direct claims received thorough consideration was that of the Alabama arbitration before the Geneva tribunal, in which Count Sclopis, for the arbitrators, expressed the opinion that upon general principles of international law the indirect claims, arising out of (1) the loss due to the transfer of the American merchant marine to the British flag; (2) the enhanced payments of insurance; and (3) the prolongation of the war and the addition to the cost of the war and the suppression of the rebellion, did not constitute good foundation for an award of damages between nations.1 This award, including the finding that "prospective earnings cannot properly be made the subject of compensation, inasmuch as they depend in their nature upon future and uncertain contingencies," has been regarded as a reliable precedent by numerous other arbitral tribunals, which have disallowed indirect claims based upon loss of anticipated profits, loss of credit, and similarly consequential elements of loss.2

1 Moore's Arb. 623, 646, 658; Moore's Dig. VI, 999. See Ralston, J. H., International arbitral law, ch. IX, and Moore's Arb., ch. LXX in which a good collection of awards relating to the question of damages may be found. The London Naval Conference of 1908-1909 decided to lay down no rules on the question of direct and indirect damages, but to leave the whole question of indemnity to the prize court. Renault's Report on Basis 12, Annexe 118, Cd. 4555 (Misc. No. 5), 1909, 338–339.

2 E. g., Tribunal between Great Britain and France of July 23, 1873, art. IV, dealing with British mineral oil claims, 63 St. Pap. 207 et seq.; 65 ibid. 426; Moore's Arb. 4938; La Fontaine, Pasicrisie int., 200. Commission "shall throw out claims concerning indirect losses or damages," etc., art. 3 of protocol of arbitration between France and Haiti, Sept. 10, 1913; Suppl. to 8 A. J. I. L. (1914), 145; Baldwin (U. S.) v. Mexico, Apr. 11, 1839, Moore's Arb. 2864 (whether loss of profits is a direct and immediate injury held to depend on local [Mexican] law); Brig William (U. S.) v. Mexico, Apr. 11, 1839, ibid. 4226 (prospective profits when vessel wrongfully detained disallowed); Mitchell (U. S.) v. Mexico, ibid. 4227; Hammaken (U. S.) v. Mexico, July 4, 1868, ibid. 3471 (consequential damages considered of an uncertain and imaginative nature). See also Brooks (U. S.) v. Mexico, ibid. 4310; Alabama award, ibid. 658 (prospective earnings deemed to depend upon future and uncertain contingencies); Salvador Commercial Co. (U. S.) v. Salvador, Dec. 19, 1901, For. Rel., 1902, 857, 872 ("probable future profits of the undertaking" disallowed); Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 182, 198 (loss of expected profits of a business venture, because unable to show that profits would have been made, disallowed); De Caro (Italy) v. Venezuela, Feb. 13, 1903, Ralston, 810 (average profits disallowed, when other causes, e. g., land warfare, might have prevented them); Kunhardt (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 63, 69 (loss of profits due to civil commotions); Poggioli (Italy) v. Venezuela, Feb. 17, 1903, ibid. 847 (disallowed, as indirect and uncertain, a claim for threats against claimants' debtors, inducing

Acts of Congress authorizing domestic commissions to distribute international awards have followed the general rule excluding anticipated profits and indirect losses from consideration as elements of damage. Thus, the Act of June 23, 1874 establishing the first Court of Commissioners of Alabama Claims confined the court's jurisdiction. to claims "directly resulting" from damage caused by the so-called insurgent cruisers.1 A similar jurisdictional clause is contained in the Act of March 2, 1901, creating the Spanish Treaty Claims Commission, and in the Joint Resolution authorizing the Court of Claims to adjudicate claims against the Chinese Indemnity fund.3 Domestic commissions have reached the same conclusion without specific direction from Congress.4

them to refuse to pay their debts); Costa Rica Packet (Gt. Brit.) v. Netherlands, May 16, 1895, Moore's Arb. 4948; Colombia v. The Cauca Co., 190 U. S. 524, 531. Rule 2 of the Nicaraguan Mixed Claims Commission of 1911 provided that the "Government is not responsible for lucro cesante (unaccrued or uncollected profits), or indirect damages suffered in business as a consequence of war. Tchernoff, op. cit., 346-349; Leval, op. cit., §§ 66 et seq. Doctrinal note on Don Pacifico case in Lapradelle and Politis' Recueil, I, 595, in which case consequential damages were collected by Great Britain. For. Rel., 1872, 244–246.

