289 Sharwood to Dunk

Memorandum LONDON, 3 June 1946

Reparations-Shipping

This memorandum is to confirm the telegram sent to you advising that the ship 'ADRIAN' had been finally awarded to Australia by the Assembly of I.A.R.A. [1]

When the vote was taken on the complete recommendations of the Shipping Committee to the Assembly the delegates of India and Egypt voted against the recommendations of the Committee. The reasons for their negative vote was that neither country had received from its Government authority to accept the ships offered, but had also not received information that the offer made was non-acceptable. As a result of the non-unanimous vote the decision of the Assembly was deferred under the rules of the Agency for eight days, during which time either or both nations could register their desire for arbitration. On the 28th May Egypt indicated that she accepted the ship offered, whereas India totally withdrew her claim for shipping, being prepared to let her non-acceptance of any value of ships allow her a greater value of industrial equipment under Category B. These two decisions, therefore, made the decision of the Assembly unanimous and the ship was duly allocated.

Arrangements are being made with the British Ministry of Transport who at present have control of the 'ADRIAN', for the necessary papers to be prepared to allow the ship to be taken over by Australia. In the case of the 'ADRIAN' this vessel was seized by Britain at the time of the capitulation and is at present awaiting the decision of the Prize Court as to whether or not she will be granted as prize to Gt. Britain. In the meantime Gt. Britain, in the spirit of the Potsdam Agreement, has made available as reparations the 'ADRIAN' and many other ships which are at present also subjects of litigation in the Prize Court. Until the decision has been reached it is not possible to pass the property of the ship to Australia, but the procedure to be adopted is that of chartering the vessel to us at the charge of one penny per annum.

and immediately the ship has been awarded to Gt. Britain it will be sold to Australia for the price of one penny.

The necessary documents covering this transfer and also the agreement about the payment of capital and working repairs, and how these will be borne by Australia and Gt. Britain are being prepared by the British Ministry of Transport and will be submitted to the Resident Minister within the next few days for signature and payment of the necessary chartering fee.

Regarding the putting of the 'ADRIAN' into commission Westralian Farmers London have received authorisation from the Shipping Board to get this matter in hand and they are taking immediate steps to that effect.

When the signing of the chartering documents has been completed the responsibility of the ship will then be with the Westralian Farmers and no further action will be necessary by the Australian Reparations Legation. There will, however, be the necessity for the Resident Minister, or whom he may appoint, to sign the Bill of Sale at the required time. It will be probably some time before the outstanding Bill of Costs estimated at 10,000 will be presented for consideration by the British Ministry of Transport at which time a decision will need to be arrived at between both parties as to what extent of the costs are of a capital nature, these being payable by Australia and those which are normal maintenance costs involved by Gt. Britain during the use of this vessel, and which are payable by Gt. Britain. A similar division of expenses will arise regarding the repairs which will need to be authorised by Westralian Farmers to put the ship into commission.

It will be remembered in this regard that the value given to the ship for reparation purposes-27,000-was based on the condition of the ship at the time of capitulation of Germany. For instance if the ship had suffered damage through bombing or any other reason necessitating the capital expenditure of 10,000 it could be assumed that the 1938 value of the ship in good condition would have been 37,000. As a matter of fact the cost of a similar ship on today's building costs is stated to be approximately 50/60,000.

The British shipping authorities have a very high regard for the 'ADRIAN'. They state that it is a most handy coastal vessel and it was only under pressure from our delegation that they withdrew their own claim for this vessel.

G. W. SHARWOOD Chief Administrative Officer Australian Scientific and Technical Mission

1 inter-Allied Reparation Agency.

[AA:A1067, ER46/19/6]