of a debt alleged to be due such subject is the exercise of a very delicate and peculiar prerogative, which, by principles definitely settled in this Department, is placed under the following limitations:

"1. All that our government undertakes, when the claim is merely contractual, is to interpose its good offices; in other words, to ask the attention of the foreign sovereign to the claim; and this is only done when the claim is one susceptible of strong and clear proof.

"2. If the sovereign appealed to denies the validity of the claim or refuses its payment, the matter drops, since it is not consistent with the dignity of the United States to press, after such a refusal or denial, a contractual claim for the repudiation of which there is by the law of nations no redress.

"3. When the alleged debtor sovereign declares that his courts are open to the pursuit of the claim, this by itself is a ground for a refusal to interpose. Since the establishment of the Court of Claims, for instance, the government of the United States remands all claims held abroad, as well as at home, to the action of that court, and declines to accept for its executive department cognizance of matters which by its own system it assigns to the judiciary.

"4. When this Department has been appealed to for diplomatic intervention of this class, and this intervention is refused, this refusal is regarded as final unless after-discovered evidence be presented which, under the ordinary rules applied by the courts in motions for a new trial, ought to change the result or unless fraud be shown in the concoction of the decision." 1

Even good offices will, however, be refused

"when the debt was of a speculative character, or when it was incurred to aid the debtor government to make war on a country with which the United States was at peace." 2

From this it may be inferred that the Department of State takes some official interest in the extension of good offices.

The United States will not promise protection in advance to secure the execution of a contract between a citizen and a foreign government. The American-China Development Company in entering upon contracts with China requested such advance protection and alleged that the English investors in their enterprise would receive such guaranty from the British Foreign Office. Secretary of State Day gave as the reason for his unwillingness to extend such a guaranty as the British 1 Mr. Bayard, Sec'y of State, to Mr. Bispham, June 24, 1885, Wharton, II, 656; Moore's Dig. VI, 716.

Mr. Seward, Sec'y of State, to Messrs. Leavitt & Co., May 6, 1868, Wharton, II, 656; Moore's Dig. VI, 710.

government was said to have extended, that the British Crown, exercising the executive power in Great Britain, possesses both the warmaking and the treaty-making power, and is therefore authorized, in international relations, to give guarantees and enter into engagements which the Executive of the United States would not alone be competent to assume.1

Secretary Marcy in 1855 gave a somewhat similar explanation for the unwillingness of the United States to interfere officially in a case of alleged breach by a foreign government of a contract with citizens of the United States.2 The possibility of Congress declining to support the action of the Executive does not, however, appear to have been as prominently in the minds of other secretaries of State in dealing with international claims. While the Department of State will rarely protest in advance against a proposed law of a foreign country interfering merely with contractual rights of American citizens, there have been occasions where such action was taken.3

The general belief that Great Britain does not in practice interfere in claims arising out of contract, is erroneously based upon the frequently quoted circular of Lord Palmerston, Secretary of State for Foreign Affairs, directed in 1848 to the British representatives in foreign states. Palmerston declared that while the government had the right to intervene, it was merely a question of discretion with the British government whether the pecuniary claims of subjects should be taken up or not by diplomatic negotiation, and "the decision of that question of discretion turns entirely upon British and domestic considerations." 5 This language is broad enough, indeed, to cover any class of claim, but 1 Sec'y of State Day to Messrs. Cary & Whitridge, Aug. 24, 1898, in the case of the American-China Development Co., Moore's Dig. VI, 288.

2 Mr. Marcy, Sec'y of State, to Mr. Clay, Minister to Peru, May 24, 1855, Moore's Dig. VI, 709.

Mr. Webster, Sec'y of State, to Mr. Letcher, Aug. 24, 1850, protesting against any violation, by decree, of the Tehuantepec concession, adding that this would be regarded as a national grievance. Sen. Doc. 97, 32nd Cong., 1st sess.

4 The instruction in full is printed in Phillimore, 3rd ed., London, 1882, II, 9-11. In fact, Great Britain has often interposed to redress breaches of private contract. See, for example, the intervention in Bolivia in 1853, Lord Clarendon to Mr. Lloyd, 56 St. Pap. 1003, and the criticism of Great Britain's action by Baty, Int. law, 127. Great Britain freely extends good offices. See, for example, case of Dixon v. Portugal, 75 St. Pap. 1196.

it must be understood that Palmerston's ruling was made with reference to claims arising out of unpaid bonds of foreign states held by British subjects, a case in which formal interposition is for various reasons, as will be shown, even less justifiable than in the case of ordinary contracts.

§ 114. Qualifications of General Rule of Non-Interposition.

In applying the rule of refusing diplomatic interposition in contract claims, the United States has always been careful to limit its strict interpretation to cases entirely free from the qualifying factors of a denial of justice or other tortious element. If in any respect a denial of justice could be discerned in the case, or if any arbitrary act or confiscatory breach of the contract had taken place, the rule has been considered as no longer applying. A brief enumeration of these exceptions to the rule may be of interest.

1. The United States has on several occasions insisted that its citizens entering into foreign contracts shall have free and fair access to the courts and that the courts shall be so organized that the dispensing of justice may be presumed. Secretary of State Evarts once said that when a government does not hold itself amenable to judicial suit by foreign claimants on contracts made with it, their claims may be held to form an exception to the general rule as to contracts,1 and in a subsequent case in Haiti, the Lazare case, Mr. Evarts added:

"the Government of the United States will insist on fair and impartial examination and adjudication by Haiti, without discrimination as to nationality, of a contractual claim of a citizen of the United States against Haiti.2

Mr. Bayard in stating the general rule of refusal to press contract claims excepted the case of discrimination against a citizen by the debtor government and a denial of a judicial remedy against it.3 In

1 Mr. Evarts to Mr. Gibbs, Oct. 31, 1877, Wharton, II, 662. This statement occurs in Mr. Evarts' opinion in the case of Sparrow v. Peru, Moore's Dig. VI, 720. See also For. Rel., 1895-6, II, 1036-1055.

