"Such is the case in China, and such it is here. It is a system with which we in this quarter of the world are quite familiar, for the British Courts in the Ottoman dominions and Egypt exist solely by virtue of His Majesty's ex-territorial jurisdiction in those countries. Our position is assimilated as nearly as may be to a Crown colony, and in places where the Crown has enjoyed ex-territorial power, and subsequently acquires territorial dominion, the transition to the status of a Crown colony can be effected almost insensibly, as I can personally testify from my observation of various phases in that process which have taken place in Zanzibar and East Africa. From time to time questions as to the status of British subjects in China and the Ottoman Dominions have come before our courts, and it has been settled that no British subject can change his legal domicile, by residence in any place where the Crown has ex-territorial authority. That, as we know to our cost, owing to the great inconvenience which it has entailed upon the British community, is, I think, the effect of In re Tootal's Trusts (1882), (52 L. J. Ch. 664; 23 Ch. D. 532), approved of by the Privy Council in Abd-ul-Messih v. Farra (1887) (57 L. J. P. C. 88; 13 App. Cas. 431). These decisions, it is true, relate only to the subtle and artificial doctrine of personal domicile which has been evolved by our civil courts for the purpose of determining questions relating principally to probate and administration; and a legal domicile for the purpose of a court of probate is, I need hardly say, a very different thing from a commercial domicile for the purpose of a Prize Court. But In re Tootal's Trusts emphasizes the fact that there still exist countries where, owing to fundamental differences in race and religion, Europeans do not merge in the general life of the native inhabitants, but keep themselves apart in separate communities; and where such separation is sanctioned by the exercise of ex-territorial authority I am of opinion that it is impossible for any individual to acquire a trade domicile other than that of the country to which he owes allegiance.

"Mr. Wolf is a German subject and a member of the German community in Shanghai, and his domicile for the purpose of these proceedings must be taken to be German. His goods form part of the cargo of an enemy ship which has been confiscated to the Crown, and they must be condemned in like manner."

In the similar cases of the Lützow and Koerber,1 decided by the Prize Court for Egypt, the claimants argued that even if it were impossible to acquire a "civil" domicile in China, it was nevertheless possible to acquire a "commercial" domicile; that there was a difference between the two; that the essential element in commercial domicile is an animo removendi—the intent to abandon a former domicile for a new one and does not depend on nationality nor even upon the real domicile, but on the place in which the business is carried on; whereas, on the contrary, "civil" domicile is a question of origin and nationality. This point as to the difference between the kinds of domicile 1I Br. & Col. Pr. Cas. 528.

had not been argued or passed upon by the Court in the case of the Derflinger No. 1. Although the supreme court of Maine in the case of Mathew v. Cunningham (1909), had held that domicile might be acquired by an American citizen through residence in China, the Prize Court for Egypt took a different view of the matter. In the course of his judgment, Judge Grain said:

"To take Dicey's definition of commercial domicile, can it be said that a person who pays no taxes to the country in which he is living, is more or less beyond the civil control of the country, whose conduct is regulated by his own judicial courts, who only pays such duty on imports and exports as have been arranged by treaty with his own State, and who in some extraterritorial countries cannot own the smallest parcel of land-can it be said that he is a person 'whose trade or business contributes to or forms part of the resources of such country and renders it, therefore, reasonable that his hostile, friendly, or neutral character should be determined by reference to the character of such country'?"

And he concluded:

"Although I have been much impressed by the judgment in Mathew v. Cunningham and the review of the British cases in that judgment, nevertheless I am of opinion that at the present time the British law is that neither a civil nor a commercial domicile can be established by an individual who is resident or carrying on business in a foreign land when his country has been granted the privileges of extra-territoriality."

In the case of the Eumaeus,2 Sir Samuel Evans held that a firm consisting of two British and two German subjects, neither of whom resided at Shanghai, carrying on business at Shanghai where it was registered at the German consulate as a German firm must be treated as a German firm for all purposes of trade. None of the partners, it was held, had acquired or could acquire under the circumstances a commercial domicile in China because of the system of extra-territorial jurisdiction prevailing there. The shares in the goods attributable to the German partners were therefore condemned; as regards those of the British partners the case was adjourned for further evidence as to what measures, if any, had been taken by them to sever their connection with the firm on the outbreak of the war. Adverting to the system of extra-territoriality in China, Sir Samuel said the effect was that "not only are the respective European communities governed by their own national laws among themselves, but that the Chinese authorities are precluded from exercising any 174 Atl. Rep. 809. 'IV Lloyd 270; I Br. & Col. Pr. Cas. 605.

authority in any disputes between the subjects or citizens of the European states respectively, and other foreigners." Sir Samuel was not called upon in this case to express an opinion upon the question whether at the present day a British subject could acquire a "civil" domicile in an Oriental country like China, since none of the partners claimed to have acquired it. The decision in Tootal's Trusts (1883) that it could not be acquired might or might not, he said, be good law and he pointed out that it had been dissented from by the supreme court of Maine. Nor was it necessary to pronounce upon the question whether for purposes of prize law a "commercial" domicile might be acquired by Europeans in Oriental countries. That, he thought, must be dependent upon circumstances. "For instance," he said, "it is difficult to find any good reason why a British subject might not have a commercial domicile in a country like Japan where consular jurisdiction and extra-territorial privileges have been abolished for some years."

