SECTION C.-MEMORIAL ; WRITTEN DOCUMENTS
CONCERNING THE PRELIMINARY OBJECTIOX
SECTION C. - MEMOIRE; PIECES ÉCRITES
RELATIVES A L'EXCEPTION PRELIMINAIRE
1.MEMORIAL SUBMITTEI) BY THE GOVERNMENT
OF THE UNITED KINGDOM OF GREAT BRITAIN
AND NORTHERN IRELAND
TABLE OF CONTENTS
I'aragraph
Introductory ................. '-4
The double character of the Concession Convention oi 1933. 5
General obligation to observe the terrns of concessions 6-6~
granted to foreigners............. 6c
State sovereignty is not absolute but may be limited by inter-
national customary law and by obligations of a treaty or
contractual character. ...... ...... 61,
Summary of the legal çubmissions of the ~overnment of the
United Kingdorn with regard to the cancellation of the Anglo-
Iranian Oil Company's Concession ......... 7
SECTION 1
The principle of respect for vested'rights applies ta concessions
granted to foreigner............. 8-11
A concession is a vested r-.ht urotected hv international
Iaw ...................
Leaalitv of nationalization of concessions subiect to con-
bitions ............. : ....
Conclusions of Section1. ............
SECTIONII
Cancellation of the Concession Convention of 1933 in violation
of an express renunciation of the right of unilateral ter-
mination ..................
Article21 of the Concession Convention of 1933 ....
The consequences of the renunciation of the right ofunilateral
termination ................
Limitation of legislative freedom by treaty or contr.ct.
Conclusions of Section II ............ JIEMORIAL OF THE USITED I(ISGDO>I (IO s 51)
65
~ ~ ~
.a r
Cnlaw<ulness of the lranian Oil Sationalization Act of 1st May
1951 as directed exclusi\.el.vagainst a foreign national and as
not shoun to be reauired to orolect anv vital public interest I,-~-,
The lranian Oil Nationalization Act of 1st Mav I,., is
directcd escliisivcly :ig.iiri-t tlic..\nglo-Ir:ininnO.iComli:inyig
'i'hc eprol~ri;iiiori of rhe propcrty of forcigncrs is iinla!i,ful
iir~lessniihlic intt!r~si>f\.it;il inii)orrnncc, nt,c<,ssit;ttr3iicti
expropriation. .......... 20-2OA
Views of writers that expropriation is unlawful if directed
exciusiveiy against forêigiers .......... 208
A measure, ostensibly general in character, will be illegal as
directed against foreigners if in fact it operates in a
discriminatory manner . . ....... . 21
Evidence that the Iranian Oil ~ationalization Act of 1st May
1951 is directed exclusively against the Anglo-Iranian Oil
Company and is not justified on the ground of the necessity
of protecting a vital public interest. ........ 22
Nationalization as a disguise for confiscation ... 23
Absence of good faith on the part of the Iranian Govem-
ment .................. 24
Conclusions of Section III ............ 25
Confiscatory nature of the Iranian Oil Nationalization Act of
1st May 1951 ................ 26-34~
Having regard to the terms of compensation which it provides,
the lranian Oil Nationalization Act of 1st May 1951 is
essentially confiscatory, .... : ........ 26
International rules regarding compensation in case of nation-
alization. The practice of States . : ........ 27
International mles regarding compensation in case of nation-
alization. The practice of international tribunals ... 28
International mles regarding compensation in case of nation-
alization. The views of writers. ......... 29
The meaning of "prompt" compensation. ... 30
The meaning of "effective" compensation .... 30~
The provisions for compensation in the Oil Nationalization
Act of 1st May 1951 do not çatisfy the requirements of
intemational law . ............ 3'
The orovisions of the 61 Nationalization Act of 1st Mav
1~5 relative to compensation. ......... 32
Reasons why Article 3 of the Oil Nationalization Act of
1st hlav I~;I does not satisfv the reauirements of inter-
nitionai I& .... .' . ........ 33
Article 2 of the 0ii Nationalization ;\ct of 1st hlay 1951 as
~ ~in~ ~~~io~ of the maximum com~ensation which the
Iranian legislators would he pepared to allow .... 34
Conclusions of section IV ........... 34A66 WEMORIAL OF THE UYITED KINGDOM (IO x 51)
SECTIOSV
Paragriiph
The legal remedies for unlawful expropriation ...... 35-42A
Thc relief for unlawfiil expropriation distinguished from com-
Permanent Court of InternationalropJustice in theiChorzdwhe
Factory (Claim /or Iii<lemnity) (Merits) case, Series A,
Xo. 17. .................
International rules regarding relief forunlawful expropriation.35
The practice of international arbitral tribnnals. .. 36
International rules regarding relief forunlawful exprol~riation.
The views of writers ............. 37
Restitution in kincl. The practice of international tribunal.
Restitution in kind. The views of writers ... . . 39
Restitution in kind and the solvency of the defendant tat te40
Conclusion of this portion of Section V . . . 40~
Compensation to be awarded if a restitution in kind is not
awarded ; such compensation to consist of "payment of a
sum corresponding to the value which a restitution in kind
would bear" ................. 41-42
These observations on the subject of compensation have at
present only a general character . . . 42~
SECTIOSVI
The Arbitratiou Clause and the question of restitution and com-
pensation .................. 43-46
Even if the Imperial Government of Iran is entitled to
terminatc thc Convention of 1933 unilatcrally, such right
of unilateraltermination does not exteiid to~Art~cle 22 of
the Convention ............... 43
Reasons why the right of unilateral termination of the Con-
vention of1933, even if such right existed, would not extend
to Article 22 of the Convention ... ..... 44
The refusal of the Imperia1 Government oi Iran to have
recourse to arbitration constitutesa denial of justice. . 45
Conclusions of Section VI ............ 46
The direct international responsibility of the Imperial Govern-
ment of Iran, arising out of the fact that in this case there
were no local remedies to exhaust ......... 47
Final Conclusions of the Government of the United Kingdom . 48 hlE&lORIAL OF THE UNITED KISGDOlI (10 X 51)
67
lntroductory
I. This hlemorial is submitted to the Court in pursuance of
an Order of the Court dated 5th July 1951 (I.C.J. Reports 1951,
p. 100). the time specified in that Order for its delivery having
been extended at the request of the Government of the United
Kingdom to 10th October 1951, by an Order of the President of
the Court dated zziid August 1951 (I.C.J. Reports 1951, p. 106).
Also on 5th July 1951, the Court made an Order relating to interim
measures of protection (I.C.J. Reports 1951, p. 89). The United
Kingdom Government announced at the first opportunity its
attitude to the latter Order, the Secretary of State for Foreign
Affairs saying in the House of Commons on 9th July :
"The Court's findings have heen reproduced in the press and 1
do not thiiik 1 need Say more about them here, save that His
Majesty's Government acccpt them in full and have informed the
Persian Government accordingly. We are urgently considering
whomweshould nominate to the Board ofSupervisionrecommended
hy the Court, and are also ajnsidering what suggestionswe should
make regarding the fifth member of the Board, whose name is to
he agreed upon betweenthe two Governments." (Hansard, Purlia-
menlary Debates, House of Commons, Vol. 490, No. 136,colurnns
34-35, 9th July 1951.)
Up to the present time, however, the Imperial Government of
Iran l has taken no steps to comply with the measures indicated
by the Court. Annex IA to this Rlemonal contaiiis a note (dated
7th July 1951) illustrating the attempt made by the Gnited King-
dom Government, through the diplomatic channel, to obtain the
CO-operation of the Iranian Government in carrying out the terms
of the Court's Order (Appendiu No. I to Annex 1.4).It also
contains a note (dated 12th Jiily 19j1) from the Iranian Govern-
ment to His Britannic Majesty's Ambassador in Tehran explairiing
the reasons for the Iranian Government's refusa1 to comply with
the Court's Order (Appendix No. 2 to Annex IA), as well 'as a
long telegram (dated 9th July 1951) from the Iranian Minister
for Foreign Affairs to the Secretary-General of the United Nations
(Appendix No. 3 to Annex IA) which is referred to in the Iranian
note of 12th July. This telegram, which contains some ohserva-
tions by the Iranian Governnient on the subject of the Court's
Order, is referred to again in paragraph 3 below and in Annex 2
to this Memorial.
2. In an effort to settle the dispute between the Government
of the United Kingdom and the Imperial Government of Iran,
-
1 Before 1935, lrawas knonn as I'ersia. Generally speaking. in this Memorial.
the words "Persia" and "Persianareused of thepre-,935period and the words
"lran" and "Iranian" of the post-1935 period. See note at beginning of Annex 3
to this AIemorial. 68 AIEMORIAI. OF THE UNITED KIKGDOM (IO x 51)
the President of the United States despatched his Special Repre-
sentative, or. Harriman, to Tehran to discuss this dispute with
the Iranian Government. As a result of Mr. Harriman's efforts
and on the invitation of thc Imperial Government of Iran, a,
mission headed by the Right Hon. Richard Stokes, M.P., Lord
Privy Seal, \vas despatched on 4th August 1951 by the Govem-
ment of the United Kingdom to Tehran in an endeavour to settle
the dispute between the tw Governments. This mission pro-
ceeded on the understanding that negotiations were to be held
on the basis of the following formula agreed between the Govem-
ment of the United Kingdom and the Imperial Government of
Iran :
"ln the case of the British Government, on behalf of the former
Anglo-Iranian Oil Company, recognizingthe principle of national-
ization of the oil industry in Persia, the Iranian Governrnentwould
be prepared to enter into negotiations with representatives of the
British Governrnent on behalf of the former Company." (See
paragraph I of the Iranian Cabinet minute quoted at the end of
Appendix No. z to .4nnex IB of this Mernorial.)
Further, the Iranian Government had agreed to negotiate on
the basis of the law of 20th iilarch 1951' (see paragraph 3 of the
Iranian Cabinet minute referred to above), and therefore the
Government of the United Kingdom understood that the Iranian
Government would not insist on the application of the Oil Nation-
alization Act of 1st May 1951.
Following preliminary discussions with the delegation represent-
ing the Imperial Government of Iran,the Stokes Mission presented,
without prejudice to the legal rights. of any of the parties to the
dispute, proposals of which the outline is given in Appendix No. I
to Annex IB to this Memorial. The Iranian Government replied to
these proposals by issuing a statement in which it announced that
the proposals did not conform to the formula on the basis of which
negotiations with the Stokes Mission had begun (for this formula
see above) and contended that the only prohlems which could be
discussed according to this formula were :
(a) the purchase of oil meeting the United Kingdom's own
requirements ;
(b) examination of the claims of the Iranian Government and
of the Anglo-Iranian Oil Company ;
(c) the employnient of British technicians in the oil industry
in futurc.
Fnrther discussions hetween the United Kingdom and Iranian
delegations revealed no hopes of an agreement, principally because
' --
'1.e. the law which merely enunciated the principle of nationalization of the
oil industry in Ir(sceparagraph 4 of the Application instituting proceedings
of~6thMay 1951,and paragraphSz of r\nnex 3 to this hlemorial). hlEllORIAL OF THE UNITED KIKGDOlI (10 X 51) 69
(as explained in detail in the officia1 statement issued by the
Foreign Officeon 23rd .4ugust 1gj1-Appendix No. z to Aniiex IB
to this Memorial) the Iranian Government would not counten-
ance any form of operation and management control which would
satisfy the reasonable demands of the Company's British st:aff.
The Iranian Government. in fact, advanced no proposals or sugges-
tions of its ourn which involved any departure from the Oil Nation-
alization Act of 1st May 1951 (for the text of this Act see Annex C
of the Application instituting proceedings of 26th May 1951. or
Appendix No. 25 to Annex 3 to this Memorial ;see also Appendix
No. z to Annex IB to this Memorial). As a result of the failurc of
the negotiations, the Stokes Mission was withdrawn to London
on 23rd August 1951, and the United Kingdoni Government
announced that the negotiations had been suspeiided.
ZA. On 5th September Dr. Musaddiq, the Iranian Prinie Minister,
in a speech to the Iranian Senate said that, if the Government
of the United Kingdom did not return a satisfactory answer \sithin
two weeks to what he referred to as his "proposals" (which did
not involve any departure from the Oil Nationalization Act of
1st May 1g51), the residence permits of the British members of
the Anglo-Iranian Oil Company's staff in Iran would be cancelled.
As a result the Government of the United Kingdom announced
that negotiations were now broken off. (See Appendix No. I to
Annex IC of this Jfemorial.)
On 10th September, the Government of the United Kingclom
was reluctantly compelled, as a measure of protection of the
United Kingdom economy, to uithdraw the special benefits
previously accorded to Iran because oil supplies from Iran were
of assistance to the United Kingdom economy. (See also para-
graph 69 of Annex 3 of this Memorial.) In this connection His
Britannic Majesty's Ambassador in Tehran presented a note to
the Imperial Government of Iran on 11th Septeinber (a copy of
this note is given as Appendix No. z to Annex IC of this Memorial).
On 19th September, the Iranian Prime Minister caused to he
transmitted to the United Kingdom Government certain sugges-
tions concerning a settlement of the dispute which he charactenzed
as "proposals". These suggestions, which did not differ in their
essence from those which Dr. Musaddiq sent to Mr. Harrirnan
for transmission to the Government of the United Kingdom in
his letter of 12th September (the text of which is at Appendis
No. 3 to Annex IC of this Memorial) and which were rejected by
Afr. Harriman in his reply of 15th September (the text of wliich
is given as Appendix No. 4 to Annex IC of this Memorial) were
considered by the Government of the United Kingdom to con-
stitute no advance on Dr. Alusaddiq's previous attitude and to
provide no basis on which negotiations could be resumed '.
1 Itwas neceçsary to send this Memorial to the ponthis date and conse-
quently it has not been possibcoiitinuthis recital of events anyfurtlier.70 XIEhlORIAI.OF THE UNITED KINGDO31 (IO X 51)
3. The Government of the United Kingdom understands that
the, Order of 5th July for the delivery of a Memorial is an Order
for the delivery of a written plcading with regard to the.merits
of the case, and not an Order for the delivcry of observations on
the question of jurisdiction. Accordingly, this Rlemorial is directed
to the merits of the case. However, the Imperial Govemment of
Iran has iii turo cominuiiications to the Court (a telegram of
28th May and a long message datecl 29th June) and a third com-
municatioii to the Secretary-General of the United Nations dated
9th July (Appendix No. 3 to Aiinex IA to this hlemorial) contended
that the Court has no juriscliction, and the Court, in its Order
relating to thedelivery of the Rlemorial, refers to the first of these
communications and refers to the second in its Order indicating
interim measures of protection. Consequently, the Government
of the United Kingdom, being of the opinion that it may be
convenient to the Court to receive at this time the written
observations of the Government of the United Kingdom on
the question of jurisdiction in amplification of the succinct
statement giveii in the Application of 26th May, submits in Annex 2
to this Memorial its written obscrvations oii the question of
jurisdiction, in which ,account is takcn in particular of the points
made in the three above-mentioned Iranian communications.
The Government of the United Kingdom, however, requests (and
indeed has submitted the observations in Annex 2 of this Memorial
on the supposition) that, before the Court decides the question
of jurisdiction, it will give the Government of the United King-
dom a further opportuiiity to make observations on the question
of jurisdiction. In view of the fact that it has now submitted
written observations in Annex 2 of this Mernorial, the Government
of the United Kingdom will he content if this further opportunity
is limited to the making of oral observations before the Court.
4. For the convenience of the Court a statemeut of the relevant
facts up to 1st hIay 1951 (the date on which theIranianOilNation-
alization Act received the Imperial assent), in so far as these
have not already been covered by the Application filed on
26th May, is contained in Annex 3 to this Memorial. The Govern-
ment of the United Kingdom, however, considers it appropriate
at this early stage of the Mernorial, to stress some of the salient
facts contained in Annex 3 and to indicate the inferences which,
in its view, should be drawn from these facts.
j.-(a) The original Coiicession was granted to Mr. U'Arcy in
1901 and continued until the purported cancellation of
it by the Persian Government in 1932. There were from
time to time disputes between the Company and the
Persian Governnient arising out of that Concession and MEMORIAL OF THE UNITED KISCDOLI (IO x j~) 71
the operations carried on under it. It is iinnecessary
to mention them here because Article 23 of the 1933
Concession provided for a payment by the Company
"in full settlement of al1 the claims of the Govemment
of any nature in respect of the past until the date of
coming into force of the Agreement" except in regard
to Persian taxation as to mhich special provision was
made.
(6) The 1933 Concession was accepted by the Governments of
the United Kingdom and Persia as a settlement of the
dispute between the two countries arising out of the
purported cancellation of the D'Arcy Concession, wbich
had been rcferred by the United Kingdom to the Council
of the League of Nations. The negotiations which led
up to it were conducted under the supervision of a
Rapporteur appointed by the Council of the League.
and upon their conclusion the new Concession Con-
vention \vas embodied in the Rapporteur's report to
the Council, and the representatives of both Persia and
the United Kingdom at the Council expressed their
Govemment's acceptance of the report. The Concession
Convention was ratified by the Persian hfajlis and
Senate, became a Persian law and cntered into force.
No question can therefore arise as to the validity of
the Convention under Iranian law since al1the provisions
required under Iranian law were satisfied. The dispute
\vas removed from the agenda of the Council of the
League, when, but not until, the Concession had entered
into force.
(c) Particular attention should be directed to the following
Articles of the Concession Convention :
(i) Article zr, which provides that the Concession shall
not be annulled by the Government and that
the terms therein contained shall not be altered
either by general or special legislation in the
future or hy administrative measures or any
other acts whatever of the executive authorities ;
(ii) Article22, which provides that any disputes between
the parties of any nature \\,hatever shall be
referred to a tribunal presided over by an umpire
to be appointed by the President of the Permanent
Court of International Justice (uilless the parties
themselves agree on the selection of a neutral
umpire) whose award shall be based on the
juridical principles coiitained in Article 38 of
the Statutes of the Permanent Court of Intcr-
national Justice ;and72 MEMORIAL OF THE USITED KISGDOX (IO X 51)
(iii) Article 26, which provides that the Concession is
granted for a period ending on 31st Dccem-
ber 1993, and that before that date the Con-
cession can came -to an end only in the event of
surrender by the Company or if the Arbitration
Court should declare it annulled on the grouiid
of certain specified defaults by the Company.
(d) Following upon the conclusion of the 1933 Concession and
in reliance upon the provisions of it, particularly those
quoted in sub-paragraph (c) above, the Company has
invested enormous capital sums in lran and has vastly
extended and developed the installations and the
production of oil. The lranian Government has at
al1 times encouraged this development and has
accepted the payments due to it under the Con-
cession and the other benefits conferred on it by the
Concession. .&part fromthis acceptance of the benefits
of the Concession, spokesmen of the Iranian Govern-
ment have, as lately as 1949, statedthat the Iranian
Government in no way challenges the validity of the
Concession Convention of 1933.
(e) The operation of the 1933 Concession, and of its predecessor
the D'Arcy Concession, together \\sith the activities
voluntarily carried out by the Company above and
beyond its obligations under the Concessions. have
been of the greatest benefit to Iran. The Company
has created out of barren desert a plant and an organ-
ization capable of producing 35 million tons of oil
products per annum. The Iranian Government has
borne none of the risks which are inevitably associated
with such an enterprise and has provided noiie of the
capital required. None the less the Iranian Govern-
ment lias derived from the operations of the Company
an income which has been constantly increasing and
which forms a large part of the revenue of the State.
In addition, the people of Iran have been provided
with the opportunity of employment in conditions
superior. to those existing elsewhere in Iran and
amenities and services have been provided for
employees and their families such as are found no-
where else in Iran.
(f) The Iranian Government has very recently complaincd that
the Company was guilty of breaches of the Concession
Convention. The Government of the United Kingdom
does not admit that there were such breaches, but,
even if the Iranian Governrnent's complaints were
true, the Convention itself provided a remedy; namely, MEXORIAL OF THE UNITED KINGDOM (10 X 51) 73
arbitration under Article22. The Iranian Government
has never sought recourse to that remedy.
(g) From time to time and, in particular, in the years following
the second world war, the Iranian Government lias
suggested that the Concession Convention did riot
afford to ita retum in accordance uith the greatly
increased scale of the Company's operations which
had taken place since the conclusion of the second
world war. The Company has at al1times shown itself
wvilling'to meet the lranian Government and to
consider favourably a modification of the Concession
which would give to the Iranian Government the
right to an increased payment. Negotiations to this
end were conducted in 1948 and 1949. and in 1949
a Supplemental Agreement was signed by represen-
tatives of the Company and the Iranian Governnient
which would have increased considerably the sums
payable to the Iranian Government under the 1933
Concession. This Supplemental Agreement, however,
mas never ratified by the Majlis or even given a
reasonable consideration by the Rfajlis.The Company,
on the other hand, expressed its \villingness to go
even further than the terms to which it had agreed
in the Supplemental Agreement: in January 1951
the Company offered to negotiate a new agreement on
the basis of an equal sharing of the profits arising
from its operations in Iran or of any other reasonable
proposal.
(h) Despite these offers, the Iranian Government showed itsdf
unwilling to consider any reasonable accommodation
with the Company and, under the influence of violent
nationalist feelings, uphich had shown themselves in
the assassination of the Prime nlinister, fif. Ali Raz-
mara, the RIajlis proceeded in March 1gj1 to approve
the proposa1of its oilcommittee (headed by Dr. Ifusad-
diq, the present Prime Rlinister) that the oil industry
throughout the country shoiild be nationalized. This
measure was, in fact, directcd solely against the Anglo-
Iranian Oil Company which alone conducts the opera-
tions of producing oil in Iran, and it was follou~ed,
after a campaign of increasing propaganda against
the Company, by an Oil Nationalization Act which
became law on 1st May 1951 (Annex C of the Appli-
cation and Appendix Xo. 25 to Annex 3 of this
Memonal) ;and which contains provisions appointing
a Afixed Board to dispossess at once "the former
Anglo-Iranian Oil Company", provides that the entire
revenue denved frorn oil and its products is indisput-.
974 hlEhIORIAL OF THE UNITED KISGDOhI (10 X 51)
ably due to the Persian nation and makes no satis-
factory provision for compensation to the Company.
The double character of the Concession Convention of 1933
6. The circumstances in which the 1933 Concession came to be
concluded, as described in paragraph 5 (b) abovc, had thc result
of investing the Concession Convention of 1933 with a double
character. It is convenient to deal with this point at this stage
hecause it is relevant both in connection with the question of
jurisdiction (see Annex 2) and with the question of the merits
(see the subsequent paragraphs of this Mernorial). However,
iieither in the matter of jurisdiction, nor in the matter of the
merits, is the argument which the United Kingdom Government
submits on the bais of thc double character of the Concession
Convention of 1933 an indispensable part of the United Kingdom
case.
On the one hand, the Concession Convention of 1933 is the
concessionary Convention operating between the Anglo-Iranian
Company and the Iranian Government, or, in other words, a
contract between two parties. one of which is a State and the
other of which is not a Statebut a national of the United Kingdom.
On the other hand, it also embodies the substance of an implied
agreement between the Government of the United Kingdom and
the Iranian Government because there was an implied agreement
between these two Governments (fully operative as creating an
obligation in international law) to the effect that the Iranian Gov-
ernment undertook to observe the provisions of its concessionary
Convention with the Company '. This contention of the United
Kingdom rests on two grounds, namely :
(a) There had been an international dispute between the two
Governments, arising from the fact that the Government of-the
United Kingdom, in the exercise of its right of diplomatic
protection of its nationals, had taken up the case of the Anglo-
Persian Oil Company when Persia purported to cancel the D'Arcy
Concession of 1901, the Government of the United Kingdom
alleging that this purported cancellation was an act contrary to
international law. This dispute was settled by the conclusion of
prevent it from having the charÿcter of a contract or treaty also. See, for instance,
the judgment of the PermaneiitCourt of International Justicin thecase of the
Inlcrpratoliof thSfaluleof~WernelTevritovy(Series A/B, N40).where Lithuania
argued that this Statwas not binding qnher as it was a Lithuanian law. However.
the Court sai: "The contention of the Four Po\i.erîon the other hand. is that
while for interna1 purposes the Statute may perhabe considered as forming part
of the law of the Republic, it is for the Couraly a Port ofn lrcaly."(1.e. the
I'ariç Conventionof1924. to which the Statute was an Annex...TheCourt feels
no doubt that...the Statute of Memel inust be regarded as a conventiarrange-
ment binding upon Lithuania,and that it must be interpretas such (p.300). MEMORIAL OF THE UNITED KINGDOhl (IO X 51) 75
the new Concession Convention of 1933, and both Governments
accepted this new Convention as settling that international dispute.
The Government of the United Kingdom coiitends that, when
there has been an international dispute between two Governments
which is settled on certain terms, there arises zrnder international
Lawan obligatioizbinding the Iwo Gouernmentsto observethe ternzs
of settlementand this obligation arises, even though the settlement
takes the form of a concessionary contract between a State and
a private Company; in consequence, the obligation binding the
two Governments to observe the terms of the settlement invests
the concessionary contract in such a case with a double character
as being
(i) an agreemènt (possibly of a private law character) between
the Government and the Company ; and
(ii) the embodiment of the-terms of the settlement which the
two Governments have agreed to accept and observe.
In the submission of the Government of the United Kingdom,
support for this contention is to be found in the Order of the
Permanent Court of International Justice of 6th Decembcr 1030,
relating to the case of the Fvee Zones of Upper Savoy and the
District of Gex (Second Phase), Series A, No. 24,in which the
Court held binding on Sardinia (and on France as successor in
title) the act of the King of Sardinia (embodied in a directiori to
Sardinian customs authorities) in withdrawing the Sardinian
customs line a certain distance from the Swiss Canton of Valais,
this action having been taken following a demand by the Canton
which claimed that Sardinia was bound to take this step as the
result of a treaty obligation. Sardinia, without admitting the
correctness of the Canton's interpretation of the treaty in question,
took this action in order to settle an international dispute, and
the action did settle it. The Court held that, thenceforth, Sardinia
\vas bound to maintain the withdra\\-al of the customs line as,
in the circumstances, the act which settled the dispute acquired
"the characterof a treaty stipulation" (caractèreconventionnel).The
relevant passage in the Court's Order reads as follows :
"Whereas, by the terms of Article 3 of the Treaty of Turin of
16th March 1816, the line of the Sardinian customs was to pass ....
'alongthe lake to Meillerie,to join up with and continue dong the
expressions employed tin the Treaty, being wanting in precision,e
gave rise to claims on the part of the Canton of Valais ;as this
Canton, invoking the provisions of Article 3 of the said Tre;tty,
demanded that the customs post established in the villageof Saint-
Gingolph should be suppressed, and tliat the customs line should
be withdrawn from this part of the frontier so as to constitute on
thisside a new zone comprisingthe territory of the said commune ;
as it was after this claim that His Majesty the King of Sardinia,
though of opinion that this claim did not appear to him to be76 hlE>IORIAL OF THE USITED KlSGDO~l (IO X 51)
well founded exactly in law, stated that he was willing to assent to
it;as this assent given by His htajesty the King of Sardinia, with-
out any reservation, terminated an international dispute relating
effect of the hfanifesto of the RoyalSardinian Court of Accounts,the
publislied in execution of the sovereign's orders, laid down in a
manncr binding upon the Kingdom of Sardiriia. what the law was
to be betweeii the Parties; as the agreement thus interpreted by
the Manifesto confers ori the creation of the zone of Saint-Gingolph
thecharacterof a treaty stipulationwhich France is bound to respect,
as shehas succeeded Sardinia in thesovereignty over that territory"
(P. '7).
Further, the Advisory Opinion in the case concerning Access to
Ger~naiz~IIirzoritySchools in Upper Silesia (Series A/B, Ko. 40)
seems to be authority for the proposition contended for in this
sub-paragraph, and also for the proposition contended for in
sub-paragraph (b) below, as the follo\ving passage shows :
"Homever, without going into the question whether the arrange-
ment adopted by the Council's Resolution of 12th March 1927
was solely an agreement in the nature of a compromise between the
two Goverriments concerned duly accepted by the Council, or
whether the assent of the respective Goverriments resulted from
their participation in the unanimous vote of the Couucil, so that
the cliaracter of the Resolution as a Council resolution was not
affected, itsuffices to note that the arrangement was accepted by
both sides. It was regiilarly adopted by the Council, no matter
whetlier that body intended to act nnder Article 149of the Con-
vention. or in virtue of the aeneral powers conferred on it bv the
~ovenant. It is not disputes that the arrangement, as accépted,
was valid and binding for both countries" (p. 16).
(b) The dispute between the two Governments had been brought
before the Council of the League. The dispute was removed from
the agenda of the Couiicil of the League when, but not until, the
Concession Convention entered into force on its ratification by
the Persian Parliament and its promulgation by His Imperia1
Alajesty the Shah. To the removal of the item from the Council's
agenda on this footing both the turo disputing Governments and
the Council of the League agreedl, and it is important to stress
that, when the Coiiiicil of the League was seised of a matter as a
dispute between two Governments, it was not obliged to remove
the matter from its agenda merely because the two disputing
Governments desired it. The Council of the League in dealing
with disputes had, like a court, a certain responsibility of its
own, independent of the of the contesting parties even if
the parties were in agreement. In the circumstances, the removal
of the histary of the proceedings before the League of Nofthe negotiationiption
of the Concession Convention of 1933. >IE>IORIAL OF THE UNITED KIKGDOAI (10 X 51) 77
of the matter from the agenda of the Council was the equivalent
of a resolution of the Council of the League accepted by both
contesting parties (the United Kingdom and Persia) that the
dispute should be settled by the putting into force and the
observance of the Concession Convention of 1933. There is clearly
authority for the view that a resolzitionof the Coz~ncilof the Leagne
of Nations acceptedby the contesting parties createsan international
obligation /or these contesting parties to observethe resolzition.
Support for this view is to be fouud inter alia in the case of
the Railway Trafic between Lithz~ania and Polaizd (Series A/B,
No. 42). The Council of the League of Nations had adopted a
Resolution on 10th December 1927, in which it had recommended
"the two Governments to enter into direct negotiations as soon
as possible....". The Permanent Court of International Justice
gave the following opinion : "The representatives of Lithuania
and of Poland participated in the adoption of this Kesolution
by the Council. The two Governments concerned being bouizclby
their acceptanceof the Coz~ncil'sresolzition,the Court must examine
the scope of this engagement" (p. 116).
The same principle also clearly follows from the Advisory
Opinion in the case of the Jaworzina Uonndary (Series B, No. 8),
although that case related to a recommendation not of the Council
of the League of Nations but of the Conference of Ambassaclors.
6~. Of the two reasons given in sub-paragraphs (a) and (b)
of paragraph 6 above the Govemment of the United Kingdom
contends that Iran was and is under an international obligation
to the United Kingdom to observe the Concession Convention
of 1933. It is an international obligation of a contractual character
and therefore may be described as an implied treaty or convention
betureen t\vo States concernecl.
6~. It is well known that an obligation of a treaty or contractual
character can arise under international law between two States
without there being any signed or ratified instrument. It can
arise from conduct. For this proposition, that part of the decision
of the Permanent Court of International Justice in the case
concerning thc Legal Status O/ Eastern Greenland (Series A/B,
No. 53)) relating to what was referred to there asthe Ihlen Decla-
ration, is sufficient authority, although much more authority
to the same effect could be cited l.In that case a question arose
-
For instance, Hall (InfcrnafiLaw. 8th edition~gzq,sectio109).writes:
"Usage has not prescribed any necessary form of international contract.
A valid agreement is therefore concluded so soaone party has sigiiificd
his intention to dor to refrain from a gives act, conditionally "pan the
acceptance of his declaration of intention by the other party asconstituting
an engagement. and sosoon as suchacceptance is clearly indicated. Between
the binding forces of contracts which barely fullil these requirements. aiid of
those which are couched in solemn fore. there is no difference. From the mo-
may be shown.satreaty exists of which the ohllgaforce ieomplete."er means it78 ~IEIIORIAL OF THE USITED KISGDOM (IOx 51)
concerning the effect of the so-called Ihlen Declaration. In a
conversation (which was recorded in a minute) bet\ireen the Nor-
wegian Foreign Minister, RI. Ihlen, and the Danish Minister at
Christiania, the latter had said that Denmark had no special
interests at stake in Spitzbergen and would raise no objection
to Norway's claims to that archipelago. The Danish hlinister
had further refcrred to the efforts being made by Denmark to
obtain the recognition of al1 the interested Powers of Denmark's
sovereignty over the whole of Greenland, and in particular to
a declaration by the Government of the United States that that
Government woiild not oppose the extension of Danish political
and economic interests over al1 Greenland. 1\I l.len replied eight
days later (and the reply was likewise recorded in a minute) :
"To-day 1 informed the Danish RIinister that the Xonvegian
Govemment would not make any difficulties in the settlement
of this question." Xonvay contended that the Ihlen declaration
was merely a provisional indication of intention, but Denmark
argued that it \vas a definitive undertaking. The Court, however,
considered it "bcyond al1dispute that a reply of this nature given
by the Minister for Foreign Affairs on behalf of his Government
in responsc to a request by the diplomatic representative of a
foreign Power, in regard to a question falling within his province,
is binding upon thc country to which the Minister belongs" (p. 71).
Jndge Anzilotti in his Dissenting Opinion said : "In my opinion,
it must be recognized that the constant and general practice of
States has been to invest the hlinister for Foreign Affairs-the
direct agent of the chief of the State-with authority to make
statements on current affairs to foreign diplomatic representatives,
and in particular to inform them as to the attitude which the
Govemment in whose name he speaks, will adopt in a given
question. 1)eclarations of this kind are binding upon the State.
As regards the question whether Norwegian constitutional law
authorized the Minister for Foreign Affairs to make a declaration,
that is a point which, in my opinion, does not concern the Danish
Government : it was M. Ihlen's duty to refrain from giving his
reply until he had obtained any assent that might be requisite
under the Norwegian laws" (pp. gr-gz).
General obligation to observe the terms ofconcessions granted to
foreigners
6c. In addition to the obligation towards the concessionnaire,
whicli may be primarily or exclusively a private law obligation,
there is, the Government of the United Kingdom submits, always
$rima facie an intcrnational obligation upon a State to observe
the terms of a concession granted to a foreigner-an obligation
towards the State of which the latter is a national-and the inter-
national responsibility of the grantor Statc is engaged, if there
is a brcach of this obligation and if municipal remedies have been80 JIE~IORIAL OF THE UNITED KIKGDOIL (IO x 51)
State sovereignty is not absolute but may be limited by international
customary law and by obligations of a treaty or contractual
character
6~. Since the Imperia1 Government of Iran has in its message
to the Court of 29th June 1951 (considered in the Court's Order
of 5th July 19j1 indicating Interim Measures of Protection) laïd
such emphasis on sovereignty, the United Kingdom Government,
though admitting that it is almost otiose to do so, ventures to
refer briefly at this stage to the following authorities, which al1
exemplify the elementary point that the sovereignty of a State
is not absolute, but is limited both by international customary
law and by obligations of a treaty or contractual character entered
irito by that State:
(a) Advisory Opinion conceming the Treatment of Polish
Nationals in Danzig (Series A/B, No. 44, p. 24) : "a
State cannot adduce as against another State its own
Constitution with a view to evading obligations incumbent
upon it under international law or treaties in force".
(b) Case conceming Certain GermanInterests in Polish Upper
Silesia (Merits) (SeriesA, No. 7, p. 19) : "from the stand-
point of international law and of the Court which is its
organ, municipal laws are merely facts which express the
will and constitute the activities of States, in the same
manner as do legal decisions or administrative measures".
(c) Case of the Free Zones of Ufiper Savoy and the District
of Gex (Series A/B, No. 46, p. 167) : ".... it is certain
that France cannot rely on her own legislation to limit
the scope of her international obligations....".
(d) Case of the Exchange of Greek and Tzwkish Popzblations
(Series B, No. IO, p. 20) : "....a principle which is self-
evident, according to which a State which has contracted
valid international obligations is bound to make in its
legidation such modifications as may be necessary to
ensure the fufilment of the obligations undertaken". (And
a fortiori to refrain from making such modifications as
would conflict with such obligations.)
(e) Case of the Interpretation of the Convention between Greece
and Bulgaria resfiecting reciprocal emigration, signed ut
Neuilly-sur-Seine on 27th November 19x9 (Series B,
No. 17, p. 32) : "it is a generally accepted principle of
international law that in the relations between Powers
who are contracting parties to a treaty, the provisions of
municipal law cannot prevail over those of the treaty".
(1) The Wimbledon case (Senes A, No. 1,p. 25) :"No doubt any
convention creating an obligation of this kind places a res-
triction upon the exercise of the sovereign rights of the
State, in the sense that it requires them to be exercised in a JIEJIORIAL OF THE UNITED KISGDOII (IO x 51) 8r
certain way. But the nght of entering into internationa1
engagements is an attnbute of State sovereignty."
Summary of the legal submissions of the Government of the
United Kingdom with regard to the cancellation of the Anglo-
Iranian Oil Company's Concession
7. The remainder of this RIemorial (except the coiiclusions in
paragraph 48 below) is directed to substantiating seven submis-
sions. It is convenient to preface the exposition by a sumniary
of these submissions. A section of the Memorial is de\roted to
establishing each submission in tum.
(1) JVhile a State possesses the right to nationalize and, gener-
ally, to expropriate property belonging to foreigners in its territory,
it is entitled to do so only subject to conditions laid down by
international law. Such property includes concessions graiited
by a State to foreign nationals. The nationalization (or expro-
priation) of concessions, as of other property rights, is governed
by the general principle of international law obliging the State
to respect the property and other vested rights of foreigners (para-
graphs 8 to II below relate to this submission).
(2) The termination or cancellation for the purpose of national-
ization-or generally any expropriaton-of a concession graiited
to a foreign national is unlawful, if the State granting the conces-
sion has expressly undertaken, either in a contractual engagement
with the State to which the foreign national belongs or in the
particular concessionary contract, not to terminate it unilaterally.
The concession of the Anglo-lranian Oil Company contains such
an express undertaking, and there was also, as explained in para-
graphs 6-6~ above, a contractual engagement between the
Iranian Govemment and the Govemment of the United Kingdom
that the provisions of the concessiou should be observed. The
unilateral termination (or cancellation) of the concession by the
Iranian Government is unlawful for this reason (paragraphs 12
to 18 below relate to this submission).
(3)-4 measure of expropriation or nationalization, even if not
unlawful on any other grouiid, becomes unlawful under inter-
national law, if in effect it is exclusively or primarily directed
against foreigners as such, and it cannot be shown that, but for
the measure of expropriation or nationalization, public interests
of vital importance would suffer. The mere fact that the State .
does not obtain as much financial profit from the concession as it
expected, or as it considers it should obtain, is not such a vital
interest. The action of the Iranian Government under the Oil
Xationalization Act of 1st May 195%is exclusively directecl against
a single foreign Company, the Anglo-Iranian OilCompany, Limited,
and is not justifiable on the ground that it is required for the pro-
tection of any vital public interest. Consequently, it is unlawful82 MEIORIAL OF THE UNITED KINGDOM (IO x 51)
for this further reason (paragraphs 19 to 25 below relate to this
submission).
(4) Even in cases where the nationalization of the property of
foreigners, including concessions granted to them, is not unlatvful
on any other ground, the taking of the property becomes an nn-
lawful confiscation unless provision is made for compensation
which is adequate, prompt and effective. The provisions of the
Oil Nationalization Act of 1st May 1951 with regard to compen-
sation, do not satisfy the requirements of international law with
regard to compensation. The compensation provided for in that
Act is neither adequate nor prompt nor effective (paragraphs 26
to 34 below relate to this submission).
(j) IVhere the nationalization is unlawful, the relief to be granted
is governed hy the principles formulated hy the Permanent Court
of International Justice in the ChorzdwFactory(Claim for Indem-
nity-Merits) case (Series A, No. 17). According to these principles,
the primary remedy is restitution in kind (or, where such restitution
is impracticahle, the payment of pecuniary compensation, instead
of restitution, consisting of a sum "corresponding to the value
which a restitution in kind would bear"), together with pecuniary
damages for loss sustained which would not be covered by resti-
tution in kind (or by payment in place of it). Since, for the reasons
given in (2)to (4) above, the action taken by the Iranian Gorern-
ment against the Anglo-Iranian Oil Company is unlawful, there
should he full restitution of its concessionary rights to the Com-
pany (or, in the alternative, if restitution is not granted, pecuniary
compensation should be paid of an amount corresponding to the
value \\.hich the restored concession would bear) together \\<th
pecuniary damages for al1loss, occasioned by theacts of the Iranian
Government hetween 1st May 1951 and the date of the restitution
or of the payment of pecuniary compensation in lieu thereof (para-
graphs 3j to 42 below relate to this submission).
(6) If it is otherwise lawful to nationalize the enterprise, bvhich
is covered by a contract of concession with a foreigner, and if that
contract contains a provision for arbitration, the amount of com-
pensation due must be decided by the Arbitration Court provided
for in the concession. The Iranian Oil A'ationalization Act of 1st
May IgjI provided for the determination of the compensation by
the Iranian Parliament and wrongfully excluded the Arhitration
Court provided for in the concession (paragraphs 43 to 46 relate
to this submission).
(7) A measure of confiscation or natioiializatioii of a concessioii,
which is contrary to international law, engages directly the inter-
national responsibility of the State, if it is the result of legislation
or other action admitting of no recourse against the measure to
local courts or the tribunals provided for in the concession agree-
ment. In addition, the international responsibility of the State is
directly engaged on the further ground of denial of justice, if such &lEhIORIAL OF THE UNITED KINGDObl (10 ':51) s3
a measure is put into force on the pretext of alleged defaults on the
part of the concessionnaire and if the correctness of such allegations
is not provcd, and the right to cancel the concession by reason
thereof is not established, to the satisfaction of the appropriate
judicial tribunal (in particular, to the satisfaction of the judicial
tribunal providcd for in the concession, if one is so specified). In
the prcsent case the international responsibility of Iran is directly
engaged because :
(a) the nationalization was nnlawful for the rcasons given in
(2)) (3) and (4) above ;
(b) the Iranian laws of 20th filarch and 1st May 1951 admitted
of no recourse against the operation of these lams, either
to the local courts or to the Arbitration Court provided
for in the concession ; and
(c) allegations of default or miscondnct by the Company were
advanced as some of the reasons for its expropriation
and the truth of these allegations was not proved, and the
right to cancel the concession was not established, to t.he
satisfaction of the Arbitration Court provided for in the
conccssion or indeed even submitted to that or any otlier
court (paragraph 47 below relates to this submission).
[While a State possesses the right to nationalize and, generally,
to expropriate property belonging to foreigners in its temtory, it
is entitled to do so only subject to conditions laid down by inter-
national law. Such property includes concessions granted by a
State to foreign nationals. The nationalization (or expropriation)
of concessio~is,as of other property rights, is gciverned by the
general pnnciple of international law obliging the State to respect
the property and other vested rights of foreigners.]
The principle of respect for vested rights applies to concessions
granted to foreigners
A concession is a vested riglzt firotected by itzternatio~zallaw
8. The Government of the United Kingdom does not consider
it necessary to elaborate the proposition that rights acquired by
foreign nationals by virtue of concessionary contracts are property
rights and that as such they are entitled to the samc protection
as international law grants to the property rights of foreigners.
This proposition is generally recognized and, to the knowledge of
the Government of the United Kingdom, has never been seriously
challenged. Concessions, says a modem authority, are "acqnired
rights" (droits acqz~is)(Professor Verdross in Recueil des Cours de84 )IE\lORIAL OF THE UXITED KINGDOM (IO X 51)
l'Académiede Droit international, 37 (1931) (iii), p. 364) '.In the
compromis and in the Award of the Delagoa Bay Arbitration of
1981-an arbitration concerned with the cancellation of a conces-
sion (see footnote z on p. 113 be1ow)-the concession was treated
as an acquired right. The compromis instmcted the Tribunal to
fix "le montant de la compensation due par le Gouvernement
portugais aux ayants droit". In the Oscar Chiitn case the Permanent
Court of International Justice seemed to have no doubt that a
concession created a vested right. The main question, to \\.hich
it gave a negative answer, mas whether the particular privileges
claimed on behalf of Rlr. Chinn mere "aiiything in the nature of a
genuine vested right" (Scries A/B, No. 63, p. 88). As stated in a
frequently quoted passage from the judgment of Chief Justice
Marshall in Sozdavd v. United States (4 Peters, 511) : "The term
'property' as applied to lands, comprehends every species of title,
inchoate or complete. It is supposed to embrace those rights which
lie in contract ;those which are executory, as well as those which
are executed."
Concessionsand State successio~z
g. The extent of the recognition of concessionary rights as
"vested" or "acquired" rights is illustrated by the fact that, with
slight exceptions, international practice in the matter of State
succession has treated them as coming within the mle that acquired
private rights must be respected by the successor State. By way
of example, reference may be made to the award given in 1929 in
the Sopron Koszeg Local Railway Company case, where the Tri-
bunal said :
"In principle, the rights which a private Companyderives from
a deed of concessioncannot be nullifiedor affected by the mere fact
of a change in the nationaiit of the territory on which the public
service conceded is operatedi; .... most authorities and the inter-
national judgments which conform most nearly to modern views
of international law take this view ...The contract clauses under
which the Sopron-Koszeg Railway Company was working before
the war can be pronounced neither wholly invaiidated by the
change of sovereignty affecting the territories on which its under-
taking is situated, nor indeed wholly valid and enforceahleaccord-
ing to their drafting and tenor up to the expiration of the con-
cession ;...the arbitrators appointed by the Councilof the League
of Nations are called upon ...to make such changesin the position
' See also to the svme effect Gidel, Des efdetL'annexion sur les concessions
(1904). pp."5, 118; Kaeckenbeeck in British Year Book O/Infevnatiaal Law,
17 (1936), p.ro;Scelle, PrPcis dc droit des gens, II (19120, who points out
author of the most recent workion concessions in relation to State succession,
says: "The protection of concessionary rights has its roots in the protection of
acquired rights of private persons" (IVirtscha/fskonxasbs ei oAnerung der
Stnntshoheit (1948). p. 92). I\IEMORIAL OF THE UNITED KINGD0Iv.I (10 X 51) 8.5
under the contracts as are rendered necessary by the events of the
1st fifteen years, which could not be anticipated in the joint inten-
tions of the Parties when the concession was granted ....(Annual
Digest and Refiorts of Public International Law Cases1 ,929-1930,
Case No. 34.)
If that is the position as between the successor State and its
predecessor, then a fovtiori the priiiciple of respect for acqiiired
rights in the matter of concessions must be regarded as binding
upon the government or governments of the State granting them
when there has been no change of sovereignty over the territory
where the concession operates.
Legality of natioitalization of corzcessionssz~bjectta conditions
IO. The Government of the United Kingdom does not dissent
frorn the proposition that a State is entitled to nationaie and,
generally, to expropriate concessions granted to foreigners to the
same extent as other property owned by foreigners. The exercise
of that right. with regard to concessions and other property rights,
is, however, subject to limitations clearly established by inter-
national practice and resting on \\~ell-recognizedprinciples of inter-
national law. These limitations include, in particular, the principle
that a State is not entitled to nationalize a concession if, by an
international contractual obligation towards the government of the
State of which the concessionnaire is a national or by a provision
in the contract of concession, it has expressly divested itself of the
right to do so (vide Section II) ; the rule that the nationalization
must be genuinely for vital interests and not discriminatory against
aliens or exclusively or primarily directed against them (vide
Section III) ;the requirement that nationalization, if not unlawful
in principle, must be accompanied by compensation in accordaiice
with international law (vide Section IV) ; and the requirement
that, if a ground for the nationalization is alleged defaults on the
part of the coi~cessionnaire, the truth of the allegations of default
must be proved to the satisfaction of the appropriate judicial
tribunal (in particular to the satisfaction of the judicial tribunal
provided for in the concession, ifoneissospecified (videSection VII)).
Conclusions O/ Section I
II. The conclusions of this section of the Memorial are that a
concession granted to a foreigner is a "vested", "acquired, right
protected by international la~v; that, while international law
does not prohibit the nationalization or expropriation of a vested
right, the lawfulness of such measures is conditioned by their
compliance with the limitations imposed by international law. It
is now proposed to consider the limitations which international
law imposed upon the right of the State to nationalize concessions
and the disregard of which renders nationalization unlawful.86 hlEll1ORIAL OF THE UXITED KINGDOJl (10 X 51)
SECTIONII
[The termination or cancellation for the purpose of nationali-
zation-or generally any expropriation-of a concession granted
to a foreign national is iinlawful, if the State graiiting the concession
has expressly undertaken, either in a contractual engagement with
the Stateto which the foreign national belongs or in the particular
concessionary contract, not to terminate it unilaterally. The conces-
contains such an express
sion of the Anglo-Iranian Oil Company
undertaking and there was also, as explained in paragraphs 6-6~
above, a contractual engagement between the Iraniau Govern-
ment and the Government of the United Kingdom that the pro-
visions of the concession should be observed. The unilateral ter-
mination (or canceilation) of the concession by the Iranian
Government is unlawful for this reason.]
cancellation of the Concession Convention of 1933 in violation
of an express renunciation of the right of unilateral termination
Article 21 of the Concession Conuention of 1933
12. It is contended by the Governmeiit of the United Kingdom
that, whatever may be the legal position-in other respects-with
regard to the right of a State to nationalize a concession granted
by it, in the present case the unilateral cancellation of theconcession
Convention of 1933 amounts to a breach of international law
inasmuch as it deprives the Anglo-Iranian Oil Company of a vested
right in violation of an explicit undertaking of themperia1 Iranian
Government contained in the concession itself, and also in violation
of a contractual obligation to the Government of the United King-
dom, that the provisions of the concession should be observed '.
Article 21 of the Convention lays down that the "Concession shall
not be annulled by the Government and the terms therein con-
tained shall not be altered either by general or special legislation
in the future, or by administrative measures or any other acts
whatever of the execntive anthorities". That Article of the Con-
vention was inserted with the specific object of making it legally
impossible for the Government of Iran to put an end to the
concession by some such measure of nationalizatioii. Contrasted
with the previous concession, which it replaced, it was a new
provision calculated to remove, once and for all, the danger of
coiitingencies such as gave rise to the situation which brought
about an international crisis in 1932 and which caused the dispute
between the United Kingdom and Persia to be brought before the
League of Nations. -4 companson of the terms of the two Conces-
For detailof this contractual obligation to the Governmcnt of the United
Kingdom, seeparagraph -68 abave. ME31ORIAL OF THE UNITED KINGDO>I (10 X 51)
S7
sions illustrates this point. The D'Arcy Concession of 1901 merely
provided that it \vas granted for a duration of 60 years from May
1901. It was an ordinary grant of a concession for a term of years
and the events of 1932 demonstrated the view which the Persian
Govemment took of the sanctity of such a grant. The negotiations
in 1933 for a new concession were conducted under the shadow of
the recent action of the Persian Government in pnrporting to cancel
unilaterally the D'Arcy Concession.It was the view of the Company
and of the Government of the United Kingdom at that time that
the operations of the Company and the investment of enormous
sums of capital in installations in Persia could only be securely
based upon a concession containing a guarantee against prema-
ture cancellation. Article 21 was such a giiarantee, coupled as it
was with Article 26, which provides that the concession is grarited
to the Company for a period ending on 31st December 1993, and
that before that date the concession can come to an end only in
the event of surrender by the Company or of default by the Company
in two particular specified respects. Article 26 expressly provided
that the annulment of the concession as the resnlt of such default
can take place only as the result of a declaration of the Arbitration
Court. This Arbitration Court is provided for in Article 22 of the
Concession, and a neutral umpire has to concur in any decision of
the Court.
The consequences of the renunciationof the right of unilateral termi-
nation
13. There is, in the submission of the Govemment of the United
Kingdom, a fundamental differencebetween an ordinary concessio~i,
even if granted for a term of years, and a concession in which the
State has expressly divested itself of the right to exercise the
power of terminating it by unilateral sovereign action, whatever
the ground for such action. It is arguable that normally a foreign
national \\,ho obtains a concession from a govemment must realize
that the vested right thus acquired is subject to the contingency
of its being terminated by the exercise of the grantor State's
sovereign powers of legislation and administration, on paynient
of compensation as prescribed by international law and provicled
that none of the other rules of international law limiting the
exercise of this sovereign right are infringed. However, the position
is quite different', as a matter of law and good faith, if the foreign
coinpany or national expressly stipulates in the contracl-a
stipulation formally accepted by the other contracting party-
'
' In stating above the special circumstanceç ivhich take the Anglo-iranian
concessionout of what may be the normal rule that a concessifor aterm of
years may be lawfully terminated by nationalization in return for adequate com-
circumstances which may take a concession granted to foreigners out of the normal
mle. There may be other special cùcumstances which have that effect.86 BlE31ORIAL OF THE UXITED KISGDO>I (10X 51)
that the concession shall be immune from termination by legislative
or other governmental action. It is on the strength of such express
and forma1 stipulation that the concessionnaire undertakes the
risks and burdens of what may become a prodigious investment.
He may have so stipulated because he thinks that no ordinary
compensation, such as normally accompanies nationalization, can
ineet his case. As is pointed out in -4nnex 3 to this RIemorial
(paragraph 47). this is exactly the position with regard to the
investments and the interests of the Anglo-Iranian Oil Company
in Iran. If a govemment attempts, in relation to a concession of
that nature, to proceed to nationalization, it becomes guilty of
a breach of contract in relation to a matter, \vhich the parties
I)y an explicit provision removed from the orbit of any possible
controversy and against which they provided what they intended
to be an absolute safeguard. The question whether in any particular
case a cancellation, for the purposes of nationalization, of a con-
cession granted for a fixed term of years involves a breach of
international law may be a matter of dispute, but there is, in
the submission of the Govemment of the United Kingdom, no
room at al1for controversy in relation to a case in which the State
in question has expressly renounced such power of legislative
action.
14. Reference may be made here to the possible contention
(ahich in the view of the Government of the United Kingdom is
quite untenable) that the distinction which the Government of
the United Kingdom is seeking to establish between thesc two
instances of unilateral cancellation of concessions, i.e. between
the unilateral cancellation of a concession containing a clause in
which the grantor State has expressly divested itself of the right
of unilateral' termination and the unilateral cancellation of a
concession containing no such clause, is only a matter of degree.
According to that contention, there appears in both cases to have
taken place a breach of contract and there is, therefore, no
difference in kind betweeii a breach of contract silitpliciter and
a breach of contract nrhere one of the parties expressly bound
itself not to break it. Consequently, it might be said, the under-
taking of one of the parties to a contract not to break it is
essentially redundant and without effect, seeing that, in the last
resort, in every contract there is an implied undertaking against
breaking it. However, in the submission of the Government of the
United Kingdom, the difforence between the nationalization of a
concession containing an express clause forbidding such action
and the nationalization of a concession having no such clause,
far from being a matter of degree, is a difference of a most sub-
stantial and decisive character in the realm of international law,
whatever may be the position in municipal law. According to
a view which is widely accepted and which the Govemment of
the United Kingdom does iiot challenge in the present proceedings, hlE>l0RiAL OF THE UXITED KINGDOAI (IO X 51) 89
the cancellation of a concession for the purpose of nationalization
effected in accordance with international law-although $rima
facie constituting a hreach of the contract in municipal law-is
not necessarily unlawful under international law if certain con-
ditions are fulfilled. Indeed, ordinary concessionary contracts
with governments are normally lawfully determinable in that
way, i.e. by lawful nationalization. An explicit undertaking not
to terminate a concessionary convention unilaterally is directed
to this very situation, namely, that the contract is normally
subject to lawful nationalization, and the undertaking is plainly
intended to produce a situation' other than that which- ~vould
exist if it were not inserted. It has the effect of rendering cancel-
lation of the contract illegal in al1 circumstances, including those
in which, apart from the explicit undertaking, cancellation would
be legal. The Iranian Govemment can scarcely contend that the
clause containing the explicit undertaking is redundant and
meaningless, for, to its knowledge, it \vas a material consideration
inducing the Company to enter into the Concession Convention
of 1933, and if the clause is redundant and meaningless it would
certainly have been inconsistent with good faith for the Persian
Govemment to agree to its insertion and to perniit such reliance
npon it. Indeed, it may well he said that the Iranian Govemment
is nolv in any event precluded from so contending, since it stood
by and matched the Company invest large sums of money in Iran
knowing that the Company were reljing on the undertaking against
cancellation. The same proposition may be put in a different
manner. In the case of a concession containing no clause in which
the grantor State has expressly divested itself of the right of
unilateral termination, there may even be an imfilied term that
the concession may be terminated by lawful nationalization. In
the other case, however, such as the present one, where there is
an express term that the concession shall not be so terminated,
there is clearly no room for the implied term as stated ahove:
expressz~mfacit cessare tacitztm.
Limitation of legislative freedom by treaty or contract
15. There is no \\,axant, in the submission of the Govemment
of the United Kingdom, for the view that a specific undertaking
given by a State not to exercise its legislative power for the
purpose of the unilateral termination of a contract is a meaningless
formula for the alleged reason that a State cannot fetterits future
legislative action. States certainly assume some such obligation
in the treaties which they conclude. As a matter of international
law, most treaties concluded by the State-whether relating to
the treatment of foreigners or otherwise-restrict $70 tanto the
IO hIEhlORIAL OF THE UNITED KISGDOhl (10 X 51)
9"
legislative freedom of the contracting parties1. The position is
the same with regard to contracts made with foreign nationals
in which there is ari express clause limiting the legislative freedom
of the State. Municipal courts may be under a duty to give effect
to legislation violative of the provisions of contracts made with
aforeigner, even if the violation is contrary to international law,
but that circumstance in no way affects the rule that such legis-
lation is internationally unlawful and that it engagei the inter-
national responsibility of the State. The right of expropriation
for the purpose of nationalization or othenvise is admittedly an
important nght of sovereignty. Yet it does not follow that a
State cannot for a defined penod part with the exercise of that
right in respect of any specific property or category of property
or in relation to any class of persons. Thus, there is no doubt
that State A may in a treaty concluded with State B bind itself
not to nationalize in any circumstances the property in general
of the nationals of State B or any particular property, right or
concession belonging to the nationals of State B. It may, indeed,
have good reason for doing so in order to induce the concession-
naire to undertake tremendous investments, the full benefit of
which cannot accrue prior to the completion of the concession.
To give another example, the right to regulate immigration and
the right to impose tariffs are important prerogatives of sover-
eignty. But a State may validly and with binding effect agree
to a limitation or renunciation of these rights. The Government
of the United Kingdom contends that, with regard to nationali-
zation or any other legislative measure affecting the property of
foreigners, it is irrelevant that the limitation of the legislative
freedom of the State-such as is most clearly expressed in Arti-
cle 21 of the 1933 Concession Convention-is provided not in
a treaty proper but in a contract with a foreign national 3.For,
although the contract in question may in the first instance be
governed by the law of that State-it need not necessarily be
so and in fact the Convention of 1933 was not so '-ils fufilment
' It is the contention of the Governmenofthe United Kingdom that there was
(for the reasonsgiven in paragraphç 6.6~ above) an implied internationaunder-
taking by the Government of Iran to the Government of the United Kingdom that
Iran wauld observe the provisions of the concession, including. therefore,21.ticle
AS stated in the previous footnote, it iç the contentof the Government of
the United Kingdom that there %vasan implied inter-Statobligation in tbicase:
the argument here is. therefore. an additionor alternativeone tothe argument
based on the existence of thio inter-Stobligation.
a That contracts with foreign nationals may derive obligatorforce from inter-
national law isshow" by the Report on the Law of Treaties prepared for the
InternationalLaw Commission by Professor J. L. Brierly (UnitedNationsdocument
AlCN.41~3 of 14th April 1950).where he writes: "it is not implied that agreements
towhich such entities (i.e. cntities other tlian States or inte~r~anizations).
in addition to States or internatioorganizations.are parties, lack binding force.
or that their obligatoryforce is not derived from internatiolaw" (p. 18).
' Vide Articlezzof the Convention. DIEMORIAL OF THE UNITED KINGDOXI (10 X 51) 9I
is placed in the last resort, through the nght of diplomatic protec-
tion on the part of the concessionnaire's State, under the protec-
tion of international la~v.It is not necessary to examine here the
question whether, as in the matter of treaties (e.g., the rebz~ssic
stantibtbsdoctrine),so also with regard to a concessionary contract,
absolutely overriding reasons of State, arising from a vital change
of circz~mstances', may justify the denunciation of the contract
notwithstanding an express provision against unilateral denun-
ciation. The Government of Iran has not brought-and has not
attempted to bring-its action within the purview of any such
justification. It has alleged no vital change of circumstances,
and indeed no such change has taken place.
16. The considerations adduced in the preceding paragraph
acquire particular significance if it is borne in mirid that the Con-
cession Convention of 1933 cannot be regarded as an ordinary
contract, governed by municipal law, between Iran and a fon:ign
Company. In the first place, though the Convention of 1933 was
indeed a contract between a State and a private party, it also (for
the reasons given in paragraphs 6-6~ above) embodied the sub-
stance of an inter-State treaty. In the second place, the Convention
of 1933 was not-even as a contract between the Iranian Govern-
ment and the Company-governed by Iranian municipal law,
although, having heeii ratified by the Majlis and signed by the
Shah, it had the force of law in Iran. 1)isputes as to the interpre-
tation and application of the Convention are submitted to the
jurisdiction not of the Iranian courts but of an Arbitration Court
mith a neutral umpire appointed, in the absence of agreement,
by the President of the international Court of Justice. Aloreover,
the law to be applied in interpreting the articles of the Convention
is not Iranian law but the law applied by the Court in virtut: of
.4rticle 38 of its Statute. As recounted in paragraphs 6-6~ abcive,
the origin of the Convention, concluded as part of an international
arrangement for the settlement of the dispute between the United
Kingdom and Persia under the auspices of the League of Nations,
was obviously international in character. Further, when in 1933
an enquiry was made of the Court whether its President would
accept the exercise of the function conferred upon him by Article 22
of the Convention, the enquiry was addressed to the Court
through official communications of the Governments of the United
Kingdom (not the Company) and Persia (see Appendices 17-19
to Annex zof this Memorial). III view of al1these facts, an assertion
that the Persian legislature could not validly undertake not to
-
' The question of the rigoftermination on account of defaultn by con-
cessionnaire is dealt with in Section VI1 below. Another point which would be in
a large measure relevant against any argument that there haa vital change
of circumstances-namely the absencein this casofany vital Iranian interest
justifying the Iranian actiondcalt with in Section III below. IIEJIORIAL OF THE USlTED KISGDO>I (10 X 51)
g2
terminate the Convention unilaterally would amount to an asser-
tion that the Government of Iran could not undertake any inter-
. national obligation limiting the freedom of action of its legislature '.
17. In submitting that a State can validly bind itself by treaty
or by n contract with a foreign national not to interfere with con-
cessionary rights, the Government of the United Kingdom is not
unmindful of the circumstance that the courts of some States-
including English courts-have made occasional pronouncements
to the effect that the State cannot by contract fetter the freedom
of its esecutive and legislative action. However, upon aiialysis,
such statements resolve themselves into the proposition that in
some contingencies municipal courts will decline togrant a remedy
against a breach of contract or other action, in violation of an
undertaking to the contrary, by the organs of the State. This is
because municipal courts are bourid by a municipal statute, even
if the latter amounts to or results iiithe violation of a previous
contractual or analogous undertnking. The truc legal position in
siich cases is merely that, under the municipal law in question,
therc is no remedy against such action 2. It does not follow that
there is not a remedy under international law forbreach ofcontract ;
as the extracts from the cases citcd in paragraph 6~ above show,
a State cannot invoke its own municipal legislation to jiistify an
act which is an international uTrong.Moreover, as indicated in
Section VI1 below, the very absence of such remedy may, in the
international sphere, constitute an international wrong engaging
the international responsibility of the State.
Conclz~sio ofsSectio InI
18. The following are the conclosions of this section of the
Memorial :The first reason why the application of the Iranian
Oil Nationalization Act of 1st Rlay 19j1 would constitute a viola-
tion of interiiational law is that it is in breach of an express under-
taking, in the Convention of 1933, not to terminate the Concession
by unilateral action. That express undertaking was, for the Anglo-
Irariiari Oil Company, a most material consideration in concluding
the Concession Convention. The violation of that undertaking,
iii addition to being a breach of the contract between the Iranian
Government and the Company, is, frorn the point of view of iiiter-
national law and vis-à-vti hse United Kingdom Government, a
--
1See paragraph 60above.
Wherc only nationals of the Stare concerried, no question of international
law vrises and iapurely doctrinal question of no practical importance to consider
ivhetlieon thc planeof municipal law. the position is that there is a forng
ivhich there no remedy or tliat, becausc therenoremedy, there is no wrong.
Where foreigners are concerned. however, internatiolaw comes into play as
well, and thcn, whatever the positinnmunicipal law, therisan international
the State of which the foreigner isa national.iplornatic protection exercised by XENORIAL OF THE UKITED KIllGDOhl (IOX 51) 93
tortious act on the part of the Iranian Government. It is also in
breach of an international coiitractual obligation to the Govern-
ment of the United Kingdom.
SECTIONIII
[A measure of expropriation or nationalization, even if not
unlawful on any other ground, becomes unlawful under inter-
national law, if in effect it is exclusively or primarily directed
against foreigners as such, and it cannot be shown that, but for
the measure of expropriation or nationalization, public interests
of vital importance would suffer. The mere fact that the State
does not obtain as much financial profit from the concession as
it expected, or as it considers it should obtain, is notuch a vital
interest. The action of the Iranian Government under the Oil
Nationalization Act of 1st May 1951 is exclusively directed against
a single foreign company, the Anglo-Iranian Oil Company, Limited,
and is not justifiable on the ground that it is requircd for the
protection of any vital public intercst. Conscqucntly, it isunlaw-
ful for this further reason.]
Unlawfulness of the Iranian OilNationalization Act of 1st May 1951
as directed exclusively against a foreign national and as not shown
to be required to protect any vital public interest
The Iranian Oil h'ationalization Act of rst iVay I951 is directed
exclusively against the Anglo-Iranian Oil Company
19. The Government of the United Kingdom has contended
so far that the Government of Iran has incurred international
responsibility on the ground that the Iranian Oil Nationalizatioii
Act of 1st May 1951 is in violation of an express nndertaking not
to terminate the Concession Convention of 1933 unilaterally by
legislative action. The Government of the United Kingdom now
submits, secondly, that expropriation of the Aiiglo-Iranian Oil
Company is unlawful for the reason that (a) it is a measure \\.hich,
although purporting to be of a general character, is in fact directed
exclusively against a particular foreign company, and (b) neither
in intention nor in effect is it aeaçure for the protection of :iny
vital Iranian interest. On the contrary, it \vas enacted in recklcss
disregard of Iranian economic interests. In fact, the Oil National-
ization Act of 1st May 1951 is directed exclusively against the
Anglo-Iranian Oil Company. This fact appears dircctly from the
text of the Act and requires no fiirther elaborûtion. It may be
added that, apart from the concession of the Anglo-lranian Oil
Company, there is only one other oil concession in Iran, namaly,
a concession operated by the Kavir-i-Khuriar Company and owned
jointly by the U.S.S.R. and an Iranian group. This concessionY4 ivlE3IORIAL OF THE UNITED KIKGDOJI (10 X 51)
is of negligible size and it is understood that it has not been
working for some time.
