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Joint Statement of the ^AMERICAN JEWISH COMMITTEE, the AMERICAN JEWISH CONGRESS, and the B'NAI B'RITH on S.600 and S.1302,ך relating to the return of enemy assets and the award of compensation for war damages ״ submitted to Subcommittee on Trading With the Enemy Act of the United States Senate COMMITTEE OH THE JUDICIARY April b, 1957 The American Jewish Committee, the American Jewish Congress and the Bfnai B'rith join in presenting their views on S.600 and S.1302. The three organizations are nationwide organizations of American Jews. Since their inception these organizations have consistently dedicated themselves to the preservation and extension of the democratic way of life, and to the assurance of the fundamental freedoms of man, by the elimination of all forms of political, social or economic discrimination because of race, religion or ancestry. I. Resume of major provisions of S.600 1. It establishes a ״Japanese and German Claims Fund", consisting of funds to be received by the United States (a) from the Federal Republic of Germany under the agreement of February 27, 1953 for the settlement of the claims of the United States for post-war economic assistance to Germany, and (b) from Japan or another country, in repayment of loans for post-World War II economic aid or assistance extended to such country by the United States. 2. It provides that the proceeds of the "Japanese and German Claims Fund" shall be apportioned equally to pay two types of claims, namely, a. certain categories of claims for war damages suffered by American citizens during World War II, and b. claims for the return of German and Japanese assets sequestered by the United States during World. War II under the Trading with the Enemy Act. 3• The claims for ״war damages fall into three categories: (a) for damage to property situated within the territorial limits of Czechoslovakia, Germany, Greece, Poland, Yugoslavia, as such limits existed on December 1, 1937> or in the territory occupied by Japan in the period beginning July 1, 1937 and ending September 2, 19^5; (b) for damage to shipping; and (c) for injury or loss of life sustained on the high seas during the period beginning July 1, 1937 and December 11, 1941. k. To be eligible to recover for war damages, a natural person must have been a citizen of the United States at the time of loss and at the time of the filing of his claim. A legal entity qualifies as a claimant if at least 50$ of its stock is owned by natural persons who would be eligible as individual claimants. II. Besume of major provisions of S.1302 1. It establishes a "German Claims Fund", consisting of (a) funds to be received by the United States from the Federal Republic of Germany under the agreement of February 27, 1953 ןfor the settlement of the claims of the United States for postwar economic assistance to Germany; (b) the profits resulting from the operation of the War Damage Corporation; (c) the net proceeds derived from the Paris Reparation Agreement; (d) the unexpended funds appropriated for the Foreign Operations Administration (not in excess of $1,000,000,000); and (e) funds to be derived from future treaties or agreements with a unified Germany in payment of war damage compensation to citizens or nationals of the United States. 2. It provides that the proceeds of the "German Claims Fund" shall be used for the payment of war damages suffered by American citizens during -2- World War II. 3• It provides for the return of assets sequestered under the Trading with the Enemy Act and formerly belonging to natural persons (German and Japanese) or to non-profit corporations. In the event additional funds are required to effect these returns, the funds which the United States will derive from the Federal Republic of Germany and from Japan in settlement of surplus property supplied to them by the United States shall constitute the respective funds for the payment of the return claims of the respective nationals. k. The claims for war damages fall into five categories: (a) for loss or dispossession of or damage to property situated within the territorial limits of Albania, Austria, Czechoslovakia, Germany, Greece, Poland, Yugoslavia, as such limits existed on December 1, 1937, provided such damage claims arose: (1) as a direct consequence of military operations of war or of special measures directed against property because of the enemy (or alleged enemy) character of the owner; (2) as a consequence of confiscation, dispossession or duress by Germany, its agencies or nationals at any time since January 1, 1933; or (3) as a consequence of nationalization without actual and adequate compensation. -3״ (b) for damage to shipping; (c) for injury to any person or loss of life sustained on the high seas during the period beginning July 1, 1937 and December 11, 1941; (d) for the net losses by insurance companies under war risk insurance or reinsurance policies, incurred in the settlement of claims for insured losses of ships or ship cargo; and (e) losses resulting from removal of capital equipment in Germany. 