The Mexican Minister for Foreign Affairs (Sáenz) to the Secretary of State50


Excellency: I have the honor to refer to the courteous note of Your Excellency dated July 31, last,52 in which you say that after a review of the correspondence exchanged between us with regard to the alien land law (Organic Law of fraction 1 of Article 27 of the Constitution), and to that of petroleum, and of a careful examination of the subsequent provisions issued for the enforcement of the second of these enactments, it appears to Your Excellency appropriate and useful in the interest of a complete understanding, to attempt a brief summary of the situation as the Government of the United States of America sees it in the present circumstances.

My Government cherished the assurance that all the questions relative to the interpretation of the laws above mentioned had been amply defined in the above cited correspondence and that while there did not exist uniformity of judgment (criterio) upon some points between both Governments, the American Government recognized the Mexican Government’s right, in the exercise of its sovereignty, to express its own judgment (criterio) in its own laws and to apply to their full scope the provisions contained therein.

Notwithstanding the foregoing, in the identical spirit which animates Your Excellency to procure a better understanding, and in the light of the antecedents on the subject, I am pleased to say in due reply to Your Excellency the following:

Four fundamental principles are given in the note mentioned with respect to which Your Excellency asserts that there is little difference of opinion between the two Governments.

[Page 654]

The first and the fourth of these principles are couched in the following terms:

  • First: “Rights of property of every description legally acquired are to be respected and guaranteed in conformity with the recognized principles of international law and equity.”
  • Fourth: “The principle that acquired rights may not be impaired by legislation retroactive in character or confiscatory in effect is not disputed.”

With respect to this last I must remark that the mere retroactive character of a law, taken by itself and until it does produce confiscatory effects or is harmful in any other way when applied, can not give rise to any objection whatsoever, nor be the cause of diplomatic representation. Taking into account this exception, my Government agrees with the two principles noted.

With regard to the second and third, each one of these requires that a reservation should be made.

The second states: “The general understanding (acuerdo) reached by the Commissioners of the two countries in 1923 and approved by both Governments at the time of the resumption of diplomatic relations between them, stands unmodified and its binding force is recognized.”

I do not know the full scope of the words employed by Your Excellency and underscored by me: “That its binding force is recognized”, for, frankly speaking, the Mexican Government can not recognize binding force equivalent to a treaty or a constitutional precept, in the outlines of policy presented by General Obregon through his Commissioners, all the more as their declarations and those of the American Commissioners did not take the character of a synallagmatic agreement.

The declarations of the Mexican Commissioners were not accepted by the American Commissioners in a form which constituted an agreement (acuerdo), except that they might consider it convenient to put on record in the name of the American Government their dissent with respect to the purposes expressed by the Mexican Commissioners, without prejudice to the rights of the citizens of the United States respecting the subsoil of the lands possessed by them. The Mexican Commissioners understood that reservation.

That is the construction to be put upon point five of the Declarations of August 2, 1923, which says literally:52a

“V. The American Commissioners have stated in behalf of their Government that the Government of the United States now reserves, and reserves should diplomatic relations between the two countries be resumed, all the rights of the citizens of the United States in [Page 655] respect to the subsoil under the surface of lands in Mexico owned by citizens of the United States, or in which they have an interest in whatever form owned or held, under the laws and Constitution of Mexico in force prior to the promulgation of the new Constitution, May 1, 1917, and under the principles of international law and equity. The Mexican Commissioners, while sustaining the principles hereinbefore set forth in this statement but reserving the rights of the Mexican Government under its laws as to lands in connection with which no positive act of the character specified in this statement has been performed or in relation to which no intention of the character specified in this statement has been manifested, and its rights with reference thereto under the principles of international law, state in behalf of their Government that they recognize the right of the United States Government to make any reservation of or in behalf of the rights of its citizens.”

The terms of the above reservation clearly show that the declarations of the Mexican Commissioners were not unconditionally accepted by the American Government, as it would have been necessary in order to have the contents of the journal of that session on August 2, 1923, regarded as an understanding (acuerdo).

