§ 178. Measure of Damages on Claims Arising out of Chinese Revolution of 1911.

It may not be without interest to note the extent of the losses for which indemnities were allowed by the Claims Commission of the Diplomatic Body in Peking passing upon the claims arising out of the Chinese revolution in 1911. Inasmuch as China, a weak country, was presumably given very little opportunity to object to the principles of liability determined upon, it may be assumed that these rules represent the widest measure of damages assessable against a govern

ment.

In the case of merchandise destroyed or looted, the commission agreed that the owner ought to be entitled to compensation equal to the market value of the goods prevailing at the time of loss, or in the case of export goods, to the contract price. In the case of damages caused to foreigners by the destruction, deterioration or loss of property, held by them as security, it was understood that the indemnity payable on that account cannot exceed the amount of the debt for which such security was given. Indemnity was to be allowed for the expenses incurred by foreign municipalities for the protection and defense of their property. In the case of private persons and firms, property losses indemnified included goods, personal effects, money and documents of commercial value, salaries and other payments due under contract to foreigners in Chinese government service or institutions unpaid owing to the Revolution; actual loss for non-fulfillment or delay in execution, owing to the Revolution and through no fault of the foreign claimants, of contracts and other engagements entered into by foreign firms and individuals with the Chinese government, such loss including freight, reshipment, storage, insurance and loss or deterioration of goods; travelling expenses of foreigners in Chinese official service to an adjacent place of safety and return journey, extra living expenses during absence, and rent of houses; deposits of money or investments in Chinese government banks or other government departments, not recovered; actual loss in industrial enterprises, such as damage to and deterioration of machinery and materials, resulting from unavoidable suspension or delay in working owing to local revolutionary disturbances; rents not recoverable and rents paid in advance where occupa

tion and use were actually prevented by military operations or the acts of Chinese soldiers.

Among the elements of injury for which compensation was in principle not allowed were 1, the losses of foreign municipalities arising out of (a) diminution of municipal income; (b) the rents of houses paid in advance where occupation was prevented; and (c) salaries and wages of employees whose services could not be turned to account owing to the Revolution; and 2, the losses of foreign corporations, firms and individuals based upon (a) telegrams and similar charges necessitated by the abnormal state of affairs; (b) prospective profits not realized owing to non-fulfillment or delay in the execution of contracts or other engagements entered into by foreigners with other foreigners or Chinese persons; (c) extra living expenses incurred by foreigners owing to enforced absence from the usual place of residence, and similar expenses incurred on behalf of servants and employees; (d) expenses of removing property to a place of safety and replacing it; (e) expenses incurred for reduction of staff, and extra wages for employees; (f) freight, insurance and storage of stock-in-trade which could not be realized or suffered depreciation and expenses through congestion of stock; (g) interest on capital which could not be utilized owing to the revolutionary troubles; (h) loss of prospective profit owing to partial or wholesale deterioration of stock-in-trade; (i) loss owing to fluctuation of exchange, appreciation or depreciation of market prices and appreciation of freight and transport; (j) additional wages necessitated by the rise in the price of labor. Other claims disallowed were those for principal and interest on provincial loans unpaid, loss owing to inconvertibility or depreciation of Chinese government and provincial bills and paper money attributed to the Revolution, and claims in respect to alleged illegal and unwarranted imposition of taxes during the disturbances. Certain other claims which were considered as possibly not attributable to the Revolution were left open.2

1

1 Cf. American Trading Co. v. Chinese Indemnity Fund (Boxer fund), 47 Ct. Cl. 563, 568.

2 Private correspondence from Peking, China. Cf. the report of the international claims commission passing upon the Boxer claims, Mar. 8, 1901. For. Rel, 1901, App., H. Doc. 1, 57 Cong., 1st sess. 106-108; Leval, op. cit., 110–118; paraphrase in 96

INTEREST

$179. Absence of any Settled Rule of Allowance.

Except in the case of torts based upon injuries to the person, Foreign Offices usually demand interest from the date the claim arose until the date of payment, and international tribunals have often allowed interest, notwithstanding the absence of any settled rule on the question.1 Several commissions, however, have refused to allow interest on the ground that interest is a matter of contract and that in the absence of a provision for interest in the protocol under whose authority the commission operates, interest cannot be allowed to one of the contracting parties against the other.2

Those commissions which have allowed interest have proceeded either under express authority of a protocol, or on the theory that "compensation" includes interest for the improper withholding of satisfaction, either by the failure to make prompt payment of money when due, or the wrongful detention of property.

3

Several commissions have refused interest on the ground that the claimant had been guilty of laches in presenting his claim to the government, or in refusing to accept a voluntary offer of settlement. Numerous commissions, especially in contract cases, have applied the rule that a government is only chargeable with interest from the time a demand of payment has been made, or the government put upon notice of the existence of a claim.4

St. Pap. 1077-78. For the losses excluded from indemnity by the International Claims Com, following the insurrection of 1882 in Egypt, see 74 St. Pap. 1091, 1094.

1 A valuable summary of awards on the question of interest is to be found in Ralston's International arbitral law, 82-87. Ralston presents a list of commissions in which interest has been allowed on awards, and includes the rates of interest. See also Moore's Arb. 4313-4327, in which the opinion of the commissioners under art. VII of the treaty of Nov. 19, 1794 is given. In the Case of the U. S. in claim of Alsop v. Chile, Dec. 1, 1909, point IV, pp. 315–322, the opinions of publicists and the practice of arbitral tribunals in support of the allowance of interest are set forth. See also the valuable opinion of Umpire Plumley in the Motion for Interest claim (Gt. Brit.) v. Venezuela, Feb. 13, 1903, Ralston, 413–423.