The expropriation of the property of foreigners is unlawfztl nnless
pziblic interests of vital importance necessitate sztch expropriation
20. The principle that it is unlawful to expropriate the property
of foreigners by an act which is either openly or by implication
directed exclusively against them is generally recognized (see
paragraph OB below). It is also clear that the nationalization or
expropriation of a concessionary right granted to a foreigner is
not justified under international law unless it can be shown that
public interests of vital importance necessitate the measure, and
the mere fact that the concession has not proved financially as
lucrative to the grantor Government as was cxpected is not regarded
as such a vital public intercst as to justify the measure. In this
connection the Government of the United Kingdom invites the
attention of the Court to the case of Administrator of Posts and
Telegraphs of the Rept~blicof Czechoslovakiav. Radio Corporation
of Anterica (A~iterica~tJotcrnal of International Law, Volume 30
(1936), p. 523). In this case an agreement had been concluded
between the Administration and R.C.A. for a radio telegraphic
circuit for commercial communication services between Czechoslo-
vakia and the United States. The agreement provided that each
party should transmit exclusively over the said circuit every
available message. The Administration then planned to establish
a second direct radio circuit to the United States in conjunction
with Mackay Radio. R.C.A. contended that this would be contrary
to their agreement with the Czechoslovak Government. The Arbi-
trators held that the Administration had not the right to establish
the second radio circuit.
The award is interesting inmany respects. It wasdisputed whether
the agreement was governed by civil law or by public law. The
Arbitrators inclineclto the view that it was governed by civil law,
but said : "At the same time, it may be added that also in public
law there is room for thc principle ofliberty in concluding contracts,
both as regards whcther the agreement should be entered upon
at al1and what contents it should contain, and in public law the
sentence pacta szcntservanda will also apply, just as public interest
requires stability as regards any arrangement legally agreed upon ....
How far an essential alteration in the interests of the public which
may, in certain cases, lie behind an administration contract, may
influence the continued validity of the contract will be dealt with
later on, but it may be emphasized already here that any alteration
or cancellation of an agreement on this basis as a mle should only
be possible subject to compensation to the other party ....But
even if this agreement should really be considered a public law
agreement, it must, ut any rate, be a condition for allowing the State
to repudiate the responsibilities which such agreementmight contain, MEMORIAL OF THE UNITED KINGDO51 (IO X 51) 95
and which the private party wozrldbe forced to respect, that.the State
wozcldbe able to show that pzrblicinterests of vital importance wozrld
sufferif the agreementshould be zrpheldunder the rules of ordinary
civil law ....When a public institution enters into an agreement
with a private person or a private company, it rnust be assumed
that the institution has intended by this agreement to benefit its
citizens. Bnt that this expectation sometimes proues ta fail in not
giving the cotrntry as large a profit as was expected, cannot be con-
sidered suficierrt reason for releasing that pzrblicinstitntion /rom ifs
obligations as signatory of said agreement" (pp. 531-534).
The Administration had given as a reason for wishing to establish
the second circuit "the number of telegrams transmitted to us by
your Company being insufficient and not corresponding at al1 to
the number of messages transmitted in the direction Czechoslo-
vakia-America". "But", said the Arbitrators, "this fact cannot
possibly entitle the Administration to cancel or alter an agreement
as this, concluded with a private company, appealing to the charac-
ter of the agreement as a public law contract" (p. 532).
zo~. Professor Scelle in his Précisde Droit des Gens,Vol.ii (1934).
at page 113, also makes the point that the expropriation must be
"pour cause d'utilité publique régtrlièrementconstatée",and Pro-
fessor Gidel, quoting Anzilotti, writes (Reutre de Droit international,
Vol. i (1927) p. 117) : "l'expropriation n'est compatible avec le
droit de propriétéque si elle est jzistifiéepar I'ulilitégénérale qui
prime l'utilitéindividuelle et accompagnée d'une équitable indem-
nité qui couvre le dommage subi".
Views of writers that expropriation is tmlaw/ol ifdirectedexclt~sively
against foreigners
20s. There is general support among writers for the view that
expropriation is unlawful if it is directed exclusively against
foreigners, whether such intention is plain or disguised. I?ro-
fessor Brierly writes:
"Les biens des étrangers ne peuvent êtreconfisquéspour la
raison que leurs propriétaires sont étrangers; nous avons la un cas
où la discrimination entre nationaux et étrangers, que celle-ci
soit ouverte ou dissimulée,constituerait avec certitude un facteur
décisifde la responsabilité del'État." (Recueildes Coursde l'dca-
démiede Droit international,58 (1936)(iv), at p. 171.)
Professor Gidel says in Revue de Droit intevnatio?i.al, I (1927).
at page 117 :
"Si l'expropriation pour cause d'utilité publique qui permet,
sous certaines conditions, la dépossessiond'un individu, en dehors
cela implique précisémentque la mesure est indépendante de lammun,
nationalité de l'individu."g6 >IE%IORIAL OF THE UXITED KIXGDO>I (10 X 51)
Herz (in American Jozlrnal of International Law, 35 (1941). at
p. 249) expresses a similar view :
"An important distinction is that hetween measures directed
ng!iiiistf~r'ci~iierinly ancitliose \iliii:coiicerii:ilicni ;riidiiniiiiiinls
1 . It \\.IIIhe rlio\i.iiin niore di.t:~il1:itt.rthai tliisniucli iloiil>t
as to the legal consequences of measures of expropriation which
refcr indiscriminately to citizens and foreigners, especiaily in case
of measures of general reform enacted in general legislation. No
such doubt exists, however, when the act is one of discrimination
against foreigners. Here the usual legal consequences (in particular
the obligation to pay compensation) arise even should the expro-
priation, directed only against foreigners, be efiected as part of a
general legislative program."
Profcssor A. de La Pradelle, in the Projet provisoire de~ésolutions
submitted to thc I~istitute of International Law at Bath in 1950.
says :
"Elle [scil.la nationalisation] peut porter sur les nationaus sans
porter sur les étrangers ;elle ne peut atteindre les étrangers sans
atteindre les nationaux." (Annuaire de Z'Institritde Droit inter-
national, I (1g50). p. 6s.)
A. measure, ostensibly general in character,will be illegal as directed
against foreigners if in fact it opevates in a discriminatory manner
21. The Iranian Oil Nationalization Act of 1st ~ay 1951 is
concerned with and is avowedly directed exclusively against the
Anglo-Iranian Oil Company. Its exclusive character is, therefore,
clearly established both in fact and in law. However, in so far as the
former Nationaiization Act to which it refers-that of 20th March
-speaks of "the nationalization of the oil industry throughout
Persia" and appears, therefore, to be general in character, it is
relevant to point out that the generality of the language used in
an enactment is not decisive for the question whether it is in fact
discriminatory against foreigners. The Permancnt Court of Inter-
national Justice on several occasions made it clear that discrimin-
atory legislation which is couched in general terms is nevertheless
unlawful l.
In thecase of the Germa>> Seliters iPoland (SeriesB. No. 6).where the Court
wus concerned with legislation passed by Poland and expropriating al1 lands, title
to which \vasderived from the German State, the Court found that the legislation.
although general in its terms.waç directed at perçons of German origin, and \vas
thus contrary to the Alinorities Treaty, which. in thiçcase, protected a certain
category of Polish nationals againsdiscrimination.The Court said, on this point:
"Article 8 of the Treaty guarantees ta racial minorities the same treatment
and security 'in law and in fact' as to other Polish nationals. The facts noat
racial discriminationappearç in the text of the laiv of July 14th.1920, and
that in a few instances thc law applies to non-German Polish nationals who
took as purchaser fram original holders ofGerman race, make no substantial
difference. Articl8 is dcçigned to meet precisely such cornplainasare made MEMORIAL OF THE UNITED KlNGDOll (10 X 51) 97
Evidence that the Iranian Oil Nationalization Act of rst May 1951
is directed exclzcsively against the Anglo-Ira?rian Oil Company
and is not jttstified on the grozcndof the r~ecessityof protecting a
vital $zcblicinterest
zz. The Government of the United Kingdom does not deny
(and indeed the arbitral decision quoted in paragraph zo above
shows) that cases may arise in which a measure of expropriation
solely affecting foreign nationals' is dictated by such overwhelming
considerations of public utility and general welfare that the measure
cannot be said to be directed against or discriminatory against
foreigners. In such cases the fact that the expropriation affects
foreigners only is, in a sense, accidental. The State cannot be
expected to refrain from a measure which is of vital importance
for the solereason that the persons affected are foreigners. However.
as the arbitral decision referred to in paragraph zo above shows.
the hurden of proof is on the expropriating State to show that
these overwhelming considerations exist and the situation is
altogether different when the circumstances of the case point
cogently to the conclusion that the action taken was emharked
upon not in pursuance of a general purpose but with the object
of nullifying a transaction which is deemed to be inconvenient or.
although more lucrative than \vas cxpected at the time when it
was entered into, still not as lucrative as the expropriating State
mould like. Indeed, the arbitral award in the case of Adminis-
trator of Posts and Telegraphs of the Republic O/ Czechoslovakiav.
Radio Covporation of America (paragraph zo above) shows that
an expropriation cannot be justified on such a ground. similarly
the situation is altogether different when there is clear evidence
that the measure taken was dictated hy sentiments of resentment,
animosity and vindictiveness against the foreign national in ques-
tion. The conspicuous feature of the statements of the Government
of Iran preceding, accompanying and foiloming the passing of
the Oil Nationalization Act of 1st May 1951 has been a succession
of accusations and, vituperation against the Anglo-Iranian Oil
Company. The malevolence of the charges levelled against the
Company as justifying a breach of the Concession Convention of
1933 in itself points to the true object of the Oil Nationalization
Act. The Company has heen accused of malpractice, dishonesty
and conuptione. The treatment to which the officiaisof the Com-
in the presentcase.There must be equalityin fact as well asostensible legal
equalit~ in the sense of the absence of discrimination in theofthe law."
(4. 23-14,)
Thisprinciplewas applied in favour of Polish nationalç in tofthesTreatment
of Polish Notionaisin Dn~zig (Scries1\/13No. qq, p. 28)and was reuffirmeii in
the case of the ili+torily SchoolsAiballia(SerieA/B, So. 64, at p.19).
1 1.e.solely aiiccting foreign nationals because there is oneyenterprise of
the kind in question and that isnecl by foreigners.
2 %ne of these charges iuersubrnitted to the Arbitration Court provided for
in the Convention of1933.98 MEMORIAL OF THE UNITED KISGDOM (10 X 51)
pany have been exposed since the passing of the Oil Nationaliza-
tion Act throws light on the tme motives which underlay the
passing of that enactment. It substaritiates the contention of the
Government of the United Kingdom that this is not a case of
genuine nationalization which happens to affect a foreign national,
but that it isa case of deliberate attempt at confiscation actuated
by anti-foreign prejudice. The vehemence of the political propa-
ganda unleashed against the Company is clearly shown in the
written Request for the Indication of Interim Measuresof Protection
(and the accompaiiying annexes), filed by the Government of the
United Kingdom with the Court on zznd June 1951. The interim
measures requested included an indication that the Iranian Govern-
ment should abstain from al1 propaganda calculated to inflame
public opinion against the Anglo-Iranian Oil Company. In the
course of that propaganda campaign pronouncements were made
by members of the Iranian Governinent and by other persons
associated with carrying out the Oil Nationalization Act to the
effect that they would rather see the oil-wells dry out than permit
the restoration of the rights of the Anglo-Iranian Oil Company.
These statements, and the corresponding actions of the Iranian
Government andits officialson various occasions,render it clear that
one of the main motives of the Oil Nationalization Act is anti-
foreign prejudice-a desire, in fact, not so much to confer con-
structive benefits upon the economy of Iran, as to destroy the
Company's undertaking in that country. Inspired by such motives
the Act constitutes an unlawful abuse of the power of nationali-
zation.
Nationalization as a disguise for confiscation
23. No attempt has been made on the part of the Iranian Govern-
ment to show that, on any long-range view, the Oil Nationalization
Act was dictated by imperative requirements of the Iranian eco-
nomy. In the submission of the Government of the United King-
dom, the contrary is the case. Economic conditions in Iran ;the
financial stability of that country; the industrial efficiency and
commercial prosperity of the oil industry in Iran; and considera-
tions of the peace of the world and of respect for law upon which
the economic well-being of Iran, like that of other countries,
ultimately depends-al1 these considerations demanded that, if
measures of nationalization were considered to be desirable, the
nationalization should have been accomplished by negotiation
and agreement, as repeatedly urged by the Government of the
United Kingdom andthe Company, in accordance with the solemn
pledges enshrined in the explicit articles of the Concession Con-
vention of 1933 (e.g. Article21 and 26). Indeed, as shown in para-
graph 2 above and in Annex IH to this Memorial, the Government
of the United Kingdom and the Company accepted, for the pur-
poses of negotiation and without prejudice to their respective &IE&lORIALOF THE UNITED KINGDOM (10 X 51) 99
legal rights, the principle of nationalization. Both the United King-
dom Government and the Company made, albeit \vithout success,
far-reaching proposais for a settlement on the basis of this prin-
ciple. Instead the Government of Iran has resorted to action,
closely approximating to confiscation, against a foreign Company
purely for political reasons.
Absence of goodfaith on the fiart of the Iranian Government
24. The Government of the United Kingdom desires to place
on record certain actions and omissions of the Imperial Govern-
ment of Iran \vhich throw a glaring light on the niotives inspiring
the laws of Alarch and May 1951. (For points (a), (b) and (c) below
see Annex 3 to this Rfemorial. Evidence in support of points (d)
and (e) below will be found in the United Kingdom's Request for
the Indication of lntcrim Mcasures of Protection and also in the
speech of the Rt. Hon. Sir Frank Soskice before the Court on
ioth Junc 1951.)
(a) At no time since the adoption by Iran of the Convention of
I,<<,~ ~ ~he Im~erial Governnient of Iran demand an arbitration
under Article zz'of the Convention to test the validity of itsgriev-
ances against the Anglo-Iranian Oil Company.
(b) Having signed on the 17th July 1949 a Supplemental Agree-
ment-after prolonged negotiations-with the Anglo-Iranian Com-
pany, the Imperial Government of Iran failed to explain to the
people of Iran that that Agreement tvould give considerable neits
adrantages to Iran, inter alia, by nearly doubling the financial
benefits provided for in the Convention of 1933.
(c) Early in 1951 the Imperial Government of Iran did not even
give consideration to an offer by the Anglo-Iranian Oil Company
of even greater benefits to Iran than those provided for in the
Supplemental Agreement of 17th July 1949.
(d) The Impcrial Government of Iran made no effort to stop
and indeed stimulated an unparallelled stream of anti-British
propaganda, accompanied by continuous intimidation of employees
of the Anglo-lranian Oil Company, which led to a strike ;and
disorders in April 1951, resulting in the death of three British
personnel.
(e) The Imperial Governmerit of Iran attempted to induce the
employees of the Anglo-Iranian Oil Company in Iran to break
their respective contracts with the Company and to become.ser-
vants of the Iranian Government.
(f) The Imperial Government of Iran refused to appear before
this Court to justify its actions as being consistent with international
law.
(g) The Imperial Government of Iran failed to respect the
interim measures of protection indicated by the Court in its Order
of 5th July 1951.100 \IE>IORIAL OF THE USITED KISGDOII (10 x 51)
Conclrasionsof Section III
Zj. On the.basis of the arguments and legal authority set forth
in the preceding paragraphs of this section, the Government of
the United Kingdom subniits that it has shown that,
(a) As a matter of law. it is contrary to international law for
a State to subject a concession, granted to a foreign company,
to a measure of nationalization or expropriation, if such measure
operates exclusively, or in a discriminatory manner, against the
foreign company, and it is not shown by the expropriating Gov-
eniment that the measure was justified in order to protect the
vital interests of the State-the desire of the State to rcalize
greater profits from the concession not being, as a matter of inter-
national law, a sufficient ground to justify the expropriation.
(b) As a rnatterof facl,
(i) The Iranian measures of AIarch and May 1951 operate
exclusively against the undertaking of the Anglo-lranian
Oil Company, and
(ii) These measures were not justified as measures necessary to
protect the vital interest of Iran ;but, on the contrary,
the motives for these measures were two-fold, being
firstly and predominantly, anti-foreign prejudice on the
part of that Government and, secondly, the desire of that
Government not mcrely to obtain for itself a greater
proportion of the profits accruing from the operation of
the oil industry in Iran, but also to deprive the Company
of any legitimate return for the financial risks which it
alone had run and for the enterprise and ski11which it
had shown in developing the oil inùuslry in Iran.
(c) So far from the Iranian measures of blarch and May 1951
being shown to be necessitated by, or even conducive to, the
economic prosperity of Iran, the Iranian Government both by
its words and by its conduct has shown that for it the economic
interests of Iran are a matter of secondary concern as compared
with its anti-foreign prejutlice.
(d) For the reasons given by the United Kingdom Government
in the written Request for the Indication of Interim Rleasiires of
Protection and in the speech of the Rt. Hon. Sir Frank Soskice
before the Court on 30th June 1951,there is every reason to suppose
that the carrying out of the Iranian legislation, far from promoting
the economic prosperity of Iran, will actually be most deleterious
to it.
[Even in cases where the nationalization of the property of
foreigners, including concessions granted to them, is not unlawful
on any other ground, the taking of the property becomes an
unlawful confiscation unless provision is made for compensation YEYORIAL OF THE UNITED KINGDObl (10 X 51) 101
which is adequate, prompt and effective. The provisions of the
Oil Nationalization Act of 1st May 1951 with regard to compen-
sation do not satisfy the requirements of international law with
regard to compensation. The compensation provided for in that
Act is neither adequate nor prompt nor effective.]
Confiscatory nature of the Iranian Oil Nationalization Act
of 1st May 1951
Having regard to the terms of~compensation which itprovides, tlze
Iranian Oil Natiotzalization Act of ~st May Ig5r is essentilzlly
confiscatory
26. The Government of the United Kingdom has contended
in the preceding two sections of this Rfemorialthat the Oil Natiori-
alization Act is unlawful for two reasons :(a) that it is in violation
of an express undertaking not to terminate the Concession Con-
vention of 1933 unilaterally. and (b) that the Act is in effect a
measure 'directed exclu~i\~elyagainst a foreign national and not
justified as necessary for the protection of the vital interests of
Iran. The Government of the United Kingdom now contends,
thirdly, that even if the Oil Nationalization Act of 1st May 1951
were otherwise in accordance with international law, it would
still be unlawful for the reasori that it is essentially confiscatory
in iiature, having regard to the terms of compensation which it
provides.
International rzclesregarditigcompensationin caseof nationalization.
The practice of States
27. Before examining the provisions of the Iranian Oil Nation-
alization Act of 1st May 1951, it is desirable to recall the rules
of international law govcrning compensation in case of expropria-
tion. That rule was stated repeatedly and emphatically in 1940
by the Government of the United States-as well as by other
governments-in conncction with the expropriation of American-,
owned and other oil companies in Mexico. In the first instance, the
Government of the United States, while readily rccognizing "the
right of a sovereign State to expropriate property for public
purposes", stated with equal emphasis that "the right to expropriate
property is coupled wilh and conditioned on the obligation to make
adequate, effective and prompt compensation. The legality of an
ex$ropriation is in tact dependent upon the obseruattceof this require-
ment" l.(Note of Secretary Hull of 3rd April 1940 to the hlexican
--
1 In a letter to Dr. Rfusaddiq. the L'rimehfinister of Iran (the text of which was
releaçed in Tehran on ~1st August ,95DIT.Harriman, Special Repreçentative
of the President of the United States. said, "In the vierv of niy Government, the
adequate. effective compensaorworking out arrangements mutually satisfactory
to the foreignner and the government is confiscation rvther than nationaliiation."
(See the London Tinrrs of zznd August 1951.)102 hlE~lORIAL OF THE UNITED KINGDOM (10 X 51)
Ambassador in Washington, reproduced in Hackworth, Digest
of Internatio>tal Law, Vol. 3 (1942), p. 662, and commented upon,
with approval, by Hyde, International Law, Vol. 1 (2nd cd.,
1945). section 217 C.) The attitude of the Government of the
Netherlands \vas the same. In a note to the Mexican Government
of 27th October 1938, the Government of the Netherlands declared :
".... The Government of the Xetherlands maintains that even
in cases where circumstances oblige a govemment to expropriate
private property, it is a condition sine qua nofi that the properties
expropriated must be exactly defined. and that if the anthority
takes immediate possession of such goods a just and prompt indem-
nity shall be immediately and effectively guaranteed ....In the
attitude of the Mexican Government after the decree of expro-
priation, the Netherlands Government regrets that it caii only see
a refusal to acknowledge these fundamental rules. Six months
have passed since the day of expropriation, and the properties
expropriated have not yet even been defined.Therefore, the Nether-
lands Government feels obliged to express new hope for a satis-
factory arrangement of this controversy, an arrangenient that
cannot consist in less than adetluate, prompt and effective compen-
sation or in return of the properties expropriated to the companies
affected." (Documents onInternational Affairs (published by the
Royal Institiite of International Affairs), 1938, Vol. 1, 11.472.)
The Mexican Government itself, in a note to the British Govern-
ment of 12th April 1938, stated that it wished "to place on record
that there is a universally accepted principle of international law
which attributes to al1 sovereign and independent countries the
right to expropriate in the public interest with the payment of
adequate compensation" (ibid., p. 462). In a note to the United
States Government of 1st May 1940, the Government of Mexico
affirmed that it had declared its support to the principle of the
"right to an equitable and prompt compensation for the expro-
priated properties" (Hackworth, Digest oi International Law,
Vol. 3, 1942, p. 664) l.
International rules regarding compensalioitin case of nationaliralion.
The practice of international tvibunals
28. The practice of international tribunals is uniform on the
subject, and it is not considered necessary here to substantiate,
by an exhaustive examination of such practice, the proposition
that the lawfulness of expropriation depends upon the payment
of proper compensation.
--
1 More recently, at the International ConfereofeAmerican States at Bogota,
the proposalof the hlexican Delegatian that there ought to be prompt. adequate
and effective compensationforexpropriation"exrepl when theco>rstiluliofiony
country provided olherwire" wrejected.(RcporlofNirilh InlcrnolionConference
of Americnn Sloler. United States Department of State Publication 3263.
pp. 66-67.) MEXORIAL OF THE UNITED KINGDOM (IO X 51) IO3
However, it is desirable to refer to the case of the Chorzbw
Factory (Claim /or Indemnity) (Merits), Series A, Xo. 17. In this
case the Permanent Court of International Justice was dealing
with an expropriation, which it had found to be unlawful as
contrary to the Geneva Convention, and it defined the principles
according to which redress for such an unlawful expropriation
should be governed. (Reference will be made to these principles
in Section V below.) The Court distinguished these principles
from the different principles applicable to compensation for an
expropriation which is in pnnciple lawful and only becomes unlaw-
ful if the arnount of compensation does not comply ~16th the
principles applicable to compensation for lawful expropriation.
Its brief definition of these latter principles is given in the bvords
"the value of the undertaking at the moment of dispossessiun,
plus interest to the day of judgment". These words of the Per-
manent Court of International Justice define mhat is meant by
adequate compensation. In the decision of .an arbitral tribunal
to be cited immediately below, it will be found that the require-
ment that the compensation should be prompt is also introduced.
This decision, which is that of the tribunal in the case of David
Goldettbergv. German State (Revue de Droit internatio?tal,vol. 3
(1929). p. 552). also confirms the other contentions made in this
Section of the hfemorial. The Arbitrator said :
"Le respect de la propriétéprivéeet des droits acquis des étran-
gers fait sans conteste partie des principes générauxadmis par le
droit des gens....
La réquisition militaire est une forme sui generisde l'expropria-
tion pour cause d'utilitépublique. Cette dernière est une dérogation
admise au principe du respect de la propriétéprivéedes étrangers.
II en est de mêmede la réquisition ....
Toutefois, si le droit des gens autorise un État, pour des motifs
d'utilité publique,à déroger au principe du respect de la propriété
privéedes étrangers, c'est à la condition sinequanonque les biens
expropriés ou réquisitionnés seront équitablement payés le plus
rapidementpossible.
L'application de ces. regles aboutit au résultat suivant : la
réquisition opéréepar l'autorité militaire allemande ne constituait
pas initialement un uacte contraire au droit des gens 1)Pour qu'il
continuàt à en êtreainsi, il fallait, cependantque dans un délai
raisonnable les demandeurs obtinssent une indemnité équitable.
Or. tel n'aDas étéle cas. l'indemnité atte-enant à ueine le Sixième
dela valeir des exprop;iés.
Il est dès lors constant Que M. Goldenber- et fils ont étéprivés
des 516de leurs biens, sans compensation. Il y alà u acte contraire
au droit des gens»,que l'on applique le principe généralqui s'oppose
à l'expropriation de la propriétéprivée des étrangers sans juste
indemnité."IO4 JIEAIORIAL OF THE UNITED KINGDOX (10 X 51)
There are very many other arbitral decisions which can be
cited in a similar sense l.
International rules vegarding compensation in case of nationalization.
The uiews of writers
29. \Irriters have recorded, with impressive uniforniity, the
existing practice on the subject. Miss Whiteman, in the most
comprehensive and authoritative work on the subject-Damages
in International Law (1937)-states, at p. 1386 :
"If land belonging to an alien (other than an alien enemy) is
expropriated, requisitioned or confiscated by a government, 'just
compensation'must be paid for it. The international duty to niake
compensütion exists apart from thc provisions of municipal law."
The same conclusion is reached by Professor Hyde (International
Law, Vol. 1 (2nd rev. ed., 1945). at pp. 710.717). Freeman, in
The Inter>zational Responsibility of States for Denial of Justice
(1938). states, at p. 518, that "the preponderance of legal authority
accepts the view that no foreigner may be deprived of his property
without adequate compensation" and that "it would seeni difficult
to maintain that the right to compensation does not exist just
as fully in the case of general legislation under which an alien
is expropriated as it does in individual cases of confiscation".
Professor Erich Kaufmann (Recz~eildes Cours de l'Académie
de Droit international, vol. 54 (1935). at p. 429) expresses the
view that : "La propriété des étrangers ne peut être expropriée
que pour cause d'utilité publique dans une procédure qui remplit
--
1It may be sufficient to mention the following decisions selected almost at
random :
(a) 1ii the :\\varilrciiilcrcI>y rhc I'erman~nt Court of :\rbirrationon 13th
Oc1,~ltr.1<,21in tiic .lisputI>eri\ecntlic t:nite.l 'tat2nd Soi\vn). riilatlng
to th,: rc:<liiiiiriwficilitr.. :i~rcl!<I,uil.liriif .~>ll>*,Tritiiiiia1i.il.l :
"Whether the action of the United States waç lawful or not. just
compcnsatian is due to the claimants under the municipal law of the
Ilnitcd States, as weU as under the internationallaw, based upon the
. respect for private property." (Atneriçan Journal of Inlernalionnl
LaW. 17 (1923). p.388.)
It furtlier held that "no State can exerciçe towards the citizens of another
civilired Statethe'power of eminent domain' without respecting theproperty
of such foreign citirens" or without paying just compensation as determined
by an impartial tribunal if necessary. (Ibid, p.392.)
(b) In the Spanisb Zone of hiorocco Claims. brought by Great Britain against
Spain in iyzq. where expropriation was not actually in question. Dr.FIubcr.
the llapporteur. held, in general terins. that undrr international law a
foreigner cannot be deprived of his property without just coinpençation.
(Annual Digest of Pt'blic I~ttcrnntionnlLaw Cases, 1923-1924. Case No. 85.)
(c) In the De Sabla Claim. which came before the United States-I'anama
General Claims Commission in 1933, the Commission considered it "axiomatic
that acts of a government in depriving an alien of his property without
compensation impose international responsibility".(Anrzual Digest of Public
International Law Caser. 1933-1934, Case Xo. 92.) ME>lORIAL OF THE UNITED KIKGDOM (10 X 51) IO j
toutes exigences de la justice procédurale et contre une juste
compensation."
Professor Gidel, citing with approval hzilotti, writes as foiiows:
"Le vice de cette comparaison [between expropriation and
liquidation] est qu'il négligele trait capital qui distingue I'expro-
priation pour cause d'utilité publique de toutes les dépossessions
de propriété exorbitantesdu droit commun. Dans sa célèbrecon-
sultation,RI.Anzilotti l'arappeléen cestermes: uSansdoutel'expro-
priation pour utilitépublique s'imposeaux étrangersautant qu'aux
nationaux, mais à la condition qu'ellesoit accompagnée desgai-an-
ties dont toutes les législationsmodernes l'entourent dans le but
de la rendre compatible avec le droit de propriété. L'expropriation
n'cst compatible avec le droit de propriété quesi elle est justifiée
par l'utilité généralequi prime l'utilité, individuelle et accom-
pagnéed'une équitable indemnitéqui couvre le dommage subi. n"
(Revue de Droit international,vol. 1 (1927)~p. "7.)
Eauchille and Silbert Say, in Revue générale de Droit i?tter?~ational
public, IgZj, p. 22 :
"L'indemnité devra présenter les traits suivants:
I. Il va de soi qu'elle doit êtregénéralc,'est-à-dire exister dans
tous les cas et s'appliquer sans distinction tous les biens frappés
d'expropriation ;
2. l'indemnité doit êtreintégrale,c'est-à-dire tenir compte au
propriétairede la valeur de ce qu'il transmet et de la dépréciation
subie par ce qui lui est laissé
3. elle doit êtrepréalable,ou tout au moins coïncider avec la
prise de la propriéte..."
In the above quotation once again the requirements of. adequacy
(No. z above) and of 9romptness (No. 3 above) are brought out.
The meaning of "prompt" compensation
30. From the authorities cited in paragraphs 27-29 above, it
is clear that the nationalization of the property of foreign<:rs,
even if not unlawful on any other ground, beconics an unlawful
confiscation unless provision is made for compensation lvhich is
adequate, prompt and effective. By "adequate" compensation is
meant "the value of the undertaking at the moment of dispos-
session, plus interest to the day of judgmentW-per the Permanent
Court of International Justice in the Chorrdw Factory (Claim
for Indenznity) [Merits) case, Series A, o. 17 (paragraph 28
above). The second requirement, "promptness", has already been
referred to in the authorities quoted in the above paragraphs
and has to some extent beeu defined by these authonties. It is,
however, desirable to specify in greater detail what the Govern-
ment of the United Kingdom understands by "promptness".
There have, in fact, been pronouncements that prompt compen-
sation means immediate payment in cash. Thus, in the arbitration
between the United States and Norway relating to the requisition-
II106 I\IE;\IORIAOF THE USITED KINGDON (IO x 51)
ing of contracts for the building of ships in the United States,
it was held : "The Tribunal is of opinion that full compensation
should have been paid .... at the latest on the day of the effective
taking" (Scott, Hague Court Reports, Second Series (1932), at
p. 77). The Government of the United Kingdom is, however,
prepared to admit that deferred payment may be interpreted as
satisfying the requirement of payment in accordance with the
mles of international law if
(aJ the total amount to be paid is fixed promptly ;
(b) allowance for interest for late payment is made ;
(cl the guarantees that the future payments will in fact be
made are satisfactory, so that the person to be compen-
sated may, if he so desires, raise the full sum at once
on the security of the future payments.
As Professor Hyde puts it:
"The matter of time of payment is among the factors that must
always he considered because, if payment is to be deferred. the total
amount will fail to be fully compensatory if it does not make
provision, among other things, for interest on the investment or for
lossof benefitsto the owner after the propertwas taken and priorto
payment. Thus the adequacy of compensation is to be tested in cases
where deferred payments are contemplated, by the respect which the
arrangement pays for the consequencesofpostponement. It should be
clear that a deferred payment, or series of deferred payments, is not
truly compensatory if the loss sustained by the owner in conse-
quence of postponement he unrequited. In his correspondence
with the Mexican Government, Secretary Hull did not intimate
that arrangements for deferred payments which would make
requisite provision for the period of delay would be inadequate.
There is hardly room to impute to him the thought that the fiscal
equivalent of prompt payment, if duly arranged for at the outset,
would violate any requirement of international law." (Inter~zaltonal
Law, Vol. 1 (2nd rev. ed., 1g45) pp. 718-719.)
The meaning of "effective" compensation.
~OA. In the immediately preceding paragraphs consideration has
been given to the meaning of two of the three requirements of
international law with regard to compensation for expropriations
or nationalizations, which are in principle lawful-namely, that
the compensation must be adequate in amount and promptly
paid. The third requirement is summed up in the word "effective"
and means that the recipient of the compensation must be able
to make use of it. He must, for instance, be able, if he wishes,
to use it to set up a new enterprise to replace the one that has
been expropriated or to use it foruch other purposes as he wishes.
Alonetary compensation which is in blocked currency is not effective
because, where the person to be compensated is a foreigner, he
is not in a position to use it or to obtain the benefit of it. The
compensation therefore must be freely transferable from the hlEhlORIAL OF THE USITED KINCDOhl (10 X 51) '"7
country paying it and, so far as that country's restrictions are
concerned, convertible into other currencies.
The provisions for compensation in the Oil Nationalization Act oj
rst May 1951 do not satisfy the requirements of international law
31. The Government of the United Kingdom submits that the
provisions for compensation in the Iranian Oil Nationalization
Act of 1st May 1951 do not satisfy the requirements of inter-
national law because the compensation for which they provide
is neither adequate nor prompt nor effective, and that, accordingly,
even if the expropriation of the property and rights of the Anglo-
Iranian Oil Company were not otherwise contrary to internaticinal
law, it is so contrary for the reason that the compeiisation provided
for falls short of the requirements of international law.
The provisions of the Oil Nationalization Act oj rst May 1951
relative to compensation
32. The principal provision of the Iranian Oil Nationalization
Act of 1st May 1951. relative to compensation, is Article 3, which
reads as follows :
"The Government is bound to examine the rightful claims of the
Government as well as the rightful claims of the Company iinder
the supervision of the Mixed Board and to submit its suggestions
to the two Houses of Parliament in order that the same may be
implemented after approval by the two Houses."
Reasons why Article 3 O/the Oil Nationalization Act O/rst iIIay
rggr does not satisjy the reqnirements O/ international law
33. The principal respect in which these provisions fa11short
of the requirements of international law is that there is no
certainty that under Article 3 any compensation will be paid
at al], far less that it will be adequate or prompt or effective.
In order that the provisions for monetary compensation should
be adequate, it is necessary that these provisions should either
provide in terms for a fixed siim which satisfies the requirement
'of adequacy or provide for a procedure, the fairness of which
cannot be chdenged, by which the amount of compensation will
be promptly determined. It will be seen that Article 3 does not
fix the amount of compensation, but it provides that it \vil1 be
determined by the two Houses of the Iranian Parliament upon
the proposals of the Mixed Board (itself composed of ten parlia-
mentarians with the Minister of Finance as Chairman), which is
the executive organ appointed by the law for carrying out the
act of expropriation or nationalization. It is submitted that this
is an extreme example of a party making itself the judge of its
own cause and failing to provide a fair and judicial method of
assessing compensation. It is clear that the Iranian Government,
if it were not going to fix the compensation in the Act of 1st May 108 ~IE~IORIAL OF THE UNITED KINGDOM (IO x 51)
1951, should have provided for an impartial judicial procedure
by which the amount of compensation should be assessed, and in
a case ivhere purely the interest of a foreign company is involved
and national feeling about that foreign company has been worked
up to a high pitch, a fair and judicial body would have to be one
which gave the position of umpire to some impartial person who
was neither Iranian nor British. In fact, the same Arbitration
Court provided for by Article 22 of the Concession Convention
of '1933,which contains tliis vital feature concernjng an impartial
or neutral umpire, was the body obviously indicated to assess
the compensation, and indeed in Section VI below the United
Kingdom Government submits as a legal proposition that this
Arbitration Court should assess the compensation, if it is to be
assessed on the basis that the expropriation is lawful subject to
the payment of adequate compensation. Under the Oil Xation-
alization Act of 1st May 1951, the Anglo-Iranian Oil Company
is expropriateci and the compensation is to be decided in the
future by the same Parliament which has displayed the highest
animosity against the Conipany, and, so far from there being any
guarantees that the procedure ivill be fair and judicial, there is
every reason to fear that purely political considerations will
govern the decision. Article 3, therefore, gives every reason to
suppose that the procedure for compensation offers no guarantees
either for its adequacy in amount, its promptness of payment
or its effectiveness. It should further be noticed that the lranian
Parliament, on the proposals of the same Mixed Board, is also
to pronounce upon the claims of the Iranian Government against
the Company andto set these offagainst the claims of the Company
for compensation. In the recent past the Iranian Government
has made a certain number of claims against the Company. These
claims, if the Iranian Government believed in them, were claims
which should have been pronounced upon by the Arbitration
Court provided for under Article 22 of the Concession Convention
of 1933. The Iranian Government, however. has not at any time
thought fit to bring these claims hefore that Court, but now,
under Article 3 of the Oil Nationalization Act of 1st May 1951,
the Iranian Government and Parliament is to be judge in its
own cause in the matter of deciding claims which it may think
fit to put forward against the Company.
Articlez of the Oil Nationalization Act O/ 1st hlay 1951 as an
indication of the mazimzim compensation which the Iranian
legislators would be prepared to allow
34. In this connection it is relevant to consider the provisions
of Article z of the Oil Nationalization Act of 1st May, 1951 l,
Article2reads:"The Government is bound to dispassess at once the former
Anglo-lranian Oil Company under the supervision of the blixed Board. If the
Company refused to hand over once on the grounds of existing claims on the hlEMORIAL OF THE USITED KINGDOY (10 X 51) 109
because the provisions of this Article at any rate indicate what
{vas in the mind of the Iranian legislators as to the maximum
compensation and the manner in nhich it should be paid. Article z,
having provided that the Mixed Board is to dispossess the Com-
pany, then goes on to provide that, if the Company is unwilling
to part with its property without some security for compensation.
25 per cent of the current revenue from the oil, after deduction
of exploitation expeuses, may be set aside and placed in some
bank to provide a fund out of which the compensation should
be paid. It would seem, therefore, that the Iranian legislators
thought that, as a maximum, 25 per cent of current revenue Iess
expenses would provide a fund adequatc to provide for the com-
pensation of the Company. In no event could a fund constitiited
in this way produce adequate compensation. The Government
of the United Kingdom is in a position to demonstrate this by
financial arguments ; but, as these arguments would necessarily
be somewhat long and would involve a number of calculations,
the Government of the United Kingdom will resenre them for
submission, if need be, on a later occasion.
Conclz~sions of Section N
34A. The Govemment of the United Kingdom submits that it
has shown in this section that the nationalization or expropriation
of the property of foreigners, including the cancellation of conces-
sions granted to them, is an international wrong unless there is
provision for compensation which is adequate, prompt and effec-
tive ;that the provisions for compensation contained in the Iranian
Oil Nationalization Act of 1st May 1951, do not satisfy the require-
ments of international law in this respect;and that the cancellation
of the concession of the Anglo-Iranian Oil Company (even if it
were not otherwise an international wrong) is an international
wrong for this reasori.
SECTION V
[IVhere the nationalization is unla~vful, the relief to be granted
is governed by the principles formulated by the Permanent Court
of International Justice in the Chorzdw Faclory (Claim jor
Indemnity) (Merits) case (Series A, No. 17). According to these
principles, the pnmary remedy is restitution in kind (or, where
such restitution is impracticahle, the payment of pecuniary com-
pensation, instead of restitution, consisting afsum "corresponding
to the value which a restitution in kiiid would bear") together
with pecuniary damages for loss sustained whicli would not be
--
Government, the Governmentcan, by mutual agreement. cleposit in the Bank
Rlilli-Iran or in any other hank25pper cent of currrcvenuefrom the oil
after deductian ofexploitetion expenses in order to meet the probable claims of
the Company."II0 DIEMORIAL OF THE UNITED KINGDOM (10 X 51)
covered by restitution in kind (or by payment in place of it).
Since, for the reasons given in (2)to (4) above, the action taken
hy the Iranian Government against the Anglo-Iranian Oil Com-
pany is unlawful, tbere should be full restitution of its conces-
sionary rights to the Company (or, in the alternative, if restitution
is not granted, pecuniary compensation should be paid of an
amount corresponding to the value which the restored concession
would bear) together witb pecuniary damages for al1loss occasioned
by the acts of the Iranian Government between 1st May 1951
and the date of the restitution or of the payment of pecuniary
compensation in lieu thereof.]
The legal remedies for unlawful expropriation
Therelieffor zlnlawfulexpropriationdistinguashedfroiitcompensalion
in cases of lawfzd expropriation. Decision of the Permaitent Cozlrt
of International Jzlslice in the Chorzow Factory (Claim for
Indemnity) (Merits) case, Series A, No. 17
35. It has been submitted in the preceding section of the
present Memorial that the Oil Nationalization Act of 1st Jfay
1951 is unlawful for the reason-in addition to those adduced
in Sections II and III of the Memorial-that itis confiscatory,
inasmuch as it does not provide for compensation according to
the niles which international law prescribes in cases of expropna-
tion. It will now be submitted that, even if the compensation
offered were such as is otherwise in conformity with intemational
law in cases of lawful expropriation, it would not be a sufficient
remedy in the present case, seeing that for the reasons stated in
Sections 11 and III of the Memorial, the expropriation under
the Oil Nationalization Act of 1st May 1951 is unlawful. The
Government of the United Kingdom contends that, should the
Court find that the action of the Government of Iran is unlawful
for al1 or any of the reasons adduced in the preceding sections
of this Jleinorial, then any such finding of the Court will be directly
relevant to the question of the remedy to which the Government
of the United Kingdom is entitled. That relevance lies in the
distinction, well recognized in international law, between the
consequences of an expropriation which is lawful and the conse-
quences of an expropriation which is in violation of the inter-
national obligations of the State. That distinction was formulated
by the Permanent Court of International Justice in the Chorzdw
Factory (Claiiit for Indentitity) (Merits) case (Series A, No. 17).
In view of the importance of the ruling of the Court in that case,
it is considered necessary to quote the relevant passage in full.
The Court said:
"The action of Poland which the Court has judged to be con-
trary to the Geneva Convention is not an expropriation-to112 hlEHORIAL OF TIlE UNITED KIKGDOM (10 X 51)
couldtliereforehaveno other effectbut that ofsubstituting payment
of the value of the undertaking for restitutionit would not be in
conformity either with the principles oflaw or with the wish of the
Parties toinfer from that agreement that the question of compen-
sation must henceforth be dealt with as though an expropriation
properly so-called \vas involved." (Series A, No. 17, pp. 46-48,)
In the opinion of the Government of the United Kingdom the
above judgmcnt of the Conrt expresses a rule of international
law which is not only well established but also just and practicable.
Accordingly, the Governinent of the United Kingdom submits
that, even if the compensation offered by the Government of
Iran in thc Oil Xationalization Act of 1st May 1951 wre such as
international law provides for cases of lawful expropriation. it
would still not providc the remedy to which the Government
of the United Kingdom is entitled in the circumstances of this
case. For the expropriation, in this case, is unlawful. Accordingly,
the remedy to which the Government of the United Kingdom
is entitled is that laid down by the Permanent Court of Inter-
national Justice in the Chorzbw Factory (Claim jor Indemnity)
(Merits) case and is based on the distinction between lawful and
unlawful expropriation. As has been shown, the compensation
which is envisaged in-or which may be deduced from-the Oil
Nationalization Act of 1st May 1951 is not even such as inter-
national law requires in the case of an otherwise lawful expro-
priation. A fortiori it is not compensation such as international
law requires in the case of an unlawful expropriation.
International rnles regardingrelief for unlawJt61 expropriation. The
9ractice of international arbitral tribunals
36. The above-quoted pronouncement of the Permanent Court
of International Justice is so explicit and it covers so fully all
the aspects of the case which forms the subject-matter of the
present Memorial that any further citation of judicial or arbitral
authority in the matter would appear to be redundant. However,
the Government of the United Kingdom attaches importance to
stating that that pronouncement, far from constituting a Iiew
departure in international law, was fully in conformity with
established practice and \vas regarded as such in arbitral awards
which followed the judgment of the Court.
Thus, in the Martini case, decided in 1930, although there \!,as
no occasion to apply the principles enunciated in the Chorziw
Factory case with regard either to compensation or to restitution
in kind, the Tribunal cited with approval the judgment of the
Permanent Court of International Justice in that case as an
authority for its decision to annul expressly an unjustified impo-
sition of damages by a municipal tribunal. The Tribunal said :
"Le Tribunal arbitral souligne qu'un acte illicite a étécommiset
applique le principe que les conséquencesde l'acte illicite doivent MEMORIAL OF THE UNITED KINGDOM (10 X 51) 113
êtreeffacées." (Reports O/ International Arbitral Awards, II (1949).
p.. 975 at 11. 1002; American Journal O/ Internatio?ial Law, 25
(1931) P. 554 at P. 585.)
In the Shzcleldt case, a dispute between the United States and
Guatemala, the Arbitrator emphaized that restitutio in integvum
must be given to a person injured by an unla\\?ul act. In that
case a concession held by a United States citizen was abrogated
by the legislature of Guatemala. In an Award given on 24th July
1930. the Arbitrator assessed damagcs on the principlc that "who-
ever concludes a contract is bouncl not only to fulfil it but also
to recoup or compensate (the other party) for damages and
prejudice which result directly or indirectly from the nonfulfil-
ment or infringement by default or fraud of the party concerned,
and that such compensation inclutles both damage suffered and
profits lost: damnz~m entergens et lucrum cessans". (Reports of
International Arbitral Awards. II (1949). p. 1083 at p. 1099 l.)
A conspicuous number of earlier arbitral decisions, which it is
not considered necessary to recount in detail, acted on the same
principle of fullest compensation in cases of unlawful interference
with concessionary or other proprietary rights
In the Antioqzhia Railway case, a case of breach of a contract
made with British nationals by the Colombian Government, the
Arbitral Tribunal laid down as the guiding principle for cases of
that nature that the damage caused to one party by the wrong-
ful breaking' of the contract includes, on the orle hand, al1 the
expenses and losses which it has incurred in fulfilling its contrac-
tua1 obligations (damnum emergens) and, on the other hand, the
profits which were likely to arise from its regular execution (lucrzmm
cessans). (La Fontaine, Pasicrisie i?tternationale, p. 552.)
See also the case ofWaller Fletcher Srtiiwhich was submitted to arhitration
hy the United States and Cuba. In this case the property of the claimant was
expropriated. ostensihly in pursuanceof a general law for the urhanizatioof the
districtbut in fact, as the Arbitratorfound, hy a measure specihcally directed
against him. In an Award given in1929 the Arbitratorafter holding that, according
to law, the property should he restored to the claimant, assessed compensation
to cover hoth the value of the land. buildings and personal effectç, and the depriva-
tion of the useof the property(RLPOIISO/I~~lem~li~~t~Alrbitral Amardr.II(1949).
at pp. 9x7-918 ; Americnn Journal ofInler>tolionol Lam, 24 (1930).p.384.)
2 In the Delogoo Bay Railmay case, the award in which was given in ~goo, the
Portuguese Government had rescinded the concession of the Lourcnço Marques
Railroad, which waç financed hy English and American capital. The Arhitration
Tribunal found that the decree of res<:ission had heen carried out in disrcgard of
contractof concession. It then held that th>vasbut one principle of law applicable
to the fixing of the cornpensation-that of dommages et i>itér6lscamprising. in
accordance with the niles of law universally admitted, damniim amergens and
lucrum cerraks(Archiues di~lomotiquervol. luiv.p. 2x4). MEMORIAL OF THE UNITED KINGDOM (IO X 51)
Ir4
Internationalrules regardingrelief for unlawful exfirofiriation.The
views.of writers
37. Writers on the question of State responsibility have given
full support to the view that in case of unlawful action the measure
of damages is determined by the principle of restitzltioin integrum
whether in the form of restitution in kind or full compensation.
Thus Freeman (Tlze International Resfionsibility of States for
Delzial of Justice (1938). p. 573) writes :
"Speaking generally, the reparation of an international wrong
may take two possible fonns : that of restitutioin integram or of
compensation by way of damages (dommages-inlérét s)r the
injuries suffered. The first is simply the re-establishment of the
state of facts which would exist if the unlawful act had not been
committed, the second an economic satisfaction given either in
lieu of restitution where that, for some reason, has become im-
possible, or as a complement thereof when it itself is inadequate
to repair the wrong."
This is also the view of other writers '.
Restitutionin kind. The firacticeof internationaltribunals
38. It will have been noted from the survey of authorities
referred ta above that the principle of restitutio in integrum may
assume two forms. In the first instance, it may take the form of
' Thus Salvioli (Recueil des Coursde 1'Acaddmic da Droitinternational, 28 (1929)
(iii), p. 239) expresses a similar v:ew
"Dans ce cas (oùla restitutionen nature n'est pas possible) Yarbitre doit
déterminer la voleur de ronplacemcnl en tenant compte de deux éléments:
I. Quelle serait la valeur de la chose, exprimée en monnaie - actuelle -
d'indemnité, àla date de la décision:
2. Quel serait le développement normal que la chose aurait raisonnablement
pris, si elle était restéere les mains de sonpropriétaire."
This iç also the view of Sibert (iRmue gdndrale de Droit international public.
44 (1937). pp. 539-542) and Spiropoulos (in Zeitrchrift für internationalRecht,
35 (1gz5-1g~6). p. 116). The latter says:
"In principle. according to recognired international law. the damage arising
from an internationalwrong where liability is established is to be indemnified
in full on the basis of the universal conception of compensation (damnurn
emcrgens and lucvum cessans)."
More recently, Professor A. de La Pradelle says, in the "Projet prouisoire dc
Rdsolutions"attached to Iiiç Report on International Effects of Natianalizations
presented to the Institute of InternationalLaw at Bath in rggo :
"La nationalisation, acte unilathal de souveraineté, doit respecter les
engagements valablement conclus, soit par traité. soit par contrat.
Faute de ce respect. il y aurait déni de justice donnant naissance, non pas
à une simple indemnité. valeur pour valeur. mais à des dommages-intéréts,
à caractère pénalisateur." (Annuaire de l'Institutde Droit inlernalionol.1
(1950). P. 68.) MEMORIAL OF THE UNITED KINGDOM (10 X 51) 115
completerestitution, in specie, of the status quo antcl.International
law clearly prescribes complete restitution in al1 possible cases.
As the Permanent Court of International Justice said in the
above-quoted judgment in the Chorzdw Factory (Claim /or Inde~n-
nity) (~Werits)case, Series A, No. 17, "restitution in kind" is in
the first instance the natural expression of the duty of restitzitio
in integrzim. It is only "if this is not possible" that consideration
must be given to the "payment of a sum corresponding ta the
value which a restitution in kind would bear". There is, so far
as the Government of the Uriited Kingdom are aware, no case
on record in which an international arbitral tribunal has held
that, for reasons connected with the sovereignty of the State,
no restitution in kind is admissible in international law. In many
cases, while admitting it in principle, international tribunals give
detailed reasons why in the case before them such restitution
was not practicable. The following passage from the Award of
Undén, Arbitrator, given in 1933 in the arbitration between
Greece and Belgium, illustrates that aspect of the matter :
"The Arbitrator is of the opinion that the obligation of restoring
the forests to the claimants cannot be imposed upon the defendant.
There are several reasons which may be given in favour of this
opinion. The claimants in whose behalf a claim put fonvard by the
Greek Government has been Iield admissible, are partners in a
commercial organization cornposed of other partners as well. It
would therefore be inadmissible to compel Bulgaria ta restore
integrally the disputed forests. Moreover, it is hardly likely that
the forests are in thesame condition that they werein 1918.Assum-
ing that most of the rights in the forests are rights of cutting a
fixed quantity of wood, to be removed during a certain period,
a decision holding for restitution would be dependent upon an
examination of the question whether the quantity contracted for
could be actually obtained. Such a decision would also require
examining and determining the rights which may have ansen
meanwhile in favour of other persons, and which may or may not
be consistent with the rights of the claimants.
The only practicable solution of the dispute, therefore, is to
impose upon the defendant the obligation to pay an indemnity."
(Annual Digest andReports O/ Public International Law Cases,
1933-1934, Case No. 39, at pp. 99.100.)
A writer who has devoted a monograph to the study of the
question of reparation for iUicit acts in international law summa-
rizes the position as follows :
It should be noted that, even where restitution in kind is awarded, there may
(indeed almost certainly will) be an award of damages as well for the loss suKered
as aresult of the dispossession while it continued. The Permanent Courtof Inter-
national Justice in the ChorzdwFacrovy (Clairnfor Indemniiy) (Werits)case
(Series A. No. 17) used the words: "the award if neebe of damages for loss
sustained which would not be covored by restitution in ornpayment inplace
of it" (p. 47). BIEhlORIAL OF THE USITED KISGDOBI (10 X 51) 117
the only practicable and just solution. Such cases include those
in which the offending State is unlikely to be in a position to
grant adequate pecuniary compensation and in mhich the situation,
wrongfully created by it, is calculated, if allowed to subsist, to
affect adversely its solvency. Keference is made here to the con-
siderations adduced in paragraph 8 of the Request for the Iiidi-
cation of Interim Measures of Protection filed with the Court.on
zznd June 1951.
Conclusions of this portion of Section V
40.i. The relief to be granted in the present case in respect of
the action of the Imperia1 Government of Iran should be full
restitution of its concessionary rights to the Anglo-Iranian Oil
C-~~anv. since t~-~e~is~no ~eason to render such restitntion
imp;act&ble. In addition,there shouldbe paid pecuniary damages
for al1loss incurred by the acts of the Iranian Government betmeen
1st May 1951 and the date of restitution.
Compensation to be awarded if a restitzltioin kind is not awarded;
such conzpensationto coizsist of "paynzeizt of a sunz corresponding
to the vali~ewhich a restitution in kind would bear"
41. Should the Court decide that in the circumstances of the
present case compensation, as distinguished from the restitution
of the statzls qno ante, is the proper remedy, then it is contended
by the Government of the United Kingdom that the second alter-
native envisagcd in the Judgrnent in the Chovzdw Factory case
must apply, namely, '.'paymeiit of a sum corresponding to the
value which a restitution in kiiid would bear" '. That sum, acccird-
ing to wcll-established international arbitral practice includes
both the value of the actual investment and loss of profits.
42. According to these principles, the compensation would
have to cover the value of al1 the property of the Company in
Iran of which the Company has been deprived as a result of the
confiscation of this property by the Iranian Government (this
constituting the value of the investment which the Company
had made in Iran-dantnzlm emergens), and in addition com-
pensation for al1the loss of prospective profits which the Company
had suffered (lucri~rncessans). Under this heading of loss of profits
would be included not merely an estimate of the profits which
the Company had lost by the cessation of the Iranian portion
of its enterprise, but the loss which it had suffered (including,
if necessary, the extra expense in which it would be involved)
--
Ineithercasethere will be in addition "the award, if be. ofdamages for
losç sustained. ivhich would mot be covered by restitution in kind or payment in
place of it".
See theShuleldtcase (paragraph36 above)and the remarks of Salvioli (foat-
noteon page rr*).118 MESlORIAL OF THE UNITED KISGDOhl (IO X 51)
by reason of the fact that the non-Iranian portion of its enter-
prise with which the Company is left would be an ill-balanced
truncated portion of what was designed to be a part of one
balanced whole and would, therefore, be far less valuable as a
truncated portion as compared with its value as part of a whole.
These observations on the subject of compensation have ut present
only a general character
42~. The above observations on the subject of compensation
must, at the present stage of the proceedings, of necessity be of
a general character. Any more specific legal submissions of the
Government of the United Kingdom on the question of compen-
sation will be presented if and when the Court has found that this
is the proper legal remedy to which the Government of the United
Kingdom is entitled.
SECTIO VSI
[If it is otherwise lawful to nationalize the enterprise, which
is covered by a contract of concession with a foreigner, and if
that contract contains a provision for arbitration, the amount
of compensation due must be decided by the Arbitration Court,
provided for in the concession. The Iranian Oil Nationalization
Act of 1st May 1951 provided for the determination of the com-
pensation by the Iranian Parliament and wrongfully excluded
the Arbitration Court provided for in the concession.]
The arbitration clause and the question of restitution and
compensation
Even ij the Imperia1 Governntentof Iran is eittitled10terminatethe
Convention of 1933 unilaterally, szrchright of z6nilateraltermina-
tion doesnot extendto Articlezz of the Convention
43. The Government of the United Kingdom has submitted
in previous sections of this Memorial that the Government of
Iran is not entitlcd to terminate by legislative actianConvention
which it expressly undertook not to terminate by legislative
action ; that, in particular, it is not entitled soto terminate a
Convention which, having regard to the circumstances of its
conclusion and to its provisions, constitutes an international
contractual obligation on the part of Iran towards the United
Kingdom ;and that the unilateral termination of the Convention
constitutes, therefore, a violation of the rights, protected by
international law, of the Anglo-Iranian Oil Company and of the
Government of the United Kingdom. However, assuming-though
the Government of the United Kingdom dcnies the validity of
any such assumption-that the Government of Iran was entitled,
notwithstanding the circumstances in which the Convention was MEMORIAL OF THE UNITED KINGDODI (IO X 51) 119
concluded and its express provision to the contrary, to termiriate
it unilaterally, it is submitted that such right of unilateral termi-
nation did not-or did not necessarily-extend to Article 22 of
the Convention. That Article provides for the arbitration of al1
disputes relating to the interpretation of the Convention.
Rensons why the right of unilnteral termination of the Convention
O/ 1933, men i/ sztchright existed, wozrldnot extend to Article 22 r
of the Convention
44. It is arguable-and the argument is not devoid of apparent
logic-that, if the Convention is denounced, such denunciation
must include the whole of it and cannot stop short of any particiilar
article. The Government of the United Kingdom submits that this
is not necessarily so, in particular, in relation to the present case,
for the foilowing reason :Even if it were possible for the Govem-
ment of Iran to assert that the unilateral denunciation of the
Convention for the purpose of nationalization nas dictated by the
vital interests of the State, it does not follow that these vital
interests of the State demanded that the termination of the Con-
vention be combined with the cancellation of the clause whicli is
the proper instrument for providing a remedy-in the form of
adequate compensation determined in accordance with law as
applied by the arbitrators-for what is undeniably a breach of the
contract. Even assuming that unilateral termination was admis-
sible, it would still have been possible-and proper-for the Iranian
Govemment to approach the Anglo-Iranian Oil Company and
Say :"We find ourselves under a necessity, for inescapable reasons
of State, to put an end to the Convention. We cannot, therefore,
admit that under Article zz of the Converition the arbitrators or
the sole arbitrator have the right to pass upon the legality of the
measure taken and, in particular, to decree the restitution of the
concession. However, as a matter of law, and, in the words of
Article 21 of the Convention, 'on principles of mutual goodwill
and good faith' as well as on a 'reasonable interpretation of this
Agreement', we are prepared to abide by an award of arbitrators
as ta the compensation due to the Company for the breach of the
Convention." Instead the Iranian Government has refused to
submit the dispute, even within the limited compas as suggested,
to arbitration and bas provided that compensation is to be deter-
mined by the Iranian Parliament '.
1 Reference may be made to the Lcna Goldficldarbitration (Annunl Digest of
Public International Law Caser,1929-,930,Case No. i and Case No. 258 ; see
also the London Times of 3rd Septernb1930,and Sehmarzenberger.Inler~talionol
Law, 1945edition. p215).The concession agreement between Lenaand the Soviet
Government was signed on 14th November,925.Article86authorized dissolution
and Articlegosprovided for the reference of al1 disputes to the Arbitration Court.
The dispute aroscbecause Lena complained that the Soviet Government had
"created for Lena undue dificulties and interference. and. in façt, the impossibility120 MEhlORIAL OF THE UNITED KINGDOBl (10 X 51)
The refusal of the Imperia1 Gover+zmeno tf Iran to have recoz~rse to
arbitration constitz~tesa denial of jz~stice
4j. This refusal of the Iranian Government to aiiow the clause
of the Concession Convention providing for arbitration any effect
\\,hatever enhances the unlawfulness of the unilateral termination
of the Convention and adds to it the element of another inter-
national delinquency, namely, denial of justice. For some such
proccdurc uf arbitr:~iioii oii ciimpLnr:lriun iYesicntial if th: principie
of tliv ii:~tiunalizatioii of the oil iiidiistrv iii Ir:~n is coiic?<le(l.Ttic
Oil Nationalization Act of 1st May 195 it1elf provides for the
determination of compensation, but, as shown in paragraph 33
as regards performing its part of the concession agreement, and had prevented
Lena from carrying out the concession agreement or enjoying the rights. privilege
and benefits thercby created". Lena requested arbitration and appointed its
arbitrator. 'The Soviet Government vppointed an arbitrator and agreed to the
appointment of the super-arbitrator ;later it withdrew its arbitrator.Howeuïr,
Lena's arbitrator, Sir Leslie Scott. and the super-arbitrator,Dr. O. Stutzer, sitting
in Berlin on gth Blay ~gjo, decided "that the concession agreement was still opera-
tive and that the jurisdiction of the Court remained unaffected".
The tribunal next met in London and, the report continues. "it was proved to
the satisfaction of the Court in the courseof the trial that Lena wauld nat have
entered into the Concession Agreement al al1 but for the presence in the contract
of this arbitration clause and of the preccding clause (Article 89) whereby it was
mutually agreed that 'the parties base their relations with regard to this Agreement
on the principle of goocl-niIl and good faith as well as on reasonable interpretation
of the termî of the A~reement' " lwords similar to thase in Article 21 of the i.--
(:oncesslon (:i,nventiG hetucen tiie I'crrian(;.iv<.riiii,iandr tlic :\"~IO-l'ersian
0 Co:. ï'hr Cciiirrlirnsnid 'Although lhr (;ortri~~»rniho< ihui trliased tlr
dssislonc? Io lhc iourl. rl riilrrmnlnr boiand L) 81%iobligntionsrsidrrihe Covrerrion
Agreement o>zdin parlicirlar by the lerrirrof Article go; Ihe orbitration dause ofthc
çonlrnct."
Further, although the Lena concession did not expressly provide that it should
be governed by international law, the Court accepted the argument of Lena's
counsel that. although on al1 domestic niatters in the U.S.S.R.. Soviet law should
apply except in ço far as it was excluded by the contract. for other purposes the
general principles of law, such as those recognized by Articlo 38 of the Statute of
the Permanent Court of International Justice, should be regarded as "the proper
law of the contract''-the reason being that the agreement was signed "not only
on behalf of the Executive Government of Russia generally but by the Acting
Commissary for Foreign Affairs, and that many of the terms of the contract con-
templated the application of international rather than merely national principles
of law".
Lena's main claim, said the Court, was "put in two alternative ways, preierably
the second. The Cirst \vas for damages for breach of contract-viz. the present
value of the future profits lost by reason of the Government's vcts and defaults.
The second was for restitution to the Com~an. . of the full oresent value of the
Compaiiy s prnpcrtics b).\vliicliiitlie rdiiilt [!;in<~rnliicnt had beconlr 'uiilu,tlg
eiiriilii~~l' Tliia seci>ii<lfuriiitilnri<rasefrestedupon ihc priiicililr uf c<>iitinenral
Inir. including thar ofSoiictKiihiia.which gi\.cs a right of action for \iliinI.'rensh
law iç called'enrichissementsans cause' ; ;t anses where the defendant has in his
possession money or money's worth of the plaintiff's to which he haç no just right."
In the event. the Arbitration Court, basing its aaard on the principle of "unjust
enrichment", ordered the Government to pay to Lena Çiz.g65,ooo in British
Sterling, with interest at12 percent from the date of the Award and, having made
thisorder. declared the concession agreement dissolved. MEMORIAL OF THE UNITED KINGDOM (19 X 51) 121
above, this provision is illusory and nominal since the Iranian
Parliament is itself to adjudicate upon the claims of the Company.
There is no principle of law more fundamental than that a party
cannot be judge in its owvncause. The Permanent Court of Inter-
national Justice applied that principkin a radical manner in the
Twelfth Advisory Opinion relating to the interpretation of the
Treaty of Lausanne when it held it to be supenor to the appareiitly
paramount principle of unanirnity of the Council of the League
of Nations. It would have been possible for the Government of
Iran, while insisting on its right to terminate the Convention of
1933 on account of the law nationalizing the oil industry in Iran,
to leave the arbitration clause of Article 22 intact.
With regard to the practice of national courts and municipal
legislation in granting specific performance in relation to arbitration
clauses in private agreements, the following extract from the oral
statement of the representative of the United States before the
International Court of Justice in connection with the Advisory
Opinion relating to the Interpretation of Peace Treaties with Uzhl-
garia, Hungary and Rz~maniamay be quoted :
"Although some countries, including the United States, have
found difficulty in the absence of legislation to give full effect to,
or adequate redress for, the breach of an agreement to arbitrate.
judicial decisions of national courtss well as national legislation
reveal adefinite trend not orily towards more coniplete legal recog-
nition of an agreement to arbitrate but towards more effective
legal redress for the breachf such agreement. 111Red Cross Line
v. Atlantic Fruit Co. ((1923) 264 U.S. 109, at p. IZ~), Justice
Brandeis, speaking for the United States Supreme Court, declared
that 'the substantive right created by an agreement to submit
disputes to arbitrationis recognizedas a perfect obligation'." (See
Berkovitz v. Arbib and Hoztlberg(xgzr), 230 N.Y. 261, 130N.E.
288, opinion by Cardozorecognizingthat a Statute which provided
for specificenforcement of arbitration may be applied to an arbi-
Court of Justice, Pleadings. Oral Arguments, Documents,1950,ational
P. 294).)
Conclusions of Section VI
46. For the reasons set out in the two preceding paragraphs, the
Government of the United Kingdom contends that, even if the
Iranian Government was entitlcd to cancel unilaterally thc Con-
vention of 1933, such cancellation need not, necessarily or aiito-
matically, extend to the arbitration clause of the Convention so as
to exclude the Arbitration Court (provided for in that dause) as
the body'to assess compensation. Reasons of legal priiiciple, sup-
ported by precedent, and considerations of good faith require that
that clause should be given effect in every possible case. The refusal
of the Government of Iran to give any effect at al1to the arbi-
tration clause of the Convention and its determination to remain
12122 UE>IORIAL OF THE USITED KINGDOM (10 X 51)
the sole judge in matters arising out of the unilateral canceuation
of the Convention-in uarticular with reuard to the comuensation
due to the 'Angle-1ran Oinl Company-constitute tortious actions
which engage the international responsibility of Iran.
[A measure of confiscation or nationalization of a concession
which is contrary to international law, engages directly the inter-
national responsibility of the State, if it is the result of legislation
or other action adrnitting of no recourse against the measure to
local courts or the tribunals provided for in the concession agree-
ment. In addition, the international responsibility of the State is
directly engaged on the further ground of denial of justice if such
a measure is put into force on the preteit of alleged defaults on the
part of the concessionnaire and if the correctness of such allegations
is not proved, and the right to cancel the concession by reason
thereof is not established, to the satisfaction of the appropriate
judicial tribunal (in particular to the satisfaction of the judicial
tribunal provided for in the concession, if one is so specified). In
the present case the international responsibility of Iran is directly
engaged because :
(a) the nationalization was unlawful for the reasons given in
(2). (3) and (4) above ;
(b) the Iranian laws of 20th hfarcb and 1st May 1951 admitted
of no recourse, against the operation of these laws, either
to the local courts or to the Arbitration Court provided
for in the concession ; and
(c) allegations of default or misconduct by the Company were
advanced assome of the reasons for its expropriation and
the tmth of these ailegations was not proved, and the
right to cancel the concession by reason thereof was
not established, to the satisfaction of the Arbitration
Court provided for in the concession or indeed even
submitted to that or any other court.]
The direct international responsibility of the Imperial Government
of Iran arising out of the fact that in this case there
were no local remedies to exhaust
47. There cannot in this case be any question of the responsi-
bility of the Imperial Government of Iran being dependent upon
any previous exhaustion of available local remedies, since it is an
established principle of international judicial and arbitral practice
that the requirement of exhaustion of local remedies does not hfEUORfAL OF THE UNITED KfSGDO>f (10 X 51)
123
apply in cases.where there are no local remedies to exhaust 1.There
are no local remedies under the law of Iran against a law passed by
the Iranian legislature. Moreover, the legal remedies for a breach
of the Convention of 1933 are the remedies provided for in Arti-
cle zz of.the Convention, namely, recourse tothe Arbitration Court
provided for in that Article. That legal remedy the Government
of Iran has repudiated expressly and repeatedly-a repudiation
which in itself constitutes the international delinquency of denial
of justice. Further, Iran has not only excluded arbitration as a
remedy for the Company to use if the Company disputes, as it
does, the legality of the expropriation. The expropriation has
itself been justified in part by allegations of default or misconduct
on the part of the Company, yet Iran has not called upon the
Arbitration Court provided for in the Convention to examine these
ailegations, although this Arbitration Court certainly had exclusive
jurisdiction ta pronounce upon allegations of default. Instead Iran
has made herself the judge in her own cause on this issue also 2.
