In connection with the Inter-Departmental Committee meeting to be held on Monday May 26, 1947, to discuss the possibility of establishing domestic machinery to consider reparation claims against the Canadian Government, the Custodian's Office would like to offer the following comments on the Memorandum prepared in the Department of External Affairs,† and to offer the following general observations:

(1) It is presumed that the Committee is to discuss the matter of all claims which have been filed by Canadians with respect to loss or damage suffered as a result of the recent war. External's Memorandum divides such claims into two general classes, those for reparation and those for restitution. It would probably be more accurate to divide them into claims for compensation and those for restitution in view of our understanding that reparation claims as such are only those of a Government against another Government. We understand that an individual citizen has no right in international law to file a reparation claim against a foreign Government. Moreover, we understand that the Canadian Government is prepared to waive its right to all reparation claims against most of the enemy countries. In fact, Canada has already waived its reparation claim against Italy and by signing the Paris Reparation Act, it has also waived its right against Germany. It is therefore evident that the claims of individual Canadians are those for compensation which they hope to obtain from the Canadian Government.

There would appear to be two sources from which the Government might pay compensation claims (a) from the Consolidated Revenue Fund or (b) from assets presently vested in the Custodian and which formerly belonged to belligerent enemies. It appears that the only reparation Canada will receive is the property presently under the Custodian's control, and it is possible that the Government may wish to return some of this property to certain of the enemy countries.

(2) Under the Trading with the Enemy Regulations, the Custodian's prime responsibility is to control property situated in Canada which belongs to persons residing in enemy or formerly enemy occupied territory. He is not concerned with property situated in enemy territory belonging to Canadian citizens and therefore not directly concerned with the loss of such property. After the beginning of hostilities, the Government considered it advisable to have some Department record claims which Canadians might file with respect to loss or damage to any property which they might have suffered as a result of the war. As a matter of expediency, the Custodian's Office was designated, under Section 45 of our Regulations, to keep a record only of such claims.

(3) In view of the onerous task of administering formerly enemy-owned property of all description in Canada, the Custodian feels that he has not the facilities nor the staff to cope with the question of the payment of claims. Moreover, he is of the opinion that there should be a separate Government agency, probably a commission, appointed to deal with this problem and to investigate and appraise such claims and recommend to the Government the policy that should be adopted with respect to their settlement. He would like to emphasize that such an agency should operate independently of the Custodian's Office.

(4) Up to the present, there has been no public raised, nor is there evidence of organized pressure being brought to bear on the Government for the payment of these claims. There is the danger, if the Government were now to advertise for the compulsory filing of these claims, that this issue might be aroused in the public mind and that claimants might be led to believe that they will obtain compensation which the Government might not be willing or able to pay. In this connection, it should be borne in mind that to our knowledge, neither the United States nor Great Britain have yet advertised for domestic compensation claims. It may therefore be premature for a country like Canada to take the initiative in formulating a claims policy. On the other hand, Canada, like the United States and Great Britain, pursuant to the terms of the various armistices signed with the ex-Axis satellite Governments, has already advertised for certain types of property losses in these enemy countries and for which losses these enemy Governments are obligated to compensate the nationals of the victorious powers.

(5) This office appreciates the fact that it may be useful for the Cabinet and various Government Departments, particularly the Department of External Affairs, to know the full extent of the claims of all Canadian citizens. Providing that the public notices could be worded in such a way that these claimants would understand that the Government would not in any way be committed to the settlement of their claims, this office would have no objection to advertising at the present time. But, as pointed out above, this might arouse a public issue which otherwise might not arise for some time.

(6) Under Section 45 of our Regulations, there is no obligation on the part of Canadians to file claims for their losses. They may do so on a voluntary basis. Consequently, the claims presently registered with the Custodian represent only those which have been voluntarily filed, and the result is that they may not represent an accurate picture of all Canadian claims. From his experience in the handling of claims, the Custodian is of the opinion that many of these claims are grossly exaggerated, while others represent the prewar inventory value of the property, the claimant not knowing to what extent, if any, the property was lost, damaged or destroyed. The records of this office show that as at March 31, 1947, the total amount of claims filed with respect to losses in the nine belligerent enemy countries is $94,222,167.78, while the total value of assets vested in the Custodian for these countries amounts to approximately $19,285,000.00. In addition to this; there is a total of $143,284,794.36 in claims representing claims for losses suffered in the various liberated countries. We have kept a separate record of losses resulting from the sinking of the S.S. "Athenia" and other steamships amounting to $3,657,704.82. These represent a total claims figure to date of $241,164,666.96.

(7) If the Government decided to follow the same practice as was adopted after World War I by paying Canadian claimants out of the Consolidated Revenue Fund, the payment of the present claims would obviously be a considerable strain on the Canadian taxpayer. On the other hand, if compensation were to be paid from belligerent enemy assets presently vested in the Canadian Custodian, each claimant would only receive, on the basis of present figures, a very small proportion (probably less than 10%) in actual settlement.

(8) It may be premature for the Canadian Government to decide on a policy with respect to the payment of Canadian claims, considering that the drafting of the Peace Treaties with the two main enemy countries Germany and Japan, has not yet commenced. If these Treaties follow the precedent established in the satellite Treaties, some provision will be made for payment to Canadians who have suffered loss or damage with respect to their property interests in these two countries. It may therefore be advisable to await the terms of these two Treaties before a definite decision is made.

(9) Concerning losses suffered by Canadians with respect to their property situated in the various liberated territories, it should be pointed out that agreements have now been concluded with two countries, France and The Netherlands, whereby these Governments undertake to give the same national treatment to Canadians with respect to their property in those countries as these Governments give to their own nationals, in so far as war damage compensation is concerned. If similar agreements can be concluded with the other liberated Governments on the basis of Unanimous Resolution III of the Paris Reparation Act, and it is possible that some will, this will eventually reduce the volume of claims with which the Canadian Government may have to deal. Here again, it may be premature for the Government to decide on a policy which, no doubt, will be greatly influenced by the number of agreements of this kind so concluded. However, the legislation for war damage compensation enacted by these liberated Governments provides for a varying percentage of compensation to be paid their nationals. For instance, I understand that France is prepared to compensate to the extent of 75% of the actual damage suffered; whereas Yugoslavia is prepared to pay only 50% of the damage. This might possibly leave a certain amount of the claim to be dealt with by the Canadian. Government.

(10) For the guidance of the Committee, there is attached hereto a memorandum† giving a brief summary of the method adopted for the handling of claims after World War I.