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TECHNOPOLITICS OF A CONCESSIONARY CONTRACT: HOW INTERNATIONAL LAW WAS TRANSFORMED BY ITS ENCOUNTER WITH ANGLO-IRANIAN OIL

  • Katayoun Shafiee (a1)

Abstract

The Iranian government's decision to nationalize its British-controlled oil industry in 1951 was a landmark case in international law. The Anglo-Iranian Oil Company and the Iranian government clashed over whether international authorities had the right to arbitrate for them in disputes over the terms of the oil concession. Scholarship in Middle East studies has overlooked the role of concession terms in shaping political disputes in the 20th century. Rather than seeing legal studies of the oil industry on one side and power struggles and resources on the other, this article examines international court proceedings at The Hague to argue that Anglo-Iranian oil transformed international law. Novel mechanisms of economic and legal governance, set up to deal with an expanded community of nation-states, worked as techniques of political power that equipped the oil corporation with the power to associate Iran's oil with foreign control while generating new forms of law and contract that undermined resource nationalism.

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Author's note: I am grateful for the critical comments provided by the three anonymous IJMES reviewers. Many thanks to Roham Alvandi, Houchang Chehabi, and Louise Fawcett for their comments on an earlier draft of this article.

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NOTES

1 The original D'Arcy Oil Concession was signed with the Iranian government in 1901. For an extended discussion of the history of the oil concession in Iran, see Shafiee, Katayoun, Machineries of Oil: An Infrastructural History of BP in Iran (Cambridge, Mass.: MIT Press, 2018).

2 Recent historical scholarship has started to address the politics of international tribunals and legal thought. See Anghie, Antony, Imperialism, Sovereignty, and the Making of International Law (Cambridge: Cambridge University Press, 2004); Pedersen, Susan, The Guardians: The League of Nations and the Crisis of Power (Oxford: Oxford University Press, 2015); Kattan, Victor, “Decolonizing the International Court of Justice: The Experience of Judge Sir Muhammad Zafrulla Khan in the South West Africa Cases,” Asian Journal of International Law 5 (2014): 310–55; and Fawcett, Louise, “Between West and non-West: Latin American Contributions to International Thought,” The International History Review 34 (2012): 679704.

3 For example, Homa Katouzian discusses the ruling of the ICJ in relation to diplomacy and domestic politics that helped trigger the overthrow of the Mosaddegh government. William R. Louis mentions the court's ruling to highlight the “increased tension” it produced with the British side and how this coincided with events taking place in Iran. Darioush Bayandor considers the legal dispute in more detail but only in so far as it left an “imprint on policies and perceptions both within and outside Iran.” Likewise, company histories of the oil industry mention the legal dimensions of the oil dispute only in terms of the rulings made and their impact on nationalization negotiations and the subsequent coup d’état. See Bayandor, Darioush, Iran and the CIA: The Fall of Mosaddeq Revisited (Hampshire, UK: Palgrave Macmillan, 2010), 35; Katouzian, Homa, “Mosaddeq's Government in Iranian History,” in Mohammad Mossadeq and the 1953 Coup in Iran, ed. Gasiorowski, Mark J. and Byrne, Malcolm (Syracuse, N.Y.: Syracuse University Press, 2004), 7, 911; William R. Louis, “Britain and the Overthrow of the Mosaddeq Government,” in Mohammad Mossadeq and the 1953 Coup in Iran, 149; Bamberg, J.H., The History of the British Petroleum Company, vol. 2, The Anglo-Iranian Years, 1928–1954 (Cambridge: Cambridge University Press, 1994); and Abrahamian, Ervand, The Coup: 1953, the CIA, and the Roots of Modern US–Iranian Relations (New York: The New Press, 2013).

4 For a critical historical analysis of the development of laws and contracts in relation to sovereignty over natural resources in international law, see Schrijver, Nico, Sovereignty Over Natural Resources: Balancing Rights and Duties (Cambridge: Cambridge University Press, 1997). There is only one comprehensive study of concession contracts in the Middle East, told in terms of the history of the discipline. See Cattan, Henry, The Law of Oil Concessions in the Middle East and North Africa (New York: Oceana Publishers, 1967).

