824.6363 St 2/505
The President of the Standard Oil Company of New
Jersey (Farish) to the Under Secretary of
State (Welles)
New
York, December 16, 1940.
[Received
December 17.]
My Dear Mr. Welles: Thank you very much for
your letter of December 13 on the Bolivian matter. I had already written
the enclosed letter to Mr. Bonsal, so I am enclosing a copy to bring you
up to date.
I do hope you can go forward with the negotiations as suggested.
Sincerely yours,
[Enclosure]
The President of the Standard Oil Company of New
Jersey (Farish) to the Acting Chief
of the Division of the American Republics (Bonsal)
New
York, December 16, 1940.
My Dear Mr. Bonsal: Upon my return after
our conference on December 5 my associates and I immediately
addressed ourselves to the subject matter of my interview with the
Bolivian Minister at which you and Mr. Daniels were present.
You will recall the Bolivian Minister’s statement that while Bolivia
is perfectly willing to settle our differences by arbitration he has
reason to believe that the Bolivian Congress is unwilling to approve
the arbitral protocol in its present form lest it permit a technical
finding of some value for the property in question, such as “seven
to ten million dollars,” which Bolivia would consider “impossibly
high” but would nevertheless be bound by the terms of the arbitral
award to pay. The Minister suggested as a way out of this difficulty
some change in the arbitral protocol that would limit the amount of
any award to be made, or, in the alternative, the direct negotiation
of an agreed value for the seized properties by the Minister himself
and representatives of the Standard Oil Company of Bolivia.
We have concluded that we cannot agree to limit the possible arbitral
award in advance because to do so would invalidate the whole
arbitration. As to the alternative suggestion, I told the Minister
that we would study it and determine promptly whether we could agree
to the direct negotiation of a fixed net value for the
properties.
In conformity with the expressed desire of the State Department that
we give full consideration to the viewpoint of the Bolivian
Minister,
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and in response
to the suggestions of the Bolivian Minister, we have now to submit
the following proposal:
If the State Department is willing to attempt to negotiate a
settlement of the dispute with Bolivia on a basis which secures the
inclusion in the final agreement of the clauses comprising the
attached memorandum, and if the Bolivian Minister will assure the
State Department of his authority on behalf of Bolivia to conclude
such negotiation, we will undertake through direct conversations
with the Bolivian Minister to agree on a fixed sum to be paid to the
State Department for the account of the Standard Oil Company of
Bolivia in full settlement of its claims.
This proposal contemplates a formal agreement between the Bolivian
Government and the State Department on behalf of the Standard Oil
Company of Bolivia. Our part in concluding this agreement would be
the negotiation with the Bolivian Minister of the amount to be paid
by Bolivia in the settlement.
We are hopeful that the State Department will find it possible to
undertake this settlement.
Very truly yours,
[Subenclosure]
Draft by the Standard Oil Company of New
Jersey
Whereas negotiations for the sale of the
properties of the Standard Oil Company of Bolivia were under way in
1936;
Whereas these negotiations were suspended
by virtue of the decree of March 13, 1937, purporting to cancel the
Company’s concessions;
Whereas the Department of State undertook
in 1939 to negotiate with the Bolivian Government a protocol of
arbitration by which Bolivia was to pay to the Company the appraised
value of the properties of the Standard Oil Company of Bolivia,
including the value of the unexpired term, running to 1979, of the
concession contract and including the subsoil rights thus purported
to be abrogated;
Whereas the Bolivian Government advised the
Department of State that it would prefer to make an agreed
settlement and payment for the value of the properties in question
to avoid the long delay which an arbitral proceeding would
involve;
Whereas the Bolivian Government renounces
all its claims for the alleged non-payment by the Company of back
taxes and patentes;
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Whereas the Company is not averse to
substituting an agreed settlement for an arbitral appraisal of the
properties; and
Whereas the Department of State is desirous
of a prompt settlement of the case;
It is agreed by the Government of Bolivia
on the one hand, and by the Department of State, acting on behalf of
the Standard Oil Company of Bolivia on the other hand,
That
The Government of Bolivia shall pay to the Department of State on
behalf of the Standard Oil Company of Bolivia the sum of $ . . . . .
. . . in full settlement of the claims of the United States and of
the Standard Oil Company of Bolivia arising out of the purported
cancellation on March 13, 1937, of the concession contracts of the
Standard Oil Company of Bolivia.
The sum of $ . . . . . . . shall be paid as follows:
(State terms of payment).
Title shall not be deemed to have passed to the Bolivian Government
until the final payment herein agreed to shall have been made.
Thereafter no issue will remain pending between the Bolivian
Government and the Standard Oil Company of Bolivia and there will be
no occasion on the one or the other part for any subsequent claims
or counterclaims of whatsoever character, since the fulfillment of
the present agreement, which has been freely entered into, shall be
regarded as having terminated satisfactorily and amicably the
existing differences between the Bolivian Government and the
Company.
