Counter-Memorial of the United States of America

INTERNATIONAL COURT OF JUSTICE
CERTAIN IRANIAN ASSETS
(ISLAMIC REPUBLIC OF IRAN v. UNITED STATES OF AMERICA)
COUNTER-MEMORIAL
SUBMITTED BY
THE UNITED STATES OF AMERICA
OCTOBER 14, 2019
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TABLE OF CONTENTS
PART I: INTRODUCTION..................................................................................................... 1
CHAPTER 1: Introductory Observations ............................................................................ 1
CHAPTER 2: The Preliminary Objections Judgment ......................................................... 5
Section A: What Did the Court Decide? ...................................................................... 6
Section B: What Are the Implications of the Court’s Interpretive Analysis? .............. 9
Section C: Iran’s Case as It Now Stands.................................................................... 10
PART II: BACKGROUND AND CONTEXT...................................................................... 11
CHAPTER 3: Introduction ................................................................................................ 11
CHAPTER 4: The Treaty of Amity and U.S.-Iranian Relations Thereunder.................... 12
Section A: Treaty of Amity: Object and Purpose and U.S. FCN Program ................ 13
Section B: U.S.-Iranian Relationship under the Treaty.............................................. 15
CHAPTER 5: Iran’s Sponsorship of Terrorism and Other Destabilizing Acts
Threatening U.S. National Security................................................................................... 16
Section A: Iran Has Had a Longstanding Policy of Sponsoring Terrorism and
Committing Other Destabilizing Acts ...................................................... 17
Section B: Iran’s Support of Terrorist Acts Directed at the United States................. 25
i. The Marine Barracks Bombing and Other Terrorist Bombings
Targeting U.S. Interests in Lebanon................................................... 25
ii. The Khobar Towers Bombing............................................................ 30
iii. Other Acts Targeted Against the United States and Its Nationals ..... 33
CHAPTER 6: U.S. Measures Were Taken as a Result of Iran’s Sponsorship of
Terrorism and Other Actions Threatening U.S. National Security.................................... 41
Section A: Iran’s Designation as a State Sponsor of Terrorism and Designation of
Iranian Financial Institutions under Executive Order 13599.................... 42
Section B: Efforts to Provide Redress for Victims of Terrorism............................... 45
Section C: Judicial Decisions Related to the Execution of Terrorism-Related
Judgments ................................................................................................. 49
PART III: THE COURT SHOULD REJECT IRAN’S CLAIMS......................................... 52
CHAPTER 7: Introduction ................................................................................................ 52
CHAPTER 8: Iran Comes to the Court with Unclean Hands............................................ 53
Section A: Introduction and Overview....................................................................... 53
Section B: The Scope and Application of the Doctrine of Unclean Hands................ 54
Section C: The Circumstances in which the Doctrine May Be Applied and Its
Consequences ........................................................................................... 59
Section D: Iran’s Sponsorship of Terrorism against the United States Engages the
Doctrine of Unclean Hands ...................................................................... 60
CHAPTER 9: Application of the Court’s Preliminary Objections Judgment to the Facts
Requires Dismissal of Iran’s Claims Challenging the Treatment of Bank Markazi
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Because Bank Markazi Is Not a “Company” Entitled to Rights under Articles III, IV,
and V of the Treaty ............................................................................................................ 63
Section A: If Bank Markazi Is Not a “Company” Entitled to Rights under the
Treaty, then Iran’s Claims Related to Bank Markazi Must Fail............... 64
Section B: Iran’s 1972 Monetary and Banking Act Illustrates the Sovereign
Functions Assigned to Bank Markazi....................................................... 65
Section C: By Iran’s Own Characterization, the Claims in This Case Pertain to
Bank Markazi’s Sovereign Governmental Activity ................................. 67
Section D: Iran’s Arguments that Bank Markazi Engages in Commercial, or
Professional, Activities Are Irrelevant to the Case at Hand and Also
Incorrect.................................................................................................... 70
CHAPTER 10: Claims For Which Iran Cannot Show That Local Remedies Were
Exhausted Are Inadmissible .............................................................................................. 72
Section A: Exhaustion of Local Remedies Is Required Before a State May
Institute International Proceedings on Behalf of Its Nationals................. 73
Section B: A Significant Number of Iran’s Claims Do Not Satisfy the Exhaustion
of Local Remedies Rule ........................................................................... 74
CHAPTER 11: Article XX(1) Categorically Bars Iran’s Claims Regarding Executive
Order 13599 ....................................................................................................................... 76
Section A: Executive Order 13599 was Promulgated to Address Iran’s Illicit
Activities, Including Arms Production and Trafficking, Support for
Terrorism and Terrorist Financing, and the Pursuit of Ballistic Missile
Capabilities ............................................................................................... 78
Section B: Executive Order 13599 and Its Implementing Provisions Come Within
the Exception Created by Article XX(1)(c) as a Measure Regulating
Arms Production, Arms Trafficking, and Military Supplies .................... 82
Section C: Executive Order 13599 Comes Within the Exception Created by
Article XX(1)(d) as a Measure Necessary to Protect the United States’
Essential Security Interests....................................................................... 86
i. The United States Has Essential Security Interests in Preventing
Terrorism and Terrorist Financing, and in Halting the
Advancement of Iran’s Ballistic Missile Program ............................. 88
ii. Executive Order 13599 is Necessary to Protect the Essential
Security Interests of the United States, Particularly in Preventing
and Deterring Terrorist Attacks and the Advancement of Iran’s
Ballistic Missile Program ................................................................... 91
PART IV: THE U.S. MEASURES DO NOT VIOLATE THE TREATY OF AMITY........ 94
CHAPTER 12: Iran’s Flawed Approach to Pleading Its Claims and Interpreting the
Treaty of Amity ................................................................................................................. 94
CHAPTER 13: Iran Has Failed to Establish a Claim under Article III............................. 96
Section A: Iran Has Failed to Establish a Violation of Article III(1) of the Treaty ... 96
i. Iran’s Interpretation of Article III(1) is Fundamentally Flawed. ....... 97
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ii. The U.S. Measures Satisfy the Recognition Requirement in Article
III(1) ................................................................................................. 101
Section B: Iran Has Failed to Establish a Violation of Article III(2) of the Treaty . 102
i. The Court’s Rejection of Iran’s Overbroad Interpretation of Article
III(2) Confirms That the Right of “Freedom of Access to the
Courts” Does Not Guarantee Any Other Substantive or Procedural
Rights................................................................................................ 103
ii. Consistent with Article III(2), the United States Granted Freedom
of Access to the Courts in which Iranian Companies Regularly
Appeared and Participated................................................................ 104
CHAPTER 14: Iran Has Failed to Establish a Breach of Article IV............................... 107
Section A: The Minimum Standard of Treatment under Article IV......................... 108
Section B: The United States Did Not Breach Article IV(1) ................................... 110
i. The “Fair and Equitable Treatment” Clause in Article IV(1)
Prohibits the Denial of Justice.......................................................... 110
ii. The Clauses Concerning “Unreasonable or Discriminatory
Measures” and “Effective Means” in Article IV(1) Are Not
Independent Obligations, but rather Are Subsumed within the
Obligation Not to Deny Justice ........................................................ 113
iii. The United States Has Not Denied Justice to Any Iranian
Nationals or Companies ................................................................... 118
iv. In Any Event, the U.S. Measures Were neither Unreasonable nor
Discriminatory, and Iranian Nationals and Companies Had
Effective Means to Enforce Their Lawful Contractual Rights......... 126
Section C: The United States Did Not Breach Article IV(2) ................................... 130
i. Iran’s Interpretation of Article IV(2)’s Most Constant Protection
and Security Obligation Is Flawed ................................................... 131
ii. The U.S. Measures Do Not Amount to a Denial of Most Constant
Protection and Security under Article IV(2) .................................... 135
iii. Iran’s Interpretation of Article IV(2)’s Restrictions on the Taking
of Property is Flawed ....................................................................... 135
iv. The U.S. Measures Do Not Amount to an Unlawful Expropriation 139
CHAPTER 15: Iran Has Failed To Establish A Breach of Article V(1) ......................... 143
Section A: Iran’s Article V(1) Claim Invokes Only a Limited Subset of That
Paragraph’s Provisions ........................................................................... 143
Section B: Iran Has Not Stated a Claim under Article V(1)(c)................................ 144
CHAPTER 16: The U.S. Has Not Violated Article VII(1) ............................................. 145
Section A: Article VII(1) Applies to Exchange Restrictions and Iran Fails to
Identify Any Exchange Restriction Imposed by the U.S........................ 147
Section B: Even If Article VII Prohibited Restrictions on Payments, Remittances,
and Transfers Other than Exchange Restrictions, Iran’s Claim Still
Fails ........................................................................................................ 152
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CHAPTER 17: The U.S. Legal Regime That Allows Victims Of Terrorism To Enforce
Judgments Does Not Violate Article X(1)....................................................................... 153
Section A: Article X(1)’s “Commerce” Must be Interpreted as Commerce
Related to Navigation ............................................................................. 154
Section B: In the Alternative, Article X(1)’s “Commerce” Means Trade in Goods 157
Section C: Iran’s Article X(1) Claim Fails to Satisfy the Provision’s Territorial
Requirement............................................................................................ 158
Section D: Article X(1) Cannot Properly Be Read to Apply to the Rules
Governing Terrorism-Related Litigation in U.S. Courts........................ 160
CHAPTER 18: To the Extent That the Court Finds That Iran’s Substantive Rights
under the Treaty of Amity Are Engaged, Their Exercise Is an Abuse of Iran’s Rights .. 162
Section A: The Doctrine of Abuse of Rights and the Circumstances in which It
May Be Applied...................................................................................... 163
Section B: Iran Is Precluded from Exercising Substantive Rights under the Treaty
of Amity.................................................................................................. 165
CHAPTER 19: Iran Is Not Entitled To Any Remedy ..................................................... 167
SUBMISSIONS ................................................................................................................... 169
LIST OF ANNEXES ACCOMPANYING THE COUNTER-MEMORIAL...................... 172
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PART I: INTRODUCTION
CHAPTER 1: INTRODUCTORY OBSERVATIONS
1.1 This case is an attempt by Iran to invoke the 1955 Treaty of Amity, Economic
Relations, and Consular Rights Between the United States and Iran (the “Treaty of Amity” or
the “Treaty”) to evade liability for and enforcement of judgments of U.S. courts finding Iran
responsible for or complicit in terrorist attacks against U.S. nationals. At the core of these
proceedings is the Peterson case before the U.S. courts, a claim by victims and family members
of deceased U.S. service personnel on a peacekeeping mission in Lebanon who were targeted
by a suicide bombing of the U.S. Marine barracks in October 1983, which killed 241
peacekeepers and injured many more.
1.2 In the decades since the Beirut Marine barracks bombing, Iran has persisted in
supporting terrorist acts that target the United States and its nationals. In the face of these
attacks, the United States has been left to determine an appropriate response to this violent
conduct that holds Iran accountable and responds to the losses suffered by the victims of these
attacks and their families. The United States response was to put in place a framework of
measures that enable victims of Iranian-sponsored terrorism to sue Iran in U.S. courts and,
where the courts find that Iran is responsible, to seek compensation for their injuries. It is this
framework that Iran now challenges.
1.3 The critical question for the Court is not whether Iran has sponsored terrorist attacks.
The evidence in support of this conclusion is overwhelming. Rather, the question is whether
the U.S. measures taken in response to those attacks, and the efforts of the victims of those
attacks and their families to obtain compensation for their suffering, are in breach of the Treaty
of Amity. The answer to that question is no. The Treaty’s provisions do not and were never
intended to protect a party who sponsors terrorist attacks directed at the other party and its
nationals.
1.4 The Court’s February 13, 2019 judgment on the U.S. preliminary objections
(“Preliminary Objections Judgment”) significantly narrowed the case before the Court. Iran’s
original claims, set out in its Application and Memorial, were focused in material part on the
allegation that certain of the U.S. measures improperly denied Iran and its Central Bank (Bank
Markazi) sovereign immunity by, for example, creating an exception to the Foreign Sovereign
Immunities Act for countries, like Iran, that the United States had designated as state sponsors
of terrorism. The Preliminary Objections Judgment excluded all such claims from the case on
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jurisdictional grounds, namely, that the Court does not have jurisdiction under the Treaty in
respect of Iran’s claims based on sovereign immunity.
1.5 The claims that remain are those based upon U.S. measures that allow victims of
Iranian sponsored terrorism who hold judgments against Iran to enforce those judgments by
attaching the assets of Iran’s agencies and instrumentalities. These claims are meritless and
should be dismissed, as Part IV of this Counter-Memorial explains. Before one gets to the
article-by-article analysis, however, the United States advances four threshold defenses that, if
sustained, would eliminate Iran’s case entirely or at least narrow it further.
1.6 First, because the measures that are the subject of Iran’s claims were themselves a
response to Iran’s sponsorship of terrorism, Iran comes to the Court with unclean hands. Its
claims should accordingly be dismissed in their entirety. Second, applying the test set out by
the Court in its Preliminary Objections Judgment, Iran cannot establish that its Central Bank,
Bank Markazi, is a “company” within the meaning of the Treaty of Amity. However, Articles
III, IV and V of the Treaty apply only to Iran’s companies and nationals. Thus, Iran’s claims
alleging violations of those provisions of the Treaty regarding the treatment of Bank Markazi,
including its largest claim for measures taken in connection with the Peterson litigation, must
be dismissed. Third, Iran has failed to show that many of the entities on whose behalf it is
asserting claims have satisfied the requirement to exhaust local remedies before it initiated this
case. Where Iran has not shown that a company has exhausted local remedies, any claims on
behalf of such a company are ineligible for the Court’s consideration and must be dismissed.
Fourth, Article XX(1) excludes certain measures from the Treaty’s scope, including measures
that regulate “the production of or traffic in arms” and measures “necessary to protect [a
Party’s] essential security interests.” One of the measures that Iran has challenged, Executive
Order 13599, falls into both categories, and Iran’s claims with respect to this measure are
therefore not properly before this Court and should be dismissed.
1.7 In the event the Court does not sustain these defenses, Iran’s claims fail on the merits.
For purposes of assessing the measures at issue, background and context are key, particularly
in two respects. First, Iran chose not to appear in the proceedings in U.S. courts brought by
victims of Iran’s sponsorship of terrorist acts that led to the judgments awarding damages
against Iran. Second, Iran refused to satisfy the judgments, which were based on a careful
review of the evidence, as required to hold a defaulting State responsible under U.S. law. In
doing so, Iran left the victims of its egregious misconduct without redress.
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1.8 In response to Iran’s actions sponsoring terrorism against the United States, its
nationals, and its interests, the United States chose a series of legislative and executive
measures that permit suits against state sponsors of terrorism, including Iran, and holders of
judgments from such suits to execute those judgments against the assets of state agencies and
instrumentalities. These measures are not, for the most part, unique to Iran, but are applicable
to all state sponsors of terrorism.
1.9 These measures do not violate the Treaty of Amity. They are a reasonable response
to a problem created by Iran’s sponsorship of terrorism and by Iran’s subsequent unwillingness
to bear responsibility and compensate victims for the loss, pain, and suffering that such
terrorism caused. Iran cannot rely on the Treaty of Amity to shield itself and various stateowned
entities from the consequences of its bad acts. The Treaty of Amity does not preclude
a party from taking peaceful, measured steps to enable victims of terrorist attacks to bring suit
seeking compensation for such attacks.
1.10 Beginning with Article III(1), in an effort to shield Iran’s agencies and
instrumentalities from the enforcement of terrorism-related judgments, Iran attempts to twist a
provision that requires each Party to recognize the “juridical status” of entities that meet the
definition of “companies” into a guarantee that such companies will be treated separately from
their shareholders, regardless of the circumstances. Iran’s argument hinges on transforming
the phrase “juridical status” into “separate juridical status,” despite the word “separate”
appearing nowhere in Article III(1).
1.11 Iran’s reading of Article III(2) is equally problematic and contrary to the Court’s
conclusion in its Preliminary Objections Judgment that the provision only protects “access” to
a Party’s courts and “does not seek to guarantee the substantive or even the procedural rights
that a company of one Contracting Party might intend to pursue before the courts or authorities
of the other Party.”1
1.12 Turning to Articles IV(1) and IV(2), Iran attempts to read into these provisions a host
of treatment obligations that they do not provide, primarily in reliance on a handful of awards
issued by investor-State arbitral tribunals decades after the Parties concluded the Treaty of
Amity. Properly understood, these provisions require each Party to provide the minimum
standard of treatment as it has crystallized in customary international law, which includes the
obligation not to deny justice in criminal, civil or administrative adjudicatory proceedings, the
1 Preliminary Objections Judgment, ¶ 70 (emphases added).
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obligation to provide “most constant protection and security,” and the obligation not to
expropriate the property of the other Party’s companies and nationals except under certain
conditions. Iran has not established a violation of these three obligations, nor has it established
that any of the other obligations it seeks to impose on the United States under Article IV are
part of the customary international law minimum standard of treatment.
1.13 Iran also invokes Article V(1)(c), which provides that a Party’s nationals and
companies “shall be permitted . . . to dispose of property of all kinds by sale, testament or
otherwise” under a standard of most-favored-nation treatment. However, Iran has neither
established that any of its companies attempted to dispose of property and were prevented from
doing so by any of the challenged measures, nor has it established that comparable companies
received more favorable treatment (and it has made no claims whatsoever on behalf of its
nationals).
1.14 Finally, with respect to Articles VII(1) and X(1), Iran reads the provisions to cover
measures to which they have no application. Article VII(1) applies to exchange restrictions
alone, not all restrictions on the transfer of funds, and Article X(1) is a part of a navigation
provision and contains a critical territorial limitation. Iran ignores these considerations, instead
advancing an unbounded interpretation of the provisions.
1.15 Iran has therefore misinterpreted each of the Treaty articles on which it seeks to rely
in this case. None of the Treaty’s Articles bars the United States from implementing the
challenged measures in response to Iran’s sponsorship of terrorist attacks and its refusal to
compensate the victims of those attacks.
1.16 Finally, even if the Court were to conclude that the challenged measure infringed on
Iran’s rights under the Treaty, Iran’s invocation of those rights to shield itself and its agencies
and instrumentalities from compensating victims of terrorist attacks that Iran has concededly
sponsored would be an abuse. In the circumstances, the Court should preclude Iran from
exercising its rights under the Treaty.
* * * *
1.17 The remainder of the Counter-Memorial is structured as follows. After the discussion
of the Preliminary Objections Judgment in Chapter 2, the Counter-Memorial proceeds to Part
II, which provides essential background and context for the United States’ defenses. Following
some introductory observations to this Part in Chapter 3, Chapter 4 gives an overview of the
Treaty of Amity, the basis on which Iran seeks to found jurisdiction in this case. Chapter 5
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details Iran’s long history of sponsoring terrorist acts against the United States and others, as
well as Iran’s use of money laundering and other financial improprieties to facilitate its illegal
conduct. Chapter 6 addresses the measures that Iran has challenged, which the United States
adopted in response to Iran’s sponsorship of terrorism.
1.18 Part III of the Counter-Memorial sets out four defenses, described briefly above,
that each require the dismissal of some or all of Iran’s claims. These defenses are introduced
in Chapter 7. Chapter 8 urges the Court to reject Iran’s claims on the basis of its unclean
hands, Chapter 9 explains that Iran has failed to establish that Bank Markazi is a “company”
under the Treaty, Chapter 10 shows that Iran has not demonstrated that its companies
exhausted local remedies and, finally, as demonstrated in Chapter 11, Article XX(1) excludes
one of the challenged measures, Executive Order 13599, from the Treaty’s scope.
1.19 Finally, Part IV of the Counter-Memorial responds to Iran’s claims under each
article of the Treaty. The United States identifies cross-cutting weaknesses in Iran’s approach
to the Treaty of Amity in Chapter 12. Chapters 13 through 17 addresses the claims under
Articles III, IV, V, VII, and X, respectively. The United States also shows, in Chapter 18, that
Iran’s abuse of rights bars its claims, regardless of the Court’s findings on the specific Articles
at issue, and, in Chapter 19, that Iran has failed to justify its requests for relief in this case.2
CHAPTER 2: THE PRELIMINARY OBJECTIONS JUDGMENT
2.1 The case that Iran brought to the Court – in its Application and its Memorial –
asserted that the U.S. domestic legal framework providing for suits in U.S. courts against
designated state sponsors of terrorism like Iran, including the provisions of U.S. law that
facilitate the enforcement of terrorism-related judgments against assets of Iran, its Central
Bank, and other Iranian state entities, violates various provisions of the Treaty of Amity. Under
this umbrella, Iran claimed that the Treaty of Amity incorporated customary international law
principles of sovereign immunity which, Iran claimed, protected Iran and its Central Bank
(Bank Markazi), from both suit and attachment. Not content to rely on a claim of immunity in
respect of Bank Markazi, Iran claimed also that Bank Markazi is a “company”, within the
meaning of this term in the Treaty, and in this guise able to avail itself of the protections
afforded companies under the Treaty. A significant number of other claims were subsumed
2 Documents annexed to this Counter-Memorial are rendered herein as “(U.S. Annex __).” Documents annexed
to Iran’s Memorial are rendered herein as “(IM Annex __).” Finally, documents annexed to the U.S. Preliminary
Objections are rendered herein as “(U.S. P.O. Annex __).”
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and advanced as part of Iran’s case, although Iran fails to plead many of those claims with the
specificity required to meet its burden as the complaining party.
2.2 The Court rendered its Preliminary Objections Judgment on Iran’s case on February
13, 2019. As explained below, the Preliminary Objections Judgment significantly narrowed
the scope of Iran’s case. Most significantly, the Judgment excluded Iran’s claims predicated
on a denial of sovereign immunity protections to Iran, its Central Bank, and other Iranian state
entities, as well as their property in lawsuits brought by U.S. victims of terrorism. The effect
of this is to exclude from the scope of Iran’s case going forward all claims advanced by Iran in
its own right, as well as its sovereign immunity claims in respect of Bank Markazi and other
state entities. Beyond this, the Preliminary Objections Judgment laid out a clear framework
for deciding one of the key issues that remains, namely whether Bank Markazi is a “company”
qualifying for protection under the Treaty. In its article-by-article analysis for purposes of its
conclusions on the issues of sovereign immunity and the meaning of “company”, the
Preliminary Objections Judgment also provided material guidance to the interpretation of the
provisions in question for purposes of addressing Iran’s substantive treaty claims. What
remains of Iran’s case following the Court’s Judgment is a narrower case than Iran brought to
the Court. It is a case now about U.S. measures, including certain U.S. judicial decisions, that
have facilitated the ability of victims holding terrorism-related judgments against Iran to
enforce those judgments against Iran, its Central Bank, and other state-owned entities.
Section A: What Did the Court Decide?
2.3 As the Court considers the merits of Iran’s claims, it is critical to understand which
claims have been dismissed by the Court’s Preliminary Objections Judgment, which U.S.
measures are no longer under review, and consequently, what remains of Iran’s case.
