818.51/1061: Telegram

The Minister in Costa Rica (Scotten) to the Secretary of State

268. Reference my despatch No. 655 [656] of August 15, 1942.46 The Appellate Section of the Supreme Court yesterday ruled that the [Page 124] United Fruit Company is liable for the payment of some $200,000 in the so-called gold clause cases.47 This decision which has not yet been published affirms the decision of the lower court which was reported in my despatch under reference and reverses the decision of the lower courts in one of the cases which had been previously decided in favor of the United Fruit Company.

On Monday afternoon the lower courts had ruled in favor of the United Fruit Company in two other gold clause cases. I am informed fey the chief attorney for the company however that the decision of the Appellate Section of the Supreme Court will no doubt establish a precedent on which subsequent appeals will be decided. He informs me that there is one further course of action open to the company, namely, submitting an appeal from the decision of the Appellate Section of the Supreme Court to the Court of Cassation which is another section of the Supreme Court composed of 5 judges rather than the 3 making up the Appellate Section. The United Fruit Company will make such an appeal within a few days.

I shall furnish the Department full details of the decisions by despatch as soon as they are available.

  1. Not printed.
  2. The “so-called gold clause cases” in Costa Rica referred to here were suits brought against the United Fruit Company and its subsidiary, Compañia Bananera de Costa Rica, by banana planters who claimed that their original sales contracts with those companies contained “gold clauses” which could be interpreted to justify a price increase on bananas following the United States devaluation of its gold dollar on January 31, 1934.