Foreign Relations of the United States, 1946, Paris Peace Conference: Documents, Volume IV

CFM Files

Observations on the Draft Peace Treaty With Finland Submitted by the Finnish Delegation

C. P. (Gen) Doc. 6

Paris, August 26, 1946.

Table

I. Political and Territorial Clauses

• Part II
• Part VI

II. Military Clauses

• (Part III)

III. Reparation and Restitution

• (Part IV)

IV. Economic Clauses

• Part V
• Annex 4
• Annex 5

Part II: Political Clauses

section 2

Article 6.

In the statement it made before the General Assembly of the Peace Conference the Finnish Delegation had the opportunity of pointing out that present Finnish legislation recognizes the high principles expressed in Article 6 of the Peace Treaty. Finland accordingly has but to guarantee that she will follow these principles in the future.

Article 7.

The Delegation begs to observe that Finland, as has been noted in the Draft Peace Treaty, has already fulfilled the obligations laid on her by this Article, and that she undertakes to fulfil them in the future too.

Article 8.

The Delegation declares that Finland, having taken steps in accordance with the Armistice Agreement to dissolve organizations of a Fascist type on Finnish territory whether political, military or paramilitary, as well as other organizations conducting propaganda hostile to the Soviet Union or to any other of the United Nations, is prepared in the future too not to permit any organization to conduct propaganda as aforementioned.

Article 9.

The Finnish Delegation fully approves the purpose aimed at by the provision of this Article, i.e. the surrender for trial of war criminals and such persons as in one way or other have committed crimes against peace and humanity. In this respect Finland has conscientiously fulfilled the stipulations of the Armistice Agreement, in respect whereof she has received due acknowledgement from the Allied Powers, last in the preamble of the Draft Peace Treaty. By virtue of the Armistice Agreement she has taken all possible steps in order to commit for trial both war criminals proper and the so-called war responsibles.

The Finnish authorities and courts have carefully and thoroughly examined all cases of war crime which have been submitted to them and most of which have already been brought to a close.

With regard to the cases of persons having committed crimes against peace and humanity it is considered in Finland that the question of punishing the war responsibles was definitely settled by a special trial in a manner which satisfied the Allied Powers.

As regards paragraph (a) of Article 1, the Delegation wishes to draw attention to the fact that it would make it possible to demand that Finnish citizens be surrendered for trial by foreign courts. No such demand has been made since the Armistice and such a procedure would be contrary to the principle expressed in the Form of Government according to which a Finnish citizen may not be tried before any other court than that within whose jurisdiction he stands by the law.

With regard to the last paragraph of the Article the Delegation would like to mention that in Finnish opinion a uniform procedure should be agreed upon for settling all disagreements arising out of the interpretation and execution of the Peace Treaty, in the manner proposed under Article 33.

Part VI: Final Clauses

Article 32.

The Finnish Delegation begs to refer to the wish it expresses under Article 33 in respect of achieving a uniform procedure for the settlement of disputes arising out of the execution and interpretation of the Treaty.

Article 33.

The Finnish Delegation hopes that disputes concerning the interpretation or execution of the Peace Treaty, excepting the cases mentioned under Article 29, should be settled by a uniform procedure to be agreed upon. In the opinion of the Delegation such disputes should in the first place be tried to be settled by diplomatic means, and, if the disputes can not be settled in this manner and the parties do not agree upon another procedure, they should be referred to a Court of Arbitration constituted in the manner provided by the Hague Convention 1907 regarding peaceful settlement of disputes.

Part III: Military, Air and Naval Clauses

Article 13.

1. The maintenance of land, sea and air armaments and fortifications shall be closely restricted to those required for meeting tasks of an internal character and local defence of frontiers. In accordance with this principle Finland is authorized to have armed forces consisting of not more than:

(a) a land army including frontier troops with a total strength of 34,400 personnel;

(b) a navy with a personnel strength of 4.500 including the personnel of the coastal Artillery and a total tonnage of 20.000 tons [10,000];

(c) an airforce, including naval air arm and reserve aircraft less than 5 years old, of 120 aircraft with a total personnel strength of 3,000. Finland shall not possess or acquire aircraft designed primarily as bombers with internal bomb-carrying facilities.

