This memorandum is in response to your request of April 5th, for information on the above-mentioned subject. There has been a great deal of controversy surrounding the role of the United States in Panama over the past century. The question of sovereignty has proven to be a particularly complex issue, and the time constraints imposed by your need for immediate information, precludes a discussion of all aspects of the problem. Therefore, the fololwing information is geared towards refuting the key point made by Mr. Bell's letter of December 12, 1975; that is, that the Canal Zone is, under international law, Panamanian territory. As a preclude to a discussion of the specific details pertinent to the Canal Zone controversy, it is important to recognize the long-standing principle of international law, Pacta sunt servanda treaties are binding on parties and are to be performed in good faith. The following comments are extracted from Whiteman, Digest of International Law 282-283. "... One of the most fundamental rules of international law is that treaties must be performed in good faith: the rule of pacta sunt sevanda. [See Hyde, International Law 1369, 1154 (2d ed. 1915); Whitton, Sanctity of Treaties, Int.-Con., No. 313 (1935); Kunz, Meaning and Range of the Norm "Pacta Sunt Servanda," 39 Am. J. Intl. L. 180 (1945); Harvard Research in International Law, Treaties, 29 Am. J. Intl. L. Supp. 977-992 (1935); Taube, L'Inviolabilite des traites, Hague Academy of International Law, 32 Recueil des Cours 295 (1930-11); Rice and Mayda, Some Thoughts on the Binding Force of International Treaties, 1956 Wis. L. Rev. 186.] Although sometimes not too well obeyed, there has seldom appeared any disposition on the part of statesmen or tribunals to question the existence of the rule, and it is frequently reiterated in solemn form." Bishop. International Law. Cases and Materials (2d ed., 1962) 133. In instances of States achieving independence, provision is frequently made for the continuation in force of international agreements. This may be accomplished in various ways, e.g., provisions in independence acts or agreements, in constitutions, notifications to the Secretary-General of the United Nations, bilateral agreements between the States concerned, notifications to depositary governments or organizations in the case of multilateral treaties. See vol. 2, this Digest of International Law (1963), ch. IV. "State Succession", § 14. "Sanctity of Treaties", pp. 221-223, and V. Hackworth, Digest of International Law (1943) 164-165. Article 26 of the 1969 Vienna Convention on the Law of Treaties reads: "Article 26. Pacta sunt servanda "Every treaty in force is binding upon the parties to it and must be performed by them in good faith." U.N. Conference on the Law of Treaties, Doc. A/CONF.39/27. May 23, 1969. Additionaly, the Preamble to the 1969 Convention notes that "the principles of free consent and of good faith and the pacta sunt servanda rule are universally recognized". Ibid. The Commentary of the International Law Commission on article 23 of the 1966 draft law of treaties prepared by the Commission read: "(1) Pacta sunt servanda-the rule that treaties are binding on the parties and must be performed in good faith-is the fundamental principle of the law of treaties. Its importance is underlined by the fact that it is enshrined in the Preamble to the Charter of the United Nations. As to the Charter itself, paragraph 2 of Article 2 expressly provides that Members are to 'fulfill in good faith the obligations assumed by them in accordance with the present Charter." I. Claims to Sovereignty Three U.S.-Panamanian treaties provide the basis for U.S. claims to sover. eignty in the Canal Zone. HAY-BUNAU VARILLA CONVENTION. 1903 ARTICLE II "The Republic of Panama grants to the United States in perpetuity the use, occupation and control of a zone of land and land under water for the construction, maintenance, operation, sanitation and protection of said Canal of the width of ten miles extending to the distance of five miles on each side of the center line of the route of the Canal to be constructed. . ." ARTICLE III "The Republic of Panama grants to the United States all the rights, power and authority within the zone mentioned and described in Article II of this agreement and within the limits of all auxiliary lands and waters mentioned and described in said Article II which the United States would possess and exercise if it were the sovereign of the territory within which said lands and waters are located to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power or authority." U.S. TS 431; 33 Stat. 2234-2235; II Malloy, Treaties, etc. (1910) 1322 General Treaty of Friendship of Cooperation, 1936 ARTICLE I "In view of the official and formal opening of the Panama Canal on July 12, 1920, the United States of America and the Republic of Panama declare that the provisions of the Convention of November 18, 1903, contemplate the use, occupation and control by the United States of America of the Canal Zone