Iran-U.S. Claims Tribunal Reports: Volume 36, 2000-2002

Overview

The Iran-U.S. Claims Tribunal, concerned principally with the claims of U.S. nationals against Iran, is the most important international claims tribunal to have sat in over half a century. Its jurisprudence is bound to make a uniquely important contribution to international law and, in particular, the law relating to aliens. The series is the only complete and fully indexed report of the decisions of this unique Tribunal. These Reports are essential for all practitioners in the field of international claims, ...

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Overview

The Iran-U.S. Claims Tribunal, concerned principally with the claims of U.S. nationals against Iran, is the most important international claims tribunal to have sat in over half a century. Its jurisprudence is bound to make a uniquely important contribution to international law and, in particular, the law relating to aliens. The series is the only complete and fully indexed report of the decisions of this unique Tribunal. These Reports are essential for all practitioners in the field of international claims, academics in private and public international law and comparative lawyers as well as all Governments and law libraries. Each volume contains a detailed consolidated index and tables of cases covering the whole series to date.

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Product Details

  • ISBN-13: 9780521867139
  • Publisher: Cambridge University Press
  • Publication date: 7/31/2006
  • Series: Iran-U.S. Claims Tribunal Reports Series
  • Edition description: First Edition
  • Pages: 460
  • Product dimensions: 5.98 (w) x 8.98 (h) x 1.42 (d)

Meet the Author

Karen Lee is a Fellow of the Lauterpacht Research Centre for International Law and of Girton College at the University of Cambridge.

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Iran – United States Claims Tribunal Reports
Cambridge University Press
978-0-521-86713-9 - Iran – United States Claims Tribunal Reports - Volume 36 - Edited by Karen Lee
Excerpt

2000







DECISION AND AWARDS







   THE UNITED STATES OF AMERICA,
THE
FEDERAL RESERVE BANK OF NEW YORK, Claimants

v.

THE ISLAMIC REPUBLIC OF IRAN, BANKMARKAZI IRAN, Respondents

(Case No. A28)

Full Tribunal: Skubiszewski, President[1] Broms,[2] Arangio-Ruiz, Noori,[3]
Aldrich,[4] Ameli,[5] Duncan,[6]Aghahosseini[7] and Mosk,[8] Members[9]

Signed 19 December 2000[10]


DECISION NO. DEC 130-A28-FT

   The following is the text as issued by the Tribunal:


   DECISION


APPEARANCES 
For the Claimants:Mr. Allen S. Weiner,
 Agent of the United States of America,
 Ms. Jessica R. Holmes,
    Deputy Agent of the United States of America,
 Mr. Michael J. Matheson,
    Deputy Legal Adviser,
    United States Department of State,
 Mr. Ronald J. Bettauer,
   Assistant Legal Adviser,
    United States Department of State,
 Mr. Thomas Baxter,
   General Counsel,
   Federal Reserve Bank of New York,
 Ms. Kathleen M. Milton,
    Attorney Adviser,
   United States Department of State,
 Ms. Kathleen A. Wilson, Attorney Adviser, United States Department of State,
 Mr. Mark A. Clodfelter, Attorney Adviser, United States Department ofState,
 Ms. Michelle Meertens,
    Attorney, Federal Reserve Bank of New York,
 Mr. Dirk Meerburg,
    Counsel,
 Mr. William T. Lake,
    Witness,
 Mr. James Oltman,
    Witness.
For the Respondents:
 Mr. M. H. Zahedin-Labbaf,
    Agent of the Government of the Islamic
    Republic of Iran,
 Dr. Ali Akbar Riyazi,
    Legal Adviser to the Agent,
 Mr. Ian Brownlie, Q. C.
    Legal Adviser to the Agent,
 Mr. Zainolabedin Marousi,
    Legal Assistant to the Agent,
 Mr. Jafar Tamaddoni,
    Adviser to the Agent,
 Mr. Behazin Bijani,
    Adviser to the Agent,
 Mr. Behzad Nabavi,
    Witness,
 Mr. Ali Manavi-Rad,
    Witness.

TABLE OF CONTENTS




 Para.
I.INTRODUCTION1
II.FACTUAL BACKGROUND5
III.THE PARTIES’ CONTENTIONS14
IV.JURISDICTION48
V.MERITS53
vi.DECISION9595

I.  INTRODUCTION

   1. On 29 September 1993, the Claimants, the United States of America and the Federal Reserve Bank of New York (“Federal Reserve Bank”), submitted a claim against the Respondents, the Islamic Republic of Iran (“Iran”) and Bank Markazi Iran (“Bank Markazi”). At issue in this Case are the Respondents’ obligations under the Algiers Declarations11 and the implementing Technical Agreement12 concerning the replenishment of the Security Account established pursuant to Paragraph 7 of the General Declaration (“Security Account”) “for the sole purpose of securing the payment of, and paying, claims against Iran” in accordance with the Claims Settlement Declaration. Paragraph 7 of the General Declaration is quoted in full infra, at para. 5.