2. These strengths will in each case include combat, service and overhead personnel.

The motives of changes to Article 13.

(a) It is proposed that the words “anti-aircraft Artillery” be omitted because units of anti-aircraft Artillery are included and should continually be included in land, naval and air force.

(b) Because of the considerable length of Finland’s coastal line—about 1.500 kilometers—a navy of 10.000 tons is unable to defend it and to protect the maritime trade in waters close to it even if auxiliary and training vessels are not included.

(c) For the reason of the extensiveness of Finland’s territory—the total area being about 340.000 square kilometers—the local points of defence will be situated far apart from each other. Air scouting must be territorially limited because of the denseness of the forests. All this means that the air forces must be divided into small units for scouting and defence purposes, situated far from each other even if local defence operations only are at issue. On account of woody and hilly ground forced landings always result in destruction of material. Our difficult weather conditions—especially cold and frequently unfavourable flying weather—cause a great part of material to be continually under repair or attendance and this increases the need of material even for peace time training.

Aircraft over 5 years old have no fighting value. They could, however, be used in the first stages of training. Thus they would admit training without representing any fighting value.

Interpretation.

The Delegation begs to be informed as to how the expression “fortifications required for local defence of frontiers (coastal frontiers)” is to be interpreted.

Article 17.

In order to make local defence possible, Finland is authorized, in addition to the war material required for the maintenance of armed forces permitted under Article 13 above, to retain the present coastal Artillery, anti-aircraft and anti-tank material.

Finland shall not retain, produce, otherwise acquire or maintain facilities for the manufacture of war material in excess of material permitted above.

The motives for changes to Article 17.

It has been conceded that Finland’s defence forces have the right to execute tasks of internal character and of local defence of frontiers. In a country, the area of which is about 340.000 square kilometers the troops allowed by Article 13 have no possibility of using their right for defence. The proposed coastal Artillery, anti-aircraft and antitank material is clearly of defensive character and in its main parts locally and entirely bound beforehand.

Article 18.

1. Excess war material of Allied origin shall be placed at the disposal of the Allied Power concerned according to the instructions given by that Allied Power.

2. Excess Finnish war material shall be placed at the disposal of the Governments of the Soviet Union and the United Kingdom.

3. War material of German origin or design in excess of that required for the use of the army permitted in the Treaty will be placed at the disposal of the Soviet Union and the United Kingdom.

4. Excess war material mentioned in paragraphs 1, 2 and 3 and the character of which is defined in annex 3, will be handed over or destroyed within one year from the date Finland has received detailed instructions regarding surrender or destruction.

5. Finland relinquishes all her rights to war material which has been handed over in accordance with the paragraphs 1, 2 and 3. The value of this material which will be fixed by a commission of experts of both parties, will constitute in regard to the material to be handed over to the Soviet Union, a part payment of Finland’s war reparations to the Soviet Union, and, in regard to the material to be handed over to the United Kingdom, part payment of Finland’s debt to England arising from earlier deliveries of war material.

6. It is also considered to be destruction of war material if material suitable or reconvertible to civilian use is given without delay to civilian use and normally used up.

7. Finland will not acquire or manufacture any war material of German origin or design except equipment which is necessary for the maintenance and use of that material of German design which according to paragraph 3 of this Article remains in her possession.

8. Finland will not employ or train any technicians, including military and civil aviation personnel, who have been nationals of Germany.

The motives for changes to Article 18.

Paragraph 4. The handing over and destroying of the material can not begin before detailed instructions have been given. In respect of the technical execution of the handing over and the destroying a period of one year is requested. It is reasonable that this period of one year begins to run first from the date when the detailed instructions have been given to Finland.

Paragraph 5. Finland’s payments of war reparations to the Soviet Union are to be paid in commodities. It is natural and reasonable that commodities owned and handed over by Finland are to be considered as part payments of reparations even if they are war material.

In regard to the material to be handed over to the United Kingdom it is natural that this material is to be considered as part payment of the Finnish debt caused by the earlier purchase of the same war material from England.

Paragraph 6. Finnish economic life and the civilian population are in dire need of commodities. In order to relieve this need, it is to be hoped that a suitable or convertible part of the war material could be used in this manner.

