Doninelli v Ebeling (Jurisdiction)

The Facts (as stated by the Commission).

The subject-matter of the Application is the settlement under the Debt Agreement of a claim arising from a loan by the Applicant to the Respondent.

Until spring 1934, the Applicant had her residence in Germany and held German nationality. On May 16, 1934, she married the Swiss national Armando Doninelli, Minusio, Switzerland (Canton Tessin) and thereby acquired Swiss nationality. Since her marriage and even after the death of her husband on April 4, 1939, she has preserved her domicile in Switzerland.

By a contract of November 28/December 1,1929, the Applicant granted to the firm of F. Wilhelm Ebeling & Co., at Magdeburg, a private partnership, a loan to the amount of RM 16,000 out of funds which she had inherited in Germany. The contract was signed by the Applicant, of the first part, and carried the partnership signature F. Wilhelm Ebeling & Co. and the signature of its two partners Friedrich Ebeling and Herbert Wilcke, of the second part. The contract reads as follows:

The loan has not yet been repaid; nevertheless the Applicant received acknowledgments stating the existence of her claim to principal and accessories of which the following of May 17, 1937, reads thus:

Pursuant to that statement of account, the principal debt remained unchanged at RM 16,000 and the interest payable up to December 31, 1936, is RM 7,651.72, this interest having been computed at the rate of 5 per cent. whereas the contract provides for interest at 12 per cent. per annum.

The partners of the firm in that capacity and as guarantors stated that their sale of books had first declined and then disappeared as a result first of the economic crisis, which had occurred shortly afterwards, then of the interventions under National-Socialism and finally of the war. After the end of the war, the Applicant lost all contact with her debtors and learnt only late in 1962 that the Respondent had already moved his residence to Munich in 1947, where he had established a new career as a tax counsel, without having informed the Applicant thereof.

After she had been informed of the residence of the Respondent in Munich, the Applicant herself and subsequently her counsel and finally the Swiss Embassy in the Federal Republic of Germany tried to obtain a settlement and repayment of the debt according to the agreed terms or at least on an equitable basis. However, no agreement was reached. Instead, the Respondent merely declared himself prepared to settle the debt at a rate of 10 : 1 and to raise the resultant principal amount plus arrears of interest of DM 2,700 to an amount of DM 4,400 provided the Applicant would consider this in settlement of all claims. The Applicant rejected this proposal.

In these circumstances, the Applicant on December 16, 1964, filed an Application with the Mixed Commission for settlement of her claim. The Respondent replied to the Application of December 16, 1964, by his pleading of April 8, 1965, after the original time-limit fixed for February 10, 1965, had been extended by the Commission to April 10, 1965. The Applicant replied by her pleading of May 4, 1965. The Respondent, in addition, submitted the pleading of June 28, 1965, to the Commission and the Applicant, in reply thereto, the pleading of July 3, 1965.

Invoking her poor financial condition and by submission of a corresponding certificate of November 30, 1964, issued by the President of the Community of Minusio, the Applicant, pursuant to Article 3, paragraph 2, of the Rules governing the costs of proceedings before the Mixed Commission, applied that the Commission be pleased to free her from the liability to pay the costs. This application was granted by Order of the Commission of December 18, 1964.

By letter of January 5, 1965, the Federal Minister of Finance first announced that the Federal Government would not become a party to the proceedings. By a subsequent letter of February 12, 1965, however, he reserved to himself the right of intervening in the proceedings, should there be a modification in the subject of the litigation. This intervention did not take place. The Federal Minister of Finance merely sent an observer to the oral hearing.

On May 23, 1965, the Commission ordered that the question of competence be joined to the merits.

The oral hearing took place on October 14, 1965, at the seat of the Commission. At the oral hearing the Applicant, in agreement with the Respondent, delivered the following documents to the Commission on its request:

(a) letter from the Respondent's counsel to the Applicant of November 20, 1962,

(b) letter from the Applicant's counsel to the counsel of the Respondent of December 3, 1962, and

(c) letter from the Respondent's counsel to the counsel of the Applicant of December 10, 1962.

The dispute between the parties comprises, in the first place, the admissibility of the application and the jurisdiction of the Mixed Commission (hereinafter referred to as the Commission).

On this subject, the Applicant, relying on Article 31, para. 2 (a), and Article 15, para. (4), of the Debt Agreement,[1] points out that the parties hold different opinions on the question whether the claim constituted by a loan of the kind envisaged in Annex IV of the said Agreement should be settled either, as she herself claims, in accordance with the provisions of Article 34 of the above-mentioned Annex or, as the Respondent contends, in accordance with Article 33 of the said Annex.[2] In this connection, the Applicant refers to the Declaration of the Federal Political Department at Bern of November 3, 1964, which reads as follows:

The Applicant is further of the opinion that the Respondent made a proposal of settlement pursuant to the Debt Agreement and thus subjected himself to the procedure before the Mixed Commission and in support she refers to the letters of November 20, December 3 and 10, 1962, which were submitted to the Commission during the oral hearing and more particularly to the letter of December 3, 1962, which shows clearly that both parties had envisaged a settlement based on the Debt Agreement.

In the Applicant's opinion the loan contract of November 28/ December 1, 1929, clearly shows that the Respondent, both as a partner of the private partnership who is personally liable pursuant to the provisions of German law ( 128 Commercial Code) as well as in his capacity as guarantor is bound to repay the said loan; that the loan has the character of a financial debt as envisaged in Article 2 of Annex IV[1] and should be settled as a foreign debt within the meaning of Article 4 of the Debt Agreement[2] which pursuant to

The Applicant affirms that, pursuant to Article 6 of the loan contract, she has a currency option and declares in her Application that she thereby exercises her option to claim settlement of the loan in Swiss francs; that, consequently, the terms of settlement should be settled in application of Article 34 of Annex IV to the Debt Agreement.[2]

The Applicant contends that by virtue of the agreed gold clause she is entitled to claim repayment in gold value and that the said value represents in round figures 5.734 kgs. of refined gold corresponding to an amount of approximately 30,000 Swiss francs; but that since the Debt Agreement had provided to the disadvantage of the creditors that, in the case of claims worded in terms of foreign currency, they must renounce a conversion on the basis of the agreed quantity of gold and content themselves with the nominal amount in foreign currency on the basis of the rate of exchange in force on the date of the contract (Article 7 of Annex IV and Article 12 of the Agreement itself[3]); that the principal accordingly amounts to 19,680

The same terms of settlement would also result from the specifically foreign character of the loan in the sense of Article 6, para. (2), of Annex IV[1] read with Annex VII; that, indeed, the loan agreement also stipulated for an option in Goldmarks and fixes as place of payment the domicile, which is abroad, at the date of repayment; that the same solution would be arrived at from the consideration that, by reason of the option of foreign currencies, the loan agreement envisages the application of the foreign law governing the chosen currency; that finally, the Applicant fulfils in her person the special condition raised by Annex VII, para (4),[2] since she had held Swiss nationality on January 1,1945; however, the problem of the specifically foreign character need not be decided because its sole interest is to Respondent in...