HOUSE OF LORDS

BUTTES GAS AND OIL CO. AND ANOTHER, RESPONDENTS

AND
HAMMER AND ANOTHER, APPELLANTS
BUTTES GAS AND OIL CO. AND ANOTHER, APPELLANTS
AND
HAMMER AND ANOTHER, RESPONDENTS
See annotated judgment at [1982] A.C. 888 and [1981] 3 All ER 616
DIGEST FROM NET
In a defamation action, issues arose as to two conflicting oil concessions which neighbouring states in the
Arabian Gulf had granted over their territorial and offshore waters. The foreign relations of the United
Kingdom and Iran were also involved in the dispute. The authorities concerning acts of state were
reviewed for the purpose of a submission by the defendants that the action raised issues which were nonjusticiable in English courts and should therefore be stayed.
The motives of governments are not justiciable and courts should refrain from adjudicating upon
them. The House considered an action by an officer of the Crown taken outside this country against
foreigners otherwise than under colour of legal right.
The principle of non-justiciability is applicable. The important inter-state issues and/or issues of
international law which would face the court . . have only to be stated to compel the conclusion that these
are not issues upon which a municipal court can pass. . [T]here are no judicial or manageable standards
by which to judge [the] issues or to adopt another phrase . . the court would be in a judicial no-mans land:
the court would be asked to review transactions in which four sovereign states were involved, which they
had brought to a precarious settlement, after diplomacy and the use of force, and to say that at least part
of these were unlawful under international law. I would just add . . that it is not to be assumed that these
matters have now passed into history, so that they now can be examined with safe detachment. and
There is a more general principle that the courts will not adjudicate upon the transactions of foreign
sovereign states . . one for judicial restraint or abstention . . not one of discretion, but . . inherent in the
very nature of the judicial process
FULL TEXT
The issue in this appeal was whether certain documents and classes of documents which had
been disclosed by Buttes were privileged from production either by reason of legal professional
privilege, or because they consisted of confidential communications with, and documents or
copy documents obtained in confidence from, a foreign sovereign, namely the Ruler of Sharjah,
whose successor, in his capacity as ruler of a friendly foreign state, objected to the documents
being produced in these proceedings.
. . . The Permanent Under-Secretary of State at the Foreign and Commonwealth Office
subsequently wrote that his department knew of no overriding considerations of the national
interest which would warrant intervention by the Crown in the proceedings. Her Majestys
Government had not sought to intervene in the proceedings, hence there was no claim for
privilege of the kind formerly known as Crown Privilege.
[*919] Their Lordships took time for consideration.
October 29.LORD WILBERFORCE. My Lords, this action and counterclaim arise from the discovery of oil
in a location (hereafter referred to as the location) in the sea bed of the Arabian Gulf. This lies about 9
miles from an island called Abu Musa. This island is about 40 miles distant from the southern shore. On
that southern shore are 2 neighbouring Arab Emirates, Sharjah and Umm al Qaiwain (U.A.Q.). The island
of Abu Musa is, and at material times was, recognised by both Emirates and by Her Majestys
Government in the United Kingdom to belong to Sharjah. As the result of various events occurring in
1969-73 Buttes Gas and Oil Co. (Buttes) emerged as concessionaire entitled to exploit the location, to
the exclusion of Occidental Petroleum Corporation [*920] (Occidental): out of this situation, which was
unwelcome to Occidental, the present litigation arose. Both companies are incorporated in California,
United States of America. (References hereafter to Occidental include reference where appropriate to its
local subsidiary in the Gulf, and include, if necessary or relevant, Dr. Armand Hammer, its chairman and
coappellant/respondent.)

It is necessary to describe the history of the litigation. It was triggered by a press conference given in
London on October 5, 1970, by Dr. Hammer. At this conference he accused Buttes (inter alia) of using
improper methods and colluding with the then Ruler of Sharjah to backdate a decree by the ruler
extending the territorial waters of Sharjah, in respect of Abu Musa, from three miles from the coast of the
island to 12 miles so as to obtain for themselves the benefit of the oil-bearing deposit at the location which
he claimed was discovered by and belonging to Occidental.
On October 18, 1970, Buttes issued a writ against Occidental and Dr. Hammer claiming damages for
slander, and obtained leave to serve it out of the jurisdiction under R.S.C., Ord. 11. On July 21, 1971, the
Court of Appeal (first decision) dismissed an application by the defendants to have this order set aside.
Leave to appeal to the House of Lords was refused both by the Court of Appeal and by this House.
On April 7, 1972, the defendants delivered their defence and counterclaim. The defence contained a full
and elaborate justification of the slander, alleging the backdating of the decree of the Ruler of Sharjah at
the request or on the advice of Buttes and setting out a whole sequence of events which, it was said,
resulted in operating limits, excluding the location, being imposed on Occidental.
The counterclaim repeated the factual allegations in the defence and then alleged that, in or about
December 1969 and onwards, the plaintiffs, the then Ruler of Sharjah and others whom Occidental could
not then particularise:
wrongfully and fraudulently conspired to cheat and defraud [Occidental], and further or
alternatively to cause and procure Her Majestys Government and others to act unlawfully to the
injury of [Occidental].
A number of overt acts (as pleaded in the defence) were alleged as a result of which Occidental and its
local subsidiary or associate were permanently deprived of their rights to exploit the location. They
claimed damages amounting to more than U.S.$4,000,000.
The counterclaim also alleged that Mr. John Boreta, president of Buttes (joined as defendant to the
counterclaim), had libelled Occidental on July 14, 1970, in a report to the shareholders of Buttes in which
he said that certain United States proceedings brought by Occidental against Buttes were, in the opinion
of Buttess attorneys, wholly without merit.
On July 7, 1972, a summons was issued by Buttes seeking an order that the court should not exercise
jurisdiction in respect of certain specified acts being acts of state of the Governments of Sharjah, U.A.Q.,
Iran and the United Kingdom: alternatively, that certain specified parts of the defence and counterclaim
should be struck out or all proceedings stayed [*921] as to any issue arising therefrom on the ground that
they raised matters which are acts of state. A further summons, dated November 16, 1972, requested that
service of the counterclaim on Mr. Boreta should be set aside. After proceedings before Master Warren
and, on appeal, May J. (who acceded in part to Buttess application) the summonses came before the
Court of Appeal.
The decision (second decision) of the Court of Appeal [1975] Q.B. 557, was given on December 5,
1974. The court refused to strike out the conspiracy counterclaim or parts of the plea of justification, or the
libel counterclaim. Lord Denning M.R. based his decision in the main upon his conclusion that the scope
of act of state was ill-defined in English law but that it did not extend as widely as in the United States
where the courts had refused to entertain an action by Occidental against Buttes in respect of the same
issues as those raised in these proceedings. Roskill L.J. held that the power to strike out should be used
sparingly and only in a clear case: the present action was not such a case since it involved difficult
questions of general importance and the grounds of defence or causes of action were far from obviously
bad and unarguable.