Paragraph 7. The proposed addition is necessary in order to avoid incompatibility between paragraphs 3 and 7.

Part IV: Reparation and Restitution

Article 22.

Finland’s economic position, the influence brought on it by the reparations provided in the Armistice Agreement, and the conditions which must be considered in judging the real consequence of Finland’s present war reparation have been described in the appended memorandum. From the Finnish point of view it would be important if the reparation sum of 300 million dollars fixed in the Armistice Agreement could be reduced to 200 million dollars.

Article 23.

On September 6, 1945, an agreement relative to Article 14 of the Armistice Agreement was signed between the Finnish Government and the Allied Control Commission in Finland concerning property unrestituted before August 1, 1945, or compensation for it, amounting to a total of 22 million dollars. On April 29, 1946 a notification in writing was received from the U.S.S.R. authority concerned to the effect that the Soviet Government in accordance with its decision made in April 1946 considered that the obligations under the said Article of the Armistice Agreement were deemed to have been fulfilled. Consequently, the deliveries which had taken place according to the aforementioned special agreement were discontinued as from May 1, 1946.

Finland’s war reparations

By virtue of the Armistice Agreement concluded on September 19th, 1944 between Finland and the Soviet Union, Finland was enjoined to pay a war reparation in fulfilment of which she was to deliver commodities to the value of 300 million gold dollars over a period of six years. After the close of the first reparation year the term of delivery was prolonged by two years, and consequently reparations, amounting to 50 million dollars during the first reparation year, will be about 35.5 million dollars during each of the following seven years. With regard to their value in dollars and the term of payment, reparations imposed on Finland are thus equal to those to be paid by Roumania and Hungary, but, when calculated after the size of the population, they are found to be more than two and a half times higher than Hungary’s and not less than five times higher than Roumania’s.

As Finland has to pay her war reparations in the form of commodities, the real significance of this burden appears from the prices with which Finland is credited in respect to such goods. A special agreement concluded on December 17th, 1944 established that the latter are to be valued on the basis of world market prices in 1938, with an increase of 15 per cent in respect of machinery, appliances and ships to be built, and 10 per cent in respect of other goods. For this reason, and considering the requirements regarding quality specified for the individual items in the schedule of delivery established for each year, the total value of goods delivered, provided no change will take place in the principles adopted for pricing, will be about 417 million dollars according to prices prevailing in the year (1944) when the Armistice Agreement was signed. The value of reparations is actually higher still if present dollar prices are to be considered.

The Armistice Agreement further stipulated that Finland had to restitute to the Soviet Union all property carried away from the latter’s territory during the war. As, however, original or corresponding property could not always be delivered, it was agreed in summer 1945 that Finland was to compensate such unrestituted property by delivering products of her own instead. In regard to restitutions no heed was paid to the considerable investments made in the territories occupied by Finland troops after 1941. Excluding original Russian property restituted, Finland has delivered under the Restitution Agreement, until the end of April 1946 when the Soviet Union relieved Finland of further obligations in respect hereof, commodities totalling 24 million dollars at 1944 prices.

Besides this Finland has to stand for the expenses of the Allied Control Commission, 4 million dollars in 1945, and hand over German property and claims in Finland 44 million dollars in all. The latter item need not have been paid under other circumstances, and Finland is not even allowed to deduct from it Finnish nationals’ claims against German nationals. Furthermore, the costs for administrating and for transporting to the Soviet Union the spoils of war taken from Germans amounted to about 12 million dollars.

In discharge of these burdens Finland has surrendered during the first reparation year 23 million dollars worth of national wealth, not accounting for the capital value of the ceded territories which it is difficult to estimate, but should be about 13 per cent of the country’s whole national wealth. The major part of the burden has to be paid out of annual national income, i.e. about 76 million dollars in the first reparation year, about 60 million dollars in the second, and about 370 million dollars over the remaining six years, or 506 million dollars all told at the price level of 1944.

It is doubtful whether Finland could have acquitted herself of this burden had she even been in possession of her full capacity of production such as it was before World War II. It is true that the foreign payments balance, for instance under the favourable conditions in 1934–1938, gave an average net annual surplus of about 20 million dollars, but even such a surplus would have been scarcely sufficient to cover an appreciable part of the annual expenses for reparations, etc. evenly divided over the eight years. But, in fact, Finland’s economic resources have further greatly deteriorated on account of the war.