   2. The Claimants allege that the Respondents have breached those obligations by failing to maintain a balance of at least U.S.$500 million in the Security Account. According to their final pleadings, the Claimants request that the Tribunal order the Respondents to replenish the Security Account to U.S. $500 million and to maintain it at that level until all awards against Iran have been satisfied. In addition, the Claimants request that, at any time that the Respondents have not replenished the Security Account to U.S. $500 million, the Tribunal allow the Claimants to satisfy any awards rendered against them in favor of Iran by paying such awards into the Security Account until the required minimum balance is reached.

   3. The Respondents deny any liability for this claim. They contend that, because the current balance in the Security Account is, in their view, sufficient to satisfy any future Tribunal awards against Iran, the Respondents are not obligated to replenish the Security Account to U.S. $500 million.

   4. A Hearing in this Case was held on 17-19 November 1999 in the Peace Palace, The Hague.

II.  FACTUAL BACKGROUND


5. Paragraph 7 of the General Declaration (“Paragraph 7”), the provision at the heart of this claim, states:

As funds are received by the Central Bank pursuant to Paragraph 6 [of the General Declaration], the Algerian Central Bank shall direct the Central Bank to (1) transfer one-half of each such receipt to Iran and (2) place the other half in a special interest-bearing Security Account in the Central Bank, until the balance in the Security Account has reached the level of U.S. $1 billion. After the U.S. $1 billion balance has been achieved, the Algerian Central Bank shall direct all funds received pursuant to Paragraph 6 to be transferred to Iran. All funds in the Security Account are to be used for the sole purpose of securing the payment of, and paying, claims against Iran in accordance with the Claims Settlement Agreement. Whenever the Central Bank shall thereafter notify Iran that the balance in the Security Account has fallen below U.S. $500 million, Iran shall promptly make new deposits sufficient to maintain a minimum balance of U.S. $500 million in the Account. The Account shall be so maintained until the President of the arbitral tribunal established pursuant to the Claims Settlement Agreement has certified to the Central Bank of Algeria that all arbitral awards against Iran have been satisfied in accordance with the Claims Settlement Agreement, at which point any amount remaining in the Security Account shall be transferred to Iran

   6. On 17 August 1981, the Central Bank of Algeria as Escrow Agent, Bank Markazi, the Federal Reserve Bank as Fiscal Agent of the United States, and N.V. Settlement Bank of the Netherlands (“N.V. Settlement Bank”)13 entered into the Technical Agreement to implement, inter alia, “the relevant parts of the [Algiers] Declarations.” Technical Agreement, Introductory Paragraph.

   7. The details of the operation of the Security Account are contained in the Technical Agreement. Under the terms of the Technical Agreement, the Security Account consists of three separate accounts, denominated A, B, and C. Account A was to be used to receive, in accordance with Paragraph 7, Iranian funds previously held in United States banking institutions. One-half of these funds were then to be transferred into Account B until it reached U.S. $1 billion; the remainder was to be returned to Iran. See Article 1(b)(ii) of the Technical Agreement. See also Paragraph 7.

   8. Account C holds the interest earned on the funds in Account B. The Tribunal has determined that Iran shall have access to the funds in Account C for the purpose of satisfying its obligation to replenish the Security Account. See Islamic Republic of Iran and United States of America, Decision No. DEC 12-A1-FT, at 5 (3 Aug. 1982), reprinted in 1 IRAN-U.S. C.T.R. 189, 192 (“Case No. A1”).

   9. The provisions of the Technical Agreement that may be relevant to the present claim are:

  1.    Article 1(d), which provides:

    1. Whenever the balance in Account B has fallen below US $500 million, the Depositary14 shall notify the other parties to this Agreement of this fact.

    2.    As soon as such notification is received by Bank Markazi, it shall promptly make new deposits sufficient to maintain a minimum balance of US $500 million in Account B.

