1

The Law of the Seals1

The Northern Fur Seal (Callorhinus ursinus) played a much more prominent role in the development of international law than any member of this species would have hoped to play. Two historical arbitration cases in 1893 and in 1902 revolved around the hunting and the protection of the seal. The 1893 Bering Sea Arbitration between the United Kingdom and the United States of America is seen as one of the milestones of international environmental law, the freedom of the High Seas and the protection (and exploitation) of natural resources. The 1902 arbitration between the Russian Empire and the United States (often called the Asser Arbitration after its sole-arbitrator Tobias Michael Carel Asser) concerned the seizure of four whaling and sealing ships seized by the Russian navy.

2 One of the captains of the seized ships,

Alex McLean, is rumoured to be the true-life model for Jack London’s “Sea Wolf”. Tobias Michael Carel Asser was awarded the Nobel Prize for Peace in 1911.

3

The regulations set up by the Bering Sea Tribunal for the hunting of fur seal turned out insufficient for protection of the species (one reason being that they only applied to British/Canadian and US sealers). In 1911, Japan, Russia, the United Kingdom and the United States entered into the Convention between the United States and Other Powers Providing for the Preservation and Protection of Fur Seals. This treaty (and its successor treaty of 1957, amended in 1976) allowed the fur seal population to stabilize and to grow. In 1945, the population of fur seals on the Pribilof Islands was again at 2,5 million animals. The fur seal treaties survived two world wars and the cold war. They were only abandoned in 1984, when environmental groups pressured the US Senate not to renew the treaty. The present case study focuses on the repercussions the arbitration had on the concession for “harvesting” fur seals which the United States had entered into with the North American Commercial Company (“NACC”) in 1890. Historians believe that the capital of the company of USD 2 million also stemmed from foreign sources. Don MacGillivray suspects that the Rothschild bank in London invested in the NACC.

4

Indeed, a New York Times article of 27 November 1897 reports that the Rothschilds through Liebes &Co. invested in the Alaska Exploration Company.

5 We therefore know that seven years

after the incorporation of the NACC, there was a business relationship between Isaac Liebes, the “man who actually ran the NACC”,

6 and the Rothschilds. However, no such reports were found

for the time around 1890. Despite legal skirmishes and raids on the High Seas, the economies of the United Kingdom and the USA worked hand in hand when it came to processing the fur seals. London was the centre of the fur processing industry. An investment of English money in the NACC therefore would have made excellent economic sense. However, Mr. Isaac Liebes emphasized strongly that one of the main selling points for awarding the tender to the NACC was that it was truly American.

7

The allegations made against the NACC, Herman Liebes, Alexander McLean, H.H. D. Peirce, C.H. Townsend and others were made at the time. The drafter of the case study takes no view on

1 Profound thanks go to Ellen D. Bowman and her colleagues of the K&L Gates LLP library team. Without their creativity and gift

for digging up documents, this case study would not have been possible. Thanks are also due to John Cloud, John Lindsay

and Paul Hillman of the NOAA for their valuable assistance as well as to Claire-Amandine Soulie of the Rothschild Archive in

London. Last, not least, thanks go to Oliver Bryk, a hobby historian from California. - All mistakes are my own. 2 Available at www.investmentmoot.org.

3 http://www.nobelprize.org/nobel_prizes/peace/laureates/1911/asser-bio.html; see also

http://www.asser.nl/Default.aspx?site_id=1&level1=13688&level2=13742. 4 Don MacGillivray, Captain Alex MacLean: Jack London's Sea Wolf, p. 75.

5 http://query.nytimes.com/gst/abstract.html?res=9807EED71330E333A2575BC2A9679D94669ED7CF

6 Briton Cooper Busch, The War Against the Seals, p. 124.

7 See letter of 24 February 1890 at www.investmentmoot.org

2

their veracity or credibility. Perhaps the allegations will be clearer after the merits phase of our case which will take place on the day following the Moot’s traditional final.

8

We have taken care to represent the facts of the case (other than the investor-State arbitration – which is our invention) with great precision. Some information stems from contemporaneous reports, including congressional enquiries and newspapers, as well as party submissions in contentious proceedings. Participants should exert professional caution as to their probative value. In case of any discrepancy between the case study and the original documents, the case study takes precedence. Although the facts of the case and the proceedings take place in the late 19th and early 20th century, treaties (except for those explicitly mentioned in the study), customary public international law and case law are those of the 21st century. Participants will, however, have to bear in mind that the fur seal was seen as an economic resource throughout the period covered by the facts of the case and the (fictional) arbitration. The 1923 Treaty is historic.

9 The Alaska Charter Treaty of 1911 (ACT) is not. For the purposes of

the case study, the ACT was a treaty between Her Britannic Majesty, the Russian Empire, the Japanese Empire and the Unites States of America. A copy of the relevant parts of this treaty is available on the Moot’s website. No mammals, maritime or other, were harmed in producing this case study. Pribilof Islands The Pribilof Islands are a group of four small islands (but cover 200km

2), situated north of the

Aleutes in the Pacific ocean; 320 km from the Alaskan coast and 500km from the shores of Siberia. It is fair to say, a few sea miles north of the middle of nowhere. The group was discovered in 1786. In 1788, the islands were first explored by Gavriil Loginovich Pribylov, captain of the ship "Svyatoy Georgy" (St. George), which belonged to a Russian-American Company. It is reported that there was no permanent settlement on the islands, but that they were used for hunting by the native Aleuts. Pribylov also discovered the fur seal rookeries. Almost immediately, Russian sealers began to exploit the herd, initially for their leather, not the fur. When stocks declined, Russia undertook attempts at limiting the killing and preserving the heard. By the time of the sale of Alaska, the herds had recovered to the pre-exploitation level of about 3 million animals (80% of which were breeding on the Pribilofs).

10

Another form of exploitation coincided with the hunting of the seals. Native Aleuts were moved up north to settle permanently on the Pribilofs to assist with the sealing and at the same making them dependent on supplies from mainland Alaska.

1112

Seward’s Folly – Russian Folly? Andrew Johnson became president of the United States after the assassination of Abraham Lincoln in 1865. His Secretary of State, William H. Seward, negotiated the Purchase of Alaska

8 Invitations to the merits phase proceedings will be extended to selected teams following the semi-final rounds. Additional

details will be provided by the Moot’s organizers. 9 http://usa.usembassy.de/etexts/friendtreaty0139.htm.

10 See Briton Cooper Busch, p. 99 et seq.

11 Ibid. p. 101 et seq. US merchants were becoming a power in “Russian America“. In 1821, Russia banned US Americans from

Russian territory in North America. Following vociferous protests by the US government that ban was reversed in 1824. For

the next 40 years, Russia oscillated between protectionism and encouraging US and Canadian investment. 12

See also Indian Claims Commission, 9 June 1978, Docket Nos 352, 369, Aleut Community of St. Paul Island v. USA, Aleut

Tribe and Aleut Community of St. Paul Island v. USA, 42 Ind. Cl. Comm. 1,

http://digital.library.okstate.edu/icc/v42/iccv42p042.pdf.

3

from the Russian Empire in 1867.13

The treaty was signed at 4 a.m. on 30 March 1867,with a purchase price of USD 7.2 million.

14

The purchase was by no means just ”Seward’s folly“. Important American business interests had pushed for the acquisition for more than a decade. Even before the discovery of gold and oil in Alaska – and irrespective of Alaska’s geopolitical importance, the deal proved profitable for the USA. The first Fur Seal Lease (see below) alone yielded an income of more than USD 10 million for the US Government.

15

The Northern Fur Seal Callorhinus ursinus, the Northern Fur Seal or Sea-bear, is an impressive animal. It hunts fish and squid in depths of 70 m and up to 200 m, covering distances of 10,000 km outside the breeding season. It roams the entire west coast of North America, the coasts of Kamtshatka, Japan and Korea. However, its breeding grounds are not as widespread. The Fur Seal breeds in large rookeries of thousands of animals on a handful of islands. The Pribilofs (Alaska)

16 and the Commander

Islands (Russia) being the most important ones.17

At the time of the facts of the case, some 80% of the seal population bred on the Pribilofs.18

It is easy to distinguish the sexes of adult Fur Seals: adult males are massive, 2 m to 2.1 m and up to 270 kg. Females are much smaller: up to 1.5 m and 50 kg. However, up to the age of five, it is difficult to tell them apart, especially at sea.

19

Sharks and orcas hunt seals. Similarly, young animals can fall prey to Steller sea lions or arctic foxes. However, in the period covered by our case study, the biggest risk was posed by human hunting.

20

Fur Seals are highly polygamous; a harem of an adult bull often counting between 15 to 25, sometimes 40 females.

21 Young males will form bachelor groups, “haul-outs”.

22 The adult bulls

keep them away from the females. Typically only very few males get a chance to acquire a harem and to breed. The First Lease – 1870 to 1890

23

As described above, the seal herd had recovered by the time of the American takeover of Alaska. After an unregulated season in 1868,

24 the US Government decided to administer the seal herd

through a lease. All other killing of fur seals was prohibited.25

13

See for example. Briton Cooper Busch, p. 102 ff. 14

Seward, Frederick W., Seward at Washington as Senator and Secretary of State. Volume: 3, 1891, p. 348. 15

Briton Cooper Busch, p. 111. 16

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 91 et seq. 17

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 94. Tyulen'i Islands (off the coast of Sakhalin) and the Kuril Islands rookeries as well as rookery on San

Miguel island (the latter was established later) play no role for the case-study. 18

Briton Cooper Busch, 95 et seq. 19

For an extensive report see Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission,

Report of the American Commissioner, p. 98 et sq. 20

Although hunting seals for their fur has stopped, the species is classified as “vulnerable” today. There is no general

consensus as to the causes. This is, however, outside the scope of the case-study. 21

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 109. 22

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 92. 23

See also Frank Sloss, Who Owned the Alaska Commercial Company, Pacific Northwest Quarterly 1977, pp. 120 – 130. 24

Admitted by the US Government: Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission,

Report of the American Commissioner, p. 132 f.; for a more critical appraisal, see Briton Cooper Busch, p. 107 ff. 25

See Section 1956 of the Revised Statutes of the USA.

4

On 1 July 1870, Congress passed legislation authorizing a bidding process for a 20-year exclusive lease for the Pribilof Islands. The tender was published in August 1870.

26 Of the 14 bids

submitted,27

the government selected the Alaska Commercial Company (“ACC”). The terms of the lease are described in Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American Commissioner, p. 135 et seq. In all, over 2 million seal skins were ”harvested“ under the ACC-Lease.

28

The Second Lease – 1890 to 1910 When the first lease expired, the US Government tendered out a new lease (also for 20 years). It fixed the number of seals to be killed in the first season (summer 1890) at 60,000.

29 12 bids were

received.30

The winning bidder was the newly established North American Commercial Company (“NACC”).

31

The terms of the lease were as follows:

32

“CONTRACT BETWEEN THE UNITED STATES AND THE NORTH AMERICAN

COMMERICAL COMPANY; UNDER WHICH SAID COMPANY IS GRANTED THE EXCLUSIVE RIGHT OF TAKING FUR SEALS UPON THE PRIBILOF ISLANDS IN ALASKA.

This indenture, made in duplicate this twelfth day of March, 1890, by and between

William Windom, Secretary of the Treasury of the United States, in pursuance of chapter 3 of title 23, Revised Statues, and the North American Commercial Company, a corporation duly established under the laws of the State of California, and acting by I. Liebes, its president, in accordance with a resolution and said corporation adopted at a meeting of its board of directors held January 4, 1890, witnesseth:

That the said Secretary of the Treasury, in consideration of the agreements

hereinafter stated, hereby leases to the said North American Commercial Company for a term of twenty years, from the first day of May, 1890, the exclusive right to engage in the business of taking fur seals on the islands of St. George and St. Paul, in the Territory of Alaska, and to send a vessel or vessels to said islands for the skins of such seals.

