Oil: Mexico: impropriations 212/ /40 BRITISH 1SMBA33Y, WASHINGTON, D. C., April 3rd, 1940 Ho, 313. -St 7 ¦A My Lord, I have tho honour, with reference to Your Lordship's telegram 480 of March 27th regarding tho 1'exioan oil dispute, to transmit herewith a copy of the letter which I sent to the secretary of State on March 28th informing him that His Itajesty's Government were in general agreement with the terms of reference communicated to him on behalf of the American oil companies by Mr. Farish in his letter of March 14th. As will be seon from the enclosed y copy of Ltr. Hull's reply, the latter would seem to have thought from the terms of my letter that, despite our conversation on March 22nd reported in my telegram No. 405, I was under the impression that the question of arbitration was still a live issue and had not appreciated that the Mexican Government had declined to agree to the submission of tho matter to any form of arbitration at the present time. I have there- fore replied to Mr. Hull in a letter, a copy of which is also enclosed, making it clear that I had in fact been well aware of tho exact position/ k The Hight Honourable Tho Viscount Halifax, K.0», etc., etc., etc., 1 JF:FKHM:IIK -2 position and that my object in writing to him had been to place on record the fact that if it were eventually decided to submit the claims of all the companies to some form of international arbitration His Majesty's Govern- ment felt that the terms of reference suggested by the American companies were very suitable* I also enclose for purposes of record the text of the terms of reference as forwarded to the State Department by Mr. Farish under cover of hi3 letter of March 14th. It will be seen that this revised text meets the majority of the points raised in your telegram Ho. 371. The preamble has been redrafted in proper "Heads of States" form and provision has been made for the settlement of all claims by including a new paragraph (d) at the end of Article X and by re- drafting the last sentence of Article VII so as to run as follows "The decision of the tribunal upon the questions submitted to it shall bo considered as final and conclusive and shall be deemed to bar all further claims arising out of the matters herein sub- mitted to arbitration." As a result of this redrafting the words "and the Government of Mexico agrees to give full effect to such decision" which originally appeared at the end of Article VII have been eliminated. The/ -3 The words "and properly" have been Inserted In Article I (c) and the words "which may give any direction which it may think fit" have been added to Article V (g), while Washington has been inserted in Article IV as the place of Meeting. As regards the inclusion In Articles I and IV of references to international law, the words "in accordance with the principles of international law" have boen removed from Article I, and the word "matters" substituted for "questions", but for the reasons given in the memorandum quoted in Mr. .ilkinson's telegram of March 15th to Mr. Oodber the words still occur in Article IV. The position as regards the mention of the words "Mexican Government" in Article I (b) was explained in my tolograci Ho. 546 • In order to make matters clearer, the word "ultimately" has now been inserted in the last sentence of the Article. In the revised terms of reference the words "or violated" havo been omitted from the first sentence of Article I (a), while as ex- plained in my telegram No. 371 no change has been made in the references to the method of composition of the arbitral tribunal. I have the honour to be, with the highest respect, Hy Lord, Your Lordship's moat obedient, humble servant, (SOP) LOTHIAN