1 See the case of the Poneverys-Salduliskis Railwny (Judgmcnf) (Series :\/B.
Xo. 76. pp. 18-19).
2The Marlini case. decided in 1930 between Italy and Venezuela, provides an
instructive example of judicial examination of the question of existence of reasons
adduced as a justification for the canceiiation of a concession (çee Annual Digerl
of Public Inlernalionol Law Cases, 1929-1930, Case So. 93).
Also in the Turnbull case. the Umpire said :
"the non-fulfilment of the pledged obligations by one party does not annul
the contract ipso facto, but forms a reason for annulment. which annulment
must be asked of the tribunals, and the proper tribunal alone has the power
to annul such a contract-this rule of the law of almost al1 civilized nations
being in atisolute concordance with the law of equity-that nobody catibe
judge in his own case". (Ralston. the Law and Procedure of Infcrnotional
Tribunalr (1926). p. 83.)
In the El Triunfo case (United States u. Salvador), it was said :
"In anvcase. bv the mle of natural iustice obtaininc universallv throuehout
the uorld \vherr\,era lr~alsyrreiii erisrrthe ohligatton of prtiei toa coiirr;ict
r<,appeal for )udiciaI relie1isrcc!procal II thc Reput>lir of 5alrador.a pari"
to the contrnct which iii\.<>lveiltlic fraiichisc io El 'l'riiinfo Company. ha1 ~tist
grounds for complaint rh:xt iinil<!rits organlc Isir tgranrcci Iiad. 11yiiiiriircr
i,ini,i,iireof the frsncliise grnnied. broiightupon rheins<.lvcs the pcnalty of
forfeirure of th6 righrs undsr it. then the iourie of rliat goveriimenr should
have been to have itself appevled to the courts against the Company and there,
by the duo procers of judicial proceedings, involving notice, full opportunity
to be heard, consideration, and solemn judgment, bave invoked and seciired
the remedy sought." (Ibid.)
In the Milligan case before the Alixed Commission of Lima, it was contended
by the American Commissioner that the Government of Peru. in declaring the
contract nuIl and void, depnved itself automatically of the right to insist that the
Company should submit the dispute to the local courtsT .he observation, on Lhat
argument. of the learned commentator in La Pradelle & Politis (Rccucil der
Arbitrages infernolionaux, vol. II (1923). p. 595) ir relevant:
"L'argumentation du commissaire américain ne semble pas admissible, car
la question de savoirsi le PBrou avait eu le droit de rBvoquer soncontrat etait
pr6ciçBment une question d'interpretation de ce contrat, qui devait, d'aprhs
sespropres termes, ètre soumise aux tribunaux du PBrou.
La clause. en droit international. Btait nulle. comme fermant tout recours
à l'arbitrage."124 hfEhIORIAL OF THE UXITED KINGDOM (10 X 51)
It wiii be noted, in so far as the unilateral termination of the
Convention is bascd on allegations that the Company has been
guilty of a breach of the Convention, that Articlc 26 of the Conven-
tion provides that the following cases only shall be regarded as a
default of the Company in the performance of the Convention,
justifying a declaration by the Arbitration Court that the con-
cession is annulled, namely :
"Ia) If anv sum awarded to Persia bv the Arbitration Court has
not'l>C<[~iniiir.ithone muritliofthe date of tlie .î\\.ard.
(6) If the \~oluntaryor coiiil>ul,oryIi<luidntionof ttie Company
be'decided upon."
"In any other cases", the Article continues, "of breach of the
present Agreement hy one party or thc other, the Arbitration
Court shall establish the responsibilities and determine their
consequences."
FINAL CONCLUSIONS OF THE GOVERNAlENT
OF THE UNITED KINGDOhl
48. The Government ofthe United Kingdom accordingly suhmits:
A. That it is entitled toa declaration and judgment that
(1)The putting into effect of thc Iranian Oil Nationalization
Act of 1st hlay 1951, inasmuch as it purports to affect a unilateral
annulment, or alteration of the terms, of the Convention concluded
on 29th April 1933 between the Imperial Governrnent of Persia
and the Anglo-Persian Oil Company, Limited, is an act contrary
to international law; and that the aforesaid Convention cannot
lawfully he annulled, or its terms altered, by the Imperial Govern-
ment of Iran, otherwise than as the result of agreement with the
Anglo-Iranian Oil Company, Limited. or under the conditions
provided in Article 26 of the Convention ; and
(z)=(a) The Imperia1 Government of Iran is bound, within
a period to be fixed by the Court, to restore the Anglo-Iranian Oil
Company, Limited, to the position as it existed prior to the said
Oil Nationalization Act and to abide by the provisions of the
aforesaid Convention, including the obligations of Article 22
thereof, providing for the arbitration of any differences of any
nature whatever between the Imperial Government of Iran and
the Anglo-Iranian Oil Company, Limited, and that the Company
is entitled to compensation for al1loss and damage suffered by it
as the result of al1acts by the authorities of the Imperial Govern-
ment of Iran which arecontrary tothe provisions of the Convention
of 29th April 1933, and which occurred between 1st May 1951
andthedate of the restoration of the Company toits former position
and that the amount of such damage shall be assesçed either MEMORIAL OF THE UNITED KINGDOM (10 X 51) 125
(i) by the Arbitration Court provided for in Article 22 of the
aforesaid Convention, or
(ii) in such other manner as the International Court of Justice
shall decide; or
(b) In the alternatiuif theIwternational Courtof Justice, contrary
to the contentions of the Governmentof the United Kingdom, decïdes
that it should not give jndgment in tlzesense of sub-paragraplz(a) of
this paragraph, the Imperial Government of Iran should pay
compensation to the Governrnent of the United Kingdom, on
behalf of the Anglo-Iranian Oil Company, Limited, in accordance
with the principles, with relation to expropriations which violate
international law, accepted in international jurisprudence and
formulated by the Permanent Court of International Justice in
the Chorzdw Factory (Claim for Indemnity) (Merits) case, Series A,
No. 17. such compensation including
(i) A sum corresponding to the value which a restitution in kind
would bear (or in other words the value of the undertaking
expropriated and of the loss of future profits) :
(ii) Damages for loss sustained which would not be covered by
a restitution in kind (or by payment in place of it) :
the amount of compensation to be assessed in such manner as the
Court should decide.
B. Alternatiuely, if, contiary to the contentionsof the Gouernment
of the United Kingdom, the International Conrt of Justice slzor~ld
hold that the Governmentof the United Kingdom is not entitled to a
declaration and judgment in acconlance with the subrrzissions of
"A" above, and that theIranian Oil Nationalizafion Act of 1st May
1951 only infringes international Lawin so fur as its provisions with
regard to compensation are i?radeqtrate: then the Court should
declare that the provisions contailied in the said Act with regard
to compensation do not satisfy the requirements of international
law with regard to compensation and that the amount of compen-
sation should be decided by the procednre of arbitration provided
for in Article22 of the Converition coiicluded on 29th April 1333
between the Imperial Government of Persia and the Anglo-Persian
Oil Company, Limited, and that, in the case of the failure of the
Imperial Government of Iran to agree to arbitration as therein
provided, the amount of such compensation shaü be determined by
the International Court of Justice.
(Sigued) \V. E. BECKETT,
Agent for the Government of the
United Kingdom.
10th October 1951. ANNEXES
-
LIST OF ANNEXES
Amex Tifle Page
I A. Diplomatic Notes relating to the Court's Order of 5th July
1951 iodicating Interim hfeasures .of Protection in the
case .................. 129
Appendix h'o. r.-Note presented by His Britannic
blajesty's Ambassador in Tehran to the Imperial
Govemment of Iran on 7th July 1951 ..... 129
Appendiz No. 2.-Note presented by the Imperial
Government of Iran to His Britannic Majesty's
Ambassador in Tehran on 12th July 1951 .... 129
Appendix No. 3.-Telegram from the Iranian hlinister
for Foreign Affairs to the Secretary-General of the
United Nations, dated 9th July 1951 ..... 130
I B. The Stokes Mission .............. '34
Appendix No. r.-Outline of suggestions submitted
to the Iranian Delegation on 13th August 1951 by
the Stokes Mission without prejudice to any party
concerned ............... 134
Appendix No. 2.-Statement isçued by the Foreign
Office on 23rd August 1951 ......... 136
I C. Events subsequent to the withdrawal of the Stokes Mission 138
Appe~~dix No. 1.-Statement by Foreign Officespokes-
man on 6th September 1951. ........ 138
Appendix No. 2.-Note presented by His Britannic
Majesty's Ambassador in Tebran to the Imperial
Govemment of Iran on 11th September 1951. .. 138
Appe~zdix No. 3.-Letter, dated 12th September 1951,
from the Iranian Prime Minister to Mr. Harriman,
Special Representative of the President of the United
States. ................ 140
Appefzdix No. 4.-Letter, dated 15th September 1951,
from hlr. Hamman, Special Kepresentative of the
President of the United States, to the Iranian Prime
Minister ................ 142
2. Observations of the Government of the United Kingdom with
regard to the jurisdiction of the Court to deal with the
merits of the case ............. 145
Appendix No. 1.-Text of the Establishment Con-
vention concluded at Tehran between Iran and Turkey
on 14th March 1937 ...........
172 LIST OF ,\SSEXES 127
Anne Title Page
Appettdix No. 2.-Exchange of Notes, datcd 10th May
1928, between the United Kingdom Government and
the Imperial Persian Government regarding the
position of British nationals in Persia after the Aboli-
tion of the Capitulations ..........
Statement of relevant facts up to 1st May 1951 ...
3.
Apimportant places mentioned in this filemonal (and in
particular in this Annex). .........
Appendix No 2.-The D'Arcy Concession dated
28th May 1901 .............
Appendix No. 3.-Letter, dated 29th Aiigust 1920,
from the Under-Secretary of the Persian hlinistry of
Finance appointing Sydney Armitage Armitage-Smith
Esq., C.B., as "representative of themperia1 Govern-
ment to finally adjust al1questions in dispute between
the Anglo-Persian Oil Company and the Imperial
Government of Persia" .... . . ...
Apber 1920 between the Anglo-Persian Oil Company,cem-
Limited, and Sydney Armitage Annitage-Smith Esq.,
C.B., as representative of the Imperial Persian
Government ...............
Appendix No. 5.-Letter, dated 27th Sovcmber 1932,
from the Persian hlinister of Finance to the Resident
Director in Tehran of the Anglo-Persian Oil Company
Appeitdix No. 6.-Letter, dated 29th November 1932,
from the Resident Director in Tehran of the Anglo-
Persian Oil Company to the Pcrsian Minister of
Finance ... : ... .....
Apfrom the Persian htinister of Financc to the Resident
Director in Tehran of the Anglo-Persian Oil Company
Appendix No. 8.-Note, dated 2nd December 1932,
presented by His Britannic hlajcsty's Minister in
Tehran to the Imperia1 Persian Government ...
Appendix h'o. 9.-Xote, dated 3rd December 1932.
presented hy the Persian alinister for Foreign Affairs
to His Britannic Majesty's fifinister in Telir...
Appendix No. IO.-Xote, dated 8th December 1932,
presented by His Britannic Alajesty's Minister in
Tehran to the Imperia1 Persian Government ...
Appresented by the Persian hlinister for Foreign Affairs
to His Britannic hfajesty's Rfinister in 'Tehran. .
Appendix No. 12.-Letter, dated 14th December 1932.
from the United Kingdom Government to the Secre-
tary-General of the League of Nations .....
Appendix No. 13.-Telegram, dated 14th December
1932, from the United Kingdom Government to the
Secretary-General of the League of Xations ...128 LIST OF ANNEXES
Annex Title 1
Appendix No. 14.-Letter, dated 17th February 1933.
from Dr. Edvard BeneS, rapporteur of the Council
of the League of Nations, to M.Davar, representative
of the Imperial Government of Persia before the
Council ................
Appendix No. 15.-Letter, dated 24th February 1933.
of the League of Nations, torM. Davar, representative
of the Im~erial Govemment of Persia before the
Council . . ........ ....
Appendix No. 16.-Convention concluded between the
Imperia1 Govemment of Persia and the Anglo-Persian
Oil Company, Limited, at Tehran, on 29th April1933
Appendix No. 17.-Letter, dated 17th August 1933,
from the Persian Chargé d'Affaires inLondon to the
Rwistrar of the Permanent Court of International
APpendix No.
from the United Ki -
of the Permanent Court of International ~ustice . .
Appendix No. 19.-Letter, dated zrst October 1933,
national Justice to the Under-Secretary of State at
the Foreign Office ............
Appendix No. 20.-hlap showing the concessional area
in Iran of the Anglo-Iranian Oil Company, Limited
Appeiidix No. 21.-"Labour Conditions in the Oil
Industry in Iran." Report of a Mission of the Inter-
national Labour Office (January-February 1950)
Appendix No. 22.-Text of Single Article Law passed
hy the Iranian Majlis on zznd October 1947 ....
Appendix No. 23.-Supplemental Agreement between
the Imperial Iranian Government and the Anglo-
Iranian O~l C~ ~a'v.,.imited. made at Tehran on
;th July 1949 ...... . . ...
Appendix No. 24.-Note presented by His ~ritannic
Governnient of Iran on 14th March 1951 ....ria1
Appendix No. 25.-Text of the Iranian Oil Nationaliza-
tion Act of 1st May 1951 ......... Annex r a
DIPLOMATIC NOTES RELATING TO THE COURT'S ORDER
OF 5th JULY 1951 INDICATING INTERIhf MEASURES OF
PROTECTION IN THE CASE
This Annex contains the following .epa.ate App-.dices :
Appendix No. 1.-Note presented hy His Britannic Majesty's
Ambassador in Tehran to the Imperial Government of Iran on
7th July 1951.
Appendix No. 2.-Note presented by the Imperial Government
of Iran to His Britannic Majesty's Ambassador in Tehran on
12th July 1951.
Appendix No. 3.-Telegram, dated 9th July 1951, from the
Iranian hlinister for Foreign Affairs to the Secretary-General
of the United Nations.
Appendix No. r toAnnez r a
NOTE PRESENTED BY HIS BRITANNIC MAJESTY'S AMBASSADOR IN TEHRAN
TO THE IMPERIAL GOVERNMENT OF IRAN ON 7th JULY 1951
As already publicly announced, His Majesty's Government accept in
full the recommendations of the International Court on the United
Kingdom request for the indication of interim measiires of protection
relative to the present oil dispute. On the assumption that the Imperial
Government similarly accept these recommendations in full, His
Majesty's Government are considering their nominations to the Board of
Supervision recommencied by the Court and hope to let the Imperia1
Government know very shortly the names of their representatives.
They will be glad tolearn in due course the narnes of the two represen-
tatives to be nominated by the Imperial Government. His Majesty's
Govemment also hope shortly to be in a position to make suggestions
regarding the fifth member of the Board, whose name is to be agreed
between the two Governments, and will in the meantime be glad to
learn of any suggestion which the Imperial Government may wish to
make.
His hfajesty's Government will be making a further communication
to the Imperial Govemment about the detailed implementation of the
Court's recommendations, particularly about measures to be taken to
make possible the resnmption of the Company's operations on the basis
proposed by the Court.
APpendix No. 2 to Annez I a
NOIE PRESENTED BY THE IMPERIAL GOVERNMENT OF IRAN TO HIS
BRITANNIC MAJESTY'S AMBASSADOR IN TEHRAN ON 12th JULY 1951
In reply to Your Excellency's Note of 7th July, you are infonned
that (1) Imperial Government in its declaration of 2nd October 1930 did
not accept competence of International Court of Justice in
matters relating to Persia's national sovereignty.
(2) Imperial Government had notified International Court of this
view and Court should therefore, instead of taking any decision,
have issued declaration of its own non-competence.
(3) Court's decision of 4th Tulv has no leml foundation whatever
and is contrary to justice jnd equity, and Imperia1 Government
does not consider it valid.
(4) In telegram addressed to Secretary-General of United Nations
9th July and repeated for information to International Court,
1 stated clearly that the Imperial Government did not consider
Court competent to invcstieate this matter. and in addition,
ivithdrew &ceptance of COU&'S compulsory jurisdiction as laid
down in part z of Article 36 of Court's constitution. Imperial
Govemment has thus decided that decision of Internatio~ial
Court is unjust and contrary to Persia's independence and
national sovereignty and as 1informed Your Excellency orally
at our interview on Saturday 7th July continues to regard
decision mentioned as invalid.
Appendix No. 3 to Annex I a
[Translatioiz]
TELEGRAM ,ATED 9th JULY 1951, FROM THE IRANIAN MINISTER FOR
FOREIGh' AFFAlRS TO THE SECRETARY-GENER OFLTHE UNITED NATIONS
At the request of the Govemment of His Britannic Majesty the
International Court of Justice made an Order dated 5 July 1951, con-
cerning measures of protection in the petroleum case. 1 am instmcted
by my Govemment to bring the followingto your attention: (1)Accord-
ing to Article 36 of the Statute of the International Court of Justice,
the jurisdiction of the Court comprisesall cases which the parties refer
to it and al1matters specially provided for in the Charter of the United
Nations or in treaties and conventions in force. Article 36, paragraph 2,
of the said Statute provides that the States parties to it may at any
time declare that they recognize as compulsory i$so facto and without
special agreement, in relation to any other State accepting the same
obligation, the jurisdiction of the Court in al1legal disputes concerning
specified cases. No declaratiori has so far been made by the Imperial
Govemment of Iran to the effect of recognizing the jurisdiction of the
International Court of Justice as compulsory. Accordingly, the compe-
tencc of the Court so far as compulsory jurisdiction in questions and
disputes affecting Iran is concemed is based on Article36, paragraph 5,
which reads aç follows: declarations made under Article 36 of the
Statute of the Permanent Court of Intemational Justice and which
are stiU in force shall be deemed, as between the parties to the present
Statute, to be acceptance of the compulsory jurisdiction of the Inter-
national Court of Justice for the pcriod which they still have to run
and in accordance with their terms. The accession of the Imperial
Government of Iran to the provisions of Article 36 of the Statute of
the Permanent Court of Internatioiial Justice, according to the Declara- AKNEXES TO U.K. XE~IORIAL (xo. I a) 131
tion of IO Mehr 1309 (2 October 1g30) and the Act of 23 Khordad
1310 took place on 13 September 1932, the compulsory jurisdiction
of the Court being extended only to disputes arising ont of situations
and events directly or indirectly connected with the application of
treaties and conventions concliided by the Govemment of Iran after
the ratification of the said Declaration. iiforeover, any questions which
~ould, according to international law, be exclusively xvithin the com-
petence of Iran were excluded by the said Declaration from the com-
pulsory jurisdiction of the Court. Hence it is obvious that agreements
made under private and domestic law such asthe concessions which
States grant to their nationals or to aliens for the purpose of working
certain sources of wealth, commercial matters and questions relating
to the sovereign rights of Iran and exclusively within its domestic
jurisdiction, were and still are excluded from the compulsoryjurisdiction
of the former Permanent Court of international Justice and of the
present Court. (2)In 1933, by meaiis of machinations and by the creation
of special circumstances due to British policy, the particulars of which
need not be enumerated here, a new concession was obtained from the
Iranian Govemment by the former Anglo-Iranian Oil Company for the
prospecting, extraction and utilization of petroleum in a specified region
of Iran. We do not wish to enter into a discussion of the nature of this
imposed concession and of its invalidity in law ; but even on the assump-
tion that it is valid and well-founded, it relates to the intemal law of
Iran and merely represents a concession granted by the Iranian Govem-
ment to a company, that is a private legal person, and the granting of
any concession, even to nationals, has to be effected by legislation uith
the approval of Parliament, as prescrihed in Article 24 of the Iranian
Constitutional Act. The United Kingdom was not mentioned in any
capacity in this concession and no rights or powers were reserved to it
therein. Therefore, the concession has nothing in common with the
intemationai treaties and conventions referred to in the Statute of the
former Permanent Court of International "Tustice and in the Statute
of the liresent Coiirt. (3) I<clyingon plramount iintion:,l coiisidcrations
and iiicurifuniiity ii.ith ilrticle1. paragrrij>li ?, of rh~.Clilrter of the
Linitrcl Sntiiiris, tvhich r)rocl;iiiiistlic rialit of rienulesto self.dctrrmin;i-
tion, and aith a view 'to liberating thëmsclvêsfiom the clutches of a
usurping company which for many years has served as an instmment
of interference in the economic, social and political affairs of Iran, the
~~cuple 2nd Gnvcmmcnt of Iran Iin\.e,\r,itlioiit:iny disriiiction *s het\veeii
n:itiorills and ali~ns. ~irocl;iiincdthc nationn1iz;ition ,,i tlic ~>ctrolcum
industries throughout Iranian territory by two acts nninimously
approved by the Legislative Chambers and dated 29 Esfand 1.329
(20 March 1951)and g Ordibeliechte 1330(30April1951), and have at the
same time devised means of providing fair compensation forany damage
which the holders of the concession may suffer and of organizing the
exploitation of petrolerim and its sale to the countries which have
hitherto been purchasers of it. It is the incontestable right of each
nation to nationalizc any of its industries, a right which has been used
and is being used by some nations in various forms and for varions
reaçons. Thus the present British Govemment haç nationalized certain
branches of Britain's industries. ,~n~ ~dine the co~l~and s~e~l ind~ ~ ~es.
u
no protest beirig raiscd by nny u~li<:ifi<)veniinc3ntor intcmariurial
authority, nor is nationslization being obstrusted by an), concr'jsionnia?teII~the beneficiaries iinder the concession or contract(4)uThtr foniicr
Anclo-lr:ini;in Comnnnv on the one h:ind and thc 13ritishGovcrniiicnt
\i.ti;ch eiicoiiraged ihai Company on the otticr Iiand tia\.c interfc.rc.din
th^.donte~tic :iH;iirjof Iran in disrcgnrd of 1egisl:ition:ind intcniationdl
Inw y rit tlic til~lilication of the lrnninn petruleiirii iiidiistr\.
Snti<m:iliz:,tionAct. I<yintcrnal intrigues.by tltc or;niii~:itioii of strikes
h\ the <Ics~~;itctif ivnriliii:iiitlic rcinforcement r~fits I:ind tind
air foices in arias near lran-a circumstance which might conceivahly
cause my Government to lodge a complaint with the United Nations-
England is on the one hand threatening the Government and people of
Iran, and on the other hand appealing to the International Court of
Justice and, on the bais of the invalid Contract of Concession of 1933,
requesting that the application of the petroletim industry Xationali-
zation Act should be suspended and that the former Company should
have freedom of action as in the past. England is also applying to the
Court for measures of protection. It must be taken into consideration
that England had no right to make such a complaint, for in the first
place Iran has concluded no treaty with her onthat subject.Furthermore,
as mentioned in the first and second parts of this statement, the Inter-
national Court of Justice is not competent to give a ruling in this alleged
dispute, for Iran did not consent to the submission of this matter to the
Court, the Chartcr of the United Nations did not authorize the Court
to assume jurisdiction in this particular case. and there are no inter-
national conventions or treaties on this subject which confer such
jurisdiction on the Court. kforeover, the Imuerial Government's Decla-
ration of 2 Octohcr ii).zi~rcgnriling tlie rciognition of the compiilsory
jurisdiction of tli~.lorincr l'ermnncrit Coiirt rcltited solely to dispiites
:injing oiit of the i~crf<nrin:~ocf international con\,entii>nsaiid treaties.
As thé petroleu& concession \vas not the subject of any convention
between the Government of Iran and England and since, as stated
above, Iran by its Declaration has excluded from the competence of the
Court any disputes regarding matters solely within its domestic juris-
diction, therefore, in view of these facts, the Iranian Government, in
attention to the lack of junsdiction in the Court and subsequently in itsis
reply to the notice of 22 Juiie 1951 regarding the 13ritishGovernment's
request for measurcs of protection (a copy of which will be forwarded
to yon later), set forth this point in detail with incontrovertihlearguments.
Nevertheless, the Court by its action to date and in particular hy its
Order of 5 July 1951h ,as unfortunately impaired the confidence which
the Government of Iran and the Iranian nation had always had in
international justice, namely (a) since the fact that England was not
legally competent to institute proceedings and that the Court had no
jurisdiction in the case \vas clear and evident the Court, before taking
any action or making any decision, should have declared its lack of
jurisdiction ;(b) the notice from the Registrar of the Court communi-
cating the British request for measures of protection was received by
the Iranian Government at Tehran on Monday, 25 June at 7 p.m.,
while the date appointed for the Sitting of the Court was Saturday,
30 Tune. The short time allowed which was barelv sufficient for the
preparation of a reply and its despatch was contcary to Article 61,
paragraph 8,of the Rules of the Court, which provide that in the case'34 AXSEXES TO U.K. MEblORIAL (NO. 1b)
the Iranian Government and people are at present in a difficult financial
situation, may be under the impression that the stoppage and sequestra-
tion of petroleum profits payable toIran and the designation of a distant
time-limit for the decision on the substance of the case (the time-limit
for consideration of the interim measures was five days, but the time-
limit for consideration of the substance of the case laid down in the
interim measures order is six months) willsufficeto persuade the Govern-
ment and people of Iran to give way and abandon their national aims.
In view of the foregoing, and of the fact that the Court has departed
from the ways of justice and shaken the confidence placed in it by the
world, 1 have the honour to inform Your Excellency with great regret
that the Imperia1 Government of Iran withdraws its Declaration of
2 October 1930 concerning acceptance of the compulsory jurisdiction of
the International Court of Justice. A copy of this Declaration is heing
transmitted to the International Court of Justice at The Hague. 1 have
the honour, etc.
(Sigmd) B. KAZEMI,
Minister for Foreign Affairs.
Annex Ib
THE STOKES BIISSION
This Annex contains the following separate Appendices :
Appendix No. 1.-Outline of suggestions submitted to the Iranian
Delegation on 13th August 1951 by the Stokes Mission, without
prejudice to any party concerned.
Appendix No. 2.-Statement issued by the Foreign Office on
~3rd August 1951.
Afifie~idixNo. I lo Annex Ib
OUTLINE OF SUGGESTIONS SUBhlITTED TO THE IRAXIAN DELEGATION ON
13th ~ucus~ 1951 BY THE STOKES xISSION,
WITHOUT PREJUDICE TO ANY PARTY CONCERNED
[The following abbreviations are used throughout : A.I.O.C. for
Anglo-Iranian OilCompany; N.I.O.C. for National Iranian OilCompany.]
I.A.I.O.C. will transfer to N.I.O.C. the whole of its iiistallations,
machinery, plant and stores in Iran. As regards the assets in southem
Iran compensation by N.I.O.C. to A.I.O.C. would be included in the
operating costs of the oil industry in the area. Compensation for the
assets used in the past for distribution and marketing in Iran will be
dealt with under the separate arrangements snggested in paragraph 7
below.
2. A Purchasing Organization \vil1be formed in order to provide the
assured outlet for Iranian oil which is the only basis upon which an oil
industry of the magnitude of that of Iran could hope to maintain itself. ANNEXES TO U.K. MEMORIAL (NO.Ib) I35
This will be done by means of a long-term contract, Say twenty-five
years, with N.I.O.C. for the purchase f.0.b. of very large quantities of
crude oil and products from southern Iran.
3. Apart from this arrangement N.I.O.C. would be able to make
additional sales of ail subject to the normal commercial provision that
such salesshould beeffected in sucli a way as not to prejudice the interests
of the Purchasinr ., Ore..ization.
4. Tli,. i'iirchniin: Or<;iniz;,tion uiid~tlii:ijirccnirri\i,ihe pl:,cing
ar rhr dispos:ilof tlic S.I.O.C.;\vorld-iii~lctr:insli«rt<ition:inclinarkrtiii~
scrvicc. includin? one of tlii. I;lrcr.it iniikcr fiecrtlir\iorl<l.:aiii\.ill
be entéringinto%rm commitme~ts with its customers forthe fulfilment
of which it will be relying on Iranian oil. It will, therefore, as a matter
of normal commercial practice, have to assure itself that ail in the
necessary quantities and qualities will come forward at the tiines
required. In order to secure this objective, the Purchasing Organization
will agree with N.I.O.C. an Organization which, under the authority of
N.I.O.C., will manage on behalf of N.I.O.C. the operations of searching
for, producing, transporting, refining and loading oil within the area.
The Purchasing Organization will arrange from current proceeds the
finance necessary to cover operating expenses.
5. In order that the proposed Purchasing Organization can be induced
to commit itself ta the purchase of large quantities of Iranian oil over
a long period of years, the commercial terms must be not less advanta-
geous than the Purchasing Organization would secure elsewhere either
by purchase or development. In effect, this means that the Purchasing
Organization would buy the oil from N.I.O.C. at commercial prices
f.0.b. Iran less a pnce discount equal in the aggregate ta the profit
remaining to N.I.O.C. after allowing for the discount and for the costs
of making the oil availahle ta the Purchasing Organization.
6. In the event of the foregoing suggestions being accepted by the
Iranian Government as a basis forthefuture operatiou of the ail industry
in southem Iran, it is suggested that they should be expanded into the
Heads of an Agreement which could later be developed into a detailed
purchasing arrangement between the Iranian Government and the
proposed Purchasing Organization. The Heads of Agreement would
also provide for the immediate resumption of operations in southern
Iran on an interim basis.
Petrolenm Company Limited which produces and refnes oil for con-h
sumption in Iran, together with the installations, machinery, plant and
movable assets of A.I.O.C. which have been used in the past for distribu-
tion and marketing ofrefined products within Iran, shoiildbe transferred
to the Iranian Govemment on favourable terms.
8. There will be Iranian representation on the board of directors (or
its equivalent) of the Operating Organization, which will, of course,
only employ non-Iranian stafi to the extent that it finds it necessary
to do so for the efficiency of its operations. It dl also offer its full
CO-operationto N.I.O.C. in any programme of training on which the
latter may wish to embark.136 ANNEXES TO U.K. MEMORIAL (NO. Ib)
A@endix Iv'o.z toAnnex I b
STATEMENT ISSUED BY THE FOREIGN OFFICE ON ~3rd AUGUST 1951
It will he recalled that on 3rd August the Foreign Office published
the texts of the messages exchanged between the Persian Govemment
and his Majesty's Govemment, which formed the basis on which the
Lord Privy Seal's mission was dispatched to Tehran. At the same time
it was announced that the Persian Govemment had agreed that the
basis for His hfajesty's Government's acceptance of the "principle of
nationalization" was the Persian law of 20th March 1951 (which merely
stated this principle) ; that they had recognized that they would have
to negotiate with His Majesty's Government the manner in which this
law would be carried out in so far as it affected British interests ; and
had confirmed to Mr. Harriman that they recognized the necessity of
relieving the atmosphere which then ohtained, particularly in the oil
areas.
The text of the Persian Cabinet minute which formed the agreed basis
for negotiation is attached. At that time, in the light of Mr. Harriman's
conversations with the Persian Government, His Majesty's Govemment
had every reason to suppose that the Persian Government would not
insist on negotiating on the basis of the nine-point law of1st Nay 1951.
This law, which attempted to provide for the practical implementation
of the principle of nationalization, hadbeen liastily drafted withoutthe
necessary reflection or consultation with qualified technicians, and was
in the view of His Majesty's Govemment not only entirely unworkable
in practice, but represented a clear breach of the Persian Government's
contractual obligations.
During the Lord Privy Seal's negotiations, he put forward an eight-
point proposa1which has been widely recognized as providing a fair and
indeed generons solution to the oil dispute. Under it the Persian people
would have realized nationalization and control of their ~rincival
industry, and woulù have had at their disposa1 the technical knowledge
and experience of British personnel and the Company's fleet of tankers
and world-wide marketingorganization. A "
The Persian Government could, moreover, have expected to receive
an annual revenue of some L5o million under the equal sharing of profits
proposed. They could thus have pursued the urgently needed economic
development of their country and improved the lot of their people.
In the course of negotiations, however, it became increasingly clear
that the Persian Govemment had no intention of negotiating on the
basis agreed hy Mr. Harriman with both Governments. Instead, the
Persian Government were in effect insisting on the full implementation
of the nine-point law of 1st May 1951.
Furthermore, they took no steps to mitigate the campaign of inter-
ference with the Company's personnel in southern Persia in their work
and the harrassing of them in their daily lives. Finally, the Persian
Govemment refused to agree to any arrangement which would have
allowed the British staff to work under proper management and in
acceptable working conditions. To-day the great industry remains at a
standstill, to the advantage of no one and at heavy cost to Persia.
His Majesty's Govemment must now take their stand on the intenm
decision given by the Intemational Court of Justice at The Hague on ANNEXE SO U.K. XEMORIAL (Nu. 1 b) I37
5th JuIy. Shis dccision, as it will be rccalled, indicatcs inter olia 1:hat
both the Persian and the United Kingdom Governments should ensure
that no measure of any kind is taken dcsigned to hinder the operations
from being carried on as they were carried on before 1st 3lay 1951, and
that the Comoan.'s .verations in Persia should continue under the
direcrion uf iti iiiaii:igcinc.nt ;it\i.;tconstitiitcil 11i:flirc1st >la! ri)51.
2i.i;Irisiilt of tlic jtLJ>I>:lf ils nj>er;~ti~~iis tlir oiltields coiisCqlirnt
un tt.~ilciion of tlic I'~rsi.,riGn~t:riin1êntt,l~c:\.IO.(:liitIJCC Ionll~<,ll~.d
ru \vitli.lr,<ira~icrsoiiiii:lfroiii rt.ese iicl;ir Ii,ii, iiu\vci.,r iiistru<.tc<l
:t niicleus ui its 1irrionnc.l ro rciii;iiiin :\I,:,d;tiiiiiuralcr ro tie rcd\,
to carry on the Company's operütions, in accordance with the Hague
Court's decision, whenever the Persian Govemment make it possible
for them to do so.
The Persian Government are, of course, iinder an obligation in inter-
national law to enstire the safety and protection of these personnel, as
of al1 foreigners. As has been stated before, His Majesty's Govemment
would he obliged to take the necessary measures to protcct them should
the Persian Govemment fail in their obligations in this respect.
His Majesty's Government are deeply grateful to Mr. Harriman for
the iintiring efforts which he has made to create and maintain a basis
for negotiation. Tliey cannot but express their extreme regret that the
departure of the I'ersian Governinent from this basis and their failiire
to appreciate the conditions essential for the carrying on of the industry
should have resulted in a suspension of the negotiations and in the
continued stoppage of the Company's operations.
They remain prepared at any time to reopen negotiations on the basis
of Mr. Hamman's formula whenever any disposition is shown on the
Persian side to discuss the questions in dispute in a spirit of good will
and reason. and in the lieht of the inescaoabie facts which confront
Persia in this matter. The; will continue toLpursue their application to
the Hague Court for a definitive judgment in this dispute.
*
The text of the Pcrsian Cabinet minute handed to Mr. Harriman on
24th July, which formed the agreed basis for negotiations between the
British and Persian Governments. was as follows :
The Council of Alinisters and the Alixed Oil Commission in their
meeting of 31st Tirmah (~3rd July 1951) held at the residence of His
Excellency Dr. Moussadek, the Prime Illinister, approved the following
formiila :
I. In case the British Governrnent, on behalf of the former Anglo-
Iranian Oil Company, recognizes the principle of nationalization of the
oil industry in Persia, the Persian Government would be preparecl to
enter into negotiation with representatives of the British Govemment
on behalf of the former Company.
2. Before sending representatives to Tehran, the British Govemment
should make a forma1 statement of its consent to the principle of nation-
alization of the oil industry on behalf of the former Company.
3. By the principle of nationalizatioii of the oil industry is meant the
1~ro1>osaw l hich was approved by thc special oil committee of the M;ljlis
and was conhrmed by the law of Isfand 29, 1329 (20th March 1951), the
text of which proposal is quoted hereunder : "In the iiame of the pros-
perity of the Persian nation, and nith a view to helping secure world
'3 13s ASNEXES TO U.K. MEIIORIAL (NO. Ic)
peace, we the uiidersigncd propose that the oil industry of Persia be
declared as nationalizcd throughout al1 regions of the country without
exception, that is to say, al1operations for exploration, extraction,and
ex loitation shall bc in the hands of the Government."
fn this connection, for hfr. Harriman's further information, a copy
of the Xote which the representatives of the former oil Company sub-
mitted to the Persian Goremment on their method of accepting the
principle of the nationalization of the oil industry, \\.hich Xote \vas not
accepted, is being hcrewith enclosed.
4.The Persian Government is prepared to negotiate the nianner in
which the law will be carried out in so far as it affects British intcrests.
E\'EXTS SUBSEQUEXT TO THE WITHDRAWAL 01; THE
STOKES h1ISSIOX
This Annex contains thc following separate .4ppendices :
Ap..ndix No. 1.-Statement by Foreign Office spokesman on
6th September 1951.
Appendix Xo. 2.-Xote presented by His Britannic hlajesty's
Ambassador in Tehran to the Imperia1 Govemment of Iran on
11th September 1951.
Appendix No. 3.-Letter, dated 12th September 1951, from the
Iranian Prime hfinister to Mr. Harriman, Special Representative
of the President of the United States.
Appendix Xo. 4.-Letter, dated 15th Septemùer 1951, from
Mr. Hamman, Special Representative of the Prcsideiit of the
United States, to the Iranian Prime hlinister.
A$pendix No. I 10 Anizex I c
STATEMENT BY FOREIGX OFFICE SPOKEShlAN ON 6th SEPTEMBEll 1951
The recent speech hy the Persian Prime Minister in the Senate shows
conclusively that no further negotiations witli the present Persian
Govemment can produce any result. His hlajesty's Government therefore
now consider that the negotiations begun by the Lord Privy Seal are
no longer in suspense but broken off. As regards the threat to withdraw
the residence permits of the British Company employees, it is evident
that any attempt made by the Persian Government to evict them would
be a further breach of the interim decision of the Hague International
Court.
--
Appeitdix No. z to Annen. I c
NOTE PRESESTED BY HIS BRlTASKIC MAJESTY'S AMBASSADOR IN TEHRAS
TO THE IMPEHlAL GOVERSSIEST OF IRAS OS 11th SEPTEMBER 1951
1have the honour, under instructions froin His 3fajesty's Government
in the United Kingdom, to inform Your Excellency that in view of the ANNEXES TO U.K. >IEhlORIAL (~<i.Ic)
'39
breakdown of thc negotiations in Tehran His AIajesty's Governnient
have been comoelled to review tlie effcct on the economv of the United
Kingdom of thécessation of the export of Iranian oil. ?'héyhave decided
that they have no alternative but to withdraw certain exceptional
facilities whicli have hitherto been granted to Iran by virtue of the
importancc of that oil to the economy of the United Kingdom.
members of the sterling areas-forfaconversion of sterling into douars.
She also enjoys automatically the right to make use of sterling for
payment to and from countries in tlie sterling area and to certain other
countnes.
The cessation of tlie export of oil from Iran not only removes the
justification for thesc exceptional facilities but a1sornakes it necessary
for the United Kingdom to spend large sums of dollars on the replacement
of oil. In these circumstances, His Majesty's Government can no longer
affordto supply Iran with dollars. For this reason it has been necessary
for His Majesty's Treasury to make an order under which al1 sterling
payments to and from Iran will be subjected to the permission of His
Majesty's Treasiiry. Since, however, the intention is to withdraw only
conferred'by the order \vil1normally be ex&cisede iusuclindwag'as toer
allow al1transactions cxcept conversions into United States' dollars and
payments and receipts of çterling hy Iran in respect of oil transactions.
In addition to these facilities in financial spheres, Iran has hitherto
been given the right, in view of the contribution which her oil has madc
to the economy of the United Kingdom, to purchase certain scarce
goods which are urgently required in the United Kingdom or could
have been sold cither for dollars or to other markets. As a corolla
the action described above. His Maiestv's Government have. there ore'9
in addition, takcn tlic necessary stel,s by action under expo;t ljcensing
arrannements for the immediate discontinuance of sul~p. .s from the
United Kingdorn of these scarce goods.
It is His Majesty's Government's sincere hope that theneed for these
measures of defence of the United Kingdom economy and have beenely as
forced on His AIajesty's Government in circumstances not of 'their
making. The intention of His blajesty's Government is to limit the harm
which has been caiised to the econoiny of the United Kingdom by the
action of the lranian Government and the measures in question can be
revoked whenevcr the Iranian Governrnent rnakes possible a solution
to the oil question.
1 avail myself of this opportunity to renew to Your Excellency the
assurance of my highest consideration.
(Signed) F. M. SHEPHERD140 ANNEXES TO U.K. ME~IORIAI. (NO. 16)
APPendix No. 3 to A?t?tex I c
r.i:.ni:KIL~TED 12th ~EPTE)IB~:K19j1. I:I(C>>ITHIIK..\ZI.IKIYB MISISTEI~
TO 3lr. HI\HI<I.\ISI>ECI:\I. i<EPIIESEST;\TI\OF THE PKE.CII)ES T F THE
[The text given below is as received from the Government of the United
States. As thc letter !vas telegraphed the words shown in brackets
were omitted.]
Dear Mr. Harriman :
Saheb Gharanieh Conference which came into existence as resiilt (of)
Your Excellency's endeavours and good will and in which Iran Govem-
ment and people had lodged their complete faith unfortunately did not
produce desirable results. Subsequent (to) this, &Ir. Stokes and Your
Excellency leftIran (on) zznd and 24th August, respectively, and (the)
negotiations were declared suspended in spite (of the) fact tliat in my
last meeting with (Mr.) Stokes 1 gave Iiim in writing viewpoints of
(the) Imperia1 Iranian Govemment and he promised (to) give due
consideration to (the)same and inform me about his views from London.
While (the) Iranian Govemment expected (that) negotiations would be
started on (the)hasis of (the) viewpoints submitted to him, unfortunately,
we have been kevt in susvense UV to (thel vresent. It is even said thev
are expecting ne; propo&ls from us ~bndon. This state of susPenSe
which has lasted has become intolerable.
Since Your Excellency, representing the President (of the) United
States, has arranged negotiations hetween Iran on (the) one hand and
(the) British Govemment representing (the) former A.I.O.C. on (the)
other and on vour de~arture from Tehran and later in London and
Washington had kindiy proposed your voluntary CO-operation,hence
the Iranian Govemment ventures (to) offer present proposais through
Your Excellency with (a) request (to) their immediate transmission to
(the) British Govemment as representative of (the) former A.I.O.C.
First, as Your Excellency is well aware, (the) main point of difference
which had appeared dunng (the) 1st days of negotiations concerned
itself with (the) management of (the) N.I.O.C. (MI.) Stokes suggested
that either (an) operating agency or (a) British general director should
have charge of (the) management of (the) oil industry in (the) sonth of
Iran. While (the) Iranian Govemment could not give its accord to such
aproposa1because, according to (the) fopula which had beeu submitted
by Your Excellency to (the) British Government and both (the) Iranian
and British Govemments Iiad agreed with (the) sane, it was obvious
that all exploration, extraction and exploitation activities shouldbe in
(the) hands of (the) Iranian Govemment and to accept any proposal
contrary to said formula would be looked upon as submission to revival
of (the) foner A.I.O.C. iinder new guise.
foreign technical staff and also (the) fact that siich technical men need
(to) have sufficient autonomy and liberty of action which would be
conducive (to the) best management of (the) industry. (The) former
A.I.O.C. was divided (into) various departments having at (the) head
(of) each department foreign experts with necessary and proper liberty
of action. (The) Iranian Govemment has in mind (to) keep (the) same ANNEXES TO U.K. i\IEMOKIAL (NO. Ic) IqL
original (staff) in so far as it does not coiitradict (the) terms (of the)
Nationalization Law and employ managers and (?) (responsibilities) of
technical sections in the National Iranian Oil Company with (the) same
in order (to) keep pace with (the) technical (advancements) of (the),
modem world in line (with) oil technology, (the) Imperial Iranian
Govemment is prepared (to) take advantage (of) expert knowledge
(of) foreign technicians from neutral countries and provide in (the)
original law of (the) National Iranian Oil Company (the) existence of
(a) mixed executive board composed (of) such experts and Iranian
specialists who would jointly manage adrninistrativc and technical
affairs of (the) Xational Iranian Oil Company.
Secondly, while it has been repeatedly stated that (the) Irariian
Govemment had never intended and is not intending (to) confiscate
properties of (the) former Company, yet, it proposes (the) following
three methods for cquitable settlemcnt (of) just claims of (the) former
A.I.O.C. with due regard (to) claims of (the) Imperial Iranian Govem-
nient :
(a) Determination and amount (of) compensation to be based on
quotedvalue (of) shares of (the) former Company at prevailing
quotations prior (to the) passage of (the) Oil Nationalization Law.
(b) Rules and regulations relative to (the) Nationalization in general
whicb have been followed in democratic countries to be
regarded as basis for (the) determination and amount (of) com-
pensation.
(c) Or any other method which may be adopted by rniitual consent
(of the) two parties.
Tliirdly, with reference to (the) sale of oil, as we have been inlormed,
Britain has been using about ten millions tons (of) Iranian oil per
year for its interna1 consumption, (the) Iranian Government declares
its readiness (to) sel1this amount (of) oil for (a) period agreed upon by
mutual consent of bot11parties every year at prevailing intemational
prices on basis of 1.o.b. value in Iranian port.
Fourthly, one of (the) proposais of Rlr. Stokes was (to) transport
lranian oil by (the) Company which he proposed. It must be said that
we can agree (to) deliver (a) fixed amount (of) oil which is sold to Great
Britain to anv comnanv or tr:msoort aeencv of their desimation.
.4foresaid poinis are th beregarded basis'ior $arting new neg&ations
and (the) Iranian Government hopes eventually (tha. .n) a~ree,en-
may 'be reached.
(The) Iranian Government and (the) people can no longer tolerate
tliis state of suspension because on one hand there are great numben
of British exoerts in Abadan who are ~resented bv (the) former A.I.O.C.
to bc emploied by (thc) Xational 1ran;an Oil ~om>;ny knd (the) Iranian
to arrive at (a) inutually satisfactory conclusion has so far'ahstained
from employing cxperts from other countries. On (thc) other hand,
so long as exis'tingdifferences have not been removed and certain em-
lovee esof (the) former A.I.O.C. cause new aeitation everv dav and
Create rniskd&standings in relations between the two ~ovemkents
of Great Britain and Iran, it is quite obvious that other countries will
not be ready (to) send their expeks to Iran and enter into transactions142 ASNEXES TO U.K. MENORIAL (NO. IC)
for purchase of oil with us. It must be pointed out that as(a) result, tliis
confiised state of affairs and derangements in economic and financial
affairs of (the) country in addition (to) enormous maintenance costs
(of the) oil industry imposed on our budget, we cannot endure siich a
situation for (a) long time and (the) Iranian Go\,crnment, bccause of
its great responsibility, deems it neccssary (to) bring to a close this
period of uncertainty. Hence, if in (the) lapse of 15days from (the) date
at which this present proposal is submitted to (the) British Govcmmcnt
no satisfactory conclusion is achieved. (the) Imperia1 Iranian Govern-
ment regrets (IO)statc its coinpiiliioi(t;)c;~nccl'(tlielresidciii:c.pcnnits
Iicld I>v(tlicj llritisli sttiff ;ind experts non. r~.sidiiigin soutliciii oil iiclds.
(Signed) Dr. hfo~,\nr~~\D&IUS.~DDIQ.
Appendix No. 4 to Anner IC
LEITER, DATED 15th SEPTEhlBER 1951, FROM DIT.H.4RRIMAN ,PECIAL
REPRESENTATIVE OF THE PRESIDENT OF THE UNITED STATES,
TO THE IRANIAN PRIME MINISTER
Dear Mr. Prime hlinister :
Your Excellency's message of 12th September 1951 has been communi-
cated to me by the Iranian Ambassador. 1 share your regret that the
discussions between the Iranian Government and the British delegation
under Lord Privy Seal Stokes did not culminate in an agreement upon
'
a settlement of the oil controversy. 1 know that the continued inter-
ruption of the production and shipment of Iranian oil imposes a very
considerable hardship upon the economy of Iran as it does upon the
economy of Great Britain. The United States and theentirefree world
looked anxiously upon these discussions in the hope that some solution
could be found which would satisfy the legitimate interests of both
parties.
1 assure Your ~xcellenc; that 1 continue to stand ready to assist in
any way that 1 can in finding a just solution. In my efforts thus far 1
have endeavoured to be frank and objective in the advice that 1 Iiave
given to the Iranian Government, as well as to the British Government.
It is in this objective and friendly spirit, and in an effort to be helpful
to you in arriving at a settlement, that 1 should like to comment iipon
the substance of your communication.
With reference to the proposals in general, 1 should Say at the out-
set that they appear to be the same asthe proposals madeby the lranian
Govemment during the course of the negotiations in Tehran, which the
British Mission did not acceDt since thev did not conform to ~ractical
and commercial aspects of théinternational oilindustry. In somêrespects
the proposals in fact represent a retrogression from the position taken
during the discussions. .
Your Excellency has suggested that the various departments of the
Anglo-Iranian OilCompany be retained. in so far as this does not couflict
with the terms of the Nationalization Law. and that the managers and
other responsible personnel of the technical sections be employed in the
National Iranian Oil Company with the same aiithority which they ANNEXES TO U.K. MEMORIAL (NO. IC) 143
enjoyed previously. You have also stated that the Iranian Government
is prepared to create a mixed executive board composed of Iranian
and neutral foreign technicians who would jointly manage the adminis-
trative and technical affairs of the Xational Iranian Oil Company.
In discussing this possibility during the negotiations in Tehran. 1
endeavoured to point out to the Iranian representatives the impracti-
cability of attempting to operate a large and complex industry on the
basis of a number of section heads reporting to a board of directors,
with no single individual being given executive authonty. 1believe that
no organization can operate effectively in this manner, and I understood
Rlr. Stokes's position in Tehran to be that the British would not con-
sider it workable. Moreover, 1have pointed out that effectiveoperations,
particularly of a refinery of the size and complexity of that in Abadan,
require the employment of an integrated organization rather than the
employment of individual foreign specialists. Competent technicians
would not themselves consent to employment except under conditions
satisfactory tothem. Such conditions would include assurance that the
indiistry was .under capable management and operated in a inanner
whYour Excellency has expressed concern that the arrangement for the
operation of the oil industry must take into account the rctliiirements
of the Nationalization Law. 1 am convinced that arrangements are
possible which would meet this objective and at the same time would
assure that the oil industry is conducted on an efficient basis. During
our visit in Tehran, Mr. Levy and 1 discussed with Iranian officiais
arraiigements under which a competent organization could be employed
to ouerate under the control of the National Iranian Oil Companv.
Siich arrnngcmrnts are a cominuii biisincss ~>rncritliroiiglioitlirworld.
\oiir Esc~ll~nc\ II:<r,.iti.ratctli.ithe 1r:iiiinn(;o\.t:rnmiiit ti:ii not
intended and doei not intend to confiscate the property of thc Anglo-
Iranian Oil Company and has suggested metliods for the determination
of the amount of.compensation. O
While 1 have no comments iipon your suggestions for determining
the value of the assets, it is ohvious that payment of compensation
must depend upon and will be affected by arrangements for the efficient
operation of the oil industry to assure that the products continue to
he made available for sale to world markets. As 1 have pointed out to
Your Excellency, in the view of the United States Government. the
seizure by any government of foreign-owned assets without either
prompt, adequate and effective compensation or alternative arrange-
ments satisfactory to the former owner is, regardless of the intent, con-
fiscation rather than nationalization. There must be more than a willing-
ness to pay ;there must be the ability to do so in an effective form. 1
believe, however, that if arrangements for the sale of oil are made uith
the British interests, the compensation -problem could be yorked out
satisfactorily and that the net oil income accruing to Iran could be as
large as that of any other oil-producing country under comparable
circunistances.
Yoiir Excellency has stated that the Iranian Government is prepared
to sel1to the British ten million tons of oil per year, this quantity repre-
senting an estimate of Iranian oil previously used in Great Britain. It
is specified that sales would be at prevailing international prices on the
basis of the f.0.h. value at Iranian ports. It is also stated that this oil ANNIEXES TO U.K. MEXORIAL (No. IC)
I44
would be delivered to any Company or transport agency designated by
the British.
:\s 1poiiited oiit to Your Ex,-llency iiiTeliraii. in order to bc assured
of continuous r~lcs of substanti;il qunntities of its oil in \i,orld m:irki,ts.
Iran must make arrangements with customers that can make available
large transportation and distribution facilities for marketing it on a
world-wide basis. Potential customers would not make such arrange-
ments unless they could obtain Iranian oil on a basis as favourable as
that on which they could buy or develop oil in other producing countries.
This, of course, is a practical business consideration. It is also trtie that
only those who have developed markets for Iranian oil are in a position
to commit themselves for its purchase in the large quantities produced.
The production of Iranian oil before the present controversy arose
amounted to some 30 million tons per year. The major portion of this
production was handled by British concerns and affiliates which Iiave
developed markets for it throughout the world. Only they have the
great transportation facilities needed to carry the oil from Iran to its
markets, where only they have the necessary distribution facilities
for it. Arrangements, including financial terms, for the'sale of only
that portion of the oil which previously went to Great Britain would
leave the problem of shipping to and distribution in other parts of the
world unsolved, and woiild force the British interests to develop other
sources of supply.
During the negotiations in Tehran the Iranian Government indicated
its willingness to consider a long-tetm contract for the sale of Iranian
oil to an organization acting on behalf of former purchaserç of the
products. Under this suggestion, that portion of the industry's output
which was not covered by this contract could be sold directly by the
National Iranian Oil Company to its own customerç. Your Excellency's
present sug.e-tion would indicate that there has been a change in this
position. -
Your Excellency, in pointing out that the suspension of negotiations
with the British and the shut-down of the Iranian oil industry have
created a serious situation in Iran, has stated that if a satisfactory
conclusion is not achieved uithin xi;davs from the date on which vour
proposal is submitted to the ~ritis6 ~Gvernment, the Iranian ~o;ern-
ment intends to cancel the residence ~ermits held bv the British staff
and experts now residing in the southern oil-fields. '
As 1 pointed out to Your Excellency, the proposa1 which you have
set forth in your communication do not represent an advancc from the
positions taken in the discussions in Tehran and in some respects appear
to be opposite. 1 believe tliat the problem with which Iran and Great
Britain are confronted can be settled only by negotiations based upon
recognition of the practical business and technical aspects of the oil
industry and based upon mutual goodwill between the parties. Such a
settlement which would attain Iranian aspirations for control of the
oil industrv within Iran is. 1 am convinced. Dossibie and feasible in
:tccord;iric~iiitltlit<iisciissit~iisive have had in i'e11r:in;incl tlie com-
nienis 1have made. Ho\vcvcr. Iconsidvr tlint iiiy paising your coinniiirii-
cation to ttic I3ritisli Governriient \i,oiild militate againja settlenient.
1iarticiil;irly in viçu, of ttic position taken regarding ttie eupiiliion of the
Rritish enii>lo\,>esin sourhern Iran. a position \\.hich 1 bclic\.eaiIl only
further aggra;ate an already serious situation. ANNEXES TO U.K. B~I~MORIIII. (NO. 2) '45
As a sincere friend of Iran, 1 carnestly tiope that Your Excellency
will reconsider the points set forth in your communication and that a
basis can be developed under which negotiations can soon be resumed.
1 want to tell Your Excellency how much 1 appreciate your comniuni-
cating with me on this matter. As stated earlier, 1 am anxious to be as
Iielpfiil as circumstances permit, but for the reasons 1 have set forth
1 regret that it is not possible for me to meet your request in this par-
ticular instance.
(Signcd) W. AVERELLHARRIMAN.
OBSERVATIONS 01' THE GOVERNivlENT OF THE UNITED
KINGDOM WITH REGARD TO JURISDICTION OF THE COURT
TO DEAL WITH THE MERITS OF THE CASE
I. The Application, filed by the Govemment of the United Kingdom
on 26th May 19j1 and instituting proceedings against the Imperia1
Government of Iran in the Anglo-Iranian Oil Company case. is hased,
so far as the provisions on which the jurisdiction of the Court is founded
arc concemed, on
(a) Article 36 (2) 'and Article 36 (5) of the Statute of the Court, and
(b) The declarations made by the Governments of Persia and of the
United Kingdom under Article 36 (2) of the Statute of the
Permanent Court of International Justice, which are given
respectively in paragraphs 2 and 4 helow.
IA. The Govemment of the United Kingdom accepts the position
that, since the jurisdiction of the Court is contested by the Imperia1
Government of Iran, that Government must be taken to have declined
to confer jurisdiction on the Court on the basis of forum Prorogatum(see
paragraph zo of the Application). The Court must therefore satisfy
itself that it has jurisdiction and it is for the Govemment of the United
Kingdom to satisfy the Court on this question. Thus, in the case of the
Maurommatis Palestine Concessions,Senes A, No. 2 (at p. IO).the Court
said : "the preliminary question to be decided is not merely whether the
-
1 Article 36 (2) reads : "The States partiesto the preîent Statute may at any
tirne declare that they recognize as compulsory i$ro facto and without çpecial
agreement. in relation to any other State accepting the same obligation, the juris-
diction of the Court in al1 legiil disputes concern:ng
(a) the interpretation of a treaty :
(b) any question of international law :
(c) the existence of any fact which, if established, would constitute a breach
of an international obligation :
(d) the nature or extent of the reparation to be made for the breach of an
international obligation."
Article 36 (5) reads : "Declarations made under Article 36 of the Statute of
the Permanent Court of International Tustice and which are still in force sh;bel
deemed. as between the parties to tliépresent Statute,to be acceptances of the
compulsary jurisdictionof the 1"ternationalCourt of Justice for the period which
thoy still have to ru" and in accordance with their terms." 14~ ASSEXES TO U.K. LlEMORIi\i. (NO. 2)
. nature and subject of the dispute laid before the Court are such that
the Court derives fromthem jurisdiction to entertain it, but also whether
the conditions upon which the exercise of this jurisdiction is dependent
are al1 fulfilled....". At pp. 16-17 the Court distinguished the dictum in
the Tunis and AloroccoBecreescase, Series B. No. 4 (dealt with later in
paragraphs 19-22 below), that the Coiirt need only decide provisionally
that the legal grounds (titres) relied on are of juridical importance for
the dispute, on the groiind that the objection in the iWavrommatiscase
relatcd not to a general jurisdiction, such as that under Article 15 (6)
of the Covenant, but to "a jurisàiction limited to certain categories of
disputes which are determined accordine to a leeal criterion". and held
th& "it cannot content itself with theuprovisional conclusion that the
dispute falls or not within the terms of the Mandate. The Court. before
giv'ingjudgment on the merits of the case, willsatisfy itself that the suit
before it, in the form in which it has been submitted and on the basis of
the facts bitlierto established, falls to be decided by application of the
clauses of the Mandate."
No doubt, the words of the Court in the above-quoted extract are
relevant to the present case. if one substitutes for "Alandate" the Persian
t1rcl:irntion iindcr :\rticlr 36(ij of the St;itiitc of the iJeriii:inent Cutirt
of liit~rnationnl lustice. The Go\.~rninciit of ttic Lnitecl Kingdoni ncccpts
the i>usition tlt.itit ij for it to slio!iJthnt tlrcc;ijc cornes \i,ithiri th?
termi of the Persian declaration and relates to the applicatiori oftreaties
and conventions invoked by the United Kingdom as bringing the case
within the Persian declaration. On the other hand, there are cases-of
which this may be one-where, in the words of the Permanent Court of
International Justice in the case of the Electricity ComPany of Sofia
and Bulgaria (Series A/B, No. 77), the objection to the jurisdiction
"is closelylinked to the merits of the case" (p. 83). and where that is so,
then, as indicated by the Court in that case, the Court cannot regard the
objection as preliminary in character and must examine it together
with the merits of the case (see also paragraph 25 below).
2. On 2nd October 1930, M. Hussein Ala on behalf of the Imperia1
Persian Government signed a declaration under Article 36 of the Statute
of the Permanent Court of International Justice accepting the com-
pulsory jurisdiction of that Court in the follwing terms :
"Le Gouvernement impérial de Perse déclarereconnaître comme
obligatpire, de plein droit et sansconvention spéciale,vis-à-visde tout
autre Etat acceptant la mêmeobligation. c'est-à-dire sous condition
de réciprocité,la juridiction de la Cour permanente de Justice
internationale, conformément à l'article 36, paragraphe 2, du
Statut de la Cour, sur tous les différends qui s'élèveraientaprhs
la ratilication de la présente déclaration, au sujet de situations
ou de faits avant directement ou indirectement trait à l'aunlication
des traités ou conventions acceptés par la Perse et postérieurs ~à~
la ratification de cette déclaration. exception faite pour :
a) les différends ayant trait au statut temtorial de la Perse,
y compris ceux relatifs à ses droits de souveraineté sur ses
iles et ports ;
b) les différendsau sujet desquels les parties auraient convenu
ou conviendraient d'avoir recours à un autre mode de règle- ANNEXES TO U.K. DlEMORIAL (NO. 2) I47
c) les différendsrelatifs à des questions qui, d'après le droit
international, relèveraient exclusivement de la juridiction
de la Perse.
Toutefois, le Gouvernement impérial de Perse se réserve ledroit
de demander la suspension de la procédure devant la Cour pour
tout différendsoumis ail Conseil de la Sociétédes Xations.
La présente déclaration estfaite pour une durée de six ans ; à
l'expiration de ce délai, elle continuera A avoir ses pleins effets
jusqu'à ce que notification soit donnée de son abrogation."
3. An instrument of ratification of this declaration was deposited with
the Secretariat of the League of Nations on 19th September 1932.The
instrument States, inter aliat,hat the declaration (which was appended
thereto) had been approved by the Persian Parliament.
4. The Government of the United Kingdom accepted the compulsory
jurisdiction of the Permanent Court of International Justice on 19th
September ~gzg in the following tem :
"On behalf of His hlajesty's Government in the United Kingdom
and subject to ratification, 1 accept as compulsory ipso facto and
diction of the Court in ccnformity with Article 36, paragraphjur2,-of
the Statute of the Court, for a period of ten years and thereafter
until such time as notice may be given to terminate the acceptance,
over al1 disputes arising after the ratification of the present $e-
claration with regard to situations or facts subsequent to the said
ratification, other than
~lispiitcin rcg:ird tu \i.liiclithe parties to ttie diipiitt- ha\.e .igiçeil
<irsli;ill:!grectt, have recoiirsc Io joint. o1lit.rilit~thodof ~,i.;iccful
settlement; and .
disputes with the government of any other Member of the League
which is a member of the British Commonwealth of Nations,
al1 of which disputes shall be settled in such manner as the
parties have agreed or shall agree ; and disputes with regard
to questions which by international law fa11exclusively within
the jurisdiction of the United Kingdom ;
And subject to the condition that His Majesty's Government
reserve the right ta require that proceedings in the Court shall be
suspended in respect of any dispute which has been subrnitted to
or is under consideration by the Council of the League of Nations,
provided that notice ta suspend is given after the dispute has be,en
submitted to the Council and is given within ten days of the nqtifi-
cation of the initiation of the proceedings in the Court, and provided
also that such suspension shall be limited to a period of twelve
months or such longer period as may be agreed by the parties to the
dispute or determined by a decision of al1 the Members of the
Council other than the parties to the dispute.
(Sigi~ed)ARTHUR HENDERSON."
5. An instrument of ratification of this declaration was deposited
witli the Secretariat of the League of Nations on 5th Febmary 193"148 ANNEXES TO U.K. ~IEDIORIAL (SO. 2)
6. At the date of the institution of the present proceedings, neither
Iran nor the United Kingdom had tennuiated its acceptance of compul-
sory jurisdiction or abrogated its declaration. In the telegram nddressed
by the Iranian Minister for Foreign Affairs to the Secretary-General of
the United Kations on 9th July 19j1 (Appendix Ho. 3 to Annex II\ to
this Afemorial), to ahich reference is made later in this Annex (para-
graph 28 below), the Foreign Afinisterpurported to abrogate the Persian
declaration and to terminate the acceptance by Iran of the compiilsory
jurisdiction of the Court. It does not appear whether or not the Iranian
Govemment proposes to contend that this purported abrogation (if it
is effective) applies to the present case, in which proceedings be'iorethe
Intemational Court had already been instituted. If any such contention
is made, the Government of the United Kingdom reserves'the right to
reply fully to it and will content itself at this stage with this observation
only, namely, that, if a State can retrospecti\rely terminate its acceptance .
of compulser jurisdiction in relation to a case which has already been
instituted begre the Court, the provisions of Article 36 (2)of the Statute
would become completely worthless '.
7. 'i'heGovernment of the United Kingdom submits that the present
dispute between the Govemment of the United Kingdom and the
Imperia1 Government of lran is a dispute covered by the terms of the
declaration of the Imperia1 Govemment of Persia set out aho\~e, and
also by the terms of the declaration of the Govemment of the United
Kingdom similarly set out above, because :
(a) the dispute is a legal dispute concerning one or more of the matters
set out in Article 36 (2) of the Statute ;
(b) the dispute has arisen "après la ratification de la présente décla-
ration" (i.e. the Persian declaration), and a fortiori after the
ratification of the United Kingdom declaration (paragraph 8
below) :
(c) thedispute is "au sujet de situations ou de faits ayant directement
ou indirectement trait i l'auulication des traités ou conventions
acceptés par la Perse" (parairaph 9 below) ;
(ci) the dispute is "au sujet de situations ou de faits" which are
"uostérieurs Bla ratification de cette déclaration" Le. the Persian
déclaration), and u fortiori is with regard to situations or facts
subsequent to the ratification of the United Kingdom declar t' a ion
(paragraph 8 below) ;
(e) the dispute does not fall within any of the exceptions set forth in
either the Persian or the United Kingdom declaration.
8. The disuute between the Govemment of the United Kinrrdom and
ttic ~rn~~crin1 l'rniii;iii Go\~crnnit:ntnrcliiihl:~yrr,ji jc~ I>:~:i~r:tphs,i-7
of tli~..\111111c:1tioinstitlitiiig I'rocccdin:~,. TIICi,~rts :ind jit1i:ctions
wliicliarc tlie siihiect-martcr of tlii: cli31,i.iretlic Ir.ini:in Oil S.itic~ii;~l-
ization Act of xsiiMay 1951 and its cÔnsequences.
1 The observation of Judge Hudson in the case of the Electricity Co*iipany of
Sofiaand Bulgarin,Series A,So. 77. at p.123. arenoteworthy. He said :"The fact
toahe in force some nine days latera(i.eafter the Applicationwassdfiled) can have
no bearing on the Court's jurisdiction Mth respect to thicase. If the jurisdiction
existed on 26th January 1938,it will continue until the case is disposeof in due
course." ANNEXES TO U.K. hlEMORIAL (XO. 2) '49
9. The "traités ou conventions acceptéspar la Perse", to the applica-
tion of which the situations and facts out of which the dispute anses
have relation (ont trait), fa11into three classes :
(a) Treaties and conventions between Iran and the United Kingdoin
by which Iran is obliged to accord to British nationals the saine ,
treatment as that accorded to nationals of the most favoured
nation, taken in conjunction with treaties and conventions
between Iran and other States by which Iran is obliged to treat
the nationals of these States in accordance with the principles
of intemational law (paragraphs IO and II below) ;
(b) A treaty or convention betweeii Iran and the United Kingdom
bv which Iran is oblieed to treat British nationals in accordance
sth the rules and Gactice of international law (paragraph 13
below) ;
(c) (i) The Agreement between the Governments of the United
Kingdom and of Persia to observe the provisions of the 1933
Concession Convention hetween the Persian Govemment and
the Anglo-Persian Oil Company, the conclusion of which was
accepted by the two Governrnents as the settlement of the
dispute then existing between them before the Council of the
League of Nations (thedate of this Agreement must be regarded
as 12th October 1933, the date of the last meeting of the
Council of the League of Nations which dealt with this dispute)
and (ii) the Concession Conventio. itself which came into
force on 29th May 1933.
