Doctrine and the Porter proposition adopted at the Hague Conference of 1907 have been examined under the general subject of contract claims.1

§ 372. Its Incorporation in Concession-Contracts in Latin-America.

Of the three principal classes of claims in which Latin-American States have sought to limit the diplomatic protection of foreigners, namely: first, claims arising out of injuries received in civil wars; secondly, claims based upon acts of violence and oppression, such as false arrest, imprisonment, and expulsion; and, thirdly, claims arising out of concession-contracts concluded with aliens, the subject of our present inquiry-the contractual renunciation of diplomatic protection arises generally in connection with concession-contracts granted by governments to foreigners, although there have occasionally been cases of personal injury or other forms of contract in which there has been an express waiver of the alien's right to national protection.

The European states having for the most part been unwilling to conclude treaties stipulating for the complete surrender of private claims of their citizens to the local courts, the Latin-American states, on the authority of Calvo and the general international law applied in Europe, have sought other means to attain their end and secure freedom from the constant employment of diplomatic measures of coercion to which they find themselves subject.2

This they have done by establishing certain limitations upon protection in their constitutions, laws, treaties and contracts with foreigners. They assert the right to do this on the legal grounds of independence, sovereignty, complete territorial jurisdiction and the principle, generally recognized, that individuals who establish them377-382; Edgington, T. B., The Monroe doctrine, Boston, 1904, pp. 218–260; Crichfield, G. W., American supremacy, New York, 1908, Vol. II, 39 et seq.

1 Supra, §§ 119 et seq.

2 Pradier-Fodéré, I, §§ 204-5; Calvo, I, §§ 204-5; Despagnet, Cours de droit international public, 2d ed., 1899, p. 197; 2 R. G. D. I. P. (1895), 341.

As early as 1852 the Venezuelan Government had endeavored to obtain an agreement among the Latin-American states not to recognize any of the claims presented by foreign governments in matters of private interest. Mr. Leocardio Guzman was charged at Lima and other capitals with a mission whose object was, it was said, to prepare an entente of the American states on this point. Annuaire des deux mondes, Vol. 3, 1852-3, p. 749, cited in 4 R. G. D. I. P. (1897), 227–228.

ITS INCORPORATION IN CONCESSION-CONTRACTS IN LATIN-AMERICA

795

selves in a foreign state must submit to the local law. In this contention they are supported by some well-known publicists, particularly Calvo,1 Pradier-Fodéré,2 Bluntschli,3 Seijas, and Fiore.5

Since 1886 many of these states have incorporated into their constitutions and laws a provision that every contract concluded between the government and an alien shall bear the clause that the foreigner "renounces all right to prefer a diplomatic claim in regard to rights and obligations derived from the contract," or else that "all doubts and disputes" arising under it "shall be submitted to the local courts without right to claim [the] diplomatic interposition of the alien's government."

1 Calvo, I, §§ 204-5, pp. 350-351, § 1278 et seq., III, 140 et seq., VI, § 256, p. 231. 2 Pradier-Fodéré, §§ 204-205; §§ 402-403, § 1363 et seq. "But in regard to the duty of protecting its nationals, we must posit certain rules. We must remember that when individuals establish themselves in a foreign country, they submit tacitly to its laws, and must make use of the means of redress open to the inhabitants, without being placed in a better position than natives of the country. . . . When the local courts have decided a case, the alien and his government cannot complain, if the alien has not been the victim of violations of international law, of arbitrary procedure or denial of justice on the part of the local authorities, of odious discriminations, of penalties harsher than those inflicted on nationals . . . and finally, if there has been no violation of the provisions of public treaties in force between the two governments. (§ 403.)

3 Bluntschli, Le droit international codifié, 5th ed., by C. Lardy, Paris, 1895, §§ 380, 386, 388.

Seijas, El derecho international, III, p. 308 et seq.; IV, pp. 507–514 and opinions there cited.

Fiore, P., Nouveau droit international public, Paris, 1885, Antoines' translation, §§ 648-657.

