A significant predecessor of the United Nations was the Permanent Court of Arbitration. It was established in a hurry to decide a case about gifts to the Catholic Church that Mexico had decided to tax retroactively.
by Massimo Introvigne*
*Introduction to the webinar “The UN, the Two Covenants, and the Tai Ji Men Case,” co-organized by CESNUR and Human Rights Without Frontiers on October 24, 2024, on the United Nations Day.
An article already published in Bitter Winter on October 26th, 2024.
Celebrating the United Nations Day, I would like to reflect on how the long road leading to the creation of the United Nations actually started with an incident including all the ingredients of the Tai Ji Men case: gifts freely given to a spiritual organization, greedy bureaucrats who wanted to get hold of them, and domestic institutions incapable of solving the issue.
Before the United Nations, as we all know, there was the League of Nations, founded in 1920. But before the League of Nations, most scholars recognize as the real ancestor of the United Nations the Permanent Court of Arbitration, which was established two decades before the League of Nations, in 1899, and still exists. It is often confused with the International Court of Justice, founded in 1945, for the good reason that they are located in the same building, the Peace Palace in The Hague, Netherlands, but the two institutions are different. The International Court of Justice is part of the United Nations and may render verdicts against any member state. However, because of the enforcement of its decisions should pass through the Security Council, the International Court of Justice is not very effective. It can always be stopped by the veto power of the permanent members. For example, in 2022 the Court ordered Russia to immediately withdraw its troops from Ukraine, but because of the Russian veto power at the Security Council the decision could not be enforced.
In contrast, the Permanent Court of Arbitration is not part of the United Nations. Its verdicts are more effective, because it only rules in cases between two states that have both preliminarily declared that they would accept its verdict. Although several intellectuals, with very different political ideas, lobbied in the 19th century for the institution of the Permanent Court, in the end the decisive impulse for its creation came from Czar Nicholas II of Russia. It is today recognized as the first institution aimed at realizing a key objective of the United Nations: solving international disputes through arbitration, thus avoiding war.
Interestingly, creating the Permanent Court became urgent at the end of the 19th century because United States and Mexico had a case they wanted to submit to such an institution, which did not yet exist. It became in 1902 the first case decided by the Permanent Court. The case was called “Fondo Piadoso de las Californias,” Spanish for “Pious Fund of the Californias” and it was about, precisely, gifts given to a spiritual institution. The origins of the case were very old. They dated back to 1696 when Jesuit Catholic priests in both Baja California (currently part of Mexico) and what is now the State of California in the US decided to organize in a systematic way the collection of gifts for their activities, by creating a fund independent from the government and tax-exempt. Because of the complicated story of the Jesuits, the fund later supported other Catholic orders as well. Supported by gifts for centuries, it accumulated a very significant patrimony.
In mid-19th century both Baja California and present-day American California were part of Mexico, an impoverished state that badly needed money. It did what many states do in these cases. It declared that the gifts given for centuries to the Pious Fund were in fact taxable, calculated the taxes, and seized by force all the properties of the Fund. Mexico unilaterally decided that everything now belonged to the state, except an interest of 6% on the value of the properties that would be devoted to the original purpose of the Fund, i.e., supporting Catholic priests in California.
A war between the United States and Mexico ended in 1848 with the American victory. Mexico was compelled to surrender California (and other territories) to the U.S., keeping only Baja California. Because of events in Mexico, its government stopped paying even the 6% interest to the Catholic priests. The United States, however, claimed that the 6% after the partition of California should be divided in two. Mexico should still pay 3% to the United States, which would in turn give the money to the Catholic Bishops in California. The controversy escalated to threats of military retaliation by the U.S., since Mexico did not pay anything. Both parties agreed that they would accept the verdict of the proposed Permanent Court of Arbitration.
The Court decided the case in 1902 in favor of the United States. It was already bad enough that Mexico had appropriated centuries of gifts made by privates for spiritual purposes. It should at least pay to the priests the interest percentage fixed by its own legislation. Mexico started to pay the 3% interest to the U.S. every year in 1903, but because of the anti-Catholic Mexican Revolution suspended the payments in 1912. The case was settled only in 1966, with Mexico transferring a lump sum of US $719,546 to the United States but declaring it would pay nothing in the future. The sum represented only a small fraction of the value of the money donors contributed to the Pious Fund for centuries, which had basically been stolen.
We can thus see that the activities of the most significant predecessor of the United Nations were set in motion by the case of a state falsely declaring that gifts to a religious organizations were taxable in order to steal goods and money. It left only a small percentage to the intended recipients of the gifts and then tried to steal it as well.
The lesson for the Tai Ji Men case is that history repeats itself. Their land was stolen just as the money of the Pious Fund was stolen, by making gifts taxable through legal and semantic acrobatics. In the case of the Pious Fund, international arbitration in a way worked, showing that the system of the Permanent Court was in fact a good idea. But it did not work completely.
Greedy state bureaucrats and the temptation to appropriate gifts given for spiritual purposes are as old as history. Internationalizing such controversies does not guarantee success, but it may help. This is why internationalizing the Tai Ji Men case remains an important strategy to pursue after so many disappointments in Taiwan.