Where there have been confiscatory breaches of contract, it has been noted that the government has not considered itself hampered by its general policy of non-intervention in contract claims and both the Department and international commissions have in such cases relieved claimants from the obligation of their stipulation inhibiting them from invoking the diplomatic protection of their own government. It has already been observed that the government may prosecute a claim arising out of an injury to a citizen, notwithstanding the fact that the citizen renounces his right to an indemnity, the principle being explainable on the theory that the injury to the citizen gives rise to two independent causes of action, one of the state, the other of the citizen. Nevertheless, unless the offense is particularly flagrant or may be deemed a national affront, the individual's waiver of a right to indemnity weakens the moral, if not the legal, right of his government to demand reparation, and the government may well consider itself justified in desisting from pressing a claim waived by the individual who actually sustained injury, as Great Britain did in the Jencken claim against Spain. As will be noted presently, an international arbitral tribunal has regarded a private waiver of indemnity as a bar to an international claim.

In the Orinoco Steamship Company case, in considering the rights of the British stockholders, the British government took the view that its general international right of diplomatic interposition was not modified by the renunciatory clause contained in the concession of that company.2 The German government in a case which likewise arose in Venezuela did not consider itself bound by the renunciatory clause, taking the ground that the German government is not a party to these contracts. That government reserves the right to intervene diplomatically for the protection of its citizens whenever it considers it best to do so, "no matter what the terms of the contract, in this particular respect, are." 3

1 Supra, p. 372.

2 Although, added the English government, the fact that the company had contracted themselves out of every remedial recourse in case of dispute is an element to be taken into consideration when they subsequently appeal for the intervention of his Majesty's Government. Ralston, 90.

* Position of the German government as stated by the German minister at Caracas to Mr. Loomis, the American minister, Moore's Dig. VI, 300.

§ 375. Decisions of International Tribunals on Effect of Contractual Renunciation.

International commissions have had frequent occasion to construe the effect on the right of the claimant to ask the intervention of his government and of the government to intervene in a case where there has been an express renunciation of the right. In the case of Jarr and Hurst,1 Palacio, the Mexican commissioner, speaking for the commission, held that the release of claimants from imprisonment on the understanding that no claim should be brought for the imprisonment, to which arrangement the American minister consented, operated as a bar to the claim.

For the most part, however, the occasions on which international commissions have had to construe the effect of a contractual renunciation of protection have involved the question of the validity of the Calvo clause, which, in contracts, generally reads:

"The doubts and controversies that may arise on account of this contract shall be decided by the competent tribunals of the Republic, in conformity with the laws, and shall not give rise to any international reclamation."

The clause is worded differently from time to time, sometimes stopping with the mere statement that the doubts shall be submitted to the local courts, with no further stipulation as to the renunciation of diplomatic protection. Sometimes such renunciation is added to the stipulation for exclusive jurisdiction of the local courts, with the proviso that cases of denial of justice are excepted. For the present purposes, all forms of the clause may be considered together, for in the cases that have arisen where the stipulation involved nothing further than exclusive submission to the local courts, the local remedies had not been exhausted.

Nor are the principles laid down seriously modified by the fact that the clause has not always been framed in identical language.

The decisions of various international commissions are by no means uniform. In the nineteen cases reported by Moore and Ralston, eight have upheld the clause as barring the right of the claimant to appear before an international commission without having fulfilled his obliga

1 1 Jarr and Hurst (U. S.) v. Mex., July 4, 1868, Moore's Arb. 2713.

tion under the stipulation, and eleven have denied the validity of the clause as barring the right of the claimant, or of his government, to bring the claim before an international commission, in spite of the fact that the obligation of the stipulation had not been fulfilled. One tendency is noticeable throughout. The commissions generally have sought to find a ground on which they could relieve the claimant from the binding character of the obligation contained in the clause.

§ 376. The Validity of Calvo Clause Upheld.

Two of the earliest cases in which the clause was construed came before the United States-Venezuelan commission of 1885. The contract in the case of Day and Garrison provided for private arbitration of disputes under it and precluded by renunciation any international claim. The contracts were held invalid, but Findlay, the American commissioner, upheld the renunciatory clause on the ground that the provision for settlement by arbitration was "inconsistent with any attempt to make [disputes] cause for an international claim on any pretext whatever"-this in spite of the fact that the contracts had been annulled by a decree of Venezuela, which Commissioner Little, in a dissenting opinion, held to have closed the door to arbitration and therefore to bar the defendant from setting up the renunciation of national protection.