and of the additional lands and waters under the jurisdiction of the United States of America for the purposes of the efficient maintenance, operation, sanitation and protection of the Canal and of its auxiliary works." ARTICLE XI "The provisions of this Treaty shall not affect the rights and obligations of either of the two High Contracting Parties under the treaties now in force between the two countries, nor be considered as a limitation, definition, restriction or restrictive interpretation of such rights and obligations, but without prejudice to the full force and effect of any provisions of this Treaty which constitute addition to, modification or abrogation of, or substitution for the provisions of treaties." U.S. TS 945; 53 Stat. 1807, 1808, 1825. The effect of the latter article was to leave the juridicial status of the Canal Zone as defined in Article III of the 1903 convention unaltered.1 Treaty of Mutual Understanding and Cooperation, 1955 The Preamble to this treaty states that both parties recognize that: neither the provisions of the Convention signed November 18, 1903, nor the General Treaty signed March 2, 1930, nor the present Treaty, may be modified except by mutual consent, . . .' (Preamble.) II. Sovereignty 6 U.S. T.S. 2273; TIAS 3297 On pages 2 and 3 of his letter, Mr. Bell discusses the question of whether or not the territory comprising the Canal Zone was transferred from Panamanian to U.S. sovereignty. The United States government has never denied that Panama has retained titular sovereignty. The important issue to be faced is, what is the nature of a "titular sovereignty?" Or, can "titular sovereignty" be equated with territorial sovereignty? On page 2 of the letter, Mr. Bell utilizes part of an oft-quoted statement made by William H. Taft, then Secretary of War in President Theodore Roosevelt's cabinet. The portion of the statement Mr. Bell quotes is as follows: ***** The truth is that while we have all the attributes of sovereignty necessary in the construction, maintenance, and protection of the canal, the very form in which these attributes are conferred in the treaty [of 1903] seems to preserve the titular sovereignty over the Canal Zone in the Republic of Panama * * * The conclusion of that statement, which Mr. Bell omits, is also of interest. *** and as we have conceded to us complete judicial and police power and control over the Zone and of the two ports at the end of the canal, I can see 1 II Hackworth, Digest of International Law 809 (1941). 3 Whiteman, Digest of International Law 1130 (1964). no reason for creating a resentment on the part of the people of the Isthmus by quarreling over that which is dear to them but which to us is of no real moment whatever." Has the element of titular sovereignty even been construed to limit the powers exercised by the United States in the Zone? The following excerpts from Padelford's The Panama Canal in Peace and War 2 describe the response of the United States to such claims. "All contentions of this nature have been forthrightly refuted by the United States, to the extent that they deny, or appear to do so, the right freely to exercise sovereign powers within the zone. Secretary Hay, in the note to Senor de Obaldia already quoted above, insisted that the United States 'cannot concede the question to be open for discussion or the Republic of Panama to possess the right to challenge such exercise of authority,' and he laid much weight upon the words of Article III: 'to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights.' [Secretary Hughes reiterated this in 1923: "The grant to the United States of all the rights, power and authority which it would possess if it were sovereign of the territory described, and to the entire exclusion of the exercise by Panama of any such sovereign authority, is conclusive upon the question you raise. The position of this Government upon this point was clearly and definitely set forth in the note of Mr. Hay to Mr. de Obaldia of October 24, 1904." For. Rel., 1923, Vol. II, pp. 638, 653 et seq. In conversation Secretary Hughes said: "This Government would never recede from the position which it had taken in the note of Secretary Hay in 1904. This Government could not and would not enter into any discussion affecting its full right to deal with the Canal Zone under Article III of the Treaty of 1903 as if it were the sovereign of the Canal Zone and to the exclusion of any sovereign rights or authority on the part of Panama. This must be regarded as ending the discussion of that matter." Ibid., p. 684. "[Cf. the citation of J. N. Gris v. The New Panama Canal Co., Supreme Court of Panama, in Secretary Hughes' note of Oct. 15, 1923, quoted above, in which that Court said: "The Republic of Panama agreed that the United States should possess and exercise, to the entire exclusion of the Republic, those rights, powers and authority, that is to say, the rights, power and authority that a sovereign alone can have . ." Ibid., p. 656. ["In a note dated Oct. 13, 1923, the