The American Chancellery appears to understand that there existed a promise of the Mexican Government to adjust its future acts, not only the legislative but the judicial and executive, to the points of view expressed in the memorandum of the Mexican Commissioners of August 2, 1923, and it is inferred that the American Chancellery so considers when in all its notes, official and unofficial, which we have mentioned before it lays stress upon the declarations of the Mexican Commissioners and upon the fact of their having been approved by President Obregón.

It is, however, incredible that the American Government would seriously claim that the recommendations of the Mexican Commissioners have the same force as a treaty no matter how much this may be inferred from the wording of its notes and even from the insistence with which those declarations are mentioned and put forth as negotiations of the highest importance and as stipulations upon which the recognition of the Government of General Obregón was conditioned.

The Mexican Government therefore feels constrained to reiterate its opinion expressed in its memorandum of November 26, 1925,53 and reproduced later in its subsequent notes, to the effect that these conferences did not result in a formal agreement, outside of the Claims Conventions which were signed after the resumption of diplomatic relations by the Executives of both countries and which were submitted for the approval of the Senates of Mexico and of the United [Page 656] States; and that the declarations of the Mexican Commissioners merely constitute a statement of the purposes of President Obregón to adopt a policy which although approved and followed in its main points by the present President cannot in any manner constitute a promise with the binding force of a treaty that the future Presidents must observe in all its details, and much less that it might bind the legislative power and the Supreme Court of Justice, curtailing their liberty of action as to the first in enacting laws when the question is to solve the problems of the country in general terms, and as to the second in deciding the concrete cases when they refer to conflicts Which affect private parties.

Never might it be said, nor can the Mexican Government believe that the American Government so thinks, that the recognition of the Government of General Obregón might have been accorded on the condition that the policy outlined in the memorandum of the Mexican Commissioners respecting foreign interests should have to have the force of a treaty; but, even supposing it to be so, the American Government could not deny that President Obregón during his administration did adjust his acts to the moral promise involved in his approval of that memorandum, nor that the present President has departed from the general lines with respect to the foreign interests created in the country, nor to the general principles of International Law and of equity.

The Government of General Calles never repudiated the recommendations and purposes of the Government of General Obregón which it has always observed within its constitutional bounds because it deemed it convenient for the good of the country and the good understanding with the United States of America; but without admitting that those declarations have the binding force of a treaty which restricts the freedom of the Mexican Congress to enact laws or that of the Executive itself to issue regulations concerning the laws enacted by the Congress.

From all the diplomatic correspondence that preceded and followed the conferences of 1923, it is clearly inferred that the Government of General Obregon took special pains not to admit a conditional recognition subject to the outcome of the conferences being held and much less to the declarations of the Commissioners and therefore it caused a general surprise to my Government to find in the closing part of the note of July 31 an intimation that the recognition of General Obregón was subject to the declarations of his Commissioners when speaking on the subject Your Excellency says:

“I can only say to Your Excellency in this connection that my Government continues to regard the proceedings of 1923 as a negotiation of the highest importance upon which two sovereign states may [Page 657] engage. The paramount issue was that of recognition. Without the assurances received in the course of that negotiation recognition could not, and would not, have been extended, and my Government confidently relies upon the fulfillment of the assurances then given.”

That surprise is all the more natural as in the telegram of August 24, 1923, sent by this Ministry to Mr. Ch. Hughes,54 a proposal was made to him that the resumption of diplomatic relations between the two countries and the signing of the Claims Conventions be not simultaneous nor very near because otherwise the first of those acts might unjustly be given the false appearance of being conditioned. And it was so done, Your Excellency’s Government therefore admitting that the recognition of the Government of General Obregón was not conditioned.

As to the third principle which I mentioned above it reads as follows:

“Third. The principle of international law that it is both the right and the duty of a government to protect its citizens against any invasion of their rights of person or property by a foreign government, and that this right may not be contracted away by the individual is conceded.”

