XVI. In case of civil or national war, the Company is to observe strict neutrality, but in case of the invasion of the Republic of Nicaragua by filibusters or pirates, the Government may use the steamers of the Company for the conveyance of troops and warlike stores, in so far as may not interfere with the regular service of the transit; and even without this limitation in cases of actual invasion upon the transit route. For the use of the steamers the Government will pay the Company only for the current expenses of the said steamers during the time they may be employed, and will indemnify it according to the just valuation by professional persons appointed, one on each side, for the damage and evident deterioration that the said steamers may have suffered, and the payment shall be made without interest, the amount thereof being deducted from such sums as the Company may have to pay to the Government.

XVII. If the Government of the Republic should be a party to any Contract or Convention which may at present exist for the construction of a maritime canal across its territory, and the duration of the rights and privileges stipulated for in the present Contract should be incompatible with the terms and conditions of the said Contract or Convention, in such case the rights and privileges stipulated by the present Contract shall last solely until the complete execution of the work of the maritime canal, according to the terms of the said Contract or Convention,

XVIII. The Government sells to the Company the wharves, houses, steamers and the remains of steamers, and all the other effects and properties which belonged to the old transit by the department of Rivas, and which the Government possesses in the ports of San Juan del Norte, San Juan del Sur, the river San Juan and the Lake of Nicaragua, and between the Bahia de la Virgen, and the Port of San Juan del Sur, which sale, the Government makes to the Company for the total sum of 35,000 dollars, legal money of the United States of America; and which the Company shall pay, by delivering into the General Treasury of the Republic the sum of 5,000 dollars previous to taking possession of the objects sold, and paying a like sum subsequently at the end of each year, until the total sum of 35,000 dollars be completed; taking note that of this sum 10,000 dollars are the price of the lake steamer named Virgen, included amongst the property sold. The Government moreover lets to the Company for the period it may require it, during the existence of the present Contract, the road of the old transit route situated between the port of La Virgen, and that of San Juan del Sur, for which the Company shall pay to the Government the annual sum of 3,000 dollars legal money of The United States of America, which likewise must be paid into the General Treasury of the Republic. And the Company can make

such alterations as it may think proper in the road let to it; occupying the whole or part thereof with railroad or other works, and using it in any manner that may be required for the object of the transit route; it being agreed that the Company will not be bound to return the said road in the same condition as it was received.

XIX. The Company shall pay to the Government the sum of 200,000 dollars in free shares of its capital within 90 days after the exchange of the ratifications of the present contract, on sight of an order of the Government. The Company shall also pay to the same one dollar and a half for every passenger of either sex that it may convey from ocean to ocean, excepting only infants in arms. And the payment of this head money shall be made by the Company at the end of every month in the Republic of Nicaragua; and, in order to ascertain the number of passengers conveyed, the captains of the maritime vessels by which they have arrived shall exhibit to the captain of the respective port the list of passengers that they may have conveyed, and the agents of the Company shall submit to the Government the books, lists, and whatsoever data they may be able to furnish, and that may be required of them in order to cbtain the information.

XX. The Company, being desirous of promoting the commerce of the Republic of Nicaragua, will make a reduction of one-half the passage money for passengers and the wharf duty established in the general tariff of its route, in favour of citizens of the Republic of Nicaragua, and will allow them the gratuitous use of the wharves that the said Company may have on the river San Juan and the Lake of Nicaragua, in so far as the said use does not embarrass the Company's own use of those wharves, and does not interfere with the general rules established for their use.

XXI. Both Contracting Parties by these presents renounce in the most absolute and effective manner, each in favour of the other, all rights or interests whatsoever that they may consider they had acquired in virtue of the contract made between them under date the 27th August, 1849, which was reformed by Convention of the 9th March, 1850, or of the Convention ratified on the 20th August, 1851, or in virtue of the law of incorporation of that same date, or of the contract of the 19th June, 1857, or of the explanatory Articles of the 26th October of the same year, or of any contracts whatsoever which may have been made between them, the said Contracting Parties, up to the present time, all which are null and of no value or effect. Likewise the same parties renounce and abandon for ever every claim, pretension, or demand to which they may think they have a right, the one against the other, for damage, injuries, compensation, or indemnifications, or for

any other consideration whatsoever. And it is understood that amongst the rights and interests renounced and abandoned as aforesaid are comprised all rights whatsoever, real or personal, that the said American Company of the Atlantic and Pacific Maritime Canal may think it possesses to or in lands or real property of any other description situated in the Republic of Nicaragua.

XXII. Although the said Central American Transit Company will be able to dispose of its capital in shares in such manner as it may think fit, it is expressly stipulated that it cannot alienate the present Contract in favour of any Government, company, or individual whatsoever, without the previous written permission of the Government of the Republic of Nicaragua.

