'File 14/115 VII Annex (B 9) Abu Musa oxide: collected background material on the case' [‎62v] (135/1904)

Sagar will continue to be deprived of all income from the island, and their attitude
will become sulky and difficult.
It is submitted that the case is at present no subject for reference to The
Hague, and is solvable by commercial settlement or compromise.
Count Metternichs communication to His Majesty's Foreign Office, dated the 4th
December, 1909, claims that— .
1. Wonckhaus should be compensated for damage sustained by non-fulfilment of
his contract with Hassan.
2. The firm of Wonckhaus and Co. deserve compensation as shareholders in the
mining concession for loss suffered by suspension of their operations.
Perhaps the position could be discussed with the German Embassy on some such
lines as the following :—
We should in the first instance again press the view that the case is essentially a
a commercial one ; that there has never been any desire to prevent Wonckhaus trading
in the oxide ; and that if the settlement of the dispute continues to be sought on
the deliberate methods hitherto employed, months, if not years, must elapse before
it is laid to rest; meanwhile the pecuniary interests of all concerned, will sutler, and a
chronic element of friction will continue to exist. His Majesty's Government are most
anxious to obviate this, as, no doubt, the German Government are also, and they suggest
that an expeditious settlement of the case be sought in the interests of all parties. His
Majesty's Government agree that whether or not Hassan Samaiyeh had the power to
enter into such a transaction, and although the secretive tactics employed by the
German firm naturally laid them under suspicion, Messrs. Wonckhaus could not be
blamed for obtaining such a contract as that executed on the 1st June, 1906, and would
no doubt be entitled to receive relief in the shape of compensation from some source
for any bond fide loss which he could prove before the judicial tribunal concerned to
have suffered by the non-fulfilment of the said contract by the contractors.
All the parties who might conceivably be held, alternatively, to be liable to pay
such compensation to Messrs. Wonckhaus are under British protection, and His
Majesty's Government will be prepared to take measures to recover such amounts as
the said court may hold to be due.
Then would come the question of the precise terms to be offered, and I am brought
to Mr. Hurst's minute.
He goes considerably further than I should have felt able to recommend myself. I
think the points on which our views diverge, or in regard to which 1 have any
suggestion to make, will be shown most conveniently if I take the liberty of numbering
his paragraphs and commenting on them seriatim.
Comment on Mr.
Paragraph 1.—I agree.
Paragraph2 {last clause). —We have informed the Germans that we considered
the sheikh's action justified, but ostensibly we do not accept responsibility for it, and
I suppose vis-d-ms the German Government we should maintain that, attitude and
ostensibly " recover" compensation rather than " pay " it.
Paragraph 3.—Our original objects as understood by myself and the Government
of India were—
1. To prevent Wonckhaus getting a monopoly.
2. To prevent him getting a footing in. the island.
His Majesty's Government, however, decided not to raise the monopoly question,
I have elsewhere ventured to inquire whether this point could be reconsidered, as,
if we do not use the argument, the Sheikh of Shargah's action is less defensible.
Paragraph 4.—The cancellation of the contract to Wonckhaus, or its revision so as
to exclude monopoly, might have been sufficient in the first instance, but the German
firm would, I think, have opposed that just as much as the cancellation of the con
cession. ; as shown by their action in getting a share in the concession to strengthen
their right to protect the contract.
Paragraph 5.— The " same position," except that it must exclude any right to a
monopoly of the output.
We cannot afford to ignore this question of monopoly. It is true that Wonckhaus