unduly delay justice, in which event the government's right of interposition rests on the denial of justice alone and disregards the fact that the claim had its origin in a contract. This rule has generally been followed by the governments of contracting citizens, and has been applied by international commissions.1

CONTRACTS BETWEEN CITIZEN AND FOREIGN GOVERNMENT

§ 112. Formal Interposition not Customary.

A more doubtful case arises where the contract has been concluded between the citizen and the foreign government. It is not proposed here to discuss the question of unpaid bonds, for this is a distinct branch of the subject, although some writers do not observe it as such. The contracts now in question are such as are made with the foreign government for the supply of material, for the execution of public works, or for the exercise of concessions of various kinds. Here again the general rule followed by the United States, although not by all other governments, is that a contract claim cannot give rise to the diplomatic interposition of the government unless, after an exhaustion of local remedies, there has been a denial of justice, or some flagrant violation of international law. The use of good offices is, however, usually sanctioned. While the rule is fairly clear, its application and its exceptions are vague, due principally to the fact that the intervening government interprets for itself what is a denial of justice and frequently concludes that harsh treatment of its contracting citizen by the foreign government constitutes a tortious act which takes the case out of the ordinary rule. Broadly speaking, we might state the rule as follows: Diplomatic interposition will not lie for the natural or anticipated consequences of the contractual relation, but only for arbitrary incidents or results, such as a denial of justice or flagrant violation of local or international law.2

1 Smith (U. S.) v. Mexico, Act of Congress, Mar. 3, 1849, Moore's Arb. 3456; Rowland (U.S.) v. Mexico, Mar. 3, 1849, Moore's Arb. 3458; Hayes (U. S.) v. Mexico, Mar. 3, 1849, Moore's Arb. 3456; Chase (U. S.) v. Mexico, Moore's Arb. 3469-70; La Guaira Light & Power Co. (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 182.

2 F. de Martens, in his essay "Par la justice vers la paix" (pp. 30-31), supports the rule of non-interference by the government until the claimant has appealed to the local courts and justice has been denied. Even then he suggests a preliminary judicial examination into the justice of the claim by the government of the claimant.

There are several reasons why governments are and should be less zealous in pressing the claims of their citizens arising out of breach of contract than those arising out of some tortious act. The first reason is that the citizen entering into a contract does so voluntarily and takes into account the probabilities and possibilities of performance by the foreign government. He has in contemplation all the ordinary risks which attend the execution of the contract. In the second place, by going abroad, he submits impliedly to the local law and the local judicial system. The contract or the law provides remedies for breach of contract. These he must pursue before his own government can become interested in his case. In the third place, practically every civilized state may be sued for breach of contract. Even the United States, which renders itself less amenable to suit at the hands of injured individuals than perhaps any other country, recognizes its liability for illegal breaches of contract. In England, a petition of right is rarely refused; in the United States, the Court of Claims, or a similar body in most of the states, has jurisdiction; in France and some other countries, the Council of State or some administrative body is the proper forum for suits against the state; in Latin-America, the Supreme Court is generally given jurisdiction.

The exceptions to this requirement of exhausting local remedies occur first, where the local judicial organization is so corrupt, or the possibility of local remedy so remote, that it would be folly to compel a citizen to submit his cause of action to local courts. The fact that the protecting government determines for itself the existence of these qualifying conditions renders the application of the rule uncertain. Secondly, where the breach is one not within the contemplation of the contracting parties, but partakes of the nature of an arbitrary tort, the protecting government will relieve its citizen from the ordinary rule of submission to local courts. The position of the injured individual and the protecting government is the same as in cases of ordinary tortious acts of the defendant government and justifies interposition. See also Martens' Traité de droit international, vol. I, 446-447. See also Fiore, P., Nouveau droit int. public (Paris, 1885, Antoine's trans.), § 651; Lomonaco, Diritto internazionale pubblico (Napoli, 1905), 218-219.

1 Revised Statutes, § 1059, par. 1; § 1060; § 1068; Act of March 3, 1887 (Tucker Act), 24 Stat. L., 505, § 1.

The early publicists seem to have justified reprisals by a government for default of obligations due its citizens on the part of another government. Grotius appears to have sanctioned reprisals for the collection of debts due to subjects from a foreign power, notwithstanding the fact that the claim to be thus satisfied had been submitted to the courts of the government in default and by them pronounced unfounded.1 Vattel similarly justified hostile action to enforce contracts concluded between a citizen and a foreign government. But Vattel admits that before the claimant nation proceeds to such extremities (reprisals) it must be able to show that it

"has ineffectually demanded justice, or at least that [the claimant] has every reason to think it would be vain to demand it." 2

From that time on, the conviction has gained ground that an attempt to exhaust local justice must be shown before diplomatic pressure or hostile action is warranted. Modern writers generally agree that where the citizen has at his disposal the legal means of asserting his rights and obtaining reparation of his injury by judicial proceedings, the interposition of his government is unjustified, for

"to secure by diplomacy what the individual might secure judicially is to be deemed highly reprehensible." "

As will be noted, contractual claims are among the first causes of complaint now largely removed from the field of armed conflict, through the adoption by the Second Hague Conference and the general ratification of the convention for the limitation-better, postponement of the use of force to recover contract debts.

