## Facts

- The Ruler of Qatar granted an offshore oil concession by a “Principal Agreement” dated August 5, 1949, referencing a June 8, 1949 proclamation asserting control over the contiguous seabed and subsoil.
- The concession covered offshore exploration, drilling, and exploitation rights, with royalties and other payment obligations owed to the Ruler.
- The original corporate signatories acted for a company to be formed; the concession rights and obligations were later assigned to International Marine Oil Co. Ltd. (the concessionaire).
- The Ruler’s contractual position was assigned to his son, who later succeeded as Ruler and pursued the claim.
- The agreement required arbitration of any dispute about interpretation or the parties’ rights and liabilities; each side appointed an arbitrator, and the arbitrators appointed Sir Alfred Bucknill as Referee (umpire).
- In 1952, disputes arose regarding contractual payments and related obligations, but the parties first presented a preliminary question on the law governing interpretation and application of the concession.
- The Ruler argued for Qatar’s municipal law, characterized as Islamic (Shari’a) law; the company opposed applying Islamic law and argued for non-national standards described as “principles of justice, equity and good conscience.”
- The award addressed only this choice-of-law question, not the full merits of the commercial dispute.

## Issues

1. Whether the concession should be governed by Qatar’s municipal law (Islamic law) or by “principles of justice, equity and good conscience.”
2. If Qatar’s municipal law applied in principle, whether it supplied sufficiently determinate rules to construe and administer a complex, long-term offshore oil concession.

## Decision

- The Referee declined to apply Qatari (Islamic) law as the exclusive governing law for the concession’s interpretation and performance.
- The Referee concluded that, as presented, Qatari/Islamic law did not provide an adequate and complete body of rules for resolving the detailed questions arising under a modern commercial oil concession.
- The Referee held that the agreement should instead be interpreted and applied by reference to “principles of justice, equity and good conscience,” understood as general principles and rules common to developed legal systems and suitable for international commercial relations.
- The referred choice-of-law question was therefore answered in favor of applying general principles rather than the host State’s municipal law alone.

## Legal Principles

- Where an arbitration agreement authorizes decision by “justice, equity and good conscience,” an arbitral tribunal may apply general principles of law and non-national standards associated with fairness in commercial relations.
- A tribunal may treat the municipal law of a State party as governing in theory but inadequate in practice when it lacks settled, applicable rules for interpreting and administering a complex, technical, long-term commercial concession.
- In a State–foreign investor arbitration, entry into an arbitration clause may support recourse to non-national legal standards to supply predictable rules for contract interpretation and performance when a detailed municipal commercial framework is absent.

## Conclusion

The award resolved a preliminary choice-of-law dispute by holding that the offshore oil concession should be construed and applied under general principles of justice, equity, and good conscience, rather than exclusively under Qatari (Islamic) law, because the tribunal found the available local legal materials insufficiently developed for a modern commercial concession.


Ruler of Qatar v. Int’l Marine Oil Co. Ltd., 20 I.L.R. 534 (Arb. 1953)