this country would certainly decline to go to war to prevent a foreign government from collecting a just debt; on the other hand, it is very inadvisable to permit any foreign power to take possession, even temporarily, of the custom-houses of an American Republic in order to enforce the payment of its obligations, for such temporary occupation might turn into a permanent occupation. The only escape from these alternatives may at any time be that we must ourselves undertake to bring about some arrangement by which so much as possible of a just obligation shall be paid. It is far better that this country should put through such an arrangement rather than allow any foreign country to undertake it. To do so insures the defaulting republic from having to pay debts of an improper character under duress, while it also insures honest creditors of the republic from being passed by in the interest of dishonest or grasping creditors." 1

This method of administering the finances of bankrupt and unstable governments has in fact been applied in the Dominican Republic. In 1905 it was effective in restraining the forcible attempt of Germany, Spain and Italy to secure payment of arrears of interest and pledged revenues to their subject creditors. International practice seems to have given a sanction to this form of intervention. It might be called benevolent intervention in the interests of the debtor state and of its creditors, and however the paternal control of the temporary guardian may hurt the pride of the citizens of the bankrupt nation, the advantages resulting to world peace exceed by far such minor disadvantages as the disapproval of a few patriotic nationals.2 Nevertheless, in the absence of an international forum, it is not apparent how grossly exaggerated claims against these states can be avoided, for presumably the financial administration looks only to the payment of the current expenses and of the national debts and makes no provision for the judicial examination of the legitimacy of the latter. The existence of the Platt Amendment in the treaty with Cuba and in the proposed treaty with Nicaragua is an effective check upon the undue increase of public debts by these countries. The unratified treaties of 1911 between the United States and Honduras and the United States and 1 For. Rel., 1905, H. Doc. 1, 59th Cong., 1st sess., 34-35.

2 This Latin-American disapproval of the policy of the United States as evidenced in the unratified treaties of 1911 with Honduras and Nicaragua is expressed in a series of pamphlets: United States and Latin-America, Dollar Diplomacy, by Juan Leets, New Orleans, 1912; Nicaraguan Affairs, San José, 1912; the Morgan-Honduras Loan, 3 parts, New Orleans, 1911-12.

Nicaragua and the recently proposed "protectorate" treaty with Nicaragua, all of which were invited by these small republics, indicate a necessary policy of this government, whether by temporary receivership or supplementary administrative control, to secure the financial rehabilitation of the weaker states of Latin-America, and thus reassure foreign creditors and maintain domestic peace and prosperity on terms most favorable to Latin-America.1

§ 126. Conclusion.

1

The Porter proposition is by no means a complete remedy for ex

European countries have adopted practices of various kinds to assure the successful operation of a loan contract concluded between a foreign nation and their subjects. Thus Great Britain has provided in such cases for the selection of a British supervisor of the loan and the government "takes cognizance" of the contract. The Corporation of Foreign Bondholders, an association for the protection of British holders of the bonds of foreign countries, usually seems to receive material support from the British government in its demands. Similar associations exist in Germany, France, and Belgium (41 Clunet, 1914, 137-140).

In the Dominican and the unratified Honduras and Nicaraguan treaties with the United States, diplomatic protection is extended to the receiver or supervisor in the performance of his duties. See the treaties between the United States and Dominican Republic, Feb. 7, 1907, Honduras, Jan. 26, 1911, and Nicaragua, June 8, 1911. See also editorial comment on the treaties in 5 A. J. I. L. (1911), 1046-1051. A discussion of the treaties by Sec'y of State Knox is contained in his speech before the New York State Bar Association (1912), 311-318. An elaborate explanation and justification of the policy of the United States in negotiating the treaties is to be found in President Roosevelt's message in connection with the customs revenues of the Dominican Republic, Confidential Executive, V, 58th Cong., 3rd sess. See also speeches incident to the visit of Philander C. Knox to the countries of the Caribbean, Feb. 23 to April 17, 1912 (Washington, 1913, ch. III and IV). France has apparently no objection to using its subjects' foreign loans to foster its commercial interests. Speech of M. Pichon, Minister of Foreign Affairs, in the Chamber of Deputies, Jan. 13, 1911, Journal Officiel, Jan. 14, 1911. Notwithstanding the disapproval by the present Administration of "dollar diplomacy”—an ill-defined and much-abused term-as evidenced in the withdrawal from the Chinese loan, the Administration has clearly indicated by the proposed so-called "protectorate" treaty with Nicaragua its necessary interest in the financial stability of the small Latin-American states. The recent threat of Great Britain to dispatch a warship to Guatemala to secure the payment of debts and the resulting appeal of Guatemala to the United States presents a familiar situation in our Latin-American relations. By reason of the Monroe Doctrine, we cannot avoid an active concern in the adjustment of these difficulties, and had better sanction a method of peaceful administrative supervision most conformable to the interests of all parties concerned.

isting evils, except in so far as it protects a debtor state from the immediate use of force. It still permits of much injustice to the debtor nation, inasmuch as claims are still presented on ex parte evidence without a judicial examination of the merits of the case. Experience has shown that claims are generally greatly exaggerated. Again, the creditor's national government is not required to arbitrate. The failure to make or accept the offer of arbitration simply precludes the use of force in first instance, but not the use of other methods of oppression. Experience has shown that it is only against weak states that governments will interpose to secure the payment of contract debts. Moreover, there is a question whether the debtor government can demand arbitration. This should certainly be made possible.

