I am in receipt of your minute of 23 February 1921, submitting for my perusal and comments copies of certain cable communications between the Secretary of State, the Commonwealth, and the Prime Minister of New Zealand, relating to the application to vessels trading between the Commonwealth and Nauru of the coasting trade provisions of the Navigation Act 1912-1920.

In one sense the Island of Nauru is a 'territory governed by the Commonwealth under a Mandate' inasmuch as the Commonwealth participates in the government of the Territory under that authority.

It is probable, however, that the Commonwealth will not be able to insist, in the face of opposition by both the other participating Governments, upon extending to Nauru the operation of any Commonwealth law, even though such extension were contemplated by the terms of the Commonwealth statute.

The laws operating in Nauru will be such as are settled by the mandatory Governments of a majority of those Governments.

In my opinion the Commonwealth cannot effectively apply to vessels trading between the Commonwealth and Nauru the coasting trade provisions of the Navigation Act unless the proposal is concurred in by at least one other mandatory Government.

[Vol. 17, p.258]