888.2553/8–554: Telegram
No. 489
The Ambassador in Iran (Henderson) to the Department of State
1
307. Copy aide-mémoire on compensation settlement received this morning from British Embassy. It has been initialled by British [Page 1045] Ambassador and Iranian Minister Finance. It remains secret pending drafting formal compensation agreement.2 Text follows:
“Whereas the conclusion of arrangements with the Consortium necessitates an agreement on the question of compensation the two delegations have given careful consideration to the financial matters outstanding between the Iranian Government and the Anglo–Iranian Oil Company, Ltd.
They have had regard to the arrangements made between the Iranian Government and the Consortium which include provisions in respect of the use of the Southern assets, in consideration of which the Anglo-Iranian Oil Company, Ltd., relinquishes all claims in respect of the said assets.
They have made a meticulous examination of all the claims and counterclaims of both sides.
They have taken into account the value of the internal distribution assets, the Kermanshah Refinery, and the Naft-I–Shah oilfield, and the disruption of the enterprise of the Anglo-Iranian Oil Company, Ltd., on the one hand, and the disruption of Iran’s economy arising out of the failure of the two parties to reach a settlement following upon the nationalization of the Iranian oil industry in 1951 on the other hand.
They have also taken into account the Iranian government’s views that in equity they should receive upon ratification of the new agreement with the Consortium additional sums which would have accrued to them under the Supplemental Agreement of 1949 if it had come into force.
Having regard to the foregoing it has been agreed that the Anglo-Iranian Oil Company, Ltd., shall pay to the Iranian Government the additional sums referred to in the preceding paragraph, and such sums totalling pounds 51 million will in turn be set off against the amount payable by the Iranian Government to the Company representing the balance struck after the examination of other claims and counterclaims. In the result, a net amount is payable by the Iranian Government to the Anglo-Iranian Oil Company, Ltd., of pounds 25 million free of interest. This sum shall be paid by Iran in ten equal annual installments beginning on January 1, 1957. Settlement may be effected by the relevant installments being set off against the tax payments of the Trading Company to be established by the Anglo-Iranian Oil Company, Ltd., under the Consortium Agreement.
This payment is in full and final settlement of all claims and counterclaims by the Iranian Government and NIOC on the one [Page 1046] hand, and by the Anglo-Iranian Oil Company, Ltd. on the other, in respect of any matter prior to the effective date of the Consortium Agreement. The Anglo-Iranian Oil Company, Ltd. gives in favour of the Iranian Government and NIOC a formal release from all claims and demands of the Company in respect of any such matter. The Iranian Government and NIOC in their turn give the following formal releases and indemnities in favour of the Anglo-Iranian Oil Company, Ltd.:
- (a)
- A release from all claims and demands of the Iranian Government and the NIOC in respect of any matter prior to the effective date of the Consortium Agreement.
- (b)
- An indemnity against any liability in respect of any claims and demands that may be made against the Anglo-Iranian Oil Company, Ltd. by third parties arising out of the oil operations in Iran of the said Company.
The wording of this Aide-Mémoire is not intended to represent necessarily the wording to be used in the Compensation Agreement, which is to be satisfactory to the lawyers for both sides, and which will come into force together with, and form an integral part of, the Consortium Agreement. August 4, 1954”