Papers Relating to the Foreign Relations of the United States, 1923, Volume II
867.602 Ot 81/386
The Ottoman–American Development Company to the Secretary of State
[Received July 26.]
Sir: Mr. K. E. Clayton-Kennedy is going to Washington tonight for the purpose of handing to the State Department photostat copies of the following documents referring to the Ottoman-American Concessions in Turkey:
- Preliminary Agreement and certified English translation.
- Definitive convention and certified English translation.
- Cahier des Charges. (Turkish only).70
- Supplementary Contract and certified English translation.
- 1. Expose de Motif of Faizi Bey, Minister of Public Works, dated Jan. 22, 1339/1923.70
- 2. Letter of Mahmoud Essad Bey, Minister of Economy, dated Jan. 11, 1339/1923.70
- 3. Draft of the Law for Ratification of the project, accepted by Board of Ministers, (English only).70
- Certified copy of Law ratifying the project and certified translation (English).
- Letter of Faizi Bey, Minister of Public Works, dated April 30/1st May, 1923.
- Ref. Dir. Gen. Railroads Nr. 1201/3878 and certified English translation.70
- Convention for supply of Agricultural implements and machinery and certified English translation.70
The Turkish copy of (c) and the English copy of (e) will be ready in the near future and will be sent if the State Department desires them.
Assistant to Vice President & Gen. Mgr.
Preliminary Agreement between the Turkish Government and the Ottoman–American Development Company Regarding the Eastern Anatolian Railways
The Minister of Public Works, Feyzi Bey, acting in the name and on behalf of the Government of the Great National Assembly of Turkey,
Party of the First Part,
Mr. K. E. Clayton-Kennedy and Mr. Arthur T. Chester, both acting in conformity with Power of Attorney dated May 5th, 1922, on behalf and for the interest of the Ottoman-American Development Company, a firm established in accordance with the laws of the State of Delaware, U. S. A.,
Parties of the Second Part.
The following articles have been agreed to:
The Ottoman–American Development Company agrees to execute and perform the work specified in the following Articles at its own expense and risk, provided this Agreement is confirmed and approved by a law.
The Company must prepare reconnaissance survey maps for establishment of a railway having a gauge 1,435 meters, and [make] delivery of them to the Public Works Department. The general direction of the lines will be directed by the Public Works Department and the whole system will follow the itinerary viz.:
- –A line from Sivas to Van following the North or South shore of Lake Van passing through Harpoot, Etgani, Diarbekir, and Bitlis.
- –Likewise from a point near Harpoot to Youmourtalik following the valley of Djeyhoun.
- –Starting from a point, to be fixed, on the line (1) passing through Moussoul and Guerkeuk and terminating at Suleymaniey.
The reconnaissance survey map concerning each of the lines which were stated in the Article (1) should contain the following particulars:
- A general map will be prepared to the scale of 1/200,000 meter showing physical development of the land, particularly high and low lands. The route of the proposed railway will be shown on this [Page 1217] map by a heavy red line, kilometrie distances, location of stations, and important industrial centers will be also indicated.
- A map numerically indicated in such a way as to show important political and physical features, and drawn to a scale of 1/25,000 meter shall be made from an instrument survey. This map will contain the elevations of a sufficient number of points which with the aid of contour lines at convenient intervals will show clearly the topographical features of the route selected. The route of the proposed railway will be indicated by a heavy red line and kilometrical distances, location of stations and important industrial centers as well as radii of horizontal curves with their lengths will be also indicated thereon.
- Longitudinal profiles will be indicated on a scale of
1/500 meter in vertically and 1/5,000 meter in horizontally.
On this longitudinal profile, the different elevations will
be shown in terms of distances above sea level. Underneath
the base line several horizontal parallel lines will be
indicated, containing the following informations:—
- –The elevations of important points of the route.
- –The elevations of different points of the original surface of the earth.
- –The plus distances to preceeding hectometer of ordinates of different points.
- –Kilometric distances from the beginning of the proposed railway.
- –Lengths of grades as well as their degree of inclination.
- –The lengths of all tangents, the length and the degree of all curves and the lengths of the radii thereof will be indicated. The excavation and embankment figures will be placed below and above respectively the grade line. The elevation of original surface and proposed grade will be indicated in centimeters and meters. The location of all stations and industrial centers will be indicated on the longitudinal profile.
- Typical cross sections of the proposed railway.
- A list indicating briefly the various items of construction and their cost.
- A report on the proposed route of the railway.
The above mentioned maps will be prepared on tracing cloth and submitted to the Public Works Department gratis.
The Government of the Great National Assembly of Turkey allows to the Ottoman–American Development Company a period of two years, starting from the date of ratification by law of this Agreement, for preparing and completing reconnaissance survey stated in the Article (1).
The Ottoman–American Development Company will have the right to notify the Turkish Government if it definitively accepts or not the [Page 1218] concession within the time of two years, for the construction and the exploitation of the railways specified in the 1st Article, as well as for the working of all mines situated within the lands comprised in a distance of twenty kilometers on each side of the line, according to the terms of annexed Convention and Cahier des Charges.
If the Ottoman–American Development Company does not give, within the two years as above stated, written notice to the Public Works Department that it will exercise its option granted as per Article 4 above stated, this Agreement will be cancelled and both parties will have no right to apply to each other for any compensation, damage or indemnity. However, the caution money (deposit) stated in Article 9 will be returned to the Party of the Second Part upon the delivery by them to the Party of the First Part of the plans and specifications prepared in conformity with Article (2) hereof. If the Company does not submit to the said Department all the documents in complete series concerning the reconnoitring operations for the railways and for the mines, or, if the documents submitted by the Company are not prepared in accordance with the terms of this Agreement, and the rules of technic, the Government will seize the amount placed as deposit by the Company; in event of which the Government can act without previous warning.
