File 838.77/106.
As you will observe, the Haitian Government contends that the terms of
the railroad contract forbid diplomatic intervention and provide, as the
proper mode of procedure in case of disagreement as to the construction
to be placed upon any of its terms and conditions, the appointment of a
board of arbitration to render a decision as to the proper construction
of the contract.
As to the method of foreclosure employed, the Haitian Government claims
that it has acted strictly in accordance with Article 10 of the Cahier
des Charges.
The Haitian Government further claims that the railroad company has
failed to live up to its contract with respect to the delivery of
completed sections of the road, setting forth the fact that there is a
stipulation in the contract that five completed sections must be
delivered every twelve months, while as a matter of fact, up to the
present date, only six sections have been delivered, although more than
four years have elapsed since the date on which this stipulation became
effective.
On the 28th instant, no reply having been received to my cable to the
Department of the 25th instant, and having ascertained from the
representative of the railroad company here that he had been served with
notice of foreclosure for non-compliance with Article 11 of the railroad
contract, I availed myself of an opportunity, when calling upon the
Minister for Foreign Affairs on another matter, without prejudging what
might be the Department’s views or those of the concessionnaire
regarding the suggestion as to a stay in the proceedings, to point out
that owing to the Saturday half-holiday followed by Sunday there was a
material impossibility for the Department to communicate with the
concessionnaire in season to have a reply reach me on the 27th.
The Minister then remarked that the proceedings had to be carried out
regularly; but, as the suggestion had been made in a spirit of
conciliation, the request for a stay in the proceedings, if made within
a reasonable time, would of course be granted; and he assured me, in
that case, of the best dispositions of the Haitian Government to
endeavor to come to an understanding with the company. He felt confident
that a satisfactory solution could be found by mutual concession through
arbitration and suggested that negotiations for such propositions of
agreement as the railroad company might make be carried on by me in the
interest of the railroad company, under instructions from the
Department, with him representing the Haitian Government.
The above views, which I believe to be in earnest and prompted by a
sincere desire on the part of the Haitian Government to come to a
mutually satisfactory arrangement with the National Railroad Company of
Haiti, are respectfully submitted to the favorable consideration of the
Department.
I have [etc.].
[Inclosure—Translation.]
The Minister for Foreign
Affairs to Minister Blanchard.
Foreign Office,
Port au Prince,
September 29, 1914.
The Department of State for Foreign Affairs of the Republic of Haiti
received on September 25, 1914, the memorandum which the Minister
Plenipotentiary of the United States of America, by order of his
Government, was good enough to communicate to it relative to the
affairs of the National Railroad Company of Haiti, a corporation,
having its principal office at Port au Prince. It states:
[Page 541]
The Department of State at Washington has been informed by
Mr. Farnham that the Haitian Government has served a
notification on the National Railroad Company of Haiti, by
an act of bailiff, of its intention to foreclose [its
contract] and take possession on the 27th instant of the
property of the said railroad company under claim of
noncompliance with Article 11 of said contract.
According to the instructions of his Government, the American
Minister has the honor to inform the Haitian Government that
in the opinion of the Government of the United States such a
method of procedure for foreclosure is directly contrary to
the provisions of Article 10 of the Cahier des Charges
attached to the railroad contracts, which article
specifically provides for this contingency.
The Haitian Government upon receipt of this memorandum was greatly
surprised at the criticisms made therein, and of the gratuitous
intention which is attributed to it of desiring to take possession
of the property of the National Railroad Company of Haiti.
The Secretary of State for Foreign Affairs of the Republic of Haiti
begs the Minister of the United States of America to please to
examine anew the contracts of the railroads of Haiti and the Cahier
des Chargés which accompany them; he invites particularly his
attention to the following points:
A. “In no case and for no reason shall disputes that may arise as to
the interpretation of the clauses of the present contract give
occasion for diplomatic recourse.” (Article 16 of the contract of
April 16, 1910.)
The sense of this article is clear. Its text can not be
misunderstood. It renders, therefore, inadmissible the intervention
of the Government of the United States.
