De Bataafsche Petroleum Maatschappij v War Damage Commission

• Jurisdiction: Singapore
• Judgment Date: 13 April 1956
• Date: 13 April 1956
• Court: Court of Appeal (Singapore)

Singapore, Court of Appeal.

(Whyatt C.J.; Mathew C.J. (F.M.), Whitton J.)

N.V. de Bataafsche Petroleum Maatschappij and Others

and

The War Damage Commission.

Treaties — Kinds of — Inter-Allied Declaration of 1943 against Acts of Dispossession in Territories under Enemy Occupation or Control — Whether Amounting to a Treaty.

Treaties — Interpretation of — Changed Conditions — Interpretation of Hague Regulations in Light of Changed Conditions of Warfare Since 1907.

War — In General — Miscellaneous — War of Agression — Purported Title Acquired by Occupant in War of Agression.

Belligerent Occupation — Requisition of Private Property — Article 53 of Hague Regulations, 1907 — Seizure of Oil Installations — Crude Oil — Whether Constituting “Munitions de Guerre”— Interpretation of Hague Regulations in Light of Changed Conditions of Warfare Since 1907 — Nature of Title Acquired by Occupant — Whether Occupant Can Acquire Title in Crude Oil by Specification — Acquisition of Title in a War of Aggression — Maxim Ex Injuria Jus Non Oritur — Inter-Allied Declaration of 1943 Concerning Spoliation by Enemy Powers — Whether Amounting to a Treaty.

The Facts (as stated by the Court).—“The appellants are three oil companies, incorporated in Holland, who prior to the outbreak of the war with Japan in 1941, carried on the business of producers and refiners of oil in Sumatra. Between them, they held all the concessions in Sumatra and owned two large refineries in the Palembang area in the southern part of the island. The total number of concessions was 86 of which 61 were held by the first appellant, 2 by the second appellant and 23 by the third appellant. The earliest concession was granted by the Netherlands Indies Government in 1907, and thereafter concessions were granted at various dates for periods ranging from 40 years to 75 years, the last concession being granted in 1941. By the end of 1941, the appellants had established production in 32 oil reservoirs, as they are technically known, situated in various places in the concession areas as shown on a map produced at the hearing of the appeal. These oil reservoirs are geological structures enclosing the crude oil in its natural state and it was agreed by the parties that the oil does not escape from them except by means of bore-holes, or wells, drilled into the reservoirs from the surface. No detailed information was supplied as to the number of wells which had been drilled into the reservoirs by the appellants by the end of 1941 or as to the rate of production of the wells at that date but it may be inferred that production was on a substantial scale from the fact that the two refineries already referred to had a total capacity of 90,000 gallons per day. The position, therefore, at the outbreak of hostilities, was that the appellants were producing crude oil in commercial quantities from some 32 reservoirs under concessions granted by the Netherlands Indies Government which still had substantial periods to run, and were refining crude oil obtained from these reservoirs on a large scale in their refineries at Palembang.