On the contrary, if the Ottoman–American Development Company gives notice, within two years that it will exercise its option mentioned in Article 4, it will have to increase the amount deposited to 70.000 Turkish pounds, within the space of time fixed in the annexed Agreement, after the fulfilment of this condition, the Company will be considered as the “Concessionaire,” according to terms of the annexed Convention and Cahier des Charges.
If the Ottoman–American Development Company after having definitively accepted the concession according to Article 4, does not increase the amount deposited within the time specified in the annexed Convention, to 70.000 Turkish Pounds, the concession will be considered as cancelled and the Government will seize the amount originally placed by the Company as deposit without any further notification.[Page 1219]
If the Ottoman–American Development Company does not carry out its engagements, except in case of “force majeure”, this Agreement will be considered as cancelled and the Government will seize the amount deposited of the Company without any further notification. Bad weather can not be considered as being a case of “force majeure”.
The Ottoman–American Development Company as a guaranty for the execution of its engagements has placed in the Constantinople Branch of the Banca Commerciale Italiana, which Bank is recognized and accepted by the Government, 50.000 Turkish Pounds.
The Government reserves the right to appoint at its own expenses, technical representatives to attend the staff of the Company along the reconnoitring operations; however, the Government representatives will have no right to interfere with the execution of the work; they will merely observe and follow the operations.
The Council of State or the body which may be substituted for it, is the competent authority for the judgment and settlement of all disagreements which may eventually occur between the Great National Assembly of Turkey and the Ottoman–American Development Company through misunderstanding or misinterpreting the terms of this Agreement.
In case the Turkish Government does not ratify the terms of this Agreement, the Principal Convention, the Cahier des Charges, and the Supplementary Contract, the Ottoman–American Development Company will have no right to claim any compensation or indemnity. However, in eight days from the date of the receipt of notification to be given by the Public Works Department to the Ottoman–American Development Company, of the fact that the said Agreement has not been ratified, the amount placed by the Company as a deposit will be returned.
The articles of the Principle Convention concerning mines are also a part of this Preliminary Agreement.
Definitive Convention between the Turkish Government and the Ottoman–American Development Company for the Eastern Anatolian Railways
His Excellency Feyzi Bey, Minister of Public Works, acting, in the name and on behalf of the Government of the Great National Assembly of Turkey.
Party of the First Part,
K. E. Clayton Kennedy and Arthur Chester, both acting in conformity with Power of Attorney dated May 5th 1922, in the name and in behalf of the Ottoman–American Development Company, a Society formed under the laws of the State of Delaware U. S. A.,
Party of the Second Part,
it has been agreed and determined as follows, and the convention shall be ratified by Parliament:
The Government of the Great National Assembly of Turkey accords under the conditions of the present convention and of the Cahier des Charges annexed, to the Ottoman–American Development Company, the concession, which, it accepts, for the construction and the exploitation of Railways, having a gauge of 1,435 meters measured from the inside of the T. rail as follows, to wit:
- –From Sivas to Van, following the North or South shore of the lake, by Harpoot, Ergani, Diarbekir and Bitlis.
- –From a point near Harpoot to Youmourtalik, following the valley of Djejhoun.
- –From a point on the line (1) to Suleymanié, by way of Moussoul and Guerkeuk.
The duration of the Concession shall be ninety-nine years, reckoned from the date at which the present convention shall become definitive.
As a guaranty of execution of the present engagements, the Ottoman-American Development Company must, within the period of one month, reckoned from the day when it shall have notified the Minister of Public Works of its definitive acceptance, increase the deposit money of Ltqs. 50.000.—in the Banca Commerciale Italiana, [Page 1221] Constantinople Branch, to the sum of Ltqs. 70.000.—. The deposit money must be deposited in specie or an equal amount in bonds at the market value of the day; if the increased deposit is made in bonds, the Bank will take the engagement to make good the depreciation in case it occurs. The deposit will not be returned to the Society, until the final receipt of a section of 200 kilometers. The Society will have the right to deposit the money in a Bank other than the Ottoman Bank, provided that this Bank be agreed to by the Minister of Public Works. At all times, if the Bank is foreign, it must, by an act formally legalised by its Ambassador, declare that it recognises the jurisdiction of the Court of the Government of the Great National Assembly in case of a contest bearing on the deposit money. If in a period of one month, as above stated, the Ottoman American Development Company has not effected the deposit above mentioned, the present concession will be annuled without notice in advance and the original deposit money of Ltqs. 50.000.—becomes the property of the State. If the Ottoman American Development Company does not form the Turkish Limited Society within the period and under the conditions fixed by the present convention, and in conformity with legal procedure, the deposit money increased to Ltqs. 70.000.—becomes the property of the Government without notice in advance, and this concession will be annuled.
For the execution of the engagements which it contracts by the present convention, the Ottoman-American Development Company is held to form, at the latest within a period of six months reckoned from the time when the convention shall become definitive, and on the basis of the Statutes agreed and approved by the Government of the Great National Assembly, a Turkish Limited Society which shall be subjected to all the laws, present and future, of the said Government of Turkey. At least one third of the elected Board of Directors will be Turks. The Ottoman American Development Company engages itself to reserve 50% of the shares of the Turkish Limited Company which it shall issue and offer these for sale to Turkish Subjects who may wish to subscribe during the six months following the notice which shall be given in the newspapers of the Capital. At the end of this delay, the Ottoman American Development Company shall have the right to sell to other subscribers all or any part of these shares not subscribed to by Turkish Subjects.
