¹ The legal instruments providing for the termination of the mandate are the Palestine Act, 1948, and the Orders in Council made in pursuance of that Act, i.e., the Termination of Jurisdiction in Palestine (Transitional Provisions) Orders, 1948 and 1949: 1948 No. 1003, and 1949 No. 138, respectively.

² Geographically the Federal Republic comprises only part of the territory of the German Reich which ceased to exist after the cessation of hostilities in the second World War, and which would have been internationally responsible for the criminal acts committed at the direction of its government. It is not proposed here to consider the controversial question of the legal status of Germany. The literature on the subject is vast, and in describing the Federal Republic as the successor of the defunct German Beich we merely state the factual situation, without thereby attempting to take sides on the legal connotation of the term “successor state.”

³ In this figure is included the claim against Eastern Germany; this is implied in a Note of the Government of Israel, of March 12, 1951, which is addressed to the four Occupying Powers. Cf. Documents Relating to the Agreement between the Government of Israel and the Government of the Federal Republic of Germany (Government Printer, Jerusalem, 1953), at p. 20 (hereinafter cited as “Documents”).

⁴ This Conference was held between February and August, 1952, and was concerned with a general settlement of German indebtedness arising from commercial transactions and from external loans granted to Germany before the late war.

⁵ Cf. The Times (London), April 15, 1952. The deputy leader of the German Delegation, Herr Küster, resigned after a violent attack on Herr Schaeffer, the German Minister of Finance, in which he threw doubt on the sincerity of the German Government in their desire to make material reparation to Israel.

⁶ Cf. The Times, May 8, 1952. Of the total of $1,500 million claimed, $1,000 million was considered to be the share of the Federal Republic, and $500 million the share of the German Democratic Eepublie (Eastern Germany).

⁷ Cf. Documents, at p. 125.

⁸ The way in which the difficulties resulting from the absence of diplomatic relations are intended to be overcome in the execution of the Agreement will be referred to later.

⁹ For the text of the declaration as published in the United Kingdom see Supplement to the London Gazette of July 6, 1951.

¹⁰ In fact, it would have been quite impossible to contend that a state of war existed between the two countries. On the other hand, Great Britain had, as she was entitled to do, enacted certain legislation in Palestine during the war which had remained in force while the Mandate continued in existence, and which, in a general way, put the economy and administration of Palestine on a war footing; see, e.g., the Trading with the Enemy Ordinance, No. 36 of 1939, in Supplement No. 1 to the Palestine Gazette Extraordinary No. 923, of Sept. 5, 1939. This legislation Great Britain was clearly not entitled to abrogate by a declaration made in 1951; insofar as the declaration terminating the state of war with Germany purported to establish peace between Israel and Germany, it was not only ultra vires, but also superfluous, no state of war ever having existed between the two countries.

¹¹ One dollar is the equivalent of about 4.2 Deutschemark. In the Agreement under review all figures are expressed in Deutschemark, but for the sake of convenience they are hereafter set out in United States dollars.

¹² There is one exception to this provision. It concerns the purchase of oil from British oil companies with sterling funds to be made available by the Federal Eepublic; as to this, see below.

¹³ The relevant provision is contained in Art. 2 of Protocol No. 2 signed between the Government of the Federal Eepublic of Germany and the Conference on the same day as the Agreement under review.

¹⁴ For the sake of simplicity the Federal Republic of Germany will hereafter be referred to as “Germany,” it being understood that, unless otherwise stated, the term “Germany” does not include the Soviet zone of occupation or Berlin.

¹⁵ The Agreement was ratified by the Bundestag on March 18, 1953. (Bundesgesetz-Blatt 1953, II, 35; Art. III of the “Law relating to the Agreement of September 10, 1952, between the Federal Eepublic of Germany and the State of Israel” provides expressly that the Agreement shall also apply to West Berlin.) By the law of Israel, insofar as concerns ratification by that country, this means ratification by the government, and not by Parliament; this took place on March 22, 1953.

¹⁶ As regards the first financial year, $15 million became due on the day of the coming into force of the Agreement, and $33 million on March 31, 1953.

¹⁷ It will be seen later that a permanent Arbitral Commission has jurisdiction to decide all disputes arising out of the interpretation or application of the Agreement. Although a reduction by Germany of the annual installments payable under the Agreement may well result in a dispute between the parties, it seems that the Commission would not be competent to decide such a dispute. This would appear to follow from the wording of Art. 3(a) (iii), which provides that installments may be reduced “should the government of the Federal Eepublic of Germany be of opinion that they cannot comply with the terms of sub-paragraph (ii)….”

¹⁸ The difference between these two cases is that, whereas in the first case the liability must be reduced by the whole amount available, regardless of whether this amount exceeds the equivalent of two annual installments, in the second case only an amount equivalent to not more than two normal annual installments can be used for the purpose of reducing the liability then outstanding.

¹⁹ The composition and powers of the Mixed Commission will be referred to later. From what has been said it can be concluded that the Agreement may run for a period of a little over 11 years or not more than about 13 years. If circumstances are favorable, and if Germany is willing to discharge her liability at an increased rate of payment, the period may be a great deal shorter.

²⁰ Cf. Art. 5(a), (c) and (d).

²¹ The law which is made applicable is the Umsatzsteuer-Gesete of Sept. 1, 1951 (BGBL. [Bundesgesetz-Blatt] I, 791), and the implementary provisions enacted thereunder (BGBL. I, 796).

²² This law is the Gesetz über steuerliche Massnahmen sw Förderimg der Ausfuhr (BGBL. I, 405); it is concerned with taxation on income and profits.

²³ Cf. Art. 16(a) and Schedule.

