818.51/1061: Airgram

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

A–396. Reference your 268, March 24, 10 a.m. Please forward to the Department as soon as possible an English translation of the decision of the Appellate Section of the Costa Rican Supreme Court.48

Please also inform the Department by airgram (1) whether the three judges of the Appellate Section sit also on the Court of Cassation, (2) whether the lawyers for the United Fruit Company believe that the Court of Cassation will uphold the Appellate Section’s decision, (3) whether these lawyers believe that the Appellate Section’s decision if affirmed will constitute a denial of justice49 and if so on what specific grounds, (4) whether the precedent established by the Appel [Page 125] late Section’s decision if affirmed would not apply equally to many other private contracts in Costa Rica, with consequent confusion and litigation, (5) on what grounds the National Bank of Costa Rica is relieved of its obligation to redeem its notes in gold coin (see your despatch no. 402 of June 22, 194250) (6) whether the Government is likely to bring suit against the United Fruit Company.

The Department is concerned at the decision of the Appellate Section, which is at variance with decisions of the Supreme Court in interpreting this country’s policy regarding the important matter of gold clauses in contracts. Moreover, the raising of the question of gold clause payments at this late date would appear to constitute highly inequitable treatment in view of the time which has elapsed and the whole course of dealings between the United Fruit Company and Costa Rican citizens. Such a decision if upheld would obviously be a deterrent to other capitalists who might wish to invest in Costa Rica.

You may express the views set out in the above paragraph discreetly and informally to President Calderón Guardia.

  1. English and Spanish copies of the decision were transmitted to the Department by the Minister in Costa Rica in his despatch No. 1688 of April 16, not printed.
  2. According to Green H. Hackworth, Digest of International Law, vol. v, pp. 526–527, “Denial of Justice” may consist either of denial of access to the courts or of injustice at their hands.
  3. Not printed.