanimous, and I do not think that the course of subsequent decision has materially affected this conclusion … Under these circumstances I am of opinion that it is open to us, as a supreme tribunal unfettered by any decision of its own, to look at the reason of the rule invoked. If we can do this I agree with the majority of the Court of Appeal that it is premature to stop the action at this stage from proceeding.” Though the decision is binding on your Lordships, I do not think that this reasoning was the ratio decidendi of the other two noble and learned Lords constituting the majority of the House. Indeed, in

 

(1) [1917] 2 Ch. 144.

 

(2) [1919] A. C. 59.

 

(3) Ibid. 77.

 

(4) Ibid. 86. [*251]

 

its breadth of statement, as the noble and learned Viscount recognized, it trenches on the observation of the Earl of Halsbury L.C. in Janson v. Driefontein Consolidated Mines, Ld. (1), that the courts cannot “invent a new head of public policy” and that when it is said that things are unlawful because they are contrary to public policy it is meant that they “have been either enacted or assumed to be by the common law unlawful, and not because a judge or court has a right to declare” them to be so. Viscount Haldane, however, maintained(2) that “the observation must be taken with the qualification that what the law recognizes as contrary to public policy turns out to vary greatly from time to time.”

 

In drawing this distinction the noble and learned viscount evidently accepts the view that anything which assists the enemy is always contrary to public policy, but is careful to point out that, on the one hand, certain types of act may at a given time be such as to afford assistance to the enemy though at another time they would not have done so, and that, on the other hand, certain types of act, which on earlier occasions and in other circumstances had been of assistance, may at a later date confer no benefit. Assistance to the enemy is always illegal, but the things which assist him may vary from time to time. Such a view is in accordance with the observations of Lord Watson in Nordenfelt v. Maxim Nordenfelt Guns and Ammunition Co., Ld. (3), and of Lord Parker in Daimler Co., Ld. v. Continental Tyre and Rubber Co. (Great Britain), Ld. (4). “Their function” (i.e., the function of English tribunals), says Lord Watson, “when a case like the present is brought before them, is, in my opinion, not necessarily to accept what was held to have been the rule of policy a hundred or a hundred and fifty years ago, but to ascertain, with as near an approach to accuracy as circumstances permit, what is the rule of policy for the then present time.” Lord Parker’s words are: “The rule against trading with the enemy is a belligerent’s weapon of self-protection. I think that it has to be applied to modern circumstances as we find them, and not limited to the applications of long ago, with as little desire to cut it down on the one hand as to extend it on the other beyond what those circumstances require.”

 

The question, however, whether a given act is against public

 

(1) [1902] A. C. 484, 491, 492.

 

(2) [1919] A. C. 59, 79.

 

(3) [1894] A. C. 535, 554.

 

(4) [1916] 2 A. C. 307, 344. [*252]

 

policy must, I think, be decided on general principles. It is not permissible to say that a particular act will not in fact assist the enemy. The proper inquiry is whether that act is of a class which is likely to assist him, and it is immaterial to ascertain whether in the individual case he may or may not be found to profit from it. In the present instance the respondents are technically enemy aliens and as such not entitled to sue. As Lord Stowell said in The Hoop (1): “It is not for individuals to determine on the expediency of such occasions on their own notions of commerce, and of commerce merely, and possibly on grounds of private advantage not very reconcileable with the general interests of the state. It is for the state alone, on more enlarged views of policy, and on consideration of all circumstances that may be connected with such an intercourse, to determine when it shall be permitted and under what regulations.” But if it were necessary to ask whether in the particular circumstances now under consideration a judgment in the respondents’ favour would be likely to assist the enemy, I should answer that it would. In the ramifications of modern financial transactions a recovery by legal action might well benefit an enemy who has shown himself astute to increase his resources by transferring to neutrals debts due to him from British subjects, leaving the former to collect from the British debtor the sums so transferred. I should agree with Lord Sumner’s words in Rodriguez v. Speyer Brothers (2): “It is a fallacy to suppose that everything turns on not remitting money to Germany during the war …. Even if judgment only were recovered against Se–or Rodriguez without satisfaction, Herr von Speyer would benefit at once by getting an interest in a specialty debt secured by a charge, in lieu of an interest in a debt only due upon a simple contract and unsecured. No order to keep the cash in this country during the war would deprive him of this immediate improvement of his position, nor is it impossible that, in some neutral country where the defendant may have property, he might actually recover satisfaction in respect of some right under the English judgment.” In that sense the judgment will be for the benefit of an enemy during the war and not merely to use Lord Parker’s words in the Daimler case(3), “the possible advantage he may gain when peace comes.”

 

(1) 1 C. Rob. 196, 199.

 

(2) [1919] A. C. 59, 114.

