File No. 422.11G93/563.
The American Chargé
d’Affaires to the Secretary of
State.
No. 170.]
American Legation,
Quito,
December 16, 1912.
Sir: I have the honor, with reference to
telegram from this Legation dated December 14, to report that the
Minister for Foreign Affairs requested an interview with me on the
afternoon of December 14th for the purpose of discussing matters
connected with the proposed arbitration.
[Page 475]
The Minister desired to take up the contents of my note No. 122,1 enclosure in despatch to
the Department No. 1631,
dated November 13, 1912, which embodied the Department’s instruction
dated November 9.2
The Minister stated that the Arbitral Tribunal of 1907–1908 had never
rendered a decision. That the controversy at that time was settled by
the contract of September 30, 1908, which was reached by direct
agreement between the Government of Ecuador and the Railroad Company.
This agreement was approved, with slight modifications, by the
Ecuadorean Congress, November 6, 1908.
The point which the Minister for Foreign Affairs wished to make was the
following: Has the Railroad Company carried out its part of the contract
of September 30, 1908, or has it failed in some of its obligations?
The Minister stated that the Government of Ecuador was very desirous of
having this question passed upon by the Arbitral Tribunal. If the
Arbitral Tribunal decides that both the Government of Ecuador and the
Railroad Company have complied with the stipulations of the contract of
September 30, 1908, the other questions to be decided will be those of a
date later than September 30, 1908; but if on the other hand either the
Ecuadorean Government or the Railroad Company has failed to carry out
the obligations imposed upon them by the above-mentioned contract, it is
evident (according to the Minister) that these points can not be
considered as being res judicata, and should be presented to the
proposed Arbitral Tribunal for decision.
Therefore the Minister for Foreign Affairs informed me (Legation’s
telegram of December 14) that he had instructed the Ecuadorean Legation
in Washington to request that the departure of Mr. Janes be delayed
until receipt by mail of the note, copy and translation of which is
enclosed herewith, by the Department, in order that Mr. Janes’
instructions might be amplified, so that the Tribunal could pass upon
the question of the fulfillment by the Railroad Company of its
obligations under the contract of September 30, 1908,
It is not felt that the Minister for Foreign Affairs of Ecuador has made
the main point of his argument sufficiently clear in the note enclosed
herewith. As the contents of this despatch was reached by the writer as
the result of a long personal conversation with Mr. Dillon, it is hoped
that it may serve to throw some light on the real feelings of the
Government of Ecuador with regard to the proposed arbitration.
I have [etc]
[Inclosure—Translation.]
No. 118.]
Ministry of Foreign Relations,
Quito,
December 12, 1912.
Sir: I have the honor to reply to your
note No. 122 dated the 11th of last November, in which you state
“that the Government of the United States cannot now regard as open
for discussion matters involving the existence and validity of the
fundamental contractual agreements between the Government of Ecuador
[Page 476] and the Railway
Company”; matters which, as you state, “were under discussion in a
former controversy and were passed upon by the Arbitral Tribunal of
1907–1908, in an act having the status and value of an arbitral
award, which has since not only been fully recognized but until the
present time unquestioned by the Ecuadorean Government.” Finally you
add in the above-mentioned note that: “The status as to the
fundamental agreements being thus, and the matters of present
dispute between the Ecuadorean Government and the Company, as
heretofore considered by the two Governments, having solely to do
with the transactions between the Government of Ecuador and the
Railway since September 30, 1908, the Government of Ecuador will
perceive that the present proposed arbitration can have relation
only to such latter matters and that in the discussion and decision
thereof the status referred to must be accepted as a fundamental
basis upon which to ground the determination of the questions
involved.”
With reference to what I have quoted, I shall begin by stating
certain ideas which I consider of the greatest importance:
Regarding the arbitration, it is the President of the United States,
individually, and not the Government of that Republic who possesses
the character of Arbitrator, by reason of the contract entered into
with the Railroad Company. Therefore I believe that the intervention
of the North American Government in the matters treated of in this
note can not be accepted.
Therefore I can do no less than deplore that your judgment in this
matter differs materially from the opinion of the Ecuadorean
Government and that this discrepancy may result in the postponement
of the settlement, which the Chief of the State greatly desires to
conclude in the shortest possible time.
In fact, theoretically as well as practically, the constitution of an
Arbitral Tribunal whose members had not received ample and equal
full powers for the discharge of their functions, would be
unacceptable.
The reasons which in your opinion have determined the President of
the United States to restrict the powers of his representative are
based upon this false idea: that the difference between the
Government of Ecuador and the Railroad Company previous to September
30, 1908, “were discussed and passed upon” by the Arbitral Tribunal
of 1907–1908, it being the case that the said Tribunal, although it
was properly constituted, did not pronounce any award, as appears
from the evidence. These differences were arranged, it is true, but
not by the Arbitral Tribunal above mentioned; they were arranged by
the mutual agreement of September 30, 1908, approved with
modifications by the Legislative Decree of November 6 of the same
year: an adjustment which does not have the legal status peculiar to
an arbitral award. The agreement is a contract, and bilateral
contracts have the characteristic that they are null and void in
case one of the contracting parties does not carry out his part of
the agreement. It is not thus with arbitral awards, which have the
character of finality or definitiveness independent of the
accomplishment or non-accomplishment of the undertakings therein
contained. In consequence, the only arrangement that exists between
the Government of Ecuador and the Railroad Company, that is to say,
the transaction of 1908, does not have the decisive character with
which you desire to endow it in the note to which I am now
replying.
On the other hand, the discussion as to what shall constitute the
matters which the projected Arbitral Tribunal shall decide I
consider irrelevant because the Tribunal is the only authority
empowered to determine them, without further limitations than those
established by the mutual obligations of the parties, obligations
which in this case are no other than the contract of June 14, 1897,
between the Government of Ecuador and the Railroad Company. The
powers of the Arbitrators should have the scope that is indicated by
Article 27 of the above-mentioned contract. It is not the attribute
of one only of the Arbitrators to determine in advance the matters
that shall fall under the jurisdiction of all the Tribunal, because,
in the exercise of its functions, not even the Tribunal itself can
amplify or restrict the limits of the pact that gives it life.
On account of what I have above set forth, I should appreciate it if
you would suggest to His Excellency the President of the United
States of North America the expediency of not limiting the juridical
powers of his Delegate, in order that he may exercise them without
restriction, whatever may be the claims of the Government of Ecuador
or its disagreements with the Railroad Company, provided that these
disagreements are those contemplated by article 27 of the contract
of June 14, 1897. My Government considers it an indispensable
condition for the perfect working of the Arbitral Tribunal that no
one of its members [Page 477] have
restricted powers, differing from the ample powers with which both
Representatives should be invested, as the Representative of the
Republic will in fact be invested.
I avail [etc.]