In the Flannagan case before the same commission,2 Commissioner Findlay, for the commission, held the claimant bound by the stipulation for exclusive local jurisdiction, but expressed serious doubt as to whether the decisions of the local courts would stand free from international claim in case of a denial of justice. The dissenting opinion of Commissioner Little in that case 3 has since become the starting point for the decisions of subsequent commissions denying the binding character of the clause in case of a subsequent agreement

1 Day and Garrison (U. S.) v. Venezuela, Dec. 5, 1885, Moore's Arb. 3548, 3563–64 (dictum only). The umpire of the 1866 commission had held that the decree annulling the provision as to arbitration, revived claimant's right to make the contract the subject of an international claim, in spite of the stipulation. Moore's Arb. 3563. Flannagan, Bradley, Clark & Co. (U. S.) v. Venezuela, Dec. 5, 1885, Moore's Arb. 3564, 3565.

2

3 Moore's Arb. 3566; Report of the Commission, Washington, 1890, p. 451, Ralston, International arbitral law and procedure, Boston, 1910, p. 36.

by the two nations to submit the question to arbitration. A portion of his opinion on this point may be quoted:

"An agreement in my judgment between the United States and Venezuela to submit its claims to a Mixed Commission for decision according to justice, superseded and took the place of any previous understanding between the latter and the claimants, if any binding one existed, to submit them to any other tribunal for determination. A contract between a sovereign and a citizen of a foreign country not to make matters of difference or dispute. . . the subject of an international claim . . . would involve pro tanto a modification or suspension of the public law.

which he considered beyond the competence of any individual. His government's

"rights and obligations in the premises cannot be affected by any precedent agreement to which it is not a party. Its obligation to protect its own citizen is inalienable."

In 1900 Secretary of State Hay declined to present the claim again to the government of Venezuela "until there has been a compliance with the aforesaid stipulation, resulting in a denial of justice." The claim was, however, brought before the Venezuelan commission of 1903 in the Woodruff case.2

This was the first of four decisions in which the umpire, Dr. Barge of Holland, had an opportunity to construe the effect and validity of the renunciatory clause under protocols essentially the same, and in which his decisions varied to such an extent as completely to obscure the law. In this Woodruff case, Bainbridge, the American commissioner, approved the opinion of Mr. Little, quoted above in the Flannagan case. The Venezuelan commissioner, Paul, considered, as Commissioner Findlay had done in the 1885 commission, that the Calvo clause withdrew the claim from the jurisdiction of the commission. The umpire, Dr. Barge, held that the failure to comply with the stipulation conferring exclusive jurisdiction on the local courts barred the right of the claimant to appear before the commission, although, he added, the citizen could not impede the right of his government to bring an international claim, in case of denial or undue delay of justice. 1 Mr. Hay, Sec'y of State, to Mr. Woodruff, Nov. 28, 1900, Moore's Dig. VI, 301. 2 Woodruff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 151, 160.

In the Rudloff case,1 which was then pending before the local courts but had not yet been decided, Umpire Barge held that the stipulation for exclusive jurisdiction in the local courts did not prevent the commission from exercising jurisdiction, on the ground that the "absolute equity" clause 2 gave the commission the right to determine whether such stipulation operated inequitably. He considered that it did so operate and entertained jurisdiction, after doing which, he said, he could decide whether the failure to submit the case to the local courts affected the claim with a vitium proprium.

In the Orinoco Steamship case,3 Barge again held, after finding that the particular question under discussion was a "dispute" and that the rule of absolute equity could not permit the same contract being made "a chain for one party and a screw press for the other," that the parties having selected their own judges and renounced international reclamation, "absolute equity" did not allow the commission to recognize the claim.

In the Turnbull case,4 Umpire Barge made the most sweeping decision of all. He held that where the parties had "deliberately contracted themselves out of any interpretation of the contract" except by certain designated judges, and no such submission to or decision of these judges awarding damages had taken place, an international commission is precluded from taking jurisdiction of the claim. Mr. Moore pertinently remarks:

"It may be superfluous to remark that, according to this view, there can be no room whatever for international action, in diplomatic, arbitral, or other form, where the renunciatory clause exists, unless indeed to secure the execution of the judgment of a local court favorable to the claimant; for, if the parties have 'no right to claim' damages which the local courts have not found to be due, it is obvious that international action of any kind would be as inadmissible where there had been an adverse judgment, no matter how unjust it might be, as where there had been no judgment whatever."5

1 Rudloff (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 182, 193.

This clause reads: "The commissioners, or in case of their disagreement, the umpire, shall decide all claims upon a basis of absolute equity, without regard to objections of a technical nature, or of the provisions of local legislation."

3 Orinoco Steamship Co. (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 72, 91–92. Turnbull (U. S.) v. Venezuela, Feb. 17, 1903, Ralston, 200, 245.

'Moore's Dig. VI, 307. A good summary of the fluctuating position taken by