 

(3) [1916] 2 A. C. 307, 347. [*253]

 

It is said, however, that to turn a neutral into an enemy it must be shown that he owes allegiance to a state at war with this country. I am prepared to accept this statement, but the inhabitants of an occupied country may by residing and carrying on business there come under allegiance to the occupying power, none the less that they hate that power and desire its extrusion and destruction. It is the act which counts, not the feeling which accompanies it. If he remains he puts himself under allegiance to a hostile state, temporarily it may be, but that is enough. Such a decision may seem harsh, and, indeed, must be distasteful when applied to a Dutch subject, but in war as now waged many things have to be done and steps taken which would gladly be forborne. Their defence is that they do or may contribute to the downfall of the enemy, an event so ardently desired that even members of a state whose government is our any, but whose country is temporarily overrun, may welcome steps which in other circumstances we should deplore. I would add in the words of Lord Stowell in The Hoop (1): “It is said that these circumstances compose a case entitled to great indulgence; and I do not deny it. But if there is a rule of law on the subject binding the court I must follow where that rule leads me; though it leads to consequences which I may privately regret.”

 

Before I close the observations which I venture to put before your Lordships one other matter should I think be discussed, namely, the authority of the respondents’ agents to continue to represent them after the respondents have themselves become technical enemies. They had, it appears, appointed their arbitrator before the occupation of Holland and presumably their solicitors had been instructed before that time. The opinions expressed in your Lordships’ House in Daimler Co., Ld. v. Continental Tyre and Rubber Co. (Great Britain), Ld. (2) appear to accept the view that it would not be permissible for an enemy alien to appoint an agent after he had become such. Could then such an agent continue to act on behalf of one who was an alien friend when the appointment was made but had subsequently been placed in a position which compelled him to be treated as an enemy? Le Bret v. Papillon (3) is an authority for the proposition that an action commenced by an alien in peace cannot be continued by him in war, and

 

(1) 1 C. Rob. 196, 198.

 

(2) [1916] 2 A. C. 307, 347.

 

(3) 4 East, 502. [*254]

 

that in that respect he is in no better position than one who did not issue his writ until after war broke out, but it does not decide that the authority of an agent is withdrawn in the same circumstances. Tingley v. Müller (1) decided that in certain cases such an appointment continued to be effective since in that instance the Court of Appeal held that, though the respondent was an enemy alien, yet his agent validly appointed in time of peace could transfer to a British subject property owned by him in this country. Assuming, however, that that case was rightly decided, still it depends, as I have indicated, on its special facts and is an exception, as I think, to the general rule. Ordinarily, when the principal becomes an enemy the authority of the agent ceases on the ground that it is not permissible to have intercourse with an enemy alien, and the existence of the relationship of principal and agent necessitates such intercourse. That the representatives, legal or non-legal, of a litigant may require to have such intercourse with their principal in the litigation is, I imagine, clear, and I do not think it is an answer to say that in the event it may not be found necessary for the one to communicate with the other. At any moment the necessity may arise. The very relationship requires it even if it is desired only to terminate the mandate itself.

 

If authority be required for the proposition that the relationship of principal and agent is determined when the parties to the agency agreement become enemies one to the other, it is to be found in Hugh Stevenson & Sons, Ld. v. Aktiengesellschaft für Carton-nagen-Industrie (2). In that case an English company was not only the agent for a German company, but was also its partner, and after the partnership was dissolved by the outbreak of war continued to carry on business with the assistance of assets belonging to the latter. Your Lordships’ House, affirming the decision of the Court of Appeal, and differing from that of the learned judge, held the German company entitled to be credited with a proper sum as remuneration for the use of their property, but a decision that enemy property on land cannot be expropriated in time of war has no bearing on the question of the continuance of the authority of an agent. Both courts below had held the agency determined and the point was not even contested on appeal to your Lordships. It is true that in that instance the agency was a mercantile one, but the prohibition of intercourse with an

 

(1) [1917] 2 Ch. 144.

 

(2) [1918] A. C. 239. [*255]

 

enemy is not confined to trade, and would, therefore, apply to a solicitor, who, at any rate in this country, is the mandatory of his principal for the purposes of litigation. This view is in accordance with that expressed by Scrutton L.J. in Tingley v. Müller (1), and by Lord Sumner in Rodriguez v. Speyer Brothers (2). If the majority of the Court of Appeal took a contrary view in the former case, with all due respect I am unable to accept their conclusions. Lord Sumner’s opinion is not, I think, controverted in this respect by the views of the majority of their Lordships who sat to hear the appeal, nor is it contrary to the grounds on which their decision was reached. I would allow the appeal.

 

Appeal allowed.

 

(1) [1917] 2 Ch. 144, 177.

 

(2) [1919] A. C. 59, 130.