2.4 The decision of the Court that all of Iran’s claims premised on the purported failure
to accord sovereign immunity protections arising under customary international law to Iran, its
central bank, and other state entities are outside the scope of the Treaty and therefore outside
the jurisdiction of the Court has far-reaching consequences. As expressed by the Court, “in so
far as Iran’s claims concern the alleged violation of rules of international law on sovereign
immunities, the Court does not have jurisdiction to consider them.”3
3 Preliminary Objections Judgment, ¶ 80.
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2.5 It follows from this conclusion that Iran’s claims under Article XI(4) of the Treaty,
which was exclusively concerned with the denial of sovereign immunity, are fully dismissed
from the case. In addition, Iran’s claims under Articles III(1), III(2), IV(1), IV(2), and X(1) to
the extent they are based on the denial of sovereign immunity protections are also dismissed.
2.6 A number of U.S. measures that were challenged exclusively on the basis that they
improperly denied sovereign immunity protections are also no longer before the Court.
Specifically, the Anti-terrorism and Effective Death Penalty Act of 1996, which provides an
exception to sovereign immunity in lawsuits against designated state sponsors of terrorism
cannot form the basis of any of Iran’s claims that remain in the case.
2.7 A large number the U.S. judicial decisions that Iran has challenged are also outside
the scope of the case following the Court’s Judgment. These U.S. judicial decisions are set
forth by Iran in Attachments 1-4 appended to its Memorial. As noted further below, these
summary charts fall far short of presenting the information necessary for the Court to
understand the listed decisions in detail or how they fit with Iran’s case. In any event, a number
of those charts and many of the decisions listed on them are now outside the Court’s
jurisdiction. First, the cases listed in Iran’s Attachment 1 (“U.S. Court Judgments against Iran
& Iranian State Entities as of 31 January 2017”) are outside the scope of the case, as Iran’s only
claim with respect to these cases was that the courts did not recognize the sovereign immunity
of the Government of Iran and other state entities in finding that Iran was responsible for
sponsoring the underlying acts of terrorism. Similarly outside the Court’s jurisdiction are the
cases listed in Iran’s Attachment 4 (“Claims Pending before U.S. Courts against Iran & Iranian
State Entities as of 31 January 2017”). In these cases, U.S. victims of Iranian-sponsored
terrorism are invoking the exception to immunity in the 1996 Act to pursue judgments against
the Government of Iran and Iranian state entities for damages for their losses. As such, these
cases concern sovereign immunity.4
2.8 Second, the cases in Attachment 2 (“Actions filed with U.S. Courts to Enforce
Judgments against Assets of I.R. Iran & Iranian State Entities As of 31 January 2017”) are also
outside the Court’s jurisdiction to the extent they are based on claims concerning a denial of
4 In any event, these are pending cases that have not reached a final conclusion in U.S. courts, let alone been
subject to efforts to enforce any judgments that may be issued. Thus, these cases are also not ripe for review
before this Court.
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sovereign immunity protections or where they involve entities that are not entitled to Treaty
protections afforded only to “companies.”
2.9 Third, and finally, any claims concerning the U.S. judicial decisions listed in
Attachment 3 (“Actions filed in other Jurisdictions for Recognition & Enforcement of U.S.
Judgments against Assets of Iran & Iranian State Entities as of 31 January 2017”) are also
excluded. These cases concern efforts to enforce U.S. judgments obtained against Iran and its
state entities in courts outside of the United States. As discussed, because Iran’s only basis for
challenging the judgments concerns sovereign immunity, they are outside the Court’s
jurisdiction. Any resulting enforcement outside the United States, about which Iran has
provided little to no evidence in any event, would be based on the law of those other
jurisdictions, and not on U.S. law.
2.10 The Preliminary Objections Judgment eliminated certain claims pertaining to the
treatment of Iran, its Central Bank, and other state entities based on sovereign immunity. The
case that remains before the Court is a challenge to the legal framework put in place by the
United States to allow victims of Iranian-sponsored terrorism who have lawfully-obtained
judgments against Iran to enforce those judgments against Iranian state entities and obtain
compensation for their losses.
2.11 Apart from its ruling on Iran’s claims with respect to the alleged violation of its
sovereign immunity, the Court also ruled on other matters in its Preliminary Objections
Judgment that are of critical importance to Iran’s case on the merits. The United States
advanced a jurisdictional objection to Iran’s claims as they relate to Iran’s Central Bank, Bank
Markazi, on the grounds that Bank Markazi is not eligible for the protections afforded to
“companies” under the Treaty. The Court’s Preliminary Objections Judgment held that “an
entity carrying out exclusively sovereign activities, linked to the sovereign functions of the
State, cannot be characterized as a ‘company’ within the meaning of the Treaty and,
consequently, may not claim the benefit of the rights and protections provided for in Articles
III, IV, and V.”5 It follows from this that Iran’s claims concerning sovereign entities which are
based upon Treaty protections afforded only to “companies” within the meaning of the Treaty
are excluded from the case before the Court. The first case listed in Attachment 2 is a case
against Iran’s Ministry of Defence and Support for Armed Forces of Iran (MODSAF), which
is a governmental ministry and therefore does not qualify as a “company” under the Treaty.
5 Preliminary Objections Judgment, ¶ 91.
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For the reasons discussed in Chapter 9 below, Bank Markazi is also not a “company” under the
Treaty. Iran’s claims challenging the treatment of Bank Markazi under Article III, IV, and V
of the Treaty, should, accordingly, be dismissed.
Section B: What Are the Implications of the Court’s Interpretive
Analysis?
2.12 In reaching the conclusion that Iran’s claims premised on the denial of sovereign
immunity were outside the scope of the Treaty, the Court examined each of the Treaty
provisions invoked by Iran for this claim. Certain elements of the Court’s article-by-article
analysis, in particular as it relates to Article III(2) and Article IV of the Treaty, provide helpful
guidance regarding the meaning and scope of these provisions more generally that bear on the
Court’s consideration of the merits of Iran’s remaining claims.
􀁸 With respect to Article III(2) of the Treaty, which guarantees to nationals and
companies of each Treaty Party access to courts in the other, the Court found that the
provision “does not seek to guarantee the substantive or even the procedural rights that
a company of one Contracting Party might intend to pursue before the courts or
authorities of the other Party, but only to protect the possibility for such a company to
have access to those courts or authorities with a view to pursuing the (substantive or
procedural) rights it claims to have.”6 As set forth in Chapter 13.B below, what Iran
seeks under Article III(2) – to insulate its companies from judgment-enforcement
actions – is precisely a guarantee of substantive and procedural rights. Iran does not –
nor could it – establish that the U.S. measures in any way interfere with the “possibility”
of Iranian companies accessing U.S. courts to pursue their rights. This is made clear
by the active participation of Iranian companies in U.S. court proceedings including
some that are at issue in this case.
􀁸 With respect to Article IV, the Court also noted that Article IV(1) and (2) must be
viewed as a whole, and when read together, it is clear that “the purpose of Article IV is
to guarantee certain rights and minimum protections for the benefit of natural persons
and legal entities engaged in activities of a commercial nature.”7 In addition, in
rejecting Iran’s claim that Article IV incorporates international law protections of
sovereign immunity, the Court observed that “[t]he ‘international law’ in question in
6 Id., ¶ 70.
7 Id., ¶ 58.
10
this provision is that which defines the minimum standard of protection for property
belonging to ‘nationals’ and companies’ of one Party engaging in economic activities
within the territory of the other . . . .”8 Chapter 14 of this Counter-Memorial,
demonstrates that even with respect to those claims that remain in the case, there is a
fatal disconnect between the scope of Article IV, as confirmed by a proper interpretation
of that provision pursuant to customary rules of treaty interpretation, on the one hand
and Iran’s claims on the other.
2.13 The remainder of this submission relies where appropriate on these interpretive
analyses as useful guiding principles in order to demonstrate that Iran’s case is divorced from
the Treaty’s text and its object and purpose.
Section C: Iran’s Case as It Now Stands
2.14 Iran’s case must be understood in light of the rulings and analyses set out in the
Court’s Preliminary Objections Judgment, and the remainder of the U.S. Counter-Memorial
responds to Iran’s case through that lens. Before turning to the U.S. defenses, it is important
to bear in mind an overarching defect in the way Iran has pleaded its case that has hampered
the U.S. effort to respond. In particular, many of Iran’s arguments are comprised of conclusory
assertions supported only by generalized factual allegations or vague charts, neither of which
are sufficient to substantiate Iran’s claims.
2.15 The skeletal nature of Iran’s pleading puts the United States in the awkward position
of trying to respond without a clear understanding of what Iran is claiming, including because
Iran has failed to precisely identify which measures it considers to be in violation of which
Treaty provisions, or to analyze, with reference to the measures, how they allegedly violate the
Treaty. The United States demonstrates in this Counter-Memorial why Iran’s claims fail as
they have been presented, but the United States has not attempted to fill in the precise contours
of Iran’s contentions where Iran has not done so itself. It is, of course, Iran’s responsibility to
adequately plead and prove its claims.
2.16 One example of Iran’s vague pleading is that it has in a number of cases provided
only an indicative list of the property that has allegedly been subject to treatment in violation
of the Treaty of Amity9 or has made vague references to the property of “Iranian companies”
8 Id., ¶ 57.
9 See, e.g., Iran’s Memorial, ¶¶ 5.14(b), 5.44(b)-(c), 5.46(b)-(d), 5.49, 5.50(b), 5.59.
11
in general.10 Neither approach is sufficient to identify for the United States or for the Court
the specific universe of property that is the subject of each of Iran’s specific claims or to link
that property to a specific breach allegedly committed by the United States. Thus, Iran’s
allegations fall well short of what is required to establish a claim under the Treaty.
2.17 Another problem with Iran’s Memorial is its reliance on the summary litigation charts
that it has included as Attachments 1 to 4. Attachments 1, 3 and 4 are irrelevant to these
proceedings, either because they relate to the sovereign immunity claims rejected by the Court
in its Preliminary Objections Judgment (Attachments 1 and 4) or because they identify cases
pending in jurisdictions outside the United States (Attachment 3), which are not subject to the
challenged measures. Although Attachment 2 remains relevant because it lists enforcement
actions in the United States, it provides only basic, and in most cases incomplete, information
about the parties to and the procedural status of the 90 listed cases. Indeed, as shown in relevant
sections of this submission, claims with respect to some of these cases may summarily be
dismissed by the Court for reasons that are not evident from the Attachment itself, such as that
the Iranian entity at issue has not exhausted local remedies, the Iranian entity subject to
attachment is a governmental entity and therefore not a “company” entitled to protections under
the Treaty, or the Iranian entity has in fact prevailed in avoiding attachment in the listed case.
Without this context for the cases, Iran has not put before the Court the information necessary
to understand Attachment 2 and how it fits with Iran’s claims.
2.18 In the chapters that follow, the United States has attempted to respond to the case that
Iran has put to it, but, again, this undertaking has been hampered for the reasons noted above.
Should Iran seek an opportunity to elaborate on the inadequate factual support it has so far
provided for its claims, the United States will respond as appropriate.
PART II: BACKGROUND AND CONTEXT
CHAPTER 3: INTRODUCTION
3.1 Part II of this Counter-Memorial addresses three issues that provide necessary factual
background and context relevant to the substantive U.S. defenses addressed in Parts III and IV
that follow.
3.2 First, Chapter 4 provides an overview of the Treaty of Amity, on which Iran relies to
found jurisdiction in this case. The first section of this chapter provides a framing for all of
10 See, e.g., Iran’s Memorial, ¶¶ 5.15, 5.18, 5.75.
12
Iran’s claims by setting out the Treaty’s object and purpose, which as described is divorced
from the context in which Iran brings its case. Chapter 4 also puts the Treaty of Amity in the
historical context of the U.S. program in the post-war period of negotiating and concluding
treaties of Friendship, Commerce, and Navigation with a wide range of countries, including
Iran.
3.3 Chapter 5 provides the factual background necessary to understand Iran’s claims and
the U.S. measures that Iran challenges. This chapter focuses on Iran’s long history of
sponsoring terrorist acts against the United States, which is the impetus for the measures about
which Iran complains. This chapter also includes discussion of Iran’s policy of supporting
terrorism targeting other countries as well as Iran’s other destabilizing conduct, which has
drawn the attention of the international community.
3.4 Chapter 6 contains an overview of the U.S. measures that give rise to Iran’s claims
and contextualizes those measures in the broader U.S. effort to afford victims of Iraniansponsored
terrorism an avenue to hold Iran accountable and seek compensation for their losses.
CHAPTER 4: THE TREATY OF AMITY AND U.S.-IRANIAN RELATIONS THEREUNDER
4.1 The Treaty of Amity is well known to the Court. Nevertheless, because it is the basis
on which Iran seeks to found jurisdiction it is important to begin any discussion of Iran’s claims
and the reasons they must fail with the Treaty, including certain foundational elements of the
Treaty, its object and purpose, and the limits to its scope and breadth. In the Preliminary
Objections phase, the United States put before the Court extensive background and
argumentation regarding the Treaty of Amity, its origin and negotiating history, a general
framing of its provisions, and the relevance – or lack thereof – of the Treaty to the U.S.-Iranian
relationship in the last few decades.11 Rather than repeat those arguments, this chapter, which
is divided into two sections, highlights key points that should continue to bear on the Court’s
review of the case. The first section relates to the object and purpose of the Treaty of Amity
and its place in the context of the broader U.S. program of concluding Friendship, Commerce,
and Navigation treaties in the aftermath of World War II, and shows in general terms the
disconnect between the purpose of such treaties and Iran’s case. The second section
summarizes the history of U.S.-Iran relations in relation to the Treaty since it was concluded
11 Preliminary Objections Submitted by the United States of America, Part I, Chapter 2, Certain Iranian Assets
(Iran v. United States) (May 1, 2017) (hereinafter “U.S. Preliminary Objections”); Verbatim Record of the Oral
Hearing on U.S. Preliminary Objections 24-30, Certain Iranian Assets (Iran v. United States) (Oct. 8, 2018).
13
and shows that the Treaty has not been operating in a meaningful sense between the Parties for
decades.
Section A: Treaty of Amity: Object and Purpose and U.S. FCN Program
4.2 The United States and Iran signed the Treaty of Amity on August 15, 1955.12 At the
time, the United States and Iran enjoyed friendly relations and sought to build on those relations
by creating a framework for a more robust economic relationship. In the Preamble to the
Treaty, the Parties provided that they were “desirous of emphasizing the friendly relations
which have long prevailed between their peoples . . . of encouraging mutually beneficial trade
and investments and closer economic intercourse generally between their peoples, and of
regulating consular relations.” The Parties, therefore, “resolved to conclude, on the basis of
reciprocal equality of treatment, a Treaty of Amity, Economic Relations, and Consular Rights.”
4.3 Article I of the Treaty also provides that: “There shall be firm and enduring peace
and sincere friendship between the United States of America and Iran.” Thus, at the time the
Treaty was concluded, the Parties had a shared goal of furthering their friendly relationship
through a series of reciprocal commitments to engage in mutually beneficial trade and
investment. By its terms, the Treaty advances this objective by providing protections for each
Party’s nationals and companies in respect of their ordinary commercial and investment
activities within the territory of, or in trade between, the two Parties.
4.4 The Treaty, together with its object and purpose, is consistent with the broader
context of U.S. FCN treaties in the post-World War II period. The Treaty of Amity was part
of a series of post-World War II bilateral commercial and consular treaties between the United
States and other friendly nations.13 The U.S. commercial treaty program was one of the longestrunning
diplomatic initiatives of the United States. Early U.S. commercial treaties were
primarily focused on simply establishing basic trade relations between two countries.14 In the
post-World War II era, the United States sought to update and modernize those early
commercial agreements in certain respects, in what became known as treaties of “Friendship,
Commerce and Navigation” (“FCN treaties”). These treaties were aimed at enabling commerce
12 The Treaty entered into force on June 16, 1957.
13 The Treaty of Amity was described in 1958 as an “abridged edition” of the standard U.S. FCN treaty. Herman
Walker, Jr., Modern Treaties of Friendship, Commerce and Navigation, 42 MINN. L. REV. 805, 807 (1958) (U.S.
P.O. Annex 1).
14 See generally Herman Walker, Jr., The Post-War Commercial Treaty Program of the United States, 73 POL.
SCI. Q. 57, 57-58 (1958) (U.S. P.O. Annex 2); KENNETH J. VANDEVELDE, THE FIRST BILATERAL INVESTMENTS
TREATIES: U.S. POSTWAR FRIENDSHIP, COMMERCE, AND NAVIGATION TREATIES 57-60 (2017) (U.S. Annex 3).
14
with, and safeguarding U.S. investment in, nations with which the United States had friendly
relations.15 Each of these treaties operated on a reciprocal basis, providing protections to the
other party to the treaty in respect of its commerce with, and investment in, the United States.
In 1951, Assistant Secretary of State Willard Thorp described the FCN treaties as part of a
“program of extending and modernizing the treaty protection of American citizens,
corporations, capital, trade and shipping abroad, with special emphasis on establishing
conditions favorable to private investment.”16 Similarly, in 1952, Deputy Assistant Secretary
of State Harold F. Linder explained that the post-war FCNs were aimed at mitigating the risks
to U.S. investors overseas by “establish[ing] mutually agreed standards of treatment for the
citizens and enterprises of one country within the territories of another.”17
4.5 Iran’s case must be scrutinized through the lens of these principles that underpin the
Treaty. Specifically, the Treaty was intended to rest on an edifice of “enduring peace and
sincere friendship” and to facilitate increased and mutually beneficial commercial and consular
relations between the two Parties. Iran’s case, by contrast, addresses issues, in the form of
underlying Iranian conduct and U.S. measures taken to address that conduct, that bears no
relationship to the commercial and consular goals of the Treaty. It goes without saying that
taking actions, such as support for acts of terrorism targeting the United States, its nationals
and national security interests, is completely antithetical to the underlying principles set out in
Article I of the Treaty and of the Treaty as a whole. The measures at issue were put in place
by the United States to respond to these acts of terrorism against the United States and to allow
15 See generally Herman Walker, Jr., The Post-War Commercial Treaty Program of the United States, 73 POL.
SCI.Q. 57, 57-58 (1958) (U.S. P.O. Annex 2); Herman Walker, Jr., Treaties for the Encouragement and Protection
of Foreign Investment: Present United States Practice, 5 AM. J. COMP. L. 229, 230 (1956) (U.S. P.O. Annex 3)
(stating that the FCN treaties “acquired in time a familiar and distinctive form and character, as a normal medium
through which to provide extensively for the rights of each country’s citizens, their property and other interests,
in the territories of the other, and for rules to mutually govern their trade and shipping.”). Herman Walker served
as a State Department official between 1946 and 1962, and has been described as the “architect of the modern
FCN treaty.” See Wolfgang Saxon, “Herman Walker, 83, Professor and U.S. Foreign Officer, Dies,” N.Y. Times
(May 13, 1994) (U.S. P.O. Annex 4).
16 Memorandum from Willard Thorp, Assistant Secretary for Economic Affairs, to Jack K. McFall, Assistant
Secretary for Legislative Affairs (Dec. 29, 1951) (U.S. P.O. Annex 6). See also Commercial Treaties with Iran,
Nicaragua, and The Netherlands: Hearing Before the S. Comm. on Foreign Relations, 84th Cong. 1-2 (1956)
(statement of Thorsten V. Kalijarvi, Dep’t of State) (U.S. Annex 1) (explaining that the Treaty of Amity, as well
as FCN treaties with Nicaragua and the Netherlands, were negotiated in furtherance of Congress’s directive in the
Mutual Security Act of 1954 for the President to “accelerate a program of negotiating treaties for commerce and
trade . . . which shall include provisions to encourage and facilitate the flow of private investment to nations
participating in programs under this act”).
17 Treaties of Friendship, Commerce and Navigation Between the United Sates and Colombia, Israel, Ethiopia,
Italy, Denmark, and Greece: Hearing Before the Subcomm. of the S. Comm. On Foreign Relations, 82d Cong. 4
(1952) (statement of Harold F. Linder, Deputy Assistant Sec’y for Economic Affairs) (U.S. Annex 2).
15
enforcement of terrorism-related judgments against Iran to afford U.S. victims and their
families much deserved redress.
4.6 To put it another way, while the Treaty sets up rules to govern the treatment afforded
by one Party to the companies and nationals of the other Party in a context of increasing and
mutually beneficial economic activity, the U.S. measures at issue in this case were enacted in
the absence of economic engagement and friendship between Iran and the United States to
address Iranian conduct outside the framework of the Treaty. Indeed, it is ironic that Iran,
having adopted a policy of supporting terrorism that targets the United States and its nationals,
and having not provided redress to the victims of those attacks for the resulting harms, now
seeks to use a Treaty premised on mutual friendship and a growing commercial relationship to
challenge these U.S. measures. In any event, as set forth in Part IV below, the Treaty’s
provisions nowhere address, let alone prohibit or circumscribe, rules that a Party can maintain
to respond to terrorism, or to enable the enforcement of judgments, or to allow a corporate
entity’s veil to be pierced to reach its owners or its affiliated entities. In short, Iran’s case bears
no relationship to the Treaty’s object and purpose or to the specific provisions that Iran has
invoked.
Section B: U.S.-Iranian Relationship under the Treaty
4.7 In addition to the misfit between the Treaty and Iran’s claims, it is important to
understand Iran’s claims in light of the history of the U.S.-Iranian relationship since the
conclusion of the Treaty. Although Iran and the United States embarked on the negotiation
and conclusion of the Treaty of Amity on the expectation of an enduring friendship with robust
economic ties, the Parties’ relationship was fundamentally ruptured when the Iranian
government endorsed and supported the takeover of the U.S. Embassy in Tehran and held U.S.
diplomatic personnel and others hostage.18 Indeed, the Court found that Iran had committed
“successive and continuing breaches of the obligations laid upon it by” the Vienna Conventions
on Diplomatic and Consular Relations, the Treaty of Amity, “and the applicable rules of general
international law.”19 Thus, the friendly relationship that underpinned the Treaty of Amity came
to an abrupt halt on November 4, 1979.
18 See United States Diplomatic and Consular Staff in Tehran (United States v. Iran), 1980 I.C.J. 3, 12, ¶ 17 (May
24).
19 Id., 41, ¶ 90.
16
4.8 In the decades following the Iranian government’s actions in 1979, the U.S.-Iranian
relationship suffered further setbacks because Iran persisted on a path of violent and hostile
conduct directed at the United States and its nationals, which it has maintained for nearly four
decades. The reason that this case even exists is because of Iran’s long-standing support for
terrorist acts and related conduct specifically targeting U.S. persons and interests, and the
peaceful measures taken by the United States to hold Iran accountable for such conduct. Thus,
any consideration of Iran’s claims under the various Treaty provisions it has invoked and the
U.S. measures that Iran challenges under the Treaty must be carried out through the lens of
Iran’s malign conduct.