The Turkish Limited Company must present, after definitive studies at the railroad lines mentioned in this convention and in [Page 1222] conformity with the clauses of the cahier des charges, in four copies, one of which is on tracing cloth, the plans and projects of the lines, in the periods following, to wit:
- In that which concerns the line number (2) the projects and plans must be submitted at the rate of 200 kilometers every four months, and the projects of the first 200 kilometers reckoned from Yomourtalik must be presented in a period of twelve months counting from the time when the present convention shall become definitive.
- In that which concerns the projects and the plans of the rest of the system, must be presented at the rate of 200 kilometers every nine months, and this reckoned from the date of presentation of the plans for the whole of the line number (2). These plans and projects must be examined and as the case may be, approved by the Minister of Public Works, or modified if there is need thereof, in a period of three months reckoned from their presentation.
It is intended that these modifications, made by the Ministry, shall conform to technical rules, and they shall not change the general route accepted and in conformity with the plans made according to the preliminary agreement. After the expiration of this period of three months, if the Public Works Department has not notified the Society of its decision, the latter may consider the projects, as presented, as approved, and proceed with the execution of the works. If the public Works Department introduces modifications of a character to cause delay in plans, and/or execution of the work the period fixed for both shall be extended by a period equal to that of the said delay or delays.
At all times, in case of interference by “force majeure” duly proved, the periods mentioned herein will be prolonged by one of equal duration to the one suffered, on condition that the Society advises this officially and in writing to the Minister of Public Works and the Local Authorities.
The Society undertakes to commence the work of each of the sections of line number (2) in a maximum period of six months after date fixed for the presentation of the plans relative thereto, and to finish these in a maximum period of three years reckoned from the expiration of the time fixed for the presentation of the said plans. In that which concerns the other sections of the system, the work must commence within two years and be finished within seven years, reckoned from the time fixed for the presentation of plans relative thereto.
At all times, in case of interference by “force majeure”, duly proved, the periods fixed for the execution shall be prolonged by one [Page 1223] of the equal duration to that of the interruption of the works, on condition that the Society advises this officially and immediately in writing, to the local Authorities and the Minister of Public Works.
The work must be executed in conformity with the rules of the technic, and the specification of the Cahier des charges as well as with the disposition of the plans and projects approved.
The Minister of Public Works will control the survey and works by means of one or more commissioners during their execution and up to the finishing of the work and before its acceptance, this control will apply as well to the upkeep of the work and exploitation during the duration of the concession. The Society will deposit each year, to the order of the Ministry of Public works, under the head of “Cost of Control”, a sum of 270 Piasters in gold per kilometer granted payable monthly in twelfths, and this reckoned from the date when the present convention becomes definitive up to the end of this last.
The enterprise being of public utility, in case the Society cannot reach an agreement for the purchase of the real estate and lands necessary for the railroad and the dependencies joined to it, as well as for the port of Youmourtalik,—in case of the execution of this last—with the private proprietors eventually met with, the necessary formalities will be made in accordance with the terms and dispositions of the law of the expropriations, and in such case, the cost and expense provided for such expropriation operations will be charged for, to the Society.
After the route of the Railroad is approved of, and that it is appropriated on lands, the Government will expropriate for the account of the Society, the lands and buildings necessary for the construction of the Railroads and the dependencies joined to it, and will deliver same to the Society. This delivery will be made by the Government within a delay of two months reckoned from the delivery of the plan relating thereto, to the Government.
The quarries and ballast pits, of which the temporary occupation during the Construction works as well as for the upkeep of the railroad shall be judged necessary by the Ministry of Public Works, will be delivered by the Local Authorities to the Society, on the agreement of the latter to indemnify the owners.
The land called: “Arazi-i Emiriye-i Haliye” necessary for the establishment of the Railway and its dependencies, will be abandoned gratuitously to the Society up to the end of the Concession. [Page 1224] The temporary occupation during the execution of the works of these lands as well as the quarries and ballast pits, which it may find there, will also be accorded to it under the head of a gratuity. The Society will have the right to use the same quarries and ballast pits for repair works and upkeep of the railroad during the exploitation in conformity with the regulations.
The line shall be established for a single track, however, the expropriations and taking of gratuitous lands, shall be made in view of the establishment of a second track. The Government of the Great National Assembly of Turkey shall have the right to ask the Society to construct the second track when the net receipts, calculated in conformity with Article 22, of the Railway shall reach a sum sufficient to pay the interest and amortizement on the bonds for the second line, as well as the bonds for the old construction still outstanding, and the Society will be bound to construct this second track at its cost.
The material for the Railway, and the fixed material and rolling stock, as well as material iron, wood, machines, and other necessities for the first establishment of the Railway and its dependencies and for the Port of Youmourtalik,—in case of the execution of the latter—which the Society shall buy in Turkey, or which it shall bring from abroad, will be exempt from all interior taxes as well as from all customs. The coal necessary for the exploitation of the Railways described in Article 1 of the present convention, and which the Society shall bring from abroad during the first ten years, (reckoned from the time when the Concession shall become definitive), will be free of all customs duties provided that coal suitable as to quantity and price cannot be secured in Turkey. The lands of the Railway and Port, the capital and revenues of the Society during the duration of the concession shall be free from any taxes.