Fiore believes that protection is unjustifiable when its object is to obtain for subjects abroad a privileged position. He holds that if, for reasons of State, the constituted authorities of a country enact measures applying to the whole population, but which may seem harsh to foreigners, foreign governments have no right to endeavor to relieve their subjects in such cases from burdens which all the inhabitants must bear (§ 648). He justifies protection of the interests of an individual only where the foreign government acts arbitrarily towards the alien in violating a principle of law, i. e., only when it deprives aliens of the enjoyment of civil rights, etc. (§ 649).

Antoine, Fiore's translator, believes that when a state treats aliens in a prejudicial manner by laws which are in derogation of the usage of civilized countries of our time, intervention is legitimate. He thus justifies the intervention of France in 1838 in Buenos Ayres and Mexico.

• Ecuador, constitution, Art. 38, Rodriguez, American Constitutions, II, 283,

1

The general policy of the United States and of one or two other countries in the matter of contract claims has already been discussed, and it has been observed that in ordinary cases arising out of contract these countries have declined their diplomatic interposition, except in case of denial of justice-so that the clause renouncing diplomatic protection in these cases may be regarded as merely confirmatory of the general attitude assumed by these states. As a rule, the policy of the United States has been not to interfere with the right of a foreign government to prescribe the terms of concessions which it may grant to American citizens to carry on business within its territory, and after a concession in which a certain privilege is denied has been accepted, the United States will not demand the annulment of the provision. Unless the foreign state has perpetrated upon its citizen some gross violation of the rights of the concessionary, usually embraced in the category of a denial of justice, or confiscatory breach of the contract, the United States has declined its official interposition to Americans contracting with foreign governments or individuals, although good offices are generally extended.4

4 R. G. D. I. P. (1897), 228. See also Ecuador, law of August 25, 1892, Art. 14, 84 St. Pap. 646; Venezuela, constitution, Art. 124, Rodriguez, I, 230-1; Colombia, law of November 26, 1888, Art. 15, 79 St. Pap. 167 et seq.

See letter of Secretary of State Bayard, to Mr. Straus, Minister to Turkey, June 28, 1888, For. Rel., 1888, pt. 2, p. 1599, Moore's Dig. VI, 296-7, with reference to a law of Turkey of January 10, 1888, Art. 5, providing that foreigners shall not be permitted to set up printing offices in Turkey unless by formal declaration they renounce the privileges and immunities of foreigners.

1 Italy, for example. For the policy of Italy see 4 R. G. D. I. P. (1897), 405-406, citing notes of Italian Minister of Foreign Affairs. Nevertheless, it may be doubted whether Italy considers this a general policy.

2 Although the United States has usually not declined to exercise good offices. See Moore's Dig. VI, 705 et seq.

3 Mr. Hay to Mr. Powell, Minister to Haiti, April 1, 1899, Moore's Dig. VI, 289.

4 Mr. F. W. Seward, Act'g Sec'y of State, to Mr. Logan, April 15, 1879, Moore's Dig. VI, 293; Statement of Mr. Hay, Sec'y of State, in the case of Salvador Commercial Company (U. S.) v. Salvador, Moore's Dig. VI, 731-732, For. Rel., 1902, pp. 839, 871; Mr. Olney, Sec'y of State, in claim of North and South American Construction Company v. Chile, Moore's Dig. VI, pp. 728-729, For. Rel., 1895, pt. 1, p. 83; Calvo, op. cit., VI, § 366, p. 351; McMurdo's case (U. S.) v. Portugal, Moore's Arb. 1865-1899, Moore's Dig. VI, 727-728, 297.

§ 373. Its Ineffectiveness in Preventing Interposition. Practice of the United States.

In some cases, however, interposition has been made dependent upon the absence of any renunciation on the part of the citizen of the privilege of appealing to his own government, and Secretary of State Fish in one case believed himself barred from interfering where such a stipulation had been entered into by the citizen.1 This attitude, however, is a distinct exception to the general practice of the Department of State. The position now uniformly assumed is perhaps best expressed in an instruction of Secretary of State Bayard in 1888:

"This government cannot admit that its citizens can, merely by making contracts with foreign powers, or by other methods not amounting to an act of expatriation or a deliberate abandonment of American citizenship, destroy their dependence upon it or its obligations to protect them in case of a denial of justice."

