THE CANEVARO CASE

between

ITALY and PERU

Decided May 3, 1912

Syllabus

The claim of the Italian Government against Peru on behalf of Napoléon, Carlos and Rafael Canevaro originated as follows: It appears that on December 12, 1880, N. de Pierola, at the time dictator of Peru, issued a decree by virtue of which there were created, under date of December 23, 1880, pay checks (bons de paiement, libramientos) to the order of the firm of José Canevaro & Sons for the sum of 77,000 pounds sterling, payable at different periods; that these pay checks were not paid as they fell due; that in 1885, the father having died in 1883, the firm was reorganized with José Francisco, César and Rafael Canevaro, Peruvian citizens, as copartners, forming a Peruvian corporation; that in 1885 the Peruvian Government paid 35,000 pounds sterling on account, leaving due and outstanding to the firm the sum of 43,140 pounds sterling; that the firm remained in existence until it was dissolved in 1900 by the death of José Francisco Canevaro; and that the pay checks (bons de paiement) finally passed into possession of Napoléon and Carlos Canevaro, Italian subjects, and Rafael Canevaro, whose claim to Italian nationality was contested by Peru.

Differences arose between the claimants and Peru as to whether the pay checks should be paid in coin, or in one per cent bonds in accordance with the provisions of the Peruvian domestic debt law of June 12, 1889, as to the amount which the claimants had a right to demand, and as to the nationality of Rafael Canevaro. Peru contended that the debt was contracted by Peru with a Peruvian corporation and that therefore its settlement was entirely a domestic matter, but, finally, on April 25, 1910, as the result of diplomatic negotiations with Italy, a compromis1 was signed, submitting the questions in dispute to a tribunal of the Permanent Court of Arbitration at The Hague composed of the following members: Louis Renault of France, Guido Fusinato of Italy and Manuel Alvarez Calderón of Peru. The sessions began April 20, 1912, and ended April 22, 1912, the decision being rendered May 3, 1912.

The tribunal first decided the status of Rafael Canevaro. It considered him as having a twofold nationality: first, by birth in Peru, and, secondly, as the child of an Italian father; but, because of his having acted as a Peruvian citizen, it held that the Government of

1Post, p. 294.

Peru had a right to consider him as such and to deny his status as an Italian claimant. His claim was therefore dismissed.

The tribunal found that the firm of Canevaro & Sons, reorganized in 1885 upon the death of the father, was composed of Peruvian citizens, so that it was Peruvian by domicile as well as by the nationality of its members, and that the firm remained in existence until it was dissolved in 1900 by the death of José Francisco Canevaro. The debt was therefore domestic in its origin and subject to the laws of Peru, especially to the act of 1889, which Canevaro & Sons had recognized by attempting to avail itself of some of the provisions thereof. Napoléon and Carlos Canevaro urged their Italian nationality as a reason why the act of 1889 should not affect their claim, but the tribunal held that their title was derivative and could be neither better nor worse than the right originally acquired by the firm through which they directly or indirectly claimed. Hence, instead of the sum of 43,143 pounds sterling, they were only entitled to the bonds issued in 1889 to meet this indebtedness. The decision as to the amount of the claim was settled by the tribunal's holding that it should be paid in bonds. As to the question of interest, the tribunal decided that the bonds or pay checks (libramientos) of 1880 bore four per cent until due, and after this period until payment the legal rate of six per cent. But, as the act of 1889 provided one per cent interest, the tribunal allowed four per cent upon the original outstanding indebtedness until the date of maturity, six per cent after that date until the first of January, 1889, and one per cent upon the bonds issued in 1889 until July 31, 1912, at which date the bonds were to be paid. The tribunal, however, provided further that payment might be delayed until the first of January, 1913, but that from the first of August, 1912, to the first of January, 1913, the debt should bear six per cent interest.

AWARD OF THE TRIBUNAL

Award of the arbitral tribunal charged with passing on the difference between Italy and Peru in regard to the claim of the Canevaro brothers.-The Hague, May 3, 1912.1

Whereas, by a compromis dated April 25, 1910, the Italian and Peruvian Governments agreed to submit the following questions to arbitration:

Should the Peruvian Government pay in cash, or in accordance with the provisions of the Peruvian law of June 12, 1889, on the domestic debt, the bills of exchange (cambiali, libramientos) now in 1Translation. For the original French text, see Appendix, p. 522. 2Post, p. 294.

the possession of the brothers Napoléon, Carlos, and Rafael Canevaro, which were drawn by the Peruvian Government to the order of the firm of José Canevaro & Sons for the sum of 43,140 pounds sterling, plus the legal interest on the said amount?

Have the Canevaro brothers a right to demand the total amount claimed?

Has Count Rafael Canevaro a right to be considered as an Italian claimant?

