§ 278. Anglo-American Law.

In Anglo-American law no such theoretical conflicts as have prevailed in continental law appear to have found a place. The conception of domicil with respect to corporations has been applied in cases of taxation and of belligerent rights and for these purposes, the seat of the corporation has on occasion been considered the place where the business is carried on.1 For other purposes, the question of domicil and nationality is decided by practical considerations, the most important of which is the place of incorporation.

In the United States the citizenship of corporations is judged almost exclusively according to the place of incorporation, which involves, in most municipal cases, the determination of state citizenship. Only thirteen states even require residence on the part of any of the incorporators and only six require state citizenship. New York appears to be the only state demanding United States citizenship. While the courts have made numerous distinctions between natural persons and corporations in the matter of citizenship, they have held a corporation to be a citizen for the purposes of suit under the federal constitution,2 and under the Act to provide for the adjudication and payment of claims arising from Indian depredations.3 The Supreme shall be deemed the place of its incorporation, 22nd Report (1905), p. 250. This substitution of place of incorporation for siège social was also recommended by Judge Neukampf in the Verhandlungen der ersten Hauptversammlung der Int. Ver. f. vergl., Rechtswissenschaft at Heidelberg, Sept., 1911, Berlin, 1912, 203-226 and discussion 227-232.

The legislative system of the various countries is outlined in Isay, op. cit., 214-224, and is discussed in the other works cited in note 1 (supra, p. 617).

See the award of the Hague Court of Arbitration in Canevaro (Italy) v. Peru, April 25, 1910, 6 A. J. I. L. (1912), 746, and Boeck in 20 R. G. D. I. P. (1913), 349 et seq.

1 Foote, op. cit., 3rd ed., 143; Martine v. Int. Life Ins. Soc., 53 N. Y. 339 (a British insurance company with a permanent agency in New York and doing business there, was considered domiciled in New York, for belligerent purposes). Recent decisions in Great Britain have confirmed the rule that for purposes of suit the nationality of a corporation is that of the place of incorporation, regardless of the nationality of the stockholders. Continental Tyre and Rubber Co. v. Daimler [1915], 1 K. B. 893 (alien enemy stockholders in British corporation). See criticism by J. E. Hogg in 31 Law Quar. Rev. (1915), 170-172.

2 Muller v. Dows, 94 U. S. 444.

3 United States v. Northwestern Express Co., 164 U. S. 686 (Act of March 3, 1891).

Court, moreover, has held that for jurisdictional purposes there is a conclusive presumption of law that the persons composing the corporation are citizens of the same state with the corporation,1 and "although an artificial person," a corporation is "to be considered as a citizen of the state as much as a natural person."

While it has been held that a corporation could be an alien enemy as well as an individual, it has not been definitely established whether the place of incorporation governs enemy character, or whether this is determined according to each place where the corporation has a branch and does business. In earlier cases, the place of actual business has been held to control;2 more recently, however, it has been held in England that the place of incorporation and registration, and not the place of operation governs.3 The British proclamation of September 9, 1914, in regard to trading with the enemy, provides that in the case of incorporated bodies, enemy character attaches only to those incorporated in an enemy country. On the other hand, for the purposes of the effect of war on patents, designs and trade-marks, a British corporation controlled by or carried on wholly or mainly for the benefit of subjects of an enemy state, was to be deemed an alien enemy. § 279. Diplomatic Protection of American Corporations. Conditions.

In the matter of diplomatic protection, the United States and Great Britain 5 have considered themselves entitled to interpose in behalf of a corporation incorporated under its laws or those of a constituent state, on the theory that the company is clothed with the 1 Louisville, etc., Railroad v. Letson, 2 How. 497, 558; St. Louis and San Francisco Ry. Co. v. James, 161 U. S. 545, 562.

