¹ Those signed since World War II are: treaties of friendship, commerce and navigation with China, 1946 (63 Stat. Pt. 2, 1299), Italy, 1948 (63 Stat. Pt. 2, 2255; supplemented by Agreement of Sept. 26, 1951, S. Exec. H, 82d Cong., 2d Sess.), Ireland, 1950, (1 U. S. Treaties 785), Colombia, 1951 (8. Exec. M, 82d Cong., 1st Sess., withdrawn from Senate, June 30, 1953), Greece, 1951 (T.I.A.S. No. 3057), Israel, 1951 (5 U.S. Treaties, Pt. 1, 550), Denmark, 1951 (8. Exec. I, 82d Cong., 2d Sess.), Japan, 1953 (4 U. S. Treaties, Pt. 2, 2063), Federal Republic of Germany, 1954 (S. Exec. E, 84th Cong., 1st Sess.), Haiti, 1955 (8. Exec. H, 84th Cong., 1st Sess.) ; Nicaragua, signed Jan. 21, 1956 (S. Exec. G, 84th Cong., 2d Sess.); treaty of friendship, commerce and economic development with Uruguay, 1949 (S. Exec. D, 81st Cong., 2d Sess.); treaty of amity and economic relations with Ethiopia, 1951 (4 U. S. Treaties, Pt. 2, 2134); and treaty of amity, economic relations and consular rights with Iran, signed Aug. 15, 1955 (S. Exec. E, 84th Cong., 2d Sess.) These treaties fall into three patterns. Those succeeding the China and Italy treaties reflect an extensive reorganization and condensation of the content of those two instruments. The Ethiopia and Iran treaties represent a further abridgment of this material, and add provisions on diplomatic and consular rights. All are substantially alike, however, with regard to the points discussed in this article, except as otherwise noted and except that the Ethiopia and Iran treaties lack some of the refinements found in the others. The treaty with Japan will usually be used herein for illustrative purposes, because it is the most recent in point of signature to have entered into force.

² Testimony of Deputy Assistant Secretary of State Linder, Hearing before a Subcommittee of the Committee on Foreign Relations, U. S. Senate, Eighty-second Congress, second session, on treaties of friendship, commerce and navigation with Colombia, Israel, Ethiopia, Italy, Denmark, and Greece … May 9, 1952, p. 4.

³ This was signed even before the Franco-American treaty of alliance of the same date (5 Moore’s Digest 586). Other commercial treaties prior to the adoption of the Constitution include those with the Netherlands, 1782; Sweden, 1783; and Prussia, 1785. Texts may be found in Malloy, Treaties, Conventions, International Acts, Protocols and Agreements between the United States and Other Powers, 1776–1909. Citations will not be given in this article for treaties which may readily be found in Malloy, or in the supplementary collections for 1910–1923 and 1923–1937 compiled by Redmond and Trenwith, respectively.

⁴ Fact Sheet entitled “Commercial Treaty Program of the United States” (Department of State, March, 1952), p. 3. An annex lists those actually in force as of that date.

⁵ McGovney, “A Supreme Court Fiction: Corporations in the Diverse Citizenship Jurisdiction of the Federal Courts,” 56 Harvard Law Rev. 853, 897 (1943); Williston, “History of the Law of Business Corporations before 1800,” 2 ibid. 149, 165–166 (1888).

⁶ Davis, Essays in the Early History of American Corporations, Vol. II, pp. 8, 331–334 (Cambridge, 1917).

⁷ Commentaries on American Law, Vol. II, p. 414 (14th ed.).

⁸ Bank of Augusta v Earle, 13 Peters 519, 585, 590 (1839.)

⁹ For example, Foreign Relations of the United States, 1866, Vol. III, p. 552; 1867, Vol. I, pp. 452, 456; 1867, Vol. II, p. 272; 1868, Vol. II, p. 1034; 1871, p. 242; 1875, Vol. I, pp. 275–276, 278.

¹⁰ For example, the Claims Convention of 1853 with Great Britain, Art. I. The usual form of words in such instances was “all claims on the part of corporations, companies or individuals, citizens of … etc.”

¹¹ For example, Art. VII of the 1827 Treaty of Commerce and Navigation with Sweden/Norway pledges each signatory “not to grant in its purchases, or in those which might be made by companies or agents acting in its name or under its authority, any preference to importations made in its own vessels …” (Art. XV of the same instrument contained also a rule concerning the services of “salvage companies,” in connection with shipwrecks). A fairly common provision has been one providing non-discrimination in the matter of shipping charges “levied in the name or to the profit of the Government, the local authorities, or of any private establishments whatsoever” (Art. II of the 1837 treaty with Greece), phraseology which later became spelled out to read “Government, public functionaries, private individuals, corporations or establishments of any kind” (Art. VII, treaty of 1902 with Spain). The evident purpose of such references was to prevent indirect impairment or nullification of treaty rights through actions of entities not the government (e.g., a monopolistic trading company enjoying special powers, such as an East India Company).