5 Trudgill, Charlotte Joy, “International Oil Companies and Petroleum Legal Policy in Iran: Evolution in the Shadow of Resource Nationalism, 1951–1980,” SOAS Law Journal 2 (2015): 129–50; Mafi, Homayoun, “Iran's Concession Agreements and the Role of the National Iranian Oil Company: Economic Development and Sovereign Immunity,” Natural Resources Journal 48 (2008): 407–30.

6 Brownlie, Ian, “Legal Status of Natural Resources in International Law (Some Aspects),” The Hague Academy of International Law 162 (1979): 245318; Jessup, Philip C., Transnational Law (New Haven, Conn.: Yale University Press, 1956); Friedmann, Wolfgang, “The Changing Dimensions of International Law,” Columbia Law Review 62 (1962): 1147–65.

7 Dietrich, Christopher R.W., “‘Arab Oil Belongs to the Arabs’: Raw Material Sovereignty, Cold War Boundaries, and the Nationalisation of the Iraq Petroleum Company, 1967–1073,” Diplomacy and Statecraft 22 (2011): 455.

8 Anghie, Imperialism, Sovereignty, and International Law; Schrijver, Sovereignty Over Natural Resources.

9 On the role of the World Bank in the oil nationalization dispute, see Staples, , “Seeing Diplomacy through Banker's Eyes: The World Bank, the Anglo-Iranian Oil Crisis, and the Aswan High Dam,” Diplomatic History 26 (2002): 397418.

10 International lawyers and legal consultants on both sides were highly experienced, having previously worked at the League of Nations, the ICJ, and the UN. They published their opinions in academic and professional law journals. See Rolin, Henri, “The International Court of Justice and Domestic Jurisdiction: Notes on the Anglo-Iranian Case,” International Organization 8 (1954): 3644; Carlston, Kenneth S., “International Role of Concession Agreements,” Northwestern University Law Review 52 (1957–58): 618–43; and McNair, Arnold, “Individual Opinion of President McNair,” Anglo-Iranian Oil Co. Case (United Kingdom v. Iran), 116–23, International Court of Justice (ICJ), accessed 5 June 2016, http://www.icj-cij.org/files/case-related/16/016-19520722-JUD-01-01-EN.pdf.

11 Mitchell, Timothy, Carbon Democracy: Political Power in the Age of Oil (London: Verso, 2011), 138.

12 Anghie, Imperialism, Sovereignty and International Law, 241.

13 Cheng, Bin, “The Anglo-Iranian Dispute, 1951,” World Affairs 5 (1951): 394.

14 Elm, Mostafa, Oil Power and Principle (Syracuse, N.Y.: Syracuse University Press, 1992), 7374.

15 Cheng, “The Anglo-Iranian Dispute,” 388.

16 Ford, Alan, Anglo-Iranian Oil Dispute of 1951–1952 (Berkeley, Calif.: University of California Press, 1954), 51.

17 Cheng, “The Anglo-Iranian Dispute,” 389–90.

18 Ford, Anglo-Iranian Oil, 56.

19 Ibid., 50.

20 Ibid., 58.

21 The Iranian monarch's cancellation of the 1901 D'Arcy Oil Concession in 1932 was the most controversial confrontation between the AIOC and the Iranian government in the interwar period. Its resolution would set a precedent for managing future conflicts over oil. Article 17 of the 1901 concession provided for arbitration. The British Foreign Office argued that the dispute potentially involved a “confiscatory act of sovereignty committed against a foreign company.” The latter point constituted a breach of international law and enabled the government of the injured party to make the matter the subject of a diplomatic claim. Framing the dispute in terms of international law and the cancellation as a hostile “act of sovereignty” gave the British government the right to get involved in Iran's concession dispute, on behalf of the AIOC. The Iranian government argued that the remedies of Iranian municipal law had not been exhausted by the British government. For this reason, it did not have the right to make a diplomatic claim. For a discussion of the negotiations that ensued, but one that underplays the work of Anglo-Iranian oil in international law, see Brew, Gregory, “In Search of ‘Equitability’: Sir John Cadman, Reza Shah and the Cancellation of the D'Arcy Concession, 1928–33,” Iranian Studies 50 (2017): 125–48.

