tion under the stipulation, and eleven have denied the validity of the clause as barring the right of the claimant, or of his government, to bring the claim before an international commission, in spite of the fact that the obligation of the stipulation had not been fulfilled. One tendency is noticeable throughout. The commissions generally have sought to find a ground on which they could relieve the claimant from the binding character of the obligation contained in the clause.

§ 376. The Validity of Calvo Clause Upheld.

Two of the earliest cases in which the clause was construed came before the United States-Venezuelan commission of 1885. The contract in the case of Day and Garrison 1 provided for private arbitration of disputes under it and precluded by renunciation any international claim. The contracts were held invalid, but Findlay, the American commissioner, upheld the renunciatory clause on the ground that the provision for settlement by arbitration was "inconsistent with any attempt to make [disputes] cause for an international claim on any pretext whatever"-this in spite of the fact that the contracts had been annulled by a decree of Venezuela, which Commissioner Little, in a dissenting opinion, held to have closed the door to arbitration and therefore to bar the defendant from setting up the renunciation of national protection.

In the Flannagan case before the same commission,2 Commissioner Findlay, for the commission, held the claimant bound by the stipulation for exclusive local jurisdiction, but expressed serious doubt as to whether the decisions of the local courts would stand free from international claim in case of a denial of justice. The dissenting opinion of Commissioner Little in that case 3 has since become the starting point for the decisions of subsequent commissions denying the binding character of the clause in case of a subsequent agreement

1 Day and Garrison (U. S.) v. Venezuela, Dec. 5, 1885, Moore's Arb. 3548, 3563–64 (dictum only). The umpire of the 1866 commission had held that the decree annulling the provision as to arbitration, revived claimant's right to make the contract the subject of an international claim, in spite of the stipulation. Moore's Arb. 3563.

2 Flannagan, Bradley, Clark & Co. (U. S.) v. Venezuela, Dec. 5, 1885, Moore's Arb. 3564, 3565.

3 Moore's Arb. 3566; Report of the Commission, Washington, 1890, p. 451, Ralston, International arbitral law and procedure, Boston, 1910, p. 36.

by the two nations to submit the question to arbitration. A portion of his opinion on this point may be quoted:

"An agreement in my judgment between the United States and Venezuela to submit its claims to a Mixed Commission for decision according to justice, superseded and took the place of any previous understanding between the latter and the claimants, if any binding one existed, to submit them to any other tribunal for determination. . . . A contract between a sovereign and a citizen of a foreign country not to make matters of difference or dispute . . . the subject of an international claim . . . would involve pro tanto a modification or suspension of the public law. . . ."

which he considered beyond the competence of any individual. His government's

'rights and obligations in the premises cannot be affected by any precedent agreement to which it is not a party. Its obligation to protect its own citizen is inalienable."

In 1900 Secretary of State Hay declined to present the claim again to the government of Venezuela "until there has been a compliance with the aforesaid stipulation, resulting in a denial of justice." The claim was, however, brought before the Venezuelan commission of 1903 in the Woodruff case.2

This was the first of four decisions in which the umpire, Dr. Barge of Holland, had an opportunity to construe the effect and validity of the renunciatory clause under protocols essentially the same, and in which his decisions varied to such an extent as completely to obscure the law. In this Woodruff case, Bainbridge, the American commissioner, approved the opinion of Mr. Little, quoted above in the Flannagan case. The Venezuelan commissioner, Paul, considered, as Commissioner Findlay had done in the 1885 commission, that the Calvo clause withdrew the claim from the jurisdiction of the commission. The umpire, Dr. Barge, held that the failure to comply with the stipulation conferring exclusive jurisdiction on the local courts barred the right of the claimant to appear before the commission, although, he added, the citizen could not impede the right of his government to bring an international claim, in case of denial or undue delay of justice. 1 Mr. Hay, Sec'y of State, to Mr. Woodruff, Nov. 28, 1900, Moore's Dig. VI, 301. 2 Woodruff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 151, 160.

In the Rudloff case,1 which was then pending before the local courts but had not yet been decided, Umpire Barge held that the stipulation for exclusive jurisdiction in the local courts did not prevent the commission from exercising jurisdiction, on the ground that the "absolute equity" clause 2 gave the commission the right to determine whether such stipulation operated inequitably. He considered that it did so operate and entertained jurisdiction, after doing which, he said, he could decide whether the failure to submit the case to the local courts affected the claim with a vitium proprium.

In the Orinoco Steamship case,3 Barge again held, after finding that the particular question under discussion was a "dispute" and that the rule of absolute equity could not permit the same contract being made "a chain for one party and a screw press for the other," that the parties having selected their own judges and renounced international reclamation, "absolute equity" did not allow the commission to recognize the claim.

