824.6363 St 2/407
Memorandum of Conversation, by the Chief of the
Division of the American Republics (Duggan)
[Washington,] August 14, 1939.
The Minister37 informed me that the latest information he had was
to the effect that Señor and Señora Foianini would pass through
Washington en route to New York Thursday at 4 a.m. by plane. The
Minister said that he did not know when they would return from New York
and that he did not have any further information with respect to their
plans.
I told the Minister that since his conversation with me on June 26 in
which he commented on the proposed agreement for the settlement of the
Standard Oil controversy the Department had been studying continuously
and carefully a revision of the agreement that would take into account
his views. There had been several new drafts prepared and discussed with
representatives of the Standard Oil Company. In the beginning the
company was most reluctant to consider the inclusion in the agreement of
a provision authorizing the tribunal to pass upon the question of the
amount of taxes due the Government from the company over and above those
that had already been paid. By dint of insistent effort the company had
finally been persuaded to accept a formula that would submit to the
tribunal this question.
I thereupon handed to the Minister a copy of a new draft38 providing for the submission to a tribunal of
three persons two questions—(1) the value in United States dollars of
the property of the company in Bolivia on March 12, 1937, and (2) the
amount of taxes, if any, over and above those paid by the company, due
the Government from the company. I told the Minister that I knew he was
as desirous of a prompt settlement of this controversy as was the
Department. The company’s agreement had only been obtained after long
discussions and after the submission and counter-submission of many
drafts. I urged therefore that the Bolivian Government give the most
careful consideration to the new draft, suggesting only such changes as
seemed
[Page 338]
absolutely necessary to
meet the Bolivian point of view. In particular I urged that no changes
in language, unless absolutely essential, be suggested with regard to
paragraph 2 (b), since the language relating to
that section had been worked out only after a great deal of effort. I
said that I considered the company’s acquiescence so precarious that any
material change in the language might result in the company’s
reconsidering its whole position.
The Minister assured me that he would study the new draft first of all to
determine whether the Government could agree to it in principle. If he
thought that it could he would keep to a minimum any suggestion to his
Government for modifications of language. He again expressed his belief
that the Minister of Mines would not be coming to the United States
unless he had decided to come to some agreement on this problem. He
hoped a settlement along the lines under discussion would meet with the
Minister’s favor, but of course he would not know until he had discussed
the proposal with the Minister, who so far was not informed as to the
informal discussions that had taken place in Washington. Dr. Guachalla
reminded me that he had not wished to bring anything to the Minister’s
attention until it was in a form which he himself could support and
recommend.
The Minister told me that he was returning to Washington on Thursday and
that he would probably come in to discuss the new draft.
[Enclosure]
Draft by the Department of State of Proposed
Agreement Between the Bolivian Government and the Standard Oil
Company of Bolivia
Whereas differences have arisen between
the Bolivian Government and the Standard Oil Company of Bolivia
growing out of the cancellation on March 13, 1937 by the Government
of the concession contract dated July 27, 1922, under which the
Company was operating in Bolivia; and
Whereas the Government of Bolivia alleges
that the Company has failed to pay certain taxes due to the
Government as set out in the preamble of the Decree of March 13,
1937; and,
Whereas the parties desire to put an end
to these differences:
The Government of Bolivia, duly represented by . . . . . . . . . . .
. , and the Standard Oil Company of Bolivia, duly represented by . .
. . . . . . . . . . , freely agree to the following terms of
settlement:
- 1.
- There shall be established a Tribunal consisting of three
members, one, who must be either an engineer or geologist,
to be designated by each party within thirty days following
the signature of this agreement,
[Page 339]
and the third member, who shall
preside and who shall not be a national of either Bolivia or
the United States. The third member shall be selected by
mutual agreement between the parties; provided, however,
that if the parties shall fail to agree upon the selection
of the third member within thirty days from the date of the
signature of this agreement, the selection shall be left to
the President of the Geological Society of London, referred
to in Article 17 of the concession contract between the
Government and the Company, dated July 27, 1922, who shall
make the selection within thirty days from the date upon
which either the Government or the Company shall notify him
of their disagreement.
- 2.
- The questions to be submitted to the Tribunal are as
follows:
- (a)
- What amount in United States dollars may in equity
be due the Company for its property, rights and
interests in Bolivia based upon their value as of
March 12, 1937, which amount with interest, it is
agreed, shall be paid by the Government to the
Company;
- (b)
- What amount of taxes may be due the Government by
the Company on account of the claims of the
Government against the Company as set forth in the
preamble to the Decree of March 13, 1937, which
amount, with interest, it is agreed, shall be paid
by the Company to the Government.
- 3.
- It is the intention of the parties to this agreement that
the Tribunal shall not consider or question the validity,
under the law of Bolivia, of the Company’s concession
contract or of the Government’s cancellation decree of March
13, 1937.
- 4.
- The procedure of the Tribunal shall be as follows:
- (a)
- Within sixty days from the date of the selection
of the third member, the Tribunal shall convene at
Buenos Aires or at such other place as it may find
appropriate and shall within an additional period of
one hundred twenty days make a fair and impartial
determination of the amounts to be paid, as above
stated.
- (b)
- Each party shall submit to the Tribunal within
ninety days from the date of signature of this
agreement a complete statement of its case and the
evidence relied upon in support thereof, at the same
time furnishing a copy thereof to the other party.
Within thirty days after the filing of the last of
the two statements just mentioned, each party may
submit to the Tribunal such written arguments and
additional evidence in rebuttal of the evidence
submitted by the other party as it may desire to
submit. No further statement or evidence shall be
submitted by either party unless requested by the
Tribunal; and any such request made by the Tribunal
for additional statements or evidence shall be
communicated to both parties and each shall have an
opportunity to respond to the request;
- (c)
- Each party shall pay the honorarium and expenses
of the member of the Tribunal designated by it and
shall bear its own expenses. The expenses of the
Tribunal, including the honorarium of the third
member, shall be borne in equal moieties by the two
parties;
- (d)
- The decision of the Tribunal shall be by majority
vote and shall be accepted by both parties as final
and binding;
- (e)
- The Government and the Company shall, within . . .
. . months from the date of the decision of the
Tribunal, pay in cash, in United States currency or
its equivalent in sound free exchange currency, the
total amounts determined by the Tribunal to be
proper and equitable.
- 5.
- The Government of Bolivia and the Standard Oil Company of
Bolivia declare that, upon the payment of the amounts
referred to in paragraph 4(e), no
issue will remain pending between them and that there will
be no occasion, on the one or the other part, for any
subsequent claims or counter-claims of whatsoever character,
since the ful-filment of the present agreement, which has
been freely entered into, shall be regarded as having
terminated satisfactorily and amicably the controversy
raised by the Decree of March 13, 1937. If all the terms of
this agreement are not duly fulfilled by either party, it is
understood that the status quo ante
as of the date of this agreement shall be deemed restored at
the option of the aggrieved party.
In faith of which, etc.
[Place and date of signature]39