The wood and timber necessary for the construction and repair of the Railway can be cut in the neighbouring forests belonging to the State, by conforming with the laws and regulations and on paying the taxes relative thereto, and the Society shall have the right to establish brick and tile works, and sawmills for the requirements of its own establishments, but shall conform with the Laws and regulations [Page 1225] regarding the matter. If the Society wishes to establish such factories for market requirements it will have to act as other individuals.
As soon as the Society shall notify the Ministry of Public Works of the completion to a point of operation of a part of the work, inspection shall be made, in the shortest delay possible, of the work executed, by a technical Commission, named for this purpose, and which shall proceed to the provisional acceptance, if necessary. A second inspection of the work shall be made a year after, by a technical Commission, and in the case where it is found that the works have been executed in conformity with the rules of the technic and with the clauses of the Cahier des charges, the Public Works Department will pronounce, following the report of the Commission, a definitive acceptance. The above mentioned Commission shall be limited to a maximum of eight persons. All the travelling expenses from the National Capital, will be at the charge of the Society.
The Society has the right to open to traffic and to exploit successive sections of the Railroads which it will construct, provided that such sections amount to, at least 30 kilometers, and are ended at a station; these sections so opened to traffic will be subject to acceptance by the technical Commission.
During the duration of the Concession, the Railway, its dependencies and the port of Yomourtalik,—in case of the execution of the latter—as well as the fixed material and rolling stock shall be kept in a good state of repair, at the cost of the Society, failing which it will be proceeded against in regard of this last, in conformity with Art. 25 of the Cahier des charges.
The Society is held to conform in that which concerns the police, the security and the upkeep of the railway and of the mines to all the laws actually in force or to be promulgated in the future in Turkey.
In case of the interruption of the service of a part or of the whole of the railway or of the Port, by fault of the Society, the Government will take measures necessary, in conformity with Article 25 of the Cahier des charges, to insure the provisional operation. If, in the nine months which follow the interruption, the Society does not [Page 1226] give valid proof that it is in shape to continue the operation, and if it has not effectively taken the measures necessary to obtain this result, the loss of the Concession may be pronounced according to the conditions indicated in Article 27 of the present convention.
This provision will not be applicable and the Society will not incur the loss of the concession in the case where the Society has not carried out its obligations because of “force majeure” duly proved.
The Society will have the right to collect freight and passenger rates according to the traffic of the Cahier des charges, from the date of the provisional acceptance of the works of each part until the end of the Concession.
The transport of the soldiers and sailors, travelling in bodies or alone, in times of war and peace, as well as the material and provisions of war, prisoners and convicts, the Agents of State, and the postal bags will be effected in conformity with the terms of Chapter 6 of the Cahier des charges relative thereto.
The Society will have, without that which constitutes for it a monopoly, the right to establish at its cost, risk and peril, the subsidiary branches necessary to connect the railway with mines granted to it and which it proposes to exploit in conformity with this convention. These branches will revert gratuitously to the State in the same manner as the mines at the expiration of the present concession. The Society will have the right to connect its oil wells with desired points in Turkish territory by a pipe line following such route as may be most feasible from a technical and economical standpoint. The Company will agree to carry in its pipes petroleum other than its own provided that such petroleum is not detrimental to the pipe line system or other petroleums transported and does not interfere with the transportations of the company’s petroleum.
Right of way for such lines to be secured in the same way as that of land expropriations and of abandoning to the Society of the “Arazi-i-Emeriye-i-Haliye” for the Railway mentioned in this convention, as far as compatible with the law.
The Society will have, without that which constitutes for it any privilege of monopoly, and on condition that it conform to the Government [Page 1227] laws and regulations, present or future in the matter, the right to utilize gratuitously natural water power in a zone twenty kilometers on each side of the railway of which the right of enjoyment belong to no one, and to produce electric power which may be necessary for the operation of the Railway and its dependencies as well as for the mines and mineral deposits. It also can sell electric power to third parties, but shall comply with the formalities of the law regarding the matter and have its tariffs especially approved by the Government. The plants for such electric installations must, before their execution, be approved by the Minister of Public Works.
The electric installations will go to the State at the expiration of the concession gratuitously.
In case, however, the Government purchases the Railroad and takes over the electric installations it shall pay to the Society a sum equal to the value of such installations as agreed to by specialist representatives of both parties.
Failing such agreement, an arbiter, agreeable to both side, will be appointed by both said representatives to make the decision, which will be in force. Should they not be able to decide on such a person, the First President of the Supreme Court (Cour de Cassation) of the Government of the Great National Assembly will appoint such an arbiter.
However, in case of purchase of railways such electric installations as serve for mines and mineral deposits or for mineral subsidiary branches, will remain up to the end of the time fixed in Article 2 of the present convention the property of the Society:
The Society will have the optional right to construct at its cost, at Youmourtalik a Port with all the installations necessary for the mooring alongside quays of ships and the embarking and debarking direct of passengers and of cargo and the storage of the latter. The plans of such port must be presented to the public Works Department for study, in a maximum delay of five years, reckoned from the time when the present Agreement becomes definitive and the works of the port must be finished within seven years from the same date.
The tariffs of the port should be annexed to the above plans for the approbation of the Government.
This port will be an integral part of the Railway and the gross receipts will be included in the gross receipts of the Railway. At the expiration of the concession this port and its dependencies will revert to the State gratuitously. In case the Society shall not present [Page 1228] the plans or shall not execute the port in the delay above mentioned, the Government can accord the concession to third parties. In any case, the Society may, during the period of construction of the Railway, establish in the Port of Youmourtalik provisional installations for the unloading of material destined for the Railway, but if the Society shall not execute the port, in the period specified and the Government gives the concession for the port to third parties, the Society will be obliged, if the Government makes such demand upon it, to remove, at its cost, all the maritime installations which it may have established.
