824.6363 St 2/424
Memorandum of Conversation, by the Chief of the Division of the American Republics (Duggan)
The Bolivian Minister called to review briefly the discussions carried on in Panama between the Foreign Minister and Mr. Welles.42
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The Minister then referred to the controversy with the Standard Oil Company. He thanked me for the résumé sent him of a recent letter from the Standard Oil Company commenting upon the Minister’s observations. Dr. Guachalla stated that he was of the opinion that his Government, while possibly willing to submit to the Arbitral Board the question as to whether the subsoil resources should be taken into account in calculating the value of the company’s interests, would not accept the words “property rights and interests” in the present draft. From the Government’s point of view, the acceptance of this language would imply an admission of the validity of the concession contract, which of course the Government was not prepared to do, particularly in view of the recent Supreme Court decision. Nevertheless the Minister stated that there was a principle of Bolivian law called lucro cesante embodied in both the Civil and the Commercial Codes, which acknowledges that prospective profits be taken into account in calculating damages and compensation. In view of this accepted principle of Bolivian law, the Minister thought that it should be possible to find language more acceptable to his Government [Page 342] to replace the words “property rights and interests”. I told the Minister I was very interested in the principle of Bolivian law he mentioned and would appreciate his submitting any redrafts which he thought would be acceptable to his Government. The Minister said he would try his hand and hoped to send the new language on this point within the next few days.
The Minister stated that he had decided not to submit his formal report to his Government on the present status of the controversy until there had been further exploration on the point he had elaborated. He will, however, send a personal letter to the Foreign Minister outlining the situation as he sees it, and indicating that a formal report will be sent within the near future.