5- To be eligible to recover a natural person must be a citizen of the United States at the time of the enactment of the law. A legal entity is qualified as a claimant if at least 50$ of the stock is owned by natural persons who would be eligible as individual claimants. III. General propositions in the light of which bills should be evaluated To evaluate S.600 and S.1302 properly, it is essential to acknowledge four incontrovertible facts. One, that the Congress has plenary authority to legislate in th®. field of war damages and that the only limitation on this power is derived from a self-imposed discipline to be just. Two, that the war damage claims are domestic and not international claims and that, therefore, principles governing the adjudication of international claims need not be observed by the Congress in establishing eligibility of claims and claimants. Three, that the monies to be employed in the payment of the claim are funds supplied by the American taxpayer and not by a foreign government. Note: In the case of S.600 all, and in the case of S.1302 most of, the funds are those supplied by the American taxpayers.) In the preamble to -4- S.600 there is reference to the fact that the objectives of the bill (the return of enemy assets and the compensation for ״war damages) will be achieved "without direct appropriations or otherwise increasing the burdens of the American taxpayer." There is no basis for this optimistic calcu.!ation. The funds for the post-war loans being repaid by Germany and Japan came originally from the pockets of the American taxpayer. It is not the granting of these loans but rather the expenditure of the funds derived from the repaid loans, in discharge of the projected war damage claims, that constitutes the burden oh the taxpayer. This point requires emphasis because once it is conceded, as it must be, that the funds are provided by the American taxpayer and not by a foreign government, two unavoidable conclusions follow: one, further support is given to the proposition that the war damage claims whose payment S.600 and S.1302 contemplate are domestic and not international claims, and two, that since the funds do not come from a specific enemy power, it is Illogical to confine eligibility to those claims which are traceable to the action of a specific enemy power. Four, that World War II was one war and not separate wars with the individual enemy powers, and that, therefore, any war damage legislation which, in the final analysis, makes the rate of recovery on war damages contingent upon accidents of geography - i.e., on where the damaged property was situated must, necessarily, be unjust and by the same token, indefensible. IV. Provisions in which the bills are too restrictive It is the position of the three organizations that S.600 and S.1302 are too restrictive in two respects: (1) as to the type of losses that are to be compensable; and (2) as to the countries where losses, to be compensable, -5- must have occurred. In addition, S.600 is too restrictive in respect to tte citizenship as a factor of eligibility of a claimant. A. Type of Losses Except as to a very limited category of claims, those for injury or death of a civilian national of the United States while a passenger on a vecool engaged in commerce on the high seas, neither S.600 nor S.1302 make any provision for personal injury and death claims based on the personal injury or death of American civilians caught in the path of ־war. In the Supplementary Report on War Claims Arising out of World War II (House Document No. 67, 83d Congress, 1st Session), prepared by the United States War Claims Commissio**, it 1a ,dlGcIociad •that at least 1000 UtaitM States citizens and nationals were either disabled or died as a direct result of hostilities for whose injury or death no compensation has, as yet, been provided, (p.101 of the Report). In addition, there are American citizens who suffered injury or death as a result of their status as enemy nationals. In view of the traditional policy of the United States and other governments to give the highest priority to death and personal injury claims, the failure of S.600 and S.1302 to recognize these claims represents a serious omission and should be remedied. B. Place where compensable loss must have occurred As seen above, under S.600 a property loss, to be compensable, must involve property which was situated in Albania, Austria, Czechoslovakia, Germany, Greece, Poland and Yugoslavia or in territory occupied by Japan in the period beginning July 1, 1937 and ending September 2, 19^5. To grasp the significance of this limitation, it is essential to bear in mind that -6- "both under S.600 and S.1302, full compensation is virtually assured to American claimants who sustained losses in the countries listed above. In sharp contrast with the preference extended to these claimants, American citizens who sustained losses elsewhere wiH, under S.600, be left in the following situations, depending upon - what they received by the way of compensation under United States legislation or under treaties with, or under the local laws יof, the countries in which their property was situated: (1) Those who sustained losses in Algeria, Morocco, Tunisia, Estonia, Latvia, Lithuania, and Luxembourg - no compensation,either because these countries enacted no war damage laws, or because these laws, if any, limited compensation to their own respective citizens. (Lithuania, Latvia and Estonia are exactly in the same situation as the parts of Poland and Czechoslovakia which, after the war, were incorporated or reincorporated into the Soviet Union). (2) Those who sustained losses in the Phillippines -2צjorecovery made under the Phillippine Rehabilitation Act of 19^6 (60 Stat. 128, 15 U.S.C. App., Sec. 1751 et seg,.) 