871.63/32

The Minister in Rumania ( Culbertson ) to the Secretary of State

No. 108

Sir: I have the honor to transmit herewith a copy of a note on the subsoil rights of certain embatic lands in Rumania which I today handed in person to the Minister for Foreign Affairs and which I [Page 902] reinforced with additional observations. In view of the important American interests involved and the possible early enactment of the proposed law prejudicing those rights prompt action in this case seemed to me imperative. A telegraphic confirmation of my position, if approved by the Department, will aid me greatly in further efforts which I may have to make to protect American interests threatened by the proposed law.

I also have the honor to transmit herewith a memorandum on the status of the Rumanian Mining Law prepared by Mr. Hamilton C. Claiborne, Secretary of Legation.2 The embatic land question is discussed on pages 22 to 24. From time to time this memorandum will be used as the background for other despatches on the Mining Law and kindred subjects.

I have [etc.]

W. S. Culbertson
[Enclosure]

The American Minister ( Culbertson ) to the Rumanian Minister for Foreign Affairs ( Duca )

No. 152

Dear Mr. Minister: My attention has been called to a draft of a law, dated December 22, 1925, entitled “Proiect de Lege pentru Interpretarea Art. 24 din Legea pentru Reforma Agrara din 17 Iulie 1921,” passed last month by the Rumanian Senate and now pending before the Chamber of Deputies which declares that the subsoil of “Embatic” lands, “Terenurile in Embatic” is the property of the State and that concessions agreed to by the owners of “Embatic” lands are null and void. This draft of law, by its terms, is retroactive, so that concessions obtained since July 17, 1921, the date of the Agrarian Law, are declared invalid.

The Constitution of the Rumanian State of March 29, 1923, Article 19, and the Mining Law of July 4, 1924, Art. 256, declare that the landowner may consent to a concession on his land if it is situated in a Commune where normal exploitation has taken place since August, 1914. At the time of the passage of the Agrarian Law of Expropriation July 17, 1921, “Lege pentru Reforma Agrara din Oltenia, Muntenia, Moldavia si Dobrogea din 17 Iulie, 1921”, the Rumanian Parliament decided that “Embatic” lands, that is, lands held under perpetual lease, are expropriated in favor of the holder, who thus became the landowner with the right to lease his lands under the conditions shown above.

The question having been raised as to the ownership of the subsoil rights of these lands, it was taken before the Rumanian courts which overruled the contention of the Ministry of Agriculture and Domains and established the principle that the holders of “Embatic” [Page 903] lands are the owners of the subsoil rights thereof, and that they alone may consent to petroleum concessions. This decision of the lower courts was confirmed on February 29, 1924, by the Supreme Court (Curtea de Casatie) Section II, decision No. 81.

Under this principle of law thus reaffirmed by the highest court of Rumania, companies entered into valid contracts with owners of the subsoil rights of certain “Embatic” lands, and by virtue of these contracts such companies are now the legal owners under Rumanian law of these subsoil rights.

However, on the motion of the Ministry of Agriculture and Domains, the draft of a law referred to above has already passed the Senate and is now before the Chamber of Deputies. If this bill becomes law it would apparently impair the validity of contracts entered into in good faith by these companies and it would abrogate vested rights legally acquired under Rumanian law, affirmed by the Rumanian Supreme Court. This validity of contracts will be defeated even if the concessions approved after 1921 have been consolidated by final judgment (Art. 260 of the Mining Law).

I take the liberty of bringing to Your Excellency’s personal knowledge these facts as they have come to my attention. If they are correct, the project of law, if enacted, would seriously prejudice American rights entitled to protection under accepted principles of friendly international relations. Necessarily therefore I look with concern, in which I am sure my Government will share, upon the proposal to enact such a law. A careful examination of the proposed law will, I believe, convince Your Excellency that the provisions of the law are not entirely in accord with the principles of consideration for established rights.

Please accept [etc.]

W. S. Culbertson
  1. Not printed.