of State, brought forward a proposition to the effect that the use of force for the collection of contract debts is not permissible until after the justice and amount of the debt, as well as the time and manner of payment, shall have been determined by arbitration.1

Gen. Horace Porter took charge of this proposition, and made the principal address in its support. After several amendments to his original draft, the conference by a vote of 39 in favor and 5 abstentions (Belgium, Roumania, Sweden, Switzerland and Venezuela) adopted the following convention-a few states making special reservations:

"The Contracting Powers agree not to have recourse to armed force for the recovery of contract debts claimed from the government of one country by the government of another country as being due to its nationals.

"This undertaking is, however, not applicable when the debtor state refuses or neglects to reply to an offer of arbitration, or, after accepting the offer, prevents any compromis from being agreed on, or, after the arbitration, fails to submit to the award."

While not rejecting completely the possibility of forcibly collecting contract debts, the convention represents a considerable step in advance, inasmuch as it makes the use of force conditional upon (1) a refusal to arbitrate; (2) making a formulation of an agreement impossible after arbitration is accepted; (3) failure to carry out the award. These are more definite and more appropriate limitations than the vague terms "bad faith," "deliberate and voluntary insolvency," etc., which we may infer even the opponents of intervention and Dr. Drago himself would consider as justifiable causes of intervention.2

A few countries either declined to subscribe to the convention or

1 In the Russian program of the First Peace Conference of 1899 regarding international arbitration a clause had been included providing that arbitration shall be obligatory "in the case of differences or conflicts regarding pecuniary damages suffered by a state or its citizens in consequence of illegal or negligent action on the part of any state or the citizens of the latter." This proposition for the arbitration of pecuniary claims was for various reasons dropped.

2 A good account of the preli inary instructions and principal speeches and proposals in connection with this convention for the limitation of the employment of force, with appropriate quotations, may be found in J. B. Scott's Hague Peace Conferences, I, Chap. VIII, 386–422. See also article by G. W. Scott, supra, in 2 A. J. I. L. (1908), 78–94. The convention in full is printed in Scott's Hague Peace Conferences, II (Documents), 357-361.

in adhering registered important reservations. Switzerland and Venezuela declined to sign the convention (although the latter was very willing to accept the renunciation of force) on the ground that it ousted the national courts of jurisdiction. One can understand Switzerland's unwillingness to be bound to arbitrate a question in which its courts, internationally recognized as impartial, have jurisdiction.1 Venezuela's protest, which took the following form

"recourse to arbitration should be permitted only in the case of denial of justice after the judicial remedies of the debtor state had been exhausted"

is to be regarded as traditional. If its judicial organization is as independent as it ought to be, the justification for the protest is readily apparent. Seven other Latin-American republics, by way of reservation, joined in the objection of Venezuela.

The principal reservation was made by Dr. Drago himself, on the part of Argentine. After declaring that ordinary contracts should be arbitrable only in case of denial of justice after the exhaustion of local remedies, he added:

"Public loans with bond issues constituting the national debt cannot in any case give rise to military aggression nor to the occupation of the soil of American states."

In this reservation Argentine was joined by Colombia, Ecuador, Guatemala, Nicaragua, Paraguay, Peru and Uruguay.2

Another reservation by Peru, in which Uruguay joined, sought to protect the so-called Calvo clause from possible infringement. The reservation reads:

"That the principles adopted in this proposition cannot be applied to claims or differences arising from contracts between the government of one country and foreign subjects, when it has been expressly stipu

1 In theory at least the strong and well-organized states have renounced an inherent right. Dr. Heinrich Pohl in the Zeitschrift für Politik (vol. 4, 134, 138) criticizes Germany for having ratified the Porter Proposition (Reichsgesetzblatt, 1910, 59-81), for he states that Germany may sometimes be a defendant state and will be bound by the agreement to arbitrate, thus ousting its courts of jurisdiction.

2 See table of reservations in J. B. Scott's Hague Peace Conferences, II, 532–534, and article by G. W. Scott, 2 A. J. I. L. 89. See also 3 Zeitschr. für Völkerr. u Bundesstaatsrecht, 72, 73.

lated that the claims or differences must be submitted to the judges and tribunals of the contracting country."

The general futility of this clause in so far as it seeks to attain the exclusive jurisdiction of local courts and the avoidance of diplomatic interposition, has been demonstrated by international practice.

One possible objection to the Porter proposition, which appears to have escaped general attention, lies in the fact that it actually sanctions the use of armed force in a class of cases in which the United States, and, on occasion, other powers, have declined, as a matter of policy, to intervene diplomatically.

§ 123. Relation Between Porter Proposition and Drago Doctrine.

It will be seen that this Hague convention for the limitation of the use of force in the collection of contractual debts, popularly known as the Porter proposition, is at once narrower and wider in scope than the Drago doctrine. It is narrower inasmuch as it recognizes the ultimate legality of the use of force. As a definite check upon the use of force in first instance, and an important extension of the principle of international arbitration, it is to be welcomed, for pacific blockades, threats of hostilities, and rumors of warlike preparations, have a most disturbing effect on international commerce, and as General Porter showed, the disposition of neutral states to refuse to recognize pacific blockade leads to the more effective blockade of actual war, and as Mr. Roosevelt on a number of occasions has stated, the seizure of custom houses easily leads to a more permanent occupation of territory.