On this point there is an apparent difference between the two positions (criterios) concerning the true scope of the right of a Government to protect its nationals in a foreign country.

The Government of the United States has always expressed the idea that an American subject may not of his own will cancel the relationship which binds him to his own Government so that the obligation of that Government to protect him in case of a denial of justice be extinguished and that the American Government considers itself under obligation to protect the just interests of its nationals even in the case where they have agreed to consider themselves as non-Americans with regard to certain property.

The right of States to protect their citizens or subjects abroad is recognized; that right is unassailable. But the foreign private persons are also given the right to apply to their governments for protection: the exercise of this right is subject to the will of the parties in interest and therefore they may forego its exercise without thereby affecting the right of the state concerned.

The Mexican Government, therefore, does not deny that the American Government is at liberty to intervene for its nationals; but that does not stand in the way of carrying out an agreement under which the alien agrees not to be the party asking for the diplomatic protection of his Government. In case of infringement of any international duty, such as a denial of justice would be, the right of the [Page 658] American Government to take with the Mexican Government appropriate action to seek atonement for injustice or injury which may have been done to its national would stand unimpaired.

Under those conditions neither would the American Government have failed to protect its nationals nor the Mexican Government to comply with its laws.

Therefore, and on the supposition that there may have been a denial of justice, an injury or a wrong done to an alien, the matter would be solved by granting the proper reparation without prejudice to the legal sanction attending the infringement of the undertaking that may have been entered into.

It is further proper to offer two remarks of a general character before going into particulars.

The first has reference to the force and scope which may go with the writs issued by the Supreme Court of Justice of Mexico in cases of petroleum with respect to the non-retroactivity of Article 27. How far can those writs necessarily influence the Mexican legislation in the matter is a question that is to be decided in the light of the Mexican constitutional principles.

The American position (criterio) seems to be that the laws for the regulation of petroleum cases have to adapt themselves precisely to the conclusions arrived at by the Supreme Court of Justice in the five petroleum cases that are well known, that is to say, that the decisions of the Supreme Court of Justice are not only binding on the courts as precedents but also bear on the executive and legislative branches by constraining those two powers to adjust their legislation and executive acts to such decisions.

The Mexican Government, although aware of the force that jurisprudence of the Supreme Court within the limits of the evolution which that very jurisprudence may undergo in the course of time, can not lose sight of the fact that the nature of the decisions of that high tribunal in amparo cases is determined by the Mexican Constitution of 1917 within the same scope which the Constitution of 1857 gave to those same decisions, namely: that of mere resolutions of a concrete character going no farther than the very case in which they are handed down and in which it is expressly forbidden to make declarations of a general character concerning the laws or acts on which the amparos were based.

The other remark is the following:

The obligation of a state to protect its nationals may lead a government to the point of suspending the violations of the rights of those nationals which in the future may be occasioned by the enforcement of the laws; but in truth the diplomatic intervention properly so-called is not conceived otherwise than when it is a concrete case calling for the protection of an alien by his government.

[Page 659]

To carry the foresight to such an extreme as to offer remarks concerning possible injustice that might be committed in connection with the prospective enactment of certain laws is tantamount to a government meddling (se ingiera) in the legislation of another; either by making those remarks before the laws are promulgated or by asking in euphemistic words that it be ignored and another put in its place, both being contrary to the principle of sovereignty of the nations.

The attempt to prevent in a general way the unjust applications that may be made of a law already promulgated is equivalent to one country intervening in the administration of the justice of another by attempting to insure beforehand the trend of the judicial decisions that may be rendered in the future in connection with conflicts concerning the application of that law.

A feeling of extreme courtesy and a sincere wish of cordiality caused the Mexican Government to take into consideration the unofficial memoranda submitted on behalf of the Government of the United States on the dates of November 17 and 27, 1925,55 before the promulgation of the laws of December 26 and 31 commonly known by the name of “Petroleum Law” and “Alien Land Law”.

