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The Latest Award from the Iran–United States Claims Tribunal: The Line Between Approximation of Damages and Ruling ex Aequo et Bono

Published online by Cambridge University Press:  20 January 2017

David P. Stewart ,
Stephen M. Schwebel  and
Ruth Teitelbaum
Stephen M. Schwebel
Affiliation:
Of the Board of Editors
Ruth Teitelbaum
Affiliation:
Freshfields Bruckhaus Deringer
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Extract

The Iran–United States Claims Tribunal (Tribunal) has functioned in the Hague since 1981. To date, the Tribunal has completed its work in over thirty-nine hundred cases, making it one of the most significant claims settlement efforts in history. Remaining on the Tribunal’s docket are several very large and complex claims between the Islamic Republic of Iran and the United States of America.

Type
International Decisions
Information
American Journal of International Law , Volume 109 , Issue 2 , April 2015 , pp. 369 - 378
Copyright
Copyright © American Society of International Law 2015

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Footnotes

*

The author co-wrote this report in her personal capacity only, and the views expressed herein should not be attributed to her law firm.

References

1 Background information about the Tribunal is available at its website, http://www.iusct.net. Online public access to the Tribunal’s awards and decisions is limited to academic users and international organizations.

2 Iran v.United States, 34 Iran-U.S. Cl. Trib. Rep. 105 (1998),available in 1998 WL930565 [hereinafter Partial Award]; Iran v. United States, AWD No. 602-A15(IV)/A24-FT (Iran-U.S. Cl. Trib. July 2, 2014) [hereinafter Final Award].

3 Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the United States of America and the Government of the Islamic Republic of Iran, Art. VII(2), Jan. 19, 1981, 1 Iran-U.S. Cl. Trib. Rep. 9, 11 (1983) [hereinafter Claims Settlement Declaration], 75 AJIL 422 (1981).

4 Declaration of the Government of the Democratic and Popular Republic of Algeria, Jan. 19, 1981, id. at 3 [hereinafter General Declaration], 75 AJIL 418 (1981).

5 General Declaration, 1 Iran-U.S. Cl. Trib. Rep. at 3.

6 Claims Settlement Declaration, supra note 3, Art. VII(2), 1 Iran-U.S. Cl. Trib. at 11.

7 Partial Award, para. 214. Iran’s claims are described in paragraph 2 of the partial award. The remaining docket of the Tribunal consists of claims of the government of the Islamic Republic against the United States government, largely for armaments purchased in the United States by the imperial government of Iran. Delivery of those armaments was interdicted by the United States as a result of the overrunning of the U.S. Embassy in Tehran and the imprisonment of its diplomatic staff as hostages. The claims of the Islamic government for the amounts paid for those undelivered armaments, plus interest accruing since 1979, total many billions of U.S. dollars. Adjudication of these claims has been pending since Iran’s presentation of its Statement of Claim on October 25, 1982.

8 Exec. Order No. 12,294, 3C.F.R. §139 (1981), reprinted in 20 ILM 412 (1981); see also Iranian Assets Control Regulations, 31 C.F.R. pt. 535 (1981) (U.S. Treasury regulations issued after January 19, 1981, to implement the United States obligation to terminate litigation).

9 Exec. Order No. 12,294, supra note 8 (emphasis added).

10 The legal concepts of obligation of means versus obligation of result are concepts of civil law and public international law.See Dupuy, Pierre-Marie,Reviewing the Difficulties of Codification: On Ago’s Classification of Obligations of Means and Obligations of Result in Relation to State Responsibility, 10 Eur. J. Int’l L. 371, 375 (1999)CrossRefGoogle Scholar (citing Jean Combacau, Obligations de résultat et obligations de comportement, quelques questions et pas de réponse, in Mélanges Offerts à Paul Reuter: le droit international, Unité et diversité 181 (1981)); see also Ago, Roberto, Le délit international, 68 Recueil des cours 415 (1939 II)Google Scholar.

11 Avena and Other Mexican Nationals (Mex. v. U.S.), 2004 ICJ Rep. 12 (Mar. 3). In Avena, the Court concluded that “the appropriate reparation in this case consists in the obligation of the United States of America to provide, by means of its own choosing, review and reconsideration of the convictions and sentences of the Mexican nationals. “ Id. at 72, para. 153(9).

12 The Court rejected Mexico’s request for an interpretation of the “means of its own choosing” language and what Mexico argued was an “obligation of result” as opposed to an obligation of means. Request for Interpretation of the Judgment of 31 March 2004 in the Case Concerning Avena and Other Mexican Nationals (Mexico v. United States of America) (Mex. v. U.S.), 2009 ICJ Rep. 3, 6, para. 9 (Jan. 19). Mexico’s request for an interpretation was rejected on the ground that it went beyond the scope of issues decided in the earlier 2004 Avena judgment. Id. at 17, para. 44.

13 Judge Sepúlveda-Amor, in discussing the judgment of the Court concerning Mexico’s request for an interpretation, observed that “[i]n the present Judgment, the Court has clearly established what is meant by an obligation of result:it is’an obligation which requires a specific outcome.’ “Id., Dissenting Opinion of Judge Sepúlveda-Amor, 2009 ICJ Rep. at 31, para. 2. He also expressed his dismay that “the Court ha[d] missed a splendid opportunity to settle issues calling for interpretation and to construe the meaning or scope of the Avena Judgment in certain respects incontrovertibly characterized by a degree of opacity.” Id. at 30, para. 1.