²⁴ The main groups are ferrous and non-ferrous metals, products of the steel manufacturing industries, products of the chemical industry and other industries, and agricultural products. Services include insurance, freight and the like; as to these, see below.

²⁵ Cf. Art. 6(g).

²⁶ This is the amount payable in the absence of special circumstances to be referred to below.

²⁷ Cf. Payments Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Federal Republic of Germany, of Dec. 9, 1950, Cmd. 8134.

²⁸ The agreement relating to the delivery of oil is contained in an exchange of letters between the Minister of Foreign Affairs of Israel and the German Chancellor; by virtue of Art. 16 of the Agreement all letters exchanged between representatives of the respective governments form an integral part of the Agreement.

²⁹ Cf. Arts. 2, 6(a), 8 and Schedule. Such of the moneys as have been set aside for the provision of services and as have remained unspent may be used for the purchase of commodities.

³⁰ It was originally provided that ships so supplied should not sail under the German flag. This restriction, however, was subsequently lifted by an exchange of letters between the Head of the Israeli Mission and the German Secretary of State for Foreign Affairs; cf. Documents, at p. 164.

³¹ As to the composition of the Arbitral Commission and the powers it is entitled to exercise under the terms of the Agreement, see below.

³² Any penalty imposed on Israel is to be deducted from the annual installment next payable.

³³ Cf. Art. 2 of Protocol No. 2. In addition, Israel expresses her willingness, in an exchange of letters between the parties, to place orders for the supply of commodities, as far as practicable and economically justifiable, with industries in West Berlin. This, however, is not an undertaking enforceable against Israel.

³⁴ Cf. Art. 12(c); the actual term used is “ … legal relations arising out of …,” but this wording has been chosen merely to adapt it to the German word “Bechtsverhaltnisse.”

³⁵ In addition, the Government of Israel undertook to set up a body in Israel whose duty it is to deal with all matters connected with the purchase of commodities and services.

³⁶ Insofar as concerns criminal jurisdiction, officials of the Mission may not be arrested except for offenses which German criminal law defines as “Vertreohen,” viz., offenses punishable with penal servitude: cf. German Criminal Code, sec. 1(1). To this extent the provisions of the Agreement relating to diplomatic inviolability differ from accepted practice, on the ground, presumably, that the functions of members of the Israeli Mission are mainly commercial and not diplomatic.

³⁷ Cf. Art. 12(c). The Mission is not required, however, as would normally be the case where a corporate body engages in business, to register in the Commercial Register (German Commercial Code, sec. 13 et seq.); all that is required is that the names of persons authorized to act on behalf of the Mission shall be published in the Federal Gazette from time to time: cf. Art. 12(c).

³⁸ Space does not permit dealing with this matter fully. It should be merely noted that the Israeli Mission does not assume any functions regarding claims by persons of other than Israeli nationality.

³⁹ As to schedules of commodities and services, see above, p. 570. The Mixed Commission also has power to authorize the re-export of German commodities from Israel to third countries; such re-export, it will be remembered, is normally prohibited by virtue of Art. 5(e).

⁴⁰ Cf. Art. 14. Each contracting party appoints one arbitrator whose nationality is not specified. Both parties, by mutual agreement, appoint an umpire who must not be a national of or in the service of either of the parties. In default of agreement between the parties as to the appointment of an umpire, the latter will be appointed by the President of the International Court of Justice.

⁴¹ In addition, special power is conferred upon the Commission to adjudicate upon disputes which may arise as to the use of such part of the funds as is intended to be applied by the Conference on Jewish Material Claims against Germany for the relief of distress among Jews; as to this, see below.

⁴² Cf. Art. 14 (m).

⁴³ It may be recalled that the Federal Eepublie of Germany undertakes to pay to Israel a total sum of $107 million “for the benefit of the ‘Conference.’ ” To the extent of this payment Israel may be regarded as a trustee and the Conference as a beneficiary. Insofar as Germany may consider that Israel has failed to pay an appropriate share of that sum to the Conference, a dispute resulting from an alleged failure of Israel to fulfil her obligation would undoubtedly be a dispute “arising out of the interpretation or application of the Agreement” as provided by Art. 14(a). But insofar as Germany may consider that the Conference has failed to apply funds received from Israel for the purposes stipulated in the Protocol drawn up between Germany and the Conference, this would not constitute a “dispute,” and therefore Art. 15 expressly confers competence upon the Arbitral Commission to adjudicate between Germany and the Conference. It may be observed that Protocol No. 2 drawn up between Germany and the Conference on Jewish Material Claims contains a similar provision expressly conferring competence upon the Arbitral Commission.

⁴⁴ See above, in particular note 17.

⁴⁵ Cf. Art. 10.

⁴⁶ This provision, of course, overrides the limited right conferred upon Germany by virtue of Art. 3(a) (iii) of the Agreement; see above, note 17.

⁴⁷ Cf. letters Nos. 1(a) and 1(b) exchanged between the Minister of Foreign Affairs of Israel and the Chancellor of the Federal Republic of Germany. A further agreement concluded between the parties on the same day as the Agreement under review provides, in relation to German-owned property situated in the territory of Israel, for negotiations between the parties on the manner in which compensation may be paid by Israel to owners of property falling within the terms of sec. 2(e) of the Israel “German Property Law, 5710–1950.” Any compensation which may be found to be payable by Israel will be paid in German currency out of funds obtained under the terms of the Agreement under review. It is further provided that if negotiations between the parties fail to lead to an agreement on the compensation to be paid, a mediator shall be nominated by the King of either Denmark, Norway or Sweden.

⁴⁸ It may be observed that certain limitations are imposed upon such claims to compensation; these are provided for in an exchange of letters.