2 (3) Those who sustained losses in Italy - 66 /3$ recovery, under the post-war Treaty of Peace with Italy. (4) Those who sustained losses in Belgium, Denmark, France, the Netherlands, Norway and the United Kingdom - varying percentages of recovery, all less than 100$, depending upon the rate of compensation provided by these countries. (5) Americans who sustained losses in Japan - full compensation under the Allied Compensation Law enacted by Japan pursuant to the post- •7־ war Treaty of Peace. (6) Americans who sustained losses in Hungary, Rumania, and Bulgaria varying percentages of recovery, under the Satellite Bill(P.L.285, 84th Congress, 1st Session, approved August 9, 1955)> currently estimated at 20$, 70$, and 100$, for losses sustained in Hungary, Rumania and Bulgaria, respectively. Under S.1302, the foregoing situation will not "be improved, but, in addition,^those who sustained losses in all the countries in the Pacific theater of operations (except in Japan, the Phillippines, Malaya, and in Thailand) will be left with no remedy. Included in this list of countries are Burma, HongKong, Indonesia and Indochina. It is inconceivable that the Congress, recognizing that World War II was one war, that the fundamental purpose of war damage legislation is to equalize the burdens of war, and that the funds which are to constitute the source for the payment of the claims are funds supplied by the American taxpayer, would enact a law which discriminates as between American citizens, all of whom have an equal claim upon the United States Government for compensation for the losses they sustained. On July 26, 1956 the Committee of the Judiciary reported favorably S.2405 (Report No. 2809, 84th Congress, 2d Session), a bill which in all essential details is identical with S.600. In its report, the Committee said, inter alia, the following: "Many of the claims which will be submitted if this legislation is adopted will arise as the resuit of the investment of American citizens in industry abroad. In recent years it has been a consistent policy of the United States Government to encourage such investments and recently a program has "been inaugurated providing a measure of insurance for American investors. If the United States is to continue to encourage investments abroad, adoption of the program advocated here should represent considerable reassurance to such investors....The Committee has, in S.4205, recommended a comprehensive program for the payment of ־war damage claims. Such a program serves to affirm the consistent policy of the United States to provide redress for ־war losses. Such a program ohauM also ser®e to alleviate-some of the Inequities visited on American citizens as the direct consequence of the war. It should also provide a measure of reassurance for American citizen investors abroad." In view of the restrictive character of S.600 and S.1302 described above, it cannot be said that these bills provide a "cotf^rehensive ׳-^)Eogram for the payment of war damage claims," that they will "alleviate some of the inequities visited on American citizens as the direct consequences of the war" (unless the word "some" is inserted before the word "American"), and that they will provide "a measure of reassurance for American citizen, investors abroad." Rather than providing the claimed "reassurance" to potential investors, S.600 and S. 1302 will convince them that luck is an important element even in a field - congressional legislation - where impartiality is the traditional rule. The "assurance" implicit in S.600 will be poor comfort to the American investor who has made his investment in a country where American-owned property damaged as a result of war is excluded from a program of war damage legislation. The only just formula which will insure the equal treatment of all American citizens who sustained losses during World War II is one which provides for the adjudication of all the war damage claims, irrespective of where the property was situated, and which provides for deductions of -9- the payments the claimants received from any other source. This formula, recommended by the United States War Claims Commission in its Supplementary Report on War Claims arising out of World War IX, mentioned above, would achieve the objectives which the Committee on the Judiciary claimed for S.4205, namely, provide a "comprehensive program for the payment of war damage claims," "alleviate some of the inequities visited on American citizens as a direct consequence of the war", and provide a "measure of reassurance for American citizen investors abroad." Any other formula will, inevitably, be inequitable. C• Citzenshlp as an element of eligibility As indicated above, S.600 makes United States citizenship as of the date of loss a prerequisite to recovery. It is the view of the three organizations that the provision on citizenship as a factor of eligibility contained in S.1302, which would extend the benefits of the law to persons who are citizens at the date of the enactment of the bill, is, in every respect, a more just rule. The requirement that a person must be a citizen of the date of loss is generally considered a sine quo non in the