Secretary refused to agree to arbitrate "any question attacking the exercise of sovereign rights of the United States explicitly granted under Article III of the Treaty of 1903 wih Panama." Ibid., p. 710.] At length, in 1923, the Panamanian Minister, in a conversation with Secretary Hughes, 'said that the position taken by the Secretary might be sound from a technical, legal standpoint.' [Ibid., p. 685.] "Secretary of State Hay enunciated the stand of the United States, which has been adhered to since: "The position of the United States is that the words "for the construction, maintenance, operation, sanitation and protection of the said canal" were not intended as a limitation on the grant but are a declaration of the inducement prompting the Republic of Panama to make the grant.' Asserting that the great object of the United States was to construct and operate the Canal, he added that the right to exercise sovereignty, conferred by Article III, left the United States exclusive right to determine what things should be done in the zone ancillary to the main objective. [For. Rel., 1904, pp. 613–630. This position was strongly sustained by Secretary Hughes in 1923. Ibid., 1923, Vol. II, pp. 652-653.] The successful operation, sanitation, and protection of an enterprise of the magnitude of the Panama Canal, located as it is far from the United States, must entail the provision of many subsidiary services in the Canal Zone. Of the necessity of providing any such services or activities within the Canal Zone the authorities of the United States must be the judges." What then is the net legal effort of the concept of titular sovereignty? Mr. Bell's broad description of U.S. rights (“** * the most complete transfer of jurisdiction over a territory without its being a cession in the technical international law sense ***"-pg. 3 of letter, quoting Vali) appears to be correct. In fact, Panama possesses no sovereign powers in the Canal Zone until the U.S. ceases to maintain and operate the canal. (See Treaties of 1903 Art. II and 1906 Art. I.) 2 cited in Whiteman. at 1142-44 The following discussion between Rep. Murphy, Rep. Sullivan, Ambassador John C. Mundt, Deputy Chief Negotiator for the treaty with Panama, and Carl F. Salans, Deputy Legal Adviser, Department of State, attempts to determine a definition of titular sovereignty at a recent congressional hearing.3 Mr. MURPHY. We get into the sovereignty issue so much. Has anyone defined titular sovereignty? Mr. MUNDT. Not that I know of. Perhaps one of these other gentlemen can answer that. I do not think that President Taft defined it at that time. Perhaps he did. Mr. SALANS. I might just say a few words about that. I do not think that the doctrine has been very clearly defined. We have had this notion both with respect to the Ryukyu Islands, Okinawa, under the Treaty of Peace with Japan and also with the Republic of Panama in respect to the Canal Zone. In both instances, the United States has a right to exercise all kinds of administrative and other powers. It was understood the United States did not have sovereignty. There was a remaining interest in Japan, in the case of Okinawa, and in Panama in the case of the Canal Zone, and that is what we refer to as titular sovereignty. Mr. MURPHY. You quote Secretary of War Taft on page 4 of your statemnt. I would like to refer other members of the committee to it. You state Secretary of War Taft testified in 1906 that Panama retained "titular sovereignty" over the canal. Are you representing to this subcommittee that that statement is a true reflection of Taft's understanding of the words "titular sovereignty,” because in that same testimony Taft referred to "titular sovereignty," as a "barren ideality," that he agreed that this characterized that term and he went on in an address as President in 1909, and I quote: Under the treaty with Panama, we are entitled to exercise all the sovereignty and all the rights of sovereignty that we would exercise if we were sovereign and Panama is excluded from exercising any rights to the contrary of those conceded to us. Now that may be a ticklish argument, but I do not care whether it is or not. We are there. We have the right to govern that strip and we are going to govern it. That is a pretty clear definition of "titular sovereignty" as of the time of the negotiated treaty. Mr. SALANS. It remains the same today, Mr. Chairman. I think that is perfectly consistent with what I said. We have all the rights as if we are sovereign, but the fact is we are not sovereign. That leaves something for Panama and that is something that is a reversionary interest in normal property terms. Secretary Taft labeled it titular sovereignty and that notion has developed throughout the years as meaning that somehow Panama had a final, ultimate interest, a recognition that the United States was not, in fact, the sovereign, did not have sovereignty. We have all rights as if we were the sovereign, but we do not have the elusive thing called sovereignty. Mrs. SULLIVAN. If the chairman