COUR PERMANENTE DE JUSTICE INTERNATIONALE

SÉRIE AIB
ARRETS, ORDONNANCES ET AVIS CONSULTATIFS

FASCICULE N° 77

COMPAGNIE D'ÉLECTRICITÉ
DE SOFIA ET DE BULGARIE

(EXCEPTION PRÉLIMINAIRE)

ARRÊT DU 4 AVRIL 1939

1939

JUDGMENT OF APRIL 4th, 1939

PERMANENT COURT OF INTERNATIONAL JUSTICE

SERIES A./B.
JUDGMENTS, ORDERS AND ADVISORY OPINIONS

FASCICULE No. 77

THE ELECTRICITY COMPANY
OF SOFIA.AND BULGARIA

(PRELIMINARY OBJECTION)

SOCIETE D’EDITIONS A. W. SIJTHOFE’S

LEYDE LEYDEN
A. W. SIJTHOFF PUBLISHING COMPANY
64
PERMANENT COURT OF INTERNATIONAL JUSTICE

1939-
April 4th.
JUDICIAL YEAR 1930. General List:

No. 78.
April 4th, 1939.

[Tvanslation. |

THE ELECTRICITY COMPANY
OF SOFIA AND BULGARIA

(PRELIMINARY OBJECTION)

Two grounds of jurisdiction : the Treaty of conciliation, avbitration
‘and judicial “‘setilement of June 23rd, 1931, between Belgium and
Bulgaria ; the Declarations of Belgium and Bulgaria recognizing
the compulsory jurisdiction of the Court. Examination of the prelim-
inary objection with reference to each of these two grounds of
juvisdiction. Objections raised to the jurisdiction of the Court under
the Treaty: the argument ratione materiæ ; the local remedies rule.
Objections raised to the jurisdiction of the Court under the Declar-
ations : the limitation ratione temporis ; the limitation ratione mate-
riæ.—Inadmissibility of one part of the Applicani’s. claims, because
the existence of a dispute prior to the filing of the Application has

not been established.

JUDGMENT.

Present : M. GUERRERO, President ; Sir CECIL Hurst, Vice-Presi-
dent; Count RosTworoWsKI, MM. FROMAGEOT, ALTA-
MIRA, ANZILOTTI, URRUTIA, Jhr. vaAN EYsINGA,
MM. Nacaoka, CHENG, Hupson, DE VISSCHER, ERICH,
judges ; M. PAPAZOFF, Judge ad hoc.
4.
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 65

In the case of the Electricity Company of Sofia and Bul-
garia,

between

the Government of the Kingdom of Belgium, represented by
M. J. G. de Ruelle, as Agent, |

and

the Government of the Kingdom of Bulgaria, represented by
M. Ivan Altinoff, as Agent,

The Court,
composed as above,

delivers the following judgment :

By an Application filed with the Registry of the Court on
January 26th, 1938, under Article 40 of the Statute of the
Court, the Belgian Government instituted proceedings before the
Court against the Bulgarian Government.

In submitting the case to the Court the Applicant relied upon : ,

(1) the declarations of Belgium and Bulgaria recognizing the!
jurisdiction of the Court as compulsory, declarations which
were respectively ratified on March roth, 1926, and August 12th, :
1921 ;

(2) the Treaty of conciliation, arbitration and judicial settle-’
ment concluded between the two countries on June 23rd, 1931.

After a succinct statement of the facts and arguments adduced
in support of the claim, the Application prayed the Court:

“(A) to declare that the State of Bulgaria has failed in its inter-
national obligations:

{1) by reason of the fact that the State Administration of
Mines, on November 24th, 1934, put into force a special
artificially calculated tariff for coal supplied to power
stations, in order to enable the Municipality of Sofia to
distort the application of the decisions given by the
Mixed Arbitral Tribunal in 1923 and 1925;

(2) by reason of the above-mentioned judgments of the Dis-

_ trict Court and of the Court of Appeal of Sofia, which

deprived the Electricity Company of Sofia and Bulgaria

of the benefit of the said decisions of the Mixed Arbitral
Tribunal

(a) by allowing the fictitious value fixed by the Adminis-
tration. of Mines to be used for the calculation of
the factor ‘P’ in the formula for determining the tariff,

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A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 66

(b) by deciding that the factor ‘r’ should be calculated
on the basis of the official rate of exchange decreed
by the National Bank of Bulgaria and not on the
basis of the rate of exchange actually applied by
that Bank for the conversion of Bulgarian currency
into foreign currency,

(c) by deciding that the Company could no longer
require its consumers to pay the amount of the excise
duty, |

(d) by deciding that the Company could not put any tariff
into operation before having obtained the formal
agreement of the Municipality ;

(3) by reason of the promulgation of the law of February 3rd,
1936, Article 30, paragraph C, of which establishes
a special tax on the distribution of electric power pur-
chased from undertakings not subject to tax.

(B) and to order the requisite reparation in respect of the above-
mentioned acts to be made.”

On January 26th, 1938, notice of the Application of the Belgian
Government was given to the Bulgarian Government, and on
February Ist the communications provided for in Article 40 of
the Statute and Article 34 of the Rules of Court were duly
despatched. ,

As the Court does not include upon the Bench a judge of Bul-
garian nationality, the Bulgarian Government availed itself of its
right under Article 31 of the Statute and nominated M. Theohar
Papazoff.

The two Governments appointed as their Agents: the Belgian
Government, M. J. G. de Ruelle, assisted by Maître René Marcq
and Maître Henri Rolin, and the Bulgarian Government, M. Ivan
Altinoff, assisted by Maître Gilbert Gidel.

By an Order made on March 28th, 1938, the President of
the Court fixed the time-limits for the filing of the Memorial
by the Belgian Government and of the Counter-Memorial by
the Bulgarian Government.

On July 2nd, 1938, the Belgian Government, in view of cer-
tain measures of execution against the Electricity Company of
Sofia and Bulgaria, announced by the Municipality of Sofia in
default of payment by that Company of a certain sum claimed
from it, requested the Court, under Article 41 of the Statute
and Article 61 of the Rules, to indicate, as an interim measure
of protection, that the compulsory collection by the Municipal-
ity of Sofia of the said sum must be postponed pending the
delivery of judgment on the merits.

- The Court held a hearing on July 13th, 1938, for the examin-
ation of this request, but a communication was received from
the Agent for the Bulgarian Government stating that he could
not be present at the hearing as the notice given was very
short. The Court however heard a statement by the Agent for

6
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 67

the Belgian Government to the effect that his Government would
make no objection to the granting of the necessary time to
the Bulgarian Government. . After deliberation, the Court decided
the same day to adjourn the proceedings in regard to the
request for the indication of interim measures of protection,
in order to enable the Bulgarian Government to prepare its obser-
vations upon that request and, if need be, in regard to the
jurisdiction of the Court; the Agents of the Parties would
be heard by the Court at a public sitting the date of which
would be subsequently fixed by the President.

Following upon a telegram sent on July 27th, 1938, by the
Agent for the Bulgarian Government to the President of the
_ Court, the text of which was duly communicated to the Agent
for the Belgian Government, the latter informed the Court in
a letter of August 26th, 1938, that in view of the statements
contained in this telegram, the Belgian Government withdrew
the request for the indication of an interim measure of pro-
tection presented on July 2nd, 1938.

On August 27th, 1938, the President of the Court made an
Order recording the withdrawal by the Belgian Government of
its request for the indication of an interim measure of pro-
tection and stating that in these circumstances there was no
occasion to fix the public hearing contemplated by the Court’s
decision of July 13th, 1938.

