Mr. Olney to Mr. Gana.

No. 6.]

Sir: My attention has been called to your note of the 28th of February last, in relation to the proposal made by my predecessor for the establishment of a new commission of arbitration to consider and finally dispose of those cases which were presented to the late commission, but which it, for want of time, failed to dispose of finally.

You state that the number of claims presented on behalf of American citizens before the late commission was much larger than your Government had been led by Mr. Egan, our late minister to Chile, to anticipate, and you intimate that some of them should not have been presented. You also refer to several propositions made by you to my predecessor, since the termination of the late commission’s existence, looking to the adjustment of the unsettled claims by methods which you, under the circumstances, thought preferable to arbitration. Finally, however, waiving these considerations, you consent, on behalf of your Government, to a new commission, but suggest two conditions, namely: (1) That the claim of the North and South American Construction Company against the Republic of Chile shall be excluded from the commission’s consideration; and (2) that the commission shall sit in the city of Santiago.

I am constrained to say that I do not feel justified in assenting to either of these conditions. I note the arguments advanced by you in behalf of your suggestion that the North and South American Construction Company’s claim should be excluded. These objections were in substance made before the late commission, and were not considered by it sufficient to exclude the case from its jurisdiction. One of the principal reasons advanced by you for excluding that case from the new commission is that the claim is in its nature contractual. If this were true your objection might be sufficiently answered by calling attention to the fact that a purely contractual claim asserted by a citizen of Chile against the United States was entertained by the commission, a demurrer which the agent of this Government made to the same having been overruled.

I refer to the case of Mr. Trumbull, who filed a claim for $6,000 for service rendered by him as attorney in securing the extradition from Chile of a fugitive from the justice of this country. In point of fact, however, the construction company’s claim is not, properly speaking, based upon the contract, but upon conduct of the Chilean Government, amounting to a practical confiscation of its property.

But the question whether any particular claim is a proper one for the consideration and decision of an international commission is necessarily one which the commission itself must determine. The conventions under which such commissions are organized usually describe in general terms the class of cases of which the commission is to take jurisdiction, and whether any particular case presented to it comes within this class the commission must, of course, determine. The decisions [Page 84] of the late commission, both interlocutory and final, are binding upon both Governments, the latter absolutely so, the former unless reversed, after proper proceedings for a rehearing. That commission having overruled a demurrer interposed by your Government to the construction company’s claim, any new commission must take up the question just where the former commission left it, subject to the right of your Government to move for a rehearing. It certainly would not be proper to exclude the claims entirely from the consideration of a new commission.

Passing now to the question of the place of session for the proposed new commission, I am unable to acquiesce in your argument in behalf of Santiago, and among other reasons for this, which seems to me conclusive: The convention under which the late commission was organized was undoubtedly entered into by both parties in good faith, for the purpose of procuring a settlement by means of an international commission sitting in this capital of all claims between the two countries of the character described in the convention. This was the leading purpose. The limitation of the period for the commission’s sessions was altogether subordinate to this leading purpose, and the consummation of this purpose should not be frustrated because experience has shown that the period fixed was inadequate for its accomplishment. Good faith, in my opinion, requires that a new commission should be created to take up all the cases which were brought before the former commission, but not finally decided, exactly in the condition in which they were left by it; and the same good faith requires that the hearing and decision of these cases should be completed in this city, as contemplated by the former treaty.

The situation is the same as if the labors of the commission had, by some inevitable accident, been cut short in their midst; and in the actual case the duty of both Governments to reinstate affairs in just the position in which they were left when the functions of the late commission ceased is as clear as if they had been terminated by inevitable accident in the manner supposed.

Accept, etc.,

Richard Olney