The Society will construct and exploit the Railways referred to in Article 1, of the present definitive convention, at its cost, risk and peril, and without pretending to any guaranty or pecuniary assistance from the Government, and shall have full benefit from the revenues up to the end of the concession, except in the case of purchase of the concession after deducting the Government’s share of profits according to Article 42 hereafter.
At any time after the 30th year reckoned from the time when the present concession shall become definitive, the Government of the Great National Assembly of Turkey will have the right to purchase the Railway and its dependencies (exclusive of the mines and mineral branches) as well as the port of Youmourtalik in case it is built and the Government’s share of profits according to Article 42 hereafter by paying to the Society at the end of each year remaining to run up to the end of the concession an annuity equal to the net annual average profit of the five years of exploitation proceeding that to which the sale shall be made.
The net profit of each year will be calculated after deducting from the gross receipts, mineral subsidiary branches excepted, the operating and upkeep expenses of the railway and its dependencies and the port of Youmourtalik, if constructed, referring to the same year.
The interest and amortizement of the amount expended for the first installations are not naturally included in these expenses.
The Government will assure to the Society the regular payment of this annuity, which will, in no case, be less than Francs 7,500.—(gold) per kilometer of Railway, or such greater sum as may be necessary to pay the interest and amortizement of the bonds of the Railway, dependencies and port, then outstanding. The Government reserves to itself the right to convert if it so desires, this annuity, into capital which it will pay in one cash payment to the Society, [Page 1229] taking as a basis for the cancellation of the capitalization the rate of interest the bonds outstanding as stated above.
The sale and delivery to the Government be made of the Railway line, of electric installations, and so forth, provided for in Article 19, and of the port of Youmourtalik free of all sorts of debts and engagement and the Government will purchase the material and supplies on hand in accordance with Article 30 of the Cahier des charges.
At the expiration of the concession the Government will be substituted for the Society in all the rights of the Society in the Railway, the port of Youmourtalik (in case of the execution of the latter) and of their dependencies in the mines, mineral deposits, mineral subsidiary branches, water powers and other installations, and materials, and will enter into the enjoyment of the income arising therefrom.
It will take over the line and port and their dependencies, the mines and mineral deposits free of all sorts of debts and engagements and in good repair up to the end, and the Government of the Great National Assembly of Turkey will buy the material and supplies in conformity with Article 28 of the Cahier des charges.
The employees and Agents of the Society will be Turks and the Society shall establish the necessary schools for the purpose of training them for their technical duties. However, the Society can employ, in that which concerns the superior personnel of the operation, foreigners whose names shall be communicated to the Ministry of Public Works. It can also employ a certain number of technical men and foreign foremen, All the employees and Agents connected with the physical operation of the Railway shall wear the uniform which shall be approved by the Government. The Society shall have the right to import Turk immigrants, under contract or otherwise for the construction and/or operation of any of the works authorised in this convention.
The Government can build at its cost, forts and works of defence at principal points of the line and branches or at the port of Youmourtalik whenever it shall judge necessary.
Objects of art and antiquities discovered during the work will be subject to the regulations governing the matter.[Page 1230]
In the case where without cause of “force majeure” duly proved, the Society shall have ceased the service of the trains or where it shall not have executed the other engagements devolving upon it by the present convention and Cahier des charges, it will be deprived of its rights to the concession for the railway, the port of Youmourtalik, and of its rights in regard to the mines and mineral deposits, and in this case proceedings will be taken in conformity with Article 28 of the Cahier des charges.
Likewise, the case of “force majeure” always excepted, if the Society has not, in the delays provided in Article 6, presented the plans or commenced, or finished the works of any of the sections forming the line Youmourtalik to the Junction with line (1) or, again, if having finished the line Youmourtalik to line (1), it has not completed the grading and stone travaux d’art of the first 150 kilometers of line (1) from Sivas towards Van, the Government may pronounce the forfeiture of the concession and/or other rights, and proceedings will be taken under the provisions of Article 28 of the Cahier des charges.
It is always intended that forfeiture cannot be pronounced until after the Government shall have notified the Society “une mise en demeure” demanding that the Society fulfill the obligations assumed which remained unexecuted; and only in the case, when this last has not been done according to the notice after a period of six months beginning from the date of receipt of the said notice.
If on the contrary, the part of the system forming the line from Youmourtalik to the junction point with line (1) as well as the grading and stone travaux d’art of 150 kilometers reckoned from Sivas in the direction of Van, is finished in the time stipulated in Article 6th, but the other sections are not finished in the time stipulated in Article 6th the Society will only lose rights to other sections not finished, works completed on the uncompleted sections and the mines and mineral deposits belonging to the said section will revert gratuitously to the state.
The Society will establish at the point designated by the Government, in the stations, the locations necessary for the office of the Government Agents charged with the inspection of the system and of the employees of the customs, the post, the police and the Gendarmery.
The Society must establish over the whole of the road, telegraph and telephone lines and instruments destined to transmit the signals [Page 1231] and despatches necessary for the service of the Railway; but these lines cannot serve for private Correspondence having no reference to the operation of the Railway.
The Government of the Great National Assembly of Turkey reserves the right to control at any moment by inspectors delegated by the Ministry of Posts and Telegraph, all telegraphic correspondence sent over the wires of the Railway.
The Government can make use of the telegraph posts of the railway to establish a telegraphic wire for official use only, and the poles of the Railway will be set in a manner to enable them to support eventually, this supplementary wire, besides those of the Society.