1 Act of June 23, 1874, § 11, 18 Stat. L. 247. This clause was held to exclude a claim for loss of catch in consequence of a vessel being driven away from the scene of whaling operations. Gannett v. U. S., Moore's Arb. 4295. For other claims considered as indirect injuries see Hyneman v. U. S., ibid. 4292, Davis Rep. 45; Phillips v. U. S., Davis' Rep. 56; Haskins v. U. S., Moore's Arb. 4303 (vessel ran on bar and caught fire while attempting to escape from the Shenandoah); Gannett v. U. S., No. 1321, ibid. 4305. The Act of June 5, 1882 (22 Stat. L. 98) creating the second court to distribute a large surplus in the Treasury was given jurisdiction over indirect claims arising out of "the payment of premiums for war risks." Moore's Arb. 4653, 4660.

? Section 11, 31 Stat. L. 879. "Award shall be only for the . . . actual and direct damage... Remote and prospective damages shall not be awarded." See Brief of U. S. in Tolon, No. 124, June 8, 1904 on "loss of prospective profits and earnings." S. J. R. 29, May 25, 1908, 35 Stat. L. 577, "excluding merely speculative claims and elements of damage." See American Trading Co. v. Chinese Indemnity Fund, 47 Ct. Cl. 563, 568.

• The commission under the treaty with France of July 4, 1831 held that captured American "property" excluded allowance for commissions, profits, wages of seamen and a variety of contingent interests. Moore's Arb. 4472; Van Ness convention of Feb. 17, 1834, Act of Congress, June 7, 1836, Commissioner Henry's Final Report, Moore's Arb. 4542, 4545; The Peruvian indemnity of March 17, 1841, Act of Congress, Aug. 8, 1846, 9 Stat. L. 80; Smith and Tracy, Moore's Arb. 4597; Macedonian,

Speculative,1 conjectural, and remote 2 damages have uniformly been disallowed by claims commissions.

§ 173. Circumstances under which Claims for Indirect Damages

Allowed.

Notwithstanding numerous decisions which may be found to the effect that indirect losses do not constitute recoverable elements of damage, arbitral courts have nevertheless attempted in many cases to draw a distinction between indirect losses which may fairly be considered as certain, e. g., the profits of an established business, and indirect losses which are speculative, imaginative and incapable of computation. The allowance of the former class of claims may indeed

ibid. 4603; Chinese indemnity under treaty of Nov. 8, 1858, Act of March 3, 1859, 11 Stat. L. 408, Report of Commissioners, Moore's Arb. 4628.

1 Taussig (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3472; Mora and Arango (U. S.) v. Spain, Feb. 12, 1871, ibid. 3783; Oliva (Italy) v. Venezuela, Feb. 13, 1903, Ralston, 781.