Thus Finland has been obliged to cede roughly 13 per cent of her territory with all real property situated there. In 1938, these ceded areas accounted for 10 per cent of the whole country’s industrial, farming and forestry production About one-third of Finland’s water-power, both exploited and under construction, was to be found there. German devastation in Northern Finland in autumn 1944 rose to about 107 million dollars. In other parts of the country damages caused by bombings and other direct acts of war were 210 million dollars. Inner communications have been badly upset and the merchant fleet has been reduced by two-thirds. Fields have fallen into decay and farm, industrial and town buildings are in bad repair. Railways and roads, machinery and productive plants are in a bad state and have become technically obsolete, and their efficiency has consequently greatly declined. The automobile park is practically worn out. Stocks of raw materials, dealers’ stocks and private stocks of consumers’ goods such as clothing, household Articles, etc., are either small or inexistent. Finland’s material national wealth is estimated to have fallen by at least 1,000 million dollars at 1944 prices, which makes about 25 per cent of her national wealth before the war.

Finland’s resources of physical labour have also diminished during the war. She lost 85,500 men in killed and missing, or 7.2% of the able, male population in 1938. Besides this Finland has more than 50,000 invalids whose ability is substantially reduced. The labour crisis would have been greater still if the whole population of the ceded territories, about 436,000 people, had not moved over to Finland’s present territory; but on the other hand the re-establishment of a displaced population of more than 10 per cent of all inhabitants in the country, and the task of providing these people, who were torn off from their homes and their occupations, with productive occupations corresponding to their capacities, have caused the country enormous difficulties and expenses and cannot be carried through within the space of a few years.

Lastly, prevailing conditions have not even allowed Finland to make the best of these essentially reduced productive forces. This was in the first place due to limited trade possibilities, in consequence whereof it was necessary to replace the efficient fuel coal by labour-wasting firewood, to use unprofitable substitutes in numerous other branches, and so forth. The existing capacity of many industries cannot be fully utilized on account of the shortage of raw materials and electric power.

In result of these facts the real national income in 1945 was only about 500 million post-war dollars, that is roughly 60 per cent of what it was before the war. In the second year of peace somewhat better results will evidently be obtained in industry and transportation, but on the other hand the output of farmers’ produce cannot be raised owing mainly to lack of fertilizers and fodder. The value of all production in 1946 can be estimated at about 585 million dollars, which is 70 percent of the pre-war level accounting for the depreciation of money value. The first reparation year’s total uncompensated exports rose to 76 million dollars, or 15 per cent of the national income in 1945, and the second reparation year’s corresponding expenditure is about 60 million dollars, or 11 percent of the estimated national income in 1946. It may be interesting to note, for the sake of comparison, that the reparations Germany had to pay in the late 1920’s, and which were found to be too high, on the average were only 2.3 per cent of Germany’s annual national income.

The fact that Finland has fulfilled entirely, and on the whole punctually too, the first year’s reparations and other financial obligations might give the impression that she will be able to discharge herself, by her own means, of these commitments even such as they are now. Actually, this is not the case.

Firstly, there were still stocks of raw materials, requisites and finished goods in 1945 which could be used for fulfilling reparation and restitution deliveries. These stocks are depleted now, and they have to be refilled alone with a view of maintaining the continuity of production. It should thus be remembered that the first year’s reparations included, for instance, floating ships for 18 million dollars.

Secondly, the relative importance of machine shop manufactures in reparation deliveries is much greater in the second reparation year and will be still more so during the following years; but heretofore the metal working industries have mainly served the purpose of supplying other Finnish industries with necessary manufactures without producing practically anything for exports—in fact, imports of machinery and appliances have always been large in Finland. This fact alone makes it necessary to invest large sums in these industries, the capacity of which must be raised about three times from the pre-war level. Until June 1946, no more than about one-third of such total investments of estimatedly 25 million dollars had as yet been affected. Indirectly too, war reparations and cession of territory have created a great need of investments. Thus, for instance, the output of water power must be increased during the next four years by 2.450 million KWH, or practically by the same amount as previously over a period of 25 years.