The Judicial Committee of the Privy Council does not appear to have pronounced an opinion on the question of the acquisition by Europeans of domicile, civil or commercial, in Oriental countries. Likewise decisions of the Prize Courts of other countries than Great Britain seem to be lacking.

But the House of Lords held in 1918 in the case of Casdagli v. Casdagli (L. R., 1919, A. C., 145), that a British subject might acquire through residence a "civil" domicile in Egypt. The decisions of the Prize Courts referred to above were made before the decision of the House of Lords in the Casdagli case. It is possible that if the question of the acquisition of "commercial" domicile in Oriental countries had come before the Prize Courts subsequent to the decision of the House of Lords they would have reached a different conclusion. There would seem to be no logical reason why commercial domicile cannot be acquired in a country where the system of extra-territorial jurisdiction prevails. Compare the criticisms of Evans in his Cases on International Law, pp. 433-4, and Huberich in the Law Quarterly Review, 1915, p. 447.

CHAPTER XII

PASSING OF PROPERTY

I

ANTE-BELLUM CONTRACTS AND SHIPMENTS

Sec. 349. Preliminary Observations. The question which the Prize Courts were most frequently called upon to decide in connection with the liability of goods to condemnation was whether the ownership had legally passed to the claimant at the time of capture. The determination of the question frequently involved an interpretation of particular kinds of contracts employed in maritime transactions such as those containing f.o.b. (free on board) and c.i.f. (carriage, insurance, freight) clauses, clauses containing the words "documents against acceptance," "no arrival, no sale," etc.; whether the sellers intended to reserve the right of disposal of the goods (jus disponendi); the legal import of bills of lading; who had the ownership in the case of shipments to or by enemy branch houses or selling agencies in neutral territory; the effect of the domicile of the claimant in neutral territory; and whether the rights of mortgagees, pledgees and lien holders of enemy goods were rights of property. The determination of these questions was often admittedly very difficult in view of the complex and involved nature of the transactions. The decisions of the British Prize Courts were by far the most numerous and it was they which discussed with the greatest fullness the questions of law involved and which laid down in the clearest terms the principles upon which the decisions were reached.

Sec. 350. Distinction Between Ante-Bellum and PostBellum Transactions. The British Prize Courts, in particular, attached great importance to the distinction between contracts and shipments made in good faith prior to the outbreak of war, especially when war was not yet anticipated by the parties, and those made after the outbreak of war or at a time when war

was imminent or expected. In the former case in determining the question as to who was the owner of goods at the time of capture they applied generally the rules of municipal law, that is, the rules of the English civil or commercial law. On the other hand, in determining the fact of ownership in the case of contracts or shipments made during the war or when war was already imminent and expected, they applied the more rigorous rules of prize law and not those of municipal law, and refused to recognize the validity of transfers of property from enemy to non-enemy persons which if the rules of municipal law had been applied would have been valid transfers.1 Likewise, they held that, according to the principles of prize law, a non-enemy owner who during the war shipped goods to an enemy country could not be regarded as retaining the jus disponendi, and therefore the ownership, and hence goods so shipped must be regarded as enemy goods when captured. This rigorous interpretation was almost exclusively English.

Sec. 351. The Risk Test. The Jus Disponendi. Case of the "Miramichi." The question of the passing of property in consequence of shipping contracts made before the outbreak of war first came before the British Prize Court in the case of the Miramichi, November, 1914.2 Briefly, the facts were the following: In July, 1914, before war was imminent, an American firm made c.i.f. contract for the sale of wheat to a German firm. The wheat was shipped on the Miramichi, a British vessel, and was destined to the port of Rotterdam. During the course of the voyage war broke out and, in consequence, the buyers became enemies of Great Britain. The sellers' bankers, a neutral company, had discounted the bill of exchange drawn by the sellers on the buyers and had forwarded it together with the bill of lading and other documents to a bank in Germany for tender of the latter documents against acceptance of the bill of exchange. The cargo being seized as prize by the British, the German buyers refused to take up the documents, whereupon the neutral sellers claimed the wheat as their property. The Attorney-General asked for condemnation on the ground that the test of liability to condemnation was whether the enemy or the neutral would suffer the loss if the wheat was condemned, that is, it depended on the answer to the question upon whom was the risk at the moment of capture. In this case, since the sellers had a

See the case of the Posterior and Other Vessels, VII Lloyd 21; III Br. & Col. Pr. Cas. 275.

'I Lloyd 157; I Br. & Col. Pr. Cas. 137.