‘File 28/33 Compensation & war risk insurance’ [‎48r] (95/202)

Received under India Office The department of the British Government to which the Government of India reported between 1858 and 1947. The successor to the Court of Directors. Printed Letter No. Ext.
2881/194^, dated 1st August, 1943.
Ext. 2881/42.
INDIA OFFICE The department of the British Government to which the Government of India reported between 1858 and 1947. The successor to the Court of Directors. ,
?THITE HALL,
London, S. 7 ^. 1.
28th July, 1942.
Dear Syers,
The Bahrain Petroleum Company have raised with us
the Question of compensation for possible loss or damage to
their property at Bahrain by enemy action or by the action
of our own military forces (including, of course, "scorched
earth" destruction ordered by the latter). This las led us
to consider these questions in relation to the Arab Sheikh
doms of the Persian Gulf The historical term used to describe the body of water between the Arabian Peninsula and Iran. generally. It seems to us, how
ever, that for the time being we need take into account
Bahrain and Kuwait only; that is to say, we do not think
we need at present consider either the small shaikhdomson
the Trucial coast A name used by Britain from the nineteenth century to 1971 to refer to the present-day United Arab Emirates. or the Sultanate of Muscat, which has a
different status from the others.
2. A s you doubtless know, Bahrain and Kuwait are
British protected States in special treaty relations with
H.MG., in conseouence of which their foreign affairs are
controlled by the latter. -"hey are both regarded as bel
ligerents in the present war. Their rulers have repeatedly
expressed their loyalty to the British connection and to pur
cause; and they have placed considerable f'acilities at the
disposal of our Forces, especially the Navy and the R.A.F.
3. The political control which, by virtue of her
treaty rights, H.M.O. exercises over these shaikhdoms, is
in practice exercised by the Government of India. Mili
tarily, however, they lie within the sphere, not of the
Oommander-in-Ohief India, but of the Oommancler-in-^hief
Middle East, and it is the latter therefore who is respon
sible for their defence. We think that this is a factor
of cardinal importance in the present connection; since the
military authorities on the spot who might cause damage to
be inflicted on property or issue orders for destructive
measures would be the agents of a military command over
which the Government of India has no control. fence it
seems to us that the question of compensation for any such
damage, whether due to military operations or to the insti
tution of a "scorched earth" policy is one for consideration
by H.M.G. rather than the Government of India.
4. The most valuable privately owned property in
these shaikhdoms undoubtedly consists of the installations
of the Bahrain Petroleum Company (no oil has yet been won
in Kuwait, and the Oil Company there is about to plug its
wells and suspend its operations for the duration). The
Bahrain Company, though owned and controled by Americans,
is technically British; and there is no doubt but that in
present circumstances its operations are of very great
value to the United Nations. As you are probably aware it
is now discussing with the Petroleum Department and the ar
Office a programme of denial measures in regard to the actual
oil wells themselves.
5. At present no scheme of war damage compensation
or insurance is in force in either Bahrain or Kuwait.
Even if such a scheme were introduced in, or extended to,
these shaikhdoms, it could not of course cover the whole
field; "scorching", seizure and other risks incidental to
invasion would of necessity be omitted.
/ 6.
G.L. Syers, Esq.,
Treasury Chambers, 3.W.I.