Al-Ahram Weekly Online   13 - 19 October 2005
Issue No. 764
Published in Cairo by AL-AHRAM established in 1875

Yunan Labib Rizk

Al-Ahram: A Diwan of contemporary life (617)

The end of the third reservation

In the Swiss spa town of Montreux, Egypt embarked on a one-month negotiations marathon with 12 European powers to end capitulations. Yunan Labib Rizk follows the month's proceedings

Click to view caption
El-Nahhas Pasha in Montreux

In the Declaration of 28 February 1922, recognising Egypt as an independent might, the British reserved the right "to protect foreign interests and minorities." This brief and seemingly innocuous statement was the third of the four "reservations" that effectively voided the declaration of its substance.

The Anglo-Egyptian Treaty of 1936 resolved the other three: the right to safeguard British imperial communications in Egypt; the right to defend Egypt from all foreign aggression or direct or indirect intervention; and the last pertained to the defence of the Sudan. The first was resolved by the treaty's military provisions and the last by the British agreement to allow Egyptian forces to return to Sudan, these having been evacuated following the assassination of the British governor-general of Sudan in 1924. The third reservation proved much stickier.

The foreign communities that had established themselves throughout Egypt had a long history. In modern times, their story dates back to the Napoleonic invasion of 1798, the first time since the Crusades that Egyptians saw hordes of firanji or Franks as Europeans in general were called, descending upon their country. Although the Napoleonic expedition was short-lived and the vast majority of those invaders were soon expelled from the country, it was not long afterwards that Muhammad Ali embarked on an ambitious modernisation programme, for which he relied quite heavily on foreign expertise.

There was only a trickle at first. However, several developments would turn this trickle into a gush. The first took place during Muhammad Ali's reign, when Greece obtained its independence from the Ottoman Empire. Until then, the Greeks in Egypt had been Ottoman subjects; now, as Greek subjects, they formed the largest expatriate community in the country. It was not long before the Italians, another foreign community with ancient bonds with Egypt, would begin to catch up with them. The influx of Italians, especially from the southern part of the Italian peninsula, increased dramatically under the reign of Muhammad Ali's grandson, the Khedive Ismail (1863-1879), who had special relations with the Italians and who relied on them extensively in his massive urban development programmes. The Greeks and Italians were followed by other peoples from Mediterranean countries, with which Egypt had long-standing relations.

In tandem with the influx of foreigners came increasing foreign interests in the country. The transformation to capitalism under Muhammad Ali brought a growing foreign presence in the economy. As the state monopoly which Muhammad Ali had instituted over many areas of the economy stood in the way of foreign economic ambitions in Egypt, European powers -- Britain in particular -- fought it with every means at their disposal. Indeed, in succeeded in concluding a pact with the Ottoman sultan in 1837, in accordance with which this system was banned throughout the Ottoman Empire. Muhammad Ali managed to put up feeble resistance; his successor Abbas I ultimately raised the white flag.

In effect, Muhammad Ali's state monopoly system had decimated the local manufacturing and merchant classes, creating a socio-economic void between the upper class, then consisting primarily of Turks, and the lower class of peasants and petty artisans and traders. Others would hasten to fill the gap, and these were the Europeans who flooded into the country in growing numbers in the eras of the Khedive Ismail and the British occupation.

Moreover, as Egypt was still a part of the Ottoman Empire, the newcomers benefited from the privileges granted to foreigners residing in Ottoman territories. The most far-reaching of these privileges under the so-called capitulations was immunity from prosecution in Egyptian courts. Each nation that was party to the capitulations had its own consular court which tried cases between its own subjects, its own subjects and other subjects of other foreign powers and its own subjects and Egyptians. Because of this and other advantages, many subjects of nations that were not party to the capitulations agreements, and even Egyptian nationals, strove to obtain subject status of capitulatory powers. The result was judicial chaos and wholesale flouting of local laws.

In an attempt to establish some order in that madness, the government of the Khedive Ismail concluded a treaty with the 12 capitulatory powers in 1875 establishing the so-called Mixed Court system. The new system, intended to supplant the consular courts, was a mixed blessing. One of its disadvantages as far as negotiations over the Anglo-Egyptian Treaty of 1936 were concerned was that it involved a third party in the relationship between Egypt and resident foreigners. Egypt and Britain could not resolve the question of the "third reservation" on their own, since the other 11 capitulatory powers also had a stake in the matter.

