1941: Arbitration

The United States Supreme Court on Jan. 6, 1941, upheld the validity of the arbitral awards of $50,000,000 on claims against sabotage acts arising out of the Black Tom and Kingsland explosions in 1916-17. The decision was based on the narrow ground that the certification of the awards of the arbitral tribunal by the Secretary of State under the Settlement of War Claims Act of 1928 was conclusive on the court and thus it did not review the issues challenging the existence, authority and actions of the Mixed Claims Commission and the validity of its awards. The awards certified Oct. 31, 1939, by the Secretary of State approved 153 claims in the payment of $21,157,227 out of the fund established by the Act of 1928, but these became the subject of an injunction by the Z and F Assets Realization Corporation and the American-Hawaiian Steamship Company, holders of prior awards by the Mixed Claims Commission, in order to invalidate the sabotage awards and to force payment of the balance of their own awards. The Court decided that the petitioners were not entitled to complain of payments from the fund of awards which the Secretary had certified in accordance with the competence of the Commission and of the executive agency of the Government. This decision disposed of the last of the 20,443 claims submitted to the Commission against the German government's activities during the last war. By May 29, payment of $10,016,953.60 had been made to the Lehigh Valley Railroad for property damage caused by the Black Tom explosion out of the fund established from German-owned property seized and liquidated during the First World War. Half of this amount has been placed in escrow pending a decision by the American member of the Claims Commission regarding the fee to be paid a group of attorneys who claim winning the award for the railroad on a 50.50 basis.

On March 11 the mixed arbitral tribunal in the Trail Smelter case reported its final decision to the governments of the United States and Canada under the Ottawa Convention of 1935 regarding the damage caused in the State of Washington by noxious fumes from a smelter situated at Trail, British Columbia, on the Columbia River near the frontier. The matter has been under arbitration since 1928 when it was first referred by the two governments under the Convention of 1909 for the settlement of any frontier difficulties between them. Decisions in 1931 and 1938 awarded indemnities for damage caused between 1925 and 1937; the present question concerned damages between 1937 and 1940 and the fixing of a permanent regulation for operating the smelter, as well as the revision of the earlier decision rejecting reimbursement to the United States of expenditures for investigating and proving its case. No indemnity was awarded nor did the tribunal reverse the decision concerning expenses of the United States Government. Regarding the other issues involved, in the absence of conflicting international law or cases dealing with air and water pollution, the board used as precedents certain decisions of the United States Supreme Court and found that no state has the right to use or permit the use of its territory so as to cause injury by fumes in the territory of another state. Since the injury was both serious and indisputably proved, Canada was held responsible for the smelter's operation and for ensuring a condition conformable to that government's international responsibility. This means that possible future damage in Washington through fumes must be safeguarded by technical control of the smelter which, if insufficient to prevent damage, is to be indemnified by joint agreement of the two governments acting under the convention. An important point established for future arbitrations was that a matter once decided by a tribunal cannot be reconsidered without express grant of special powers to do so, thus emphasizing the rule of stare decisis in arbitration.

The present American members of the Hague Court of Arbitration are Manley O. Hudson (judge of the Permanent Court of International Justice), Green H. Hackworth (legal adviser to the State Department), Henry L. Stimson (Secretary for War), and Michael Francis Doyle (of the Philadelphia Bar).

1940: Arbitration

Central and South American Disputes.

Acceptance by Great Britain and Guatemala of President Roosevelt as arbiter advanced the solution of their eight year territorial dispute over Belize (British Honduras). When Guatemala became independent in 1821, it claimed jurisdiction over the present British Honduras. This Great Britain rejected because of British settlers already established there. An Anglo-Guatemalan Convention of 1859 first defined the boundaries of the two territories and provided that Great Britain build a road or waterway to give Guatemala access to the Atlantic. Guatemala's claim to the territory was revived on the ground that, by not building the road, Great Britain had not carried out the terms agreed upon. The British held that non-performance of one provision did not invalidate the whole convention, and that the boundary dispute was closed. Great Britain's other territorial dispute in the Western Hemisphere concerns the Falkland Islands, persistently claimed by Argentina. With these disputes in mind, both Guatemala and Argentina made reservations to the action on European colonies taken at the Habana Conference in July. Argentina also contests some European claims in the Antarctic and disputes with Chile the ownership of the Beagle Islands at the southern tip of South America. The latter disagreement the two states have agreed to refer to arbitration by a justice of the United States Supreme Court.

Mexican Oil Question.

The Mexican Government on May 4, in reply to the United States' note of April 3, again refused the proposal to arbitrate the oil dispute on the ground that the issue is of purely domestic concern and still before the Mexican courts. It contended that no denial of justice exists and stated as 'the unanimous will of the continent that international action in favor of foreigners is only proper when, domestic legal resources having been exhausted, a case of denial of justice can be shown.' The note also refused the request to submit to an umpire the nonadjudicated general claims from the period before 1927; the reason given was that an arbitral commission had not yet passed on these claims and thus that who is creditor or debtor is yet unknown. On May 9 it was announced that the Mexican Government had agreed to pay the Sinclair Oil Company $8,500,000 in cash within three years for its expropriated property, which was estimated to amount to much less than half of all the expropriations. This agreement marks the first break in the united resistance of the oil companies to the Mexican action and strengthened that Government's contention that a settlement could be made with the oil companies without intervention from the United States. With regard to farm properties that have been expropriated by Mexico since Aug. 30, 1927, the two members of the joint Agrarian Claims Commission (United States and Mexico) have been completing their work of studying and evaluating the claims filed with them. The results will determine definitely the total amount owed by Mexico on these claims.

