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Report of the Pre-War Contract Committeel appointed by the Board of Trade with Lord Buckmaster as chairman. Their terms of reference were 'to consider and report on the position of British manufacturers and merchants after the War in respect of contracts entered into by them prior to the War with persons or companies in the United Kingdom or in Allied or neutral countries, the fulfilment of which has been prevented or impeded by the War, and as to the measures, if any, which are necessary or desirable in this respect.' Two passages in the Report at least are relevant to our subject; one (section 11) is a summary of the emergency legislation already passed during the war enabling the court in certain very limited classes of cases to grant relief from serious hardship by varying, suspending, or annulling contracts. From the other (section 10), which contains a statement of the position under the common law, we have already made some extracts.
The Report is dated January 12, 1918, i.e. after the three decisions in the House of Lords previously discussed in this chapter.
The emergency legislation only deals with a very small part of the problem, and the general conclusions of the Committee are not in favour of further legislative interference. Indeed, no one can read this Report without being impressed with two facts; one is the 'sweet reasonableness,' the non-litigious character, of the English business man; for instance, 'a majority (and probably a large majority) of business men in this country have acted reasonably, have not insisted on their strict rights against those who were in difficulties, and have made a fair compromise.' The other fact is the adequacy of the common law, under such disturbing conditions and with very little aid from the legislature, to deal with the cases in which a decision has been asked for. As already indicated, there is just a danger that in seeking to rise to the occasion the common law may have developed a somewhat lax tendency which needs to be carefully watched in the future; for, as one of the witnesses before the Pre-War Contract Committee puts it, the essential basis of all trade is the right to rely upon contracts.'
1 Cd. 8975 of 1918.
TRADING WITH THE ENEMY'
We have made an attempt in the two preceding chapters to state the general principles applicable to the effect of war upon contracts and now, without adhering to our classification of contracts according to the status of the parties to them, it is proposed to review the application of those principles to some of the more important kinds of contract. We are not attempting an exhaustive digest of decisions but rather to draw attention to some of the points at which the events of the past five years have made the greatest impression.
We frequently meet the expression 'trading with the enemy.' Clearly, it does not indicate any particular kind of contract. It is a generic term, chiefly used in considering whether a
1 It is outside the scope of this volume to consider the effect of the Treaty of Peace with Germany signed on the 28th June, 1919, upon the various topics dealt with in these Essays and Lectures. Its relevant provisions are far from being lucid either in their drafting or their arrangement, and until the Treaty comes into force and the British Government takes the necessary powers for the enforcement of these provisions (which the Treaty of Peace Act, 1919, by means of a blank cheque of the D.O.R.A. type enables them to do), it will not be possible to form any serious estimate of the violence which they may do to the principles of the common law. The issues of the Law Times dated 12th, 19th and 26th July and 2nd August contain a useful summary of those provisions which principally affect our private law-Debts, Property, Rights, and Interests, Contracts, Prescriptions, and Judgments, Industrial, Literary, and Artistic Property, and the Mixed Tribunal which is to administer the provisions. The general scheme appears to be that the settling up between the nationals of the High Contracting Parties shall be achieved mainly by administrative procedure and that the ordinary municipal courts of law will retire into the background. The latter have however an awkward way of asserting their position and are jealous of rivals. Boni judicis est ampliare jurisdictionem. The Treaty provisions above-mentioned relate only to Germany, and it has been officially announced by the Board of Trade (7th August, 1919) that it is not intended to apply the debtcollecting clearing-house scheme to Austria, Turkey, and Bulgaria.
criminal offence has been committed, whether property belonging to British or allied subjects and seized as prize is subject to condemnation, or whether the object of a contract is or has become unlawful as involving 'trading with the enemy.' A better expression is 'intercourse with the enemy,' because, as we have seen, the intercourse to be obnoxious need not be commercial at all.
Before we consider some of the particular contracts which are most likely to involve 'trading with the enemy,' let us glance at the general provisions of the common and maritime laws and of recent statutes, aimed at prohibiting this intercourse.
A. By the common and maritime laws. Whatever may have been the original reasons for the prohibition—whether you base it on the ground that war is a relation between subjects as well as between states or on the ground that intercourse might inure to the benefit of the enemy, it is plain that modern public opinion demands that intercourse across the line of war should be prohibited.
