1941: Arbitration

The United States Supreme Court on Jan. 6, 1941, upheld the validity of the arbitral awards of $50,000,000 on claims against sabotage acts arising out of the Black Tom and Kingsland explosions in 1916-17. The decision was based on the narrow ground that the certification of the awards of the arbitral tribunal by the Secretary of State under the Settlement of War Claims Act of 1928 was conclusive on the court and thus it did not review the issues challenging the existence, authority and actions of the Mixed Claims Commission and the validity of its awards. The awards certified Oct. 31, 1939, by the Secretary of State approved 153 claims in the payment of $21,157,227 out of the fund established by the Act of 1928, but these became the subject of an injunction by the Z and F Assets Realization Corporation and the American-Hawaiian Steamship Company, holders of prior awards by the Mixed Claims Commission, in order to invalidate the sabotage awards and to force payment of the balance of their own awards. The Court decided that the petitioners were not entitled to complain of payments from the fund of awards which the Secretary had certified in accordance with the competence of the Commission and of the executive agency of the Government. This decision disposed of the last of the 20,443 claims submitted to the Commission against the German government's activities during the last war. By May 29, payment of $10,016,953.60 had been made to the Lehigh Valley Railroad for property damage caused by the Black Tom explosion out of the fund established from German-owned property seized and liquidated during the First World War. Half of this amount has been placed in escrow pending a decision by the American member of the Claims Commission regarding the fee to be paid a group of attorneys who claim winning the award for the railroad on a 50.50 basis.

On March 11 the mixed arbitral tribunal in the Trail Smelter case reported its final decision to the governments of the United States and Canada under the Ottawa Convention of 1935 regarding the damage caused in the State of Washington by noxious fumes from a smelter situated at Trail, British Columbia, on the Columbia River near the frontier. The matter has been under arbitration since 1928 when it was first referred by the two governments under the Convention of 1909 for the settlement of any frontier difficulties between them. Decisions in 1931 and 1938 awarded indemnities for damage caused between 1925 and 1937; the present question concerned damages between 1937 and 1940 and the fixing of a permanent regulation for operating the smelter, as well as the revision of the earlier decision rejecting reimbursement to the United States of expenditures for investigating and proving its case. No indemnity was awarded nor did the tribunal reverse the decision concerning expenses of the United States Government. Regarding the other issues involved, in the absence of conflicting international law or cases dealing with air and water pollution, the board used as precedents certain decisions of the United States Supreme Court and found that no state has the right to use or permit the use of its territory so as to cause injury by fumes in the territory of another state. Since the injury was both serious and indisputably proved, Canada was held responsible for the smelter's operation and for ensuring a condition conformable to that government's international responsibility. This means that possible future damage in Washington through fumes must be safeguarded by technical control of the smelter which, if insufficient to prevent damage, is to be indemnified by joint agreement of the two governments acting under the convention. An important point established for future arbitrations was that a matter once decided by a tribunal cannot be reconsidered without express grant of special powers to do so, thus emphasizing the rule of stare decisis in arbitration.

The present American members of the Hague Court of Arbitration are Manley O. Hudson (judge of the Permanent Court of International Justice), Green H. Hackworth (legal adviser to the State Department), Henry L. Stimson (Secretary for War), and Michael Francis Doyle (of the Philadelphia Bar).