The said North American commercial Company, in consideration of the rights

secured to it under this lease above stated, on its part covenants and agrees to do the things following, that is to say:

To pay to the Treasurer of the United States each year during the said term of

twenty years, as annual rental, the sum of sixty thousand dollars, and in addition thereto agrees to pay the revenue tax, or duty, of two dollars laid upon each fur-seal

26

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 134. 27

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 134; see also Briton Cooper Busch, p. 109 et seq. 28

Briton Cooper Busch, p. 111. 29

New York Times, 25 December 1889, http://query.nytimes.com/mem/archive-

free/pdf?res=9F02E3DD1E30E633A25756C2A9649D94689FD7CF; Los Angels sic! Daily Herald, 25 December 1889,

http://chroniclingamerica.loc.gov/lccn/sn85042460/1889-12-25/ed-1/seq-4/; see also New York Times, 14 January 1890,

http://query.nytimes.com/mem/archive-free/pdf?res=9B01EEDC143BE533A25757C1A9679C94619ED7CF; 30

New York Times, 22 February 1890,

http://query.nytimes.com/gst/abstract.html?res=F20F13FE3E5F10738DDDAB0A94DA405B8085F0D3; see also letter to the

editor of the New York Times, http://query.nytimes.com/mem/archive-

free/pdf?res=9A00E4DE153BE533A2575BC2A9649C94619ED7CF. 31

The NACC’s registration documentsare available on www.investmentmoot.org. 32

David Starr Jordan, The Fur Seals and Fur-Seal Islands Part 1, p. 238-240;

http://www.archive.org/stream/fursealsfurseali01jorduoft#page/n7/mode/2up, Fur Seal Arbitration, The Case of the United

States, Report of the Bering Sea Commission, Report of the American Commissioner, p. 120, 146.

5

skin taken and shipped by it from said islands of St. George and St. Paul, and also to pay to said Treasurer the further sum of seven dollars sixty-two and one-half cents apiece for each and every fur-seal skin taken and shipped from said islands, and also to pay the sum of fifty cents per gallon for each gallon of oil sold by it made from seals that may be taken on said islands during the said period of twenty years; and to secure the prompt payment of the sixty thousand dollars rental above referred to, the said company agrees to deposit with the Secretary of the Treasury bonds of the United States to the amount of fifty thousand dollars, face value, to be held as a guarantee for the annual payment of said sixty thousand dollars rental, the interest thereon when due to be collected and paid to the North American Commercial Company, provided the said company is not in default of payment of any part of the said sixty thousand dollars rental.

That it will furnish to the native inhabitants of said islands of St. George and St.

Paul annually such quantity or number of dried salmon, and such quantity of salt and such number of salt barrels for preserving their necessary supply of meat as the Secretary of the Treasury shall from time to time determine.

That it will also furnish to the said inhabitants eighty tons of coal annually, and a

sufficient number of comfortable dwellings in which said native inhabitants may reside; and will keep said dwellings in proper repaid; and will also provide and keep in repair such suitable schoolhouses as may be necessary, and will establish and maintain during eight months of each year proper schools for the education of the children on said islands, the same to be taught by competent teachers, who shall be paid by the company a fair compensation, all to the satisfaction of the Secretary of the Treasury; and will also provide and maintain a suitable house for religious worship; and will also provide a competent physician or physicians, and necessary and proper medicines and medical supplies; and will also provide the necessaries of life for the widows and orphans and aged and infirm inhabitants of said islands who are unable to provide form themselves; all of which foregoing agreements will be done and performed by the said company free of all costs and charges to said native inhabitants of said islands or to the United States.

The annual rental, together with all other payments to the United States provided

for in this lease, shall be made and paid on or before the 1st day of April of each and

every year during the existence of this lease, beginning with the 1st day of April, 1891.

The said company further agrees to employ the native inhabitants of said islands to

perform such labor upon the islands as they are fitted to perform, and to pay therefore a fair and just compensation, such as may be fixed by the Secretary of the Treasury, and also to contribute, as far as is in its power, all reasonable efforts to secure the comfort, health, education, and promote the morals and civilization of said native inhabitants.

The said company also agrees faithfully to obey and abide by all rules and

regulations that the Secretary of the Treasury has heretofore or may hereafter establish or make in pursuance of law concerning the taking of seals of said islands, and concerning the comfort, morals, and other interests of said inhabitants, and all matters pertaining to said islands and the taking of seals within the possession of the United States. It also agrees to obey and abide by any restrictions or limitations upon the right to kill seals that the Secretary of the Treasury shall judge necessary, under the law, for the preservation of the seal fisheries of the United States; and it agrees that it will not kill or permit to be killed, so far as it can prevent, in any year a greater number of seals than is authorized by the Secretary of the Treasury.

The said company further agrees that it will not permit any of its agents to keep,

sell, give, or dispose of any distilled spirits or spirituous liquors or opium, on either of said islands, or the waters adjacent thereto, to any of the native inhabitants of said

6

islands, such person not being a physician and furnishing the same for use as a medicine.

It is understood and agreed that the number of fur seals to be taken and killed for

their skins upon said islands by the North American Commercial Company during the year ending May 1, 1891, shall not exceed 60,000.

The Secretary of the Treasury reserves the right to terminate this lease and all

rights of the North American Commercial Company under the same at any time, on full and satisfactory proof that the said company has violated any of the provisions and agreements of this lease, or any of the laws of the United States, or any Treasury regulation respecting the taking of fur seals, or concerning the islands of St. George and St. Paul, or the inhabitants thereof.

In witness whereof the parties have set their hands and seals the day and year

above written.

[SEAL] WILLIAM WINDON, Secretary of the Treasury. [SEAL] NORTH AMERICAN COMMERCIAL COMPANY, By I.

LIEBES, President of the North American Commercial Company.

Attest: II.B.PARSONS, Assistant Secretary.”

On the same day, the NACC executed a bond as surety for the lease. As to the nominal value of the bond, the evidence is contradictory. While in the 1913 and 1914 Rothermel Reports (see below), a value of USD 500,000 is alleged, a legal opinion by the Attorney General of 21 May 1895 as well as Treasury documents have a sum of USD 50,000.

33 The legal opinion also states

“the Secretary of the Treasury can not rightfully require the North American Commercial

Company to furnish … additional bonds or other security”.34

The text of the bond was as follows: “Know all men by these presents: That we, the North American Commercial Co., a corporation duly established by law of California and having its usual place of business at San Francisco, in said State, by I. Liebes, of San Francisco, its president, duly authorized by a resolution of its board of directors, passed January 4, 1890, as principal, and Darius O. Mills, of the city and State of New York; Lloyd Tevis and Herman Liebes, of the city of San Francisco, State of California; and Stephen B. Elkins, of Elkins, State of West Virginia, as sureties, are held and firmly bound unto the United States of America in the full and just sum of $50,000, lawful money, to be paid to the said United States; for which payment, well and truly to be made, we jointly and severally bind ourselves, our successors, heirs, executors, and administrators, and each of them, firmly by these presents. Signed with our hands and sealed with our seals and dated this 12

th day of March, in the year of our Lord 1890.

The condition of this obligation is such that whereas the Secretary of the Treasury has on the day of the date hereof made with said North American Commercial Co. a written lease, under the provisions of chapter 3 of title 23 of the Revised Statutes of the United States, now if the said North American Commercial Co. shall truly and faithfully abide by and observe all laws and requirements of Congress and the regulations of the Secretary of the Treasury, made and to be made by authority of law, touching the subject matter of taking of fur seals and of disposing of the same, and shall well and truly pay all rentals, taxes, dues, and other sums of money accruing to

33

US Attorney General, 21 May 1895, 21 Op. Att’y Gen. 177 1894-1897; see also US Supreme Court, No 481, 31 May 1898,

171 US 110, p. 122, 123. 34

US Attorney General, 21 May 1895, 21 Op. Att’y Gen. 177 1894-1897; see also US Supreme Court, No 481, 31 May 1898,

171 US 110, p. 122, 123.

7

the United States under said lease, and perform all other considerations connected therewith, and generally shall truly and faithfully abide by and perform all the covenants and agreements in said lease to be by them performed, then this obligation to be void, otherwise to remain and be in full force and virtue. NORTH AMERICAN COMMERCIAL CO., By I. LIEBES, President. Attest: H. B. PARSONS Assistant Secretary. DARIUS O. MILLS, LLOYD TEVIS HERMAN LIEBES By D.O. MILLS Attorney in fact. STEPHEN B. ELKINS” AFFIDAVIT

35

Competitors were not happy with the award of the Lease to the NACC and spread rumors about the NACC. William Windon therefore asked Isaac Liebes for an affidavit as a condition to signing the Lease with the NACC: “I, Isaac Liebes, on oath depose and say that I am 37 years of age, that I am a citizen of the United States, and reside in the city of San Francisco, Cal.; I have for the last 21 years been engaged in the fur business and am thoroughly acquainted therein from the capture of the fur-bearing animals to the manufacture and sale of fur goods. That I am the president of the North American Commercial Co., of California; that Lloyd Tevis, of San Francisco, is the vice president of said company, and Albert Miller Mathias Meyer, and H. Cowell, with said Tevis and myself, compose its board, of directors, and D.O. Mills and others are large stockholders therein; that as president of said company I have submitted proposals to the Hon. Secretary of the Treasury for a lease of the seal islands St. George and St. Paul, Alaska, under his advertisement for bids, that the directors and stockholders of said company are mostly men of great wealth and high financial and business standing; that I am informed that charges have been filed in the office of the Secretary of the Treasury by parties competing for such lease of said seal islands, charging that I have been prosecuting my said business in violation of the law of the United States; and claiming that the bids or proposals submitted by me for said lease are in excess of any reasonable sum for which the business thereunder can be properly and profitably conducted, and that the company must necessarily fail to fulfill the requirements of such lease.

I further depose and say that I have not during my said business life, directly or indirectly, knowingly engaged in any transactions involving violations of the laws of the United States; and to my best knowledge and belief no member of the company I represent has ever been engaged in such violations of law in respect to its business or otherwise. As to the profits which the company may derive from the possession of such lease, I think I am better competent to judge than interested parties competing against it; and that from my knowledge of the business as aforesaid, I depose and say that I believe that the company will derive reasonable and satisfactory profits therefrom, and at the same time give satisfaction to the authorities and agents of the United States. That the principal charge, if charge it may be termed, against me is stated, in respect to a vessel called the Ariel. Many years ago, say, more than 10 years ago, I was interested for a short time in a vessel bearing that name, but that during such interest she was not to my knowledge employed in any illegal transaction or under seizure for any violation of the laws of the United States. The British vessel called the Ariel, seized in 1889, and sought to be connected with the American vessel of that name, in which I was interested as aforesaid, I never

35

48 Cong. Records 1912, p. 10913 (amount corrected).

8

had, and have not now any connection or interest whatsoever. As to the schooner La Ninfa, embraced in the charges aforesaid, I did have an interest in her at the time therein stated, and she cleared from San Francisco upon a sealing voyage, and proceeded under orders to the Cape Horn rookeries, there to prosecute her business. During the time I was so interested in said last-named vessel she was not engaged in any business involving violations of law, and never under seizure for any cause, and further your deponent saith not.