In case of need the Government will have the right to establish, at its own cost, other poles along the course of the way, or to install in case of rupture and derangement of the telegraph lines, operators in the station for the transmission of official despatches which it shall consider important, by the lines of the Society. However it must cause no embarrassment to the service of the Railway.
The Society will have the right to transfer, with its proper means of transport and without paying any tax to the Administration of the Posts of Turkey, correspondence and sacks concerning exclusively the service of the Railway and of the mines and mineral deposits but, on condition that it submits to inspection and control the Agents of the Administration of Posts. The private letters of the personnel, will be subject to the postal taxes. The Society cannot effect the transport of these letters of the personnel, but they must pay postage according to the laws of Turkey. It will also have the right to transport, and without the collection of any charge therefore, personnel objects and materials for consumption, such as oil, grease, materials and rolling stock necessary for the construction, repair and exploitation of the Railway and its dependencies, (mines and mineral deposits not included) and this, not only for the lines making the object of this concession and their dependencies, but also for the extensions and branches, the concession for which shall be accorded to the Society later. On the contrary, the materials necessary for the establishment and exploitation of the mining installations, as well as the products extracted from the mines, exploited by the Society, and for the Railways connecting with the mines, will be transported by paying the tariffs in force on the Railways.
The Society shall have the right to construct such lines and branches as may be necessary or desirable and with the approval [Page 1232] of the Public Works Department, leaving its system mentioned in Article (1) provided they do not interfere with acting concessions and exploit them in conformity with the stipulations of the present convention and cahier des charges regarding the principle line.
In the case where the Government wishes to accord to third parties, a concession for other lines or branches leaving the system indicated in Article 1, the Society will have the right of preference under equal conditions for the concession of these lines or branches. It being intended that the Society shall, in a period of six months, reckoned from the notification which shall be given by the Government, make known officially its intention to make use of its rights of preference. It is intended that the said right of preference shall be applicable only during the first 20 years counted from the moment when the present concession becomes definitive.
It is equally intended that if the Society shall not execute, in its entirety, the system provided for in the first article of the present convention, or other lines which may be substituted for the said system, it cannot make use of the present right of preference.
In the case where the Turkish Government shall order or authorize the constructions of streets or roads or Railways, or Canals, which shall cross the line made the railway system of the present convention, the Society cannot oppose these works, but all dispositions will be taken so that no obstacle shall result to the construction or operation of the Railway or cause any expense to the Society.
The Government has granted to the Concessionnaire or to the Society which shall be substituted for the Concessionnaire the exclusive concession for the exploitation, in conformity with the Mines regulations, of all the Mines and quarries existing in the zone twenty kilometers each side of the Railway to be constructed according to this convention with the exception of the right already given to third parties, and provided that the provisions of Article 40 hereof are observed, such mines as may be discovered by the Concessionnaire or the above mentioned Society or by third parties after the date of the signature of the present convention and including also the mines exploited by the Government, and in general all the mines abandoned, belonging to the category of discovered or undiscovered mines.
The term “Mines” abovementioned and which follow, includes all the mineral deposits, mineral water springs, petroleum areas. If [Page 1233] the Public Works Department changes the route chosen by the Society or substitutes for it another route, at the time plans and projects are submitted for approval, the Society will have the right within a delay of one year, reckoned from the date when the said plans and studies shall be approved of substituting the mineral zone of its original route for that of the approval route. However, if the modifications made by the Government are deemed necessary owing to the fact that the Society did not follow the general direction established by the Government, the Society will lose the above mentioned optional right.
The Society will exploit the mines and mineral deposits mentioned in Article 33 in conformity with the existing laws and regulations and the concession for the mines and quarries will expire the same day as the Railway concession.
The Society will pay all the proportional and fixed (royalty) taxes and other duties established by the present laws and regulations but if the taxes and other duties are increased later on, the Society will not be bound to pay anything over the amount existing on the day when the present convention will be signed. However, if such taxes are reduced, the Society will have the benefit of such reduction, but if later on they are increased, the Society will be bound to pay such increase not over the amount existing on the day when the present convention shall become definitive.
The Society will have the benefit of all facilities and exemptions stipulated in the mines concession regulations.
The Society will buy all movable and immovable installations and campment existing in the discovered mines, to be turned by the Government to the Society according to the value which shall be estimated by experts approved by both parties.
The Society is not bound to ask for permits of search of mines in the zone of the concession. However, the Society will inform the Economic Department every time it shall begin to exploit a mine and supply the Ministry of Economics with four copies of the plans of the mine to be exploited prepared on the scale of 1/500 meters.
As soon as the route of line number (2) shall be approved, the Society will have the right without a special authorization being required, of beginning the exploitation of mines and mine deposit situated in the zone of the sections where the route is already laid [Page 1234] out, however the Society is not authorized to transport ingots or dispose of the ore found or extracted until the Railway of the same section is finished and opened to traffic.
The Society will have to notify the Ministry of Economics as to the limits of each mine. Such notification will be considered as being in lieu of the delivery and reception of the mine it concerns.
It is especially understood that the obligation of exploiting a quarry or mine, is subordinated to the finishing and opening for traffic of the Railway of the same section.
The Society is bound to exploit according to the rules of the technic, the mines and quarries it finds and receives from the Government within the lands of the Concession.
The Society shall lose its rights to each mine or quarry that it abandons for more than two years consecutively, except in case of “force majeure”.
The Society will have the right to construct refineries to work or refine the ore extracted from its mines, or from other mines, (but this right will not constitute a monopoly or concession).