(For the contention of the Govemment of the United Kingdom,
with regard to (c) (i) and (c) (ii) above, attention is invited to para-
graphs 6-6~ of the Mernorial and paragraph 40 below.)
IO. The treaties and conventions obliging Iran to accord to British
nationals the same treatment as that accorded to nationals of the most
favoured nation (referred to in paragraph 9 (a) above) are :
(a) The Treaty concluded at I'aris between the United Kingdom and
Persia on 4th March 1857 (ratifications exchanged 2nd May 1Sj7),
Article IX of which reads : "The High Contracting Parties engage
that, in the establishment and recognition of Consuls-General.
Consuls, Vice-Consiils, and Consular Agents, each shall be piaced
in the dominions of the other on the footing of the most favoured
nation ;and that the treatmentof their respectivesubjects,and their
trade, shall also, in every respect, be placed on the footing of the
treatmentof thesubjectsand commerce of themostfavourednation."
(British and Foreign StatePapers, Vol. 47, p. 43.)
(b) The Commercial Convention concluded at Tehran hetween the
United Kingdom and Persia on 9th February 1903 (ratifications
exchanged 27th May 1903). Article II of which reads :
"....Il est formellement stipulé que les sujets et les impor-
tations britanniquesen Perse, ainsi que les sujets persans et les
àmjouir sous tous les rapports du régimede la nation la plzcsîrotrt
favorisée....,(British and Foreign State Papers, Vol. 96, p. 51.)*50 ANSEXES TO U.K. 1IE1IORIAL (SO. 2) ,
II. The treaties obliging Iran to treat the nationals of certain other
States in accordance with the principles of international law (also
referred to in paragraph 9 (a) above) incliide the following :
(a) The Treaty of Friendship and Establishment concluded at Tehran
between Persia and Egypt on 28th November 1928 (ratifications
exclianged zrst July rgzg), Articlc IV of which provides that the
subjects of eacli of the Higli Contrncting Parties shall enjoy "la
plus constante protection et sécuritéquant à leurs personnes,
biens, droits et intérêts,conformément au droit commiin inter-
national". (League of Natioizs Treaty Series, Reg. No. 2127.)
(b) The Establishment Convention concluded at Tehran between
Persia and Belgium on 9th May 1929 (ratifications exchanged
24th Xovember 1930). Article 1 of which provides that: "Les
ressortissantsde chacune des Hautes Parties contractantes seront,
sur le territoire de l'autre, reçus et traités, relatiuement à letcr
personizeetà leurs biens, conformémentau droit commun internatio-
nul. Ils y jouiront de la plus constantc protection des lois et des
aiitorités territoriales polir leur personne, leurs biens, droits et
intéréts." (League of Nations Treaty Series, Reg. No. 2570.)
(c) The Establishment Convention concluded at Tehran hetween
Persia and Czechoslovakia on 29th October 1930 (ratifications
exchanged 25th June 1931), Article 1 of which provides that :
"Les ressortissants de chacun des États, contractants seront
accueillis etraitéssur le territoirede l'autre Etat, encequi concerne
leurs persoicneset leurs biens, d'après les principes et la pratique
du droit commun international. Ils y jouiront de la plus constante
protection des lois et autorités territoriales pour leurs personnes
et pour leurs biens, droits et intérêts."(Leagtceof Nations Treaty
Series, Keg. No. 2784.)
(d) The Treaty of Friendship, Establishment and Commerceconcluded
at Tehran between Persia and Dcnmark on 20th February 1934
(ratifications exchanged 6th March 1935), Article IV of which
contractantes seront, surorle territoire de l'autre, reçus et traités,
relativementà leurs personnes et à leurs biens, conformémentaux
principes et à la pratique du droit commun international. Ils y
jouiront de la plus constante protection des lois et des autorités
territoriales pour leurs personnes,' et pour leurs biens, droits et
intérats." (Leaxae of Nations Treaty Series, Keg. Xo. 3640.)
(e) The Establishment Convention concluded hetween Persia and
Switzerland at Berne on 25th April 1934 (ratifications exchanged
1st June 1935).Article 1of which provides that :"Les ressortissants
de chacune des Hautes Parties contractantes seront accueillis
et traitéssur le territoire de l'autre partie, en cequi concer~letcrs
personnes et leurs biens, d'aprèsles principes et la pratique du droit
commun interizational.Ils y jouiront de la plus constante protection
des lois et autorités territoriales pour leurs personnes et pour
leurs biens, droits et intérêts."Leagzceof Nations Treaty Series,
Keg. No. 3691.)
(fJ The Establishment Convention concluded at Tehran hetween
Persia and Germany on 17th February 1929 (ratifications ex-
changed 11th December 1930). .4rticle 1 of which provides that :
"Les ressortissants de chacun des États contractants seront AXNEXBS TO U.K. XE>IORIAL (so. 2) IjI
accueilliset traitéssur le temtoirede l'autre État. enceoui concerne
leurs personneset leurs biens, d'aprèsles principes et la pratiqace
du droit communinternational. Ils v iouiront de la ulus constante
protection des lois et aiitorités teGiforiales pour lêurspersonnes,
et pour leurs biens, droits et intérêts." .Leag.eof Nations Trealy
Series. Reg. No. 2590,)
,", The Establishment Convention concluded at Tehran between Iran
and Turkey on 14th March 1~~ l.7~iticle 1 of which provides
that :"Les ressortissants de chacune des Hautes Parties contrac-
tantes seront, sur le territoire de l'autre, reçus et traités.relative-
ment ri lezrrspersoizneset ri leurs biens, conformémena tzcdroit com-
muit international. Ils y joiiiront de la plus constante protection
des lois et des autorités territoriales pour leurs personnes et leurs
biens, droits et intérêts."(A copy of the test of this Convention
is given in Appendix Xo. r to this Annex.)
(IL T)he Exchange of Notes between Persia and the United States
constituting a modzcsvivendi regarding friendly and commercial
relations, dated 14th May 1928, in which the Acting Persian
hlinister for Foreign Affairs stated that :"A dater du IO mai I~S,
les ressortissantsdesEtats-Unis d'Amérique en Perseseront admis
et traitéscoitformémentazrx règleset pratiques dtc droit commun
inter~tationalet sur la hasc d'une parfaite réciprocité." (League
of hTationsTreaty Series, Reg. No. 2494.)
(i) The Exchange of Notes between Persia and the Xetherlands
constituting a modus vivendi regarding friendship and.commi:rce
dated 20th June 1928, in which the Acting Persian Jlinister for
Foreign Affairs stated : "Les ressortissants des Pays-Bas sur le
territoire de la Perse y seront admis et traitésconformémena t ux
rècles et pratiques du droit commzin international." (League of
Nations Treaty Series, Reg. No. 1852.)
(1) The Exchange of Notes between Persia and Italy, constituting a
modus vivendi in matters of cominerce and jurisdiction dated
?;-th June 1928, in which the Acting Persian Minister for Foreign
Affairs stated :"Les ressortissants italiens seront admis et traités
sur le territoireersaii co~zfo~mémea ntx règleset pratiquesdu droit
commun international sur la base d'une parfaite réciprocité."
(League of hTatiorisTreaty Series, Reg. No. 2179.)
12. 13yvirtiie of the treaty and the convention refcrred to in para-
graph IO abovc, the Iranian Government became obliged, upon the
concliision of each of the treaties and conventions referred to in para-
graph II ahove, to accord to British nationals the treatment assured
thereby to the nationals of the States which were parties to them, i.e.
(inter alia) totreat British nationals in accordance with the priuciples
of international law.
' 13. The treaty or convention between Iran and the United Kingdom
by which Iran is obliged to treat British nationals in accordance with
' The exact date of the exchangc ol ratifications in respeof this Convention
is not k!iotvnto tlie Government of the United Kingdom. The Convention was
approved by the Iranian blajlison 5th June 1937, and by the Turkish Parlianient
on 7th June 1937. It came into force. aslaw No. 3209 ofthe Turkiah Parliament.
on 15th June 1937. being publishcd in ResiviiGazeta (Journal oficiel).No. 3636
of ?ist June ig37.1j2 :\SNEXES IO U.K. \IE\IORIAL (SU. 2)
the rules and practice of international law is the Exchange of Xotes
between the Imperial Government of Persia and the Govemment of the
United Kingdom on 10th May 1928, relating to the abolition of capi-
tulations in Persia, bywliich the Imperial Persian Governmentundertook
that thenceforth British nationals in Persia "seront admis et traités
sur le temtoire persan conformément aux règles et.pratiques du droit
international". (A copy of this Exchange of Xotes 1sappended to this
Annex as Appendix No. z '.)
14. The Government of the United Kingdom is complaining of condiict
by the Iranian Government towards the Anglo-Iranian Oil Company
which, in the suhmission of the Government of the United Icingdom,
constitutes acontravention ofthe principles, and of-he rules and practice.
of international law, in the respects summarized in paragraph g of the
Application instituting Proceedings and in paragraph 7 of this AIemorial.
A contravention of the principles, and of the rules and practice, of
international law, by the Govemment of Iran in its treatment of the
Anglo-Iranian Oil Company, a British national, is a contra\rention of
the treaties and conventions accepted by Iran, and referred to in para-
graphs 1-13 above. The dispute between the Iranian and United
Kingdom Governments is a dispute as to whether the Iranian Government
has been guilty of such contravention of these treaties and conventions.
This is therefore a dispute "au sujet de situations oii de faits ayant
directement ou indirectement trait à l'application des tr 't' ou conven-
tions acceptés par la Perse", the situations or facts being the conduct
of the Iranian Government in attempting to put into force the Oil
Nationalization Act of 1st May 1951, which conduct is alleged by the
United Kingdom Government to constitute a contravention of these
treaties and conventions.
14h. The Agreement and the Concession Convention referred to in
paragraph q (c) above make it a breach of an international contractual
obligation between Iran and the United Kingdom for Iran to fail to
observe the provisions of the Concession Convention ;and theUnited
Kingdom Government complains that Iran has infringed the provisions
of the Concession Convention.
15. In the telegram sent to the President of the Court on,?gth June
1951 by the Impenal Government of Iran, that Government, in addition
to addressing to the Court arguments directed to the merits of the case,
challenged the jurisdiction of the Court. Although the message purported
to be an answer to the United Kingdom Government's Request for the
Indication of Interim Measures of Protection, these challenges were to
the jurisdiction of the Court to deal with the dispute on the merits.
The material passages of the telegram are the following :
"(a) We wish to hring to the notice of the Honourable Jiidges of the
International Court of Justice a case which is purely based on the
greed and selfishness of an English Company against a peace-
loving and weak oriental nation, which has been submitted to an
incorrect appeal by the British Governrnent beyond the juris-
diction of the Court ....
'This Exchange of Sotes \vasnot registered with thLcague of Sations under
Articl18 of the Covenant.154 ANSEXES TO U.K. ~IEMORIAL (NO. 2)
eignty and which' is exclusively within the jurisdiction of the
Iranian Goveriiment.
(ii) Granted that a controversy exists on the nationalization of
Iranian oil. such controversv could onlv be between the
Iranian ~overnment and ihe former Angle-Iranian Oil
Company, which is a juristic personality no different from a
single British national, and by virtue of paragraph I of Arti-
cle 34 of the Statute of the Court \r.hiclistipulates that only
Statesmay be parties in cases before the Court, it coiild not
be brought up before the Intemational Court....
(d) In view of the foregoing considerations, the Iranian Govemment
houes that the Court will declare that the case is not within its
juÎisdiction because of the legal incornpetence of the cornplainant
and because of the fact that exercise of the right to sovereignty is
not subject to complaint."
16. The first objection raised by the Imperia1 Govemment of Iran to
the jurisdiction of the Court is that the Govemment of the United
Kingdom has no locus standi. This objection does not in fact relate to
the jurisdiction of the Court. It would, if it were well founded, be a
ground for dismissal of the case for the reason that the Govemrnent
of the United Kingdom had shown no cause of action at al1rathcr than
for the reason that the Court had no jurisdiction. However, without
prejudice to this point, it may be more convenient to deal with this
obiection here rather than in that art of the Memorial which deals
\viili tlit nierits uf tlicase. \loreo\.&, wr.ri3it iiot tli:it thc(~o\'i!rnmenr
of tlit: I:nitcd Kiiijidoin di8i:snbt \vis11to nl.l>enrto sho\rfan!. disrcslxct
t<~\vards t11cRrcumcilts of ~IILI.1111)i?ri< :t;io\'~rnmi:ntof ir:111t.he Gu\.erri-
ment of the dited Kingdom w&ld scarcely have thought it necessary
to address any argument or cite any authority to the Court to show
that this objection is ill-founded. It is not, of course, as a sliareholder
of the Anglo-Iranian Oil Company that the Govemment of the United
Kingdom has made the present Application to the Court, Ilut in the
exercise of the well-recomized rieht of a State to take un the case of
one of its nationals in &ses where it considers that its nati'onalhas been
treated in a manner contrary to international law and to ensure, in the
person of its nationals, respect for the mles of international law l. It
will be sufficieut to cite the well-knowi passage in the decision of the
Permanent Court of International Justice in the case of the Mavrom-
matis Palestine Concessions,Series A, No. 2, at pages 11-12 :
"A dispute is a disagreement on a point of law or fact, a conflict
of legal views or of interests between two persons. The present suit
between Great Britain and Greece certainly possesses these char-
acteristicç. The latter Power is asserting its own rights by clairning
from His Britannic hfajesty's Govemment an indemnity on the
ground that M. hIavrommatis, one of its subjects, has been treated
' In it Ordrr inilirîiiiiInteriiii .\learure* of I'rotcsrion. ihc Couhns in Iüçt
iii<licatrd tliat tlie objcctisiniis~iii.~iicby raying . '\Vheri.asir apl>r.nriroiit
the .\..iilicslioIi. ir~ ~ ~rht. <;ia~.ern~>ciiof ~ ~ ~~~tcd Kin~"luiii insritiiterl
proceedings, that that Gorernrnent has adopted the cause of a British cornpany
and is proceeding in viztue of the right of diplornatic protection" (I.C.J. Reports
195'. P. 92). ANNEXES TO U.K. MEMORIAL (No. 2)
I55
by the Palestine or British authonties in a manner incompatible
with certain international obli~ations which they were bound to
observe.
In the case of the Mavrommatis concessions, it is true that the
dispute was at first between a private person and a State-i.e.
betwcen M. Mavrommatis and Great Britain. Subseauentlv. the
Crcek (;o\.zrniii~.nttook 1111thc CISC TIIL'~sl>~ittïlien ktt-rcd iipon
;incw 18liasc .it ,>nterc<tlit<loiii;iinof intcrnn1ioii;ilI;iw.;ind becnrnc
n disi,iitc I,ct\veen t\vo Stntcs. Ilrncefor\\.ard rhereforit ij:idls~utc
which may or may not fa11under thc )orisdiction of the permanent
Court of International Justice ....
It isan elementary principle of international law that a State is
entitled to protect its subjects, when injured by acts contrary to .
international law committed by snother Statc, from whom they
have been unable to obtain satisfaction throitgh the ordiiiary
channels. By taking iip the caseof one ofits subjects andby resorting
to diplomatic action or international judicial proceedings on its
behalf, a State is in reality asserting its own rights-its nght to
ensure, in the person of its subjects, respect for the niles of inter-
national law.
The question, therefore, whether the present dispute originates
in an injury to a private interest, which in point of fact is the case
in many international disputes, is irrelevant from this standpoint.
Once a State has taken up a case on behalf of one of its subjects
before an international tribunal, i~ithe eyes of the latter the State
is sole claimant."
17. It is in general a condition of the right of a State to intervene on
behalf of its national that the national should have exhausted the local
remedics available to it under municipal law, if there are any. The
telegram sent by the Imperia1 Iranian Government to the President of
the Court on 29th June 1951 appears to touch on this point when it
says : "these companies [scilicet, private companies] as in the caçe of
al1 other private companies whether foreign or local are snbject to the
international [sic] laws of the country where they operate, and in case
of having any claims against the Iranian Government they must refer
to the local courts of justice for gaining their rights". Shis objectioii is,
however, also clearly an objection wbich doesnot relate to the jurisdiction
of the Court ', but is an objection which, if it were well founded, would
lead to a rejection of the United Kingdom's claim on its merits. It is
a point which might be decided as a preliminary point before the rest
of the merits of the casc are investigated, but it is not a point which is
relevant to the jurisdiction ofthe Court under the instruments on which
the United Kingdom Government submits that the Court has jurisdiction
in tbis case. In fact, the United Kingdom Government has shown in
paragraphs 7 (7)and 47 of the Memorial that in this case there were
no municipal remedies to exhaust.
This objection could only beone which related to thc jurisdiction of the Court
if the instrumenton the basis of whichwas claimed that thecriurt hadjurisdiction,
conhned it to cases where municipal remedies habeen exhausted. The point came
up in this forminthe caçe of the Electririly Cornponof Sofiund Rz'lgarin (Series
A/B. So. 77) because one of the instruments reliedon in that case made this a
condition limiting the Court's jurisdiction. 18. The second objection raised by the Iniperial Government of Iran
is that the present dispute f:ills within the third exception contained in
the Persian declaration of 2nd October 1930, i.e. "les différendsrelatifs
à des questions qui, d'aprks le droit international. relèveraient exclusive-
ment de la juridiction de la Perse". A similar exception, on ivhich by
virtue of the condition of reciprocity Iran is entitled to rely if it is
applicable, occurs in the United Kingdom declaration of rgth Scptember
1929, namely, "disputes witti regard to questions mhich by international
law fa11exclusively within the jurisdiction of the United Kingdom".
The Dresent dis~ute. in the siibmission of the Governinent of the United
~inidom. c:tiii;nt bc rcg;irdeil ;is one cunceriiing :i qiicition wliicti by
intcrn:itionnl I:iiv f:illitsclii.ii\~ely\i-itliiii tlic jiirisiliction of Irtin. siiicç
tlii ilispiite hetii.rrri th,: linitcd liingrluni ancl Iran concerii, the qiiestion
\rherlicr Iran Ii;iscùniinitt,tit ;ilirt,;icliof intern:ition;il I;i\v.The qiiestion
\i.hvtlirr c,r riut1r:iiiIi.,scommitted :iIir<-ncliof intern;itiun;il I:in c:inn<it
hi :i~lu~ition\iliich 1,).intçrn:itiurinl I:iivis ccliisiv~~lywilhin tlic jiiris-
clicrionof Irîn. sincl. ttii.pusvcrs,th,. c\cr.:içr. uf \vliicliint(:rn;itiuii;il 1:iii
le.i\.cs wittiin ttie iloiii~~sticiiirisdictioii uf n Stnt~..cnnnot cstcnJ tu th,:
cornmissibn ofan internatiod wrong. The contention of the Goveriiment
of the United Kingdom in this respect is siipported by the Ttritis a~td
Mo~occo Nationality Becrees case (Senes B, No. 4), which is discussed
in the succeeding paragraph. The words in Article 15, paragraph 8, of
the Covenant of the League and in the Resolution of the Council of the
Leaguel which were considered in that case have, it is submitted, the
same meaning as those in the Persian and United Kingdom declarations
under the Optional Clause The parties to these declarations ineant to
make the same exception as is made in Article 15 of the Covenant of
the League The Court should. in the submission of the Government
. .
1 The wordç ço used werr coinpéicnce exclusiuc (solely within the domestic
jurisdiction) and exclusivemen1 une auaire d'ordre inlériet'r(solely a matter of
domestic jurisdiction).
AIoreovcr, the Iranian telegram refcrs to Articlc 2 (7) of the Charter of the
United Xationç. which u6es the words "domestic jurisdiction" (in English) and
"compétence noiioriale"(in French), as if Article2 (7) of the Charter had thc same
effectas Iran's reservations to the Optional Clause. Indeed. apart fromthe difference.
if any, which arises from the qoalifying adverb "exclusively" in the declarations
and in Article 15of the Covenant. as compared with the qualifying advcrb "essen-
tially" ivhich is used in the Charter (apoint which does not arise bere). il is plain
that the Charter exception and the Covenant exception have the same meaning.
The words most generally used arc "domestic jurisdiction" (in English) and
,'compétence nationale" (in French) ; but, when the other slight variants arc uscd.
the same meaning is intended.
(a) The words in the Iranian declaration arc: "B'aprhs le droit international
releveraient exclusivement de la juridictionde [la Perse]."
(b) The \v.orrdsin the United Kingdom declaration are : "by international law
lall exclusively within the jurisdiction of [the United Kingdom]".
(c) The words of Article 15 of the Covenant of the League of.Xations. in
French, are : "que le droit international laisseà la compétence exclusive
dc [cette partie]".
(d) The words of Article 15 of the Covenant of thc League of Nations. in
English. are :"by international law is solely within the domeçtic jurisdiction
of [that party]".
(e) The ivords of Article 2 (7) of the Charter of the United Sationç. in French.
are :"qui relèvent essentiellement de la comp6tencc nationale d'un Etat". :\SSEXES TO U.K. YE>IORIAL (&'o. 2) '57
of the United Kingdom, interpret the reservations in these declarations
in accordance with the çame priiiciples as were laid down by the Perina-
nent Court of International Justice with regard to the exception in
Article rj of the Covenant in the Tunis case, for thc reason that States
which, in declarations made subsequently to the judgrnent of the Court,
used words substantially identical aith those which had been interpreted
by the Court in that case, must be deemed to have intended to give ta
those words the meaning which the Court had held them to have.
19. In the case of the Tunis andMoroccoNatioiialityDecrees,Series B,
No. 4, the Permanent Court of Justice! had to consider the words in
paragraph 8 of Article 15 of the Covenant of the League of Sations,
namely :
"If the dispute between the parties is claimed by one of tliem,
and is found by the Council to arise out of a matter which by iiiter-
national law is solelv within the domestic iurisdiction of that ~artv
(qzrele droit internitional laisse à la compétenceexclzrsivedécelie
bartic), the Council shall so report, and shall make no recommenda-
dation as to its settlement",
and also the words in the Resolution asking for the Advisory Opinion
of the Court, namely,
The Court said at pages 23-24 :
"From one point of view, it might well be said that the jurisdic-
tion of a State is exclusivewithin the limits fixed by international
law-using this expression in its uider sense, that is to Say,embrac-
ing both customary and general as well as a particular treaty law.
But a careful scrntiny of paragraph 8 of Article xj shows that it
is not in this sense tliat exclusive iurisdiction is referred to in that
paragraph.
The words 'solely within the domestic jurisdiction' seem rather
to contem~late certain matters which. thoueh th-v mav verv closelv
concern the interests of more than one State, arénot: in principlé,
reaulated bv international law. As rerar-s suc11matters, each State
istole judgé.
The question whether a certain matter is or is not solely within
the jurisdiction of a State is an essentially relative question ; it
deoends uDon the develo~ment of international relations. Thus. in
thépreseit state of intepnational law, questions of nationality are.
in the opinion of the Court, iii principle within this reserved domain.
(/) The words of Articleï (7) of the Charter of thc United Nations in English
are "which are essentially within the domcstiç jurisdiction of any Skrte".
It lollows. comparing (c) and (d), that "domestic jurisdiction" in English hm
the samc meaning as "compétence" in French. It also follows, comparing (e) and
(1).that "compétence nationale" in French and "domestic jurisdiction" in English
have the same meaning. Therefore. it is submitted. thereiçno doubt that "juns-
diction" in (b) has the same mcaning as "domestic jurisdiction" in (d) (1).and
that "juridiction" in (a) has the same meaning as "comp6tence" in (c) andtherefore
as "domestic jurisdiction" in (d) or "jurisdiction" in (b).158 ANXEXES TO U.K. MEAIORIAL (Xi,. 2)
For the purpose of the present opinion, it is enough to observe
that it may well happen that, in a matter which,like that of natioii-
ality, is not, in principle. regulated by international law, the right
of a State to use its discretion is nevertheless restricted by obli-
gations which it may have undertaken towards otherStates. In such
a case, jurisdiction which. in pnnciple, belongs solely to tlie State,
is lirnited by rules of international ]au,. Article 15, paragraph S.
then ceases to apply as regards those States which are entitled to
invoke such les, and the dispute as to the question whether a
Statc has or has not the right to take certain measures becomes in
these circumstances a dispute of an international character aiid falls
outside the scopc of the exception contained in this paragraph."
Again at pages zj-26 the Court said :
"It is certain ....that the mere fact that a State brings a dispute
before the League of Nations does not siifficeto give the dispute an
international character calculated to except it from the application
of paragraph S of Article 15.
It is equally true that the mere fact that one of the parties appeals
to engagements of an international character in order to contest tlie
exclusive jurisdiction of the other is iiot cnough to render para-
graph 8inapplicable. But when once it appears that the legal grounds
that they are of juridical importance for the dispute submitted toon
the Council, and that the question whether it is competent for one
State to take certain measures is subordinated to the formation of
an opinion with regard to the validity and construction of tliese
legal grounds (titres), tlie provisions contained in paragraph S of
Article 15 cease to apply and the matter, ceasing to be one solely
withiii the domestic jurisdiction of the State, enters the domain
governed by international law."
In considering the coiitentions of the parties on the vanous poiiits.
the Court said :
(a) "Tlic qiic;tion whethcr the esilusi\re ]iiri.;d~ctiony<~scrsjcdby
:I prorectiiig Statc IIIregard to niirional~tyqucstio~~sil1its o\vn
terrirorv exreiids ro tlie térriton(iftlir. i~rutectedSrare d~ricnds
upon ai examination of the wiiole situitioii as it appear<frorn
the standpoint of international law. The question is therefore
no longer solely one of domestic jurisdiction as defined above"
(at p. 28).
(b). "The Court observes that, in any event, it will be necessary to
have recourse to international law in order to decide what the
value of an agreement of this kind may be as regards third
States, and that the question consequently ceases to be one
which, by international law, is solely u.itliin the jurisdiction of
a State, as that jurisdiction is defined above" (ibid.).
(c) Similarly (at pp. 29-32).the Court Iield that a point on which it
is iiot possible to make any pronooncement "without recourse
to the principles of interiiational law concerning the diiration
of the validity of treaties", a point whicli involves "the inter-
pretation of international engagements", and a point concerii-
ing the application of iitreaty are not questions which, by inter- ASNEXES TO U.K. IIEMORIAL (NO. 2)
'59
national law, fall solely withiri the domestic jurisdiction of a
State as defined above.
20. Applying the principles set fortli in the passage in the Court's
Opinion quoted in the preceding paragraph, it is plain that the first
question to he asked is whether the matter brought before the Court is
in principleregulated by international law. If the answer is "Yes", then
it is not necessary to consider whether it is only regulated by international
law because of treaty provisions.
The matter in this case is the cancellation of a concession granted to
a foreign Company and the taking of its property. It is submitted tliat
this rnatter is -clearly pritece@leregulated by international law. Para-
graph 7 of the Memorial outlines the rules of international law which
the United Kingdom contends are applicable, and paragraphs 8-47
contain the further exposition of these rules and the legal authority for
them as well asthe reasons wliy it is alleged that Iran has violatedhem.
These rules show that in this matfer the expropriating State is not left
by international law as the solejudge.On the contrary, international law
imposes many limitations and conditions upon the exercise of the right
of expropriation.
21. In fact the United Kingdom also invokes treaty obligations as
well, but as, with one exception, these treaties simply prescribe the
obligation to act in accordance with internationallaw, they do not carry
the issue now under consideration further. However. the one exceution
Concession Convention of ~q-~fand therefore not to abrogate it in viola-
tion of its terms. As the later portion of the extract from the Court's
Opinion shows, this contractual obligation would prevent the cancella-
tion of this particular concession from falling into the sphere of domestic
jurisdiction even if (contrary to the contention in paragraph 20 above)
the abrogation of foreign concessions was not in principle regulated by
international law. ,
22. It appears frok the Opinion of the Court quoted in paragraph 19
above that, where a matter is in $rinc@le regulated by international
law, then the domestic jurisdiction exception never excludes a question
relating to that matter from the jurisdiction of the Court. Therefore the
first question is rvhether the United Kingdom has shown that the abro-
gation of foreign concessions is in principle regulated by internatioiial
law, or in other words whether the rules set forth in the Memorial have
any existence or not. The Court cannot hold, on an objection to the
jurisdiction, tliat these rules have no existence without going into the
merits of the case, unless it is prepared on a summary consideration to
hold that the United Kingdom has not even made a prima facie case for
their existence. The Government of the United Kingdom is convinced
that the authority cited for these rules in the Memorial is much more
than sufficient to establish a rzma facie case. The question of f:ict
whether there has been an in ringement of these rules is a question
whicli can only be decided on the merits of the case. At most (and even
this is far from clear) the Court could only, on an objection to the juris-
diction, dismiss the Application if it were prepared to hold, on a suni- ANNEXES TO U.K. ~IE~IORIAL (XO. 2)
160
mary consideration, that it \vas clear that none of the facts alleged.
even if true, constituted violations of the mles of international law. The
Govemment of the United Kingdom is convinced that in this hfemorial
it has made much more thaii a priina facie case that the acts of which it
com~lains infrinee the rules of international law on which it relies. The
arp'ment in this paragraph is supported by the case referred to in para-
ma~h 21 below. Indeed. if anvthina. this case shows that the armment -
cn the Gesent paragraph is undersked.
23. In this connection, reference may be made to the case of the
Electricity Compa~iyof Sofia n~id Bidgaria (Series A/B, No. 77). This
case related to a concession held by a Belgian Company for the distri-
bution of light and electricity. Belgium contended that the municipality
of Sofia was levying rates on the Company in a manner which conflicted
with the concession as interpreted by a certain decision of a Mixed
Arbitral Tribunal. Alunicipal remedies were exhausted and Belgium took
up the case in diplomatic protection of its national, the Company, and
instituted proceedings by unilateral Application before the Permanent
Court of Internatio~ial Justice under the Optional Clause (Article 36 (2)
of the Statute of the Court), and also under a Treaty of Conciliation and
Arbitratioii. There was no domestic jurisdiction exception in the Belgian
or Bulgarian declaratioiis ', but Bulgaria contended that the dispute
did not fa11within aiiy of the catcgories of Article 36 of the Court's
Statute. Belgium complaiiied of "acts prejudicial to the Electricity Com-
pany of Sofia and Bulgarki, carried out by various organs of the Bul-
garian State in violation of tlie latter's international obligations", and
relied on "the rieht to obtain reoaration for the damaee resultine for
the Belgian ~ornupany" (p. 77). The Court said the "Kelgian ~oliern-
ment had thus raised a r ointof an international character in thisdispute"
(p. 77). and further : '
"Although tliis [Bulgarian] argument is designed to prove that
the Court has no iurisdiction and to Drevent ~roceedines beina
continii~,d.the COU&. =[ter corisideriiig iÎs scope.lias arri5ed at th;
cuiiclusion rliat [Ris obiectioii 1sclosely linked to tlic riierits of tlis
case. The reasonine in- fact aims at éstablishine that there is no
iiitcrnational cleniGit iiithe legnl rclntiuii L.rr;ttrz tietwrrii tlrc Ilel-
gi:rn (:ompany aiiil th* Rulgariaii aiithorities by ttir. nu,ards of tlic
.\liscd .Arl>itr;i'l'ribunnl.But that amounts iioi oiil\, to encronchin~
on th,: inerits. biir ro coming ro a decision iriregard to orle of th2 -
fiindameiital factors iiitlie case. l'lie Court rannut ttierefore rcgard
thisoleaas~ossessine the character of a ~reliminarv obiectionwiihin
. .
the heaniLg of ArtiGle62 of the Rules.'
In these circumstances, the Court cannot accept the contention
that it lacks iurisdiction under the declarations of adherence to the
Optional ~la;se, in so far as this contention is founded on the argu-
ment ratione temporis ; and iii so far as this contention is founded
on the argument ratione materiŒ, the Court does not regard it as
preliminary in character and consequently rejects it, though the
Indeed, aswriterç have often said, it isquestionable whether these dameîtic
casesdcovered by them would bc outsidc the terms of Articlere36t(2)iof the Statute
anyway. ASSEXES TO U.K. MENORIAL (XO. 2) 161
Parties remain free to take it up again in support of tlieir case on
the merits'." (Pp. 82-83,)
24. There remains, howe\.er, the contractual obligation referred to in
paragraph 21 above, and it isabundantly clear that, if the existence of
this contractual obligation is established, Iran has infringed it.The [lues-
tion, therefore, is wliether the United Kingdom in paragrnphs 6-6~ of
this Memorial hail rnade a case in favour of the existence of this obliga-
tion sufficient (using the words of the Court in the Tunis and Morocco
Nationality Decrees case, Series B, No. 4) "to justify the provisional
conclusion" that this contractual obligation (allegedbythe United King-
dom) "is of juridical importance for the dispute", so that the Court has
"to form an opinion with regard to the validity and constructiori" of
this contractual obligation. If the United Kingdom contention (that this
contractual obligation came into existence) is of juridical import:uice,
then for this further reason the case cannot be dismissed on account of
the domestic jurisdiction exception. The United Kingdom is confident
that, in para~raphs 6-6n of this Memorial, it has made more than a suffi-
cient case foÏ this purpose.
2j. It may happen that the question which arises ori the issue of juris-
diction and the question which arises on the merits are in one sense the
same, or, as it was said in the case of the Electricity Company of .Sofia
and Bzilgaria, Series AIR, No. 77 (paragrapb 23 above), the two ques-
tions are "closely linked", and that is why the Permanent Court of
International Justice was led in many cases to join the objection to the
jurisdiction to the merits of the case and decide both issues simulta-
neously. In this case, too, the two questions are in one sense the same or
are "closely linked". 011 the issue of jurisdiction, thc question is whether
there is a question of a violation of international la\\.. On the merits,
the question is whether there has been a violation of international law.
It is clear, on the principles followed in the case of the Electricity Com-
jurisdiction" objection in this case as "preliminary in character" and
must reject it.
26. For al1 thesc reasoiis, the Uiiited Kingdom Government submits
that the present dispute is not within the exception of domestic juris-
diction in the Persian declaratioii. In fact, in its Order of 5th July 1951
(I.C.J. Reports 1951, p. 89). the Court has already indicated as much,
because, after reciting the Iiaiiian objection niade "on the gmunds prin-
cipally of the want of competence on the part of thc United Kingdom
Government to refer to the Court a dispute which had arisen between
the Iranian Government and the Anglo-lranian Oil Company. Limited,
and of the fact that this dispute pertaining to the exercise of the silver-
eign rights of Iran was exclusively mithin the national jurisdiction of
that State and thus not subject to the methods of settlemeiit specified
in the Charter" (p. gz), the Court said: "\Vlereas thecomplaint made in
the Application is one of an alleged .yiolation of international law by
the breach of the agreement for a concession of 29th April 1933. and by
a denial of justice which, according to the Gorernment of the Uiiited
Kin~dom, would follow from the refusa1 of the Iranian Governmelit to
' See çeparate opinion of Judge hnzilain the same senso at p95 162 ANSEXES TO U.K. MEAIORIAL (XO. 2)
accept arbitration in accordance with that agreement, and whereas it
cannot be accepted a priori that a claim hased on such a complaint falls
completely outside the scope of international jurisdiction" (pp. 92-93),
26~. The third objection raised by the Imperial Government of Iran
to the jurisciiction of the Court is that that jurisdiction is excluded by
paragraph 7 of Article z of the Charter of the United Nations, which
reads as follows :
"Nothing contained in the present Charter shall authorize the
United Nations to intervene in matters which are essentially within
the domestic jurisdiction of any State (qni relèuerre tsseritiellenzete
la comfiétence nationale d'zrnÉtat) or shall reauire the Memhers to
submif such matters to settlemeit under the iresent Charter ;but
this principle shall not prejudice the appli- -ion of enforcement
measüres Ünder Chapter %'II."
The United Kingdom Government would in any case contend that the
present dispute is not a matter which is essentially within the domestic
jurisdiction of Iran. A matter which is in principle regulated by inter-
national law or to which treatics and international contractual obliga-
tions are applicable is not "essentially" within the jurisdiction of a
State any more than it is "exclusively" within it. As indicated in foot-
note 3 on page 156, the meaning of the words in the Charter is the same
as the meaning of the words in Article 15 of the Covenant of the League
of Nations and in the two relevant declarations under Article 36 (2) of
the Statute of the Permanent Court of International Justice, apart from
the effect of the difference (ifaiiy) in the qualifying adverbs "exclusively"
and "essentially". However, the difference (if any) is irrelevant in the
present case because Article z (7) of the Charter is irrelevant. The juris-
diction of the International Court of Justice is derived not from the
Charter but from its own Statute, which is annexed to the Charter, and,
as regards this particular case, by the declarations under Article 36 (2)
of the Statute of the Permanent Court of International Justice made by
the United Kingdom and by Iran. Article 2 (7)of the Charter is, there-
fore, completely irrelevant to the issue of jurisdiction now before the
Court.
27. The Court, in its Order indicating Interim hfeasures of Protection
in this case (I.C.J. Reports 1951. p. 89). after referring to,and indeed in
a sense disposing of, the objections to the jurisdiction hitherto advanced
by Iran, added the following :
"Whereas the indication of such measures in no way prejudges
the question of the jurisdiction of the Court to deal with the merits
of the case and leaves iinaffected the right of the Respoiident to
submit arguments against snch jurisdiction" (at p. 93).
The Iranian Government has the right to file objections to the juris-
diction at any time up to 10th January 1952-the time for the delivery
of its Counter-hlemorial. It may or may not avail itself of this right.
The Government of the United Kingdom is, however, under the duty,
recognized in paragraph IA above, of satisfying the Court that it has
iurisdiction, and it is for this reason that it is now ~ronosed. in the
subseqiient pnragraplis of tl,is :lnnes, 15 ariiplify tlie FiitAissioiis cori-
tained in the :\l~l>lic;itiuiiinstitutirig I'r<icçeJingsi,f;irris tlicy relate ANNEXES TO U.K. .\IEi\lORIAL (SO. 2) 163
to jurisdiction, and to deal with other possible objections to the jui-is-
diction whicli might occur to the Court whether Iran raises them or not.
In so doing, the Government of the United Kingdom desires to recall
the attention of the Court to what lias been said in paragraph 3 of l.he
Memorial-nainely, that the Observations iii this Annex are submitted
now, because it is believed that it will be convenient for the Court to
have them now-since the United Kingdom Government desires to
show at this stage that it entertaiiis no doubt as to the jurisdiction of
the Court and hopes to convince Judges M'iniarski and Badawi Pnslia
that the doubts, which they expressed (iii a purely provisional way on
a purely summary view of the matter) as to the right of the Court to
exercise jurisdiction in the case in tlieir dissenting opinion to the Order
indicating Interim blessures of Protection, will be found on furtlier
examination to be unfounded.
On the other hand, as stated in paragraph 3 of the Memorial, 1.he
United Kingdom Government submits these observations now, before
the time when it is (as it believes) obliged to do so, on the faith that. it
will have aiiotlier opportunity to address the Court on the suhject of
jurisdiction before the Court reaches its decision on jurisdiction, but it
will be content if this opportunity is confined to making obserratii>ns
orally. The Iranian Government may yet suùrnit further arguments to
the Court on the subject of jurisdiction-raising objections which the
United Kingdom Government has not been able to anticipate here or
even making arguments relating to the objections already made or anti-
cipated, to both of which the United Kingdom Government would desire
to be able to reply. Moreover, even if the Iranian Government makes
no further communication to the Court on this subject, the Government
of the United Kingdom wishes to exercise the right, which it is believed
the practice of the Court giveç iii every case. to make oral observ t' a ions
on the subject of jurisdiction as well as written observations.
28. One at least of these ~ossibie further obiections is hinted at in
the teli:gr;ini :iddrcss~~dtoitic ~ecrït;tr!.-(;enïr~i of ttic I-nited S:ttioiis
uii c]tlJiily iq5r by rhc 1rnni;tn \liriistcr fur 1.rireig:\llÿir..2 copy of
whicli 1s IO be foiiiidin .Anne\. I.\ in rtie .\leinorial:is.Ai~i>eiidisSo. 7.
This telegram contains the following passages : .
"The accession of the Imperia1 Government of Iran to the provi-
sions of Article 36 of the Statute of the Permanent Court of Inter-
national Justice, according to the Declaration of IO Mehr 1309
(2nd October 1g30), and the Act of 23 Khordad 1310, took piace
on 13 September I~~Z[S~C],the compulsory jurisdiction of the Court
being extended only to disputes arising out of situations and everits
directly or indirectly connectcd with the application of treaties and
conventions concluded by the Government of Iran after the rati-
fication of the said Declaration."
In this passage au interpretation is put on the Persian declaration
differentfrom that relied upou by the Government of the United Kiiig-
dom. According to this interpretation, the Persian declaration relates
onlv to conventions concluded after the date of Persia's ratification of
th& declaration ; whereas, according to the Government of the United
Kirtedom's interpretation of the Persian declaration, that declaration
relates to conventions concluded at any time, the word "postérieurs" ANNEXES TO U.K. SlE310RIAL (SO. 2)
1~4
(Le. the word which cornes just before the words "à la ratification de
cette déclaration") being applicable not to the words "traités ou coiiven-
tions acceptéspar la Perse" but to the words "situations et faits" (which
come two lines higher up) '.If the interpretation given in the Iranian
telegram ta the United Nations were correct, the United Kiiigdom
Government would not be able ta rely (on the issue of jurisdiction) on
treaties or conventions concluded by Iran prior to 19th September 1932.
It may be pointed out at once that this objection does not apply to the
Concession Convention itself, which was concliided in 1933. or to the
contractual agreement between the tluo Goyernments which came into
existence at the same date or at a later meeting of the Council of the
League of Nations referred to in paragraph g (c) above, and which are
relied upon by the Covernment of the United Kingdom as an alternative
ground on which the Court has jurisdiction l.
29. However, some, but not all, of the treaties referred ta in pafa-
graph 9 (a) above and set out in paragraphs 10 and II above, on which
the United Kingdom Government also relies as alternatives, were
concluded prior to 19th September 1932 (Le. the date of the ratification
of the Persian declaration). It is necessas., therefore. to deal with the
objection, which appears to be raised in the Iranian .telegram to the
Secretary-General of the United Xations, that the Persian declaration
extended the compulsory jurisdiction of the Court only ta situations and
facts directly or indirectly connected with the application of treaties and
conventions concluded by the Government of Iran after the ratificatioii
of the said declaration.
30. The Government of the United Kingdom concedes that the decla-
ration is grammatically capable of bearing the meaning implied in the
Iranian telegram, although, if that is what was intended, it could have
been much more simply and naturally expressed by saying "au sujet de
situations ou de faits ayant directement ou indirectement trait à i'appli-
cation des traités ou conventions acceptés par la Perse après la ratifi-
cation de cette déclaration". The'Corernment of the United Kingdom
submits that, for the reasons given in paragraplis 31-37 below, the Court
should interpret the Persian declaration in the sense contended for by
the United Kingdom Government, namely, that the words "postérieurs
à la ratification de cette déclaration" should be construed as guverning
"situations ou faits" rather than "traités ou conventions acceptés par
la Perse".
31. It is legitimate, iii considering thc meaning to be attributed
to a text such as the Persian declaration. to consider the fornis of
words used in other documents of a similar nature prior to the date
of the Persian declaration, and the historical development of the form
of words used.
This course is especially indicated in the case of declarations under
Article 36 (2) of the Statute of the Court, because the declarations
made successively by governments are almost al1variants of a common
pattern (like a series of municipal enactments of which all, after the
' See also paragraph40erbelow on this point;seegalso.inageneral, pragraphs
6-6~ of the hlemorial. ASNEXES TO U.K. YEhIORIAL (SO. 2) 1~5
first, are amendments, by addition or subtraction, of the first one).
Judge van Eysin a noted this in the Phosphates in iMorocco(Preli-
minary 0biectionsY case, Series A/B, No. 74 (at p. 34). when he said :
"Disregarding a minor difference in the French dcclaration
which s~eaks of 'des situations' and 'des faits' in dace of 'de'-
R detriil i~>l):ircntly of no jigiiiii,.:~iice-\i.c hnd the s;iiiit \\onls
ern1)loycdin :iI;irgc nuiiil~crSJ~siiiiil:ir de~l:ir:~tio?s.l'liv!. n[>l>t7nre!!
for tlie firjt tiinc itlii:Ri.lgi;inileclar:ition (z5tli b~ptciiiber iqrj,.
It is permissible to conclude that at any rate Judge van Eysinga wou!d
have considered the Court's interpretation of the relevant words in
the French declaration in the Phosphatesin Morocco case asanauthonty
for the interpretation of similar words in the declaration of other
countries '.
32. It was common in arbitration conventions from the first to
make some exception ratione temporis, as stated in the Mavrommatzs
Palestine Concessions case '.A popular formula was to exclude disputes
having their origin "dans des faits antérieurs" to the conclusion of
the convention, or words to that effect2.
j:j. 1-roni tq20 oii\i,nrds. \i.licriSt3tei. bcg;,n to :icct!pt tlic com[,iilsor!.
ju;iidicrion of tli,: llïnn:incnt Coiirt of Intt:rn3tit,n:il Jusricc I)!.dccl;ir:t-
tiuns iinder the Optional (:laifi? of the itiitlitc of tlic Coiirt. it becnmï
the custom for States in so doing to make exceptions or resen7ations.
As Professor Manley Hudson says at page 468 of his book on the
lloreover (in regard to other documents of a similar nature but still relating to
provisions conferring jurisdiction).we find that in the Mavrommatis Polesli+le
Cacerrions case, Scrieç A, So. 2 (at p. 35). the Court used the fact that certain
language was commonly employed in arbitration trevties as ;inaid to the inter-
pretation of the jurisdictionalprovision in Article 26 of the hiandate. The Court
said : "the Court is of opinion that, in cases of doubt. jurisdiction based on an
international agreement ernbraces al1 disputes referred to it after itç establishment.
In the pieçent case,thiç interpretation appears ta bc indicated by the terms of
Article 26 itself, wliere it is laid down that 'any disputc wliatsoeve... which may
arise' shall be submittcd to the Court. The reservation made in rnany arbitration
treaties regarding disputcs arising out of eventç previouç to the conclusion of the
treaty seems to provc the necessity for an explicit limitation of jurisdiction, :md,
consequently. the eorrectness of the rule of interpretation cnunciated above."
So in the Choridw Faclory (Claim for Indemnily) (Jurirdi~tion)case, Series A.
Xo. 9, the Court. in interpreting Article 23 of the Geneva Convention, considerecl
the developmcnt of general treatieç of arbitration during the previous j0 yçars.
with special reference to the "clauses compromissoircs "f ahich Article z3 was an
example. It rejected the Polish contention as being "cantrary to the fundamental
conceptions by which the movement in favour of general arbitration has been
charactetired" (p.22). and included "the histoncal developinent of arbitration
treaties",as wellas "the terminology of such treaties" among the factors of whicli
account must be taken in interpreting Article 23 (p. 24).
See for instancc the conventions between Belgium and Greece, signed at Athens
on 19th April/znd hlay rgog, and ratified on gth/zznd July igoj (British and
Foreign Slale Popers-çubsequently referred to as B.F.S.I'.-Vol. 98, p. 407) ;
between Chile and Italy. signed at Santiago on 8th August ,913. and ratifieii on
27th March ~giq (l3.F.S.P.. Vol. 107, p. 721) :betwcen France and Roumania.
çigned at Paris on 10th June1926, and ratified on 8th Sovember 1926 (B.F.S.P.,
Vol. 125.p. 5853; and betseen Austtia and Poland. signed at Vienna on 16th .kpril
1926,and ratifiecl on 2nd April 1927 (ibid.p. 169).166 ANNEXES TO U.K. MEMORIAL (XO. 2)
Permanent Court of International Justice (1943 edition), "certain
types of exclusions were frequently employed and the forms of stating
them became more or less standardized". One exception ivhich in
particular became standardized was the exception ratione temporis.
On 6th August 1921, the Netherlands, and on 2nd May 1923. Esthonia,
accepted the jurisdiction simply "sur tout différendfutur". On 25th Sep-
tember 1925, however, Belgium accepted the jurisdiction in a form
which, so far as concerns the exception ratione temporis, is manifestly
based on the formula in the arbitration conventions referred to in
paragraph 32 above, to one of which Belgium was a party. The declara-
tion (an instrument of ratification of whichwas deposited on 10th Alarch
1926) was in tbe following terms :
"Au norn du Gouvernement belge, je déclare reconnaitre comme
obligatoire de plein droit et, sans convention spéciale, vis-à-vis
de tout autre Membre ou Etat acceptant la même obligation,
la juridiction de la Cour, conformément à l'article 36, paragraphe 2,
du Statut de la Cour, pour une durée de quinze années, sur tous
les différendsaui s'élèveraienta~rès la ratification de la rése ente
déclaration au'sujet de situations ou de faits postérieurs'à cette,
ratification, sauf les caç où les Parties auraient convenu ou convien-
draient d'avoir recourà un autre mode de règlement pacifique."
The German declaration of 23rd September 1927 (instrument of
ratification deposited 29th February 1928) used identicaiiy the same
words. The Spanish declaration of ~1st September 1928 was (so far
as is material) identical, Savethat the relevant date was that of signature,
not that of ratification. The Latvian declaration of 10th September
1929 (instrument of ratification deposited 26th February r930), the
French declaration of 19th September 1929 (instrument of ratification
deposited 25th April 1931). the British Commonwealth declarations
of 19th September 1929 (instruments of ratification deposited at various
dates between 5th Fehriiary 1930 and 18th August 1930). the Czecho-
slovak declaration of 19th September 1929, the Luxembourg declara-
tion of 15th September 1930. and the Albanian declaration of 17th Sep-
tember 1930 (instrument of ratification deposited same day), are (so
far as material) identical with the Belgian. The Pemvian declaration
of 19th September 1929 (instrument of ratification deposited 29th March
1932) differç materially only by the omission of the words "après la.
ratification de la présente déclaration" after "s'él8veraient". Indeed,
with the exception of Ethiopia and the Netherlands (renewing their
earlier declaration), no State which accepted the jurisdiction subject
to an exception ratzonetempovis between 1925 and October 1930 used
any other form of words. The texts of al1 these declarations .are to
be found in the Permanent Court of International Justice, Series D,
No. 6, Collectionof Texts goverttingthe juuisdzctionof the Court (fourth
edition, 1932) ; moreover, they had al1 (except the Luxembourg and
Albanian) been published pnor to October 1930 in the third edition,
1926 (Series D, No. j), or in the 3rd, 4th, 5th or 6th Annual Keports
of the Permanent Court of International Justice. In al1 these texts
indubitahly govern the words "situations ou faits". The reason forords
such an exception is described in the case of the Phosphdtesin Morocco
(Preliminary Objectio,ts), Series A/B, No. 74, in the following words ASSEXES TO U.K. >lEMORIAL (';o. 2) 1~7
dealing with the French declaration : "Not only are the terms espressing
the limitation ratione temporis clear, biit the intention which inspired
it seems equally clear ; it was inserted with the object of depriving the
acceptance of the compulsory jurisdiction of any retroactive effects,
in order both to avoid, in general, a revival of old disputes and to
preclude the possibility of the siil~mission to the Court by mearis of
an application of situations or facts dating from a period urlien the
State whose action was impugned was not in a position to foresee the
legal proceedings to which these facts and situations might give rise"
(at P. 24).
34. The Persian declaration of 2nd October 1930 differs from the
Belgian and other sirnilar declarations only by the addition of the
words "ayant directement ou indirectement trait à l'application des 2
traités ou conventions acceptés par la I'erse". In al1 other respects it
is identical with the "more or less standardized form of those decla-
rations. The natural inference is t1i:lt Persia intended to accept the
compulsory jurisdiction subject to the same exceptions as those cither
countries, Save for the additional reservation that the acceptance was
lïmited to disputes "au sujet de situations ou de faits ayant directe-
ment ou indirectement trait à I'apj~lication des traités ou conventions
acceptés par la Perse". The declaration is drafted in the common form,
Save for the addition of the words qiioted ; and it would be an odd
result, and one which the Court would strive to avoid, if the effect of
the addition of these words was not only to add the further limitation
imposed by the additional words themselves, but also to alter the
meaning and effect of other. words which form part of the common
form declaration (namely "postérieurs à cette ratification" or "posté-
rieurs à la ratification de cette déclaration"), by attaching them to
"traités ou conventions" instead of to "situations ou faits".
35. Moreover, "it is a fundamental rule in interpreting legal texts
that one sliould not lightly admit that they contain superfluoiis words :
the right course, whenever possible, is to seek for an interpretation
which allows a reason and a meaning to every word in the test" (Lighl-
bouses case betweenFrance aiid G7~eç6, Series A/B, ATo.62, p. 31, per
Judge Anzilotti in a separate opinion).
If the construction now suggested by Iran, namely, taking "poste-
rieurs" as goveming "traités ou conventions", is correct, the words
"qui s'élèveraientaprès la ratification de la présentedéclaration" are
completely otiose, and their oinission would leave the effect of the
sentence quite unchanged, for a dispiite conceming :i treaty or con-
vention posterior to the ratification of a declaration could not possibly
arise or have arisen before such ratification '. On the other hand, it
might reasonably have been thought (as it clearly was thought. by
the countries whose declaration followed tlie Belgioi formula) that
situations or facts, which existed prior to the date of ratification,
might before that date either have given rise to no dispute at all, but
could possibly be made the ground of a new dispute later, or Iiave
1 It issubmitted thnt rtrc.titiofithesu >\~rd+rliosis almuirsuiielulivelythat
clic(;<i\,c.rnmentf th<: Iiiiil Kio~diim's iiitcrprctaiio1,th- i.>rrcct one Iti,
alinost in;uncei\.ahle ththry woulil 1inibccn Ic:fiiiltheiiit~r~irt~t;iti..iiruç~~!strd
in the Iranian telegram to the United Nations is correct. 168 ASSEXES TO U.K. JIEJIORIAI. (SO. 2)
given rise to a difference which might even have hecome dormant ;
and in both cases it \vas not desired that the acceptance of the Optional
Clause should apply so as to cover a new disjmte about old facts or
an old dispute about old facts, including an old dispute which might
have become donnant. On the interpretation contended for by the
United Kingdom Government, therefore, tlie words "qui s'élèveraient
après la ratification de la présefitedéclaration" do serve some purpose.
35A. Further, the reaion for the limitation ratione temporis isciearly
given in the passage (quoted at the end of paragraph 33 above) from
the decision of the Permanent Court of International Justice in the case
of the Phosphates il& Morocco (Preliminary Objections), Series A/B.
No. 74. That reason is fully satisfied by theinterpretationgiven by the
2 Government of the United Kingdom. It does not in any way require
the interpretation suggested in the Iranian tclegram.
36. In addition to the foregoing considerntions. which lead towards
the interpretation contended for by the Government of the United
Kingdom, that Government submits that the Persian declaration
accepting the jurisdiction of the Court should be intcrpreted as if it
formed, together with the declaration of the United Kingdom Govern-
ment, a treaty or international engagement. As Fachiri says, at page 99
of his book on the Permanent Court of International Justicc (2nd
edition, 1932) : "The Optional Clause constitutes an international
agreement each party to which contracts with every other to accept
the compulsory jurisdiction of the Court as defined hy Article 36,
paragraph z, of the Statute." Professor hfanley O. Hiidson, at page 473
of his book on the Permanent Court of Internatioiial Justice (1943
edition), says : "The 42 effective declarations were equivalent to 861
bipartite agreements." It has been the practice of the Secretariats
both of the League of Nations and of the United Nations to register
such declarations and to notify them to other States which have
accepted the compulsory jurisdiction. In this dissenting opinion in the
case of the Ebctricity Company O/ Sofia uird Rulgaria, Series A/B,
No. 77. Judge Urrutia said : "The adherence of the two Parties to
Article 36 of the Statute of the Court is equivalent iii law to an inter-
iiational agreement between them within the limits fixed by the reser-
vations in the Relgian declaration" (at p. 103). hloreover, in the case
of the Austro-Gcrman Ct~stomsRégime,Series A/B, No. 41, the Court
said that "from the standpoint of the obligatory cliaracter of inter-
national engagements, it is well known that siich engagements may
be taken in the form of treaties, conventions, decl<iratiofcs,agreements,
protocols, or exchanges of notes" (at p. 47).
It is apparent that declarations accepting the compulsory jurisdiction
of the Court are of a consensual nature ;since, tlierefore, other States
which had made such declarations would naturally attribute to the
Persian declaration, in view of its close approximation to the common
form, the meaning for which the Government of the United Kingdom
contends, Iran is precluded from alleging tliat her declaration has
any other meaning.
37. 1f' it is suggested that the declaration, heing a document
conferring jurisdiction on an international tribunal, must be construed
restrictively, the conclusive answers to any such argument are : AN'EXES TO U.K. MEMORIAL (NO. 2)
169
(a) That the so-called mle of restrictive interpretation can be resorted
to only if al1 other methods of interpretation have failed (see the case
relating to the Territorial Jurisdiction of the International Commission
of the River Oder,Series A, No. 23, p. 26). In the present case, as has
been stated above, there are other methods of interpretation which
point to the interpretation contended for hy the United Kingdom.
(b) Despite certain dicta of the Permanent Court of International
Justice in favour of the so-called principle of.restrictive interpretation,
the practice of the Permanent Court of International Justice showed
a clear tendency in the opposite direction. \ITith the exceptions of the
Phosphatesin Morocco(Preliminary Objections)case (Series A/B, Xo: 74).
in which the wording of the declaration of signature of the Optional
Clause left little room for doubt, and of the case of the Readaptatioii
of the Mavrommatis Jerusaleni Concessions (Jurisdiction) (Series A,
jurisdiction rather than to deny it. In the Mavrommatis Palestinessuine
Concessions case it assumed jurisdiction grounded in a treaty which
had not yet entered into force at the time when the Application sub-
mitting the case to the Court was filed ; it did so for the reason that
"the Court, whose jurisdiction is international, is not bound to attach
to matters of fom the same degree of importance which they might
possess in municipal law". (Series A, No. 2, p. 34.) In the same case
the Court gave a wide-not a restrictive-interpretation to the provision
which conferred uuon it iurisdiction onlv if necotiations had failed.
It considered that' aborthe negotiation< betwek the private party
concerned and the defendant Government could be assimilated to
negotiations between the two Govemments in question. It expressed
the view that "it would be incompatible with the flexibility which
should characterize international relations to require the two Govern-
meuts to reopen a discussion which has in fact already taken place
and on which they rely". (Series A, No. 2,p. 15.) In the first plrase
of the case concerning Certain German Interestsin Polish Upper Silesia.
the Court refused to be hampered "by a mere defect of form"-that
defect of form being such that it could be remedied at any time on the
part of the plaintiffGovernment. (Series A, No. 6, p. 14.) In the second
phase of that case, the Court went much further in interpreting exten-
given to it in the matter of the interpretation and heapplication of theon
Convention cave it iurisdiction to decrec and assess reuaration in
rcspcct of tlic disrc;.îr<l of tlic ohligntioiis of the (:oii\,-ntion. As ra:l>.î-
riition, it considered, iras an indijpcnsible coml~lcnient of n fniliire
to apply a treaty, it was not necëssary that jürisdiction in respect
of such reparation should be specifically provided for. Only an express
provision to thc contrary could have excluded that implied jurisdiction
of the Court. (Series A, Ko. g, p. 23.) In a less drastic manner, but
equally by way of implication, the International Court of Justice held
in the Corfz~ Channel case that the jurisdiction to detennine the
question whether there is any duty to pay compensation implied the
competence to assess the amount of compensation. The Court held
that the jurisdiction to decide what kind of satisfadion is due to
Albania included the jurisdiction to decide the amourltof compensation
due to the United Kingdom. (I.C.J. Reports 1949, p. 26.) In giving
that interpretation of the Special Agreement, the Court referred to
15 ANNEXES TO U.K. hIEhlORIAL (NO. 2)
170
the mling of the Permanent Court of International Justice in the Free
Zones case (Series A, No. 22, p. 13), in which that Court expressed the
opinion that "in case of doubt, the clauses of a special agreement by
which a dispute is referred to the Court must, if it does not involve
doing violence to their terms, be construed in a manner enabling the
clauses themselves to have appropriate effects".
There is no trace in al1 these pronouncements or, what, is, more
important, in the unambiguous instances of assumption of jurisd!ction,
of any restrictive interpretation of jurisdictional clauses1. It 1s not
surprising that, in a period during which the Court was declining to
adopt restrictive interpretations of jurisdictional clauses, an inter-
national arbitrator should have followed the practice of the Court
and that he should have preferred expressly to dissociate himself from
the view that such clauses must be interpreted restrictively. He said :
"The defendant Government maintains that, in case of doubt
as to the meaning of an arbitral clause, the incompetence of the
Arbitrator must be presumed, according to the general mle by
which a State is not obliged to have recourse to arbitration except
when a forma1 agreement to that effect exists. The Arbitrator
cannot agree *th this principle of interpretation of arbitral clauses.
Such a clause should be interpreted in the same way as other
contractual obligations. If analysis of the text and examination
of its purpose show that the reasons in favour of the competence
of the Arbitrator are more plausible than those which can be
shown to the contrary, the former must be adopted." (Undén,
Arbitrator, in the case betwecn Greece and Rulgana concerning
the I~zterpretationof Article r8r of the Treaty of Neuilly of 1920
(4th November 1931) : American Journal of International Law,
Vol. 28 (1934)~p. 760 at p. 773 '.)
38. If the Court should decide. contrary to the contention of the
United Kingdom C;overnment. that the Persian declaration is limited to
disputes which directly or indirectly concern the application of treaties
or conventions accepted by Persia after 19th September 1932, the Court
will recollect that, among the treaties and conventions relied upon by
the Government of the United Kingdom (see paragraphs 9-13 of this
Annex), there are some which were accepted by Persia after that date,
namely :
(a) the treaties between Persia and Denmark, Switzerland and
Turkey respectively. referred to in paragraph II, suh-para-
graphs (d),(e) and (g)above ;
(b) the Agreement between the Governments of the United King-
dom and Persia to compromise or settle the dispute then current
'The opposite is the case-not to mention the numerous casesin which the
Court assumed jurisdiction by virtue of the conduct of the parties such as sub-
missions made ina counter-case. See the case of the Rigofs;Minoritiesin Uppcr
Sileria (Minority Schools) (Series A, No. 15. p24). See also theMavrommalis
Jerusalem Concession csse (Series A. Na.5,pp.27-28),where the Court considered
that a declaration made by Great Britain in the course of the proceedingswas
suficientto invest the Court with jurisdiction onone aspect of the dispute on
which it could not otherwise have had jurisdiction to pronounce.
This paragraph follawç rather cloçely portions ofan article by ProfessoHr.
Lauterpacht in the Briiiah Yenr Book of International Law, 1949,at pp.65-66. ANNEXES TO U.K. MEhlORIAL (SO. 2)
'7'
between them before the Council of the League of Nations iipon
the conclusion of the 1933Concession Convention between the
Persian Govemment and the Anglo-Persian Oil Company,
Limited, and the Concession Convention itself (see riara-
graph g (c) above).
39. As to fiaragraph 38 (a) above,the present dispute is upon the sub-
ject of situations or facts involving directly or indirectly the application
of these treaties, since the Govemment of the United Kingdom is alleg-
ing that the conduct of the Iranian Govemment towards the Aiiglo-
Iranian OilCompany, a British national (out of which the present dispute
arose), is a breach of the pnnciples and practice of general international
law, which by those treaties Iran proinised to observe towards Danish,
Swiss and Turkish nationals and which consequently, by the operation
of the most-favoured-nation clause in lier treaties with the United King-
dom, she became u#on the corninainlo force of the said trealies (Le. on
z~st hlarch 1935. 1st July 1935, and some date in June 1937 rkpecti-
vely) bound to observe towards British nationals. The dispute concerns
the application of those treaties in exactly the same way as the dispute
between France and Great Bntain over the Tunis and MoroccoNation-
ality Decrees (Series B. No. 4) concerned the application of the Eranco-
Italian Consular Convention of 1896. .
40. As 10 paragraph 38 (b) above,it was pointed out in paragraph 28
above that the construction ut on the Persian declaration in the Iranian
telegram to tlie Liiited ~n;ions did not affect the :ipplicnl>ilityof the
declaration to tlic ConcessionConvention itself or 11,tlic iiiil~liedconirnc-
tii;il at.reeinent I,etii.tthe iivo Go\.ernnients \i.hicli the United Kind-
dom ontends came into existence at the same date as the ~oncessi~n
Convention or at the later date when the dispute was removed from the
a enda of the Council of the League of Nations. (For the contentions
Of the Government of the United Kingdom that the Concession Conven-
tion had a double character and for the existence of this contractual
relation, see paragraphs 6-6~ of the Memonal.) There can be no doubt,
it is submitted (in the light of the aiithorities cited in paragraphs 6-68
of this Memorial), that an obligationof a contractz~aclharacterresults from'
a compromise settling an international dispute and from a resolution
of the Council of the League accepted by both contesting Governmeiits.
The only remaining question is therefore whether the word "conventions"
in the Persian declaration islimited to formal treaties signed and ratified a
or whether it extends to al1obligations of a contractual character having
the force of a treaty.
The Government of the United Kinedom submits that there is no
reason to interpret the word "conventi~ns" in any such limited sense.
Clearly, it cannot be renarded as limited to instruments which happen
to be called treaties and-coltuentionsas opposed to instruments descÏibed
as agreements, acts, declarations, protocols, exchanges of notes, etc. 1s
there any reason to exclude from it other obligations of a contractual
(conventional) character ? The Government of the United Kingdom sub-
mits that there is no such reason. The proper sense of the Persian declar-
--
1 See paragraph i (g) ahove.
2 (In fact the Concession Conventionwas signedfor the PersianGovernrnent
and ratifiedby the Persian Parliament and His Imperia1 hIajesty theShah.)172 ASNEXES TO U.K. AlEMORIAL (NO. 2)
ation is that it covered disputes arising out of conventional obligations
and not disputes arising purely from acts which could be claimed to
be international torts. In aid of such interpretation. the United King-
dom relies on the legal authorities referred to in paragraph 37 above,
which support the view tbat instruments creating lurisdiction are not
interpreted restrictively.
41. For al1the above reasons, the Government of the United Kingdom
contends that the Court ha jurisdiction to deal with the merits of the
present case.
Appendix No. I to Annex 2
TEXT OF THE ESTABLISHAIEST CONVENTION CONCLUDED AT TEHRAN
IIETWEEN IRAS AND TURKEY ON 14th M.ARCH 1937
Convention d'établissemee nttrel'Empiredel'Iranetla Rdpubliqueturque
-~ ~~~~ ~té im~érialele Schahinchah de l'Iran d'une art et le Prési-
aent de iiXépuMique turque d'autre part,
Animésdu désirde régler les conditions d'établissement des ressor-
tissants iraniens en Turquie et des ressortissants turcs en Iran, ont résolu
de conclure, à cet effet, une convention et ont nommé pour leun pléni-
potentiaires respectifs,
\
Sa hfajestéimpériale le Schahinchah de l'Iran :
Son Excellence Monsieur Enayatollah Samiy, ministre des Affaires
étrangères,
Le Président de la République turque :
Son Excellence Monsieur Cemal Hüsnü Taray, ancien ministre, ancien
délégué permanent à la Société desNations, député A la Grande Assem-
bléenationale : et
Son Excellence blonsieur Kemal Kijprülü, ministre plénipotentiaire,
lesquels, aprèss'êtrecommuniqué leurspleins pouvoirs, trouvés enbonne
et due forme,sont convenus de ce qui suit :
Les ressortissants de chacune des Hautes Partiescontractantes seront,
sur IV tc,rritt.irc dc I'niitri~,r<:'1itr.,itr'i. r~l,,ti\~~i:lIziirsIlcrsiinrics
tt .iIciirs bien;, cuiiiurmcni~nt titidruit rt,iiiiiiiiii inrcrn~tiuiiil. Ily
iouirunt <le I;ii~liiconst;iiitc i,rutiilii,ii clci lois ~r cles ;~iitvritr:str-rri-
ioriales pour l&rs personnes el leurs biens, droits et intérêts.
