Aramco

Abstract:
Case: Saudi Arabia vs. Arabian American Oil Company (ARAMCO).
Parties: Claimant: Saudi Arabia / Defendant: Arabian American Oil Company.
Arbitrators: Sauser-Hall, Referee; Badawi/Hassan,1 Habachy, Arbitrators.)

The arbitration was between the Government of the State of Saudi Arabia and the Standard Oil Company of California that later changed it’s name to Arabian American Oil Company (ARAMCO). It was related to the interpretation of a concession agreement made on 1933. On this agreement the referred corporation was granted the right to all activities referred to the oil industry with exclusive rights.
These rights conflicted with the concession granted by the Government of Saudi Arabia, on 1954, to Mr. A. S. Onassis and his company, Saudi Arabian Maritime Tankers Ltd.(SATCO), on which the Onassis company would be given the priority to Saudi Arabian’s oil’s transportation.
As main argument, the Government of Saudi Arabia defended that the “Concession Agreement purports to authorize the Company to explore areas supposed to contain oil deposits, and, in case of discovery, to extract and produce the oil, but not to transport it by sea.”
The dispute then goes on about the conflict between those provisions and the agreement with Aramco, which, in the end, the tribunal recognized Aramco’s right to transport the oil it had extracted from its concession area in Saudi Arabia.

Comment:
The Saudi Arabia Government’s desire to exploit the possible resources of its subsoil in contact with an large and experienced corporation – prepared to run the many risks of which an enterprise could possibly not be able to recover from – led to a Concession agreement on which, the enterprise, named as Arabian American Oil Company (ARAMCO), would have its exclusive rights – when viewed as a whole – to be correspondent to the integral activity of a company operation on an oil concession, and under Article 1 this activity may be divided in four stages:
“The Company has