824.6363 St 2/378

Memorandum of Conversation, by the Assistant Chief of the Division of the American Republics (Butler)

[Participants:] Bolivian Minister
Mr. Duggan29
Mr. Butler

The Bolivian Minister called at Mr. Duggan’s request to discuss the case of the Standard Oil Company of Bolivia.

Mr. Duggan explained to the Minister that he wished to explore possible procedure for a friendly and mutually satisfactory settlement of this case. He explained that the Department’s policy in such cases is to use its good offices to bring the two parties together and to facilitate in every appropriate way direct negotiations and agreement between the parties. He pointed out that it is impossible for the Department to act as mediator or go-between in the many problems which confront American business throughout the world, not only because the Department lacks complete information and data in the cases, but also because it has not the personnel necessary for this work. Mr. Duggan then inquired what the Minister’s specific instructions are and if the Minister would be able to transmit to his Government a proposal which might be made by the company and submitted to the Minister by the Department.

Dr. Guachalla said that he has rather strict instructions and is only authorized to transmit to his Government the suggestions of the Department. Mr. Duggan then inquired if these instructions would be [Page 329] satisfied if the Department were to submit a company proposal to him with the comment that the Bolivian Government might wish to examine it as a possible basis for settlement. The Minister replied that the Government knows the company’s views, that it takes the attitude that it has nothing further to discuss with the company, and that therefore what the Bolivian Government wants is the Department’s suggestions or at least the Department’s analysis of and comment upon any proposal that might be made by the company. The Minister pointed out that since the decision of the Bolivian Supreme Court, it will be very difficult for the Bolivian Government to reconsider the juridical aspects of the case, or to enter into direct negotiations with the company. He repeated the opinion, however, that if the Department could submit some formula or suggested plan, he believed that something might grow out of it. The Minister recalled that while he was in La Paz Mr. Caldwell had received a telegram from the Department expressing approval of an out-of-court settlement which would leave to one side the question of the validity of the decree of March 13, 1937. He stated that the Standard Oil Company of New Jersey had rejected a proposed settlement along these lines and that he understood the company to have declared that it would prefer an adverse decision by the Bolivian Supreme Court so that the Department would ask for international arbitration. The Minister commented upon the fact that the Department had not made this request. He added that the Bolivian Government could not accept international arbitration.

Mr. Duggan then asked if the Department took the first step in transmitting a proposal which the company might make, together with the Department’s comment thereon, the Minister would be able to transmit the proposal to his Government. He also inquired if after such a first step the Bolivian Government might be disposed to designate the Minister or some other representative to meet with a representative of the company to carry on the discussions. The idea would be to have the company designate a representative who was not an employee of the company and who had had nothing to do with the case. The Minister asked if Mr. Duggan had in mind an arrangement similar to the Mexican one30 and Mr. Duggan replied in the affirmative. Dr. Guachalla stated that he thought such a procedure might be possible, but he emphasized that in order to make action possible and easy for the Bolivian Government the latter feels that it must deal with the Department instead of with the company, at least at the beginning.

Dr. Guachalla added that after a preliminary exchange between his Government and the Department, he would be willing to discuss the matter informally and unofficially with representatives of the company, but with the specific understanding that no publicity would be [Page 330] given to such discussions and that they would not be regarded as committing either his Government or himself to any action whatever. The Minister repeated that he is always at the Department’s disposal to discuss the case and to explore the possibility of agreeing upon a formula. He indicated that such a formula would include compensation to the company, reciprocal release of all claims and counterclaims, and the exclusion of all juridical phases of the case. The Minister promised to send Mr. Duggan a copy of the proposal that was under discussion in La Paz when the Minister returned there after the Lima Conference. Mr. Duggan promised to go over this proposal and to get in touch with the Minister within the next few days for a further discussion.

A possible procedure might be to redraft the proposed agreement dated May 26, 1939,31 which is the subject of Mr. Hackworth’s32 memorandum of the same date, in the light of the material which the Bolivian Minister is to furnish. The situation then could be explained to representatives of the company, and the Department might formally submit to the Bolivian Minister a proposal which he could transmit to his Government. In submitting this proposal it probably would be necessary for the Department to state that it had carefully examined the terms of the proposal and that they appeared to offer the basis for a possible satisfactory settlement of the case.

  1. Chief of the Division of the American Republics.
  2. See pp. 667 ff.
  3. Not printed.
  4. Legal Adviser.