case of the claim of an individual against a foreign government, i.e. in the case of international claims. Because an individual cannot prosecute a claim against a foreign government, he must turn to a state to espouse his claim. By the application of a legal fiction, the injury to a person is deemed to be an injury to the state of which he is a citizen and his state prosecutes the claim on his behalf. As a result of this legal fiction the rule is international claims has grown up that a state will not espouse a claim unless the person assert- -10- ing it ״was a citizen of that state at the time of the loss - otherwise the theory that the state had "been injured when the person sustained the loss would have no validity. This rule has no application in the war damage claims ־essentially domestic claims - compensable under S.600. The claims are not claims against a foreign government. In fact, they are against no government. They are claims which the United States, in the exercise of its sovereign powers, decides to honor. In these circumstances, the Congress, in fixing eligibility, is not fettered by the rule that it must restrict recovery to persons who were citizens of the United States at the time of loss. Honoring claims which the Congress, in its sole discretion, chooses to honor, and appropriating taxpayers' money to pay the claims, It can permit itself to be as just as it wants to be. That is precisely what Great Britain did in the disposition of monies which it received from Czechoslovakia in settlement of British nationalization claims. On September 28, Great Britain entered into an agreement with Czechoslovakia pursuant to which Czechoslovakia paid Great Britain 8 million pounds sterling "in final settlement... of claims with respect to British property, rights, and interests affected by various Czechoslovak measures of nationalization..." Article 1 of the agreement defined "British property" % as property owned by British nationals on the date of the agreement and "at the date of the relevant Czechoslovak measures" (in other words, at the date of loss.) Despite this clear-cut provision in the agreement, the foreign compensation bill of 1950, enacted by the British Parliament and the order in -11- council promulgated pursuant to that hill provided that persons who were ?ritish citizens either on the date of the official decree of confiscation, the date of the physical dispossession, or on the date of the agreement, were eligible to participate in the fund. Referring to the disparity between the provisions in the foreign compensation bill of 1950 and the agreement with Czechoslovakia, the Secretary of State for Foreign Affairs reported to Parliament as follows: "These provisions follow in general those of the agreements (the plural was used because the reference is to an agreement with Yugoslavia as well), but it is not practicable to follow the agreements entirely because they were drafted for the purpose of making settlements with foreign governments and not for the purpose of application as municipal legislation." In other words, in settling the nationalization claims with Czechoslovakia, Great Britain could assert the claims only of its citizens at the time of loss, but in distributing the bulk amount under its domestic law, it felt free to distribute the money as it chose, and, finding it equitable to do so made the fund available to persons who were citizens at the time of agreement - a much later date than the date of the loss. American precedent for the provision on citizenship in S.1302 is found in the legislative history of the International Claim Settlement Act of 1949, the act which implemented the agreement with Yugoslavia under which the United States received $17 million in settlement of nationalisation claims of United States citizens arising out of nationalization of their property in Yugoslavia. The act as passed by the Senate provided that persons who were citizens of the United States at the time of the enactment of the law should be eligible to participate in the Yugoslav fund. It was only in conference that the Senate yielded to the House version which limited recovery -12- to persons who were citizens at the time of taking. This example Is cited only to show (1) that there are no legal obstacles against the broadening of the rule of eligibility to include persons who were citizens at the time of the enactment of the law, and (2) that even where a fund was received from a foreign power there was the disposition to admit the participation of persons who were citizens at the time of the enactment of the law. A fortiori where the funds are supplied by the American taxpayer the reasons for extending eligibility to persons who are citizens on the date of the enactment of the law are even more compelling. Since there are no legal obstacles to the rule of eligibility proposed by S.1302, considerations of justice demand that persons who were citizens of the United States at the date of the enactment of the law should be eligible to compensation for the war losses they sustained. By adopting this recommendation the Congress would be honoring the claims of persons who had contributed to the war effort, whose sons had served in the Armed Forces of the United States, who, as taxpayers, had contributed to the fund which is used as the source for the payment of the claims, and