Still, something had to be done. Much had changed since 1875. Above all, the Ottoman Empire, which had struck the agreement with European powers establishing the capitulations system, had collapsed in the aftermath of World War I and the modern Turkish Republic which emerged in its place abolished the system as it applied to itself. That Iran and China had also revoked similar agreements they had had with colonial powers underscored the extent to which the concept of capitulations was glaringly inconsistent with the spirit of the times. Britain understood this, which is why it agreed to help Egypt extricate itself from this particular difficulty. But the best it could do for the moment was to pledge, in Article 13 of the Anglo-Egyptian Treaty, the following: "His Majesty the King and Emperor acknowledges that the existing capitulations system in Egypt is no longer consistent with the spirit of the age and with Egypt's current status, and His Majesty the King of Egypt wishes to abolish this system without delay. The parties to this agreement have agreed to the arrangements towards this end which appear in the annex to this article."

The arrangements included a "reasonable" interim period that could not be renewed without good reason, after which the functions and jurisdictions of the Mixed Courts would be terminated. In return, Egypt would pledge not to apply to foreigners legislation what that conflicts in general with the principles of modern law. In addition, Egypt would not acquire jurisdiction over the personal status affairs of the subjects of the capitulatory powers.

THE NEXT STEP was to hold a convention that would bring Egypt together with the 12 capitulatory powers. The Swiss spa town of Montreux was chosen as the venue and the date was set for 18 April 1937. Al-Ahram of 16 January 1937 relayed the text of the invitation addressed from Egyptian Foreign Minister Wassif Ghali to the ambassadors of those nations to Egypt. The foreign minister explained how inconsistent the continuation of the capitulations was with Egypt's current status and expressed his government's desire to alter the situation. He simultaneously stressed that his government pledged to abide by the general principles of modern law in its legislation pertaining to foreigners. He added that with the abolition of the capitulations the judicial authorities that foreign powers had had over foreigners and foreign concerns in Egypt must also be abolished and brought under the jurisdiction of the Egyptian judiciary. However, he expressed his government's willingness to institute special arrangements for an interim period, the duration of which would be agreed upon with the capitulatory powers and during which the Mixed Courts would continue to operate under modified terms.

The following day Al-Ahram listed the names of the capitulatory powers. These were Great Britain, France, Italy, Belgium, Denmark, Spain, the US, Greece, The Netherlands, Portugal, Sweden and Norway. It added that before the Great War there had been 15. The other three were Germany, the Austro-Hungarian Empire and Russia. The first two had conceded the privileges that had been accorded to their subjects in Egypt before the war in accordance with the terms of the peace treaties signed in Versailles. The third had become the communist Soviet Republic, "which Egypt does not recognise and with which Egypt has no diplomatic representation and the subjects of which, therefore, enjoyed no immunities in Egypt."

The Egyptian letter to the capitulatory powers raised several subsidiary issues. One was the question of how many foreign judges would serve on the Mixed Courts during the interim period. The introduction of the Mixed Courts five decades earlier had not entirely supplanted the consular courts. Under the Egyptian proposal the remaining jurisdictions of consular courts would be brought under the Mixed Courts during the interim period, which would temporarily add to the workload of the latter courts.

There was also the question whether Egyptian lawyers should be allowed to plea before the Mixed Courts. Egyptian lawyers felt that they had a strong case on their behalf. They argued that their early involvement in the processes of these courts would facilitate the eventual transfer of the jurisdictions of these courts to the national courts. They would also be able to win the confidence of foreign litigants as they acquired better insight into foreign customs, ethics and ways of thinking. By working alongside foreign lawyers, Egyptian lawyers would gain invaluable expertise in commercial law, maritime trade law, insurance issues and other such legal fields.

In its editorial of 7 February, on questions before the "capitulations conference," Al-Ahram discussed two other issues. In its opinion, the capitulatory powers would raise no objections to the Egyptian proposals except on two points. The first concerned the Egyptian demand to exclude what were termed "common interests" from the jurisdiction of the Mixed Courts. "Most foreign companies operating in Egypt are registered as Egyptian companies. These include many which are of vital importance, such as the Suez Canal Company and the Egyptian Real Estate Bank. The custom in the past has been for the Mixed Courts to arbitrate cases involving them on the grounds that common interests are entailed. The Egyptian government now proposes that it should be empowered to arbitrate in their affairs."