But investments in the so-called old home market industries, in expert industries, in transportation and in farming can be postponed no longer, as has been done ever since 1939. If the most urgent repairs to machinery, installations and buildings are not done now, the whole country’s capacity of production instead of rising, as it ought to, will very soon decline catastrophically.

For these reasons productive investments in 1946 and the next few years will call for a much greater share, estimatedly 20–25 per cent, of the national income than in 1945. If war reparations and other uncompensated outlays be added to this, barely two-thirds of the present, reduced national income will be available for general consumption. Is it, in fact, possible to go so far?

Such a curtailment of consumption might be temporarily possible under conditions of exceptional wealth. In fact, it is considered to be a very good achievement even in the wealthiest countries if 15 per cent of the national income can be saved, or in other words if only 85 percent of it can be reserved for general consumption. But Finland is a poor country now, and her standard of consumption has steeply declined during the war. Food rations can be reduced no further without impairing the peoples’ working capacity, and the clothing situation must necessarily be improved now if the imminent crisis shall be avoided. This applies likewise to the housing situation which has been aggravated not only by the stagnation of building operations during the war, but also by the displaced population’s need for dwellings.

The question of war reparations can therefore be solved neither by means of a further reduction of the present standard of consumption, nor in desisting from indispensable repairs or ignoring the needs for renewal of productive capital.

One solution would of course be that to extend the burden of reparations over a longer period by means of foreign credits, provided such can be had. Such a measure has, in fact, already been necessary in order to enable Finland to pay reparations up to now. After the conclusion of Armistice, Finland has obtained foreign credits amounting to a total of 120 million dollars, this sum being very little short of that representing the value of payments made out of national income during the first two reparation years.

In excess of net incomes obtained from exports, etc. credits amounting to no less than 100 million dollars, including loans already granted, are required for financing imports with a view of meeting the minimum requirements mentioned above. At this condition production and exports can be raised in a sufficient measure to allow the need of supplementary foreign credits to be reduced to about 70 million dollars in 1947. In the subsequent reparation years it should be possible to gradually reach a state of balance in foreign payments.

Finland is prepared to do all that is in her power in order to fulfil her obligations in respect of war reparations. However, she fervently hopes that the burden imposed on her be reduced so that the fulfilment of her obligations does not exceed her economic capacity and destroy the economic resources which, if they are preserved, can allow her to make her best contribution not only to the reconstruction of her own country, but also to that of the whole world.

Part V: Economic Clauses

Article 24.

Paragraph 1.

With regard to the stipulation that Finland shall restore all the legal rights and interests in Finland of the United Nations and their nationals as they existed on June 22, 1941, the Delegation begs to remark that the fact that the time fixed is counted to begin on June 21, 1941, makes this stipulation more severe than that of Article 13 of the Armistice Agreement. In fact, Finland’s state of war with several of the United Nations began later, as for instance with England on December 6, 1941. In this respect the position adopted in the Appendices is more equitable; in paragraphs 1 (c) as well as 2 and 3 of Appendix 4 the time is calculated as from the date of the outbreak of war, and paragraph 1 of Appendix 5 still more explicitly says that contracts shall be deemed to have been dissolved as from the time when any of the parties became an enemy. The delegation hopes that the aforementioned effects of war in accordance with the last-mentioned stipulation will be deemed to have begun in respect of each State and its nationals as from the date when the state of war has actually begun between the State concerned and Finland.

Paragraph 2.

It is understood that the charges referred to in this paragraph do not include the administration fees collected by the Allied Property Custodian for property kept in his custody, these fees being in conformity with international usage and in no respect immoderate.

It is also understood, in conformity with what seems to appear from paragraph 1 (a) of Appendix 4, that the charges referred to in this paragraph, whilst including additional charges and other fines, do not include such regular charges to be paid in peace time the payment of which was deferred as long as the state of war lasted and which thus have to be paid later. Annual patent fees can be mentioned as an example of such charges.

Paragraph 4.