2 Mr. Evarts to Mr. Langston, Minister to Haiti, Dec. 13, 1877, Moore's Dig. VI, 724. For a history of the Lazare case, see Moore's Arb. 1749 et seq.

Mr. Bayard, Sec'y of State, to Mr. Hall, Minister to Central America, Mar. 27, 1888, For Rel., 1888, I, 136. See also Moore's Dig. VI, 727.

the celebrated Idler case the fact that Venezuela had illegally invoked the remedy of restitutio in integrum and by executive action had arbitrarily changed the personnel of the court and district attorney for that particular case was held by the mixed commission under the convention of Dec. 5, 1885, to have been a denial of justice and to warrant an award.1

2. Cases have frequently occurred in which the contracts of citizens of the United States with foreign governments were arbitrarily annulled by the contracting government without recourse to a judicial determination of the contract or of the legitimacy of its act. An act of this kind has generally been held by the Department of State to be a confiscatory breach of the contract and to warrant diplomatic interposition as in cases of tort. Any weakening of the judicial remedy of the citizen has been held equally to relieve the government from the ordinary rule of non-interposition in contract cases. The rule in such cases has perhaps been best stated by Lewis Cass, when Secretary of State, as follows:

"It is quite true, for example, that under ordinary circumstances when citizens of the United States go to foreign country they go with an implied understanding that they are to obey its laws, and submit themselves, in good faith, to its established tribunals. When they do business with its citizens, or make private contracts there, it is not to be expected that either their own or the foreign government is to be made a party to this business or these contracts, or will undertake to determine any disputes to which they may give rise. The case, however, is very much changed when no impartial tribunals can be said to exist in a foreign country, or when they have been arbitrarily controlled by the government to the injury of our citizens. So, also, the case is widely different when the foreign government becomes itself a party to important contracts, and then not only fails to fulfill them, but capriciously annuls them, to the great loss of those who have invested their time and labor and capital from a reliance upon its own good faith and justice." 2

In a previous communication to Mr. Lamar, Minister to Central America, Mr. Cass stated:

"What the United States demand is that in all cases where their citizens have entered into contracts with the proper Nicaraguan authorities, and questions have arisen or shall arise respecting the fidelity of 1 Idler (U. S.) v. Venezuela, Dec. 5, 1885, Moore's Arb. 3517.

2 Mr. Cass, Sec'y of State, to Mr. Dimitry, May 3, 1860, Moore's Dig. VI, 287.

their execution, no declaration of forfeiture, either past or to come, shall possess any binding force unless pronounced in conformity with the provisions of the contract, if there are any; or if there is no provision for that purpose, then unless there has been a fair and impartial investigation in such a manner as to satisfy the United States that the proceeding has been just and that the decision ought to be submitted to." 1

The forcible deprivation of the property and franchises of a citizen of the United States without due process of law and a fair trial is considered as a tort and the claim will be pressed on that ground regardless of its contractual origin.2

Madison, at an early date in our history, distinguished between 'compulsory measures" practiced upon United States citizens and "voluntary contracts," the possible results of which may be presumed to have been in the contemplation of the parties.3

Perhaps the most zealous interposition on the part of the United States has been in cases where the confiscatory act of the foreign government consisted in the arbitrary annulment of the entire contract or of some of its essential provisions without a resort to the courts.4

1 Mr. Cass, Sec'y of State, to Mr. Lamar, Minister to Central America, July 25, 1858, Wharton, II, 661; Moore's Dig. VI, 723–724. See also Mr. Cass to Mr. Jerez, May 5, 1859, Moore's Dig. VI, 724; Mr. Bayard, Sec'y of State, to Mr. Scott, Minister to Venezuela, June 23, 1887, Moore's Dig. VI, 725.

2 The interposition of the Department of State in the case of the New York and Bermudez Co. v. Venezuela was based on the ground that the company was deprived of its rights by an abuse of judicial process. Sen. Doc. 413, 60th Cong., 1st sess., 123159. The U. S. and Venezuela Co. claim v. Venezuela, ibid. 95–118, which the Department was willing to submit to arbitration, was diplomatically settled by agreement of Aug. 21, 1909, For. Rel., 1909, p. 624.

* Mr. Madison, Sec'y of State, to Mr. Livingston, Oct. 27, 1803, Moore's Dig. VI, 707.

Delagoa Bay Railroad case, McMurdo (U. S.) v. Portugal, For. Rel., 1900, 903; 1902, 848-852. See also Moore's Dig. VI, 727-728; Moore's Arb. 1865-1899. See the claim of Emery (U. S.) v. Nicaragua, settled by agreement of Sept. 18, 1909, For. Rel., 1909, 463.

For the El Triunfo case, Salvador Commercial Co. (U. S.) v. Salvador, see For. Rel., 1902, 838-880, and the learned arguments of W. L. Penfield, Solicitor of the Department of State, 839-848. See also the legal opinion (Gutachten) of Professor Ludwig von Bar, given at the request of the Government of Salvador, which is printed under the title "Eine internationale Rechtsstreitigkeit," in 45 Jhering's Jahrbücher, 161-210.

See also the case of May (U. S.) v. Guatemala, For. Rel., 1900, 648-674, Jenner,