411.12/2567½
Memorandum by the Legal Adviser (Hackworth)38
On March 17 Mr. Hunt and I discussed with Mr. Córdova, Legal Counselor of the Mexican Embassy, the possibility of completing the General Claims work. He stated that he was authorized to enter into discussions with us with a view to arriving at a lump sum settlement, but that he was not prepared to proceed under the terms of the protocol of April 24, 1934. It was his contention that the work of the Commissioners contemplated by the protocol had not been completed and that therefore it was not in order to proceed under the fifth paragraph thereof, which provides in effect that upon the basis of the report of the two Commissioners the two Governments shall conclude a convention for the final disposition of the claims, which convention shall take one of the following forms, that is to say:
- (a)
- an agreement for an en bloc settlement,
- (b)
- disposition of the claims on their individual merits in connection with which the cases on which the two Commissioners have not agreed would be submitted to an umpire.
The protocol provided for the selection of Commissioners “to appraise, on their merits, as rapidly as possible, the claims of both Governments”. The Commissioners were to meet not later than six months before the termination of the period for the completion of the pleadings for the purpose of reconciling their appraisals, and were to submit to the two Governments, not later than six months from the date of the completion of the pleadings, a joint report of the results of their conferences “indicating those cases in which an agreement has been reached by them with respect to the merits and the amount of liability, if any, in the individual cases, and also those cases in which they shall have been unable to agree with respect to the merits or the amount of liability, or both.” The Commissioners [Page 770] submitted the joint report provided for, which disclosed that they had agreed upon certain cases, had disagreed upon other cases, and that still other cases had not been discussed by them. It seems that the cases on which the Commissioners agreed, either on the amounts to be allowed the claimants or on the dismissal of the claims, were for the most part small claims for personal injury or death, of which the largest number were Mexican claims. To be exact, there were 38 awards in favor of Americans amounting to $190,343.23, and 63 awards in favor of Mexicans amounting to $392,431.82. When the Commissioners came to a discussion of the large property cases the Mexican Commissioner was not prepared to go forward. Mr. Underwood, the American Commissioner, states:
“With the exception of a few Vera Cruz cases the only Mexican claims remaining undiscussed are the so-called Texas land claims and the claim of Garfias, Docket No. 3029. These are ancient claims and in my opinion are worthless; so, I think, practically speaking, all of the meritorious Mexican claims have been discussed. I had no objection whatever to covering so large a proportion of the Mexican claims and I am well satisfied that they have been passed upon.
“With regard to that large group of American claims comprising, in general, business losses, contract, tax, expropriation, and agrarian cases, generally speaking they have not been discussed.
“During the Mexico City conferences in February and March of this year some cases belonging in these categories were brought before the Commissioners and it then became evident that the Commissioners lacked a common objective with regard to such claims. The discussion in Noble, Docket No. 2503, the SS Elena Valdez cases, Docket Nos. 3087, 3247, 3297, and 3383, Tomas MacManus, Docket 905, Chihuahua Copper Mining Company, Docket No. 436, Mexican Asphalt and Paving Company, Docket No. 59, and E. I. Dupont de Nemours & Company, Docket No. 112, among others, brought to me the realization that the Commissioners were about to reach a dead end. I did not, however, let the matter rest with this realization, but subsequently and in fact until June, 1937 I sought by deferential suggestion to convey my own impression with regard to the arbitration, which was that the Commissioners could reach a substantially successful conclusion if they would continue to make endeavors to reach a common ground for appraising the meritorious cases justly, and I tried to make it clear that I was not disturbed by the fact that there is naturally and historically a particular Mexican viewpoint in matters of international law. I suggested that if we should go ahead along these lines it would become evident that I was willing to recognize the lack of merit of American cases, however large, when they did lack merit; but I hoped for a reasonable showing that those which were meritorious would be recognized as such, rather than be rejected upon points of local municipal law, or those technical but unsubstantial objections which may be made in any case. I asked for suggestions but there was no response. I was forced to the conclusion that present events and the developments of the times are such that conditions are not yet ripe for a full and free arbitration of these matters between Mexico and the United States.
[Page 771]“…38a It was certainly evident to us that Mr. Flores39 and his staff were entirely at home with us and under no restraint whatever. I have much respect for Commissioner Flores and I do not attribute any of these difficulties to him, but I merely feel that they were derived from larger measures of which he was not in control.”
The Mexican Government now advances the proposition, as indicated above, that we cannot proceed to a completion of the claims work under the protocol either by a lump sum settlement or by reference of the unadjudicated cases to an umpire, since the Commissioners did not discuss all of the cases despite the fact that it seems perfectly obvious, although the Mexican Government does not admit this, that the cases could have been discussed in good time had the Mexican Commissioner been willing to join Mr. Underwood in such discussion.
As a matter of fact, the Commissioners, even though they did not discuss all the cases, have complied with the conditions laid down in paragraph fourth of the protocol, that is to say, they have submitted to the two Governments a joint report of the results of the conferences and have indicated the cases on which they agreed and the cases on which they were unable to agree. That is all that paragraph fourth requires, although it was of course contemplated that all cases would be discussed. Mr. Cordova contends—and that, of course, is the view of his Government—that the Commissioners should have discussed all the cases and based their report upon such discussion. Such a contention, if followed, would mean that the Mexican Commissioner could forever and a day prevent a settlement of the claims by merely declining to discuss, as he did, certain of the cases. Nothing like that was ever in contemplation at the time the protocol was completed. Mr. Cordova also contends that an appraisal by the Commissioners was deemed necessary as a condition precedent to arriving at a lump sum settlement, to which we replied that insofar as the American Commissioner is concerned we have his appraisals of all the cases. That Government undoubtedly knows or could soon obtain the appraisals of its own Commissioner. This argument would therefore appear to be a subterfuge.
Mr. Cordova made it plain in the course of the conversation that his Government was not willing to risk the possibility of being required to take the second step contemplated by the fifth paragraph of the protocol, namely, the submission of the cases to an umpire. He mentioned in particular the agrarian land cases, on which he stated his Government could not risk a decision requiring it to make payment for such lands. He stated that the Mexican Government had been committed to the agrarian policy since 1910. We told him that we had no desire to force an issue on the agrarian claims or any other claim or [Page 772] class of claims and that our only and sole desire was to obtain a settlement that would be reasonably fair to the American claimants, and that insofar as we are concerned every effort would be made, if discussions were entered into, to reach an agreement on a lump sum basis, but that it was our feeling that we could not undertake a discussion outside the protocol as desired by him; that such a discussion, if it should fail, would amount to taking the first step contemplated by the fifth paragraph of the protocol without any other step being open to us, to which he agreed, except that he stated that he personally had some other method of settlement in mind which he was not free to divulge at that time. I told him that we felt that we were under the necessity of staying within the terms of the protocol but that I would let him know within the next two or three days whether it would be possible to open discussions on the basis suggested by his Government.
It is my view that we would be at a distinct disadvantage to undertake a discussion of the lump sum settlement unless such discussion should take place pursuant to the terms of the protocol; that it would be better to allow the Mexican Government to be in the position of having refused to carry out the terms of the protocol than be placed in a position where it could say that we had departed from the protocol and that therefore it is no longer applicable. It is my suggestion that we should tell Mr. Cordova that we cannot proceed on the basis proposed by him; also that we should make strong representations to the Mexican Government with a view to going forward in the manner agreed upon in 1934.40