B-144311, JAN. 30, 1962

B-144311, JAN. 30, 1962

TO SURREY, KARASIK, GOULD AND EFRON:

FURTHER REFERENCE IS MADE TO YOUR LETTER, WITH ENCLOSURE, RECEIVED OCTOBER 24, 1960, CONCERNING THE LOSS OF APPROXIMATELY $285,000 ALLEGED TO HAVE BEEN SUSTAINED BY YOUR CLIENT, LA CELLULOSE D AQUITAINE, A FRENCH CORPORATION, UNDER ITS AGREEMENT, IDENTIFIED AS CONVENTION 18-C-00, WITH THE REPUBLIC OF FRANCE.

THE RECORD SHOWS THAT, IN CONNECTION WITH THE PROPOSED CONSTRUCTION OF A PULP AND PAPER MILL BY YOUR CLIENT WITH THE SUPPORT OF THE FRENCH GOVERNMENT, THE UNITED STATES AND THE REPUBLIC OF FRANCE ENTERED INTO CONTRACT NO. DA-91-516-EUC-573, DATED JUNE 28, 1956, UNDER WHICH, IN CONSIDERATION OF THE MODIFICATION OF THE PROPOSED FACILITY TO MEET CERTAIN MUTUAL DEFENSE REQUIREMENTS, THE UNITED STATES AGREED TO PAY THE COST, NOT TO EXCEED $1,780,500, OF PRODUCTION EQUIPMENT REQUIRED BY REASON OF SUCH MODIFICATION. IT IS CONTENDED THAT, WITH RESPECT TO CERTAIN DOLLAR EXPENDITURES INCURRED BY YOUR CLIENT IN THE PURCHASE OF THIS EQUIPMENT, THE RATE OF EXCHANGE, FRENCH FRANCS FOR DOLLARS, USED BY THE FRENCH GOVERNMENT IN BILLING THE UNITED STATES AND IN REIMBURSING YOUR CLIENT RESULTED IN A WINDFALL TO THE UNITED STATES AND A CORRESPONDING LOSS TO YOUR CLIENT IN THE APPROXIMATE AMOUNT OF $285,000. WHILE APPARENTLY RECOGNIZING THAT THERE IS NO PRIVITY OF CONTRACT BETWEEN YOUR CLIENT AND THE UNITED STATES, YOU HAVE REQUESTED THAT WE REVIEW THE PROBLEM INVOLVED AND TAKE SUCH ACTION AS MAY BE NECESSARY TO RECTIFY THE CLAIMED INEQUITABLE RESULT.

WE UNDERSTAND THAT YOU HAVE NOW CONFIRMED THE INFORMATION, INFORMALLY BROUGHT TO YOUR ATTENTION BY A REPRESENTATIVE OF THIS OFFICE IN A CONFERENCE ON SEPTEMBER 25, 1961, THAT THE UNITED STATES HAS NOT, BY REASON OF THE RATE OF EXCHANGE USED IN EFFECTING SETTLEMENT OR FOR ANY OTHER REASON, BEEN THE BENEFICIARY OF ANY WINDFALL AT THE EXPENSE OF YOUR CLIENT. IN THAT CONNECTION, THE RECORDS OF THIS OFFICE SHOW THAT THE UNITED STATES HAS BEEN BILLED BY, AND HAS MADE PAYMENT TO, THE FRENCH GOVERNMENT IN DOLLARS IN THE TOTAL AMOUNT OF $1,780,500--- THE EXACT MAXIMUM AMOUNT THE UNITED STATES WAS COMMITTED TO PAY UNDER THE TERMS OF ITS CONTRACT WITH THE REPUBLIC OF FRANCE.

SINCE WE HAVE NO JURISDICTION OVER THE BASIS OF SETTLEMENT BETWEEN THE FRENCH GOVERNMENT AND YOUR CLIENT UNDER THE TERMS OF THEIR AGREEMENT, THERE IS NO FURTHER ACTION WE MAY PROPERLY TAKE IN THE MATTER.