Ils auront le droit de s' établir, de séjourner, d'aller, de venir et de
circuler librement. en conZrmité des lois et règle-ents en vigueur-dans
le pays.
Les Hautes Parties contractantes se garantissent, en toutes ces
mati&res,le traitement de la nation la plus favorisée.
Toutefois, encequi concerne l'immigration,chacunedes Hautes Parties
contractantes se réservetoute liberté d'action. ANNEXES TO U.K. MEMORIAL (NO. 2) I73
ARTICLE 2
Chacune des Hautes Partiescontractantes seréserveledroit d'expulser
les lois et règlements de police, ainsi que pour des motifsde sûreté inté-
rieure ou extérieure de l'État, dont d'ailleurs elle reste seule juge, les
ressortissants de I'aiitre partie.
L'expulsion sera effectuéedans les conditions conformes à I'liygièiieet
à l'humanité.
Le transfert des personnes expulsées jusqu'à la frontière ou jusqu'au
port d'embarquement de la partie qiii prononce l'expulsion sera à la
charge de cette dernière. Cette charge sera supportée par les expiilsés
s'ils sonà mémede la couvrir.
ARTICLE 3
Les ressortissants de chacune des Hautes Parties contractantes, tout
en se conformant :iiix lois et règlements du pays, jouiront sur le terri-
toire de l'autre, en ce qui concerne le droit de posséder, d'acquérir,
d'aliéner,de louer tous biens meubles et immeubles et d'en disposer de
q.elq.e manière <luece soit. du traitenient de la nation la ~lus favorisée.
Ils ne pourront'être assuj'ettis dans les cas prévàsl'alhéa précédent
à des impbts, taxes ou charges de quelque nature que ce soit, autres ou
plus élevésque ceux qui soit ou seiont-appliqués aux nationaux.
Il leur sera également permis, en se conformant aux lois et règlements
du pays, d'exporter librement leurs biens.
Ils ne seront assuiettis en cette matièrà aucune autre restriction ni
à aucun droit autre&ou plus élevésque ceux auxquels seraient soumis
ou dont seraient redevables, en pareille circonstance, les ressortissants
du pays le plus favoris&
ARTICLE q
1.esrcsjurtissnnts rlechncune des Hniitrs Pnrtips contr:ict:iritt?sxiiront.
sur Ir territuirc de l'autre. nus iii2mes conditions qiie lcs narion;ius. Ic
droit d'exercer toute sorte d'industrie et de commerce et de se vouer
tous métiers et professions quelconques, sauf ceux qui en vertu des lois
et règlements locaux sont ou seront réservesaux seuls nationaux O! qui
font ou feront l'objet d'un monopole d'Etat ou concédéspar l'Etat.
ARTICI.E 5
. Les ressortissants de chacune des Hautes Parties contractantes n'au-
ront & payer, sur le territoire de l'aiitre. uour leurs r~ersonneset leurs
biens, ainsi que pour l'exercice de toute' Corte de commerce, industrie,
métier et profession, aucun impbt, taxe ou charge, de quelque nature
que ce soit, autres ou plus élevésque ceux perçus des nationaux.
Les dispositions de cette convention ne font pas obstacleà la peri:ep:
tion, le cas échéant, des taxes afférentes au séjour des étrangers ainsi
qu'aux formalités de leur enregistrement. Cette matière sera régiepar
le traitement de la nationla plus favorisée.
ARTICLE 6
Les ressortissants de chacune des Hautes Parties contractantes ne
seront astreints, en temps de paix comme en temps de guerre, sur leI74 ANNEXES TO U.K. hlEhlORIAL (SO. 2)
territoire de I'autre,à aucun service militaire, gardes ou milices natio-
soit en nature, destinéeiàutenir lieu du service militaire personnel.,
Les ressortissants et les sociétésdes Hautes Parties contractantes ne
seront soumis, en temps de paix comme en temps de guerre, à d'autres
réquisitions ou prestations que dans les mesiires et conditions prescrites
pour les nationaux.
La restitution des biens et s'ily a lieu l'indemnisation seront effectuées
d'aprèsla Iégislation locale.
Les ressortissants dechacune des Hautes Parties contractantes seront.
sur le territoire de l'autre, exempts detous emprunts forcés.
En cas de calamité provenant des élémentsde la nature, les ressor-
tissants de l'une des Parties contractantes pourront êtresouniis sur le
territoire de l'autre,à des prestations de travail.
Les ressortissants ainsi qiie les sociétésde l'une des Hautes Parties
contractantes ne pourront, sur le territoire de I'autre, êtreexpropriésde
leurs biens, ni vrivés mêmetemvorairement de la iouissance de leurs
biens, que pou; une cause d'uti1;tépublique, confo;mément aux pres-
criptions de la loi, et moyennant une juste indemnité suivant la procé-
dure établiepar la législationdu pays
Lesressortissants et lessociétésde chacunedes Hautes Parties contrac-
tantes auront, sur le territoire de I'autre, libre accèsaux tribunaux aux
fins de poursuivre et de défendre leurs droits, sans autres cautions,
restrictions ou taxes nue celles imoosées aux nationaux. et iouiront.
comme ceiix-ci. de I:111>t~rdt!:choisir dans tous les proc6s. leur:i\.ocats,
avouGsoii agents parmi lei pcrsnnnes ndniises A I'exrrcicc de ccs yrofcs-
sions selon lésloicdu territoire en question.
Les ressortissants de chacune de.; Hautes Parties contractantes joui-
ront à charge de réciprocitésur le territoire de l'autre de l'assistance
judiciaire et de l'exemption de la caution jtcdicatumsalai.
Toute sociétéde commerce, y compris les sociétésindustrielles. finan-
cières,d'assurances et de transport, qui ont leur siège socialsur le terri-
toire de l'une des Parties contractantes. qui y existent régulièrement
d'après les lois de cette dernière, et qui y sont légalement reconnues
comme jouissant de sa nationalité, verront reconnue par l'autre partie
leur existence juridique. Lesdites sociétéspourront s'établir sur le tem-
toire de I'autre, y créerdes filiales, succursales ou agences en se soumet-
tant aux lois et règlements qui sont ou seront en vigueur, et après avoir
obtenu l'autorisation de l'Etat dans le cas où cette autorisation est
exigéeDar les lois et rèelements intérieurs.
i'aciivité desdites souciétées,n tant qu'elle stexerCesur le territoire de
l'autre Haute Partie contractante, sera soumise aux lois et rè~le-ents
de celle-ci.
Pour tout ce qui concerne la protection légaleet judiciaire de leurs
biens, elles jouiront dans le pays d'établissement du mêmetraitement
que les sociétésnationales. ANYEXES TO U.K. ME310RIAL (NO.2) I75
Les sociétésde chacune des Hautes Parties contractantes, ainsi qiie
leurs filiales, succursales et agences ne seront pas soumises sur le terri-
toire de l'autre, en ce qui concerne les droits, taxes et impôts, à une
charge fiscale autre ou plus élevéeque celle supportée par les sociétés
nationales de mêmenature.
Toutefois, en ce qui concerne les impôts calculés sur le capital, le
revenu, le chiffre d'affaires et les bénéfices,chacune des Parties contrac-
tantes se réservele droit de tixer les sociétésde l'autre. selon la nature
des impôts, sur la partie des capitaux investis sur son temtoire et des
revenus qui y sont produits, des biens qu'elle~ -ossèdent ou des affaires
qu'elles$ font. -
D'autre part, en se soumettant aux lois et règlements du pays, les
sociétésde chacune des Hautes Parties contractantes pourront acquérir,
sur le territoire de l'autre. toute esuècede biens meubles et immeubles
nbcrss:iircRLIfnnctionnri~i~'i~cti<:I:IsociCt6,milis ne s111r~icnt11;nLlicier
de 1,.clroir les sociLt<~ilif,:rai<:ntde I'~i<liiisition~l'iinii~cI'sol~~et
méme de la société.
Il reste entendu que les dispositions de la présente conventio~i ne
sauraient autoriser à réclamer les privilèges spéciaux accordés de part
et d'autre. à des sociétésdont les conditions d'activité sont r"glées-ar
des concessions spéciales.
D'autre part, les sociétésde l'une des Hautes Parties contractantes
dont les conditions d'activité sur le territoire de l'autre sont régléespar
des concessions spéciales,n'auront pas le droit, pour les poin& prébiis
par l'acte de concession, de réclamer des avantages accordPs en vertu
des traités et conventions en vigueur, ou découlant du régime de la
nation la plus favorisée.
ARTICLE g
La présente convention sera ratifiée et la ratification en sera com-
muniquée par note à l'autre Partie contractante.
Elle entrera en vigueur 15 jours après la remise de la dernière note et
aura une durée de trois ans.
Après l'expiration de ce délai, elle restera en vigueur, tant qu'elle
n'aura pas étédénoncéepar l'une des Hautes Parties contractantes, et
la dénonciation ne produira ses effets que six mois après la date de sa
notification.
Les instruments de ratification seront échangésà Ankara, aussitôt que
faire se pourra.
En foi de quoi, les plénipotentiaires des Hautes Parties contractantes
ont signéla présente convention.
Fait en double exemplaire, en français, à Téhéran,le quatorze mars
'937.
(Signé)SA~IIY. (Signé)CEMAL HÜsNÜTARAY.
K. KOPRULÜ.17~ ANSEXES TO U.K. MENORIAL (NO. 2)
APfiendix No. z to Annex z
EXCIIANGE OF NOTES, DATED
10th MAY 1928, BETWEEN THE UNITED
KINGDOM GOVERNMENT AND THE IMPERIAL PERSIAN GOVERNMENT
REGARDING THE POSITION OP BRITISH NATIONALS IN PERSIA AFTER THE
ABOI.ITION OF THE CAPITUI.ATIONS
(i)
Acliug Persiarz Minister for Foreign Affairs 10 Sir R. Clive
Téhéran,le IO mai 1928.
RI. le Ministre.
En réponseaux demandes adresséeset au moment de la réalisation
de sa résolutiond'abolir le régimeconnu soiis le nom de régimecapitu-
laire, le Gouvernement impérial de Perse, animé du désirde dissiper les
inquiétudes qui pourraient naître chez les ressortissants britanniques
séjournant en Perse, eii raison de la nouveauté du régimequi lui sera
désormais appliqué, et désireux de mettre par votre intermédiaire
vos ressortissants au courant des dispositions prises par la législation
et le Gouvernement persans à leur égard, vousadresse, pour que vous en
puissiez transmettre la teneur à vos ressortissants, la présente décision.
Il est inutile de vous dire que le Gouvernement persan lui-même,qui
a pour intérêtet qui tientà cŒur deprocurer le plus de garanties possibles
aux citoyens persans et d'avoir à cet effet un appareil judiciaire dont
le fonctionnement approche autant que possible de la perfection. a
accompli des réformestrès appréciables quant au personnel et aux lois
judiciaires.
Sans parler des lois qui sont connues de tout le monde, actuellement
la possession de con~iaissancesen matière de droit équivalant à celles
que consacre le diplame de licenciéen droit, est une condition obliga-
toire pour l'entrée dans la carrière judiciaire.
Quant à la situation des ressortissants britanniques en Perse découlant
des prescriptions des lois persanes, les dispositions suivantes prises par
le Gouvernement persan leur seront appliquées à daterdu IO mai 1928 :
I. Sur la base d'une parfaite réciprocité,ils seront admis et traités
sur le territoire persan conformément aux règles et pratiques du droit
commun international, y jouiront de la plus entière protection des lois
et des autorités territoriales ety bénéficierontdu mêmetraitement que
les nationaux.
2.En tout procès civilou commercial où une des parties est un ressor-
tissant britannique, seule la preuve écrite sera admise.
En tout procès. mêmecriminel, les jugements seront rédigéspar écrit
et contiendront les considérants de droit et de fait sur lesquels ils se
fondent.
Les intéressésau procès ou les personnes autorisées de leur part
auront droit à obtenir copie des témoignages et du jugement, sous
condition d'acquitter les taxes réglementaires.
En matière criminelle. le témoie,,ee oral étant un mode normal de
preii\,ç, les iiitCrCtsd<.siiiculpis restent r:iu\~c);ird>spar 1c.iarii213s
et 2rtj du Coile p;iial frnpp.iiit 1,.f.,iix lh<iign:ige.
7. i\1'cx;liisi~CiI:uutç ;iiitrc iiiri(liitiuii. sculs Icsetitrihuiiaux
rehant du ministère de la ~usti& seront compétentsdans le cas où une
des parties est de nationalité britannique. ANNEXES .TO U.K. MEMORIAL (NO.2) I77
Seuls les tribunaux criminels relevant du ministère de la Justice
Dourront. en eé"éral. .r.noncer des neines d'em~risonnement contre
Tes ressortissants britanniques.
Toutefois, dans le cas d'une proclamation d'état de siège, lorsque
l'instmction d'un procès reviendra à un tribunal spécialement formé,
ce tribunal pourra aussi connaître des cas où un ressortissant britannique
sera prévenu.
De nlus. en matière fiscale et en eénéraldans une contestation entre
une admin'istration et un ressortissant britannique relative à une matière
purement administrative, les tribunaux administratifs conservent leur
4' Les rcisurtissniits briranniqiie, ni: scri~nt eii tr~iitci luitici:ihl*:s
Our 4,- tîibiiri:iiix Iniqiies ct les lois I;fi<~iit:lseiir çt:roiit sciilc; :ipl)lit::il)les.
G.Les tribunaux désimole Aoli>e néseront com~étents aüëdans les
affiires de minime importance et pour des faits i'entraîn'ant qu'une
amende légère.
Ilsne pourront prononcer des peines d'emprisonncrnent, sauf le cas où
les ressortissants britanniques demanderaient eux-mêmesde convertir
en emprisonnement la peine d'amende qui aura étéprononcée contre
eux. Conformément à la loi. les tribunaux de simple police ne pourront
jamais prononcer un emprisonnement de plus d'une semaine. Il est bien
entendu qu'ils ne sont pas autorisés de prononcer des peines corporelles.
6. Un ressortissant britannique arrêtéen flagrant délit pour un fait
qualifiédéliton crime ne pourra êtreconservéen prison plus de 24 heures
sans être amené devant l'autorité judiciaire compétente.
En dehors des cas de flagrant délit, aucun ressortissant britannique
ne sera arrêtéou incarcérésans un ordre émanant de l'autorité judiciaire
compétente.
Ni la maison Drivée ni la maison de commerce d'un ressortissant
I~rit;iiini(liizne se;;<forcc'cou per<luisiti<inii~e~irirn:ind:it pruLreri:int
de I'autoritc iudiciaire comvétciire avec des gar:intics :idCtcnninzr
ultérieuremeni contre les abCs.
7. I.cs ressortissaiits brit:iiiniques nrri.ti.s,ct nii; en pristm aiiront le
droit. conforniénient aux rPgleineiits :les prisons, di: coinriiiirii<lucriivec
leurs consulsles Dius'Droche<et les consuls ou leurs re~résentants auront,
cn se çoiifom;iiit ;iiix réglcnienrsdes prisoiii, la pem;jsi~,n cl<:les visiter.
1.rj :iutoritl:s ~ouveriit:inent;ilcs transmettrodc siiitci 1'sdri:ssetelles
demandes de Eommuniquer avec eux.
8. Le Gouvernement impérial a pris en vue une généreuseréglenien-
tation en ce qui concerne la mise en liberté sous caution, qui sera de
rieueur dans tous les cas. excenté en cas de crime (le crime tel qu'il est
dzfini par le Code pénal).
La somme demandée comme cautionnement sera raisonnablenient
nronortionnée au degré de l'infraction.
corsqu'uoe personGe condamnée se pourvoira en appel, les mêmes
facilitésde libertésous caution mentionnées ci-dessus lui seront accorilées
jusqu'à ce que le jugement d'appel ait étérendu.
9. Selon la loi persane. les audiences relatives au procès en génBral,
et sauf dans des cas exceptionnels, étant publiques, les intéressés au
procès et au sort des ~arties en cause ont donc le droit, toutefois, de se
mêleraux débats. .
IO. En matière pénale, l'inculpé est absolument libre de choisir son
ou ses défenseurs, qui peuvent êtrechoisis mêmeparmi ses compatriotes.17~ ANNEXES TO U.K. MEMORIAL (NO. 2)
II. Le Gouvernement impérial a décidé d'améliorer lesconditions
des prisons, afin que ces dernières soient plus conformes aux usages
modernes, et une somme d'argent suffisante pour l'aménagement des
prisons en Perse remplissant les conditions hygiéniques nécessairesest
déjà votée.
En attendant. les ressortissants britannioues aui seront condamnés
Bun ~mprisonn~nieiit de plus d'uii mois - ~'cm~r~sunn~~iiird ii'tlin iiiois
oii inuin it:int con\~crtijs~blccriiiric~)eiried':inier-dcsur lcur dcm.,nde
seront transférésdans une prison remplissant les conditions hygiéniques
nécessaires.
12. La Grande-Bretagne accordaiit aux ressortissants persans dans
l'Empire britannique et les territoires appartenant à Sa Majestébritan-
nique en matière de statut personnel le traitement de la nation la plus
favorisée, il est entendu entre la Perse et la Grande-Bretagne qu'en
matière de statut personnel, c'est-à-dire pour toutes les questions concer-
nant le mariage et la communauté conjugale, le divorce, la séparation
de corps, la dot, la paternité, la filiation, l'adoption, la capacité des
Dersonoes. la maiorité. la tutelle. la curatelle. l'interdiction:en matière
;nol>ilièrl, droit de succession testamentaire, ou ab intestat; partage et
liquidation ; et, en général, ledroit de famille, seuls seront compétents
vis-à-vis des ressorfissants britanniaues non musulmans établis ou se
trouvant en Perse leurs tribunaux nationaux. Quant aux ressortissants
britanniques de la religion niusulmane, en matière de statut personnel.
les ~rescri~tions des rois relieieuses musulmanes. conformément aux
cod& leur seront ap$iquées, en attendant que cette question
soit définitivement réglée.
La présente disposition ne porte pas atteinteaux attributions spéciales
des consuls en matière d'état civil d'après le droit international ou les
accords particuliers qui pourront intervenir, non plus qu'aux droits
des tribunaux persans de reouérir et recevoir les preuves relatives aux
questions reconnues ci-dessui comme étant de la compétence des tri-
bunaux des parties en cause.
Par dérogation à l'alinéa1, les tribunaux persans pourront également
êtrecompétents dans les questions viséesaudit alinéa, si les parties en
cause se soumettent par écrit à la juridiction de ces tribunaux, lesquels
statueront d'après la loi nationale-des parties.
13. En matière d'impôt, les ressortissants britanniques seront traités
sur un pied d'égalité avecles ressortissants persans et ne seront pas
astreints à acquitter à quelque titre que ce soit des impôts, taxes ou
autres redevances fiscales auxquels ne seront pas astreints les ressor-
tissants persans.
14.En matière judiciaire, tous les jugements rendus par les anciens
tribunaux. même s'ilsn'ont oas étémis A exé~~tion. sont considérés
comme définitivement réglése'tne seront en aucun cas Susceptibles dun
nouvel examen ;de mème,tout jugement définitifrendu Dar les anciens
tribunaux est reconnu exé~utoiie.~En somme, tous les i>rocèsachevés
sous le régime judiciaire aiicien sont considérés comme définitivement
régléset lie sont en aucun cas susceptibles d'ètre ouverts à nouveau.
Les procès non achevés au tribunal du ministère des Affaires étran-
gères et aux tribunaux des gouverneurs des provinces seront achevés
devant ces tribunaux, à moins que la partie de nationalité étrangére
demande, avant la clôturedes débats, à transférer le litige aux tribunaux
judiciaires. ANNEXES TO U.K. MEMORIAL (NO. 2) I79
Le délaiaccordépar le Gouvernement impérial pour achever lesprocès
non achevésdevant lesdits tribunaux est au plus tard jusqu'au IO mai
1929.
15. Toutes questions relatives à la caution judicatum solvi, à l'exé-
cution du jugement, à la communication des actes judiciaires et extra-
judiciaires, aux commissions rogatoires, aux condamnations aux irais et
dépens, à l'assistance judiciaire gratuite età la contrainte par corps
sont réservéesà des conventions à établir entre la Perse et la Grande-
Bretagne.
16.-Selon la loi Dersane. tous comuromis et clauses com~romissoires
eii ,iiariirc ci\.ile oi; commcrcialc 6tai;t peniiis ct Ivsdi'cisiok ;irbitralcs
ainsi ri:nJiies l'tniit esécutcirei siir I'orilre du prCsitlent du trihiiiinl de
memière instance, aui est tenu de donner cet ordre sauf dans les cas où
fa décisionarbitrale' serait contraireà l'ordre public, il est évident que
les ressortissants britanni-.es jouiront entièrement de cette disposition
légale.
17. Pour sauvegarder provisoirement des créancesde droit civil, on
ne pourra ni arrêterni soumettre à des limitationsdeliberté individtielle
lesiessortissants britanniques, sauf dans les cas où l'exécutioià opérer
sur les avoirs appartenant aux débiteurs et se trouvant en Perse semble-
rait courir un danger sérieuxvenant de la part du débiteuret où ellene
pourrait être sauvegardée par aucun autre moyen.
18. En ce oui concerne les biens et droits de nature immobilière. il
reste ,:iireii,l.ILlesrc~~ortissiintshritiinniqu~~ sur It territnirc l>er<.i311
sont autorises :t:ic<111éroirc.ciiper oii puss.~lcrles immeiil>lesn6cess;iircs
h lcur hdbittitiun eth l'exercice (IL.Içur coiiinicrcc et iiidiistrie.
Veuillez agréer, etc.
(Signé) I.' PAKXEV.~X.
[Translation]
Tehran, 10th hlay 1928.
M. le Ministre,
In reply to enquiries, and at the moment of the realization of their
resolution to abolish the régime knownas the capitulatory system, the
Imperia1 Persiaii Government, animated by the wish to dispel the
disquietude which might arise among British nationals resident in
Persia, by reason of the novelty of the régime whichwill henceforth be
applied to them, and desirous of keeping your nationals informed through
you of the measures taken by Persian legislation and the Persian Govern-
ment with regard to them, commuiiicates the present decision in order
that you may transmit its tenor to your nationals.
It is unnecessary to inform you that the Persian Government them-
selves, whose interest and earnest desire it is to ohtain for Persian
citizens as many guarantees as possible, and with this object to have a
judicial system theaorking of which shall be asnearly perfect as possible,
have accomplished considerable reforms in the judicial personnel and
legislation.
Without mentioning laws which are known to everybody, the posses-
sion of knowledge in matters of law equivalent to that required for a
upon a judicial career.sent an essential condition for anyone entering180 ASSEXES TO U.K. YE>lORlAL (NO. 2)
As for the situation of British nationals in Persia resulting from the
provisions of Persian law, the following measures taken by the Persian
Government will be applied to them as from 10th May 1928 :
r. On the basis of perfect reciprocity, they will be adrnitted and
treated on Persian territorv in confonnitv witli thc rules and ~ractice
of international law, urillei;joy the fullest protection of the laws'and the
authorities of the country and will receive the same treatment as
nationals.
2. In al1 civil or coinmercial cases in which one of the 'parties is a
British national, only written evidence \vil1be admitted.
In al1 proceedings, even crirninal proceedings, judgrnents will be
reduced to wriring and will contain the considerations of law and of
fact on which they are founded.
Those interested in the proceedings, or the perçons authorized by
them, shall have the right to obtain a copy of the evidence arid of the
judgment, subject to payment of the prescribed charges.
In criminal matters, oral testimony being a normal method of evidence,
the interests of the accused will be safeguarded, as at present, by Arti-
cles 215 and 216 of the Penal Code dealing with perjury.
3.To the exclusion of al1 other jurisdiction, only the courts and
tr<bunals subordinate to the Ministry of Justice will be competent to
deal with cases in which one of the parties is of British nationality.
Only the criminal tribunals subordinate to the Ministry of Justice
will, generally speaking, be able to pronounce sentences of imprisonment
on British nationals.
Nevertheless, in the event of the proclamation of state of siege,when
a case is brought before a tribunal specially constituted, that tribunal
will also be able to take cognizance of cases in which a British national
is concerned.
hloreover, in fiscal matters and in general in a dispute between an
administration and a British national relating to a purely administrative
matter, the administrative tribunals will retain tlieir competence.
4. British nationals will in every case be amenable only to lay (non-
religious) tribunals. and lay laws alone will be applicable to them.
5. The ordinary police courts will only be competent in matters of
trifling importance and for facts involving only a slight penalty.
They wil1,not be able to order sentence of imprisonment, Save in
cases where British nationals themselves request that the sentence of
a fine imposed on them shall be converted into iniprisonment. According
to the law, the ordiiiary police courts will never be able to order more
than one week's imprisonment. It is clearly understood that they are
not authorized to order corporal punishment.
6. A British national arrested in flagrantedelictoshall not be kept
in prison for more than twenty-four hours without being brought before
the competent judicial authority.
Apart from cases of arrest inpacrante deliclo, no British national will
be arrested or imprisoned without a warrant emanating from the com-
petent judicial authority.
Neither the private dwelling-house nor the business premises of a
British national will be forciblv entered or searched without a warrant
from the competent judicial au<hority with guarantees, to be determined
later, against abuses. ASXEXES TO U.K. AIENORIAL (KO. 2) 181
7. British nationals arrested and imprisoned will have the right, in
conformity with the prison regulations, to communicate with their
nearest consuls. and the consuls or their renresentatives will have. sub-
ject to prisoii regiilatioiis, pemiissioii to viiir ttiem -\II). request10so
coriiiiiiinicatc\viIIst once hc triinsinittcdttie~<)\~~riinieiit~l3utl1orities.
8. The Imperial Government has in iontëmplation generous regu-
lations regarding release on bail, which will be compulsory in al1cases,
except cases of crime (crime as it is defined in the Penal Code).
The sum demanded as bail will be reasonablv orov,.tionAd to the
nature of the offence.
In cases of appeal, the same facilities of release on bail as tliose
meiitioned above will be ei-en until iu,eme-t in the av..al has been
pronounced.
tional cases, held in public, and those interested in the trials and in the
fate of the parties concerned have, therefore, the right to be present,
Save in exceptional cases, as spectators, without any right, however,
to take part in the proceedings.
IO. In criminal matters, the accused is absolutely free to choose his
counsel, who may be chosen even from his compatriots.
II. The Imperial Government has decided to reform the conditions
of the prisons, in order that these may conform to a greater extent,to
modern custom, and a sum sufficient to provide prisons in Persia wliich
shall fulfil the necessary hygienic conditions has already been voteil.
In the meantime, British nationals who may he condemned to
imprisonment for more than one month-imprisonment for one munth
or less being convertible into a fine-shall be transferred at their
request to a prison fulfilling the necessary hygienic conditions.
12. Whereas Great Britain accords most-favoured-nation treatnient
in matters of personal status to Persian nationals in the British Empire
that in matters of personal status, i.e. al1questions relating to mamage,
conjugal rights, divorce, judicial separation, dower, paternity, affiliation,
adoption, capacity, majority, guardianship, trusteeship and inter-
diction ; in matters relating to succession to personalty, whether by
will or on intestacy, and the distribution and winding up of estates ;
and family law in general, it is agreed between Persia and Great Britajn
that as regards non-hloslem British nationals established or being in
Persia their national tribunals will alone have jurisdiction. As regards
British nationals of the hloslem religion, the provisions of Moslem
religious law, in conformity with the Persian codes, will be ayplied
to them in matters of persona1 status, until this question has been
finally settled.
The present stipulation does not affect the special attributions of
consuls in matters of status in accordance with international lau. or
special agreements which may be concluded, nor the right of Persian
cou~ts to request and receive evidence respecting matters acknowledged
parties conceGed.thin the cornpetence of the national tribunals of the
By way of exception to the first paragraph, the Persian courts will
also have jurisdiction in the matters referred to therein, if the parties
concemed submit in writing to the jurisdiction of the said courts.,In
such case the Persian courts will apply the national law of the parties.182 ASNEXES TO U.K. UEMORIAL (NO. 2)
13. In matters of taxation, British nationals will he treated on
a footing of equality with Persian nationals and will not be compelled
to pay, under any pretext whatever, imposts, taxes or other fiscal
dues which Persian nationals are not compelled to pa
14.In judicial matters, al1judgmentsgiven by the trmer tnhunals,
even if they have not been carried into execution, are considered as
finally settled, and shall in no case he subject to fresh enquir; in the
same way, every final judgment given hy the former tribunals is
recognized as one to be put into execution. In short,al1cases concluded
under the former judicial régimeare considered as finally settled and
sliall in no case be reopened.
Unfinished cases in the Tribunal of the Ministry for Foreign Affairs
and in the courts of ~rovincial Govemors shall be finished hefore those
tribunals, unless the' foreign national concerned rcquests before the
close of the discussions that the proceedi.gs shall be transferred to the
judicial tribunals.
The period allowed by the Imperia1 Government for the completion
of unfinished cases before the said tribunals will not extend beyond
the 10th May 1929.
15.All questions relating to secunty for costs, execution of judg-
ments, service of 'udicial and extra-judicial documents, commissions
rogatoires,orders 1or the payment of costs and expenses, free judicial
assistance and imprisonment for debt are left to be regulated hy
separate conventions to be concluded between Persia and Great Britain.
16. Seeing that in civil or commercial matters Persian law allows
arbitration and clauses in agreements providing therefor, and since
arbitral decisions rendered in pursuance thereof shall be execiited
on order of the president of the Court of First Instance, who is ohliged
to issue that order unless the arbitral decision should he contrary to
ment of this legal arrangement.British nationals will be in complete enjoy-
17. British nationals shall not be arrested or suffer restraint in their
individual liberty in order provisionally to safeguard claims of a
pecuniary nature, except in cases wliere any distraint to be made
upon a debtor's possessions wliich are actually in Persia would be
liable to be jeopardized by some action on the part of the debtor, and
where they could not be safeguarded by any other means.
18. As regards immovable property and rights, it is understood that
British nationals are permitted as in the past to acquire, occupy or
possess such property on Persian soi1as is necessary for their residence
and for the exercise of their commerce and industrv.
Please accept, etc.
(Sigited) F. PAKREVAN
(ii)
Sir R. Clive lo Acting Persian Minister for Foreign Aflairs
Téhéran,le IO mai 1928.
M. le Gérant,
Me référant la note de Votre Excellence en date du 21 ordibehecht
1306 (le 12 mai 1927). j'" l'honneur de vous informer que mon gou- ANNEXES TO U.K. MEMORIAL (No. 2) 183
vernement a donné une considératibn sympathique aux désirsexprime
Dar le Gouvernement imriérial Dour la résiliation des privil&es capi-
tulaires dont jusqu'ici les ;essortlssants britanniques ontLbénéfi;ié.
Teprends acte des mesures judiciaires dont Votre Excellence a bien
voülu-me faire Dart dans votre lettre du IO mai et vous informe que
mon gouvernem'ent compte absolument sur le fait que le Gouvemi:
ment impérial assurera sous le nouveau régime complèteet adéquate
orotectiôn aux ressortissants britanniques-ainsi au% leurs droits et
à leurs propriétés.
Je prends note que le Gouvernement impérial accordeun délaid'une
annéeau tribunal du ministère des Affaires étrangèreset aux tribunaux
des gouverneurs pour que les affaires inachevé& dans ces tribiinaus
y soient achevées. Je viens donc prier le Gouvernement impérial de
- bien vouloir accorder le même délaiaux tribunaux consulaires britan
niques afin que ces derniers puissent achever les afiaircs entre les ressor-
tissants britanniques qu'ils n'ont. .s pu conclure ~usq-'aujourd'hui.
Je saisis, etc.
(Signé) R. H. CLIVE,
[Tvanslation]
Tehran, 10th May 1928.
M. le Gérant,
With reference to Your Excellency's note dated the zrst Ordibe-
hecht 1306 (the 12th May 1927), 1 have the honour to inform you rhat
my Government have given sympathetic consideration to the wishes
expressed by the Imperial Government for the cancellation of the
capitulatory privileges by which British nationals have hitherto
benefited.
1 take note of the judicial measures which Your Excellency has been
kind enough to communicate to me in your letter of the 10th Xay,
and beg to inform you that my Government rely absolutely on the
fact that the Imperial Government will ensure under the new régime
complete and adequate protection to British nationals, their rights
and their properties.
1 note that the Imperial Government allow a period of one year
to the Tribunal of the Ministry for Foreign Affairs and the Governors'
courts in order that unfinished business in these tribunals may be
completed. 1 now therefore request the Imperial Government to be
so good as to allow the same period to the British consular courts in
order that these may finish the cases between British nationals wliich
they have not up to the present been able to complete.
1 avail, etc.
(Signed) R. H. CLIVE. AXNEXES TO U.K. XEMORIAL (NO. 3)
1~4
(iii)
Acting PersianMinister for Foreign .4ffairs to Sir R. Clive
M. le Ministre, Téhéran,le IO mai 1928.
J'ai l'honneur de vous accuser réception de votre lettre en date
du IO mai courant.
Le Gouvernement de Sa Majesté britannique pourra être assuré
que le nouveau régime judiciaire en Perse pourvoira une protection
complète dans tous les sens aux ressortissants de l'Empire britannique.
En conformité avec le désir que vous m'avez exprimé au nom de
votre gouvernement, le Gouvernement impérial accorde aux tribunaux
consulaires britanniques un délaid'une année afin que les affaires des a
ressortissants britanniques qui y restent inachevéesaujourd'hui puissent
y êtreconclues.
Je saisis, etc.
(Signé)F. PAKREVAN.
[Translation]
Tehran, 10th May 1928.
' M. le Ministre,
1 have the honour ta acknowledge the receipt of your letter of the
10th May.
His Britannic Majesty's Govemment can be assured that the new
judicial régime inPersia will provide complete protection in al1respects
to the nationals of the British Empire.
In accordance with the wish which yoii have exprcssed to me in
the name of your Govemment, the Imperial Government will allow
to the British consular courts a period of one year for the completion
in those courts of the unfinished cases of British nationals.
1 avail, etc.
(Signed) F. PAKREVAN.
Annex 3
STATEMENT OF RELEVANT FACTS UP TO 1st MAY 1951
Introdz~ction
Prior to 1935, Iranwas known as Persia. In that His Imperial hfajesty the
names "Iran" andov"Iranian" instead of "Persia"and "Persian".The namee
of the Angl-l'ersian Oil Company was accordinglyaltercd to the Anglo-
IranianOil Company. In this Annex. in dealing with events prior to 1935.
His Impenal Rlajesty the Shah of Iranand the ImperiaIranianGovernment
are referred to hy the titles by which they were then known. namely His
Imperia1 hlajestthe Shah of Persia and the Imperia1 I'ersian Government.
In the pre-,935 period the countitself is generally referred to as Persia.
I. Iran covers an area of 628,000 square miles. It is boundedon the
north by Russia and the Caspian Sea, on the west by Turkey and Iraq,
on the south-west and south by the Persian Gulf and Indian Ocean, and ANNEXESTO U.K. ~IEMORIAL (NO. 3) 18j
on the east by Pakistan and Afghanistan. It is in the main mountainous
country, being traversed by twn monntain ranges, the Elburz in the
north and the Zagros dong the western and snuth-western borders;
6,000 feet above sea level and is largely desert. Khuzistan, the provinceo
in south-west Iran where the main operational areas of the Anglo-
Iranian Oil Company are situated, was formerly a very productive and
relatively thickly populated province ; but the decay of the ancient
irrigation system in the Middle Ages (11th to 16th centuries) through
wars and neglect brought about a serious decline in its fortunes. It
became for the most part desert and (save for a few small Settlements)
occupied only by nomadic tribesmen. Its climate in the summer is ex-
tremely hot, the sun temperatures reachirig 170degrees Fahrenheit. The
land on which Abadan is bnilt is alluvial and contains about 100 tons
of Salt to the acre; unless treated to remove the Salt it will not support
vegetation.
z. A map of Iran, showing the more important of the places men-
tinned in this Memorial (andin particular in this Annex), is attacheii to
this Annex as Appendix No. I.
3. For several thousand years before the beginning of the present
century the inhabitants of Persia and neighbouring countries collected
by primitive methods oil and bitumen from seepages. A descriptiori of
the methods emplnyed at Arderikkanear Sousa (whichwas in what is~iow
Khuzistan) is to be found in the sixth book of Herodntus at Chapter 119.
The oil so obtained was used as fuel for lamps and as a medicament
for the cure of sucli things as mange in camels. Bitumen was used in
place of mortar in building and also as a setting for jewels. In ancient
times temples were built over places where petroleum gas was escaping
from vents in the ground and the jet was used to feed a perpetual fiame
at the summit in honour of God, whose nature was symbolized iii the
Zoroastrian religion by fire.
4. No steps were, however, taken to discover whether oil existed in
sufficient quantities to justify commercial exploitation until the niiie-
teenth century. In 1872 Baron Julius de Keuter obtained a coricession
from the Persian Government covering the whole country, which gave
him the exclusive right (1) to form a bank, and (z) to prospect for ;and
exploit certain miiierals, including oil. Owing to pressure by Russia, the
Persian Government, in 1873, cancelled this concessioii and confiscated
the &o,ooo which de Keuter had lodged with it in token of good faith.
In 1884 the fim of Hotz and Company of Uushire, having obtained
permission from the Persian Government, drilled a shallnw well near
the oil springs or seepages of Daliki, but found no oil. In 1889 Baron
de Reuter obtained a second concession from the Persian Government.
The concession, which was valid for 60 years, gave him the right to form
a bank and the exclusive right to explore for and exploit certain minerals,
including oil. The Persian Government was to get 16 per cent. of thenet
profits. On the strength of this concession, the Imperia1 Bank of Persia
(now the British Bahk of Iran) was formed and a concern known as the
Persian Bank Rlining Rights Corporation (a United Kingdom corpora-
tion) was fonned to work the. minerals. The Corporation drilled two
nnsuccessful wells at Daliki, near Bnshire in the province of Fars, and
anotheron Qishm Island in the Persian Gulf. In 1899the Persian Govern-
ment stated that the Corporation's mineral rights were no longer valid,
16186 AXNEXES TO U.K. ME~IORIAL (NO. 3)
and in 1901 it \vent into liquidation. In 1901 the only oil produced in
Persia was from pits sunk near oil seepages near Shushtar in Khnzistan,
near Qasr-i-Shirin in western Persia and at Daliki. The method of pro-
duction was primitive and the yield meagre.
The D'Arcy Concession
5. In 1901blr. William Knox D'Arcy, a British subjcct, impressed by
the condusions reached by :rFrench archæologist and geologist named
de Morgan in an articlc in the Paris periodical Annales des Mines in
February 1892 on tlie oil deposits in the western part of Persia, decided
to seek a concession from the Imperial Government of Persia. After
negotiations in Tehran, an Agreement between the Governmcnt of His
Imperial Majesty the Shah of Persia of the one part and Mr. D'Arcy
the Shahthe; the Agreement was also sealed by the Prime Minister ofsty
Persia, and the Dlinister of Foreign Affairs. A copy of.the Agreement
(which niIl be referred to hereafter in this .4nnex as the D'Arcy Conces-
sion) is attached hereto as Appendix No. z.
6. By Article I of this Agreement, the Government of His Imperial
hfajesty the Shah granted tothe concessionnaire, Mr. D'Arcy, the special
and exclusive right to search for, obtain, exploit, develop, render suitable
for trade, cany away and sel1 natural gaç, petroleum, asphalt and
ozokerite throughout the wholeentent of the Persian Empire for a pcriod
of 60 years from the date of signature of the Agreement, i.e. IL@ to
28th May 1961. By Article 6 it was provided that the rights conferred
by the Agreement sliould not extend to the provinces of Azarbaijan,
Gilan, Mazandaran, Astarabad and Khorassan (which lie in thc iiorthern
part of Iran), but this provision was expressed to be subject to the
condition that the Imperial Persian Government wonld not grant to any
other perçons the right to construct a pipeline to the southern rivers or
to the south coast of Persia.
7, Bv, Article 2 of the Ae.,ement there \vas conferred on the conces-
sioiiiiairr: the eclusive riglit 01 iiislallirig tlir nccessary pipeliiies froni
th~ dei)osits \!.hue one or ri~orr.01tlie slwcificd products mav Iiave been
found ?O the Persian Gulf.
S. By Article 7 of the Agreement it was provided that for the duration
of the concession al1 land granted to the concessionnaire by the Agree-
ment or acquired by him in the manner provided thereby, and al1 the
products esported from Persia, should be freefrom al1imposts andtaxes ;
and that al1 the material and apparatus required for the prospecting,
exploitation and development of the deposits, and for the construction
and development of the pipelines should enter Persia free of al1 taxes
and customs duties.
a. Bv Articles 8. o. IO and 16 of the Agreement ceitain obliaations
w&e iGposed on théconcessionnaire. By article g the concessi&naire
was authorized to constitute one or more companies for the exploitation
of the concession, and it was provided that the Company or iompanies
so formed should enjoy al1the rights and privileges conferred, and should
be subject to al1 the obligations and liabilities imposed on the conces-
sionnaire by the Agreement. Article 16 provided that if, after the lapse
of two years from the date of signature of the Agreement, the concession-
naire had not formed the first of such companies, the concession should
be nul1and void. In conformity with these two Articles, the concession- ANNEXES TO U.K. ME>IORIAL (SO. 3)
'87
naire formed a company named the "First Exploitation Company", a
compapy incorporated under the law of England, which was registered
on zrst May 1903,This brought into play Article IO of the Agreement,
which provided that it should be stipulated iii the contract betwcen the
concessionnaire and the Company that the latter sliould, within the
tenn of one month as from thedate of the formation of the first exploita-
tion company, pay the Imperial Persian Government the sum of ~zo.ooo
sterling in cash and an additional sum'of ~zo,ooo sterling in aiclup
shares of the first company. The Company should also pay the zovin-
ment annually a sum equal to 16 per cent of the annual net profits of
any company or cornpanies that might be formed in accordance with
Artile g of the Agreement. It will thus be seen that the royalty pay-
ments to which the Imperial Government of Persia was entitled were
related to profits rather than to production and that, as a result, although
the Government might (anddid) fare very well in good years, it had no
guaranteed income in bad years. (See paragraph 41 below.)
IO. Article 8 of the Agreement required the concessionnaire to dis-
patch at once to Persia at his owii expense one or more experts tosurvey
the regions where the specified products were believed to exist, and, in
the event that the experts' report seemed to him to be satisfacti~ry,
to dispatch immediately to Persia at his onrn expense the necessary
technical personnel, machinery and equipment to sink wells and to ascer-
tain the value of the property. Even before the Agreement had been
signed, a geologist dispatched to Persia by Alr. D'Arcy had startecl to
examine certain areas in tlie south-west and west of the country. In
consequence of his report, it was decided to drill at a place called Chiah
Surkh, near the present Naft-i-Shah oilfield, some 300 miles north-west
of the head of the Persian Gulf; owing to boundary adjustments Chiah
Surkh is now in Iraq. Owing largely to transport difficulties due to the
absence of roads, drilling operations did not begin until December 1902.
Eighteen months Inter, after very heavy expenditure had been incurrecl
and oil in small auantities had been struck. the drilline at .hiah-Surk~ ~ ~ ~ ~ ~ ~
w:is discoiitiriued'. siiice ttieuil struck \r.:tin5iitIit:iciii iii 11ii:intity to
justify the lioivv t:xl>cnscofconstructiiig a pipe-liiii:tu sr:il>u~rd.Drilliiig
waî ttieii bocun irisoiitli-\icst IJcrsi;i.ncnr tlie urejerit Haft Kel t,ilfields.
but these operations proved unsuccessful. Thénext place selected &A
Alaidan-i-Naftun in the hills of Khuzistan, on the site of the oilfield now
known as Masjid-i-Sulaiman ; there, after immense difficulties had been
sunnounted and further considerable sums expended, oil was struck in
large quantities on 26th May 1908 ;further successful wells were drilled
in the vicinity, aiid it was evident that a large and important oilfield
had been discovered.
II. It will be apparent from the foregoing that the concession granted
in 1901 involved the concessionnaire initially in the expenditure of
considerable sums of money, running into hundreds of thousands of
pounds, with no certainty of any commensurate retum, or indeed of any
return. There was no certainty, until oil was struck in 1908, that petro-
leum existed below the soi1of Persia in sufficiently large quantities to
justify commercial exploitation. Repeated experiments were necesssary
in numerous places before oil was found in quantity. Owing to thenature
of the terrain, and the undeveloped state of the country, each experi-
ment was difficult and costly. Large amounts of capital yere therefore
required. and the risk to be borne by those providing the capital wasconsiderable. It is to be notcd that the Imperial Government of Persia
provided none of the capital and bore none of the risks, although (as
will be seen) in the event of success it was assurcd of a consiilerable
rcwiiu~:.
rz. :\ftcrt1.cdis~.oi.erjnr Jl:iid:iri-i-Slftun (szc pnr~gr~jili ru ;,l>ov~,),
>Ir. I)'.\rcy andtii njjociates,IIIcoiifoniiitv trirli Artic9cof tlic :\grce-
iiiciit. funiicd8 fiirrli~r COIIIII~II\.c.iillecl tlrc r\iitrlo-Persinn Oil Cinii-
pany; a Company incorporatéd <;der the law ofungland, which was
registered on 14th April 19og. with its registered officesin London, and
the rights and obligations uiider the D'Arcy Concession weretransferred
to this Company. The Company immediately began the construction of
a refinery at Abadan and of a pipeline from Maidan-i-Naftuii to Aba-
dan : in 1912 production on a commercial scale began, and Persian oil
began to flowout into the niarkets of the world.
Development1912-1930
13. Under Article IO of the D'Arcy Concession, the Imperial Persian
Government was to receive annually a sum equal to r6 per cent. of the
net profits ofal1the companies fonned in conformity with Article 9 (see
paragraph 9 above). For the years 1913-1919 (31st March) the total sum
figures wereo: royalty was £1,325,552 ; for the following years the
1st April 1919-31st hlarch 1920 . . . 468,718
1st A~nl 1020-71st alarch 1021 . . . 585,240
1st ~pril ~~zr-jxst Alarch 1422 . . . 29j,4ig
1st April 1922-31st hlarch 1923 . . . 533,251
1st Apnl1g23-pst March 1924 . . . .411,322
1st April1924-31st March 1925 . . . 830,754
1st April 1925-31st March 1926 . .. . 1,053,929
1st April1gz6-31st hlarch 1927 . . . 1,400,269
1st April 1927-31st March 1928 . . . 502,080
1st April 1928-31st Decemher 1928 . . 529,085 (g months only)
1st January 1929-31st Deccmber 1929 . 1,436,764
1st January 1930-31st December 1930 . 1,288.31~'
\\'ith regard to the above figures, it should he noted that the level of
world prices fell considerably in 1927-1928 and that it was not until
1929 that more stable prices were achieved ;this had a material effect
on the Company's profits for those years and therefore on the royalties
pay14. In 1914 the Government of the United Kingdom acqnired a
coiisiderable interest iii the Anglo-Pcrsian Oil Company, but, as is stated
in the hlemorial and in Anncx 2,it is not as a shareholder in that Com-
pany (now the Anglo-Iranian Oil Company) that the Government of
the United Kingdom is making the present application to the Inter-
national Court of Justice.
15. During the period from 1912 to 1930, a steady but nevertheless
considerable expansion of the Company's activities took place, and
equally considerable sums of capital were needed for the purpose. The
original Maidan-i-Xaftun oilfield (renamed Masjid-i-Sulaiman in 1926)
increased its production from 43,084 tous in 19x2 to 1,106,415 tons in
1919 ;in 1926 it produced 4,556,157 tons. In 1928 a second field of even ANNEXES TO U.K. ME>IORIAL (NO. 3) 189
greater richness and extent !vas proved at Haft Kel, some jo miles to
the south-east ;in 1929 a pipeline was constructed from this field to
join the main pipeline from Masjid-i-Sulaiman to Abadan near Ahwaz.
The following table shows the growtli of production iii the wholc conces-
sioiial area year by yea:
Long tom Lofzgtons
1912 . . . 43,084 1922 . . . 2,327,221
lQ~î . . . 80,800 Iq23 . . . 2,959,028
During the same period, the capacity of the Abadan refinery !vas
increased from 120,ooo tons of annual capacity in 1913, to ~,ooo,ooo
tons in 1918, to 3,000,000 tons in 1925 and to 5,000,000 tons by 1930.
In addition, fuel oil bunkering stations were built in the chief ports of
the world, the tarikcrfleet of the British Tanker Company was created
(the Company itself-a subsidiary of the Anglo-Persian Oil Company-
was incorporated in 1915) and a world-wide marketing and distributing
organization was set up. The deadweight tonnage of the shipping owneù
by the British Tanker Company, whicli was 101,288 tons (14 ships) in
1918, increased to 797,659 tons (82ships) in 1932.
16. In all, during the years 1909 to 1930 the Company's capital
expenditure in Persia on fixed assets from year to year amoiinted to
f18.ooo.000. a sum which in terms of the Dresent value of money is
and considerable sumi were spent on mobile assëts for operations in
Persia (mechanical transport, aircraft. dnlling tools, senrice plant, etc.).
These large sums were drawn partly from the proceeds of debenture and
new share issues (subscribed for by persons of many nationalities, indud-
ing tlie Government of the United Kingdom, but not by the Imperial
Persian Government) and partly from eariiings and reserves, including
those denved from the operations of the Company outside Persia.
The Armitage-Smith Agreement
17. l'rom time to time, differences of opinion arose betweeri the
Imperial Persian Government and tlie Anglo-Persian Oil Company,
principally as to the meaning of the phrase "net profits" in Article ro
of the D'Arcy Concession. The inexact wording of the Concession Agree-
ment laid open the way to differences of interpretation and to disagree-
ments as to the sums payable by way of royalty thereunder. In addition,
during the 1914-1918 war a dispute had ariseii as to the applicatiori to
certain events which had occurred of Article 14 of the D'Arcy Conces-
sion (which had imposed upon the Imperial Persian Government the
duty to take al1 necessary measures to secure the safety of the plant
necessary for the canying out of the concession), and there was out- =go ANSEXES TO U.K. 1\IEhIORIAL (NO. 3) .
standing a large claim by the Company against which the Company had
'withheld part of the royalty payments. In view of the settlement de-
scribed in the next paragraph, it is unnecessary to enter into detail of
tliis ancient dispute.
18. In 1919 and 1920 negotiations were conducted between the
Company and the Imperia1 Persian Government. Finally, Mr. (later Sir
Sydney) Armitage-Smith, usho had in 1919 been appointed Financial
Adviser to the Imperia1 Persian Govemment, was appointed, by a letter
to him dated zgth Aiigust 1920, from the Under-Secretary of the Persian
Alinistry of Finance (attached hereto as Appendix No. 3), "representative
of the Imperial Government to finaliy adjust al1 questions in dispute
of Persia", and on ~2nd December 1920, an Agreement (attached hereto
as Appendix Ko. 4)was signed between the Company andsir S.Armitage-
Smith as representativc of the Imperial Persian Governmeiit. These
negotiations were not in any way directed towards the modification of
the D'Arcy Concession, but solely towards a definition of the basis on
which the Company's profits were to be calculated for the future in
determining the suni payable by way of royalty under Article IO of
that concession. The Agreement defined such basis, and provided i~zter
alia that the royalty figure and the figures on whicli it vas based might
each year be checked on behalf of the Imperial Persian Government by
a fim of charteredaccountants in England. On the same day, a collateral
agreement wassigned under which theCompany agreed to pay L~,ooo,ooo
in settlement of al1oiitstanding questions between the Imperial Persian
Govemment and the Company, including such royalties as were unpaid
up to 31st March 19x9.
19. The Agreement of zznd December 1920 was at a later date
challenged by the Imperial Persian Govemment on the grounds that
Sir S. Armitage-Smith had exceeded his authority. and that the Agree-
ment had never been ratified by the hlajlis. In this connection it is
pertinent to observe
(1) that the first occasion on which the Imperial Persian Govemment
chailenged the Agreement was in April 1928 ;
(2) of the L~,ooo,ooopayable under the collateral agreement, Lxg2,ooo
was paid on the signature of the collateral agreement and accepted
by the Imperia1 I'ersian Government ;
(3) royalties determined by reference to "net profits" calculated on
the basis laid down in the Agreement were paid in each of the
years 1919-1920 to 1930 and were accepted by the Imperial
Persian Government ;
(4) chartered accountants appointed by the Imperial Persian Govem-
ment in each of those years examined the royalty figure and the
figures on which it was based, as provided by the Agreement;
(5) it is in any case doubtful whether under Persian law ratification
by the Majlis \vas necessary, since the Agreement was not for
the grant or modification of a concession.
Subsequentnegotiations
20. Despite the clarification effected by the Armitage-Smith Agree-
ment, from 1926 onwards further disputes arose on the subject of ANNEXES TO U.K. >lEMORIAL (SO.3) =gr
royalties, and the suggestion was made by both the Company and the
Govemment that the concession should be revised. As earlv as 1028.
Sir John Cadman, for the Company, suggested to His Éxcellénci
Teymourtache, the ~Ministerof Court to His Imperial hlaiesty the SIiah,
that an extension of the concession period would be neceisary if the
requisite capital was to be obtained, and Sir John Cadman and His
the D'Arcy Concession for a new one with a longer term but coveringe
a reduced area. Discussions on the subject of a new concession were
camed on with intennissions throughout 1929 and 1930, but finally
came to an end in 1931, since the demands of the Persian Govemnient
were greatly in excess of anything which the Company could accept.
21. In Noaember 1931, more limited negotiations were opened for
a modification of ArticleIO of the concession relating to the basis on
which "net profits" were to be ascertained. In 1932, a preliminary
agreement on principles mas concluded between His Excellency Tey-
mourtache, the Minister of Court to His Imperia1 hlajesty the Shah,
and the Company, and was approved by the Council of hlinisters in
Febmary 1932. This agreement was provisional and was referred to
lawyers and accountants representing the Imperial Penian Govemnient
and the Company respectively, to draft a final agreement. A formal
draft royalty agreement was accordingly drafted and was initialled for
the Imperial Persian Govemment by their authorized representative,
His Excellency hlirza Eissa Khan, and for the Company. The draft
agreement was sent to Tehran for ratification and amived there on
29th May 1932, but was never ratified by the Blajlis.
Cancellationof the D'Arcy Concession
22. In the year 1931, as a resnlt of the economic depression which
had set in in xgzg and which had affected practically every country in
the world, the prices obtainable for oil were very much reduced. The
Gulf of Mexico1.o.b. quotations for motor spirit fellfrom the equivalent
of £6 15s. zd. per ton in 1930to L3 18s 5d.in 1931,and the qiiotations
for other petroleum products snffered a similar fall. By reason of this
fall in prices, although the Company's production in 1931 feu by only
3. 18 per cent below that for 1930 (as compared with a fall of 3. 25
per cent in world production),and although sales were well maintained,
the Company's net profits for 1931. like those of other oil cornpnriies.
were much rediiced. (The Standard Oil Company of Xew York made
a loss of $~7,ooo,ooo.) Consequently, the sum payable to the Imperial
Persian Government by way of royalty was much smaller than that
for the preccding year. On 3rd June 1932, the Company's accounts xvere
completed, and it became known that the royalty payment for 1931
would bc only £306,872 as compared with L1,288,312 for 1 30 The
Imperial Government protested to the liesident Director of the Zo~~nny
at the smallness of the figure, and on 29th June refused to accept the
royalty calciilated on the existing basis. The Imperial Govemment had
not exercised its right to have the 1931 royalty figure and the figures
on which it was based checked by chartered accountants in London.
indicated to the Company its view that the draft royalty agreementent
referred to in aragraph 21 above reqnired further interpretation and
redrafting, anJ'asked that the Company should send its experts to192 ANNEXES TO U.K. MEMORIAL (No. 3)
Tehran for conversations. The Company replied that this was unfortun-
ately impossible and suggested talks in London. The Imperial Govern-
ment then indicated, on 7th July, that it had new proposals to subrnit :
on ~GthNovember, the Company was informed that the new proposals
nere nearly ready. These proposals were never in fact submitted. Instead,
on 27th November the Persian Minister of Finance addressed to the
Resident Director of the Company a letter, a copy of which is attached
hereto as Appendix No. 5, notifying the Company that the Imperial
Govemment had cancelled the D'Arcy Concession and would consider
it void. The letter went on to Saythat "should the Company be prepared,
contrary to the past, to safe-pard Persian interests, in accordance with
the views of the Imperial Persian Govemment, on the basis of equity
and justice, with the necessary security for safeguarding those interests,
the Imperial Persian Government will not in principle refuse to gant
a new concession to that Coinpany". The decision to annul the D'Arcy
Concession was formally approved and confirmed hy the Majlis on
1st December 1932.
24. On 29th November 1932. the Resident Director replied to the
letter, stating that the Company didnot recognize the right of the Impe-
rial Persian Government to cancel the concession (Appendix No. 6).On
1st December, the Minister of Finance replied (Appendix No. 7). On
2nd December, His Britannic Majesty's Minister in Tehran presented
a note to the Imperial Persian Government from the Govemment of
the United Kingdom, in which the latter Government, in the exercise
of its right to protect a British national when injured by acts contras.
to international law committed by another State, and to ensure in the
person of its nationals respect for the niles of international law, protested
and demanded the withdrawal of the Persian note which purported to
cancel the concession (Appendix No. 8). On 3rd December, the Imperial
Persian Government replied (Appendix No. 9). On 8th December, the
Govemment of the United Kingdom addressed a further note to the
Imperial Persian Govemment intimating that, unless the Persian note
were withdrawn by 15th Decemher, the Government of the United
Kingdom would refer the dispute to the Permanent Court of International
Jiistice (Appendix No. IO). On 12th December, the Imperial Persian
No.erII).t replied disputing the jurisdictiou of the Court (Appendix
Proceedings beforethe Council O/ the League
25. Upon receipt of the note of 12th December, the Govemment of
the United Kingdom, in view of the fact that in accepting the compulsory
jurisdiction of the Permanent Court of Intemational Justice the Imperial
Persian Govemment had reserved the right to demand the suspension of
proceedings before the Court in the case of a dispute which had been
referred to the Council of the League of Nations, decided to refer the
dispute to the Council under Article 15of the Covenant. Accordingly, on
Kingdom requested that,etteraadispute having arisen between the Govern-
conseauence of the Im~erial Persian Government's action in~uruortine to
cancel'the Concession:.\Srcement bet\veen tlie Iml~crialPersian~ ,~(~o\'crn-
Go\.crnrncnt of thc Cnited Kingdom I&g ofopinion that tli~~<lispiitand t:IS AXNEXES TO U.K. MEhIORIAL (NO. 3) I93
likely to lead to a rupture, the matter should be submitted to the Council
of the League of Nations in accordance with the terms of Article ~j of
the Covenant of the League. (The letter and telegram are printed in the
League of Nations Oficial Joztrital, 13th Year (Decemher 1932). at
pp. 2296-2297; Annexes 14x9 and I~I~A, and are attached hereto as
Appendices 12 and 13.)
26. On 19th December, the Government of the United Kingdom
printed at pp. 2296-2308 of the same volume of the League of Nations
Oficial Journal, as Annex 141gc. On the same day, an extraordinary
meeting of the Council was held, and the Council placed the question
on the agenda for its next ordinary session, which \vas to start on
23rd January 1933; the proceedings are reported in the same volunie at
page 1987 On 18th January 1933. the Imperial Perçian Governrnent
submitted to the Council a memorandum in reply to that submitted by
the Government of the United Kingdom, which ispriiited in the Leagzie
of Nations Oficial Journal, 14th Year (February 1933). at pages 269-
303, Annex 1422~. On 24th January 1933, the Council, at the first
meeting of its ordinary session, invited M. Bene9 of Czechoslovakia to
act as Rapporteur. On 26th January, at the third meeting of the session,
the cases for the Government of the United Kingdom and the Imperial
Persian Government respectively were presented orally to the Coimcil
by Sir John Simon and His Excellency M. Davar ; thc speeches are
reported in the same volume at pages 197-211.
27. Following upon this meeting, strenuous efforts were made hy the
Rapporteur to discover some means of resolving the dispute.
28. On ?rd Februarv. at the sixth meetine of the Council. the R~D-
portciir a&ouni.cd tli;;t'tlir t1i.oIJnrties to th> dispiitc. t1.c~overninrnt
of the Unitrd Kinedorii and thc Imi>erinlI'ersian Govcrnmcnt, Iind come
to a provisional agreement in the iollowing terms :
"(1) The two Parties agree to suspend al1 proceedings before the
Council until the session of 3Iay 1933,with the option of prolong-
"(2) The two Parties agree that the Company should immediately
enter into negotiations with the Persian Government, the
respective legal points of view being entirely reserved.
"(3) The two Parties agree that the legal standpoint of each of them,
as stated before the Council in their memoranda and in their
verbal statements, remains entirely reserved. If the negotiations
for the new concession remain without result, the question will
come back before the Council, before which each Party remains
free to resume the defence of its case.
"(4) In accordance with the assurance given by the Persian Govern-
ment in its telegram of 19th December 1932 to the Presidetit of
the Council, it is understood that while negotiations are proceed-
ing and until the final settlement of the qiiestion, the work and
operations of the Company in Persia will continne to be camed
on as they were carried on before 27th November 1932."
29. The representatives at the Councilofthe Government ofthe United
Kingdom and the Imperial Persian Govemment having indicated that
they accepted the above agreement, the Council proceeded to pass a
Resolution in the following terms :'94 ANSEXES TO U.K. hlEA1ORIAL o. 3)
"The Council,
Having had referred to it the dispute between His Majesty's
Govemment in the United Kingdom and the Impenal Persian
Government :
(1) concemed and reserves the right to study them.two Parties
(2) Appreciates the wisdom for (sic) the two Parties to the
dispute in refraining from any steps likely to aggravate the
situation.
(3) Approves the present report together with the conclusions
of the provisional agreement to which the conversations
between the Rapporteur and the two Parties have led."
(The proceedings are reported in the same volume of the Leagzte of
Nations Oficinl Jounlal at pp. 252-253.)
30. It will be noted that the agreement of the Govemment of,the
United Kingdom to the suspension of the proceedings before the Council
was conditional on the institution of negotiations between the Imperia1
Persian Government and the Company for a new concession ;that the
Council remained seised of the dispute which had been referred to the
Council by the Government of the United Kingdom under Article 15 ;
and that in the event of the negotiations proving fmitless the Council
would have further to consider the dispute. It is la inthat it was only
iipun tlic consliisiun of :incir concess;oii s;itisfa&ory to the Company
that tlie Go\.ernniciit uf rlic Cnited iiingdoni wac prcpared to regard
tlic disi~iite betivccn the (;oveminent of the Unitcd liinzdc-rii and the
Imperiàl Persian Govemment as settled.
31. It was the original intention of the Rapporteur that negotiations
should take place initially in a neutral capital, probably Prague, where
he himself would be accessible to both Parties and available to actin a
mediating rôle, and should not be transferred to London or Tehran until
agreement on principles had been reached : both the Imperial Persian
Government and the Govcrnment of the United Icinedom had aere-d
to tliis. 1)iiciiisions in f3c.tst~irtc~lin (;enon,n.+rht'Cl>rii;ir);ilid ii,crc
continii~d iriP:iriaoii 10th aiid 11181:cbrusry bet\r.ecn i'livir1%~-cllcncics
\li!ssieiirs I)n\.n.triilIl~~-~~~n Aln re~'r~ ~ ~inv tlir Iiiiiirrial I'crsiari
Government and representatives of the Company, but' they proved
inconclusive ouing to the vagueness of the Persian proposais. Later in
the month, the Government of the United Kingdom and the Company
agreed that the negotiations should be continued in Tehran, but on the
understanding that the negotiations should continue to be camed on
within the frameworl<of the arrangement approved by the Council of
the League, and that the Rapporteur should continue to exercise super-
vision over tlie negotiations and that either Party could have recourse
to him. In two letters addressed to His Excellency M. Davar on 17th .
and 24th Febniary (which are attached hereto as Appendices 14 and 15).
M. Bene5 confirmed that he conceived it to be his duty to remain in
contact with the Parties, and to keep himself informed of the progress
of the negotiations and to follow their course up to the moment
when a definitive settlement was reached. He intimated that, though
maintaining his view that the negotiations should not be transferred
to London or Tehran until pnnciples had been agreed, he would not ASNEXES TO U.K. MEMORIAL (No. 3) I95
ohject to an earlier transfer if(1) the Company were willing togo to
Tehran or the Persian Govemment to London, (2) the two Parties would
continue to proceed in such a way as to he able to be in contact with
him as Rapporteur, both to inform hi~nperiodically of the progress of
the negotiations and if need arose to seek his interpreattion of the
provisional agreement.
The 1933 CoftcessiofzConvefttion
32. On 4th Aprilxg33, discussions hegan in Teliran between represent-
atives of the Imperial Persian Govemment, headed by His Excellency
Taqizadeh, Minister of Finance, and representatives of the Company,
headed in the first instance by Mr. (later Sir) William Fraser (Deputy-
Chairman). After considerable discussion between the representatives
of the Imperial Persian Government and of the Company, in which His
Imperial Majesty the Shah and SirJohn (later Lord) Cadman (Chairman
of the Company) took part in the later stages, a Convention was signed
on 29th April. A copy of this Convention (which was madein the French
language), containing also an English translation prepared for the use
of the Company, is attached hereto as Appendix 16 ; it is also printed
in the Lea zaeof Nations Oficial Journal, 14th Year (December 1933).
at pages Ii53 to 1660, and was filed as Annex A to the Application of
26th hfay 1951 instituting proceedings in this case.
33. On 26th hfay 1933, M. BeneS, the Rapporteur, reported to the
Council of the League of Nations the conclusion of an agreement for
a new concession hetween the Imperial Persian Government and the
Company, and informed the Council that, having got into touch wth
the two Parties to the dispute, the Government of the United King-
dom and the Imperial Persian Government, he had found that, as a
result of the signature of the new concession, the dispute hetween
the'two Governments might be regarded as virtually settled. (League
O/ Nations Oficial Journal, 14th Year, p. 827.) The Persian represent-
ative, M. Sepahhodi, informed the Council that the difficulties between
his Government and the Company had been definitely settled, but
M. BeneS asked leave to submit a further report at the next ordinary
session of the Council on the complete and final liquidation of the
dispute. Accordingly, on 12th October he reported that he had been
informed by the Persian Govemment that the Persian Parliament had
ratified the new concession to the Anglo-Persian 'Oil Company, and
he appended a copy of the text of the new concessioii (which had been
submitted to him hy the Parties) to his report. "In these circumstances",
he continiied, "1 am happy to say that the Council may take it that
the dispute between His Majesty's Government in the United King-
dom and the Imperial Government of Persia is now finally settled."
M. Foroughi, the Persian representative at the Council, said, "1 have
the honour to announce my Government's entire approval of the report
placed before the Council. 1 have nothing furtlier to add. 1 wish merely
to express my happiness at having had this opportunity of making
hefore the Council a statement testifying to the hetter relations between
my Govemment and that of His Hritannic hfajesty. 1 cannot fail to
renew the expression of gratitude tendered by my predecessor to the
Council in connection with this incident nor to offer our warm thanks
to the Rapporteur, hf. BeneS, and to the Secretary-General for aii
the trouble they have taken and the impartiality they have shown."19~ ANSEXES TO U.K. JIE~IORIAI. (SO. 3)
Sir John Simon for the Govemment of the United Kingdom spoke
in the same sense. The Council took note of the Rapporteur's report.
(Leagzre of Nations O@cial Joz~rnal, 14th Year, December 1933.)
