CHAPTER IV

DISTRIBUTION OF AWARDS AND INDEMNITIES

§ 150. Two Stages of the Proceedings; the International and the Municipal.

In the procedure for the adjustment of an international claim arising out of injuries sustained by a citizen there are two distinct stages, the international and the municipal. The former constitutes an appeal by nation to nation, and both in the case of international arbitration and purely diplomatic adjustment, consists in the determination of the validity and amount of the claim as between sovereigns. These are matters of international law. When the government assumes the obligation of paying the claims of its citizens upon foreign nations, referring the determination of the merits of the claims to a domestic court or commission, the legal questions involved are likewise decided according to the principles of international law.

The distribution of the award by the claimant state and the determination of questions relating to the private ownership of the award constitute the second stage of the proceedings. These are matters to be decided according to the municipal law of the claimant country, whether the award is made in a lump sum for a group of claims,1 or in a specific amount for the liquidation of an individual claim. The protocol or treaty creating the international commission or the statute

1 In such cases, the claimant government usually creates a domestic commission for the determination of individual claims upon the lump sum. See, e. g., Act of July 13, 1832 (4 Stat. L. 574) for commission under treaty with France of July 4, 1831; Act of March 3, 1859 (11 Stat. L. 408), for distribution of Chinese indemnity under treaty of Nov. 8, 1858. Act of June 23, 1874 (18 Stat. L. 245), creating court for distribution of Alabama award. See Comegys v. Vasse, 1 Pet. 193 and Sheppard v. Taylor, 5 Pet. 710, under treaty of 1819 with Spain, and Frevall v. Bache, 14 Pet. 95, under treaty of 1831 with France. A number of cases dealing with the ownership of claims as between private parties are listed in the Opinion of J. Reuben Clark, Jr., Solicitor, In re Distribution of Alsop award (1912), pp. 28-30.

creating the domestic commission usually provides the extent of the tribunal's jurisdiction.1

The question has occasionally arisen as to whether the award of an international commission is final as between the prosecuting government and the successful claimant in whose behalf the claim was presented. The control of the government over an award in all matters affecting its integrity, is well established. The fact that municipal courts have sustained the right of the government to set aside the award for fraud or other good reason, leaving the claimant without judicial remedy against the act of the government, proves clearly that as between the citizen and his own government the award of an international commission is not final.2 Nor, as will be noted presently, has the individual any title, legal or equitable, in an award or diplomatic settlement made in his behalf. On the other hand, as between the two governments, the decision of an arbitral tribunal in the case of a single or a collective award is final as to the validity and amount of the claim, although the two governments may, by agreement, set the award aside without consulting the individual claimant. It has even been held that the decisions of domestic commissions created by Congress to distribute a collective award to the entitled claimants, are final and conclusive as to the validity and amount of the claims, but not as to the ownership of the amounts as between conflicting claimants, who are left to resort to the ordinary courts.1

1 Opinion of J. Reuben Clark, Jr., Solicitor, In re Distribution of Alsop award, p. 15.

2 U. S. v. La Abra Silver Mining Co., 29 Ct. Cl. 432; Boynton v. Blaine, 139 U. S. 306; La Abra Silver Min. Co. v. U. S., 175 U. S. 423. See, however, the opinion of Hoar, Atty. Gen., in Gibbes' case (13 Op. 19) in which he considered that an award gave the claimant a right which could not be divested by the government by resubmitting the claim to a new commission. This opinion is contrary to the general rule, and is not considered good law.

› Frelinghuysen v. Key, 110 U. S. 63; La Ninfa, 75 Fed. 513, Moore's Dig. VII, § 1081. Certain awards of the 1857 U. S.-Colombian commission were set aside and resubmitted to the 1864 commission. The Orinoco Steamship Co. award of Umpire Barge was opened and the case resubmitted to the Hague Court, 1909-1910. Contra to the rule of the text, Atty. Gen. Hoar's dictum in 13 Op. 19.

'Comegys v. Vasse, 1 Pet. 193, 212; Frevall v. Bache, 14 Pet. 95; Phelps v. Mc

In the Caldera cases, it was held by the Court of Claims and affirmed by the Supreme Court,1 that this government having diplomatically asserted a claim against China to be valid, a domestic commission or court authorized to pass upon the claim is constrained to regard it, as between this government and the claimants, as a legitimate international claim. This decision constituted the basis for the contention of several claimants before the Spanish Treaty Claims Commission to the effect that the government, having supported a claim for a certain indemnity against Spain, the Commission was bound to consider the claim as valid and to hold the United States under an obligation to pay the indemnity claimed out of the sum set aside by the treaty for the payment of claims.2 This argument appears to have been rejected by the Commission.3

§ 152. Award or Indemnity a National Fund, Free from Individual Lien.

It has already been observed that in the prosecution of an international reclamation the government has complete control of the claim and may settle it in such manner as in its opinion may best subserve the public interests. Not being the representative or agent of the individual injured, it need not necessarily, although it does usually, demand a pecuniary indemnity. To this indemnity, when collected, the individual has no legal right, because international responsibility is a relation between states only. The indirect effect of such responsibility is usually, however, the indemnification of the injured individual, not in virtue of any enforceable right or lien upon the fund, but because, first, the receiving state may be bound by agreement toward

Donald, 99 U. S. 298; Williams v. Heard, 140 U. S. 529. See also as to finality of decisions of domestic commissions, Meade v. U. S., 9 Wall. 691; In re Atocha, 17 Wall. 439. The Department of State, however, altered many awards of the Board passing on Boxer claims against China, particularly in death claims. The Department probably has the same right to open the awards of the Board passing on the 1911 Revolutionary Claims against China. These boards were appointed or their American members named by the Department and not by Congress.

