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136 THE LEGAL STATUS OF THE ARABIAN GULF STATES
violated or broken the provisions of this contract. According to
Borchard, State practice has shown that
diplomatic interposition will not lie for the natural or anticipated con­
sequences of the contractual relation, but only for arbitrary incidents or
results, such as a denial of justice or flagrant violation of local or inter­
national law.1
Disputes regarding oil agreements: There appears to be general agree­
ment, in the light of a number of arbitration awards relating to the
Gulf States, that oil agreements entered into between the Rulers of
these States and various oil companies are not subject—whether in
their application or interpretation—to the local laws of the States
within which they operate.2 Usually, agreements of this nature contain
some provisions indicating a legal system of law within which they
are intended to operate and thus, impliedly, excluding the local system
of either party to the transaction.3 Moreover, references have very
often been made in such agreements to the necessity of settling all
disputes between the parties through arbitration which normally takes
the form of appointing an arbitration tribunal or an umpire agreed
upon by the parties concerned.4
In these circumstances, it can be stated that where a Ruler, who is a
party to such an agreement, elects to violate, in any manner, the terms
of the agreement, the other party—in this case the foreign Company—
cannot invoke the diplomatic protection of its government unless it
can prove that the matter of dispute was taken to arbitration accord­
ing to the provisions of the agreement, or that the Ruler refused to
arbitrate at all, or, if he accepted arbitration, intentionally and
maliciously disregarded the award of the umpire or tribunal, or took
some violent action against the employees or property of the Com­
pany. In other words, it is not enough in order to establish the respon­
sibility of the Ruler or his government, to show that he infringed the
terms of his agreement, but it must be clearly shown that he com­
mitted by his action an international wrong.5
The imputability of actions of the Rulers of the Shaikhdoms against
oil companies to the British Government seems to present a difficult
situation. This situation might arise as a result of wrongs committed
by the Rulers against British oil companies in particular. Conse­
quently, if, for example, a British oil company calls for the diplomatic
interposition of the British Government against a Ruler who has
1 Borchard, E. M., Diplomatic Protection of Citizens Abroad (1915), p. 284.
And see Dunn, op. cit., p. 167.
2 See Lord McNair, ‘The General Principles of Law Recognised by Civilised
Nations’, B.Y.I.L., 33 (1957), pp. 2-3.
4 Seee.g?below, p. 284, Lord Asquith’s Award in the Abu Dhabi Case, 1951.
8 See Eagleton, op. cit., pp. 157-8; Dunn, op, cit., p. 164.