¹² Art. VIII, treaty of 1858 with Bolivia.

¹³ Art. IV (17) of the 1881 treaty with Madagascar (coaling rights of American steamship companies); Art. XII of the 1903 treaty with China (navigation on the inland waters of China).

¹⁴ Bank of Augusta v. Earle, 13 Peters 519, 588 (1839).

¹⁵ See McGovney, Loc. cit. 853–898, 1090–1124; Neirbo Co. v. Bethlehem Corp., 308 U. S. 165, 169 (1939); Willoughby on the Constitution 1291 (2nd ed., 1929); “Willis, Constitutional Law 849–850 (Bloomington, 1936) ; note in 14 Col. L. B. 434–436 (1910) ; note in 48 Mich. L. R. 228–230 (1949). These two law review notes indicate that the Supreme Court’s development of the main theoretical bases for constitutional protection to corporations was not complete until 1910.

¹⁶ Also of possible pertinence to the conceptual feasibility of treaty-making about corporations was the doctrinal debate between the “fictional” and “natural” schools which, according to Latty, was still so unresolved at the beginning of the 20th century that at that time “it could not be said … that there was any well defined principle of international law” as to the juridical position of foreign corporations. “International Standing in Court of Foreign Corporations,” 29 Mich. L. R. 28, 32 (1930). Indeed, historically the “attribution of personality to business corporations was a matter of slow evolution” (Baty, “The Rights of Ideas—and of Corporations,” 33 Harv. L. R. 358, 360 (1920)), an evolution accompanied by much debate. For example, Prof. Hohfeld argued vigorously in an article published in 1909 that the “only conduct of which the state can take notice by its laws must spring from natural persons—it cannot be derived from any abstraction called the ‘corporate entity’…” 9 Col. L. R. 285, 289.

¹⁷ Justice Frankfurter in the Neirbo case, supra, 170. The American cases cited by Beale as settling the proposition, already known at common law, that a corporation may lawfully act (by agent) outside the jurisdiction of its creation, date mostly from the end of the 19th century (The Law of Foreign Corporations 154 (Boston, 1904)) ; and Keasbey remarks that it was only in 1865 that New Jersey, a leader in the latter 19th century in adopting legislation facilitating incorporations, recognized by statute that “any company organized under the general law might carry on part of its business outside of the state.” “New Jersey and the Great Corporations,” 13 Harv. L. R. 198, 204 (1899).

¹⁸ Justice Brandeis, in the course of his dissenting opinion in Liggett Co. v. Lee, states: “Authority to incorporate for mercantile business, where specifically provided, was given relatively late. E.g., Md. Laws 1894, c. 599; Tenn. Acts 1887 c. 139; Vt. Laws 1884, no. 105; compare Ind. Laws 1889, c. 81, No. 1. And see Cook on Corporations (1889), p. 91: ‘The general corporation laws [of Penna.] do not provide for mercantile corporations.’ ” 288 U. S. 517, 541, 555 n. Texas affords another illustration: Empire Mills v. Alston Grocery Co., 15 S. W. 505 (1891).

¹⁹ Jones, “Claims on Behalf of Nationals Who Are Shareholders in Foreign Corporations,” 26 Brit. Year Book of Int. Law 225–226 (1949). See also 3 Hackworth’s Digest 432. In Wharton’s Digest (1887) there appears only negligible material on corporations, whereas in Moore’s Digest, published 20 years later, the amount is moderately substantial.

²⁰ During that span, it seems that the only general-purpose commercial treaty of a normal reciprocal type concluded was that with Peru in 1887, aside from the treaty of 1894 with Japan, which ended extraterritoriality for the United States in that country, and the treaty of 1902 with Spain, following the Spanish-American war. “After the Civil War, interest in treaty-making decreased with the dwindling of our merchant marine and the growing national absorption in industrialization and the development of our natural resources.” Fact Sheet, cited supra, p. 4.

²¹ Infra, at notes 26 and 27.

²² Foreign Relations, 1889, pp. 480–483 (Art. I, 1837 treaty with Greece); Foreign Relations, 1891, pp. 3–4 (Art. IX, 1853 treaty with Argentina); Foreign Relations, 1899, pp. 345–347 (taxation under the treaties of 1850 with Switzerland and 1875 with Belgium) ; Foreign Relations, 1902, pp. 37–42 (1829 treaty with Austria-Hungary); Foreign Relations, 1910, pp. 61–66 (Art. III, 1853 treaty with Argentina); 3 Foreign Relations, 1929, pp. 227–229 (1864 and 1928 treaties with Honduras); and 3 Hack-worth’s Digest 428 (Art. XXIV, 1858 treaty with China). Further, see 2 Hyde, International Law 1181 (2nd ed.); and compare Pearl Assurance Co. v. Harrington, 38 F. Supp. 411, 413 (1941).

