About the middle of last November I was lunching with Prince Stirbey at
his country place at Buftea. I had previously resolved to make another
effort to clear up the oil situation for the Romano-Americana, at least
so far as the embatic lands were concerned, and on that occasion I spoke
frankly with the prince concerning the entire question. He showed real
interest, and as subsequent events proved, he soon thereafter discussed
the oil situation with Mr. Vintila Bratiano.3 Mr.
Bratiano came to see me on November 23 and I had an opportunity to speak
further concerning the oil situation, particularly with reference to the
embatic lands. Thereafter I arranged a meeting between Prince Stirbey
and Mr. Seidel4 in Paris (see my despatches, No. 499 of November 23,
1927 and 509 of December 14, 1927).5
When Prince Stirbey returned from Paris, he came to see me and, among
other things, stated that the Rumanian Government, as evidence of good
faith and independent of other negotiations with the Romano-Americana,
intended to clear up the question of embatic [Page 799] lands. It was evident that discussions were going on
between Prince Stirbey, Mr. Bratiano, and Mr. Mrazec, the Minister of
Industry and Commerce, but I heard nothing officially.
This week the lawyer of the Romano-Americana and Mr. Mrazec have drafted
a law to make effective the agreement, and upon its enactment I will
telegraph the Department.
It is possible that this is the beginning of a general settlement between
the Romano-Americana and the Rumanian Government. Negotiations on other
aspects of the oil situation are now being pursued in Paris by Prince
Stirbey and other representatives of the Rumanian Government. From
information which I have received through Mr. Hughes,7 it appears that representatives of the Standard
Oil Company and Blair and Company have discussed in New York the
Rumanian oil situation. Mr. Seidel has addressed a letter to Mr.
Teagle8 summarizing the points at issue, and recently
the representative of some bank (name not given) called on Mr. Seidel
and asked him what his company would suggest as the solution of the oil
problem in Rumania. Mr. Seidel gave him the following paragraph, which,
he said, if enacted into law would clarify the situation completely:
It is obvious that this paragraph, if adopted by the Rumanian Government,
would amount to an abandonment of the principle of nationalization.
[Enclosure—Translation]
Rumanian Memorandum Pertaining in General to the
Embatic Land Questions and Concessions From Embatic Holders
Taken by the Romano-Americana Company
A. 1) The embatic holders only had the right to the use of the
surface; the real right of ownership of the surface and of the
subsoil belonging to the State, they were required to pay annually a
so-called embatic tax.
2) In accordance with the agrarian law of 1921, the embatic lands
were expropriated for the benefit of embatic holders, without,
however, touching the subsoil question, which in accordance with
elementary juridical principles remained the property of the
State.
3) In March 1925, on the occasion of a law-suit concerning precisely
the question whether petroleum concessions given by embatic owners
are legal or not, following the pleading of Mr. Istrate Micescu, at
a time when the State was poorly defended, the Court of Cassation
decided that embatic owners also have the right to the subsoil of
such properties.
Following this decision thousands of hectares of lands have been
concessioned, until April 1, 1926, when the effect of the Court of
Cassation’s decision was stopped by the Interpretative law having
retroactive effect.
The concessions obtained from embatic holders are divided in
concessions acquired on the basis of the decision of the Court of
Cassation (March 1925) up to the time of the Interpretative Law
(April 1, 1926), in concessions obtained previous to the decision of
the Court of Cassation, and in concessions made subsequent to the
interpretative law.
In 1927, the Ministry of Industry, in the face of these incomplete
consolidations against the State, especially because the real status
of some of these concessions was fictitious when compared to that
indicated in documents and plans, as to composition, size, evident
violation against incontestable State property, some not even being
embatic holders, decided to bring this entire question, on the
occasion of a validation, again before Justice in order to better
define the rights of the State to the subsoil.
4) Independent of this action, which tended to clarify a principle,
the Ministry of Industry, taking into consideration the fact that
the concessions were granted subsequent to the decision of the Court
of Cassation, has admitted as an equitable solution to recognize the
concessionee with all his rights and royalty obligations for the
concessions taken in the period of time between the decision [Page 801] of the Court of Cassation
and the interpretative law, on grounds of good faith.