Al-Ahram contested the grounds upon which the Mixed Courts claimed jurisdiction over such cases. It argued that although the national courts were founded to arbitrate in cases in which both litigants were Egyptian, the Mixed Courts undermined the authority of the national courts by asserting an argument that had no basis in law, which was that even if a foreign interest was indirectly involved in a dispute between Egyptian litigants, that dispute should come under the jurisdiction of the Mixed Courts. "Officials of the National Courts take strong issue with this theory and have alerted the government to its injustice, which is of service to no one."

The second point was the Egyptian demand that any judge who retires from service on the Mixed Courts should be replaced by an Egyptian national. Adopting this "necessary and useful" principle would possibly reduce the length of the interim period, Al-Ahram argued. More importantly, it would help make for a smooth and gradual transition from the Mixed Courts to the National Courts gradual and it would give the Egyptian judges appointed to the Mixed Courts the necessary training and experience in handling cases involving foreign interests.

As of 10 March 1937 the responses from the capitulatory powers to the foreign minister's invitation began to arrive. When some newspapers observed that the texts of the responses that were given to them did not contain the names of the delegates, the Ministry of Foreign Affairs informed them that the governments in question had indeed nominated delegates. These included an array of prominent diplomats, lawyers and economists. One of the criteria of selection was that they were "fully informed on the political, legal and economic aspects of the capitulations question." It was also noted that many of the responses had clearly suggested that the foreign governments hoped that the conference would be as short as possible.

As Egypt had called for the conference it was decided the Egyptian government would foot the bill. An initial LE30,000 was allocated for the purpose with the understanding that the Egyptian delegation could request additional funding, if necessary, to cover the expenses of staffing, rental of premises and other incidentals.

By 1 April, final preparations were under way. Security would be provided by the police of Vaud, the canton in which the Swiss spa town was located. The venue selected was the Montreux Palace Hotel in which the Egyptian government booked rooms for all the participating delegations. Two conference rooms were booked for journalists and equipped with telephones and telegraph machines to ensure the rapid transmission of news. And, from that early date, Al-Ahram 's special correspondent who would be covering the conference, ensconced himself in the hotel to await the arrival of the delegations.

The first to arrive, of course, was the Egyptian delegation. In addition to Prime Minister Mustafa El-Nahhas, it included Speaker of Parliament Ahmed Maher, Foreign Minister Wassif Ghali, Finance Minister Makram Ebeid and head of the government's Cases Division Abdel-Hamid Badawi. They had been given an exuberant popular send-off that had accompanied them from Cairo to Alexandria. Then, no sooner did they arrive at the hotel and before they had a chance to recuperate from the long journey, they learned that King Faruq who was then on a European excursion, had taken an unplanned detour to the Swiss spa town. Al-Ahram reports that after lunching in the Montreux Palace with some members of his retinue, Farouq toured the palace in which the conference would be held. One imagines that the young king's advisors had urged him to make this surprise visit so that the Wafd Party, whose leader, El-Nahhas, headed the government and the negotiating delegation, would not be able to take all the laurels for escorting the superannuated capitulations system to its final resting place.

Soon the other delegations made their appearances. Al-Ahram observed that the size of the delegations varied from one to 15 members: Italy brought the most with 15 politicians and technical experts. It was followed by Britain and France with 12 and 10 members respectively. The Spanish delegation had four members and the Dutch three; Denmark, South Africa and Sweden had two members each; and Portugal and Norway were represented by one member each. The disparity in the sizes of these delegations was proportional to these countries' interests in Egypt. A good index in this regard was the relative size of their populations in Egypt. For example, according to the 1927 census there were 52,462 Italians in Egypt as opposed to only 139 Norwegians.

The Montreux Conference opened on 12 April. Contrary to the expectations of many it lasted nearly a month, concluding on 8 May.

AS ONE FOLLOWS that month's proceedings one observes that mot of the objections to the Egyptian demands came from the French delegation. There is little wonder in this. France was the first country to obtain special immunities and privileges for its subjects from the Ottoman Empire, the earliest bilateral agreement to this effect dating back to the 16th century. Of more immediate concern to Paris, French subjects in North Africa still enjoyed immunities similar to those accorded to foreigners in Egypt, and Paris feared that if the capitulations system was terminated in Egypt the governments of France's North African protectorates would demand likewise. As regards the Egyptian case specifically, although the French community in Egypt came fourth in size after the Greeks, Italians and British, French economic interests in the country were second only to those of the British. The French, moreover, had controlling interests in some very important firms such as the Suez Canal Company and the National Electricity Company. Nevertheless, Paris could not swim against the tide for long. The tide did not just consist of the general consensus among the other capitulatory powers -- especially Britain -- in favour of Egypt's demands, but also of a considerable segment of public opinion in France.

