PERSIAN OILFIELDS

New Zealand Herald, Volume LXX, Issue 21400, 26 January 1933, Page 9

PERSIAN OILFIELDS

CANCELLED CONCESSION

CASE BEFORE THE LEAGUE HOPES OF CONCILIATION FAVOURABLE ATMOSPHERE > By Tele graph—Press Association—Copyright' British Wireless RUGBY, Jan. 24 The Council of the League of Nations has appointed Dr. E. Benes, G'zechoSlovakian Minister of Foreign Affairs, rapporteur on the dispute between Britain and Persia over the repudiation by the latter country of the Anglo-Persian Oil Company's concession. The matter is to be taken up by the Council on Thursday. The Persian delegates at Geneva already have revealed somo of the arguments by which they hope to justify, firstly, the repudiation of the concession, and, secondly, their contention that, as the company ought to have had recourse to tho Persian Courts, the case is not one with which the League ought to deal. It appears that many of the statements contained in tha Persian Government's memorandum are based on a misunderstanding, and it is hoped that the majority of the points will bo easily cleared up when they arc explained in the conciliatory atmosphere of the League. Sir John Simon, British Foreign Secretary, will justify the action of Britain in bringing the case before the League. This is a course of action which it is hoped in London will produce an amicable and equitable settlement beneficial to both parties. Some surprise has been caused in London by a statement in the Persian Government's memorandum that the Anglo-Persian Oil Company confined the extraction of oil for more than 30 years to an area a little more than one square mile in extent. The contention is made that the company intended to develop the concession to the fullest possible limits.

Actually the area of the company's Persian oilfields, from the whole of which oil is now being extracted, amounts to about 150 square miles. Tho company has technically examined more than 130,000 square miles, drilled 140,000 feet, carried out 380 geological surveys and has spent £3,500,000 on work of this character outside of the two proved producing oilfields.

BRITAIN'S ATTITUDE

OFFICIAL MEMORANDUM RIGHTS OF THE COMPANY When the Anglo-Persian Oil Company's business first came before the Council of the League of Nations on December 19 last, the Persian representative asked for time to enable his Government to prepare its case and communicate it to the League. The detailed examination of the matter was therefore adjourned until January 23. The British case was communicated to the Council in the form of a memorandum. This recapitulated the history of the D'Arcy Concession and the stages of the present dispute, and pointed out that the British Government was not bringing the dispute before the Council as shareholders of the Anglo-Persian Oil Company but "as the Government of a State which has thought it necessary to take up the case of one of its nationals whose interests have been injured by a breach of international law committed by another State."

That questions of the precise amount to be paid to the Persian Government under the concession should have arisen was not a matter for surprise, the memorandum proceeded, having regard, on the one hand, to the lack of precise definition within the body of the D'Arcy Concession agreement, and, on the other, to the steady expansion in all directions of the company's business relations and to the inevitably increasing complexity of its financial and accounting arrangements. After long negotiations, however, an agreement was signed in December, 1920, setting out the basis upon which the company's profits were to be calculated for the future in ascertaining the royalty to be paid to the Persian Government. At the same time the company agreed to pay to the Persian Government in final settlement of the outstanding questions between the Government and the company a sum of £1,000,000. That settlement covered all claims of the Persian Government in respect of unpaid royalties up to March 31, 1919.

Negotiations for a Revision In 1931 fresh negotiations were opened for a revision of the basis upon which the net profits of the company were to be ascertained, said the memorandum. The lawyers and accountants concerned eventually produced a formal draft royalty agreement which, subject to certain modifications —mainly in favour of the Persian Government and included at the request of their representative—gave effect, in their opinion, to the general principles which had been agreed upon between the Persian Government's representative and the chairman of the company. The draft was initialled in London on behalf of the company and by the Persian- Government's representative, and was transmitted to Teheran, where it arrived on May 29, 1932, for formal ratification by the Persian Government. This iiad not yet been accorded.

On June 29 the Persian Government refused to accept the royalty for 1931 payable to it under the terms of the existing agreements, and on July 7 the company learned from Teheran that tho draft royalty agreement was still under examination, but that tentative proposals to the company on an entirely different basis were under consideration. No such proposals had, however, been communicated to tho company. Tho company would have been perfectly prepared to consider proposals on receiving them. Moreover, should it have ultimately proved impossible for tho Persian Government and the company to come to an agreement, any claims by the Government against the company could and should have been submitted to arbitration in accordance wi|,h article 17 of the concession. An International Wrong A summary was then given of a lengthy Note addressed by the Persian Government to' tho British Minister at Teheran. This mainly dealt with the competence of tho Permanent Court of International Justice to deal with the case. Tho British Government, continued the memorandum, was compelled to take a serious view of the situation created by the action of the Persian Government. It was admitted that certain differences had arisen between the Persian Government and the company as to the computation of tho royalties payable to the Persian Government, but it was idle for the Persian Government to contend that the company had shown an unwillingness to reach a reasonable settlement. The British Government could only regard the Persian action as a unilateral act of confiscation committed by the Persian Government against the company, and itwas well established under international law that the confiscatory cancellation by a Government of a concession held by a foreign company was an act contrary to international law. In the present instance the action of the Persian Government constituted an international wrong done to the United Kingdom in the person of a British company.