2 See Plumley in Motion for Interest opinion, Ralston, 413-423 and authorities there cited. See also Christern (Germany) v. Venezuela, Feb. 13, 1903, Ralston, 525, and Atty-Gen. in Peruvian Indemnity awards, Moore's Arb. 4595.

3 Awards in Ralston's International arbitral law, § 164, p. 84.

4 See Ralston, op. cit., § 168, p. 86, and especially Cervetti (Italy) v. Venezuela,

An exhaustive discussion of the liability of a government to compensatory interest for the failure to fulfill a pecuniary obligation was undertaken by the Hague Court of Arbitration in deciding the claim of Russia against Turkey based upon the non-payment of interest on a certain war indemnity exacted in the treaty of peace between those countries of Jan. 27-Feb. 8, 1879. The tribunal held that even in the absence of an express stipulation, interest is due by international as by municipal law, for the debtor's improper withholding of a debt from his creditor, but that interest runs only from the date when payment is expressly demanded. In view of the fact, however, that for eleven years only the unpaid principal had been demanded by Russia in various extensions of the time of payment, the tribunal drew the legal presumption that Russia had relinquished all claim to interest.1

Interest has been allowed for various periods, beginning sometimes from the date of the original injury, and more often, from the date of notice of the claim, unless otherwise provided by contract. The period during which interest runs has at times been held to terminate at the date of payment of the principal and sometimes at the date when the commission concludes its labors, depending largely upon the jurisdiction of the commission.2 Commissions have refused to compound

interest.3

The rate of interest, when allowed, has generally varied from three to six per cent, although on occasion eight and twelve per cent interest has been granted. There is no settled rule as to the rate of interest,

Feb. 13, 1903, Ralston, 658, 663, and Christern (Germany) v. Venezuela, ibid.

523.

1 Russia v. Turkey, July 22/August 4, 1910, award Nov. 11, 1912; 7 A. J. I. L. 178, 188 et seq. 200. See also Robert Ruzé in 15 R. D. I., 2nd ser. (1913), 351–371. Turkey's contention that states differ from individuals as debtors, in that they are not liable to pay interest on unfulfilled obligations, was expressly denied. By granting an extension of time in the payment of the debt, Russia was held to have released its claim for accrued interest. See also Law Mag. and Rev., Aug., 1914, 464. The

decision appears to have followed the principles of French private law.

2 Ralston, op. cit., §§ 169-171.

3 Ralston, op. cit., § 166.

Eight per cent by the Spanish-American commission of 1871, Moore's Arb. 3763; 12 per cent by the Chinese indemnity domestic commission under treaty of 1858, ibid. 4629. The Boxer Claims Com. of 1900 (For. Rel., 1901, Appendix, 107), allowed 5 per cent on personal, and 7 per cent on commercial claims.

although numerous commissions have adopted the rate prevailing in the place where and at the time when the claim arose.

1 EXTRATERRITORIAL PROTECTION

180. Protection Amounting to Jurisdiction.

The widest range of the protective function is to be found in the exercise of extraterritorial jurisdiction by the countries of European civilization, through their diplomatic and consular representatives, in certain countries of the Orient.2 The exercise of this jurisdiction involves in large degree a withdrawal of the nationals of the countries. enjoying extraterritorial rights from the local jurisdiction of the authorities of the country of residence, and a subjection of these foreigners to the jurisdiction of their own diplomatic and consular officers in certain classes of cases and for certain purposes. These exceptional privileges of foreigners in certain Oriental countries are based either on custom and treaty, as in Turkey, or on treaty alone, as in China. The reason for their exemption from the local jurisdiction is to be found in the diversity of law, custom and social habits of the people of European civilization for whose benefit the extraterritorial privileges were secured. For many purposes, these foreigners are subject to their national law, administered by their own consuls or diplomatic officers.

1 The technical distinction between exterritoriality and extraterritoriality is discussed by Piggott in his work on Exterritoriality (new ed.), London, 1907, p. 3, note. 2 Moore's Dig. II, §§ 259–290; H. Doc. 326, 59th Cong., 2nd sess., 196-247; Hinckley, F. E., American consular jurisdiction in the Orient, Washington, 1906; Brown, Philip M., Foreigners in Turkey; their juridical status, Princeton, 1914; Hall, W. E., Foreign powers and jurisdiction of the British Crown, Oxford, 1894, p. 132 et seq.; Piggott, F., Exterritoriality, new ed., London, 1907; Jenkyns, Henry, British rule and jurisdiction beyond the seas, Oxford, 1902, p. 150 et seq.; Arminjon, P., Étrangers et protégés dans l'Empire Ottoman, Paris, 1903; Lippmann, K., Die Konsularjurisdiktion im Orient, Leipzig, 1898; Pelissié du Rausas, G., Le régime des capitulations dans l'Empire Ottoman, 2nd ed., Paris, 1910, introduction to v. 1; Rey, F., La protection diplomatique et consulaire dans les Echelles du Levant, Paris, 1899.

3 See Act of August 11, 1848, 9 Stat. L. 276 and particularly R. S., §§ 4083-4130; see also Act of June 30, 1906, 34 Stat. L. 814, creating U. S. court for China; Hinckley, p. 41 and Appendix I-III; H. Doc. 326, 59th Cong., 2nd sess., 216-246, contains treaties, statutes and regulations relating to extraterritorial jurisdiction of the United States.