File 838.77/106.

Minister Blanchard to the Secretary of State.

No. 10.]

Sir: I have the honor to forward herewith copy and translation of a note received from the Minister of Foreign Affairs in reply to the memorandum which, at his request, I handed to him at the close of my interview with him on September 25.

As you will observe, the Haitian Government contends that the terms of the railroad contract forbid diplomatic intervention and provide, as the proper mode of procedure in case of disagreement as to the construction to be placed upon any of its terms and conditions, the appointment of a board of arbitration to render a decision as to the proper construction of the contract.

[Page 540]

As to the method of foreclosure employed, the Haitian Government claims that it has acted strictly in accordance with Article 10 of the Cahier des Charges.

The Haitian Government further claims that the railroad company has failed to live up to its contract with respect to the delivery of completed sections of the road, setting forth the fact that there is a stipulation in the contract that five completed sections must be delivered every twelve months, while as a matter of fact, up to the present date, only six sections have been delivered, although more than four years have elapsed since the date on which this stipulation became effective.

On the 28th instant, no reply having been received to my cable to the Department of the 25th instant, and having ascertained from the representative of the railroad company here that he had been served with notice of foreclosure for non-compliance with Article 11 of the railroad contract, I availed myself of an opportunity, when calling upon the Minister for Foreign Affairs on another matter, without prejudging what might be the Department’s views or those of the concessionnaire regarding the suggestion as to a stay in the proceedings, to point out that owing to the Saturday half-holiday followed by Sunday there was a material impossibility for the Department to communicate with the concessionnaire in season to have a reply reach me on the 27th.

The Minister then remarked that the proceedings had to be carried out regularly; but, as the suggestion had been made in a spirit of conciliation, the request for a stay in the proceedings, if made within a reasonable time, would of course be granted; and he assured me, in that case, of the best dispositions of the Haitian Government to endeavor to come to an understanding with the company. He felt confident that a satisfactory solution could be found by mutual concession through arbitration and suggested that negotiations for such propositions of agreement as the railroad company might make be carried on by me in the interest of the railroad company, under instructions from the Department, with him representing the Haitian Government.

The above views, which I believe to be in earnest and prompted by a sincere desire on the part of the Haitian Government to come to a mutually satisfactory arrangement with the National Railroad Company of Haiti, are respectfully submitted to the favorable consideration of the Department.

I have [etc.].

A. Bailly Blanchard.
[Inclosure—Translation.]

The Minister for Foreign Affairs to Minister Blanchard.

The Department of State for Foreign Affairs of the Republic of Haiti received on September 25, 1914, the memorandum which the Minister Plenipotentiary of the United States of America, by order of his Government, was good enough to communicate to it relative to the affairs of the National Railroad Company of Haiti, a corporation, having its principal office at Port au Prince. It states: [Page 541]

The Department of State at Washington has been informed by Mr. Farnham that the Haitian Government has served a notification on the National Railroad Company of Haiti, by an act of bailiff, of its intention to foreclose [its contract] and take possession on the 27th instant of the property of the said railroad company under claim of noncompliance with Article 11 of said contract.

According to the instructions of his Government, the American Minister has the honor to inform the Haitian Government that in the opinion of the Government of the United States such a method of procedure for foreclosure is directly contrary to the provisions of Article 10 of the Cahier des Charges attached to the railroad contracts, which article specifically provides for this contingency.

The Haitian Government upon receipt of this memorandum was greatly surprised at the criticisms made therein, and of the gratuitous intention which is attributed to it of desiring to take possession of the property of the National Railroad Company of Haiti.

The Secretary of State for Foreign Affairs of the Republic of Haiti begs the Minister of the United States of America to please to examine anew the contracts of the railroads of Haiti and the Cahier des Chargés which accompany them; he invites particularly his attention to the following points:

A. “In no case and for no reason shall disputes that may arise as to the interpretation of the clauses of the present contract give occasion for diplomatic recourse.” (Article 16 of the contract of April 16, 1910.)

The sense of this article is clear. Its text can not be misunderstood. It renders, therefore, inadmissible the intervention of the Government of the United States.