Against this decision, Buttes and Mr. Boreta sought leave to appeal to this House, but their application
was refused by an Appeal Committee on February 27, 1975.
After the second decision of the Court of Appeal a number of further pleadings have been exchanged. On
May 2, 1975, Buttes served a reply to the defence, and Buttes and Mr. Boreta a defence to the
counterclaim of Occidental. These pleadings referred to a number of specific documents. While other
documents may be material (and indeed are requested to be produced on discovery), those now available
enable the issues raised by the action and counterclaim to be analysed far more clearly than was possible
in 1975. At various dates further and better particulars of the defence and counterclaim of Occidental
have been requested and delivered. A rejoinder has been delivered on January 19, 1979, and an
amended reply and defence and counterclaim on May 8, 1980. Moreover, since the second decision there
have been important decisions in the United States of America on similar issues.
Apart from these proceedings on the substance of the case, issues have arisen as regards discovery of
documents. On April 11, 1976, Occidental applied for an order for inspection of 23 documents referred to
in Buttess reply and defence to counterclaim; Buttes declined to allow inspection of a number of these

documents. Occidental persisted in its application for inspection of these and other documents, and after
production had, on January 8, 1979, been ordered by Master Warren, McNeill J. in chambers partly
allowed Buttess appeal, holding that most of the documents were privileged Both sides thereupon
appealed to the Court of Appeal. On June 20, 1980, the Court of Appeal (third decision) [1981] Q.B. 223,
dismissed the appeal of Occidental and allowed that of Buttes, and refused leave to appeal to this House.
The grounds given by the Court of Appeal were (i) by Lord Denning M.R., that the courts powers as to
discovery were discretionary, that the case was one for the exercise of judicial restraint since it would be
contrary to the comity of nations to order [*922] discovery without the consent of the foreign sovereign
concerned in casu the Ruler of Sharjah; (ii) by Donaldson and Brightman L.JJ. that the courts should
recognise a category of United Kingdom public interest immunity relating to copies of confidential
documents of a foreign sovereign (the Ruler of Sharjah) in the possession of a third party (Buttes).
These judgments clearly gave rise to novel and important questions. Moreover it was said by Occidental
to be illogical and unfair in that, while the counterclaim was, by the second decision, permitted to go on,
the result of the third decision was to deny to Occidental the means necessary for its prosecution.
On November 11, 1980, an Appeal Committee of this House (i) gave leave to Occidental to appeal
against the third decision (1980) of the Court of Appeal; (ii) gave leave to Buttes and Mr. Boreta to appeal
out of time against the second decision (1974) of the Court of Appeal and discharged the previous order
(1975) refusing leave to appeal; (iii) ordered that a fresh summons issued by Buttes and Mr. Boreta on
July 11, 1980, should be dealt with on the hearing of the appeal. This fresh summons sought an order that
on Buttes undertaking to consent upon application by Occidental and Dr. Hammer (if so advised) to a stay
of the slander claim, the counterclaims of Occidental and Dr. Hammer be stayed on the grounds (inter
alia) that the said counterclaims raised issues which are non-justiciable by the court and/or which it is
contrary to the public interest for the court to adjudicate upon.
This narrative has been necessary to show two things, first, that this House is now in a position to
adjudicate upon the entirety of the issues raised by the parties at the various stages between 1971 and
1980 and secondly, that since the last substantive decision of the Court of Appeal (the second decision of
1974) the issues have been more clearly defined, and crystallised. This House is now in as good a
position as any court is likely to be to form an opinion as to the justiciability of the claims of either side,
and the decision has to be made whether the proceedings should be allowed to continue to trial with
appropriate discovery or should be terminated by stay or striking out.
Only two final preliminary observations. First, though at times some of the arguments addressed seemed
to lose sight of this, we are not now trying the merits of the cases or any part of them. We must deal with
the applications upon the basis of facts alleged in the pleadings and of such documents as have emerged
resisting, in the latter case, the temptation to try to interpret the documents (many of which are not
governed by English law) beyond the parties' allegations. Secondly, it is convenient, and was agreed by
the parties, to consider first the general issue of justiciability, decision upon which may make the
discovery issues unnecessary to consider. However, the fact that if the action is allowed to proceed,
discovery of certain classes of documents may have to be given, may have implications for the prior
question, whether the action should be allowed to proceed. To that extent argument heard upon the
discovery issue (other than that of legal professional privilege) has been enlightening.
I shall now attempt a summarised account of the relevant facts.
I have already mentioned that we are here concerned with the territories [*923] of three states, the
Emirates of Sharjah and U.A.Q., and the State of Iran. Sharjah and U.A.Q. are neighbours lying on the
south side of the Arabian Gulf: they were, at the relevant times, sovereign states in separate treaty
relations with the United Kingdom which was responsible for their foreign relations. At all material times
Sharjah has claimed title to Abu Musa, and this has been recognised by Her Majestys Government and
by U.A.Q. Since the 19th century the island has been claimed by Iran.
The waters of the Arabian Gulf are less than 200 metres in depth, and so potentially have continental
shelf status of some coastal state or states. It is obvious that there may be conflicting claims, and that the
position of median or other boundary lines may be a matter of controversy. The Gulf contains a number of
islands. Although islands are mentioned in Article I of the 1958 Geneva Convention on the Continental
Shelf there is no universal rule as to when, and for what distance, islands can generate a continental shelf
for themselves. Further, there are differences as regards the width of territorial waters. Many of the
adjoining states, including Iran, claim a width of 12 miles, but three miles was the distance recognised by
the United Kingdom and claimed, until the events in question, by Sharjah, as also by other states in treaty
relations with the United Kingdom.
Following the Truman Proclamation of September 28, 1945, proclamations were made in 1949 by the
Rulers of Sharjah and U.A.Q., in identical form, that the seabed and subsoil contiguous to the territorial
waters of Sharjah/U.A.Q. and extending seaward to boundaries to be determined more precisely, as
occasion arises, on equitable principles, by each ruler after consultation with the neighbouring states,
appertain to the land of Sharjah/U.A.Q. and are subject to its exclusive jurisdiction and control. These

proclamations were approved by His Majestys Government. It is apparent that, while in principle staking
the Emirates' claims to continental-shelf rights, they left a number of vital questions to be settled by
agreement or adjudication on equitable or other appropriate principles.
In 1964 the Rulers of Sharjah and of U.A.Q., again with the approval of Her Majestys Government,
issued parallel instruments. They were in slightly different form, that of Sharjah taking into account the
existence of another small territory Ajman which lies partly within the territory of Sharjah. Each was,
however, headed, in the English version, Seabed boundary agreement by the Ruler of (Sharjah or
U.A.Q.), and continued:
I agree that the sea-bed boundary between [Sharjah and U.A.Q.] [U.A.Q. and Sharjah] shall be a line
starting from a point on the coast near the site of the dead well Mirdar bu Salaf and going out to sea on a
bearing of 312 degrees.
