The Mexican Minister for Foreign Affairs
(Sáenz)
to the American Ambassador (Sheffield)5
Mexico [undated].
No. 806
Mr. Ambassador: I duly received Your
Excellency’s note No. 989, dated January 8, 1926.
Your Excellency states therein that under instructions from your
Government you refer to the recent passage by the Mexican Congress
of the law regulating land ownership by foreigners, and recall to my
attention the statements respecting the bill now enacted which you
made to me on November 17 and 27 last,6 in order to say to me 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 passed.7
[Page 606]
With the intention of referring to this matter later, and before
proceeding further, I beg to recall to Your Excellency that in my
memorandum of December 3 [5?], 1925,8 which is
still unanswered by the Embassy, I set forth at length the reasons
why the aforesaid legislation cannot be regarded as possessing the
character which Your Excellency gives to it.
Your Excellency then discusses principally the petroleum law which
was published in the Diario Oficial of
December 31 last, after reminding me that on December 16 you
conveyed to me,9 in confirmation of the statements made by
the Secretary of State to Ambassador Tellez on December 12,10 certain
general observations relating to the retroactive and confiscatory
character of the bill then pending approval.11 Your Excellency adds that your Government
regrets to observe that the last-mentioned law as approved is
subject to the same objections which were advanced against the
pending bill. Your Excellency then states that from your
Government’s point of view you must make the following observations
which are not all which might be presented against the law:
First objection: The law does not recognize fully rights acquired
prior to the going into effect of the present Constitution,12 when Mexican law provided that
the owner of the surface lands owned also the subsoil deposits of
petroleum.
With regard to this observation I take the liberty to state to Your
Excellency that while it is true that the Mexican law provided what
is set forth and that under the new legislation petroleum deposits
are the property of the Nation, this does not signify that prior
rights lawfully acquired may be disregarded. In fact, a right is not
acquired except by its exercise. The owner of the surface could
exploit the subsoil as his own property, but so long as he did not
do so he could not acquire ownership of anything which might be
found therein. A subsequent law may modify a status in law created
by a prior law without being retroactive; and not only can it do
this, but it must necessarily be so, otherwise legislation would be
immobile, which is absurd, because law is no more than one aspect of
the life of peoples and has to be continually modified in order to
be adapted to the new necessities of peoples. Otherwise slavery
would not have been abolished, nor right of primogeniture, nor
forced inheritance, nor irredeemable taxes, etc. It is always [Page 607] assumed that a new law is
better than the former one, and the only limitation placed on the
application of such new law is that it shall not be retroactive, and
it is not so when it does not infringe upon any right that has been
completed, and in the case under discussion no act was performed.
Now, if there are in question cases in which acts have been
performed, article 14 of the law provides that it will not apply
retroactively.
As a second objection, Your Excellency states that the law not only
fails to respect what is indicated above, but that it also fails to
respect the decisions of the Supreme Court of Justice,13 according to
which the constitutional precepts are not retroactive nor applicable
to corporations or individuals who performed any of those acts
denominated “positive acts”; an objection which, having a general
character, it is sought to base on the following objections having a
special character.
(a) That under article 4, foreign
corporations, without taking into consideration the time when they
acquired their rights and without taking into account any “positive
act,” will not be able to obtain the recognition of their
rights.
In reply to the foregoing objection, I beg leave to state to Your
Excellency that, from a careful reading of the law, it clearly
follows that the hypothetical case in question does not come under
article 4, but under article 14, according to which foreign
corporations which have acquired rights and performed “positive
acts,” before the going into effect of the Constitution, will have
such rights confirmed.
Article 14, furthermore, should, in this case, be considered along
with articles 5 and 6 of the organic law of section 1 of article 27,
which provides that rights to real property situated in the
prohibited zones, not devoted to agricultural purposes, and lawfully
acquired by foreigners prior to the going into effect of the law,
may be retained by the present owners until their death.
