867.602/85: Telegram
The Special Mission at Lausanne to the Secretary of State
[Received 9:11 a.m.]
429. [Paraphrase.] Tonight Pellé gave me a copy of the concessionary clauses which the Allies wish to have incorporated in a protocol to the treaty. Rumbold sent Payne, his economic adviser, to tell me that the second article of the protocol which we consider objectionable is intended to apply to the British interest in the Turkish Petroleum Company as well as to the French interest in the Samsoun-Sivas railway.
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The following is the text or resume of the clauses as given to me by Pellé: [End paraphrase.]
- “1. The concession contracts, as well as the subsequent agreements relating to them, concluded before October 29, 1914, between the Ottoman Government or any local authority on the one hand, and Allied nationals (including companies) on the other, are maintained if they are being carried out or have begun to be carried out.
- 2. The contracts and agreements concerning which, on October 29th, 1914, all formalities had not been fulfilled, shall, nevertheless be considered as valid and be maintained if they have begun to be carried out or if they have been the subject of arrangements between the Ottoman Government and an Allied Government.
- 3. The sums due, after the settling of accounts, to the beneficiaries of the said contracts and agreements, on account of the utilization by the state of their property or their services, shall be paid in accordance with the existing contracts or agreements, or in the absence of contracts or agreements, in accordance with the method of appraisement provided for by this protocol.
- 4. The concession contracts under which work was not commenced before October 29th, 1914, are also maintained.
- 5. The clauses of subsequent contracts and agreements referred to in the preceding paragraphs shall, by mutual agreement and as regards both parties, be made to conform with the new economic conditions.
- 6. Failing an understanding within a year’s time counting from the coming into force the peace treaty of this day’s date, the parties shall adopt provisions which will be considered, as well in regard to the settlement of accounts as to the readaptation of concessions, as suitable and equitable by two experts, whom they shall appoint and who will, in case of disagreement between them, refer to a third expert appointed by the Turkish Government from a list of three persons [Page 1022] drawn up by the Chief of the Federal Department of Swiss Public Works.
- 7. In case the readaptation of the concession contracts under which work was not commenced before October 29th, 1914, should entail for the state an additional charge which no longer corresponds, in the opinion of the experts provided for in the preceding paragraph, to the services which the concession was expected to render the country, those contracts may be canceled upon the request of one or the other of the parties. In case of cancelation the concessionaire shall be entitled, should it be necessary, to such indemnity as the said experts shall deem equitable.
- 8. The agreements concluded between October 30th, 1918, and October 1st, 1922, between the Ottoman Government and the beneficiaries of the contracts and concessions referred to in paragraph one as well as the transfers of concession contracts effected during that period, shall remain in force until they have been approved by the Turkish Government. In case this approval is not given, each of the concessionaires shall be allowed, if necessary for the actual loss sustained, an indemnity to be fixed by the experts appointed under the conditions indicated in paragraph six. This provision shall be with a view, in respect to contracts prior to October 29th, 1914, to the right of readaptation provided for by the present protocol”.
Section 2 of the proposed protocol provides that in territories detached from Turkey as a result of the Balkan wars or under the present treaties the successor states shall, as of the date of the coming into force of treaties effecting the transfer of territories, be subrogated to all the rights and obligations of Turkey toward Allied nationals, and companies controlled by Allied capital, beneficiaries of concessionary contracts made before October 29th, 1914, with the Ottoman Government or local Ottoman authorities. Such contracts are subject to all the provisions of section 1 except those in article 8 thereof. For the rest section 2 reproduces textually article 99 of draft treaty as printed in British Blue Book.
It is proposed to supplement the protocol by a declaration of the Turkish delegation to the effect that the stipulations of section 1 shall apply to Ottoman companies controlled by Allied capital provided foreign capital was preponderant before October 29th, 1914.