34. The Convention of 29th April (hereinafter referred to as "the
1933 Conccssion") was ratified by the Majlis on 28th May 1933. and
received the Impcrial Assent on 29th May 1933. It was published in
th35. In Augiist 1933, identical letters were, by agreement between
the Imperial I'ersian Government and the Govemment of the United
Kingdom, addressed to the Registrar of the Permanent Court of Inter-
national Jiistice by the Persian Chargé d'Affaires inLondon on behalf
of the Imperial Persian Govemment (Appendix No. 17) and by the
Under-Secretary of State for Foreign Affairs on hehalf of the Govem-
ment of the United Kingdom (Appendix No. 18), bnnging to the notice
of the Court Article 22 of the Concession Convention, whereby the
Parties agieed in certain circumstances to have recourse to the good
officesof the President (or Vice-President) of the Court in connection
with the nomination of an umpire or sole arbitrator, and asking the
Court to accept these functions. By a letter dated zrst October 1933,
the Registrar of the Court replied that the Court saw no obstacle to
the acceutance bv the President and Vice-President of the functions
conferred upon {hem by Article 22 of the Concession Convention
(Appendix No. 19).
16. The comi~arisonof the terms of the D'Arcv Concession and the
1933 Concessio; respectively which follows shois that, in return for
the extension by 32 years of the term of the Concession, which u.as
a necessary condition for the sinking of further large capital sums in
the installations in Persia,the Company accepted a severe curtailment
of its nghts under the D'Arcy Concession and the imposition upon
it of fresh obligations. In particular, the Company agreed to a consider-
able reduction in the concessional area. hloreover, in order to meet
the constant Penian complaints about, and the difficulties which had
arisen out of. the basis on which royalties were to be calculated under
the D'Arcy Concession, a new hasis was substituted in the 1933 Con-
cession.
37. Article I of the D'Arcy Concession (read with Article 6 thereof)
had granted the exclusive right ta search for, obtain, exploit, develop,
render suitable for trade, cany away and sel1natural gas, petroleum,
asphalt and ozokerite throughout Persia (except for the five northem
provinces), a total area of some 480,000 square miles. Article I of the
1933 Concession granted to the Company the exclusive right, within
the temtory of the Concession, to search for and extract petroleum
(which is defined to mean "cmde oil, natural gases, asphalt, ozokerite,
as urell as al1 prodiicts obtained either from these substances or by
mixing these substances with other substances") as well as to refine
or treat in any other manner and render suitable for commerce the
petroleum obtained by it. The temtory of the (1933) Concession \vas
defined by Article 2 : up to 31st December 1938, the temtory to the
south of the violet line drawn on a map annexed to the Agreement,
and thereafter such area or areas within that territory, of a total area
not exceeding roo,ooo square miles, as the Company might on or before
that date select. A map showing the areas which the Company did
so select, and whicli are accordingly now the territory of the Concession, ASNEXES TO U.K. .\IEAIORIAL (SO. 3) 197
is attached to this Annex as Appendix No. 20. Article I of the 1933
Concession further confers on the Company the non-exclusive right
throughout Persia to transport petroleum, to refine or treat it in any
other manner and render it suitable for commerce as well as to sen
it in Persia and to export it.
38. Article 2 of the D'Arcy Concession had conferred (inter alia)
the exclusive right to install the necessary pipelines from the deposits
where one or more of the specified products might he found to the
Persian Gulf, togethcr with I~ranch lines necessary for distribution.
Moreover, it had heen an express condition of the exclusion of the
five northern provinces (hy Article 6 of the D'Arc). Concession) that
the right to construct a pipeline to the southern rivers or to the southern
coast of Persia. The 1933 Concession conferred no such exclusive right,
and does not contain the same or any similar condition. By Article 3
of the 1933Concession,the Company was simply given the non-exclusive
right to construct and to own pipelines.
39. The D'Arcy Concession had been granted for a period of 60 years
from Nay 1901. The 1933 Concession was granted for the period
beginning on the date of its coming into force and ending on 31st Decem-
ber 1993. Moreover,Article ZI of the 1933 Concessionexpressly provides
that the Concession shall not be anniilled by the Government and the
terms therein contained shall not be altered either by general or speual
legislation in the future, or by administrative measures or any i~ther
acts whatever of the executive authorities : and Article 26 provides
that before 31st December 1993 the Concession can come to an end
only by reason of a surrender hy the Company, or upon aunulment
by the Arbitration Court in the event of the Company being a mnntb
in arrear in the payment of a sum awarded to Persia by an art~itral
award or going into liquidation. It was in return for this extension of
the period of the D'Arcy Concession and in reliance on the above-
quoted provision against cnncellation that the Company agreed to
a reduction in the area of the Concession and to the assumption of
obligations heavier than those imposed by the D'Arcy Concession.
Article zr of the 1933 Concession further contains a declaration by
the Contracting Parties that they hase the performance of the Con-
cession Convention on principles of mutual goodwill and good faith
as well as on a reasonable interpretation of the Convention.
40. Article 9 of thc 1933 Concession imposes on the Company an
obligation, which was not in the D'Arcy Concession, to proceed with
its operations in the province of Kermanshah throiigh a subsiiiiary
Company with a view to producing and refining petroleum there.
41.Since it was the royalty provisions of the D'Arcy Concession
which had been the principal cause of dissatisfaction to the Imjierial
Persian Government, owing both to the inexact wording of the Agree-
ment and the difficulty of arriving at an agreed interpretation and to
the wide fluctuations in the sums payable thereunder, the 1933 Con-
cession substituted an entirely new basis for calculating the royalties
due. The new basis was designed to meet the complaints of the Imperial
Persian Government, and to provide a more stable income for that
Government while at the same time enabling the Government to share
in the prosperity of the Company in good years. Under the D'Arcy
Concession, the Imperial Persian Government had been entitled to19~ ASSEXES TO U.K. hlElIORIAL (NO. 3)
receive annually 16 per cent of the net profits of the Company; there
had heen no guaranteed minimum payment, and the royalties had
not been iii any way related to production. Under the new Agreement :
(1)Thc sum payable annually was to bc made up of a royalty of
four shilliues Derton of uetroleum sold for consumution in Persia
or exporte; irom ~ersh, together with a sum 'equivalent to
20 per cent of the distribution to ordinary stockholders in excess
of i671,250 in any one year whether by way of dividend or out
of reserves accumulated subsequently to 1932. (Article IO (1)
(2)There was to be a guaranteed minimum anniial payment under
Article IO (1)(a) and (6) of L750,ooo. (Article IO (1) (c).)
(3) By Article II, there \vas to he a further payment, in consider-
ation of the exemption of the Company for 30 years from any
taxation presciit or future of the State and of local authonties,
of ninepence per ton on the first 6 million tons of petroleum sold
for consumption in Persia or exported from Persia, and sixpence
per ton on the remainder. After 15 years these figures were to
become one shilling and ninepence respectively.
(4) There was to be a guaranteed minimum annual payment under
Article II of ~225,000, rising after 15 years to ~300,ooo.
(5)the sums payable by way of tonnage royalty under Articlee in IO
and the sums payable under Article II in the event of the value
of sterling depreciating in terms of gold. (Article IO (V) (a)
and /bJ.)
(6) ~poi; fhe expiry or surrender of the Conccssion. a sum equal
to 20 per cent of the surplus difference bctween the amount
' of the reserves (General Reserve) and balances of the Company
at the date of such expiry or surrender over the same reserves
and balances at 31st December 1932 was to be paid to the
Impenal Persian Government. (Article IO (III).)
Furthemore, by Article 23, the Company agreed to pay ~~,ooo,ooo
in full settlement of al1 claims of the Imperial Persian Government
(except in regard to Persian taxation) up to the date of the corning
into force of the Agreement, and to settle the payments due to the
Government for 1931 and 1932 on the basis of the new Agreement,
and to settle the Government's claims in respect of taxation on the
same basis. These latter sums were duly paid by the Company on
6th June, rvithin the time-limitç laid down iii the Convention, and were
accepted by the Imperial Persian Government : ;C1,339,132was thus
paid on account of tlie year 1931, and L1.525.383 for the year 1932.
42. It will be noted that in one respect the provisions of Article IO
depart from the common pattern of concessional agreements. The
participation of the Persian Government in the prospenty of the Com-
pany, by reason of its entitlement to a payment equivalent to 20 per
cent of tlie sums distributed to stockholders over a certain figure,
applies to al1 the profits of the Company, including those eamed out-
side Persia, and even those denved from oilof other origin than Persian
and in no way dependent on operations in Persia.
43. Article 12 of the 1933 Concession Convention imposed on the
Company the obligation to employ ail means customary and proper ANNEXES TO .U.K. MEHORIAL ('o. 3) I99
to ensure economy in and good returns from its operations, to preserve
the deposits of petroleum and to exploit its Concession by methods
in accordance with the latest scientific progress.
44. Article 12 of the D'Arcy Concession had provided that, with
the exception of technical personnel such as managers, engineers,
borers and foremen, the Company's employees should be Persians.
Article 16 of the 1933 Concession Convention provided that, irhile
both Parties recognized that efficiency and economy of operations
was the chief guiding principle in the performance of the Convention,
the Company should recruit its artisans as weii as its technical and
commercial staff from among Persian nationals to the extent that it
should find in Persia perçons possessing the requisite competence and
experience, and that its unskiiied staff should be composed exclusively
of Persian nationals. Furthermore, the Parties agreed to study and
prepare a general plan of yearly and progressive reduction of the non-
Persian employees with a view to replacing them in the shortest possible
time and progressively by Persian nationals. The Company also agreed
to make an annual grant of L10,ooo in order to give in Great Britain
to Persian nationals the professional education necessary for the oil
industry.
45. 13yArticle 19, the Company agreed to sel1 oil for intemal con-
sumption in Persia at especiallyfavourable prices.
46. Article 22 provided for the reference to arbitration of any
differences hetween the Parties of any nature whatever, and provided
that the award should be based on the juridical principles contained
in Article 38 of the Statute of the Permanent Court of International
Justice and should be final.
Development1933-1939
.,. in reiiance uDo, ~ ~~Decu,iar sanctitv of a Convention thus
concliid,?dthro~i~litlie goud officesof tlir I.eîg;c of S:~tii>risKappurteur.
hi. l3ent.i.1,).\iay of scttleriiciit of the dijliiite then prndiril: hctii.c.cn
the Go\~ernment of the Ciiitcd liinedoni and tlir Inii~ensl Prrsinn
Government before the Colincil of the League of ~ations, and npon
the express guarantees against premature determination contained in
between 1932 and 1939 to expend vast capital sums and greatly toears
expand the output of Persian oil. By 1934, Haft Kel was producing
over 2,000,000 tons per year. In 1935, the small field at Naft-i-Shah
in Kermanshah province in North-Western Iran was developed, in
pursuance of the obligation imposed on the Company by Article g
of the 1933 Concession. A pipeline was constructed to Kermanshah,
where ~etroleum oroducts for the north and north-west of Iran are
refined.' This deveiopment was effected through a subsidiary Company
(the Kermanshah Petroleum Company. Lirnited). which was registered
in June 1934. -. -
48. An idea of the growth in output can be gained from the annual
production figures, which had increased from 5,730,498 long tons in
1931 to 6,445,808 long tons in 1932 (although world production in
1932 had continued to decline) and thereafter steadily increased until
progress washalted by the onset of war conditions : ANNEXES TO U.K. XEMORIAL (NO. 3)
Long tons
1933 ........... 7,086,706
1934 ........... 7.537.372
1936 ........... 8,1g8,11g
1937 ........... 70,767,795
1938 ........... 10.195,371
1939 ........... 9,583,256
49. Along with the development of the oil fields went an expansion
of the refineries and other installations at Abadan. Refining capacity
increased from 7 million tons annually in 1933 to IO million tons in
1939. There \vas a corresponding growth in the tanker fleet of the
British Tanker Company (a suhsidiary of the Anglo-Iranian Oil Com-
pany) and in thc marketing organization. In the case of the tanker
fleet, tonnage rose from 786,869 tons (81 ships) in 1933 to 903,061 tons
(89ships) in 1939.And large sums were spent on the welfare, educational,
recreational and mcdical facilities provided for employees and their
families.
49~. It must be emphasized that the development which took place
in these and subsequent years was camed out in strict conformity
with the obligations imposed on the Company by Article 12 of the
1933 Concession. (See paragraph 43.) The methods used to exploit
the Concession were in accordance with the latest scientific progress:
indeed, in some respects the Company \vas a pioneer in the invention
of methods suitable to the peculiar conditions which exist in the Middle
East. At the same time, dl means customary and proper to ensure
economy in and good returns from its operations and to preserve the
deposits of petroleum were employed ; in particular
(i) the system whereby there is a continuous flow of oil from the
oil wells through the pipelines to and through the refinery and
theiice to the tank farms results in the greatest possible economy
in operation ;
(ii) careful steps are taken, hy drawing oil only from those wells
which produce oil with minimum gas content, hy limiting the
rate of production from particular wells and by various other
means, to maintain the gas pressure in the oil reservoirs and
also to ensure the ultimate maximum recovery of oil :
(iii) the Company has at al1 times employed throughout the wliole
production. pipeline and refining system the most up-to-date
plaiit and equipment capable of giving the greatest practicable
retiirn of high quality products.
50. The expansiori of the Company's activities resulted in a corre-
sponding increasc in the sunis payable to tlie Imperia1 Persian Govern-
ment under the 1933 Concession. The total sums paid for tlie years
1931.1938inclusive under Articles IO and II were as follows (the figures
.for 1931 and 1932 take into account the retrospective settlement in the
1933 Concession Convention) : AXXEXES TO U.K. &1EZIORI.4L(NU. 3)
Year Amouiil
£
1931 ........... 1,339,132 .
1932 ........... 1,525,383
1933 ........... 1,812,442
1934 ........... 2,189,8j3
1935 ........... 2,220,648
1936 ........... 2,$80,20$
1937 ........... 3,545,313
1938 ........... 3,307,478
51. The new basis of calculation substituted by the 1933 Concission
proved very satisfactoqr dunng this period ; the clarity of tlie terms
gave few occasions for disputes and the relations between the Company
and the Government continued harmonious. Such disputes as did :mise
were settled amicably. Particular mention may perhaps he made of a
difference of opinion as to the meaning of the word "ton" in tlie 1933
Concession,Articles IO and II ;the Company contended thatthe English
that the metric (or short) ton of 2,000 lb. was intended. This questiont
has a considerable effect on the amounts payable by way of royalty,
which are to be calculated at the rate of so much per ton of petroleum
sold for consumption in Iran or exported from Iran. On 30th July 1936,
the Company, while maintaining its contention, agreed, in view of the
good relations between the Government and the Company, to pay
royalty on the'basis of the metric ton. Towards the end of the pre-war
period, thegreat increase in production of the previous years was halted,
with a consequeiit balt in the increase of the sums payable to the Imperial
Iranian Government ;the Government at the time expressed its disap
pointment at this trend, but it was entirely in keeping with the trend
elsewhere in the world at that time. The effect of the outbreak of war,
and the steps taken to ensure tliat Iran did not suffer by reason thereof,
are described in paragraphs 65 etseq. of this Annex.
The Gel~eralPLUPL
52. It will be recalled that Article 16 of the 1933 Concession Conven-
tion (see paragraph 44 above) provided that the Company and the
Government should study and prepare a general plan of yearly and
progressive reduction of the non-Persian employees with a view to
replacing them in the shortest possible time and progressively by Persian
nationals. Discussioiis to this end were started in 1933. and contiiiued
throughout 1934 and 1935 both in Tehran aiid in London. After
further conversations in Apnl 1936 in Tehran between His Excellency
M. Davar, Minister of Finance of the Imperial Iraiiian Government, and
Mr. (later Sir\Ir.Fraser, Deputy Chajrman of the Company, a Geiieral
Plan was approved; a procès-verbal of the conversations, to which
were attached as annexes the General Plan together with explaiiatory
notes and schedules, was drawn up, and tlie proces-verbal and the
annexes were signed by the Minister of Finance and the Deputy Chair-
man. The General Plan provided that, in applicat,ion of the guiding
pnnciples laid down in Article .16, in conjunction with those prescribed
in Article 12 (A), the artisans and technical and commercial staff of tlie
'7 ANNEXES TO U.K. MEMORIAL (NU. 3) 203
of carrying out. There follows a brief summary of the training and
educational facilities provided by the Company.
(a) -4ssistance10 the Iranian Government'sDepartinentof Educatiori
(i) The Company has huilt or provided buildings for 35 pnmary
and secondary schools in Khuzistan, the province in which
most of the Company's activities are located, and handed
them over to the local education authorities. These schools are
attended by some 20,000 children. The Company bears a
very. large part (in the regioii of 75 per cent) of the total
cost of running these scliools.
(ii) In 1939, the Company presented complete and upto-date
laboratory equipmenr to Tehran University, and since the
recent war has completely re-equipped the Faculty of
Engineering and Science to accepted international standards.
(b) Vocational training of artisans, foremen, clerks, draughtstnen,
processoperators, chemists,engineers,acconntants,etc., in Iran
(i) In 1939. the Company completed and opened a Technical
Institute at Abadan. It consists of a laree modern building
surrouiiilcil 11).gnrileiis aiid sports groiiii:iii<incliidt:~j:
main liaIlreadi~i~room. libr;iry. classrooms :iii<Iiiboratoricî
for the three tech>ical departments (engineering, science and
commerce). It is entirely financed and administered by the
Company, but is academically governed by the Ministry of
Education : its degrees and certificates are officially rei:og-
nized, and its teaching forms an integral part of the Iranian
national system of education. In 1949-1950, there were
1,204 students at the Institute.
(ii) The Company carries on a number of different vocational
training courses designed to take account of the availability
of youths with the requisite standard of education and the
reouirements of the Com~ai.v f,r aualified ~ersonnel. There
ish fi\.e-y:ar course for ;irtisan :~~;~reiitice;,s:irried ou1 in
the appreiitice trniiiiiig shop aniiidiffereiir hranches of tlie
rcfint.~. anddesiened to train \'outlisof tliei'ith-classstandard
of pri&ary educ2ion as artisans of the highest grade. There
are four-year courses for commercial apprentices, carried
offices.There are four-year courses or technical apprenticces,
in which the training is partly theoretical training in the
Institute and partly practical training in the apprentice
training shop and in different branches of the Company's
works. The latter two courses are designed to train youths
of the 2nd or 3rd class of secondary education up to the
standard of the 'ordinary certificate. There are five-year
courses in petroleum teclinology and engineering, in which
the theoretical training iii the Institute is supplemented by
practical experience in the works for 79 moiiths in the year ;
these courses are designed for youths with 5th-class diplomas
of the State Secondary Schools, and successful completion
of them is recognized by the Ministry of Education as equi-
valent to an Iranian University degree. 'i'here are two-year204 ANNEXES TO U.K. MEMORIAL (SO. 3)
courses for maduates of Tehraii Universitv or Tehran Tecti-
ment ttie tlieorc.tical knun.l~dg~! ltlitraiiict3 iviilpracticale-
expenence. In all, in 1950 s6me 3,500 Iranians were under
training. The approximate cost of maintaining the Compariy's
training facilities is some ~1,800,ooo per annum.
(iii) In addition, there arc courses for youths and men of :rlower
educational standard. designed to produce artisans and
skilled workers, and classes for illiterates organized in con-
junction with the local education authority and financed by
the Company.
(c) Educalionin the United Kingdom
Up to 1950, a total of 99 university and 133 non-university
students had been sent to the United Kingdom for training ;
the number under training had been expanded greatly, and in
1950 there were actually 80 Iranian apprentices and students
receiving training in British works, technical colleges and
uiiiversities, the cost to the Company being no less than L37,362
in that year. At various times, particularly during the recent
war years, the level of actual annual expenditure has unavoid-
ably been below the figure for the annual grant mentioned in
tlie Concession Convention (see paragraph 44 above). Unspent
balances are. however, carried forward, and at the end of 1950
accumulated total expenditure was in excess of the accumu-
lated total of the annual grants which the Company had under-
taken to make.
57. The numbers paçsing through the various courses were often in
excess of the figures given in the Company's proposals contained in the
explanatory notes and schedules annexed to the general plan. Where
they fell below these figures, this was due solely to the shortage of
recmits possessing the requisite educational qualifications and physical
fitness.
58. The Company has always realized, and it was recognized in the
proch-verbal, that measures taken to recruit andtrain suitableemployees
are valueless uuless measures are also taken to retain their services.
Life in Khuzistan is inevitably difficult because of the great heat in sum-
mer, and the arid and desert nature of the country in which the oil-
fields and the Abadan refinery lie and which prior to its development by
ties. The Company has therefore spent very considerable sums in assist-ni-
iiig the Iranian Government and the local municipal authorities, and
in itself providing amenities and social and other services.
Ijublicservices '
59.. In Abadan town, tlie Company lias for Inany years past beeu
çarrying out, in agreement with the Government and local autliorities,
an extensive scheme of rehabilitation and town cleansing. Rose, surface
water drainage, and electric power and drinking-water reticulations
have been constmcted by the Company, and tlie cost has been shared
between the Company and tlie municipality. The Co,mpanyhas, eiitirely
at its oun cost, laid suhstantial sections of a main sewerage system. ANNEXES TO U.K. IIEMORIAL (No. 3) 20.5
No municipal facilities exist for the bulk supply of filtered .water or for
the generatioii and supply of electricity other than those made available
by the Company : the Company supplies electricity and I$ million
gallons of treated drinking water daily to Abadan municipality at a
nominal rate. The Company has offered to assist in the construction of
civil buildings and houses for officiais by lending large sums to the
municipal authorities at a low rate of interest. In the villages round
Abadan (where no substantial improvements have been effected by the
Govemment or local authorities), the Company has offered to bear half
the cost of improvements and also for the time being to bear the
remaining half of the capital expenditure, the latter to he recovered by
the Company from the municipality in instalments without interest
over a period. In the oil field areas. the Company itself cames out the
functions normally carried out by a municipal authonty, since there
are no municipal authonties except in Abadan and Ahwaz.
60. An outline is given in this paragraph of some of the amenities
and social and otlier services xvhichthe Company has provided. An idea
of their scale mav be ga.,ered from the fact that hetween 1446 and. .
rgîo ttic iiiiiis ,+nt«II Iioiisin~ nrid ancillary services (\v:itçr. po\r,er.
sCzh.ioo,ooo..)Ifntlieic is adcled to ttiis surn the iiicre:i$ciii cstablislinient
Zn&>verhead charges resulting from the woik covered by this expen-
diture, the total isapproxiiiiately ~34,500,ooo.
Housinp- aizd ame~rities
(i) Betwcen 1936 and the pfesent time, the Company has paid
great attention to the provision of accommodation for emploj~ees,
and continued to do 50 even during the war years, despitë the
inexritahle shortage of materials and labour. In all, the Company
h:is built over z1,ooo houses for its employees, for tlic most
part provided with electric light, treated water and proper
drainage ; 9,500 of these were huilt between 1g45and 1950.
(ii) In addition, the Company has built shops. stores, canteens,
restaurants, 35 cinemas, swimming pools (six in Abadan and
at least one in each of the oil fields) and clubs, and has provided
football fields(19 in Abadan done) and other sports ~rounds.
siilce1946, no i&s ttiaii f 1.700.i>(or apl~r~~siiiiaic~z:~~o.oo~>
ifan :~llo\r.iii.sniadc for estiiblistirneiit aiid o\.erlrc:idc1i:irjies)
113sbec11 spïnt on siicii ariienities. 'l'hisireiciiot includerl in
the expenditure figures for housing, medical and educational
buildings quoted above.
(iii) During the war, in a period of shortage and inflation, the Com-
pany made itself responsible for the import and distribution of
'food, clothing and other supplies and supplemented wnges
with free issues of food and sales at snhsidized prices. The
import and distribution of supplies continued after the \var, and
this, together with the reclamation and development of land
for agricultural purposes undertaken by the Company, has
assured a supply of the necessaries of life at reasonahle pnces.
The 1050 renort of the mission of the International Labour
Office (Cowhfch reference is made in paragraph 61 below) makes
vew favourahle comment on this particular scheme of the .
Company (see p. 77 of the report). '206 ANSEXES TO U.K. hlEZIORIAI. (SU. 3)
Medical and heallh srnices
(iv) The Company provides not only a niedical and liospital service,
but also a public health and disease prevention service ;dental
treatment is provided, and there is a scheme for training Iranian
nurses. There is medical and niirsing staff consisting of
IOI medical officers (including IO specialists), 7 dentists and
130 nursing staff (including 40 student nurses). There is a fully
staffed research and diagnostic laboratory. There is a total of
853 hospital beds available in al1 the Company areas ; two
fully-equipped hospitals (the only ones in the town) are main-
tained by the Company at Abadan, one with 350 beds for
geiieral treatment and the other with 250 beds for infectious
diseases :there are also modern hospitals at Masjid-i-Sulaiman
and Agha Jari. In addition, 35 clinics and dispensaries are in
operation, and since 1943 the Company has lent doctors and
trained staff for a school medical service in Abadan.
(v) The Assistant Secretary of the British Medical Association,
who visited Abadan in March 1951, described the "medical
service which the Company provides for its employees and
the surrounding Iraiiian population" as "excellent", and went
on : "The Company's clinics, or health centres, are the fulfil-
ment of a general practitioner's dream. Altogether Abadan
miist be one of the hest-cared-for industrial commnnities in
the world." (British Medical Jozcrnnl, zxst April 1951, Supple-
ment, Vol. I. p. 101.)
(vi) The extent to which these services are employed is revealed by
the following statistics for 1950 :
Hospital admissions : 12,162 (6,955 employees, 5,206 noii-
em~loveesl.
~is~&&ry 'attendances: 1,530,815 (504,418 eniployees,
1,026,397-non-employees).
Najor opérations : ~,IÏI.
Ninor operations :15.080.
Laboratory examinations : g1,70g.
X-ray examinations : 17.790.
Trachoma treatments : 85o.000.
(rii) The Company lias provided numerous bathhouses for employees
and their de~endants. and has carried out extensive anti-
malarial measures.
(viii) As a result of the services provided by the Company, a great
reduction iithe incidence of disease has occurred. It is ex~ected
that trachoma in children and young adults will be lotally
eleminated from the Company's areas within a generation.
Diseases resultiiig from the attacks of intestinal worms have
been largely eliminated. Malaria cases have fallen from 1,725
in 1947to 335 in 1950.There has been no epidemic of cholera or
plngue during the last zj years, and an epidemic of typhus in
1943 was spepdily checked. Small-pax (which is endemic) is
countered by mass vaccinationscarried out with the CO-operation
of the Iranian hlinistry of Healtli.
(ix) The cost of maintaining the medical aiid health services ii1950
was approximately &,ooo,ooo. ASNEXES TO U.K. MEIIORIAL (NO. 3)
z07
61. It \dl serve to shorten this account of the measurres which the
Company has taken to ensure, so far as lay within its power, the welfare
of its employees and their dependants if reference is made to the report
of a mission of the International Labour Office (of which one member
was an Iranian) which visited South Iran at the invitation of the lranian
Government in 1950with a view "to preparing a report giving an objoct-
ive pictnre of social conditions in the oil industry and, if necessary, to
framing recommendations which the Iranian Government might take
into account in giving effect to the resolutions adopted by the Petroleuni
Committee" of the I.L.O. (Labour Conditions zn the Oil Indztstry ifr
Iran, Studies and Reports, New Series, No. 24, published by the I.L.O..
Geneva, Switzerland, 1950). (This report is attached hereto as Appen-
dix No. 21.)There follow some extracts from the report :
While recording that "housing is tlie most :serious problem in the
Company's areas and the one which gives most cause for concem", the
report goes on to state that : "Looking objectively and soberly at the
manner in which this problem (scilicet, housing in Abadan) has been
tackled, the observer cannot fail to be impressed by the vast number
of modern houses and amenities which the Company has been able to
~rovide in a com~arativelv short time in soite of excevtionallv unfavour-
able circumstan~es" (p. 31).
"No one who visits the Company's areas can fail to recognize the
effort which the Comoanv has made in oreanizine its health and medical
scr\.ices...A Krrnt sirniri is thrown upoii tlie ~oni~any'smedicnl sïrvices
by the fnct thnt thoiigli thcy \r,eredesigned priii~lrily fur tlic Coiiipnny s
own c:rni)lo\~~.e.t;l.ic\. arin klct iised csttnsi\,t.l\f LI\.tlic \r.ork<rs'
families ândevei by People who have no connection kith the Company"
(P.,,78).
Remarkable progress (scilicet,in providing educational facilities) is,
however, being made in some areas, and among these Abadan and
Fields 'take a high place, thanks to the combined efforts ofthe authorities
and the Company. The future industrial and social development of
Iran will be influenced in a high degree by the progress which is made.
in the sphere of education, and the efforts put fomd in the Company's
areas to vrovide increased educationai facilities will moduce their
reward no; orily for the Company but for the country gdiiérally"(p. 79).
"011~.of the Company's most remnrkable actiie\~rnicnts t1.sbeen tlie
orgnnizatioii of its sclieme for tlie distribution of food. clothing and
other essen1i:il commoditics . Tliere can bc no <loiihttliiit tliis sclieme
li:is .... coritriliutrcl to\i,;irils holding do\rii prices an--siipporting the
purchasing power of wages" (p. 77)-
"The mission was impressed hy the extentof the Company'straining
schemc and the efficient way in which it is organized ...The Technical
Institute at Abadan, which is the apex of the Company'strainingsystem,
is considered to be 6ne of the foremost educational institutions in the
country .... On the whole,themission formed theview that the Company's
training scheme is adequate and will in time provide al1 the trained
Iranian personnel required to fil1any post in the Company's service"
(P. 72).
62. A reference to the same publication wiil also obviate a survey
of labour-management relations and conditions of work. It will suffice
to quote two passages :
' 1.e.theoil fields.206 ASSEXES TO U.K. ZIE>IORIAL (su. 3)
"The Company has given clear evidence of its desire to promote
satisfactory industrial relations by its initiative in forming the
joint departmental committees, hy its full participation in the work
of the factor). councils and other statutory bodies, and by its
scrupulous observance of the provisions of the labour law" (p. 61).
"Against this background (scilicet,conditions generally prevalent
in Iran), the working and living conditions of the oil workers appear
as an encouraging example of what can be done" (p. 83).
63. Duriiig the years following the agreeing of the 1936 Gencral Plan,
a vast expansion of the Company's nctivities took place, involving not
only a great increase in the total number of its employees, but also the
introduction of new .and highly specialized machiner).. Despite this
fact, however, and despite the difficulties of obtaining and retaining
the services of Iranian staff with the necessary qualifications, in view of
the great demand for their services elsewhere in regions of Iran which
are climaticaliy and socially more congenial, there has been over the
penod a progressive reduction in the percentage of non-Iraniau employ-
ees, as the follouing comparative figures of employees (excluding
unskilled labour) uill show :
Ira~riun Non-Irairian
The actual reduction in the number of foreign employees inrelation
to the total staff, apart from unskilled labour, achieved during the penod
xg36-1g50. as compared with that envisaged in the General Plan
(with a continuation after 1943 at the rate envisaged), is as follows :
Yenr E?ivisagcd (46)Actual (%)
1936 (end). .......... 16.63 14.84
1937 ............ 16.00 13.63
1939 ............ 15.00 12.69
1941 ............ 14.00 II .36
1943 ............ 13.50 15.12 '
1945 ............ 13.00 14.57 '
1947 ............ 12.50 II .85
1949 ............ 12.00 10.92
1950 ............ 11.75 10.45
64. In this connection, it ispertinent to cite the words of the I.L.O.
commission, at pages 71-72 of their report :
"The arrangements made by the Anglo-Iranian Oil Company
for the recruitment of its workers seem to correspond closely to
the iieeds and conditions of the country ....There is no apparent
overall shortage of recriiits for the industry .... There is, however,
a definite shortage of workers with the required skills. The problem
'lixceptional aar-time conditionsfrarii,943 temporarily affccted the progress
wliich Iiabeen made up to that tiinc in rcducing tlie proportion of fortototal
einployces.From 1943, there was an eliorinousexpansion in activityat a time
iuhen many other war-time projects in Iran werc competing for hoth staff and
labour . s areçult, the Company had tu iniport lndian artisans and to increase
the number of foreign supervisorystaff. AYNEXES +O U.K. >lE>lORIAL (NO. 3) Zog
of recruitment ....is complicated by the high rate of turnover in
some at least of the grades. It may be anticipated that as long as
the general shortage of skilled labour in Iran persists, many trained
workers will leave the Company's service every year in ordt:r to
take jobs in more attractive areas or in their native towns and
villages. Accordiugly, the Company will presumably continue to
enrol and train many more workers than would normally be needed
for its own operations. On the other hand, it will be difficult to
increase the rate at which Iranian nationals are recruited for
employment in the higher categories of wage earners and as memben
of the supervisory staff. There is no reluctance on the part of the
Company to recruit and promote Iranians for those categories.
On the contrary, the mission understands that the positions are
open to al1who acquire the necessary qualifications and experience.
In any case, the proportion of Iranians in the Company's eml~loy-
ment is large, even in the higber categones, and it is increasing."
The 1939-1945 War
65. The outbreak ofwar in 1939inevitably brought problems. Produc-
tion had to be restricted owing to the loss of markets caused by the
closing of the Mediterranean and the occupation of much of Europe by
Germany, and the shortage of shipping. The Imperial Iranian Govern-
ment was much concemed by the consequent fa11in the amounts payable
to them by way ofroyalty under the Concession.In response to represent-
ations made by the Imperial Iranian Government, the Company in
August 1940 agreed to pay to the Government on 31st August Igqo.an
additional sum of ~1,500,ooosterling in respect of 1939, and to make iip
the sums due on account of royalty tonnage, dividend participation,
taxation and gold premium (i.e. under Articles IO and II of the 1933
Concession Convention) to &+,ooo,ooosterling in total in respect of
each of the ycars 1940 and 1941. In making this proposal, the Company
expressly stipulated and the Government agreed that it should in no
way affectthe terms of the Concessionand shoiild not create a precedent.
In May 1943, at the request of the Imperial Iranian Government, the
Company undertook to continue this arrangement "in respect of each
year in which the aggregate sum payable iinder Articles IO and II of
the Concession should not'reach this figure (~~,OOO.OOO up, to and
including the year in which hostilities between the United Kingdom and
both Germany and Italy cease as the result ofthe conclusion of a general
armistice, or if armistices are concluded with these Powers separately,
the year in which the later armistice is concluded, but stipulated that
tliereafter al1payments to be made by the Company should be regulated
by the terms of the Concession. The Imperial Iranian Government
accepted this undertaking and contirmed the arrangement. The fi(:ures
included in paragraph 66 hclow show the special additional paynients
wliich were made to the Iranian Government in respect of the years
1939.1943: there was, of course, no obligation under the Concession
itself to make these payrnents, and they were mhde at a time of great
commercial uncertainty for the Company, entirely to assist the Iranian
Government in its difficulties.
66. However, from 1942 onwards large demands began to be made
on the Company to supply petroleum for war purposes. By 1944 produc-
tion, which had fallen in 1941 to 6,605,000 tons, had risen again to210 ANNEXES TO U.K. IIEMORIAL (No. 3)
13,274,000 tons ;in 1945 it rose to 16,839,490 tons and in 1946 to
19,189,551 tons. The payments to the Iranian Government due under
the Concession Convention consequently greatly increased, 'and soori
exceeded the ~~,ooo,ooominimum which the Company had guaranteed.
The total sums paid under Articles IO and II in respect of the war
years (including 1939 and the two following years 1946 and 1947) were
as follows :
Additional
Year payments Total
The post-war period
67. The latter years of the war and the six years since the end of the
war represent a period of unprecedented expansion in the world oil
industry. It is against this background that the more recent relationship
between th(: Iranian Government and the Company must be considered,
and before reference is made to this relationship, it will be convenient
to record the development that has taken place, in strict accordance
with the obligations imposed by Article rz of the 1933 Concession, in
has nearly doubled, the increase being from 268,123,000 tons in 1938
to 516,925,000 tons in 1950. Iranian production over the same period
has in fact trebled, the increase being from 10,195,371tons to 31,750,000
for the same years. In 1938, Iran's production was 4 per cent of the
world figure: by 1950 it had risen to 6 per cent. The yearly Iranian
production has been as foiiows (long tons) :
1938 .... 10,195,371 1945 .... 16,839,490
1939 .... 9,583.285 1946 .... 19,189,551
1941 .... 6,605,320 1948 .... 24,871,058
1917 .... 9.399.231 1949 .... 26,806,564
1943 ... 9.705.769 1950 .... 31,750,147
1944 .... 13,274,243
After the initial set-backs to production following the outbreak of
war, the recovery was extremely rapid, and it will be seen that the
increase in productionhas continued ever since, and had it not been
for recent events the figure for 1951 would have been of the order of
35 "Ilion tons. This extra production was largely made possible as a
result of the development of the Agha Jari, Naft Saiid and Gach Saran
miles east of Abadan) commenced commercial production in 1940. The 155 ANNEXES TO U.K. MEhIORIAL o. 3) 211
Agha Jari field (north-west of Gach Saran) \vas joined by pipeline to
Abadan in 1944. and the Naft Safid field (zo miles south of blasjid-i-
Sulaiman) in 1945. In addition to the growth in housing and amenities
already described, there hasbeen a vast increase in the technical plant
and equipment both in the oil fields and in connection with the pipeline,
refining, storage and oil-loading arrangements. By 1951, the refiiiing
capacity had grown from IO million tons of annual capacity in 1939 to
25 million tons, and Abadan had become the largest single refinery in
the world. -4s regards the tanker fleet of the British Tanker Company,
bythe beginning of 1951 the heavy losses sustained during the \var had
not only been made good, but the deadweight capacity of the fleet had
been increased to 1,660,186 tons (representing 139 ships) as compared
with 903,061 tons (89ships) at the beginning of 1939.
68. It will be a~~arent from this description that the capital sums
which the comp/iy, relying on the ~oniession convention of 1933,
has. to the knowledee and with the encouragement of the Imperial
Iranian Govemment,"sunk in Iran are enorm~ns. Between the yzars
1931and 1950the capital expenditure incurred on fixed assets from year
to year in Iran has amounted to L93 million. Expenditure on drilling
and testing new areas in Iran during the same period amounted to,oyer
LIO* million; in addition, large sums (amounting to some Lr6 million
during the period 1942-1950) have heen spent on mobile assets in
Iran (mechanical transport, drilling tools, service plant, etc.).
69. In 1946, a question was raised by the Imperial Iranian Govern-
ment whether, in view of the fact that sterling was not convertible into
gold or dollars and of the scarcity of goods on which it could be expended
in the sterling area, the security envisaged by ArticlIO (V) of the 1933
Concession Convention still existed. This question was discussed in
conversations held in Tehran in October 1446 between representatives
of th,: 1rn~i~~rilnninii Go\fernrnent and tlie'~~iii~nn~.:ind ~ubscqiiently
there wt~rcneguti;itionh bet\vecii rel>reseiitnti\,esof tlie Imycrinl Iraiiian
Go\.ernmcnt and th^.Co\~ernriieiirof the Cnited Kingdom, tirid of the
Central l{anks of the t\i,o countries. The Imperial Iranian (;overnment
considcrrd its interesrs properly st,cured hy reason of the arrtingcrn8:nts
concluded I>ctii.rriitlit\vuGovernments and betiveen the t\ro Rxiiks,
and on 24th November 1946 the Rfinister of Finance stated in a letter
to the Company that, in view of the arrangements made, the Impen?
Iranian Govemment accepted that the Company \vas fulfilling its obh-
gations under Article IO (V) of the 1933 Concession Convention, dunng
the period for which the arrangements would operate. Wlen tliese
arrangements expired in 1947. a further understanding to cover the
succeeding period of 12 months was reached between the two Centrai
Governments. This understanding was recorded inand aparMemorandum ofwo
Understanding and has been estended annually up to the present t!me
and is still in force. The terms of the understanding, though not identical
with those of the 1946arrangements, provided an equal, or eveii greater,
security for the interests of theranian Government. This Rfemorandum
of Understanding has since been largely superseded by the with.awa1
by the United Kingdom Govemment of the special benefits previoiisly
accorded to Iran because oil supplies from Iran were of assistanct: to
the United Kingdom economy (see paragraph ZA of this Memorial). ANNEXES TO U.K. MEMORIAL (SO. 3) 213
question in these discussions of altering the terms of the Concession,
much less of denouncing or abrogating it, nor \\.asits validity challenged.
Moreover, the representatives of the Imperial Iranian Government were
more than once at pains to point out that the Government was not
alleging that the Company had failed to pay any of the sums due to the
Government thereunder. The basis on which both Parties were working
was that of makine a-.ustments within the framework of the Concession,
ancl uf rcacliiiig agrccnicnt un p:iyniciir, ;id<litiuiinl IO tliost,ilui:iinclcr
tlic Coiicessioii to r.ik :iccriliiit of tlir: c1i:iiigeiiii ccoiiiiiiiic r.i,iidiiioii
hroiiglit :~boiitiiy111,\V;LI.:\t*II c:irly st:i&IIItlic ~Ii.+.~issioii.jotli 5.p
teinbcr rqqb , tlic (:onil>.in!.d<~~l.~rid\i.illingiieîsto iiiakr.;in;id~lition;il
pÿyrnaiil. I'his OHL~ \KI> iiot [alici~III>:iiic2s tlic 1:illis~iroceedcrl,tliii
paiticular question came to be deait with as a part of a more coni-
prehensive settlement which was agreed to be necessas. and which took
the form of a Supplemental Agreement to the Company's 1933 Co~ices-
sion. This Supplemental Agreement was signed on behalf of the Imperial
Iranian Government and the Company on 17th July 1949,afterthere hacl
taken place a most thorough review of a great varietÿ of matters whicli
affected the relationships of the Government and the Company. A copy
of the Agreement is attached to this Annex as .4ppendix No. 23.
The Szd$$lementalAgreement
72. The Supplemental Agreement recites that the Goverilment and
the Company have after full and friendly discussion agreed that, in
view of the chances in economic conditions brourht about bv the wrrr.
tlie fin:inci:ill)rn$its itccrtiiiigto tlie Go\.ernrneiit ;;iicler1633 Coii<:es-
sion :\grecnient s1i<iiiIilIje iiicren5ed to tlie extçnt :iiiiiiith~.Ili:Lnil.!i
thereinafter appearing, the principal provisions being as follows :
(1) The tonnage royalty payable for the year 1948 and subsequent
years under Article IO (1) (a) of the 1933 Concession Agreement
ta be increased from four shillings to six shillings per ton of
petroleum sold for consumptiori in Iran or exported from Iraii
(Clause3 (a)).
(2) An immediate payment of L5,ogo,gog to be made to the Goveril-
ment out of the sum of ~14,000,ooo shown in the balance sheet
as constituting the genernl reserve of the Company as at 31st De-
cember 1947 (Clause 5 (a)), and thereafter the payment to the
Government in 1948 and each subsequent year of zo per cent of
the sums (if any) placed to general reserve in the year in'question,
increased by such a proportion as would offset the effect of British
income tas (Clause4 (a)).
(3) A guaranteed mininium payment (subject to events outside tlie
Company's control preveuting the export of petroleum) of L4mil-
lions per annum in respect of payments under Article IO (1) (6)
of the 1933 Concession and Clause 4 (a) of the Supplemental
Agreement (i.e. payments calculated by reference to dividends
and allocations to general reserve) (Clause4 (b)).
(4) The rate of paymeut under Article rr of the 1933 Concessioii in
resoect of Iranian taxation for 10~6and subseouent vears to be
in&eased to a flat rate of 1s.per t0;i'instea.dof 9d.'perton in respect
of the excess over the first 6,000,oootons of production per annumz14 APINEXES TO U.K. MEMORIAL (NO. 3)
(5) The revised payments under (1)and (4) above to remain subject
to adjustment for fluctuations in the price of gold as defined in
Article IO (V) of the 1933 Agreement.
(6) The prices for the sale of oil products in Iran to consumers other
than the Govemment to be 25 per cent below the basic prices
instead of IO per cent below, as provided by Article 19 of the
1933 Concession. (Clause 8 (b).) (Prices for sales to the Govern-
ment had been 25 per cent below the basic prices al1along, under
the terms of the 1933 Concession.)
73. It nas provided in the Supplemental Agreement that payments
under Clauses 4 and 5 thereof should be in substitution for pa
under Article IO (1)(bj of the 1933Concession in respect of distriE:,";:
relating to the general reserve and payments under Article IO (III) (a)
on the expiration or surrender of the Concession. The amounts of the
retrospective payments in respect of tonnage royalty and taxation under
Clauses 3 and 7 for the vear 1948 were aereed and stated in the Aeree-
ment, at £3,364,459 and t312;gbo respecbely. The Agreement w& to
come into force after ratification by the Majlis.
74. The effect of this Agreement on the sums ~avable to the Im~erial
Iraniau Government would have been as follows': .
(1)There would have been the special payment of £5,ogo,gog in
respect of the amount standing at general reserve at 31st Decem-
ber 1947.
(2)The comparative figures for 1948, 1949and 1950would have been
as follows :
1933 Concessionand
1933 Concessio~r Sz<pplementalAgreement
75. It is to be noted that the alterations to be effected by the Supple-
mental Agreement would uot only have counteracted the effect of divi-
dend limitation (Clause 4 (a) and 5(a)), but also independently of that
question reatly have increased the sums payable (Clauses 3 (a), 4 (b)
and 7 (a)T,and the other benefits derived by Iran from the Concession
(Clause 8 (b)).
The new General Plan
76. During the series of conversations there was also (as has been
stated in paragraph 71 above) discussion on the General Plan question.
Although the Company and the Government had in 1936 agreed that
the contents of the General Plan were (with certain exceptions) perma-
nent and should be considered as governing the relations between the
two Parties in al1 that concerne<lthe interpretation of Article 16 (III)
-- the 1933 Concession during the whole period of the Concession, the
' As rcgaidsrpp, it should bc nated that under the terofthe Supplemental
Agreement there would nlmast certainly hnvc been due a substantial extra payment
inrespect of allocatitogeneral reserveforigso.Thisfigur eannot be cahulatcd.
as the Company's accounts for the year 1950are not yet available. ANNEXES TO U.K. MEMORIAL (NO. 3)
215
proposai cs'otained in the explanatory notes and schedules thereto
(Part II) covered only the period 1936.1943. The Company in 1943gave
assurances that it did not intend to diminish the scale of these latter
voluntary activities, although the period covered by the nndertakings
contained in Part II of the 1016 General Plan was about to exvire.
In fact, the training schemes'contained therein were developed'still
further both as regards nnmbers and categories of men under training.
From 1943 onwaFds, however, there weÏe several enchanges of view
between the Imperial Iranian Government and the Company, and as
signing of the Supplemental Agreement. Finally, on 6th June 1949. the
Company submitted a final draft of a new General Plan. This draft
contained inler alia :
(i) a reaffirmation of the principle that in effecting reductions in the
numbers of employees of non-Iranian nationality, the Company
must be guided by the provisions of the Concession, and in parti-
cular by Articles 12 (A) and 16. (See paragraph 54 above.)
(ii) a declaration by the Company of its intention to reduce within
IO years from 1949 the proportion borne by its non-Iranian to
its total (salaried) staff from 40 per cent to 33 per cent, and its
non-Iranian artisans to itstotal labour (lessunskilled labour) from
3 per cent to Iper cent ;
(iii) a recognition by the Parties that the rate of reduction might be
retarded by an increase in the extent or a change in the scope
of the Company's operations or by factors beyond the control of
the Company.
77. In an explanatory note annexed to the draft. the Company set
out some of the facilities already in existence and certain measures
linvolvinz the ex~enditure of manv millions of vounds) which the Com-
ilan!. \va; plniin;iig i~oliiiitarily to iiiidert;ike 'in sunnection \\.itli tlie
ediicntion :andtraining of its eniployees aiid tlicir ctiilalrenancl with ttic
r>rovisionof medicnl Incilities. Iiuusin-.and ameiiitics iiiits centres of
operntions, and tlic esecutioii (iii c~>njiiiictiun\r.itti ltit: Guvt-riiiiieiit) uf
mii78. On 17th Jnly 1949, a letter was signed on behalf of the Impeiialillager;.
Government of Iran and of the Company, which was expressed to be
valid on condition of the ratification by the Majlis of the Supplemerital
Agreement and which (as amended by a letter of 9th October 1949)
contained inler alia the following statements and provisions :
(i) that the Government recognized that the essential principles of
the (draft) General Plan, including the principle of percentage
reduction, on which the General Plan prepared in accordance ait11
Article 16 (III) of the (1933) Concession was based, were accept-
able to the Government ;
(ii) that if withiia period of three months from the ratification of the
Supplemental Agreement the (draft) General Plan was not agreed
upon between the Government and the Company, the Parties
would immediately refer to arbitration in accordance with Arti-
cle 22 of the 1933 Concession any matter in connection with
the General Plan upon which they could not agree.216 AXXEXES TO U.K. MENORIAI. (NO.3)
Subseqzrenthistory O/the Sz~pplententalAgreement
79. In accordance with the la\%of Iran, the Supplemental Agreement
was duly submitted to the Alajlis, but that body was dissolved only a
since, has the Agreement received tlie benefit of a sympathetic, detailed
or objective examination during Majlis debate.
80. hluch delay occurred over the elections to the next Majlis, which
was not convened until 9th February 1950, and there \vas also a change
of Government on 3rd April. Thc question of the Agreement was not
again discussed until June 1950. when the Government proposed to the
Majlis that it should be examined, before debate, by a Parliamentary
Committec. The Majlis adoptcd this procedure and the Committee (under
the chairmanship of Dr. Musaddiq, the present Prime Minister) held
meetings from June until December. Shortly after the setting up of the
Committee, the Prime Minister, His Excellency M. Ali hlaiisur, was
succeeded by His Excellency hl. Ali Razmara. On 12th Deceinber, the
Committee submitted an advance report stating that it was not in
fav~ur of the Supplemental Agreement Bill on the grounds that it did
not satisfactorilysafeguard Iranian rightsand interests. On 11th January
1951, the klajlis confirmed the report of the Committee and approved a
motion which charged the Committee to prepare in the following two
months a further report as to the coiirse wliich the Government should
take in the matter. This decision \vas confirmed by the Senate on
31st January. In the meantime, the Government had withdrawn the
Supplemental Agreement Bill on 26th December.
81. On 31st December 1950, the Saudi-Arabian Government and the
Arabian-American Oil Company coiicluded an agreement which, gene-
rally speaking, provided for the equal sharing between themof the profits
derived from that Company's operations iii Saudi-Arabia after deduc-
tion of United States taxation. The terms of tliis agreement attracted
some attention in Iran. and in discussion with the new Prime Minister
about the end of ~aiiuar~, the Anglo-Iranian Oil Company expressed its
willingness to examine with the Government a new agreement on the
basisof an equal sharing of the profits arising from Ctsoperations in
Iran, or for that matter any other reasonable proposal. It is of interest
that royalties based on trading profits had in fact been provided for in
the D'Arcv Concession. but froni earlier ~araeraulis it will be clear that
experience during the'depression years'had-p;oved conclusively that
fluctuations inannual payments dÜe to changes Cnmarket pÏices, andwide
difficulties inrriving at mutually acceptable assessments of net profits.
Eventsleadingup to the Oil Nationalizalioiz Act
82. 011 19th February ~gjr, Dr. Musaddiq (Chairman of the Oil Com-
mittee) formally proposed to thecornmittee tliat the oilindustxy through-
out Iran shourd-benationalized, and on 8th March (the day following
Razmara's assassination) the following resolution was adopted :
"In view of the fact that, among the proposals received by the
Oil Committee, the proposa1to nationalize the oil industry through-
out the country has been considered and accepted by the Com- ANNEXES TO U.K. hIEMORIAL (No. 3) 217
mittee ',and since the time left for studying the execution ofthis
proposal is not enough, the Special Oil Committee requests the
Majlis to grant an extension of two months for this purpose."
On 15th Ilfarch, the Majlis approved a Single Article in the following
tenus : "The Majlis confirms the Special Oil Committee's decision of
8th Rlarch, and approves the extension of the Committee's tenu of
office for two months." On 20th March, the Senate also approved the
SingleArticle. In the meantime. followingthe assassination of His Excel-
lency M. Ali Razmara, on 7th Afarch, His Excellency M. Hussein Ala
had been made Prime Minister in his place.
83. The new turn that events had taken was a matter of deep concem
to the Government of the United Kinedom. as was shown bv the text
of a note (attached as Appendix No. z4Yheret'ow ) hich the ~ritiih Ambas-
sador delivered to His Excellency hl. Hussein Ala on 14th Afarch. As
stated in that note, for a .variety-of reaso? successive Iranian Govem-
ments had failed to present the case for the Supplemental Agreement in
a manner which would enable the Iranian public to understand it and
to realize not only that it was fair but also how much it would be to
their advantage. The Company's Information Officein Tehran suitably
publicized the tenus and advantages of the Agreément through the
medium of the Iranian Dress.radio. etc.. but its efforts in this direction
uere tinndicnppcd hy ttÎc rel,i<:tniiceof tlie 1r:ini:~n:tuthoritics to iindcr-
take an!,similar ~)uhlicityrne;rsurcs.
SJ. Afrer the Irniiiaii Sew Yr:ir recess at tlic end of .\lnrch. tlir Oil
~ommittee resumed its sittings, and on 26th April the ~ommittéeunani-
mously approved the text of a Bill giving immediate effect to the prin-
ciple of nationalization. The following day His Excellency M. Hussein
Ala resigned from officeas Prime Minister, and Dr. Musaddiq, with the
approval of the Majlis, succeeded him. On 28th April, Dr. Musaddiq
secured. the passage through the Rfajlisof a Bill substantially as recom-
mended by the Oil Committee, providing, inter alia,for the taking pos-
session of the installations of what was described in the Bill as the "late
Company". The Senate the next day approved the appointment of
Dr. hlusaddiq as Prime Illinister, and on 30th April approved the Nation-
alization Bill : on 1st May, His Imperia1 Majesty the Shah gave his
assent botli to the "legal decision concerning the nationalization of the
Oil Industry throughout the country and an extension for two morrths
for a study of execution of the article and the decision adopted by the
Oil Committee which was approved by the Majlis and the Senate ou
17th March '", and to the Oil Nationalization Bill approved hy the
Senate on 30th April. (A copy of the Oil Nationalization Act of 1st May
is appended hereto as Appendix No. 25. It also appears as Annex C of
the Application Instituting Proceedings of 26th May 1951.)
' The propusal referred to is that accepted by the Cammittee on zgth November
and withica view to ensuring world peace, the undersigned propose that th,: oil
industrv be entirelv nationaliz:i.e. the entire o~erations for ex~lorat.on. exnloit-
ation and extractiinto bs controlled by the ~overnment."
This refers to thesingle Article referred toinparagraabove. The 17thMarch
was the date on which the Senate Standine Committees on Forei-n Aiiairs and
Finance reached agreement on it.
18218 ASSEXES +O U.K. YEhlORIAL (NO. 3)
Certain otlicrassistanceextendedto Iran
85. It has been the practice of the Company to make advances to the
Iranian Government (at the request of that Government) against the
payments which would become due from the Company under Articles IO
and II of the 1411 Concession. This has in fact freoiientlv resulted
in the Go~ernmenïrcceivin~ a large part of its conces&onalj~ayments
well in advance of thc due date of payment, and irithe case of the large
advances of the past fcw years, nô interest at al1has been charged 6y
the Comp:my. For instance, in August 1943 an advance of f2,675,ooo
was made and recovered, together with interest at the agreed rate of
z& per cent, by the retention of sums due in February and March 1944.
In 1944-1945. advances totalling 13,737,500 were made, and in each of
the years 1946 and 1948 fiirther advances of Lr,ooo,ooo. In October
1949,the Company agreed to make advances totalling ~6,000,oooagainst
amounts dite in February rgjo, and to forgo interest thereon. In May
1950,the Company agreed to make advances totalling ~6,000,oooduring
the period May to July 1950, and in September 1950 agreed to make
yet further advances totalling ~8,000,ooo during the period September
1950 to January 1951 ; al1 these advances agreed in 1950 were to be
free of interest and were repayable "by deduction from al1future conces-
sional paymcnts as they accrue to the Government". These latter two
advances, totalling ~rq,ooo,ooo, were actually made, and were recovered
against the payments due by virtue of the Concession Convention in
1950 and in 1951, the final recovery being effected on 28th February
1951. During February rgy, the Company agreed to make still larger
advances which would have amounted to ~25,000,000in 1951, starting
witli ~5,000,ooo in February rgjr and thereafter being at the rate of
~2,000,000per month up to the end of 1951. Two payments were made,
~~,ooo,oooin February and ~z,ooo,oooin Atarch ;but since the Imperial
Government in April then made it plain that it regarded these advances
as sums which would be camed into account "as partial payments
a.,inst the Imverial lranian Govemment's claims aeainst the-Comnanv .
iiircspecr of rliépn.-i",ilii(iior ;is:icivniic~sro I,crccoierc.<l iritlitngreed
and iijii:imniiner LI).ira\.of di.ductiun fruriiall Liitiirccoiici~ssioii;~11;iy-
ments. further »avments were discontinued.
86. In addition, the Imperial Government of Iran has secured sub-
stantial benefits froni thc ~urchases of rials by the Company. 13yreason
of decrees of 26th July 1gÂ,8 and 10th ~anuaÏy 1949 :
(i) Thi: Company has been obliged to obtain the Iranian rials essen-
tial for its operations in Iran by selling foreign exchange at a
rate considerablv 2~wer t~an ~hat whi~ ~could be obtained bv
orhcr sellerj of uscli;ingc in Iran.
(.i, 'l'tic13;ink-i-31elli\vas :iiitlionzed to scll:itthe niiicli lii~lierrates
payable by importers, foreign exchange which had been iurchased
fromthe Compan at the officialrate.
(iii) The hlinistry of Jinance was empowered to use the profit thus
made by the Bank-i-Melli for the purpose of reducing taxation in
Iran. ANNEXES TO U.K. MEMORIAL (iXo. 3) 219
Conclusioit
67. The foregoing records the sequence of events and also makes clear
the great benefits, financial and otherwise, which the Iranian Govem-
ment and nation have derived from the operations of the Company in
Iran. hfanv of these benefits extend far bevond what was laid down as
obligatory-under the terms of thc r\r.o (:~iicrssioii (:on\,cntions wliicli
Ii:i\Oeen in forcefrom 1901to the present time. \loreovcr. thcse benrfits
have been larzelv dile tothe enornious monetarv investments which the
Company, in ;ellance upon the sanctity of the i933 Concession Conven-
tion, has made in Iran. The Iranian Government's annual revenue from
the Company's royalties has risen nearly tenfold since 1933. In virtue
of the Company's nation-wide distribution system, the Iranian public
is assured of supplies of high-quality oil products at reasonable prices.
The Company has made a considerable contribution to the education
and training of Iranians, many of whom, having taken advantage of the
facilities provided by the Company, have found employment outside
. its areas, thus benefiting industry elsewhere. Inside those areas, many
thousands of Iranians have assured employment at generous rates and
under most favourable conditions. It is no exaggeration to Say that,
but for the Anglo-Iranian Oil Company and its activities and invest-
ments in Iran, that country would be in a far less developed and pros-
perous condition than it actually is at the present day.
.4ppendix No. r 10Annex 3
hIAP OF IRAN
[Not reprodtrcedj
Appendix No. 2 to Annex 3
Below is giveii the French text. which is the only authoritative text
(see Article18 of the Concession). An English translation is given on
the following page.
Entre le Gouvernement de Sa Majesté impériale leSchah de Perse
d'une part et William Knox D'Arcy, rentier demeurant à Londres,
no 42 Grosvenor Square (ci-aprhs désignépar l'expression «le conces-
sionnaire »)d'autre pnrt.
Il est par ces présentes convenu et arrêtéce qui suit, savoir:
Le Gouvernement de Sa Majestéimpérialele Schah octroie au conces-
sionnaire par ces présentes le privikge spécialet exclusif de rechercher, 220 ANNEXES TO U.K. hlEllOR1.4L o. 3)
obtenir, exploiter, développer, rendre propres pour le commerce, et
emporter et vendre le gaz naturel, le pétrole, l'asphalte et l'ozokénte,
dans toute l'étendue de l'Empire persan, pour une durée de soixante
années à découlerde la date des présentes.
Ce privilège comprendra le droit exclusif d'installer les upipeline?a
nécessaires des gisements, où il serait trouvé l'un ou plusieurs desdlts
produits, jusqu'au golfe Persique, ainsi que les embranchements de dis-
tribution nécessaires. IIcomprendra aussi le droit de constmire et entre-
tenir tous puits, réservoirs,stations et services de pompes d'accumula-
tion et de distribution, usines et autres travaux et agencements qui
seraient jiigésnécessaires.
ART.3
Le Gouvernement impérial persan concède gratuitement au conces-
sionnaire tous les terrains non cultivés appartenant à l'État que les
ingénieurs du concessionnaire jugeront nécessairespour la constructon
de tout ou partie des travaux ci-dessus mentionnés, quant aux terrains
cultivés appartenant à l'État, le concessionnaire devra les acheter au
prix équitable et courant de la province.
Le Gouvernement accorde également au concessionnaire le,droit de
faire acquisition de tous autres terrains ou bâtiments nécessairespour
le mêmeobjet, du consentement des propriétaires, aux conditions qui
.pourront ètre arrêtéesentre lui et eux sans qu'il leur soit permis d'élever
des prétentions de nature à surcharger les prix ordinairement en usage
pour les terrains situés dans leurs localités respectives.
Les lieux saints et toutes leurs dépendances dans un rayon de deux
cents archines persans sont formellement exclus.
Commt.truii iiiincs de 11Ctruljitii;~i.3choilit~.r,i lia.*r<~-(:hiri-ic
provincc de Kcmnnschalinii - et I),zlckiyrhs de Moucliirsont :ictiiclle-
ment affermées à des ~articuliers et woduisent annuellement un revenu
de deux mille tomans'au profit du Gouvernement, il a étéconvenu que
ces trois susdites inines sont comprises dans l'acte de concession, confor-
mément à l'art.I.A condition aüe. outre les seize ~our cent mentionnés
a l'art.IO, le concessionnaire bayeri cliaque aniée la somme fixe de
zooo (deux mille) tomans ail Gouvernement impérial.
Le tracé des pipelines), sera fixé par le concessionnaire et ses
ingénieurs.
ART. 6
Nonobstant ce qui est contenu ci-dessus, le privilège accordépar les
présentes ne s'étendra pas aux provinces d'Azerbadjan, Ghilan, Mazen-
daran, Asdrabad et Khorassan, mais à la condition explicite que le
Gouvernement impérial persan n'accordera à aucune autre personne le
droit de construire un iipipeline» aux fleuves du siid oua la côte méri-
dionale de la Perse. .4NSEXES TO U.K. hlEhIORIAL (SM. 3) 221
ART. 7
Tous les terrains accordés, par ces présentes, au concesjionnaire ou
qui seront acquis par lui de la manière prévue aux articles 3 et 4 des
présentes, ainsi que tous les produits exportés seront francs de tous
impôts et taxes pendant la durée de la présente concession. Tous les
matériaux et appareils nécessairespour l'exploration, l'exploitation et
le développement des gisements et pour la construction et le développe-
ment des pipelinesiientreront eu Perse francs de tous taxes et droits
de douane.
ART. 8
Le concessionnaire devra faire partir immédiatement pour la Perse
et à ses propres frais, un ou plusieurs experts dans le but d'explorer la
région oùexistent, comme il le croit, lesdits produits, et dans le cas où
le rapport de l'expert serait, selon l'opinion dii concessionnaire, d'une
nature satisfaisante, ce dernier devra envoyer immédiatement en Perse,
et à ses propres frais, tout le personnel technique nécessaire avec le
matériel d'exploitation et les machines nécessairespour forer et foncer
des puits et prouver la valeur de la propriété.
Le Gouvernement impérial persan autorise le concessionnaire à fonder
une ou plusieurs sociétéspour l'exploitation de la concession.
Les noms, les statuts et le capital de ces sociétésserqnt fixéspar le
concessionnaire, et les administrateurs seront choisis par lui,à la condi-
tion expresse qu'à la constitution de chaque société,le concessionnaire
donnera avis officiel de cette constitution au Gouvernement impérial
I'ini1ic;itiidrcnliciixoiii:etti. soc.i;t; doit fonctioniier. Ccttc soci;ti: oii
sionnaire, mais elles devront prendretsàeleu: charge tous ses engagements
et responsabilités.
il sera stipulé au contrat entre le concessionnaire d'une part, et la
sociétéd'autre part, que cette dernière devra, dans le délaid'un mois
à partir de la constitution de la première sociétéd'exploitation, payer
au Gouvernement impérial persan une somme de vingt mille livres ster-
ling, espèces. et une somme additionnelle de vingt mille livres sterling
en actions entièrement libéréesde la premi6re société, fondée en vertu
de l'article précédent :eiie devra payer également auditgouvernement,
annuellement. une somme éealeau seize Dour cent des bénéfices anniiels
nets de toute Société ou de toutes ~ociétés'~upiourraient êtreconstituées
conformhmqnt audit article.
Ledit gouveruemcnt sera libre de nommer un commissaire impérial
leouel sera consulté Dar le concessionnaire et les administrateurs des
sociétésà former, il fokira tous les renseignements utiles en son pouvoir
et leur indiquera la meilleure ligne de conduite à suivre dans l'intérst222 ANNEXES TO U.K. &lE>IORIAI. (SO. 3)
de I'ciitrclirise. Il établir:^.d'accor<l;iIçconcessionnaire. Iicnntriilc
qu'il juger;, utiOUF jau\.eg.lrder 1c.iiiit6rCtsdu Gouvernement impCria1.
Lcs susdites attribiitioiis du commissaire imvcrial seront indioutes
dans les statuts des souétésà créer.
Le concessionnaire paiera au commissaire ainsi nommé une somme
annuelle de mille livres sterling pour ses services àpartir de la date de
la constitution de la première société.
Les ouvriers employés au service de la sociétédevront ètre sujets de
Sa Majestéimpériale le Schah, exception faite du personnel technique
tel que les directeurs. ingénieurs,perforateurs et contremaîtres.
Dans tout lieu où il pourrait êtreétabli que les habitants du pays
obtiennent actuellement du pétrole pour leur propre usage, la société
devra leur fournir gratuitement la quantité de pétrole qu'ils se procu-
raient eux-mêmesauparavant : cette quantité sera établie d'après leurs
propres di:clarations. sous la réservedu contrôle de l'autorité locale.
ART. 14
Le Gouvernement impérial s'oblige à prendre toutes les mesures qui
seraient nécessairespour assurer la sûreté et l'exécution de l'objet de
cette concession. du matériel et des amareils dont il est fait mention
pour les objets de l'entreprise de lasoc:6téet protégerles représentants,
agents et employésde la société.Le Gouvernement impérial ayant ainsi
exécutéses enea~ements. le concessionnaire et les sociétés créév ear lui
ne pourront, ioÜs aucun prétexte, réclamerdes dommages-inté&ts au
Gouvernement persan.
A l'expiration de la durée de la présente concession, tous les maté-
riaux, bâtiments et appareils dont il serait fait alors usage par la société
pour l'exploitation de son industrie deviendront la propriété dudit gou-
vernement, et la sociétén'aura droit à aucune indemnité de ce chef.
Si dans le délaide deux ans à partir de la présente date, le conces-
sionnaire n'a pas établi la premiere desdites sociétésautorisées par
l'articleg de la présente convention, la présente concession sera nulle
et non avenue.
Dans le cas oh il viendrait à s'éleverentre les parties intervenant a
la présente concession toute question ou tout différendau sujet de son
interprétation ou des droits ou responsabilités de l'une ou de i'autre
des parties en résultant, cette question ou ce différend sera soumis à
deux arbitres,à Téhéran,dont l'un sera nommépar chacune des parties, ASSEXES TO U.K. >~EI\IORIAL (sa. 3) 223
et à un tiers-arbitre aui sera dé"iAnévar les arbitres avant de vrocéder
à l'arbitrage. La déciSiondes arbitres, ou dans le cas où ces dehiers ne
tomberaient pas d'accord, du tiers-arbitre, sera concluante.