²³ For summary of statutory and constitutional construction, see 18 C.J.S. 388–389; 7 Words and Phrases 255–262 (1952), and note 15 supra.

²⁴ By way of a comparative note, McGovney, loc. cit., emphasizes that the Supreme Court consistently, “over and over again, early and late” (p. 861), has held a corporation not actually to be a “citizen” for constitutional purposes. The jurisdictional privilege developed for corporations under the diversity-of-citizenship clause was based on a presumption concerning the citizenship of the individuals forming the corporation. Compare, for example, Pilgrim Real Estate, Inc. v. Superintendent of Police, 112 N.E. (2d) 796 (Mass. 1953).

²⁵ 3 Hackworth’g Digest 431–432. This would be so, at least, in the absence of persuasive evidence of a contrary intent in the negotiating record. Compare Swiss Ins. Co. v. Miller, 267 U. S. 42, 46 (1925). A similar position apparently has been taken on occasion by the Spanish Government (ibid. 430) ; by British legal officials (Law officers’ opinion, 1891, cited in Jones, loc. cit., 228 n.) ; and by the Supreme Court of Iowa (Scottish Union and National Insurance Co. v. Herriott, 80 N.W. 665 (1899)).

²⁶ This was in the form of an exchange of notes explaining that Art. I of the 1837 commercial treaty was construed to extend to business companies, especially in respect of access to courts, provided only such entities “always conform” to the “laws and customs” of the country. This exchange appears to have been considered merely declaratory of municipal law in the United States. Foreign Relations, 1889, pp. 482–483.

²⁷ Although this agreement is explicitly limited to status and juridical rights, and although there was at the time in force with Russia a treaty (of 1832) similar to that in force in 1890 with Greece, this document was handled independently and as a treaty requiring Senate approval. Whether this difference in procedure has bearing on the question raised at notes 22–25 supra, is not clear. These agreements were in each instance apparently occasioned by the policies of the other country (Foreign Relations, 1889, pp. 480–482; Universal Adjustment Corp. v. Midland Bank, 184 N.E. 152, 164 (Mass., 1933)), and illustrate the development of provisions on companies in response to practical need.

²⁸ For example, Great Britain had entered such agreements with several countries, beginning in 1862 with France and then Belgium (52 Brit, and For. State Papers 31 and 24) ; and a provision on companies had appeared in a number of commercial treaties concluded by Belgium, beginning with Portugal in 1874 (65 ibid. 322, Art. II).

²⁹ Treaty of Friendship, Commerce and Consular Rights signed Dec. 8, 1923, Art. XII. The others were with: Austria, 1928, Art. IX; El Savador, 1926, Art. XII; Estonia, 1925, Art. XII; Finland, 1934, Art. XVI; Honduras, 1927, Art. XIII; Hungary, 1925, Art. IX; Latvia, 1928, Art. XIII; Liberia, 1938, Art. XVII; Norway, 1928, Art. XII; Poland, 1931, Art. XI; and Siam (Thailand), 1937, Art. 5. The treaties with Liberia and Siam were called “friendship, commerce and navigation”; the rest had the same title as the treaty with Germany. In addition, two short establishment conventions were concluded, each containing a single substantive article providing most-favored-nation treatment for nationals and corporations, with, respectively, Turkey (1931) and Greece (1936).

³⁰ The Siam treaty of 1920 was not explicit on the point, while the Japan treaty of 1911, as well as the earlier agreements with Greece and Russia, related only to “commercial, industrial, and financial” entities. Treaties made by other countries usually contain this qualifying formula or a variant thereof (e.g., “for profit” or “economic character”). Sometimes provision will be made for “civil” as well as “commercial” entities (e.g., Italy-Albania, 1924, Art. IX, 122 Brit, and For. State Papers 1) and, occasionally, for co-operatives (e.g., Norway-Guatemala, 1938, Art. II, 142 Brit. and For. State Papers 619).

³¹ Of a sampling of 63 relevant treaties found in the British and Foreign State Papers for the years 1923, 1925, 1930, 1937 and 1938, and involving a wide variety of countries other than the U. S., 37 contain a qualification to this effect (sometimes in briefer terms and sometimes with the addition of a most-favored-nation clause). Of the remainder, 23 achieve a comparable result by limiting the rights of companies to most-favored-nation treatment, with or without an accompanying reference to an obligation to conform to the local laws; in one, the company provision is unilateral; and in another the provision on companies is confined expressly to the matter of juridical status. One instrument is of uncertain classification: a treaty of 1925 between Hungary and Poland (122 Brit, and For. State Papers 861, Art. 3). Earlier examples of an explicit reservation like that in the U. S. treaties in reference may be found in a number of treaties or agreements dating from the two decades preceding World War I, to which Japan, Russia, Germany, or Austria-Hungary, respectively, were signatory.