By another Order of the same date, the President extended
until October 31st, 1938, the time-limit for the filing of the
Bulgarian Counter-Memorial which had originally been fixed to
expire on September 12th, 1938. This time-limit, which was
subsequently further extended, finally expired on November 30th,

1938.
In its Memorial, the Belgian Government prayed the Court :

“A.—To declare that the State of Bulgaria has failed in its
international obligations :

(1) By reason of the fact that the State Administration
of Mines, on November 24th, 1934, put into force a special
artificially calculated tariff for coal supplied to power
stations, in order to enable the Municipality of Sofia to
distort the application of the decisions given by the Mixed
Arbitral Tribunal in 1923 and 1925 ;

(2) By reason of the above-mentioned judgments of the
District Court and of the Court of Appeal of Sofia and of
the judgment of the Court of Cassation of March 16th,
1938, which deprived the Electricity Company of Sofia and
Bulgaria of the benefit of the said decisions of the Mixed
Arbitral Tribunal ;

(a) By allowing ‘the fictitious value fixed by the Adminis-
tration of Mines to be used for the calculation of the
factor ‘P’ in the formula for determining the tariff;

7
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 68

(6) By deciding that the factor ‘7’ should be calculated
on the basis of the official rate of exchange decreed by
the National Bank of Bulgaria and not on the basis of the
rate of exchange actually applied by that Bank for the
conversion of Bulgarian currency into foreign currency ;

(c) By deciding that the Company could no longer
‘require its consumers to pay the amount of the excise
duty ;

(d) By deciding that the Company could not put any
tariff into operation before having obtained the formal
agreement of the Municipality;

(3) By reason of the promulgation of the law of Febru-
ary 3rd, 1936, as supplemented by Circular No. 3800 of Febru-
ary 28th, 1936, and the law of April 2nd, 1936, instituting
a special tax on the distribution of electric power purchased
from undertakings not subject to tax.

B.—To order the respondent Party to take all administrative,
legislative or other measures necessary :

1. To reinstate the Electricity Company of Sofia and
Bulgaria in its rights as against both the State of Bulgaria
and the Municipality, also as against any public or private
consumer of current; _

2. To ensure repayment to the Electricity Company of
Sofia and Bulgaria of all undue payments made by it as a
result of the measures complained of and compensation for
any sums due which it has been prevented from collecting
as a result of these measures.

C.—To authorize the Belgian Government to specify the damage
sustained by the Electricity. Company of Sofia and Bulgaria
as a result of the facts set out above.”

On November 25th, 1938, that is to say before the expira-
tion of the time-limit finally fixed for the filing of the Counter-
Memorial, the Agent for the Bulgarian Government filed a
document entitled “Memorial of the Bulgarian Government”
in which, as the conclusion of a preliminary objection to the
jurisdiction, he prayed the Court:

“To declare that it has no jurisdiction to entertain the Appli
cation filed by the Belgian Government on January 26th, 1938.

To dismiss all the claims, pleas and submissions of the Bel-
gian Government.”

The proceedings on the merits having, under. Article 62,
paragraph 3, of the Rules of Court, been suspended by the
filing of the objection, the President of the Court, on Novem-
ber 30th, 1938, made an Order fixing January 25th, 1939,
as the date of expiration of the time allowed to the Belgian
Government for the presentation of a written statement of its

8
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 69

observations and submissions in regard to the objection raised
by the Bulgarian Government.

The Belgian Government’s written statement, entitled ‘‘Addi-
tional Memorial”, was duly filed on January 25th, 1939, and
accordingly on that date the case became ready for hearing
in regard to the objection of the Bulgarian Government.

In this written statement, the Belgian Government prayed
the Court:

“To declare that it has jurisdiction,

To order the respondent Party to plead on the merits and
to fix the time-limits for the further written proceedings.”

In the course of public sittings held on February 27th and
28th, and March ist, 1939, the Court heard:

M. Ivan Altinoff, Agent, and Maitre Gilbert Gidel on behalf
of Bulgaria; and M. J. G. de Ruelle, Agent, and Maitre Henri
Rolin on behalf of Belgium.

The submissions made in the written proceedings were not
amended on either side in the course of the oral proceedings.

Documents in support of their contentions were filed on behalf
of either Party 1.

The above being the state of the proceedings, the Court must
now adjudicate.

The facts are as follows:

A concession for the distribution of electric current for light and
power was granted by the Municipality of Sofia in 1898 to a
French company, the Société des Grands Travaux de Marseille. In
1909 the said French company transferred its rights to the ‘‘Elec-
tricity Company of Sofia and Bulgaria’, a company founded in
Brussels on September 8th, 1908, by a notarial act published
in the Moniteur belge on September 23rd, 1908. The transfer
was approved by the Municipality of Sofia with some modifi-
cations of the original contract, the concession being due to
expire on December 31st, 1040. The rights and obligations of
exploitation are set out in the contract of concession of 1808,
the specification annexed thereto, and the contract of transfer
of 1909.

During the War of 1914-1918, which found Belgium and
Bulgaria on opposite sides, the works of the Belgian Com-
pany were taken over by the Municipality of Sofia on

1 See list in annex.
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 70

September ist, 1916. After the conclusion of peace, the Belgian
Company, under Article 182 of the Treaty of Neuilly of Novem-
ber 27th, 1919, was given the right to restitution of its prop-
erty with an indemnity to be assessed by a Mixed Arbitral —
Tribunal, which was also entrusted with the task .of adapting
the concession contract to the new economic conditions in case
of disagreement between the parties. Consequently, a suit was
instituted by the Company before the Belgo-Bulgarian Mixed
Arbitral Tribunal against the State of Bulgaria and against the
Municipality of Sofia.

On July 5th, 1923, the Belgo-Bulgarian Mixed Arbitral Tri-
bunal gave a first judgment decreeing inter alia the resti-
tution of the Belgian Company’s property and the restoration
of its position as existing before the war, subject to modifica-
tions to be decided by the Mixed Arbitral Tribunal in appli-
cation of Article 182 of the Treaty of Neuilly. Accordingly,
the Mixed Arbitral Tribunal nominated a commission of experts
for the purpose of fixing a flexible tariff--which should take
into account the new economic conditions and future varia-
tions of different elements relevant to the fixing of the sale
price of electric current—such as salaries, the rate of the
lev and its purchasing power—and also for the purpose of
assessing the amount of the indemnity. The experts depo-
sited their report on March 3rd, 1924; with the Mixed Arbitral
Tribunal, which on May 27th, 1925, delivered its final judg-
ment (a clerical error in which was corrected by a judgment
rendered on October 30th, 1925). This judgment, in brief:
(1). dismissed the applicant’s claims against the State of Bul-
garia ; (2) ordered the immediate restitution of the Company’s
property, the payment of a sum of 9,000,000 Belgian francs
by the Municipality ef Sofia to the Company, the prolongation
of the concession to December 31st, 1960, and the acceptance
of the formula arrived at by the experts for fixing the selling

price.

' The application of the formula, which is composed of different
factors, such as “‘P’’ (price of coal), ‘‘t’’ (cost of transport),
“r’ (rate of exchange), ““‘S’’ (salaries), ‘‘x’’ (taxation), appears
to have encountered no serious difficulties until the last quarter
of 1934, when a controversy arose in regard to the value to
be assigned to the factor “P”..

On October 6th, 1934, the Electricity Company communic-
ated to the Municipality as usual the data for the deter-
mination of the tariff for the fourth quarter of 1934. The
value attributed to the term ‘‘P” therein was 330 leva. The
Municipality requested that the documents in support of the
figures should be furnished.

On October 24th, 1934, the State Mines Administration
delivered to the Electricity Company a certificate indicating

10
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 71

that the price of second quality coal was 360 leva per ton
for the “first zone”. This certificate was forwarded by the
Electricity Company on November 15th, 1934, to the Muni-
cipality, which informed the Company on November 2oth that
it could not accept the certificate supplied by the Mines Admin-
istration on October 24th, 1934, because it related to second
quality coal at that particular time and not to second quality
coal unsorted (tout-venant) as produced in 1925 and as referred
to in the judgment of the Mixed Arbitral Tribunal.

On November 26th, 1934, the Company received from the
State Mines Administration a notice stating that, by a decision
of November 24th of the Board of Directors, the prices of coal
destined for the production of electric current were fixed at a
certain figure. The Electricity Company protested against this
figure, but finally an agreement, with certain reservations, was
reached fixing the tariff for the year 1935 at a certain rate
per kilowatt-hour of current distributed.

