The Comptroller-General of Customs has forwarded me the following memorandum for advice:

A claim for £11950 9s 8d has been lodged in this office by George Wills & Co. Ltd, against the Deutsche Australische Dampfschiffs Gesellschaft (German-Australian Steamship Company) for moneys advanced and paid for ships' disbursements-a statement of the claim is attached and marked 'B'.

2. The claim is supported by bills of exchange amounting in all to £8463 6s 6d and a judgment obtained in the Supreme Court of New South Wales on 5 January 1916, as amended by an order of the Court dated 16 June 1916, which increases the amount of the judgment to £9722 16s 2d plus interest thereon at the rate of 6 per cent per annum until payment-Exhibit 'C.
3. In their letter of 30 April 1921, provisionally contesting the claim the Deutsche Australische Dampfschiffs Gesellschaft point out that the sum of £9722 16s 2d includes interest amounting to £949 13s 2d, therefore the computation of interest on £9411 15s 3d as shown in statement 'A' includes compound interest on the amount of £949 13s Od. They enclose a statement setting out their indebtedness at £8462 0s Id plus interest at 6 per cent from each respective date-Exhibit 'D'.
4. In this connection attention is invited to Article 302 of the Treaty of Versailles, which provides, inter alia, as follows:
   

   Judgments given by the Courts of an Allied or Associated Power in all cases which, under the present Treaty, they are competent to decide, shall be recognised in Germany as final, and shall be enforced without it being necessary to have them declared executory.

   and the second paragraph of Clause 22 of the Annex to Article 296 which reads:

   Interest shall not be payable on sums of money due by way of dividend, interest or other periodical payments which themselves represent interest on capital.

5. Advice is desired as to whether the contention of the Deutsche Australische Dampfschiffs Gesellschaft relative to compound interest is in order or whether the fact that a judgment has been given by the Supreme Court of New South Wales entitles George Wills & Co. Ltd to claim the amount thereof, viz. £9722 16s 2d plus interest at 6 per cent per annum from date thereof until payment.

The judgment of the Supreme Court of New South Wales given on 5 January 1916 is not one to which the first paragraph of Article 302 applies.

The amount of the debt being ascertained and fixed by the order of the Court, Clause 22 of the Annex to Article 296 cannot be invoked as authority for reopening the question of the amount of liability of the German-Australian Steamship Co.

That Clause operates in the first place to enable interest, not otherwise expressly provided for, to be charged on debts to which the Article applies and in such cases restricts the interest to simple interest and the rate to 5 per cent except in cases where by contract, law or custom the creditor is entitled to a different rate.

In this case the capital amount of the debt is the amount awarded by the Court viz. £9722 16s 2d and the rate of interest thereon, 6 per cent, is not affected by Clause 22, seeing that an exception in favour of different rates fixed by law is provided as an alternative to 5 per cent.

[Vol. 19, p. 241]