Cet acte de concession fait en double est écrit en langue française et
traduit en langue persane avec la mêmesignification.
Mais dans le cas où il viendrait à surgir toute contestation relativeà
cette signification, ce sera le texte français qui seul prévaudra. Téhéran
le... . Séfer1319 de l'Hégire,soit le... .mai mil neuf cent un.
Opposite the signature of \Villiarn
Knox D'Arcy. under the Persian. as
certificate is written opposite the sig-
nature: (Signé)WILLIAM KNOXD'ARcY,
"Cortificd that this writing is the
vis4 or sign manualof H.I.M. MurzafferB~ Attorney,
es DinShah ofI'ersia. (Signé)ALFREDL. MARRIOT~.
(Sgd.) GEORGE GRAHAME.
Vice-Consul.
Tehran.
6th June igor
Certifiéque les signatures ci-dessus ont étéapposéesen ma présence
au consulat généralbritannique à Gulaket près Tehran, ce quatrième
jour du mois de juin 1901, par Alfred Lyttelton Mamott, fond6 de
pouvoirs de William Knox D'Arcy, conformément a i'acte de notaire
daté du zr mars 1901 et vu par moi.
(Signé)GEORGE GRAHAME,
Vice-Consul.
Certified that this Seal is tliat of
Certified that this Seal is that of
Amines-Saltan Atabek-i-Azam, Rlushir cd Douleh, Minister of
Prime Minister of Persia. Foreign Affairs, Persia.
(Sgd.) GEORGE GRAHAME, (Sgd.) GEORGE GRANAXE,
Vice-Consul, Vice-Consul,
Tehran, Tehran,
6th June 1901. 6th June 1901.
Certifieclthat the writing in the Persiaii and French languages on this
and the preceding seven pages was registered in the Archives (Register
Book) of H.M.'s Legation, Tehran, on ages 117 to 124on the 5th June
1901. Dated at Gulaket, near Tehran, tRis sixth day of June 1901.
(Signed) GEORGE GRAHAME,
Vice-Consul.224 ANNEXES TO U.K. MEMORIAL (NO. 3)
[Translatimj
Between the Government of His Imperial Majesty the Shah of Pecsia
of the one part aiid William Knox D'Arcy of independent means residing
in London at No. 42 Grosvenor Square (hereinafter called "the Conces-
sionnaire") of the other part.
The followinghm by these presents been agreed on and arrangea, viz. :
ARTICLE 1
The Government of His Imperial hlajesty the Shah gnnts to the
Concessionnaire by these presents a special and exclusive privilege ta
search for, obtain, exploit, develop, render suitable for tracle, carry
away and sel1natural gas, petroleum, asphalt and ozokerite throughout
the whole exteiit of the Persian Empire for a term of 60 years as from
the date of these presents.
This privilegr shall comprise the exclusive right of laying the pipe-
lines necessary from the deposits where there may be found one or
several of the said products up to the Persian Gulf, as also the necessas.'
distributing branches. It shall also comprise the nght of constructing
and mainkiining al1andany wells, reservoirs, stationsand pump services,
accumulation services and distribution services, factories and otlier works
and arrangements that may be deemed necessary.
The Imperial Persian Government grants gratuitously ta the Conces-
sionnaireal1uncultivated lands beloneine to the State which the Conces-
sionnaire's engineers rnay deem necës&y for the construction of the
whole or an" art of the above-mentioned works. As for cultivated lands
beloneine tg ihe State. the Concessionnaire must ~urchase them at the
fair and Ycurrentpriceof the Province.
The Government also grants to the Concessionnaire the right of
acauirin- al1 and anv other lands or huildines necessarv for the said
pi~;poje, wirh thc cokent r,f tlitprol>rictors.oii iuch coiiditioiis :is ni:iy
he :irr:inged beta.een liirnaritl tlicrii \i.iltiout their bcing alloa.ed to riinke
deniariils of a riaturc ro siirctiargo tlii: prices onliri?rily ciirrent for I:inds
situate in tlieir respecti\.e localiries. Iloly placesal1their dependen-
cies witliin a radius o200 P?rsian arch~nesare lornially excluded.
As three petroleum mines situate at Schouster Kassre-Chirine in the
Province of Kermanschahan and Daleki near Bouchir are at present let
to private persans and produce an annual revenue of two thousand
tomans for the benefit of the Government, it has been agreed that the
three aforesaid mines shall be comprised in the Deed of Concession
in conformity with Article I, on condition that over and above the 16
per cent mentioned in Article IO the Concessionnaire shall pay every
year the lixed sum of 2,000 (two thousand) tomans to the Imperial
Govemment. ANNEXES TO U.K. MEMORIAL (NO. 3) 225
The course of .the pipelines shall he fixed by the Concessionnaire and
his engineers.
ARTICLE 6
these presents shall not extend to the Provinces of Azerbadjan. Ghilan,
Mazendaran, Asdrabad and Khorassan, but on the express condition
that the Persian Imperial Government shall not grant to any other
person the right of constructing a pipeline to the southern rivers or to
the south Coastof Persia.
All lands eranted bv these Dresents to the Concessionnaire or that
nia). be acqÙ;rrd by liiiiiii tlic'manncr pro\.ide<lfor in :\rticlrs 3 4nd
of thesï prescrits, :is nlsonll prodiicts ,?xliortcdshnll he fier of nll imposts
aiid taxe, during tlit: tt:rni of the prcsciit Coriccssioii.1\11m:iterial and
applrntusei nrcesS;ir!. for tlrc cxplor;itiuri. \\,orking and dtv~.lopmr.iitof
thc <lepusi13 ;and for tlic construction niid developmentuf tlic pipcliiic:s
sliill t.iitci Persia frcc of al1t:isc.î nrirlcustom-liousc diitic;.
The Concessionnaire shall immediately send out to Persia and at his
own cost one or several experts with a view to their exploring the region
in which there exist, as he believes, the said products, and in the event
of the report of the expert being in tlie opinion of the Concessionnaire
of a satisfactory nature, the latterhall immediately send to Persia and
at his own cost ail the technical staff necessary with the working plant
and machines. required for boring and sinking wells and ascertaining
the value of the property.
ARTICLE g
The Imperiai Persian Government authorizes the Concessionnaire to
found one or several companies forthe working of the Concession.
The names, "statutes" and capital of the said companies shall be iked
by the Concessionnaire, and the directors shall be chosen by him on
the expresscondition that on the formation of each company the Conces
sionnaire shall give official notice of such formation to the Imperial
Government through the medium of the Imperial Commissionerand shaii
fonvard the "statutes" with information as to the places at which such
company is to operate. Such company or companies shall enjoy al1 the
rights and privileges granted to the Concessionnaire, but they must
assume al1his engagements and responsibilities.
ARTICLE IO
It shall be stipulated in the contract between the Concessionnaire of
the one part and the Company of tlie other part-that the latter is within
the term of one month as from the.date of the formation of the first
exploitation company to pay the Imperial Persian Government the jum226 AXSEXES TO U.K. hlE>IORIhL (NO. 3)
of [zu,ouu sterling in i:iîti:ind an :idditionnl sum of t2o.000 sterling in
paid-III)iliares uf tlic firit c,>inyaiiyiutiiided by virtuc of tlie furegoiiig
Article. It sIia11also lia) tlie said (;uvernment :iiinu:il;iitiin equ:il to
16 per sent uf tlic annti:iI net profits of an!. cornplny or coiiip:inies thnr
ma) hc foinie11 iii;ici.t,id.ii\vit1the stiid Articlr.
Tlie said Government shall be free to appoint an Imperial Commis-
sioner who shall be consulted bv the Concessionnaire and the directors
of the comnanies to be forined. H~ ~hall -u~nlv al1 and anv useful
informationrat his disposal and he shall info; them of the begt course
to be adoutcd in the interest of the undertakine. He shall establish bv
aereemeni kith the Concessionnaire sucli suoe&ision as he mav deem
expedient to safeguard the inter& ofthe lkperial ~overnmen<
The aforesaid Dowersof the Im~erial Commissioner shall be set forth
in the "statutes"*of the compauieç'to be created.,
The Concessionnaire shall pay the Commissioner thus appointed an
annual sum of Lr,ooo sterling for his services as from the date of the
formation of the first Company.
The workmen employed in the service ofthe Company shall be subjects
of His Imperial Majesty the Shah, except the technical staff such as the
managers, engineers, borers and foremen
At any place in which it may be proved that the inhahitants of the
country now obtain petroleum for their own use, the Company must
supply them gratuitously with the quantity of petroleum that they
themselves got previously.
Such qnantity shall he fixed according to their own declarations,
subject to the supervision of the local authority.
ARTICLE 14
The Imperial Government binds itself to take al1 and any necessary
measures to secure the safety and the carrying out of the object of this
Concession. of the plant and of the apparatuses of which mention is
made for the purposes of the undertaking of the Company and to pro-
tect the representatives, agents and servants of the Company. The
Imperial Government having thus fulfilled its engagements, the Conces-
sionnaire and the companies created by Iiim shall not have power under
any pretext whatever to claim damages from the Persian Government.
ARTICLE 15
On the expiration of the term of the preseiit Concession, al1rnaterials,
buildings and apparatuses then used by the Company for the exploi-
tation of its industry shall become the property of the said Govem-
ment, and the Company shall have'no riglit to any indemnity in this
connection. AXNEXES TO U.K. MEXORIAL (NO.3) 227
If within the terin of two years as from the present date the Coiices-
sionnaire shall not have established the first of the said companies
authorized by Article 9 of the present Agreement, the present Concession
shall become nul1ancl void.
In the eventofthere arising between the parties to the present Co!ices-
siou any dispute or difference in respect of its interpretation or thenghts
or responsibilities of one or the other of the parties therefrom resulting,
such dispute or difference shall be submitted to two arbitrators at
Teheran, one of whom shall be named by each of the parties, and to an
Umpire who shall be appointed by the arbitrators before they proceed
to arbitrate. The decision of the arbitrators or, in the event of the latter
disagreeing that of the umpire, shzll be final.
ARTICLE 18
This Act of Concession made in duplicate is written in the French
language and translated into Persiari with the same meming.
But in the eveot of there heing any dispute in relation tosuchmearii?g,
the French text shall alone prevail. Teheran Sefer 1319 of the Hegire,
thpt is to Say May xgor.
(Signed)\~ILLIAM KNOXD'AKcY,
By his Attorney,
(Signed) ALFREDL. MAR RIO^.
Certiiïed that the above signatures were affixed in my presence at the
British Consulate General at Gulaket near Teheran, on this 4th day of '
the month of June 1901 by Alfred Lyttelton Marriott, Attorney of
William Knox D'Arcy, in accordance with the Notarial Act dated
zrst March 1901, and seen by me.
(Signed) GEORGEGRAHAME,
Vice-Consul.
Here follows in English.
Certified that the writing in the Persian and French languages, on
this and the preceding sevcn pages were registered in the Archives
(Register Book) of H.Rl.'s Legation, Tehran, on pages 117 to 124,on the
5th June 1901.
Dated at Gulaket near Tehran this 6th day of June 1901.
(Signed) GEORGEGRAHAME.
Vice-Consul. ANNEXES TO U.K. MEMORIAL (No. 3)
LETTER OF 29th AUGUST 1920 FROM THE UNDER-SECRETARY OF THE
PERSlAN MINISTRY OF FINANCE AFPOINTING SYDNEY ARMITAGE ARMITAGE-
SMITH, ESQ.. C.B.,AS "REPRESENTATIVE OF THE IMPERIAL GOVERNMENT
TO FINALLY ADJUST ALL QUESTIONS IN DISPUTE BETWEEN THE ANGLO-
FERSIAN 01~ COMPANY AND THE IMPERIAL GOVERNMENT OF PERSIA"
This lettcr was written in French and its text is given below.
' Téhbran, le 29 août 1920. ,
N" 18059
Monsieur,
J'ai l'honneur de vous notifier que par la présente vous êtesnommé
comme représentant du Gouvernement impérial pour régler définitive-
ment toutes les questions en litige entre The Anglo-Persianl Company
et le Gouvernement impérial de Perse.
Dans le cas où vous jugerez qu'un accord amical sur toutes les ques-
tions pendantes, de nature à satisfaire entiérement aux droits et aux
intérêtsde la Perse, ne soit possible, vous avez L'autorisation d'avoir
recours à l'arbitrage au sujet des revendications du Gouvernement
impérial contre la compagnie et d'admettre égalementcemême procédé,
si ladite compagnie en exprime le désir, concernant ses propres reven-
dications.
Pour le hlinistre des Finances,
Le Sous-secrétaire d'État,
(Signé EISSA.
S. E. Monsieur S. A. Armitage-Smith, C. B.,
Conseiller financier du Gouvernement
impérial de Perse.
[Translation]
Tehran, the 29th August 1920.
No. 18059.
Sir,
1 have the honour to notify you that you are hereby appointed as the
representative of the Imperial Govemment to finally adjust al1questions
in dispute between the Anglo-Persian Oil Company and the Imperial
Government of Persia.
Should you think that an amicable arrangement in relation to al1
questions pending, of a nature to fdy satisfy the rights and interests
of Persia, is not possible, you are authorized to have recourse to arbi-
tration in connection with the claims of the Imperial Government ANNEXES TO U.K. MEhlORIAL (NO.3)
zz9
against the Company, and also to agree ta this same procedure if.the
Company expresses the wish therefor with regard ta its own clams.
For the Fiance Minister,
The Under-Secretary of State,
(Signed) EISSA.
To His Excellency Mr. S. A. Armitage-Smith, C.B.,
Financial Adviser of the Imperial
Government of Persia
Appendiz No. 4 to Annex 3
AGREEMENT CONCLUDED ON zznd DECEMBER 1920 BETWEEN THE ANGLO-
PERSIAN OIL COMPANYL , IMITED, AND SYDNEY ARMITAGE ARMITAGE-
SMITH, ESQ.,C.B., AS REPRESENTATIVE OF THE
IMPERIAL PERSIAN GOVERNMENT
Agreement dated December zznd one thousand nine hundred and
twenty between the Imperial Persian Govemment and the Anglo-
Persian Oil Company, Limited, with respect ta determining the manner
in which the annual sum or royalty payable to the Persian Governinent
under the D'Arcy Concession dated in May one thousand nine hundred
and one shall as from the thirty-first March one thousand nine hundred
and nineteen be ascertained.
Definilions
In this Agreement, unless the context otherwise requires, "Persian
Oil" shall be deemed to mean oil won pursuant to the said conceçsion
within the temtory of the Persian Empire covered by the concession
and any product of such oil.
"The Government" means the Imperia1 Persian Govemment.
"The Company" means the Anglo-Persian Oil Company, Limited.
"Subsidiary Company" shall be deemed to mean (a)any company
of which "the Company" owns whether directly or through some ?the1
subsidiary company a number of shares sufficient to give to "the Lam-
pany" the control of more than fifty per cent of the total votes which
can be cast at a general meeting of shareholders of such company; (4)
any company more than one-half of the directors of which are nominated
or appointed by "the Company" and/or by any subsidiary comp:tny
and in addition in the case of shipping companies; (c)any company
which is managed by "the Coinpany"; "a controlling interest" is the
interest of "the Company" in a subsidiary Company.
Article I.-Subject to the conditions, limitations and exceptions
hereinafter mentioned, the Imperial Persian Govemment (hereinafter
referred ta as "the Government") is entitled to receive from the Anglo-
Persian OilCompany, Limited (hereinafter referred as"the Compaiiy"),
the royalty of sixteen per cent of al1the annual net profits arising from
the winning, refining and marketing of Persian oil, whether al1the stages 230 ANNEXES TO U.K. >IE~IORIAI XO. 3)
of the above processes be handled by the Company itself or through
siihsidiary coinp:inics or by ine:ins of pooliiig silivines or ottier :irrangc-
mcrits. ;ind \vIiethcr flic refiiiing :ind rn;irk~tiiig t;ikc,s ~,l;iccnitliin the
I'crsian Enipire or iiot, iut>lirct:il\iritv tlitsiiiglv csi.iptiuii tliat the
Govemment is iiot to receive royalty on the profits ansing from the
transporting of oil by means of ships, but subject to the conditions and
limitations hereafter mentioned, thc profits however arising from the
employment of lighters and othcr small craft in the Persian Gulf will
be subject to the above-mentioned royalty.
Article -.-In ascertaining the net profits arising from Persian oil,
freight costs \vill, when the oil is carried in tankers of "the Company"
or of any subsidiary company, be based upon thc ordinary market time
charter rates for tankers similar to those employed in carrying the oil,
irrespectivc of the freights actually paid, such time charter rates to be
fixed year by year on the first day of Apnl for the ensuing twelvc months
at the rate current on that date.
For the purpose of computing such freight costs, voyage rates shall
be charged based on the time charter rates and full account shall he
taken of :il1other freight earned hy thc shi s during the voyage in
question. If at any time during the months O PJanuary, February and
March in aiiy year either of the parties hereto shall give notice in writing
to the othor that in the opinion of that party there is no free market in
time chartcrs for oil tankers, then, failingagreement between the parties,
that question and if it be decided in the affirmative also the question
of what will he a fair and proper rate of freight to be charged as from
the first d:~yof April next following the giving of such notice against
Persian oil for the purposes of this Agreement shall be submitted to a
single arbitrator whose decision shall be final. Such arbitrator shall, in
default of agreement between the parties, be nominated by the President
for the time being of the Chamber of Shipping in London. As regards
the royalty accounts for the years ending thirty-first March one thousand
nine hundred and twenty and thirty-first March one thousand nine
ture of this Agreement agree rates or, failing agreement within threegna-
months of the date hereof, rates shnll be settled by an arbitrator as
above provided.
Article 3.-The provisions of this and the next following Article of
this Agreement shall apply to subsidiary companies refining, distnbuting
or dealing with Persian oil outside Persia, and to any other company
refinina. distributine or dealine with Persian oil outside Persia where
the C8rn[i.iny" is able to proci;;c the iieccsrlq~ accoiints to I)e prcpared
hy siich coinl,nn!. and tliï necess:in facilitics for insliri.tiori hi.givcn
hy siich coni1i:~riytoth? Çovcniiiiciit.111tlic asi: of an). coml);iny to
sirhichtliis clniisc q~l~lics,th,: follo\i~iiigdediictions ;hall I)c mndc from
thc net profits ascertaincd as hcrenftc.r l>ro\,idcdon \rlii~,tiruy;ilty is to
be calcuïated before computing the amount of the royalty, viz. :
(a) In the case of refining companies :
A di:duction of six shillin., D.r ton in resuect of the first thrce-
(~iixrtus ul n riiilliuii tuiis throiiglipiit of I'eriion oil 1)c.rannurii, a
dcduction of fivesliilliiinii<lsixpence pcr toi1on ,111tliroiiglil>iitof
I'ersi:iiioil bct\\.een tlirrc-qii;irter:iinillion tons 2nd onc milliori ANNEXES TO U.K. MEIIIORIAT. (SO. 3) 231
tons per annum, and a deduction of five shillings per ton ou all
throughput of Persian ail in excess of one million tons per annnm.
(b) In the case of distributing companies :
Quantities of Rate of deduction
Persian oil per gallon,
distributed by a per Pound,or
Qualities single company $er ton of
in any yenr Persian oil
Tons
Kerosene . . . . . . . 150,000 Sd. per galion
Spirit . . , , . . . . 200,000 1d. . .,
Liquid fuel . , . . . . 300,000
Gas oil . . . . . . . 2g.000
Lubricants and al1other oils
not otherwise specified . 20,000 ' rd.
Wax and candles . . . . 4.000 id. pcr'ib.
Pitch . . . . . . . . 50,000 2s. 6d. per ton.
Medicinal oils . . . . . 100 6d. per gallon
In the event of the quantities of any quality distnbuted by any
company exceeding the quantities above stated by not mure than
fifty per cent, then the rate of deduction on such excess for that
. quality shall be reduced by one-eighth, and, in the event of the
quantities of any quality distributed by any of the companies
exceeding tof deduction on such excess over fiftv Der cent for.that
quality shall be reduced by one-quarter. . .
(c) The above deductions shall be made from the total net profits of
any company arising from Persian oil beforecalculating the royalty,
and if such deductions more than absorb the whole of the profit,
then any deficiency so caused shall not be carried forward to any
subsequent year and ariy-such deficiencyin the case of one company
shall not be set against the net profit in the case of any other
company. PROVIDED ALWAYS that such deductions shall only be
made once for refining in respect of any quantity of ail and once
for marketing. distributing or dealing with any "quality".
Article 4.-In cases where a refining or distributing company,to
which this Article applies handles other ail or oil products in addition
to Persian oil, the net profits on Persian ail on which royalty is to be
paid shall be ascertained each year as follows :
(a) In the case of refining companies :
I. When the refining Company does not buy the oil but refines the
oil for payment, then the cost of refining Persian oil (including
a proper proportion of overhead charges other than those which
are not chargeable under this Agreement) shall be ascertained
as nearly as possible from the books of the refining company, ;and
the net profits attributable to Persian ail shall be obtained by
2. When the refining company purchases the oil, then the actualch oil.
price paid by the refining company for the Persian oil refined
during the year shall be ascertained from the books.232 ASSEXES TO U.K. 31EhlORIAL (SU. 3)
The cost of refining the Penian oil (including such overhead
charges as aforesaid) will be ascertained as nearly as possible
from the books and added to the said price, and the total will
be deducted from the selling value of the products ofsuclirefining,
the balance being the profit or loss on Persian oi;for the piirpose
of ascertaining the selling value of the refined products from
Persian oil the total quantities of the refined products from
Persian and other oils shall be ailocated betweeii I'ersian and
other oilon the basis of thc respective outputs from the respective
crude oils if refined separately. If Persian and other crude oils
are mixed for refiningpurposes, then the allocation shall.be made
on the basis of the quantities of each class so refined, and thc
respective qiialities as determined by chemical analysis. The
selling value of refined products sold during the year shall be
taken at the prices realized. Refined products not sold during
the year shall be taken at the prices sobsequently realized.
(b) In the case of distributing companies :
Thc prices realized for Persian and other oil products distributed
during any year shall be kept separately,and there shall be deducted
therefrom in each case the price paid for such products by the
distributing company in order to amve at the respective gross
profits on Persian and other oils.
bution oftaal1 classes of oil during the year shall be ascertained as .
hereiiiafter provided (Article 7), and shall be apportioned between
Persian and other oil in proportion to the respective gross profits
ascertained as aforesaid.
In cases where a coinpany both refines and distributes oil, the
accounts of sucli company for the purposes of this Agreement shall
be mide out as if the two branches of the business were carried on
by separate companies.
"The Company" shall keep and shall procure that al1 companies to
which this and the preceding clause apply shall keep proper books of
account and other records to enable the necessary calculations of costs
and profits to be made for the purposes of this Agreement.
Article 5.-(a) In the case of any subsidiary company in which the
Company holds the whole of the share capital, the total net profits
arising from Persian oil (amved at in accordance with this Agreement)
shall be iricluded in the royrilty statement, subject to and shewing the
deductions provided for in Clause 3. In the case of any other subsidiary
company or of any other company to which the provisions ofArticles 3
and 4 apply, the net profits arising from Persian oil shall be determined
in accordnnce with this Agreement, but the Government shall only bc
entitled in respect of any year to royalty on a proportion ofhenet profits
from Persian oil for such year after making the deductions provided
for in Clause 3, bearing the same relation to the whole of such profits
as the proportion of the whole profits of such company for such year
which "the Company" would receive in respect of its shareholding or
otherwise if the whole profits were distributed bears to the whole of
such profits. If "the Company's" interest in any company has been
increased or diminished during any year, then an allowance shall be ANNEXES TO U.K. ME~IORIAL (NO. 3) 233
made in respect thereof, having regard to al1 material circumstances.
(b) In the case of companies in which "the Company" is interested
but to which Articles 3and 4do not apply,"the Company" shall include
in the statement of net profits on which royalty is to be calculated a
fair commercial profit in respect of al1Persian oil sold to any such other
company, having regard to the period of the contract, the quantities
and qualities of oil to be supplied and al1 other terms of any material
agreement. Any difference as to what is a fair commercial profit shall be
referred to arbitration as hereafter provided.
Article 6.-A11 directors' fees and office charges of "the Company"
shall be allocated fairly as between "the Company" and al1 subsidiary
companies as may be agreed by the parties or as may be settled by
arbitration.
Article ?.-The net profits of "the Company" and of subsidiary
companies or otlier companies to which Articles 3 and 4 hereof apply
shall be taken for the purposes of this Agreement to be the net profits
for each year as adjusted for income tax purposes, subject to the following
conditions, viz :
(i) Any adjustments made in respect of any penod prior to thirty-
first March one thousand nine hundred and nineteen shall be
excluded.
(ii) Depreciation shall only be allowed to the extent to which it
may be allowed for income tax purposes and shall not include
any sums in respect of depreciation camed forward from ziny
penod prior to thirty-first lvfarch one thousand nine hundred
and nineteen.
(iii) No deduction shall be made in respect of excess profits, duty
corporation profits tax, income tax or any other taxation of a
similar nature imposed by the British Govemment or by ziny
Colonialor Foreign Government (other than the Persian Govern-
ment).
IV) Xo deductions shall be made from the profits for interest or
' dividends of any descriptioii paid, and interest and dividends
received shall be excluded from the profits on which royalty is
payable.
IV) Where for the purposes of this Agreement it is necessary to
dctermine the profits of any company which is not liable to
British taxation,the profits of that company shall be determined
a3 nearly as may be in the same manner as they would be if the
conipany were liable to British income tax.
(vi) No deduction shall bc allowed in respect of royalty payable
under this Agreement by "the Company" or any subsidiary
company, and no deduction shall be allowed in respect of
payrnents relating to dividends guaranteed by the Company,
except in so far as sucli dividends arc themselves brought into
account as Dart of the rcceiuts of some other comp. . on which
royalty is kalculated.
(vii) No deduction shall be made in respect of the annual value of
lands and buildings owried and occupied under Schedule A.
(viii) The net profits and losses for each year ascertained as aforesaid
(and subject to the provisions relating to deductions referred ANXEXESTO U.K. \IEMORIAL (30. 3) 235
As Witness the hands of the respective duly authorized representatives
of the Government and the Company the day and year first nbove
written.
Signed by Sydney Armitage
Armitage'Smith, the Financial
Adviser to the Imperial Persian
Government for and on behalf of
the Imperial Persian Government
in the presence of
(Sgd.) WILLIA~INCLINTOCK, (Sgd.) SYDSEYAR~IITAGB
Chartered Accountant, ARMITAGE-S~IITH.
Bond Court House,
Walbrook, London.
Signed by Forand on behalf of the Anglo-
for and on. behalf of the Anglo- I'ersian Oil Company, Limiteii.
Persian Oil Company, Limited, in
the presence of
(Sgd.) FREDG.'WATSON, (Sgd.) C. GREENWAY,
23, Gt. Winchester St., Chairman.
London, E.C.2, F. MACINDOE,
Solicitor. Secretary.
Appendix No. 5 lo Annex 3
LETTER, DATED 27th NOVEMBER 1932, FROM THE PERSIAN MINISTER OF
FINANCE TO THE RESIDENT DIRECTOR IN TEHHAN OF THE ANGLO-PERSIAN
OIL COMPi\NY
The Anglo-Persian Oil Company has heen repeatedly informed by
the Persian Government that the D'Arcy Concession of 1901 does not
to place relations between the Imperial Persian Government and theessary
Persia. The deircts aiid shortcomings of the D'Arcy Concession andof
its disagreement with Persian interests have been repeatedly pointed
consider itself hound to the provisions of a concession which was granted
prior to the establishment of a coiistitutional régime in vieiv of the
time. However, the Persian Governmeiit, in the hope that the Company
would take into consideration the needs of the' time and the vresent
positioii of I'crsin ariil srciirc lier iiit~iiinccordaricc i\.ilIi those
nceds, has so far refrairic.dfri>niésérzisingirs righrs rocarice1clic1l':lrcy
Conci.s5ion. Cnforruiiarrl~. in rhz Lice of tlie v~tii:iicr disrilaveci bv
the Persian ~overnmencthe Company not only took nô p;acticd
steps to protect the interests of Persia, but the more the Company's
espansion increased the more Persiaii interests were endangered.236 ASKEXES TO U.K. UE\LORIAL (NO.3)
Therefore the Persian Government has lost hope of achieving the object
in view by means of negotiations with the Company, and therefore
the only aay to safeguard its rights is by a cancellation of the D'Arcy
Concession, and tliis hliiiistry, in accordance with the decision of the
Persian Government, has to notify you that as from this date it
has cancelled the D'Arcy Concession and will consider it void. .4t the
same time, as the Persian Government has no other intention except
to safeguard Persiaii interests, should the Anglo-PersianOil Company
be prepared contrary to the past to safeguard Persian interests, iii
accordance with the views of the Persian Government, on the basis
of equity and justice, with the necessary security for safeguarding '
those interests, the Persian Government will not in principle refuse
to grant a new coiicessioii to that Company.
(Signed) HASANTAQIZADEH.
LETTER, DATED 29th XOVEMBER 1932, FROM THE HESIDENT DlRECTOK
IN TEHRAS OF THE :\NGLO-PERSIAN OIL COhlPANY TO THE PERSlAh'
DLlXISTER OF FINANCE
1have by telegrain subniitted to the Directors of the Anglo-Persian
Oil Company in London the text of Your Excellency's letter dated
the 27th November. 1 am instructed respectfully to inform your
Excellency that tlie Company does not admit that the terms of the
D'Arcy Concession do not protect the interests of the Persian Govern-
ment, nor do they admit that even if that were the case the Govern-
ment has the right to cancel the Concession.1 may remind Your Excel-
lency that the validity of the D'Arcy Concession has been recognized
by successive Persian Governments before and alter the establishment
of the constitutional régime, ~iot only by acceptance for many years
of the royalty provided for therein but also in many other ways. You
will understand that the Company cannot recognize the right claimed
by the Persian Goveriiiiient to cancel the Agreement, such contention
having no foundation either in law or in equity. 1 ain instrncted to
remind Your Excellency tliat, relying upon the good faith of the Persian
Government and tlie riglits conferred upoii the Company by the Con-
cession, tlie Company has expended in Persia many millioiis of pounds
sterling. The beiiefits receiaed by the l'ersian Government from tliis
expenditure cannot be ignored in considering whether the terms of
the Concession are fair to the Government, nor can tliey be ignored
in any discussions between the Government and the Company which
are to be based on equ/ty aiid justice. The Company takes the strongest
exception to the statements in Your Excellency's letter that the Com-
pany has failed to take into consideration the needs of the time and
the present position of the Persian Goveriiment. The Company has
at al1 times shown itself willing by friendly negotiations to endeavour
to meet the views and tlie iieeds of the l'ersian Government. aiid so
far as accord has not been reached the failure has certainly not beeii
due to any want of effort or goodwill on tlie part of tlie Companv. The ASSEXES TO U.K. AlE>IOHIAL (su. 3) 237
Company must point out that the publication of the Government
announcement in the press will have most damaging repercussions on
the Company's business, and the Directors venture to hope that on
further consideration thc Government will immediately withdraw this
announcement.
For Aiiglo-Persiaii Oil Co., Ltii.,
(Signed) T. L. JACKS,
Kesident Director.
Afipendix No. 7 IoAnnex 3
LETTER, DATED 1st DECEMBER 1932, FROM THE PERSIAN MINISTER OF
FINANCE TO THE RESIDENT DIRECTOR IN TEHRAN
OF THE ANGLO-PERSIAN OIL COMPANY
In reply to your letter of 29th November, 1 deem it necessary to
state that the Persian Government does not admit the statements
and reasons as mentioned in the said letter and considers itself entitled
with sufficient reasons to cancel the D'Arcy Concession and that it
remains its final decision which has been communicated under this
Ministry's letter of 27th November.
(Signed) HASAN TAQIZADEH.
Appendix No. 8 Io Anptex 3
NOTE, DATED 2nd DECEMBER 1932, PRESENTED BY HIS BRITANNIC
MAJESTY'S MINISTER IN TEHRAN TO THE IMPERIAL
PERSIAN GOVERNhIENT
(1) His Alajesty's Government in the United Kingdom have taker~
cognizance of the terms of the letter addressed by the hlinister of
Finance to the Resident Director of the Anglo-Persian Oil Company
on 27th November. His Alajesty's Government consider the action of
the Persian Government in cancelling the Company's concession to
be an inadmissible breach of its terms ;they take a most serions view
of the conduct of the Persian Government, and bave instmcted me
~ ~~emand the immediate withdrawal of the notification issued to the
Company.
(2) Furthermore, 1 am directed to state that, while His Majesty's
Government still hope that the Persian Government will be at pains
to reach an amicable settlement in direct negotiations witb the Com-
pany, His Majesty's Government will not hesitate, if the necessiFy
aises. to take al1 leeitimate measures to orotect their iust and iridis-
putabie interests.
(3) Finally, 1 have the honour to state that His Majesty's Goverii-
ment will not tolerate any damage to the Company's interests or inter-
ference with their premises or business activities in Persia.238 AXNEXES TO U.K. MEIIORIAL (NO. 3)
Appeizdix No. g to Annex 3
NOTE, DATED 3rd DECEMBER 1932, PRESENTEU BY THE PERSIAN
MINISTER FOR FOREIGN AFFAlRS TO HIS BRITANNIC . .
MAJESTY'S MINISTER IN TEHRAN
Iii reply to your respected note of 2nd December, 1 have tlic lionour
to state :
(1)The Persian Government regards itself as within its rights in
cancelling the D'Arcy Concession and does not agree to withdraw the
note of the Alinister of Finance to hlr. Jacks, the Director of the Anglo-
Persian Oil Company, announcing the cancellation of the Concession.
The Imperial Persian Government is of opinion that for some time past
it has been entitled to take steps to cancel the D'Arcy Concession
and for a long time past the Persian Government ha5 repeatedly pointed
out the fact that the stipulations of the above-mentioned concession
are not in accord with the legitimate interests of Persia, and that it
bas not been satisfied with the situation arising froin thc above-
mentioned Concession and within the conduct of the Anglo-Persian
Oil Company; but, in the Iiope that the above-mentioiied Company
would be prepared to ameiid their ways so as to satisfy the mind of
the Government in the desired manner, it has waited in patience.
(2) As the hlinister of Finance has poïnted ont in the note announciiig
the cancellation of the D'Arc? Concession to the Anglo-Persian Oil
Company, the Persian Covernment has not refused to enter into direct
discussions with the above-mentioned Company with a view to the
negotiation of a new concession which would safeguard in an equitable
manner the rights and interests of Persia ; hence the attainment of
the desired result in this matter depends upon the good faith which
the Company shows in this respect.
(3) In reply to paragraph 3 of your respected note,1 have the Iionour
to state that the Persian Government does not regard itself as respon-
sible for any damage accming to the Company, and responsibility for
any damage which the Conipaiiy may possibly suffer will rcst on the
Company itself.
ApPendix h'o. IO to Aiznex 3
NOTE, DATED 8th DECEMBER 1932, PRESENTED BY HIS BRITANNIC
MAJESTY'S MINISTER IN TEHRAN TO THE IMPERIAL PERSIAN GOVERNMEXT
(1) His Majesty's Government in the United Kingdom have had
under consideration Your Excellency's note of 3rd Decembcr, replying
to my note of 2nd December in regard to the Persian Government's
cancellation of the Anglo-Persian Oil Company's Concession. 1 have
the honour to inform Your Escellency that His Alajesty's Govern-
ment are unable to adniit the validity of a unilateral cancellation of
this Concession. Such a cancellation is a confiscatory measure and a
clear breach of international Inw committed against a British com-
pany, and His Alajesty's Covernment feel obligcd to take the matter
np in the evercise of their rights to protect the interests of their nationals.
His Majesty's Government have from the outset, as pointed out in ANNEXES TO U.K. MEMORIAL (NO.3) 239
my. note of 2nd December, and as repeated in the statement made
by the Under-Secretary of State for Foreign Affairs in the House of
Commons on 5th December, been anxious that an amicable settlement
may be reached between the Persian Government and the Anglo-
regard the Persian Government's note of 3rd December as offering
any satisfactory basis for such a settlement. As 1 explained on
2nd December, His Majesty's Government consider the action of the
Persian Government in cancelling the Concession to be an inadmissible
breach of the terms of that instrument, and have therefore requested
the withdrawal of the notification to the Company of 27th November.
Since the Persian Government in their reply adduce no argument
which can be regarded as in any way justifying their action, His
Majesty's Government must reiterate their request.
(2) Should the Persian Government be unwilling to withdraw their
notification of the cancellation of the Concession within one week
from the date of the oresent note. i.e. Thursdav. 15th December. His
>lajcjty's Govcriirneiit'\i~illIi;ivr:iio':,lrr.rn;~tivcbit r&zrring rhc dispurc
whicti tins ariszn I>ct\r,eenttieiii aiid tlie Pcrsian (;o\.crnmciir in regard
to tlie leralit\, of the I'crsian Govi.riinicnt's :ictioii to tlic I'eniinnenr
Court of 7nte;national Justice at The Hague, as a matter of urgency.
under the Optional Clause. In so doing, His Majesty'sGovernment would
request the Court to indicate, under Article 41 of the Statute, the
provisional measures which ougbt to be taken to preserve their riglits.
(3) Further, 1 am instructed to state that my Government do not
that the Persian Government cannot regard themselves as responsibleect
for any dama e accruing to the Company. On tlie contrary1 have the
honour to in orm Your Excellency categorically that His Majesty's
Government will hold the Persian Government directly responsible
for any damage to the Company's interests, any interference aith
their preinises or business activities in Persia, or any failure to afford
the Company adequate protectiori, and, in the event ofany such damage
occurring, His Majesty's Government will regard themselves as entitled
to take al1 sucli measures as the situation may demarid for that Corn-
pany's protectiori.
Appendix Nu. II lu Annex 3
IN TEHRAN
In reply to Your Excellency's note of 17 Azar, 1311 (8th December
1g3z), No. 604, whicli \vas a 1-eplyto my note of rz Azar,1 have the
honour to communicate to you the following :
The first paragraph of Our note concludes by stating that the
Persian Governmerit lias a2duced no argument \\,hich can be regardcd
as inany way justifying its action in cancelling the D'Arcy Concession,and that His Britannic hlajesty's Goveriiment must therefore reiterate
its request for the withdrawal of this cancellation.
In reply, 1 wish to state that the Persian Government has several
times indicated the causes of its dissatisfaction with the action of the
Company holding the Oil Concession, and 1 thought it unneccssary
to repeat them. 1 need hardly Say that, should the Persian Government
be unahle to conclude a new and satisfactory agreement with the
Company, and should it think it necessary, in order to uphold its right
to denouiice the D'Arcy Concession, to refer the case to a court, it
would not hesitate a moment to submit its arguments in detail.
The Persian Government has always displayed good faith in tliis
question, and it was with the best intentions that, in its previous note
concerning the denunciation of the D'Arcy Concession, it refrained
from going into details. It is regrettable that this repugnance of the
Imperial Go\sernmeiit to embark upon discussions and arguments has
been interpreted hy the British Government as a proof that the Persian
GovIn order that His Britannic Majesty's Government should not think
that the Imperial Government refuses to give the reasons that have led
it to canci:l the contract, 1 shall briefly iiidicate a few of them belo:
Not only was the D'Arcy Concession incompatible in itself with the
interests of Persia, whose legitiinate rights have been disregarded. but
the Concession was granted at a time when the interests and welfare
of the country were unfortunately not taken into consideration in
drawing iip contracts of this kind, and when those who wished to
obtain them took great advantage of the ignorance of the authorities
in charge. Furthemore, in order to ohtain these concessions, al1 sorts
of threats and pressure were used at the time, and, as a result of these
threats and this pressure, the authorities that granted concessions
were unable to refuse them.
Your Excellency and His Britannic Rfajesty's Government will no
doubt admit that the world to-day attaches no value to contracts
obtained iii tliis way and does not consider them as binding on their
signatories.
relations with the Persian Government, did not even observe the stipu-
lations of the Concession, which was already so detrimental to Persia.
The Company has failed to respect tlie rights of the Government as
laid down in this burdensome and obsolete Concession. In doing so,
it has infringed the rights of the Persian Government.
As an example 1 may quote the following fact :
Under the D'Arcy Concession, the Company was to pay tothe Persian
Governmr:nt 16 per cent of al1 its profits and of those of al1 its
subsidiaries without exception. The logical result of this stipulation
was to give the Persian Government the right to supervise the expen-
diture wliich was to he deducted from the Company's gross profits
in order to arrive at the amount of tlie net profits, and also the right
to express its opinion on tlie justitication of this expenditure. Other-
wise. Persia ran the risk of sufferine continual reductions in the rAvaltA
which was due to her.
Unfortiinately, the Company, which has been conspicuous by its
prodigality and extravagance, has never consented to the I'ersian ASSEXES TO U.K.XEMORIAL (NO. 3) 241
Government's having a right of supervision over the operating expen-
diture before the payment of its royalty.
1 do not wish to expatiate on the fact that the expenditure, for the
most part unjustified, in which the Company indulged, has a very
great effect on the royalty accruing to the Persian Government and
reduced it to a ridiculously small amount.
More than this. the Comi~anvhas never hitherto submitted to the
I1crsinriGi~ii.riiiii~iitor its r~l>r~sriitcn!, iictnilt!<laccounts or otlier
~:vidcnccof itirxpi.ii<litiir~:.nofdthe cs1,cndittirc o;IIirssut>sidi:irics.
\i,hiili \voiil~lcn;ible [lie t'crsi:iii Go\~erniii~:ntto c:licik tlic (:nlciilntion
of its royalties.It has also refused, contrary to the express conditions
of the contract, to pay the Persian Government its share in the profits
earned bv its subsidiaries. It has further manted to some of its subsi-
diarics I:irge siibsidies taken froin its ~~rofitsi.iicliiiiinjithcsc sums in its
accoiirits as exjienditiirc :ind tliiis :ipprrciablv diminisliing tlie I'crsi;iri
Go\~ernment'sslinre. (:oiisi~iiut.ntl\~t.he Como:in\.linsin:inifrstlv violatcd
the clauses of the on cessi anyn has theriby'caused the ~kernment
considerable loss.
1could mention many other circumstances in which the Company has
shown a lack of sincerity in its relations with the Persian Government.
If Your Excellency will refer to the reportssubmitted by various British
experts, you will find that on numerous occasions the Company has
acted in such a wav as to iniure Persia's interests.
Another proof that the c&nI>any has not respected the stipulations
of the D'Arcv Concession is ~rovided bv the followint?facts :
Although, &ring the ~re& War, th' price of oil and of oil products
constantly rose and the demand grew greater and greater (Persian oil
being considered asan important factor in the Alliedfleets);and although
the sale of Persian oil at world rates brought the Company enormous
profits, the Company, despite the explicit terms of the Concession,
failed to pay the Persian Government the sums which were its due, thus,
in practice, completely invalidatin~ the contract.
The Persian Goveriment has ofi various occasions endeavoured to
recover these royalties and to secure a settlement of the accounts of
arrears, but without obtaining any satisfactory resiilt.
Your Excellency is also aware that, under the D'Arcy Contract, the
Comj~anywas not entitled to any exemption from taxation in Persia
to al1the laws of the country. Customs taxes) and that it was subject
and although the Company was bound to submit to the laws of the (1930)
country, it has hitherto refused to pay the tax in question and has thus
shown its contempt for the laws of my country.
1 have no need to inform Your Excellency of the development of the
Company, of its present expansion and of its wealth. This wealth is
obviously derived from Persian soil. Nevertheless, if the profits obtained
by the Persian Government are compared with those of the Company,
it willbe seen to what extent tlie interests of the Persian State have been
sacnficed, in what an nnjust manner the country has been deprived of
its revenue, and how the Company has employed the wealth extracted
from Pe~ia in foreign oil undertakings, thus endangering the future of
Persian oil.2# ANNEXES TO U.K. MEHOKIAL (NO. 3)
Members of the League of Nations, and consider themselves within
their rights in bringing ta the notice of the Council of the Leagile of
Nations thc threats and pressure which have been directed against them.
(Signed) M. A. FOROUGHI.
Appendix No. 12 to ilnnex 3
LETTER, IIATEI) 14th DECE~IBER 1932. FI<OM THE UNITED KINGDOM
GOVERNMIiNT T0 THE SECRETARY-GENERAI. OF THE LEAGUE OF NATIONS
Sir, Geneva, 14th December 1932.
On behalf of His Majesty's Government in the United Kingdom, 1
request that you will insert on the agenda of the Council the follo\r,ing
item :
"Dispute which has arisen between His Majesty's Govcriiment
in th,: United Kingdom and the Imperial Govemment of Persia in
consequence of the Persian Government's action in purporting to
cancel the concession held by the Anglo-Penian Oil Company, a
British company."
1am to express the hope that the Council may be able to take this
matter into consideration at a very early date.
(Signed) JOHS SI&ION.
Appendix No. 13 to Annex 3
TELEGRAM ,ATED 14th DECEMBER 1932. FROM THE UNITED I<ISGDOM
GOVERNMIINT TT THE SECRETARY-GENERAL OF THE LEAGUE OF NATIONS
London, 14th December 1932.
A dispute having arisen hetween His hfajesty's Government in the
United Kingdom and the Imperial Government of Persia in consequence
of the Persian Govemment's action in purporting ta cancel the con-
cession held by the Anglo-Persian Oil Company, a British company,
and His Majesty's Government being of opinion that this dispute is
likely ta lead ta rupture, 1 have the honour to request, under instruc-
tions from His Majesty's Govemment, that the matter may be submitted
to the Coiincil of the League of Nations in accordance with the terms of
Article 15 of the Covenant of the League. A statement of the case of
His Majesty's Government will be commnnicated ta you at the earliest
possible nioment, and His Majesty's Government hope that the Council
may find it possible to deal with the mattcr on 19th or 20th December.-
VANSITTART. ANNEXES TO U.K. MEMORIAL (NO. 3) 245
AfifiendixNo. 14 ta Annex 3
LETTER, DATED 17th FEBRUARY 1933,FROM Dr. EDVARD BENE:, RAPE>OR-
TEUR OF THE COUNCIL OF THE LEAGUE OF NATIONS. TO M. DAVAR.
REPRESENTATIVE OF THE IMPERlAL GOVERNMENT OF PERSIA
BEFORE THE COUNCIL
Mon cher Ministre, Genève, le 17 février 1933.
Je viens d'avoir, comme rapporteur devant le Conseilsur le différend
anglo-persan, une conversation avec le représentant du Gouvernenient
britannique. Il a quelques inquiétudes au sujet des négociations entre
le Gouvernement persan et la compagnie qui sont en cours. Il m'a
demandé des nouvelles à ce sujet, et lui-mêmem'a mis au courant de ce
qu'il sait de la part de la compagnie.
En le remerciant Dour les informations données. ie lui ai dit aue ie
me mettrai en contact avec Votre Excellence pour Gir si et dans Qiieiie
forme mon intervention est nécessairedans l'état actuel des choses, vu
aue mon rôle consiste d'abord à donner des interorétations de l'accord
&venu entre les deux parties - évidemment si'cela est nécessaireet
si je suis demandé de le faire- et ensuite de rester en contact avec les
deux parties pour voir le développement des négociations et tenir au
courant les bureaux du Secrétariat qui ont pour devoir de suivre l'affaire.
Le délégué britannique m'a dit que des difficultésont surgi au sujet
de l'endroit des négociations. Je lui ai répétce que nous avons établi
entre nous à ce sujet, icà Genève, en maintenant mon point de vue,
à savoir qu'il existe un danger si les négociations étaient transportées
immédiatement, soit à Londres, soit à Téhéran,avant que les Lignes
directrices et de principe de l'accord ne fussent tracées.
J'ai, toutefois, constaté qu'il ne m'appartient pas de faire ce sujet
des objections formelles quelconques, sous deux conditions, à savoir :
1) si les deux parties se mettent d'accordà ce sujet et si la compagnie
est prêteà envoyer son représentant à Téhéranou si les déléguép sersans
sont prêts à se rendre à Londres, et 2)si les deux parties continuentà
procéder detelle façon pour qu'elles puissent êtreen contact avec moi
comme rapporteur, soit pour m'informer périodiquement de la marche
des négociations,soit pour avoir des interprétations de l'accord si besoin
s'en fait voir.
Voilà, mon cher Ministre, ce que j'ai voulu vous communiquer en ce
moment. en vous riant de vouloir bien me faire savoir l'état actuel
des négociationset'si, de votrc côté,il y a quelque chose où mon inter-
vention est nécessaire, Mon devoir est, en effet, de demander deserisei-
gnements de tous les deux côtéspour pouvoir rester le rapporteur abso-
lument impartial et objectif. Je suis, du reste, convaincu qu'il n'y a
pas et qu'il n'y aura pas de difficultésquelque peu sérieusesdans vos
néaociations.
veuillez, etc.
(Szgned) Dr ED~ARDBENES.246 ASSEXES TO U.K. JIE~IORIAL (‘;o.3)
Appendin No. 15 10 Annex 3
I.ETTER, DATED 24th FERRUARY 1933, EROM DI. EDVARD BESE:,
RAPPORTEUR OF THE COUNCIL OF THE LEAGUE OF NATIONS,
TO M. DAVAR, REPRESENTATIVE OF THE IMPERIAL
GOVERNMENT OF PERSIA BEFORE THE COUNCIL
hlon chcr Ministre, Genève, le24 février1933.
En vous remerciant de votre aimable lettre en date du 20 courant
ainsi que des informations relatives au départ du président de la com-
p:igniC ce qui proli\-c que ics nCgociatiunsSClioi~rsui\~rntrCgiilièrement.
je m'empresse de \.otis réporidreaiissitiitpropos (lccertiiins doutes que
vous iiianifcstez dans votrc I~ttrc, et le tisiis1c.disji-jer iniincdiate-
ment, parce qu'il s'agit de la fonction de rapporteur.
Si je saisis bien votre réserve, vous avez des doutes au sujet de la
légitimitéde l'intervention britannique auprès du rapporteur. Si tel était
le cas, il y aurait un malentendu en ce qui concerne le r6le de rapporteur
dans une question dont la Société desNations a étésaisie. Puisque. à
la fin des négociations, le rapporteur aura Aprésenter un rapport défi-
nitif, soit sur leur réussite,soit sur leur échec,il est de son devoir de se
tenir au courant de la marche de ces négociationsen s'enquérant auprès
de l'une et de l'ant~epartie. Aussi est-il de mon devoir de m'informer
auprtis de l'une des parties si l'autre me présente des observations. C'est
la loi d'objectivité et d'impartialité qui me le commande, ainsi que le
devoir qui m'incombe de suivre, jusqu'à la conclusion de l'accord final,
la marche des négociations.
En outre, de par sa fonction, le Secrétariatest tenu d'établirle dossier
de toute affaire en cours, et moi, comme rapporteur, je dois y verser
tonte pièce qui touche mon rôle de rapporteur et que je reçois comme
celui qui est responsable de suivre cette affaire jusqu'à ce que son règle-
ment définitifen droit soit obtenu.
Voilà, mon cher Ministre, ce que j'ai tenuà vous dire, étant convaincu
que je sers objectivement et impartialement la cause des deux parties.
Je procédcrai de la mème façon, si vous voulez bien vous adresser à
moi, en me présentant des observations concernant l'attitude de l'autre
partie ou en me faisant parvenir des informations sur la marche des
négociationsen cours.
Inutile de faire remarquer que je ne dépasserai jamais le rôle qui
m'est dévolu,en intervenant de ma propre initiative soit dans les négo-
ciations, soit auprès de l'une ou de l'autre partie. Ce serait donc mal
interpréter les choses si l'on supposait que s il se produisait une inter-
vention d'un côté oude l'autre, tenue strictement dans le cadre que je
viens de vous indiquer, le rapporteur ne devrait pas intervenir auprès
de l'autre partie.
Persuadé que nous sommes entièrement d'accord à ce sujet, puisque
Votre Excellence a bien vu avec quel souci d'impartialité ]'ai agi pen-
dant toutes les négociationsqui se sont déroulées jusqu'àprésent, je la
prie, etc.
(Signed) BENES. ANNEXES TO U.K. MEhlORlAL (SO. 3)
APPendix No. 16 to Aizneï 3
CONVENTION CONCLUDED BETWEEN THE IMPERIAL GOVERNMENT OE'PERSIA
AND THE ANGLO-PERSIA NIL COMPANY AT TEHRAN ,N 29th APRIL 1933
[N.B.-This convention was concluded in the French language and
the French text is the sole authoritative text. An Enrlish translation is
given in the following pages.]
Dans le but d'établir une nouvelle concession en remplacement de
celle qui avait étéaccordéeen 1901 à William Knox D'Arcy, la présente
concession est octroyée par le Gouvernement persan et acceptée par
I'Anglo-Persian Oil Company, Limited.
Cette concessionréglera pourl'avenir les rapports entre lesdeux parties
ci-dessus mentionnées.
DÉFINITIONS
Les définitions ci-dessousdecertains termes employésdans la présente
convention sont applicables aux fins de celle-ci,abstraction faite de toute
signification différente qui peut ou pourrait leur ètre attribuée pour
d'autres fins.
uLe gouvernement J)
signifiele Gouvernement impérial de Perse.
<(La compagnie u
signifie I'Anglo-Persian Oil Company, Limited, et toutes ses sociétés
subordonnées.
«L'Anglo-Persian Oil Company, Limited i,
signifie 1'Anglo-Persian Oil Company, Limited, ou toute autre personne
morale à laquelle, avec le consentement du gouvernement (article 26).
cette concession pourrait êtretransférée.
u Sociétésubordonnée a
signifie toute société pour laquellela compagnie a le droit de nommer
plus de la moitiédes administrateurs directement ou indirectement. ou
dans laquelle la compagnie possede, soit directement soit indirectement,
un nombre d'actions suffisantpour lui garantir plus de0 % de la totalité
des droits de vote dans lesassemblkes généralesd'une telle société.
« Le pétrolei,
signifie l'huile bmte, les gaz natiirels, les asphaltes, les ozokérites, ainsi
que tous les produits obtenus soit de ces substances soit en mêlant
celles-cà d'autres substances.
«Opérationsde la compagnie en'Perse n
signifie toutes les opérations industrielles, commerciales et techniques
faites par la compagnie exclusivement aux fins de cette concession.248 ASSEXES TO U.K. >lE>1ORlr!l(SO. 3)
Le gouvernement octroie à la compagnie, aux termes de cette conces-
sion, le dn~it exclusif, dans le territoire de la concession, de rechercher
et d'extraire le pétrole ainsi que de raffiner ou traiter de toute autre
manière et rendre propre pour le commerce le pétrole obtenii par elle.
Le gouvernement octroie également à la compagnie, dans l'étendue de
de la Perse, le droit non exclusif de transporter le pétrole,de le raffiner
ou traiter de toute autre manièreet de le rendre proprelir le commerce,
ainsi que de le vendre en Perse et l'exporter.
ARTICI. E
A) Le temtoire de la concession, jusqu'aii 31 décembre 1938, sera le
territoire au sud de la ligne violette tracée surlacarte signéepar les
deux parties et annexée à la présente convention.
B) La compagnie devra, au plus tard le 31 décembre 1938, choisir
dans le territoire ci-dessus mentionné un ou plusieurs espaces de telle
forme et telle grandeur situés dans tek endroits que la compagnie jugera
convenir. L'ensemble de la superficie du ou des espaces choisis ne doit
pas dépasser cent mille milles carrés anglais (~oo,ooo milles carrés),
chaque mille simple correspondant à 11309mètres.
La compagnie informera le gouvernement par écrit le 31 décembre
1938,ou avant cettedate, de l'espace ou des espaces qu'elle aura choisis
comme il est prévu ci-dessus. Seront jointes à chaque information les
cartes et les donnéesnécessairespour identifier et délimiter l'espace ou
les espaces qu'aura choisis la compagnie.
C) Après le 31 décembre 1938, la compagnie n'aura plus le droit de
rechercher et d'extraire le pétroleque dans l'espacei les espaces choisis
par elle selon le paragraphe B) ci-dessus, et le territoirede la concession,
après cette date, signifieraseulement l'espace ou les espaces ainsi choisis
et dont le choix aura éténotifiéau gouvernement comme ilest prévu
ci-dessus.
ARTICL3 E
La coml~agnieaura le droit non exclusif de construire et d'avoir des
pipelines. Il lui appartient de fixer le tracé de ses pipelines et de les
exploiter.
ARTICL4 E
A) Tous terrains non utilisés appartenant au gouvernement, que la
compagnie jugera ni-cessaire pour ses opérations en Perse et dont le
gouvernenient n'aura pas besoin pour des buts d'utilité publique, seront
cédésgratuitement à la compagnie.
La manière d'acquérir lesdits terrains sera la suivante :chaque fois
qu'un temain devient nécessaire à la compagnie, cette dernière doit
envoyer ail ministère des Finances une ou,plusieurs cartes sur lesquelles
leterrain dont la compagnie a besoin sera indiqué encouleur. Le gouver-
nement s'engage à donner son approbation dans lin délaide trois mois
après avoir reçu la demande de la compagnie, s'il n'a pas d'objection
à faire.
B) Les terrains utilisésappartenant au gouveriicment, et dont la com-
pagnie aura besoin, seront demandés au gouvernement de la manière ANNEXES TO U.K. hIEMORIAL (NO. 3) 249
indiquée à l'alinéa précédente ,t le gouvernement, au cas où il n'aurait
pas lui-même besoin de ces terrains et n'aurait aucune objection à
formuler, donnera, dans un délai de trois mois, son approbation à la
vente sollicitéepar la compagnie.
Le prix de ces terrains sera payé par la compagnie ; ce prix devra
êtreraisonnable et ne pas dépasser le prix courant des terrains de mème
nature et de mêmeemploi dans la même région.
C) En l'absence d'une réponse de la part du gouvernement aux
demandes prévues aux alinéas A et B précités,après l'expiration de
deux mois à partir de la date de la réception desdites demandes, un
rappel sera adressé par la compagnie au gouvernement; à défaut de
réponse de la part du gouvernement à ce rappel dans un délaid'un
mois, son silence sera considéré commeapprobation.
D) Les terres qui n'appartiennent uas au eouvernement et aui sont
intéressés,et par l'intermédiaire du gouvernement.e, d'accord avec les
Dans le casoù l'on ne se mettrait ilas d'accord sur les urix. le eouver-
nement ne permettra pas aux propÎiétaires desdites tekes de rzclamer
un prix plus élevéque les prix ordinairement courants pour des terres
voiiines de mêmenature. En évaluant les terres susmentionnées. on ne
s'occiilirr.t ~>ot e I'éi~ipliiie In coriil>;igni<\:.i>in<f;iirï.
endroitseetsires avant un in1éri.rhistorioiic. sorit exclii~des <lisvosirions
qui précèdent, dé mêmeque leurs dépendances à une distaece d'au
moins deux cents mhtres.
F) La com~aenie a le droit non exclusif de urendre dans le territoire
de ia concessio< mais pas ailleurs, dans tout ierrain non utiliséappar-
tenant à I'Etat, et d'employer gratuitement pour toutes les opérations
de la compagnie, toutes esphcesde terre, sable, chaux, gypse,-pierre et
autres matières de construction. Il est entendu que si l'utilisation desdits
matériaux était préjudiciable à des droits quelconques appartenant à
des tiers, la compagnie dédommagerait les ayants droit.
ARTICL5 E
Les opérations de la compagnie en Perse seront restreintes de la
manière suivante :
I) La construction de toute nouvelle ligne de chemins de fer et de
tout port nouveau sera subordonnée à un accord préalable eiitre
le gouvernement et la compagnie.
2) Si la compagnie désireaugmenter son service actuel de téléphones,
télégraphe,T. S. F. et aviation en Perse, elle ne pourra le faire
que moyennant le consentement préalable du gouvernement.
Si le gouvernement a besoin d'utiliser les moyens de transport et de
communication de la compagnie pour la défense nationale ou dans
d'autres circonstances critiques, il s'engage à entraver aussi peu que .
possible les opérations de la compagnie, et à lui verser une légitime
compensation pour tous les dommages causéspar l'utilisation ci-dessus
prévue.250 ANNEXES TO U.K. YEIIORIAL (NO. 3)
A) La compagnie est autorisée de faire, sans licence spéciale, toutes
les importations nécessairespour les besoins exclusifs de son personnel,
movennant le vaiement des droits de douane et autres droits et taxes
eii !.igueui aii inuiiicrit de 1'imp~rt;itioii.
1.ncomliagnic prendr:~Ici iiicsurcs niccsj.iircs p(iiir <:riil,;shcrla vcnte
ou IIcvssiun ,les prodiiits imi>ort;si des i>crionnesnc Isistint r,;1partie
n) Lr .-..~ ~ ~ ~ - -
a compagnie aura le droit d'importer, sans licencespéciale,l'équi-
Dement. le matériel. les instmments médicaux et chirur~caux et les
produit; pharmaceutiques, nécessaires à ses dispensaires et hôpitaux en
Perse, et sera exempte de ce chef de tous droits de douane et autres
droits et taxes en vieueur au moment de l'importation. ou paiements
de quelque nature ce soità l'État persan ou aux aitorités locales.
C) La compa~nie aura le droit d'importer, sans aucune licence et
exemvt de tous-droits de douane et de toutes taxes ou vaiements de
quelGe nature que ce soit à l'État persan ou aux autorité; locales, tout
ce qui sera necessaiie exclusivement pour les opérationsde la compagni..
en Perse.
D) Les exportations de pétrole jouiront de la franchise douanière, et
seront exemptes de toutes taxes ou paiements de quelque nature que
ce soit à l'État persan ou aux autorités locales.
A) La compagnie et ses employésjouiront de la protection légaledu
gouvernenient.
B) Le gouvernement donnera, dans les limites des lois et règlements
du pays, toutes les facilités possibles pourles opérationsde la compagnie
en Perse.
C) Si le gouvernement accorde à des tiers des concessions ayant pour
objet l'exploitation d'autres mines dans le territoire de la concession,
il dewa faire prendre les précautions nécessaires afin que ces exploi-
tations ne produisent aucun dommage aux installations et travaux de
la comvaenie.
1)) i.~::oml>agnic aurd ;isi c1iarl;cdc d2tcrminer 1.izoiii: <Ilingerc.iise
11oiirII cuiiitructiondcs 1i:~bitntirii. IciI>outi<liiçtdes niitres ronitruc-
iions, afin que le gouvernement les habitants de ne pas
s'y installer.
La compagnie ne sera pas obligéede changer en monnaie persane une
partie quelconque de ses fonds, notamment les produits de la vente de
ses exportations de Perse.
La comnaenie orendra immédiatement ses disvositions vour urocéder
ses opéritiins dans la province de Kermanchah au moy& d';ne com-
pagnie sul~sidiaireen vue d'y produire et d'y raffiner le pétrole. ANNEXES TO U.K. MEMORIAL (NO. 3) 25'
1) Les sommes à payer au gouvernement par la compagnie en vertu
de cette convention (outre celles prévues dans les autres articles) sont
déterminées comme suit :
a) Redevance annuelle, commençant le Ier janvier 1933, de quatre
shillings par tonne de pétrole vendu pour la consommation en
Perse ou ex~ortéde Perse :
b) Paiement d'une somme égale à vingt pour cent. (20y) de la
distribution aux actions ordinaires de I'Ando-Persian 8i1 Com-
pany Ltd., excédant la somme de six cent soixante et onze mille
bution soit faite comme dividendes pour une année quelconquestri-
ou qu'elle se rapporte aux réservesde la même compagnie, excé-
dant celles qui, d'après ses livres, existaient au 31 décembre193;
c) Le montant total à payer par la compagnie pour chaque année
calendrière (chrétienne) selon les alinéasa) et b) ne peut jamais
êtreinférieurà sept cent cinquante milleLivres Sterling(L7$0.000).
II) Les paiements de la compagnie selon cet article seront faits
comme suit :
a) Lss 31 mars, 30 juiii, 30 septembre et 31 décembre de chaque
année, chaque fois cent quatre-vingt-sept millé cinq cents Livres
Sterling (~187.~00). (Le paiement relatif au 31 mars 1933 sera
effectue immédiatement apres la ratification de la présente con-
vention.)
b) Le 28 février 1934, et ensuite à la mêmedate de chaque année,
le montant de la redevance pour l'année précédente sur le tonnage
prévu dans l'alinéa 1 a), après déduction de la somme de sept
l'alinéa IIa). mille Livres Sterling (L750.000) déjà payée selon
c) Toute somme due au gouvernement selon l'alinéa 1 b) de cet
article lui sera payée .en mêmetemps que s'effectuera la répar-
tition aux actions ordinaires.
III) A l'expiration de cette concession, ainsi qu'en cas de renon-
ciation par la compagnie selon l'article 25, celle-ci paiera au gouverne-
ment une somme égale à vingt pour cent (20 %) :
a) de la différence en plus entre le montant des réserves (general
reserue)de I'Anglo-Persian Oil Company Ltd., à la date de l'expi-
ration de la concession on de sa renonciation, et le montant des
mêmes réserves à la date du 31 décembre1932 ;
b) de la différence en plus entre le solde à nouveau reporté par
l'Anglo-Persian Oil Company Limited à la date de l'expiration
de la concession ou de sa renonciation, et le solde à nouvcau
reporté par la même compagniele 31 décembre 1932. Tout paie-
ment dû au gouvernement d'après cet alinéa sera effectué clans
le délai d'un mois apres la date de l'assemblée générale de la
la concession.séquente à l'expiration ou à la renonciation de
IV) Le gouvernement aura le droit de contrôler les décomptes se
rapportant à l'alinéa 1a) qui lui seront envoyés au plus tard le
28 février pour l'annéeprécédente.2jZ ASNEXES '10 U.K. hlEllORlAL (NO.3)
V) Pour garantir le gouvernement contre toute perte pouvant résiilter.
des fluctuations de I;ivaleur monétaireanglaise, les parties ont conveiiu
ce qui suit :
a) Si,à un moment quelcoiique, le prix de l'or à Londres dépasse
six Livres Sterling par once(ounce troy),les paiements àeffectuer
par la compagnie en vertu de la présente convention (à l'exception
des sommes revenant au gouvernement en vertu des alinéas 1 O)
et IIIa) et Ii) du présent article et de l'alinéa) de l'article 23)
seroiit augmentés d'un mille quatre cent quarantième ('/,,,,) pour
chaque penny d'augnientation du prix de l'or audessus de six
Livres Sterling (L 6) par once (ounce troy) au jour de l'échéaiice
des paiements.
b) Si, à un moment quelconque, le gouvernement estime que l'or
a cesséd'êtrela base générale desvaleurs et que les paiements
mentionnés ci-dessus ne lui donnent plus la garantie qui est dans
les intentions des parties, celles-ci se mettront d'accord au sulet
d'une modification de la nature de la garantie susmentionnée
ou, à défaut d'un tel arrangement, soumettront la question au
tribunal arbitral (article22) qui déclarera si la garantie prévue
à l'alinéaa) ci-dessus doit être changée, et dans l'affirmative
déterminera les conditions qui y seront substituées et fixera la
période à laquelle celles-ci s'appliqueront.
VI) En cas d'un retard au delà 'des dates fixéesdans la préseiite
convention, éventuellement apport6 par la compagnie dans le verse-
ment des sommes dues par elle au gouvernement, un intérêtde cinq
pour cent (5%) par an sera payépour la duréedu retard.