Isaac Liebes”

The North American Commercial Company The NACC’s registration form of 30 December 1889

36 shows the following directors:

Lloyd Tevis

Henry Cowel

Mathias Meyer

Albert Miller

Isaac Liebes Each of the five directors took one share of USD 100. The entire capital of the company was USD 2 million divided into 20,000 shares. Subsequently, Isaac Liebes received 666 shares in total in consideration for his services as president of the company. According to testimony by Isaac Liebes, Herman Liebes never owned shares in the NACC.

37

Decline of the Herd - Hunting of Seals on Land and on Sea Already during the life-time of the ACC-Lease, a marked reduction in the number of seals was observed on the Pribilof Islands. Seals can be hunted on land during the breeding season and at sea (pelagic sealing). Both methods are described, for example, in the pleadings submitted by the US Government to the Bering Sea tribunal.

38

Because of the polygamous nature of the fur seal, the US Government stated that killing “surplus males” on land between 1 and 5 years of age did not have an effect on the size of the population.

39 It considered a controlled hunt of bachelor males innocuous.

According to the US Government, pelagic sealing was the cause of the decline of the seal heard. It blamed the loss of a multiple of animals that were killed but not recovered,

40 as well as the

indiscriminate killing of females and males.41

Not only was the female’s breeding potential

36

The NACC’s registration documents at www.investmentmoot.org. 37

Newspaper articles suggested otherwise: http://query.nytimes.com/mem/archive-

free/pdf?res=F50612F7395416738DDDAA0894D0405B8785F0D3;

http://query.nytimes.com/gst/abstract.html?res=9B04EFDA1339E033A25750C1A9649D94609ED7CF. 38

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, pp. 147 et seq. and pp. 187 et seq. 39

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 120, 178. 40

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 190 et seq. 41

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 196 et seq.

9

exterminated,42

many females were pregnant, or were caught during a feeding excursion leaving their pups to starve.

43 Pregnant seals were also much more vulnerable than males as they

typically rest on the surface of the ocean.44

According to H.W. Elliott, the heard had dwindled to a mere 20% of its former size in July 1890.

45

War on the Sealers As discussed above, the US Government attributed the rapid decline of the herd to the rise in pelagic sealing, especially by British/Canadian sealers since the 1870ies. In 1886, the US took military/police action. It began seizing sealing vessels, not only in the 3 miles zone, but also on the high seas.

46 This was despite outspoken and vociferous criticism even in the US itself.

Indeed, even Thomas F. Bayard, Secretary of State under President Cleveland, a true beacon and source of inspiration for international maritime law, doubted the legality of the seizures.

47

Despite this, at least 20 British Canadian ships were seized between 1886 and 1889.

48

Naturally, Her Britannic Majesty was not amused. The freedom of the high seas was central to British foreign policy. While the United Kingdom did not want a conflict with the US, it was conscious that it had to support its British-Canadian subjects, or risk Canada declaring independence.

49

Negotiations were not easy, especially after Harrison had succeeded Cleveland as US President and James G. Blaine Bayard as Secretary of State.

50 The US blamed pelagic sealing as sole

cause of the decline. In April 1890, Britain, however, proposed a joint commission to investigate and propose regulation and insisted for the duration of the study on a “partial closed season” both on sea and land. In May 1890, the US rejected this proposal. This rejection came just two months after the new lease had been signed with the NACC.

51 Indeed, the contract had entered into

effect on 1 May 1890 and the sealing season was to start on 1 July 1890. Britain and the US were at the brink of war in 1890, when US revenue cutters received instructions to patrol the Bering Sea. Britain sent warships in the region to protect its sealers.

52 In

order to avoid a military confrontation, Britain leaked its order. The US responded by withdrawing the order to its own revenue cutters.

53

In November, H.W. Elliott’s report was submitted (but not published). It blamed not only pelagic, but also the land sealing carried out by the ACC for the decline of the Pribilof herd.

54 Whether this

contributed to the final success of the negotiations between Britain and the US is a matter of speculation.

42

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 179. 43

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 115 et seq., 196 et seq. 44

Fur Seal Arbitration, The Case of the United States, Report of the Bering Sea Commission, Report of the American

Commissioner, p. 208. 45

Briton Cooper Busch, p. 120 et seq. 46

Scott Barrett, Environment and Statecraft, the Strategy of Environmental Treaty-making, 2005, p. 27. 47

Briton Cooper Busch, p. 148; see also New York Times, 13 January 1890, http://query.nytimes.com/mem/archive-

free/pdf?res=9805EEDC143BE533A25750C1A9679C94619ED7CF. 48

Fur Seal Arbitration, Vol. IV, The Case of Her Britannic Majesty, pp. 133 et seq. 49

Briton Cooper Busch, p. 148. 50

Briton Cooper Busch, p. 148. 51

Briton Cooper Busch, p. 148; newspaper articles of 31 May 1891 and 21 June 1891 suggested friendly relations between

Blaine and the NACC, http://query.nytimes.com/mem/archive-

free/pdf?res=F0061EFF3C5E10738DDDA80B94DD405B8185F0D3, http://query.nytimes.com/mem/archive-

free/pdf?res=F70812FB3C5E10738DDDA80A94DE405B8185F0D3. 52

Scott Barrett, Environment and Statecraft, the Strategy of Environmental Treaty-making, 2005, p. 27; Briton Cooper Busch, p.

149. 53

Scott Barrett, Environment and Statecraft, the Strategy of Environmental Treaty-making, 2005, p. 27. 54

Briton Cooper Busch, p. 120 et seq.

10

The Modus Vivendi On 15 June 1891, the USA and Her Britannic Majesty signed a “modus vivendi”:

55

“Proclamation 306 - Modus Vivendi Respecting the Fur-Seal Fisheries June 15, 1891 By the President of the United States of America A Proclamation Whereas an agreement for a modus vivendi between the Government of the United States and the Government of Her Britannic Majesty in relation to the fur-seal fisheries in Bering Sea was concluded on the 15th day of June, A.D. 1891, word for word as follows: AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES AND THE GOVERNMENT OF HER BRITANNIC MAJESTY FOR A MODUS VIVENDI IN RELATION TO THE FUR-SEAL FISHERIES IN BERING SEA. For the purpose of avoiding irritating differences and with a view to promote the Friendly settlement of the questions pending between the two Governments touching their respective rights in Bering Sea, and for the preservation of the seal species, the following agreement is made without prejudice to the rights or claims of either party: (1) Her Majesty's Government will prohibit until May next seal killing in that part of Bering Sea

lying eastward of the line of demarcation described in article No. 1 of the treaty of 1867 between the United States and Russia, and will promptly use its best efforts to insure the observance of this prohibition by British subjects and vessels.

(2) The United States Government will prohibit seal killing for the same period in the same part of

Bering Sea and on the shores and islands thereof the property of the United States (in excess of 7,500 to be taken on the islands for the subsistence and care of the natives), and will promptly use its best efforts to insure the observance of this prohibition by United States citizens and vessels.

(3) Every vessel or person offending against this prohibition in the said waters of Bering Sea

outside of the ordinary territorial limits of the United States may be seized and detained by the naval or other duly commissioned officers of either of the high contracting parties, but they shall be handed over as soon as practicable to the authorities of the nation to which they respectively belong, who shall alone have jurisdiction to try the offense and impose the penalties for the same. The witnesses and proofs necessary to establish the offense shall also be sent with them.

(4) In order to facilitate such proper inquiries as Her Majesty's Government may desire to make

with a view to the presentation of the case of that Government before arbitrators, and in expectation that an agreement for arbitration may be arrived at, it is agreed that suitable persons designated by Great Britain will be permitted at any time, upon application, to visit or to remain upon the seal islands during the present sealing season for that purpose.

Signed and sealed in duplicate at Washington, this 15th day of June, 1891, on behalf of their respective Governments, by William F. Wharton, Acting Secretary of State of the United States, and Sir Julian Pauncefote, G. C. M. G., K. C. B., H. B. M. envoy extraordinary and minister plenipotentiary. WILLIAM F. WHARTON. JULIAN PAUNCEFOTE.

55

http://query.nytimes.com/mem/archive-free/pdf?res=F70D11FD355D15738DDDA90994DB405B8285F0D3

11

Now, therefore, be it known that I, Benjamin Harrison, President of the United States America, have caused the said agreement to be made public, to the end that the same and every part thereof may be observed and fulfilled with good faith by the United States of America and the citizens thereof. In witness whereof I have hereunto set my hand and caused the seal of the United States to be affixed. Done at the city of Washington, this 15th day of June, A. D. 1891, and of the Independence of the United States the one hundred and fifteenth. BENJ. HARRISON By the President: WILLIAM F. WHARTON, Acting Secretary of State.”

56

The Agreements of 1892 However, by beginning of 1892, the parties were back in the ring. The modus vivendi had to be prolonged, or the sealing war would start anew. Press reports were belligerent.

57 However, at that

time, the two States had already signed a treaty to arbitrate. The signing took place in Washington DC on 29 February 1892. The instruments of ratification were then exchanged on 7 May 1892.

58 They had also agreed on a new modus vivendi on 18 April 1892.

Treaty of Arbitration of 1892

59

“A convention between the Governments of the United States and Her Britannic Majesty, submitting to arbitration the questions which have arisen between those Governments concerning the jurisdictional rights of the United States in the waters of Bering Sea.

[Concluded at Washington February 29, 1892. Ratification advised by the Senate

March 29, 1892. Ratified by the President April 22, 1892. Ratifications exchanged May 7, 1892. Proclaimed May 9, 1892.]

The United States of America and her Majesty the Queen of the United Kingdom of

Great Britain and Ireland, being desirous to provide for an amiable settlement of the questions which have arisen between their respective governments concerning the jurisdictional rights of the United States in the waters of Bering's Sea, and concerning also the preservation of the fur-seal in, or habitually resorting to, the said Sea, and the rights of the citizens and subjects of either country as regards the taking of fur-seal in, or habitually resorting to, the said waters, have resolved to submit to arbitration the questions involved, and to the end of concluding a convention for that purpose have appointed as their respective Plenipotentiaries:

The President of the United States of America, James G. Blaine, Secretary of State

of the United States; and

56

http://www.presidency.ucsb.edu/ws/index.php?pid=71008 57

http://news.google.com/newspapers?nid=2249&dat=18920305&id=QXs-

AAAAIBAJ&sjid=AVoMAAAAIBAJ&pg=3321,5088461; http://query.nytimes.com/mem/archive-

free/pdf?res=F20C11FD355D15738DDDA80994DB405B8285F0D3. 58

Award of the Tribunal, 15 August 1893, Fur Seal Arbitration, Vol. I, p. 75., available at www.investmentmoot.org. 59

http://ia600308.us.archive.org/20/items/arbitrationfurse02beri/arbitrationfurse02beri.pdf.

12

Her Majesty the Queen of the United Kingdom of Great Britain and Ireland, Sir Julian Pauncefote, G. C. M. G., K. C. B., Her Majesty's Envoy Extraordinary and Minister Plenipotentiary to the United States;

Who, after having communicated to each other their respective full powers which

were found to be in due an proper form, have agreed to and concluded the following articles.

Article I. The questions which have arisen between the Government of the United States

and the Government of Her Britannic Majesty concerning the jurisdictional right of the United States in the waters of the Bering's Sea, and concerning also the preservation of the fur-seal in, or habitually resorting to, the said Sea, and the rights of the citizens and subjects of either country as regards the taking of fur-seal in, or habitually resorting to, the said waters, shall be submitted to a tribunal of Arbitration, to be composed of seven Arbitrators, who shall be appointed in the following manner, that is to say: Two shall be named by the President of the United States; two shall be named by Her Britannic Majesty; His Excellency the President of the French Republic shall be jointly requested by the High Contracting Parties to name one; and His Majesty the King of Italy shall be so requested to name one; and His Majesty the King of Sweden and Norway shall be so requested to name one. The seven Arbitrators to be so named shall be jurists of distinguished reputation in their respective countries; and the selecting Powers shall be requested to choose, if possible, jurists who are acquainted with the English language.