2 Grant (Gt. Brit.) v. U. S., May 8, 1871, Hale's Rep. 162 (destruction of business); Pelletier (U. S.) v. Haiti, May 24, 1884, Moore's Arb. 1779 (alleged loss of investments of real estate, and claims in consequence of his imprisonment); Dix (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 7 (sale of cattle at inadequate price, owing to revolution); Oliva (Italy) v. Venezuela, Feb. 13, 1903, Ralston, 782 (sale of business at reduced price to enable claimant to enter on a concession-contract with the government -too many elements may have contributed to reduce price); Valentiner (Germany) v. Venezuela, Feb. 13, 1903, Ralston, 564 and Plantagen Gesellschaft, ibid. 631 (loss of crop owing to draft of claimant's laborers); Monnot (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 171 (loss of business prospects); Bischoff (Germany) v. Venezuela, Feb. 13, 1903, ibid. 581 (injury to business resulting from unreasonable detention of property lawfully seized); Larrieu v. U. S., No. 468, Span. Tr. Cl. Com., Briefs XXIV, 138; Sen. Doc. 16, 58th Cong., 2nd sess. (Sec'y Hay on loss of traffic and business by cable company, whose cable was cut as an operation of war). Section 11 of Act of Mar. 2, 1901, 31 Stat. L. 879; Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 182, 198 (dictum) and Poggioli (Italy) v. Venezuela, ibid. 847, 870 [loss of credit too remote, indefinite and uncertain; but see Irene Roberts case (U. S.) v. Venezuela, ibid. 144, and May (U. S.) v. Guatemala, Feb. 23, 1900, For. Rel., 1900, 648, 654, Moore's Dig. VI, 731, where under exceptional circumstances loss of credit allowed as element of damage]. China commissioners under Boxer indemnity disallowed claims based upon "general interruption of business." American Trading Co. v. Chinese Indemnity Fund, 47 Ct. Cl. 563, 568.

3 Such a distinction was drawn by Umpire Lieber in Rice (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3248 (dictum); Mora and Arango (U. S.) v. Spain, Feb. 12, 1871, ibid. 3783 (dictum); Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 182, 198

be reconciled with the disallowance of the latter on the theory that they are proximate results of the original wrongdoing and were presumably or constructively within the contemplation of the parties. An examination of numerous cases in which such incidental losses have been allowed as elements of damage discloses a wide range of factors and the exercise of a wide discretion on the part of arbitrators.1 While probable future profits may with some reason be disallowed, they may properly be taken into consideration in computing the value of a franchise or concession which has been unlawfully or arbitrarily cancelled.2

Expenses incurred in the presentation and prosecution of a claim have in many, although not in all cases, been allowed as recoverable

(dictum); Salvador Commercial Co. (U. S.) v. Salvador, Dec. 19, 1901, For. Rel., 1902, 872. See also Brooks (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 4309.

1 Loss of employment arising out of illegal imprisonment (Gahagan, U. S., v. Mexico, Apr. 11, 1839, Moore's Arb. 3240). Loss of business resulting from wrongful arrest (Canty, Gt. Brit., v. U. S., May 8, 1871, ibid. 3309). Proximate and direct consequences of wrongful seizure of property, including a reasonable profit (Smith, U. S., v. Mexico, Apr. 11, 1839, ibid. 3374; Monnot, U. S., v. Venezuela, Feb. 17, 1903, Ralston, 170). "Full compensation" for the injury incurred (Barque Jones, U. S., v. Great Britain, Feb. 8, 1853, ibid. 3049). Cheek (U. S.) v. Siam, July 6, 1897, ibid. 1899, award 5068 (value of concession estimated by annual yield). Profits allowed in the form of interest (Bronner, U. S., v. Mexico, July 4, 1868, ibid. 3134). Loss of prospective output of mines, where there was an assured market (Martini, Italy, v. Venezuela, Feb. 13, 1903, Ralston, 819; but see Duffield, Umpire, in Orinoco Asphalt Co., Germany, v. Venezuela, Feb. 13, 1903, ibid. 586, 589, who only allowed interest on the amount for which the product of the mine would have sold during the suspension of operations. Cf. Ralston, International arbitral law, 170). "Derangement of [claimant's] plans, interference with his favorable prospects, his loss of credit and business" (Irene Roberts, U. S., v. Venezuela, Feb. 17, 1903, Ralston, 142, 145). Two years' loss of time, suspension of credit, grave anxiety of mind, and profits which would have been earned had not the Government prevented performance of the contract (May, U. S., v. Guatemala, Feb. 23, 1900, For. Rel., 1900, 648, 654, Moore's Dig. VI, 731). Consequences of unlawful detention of vessel, e. g., repairs, wages of captain and crew (Orinoco Asphalt Co., Germany, v. Venezuela, Feb. 13, 1903, Ralston, 588). Loss and destruction of crops during period of compulsory abandonment of plantation (Poggioli, Italy, v. Venezuela, Feb. 13, 1903, Ralston, 870; Irene Roberts, U. S., v. Venezuela, ibid. 145). Loss of prospective catch when fishing vessels were improperly ordered out of fishing grounds before end of season, infra, p. 421.

