The binding character of the clause was upheld by the Anglo-Chilean commission of 1893 in the case of the Nitrate Railway Company,1 in which it was held that the claimant had voluntarily accepted the concession and could agree to such stipulations as he desired; that the granting government in giving concessions, had the right to place foreigners on the same basis as its nationals; and that there is no principle of international law which forbids citizens to agree personally to contracts renouncing diplomatic action, although the stipulation, they added, does not "obligate foreign governments." That is, while his government may not be bound by the renunciatory clause, the citizen is, and the claim was dismissed.2

Plumley, umpire of the French-Venezuelan commission of 1902,3 stated that "he could not entirely ignore the restrictive features of the contract." He gave it partial effect, although evidently consciously restricting it to its narrowest limits, by stating that the question of damages under the operation of the contract is ulterior to the contract itself, and the renunciatory clause is inapplicable, covering, as it does, only the question of rescission. Paul, the Venezuelan commissioner in the Kunhardt case, upheld the validity of the clause although his conclusion to this effect was not involved in the final judgment.

4

Commissioner Wadsworth, speaking for the commission in the Tehuantepec ship canal case 5 held that a stipulation to refer questions arising under the contract to private arbitration must be complied with in order to give an international commission jurisdiction over the case.

Umpire Barge in the interpretation of the renunciatory clause is given in Senate Document 413, 60th Cong., 1st sess. (1908), Correspondence relating to wrongs done to American citizens by the government of Venezuela, pp. 79–84.

1 Nitrate Railway Company, Lim. (U. S.), v. Chile, Reclamaciones presentados al Tribunal Anglo-Chileno, Santiago, 1894–96, II, 320 et seq., cited in Ralston's International arbitral law, 41.

2 This is somewhat analogous to Umpire Barge's conclusions in the Woodruff case, Ralston, 160.

3 Plumley, Umpire in the French-Venezuelan Mixed Claims Commission of 1902, Senate Document, 533, 59th Cong., 1st sess. (1906), 367, at p. 445.

* Kunhardt (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 63, 70 (dictum).

5 Tehuantepec Ship Canal Co. (U. S.) v. Mex., July 4, 1868, Moore's Arb. 3132

§ 377. The Validity of Calvo Clause Denied.

In the several international claims cases in which the binding character of the renunciatory clause has been denied and the claimant relieved from its inhibitions, there is evident an attempt to limit its application and to find grounds for denying its validity as a bar to an international claim. The grounds taken by international commissions to uphold the claimant's right to appeal to the international forum in spite of the renunciatory clause have been three: first, that it is beyond the competence of an individual to contract away the superior right of his government to protect him, as in the Rudloff and Martini cases before the Venezuelan Commissions of 1903; secondly, in cases where the government had annulled the contract without first appealing to the local courts, that such action relieves the claimant from the stipulation not to make the contract a subject of international claim, as in the Milligan case against Peru and the North and South American Construction Co. case against Chile; thirdly, wherever possible, the courts try to find that the claim arises not out of the contract itself, but out of some violation of property rights, thus basing the claim on tort, as in the Selwyn and the Rudloff cases.

It may be profitable to examine the cases somewhat more closely. The principle laid down in the Martini case and the learned opinion of Umpire Ralston is considered good law.1

"The right of a sovereign power to enter into an agreement of this kind" (to submit to a mixed commission the claims of its citizens against another government) "is entirely superior to that of the subject to contract it away. It was, in the judgment of the umpire, entirely beyond the power of an Italian subject to extinguish the superior right of his nation, and it is not to be presumed that Venezuela understood that he had done so."

So in the Rudloff 2 case, Bainbridge, the American commissioner, said:

1 Martini (Italy) v. Venezuela, Feb. 13, 1903, Ralston, 819-841. The opinion on this point seems to be dictum, inasmuch as the umpire decided that damages were due because of the closing of a port in violation of the contract and that the dispute was not within the terms "doubts and controversies which may arise in the interpretation or execution of the contract."

2 Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 183, 187. The opinion by Bainbridge on the question of jurisdiction is not the opinion of the commission,

"It is not within the power of a citizen to make a contract limiting in any manner the exercise by his own government of its rights or the performance of its duties" (the right and duty of protecting its citizens abroad). "The individual citizen is not competent by any agreement he may make to bind the state to overlook any injury to itself arising through him, nor can he by his own act alienate the obligation of the state toward himself, except by a transfer of his allegiance."

In the Selwyn case the question under dispute was still pending in the local courts. Plumley, Umpire, stated that

"within the limits prescribed by the convention constituting it the parties have created a tribunal superior to the local courts,"

and it is not affected jurisdictionally by the fact that the question submitted for its decision is pending in the courts of one of the nations.2 The second class of cases embraces those in which the government has annulled the contract or some important term of it and then sought to estop the claimant by alleging the binding character of the renunciatory clause as a bar to the international claim. In such cases international courts have been apparently very willing to construe the breach by the government as relieving the claimant from his stipulation to be bound by the decision of the local courts and not to make the contract the subject of an international claim. They begin with the premise that the obligations of the clause bear equally and reciprocally upon both parties to the contract-the government and the claimant and that when the government, without resort to the local tribunals, declares the contract null, the claimant is absolved from all obligations limiting his remedial rights.3 The basis for this decision, which finds ample support, bears an analogy to the rule of the Departwhich was rendered by the umpire, Barge. Bainbridge's opinion, however, appears not to have been contradicted by the umpire.

