In September 1945, Gracey led 20,000 troops of the 20th Indian Division to occupy Saigon. During the Potsdam Conference in July 1945, the Allies had agreed on Britain taking control of Vietnam south of the 16th parallel from the Japanese occupiers. The French, anxious to retain their colony, persuaded Gracey's Commander in Chief, Lord Mountbatten, to authorise Gracey to declare martial law. French General Leclerc arrived in Saigon in October 1945 to assume authority but it was not until well into the first half of 1946 that enough French troops had arrived to allow General Gracey to withdraw.