838.51/1707
The French Chargé (Laboulaye) to the Secretary of State
Mr. Secretary of State: In a letter dated June 12 last, and afterward in a conversation he had with Your Excellency on the 30th of the same month, the Ambassador called your attention to the difficulties raised by the Haitian Government on the question of the payment of interest and amortization of the gold loan of 1910 of Haiti.
As is known to Your Excellency the Government at Port-au-Prince disputes the right claimed by the Bank of the Union Parisienne to refer to arbitration the question of the service of the said loan in gold. By a note dated July 10, 1924, the Secretary of State for Foreign Relations of Haiti notified the Minister at Port-au-Prince that such a proceeding could only be considered in the relations between the Government of Haiti and the three banks that were parties to the said contract. The bondholders not being parties to the contract could not under the theory upheld by the Haitian Government be allowed to present in their own name any claim on the point of the redemption of the securities in gold or paper francs. The Secretary of State added that he cannot admit that the Union Parisienne is qualified to lay before the Haitian Government any claim whatsoever in the name of the French bondholders, as the 1910 contract concerning the relations between the said bank and the State of Haiti for the service of the loan does not confer upon the bank any such rights. In its capacity of agent of the Haitian Government, so ends the communication, the Union Parisienne is under the obligation to act for the interest of the Republic of Haiti and not that of the bondholders.
After reading the communication above summed up, the President of the Council, Minister of Foreign Affairs, advised the Minister of France at Port-au-Prince that he could not in any way concur in the views of the Minister of Foreign Affairs of Haiti as the argument followed by him seemed to be without juridical foundation.
Indeed the Haitian Government’s main argument comes to this: The borrowers of the 1910 loan, not being parties to the loan contract, “cannot be allowed to lay before the Haitian Government in their [Page 297] own behalf any claim on the point as to whether the securities must be redeemed in gold or paper francs.” This is a purely gratuitous assertion, to the support of which there is brought no legal consideration of any kind, and furthermore, it rests on a misapprehension which the Government of the Republic wishes to dispel.
It is any creditor’s natural and obvious right to be allowed to look to his debtor when he believes his interests are injured on the strength of the very text of the instrument which constitutes the debt, that is to say, in this case, on the wording of the bond. Leaving aside the contract of loan to which they were not a party and by which they cannot in any way be bound, the bondholders are therefore in no way powerless to claim from their debtor the execution of engagements entered into by the said debtor. They always have at their command, since an action at law cannot be brought against a sovereign state, the facility of applying to their Government, which is qualified to vindicate their rights by all means placed at its disposal by the law of nations.
But in this case this question does not arise. The bondholders indeed are not concerned in the case for the present. The dispute is merely between the borrowing Government and one of the banks of issue, bound to each other by a contract entered into on August 29, 1910.6 In the exercise of the right conferred upon it by article 30 of that contract, the Union Parisienne asks that the question of service of the loan in gold be referred to arbitration. In the letter which it addressed on this subject to the Minister of Finance of Haiti, it specified that it acted “in its capacity as bank of issue” and therefore as party to the contract. The Haitian Government has therefore no ground on which it can assert that the bank is acting “on behalf of the holders” and on that account deny it the right to intervene. The Union Parisienne claims a right which is positively conferred upon it by the contract of issue. The fact that this intervention happens to subserve at the same time the interests of the Union Parisienne and that of the bondholders is one that cannot make any difference as to the rights in the question. That action is absolutely independent of any recourse which in common law the bondholder may have against his debtor.
The Minister of Foreign Affairs of Haiti, on the other hand, declares that “in its capacity as agent of the Haitian Government, the Union Parisienne is under the obligation to act in the interests of the Republic of Haiti and not in that of the lenders”.
There is nothing in the contract of issue to support that pretension. The banks of issue, of which the Union Parisienne is one, under-took [Page 298] (article 24) to “buy outright” 130,000 five-hundred-franc bonds. By way of compensation for that undertaking, the banks of issue reserved to themselves certain advantages. For instance, under article 13, the Union Parisienne has charge of the service of the loan for the consideration of a fixed commission of ¼ percent of the sums needed for the service. The contract determines the rights and obligations of each party in connection with one special operation, the issue of the loan, but goes no further. The above-mentioned commission, which is customary in such cases, does not place the Union Parisienne under any obligation to the Haitian Government of a general nature that would not be expressly provided by the contract.
Mr. Camille Léon’s argument would further lead to the unacceptable conclusion that article 30 (providing for arbitration) could never be invoked by the Union Parisienne and would exist for the benefit of the Haitian Government alone.
In directing me to lay before Your Excellency the foregoing remarks, my Government instructs me to inform you of the great value which would attach to having the Government of the United States intervene so as to induce the Haitian Government to desist from its refusal to let the Bank of the Union Parisienne avail itself of the right which lawfully results from the contract signed by the two parties on August 29, 1910.
Be pleased [etc.]