The Tinoco Arbitration, Great Britain v.

Costa Rica (1923)

Plaintiff- Great Britain
Defendant- Costa Rica

FACTS

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.

The “Tinoco regime” came to power through a coup in Costa Rica in 1917. It lasted for two years. During
this time, the Tinoco regime was recognized as legitimate by some States, but not large powers such as
Great Britain (plaintiff). During its time in power, the Tinoco regime entered into several contracts
(including an oil concession) with the British government. When the regime fell in 1919, Great Britain
brought suit against Costa Rica (defendant) to enforce the contracts and collect on the Tinoco regime’s
liabilities. Costa Rica argued that the Tinoco regime was not a recognized government capable of
entering into contracts on behalf of the State. Additionally, Costa Rica argued that since Great Britain
itself did not recognize the Tinoco regime as a government, it could not claim that Tinoco conferred
enforceable rights such as the oil concession on British citizens. In March 1923, the case was considered
by an Arbitrator, United States Chief Justice William H. Taft.

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?

RULING:  
No. A government need not conform to a previous constitution if the government had established itself
and maintained a peaceful de facto administration and non-recognition 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.

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