The Secretary of State to Minister Russell.
Washington , June 21, 1907 .
Sir: I have to acknowledge the receipt of your No 188 of April 28 last, inclosing a note and a memorandum from the Venezuelan Government in regard to the five pending cases in which American citizens claim redress from the Venezuelan Government.
The department regrets to find in the position assumed by Venezuela a complete absence of anything responsive to the propositions contained in its instruction to you of February 23 last, looking to an amicable adjustment of these controversies by means of international arbitration That instruction, prepared only after a most exhaustive examination into the merits of each of the controversies in question, directed you to bring these cases again to the attention of the Venezuelan Government, and to urge upon that Government the reasons existing in each case for favorable action, and to insist that each and every demand therein set forth should receive consideration.
The answer the Venezuelan Government makes to these demands practically refuses consideration It is practically confined to a simple denial of the correctness of the attitude of this Government The curt and contemptuous way in which it ignores or dismisses the serious and respectful representations of the United States produces a painful impression of indifference and disrespect With the patience, however, which has characterized the actions of the Government of the United States in the past in all its relations to Venezuela, the department again instructs you to reiterate the views expressed in the instruction of February 23 last and to make the following brief reply to each of the points raised by the memorandum of Venezuela:
the claim of a. f. jaurett.
The answer of the Venezuelan minister of foreign affairs qualifies in general and unfavorable terms the conduct of Mr. Jaurett, but without bringing forward any specific facts which the department had not already most carefully investigated and considered, with the result that no justification appears to exist in point of law or fact for his expulsion It should hardly be necessary to say that the mere characterization of Mr. Jaurett’s conduct as bad, unsupported by facts specific and sufficient in point of law, does not satisfactorily meet the issues presented.
[Page 801]The Venezuelan Government’s attention was called to the unnecessarily harsh manner and method of Mr. Jaurett’s expulsion, involving the double grievance of personal humiliation and pecuniary loss Moreover, attention was called to the fact that the summary and ignominious expulsion of Mr. Jaurett was in contravention of the fundamental law of Venezuela As to these points no explanation or justification is offered.
The answer finally rests on a mistaken assumption of fact that “the Government of the United States found the expulsion of Mr. Jaurett so right and just, in view of his bad conduct, that at the time it closed the affair.” From this assumption the United States Government is constrained to vigorously dissent.
There is an absence of any serious attempt on the part of the minister of foreign affairs to meet the arguments and authorities abundantly adduced in support of this claim On the other hand, there is an assumption, at once erroneous and gratuitous, that the Government of the United States found the expulsion of Jaurett right and just and had abandoned the case Both that which is said and that which is omitted in the Venezuelan reply seem clearly to indicate that the Government of Venezuela is without an adequate answer to the merits of the case and to afford additional proof of the justice of the claim.
the question of opening awards.
The Government of Venezuela interposes the general objection to a consideration of the cases of the Manoa Corporation and its predecessors and the Orinoco Steamship Co., that these cases were passed upon by the American-Venezuelan Mixed Commission The Venezuelan memorandum asserts that if these cases are to be examined, there is “no reason then why all the rest of the verdicts of the mixed commissions against Venezuela should not be revised; verdicts claimed by her in several cases to be contrary to law.” To answer this objection it is only necessary to refer once more to the well-known fact suggested in the last clause of the Venezuelan answer just quoted, that the Venezuelan Government recognizes that there are certain well-defined grounds for impeaching and setting aside the decisions of arbital tribunals, and that such action in these specific and exceptional cases in no way conflicts with the general obligation to maintain and perform such awards.
The Venezuelan minister of foreign affairs remarked in his report to the National Congress in 1904, referring to the awards of the mixed commissions of 1903:
The fact that Venezuela subscribed to the agreements to which I have referred, and that by virtue of said agreements the mixed commissions entered upon an examination of the claims of foreign subjects, did not impose upon the Government the duty of indiscriminately accepting the sentences they might render * * * The character of a final decision can not always be conceded to arbitral decisions merely because they proceed from the persons appointed to constitute an arbitration commission.
