An exhaustive discussion of the liability of a government to compensatory interest for the failure to fulfill a pecuniary obligation was undertaken by the Hague Court of Arbitration in deciding the claim. of Russia against Turkey based upon the non-payment of interest on a certain war indemnity exacted in the treaty of peace between those countries of Jan. 27-Feb. 8, 1879. The tribunal held that even in the absence of an express stipulation, interest is due by international as by municipal law, for the debtor's improper withholding of a debt from his creditor, but that interest runs only from the date when payment is expressly demanded. In view of the fact, however, that for eleven years only the unpaid principal had been demanded by Russia in various extensions of the time of payment, the tribunal drew the legal presumption that Russia had relinquished all claim to interest.1

Interest has been allowed for various periods, beginning sometimes from the date of the original injury, and more often, from the date of notice of the claim, unless otherwise provided by contract. The period during which interest runs has at times been held to terminate at the date of payment of the principal and sometimes at the date when the commission concludes its labors, depending largely upon the jurisdiction of the commission.2 Commissions have refused to compound

interest.3

The rate of interest, when allowed, has generally varied from three to six per cent, although on occasion eight and twelve per cent interest has been granted. There is no settled rule as to the rate of interest, Feb. 13, 1903, Ralston, 658, 663, and Christern (Germany) v. Venezuela, ibid. 523.

1 Russia v. Turkey, July 22/August 4, 1910, award Nov. 11, 1912; 7 A. J. I. L. 178, 188 et seq. 200. See also Robert Ruzé in 15 R. D. I., 2nd ser. (1913), 351-371. Turkey's contention that states differ from individuals as debtors, in that they are not liable to pay interest on unfulfilled obligations, was expressly denied. By granting an extension of time in the payment of the debt, Russia was held to have released its claim for accrued interest. See also Law Mag. and Rev., Aug., 1914, 464. The decision appears to have followed the principles of French private law.

2 Ralston, op. cit., §§ 169–171.

4

Ralston, op. cit., § 166.

Eight per cent by the Spanish-American commission of 1871, Moore's Arb. 3763; 12 per cent by the Chinese indemnity domestic commission under treaty of 1858, ibid. 4629. The Boxer Claims Com. of 1900 (For. Rel., 1901, Appendix, 107), allowed 5 per cent on personal, and 7 per cent on commercial claims.

although numerous commissions have adopted the rate prevailing in the place where and at the time when the claim arose.

EXTRATERRITORIAL PROTECTION

§ 180. Protection Amounting to Jurisdiction.

1

The widest range of the protective function is to be found in the exercise of extraterritorial jurisdiction by the countries of European civilization, through their diplomatic and consular representatives, in certain countries of the Orient.2 The exercise of this jurisdiction involves in large degree a withdrawal of the nationals of the countries enjoying extraterritorial rights from the local jurisdiction of the authorities of the country of residence, and a subjection of these foreigners to the jurisdiction of their own diplomatic and consular officers in certain classes of cases and for certain purposes. These exceptional privileges of foreigners in certain Oriental countries are based either on custom and treaty, as in Turkey, or on treaty alone, as in China. The reason for their exemption from the local jurisdiction is to be found in the diversity of law, custom and social habits of the people of European civilization for whose benefit the extraterritorial privileges were secured. For many purposes, these foreigners are subject to their national law, administered by their own consuls or diplomatic officers.

1 The technical distinction between exterritoriality and extraterritoriality is discussed by Piggott in his work on Exterritoriality (new ed.), London, 1907, p. 3, note. 2 Moore's Dig. II, §§ 259–290; H. Doc. 326, 59th Cong., 2nd sess., 196–247; Hinckley, F. E., American consular jurisdiction in the Orient, Washington, 1906; Brown, Philip M., Foreigners in Turkey; their juridical status, Princeton, 1914; Hall, W. E., Foreign powers and jurisdiction of the British Crown, Oxford, 1894, p. 132 et seq.; Piggott, F., Exterritoriality, new ed., London, 1907; Jenkyns, Henry, British rule and jurisdiction beyond the seas, Oxford, 1902, p. 150 et seq.; Arminjon, P., Étrangers et protégés dans l'Empire Ottoman, Paris, 1903; Lippmann, K., Die Konsularjurisdiktion im Orient, Leipzig, 1898; Pelissié du Rausas, G., Le régime des capitulations dans l'Empire Ottoman, 2nd ed., Paris, 1910, introduction to v. 1; Rey, F., La protection diplomatique et consulaire dans les Echelles du Levant, Paris, 1899.

See Act of August 11, 1848, 9 Stat. L. 276 and particularly R. S., §§ 4083-4130; see also Act of June 30, 1906, 34 Stat. L. 814, creating U. S. court for China; Hinckley, p. 41 and Appendix I-III; H. Doc. 326, 59th Cong., 2nd sess., 216-246, contains treaties, statutes and regulations relating to extraterritorial jurisdiction of the United States.

§ 181. Sources of Extraterritorial Rights.

