Oscar Chinn - Expropriation

Expropriation
Cases 2
The Oscar Chinn Case
• Before the war of 1914-1918 and also afterwards
until 1925, transport services on the Congo had
been operated by, or under the auspices of, the
Belgian Government, though not in any way to
the exclusion of private enterprises.
• In 1921 it abandoned this business and
transferred it to a Company known as the
"Sonatra“ Company, which it formed and which
was under its management.
• In 1925, the Sonatra Company combined with a
private Company known as "Citas" and became
the "Union nationale des Transfiorts fluviaux"
known as "Unatra".
• According to the statutes of this Company, the
State owned more than 70,000 shares out of
120,000 ; it still at the present time owns more
• than one-half of the shares (128,987 out of
243,000 shares)
• The Colony to keep permanently in service a
fleet capable of meeting the present needs
and future expansion of transport traffic and
to establish regular services with fixed time-
tables on the Congo and on the Kasaï, as well
as on the navigable tributaries of those rivers.
Transport rates are to be approved by the
Minister for the Colonies or by the Governor-
General before being put into force.
• The Colony has the right to insist on the
maintenance of services even though they show
a deficit, but is bound to make up the receipts to
an amount equal to the running expenses.
• The Company can not grant exceptional rates
without the special permission of the Colony. The
State, for its part, is bound to entrust the
Company with the transport by water of its
officials and goods
• At the beginning of 1929, Mr. Chinn, a British
subject, who had worked in the Congo since
1927, came to Leopoldville and established
there a river transport and ship-building and
repairing business.
• In the course of 1930 and 1931, the severe
commercial depression which prevailed
throughout the whole world seriously affected
trade in the Congo colony.
• Reduction in transport costs of certain goods.
Colonial adm. To reimburse the loss after
checking and auditing the figures.
• the charge which the Colony thus agrees to bear
shall be recoverable, whenever the economic
position allows of the transport tariffs being again
raised.
• In both cases the charge, reduced to one franc
per ton, was, practically speaking, a purely
nominal one.
• Under the arrangement, the Belgian State paid to
Unatra 2,072,000 fr. in 1931, 2,107,000 fr. in 1932
and 7,456,000 fr. in 1933,
• The measure gave rise to discontent in certain
circles in the colony.
• According to the Government of the United
Kingdom, the effect of the decision of June zoth,
1931, was to ruin Mr. Chinn by forcing him
entirely to suspend both his transport business
and his ship-building and repairing business.
• Creation of virtual monopoly
• Peculiar importance of fluvial transport for the whole
economic oïganization of the colony.
• The river Congo, owing to the magnitude and extent of its
waterways, constitutes the chief highway of the Belgian
colony.
• by means of its numerous tributaries, to the remotest
confines of the territory, it makes it possible to exploit and
turn to account the local sources of wealth of every part of
the colony, so that, from the point of view of the
evacuation of products to be exported, it constitutes an
essential factor in the commercial activities of the colony.
• Having succeeded in 1925 to the Sonatra
Company, which was under the direction of
the State, the Unatra Company was in form a
private Company; but it was charged, the
supervision therein reserved to the State-with
the conduct of an organized public service,
involving special obligations and
responsibilities, with a view, primarily, to
satisfying the general requirements of the
colony.
• The fact that Unatra was responsible for these
services was, it is true, no bar to the enterprises
of other concerns who were desirous of engaging
in fluvial transport on their own account, or for
the account of others.
• But these concerns, carrying on business freely,
and having pecuniary profit as their main and
legitimate object, had no claim to any guarantee
of their profits from the State.
• Finally, the circumstance which, according to
the Belgian Government, was the determining
cause of the measure which it took on June
1931, was the general economic depression
and the necessity of assisting trade, which was
suffering grievously from the fa11 in prices of
colonial products, and of warding off the
danger which threatened to involve the whole
colony in a common disaster.
• The Belgian Government was the sole judge of
this critical situation and of the remedies that it
called for-subject of course to its duty of
respecting its international obligations.
• The United Kingdom submits that, by making it
commercially impossible for Mr. Chinn, a British
subject, to carry on his business, these measures
constituted-it is alleged -a violation of vested
rights, protected by the general principles of
international law.
• The Court, though not failing to recognize the
change that had come over Mr. Chinn's
financial position, a change which is said to
have led him to wind up his transport and
shipbuilding businesses, is unable to see in his
original position which was characterized by
the possession of customers and the
possibility of making a profit-anything in the
nature of a genuine vested right.
• Favourable business conditions and goodwill are
transient circumstances, subject to inevitable
changes ; the interests of transport undertakings
may well have suffered as a result of the general
trade depression and the measures taken to
combat it.
• No enterprise-least of al1 a commercial or
transport enterprise, the success of which is
dependent on the fluctuating level of prices and
rates-can escape from the chances and hazards
resulting from general economic conditions.
• Some industries may be able to make large
profits during a period of general prosperity,
or else by taking advantage of a treaty of
commerce or of an alteration in customs
duties ; but they are also exposed to the
danger of ruin or extinction if circumstances
change.
• Where this is the case, no vested rights are
violated by the State.
• It is true that in 1932 the Belgian Government
decided to grant Belgian or foreign ship-owners,
whose business was endangered, advances
similar to those allowed to the Unatra Company
• the taking of this measure cannot, however, be
regarded in itself as an admission by the Belgian
Government of a legal obligation to indemnify
the transporters for an encroachment on their
vested rights
• it is rather to be ascribed to the desire of
every government to show consideration for
different business interests, and to offer them
some compensation, when possible.
• The action of the Government appears to have
been rather in the nature of an act of grace.

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Expropriation

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