This week is Nobel Week, a week celebrating the awarding of Nobel Prizes in chemistry, medicine, physics, literature, and peace, as well as the affiliated Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, commonly referred to as the Nobel Prize in Economics. Thursday (December 10) marks the commemoration of Alfred Nobel’s death in 1896, and is the day that the official prize ceremonies take place in Stockholm, Sweden and Oslo, Norway. This year, November 27 marked the 120th anniversary of Alfred Nobel signing his final will and testament – the will that set up the Nobel Prizes. This seemed like a great reason to look a little closer into that famous will and the history surrounding it.
Among the awards Nobel created in his will was the Nobel Peace Prize. Interesting, I thought, as Nobel was actually an arms dealer.
That Nobel saw no paradox between his invention of dynamite and peace was clear from one of his most famous quotes:
“[my] dynamite will sooner lead to peace than a thousand world conventions. As soon as men will find that in one instant, whole armies can be utterly destroyed, they surely will abide by golden peace.”
But others felt differently. According to reports, upon the death of Nobel’s brother, a French Magazine published a premature obituary of Nobel titled “The Merchant of Death is Dead,” which led Nobel to set up his prizes to ensure his legacy.
Nobel the Man
Alfred Nobel was born in Sweden, and was a well-traveled “vagabond.” He had properties in several countries. At the time of his death he was best known as the inventor of dynamite, although he held as many as 355 patents.
Nobel was rumored to have hated lawyers as a result of his patent litigation. His will was drafted without any aid from lawyers and, as far as legal documents go, left much to be desired. In fact, there was not even an institution to receive the sizable bequest; it had to be established by the executors, two non-lawyers who did in fact ask a lawyer for help.
The Famous Will
The text of the 1895 will provided:
The whole of my remaining realizable estate shall be dealt with in the following way: the capital, invested in safe securities by my executors, shall constitute a fund, the interest on which shall be annually distributed in the form of prizes to those who, during the preceding year, shall have conferred the greatest benefit to mankind.
The said interest shall be divided into five equal parts, which shall be apportioned as follows: one part to the person who shall have made the most important discovery or invention within the field of physics; one part to the person who shall have made the most important chemical discovery or improvement; one part to the person who shall have made the most important discovery within the domain of physiology or medicine; one part to the person who shall have produced in the field of literature the most outstanding work in an ideal direction; and one part to the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses.
The prizes for physics and chemistry shall be awarded by the Swedish Academy of Sciences; that for physiology or medical works by the Karolinska Institute in Stockholm; that for literature by the Academy in Stockholm, and that for champions of peace by a committee of five persons to be elected by the Norwegian Storting. It is my express wish that in awarding the prizes no consideration be given to the nationality of the candidates, but that the most worthy shall receive the prize, whether he be Scandinavian or not.
(Translation by the Nobel Prize Organization; with paragraph breaks added by author).
As a man without immediate heirs, Alfred Nobel was legally free to testate his property to whomever he chose. And so he did. His family only received half a percent of the entire estate in the will. Perhaps not surprisingly, this sparked great controversy among his family members as well as the public, which a local Swedish newspaper at the time described as “the Great Comedy of the Will” (translation by author).
The main issues with Nobel’s will were:
- Determining the domicile of Nobel at his death
- Relocating his French property to Sweden
- Paying taxes on the estate
- Satisfying the snubbed relatives
- Creating the foundations that were going to manage the awards
- Interpreting the will when choosing awardees
Let’s explore these issues.
- Domicile – Your Home is Where Your Horses Are
Although Nobel died in San Remo, Italy, he also had a home in Paris, France and a larger estate in Bofors, Sweden. Only one of these places could be his legal domicile, in effect his real home, the place where the will was to be probated. It was not easy to determine, but a Swedish court finally found that Sweden was indeed the place of Nobel’s domicile, as he had moved his horses to his home in Sweden prior to his death (a criteria for determining legal domicile under French law).
Making Sweden the legal domicile was important as this meant both that Swedish law applied to the will and that any objection thereto had to be presented in Sweden, but also that taxes on the estate should be paid in Sweden.
In fact, until 1946 (when a law change made it exempt) the Nobel Foundation paid taxes on its returns on investment in Sweden, and was one of the largest taxpayers in Stockholm.