5) However, as through the gaining of the law suit at the Court of
Appeal, Validation Section, in December 1927, the State’s right to
the subsoil was recognized in entirety, the State was able to call
upon the provisions of the Mining Law, in which case there would be
due to it the royalty of 8–25%.
However, in a spirit of equity and in order to show to concessionees
of good faith that the State does not wish to cause difficulties to
the petroleum industry even in this question, the Ministry of
Industry has admitted a method of compromise, in the sense that the
State be given a certain royalty—so far as possible comprised within
the royalty obligations—so as to maintain the principle of property
right recognized by the Constitution and the Mining Law in subsoil
matters.
In the case of the Eldorado Company, after a detailed examination of
the deeds and the real situation of the lands, its rights to the
lands contained within the delimitation of 1864 in the Commune of
Ocnita have been recognized in entirety, and at the same time the
company has recognized in entirety the State’s rights to the lands
in the perimeter of the woods of Ocnita, while for the lands
comprised between the line of delimitation of 1864 and the perimeter
of the State’s wood, as it was made evident that same were State
Embatic lands, the concessions taken in the interval between the
decision of Court of Cassation and the interpretative law have been
recognized as valid, with the obligation for the company to give the
State a royalty of 4% gross.
B. The Special Case of the
Romano-Amerioana Company
1) The Eldorado Company was defended by attorney I. Micescu, Vice
President of the Chamber of Deputies, and by Mr. Xeni, Deputy and
Ex-Minister.
During the period of the law suit, the Minister of Industry declared
to Mr. Xeni that he is disposed to envisage the question of the
concessions of the Romano-Americana Company on the same basis as
that of the Eldorado Company, and insisted that his point of view
had the complete approval of the President of the Council of
Ministers.
2) The Minister of Industry was absent from the country until the end
of January, 1928, and on his return received Mr. Luca, of the
Romano-Americana Company, who asked him what was the status of the
embatic lands of the latter company.
The Minister replied that he recognizes the Romano-Americana Company
as concessionee of the embatic lands taken in the interval [Page 802] between the decision of
the Court of Cassation and the interpretative law, and again
repeated that in this regard he has the assent of the President of
the Council.
In reply to Mr. Luca’s objections that in the question of royalty the
Romano-Americana Company has on its concessions variable obligations
to various lessors, the Minister of Industry requested Mr. Luca to
show him the entire status, and that in regard to the question of
royalty it will be possible to arrive at a friendly understanding
also on the basis of equity; at the same time he requested Mr. Luca
to get in contact with Engineer Ivanceanu, the head of the Survey
Register Department of the Ministry of Industry.
3) Engineer Ivanceanu has received instructions to the above effect,
and from a memorandum by him on this question it results that the
deeds concerning the embatic concessions of the Romano-Americana
Company were only sent to him two weeks ago. The deeds were
examined, the concessions verified, and a week ago Engineer
Ivanceanu informed Mr. Brailoiu, of the Romano-Americana Company
that he is at the company’s disposition for definite clarification
of the question from the technical standpoint, with a view to a
compromise.
4) In accordance with the understanding established yesterday, March
10, Engineer Ivanceanu today again got in contact with Mr. Luca of
the Romano-Americana Company in order to give due form to the work,
and requested Mr. Luca to present a statement of the royalty
obligations, in order that same might be discussed with the Minister
himself.
5) On Monday, the 12th instant, the Minister of Industry will receive
Mr. Luca on the question of royalty, and also Attorney Otulescu is
summoned to the Ministry in order to discuss the form of the
compromise which has to be submitted to parliament.
From all this it arises that the President of the Council, as well as
the Minister of Industry, has from the beginning considered the
concession rights of the Romano-Americana Company as being identical
with those of the Eldorado Company, that they have advised the
representatives of the Romano-Americana Company of this, and that
since the first step taken by Mr. Luca the necessary orders have
been given that these rights of the Romano-Americana Company should
be settled by priority.
We hope in the present session, if the Romano-Americana Company is
sufficiently in order with its concessions so that same may be
included in the compromise, to present the law for the compromise
before parliament within the course of 8–10 days.