22 Ford, Anglo-Iranian Oil, 58.

23 Ibid.

24 Ibid., 59–60. See also Mafi, “Iran's Concession Agreements,” 412–13.

25 Ford, Anglo-Iranian Oil.

26 Ibid., 61.

27 “Application Instituting Proceedings,” by Eric Beckett, 26 May 1951, Anglo-Iranian Oil Co. Case (United Kingdom v. Iran), 12–13, accessed 5 June 2016, ICJ, http://www.icj-cij.org/docket/files/16/8979.pdf.

28 Ibid.

29 Ford, Anglo-Iranian Oil, 180.

30 “Application Instituting Proceedings,” by Eric Beckett, 26 May 1951, Anglo-Iranian Oil Co. Case, 13, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/8979.pdf.

31 Mitchell, Carbon Democracy, 75.

32 Anghie, Imperialism, Sovereignty, and International Law, 239.

33 Rodman, Kenneth, Sanctity versus Sovereignty: The United States and the Nationalization of Natural Resource Investments (New York: Columbia University Press, 1988), 153.

34 Anghie, Imperialism, Sovereignty, and International Law, 225.

35 Cattan, The Law of Oil Concessions, 142–43.

36 Anghie, Imperialism, Sovereignty, and International Law, 227. On the history of arbitral decisions in the Middle East, see Cattan, The Law of Oil Concessions.

37 Ford, Anglo-Iranian Oil, 181.

38 O'Connell, D.P., “A Critique of Iranian Oil Litigation,” British Institute of International and Comparative Law 4, no. 2 (1955): 293. See also Mafi, “Iran's Concession Agreements,” 412–14.

39 Ford, Anglo-Iranian Oil, 61.

40 Ibid., 62.

41 Ibid.

42 Ibid., 66–77.

43 Ibid.

44 Ibid., 85.

45 “Request for Interim Measures of Protection,” 22 June 1951, Anglo-Iranian Oil Co. Case, 46, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/8983.pdf.

46 Ibid., 51.

47 Ibid., 52.

48 “Oral Proceedings,” 30 June 1951, Anglo-Iranian Oil Co. Case, 408, 417, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/8991.pdf.

49 Ford, Anglo-Iranian Oil, 78.

50 Ibid., 74–75.

51 Anghie, Imperialism, Sovereignty, and International Law, 223.

52 “ICJ Order indicating Interim Measures of Protection,” 5 July 1951, Anglo-Iranian Oil Co. Case, 93, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/2013.pdf.

53 “Dissenting Opinions by Judges Winiarski and Badawi Pasha,” Anglo-Iranian Oil Co. Case, 96–97, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/2015.pdf.

54 Ford, Anglo-Iranian Oil, 88–89.

55 Latour, Bruno, Science in Action (Cambridge, Mass.: Harvard University Press, 1987), 250–51.

56 Ford, Anglo-Iranian Oil, 122–23.

57 Ibid., 124–25.

58 Ibid.

59 Ibid., 126.

60 Ibid., 128.

61 Mitchell, Timothy, Rule of Experts (Berkeley, Calif.: University of California Press, 2002), 56.

62 Anghie, Imperialism, Sovereignty, and International Law, 225.

63 See Mitchell, Rule of Experts, 56, 78–79.

64 Anghie, Imperialism, Sovereignty, and International Law, 212, 216.

65 Ibid.

66 Ibid., 197.

67 Cheng, “The Anglo-Iranian Dispute,” 390.

68 Ibid.

69 Ibid., 391.

70 Ibid., 392.

71 Ibid., 393; Anghie, Imperialism, Sovereignty, and International Law, 214.

72 Cheng, “The Anglo-Iranian Dispute,” 394.

73 See Abrahamian, The Coup, 161–63.

74 “British Memorial,” 10 October 1951, Anglo-Iranian Oil Co. Case, 64, 85, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/8981.pdf.

75 Ibid., 65–66.

76 Ibid., 74.

77 Anghie, Imperialism, Sovereignty, and International Law, 232–35.

78 Ibid.

79 “British Memorial,” 10 October 1951, Anglo-Iranian Oil Co. Case, 76-78, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/8981.pdf.

