provided that such third arbitrator shall not be a national of either contracting party. Each of the contracting parties shall designate an arbitrator within two months of the date of delivery by either party to the other party of a diplomatic note requesting arbitration of a dispute; and the third arbitrator shall be agreed upon within one month after such period of two months. If either of the contracting parties fails to designate its own arbitrator within two months, or if the third arbitrator is not agreed upon within the time limit indicated, the President of the Council of the International Civil Aviation Organization (hereinafter called Icao) shall be requested to make the necessary appointments by choosing the arbitrator or arbitrators from a panel of arbitral personnel maintained in accordance with the practice of ICAO. The contracting parties will use their best efforts under the powers available to them to put into effect the opinion expressed in any such advisory report. A moiety of the expenses of the arbitral tribunal shall be borne by each party. The Chief of the Swiss Federal Political Department to the American LE CHEF DÉPARTEMENT POLITIQUE FÉDÉRAL MONSIEUR LE MINISTRE, BERNE, le 13 mai 1949. Par lettre de ce jour, vous avez bien voulu me proposer d'insérer une clause arbitrale dans l'accord provisoire sur les lignes aériennes entre la Suisse et les Etats-Unis d'Amérique, du 3 août 1945. J'ai pris bonne note que ce texte, qui deviendrait l'article 10 de l'accord, a fait l'objet de conversations entre représentants des Autorités fédérales suisses et américaines. J'ai l'honneur de porter à la connaissance de Votre Excellence que le Conseil Fédéral Suisse approuve le texte dont il s'agit et qu'il le considère comme en vigueur dès aujourd'hui. Veuillez agréer, Monsieur le Ministre, l'assurance de ma haute considération. Translation THE CHIEF FEDERAL POLITICAL DEPARTMENT MR. MINISTER: BERN, May 13, 1949. In a letter dated today you were so good as to propose to me that an arbitration clause be inserted in the Interim Agreement between the United States of America and Switzerland relating to Air Transport Services, dated August 3, 1945. I have taken due note of the fact that such text, which would become article 10 of the agreement, was the subject of conversations between representatives of the Swiss federal Authorities and representatives of the American Authorities. I have the honor to inform Your Excellency that the Swiss Federal Council approves the text in question and that it considers it to be in force as of the present date. Accept, Mr. Minister, the assurances of my high consideration. MAX PETITPIERRE. Ante, p. 2437. 60 Stat. 1935. His Excellency JOHN CARTER VINCENT Minister of the United States of America (Max Petitpierre) Bern The American Minister to the Chief of the Swiss Federal Political Department LEGATION OF THE UNITED STATES OF AMERICA BERN, May 13, 1949 EXCELLENCY: I have the honor to refer to the conversations between the Governments of the United States of America and Switzerland in regard to the amendment of the Interim Agreement relating to Air Transport Services concluded between the United States of America and Switzerland on August 3, 1945, with a view to the incorporation of the Bermuda principles into this Agreement. I understand that these conversations which have taken place pursuant to the suggestion of the Federal Air Office communication of May 21, 1948, ['] have now resulted in a text agreed upon between the negotiating parties which is enclosed herewith and which is to be inserted as the Annex immediately following Article 10 of the Interim Agreement of August 3, 1945. I further understand that the Schedule to the enclosed Annex has been agreed upon as a substitute for the present "Annex" of the Interim Agreement. It is finally understood that the enclosed Annex and Schedule will form an integral part of the Interim Agreement of August 3, 1945. 'Not printed. 81939-52-PT. III- -10 60 Stat. 1935. Post, p. 2443. 60 Stat. 1938. 60 Stat. 1938. I shall be glad to have you inform me whether the Swiss Government understands that the terms of the Annex and of the Schedule resulting from the conversations referred to are as set forth in the enclosure to this note. If your answer is in the affirmative, the Government of the United States of America will regard the new Annex and Schedule to the Interim Agreement of August 3, 1945, effective upon the date of your answer in accordance with the provisions of Article 9 of the Agreement. Accept, Excellency, the renewed assurances of my highest consideration. Rights of transit and stops for nontraffic purposes, etc. Fair and equal operation. Operation of trunk services. Adequate capacity. One or more airlines designated by each of the contracting parties under the conditions provided in this Agreement will enjoy, in the territory of the other contracting party, rights of transit and of stops for non-traffic purposes, as well as the right of commercial entry and departure for international traffic in passengers, cargo and mail at the points enumerated on each of the routes specified in the Schedule attached. SECTION II The air transport facilities available hereunder to the traveling public shall bear a close relationship to the requirements of the public for such transport. SECTION III There shall be a fair and equal opportunity for the airlines of the contracting parties to operate on any route between their respective territories covered by this Agreement and Annex. SECTION IV In the operation by the airlines of either contracting party of the trunk services described in the present Annex, the interest of the airlines of the other contracting party shall be taken into consideration so as not to affect unduly the services which the latter provide on all or part of the same routes. SECTION V It is the understanding of both contracting parties that services provided by a designated airline under the present Agreement and Annex shall retain as their primary objective the provision of