1*1
CoPy> Treasury Solicitor.
(W 687/687/49). 13th January, 1940.
T. & M. 34234*
ft
2.
Sir,
The Treasury Solicitor has recently "been asked
to consider whether there is any danger of funds
belonging to the British Government; which have been
deposited in banks in neutral countries, being attached
in proceedings brought in the neutral countries
concerned*
These funds are deposited in the United States,
Holland, Belgium, Switzerland, Sweden, Norway, Hungary \
and the Argentine;    in all these countries, except some
part of the deposit in the United States and the
reichsmark deposit in the B. I.S. which are in the name-
of the Treasury, they are in the name of the Bank of
England or of some other London bank;    they consist of
gold and foreign currency and may at times be represented
by securities.
2. *¦ The danger against which it is chiefly desired to
guard arises from the fact that the Bank of England and
the other London banks concerned hold, or may hold,
in England assets of the Reichsbank and other enemy
banks or individuals.     Under the Trading with the Enemy
Act, 1939 payment cannot be made to the banks or individuals
even/
The Under-Secretary of State,
Foreign Office,
8vW*.l«
even if demand is made, but the assets are held to the
order of the Custodian of Enemy Property./K It is
feared, however,  that these banks or individuals may
assign their rights to a neutral in one of the
countries in which the British Government funds are
deposited and an attempt may be made to attach these
funds in order to satisfy the right so assigned*
The question whether any such funds are liable
to attachment is, of course, a matter of law of the
neutral country concerned.     The Treasury Solicitor
is informed that, so far as the United States is
concerned, there is little risk of any proceedings
being successfully taken either against the fund depasjlieiL
in the name of the Treasury or against the fund deposited
in the name of the Banks* .   He is also informed that
Switzerland has recently passed a law,  in the interests
of the maintenance of its neutrality, abolishing the
right to take proceedings in Swiss Courts based solely
upon the existence of funds there.     A copy of this
law is enclosed.     The Treasury Solicitor is, however,
anxious to ascertain the precise position in the United
States and in the other countries mentioned above in
which funds have been deposited and he would be glad
if the legal advisers to the British Embassies concerned
could be asked to give their opinion on the matter* There
are some deposits in Java and the opinion given on Dutch
law should include the position in Java.
The questions on which the Treasury Solicitor would
welcome/
welcome advice are as follows:
'Whether, under the law of r "wrrftrv
•fte—it-now stands, the assets deposited in the name
of the Bank of England or other London hank would
be liable to attachment at the suit of an assignee
of a claim of an enemy against the Bank of England
or other bank concerned and,  if so, in what
circumstances.
2. If there is danger of attachment at the suit,
of such an assignee while the assets remain in the
name of the Bank of England or other London bank,
whether this danger would be completely removed cither
(a) by transferring them into the name of a British v
Government nominee, or
(b) by notifying the neutral bank concerned that
the assets are held on behalf of the British Government.
3. If the method referred to in paragraph 2 (a)
above is used, would the assets on the transfer be
liable to attachment in respect of (a) claims
by enemy Governments or enemy nationals against the
British Government, or (b) debts incurred in respect
of commercial transactions conducted by the British
u £
Government with subjects of the neutral country
-concerned;   or (o) any other kind of claim.
4*    If a transfer into the name of a British Government
nominee is advised, who should the nominee be<> It
is suggested that the Nominee might be the British
Treasury or the British Ambassador or Minister to-
the/
•fcke-netrtral country concerned,   in which case the
account would be a subsidiary Bnbassy account. In
any case, however,   it would be necessary for the
nominee to authorise certain London banks to operate
the account on the nominee1s behalf
The Treasury are anxious to ascertain the position with
regard to these assets and,  so far as they can, to remove
any danger of attachment as soon as possible, and the
Treasury Solicitor would be glad if the matter could be
treated as one of ^Sj^py*
I am, etc.,
(Sgd.)   R.W.A. Speed.