Lord Mansfield, whose indulgent, doctrinaire views upon ‘trading with the enemy,' particularly in the matter of insurance, would have earned for him to-day a most unenviable reputation, draws attention in Gist v. Mason' to two early references to the subject. In 2 Rolle's Abridgement, 173, Guerre, we read of a licence granted in the thirteenth year of the reign of Edward II 'to certain men to go and sell and buy their merchandise in Scotland which was then an enemy of the King,' a thing which was evidently illegal without such a licence, and in the reign of William III we hear that the king's judges were asked whether it was a crime to carry corn to the enemy in time of war and replied that it was a misdemeanour. The whole matter was examined in The Hoop2 where the prohibition is rested by Lord Stowell on two grounds, (1) a general rule of our maritime law in accordance too with the law of nations prohibiting commercial intercourse with an enemy unless specially authorized by the state: and (2) the fact that such
1 (1786) 1 T. R. 88. 3 (1799) 1 C. Rob. 196.
intercourse is fundamentally inconsistent with a state of war because the character of alien enemy carries with it a disability to sue or sustain in the language of the civilians a persona standi in judico.' Further, the case shows that innocence or ignorance is no defence, for the claimants to the condemned property-Glasgow merchants—had been informed by customs officials that existing Orders in Council permitted this trade with Rotterdam, though we were at war with Holland. In Esposito v. Bowden? Willes J. says 'the presumed object of war being as much to cripple the enemy's commerce as to capture his property, a declaration of war imports a prohibition of commercial intercourse and correspondence with the inhabitants of the enemy's country, and such intercourse, except with the licence of the Crown, is illegal.'
Reference should also be made to an article in the Law Quarterly Review of January 1915, entitled 'Intercourse with Alien Enemies,' by Dr T. Baty who concludes that the reason of the prohibition is, not that given by Willes J. nor 'any abstract theory of individual hostility,' but mainly, if not
entirely... the danger and impossibility of permitting intimate intercourse between the subjects of enemy States3.'
The prohibition applies equally to the subjects of an ally as to British subjects and will be enforced by British courts against them4.
A century ago and earlier when the orthodox view of 'trading with the enemy' was not nearly so strict as it now is, it was customary to relax the general prohibition by granting either to British and enemy subjects licences to trade' which had the effect of legalizing pro tanto intercourse with the enemy and incidentally making enforceable contracts involving intercourse or collateral to it. Similarly neutral subjects sometimes received licences dispensing with the strict requirements of the law of Contraband or Blockade. The case-law which is built up round
* See also for innocence The Panariellos (1915) 31 T. L. R. 326; (1916) 32 T. L. R. 459. 2 (1857) 7 E. & B. 763.
81. Q. R. XXXI. 49. 4 The Panariellos (supra); Kreglinger v. Samuel and Rosenfeld (1915) 31 T. L. R. 592.
these practices will be found in recognized text-books upon International Law and need not detain us, as, so far as the recent war is concerned, the practice of licensing trade with the enemy was not revived and the law is mainly of historical interest. It is however interesting to note, that during the earlier part of the recent war a number of booksellers in this country received from the Crown licences to procure books of enemy origin, and that these licences were exercised by invoking the aid of a bookseller in a neutral country. He was probably a principal in buying from the enemy bookseller and selling to the British one, but this is nevertheless 'trading with the enemy' and, unless licensed, would have been illegal and criminal. Later in the recent war this practice was abandoned and enemy books of this character were obtainable upon application to H.M. Stationery Office who procured them presumably through our diplomatic or consular representatives in neutral countries.
What then are the penalties and disabilities attaching to 'trading with the enemy'?
(a) In prize, the goods involved in the transaction and belonging to a British or allied1 subject may be seized and condemned.
(6) Criminally, it would appear from the answer of the Judges quoted in Gist v. Mason? to be at least a common law misdemeanour, and if it amounted to High Treason (as it might) it would entail the peculiar consequences which distinguish this form of crime and are none the less pleasant to the victim because archaic and picturesque.
(c) There is the sanction of nullity in that the contract will not be enforced, whether it was made before the war or attempted to be made during it, and the effect upon collateral and incidental contracts is the same 4.
B. By Statute and Royal Proclamation. It is not possible to state definitely whether the Trading with the Enemy legislation passed during the recent war can be 1 The Panariellos (supra).
2 Supra. 3 Esposito v. Bowden (supra). 4 Poits v. Bell (1800) 8 T. R. 548.