B. On the other hand, Article 7 of the contract of the railroad from
Gonaives to Hinche, of which the National Railroad Company of Haiti
is concessionnaire, stipulates that:
All disputes or all difficulties between the concessionnaire
and the State as to the interpretation or as to the
execution of one or more clauses of the present contract or
of the Cahier des Charges shall be settled by a board of
arbitration named for that purpose. (Contract of July 19,
1904.)
Article 7 of the contract of the railroad from Cape Haitien to Port
au Prince, of which the same company in concessionnaire, contains
the same clause and lays particular stress on the board of
arbitration called to solve the difficulties which might arise
between the Government and the Company. This article is worded thus:
All disputes or difficulties between the Company and the
State as to the interpretation or the execution of one or
more clauses or provisions of the present contract or of the
Cahier des Charges, shall be settled by a board of
arbitration named for that purpose. Each party will
designate an equal number of arbiters who, if they can not
agree, shall select an umpire to cast the deciding vote, and
from whose decision there shall be no appeal.
Therefore, supposing that the procedure employed against the National
Railroad Company of Haiti was irregular or contrary to a stipulation
of the contracts which bind the parties, the company could only have
recourse to arbitration, the only means of ascertaining these
difficulties and settling them.
C. These points having put in evidence the inadmissibility of the
intervention of the Government of the United States in the
litigation that exists between the Government of Haiti and the
National Railroad Company of Haiti, there remains to have it
recognized that the procedure followed in the present case is, for
the Republic, in accord with all involved principles.
The procedure employed for the foreclosure and adjudication has even
been provided for in Article 10 of the Cahier des Charges annexed to
the contract of April 16, 1910.
(a) As to foreclosure or forfeiture, Article 11 of the contract of
concession expressly states:
In the course of the first year after the promulgation of the
law sanctioning the present convention, the Company shall
deliver at least one section [of the railroad to be
constructed], and every twelve months thereafter an average
of five sections, except in case of force majeure duly
verified, and this under penalty of foreclosure, so as to
complete the whole system in five years or earlier.
(b) As to the procedure in case of foreclosure, Article 12 of the
contract or convention of April 16, 1910, and Article 10 of the
contracts of July 19, 1904, and September 12, 1906, state that—
At any time when the foreclosure or forfeiture may be
incurred, there shall be no other formalities to be
fulfilled for its execution than those provided for in
Article 10 of the Cahier des Charges annexed to the
concession-contract. [Article 12 of the contract or
convention of April 16, 1910.]
If the concessionnaire incur a foreclosure, the Minister of
Public Works, without further summons, shall serve on him a
notification thereof by bailiff, and shall put in
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adjudication the
concession, the existing property (material, rolling stock,
etc.), and the construction completed and still to be
completed. And the concessionnaire or his assigns shall
receive the amount of the adjudication, costs deducted,
without right of claiming any indemnity. [Article 10 of the
contracts of July 19, 1904 and September 12, 1906.]
The fact is that the Company has not delivered the sections which
should be delivered in accordance with Article 11 of the convention
of 1910. It has delivered only six sections designated as follows:
(1) Cape–Grande Rivière; (2) Gonaïves–Ennery; (3) Port au
Prince-Arcahaie, Arcahaie-Mont Bouis-St. Marc; and (4) Grande
Rivière-Bahon.
At this date, September 27, 1914, it ought to have delivered 11
sections, since Article 11 says that it should deliver five
sections, at least, every twelve months, the concession having
commenced August 6, 1910, at which time it had to deliver one
section.
For the other years—August 1911 to August 1912, August 1912 to August
1913, and August 1913 to August 1914—it should have delivered
fifteen sections.
On the part of the Government there have been three successive
extensions of time (total 11 months) which extensions permit the
company to say that it has eleven sections to deliver instead of 16,
but the fact is that there are only six sections in operation up to
this date, September 27, 1914. No disputes can be raised on these
extensions of time with respect to the sections already delivered,
which are six in number instead of eleven. These are facts which can
be materially proven.
The Haitian Government is sure that as soon as the Honorable Mr.
Bailly-Blanchard shall have communicated to the Department of State
the clauses of the contracts of concession and of the Cahier des
Charges, the Government of the United States, in its high
impartiality, will recognize that the procedure which has been
followed with regard to the Company is well founded.
