APPENDIX TO CASE OF GREAT BRITAIN. 849 
79 No. 127. 
Sir J. Pauncefote to the Marquis of Salisbury.—( Received September 7.) 
NEWPORT, August 28, 1891. 
My Lorp: With reference to your Lordship’s telegram of the 22nd 
instant, I have the honour to inclose copy of the private and unofficial 
letter which I[ have addressed to the Acting Secretary of State, relating 
to the compensation clause in the Behring’s Sea Arbitration Agreement. 
Ihave, &c. 
(Signed) JULIAN PAUNCEFOTE, 
[Inclosure in No. 127.—Private and Unofticial.] 
Sir J. Pauncefote to Mr. Wharton. 
NEWPORT, August 26, 1891, 
DEAR Mr. WHARTON: In my reply to your official note of the 22nd instant I stated 
that I hoped to be able to send an answer to your note of the 23rd ultimo in a few 
days. 
Before doing so, however, I am anxious to explain to you privately and unofficially, 
as I would do verbally were I in Washington, the objection which my Government 
entertain to the latest form of clause relating to compensation, which has been pro- 
posed by the President for adoption as Article 7 in the Behring’s Sea Arbitration 
Agreement. Such a private and unofficial exchange of views at this point of the 
negotiations may abridge the official correspondence, and facilitate a solution of the 
present difficulty, on the basis of a suggestion which you made when we discussed 
the question informally at Washington. My Government are unable to accept the 
form of clause proposed by the President, because it appears to them, taken in con- 
nection with your note of the 23rd ultimo, to imply an admission on their part of a 
doctrine respecting the liability of Governments for the acts of their nationals or 
other persons sailing under their flag on the high seas, which is not warranted by 
international law, and to which they cannot subscribe. 
Ineed hardly say that the discussion of such a point (which after all may never 
arise) must prolong the negotiation indefinitely. Moreover, it seems premature to 
enter into such a discussion before the other questions to be submitted to the Arbi- 
trators have been determined, and all the facts on which any liability can arise have 
been ascertained. 
Your suggestion, to which I have referred, was to leave out altogether the ques- 
tion of damages from the Arbitration Agreement, and you may remember that, at 
the time, I did not encourage the idea, not apprehending that the clause would give 
rise to such protracted discussion, and being, moreover, anxious that the settlement 
to be arrived at should embrace and finally dispose of every point in controversy. 
There is a middle course, however, which appears to me to commend itself, from 
every point of view, as a practical and logical solution of the present difficulty. It 
is to omit the 7th clause as to compensation, and to insert, in its place, a clause 
referring to the Arbitrators any question of fact which either Government may put 
to them with reference to the claims for compensation it believes itself to possess. 
The application of the facts to international law might be a matter for negotiation 
after they are determined, and, if the two Governments agree, might be referred, in 
whole or in part, to the Arbitrators. The clause might be worded as follows: 
‘“Clause 7. Either of the two Governments may submit to the Arbitrators any 
question of fact which it may wish to put before them in reference to the claims for 
compensation which it believes itself or its nationals to possess against the other. 
“The question whether or not, and to what extent, these facts as determined by 
the Arbitrators, and taken in connection with their decision upon the other ques- , 
tions submitted to them, render such claims valid, according to the principles of 
international law, shall be a matter of subsequent negotiation, and may, if the two 
Powers agree, be referred, in whole or in part, to the Arbitrators.” 
I do not, of course, propose the above wording as definitive. It should be open to 
amendment on either side. But if, after submitting it to the President, you should 
be able to inform me privately that such a clause, under the circumstances, would 
be acceptable to your Government, I would then address you officially in reply to 
your note of the 23rd ultimo, and formally make the above proposal, stating the 
ground on which it is based. 
BeSopk Boy: OL 
