Mexican Oilfields (British Interests).

Oral Answers to Questions — League of Nations. – in the House of Commons at on 13 April 1938.

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Photo of Sir John Mellor Sir John Mellor , Tamworth

asked the Prime Minister whether he is in a position to make a further statement with regard to British interests in the Mexican oilfields?

Photo of Mr Roland Robinson Mr Roland Robinson , Blackpool

asked the Prime Minister whether he can make a statement as to the present position with regard to the expropriation of British oil interests in Mexico?

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

Acting on instructions, His Majesty's Minister at Mexico City presented a note to the Mexican Government on 8th April stating that His Majesty's Government regarded the expropriation of the properties of the Mexican Eagle Company as inherently unjustified and must formally request their restoration to the company. I will circulate the text of this note in the OFFICIAL REPORT.

Photo of Mr Roland Robinson Mr Roland Robinson , Blackpool

Can the hon. Member say when he expects to receive a reply?

Photo of Mr R.A. Butler Mr R.A. Butler , Saffron Walden

I understand that a reply came in just before I answered this question, and that it is now being deciphered.

Mr. Davidson:

Will His Majesty's Government follow strictly a policy of non-interference in this matter?

Photo of Mr Wilfred Paling Mr Wilfred Paling , Wentworth

May I ask whether as British financial interests are concerned the Prime Minister has no longer any interest in a policy of non-intervention?

Following is the text of the note:

NOTE PRESENTED BY His MAJESTY'S MINISTER TO THE MEXICAN GOVERNMENT ON 8TH APRIL, 1938.

In a note of March 21st addressed to His Excellency the Minister for Foreign Affairs Senor Don Edouardo Hay, His Britannic Majesty's Minister had the honour to inform the Mexican Government that His Majesty's Government in the United Kingdom expressly reserved their full rights in the matter of the judgment of the Supreme Court in the appeal brought by the Compania Mexicana de Petroleo el Aguila S.A. (Mexican Eagle Oil Company) et al as also in the matter of the expropriation decree of March 18th last. His Majesty's Government have refrained from making a more immediate protest than they now do herein against this treatment of the Mexican Eagle Oil Company, in which British investors are very largely interested, in the hope that the Mexican Government would themselves recognise that the treatment had been unjust and would take steps on their own initiative to remedy the situation which has arisen in the only way in which it could in their view he remedied; namely by the return of its expropriated properties to the Company, which would, as always, be ready to deal reasonably and liberally with their employees. Three weeks have elapsed since the expropriation decree was issued without affording any grounds for thinking that these hopes will be fulfilled. While their final conclusions on the legal aspects of the situation still await fuller examination of the relevant documents, they are already impressed by the following points and have accordingly felt constrained to instruct His Majesty's Minister to make to the Mexican Government the following communication:

His Majesty's Government in the United Kingdom do not question the general right of a government to expropriate in the public interest and on payment of adequate compensation; but this principle does not serve to justify expropriations essentially arbitrary in character. In the present case expropriation was the culminating point in a series of events and the question of its validity cannot be separated from these. As a result of a preliminary review of these events and of the situation which has arisen, and without prejudice to such further considerations as they may later put forward, His Majesty's Government therefore desire to draw the serious attention of the Mexican Government to the points which follow.

The Mexican Eagle Company were, as a result of various proceedings in law, confronted with an award rendered by the Labour Board and confirmed by the Supreme Court, which was not in the view of His Majesty's Government, justified on facts. For example, the Supreme Court in its decision ignored the fact that essential evidence had been improperly excluded, inadequately considered or unjustifiably overriden by experts and the Labour Board: which evidence was directed to show that the figures of profits and costs of the Company subsequently adopted by the experts and the Labour Board were erroneous.

Passing from the award and its confirmation by the Supreme Court to the decree of expropriation, His Majesty's Government find that one injustice becomes the basis for others. His Majesty's Government are fully satisfied that the conditions following from the non-compliance with the award were not such as have warranted the adoption of such a drastic and far-reaching measure as expropriation. The severity of this harsh and arbitrary step was out of all proportion to the exigencies of the situation which it was allegedly designed to meet, and went far beyond what was necessary if the real object which the Mexican Government had had before them was merely to secure the execution of the award and what in their view would be fair treatment for the wage earners.

Article 1 of the decree of 18th March states that the Company's assets were being expropriated "on grounds of public interests (utilidad publica)." And the preamble to decree recites circumstarces which allegedly sufficed to justify an act of expropriation on grounds of public interest. His Majesty's Government, however, have looked in vain for any explicit and adequate statement of such public interest as would be served by nothing less than expropriation; nor do they think it could have been demonstrated that any such public interest existed.

In the face of considerations such as those set forth above which His Majesty's Government must reserve the right in due course to restate and to add to, they find difficulty in escaping the conclusions that the real motive for expropriation was a political desire to acquire for Mexico in permanence the advantages of the ownership and control of the oilfields: that expropriation was tantamount to confiscation carried nut under a veil of legality formed by basing it upon labour issues; and that the consequences have been a denial of justice and a transgression by the Mexican Government of the principles of international law.

His Majesty's Government see no way in which this situation can be remedied but by the restoration of its properties to the Company itself. This His Majesty's Minister is instructed hereby formally to request.