Iwayama, Minami O.

US (SHUFELDT) VS THE GOVERNMENT OF GUATEMALA

Facts:

Shufeldt is a citizen of the United States. As a cessionary of the rights of Morales and Andrade – who
entered into a contract with David Pivaral, the Minister of Agriculture of the Government of the
Republic of Guatemala – which grants to the former a permission to extract chicle in a section of the
public lands situated in the Department of Peten in Guatemala for a period of 10 years, Shufeldt
through the US Government, asserts that he has the right to claim a pecuniary indemnification for
damages and injuries which may have been caused to him by the promulgation of the Legislative
Decree of the Assembly of Guatemala which it disapproved the said contract entered into between
Morales and Andrade and the Sec. of Agriculture Pivaral, for the extraction of chicle.

Issue:

However, the Guatemalan government asserts that:

[1] it is not liable to Shufeldt because the contract entered into by Morales, Andrade, and Pivaral was
not submitted to the Assembly, and that the report of the Agricultural Commission of the Assembly on
the memorial does not mention the contract; and

[2] the contract entered into by Morales, Andrade, and Pivaral is void because Pivaral as the Minister
for Agriculture, had no authority to enter into such an agreement, and that the President of Guatemala
had no authority to approve the same.

Ruling:

[1] In answering the 1st issue, the fact that the contract was approved by the President of Guatemala,
and having such fact be published in El Guatelmateco (a national-level newspaper of Guatemala),
and the fact of the contract being reflected in the records of the Executive Orders, led the arbitrator of
the case to conclude that the contract was submitted to the Legislative Assembly in the memorial,
and that the body was fully cognizant thereof.

[2] On the question of the legality of the contract, the arbitrator ruled that where the contract has been
made by the Executive and duly reported to the Legislative Assembly and approved by such body,
and where a document is laid before the Assembly in accordance with the law, and no objection was
taken, it must be taken to be approved.

Hence, the arbitrator ruled that Shufeldt has the right to claim pecuniary indemnification from the
government of Guatemala; and that the government of Guatemala should, in justice, pay the
government of the United States $225,468.38 for the account of Shufeldt.