Papers Relating to the Foreign Relations of the United States, With the Annual Message of the President Transmitted to Congress December 6, 1904
Mr. Russell to Mr. Hay.
Caracas, December 6, 1903.
Sir: I have the honor to inclose a copy with translation of a letter from the foreign office referring to the protest of Venezuela against the award of the umpire in the Belgian claims. I also inclose a copy with translation of the protest of the attorney-general of Venezuela referred to.
I am, etc.,
Mr. Sanabria to Mr. Russell.
Caracas, November 27, 1903.
Sir: With the request that you will please forward it to the Government you worthily represent, permit me to inclose a copy of the statement and protest, which the representative of the Republic made to the members of the Venezuelan-Belgian mixed commission in regard to an award given by the umpire of said commission in the claim presented by the Compagnie Générale des Eaux de Caracas.
Venezuela, as you know, has resorted on more than one occasion to arbitration for settling various questions of the gravest importance, and has carefully complied with the sentence of the judges. But her interest in and action in regard to such a beneficial and civilizing process imposes upon her at the same time the duty of disregarding those awards which are in violation of the obligations of contract and the principles of justice.
Once before in a similar case Venezuela was obliged to avail herself of the means now employed to try and obtain, as in effect she did obtain, that the Government of the United States should listen to her just demands, and agree to a revision of the awards of the mixed commission of April 25, 1860.
The lofty sense of justice and honor of which the American Union gave eloquent proof in giving heed to the claims of the Republic, will inspire, as it is to be sincerely hoped, the course of the Government of the Kingdom of Belgium, whose elevated spirit of justice, no doubt, will cause it to receive favorably the protest so justly made by the representative of the nation.
The undersigned takes this occasion, etc.,
Mr. Parejo to the members of the Venezuelan-Belgian mixed commission.
The undersigned, agent of the United States of Venezuela before the mixed commission, by virtue of special instructions from his Government, very respectfully lays before your honorable commission the following facts:
On the 22d of the present month the umpire of your commission made an award in a claim presented by “La Compagnie Générale des Eaux de Caracas” against the Government of Venezuela, by which award Venezuela is obliged to [Page 868] pay the sum of 10,565,199.44 bolivars gold, and in the form prescribed by Article V of the protocol signed in Washington last March. Said award, which absolutely disregards the rights set up by Venezuela, is in contradiction with the facts proved in the memorial, and constitutes a manifest violation of those principles of equity which should govern the decisions of your commission in accordance with the provisions of Article I of the protocol referred to, all of which your orator will now proceed to demonstrate:
I.
According to the Washington protocol there are two essential requisites to be observed in the presentation of claims to your honorable commission.
- 1.
- All claimants must be Belgian subjects.
- 2.
- All claims must be owned by Belgian subjects. The first of the
two conditions required has not been plead against the claimant
company; the second seems to have been disregarded in making the
award for the following reasons:
- (a)
- The claimant company in its memorial textually states “Au premier Janvier 1901 d’apres le Livre Jaune le chiftre que nous ne pouvons controller était ramené par suite des amortissements efectués á, bs. 10,175,000 representés par 20,350 obligations.” If the company had been in possession of all the bonds of the special internal debt of the Caracas waterworks, which constitute the award of the umpire, it would undoubtedly have been able to verify the figures mentioned in the yellow book; it asserts on the contrary that it was unable to do this, and, consequently, according to its own confession, it is evident that it was not the owner of all the bonds, the payment of which nevertheless is demanded by the umpire.
- (b)
- The commissioner for Venezuela produced with his opinion an affidavit from the manager of the Bank of Caracas to the effect that on the 24th of last July said bank was the owner of 100,000 bolivars worth of bonds of the debt referred to, and that in addition there was on deposit in said bank 52,500 bolivars of the same debt belonging to different persons, no one of whom is the claimant company, nor even a Belgian subject.
- (c)
- The special internal debt of the Caracas waterworks has been always quoted, and is quoted to-day on the Caracas market, which is a proof that there is in circulation a part of the bonds, and as said bonds are payable to bearer and the claimant company is not domiciled here it is a necessary presumption that it does not own the bonds that are in circulation.
II.
By the award Venezuela is compelled to pay in gold and for the nominal value 21,131 bonds of the special internal debt of the Caracas waterworks, in spite of the following facts, which could not have been hidden from the umpire:
The 10,792,199.44 bolivars in bonds of the special internal debt of the Caracas waterworks issued by the Venezuelan Government amount to 4,316,879.77 bolivars in gold, as irrefutably proven.
- 1.
- By the conferences between Messrs. José Herrera and George Nevett, for the Government, and Mr. Norberto Paquet, the representative of the company. At the last conference there was produced a copy of the opinion of the commissioner for Venezuela, together with the report of the ministry of public works, wherein appears an account of it.
- 2.
- According to article 6 of an agreement with the company the Venezuelan Government reserved to itself the right to redeem the special internal debt within two years, paying for it in gold at 40 per cent. It is not rationally conceivable how the company could recognize the Government’s right to buy at 40 per cent if it had not received the debt at the same rate of 40 per cent.
- 3.
- The debt was quoted on the Caracas market up to the 28th of last July at from 18 to 20; it has gone up considerably lately, but has never reached its nominal value. Notwithstanding all this, the award directs the conversion to be made at par.
III.
It is an undisputed and indisputable fact that the claimant company accepted voluntarily and deliberately as the price for its property bonds of the special debt issued for the purpose by the Venezuelan Government. Said debt having been suspended for reasons which your commission is aware of are due to the [Page 869] claimant itself, the only thing that can be justly claimed now is a resumption of said debt, as it is a principle of international law that no action can be taken to collect from governments through the diplomatic channels claims of the nature of this one. (See circular of Lord Palmerston to the British agents in January, 1848, and the opinion of Rolin Jacquemin, Revue de droit international et de législation comparée, tome XIX, and tome I, 1869, cited by Pradier Foderé, Public International Law.)
IV.
Lastly, the award to which your orator refers places the claimant company in the ignominious position, be it said, of engaging in a fraudulent negotiation, viz, that of purchasing the debt at the price it fixes, being sure of collecting it in gold at its nominal value.
To sum up, the award of the umpire is in violation of the protocol signed in Washington on the 7th of March by Venezuela and Belgium, infringes on the principles of justice and equity, and is directly opposed to the unquestionable rights of Venezuela.
Consequently your orator, in his capacity as agent of Venezuela before your honorable commission, in the most formal and solemn manner reserves to the Republic all the rights it may have to ask from the proper authority the nullification of said award on account of the radical faults contained in it.