File No. 422.11 G 93/621.

The American Chargé d’Affaires to the Secretary of State.

No. 200.]

Sir: I have the honor to report that since my despatch No. 197, dated March 17, 1918, the progress in the formation of the Arbitral Tribunal has been very slight. Since that date the time has been taken up by a correspondence between Dr. Henry L. Janes, the American Arbitrator, on the one side, and the Minister of the Interior and the Judge of Letters of the Province of Pichincha on the other. Copies of this correspondence are enclosed for the information of the Department.

I have [etc.]

Rutherfurd Bingham.
[Page 487]
[Inclosure 1—Translation.]

The Judge of Letters to the American Arbitrator.

No. 417.]

Dr. Henry L. Janes: This Court ordered that you take possession of the charge of Arbitrator; and in order that this proceeding may be effected, a new day and hour being fixed, you will, if you please to do so, make it known whether you are willing to take the oath, or, in the contrary case, to make known the objection you may have to performing that act, in which this Court can intervene with indisputable authority.

God and Liberty,

Carlos F. Gómez.
[Inclosure 2—Translation.]

[Untitled]

Dr. Henry L. Janes: In the proceedings put into effect in order that you and Dr. Alfredo Baquerizo Moreno may take possession of your offices as Arbitrators, in order to pass upon the controversies which have arisen between the Guayaquil and Quito Railway Company and the Government of Ecuador, there is filed further the following decree:

Quito, March 15, 1913, 1 p.m. In accordance with Clause No. 1 of Article 49 of the Organic Law of Judicial Power, this Court has authority to give possession to Doctors Alfredo Baquerizo Moreno and Henry L. Janes of the office of Arbitrators, by means of the prescribed oath; since the State is the plaintiff in the controversies or disagreements with the Guayaquil and Quito Railway Company, this authority can not be doubted. For the purpose indicated in Clause No. 1, the Secretary will amplify his communication of the 10th instant; and for the purpose indicated in Clause No. 2 of said order, let the said Dr. Henry L. Janes be informed, without waiving the notice of this decision. In view of the answer which may be given to the said notice, a day and hour will be fixed for giving possession of the office.

Gómez.

I communicate this to you for your information.

The Second Secretary of Hacienda.
A. Villacreses Gómez.
[Inclosure 3—Translation.]

The American Arbitrator to the Minister of the Interior.

Mr. Minister: I have the honor to acknowledge receipt of your note No. 140 of the 13th instant, in which you have the kindness to inform me of the steps taken by the State’s Attorney intended to promote the organization of an Arbitral Tribunal in order to pass upon the controversies which have arisen between the Government and the Guayaquil and Quito Railway Company. You add that the Attorney and the agent of the Company had placed obstacles in the way of having the oath referred to taken before the Supreme Court. Upon informing me that the Government had designated the Senate Chamber as the office of the Arbitral Tribunal in the beginning of its labors, you invite me to present myself at this hall for the installation of said Tribunal.

I believe I can say to you, Mr. Minister, frankly, that nothing would give me greater pleasure than to see the immediate beginning of the labors for which I came expressly from a long distance and underwent an arduous journey, believing that the Tribunal formed by the delegates of two Presidents would act without delay. Before arriving in Ecuador I could not imagine any difficulty or ambiguity in the clear interpretation of the clause by which the contracting [Page 488] parties agreed to resort to arbitration as the sole means for deciding all controversies which might arise between them.

The representatives of both parties now assure me that difficulties have arisen relating to the character of the Tribunal which the Governments of the United States and of Ecuador have endeavored to start aright.

The conversation which took place in the Ministry last Monday to which you refer in your kind communication, gave me the impression that no real divergence existed between the desires and intentions of the representatives of the parties; that, as I had the opportunity of stating to you at your home the evening of the same day, it was a question merely of words and of finding a satisfactory formula which might enclose the purposes of the parties which really are not antagonistic. I still hope that the bases for the submission of the controversies will be found before long in the good-will of the parties, so that in this manner the prompt solution may be arrived at of a problem which cannot but present in the future new and more serious difficulties to the Ecuadorean nation and to this public utility, which should measure up to the growing necessities of the country.

I have delayed in answering this note, in the belief and hope that during these days I would receive the pleasing announcement of an arrangement of the question pending in regard to said bases.