In case of the death, absence or incapacity to serve of any or either of the said

Arbitrators, or in the event of any or either of the said Arbitrators omitting or declining or ceasing to act as such, the President of the United States, or Her Britannic Majesty, or His Excellency the President of the French Republic, or His Majesty the King of Italy, or His Majesty the King of Sweden and Norway, as the case may be, shall name, or shall be requested to name forthwith another person to act as Arbitrator in the place and stead of the Arbitrator originally named by such head of a State.

And in the event of a refusal or omission for two months after receipt of the joint

request from the High Contracting Parties of His Excellency the President of the French Republic, or His Majesty the King of Italy, or His Majesty the King of Sweden and Norway, to name an Arbitrator, either to fill the original appointment or to fill a vacancy as above provided, then in such case the appointment shall be made or the vacancy shall be filled in such manner as the High Contracting Parties shall agree.

Article II. The Arbitrators shall meet at Paris within twenty days after the delivery of the

counter cases mentioned in Article IV, and shall proceed impartially and carefully to examine and decide the questions that have been or shall be laid before them as herein provided on the part of the Governments of the United States and Her Britannic Majesty respectively. All questions considered by the tribunal, including the final decision, shall be determined by a majority of all the Arbitrators.

Each of the High Contracting Parties shall also name one person to attend the

tribunal as its Agent to represent it generally in all matters connected with the arbitration.

Article III. The printed case of each of the two parties, accompanied by the documents, the

official correspondence, and other evidence on which each relies, shall be delivered in duplicate to each of the Arbitrators and to the Agent of the other party as soon as may

13

be after the appointment of the members of the tribunal, but within a period not exceeding four months from the date of the exchange of the ratifications of this treaty.

Article IV. Within three months after the delivery on both sides of the printed case either party

may, in like manner deliver in duplicate to each of the said Arbitrators, and to the Agent of the other party, a counter case, and additional documents, correspondence, and evidence, in reply to the case, documents, correspondence, and evidence so presented by the other party.

If, however, in consequence of the distance of the place from which the evidence

to be presented is to be procured, either party shall, within thirty days after the receipt by its agent of the case of the other party, give notice to the other party that it requires additional time for the delivery of such counter case, documents, correspondence, and evidence, such additional time so indicated, but not exceeding sixty days beyond the three months in this Article provided, shall be allowed.

If in the case submitted to the Arbitrators either party shall have specified or

alluded to any report or document in its own exclusive possession without annexing a copy, such party shall be bound, if the other party thinks proper to apply for it, to furnish that party with a copy thereof; and either party may call upon the other, through the Arbitrators, to produce the originals or certified copies of any papers adduced as evidence, giving in each instance notice thereof within thirty days after delivery of the case; and the original or copy so requested shall be delivered as soon as may be and within a period not exceeding forty days after receipt of notice.

Article V. It shall be the duty of the Agent of each party, within one mouth after the expiration

of the time limited for the delivery of the counter case on both sides, to deliver in duplicate to each of the said Arbitrators and to the agent of the other party a printed argument showing the points and referring to the evidence upon which his Government relies, and either party may also support the same before the Arbitrators by oral argument of counsel; and the Arbitrators may, if they desire further elucidation with regard to any point, require a written or printed statement or argument, or oral argument by counsel, upon it; but in such case the other party shall be entitled to reply either orally or in writing, as the case may be.

Article VI. In deciding the matters submitted to the Arbitrators, it is agreed that the following

five points shall be submitted to them, in order that their award shall embrace a distinct decision upon each of said five points, to wit:

1. What exclusive jurisdiction in the sea now known as the Bering's Sea, and what

exclusive rights in the seal fisheries therein, did Russia assert and exercise prior and up to the time of the cession of Alaska to the United States?

2. How far were these claims of jurisdiction as to the seal fisheries recognized and

conceded by Great Britain? 3. Was the body of water now known as the Bering's Sea included in the phrase

"Pacific Ocean," as used in the Treaty of 1825 between Great Britain and Russia; and what rights, if any, in the Bering's Sea were held and exclusively exercised by Russia after said Treaty?

4. Did not all the rights of Russia as to jurisdiction, and as to the seal fisheries in

Bering's Sea east of the water boundary, in the Treaty between the United States and

14

Russia of the 30th March, 1867, pass unimpaired to the United States under that Treaty?

5. Has the United States any right, and if so, what right of protection or property in

the fur seals frequenting the islands of the United States in Bering Sea when such seals are found outside the ordinary three-mile limit?

Article VII. If the determination of the foregoing questions as to the exclusive jurisdiction of the

United States shall leave the subject in such position that the concurrence of Great Britain is necessary to the establishment of Regulations for the proper protection and preservation of the fur-seal in, or habitually resorting to, the Bering Sea, the Arbitrators shall then determine what concurrent Regulations outside the jurisdictional limits of the respective Governments are necessary, and over what waters such Regulations should extend, and to aid them in that determination the report of a Joint Commission to be appointed by the respective Governments shall be laid before them, with such other evidence as either Government may submit.

The High Contracting Parties furthermore agree to cooperate in securing the

adhesion of other Powers to such Regulations. Article VIII. The High Contracting Parties having found themselves unable to agree upon a

reference which shall include the question of the liability of each for the injuries alleged to have been sustained by the other, or by its citizens, in connection with the claims presented and urged by it; and being solicitous that this subordinate question should not interrupt or longer delay the submission and determination of the main questions, do agree that either may submit to the Arbitrators any question of fact involved in said claims and ask for a finding thereon, the question of the liability of either Government upon the facts found to be the subject of further negotiation.

Article IX. The High Contracting Parties have agreed to appoint two Commissioners on the

part of each Government to make the joint investigation and report contemplated in the preceding Article VII, and to include the terms of the said Agreement in the present Convention, to the end that the joint and several reports and recommendations of said Commissioners may be in due form submitted to the Arbitrators should the contingency therefor arise, the said Agreement is accordingly herein included as follows:

Each Government shall appoint two Commissioners to investigate conjointly with

the Commissioners of the other Governments all the facts having relation to seal life in Bering's Sea, and the measures necessary for its proper protection and preservation.

The four Commissioners shall, so far as they may be able to agree, make a joint

report to each of the two Governments, and they shall also report, either jointly or severally, to each Government on any points upon which they may be unable to agree.

These reports shall not be made public until they shall be submitted to the

Arbitrators, or it shall appear that the contingency of their being used by the Arbitrators can not arise.

15

Article X. Each Government shall pay the expenses of its members of the Joint Commission

in the investigation referred to in the preceding Article. Article XI. The decision of the tribunal shall, if possible, be made within three months from the

close of the argument on both sides. It shall be made in writing and dated, and shall be signed by the Arbitrators who

may assent to it. The decision shall be in duplicate, one copy whereof shall be delivered to the

Agent of the United States for his Government, and the other copy shall be delivered to the Agent of Great Britain for his Government.

Article XII. Each Government shall pay its own Agent and provide for the proper remuneration

of the counsel employed by it and of the Arbitrators appointed by it, and for the expense of preparing and submitting its case to the tribunal. All other expenses connected with the Arbitration shall be defrayed by the two Governments in equal moieties.

Article X. The Arbitrators shall keep an accurate record of Record of their proceedings, and

may appoint and employ necessary officers to assist them. Article XIV. The High Contracting Parties engage to consider the result of the proceedings of

the tribunal of arbitration, as a full, perfect, and final settlement of all the questions referred to the Arbitrators.

Article XV. The present treaty shall be duly ratified by the President of the United States of

America, by and with the advice and consent of the Senate thereof, and by Her Britannic Majesty; and the ratification shall be exchanged either at Washington or at London within six months from the date hereof, or earlier if possible.

In faith whereof we, the respective Plenipotentiaries, have signed this treaty and

have hereunto affixed our seals. Done in duplicate at Washington the twenty-ninth day of February, one thousand

eight hundred and ninety-two.

James G. Blaine [seal] Julian Pauncefote [seal]”

16

Modus Vivendi of 189260

“Convention between the United States of America and Great Britain for the renewal of the existing "modus vivendi" in Bering Sea. Whereas by a Convention concluded between the United States of America and Her Majesty the Queen of the United Kingdom of Great Britain and Ireland, on the twenty-ninth day of February, one thousand eight hundred and ninety-two, the High Contracting Parties have agreed to submit to Arbitration, as therein stated, the questions which have arisen between them concerning the jurisdictional rights of the United States in the waters of Bering's Sea and concerning also the preservation of the fur-seal in, or habitually resorting to, the said sea, and the rights of the citizens and subjects of either country as regards the taking of the fur-seal in, or habitually resorting to, the said waters; and whereas the High Contracting Parties, having differed as to what restrictive Regulations for seal-hunting are necessary, during the pendency of such Arbitration, have agreed to adjust such difference in manner hereinafter mentioned, and without prejudice to the rights of either party: The said High Contracting Parties have appointed as their Plenipotentiaries to conclude a Convention for this purpose, that is to say: The President of the United States of America, James G. Blaine, Secretary of State of the United States; and Her Majesty the Queen of the United Kingdom of Great Britain and Ireland, Sir Julian Pauncefote, Knight Grand Cross of the Most Distinguished Order of Saint Michael and Saint George, Knight Commander of the Most Honorable Order of the Bath, and Envoy Extraordinary and Minister Plenipotentiary of Her Britannic Majesty to the United States; Who, after having communicated to each other their respective full powers, found in due and good form, have agreed upon and concluded the following articles: Article I. Her Majesty's Government will prohibit, during the pendency of Arbitration, seal killing in that part of Bering Sea lying eastward of the line of demarcation described in Article No. I of the Treaty of 1867 between the United States and Russia, and will promptly use its best efforts to ensure the observance of this prohibition by British subjects and vessels. Article II. The United States Government will prohibit seal killing for the same period in the same part of Bering's Sea, and on the shores and islands thereof, the property of the United States (in excess of seven thousand five hundred to be taken on the islands for the subsistence of the natives), and will promptly use its best efforts to ensure the observance of this prohibition by United States citizens and vessels. Article III. Every vessel or person offending against this prohibition in the said waters of Bering Sea outside of the ordinary territorial limits of the United States, may be seized and detained by the naval or other duly commissioned officers of cither of the High Contracting Parties, but they shall be handed over as soon as practicable to the authorities of the nation to which they respectively belong, who alone shall have jurisdiction to try the offence and impose the penalties for the same. The witnesses and proof necessary to establish the offence shall also be sent with them.

