THE VENEZUELAN PREFERENTIAL CASE

between

GERMANY, GREAT BRITAIN, ITALY and VENEZUELA ET AL

Decided February 22, 1904

Syllabus

The arbitration had its origin in a controversy which arose over certain pecuniary claims of the subjects of Great Britain, Germany and Italy against the Republic of Venezuela. A solution not having been reached by the diplomatic negotiations, the controversy culminated on December 11, 1902, in the ordering by Great Britain of a blockade of the ports of Venezuela. Two days afterward Venezuela offered to submit the controversy to arbitration. This offer was ignored and seven days later the blockade of the Venezuelan ports was declared by the British, German and Italian Governments.

At the same time the United States, Mexico, Spain, France, Belgium, the Netherlands, and Sweden and Norway also held claims against Venezuela, which had been the subject of diplomatic negotiations, but no forcible measures had been employed by these Governments to secure the adjustment of their claims.

After the blockade had been put into effect, Venezuela sent a representative to Washington with full powers to negotiate with the representatives of the creditor Powers a settlement of all the matters in controversy. The negotiations took place during the winter and spring of 1903. In the course of the negotiations the Venezuelan representative proposed that the claims of all the countries above-mentioned against Venezuela be paid out of the customs receipts of the ports of La Guaira and Puerto Cabello, thirty per cent of the receipts of which would be set aside each month for that purpose. The proposal was accepted by the claimant nations and an assignment of the revenues mentioned was made in their favor; but Great Britain, Germany and Italy, the blockading Powers, took the position that their claims should not rank with the claims of the other Powers for compensation, but should be given priority of payment. Venezuela declined to accept this view and the question was submitted by agreements signed May 7, 1903,1 for determination by the Hague tribunal. The other creditor Powers were joined as parties to the arbitration.2

1Post, p. 62.

2The respective claims of all the creditor Powers were submitted to mixed commissions consisting of one national each of Venezuela and the claimant nation, with a neutral as umpire, which met at Carácas and subsequently reported their awards.

Pursuant to the provisions of the protocols, the Czar of Russia named three members of the panel of the Permanent Court of Arbitration as arbitrators, no one of whom was a citizen or subject of any of the signatory or creditor Powers, as follows: Nicolas V. Mourawieff and Fr. Martens of Russia, and Heinrich Lammasch of Austria-Hungary. The sessions of the tribunal began October 1, 1903, and ended November 13, 1903. The decision, which was rendered on February 22, 1904, held that:

1. Germany, Great Britain and Italy have a right to preferential treatment for the payment of their claims against Venezuela;

2. Venezuela having consented to put aside thirty per cent of the revenues of the customs of La Guaira and Puerto Cabello for the payment of the claims of all nations against Venezuela, the three abovenamed Powers have a right to preference in the payment of their claims by means of these thirty per cent of the receipts of the two Venezuelan ports above mentioned;

3. Each party to the litigation shall bear its own costs and an equal share of the costs of the tribunal.1

AWARD OF THE TRIBUNAL

Award of the tribunal of arbitration constituted in virtue of the protocols signed at Washington on May 7, 1903, between Great Britain, Germany and Italy, on the one hand, and Venezuela on the other.-The Hague, February 22, 1904.2

3

The tribunal of arbitration, constituted in virtue of the protocols signed at Washington on May 7, 1903, between Germany, Great Britain and Italy on the one hand and Venezuela on the other hand; Whereas other protocols were signed to the same effect by Belgium, France, Mexico, the Netherlands, Spain, Sweden and Norway and the United States of America on the one hand and Venezuela on the other hand';

Whereas all these protocols declare the agreement of all the contracting parties with reference to the settlement of the claims against the Venezuelan Government;

Whereas certain further questions, arising out of the action of the Governments of Germany, Great Britain and Italy concerning the settlement of their claims, were not susceptible of solution by the ordinary diplomatic methods;

1Post, p. 61.

2Official report, p. 123. For the French text, see Appendix, p. 441.

Whereas the Powers interested decided to solve these questions by submitting them to arbitration, in conformity with the dispositions of the Convention, signed at The Hague on July 29th, 1899, for the pacific settlement of international disputes;

Whereas in virtue of Article 3 of the protocols of Washington of May 7th, 1903, His Majesty the Emperor of Russia was requested by all the interested Powers to name and appoint from among the members of the Permanent Court of Arbitration of The Hague three arbitrators who shall form the tribunal of arbitration charged with the solution and settlement of the questions which shall be submitted to it in virtue of the above-named protocols;

Whereas none of the arbitrators thus named could be a citizen or subject of any one of the signatory or creditor Powers and whereas the tribunal was to meet at The Hague on September 1st, 1903, and render its award within a term of six months;

