Foreign Relations of the United States, 1952–1954, Iran, 1951–1954, Volume X

888.2553/1–1153: Telegram

No. 275
The Ambassador in the United Kingdom (Gifford) to the Department of State¹

secret
niact

London, January 11, 1953—7 p.m.

3790. From Byroade. At today’s meeting Dixon and Maud handed us following British redraft of terms of reference as result numerous week-end meetings which included company:

“To determine the sum expressed in sterling required to provide fair compensation for the loss by Anglo-Iranian Oil Company of its property, rights and interests as the result of the Iranian oil nationalization laws of March and May 1951; and for that purpose the tribunal shall employ the principles applied for the purpose of determining the compensation awarded under any United Kingdom law nationalizing any industry in the United Kingdom which the company may specify; and to determine the validity of counterclaims which the Iranian Government may have against the company and the sum expressed in sterling required to meet them”.

United Kingdom stated that phrase “expressed in sterling” was inserted for purpose of making clear that compensation was not to be in Iranian rials. Phrase “expressed in sterling” obviously refers only to currency of calculation and not to method of payment, but United Kingdom believes this useful in arbitration agreement.

Department will also note that terminology employing word “principles” has been substituted in United Kingdom redraft for word “basis”. New United Kingdom wording evidently designed to give loose and more vague terminology in terms of reference. Believe it may be difficult to persuade United Kingdom to abandon either of these changes in their redraft.

New wording on sterling is not unusual or out of the way as a provision in an agreement of this kind. However, it might create some public relations problem for Iran. Shawcross, when informed of this change in terms of reference, is reported to have said it was a useful addition.

United Kingdom Government officials are also pressing for addition to terms of reference of language calling on arbitral tribunal in fixing its award to take “into account in each case the method of payment of any balance due to either party”. Reasoning behind inclusion such a provision is complex, and it would seem undesirable to introduce this new feature into terms of reference. AIOC apparently is not urging inclusion such provision, and we hope to avoid it.

Gifford

1. Repeated to Tehran.