4.9 As a result of Iran’s conduct over the last four decades, the Treaty of Amity has not
been operating between the Parties in a meaningful sense during this period. While the Treaty
sought to further closer economic relations, both Parties have taken measures over the years to
discourage or prohibit economic activity between them. Moreover, in the absence of economic
engagement, the Parties cannot be said to have been relying on the Treaty in the preceding
decades to guarantee the protections to companies and nationals provided for therein. In
recognition of this reality, the United States announced on October 3, 2018 that it was
terminating the Treaty of Amity and notified Iran of the decision via diplomatic note.
4.10 Having set out an overview of the Treaty, which forms the sole basis for the Court’s
jurisdiction over Iran’s claims, the next chapter provides the factual background concerning
Iran’s long-standing support for terrorism that is the impetus for the U.S. measures at issue in
this case.
CHAPTER 5: IRAN’S SPONSORSHIP OF TERRORISM AND OTHER DESTABILIZING ACTS
THREATENING U.S. NATIONAL SECURITY
5.1 Iran challenges measures taken by the United States in response to Iran’s decadeslong
pattern of supporting and sponsoring acts of terrorism against the United States and its
nationals, acts that have killed or injured hundreds of U.S. victims who, along with their
families, suffered enormous losses as a result of those acts. This chapter details a number of
these acts, as relevant to the United States submissions. It begins by setting out Iran’s
longstanding policy of sponsoring terrorism (in Section A), before discussing terrorist acts that
Iran has directed specifically at the United States and its nationals (in Section B).
17
Section A: Iran Has Had a Longstanding Policy of Sponsoring
Terrorism and Committing Other Destabilizing Acts
5.2 Iran is widely recognized as a global state sponsor of terrorism. It actively pursues a
foreign policy that counts among its tools proxy actors such as Hezbollah, in Lebanon, to whom
it provides direction, training, and material. Iran’s proxies in turn have carried out, and
continue to carry out, not only terrorist attacks, but also assassinations and kidnappings directed
by the highest levels of the Iranian regime. As is apparent from the illustrative examples
described below, virtually every region of the world has been affected by Iran’s terrorism-based
foreign policy. Governments and their courts have repeatedly recognized the responsibility of
Iran’s leadership for these acts.
5.3 The terror apparatus that guides the decision-making of the Iranian State is
exemplified by the September 17, 1992 murder of four members of the Democratic Party of
Kurdistan-Iran (DPK-I), a Kurdish opposition group, at the Mykonos Restaurant in Berlin.20
The perpetrators of this attack – at least two of whom were members of Hezbollah – were
subsequently convicted by the Berlin Superior Court of Justice on charges of murder or
complicity to murder.21 German authorities also issued an arrest warrant for Ali Fallahian, the
Iranian Minister of Information and Security, for his involvement in the assassinations.22
During the related criminal trial, the Berlin Superior Court of Justice confirmed the Iranian
government’s responsibility for the killing of the four DPK-I members. In its Judgment, the
Berlin Superior Court explained that:
[T]he attack on the leadership of the [DPK-I] is neither a crime
committed by lone gunmen, nor is it caused by differences
among opposition groups. On the contrary, the attack was
organized by the Iranian regime.23
20 See Parliamentary Human Rights Group, Iran: State of Terror, An account of terrorist assassinations by Iranian
agents 28 (1996) (U.S. Annex 4). As noted in the report, “the Parliamentary Human Rights Group was founded
in 1976 as an independent forum in the British Parliament concerned with the defense of international human
rights.” Id., at i.
21 Summary of Judgment of the Superior Court of Justice, Berlin, in the Mykonos trial, at 1, 4 (U.S. P.O. Annex
33); see also Judgment of the Superior Court of Justice, Berlin, in the Mykonos trial [Kammergericht: Urteil im
‘Mykonos’ – Prozess], at 23 (Apr. 10, 1997) (U.S. Annex 5) (hereinafter “Mykonos Judgment”).
22 See Parliamentary Human Rights Group, Iran: State of Terror, An account of terrorist assassinations by Iranian
agents 33 (1996) (U.S. Annex 4).
23 Mykonos Judgment 188 (U.S. Annex 5) (emphasis added); see id. (“[T]he evidence has shown that Iranian
leaders not only approve of terrorist attacks abroad and heap honors on their perpetrators, but that they themselves
organize such attacks against people who displease them simply because of the political convictions.”). The court
also found the Iranian government responsible for the July 13, 1989, murder of three other DPK-I leaders in
18
5.4 The court described in detail the decision-making process of Iran’s Committee for
Special Affairs, which is tasked with deciding on important security matters, including “cases
involving the killing of regime opponents abroad.”
The decisions made by the official Committee for Special
Affairs were prerequisites for carrying out operations,
particularly those involving activities abroad. If such an
operation involved killing people, the leader of the revolution,
acting as the political authority, confirmed the death order. For
the leader of the revolution it is a matter of issuing a liquidation
order, in secret and without a sentence having been passed,
against persons who stood in the way of the Iranian regimes
political interests or against others who for other reasons
particularly displeased him. As a rule, it was directed against
leading personalities of opposition groups or parties.24
5.5 The court also described Iran’s relationship with Hezbollah. In particular, the court
found that Hezbollah acted as “an arm of Iranian policy,” was “established by Iran and . . .
largely financed, armed, and trained by Iran. . . . not only to spread the Islamic Revolution in
Lebanon, but also to fight the opponents of Iran’s Islamic regime with militant means.25
5.6 The Mykonos Restaurant atrocity of 1992 is brought into contemporary focus by a
foiled bomb attack on a rally in Paris in July 2018, directed by an Iranian diplomat.26 On
January 8, 2019, the European Union also sanctioned Iran over allegations that Iran’s
intelligence service orchestrated a series of assassination plots in Europe in recent years,
including the killing of two Iranians in the Netherlands, and other plotted attacks in France and
Denmark.27
Vienna. Summary of Judgment of the Superior Court of Justice, Berlin, in the Mykonos trial, at 2 (U.S. P.O.
Annex 33); see Mykonos Judgment 177-78 (U.S. Annex 5).
24 Mykonos Judgment 21 (U.S. Annex 5).
25 Id. 22. Following this judgment, virtually all member States of the European Union (EU) recalled their
ambassadors to Iran. “EU Members Urged Not to Send Ambassadors Back to Iran,”
RadioFreeEurope/RadioLiberty (May 9, 1997) (U.S. P.O. Annex 48). The EU Presidency issued a Declaration in
April 1997 stating that “[i]n the findings of the Superior Court of Justice in Berlin in the so-called Mykonos case
the involvement of the Iranian authorities at the highest levels was established.” Declaration by the Presidency
on behalf of the European Union on Iran (Apr. 10, 1997) (U.S. P.O. Annex 49); see also EU Press Release No.
26/97, “European Union Declaration on Iran” (Apr. 29, 1997) (U.S. P.O. Annex 50).
26 See “France expels Iranian diplomat over failed bomb plot: sources,” Reuters, Oct. 26, 2018 (U.S. Annex 6);
“Exclusive: France restricts travel by diplomats to Iran,” Reuters (Aug. 28, 2018) (U.S. Annex 7); “Iranian
Diplomat Extradited to Belgium to Face Charges in Bomb-Plot Case,” RadioFreeEurope, Oct. 10, 2018 (U.S.
Annex 8).
27 See, e.g., Letter from Stef Blok, the Minister of Foreign Affairs, and Kajsa Ollongren, the Minister of the Interior
and Kingdom Relations, to the President of the House of Representatives on sanctions against Iran on the grounds
of undesirable interference (Jan. 8, 2019) (U.S. Annex 9); “E.U. Imposes Sanctions on Iran Over Assassination
Plots,” N.Y. Times, Jan. 8, 2019 (U.S. Annex 10); “In shift, EU sanctions Iran over planned Europe attacks,”
19
5.7 These Iran-sponsored assassination attempts exemplify a long-standing Iranian
policy. This policy has been documented extensively. In its 1996 report, the U.K.
Parliamentary Human Rights Group stated that, since the revolution, Iran has been tied to over
150 assassination attempts against Iranian dissidents living in other countries, terrorist acts
committed in 21 countries, and the deaths of or injuries to 350 people in those attacks.28 Noting
that Iran’s “use of terrorism as an adjunct to foreign policy has developed into an organised
and professional activity over the last 15 years,” the report stated the problem in stark terms:
The international community has to confront the unthinkable:
that a member state of the United Nations is dedicated to
subverting international law, and carrying the infection of its
own brand of religious terrorism into the four quarters of the
globe. . . . the Iranian government is indeed organising an
international murder machine.29
5.8 Iran’s regional neighbors have also suffered because of Iran’s support for terrorism.
As discussed in Section B below, Iran was responsible for the attempted assassination of Saudi
Arabia’s Ambassador to the United States. Iran was also responsible for airplane hijackings
by its proxy, Hezbollah.30 The Kingdom of Bahrain, in particular, has been a target of Iran’s
campaign of terror, and has repeatedly discovered terrorist cells, financed and directed by the
Islamic Revolutionary Guard Corps (“IRGC”). In October 2015, Bahrain transmitted to the
Reuters, Jan. 8, 2019 (U.S. Annex 11); see also “Read statement by foreign Minister Samuelsen on Illegal Iranian
intelligence activities in Denmark,” Ministry of Foreign Affairs of Denmark (Oct. 31, 2018) (U.S. Annex 12);
“Netherlands recalls ambassador to Iran,” Deutsche Welle, Mar. 4, 2019 (U.S. Annex 13).
28 Parliamentary Human Rights Group, Iran: State of Terror, An account of terrorist assassinations by Iranian
agents 3 (1996) (U.S. Annex 4).
29 Id. at 5-6 (U.S. Annex 4) (emphasis added). Other bodies have echoed this assessment. The UN Sub-
Commission on Prevention of Discrimination and Protection of Minorities, demanded that Iran “cease forthwith
any involvement in or toleration of murder and State-sponsored terrorism against Iranians living abroad and the
nationals of other States.” UN Econ. & Soc. Council, Comm. On Human Rights, Report of the Sub-Commission
on Prevention of Discrimination and Protection of Minorities, 46th Sess., U.N. Doc. E/CN.4/1995/2,
E/CN.4/Sub.2/1994/56, at 55 (Oct. 28, 1994) (U.S. P.O. Annex 80). One of the most infamous examples of Iran’s
policy of targeted assassinations, was the fatwa issued by Ayatollah Khomeini in 1989, calling for the murder of
British novelist Salman Rushdie and of those who facilitated the publication and distribution of his novel, “The
Satanic Verses.” “[Khomeini] Exhorts Muslims to ‘Execute’ Rushdie,” Tehran Radio Domestic Service, in
Foreign Broadcast Information Service Daily Rep., FBIS-NES-89-029 (Feb. 14, 1989) (U.S. P.O. Annex 75); see
also Parliamentary Human Rights Group, Iran: State of Terror, An account of terrorist assassinations by Iranian
agents 85 (1996) (U.S. Annex 4); U.N. Econ. & Soc. Council [ECOSOC], Commission on Human Rights,
Situation of human rights in the Islamic Republic of Iran 275, E/CN.4/1996/177 (Mar. 18 – Apr. 26, 1996) (U.S.
P.O. Annex 60); Robert Tait, “Iran resurrects Salman Rushdie threat,” The Telegraph, Sept. 16, 2012 (U.S. P.O.
Annex 76).
30 See “Chronology of Events in Hijacking of Kuwait Airways Flight 422,” Associated Press, Apr. 12, 1988 (U.S.
P.O. Annex 58) (discussing Hezbollah’s April 1988 hijacking of Kuwait Airways Flight 422, which included 112
passengers and three members of the Kuwaiti royal family, on board); U.S.DEP’T OF DEFENSE, TERRORIST GROUP
PROFILES 18 (1988) (U.S. P.O. Annex 19).
20
UN General Assembly a letter to the UN Secretary-General explaining its decision to withdraw
its ambassador to Iran. The letter stated:
Iran has allowed its territory and state resources to be used by
terrorist groups to carry out armed attacks in Bahrain. The
Government of the Islamic Republic of Iran is actively engaged
in spreading weapons, such as assault rifles, grenades,
improvised explosive devices (IEDs), explosively formed
projectiles (EFPs) and associated technologies, to terrorist
groups, including those operating in Bahrain.31
5.9 Iran’s reach has also extended to South America, where Argentina has been the site
of several Iran-sponsored attacks. On March 17, 1992, the Israeli embassy in Buenos Aires
was attacked by a Hezbollah suicide bomber driving a truck laden with explosives through the
front of the embassy building. The subsequent explosion destroyed the embassy, a nearby
church, and a school building. Twenty-nine individuals lost their lives, including three Israeli
embassy personnel and six local embassy employees, and 242 other individuals were injured.32
5.10 Two years later, on July 18, 1994, members of Hezbollah drove a van loaded with
high explosives into the Argentine Jewish Center, known as the Asociación Mutual Israelita
Argentina (“AMIA”) building in Buenos Aires, Argentina. The resulting explosion killed 85
individuals and wounded at least 151 more. On October 25, 2006, Argentine prosecutors
Alberto Nisman and Marcelo Martinez Burgos published a Report and Request for Arrests
concluding that:
[I]n our view it has been proven that the decision to carry out the
attack was made not by a small, isolated group of extremist
Islamic officials, but was instead a decision that was extensively
discussed and was ultimately adopted by a consensus of the
highest representatives of the Iranian government at the time
within the context of a foreign policy that did not rule out
31 UN GAOR, 70th Sess., Agenda items 85 and 108, Letter from the Permanent Mission of Bahrain to the UN
addressed to the Secretary General, U.N. Doc. A/70/445 (Oct. 26, 2015) (U.S. P.O. Annex 42). Since the letter,
similar reports indicating Iranian support for terrorism have continued unabated. See, e.g., “Bahrain court
overturns stripping of 92 Shiites’ citizenship: judicial source,” Business Standard, June 30, 2019 (U.S. Annex
14); “Bahrain arrests 116 on charges of terrorism, Iran collusion,” Deutsche Welle, Mar. 3, 2018 (U.S. Annex
15); “Bahrain arrests four linked to pipeline blast: ministry,” Reuters, Feb. 7, 2018 (U.S. Annex 16); “Bahrain
says deadly bus attack engineered by Iran,” Reuters, Nov. 15, 2017 (U.S. Annex 17); “Bahrain accuses Iran of
harboring 160 ‘terrorists’,” Times of Israel, Oct. 18, 2017 (U.S. Annex 18).
32 Subsequent investigations by Argentina, the United States, and Israel revealed Iranian complicity in the attack.
RONEN BERGMAN, THE SECRET WAR IN IRAN: THE 30-YEAR CLANDESTINE STRUGGLE AGAINST THE WORLD’S
MOST DANGEROUS TERRORIST POWER 171-72 (2008) (U.S. Annex 19); see also “Hezbollah’s 1992 Attack in
Argentina Is a Warning for Modern-Day Europe,” The Atlantic, Mar. 19, 2013 (U.S. Annex 20); MARK SULLIVAN
& JUNE BEITEL, CONG. RESEARCH SERV., RS21049, LATIN AMERICA: TERRORISM ISSUES (2016) (U.S. Annex
21); Israel Ministry of Foreign Affairs, Report: Hizbullah and Iran behind Buenos Aires bombings (Oct. 26, 2006)
(U.S. Annex 22).
21
resorting to violence in order to achieve the goals [that] are
inherent to the Islamic republic that was established by the
revolution of February 1979.33
5.11 Over Iranian objections, Interpol Red Notices were issued for six individuals,
including five of the Iranian government officials, in connection with the bombing.34 Twentyfive
years later, Argentina continues to seek justice for the Iranian-supported bombing of the
AMIA building.35
5.12 Iran has also engaged in a multitude of other destabilizing acts that threaten the
national security interests of the United States and others, in particular acts related to the
development of its ballistic missile program and arms trafficking. In adopting UN Security
Council resolution 1929 (2010), the Security Council “decide[d] that Iran shall not undertake
any activity related to ballistic missiles capable of delivering nuclear weapons, including
launches using ballistic missile technology” and prohibited the transfer to Iran of a broad range
of arms and related materiel.36 The Security Council further requested that the Secretary-
33 Investigations Unit of the Office of the Attorney General, Report; Request for Arrests 13-14 (Oct. 25, 2006)
(U.S. Annex 23) (emphasis added); see also id. at 781-95 (reviewing and summarizing evidence). The report
continued: “We show in the present report that the decision to carry out the attack . . . was made, and the attack
was orchestrated, by the highest officials of the Islamic Republic of Iran at the time, and that these officials
instructed Lebanese terrorist group Hezbollah (Party of God) – a group that has historically been subordinated to
the economic and political interests of the Teheran regime – to carry out the attack.” Id. at 16 (U.S. Annex 23).
34 INTERPOL Media Release, INTERPOL General Assembly upholds Executive Committee decision on AMIA
Red Notice dispute (Nov. 7, 2007) (U.S. P.O. Annex 32). Red Notices were issued for, among others, Ahmad
Vahidi, former Iranian defense minister and member of the IRGC-QF; Ali Fallahian, a former Iranian intelligence
minister who was also found by the Berlin court in the Mykonos case to have been responsible for carrying out
the instruction to kill Kurdish leader Sharafkandi, see Mykonos Judgment 22 (U.S. Annex 5); Mohsen Rabbani,
the former Iranian cultural attaché in Argentina, who was to meet with Abdul Kadir, one of the defendants
convicted in the 2007 plot to bomb John F. Kennedy International Airport, see Federal Bureau of Investigation
Press Release, Imam from Trinidad Convicted of Conspiracy to Launch Terrorist Attack at JFK Airport (May 26,
2011) (U.S. P.O. Annex 34); and Mohsen Rezaee, former IRGC commander and member of Iran’s Supreme
Defense Council.
35 On July 19, 2019, Argentina’s President Mauricio Macri stated that “[w]e will continue to look for those accused
of these acts to be tried in Argentine territory and we will keep the red alerts (from Interpol) on them, and we ask
the Islamic Republic of Iran to collaborate in the investigation.” “Argentina: Macri Wants Those Behind AMIA
Attack To Be Tried in Argentina,” MercoPress, July 19, 2019 (U.S. Annex 24). Iran, however, has refused
repeated requests by Argentina to cooperate with the Red Notices. See, e.g., UN GAOR, 64th Sess., Agenda item
8, Letter from the Permanent Representative of Argentina to the UN addressed to the President of the General
Assembly, U.N. Doc. A/64/505 (Oct. 28, 2009) (U.S. P.O. Annex 41); UN GAOR, 64th Sess., 5th plen. Mtg.,
Address by Cristina Fernandez de Kirchner, President of the Argentine Republic, U.N. Doc. A/64/PV.5, at 2-3
(Sept. 23, 2009) (U.S. P.O. Annex 38). Of further relevance, Argentine prosecutor Nisman also produced a report
on Iranian terror networks throughout Latin America in May 2013. See Attorney General’s Unit, “Opinion,” at
252 (May 29, 2013) (U.S. Annex 107) (“[T]he attack against the Jewish community . . . is part of an extensive
regional strategy reflected in the establishment in certain countries of intelligence bases which, through the dual
use of political, religious and cultural institutions, were positioned to provide, if needed, essential support for
committing acts of terrorism.”).
36 S.C. Res. 1929, ¶ 9, U.N. Doc. S/RES/1929 (June 9, 2010) (U.S. P.O. Annex 110).
22
General create a panel of experts to review incidents of non-compliance by Iran in connection
with these prohibitions. That Panel issued numerous reports detailing Iran’s continued acts in
contravention of resolution 1929.37 Following the dissolution of the panel of experts upon
adoption of UN Security Council resolution 2231, the Secretary-General’s six-month reports
on implementation of the resolution likewise have continued to report on acts demonstrating
Iran’s ongoing non-compliance with these restrictions.38
5.13 As part of its broader campaign of supporting terrorism, Iran has also supplied
weapons and training to terrorist groups actively carrying out attacks on U.S. military forces,
and those of partner States. This activity has been in contravention of UN Security Council
resolution 1373 (2001), which was adopted following the attacks on the United States on
September 11, 2001, and requires all States to “[r]efrain from providing any form of support,
active or passive, to entities or persons involved in terrorist acts.”39 For example, Iran provided
training and material for the Taliban to carry out attacks on Coalition Forces in Afghanistan,
including those of the United States, as well as the Afghani government.40 In April 2011,
Afghan forces intercepted a shipment of ammunition supplied by Iran to the Taliban41 and
37 See, e.g., Final Report of the Panel of Experts Established Pursuant to Resolution 1929 (2010), at 2, 30 (2011)
(U.S. P.O. Annex 115); Final Report of the Panel of Experts Established Pursuant to Resolution 1929 (2010),
U.N. Doc. S/2012/395, at 3-4 (June 4, 2012) (U.S. P.O. Annex 114); Final Report of the Panel of Experts
Established Pursuant to Resolution 1929 (2010), U.N. Doc. S/2013/331, at 5, 32 (June 3, 2013) (U.S. P.O. Annex
117); Final Report of the Panel of Experts Established Pursuant to Resolution 1929 (2010), U.N. Doc. S/2014/394,
at 3, 9 (June 5, 2014) (U.S. P.O. Annex 118); Final Report of the Panel of Experts Established Pursuant to
Resolution 1929 (2010), U.N. Doc. S/2015/401, at 3 (June 1, 2015) (U.S. P.O. Annex 119).
38 See, e.g., Report of the Secretary-General on the implementation of Security Council resolution 2231,
S/2016/589, at 3, 8-10 (July 12, 2016) (U.S. P.O. Annex 123); Report of the Secretary-General on the
implementation of Security Council resolution 2231, S/2016/1136, at 5-7. (Dec. 30, 2016) (U.S. P.O. Annex 125);
Report of the Secretary-General on the implementation of Security Council resolution 2231, S/2017/515, at 2, 5-
8 (June 20, 2017) (U.S. Annex 25); Report of the Secretary-General on the implementation of Security Council
resolution 2231, S/2017/1030, at 4-5 (December 8, 2017) (U.S. Annex 26); Report of the Secretary-General on
the implementation of Security Council resolution 2231, S/2018/602, at 5-6, 8-11 (June 12, 2018) (U.S. Annex
27); Report of the Secretary-General on the implementation of Security Council resolution 2231, S/2018/1089, at
6-7 (Dec. 6, 2018) (U.S. Annex 28); Report of the Secretary-General on the implementation of Security Council
resolution 2231, S/2019/492, at 4-6, 8-11 (June 13, 2019) (U.S. Annex 29).
39 S.C. Res. 1373, U.N. Doc. S/RES/1373, Preamble, ¶ 2(a) (Sept. 28, 2001) (U.S. P.O. Annex 81).
40 “Iranian support of Afghan Taliban targeted by new US sanctions,” Deutsche Welle, Oct. 25, 2018 (U.S. Annex
30). The United States has determined that “from at least 2006 . . . Iran has arranged frequent shipments to the
Taliban of small arms and associated ammunition, rocket propelled grenades, mortar rounds, 107 mm rockets,
and plastic explosives.” Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering
Concern, 76 Fed. Reg. 72756, 72757-72758 (Nov. 18, 2011) (U.S. P.O. Annex 152).