The cause of arbitration would suffer severe injury if the principle should come to be accepted that all arbitral decisions must be carried out, whatever they may be Publicists have already declared unanimously in favor of the right that governments have to seek the invalidation of certain sentences, and well known are the causes that neither opinion may lead to that recourse.
Accordingly, Venezuela has contested the award of the Belgian-Venezuelan Mixed Commission in the case of the General Co of the Caracas Water Works and the award of the Venezuelan-Mexican Commission in the case of the claim of Messrs Martinez del Rio Hermanos Under these circumstances it would not appear that the contention of this Government that certain awards of the American-Venezuelan Commission should be reexamined, for definite and specific reasons, threatens the integrity of finality of the awards of the mixed commissions in general.
the case of the orinoco corporation et Al.
This Government can not regard the Venezuelan answer to our proposition to arbitrate the claims of the Orinoco Corporation and its predecessors, the Manoa Co (Ltd.) and the Orinoco Co (Ltd.), as satisfactory or sufficient Many of the claims of the Orinoco Corporation had their origin in 1906, long subsequent to the American-Venezuelan Claims Commission of 1903, and none of them were presented to that or to any other tribunal for adjudication.
The action of the umpire of the American-Venezuelan Claims Commission in dismissing certain claims of the Manoa Co and the Orinoco Co which were presented to the commission can not be accepted as final, since the umpire, in looking to the language of the Fitzgerald contract rather than to the plain text of the protocol for a definition of the authority of the commission to examine and adjudicate the claims presented to it, decided that the clause of the contract providing that any controversies growing out of the contract should be submitted to the local courts prevented the commission from passing on the merits of the case.
It should be added in passing that in his purely obiter discussion of the status of the Fitzgerald contract the umpire overlooked the fact that some of the claims of the Manoa Co and all of the claims of the Orinoco Co which were presented to the commission arose subsequently to the promulgation of the executive resolution of June 18, 1895, which reinstated the Manoa Co in all of its rights under the Fitzgerald contract, and, therefore, they could not have been invalidated by the failure of the Manoa Co in 1884–85–86 to perform that contract, if such failure there had been, as the umpire supposed.
Such a decision, disregarding alike the terms of the protocol which gave rise to the commission and defined its jurisdiction, and the plain principles of justice and equity which should have guided its judgment even had there been no express provision to that effect, can not be regarded as a final or satisfactory disposition of these claims.
the orinoco steamship co.
That the Government of Venezuela recognizes that the awards of arbitral commissions are not necessarily binding upon the parties, has already been remarked That the decision in the case of the Orinoco Steamship Co falls within the well-defined limits of the principles which justify a government in refusing to be bound by such a decision, has been pointed out in detail in the instruction of February 23, 1907, to the United States minister, which has been presented to the Government of Venezuela.
[Page 803]It has been shown that the decision of the umpire of the American-Venezuelan Commission of 1903, in this case, rested on such serious errors of law and fact, and manifested such a complete disregard as well of the terms of the protocol as of those principles of justice and equity common not only to international law but to the law of all civilized States, that the United States could not be expected to regard the decision as a finality This well-considered and well-supported opinion has not been changed by the simple statement of the Government of Venezuela that the questions involved in this case “have already been adjudicated.”
the new york & bermudez co.
The Venezuelan note says that the claims of the Orinoco Steamship Co and the New York & Bermudez Co are “matters which have been adjudicated and closed in legal form, and in accordance with the legal procedure required in each case.”
Formerly when representations were made to the Venezuelan Government concerning the seizure of the property of the New York & Bermudez Co that Government answered that it could not discuss the allegations made as to the irregular and arbitrary character of the seizure because the case was pending before the courts But now, after the lapse of nearly three years, the ground is taken that the matter is not one to be discussed because it has been “adjudicated and closed in legal form.” As the result of this second position the Venezuelan Government in effect declines to enter into any discussion of the subject at all The proofs submitted by this Government of denial of justice, and its representations that the claimant’s property rights have been taken away arbitrarily and in gross violation of Venezuelan law, have been passed over in utter silence.
