"We accept the 1973 Agreement as drafted in July of this year with language changes agreed at the aforesaid meetings and with the following amendments requested by the Ministry during the aforesaid meetings..."
The December Letter then went on to state, inter alia, that certain new or further payments to the Government, provided for by the draft July 1973 Agreement, would be made by Aminoil "as if" that Agreement was in force - (this was not of course all that the Letter contained, and I shall come back to that).
"It is our understanding that the [July] 1973 Agreement will be signed as soon as the final documents can be prepared, and that you [the Minister] will then take appropriate steps to obtain due ratification thereof."
It was further added that the Company would be obliged if the Minister would signify his agreement "with the foregoing amendments and procedures by signing and returning the accompanying copy of this letter". This the Minister duly did, - but the July 1973 Agreement remained unsigned and unratified.
(a) There is the point made in paragraph 6 above, in connection with the question of duress, and equally applicable here. The increased price of oil, and hence greatly increased profits of the Company as from late 1973, reconciled it to the increased amounts payable to the Government under the December Letter, and make it less likely that those payments were being made - or were continuing to be made - on a purely conditional basis.
(b) The Company does not seem to have accompanied any actual payment with a concrete statement that it was conditional or provisional. It did, at least on occasion, mention that the payment was made subject to the "understanding" clause of the December Letter, - but this could not retroactively impart to that clause any character other than it originally had. It could only operate as a reminder to the Government of the action it was supposed to take under this clause, and was not yet taking, and this could have an effect I shall state later, but not the effect of testifying to it being a positive condition of the validity of the agreement that such action must be taken.
(c) Shortly after the December 1973 Letter - that is to say in February 1974 - a "final draft" of the July 1973 Agreement was drawn up, incorporating changes already agreed, and certain new ones; and on several occasions later in the year further changes were made to give effect to additional Government demands (see Section IV paragraph 29 of the Award). On none of these occasions did Aminoil use the opportunity for the purpose of pointing out that the payments they were, or would be, making, were subject to a condition that would nullify their acceptance if the condition remained unfulfilled. Again, it is easy to see why, but not possible to regard such a condition as having nevertheless been implied.
(d) Article 6 of the Supplemental Concession Agreement of 1961 bad provided that no moneys paid to Kuwait "under this Agreement" should, except if there had been an accounting error, "be returnable in any circumstances whatever." It was a question, in the course of the proceedings, whether the words "under this Agreement" in the 1961 Agreement, also operated in respect of payments made under the 1973 Agreements. For present purposes it may be assumed that they did not. Nevertheless the existence (well known to both sides) of this provision in the 1961 Agreement which was still in full force, except as subsequently amended, makes it unlikely that, in December 1973, any real credence could have been given to the possibility that there might be an eventual refund of moneys paid by Aminoil -at least in the sense of attributing to such payments the character of amounts transferred subject to a condition of repayment in certain circumstances.
"(B) Save as aforesaid this Agreement shall not be terminated before the expiration of the period specified in Article 1 thereof except by surrender as provided in Article 12 or if the Company shall be in default under the arbitration provisions of Article 18."
More important still, Article 17 of the 1948 Concession provided that
"The Shaikh shall not by general or special legislation or by administrative measures or by any other act whatever annul this Agreement except as provided in Article 114. No alteration shall be made in the terms of this Agreement by either the Shaikh or the Company except in the event of the Shaikh and the Company jointly agreeing that it is desirable in the interest of both parties to make certain alterations, deletions or additions to this Agreement."
Furthermore, in case there could be any doubt as to whether such a provision as Article 17 of 1948 was freely accepted by the Ruler, not only was the Supplemental Agreement of 1961 concluded after the attainment of full sovereign independence by Kuwait, -not only did its Article 7(g) introduce a new and explicit stabilization clause (amending Article 11 of 1948, as set out above), - but in addition, the concluding provision of the 1961 Agreement in terms kept in force all unamended provisions of 1948, expressly stating that
"This [1961] Agreement shall be construed as an amendment and supplement to the principal Agreement [i.e. the 1948 Concession] and all provisions of the principal Agreement shall continue in full force and effect except in so far as they are inconsistent with or modified by this [1961] Agreement" - (stress added).
Thus Article 17 remained in force, and at no time, right up to the take-over in 1977, or until the present proceedings, was its validity, or that of Article 11, called in question by the Government.
(1) A prohibition on the termination of a contract, where it takes the form of a nationalisation on grounds of public interest (whether real or purported5), must be provided for expressly, and cannot be left to be inferred from a general prohibition on termination, even one expressed in such explicit and comprehensive language as that of the stabilization clauses of Aminoil’s Concession.
(2) The danger that the stabilization clauses were really intended to protect the Company against was that of a confiscatory termination and
(3) A termination and take-over accompanied by, or by an offer of, monetary compensation is not confiscatory.
(4) Since the Government in the present case made such an offer, and set up a Ministerial Committee to deal with the matter, which it eventually agreed to refer to arbitration, no confiscatory element inconsistent with the stabilization clauses is involved.
(5) Even if the above propositions could not be sustained, the character of the Concession had changed so much by 1977 that the stabilization clauses no longer retained their original absolute character.
(6) A variation of (5) really: Aminoil’s case was, or had become, one of "special" circumstances" justifying departure from normal rules.
(a) My view of the stabilization clauses does not in the least imply that in time of war or other crisis or national emergency, they could stand in the way of such exceptional measures as might then be needed. But in the case in hand, no emergency of any kind is involved.
(b) Nor are my views in any way directed against the right to nationalise, as such. But that is not the real question here. The question here is not that of the right to nationalise -"period" - i.e. in abstracto - but of the right to nationalise in the face of a contractual undertaking not to do so, if that exists; or more accurately, in terms of the present case, to nationalise where this involves terminating a concession before its time in spite of a provision to the contrary. The Award (paragraph 96) deals with this point - a little obliquely perhaps - by saying that although the stabilization clauses cannot prevent a nationalisation as such, they are not thereby voided of effect or rendered objectless: they still prohibit confiscatory measures, and in the case of nationalisation require it to be accompanied by (adequate6) compensation. However, this is really only a different way of putting propositions (2) and (3) supra : and I will now give my views on these and the other three propositions listed in paragraph 21.
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