800.054/12–1952
Memorandum by the Assistant Legal Adviser for Economic Affairs (Metzger) 1
The Current Situation of the Anti-Trust Oil Case
At present, the so-called Anti-Trust oil case is not actually a criminal case against defendants; rather, it is a Grand Jury investigation [Page 1305] into possible violations of the Anti-Trust statutes on the part of five major American companies and the Anglo-Iranian Oil Company, and the Shell combination. Subpoenas have been issued for domestic and foreign records of the American companies; no subpoena has been issued to the foreign Shell corporations, while the subpoena which had been issued to the Anglo-Iranian Oil Company was quashed by the court in its order of December 15, 1952. Under the court’s orders of November 10 and December 15, 1952, the domestic records of the American companies must be submitted pursuant to the subpoena by January 12, 1953. Regarding the foreign records, the American companies must make good faith efforts to gain consent from foreign sovereigns to remove foreign documents in order to present them; the court must be advised of these good faith efforts by February 2, 1953; where the foreign sovereign has granted consent, the foreign documents must be submitted for consideration by the Grand Jury by March 16, 1953; where the foreign sovereign denies consent, it shall be done through diplomatic channels in clear and unambiguous terms, and a preliminary hearing shall take place on February 16, 1953, at which time these refusals will be disclosed to the court, and the court will determine the proper procedure of presenting the proof and effect of foreign laws as they pertain to the question of enforcement of the subpoena; the presentation of such proof of foreign laws will then commence on March 2, 1953, in the manner ordered by the court at the preliminary hearing of February 16, 1953.
It cannot now be predicted what the court will do with respect to further orders upon an American company in the event that any foreign sovereign refuses permission to export documents of that company or its subsidiary located abroad. It also cannot be stated whether the quashing of the subpoena upon the Anglo-Iranian Oil Company takes that company out of the case for good; if the Justice Department were to appeal from the court’s order quashing the subpoena, it may well secure a reversal.
If the case were continued along present lines, it does not appear that an indictment would be secured until sometime in the fall of 1953, or that trial would be completed until the end of 1954 and possibly later, during 1955. Appeals might result in a final determination not being made until 1956 or 1957. Since it is understood that following the criminal case a civil case would be instituted, and since the trial of a civil case might take substantial time by itself, even though evidence would have been obtained, the litigation in connection with international operations in oil might continue through the remainder of the decade; this time might be shortened if the civil case were instituted prior to the determination of appeals in the criminal case. It should be noted, in this connection, [Page 1306] that effective remedies leading to a change in the practice of conducting oil operations abroad of American companies can only be had through a decree in the civil case. Fines and imprisonment are the only remedies on the criminal side.
If the criminal case were to be postponed, a civil suit by the Justice Department could, nevertheless, be instituted through the filing of a complaint. The foreign documents problem would be much the same in a civil case, since the Justice Department could, through discovery under the Federal rules, call for the production of documents relating to the issues in the complaint. If the basis of the court’s order quashing the subpoenas on the Anglo-Iranian Oil Company is valid, Anglo-Iranian Oil could not be made a party defendant in the case, or, if made a defendant, could secure dismissal of the complaint; if, however, the basis of the court’s order is erroneous, as may well be held upon appeal, Anglo-Iranian Oil Company would be a defendant in the civil action. It should be emphasized that the decree in the civil case is the instrument by which restrictive practices, changes in organization, etc., affecting oil operations, are accomplished. The institution of a civil suit during a postponement of the Grand Jury’s proceedings would not preclude a subsequent institution of a criminal suit.
- Attached to the source text was a memorandum, dated Dec. 19, from Metzger to Armstrong, informing the latter that the memorandum contained some material for the oil paper he was preparing. (800.054/12–1952)↩