115 Ct. Cl. 546; 16 Ct. Cl. 635.

Argument of John G. Carlisle in the Rosario Sugar Co. case, No. 341.

Opinions of the Commissioners filed Dec. 5, 1903, p. 85. See also the dissenting opinion of Davis, J., in Hubbell v. U. S., 15 Ct. Cl. 546, 600.

the state making reparation to devote the sum to the indemnification of its injured citizen,' or else, secondly, because the receiving state may carry out its moral obligation to bestow the fund upon the citizen whose injury initiated the international claim. Technically, of course, all claims urged by one state upon another are national. It is obvious, however, that there is a distinction between claims founded upon an injury to the people or the country as a whole and those founded upon injury to particular citizens.2 It is this distinction which creates the moral obligation in the second case.

§ 153. Nature of Individual Claimant's Title to Fund.

3

As a matter of law, the indemnity which passes between governments in liquidation of claims arising out of injuries inflicted upon individuals is a national fund free from any lien or trust in favor of any particular individual. The government may, as has been seen, waive the payment of an unconscionable award, withhold an indemnity pending an investigation into the bona fides of the claim or claimant, and if convinced of the defective right of either, return to the foreign nation an indemnity already paid. This control over the fund by the execu

1 If bound by a treaty to distribute an award, the government may be considered legally bound, inasmuch as, under our system, a treaty is the law of the land. In this connection, the government's control over the distribution of an award is illustrated by the treaty of Nov. 25, 1899 between Italy and Peru for the settlement of Italian claims arising out of the Civil War of 1894-1895, in which Italy reserves the right (art. 8) of giving preference in the distribution of awards to those of its claimants who are most needy. Descamps and Renault, Rec. int. des traités du xx siècle, I, 709.

2 See Gray v. U. S., Act of Jan. 20, 1885, 21 Ct. Cl. 340.

3 Williams v. Heard, 140 U. S. 529; U. S. v. Weld, 127 U. S. 51; Great Western Ins. Co. v. U. S., 19 Ct. Cl. 206, 217; Rustomjee v. The Queen, 1 Q. B. D. 489; 2 ibid. 69; Mr. Olney, Sec'y of State, to the Attorney General, Oct. 2, 1895, Moore's Dig. VI, 1034. But see dicta in Comegys v. Vasse, 1 Peters, 193 and the Act of Parliament, Aug. 2, 1875 (In re distribution of awards of British-American commission of 1871, which provided that the sums be turned over to the High Court of Chancery as trustees for the persons entitled thereto. 66 St. Pap. 240). The Act of Feb. 27, 1896 (29 Stat. L. 32) states, however, that "all moneys received by the Secretary of State from foreign governments and other sources, in trust for citizens of the United States or others, shall be deposited and covered into the Treasury." This Act is discussed infra, § 155.

4 Supra, p. 374. The government, on receipt of lump sums in settlement of claims,

tive or by the legislative branch of the government is free from interference by the courts, either by mandamus,1 upon the petition of interested claimants, or otherwise. Although the individual claimant, therefore, whether in case of a single claim, or a group of claims for which a lump sum is received-has no strict legal or equitable right to the indemnity, its distribution by the government is not a gift to the individual claimant, who may be said to have at least "an expectancy of interest in the fund" 3 and a moral right to receive the benefits of an indemnity collected in his behalf. He has a right of property in the claim and the corresponding indemnity, notwithstanding the fact that it may be unenforceable in law until the government makes it so.4

2

§ 154. Its Distribution a Matter of Executive or Congressional Discretion, Free from Judicial Control.

The indemnity fund having been received by the government may be apportioned and distributed among the various claimants as the Executive or Congress deems proper. The distribution is usually made by the Secretary of State without any special legislative authority, under the general powers possessed by him through the President may return sums in excess of losses actually sustained, e. g., The Chinese Indemnity of 1858 and 1901 and the Japanese Indemnity of 1864, supra, p. 375.

1 Frelinghuysen v. Key, 110 U. S. 63; Boynton v. Blaine, 139 U. S. 306, 323; La Abra Silver Mining Co. v. U. S., 175 U. S. 423.

2 Several state courts erroneously so held in the case of the distribution of the Alabama award (see the summary of the decisions of these courts in 5 Harvard Law Rev., 1891, 204-205). The Supreme Court in Williams v. Heard, 140 U. S. 529, reversed these decisions. See also Comegys v. Vasse, 1 Peters, 193 and Phelps v. McDonald, 99 U. S. 297. But in Blagge v. Balch, 162 U. S. 439, the Supreme Court distinguished Williams v. Heard and Comegys v. Vasse and held that the Act of Congress making appropriations for the payment of French Spoliation Claims (released to France for a consideration, compensation therefor being granted by Congress) was to be regarded as a gratuity to claimants, and not a matter of right. See also Emerson v. Hall, 13 Pet. 409. Probably the clearest statement of the claimant's relationship to the international award and to the fund received in payment thereof is set forth in Williams v. Heard, 140 U. S. 529.

'Williams v. Heard, 140 U. S. 529.

4 Comegys v. Vasse, 1 Pet. 193. To effect that claimant's interest may be bought and sold, assigned, devised and pass to legal representatives, see also Williams v. Heard, 140 U. S. 529 and Porter v. White, 127 U. S. 235; to effect that it constitutes a chose in action, Judson v. Corcoran, 17 How. 612.