WHAT IS THE BALD CLAUSE? - HISTORY - 2025

The Calvo Clause is a legal provision, with little use today, that is included in contracts signed between national and foreign governments. This clause is the practical embodiment of the so-called Calvo Doctrine, which states that non-nationals must submit to the legal jurisdiction of the country in which they are located and not to the courts of their own.

The author of the doctrine that gave rise to the clause was Carlos Calvo, an Argentine jurist born in 1824. During the first decades of independence of the Latin American countries, the fragility of their institutions placed them in a position of weakness in the face of the great powers., especially against the United States.

Bust of Carlos Calvo in The Hague - Source: Lybil / CC BY-SA (https://creativecommons.org/licenses/by-sa/4.0)

During this period it was also common for countries to try to defend their citizens abroad from local legal action, especially in the case of commercial disputes. At times, this defense even included the threat of military action. To end this custom, Calvo created the doctrine that bears his name.

The clause did not begin to become reality until the Sixth Inter-American Conference, although it always counted on US opposition. Some countries in the region began to include it in their constitutions, as was the case with Mexico.

The

The instability of the newly independent Latin American countries in the nineteenth century left them in a very vulnerable position to attempts by the European powers and the United States to intervene in their economy and politics.

Furthermore, at that time it was common for different states to meddle when their citizens had legal problems abroad.

To try to put an end to this interference and strengthen their sovereignty, the Latin American states sought to strengthen their legislation. In this context, the Calvo doctrine appeared, formulated by the Argentine jurist Carlos Calvo.

Purpose

The Calvo Clause is a stipulation of waiver of diplomatic protection that is added to contracts between a State of Latin America and an individual or company from another country. This clause assumes that outsiders cannot turn to their government to defend their contractual rights in any of their aspects.

In this way, in the event that some type of legal problem appears, the foreign contractor must resort to local justice.

The clause usually appears as follows: "The doubts and controversies that may arise due to this contract will be resolved by the competent courts of the State, in accordance with its law, and will not give rise to any diplomatic intervention or international claim."

Inter-American Conferences

Putting the Calvo Clause into practice was no easy task. In the first two Inter-American Conferences, held in Washington (1889-1890) and in Mexico City (1901-1902) respectively, the United States refused to sign the Convention on the Rights of Aliens, in which the bases of the doctrine appeared.

In that Convention it was decreed that nationals and foreigners should have legal equality and claims for damages during revolutions were regulated.

The United States, for its part, pushed for the signing of the Pecuniary Damage Claims Treaty, which created a regional judicial body to resolve claims. This annulled the Calvo doctrine.

Despite the above, the second of these conferences did represent a breakthrough for supporters of the Calvo Clause. Thus, the limitation of the use of force to collect debts was approved.

Later, during the Fourth Conference (Buenos Aires, 1910), the American countries agreed that, in the event of any incident, they would first go to the local courts. If they did not respond, an international arbitration could be claimed.

Sixth Inter-American Conference

The Calvo Clause had been formulated in 1890, but it was not until 1928 that it was established with more precision. This happened during the Sixth Pan American Conference, in which the Convention on the Rights of Foreigners was introduced.

His first article was worded as follows: "Foreigners will be subject, as well as nationals, to jurisdiction and local laws (…)".

Ninth Pan American Conference

The Ninth Pan American Conference, held in Bogotá in 1948, represented a great advance for supporters of the Calvo doctrine.

At that meeting, the Charter of the Organization of American States was drafted, in addition to approving a treaty so that conflicts could be settled peacefully.

Both documents include various concepts related to the Calvo doctrine. Thus, it was stated that "the jurisdiction of the States within the limits of the national territory is equally exercised over all inhabitants, whether nationals or foreigners."

Other articles of the Charter stated that “the Parties undertake not to attempt a diplomatic claim to protect their nationals or to initiate a dispute before the international jurisdiction, when said nationals have had expedited means to go to national courts. competent authorities of the respective State »

However, these articles were rejected by the United States, even though it had signed the treaties.

First case study

The first diplomatic conflict in which the Calvo doctrine was invoked occurred in Mexico. In 1873, his foreign minister, Lafragua, sent a letter to the US ambassador stating that his country was not responsible for the damage caused to the property of foreigners.

The US response was not to recognize the Calvo doctrine, a position that the US government held on many occasions.

Calvo Clause in Mexico

The Calvo Clause was included in several Latin American constitutions. The best known case was the Mexican one, since it had very important repercussions.

Thus, Mexico incorporated Calvo's thesis in Article 27 of its Constitution, which established that any foreigner who wished to buy land, water or obtain concessions to exploit mines should renounce the protection of his government in the event that they arose. legal conflicts.

Types of Calvo Clauses

In Latin America there are several different kinds of legislation under the name of the Calvo Clause.

Legislative Calvo clause

This Clause is usually included in contracts that are signed between a foreigner and the government of the country in which he wishes to do business. In some cases, the clause indicates that claims from foreigners other than those that could be made by a national are not allowed.

In other cases, diplomatic intervention is accepted if there is a denial of justice for the claimant.

Calvo clause for exhaustion of local resources

When this type of clause is used, foreigners are obliged to exhaust all judicial channels in the country in which they reside before asking their own government for help.

Calvo clause as waiver of diplomatic protection

In the event that the signed contract includes this clause, the foreigner waives the diplomatic protection of his government and undertakes to abide by the laws of the country in which he resides.

References

1. Legal encyclopedia. Clause «Calvo». Obtained from encyclopedia-juridica.com
2. Rodrigo, Borja. Calvo Clause. Obtained from encyclopediadelapolitica.org
3. Alanís Sánchez, Ricardo A. A look at the Calvo clause. Obtained from anagenesisjuridicorevista.com
4. The Editors of Encyclopaedia Britannica. Bald Doctrine. Retrieved from britannica.com
5. The Law Dictionary. What is CALVO DOCTRINE ?. Retrieved from thelawdictionary.org
6. Latin American History and Culture. Bald Doctrine. Retrieved from encyclopedia.com
7. The Business Professor. Calvo Clause or Calvo Doctrine - Definition. Retrieved from thebusinessprofessor.com