Night before last the Chargé d’Affaires of the United States informed me of the contents of the note of the Ministry of Foreign Relations of the 14th instant, which appears to indicate the same status which existed on Monday, the 10th instant. The reply which the Honorable Mr. Bingham made to that note of the Ministry has as an object the assisting of the parties in so far as possible to come to an understanding without further delay and set forth the points which, without apparent reason, have appeared, under certain aspects, as stumbling blocks, when in reality that nature should not be given to them.

As unfortunately, dear Mr. Minister, these doubts have arisen regarding the scope and nature of the arbitration, it appears to me that the interests of the parties would be better served and that future difficulties would be avoided by arriving at once at an agreement (which does not appear to be difficult) which may make clear the relations established by the contract in this regard and may provide a ground of mutual understanding. I hope that your clear mind may deign to work to the end that the Tribunal may begin its labors without delay, or that the parties may decide with equal promptness to appeal directly to another means for fixing and securing their respective rights.

I write you thus privately with the strong hope of being able to register very soon a definite decision in regard to the present situation, and in order to tell you that I must therefore write to the Second Judge of Letters, informing him that various questions with regard to the organization of the Arbitral Tribunal, the elucidation of which properly belongs to diplomacy, are now being discussed officially, and that for this reason it is not possible for me to recognize his jurisdiction in the matter.

I am [etc.]

Henry L. Janes.
[Inclosure 4—Translation.]

The American Arbitrator to the Judge of Letters.

Honorable Sir: I have the honor to acknowledge receipt of the note dated the fifteenth instant, addressed to me by the Court, in which it is said that I have been ordered to take possession of the office of Arbitrator; and in order that this proceeding may be put into effect, day and hour being fixed, it is added that I make it known whether I am ready to take the prescribed oath before you as the Ecuadorean authority designated by the law and procedure of Ecuador to intervene in giving arbitrators possession of their offices.

In view of the fact that the Chargé d’Affaires of the United States of America has informed me that he is now in communication with the Minister of Foreign Relations of Ecuador in regard to matters concerning the immediate organization of the Arbitral Tribunal, with the view of cooperating in so far as possible [Page 489] and proper towards this much-desired end, you will perceive that the only correct course which I can now follow is to await the result of this diplomatic exchange of ideas.

Naturally, I can only send you the above in a very private manner for your information, without accepting nor entering into discussion regarding your jurisdiction in the matter, upon which, of course, it is not within my province to pass.

I am [etc.]

Henry L. Janes.
[Inclosure 5—Translation.]

The Minister of the Interior to the American Arbitrator.

No. 179.]

Mr. Henry Janes: I received your private communication dated the 17th of the present month, which you were pleased to address to me in reply to my note No. 140 of the 13th instant; and I permit myself to state to you that, while I applaud the desire which you make known to me, to begin the labors for which you expressly came from a long distance and after a rather weary journey, I regret, at the same time, that the objection of the Guayaquil and Quito Railway Company to proceed in accordance with that which we had agreed upon, and your fear, made known to the Chargé d’Affaires of the United States of America, that there might be error in procedure, should be the cause of the delay in beginning the labors of the Arbitrators, a delay which is contrary to the earnest desires of the Government of Ecuador and causes the latter great injuries.

Clause 27 of the Contract of June 14, 1897 is the authority by virtue of which the President of Ecuador and that of the United States have proceeded to name respective Arbitrators to pass upon the controversies or disagreements which might arise between the two contracting parties; and the tenor of this clause is so clear that, in truth, there is nothing which forbids interpreting it in accordance with its literal tenor, which explains, at the same time, the manifest intention of the contracting parties. The railroad company finds no obscurity whatever in the meaning of said clause, but desires, as I made known to you, that it be amplified by introducing a declaration relating to the finality of the arbitral award, a declaration which it is impossible for me to make, for the incontrovertible reason, which also I made known to you, that it is not within my province to add to nor to modify the contract under pretext of interpreting it. If, having in mind the nature of the arbitration and its antecedents, the arbitral award is judged to be final, the parties do not have to so declare it; but if, by virtue of those same considerations, it is believed that it may be appealable, neither the representatives of the Company nor this Ministry would have the authority to declare the contrary. But this unfounded pretension of the Company is not, in my judgment, any reason why you should delay taking the oath, which you yourself consider indispensable in order that the Arbitrators may begin to discharge their functions.

