found in practice or theory a reasonable and just basis for such freedom of action.1

Numerous conventions concluded within the one hundred and twenty-five years prior to The World War have announced the acceptance by the transferee of concessions and contracts granted or undertaken by the transferor.2 These instances have recorded a trend of practice distinctly favorable to the contention that a sense of obligation has induced such action. Probably the reason impelling even a conqueror so to burden itself in a treaty of peace has been the belief that the public interests of the territory transferred would be thereby benefited rather than harmed, and that rights analogous to those of private property would likewise be respected. There does not, however, appear to have been habitual

1 One aspect of American procedure may here be observed. In construing the relevant Acts of Congress (the Act of Mar. 3, 1887, Ch. 359; 24 Stat. 505), the Supreme Court of the United States has declared that the Court of Claims is without jurisdiction in cases where the liability of the United States on a contract entered into by its predecessor as sovereign over territory transferred is asserted by a claimant as a result of an express provision of an assumption contained in a treaty, or is sought to be enforced as a necessary consequence of the cession made by a treaty. The latter tribunal is deemed, however, to possess jurisdiction of claims based on contracts originally made with the former sovereign of the ceded territory, and assumed by the United States after the transfer, either expressly or by implication. Eastern Extension, Australasia and China Telegraph Co., Ltd. v. United States, 231 U. S. 326, reversing 48 Ct. Cls. 33. Declared Mr. Justice Hughes in the course of the unanimous opinion of the court: "But, if the claim of the appellant were deemed to rest exclusively upon the transfer of sovereignty, upon the theory that thereby under the principles of international law an obligation in its favor was imposed upon the United States, the claim would still, in our judgment, be excluded by the statute from the consideration of the court below." (333.)

In the course of the opinion of the lower court it was declared by Chief Justice Peelle that "when the United States succeeded to the sovereignty of Spain over the [Philippine] islands they were under no more obligation to continue the contracts for public or private service of individuals or corporations than they were to continue in office officials appointed by the Spanish Government." 48 Ct. Cl. 33, 45. Inasmuch as that tribunal lacked and did not seek to exercise jurisdiction to adjudicate on the question as to the effect of the change of sovereignty produced by the treaty of cession, the language quoted may be regarded as merely a dictum.

See also Eastern Extension, Australasia & China Telegraph Company, Ltd. v. United States, 251 U. S. 355, 362.

Concerning the inability of a British court to determine the effect of annexation of territory by Great Britain upon concessions granted by the prior sovereign, see Cook v. Sprigg (1899), A. C. 572; Moore, Dig., I, 410.

2 See group of treaties from that of Campo Formio of October, 1797, to that of Constantinople of Sept. 16 (29), 1913, contained in Coleman Phillipson, Termination of War and Treaties of Peace, 326-330; also collection in Moore, Dig., I, 385-387. Also see discussion in A. B. Keith, Theory of State Succession, 66-72; A. S. Hershey, in Am. J., V, 285, 294-296; E. M. Borchard, Diplomatic Protection, 883; West Rand Central Gold Mining Co. v. the King (1905), 2 K. B. 391; Am. J., I, 217.

After the Spanish-American War in 1898, the American peace commissioners at Paris rejected certain Articles tendered by the Spanish commis

recognition by treaty or otherwise of any duty to accept and maintain contractual obligations regarded by the new sovereign as certainly detrimental to the territory transferred. Practice has thus indicated soundly although roughly the basis of a useful distinction. Without attempting classification of the situations in which a contract has been regarded as locally detrimental, attention is called to the significance of various pleas by which a new sovereign may urge that an agreement possesses such a character.1

sioners in respect to contracts entered into for public works and services. They did so for the reason that the "extent and binding obligation of these contracts are unknown", at the same time disclaiming any purpose of the Government "to disregard the obligations of international law in respect to such contracts as investigation may show to be valid and binding upon the United States as successor in sovereignty in the ceded territory." Senate Doc. 62, 55 Cong., 3 Sess., Part II, 240, 241, 262, Moore, Dig., I, 389-390.,