³² Citations to this and subsequent treaties are in note 1 supra, and will not be repeated.

³³ Art. VII, par. 1, Japan treaty of 1953.

³⁴ The standard definition is exemplified by Art. XXII, par. 3, of the 1953 Japan treaty. The question of government corporations is not dealt with in the present paper.

³⁵ A “company” for treaty purposes includes common-law partnerships and other unincorporated associations which are not regarded as distinct legal persons. This absence of differentiation between those which are, and those which are not, endowed with legal personality is stated to have been the general commercial treaty practice also of other countries (22 A.J.I.L. Spec. Supp. 160 (1928) as cited infra). U. S. Treaties follow the usual conflict-of-laws rule to the effect that the law of the place of creation determines whether a given association, whatever its name, enjoys the attribute of legal personality. Ibid. 189; Liverpool Insurance Co. v. Massachusetts, 10 Wall. 566; Puerto Rico v. Russell and Co., 288 U. S. 476 (1933); 2 Beale, Conflict of Laws 736–738, 766–767 (1935); Wolff, Private International Law 302 (1950).

³⁶ For example, the recommendations of the League of Nations Committee of Experts for the Progressive Codification of International Law on conventions concerning, respectively, “Recognition of the Legal Personality of Foreign Commercial Corporations” and “Nationality of Commercial Corporations and their Diplomatic Protection” (Art. I of Draft Convention in each case), 22 A.J.I.L. Spec. Supp. 202 and 166 (1928); “Declaration on the Juridical Personality of Foreign Companies,” opened for signature at the Pan American Union on June 25, 1936 (ratification of the U. S. deposited, Treaty Series No. 973). Art. 19 of the project on Private International Law prepared by the International Commission of Jurists (Rio de Janeiro, 1927) for submission to the 6th Conference of American States proposed that nationality be determined by “where the general meeting of shareholders is normally held” or, alternatively, by the location of its principal governing board (22 A.J.I.L. Spec. Supp. 273, 275 (1928)).

³⁷ This was true, for example, of four-fifths of the sample mentioned in note 31 supra. A notable group exception is afforded by a number of the treaties concluded between Siam and European countries in 1937–38.

³⁸ The normal continental rule apparently is that the determining factor is “siège sociale,” in the sense of real center of administration or management. Wolff, , Private International Law 297, 301 (Oxford, 1950)Google Scholar. Further on “siège sociale,” and the possibility of determining nationality by criteria other than center of management, see ibid. 297–299; and Ripert, , Traité Elementaire de Droit Commercial 250–251, 370–371 (Paris, 1951)Google Scholar.

³⁹ E.g., Kronstein, “The Nationality of International Enterprise,” 52 Col. L. R. 983, 1001–1002 (1952); Ripert, op. cit. 371. The control test has been applied, for example, by the Franco-German Mixed Arbitral Tribunal, under the terms of the Treaty of Versailles (Lauterpacht, Annual Digest, 1919–22, p. 227, 1923–24, p. 259, 1925–26, p. 283). See also, for example, sec. 301(2) of the International Claims Settlement Act of 1949, as amended (P.L. 285, 84th Cong., 1st Sess., approved Aug. 9, 1955); and the Trading with the Enemy Act, as construed in the 1947 and 1952 Uebersee cases, 332 U. S. 480 and 343 U. S. 205. It has been suggested that “in general there has been in the post-war period a tendency to regard the control test as a transient measure conditioned and justified by reasons of national safety” (2 Oppenheim’s International Law (7th ed., Lauterpacht) 276 n.). This subject has recently been reviewed by Domke, “ ‘Piercing the Corporate Veil’ in the Law of Economic Warfare,” Wisconsin Law Review (Jan. 1955), pp. 77–90. A “control” test is not necessary for such purpose in the treaty, however, as the treaties of the current series all contain an “essential security” reservation (e.g., Art. XXI, par. 1(d), Japan treaty).

⁴⁰ One writer has concluded that, as to a recognized test of nationality, “in the corporate field, we find confusion and uncertainty” (Timberg, “Corporate Fictions,” 46 Col. L. R. 533,572 (1946)).

⁴¹ E.g., the above-cited agreement of 1890 with Greece. A number of illustrations are afforded by treaties or agreements of that period entered into by Great Britain, Belgium, or Germany, respectively. An unusual compromise is found in an exchange of notes to the Italo-Rumanian treaty of 1930, providing that the rights accorded companies, in principle limited to those “domiciled” in the country of charter, will in certain instances be extended to those which “even” have their seat outside the country to which they “belong” (133 Brit, and For. State Papers 685, 712).

