"The treaties of commerce with the different States of Germany having been annulled by war, the French and German Governments will base their commercial relations upon the system of reciprocal treatment on the footing of the most favoured nation.

“This rule shall not apply, however, to the favours which either of the Contracting Parties, by commercial Treaties, has granted or shall grant to States other than the following:-England, Belgium, Holland, Switzerland, Austria, and Russia. . . .

"Nevertheless, the French Government reserves to itself the faculty to establish on German vessels and their cargoes, tonnage and flag duties, under reserve that these duties shall not be higher than those which are imposed upon vessels and cargoes of the above mentioned nations."

of

The German-Austro-Hungarian Treaty of commerce December 6, 1891, amended and completed by that of January 25, 1905, provides that no more favourable conditions in respect of "import, export, or transit" duties shall be granted by either Contracting Party to a third Power than are accorded to the other Party, and that any concessions of this kind made to a third Power shall at once be applied to the other (Art. II.), any dispute relating to this provision to be referred to arbitration (Art. XXIII.). This seems equally clear in the contrary sense.1

In Europe the American view has found a supporter (semble) in Prof. F. de Martens, who considers that a distinction must be made between a case where a commercial advantage is granted purely and simply, and a case where there is simply an exchange of bons procédés or a dédommagement. "In the former

case alone have other States a right to claim the same advantage. To grant it in the second would be contrary to the principle of the reciprocity of commercial obligations." 2

The same opinion was also arrived at much earlier by a distinguished French writer, M. Hautefeuille, who, in answer to the question of whether the condition of being treated as the most favoured nation only carried the advantages existing at the time of the signature of the treaty, or comprised those which should be subsequently conceded to another State, answered that the.

1 The forms of most-favoured-nation clauses vary considerably. That of the Treaty of Commerce and Navigation between Great Britain and France of February 28, 1882, runs: "Each of the High Contracting Parties engages to give the other immediately and unconditionally the benefit of every favour, immunity, or privilege in matters of commerce or industry which may have been or may be conceded by one of the High Contracting Powers to any third nation whatsoever, whether within or beyond Europe."

The British Treaty of Commerce with Honduras of January 21, 1887, provides: "The High Contracting Parties agree, that in all matters relating to commerce and navigation, any privilege, favour, or immunity whatever which either contracting party has actually granted or may hereafter grant to the subjects or citizens of any other State shall be extended immediately and unconditionally to the subjects or citizens of the other contracting party; it being their intention that the trade and navigation of each country shall be placed in all respects by the other on the footing of the most favoured nation" (Article I.).

The Anglo-Roumanian Treaty of August 13, 1892:

"The subjects, vessels, and goods, produce of the soil and industry of each of the two High Contracting Parties shall enjoy in the dominions of the other all privileges, immunities, or advantages granted to the most favoured nation" (Article I.).

2 Droit International (1886), ii. p. 322. "At the present day, when national interests are so entangled and complex," says M. Lehr, "it is always a serious matter to bind oneself in advance by a clause which is vague and general, and the eventual bearing of which cannot be estimated. There have been several instances in the course of the last few years in which a Power in the negotiation of a treaty has been in the necessity of refraining from granting concessions, because being extended by virtue of the clause, without any compensation whatever to a whole series of other countries, they would have been disastrous to the national industry." See Ernest Lehr, Revue de Droit International, 1893, p. 315.

clause must be considered as implying everything that existed at the moment when signed, but that it could not be considered to extend to anything later in date.1

1 Histoire des Origines, etc. (1858), ii. pp. 300, 301.

It is evident that it will be necessary in future treaties of commerce to be careful to provide against the possibility of a construction which might frustrate the very objects for which most-favoured-nation clauses are resorted to, namely, to prevent any third Power from enjoying special advantages. Meanwhile the interest of stable international relations requires that the sense of the existing terminology of the clause should be defined.2

2 See draft clause on the subject, p. 159.

2. For matters of a judicial character, or relating to the construction (interpretation) of treaties, the Court shall be composed in accordance with Article XXXII. of the said Convention.

Subject to an alteration to reduce the number of arbitrators to be appointed under the 3rd section of Article XXXII., which is as follows:-Art. XXXII.-The duties of arbitrator may be conferred on one arbitrator alone or on several arbitrators selected by the parties as they please, or chosen by them from the members of the Permanent Court of Arbitration established by the present Act. Failing the constitution of the Tribunal by direct agreement between the parties, the following course shall be pursued: Each party appoints two arbitrators, and these latter together choose an umpire. In case of equal voting, the choice of the umpire is intrusted to a third Power, selected by the parties by common accord. If no agreement is arrived at on this subject, each party selects a different Power, and the choice of the umpire is made in concert by the Powers thus selected.