B. On the other hand, Article 7 of the contract of the railroad from Gonaives to Hinche, of which the National Railroad Company of Haiti is concessionnaire, stipulates that:

All disputes or all difficulties between the concessionnaire and the State as to the interpretation or as to the execution of one or more clauses of the present contract or of the Cahier des Charges shall be settled by a board of arbitration named for that purpose. (Contract of July 19, 1904.)

Article 7 of the contract of the railroad from Cape Haitien to Port au Prince, of which the same company in concessionnaire, contains the same clause and lays particular stress on the board of arbitration called to solve the difficulties which might arise between the Government and the Company. This article is worded thus:

All disputes or difficulties between the Company and the State as to the interpretation or the execution of one or more clauses or provisions of the present contract or of the Cahier des Charges, shall be settled by a board of arbitration named for that purpose. Each party will designate an equal number of arbiters who, if they can not agree, shall select an umpire to cast the deciding vote, and from whose decision there shall be no appeal.

Therefore, supposing that the procedure employed against the National Railroad Company of Haiti was irregular or contrary to a stipulation of the contracts which bind the parties, the company could only have recourse to arbitration, the only means of ascertaining these difficulties and settling them.

C. These points having put in evidence the inadmissibility of the intervention of the Government of the United States in the litigation that exists between the Government of Haiti and the National Railroad Company of Haiti, there remains to have it recognized that the procedure followed in the present case is, for the Republic, in accord with all involved principles.

The procedure employed for the foreclosure and adjudication has even been provided for in Article 10 of the Cahier des Charges annexed to the contract of April 16, 1910.

(a) As to foreclosure or forfeiture, Article 11 of the contract of concession expressly states:

In the course of the first year after the promulgation of the law sanctioning the present convention, the Company shall deliver at least one section [of the railroad to be constructed], and every twelve months thereafter an average of five sections, except in case of force majeure duly verified, and this under penalty of foreclosure, so as to complete the whole system in five years or earlier.

(b) As to the procedure in case of foreclosure, Article 12 of the contract or convention of April 16, 1910, and Article 10 of the contracts of July 19, 1904, and September 12, 1906, state that—

At any time when the foreclosure or forfeiture may be incurred, there shall be no other formalities to be fulfilled for its execution than those provided for in Article 10 of the Cahier des Charges annexed to the concession-contract. [Article 12 of the contract or convention of April 16, 1910.]

If the concessionnaire incur a foreclosure, the Minister of Public Works, without further summons, shall serve on him a notification thereof by bailiff, and shall put in [Page 542]adjudication the concession, the existing property (material, rolling stock, etc.), and the construction completed and still to be completed. And the concessionnaire or his assigns shall receive the amount of the adjudication, costs deducted, without right of claiming any indemnity. [Article 10 of the contracts of July 19, 1904 and September 12, 1906.]

The fact is that the Company has not delivered the sections which should be delivered in accordance with Article 11 of the convention of 1910. It has delivered only six sections designated as follows: (1) Cape–Grande Rivière; (2) Gonaïves–Ennery; (3) Port au Prince-Arcahaie, Arcahaie-Mont Bouis-St. Marc; and (4) Grande Rivière-Bahon.

At this date, September 27, 1914, it ought to have delivered 11 sections, since Article 11 says that it should deliver five sections, at least, every twelve months, the concession having commenced August 6, 1910, at which time it had to deliver one section.

For the other years—August 1911 to August 1912, August 1912 to August 1913, and August 1913 to August 1914—it should have delivered fifteen sections.

On the part of the Government there have been three successive extensions of time (total 11 months) which extensions permit the company to say that it has eleven sections to deliver instead of 16, but the fact is that there are only six sections in operation up to this date, September 27, 1914. No disputes can be raised on these extensions of time with respect to the sections already delivered, which are six in number instead of eleven. These are facts which can be materially proven.

The Haitian Government is sure that as soon as the Honorable Mr. Bailly-Blanchard shall have communicated to the Department of State the clauses of the contracts of concession and of the Cahier des Charges, the Government of the United States, in its high impartiality, will recognize that the procedure which has been followed with regard to the Company is well founded.