On my part I beg to call to Your Excellency’s attention that it is
not juridical to judge of legislation by a single legal precept, but
that it should be examined in its entirety and all the provisions
which may be applicable should be taken into consideration in order
to determine under which one of them a definite case would come.
(b) That foreign individuals, without regard
to the date when they acquired their rights and without taking into
account any “positive act” will be deprived of such rights, unless
they renounce their nationality with respect to such rights.
[Page 608]
To this objection I beg leave to observe that—leaving aside the last
assertion, that is, the one which refers to the so-called
renunciation of nationality—the same explanation must be given as
was advanced in treating the preceding objection, since the case
does not come under article 4, but under article 14, which respects
the rights in question.
(c) That the number of “positive acts”
recognized shall be much less than those enumerated in the decisions
of the Court.
The “positive acts” enumerated are: drilling; leasing; concluding any
contract relative to the subsoil; investing capital in land with the
object of obtaining petroleum from the subsoil; carrying out the
work of exploitation and exploration; concluding subsoil contracts
in which the price stated appears to be greater than that paid for
the surface, because it was purchased for the purpose of searching
for petroleum; and, in general, any other act which indicates a
similar intention. It will be seen that this list of “positive acts”
is limited to cases where petroleum exploration has been started or
where contracts have been concluded to that end—cases which are
precisely those set forth in article 14, in order that prior rights
legally acquired may be confirmed and, therefore, respected.
Actually, article 14 of the petroleum law provides as follows:
“Article 14. The following rights will be confirmed without
cost by means of concessions granted in conformity with this
law:
- “I. Those derived from lands on which petroleum
operations were commenced prior to May 1,
1917.
- “II. Those derived from contracts concluded prior
to May 1, 1917, by the owner of the surface (superficiario) or his
successors (causa-habientes)
for express purposes of petroleum
exploitation.
- “Confirmation of these rights may not be granted
for more than fifty years, counting, in the case of
section I, from the date when exploitation work was
commenced, and in the case of section II, from the
date when the contracts were concluded.
- “III. To owners of pipe lines and refineries who
at the present time are operating under a concession
or permit issued by the Department of Industry,
Commerce and Labor, and for that which relates to
the said concessions or permits.”
(d) That even as to foreign individuals who
performed “positive acts” and made the renunciation mentioned,
confirmation of their rights must be applied for within a year or
such rights will be forfeited, according to article 15.
As to this observation, I must state to Your Excellency that this
article, far from injuring alien individuals in the case in
question, favors them inasmuch as it gives them the right to have a
title emanating from the Government; and it is to their advantage,
moreover, that this Government have full knowledge of all such
titles (adquisiciones) to which the same
provisions will not be applied [Page 609] which are to govern subsequent titles (adquisiciones), it being obvious, moreover,
that no person can in any way be injured by applying for a
confirmation of his rights.
The third objection of a general character made by Your Excellency is
that, in contradiction to the statements made by the Mexican
Commissioners in the conference held in Mexico City in 192314 as to the policy of the Mexican Government
to grant preferential rights to the owners of the subsoil [surface?] or persons entitled to exercise
their preferential rights to the oil in the subsoil who have not
performed a “positive act,” the law does not recognize such
preferential rights.
In this connection, permit me to state to Your Excellency that this
supposed contradiction does not exist because the Mexican
Commissioners stated that the then Executive15 considered it
just to grant the preferential right in question, and they added
that this statement was not intended to constitute an obligation for
an unlimited time on the part of the Mexican Government. In fact, it
suffices to read carefully paragraph numbered IV of the minutes of
the meeting of August 2, 1923, which reads literally as
follows:16
“IV. The present Executive, in pursuance of the policy that
has been followed up to the present time, as above stated,
and within the limitations of his constitutional powers,
considers it just to grant, and will continue in the future
to grant, as in the past, to owners of the surface or
persons entitled to exercise their preferential rights to
the oil, who have not performed prior to the Constitution of
1917 any positive act such as mentioned above, or manifested
an intention as above specified, a preferential right to the
oil and permits to obtain the oil to the exclusion of any
third party who has no title to the land or subsoil, in
accordance with the terms of the legislation now in force as
modified by the decisions of January 17, 1920,17 and January 8, 1921,18 already mentioned.
