## Facts

- A U.S. corporation, North American Dredging Company of Texas, contracted with the Mexican government (1912) to perform dredging works at the port of Salina Cruz.
- The contract required performance and payment in Mexico and included an “Article 18” Calvo clause treating the contractor as Mexican for matters in Mexico and renouncing diplomatic intervention.
- The United States espoused the company’s claim seeking approximately $233,523.30 plus interest for alleged losses from Mexico’s breach of the dredging contract (performance and payment).
- Mexico filed a preliminary objection seeking dismissal for lack of jurisdiction, arguing the Calvo clause waived diplomatic protection and barred the claim before the Commission.

## Issues

1. Whether the Calvo clause validly barred the United States from espousing before the Commission a claim based on Mexico’s breach of the dredging contract.
2. If enforceable, whether the clause excluded only purely contractual claims or also excluded claims alleging independent violations of international law.

## Decision

- The Commission held the Calvo clause effective as between the contractor and Mexico to require reliance on Mexican legal remedies for rights arising out of the contract.
- The Commission concluded that purely contractual claims were placed outside the Commission’s jurisdiction by the contractor’s contractual undertaking.
- The Commission rejected Mexico’s argument that the Calvo clause deprived the Commission of jurisdiction over all claims connected with the contractual relationship.
- The Commission held the clause did not preclude the United States from espousing, nor the Commission from considering, claims grounded in violations of international law.
- Mexico’s motion to dismiss was denied insofar as it sought dismissal of all contract-related claims, but the Commission treated the contract-performance/payment components as excluded from its jurisdiction.

## Legal Principles

- A Calvo clause may bind a foreign contractor to pursue local remedies for disputes arising from the contract and may bar diplomatic protection for purely contractual claims.
- A private contractual waiver cannot extinguish a sovereign’s right to exercise diplomatic protection where the host state’s conduct constitutes an international law violation.
- International adjudicatory jurisdiction may be limited for contract disputes by an agreed local-remedy framework, but remains available for claims alleging denial of justice, arbitrary treatment, or other independent international wrongs.
- For jurisdictional analysis, tribunals distinguish contract claims (municipal-law performance/payment disputes) from claims asserting internationally wrongful acts.

## Conclusion

The Commission enforced the Calvo clause to exclude purely contractual breach claims from its jurisdiction while preserving jurisdiction over any claims alleging independent violations of international law, thereby allowing only the latter type of claim to be espoused despite the contractual waiver.


United States (N. Am. Dredging Co. of Tex.) v. United Mexican States, 4 R.I.A.A. 26 (Gen. Claims Comm’n U.S.-Mex. 1926)