It is said to be disputable whether the word sea-bed is a correct translation from the Arabic; apart from
this, it does not appear how far out to sea the lateral line referred to is intended to go, or what, if any,
frontal boundary is contemplated. No map was attached to either declaration, but, later, various maps
were produced. One Admiralty chart in H.M. Foreign and Commonwealth Office showed the lateral
boundary line skirting Abu Musa at a distance of three nautical miles. [*924] In 1968 Her Majestys
Government announced its intention to terminate its special treaty relationship with the Emirates and to
withdraw British forces from the area within three years.
In 1969 the rulers of Sharjah and U.A.Q. invited bids for oil concessions in their offshore seabed. On
November 10 Occidental obtained from the ruler of U.A.Q., with the approval of the Foreign and
Commonwealth Office, an exclusive concession to explore and exploit the territorial and offshore waters
of U.A.Q. and the seabed and subsoil underlying such waters. It is said by Occidental that the concession
area was outlined on an attached map based upon the above-mentioned Admiralty chart and shown as
including the disputed location, where oil deposits were later discovered some nine miles from Abu Musa,
but Buttes contends that no such map was shown to Buttes or the Ruler of Sharjah at the time and was
never agreed by them. It made no allowance for any continental shelf round Abu Musa. On December 29,
1969, Buttes obtained from the Ruler of Sharjah the exclusive right to explore and exploit
the territorial waters of the main land of Sharjah all islands within the jurisdiction of the Ruler
and the territorial waters of the said islands and all the area of the sea bed and subsoil lying
beneath the waters of the Arabian Gulf contiguous to the said territorial waters over which the
Ruler exercises jurisdiction and control.
No map was, it appears, attached to the grant.
Buttes contends that this grant included the location by virtue of a decree of the Ruler of Sharjah dated
September 10, 1969, whereby he declared the territorial sea of his Emirate as of a width of 12 nautical
miles from the baselines around its coasts and islands, and also by virtue of Sharjahs rights over the
continental shelf.
Occidental alleges that the decree was in fact made in March or April 1970, that it was back-dated to
September 1969, and that this was unlawful and fraudulent. This allegation is central both to the defence
of justification of the slander, and to Occidentals counterclaim for conspiracy.
This being the situation between Sharjah and U.A.Q., both Iran and Her Majestys Government became
involved. Iran had already in 1959 claimed a 12-mile belt of territorial waters for its mainland and islands,
and at various dates, 1949-66, issued continental shelf proclamations which in terms extended-to islands
owned by it in the Arabian Gulf. In May 1970 Iran reiterated her claim to Abu Musa and demanded that no
exploration or other activities take place in the disputed area.
In May 1970 Her Majestys Government intervened. It recommended to the Ruler of U.A.Q. that he should
not permit operations of any kind by Occidental in the area claimed by the Ruler of Sharjah for a period of
three months. It was indicated that Her Majestys Government hoped for a third party settlement.
Occidental, however, sent a drilling platform towards the location, but this was turned back by H.M.S.
Yarntonof the Royal Navy. After what is described as a show of force by Her Majestys Government, the
Ruler of U.A.Q. on June 2, 1970, ordered Occidental not to operate within 12 miles from Abu Musa.
There followed proposals for arbitration and an attempt at mediation, but these came to nothing. In
November 1971, shortly before the intended [*925] British withdrawal from the Arabian Gulf, an
understanding was reached between Sharjah and Iran whereby: (a) Neither Iran nor Sharjah ceded its
claim to sovereignty over Abu Musa; (b) Iranian troops were permitted to occupy a part of Abu Musa; (c)
All parties accepted the existence of a 12-mile territorial sea round Abu Musa, with Buttes as the
concessionaire for the area on the terms of its agreement with Sharjah; (d) The revenues resulting from
such exploitation were to be shared between Sharjah and Iran, and it appears that Sharjah, in turn,

agreed to share its royalties with U.A.Q. This understanding appears to have been approved by Her
Majestys Government.
In January 1972 the Ruler of Sharjah was assassinated, an event which, it is suggested, was connected
with his participation in the 1971 understanding.
Later, in June 1973, Occidentals concession was terminated by the Ruler of U.A.Q. acting under a clause
in the concession agreement.
It is obvious that even these skeleton facts, and many more may be or become relevant, raise farreaching issues. Before reaching a conclusion whether these admit of adjudication by an English court, I
shall summarise the legal arguments.
In support of their contention that the proceedings necessarily involved non-justiciable issues, the
appellants, Buttes and Mr. Boreta, relied upon a number of distinct arguments.
First, they contended that the English courts will not try an action which would require them to pronounce,
directly or indirectly, on rights in immovable property situated abroad. They appealed to the decisions of
this House in British South Africa Co. v. Companhia de Moambique [1893] A.C. 602 and Hesperides
Hotels Ltd. v. Aegean Turkish Holidays Ltd. [1979] A.C. 508.
Secondly, they invoked the doctrine of sovereign immunity, in so far as this excludes actions concerning
property which is in the ownership, possession or control of a foreign sovereign state, or in which a
foreign state claims an interest: Compania Naviera Vascongado v. S.S. Cristina (The Cristina) [1938] A.C.
485 and United States of America and Republic of France v. Dollfus Mieg et Cie S.A. [1952] A.C. 582.
Thirdly, they argued that the English courts will not entertain actions either (a) requiring the interpretation
of, or the ascertainment of the precise nature of obligations arising under, transactions between foreign
sovereign states: Cook v. Sprigg [1899] A.C. 572; or (b) questioning the validity or effectiveness of foreign
legislation; or (c) examining the validity of or motives for, acts of foreign sovereign states in their
international relations; or (d) challenging the legality of acts of Her Majestys Government outside the
United Kingdom and not relating to British subjects.
In answer to these, the contentions of Occidental can be summarised as follows. 1. There is no absolute
rule forbidding English courts from entertaining questions relating to foreign land. Such questions have, in
fact, been considered: see Foster v. Globe Venture Syndicate Ltd. [1900] 1 Ch. 811; more fully reported in
82 L.T. 253 and Duff Development Co. Ltd. v. Government of Kelantan [1924] A.C. 797. Such questions
may be, and are, decided by English courts where decision upon them is incidental to[*926] other
questions, such as domicile, or is collateral to the main question Tito v. Waddell (No. 2) [1977] Ch. 106,
262, 271. In the present case a decision upon the title to the location: (a) is not necessary in the
conspiracy claim; Occidental in fact do not dispute the validity of the decree of 1969 under the law of
Sharjah; (b) is rendered unnecessary or is precluded by the attitude taken by Her Majestys Government;
(c) alternatively can be decided upon evidence. 2. There is no absolute or general rule forbidding English
courts from sitting in judgment upon or inquiring into the validity or nature of a foreign law. In particular
the courts may do so when either that law is not confined in operation to the territory of the enacting state,
or is contrary to public policy, or to international law. 3. There is in English law no general doctrine of act
of state which can be applied to the facts of the present case. Nor is there any rule of judicial restraint
such as is found in some United States cases. 4. The doctrine of sovereign immunity has no application.
