Background:
- 1917 – Government of Costa Rica [President Alfredo Gonzales] overthrown by Federico Tinoco.
- Tinoco assumed power & established new constitution
- During his tenure, he:
- Granted certain concession to search for oil to a British company
- Passed legislation issuing certain new currencies, and British banks [in the course of business] became holders of much of this currency
- 1919 – Tinoco retired, left the country – Government fall.
- Old constitution restored and elections were held.
- August 22, 1922, restored government passed Acts nullifying the currency laws it had made
- Consequence: Invalidated all transactions involved
- The restored government is a signatory of the treaty of arbitration.
The Claim:
- Brought by Great Britain on behalf of two British Corporations:
- Royal Bank of Canada
- Central Costa Rica Petroleum Company
- Royal Bank of Canada claimed:
- Banco Internacional of Costa Rica and the Government of Costa Rica are indebted to it proven by the holding of 998 1000 colones bills
- Central Costa Rica Petroleum Company [CCRPC] claimed:
- It owns the rights to explore and exploit petroleum reserves in Costa Rica
- This is based on a grant issued by Tinoco
The Defense:
- Great Britain:
- On behalf of its nationals, legislation passed invalid
- Restored g’ment should recognize the concessions given to CCRPC and the validity of Tinoco’s currency held by the Royal Bank of Canada
- During the period in question, the Tinoco Government had been the de facto and de jure government[2]
- Supported by the fact that the government was not opposed in any significant manner
- Thus giving the government legitimacy
- All its acts were valid and its successor has no right to repudiate[annul] them
- Costa Rica:
- Objected. Claimed that any acts carried out by the government were void because the Tinoco regime violated the Costa Rican constitution.
- Because Great Britain did not recognize the Tinoco Government as legitimate, it cannot then turn around and claim agreements with an illegitimate government as binding.
Held:
- Rejected Costa Rica arguments
- While the failure on the part of Great Britain to recognize Tinoco government was evidence to be taken into account in deciding on the status of that government, it was not decisive as the status of the government had to be determined in the light of all evidence
- In fact, the Tinoco g’ment had been a de facto g’ment during the period of its existence
- For the two years while in power, the Tinoco government served its role in a peaceful environment
- No objections, no revolution and no power dispute.
- The court then holds that “the Tinoco government was an actual sovereign government.”
- The court finds in favor of the Royal Bank of Canada, but finds the petroleum concession to be a violation of the 1917 Constitution (which means Tinoco could have nullified the agreement as well).
Courts arguments which is significance to the aspect of International law:
- Scholarly writing: Dr. John Basset Moore: “Changes in the government or the international policy of a state do not as a rule affect its position in international law.”
- States may change between forms of government without ceasing to be that state in the eyes of international law, or in terms of its international obligations.
- “The principle of the continuity of states” = “state is bound by engagements entered into by governments that have ceased to exist; the restored government is generally liable for the acts of the usurper.”
http://www.scribd.com/doc/12849256/The-Tinoco-Arbitration-Case-Presentation
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