2 Martine v. Int. Life Ins. Soc., 53 N. Y. 339.

3 Nigel Gold Mining Co. v. Hoade, 70 L. J., K. B. 1006 [1901], 2 K. B. 849. The note in 15 Harvard Law Rev. 237 on this case is most confusing. Continental Tyre and Rubber Co. v. Daimler [1915], 1 K. B. 893. In support of the place of incorporation as the test see the Pedro and the Guido, 175 U. S. 354 and 382; Robinson Gold Min. Co. v. Alliance Ins. Co. [1901], 2 K. B. 919, and the following prize cases: The Manchuria, Russian and Japanese Prize Cases, II, 52; The Tommi, L. R. [1914], Probate, 251; The Roumanian, L. R. [1915], Probate, 26. See also Russell T. Mount in 15 Columbia L. Rev. (1915), 332–333.

4 Moore's Dig. VI, § 984. Mr. Knox, Sec'y of State, to Mr. Arnold, Apr. 25, 1910, For. Rel., 1910, 197.

5 Lord Palmerston to Mr. Drouey, President of the Swiss Confederation, October 16, 1859, reprinted in For. Rel., 1873, II, 1348.

nationality of its creator, regardless of the citizenship of the bondholders or stockholders.1 General claims conventions concluded by the United States usually provide for the adjudication of "all claims on the part of corporations, companies or private individuals, citizens of the United States," or the other claimant government. Even where the protocol was confined to "citizens" or "subjects," it has been held by arbitral commissions to include corporations duly organized under the laws of the claimant government.2

While American incorporation, therefore, affords a prima facie title to American protection, no hard and fast rules governing protection can be laid down. The Department of State, in the exercise of its discretion, requires evidence of the substantial American interest in a corporation before protection is authorized. Thus the Department uniformly requires the party in interest to place on file a properly certified copy of the charter or articles of incorporation, together with a duly executed instrument setting forth the ownership-legal or equitable of the stock and bonds of the corporation, including such a statement of the nationality of the holders as will show in whom the greater part of the real beneficial interest lies. Complete American ownership of the stock or bonds is by no means required. When there is reason to believe that American incorporation was sought merely for the purpose of securing American protection for what is in fact a foreign-owned enterprise, the Department is loath to extend its protection to the corporate entity. Such protection has been refused in cases where the incorporators were all aliens or where the majority of the stock was owned by nationals of the country against which protection was sought, or where the corporation has not been considered to represent sufficient American interests.3 In a case where four-fifths 1 Chauncey (U. S.) v. Chile, Case No. 4, May 24, 1897, U. S. and Chilean Comm. Rep., 1901, 22; For. Rel. 1910, 197.

2 Stirling (Gt. Brit.) v. Chile, No. 4, Sept. 26, 1893, Reclamaciones pres. al Trib. Anglo-Chileno, I, 128, 152, dissenting opinion by Commissioner Aldunate, ibid. 163– 187; Rosario Nitrate Co., Ltd. (Gt. Brit.), v. Chile, ibid. I, 306, 338; Comp. Consig. du Guano (France) v. Chile, Award July 5, 1901, Descamps and Renault, Rec. int. des traités, 1901, p. 367. See also U. S. v. Northwestern Express Co., 164 U. S. 686; Dictum contra by Deemer, J., in Scottish U. and N. Co. v. Herriott (1899), 109 Iowa, 606, 617.

Mr. Adee to Consul Bergholz, Oct. 12, 1909, For. Rel., 1909, 67. See also

of the American-owned stock in an American corporation had, after the origin of the claim, passed into foreign hands, it was considered within the discretion of the Secretary of State to divide the claim and prosecute to satisfactory adjustment only the bona fide American interest in the claim.

Again, while a duly organized American corporation is subject to American consular jurisdiction in China and is entitled to registration as such, this does not necessarily imply that the corporation is entit entitled to the diplomatic protection of the United States.1

§ 280. Foreign Corporation Substantially Owned by American Citizens. In the obverse case, a foreign corporation will not be denied protection, if a substantial interest in the corporation is owned by American citizens. Here again, it is impossible to lay down a rule as to the proportion of stock which must be owned by American citizens. The Department in the exercise of its discretion will look behind the corporate entity to determine the nationality of the real parties in interest. While there are many reasons in legal theory for declining to protect an American stockholder in a foreign corporation, so long as the corporation is a going concern-and the United States has, at times, on palpably valid legal grounds declined its protection in such cases, the government has on numerous occasions intervened on behalf of foreign corporations when it appeared that a substantial proportion of the stock was owned by American citizens. In this practice, it has apparently been sustained by arbitral decisions.4

3

In the case of a large American stock-holding interest in a foreign corporation doing business in a third country, the Department has ibid. 65. See also Leval, G. de, La protection diplomatique, Bruxelles, 1907, §§ 40-41.

