The Secretary of State to the Minister in Cuba (Gonzales)
Sir: Referring to your No. 1048 of July 25, 1919, with which you transmitted a translation of a note, No. 96, dated July 10, 1919, received by you from the Cuban State Department, which states the position of the Cuban Government regarding the proposed arbitration of the claim of the McGivney and Rokeby Construction Company against Cuba, the Department instructs you again to urge upon the Cuban Government the necessity for arbitration of this complicated claim which has been so long pending.
The position of the Cuban Government, as set forth in its note of July 10, 1919, appears to be that the contract of the McGivney and Rokeby Construction Company for the paving and sewering of the City of Havana is of a purely private nature, and that all disputes with regard to it should have been submitted to the Cuban courts, or to the administrative procedure provided by Cuban law. The Cuban Government admits that Article V of the Treaty of 1903 which provides:
“The Government of Cuba will execute, and, as far as necessary, extend the plans already devised, or other plans to be mutually agreed upon, for the sanitation of the cities of the island, to the end that a recurrence of epidemic and infectious diseases may be prevented, thereby assuring protection to the people and commerce of Cuba, as well as to the commerce of the southern ports of the United States and the people residing therein.”
has reference, among other contracts, to the contract of the McGivney and Rokeby Construction Company. The Cuban note, however, goes on to state:
“But none of those precedents carry the category of that contract to that of a public and international agreement, since evidently the interest of the United States,—and in which respect it can not be presumed to exceed that of the Government of Cuba—is that there shall be compliance with the plans for sanitation by means of the works which have been the object of that contract; and this interest of both Governments, American and Cuban, in so far as refers to the sanitation and paving and sewering which were the purpose of the contract with the McGivney and Rokeby Company, has already been completely satisfied and fulfilled, since the said works are concluded for all purposes of the contract, whether done by the Company, or by the Cuban Government itself; wherefore, it does not appear that the Treaty mentioned, of 1903, has been infringed in any part, nor can it enter into question in this matter.”
The contention of the Cuban Government, then, apparently is that Article V of the Treaty of 1903 gives the Government of the United [Page 101] States a right to demand that the work necessary for the sanitation of the Islands be performed, and more specifically, that the work required by the McGivney and Rokeby Construction Company contract be performed, but does not give it the right to insist that the Cuban Government shall carry out its side of the contract which consists in allowing the McGivney and Rokeby Construction Company to perform the work, and in paying the Company in full for work performed. When the contract and the treaty are looked at in the light of all the circumstances, the fallacy of this argument is apparent. The contract is not separable into parts which may be performed independently; and, if the Cuban Government is obliged by a promise to the United States to “execute” the contract, it is obliged both to have the work done and to pay for work properly performed in accordance with the terms of the contract. Whether the work under the contract has been properly performed, and whether the Cuban Government has paid in full for work properly performed, can best be determined at the present time by arbitration.
Moreover, the original contract of June [January] 10, 1902, was made by officials of the Military Government of Cuba during the first American occupation, and the renewing contract of June 23, 1908, was made by the Military Government of Cuba during the second occupation by the United States. As the Government of the United States in effect during a military occupation entered into the contract for the benefit of the Republic of Cuba, it has a direct interest, even in addition to that given by Article V of the Treaty of 1908 , in its complete execution. It should, moreover, be noted that Article IV of the Treaty of 1903, which has apparently been overlooked by the Cuban Government, specifically provides:
“All acts of the United States in Cuba during its military occupancy thereof are ratified and validated, and all lawful rights acquired thereunder shall be maintained and protected.”
The Government of the United States, therefore, both because of the provisions of the Treaty of 1903, and because of the fact that it negotiated the contracts in question for the benefit of Cuba during periods of military occupation, has a direct interest in the full performance of the McGivney and Rokeby Construction Company contract, both as to the performance of the work and the payment of just compensation therefor. The contract, made under these circumstances and given sanction by a treaty, is not a purely private one, but is one in which this Government has a special interest.
As to the present contention of the Cuban Government that the dispute should have been submitted to the administrative and judicial tribunals established by the laws of Cuba, it may be observed that that contention appears highly technical and lacking in substantial [Page 102] merit when it is considered that there is admittedly no existing remedy before the courts or administrative authorities of Cuba and that the adequacy of such remedies at any stage may well be considered to be doubtful. In any event, the scheme of arbitration proposed in the draft protocol is believed to be fair to both sides, for, under it, an award may be made in favor of the Cuban Government against the Construction Company, or in favor of the Construction Company against the Cuban Government, as the proposed arbitration tribunal may decide upon the merits of the case.
It is difficult to understand the further contention of the Cuban Government that it can not enter into an arbitration agreement because of Article 85 of the Cuban Constitution which provides that such disputes as the present shall be submitted to the Cuban courts, and because the matter is now res judicata. If the contention of the Cuban Government were valid, no agreement with Cuba for the arbitration of an international dispute would be possible. It is not believed the Government of Cuba would venture to assume an attitude of opposition to the principle of arbitration, in view of the general practice of Governments to submit to arbitration, on occasion, the justice of their own governmental acts or even the decisions of their courts. If the decisions of the authorities of the Cuban Government in this case, which it is alleged make the matter res judicata, have been correct, they will undoubtedly be affirmed by the decision of the impartial arbitral tribunal provided for in the proposed protocol.
There is, then, above all in the present case the great interest of both Governments of reaching an amicable settlement of a long-drawn-out controversy—a controversy which has led to considerable irritation during its continuance, and a settlement of which can most fairly be made, because of the complicated nature of the case, by arbitration. The draft protocol submitted by you to the Cuban Government in your note of April 10, 1919, has for its purpose the attainment of this object.
You are instructed to bring the views of this Government on this case to the attention of the Cuban Government, and to intimate orally that this Government perceives no valid or substantial reason in the contentions of the Cuban Government why this whole controversy arising out of the contract of June 23, 1908, should not be submitted to a fair arbitration in accordance with the protocol proposed by this Government. You may also state orally to the Secretary of State of Cuba that unless the Government of Cuba, which is committed to the principle of arbitration by its adherence to the Hague Convention for the Pacific Settlement of International Disputes, is able to conclude a protocol for the arbitration of this [Page 103] case along the lines of that submitted in your note of April 10, 1919,93 this Government will be under the necessity of taking this position of the Cuban Government into consideration in other matters pending between the two Governments.
I am [etc]
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