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Chorzow Factory Case

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Kirstin dela Cruz

on 5 January 2014

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Transcript of Chorzow Factory Case

Chorzów Factory Case
Germany v. Poland
Chorzów, Upper Silesia
Facts
March 05, 1915
A contract between the Chancellor of the German Empire, on behalf of the Reich, and the Bayerische Stickstoffwerke Aktiengesellschaft of Trostberg, Bavaria was concluded to establish for the Reich and begin the construction of "amongst other things, a nitrate factory at Chorzów in Upper Silesia."
Facts
Undertakings:
1) Acquisition of the necessary lands and its registration;
2) Patents, Licences, Experience gained, innovations and improvements, all supply and delivery contracts;
3) Bayerische (Company) was to manage the factory until March 31, 1941
Facts
Dec. 24, 1919
Oberschlesische Stickstoffwerke A. -G, a new company, was formed. Part of such creation was the sale by the Reich to the newly-formed company of the factory at Chorzów.
January 29, 1920
- Oberschlesische was duly entered as the owner of the landed property constituting the factory.
Facts
July 01, 1922
- Polish Court nullified the registration, caused it to be cancelled and were to be registered in the name of the Polish Treasury. Art 256 of the Treaty of Versailles and the Polish law and decree of July 14, 1920 and June 16, 1922 were cited.
- Decision was put into effect on the same day.
Facts
July 03, 1922
- Polish Government took possession of the factory and took over its management. During such undertaking, German Government contends and the Polish Government admits that the delegate of the latter also took possession of the movable property, patents, licences, etc.
Facts
Nov 10, 1922
- Oberschlesische brought an action against the Germano-Polish Mixed Arbitral Tribunal at Paris to xxx order the Polish Government to restore the factory make any other reparation which the court may see fit to fix and to pay the costs of the action.
- The company also brought an action before the Civil Court of Kattowitz.
Facts
While these suits were pending, Germany filed in the PCIJ an Application praying the Court to adjudge that:
1) Polish law instituted a measure of liquidation;
2) Liquidation was not in conformity w/ Articles 92 and 297 of the Treaty of Versailles;
3) Such was contrary to Art 6 of the Geneva Convention
Issue
Whether or not the Polish Government should be made liable to make reparations to the German Government.
1st ruling
(1) That Articles 2 and 5 were incompatible with the provisions of the Geneva Convention, and that Poland had invoked no title of international law which would permit Articles 2 and 5 of the law of July 14th to be regarded as constituting the exercise of a right overcoming the obligations ensuing from Head III of the Geneva Convention;
1st ruling
2) That, in the transfer of the factory to the Oberschlesische, there was no misuse by Germany of the right of alienation of property in the plebiscite area; that the alienation was a genuine transaction effected in good faith and was not designed to be detrimental to Poland's rights and that the Oberschlesische's right of ownership must be regarded as established;
Conclusion
1) That the application of Articles 2 and 5 of the law of July 14th, 1920, decreed by the law of June 16th, 1922, constituted, as to German nationals or companies controlled by them, within Part I, Head III, of the Geneva Convention, an infraction of Article 6 and the following articles of that Convention;
Conclusion
2) That the attitude of the Polish Government toward both Companies was not in conformity with those articles, but that the Court was not called upon to state what attitude would have been in conformity with them.
Amicable Settlement
Based on this ruling of the Court, the two countries tried to reach an amicable settlement.
Germany demanded the following:
(1) the re-entry in the land registers of the Court of Königshiitte of the Oberschlesische as owners of the real estate constituting the Chorzów factory;
(2) the restoration of the factory as an industrial enterprise to the Bayerische;
3) the payment to these two Companies of an indemnity, the amount of which to be fixed by direct negotiations between the two Governments.

Poland had a different proposal.
Basis
Article 297 of the Versailles Treaty relates to the liquidation by the Allied and Associated Powers of property, rights and interests belonging at the date of the coming into force of the Treaty to German nationals, or companies controlled by them, within the territories, colonies, possessions and protectorates of such Powers, including territories
colonies, possessions and protectorates of such Powers, including territories ceded to them by the Treaty, and, while stipulating that the liquidation shall be carried out in accordance with the laws of the Allied or Associated State concerned, Article 297 lays down certain rules. which connect the subject with that of reparations.
Article 92 of the Treaty of Versailles, however, in accordance with Article 297h of that Treaty, expressly provides that the property, rights and interests of German nationals shall not be liquidated under Article 297 by the Polish Government, except on condition (1) that the proceeds of the liquidation shall be paid direct to the owner, and (2) that if, on
the owner's application, the Mixed Arbitral Tribunal ... or an arbitrator appointed by it, is satisfied that the conditions of the sale or measures taken by the Polish Government outside its general legislation were unfairly prejudicial to the price obtained, they shall have discretion to award to the owner equitable compensation to be paid by the Polish Government.
Ruling
For These Reasons, the Court, having heard both Parties, by ten votes to three:

1. dismisses the plea made by the Polish Government requesting the Court to declare that it has no jurisdiction to deal with the suit brought by the German Government on February 8th, 1927
and reserves this suit for judgment on the merits;
2. instructs the President to fix the times for the deposit of the Counter-Case, Reply and Rejoinder on the merits.
Full transcript