who, by virtue of having relinquished their former citizenship, have no government other than the United States to turn to for compensation. It is important to bear in mind that some of the persons whom S.600 would exclude are persons to whom the United States offered a haven when they were fleeing from persecution by Nazi Germany and her Allies. The moral claim of persons in this category was recognized by the Allied Powers, including the United States, when they insisted that persons who were treated as enemy nationals by the enemy (victims of persecution) should be -13״ assimilated to that of United Nations nationals and as such, entitled to recover for the war losses they sustained in the countries where persecution was practiced. Thus, the United States helped in e^cting provisions from Hungary, Rumania and Italy that such persons who sustained war losses in these countries be given the same rights that American citizens enjoy under the treaties. It would be strange if the United States were not as solicitous of the rights of these people in laws which it enacts as it was in the post-war treaties which it negotiated. Moreover, both S.600 and S.1302 contemplate the return of enemy assets sequestered pursuant to the Trading with the Enemy Act. Unless the rule of eligibility contained in S.1302 prevails, the consequence of it would be that persons who were avowed enemies of the United States would have restored to them their property rights, while persons who suffered from the ravages of a war which was pre• ceded by an assault against them, and of which they were the principal victims, would be given no relief for their war damages. Finally, it should be pointed out that under both S.600 and S.1302, legal entities may recover war damage compensation if 50$ of the stock of the legal entity is owned by persons who, as natural persons, could qualify as claimants. It is, thus, possible that 50$ of stockholders who at no time were residents of the United States may indirectly recover for the war losses sustained by the corporations in which they hold stock, while persons who have integrated into American life, who contributed to the American war effort and who, as taxpayers, provided part of the funds which will be used to pay the war damage claims, will be denied any measure of recovery. It is not conceivable that the Congress would dignify this bit of irony by incorporating it into law. -14- 14ft י . Estimates ©C war <£ama§*• sustainedfeyAm*!••* M i s s during World War H f coiatAiaed la tha Sttppl«ra<mtary S8y9ft ^ ft• W * » Claim C©mml»»l©» t#S| ״warrant tha conclusion M allocated by either S. I0t or $• 1302 i&t tha payma»t claim* would ha tie amount* war damage thaa adequate t© pay all claimaats *1* at* cit£«a>1• of the United Stat•• on the date ©I tha •aactnaat 01tha law• Thn». th* implemen&tation ©f the m s m m M f l i f «*1a<ta hy the thraa pyga11t»afttf»» would In m way dlmtalab the rata ©r the amount of recovery 0* who w«r« United States cltiaeas 0a the dat« of losa. D. Observations on other provisions (a) Both S,600 and S.1302 provide that recovery can be made for "physical damage to or physical loss or destruction...as a direct consequence of military operations of ״war, or special measures directed against property during the war because of the enemy or alleged enemy character of the owner", etc. The reference to the "enemy or alleged enemy character of the owner" is ambiguous. A preferable wording of this provision would be the language employed by the United States in corresponding sections in the Satellite and Austrian Treaties. In conformity with these treaty provisions, the provision under consideration should be amended to read: "physical damage to or physical loss or destruction.. .as a direct consequence of military operations of war or special measures directed against property during the war because, under the law in force in the country concerned, the owner was treated as an enemy." (b) Whereas S.600 limits recovery for damages resulting from the acts set forth in the last preceding paragraph, S.1302 includes, as well, damages resulting from confiscation, disposess, larceny, or duress, etc., and damage resulting from the nationalization of property of United States citizens. The three organizations favor the broader basis for compensation. In addition, they would invite attention to a situation which neither bill appears to cover. Jy^ny American citizens would, even under the more restricted rule of eligibility proposed by S.600 with respect to citizenship, be eligible for compensation for war damage to their property but for the confiscation of their property or the transfer of their property under duress in Nazi Germany and in countries overrun by the Nazi forces. After the war, restitution laws י15 ־ were enacted in most of these countries which gave the former owners the right to reacquire title to their property. In many instances, the original owners reacquired their property while in other instances, the original owners or their heirs made amicable settlements with the transferees, but did not in these settlements take into account any claim for war damages. It was the United States which set the pace for this restitution program when it enacted Military Government Law 59 in the United States Zone of Geimany. This law became the model for subsequent legislation in this