ALABAMA CLAIMS. 159 
ing out of a state of war being thus disposed of, we 
arrive at the great class of private losses, which chief: 
ly occupied the time of the Tribunal. 
DECISION AS TO PRIVATE LOSSES. 
The Arbitrators, assuming that, pursuant to the 
command of the Treaty, they are to be governed by 
the three Rules, and the principles of international 
law not incompatible therewith, proceed to lay down 
the following prefatory positions, namely : 
1. “The ‘due diligence’ referred to in the first and third of 
the said Rules, ought to be exercised by neutral Governments 
in exact proportion to the risks to which either of the Belliger- 
ents may be exposed from a failure to fulfill the obligations of 
neutrality on their part. 
2.“ The circumstances, out of which the facts constituting the 
subject-matter of the present controversy arose, were of a na- 
ture to call for the exercise on the part of Her Britannic Maj- 
esty’s Government of all possible solicitude for the observance 
of the rights and the duties involved in the proclamation of 
neutrality issued by Her Majesty on the 13th day of May, 1861. 
3. “The effects of a violation of neutrality committed by 
means of the construction, equipment, and armament of a ves- 
sel are not done away with by any commission which the Gov- 
ernment of the belligerent Power benefited by the violation of 
neutrality may afterward have granted to that vessel; and the 
ultimate step, by which the offense is completed, can not be 
admissible as a ground for the absolution of the offender; nor 
can the consummation of his fraud become the means of estab- 
lishing his innocence. 
4.“ The privilege of ex-territoriality accorded to vessels of 
war has been admitted into the laws of nations, not as an ab- 
solute right, but solely as a proceeding founded on the princi- 
ple of courtesy and mutual deference between different na- 
tions, and therefore can never be’ appealed to for the protec- 
tion of acts done in violation of neutrality. 
