886A.2553/8–1654
No. 361
Memorandum of Conversation, by the
Officer in Charge of Economic Affairs, Office of Near Eastern
Affairs (Gay)
Subject:
- Onassis case
Participants:
- Messrs. Case, Socony Vacuum and Coleman, Standard Oil of New Jersey
- Messrs. Brougham and Duce, Aramco
- Mr. Murphy—G
- Mr. Jernegan—NEA
- Mr. Bechner—PED
- Mr. Gay—NE
The representatives of the corporation called primarily to discuss the legal aspects of the Onassis case, although some attention was also given to Pacific Western’s proposed agreement with Onassis. Mr. Hadfield of Pacific Western had recently discussed it with Aramco officials. Reference was made to the wording of the Aide-Mémoire handed to the Saudi Foreign Office on August 2, specifically to the omission of the sentence in the original version of the Aide-Mémoire which stated the Onassis Agreement to be “violative of the relative obligations assumed by Saudi Arabia on granting the exclusive rights set forth in the Agreement”. It was felt that merely stating the Onassis Agreement was “inconsistent” with the Aramco concession contract was not strong enough and that Mr. Wadsworth consequently felt restrained from stressing the legal aspects of the case. Mr. Case said all legal opinions they had obtained so far agreed to the violative nature of the Onassis Agreement including British and Islamic opinion. These legal opinions are to be provided to the Department.
Mr. Brougham who was present at the time of the first discussion of the Onassis Agreement with the King and Faisal alluded to the King’s statement, and it has been repeated by Saudi officials, that they did not intend to violate the Aramco concession agreement. He felt, therefore, that our strongest position lay in stressing the legal violation implicit in the Onassis Agreement. In this connection reference was made to the arbitration clause in Aramco’s concession contract, the corporation officials indicating that arbitration of the case would not be objectionable if the Saudi Government wished to apply this procedure.
Mr. Jernegan indicated that the Department’s legal counsel has had some reservations about the strength of the legal position [Page 847] against the Onassis Agreement and that the Secretary, on the basis of preliminary consideration, had inclined to this view.1 He also mentioned that we had understood Aramco was not anxious to invoke the arbitration clause.
Mr. Murphy expressed interest in the further legal opinions that were mentioned and told the corporation officials the Department would fully re-examine the legal aspects of the case on the basis of all information now brought to bear.2
- A memorandum by Jernegan to Murphy, Aug. 14, gave some background information on the subject matter to be discussed in this conversation. The memorandum suggested the oil company officials might want the Department of State “to take a stronger line regarding the asserted violation of the Aramco concession.” The Department of State Legal Adviser’s Office, however, had carefully chosen the language used by the Department, since it was considered somewhat debatable whether the Onassis agreement really infringed on the concession in the strict legal sense. The memorandum indicated the Secretary of State had not studied the matter carefully, but had indicated his “off-hand concurrence in the views of the Legal Adviser’s office.” The memorandum suggested that if the legal point should prove to be of major importance the Legal Adviser, and perhaps the Secretary of State himself, should be asked to give the matter further consideration. (886A.2553/8–1454)↩
- Telegram 50 to Jidda, Aug. 20, advised the Embassy that if the Saudi Arabian Government raised the point of the legality of the Onassis agreement, the Embassy was authorized to state that the opinion of the United States Government was that the agreement “as written is violative of Concession Agreement,” but that the Ambassador did not wish to argue legalities as he was not a lawyer. (886A.2553/8–2054)↩