This clause actually implies a considerable increase of the Finnish war reparation burden. Finland would have to pay compensation for property which was destroyed or damaged for instance by bombs, and according to the U.K. proposal also or such property as remained in the territories ceded to the Soviet Union. Furthermore, Finland should have to pay, at least according to the U.K. proposal, compensation in such cases too as a Finnish corporation whose shareholder is a national of one of the United Nations has suffered losses through the war. As damages according to Article 30 shall be indemnified to the Allied and Associated Powers and France and those of the United Nations which have broken off diplomatic relations with Finland, as well as to nationals of all these countries, i.e. on a very wide scale, this considerably increases Finland’s obligations in respect of indemnification.

It would be equitable if Finland’s obligations in respect of indemnity were not extended further than what is established in Article 11 of the Armistice Agreement, by virtue of which Finland has to make compensation for such losses only as she herself has caused. If her obligations in respect of indemnity become more extensive as compared with the Armistice Agreement, Finland should be granted a reduction on the amount of compensation in order to make it possible for her to bear the additional burden thus arising. In all cases the paragraph regarding payment of compensation should include a clause corresponding to that expressed under paragraph (b) of the U.K. proposal.

Article 27.

The Finnish Delegation has no observations to make with regard to this Article provided paragraphs 1 (c) and 4 are interpreted in such manner that the Finnish State and Finnish nationals have the right to look after their interests in matters concerning Finnish ships, Finnish goods or payment of costs before Prize Courts of Allied or Associated Powers and according to the procedure followed in the countries concerned, lay forth testimonies and in case of need appeal to a superior Court for a decision on a judgement or decision made by an inferior Prize Court.

Article 28.

In the opinion of the Finnish Delegation it would be appropriate if paragraphs 1 (c) and 2 of this Article were approved in the form proposed by the Soviet Union.

Annex 4. Special Provisions Relating to Certain Kinds of Property

a. industrial, literary and artistic property

Rights to industrial property.

As the period of validity of a patent in Finland is exceptionally long, for patents granted prior to 1.1.1944 20 years and thereafter 17 years, it would be desirable from the Finnish point of view if the period of validity instead of being extended by a period corresponding to the duration of war, would remain unchanged and the holders of patents for this period would get compensation from the user of the patent. In such case it would be an internal matter for Finland to decide whether the State should pay the compensation owed by a bona fide user.

It is understood that the unpaid annual fees for patents should be paid when the patent rights are re-established if it is meant that the holder of a patent is entitled to compensation from the user of a patented invention for the years during which the patent was lost.

As during war practically all connections with the Allies were severed, patent agents in Finland had hardly any possibilities of pursuing their clients’ patent applications. According to the regulations of the Finnish Patent Office these applications should have been considered void. Directly after the outbreak of war the patent office adopted a procedure according to which the applications of Allies were not considered void unless there was an absolutely compelling reason for it. For this reason comparatively few patent applications of Allies have become void, and the number of such cases to be taken up again is by no means alarming. If patent applications have become void, the same procedure should be applied to them as to patents, i.e. they should not automatically have to be taken under consideration unless the patent holder or his assignee applies for it. No protection of utility models is in force in Finland.

In Finland trade marks are registered for 10 years. The registration can be renewed for another 10 years if it is done before the expiration of the previous period. A great number of the trade marks of Allies which were registered in Finland on June 22, 1941, have ceased to be valid because of the expiration of the registration period, and renewals could not be applied for, all connections being cut off. The Draft Peace Treaty cannot either purport that such trade marks as have been deleted from the register should automatically be considered to have been continually in force; the holder of the trade mark shall on the contrary make an application in order to have the deletion cancelled. It would seem reasonable if a system could be adopted according to which the holder of the trade mark in so far as the 10-year period expired between June 22, 1941, and the date of signature of the Peace Treaty can apply for a renewal of the registration within a certain fixed time limit after the signing of Peace, in which connection a fee for the renewal of the registration should be paid and the new registration period would begin to run as from the date on which the previous registration expired. It might be possible that the utility mark thus renewed would be deceptively similar to that which in the meantime has been registered in the name of the third party, but according to general principles of law regarding utility marks the latter would have to make way for the former. The number of possible conflicts arising out of this arrangement would evidently be very small, because the Finnish Patent Office did what was possible in order to prevent utility marks which expired during the war from being registered in the name of another person.