After the devaluation of the Belgian franc on April Ist,
1035, the Electricity Company, by a letter addressed to the
Municipality on October 29th of that year, observed that the
introduction of the new rate of exchange in the calculation of
the tariff according to the formula of the Mixed Arbitral Tri-
bunal led to results very near to those agreed on for the
year 1935 and announced its decision to adhere strictly, for
the year 1936, to the judgments of the Mixed Arbitral Tribunal,
pointing out that the term “P’’ should be understood as
applying to the second quality of coal appearing in the price
list at the time when the formula was established.

On December 13th, 1935, the Municipality replied by letter
that the formula contained elements that were inapplicable
and led to absurd results, in that it did not take into con-
sideration the real state of affairs and the economic condition
prevailing in Sofia. No agreement was reached on this issue
and, by letter dated January 31st, 1936, the Municipality
expressed its intention no longer to authorize the Company
to recover from consumers the amount of the excise duty.

A new exchange of letters between the Company and the
Municipality also led to no result.

By a note verbale dated January 28th, 1936, the Belgian
Legation at Sofia proposed to the Bulgarian Minister of Foreign
Affairs the joint submission by the Municipality and the Company
to the Mixed Arbitral Tribunal of the divergences of interpreta-
tion to which the factor “P’” (price of coal) in the formula had
given rise. To this the Bulgarian Ministry for Foreign Affairs, by

2 II
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 72

a note verbale dated February 18th, 1936, replied that the
Municipality and the Ministry of Agriculture could not accept
this proposal. The note verbale added that the Mixed Arbitral
Tribunal no longer existed and could not be revived, and that
the Municipality had therefore seen fit to have recourse to
the only tribunal competent to adjudicate in the matter,
namely the Regional Court of Sofia.

The Company having seized the Mixed Arbitral Tribunal
the Council of the League of Nations, in application of provisions
in the Treaty of Neuilly, appointed a substitute in the place of
- the Bulgarian arbitrator on the Mixed Arbitral Tribunal. Tha
Tribunal rendered a judgment on December 20th, 1936, declar-
ing the claim of the Company inadmissible, either as a request
concerning the interpretation of the original award, because the
time-limit for this had expired, or as a request for execution,
because the latter was a question exclusively for the two
Governments.

Meanwhile, as had already been stated, the Municipality had
instituted a suit against. the Company before the Regional
Court of Sofia for the determination of the rights and obliga-
tions in respect of the sale price of electric current. In this
suit the Municipality also claimed that the Company had no
tight to collect either from the subscribers or from the Muni-
cipality the price of the current consumed calculated according
to the formula of the arbitral judgment until the price in
question had been approved by the Municipality, according to
Article 21 of the contract specification. It further asked for
the appointment of experts to establish the real value of the
factors “P’’ (price of coal) and “x” (taxation) and, thereby,
the legal sale price per kilowatt- hour.

In its defence the Company contested both the jurisdiction
of the Regional Court and the admissibility of the suit; alter-
natively, on the merits, it requested that, in case the Court
should order an expert enquiry as to the terms “P” (price of
coal) and ‘‘x’”’ (taxation), it should have the terms ‘‘S’’ (salaries)
and “‘r”’ (exchange) likewise examined.

The Regional Court, in its decision of October 24th, 1936,
on the merits, found in favour of the Municipality as regards
the interpretation of the terms “P” (price of coal) and “r’”
(exchange) and, to a certain extent, in favour of the Company
as regards the interpretation of the term “x” (taxation).

Both parties appealed to the Sofia Court of Appeal which
by its judgment of March 27th, 1937, confirmed that part of
the judgment of the Regional Court which was in favour of
the Municipality and reversed that part which. was in favour :
of the Company. An appeal against this judgment was made
by the Company on June 23rd, 1937, to the Court of Cassation.

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A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 73

In the meantime a new income tax law dated January 24th,
1936, was promulgated on February 3rd of the same year by
the Bulgarian Government. Article 30 of this law created a
different rate of taxation as between electricity companies
producing electric current themselves and those purchasing it
from undertakings not subject to taxation; the Article was
subsequently defined, in respect of Municipalities, by a circular
published in the Official Journal of March 4th, 1936, and
modified, in respect of State mines and hydraulic syndicates,
by a law dated April znd, 1936, published in the Official
Journal of April 16th, 1936.

On May rèêth, 1936, the Company wrote to the Bulgarian
Minister of Finance, saying that there was an error in the
estimation of the tax referred to in Article 30 (b) of the Income
Tax Law dated January 24th, 1936, and promulgated on
February 3rd of the same year, and requested him to verify
the accuracy of the figures submitted by it and to make the
corresponding corrections in the said Article.

On April 22nd, 1937, the Belgian Minister at Sofia, in a
letter to the Bulgarian President of the Council and Minister
for Foreign Affairs and Public Worship, complained of the
attitude of the Mayor of Sofia in invoking the judgment of
the Court of Appeal, against which the Company had decided
to appeal to the Court of Cassation, adding that ‘‘the Electri-
city Company has never ceased to declare that it will comply
with any judgment by the Bulgarian courts which, after the
exhaustion of all the remedies provided for in the proceedings,
shall have’ acquired the effect of a final yudgment’’, and that
“the recent judgment of the Court of Appeal has no executory force,
because the action brought against the Electricity Company by
the Mayor was for the purpose of determining facts (constatatoire)
and not for the purpose of securing a conviction (condamnatotre)”’.

On June 24th, 1937, the Belgian Minister at Sofia, in a
letter to the Bulgarian President of the Council and Minister
for Foreign Affairs and Public Worship, referred to the dispute
between the Municipality and the Company as one resulting
from the intervention of “certain administrative.and judicial author-
ities of the Bulgarian State”. The Belgian Minister expressed the view
that the decision of the Court of Appeal of Sofia on March 27th,
1937, had disregarded the rights of the Company as defined by
the Belgo-Bulgarian Mixed Arbitral Tribunal in its judgments of
July 5th, 1923, and May 27th, 1925. In these circumstances the
Minister intimated that the dispute in question was one which,
according to Articles 4 and 6 of the Treaty of conciliation,
arbitration and judicial settlement entered into between Bulgaria
and Belgium on June 23rd, 1931, might be unilaterally submitted
to the Permanent Court of International Justice ‘(à la clause de
compétence obligatoire de laquelle la Bulgarie, a, d'autre part, adhéré

13
i

i
H

A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 74

Ze 21 août 1921)”, unless an agreement was reached to submit
it to arbitration. He therefore proposed to the Bulgarian Govern-
ment that the case should be referred to the Permanent Court
of International Justice by means of a special agreement and
added that, if no agreement on the terms of this special agree-
ment could be reached in two months, the Belgian Government,
availing itself of its rights, would bring the case before the
Permanent Court of International Justice unilaterally by appli-
cation.

In a letter of July 30th, 1937, addressed to the President of the
Council and Minister for Foreign Affairs and Public Worship, the
Belgian Minister in Sofia repeated and confirmed this declaration.

On August 3rd, 1937, the Bulgarian President of the Coun-
cil arid Minister for Foreign Affairs and Public Worship replied
by letter to the Belgian Minister at Sofia that, as in his opinion the
disputes between the Municipality and the Company ‘depend
on the exclusive competence of the Bulgarian tribunals which
have already had occasion to render their decision to this
effect”, the Bulgarian Government. could not agree to a propo-
sition of compromise tending to bring this dispute before
another jurisdiction, and that, ‘in so far as the communication
that, in default of a compromise, the Belgian Government,
basing itself on Articles 4 and 6 of the Treaty of conciliation,
arbitration and judicial settlement between Bulgaria and
Belgium, would lay the case unilaterally before the Permanent
Court of International Justice, is concerned’’, the Bulgarian
Government, by application of Article 3 of that Treaty,
claimed in this case the jurisdiction of its own tribunals and
could not consent to the dispute being submitted to the various
procedures provided in the Treaty. By the same letter the
Bulgarian Government informed the Belgian Government that
Bulgaria denounced the Treaty in accordance with the third
paragraph of Article 37 of that instrument.

On January 26th, 1938, the Belgian Government filed with
the Registry of the Court the Application instituting the present
proceedings.

