824.6363 ST 2/189
The Under Secretary of State ( Welles ) to the Representative of the Standard Oil Company of New Jersey ( T. R. Armstrong )
My Dear Mr. Armstrong: With reference to my conversation with you and Mr. Pannill last week, the American Minister at La Paz is being instructed to express to the appropriate officials of the Bolivian Government the hope that the time limit of ninety days, set in the Bolivian decree of October 22, may be extended as concerns the case of the Standard Oil Company of Bolivia. Reports received by the Department are to the effect that the Bolivian Minister for Foreign Affairs has informally given the impression that such an extension might be granted.
There are several factors which have led the Department to the decision that it should not request arbitration of the case at this time. In spite of the considerations set forth in the memorandum of November 8, 1937,53 which you left with me, the fact remains that there has been no resort to the Bolivian courts regarding the cancellation of the contract. In the second place, it is understood that Bolivian officials have stated that the decree of October 22 should not interfere with “prospective informal, exploratory conversations with the representative of the Standard Oil Company now in La Paz”. Finally, you will appreciate that there are inherent dangers in proceeding to arbitrate in the absence of exhaustion of remedies provided by Bolivian law, especially in view of the Calvo clause in the concession contract.
It is the judgment of this Department that in order to protect the company’s rights the company should take immediate steps to present its case to the Supreme Court of Bolivia before the expiration of the ninety-day period set in the decree of October 22, in order to avoid difficulties in the event that an extension of this period should not be granted. There appears to be reason to believe that such legal steps need not prejudice the informal and friendly discussions which have been initiated between representatives of the Bolivian Government and of the company.
Sincerely yours,
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