The same feeling of courtesy moved the Mexican Government to listen with due attention to the American notes of January 8 and 28 and March 1, 1926,56 presented by the American Government in connection with the framing of the said laws.

The Mexican Government, however, was aware that a diplomatic representation with regard to the consideration and early framing of the law and even in connection with its promulgation is an unusual case in the relations between sovereign countries.

The a priori discussion of the effects that a law may work on the nationals of another country is also something that can only be done on grounds of courtesy and in a sincere effort of good understanding between two countries and it was in that sense that the Mexican Government received the notes of January and March of this year and the recent one of July 31, but that makes no change in the Mexican Government’s understanding that those diplomatic representations are only for the purpose of preparing a study of the concrete cases that may occur in the future, the solution of which would belong to the judicial authority and in particular to the Supreme Court of Justice of Mexico, if it be supposed that the administrative decisions are disputed.

[Page 660]

Fortunately, while there is no concrete case of violation of a lawfully acquired right in existence there is in truth a cloud on the horizon of the friendship of the two countries.

Coming now to points of details, I shall begin with a reference to the waiver by aliens of their government’s protection.

If it were merely a case of retroactivity, that is to say, of obtaining that with respect to rights acquired prior to 1917, aliens would be released from the obligation to waive that right, the matter would be extremely simple, seeing that every act of acquisition of real estate assumes in Mexico solemn forms by which it is governed and which remove from any doubt the authenticity of the time when the rights were acquired. As the point under discussion is the application of this constitutional precept hereafter, it seems natural to wait for the results of such application.

The American Government has gone so far as frankly to express its idea that the only interest it has in the subject bears on the past and that it would not find it improper for the Government of Mexico in the future absolutely to deprive aliens from the right to acquire real estate in the country; but although the Mexican Government had never had such thought in mind, the American Government could obviously recommend to its nationals, if it deemed it proper, to refrain from acquiring certain property in Mexico.

All the other questions that have been brought up for discussion in the diplomatic correspondence come to defining precisely the acquired rights and carefully studying whether the Mexican laws afford sufficient protection to such rights.

The central point from which we should start to pass upon the greater part of the concrete remarks offered by the American Government against the Petroleum Law is as to what are the acquired rights. On this point the difference between the American and Mexican position (criterio) is easily perceived.

According to the American position, the rights exist just because the law makes it possible for them to exist. From the Mexican position, a right cannot exist unless there be a positive act of man which gave it birth.

According to the Mexican position, it is not enough that the laws of 1884, 1892 and 1909 shall have left to the owners of the surface the right to exploit the substances in the subsoil to create acquired rights, but it is necessary that the owner of the surface should have performed some positive act in seeking the oil or in having the oil form part of his patrimony.

The matter was discussed at length in the sessions of the conferences held in 1923, particularly in the third session on the fifth, the fifth session on the eighteenth and the sixth on the nineteenth of May of that year. The same point was fully dealt with in the instructions [Page 661] given to the Mexican Commissioners known as “Mexican Document No. 1”. It was the main topic of the five writs of the Supreme Court of Justice of Mexico in petroleum cases, and the Mexican position is well defined in point I of the declarations of the Mexican Commissioners of August 2, 1923. It is therefore unnecessary to insist on the ideas which underlie that position which has been made precise and reaffirmed in the recent correspondence exchanged between the two governments.

The note of July 31 in substance does nothing more than confirm the reservations made by the American Commissioners during the conferences of 1923.

For some time it appeared that the American Government had foregone the claim that Mexico should protect as if they were acquired rights, the prospects or possibilities in petroleum that might be found in any class of real estate acquired by Americans prior to 1917, and in the course of the recent diplomatic correspondence it seemed to be accepted that the proof of the existence of rights acquired in petroleum cases should be a positive act disclosing the intention of the owner of the surface to avail himself of the subsoil which act was to be executed before 1917.

The note of July 31, however, goes farther when it says that “ex vi termini”, an acquired right does not require that any act of protection be performed to support it. That is to say, that the American Government does not agree that the owner of the surface should have declared his intention to exploit the oil through some positive act, but claims as an acquired right the mere possibility of acquiring it.