1) La cun~~agiiieserx coiiiplètemcrit esc.iiipt<:,puiir ses ol>ératioiis
PII Pers<: pendant les trente prt.iiiiCrt:s ;~niil'es,<le toute iinposiliuii
actucllc ou future :lu profit (lel'État et <lesautorit;s l;enl~!cl~;irijir..
les versements suivants seront effectuésau gouvernement :
a) Pendant les quinze premières années de cette concession, .le
28 février de chaque année et pour la première fois le 28 février
1934n ,euf pence pour chacune des premièressix millions (6.ooo.000)
toniies de pétrole, pour lesquelles la redevance prévue à I'arti-
cle IO, 1, a) est payable pour l'année calendrièrechrétienne
précédente,et six pence pour chaque tonne au-dessus du chiffre
de six millions (G.ooo.ooo)tonnes indiqué ci-dessus.
b) La compagnie garantit que le montant payé eu vertu de I'aliiiéa
précédentne sera jamais inférieur à deiix cent vingt-cinq mille
Livres Sterling (L225.000).
c) Pendant les quinze années suivantes, un shilling pour chacune
des premières six millions (6.ooo.000) tonnes de pétrole, pour
lesquelles la redevance prévue à l'article IO, 1,a) est payable
pour l'année calendrière précédente,et neuf pence pour chaque
tonne au-dessus du chiffre de 6.ooo.000 tonnes indiqué ci-dessus.
d) La compagnie garantit que le montant payé en vertu de I'aliiiéa
précédent c) ne sera jamais inférieur à trois cent mille Livres
Sterling(L 3oo.000). APINEXES TO U.K. AlEMORIAL o. 3) zj3
II) Avant l'année 1963, les parties se mettront d'accord sur les
montants des versements annuels à effectuer. en échan-ede l'exemw
tion cornpl6te de .nie polir ses ol)6rations cil Perse (le ti>utc
irnuojition ;tu profit de 1' tat et clesiiutoritrî loc;iles.i~ciiilaritIn icsoiidc
&iode de trente ans s'étendant jusqu'au 31 décembre 1993
A) La compagiiie, pour ses opérationsen Perse en vertu de la présente
convention, se servira de tous les moyens qui sont d'usage et coiive-
nables, pour assurer l'écoiiomieet le bon rendement de ses opérations,
pour conserver les gisemciits de pétroleet pour exploiter sa concession
paB) Si, dans le territoire de la concessioii, se trouvent d'autres sub-
stances niinérales que le pétrole ou des bois et forêtsappartenant au
gouvernemeiit, la compagnie iic pourra les exploiter en vertu de la
présente concession, ni s'opposer à leur exploitation par d'autres per-
sonnes (à condition de respecter les dispositions du littera C) de l'arti-
cle 7); mais la compagnie aura le droit d'utiliser lesdites substances
ou les bois et forêtssusvisés s'ils sont nécessairesà l'exploration ou
à l'extraction du pétrole.
C) Tous les sondages qui, n'ayant pas abouti à la découverte de
pétrole, produisent des eaux ou des matikres précieuses,doivent être
réservésau gouvernement, qui sera immédiatement aviséde ces décou-
vertes par la compagnie, et le gouvernement l'informera aussitôt que
possible s'il veut en prendre possession. Dans l'affirmative, il veillera
à ce que les opérationsde la compagnie ne soient pas entravées.
La compagnie s'engage à remettre, à ses propres frais et dans un
délai raisonnable, au ministère des Finances, chaque fois que le repré-
sentant du gouvernement le demandera, des copies exact& de tous les
plans, cartes, profils et toutes autres données, soit topographiques,
géologiquesou de sondage, se rapportant au temtoire de la concession,
qui se trouvent en sa oss session.
AEn outre, la compagnie communiquera au gouvernement pendant
toute la duréedela concessiontoutes lesdonnéesimportantes scientifiques
et techniques résultant de ses travaux en Perse.
Tous ces documents seront considéréspar le gouvernement conime
confidentiels.
ARTICLE14
A) Le gouvernement aura le droit de faire inspecter à son gré,à tout
temps raisonnable, l'activité technique de la compagnie en Perse, et de
nommer à ce but des experts-spécialistes techniques.
B) La compagnie mettra à la disposition des experts-spécialistes
nommés àcette fin par le goiivernement. toute sa documentation relative
aux données scientifiqueset techniques, ainsi que toutes les installations
et moyens de mesurage. et ces experts-spécialistes auront, en outre, le
droit de demander toutes informations dans tous les bureaux de la
compagnie et sur tous les territoires en Perse.'254 ANNEXES TO U.K. BIEX~ORIAI. o. 3)
Le gouvernement aura le droit de nommer uri représentant qui sera
désigné cdélégué du Gouvernement impérial iiCe représentant aura le
droit :
(1) d'olltenir <lela cornl,3giiii: toiiti.; les inforniatioii; auxqii<~llcsuiit
droit les nctioiinairm dc la conil)n~riie:
(2) d'issister i toutes les ;<:inces du conseil d':idiniiiistr;ition. dc ses
cuiiiitF; ei toutes lessé:iiices(Ivsitsscmbléesgcriérales,cori\,oqtiécs
I>oiiid<.libtrer sur toiite question rcsiiltant des relations cntrr le
gouvernement et la compagnie ;
(3) de présider ex oficio, avec vote décisif,le comité à créer par la
compagnie daris le but de distribuer I'allocation et de surveiller
l'éducation professionnelle en Grande-Bretagne des ressortissants
persans visési l'article 16 ;
(4) de demander que des réunionsspécialesdu conseil d'administration
soieiitconvoaiiées à ttn moment auelconaue..Dour d.libérersur
toiitc prol~osiiionque le fioii\,eriii.riIiiisoumettra. t:csrciunions
irront con\~oqiii'cs;i\.zcun d;>laidc 15joiirj:adatvr dc Iircception
~>'irVsccr6tnire de 13 COIIIIYB~~~Cd'une deninnde 6crite 5cette fin.
La compagnie paiera au gouvernement pour couvrir les dépenses
incombant à celui-ci du chef de la rémunération et des dépenses du
délégué susmentionnéune somme annuelle de deux mille Livres Sterlinp
(L zrooo). Le gouvernement avertira par écrit la compagnie de la nomi'-
nation de ce délégué et, éventuellement, de son remplacement.
1) Les deux parties reconnaissent et acceptent comme principe
directeur de l'exécutionde cette convention la su~rêmenécessité.dans
leur intéret mutuel, de maintenir le plus haut'degré d'efficacité et
d'économiedans l'administration et les opérations de la compagnie e. -
I'ene.
II) 11est toutefois entendu ~IIC licompagnie récriiterii ses artisaiis
ainsi quc son personiicl technique et coriirnerciiilparmi les ressortissants
ersa ais~our autant au'elle trouve en Perse des ~ersonnes ~ossédantla
èompéte;iceet l'expéhence requises. Il est égalémententéndu que le
personnel non qualifié sera composé exclusivement de ressortissants
pcrsniis.
1II, 1.c~~>;irtiese déslan:iit (l':ic<.<IngurCtudicr et prLpircr uii }>I:iii
g2iiéral d? r<:cliictioiiannuelle ct progressive dcs enipluy& rion pcrsnns
afin de Iciir siihstituc-r dans le ijliis <I&l:ii,os;ible et.r>rozressi\~erncnt
des ressortissants persans.
IV) La compagnie fera une allocation annuelle de dix mille Livres
Sterling pour donner en Grande-Bretagne, à des ressortissants persans,
l'éducatioii professionnelle nécessaire à l'industrie pétrolière.
La susdite allocation sera dépensée parun comitéqui sera constitué
suivant l'article 15.
La compagnie se chargera de l'organisation, et en supportera les frais
d'installation, de contrôle et d'entretien, des mesures sanitaires et de ANNEXES TO U.K. MEAIORIAL (No. 3) zjj
santévublioue. selon les exi~encesde l'hveiènela ~liismoderne ~ratiouée
en ~eise, sûr tous les terrains de la compagnie et bans tous les bâtiménts
et habitations. affectéspar elle l'usa~ede son personnel, y compris les
ouvriers employés dans le territoire dë la conceision.
ARTICLE 18
Lorsque la compagnie fera des émissionsd'actions düiis le public, les ,
listes de souscription devront êtreouvertes à Téhéranen même ternps
qu'ailleurs.
ARTICLE 19
La com~aenie vendra Dour la consommation intérieure en Perse. Y
cornpris Ici ~Gsoiiisdi1goi;vern~mcnt. I'essencc(>nulorspir11)Ic1amp;ir;t
(kdrosi~itérle mnzoiit (luel aofl)pro~iiiitsdi] 11Ctrolepcrsiiil. sur la hase
suivante: . -
a) Le premier juin de chaque année,la compagnie établira les moy-en-
nes des prix f. o. b. Roumanie pour l'essence, le lampant et le
mazout et les moyennes des prix f.o. b. du golfe du Mexique pour
chacun des mêmesproduits pendant la période précédente de
douze mois prenant fin le 30 avril. On choisira de ces moyennes
celles qui ont étéles plus basses. Celles-ciseronules prix de baseo.
pour une périoded'une annéecommençant le Ir1juin. «Les prix
de base » seront considérés commeétant les prix à la raffinerie.
b) La compagnie vendra: 1) au gouvernement pour ses propres
besoins, et non pas pour la revente, l'essence, le lampant et le
mazout aux prix de base, prévus à l'alinéa a) ci-dessus, avec
déduction de vingt cinq pour cent (25%) ; 2) aux autres consom-
mateurs aux prix de base avec déduction de dix pour cent (10%).
c) La compagnie aura le droit d'ajouter aux prix de base mentionnés
à l'alinéaa), tous les frais réelsde transport et de distribution et
de vente, ainsi que tous impbts et taxes sur lesdits produits.
d) Le gouvernement interdira l'exportation des produits du pétrole
vendus par la compagnie sous le régimedu présent article.
ARTICLE 20
1)a) Pendant les dis dernières années de la concession ou pendant
les deux années di1 préavis précédant la renonciation à la concession
prévue par l'article 25, la compagnie ne pourra vendre ou autrement
aliéner,sauf àdes sociétéssubordonnées,un ou plusieurs de ses immeubles
situés en Perse. Pendant la mêmepériode, la compagnie ne pourra
aliéner ou exporter une quelconque de ses propriétés mobilières, à
l'b)cePendant toute la périodeprécédantles dix dernières annéesde la
concession, la compagnie ne pourra aliéner aucun terrain obtenu par
elle gratuitement du gouvernement ;elle ne pourra non plus exporter
de la Perse aucune propriétémobilière, excepté dans le cas où ce!e-ci
serait devenuc inutilisable ou ne serait plus nécessaire pourles opérattons
de la compagnie en Perse.
II) A la fin de la concession. soit par expiration ordinaire soit d'une
autre manière, toute lapropriétéde la compagnie en Perse deviendra
propriétédu gouvernement dans un état convenable d'exploitation et
libre de tous frais et de toutes charges.?Y5 AXNEXES TO U.K. >IEMORIAL (SO.3)
III) L'expression itoute la propriété n comprend tous les terrains,
bitimentj et iisines, constriiciiunj, i t jctbcs. routcs, 11ipclines.
ponts, s!.stimes d'cguiitct (le distrihi~tiuii d mu, mncliincs. iiistall;ttions
et Ci~uip~iiciits(yconipris 1t.ioiitils, de toiitt: sorte. toi13Ics mo\.ciis iIe
transport et de communication en Perse (y compris par exemple auto-
mobiles, voitures, avions), tous stocks et tous autres objets en Perse que
la compagnie utilise d'une manikre quelconque pour les buts de la
concession.
ARTICLE 21
Les parties contractantes déclarent baser l'exécution de la présente
foi ainsi que sur une interprétation raisonnable de cette convention.
en tous lieux aux droits, privilkges et.intérêts du gouvernement etps et
s'abstiendra de toute action ou omission préjudiciable à ceux-ci.
Cette concession ne sera pas annulée par le gouvernement et les
ou spéciale future, ni par des mesures administratives ou tous autresérale
actes quelconques des autorités exécutives.
ARTICLE 22
quelconqite entre les parties et spécialement tous différendsrésultant
de l'interprétation de cette convention et des droits et obligations y
contenus, ainsi que tous différends d'opinionpouvant naître à l'égard
de questions pour la solution desquelles, d'aprésles dispositions de cette
convention, l'accord des deux parties est nécessaire.
B) La partie qui demande l'arbitrage doit le notifier par écrià l'autre.
Chaque partie désignera un arbitre, et les deux arbitres, avant de pro-
céder à l'arbitrage, désigneront un tiers arbitre. Si les deux arbitres ne
tiers arbitre, ce dernier sera nommé,ettàela demanded'une partie ou de
l'autre,p;ir le Présidentde la Cour permanente deJustice internationale.
Si !e Président de la Cour permanente de Justice internationale appar-
tient à une nationalité ou à un pays qui n'a pas, en vertu de l'alinéaC),
qualité pour fournir le tiers arbitre, la nomination sera faite par le Vice-
Président de ladite Cour.
nique L;en outre. il ne sera r>asen étroite relation avec la Perse ou avec
la Grande-Bretagne comme'appartenant à un dominion, un protectorat,
une colonie, un pays de mandat ou autre administré ou occupépar un
des deux pays pÏécitésou comme étant ou ayant étéau service d'un de
ces pays.
la désignation dàsla partie adverse dans les soixante jours après avoirs
reçu notification de la demande d'arbitrage, l'autre partie aura le droit
de demander au Président de la Cour permanente de Justice internatio-
nale (ou au Vice-Président dans le cas rév vu à la finale de l'alinéaB))
de nommer un seul arbitre, à choisir Parmi des personnes qualifiées
comme il est mentionnéci-dessus, et dans ce cas le différendsera tranché
par ce seul arbitre. ASNEXES TO U.K. YEMORIAL (NO. 3) 257
E) La procédure de l'arbitrage sera celle qui sera suivie au moment.
de l'arbitrage, par la Cour permanente de Justice internationale. Le
lieu et le temps de l'arbitrage seront déterminés,selon le cas, par le tiers
arbitre ou par l'arbitre uniaue visé à l'alinéa D).
F) La sentence se basera iur les principes juridiques contenus dans
l'article 38 des Statutsde la Cour permanente de Justice internationale.
La sentence sera sans appél.
G) Les fraisd'arbitrage seront supportés de la façon déterminéepar
la sentence.
ARTICLE 23
'1) En entière liquidation de toutes les réclamations de toute nature
du gouvernement pour ce qui concerne le passé jusqu'à la date de
l'entréeen vieueur de cette convention (sauf en cequi touche les impôts
persans), la compagnie: a) paiera dans le délaide trénte jours àconipter
de laate date la somme d'un million de Livres Sterling (L ~.ooo.ooo)et
en oitre b) réglerales paiements dus au gouvernement pour les exer-
cices 1931 et 1932 sur la base de l'articleIO de cette convention et non
sur celle de l'ancienne concession D'Arcy, après déductionde deux cent
mille Livres Sterling(L2oo.000)payéesen 1932au gouvernement comme
avance sur les redevances et f:113,403 3s. rod. mises en dépôt à la dis-
position du gouvernement.
II) Dans le mêmedélai, la compagnie paiera au gouvernement en
entière liquidation de toutes ses réclamations en matiere d'impôts pour
la période du 21 mars 1930 jusqu'au 31 décembre 1932 une somme
calculéesur la base de l'alinéaa) du paragraphe I de l'article II, mais
sans la garantie prévue à l'alinéab) du mémeparagraphe.
Si, en raison de l'annulation de la concession D'Arcy, il se produit des
litiges entre la compagnie et des particuliers an sulet de la durée des
contrats de baux passésen Perse avant le IP~.décembre 1932 dans les
limites permise par la concession D'Arcy,,le litige sera tranché suivant
les règles interprétatives suivantes :
a) Si le contrat doit finir, d'après ses propres termes, à la fin de la
concession D'Arcy, il gardera sa valeur jusqu'au 28 mai 1961,
nonobstant l'annulation de ladite concession.
bl Si on a urévu dans le contrat au'il sera valable pour la duréede la
' concessi'on D'Arcy et dans l%ventiialité de <on renouvellement
pour la durée de la concession renouvelée, le contrat gardera sa
Gaieur jusqu'au 31 décembre 1993
La compagnie aura le droit de renoncer à cette concession à la fin de
toute année calendrière chrétienne, moyennant notification écrite au
gouvernement par un préavisde deux ans.
A l'expiration du délai ci-dessusprévu, la totalité de la propriétéde
la compagnie en Perse (définie à l'articl20,III) deviendragratuitement
et sans charge propriété du gouvernement dans un état converiable
d'exploitation, et la compagnie sera libéree de tout engagement pour
l'avenir. Dans le cas où il y aurait des ùtiges entre les parties concer- ANXEXES TO U.K. JJEi\fORIAL (XO. 3)
Zj8
nant leurs engagements avant l'expiration du délai ci-dessus prévu,
le différendsera tranché par l'arbitrage prévu à l'articlezz.
Cette concession est octroyée à la compagnie pour la période commen-
çant le jour de son entrée en vigueur et expirant le 31 décembre 1993,
Avant ladate du 31 décembre1993c .ette concessionne pourra prendre
fin que dans le cas où la compagnie renoncerait à la concession (art. 25)
ou dans le cas où le tribunal arbitral déclarerait annuléela concession
par suite de faute de la compagnie dans l'exécution de la présente
convention.
Ne seront considérés commefautes dans ce sens aue les cas suivants :
UJ si iine sorniiie qiielcontliie allo;i1;I'crse p;ir le trihunnl arLitr.11
n'a pasétép;iyGedans le J6l;ii d'un inois i compter de la sentence ;
6) siI:iliquidatiuri volont;iire oii forc<.t:I;icomp:ignir est decid&.
PSntoiis ;iiitrrs cas d'infrnctioi:tIï 1)r~scntcconvention par l'une oii
l'autre i>;irtie.le tribunal arbitral fiserit les resvon~nl>ilitr:set en deter-
minera -les conséquences.
Tout transfert de la concession sera subordonné à la ratification du
gouvernement.
Cette convention entrera en vigueur après avoir étératifiée par le
-Medjlesse et promulguée par le décret de Sa Majesté impériale leChah.
Le gouveniement s'engage :isoumettre cette convention, le plus tôt
possible, à la ratification du >Iedjlesse.
Fait à Téhéranle vingt-neuf avril mil neuf cent trente-trois.
(Signé) S. H. TAQIZADEH,
Pour le Gouvernement impérial de la Perse.
For and on behalf of the Anglo-Persian Oil Company, Limited,
(Signed) JOHN CADMANC ,hairman.
(Signed) W. FRASERD , eputy Chairman.
CONVENTION CONCLUDED BETWEEN THE IMPERIAL GOVERNMENT OF PERSIA
AND THE ANGLO-PERSIA ONIL COMPASY, LIMITED. AT TEHRAS, ON THE
For tlie piirposcof estalilishing a new Ci>iict:sjiontu rq)lacc that \\,hich
\vis gr:iiitediri1901 to \\'illiani Kiiox I)'.\rcy, tlic vreseiit Coiicessiori
is granted by the Persian Government and-accepied by the Anglo-
Persian Oil Company Limited.
This Concession shall regulate in the future the relations between the
two parties above-mentioned. ANNEXES TO U.K. hlEh1ORIAL (No. 3) 259
DEFINITIONS
The foilouing definitions of certain terms used in the present Agree-
ment are applicable for the purposes hereof without regard to any
different meaning which may or might be attributed to those terms for
other purposes.
"The Government"
means the Imperia1 Government of Persia.
"The Company"
means the Anglo-Persian Oil Company, Limited, and al1its szcbordinate
compnnies.
"The Anglo-Persian Oil Company, Limited"
means the Anglo-Persian Oil Company, Limited, or any other body
corporate to which, with the consent of the Government (Article 26),
this Concession might be transferred.
"Subordinate Company"
'means any company for which the Company has the right to nominate
directly or indirectly more than one-half of the directors, or in which
the Conzpanyholds, directly or indirectly, a number of shares sufficient
to assure it more than 50 % of al1voting rights at the general meetings
of such a company.
"Petroleum"
means crude oil, natural gases, asphalt, ozokerite, as well as al1products
obtained either from these substances or by mixing these substances
with other substances.
"Operations of MteCompany in Persia"
means al1industrial, commercial and technical operations camed oii by
the Company exclusively for the piirposes of this Concession.
ARTICLE I
The Governmentgrants to the Company, on the terms of this Conces-
sion. the exclusive right, within the territory of the Concession, to
search for and extract $etroleuinas well as to refine or treat in any other
manner and render suitable for commerce the I>etroleumobtained by it.
The Governmentalso grants to the Company, throughout Persia, the
non-exclusive right to transport petroleum, to refine or treat it in any
other manner and to render it suitable for commerce, as well as to sel1
it in Persia and to export it.
ARTICLE 2
(A) The temtory of the Concession, until pst December 1938, shall
be the temtoryto the south of the violet line* drawn on the map signed
by both parties and annexed to the present Agreement.
The violet iine here referred to may be seen on the map filed asAppendix
Sb. 20to Annex 3 of this hlemorial.260 ASNEXES TO U.K. JIEMORIAL (so. 3)
(B) The Company is bound, at latest by 31st December 1938, to select
on the territory above mentioned one or several areas of such shape and
such size and so situated as the Combanv mav deem suitable. The total
.îre:i of thr :ire:<or arras selected iniiLtnit ex&ed ont: Iiundrcd tho~iiand
Englisli siluarc miles (ioo.ooo squarc niiles). z;icti linear niilc Ijeing cqiii-
valënt to Ï,609 metrei. . .
The Company shall notify to the Governlnentin writing on 31st Decem-
ber 1938, or before that date, the area or areas which it sliall have
selected as above provided. The maps and data necessary to identify
and define the area or areas which the Comfianyshall have selected shall
be attached to each iiotification.
(C) After 31st December 1938, the Company shall no longer have the
right to search for and extract petvoleum escept on the area or areas
selected by it under paragraph (B)above, and the temtory of the Conces-
sion, after that date, shall mean only the area or areas so selected and
the selection of which shall have been notified to the Government as
above provided.
' ARTICLE 3
The Cofnpany shall have the non-exclusive right to construct and to
own pipelines. The Company may determine the position of its pipe-
lines and operate them.
ARTICLE 4
(A) Any unutilized lands helonging to the Government,which the Com-
pany shall deem necessary for its operatio~zsin Persia and which the
Government shall not require for purposes of public utility, shall be
handed over gratuitously to the Company.
The maiiner of acquiring such lands shaii be the following :whenever
Alinistry of Finance a map or maps on which the land which the Com- the
pany needs shall be shown in colour. The Governmentundertakes, if it
has no objection to make, to give its approval within a period of three
months after receipt of the Cam any's request.
(B) Lands belonging to the t wernment, of which use is being made,
and which the Compnny shall need, shd be requested of the Gwer?rment
in the manner prescribed in the preceding paragraph, and the Gwern-
ment, in case it should not itself need these lands and should have no
objection to make, shall give, within a period of three months, its
approval to the sale asked for by the Cmnpany.
The price of these lands shall be paid by the Company; siich pnce
must be reasonable and not exceed the current pnce of lands of the
same kind and utilized in the same manner in the district.
(C) In the absence of a reply from the Governmentto requests under
paragraphs (A) and (B) above, after the expiry of two months from the
date of receipt of the said requests, a reminder shall be sent by the
Company to the Government; should the Governmentfail to reply to
such reminder within a period of one month, its silence shallbe regarded
as approval.
(D) Lands which do not belong to the Government and which are
necessary to the Compniryshall be acquired by the Company, by agree-
ment with the parties interested, and through the medium of the
Government. ANNEXES TO U.K. MEDIORIAL (NO. 3) 361
In case agreement should not be reached as to the prices, the Gouern-
ment shall not allow the owners of such lands to demand a pnce higher
than the prices commonly current for neighbouring lands of the same
nature. In valuing such lands, no regard shall be paid to the use to
which the Company may wish to put them.
(El Holv nlaces and historical monuments. as well as al1 nlaces and
sitès'of hiSt&ical interest, are excluded from the foregoing i>rovisions,
as well as their immediate surroundinps-for a distance of at least
zoo metres.
(F) The Company has the non-exclusive right to take within the
temtory of the Concession, but not elsewhere, on any unutilized land
belonging to the State,and to utilize gratuitously for al1the operations
of the Company, any kinds of soil, sand, lime, gypsum, Stone and other
building matenals. It is understood that if the utilization of the said
matenals were prejudicial to any rights whatever of third parties, th
Company should indemnify those whose rights were infringed.
The operations of the Company in Persia shall be restricted in the
following manner :
(1)The construction of any new railway line and of any new port
shall be subject to a previous agreement between the Government
and the Company.
(2)If the Company wishes to increase its existing service of tele-
phones, telegraphs, wireless and aviation in Persia, it shall only
be able so to do with the previous consent of the Gouernment.
If the Governmentrequires to utilize the means of transport, and
communication of the Comfiany for national defence or in other critical
circumstances, it undertakes to impede 'aslittle as possible the oper-
ations of the Company, and to pay it fair compensation for al1damages
caused by the utilization above mentioned.
(A) The Company is authorized to effect, without special licence,
ail imports necessary for the exclusive needs of its employees on pay-
ment of the custom duties and other duties and taxes in force at the
time of importation.
The Company sball take the necessary measures to prevent the sale
or the handine over of nroducts im~orted to nersous not emnloved. .
by the ~ompal~.
licence, the equipment, material, medical and surgical instruments ,and
pharmaceutical products, necessary for its dispensaries and hospitals
in Persia, and shall be exempt in respect thereof from any custom
duties and other duties and taxes in force at the time of imnortation.
or of any nature whatever to the Persian State & to local
authorities.
(C) The Company shall have the right to import, without any licence
and exempt from any custom duties and from any taxes or payments
of any nature whatever to the Persian State or to local authorities,262 ANNEXES TO U.K. MEHORIAL (NO.3)
anything iiecessary exclusively for the operalias of the Company in
Persia.
(D) The exports of petroleum shaii enjoy customs immunity and
shall be exempt from any taxes or payments of any nature whatever
to the Persian State or to local authorities.
(A) The Company and its employees shall enjoy tlie legal protection
of the Goa:rnrnent.
(B) The Governme1:tshall give, within the limits of the laws and
regulations of the country, al1 possible facilities for the operations of
the Company in Persia.
(C) If the Govencment grants concessions to third parties for the
purpose of exploiting other mines within the territory of the concession,
it must caiise the necessary precautions to be taken in order that these
exploitations do not cause any damage to the installations and works
of the Company.
fD) The Combanv shall be resoonsible for the determination of
dang'erous zones'fo/tlie construction of habitations, shops and other
buildings, in order that the Governmentmav Dr. .nt the inhabitants
from s&tling there.
ARTICLE 8
The Com any shall not be bound to convert into Persian currency
any part w atsoever of its funds, in particular any proceeds of the
sale of itsexports from Persia.
The Company shall immediately make its arrangements to proceed
with its operations in the province of Kermanshah through a subsidiary
Company with a view to producing and refining petrolerrmthere.
(1) The siims to be paid to the Governmentby the Company in accord-
ance with this Agreement (hesides those provicled in other articles)
are fixed as follows:
(a) .4n annual royalty, beginning on the 1st January 1933. of four
shillings per ton of pet~oleumsold for consumption in Persia or
exported from Persia ;
(b) Payrnent of a sum equal to twenty per cent (20 %) of the distri-
bution to the ordinary stockholders of the Anglo-Persian Oil
Company. Limited, in excess of the sum of sis hundred and
seventy-one thousand two hundred and fifty pounds sterling
(L671.250). whether that distribution be made as dividends for
any one year or whether it relates to the reserves of that Com-
Danv. exceedine the reserves which. according to-its books,
êsiçiedon 31st kecember 1932 ;
(c) The total amount to be paid by the Company for each calendar
(Christian) year under sub-clauses (a) and (b) shall never be
less than seven hundred and fifty thousand pounds sterling
(L750,ooo). ANNEXES TO U.K. MEhlORIAL (SO.3) 263
(II) Payments by the Company under tliis Article shall be niade
as follows :
(a) On 31st hlarch, 30th June, 30th September and 31st Deceniber
of each year, on each occasion one hundred and eighty-seven
thousand five hundred pounds sterling (£187,500). (The payment
relating ta 31st March 1933shall be made immediately after
the ratification of the present Agreement.)
(b) On 28th February 1934, and thereafter on the same date in
each year, the amount of the tonnage royalty for the previous
year provided for in sub-clause (1) (a) less the sum of seiren
hundred and fifty thousand pounds sterling (L75o,ooo),already
paid under sub-clause (II) (a).
(c) Any sums due to the Governmentunder sub-clause (1) (b) of this
Article shall be paid simultaneously with any distributions to
the ordinary stockholders.
(III) On the expiration of this Concession, as well as in the case
of surrender by the Company under Article 25 the Company shall pay
to the Government a sum equal to twenty per cent (20%) of :
(a) the surplus differencebetween the amount of the reserves (General
Reserve) of the Anglo-Persian Oil Company, Limited, at the
date of the expiration of the Concession or of its surrender, and
the amount of the same reserves at 31st December 1932 ;
(b) the surplus difference between the balance carried fon5.a- hy
the Anglo-Persian Oil Company, Limited, at the date of the
expiration of the Concession or of its surrender and the balance
carried forward by that Company at 31st December 1932. Any
~avment due to the Governmentunder this clause shall be made
hithin a period of one month from the date of the General
Aleetina of the Company followina the expiratioil or the surrender
(IV) The Government shall have the right to check the returns
relating to sub-clause (1) (a) which shall be made to it at latest. on
28th February for the preceding year.
(V) To secure the Goue~nmentagainst any loss which might result
from fluctuations in the value of English currency, the parties have
agreed as follows :
(a) If, at any time, the price of gold in London exceeds six pounds
sterling per ounce (ounce troy), the payments ta be made by
the Company in accordance with the present Agreement (with the
exception of sums due to the Governmentunder sub-clause (1)(b)
and clause (III) (a) and (b) of tliis Article and sub-clause (1) (a)
of Article 23) shall he increased by one thousand four hundred
and fortieth part (,,',,) for each penny of increase of the
price of gold above six pounds sterling (L6) per ounce (ounce
troy) on the due date of the payments.
(b) If, at any time, the Governmentconsiders that gold has ceased
to be the general basis of values and that the payments above
mentioned no longer give it the security which is intended hy
the parties, the parties shall come to an agreement as to a
modification of the nature of the security above mentioned or,~~4 ASNEXES l'O U.K. AlE31ORIAL (SO. 3)
in default of such an arrangement, shall submit the question
to the Arbitration Court (Article 22) which shall decide whether
the security provided in sub-clause (a) above ought to be altered
and. if so, shall settle the provisions to be substituted.therefor
and shall fis the period to which such provisions shall apply.
(VI) In case of a delay, beyond the dates fixed in the present Agree-
ment, which might be made by the Cam any in the payment of sums
shall be paid for the period of delay.t i te per cent (j %) per annum
ARTICLE II
(1) The Company shall be completely exempt, for its operations in
Pwsia, for the first thirty years, from any taxation present or future
of the State and of local authorities ; in consideration therefor the
following payments shall be made to the Gouernment:
(a) During the first fifteen years of this Concession, on 28th February
of each year and for the first time on 28th February 1934. nine
pence for each of the first six million (6,000,ooo)tons of petroleum,
on xvhichthe royalty provided for in Article IO (1)(a) is payable
for the preceding calendar (Christian) year, and six pence for
eacli ton in excess of the figure of six million (6,ooo.ooo) tons
above defined.
(b) The Company guarantees that the amount paid under the preced-
ing sub-clause shall never be less than two hundred and twenty-
five thousand pounds sterling (Lzzj,ooo).
(c) Duiing the fifteen years following, one shilling for each of the first
six million (6,000,ooo) tons of petroleztm, on which the royalty
provided for in Article IO (1) (a) is payable for the preceding
calendar year, and nine pence for each ton in excess of the figure
of G,ooo,ooo tons above defined.
(d) The Company guarantees that the amount paid under the preced-
ing sub-clause (c) shall never be less than three hiindred thousand
pounds sterling (~300,ooo).
(II) Before the year 1963, the parties shall come to ail agreement as
to the amounts of the annual payments to he made, in consideration of
the complete exemption of the Company for its operations in Persia
from any taxation of the State and of local authorities, during the second
penod of thirty ye;irs extending until 31st December 1933.
(A) The Company, for its operationsin Persia in accordance with the
present Agreement, shall employ al1 means customary and proper, to
ensure economy in and good returns from its operations, to preserve
the deposits of petroleum and to exploit its Concession by methods in
accordance with the latest scientific progress.
(B) If, within the temtory of the Concession,there exist other minera1
substances than petroleacmor woods and forests belonging to the Gouern-
ment, the Company rnay not exploit them in accordance with the present
Concession, nor object to their exploitation by other persons (subject
to the due compliance with the terms of clause (C) of Article 7) ;but ANNEXES TO U.K. MEhIORIAL (NO. 3)
265
the Company shall have the right to utilize the said substances or the
woods and forests above mentioned if they are necessary for the explo-
ration or the extraction of petroleum.
(C) AU boreholes which, not having resulted in the discovery of
petroleunr, produce water or precious substances, shall be reserved for
the Governnzent,which shall immediately be informed of these discoveries
by the Company, and the Governmentshall inform the Company as soon
as possible if it wishes to take possession of them. If it wishes to take
possession, it shall watch that the operations of the Company be not
impeded.
ARTICLE13
The Company undertakes to send, at its own expense and withiu
a reasonable time, to the hfinistry of Finance, whencver the represen-
tative of the Gouernmentshall requcst it, accurate copies of ail plans,
maps, sections and any other data, whether topographical, geological or
of drilling, relating to the territory of the Concession, which are in its
possession.
Furthermore, the Company shall communicate to the Government
throughout the duration of the Concession al1 important scientific and
technical data resulting from its work in Persia.
Ali these documents shall be considered by the Governmentas confi-
dential.
ARTICLE14
its(wish, at any reasonable time, the technical activity of the Company
in Persia, and to nominate for this purpose technical specialist experts.
(B) The Company shall place at the disposal of the specialist experts
nominated to this end by the Government,the whole of its records relative
to scientific and technical data, aswell as ail measuring apparatus and
means of measurement, and these specialist experts shd, further, have
the right to ask for any information in al1the officesof the Company and
on ali the temtories in Persia.
The Governmentshall have the right to appoint a Representative who
shall be desi~nated "Dele~ate of the Imperia1 Government". This Rertre-
seutative shall have theUright :
(1) to obtain from the Company al1 the information to which the
stockholders of the Company are entitled ;
(2) to be present nt al1tlie meetings of the Board of Directors, of its
committees and at al1 tlie meetings of stockholders, which bave
been convened to consider any question arising out of the relations
between the Governmentand the ComPany ;
(3) to preside ex oficio, with a casting vote, over the Committee to
be set up by the Company for the purpose of distributing the grant
forand supervising the professional education in Great Britain of
Persian nationals referred to in Article 16 ;
(4) to request that special meetings of the Board of Directors be
convened at any time, to consider any proposa1that the Government
shall submit to it. These meetings shall be convened within
21266 ANNEXES TO U.K. YEMORIAL (NO. 3)
15 days from the date of the receipt by the Secretary of the
Company of a request in writing to that end.
The Contpanyshall pay to the Governmentto cover the expenses to be
borne by it in respect of thealary and expenses of the above-mentioned
Delegate :iyearly sum of two thousand pounds sterling (Lz,ooo). The
Governmentshall notify the Comfiany in writing of the appointment of
this Delegate and of any changes in such appointment.
ARTICLE 16
(1) Both parties recognize and accept as the principle goveming the
performarice of this Agreement the supreme necessity, in their mutual
interest, of maintaining the highest degree of efficiency and of economy
in the administration and the ofierations of the Contpany in Persia.
(II) It is, however, understood that the Company shall recruit its
artisans as well as its technical and commercial staff from among Persian
nationals to the extent that it shall find in Persia persons who possess
the requisite competence and experience. It is likewise understood that
the unskilled staff shall be composed exclusively of Persian nationals.
(III) The parties declare themselves in agreement to study and
prepare a general plan of yearly and progressive reduction of the non-
Persian einployees with a view to replacing them in the shortest possible
time and progressively by Persian nationals.
(IV) The Company shall make a yearly grant of ten thousand pounds
sterling in order to give in Great Britain, to Persian nationals, the
professional education necessary for the oil industry.
The said grant shall be expended by a Committee which shall be
constituted as provided in Article 15.
The Combanv shall be re~onsibie for oreanizin~ and shall Dav the
cost of the proGision, controf and npkeep of sanitah and health
~ractised in Persic on al1the lands of the Combanv and in al1buildings
and dwellings, deçtined by the Comfiany for ihe ;se of its employe&,
including the workmen employed within the territory of the Concession.
Whenever the Comfiany shall make issues of shares to the public, the
subscription lists shail be opened at Tehran at the same time as else-
where.
ARTICLE 19
The Ciiinpnny shall scll for iiiterii:il soiisuiiiiiiPersia, including
tlienwds of theGo~ernnre~lrln.oror spirit. kcroseiieaiid fuel oil. ~~ruil~iced
from Persian petroleum, on the folïowing basis :
(a) On the first of June in each year, the Company shall ascertain the
avcrage Roumanian f.0.b. prices for motor spirit, kerosene and
fuel oil and the average Gulf of Mexico f.0.b. prices for each of
these products during the preceding period of twelve months
enclingon the 30th April. The lowest of these average prices shall ASXEXES TO U.K. MEXORIAL (NO. 3) 267
be selected. Such prices shall be the "basic prices" for a period
of one year beginning on the 1st June. The "basic prices': shall
be re arded as being the prices at the refinery.
(4, The iompany shall seIl : (1)to the Governmentfor its own needs,
and not for resale, motor spirit, kerosene and fuel oil at the basic
prices, provided in sub-clause (a) above, with a deduction of
twenty-five per cent (25%) ; (2)to other consumers at the basic
prices with a deduction of teu per cent (IO%).
(c) The Company shall be entitled to add to the basic prices mentioned
in sub-clause (a), al1actual costs of transport and of distribiition
and of sale, as well as any imposts and taxes on the said products.
'(d) The Governmentshall forhid the export of the petroleumproducts
sold by the Company under the provisions of this Article.
(1) (a) During the last ten years of the Concession or during the two
years from the notice preceding the surrender of the Concessionprovided
in Article25, the Company shaU not seIl or otherwise alienate, except to
subardinatecompanies,any of its immovable properties in Persia. During
the same period, the Company shall not alienate or export any of its
movable property whatever except such as has become unuti1iz:ible.
(b) During the whole of the period preceding the last ten years of the
Concession, the Company shall not alienate any land obtained by it
eratuitouslv from the Government ; it shall not export from Persia any
inovable pÏoperty except in the case when such-property shall havé
become unutilizable or shall be no longer necessary for the opernlions
of the Company in Persia.
(III At the end of the Concession. whether bv cx~iration of time
or'otherwise, al1 the property of the'~ompan~ in ~ekia shall become
the property of the Governmentin proper workin~ order and free of anv
expensës and of any encumbraiicés. - -
(III) The expression "al1 the property" comprises al1 the lands,
buildings and workshops, constructions, wells, jetties, roads, pipe-
lines, bridges, drainage and water supply systems, engines, installations
and equipments (including tools) of any sort, al1 means of transport
and communication in Persia (including for example automobiles,
carriages, aeroplanes), any stocks and any other objects in Persia which
the Company is utilizing in any manner whatsoever for the objects of the
Concession.
ARTICLE 21
The contracting parties declare that they base the performance of
the present Agreement on principles of mutual good wiii and good fait11
as well as on a reasonable interpretation of this Agreement.
The Company formally undertakes to have regard at al1 times and
in al1places to the rights, privileges and interests of the Governmentand
shaü abstain from any action or omission which might be prejudicial
to them.
This Concession shall not be annulled by the Gouernmentand the terms
therein contained shaü not be altered either by general or special legis-
lation in the future, or by administrative measures or any other acts
whatever of the executive authorities. ANSEXES TO U.K. hlEhIORIAL (NO. 3) 269
the royalties and L113,403 3s. IO^.placed on deposit at the disposai
of the Government.
(II) Within the same period, the Company shall pay to the Government
in full settlement of ali its clairns in respect of taxation for the period
from ~1st March 1930 to 31st December 1932 a sum calculated on the
basis of sub-clause (a) of clause 1of ArticlII. but without the guarantee
provided in sub-clause (b) of the same clause.
If, 'by reason of the annulment of the D'Arcy Concession, litigation
should arise between the Company aiid private persons on the subject
of the duration of leases made in Persia before the 1st December 1932
within the limits allowed by the D'Arcy Concession, the litigation
shall be decided according to the rules of interpretation following :
(a) If the lease is to terminate, according to its terms, at the end
of the D'Arcy Concession, it shall retain its validity until
28th May 1961, notwithstanding tlie annulment of the said
Concession. -
(b) If it has been provided iii the lease that it shall be valid for the
duration of the D'Arcy Concession and in the event of its renewal
for the duration of the renewed Concession, the lease shall retain
its validity until31st December 1993.
The Com9any shall have the right to surrender this Concession at
the end of any Christian calendar year, on giviiig to the Government
notice in writing two years previously.
On the expiry of the period above provided, the whole of the property
of the Company in Persia (defined in Article zo (III)) shall hecome free
of cost and without encumbrances the p!operty of the Governmentin
proper working order and the Company shall be released from any
enaaeement for the future. In case there should be disuutes between
th& carties concerning their engagements before the êxpiry of the
period above provided, the differences shall be settled by arbitration
& provided in Article 22.
Tliis (:oncession is panteri tc,ilre Coinpa~ryfor the period hcgiiiiiing
oii tliedate uf its ,:oniiiig into force and ending on 31st Lkcernbtr LI)')3.
Ilrf(8rr:tlic riate tilt?ist L)ecembcr 1oq7. tliis Concession <:nitiinly
come to an end in the case that the C&&ny should surrender thé
Concession (Art. 25) or in the case that the Arbitration Court sliould
declare the Concession annulled as a conseauence of default of the
Company in the performance 01the present ~ireement.
The following cases only shall be regarded as default in that sense :
(a) if any sum awarded to Persia by the Arbitration Court has not
been paid within one moiith of the date of the award ;
(6) if the voluntary or compulsory liquidation of the Company be
decided upon. ASSEXES TO U.K. hIEJ1ORIAL (SO.3)
270
In any other cases of breach of the present Agreement by one party
or tlie other, the Arbitration Court shall establish the responsibilities
and determine their consequences.
Any transfer of the Concession shall be subject to confirmation by
the Government.
This Agreement shall come into force alter ratification by the Majlis
and promulgation by Decree of His Imperial hlajesty the Shah. The
Gouenlment undertakes to submit this Agreement, as soon as possible,
for ratification by the Majlis.
Made at Tehran, the twenty-ninth April one thousand nine hundred
and tliirty-three.
For the Imperial Government of Persia,
(Signed) S. H. TAQIZADEH.
For and on behalf of the Anglo-Persian Oil Company, Limited,
(Sigiled)JOHN CADMANC ,hairman.
(Signed) W. FRASER,Deputy Chairman.
-4ppendix No. 17 to Annex 3
LETTER, DATED 17th AUGUST 1933, FROM THE PERSlAN CHAR&
D'AFFAIRES IN LONDON TO THE REGlSTRAR OF THE PERMANENT COURT
OF INTlillNATIONAL JUSTICE
No. 518/312
Sir, London, 17th August 1933.
1 am directed by the Persiaii Government to transmit to you the
accompanying copy of an agreement recently concluded between them
and the Anglo-Persian Oil Company, Limited.
2. Acting in agreement with His Britannic Majesty's Secretary of
State, Sir John Simon, the Persian Government desire to bring Article22
of tliis Agreement, dealing with the arbitration of possible disputes
between the two parties, to the notice of the Court. It will be observed
that under this Article tlie two parties agree in certain circumstances
to 11a\~recourse to the good officesof the Presidcnt (or Vicc-President)
of the Permanent Court of International Justice in connection with
the iiomination of an umpire or a sole arbitrator.
3. The Persian Government desire me to explain that circumstances
made it desirable that the formalities necessary for the entry into
force of the Agreement shoiild be accomplished with the minimum
of delay; and, since it was understood that the Permanent Court was
unlikely to meet again before the month of September, it appeared
impracticable to obtain belorehand the formal concurrence' of the
Court in this provision. ANNEXES TO U.K. I\IE>lORIi\L(No.3)
271
4. The Persian Government trust that no obstacle will be seen to
the acceptance by the Court of the functions conferred by Article 22
of the Agreement upon its President or Vice-President.
1 have, etc.
(Signed F. NOURYESFANDIARY,
Persian Chargé.d'Affaires.
Appendiz No. 18 10 Annex 3
LETTER, DATED 17th AUGUST 1933, FROM THE UNITED KINGDOM
GOVERNMENT TO THE REGISTRAR OF THE PERMANENT
COURT OF INTERNATIONAL JUSTICE
E 4719117134
. Sir, Foreign Office, 17th August 1933.
1 am directed by His Majesty's Principal Secretary of State for
Foreign Aflairs to transmit to you the accompanying copy of an Agree-
ment recently concluded between the Persian Government and the
Anglo-Persian Oil Company, Limited.
2. Acting in agreement with the Persian Government, the Secretary
of State desires to bring Article22 of this Agreement, dealing with
the arbitration of possible disputes between the two parties, to the
notice of the Court. It will be observed that under this Article the two
parties agree in certain circumstances to have recoiirse to the good
offices of the President (or Vice-President) of the Permanent Court ,of
International Tustice in connection with the nomination of an umpire
or a sole arbiirator.
3. The Secretary of State desires me to explain that circumstances
madé it desirable that the formalities necessary for the entry into
force of the Agreement should be accomplished with the minimum
of delay ;and, since itwas understood that the Permanent Court was
unlikely to meet again before the month of September, it appeared
impracticable to obtain beforehand the formal concurrence of the
Court in this provision.
4. The Secretary of State trusts that no obstacle will be seen to the
acceptance by the Court of the functions conferred by Article 22 of
the Agreement upon its President or Vice-President.
1 am, etc.
(Signed G. W. RENUEI..272 ANNEXES TO U.K. MEHORIAL (No. 3)
Appendix No. 19to Annex 3
LETTER. DATED 21~t OCTOBER 141,.." FROM THE REGISTRAR OF THE
1~I:ll\1:\SIT0I:RT OF IZITEKVATIO'II USTICE 1'0 THli USI>I:R-
SECRI:T,\I<YOF STATE .\T I'HE I:<lRI:IZOFI'LCli
.Cour permanente de Permanent Court of
Justice internationale, International Justice,
La Haye. The Hague.
II, 7947
Sir, zrst October 1933.
With reference to my letter of ~1st August 1933. in reply to yours
of 17th August 1933, relating to the Agreement recently concluded
between the Persian Government and the Anglo-Persian Oil Company,
Ltd., 1 have the honour to inform you, under instructions from the
Court, that it sees no obstacle to the acceptance by its President and
Vice-President of the functions conferred upon them by Article 22
of the said Agreement.
1 have, etc.
(Signed) A. HAMMARSKJOLD,
Registrar.
Appendix No. 20 to Annex 3
MAP SHOWlNG THE CONCESSIONAL AREA IN IRAN OF THE
ANGLO-IRANIA OIL COMPANY ,IMITED
[Not reprodzrced] ANNEXES TO U.K. MEXORIAL(No. 3) 273
Apfiendix No. 21 ta Altneï 3
LABOUR CONDITIONS IN THE OIL INDUSTRV IN IRAN'
[Not reproduced]
Appendix No. 22 to Annex 3
TEXT OF SINGLE ARTICLE LAW PASSED BY THE IRANIAN MAJLIS ON
zznd OCTOBER 1947
(a) In view of the fact that the Prime Illinister, acting in good faith
and upon his inference from the provisions of Article z of the law of
2nd December 1944, entered into negotiations and drew up an agree-
ment under the date of 4th April 1946, concerning the creation of a
mixed Irano-Soviet Oil Company, and wliereas the Iranian Majlis
does not deem the said inference to be consistent witli the true purport
and intent of the above-mentioned law, it therefore considers the said
negotiations and agreement as nul1 and void.
(b)The Government is required to make arrangements for atechnical
and scientific research to be made for the exploitation of petroleum
mines and to draw up and prepare within a period of five years full
technical and scientific plans of the oil-bearing zones of the country,
whereafter the Majlis may, with full knowledge that oil exists in
sufficient quantities, arrange forthe commercial exploitation of these
national resources through the enactment of the necessary laws.
(c) The grant of any concession for the exploitation of oil anci its
derivatives in the country to foreigners and the creation of any kind
of Company for this purpose in which foreigners may have a share in
any way whatsoever is absolutely forbidden.
(d) If, after the technical investigations mentioned in paragrapli (b)
above, the existence of oil in commercial quantities in the northem
areas of Iran is proved, the Government is hereby authorized to enter
into negotiations with the U.S.S.R. for the sale of oil products.
informing the BIajlis of the result.
(e) In al1 cases where the rights of the Iranian nation, in respect of
the country's natural resources, whether underground or othenvise,
have been impaired, particularly in regard to the southern oil, the
Government is required to enter into such negotiations and take such
measures as are necessary to regain the national rights and inform
the Majlis of the result.
InternationaLabour Office. Refioof a Mission oftheInfernational L<ibai'r
Office (January-Februar1950). Geneva,1950.Studies and Reports. NewSenes.
No. 24. IV + 87 pages. AXNEXES TO U.K. MEMORIAL (NO. 3)
274
Appendix A7o.23 10 Annex 3
SUPPLEMENTAL :\tiKEE3IEST BET\\'EES THE I>IPERIAII.K.\SIAS
GOVI:HS3II:ST AR0 THE .\Stil.O-IK.ASIA$ OIL COJIPASY.
Whereas on the 29th April 1933, an Agreement (herein called "the
Principal Agreement") was entered into between the Imperial Govern-
ment of Persia (now known as "the Imperial Iranian Government")
of the one part and the Anglo-Persian Oil Company, Limited (now
known as the "Anglo-Iranian Oil Company, Limited) of the other
part which established a Concession for the regulation of the relatioiis
hetween the two parties ahove mentioned,
And whereas the Government and the Company have after full and
friendly discussion agreed that in view of the changes in economic
conditions brought about by the World War of 1939-1945the financial
benefits accrning ta the Governmeiit under the Principal Agreement
should be increased to the extent and in the manner hereinafter
a&.earine.
And w%ereasfor this purpose the parties have agreed ta enter into
a Supplemental Agreement :
Now it is hereby agreed between the Imperial Iranian Gorernment
and the Aiiglo-Iranian Oil Company, Limited, as follows :
I.This Agreement is supplemental to and shall be read with the
Principal Agreement.
z. Any of the terms used herein which have been defined in the
Principal Agreement shall have the same meaning as in the Principal
Agreement. Savethat, for the purposes of this Agreement, al1references
in the Principal Agreement to Persia, Persian, the Imperial Govern-
ment of Persia and the Anglo-Persian Oil Company, Limited, shall
be read as references to Iran, Iranian, the Imperial Iranian Govern-
ment and the Anglo-Iranian Oil Company, Limited, respectively, and
the references to the Permanent Court of International Justice shall
be read as references to the International Court of Justice established
by the United Nations.
3. (a) In respect of the calendar year ended 31st December 1948,
and thereafter, the rate of the annual royalty payable to the Govern-
ment under sub-clause (1) (a) of Article IO of the Principal Agreement
shall be increased from four shillings to six shillings per ton of petroleum
sold for consumption in Iran or exported from Iran.
(b) The Company shall, within a period of thirty days from the date
of coming into force of this Agreement, pay to the Govemment the
sum of three million three hundred and sixty-four thousand four
hundred and fifty-niiie pounds sterling (£3,364,459).as a retrospective
application to cover the calendar year erided 31st Decemher 1948.
of the modification introduced by sub-clause (a)of this Clause 3, taking
into accouut the provisions of sub-clause (V) (a) of Article IO of the
Principal Agreement.
4. (a) III order that the Governmeiit may receive a greater and
more certain and more immediate benefit in respect of amounts placed
to the Geiieral Reserve of the Anglo-Iranian Oil Company, Limited,
than that provided by sub-clause (1) (b)and sub-clause (III) (a) of ANSEXES TO U.K. IIEMORIAL (XO. 3) z75
Article IO of the Principal Agreement, the Company shall pay to the
Government in respect of each amoupt placed to the General Reserve
of the Anglo-Iranian Oil Company, Limited, in respect of each financial .
period for which the accounts of that Company are made up (starting
with the financial period ended 31st December 1948) a sum equal to
twenty per cent (20%) of a figure to be arrived at by increasing the
amount placed to General Rescrve (as shown by the published accounts
for the financial period in question) in the same proportion as tweiity
sliillings sterling (s.zo/-) hear to the difference between twenty sliillirigs
sterline ls.201-)and the Standard Rate of British Income Tax in force
at the"rè1evjnt date.
The relevant date shall be the date of the final distrihution to the
ordinary stockholders in respect of the financial period in question,
or, in the event of there being no such final distribution, a date one
calendar month after the date of the annual general meeting at which
the accounts in question were presented.
Examples of the implementation of the principle set out in this
sub-clause (a) have been agreed between the parties hereto and are
set out in the Schedule to this Agreement.
(b) If, in respect of any financial period for which the accounts of
the financial period endedmpan31st December 1948), the total amoiint
payable hy the Company to the Government under sub-clause (a) of
this Clause 4 and sub-clause (1)(b) of Article IO of the Principal Agree-
ment sliall be less than four million pounds sterling (~4,ooo,ooo),the
Company shall pay to the Government the difference between the
said total amount and four million pounds sterling (~4,000,ooo).
Provided, however, that if during any such financial period the Company
shall have ceased, owing to events outside its control, to export petro-
leum from Iran, the amount payable by the Compaiiy in respect of
such period in accordance with the foregoing provisions of this siib-
clause (b) shall be reduced by a sum which bears the same proportion
to such amount as the period of such cessation bears to such financial
period.
(c) Any sum due to the Government in iespect of any financial
period under sub-clause (aj or sub-clause (b) of this Clause 4 shall
be paid on the relevant date appropriate to that financial period.
(d) The provisions of Clause (V) of Article IO of the Principal Agree-
ment shall not apply to any payments made by the Company to the
Govcrnment in accordance with suh-clause (a) or sub-clause (b) of this
Clause 4.
j. (a) In iespect of the sum of fourteen million pounds sterling
(~~~.ooo,ooo)shown in the Balance-heet of the Anglo-Iranian Oil Coni-
pany, Limited, dated 31st Decemher 1947, as constituting the General
Reserve of that Company, the Company shall, within a period of thirty
days from the date of coming into force of this Agreement, pay to the
Government the sum of five million and ninetv thousand nine hundred
and nine pounds sterling (Lj,ogo,gog).
/bJ The ~rovisions of Clause (VI of ArticleIO of the Principal Agree-
mént shall'not apply to the pa+ent to be made by the CÔmpaiy in
accordance witb sub-clause (a) of this Clause 5.
6. The payments to be made by the Company under Clauses 4 and 5
of this Agreement shall he in lieu of and in substitution for-276 AXSEXES TO U.K. 1IE1IORIAL o. 3)
(i)any payments to the Govemment under sub-clause (1) (b) of
Article IO of the Principle Agreement in respect of any distribution
relating to the General Reserve of the Company, and
(ii) any payment which might become payable by the Company to
claiise (III)(a)nof ArticlefIOheof the Principal Agreement on theb-
expiration of the Concession or in the case of surrender by the
Company under Article 25 of the Principal Agreement.
7. (a) In respect of the calendar year ended 31st Decemher 1948, and
thereafter, the rate of payment to be made by the Company to the
Government in accordance with sub-clause (1) (c)of Article II of the
Principal Agreement which relates to the payment to be made in respect
of the excess over 6,000,ooo tons sliall be increased from ninepence to
one shilliiig.
(b) The Company shall, within a period of thirty days from the date
sum of t ree hundred and twelve thousand nine hundred pounds ster-nt the
ling (L31z,goo), as a retrospective application to cover the calendar
year endod 31st December 1948, of the modification introduced by sub-
clause (a) of this Clause 7, taking into account the provisions of sub-
clause (V) of Article IOof the Principal Agreement.
8. (a) At the end of suh-clause (a) of Article 19 of the Principal
Agreement, there shall he added a paragraph in the following tem :
"If at any time either party shall consider that either Roumanian prices
or Gulf of Mexico prices no longer provide suitahle standards for fixing
'basic prices', then the 'basic prices' shail he determined by mutual
agreement of the parties, or in default of such agreement by arhitration
under the provisions of Article 22. The 'basic prices' sodetermined shall
hecome hinding on both parties by an agreement effected by exchange
of letters between the Government (which shall have full capacity to
enter into such an aereement) and the Com~anv."
(b) ASfrom the kt June I~~~t,he prices'at Whichthe Company shall
seIl motor spirit, kerosene and fuel oil, produced from Iranian petroleum
to consuiners other than the Government for intemal consumotion in
Iran, shall he the basic prices with a deduction of twenty-five ber cent
(25%). instead of a deduction of ten per cent (10%) as providedin sub-
clause (b) of Article 19 of the Principal Agreement.
9. In consideration of the payment of the above sums by the Com-
pany, the Govemment and the Company agree that al1their obligations
one to another accrued u» to the 71st December 1~48. in resoect of
suh-clause I (a) and sub-'clause I (bJ of Article IO and in reCpect of
Article II of the Principal Agreement and also in respect of the General
Reserve liave been fully discharged.
IO. Subject to the provisions of this Agreement, the provisions of the
Principal Agreement shall remain in full force and effect.
II. This Agreement shall corne into force after ratification by the
Majlis and on the date of its promulgation hy Decree of His Imperia1
Jlajesty the Shah. The Government undertakes to submit this Agree-
ment, as soon as possible, for ratification by the Majlis. ANNEXES TO U.K. MEMORIAL (No. 3) 277
Examplesof theImplementationof the Principle set out in Sub-classe(a)
of Clause 4 of the Within Written Agreement onthe Assumption that
~r,ooo,ooo is Placedto GeneralReserve
EXAMPLE1 EXAXPLE II EXAMPLE III
I. Standard Rate of British Incorne Tax . 10s.in the fr gs.in the I gr. in th£1
2. Amount placed to General Reserve as
show" by the published accounts for the
financial period in question . . . . . f~.ooo,ooo fi.ooo.ooo E~,ooo,ooo
3. The above amount is increased as followç:
A Standard Rate B . Pvopor-
"Twenty ofBrilish tionale
Shillirtgs Incorne Diflevence Increase
sfcrling" Tas A B
20s. 10s. 10s. 20 10 Ez,ooo.ooo
205. 99. 11s. 20 11 - f1.8r8.18~
201. 55. 15s. 20 15 - - f1,333,333
4. The "sum equal ta 20%" which is therefore
payable to the Iranian Government is . . f.po,ooo f363.636 £266.667
Made at Tehran the 17th July, one thousand nine hundred and
forty-nine.
For the Impenal Iranian Govemment :
(Sgd.) A. Q. GULSHAYAN.
For and on behalf of the Anglo-Iranian
. Oil Company, Limited :
(Sfd.) N. A. GASS.
Appendix No. 24 to Annex 3
As Your Excellency is aware, His Majesty's Government in the United
Kingdom attach the highest importance to relations of friendship and
confidence in al1 matters between the people and Government of Iran
and those of the United Kingdom ; and His Najesty's Govemment have
followed with fnendly interest the plans of the Imperia1 Government to
secure administrative reforms and to provide for the improvement of
the standards of livine of the lranian r)eo~le.Thev had therefore noted
tifirti snrisf;iition tlic coii<:liiioii311.~\grc~tiiei~rin 1943 I>t:r<vc~tnh,:
Imperia1Go\'t:rniiicnt ;iiirthe .Aiiglo-Iraniln OilComlinny fur :in iiiir~ ili~.
in the annual ~avments to the Irinian Government. in Greement which
would have s;c;red for the Imperial Government a morë advantageous
return per ton of oil than that enjoyed by any other government in the
hfiddle East and which would have enabled the Imperial Government
to proceed with its plans.
His Majesty's Government were correspondingly clisappointed that
this agreement could not be put into force owing to the difficulties and 27s ASSEXES TO U.K. ~~E~IORIAL (SO. 3)
cation by the Majlis; but meanwhile, as Your Exceiiency is also aware. ratifi-
His Majesty's Government had for some time past been considering in
what way the Imperial Government could be assisted in their consequent
financial difficulties. It was accordingly gratifying to His hfajesty's
Governmorit to know that the Anglo-Iranian Oil Company had recently
voluntarily offered, in spite of the withdrawal from the Majlis of the
Supplemental Agreement, to make advances of royalties to the Imperial
Governmcnt as a result of which the total payments to that Government
in 1951 will be some L284million. This sum is considerably in excess
of the total payments which might have been expected during the same
period under the 1933 Agreement. This offer was accepted and the first
instalment has already been paid.
His Afajesty's Govemment cannot be indifferent to the affairs of the
Anglo-Iranian Oil Company, an important British and, indeed, inter-
national interest. It is therefore with much concern that His lfajesty's
Government leam that the alailis Oil Commission bave indicated that
the! arc contciiiplnting ttic .'n:iiinnalizntioii" of th;it intercst hcfore tlie
rzpiry uf the (:i>iiilnii!.'jiuncc3sion agreeineiit. In tlidr regard there are
certain conjidcrations to iihicli tli~.!'desire 10iri\.ite the urwnt xttentinri
of the Imperial Government. -
(a) It isnecessary, first, to draw clear distinction between the principle
of nationalization and the expropriation of an industry which has
been operating in Iran on the security of a regularly negotiated
agreement valid until 1993, and, relying on that security, has in
al1 good faith spent enormous sums of money in development.
(b) His ùlajesty's Govemment are advised that under the terms of
its agreement, the Company's operations cannot legally be tem-
inated by an act such as "nationalization".
(c) Under Article 22 of the Agreement, the Imperial Govemment and
the Anglo-Iranian Oil Company agreed in certain circiimstances
to Iiave recourse to the good offices of the President (or Vice-
President) of the Permanent Court of International Justice in
connection with the nomination of an um~,re or a so~e ~rbitrator
jlioiil~l~liiiçr~iiccjof opiiiiori(icciirto m;ikc recours? tu arbitratioii
dcjir;iblc :tlint ~,rovision\v;ismndc kiiu\i.ii iiitlirCourt iiisiinul-
tancoiis and identical lctters nddresjcd bv His \laicstv's Govern-
ment and the Imperial Government to t<e ~e~istiar lf the Court
on 17th August 1933.
(d) As the Imperial Government are a\rrare,the Companyare prepared
to discuss a new agreement with them on the basis of an equal
sharing of profits in Iran ; but the Company evidently could not
entertain any such proposition unless they were assured that their
agreement would be permitted to run its full course.
His Majesty's Govemment must at the same time express their regret
that public opinion in Iran has apparently not been adequately or
correctly informed regarding the operations and intentions of the Anglo-
Iranian Oil Company. The fact is that, as Your Excellency's Government
are well aware. theAndo-Iranian OilCom~anv have no desire other than
ti~c:irry on ~c~itiniatcb~~iiicss iii:is~oci:ttion\vit11the Iranim (;ovcrn-
incnt. His .\lajesty's Go\.<.riimeiitfor their part \~~lcniii~d:lie initiative
taken in 1948~bythe Company in proposing an increase in royalties and AXNEXES TO U.K. >IE%IORIAL o. 3)
279
other benefits to Iran. The advantages of the resulting agreement, Iiow-
ever, were never explained to the Iranian public nor was the agreement
fdy discussed by the Majlis, whose debates on the subject of oil Iiave
dealt with matters outside the scopc of the actual Agreement. The
impression was allowed to anse thatthe Supplemental Agreement implied
some prolongation of the Agreement of 1933 or imposed obligations on
the Imperial Govemment ; whereas, as Your Excellency is aware, this
was not the case. The Supplemental Agreement would have brought
substantial benefits to Iran, and it did not affect either the period or the
general validity of the 1933 Agreement.
h'otwithstanding the lack of appreciation that has hitherto been shown
of the intentions of the Anglq-Iranian Oil Company towards the Imperial
Govemment and people of Iran, His blajesty's Government wish, in
bringing these considerations to the attention of Your Excellency's
Govemment, to express their conviction thatthe continued collaboration
of the Anglo-lranian Oil Company with the Govemment of Iran is in
the best interests of the Government and people of Iran : and they
earnestly hope that future discussions on the oil question will take place
on a fair and reasonable basis in a friendly spirit.
--
A$pendix No. 25 10 Annex 3
TEXT OF THE IRANIAX OIL XATIONALIZATIOX ACT OF 1st MAY 1951
[Translation]
By the grace of Almighty God
We
Pahlavi Shahinshah of Persia
hereby command, by virtue of Article 27 of the Supplementary Coiisti-
tutioual law that :
Art. I. The Bill conceming the procedure for enforcement of the law
conceming the nationalization of the oil industry throughout the country
which was approved by the Senate and the hlajlis on 9th Urdibihisht
(30th April) and is hereto attached may be enforced.
Art. z.The Counul of Ministers are charged with the enforcement of
this law.
-
The text of the Bill conceming procedure for enforcement of the Iaw
relating to the nationalization of oil, as approved by the two Houses
of Parliament after amendments by the Majlis.
Art. I. With a view to arranging the enforcement of the law of 24
and 29 Island 1329 (15th and 20th March 19j1) conceming the nation-
alization of the oil industry throughout Persia, a mixed Board compi~sed
of five Senators and five Deputies selected by each of the two Houses
and of the hlinister of Finance or his d.put. shall be formed.
Art. 2. The Govemment is bound to dispossess at once the former
Anglo-Iranian Oil Company under the supervision of the mixed Board.280 ANNEXES TO U.K. hlEhIORIAL a. 3)
If the Company refused to hand over at once on the grounds of existing
claims on the Government, the Government can, by mutual agreement,
deposit in the Bank Milli Iran or in any other bank up to 25 per cent
of current revenue from the oil after deduction of exploitation expenses
in order to meet the probable claims of the Company.
Art. 3. The Government is bound to examine the rightful claims of
the Government as well as the rightful claims of the Compaiiy under
the supervision of the mixed Board and to submit its suggestions to the
two Houses of Parliament in order that the same may be implemented
after approval by tlie two Houses.
Art. 4. Whereas, with effect from 29th Isfand 1329 (20th March 1951),
when nationalization of the oil industry was sanctioned also by the
Senate, the entire revenue derived from oil and its products is indisput-
ably due to the Persian nation, the Government is bound to audit the
Company's accounts under the supervision of the mixed Board which
must also closely supervise exploitation as from the date of tlie imple-
mentation of this law until the appointment of an executive body.
Art. 5. The mixed Board must drawup, as soon as possible, the statute
of the National Oil Company in which provision is to be made for the
setting up of an executive body and a supervisory body of experts, and
must subniit the same to the two Houses for approval.
Art. 6. For the gradua1 replacement of foreign experts by Persian
experts, the mixed Board is bound to draw up regulations for sending,
after competitive examinations, a number of students each year to
foreign coiintries to iindertake study in the various branches of required
knowledge and gain experience in oil industries, the said regulations to
be carried out by the Ministry of Ediication, after the approval of the
Council of Ministers. The expenses connected with the study of such
students shall be met out of oil revenues.
Art. 7. Al1purchasers of products derived from the wells taken back
from the former Anglo-Iranian Oil Company can, in future,buy annually
the same quantity of oil they used to buy annually from the Company
from the beginning of the Christian year 1948 up to 29th Isfand 1329
(20th hlarch 1951) at a reasonable intemational price. For any surplus
quantity they shall havepriority in the event of equal tems of purchase
being offered.
Art. 8. Al1proposals formulatedby the mixed Board for the approval
of the Majlis and submission~to the Majlis must be sent to the Oil
Committee.
Art. 9. The mixed Board must finish its work within three moiiths
as from the date of approval of this law and must submit the report
of its activities to the Majlis in accordance with Article 8. In the event
of requiriiig an extension, it must apply giving valid reasons for such
extension. Whilst, however, the extension is hefore the two Hoiises for
approval, the mixed Board can continue its functions.
Memorial submitted by the Government of the United Kingdom of Great Britain and Northern Ireland