60

Fur Seal Arbitration, The Case of the United States, Appendix, Vol I, pp. 6 et seq.,

http://ia600308.us.archive.org/20/items/arbitrationfurse02beri/arbitrationfurse02beri.pdf

17

Article IV. In order to facilitate such proper inquiries as Her Majesty's Government may desire to make with a view to the presentation of the case and arguments of that Government before the Arbitrators, it is agreed that suitable persons designated by Great Britain will be permitted at any time, upon application to visit or remain upon the Seal Islands during the sealing season for that purpose. Article V. If the result of the Arbitration be to affirm the right of British sealers to take seals in Bering Sea within the. bounds claimed by the United States, under its purchase from Russia, then compensation shall be made by the United States to Great Britain (for the use of her subjects) for abstaining from the exercise of that right during the pendency of the Arbitration upon the basis of such a regulated and limited catch or catches as in the opinion of the Arbitrators might have been taken without an undue diminution of the seal-herds; and, on the other hand, if the result of the Arbitration shall be to deny the right of British sealers to take seals within the said waters, then compensation shall be made by Great Britain to the United States (for itself, its citizens and lessees) for this agreement to limit the island catch to seven thousand five hundred a season, upon the basis of the difference between this number and such larger catch as in the opinion of the Arbitrators might have been taken without an undue diminution of the seal-herds. The amount awarded, if any, in either case shall be such as under all the circumstances is just and equitable, and shall be promptly paid. Article VI. This Convention may be denounced by either of the High Contracting Parties at anytime after the thirty-first day of October, one thousand eight hundred and ninety-three, on giving to the other Party two months notice of its termination; and at the expiration of such notice the Convention shall cease to be in force. Article VII. The present Convention shall be duly ratified by the President of the United States, by and with the advice and consent of the Senate thereof, and by Her Britannic Majesty; and the ratifications shall be exchanged cither at Washington or at London as early as possible. In faith whereof, we, the respective Plenipotentiaries have signed this Convention and have hereunto affixed our Seals. Done in duplicate at Washington, this eighteenth day of April, one thousand eight hundred and ninety-two.

James G. Blaine, [Seal] Julian Pauncefote. [Seal]”

Sealed Deal? As the mighty powers struggled, what was happening to the NACC and its new lease? The NACC had been promised a harvest of 60,000 seals in the tender advertisement for the season starting in 1 July 1890. However, on 20 July 1890, about 10 days before the end of the regular season on 31 July, Charles J. Goff, the representative of the US Government on the Pribilofs, closed the season.

61 The NACC protested arguing that it had been prevented from

“harvesting” nearly 40,000 seals and therefore sustained a loss of USD 400,000.62

It is suggested that Goff’s subsequent dismissal was brought about by intense lobbying of the NACC.

63

61

New York Times, 20 June 1891, http://query.nytimes.com/mem/archive-

free/pdf?res=9C01E4DA173AE533A25753C2A9609C94609ED7CF, New York Times, 21 June 1891,

http://query.nytimes.com/mem/archive-free/pdf?res=F70812FB3C5E10738DDDA80A94DE405B8185F0D3. 62

New York Times, 20 June 1891, http://query.nytimes.com/mem/archive-

free/pdf?res=9C01E4DA173AE533A25753C2A9609C94609ED7CF; see 31 Cong. Rec. 2108 (1898) for the number of seals

18

On 11 April 1891, the Secretary of the Treasury approved a killing quota of again 60,000. This was later dubbed a “secret permit”.

64 It has been questioned why the Treasury would set a quota

of 60,000 while negotiations were going on with Britain. The timing is considered surprising since the US negotiators had proposed a complete standstill for sealing on sea and land just weeks before setting the quota.

65 One explanation which has been brought forward was that the US side

did not expect Britain to accept. They did, however, on 20 April leading to the 1891 Modus vivendi of 15 June 1891.

66 The US Treasury immediately withdrew the allocated quota – much to the

dismay of the NACC. To the dismay of the US Government, this blunder was made public.67

The NACC was livid. Why should the diplomatic struggle between Britain and the USA affect its lease? “The right of this Government to take seals on its own territory is not one of the questions to be settled by arbitration, and has no relation to the contention between the two countries.” The

NACC complained that “its rights have been overlooked in the agreement made between the

USA and England, and that the deprivation of its legal rights has inflicted a severe loss” on it.68

The Claim of the NACC in the Bering Sea Arbitration On the State-State level, the lawyers were getting ready for the arbitration. The US Government submitted a damages claim on behalf of the NACC under Article V of the Treaty of 1892.

CLAIM OF THE NORTH AMERICAN COMMERCIAL COMPANY69

CERTIFICATE OF AUTHENTIFICATION. UNITED STATES OF AMERICA,

Treasury Department, July 23, 1892.

Pursuant to section 882 of the Revised Statutes, I hereby certify that the annexed paper is a true copy of a latter on file in this Department. In witness whereof, I have hereunto set my hand and caused the seal of the Treasury Department to be affixed, on the day and year first above written.

[L.S.] CHARLES FOSTER, Secretary of Treasury.

_______

WASHINGTON, April 12, 1892.

Hon. CHARLES FOSTER;

Secretary of the Treasury:

SIR: I am instructed by the North American Commercial Company, the lessee of the right to take fur-seals for their skins in Alaska, to present for payment by the United States its account for $1,532,947.44, due to said Company from the United States by reason of said Company’s having prohibited by the United States, during the years 1890 and 1891, from taking the number of fur-seals

taken (20,005 in 1890, 13,482 in 1891, 7,549 in 1892; 7,500 in 1893, 16,031 in 1894, 15,000 in 1895, 30,000 in 1896 and

20,885 in 1897). 63

Briton Cooper Busch, p. 149. 64

http://ia600208.us.archive.org/3/items/statementsubmitt00ellirich/statementsubmitt00ellirich.pdf, p. 136 65

Gerald O. Williams, The Bering Sea Fur Seal Dispute, p. 71 fn. 42. 66

Gerald O. Williams, The Bering Sea Fur Seal Dispute, p. 71 fn. 42. 67

Gerald O. Williams, The Bering Sea Fur Seal Dispute, p. 71 fn. 42. 68

New York Times, 20 June 1891, http://query.nytimes.com/mem/archive-

free/pdf?res=9C01E4DA173AE533A25753C2A9609C94609ED7CF. 69

http://archive.org/stream/fursealarbitrati02bering#page/520/mode/2up (pp. 520-522).

19

on the islands of St. Paul and St. George to which it was entitled under the law an its contact with the United States, dated March 12, 1890.

It appears from the records of the Treasury Department that said Company was authorized by the Secretary of the Treasury to take a quota of 60,000 seals for their skins during each of the years 1890 and 1891, under the subsisting contract between the United States and the lessee, and conformity with the law regulating the same.

It further appears from the records of the Treasury Department that the United States prohibited said Company from taking its said quota of 60,000 in 1890 and said quota of 60,000 in 1891, and that the lessee was restricted to a quota of 20,995 fur-seals in 1890 and 1891, the lessee received but 34,477 during both years.

Respectfully submitted. THE NORTH AMERICAN COMMERCIAL COMPANY,

By N. L. JEFFRIES, Its Attorney.

_______

WASHINGTON, D. C., April -, 1892.

The United States in account with the North American Commercial Company. September 1, 1890-

To losses on account of being prohibited by the United States from taking 39,005 fur-seal skins on the islands of St. Paul and St. George, Alaska, which said Company was authorized by law and by its contract with the United States to take and ship from said islands during the year 1890, at $ 20.78 per skin ................

$ 810,523.90

September 1, 1891-

To losses on account of being prohibited by the United States from taking 46,518 fur-seal skins on the islands of St. Paul and St. George, Alaska, which said Company was authorized by law and by its contract with the United States to take and ship from said islands during the year 1891, at $ 15.53 per skin

$722,424.54

Total ........................................................................ $1,532,947.44

___________

CERTIFICATE OF AUTHENTIFICATION

UNITED STATES OF AMERICA Treasury Department, July 23, 1892.

Pursuant to section 882 of the Revised Statutes, I hereby certify that the annexed paper is a true copy of a letter addressed to Hon. Noah L. Jeffries, attorney for the North American Commercial Company, as shown by the records in this Department. In witness whereof, I have hereunto set my hand and caused the seal of the Treasury Department to be affixed on the day and year first above written. [L.S.] CHARLES FOSTER, Secretary of the Treasury.

______

TREASURY DEPARTMENT; OFFICE OF THE SECRETARY, Washington, D.C., June 27, 1892.

Hon. NOAH L: JEFFRIES, Attorney for the North American Commercial Company,

Washington D.C.:

20

SIR: The Department has received your letter of this date, in which you withdraw the protest of the North American Commercial Company which accompanied its deposit of the sum of $46,749.23, in payment of rent and taxes under its lease of the seal islands in Alaska for the year ending April 1, 1892.

The Attorney General having expressed the opinion that this Department is authorized to reduce proportionately the rental and bonus due from said Company on a basis of a maximum catch of 100,000 skins, the account has been adjusted as follows, in accordance with our verbal understanding, viz: Tax on 13,482, at $2 ........................................................ $26,964.00 Rental on 13,482, at $0.60 ................................................ $8,089.20 Bonus on 12,251, at $0.95471

70 ...................................... $11,696.03

$46,749.23

It is understood that this adjustment is accepted by said Company as full settlement and satisfaction of all claims and demands against the United States for whatever cause to the date thereof, except only as to its right to claim any amount which may be awarded to it by the Arbitrators appointed by Great Britain and the United States under the treaty of April 18, 1892.

Respectfully, yours, CHARLES FOSTER,

Secretary.

________

CERTIFICATE OF AUTHENTIFICATION.

UNITED STATES OF AMERICA, Treasury Department, July 27, 1892.

Pursuant to section 882 of the Revised Statutes, I hereby certify that the annexed paper is a true copy of a letter on file in this Department.

In witness whereof, I have hereunto set my hand, and caused the seal of the Treasury Department to be affixed, on the day and year first above written.

[L.S] CHARLES FOSTER, Secretary of the Treasury.

_______

To the Hon. CHARLES FOSTER, Secretary of the Treasury:

SIR: On behalf of the North American Commercial Company, of San Francisco, the lessee of the right to take fur-seals for their skins on the islands of St. Paul and St. George in Alaska, I have the honor to present the claim of said company for damages sustained by the limitation of the quota of fur-seals by the United States from 100,000 to 7,500 during the beginning May 1, 1892, involving a loss to said company of $1,665,000, for which amount said company respectfully requests payment.

THE NORTH AMERICAN COMMERCIAL COMPANY, By N.L. JEFFRIES, Its Attorney.

That is to say, initially the US Government did. Judge Blodgett, counsel for the US, made this statement: “Frankness requires us, as we think, to say that the proofs which appear in the counter case of the United States as to the condition of the seal herd on the Pribilof Islands show that the

70

There is an error in these figures due to a transposition. The rate per skin should be $0.9344 and the amount $11,444.13. The

correct total being $46,497.33.

21

United States could not have allowed its lessees to have much, if any, exceeded the number of skins allowed by the modus vivendi of 1892 without an undue diminution of the seal herd, and upon this branch of the case we simply call the attention of the tribunal to the proofs, and submit the question to its decision.”

71 The US’ counsel also later “announced that the United States

would not ask the tribunal for any damages upon and under Article V”.72

The US Supreme Court, which reproduced this quote in its decision of 31 May 1898, also stated “all counsel concurred” with Judge Blodgett.

73

The Bering Sea Award The first meeting of the tribunal took place on 23 February 1893 in Paris. On 15 August 1893, it delivered its award.

74

Of course, arbitration is a confidential process. It is therefore a complete coincidence that a press report appeared two days before speculating that the award would be issued promptly.

75

The tribunal dismissed the USA’s claim of sovereignty over the Bering Sea. It held that “the United States has not any right of protection or property in the fur-seals frequenting the islands of the United States in Bering Sea, when such seals are found outside the ordinary three-mile limit”.