On this point the Mexican and the American positions are diametrically opposed.

The Mexican Government holds that the acquired rights, in order to be such, must have a positive act, an act of appropriation performed by the party concerned in order to put those rights within their patrimony.

Ex vi terminorum, the words “derechos adquiridos” imply a human effort and this is so whether the English phrase “vested rights” or the Spanish phrase “derechos adquiridos” is used.

The difference between “rights” and “vested rights” consists exactly in that these last named rights must be of such a nature that they are already within our patrimony. “Those in which the right is [to] enjoyment, present or prospective, has become the property of a particular person or persons, as a present interest” (Century Dictionary).

Adquirir is in all the Latin languages a word having the same meaning as the English “acquire” and this has exactly the same [Page 662] connotation as the Latin word “acquirere”, the etymology of which “ad-quaero”, to seek for oneself, always indicates an action taken by the owner to achieve what he has a right to obtain.

And if, from the etymological field, we go to the juridical, the conclusion is also that there cannot be acquired rights properly so-called unless there be an act of appropriation, a possessory will (voluntad posesoria); neither is it necessary that the law should give its protection to more rights than those the conquest of which has cost an effort, be it physical, intellectual or financial.

To claim that the Mexican Government must protect and safeguard not only the acquired but also the potential rights is to impart to the idea of retroactivity of the laws an unjustified breadth.

The American Government has repeatedly said that its purpose in making observations regarding the petroleum laws has not the future but the past in view. But the fact that guarantee of rights which do not yet exist is sought and that the laws are discussed before they are promulgated as well as cases of conflict before they arise, might open the door to a supposition that the object is not a purpose to guarantee acquired rights but to insure the possibility of acquiring petroleum rights for foreigners in Mexican territory.

The problem being in this way precisely put, the first concrete question that arises is whether the law of December 26, 1925, in its Article 14, included all the positive acts disclosing the surface owner’s intention to create interests in oil matters and whether that law does not omit certain other acts which might disclose the intention to create petroleum interests.

In Your Excellency’s note of July 31, it is suggested that among the positive acts enumerated in Article 14 of the law of December 26, 1925, there are not found the declarations offered during the year 1916 and the months preceding the promulgation of the Constitution of 1917 in compliance with Circular No. 111 [11?] of the Ministry of Fomento dated November 15, 1915.

Your Excellency considers that the register of oil property gotten up in that connection was the most public, solemn and official manifestation of the purpose for which that very property was acquired. From that Your Excellency draws the conclusion that the requirements of Articles 150 and 153 of the regulations concerning the petroleum law unjustly put upon persons interested in this matter the obligation to produce evidence of the positive act of acquisition of oil rights through certain authentic contracts. On this point I venture to call Your Excellency’s attention to the opinion (criterio) already expressed by the Supreme Court of Justice and in substance reproduced by the Mexican Commissioners in August, 1923, which demands a positive act showing the intention of the surface owner [Page 663] to exercise the rights to the oil, “such as drilling, leases, execution of any contract concerning the subsoil, investment of capital in land for the purpose of obtaining the oil in the subsoil, subsoil prospecting and exploitation work, and in cases where the contract relative to the subsoil shows that the parties fixed and received a price higher than that which the area of the land would have commanded, on account of having been bought with the purpose of seeking petroleum, exploiting that oil in case it were found and in a general way performing and executing any positive act or evincing an intention of a character similar to that of those hereinabove described.”

It is seen, therefore, that what the Supreme Court and the Mexican Commissioners consider as an act disclosing the intention is the investment of money or effort intended to obtain petroleum.

Your Excellency’s remark that the American Government does not believe it fair to demand in any case that the title to the property or lease of the land should expressly name a petroleum object is, therefore, of more apparent than actual strength.