It is, moreover, necessary to point out that the assertion that the case has been “adjudicated and closed in legal form” involves a strange misconstruction of the legal situation Except for the decision of the federal and cassation court, rendered on August 7, 1905, declaring the Hamilton concession to be annulled, the company’s legal rights, embracing its land and mining titles, stand judicially unassailed, save in so far as they were arbitrarily disregarded and violated in the ex parte order of sequestration under which the company’s property was seized It is also necessary to point out that even the proceeding for the annulment of the Hamilton concession has not been terminated, since no disposition has been made of the report of the appraisers appointed by the federal and cassation court to assess damages against the company in that suit Although this report was filed on November 24, 1905, it still remains unacted upon.
In its instruction of February 23 last the department set out the claim of the New York & Bermudez Co in sufficient detail to acquaint the Venezuelan Government with the specific wrongs complained of, for which a remedy was courteously asked This Government then made earnest protest against the continuance in the case of this perversion of judicial process In reply thereto no remedial action is promised, or is there even a recognition that the facts stated by this Government call for inquiry Such a state of affairs constitutes a plain denial of justice and should not be permitted to exist.
[Page 804]claim of the united states & venezuela co.
In regard to the case of the United States & Venezuela Co., ordinarily known as the Crichfield case, the Venezuelan memorandum asserts that the Crichfield concession was not approved by the Nation Congress This Government once more calls attention to the general resolution of the Venezuelan Congress, passed on the 25th of February, 1902, approving all the acts executed by the Citizen General Cipriano Castro “during the period in which he has exercised the provisional presidency of the republic.”
Inasmuch as the Crichfield concession was granted by Gen Castro during his provisional presidency, it would seem to have been approved and validated by the above resolution in case such approval by the legislative department is required by the constitution of Venezuela This resolution was called to the attention of the Venezuelan Government in the department’s instruction of February 23, The answer of the Venezuelan Government, however, is silent upon this point.
In regard to the statement in the Venezuelan reply that the Government of Venezuela has, through private conference, come to a friendly understanding with Mr. Crichfield, and is not able to understand why Mr. Crichfield does not “take up the matter again instead of leaving it in the state it is now in,” this Government is constrained to reply that it does not understand that any arrangement has been reached which is satisfactory to the United States & Venezuela Co On the contrary, it understands that having failed to reach a private settlement with the Government of Venezuela that company has notified the Government of Venezuela of its election to regard the action of that Government as amounting to a repudiation of the Crichfield contract, and that the company has therefore elected to rescind the said contract, and to claim from the Government of Venezuela all damages suffered by the company by reason of said repudiation, always providing that such election to rescind will become inoperative if the Government of Venezuela should elect to affirm and to comply with the terms of the original Crichfield concession.
Under these circumstances the Government of the United States is constrained to believe that the Crichfield concession was a valid and subsisting contract, duly ratified and binding upon the Government of Venezuela That this contract has been improperly violated and repudiated by the Government of Venezuela, and that the United States & Venezuela Co., not having been able to agree upon any terms of settlement with the Government of Venezuela, has elected to regard the acts of that Government as a repudiation of the contract and to rescind the contract and claim damages for such repudiation unless the Government of Venezuela consents to acknowledge the validity of the original Crichfield concession and to comply with its terms.
This Government therefore instructs you to bring this case once more to the attention of the Venezuelan Government and to urge its immediate and careful consideration.
As to each and every one of the aforesaid cases, in case you shall not receive a prompt and favorable reply from the Government of Venezuela, you will expressly and formally propose to the Government of Venezuela that the claims against that Government in respect [Page 805] thereof be submitted to arbitration before the permanent court of arbitration at The Hague, or, if Venezuela shall prefer, before a tribunal of three jurists not members of The Hague tribunal, to be selected in the usual manner.
I am, etc.,