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rehabilitation or otherwise, such as Cuba, Haiti, Nicaragua and the Dominican Republic, the Department of State has long exercised a large and perhaps decisive influence of incalculable benefit to American lenders. In at least one instance, a bond agreement has made definite reference of the absence of objection to the arrangement on the part of the Secretary of State to whom the document was submitted.1 On another occasion, the prospective American lender has conditioned its flotation of bonds upon the acceptance by the borrower of the terms of a particular convention with the United States establishing the basis of protection.2 The China Consortium Agreement of October 15, 1920, and the relation of the Department of State thereto, during the régimes of opposing political administrations, have revealed the closeness of the working arrangement that may under certain conditions be effected between the United States and American bankers.*
The full significance of American governmental cooperation deserves consideration. To the lender, the known approval of its government is of distinct value because of the removal of possible obstacles which might otherwise supervene should the lender have cause to request diplomatic interposition, and because also of the salutary effect upon the mind of the borrower of entire harmony between the lender and its government. The favorable effect of that harmony upon the mind also of the American investor may be considerable. For that reason it is believed that when such a relationship does in fact exist, the lender may well be permitted to make formal announcement of it, and perhaps beyond the limitations contemplated by the Department of State in its cautious declaration of policy.
Real cooperation between the Department of State and American lenders ought to be productive of something more. It should, for example, serve to aid the lender in ascertaining the nature and extent of requirements essential to the validity of the transaction according to the local laws and institutions of the borrower, and to give warning when those requirements are not met. It should place within the reach of the banker fresh counsel as to the desirability or need of security, and as to the kind of security to be demanded of a particular applicant, as well as the means to be employed for its utilization. Necessary safeguards should be suggested and needless impediments discouraged. Thus the Government might well bring home to the attention of prospective lenders the insufficiency of pledges or hypothecations of assets not surrendered to the control of the lender or of an agency in its behalf. It might emphasize the impotence of a lender as against a foreign public
1 See Art. X of Bond and Fiscal Trust Agency Agreement between the Republic of Nicaragua and certain bankers, Oct. 5,1920.
'Such was the attitude of certain American bankers in 1911, in negotiations with the Republic of Honduras. See in this connection U. S. Foreign Relations, 1912, p. 587.
'For the text of the agreement, see this Journal (Jan. 1922), Vol. XVI, Official Documents, p. 4. See also Geo. A. Finch, "American Diplomacy and the Financing of China," id., XVI, 25.
borrower retaining in its grasp the asset employed to induce credit. With its close knowledge of the fiscal, political and economic conditions confronting every foreign public applicant for a loan, the Department of State might unhesitatingly inform a prospective lender of the probable effect of certain forms of security upon the stability of the borrower from which they were exacted. Thus it might, for example, in a particular case, question the wisdom of demanding of a borrower constituting an independent State not under the protection of the United States (and not subjected to a r6gime of extraterritorial jurisdiction) pledges of customs revenues to be relinquished to an alien trustee.4 Should the borrower be called upon to surrender by way of security or for the purpose of utilizing security, the exercise of privileges locally deemed to be incapable of delegation to a foreign entity, the danger of the transaction, however valid, should be made known. The effect of terms likely to be challenged by enlightened opinion as subversive of the sovereignty of the borrower upon the popular mind throughout its domain should be made clear. Arrangements likely to beget hostility towards the United States and resentfulness in relation to American investors should be pictured in their true colors. In a word, governmental cooperation should serve to emphasize precautions to be taken, risks to be guarded against, forms of security to be avoided, pitfalls to be shunned, as well as safeguards to be demanded. Under scientific and persistent and friendly development, the coordinated labors of the Department of State and American lenders to foreign governments are capable of safeguarding the interests of American investors, enhancing the ultimate success of American loans, and simultaneously of advancing in the best sense the cause of American diplomacy by eliminating obstacles otherwise bound to impede its progress.
Charles Cheney Hyde.
The Classification Of Justiciable Disputes There was considerable discussion at the annual session of the Institute of International Law in Rome last October concerning the jurisdiction of the Permanent Court of International Justice provided for by Article XIV of the Covenant of the League of Nations. This discussion centered around the wording of Article 36 of the Statute of the Court adopted by the Assembly of the League of Nations at Geneva on December 13, 1920. The text of this Article reads as follows:
The jurisdiction of the Court comprises all cases which the parties refer to it and all matters specially provided for in Treaties and Conventions in force.
The Members of the League of Nations and the States mentioned in the Annex of the Covenant may, either when signing or ratifying the protocol
4 It is not suggested that such terms might not, under entirely different circumstances, be justly exacted as a necessary safeguard for the lender and without jeopardizing the validity or ultimate success of the loan.
to which the present Statute is adjoined, or at a later moment, declare that they recognise as compulsory ipso facto and without special agreement, in relation to any other Member or State accepting the same obligation, the jurisdiction of the Court in all or any of the classes of legal disputes concerning:
(a) The interpretation of a Treaty;
(b) Any question of International Law;
(c) The existence of any fact which, if established, would constitute a breach of an international obligation;
(d) The nature or extent of the reparation to be made for the breach of an international obligation.
The declaration referred to above may be unconditionally or on condition of reciprocity on the part of several or certain Members or States, or for a certain time.
In the event of a dispute as to whether the Court has jurisdiction, the matter shall be settled by the decision of the Court.
It will be observed that by the first paragraph of Article 36 the jurisdiction of the Court is most comprehensive so far as it concerns disputes which the parties may voluntarily refer to it.