The above statement in this paragraph of the policy of the
present Executive is not intended to constitute an
obligation for an unlimited time on the part of the Mexican
Government to grant preferential rights to such owners of
the surface or persons entitled to exercise their rights to
the oil in the subsoil.”
It suffices, as I said above, to read these minutes carefully in
order to dispel completely the alleged contradiction, apart from the
fact that the nongranting of preferential rights to the owners of
the surface does not imply any retroactivity in the law.
Your Excellency then states in regard to the two laws that your
Government does not accept the waiver of its nationality required of
aliens and the agreement not to invoke the protection of their [Page 610] Governments, since this
would be equivalent to the annulment of the relation between an
American citizen and his Government, and, consequently, the
releasing of the latter of any obligation to protect the former in
the event of a denial of justice.
After reminding you of all that I have stated in this respect in my
note No. 12816 of September 28, 192519 and in my memorandum of December 5, 1925,
before-mentioned, I wish to observe, in the first place, that there
is no such waiver of nationality, since the alien retains the
nationality he has. What the Constitution requires of aliens, in
order that they may acquire certain property, is, that as regards
such property, they agree to consider themselves as nationals. It
is, therefore, a necessary consequence that such aliens undertake
(only in respect to such property) not to invoke the protection of
their Governments. Attention has already been called to the power
which all countries have to impose upon aliens the conditions and
requirements which they may believe expedient in order to permit
such aliens to acquire real property. On the other hand, an alien
who acquires property under these conditions, does so under a
resolutory condition, and, in conformity with the jurisprudence of
all countries, when a condition of this nature is fulfilled, the
right so acquired is voided. This is absolutely different from a
confiscation.
Your Excellency concludes by stating that, notwithstanding the
statements of the Mexican Commissioners at the conferences I have
mentioned to the effect that the Executive power would respect and
enforce the decisions of the Judicial power, the petroleum law
violates rights acquired under the provisions of Mexican law, of the
present Constitution, of decisions of the Supreme Court of Mexico,
and pledges given by the authorized representatives of the
Government.
I must state to Your Excellency with regard to this point that the
law does not modify, nor can it modify, these decisions. On the
contrary, it gives them universal application through the provisions
of article 14. Moreover, these decisions do not restrict the power
of Congress to enact laws deemed to be expedient. Those laws which
Congress has enacted do not violate rights lawfully acquired under
provisions of Mexican law, of the present Mexican Constitution, and
decisions of the Supreme Court of Mexico; nor are they contrary, as
you say, to statements made by the representatives of our
Government.
I must point out to Your Excellency that whatever may have been the
offers of the Executive, they were made with the express statement
that they fell within the limitations of his constitutional powers
and did not encroach upon the prerogatives of the judicial and
legislative [Page 611] branches. As
organized by our Constitution, no branch of the Government except
the Supreme Court had at its disposal any set standard by which to
go when applying the provisions of paragraph 4 of article 27 of the
Constitution until Congress enacted a law regulating this article.
The decisions of the Supreme Court, always respected by the Federal
Executive, cannot be considered as a doctrinal interpretation of
general character of paragraph 4 of article 27 of the Constitution,
but only as decisions rendered in the specific cases which gave rise
to them. Such an interpretation, under the Constitution, can be made
only by the Legislative power.
In the absence of a law regulating the Constitution in petroleum
matters, the Supreme Court was empowered to render decisions in the
form in which it did, and it can decide in applying the recently
enacted petroleum law to new specific cases, whether this law is, or
is not, constitutional. But the Federal Executive cannot give the
decisions of the Court a universal application equivalent to a law
regulating the Constitution. If he did so, he would exceed his
powers.