In the Turnbull case,4 Umpire Barge made the most sweeping decision of all. He held that where the parties had "deliberately contracted themselves out of any interpretation of the contract" except by certain designated judges, and no such submission to or decision of these judges awarding damages had taken place, an international commission is precluded from taking jurisdiction of the claim. Mr. Moore pertinently remarks:

"It may be superfluous to remark that, according to this view, there can be no room whatever for international action, in diplomatic, arbitral, or other form, where the renunciatory clause exists, unless indeed to secure the execution of the judgment of a local court favorable to the claimant; for, if the parties have 'no right to claim' damages which the local courts have not found to be due, it is obvious that international action of any kind would be as inadmissible where there had been an adverse judgment, no matter how unjust it might be, as where there had been no judgment whatever."5

1 Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 182, 193.

This clause reads: "The commissioners, or in case of their disagreement, the umpire, shall decide all claims upon a basis of absolute equity, without regard to objections of a technical nature, or of the provisions of local legislation."

3 Orinoco Steamship Co. (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 72, 91–92. Turnbull (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 200, 245.

5 Moore's Dig. VI, 307. A good summary of the fluctuating position taken by

The binding character of the clause was upheld by the Anglo-Chilean commission of 1893 in the case of the Nitrate Railway Company,1 in which it was held that the claimant had voluntarily accepted the concession and could agree to such stipulations as he desired; that the granting government in giving concessions, had the right to place foreigners on the same basis as its nationals; and that there is no principle of international law which forbids citizens to agree personally to contracts renouncing diplomatic action, although the stipulation, they added, does not "obligate foreign governments." That is, while his government may not be bound by the renunciatory clause, the citizen is, and the claim was dismissed.2

Plumley, umpire of the French-Venezuelan commission of 1902,3 stated that "he could not entirely ignore the restrictive features of the contract." He gave it partial effect, although evidently consciously restricting it to its narrowest limits, by stating that the question of damages under the operation of the contract is ulterior to the contract itself, and the renunciatory clause is inapplicable, covering, as it does, only the question of rescission. Paul, the Venezuelan commissioner in the Kunhardt case, upheld the validity of the clause although his conclusion to this effect was not involved in the final judgment.

Commissioner Wadsworth, speaking for the commission in the Tehuantepec ship canal case 5 held that a stipulation to refer questions arising under the contract to private arbitration must be complied with in order to give an international commission jurisdiction over the case.

Umpire Barge in the interpretation of the renunciatory clause is given in Senate Document 413, 60th Cong., 1st sess. (1908), Correspondence relating to wrongs done to American citizens by the government of Venezuela, pp. 79-84.

1 Nitrate Railway Company, Lim. (U. S.), v. Chile, Reclamaciones presentados al Tribunal Anglo-Chileno, Santiago, 1894-96, II, 320 et seq., cited in Ralston's International arbitral law, 41.

2 This is somewhat analogous to Umpire Barge's conclusions in the Woodruff case, Ralston, 160.

3 Plumley, Umpire in the French-Venezuelan Mixed Claims Commission of 1902, Senate Document, 533, 59th Cong., 1st sess. (1906), 367, at p. 445.

Kunhardt (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 63, 70 (dictum).

Tehuantepec Ship Canal Co. (U. S.) v. Mex., July 4, 1868, Moore's Arb. 3132

§ 377. The Validity of Calvo Clause Denied.

In the several international claims cases in which the binding character of the renunciatory clause has been denied and the claimant relieved from its inhibitions, there is evident an attempt to limit its application and to find grounds for denying its validity as a bar to an international claim. The grounds taken by international commissions to uphold the claimant's right to appeal to the international forum in spite of the renunciatory clause have been three: first, that it is beyond the competence of an individual to contract away the superior right of his government to protect him, as in the Rudloff and Martini cases before the Venezuelan Commissions of 1903; secondly, in cases where the government had annulled the contract without first appealing to the local courts, that such action relieves the claimant from the stipulation not to make the contract a subject of international claim, as in the Milligan case against Peru and the North and South American Construction Co. case against Chile; thirdly, wherever possible, the courts try to find that the claim arises not out of the contract itself, but out of some violation of property rights, thus basing the claim on tort, as in the Selwyn and the Rudloff cases.

It may be profitable to examine the cases somewhat more closely. The principle laid down in the Martini case and the learned opinion of Umpire Ralston is considered good law.1

"The right of a sovereign power to enter into an agreement of this kind" (to submit to a mixed commission the claims of its citizens against another government) "is entirely superior to that of the subject to contract it away. It was, in the judgment of the umpire, entirely beyond the power of an Italian subject to extinguish the superior right of his nation, and it is not to be presumed that Venezuela understood that he had done so."

So in the Rudloff 2 case, Bainbridge, the American commissioner, said:

1 Martini (Italy) v. Venezuela, Feb. 13, 1903, Ralston, 819-841. The opinion on this point seems to be dictum, inasmuch as the umpire decided that damages were due because of the closing of a port in violation of the contract and that the dispute was not within the terms "doubts and controversies which may arise in the interpretation or execution of the contract."

2 Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 183, 187. The opinion by Bainbridge on the question of jurisdiction is not the opinion of the commission,