41 See Final Report of the Panel of Experts Established Pursuant to Resolution 1929 (2010), U.N. Doc. S/2012/395,
at 27 (June 4, 2012) (U.S. P.O. Annex 114) (noting the shipment of 48 122mm rockets and 1,000 rounds of
ammunition). Recently, an unmanned aerial system of Iranian design was also recovered by coalition forces in
Afghanistan. Brian H. Hook, “The Iranian Regime’s Transfer of Arms to Proxy Groups and Ongoing Missile
Development,” U.S Dep’t of State, Nov. 29, 2018 (U.S. Annex 31).
23
commanders of the Taliban have also confirmed that Iranian officials paid them to attend
training courses in Iran devoted to teaching them how to attack NATO troops and convoys.42
5.14 Iran’s arms trafficking and other malign activities have been made possible in part
through its use of money laundering practices, which permit the clandestine movement of arms
and material to actors posing a direct danger to U.S. national security interests, as confirmed
by both U.S. and international sources.
5.15 The multilateral Financial Action Task Force (FATF) has repeatedly issued warnings
concerning the terrorism-finance and money-laundering risks posed by Iran.43 Since 2007, the
FATF has advised financial institutions to use “enhanced due diligence” in dealings with Iran
given Iran’s failure to implement a comprehensive anti-money laundering or anti-terrorist
financing regime, which represented “a significant vulnerability within the international
financial system.” Subsequently, the FATF also began urging States to apply “[e]ffective
counter-measures to protect their financial sectors from money laundering and financing of
terrorism . . . risks emanating from Iran.”44
42 “Iranians train Taliban to use roadside bombs: report,” The Nation, Mar. 21, 2010 (U.S. P.O. Annex 88);
“Captured Taliban Commander: ‘I received Iranian Training,’” RadioFreeEurope/RadioLiberty, Aug. 23, 2011
(U.S. P.O. Annex 89). Member States of the Terrorist Financing Targeting Center likewise have recognized Iran’s
support for the Taliban, notably in the form of, for example, agreements between the IRGC-QF and the Taliban
to provide training to Taliban forces in exchange for them attacking specific targets, including through the use of
suicide bombers. “Treasury and the Terrorist Financing Targeting Center Partners Sanction Taliban Facilitators
and their Iranian Supporters,” U.S. Dep’t of Treasury, Oct. 23, 2018 (U.S. Annex 32). In addition, in a televised
speech in May 2019, Hamas’s political leader in the Gaza Strip, Yahya Sinwar, admitted that Iran had provided
arms to Hamas, stating that “rockets launched at Tel Aviv in 2014 were either “provided by Iran” or “locally
made, with financial and technical support from Iran.” He also stated that, in case of another conflict, “Tel Aviv
will be struck with several times the number of [missiles] than in 2014.” He further stressed that “if not for the
support of Iran for the resistance in Palestine, we would not have obtained these capabilities.” Report of the
Secretary-General on the implementation of Security Council resolution 2231, S/2019/492, at 11 (June 13, 2019)
(U.S. Annex 29).
43 The FATF is an inter-governmental body with representatives from many regions of the world (including the
United States), whose purpose is to set standards and promote the effective implementation of legal, regulatory,
and operational measures for combating money laundering, terrorist financing, and related threats to the integrity
of the international financial system.
44 Financial Action Task Force Statement (Feb. 25, 2009) (U.S. PO Annex 146). While Iran has pledged that it
would implement an action plan to address deficiencies in its anti-money laundering provisions and actions to
combat the financing of terrorism, it has failed to do so to date. As recently as June 2019, the FATF noted that
Iran still had not fully addressed the issues identified by FATF as necessary for a comprehensive anti-terrorist
financing regime. FATF, Public Statement – June 2019 (June 21, 2019) (U.S. Annex 34). FATF continues to
“call upon members and urging all jurisdictions to require increased supervisory examination for branches and
subsidiaries of financial institutions based in Iran.” FATF also stated that “[u]ntil Iran implements the measures
required to address the deficiencies identified with respect to countering terrorism-financing in the Action Plan,
the FATF will remain concerned with the terrorist financing risk emanating from Iran and the threat this poses to
the international financial system.” Id.; see also “UPDATE 1-SWIFT says suspending some Iranian banks’ access
to messaging system,” Reuters, Nov. 5, 2018 (U.S. Annex 35) (reporting that in November 5, 2018, Belgiumbased
SWIFT financial messaging service suspended unspecified Iranian banks’ access to messaging system in
interest of stability and integrity of global financial system).
24
5.16 The UN Security Council has likewise recognized the danger posed by Iran’s
financial system. The Security Council, in resolution 1803 (2008), “[c]all[ed] upon all States
to exercise vigilance over the activities of financial institutions in their territories with all banks
domiciled in Iran, in particular with Bank Melli and Bank Saderat, and their branches and
subsidiaries abroad, in order to avoid such activities contributing to the proliferation of
sensitive nuclear activities, or to the development of nuclear weapon delivery systems.”45 In
resolution 1929 (2010), the Security Council also “recall[ed] in particular the need to exercise
vigilance over transactions involving Iranian banks, including the Central Bank of Iran, so as
to prevent such transactions contributing to proliferation-sensitive activities, or to the
development of nuclear weapon delivery systems.”46
5.17 In recognition of this growing concern, in November 2011, the U.S. Treasury
Department issued a finding concluding that Iran was a “jurisdiction of primary money
laundering concern,”47 and that Iran “used deceptive financial practices to disguise both the
nature of transactions and its involvement in them in an effort to circumvent sanctions.”48 The
U.S. Treasury Department further found that “Iranian financial institutions, including the
Central Bank of Iran (Bank Markazi), and other state-controlled entities, willingly engage in
deceptive practices to disguise illicit conduct, evade international sanctions, and undermine the
efforts of responsible regulatory agencies around the world.”49
45 S.C. Res. 1803, ¶ 10, U.N. Doc. S/RES/1803 (Mar. 3, 2008) (U.S. P.O. Annex 102).
46 S.C. Res. 1929, prmbl., U.N. Doc. S/RES/1929 (June 9, 2010) (U.S. P.O. Annex 110).
47 Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756, 72756 (Nov. 18, 2011) (U.S. P.O. Annex 152).
48 Id. at 72760 (U.S. P.O. Annex 152).
49 Id. at 72760 (U.S. P.O. Annex 152). The U.S. determination noted many of the kinds of deceptive practices
utilized by Iranian financial institutions to disguise the Iranian origin of transactions, as well as identifying the
array of agencies, instrumentalities, and financial institutions through which Iran sought to evade sanctions and
further its support for terrorism abroad and its pursuit of ballistic missiles domestically. These included the
transfer of funds to exchange houses outside Iran, including transferring funds to local banks in the same
jurisdiction for onward payments; the use of back-to-back letters of credit; removing the names of Iranian banks
from financial transactions; using front companies and complex corporate ownership structures to disguise Iranian
control; and collusion with exporters to enter fictitious end-user names on export forms. Id. at 72760-63 (U.S.
P.O. Annex 152); see also Press Release, U.S. Dep’t of Treasury, Treasury Sanctions Iran’s Central Bank and
National Development Fund (Sept. 20, 2019) (U.S. Annex 33) (quoting Treasury Secretary Steven T. Mnuchin
as stating that “Iran’s Central Bank and the National Development Fund were ostensibly intended to safeguard
the welfare of the Iranian people, but have been used instead by this corrupt regime to move Iran’s foreign currency
reserves for terrorist proxies.”); id. (quoting Under Secretary for Terrorism and Financial Intelligence Sigal
Mandelker as stating “[w]e are putting governments on notice that they are risking the integrity of their financial
systems by continuing to work with the Iranian regime’s arm of terror finance, its Central Bank”).
25
Section B: Iran’s Support of Terrorist Acts Directed at the United States
5.18 Against the background of the preceding discussion of malign Iranian conduct around
the world, this section addresses, by way of example, the numerous instances of Iran’s support
for terrorist acts targeted directly at the United States and its nationals.
i. The Marine Barracks Bombing and Other Terrorist Bombings Targeting U.S.
Interests in Lebanon
5.19 Less than two years after the release of 52 U.S. diplomats and citizens and the
conclusion of the Iran hostage crisis, Iran defined the shape of its future relations with the
United States when Hezbollah—a group founded, supported and that has been directed by
Iran—attacked the U.S. Embassy in Beirut on April 18, 1983. The attack by a Hezbollah
suicide bomber, driving a truck with over 2,000 pounds of explosives, destroyed the embassy
building and killed 63 people, including 17 U.S. diplomats and military personnel, while
wounding many more.50
5.20 The embassy bombing was followed in October of that same year by another attack
aimed at the U.S. and French peacekeeping forces stationed in Beirut at the request of the
Lebanese government as part of a multilateral peacekeeping contingent.51 As part of the
agreement between the U.S. and Lebanese governments, U.S. forces were not engaged in
combat and were equipped only with weapons consistent with that non-combat role.52
5.21 The attack occurred on the morning of October 23, 1983, beginning when a
Hezbollah member and Iranian citizen drove a 19-ton truck loaded with over 18,000 pounds of
high explosives through a wire fence and a wall of sandbags, into the U.S. Marine barracks.53
50 See Thomas L. Friedman, “U.S. Beirut Embassy Bombed; 33 Reported Killed, 80 Hurt; Pro-Iran Sect Admits
Action,” N.Y. Times, Apr. 19, 1983 (U.S. P.O. Annex 28); Matthew Levitt, The Origins of Hezbollah, The
Atlantic, Oct. 23, 2013, at 3 (U.S. P.O. Annex 23). The Islamic Jihad Organization claimed responsibility for the
attack; analysts have determined that this was a cover name or earlier iteration of Hezbollah. See, e.g., U.S. DEP’T
OF DEFENSE, TERRORIST GROUP PROFILES 15-16 (1988) (U.S. P.O. Annex 19); Matthew Levitt, The Origins of
Hezbollah, The Atlantic, Oct. 23, 2013, at 4 (U.S. P.O. Annex 23).
51 See Letter from Luc de La Barre de Nanteuil, Permanent Representative of France to the United Nations, to the
Secretary-General of the United Nations, U.N. Doc. S/15420 (Sept. 21, 1982) (U.S. P.O. Annex 20); Letter from
Charles M. Lichenstein, Acting Permanent Representative of the United States of America to the United Nations,
to the Secretary-General of the United Nations, U.N. Doc. S/15435 (Sept. 24, 1982) (U.S. P.O. Annex 21). Italian
military personnel also participated in the multinational force.
52 See Exchange of Notes Constituting an Agreement Between the United States of America and Lebanon on
United States Participation in a Multinational Force in Beirut (Aug. 20, 1982), 1751 U.N.T.S. 4, 21 I.L.M. 1196
(1982) (U.S. P.O. Annex 22).
53 See Matthew Levitt, The Origins of Hezbollah, The Atlantic, Oct. 23, 2013, at 4 (U.S. P.O. Annex 23) (U.S.
P.O. Annex 23); Thomas L. Friedman, “Beirut Death Toll at 161 Americans; French Casualties Rise in Bombings;
26
The explosives’ detonation destroyed the four-story barracks, killed 241 U.S. service members
and gravely wounded many others. A few minutes afterwards, a similar attack on the French
barracks killed 58 French peacekeepers and five Lebanese civilians.54
5.22 Less than a year later, Iran’s proxy Hezbollah again attacked the U.S. Embassy in
Lebanon, which had relocated to East Beirut following the attack in April 1983. On September
20, 1984, a suicide bomber crashed a van filled with explosives through the security checkpoint
at the embassy, killing 24 individuals, both U.S. and Lebanese civilians, and again wounding
many others.
5.23 Iran has admitted to – even boasted about – its involvement in the Marine barracks
bombing. Following that attack, the Iranian Minister of the IRGC stated:
With the victory of the Iranian Revolution, America deeply felt
the effect of our hard blow to its corrupt body in Lebanon and
other parts of the world. [America] knows that both the TNT
and the ideology which in one blast sent to hell 400 officers,
NCOs and soldiers of the Marine Headquarters have been
provided by Iran.55
5.24 Other Iranian officials, including then-Speaker of the Majlis (the Iranian Parliament)
and, later, President of Iran, Akbar Hashemi Rafsanjani, also acknowledged Iran’s
responsibility for the Marine barracks bombing. In a speech marking the seventh anniversary
of the seizure of the U.S. Embassy and hostages, Rafsanjani stated that:
The Americans put the blame for the blow that was delivered to
the United States in Lebanon and the disgrace the Americans
suffered there on us; and, in fact, they should blame us for it. If
the U.S. Marines had to flee Lebanon and if a group of them also
went to their graves under those circumstances, all this was part
of the influence of the Islamic Revolution.56
5.25 Iran has also made no secret of its support for and close operational ties with
Hezbollah, its Lebanon-based proxy. A book published by the Iranian Ministry of Foreign
Reagan Insists Marines Will Remain; Buildings Blasted,” N.Y. Times, Oct. 24, 1983 (U.S. P.O. Annex 24);
“Beirut Death Toll Is 241,” N.Y. Times, Dec. 15, 1983 (U.S. P.O. Annex 25).
54 See Thomas L. Friedman, “Beirut Death Toll at 161 Americans; French Casualties Rise in Bombings; Reagan
Insists Marines Will Remain; Buildings Blasted,” N.Y. Times, Oct. 24, 1983 (U.S. P.O. Annex 24); Matthew
Levitt, The Origins of Hezbollah, The Atlantic, Oct. 23, 2013, at 4 (U.S. P.O. Annex 23).
55 “Speech of Our Brother Rafiqdoust at One of the Country’s Factories for Defense,” Ressalat, July 20, 1987
(U.S. P.O. Annex 27).
56 “Hashemi-Rafsanjani on Alleged McFarlane Visit,” Tehran Radio Domestic Service, in VII Foreign Broadcast
Information Service Daily Rep. 11 (Nov. 5, 1986) (U.S. P.O. Annex 26).
27
Affairs in 2000 brazenly proclaimed that the “alliance between Hezbollah and the Islamic
Republic of Iran is deep, strategic, and unbreakable.”57 Hezbollah likewise has publicly
confirmed that “the Islamic Revolutionary Guards help us and train us,”58 and that it receives
from Iran missiles with “pinpoint accuracy.”59 As recently as 2016, Hezbollah’s leader, Sheikh
Hassan Nasrallah, confirmed publicly that Hezbollah receives full financial and arms support
from Iran: “[W]e are open about the fact that Hezbollah’s budget, its income, its expenses,
everything it eats and drinks, its weapons and rockets, come from the Islamic Republic of
Iran.”60
5.26 The 1983Marine barracks bombing, “the most deadly state-sponsored terrorist attack
made against American citizens prior to September 11, 2001,”61 resulted in multiple claims
brought against Iran in U.S. courts by U.S. Marines who were injured in the attack and by the
family members of the Marines who were killed. Central to Iran’s claims before the Court is
the judgment resulting from the claims made by the U.S. victims in the Peterson litigation.
While the Peterson judgment features prominently in the relief Iran seeks, Iran has assiduously
avoided discussion of its role and responsibility in the underlying facts giving rise to that
litigation.
5.27 In awarding compensatory damages for the deaths, injuries and suffering endured by
these members of the U.S. armed forces and their families, the U.S. court ultimately found that
the facts showed that Iranian Ministry of Information and Security (“MOIS”), “acting as an
agent of the Islamic Republic of Iran, performed acts on or about October 23, 1983 . . . which
acts caused the deaths of over 241 peacekeeping servicemen at the Marine barracks in Beirut,
Lebanon.”62 As the court explained, “the deaths of these servicemen were the direct result of
57 IRANIAN MINISTRY OF FOREIGN AFFAIRS, PLAYERS IN THE MIDDLE EAST PEACE PROCESS 235-36 (2000) (U.S.
P.O. Annex 84) (emphasis added); see also A. Savyon et al., “Iranian IRGC Missile Unit Commanders: We’ve
Developed 2,000-km Range Missiles And Equipped [Hezbollah] With 300-km Range Missiles; Fars News
Agency: Israel’s Illusions About Its Natural Gas Fields Will Be Buried In The Mediterranean,” Middle East Media
Research Institute, at 5 (Dec. 3, 2014) (U.S. P.O. Annex 85) (quoting head of the IRGC Aerospace Force as stating
that “[i]n effect, the IRGC and [Hezbollah] are a single apparatus joined together”).
58 Frontline, “Target America,” program 2001 transcript, Oct. 4, 2001, at 7 (U.S. P.O. Annex 57).
59 Nicholas Blanford, “Hezbollah claims ‘pinpoint’ Iranian missiles added to its arsenal,” Christian Science
Monitor, Nov. 23, 2014 (U.S. P.O. Annex 86).
60 “In first, Hezbollah confirms all financial support comes from Iran,” Al Arabiya English, June 25, 2016 (US
P.O. Annex 87) (emphasis added).
61 Peterson v. Islamic Republic of Iran, 264 F. Supp. 2d 46, 47-48 (D.D.C. 2003) (U.S. Annex 36).
62 Id. at 61 (U.S. Annex 36).
28
an explosion of material that was transported into the headquarters of the 24th MAU [(the 24th
Marine Amphibious Unit)] and intentionally detonated . . . by an Iranian MOIS operative.”63
5.28 Iran chose not to participate in the proceeding. The U.S. court nonetheless reviewed
extensive evidence of Iran’s responsibility for the attack. By way of example, the U.S. court
relied, inter alia, on the testimony of former U.S. Admiral James Lyons. As set out in the
court’s judgment:
On October 25, 1983, the chief of naval intelligence notified
Admiral [James] Lyons of an intercept of a message between
Tehran and Damascus that had been made on or about September
26, 1983. The message had been sent from [the Ministry of
Information and Security] to the Iranian ambassador to Syria, Ali
Akbar Mohtashemi . . . . The message directed the Iranian
ambassador to contact Hussein Musawi, the leader of the
terrorist group Islamic Amal, and to instruct him to have his
group instigate attacks against the multinational coalition in
Lebanon, and “to take a spectacular action against the United
States Marines.”64
5.29 Admiral Lyons, who received the intercept, testified at trial that the message was “the
only one I’ve seen of that quality,” and stated “if there was ever a 24-karat gold document, this
was it.”65 While the court found that “the complicity of Iran in the 1983 attack was established
conclusively by the testimony” about the intercept, it also heard other evidence.66 For example,
a member of the group that carried out the October 23 attack testified that “[Iranian]
Ambassador Mohtashemi contacted a man named Kanani, the leader of the Lebanese
headquarters of the [Iranian Revolutionary Guard]. Mohtashemi instructed Kanani to go
forward with attacks that had been planned against the [Marines] and the French
paratroopers.”67
5.30 Another U.S. court proceeding concerning the Marine barracks bombing reached the
same conclusion, finding that the facts showed that the “formation and emergence of Hezbollah
as a major terrorist organization was due to the government of Iran.”68 Citing Dr. Bruce Tefft,
63 Id. (U.S. Annex 36).
64 Id. at 54 (U.S. Annex 36); see Transcript of Trial at 54:22-55:5, Peterson v. Islamic Republic of Iran, No. CA
01-2094 (D.D.C. Mar. 17, 2003), ECF No. 23 (U.S. Annex 37).
65 Transcript of Trial at 55:8-9, 56:12, Peterson v. Islamic Republic of Iran, No. CA 01-2094 (D.D.C. Mar. 17,
2003), ECF No. 23 (U.S. Annex 37).
66 Peterson, 264 F. Supp. 2d at 55 (U.S. Annex 36).
67 Id. at 54-55 (U.S. Annex 36).
68 Holland v. Islamic Republic of Iran, 496 F. Supp. 2d 1, 4, 8 (D.D.C. 2005) (U.S. Annex 38).
29
one of the founding members of the CIA’s counterterrorism bureau and an expert witness on
terrorism, the court stated that:
[t]he Iranian government has provided Hezbollah with roughly
$100 million per annum in financing, and has also provided it
with arms, training, and strategic planning in its operations
against the United States and Israel. [. . . ] The primary agency
through which the Iranian government established and exercised
operational control over Hezbollah was through the MOIS. . . .
The engagement with and promotion of Hezbollah marked a
profound shift for the MOIS [. . . ] from 1983 forward, Iran and
the MOIS would look to employ international terrorism against
non-Iranians.69
5.31 Further, the court concluded that “the MOIS was a vital conduit for Iran’s provision
of funds to Hezbollah, providing explosives to Hezbollah, and—at all times relevant to these
proceedings—exercising near-complete operational control over Hezbollah.”70 In particular,
the court stated that the plaintiffs had conclusively established the connection between Iran,
the MOIS, the IRGC, and Hezbollah that culminated in the Marine barracks attack. It noted:
During the months immediately preceding the October attack,
there was a great deal of communication between the Iranian
ambassador to Syria, Ali Akbar Mohtashemi, and various Iranian
officials connected with the MOIS such as Sheik Ol–Islam–Zadi,
who closely monitored the whole progress of the operation,
frequently met with the heads of Hezbollah, and traveled
between Damascus and Tehran. . . . Indeed, on September 26,
1983, MOIS sent a message to Ambassador Mohtashemi,
directing that he contact Hussein Musawi, the leader of the
terrorist group Islamic Amal, and to instruct him to have his
group investigate attacks against the multinational coalition in
Lebanon, and “to take a spectacular action against the United
States Marines” in order to force the United States to withdraw
militarily from the region.71
5.32 The U.S. court also considered that, in addition to ordering Hezbollah to undertake
attacks against the American and French barracks, Iran “provided substantial support for the
operation in other ways,” including because (1) the explosives that were to be used in the
operation were actually purchased by Iran from the government of Bulgaria, and then provided
69 Id. at 8 (U.S. Annex 38). See also Fact Sheet: Designation of Iranian Entities and Individuals for Proliferation
Activities and Support for Terrorism, U.S. Dep’t of Treasury (Oct. 25, 2007) (U.S. Annex 39).
70 Holland v. Islamic Republic of Iran, 496 F. Supp.2d 1, 8 (D.D.C. 2005) (U.S. Annex 38).
71 Id. at 9 (U.S. Annex 38).
30
to Hezbollah;72 (2) Iran provided complete financial support for the operation, going so far as
to use the Iranian embassy in Damascus to cash various checks to provide funding for
Hezbollah;73 and (3) Iran provided Hezbollah with virtually all of its operational training in
various terrorist camps located in Lebanon, Syria, and Iran.74 As the court explained:
[T]he MOIS was directly involved in the preparations for the
attack, conducting the relevant surveillance and intelligence,
coordinating with Syrian officials for safe passage for the trucks
and materials used in the attacks, and paving the way for the
operation through a variety of liaising activity. The IRGC was
the primary mover behind the attack itself, acting as the
authorizing agent for the Iranian government in Tehran in
addition to recruiting the individuals involved, training the
suicide bombers, preparing the explosives, and installing the
explosives in the trucks in camps located in the Beka’a Valley.75
5.33 None of the victims of the U.S. Marine barracks bombing received any compensation
from Iran until decades after the attack, and that compensation was a result of the U.S. measures
Iran has challenged in this case.
ii. The Khobar Towers Bombing
5.34 In 1996, in an attack that was reminiscent of the 1983 Marine barracks bombing, Iran
supported a terrorist attack carried out by Hezbollah on a housing complex in Saudi Arabia
known as the Khobar Towers. A truck bomb close to the building detonated, destroying much
of the eight-story structure. At the time, the Khobar Towers were housing U.S. military forces
who were part of the Coalition forces monitoring Iraqi implementation of UN Security Council
resolution 688 (1991) by enforcing a no-fly zone over southern Iraq. The bombing killed 19
U.S. service personnel. A four-year investigation by the U.S. Federal Bureau of Investigation
concluded that Iran provided key support for the attack.