These respective arguments cover a wide area but I think that in the end they leave for decision a limited
number of, admittedly difficult, points.
The doctrine of sovereign immunity does not in my opinion apply since there is no attack, direct or
indirect, upon any property of any of the relevant sovereigns, nor are any of them impleaded directly or
indirectly.
I will deal first with the territorial argument and the contention that we are here concerned with a nonjusticiable dispute as to the title to foreign land. As to this I am prepared to accept much of the
respondents' argument. I would agree, in the first place, that this is not just a question arising between
private individuals as to the title to, or possession of, foreign land so as to come directly within the rule
laid down in the Moambique [1893] A.C. 602 and Hesperides [1979] A.C. 508 cases: we do not have
once more to examine that much criticised rule. The present case is more nearly within the category of
boundary disputes between states. As to these it would be too broad a proposition to say that the mere
emergence in an action here of a dispute as to the boundaries of states is sufficient to preclude the
jurisdiction of the court. The main authorities cited by the respondents' counsel Foster v. Globe Venture
Syndicate Ltd. [1900] 1 Ch. 811; 82 L.T. 253 and Duff Development Co. Ltd. v. Government of
Kelantan [1924] A.C. 797 though as I read them depending essentially upon recognition, are at least
instances where the court has without difficulty decided questions depending upon the ascertainment of
boundaries, and I would agree that there may be other cases where a question relating to foreign land,

even to the title to foreign land, may either be capable of determination as a matter of fact (see per Lord
Sumner in the Duff Development case, at p. 827 whom I do not understand as arguing for justiciability in
all cases), or may arise incidentally or collaterally to some other question, and may be decided. I need
only quote Lord Herschell L.C.s words in theMoambique case [1893] A.C. 602, 626: It is quite true that
in the exercise of the undoubted jurisdiction of the courts it may become necessary incidentally to
investigate and determine the title to foreign lands; words applied by Sir Robert Megarry V.-C. in the
great case of the Banaban Islands, Tito v. Waddell [*927] (No. 2) [1977] Ch. 106, 262, 263, (incidentally
or as a collateral incident).
But here the question of title to the location does not arise incidentally or collaterally: it is at the heart of
the case. It is essential to Occidentals claim (both in its counterclaim and in its defence of justification) to
establish that before the intervention of Buttes and Sharjah it had a right with some degree of legal validity
over the seabed at the location i.e. nine miles from Abu Musa (see the words in its counterclaim, quoted
above, permanently deprived of their rights to exploit the location). Occidental does not contend, it is
true, that the action of Sharjah in extending its territorial waters so as to include the location was unlawful
under Sharjah law: and in so far as this is so, the dispute avoids the area of municipal law, or of conflict of
(private) law. But that very fact makes it, not more, but less justiciable by a municipal court either, as Mr.
Bathurst Q.C. argued as an a fortiori case to, or as an extension of, Hesperides [1979] A.C. 508, or, as I
would rather see it, as an issue in a different, and international dimension. This cannot be decided simply
as an issue of fact upon evidence: it calls, on the contrary, for adjudication upon the validity, meaning and
effect of transactions of sovereign states. While, therefore, I agree with the respondents that
the Moambique rule is not of itself decisive of this case, we have still to consider whether a wider
principle of judicial abstention has to be applied. I reserve this point for discussion later.
At this point it is convenient to deal with the argument of Mr. Littman Q.C. mentioned above under 1 (b):
this is special to this case. The contention was that what might otherwise have been a non-justiciable
question (as concerning transactions between states) became justiciable through the actions of Her
Majestys Government. It, so Mr. Littman claimed, had set its seal of approval on all the relevant
dispositions by Sharjah and by U.A.Q. up to 1971, So that there would be no evidential difficulty, or
potential breach of comity, or possibility of embarrassing the United Kingdom in its foreign relations if the
court were to pass upon them.
In order to appraise this argument, which I found the most formidable of Mr. Littmans submissions, it is
necessary to state some additional facts.
1. On March 29, 1973, in response to an inquiry from the Chambers of Master Warren, made in the
course of this action, the Foreign and Commonwealth Office supplied a certificate signed by the Foreign
Secretary. I must set out the most relevant portions.
Between September 9, 1969, and December 1, 1971, Her Majestys Government recognised
the State of Sharjah as an independent sovereign State in special treaty relations with the
United Kingdom. By virtue of the special treaty relations, Her Majestys Government were
generally responsible for the conduct of the international relations of Sharjah and for its defence.
Between September 9, 1969, and December 1, 1971, Her Majestys Government recognised
His Highness Shaikh Khalid bin Muhammed al Qasimi as the sovereign Ruler of the State of
Sharjah. Thereafter, between December 2 and 30, 1971, His Highness continued to be the
sovereign Ruler of the [*928] State of Sharjah as a member Emirate of the United Arab
Emirates. Her Majestys Government did not during any part of the period between September
9, 1969, and December 30, 1971, exercise or claim any rights of sovereignty over or in relation
to the affairs of Sharjah. However, as indicated in the answer to question 1, Her Majestys
Government had, until December 1, 1971, general responsibility for the conduct of the
international relations of Sharjah. During the period between September 9, 1969, and December
30, 1971, Her Majesty the Queen also had jurisdiction within the State of Sharjah, including the
territorial waters thereof and all other areas over which the ruler had jurisdiction, over certain
persons and matters, the extent and exercise of which were regulated by the Foreign
Jurisdiction Acts 1890 and 1913, by the Trucial States Orders 1959 to 1969 made under those
Acts, and by Queens Regulations made under those Orders.
On this it was found by May J., in my view correctly, that at the relevant time Sharjah was an independent
sovereign state and the ruler the sovereign ruler of that state. On the other hand, Her Majestys
Government had and retained until 1971 control over Sharjahs foreign relations.
There is no certificate with regard to U.A.Q. or its ruler, but I think we must assume that, if one had been
applied for, a certificate to a similar effect would have been given.
The later actions of Her Majestys Government must be viewed in the light of this certificate. There were a
number of interventions, including, as I have mentioned, the approval of the concessions to Buttes and to
Occidental. In February 1970 an informal note was given by a Foreign Office official to Buttes stating that
the seaward boundaries of all the offshore areas have never been defined, in the absence of an agreed

median line. At various dates, the Foreign and Commonwealth Office prepared maps and provided them,
and information about them, to one or other of the parties but I need not, and in the interest of brevity,
ought not to describe them since the whole attitude of Her Majestys Government is set out most fully and
clearly in two letters. The first is a letter to Occidentals solicitors of May 8, 1970. In it the Foreign and
Commonwealth Office referred to unilateral action on the part of Sharjah, to problems raised by an
extension of the breadth of Sharjahs territorial waters, to a claim by Sharjah to jurisdiction over the
same area [viz. the location"]. It is clear from this letter that Her Majestys Government did not authorise,
or approve, the extension, by decree, of Sharjahs territorial waters to 12 miles from Abu Musa.