The treaty of peace with Germany of June 28, 1919, sheds little light on the solution of the general problem, doubtless because of the circumstance that contracts and concessions granted by German authority within and with respect to territory ceded by Germany, were almost entirely held by nationals of Germany, or possibly by those of its allies in the war. Thus the provisions of that treaty permitting the Allied and Associated Powers to retain and liquidate the interests, rights and properties of German nationals within territories detached by cession, served to place those powers in the position of obligees as well as obligors, according to their election. Art. 297 (b); also Section 2 of Annex following Art. 303. It may be observed that Germany also, by Art. 258, renounced all rights of its own or its nationals by virtue of any agreement, to representation upon or participation in the control or administration of commissions, State banks, agencies or other financial or economic organizations of an international character, exercising powers of control or administration, and operating in any of the States of its enemies or in Austria, Hungary, Bulgaria or Turkey, or in the dependencies of those States, or in the former Russian Empire. Moreover, by Art. 260, Germany undertook, upon the demand of the Reparation Commission, to possess itself of any rights and interests of German nationals in any public utility undertaking or in any concession operating in Russia, China, Turkey, Austria, Hungary and Bulgaria, or in the possessions or dependencies of those States or in any territory formerly belonging to Germany or its allies to be ceded by it or them to any Power, or to be administered by a Mandatory under the Treaty, and within six months of such demand to transfer such rights and interests to the Reparation Commission. Provision was also made in the same Article for German indemnification of German nationals thus dispossessed, and for crediting Germany on account of sums due by it for reparation with the value of what might be transferred to the Commission. See also Arts. 211 and 212 of the treaty of peace with Austria, of Sept. 10, 1919.

1 Numerous treaties of the nineteenth century containing provision for the maintenance of contracts and concessions of the old sovereign have made clear the design to confine the obligation of the transferee to bear burdens deemed beneficial to the territory concerned, by referring to the arrangements to be respected as those contracted for the "public interests" of what was ceded. See, for example, Art. VIII of the Treaty of Zurich of Nov. 10, 1859, Brit. and For. State Pap., XLIX, 366; Moore, Dig., I, 385. The numerous provisions for the maintenance of contracts relating to railroads seem to confirm the opinion that the construction and operation thereof is not to be regarded as other than beneficial to the territory which they traverse. Cf., for example, Art. XVI, treaty between Turkey and Bulgaria Sept. 16 (29), 1913, Am. J., VIII, Supp. 27, 35; Coleman Phillipson, Termination of War and Treaties of Peace, 440, 445.

A contract or concession may be deemed adverse to the territory transferred because of the purposes of the undertaking, or by reason of the terms of the agreement, or on account of the method by which performance is contemplated. On any one of these grounds the new sovereign may differ from the opinion entertained by its predecessor in a given case. The reasonableness of such a difference may not, however, suffice to indicate the existence or scope of the duty to be imposed upon the transferee. If the detriment to the territory concerned is to permit the transferee as a successor to the contract to enjoy complete freedom of action in the matter of cancellation, it must be due to the fact that the very nature of the agreement is such as to forbid the conclusion that it could be reasonably deemed beneficial if a change of sovereignty took place. The detrimental aspect of the contract must be an obvious and certain result of the change of sovereignty. In such case it is not unjust to charge the concessionaire with anticipation of the character which his concession would necessarily assume upon a transfer of the territory, and, therefore, with contemplation of the natural and logical attitude of any transferee. On the other hand, if the detriment to the territory is one attributable solely to the special public policy of the particular transferee, in contrast to that of the transferor, rather than to the failure of the latter to retain its sovereignty or to a circumstance indissolubly connected with the change thereof, the situation is otherwise.

The application of the foregoing distinction is easily illustrated. A contract the object of which is to frustrate or impede the attempt by force or otherwise to effect the change of sovereignty which actually results, is one which must be regarded as hostile to the territory transferred as soon as that change takes place. Doubtless other classes of agreements may be fairly placed in the same category.

A concession for a purpose distinctly beneficial to the territory transferred may have been lawfully granted on terms which in the judgment of the new sovereign appear to have been unduly advantageous to the concessionaire and correspondingly burdensome to

1 "In this last case, however [respecting the cancellation or modification of a concession deemed injurious to the public interest], the question of compensation arises, inasmuch as it would be inequitable that a concessionaire should lose without compensation a right duly acquired, and whose conditions he had duly fulfilled, because the new government differed from the old in its view as to what was, or was not, injurious to public interest, even though the opinion of the new government were obviously the true one." Report of Transvaal Concession Commission, Apr. 19, 1901, Blue Book, South Africa, June, 1901 [Cd. 623], 6-8, Moore, Dig., I, 411, 413.

the grantor. This circumstance may encourage the attempt to modify or cancel the arrangement. In such case it may be urged that the new sovereign ought not to be obliged to stand by the bad bargain of its predecessor. It is believed, however, that if the good faith of the concessionaire was beyond question, and the terms of the contract not such as to indicate the perpetration of fraud, any termination of the agreement should still make provision for the existing equities of the concessionaire. Again, a concession for a reasonable purpose may have assumed the form of a monopoly which in the estimation of the new sovereign is essentially adverse to the economic interests of the territory concerned. In such case the divergence of opinion as to the propriety of the means of accomplishing what the concession was designed to achieve, ought not to justify cancellation save on terms responsive to the equities of the concessionaire.1 Doubtless in every case the reality and extent of those equities should be judged by the actual or constructive knowledge of the concessionaire at the time when he acquired the concession, with respect to the precariousness of his venture if a change of sovereignty should occur.2