⁴² Crandall, , “Principles of International Law Applied by the Spanish Treaty Claims Commission,” 4 A.J.I.L. 806, 814–815 (1910)Google Scholar; Feller, “The German-Mexican Claims Commission,” 27 ibid. 62, 68 (1933); Woolsey, “Litigation of the Sabotage Claims Against Germany,” 35 ibid. 282, 299–301 (1941); 6 Moore’s Digest 641; Borchard, Diplomatic Protection of American Citizens Abroad 623; 2 Hackworth’s Digest 567, 3 ibid. 420, 423. However, the government will not necessarily choose actually to espouse a specific claim in which a corporation lacks a substantial national interest in its ownership (see, for example, 1 Whiteman, Damages in International Law 129; 2 Hackworth’s Digest 500, 5 ibid. 845; and Art. 2(B) of Agreement on Settlement of Pecuniary Claims Against Yugoslavia, signed July 19, 1948, T.I.A.S. No. 1803).

⁴³ Drachsler, “The Status of Alien Corporations in the Law of the United States,” 23 Fordham Law Review 49, 50 (1954); Steamship Co. v. Tugman, 106 U. S. 118 (1882); Thomas v. Trustees, 195 U. S. 207 (1904); 20 C.J.S. 10.

⁴⁴ The standard rule recites: “Vessels under the flag of either Party, and carrying the papers required by its law in proof of nationality, shall be deemed to be vessels of that Party …” (Art. XIX, par. 2, Japan treaty of 1953).

⁴⁵ See, for example, Art. XXIV, par. 7, of the 1951 treaty with Greece in conjunction with Arts. XVII, par. 2, and XXI, par. 5, of the same.

⁴⁶ This normal principle is not usually spelled out in the commercial treaties. Two instances, in which it is, are afforded by the 1954 treaty with the Federal Republic of Germany (Art. XXV, par. 6; Protocol, par. 22) and the 1951 treaty with Israel (accompanying exchange of notes).

⁴⁷ Nationality and juridical status do not exhaust the roster of attributes of “civil capacity,” as given in the usual definition. However, insofar as the exercise of rights associated with other civil attributes (e.g., capacity to own property) is concerned, this is dealt with specifically in the treaty, as is the exercise of rights associated with functional capacity.

⁴⁸ In foreign treaty practice, in contrast, there has been evident a tendency to deal with business corporations to the exclusion of non-profit societies. See note 30 supra. The League of Nations projects, cited supra, were for their part confined to “commercial” corporations. For material bearing on this point, see Latty, loc. cit. 33–37, and Wolff, Op. cit. 301.

⁴⁹ See Wilson, article in 47 A.J.LL. (1954), cited supra.

⁵⁰ The inclusion of entities lacking legal personality in the concept of “companies” for treaty purposes (supra, note 35) is warranted on the ground that it is not always necessary for an association to have a distinct and independent personality for it to be recognized and regarded as an entity “capable of exercising certain rights and subject to certain obligations of a collective nature” (e.g., to sue or be sued). 22 A.J.I.L. Spec. Supp. 159 (1928) (as cited supra, note 36) ; also Smith, Bryant, “Legal Personality,” 37 Yale L. J. 283, 299 (1928)CrossRefGoogle Scholar. Since the treaty rule is “national treatment,” the question is left open as to whether, and under what circumstances and conditions, an unincorporated entity might be allowed to appear as party to litigation or exercise other rights. On this subject see notes in 37 Mich. L. R. 141 (1938) ; 38 Col. L. R. 454 (1938) ; 33 Calif. L. R. 444 (1945); Dodd, , “Dogma and Practice in the Law of Associations,” 42 Harv. L. R. 977 (1929)CrossRefGoogle Scholar; Sturges, , “Unincorporated Associations as Parties to Actions,” 33 Yale L. J. 383 (1924)CrossRefGoogle Scholar; and cases applying Rule 17(b) of the Federal Rules of Civil Procedure.

⁵¹ Recognition of legal status does not necessarily carry with it the right to access to courts. See 20 C.J.S. 65–67; Rabel, The Conflict of Laws (1947, Michigan Legal Studies), II, pp. 203–206.

⁵² This standard is usually supplemented by a most-favored-nation treatment clause. A representative provision is that in the 1953 treaty with Japan (Art. IV, par. 1).

⁵³ The phrase “in conformity with the applicable laws and regulations” occurs, however, in the wording of the treaties with China and Italy. This phrase is framed in such manner as to imply that it does not constitute a reservation detracting from the treaty right; and such phraseology has been omitted from subsequent treaties.

⁵⁴ E.g., Protocol, par. 1, of the Japan treaty: “The term ‘access to the courts of justice and to administrative tribunals and agencies’ as used in Article IV, paragraph 1, comprehends, among other things, legal aid and security for costs and judgment.” For variant formulas see treaties with Ireland (Protocol, par. 4), Ethiopia (Art. VII, par. 2), Germany (Protocol, par. 6).