2 Salvador Commercial Co. (U. S.) v. Salvador, Dec. 19, 1901, For. Rel., 1902, 872. See also Navigation Co. v. U. S., 148 U. S. 312.

elements of damage.1 When disallowed, the refusal may be justified on the ground that as a general rule of municipal law the costs and expenses of litigation other than the usual and ordinary court costs are not recoverable in an action for damages, and this ground has in certain cases been expressly advanced. It will have been noted, however, that most arbitrators in the allowance of costs and expenses have been governed by equitable considerations rather than by this technical rule of law.

It will have become apparent from the foregoing endeavor to draw a distinction between proximate and remote damages, that notwithstanding the general agreement as to the principle, international tribunals in its application meet the same difficulty encountered by municipal courts 3 when attempting to draw a line between injuries and losses which are sufficiently proximate and those which are too remote to be the foundation of an action. On the other hand, international tribunals do not necessarily apply the rule of municipal courts

1 Allowed in Baldwin (U. S.) v. Mexico, April 11, 1839, Moore's Arb. 3235, 3240; Augusta (U. S.) v. Mexico, ibid. 4347 (including expenses of translation); Potter, ibid. 4227; Mitchell, ibid. 4228 and Comp. Gén. des Asphaltes (Gt. Brit.) v. Venezuela, Feb. 13, 1903, Ralston, 331 (expenses of translation); Stetson (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3131 (cost of printing); Richter (Germany) v. Venezuela, Feb. 13, 1903, Ralston, 575 (cost of taking additional testimony as directed by commission); Louisa (U. S.) v. Mexico, Apr. 11, 1839, Moore's Arb. 4325 (expenses incurred in efforts to obtain payment); Poggioli (Italy) v. Venezuela, Feb. 13, 1903, Ralston, 871 (expenses incident to submission of claim and to defense against wrongful charges); Rebecca Adams (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 2770 (expenses incurred to secure release of wrongfully detained vessel); May (U. S.) v. Guatemala, Feb. 23, 1900, For. Rel., 1900, 648, 654, Moore's Dig. VI, 731; Cheek (U. S.) v. Siam, July 6, 1897, Moore's Arb. 5068; Costa Rica Packet (Gt. Brit.) v. Netherlands, May 16, 1895, ibid. 4948 (expenses of recovery); Salvador Commercial Co. (U. S.) v. Salvador, Dec. 19, 1901, For. Rel., 1902, 872 (attorney's fees, and other costs); Act of June 23, 1874 (attorney's fees).

2 Valentiner (Germany) v. Venezuela, Feb. 13, 1903, Ralston, 562, 565 and Bischoff, ibid. 581. See also Orr and Laubenheimer (U. S.) v. Nicaragua, Mar. 22, 1900, For. Rel., 1900, 826 and Masonic (U. S.) v. Spain, Moore's Arb. 1069 (attorney's fees disallowed); Bronner (U. S.) v. Mexico, July 4, 1868, Moore's Arb. 3135 (special circumstances governed); Feuilletan (Gt. Brit.) v. Venezuela, Feb. 13, 1903, Ralston, 406; British mineral oil claims (Gt. Brit.) v. France, July 23, 1873, art. 4, Moore's Arb. 4939.

38 Amer. and Eng. Encyc. of Law (2nd ed.), 563; Scott v. Hunter, 46 Pa. St. 192; Smith v. Telegraph Co., 83 Ky. 104.