As a matter of fact, under the law of the State of Vera Cruz, where most of the petroleum land which was prospected and exploited prior to 1917 are located, every transfer of real estate and all contracts implying a division of the property must be of record in a public instrument when the value exceeds 200 pesos and in every case must be entered in the public register of property. The contracts entered into in good faith prior to 1917 by persons engaged in exploiting petroleum must have been made of record therefore in some authentic form and the very interest of the concessionaires so demanded when dealing with permits or leases with the purpose of petroleum exploitation.

The cases that might occur of a person, concern or company failing to make of record through a public instrument or to express in the public instrument which may have been made the purpose of the lease or the purchase, but nevertheless making the declaration and registered in accordance with the Circular of November 15, 1915, could be easily passed upon by the Department of Industry on terms of equity or be referred to the courts in order that the said courts with other evidence before them could decide whether the right should be confirmed; all of which would reduce to a minimum the cases of injury that might be suffered by those who being without authentic evidence of the positive act of petroleum appropriation might claim a confirmation of their rights to the subsoil.

Among all the questions that have been dealt with in the diplomatic correspondence exchanged between the two Governments in connection with the two laws above mentioned, the Organic Law of Fraction 1 of Article 27 of the Constitution and the Petroleum [Page 664] Law, there are but two which maintain a semblance of concrete differences and deserve discussion, namely: the transformation of the ownership right to the subsoil into an administrative concession for a term of 50 years and the limitation of certain rights held by aliens to the life time of the natural person who owned the rights or to ten years in the case of an artificial person.

The measures that have been noted which are those that are referred to in Articles 14 of the Petroleum Law and 4 of the Organic Law of Fraction 1 of Article 27 of the Constitution both have the same purpose: that of adjusting pre-existing rights to the new legislation.

Whenever a law is enacted which brings a change in the ownership system, the main problem consists in laying down the temporary measures of a provisional character which make it possible to pass from one system to the other.

The difficulty of these measures consists in the fact that two tendencies are met,—that of the created interests which would prefer and demand that the same system of law be continued and that of the general interests of the nation which require that the old rights adjust themselves to the new principles.

In the matter of petroleum, the purpose of the foreigners who believe they have acquired rights to the subsoil antedating 1917 is that those rights be respected. The purpose of the Mexican Government is that the principles of the nationalization of the petroleum be applied. But there cannot be two laws one concerning the rights acquired prior to 1917 and another concerning rights acquired subsequently; and with regard to the rights acquired prior to 1917, neither can there be two ways of enforcing the law one for the nationals and one for the aliens. Neither can the operation of the Constitution be indefinitely suspended. It is, therefore, proper to seek the manner in which the rights acquired prior to 1917 subsist in practice within the new laws and this cannot be done except by placing the former acquired rights under the new rules under such conditions that although the legal theory on which they are based has been changed they are not altered or impaired.

Article 14 of the Petroleum Law requires owners who had petroleum rights acquired prior to 1917 to apply for their confirmation and offers such a confirmation by issuing a government concession entirely free of cost for fifty years.

The Government concession in exchange for the right acquired by title of private ownership seems to be a lessening of that right but is not so in practice. For with regard to the strength of the new title the Mexican mining laws show that a system independent of the ownership of the subsoil founded on a concession is as strong [Page 665] and more secure than the system of private ownership; and as for the life of the concession fifty years appeared to the lawmaker more than enough to protect the working of any petroleum property among those that have been discovered up to date.

If it be taken into account that the most ancient investments of petroleum or the first operation works in Mexico do not antedate 1905, it will be seen that the greater part of the confirmations that may be applied for will be extended to at least the year 1955.

It is a fact, however, that the greater part of the investments of consequence made in the oil business in Mexico only date from 1909 to 1910. Therefore, the application of the law to those acquired rights would have to extend up to 1959 or 1960, that is to say, thirty three years from the year 1926 when the applications for confirmations would have to be made.

It is, therefore, seen that the danger of encroaching upon rights by limiting the life of a concession is so remote that it is not worth taking into account as a paramount point in the diplomatic discussion of the petroleum law.

