Coll 30/124A 'Koweit (Neutral Zone) Oil Concession: Negotiations with Petroleum Concessions Ltd.' [‎414r] (827/883)

AKjCICLB XXI (Cjeneral operation)
Paragi»aph 1 of Article XXI of the Pipe-Line
Convention jiri.th. the Anglo-Iranian Oil Company differs from
paragraph 1 of Article XXI of the Convention with the Iraq.
Petroleum Company* In the I.P.C* Convention the Company have to
conclude the necessary agreements with other Governments within
three years of signing the Convention and submit plans of the
line within eight years thereafter under penalty of the
Convention being cancelled* In the A*I.O.C. Convention the
Company merely have to submit plans within ten years of
signature of the Convention under penalty of paying a fee of £25
a year until they are submitted The Arabian-American Oil Company
would naturally prefer a provision on these lines.
While it would obviously be most undesirable to
obstruct the Company^ operations in any way, it must be
recognised that the construction of this American pipe-line would
probably eventually cause a reduction of sales on the European
market of sterling, oil in favour of dollar oil. Accordingly
there seems no object in imposing a heavy penalty for failure to
construct the pipe-line within a stipulated period and if you
agree I should be prepared to fall in with the Company 9 s wishes*.
ARTICLE XXIV (Arbitration)
The question arose whether it would still be
appropriate to include in this clause a provision that failing
agreement between the parties the President of the Permanent
Court of International Justice should be requested to appoint an
umpire. The Foreign Office have been asked for their
observations on this point.
ARTICLE XXVI (Power to assign Convention)
The Company contemplate assigning the rights under
their Convention to a subsidiary Company which will be formed for
the purpose of constructing and operating the pipe-line. I
gather from Sir Arthur Wauchope^ despatch Ho* 979 of the
17th September, 1932 that the Iraq Petroleum Company made a
similar assignment to a Company named Mediterranean Pipelines
Limited, and that the High Commissioner gave his consent to this
assignment in a fomal document under his signature. Presumably
a similar procedure could be adopted in the case of the
Arabian-American Oil Company.
4. The terms of a Convention with Trans-Jordan have not
been discussed in detail with the Company but it is evident that
they would wish to sign a Convention similar to that signed with
Palestine, mutatis mutandis . 5
5. In paragraph 5 of your telegram you suggest that the
Company should pay a transit fee to the Governments of Palestine
and Trans-Jordan. I feel considerable difficulty in pressing
this proposal upon the Company. There is no such provision in
the case of the Iraq Petroleum Company or the Anglo-Iranian
Oil Company and it would be difficult therefore to introduce it
in the case of an American Company without laying oursevles open
to the charge of discrimination. The levying of such dues would
moreover be contrary to established custom in such matters and
if the due was substantial it might materially affect the
economics of the whole scheme* The generally accepted practice
is that the incidental benefits of such undertakings to the
country in which they are situated provide sufficient advantage