76

It then proceeded to establish “Regulations for the proper protection and preservation of the fur-seal in or habitually resorting to the Bering Sea”: “ARTICLE 1. The Governments of the United States and of Great Britain shall forbid their citizens and subjects respectively to kill, capture or pursue at any time and in any manner whatever, the animals commonly called fur seals, within a zone of sixty miles around the Pribilov Islands, inclusive of the territorial waters. The miles mentioned in the preceding paragraph are geographical miles, of sixty to a degree of latitude. ARTICLE 2. The two Governments shall forbid their citizens and subjects respectively to kill, capture or pursue, in any manner whatever, during the season extending, each year, from the 1

st of May to

the 31st of July, both inclusive, the fur seals on the high sea, in the part of the Pacific Ocean,

inclusive of the Bering sea, which is situated to the North of the 35th degree of North latitude, and

eastward of the 180th degree of longitude from Greenwich till it strikes the water boundary

described in Article 1 of the Treaty of 1867 between the United States and Russia, and following that line up to Bering straits. ARTICLE 3. During the period of time and in the waters in which the fur seal fishing is allowed, only sailing vessels shall be permitted to carry on or take part in fur-seal fishing operations. They will however

71

Quoted by the US Supreme Court, No. 431, North American Commercial Company v. USA, 31 May 1898, 171 US 110, pp.

131 et seq. 72

US Supreme Court, No. 431, North American Commercial Company v. USA, 31 May 1898, 171 US 110, p. 132. 73

US Supreme Court, No 431, North American Commercial Company v. USA, 31 May 1898, 171 US 110, p. 131. It is unclear

what James C. Carter, Mr. Blodgett’s co-counsel in the Bering Sea Arbitration thought of this. He later represented the NACC

against the US before the US Supreme Court – in the same case in which the NACC sued the US for damages for the

reduction of the quota and in which the quote appears that he “concurred” that his subsequent client, the NACC, had no claim. 74

Available at www.investmentmoot.org. 75

New York Times, 13 August 1893, http://query.nytimes.com/mem/archive-

free/pdf?res=F40C15F63F5A1A738DDDAA0994D0405B8385F0D3. 76

See Award page 269.

22

be at liberty to avail themselves of the use of such canoes or undecked boats, propelled by paddles, oars, or sails, as are in common use as fishing boats. ARTICLE 4. Each sailing vessel authorised to fish for fur seals must be provided with a special license issued for that purpose by its Government and shall be required to carry a distinguishing flag to be prescribed by its Government. ARTICLE 5. The masters of the vessels engaged in fur seal fishing shall enter accurately in their official log book the date and place of each fur seal fishing operation, and also the number and sex of the seals captured upon each day. These entries shall be communicated by each of the two Governments to the other at the end of each fishing season. ARTICLE 6. The use of nets, firearms and explosives shall be forbidden in the fur seal fishing. This restriction shall not apply to shot guns when such fishing takes place outside of Bering’s sea, during the season when it may be lawfully earned on. ARTICLE 7 The two Governments shall take measures to control the fitness of the men authorized to engage in fur seal fishing; these men shall have been proved fit to handle with sufficient skill the weapons by means of which this fishing may be carried on. ARTICLE 8. The regulations contained in the preceding articles shall not apply to Indians dwelling on the coasts of the territory of the United States or of Great Britain, and carrying on fur seal fishing in canoes or undecked boats not transported by or used in connection with other vessels and propelled wholly by paddles, oars or sails and manned by not more than five persons each in the way hitherto practised by the Indians, provided such Indians are not in the employment of other persons and provided that, when so hunting in canoes or undecked boats, they shall not hunt fur seals outside of territorial waters under contract for the delivery of the skins to any person. This exemption shall not be construed to affect the Municipal law of either country, nor shall it extend to the waters of Bering Sea or the waters of the Aleutian Passes. Nothing herein, contained is intended to interfere with the employment of Indians as hunters or otherwise in connection with fur sealing vessels as heretofore. ARTICLE 9. The concurrent regulations hereby determined with a view to the protection and preservation of the fur seals, shall remain in force until they have been, in whole or in part, abolished or modified by common agreement between the Governments of the United States and of Great Britain. The said concurrent regulations shall be submitted every five years to a new examination, so as to enable both interested Governments to consider whether, in the light of past experience, there is occasion for any modification thereof.”

77

The tribunal also held the United States liable for damages because of the seizure of sealing vessels outside the three-mile zone.

78

77

Id. at 269-272. 78

The USA did not pay up until 1898, Briton Cooper Busch, p. 150.

23

The Asser Arbitration Before we turn to the court cases in the US which followed the Bering Sea Award, let us briefly turn to another famous seal arbitration. The Bering Sea Arbitration was by no means the only State-State arbitration in connection with the fur-seals and – arguably – the NACC. Not only the USA was busy seizing pelagic sealing vessels and their crews. The Russian Empire also was protecting its seal herd. On 7 March 1891, the James Hamilton Lewis, an American schooner under the command of Alexander McLean, had sailed from San Francisco. On 2 August, the Russian cruiser Aleut sighted her. The James Hamilton Lewis tried to escape, the Russian cruiser giving chase. Eventually the Russians “captured her by force of arms”. Captain, officers and crew were taken prisoner.

79

The seizure took place - according to the US - “about 20 miles east of Copper Island”. According to the Russian Empire, the schooner was sighted 5 miles off the island and seized 12 miles from the coast.

80

The Russian agent relied on the point of view adopted by the US in the Bering Sea arbitration. He argued that the US could not deny Russia a right that the US had claimed for itself vis-à-vis Britain.

81

T.M.C. Asser was not persuaded. He held Russia liable for damages in the amount of USD 28,588 plus 6% interest. The Court Cases Back home in the US, the seal dispute continued - this time between the NACC and the United States.

82 James C. Carter, counsel for the US in the Bering Sea Arbitration, had changed sides.

He now acted for the NACC against the US Government in some of the cases. 1. The Lease Cases The NACC, its sealing quota restricted and presumably not too happy with the US Government’s diplomatic protection in the Bearing Sea Arbitration, did not understand why it should pay the full rent for only a fraction of the seals. Indeed legal opinions by US Solicitor General Taft of 27 March 1891,

83 1 April 1891

84 and of US

Attorney General Miller of 17 January 1893,85

allowed a reduction of the rent and of the payments per skin. However, that was not the end. President Harrison’s presidency ended in March 1893. On 7 August 1893, the new US Solicitor General reversed the position of the US Government. He held that the reductions were made without legal authority and stated: “I am aware that this

79

http://images.library.wisc.edu/FRUS/EFacs/1902ap1/reference/frus.frus1902ap1.i0013.pdf; in French

http://untreaty.un.org/cod/riaa/cases/vol_IX/51-78.pdf 80

http://images.library.wisc.edu/FRUS/EFacs/1902ap1/reference/frus.frus1902ap1.i0013.pdf; in French

http://untreaty.un.org/cod/riaa/cases/vol_IX/51-78.pdf 81

http://images.library.wisc.edu/FRUS/EFacs/1902ap1/reference/frus.frus1902ap1.i0013.pdf; in French

http://untreaty.un.org/cod/riaa/cases/vol_IX/51-78.pdf 82

There were other cases as well, including two tax cases: one concerning tax on several life insurance payments made to the

heirs of Isaac Liebes (Circuit Court, 9th Circuit, No. 6814, 6 March 1933, 63 f. 2d 870), the other concerning the tax effect of

good will as asset of H. Liebes & Co. Corp. (United States Board ofTax Appeals, H. Liebes & Co v. Commissioner of Internal

Revenue, No. 14501, 30 January 1929, 15 B.T.A. 149). These and other cases are irrelevant for the case-study. 83

US Solicitor General, 27 March 1891, 20 Op. Att’y Gen. 51 1891-1894, p. 51 (reduction of rent). 84

US Solicitor General, 1 April 1891, 20 Op. Att’y Gen. 62 1891-1894, p. 62 f. (reduction calculated on the basis that the

standard catch was 100,000 seals). 85

US Attorney General, 17 January 1893, 20 Op. Att’y Gen. 510 1891-1894, p. 510 et seq. (reduction of the rate per skin).

24

opinion is not in accord with the opinions of Mr. Solicitor-General Taft of March 27 and April 1, 1891, and of Mr. Attorney-General Miller of January 17, 1893, and it is naturally with much diffidence that I venture to express views contrary to those gentlemen for whose professional attainments I entertain such high regard, but I must state the case as it appears to me.”

86

A legal opinion by US Attorney General Olney of 23 February 1894 then authorized the US authorities to sue the NACC, “notwithstanding the action of a prior Secretary of the Treasury in reducing sums due under the lease”.

87 With interest, said another US Attorney General in 1898.

88

At least three cases were brought by the US Government against the NACC for payments under the lease. Allegedly, the US Government wanted USD 2,000,000 from the NACC in total.

89 One

of the cases, for the year 1893, went up to the Supreme Court and is well documented: The Circuit Court for the Southern District of New York agreed on 27 April 1896 that the NACC’s rental payment (but not the price per skin) should be reduced. The judge stated with regard to the fixing of the seal quota by the Secretary of the Treasury: “It is not unusual for a contractor with the government, as with other municipal bodies, to repose upon the good faith and discretion of some

public officer who represents the government and is responsible. … it is implied that the public officer will not act arbitrarily or capriciously, but will exercise an honest judgment.”

90

He considered the modus vivendi with Britain: “Undeniably, the preservation of the seal fisheries upon the islands was one of the objects which influenced it; but is adoption was not necessary for their preservation, except in the sense that the fisheries were likely to be destroyed by pelagic sealing, and without the modus vivendi pelagic sealing could only be suppressed by force and at the risk of war. It was adopted for the purposes of avoiding irritating differences, and to promote a friendly settlement between the two governments touching their rights in Bering Sea. There never was a time in the history of the seal fisheries when it was necessary, or even desirable, to limit the killing upon the islands to the number specified in the modus vivendi.”

91

He reduced the rent holding that the acceptance of 7,500 skins by the NACC constituted acceptance of a partial performance of the contract.

92 He also opined that the NACC had a claim

against the US Government as in the court’s opinion the NACC could have taken 20,000 seals in 1893. He also held, however, that he could not hear this claim as a counterclaim and that the NACC would have to sue the US Government separately.

93

The US Supreme Court, however, disagreed. While it allowed the rent to be reduced, it disagreed with the Circuit Judge on the assessment of the quota reduction under the modus vivendi. Why the government decided to reduce the quota or whether it did so by treaty with Britain was irrelevant.

94 The NACC was “bound to obey the instructions of his principal” and had no right to

contest whether the limitation was necessary for the protection of the seal.95

It also disagreed with the assessment of the damages case. The Supreme Court also stated that the fact that the US Government had presented damages claims against Britain in the Bering Sea Arbitration did not help the NACC and quoted from the argument of Judge Blodgett.

96 It directed

the Circuit Court to dismiss the case on the merits with prejudice.97

86

US Solicitor General, 7 August 1893, 20 Op. Att’y Gen. 639 1891-1894, p. 634, 639. 87

US Attorney General, 23 February 1894, 20 Op. Att’y Gen. 732 1891-1894, p. 732 et seq. 88

US Attorney General, 2 August 1898, 22 Op. Att’y Gen. 173 1897-1899, p. 172 et seq. 89

Boston Evening Transcript, 9 June 1898, p. 9,

http://news.google.com/newspapers?nid=sArNgO4T4MoC&dat=18980609&printsec=frontpage&hl=de. 90

Circuit Court, SD New York, United States v. North American Commercial Co., 27 April 1896, 74 F1. 145, p. 150, see

www.investmentmoot.org. 91

Circuit Court, SD New York, United States v. North American Commercial Co., 27 April 1896, 74 F1. 145, p. 150. 92

Circuit Court, SD New York, United States v. North American Commercial Co., 27 April 1896, 74 F1. 145, p. 152. 93

Circuit Court, SD New York, United States v. North American Commercial Co., 27 April 1896, 74 F1. 145, p. 152, 153. 94

US Supreme Court, No 481, 31 May 1898, 171 US 110, p. 134. 95

US Supreme Court, No 481, 31 May 1898, 171 US 110, p. 134, 135. 96

US Supreme Court, No 481, 31 May 1898, 171 US 110, p. 131, 132;seeabove p. 520-522. 97

US Supreme Court, No 481, 31 May 1898, 171 US 110, p. 137.