And even if there should be left any petroleum rights of this nature of any commercial value in the years from 1959 to 1960 they would still be of such small consequence as compared with the future development of the petroleum industry under the new principles that they would assume the character of exceptions and as such exceptions, the conflict that would arise between the Mexican Government on the assumption that it would refuse to grant an extension of those rights and the person in interest who should deem that his interests had been injured could be deferred to the courts who would pass upon the concrete circumstances of the case and decide it in justice by avoiding any injury that might be caused thereby. But under the laws a concession may be extended or a new one may be given which finally removes any danger of injury to the parties in interest.

The one thing which does not seem logical is that taking into account the volume of interests created from 1910 to 1917 and comparing them with the interests that were created since 1917 up to 1926 and those which will be created in connection with petroleum the Constitution and the petroleum law should be regarded as inapplicable for the remote possibility of foreign interests being possibly injured on the theoretical assumption of the American Chancellery that some petroleum rights may have been acquired in 1883.

The best defense that may be offered for the petroleum law in that respect is the large number of applications for confirmation that have been filed and published, many of these being from foreign concerns.

[Page 666]

The same considerations that have been herein before presented are applicable to the limitations put in Article 2 of the Organic Law of Fraction 1 of Article 27 of the Constitution upon natural and artificial persons in order to hold the shares which at present would exceed fifty per cent in Mexican corporations owning rural property for farming purposes.

The said article provides that said foreign persons may hold their interests until their death in the case of natural persons or for ten years in the case of artificial persons.

No matter how conservative the judicial, civil or international position (criterio) may be a government could not be required to protect the rights of a person beyond the time when that person disappears.

When the lawmaker frames a law limiting the enjoyment of certain rights to the life of a certain person without of course assuming to strip the heirs of their rights which at most goes no farther than limiting the capacity to testify or dispose of property after death and the capacity of the successors to inherit and any provision making a change in the capacity of bequeathing and inheriting has never been considered retroactive.

Before the death of a person there are absolutely no rights created or acquired for the heirs who are not even known nor is it known to what nationality they may belong except until the moment of the death of the creator of the inheritance.

The form in which certain rights may be transferred by inheritance has to do with the interests of unknown persons who are the heirs who may be aliens or Mexicans or even may not exist.

To permit all the foreigners who have interests incompatible with the new laws to retain them until death is the most which could be demanded of the Mexican Government as protection of the rights acquired by them.

Nevertheless, the Mexican Government has gone a step further, since in conformity with Article VI of the Organic Law of fraction 1 of Article 27 of the Constitution, it provided for the case of some foreign person acquiring by inheritance rights whose adjudication would be prohibited by the law, and in that case authorized permission for the adjudication with the sole obligation that the beneficiary should divest himself of these rights within a period of five years, counting from the date of the death of the creator of the inheritance, it be taken into account that this article holds not only for foreigners, heirs of foreigners, but also for foreigners, heirs of Mexicans.

Five years is a period more than sufficient for a person to dispose (of property) under convenient conditions and without haste which would force him to sell too cheaply the property which might belong to him by inheritance.

[Page 667]

There is no idea of any injury to the right of a foreigner through this obligation which the law imposes, supposing that, as we have said before, the heir has no rights of any sort acquired before the death of the creator of the inheritance, and when the case arises the succession would be governed by pre-existing rules dictated by the State which is wholly sovereign to establish them and to which the heirs of real property situated in its territory must submit themselves.

With regard to artificial persons (personas morales) the same system cannot be adopted. Death puts an end to questions of nationality of a physical person, but artificial persons have at times a limited life and at others an indefinite life. The life of foreign artificial persons interested in Mexican business may be very long or have no end. Since Mexican law cannot limit this life, the legislator had to choose between two systems; either to fix a period for the dissolution of the Mexican company in which foreigners had an interest and order its liquidation after a certain time, or adopt the system which was employed in Article 4 of the Organic Law of fraction 1 of Article 27 of the Constitution, that is to say, fix a period sufficiently ample in which the corporation can dispose of its interests. The Mexican Government believes it has been much more liberal with this system than with the former.