State of Washington Claims against Canadian Company.

An international arbitration board was considering in December claims presented by the State Department for damages suffered by farmers in the State of Washington from sulphur dioxide fumes caused by the giant smelter at Trail, British Columbia, which is owned by the Consolidated Mining and Smelting Company of Canada, Limited. The claims cover the period from October, 1937, to the present, after an interim award in 1938 concerning damages from 1932 to 1937. The United States seeks a permanent remedy for the situation, as well as financial compensation for the injuries.

1939: Arbitration

Black Tom Terminal and Kingsland Cases.

On behalf of the Mixed Claims Commission, Mr. Justice Roberts of the United States Supreme Court acting as umpire delivered on June 15 his opinion in the sabotage cases connected with the Black Tom Terminal and the Kingsland Plant between Germany and the United States. The Commission found that Germany had offered false evidence on material issues in the earlier decision of 1939 and, discarding this evidence, pronounced Germany liable for the damages involved in these cases.

By the Treaty of Berlin (1922), Germany's liability for damages incurred in 1916 and 1917, while the United States was a neutral during the Great War, must be affirmatively proved to result from an act of the Imperial German Government or its agents. Accordingly, the two Governments set up a Mixed Claims Commission; and in 1927 the United States filed 153 claims amounting approximately to $22,500,000 exclusive of interest, on behalf of some 93 American nationals.

Pending since that time, the cases have been argued six times more or less completely. The first decision, in 1930, dismissed the cases as not involving German responsibility on evidence which the United States, in a petition filed in 1933, claimed to have been false, fraudulent and perjured. In June 1930, the Commission set aside earlier decisions and called for further evidence. At last, in 1939, all the evidence was examined and re-examined for a final determination of the cases and of Germany's ultimate responsibility; and adjudication resulted in the award of damages to the United States.

One of the latest difficulties concerned the withdrawal of the German commissioner in March 1939, after the case was under consideration by the tribunal — thus raising the question of the legality of further consideration without his presence. His action, the Commission decided, did not oust its jurisdiction, since the parties had submitted to its jurisdiction and the issues were already in process of determination. Before the decision was reached, the German Embassy announced that its country would ignore any decision.

After establishing the liability of Germany, the Commission in October approved awards of about $50,000,000 to cover the various claims as submitted by the American agent. On Dec. 14, the Lehigh Valley Railroad Co., a principal claimant, sought for itself and others in the Federal District Court (of Washington, D. C.) to force payment of the awards from a balance of $24,000,000 remaining in the Treasury from the German deposit account in the United States; while another claimant, the Zimmern and Forshay Assets Realization Co., attempted postponement of that award until its own claims were satisfied.

1938: Arbitration

The most important arbitration of 1938 decided the dividing line in the Chaco between Bolivia and Paraguay after their dramatic and critical boundary dispute. The award was made on Oct. 10 by delegates representing the presidents of Argentina, Brazil, Chile, the United States, Peru and Uruguay in accordance with the treaty of peace, friendship and boundaries signed by the two states on July 21, 1938, after four years of peace negotiations. It appears at first sight that Paraguay was more favored by the award by being given three quarters of the Chaco territory in dispute, yet Bolivia received a triangle of land giving it thirty miles of water front on the upper Paraguay River — territory originally granted to it by Brazil but always opposed by Paraguay on the ground of previous ownership. Bolivia was also given use of the important Puerto Casado as a free port. Other provisions push Paraguay back from Bolivian territory containing its oil field and international road. The new frontier guarantees to Bolivia complete security against military advance since the boundary line runs through a desert. Paraguay, on the other hand, has received a larger territorial area. Under the terms of the peace treaty, the Chaco peace conference will not disband until the boundary commission completes the work of surveying and marking the new frontier, which will probably last about two years. The conference will serve also as a consultative body in case any dispute arises. Both countries have now reopened their respective legations in the other state.

On Oct, 12, the Government of Ecuador requested the presidents of the states that had acted in the Chaco arbitration to intervene in a friendly manner in its long-standing boundary dispute with Peru. The controversy concerns a large amount of territory surrounding the waters of the Amazon River and has been the subject of several negotiations. As a result of this success, suggestions have been made among Latin American representatives for the establishment of a permanent board of arbitration or mediation to settle all pending boundary disputes.

Other frontier questions in Latin America that have been agreed upon in 1938, either by mediation or by a joint commission, are that between Brazil and Netherlands Guiana in May, between Panama and Colombia and between Nicaragua and Honduras in December.

In a series of notes between the Governments of the United States and Mexico, the former proposed arbitration under the General Arbitration Treaty of 1929 of the question whether the Mexican Government had complied with international law regarding compensation of American citizens whose agrarian property in Mexico had been expropriated after Aug. 30, 1927, and, if not, the terms and manner of payment. Mexico refused both as to subject matter, which, it claimed, was suitable for diplomacy and as to conditions of payment, which must be in accord with economic conditions and therefore not suitable for arbitration. Since the United States again reiterated that Mexico had disregarded international law and had committed a breach of international obligations, the Mexican government proposed determination of the property's value and manner of payment by representatives of the two countries. The next American note agreed to a joint commission, as alternative to arbitration, with final decision in case of disagreement by an arbiter. On Sept. 2, Mexico accepted 'the American proposal' that value of the lands and terms of payment therefore be submitted to a commission constituting one representative of each party and, if unable to agree, a third member chosen by the Permanent Commission in Washington under the Gondra Pact.