211. Memorandum of Conversation1
SUBJECT
- United States Government note to the Government of Algeria on the nationalization of the US-owned oil interests
PARTICIPANTS
- Mr. Luke W. Findley, Natl. Govt. Relations Dept, Standard Oil
- Mr. Grant Kelleher, General Counsel, Standard Oil
- AF—Mr. William C. Trimble
- AF/AFN—Mr. John Root
- AF/AFN—Mr. Rene Tron
- L—Mr. Carl F. Salans
- L—Mr. Murray Belman
- L/E—Mr. Philip Patman
- L/C—Mr. Edison W. Dick
Mr. Findley began the discussion by stating that Esso was unhappy that a note was sent to the Government of Algeria without Esso first being consulted as to the content of the note.2 Mr. Findley stated that Esso objected to the note in that it gave the Algerian Government the alternative of merely paying compensation for the nationalization of Esso interests rather than insisting upon rescission of the actions and restitution of the property. Mr. Findley stated that the ordinances and decrees enacted by the Government of Algeria were clearly discriminatory, arbitrary and confiscatory and that thus restitution was the only appropriate remedy under international law as interpreted by the United States.
Mr. Salans pointed out that the historical United States position was not that restitution was the only appropriate remedy under the circumstances but rather that damages by the United States has always been considered to be an equally satisfactory form of reparation.
Mr. Belman brought out the point that the OECD Draft Convention on the Protection of Foreign Property confirmed this fact. He referred specifically to the notes and comments to Article 5 of the Draft Convention which discussed “full reparation” in the event of an illegal act. He pointed out that these notes and comments were altered at the [Page 386] insistence of the United States to state that “in practice, such reparation will generally take the form of damages.” He stated that the reason for the United States insisting on this language is because of a United States Supreme Court decision holding that the federal government could never be bound to restore property it had taken by eminent domain.
Mr. Belman went on to say that the United States position for the OECD draft with respect to this question of reparation was reached following consultation with the Business and Industry Advisory Committee and was concurred in by that Committee. Mr. Belman stated that he worked closely with Mr. Haitt of Shell Oil Corp. on this question and that to his knowledge Mr. Collado of Standard of New Jersey had been involved.
Mr. Findley stated that he was unaware of what had transpired in connection with the OECD Foreign Property Convention and was grateful for the information regarding the United States position on reparations and how it had been developed. Mr. Findley stated that he believed the United States position was a poor one since it would have the effect of selling the United States investment community down the river overseas. He felt that foreign governments (especially those in the Middle East) would have less hesitation about nationalizing United States properties in violation of international law since they only would be required to make some compensation which was rarely ever prompt, adequate or effective. Mr. Salans pointed out that the promptness, adequateness or effectiveness of compensation was a separate question.
Mr. Salans suggested that since the United States note had already been delivered to the Government of Algeria, no decision be taken at the moment on what the tactical position of the United States should be with respect to reparations and that any such decision would await a reply from the Government of Algeria. Mr. Findley agreed with this course of action.
Mr. Dick pointed out that the Government of Algeria in 1964 took the position that “either compensation or restitution at the discretion of the Algerian authorities” was the appropriate remedy with regard to the properties nationalized pursuant to the decrees of 1963.