Lord Lyons to Mr. Seward.

Sir: Her Majesty’s government have had under their consideration the note which Mr. Stuart had the honor to address to you on the 24th September last respecting the case of the Labuan, as well as the reply which you were so good as to make to that note on the 30th of the same month.

Her Majesty’s government cannot regard the conduct of the district attorney at New York, with respect to procuring ex parte evidence from Matamoras, as consistent with the terms of your note to me of the 9th April last; nor can they consider this proceeding as one in accordance with the usual practice of prize courts. Her Majesty’s government are advised that, according to that practice, evidence might properly be admitted before commissioners appointed by the court, limited to the purpose of ascertaining the amount of damages really sustained; but after sentence upon the merits in the principal cause, to allow fresh evidence to be admitted as to the principle and law of the case, to which alone the evidence suggested by the district attorney would seem to apply, is, her Majesty’s government believe, without precedent in the practice of prize courts, either in England or in America, and fraught in the present case with manifest injustice.

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Her Majesty’s government have throughout maintained the position that the peculiar circumstances of this case rendered it an affair between the two governments, and it was pointed out to the government of the United States that to refer the case to the prize court would be attended with no other consequences than an increase of costs and expenses, and the infliction of the further injury of delay in redress to the claimants.

Under these circumstances, I am directed to state to you that though the question of the amount of damages may be open to further evidence, her Majesty’s government consider that the principle is not open to controversy, and, consequently, that the evidence which it is proposed now to adduce is wholly irrelevant; and I am desired to add, that her Majesty’s government much regret, after all that has passed, the additional injury of further delay thus inflicted upon the claimants, which appears to them to be without justification or excuse.

I have the honor to be, with the highest consideration, sir, your most obedient, humble servant,

LYONS.

Hon. William H. Seward, &c., &c., &c.