The letter explains the position of Her Majestys Government vis--vis the 1969 (?1970) decree at
considerable length. It is clear that Her Majestys Government did not approve of the extension,
considered that there were international law questions as to its validity, and expressed its own opinion
that there was an agreed sea (sic) boundary based on a three-mile limit of territorial waters around Abu
Musa. There was, it states, a whole series of problems in relation to other states in the area, which had to
be faced before it was safe to regard the territorial waters of Sharjah as having been effectively
extended. [*929] At the same time, it was said, it must be recognised that a claim exists, made on the
basis of legal advice, to part of the area of seabed which has been regarded as under the jurisdiction of
the Ruler of Umm al Qaiwain. Whatever may be the merits of this claim, the fact that it has been made
must be faced and a means for resolving the problems which it raises must be found. We do not
ourselves wish to propose any particular means of resolving the problem but we remain fully prepared to
assist in any way we can.
This paragraph may be read as referring not or not only to an extension of territorial waters but to a
continental shelf in respect of Abu Musa.
The second letter was written on May 16, 1970, to the Ruler of Sharjah by Her Majestys political agent at
Dubai. This letter explained that the concession agreement with Buttes, and the agreement between
U.A.Q. and Occidental, proceeded and were approved by Her Majestys Government on the basis that the
breadth of the territorial waters of Sharjah was three miles. I quote the next paragraph:
Having said this, I must at once go on to say that the extent of a states territorial waters is to be
determined in accordance with international law and a state may treat as its territorial waters
those waters adjacent to its shores which international law permits it to treat as territorial waters.
It is not necessary for a state to make a declaration claiming its territorial waters or stating the
breadth of those waters. But, if it chooses to do so, a state may declare the extent of its
territorial waters. Many states (including the United Kingdom, the United States and the Persian
Gulf States in special treaty relations with the United Kingdom) have territorial waters of three
miles. Many states (including most of the other states in the Persian Gulf, that is the states other
than those in special treaty relations with the United Kingdom) claim territorial waters of 12
miles.
It continued by pointing out that there was another aspect of the problem:
As a matter of international law, it is not right for a state simply to extend its territorial waters
regardless of the consequences on its neighbours. If there are agreements or settled legal
situations with its neighbours, or if vested rights have been acquired in the area, account must
be taken of these agreements, situations and rights. In the case of Sharjah, for example, there is
a particular problem arising in relation to Umm al Qaiwain, where there is an agreed sea
boundary of 1964 between Sharjah and Umm al Qaiwain and where a Concession Agreement
was concluded by the Ruler of Umm al Qaiwain and approved by Her Majestys Government on
the basis of that sea boundary. It is not right simply to ignore the existence of the sea boundary
and the Concession Area of Occidental of Umm al Qaiwain. But there is a whole series of further
problems stemming from an extension of Sharjahs territorial waters. There are potential
problems with Ras al Khaimah (the Tunbs), Ajman, Dubai and Abu Dhabi (in connection with Sir
Abu Nu'Air). All these problems would have to [*930] be faced and sorted out before it would be
safe to regard the territorial waters of Sharjah as having been effectively extended.
It concluded by expressing hope of a solution by agreement, and, as stated above, attempts were made
to dispose of the matter by mediation.
These letters show beyond any doubt that Her Majestys Government regarded the issues between
Sharjah and U.A.Q. and between their respective concessionaires, as issues of international law, and
involving difficult problems as to the width of territorial waters, and by implication of the continental shelf,
in the light, not merely of geographical considerations, but of existing arrangements between Sharjah and
U.A.Q., and of the interests of other states, amongst which Iran must have been in mind. Even if they can
be read as expressing, or implying, an acceptance by Her Majestys Government of a three-mile width of
territorial waters, they do not, and in view of the claims of Iran could not, involve any recognition. or nonrecognition, of continental shelf rights in respect of Abu Musa, or of Sharjah or of U.A.Q. On these
questions, Her Majestys Government was willing, up to a point, to express its own opinion, but it

regarded the matter as one to be solved by diplomacy, or third-party settlement. Ultimately, as we know,
it was solved temporarily at least, after the use of force, by agreement.
These considerations make it impossible to accept Mr. Littmans contention. The issues as to the extent
and nature of Occidentals rights cannot either be said to have been solved in advance for the courts by
Her Majestys Government through its attitude to the various relevant transactions, nor be said to be
capable of being solved by a request to Her Majestys Government for an executive certificate or
statement. Her Majestys Government regarded the whole matter as lying in the international sphere,
subject at most to such influence as Her Majestys Government could bring to bear, but not susceptible of
decision by Her Majestys Government. The issues are, as Her Majestys Government saw them,
international issues, and it is in that character that their justiciability by a municipal court must be
considered. I take up this question, with others, at the end of this opinion.
I pass now to the second branch of the argument which is described broadly, as the act of state
argument. As to this the submissions of the respondents have brought some much needed clarification to
a generally confused topic. Not the least of its difficulty has lain in the indiscriminating use of act of state
to cover situations which are quite distinct, and different in law.
In the first place we can segregate that version of act of state which concerns action by an officer of the
Crown taken outside this country against foreigners otherwise than under colour of legal right: the classic
example of this is provided by Buron v. Denman (1848) 2 Exch. 167. The action taken by officers of Her
Majestys Government, by means of H.M.S. Yarnton, and in bringing pressure to bear upon the Ruler of
U.A.Q., might fall into this category. They are not directly attacked in these proceedings, but it is part of
Occidentals case that they were unlawful. However, the question whether these actions can be described
as acts of state within [*931] this doctrine does not lie at the heart of the dispute and I do not propose to
pursue it.
A second version of act of state consists of those cases which are concerned with the applicability of
foreign municipal legislation within its own territory, and with the examinability of such legislation often,
but not invariably, arising in cases of confiscation of property. Mr. Littman gave us a valuable analysis of
such cases as Carr v. Fracis Times & Co. [1902] A.C. 176; Aksionairnoye Obschestvo A. M. Luther v.
James Sagor & Co. [1921] 3 K.B. 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718, suggesting
that these are cases within the area of the conflict of laws, concerned essentially with the choice of the
proper law to be applied.
Two points were taken as regards the applicability of this line of authority. First, it was said that foreign
legislation can be called in question where it is seen to be contrary to international law or to public policy;
the decree of 1969/70 was so contrary. Secondly, it was contended that foreign legislation is only
recognised territorially i.e. within the limits of the authority of the state concerned.