I permit myself to call the attention of your enlightened and upright discernment to the fact that an error of judgment would be incurred by affirming that the Arbitral Tribunal is formed by the Delegates of two Presidents, that of Ecuador and that of the United States, if it should be desired to attribute to the delegation any characteristics of dependence upon those who are considered as delegators. Both you and Dr. Baquerizo have been named by the respective Presidents, by virtue of the powers which belong to them by Clause 27 of the Contract of June 14, 1897: the Presidents have not accepted the charge of Arbitrators, and for this reason each one of them has named the respective Arbitrator in order that the latter may pass upon all difficulties between the contracting parties; and by virtue of these antecedents your actuation as Arbitrator is not subject to the President of the United States nor to the hindrances placed by the railway company, as you intelligently explained to me in the agreeable conversation to which you refer in your esteemed note.

If you should discharge the duties of arbitro arbitrator or amiable compositeur, under shelter of that independence, seeking the truth and guided by the [Page 490] principles of justice and by good faith; and if, as you stated, diplomatic intervention had no reason for being invoked in this controversy, I find no satisfactory explanation why you should delay for a longer time in accepting the charge, influenced by the expectation of an arrangement between the Government and the Company, which has no reason for existence, since what was agreed upon in said Clause 27 is the legal and sufficient antecedent in order that the Arbitrators may accept the charge and begin their labor of justice.

In the last paragraph of your letter, you say to me: “I write to you thus privately with the strong hope of being able to register very soon a definite decision in regard to the present situation, and in order to tell you that I must therefore write to the Second Judge of Letters, informing him that various questions with regard to the organization of the Arbitral Tribunal, the elucidation of which properly belongs to diplomacy, are now being discussed officially and that for this reason it is not possible for me to recognize his jurisdiction in the matter.” Permit me to state to you, that I consider lacking in foundation the statement that the organization of the Arbitral Tribunal should properly be elucidated by diplomacy and that said organization is being discussed officially. No, Mr. Janes, you know perfectly not only that the Government of Ecuador upon entering into the contract dated June 14, 1897, acted in its character as a legal person, leaving out absolutely the other characteristics belonging to the State, in regard to a contract for which any individual or legal entity has legal capacity, but also that the other contracting party is also a legal entity, which undertook the obligation of constructing a work in Ecuador. Contracts of this nature between two natural or legal persons which relate to acts which can be done by any natural person, are not subject to diplomatic intervention, except in the sole case of a denial of justice, as the foreign contracting party, Mr. Harnian, recognized before the Contract of June 14, 1897, was reduced to public writing.

The contracting parties set forth the form of conduct by which they should be guided, and they can demand the fulfillment of the legal relations established by it under shelter of the principles which are implicitly contained in the contract by the act of its being entered into. In the present case, there is no question of conventions or treaties between nations, or that they owe their existence to diplomatic intervention; in the contract it is expressly agreed that the controversies or disagreements between the contracting parties should be decided by arbitrators; the provisions of the contract have been followed in your appointment and in that of Dr. Baquerizo as Arbitrators; there is no denial of justice; on the contrary, it is demanded by the Government of Ecuador that justice should be done by the persons who according to the contract are called upon to discharge that duty. What sound reason can induce you to await the diplomatic elucidation of a matter, which is in no sense submitted to it, before proceeding to discharge the function of arbitrator?

If there were any deficiency in the arbitral compromise, this should be supplied by the parties by virtue of their own will, and not by extraneous influences which might limit the free-will and independence of the contracting parties; but, in truth, there is no such deficiency, because, as I stated to you, the respective complaints of the parties and their means of defense will be presented before the Arbitral Judges and the Arbitral Judges are authorized to establish the procedure which may be the most convenient for the effective discharge of their duties.

You have recognized it more than once to be indispensable that the Arbitrators should take the oath before discharging their duties, and as the Judge who should receive the oath by virtue of the petition of the representatives of the Government of Ecuador is the Judge of Letters, you should take the oath before him, without this implying that the Arbitrators are subjected to the jurisdiction of the Judge of Letters, as they world not be either to the Supreme Court, if, according to what was suggested by the Railway Company, the latter had presented its petition before the President of said Court.

I hope, therefore, that you, Mr. Janes, in whom I recognize merits of the highest value, will be pleased to cast aside difficulties which have no reason for existence, having in mind that the best method of properly looking after the just interests of the parties, is that the Arbitrators should begin their functions.

God and Liberty,

Modesto A. Peñahereera.