1938: Arbitration

The most important arbitration of 1938 decided the dividing line in the Chaco between Bolivia and Paraguay after their dramatic and critical boundary dispute. The award was made on Oct. 10 by delegates representing the presidents of Argentina, Brazil, Chile, the United States, Peru and Uruguay in accordance with the treaty of peace, friendship and boundaries signed by the two states on July 21, 1938, after four years of peace negotiations. It appears at first sight that Paraguay was more favored by the award by being given three quarters of the Chaco territory in dispute, yet Bolivia received a triangle of land giving it thirty miles of water front on the upper Paraguay River — territory originally granted to it by Brazil but always opposed by Paraguay on the ground of previous ownership. Bolivia was also given use of the important Puerto Casado as a free port. Other provisions push Paraguay back from Bolivian territory containing its oil field and international road. The new frontier guarantees to Bolivia complete security against military advance since the boundary line runs through a desert. Paraguay, on the other hand, has received a larger territorial area. Under the terms of the peace treaty, the Chaco peace conference will not disband until the boundary commission completes the work of surveying and marking the new frontier, which will probably last about two years. The conference will serve also as a consultative body in case any dispute arises. Both countries have now reopened their respective legations in the other state.

On Oct, 12, the Government of Ecuador requested the presidents of the states that had acted in the Chaco arbitration to intervene in a friendly manner in its long-standing boundary dispute with Peru. The controversy concerns a large amount of territory surrounding the waters of the Amazon River and has been the subject of several negotiations. As a result of this success, suggestions have been made among Latin American representatives for the establishment of a permanent board of arbitration or mediation to settle all pending boundary disputes.

Other frontier questions in Latin America that have been agreed upon in 1938, either by mediation or by a joint commission, are that between Brazil and Netherlands Guiana in May, between Panama and Colombia and between Nicaragua and Honduras in December.

In a series of notes between the Governments of the United States and Mexico, the former proposed arbitration under the General Arbitration Treaty of 1929 of the question whether the Mexican Government had complied with international law regarding compensation of American citizens whose agrarian property in Mexico had been expropriated after Aug. 30, 1927, and, if not, the terms and manner of payment. Mexico refused both as to subject matter, which, it claimed, was suitable for diplomacy and as to conditions of payment, which must be in accord with economic conditions and therefore not suitable for arbitration. Since the United States again reiterated that Mexico had disregarded international law and had committed a breach of international obligations, the Mexican government proposed determination of the property's value and manner of payment by representatives of the two countries. The next American note agreed to a joint commission, as alternative to arbitration, with final decision in case of disagreement by an arbiter. On Sept. 2, Mexico accepted 'the American proposal' that value of the lands and terms of payment therefore be submitted to a commission constituting one representative of each party and, if unable to agree, a third member chosen by the Permanent Commission in Washington under the Gondra Pact.