Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

824.2544/12–2352:Telegram

The Secretary of State to the Embassy in Bolivia

confidential
priority

Washington, December 23, 1952—5:17 p.m.

160. Amb Andrade was informed yesterday Dept prepared discuss further his Dec 9 proposal consider tin contract and compensation problems simultaneously. Re compensation he was given as a “working paper” draft of a possible arbitration agreement (text infra). Re contract he was told RFC prepared negot quickly and simultaneously with settlement compensation problem.

Amb appeared entirely agreeable idea arbitration and acceptance draft agreement as working paper. His only important immed comment on draft was his Govt might prefer exclude claims persons who acquired Patiño shares after Apr 9 or May 13. He believed large transfers Patiño stock had been made past few months. Dept officers agreed fictitious transfers shld not be recognized but suggested determinations this point might best be made by Arbitral Tribunal and other considerations might also make Oct 31 cutoff date preferable.

Amb expressed desire arbitration agreement be related some US-Bol treaty. He was informed Dept wld consider this matter and that Inter Amer Convention for Arbitration Pecuniary Claims signed Buenos Aires 1910¹ might provide the answer.

Amb said he wld cable Span summary draft arbitration agreement to his Govt and requested Sparks be provided exact Eng text for discussion with Bol officials La Paz.

You may now disregard request Deptel 157² that you delay such discussion. In ur talks with Bol officials you shld stress entire credit on Bol side initiation present negots belongs to Andrade; Dept has not dealt in this matter with any other agent and is happy present arrangement has been made directly with Bol Govt; no agent can obtain better terms than Amb himself.

Amb asked whether US willing buy Patiño ores if no agreement cld be reached with Williams Harvey. He was informed no commitment cld be made re this point and that Dept understood Brit anxious buy. Dept suggested direct frank Bol exploration of problem with Brit Emb and Williams Harvey.

It was agreed any replies to press inquiries shld be limited for time being to substance of Depts press release Dec 19.³

Text draft arbitration agreement fols:

• Art 1. Govt Bol and Govt USA agree claims nationals USA arising consequence nationalization properties pursuant Bol Exec Decree for Nationalization Certain Mining Properties in Bol Oct 31 shall be submitted Arbitral Tribunal constituted accordance provisions Art 2 this Agreement.
• Art 2(a). Tribunal shall consist three members one designated by Govt Bol one designated by Chairman Board Amer Arbitration Assoc and third member chosen by such two members. If either first two members not designated within (blank) days effective date this Agreement Govt USA or Govt Bol may request Pres Interntl Court Justice designate such member. If first two members unable, within period (blank) days after designation both, agree, selection third member either Govt may similarly request Pres Interntl Court Justice designate such third member.
• Art 2(b). Decision majority members Tribunal shall be accepted as final and binding. Case death or resignation of a member successor shall be designated in manner and within period days prescribed paragraph (a) this Art. Event member omitting or ceasing act as such remaining two members are authorized render decisions if in agreement.
• Art 2 (c). Proceedings Tribunal shall be governed by such rules and regulations as it may adopt.
• Art 2 (d). Compensation members Tribunal shall be fixed by special agreement between Govt Bol and Chairman Board Amer Arbitration Assoc and together with other expenses Tribunal shall be paid in equal parts by Govt Bol and US shareholders.
• Art 3 (a). Tribunal shall determine, accordance principles interntl law, justice, equity, amount compensation which as consequence nationalization referred to Art 1 this Agreement is due nationals US who on 31 Oct were bona fide and beneficial owners either directly or indirectly of rights and interests in companies or entities whose properties have been nationalized.
• Art 3 (b). Amount compensation due a shareholder shall be calculated basis total value nationalized property company or entity and shall bear same proportion such value as beneficial interest such shareholder in company or entity bears to total outstanding capital stock thereof.
• Art 3 (c). Interest on awards shall be computed at rate five per cent per annum from 31 Oct to date termination functions Tribunal under this Agreement.
• Art 3 (d). Since it desire both Govts effect expeditious determination claims encompassed this Agreement it agreed no such claims shall be disallowed or rejected by application general rule interntl law that local remedies must be exhausted as condition precedent validity or allowance any claim.
• Art 4 (a). Awards shall be entered by Tribunal in terms currency USA and shall be paid by Govt USA out of a compensation fund established exclusively for purposes this Agreement which shall consist such amounts in currency USA as may be deposited therein by Govt Bol and such amounts as Govts two countries or their agencies may agree shall be withheld by Govt USA or any authorized agency thereof pursuant any mineral purchase contract which any agency Govt USA may conclude with any agency Govt Bol.
• Art 4 (b). All sums necessary pay awards Tribunal shall be covered into fund prior expiration period (blank) years from date this Agreement.
• Art 4 (c). If it shall be determined total amounts deposited compensation fund are in excess total amount awards Tribunal Govt USA will take necessary steps return such excess to Govt Bol.
• Art 5. This Agreement shall become effective on (blank).⁴

Acheson

1. For text of the referenced convention, entered into force on Jan. 1, 1913, see 38 Stat. 1799.
2. Department’s telegram 157, dated Dec. 19, 1952, not printed (824.2544/12–1952).
3. Reference is to press release 928; for text, see Department of State Bulletin, Jan. 5, 1953, p. 14.
4. The Bolivian Government’s draft counterproposal for an arbitration agreement was transmitted to the Department of State under cover of despatch 486, from La Paz, dated Jan. 19, 1953 (824.2544/1–1953).