The extent of the extraterritorial jurisdiction of the United States in a given country is to be found in the treaty conferring extraterritoriality and in the statutes and regulations of the United States providing for the exercise of this jurisdiction by American diplomatic and consular officers.1 Such extraterritorial jurisdiction is exercised in conformity (1) with the laws of the United States, and, if they are unsuitable or deficient, (2) with "the common law, and the law of equity and admiralty," and if all these do not furnish appropriate and sufficient remedies, (3) with "decrees and regulations" having "the force of law," which the "ministers" may make to "supply such defects and deficiencies." 2

Besides the consular jurisdiction exercised over nationals, a wide degree of protection is extended by consuls to the subjects of non-treaty powers and even to natives in the employ of foreigners. This protection of non-nationals, which differs from jurisdiction, will be discussed hereafter.3

The so-called extraterritorial rights, resting in their origin upon treaty, have in the course of time, particularly in Turkey, Morocco and other countries, gathered around themselves by custom an accretion of further encroachments upon the local jurisdiction, so as to constitute in some countries a veritable imperium in imperio. Apart from all consideration of the justice or desirability of the step, one can understand and sympathize with the attempt of the Turkish government to rid itself—as it undertook to do by notification to the Powers shortly after the outbreak of the European War of 1914of the serious encroachments upon national sovereignty imposed by the Capitulations. The contention of the United States, to the effect that a treaty cannot be abrogated by a unilateral act, in the absence of specific stipulation, will serve to keep the matter in abeyance for

1 The federal government, as a matter of constitutional law, has the right to determine when and under what circumstances the rights of extraterritoriality will be exercised.

2 R. S., § 4086; 7 Op. Atty. Gen. 503; Moore's Dig. II, 614.

* Infra, p. 467.

* See an interesting note in 40 Law Mag. and Rev. (November, 1914), 84, and a discussion by Brown, Ph. M., Foreigners in Turkey, 112–118.

the present. The success of Turkey's attempt will probably depend largely upon the outcome of the European War.

§ 182. Origin and Development of the System.

1

The purpose of the extraterritorial privileges was quite different in origin from their present raison d'être. As early as the twelfth century various Italian cities had obtained from the Greek Christian rulers at Constantinople and later from their Mohammedan conquerors numerous charters or capitulations for the protection of their commerce, and exemption for their merchants in the Levant from the local jurisdiction. In the development of this system after the Moslem conquest, the exemption was based on a presumed inferiority of the western merchants as unfit to share in the privileges of Moslem law, so largely religious in character, resembling, in this respect, the grant of the jus gentium to foreigners at Rome, because they were considered unfit to share in the privileges of the jus civile. The spread of the system, however, is founded upon the desire of countries of the western world to protect their nationals from the operation of unfit or unequal laws and from the danger of corrupt and ignorant local courts.2 The exercise of extraterritoriality found an early prototype in the quasijudicial functions which foreign consuls had been accustomed to exercise in European ports as between merchants of their own country.

3

Beginning with the capitulations in favor of the Italian republics, the system extended gradually to the nations of modern Europe. The Turkish capitulations in favor of France from 1535 on became the basis for the treaty rights of other powers. The extraterritorial rights of the United States in Turkey are based principally on the treaty of 1830. As early as 1787, however, the United States concluded a treaty with Morocco securing the privileges of extraterritoriality, followed in 1797, 1805 and 1815, by treaties with Tunis, Tripoli and Algiers

1 Hinckley, 2; Pelissié du Rausas, v. I, introduction. 2 Hall, 135.

3 Hinckley, 7; Brown, 33 et seq.

4 Philip M. Brown has recently written an interesting work on the legal status of foreigners in Turkey (Princeton, 1914) in which the much disputed question of the rights of American citizens under art. IV of the treaty of 1830 is discussed. See pp. 76-80.

respectively. In 1844 the system was extended by treaty to China, and in 1857-1858 to Japan, in which country it has since been abandoned. The United States now exercises extraterritorial jurisdiction in Turkey, Bulgaria, China, Persia, Siam and Maskat. Owing to the many changes in the international status of the oriental countries with which the United States has negotiated treaties of extraterritoriality, extraterritorial jurisdiction is now either suspended or greatly modified in its exercise in Zanzibar, Borneo, Tonga, Tripoli and Morocco and has been entirely relinquished in Algiers, Japan, Korea, Madagascar, Roumania, Samoa, Servia and Tunis.2

It is obviously beyond the scope of this work to analyze the provisions of the treaties and statutes to determine in each particular country the extent of extraterritorial jurisdiction. The extraterritorial privileges usually include an exemption from the jurisdiction of the courts of the oriental state; inviolability of the domicil; freedom from arrest by native officials, except when in the act of committing a flagrant crime; if arrested, the right of surrender to the consul for trial and punishment; criminal or civil trial in consular or national courts of the accused or defendant; general jurisdiction of the foreign consul over his nationals, with right to require the assistance of the local authorities; and notification of the consul in case of the arrest of native employees of an American citizen.4

Hall mentions certain privileges which Great Britain and a few other favored nations possess to prevent an oppressive exercise of power on the part of the local authorities. Thus, in the territories to which the Capitulations extend, the local police are forbidden to enter by force the house of a British subject without notice to the ambassador or consul; or where a criminal is arrested flagrante delicto, notice of the arrest must be given to the consul within twenty-four hours. In 1 By the treaty of Nov. 22, 1894; Hinckley, 183.

Hinckley, 40; H. Doc. 326, 59th Cong., 2nd sess., 214–222, and citations to Hinckley; Moore's Dig. II, §§ 271, 282, 283, 284.

This has been done by Hinckley and Brown for the United States in particular, and for various European countries by the authors cited in note 2, p. 430. As to extraterritorial jurisdiction in China, see especially Koo, V. K. W., Status of aliens in China, New York, 1912, ch. IX-XII; and in Turkey, Brown, op. cit., ch. III and IV. Hinckley, 2 and H. Doc. 326, 59th Cong., 2nd sess., 202, quoting Atty. Gen. Cushing in 7 Op. Atty. Gen. 565, 569 and Hall.