14 See, e.g., Statement of Interest of the United States, Crocker Nat’l Bank v. Iran, No. 79 Civ. 6493 (S.D.N.Y. Feb. 26, 1981),reprinted in 20 ILM 363 (1981).In this statement, the United States asked the court to stay litigation of those claims against Iran arguably within the Tribunal’s jurisdiction and vacate the attachments against Iranian assets. In addition, in the Marriott case, the complex facts of which are explained in the final award, the United States had filed a statement of interest requesting that the appellate court stay the state court litigation, and had then filed a second statement of interest in support of an Iranian foundation before the Court of Appeals of the State of New York, its highest court. See Marriott Corp. v. Rogers & Wells, No. 79 Civ. 21884 (N.Y. Sup. Ct. decided Feb. 13, 1980), rev’d, 438 N.Y.S.2d 330 (App. Div. 1981), aff‘d, 459 N.E.2d 1287 (N.Y. 1983); Final Award, paras. 132–38.

15 Judge McDonald observed in her separate opinion that even though she agreed that the United States had breached its obligation under General Principle B, she would have found that the breach was not due to the suspension mechanism itself but, rather, a failure of the courts to suspend litigation as required by Executive Order 12,294. Final Award, Separate Opinion of Judge Gabrielle Kirk McDonald, Concurring in Part, Dissenting in Part, para. 1 [hereinafter sep. op. McDonald, J.].

16 Partial Award, para. 102. The composition of the Tribunal in the 2014 award was almost entirely different from that of the 1998 award. The members of the Tribunal that rendered the 1998 award were KrzysztofSkubiszewski (president), Bengt Broms, Gaetano Arangio-Ruiz, Assadollah Noori, George H. Aldrich, Koorosh H. Ameli, Richard C. Allison, Mohsen Aghahosseini, and Charles T. Duncan. The members of the Tribunal that rendered the 2014 award were Hans van Houtte (president), Bengt Broms, Herbert Kronke, Charles N.Brower, Hamid Reza Nikbakht Fini, Mir Hossein Abedian Kalkhoran, Gabrielle Kirk McDonald, Seyed Jamal Seifi, and O. Thomas Johnson.

17 Nowhere in the final award was the term “monitoring expense” defined. In a footnote to the award, the Tribunal observed that “the notion of ‘monitoring of the suspended claims,’” see, e.g., Partial Award, paras. 102, 214A(a)(4), “or, simply, ‘monitoring’—as used and understood in this arbitration, is not one that has been employed contemporaneously by the Parties.” Final Award, para. 228 n.226. The Tribunal understood the term “general representation,” as employed in the document, to encompass relevant monitoring activities carried out by Shack & Kimball. Id.

18 William J. Levitt v. Islamic Republic of Iran, 14 Iran-U.S. Cl. Trib. Rep. 191, 205–06 (1987).

19 Final Award, Concurring and Dissenting Opinion of Judge Charles N. Brower, para. 3 [hereinafter sep. op. Brower, J.]. Judge McDonald joined Judges Brower and Johnson in her opinion. Sep. op. McDonald, J., supra note 15, para. 1.

20 Final Award, Separate Opinion of Judge O. Thomas Johnson, Concurring in Part, Dissenting in Part, para. 14 [hereinafter sep. op. Johnson, J.].

21 Final Award, Joint Separate Opinion of Judges Mir-Hossein Abedian, Hamid Reza Nikbakht Fini, Jamal Seifi, paras. 3, 14 [hereinafter joint sep. op.].

22 Id., paras. 3–9.

23 Judge Brower criticized the joint separate opinion for describing Shack’s testimony as “pivotal” for the Tribunal, which Judge Brower believed was “grossly misleading.” Sep. op. Brower, J., supra note 19, para. 3 n.6 (quoting joint sep. op., supra note 21, para. 6).

24 Id., para. 3.

25 Sep. op. Johnson, J., supra note 20, para. 14.

26 Iran–United States Claims Tribunal, Rules of Procedure, Art. 33(2) (May 3, 1983), reprinted in Drahazol, Christopher R. & Gibson, Christopher S., The Iran-U.S. Claims Tribunal at 25, at 391 (2007), available at https://www.iusct.net/Pages/Public/A-Documents.aspxGoogle Scholar.

27 On December 17, 2014, President Obama announced sweeping policy changes that will influence investment and commercial relations with Cuba. See Address to the Nation on United States Policy Toward Cuba, Daily Comp. Pres. Doc. 201400937 (Dec. 17, 2014). In 1964, the U.S. Congress established the Cuban Claims Program, which authorized the Foreign Claims Settlement Commission (FCSC) to hear evidence from U.S. nationals on the value of their confiscated assets. The FCSC has certified nearly six thousand claims as valid, with an aggregate value of close to US$2.0 billion plus interest. See U.S. Dep’t of Justice, Completed Programs—Cuba (Feb. 3, 2015), at http://www.justice.gov/fcsc/claims-against-cuba; see also Lucy Reed & Nigel Blackaby, Settlement Prospects for Cuban-Expropriated US Assets, Freshfields Bruckhaus Deringer (Dec. 23, 2014),at http://www.freshfields.com/en/knowledge/Settlement_prospects_for_Cuban-expropriated_US_assets/?LangId=2057. For a 2007 study concerning the resolution of outstanding claims, see Creighton Univ. Sch. of Law & Dep’t of Pol. Sci.& Usaid, Report on the Resolution of Outstanding Property Claims Between Cuba & the United States (2007), available at https://www.american.edu/clals/upload/Creighton-University-Claims-Study.pdf [hereinafter Resolution Report].

28 For a discussion of the work of the Iran-U.S. Claims Tribunal, see Resolution Report, supra note 27, at 38–49.

29 Crook, John R., Fact-Finding in the Fog: Determining the Facts of Upheavals and Wars in Inter-state Disputes,in The Future of Investment Arbitration 313,331 (Rogers, Catherine A. & Alford, Roger P. eds., 2009)Google Scholar.