CO885-(15-16) — Page 642

PUBLIC RECORD OFFICE

Reference :-

C.O.885

16 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

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time be obliged under it to take any action that might conflict with the rights of the United British West Indies Petroleum Syndicate under their Agreement.

That the first two clauses of the United British West Indies Petroleum Syndi- cate's Agreement prescribed the manner in which the Governor was to deal with applications by the Syndicate for permission to lay pipe lines, and did not appear to restrict in any way the right of the Governor to permit other persons to lay pipe lines. That the third clause, however, besides prescribing that specific applications by the Syndicate for permission to lay main trunk lines should be favourably con- sidered by the Governor, also provided that, if the Syndicate had laid and was working satisfactorily any such main trunk line as a common carrier within the meaning of Section 18 of the Ordinance, the Governor would not sanction the con- struction of a competing main trunk line unless the need for it was established to the satisfaction of the Governor, and the Syndicate was unable, or unwilling, to supply the need.

That the clause went on to provide that nothing in it contained should be deemed to impose on the Governor any obligation to prevent an owner, or owners, of oil-mining rights (not being a combination of owners for this purpose only) from laying and/or connecting and/or using pipe lines on his, or their, own property or on any property of which he, or they, might be lessees or tenants, and thence to a refinery or a shipping place for the conveyance of oil won from any area over which he, or they, owned oil-mining rights so long as such pipe lines were used only for the conveyance of such oil.

That no specific application for permission to lay a main trunk line had as yet been received from the Syndicate, and that it was not considered that they could reasonably be expected to make any such application at the present stage of their operations in the island.

That the Central Mining and Investment Corporation had arranged with the Crown Agents for the Colonies the terms of a lease to be granted to them, or to a company formed by them, in respect of certain Crown lands in the Colony. But, that on becoming acquainted with the text of the Agreement with the United British West Indies Petroleum Syndicate, the Corporation informed the Crown Agents that they would be unable to take up the lease unless the Governor would make a pipe line Agreement with them in the terms of the accompanying printed draft (marked Original draft") which had subsequently been altered by the Corporation so as to form draft "A.'

That by your instructions the Crown Agents replied as follows:--

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He (the Secretary of State) has given very careful consideration to the While he is draft, and regrets that he is unable to agree to it as it stands.

not prepared to say, as at present advised, that it is in conflict with the pipe line Agreement already made with the United British West Indies Petroleum Syndicate, he is advised that the question is one which could only be deter- mined authoritatively by a court of law, and that he would not be justified in acting upon the assumption that no case could arise in which the agreements might be in conflict."

That a copy of the letter from which the above paragraph is an extract was enclosed for our information, but that the alternative Agreement suggested by the Crown Agents on this occasion was not forwarded, as it had been definitely rejected by the Central Mining and Investment Corporation.

That, in coming to the conclusion stated above, you were influenced by the con- .sideration that the first and second clauses of the Corporation's original draft Agree- ment did not contain any provision enabling the Governor to restrict the use of pipe lines laid by the Corporation to the conveyance of the Corporation's own oil, and that, therefore, it was impossible to be sure that the Corporation would not, at some future time, require the Governor to permit the laying of a pipe line which would compete with a main trunk line laid by the Syndicate within the meaning of Clause 3 of their Agreement.

That it also appeared to you that the third clause of the Corporation's original draft Agreement might be used to cover arrangements which would be incompatible with the true intention of the third clause of the United British West Indies Petroleum Syndicate's Agreement, and that, in any case, difficult questions of fact, if not of law, would continually arise in regard to arrangements proposed under the clause.

That in the alternative draft "A," now submitted, the first point had been met by the insertion in the first two clauses of words restricting the use of pipe lines to

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the conveyance of the Corporation's own oil, so that the circumstances in which the Corporation could compete with a main trunk line laid by the Syndicate were those defined in Clause 3 only. That the other objections to Clause 3, however, remained, and you were disposed to regard draft "B" as giving more promise of a satisfactory solution, unless on comparison of draft "A" with the United British West Indies Petroleum Syndicate's Agreement, we considered that that draft, or some modi- fication of it, more adequately protected the Governor from being called upon to act contrary to the Syndicate's Agreement.

That, if that draft were adopted, you would propose that Clause 3 should be altered by omitting the words "will raise no objection to such arrangements for carrying oil but," and by altering "will consent "into" will not unreasonably withhold his consent," and that the word "unreasonably" should be introduced into Clause 2 before" withheld." That, again, in Clause 7 you would propose to omit all the words after "for the purpose of acquiring" and substitute "the Crown lands held under the lease already arranged," so that the pipe line ageement, if made, could only be transferred to a company holding the Crown lease.

That you were desirous of finding some means of assuring to the Central Mining and Investment Corporation all proper facilities for laying pipe lines for the con- veyance of their own oil and that of subsidiary companies formed by them to work oil-mining rights acquired by them in respect of lands, other than Crown lands, so far as this could be done without in any way infringing the rights conferred on the United British West Indies Petroleum Syndicate. That to this end further con- sultation had taken place between the Crown Agents and the Corporation, and that an alternative draft "B" had been prepared by the Corporation which restricted them to carrying their own oil and that of allied companies" as defined" in the third clause of the draft.

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That as regards draft "B," you would, in any case, insist on the words "the Governor will not withhold his consent" in Clause 3 being altered into "the Governor will not unreasonably withhold his consent," and on the introduction of the word That you withheld" in Clause 2. unreasonably" between shall not be" and would also propose to amend the definition of "allied company" in the second paragraph of Clause 3 by omitting the words "or by some Directors, Engineers or technical advisers common to both parties" which appeared to extend the definition to such an extent as to make it useless. That Clause 7 should also be modified as in the case of draft "A."

That Mr. Collins was accordingly to request us to take the draft Agreements into consideration, and inform you whether :-

(a) If the Colonial Government entered into draft Agreement "A," amended

as above proposed, the Governor could, at any time, be called upon to sanction the laying and/or connecting and/or use of a pipe line which might improperly compete with a main trunk line laid by the United British West Indies Petroleum Syndicate?

(b) If the answer to (a) was in the affirmative, whether any, and, if so, what, alterations could be introduced into the draft Agreement to prevent this possibility?

(c) If the Colonial Government entered into draft Agreement "B," amended as proposed above, whether the Governor could at any time be called upon to sanction the laying and/or connecting and/or use of a pipe line which might improperly compete with a main trunk line laid by the Syndicate?

(d) If the answer to (c) was in the affirmative, whether any, and, if so, what, alterations could be introduced into the Agreement to prevent this possibility?

(e) Whether, in view of the fact that the Central Mining and Investment Corporation had admitted in writing that they were aware of the existence of the Agreement with the United British West Indies Petro- leum Syndicate and that the Government could not grant to them rights that would conflict with that Agreement, it would be a reason- able ground for withholding consent to the laying of a pipe line by the Corporation that the pipe line, if laid, would compete with a pipe line laid by the Syndicate in pursuance of Clause 3 of their Agreement? That in connection with the last question (e) Mr. Collins was to observe that the Corporation declined to introduce any explicit reference to the Government's Agree- ment with the Syndicate into the text of their own Agreement, and had rejected two