In the formulation of any general scheme indicative of a mode

1 Declared Mr. Griggs, Attorney-General, in an opinion of June 15, 1899, with respect to concessions for the operation of submarine cables: "The mere fact that the Western Union Telegraph Co. is enjoying, under a grant of exclusive right, what amounts to a monopoly is no reason of itself why it should be deprived of its concession. It is easy to say that monopolies are odious, but there are concessions which amount to monopolies which are lawful and cannot be disturbed except by a violation of public faith. . . The granting of such concessions and their operation have, in many instances, been of great advantage to commerce and to the countries from which the concessions were derived. Concessions of this kind, which carry with them exclusive rights for a period of years, constitute property of which the concessionary can no more be deprived arbitrarily and without lawful reason than it can be deprived of its personal tangible assets. In a case in the Supreme Court of the United States, 1 Wall. 352, Mr. Justice Field said: "The United States have desired to act as a great Nation, not seeking, in extending their authority over the ceded country, to enforce forfeitures, but to afford protection and security to all just rights which could have been claimed from the Government they superseded." If, therefore, the Western Union Telegraph Co. has an exclusive grant applicable to Cuba for cable rights, which grant has not expired, it would be violative of all principles of justice to destroy its exclusive right by granting competing privileges to another company.' 22 Ops. Attys.-Gen., 514, 516, 518; Moore, Dig., I, 409–410. See, also, opinion of law officer, Division of Insular Affairs, War Department, concerning the concession to canalize the Matadero River from the Cristina Bridge to the Bay of Atares, Magoon's Reports, 571. Also decision by the Swiss Federal Court concerning the duty of a succeeding State to recognize the concessions granted by its predecessors, published in Am. J. Int. L., I, 235 (translated from Zeitschrift für Völkerrecht und Bundesstaatsrecht (1906); also opinion of Prof. Max Huber on the case, id., I, 245 (translated from id.).

2 This idea is emphasized in the Report of the Transvaal Concession Commission above cited.

of determining the nature of concessions to be regarded as detrimental rather than beneficial to territory transferred, it is believed that care should be taken to permit no presumptions of a hostile or injurious purpose to be derived from or attributed to circumstances equally capable of sustaining an opposing inference.1

Inasmuch as there seems to be a solid foundation for the claim that a new sovereign should maintain and respect the locally beneficial contracts and concessions of its predecessor, and should oftentimes heed the equities of adverse parties, even when the arrangements are deemed in certain respects locally detrimental and subject to modification or cancellation, there is much reason why the treaty recording the transfer of sovereignty should specify the course to be followed. In order to safeguard the rights of all concerned, it should make announcement of the particular concessions to be maintained, or of the nature of those to be respected, or of the principle to be observed in effecting cancellation or modification.2

Rights of private property validly created remain unaffected by a change of sovereignty over the territory to which they may be said to belong. Declared Chief Justice Marshall in the case of the United States v. Percheman :

1 See, in this connection, the argument of Mr. Griggs, Attorney-General, in his opinion in the case of the Manila Railway Co., 23 Ops. Attys.-Gen., 181, Moore, Dig., I, 395.

A concession not unbeneficial to the territory transferred may involve consecutive payments by the original grantor which at the time of transfer was insolvent, and against which, therefore, the claims of the concessionaire for compensation pursuant to the contract were at that time of slight value. In such case it may be fairly contended that the new sovereign may set up in excuse for non-payment or partial payment, the disability of its predecessor, and in any scheme of rehabilitating the finances of the territory, may demand that its liability as transferee and as successor to the contract be measured by the actual power of the old sovereign to satisfy its obligation at the time of transfer. See, in this connection, E. M. Borchard, Diplomatic Protection, § 83.

In his paper entitled "Change of Sovereignty and Concessions", Am. J., XII, 705, 742-743, Prof. Francis B. Sayre expresses opinion that concessions, to be binding, must have been granted with a view to the general improvement or benefit of the locus ceded, and states that such a theory is the peculiar contribution of America.

2 Thus, in the convention with Denmark of Aug. 4, 1916, for the cession of the Danish West Indies, the United States agreed to maintain nine specified grants, concessions and licenses, given by the Danish Government, in accordance with the terms on which they had been granted. Art. III, U. S. Treaty Series, No. 629; Am. J., XI, Supp. 53, 55. Denmark guaranteed that the cession was free and unencumbered by any reservations, privileges, franchises, grants or possessions other than were mentioned in the treaty. Art. II.