THE ORINOCO STEAMSHIP COMPANY CASE THE UNITED STATES and VENEZUELA Decided October 25, 1910 Syllabus This claim originated in a concession from Venezuela to one Ellis Grell, granted on January 17, 1894,1 for the exclusive right to navigate the Orinoco River in steam vessels between Trinidad and Ciudad Bolívar. The contract embodying the concession contained the so-called Calvo clause, which provided that "questions and controversies which may arise with regard to the interpretation or execution of this contract shall be resolved by the tribunals of the Republic in accordance with its laws, and shall not in any case give occasion for international reclamations." By subsequent assignment the Grell concession came into possession of the Orinoco Shipping and Trading Company, a British corporation, the majority of the stock and bonds of which was held by American citizens. The Government of Venezuela became indebted to this company for approximately half a million dollars for services rendered and damages sustained. An adjustment was effected on May 10, 1900, by which the concession was extended for a period of six years and the Government agreed to pay the company 100,000 bolivars ($19,200) in cash and a second sum of the same amount at a later date. The company, on its part, acknowledged as settled all its claims against the Government. The contract of settlement also contained the so-called Calvo clause. The first payment of 100,000 bolivars was duly made, but the second was not. On October 5, 1900, Venezuela opened the navigation of the Orinoco River to the commerce of all nations, thus destroying the monopoly claimed by the company as assignee of the Grell concession. This was done by repealing a decree promulgated on July 1, 18932 a few months before the original concession was granted, which closed the Orinoco to foreign trade. On December 14, 1901, the Venezuelan Government further cancelled the extension of the concession granted in accordance with the contract of settlement of May 10, 1900. The company's efforts to obtain relief from the Government of Venezuela being unsuccessful, the matter was brought to the attention of the American and British Governments. Later, the American stock2Post, p. 253. 1Post, p. 258. holders of the British company organized an American corporation known as the Orinoco Steamship Company, which took over the business, assets and liabilities of the former company. The claims of the corporation taken over from the company for the payment overdue under the agreement of May 10, 1900, for damages arising from the annulment of the exclusive concession, for services rendered, imposts illegally exacted, for the use and detention of and damages to vessels, loss of earnings and counsel fees, amounting to approximately $1,400,000, were presented to the United States and Venezuelan claims commission under the protocol of February 17, 1903.1 The commission assumed jurisdiction of the claims under the wording of the protocol, which included "all claims owned by citizens of the United States," and the umpire, Dr. Barge, on February 22, 1904,2 made an award in favor of the claimants, amounting to approximately $28,000, covering the detention and use of steamers, goods delivered to the Government and passages furnished it. Although the protocol provided that the decision of the commission and of the umpire should be final and conclusive, the United States protested the award on the grounds that it disregarded the terms of the protocol and contained essential errors of law and fact such as invalidated it in accordance with the principles of international law. After several years of negotiations about this and other claims, in the course of which diplomatic relations were severed, a protocol was signed on February 13, 1909, which provided for the submission of the case to arbitration in the following form; The arbitral tribunal shall first decide whether the decision of umpire Barge, in this case, in view of all the circumstances and under the principles of international law, is not void, and whether it must be considered so conclusive as to preclude a reexamination of the case on its merits. If the arbitral tribunal decides that said decision must be considered final, the case will be considered by the United States of America as closed; but on the other hand, if the arbitral tribunal decides that said decision of umpire Barge should not be considered as final, said tribunal shall then hear, examine and determine the case and render its decision on the merits.* The tribunal, composed of three members selected from the Permanent Court of Arbitration at The Hague, none of whom could be a citizen of either of the contracting countries, was constituted as follows: Heinrich Lammasch of Austria, Auguste M. F. Beernaert of Belgium, and Gonzalo de Quesada of Cuba. Its sessions began September 28 and ended October 19, 1910, the decision being rendered on October 25, 1910. The tribunal held that, while on principle an arbitral decision should be accepted, respected and carried out without any reservation, in 1 Ante, p. 74. 2 Post, p. 255. Post, p. 235. 