838.51/1776
The French Embassy to the Department of State
Note Verbale
In January, 1923, the Minister of Finance at Port-au-Prince requested the Haitian Government to meet the service of its 5 percent [Page 309] loan of 1910 in gold. The matter was brought to the attention of the Federal Government in a note from Mr. Jusserand of April 10, 1923.10
As the question was not settled, the Banque de l’Union Parisienne, one of the banks that issued the loan, applied directly, in November 1923, to the Minister of Finance of the Republic of Haiti and pleading the right derived from Article 30 of the loan contract,11 asked that the dispute be referred to arbitration. This article reads as follows: “The protests that may arise as to the execution of this contract shall be referred to two arbitrators in Paris. …” The representatives of France at Washington and at Port-au-Prince were instructed to support this request at the seats of the Haitian and United States Governments. The question formed in particular the subject of two notes from the Embassy dated June 12 and September 5, 1924.12
The Haitian Government offered several arguments in reply to that request, which may be summed up as follows:
(1) The bondholders who are not parties to the loan contract cannot claim the benefit of Article 30 of that contract;
(2) The Union Parisienne being one of the three banks parties to the contract, is not competent to act alone without the other two banks concurring;
(3) It is impossible to admit that the Union Parisienne be competent to prefer any claim whatsoever against the Haitian Government in the name of the holders as the 1910 contract does not in any way confer such a right upon it;
In its capacity as agent of the Haitian Government the Union Parisienne is under the obligation to act for the interest of the Haitian Republic and not for that of the holders.
These arguments have already been met point by point by the French Government in the following manner:
- (1)
- The objection drawn from the fact that the holders are not parties to the contract of issue and have no claim to the provisions of that contract, is untenable, since those holders are no longer concerned, the claim being preferred by a bank which is a party to the contract;
- (2)
- There is nowhere in the contract of issue any mention of the fact that a claim, in order to be entertained, must be presented by all three banks acting in accord. In the absence of such article each one of the contracting parties is at full liberty to act;
- (3)
- It is not necessary to know in whose behalf the Union Parisienne is acting when it lays its claim before the Haitian Government. The Union Parisienne acts in its capacity as issuing bank, party to the contract. In so doing, it serves its own interests; the commission provided in its favor by the contract necessarily increases when it is admitted that the service of the loan must be effected in gold. That the holders of bonds will profit by the intervention of the Union Parisienne [Page 310] is a question of fact, not of law. On the other hand, no article in the contract warrants the claim of the Haitian Government that the Union Parisienne is to be considered as its agent. That bank undertook certain obligations which are well defined (to take up 130,000 bonds for delivery), in return for which certain advantages, also well defined, were assured to it (one quarter of one percent commission); but it did not assume any general obligation to the Haitian Government, as also it receives no compensation beyond the commission provided for the service of the loan. What, moreover, would article 30 of the contract signify if it could be invoked only by the Haitian Government?
No answer has yet been received to that statement of the French Government either from the Haitian Government or that of the United States. The right of the Union Parisienne to claim the benefit of article 30 is obvious and it is not easily understood why its request has not yet been met. The question for the present is not whether the claim of the Union Parisienne to have the service of the 1910 loan in gold, is or is not well founded. It is merely a question of procedure duly provided by the contract and which the Haitian Government may not decline without ignoring its own signature.
The Ambassador of France is satisfied that the Department of State, acknowledging that the objections raised by the Haitian Government to the request of the Union Parisienne are untenable, will bring to bear upon it the necessary amount of pressure to cause satisfaction to be given to a claim that is in every respect well founded.