1 Mr. Knox, Sec'y of State, to Consul Arnold, Apr. 25, 1910, For. Rel., 1910, 198. 2 E. g., in the celebrated Antioquia case, Moore's Dig. VI, 644–646.

3 See cases in Moore's Dig. III, 647-651; Orinoco S. S. Co. (U. S.) v. Venezuela, Sen. Doc. 413, 60th Cong., 1st sess., 71.

In McMurdo v. Portugal, June 13, 1891, Moore's Arb. 1865 et seq., For Rel., 1900, 903; in El Triunfo (Salvador Commercial Co.) v. Salvador, Dec. 19, 1901, For. Rel., 1902, 862-873 and in Alsop v. Chile, Dec. 1, 1909, Award July 5, 1911, p. 9. The protocol may be considered an authorization for these decisions. See von Bar's comments in his opinion on the Salvador Commercial Co. case published in 45 Jhering's Jahrbücher (1903), 161, 192.

occasionally instructed the American minister in the third country to use his informal good offices on behalf of the American interest by supporting the representations of the diplomatic representative of the country in which the company had been incorporated. Good offices are in fact frequently employed directly against a foreign government, the incorporator of a company in which an American citizen is a substantial stockholder.1 Protection has been refused as against such a government when three-fourths of the stock appeared to be owned by citizens of that government. Protection has also been refused to an American corporation, owning the bulk of the stock of a Mexican corporation, in the interest of a vessel of the Mexican corporation flying the Mexican flag.

§ 281. Rule of International Tribunals.

International tribunals which have passed upon the matter have held in many cases that the nationality of the corporation and not of its stockholders governs the jurisdiction of the commission.2 On the other hand, citizens of the claimant government, stockholders 4 or representing as liquidator a solvent corporation formed under

3

1 Good offices have been employed on behalf of subsidiaries of great American corporations, the subsidiaries being incorporated and domiciled in foreign countries. See also 27th Rep. Int. Law Asso. (1912), 379, paper of Mr. Jacobi.

2 Comp. Gén. des Eaux (Belgium) v. Venezuela, March 7, 1903, Ralston, 271, 276; Narcisa Sugar Co. v. U. S., No. 139, Span. Tr. Cl. Com., Briefs and Explanatory notes, v. XXIV, 167.

In two cases coming before a Commission to consider the claims of "British subjects" upon France, it was held that a corporation organized by British subjects in France, and under the control of France, was a "French establishment" and not within the meaning of the term "British subjects." Daniel v. Commissioners for Claims on France, 2 Knapp's P. C. Rep. 23, and Long v. Commissioners, 2 ibid. 51. In the first case, the corporation was formed for objects not permitted by British law, although this did not affect the legal point above mentioned. Nor were British subjects, as individuals, allowed to recover for injuries to the corporate property. See Phillimore, 2nd ed., III, § 578, p. 859; Baasch and Römer (Netherlands) v. Venezuela, Feb. 28, 1902, Ralston, 906 (the claim of Dutch stockholders in a Venezuelan corporation, which sustained the damage, denied). See also Henriquez (Netherlands) v. Venezuela, ibid. 910; Brewer, Moller and Co. (Germany) v. Venezuela, Feb. 13, May 7, 1903, Ralston, 595, 597 (claim of a German partner in a Venezuelan corporation, which sustained injury, denied). See also Accessory Transit Co. (U. S.) v. Costa Rica, July 2, 1860, Moore's Arb. 1560.

♦ Chauncey (U. S.) v. Chile, No. 3, May 24, 1897, Report of Commission 1901, 19,