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2) Promptly the Soviet Government replied by wire that the essence of the concession had been that both parties must continue to play their roles under the document until released from this obligation by some act of the Arbitral Board. Since Lena had started to withdraw before the Board met she had, declared the Soviet telegram, completely ruptured and destroyed the concession agreement including of course its machinery of arbitration. Therefore the Arbitral Board had become a nullity, and as it had ceased to exist the Soviet Government could not and would not send any representative to sit with Dr. Stutzer and Sir Leslie.
"Implacable Hostility." This Soviet view was not concurred in by the German and the Englishman. They plainly regarded it as a mere subterfuge. Holding that the original concession had not been destroyed, and therefore that its arbitration machinery remained valid, they pointed to Article 90. It plainly provides that if one of the disputant parties shall fail to send a representative to the Arbitral Board then a unanimous decision of the Chairman and the representative of the other party shall be binding upon both disputants. This was the unanimous decision of two that the German and the Englishman made last week, having carried their deliberations from Berlin to London during the past month.
In their decision the arbiters did not mince words, betrayed thoroughgoing exasperation with Soviet logic, methods, conduct. With frank partiality they expressed the opinion that the "friendliness" of the Soviet authorities to Lena in 1925 had changed gradually until it became in the last months of 1929 "implacable hostility." Reason: according to the Board the inception of Soviet Dictator Josef Stalin's famed Five Year Plan of Russian self-industrialization (TIME, June 9) rendered any such capitalist company as Lena "radically incongruous" in Soviet Russia. In terminating the concession (already terminated months ago in fact by the Soviet Government) the arbiters roundly defended their order that Lena should receive $65,000,000 compensation—although the investment of Lena's tycoons totals to date less than $20,000,000.
"The sum of $65,000,000," reads the decision, "represents the future profits which the company would have made and which the Soviet Government can now make on the assumption of good commercial management" of the equipment set up in the field by Lena.
In British business circles the Soviet rejection of a highly "correct" arbitral award (one in the normal tradition of British jurisprudence and made with the concurrence of a Privy Councilor of His Majesty the King) produced a most lugubrious effect. Cabled one fiscal correspondent, "This outcome is regarded in the financial district as a complete demonstration of the impossibility of working concessions in Soviet territory."