5.35 In a civil case brought by a surviving U.S. Air Force service member, Paul Blais,
who suffered severe brain trauma as a result of the attack, the U.S. court found that the attack
had been:
72 Id. at 9-10 (U.S. Annex 38).
73 Id. (U.S. Annex 38). The court noted that “even at its inception during the 1982–83 period, Hezbollah was
provided $50 million or more by Iran; as Dr. Tefft noted, ‘economically Hezbollah would not have existed or been
able to be formed without the Iranian financial support.’” Id.
74 Id. (U.S. Annex 38).
75 Id. at 10 (U.S. Annex 38).
31
[c]arried out by individuals recruited principally by a senior
official of the IRGC [i.e., the Islamic Revolutionary Guard
Corps], Brigadier General Ahmed Sharifi. Sharifi, who was the
operational commander, planned the operation and recruited
individuals for the operation at the Iranian embassy in
Damascus, Syria. . . . The truck bomb was assembled at a
terrorist base in the Bekaa Valley which was jointly operated by
the IRGC and by the terrorist organization known as Hezbollah.
The individuals recruited to carry out the bombing referred to
themselves as ‘Saudi Hezbollah,’ and they drove the truck bomb
from its assembly point in the Bekaa Valley to Dhahran, Saudi
Arabia.76
5.36 The court also determined that the Khobar Towers attack was:
[a]pproved by Ayatollah Khameini, the Supreme leader of Iran
at the time. It was also approved and supported by the Iranian
Minister of Intelligence and Security (“MOIS”) at the time, Ali
Fallahian, who was involved in providing intelligence security
support for the operation. Fallahian’s representative in
Damascus, a man named Nurani, also provided support for the
operation.77
5.37 In reaching this determination, the court cited testimony from Louis Freeh, then-
Director of the Federal Bureau of Investigation (FBI), who oversaw the U.S. investigation into
the attack, which included more than 250 FBI agents, leading to an indictment by a grand jury
that outlined “direction and assistance from Iranian government officials” provided to the
individuals responsible for the attack.78
5.38 Dale Watson, the deputy counterterrorism chief of the FBI at the time of the attack,
also gave “sworn testimony that information uncovered in the investigation, ‘clearly pointed to
the fact that there was Iran MOIS and IRGC involvement in the bombing.’” Expert witness
Dr. Tefft testified that there was “no question” that the attack “wouldn’t have happened without
Iranian support.”79
5.39 In another civil case brought by the families of victims of the attack, Heiser v. Islamic
Republic of Iran, the court concluded that
[t]he totality of the evidence at trial, combined with the findings
and conclusions entered by this Court in [the case brought by
76 Blais v. Islamic Republic of Iran, 459 F. Supp. 2d 40, 48 (D.D.C. 2006) (U.S. Annex 40).
77 Id. (U.S. Annex 40).
78 Id. (U.S. Annex 40).
79 Id. (U.S. Annex40).
32
Paul Blais], firmly establishes that ‘the Khobar Towers bombing
was planned, funded, and sponsored by senior leadership in the
government of the Islamic Republic of Iran; the IRGC had the
responsibility and worked with Saudi Hizbollah to execute the
plan, and the MOIS participated in the planning and funding of
the attack.80
5.40 In reaching this decision, the court considered the fact that captured Hezbollah agents
questioned by the FBI were able to detail the role of Iranian intelligence and military officials
in providing money, explosives, and weapons.81 During the hearing, the court also heard
testimony from FBI Director Freeh, who testified and summarized the statements of the
suspects with regard to Iranian involvement in the plot as follows:
The information we learned based on those interviews was that
the attack was organized and sponsored by the [Islamic
Revolutionary Guard Corps], which is one of the Iranian
intelligence and security services, and that there was
participation in the planning, in the funding of that attack by the
MOIS, which is the Ministry of Intelligence and Security, as well
as senior elements of the government that they provided the
funding, they provided the training, they provided the travel, as
well as the other support that was necessary to organize the
attack.82
5.41 Director Freeh further testified that “several of the witnesses . . . told us that they
would prepare surveillance reports of Khobar Towers and send those to IRGC officials for their
review.”83 He also provided a breakdown of the roles of various parts of the Iranian
government in planning and carrying out the bombing.
The target selection and the authorization to conduct the attack,
based on this witness’s descriptions, was an agreed-upon course
of action by civilian members of the government, senior
members of the Iranian government, as well as the leadership of
the IRGC and the MOIS.
So the authorization to proceed, the selection of the targets, was
done collectively by all three elements. The actual preparation
80 Heiser v. Islamic Republican of Iran, 466 F. Supp. 2d 229, 265 (D.D.C. 2006) (U.S. Annex 41). As the court
noted, “[t]he truck bomb was assembled at a terrorist base in the Bekaa Valley which was jointly operated by the
IRGC and by the terrorist organization known as Hezbollah. The individuals recruited to carry out the bombing
referred to themselves as ‘Saudi Hezbollah,’ and they drove the truck bomb from its assembly point in the Bekaa
Valley to Dhahran, Saudi Arabia.” Id. at 252.
81 Id. at 261-62 (U.S. Annex 41).
82 Transcript of Trial at 14:3-11, Heiser v. Islamic Republic of Iran, Nos. 00-2329, 01-2104 (D.D.C. Dec. 18,
2003) (U.S. Annex 42).
83 Id. at 24:9-20 (U.S. Annex 42).
33
and carrying out of the attack, according to the witness, was a
function that was delegated to the IRGC.84
5.42 Later in his testimony, the court asked Director Freeh whether “any of the six
individuals implicate[d] any person or entity other than a senior Iranian official, an official of
the MOIS, or an official of the IRGC.” Director Freeh answered: “No, they did not.”85 Asked
by the court about the reliability of these suspects’ statements, Director Freeh testified that the
suspects’ statements were consistent with admissions previously made to Saudi authorities, and
corroborated each other. Freeh also noted that the FBI was able to corroborate many of the
statements themselves through other evidence.86
5.43 The court also heard testimony from expert witness Patrick Clawson, who testified
as to the importance of Iranian support to the individuals implicated in the Khobar Towers
attack. In addition, the court considered the testimony of Dr. Tefft in the case brought by Paul
Blais, that the bombing would not have happened without Iranian support.87
iii. Other Acts Targeted Against the United States and Its Nationals
5.44 Iran’s support for terrorism and terrorist organizations is not limited to the Beirut and
Khobar Towers bombings. It has led to numerous other attacks that have killed or injured large
numbers of U.S. nationals.88 As discussed in subsection (a) below, Iran has utilized proxies
like Hezbollah to carry out other violent acts including kidnappings and assassinations of U.S.
government officials, university personnel, journalists and other U.S. citizens, as well as
hijackings of U.S. airlines. In addition, as discussed in subsection (b) below, Iran has facilitated
the planning of many attacks targeting U.S. facilities, personnel, or territory that have
fortunately been thwarted by U.S. and foreign authorities. All of these acts are further evidence
of Iran’s use of terrorism as a foreign policy tool, specifically with respect to the United States.
84 Id. at 25:10-18 (U.S. Annex 42).
85 Id. at 30:2-5 (U.S. Annex 42).
86 Id. at 21:7-22:14 (U.S. Annex 42).
87 Heiser, 466 F. Supp. 2d at 254 (U.S. Annex 41) (quoting Blais, 459 F. Supp. 2d at 49).
88 See, e.g., Weinstein v. Islamic Republic of Iran, 184 F. Supp. 2d 13 (D.D.C. 2002) (U.S. Annex 53) (attack on
a bus in Jerusalem); Stern v. Islamic Republic of Iran, 271 F. Supp. 2d 286, 289 (D.D.C. 2003) (U.S. Annex 54)
(attack on a market in Jerusalem); Owens v. Republic of Sudan, 826 F. Supp. 2d 128, 139 (D.D.C. 2011) (U.S.
Annex 52) (bombings at the U.S. embassies in Nairobi, Kenya and Dar es Salaam, Tanzania).
34
(a) Kidnappings, Assassinations, and Aircraft Hijackings
5.45 With Iran’s support, during the period between 1982 and 1989, Hezbollah kidnapped
dozens of foreign hostages. The victims included both U.S. government personnel and other
U.S. citizens. These victims were tortured and held for months, or even years, before being
either released, or executed.
5.46 Among the U.S. victims was William Buckley, the CIA station chief in Beirut.
Buckley was abducted on March 16, 1984. Following his abduction, three videos were released
by his captors showing Buckley being subjected to torture. Puncture wounds and Buckley’s
behavior showed that he had been drugged. U.S. intelligence believed “that he would be
blindfolded and chained at the ankles and wrists and kept in a cell little bigger than a coffin.”89
In the final video Buckley’s appearance was described as follows: “Buckley was close to a
gibbering wretch. His words were often incoherent; he slobbered and drooled and, most
unnerving of all, he would suddenly scream in terror, his eyes rolling helplessly and his body
shaking.”90 Buckley’s dead body was found dumped near the Beirut airport in December 1991,
over seven years after his abduction.91
5.47 U.S. Marine Lt. Col. Richard Higgins, a military observer with the UN Truce
Supervision Organization in Lebanon, was abducted on February 17, 1988. Following his
abduction, the Security Council adopted resolution 618 (1988) calling for his immediate
release.92 A year later, Higgins’ captors released videotape images showing Higgins’ dead
body, hanged by the neck and badly beaten.93
5.48 Other U.S. victims included Father Lawrence Jenco who, while serving as director
of Catholic Relief Services in Beirut, was abducted on January 8, 1985, and not released until
18 months later on July 26, 1986.94 While held captive, Father Jenco was chained, beaten, and
89 Gordon Thomas, “William Buckley: The Spy who never came in from the cold,” Canada Free Press, Oct. 25,
2006 (U.S. Annex 43).
90 Id. (U.S. Annex 43).
91 See Marilyn Raschka, “Body Dumped in Beirut Identified as Buckley’s: Hostage: Former senior CIA official,
kidnapped in 1984, was reported slain in 1985,” L.A. Times, Dec. 28, 1991 (U.S. P.O. Annex 51).
92 See S.C. Res. 618, U.N. Doc. S/RES/618 (July 29, 1988) (U.S. P.O. Annex 52).
93 See Timothy McNulty, “FBI: Higgins Most Likely Is Hanged Man,” Chicago Tribune, Aug. 8, 1989 (U.S. P.O.
Annex 53).
94 Jenco v. Islamic Republic of Iran, 154 F. Supp. 2d 27, 31 (D.D.C. 2001) (U.S. Annex 44).
35
almost constantly blindfolded.95 His access to toilet facilities was limited, if permitted at all.96
He also suffered psychological torture – his captors would hold a gun to his head that he
believed to be loaded and pull the trigger, only then revealing that it had no bullets, or fool him
into believing he was about to be released.97 Terry Anderson, a U.S. journalist, was abducted
on March 16, 1985, and only released over six years later on December 4, 1991.98
5.49 In the course of the court cases brought by victims and their families for these acts,
the courts heard expert testimony establishing Iran’s complicity in these kidnappings. Former
ambassador Robert Oakley, who served in Beirut and went on to become the Director of the
State Department Office for Combatting Terrorism, and a leading National Security Council
adviser on terrorism issues, testified that “radical elements highly placed within the government
of Iran [were] giving operational policy advice to terrorists in Iran, specifically terrorists
operating under the name Islamic Jihad or Hesbollah.”99 A former U.S. National Security
Advisor on Middle East affairs also testified that Hezbollah was a “terrorist group . . . formed
in the early 1980s under the sponsorship of the government of Iran” and included “Iranian
personnel.”100 The court summarized the testimony of Terry Anderson, one of the victims,
regarding Iran’s involvement as follows:
Anderson himself could identify them as such, based upon his
intimate familiarity with the warring factions in Lebanon during
the 1980s. He had observed, prior to his captivity, Iranian troops
in uniform training Hezbollah recruits in the Bekaa Valley [in
eastern Lebanon]. The mullahs who directed Hezbollah
operations, Anderson knew, had received their religious
instruction in Iran. While imprisoned, Anderson was once
visited by an Iranian national who formally identified himself to
Anderson as the liaison between Hezbollah and Iran. Anderson
also became aware, at one point, that his place of confinement at
the moment was a sub-basement of barracks occupied by troops
of the Iranian Revolutionary Guard.101
95 Id. at 29 (U.S. Annex 44).
96 Id. (U.S. Annex 44).
97 Id. (U.S. Annex 44).
98 See Chris Hedges, “The Last U.S. Hostage; Anderson, Last U.S. Hostage, Is Freed By Captors in Beirut,” N.Y.
Times, Dec. 5, 1991 (U.S. P.O. Annex 54).
99 Jenco, 154 F. Supp. 2d at 31 (U.S. Annex 44).
100 Id. (U.S. Annex 44).
101 Anderson v. Islamic Republic of Iran, 90 F. Supp. 2d 107, 112 (D.D.C. 2000) (U.S. Annex 45).
36
5.50 Ambassador Oakley also testified and identified the Iranian Ministry of Information
and Security as responsible for causing the seizure of hostages in Lebanon by Hezbollah.102
5.51 Hezbollah, with support from Iran, was also responsible for the June 1985 hijacking
of a flight operated by Trans World Airlines (TWA), a U.S.-based airline. Thirty-nine
passengers were held hostage for seventeen days. One passenger, U.S. Navy diver Robert
Stehem, was murdered.103
5.52 Iran’s support for these acts came from the very highest levels of its government. In
1989, then-Majlis Speaker, subsequently President, Rafsanjani called for hijacking airplanes
and blowing up factories in Western countries: “Now they will start saying that so and so, as a
man in charge, and as the speaker of parliament has officially called for acts of terror . . . . But
let them say it . . . . Aren’t they saying it now?”104 In the same speech, Rafsanjani called for
the killing of Americans and other Westerners saying: “It is not hard to kill Americans or
Frenchmen. It is a bit difficult to [kill] Israelis. But there are so many [Americans and
Frenchmen] everywhere in the world.”105
5.53 Consistent with these statements, on October 23, 1990, a U.S. citizen, Cyrus Elahi, a
former university professor and dissident of the Iranian regime, was assassinated in Paris.106
A number of those involved in the assassination were arrested, interrogated, tried, and
convicted in a criminal proceeding in France. In the course of the French criminal proceeding,
“[i]ndividuals implicated in the killing of Cyrus Elahi confirmed, under oath, to French
authorities that [Iranian Minister of Intelligence and head of MOIS Ayatollah] Fallahian was
involved in ordering the killings of Iranian dissidents in Paris.”107 The criminal process in
France also established that Elahi’s assassination was “organized and executed by Iranian
government officials.”108 Witnesses included co-conspirators and a high-ranking Iranian
102 Id. (U.S. Annex 45).
103 See U.S. DEP’T OF DEFENSE, TERRORIST GROUP PROFILES 17 (1988) (U.S. P.O. Annex 19); Frontline, “Target
America,” program #2001 transcript, Oct. 4, 2001, at 10-12 (U.S. P.O. Annex 57).
104 “Majlis Speaker Urges Attacks on U.S. Citizens,” Tehran IRNA, in Foreign Broadcast Information Service
Daily Rep., FBIS-NES-89-086, at 45-46 (May 5, 1989) (U.S. P.O. Annex 77).
105 Id. (U.S. P.O. Annex 77).
106 Elahi v. Islamic Republic of Iran, 124 F. Supp. 2d 97, 99 (D.D.C. 2000) (U.S. Annex 46).
107 Id. at 101 (U.S. Annex 46).
108 Id. at 105 (U.S. Annex 46); Court of Cassation, Criminal Div. [Cour de Cassation], Judgment of July 9, 1998.
No. 9783.612 (denying appeal) (U.S. Annex 47).
37
defector who had been detained by German authorities.109 Two Iranian nationals ultimately
were tried before the Cour d’assises de Paris (Paris Court of Assize) and, in September 1996,
convicted of conspiracy to commit terrorist acts, including Elahi’s assassination.110 French
appellate courts subsequently upheld their convictions, confirming evidentiary findings that
defendants met with “members of Iranian intelligence agencies.”111 Drawing on this and other
evidence, the U.S. court, consistent with the French court judgment, concluded that “the murder
of Cyrus Elahi was perpetrated by agents of MOIS acting at the direction of, and in furtherance
of the policies of, the Islamic Republic of Iran.”112
(b) Thwarted Attacks
5.54 Beyond the attacks that Iran and its proxies have successfully carried out, Iran has
also supported a number of attacks targeting U.S. personnel and institutions that were disrupted
by U.S. and foreign authorities before they could be carried out. While these thwarted attacks
did not cause the suffering and death that resulted from the attacks described in the preceding
section, they are equally compelling as evidence of Iran’s continued commitment to terrorism
as an element of its foreign policy.
5.55 For example, in 1997, the Supreme Court of Azerbaijan found a group of Azerbaijan
citizens guilty, inter alia, of having cooperated with Iranian officials in “prepar[ing] programs
to sabotage American and Israeli institutions operating in Azerbaijan” and overthrowing the
Government of Azerbaijan.113 The court recounted a detailed scheme between approximately
1994 and 1996, by which the defendants, pursuant to agreements with high-ranking Iranian
officials, gathered information to pass to Iran, including of strategically important places such
as sketches and maps of airports and the number of prisoners in detention centers.114
After reviewing all the evidence on this case the collegium of the
court has concluded that [the defendants], being citizens of
Azerbaijan Republic had made agreements in advance with
109 Elahi, 124 F. Supp. 2d at 105 (U.S. Annex 46).
110 Id. (U.S. Annex 46).
111 Court of Cassation, Criminal Div. [Cour de Cassation], Judgment of July 9, 1998. No. 9783.612 (denying
appeal) (U.S. Annex 47); see also Elahi, 124 F. Supp. 2d at 105 (U.S. Annex 46).
112 Elahi, 124 F. Supp. 2d at 107-08 (U.S. Annex 46).
113 Supreme Court of Azerbaijan Judgment, Case No. 63, at 2 (Apr. 14, 1997) (U.S. P.O. Annex 69).
114 Id. at 7 (U.S. P.O. Annex 69).
38
members of the special services organizations of the Islamic
Republic of Iran, doing criminal activities with them.115
5.56 In 2012, Kenyan authorities arrested and convicted two Iranian nationals identified
as members of the IRGC-Qods Force (the “IRGC-QF”) in connection with explosives
stockpiled for a suspected terrorist attack against U.S., Saudi, and British targets in Kenya, as
well as Israel’s ambassador to Kenya.116 Iran recently recalled its ambassador in March 2019
after the Kenyan Supreme Court overturned a court of appeal decision and confirmed the
convictions of the two Iranians.117 Iran has also been in the process of setting up a network of
terror cells in Africa to attack U.S. and other Western targets. The new terror network is
reportedly being established on the orders of Qassem Suleimani, head of the IRGC-QF.118
5.57 Also thwarted were Iran’s supported planned acts of terrorism on U.S. soil. For
example, in 2011 and 2012, the United States convicted four individuals on terrorism charges
for their involvement in a 2007 plot tied to Iran to commit a terrorist attack at the John F.
Kennedy International Airport in New York City by exploding fuel tanks and a fuel pipeline
under the airport.119 The conspirators were arrested on their way to Iran to meet with contacts
there, including Mohsen Rabbani, a former Iranian government official who was also indicted
for his role in 1994 AMIA bombing discussed in Section A above.120
5.58 Also in 2011, officials in the Iranian military, including the IRGC-QF, were
implicated in a conspiracy to assassinate the ambassador of Saudi Arabia to the United States.
115 Id. at 18 (U.S. P.O. Annex 69). Iran again attempted to target U.S. facilities in Azerbaijan in 2012. At that
time, the Azerbaijani national security ministry announced the arrest of 22 individuals on suspicion of plotting
attacks on the U.S. embassy in Baku on behalf of Iran. “Azerbaijan arrests 22 alleged Iran backed attack plotters,”
Al Arabiya News, Mar. 14, 2012 (U.S. P.O. Annex 72).
116 “In Kenya, two Iranians get life in prison for plotting attacks,” L.A. Times, May 6, 2013 (U.S. P.O. Annex 43);
Cyrus Ombati, “Iranians’ 30-bomb plot in Kenya,” The Standard, July 4, 2012 (U.S. P.O. Annex 44); “Iranians
planned to assassinate Israeli ambassador,” YNet, Aug. 17, 2012 (U.S. Annex 48).
117 “Supreme Court overturns decision to free two Iranian terror suspects,” Capital News, Mar. 15, 2019 (U.S.
Annex 49); “Iran recalls ambassador to Kenya over court case involving two Iranians,” Reuters, Mar. 17, 2019
(U.S. Annex 50).
118 “Tehran sets up terror cells in Africa as Western sanctions bite,” The Telegraph, June 24, 2019 (U.S. Annex
51).
119 Federal Bureau of Investigation Press Release, “Russell Defreitas Sentenced to Life in Prison for Conspiring
to Commit Terrorist Attack at JFK Airport” (Feb. 17, 2011) (U.S. P.O. Annex 45); See Federal Bureau of
Investigation Press Release, “Kareem Ibrahim Sentenced to Life in Prison for Conspiring to Commit Terrorist
Attack at JFK Airport” (Jan. 13, 2012) (U.S. P.O. Annex 46).
120 Press Release, Federal Bureau of Investigation, Kareem Ibrahim Sentenced to Life in Prison for Conspiring to
Commit Terrorist Attack at JFK Airport (Jan. 13, 2012) (U.S. P.O. Annex 46).
39
In 2012, an Iranian-U.S. dual national, Manssor Arbabsiar, pleaded guilty to participating in
the plot. In the plea agreement signed by the defendant, he admitted that:
From the spring of 2011 to the fall of 2011, Manssor Arbabsiar
and his co-conspirators, officials in the Iranian military who
were based in Iran (the “co-conspirators”), agreed to cause the
assassination of the Ambassador of Saudi Arabia to the United
States (the “Ambassador”), while the Ambassador was in the
United States.
Acting at the direction of his co-conspirators and in furtherance
of this agreement, Arbabsiar traveled internationally to Mexico
on several occasions, including from Iran, in order to· arrange
the assassination of the Ambassador. These trips occurred in
May, June, July and September of 2011. In Mexico, Arbabsiar
met with a person (“the Individual”) who claimed to be a
representative of a sophisticated and violent Latin American
drug cartel that had access to military-grade weaponry. With the
approval of Arbabsiar’s co-conspirators, Arbabsiar arranged to
hire the Individual and his criminal associates to murder the
Ambassador, while the Ambassador was in the United States.