In my opinion these arguments do not help the respondents. As to the first it is true, as I have pointed out,
that the attack on Sharjahs decree of 1969/70 is not upon its validity under the law of Sharjah, but upon
its efficacy in international law. But this brings it at once into the area of international dispute. It is one
thing to assert that effect will not be given to a foreign municipal law or executive act if it is contrary to
public policy, or to international law (cf. In re Helbert Wagg & Co. Ltds Claim [1956] Ch. 323) and quite
another to claim that the courts may examine the validity, under international law, or some doctrine of
public policy, of an act or acts operating in the area of transactions between states.
The second argument seems to me to be no more valid. To attack the decree of 1969/70 extending
Sharjahs territorial waters, i.e. its territory, upon the ground that the decree is extra-territorial seems to me
to be circular or at least question begging.
However, though I reject these particular arguments relied on by way of exception to the rule derived from
the authorities mentioned above, I do not regard the case against justiciability of the instant disputes as
validated by the rule itself. If it is to be made good it must be upon some wider principle.
So I think that the essential question is whether, apart from such particular rules as I have discussed, viz.
those established by (a) the Mocambique [1893] A.C. 602 andHesperides [1979] A.C. 508 cases and by
(b) Luthers case [1921] 3 K.B; 532 and Princess Paley Olga v. Weisz [1929] 1 K.B. 718, there exists in
English law a more general principle that the courts will not adjudicate upon the transactions of foreign
sovereign states. Though I would prefer to avoid argument on terminology, it seems desirable to consider
this principle, if existing, not as a variety of act of state but one for judicial restraint or abstention. The
respondents' argument was that although there may have been traces of such a general principle, it has
now been crystallised into particular rules (such as those I have mentioned) within one of which the
appellants must bring the case or fail. The Nile, once separated into a multi-channel delta, cannot be
reconstituted. [*932] In my opinion there is, and for long has been, such a general principle, starting in
English law, adopted and generalised in the law of the United States of America which is effective and
compelling in English courts. This principle is not one of discretion, but is inherent in the very nature of the
judicial process.

The first trace of it is in the 17th century in Blad v. Bamfield (1674) 3 Swan. 604, 607. The record of the
decision from Lord Nottinghams manuscript contains this passage:
the plaintiff hath proved letters patent from the King of Denmark for the sole trade of Iceland;
a seizure by virtue of that patent: a sentence upon that seizure; a confirmation of that sentence
by the Chancellor of Denmark; an execution of that sentence after confirmation; and a payment
of two-thirds to the King of Denmark after that execution. Now, after all this, to send it to a trial at
law, where either the court must pretend to judge of the validity of the kings letters patent in
Denmark, or of the exposition and meaning of the articles of peace; or that a common jury
should try whether the English have a right to trade in Iceland, is monstrous and absurd.
Lord Nottingham records that I thought fit to put an end to [the case] and he decreed that the plaintiff
should have a perpetual injunction to stay the defendants suit at law a decision clearly on justiciability,
and not merely on defence.
More clearly as a recognition of a general principle is Duke of Brunswick v. King of Hanover (1844) 6
Beav. 1; (1848) 2 H.L.Cas. 1: a case in this House which is still authoritative and which has influenced the
law both here and overseas. There are two elements in the case, not always clearly separated, that of
sovereign immunity ratione personae, and that of immunity from jurisdiction ratione materiae: it is the
second that is relevant. I find the principle clearly stated that the courts in England will not adjudicate
upon acts done abroad by virtue of sovereign authority. Thus Lord Cottenham L.C. states the question,
quite apart from any personal immunity, as being whether the courts of this country can sit in judgment
upon the act of a sovereign, effected by virtue of his sovereign authority abroad. His decision is conveyed
in the words, at p. 21:
It is true, the bill states that the instrument was contrary to the laws of Hanover and Brunswick,
but, notwithstanding that it is so stated, still if it is a sovereign act, then, whether it be according
to law or not according to law, we cannot inquire into it.
and he continues by distinguishing cases of private rights (cf. Luther v. Sagor [1921] 3 K.B. 532). He then
said, at pp. 21-22:
If it were a private transaction then the law upon which the rights of individuals may depend,
might have been a matter of fact to be inquired into But if it be a matter of sovereign
authority, we cannot try the fact whether it be right or wrong.
Lord Campbell is still more definite. The question he says, at p. 27, is as to the validity of an act of
sovereignty, and he expresses the view, at [*933] p. 26, that even if the Duke of Cambridge (i.e. not the
sovereign) had been sued, it would equally have been a matter of state.
It is justly said of this case, and of their Lordships' observations, that they are directed to the question
whether a sovereign can be brought to account in this country in respect of sovereign acts, and that such
general phrases as sitting in judgment on, inquiring into or entertaining questions must be read in
their context. I agree that these phrases are not to be used without circumspection: the nature of the
judgment, or inquiry or entertainment must be carefully analysed. It is also to be noted that the acts in
question were performed within the territory of the sovereign concerned, reliance is placed on this in
some passages; an argument on this I have already dealt with. These qualifications accepted, the case is
nevertheless support, no doubt by reference to the issue in dispute, for a principle of non-justiciability by
the English courts of a certain class of sovereign acts.
The discussion now shifts to the United States. The Duke of Brunswick case, 2 H.L.Cas. 1, was followed
in Underhill v. Hernandez (1893) 65 Fed. 577. In the Supreme Court (1897) 168 U.S. 250, Fuller C.J.
used the much-quoted words, at p. 252:
Every sovereign state is bound to respect the independence of every other sovereign state, and
the courts of one country will not sit in judgment on the acts of the government of another done
within its own territory. Redress of grievances by reason of such acts must be obtained through
the means open to be availed of by sovereign powers as between themselves.
Again it is a just observation that the words sit in judgment must be related primarily to the issue under
discussion, viz., whether a remedy could be obtained in the United States for an alleged wrong committed
by a foreign government in its own territory. But a principle is nevertheless stated.
A few years later Lord Halsbury L.C. uttered the well-known sentence It is a well-established principle of
law that the transactions of independent states between each other are governed by other laws than
those which municipal courts administer": Cook v. Sprigg [1899] A.C. 572, 578, a case in which lines of
argument similar to those in the present case can be found. An earlier recognition, in an appropriate
circumstance, of non-justiciability, had been given by Lord Kingsdown in Secretary of State in Council of

India v. Kamachee Boye Sahaba (1859) 13 Moo.P.C.C. 22, 86. These authorities carry the doctrine of
non-justiciability into a wider area of transactions in the international field.
Fuller C.J.s principle was taken up and again applied by the Supreme Court in Oetjen v. Central Leather
Co. (1918) 246 U.S. 297, 304 and applied to a case involving the title to property brought within the
custody of a United States court:
To permit the validity of the acts of one sovereign state to be reexamined and perhaps
condemned by the courts of another would very certainly imperil the amicable relations between
governments and vex the peace of nations. [*934]
It is worth noting that this case and that of Underhill, 168 U.S. 250, were referred to in the judgments
in Luthers case [1921] 3 K.B. 532 and Princess Paley Olga v. Weisz[1929] 1 K.B. 718, Scrutton L.J. in
the latter stating that English law on the point was the same as American law.