  2.    Article 18(b), which provides:

Any dispute arising under this Agreement, which cannot be amicably resolved, may be submitted by any of the parties to the court of competent jurisdiction in Amsterdam, to a court of competent jurisdiction in any other country in which the defendant party has a permanent business establishment in its own name or to the Tribunal, except that any case in which the Depositary is a defendant shall be submitted exclusively to the court of competent jurisdiction in Amsterdam. Notwithstanding the foregoing, neither the Escrow Agent nor the Depositary shall be bound by a decision of the Tribunal which adversely affects its rights or privileges under this Agreement. In connection with the resolution of disputes arising out of this Agreement or other enforcement of this Agreement, solely in actions brought by a party hereto and solely before the courts or the Tribunal referred to above, the parties hereby waive any immunity they may have or have the power to assert in any proceeding, and the parties agree to accept the jurisdiction of the Netherlands court or, except for the Depositary, the jurisdiction of the Tribunal.

10. Upon signature of the Algiers Declarations on 19 January 1981, the United States transferred to escrow accounts agreed to by Iran approximately U.S. $8 billion of Iran’s assets held by the Federal Reserve Bank and by overseas branches of United States banks. In addition, the United States lifted the judicial attachments on Iranian assets that were still held in United States branches of United States banks; thereafter, immediately upon the conclusion of the Technical Agreement on 17 August 1981, the United States transferred those assets, totaling U.S. $2.038 billion, to the N.V. Settlement Bank, the depositary of the Security Account. The N.V. Settlement Bank transferred U.S. $1 billion out of that amount to the Security Account and then transferred the remainder to Iran.

   11. Throughout the history of the Tribunal, the Security Account balance has frequently fallen below U.S. $500 million following the payment of awards. The Respondents had replenished the Security Account for many years. On 5 November 1992, following the payment of certain sizable awards, the Security Account balance fell to U.S. $253,628,936.74. The balance in the Security Account has been below U.S. $500 million since that date.

   12. On 5 November 1992, the N.V.Settlement Bank informed by telex the other parties to the Technical Agreement, including Bank Markazi, that the balance in the Security Account had fallen below U.S. $500 million. On 19 January 1993, the Agent of the United States sent the Agent of Iran a letter, urging that Iran and Bank Markazi take “immediate steps . . . to rectify the situation and achieve compliance with the relevant obligations.”

   13. On 22 February 1996, Iran and the United States agreed that part of a settlement reached between them concerning monies to be paid to Iran be deposited by the United States into the Security Account (see Partial Award on Agreed Terms No. 568-A13/A15 (I and Ⅳ:C)/A26 (I, Ⅱ, and Ⅲ)-FT, para. 9 (22 Feb. 1996)). The balance in the Security Account nevertheless has remained under U.S. $500 million.

III.  THE PARTIES’ CONTENTIONS


14. The Claimants contend that the clear terms of Paragraph 7 obligate Iran to maintain a minimum balance of U.S. $500 million in the Security Account so long as claims against Iran remain pending at the Tribunal. They assert that it is only after the President of the Tribunal certifies to the Central Bank of Algeria that all Tribunal awards against Iran have been satisfied that the Respondents’ obligations to replenish cease. The Claimants contend that, under the terms of Article 1(d) of the Technical Agreement, Bank Markazi is independently obligated to replenish the Security Account.

   15. The Claimants contend that in the Declarations the Parties struck a careful balance of their respective rights and obligations. The United States accepted the Security Account mechanism, along with Iran’s replenishment obligation, in place of all the restraints on Iranian property that were in effect on 19 January 1981, but only upon the terms of the agreement concluded at that time. Thus, the Claimants conclude, in order to maintain that balance, Iran must be required promptly to replenish the Security Account.

   16. Accordingly, the Claimants request that the Tribunal hold that the Respondents have been in breach of their replenishment obligations since 5 November 1992 and, as their principal relief, request that the Tribunal order the Respondents to replenish the Security Account to U.S. $500 million and to maintain it at that level until all awards against Iran have been satisfied.





© Cambridge University Press
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Table of Contents

Editorial note; Acknowledgements; Table of cases - volume 36; Consolidated table of cases; Year 2000 decisions and awards: United States of America and The Federal Reserve Bank of New York v. The Islamic Republic of Iran and Bank Markazi Iran; George E. Davidson (Homayounjah) v. The Government of the Islamic Republic of Iran; The Islamic Republic of Iran v. The United States of America; Bank Markazi Iran v. Federal Reserve Bank of New York; Aram Sabet, Karim Sabet and Reja Sabet v. The Islamic Republic of Iran; Year 2000 award on agreed terms: Frederica Lincoln Riahi v. The Government of the Islamic Republic of Iran; Year 2001 award on agreed terms: Avco Corporation v. Iran Aircraft Industries and The Islamic Republic of Iran; Year 2001 orders: United States of America and The Federal Reserve Bank of New York v. The Islamic Republic of Iran and Bank Markazi Iran; The Islamic Republic of Iran v. The United States of America; Year 2002 (no decisions or awards); index.

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