would yield, is it not true that what it would mean as long as we were there doing what we were supposed to do under the treaty we would have all these rights. Once we left, it, the ground, water and everything there, goes to Panama. Mr. SALANS. I think that is exactly right. Mrs. SULLIVAN. As long as we are under a legitimate treaty we have the right to act as though we were sovereign. III. Impact of the 1936 Trcaty on Sovereignty Mr. Bell remarks in his letter that, "This distinction between the right to exercise jurisdiction within the Zone area and its international status was recognized in Article III of the Treaty of Friendship and Cooperation of March 2, 1936 (53 Stat. 1807; TS 945), which refers to the Zone as 'territory of the Republic of Panama under the jurisdiction of the United States.'' 3 Hearings on Panama Canal Treaty Negotiations before the Subcommittee on Panama Canal of the House Committee on Merchant Marine and Fisheries, 92nd Cong., 2d Sess., Ser. No. 92-30 (1971 and 1972) at 21-22. This is the same argument posed by the Panamanian Ambassador to the United States in 1960, when he stated that ***** Article III of the 1936 Treaty settles it once and for all stipulating that the Canal Zone ‘is territory of the Republic of Panama under the jurisdiction of the United States.' " 4 The line referred to by Mr. Bell and the Panamanian Ambassador appears in paragraph 6 of Article III. Article III refers to commercial agreements, and does not make any direct statement concerning sovereignty. Moreover, when read in conjunction with the 1903 Convention, and Articles I and XI of the 1936 Treaty, it is apparent that the sovereign powers exercised by the United States remained unchanged.5 The basic U.S. position has been restated since 1936. In August of 1956, Secretary of State Dulles commented that "The Panama Canal is a waterway in a zone where, by treaty, the United States has all the rights which it could possess if it were the sovereign 'to the entire exclusion of the exercise by the Republic of Panama of any such sovereign rights, power, or authority' ***”6 The attached excerpts from Hearings of the Senate Foreign Relations Committee, held after the signing of the 1955 treaty, further support the position that there had been no yielding of any sovereignty previously retained by the United States. "STATEMENT OF HENRY F. HOLLAND, ASSISTANT SECRETARY OF STATE FOR INTER-AMERICAN AFFAIRS "Basic principles followed during negotiation "In a general way, I would say to the committee that our consideration of the Panamanian proposals were based on most careful analysis and study of each individual problem. We adopted the general principle, in considering these proposals, that it was to the interest of the United States to assist Panama to develop its economy so that Panama will be less dependent on the canal as such as a major source of income, so long as any arrangements in this regard would not conflict with the essential interests of the United States and those of individuals resident in the zone. It was possible to take a number of steps of this nature in the hope of building greater economic and political stability in this area so vital to us. On the other hand, Panama made a number of requests which, if accepted, might have weakened the jurisdictional position of the United States in the Canal Zone, or might have accorded Panama a special position in economic relations with the United States or required the United States to assume financial obligations in matters for which the United States was not prepared to accept responsibility. The United States could not favorably consider these requests. "The United States, for its part, obtained certain concessions which are beneficial to the United States in the discharge of its responsibilities in the Canal Zone.8 "Senator FULBRIGHT. Would you say that any significant rights of this Government are waived by this treaty? "Mr. HOLLAND. No. Senator. I believe that I can say without any reservations at all that through the course of the negotiations we were successful in preserving every significant right of the United States of present importance in the Canal Zone or related to the Canal Zone; and it is my conviction that no such rights are impaired by this proposed treaty. "Senator FULBRIGHT. Would you say that there is anything in this agreement which might possibly be construed as a waiver of our paramount rights in the Canal Zone? "Mr. HOLLAND. No, sir; and, as a matter of fact, I believe that the permanency and stability of those rights are strengthened by this treaty because of the inclusion in the treaty of the phrases that I referred to in my opening statement. That is the inclusion of the phraseology in the preamble that no part of the treaty of 1903 or the treaty of 1936 or this treaty can be changed save by mutual 4 cited in Whiteman at 1152. 5 footnote 1. supra. XXXV Bulletin, Dept. of State, No. 898, September 10, 1956, pg. 411, cited in Whiteman at 1150. 7 84th Congress-Hearings vol. 172. 8 Id. at 41-43. |