4Post, p. 236. this case the parties had admitted in the protocol of submission that excess of jurisdiction and essential error nullified an arbitral judgment, and called upon the tribunal to decide whether the judgment of umpire Barge was not void, and, if so, to reexamine the case on its merits. The tribunal further held that the nullity of one claim in an arbitral award embracing several independent claims does not nullify the others. The tribunal then proceeded to examine each item considered by the former award and decided as follows: The decision upon the claims based upon the annulment of the concession was not vitiated by excess of authority or essential error, and was therefore not subject to revision. In view of the express provisions of the agreement of submission of February 17, 1903, that the umpire was to decide according to absolute equity and without regard to objections of a technical nature or the provisions of local legislation, umpire Barge exceeded his jurisdiction in rejecting the claim for payment due under the contract of May 10, 1900, because of the failure of the claimants to appeal to the Venezuelan courts, in accordance with the Calvo clause of the contracts, and to notify the Government of the assignment of the claim, in accordance with local law. The claim was declared to be well founded and accordingly allowed. The tribunal made the same holding with reference to claims for transportation of passengers and merchandise and for the retention and hire of steamers, which were disallowed by the former award because the claimants omitted to notify Venezuela of the assignment of them. The balance of the former decision with reference to the remaining claims was held not subject to reexamination or revision, except that a portion of the amount claimed for counsel fees and expenses of litigation was allowed. The claims allowed by the tribunal amounted to $64,412.59, in addition to the $28,224.93 allowed by the original decision, making a total recovery of $92,637.52, upon which interest was allowed at the rate of three per cent. With the above exceptions, the decision of umpire Barge was held to remain in full force and effect. AWARD OF THE TRIBUNAL Award of the tribunal of arbitration constituted under an Agreement signed at Carácas, February 13, 1909, between the United States of America and the United States of Venezuela.—The Hague, October 25, 1910.1 By an agreement signed at Carácas the 13th of February, 1909,❜ 1Official report, p. 64. For the original French text, see Appendix, p. 504. 2 Post, p. 235. the United States of America and of Venezuela have agreed to submit to a tribunal of arbitration, composed of three arbitrators, chosen from the Permanent Court of Arbitration, a claim of the United States of America against the United States of Venezuela; This agreement states: The arbitral tribunal shall first decide whether the decision of umpire Barge,' in this case, in view of all the circumstances and under the principles of international law, is not void, and whether it must be considered to be so conclusive as to preclude a reexamination of the case on its merits. If the arbitral tribunal decides that said decision must be considered final, the case will be considered by the United States of America as closed; but on the other hand, if the arbitral tribunal decides that said decision of umpire Barge should not be considered as final, the said tribunal shall then hear, examine and determine the case and render its decisions on its merits.2 In virtue of said agreement, the two Governments respectively have named as arbitrators the following members of the Permanent Court of Arbitration: His Excellency Gonzalo de Quesada Envoy Extraordinary and Minister Plenipotentiary of Cuba at Berlin, etc.; His Excellency A. Beernaert, Minister of State, member of the Chamber of Representatives of Belgium, etc.; And the arbitrators so designated, in virtue of said agreement, have named as umpire: Mr. H. Lammasch, professor in the University of Vienna, member of the Upper House of the Austrian Parliament, etc.; The cases, counter-cases and conclusions have been duly submitted to the arbitrators and communicated to the parties; The parties have both pleaded and replied, both having pleaded the merits of the case, as well as the previous question, and the discussion was declared closed on October 19th, 1910; Upon which the tribunal, after mature deliberation, pronounces as follows: Whereas by the terms of an agreement dated February 17th, 1903,1 a mixed commission was charged with the decision of all claims owned (poseidas) by citizens of the United States of America against the Republic of Venezuela, which shall not have been settled by a diplomatic agreement or by arbitration between the two Governments and which shall have been presented by the United States of America; an umpire, to be named by Her Majesty the Queen of the Netherlands, was eventually to give his final and conclusive decision (definitiva y concluyente) on any question upon which the commissioners might not have been able to agree; Whereas the umpire thus appointed, Mr. Barge, has pronounced on the said claims on the 22nd of February 1904; Whereas it is assuredly in the interest of peace and the development of the institution of international arbitration, so essential to the well-being of nations, that on principle, such a decision be accepted, respected and carried out by the parties without any reservation, as it is laid down in Article 81 of the Convention for the pacific settlement of international disputes of October 18th, 1907; and besides no jurisdiction whatever has been instituted for reconsidering similar decisions; But whereas in the present case, it having been argued that the decision is void, the parties have entered into a new agreement under date of the 13th of February 1909, according to which, without considering the conclusive character of the first decision, this tribunal is called upon to decide whether the decision of umpire Barge, in virtue of the circumstances and in accordance with the principles of international law, be not void, and whether it must be considered so conclusive as to preclude a reexamination of the case on its merits; Whereas by the agreement of February 13th, 1909, both parties have at least implicitly admitted, as vices involving the nullity of an arbitral decision, excessive exercise of jurisdiction and essential error in the judgment (exceso de poder y error esencial en el fallo); Whereas the plaintiff party alleges excessive exercise of jurisdiction and numerous errors in law and fact equivalent to essential error; 1An agreement providing for the creation of the mixed commission for the settlement of claims of citizens, corporations, etc., of the United States against Venezuela. See ante, p. 74. Post, p. 235. |