824.6363 St 2/429
The Chief of the Division of the American Republics (Duggan) to the Counsel for the Standard Oil Company of New Jersey (Edwin Borchard)
My Dear Dr. Borchard: Mr. Flournoy has called my attention to your letter addressed to him on November 29, 193946 concerning the case of the Standard Oil Company of Bolivia.
I enclose a draft of a proposed agreement47 between the Standard Oil Company of Bolivia and the Bolivian Government to settle the differences arising out of the decree of March 13, 1937 canceling the Company’s concession contract. In a conference on December 8 last with the Bolivian Minister he was informed concerning this draft, Articles 2 and 3 of which were read to him. The phraseology of subdivision (a) of Article 2 would seem to meet the objections mentioned in the first two paragraphs of your letter. While the Bolivian Minister seemed to find no objection to the phraseology of subdivision (a), he expressed the opinion that, in order to meet the desires of his Government, it would be necessary to include in the agreement a provision under which the Commission would be required to consider a counter-claim of the Government against the Company, not only for the taxes referred to in subdivision (b), but also for damages on account of the alleged non-performance by the Company of its contract obligations. He also expressed the view that the agreement should contain in this connection a reference to certain charges made by the Bolivian Government against the Company in answering the suit of the latter to have the cancellation decree annulled, that is, the charges relating to the alleged violations by the Company of the concession contract.
Whatever views may be entertained concerning the validity of the charges brought by the Bolivian Government against the Company, it is difficult to see how it would be possible to deny the request of the Government to include in the proposed agreement provisions under which the Commission would be required to consider the Government’s claims. Consideration will therefore be given to the question of including in subdivision (b) of Article 2 of the draft agreement the words “and damages” immediately following the word “taxes” in the first line, and adding at the end of Article 3 a paragraph reading somewhat as follows:
“In determining the question under section 2 (b) the Commission will take into account, in addition to the Government’s claims of [Page 347] unpaid taxes, the Government’s claims against the company due to nonfulfillment of its contract, as set forth in the Government’s counter-suit before the Supreme Court of Bolivia.”
Before discussing this matter further with the Bolivian Minister, the Department would like to be informed whether the Company would agree to the draft agreement of November 29, 1939 with the additions suggested above.
Sincerely yours,