2. Law Applicable to the Consortium Agreement:

The code of law applicable to the agreement was decided on 28 July, but its substance has not been reported. The Iranians and [sic] insisted on the application of Iranian law, while the consortium contended for the International Court’s formula of the “law of civilized nations.”

3. Convertibility of Oil Revenues Paid to Iran:

On 22 July the Iranians presented to the consortium negotiators two new financial proposals. The first provided for the inclusion in the consortium agreement of a clause tying in the [several words excised] agreement regarding the convertibility of sterling into dollars. This was an obvious effort by the Iranians to protect themselves against further British restrictions regarding convertibility; in the face of British objections, however, Amini agreed to withdraw the suggestion. The second proposal would establish the exchange rate for the consortium’s operations in Iran at the noncommercial rather than at the more favorable commercial rate. There is as yet no indication that the Iranians will withdraw this provision, which the consortium and government representatives oppose

4. Guarantee of an Oil Settlement:

Dutch objections to an intergovernment “umbrella agreement” to provide diplomatic protection to the oil companies, on which London has insisted, have apparently been overcome. The diplomatic representatives of the United States, Britain, France and The Netherlands were to discuss on 29 July new drafts of an exchange of notes with Iran which would make compulsory the referral to the International Court of Justice of any dispute arising from the settlement. However, the French now share Dutch misgivings about such an approach. The French chargé suggested on 28 July that Iran might instead be asked to announce, at the time of the agreement’s ratification, its willingness to submit any future disputes to the International Court.

5. Compensation to Anglo-Iranian Oil Company:

In the separate British-Iranian negotiations on compensation for losses resulting from nationalization and for the Kermanshah refinery and oil fields, which will be operated by Iran, the Iranians on 23 July raised their original offer of $28,000,000 to $56,000,000. Ambassador Stevens [Sir Roger Stevens of Britain] told Henderson that he would recommend British acceptance if the figure were raised to $84,000,000. On 26 July, Foreign Office and Treasury officials met in London to consider a “final” Iranian offer of $70,000,000.

HUNTINGTON D. SHELDON
Assistant Director
Current Intelligence