The Ambassador in Costa Rica ( Johnson ) to the Secretary of State

No. 1913

Sir: I have the honor to report that in the May 8th edition of La Gaceta there was published a decree removing certain agencies of the Government of the United States from the jurisdiction of Costa Rican courts. The decree, which is transmitted, read in translation as follows:

[Here follows text of Executive decree No. 1, by President Teodoro Picado, May 6, 1946.]

. . . . . . . . . . . . . .

The decree will relieve the Institute of Inter-American Affairs, the Public Roads Administration, the Department of Agronomy, Rubber Experimental Station, Rubber Development Corporation, and the Cooperative Public Health Service from all claims in any Tribunal of Costa Rica. Of importance is the fact that the decree will permit the agencies to refuse the payment of “cesantía” and “preaviso”,27 since it will be impossible to demand their presence before a Labor Court.

It is understood, however, that the agencies, in case they so desire, are still in the position to pay “preaviso” and “cesantía” from an administrative standpoint. These payments are called for under the Codigo de Trabajo, a copy of which was forwarded in this Embassy’s despatch No. 540* of September 7, 1943.28

While the legal position of our agencies is clear, I believe that the policy question is still open. Contracts of various agencies with the Costa Rican Government are very different in form. The Public Roads Administration is specifically excepted from the provisions of the Labor Code, while it is stated in the Cinchona contract29 that [Page 695] the provisions of the Labor Code must be followed. Mr. Stadtmiller, the head of the Cinchona development which now functions under the Reconstruction Finance Corporation,30 informs me that he has already made many payments for “preaviso” and “cesantía”. Mr. Ray Hill, the Assistant Director of the Food Supply Division of the Institute of Inter-American Affairs, who is now in San José, informs me that he understands that Institute employees in Peru and Venezuela are paid preaviso and cesantía. He adds that, since it is the policy of his office to follow local customs, Christmas bonuses are also given to such employees.

The above-mentioned decree makes it clear that the American organizations cited cannot be compelled to submit to the jurisdiction of a Costa Rican Court, but the question of policy still remains, first as to whether immunity should be claimed on this basis, and second as to whether preaviso and cesantía should not be paid in order to avoid complaints to the courts. Officers of the Embassy can, of course, claim diplomatic immunity under the authority of the Department, but there may be cases in which the Department would not authorize their so doing. The same question might arise with regard to cases brought before the Labor Court with regard to Costa Rican employees of United States Government organizations. It has been pointed out to me that an obstreperous “Chief of Party” might well rely on the lack of jurisdiction of Costa Rican courts in cases where there might be no moral justification for such action.

I venture to suggest, therefore, that the Department determine the policy which should be followed regarding cases brought under local Labor Codes, and should give specific instructions to the Embassies and to the Chiefs of Party in Latin American countries. I am personally of the opinion that preaviso and cesantía should be paid voluntarily in order that the good done by the expenditure of hundreds of thousands of dollars in the furtherance of the Good Neighbor Policy should not be undone by a refusal to follow the provisions of local Labor Codes. Public opinion is a very sensitive thing, and if laborers in these countries should vociferously complain that when they work for an American corporation they do not receive the benefits of their own Labor Code, much damage might be done. Moreover, while in [Page 696] theory local laborers are adequately protected under the United States Employees Compensation Act and other legislation, I understand that these acts have not been translated into Spanish and that the red tape necessary for non-English speaking peons to avail themselves of the provisions of our legislation would make it practically impossible for them to do so. I understand, for example, that there are no doctors in Costa Rica who are nominated in foreign countries under the Compensation Act to forward required proof in specific instances to American authorities.

I should appreciate the Department’s instructions in the premises at the Department’s early convenience.

Respectfully yours,

Hallett Johnson
  1. Cesantía, a term referring to terminal leave pay; preaviso, a term referring to payment of salary in lieu of 15-30 days’ written notice prior to termination of employee’s contract of employment.
  2. Subject: “Transmitting Copies of New Costa Rican Labor Code.” [Footnote in the original.]
  3. Not printed.
  4. For memorandum of understanding on establishment of the cinchona plantation, March 12, 1943, see Foreign Relations, 1943, vol. vi, p. 96. Contract for effectuating the memorandum of understanding, March 4, 1944, not printed.
  5. During 1946 the Department of State participated, with other Governmental agencies concerned, in inconclusive discussions on the expressed desire of the Reconstruction Finance Corporation to dispose of its interests in the cinchona plantation at Isla Bonita, Costa Rica, at the earliest possible date, but efforts to settle the question of disposition of this Governmental project were extended into 1947.

    With regard to the United States interest in the cinchona program, see the testimony of William E. Houk, special representative of the Reconstruction Finance Corporation, on August 30, 1946, printed in Investigation of the National Defense Program: Hearings Before a Special Committee Investigating the National Defense Program, United States Senate, 80th Cong., 1st sess., part 37, pp. 21091–21095.