25

Following the Supreme Court’s decision, the other two cases settled on similar terms. 2. The Sealing Vessel Case In 1897, the NACC obtained a judgment against the US in relation to a maritime lean on a vessel, the Louis Olsen, seized and condemned as forfeited to the US “for having, on September 2, 1895, killed fur seals within the prohibited zone of 60 miles around the Pribilov islands”.

98 The

NACC had outfitted the schooner with provisions, supplies and other necessaries, in good faith and not knowing “that any illegal venture or voyage was about to be undertaken” as the court held.

99 The court therefore stated that the maritime lean on the ship had “survived” the seizure,

and that the NACC had a right to be paid from the proceeds of the sale of the condemned schooner. The Congressional Investigations In 1910, the lease ended. This did not, however, mean that the trouble ended (far from it as we have seen from the court cases). However, also on the political level no seal had been put on the seals. H.W. Elliott was on a crusade against the seal leases. His lobbying led to two congressional inquiries by the Committee on Expenditures in the Department of Commerce. Reports were submitted on 31 January 1913 and 4 April 1914 – the so-called Rothermel Reports.

100 The Rothermel Reports made vociferous allegations of

wrongdoing against the NACC, Herman and Isaac Liebes as well as against US officials. The 1913 report even alleged that the Asser Award had been obtained by fraud and recommended that “the State Department take up with Russia the matter of the case … for the purpose of rectifying the wrong done by Liebes, C.H. Townsend, and H.H.D. Peirce against the Government of Russia, a friendly power.”

101 It also recommended to collect a bond of USD

500,000 from the NACC and to request the Attorney General to institute civil proceedings against Isaac Liebes. To both reports minority opinions were attached, both authored by Bird McGuire. The McGuire Reports fiercely disagreed with the majority on substance and also accused the chairman of serious breaches of fundamental rules of procedure. The 1913 minority report states: “Although the committee took more than 1,000 pages of testimony, and the last hearing was six months ago, on July 31, 1912, the committee has never held a single meeting for the purpose of considering the evidence, and the report made by the chairman was never submitted to the committee for its consideration, no meeting of the committee was ever held for that purpose, and we are not satisfied that it has been approved by a majority of the committee. Carbon copies of the report were given to the undersigned members of the committee after the chairman had filed the original.”

102

The 1914 Rothermel Report is very similar to the 1913 one. However, it contains no recommendation to undo the results of the Asser Arbitration. Again, the minority found much to criticise. The 1914 McGuire Report calls into question H.W. Elliott’s independence by linking him to the Alaska Commercial Company, the NACC’s predecessor as lessee and its competitor in the

98

Circuit Court, 9th Cir., 81 F. 748. 99

Circuit Court, 9th Cir., 81 F. 748. 100

The Rothermel Reports are available at www.invesmentmoot.org. 101

Report of the Committee of Expenditures in the Department of Commerce and Labor, 31 January 1913, 62d Cong. 3d

session, Report No. 1425, p. 3 et seq., 5.

http://ia600506.us.archive.org/17/items/fursealindustryo00unit/fursealindustryo00unit.pdf. 102

Report of the Committee of Expenditures in the Department of Commerce and Labor, 31 January 1913, 62d Cong. 3d

session, Report No. 1425, pp. 7 et seq.

http://ia600506.us.archive.org/17/items/fursealindustryo00unit/fursealindustryo00unit.pdf.

26

tender for the 1890 lease. It also describes the “trial by media” which Rothermel had instigated and lists all of the venerables accused by H.W. Elliott in the course of his crusade.

103

The Aftermath of the Congressional Mayhem On 5 August 1916, the US Senate requested the Attorney General “to examine into the facts as stated in House report No. 500, Sixty-third Congress, second session, of April 14, 1914 (relating to the alleged illegal killing by the lessee between March, 1890, and March, 1910, of fur seals in the Pribilof Islands), and to bring suit if the law and the evidence warranted such action.”

104

On 27 February 1917, T.W. Gregory, Attorney General, delivered his response: he did not find evidence that yearlings had been killed. “Under these circumstances I would not be justified in advising a private client that he could reasonably hope to prevail in a suit for damages on the theory of unlawful killing; nor can I so advise as to the Government’s alleged claim.”

105

The Compensation proceedings In 1924, the United States passed a law providing for compensation with regard to the seizure of sealing ships outside the three-mile zone, which had been held to be unlawful by US courts.

106

The legislature had taken 22 years to pass a statute allowing the owners to claim compensation.

107 The Act limited the entitlement to damages to US citizens.

One of the companies claiming compensation was H. Liebes &Co. Inc. as surviving trustee of the Pacific Trading Company. By the time of the Moot Arbitration (see below), the compensation claim had not yet been awarded.

108 We know that in 1894, Isaac Liebes was a director of H.

Liebes Co. Corp.109

H. Liebes &Co. Inc. was incorporated in July 1890 and in September, 1890, it purchased for all of its capital stock, of the par value of $1,000,000, all of the assets, including stock in trade, good will, and all the personal and real property of a partnership, known as H. Liebes &Co., which had been organized in 1863. According to Isaac Liebes’ testimony, he received a nominal amount of “a few shares” which enabled him to serve as director, but he had no capital in the firm and did not serve as director until 1893. THE ARBITRATION This is where the fictional part of the case study starts. The Request for Arbitration At some point, Isaac Liebes had enough.

110 One day he has lunch with his old family friend and

lawyer Joseph Rothschild. Liebes complains "Late as usual. Where have you been? You look as though you had been fighting with the Killer Whale." Then he asks Rothschild whether there is

103

Report of the Committee of Expenditures in the Department of Commerce and Labor, 14 April January 1914, 63d Cong. 2d

session, Report No. 500, p. 11, http://ia700204.us.archive.org/3/items/fursealindustryo00uni/fursealindustryo00uni.pdf; for the

press reports see for example, New York Times, 30 January 1913, http://query.nytimes.com/mem/archive-

free/pdf?res=F70A12F93D5B13738DDDA90B94D9405B838DF1D3. 104

Letter from the Attorney General of 27 February 1917, 64th Congress, 2d session, Doc. 726.

105 Letter from the Attorney General of 27 February 1917, 64

th Congress, 2d session, Doc. 726, p. 5.

106 Whitelaw v.. United States (C. C. A.-9), 75 F. 513, 21 C. C. A. 434.

107 Circuit Court, 9th Cir., 90 F.2d 932; see also Whitelaw v. USA, 9 F.2d 103,

http://www.leagle.com/xmlResult.aspx?page=1&xmldoc=19251129F2d103_174.xml&docbase=CSLWAR1-1950-

1985&SizeDisp=7. 108

Circuit Court, 9th Cir., 90 F.2d 932. The case was rendered after the end of the Moot Arbitration. At the time of the Moot

Arbitration, the compensation proceedings were still pending. 109

United States Board of Tax Appeals, H. Liebes & Co. v Commissioner of Internal Revenue, docket No. 14501, 30 January

1929, 15 B.T.A. 149. The case was rendered after the end of the Moot Arbitration. At the time of the Moot Arbitration, the

compensation proceedings were still pending. 110

Isaac Liebes dropped anchor in the final harbor, from whence we unmoor no more on 29 May 1920 (Circuit Court, 9th Circuit,

No. 6814, 6 March 1933, 63 F.2d 870 – the case is not relevant for the case-study). For the purposes of the case-study, we

added a few years to his life.

27

really nothing that can be done. Joseph remembers that he recently read an article by another Yale alumnus on the new treaty between the United States and the German Empire, the Treaty of Friendship, Commerce and Consular Rights (which at that time had not entered into force). “You are German now, too, right?,” Joseph asked. “Yes, and a hell lot of good did it to me,” Isaac replied. “Well, it might help you now,” said Joseph smiling. Waiting for the ratification of the treaty, Isaac (with the help of his wife Helena) and initially Joseph got everything ready.

111

On 15 October 1925, Isaac’s lawyer sends a letter to the US State Department complaining about the continuing breaches of the 1923 Treaty

112 and the US Government’s failure to compensate

him as investor in the 1890 lease for more than 30 years. He intimates that Isaac Liebes, citizen of the German Empire, would commence arbitration proceedings under Article 26 of the Arctic Charter Treaty of 1911 taken in conjunction with Articles I and XIII of the 1923 Treaty providing for most favored nation treatment if no amicable settlement is reached. He also relied on Articles VII and XI emphasizing the principle of most-favored nation in particular with regard to maritime business. In the letter, Mr. Isaac Liebes expressly accepts the offer to arbitrate contained in Article 26 of the ACT. Not having heard from the US Government, Isaac Liebes’s lawyers submit a Request for Arbitration to the US State Department on 18 January 1926. A copy is received by the US embassy in Berlin on 29 January 1926.

113

In his Request for Arbitration under Article 26 (4) (b) of the ACT, Isaac Liebes raises the following claims: May it please the arbitrators to hold and adjudge to Isaac Liebes damages in an amount to be determined by the honorable Arbitrators for

- The United States’ partial expropriation of the NACC Lease during the years 1890, 1891 and 1892 by its arbitrary, improper and illegal taking of the seal quota allotted to the said NACC, thereby violating Mr. Isaac Liebes’ rights under Article 1 of the 1923 Treaty as well as Articles 13 and 10 of the ACT read in conjunction with Articles I, VII, XI and XIII of the 1923 Treaty;

- The United States’ failure to protect the NACC’s right in the peaceful enjoyment of its Lease by failing to protect the Pribilof seal herd against pelagic sealing on the high seas, thereby violating its implied duty under the NACC Lease as well as Mr. Isaac Liebes’ rights under Article 1 of the 1923 Treaty as well as Articles 10 of the ACT and Articles I, VII, XI and XIII of the 1923 Treaty;

- The United States’ raising of improper and illegal claims against the NACC for additional rent which the United States had waived effectively through binding legal opinions by the Attorney General and the Solicitor General, and which the Supreme Court of the United States upheld in a gross violation of Article I of the 1923 Treaty and Articles 10 of the Act and Articles I, VII, XI and XIII of the 1923 Treaty. Moreover, by espousing the NACC’s claims for the purposes of the Bering Sea Arbitration, the USA adopted the claims as legitimate and is now stopped from withdrawing from them.

- The United States Senate’s slander of Mr. Isaac Liebes and violation of his honor as an honorable business man by its Committee on Expenditures in the Department of Commerce, in particular but not limited to the leakage of slanderous information to the press constituting breaches of Article I of the 1923 Treaty as well as Articles 10 of the Act and Articles I, VII, XI and XIII of the 1923 Treaty.

- The United States unlawfully discriminates against Isaac Liebes by arguing that the 1924 Compensation Act makes compensation available only for US Americans and disputing

111

Joseph Rothschild died on 19 March 1925, http://mssa.library.yale.edu/obituary_record/1925_1952/1925-26.txt. 112

http://usa.usembassy.de/etexts/friendtreaty0139.htm. 113

A diary entry by Frank B. Kellogg, Secretary of State, of 28 October 1925 states: “"I haven't been doing anything but fight

since the middle of March. … Another arbitration in the Hague? … The beach is disgracefully crowded this season. … I much

prefer Paris. And these German immigrants. … Why can't people stay where they belong? Or, why can't they be sensible and

settle their disputes quietly? "

28

his right to compensation. This is despite the fact that Mr. Isaac Liebes is entitled to national treatment under Articles I, XII and XIII of the 1923 Treaty and the ACT, and, moreover, despite the fact that H. Liebes& Co. Inc. is an American entity, and, lastly, despite the fact that Mr. Isaac Liebes is a US citizen and did not lose his American citizenship when he reacquired his German citizenship.