XXIII. By any failure of the Central American Transit Company in fulfilling the stipulations of the present Contract, it will lose the rights and privileges that are herein conceded to it, on the previous decision of the tribunal of arbitrators hereinafter established, to whose cognizance every question that may occur between the Government and the Company regarding the execution of the present stipulations is to be submitted. But in case the Central American Transit Company should become complicated in foreign invasions against the Republic of Nicaragua or against any soever of the other Central American Republics; or in case the said Company should fail in their engagement to open an interoceanic route within the period fixed in Article V of the present Contract; or in case the said Company should fail in the payment of the 200,000 dollars in free shares of its capital, or in the payment of any of the sums which by the said Contract it has engaged to pay to the Government of the Republic of Nicaragua, the Government can at once suspend the action of the transit, and it shall remain, as agreed on, for the tribunal of arbitrators to decide whether or not the Contract has become vitiated by reason of the aforesaid omissions. It is to be understood that there shall be no arbitration on account of the expiration of the term mentioned in Article V, which, being absolute, leaves no room for examining into

causes.

XXIV. At the expiration of the 50 years fixed for the duration of the present Contract, or whenever it may be rescinded or annulled for any of the aforesaid causes, the interoceanic route, with all its establishments and the properties employed in its service, such as the telegraphic line, the steamers, and the rest, shall pass to the dominion of the Republic of Nicaragua; likewise all the effects of the present Contract shall cease, without the Government having to pay any sum by way of price, or for any other consideration what

soever.

XXV. All disputes that may arise between the Contracting

Parties respecting the execution or validity of the present Contract, or of any of the rights herein granted, shall be decided by a tribunal of arbitrators which shall be formed in the city of Washington, the capital of the United States of America, in the following manner that is to say,

Either of the parties shall appoint an arbitrator on its part, and shall notify the said appointment in writing to the other party, giving the name of the arbitrator in full, his occupation, and the name of the place and the house where he resides, as also a clear and detailed statement of the questions which are to be submitted to the decision of the arbitrators. This written notification shall be given to the Company at their office in the city of New York, delivering it to the President, Vice-President, or Secretary; and the notification to the Government of Nicaragua shall be delivered in the capital of this Republic to the Minister for Foreign Affaires, or to any other of the Ministers of State.

The party notified shall give to the other party within 90 days, and in the manner already stated, a notification, likewise in writing, of the nomination of its arbitrator, with his name in full, his occupation, and the place and house wherein he resides, with a clear and detailed statement of the points in question. Moreover each of the parties shall give in its notification the name in full, the occupation and residence of a person who will remain in the said city of Washington to represent it until the conclusion of the business.

When the nominations as above expressed are made, either of the parties shall give to the other party, 10 days beforehand, a written notification of the day, place, and hour at which the arbitrators are to meet in the said city of Washington, in order to hear and determine the points or questions; which last notification, as also the subsequent ones, may be given to the attorney or representative of the contrary party in Washington, either by delivering the notification to him personally, or leaving it at the house described as his residence, with any grown up person living therein.

The arbitrators shall then attend at the place and on the day and hour stated, and shall proceed to hear the parties, examine their proofs, and decide on the questions that may be submitted to them; and within the term of 15 days after the questions have been submitted by both parties, they shall give their opinion, signed by both, which shall be decisive and final.

If, when the first notification to the Company has to be given on the part of the Government of Nicaragua, no one of the persons to whom the aforesaid notifications are to be delivered should be found at the offices mentioned above, although application shall have been made there at 11 A.M. on three different days, in such

case, protest of the case shall be made before a notary public, and notice thereof shall be advertised in one of the journals of the city of New York, by which the notification shall be considered as delivered to the proper person.

In case either of the parties should omit to give the written notification of the nomination of arbitrators, or in case the arbitrators of either of the parties should not attend at the time, day, and hour appointed, and the party that nominated him should not provide another at the same place, day, and hour, then the arbitrator of the other party can proceed alone to hear the party or parties that may be present, to examine the proofs offered, and to decide the questions, and his sole opinion, given in writing and signed by him, shall be final and conclusive.

If both the arbitrators attend at the examination, and do not give their opinion within the term of 15 days after the questions have been submitted to their decision, on account of their not being able to agree, then either of the parties or their respective attorney can apply to the Ministers Plenipotentiary, or to the resident Ministers should there be no Plenipotentiaries, or to the Chargés d'Affaires should there be no resident Ministers, of European nations to the Government of The United States, who may be the first in the order of seniority by their respective receptions in Washington, requesting them to nominate, in writing, a third arbitrator. In case any of the said Ministers or Chargés d'Affaires should decline, or should for any other reason be unable to act, their place shall be filled up by the Chargé d'Affaires of an European nation with the Government of the United States of America, who may be next in the order of reception, successively until the object be attained.

When the third arbitrator has been named, one of the parties, or its respective attorney, will give, 5 days beforehand, a written notification to the attorney of the other party in Washington, of the day, place and hour at which the 3 arbitrators are to meet in the said city of Washington to hear the parties, examine their proofs, and decide the questions; and the 3 arbitrators, or two of them, if any one should be absent, can proceed to the examination, and give their opinion written and signed by them, which shall be final and decisive.

The arbitrator, or arbitrators respectively, can grant to the parties the necessary time to obtain and present proofs, by means of requisitions which they can issue, or for the presentation of witnesses, or for other means that they may consider just and fitting, as it is the intention of the Contracting Parties that the arbitrator or arbitrators respectively may have absolute and unlimited power in everything concerning the proofs, the nature of them, the mode of