1

On the other hand, the unpaid creditor has no individual right to bring about the adjustment of his claim. The action of his government in his behalf depends upon political considerations and is entirely a matter of expediency and policy. If his government for any reason declines to become interested in his case or to espouse his claim against the foreign government, the creditor is without a remedy. A legal right of the individual may therefore be sacrificed to the political exigencies of his government. With the constant growth of international contractual relations between individuals and foreign governments, the fulfillment and enforcement of legal obligations toward individuals should be divorced from political considerations. The difference in the practice of governments in the support of contract claims gives an unequal advantage to the nationals of some states and correspondingly embarrasses the governments whose policy or practice it is to decline diplomatic pressure in such cases.

These various defects of the system as it still exists, with its possibilities of injustice either to the debtor state or the unpaid creditor, or both, lend much weight to the proposal, advanced with greatest emphasis in Germany, that an international court be created by international agreement for the adjustment of these essentially legal claims. The individual should be given the right to bring suit against the debtor nation before this international tribunal, as has been done in the convention for the establishment of an international prize court and in 1O. Nippold in 18 Ztschr. für internationales privat. u. öffentliches Recht, 260.

the treaty of Washington for the establishment of a Central American Court of Arbitration. The creditor will thus be assured of a hearing, the debtor state will be secured against the pressure of exorbitant claims accompanied by disagreeable diplomatic coercion, the government of the claimant will avoid what is always a potential germ of international difficulty and ill-will, with the incidental expense of pressing a diplomatic claim, and the peace of the world will be fostered by the removal of one great source of international conflict. The details of the organization and operation of 'this international court may be left to the delegates of the Third Hague Peace Conference, who may profitably examine the proposals of several learned Germans.1 The prospect and opportunity for thus advancing the cause of international justice, toward which goal the Porter proposition makes only a slight forward step, must command universal support.

1 See the Denkschrift or memorial of the Ältesten der Kaufmannschaft von Berlin to the Imperial Chancellor, Sept. 30, 1910, reprinted in 20 Niemeyer's Zeitschrift für internationales Recht, 594-599, and the Denkschrift of May 20, 1912, summing up the whole matter, reprinted in Berliner Jahrbuch für Handel and Industrie, 497-514. See also the following works: Freund, G. S., Der Schutz der Gläubiger, Berlin, 1910, §§ 5, 43 et seq.; Wehberg, Hans, Ein internationaler Gerichtshof für Privat-klagen, Berlin, 1911, in which plans for the organization and operation of an international tribunal are carefully worked out. See also Wehberg's article, Die Durchsetzung von Privatansprüchen gegen Schuldnerstaaten, in Jahrbuch f. d. int. Rechtsverkehr, 1912-13, 391-402, and an article in Deutsche Wirtschafts-Zeitung, 1912, 704-710, Zur Errichtung eines internationalen Schiedsgerichtes für Streitigkeiten zwischen Privatpersonen und ausländischen Staaten. See also Fischer, Otto, Die Verfolgung vermögensrechtlicher Ansprüche gegen ausländische Staaten (Leipzig, 1912) and references to the proposals of others mentioned on pp. 15-16; and a further note by Fischer in 43 Ztschr. f. deutschen Zivilprozess, 282-284, and works already cited, Meili, Staatsbankerott, etc., 41, 50, 58, 59 and 63, and Pflug, 58–70.

CHAPTER VIII

INTERNATIONAL RESPONSIBILITY OF THE STATE-ConDENIAL OF JUSTICE

tinued.

§ 127. Meaning of the Term.

In last analysis, a denial of justice is the fundamental basis of an international claim. It connotes some unlawful violation of the rights of an alien. The term, however, is used in two senses. In its broader acceptation it signifies any arbitrary or wrongful conduct on the part of any one of the three departments of government-executive, legislative or judicial. The term includes every positive or negative act of an authority of the government, not redressed by the judiciary, which denies to the alien that protection and lawful treatment to which he is duly entitled. Under the head of aliens, and in the preceding chapters on the responsibility of the state, we have discussed the question of the liability of the government for many of those injuries which may be inflicted on aliens in violation of municipal law, international law, treaties or the ordinary principles of civilized justice. These are denials of justice in the broader sense. For example, a wrongful expulsion, false imprisonment, confiscatory breach of contract, wanton pillage by officered government troops, confiscation of property by legislative act or executive decree, failure to punish a criminal offense, all constitute different forms of denial of justice.

In its narrower and more customary sense the term denotes some misconduct or inaction of the judicial branch of the government by which an alien is denied the benefits of due process of law. It involves, therefore, some violation of rights in the administration of justice, or a wrong perpetrated by the abuse of judicial process. It is in this sense that the term will be considered in the present discussion.1

1 The distinction between the broad and narrow meaning of denial of justice was considered in the case of Fabiani (France) v. Venezuela, Feb. 24, 1891, Moore's Arb. 4878, discussed by R. Floyd Clarke in 1 A. J. I. L. (1907), 389 et seq.