With regard to the so-called Union priority, Finland has acceded to the Paris Convention such as it was revised in Washington in 1911, and according to which the period of priority is four months. In the opinion of the Finnish Patent Office the extension of priority, in respect of utility marks, so far back as the roughly 5½ years proposed under paragraph 1 b) of annex 4 would lead to insurmountable difficulties in Finland.

Rights in literary and artistic property.

Finland has strictly followed during the whole war the clauses of the Berne Convention regarding protection of rights in literary and artistic property, naturally in respect of nationals of those countries which have signed the Berne Convention. The rights in literary and artistic property of nationals of such countries have by no measures of legislation whatsoever been placed in the position of enemy property, regardless of whether these countries were in a state of war with Finland or not. Accordingly, performance retributions have been collected in the normal manner on behalf of foreign composers, as for instance Lyons, Coats, Kettelby, Elgar and others. These retributions in Finnish marks can thus be freely disposed of in Finland by the composers, naturally in conformity with the foreign currency regulations in force in Finland at every time, as it is suggested in the U.K. proposal for paragraph 4 a) of Article 24. Other rights in literary and artistic property of foreigners are protected in the same manner in respect of the duration of the war. Therefore, it seems as if there were no reason to extend the duration of rights in literary and artistic property for a further term corresponding to the duration of the war, as proposed in paragraph 3, annex 4.

The holder of rights in literary and artistic property must naturally be afforded a sufficient time for taking action against such persons as have infringed his rights during the war and which action he was unable to take earlier on account of obstacles due to the war. Such a time limit being included under paragraph 1 c) of the annex, the protection of holders of rights in literary and artistic property is duly guaranteed without it being necessary to extend the provisions of paragraph 3 to regard them too.

b. insurances

With regard to paragraph 1 the Delegation begs to point out that United Nations Insurers according to Finnish laws in force even now have every possibility of recovering their former portfolios of business in Finland. As to legislative enactments more onerous than those in force before the outbreak of war the stipulations contained in paragraph I should be so construed that enactments in force at the outbreak of war relating to the rights of foreign insurers to carry on insurance in Finland which are unaltered, still shall remain in force while amendments despite the aforesaid stipulation can be made in common law, as for instance in the criminal or fiscal law and in common law dealing with all insurers (e.g. the penalty for failure for preparing assessment forms for income return might be aggravated or the tax increased).

Paragraph 2 should be so construed that the words “insurance claims arising out of war” only mean payment of claims arising out of the war, not however, losses caused for instance by currency depreciation or property transfer tax levied on account of the war.

If paragraphs 1 and 2 are so construed, Finland has no observations to make.

The same applies to paragraph 3, all the more so as Finland has been afforded the possibility of accepting the securities mentioned therein as legal deposits or reserves at their value at the outbreak of war.

Should the USSR proposal relating to this paragraph be accepted and, consequently, Article 24 be considered sufficient, Finland expects that the stipulations concerning insurance in this Article are not construed in a manner more severe than has been said above of the U.K. proposal.

In the event of the U.K. proposal for Article 24, paragraph 4, of the Peace Treaty being enforced, assets of United Nations nationals in Finland and consequently also assets arising out of insurance transactions, as for instance insurance funds, should be paid in original currency. This is the more natural in insurance business as the premium and claims reserves are offset by a liability of an equal nominal amount in Finnish marks.

Should the USSR proposal for paragraph 4 be accepted Finland also expects that the construction put on the treaty will not in the result be less favourable than has been said above of the construction to be put on paragraph 4 of the U.K. proposal.

Appendix [Annex] 5. Contracts, Prescriptions and Negotiable Instruments

1 contracts

Paragraph 1.

This paragraph should be construed so that the seller, upon dissolution of the contract, shall return to the buyer the money received from him by virtue of such dissolved contract.

Paragraph 2.

Section (e) seems to be too indefinite, as according to it all such contracts would remain in force one party of which is a state, municipality or other similar juridical person charged with administrative functions.

Section (f) is vague as it leaves it open for deliberation to decide when “general interest” demands the execution of a contract, and when one of the parties is being caused “substantial prejudice”. It would also be very important to have a definition of what is meant by “general interest”