Oil Decision

Once more oil resounded with a sickly "glub" throughout Mexico. This time, however, the "glub" was in favor of U. S. oil interests.

In an appeal suit brought by the Mexican Petroleum Co. (a subsidiary of the Pan-American Petroleum and Transport Co., controlled by the Standard Oil Co. of Indiana) to restrain the Mexican Ministry of Industry, Commerce and Labor from canceling the oil drilling permits of the company (which the ministry had already done), the Supreme Court of Mexico passed judgment in favor of the U. S. concern.

The court condemned as unconstitutional article XIV of the new Mexican Petroleum Law, which turns all oil leases acquired before 1917 into fifty-year concessions, and article XV, which forfeits all titles where no confirmatory concessions were applied for before Jan. 1st, 1927.

This means that, in the opinion of the court, the government was not within its rights in canceling the Mexican Petroleum Co.'s title because that company ignored the law, preferring instead to seek legal redress against a law which is regarded as confiscatory. Moreover, according to the court, the government is not within its constitutional rights in substituting 50-year leases for outright oil titles.

This decision is based on the principle of retroactivity, the new law having been passed in January, 1926, and made effective as from 1917. It was this procedure that the Supreme Court judges held contradicted the spirit of the constitution. Moreover, the President, Senor Lombardo held that the penalties were tantamount to confiscation (forfeiture without payment) and were therefore unconstitutional.

The decision was little more than theoretical, however, and of no immediate value to the suing oil company; for in Mexico five decisions of unconstitutionally are required before a law can be declared unconstitutional.