Upon the much commented case of Banco Nacional de Cuba v. Sabbatino (1964) 376 U.S. 398 no
extended discussion is here appropriate or necessary. The case was one of act of state in the normal
meaning, viz. action taken by a foreign sovereign state within its own territory. It affirms the doctrine
of Underhill, 168 U.S. 250 and Oetjen, 246 U.S. 297. It states (and for this was relied on by the
respondents) that international law does not require application of the doctrine of act of state. Granted
this, and granted also, as the respondents argue, that United States' courts have moved towards a
flexible use of the doctrine on a case to case basis, there is room for a principle, in suitable cases, of
judicial restraint or abstention. Let us see where this has led, in the United States, in relation to the very
same situation as that before us. Their courts have given two important decisions.
In 1970 Occidental brought two suits in California on allegations closely similar to allegations made in this
action: that the Ruler of Sharjah had been induced by Buttes to backdate the decree enlarging the
territorial sea to 12 miles to September 1969, that Buttes had induced and procured illegal acts by the
United Kingdom and by the Ruler of Sharjah that Buttes had induced Iran to make a claim to the
location. These were claimed to be common law torts as well as violations of the Sherman Act [Anti-Trust
Act 1890].
The United States District Court (District Judge Pregerson, March 17, 1971) granted Buttess motion to
dismiss the Federal suit. It found that the essence of Occidentals case was to prove a conspiracy, and
that characterisation of the case as a boundary dispute clouded the issue. However, it found that
Occidental:
necessarily ask this court to sit in judgment' upon the sovereign acts pleaded, whether or
not the countries involved are considered co-conspirators. That is, to establish their claim as
pleaded plaintiffs must prove, inter alia, that Sharjah issued a fraudulent territorial waters
decree, and that Iran laid claim to the island of Abu Musa at the behest of the defendants.
Plaintiffs say they stand ready to prove the former allegation by use of internal documents.' But
such inquiries by this court into the authenticity and motivation of the acts of foreign sovereigns
would be the very sources of diplomatic friction and complication that the act of state doctrine
aims to avert.
It concluded that Buttess motion to dismiss should be granted for failure to state a claim upon which relief
may be granted. This judgment was affirmed by the Ninth Circuit Court of Appeals (June 23, 1972).
In 1974 Occidental brought numerous actions directed towards cargoes of oil shipped from the location,
based on similar allegations.
The United States District Court in Louisiana (Chief Judge Hunter, July 8, 1975) granted Buttess motion
for summary judgment against Occidental. The court gave attention to the boundary aspects of the
dispute, [*935] which it considered were intricately interwoven with the act of state' doctrine. I quote two
passages from the judgment:
The entire fabric of [Occidental's] complaint is woven out of attacks on the validity of, or
questioning the reasons for, the acts of Sharjah, Iran and Umm [U.A.Q.], with respect to the
precise rights which [Occidental] asserts. It traces a series of wrongs of foreign states to reveal
why the lease agreement cancellation by Umm was invalid and why neither Sharjah nor Iran
had a right to honor the lease contract (concession) by Buttes and its joint venturers.
It listed 10 acts of state as appearing in Occidentals claim and continued:
Practical considerations underlying a specific situation must be precisely examined to avoid
conclusions making for eventual confusion and conflict. The instant case presents one of those
problems for the rational solution of which it becomes necessary to take soundings. The case
before us is this: Sharjah and Iran recognise the Buttess concession. Umm cancelled the

Occidental concession, but participates in the rentals received from Buttes. In light of this history
and what we perceive to be the purpose of Hickenlooper [the Hickenlooper amendment of
October 2, 1964, which restricted application of the act of state doctrine], I just cannot bring
myself to believe that Congress intended to permit United States courts to tell these three
foreign countries: You are wrong and we are right as to the ownership of your offshore waters.'
On appeal by Occidental to the Fifth Circuit Court of Appeals the United States filed an amicus curiae
brief (May 1978) to which was attached a letter from the Legal Adviser to the Department of State to the
Attorney General. I quote some passages, without apology for their length, because of their obvious
pertinence and rationality:
It is our understanding that the disposition of this case would require a determination of the
disputed boundary between Umm al Qaiwain on the one hand and Sharjah and Iran on the
other at the time Umm al Qaiwain granted the concession in issue to Occidental. It is our view
that it would be contrary to the foreign relations interests of the United States if our domestic
courts were to adjudicate boundary controversies between third countries and in particular that
controversy involved here.
The extent of territorial sovereignty is a highly sensitive issue to foreign governments. Territorial
disputes are generally considered of national significance and politically delicate. Even
arrangements for the peaceful settlement of territorial differences are often a matter of continued
sensitivity.
These conditions are applicable to the question of Umm al Qaiwains sovereignty over the
continental shelf surrounding Abu Musa at the time of the concession to Occidental and to the
subsequent arrangements worked out among the affected states. For these reasons, the
Department of State considers that it would be potentially [*936] harmful to the conduct of our
foreign relations were a United States court to rule on the territorial issue involved in this case.
We believe that the political sensitivity of territorial issues, the need for unquestionable U.S.
neutrality and the harm to our foreign relations which may otherwise ensue, as well as the
evidentiary and jurisprudential difficulties for a U.S. court to determine such issues, are
compelling grounds for judicial abstention.
We do not believe that this judicial self-restraint should turn on such analytical questions as
whether the so-called Act of State doctrine which is traditionally limited to governmental actions
within the territory of the respective state can apply to an exercise of disputed territorial
jurisdiction. It rather follows from the general notion that national courts should not assume the
function of arbiters of territorial conflicts between third powers even in the context of a dispute
between private parties. As a result, we are of the view that the court should be encouraged to
refrain from settling the extent of Umm al Qaiwains sovereign rights in the continental shelf
between its coast and Abu Musa at the time of its grant of the concession to Occidental.
The Court of Appeals dismissed Occidentals appeal (August 9, 1978) and held:
The issue of sovereignty is political not only for its impact on the executive branch, but also
because judicial or manageable standards are lacking for its determination. To decide the
ownership of the concession area it would be necessary to decide (1) the sovereignty of Abu
Musa, (2) the proper territorial water limit and (3) the proper allocation of continental shelf. A
judicial resolution of the dispute over Abu Musa between Iran and Sharjah is clearly impossible.
Occidental applied to the Supreme Court of the United States for certiorari and extensive briefs were filed,
including again an elaborate amicus brief for the United States. On June 11, 1979, the Supreme Court
denied the petition.