Mr. Isaac Liebes appoints Hans Kelsen, Vienna. The US Response On 17 February 1926, the US State Department (representing itself), submits a Response. “The United States objects to the jurisdiction of any arbitral tribunal and to the admissibility of any claims for the following reasons:

1. No jurisdiction ratione consensus The 1923 Treaty cannot be a basis for any investor-State claim before an international tribunal. There simply is no investor-State arbitration clause. Nor can Articles I and XIII, or VII and XI of the 1923 Treaty be relied on to “import” Article 26 of the ACT. First, most-favored nation clauses cannot be used for such imports anyway. Second, the clauses in the 1923 Treaty are not even proper most-favored nation clauses. 2. No Jurisdiction ratione temporis

All of the claims (with the exception of the Pacific Trading Claims) relate to facts which happened decades before the entry into force of the 1923 Treaty. Under no conceivable theory can there be jurisdiction ratione temporis.

3. No Jurisdiction ratione personae Mr. Isaac Liebes is not even a German citizen. Under a Prussian law of 1842, emigrants lost their citizenship after ten years of residing abroad. Mr. Isaac Liebes would have lost his Prussian citizenship at the latest in 1852, long before there even was a German Empire! Moreover, he was born in Rawicz, which became Polish on 17 January 1920. In any event, even on the hypothesis that Mr. Isaac Liebes is German, such German nationality would be ineffective and therefore not opposable. Moreover, under the 1870 Act, on which the Lease is based, only American citizens could be lessees. Indeed, the NACC opposed the possibility of the tender to be awarded to the Alaska Commercial Company arguing that the ACC was not sufficiently American.

114 Article XII of the

by-laws of the NACC therefore required that any stockholder (direct or direct) had to be American. The same is true for the 1924 Compensation Act. How can he be American for the purposes of the Lease and the 1924 Compensation Law, but German for the purposes of the 1923 Treaty? 4. No Jurisdiction ratione materiae There is also no investment within the meaning of Articles 26 and 1 of the ACT (which of course is inapplicable anyway). The NACC was in violation of the Lease – and Mr. Isaac Liebes perjured himself in his recent court cases by stating that the Liebes family was not engaged in pelagic sealing. 5. Inadmissibility of the Claims Even if all those obstacles could be overcome, the claim with regard to the NACC would not be admissible under the Oil Platforms Test:

114

See letter of 24 February 1890 at www.investmentmoot.org.

29

- 5.a) The Lease expressly states that the number of seals to be taken will be determined

by the US Government. Therefore, the Lease never established a legal right for the lessee to any seal, let alone a particular number of seals. Therefore no property right or even legitimate expectation existed for the lessee. Consequently, there cannot be any claims based either on expropriation, a right to fair and equitable treatment, or under an umbrella clause. The limitation for the taking of seals was imposed by an international treaty (Modus vivendi). Thus, the United States is not responsible for it. Moreover, The ACT (which is not applicable in the first place) cannot be seen as lex specialis overruling the Modus vivendi. Moreover, the limitation of the taking of seals was protecting the seal species and the environment.

- 5.b) The claim that the United States failed to protect the lessee against pelagic poachers

is manifestly wrong. Neither the duty of a State to provide full security and protection, nor the Lease obliges the USA to patrol the high seas. Indeed, the Bering Sea Tribunal specifically prohibited the USA to patrol the high seas.

- 5.c) The USA were not obliged, either by legal opinions of the Attorney General or the

Solicitor General, nor by having introduced (though not espoused) the claims of the NACC in the Bering Sea Arbitration, to refrain from making claims for rent due to it. Nor can the NACC mount a claim for compensation against the USA with regard to the claims raised in the Bering Sea Arbitration as is confirmed by letter of 27 June 1892.

- 5.d) Any claims with regard to the alleged slander, the United States note that in any

democracy parliamentary inquiries will be held. Indeed, such inquiries examining and weighing evidence are a backbone of democracy and part of the system of checks and balances. The public of the United States has a right to learn of the proceedings before such committees.

- 5.e) The USA is appalled by the claims of Mr. Liebes in relation to the compensation

under the 1924 Act. The 1924 Act was enacted simply to avoid discrimination of US citizens, who – unlike foreigners – did not benefit from the right to diplomatic protection by their home States. If the “home State”, if any, of Mr. Liebes has not introduced an arbitration for his benefit, this may be because Germany/Prussia did not regard him as sufficiently German/Prussian. Moreover, the compensation proceedings are ongoing and it is by no means certain that H. Liebes &Co. Inc. will not be compensated. This claim is therefore in any event moot.

The United States has the honor of appointing Professor Albert de Geouffre de La Pradelle of Paris, France, as its arbitrator. The Constitution of the Tribunal The two party appointed arbitrators agree on Dr. Knut Hjalmar Leonard Hammarskjöld of Sweden as president of the tribunal. The Tribunal orders the Claimant to submit a Reply. REPLY Isaac Liebes’ lawyers submit in their Reply:

1. Jurisdiction ratione consensus As set out in the cooling-off letter and the Request for Arbitration, Articles I and XIII of the 1923 Treaty be relied on as most-favoured nation clauses. Such clauses mean that German citizens can rely on the consent to arbitrate investor-State claims in Article 26 of the ACT.

30

2. Jurisdiction ratione temporis

Jurisdiction ratione temporis exists under the doctrines of continuous breach, composite act and creeping expropriation.

3. Jurisdiction ratione personae Mr. Isaac Liebes is a German citizen now. He arrived in San Francisco in 1869 from London at the age of 16. While under a Prussian law of 1842,

115 emigrants lost their citizenship after ten years of

residing abroad, the 1913 Law of the German Empire on Citizenship allowed former citizens to reapply for citizenship even if they are not residing in Germany. Mr. Isaac Liebes did so and re-acquired German citizenship under Section 33 of that law on 29 June 1914.

116 When

Rawicz became Polish, this did not affect Mr. Liebes citizenship as an “immediate citizen of the Empire” (unmittelbare Reichsangehörigkeit). As Article VI of the 1923 Treaty shows, Germany and the USA recognize dual citizenship. This means that for the purposes of the 1923 Treaty, his US citizenship does not deprive him of the protection of the treaty as German citizen. As this arbitration is not under the ICSID Convention, dual nationality is not harmful to the jurisdiction of the arbitrators. The question of opposability only arises in disputes under customary international law. In relationships between two States defined by treaty, the definition of citizen is determined solely by reference to the national law of the two States. The 1913 Citizenship Law was in effect when the 1923 Treaty was signed so it was no surprise for the USA. Even in the alternative, the citizenship was effective. 4. Jurisdiction ratione materiae First, because of the operation of the most-favored clauses of the 1923 Treaty, a claimant does not need to fulfill the definition of investment in Article 1 (6) of the ACT. The most-favored nation clauses lead directly to Article 26 of the ACT. Second, in the alternative, the United States’ courts themselves confirmed that pelagic sealing outside the three-mile limit from 1886 to 1896 was not unlawful. Third, what Herman Liebes and/ or the Pacific Trading Company did or did not do, is irrelevant. Mr. Isaac Liebes has not been proven to be a shareholder of the Pacific Trading Company. Fourth, under the terms of the affidavit, there is no perjury. The text of the affidavit speaks for itself. 5. Admissibility of the Claims All claims are admissible under the Oil Platforms Test: - 5.a) While the Lease states that the number of seals to be taken will be determined by the

US Government that does not mean that the US Government had unfettered discretion. The decisions of the US Government were not determined by the size of the seal herd and the effect that the harvest by the NACC would have, but by purely political motives. That the measures were taken for the sake of the seals and the environment is pure fabrication. Political considerations such as the demands of Her Britannic Majesty’s negotiators were not elements to be considered in determining the quota. Thus by

115

An English translation is available at www.investmentmoot.org. 116

An English translation is available at www.investmentmoot.org.

31

deciding to limit the quota, the USA violated the treaty safeguards for expropriation (Article 13 of the ACT and Article I of the 1923 Treaty), Mr. Isaac Liebes’ right to fair and equitable treatment, or his rights under the umbrella clause.

It is patent nonsense that the United States now tries to exculpate itself arguing that a treaty (the Modus Vivendi) imposed the limitations. No one compelled the USA to agree to it, the USA entered into it as sovereign decision. Neither the 1923 Treaty nor the ACT suggest anywhere that they do not apply to a State acting as a treaty making party.

- 5.b) Mr. Isaac Liebes was one of the main proponents of a multilateral convention

stopping pelagic sealing. The duty of a State to provide for full security and protection is not limited to military patrols and the seizing of ships and seal skins.

- 5.c) By raising claims against the NACC contrary to the waiver authorized under the legal

opinions of the Attorney General or the Solicitor General, and contrary to the claims introduced and espoused in the Bering Sea Arbitration, the United States acted contradictorily and in a non-transparent fashion violating the legitimate expectations of the NACC and Mr. Isaac Liebes. It also violated the duty to provide for full security and protection. The United States Government cannot rely on the letter of 27 June 1892 and at the same time violate the expectations raised by the legal opinions and the conduct of its authorities in accordance with such opinions.

- 5.d) The Rothermel Reports as well as the news articles grossly misrepresent the record

of the hearings of the committee. While in principle such inquiries are useful, its does not mean that there are no international rules for such hearings. Such hearings must adhere to similar standards as court proceedings. They must comply with the State’s obligation to provide for full security and protection, as well as for fair and equitable treatment.

- 5.e) Whether or not the USA intended to discriminate against non-US citizens when

enacting the 1924 Act is not relevant. Nor is relevant whether Prussia/Germany espoused Mr. Isaac Liebes’ claim (which it could not do as at the time he was not even an investor in the Pacific Trading Company and not even a citizen). It suffices if the effect is discriminatory. The Tribunal should be mindful of the cases where discriminatory compensation laws have been held to violate international human rights law. As to the question of whether his claim is premature, it suffices to say that the compensation is more than 30 years overdue. The fact that the USA argues that compensation proceedings have been running “only” for more than a year only contributes to the scandal.

PROCEDURAL ORDER

After receipt of the Reply, the Tribunal has a (rather practical) discussion about the venue of the hearings, in particular about weather and hotels (a new yeast treatment in the Kurhaus Hotel!). It finally decides for The Hague and against Paris. The Tribunal then issues the following order:

Procedural Order Whereas the Parties have submitted their arguments on jurisdiction and admissibility, the Tribunal decides to bifurcate the proceedings and to hold a hearing on jurisdiction and admissibility from 18 to 22 March 2013. The Tribunal asks the Parties to submit skeleton arguments by 15 February 2013. For the purposes of that hearing, the Parties will argue on the basis of the facts alleged by the Claimant. In this context, the Tribunal further requests the parties to reserve 23 March 2013 for an evidentiary hearing, should the need arise.

32

The Tribunal intends to focus the oral hearing on the nine issues, set out in the Response at paras. 1 to 5 (pp. 28-29) and the Reply at paras. 1 to 5 (pp. 29-31). It expects the Parties to address these in their skeleton arguments in preparation for the hearing. Given the enormous amounts of documents which were attached to the Parties’ memorials, the Tribunal also asks the Parties to compile a core bundle of relevant documents. The Tribunal insists that all documents (other than legal authorities) which the Parties intend to refer to during the hearing must be included in the core bundle.

117

Dr. Hammarskjöld President

117

The core bundle is available at www.investmentmoot.org.