Anglo Iranian Oil Company UK v Iran Jurisdiction 1951 interim measures

UK instituted proceedings 26 may 1951, challenging the legality of the Iranian Oil Nationalisation Act 1951, such Act resolved that the oil industry throughout all parts of the country, without exception should be nationalised. The oil industry consisted only of the Company (discriminatory?) Art 22 of the concession provided for arbitration of ‘any differences between the parties of any nature whatever’ and stated that award must be based on juridical principles contained in 38 PCIJ UK claimed illegality because lack of adequate (value of the taking at them moment of dispossession plus interest), prompt (immediate payment in cash) and effective (recipient must be able to make use of it) compensation Iran rejected totally to arbitrate claiming that the annulment of the concession implied abrogating of any obligation to arbitrate The UK claimed that a concession granted to the Company by Persia in 1933, was a treaty (UK government was the major shareholder of the company). The court held that since the concession was not an agreement between two states, it was not a treaty and then, declined jurisdiction. Here the mainline jurisdiction was based on the mutual acceptances of the compulsory jurisdiction. On June 22 1951 provisional measures were asked: to permit the company extracting oil. An order giving them was issued on July 5 1951.

The court when granting Provisional Measures stated: ‘Indication of provisional measures in no way prejudges the question of the jurisdiction of the court to deal with the merits of the case and leaves unaffected the right of the Respondent to submit arguments against such jurisdiction’ Appearance by Iran to argue that the Court lacked jurisdiction could not constitute a submission to it [forum prorogatum] [Individuals have never been recognised as having the capacity to make treaties] the court rejected the argument that the contract between Iran and the British Company was a treaty because of the part played by the UK government in its negotiations through the good offices of the council of the LN. UK contended that the agreement had a double character of being at once a concessionary contract and treaty; the court does not accept that double character. ‘It is nothing more than a concessionary contract between a government and a foreign corporation The UK is not a party to the contract.