On March 16th, 1938, the Court of Cassation dismissed the

_ appeal made by the Company on June 23rd, 1937.

These are the facts, undisputed in the present case, having
regard to which the Court is now called upon to adjudicate upon
the preliminary objection raised by the Bulgarian Government.

*
* *

Before considering the preliminary objection upon which the

© Court has to adjudicate, the attitude of the Parties with regard

to the grounds on which they have based their arguments
must be determined.

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A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 75

. In order to found the jurisdiction of the Court, the Belgian
Government, both in its Application and in its Memorial, relies
on the one hand on the Declarations of Belgium and Bulgaria
accepting the compulsory jurisdiction of the Court, Declarations
which were ratified on March roth, 1926, and August 12th,
1921, respectively ; and, on the other hand, on the Treaty of
conciliation, arbitration and judicial settlement of June 23rd,
1931, which came into force on February 4th, 19331.

The Bulgarian Government for its part has also relied on
both of these agreements to support its preliminary objection
to the jurisdiction.

In these written proceedings, the Parties adopted the same
method in their endeavour to establish that their respective
contentions were well founded; that is to say, they examined
the Belgian Application of January 1938 in the light of the
conditions independently laid down by each of these two agree-
ments. Neither the Bulgarian Government nor the Belgian
Government at any time considered the possibility that either
of these agreements might have imposed some restriction on
the normal operation of the other during the’ period for which
they were both in force.

The same attitude was adopted by the Agents of the two
Governments in the oral proceedings. Thus the Agent for the
Belgian Government stated that “either of these two instru-
ments in reality suffices by itself to support our claims, and it
would be most regrettable if the conclusion were reached that
the simultaneous existence of the two instruments weakens our
position”. It is true that one of the Counsel for the Belgian
Government at one.time expressed the personal opinion—which
he subsequently described as a “‘suggestion’’—that “from Febru-
ary 3rd, 1933, the date of the coming into force of the Treaty
of. 1931, until February 3rd, 1938’’, the legal relations between
Belgium and Bulgaria had been governed by the Treaty of
1931 alone. In the afternoon however of the same hearing,
the same Counsel retracted his personal opinion or suggestion
and declared that “the Treaty was only to be regarded as
having suspended the optional clause in so far as it modified
that clause”.

This led the Agent for the Bulgarian Government to take
up a definite position on the point. He proceeded to demons-
trate by numerous arguments that ‘the signature of the Treaty
of conciliation of 193r between Bulgaria and Belgium, which
refers in Article 4 to the disputes enumerated in Article 36 of
the Court’s Statute, in no way suspended the operation of the
optional clause....”’. “On the contrary’, he said, “far from
tacitly abrogating, or at any rate suspending the operation of

me

1 League of Nations Treaty Series, Vol: 137, p. 191.
I5
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 76

the optional clause for the duration of the Treaty, the two
paragraphs of Article 4 simply reinforce and do not set aside
the obligation resulting from the optional clause.”

The Court holds that the suggestions first made by Counsel
for the Belgian Government cannot be regarded as having the
effect of modifying that Party’s attitude in regard to this
question. The Belgian Government in fact has always been
in agreement with the Bulgarian Government in holding that,
when the Application was filed, their declarations accepting
the Court’s jurisdiction as compulsory were still in force.

The Court shares the view of the Parties. In its opinion, the
multiplicity of agreements concluded accepting the compulsory
jurisdiction is evidence that the contracting Parties intended to
open up new ways of access to the Court rather than to close
old ways or. to allow them to cancel each other out with the
ultimate result that no jurisdiction would remain.

In concluding the Treaty of conciliation, arbitration and
judicial settlement, the object of Belgium and Bulgaria was to
institute a very complete system of mutual obligations with a
view to the pacific settlement of any disputes which might
arise between them. There is, however, no justification for
holding that in so doing they intended to weaken the obliga-
tions which they had previously entered into with a similar
purpose, and especially where such obligations were more exten-

sive, than those ensuing from the Treaty.

It follows that if, in a particular case, a dispute could not
be referred to the Court under the Treaty, whereas it might
be submitted to it under the declarations of Belgium and
' Bulgaria accepting as compulsory the jurisdiction of the Court,
in accordance with Article 36 of the Statute, the Treaty _
cannot be adduced to prevent those declarations from exer-
cising their effects and disputes from being thus submitted to
the Court.

It is necessary therefore in the first place to consider whether
the .objections raised by the Bulgarian Government to the juris-
diction of the Court under the Treaty are well-founded or not.
Should they prove well-founded, the Court will then consider ’
the objections raised by that Government under the declar-
ations above mentioned. Only if both these sets of objections
are alike held to be well-founded will the Court decline to
entertain the case.

The Court will consider the bearing of the arguments of the
Bulgarian Government on the final submissions of the Belgian’
Government’s Application under A, Nos. r and 2, respecting
the complaints concerning the application by the Bulgarian
authorities of the decisions of the Mixed Arbitral Tribunal

I6 :
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 77

in 1923 and 1925; it will then consider their bearings on
the submission made under A, No. 3, which relates to the
promulgation of the Bulgarian law of February 3rd, 1936, con-
cerning income tax.

The Court will first examine the Bulgarian argument concern-
ing the application of the Treaty of 1931, which was relied on
in the first place by the Belgian Government in its Memorial
of August 26th, 1938.

In support of its Application, the Belgian Government invokes
Article 4 of the Treaty, which runs as follows :

“All disputes with regard to which the Parties are in conflict
as to their respective rights shall be submitted for decision to
the Permanent Court of International Justice, unless the Parties
agree, in the manner hereinafter provided, to have resort to an
arbitral tribunal.

It is understood that the disputes referred to above include
in particular those mentioned in Article 36 of the Statute of
the Permanent Court of International Justice.”

The opposing argument of the Bulgarian Government consists
of two contentions, as follows:

In the first place, the Bulgarian Government complains of
the silence of the Belgian Memorial as to the respective “rights”
in regard to which the Parties are in conflict; that Govern-
ment, supposes that the right which is denied to Bulgaria is
the right of deciding disputes that arise between the Belgian
concessionaire and the Bulgarian grantor of a public service in
Bulgaria, on the subject of the application of the formula deter-
mining the price of electric current. “The Bulgarian Govern-
ment insists that the right of the Bulgarian authorities to
exercise jurisdiction over disputes concerning the application of
provisions governing the working conditions of a public service
conceded in Bulgaria to a foreign concessionaire, is inherent in
the sovereignty of the Bulgarian State. The Bulgarian Govern-
ment protests against any claim to invoke the Treaty of
pacific settlement of June 23rd, 1931, for the purpose of dis-
puting this right.”

The Belgian Government explains in its Additional Memorial
of January 22nd, 1039, that ‘‘the rights which the Belgian
Government relies on .... are the right to the cessation of acts
prejudicial to the Electricity Company of Sofia and Bulgaria,
carried out by various organs of the Bulgarian State, in viola-
tion of the latter’s international obligations, and the right to obtain
reparation for the damage resulting for the Belgian Company”’;
the Belgian Government has thus raised a point of an inter-
national character in this dispute. This last point has been

17
A./B. 77.—-THE ELECTRICITY COMPANY OF SOFIA 78

contested from the outset and particularly during the discus-
sion of the question whether the Belgian complaints do or do
not fall within one or other of the categories of disputes referred
to in Article 36 of the Statute (also mentioned in Article 4 of
the Treaty of 1931). But the argument vatione materiæ thus
developed and used in support of the preliminary objection to
the jurisdiction forms a part of the actual merits of the dispute.
The Court cannot therefore regard this plea as possessing the
character of a preliminary objection within the meaning of
Article 62 of the Rules.

In the second place, the Bulgarian Government raised an argu-
ment based on the non-observance of the provisions of Article 3
of the Treaty by the Belgian Government.

This Article is as follows:

“1. In the case of a dispute the occasion of which, according
to the municipal law of one of the High Contracting Parties,
falls within the competence of its judicial or administrative
authorities, the Party in question may object to the matter in
dispute being submitted for settlement by the different methods
laid down in the present Treaty until a decision with final
effect has been pronounced within a reasonable time by the
competent authority.