1 Selwyn (Gt. Brit.) v. Venezuela, Feb. 13, 1903, Ralston, 322, 323.

2 Barge, Umpire in the Rudloff case, in which a suit was likewise pending before the local courts also considered that the commission had jurisdiction, notwithstanding the pendency of the case in the local courts.

3 Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 182, 183. See also opinion of Commissioner Little in the case of Day and Garrison v. Venezuela, Dec. 5, 1885, Moore's Dig. VI, 301–2. Commissioner Findlay, however, declined to give the annulment by the Government this effect in the Flannagan case before the 1885 Commission. Barge likewise refused to give it such effect in several cases before the 1903 U.S.-Venezuelan commission.

ment of State and international tribunals, to relieve the claimant, where there has been a confiscatory breach of contract, from the usual practice of a denial of interposition or jurisdiction in contract claims. Mr. Blaine, Secretary of State, in the case of McMurdo stated that it is

"not within the power of one of the parties to an agreement first to annul it, and then to hold the other party to the observance of the conditions as if it were a subsisting agreement."

The same rule was applied by the international commission which subsequently passed upon the claim.

In the North and South American Construction Co. case against Chile, the fact that the government had failed to comply with the stipulation referring the claim to private arbitrators was held to relieve the claimant from his obligation not to invoke the protection of his own government in the enforcement of his rights. The American Commissioner, Vidal, in the Milligan case against Peru, likewise stated that through the annulment of the contract by the government of Peru, the claimant recovered the right which he had renounced to invoke the protection of his government. While Pino, the Peruvian commissioner, did not support Vidal in this decision, but considered the clause as a complete bar to the claim, Vidal's opinion seems to have prevailed, inasmuch as by subsequent agreement between the commissioners an award was made in favor of the claimant.

3

In the third class of cases, the international tribunal circumvented 1 McMurdo (U. S.) v. Portugal, June 13, 1891, Moore's Arb. 1865 et seq.; Mr. Blaine, Sec'y of State, to Mr. Loring, Minister to Portugal, Nov. 30, 1889, Moore's Dig. VI, 297, Moore's Arb. 1870.

2 North and South American Construction Co. (U. S.) v. Chile, Aug. 7, 1892, Moore's Arb. 2318-2322.

Milligan (U. S.) v. Peru, Dec. 4, 1868, Moore's Arb. 1643. In the case of La Guaira Electric Light and Power Co. (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 178–182, Mr. Ralston, in his work on International arbitral law makes the statement that Commissioner Bainbridge, speaking for the commission, said that as to a part of the claim, it was not one "in which the government itself had violated a contract to which it was a party. In such a case, the jurisdiction of the commission under the terms of the protocol is beyond question." In the La Guaira Electric case, however, the contract was not with the government at all, but with a municipality, for which reason the claim was dismissed. Moreover, there is no evidence from the case, as reported, that the contract contained the renunciatory clause.

the inhibitory effect of the renunciatory clause by holding that the subject of the claim arose not out of a "doubt or controversy" under the contract, but out of a deprivation of property rights or breach of contract or some other element which relieved the commission from directly construing the effect of the renunciatory clause.

So in the Selwyn case, Umpire Plumley based his decision upon the ground that

"the claim before him has in no particular to deal with any doubts and controversies . . . regarding the spirit or execution of the contract in which such terms appear. The fundamental ground of this claim as presented is that the claimant was deprived of valuable rights, of moneys, properties . . . and rights of property, by an act of the Government which he was powerless to prevent and for which he claims reimbursement . . . The fundamental feature of this claim is not a matter of contract." 1

A somewhat similar conclusion was reached in the Rudloff, the Martini, and other cases before the Venezuelan mixed commissions sitting at Caracas in 1903.2

$378. Conclusions.

What conclusion may be drawn as to the effect of the renunciatory 1 Selwyn (Gt. Brit.) v. Venezuela, Feb. 13, May 7, 1903, Ralston, 322.

2 Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 188. Umpire Ralston in the Martini case (Italy) v. Venezuela, Feb. 13, 1903, Ralston, 843 held that the closing of a certain port was a violation of the contract and not a doubt and controversy as to its interpretation and execution.

A similar conclusion was reached by Paúl, Venezuelan commissioner in the case of Del Genovese (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 174-178, in which the breach of the contract was apparently not held to be a "dispute and controversy." So in the case of the American Electric and Manufacturing Co. (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 246-250, Barge, umpire, held that the breach of a collateral promise (to annul a previous concession granted to another) was not a "doubt and controversy" under the contract on which claim was brought. He then held, however, that as the promise to annul a previous concession, which also contained the Calvo clause, was in itself a promise to do an illegal act, the breach of such promise could not be made the basis of a claim. No two of Umpire Barge's decisions construing the renunciatory clause seem to be consistent with each other. See also the cases of the Antofagasta and Bolivia Railway Co. (Gt. Brit.) v. Chile, Sept. 26, 1893, Reclamaciones presentados al Tribunal Anglo-Chileno, III, p. 699 at p. 788 et seq.; and Robert Stirling (Gt. Brit.) v. Chile, ibid. I, p. 128 at p. 152 et seq, cited by Ralston in his International artibral law, 42-43. See also Cora and La Vela Ry. & Impr. Co. (U. S.) v. Venezuela, Feb. 17, 1903, Morris' Rep. 69, 70.