80 Ibid.

81 Ford, Anglo-Iranian Oil, 134.

82 Ibid.

83 Ibid., 135.

84 Anghie, Imperialism, Sovereignty, and International Law, 222.

85 Ford, Anglo-Iranian Oil, 137–38, 149.

86 Ibid., 306.

87 “Preliminary Objection,” 22 July 1952, Anglo-Iranian Oil Co. Case, 93, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/1997.pdf.

88 Ibid.

89 “Summary of the Judgment of the Court,” 22 July 1952, Anglo-Iranian Oil Co. Case, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/1999.pdf.

90 Brownlie is quoted in Anghie, Imperialism, Sovereignty, and International Law, 230.

91 Mafi, “Iran's Concession Agreements,” 253; Stephen M. Schwebel, “The Story of the U.N.’s Declaration on Permanent Sovereignty Over Natural Resources,” American Bar Association Journal 49, no. 5 (1963): 463–69.

92 “Summary of the Judgment of the Court,” 22 July 1952, Anglo-Iranian Oil Co. Case, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/1999.pdf.

93 “Individual Opinion of President McNair,” 22 July 1952, Anglo-Iranian Oil Co. Case, 116-123, ICJ, accessed 5 June 2016, http://www.icj-cij.org/docket/files/16/2001.pdf.

94 Mary Ann Heiss, “The International Boycott of Iranian Oil and the Anti-Mossadeq Coup of 1953,” in Mohammad Mossadeq and the 1953 Coup in Iran, 195.

95 Trudgill, “International Oil Companies,” 129, 140.

96 Brownlie, “Legal Status of Natural Resources,” 308.

97 Friedmann, “The Changing Dimensions of International Law,” 1147, 1149, 1161–62.

98 Jessup, Transnational Law.

99 Ibid., 15.

100 Discussed in Friedmann, “The Changing Dimensions of International Law,” 1151.

101 Ibid., 1153.

102 Jessup, Transnational Law, 15.

103 McNair, Lord (Arnold), “General Principles of Law Recognized by Civilized Nations,” British Yearbook of International Law 33, no. 1 (1957): 2.

104 Ibid., 6.

105 Anghie is quoting McNair. The principles also include “unjust enrichment” when the corporation is denied its rights and the host state profits unjustly from this action. Anghie explains that once the category of “general principles” is established as a source of law, “a new ‘natural law’ of contract emerges … by which the law of the Third World state is effectively replaced by the law of England.” See Anghie, Imperialism, Sovereignty, and International Law, 228–30.

106 Friedmann, “The Changing Dimensions of International Law,” 1158.

107 Mitchell, Carbon Democracy, 114.

108 Friedmann, “The Changing Dimensions of International Law,” 1148.

109 Schrijver, Sovereignty Over Natural Resources, 24. See also Özsu, Umut, “‘In the Interests of Mankind as a Whole’: Mohammed Bedjaoui's New International Economic Order,” Humanity 6 (2015): 129–43.

110 Dietrich, Christopher R.W., “Mossadegh Madness: Oil and Sovereignty in the Anti-Colonial Community,” Humanity 6 (2015): 65.

111 I am grateful to the anonymous IJMES reviewer for drawing my attention to this point. It should be noted that the dominant oil companies of this period, the majority of which were American, maintained that concessionary rights, even if acquired as part of a colonial or otherwise dependent relationship, continued after independence. This argument formed part of the international legal principle of “legally acquired rights” which held that old investments should not be jeopardized by new laws. See Dietrich, “‘Arab Oil Belongs to the Arabs,’” 454, 461.

112 Anghie, Imperialism, Sovereignty, and International Law, 242.

113 Ibid., 244.

114 Sampson, Anthony, The Seven Sisters (New York: Viking Press, 1975), 118; Mitchell, Carbon Democracy, 107–8.

115 O'Connell, “A Critique of Iranian Oil Litigation”; Mafi, “Iran's Concession Agreements.”

116 Rodman, Sanctity versus Sovereignty.

117 Levi, Ron and Valverde, Mariana, “Studying Law by AssociationLaw & Social Inquiry 33 (2008): 805–25.

Author's note: I am grateful for the critical comments provided by the three anonymous IJMES reviewers. Many thanks to Roham Alvandi, Houchang Chehabi, and Louise Fawcett for their comments on an earlier draft of this article.

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International Journal of Middle East Studies
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