2. In such a case the Party which desires to resort to the
procedures laid down in the present. Treaty must notify the
other Party of its intention within a period of one year from
the date of the under-mentioned decision.”

The Bulgarian Government alleges that the Application of
January 26th, 1938, was introduced before a decision with
final effect—namely the judgment of the Bulgarian Court of
Cassation—was rendered, and that on that ground the applica-
tion was premature and irregular.

As regards the application of Article 3 of the Treaty of 1931,
the following considerations must be borne in ‘mind.

This Article 3 occurs in Chapter I headed ‘‘Pacific Settle-
ment in general”, amongst provisions of a general nature,
applicable to all the procedures provided for in the Treaty
of 1931. This fact alone serves to show the importance attached
to the clause relating to the exhaustion of local remedies,
which applies to all the procedures mentioned.

Article 3 itself consists of two paragraphs.

The hypothesis in paragraph 1 is that, according to the
municipal law of one of the High Contracting Parties, the
subject of the dispute is within the jurisdiction of its judicial
or administrative authorities. This hypothesis is fulfilled in
the present case; for the Belgian Government does not deny
that the dispute between the Belgian Electricity Company and
the Bulgarian authorities concerning alleged failure by the
Bulgarian authorities to observe the formula drawn up by the

18
A./B. 77.—THE ELECTRICITY COMPANY. OF SOFIA 79

Mixed Arbitral Tribunal is within the jurisdiction of the Bul-.
garian courts.

The same Article authorizes the respondent Party to ‘object
to the matter in dispute being submitted for settlement by the
different methods laid down in the present Treaty”. This formal-
ity was observed by the Bulgarian Government, in particular
in the letter addressed to the Belgian Minister in Sofia by the
President of the Council, Minister for Foreign Affairs and
Public Worship, and dated Sofia August 3rd, 1937; in this
letter, of which the date is several months earlier than the
introduction of the Application on January 26th, 1938, is the
following passage: ‘“With reference to the communication that,
failing a special agreement, the Belgian Government would make
a unilateral application to the Permanent Court of Interna-
tional Justice, relying on Articles 4 and 6 of the Treaty of con-
ciliation, arbitration and judicial settlement between Bulgaria
and Belgium, I feel bound to draw your Government’s atten-
tion to the fact that, in application of Article 3 of that Treaty,
the Bulgarian Government claims that its own courts have
jurisdiction in this matter, and it cannot consent to the sub-
mission of the dispute to the different procedures provided in
the said Treaty.”

The following words of Article 3, No. 1, indicate the limit
of time imposed on the submission of an application : “i. until
a decision with final effect has been pronounced within a rea-
sonable time by the competent authority’.

There being no dispute as to the reasonableness of the time
within which the decision was pronounced, the controversy
is reduced to the following question: at the time of the appli-
cation was there a decision with final effect, or had that
‘ decision with final effect not yet been pronounced?

The Belgian Government claims that it has not failed to
observe the provisions of Article 3, No. I, seeing that the sub-
sequent decision of the Court of Cassation could not have been
regarded by the contracting Parties to be that referred to in
Article 3,-No. 1; this ultimate Court constitutes an extra-
ordinary remedy, and in any case the appeal in cassation had
been lodged and this fact might be deemed to constitute a
fulfilment of the required condition.

Whatever the term applied by the Sofia Court of Appeal

to its judgment, the fact remains that it was not a decision
with final effect within the meaning given to that expression
by Article 3, No. 1. The local remedies rule contemplated
by the Treaty of 1931 implies the exhaustion of all appeals,
- Including appeals to the Court of Cassation, a decision by
which alone renders the judgment final either by annulling
the judgment of the Court of Appeal and sending the case
back for a re-trial, or by rejecting the appeal.

3 19
A./B. 77.—-THE ELECTRICITY COMPANY OF SOFIA 80

No. 2 of Article 3 still further emphasizes the importance
of the provision in No. 1; for, according to No. 2, a Party
which desires in the circumstances contemplated by No. 1 to
resort to the procedures laid.down in the Treaty must notify
the other Party of its intention within a period of one year
from the date of the decision with final effect referred to in No. I.

The Belgian Government has vainly relied upon Article 37
(4) which runs as follows: |

“4. Notwithstanding denunciation by one of the High Con-
tracting Parties, the proceedings pending at the expiration of
the current period of the Treaty shall be duly completed.”

This clause does not apply: it presupposes proceedings validiy
instituted, and this is not the case here owing to the absence
of a decision with final effect on January 26th, 1938. Moreover, |
the irregularity of the Belgian Application was not removed ©
by the judgment rendered on March 16th, 1938, by the '
Bulgarian Court of Cassation, for in the meantime, i.e. on
February 4th, 1938, the Treaty of 1931 had expired, having
been denounced by the Bulgarian Government.

Accordingly, since the Belgian Application has not been sub-
mitted in accordance with the conditions laid down by the
Treaty of 1931, the Belgian Government cannot found the juris-
diction of the Court on that Treaty.

*

The negative result arrived at by the examination of the
first source of jurisdiction does not however dispense the Court
from the duty of considering the other source of jurisdiction
invoked separately and independently from the first.

The Court will now proceed to consider the Bulgarian Govern-
ment’s argument relating to the declarations of adherence to
the Optional Clause of the Court’s Statute.

With regard to their terms, the declarations of adherence of
Bulgaria and Belgium differ in that the declaration of the
Bulgarian Government runs as follows:

“On behalf of the Government of the Kingdom of Bulgaria
I recognize, in relation to any other Member or State which
accepts the same obligation, the jurisdiction of the Court as
compulsory ipso facto and without any special convention,
unconditionally”,

and contains no reservation apart from the condition of reci-
procity, whereas the declaration of the Belgian Government
runs as follows :

20
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA . 81

“On behalf of the Belgian Government, I recognize as com-
pulsory, #pso facto and without special agreement, in relation to
any other Member or State accepting the same obligations, the
jurisdiction of the Court in conformity with Article 36, para-
graph 2, of the Statute of the Court for a period of fifteen
years, in any disputes arising after the ratification of the present
declaration with regard to situations or facts subsequent to this
ratification, except in cases where the Parties have agreed or
shall agree to have recourse to another method of pacific
settlement.”

The Bulgarian Government relies on the limitation ratione
temports embodied in the Belgian declaration concerning the
situations or facts with regard to which the dispute has arisen,
in order to dispute the jurisdiction of the Court. Although
this limitation does not appear in the Bulgarian Government’s
own declaration, it is common ground that, in consequence of
the condition of reciprocity laid down in paragraph 2 of Arti-
cle 36 of the Court’s Statute and repeated in the Bulgarian
declaration, it is applicable as between the Parties.

The Parties agree that the date on which the dispute arose
was June 24th, 1037, ie., after March roth, 1926—the date of
the establishment of the juridical bond between the two States
under Article 36 of the Court’s Statute.

On the other hand, the Bulgarian Government in its argu-
ment raises the following point: Although the facts complained
of by the Belgian Government in the submissions of its Applica-
tion under A, Nos. I and 2, all date from a period subsequent
to March toth, 1926, the situation with regard to which the
dispute arose dates back to a period before that date. This
situation was created by the awards of the Belgo-Bulgarian
Mixed Arbitral Tribunal and in particular by the formula estab-
lished by the awards of July 5th, 1923, and May 27th, 1925,
for the fixing of the price per kilowatt-hour of power distri-
buted. The complaints made by the Belgian Government
concerning the application of this formula by the Bulgarian
authorities relate, it is contended, to the working of that
formula and make it the centre point of the dispute. It has
also been argued that since the situation resulting from that
formula dates from before the material date, namely, March roth,
1926, the Bulgarian Government is justified in holding that
the dispute which has arisen in regard to it falls outside the
Court’s jurisdiction by reason of the limitation rvatione temporis
contained in the Belgian declaration.