⁵⁵ 20 C. J. S. 368–373; 3 Hackworth’s Digest 569.

⁵⁶ The only U. S. treaty in the inter-war period which mentions the subject is that with Estonia, which states in a Protocol that the aceess-to-courts provision does not embrace deposit of security requirements. There are continental cases reported in Lauter-pacht’s Annual Digest of Public International Law Cases holding that a general access-to-courta provision, without more, does not establish a rule with respect to such requirements (op. cit., 1919–22, p. 243; 1929–30, p. 263; 1931–32, p. 276; 1933–34, p. 307). Similarly see Nussbaum, , “American-Swiss Private International Law,” 47 Col. L. R. 186, 189–190 (1947)CrossRefGoogle Scholar.

⁵⁷ Report of the Secretary of State on the Declaration, Sen. Exec. E., 77th Cong., 1st Sess. (1941), p. 3. A series of articles concerning “the judicial status of non-registered foreign corporations” in particular countries has run in the Tulane L. R., as follows: Vol. 6, p. 558 (Argentina, Chile, Uruguay); Vol. 7, p. 210 (Brazil), p. 341 (Mexico); Vol. 8, p. 542 (Colombia) ; Vol. 9, p. 409 (Ecuador); Vol. 10, p. 58 (Nicaragua); Vol. 12, p. 74 (Guatemala); Vol. 15, p. 521 (Panama); Vol. 17, p. 575 (Venezuela).

⁵⁸ For illustrative examples of this viewpoint, which has been repeatedly asserted in recent years, both officially and unofficially, see testimony cited at note 2 supra; Final Declaration of the 37th National Foreign Trade Convention (N. T., 1950, Nat. For. Trade Council, Inc.) 16–17; and 68 Stat. 847.

⁵⁹ Art. VII (in four paragraphs) of the Japan treaty exemplifies the approach taken to providing for the business activities of companies. The same approach is in principle extended to non-profit activities (Art. VIII, par. 3). The 1946 treaty with China, however, which marked the transition in U. S. treaty policy toward companies, was somewhat more reserved in its approach; it mentioned national treatment as a principle to be generally aimed for, but subject to a reservation for such municipal legislation as might deviate from that principle (Art. III, par. 3).

⁶⁰ E.g., Japan treaty, Art. XI, par. 4. The foreign company is made taxable only as to income attributable to business done in the host country, a provision more advantageous than merely national treatment (under which tax liability might lie for the company’s entire or “world” income).

⁶¹ E.g., Japan treaty, Art. XI, par. 5.

⁶² E.g., Japan treaty, Art. VIII, par. 1. This allows, first, free choice in selection of “accountants and other technical experts, executive personnel, attorneys, agents and other specialists” generally; and, second, freedom from professional licensing requirements in the particular case of “accountants and other technical experts” needed for internal auditing and survey purposes. A provision of this type first appeared in the Uruguay treaty (1949), and is not found in several of the treaties.

⁶³ E.g., Japan treaty, Art. IX, par. 1. For recent summaries of the real property laws of the several States, as concerns alienage disabilities, see: McGovney in 35 Calif. L. R. 21–24 (1947); Boyd in 51 Mich. L. R. 1005 n. (1953); and Wilson, in 48 A.J.I.L. 363–365 (1954).

⁶⁴ For fuller discussion, see Wilson in 45 A.J.I.L. (1951), cited supra.

⁶⁵ A representative formulation of basic property-protection arrangements is Art. VI of the Japan treaty, together with Art. V, par. 1, thereof. The last-named (generally precluding “unreasonable or discriminatory measures that would impair legally acquired rights or Interests”) first appeared in the Uruguay treaty of 1949.

⁶⁶ 278 U. S. 123 (1928).

⁶⁷ Art. XIII of the 1923 treaty with Germany. In other treaties of the period the lite article appeared as that next following those cited in note 29 supra, except the treaty with Siam from which the provision was omitted.

⁶⁸ The provision of the treaty with Japan, cited at note 33 supra, continues as follows “Accordingly, such nationals and companies shall be permitted within such territories: (a) to establish and maintain branches, agencies, offices, factories and other establishments appropriate to the conduct of their business; (b) to organize companies under the general company laws of such other Party, and to acquire majority interests in companies of such other Party; and (c) to control and manage enterprises which they have established or acquired. Moreover, enterprises which they control, whether in the form of individual proprietorships, companies or otherwise, shall, in all that relates to the conduct of the activities thereof, be accorded treatment no less favorable than that accorded like enterprises controlled by nationals and companies of such other Party.”