His Majesty the Emperor of Russia, conforming to the request of all the signatory Powers of the above-named protocols of Washington of May 7th, 1903, graciously named as arbitrators the following members of the Permanent Court of Arbitration :

His Excellency Mr. N. V. Mourawieff, Secretary of State of His Majesty the Emperor of Russia, Actual Privy Councilor, Minister of Justice and Procurator of the Russian Empire,

Mr. H. Lammasch, Professor of Criminal and of International Law at the University of Vienna, member of the Upper House of the Austrian Parliament, and

His Excellency Mr. F. de Martens, Doctor of Law, Privy Councilor, permanent member of the Council of the Russian Ministry of Foreign Affairs, member of the Institut de France;

Whereas Lv unforeseen circumstances the tribunal of arbitration could not be definitely constituted till October 1st, 1903, the arbitrators, at their first meeting on that day proceeding in conformity with Article 34 of the Convention of July 29th, 1899, to the nomination of the president of the tribunal, elected as such his Excellency Mr. Mourawieff, Minister of Justice;

And whereas in virtue of the protocols of Washington of May 7th, 1903, the above-named arbitrators, forming the legally constituted tribunal of arbitration, had to decide, in conformity with Article 1 of the protocols of Washington of May 7th, 1903, the following points:

The question as to whether or not Germany, Great Britain, and Italy are entitled to preferential or separate treatment in the payment of their claims against Venezuela, and its decision shall be final.

Venezuela having agreed to set aside thirty per cent of the customs revenues of La Guaira and Puerto Cabello for the payment of the claims of all nations against Venezuela, the tribunal at The Hague shall decide how the said revenues shall be divided between the blockading Powers on the one hand and the other creditor Powers on the other hand, and its decision shall be final.

If preferential or separate treatment is not given to the blockading Powers, the tribunal shall decide how the said revenue shall be distributed among all the creditor Powers, and the parties hereto agree that the tribunal, in that case, shall consider, in connection with the payment of the claims out of the thirty per cent, any preference or pledges of revenues enjoyed by any of the creditor Powers, and shall accordingly decide the question of distribution so that no Power shall obtain preferential treatment, and its decision. shall be final.1

Whereas the above-named arbitrators, having examined with impartiality and care all the documents and acts presented to the tribunal of arbitration by the agents of the Powers interested in this litigation, and having listened with the greatest attention to the oral pleadings delivered before the tribunal by the agents and counsel of the parties to the litigation;

Whereas the tribunal, in its examination of the present litigation, had to be guided by the principles of international law and the niaxims of justice;

Whereas the various protocols signed at Washington since February 13th, 1903, and particularly the protocols of May 7th, 1903, the obligatory force of which is beyond all doubt, form the legal basis for the arbitral award;

Whereas the tribunal has no competence at all either to contest the jurisdiction of the mixed commissions of arbitration established at Carácas, nor to judge their action;

Whereas the tribunal considers itself absolutely incompetent to give a decision as to the character or the nature of the military operations undertaken by Germany, Great Britain and Italy against Venezuela;

1Post, p. 62.

Whereas also the tribunal of arbitration was not called upon to decide whether the three blockading Powers had exhausted all pacific methods in their dispute with Venezuela in order to prevent the employment of force;

And it can only state the fact that since 1901 the Government of Venezuela categorically refused to submit its dispute with Germany and Great Britain to arbitration which was proposed several times and especially by the note of the German Government of July 16th, 1901;

Whereas after the war between Germany, Great Britain and Italy on the one hand and Venezuela on the other hand no formal treaty of peace was concluded between the belligerent Powers;

Whereas the protocols, signed at Washington on February 13th, 19031, had not settled all the questions in dispute between the beligerent parties, leaving open in particular the question of the distribution of the receipts of the customs of La Guaira and Puerto Cabello;

Whereas the belligerent Powers in submitting the question of preferential treatment in the matter of these receipts to the judgment of the tribunal of arbitration, agreed that the arbitral award should serve to fill up this void and to ensure the definite reestablishment of peace between them;

Whereas on the other hand the warlike operations of the three great European Powers against Venezuela ceased before they had received satisfaction on all their claims, and on the other hand the question of preferential treatment was submitted to arbitration, the tribunal must recognize in these facts precious evidence in favor of the great principle of arbitration in all phases of international disputes;

Whereas the blockading Powers, in admitting the adhesion to the stipulations of the protocols of February 13th, 1903, of the other Powers which had claims against Venezuela, could evidently not have the intention of renouncing either their acquired rights or their actual privileged position;

Whereas the Government of Venezuela in the protocols of February 13th, 1903 (Article 1), itself recognizes "in principle the justice of the claims" presented to it by the Governments of Germany, Great Britain and Italy;

1Post, pp. 65, 67, 70.