The Court cannot accept this view. It is true that it may be
said that the awards of the Mixed Arbitral Tribunal established
between the Belgian Electricity Company and the Bulgarian
authorities a situation which dates from before March roth,

2r
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 82

1926, and still persists at the present time.. Nevertheless, the
dispute between -the Belgian. Government and the Bulgarian
Government did not arise with regard to this situation or to
the awards which established it. The Court would recall in
this connection what it said in the Judgment of June 14th,
1938 (Phosphates in Morocco. Preliminary Objection). The only
situations or facts which must be taken into account from the
standpoint of the compulsory jurisdiction accepted in the terms
of the Belgian declaration are those which. must be considered
as being the source of the dispute. No such relation exists
between the present dispute and the awards of the Mixed Arbi-
tral Tribunal. The latter constitute the source of the rights
claimed by the Belgian Company, but they did not give rise
to the dispute, since the Parties agree as to their binding
character and that their application gave rise to no difficulty .
until the acts complained of. It is not enough to say, as it is
contended by the Bulgarian Government, that if it had not
been for these awards, the dispute would not have arisen, for
the simple reason that it might just as well be said that, if it
had not been for the acts complained of, the dispute would
not have arisen. It is true that a dispute may presuppose. the
existence of some prior situation or fact, but it does not follow
that the dispute arises in regard to that situation or fact. A
situation or fact in regard to which a dispute is said to have
arisen must be the real cause of the dispute.. In the present
case it is the subsequent acts with which the Belgian Govern-
ment reproaches the Bulgarian authorities with regard to a
particular application of the formula—which in itself has never
been disputed—which form the centre point of the argument
and must be regarded as constituting the facts with regard to
which the dispute arose. The complaints made in this connec-
tion by the Belgian Government relate to the decision of the
Bulgarian State Administration of Mines of November 24th, 1934, _
and to the judgments of the Bulgarian courts of October 24th,
1936, and March 27th, 1937. These are facts subsequent to
the material date. Accordingly, the Court considers that the
argument based on the limitation ratione temporis in the Belgian
- declaration is not well-founded.

In connection with the Belgo-Bulgarian declarations of accept-
ance of the Court’s compulsory jurisdiction, the Bulgarian Govern-
ment puts also forward another argument in support of its
objection to the jurisdiction. In its contention, the present
‘dispute does not fall within any of the categories of Article 36
of the Court’s Statute, a general provision which enumerates the
legal disputes for which the Court is competent. Although this
argument is designed to prove that the Court has no jurisdic-
tion and to prevent the proceedings from being continued, the
‘Court, after considering its scope, has arrived at the conclusion

22
A./B. 77.—THE ELECTRICITY COMPANY OF-SOFIA 83

that this objection is closely linked to the merits of the case.
The reasoning in fact aims at establishing that there is no
international element in the legal relation created between the :
Belgian Company and the Bulgarian authorities by the awards
of the Mixed Arbitral Tribunal. But that amounts not only
to encroaching on the merits, but to coming to a decision in
regard to one of the fundamental factors of the case. The
Court cannot therefore regard this plea as possessing the char-
acter of a preliminary objection within the meaning of Article 62
of the Rules.

In these circumstances, the Court cannot accept the conten-
tion that it lacks jurisdiction under the declarations of adher-
ence to the Optional Clause, in so far as this contention is
based on the argument rvatione temporis ; and in so far as this
contention is founded on the argument vatione materiæ, the
Court does not regard it as preliminary in character and con-
sequently rejects it, though the Parties remain free to take it
up again in support of their case on the merits.

, The attempt to prove that the Court lacks jurisdiction under
the Optional Clause is thus unsuccessful as regards A, No. x,
j and A, No. 2.

*

The last complaint adduced by the Belgian Government to
the Bulgarian Government—which is formulated in its sub-
missions under A, No. 3, of the Belgian Application, relates to
the promulgation of the law of February 3rd, 1936, of which
Article 30, paragraph C, institutes a special tax on the dis-
tribution of electric power sold to concerns not subject to tax.

In the contention of the Belgian Government, the promulga-
tion of the law constitutes a failure by the Bulgarian Govern-
ment to observe its international obligations, owing to the
discriminatory. character of this law.

The Bulgarian Government argues that this contention of
the Belgian Government is inadmissible because the claim
respecting the law of February 3rd, 1936, did not form the
[gubiect of a dispute between the two Governments prior to the
filing of the Belgian Application.

The Court considers this argument of the Bulgarian Govern-
ment to be well-founded. Under either the 1 Clase of 1 or

of the yest a Porte had arisen’ between the Govern-
ments respecting the Bulgarian law of February 3rd, 1936.
The Court holds that the Belgian Government has not estab-
lished the existence of such a dispute and accordingly declares
that the Belgian Application cannot be entertained in so far
‘as concerns that part of the claim relating to this law.

23
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 84

FOR THESE REASONS,
The Court, by nine votes to five,

Adjudicating upon the preliminary objection raised by the
Bulgarian Government to the Application of the Belgian Govern-
ment : |

1. With regard to points 1 and 2 of Submission A of the
Application,

overrules the objection of the Bulgarian Government ; ....

7 reserves this part of the “Application” of “the “Belgian
| Government for judgment on the merits ;

states that the time-limits for the continuance of the
proceedings will be fixed by an Order bearing the date

of the present judgment.

2. With regard to point 3 of Submission A of the Applica-
tion,

upholds the objection of the Bulgarian Government ;
and dismisses this part of the Application of the Belgian
Government.

The present judgment has been drawn up in French in
accordance with Article 39, paragraph 1, of the Statute of the
Court, the Parties having agreed that the case should be
conducted in French.

Done at the Peace Palace, The Hague, this fourth day of
April, one thousand nine hundred. and thirty-nine, in three
copies, one of which will be deposited in the archives of the
Court and the others will be communicated to the Government
of the Kingdom of Belgium and to the Government of the
Kingdom of Bulgaria, respectively.

(Signed) J. G. GUERRERO,

President.

(Signed) J. Lopez OLIvAN,

Registrar.

24
A./B. 77.—THE ELECTRICITY COMPANY OF SOFIA 85

M. ANZILOTTI, M. Urrutia, Jonkheer van Eysinca, M. Hupson,
Judges, and M. Papazorr, Judge ad hoc, declare that they are
unable to concur in the judgment given by the Court and,
availing themselves. of the right conferred upon them by
Article 57 of the Statute, have appended to the judgment the
separate opinions which follow.

M. DE VisscHER and M. Ericu, Judges, while in agreement
with the operative clause of the judgment, have each appended
observations regarding some of the grounds.

(Initialled) J. G. G.

(Initialled) J. L. O.

25


IST

DISSENTING OPINION BY COUNT ROSTWOROWSKI.
[Translation.]

Being unable to concur in the conclusions of the Advisory
Opinion, I feel obliged to exercise my right under Article 57
of the Statute to append to the Opinion of the Court a
statement of my separate opinion.

The Court has had before it the request of the Council of
the League of Nations at the very moment when the latter
is about to undertake the final settlement of the question of
access to and anchorage in the port of Danzig for Polish war
vessels ; accordingly, I venture to draw attention to certain
important points which emerge from the actual wording of the
question submitted to the Court.

This question is formulated as follows:

“Do the Treaty of Peace of Versailles, Part III,
Section XI, the Danzig-Polish Treaty concluded at Paris on
November oth, 1920, and the relevant decisions of the
Council of the League of Nations and of the High Com-
missioner, confer upon Poland rights or attributions as
regards the access to, or anchorage in, the port and
waterways of Danzig of Polish war vessels? If so, what
are these rights or attributions ?”

It follows from the way in which the question is formulated
that

(1) in so far as concerns the sources of law to be consulted
for the purposes of the Advisory Opinion, two are indicated
with some precision, whereas the two others, and particularly
the decisions of the Council and of the High Commissioner,
are merely described as “relevant”; this makes it incumbent
on the Court to decide precisely which are, in its view, relevant,
i.e. which have been taken with the object of regulating the
matter in question ;

(2) with regard to the substance or constituent elements of the
rights or attributions, the Council’s request only defines them

4 27
DISSENTING OPINION BY COUNT ROSTWOROWSKI 152

by the words: ‘‘as regards the access to or anchorage in the
port and waterways of Danzig of Polish war vessels’, without
specifying more precisely the powers covered by these ideas ;

(3) as regards the actual purpose of the Advisory Opinion
which the Court is asked to give, this is to establish whether
the sources of law indicated under (I), or any one of them,
confer on Poland, in the connection described under (2), any
rights or attributions, and, if so, what rights or: attributions ?