Arbabsiar agreed to pay $1.5 million to the Individual.121
5.59 Arbabsiar further admitted that he:
[D]iscussed with the Individual a plan for the Individual and his
criminal associates to travel to Washington, D.C. to murder the
Ambassador at a restaurant there. The plan was subsequently
approved by Arbabsiar' s co-conspirators.122
5.60 Arbabsiar then:
[A]rranged for a $100,000 payment, in two installments, to be
wired to the Individual at a U.S. bank account, as a downpayment
for the anticipated murder of the Ambassador.
Arbabsiar’s co-conspirators approved this payment, which was
made via wire transfers to a U.S. bank account that passed
through Manhattan, New York.123
5.61 Additionally, Arbabsiar “met several times in Iran with Gholam Shakuri . . . a coconspirator
and Iran-based member of the Qods Force, and another senior Qods Force official.”
121 Letter from Preet Bharara, U.S. Attorney for the Southern District of New York, to Sabrina Shroff re: United
States v. Manssor Arbabsiar, S1 11 Cr 897 (JFK), Plea Agreement of Manssor Arbabsiar, at 7 (Oct. 17, 2012)
(U.S. P.O. Annex 62).
122 Id. (U.S. P.O. Annex 62).
123 Id. (U.S. P.O. Annex 62); see also Press Release, U.S. Dep’t of Justice, Man Pleads Guilty in New York to
Conspiring with Iranian Military Officials to Assassinate Saudi Arabian Ambassador to the United States (Oct.
17, 2012) (U.S. P.O. Annex 61).
40
According to Arbabsiar, “the plan was to blow up a restaurant in the United States frequented
by the Ambassador and that numerous bystanders would be killed. The plan was approved by
these Iranian officials.124
5.62 Following his arrest, Arbabsiar made monitored phone calls at the direction of law
enforcement to IRGC-QF member Gholam Shakuri in Iran.
During these calls, Shakuri confirmed that Arbabsiar should
move forward with the plot to murder the Ambassador and that
he should accomplish the task as quickly as possible, stating on
Oct. 5, 2011, “[j]ust do it quickly, it’s late . . .” Shakuri also told
Arbabsiar that he would consult with his superiors about whether
they would be willing to pay CS-1 additional money. Shakuri,
who was also charged in the plot, remains at large.125
5.63 In the aftermath, the Council of the League of Arab States “express[ed] its
condemnation and rejection of the criminal Iranian attempt,”126 and the United Kingdom’s
Foreign Secretary observed that “[t]he assassination plot appears to constitute a[n] escalation
in Iran’s sponsorship of terrorism outside its borders.”127 The EU imposed sanctions on five
individuals, including the head of the IRGC-QF.128 In addition, the UN General Assembly
adopted a resolution calling upon Iran “to comply with all of its obligations under international
law, including the Convention on the Prevention and Punishment of Crimes against
Internationally Protected Persons, including Diplomatic Agents.”129
* * * *
5.64 As the incidents detailed above make clear, Iran has for decades targeted the United
States and its nationals. Iran has targeted U.S. military forces in Lebanon, Saudi Arabia, and
124 Press Release, U.S. Dep’t of Justice, Manssor Arbabsiar Sentenced in New York City Federal Court to 25
Years in Prison for Conspiring with Iranian Military Officials to Assassinate the Saudi Arabian Ambassador to
the United States (May 30, 2013) (U.S. Annex 222).
125 Id. (U.S. Annex 222).
126 Letter addressed to the Secretary-General and the President of the Security Council, Statement issued by the
Council of the League of Arab States, U.N. Doc. S/2011/640 (Oct. 17, 2011) (U.S. P.O. Annex 63).
127 U.K. Foreign & Commonwealth Office Announcement, “Foreign Secretary welcomes EU sanctions following
assassination plot in the US” (Oct. 21, 2011) (U.S. P.O. Annex 64); see also Letter from the Permanent
Representative of Saudi Arabia to United Nations addressed to the Secretary-General, U.N. Doc. A/66/553 (Nov.
14, 2011) (U.S. P.O. Annex 65); Letter from the Secretary General addressed to the President of the General
Assembly and the President of the Security Council, U.N. Doc. A/66/517, S/2011/649 (Oct. 19, 2011) (U.S. P.O.
Annex 66).
128 EU-U.S. Summit joint statement, Memo/11/842 (Nov. 28, 2011) (U.S. P.O. Annex 67).
129 G.A. Res. 66/12, ¶ 5, U.N. Doc. A/RES/66/12 (Nov. 18, 2011) (U.S. P.O. Annex 68).
41
elsewhere. It has conspired to facilitate attacks on U.S. institutions around the world. Iran’s
sponsorship of terrorist attacks targeting the United States continues to the present day.
5.65 As is addressed in Chapter 6 below, in response to Iran’s conduct, the United States
adopted a series of measures allowing those claiming to be victims of this conduct to bring
proceedings, inter alia, against Iran to enable those claims to be tested and, if upheld, to allow
compensation to be awarded. As is addressed in Chapters 8 and 18 below, the direct link
between Iran’s conduct targeting the United States and its nationals underpins the U.S.
contention that Iran comes to the Court with unclean hands or, in the alternative, Iran’s claims
constitute an abuse of right that precludes Iran from pursuing the remedy that it seeks.
CHAPTER 6: U.S.MEASURES WERE TAKEN AS A RESULT OF IRAN’S SPONSORSHIP OF
TERRORISM AND OTHER ACTIONS THREATENING U.S. NATIONAL SECURITY
6.1 The United States has taken a range of measured actions over the years in an effort
to counteract and deter Iran’s sponsorship of terrorism and other conduct that threatens U.S.
national security described above (e.g., with respect to nuclear non-proliferation, ballistic
missiles, and arms trafficking). The United States has taken these actions in a careful and
peaceful way, utilizing tools that the United States deploys to counteract and deter similar
conduct by other State actors.
6.2 Many of the U.S. measures at issue in this case have aimed to ensure that U.S. victims
of Iranian-sponsored terrorism are able to pursue litigation, and enforce judgments, against Iran
and Iranian owned entities in pursuit of compensation for their injuries. The United Nations
has recognized the importance of providing victims of terrorism with access to justice and
redress mechanisms, as provided under applicable domestic law.130 Consistent with the United
States’ legal framework, which regularly affords injured parties the opportunity to bring civil
suits to hold liable those responsible for their injuries and obtain compensation, the United
States has put in place measures to allow victims of terrorism to bring civil litigation against
130 G.A. Res. 73/305, PP 9, ¶ 13, U.N. Doc. A/RES/73/305 (July 2, 2019) (U.S. Annex 56) (calling upon Member
States to respect the dignity and legal rights of victims of terrorism, as provided for in domestic law, in gaining
access to justice); see also “Revised Guidelines of the Committee of Ministers of the Council of Europe on the
protection of victims of terrorist acts,” Sections VII and VIII (May 19, 2017) (U.S. Annex 57) (“VII. Effective
access to the law and to justice. States must provide effective access to the law and to justice for victims by
providing the right of access to competent courts in order to bring a civil action in support of their rights, including
legal assistance and interpretation as required to this end. VIII. Compensation. 1. Victims should receive fair,
appropriate and timely compensation for the damages which they suffered. When compensation is not available
from other sources, in particular through the confiscation of the property of the perpetrators, organisers and
sponsors of terrorist acts, the State on the territory of which the terrorist act happened should contribute to the
compensation of victims for direct physical or psychological harm, irrespective of nationality.”).
42
those who have perpetrated and sponsored the terrorist acts. As described below, the U.S.
measures at issue in this case reflect reasonable efforts by the U.S. Government to ensure that
victims of terrorism are not unduly burdened in their efforts to seek justice and compensation
against terrorist actors and their state sponsors.
Section A: Iran’s Designation as a State Sponsor of Terrorism and
Designation of Iranian Financial Institutions under
Executive Order 13599
6.3 Since 1979, provisions of U.S. law have authorized the Secretary of State to
determine that “the government of [a] country has repeatedly provided support for acts of
international terrorism.”131 Such determinations result in a foreign state being designated as a
“state sponsor of terrorism.” In determining whether a foreign government has repeatedly
provided support for acts of international terrorism, the U.S. Government is guided by a number
of sources, including other provisions of U.S. law. For example, for purposes of certain annual
terrorism reporting by the Department of State, “international terrorism” is defined to mean
“terrorism involving the citizens or the territory of more than 1 country.”132 The term
“terrorism” is in turn defined to mean “premeditated, politically motivated violence perpetrated
against noncombatant targets by subnational groups or clandestine agents.”133 In accordance
with applicable law, multiple states have been designated as state sponsors of terrorism.
Currently, in addition to Iran, other states also designated as state sponsors of terrorism are
Syria, Sudan, and the Democratic People’s Republic of Korea.134
6.4 Designating a foreign state as a state sponsor of terrorism in accordance with
provisions of U.S. law only occurs after careful deliberation within the U.S. Government.
These determinations must be made public in the Federal Register.135 Updated information on
the activities of state sponsors of terrorism is included in the “Country Reports on Terrorism,”
an annual statutorily-mandated report produced by the U.S. Department of State.136 U.S. law
131 Section 620A(a) of the Foreign Assistance Act of 1961, as amended (P.L. 87-195, 22 U.S.C. § 2371(a)) (U.S.
Annex 58); Section 40(d) of the Arms Export Control Act, as amended (P.L. 90-629; 22 U.S.C. 2780(d)) (U.S.
Annex 59); Section 1754(c)(1) of the Export Controls Act of 2018 (title XVII of the John S. McCain National
Defense Authorization Act for Fiscal Year 2019; P.L. 115-232; 50 U.S.C. 4813(c)(1)) (U.S. Annex 60).
132 22 U.S.C. § 2656f(d)(1) (U.S. Annex 61).
133 22 U.S.C. § 2656f(d)(2) (U.S. Annex 61).
134 See U.S. DEP’T OF STATE, COUNTRY REPORTS ON TERRORISM 2017 at 217-220 (U.S. Annex 62).
135 22 U.S.C. § 2371(b) (U.S. Annex 58); 22 U.S.C. § 2780(e) (U.S. Annex 59); 50 U.S.C. 4813(c)(3) (U.S.
Annex 60).
136 22 U.S.C. § 2656f (U.S. Annex 61).
43
imposes a range of sanctions and restrictions on designated state sponsors of terrorism,
including restrictions on U.S. foreign assistance; a ban on defense exports and sales; and certain
controls over exports of dual use items.137 Of particular relevance to these proceedings, under
the Foreign Sovereign Immunities Act (“FSIA”) specified parties may bring civil claims in
U.S. courts against state sponsors of terrorism for personal injury or death that “was caused by
an act of torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of
material support or resources for such an act if such act or provision of material support or
resources is engaged in by an official, employee, or agent of such foreign state while acting
within the scope of his or her office, employment, or agency.”138
6.5 While the consequences of a state sponsor of terrorism designation are appropriately
significant, the United States is able to take account of a foreign state’s cessation of support for
international terrorism. U.S. law provides two possible paths for rescinding the designation of
a foreign state as a state sponsor of terrorism. The first possible option is that the President of
the United States submits a report to Congress before the proposed rescission would take effect
certifying that (1) there has been a fundamental change in the leadership and policies of the
government of the country concerned; (2) that government is not supporting acts of
international terrorism; and (3) that government has provided assurances that it will not support
acts of international terrorism in the future.139 The second possible option requires the
President to submit a report to Congress at least 45 days before the proposed rescission would
take effect justifying the rescission and certifying that (1) the government concerned has not
provided any support for acts of international terrorism during the preceding 6-month period;
and (2) the government concerned has provided assurances that it will not support acts of
international terrorism in the future.140 The United States has utilized these mechanisms to
rescind the designations of other state sponsors of terrorism upon determining that the statutory
requirements for rescission, including a cessation of support for acts of international terrorism,
were satisfied.141 In addition, where foreign states cease support for acts of international
137 See U.S. DEP’T OF STATE, COUNTRY REPORTS ON TERRORISM 2017 at 217 (U.S. Annex 62).
138 22 U.S.C. § 1605A(a)(1) (IM Annex 15). Courts may hear claims under this section if the foreign state was
designated as a state sponsor of terrorism at the time of the relevant act or was designated as a state sponsor of
terrorism as a result of such act, and if the foreign state either remains so designated when the claim is filed or
was so designated within the 6-month period before the claim is filed. Id. § 1605A(a)(2).
139 50 U.S.C. § 4813(c)(4)(A) (U.S. Annex 60).
140 50 U.S.C. § 4813(c)(4)(B) (U.S. Annex 60).
141 For example, Cuba’s designation was rescinded in 2015 (Rescission of Determination Regarding Cuba, 80
Fed. Reg. 31945 (June 4, 2015)) (U.S. Annex 63); Libya’s designation was rescinded in 2006 (Rescission of
Determination Regarding Libya, 71 Fed. Reg. 39696 (July 13, 2006)) (U.S. Annex 64); and Iraq’s designation
44
terrorism, the United States has utilized various mechanisms to address outstanding claims
against the foreign state.142
6.6 In January 1984, following the Beirut Marine barracks bombing, Secretary of State
George Schultz determined that “Iran is a country which has repeatedly provided support for
acts of international terrorism.”143 Iran has remained designated as a state sponsor of terrorism
since that time for its continued terrorist-related activity as detailed above. Each year, the
Country Reports on Terrorism detail Iran’s ongoing support for international terrorism. For
example, the 2017 Country Reports on Terrorism notes that Iran:
continued its terrorist-related activity in 2017, including support
for Lebanese Hizballah (LH), Palestinian terrorist groups in
Gaza, and various groups in Syria, Iraq, and throughout the
Middle East. Iran used the Islamic Revolutionary Guard Corps-
Qods Force (IRGC-QF) to provide support to terrorist
organizations, provide cover for associated covert operations,
and create instability in the Middle East. Iran has acknowledged
the involvement of the IRGC-QF in both of the conflicts in Iraq
and Syria, and the IRGC-QF is Iran’s primary mechanism for
cultivating and supporting terrorists abroad.144
As a result, Iran remains designated as a state sponsor of terrorism.
6.7 The United States has taken steps to combat the financing of terrorist acts, including
specific measures to counter the financing of terrorism by Iran and other state sponsors of
terrorism. In 1977, Congress enacted the International Emergency Economic Powers Act
(“IEEPA”) which authorizes the President to take broad-ranging action against the financial
assets and transactions of designated individuals and entities determined to pose an “unusual
and extraordinary threat” to the national security of the United States.145 The United States has
was rescinded in 2004 (Rescission of Determination Regarding Iraq, 69 Fed. Reg. 61702 (Oct. 20, 2004)) (U.S.
Annex 65).
142 See Libyan Claims Resolution Act (P.L. 110-301) (U.S. Annex 66) and Executive Order No. 13477, 73 Fed.
Reg. 65965 (Oct. 31 2008) (U.S. Annex 67) (noting that a comprehensive settlement of terrorism-related claims
by U.S. nationals against Libya was part of the process of restoring normal relations between Libya and the United
States); Determination of the President of the United States, No. 2008-09 (Jan. 28, 2008) (U.S. Annex 68)
(determining that Iraq was a partner in combating acts of international terrorism).
143 Determination Pursuant to Section 6(i) of the Export Administration Act of 1979 – Iran, 49 Fed. Reg. 2836
(Jan. 23, 1984) (IM Annex 21) (U.S. PO Annex 127). The Export Administration Act of 1979 was repealed by
the Export Controls Act of 2018. Section 1768 of the Export Controls Act of 2018 continues any state sponsor of
terrorism determination made under the Export Administration Act of 1979, which includes the designation of
Iran.
144 U.S. DEP’T OF STATE, COUNTRY REPORTS ON TERRORISM 2017 at 218 (U.S. Annex 62).
145 50 U.S.C. §§ 1701, 1702 (U.S. Annex 70).
45
relied on this provision of law to impose financial sanctions on foreign persons that support or
otherwise associate with these foreign terrorists.146
6.8 With respect to Iran, the U.S. Department of the Treasury found in 2011 that Iran was
a jurisdiction of primary money laundering concern based on “a growing body of public
information about [Iranian banks’] illicit and deceptive conduct designed to facilitate the
Iranian government’s support for terrorism and its pursuit of nuclear and ballistic missile
capabilities.”147 In the wake of these concerns and “particularly in light of the deceptive
practices of the Central Bank of Iran and other Iranian banks to conceal transactions of
sanctioned parties,” in 2012 President Obama issued Executive Order 13599 blocking all
property and interests in property of the Government of Iran, including the Central Bank of
Iran, and of Iranian financial institutions, where such assets are subject to U.S. jurisdiction.”148
Thus, in light of the concerns that Iranian financial institutions, including Bank Markazi, were
engaged in deceptive conduct to facilitate Iran’s support of terrorism and other conduct
threatening U.S. national security, the United States blocked assets of those financial
institutions subject to U.S. jurisdiction.
Section B: Efforts to Provide Redress for Victims of Terrorism
6.9 Because victims of terrorism have faced particular challenges in obtaining
compensation from states that have sponsored acts of terrorism that brought death or injury to
the victims, the United States has enacted laws designed to facilitate the ability of these victims
to sue state sponsors of terrorism and enforce any resulting civil judgments.149 These measures,
while generally not unique to Iran, are particularly appropriate in light of Iran’s support for acts
of terrorism targeting U.S. nationals and interests, its unwillingness to provide redress for
terrorism victims, and its efforts to avoid enforcement of valid judgments holding Iran liable
for its support of acts of terrorism.
6.10 Congress enacted a series of laws that sought to ensure that victims of terrorism were
not unduly prejudiced in their efforts to obtain and enforce valid court judgments against
146 Executive Order 13224, 66 Fed. Reg. 49077 (Sept, 23, 2001) (U.S. P.O. Annex 134).
147 Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756, 72757 (Nov. 18, 2011) (U.S. P.O. Annex 152). See U.S. Preliminary Objections ¶ 4.11.
148 Exec. Order 13599, 77 Fed. Reg. 6659 (Feb. 5, 2012) (IM Annex 22). For further discussion of Executive
Order 13599, see Chapter 11.
149 See In re Islamic Republic of Iran Terrorism Litig., 659 F. Supp. 2d 31, 45-46 (D.D.C. 2009) (U.S. Annex 73)
(noting that victims efforts to enforce judgments against state sponsors of terrorism were “a long, bitter, and often
futile quest for justice”).
46
terrorist actors, including state sponsors of terrorism. A number of the measures detailed in
Iran’s Memorial pertain to the grant of jurisdiction to U.S. courts over civil suits brought
against state sponsors of terrorism and liability of those states for their conduct. These
measures include adding to the FSIA a terrorism-related exception to sovereign immunity for
state sponsors of terrorism, an express cause of action for personal injury or death caused by
terrorist acts for which the state lacks immunity, and allowing for money damages (including
punitive damages) against states liable for personal injury or death.150 Iran’s claims with
respect to those provisions were predicated on Iran’s arguments concerning sovereign
immunity and are therefore no longer before the Court. Iran’s remaining claims before the
Court principally concern the following measures taken by Congress to facilitate the
enforcement of terrorism-related judgments.
6.11 Section 201(a) of the Terrorism Risk Insurance Act of 2002 (TRIA). Following
earlier attempts to facilitate enforcement of judgments against state sponsors of terrorism, in
2002 Congress enacted TRIA. Section 201(a) of TRIA provides:
Notwithstanding any other provision of law, and except as
provided in subsection (b), in every case in which a person has
obtained a judgment against a terrorist party on a claim based on
an act of terrorism, or for which a terrorist party is not immune
under [FSIA exceptions for state sponsors of terrorism], the
blocked assets of that terrorist party (including the blocked assets
of any agency or instrumentality of that terrorist party) shall be
subject to execution or attachment in the aid of execution in order
to satisfy such judgment to the extent of any compensatory
damages for which such terrorist party has been adjudged
liable.151
6.12 This provision of TRIA specifically permits the attachment and execution of
terrorism judgments for compensatory damages against the assets of a state sponsor of
terrorism, including those of its agencies and instrumentalities, which have been blocked
pursuant to a sanctions regime.
6.13 Section 1610(g) of the FSIA (2008). Congress also sought to address the barriers
that victims faced in holding government instrumentalities liable for the debts of their foreign
150 Iran Memorial, ¶¶ 2.4-2.8, 2.20-2.26.
151 U.S. Terrorism Risk Insurance Act of 2002, § 201(a), Pub. L. No. 107-297, 116 Stat. 2322 (2002) (IM Annex
13). “Blocked assets” under TRIA as originally enacted included “any asset seized or frozen by the United States”
under the authority of relevant sections of the Trading With the Enemy Act or International Emergency Economic
Powers Act. Id. § 201(d)(2).
47
sovereign owners.152 As originally enacted in 1976, the FSIA did not address attachment of
state agency and instrumentality property to satisfy judgments against the foreign state. In the
absence of a statutory provision, but “guided by the policies articulated by Congress in enacting
the FSIA,” the Supreme Court concluded that, in litigation permitted by the FSIA, “duly created
instrumentalities of a foreign state are to be accorded a presumption of independent status.”153
That rule, referred to as the “Bancec presumption,” recognized that under certain situations the
presumption could be overcome, with the Supreme Court explicitly declaring that “[w]e decline
to adhere blindly to the corporate form where doing so would cause such an injustice.”154 U.S.
jurisprudence developed five “Bancec factors” to be considered in determining whether the
presumption has been overcome in any given case. Yet, in the absence of further statutory
direction from Congress, lower courts were reluctant to enforce terrorism judgments against
the property of instrumentalities of state sponsors of terrorism, even where it was
acknowledged that it might be unjust that the corporate form prevented victims of a terrorist
attack from collecting on such judgments.155 With state sponsors of terrorism able to protect
their assets by placing them within agencies or instrumentalities (even though State-owned),
members of the U.S. Congress expressed concern that in the context of terrorism cases “the
misapplication of the ‘Bancec doctrine,’ . . . has in the past erroneously protected the assets of
terrorist states from attachment or collection.”156
6.14 Addressing these concerns about the enforcement of terrorism-related judgments,
Congress amended the FSIA in the National Defense Authorization Act for Fiscal Year 2008
(“2008 NDAA”). Section 1610(g) of the FSIA, as added by the 2008 NDAA, provides:
[T]he property of a foreign state against which a judgment is
entered under [FSIA exceptions for state sponsors of terrorism],
and the property of an agency or instrumentality of such a state,
including property that is a separate juridical entity or is an
interest held directly or indirectly in a separate juridical entity, is
152 First Nat. City Bank v. Banco Para el Comercio Exterior de Cuba, 462 U.S. 611, 626-627 (1983) (U.S. Annex
141) (“Bancec”).
153 Bancec, 462 U.S. at 627 (U.S. Annex 141). Notably, the Supreme Court’s reliance on the FSIA’s legislative
history in Bancec in reaching the conclusion signaled the Court’s view that Congress may identify circumstances
in which the separate corporate form of a foreign state’s agency or instrumentality will not be recognized.
