Papers Relating to the Foreign Relations of the United States, 1925, Volume II

812.6363/1629: Telegram

The Secretary of State to the Ambassador in Mexico (Sheffield)

Washington, December 31, 1925—9 p.m.

294. Your 298, December 24, 4 p.m.⁵² Department desires you to present substantially the following in a first person note:

Under instructions from my Government I have the honor to refer to the official publication in the edition of the Diario Oficial of blank date⁵³ of the text of a law regulating land ownership by foreigners, and to recall to your attention the statements respecting the bill now enacted which I made to you November 17 and 27 last, and to say that generally speaking the observations made in those statements regarding certain retroactive and confiscatory features of the bill are considered to be applicable to the law as published in the Diario Oficial above mentioned.

My Government has also instructed me, referring to the official publication in the edition of the Diario Oficial of blank date⁵⁴ containing the text of a petroleum law, to remind you that December 16 last,⁵⁵ I conveyed to you, in confirmation of the statement made by the Secretary of State of the United States to Ambassador Téllez on December 12 last,⁵⁶ certain general observations relating to the retroactive and confiscatory character of the petroleum bill then pending. My Government regrets to observe that the last mentioned law published in Diario Oficial appears to be subject to the same objections which were advanced against the pending bill. Specifically, but with the expressed statement that the following objections are not comprehensive, my Government desires me to point out that in its view:

1. This law fails by far to give full recognition to rights lawfully acquired prior to the adoption of the present Mexican Constitution, when Mexican law expressly provided that the owner of surface lands owned also the subsoil deposits of petroleum.

2. The law fails not only in the respect indicated, but it also fails to respect decisions of Supreme Court of Mexico in the interpretation of the very Constitutional provisions which the law is apparently designed to regulate, in that those decisions hold in effect that such Constitutional provisions are not retroactive as to those, whether corporations or individuals, who performed any one of a number of what are denominated as “positive acts”, whereas,

A. This law (Article 4) seems to provide that foreign corporations, regardless of the time when they lawfully acquired rights and irrespective of whatever “positive acts” they performed, will not be able to obtain recognition of those rights, and

B. That foreign individuals, without regard to the time when they lawfully acquired rights and irrespective of whatever “positive acts” they performed, will be deprived of such rights unless they renounce their citizenship with respect to such rights (Article 4), and

C. That the number of “positive acts” recognized shall be much less than those enumerated in the decisions mentioned (Article 14), and

D. That even as to foreign individuals who performed “positive acts” recognized in the law and make the renunciation mentioned, confirmation of their rights must be applied for within a year or such rights will be forfeited (Article 15).

3. In apparent contradiction to the statements made by the Mexican Commissioners in the conferences held in Mexico City in 1923, as to the past, present and future policy of the Mexican Government to grant preferential rights to the owners of the surface or persons entitled to exercise their preferential rights to the oil in the subsoil, who had not performed a “positive act”, the law in question seems to give no preferential rights to such owners or persons.

My Government also directs me to invite Your Excellency’s attention to the provision in the laws under discussion requiring foreigners to waive their nationality and to agree not to invoke the protection of their respective governments so far as their property rights are concerned under penalty of forfeiture, and to inform Your Excellency that my Government has consistently declined to concede that such a waiver can annul the relation between an American citizen and his Government or that it can operate to extinguish the obligation of his Government to protect him in the event of a denial of justice.

In connection with the foregoing considerations, my Government further calls attention to the statements made by the Mexican Commissioners at the conference mentioned regarding the duty of the Federal executive power under the Constitution to respect and enforce the decisions of the judicial power, wherein, speaking as they stated for the Mexican Government, Mexican Commissioners said: “In accordance with such a duty, the Executive has respected and enforced, and will continue to do so, the principles of the decisions of the Supreme Court of Justice in the ‘Texas Oil Company’ case and the four other similar Amparo cases, declaring that paragraph IV of Article 27 of the Constitution of 1917 is not retroactive in respect to all persons who have performed, prior to the promulgation of said Constitution, some positive act which would manifest the intention of the owner of the surface or of the persons entitled to exercise his rights to the oil under the surface to make use of or obtain the oil under the surface”.

Then enumerating a large number of positive acts the Mexican Commissioner added: “The above statement has constituted and will constitute in the future the policy of the Mexican Government, in respect to lands and the subsoil upon which or in relation to which any of the above specified acts have been performed, or in relation to which any of the above specified intentions have been manifested”.

My Government is therefore unable to escape the conclusion that the petroleum law as published in the Diario Oficial violates rights lawfully acquired under Mexican law, provisions of the present Mexican Constitution, recent decisions of the Supreme Court of Mexico, and pledges solemnly given but two years ago by designated representatives of the Mexican Government.

With respect to both the laws referred to, my Government is of the view that these laws are in violation of the principles of international law and equity.

In view of the foregoing my Government directs me to inform Your Excellency that it hereby reserves on behalf of citizens of the United States whose property interests are or may hereafter be affected by the application of the two above mentioned laws, all rights lawfully acquired by them under the Constitution and laws of Mexico in force at the time of the acquisition of such property interests and under the rules of international law and equity, and points out that it is unable to assent to an application of the recent laws to American owned properties so acquired which is, or may hereafter, be retroactive and confiscatory.

Kellogg

52. Not printed.
53. Inasmuch as the text of the land law was not published in the Diario Oficial when Ambassador Sheffield delivered this note to the Foreign Office on January 8, the first paragraph of the note was modified so as to omit reference to the publication in the Diario Oficial, The text of the land law was published in the Diario Oficial Jan. 21, 1926.
54. Dec. 31, 1925.
55. See Embassy’s telegram No. 280, Dec. 16, 5 p.m., p. 550.
56. See telegram No. 274, Dec. 12, 7 p.m., to the Ambassador in Mexico, p. 547.