With respect to artificial persons it does not attempt to curtail their possessions, and only imposes on them the obligation to transform this property incompatible with the law into another which can be (compatible) fixing a term of ten years for this to be accomplished.

In business practices and especially dealing with the interests of corporations the term of ten years is more than sufficient to enable a person to dispose, transfer, or exchange any kind of assets or property without damage; the danger that an artificial person could not for reasons other than of his own will dispose in ten years of such property without damage is so improbable that it is not worth while to undertake an argument that the law could not be made to apply. The disproportion between the numerous cases in which the law could be made to apply without prejudice or injury to the interested parties and those remote cases in which it could not be made to apply is so great that natural prudence of the two Governments counsels consideration of such cases as exceptional, to be submitted to the decision of the courts.

But there is still more. Articles 11 and 12 of the Regulations of the Organic Law of fraction 1 of Article 27 of the Constitution authorize this Department to extend the time limits set for disposition in those cases in which it would not be possible to do so in due time (en términos hábiles). And this, as should be clearly understood, excludes absolutely all danger of causing injury unjustifiably.

[Page 668]

My Government cannot believe that the American Chancellery overlooks these considerations and the practical and true effects possible by the application of the law, to entrench itself under the theory that by the mere enactment of the law or its enforcement it should be considered as a prejudice or injury to the property of the Americans alone, when in effect no such prejudice or injury results.

The new laws concerning land, mineral and petroleum property are intended to govern a volume of rights which in reason are to increase gradually with years, and all such rights will have to adjust themselves to the new laws.

Investments which may be made in the future, and they will undoubtedly be made because capital and enterprising men will always adapt themselves to new legislative conditions, will indisputably be of much greater importance than the interests which exist at present. As time passes the investments made before 1917 will be smaller in comparison to the new investments. My Government cannot account for the insistence of the American Government in defending the interests acquired prior to 1917 against improbable injury without apparently concerning itself with those which may be created under the protection of the new laws.

My Government cherishes the hope that the observations presented in this note will be considered by Your Excellency’s Government in the same spirit of concord and friendship which animates that of Mexico to arrive at a happy understanding with relation to the legislation in question.

I sincerely believe that the concrete points of difference between the American and Mexican positions offer a possibility so remote for the injury of foreign interests that the line of least resistance would without doubt be the application of those laws reserving to the courts such specific cases which might present themselves in case the administrative decisions are disputed.

Finally, I venture to call to Your Excellency’s attention the fact that it would be to more of a purpose and of greater advantage than a purely academic discussion which without doubt is caused by the different conceptions of the principle of non-retroactivity, held by both governments, and since Your Excellency declares that the discrepancies arise on account of the practical interpretation and application of the laws, it would be more useful and profitable, I repeat, to point out those concrete cases which have violated or which violate international law, by disregarding legitimate interests of American citizens; for if the Government of Mexico does not correct such violations, it is and will be disposed to accept in justice the resulting claims of the American Government. But should such cases not exist there is no occasion whatsoever for protest, since it is not by the [Page 669] simple enactment of a law, but by its application in determined cases, that injuries may be done. In this way each one will be solved in an equitable manner instead of discussing abstract questions.

I avail myself [etc.]

Aarón Sáenz
  1. Left at the Department by the Mexican Chargé on Oct. 14, 1926.
  2. Supplied by the Mexican Embassy.
  3. Supra.
  4. See Proceedings of the United States-Mexican Commission, p. 49.
  5. Foreign Relations, 1925, vol. ii, p. 538.
  6. Foreign Relations, 1923, vol. ii, p. 551.
  7. See telegrams No. 254, Nov. 13, 1925, and No. 264, Nov. 25, 1925, to the Ambassador in Mexico, Foreign Relations, 1925, vol. ii, pp. 527 and 529.
  8. See telegram No. 294, Dec. 31, 1925, to the Ambassador in Mexico, ibid., p. 552; and ante, pp. 613 and 631.