" 2

Mr. Gresham, Secretary of State, interpreted the clause of the Venezuelan constitution to the effect that

"in every contract of public interest there shall be inserted the clause 'that doubts and controversies which may arise regarding its meaning and execution shall be decided by the Venezuelan tribunals and according to the laws of the Republic, and in no case can such contracts be a cause for international claims'"

to mean that the party claiming under the contract

"agrees to invoke for the protection of his rights only the authorities, judicial or otherwise, of the country where the contract is made. Until he has done this, and, unless having done this, justice is plainly denied him, he cannot invoke the diplomatic intervention of his own country for redress. But if his application to the authorities of the country where the contract is made results in the palpable denial of justice, or in a plainly unjust discrimination against the applicant as an American citizen, the clause above quoted would hardly be construed to prevent an appeal for diplomatic intervention if such intervention would otherwise be allowable under the rules of international law." 3

1 Mr. Fish, Sec'y of State, to Mr. Butler, Oct. 5, 1871, Moore's Dig. VI, 293. 2 Mr. Bayard, Sec'y of State, to Mr. Buck, Minister to Peru, Feb. 15, 1888, Moore's Dig. VI, 294; Mr. Bayard to Mr. Scott, Minister to Venezuela, June 23, 1887, Moore's Dig. VI, 294; Mr. Bayard to Mr. Hall, Minister to Central America, March 27, 1888, For. Rel., 1888, I, 137; Mr. Adee, Act'g Sec'y of State, to Mr. Partridge, Minister to Venezuela, July 26, 1893, For. Rel., 1893, pp. 734, 735.

'Mr. Gresham, Sec'y of State, to Mr. Crawford, Sept. 4, 1893, Moore's Dig. VI, 299-300.

By the last clause Mr. Gresham probably meant that the exhaustion of local remedies and a denial of justice are conditions precedent to diplomatic intervention. With this reservation, therefore, that the citizen must not suffer a denial of justice, the Department of State has upheld the right of the citizen to stipulate for local courts as an appropriate forum for his disputes.

Where the contract stipulation has attempted to go further and completely oust the right of the government to intervene under all circumstances and to foreclose the citizen's right of appeal even in a case of denial of justice, the Department of State has denied the validity of such contractual renunciation. As Mr. Bayard stated:

"It is not competent to a citizen to divest himself of any part of his inherent right to protection or to impair the duty of his government to protect him;" 1

and furthermore that

"no agreement by a citizen to surrender the right to call on his Government for protection is valid either in international or municipal law." 2

§ 374. Executive Views as to the Renunciation of Protection or Indemnity.

The subtle measure adopted by Mexico in its railroad grants, by the terms of which officers and employees of its roads are declared amenable to the laws as Mexicans and are inhibited from pleading rights of alien protection met with a similar objection by Mr. Bayard. Such service in Mexico was deemed a contract, a condition of which was the surrender by the employees of their right to invoke diplomatic protection. While considering that alien employees became thereby "entitled to justice in Mexico in lieu of the broader claims to international justice," nevertheless, "in case of a denial of justice, the obligation of this government to protect [its citizens] remains unimpaired." 3

1 Mr. Bayard, Sec'y of State, to Mr. Straus, Minister to Turkey, June 28, 1888, For. Rel., 1888, v. 2, p. 1519. See also Mr. Wilson, Act'g Sec'y of State, to Mr. Hibben, Chargé, May 19, 1909, For. Rel., 1909, p. 222.

2 Mr. Bayard, Sec'y of State, to Mr. Hill, Feb. 16, 1887, For. Rel., 1887, p. 100. Mr. Bayard, Sec'y of State, to Mr. Morgan, Minister to Mexico, May 26, 1885, Moore's Dig. VI, 294.