'File 14/115 VII Annex (B 9) Abu Musa oxide: collected background material on the case' [‎70v] (151/1904)

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lease agreement of the iOth April, 189S, was drafted by Abdallatif. The oxide business
was at that time considered very proiitable. The lessees, and especially AbdaDatjf,
there fore wished to secure it for as long as possible. Accordingly the stipulation of
a definite term of years was omitted in the second agreement. And in order to exclude
any possible doubt as to the bearing of the two agreements upon each other, it was
expressly laid down in the second agreement that any agreements previously concluded
were to be considered null and void and that the second agreement alone was to
be binding. Apart from the fact that it is the universal practice in that region, and a
common practice in other parts of the world, to insert such a clause in agreements
of this kind, the clause in this case serves the practical purpose of invalidating,
verbis, the provisions of the former agreement. But the lessees would certainly not
nave consented to an alteration of the first agreement if their rights had thereby been
diminished.
The history of the origin of the final lease agreement accordingly shows clearly that
it was the intention of the parties that the lessor should, be permanently
lessees should be at liberty to terminate the agree This intention has been expressed
in the agreement in a manner that cannot be misunderstood.
How, in spite of the clear wording of the two agreements, it can be said that there is
no real lease agreement, b"t only "a mere permit to the partners terminable on either
side at any time," is as difficult to understand as the attempt to draw from the right
of the lessees to terminate the agreement and from the clause cancelling previous agree
ments the conclusion that the lessor had also reserved to himself the right to terminate
the contract. These conclusions are certainty not supported by the documents bearing on
the matter.
It appears from one of Sakar's letters to Hassan Samaih (Annex 12 of the first
German Memorandum) that one of the considerations which chiefly induced Sakar to take
steps against the company of lessees was the idea that he would suffer loss in consequence
of the agreement of the lessees with Wonckhaus. In connection with the other pretexts
brought forward by Sakar in his various letters to Hassan Samaih, it may be conjectured
that here, too, we have to deal with an apprehension on the part of Sakar which
belongs rather to the realm of politics, and which will be discussed later (pp. 17, 18),
namely, that the agreement with Wonckhaus might tend to bring about the gradual
separation of the Island of Abu Musa from the dominions of the sheikh. The British.
Memorandum gives a different explanation of this matter, and states in justification
of Sakar s attitude that, in view of the rise of the price of oxide in the market, his
pecuniary interest in the mines was not properly safeguarded by the rent of 250 reals
fixed an indefinite time. In other'words, SaLar cannot recognise the lease agree
ment any longer if the other party makes large profits in consequence of the rise of
market prices, while he (as lessor) has to be contented with the rent; the lessor is
therefore bound by the agreement only so long as the lessee does not make considerably
more than the amount of the rent.
It may be that Sheikh Sakar's ideas of the limits of legality and violence are
somewhat undeveloped, and that he considers himself bound by agreements only
so long as he profits more by them than the other contracting party. If, however, he
were allowed to put such ideas into practice it would involve the admission that
Europeans or the proteges of European Powers have no rights whatever in the territory
of an Arabian sheikh, and that it is permissible for the latter to act as he pleases
without regard for good faith or legality. During the long years when the company
was working at a loss he did nothing/ Now, when there is a prospect of more profitable
business for the future, he discovers that the rent is not sufficient. If Sakar wished to
participate in the gains of the company, he ought to have retained his share in the
company and borne a proportional part of its losses.
Surely une onject of the agreement between W onckhaus and the company of lessees
is, on the one hand, to make the purchaser of the oxide independent of the fluctuations
of the market and insure his obtaining a certain quantity at a fixed price, and, on the
other hand, to enable the working company to count with certainty upon selling a
definite quantity and obtaining a certain income. Supposing that the" market value of
oxide feii be.ow the price agreed upon between ~W onckhaus and the company of lessees,
this would, according to Sheikh Sakar's ideas of justice, give the German firm the right
to declare : .As in these circumstances the mining company is earning money while we
are losing, we consider the agreement as no longer valid."
From the legal point oi view, the question whether, assuming that Sakar is the
lessor, he is able to terminate the lease agreement because the lessee has begun to earn
money and the rent does not appear sufficient to him, Sakar, is one that cannot be