154 Id. at 633 (U.S. Annex 141).
155 See Alejandre v. Telefonica Larga Distancia de Puerto Rico, Inc., 183 F.3d 1277, 1282 (11th Cir. 1999) (U.S.
Annex 71) (overturning a district court decision, which had allowed for garnishment against a state
instrumentality’s assets in aid of execution of a judgment against the Cuban government to avoid “unjustly
prevent[ing] the plaintiffs from collecting their judgment”).
156 154 Cong. Rec. S55 (Jan. 22, 2008) (Statement of Sen. Lautenberg) (U.S. Annex 72).
48
subject to attachment in aid of execution, upon that judgment as
provided in this section, regardless of –
(A) the level of economic control over the property by the
government of the foreign state;
(B) whether the profits of the property go to that government;
(C) the degree to which officials of that government manage that
property or otherwise control its daily affairs;
(D) whether that government is the sole beneficiary in interest of
the property; or
(E) whether establishing the property as a separate entity would
entitle the foreign state to benefits in United States courts while
avoiding its obligations.157
6.15 In this provision, the Congress determined that the Bancec factors will not apply in
enforcing a terrorism-related judgment against assets of a foreign state’s agencies and
instrumentalities and thereby intended to “subject any property interest in which the foreign
state enjoys a beneficial ownership” to attachment and execution.158 As such, section 1610(g)
of the FSIA is best understood as a rule concerning when the assets of a terrorist state’s wholly
owned agency or instrumentality are subject to execution to pay terrorism-related judgments
against that state. However, it does not displace the role of the judiciary in determining who
has a beneficial ownership interest in the assets in question and accounting for equitable
considerations.”159
6.16 Section 502 of the Iran Threat Reduction and Syria Human Rights Act of 2012.
Finally, Section 502 of the Iran Threat Reduction and Syria Human Rights Act of 2012 reflects
another effort by Congress to facilitate justice for a certain group of terrorism victims.160 That
provision, codified at 22 U.S.C. § 8772, identifies certain “financial assets” in which the
Central Bank of Iran has a security entitlement and which were the subject of post-judgment
enforcement proceedings in the United States District Court for the Southern District of New
157 U.S. National Defense Authorization Act for Fiscal Year 2008, § 1083(b)(3)(D), Pub. L. No. 110-181, 122
Stat. 206 (2008) (IM Annex 15).
158 H.R. Rep. No. 110-477, at 1001 (2007) (U.S. Annex 74).
159 The U.S. Supreme Court has also held that 28 U.S.C. 1610(g) does not provide a freestanding basis for parties
holding a judgment under Section 1605A to attach and execute against the property of a foreign state. Rubin v.
Islamic Republic of Iran, 138 S. Ct. 816 (2018) (U.S. Annex 75).
160 U.S. Iran Threat Reduction and Syria Human Rights Act of 2012, § 502, Pub. L. No. 112-158, 126 Stat. 1214
(2012) (codified at 22 U.S.C. § 8772 (2012)) (IM Annex 16).
49
York in Peterson v. Islamic Republic of Iran at the time the provision was enacted. The law
makes those assets “subject to execution or attachment in aid of execution in order to satisfy”
certain terrorism-related judgments against Iran, provided that the assets are (1) “held in the
United States for a foreign securities intermediary doing business in the United States,” (2)
blocked assets, and (3) “equal in value to a financial asset” held abroad by the financial
securities intermediary on behalf of the Central Bank of Iran.161 In this regard, this provision,
much like the provisions discussed above, codifies a rule that permits terrorism victims who
hold judgments against Iran to execute those judgments against assets owned by an Iranian
agency. As the U.S. District Court for the Southern District of New York noted in subsequent
litigation, this provision of law did not require turnover of the assets identified, but instead left
the determination to the courts as to whether to turn over the assets.162 Specifically, under this
provision, U.S. courts were required to “make determinations regarding (1) whether and to
what extent Iran has a beneficial or equitable interest in the assets at issue, and (2) whether
constitutionally-protected interest holders other than Iran are present.”163 The Court further
explained that “[t]hese determinations are not mere fig leaves; it is quite possible that the Court
could have found that defendants raised a triable issue as to whether the Blocked Assets were
owned by Iran, or that [other parties] have some form of beneficial or equitable interest.”164
Section C: Judicial Decisions Related to the Execution of Terrorism-
Related Judgments
6.17 U.S. courts have carefully considered the above provisions of U.S. law designed to
facilitate execution of terrorism-related judgments by victims of Iranian-sponsored terrorism.
Although Iran has refused to appear in U.S. courts to contest the claims made against it, under
U.S. law a default judgment may not be entered by a U.S. court against a foreign state unless
the claimant establishes his claim by evidence satisfactory to the court.165 In a number of cases,
victims of terrorism have been able to establish their claims with satisfactory evidence, thus
resulting in adverse judgments against Iran.
161 Id. § 502(a)(1) (IM Annex 16).
162 Peterson v. Islamic Republic of Iran, 2013 WL 1155576, at *31 (S.D.N.Y. Mar. 13, 2013) (U.S. Annex 108).
163 Id. (U.S. Annex 108).
164 Id. (U.S. Annex 108).
165 28 U.S.C. § 1608(e) (IM Annex 6) (“No judgment by default shall be entered by a court of the United States .
. . against a foreign state . . . unless the claimant establishes his claim or right to relief by evidence satisfactory to
the court.”).
50
6.18 This case does not concern the validity of the terrorism-related judgments against
Iran, since the Court dismissed on jurisdictional grounds Iran’s claims based on its inability to
invoke sovereign immunity in those cases. Iran’s remaining claims before the Court instead
concern efforts to enforce those judgments, and specifically efforts to enforce those judgments
against Iranian state-owned entities. Iran and Iranian state entities have, through deceptive
practices designed to conceal the nature of financial transactions occurring in the United States,
complicated legitimate enforcement efforts to enforce terrorism judgments. As a result,
terrorist victims holding judgments, utilizing the provisions of U.S. law described above, have
sought to enforce those judgments not only against Iran, but also against entities owned or
controlled by Iran. Even still, given the difficulties in executing these judgments, the vast
majority of compensatory damages awarded to victims of Iranian-sponsored terrorism remain
unpaid.
6.19 Judicial proceedings related to the enforcement of terrorism-related judgments
against Iran have been vigorously litigated and carefully considered by United States District
Courts, Courts of Appeal, and the Supreme Court. In determining whether assets are subject
to execution under section 201 of TRIA and section 1610 of the FSIA, U.S. courts examine
whether Iran, or its agencies and instrumentalities, have an ownership interest in the assets in
question. The proceedings to enforce the judgment in Peterson illustrate the deliberate
approach, based in fact and law, applied by U.S. courts over the course of many years when
considering attachment of assets in satisfaction of these terrorism judgments.
6.20 The Peterson case pertains to the 1983 U.S. Marine barracks bombing which killed
241 U.S. service members and gravely wounded many others. The U.S. District Court’s
findings on liability in this case are addressed in detail in Chapter 5.B. After examining the
extensive evidence and determining the appropriate amount of damages available under local
law, the court in 2007 awarded $2.6 billion in compensatory damages to more than eight
hundred plaintiffs in Peterson.166
6.21 Among efforts by the Peterson plaintiffs to enforce this judgment, plaintiffs
commenced judicial proceedings in 2008 to restrain 22 debt securities and related cash held by
Citibank in an omnibus account for its customer Clearstream Banking, S.A. in which Iran was
166 Judgment, Peterson v. Islamic Republic of Iran, Nos. 01-2094, 01-2684 (D.D.C. Sep. 7, 2007), ECF No. 228
(U.S. Annex 76); Memorandum Opinion, Peterson v. Islamic Republic of Iran, Nos. 01-2094, 01-2684 (D.D.C.
Sep. 7, 2007), ECF No. 229 (U.S. Annex 77).
51
alleged to have an interest.167 In 2010, plaintiffs initiated proceedings to obtain turnover of
these restrained assets, totaling approximately $1.75 billion, in which Bank Markazi held a
beneficial interest. Other victims of terrorism holding judgments against Iran similarly asserted
claims on these assets. As a result, the Peterson judicial proceedings concerning the turnover
of $1.75 billion in Bank Markazi assets involved not just victims of the Beirut Marine barracks
attack, but sixteen groups of judgment creditors totaling more than 1,300 American victims of
Iranian-sponsored terrorist attacks, who collectively held billions of dollars in unpaid
compensatory damages judgments against Iran.168
6.22 Over the course of the next three years, Bank Markazi and other litigants “vigorously
litigated” the turnover of these assets, raising issues of state, federal and international law to
oppose the turnover of the assets at issue.169 While these judicial proceedings were ongoing,
Congress enacted the Iran Threat Reduction and Syria Human Rights Act of 2012, which
included 22 U.S.C. § 8772 as discussed above. In 2013, the U.S. District Court for the Southern
District of New York ordered turnover of the assets based on both section 201(a) of TRIA as
well as 22 U.S.C. § 8772.170 The U.S. Court of Appeals for the Second Circuit affirmed based
on 22 U.S.C. § 8772.171 On April 20, 2016, the U.S. Supreme Court affirmed the Second
Circuit’s decision.172 Acknowledging that 22 U.S.C. § 8772 was an “unusual statute,” the
Supreme Court noted that “[t]he statute, we point out, is not fairly portrayed as a ‘one-caseonly
regime.’ Rather, it covers a category of postjudgment execution claims filed by numerous
plaintiffs who, in multiple civil actions, obtained evidence-based judgments against Iran
together amounting to billions of dollars. Section 8772 subjects the designated assets to
execution ‘to satisfy any judgment’ against Iran for damages caused by specified acts of
terrorism.”173
167 Order Entering Partial Final Judgment Pursuant to Fed. R. Civ. P. 54(b), Directing Turnover of the Blocked
Assets, Dismissal of Citibank with Prejudice and Discharging Citibank from Liability, Peterson v. Islamic
Republic of Iran, No. 10-4518 (S.D.N.Y. July 9, 2013), ECF No. 462 (U.S. Annex 78). After an initial hearing
on June 27, 2008, the district court issued an order vacating the restraint on two of the securities.
168 Bank Markazi v. Peterson, 136 S. Ct. 1310, slip op. at 6 (Apr. 20, 2016) (IM Annex 66).
169 Peterson v. Islamic Republic of Iran, No. 10-4518, 2013 WL 1155576, at *3 (S.D.N.Y. Mar. 13, 2013) (U.S.
Annex 108). Notably, as discussed further in Chapter 9, the arguments advanced by Iran in this proceeding,
particularly with respect to the nature of the transactions at issue and the status of Bank Markazi, are directly
contrary to those advanced by Bank Markazi in the Peterson litigation.
170 Id. (U.S. Annex 108).
171 Peterson v. Islamic Republic of Iran, 758 F.3d 185 (2d Cir. 2014) (U.S. Annex 233).
172 Bank Markazi v. Peterson, 136 S. Ct. 1310, slip op. at 1-2 (Apr. 20, 2016) (IM Annex 66).
173 Id. (citations omitted) (IM Annex 66).
52
6.23 Subsequent to the Supreme Court’s decision, on June 6, 2016 the U.S. District Court
for the Southern District of New York authorized the distribution of the assets to the multiple
plaintiffs who were party to this turnover action.174 Because over 16 groups of judgment
creditors were party to the proceedings, the Peterson judgment holders still have outstanding
judgments against Iran for hundreds of millions of dollars in compensatory damages. Although
the U.S. measures at issue in this case have sought to facilitate the efforts of victims of terrorism
to obtain compensation from Iran, these victims have only been able to recover from Iran a
fraction of what U.S. courts have lawfully awarded in compensatory damages.
* * * *
6.24 The measures that Iran has challenged are a reasonable response to Iran’s sponsorship
of terrorist attacks and its unwillingness to compensate the victims of those attacks. These
measures have been carefully interpreted and applied by U.S. courts, in an impartial judicial
forum in which the terrorism victims and their families, on the one hand, and the subjects of
the enforcement action, on the other, have been afforded a full opportunity to present their
arguments and evidence.
PART III: THE COURT SHOULD REJECT IRAN’S CLAIMS
CHAPTER 7: INTRODUCTION
7.1 Against the backdrop addressed in the preceding chapters, Part III of the Counter-
Memorial sets out four defenses that each require the dismissal of some or all of Iran’s claims
as a threshold matter, i.e., before turning to the detail of Iran’s article-by-article claims under
the Treaty. Three of these defenses are carried over from the preliminary objections phase of
the case, one which the Court joined to the proceedings on the merits (the “company” issue in
respect of Bank Markazi), and the other two (unclean hands and Article XX) which the Court
concluded were available to the United States as defenses on the merits, rather than at the
preliminary stage. The fourth ground advanced in this Part is an objection to admissibility,
namely, the failure to exhaust local remedies.
7.2 Building on the immediate factual context of this case addressed in Chapter 5 above,
Chapter 8 establishes that, as a result of the numerous acts of terrorism it has sponsored during
the past four decades, Iran has come to the Court with unclean hands. Even if Iran’s claims
174 Order Authorizing Distribution of Funds, Peterson v. Islamic Republic of Iran, No. 10-4518 (S.D.N.Y. June 6,
2016), ECF No. 651 (U.S. Annex 79).
53
have merit – which they do not, as is addressed in Part IV of this Counter-Memorial – Iran’s
unclean hands preclude it from obtaining any of the relief it has requested.
7.3 Chapter 9 picks up the issue left over from the preliminary objections phase that Bank
Markazi is not a “company” within the meaning of the Treaty and, accordingly, that it is not
entitled to protection under any of the Treaty articles on which Iran relies. Accordingly, the
entirety of Iran’s claims with respect to the alleged mistreatment of Bank Markazi as a company
under Articles III, IV, and V of the Treaty should be dismissed.
7.4 Chapter 10 sets forth an objection to admissibility with respect to claims that Iran is
pursuing on behalf of entities that it has not shown have exhausted local remedies.
7.5 Finally, Chapter 11 demonstrates that one of the measures Iran has challenged,
Executive Order 13599, both regulates the “traffic in arms” and is “necessary to protect [the
United States’] essential security interests.” Executive Order 13599 is therefore excluded from
the scope of the Treaty’s substantive articles by Article XX(1), and Iran’s claims with respect
to this measure must accordingly be rejected.
CHAPTER 8: IRAN COMES TO THE COURT WITH UNCLEAN HANDS
Section A: Introduction and Overview
8.1 Since the 1979 Islamic Revolution, Iran has engaged in a concerted and consistent
campaign to advance its own political interests through destabilizing acts, contrary to
international law. As discussed in Chapter 5, terrorism has been – and continues to be – a core
component of that campaign, operating as an “adjunct” of Iranian foreign policy.175 U.S.
nationals have been among its principal targets and casualties. This is most starkly illustrated
by the deaths of 241 U.S. servicemen in the 1983 Beirut Marine barracks bombings, for which
Iran both contemporaneously claimed responsibility and was found, on the evidence, to be
liable in the Peterson and other proceedings before U.S. courts.176
8.2 The U.S. measures that Iran seeks to challenge under the narrow auspices of the
Treaty of Amity arose directly out of the Iranian-sponsored terrorist attacks perpetrated against
U.S. nationals. Through considered, measured and incremental legislative and executive
acts,177 the United States provided a forum for the victims of those attacks to seek the redress
175 Parliamentary Human Rights Group, Iran: State of Terror, An account of terrorist assassinations by Iranian
agents 5 (1996) (U.S. Annex 4).
176 See Chapter 5.B.
177 See Chapter 6.
54
to which they were entitled. That forum was impartial and fair, requiring plaintiffs to prove
their claims and protecting Iran’s fair trial rights where it elected not to appear itself. Iran now
seeks to avoid the payment of the consequent reparation owing to its many victims by invoking
the Treaty of Amity.
8.3 The Court should reject Iran’s invocation of the Treaty pursuant to the doctrine of
unclean hands, which is ripe for recognition and application by the Court in this case and at
this time, given the exceptional facts before it. While Iran’s global terrorist campaign provides
the background against which the Court should view Iran’s conduct, it is the elements of that
campaign that have a direct connection to the United States and its nationals that are the
foundation of the United States’ defense of unclean hands. Put simply, Iran cannot be permitted
to cloak itself in the Treaty of Amity in the hope of shielding itself from the consequences of
its support for terrorism.
8.4 Following the Court’s Preliminary Objections Judgment, and in light of that
judgment, the United States now advances Iran’s unclean hands as a defense on the merits,
rather than as an objection to admissibility. The United States asks that the Court reject Iran’s
claims on the basis that the U.S. measures that Iran challenges are a response to Iraniansupported
terrorist acts directed at the United States and its nationals.
Section B: The Scope and Application of the Doctrine of Unclean Hands
8.5 The United States acknowledges that the Court has not previously applied the
doctrine of unclean hands. It also acknowledges that some doubt has been expressed about the
doctrine’s scope and status.178 The doctrine of unclean hands is, however, extensively applied
by international and domestic tribunals and its application is warranted by the Court in the
particular circumstances of this case.
8.6 The starting point for the analysis is that the principle of good faith, which is widely
accepted and applied by the Court,179 is a cornerstone of international law and treaty
178 Occasioned, in part, by a misinterpretation of this Court’s jurisprudence. See Guyana v. Suriname, 30 R.I.A.A.
1, ¶ 418 (Perm. Ct. Arb. 2007) (U.S. Annex 80); Hulley Enterprises (Cyprus) Limited v. Russia, UNCITRAL,
PCA Case No. AA 226, Final Award ¶¶ 1358-1359 (Jul. 18, 2014) (U.S. Annex 81).
179 See, e.g., Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v. Nigeria), 1998 I.C.J.
275, 296, ¶ 38 (June 11) (“the principle of good faith is a well-established principle of international law”); Nuclear
Tests (Australia v. France), 1974 I.C.J. 253, ¶ 49 (Dec. 20) and Nuclear Tests (New Zealand v. France), 1974
I.C.J. 457, ¶ 46 (Dec. 20) (“one of the basic principles governing the creation and performance of legal
obligations”). See also Rights of Nationals of the United States of America in Morocco (France v. United States
of America), 1952 I.C.J. 176, 212 (Aug. 27) (rights “must be exercised reasonably and in good faith”).
55
interpretation. The Court has also confirmed that “the legal concept of equity is a general
principle directly applicable as law.”180
8.7 The equitable doctrine of unclean hands flows from the twin principles of good faith
and equity. The doctrine has its origins in Roman law181 and in aspects of Chinese customary
law.182 It has found more recent expression in common law systems, in particular in the
equitable maxim that “he who comes to equity must come with clean hands.”183 Civil law
systems today apply it as part of the principle of abus de droit and related principles.184 It is
closely related to the maxim ex turpi causa non oritur actio (“an unlawful act cannot form the
basis of an action in law”) and nullus commodum capere potest de sua injuria propria (“a party
cannot benefit from its own wrong”), the former of which has been recognized by Members of
the Court,185 and the latter of which has been applied by the Court.186
8.8 In essence, the doctrine of unclean hands affords the Court discretion, exercisable on
the basis of considerations of equity and good faith, to deny a party’s request for relief where
that party has engaged in serious misconduct or wrongdoing that has a sufficiently close
connection to the relief sought.
180 Continental Shelf (Tunisia/Libyan Arab Jamahiriya), 1982 I.C.J. 18, 60, ¶ 71 (Feb. 24).
181 STEPHEN M. SCHWEBEL, Clean Hands, Principle, in 2 MAX PLANCK ENCYCLOPEDIA OF PUBLIC
INTERNATIONAL LAW 232 (R􀁘􀡇 diger Wolfrum ed., 2012) (U.S. Annex 82); see also Diversion of Water from the
Meuse, 1937 P.C.I.J. (ser. A/B) No. 70, at 77 (Individual Opinion of Judge Hudson) (Jun. 28).
182 See R. A. NEWMAN, EQUITY AND LAW: ACOMPARATIVE STUDY 250 n.19 (1961) (U.S. Annex 83).
183 See, e.g., SNELL’S EQUITY ¶ 5-010 (33rd ed. 2018) (U.S. Annex 84).
184 See Chapter 18 for discussion of the codification of the prohibition of abuse of rights in civil law systems. The
concept of unclean hands is also reflected in several civil law systems insofar as a right to restitution is barred on
the basis of claimant misconduct: see, e.g., Swiss Civil Code of Obligations of Mar. 30, 1911 (as at Apr. 1, 1907),
Article 66 (U.S. Annex 85); Bürgerliches Gesetzbuch (BGB) (German Civil Code) § 817 (U.S. Annex 86). See
also R. A. NEWMAN, EQUITY AND LAW: ACOMPARATIVE STUDY 250 n.19 (1961) (U.S. Annex 83).
185 Legal Status of Eastern Greenland (Denmark v. Norway), 1933 P.C.I.J. (ser. A/B) No. 53, at 95, ¶ 308
(Dissenting Opinion of Judge Anzilotti) (Apr. 5) (“This claim should, in my view, be rejected, for an unlawful act
cannot serve as the basis of an action in law”). See also BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED
BY INTERNATIONAL COURTS AND TRIBUNALS 149 (1953) (“A State may not invoke its own illegal act to diminish
its own liability”) (U.S. Annex 87).
186 Factory at Chorzów (Germany v. Poland), 1927 P.C.I.J. (ser. A) No. 9, at 31 (July 26). See also Jurisdiction
of the Courts of Danzig 1928 P.C.I.J (ser. B) No. 15, at 26-27 (Mar. 3); Interpretation of Peace Treaties with
Bulgaria, Hungary and Romania, 1950 I.C.J. 221, 244 (Dissenting Opinion of Judge Read) (Jul. 18); Admissibility
of Hearings of Petitioners by the Committee on South West Africa, 1956 I.C.J. 23, 46 (Separate Opinion of Sir
Hersch Lauterpacht) (June 1); Temple of Preah Vihear (Cambodia v. Thailand), 1962 I.C.J. 6, 40 (Separate
Opinion of Vice-President Alfaro) (Jun. 15); 􀀪􀁄􀁅􀃾􀁴􀁎􀁒􀁙􀁒-Nagymaros Project (Hungary v. Slovakia), 1997 I.C.J.
7, ¶¶ 110, 133 (Sep. 25). See also JAMES CRAWFORD, THE INTERNATIONAL LAW COMMISSION'S ARTICLES ON
STATE RESPONSIBILITY: INTRODUCTION, TEXT AND COMMENTARIES 162, ¶ 9 (2002) (where the rule that “a State
may not benefit from its own wrongful act” is described as a “general principle”) (U.S. Annex 88).
56
8.9 The acceptance of the doctrine by States appearing before the Court is clear from the
regular and repeated assertion of the defense. At least 13 different States have sought to rely
on it before the Court in a range of different contexts.187 While the Court has not previously
upheld a defense on this basis, it also has never rejected the doctrine as a matter of principle.
This is despite the Court having been invited to do so, including in the preliminary objections
phase of the present case. Rather, the Court has in previous cases concluded that it was
unnecessary to address the issue and rejected its application on the facts. That said, at least
four Members of the Court have accepted and applied the doctrine of unclean hands, albeit in
dissenting opinions.188 Both Judge Ajibola and Judge Hudson have also referred to the
187 An unclean hands-based objection or defense has been raised by Australia (see Certain Phosphate Lands in
Nauru (Nauru v. Australia) 1992 I.C.J. 240, ¶¶ 37-38 (June 26); Certain Phosphate Lands in Nauru, Preliminary
Objections of the Government of Australia 162-164 (Dec. 1990)); the United States (see LaGrand (Germany v.