As concerns the compulsory jurisdiction of the Court the attempt made to classify legal disputes can hardly be said to be satisfactory. "Any question of international law" is obviously all-inclusive in scope, as also "the existence of any fact which if established would constitute a breach of international obligation."
It is not at all strange, therefore, that only a few of the smaller powers thus far have accepted the compulsory jurisdiction of the Court. Nations having large interests at stake cannot afford to do so unless there is a very explicit and complete agreement as to what disputes are considered to be legal or justiciable in character. By the very nature of things a true court of justice implies the right to summon the parties subject to its jurisdiction to appear before the Court. The question then of the classification of legal disputes becomes of fundamental importance. It was for these reasons that the Institute of International Law at its last session designated a special Commission for the study of the question of The Classification of International Disputes of a Justiciable Nature.
It should not be forgotten that various attempts have been made to classify justiciable disputes, notably by the Sub-Commission of the Hague Peace Conference of 1907. In fact, very considerable progress was made in this direction and a large majority agreed upon a long list of concrete subjects in which the contracting nations expressly renounced the classic reservation of "honor, independence, vital interests, etc." The unanimity rule, however, prevented the adoption of this list. The jurisdiction of the Permanent Court of Arbitration was consequently left voluntary and included a wide range of disputes.
In view of the failure of the Hague Conference of 1907 to agree upon a classification of justiciable disputes, the Commission of Jurists appointed by the League of Nations felt constrained to avoid what seemed to be another futile attempt and therefore agreed upon the general and vague phraseology of Article 36 already quoted.
Attention should also be called to the fact that the term "justiciable" was first employed in a formal international document when the United States sought to negotiate in 1911, under the Administration of President Taft, general arbitration treaties with Great Britain and France. These treaties contained a clause accepting arbitration in the case of differences "which are justiciable in their nature by reason of being susceptible of decision by the application of the principles of law and equity." It was unfortunate that the definition of justiciable should have included the term "equity." There is no general agreement among nations concerning principles of equity. As employed in English it is either very vague and general in significance or it refers to the system of equity applied in English and American courts of law. In either case it does not serve to clarify the meaning of "justiciable."
Reduced to its simplest terms the word justiciable as employed either in English or in French would seem to apply to all disputes which—to use the definition of the Century Dictionary—"are proper to be brought before a court of justice or to be judicially disposed of." It is therefore to be restricted in its application, and should not for any general purpose be applied to all international controversies. Both from the juristic and political standpoints, the utmost precision of definition of those disputes which properly may be brought before a court of justice is desirable.
Certain difficulties in the way of the classification of justiciable disputes must be acknowledged at the outset. The first great difficulty is that of distinguishing between justiciable disputes and those controversies of a political character affecting "independence, vital interests, honor, etc." Experience has shown that there is hardly any international dispute, even though of the most innocent appearance, which may not be deemed at a given moment to involve a political consideration. Among these are matters of an economic character or relating to the general intercourse of nations. As an illustration, an international agreement concerning the exchange or return of freight cars would hardly be a justiciable question at a moment of high tension between the parties concerned when such cars might be required for purposes of mobilization.
Baron Marschall von Bieberstein in the course of the discussions of the Sub-commission above referred to laid great emphasis on this difficulty, which, in his mind, seemed to preclude in large measure any attempt to classify justiciable disputes. Another German, however, Doctor Hans Wehberg, has pointed out the reverse side of the question: namely, that in every political dispute it is possible to extract what he well terms "the legal core." From the purely juristic point of view then the problem becomes, not one as to what categories of disputes certain nations may be unwilling to submit to a court of justice, but one of determining in a dispassionate, scientific manner what questions may be said to be justiciable in character, that is to say, "proper to be brought before a court of justice or to be judicially disposed of." Once such a legal classification is agreed upon, it is to be hoped that in the process of time all nations may find it compatible with their own national interests as well as those of international justice to submit without any reservation whatever all disputes of a justiciable nature to the Court of International Justice.
A second, and a very serious, difficulty in the way of classification is the fact that in a considerable number of controversies there does not exist a general agreement as to the principles of law to be applied. It cannot be denied that international law is in a relatively backward state of development in certain fields. For example, in disputes concerning the rights of aliens to damages because of the acts of states, or in the case of contracts and concessions, or international loans, it might be difficult for a court of justice to enunciate the principles of law which should apply. There is no international law of torts or of bankruptcy.
Furthermore, it may be seriously questioned either from the point of view of principles or of expediency whether nations would be willing to grant to the Court of International Justice the right to legislate judicially. The law of nations would seem by its very nature and the history of its development to be a system requiring positive assent. It is not a system to be imposed either by a sovereign executive or a court of justice.
For these reasons, therefore, the task of classification of justiciable disputes may be rendered more difficult in certain categories. But in those cases where it might appear possible to obtain a general agreement on the legal principles to be applied, this might be accomplished through international conferences and commissions. This was clearly recognized by the Commission of Jurists in its wise recommendation for conferences on international law. It is greatly to be regretted that the recommendation did not appear to have been appreciated at its full value by the League of Nations. It is certainly of the utmost importance in connection with the problem of classification.
A third difficulty in the way of classification has appeared to some minds to consist in the necessity of creating special courts for the decision of highly technical matters, particularly in regions where local customs and conventions are to be interpreted. This might well be the case in many questions affecting the interests of the nations of the American continent. This would not appear to be a serious difficulty, however, inasmuch as, from the juristic point of view, the task still remains one of determining the list of disputes which may strictly be said to be justiciable in character. As in the case of political disputes, this need of special tribunals for controversies of a special nature is one of method, not one of principle.
A fourth difficulty is that a classification of justiciable disputes would virtually amount to a codification of international law. Unquestionably the