Moreover, the interruption of the commerce of the debtor nation. diminishes its means and opportunities to pay the very debts for which the hostilities are undertaken and acts unfairly toward creditors of other nations. Many of these difficulties will now be avoided.

The Porter proposition is wider in scope than the Drago doctrine in that its provisions apply to all contractual debts, whereas Dr. Drago confined his policy to claims arising out of the non-payment of public loans. Nevertheless, doubt has been raised, both in the sub-committee of the Conference and since then, as to the meaning of "contractual debts.1

1A full discussion of these doubts and possible interpretations is contained in Moulin, op. cit., 308-320. See also article by G. W. Scott, 2 A. J. I. L. 90–93.

Without entering into the various interpretations to which the term is subject, it seems clear that it does include public loans.

There is a class of cases, however, of the "contractual" nature of which there may be some doubt. When a contract has been concluded between a government and an individual for the carrying on of some public work, it has happened that a subsequent act of the legislature, acting not as a business fiscus but as a sovereign, diminishes the contractor's rights under the contract. National courts, as, for example, the United States Court of Claims, have held that the two functions which the government possesses as a fiscus and as a sovereign are distinct, and that the United States when sued in the one character cannot be made liable for acts done in the other:

"Whatever acts the government may do, be they legislative or executive, so long as they be public and general, cannot be deemed specially to alter, modify, obstruct or violate the particular contracts into which it enters with private persons." 1

1

The question arises whether these distinctions of national law which exclude the case mentioned from the category of contractual debts will be maintained by the international forum in the interpretation of the term "contractual debts." It has been observed that Foreign Offices in dealing with the Latin-American Republics have on occasion considered it as a violation of the contract, and an arbitrary measure, thus to reduce the contractor's rights by a subsequent legislative act.2 It seems reasonable to assume that this will be the interpretation of the term "contractual debt" by an international court.

§ 124. Public Bonds Before Arbitral Tribunals.

Bond cases have come before international tribunals on several

1 Deming v. United States, 1 Ct. Cl. (1865), 190-191; Jones and Brown v. United States, 1 Ct. Cl. (1865), 384–399; Wilson v. United States, 11 Ct. Cl. (1875), 513–522; 28 Op. Atty. Gen. 123 (Wickersham), holding that the government might as a matter of grace and equity, relieve the contractor from unduly harsh burdens. French courts have held the government liable for breach of contract by an act of legislation.

2 If the act of legislation is general, affecting equally all similar contracts between private individuals, it would seem that the U. S., by the decisions of its own courts, is constrained to decline interposition based upon alleged violation of law, but that it would be justified in exercising good offices in requesting relief for its citizen from unexpected burdens cast upon him by legislation.

occasions. Very little light is thrown upon the subject by the results of these arbitrations, except as by their dicta the commissions express the opinion that governments have the right to press the claims of bondholders of a foreign debt, though they generally admit that in practice such claims are not diplomatically presented. As a general rule, however, jurisdiction has been declined-usually for the reason that governments are not in the habit of presenting such claims diplomatically and because of the unwillingness of commissions to assume that they were intended to exercise jurisdiction in the absence of express words in the protocol.1 It has been so held even where the protocol provided for the settlement of "all claims." 2 The Colombian Bonds decision, rendered by Sir Frederick Bruce, Umpire, was severely criticised by Commissioner Little in the Aspinwall case before the United States-Venezuelan commission of December 5, 1885. He held, with Commissioner Findlay (Andrade dissenting), that the inclusive term "all claims" embraced bond claims. This case constitutes one important exception, prior to the Venezuelan Arbitrations of 1903, to the general rule that jurisdiction over bond claims is not exercised by international commissions.3

1 Overdue Mexican coupons, Du Pont de Nemours (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3616. Opinion by Wadsworth; Zamacona concurred. See dictum of Thornton, Umpire, in Widman (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3467.

2 Colombian Bond cases, Riggs, Oliver, Fisher (U. S.) v. Colombia, Feb. 10, 1864, Moore's Arb. 3612-3616. In the case of Gibbes before the 1857 and 1864 U. S.Colombian commissions (Moore's Arb. 1398, 1410) an assigned bond was the subjectmatter of the claim; the jurisdictional question does not appear to have been raised. 3 Venezuelan Bond cases, Aspinwall, Executor of G. G. Howland et al. (U. S.), v. Venezuela, Dec. 5, 1885, Moore's Arb. 3616-3641. This claim was dismissed by the mixed commission under the convention of April 25, 1866. The findings of this commission were reopened because of the alleged fraud of the arbitrators. Under a strict construction of the protocol, Bates, Umpire, dismissed the Texas Bond cases before the British-U. S. Commission of Feb. 8, 1853, Moore's Arb. 3594. One reason was that they had not been treated by Great Britain as a subject for diplomatic interposition. The decision is criticised by Westlake, I, 77-78, citing Dana in Dana's Wheaton, § 30, n. 18. Jurisdiction was exercised by the Mexican commission of 1868 over a stolen bond, Keller (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3065, on the ground of fraudulent destruction of specific property having a definite value and certain assurances by the government. See also Eldredge (U. S.) v. Peru, Jan. 12, 1863, Moore's Arb. 3462. The failure to fulfill the obligations of a bond issued for supplies was held not an "injury to property" by the U. S.-Mexican Commission of 1868 (Manasse