Whereas, pursuant to this compromis the following persons were designated as arbitrators:

Mr. Louis Renault, Minister Plenipotentiary, memiver of the Institute, professor in the Faculty of Law at the University of Paris and at the School of Political Sciences, Counselor for the Ministry of Foreign Affairs, president;

Mr. Guido Fusinato, Doctor of Law, former Minister of Public Instruction, honorary professor of international law at the University of Turin, Deputy, Counselor of State;

His Excellency Mr. Manuel Alvarez Calderón, Doctor of Law, professor at the University of Lima, Envoy Extraordinary and Minister Plenipotentiary of Peru at Brussels and Berne.

Whereas, the two Governments have respectively appointed as counsel:

The Royal Italian Government: Professor Vittorio Scialoja, Senator of the Kingdom of Italy and as assistant counsel, Count Giuseppe Francesco Canevaro, Doctor of Law;

The Peruvian Government: Mr. Manuel Maria Mesones, Doctor of Law, attorney.

Whereas, in accordance with the terms of the compromis, the memorials and counter-memorials have been duly exchanged between the parties and communicated to the arbitrators;

Whereas, the tribunal met at The Hague on April 20, 1912. Whereas, in order to simplify the following statement it is deemed best to pass first upon the third question contained in the compromis, that is, the question of the status of Rafael Canevaro;

Whereas, according to Peruvian legislation (Article 34 of the Constitution), Rafael Canevaro is a Peruvian by birth because born on Peruvian territory,

1

And, whereas, on the other hand, according to Italian legislation (Article 4 of the Civil Code) he is of Italian nationality because born of an Italian father;

Whereas, as a matter of fact, Rafael Canevaro has on several occasions acted as a Peruvian citizen, both by running as a candidate for the Senate, where none are admitted except Peruvian citizens and where he succeeded in defending his election, and, particularly, by accepting the office of Consul General for the Netherlands, after having secured the authorization of both the Peruvian Government and the Peruvian Congress;

Whereas, under these circumstances, whatever Rafael Canevaro's status as a national may be in Italy, the Government of Peru has a right to consider him a Peruvian citizen and to deny his status as an Italian claimant.

Whereas, the debt which gave rise to the claim submitted to the tribunal is the result of a decree of the dictator Pierola of December 12, 1880, by virtue of which there were issued, under date of the 23d of the same month, pay checks (bons de paiement, libramientos) to the order of the firm of José Canevaro & Sons for the sum of 77,000 pounds sterling, payable at different periods;

Whereas, these "checks" were not paid at the periods set, which periods were coincident with the period of enemy occupation;

Whereas, a payment on account of 35,000 pounds sterling was made at London in 1885, leaving a debt of 43,140 pounds sterling, regarding which a decision is necessary;

Whereas, it is shown from the facts of the case that the business firm of José Canevaro & Sons, established at Lima, was reorganized in 1885, after the death of its founder in 1883;

Whereas the firm name of José Canevaro & Sons was preserved though, in reality, as shown by the act of liquidation of February 6, 1905, the company was composed of José Francisco and César Canevaro, whose Peruvian nationality was never contested, and of Rafael Canevaro, whose Peruvian nationality, in accordance with Peruvian law, has just been recognized by the tribunal;

Whereas, this company, whose firm name was Peruvian and whose members were of Peruvian nationality, continued to exist until the death of José Francisco Canevaro, in 1900.

Whereas, it was during the existence of this company that the Peruvian laws of October 26, 1886, June 12, 1889, and December 17, 1898, were enacted, prescribing the gravest measures with regard to the debts of the Peruvian Government, which measures appeared to be necessary owing to the deplorable condition to which Peru had been reduced by the evils of foreign and civil war;

Whereas, it is not the place of the tribunal to pass judgment upon the provisions themselves of the laws of 1889 and 1898, which provisions were indeed very severe upon the creditors of Peru, but as these provisions were, without doubt, forced upon Peruvian individuals and corporations alike, the tribunal can but recognize the fact.

Whereas, on September 30, 1890, the Canevaro company, through its representative, Giacometti, applied to the Senate for payment of the 43,140 pounds sterling which had, according to it, been furnished to meet the needs of the war;

Whereas, on April 9, 1891, in a letter addressed to the President of the Tribunal of Accounts, Giacometti assigned a triple origin to the debt: a balance due the Canevaro firm from the Government in payment of armaments bought in Europe during the war; drafts drawn by the Government against a consignment of guano to the United States, protested and then paid by José Francisco Canevaro; money furnished for the army by General Canevaro;

Whereas, also, on April 1, 1891, the said Giacometti, addressing the President of the Tribunal of Accounts, had invoked Article 14 of the law of June 12, 1889, which he said Congress had passed "for the most patriotic purposes," in order to obtain a settlement of the debt;

Whereas, the representative of the Canevaro firm had at first assigned a manifestly erroneous origin to the debt, it having by no means been a question of supplies furnished or advances made in view of the war against Chile, but, as was recognized later on, solely a question of the repayment of previous drafts which, drawn by the Peruvian Government, had been protested and then paid by the Canevaro firm;

Whereas, this is the standpoint from which the matter should be examined.