- Getting the Property to Sweden – Possession is Three Fourths of the Law
Most of Nobel’s assets (mostly bonds) were located in France and therefore needed to be relocated to Sweden. This was not an impossible task for the resourceful executor of the will, Roger Sohlman, who – according to his own accounts – personally moved these out of France, divided in small packages, while guarding them with a pistol on his lap. Sohlman removed the assets to ensure that Nobel’s relatives would not place an injunction on the property, in effect tying the assets to France.
- Double Taxation – Not a Problem
To quote Benjamin Franklin, “[i]n this world nothing can be said to be certain, except death and taxes.” In 1897, when Nobel’s will was probated, there were no taxation agreements like the ones that exist today, and definitely none between Sweden and France. In fact, the Swedish Supreme Court in Nytt Juridiskt Arkiv [NJA] 1899: 68 (pages 164-168) found that Nobel’s French property could indeed be taxed in France, and the same items could then be taxed again in Sweden as part of the larger estate. However, the court did allow the executors of the will to deduct the amount they had paid in foreign taxes on Nobel’s property in France the same way any other debt from the holdings of the estate could be deducted.
- Satisfying the Relatives
It appears that most of the relatives settled and received six percent of the total estate, whereas some were independently wealthy and cared little for Nobel’s fortune. The family also received a prominent role in the Nobel Foundation (see below).
- The Creation of the Nobel Foundation in Sweden & the Nobel Committee in Norway
The most important provisions of the settlement agreement included giving Robert Nobel (a relative of Nobel) influence in the foundation; setting the requirements for how and when the prizes should be awarded (at least one in a five year period); and how large the prize sum should be (at least sixty percent of the available sum based on the annual interest, each prize divided in no more than three awards).
In a special accompanying regulation, Svenska Akademin (which awards the Nobel Prize in Literature) was given the authority to use Nobel funds to fund and staff its own Nobel Institute so that it could translate foreign literary works as needed.
Today, the statutes regulating the Nobel Foundation have been amended to allow greater flexibility in the financial management of the fund and the prize sum is set at SEK 8 million per full prize in 2015 (about US$943,000). The statutes still prohibit more than three persons from sharing an award.
- The Will’s Intent
Following the establishment of the Nobel Prize the controversies have continued. Critics particularly question the real meaning of the criteria for the Peace prize. According to the will, an award should be given
…to the person who shall have done the most or the best work for fraternity between nations, for the abolition or reduction of standing armies and for the holding and promotion of peace congresses.
On occasion, disagreements on the selection of Nobel Prize winners make their way to the courts, but so far no one has been stripped of his or her award.
The Nobel Prize in Economics – Not Nobel’s Idea
While there are reports that Nobel specifically chose not to include mathematics among the sciences awarded for personal reasons, he did not set up the Nobel Prize in Economics either. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, as it is officially named, is a recent prize not contemplated by Nobel in 1895. It was established by the Swedish National Bank (Sveriges Riksbank) in the memory of Alfred Nobel in 1968. The first prize was awarded in 1969.
The Nobel Foundation consented to the use of the name in Alfred Nobel’s memory, but relatives of Nobel have claimed that it is one of the greatest intellectual property infringements to use his name in this manner. The prize is also occasionally criticized for not living up to purpose of Nobel’s prizes being for those who have done the greatest good for mankind. Nevertheless, the prize is now generally recognized as one of the Nobel prizes and is awarded during the general Nobel ceremony in Stockholm, although the prize money is derived from the Swedish National Bank.
Considering the controversies regarding the Nobel Prize in Economics, it seems unlikely that there will be a new Nobel Prize added any time soon.
Fun Facts about the Nobel Prizes
More than 300 Americans have received a Nobel Prize, making Americans the number one country of Nobel Laureates by far in real numbers, while Iceland has the highest number of Nobel Laureates per capita.
It turns out that many lawyers have been awarded Nobel Prizes. In tomorrow’s blog post, my colleague Jennifer González will be highlighting over 30 lawyers who have received the Nobel Peace Prize. Don’t miss it!
Swedish parliamentary members have submitted a motion to have Stockholm Arlanda Airport renamed after Nobel. So far the Nobel Foundation has shown little interest in such a move.
If you like libraries as much as I do, you might be interested to know that a large part of Alfred Nobel’s private library is housed in a museum in Sweden.
Again, stay tuned for Jennifer’s post on Nobel Peace Prize-winning lawyers tomorrow!