field. Any ambiguity about the right of American citizens, otherwise eligible, to recover for loss to their property, the legal ownership of which they lost temporarily, including the period when the property was damaged, should, as a matter of elementary justice, be removed. To make certain that the rights of this class of American citizens are safeguarded, it is proposed that at the conclusion of Subsection 202(a) of S.600 (or, in Subsection 203(a) of S.1302) the fongoing provision be added: "Confiscation, alienation, or sale under duress of property preceding the time of such loss, damage or destruction but subsequent to January 1, 1933 shall not bar any claim of the transferer otherwise compensable under this sub-section, provided that the claimant subsequently reacquired title to the property; and provided, further, that the claimant shall not be barred, notwithstanding that he did not reacquire title but subsequent to the date of loss entered into an amicable settlement with the transferee with respect to ownership which settlement did not include an assignment of the claim for war damage to the property." (c) The three organizations desire to make only several brief observations on the portions of S.600 and S.1302 which provide for the return of enemy assets sequestered under the Trading with the Enemy Act. As indicated above, - 16 - while S.600 provides for the return to legal entities as well as natural persons, S.1302 limits return of property to natural persons and to nonprofit organizations. Both bills are in accord in denying return to persons who had been "convicted personally and by name by a court of competent jurisdiction of murder, ill treatment, or deportation for slave labor of prisoners of war, political opponents, hostages, or civilian population in occupied territories..." It is the view of the three organizations that this provision should be amended to deny recovery to persons who were adjudged by denazification tribunals to have been "major offenders." The return of enemy assets would be an act of grace on the part of the United States Government. It is inconceivable that persons whose conduct was such as to induce their fellow citizens to brand them as "major offenders" under the denazification procedure should become the beneficiaries of an act of grace on the part of the United States. Moreover, inasmuch as S.600 provides for the return of enemy assets to legal entities, it should be amended to insure that legal entities who employed slave labor shall not be entitled to the return of their property. The same provisions should be made as to natural persons in S.1302. If deportation for slave labor of prisoners of war is a dis- qualifying act, the venality shown by those who employed slave labor and thus encouraged the traffic in such labor should likewise disqualify the employer, whether a natural person or legal entity, from benefiting from an act of grace from the United States Government. Finally, it would seem that in the disqualifying clause of S.600 and S.1302, mentioned above, there is no provision for the disqualification of persons who were found guilty of having persecuted individuals on racial or religious grounds in their own country. - 17 - This, certainly, must be an inadvertent omission. To cover these objections, the above-mentioned clause should be amended to read (in S.600): "(2) any natural person who 1ms been convicted personally and by name by a court of competent jurisdiction of murder, ill treatment, or deportation for slave labor of prisoners of war, political opponents, victims of racial or religious persecution, hostages, or civilian population in occupied territories, or of murder or ill treatment of military or naval persons, or of plunder or wanton destruction without justified military necessity; (3) any natural person who was adjudged by a denazifielation tribunal to have been a "major offender"; (H) any natural person or legal entity who employed slave labor." E. Summary It is the view of the three organizations that both S.600 and S.1302 are inadequate in failing to provide for compensation of personal injury and death claims; that both measures are too restrictive with respect to countries where the damaged property must have been situated in order to qualify the owner for compensation; and that S.600 is too restrictive in limiting eligibility to persons who were citizens at the time of loss and in limiting compensation to damage caused by war action. Both bills could be improved in the portion providing for the return of enemy property, by withholding return from persons whose past conduct disqualifies them as beneficiaries of an act of grace on the part of the United States Government. For twelve years the American people have waited for a war damage bill which is both comprehensive and just. It is the belief of the three organizations that the incorporation of the reeommendations made by them - 18 - will convert the bills under consideration into measures that are more in keeping ,with American concepts of justice and, therefore, more in line with the e3q3ectations of the American people. American Jewish Committee by Seymour Rubin, Foreign Affairs Counsel. American Jewish Congress by Abraham S. Hyman, Special Counsel. Bfnai B'rith by Herman Edelsberg, Washington Counsel, Anti-Defamation League of B*nai B'rith. April 2, 1957 - 19 -