Coming now to the practice of governments, it cannot be said that the countries of continental Europe make any substantial distinction. between claims arising out of contract and those arising out of other acts. The United States, however, and at times Great Britain, have

4

1 Grotius, De jure belli ac pacis, 3, 2, 5; cf. 1, 5, 2 and 2, 25, 1.

2 Vattel, Law of nations (Chitty-Ingraham edition, Phila., 1855), Bk. II, ch. 18, §§ 343, 347, 354; ch. 14, §§ 214-216. See also Wheaton (Lawrence's edition, 1863),

510.

3 3 Fiore, P., Nouveau droit international public (Antoine's trans.), I, § 651. Martens, Traité de droit international, 446.

4 Germany, Italy and France have at times intervened diplomatically in favor of

limited their protection considerably in the case of ordinary contract claims. The fact that the citizen entered voluntarily into the contract seems to have been a determining factor in the policy of the United States not to interpose diplomatically in behalf of its citizens prejudiced through breach of a contract concluded by them with a foreign government. John Quincy Adams' declaration as Secretary of State has been quoted frequently by his successors in the Department of State. Adams' ruling was as follows:

"With regard to the contracts of an individual born in one country with the government of another, most especially when the individual contracting is domiciliated in the country with whose government he contracts, and formed the contract voluntarily, for his own private emolument and without the privity of the nation under whose protection he has been born, he has no claim whatsoever to call upon the government of his nativity to espouse his claim, this government having no right to compel that with which he voluntarily contracted to the performance of that contract." 1

Mr. Marcy in 1856 made the following apt statement of the rule of the Department of State:

"The government of the United States is not bound to interfere to secure the fulfillment of contracts made between their citizens and foreign governments, it being presumed that before entering into such contracts the disposition and ability of the foreign power to perform its obligations was examined, and the risk of failure taken into consideration.":

their subjects in cases arising out of contract, without any question as to the propriety of such action. Germany's and Italy's attitude was shown in the action against Venezuela in 1902, although claims, other than contractual, were included in the causes of complaint. See Dulon in 38 Amer. Law Rev. 650, and Brook in 30 Law Mag. & Rev. 165. See also case of Kronsberg, a German engineer, against Roumania in 1871, Tchernoff, Protection des nationaux à l'étranger, 188; Martens' Traité, I, 70.* See the French action against the Dominican Republic, 1894, For. Rel., 1895, I, 235-243, 397-402.

1 John Quincy Adams, Secretary of State, to Mr. Salmon, April 29, 1823, Am. St. Pap., For. Rel., Vol. 5, 403, quoted in Wharton, II, 654, Moore's Dig. VI, 708, and notes there cited. See also the Landreau case, Sec'y of State Bayard to Mr. Cowie, June 15, 1885, Moore's Dig. VI, 715; and the Fiedler case, Mr. Bayard, Sec'y of State, to Mr. Jarvis, Mar. 22, 1886, Moore's Dig. VI, 715.

Mr. Marcy, Sec'y of State, to Mr. Fowler, July 17, 1856, Wharton, II, 655. To the effect that the government is not a collecting agency for claims for services rendered to foreign governments, see Seely's case (services as legal counsel), 6 Op. Atty. Gen.

$113. Use of Good Offices Authorized.

While diplomatic interposition or pressure is declined, the use of friendly good offices by the diplomatic representatives of the United States abroad is authorized. Secretary Fish expressed as follows the practice of the Department in this respect:

"Our long-settled policy and practice has been to decline the formal intervention of the government except in cases of wrong and injury to persons and property, such as the common law denominated torts and regards as inflicted by force, and not the results of voluntary engagements or contracts.

"In cases founded upon contract the practice of this government is to confine itself to allowing its minister to exert his friendly good offices in recommending the claim to the equitable consideration of the debtor without committing his own government to any ulterior proceedings." 1

What is meant by "good offices" and the extent to which they may be exerted has on several occasions been construed by secretaries of State. Mr. Fish defined the use of "good offices" as a direction to a diplomatic agent

"to investigate the subject, and if [he] shall find the facts as represented [he] will seek an interview with the minister for foreign affairs and request such explanations as it may be in his power to afford." 2

Good offices are in the nature of unofficial personal recommendations and are not tendered officially, although apparently the government may authorize or direct a diplomatic representative to extend them. Perhaps the best statement of the practice of the United States in the matter of contract claims was made by Secretary Bayard in 1885:

"It is not necessary to remind you that an appeal by one sovereign on behalf of a subject to obtain from another sovereign the payment 386 (March 17, 1854). See also dictum in 108 U. S. 90. Contrary to an almost absolute rule, the Department of State allowed the claim of General Frederick Ward for military services rendered to China, out of the Boxer Indemnity, although various administrations had declined to press the claim (For. Rel., 1888, I, 199).

1 Mr. Fish, Sec'y of State, to Mr. Muller, May 16, 1871, Wharton, II, 656, Moore's Dig. VI, 710. See the long list of cases cited by Wharton, II, 655, and by Moore, VI, 705-707, in support of the rule that it is not usual for the Government of the United States to interfere, except by its good offices, for the prosecution of claims founded on contracts with foreign governments."

2 Mr. Fish, Sec'y of State, to Mr. Osborn, Mar. 4, 1876, Wharton, II, 658; Moore's Dig. VI, 711.