I.

In view of the connection existing between these three ele-
ments, which are in part interdependent, and of the desira-
bility of determining as precisely as possible what appears to
me must constitute the starting point for the Court’s investi-
gations, ie. the precise meaning of the expression: “access
and anchorage for war vessels”, it seems to me necessary to
consider what positive data are afforded by the documents
placed on the Court’s record with regard to the. substance of
the rights or attributions in question.

In what may be called the official terminology, are employed
at the outset two expressions, used simultaneously, though
with reference to different conceptions, by the Council of the
League of Nations: these were ‘point d'attache” with special
reference to the vessels allocated to the Polish maritime police,
and “port d’attache’—a more general term used with reference
to war vessels. The distinction ceased to have any importance
when the Council of the League of Nations, by its Resolution
of June 22nd, 1921, grouped the two problems together. In
November 1927, the more general term—the only one which is
relevant—-was by agreement between Poland and the Free City
of Danzig, replaced, for the purposes of subsequent negotia-
tions, by the expression ‘access to and anchorage im the port
of Danzig for Polish war vessels’. This expression is also
used by the Council in its request of September roth, 1931,
save that it has inserted after the word ‘port’: ‘and water-
ways”.

This change in terminology did not seem to involve any
substantial. change in any rights which might exist; the

28
DISSENTING OPINION BY COUNT ROSTWOROWSKI 153

substance of these rights cannot therefore be better illustrated
and defined than by the practice of more than ten years ori-
ginating with the agreement concluded on October 8th, 1921,
between Poland and the Free City, under the auspices of the
League of Nations. Now, according to this long followed prac-
tice, access and anchorage for Polish war vessels means shelter,
mooring, provisioning, repairs, the purchase of various mate-
rial, etc., operations of which the Polish Government’s Agent
has given a detailed description in the course of the hearings
before the Court and which are all of an administrative kind
and economic in their nature and justify the description of
the use made of the port of Danzig as an exclusively pacific
use, which cannot be confounded with the establishment of a
naval base, which is expressly forbidden.

The attention of. the Council of the League of Nations was
directed to these powers, which constitute the precise import
—by no means either vague or indeterminate—of access to
and anchorage in the port of Danzig for Polish war vessels.
The Council dealt ‘with these questions by means of two dis-
tinct procedures on different lines: the first aimed at a provi-
sional modus vivendi and the second at a final setilement. Both
in their respective sphere merit examination from a legal stand-
point.

IT.

(a) The provisional setilement first finds a place in the Polish-
Danzig agreement suggested by the President of the Council
of the League of Nations on October rst, 1921, and concluded
by the two Parties concerned, before the High Commissioner,
on October 8th, Igar. The Council noted this agreement
in its Resolution of January 12th, 1922, and described it as
concluded with the object of “providing safety and the neces-
sary harbour facilities for Polish war vessels’; it also fixed
the duration of these powers by deciding that the preliminary
agreement should remain in force until the question had been
considered by the Council.

The above-mentioned Resolution may therefore be con-
sidered, for the purposes of the present proceedings, as a

29
DISSENTING OPINION. BY COUNT ROSTWOROWSKI I54

“yelevant decision” in so far as it regulates, by approving the
agreement between the Parties, the question of access. to and
anchorage in the port of Danzig for Polish war vessels. By
so doing it creates special legal relations taking the form of
attributions and obligations accruing to or ‘devolving upon
the respective Parties. Thus, by the mutual agreement of
Poland and the Free City of Danzig, and by the authority
of the Council, a régime was established in 1921 which, though
doubtless provisional and subordinate in character, was. never-
theless a legal régime the lawfulness of which has not been
disputed and which had continued in operation down to the
present day.

Under this agreement, Poland is granted “the use of the
port of Danzig’, subject to notifying the President of the
Senate of Danzig of the number of ships she wishes to keep
in the port. For his part, the President of the Senate under-
takes to raise no objection to these ships remaining in the
port. Finally, the Harbour Board is to provide the necessary
berths. Then follows a clause of style to the effect that the
arrangement does not commit. either side as regards any
future agreement on the subject between the two States, or
any decision of the Council.

(6) The provisional settlement was subsequently set out in
another resolution of the Council and in a decision of the High
Commissioner—both dated September roth, 1931. This second
intervention on the part of the organs of the League of
Nations took place in the following circumstances :

When—following upon, firstly, .the denunciation of the
agreement in 1927 by the Free City and the successive exten-
sions of the agreement in 1928 and 1931 and, secondly, the
failure of the negotiations for a new agreement—the two
Parties were about to find themselves without any agreement
to rely upon, the High Commissioner in a supplementary
report, dated August zoth, 1931, drew the Council’s attention
to the unfortunate consequences likely to ensue from the
fresh difference of opinion and stated that he believed he
would be rightly interpreting his duties by doing ‘‘everything
in his power to forestall and prevent such consequences”.

30,
DISSENTING OPINION BY COUNT ROSTWOROWSKI 155

The Council, acting on this report, adopted on September roth,
1931, a resolution to the effect that:

“Pending the Council’s final decision on this matter, the
High Commissioner is requested to draw up provisional regu-
lations. This arrangement shall in no wise prejudge the final
settlement of the question.”

In pursuance of this mandate, the High Commissioner on
the same date, September igth, 1931, issued a provisional
regulation. Formally, the new regulation—issued by the
Council’s representative—entirely superseded the agreement
concluded on October 8th, 1921, between the Parties. In
substance, the new régime at present in force retains all the
features of the preceding régime, except that a clause is
added forbidding the sending ashore of naval patrols, and
another providing for. arbitration by the High Commissioner
in the event of a difference of opinion. With regard to the
duration of the régime thus instituted, Poland is to continue
to use the port of Danzig, as during these last years, for her
war vessels until the question of the access to and anchorage
in the port of Danzig has been settled definitively by a
decision of the Council of the League of Nations.

The interest residing in an examination of the provisional
régime—apart from the fact that this examination is neces-
sary in law, since it relates to relevant decisions of the
Council and the High Commissioner—consists in the fact that
it makes it possible :

(1) to ascertain with the necessary precision, the nature
of the use made of the port since more than ten years by
Polish war vessels ;

(2) to estimate at its true value the formal insistence of
the intervention of the organs of the League of Nations in this
question ;

{3} to observe the direction of the Council’s train of thought,
which is invariably directed towards the maintenance and
continuance of the régime without the latter at any time
- being regarded as an abuse of or contrary to the law in force.

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DISSENTING OPINION BY COUNT ROSTWOROWSKI 156

III.

Before describing the Council’s activities in regard to a
final settlement of this matter, it is absolutely necessary to
examine firstly the legal provisions of a higher order governing
both the rights and obligations of the two Parties concerned
and the Council’s jurisdiction in regard to Polish-Danzig affairs.
That brings us once more to the question put by the Council
in its request, a question which upon closer analysis runs as
follows :

Should the access and anchorage of Polish warships, under-
stood in an administrative, economic and pacific sense and
which represent the necessary facilities and security granted
to Poland by the provisional regulation, be considered substan-
tially as also. forming the subject of rights of a superior order,
rights to be respected by Danzig and the Council of the League
‘of Nations? Can they be included among those specially
conferred on Poland by the relevant provisions of the Treaty
of Versailles ?

(2) In the absence of an express provision governing the case
in question, and since it is obviously impossible to find a
provision dealing with such a very special position, recourse .
must be had to the very general principles of Section XI,
Part III, of the Treaty of Versailles, and, most of all, espe-
cially to Article r0o4, paragraph 2.

This Article confers on Poland without any restriction the
free use and service of all waterways, docks, basins, wharves
and other works within the territory of the Free City, neces-
sary for Polish imports and exports.

