Sharon libel trial awaits Israeli decision on 'secrets' as closing arguments near

The trial of a $50 million libel suit against Time Inc. brought by former Israeli Defense Minister Ariel Sharon may be near to closing arguments when it reconvenes Wednesday.

The Israeli government has been considering how to disclose information about secret documents requested by Judge Abraham D. Sofaer. Israel has said the information will likely be reviewed by Yitzhak Kahan, retired head of Israel's Supreme Court. He will then discuss the evidence with both sides.

Israel has asked for assurances of confidentiality. An exchange of letters between Judge Sofaer and Israeli officials is intended to devise a procedure by which Judge Kahan can provide ''meaningful evidence'' with the full concurrence of all parties, a Time spokesman says.

The suit stems from a February 1983 article Time ran about the results of an Israeli commission investigating the massacre by Lebanese Christian Phalangists of hundreds of Palestinians in West Beruit refugee camps in September 1982.

General Sharon, now Israeli minister of industry and commerce, charges that Time committed libel by reporting that in a conversation with Phalangist leaders prior to the massacres, he allegedly discussed the need to avenge the assassination of Bashir Gemayel, the Phalangist leader and President-elect.

Time lawyers surprised Sharon's attorney Dec. 20, the day the trial recessed, by resting their case without calling any witnesses. They said Sharon's lawyers had not proved that Time had defamed him.

It is expected that Sharon's attorneys will seek to recall him to the witness stand, a move that Time would probably oppose. Both sides will present their summaries before the judge sends the jury to deliberate on whether Sharon was defamed. If Sharon wins on that issue, the question of damages will be considered.

Time has sought to dismiss the trial by claiming it has been denied due access because it has not received evidence requested from Israel. Time reporter David Halevy, a defendant in the trial, testified that he had been told by confidential sources about the ''revenge'' discussion between Sharon and the Phalangists. Although he had never seen the disputed appendix to the Israeli commission report, he said his analysis and evaluation led him to believe that the discussion was in the secret appendix. Sharon denies this.

Time editor in chief Henry Grunwald has said Time will print a retraction if it is ''demonstrated'' that the disputed material is not in the appendix of the commission report.