When the conference seemed to be dragging on longer than expected, Al-Ahram shared the concern of the Egyptian public. In its editorial of 29 April, on "The conference in Montreux: the apparent and anticipated results as pertains to the normal status of Egypt," the newspaper proclaimed that Egypt's purpose in going to Switzerland was not "to hear and obey." It accused Britain of initiating and fueling the current subject of debate. The British delegation, it said, was the first to insist that "foreign and Egyptianised companies in Egypt continue to feast in the pastures of the Mixed Courts throughout the interim period." The British also attempted to pressure Egypt into amending the second article of the proposed agreement which stipulated that Egyptian law would apply to all foreigners in Egypt. The Egyptian delegation offered a compromise solution in this regard. However, when the French were lured by this into pressuring for a provision whereby the parties to the convention could enter into bilateral treaties with Cairo concerning their subjects in Egypt, the Egyptian delegation objected strenuously and withdrew its proposal.

The editorial went on to offer a brief assessment of what had been accomplished so far. Through the "faithful dedication" of the Egyptian delegation, it wrote, Egypt had succeeded in "breaking the fetters of foreign capitulations." Henceforward, "The laws of Egypt will apply to all inhabitants of Egypt... and the government obtained the right to levy taxes from nationals and foreigners alike." However, the countries represented at the convention had managed "to preserve the liberties their subjects enjoy in this country and pressed upon Egypt to pledge never to discriminate between them and the citizens of Egypt."

On the day that the conference was due to end -- 5 May -- Al-Ahram apologised to its readers for the paucity of the information it had provided them since the conference began. In its defence, it pleaded the difficulties that journalists had in hunting down news and obtaining concrete facts, difficulties compounded "by the tense and agitated international climate." The newspaper continued, "In conferences such as this in which highly sensitive issues are discussed, secrecy may be the most effective manner of treatment. In view of the distance separating the representatives of the Egyptian press from their newspapers and in view of the many languages being used to relay information, it might transpire that news obtained from a foreign source is translated into another foreign language and then transmitted here and translated into Arabic and in the course of these many linguistic transmutations, there is a likelihood that what reaches us deviates to a small or large extent from the sense originally intended."

What left no room for doubt was the speech delivered by Prime Minister El-Nahhas and broadcast over Radio London on 15 May. Following a lengthy introduction lauding the Egyptian people for their support of their delegation in Montreux, he announced that this delegation had succeeded in its mission to realise Egypt's aspirations. The representatives of the governments invited to the convention had agreed to abolish every facet of the capitulations system in Egypt. They further agreed to the immediate elimination of all restrictions on Egypt's sovereign rights over its national law and legislation, which henceforward would apply to all inhabitants of the country even in financial affairs. Finally, there would be an interim period of 12 years, during which the Mixed Courts would continue to function and would assume the jurisdictions of the consular courts over criminal and civil suits involving foreigners, as well as over personal status cases for those nations that so wish. All that was left was for the signatory parties to ratify the treaty and deposit the documents of ratification with Cairo as soon as possible, after which the Egyptian government would register the treaty with the secretariat of the League of Nations.

It would be another 20 days before Egyptians would be able to properly celebrate their victory. The Egyptian delegation still had to pay courtesy calls on several European capitals and therefore only arrived in the Egyptian capital on 6 June. In its editorial of that day, Al-Ahram bid the members of the delegation a warm "Welcome home," writing, "If the nation as a whole and the capital in particular swells today with the desire to honour the members of the official delegation and to rejoice at their homecoming, and if government and civilian organisations are vying with one another to sing the plaudits of the delegation, these tributes are dedicated to their devotion to their great patriotic tasks and to their commitment to our higher national interests."

The editorial gives only a small clue to the tumultuous popular reception given to Mustafa El-Nahhas and his colleagues upon their return to Egypt. And, while the memory of that joyous day might have dwindled over the next 12 years, nothing halted the implementation of the Montreux Treaty. In 1949, the Mixed Courts vanished and with them Britain's third reservation in the Declaration of 28 February 1922.

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