Regard being had to the tenour of this clause together with
its terms, a literal interpretation of it seems to me to cover
completely the above defined use of the port.

I. The benefit is conferred on Poland, on the Polish State
as a whole, including its people, its commercial companies, its

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DISSENTING OPINION BY COUNT ROSTWOROWSKI 157

Government, in short, on Poland as a legal personality. No
distinction is drawn between warships, mercantile vessels, pleas-
ure boats, fishing boats. The words “without any restriction”
which follow the word “Poland” show that there was no inten-
tion to limit the principle ratione persone by excluding from
its application any given category of beneficiaries.

2. Nor was any restriction laid down in regard to the nature
of the use: “the free use and service” obviously covers the
use in question.

3. As regards the subject matter of this right of use and
service, this is indicated in so many words and includes water-
ways, docks, basins, wharves, and other works necessary for
Polish. imports and exports. It has been argued that the
concluding words rule out warships. JI cannot share this
‘view. In my view there is no ground for extending in this way
the meaning of words which define the subject matter of
this use and which are intended to withdraw from such use
installations not necessary for exports and imports, and to
give these words a restrictive effect either in respect of the
nature of the use or the special character of the beneficiaries.
Nothing in the wording of the principle laid down in Arti-
cle 104, paragraph 2, allows us to restrict the meaning by adding
the words “for commercial purposes” or. even the words “of an
economic character”, although incidentally the latter expression
would in this case cover the activities of Polish warships in
- the port of Danzig.

If, however, this wording of the text should give rise to
any doubt as to its true meaning, so that recourse must be
had to an interpretation according to its spirit, the. principles
underlying Articles 100 to 108 of the Treaty of Versailles
would not lead to a different result. Recourse to these
principles would certainly not be justified if the object were
to draw inferences contrary to the terms of the relevant
articles. Clearly such a recourse would be fully justified if,
where any dowbt exists, these principles threw a light on the
text in which they find concrete legal expression. That it
seems to me is the import in this case of the principle of
free and secure access for Poland along with its corollary, viz.

33
DISSENTING OPINION BY COUNT ROSTWOROWSKI 158

the intention’ of the Powers to establish the closest relations
‘between Danzig and Poland. In the light of these principles,
Article 104, paragraph 2, can in no circumstances be inter-
preted restrictively to the detriment of Polish warships. .

(6) Understood in this way, Article 104, paragraph 2, is not
the only provision of which account is to be taken in settling
the present case. Section XI, Part III, of the Treaty of
Versailles contains other articles which may be relevant, parti-
cularly Articles 102 and 103 the object of which is to regulate
the territorial integrity and political independence of Danzig,
the autonomy of the Danzig people and the security of the
Free City. Article 102, which places the Free City under the
protection of the League of Nations, appears to me to be
specially relevant.

- The connection which in my view exists between Poland’s
‘right to access and anchorage for her warships in Danzig—
a right based on Article 104, paragraph z—on the one hand,
and the exercise of the right of protection granted to the
League of Nations in Article 102, on the other, les in the
military character of the vessels concerned in this case. The
existence of this character which, in itself, is insufficient to
deprive Poland of the right to obtain the benefit for her
warships of the particular advantages conferred by Article 104,
paragraph 2, seems, on the contrary, sufficient to authorize
the League of Nations to make use of its right of protection
in so far as the exercise by Poland of her rights were likely
to threaten Danzig’s security. In other words, the League
of Nations, without denying or destroying Poland’s rights.
under Article 104, paragraph 2, has the power to regulate the
exercise of that right and to lay down such necessary condi-
tions as may be adjudged necessary for the security of the
Free City.

The military character of vessels—irrelevant to an accurate
interpretation of Article 104, paragraph 2—appears, on the
contrary, relevant to call into play Article 102 and to fix on
the basis of that Article the exact conditions for the applica-
tion of Article 104, paragraph 2. The two provisions cited,
one of which confers certain rights on Poland, and the other

34
‘ DISSENTING OPINION BY COUNT ROSTWOROWSKI 159

of which, jurisdictional in character, provides the Council of
the League of Nations with a legal basis to limit if necessary
the exercise—constitutes between them, to my mind, the
fundamental legal framework in which the present problem
lies.

It is otherwise with the Convention of Paris, which cannot
be regarded as relevant to the present case. The legal posi-
tion of Polish warships is outside this Convention in the same
way as the question of Danzig’s defence by Poland, a question
which was expressly placed outside its scope. Moreover, the
terms of the Convention neither explicitly nor implicitly
weaken the scope of the two relevant articles of the Treaty
of Versailles. It is in the light of both these articles taken
together that the Council’s activities can be legally appraised.
This applies both to any provisional action of the Council
and to its definitive action. In two different ways such
action assumes the character of pure regulation deriving its
legal origin from Article 102. Whether the Council acts by
itself or whether it has recourse to a friendly settlement
between the Parties negotiated under its auspices—the course
adopted cannot in any way modify its essential legal position,
as that position seems to me to result from the Treaty of
Versailles.

IV.

Having examined the Council’s work in connection with a
provisional settlement, it merely remains for me to make a
few observations on its activities in connection with definitive
regulation. |

Begun on October 20th, 1920, suspended on January 12th,
1922, the latter was resumed afresh on September roth, 1031.

Originally the question of access and anchorage for Polish
warships was connected, under the title of ‘port d’attache’,
with that of the defence of Danzig by Poland. This was due
not only to reasons of a formal character arising from the
fact that both matters fall within the jurisdiction of the
League of Nations in its capacity of Danzig’s protector, but

5 35

“ a
DISSENTING OPINION BY COUNT ROSTWOROWSKI 160

also because both matters were regarded as coming within
the scope of the principle of close relations to be established be-
tween both countries. In fact, however, the two problems were
distinct, seeing that any mandate for the defence of Danzig
contemplated extraordinary circumstances, while the question
of access and anchorage (then port d’attache) arose out of
Poland’s permanent needs. .

Dealt with jointly at the session of June r92I, the Reso-
lution of June 22nd, 1927, provided different and independent
solutions for both questions.

When the Council, after having found it (in paragraph 6 of its
Resolution) unnecessary to take a decision in regard to the defence
of Danzig by sea, nevertheless took a definite stand (in paragraph 7)
in regard to the question of the port d’attache and entrusted the
High Commissioner with the task of examining the means of creat-
ing a port d’attache in the port of Danzig without estab-
lishing there a naval base, the decision thus taken certainly
marks a significant step in the gradual development of the
efforts towards a settlement. But from a strictly legal stand-
point, it is in my view difficult to see in clause 7 (as it is
for that matter in all the acts which preceded as well as
those which followed it) anything which departs in one sense
or the other from my conception of a settlement developed
_ above. If this part of the Resolution cannot in my view be
. regarded as relevant as an original and basic source of
Poland’s rights, equally it cannot be invoked to question or
deny those same rights. Its-real significance is that it fur-
nishes evidence of the Council’s definite intention to give
satisfaction to Poland’s demands short of creating a naval
base. The reexamination of this question after a lapse of
ten years has in my view no other significance.

To sum up: If I had to reply to the question put by
the Council, I would draw the conclusion from the above
considerations, as follows:

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DISSENTING OPINION BY.COUNT ROSTWOROWSKI 161

Rightly interpreted, Article 104, paragraph 2, of the Treaty
of Versailles confers on Poland in principle rights in regard
to the access and anchorage of Polish warships in the port
and waterways of Danzig which are substantially similar to
the attributions which were and remain granted to Poland
by the relevant decisions of the Council dated January rath,
1922, and September xgth, 1931, together with the relevant
decision of the High Commissioner dated September roth,
1931.

However, the regulation of the aforementioned rights and
attributions, under Article 102 of the Treaty of Versailles,
rests with the League of Nations in so far as any given use
of the port by Polish warships, authorized in principle by
Article 104, paragraph 2, of the Treaty of Versailles, would
be likely to threaten the security of Danzig, which is placed
under the protection of the League of Nations.

(Signed) M. RoSTWOROWSKI.

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