⁶⁹ Art. VII, par. 3, of the Japan treaty. Most of the preceding treaties (those with China, Italy, Ireland, Colombia, Denmark, Greece, Uruguay) dealt with this matter in a different way: namely, the right to organize domestic companies is framed in non-contingent terms (i.e., without a national treatment standard), with the result that so long as effective procedures are available there need not be identity of treatment as between the alien and the local party (e.g., Art. VI, par. 2, treaty with Ireland); the most-favored-nation standard also is applicable.

⁷⁰ E.g., Japan treaty, Art. XXI, par. 1(e). The “except” clause is not in the reservation found in the Italy and China treaties.

⁷¹ The “explanatory note” to sec. 41.71 (b)(3) of the CFR, regarding criteria used in determining the nationality of a company for purposes of eligibility of its representatives for “treaty trader” visas, suggests one type of situation in which the United States might resort to the reservation (33 Dept. of State Bulletin 477 (1955)).

⁷² Japan treaty Protocol, par. 2. A provision of this sort first appeared in the 1948 treaty with Italy.

⁷³ A similar approach was adopted in the peace settlements following the two World Wars (e.g., Art. 297(e) of the Treaty of Versailles; Art. 78(4) of the Treaty of Peace of 1947 with Italy, 61 Stat. 1245) ; and Art. 2 (c) of the U. S.-Yugoslav Agreement on Pecuniary Claims Against Yugoslavia of July 19, 1948, T.I.A.S. No. 1803. Cf. the formulae adopted in Art. I of the U. S.-Mexican Claims Convention of 1923, wherein a “substantial” interest was stipulated; in the German-Mexican Claims Convention of 1925 and the Anglo-Mexican Claims Convention of 1926, allowing claims only if the German or British stockholder interest exceeded 50% ( Feller, , “The German-Mexican Claims Commission,” 27 A.J.I.L. 62, 66–68 (1933)Google Scholar, and 1 Whiteman 132); and in the International Claims Settlement Act of 1949, as amended, requiring American ownership of at least a 25% beneficial interest in the foreign company (sec. 311 (b), P.L. 285, approved Aug. 9, 1955). It should be noted that the latter law has to do with the distribution of a lump-sum settlement already obtained from the foreign government; and the “primary purpose” of a cut-off figure this high was stated to be administrative convenience (Cong. Rec., July 25, 1955, p. 9794). For a variant formula see paragraph 10 of agreement of Jan. 24, 1948, between the U. K. and Poland, 2 Int. L. Q. 544, 547.

Jones, “Claims on Behalf of Nationals Who Are Shareholders in Foreign Corporations,” 26 Brit. Year Book of Int. Law 225 (1949), concludes that the “probable state of international law” (p. 251) is that intervention, unless provided by treaty, is “confined to exceptional cases” (pp. 256–257). Further, see 2 Hyde, op. cit. 904–908; comment on Art. 16(b), Harvard draft convention, “Responsibility of States for Injuries to Aliens,” 23 A.J.I.L. Spec. Supp. 201 (1929); Maurer, “Protection of Non-Enemy Interests in Enemy External Assets,” 16 Law and Contemporary Problems 407, 422–432 (1951); Berger, , “ ‘Disregarding the Corporate Entity’ for Stockholders’ Benefit,” 55 Col. L. R. 808–829 (1955)CrossRefGoogle Scholar; and Baade, , Diplomatic and Treaty Protection of Nationals Who Are Shareholders in Legal Entities Organized or Created under the Law of a Foreign State (LL.M. Thesis, Duke U., 1955)Google Scholar.

⁷⁴ Art. VI, par. 4, of the Japan treaty. Such a provision first appeared in the 1948 treaty with Italy (Art. V, par. 3). A third notable respect in which the treaties afford protection to the parties-m-interest lying behind the corporate façade is that treated supra, at note 68, regarding the activities of alien-controlled domestic companies. Compare the axiomatic generalization “ex hypothesi, no state can intervene on behalf of a corporation against its own government” (Jones, loc. cit. 257).

⁷⁵ Paul v. Virginia, 8 Wall. 168 (1868) ; Hearing before the Committee on Foreign Relations, U. S. Senate, 68th Cong., 1st Sess., on Treaty of Commerce and Consular Rights with Germany, January 25, 1924, p. 21.

⁷⁶ E.g., treaty with Japan, Art. XXII, par. 4. The appropriateness of some such adjustment in respect of a country having a federal system has been recognized before. (See “federal clauses” applicable to “ressortissants” found in Art. I of Swiss treaties of establishment with: Belgium, 1887, 78 Brit, and For. State Papers 944, and Germany, 1876 and 1890, 67 Brit, and For. State Papers 534, and 82 ibid. 766).