capacity adequate to the traffic demands between the country of which such airline is a national and the country of ultimate destination of the traffic. The right to embark or disembark on such services international traffic destined for and coming from third countries at a point or points on the routes specified in the present Annex shall be applied in accordance with the general principles of orderly development to which both contracting parties subscribe and shall be subject to the general principle that capacity should be related to: (a) traffic requirements between the country of origin and the countries of destination; (b) the requirements of through airline operation; and (c) the traffic requirements of the area through which the airline passes after taking account of local and regional services. SECTION VI Traffic from third countries. Consultation for col. It is the intention of both contracting parties that there should laboration. be regular and frequent consultation between their respective aeronautical authorities and that there should thereby be close collaboration in the observance of the principles and the implementation of the provisions outlined in the present Agreement and Annex. SECTION VII A. The determination of rates in accordance with the following paragraphs shall be made at reasonable levels, due regard being paid to all relevant factors, such as cost of operation, reasonable profit, and the rates charged by any other carriers, as well as the characteristics of each service. B. The rates to be charged by the air carriers of either contracting party between points in the territory of the United States and points in Swiss territory referred to in the attached Schedule shall, consistent with the provisions of the present Agreement and its Annex, be subject to the approval of the aeronautical authorities of the contracting parties, who shall act in accordance with their obligations under the present Annex, within the limits of their legal powers. It is recognized that the determination of rates to be charged by an airline of one contracting party over a segment of the specified route, which segment lies between the territories of the other contracting party and a third country, is a complex question the over-all solution of which cannot be sought through consultation between only the two contracting parties. Pending the acceptance by both contracting parties of any multilateral agreement or recommendations with respect to such rates, the rates to be charged by the designated airlines of the two contracting parties over the route segment involved shall be set in the first instance by agreement between such airlines operating over such route segment, subject to the approval of the aeronautical authorities of the two contracting parties. In case such designated airlines cannot reach agreement or in case the aeronautical Rates. Post, p. 2443. Ante, p. 2440. Ante, p. 2437. Approval by Civil Aeronautics Board. authorities of both contracting parties do not approve any rates set by such airlines, the question shall become the subject of consultation between the aeronautical authorities of the two contracting parties. In considering such rates the aeronautical authorities shall have regard particularly to Section IV of this Annex and to the desire of both contracting parties to foster and encourage the development of efficient and economically sound trunk air services by the designated airlines over the specified routes. If the aeronautical authorities cannot reach agreement, both contracting parties shall submit, at the request of either party, the question in dispute to arbitration as provided for in Article 10 of the Agreement. C. Any rate proposed by the airline or airlines of either contracting party shall be filed with the aeronautical authorities of both contracting parties at least thirty (30) days before the proposed date of introduction; provided that this period of thirty (30) days may be reduced in particular cases if so agreed by the aeronautical authorities of both contracting parties. D. The Civil Aeronautics Board of the United States having approved the traffic conference machinery of the International Air Transport Association (hereinafter called IATA) for a period of two years beginning in February 1948, any rate agreements concluded through this machinery during this period and involving United States airlines will be subject to approval of the Board. Rate agreements concluded through this machinery will also be subject to the approval of the aeronautical authorities of Switzerland pursuant to the principles enunciated in paragraph B above. E. The contracting parties agree that the procedure described in paragraphs F, G and H of this Section shall apply: 1) if during the period of the Civil Aeronautics Board's approval of the IATA traffic conference machinery, either any specific rate agreement is not approved within a reasonable time by either contracting party or a conference of IATA is unable to agree on a rate, or 2) at any time no IATA machinery is applicable, or 3) if either contracting party at any time withdraws or fails to renew its approval of that of the IATA Traffic Conference machinery relevant to this Section. F. In the event that power is conferred by law upon the aeronautical authorities of the United States to fix fair and economic rates for the transport of persons and property by air on international services and to suspend proposed rates in a manner comparable to that in which the Civil Aeronautics Board at present is empowered to act with respect to such rates for the transport of persons and property by air within the United States, each of the contracting parties shall thereafter exercise its authority in such manner as to prevent any rate or rates proposed by one of its airlines of services from the territory of the other contracting party from becoming effective, if in the judgment of the aeronautical authorities of the contracting party whose airline or airlines is or are proposing such rate, that rate is |