'File 39/2 (1 B/8) Effect of abrogation of APOC concession by Persian Government on oil market in Bahrain' [‎11v] (22/80)

and has at no time furnished any part of the capital
required.
The Anglo-Persian Oil Co., Ltd., was formed in the
year 1909 to acquire the D’Arcy Concession, and has
since been recognised throughout by all successive
Persian Governments as the owner of this Concession.^,
The Concession provided that there was to be paid
to the Persian Government annually a sum equal to
16 per cent, of the annual net profits of any Company or
Companies that might be formed in accordance with
the terms of the Concession to operate the same. This
constituted the royalty reserved by the Concession.
The only power of cancellation contained in the Con
cession was a provision that if within two years from
the date of the Concession the Concessionnaire should
not have established the first Company to operate the
Concession, the Concession should become null and void.
That clause never came into operation, by reason of the
formation of the First Exploitation Company in 1903,
and, apart from that clause, there is no provision in the
Concession entitling the Persian Government to cancel
it.
The D’Arcy Concession did not attempt to define the
basis on which the annual net profits of any Company or
Companies formed to exploit the Concession were to be ^
arrived at in calculating the Persian Government^
royalty. It is obvious that the phrase “ net profits ” is
open to various interpretations, and when, after some
15 years’ work on the Concession, profits were first
derived from the Concession, questions soon arose between
the Company and the Persian Government as to the
manner in which the “ net profits ” on which the