The Society will supply the Public Works Department and the Ministry of Economy every six months with a report of the operations and accounts of the mines.
The Society will not, on account of the rights granted in Article 33 of the present convention, interfere with, or raise any objections about the mines and quarries which shall be discovered by third parties in the zone conceded after a period of twenty years reckoned from the date when the present convention will become definitive.
It is understood that if the Government establishes a tax on petroleum or other mineral or internal consumption in Turkey, the Society shall have to pay such taxes.[Page 1235]
On the gross receipts of the mines and the Railroad, the necessary amounts to fully pay the following:
- –The general expense of the exploitation.
- –Yearly interest and amortisement of bonds.
- –Sinking fund.
- –12% Dividend for shareholders
shall be deducted, and of the remaining profits 30% will be paid to the Government of the Great National Assembly of Turkey, and 70% will be retained by the Society.
The “Arazi-i-Emireye-i-Haliyé” lands necessary for the mining works shall be given to the Society gratis. As for the lands belonging to third parties the Society shall act in conformity with the mining law and the law of expropriations.
The term “becomes definitive” as used herein, means when the Concessionnaire finally and definitively accepts the Concession after technical studies within two years for which it has the option, and informs in writing the Minister of Public Works to that effect.
The Turkish Limited Society which shall be formed in conformity with Article 4 hereof, shall have the right to transfer to Turkish Limited Liability Societies, which may be formed under the authorization of the Government, all or part of the rights, properties, materials, and obligations which it may possess in conformity with the present convention and the Supplementary contract.
It is however understood that the Society formed under Article 4 hereof, shall remain responsible to the Government for its obligations hereunder and under the Supplementary contract.
Any difference which may arise between the Turkish Government and the Ottoman–American Development Company or the Turkish Limited Society which shall be substituted for it, relating to the execution of the interpretation of the present convention and the Cahier des charges relative thereto, will be settled by the Council of [Page 1236] State, or if the Council of State is abolished, by such other body as may be substituted for it.
As to the proceedings between the Society and individuals, they will be referred to Competent Courts of the Government of the Great National Assembly of Turkey.
The Society being under the laws of the Government of the Great National Assembly of Turkey, will correspond with all Departments of the State, in Turkish, which is the official language of the Government, and the Turkish language will be used in all the accounts correspondence and books concerning the operation of the railroad, the mines and other dependencies.
Supplementary Contract between the Turkish Government and the Ottoman-American Development Company
His Excellency Feyzi Bey, Minister of Public Works, acting on behalf of the Government of the Great National Assembly of Turkey,
Party of the First Part,
K. E. Clayton-Kennedy and Arthur Chester acting on behalf of the Ottoman–American Development Company, a Society formed under the laws of Delaware, U.S.A., in conformity with a Power of Attorney dated 5th May, 1922,
Party of the Second Part,
it has been agreed and determined as follows, and this Contract shall be ratified by Parliament:
The Government of the Great National Assembly of Turkey, accords, under the conditions of the present Supplementary Contract, the Principal Convention, and the Cahier des Charges annexed thereto, to the Ottoman–American Development Company, which accepts the concession for the construction and the exploitaion of Railroads of standard gauge, 1,435 meters wide measured inside flange of the T. rail as follows, to wit:
- –From Samsoun via Havza, Amassia and Zile to Sivas.
- –From a point near Moussa-Keuy on the line (a) to Angora.
- –From a point near Tchalti between Sivas and Harpoot on the line (1) stipulated in the Principal Convention to Erzerum.
- –From a point on the Tchalti-Erzerum line to a Black Sea Port.
- –From a point near Hodja Chafatli on the Angora Sivas line to Kaissarie.
- –From Kaissarie to Oulou Kishla.
- –From Erzerum to the Persian Border.
The whole following the route which shall be approved by the Minister of Public Works.
The duration of the concession shall be ninety-nine years, reckoned from the date at which the present and Principal Convention shall become definitive, as stated in the Principle Agreement.
The National Government shall supply the Company with, and transfer to it, all the studies already prepared for the Samsoun-Sivas Line, the Ports of Samsoun and Trebizonde, and the Angora–Sivas; Oulou-Kishla–Kaissarie; Tchalti–Erzerum; Pekeritch–(or Ash–Kalé) Black Sea lines as well as the grading works and construction, buildings and all the rolling stock and Railway plants, against payment for same.
Within six months from the date of the ratification by the Great National Assembly of Turkey, of this Contract, the Society will notify the Minister of Public Works whether or not it definitively accepts the Samsoun–Sivas lines, the port of Samsoun, and the Angora–Moussa Keuy line, and will, if accepted, commence works on the former within a period of one month from that date, and on the Angora–Moussa Keuy line within six months from the same date.
If the Society, after having accepted these lines and the port, does not start the work in the delays stipulated here above, it will lose all the rights and privileges granted to it by the Principal and present Supplementary Conventions, and the provisions of the Article of the Principal Convention relating thereto shall be applicable.
Within two years, as stipulated in the Preliminary Agreement for lines 1, 2, 3 the Society will notify the Minister of Public Works whether or not it definitively accepts the lines Tchalti–Erzerum; Hadji Shafaatli–Kaissarie; Kaissarie–Oulou Kishla; Pekeritch–(or Ash Kalé) Black Sea; Erzerum–Bayazid and Persian Border.
The Society will start grading work on the Section Sivas–Tchalti, of line I, stipulated in the principal Convention, when the laid down rails of the Samsoun–Sivas will reach a distance one hundred kilometers from Sivas and finish the construction of the Tchalti–Erzerum line within six and a half years from the date fixed for the [Page 1238] completion of the Samsoun–Sivas line. The Society will present the studies of the Pekeritch (or Ash Kalé)–Black Sea, and start work on same within two years after this Convention becomes definitive, and finish within a delay of five years reckoned from the date when this Convention shall become definitive.