The constitutional position and the relationship between the executive and the judiciary in the United
States is neither identical with our own nor in itself constant. Moreover, the passages which I have cited
lay emphasis upon the foreign relations aspect of the matter which appeared important to the United
States at the time. These matters I have no wish to overlook or minimise. I appreciate also Mr. Littmans
argument that no indication has been given that Her Majestys Government would be embarrassed by the
court entering upon these issues. But, the ultimate question what issues are capable, and what are
incapable, of judicial determination must be answered in closely similar terms in whatever country they
arise, depending, as they must, upon an appreciation of the nature and limits of the judicial function. This
has clearly received the consideration of the United States courts. When the judicial approach to an
identical problem between the same parties has been spelt out with such articulation in a country, one not
only so closely akin to ours in legal approach, the fabric of whose legal doctrine in this area is so
closely [*937] interwoven with ours, but that to which all the parties before us belong, spelt out moreover
in convincing language and reasoning, we should be unwise not to take the benefit of it.

The proceedings, if they are to go on, inevitably would involve determination of the following issues, and
here I pick up the strands left over in the preceding discussion:
(1) Whether Occidental acquired in 1969 a vested right to explore the seabed at the location within 12
miles from the coast of Abu Musa. This involves consideration of the questions: (a) which state had
sovereignty over Abu Musa, (b) what was the width of the territorial waters of Abu Musa, (c) what was the
boundary of the continental shelf between (i) Sharjah and U.A.Q., (ii) Abu Musa and U.A.Q., (iii) Iran and
both Emirates.
These questions in turn involve consideration of the meaning and effect of the parallel declarations of
1964. Did they amount to an inter-state agreement; are they to be interpreted in the light of maps and how
are the maps to be interpreted; was the agreement (if any) superseded or modified by later conduct; was
it really the intention of the Ruler of Sharjah at that time to give up any continental shelf in respect of Abu
Musa; how is any bilateral agreement between Sharjah and U.A.Q. to be fitted in with the claims of other
states to the continental shelf in the Arabian Gulf, and how any dispute as to the continental shelf can be
decided in the absence of Iran which has asserted claims to the relevant part of the continental shelf?
Even if question 1 (b) is justiciable (in view of the attitude of Her Majestys Government or otherwise),
insuperable difficulties arise as regards question 1 (c).
(2) If Occidental did acquire any vested rights as above, how and why was it deprived of those rights?
Directly, it was deprived of them by actions of sovereign states, viz. Sharjah, Iran, Her Majestys
Government and U.A.Q. Consideration of these involves examination of a series of inter-state
transactions from 1969-73. If Occidental is to succeed in either its counterclaim for conspiracy, or in the
slander action, it is necessary to show that these actions were brought about by Buttes, more exactly by a
fraudulent conspiracy between Buttes and Sharjah. This certainly involves an examination of the motives
(exclusive or dominant?) for the action of Sharjah in making and, if proved, backdating the decree of
1969/70. It involves establishing that the actions at least of Sharjah, and it appears also of Iran and of Her
Majestys Government, were at some point unlawful. Unlawful in this context cannot mean unlawful
under any municipal law (I remind that Occidental does not contend that the Sharjah decree was unlawful
under the law of Sharjah), but under international law. As Mr. Lauterpacht Q.C. put it, it involves deciding
whether the Sharjah decree was inefficacious, at least for a time, in international law. If, in the absence of
unlawful means, it is alleged that the action taken by Sharjah and the co-conspirators was predominantly
to injure Occidental (I am not convinced that Occidental makes this case but I will assume it), this involves
an inquiry into the motives of the then Ruler of Sharjah in making the decree, and a suggestion that he
invited Iran to enter into an arrangement about Abu Musa predominantly in order to injure
Occidental. [*938] It would not be difficult to elaborate on these considerations, or to perceive other
important inter-state issues and/or issues of international law which would face the court. They have only
to be stated to compel the conclusion that these are not issues upon which a municipal court can pass.
Leaving aside all possibility of embarrassment in our foreign relations (which it can be said not to have
been drawn to the attention of the court by the executive) there are to follow the Fifth Circuit Court of
Appeals no judicial or manageable standards by which to judge these issues, or to adopt another
phrase (from a passage not quoted), the court would be in a judicial no-mans land: the court would be
asked to review transactions in which four sovereign states were involved, which they had brought to a
precarious settlement, after diplomacy and the use of force, and to say that at least part of these were
unlawful under international law. I would just add, in answer to one of the respondents' arguments, that it
is not to be assumed that these matters have now passed into history, so that they now can be examined
with safe detachment.
It remains to consider the practical effect of the above conclusions.
There is no doubt that, as found by May J. in his judgment of July 31, 1974, the counterclaim in
conspiracy is really the kernel of this litigation. For the reasons I have given, this counterclaim cannot
succeed without bringing to trial non-justiciable issues. The court cannot entertain it.
As regards the libel counterclaim, the innuendo pleaded,i that Occidental had attempted to seize part of or
to interfere with Buttess oil concession granted by Sharjah knowing that it had no right to do so, involves
consideration of the same issues as arise in relation to the rest of the counterclaim and for the same
reason cannot be entertained.
The plea of justification made by Occidental in the slander action raises the same issues as the
conspiracy counterclaim and is for the same reason not capable of being entertained by the court. In
these circumstances a problem might arise if Buttes were to insist upon the action proceeding: to allow it
to proceed but deny Occidental the opportunity to justify would seem unjust, although Buttes suggests
that there are precedents for such a situation being accepted by the court. However, in the event, Buttes
has, in its summons of July 11, 1980, offered to submit to a stay on the claim, if the counterclaims are
stayed: Buttes should be held to this offer.
I suggest that Buttess appeal against the order of the Court of Appeal, dated December 31, 1974, be
allowed, that that order be set aside and that an order be made on Buttess summons of July 11, 1980,

that upon Buttes by its counsel consenting to all proceedings on the claim herein being stayed, the
counterclaim of the first and second defendants, Armand Hammer and Occidental Petroleum Corporation,
be stayed.
The stay of the counterclaim would necessarily involve that the pending application of the defendants for
discovery and/or production of documents be similarly stayed.
LORD FRASER OF TULLYBELTON. My Lords, I have had the privilege of reading in draft the speech of
my noble and learned friend, Lord [*939] Wilberforce, and I agree with it. For the reasons given by him I
would dispose of the appeal in the way that he has suggested.
LORD RUSSELL OF KILLOWEN. My Lords, I also have had the advantage of reading in draft the
illuminating speech of my noble and learned friend, Lord Wilberforce. I agree with his reasons and
conclusions.
LORD KEITH OF KINKEL. My Lords, I have had the benefit of reading in draft the speech of my noble
and learned friend, Lord Wilberforce, and agree entirely with his reasoning and conclusions. I would
accordingly dispose of the appeal in the manner which he has proposed.
LORD BRIDGE OF HARWICH. My Lords, I have had the advantage of reading in draft the speech of my
noble and learned friend, Lord Wilberforce. I entirely agree with it and with the order he proposes.
Orders accordingly.