⁷⁷ Although this phenomenon is sufficiently well known to need no documentation, a revealing figure is afforded by the Securities and Exchange Commission’s Statistics of American Listed Corporations, Summary Report, Pt. I, pp. 25–26, 150, 154 (issued before the war and not since revised): 53% of all reporting corporations organized in 1936 and 1937 were chartered by the single small State of Delaware, whereas six of the larger States accounted for the head offices of ⅔ of all tabulated corporations, wherever chartered.

⁷⁸ The one important field, unreserved by the treaties, in which apparently there exists in a number of the States a substantial degree of discrimination against the foreign company is that of insurance taxation, insurance being treated in effect as intra-state commerce (Paul v. Virginia, 8 Wall. 168, and an Act of Congress, 59 Stat. 33, U.S.C. 1011–13, following the Southeastern Underwriters case); but it has been stated that this discrimination has not as a practical matter seriously interfered with the interstate business of the industry (Federal, State and Local Government Fiscal Relations, S. Doc. 69, 78th Cong., 1st Sess., p. 260).

⁷⁹ A State may, for example, lawfully tax a “domestic” company on its total income wherever derived, but may tax a “foreign” company only on income fairly attributable to business done within the State. States have on occasion exercised their prerogative thus to tax their own companies on an apparently more burdensome basis; e.g., Arkansas, Alabama, Louisiana, Mississippi, Tax Systems of the World 196–197 (Chicago, 8th ed., 1940). Similarly as to share taxes (ibid., 26, 113, and Corry v. Baltimore, 196 U. S. 466); entrance-franchise taxes (Maxwell, The Fiscal Impact of Federalism in the United States 274 (1946)); and property taxes (Bittker, “The Taxation of Out-of-State Tangible Property,” 56 Yale L. J. 640–669).

⁸⁰ The organization of domestic corporations in the United States tends to be a relatively simple, inexpensive and expeditious process. Eder, “Some Restrictions Abroad Affecting Corporations,” 11 Law and Contemporary Problems 713 (1946) ; Breed, “Recognition of Foreign Corporations,” paper read at 3rd Conference of the Inter-American Bar Assn., Mexico City, 1944, pp. 23–24.

⁸¹ Eder, loc. cit. 715.

⁸² In a number of treaties (those other than Japan listed in note 69 supra), the reservation is handled by indirection, except as to tenure of property: that is, the reserved subject-matter is omitted from the recitation of activities for which national treatment is provided. In those with Israel, Japan, Nicaragua, Germany and Haiti, broad coverage is provided for all activities, qualified by a specific reservation (e.g., first sentence of Art. VII, par. 2, Japan treaty, reserving “public utilities enterprises, or enterprises engaged in shipbuilding, air or water transport, banking involving depository or fiduciary functions, or the exploitation of land or other natural resources”). See note 63 supra, for the way in which property-tenure rights of the treaty alien in the United States is dealt with; the property-tenure rights secured to Americans in the other country vary from treaty to treaty, the most liberal arrangement being one which assures Americans full national treatment subject to the right of the other party to reduce the treatment granted to the level reciprocally accorded its nationals and companies by particular States of the Union maintaining alienage disabilities, in the case of American nationals domiciled in or of companies chartered by such States (e.g., treaties with Italy, Israel, Uruguay, Colombia).

⁸³ Those with Japan, Nicaragua, Germany and Haiti, Art. VII, par. 2, second sentence in each case, reading: “However, new limitations imposed … upon the extent to which aliens are accorded national treatment, with respect to carrying on such activities … shall not be applied as against enterprises which are engaged in such activities therein at the time such new limitations are adopted …” This is in accord with the principle enunciated in Hanover Fire Ins. Co. v. Harding, 272 U. S. 494 (1926).

⁸⁴ Art. VIII, par. 4. The treaty with Iran, which is similar, omits even this imprecise undertaking.

⁸⁵ Art. VI, par. 4, and the Minute of Interpretation applicable thereto.

⁸⁶ Respectively, pars. 7, 6 and 16.

⁸⁷ The only assured rights of entry are with respect to so-called “treaty traders” (and, since 1952, “treaty investors”); freedom of action is retained as to others (e.g., Art. I, par. 1, Japan treaty). On this subject, see Wilson, , editorial comments in 44 A.J.I.L. 145–149 (1950)Google Scholar and 49 ibid. 366–370 (1955).

⁸⁸ E.g., Art. XIV, par. 1, Japan treaty. Thereby each party is free to adopt such protective measures as it chooses, so long only as products of the other party are treated no worse than products of any other foreign country.

⁸⁹ E.g., for goods, Art. XVI, par. 1, Japan treaty.

⁹⁰ On the historical uses and adaptability of this type of treaty, see Setser, “Treaties to Aid American Business Abroad,” 40 Foreign Commerce Weekly 3 et seq. (U. S. Dept. of Commerce, Sept. 11, 1950); Fact Sheet, cited supra.