The construction of the Hadji Shefaatli–Kaissarie will start within a delay of three years reckoned from the date when this Supplementary Convention shall become definitive, and will be finished within five years reckoned from the same date.
The construction of the Kaisserie–Oulou Kishla line will start within a delay of four years reckoned from the date when the present Supplementary Convention shall become definitive and will be finished within a delay of two years from the date when the work should be started.
The construction of the Erzerum–Bayazid and Persian Border line will start two years after the date when the railroad reaches Erzerum and the same should be open for traffic four years after the date when the construction will be started.
The Ottoman–American Development Company will pay to the Turkish Government the value of all the materials, studies, works, constructions and rolling stocks supplied in conformity with Article 3.
The engagement assumed in conformity with the present Supplementary Contract shall be executed by the Ottoman–American Development Company or by the Turkish Limited Company to be formed as stipulated in Article 4 of the Principal Convention, and which will be substituted for the former Company.
The Ottoman–American Development Company or the Turkish Limited Company which will be substituted for the former, will begin the construction of Samsoun–Sivas line within the delay of one month reckoned from the day when the present Contract shall become definitive as stated in Article 4 hereof and will finish and open it for traffic in a period of three years, reckoned from the date when starting. The same Company will begin the construction of the Angora–Moussa Keuy line and Samsoun port within a period of six months reckoned from the day when the present Contract shall become definitive, and have it opened to traffic in a period of four years from the date of starting.[Page 1239]
The Company will construct for its own account and at its own risk a Port at Samsoun and the Sea terminus of the Pekeritch–(or Ash Kalé) Black Sea line, capable of letting ships moor alongside its quays and provided with necessary equipment for loading and unloading of passengers and cargo, rolling stock and power plants in conformity with the preliminary studies already made, or acceptable alternatives.
The period of construction of the above mentioned Port is four years reckoned from the day when the present Supplementary Contract shall become definitive.
A separate Agreement and Specifications shall be signed for the above mentioned Port.
The Company shall have the right to change the terminus of the line (1) from Van to Van Lake with navigation rights (not a monopoly) on Van Lake.
The Company will have the right to modify line (2) which will start from a convenient point of the line (1) stipulated in the Principal Convention, in such a way that the said line (2) joins the Bagdad line on a convenient point and that it leaves the former at another convenient point. In case the modification of the line as above stated, is accepted, the Turkish Government will give the Society every possible facility and assistance in arranging that the trains of the line (2) as well as those of the Branch lines—if constructed—over which the Company is given prior rights in conformity with the Principal Convention or options, according to the present Supplementary Agreement, may be allowed to run on the portions of the Bagdad line.
The whole to be approved by the Minister of Public Works.
The Concessionnaire shall have the option for seven years from the date of the ratification of the present Contract, of accepting the [Page 1240] inclusion on the same general terms and conditions as those of the principal Convention and Cahier des Charges of the following line:
- –From a point on the Samsoun–Sivas line near Hadji Bayram to a point near Cherekli on the Angora–Moussa Keuy line via Choroum and Songourlou.
The whole following the route which shall be approved by the Minister of Public Works.
The construction and the exploitation of the above mentioned lines shall be submitted to all the stipulations of the Principal Convention and Cahier des Charges.
The present Contract is supplementary to the Convention and Cahier des Charges concerning the lines from Sivas to Van, and from a point on this line to Moussoul, Guerkeuk and Suleimanié and from another point on the same line to Youmourtalik.
Certified Translation of Law Ratifying the Chester Concession
- Article I.—The annexed Preliminary Agreement, the Principal Convention,72 and the technical Cahier des Charges, concluded between the Oootman [sic]-American Development Company, a corporation formed under the laws of the States [sic] of Delaware of the U.S.A. whereof Messrs. K. E. Clayton-Kennedy and Arthur Chester are the Representatives, and the Public Works Department of the Government of the Great National Assembly of Turkey, are accepted together with the list of modifications also annexed.
- Article 2.—The Minister of Public Works is charged to carry out the provisions of this law.
April 9th, 1339.
Shaban 22nd, 1341.
Conforms with the original
Railroads and Ports Section
The Turkish Minister of Public Works (Feyzi Bey) to Messrs. Clayton-Kennedy and Chester of the Ottoman–American Development Company
By your application dated 30th April 1923, we note that you have accepted the additional modifications as proposed, in the Conventions concerning the concession of the Eastern Anatolian Railroads, which has been signed and exchanged yesterday. We inform you that the following three modifications are also accepted by our Department, and we are expecting to see the Company commence as soon as possible an action:
- –Article 4th of the Supplementary Contract concerning the Samsoun-Sivas and Angora-Moussa Keuy lines, as well as the Port of Samsoun. On the expiration of the optional time of six months if the Company does not give notice to the Government, whether or not it accepts the constructions of the above lines and the port, or if the Company informs the Government that it will not accept the said undertaking, the Company will lose all its rights for the said lines and for the said port. In this case, the Company will be held to hand over to the Public Works Department all the technical documents whether they are handed to it by the said Department, or they are prepared later by the Company.
- –The time of four years fixed for the starting of the construction of the Oulou-Kishla Kayssary line, is shortened to one year.
- –The delay of two years fixed for the starting of construction works of the line Pekeritch (or Ash-Kalé) to Black Sea, is accepted to be one year.