Moreover, the decisions of the Supreme Court, when precedents are set
by them, are only binding insofar as they interpret the law for the
Federal courts. But, as indicated above, they can never bind, nor be
obligatory upon, the Legislative power, since it alone is empowered
to enact laws of general application throughout the nation.
Moreover, I take the liberty to call Your Excellency’s attention to
the fact that this happens in the United States where the Supreme
Court has been known to change its decisions on various subjects—and
not those of minor importance. Further, those variations in
decisions were made without the intervention of a subsequent law or
regulatory measure by the legislative power, as in Mexico, and in
this case.
Referring to suggestions respecting the policy of the Executive, I
take the liberty to state to Your Excellency that this policy is
entirely similar to that of the Executive of the United States in
the case of Japanese immigration. In fact, the Executive had entered
into an arrangement—the Gentlemen’s Agreement—with the Japanese
Government regarding Japanese immigration into the United States.
While this arrangement was in force the Congress of the United
States, in the exercise of its sovereignty, which could not have
been diminished by any action of the Executive, deemed it expedient,
in the interest of the Republic, to pass an exclusion act which
modified the arrangement entered into by the said Executive.20 I
do not believe that in this case, and in the one under reference,
one can accuse the President of having changed his policy.
[Page 612]
These laws, therefore, violate neither the principles of
international law nor those of equity. Far from that, they favor
aliens in various ways, since they remove all uncertainty from the
matters under discussion. And with regard to the petroleum law it
may be noted that aliens who have acquired rights in the prohibited
zones may retain them, which they could not do except for the
provisions of article 14 in conformity with the pertinent section of
article 27 of the Constitution. And, if there is nothing in the laws
which is either retroactive or confiscatory, there is no just reason
for the statement of the Embassy that it is unable to assent to an
application of these laws to American-owned properties.
Finally, I take the liberty to call Your Excellency’s attention to
the fact that article 11 of the organic law of section 1 of article
27 of the Constitution in petroleum matters, empowers the Executive
to regulate these laws. Now, it is known that the object of the
regulations was to determine the manner in which the laws which they
regulate were to be applied, and it is certain that the Executive,
in making use of this authority, would take into account not only
the express content of the laws, but also the principles of
international law, of justice, and equity.
Only when the regulations shall have been issued will the legislation
on the subjects indicated be complete, and only when taken in their
entirety will it be possible to judge whether they violate, or
respect and protect, the rights of the Nation as well as those of
private individuals whether Mexicans or aliens.
I should like also to call Your Excellency’s attention to the measure
adopted by my Government in extending a spontaneous invitation to
the interested oil companies in Mexico to be present at a conference
during which their suggestions and points of view could be set forth
in connection with the study for regulating the petroleum law; to
hear, in the most ample spirit of equity, such arguments as might be
presented, so as to endeavor, within the spirit of that law, to
remove any difficulty which may arise, in order that through the
enactment of the law, and its regulations, the petroleum industry
might enter fully upon an uninterrupted period of prosperity. This
attitude, toward which my Government is impelled by no other
consideration than that of seeking a solution which will safeguard
the interests of both parties, is the best proof of the sentiments
of equity and justice which inspire every act of the Mexican
Government; and, in this particular case, it is a demonstration of
the respect and interest which a solution of questions such as
petroleum receives. The Mexican Government seeks only to establish a
policy defined by law, which will afford security and confidence for
the development [Page 613] of the
industry and, in general, for foreign investors in Mexico who,
having a proper consideration and respect for our laws, may come to
Mexico to cooperate with us.
I also take the liberty to observe to Your Excellency that diplomatic
representations are not considered justified because of the
enactment of a law. They are only justified when the application of
a law constitutes an injury. In such cases those affected have, in
our laws, the recourse and means of asserting their rights before
the Mexican courts, to which they can go in every case in which they
believe their rights have been violated.
I am [etc.]
