Memorandum by Mr. Jacob A. Metzger, Assistant to the Solicitor

Mr. Cotton: The Cuban Government has agreed to arbitrate the Harrah claim growing out of the destruction of a railroad belonging to Harrah.

On July 6, 1929, the Department sent to the Embassy at Habana a draft of an agreement referring the claim to arbitration. The Cuban Government has submitted a counterdraft35 which, with the exception of the points mentioned in the attached telegram,36 is acceptable to the claimant’s attorney and should, it is believed, with those exceptions be acceptable to the Department.

The Cuban draft seeks to have the arbitrators decide whether the railroad was lawfully constructed rather than whether the property was lawfully or unlawfully destroyed. The distinction between the issue as to the construction of the railroad and the destruction of the property is important in this case, because it seems that there is a dispute as to whether the building of the road was authorized in accordance with Cuban law. The claimants contend that whatever defect there might have been in their authorization at the time the railroad was constructed that defect was cured by later action on the part of the competent Cuban authorities. The form in which the question to be determined by the arbitrators is defined in the Cuban draft would not permit them to pass on the validity of the existence of the road at the time it was destroyed or on the rights of the claimants at that time. The question should, of course, be so framed as to admit of an adjudication of the effect of the curative action of the Cuban authorities taken after the road was built. The change in the Cuban draft proposed in the attached telegram is calculated to render it permissible for the arbitrators to consider the status of the railroad and the rights of the claimant at the time the property was destroyed.

No explanation is deemed necessary in regard to the change of Article 8 of the Cuban draft proposed in the draft telegram.37

J[acob] A. M[etzger]
  1. Not printed.
  2. Telegram dated August 29, from the Department to the Ambassador in Cuba (not printed).
  3. The proposed change provided that if the award were not paid within 60 days from the date of rendition, it should bear interest at the rate of 6 percent per annum from the date of rendition to the date of payment. This was modified in the final form, p. 921.