Brief Fact Summary.

The Tinoco regime, which was the former government of Costa Rica, was
alleged by Great Britain to have granted oil concession to a British company that had to be
honored by the present regime.

Synopsis of Rule of Law. A government need not conform to a previous constitution if the
government had established itself and maintained a peaceful de facto administration and nonrecognition of the government by other government does not destroy the de facto status of the
government.

Facts. The Tinoco regime that had seized power in Costa Rica by coup was not recognized by
Great Britain and the United States. When the regime was removed, the new government
nullified all Tinococ contract including an oil concession to a British company. The claim of
Great Britain (P) was that the contract could not be repudiated because the Tinoco government
was the only government in existence at the time of the contract was signed. This view was not
shared by Costa Rica (D) who claimed that Great Britain (P) was estopped from enforcing the
contract by its non-recognition of the Tinoco regime. The matter was sent for arbitration.

Issue. Does a government need to conform to a previous constitution if the government had
established itself and maintained a peaceful de facto administration and does non-recognition of
the government by other government destroy the de facto status of the government?
Held. (Taft, C.J., Arb). No. A government need not conform to a previous constitution if the
government had established itself and maintained a peaceful de facto administration and nonrecognition of the government by other government does not destroy the de facto status of the
government. The non-recognition of the Tinoco regime by Great Britain did not dispute the de
facto existence of that regime. There is no estoppel since the successor government had not been
led by British non-recognition to change its position.

Discussion. Estoppel was not found by the arbitrator. The evidence of the de facto status of the
Tinocos regime was not outweighed by the evidence of non-recognition. This implies that valid
contracts may be formed by unrecognized government.