“For the evidence of the events which occurred during the Japanese occupation, the parties were, of necessity, dependant upon the testimony of Japanese naval and military officers. The effect of this testimony, some of which was given orally, and some on affidavit, may be summarised as follows. When the Japanese armed forces occupied Sumatra, they immediately seized the appellants' installations in the field and also their refineries at Palembang because, as a Japanese naval officer, Admiral Watanabe, called by the respondents put it, ‘oil was the most vital war material at that time, and personally I thought we started the war for the sake of the oil.’ The installations had been badly damaged as part of the Netherlands Indies Government's denial policy, and the Japanese military authorities organized a special technical unit under military discipline to repair them. By the end of the first year of the Japanese occupation, they were all in working order again and crude oil was once more being extracted from the reservoirs and being processed in the appellants' refineries. The Japanese military authorities did not bring any new oilfields into production but continued to extract oil from the existing reservoirs throughout the period of the occupation. The oil so extracted, or at least a substantial part of it, was shipped as refined products, and sometimes as crude, to Singapore where it was kept in storage tanks, belonging in some cases to the appellants' associated companies, until eventually it was forwarded to various destinations in Malaya, Thailand, French Indo-China and Japan proper to meet not only military demands but also civilian requirements in those areas. The Japanese colonel in charge of the Shipping Department of the Petroleum Office in Singapore throughout the occupation estimated that 6,000,000 kilo-litres, or approximately, 1,200,000,000 gallons, of petroleum from the Sumatra oilfields were distributed during the war in this way from the Singapore ‘relay storage point’, as he called it, to military and civilian consumers in the southern theatre of war: he gave no estimate of the respective quantities allocated to military and civilian consumers. When the British landed in Singapore on the 5th September, 1945, they found in the storage tanks approximately 55,000,000 gallons of refined petroleum and 11,000,000 gallons of crude oil, all of which, as is admitted by the respondents, had been extracted from the oil reservoirs in Sumatra by the armed forces of the belligerent occupant, and, after refining at Palembang in the case of the refined products, had subsequently been shipped by them to the storage relay point in Singapore. The British military forces seized the petroleum stocks as war booty. Later, by an arrangement which the parties agree does not affect the issues in this case, the appellants were allowed to withdraw 20,000,000 gallons of refined and crude oil, leaving a balance of 46,000,000 gallons of refined products, which has been valued, by agreement between the parties, on the basis of the 1941 Gulf prices at $5,099,490, which is the amount claimed by the appellants in these proceedings.”

The appellants contended that the petroleum was their property and not, as the respondents alleged, the property of the Japanese State, and in support of their contention they relied upon two broad contentions, first, that they had a valid title to the petroleum under municipal law, and, second, that they were never lawfully deprived of their title by the Japanese belligerent occupant. The appellants' claim had been dismissed by the Board constituted under the Singapore Essential Regulations, and from that decision the appellants brought this appeal.

Held: that the appeal must be allowed. The appellants had as complete a title to the oil in situ as it was possible for anyone to have during the period of concession, and the seizure and subsequent exploitation by the Japanese armed forces of the oil resources of the appellants were in violation of the laws and customs of war and consequently did not operate to transfer the appellants' title to the belligerent occupant.

Whyatt C.J., after having stated the facts, said: “It is against this background of facts that I now turn to consider the numerous issues of law which have been raised in this case. As I have already indicated, they fall broadly under two heads, municipal law and international law; but it would be wrong to suppose that this division represents a true dichotomy, and indeed the complexity and multiplicity of the arguments in this case may well be due, in part at least, to a tendency to treat the issues as belonging rigidly to one or other of these branches of the law. The substantial contest in this case is between the appellants and the respondents' predecessors in title, the Japanese belligerent occupant, who is an International Person, and therefore it follows that when their competing claims are considered under municipal law, there is inevitably introduced an element of international law in view of the international status of one of the claimants. One further preliminary observation requires to be made on a matter which likewise has increased the complexity and difficulties of this case. Counsel for the appellants objected that at the hearing before the Board the respondents had relied on the Netherlands Indies law relating to specificatio without pleading it in their defence. Counsel for the respondents, while not conceding that there was any duty to plead specificatio specifically, contended that in any case the appellants had not been taken by surprise as translations of the relevant passages of Netherlands Indies law on this subject had been furnished to the appellants long before the trial. He also complained, by way of tu quoque, that the appellants, for their part, had raised matters of Netherlands Indies law without pleading them properly but he did not make any formal objection on this ground. It is true that the pleadings of both parties in regard to Netherlands law were somewhat unsatisfactory, but after the lengthy hearings before the Board and before this Court, during which the numerous issues in this case have been fully and exhaustively canvassed by both sides, I do not think the shortcomings in the pleadings, such as they were, can be said to have caused substantial injustice to either party, and I, therefore, make no further reference to them in this judgment.

“At the outset of their argument, the appellants recognized that it was incumbent upon them to show a good root of title under municipal law to the oil in the reservoirs in Sumatra prior to the Japanese invasion. It might be thought that an issue of this kind would not raise controversial questions of law but in the present instance this proved not to be the case for the respondents strenuously...