890g.6363 T 84/123

The President of the Standard Oil Company of New Jersey (W. C. Teagle) to the Secretary of State

My Dear Mr. Secretary: With reference to my letter to the Department of October 25, 1923, with which was enclosed a copy of my proposed letter to Mr. H. E. Nichols of the same date,50 and also referring to my letter to the Department of the 9th ultimo,50 all with reference to the draft convention now under discussion between the Iraq Government and the Turkish Petroleum Company, Limited, I am now in receipt of a copy of the draft convention in its present form, called “draft of November 1923”, which brings the draft up to November 16, 1923. It should be added that all of the modifications in this November draft have been communicated to Mr. Keeling, at Bagdad, but they have not been accepted by the Iraq Government. I enclose a copy of the November draft.50

After receipt of the Department’s letter of the 8th ultimo in comment upon my letter of the 25th October, we communicated the Department’s comment relative to Article 33 to Mr. Nichols, with the result that we are now advised by Mr. Nichols by telegraph that, at our request, the words “under English Companies Acts” have been omitted from Article 33. This frees the Turkish Petroleum Company, Limited, from the stated obligation to organize its subsidiaries under British law.

Referring to the phraseology of Article 34, Mr. Nichols tentatively accepted the phraseology which we proposed in our letter of October 25th, addressed to him. He, however, urged that the amendment was not required in order to insure that transferees of portions of the defined area would not necessarily have to be of British nationality. We are now in receipt of a telegram from Mr. Nichols stating that Mr. Keeling maintains that the general prospects of reaching a favorable agreement with the Iraq Government are most seriously prejudiced unless the principal amendment to Article 34 is withdrawn. The amendment to which Mr. Nichols refers is the one stated in our letter to him of October 25th, under Article 34, in the phrase, “to any person, firm, or corporation, irrespective of nationality”. We are further advised by the Anglo Persian Oil Co., Limited, which is Mr. Nichols in this instance, that it accepts the legal view that under Article 34, with this amendment deleted, the Turkish Petroleum Company would be permitted to make transfers to persons, firms or corporations of any nationality, [Page 261]and he also points out the improbability of eventual dispute regarding nationality, since the Iraq Government would thereby prejudice its own nationals, is [if?] transferees must be of British nationality. Finally, Mr. Nichols strongly urges acceptance of this view, as otherwise an impasse in Iraq seems inevitable. We are asked to telegraph promptly our views.

It is under this Article 34 that the operation of the Open Door Plan is possible, and we are therefore writing the Department in respect to the phraseology of Article 34 in order that we may have the benefit of, and be guided by, the views of the Department.

We beg to point out that under Article 32 the Turkish Petroleum Co., Limited, agrees to be, and remain, a British company; that under Article 34, even eliminating the clause regarding nationality, it is provided that the Turkish Petroleum Co., Limited, shall have the right to underlet or transfer any part or parts of its rights and obligations with respect to portions of the defined area on such terms as it may think fit, and that, therefore, if that company does not assign its obligation to be and remain a British company, it would seem to follow that the transferee would not have to be a British company.

If, therefore, it accords with the Department’s views, we are disposed to advise Mr. Nichols that the clause in question above quoted may be omitted.

Inasmuch as we are asked for telegraphic advice, we shall appreciate having as prompt consideration of this matter at the hands of the Department as possible.

Respectfully yours,

W. C. Teagle
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