THE FALL OF THE BRITISH LABOUR GOVERNMENT IN 1951, IN THE MIDST OF THE NATIONALISATION OF THE ANGLO-IRANIAN OIL COMPANY’S CRISIS.
At this point the Company served notice on the Persian Government that they wished the dispute to be submitted to arbitration in accordance with the terms of the 1933 Concession Agreement. The Persian Government rejected this request on 26th May and demanded that the Company’s representatives should attend meetings for the liquidation of the Company. The Company then applied under the terms of the 1933 Agreement to the President of the International Court at the Hague to appoint a sole arbitrator between themselves and the Persian Government. At the same time His Majesty’s Government submitted the matter to the Hague Court as a dispute between the United Kingdom Government and the Persian Government.5
The attitude of the Iranian Government was:
(a) they insisted on their sovereign right to expropriate the Anglo-Iranian Oil Company subject to the payment of compensation at a rate which would be determined by the Iranian courts. (The second nationalisation bill provided that 25% of the net proceeds of oil sales should be set aside to provide a fund for the payment of such compensation as might be determined);
(b) they insisted on entire control of the oil operation (although they were willing to employ the expatriate staff of the Company as servants of the, now, National Iranian Oil Company or NIOC, on the same terms as they had been working for with the Anglo- Iranian Oil Company) and ownership and free disposal of the oil produced (although they were willing to guarantee supplies to previous customers of the Anglo-Iranian Oil Company).
The attitude of the Anglo-Iranian Oil Company and the British Government was that they were prepared to accept nationalisation as a matter of negotiation, and not as a diktat, provided that the efficiency of the oil operation was ensured by the employment of the Company as managing agents and provided that the Company had an absolute right to the oil produced, subject to the satisfaction of Iran’s domestic requirements (which only formed a very small proportion of the total production).
To close the gap between these two different irreconcilable points of view,
the Company sent out a delegation of Directors on the 11th June to try to convince the Persian Government of the consequences of their policy of immediate expropriation of the Company’s installations in Persia and to offer an alternative that would give them money for their present needs, acceptance of the principle of nationalisation and a foundation for partnership in the future. After meetings at which the Persian delegation proved completely intransigent, insisting that oil proposals must be in accordance with the Nationalisation Law, the Company on the 19th June made an offer which provided for an immediate payment of £10,000,000 and a sum of £3,000,000 a month from July onwards during the period necessary to reach an agreement. The offer also provided for the vesting of the Persian assets of the AIOC in the National Iranian Oil Company on condition that the latter would grant to a new company established by the AIOC the exclusive use of these assets.6
After ten days of fruitless talks, the British delegation left Iran. The offer was rejected by the Iranian Government ‘on the grounds that it was not consistent with the Nationalisation Law’. The Iranian Government insisted on tanker captains signing receipts which acknowledged the oil to be the property of the National Iranian Oil Company. The tanker captains, by arrangement with Anglo-Iranian Oil Company refused. On 24th June 1951, the Anglo-Iranian Oil Company tankers stopped loading oil at Abadan. Oil export came to a standstill. Production thus ceased and the whole oil operation ground to a halt. In the meanwhile the general situation in Abadan and the oil fields had been deteriorating. The Anglo-Iranian Oil Company’s General Manager was accused by the Persians of committing an act of sabotage. He left Persia as a bill had been presented to the Majlis on 21st June introducing the death penalty for the offence of sabotage. However, after strong representations by the British Government and the United States Government, Dr. Musaddiq announced that the Bill would be withdrawn, HMS Mauritius, which had been sent to Iraqi waters opposite Abadan, was ordered to evacuate all women and children from Abadan.
After ten days of fruitless talks, the British delegation left Iran. The offer was rejected by the Iranian Government ‘on the grounds that it was not consistent with the Nationalisation Law’.7 The Iranian Government insisted on tanker captains signing receipts which acknowledged the oil to be the property of the National Iranian Oil Company. The tanker captains, by arrangement with Anglo-Iranian Oil Company refused. On 24th June 1951, the Anglo-Iranian Oil Company tankers stopped loading oil at Abadan. Oil export came to a standstill. Production thus ceased and the whole oil operation ground to a halt. In the meanwhile the general situation in Abadan and the oil fields had been deteriorating. The Anglo-Iranian Oil Company’s General Manager was accused by the Persians of committing an act of sabotage. He left Persia as a bill had been presented to the Majlis on 21st June introducing the death penalty for the offence of sabotage. However, after strong representations by the British Government and the United States Government, Dr. Musaddiq announced that the Bill would be withdrawn, HMS Mauritius, which had been sent to Iraqi waters opposite Abadan, was ordered to evacuate all women and children from Abadan.
- PRO, London, CAB 129/47 CP (51) 257, Memorandum by Herbert Morrison on the dispute with Persia, Secret, 26th September 1951, p. 7.
- Ibid.
- Ibid.