United States of America), 2001 I.C.J. 466, ¶¶ 61-63 (June 27); Avena and Other Mexican Nationals (Mexico v.
United States of America), 2004 I.C.J. 12, ¶¶ 45-47 (Mar. 31); Oil Platforms (Islamic Republic of Iran v. United
States of America), Counter-Memorial and Counter-claim ¶¶ 5.01-5.07 (June 23, 1997); Oil Platforms (Islamic
Republic of Iran v. United States), 2003 I.C.J. 161, ¶¶ 27–30); Israel (Legal Consequences of the Construction of
a Wall in the Occupied Palestinian Territory, 2004 I.C.J. 136, ¶¶ 63–64 (July 24); Legal Consequences of the
Construction of a Wall in the Occupied Palestinian Territory, Written Statement of the Government of Israel on
Jurisdiction and Propriety, ¶ 0.7 (Jan. 30, 2004)); Kenya (Maritime Delimitation in the Indian Ocean (Somalia v.
Kenya), 2017 I.C.J. 3, ¶ 135-144 (Feb. 2)); and Pakistan (Jadhav Case (India v. Pakistan), 2019 I.C.J., ¶¶ 59-61;
Jadhav Case (India v. Pakistan), Counter-Memorial of the Islamic Republic of Pakistan ¶ 188ff (Apr. 17, 2018)).
The doctrine has also been raised by States in the following additional cases (where the doctrine was not directly
addressed by the Full Court): Belgium, the United States, the United Kingdom, Portugal, the Netherlands,
Germany and Canada in the Legality of Use of Force cases (see Legality of Use of Force (Yugoslavia v. Belgium),
Preliminary Objections of the Kingdom of Belgium ¶ 479ff (Jul. 5, 2000); Verbatim Record of the Public Sitting
of the I.C.J. Held on May 11, 1999, at 23, ¶ 3.17, Legality of Use of Force (Yugoslavia v. United States) (United
States argued that provisional measures would be inappropriate because Yugoslavia “does not come to the Court
with clean hands”); Verbatim Record of the Public Sitting of the I.C.J. Held on May 11, 1999, at 15-16, ¶ 24,
Legality of Use of Force (Serbia and Montenegro v. United Kingdom) (in which the United Kingdom argued that
the clean hands doctrine is “deeply rooted in the essential nature of the judicial function” and “should be regarded
as a ‘general principle of law’ within the meaning of Article 38 of the Statute”); Verbatim Record of the Public
Sitting of the I.C.J. Held on May 11, 1999, at 11, ¶ 3.1.4, Legality of Use of Force (Serbia and Montenegro v.
Portugal) (in which Portugal argued that “[b]earing in mind the ‘clean hands’ criterion, the request of the Federal
Republic of Yugoslavia is not legitimate” since the facts at the origin of Yugoslavia’s request were caused by
Yugoslavia’s “illicit conduct”); Verbatim Record of the Public Sitting of the I.C.J. Held on May 11, 1999, at 15-
16, ¶¶ 44, 48(d), Legality of Use of Force (Serbia and Montenegro v. Netherlands) (The Netherlands asserted the
Court should deny Yugoslavia’s request because of Yugoslavia’s “extremely dirty hands”); Verbatim Record of
the Public Sitting of the I.C.J. Held on May 11, 1999, at 10, ¶ 1.6, Legality of Use of Force (Serbia and Montenegro
v. Germany) (Germany argued that Yugoslavia “does not come to the Court with ‘clean hands’”); Verbatim
Record of the Public Sitting of the I.C.J. Held on May 10, 1999, at 7, ¶ 5, Legality of Use of Force (Serbia and
Montenegro v. Canada) (same for Canada); Greece (Application of Article 11(1) of the Interim Accord of 13
September 1995 (The Former Yugoslav Republic of Macedonia v. Greece), Counter-Memorial of Greece, ¶ 8.30
(Jan. 19, 2010)); and Nicaragua (Construction of a Road in Costa Rica along the San Juan River (Nicaragua v.
Costa Rica), Reply of the Republic of Nicaragua ¶¶ 6.85 and 6.92 (Aug. 4, 2014)).
188 United States Diplomatic and Consular Staff in Tehran (United States of America v. Islamic Republic of Iran),
1980 I.C.J. 3, 52 (Dissenting Opinion of Judge Morozov) (May 24); Military and Paramilitary Activities in
Nicaragua (Nicaragua v. United States of America), 1986 I.C.J. 14, ¶¶ 268-272 (Dissenting Opinion of Judge
Schwebel) (June 27); Arrest Warrant of 11 April 2000 (Democratic Republic of the Congo v. Belgium), 2002
I.C.J. 3, ¶ 35 (Dissenting opinion of Judge ad hoc Van den Wyngaert) (Feb. 14); Armed Activities on the Territory
of the Congo (Democratic Republic of the Congo v. Uganda), 2005 I.C.J. 168, ¶¶ 46 and 61 (Dissenting Opinion
of Judge ad hoc Kateka) (Dec. 19).
57
principle as it prevails in common law jurisdictions in separate opinions.189 Further, Judge
Iwasawa, in his recent consideration of the doctrine in the Jadhav case, did not reject the
doctrine, but instead identified limitations on its application.190
8.10 States’ practice of relying on the doctrine of unclean hands is also reflected in
international disputes addressed by other international fora. For example, States (including
Iran) have advanced this argument before international tribunals, in particular, the Iran-US
Claims Tribunal,191 Annex VII arbitration tribunals,192 inter-State claims commissions and
investor-State arbitration tribunals.193 As one illustration, in the Good Return and the Medea
case before the Ecuadorian-United States Claims Commission, Commissioner Hassaurek
declined to allow the claim on the basis of the rule that “[a] party who asks for redress must
189 Diversion of Water from the Meuse (Netherlands v. Belgium), 1937 P.C.I.J. (ser. A/B) No. 70, at 77 (Individual
Opinion of Judge Hudson) (Jun. 28) (“a court of equity refuses relief to a plaintiff whose conduct in regard to the
subject-matter of the litigation has been improper”) (citing 13 HALSBURY'S LAWS OF ENGLAND 87 (2nd ed. 1934));
Application of the Convention on the Prevention and Punishment of the Crime of Genocide (Bosnia and
Herzegovina v. Serbia and Montenegro), 1993 I.C.J. 325, 395 (Separate Opinion of Judge Ajibola) (Sep. 13)
(referring to the principle in common law jurisdictions that “an applicant who ‘wants equity must do equity’
implying that the applicant ‘must come with clean hands.’”).
190 See Jadhav Case (India v. Pakistan), 2019 I.C.J., Declaration of Judge Iwasawa ¶ 3.
191 Iran itself asserted that the doctrine was “supported by a vast and diverse body of international legal literature,
State practice and international case-law.” Aryeh v. Iran, Case Nos. 842, 843 & 844, Respondent’s Hearing
Memorial and Written Evidence, Vol. III, Exhibit C, at 44 (Mar. 23, 1993) (Doc. 80), (IRAN-U.S. CL. TRIB.) (U.S.
P.O. Annex 187). See also Mohtadi v. Iran, Case No. 271, Award No. 573-271-3 (Dec. 2, 1996), 32 IRAN-U.S.
CL. TRIB. REP. 124, 134 (U.S. P.O. Annex 188) (noting that Iran had raised clean hands as a reason to dismiss a
claim); Karubian v. Iran, Case No. 419, Award No. 569-419-2 (Mar. 6, 1996), 32 IRAN-U.S. CL. TRIB. REP. 3, 36
(U.S. P.O. Annex 189) (asserting that claims were barred by clean hands doctrine, among other things).
192 This was argued by Suriname in Guyana v. Suriname, 30 R.I.A.A. 1, ¶¶ 182-84 (Perm. Ct. Arb. 2007) (U.S.
Annex 80). Although the Tribunal declined to apply the doctrine, it did so on the basis of Judge Hudson’s limiting
factors, discussed further below. It did not decide whether the doctrine exists in international law. Id. ¶ 421.
193 The doctrine has been expressly invoked by at least eight States: Bangladesh in Niko Resources (Bangladesh)
Ltd v. People’s Republic of Bangladesh, ICSID Case No. ARB/10/11 and 10/18, Decision on Jurisdiction ¶ 476
(Aug. 19, 2013) (U.S. Annex 89); Russia in Hulley Enterprises (Cyprus) Limited v. Russia, UNCITRAL, PCA
Case No. AA 226, Final Award ¶¶ 1273 et seq. (July 18, 2014) (U.S. Annex 81); The Philippines in Fraport AG
Frankfurt Airport Services Worldwide v. Republic of the Philippines, ICSID Case No. ARB/11/12, Award ¶ 210
(Dec. 10, 2014) (where the Tribunal cited the doctrine with apparent approval at ¶ 328) (U.S. Annex 90);
Indonesia in Hesham Talaat M. Al-Warraq v. Republic of Indonesia, UNCITRAL, Final Award ¶¶ 161-164 (Dec.
15, 2014), with the Tribunal’s reliance on the doctrine recorded at ¶¶ 646-648 (U.S. Annex 91); Ecuador in
Copper Mesa Mining Corporation v. Republic of Ecuador, PCA Case No. 2012-2, Award ¶ 5.36 (Mar. 15, 2016)
(U.S. Annex 92); Venezuela in Rusoro Mining Ltd. v. Bolivarian Republic of Venezuela, ICSID Case No.
ARB(AF)/12/5, Award ¶¶ 491 et seq. (Aug. 22, 2016) (where it was “undisputed that claimants with ‘dirty
hands’ have no standing in investment arbitration”) (U.S. Annex 93); Italy in Blusun S.A v. Italian Republic,
ICSID Case No. ARB/14/3, Award ¶ 272 (Dec. 27, 2016) (U.S. Annex 94); and Bolivia in Glencore Finance
(Bermuda) Limited v. The Plurinational State of Bolivia, PCA Case No. 2016-39, Procedural Order No. 2
(Decision on Bifurcation), ¶ 45 (Jan. 31, 2018) (U.S. Annex 95). See also Plama Consortium Ltd. v Republic of
Bulgaria, ICSID Case No. ARB/03/24, Award ¶¶ 130-146 (Aug. 27, 2008) (U.S. Annex 96) (indirectly applying
the doctrine when addressing the issue of legality) and Gustav F W Hamester GmbH & Co KG v. Republic of
Ghana, ICSID Case No. ARB/07/24, Award ¶ 317 (June 18, 2010) (U.S. Annex 97) (where an investor’s “clean
hands” are cited by the Tribunal as a relevant consideration).
58
present himself with clean hands.”194 Equally, in the Frierdich case before the French-
Venezuelan Mixed Claims Commission, the Umpire dismissed the claim on the basis that the
company itself “was the primary and potent cause of its own misfortunes in connection with
[the] incident.” This led the Umpire to apply “one of the most important maxims of equity,
viz, ‘He who comes into equity must come with clean hands’.”195
8.11 Beyond international courts and tribunals, the doctrine of unclean hands is
extensively recognized and applied in domestic jurisdictions as an equitablemaxim. It operates
to bar relief where a claimant’s misconduct in regards to the subject matter of the litigation is
improper. For example, in the United States, the doctrine of unclean hands is “designed to
prevent the court from assisting in fraud or other inequitable conduct” and operates to “protect
the integrity of the court and the judicial process by denying relief to those persons whose very
presence before a court is the result of some fraud or iniquity.” 196 The application of this
equitable maxim has also been recognized in States such as the United Kingdom (the courts of
England & Wales),197 Australia,198 Canada,199 Pakistan200 and South Africa.201
8.12 The Court, like the domestic and international tribunals surveyed above, plainly has
the discretion to apply the doctrine of unclean hands in order to deny an applicant the ability to
employ the Court’s judicial process to vindicate a wrong of that party’s own making. The
United States accepts that the exercise of that discretion must encompass considerations of
justice and fairness, given that it is founded on an equitable maxim. The United States further
accepts that the Court’s discretion should not be exercised lightly. However, in exceptional
194 Good Return and the Medea, Opinion of the Commissioner Hassaurek, 29 R.I.A.A. 99, 107 (Aug. 8, 1865)
(U.S. Annex 98).
195 Frierdich & Co, Opinion of the Umpire, 10 R.I.A.A. 50, 54 (July 31, 1905) (U.S. Annex 99).
196 See, e.g., Gilead Sciences Inc. v. Merck & Co., Inc., 888 F.3d 1231, 1239-40 (Fed. Cir. 2018) (U.S. Annex
100).
197 See, e.g., Royal Bank of Scotland plc v. Highland Financial Partners LP [2013] EWCA Civ 328, ¶¶ 158-172
(Court of Appeal of England and Wales) (U.S. Annex 101). See also SNELL’S EQUITY ¶ 5-010 (33rd ed. 2018)
(U.S. Annex 84).
198 See, e.g., Official Trustee in Bankruptcy v. Tooheys Ltd (1993) 29 NSWLR 641 (Mar. 18, 1993) (New South
Wales Court of Appeal) (U.S. Annex 102).
199 See, e.g., Volkswagen Canada Inc. v. Access International Automotive Ltd [2001] 3 FC 311, ¶ 19 et seq. (Mar.
21, 2001) (Federal Court of Appeal) (U.S. Annex 103).
200 See, e.g., Société Générale de Surveillance SA v. Pakistan (Minister of Finance, Revenue Division and
Islamabad), Civil Appeal No 459/2002, ¶ 61 (Jul. 3, 2002) (Supreme Court of Pakistan) (U.S. Annex 104).
201 See, e.g., South Africa v. Mahala and Mahala, Determination of Jurisdiction, 1992 (2) SACR 305 (E), ¶ 32
(May 21, 1992) (High Court, Eastern Cape) (U.S. Annex 105).
59
cases, such as the present, where the applicant seeks to use the Court to shield its own
wrongdoing, it is appropriate that the Court deny the applicant’s request for relief.
Section C: The Circumstances in which the Doctrine May Be Applied
and Its Consequences
8.13 There are certain factors that the Court may use to guide its discretionary assessment
in identifying cases of an exceptional character that warrant application of the doctrine. These
factors include: first, whether there is a qualifying wrong or misconduct; second, whether the
wrong or misconduct was undertaken by or on behalf of the applicant State;202 third, whether
there is a nexus between the wrong or misconduct and the claims being made by the applicant
State;203 fourth, whether the wrong or misconduct is of sufficient gravity to render the Court’s
grant of the requested relief inequitable or improper; and fifth, whether there exists any
countervailing misconduct or wrong on the part of the respondent State that may cause the
Court to decline to exercise its discretion in favor of applying the doctrine.
8.14 At the preliminary objections phase of the case, there was some debate as to whether
the criteria set down in Judge Hudson’s individual opinion in the Diversion of Water from the
Meuse case204 are engaged by the doctrine of unclean hands. For the avoidance of any doubt,
they have no relevance to the doctrine of unclean hands, contrary to Iran’s (revised) position.205
202 See, e.g., Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, 2004 I.C.J.
136, ¶¶ 63–64 (Jul. 24).
203 The level of connection between the misconduct or wrong and the applicant’s claim will depend on the
circumstances of the case (including the relief sought by the respondent in relying on the doctrine). For example,
in cases where a declaration of inadmissibility is sought, it is necessary to establish a relationship between the
treaty on which the application is based and the misconduct or wrong in question. See Jadhav Case (India v.
Pakistan), 2019 I.C.J., Declaration of Judge Iwasawa, ¶ 3. See, more broadly, the nexus expressed in Frierdich
& Co, Opinion of the Umpire, 10 R.I.A.A. 50, 54 (July 31, 1905) (U.S. Annex 99) (where the company was the
“primary and potent cause of its own misfortunes” and was denied its requested relief on that basis); see also
Gerald G. Fitzmaurice, The General Principles of International Law Considered from the Standpoint of the Rule
of Law, 92 COLLECTED COURSES OF THE HAGUE ACADEMY OF INTERNATIONAL LAW 1, 119 (1957) (U.S. Annex
106).
204 Diversion of Water from the Meuse (Netherlands v. Belgium), 1937 P.C.I.J. (ser. A/B) No. 70, at 77 (Individual
Opinion of Judge Hudson) (Jun. 28) (“It would seem to be an important principle of equity that where two parties
have assumed an identical or a reciprocal obligation, one party which is engaged in a continuing non-performance
of that obligation should not be permitted to take advantage of a similar non-performance of that obligation by the
other party.”); see also id. at 78 (“[T]he Netherlands itself is now engaged in taking similar action, similar in fact
and similar in law. This seems to call for an application of the principle of equity stated above.”)
205 Preliminary Objections Judgment, ¶ 121, recording Iran’s argument that “it only applies when the claimant is
engaged in ‘precisely similar action, similar in fact and similar in law’ as that of which it complains” (mirroring
page 78 of Judge Hudson’s opinion). As Judge ad hoc Brower observed, Iran’s original position was that Judge
Hudson’s opinion did not address the doctrine of clean hands: see Preliminary Objections Judgment, Separate
Opinion of Judge ad hoc Brower, ¶ 4; Certain Iranian Assets, Iran’s Observations and Submissions on the U.S.
Preliminary Objections ¶ 8.8 (Sep. 1, 2017).
60
Instead, they relate to another maxim entirely, exceptio non adimpleti contractus,206 which is
not (and has never been) relied upon by the United States in this case. For this reason, the
decisions of those tribunals that have declined to apply the doctrine on the basis that the
conditions laid down in Judge Hudson’s Opinion have not been satisfied should be disregarded
by the Court, if and to the extent that Iran should seek to rely on them.207
8.15 As to the legal consequences of the successful application of the doctrine of unclean
hands, they are not circumscribed. Given its foundation in good faith and equity, the doctrine
should be applied in a manner that best meets the ends of justice, having regard to the particular
circumstances of the case and the factors set out above.
Section D: Iran’s Sponsorship of Terrorism against the United States
Engages the Doctrine of Unclean Hands
8.16 The crux of the United States’ defense of unclean hands is that Iran seeks to deploy
the Treaty of Amity to avoid the consequences of its own conduct, through the guise of
allegations of treaty breaches against the United States. Critically, those allegations concern
the steps that the United States has taken to mitigate the consequences of Iran’s wrongful acts.
8.17 As described in Chapter 5 above, Iran has, since 1979, engaged in conduct that
includes sponsorship of terrorist acts which were carried out against U.S. nationals and U.S.
interests and which led to the U.S. measures of which Iran now complains. Iran’s wider support
for and direction of terrorist acts, as well as assassinations, killings and airline hijackings, and
206 The principle that Judge Hudson was seeking to invoke in that case, and to which the conditions at the end of
page 77 of his judgment refer, is the exceptio non adimpleti contractus (i.e., the exception of non-performance of
a contract, which entitles a state to suspend performance and is codified in Article 60 of the Vienna Convention).
That the application of this principle is the proper characterization of his decision has been recognized by several
Members of the Court: see Military and Paramilitary Activities in Nicaragua (Nicaragua v. United States of
America), 1986 I.C.J. 14, ¶ 269 (Dissenting Opinion of Judge Schwebel) (June 27); Oil Platforms (Islamic
Republic of Iran v. United States), 1998 I.C.J. 190, 228 (Dissenting Opinion of Judge ad hoc Rigaux) (Mar. 10);
Application of the Interim Accord of 13 September 1995 (the former Yugoslav Republic of Macedonia v. Greece),
2011 I.C.J. 644, ¶ 16 (Separate Opinion of Judge Simma) (Dec. 5). See also JAMES CRAWFORD, THE
INTERNATIONAL LAW COMMISSION’S ARTICLES ON STATE RESPONSIBILITY: INTRODUCTION, TEXT AND
COMMENTARIES 162, ¶ 9 & n.337 (2002) (U.S. Annex 88). This is also how Judge Anzilotti characterized the
relevant principle to which Belgium’s submissions had given rise: see Diversion of Water from the Meuse
(Netherlands v. Belgium), 1937 P.C.I.J. (ser. A/B) No. 70, at 50 (Dissenting Opinion of Judge Anzilotti) (Jun. 28)
(“I am convinced that the principle underlying this submission (inadimplenti non est adimplendum) is so just, so
equitable, so universally recognized that it must be applied in international relations also. In any case, it is one of
these ‘general principles of law recognized by civilized nations’ which the Court applies . . . .”). Judge ad hoc
Brower also recognized in the present case that Judge Hudson “did not write specifically about the clean hands
doctrine.” See Preliminary Objections Judgment (Separate Opinion of Judge ad hoc Brower), ¶ 5.
207 See, e.g., Guyana v. Suriname, 30 R.I.A.A. 1, ¶¶ 420-421 (Perm. Ct. Arb. 2007) (U.S. Annex 80); Niko
Resources (Bangladesh) Ltd v. People’s Republic of Bangladesh, ICSID Case No. ARB/10/11 and 10/18, Decision
on Jurisdiction ¶¶ 476, 480-485 (Aug. 19, 2013) (U.S. Annex 89).
61
Iran’s violations of its ballistic missile and arms trafficking obligations provides background
and context to the Court’s assessment of Iran’s conduct.
8.18 There can be no doubt that Iran has sponsored a comprehensive program of terrorist
acts against the United States and its nationals, which has endured from 1983 until the present
day. As addressed above,208 Iran’s terrorist campaign has specifically targeted U.S. nationals
and U.S. facilities. This campaign is exemplified by the attack on the U.S. Marine barracks in
Beirut, causing the deaths of 241 U.S. servicemen, and the attack on Khobar Towers (the
residence on the U.S. military base in Dharan, Saudi Arabia), resulting in the deaths of 17 U.S.
servicemen.209 Both attacks were egregious in character and gave rise to the principal cases
that Iran invokes before the Court, namely the Peterson210 and Heiser cases.211 In both cases,
U.S. courts concluded, in reliance on extensive fact and expert testimony at trial212 and with
regard to the applicable U.S. legal principles, that Iran had knowingly sponsored and supported
the wrongful terrorist acts perpetrated against U.S. servicemen, which were deliberately and
callously targeted. Beyond these acts, the United States also relies on and invokes the broader
series of terrorist acts perpetrated against U.S. nationals to which it responded through U.S.
208 See Chapter 5.B.
209 See Chapter 5.B.
210 Iran relies on the Peterson case in its Memorial at ¶¶ 1.13, 1.27, 1.29, 2.39-2.43, 2.46, 2.58, 4.22, 4.35, 5.12,
5.14, 5.16, 5.45, 5.60 and 7.2 and at Attachment 2, lines 21, 23, 29, 30, 38 and 79. See also the Bland (Attachment
2, lines 38, 67 and 79), Brown (Attachment 2, lines 38, 71 and 79), Davis (Attachment 2, lines 9 and 70), Holland
(Attachment 2, line 69), Murphy (Attachment 2, line 17), Relvas (Attachment 2, line 83) and Valore (Attachment
2, lines 38, 47 and 79) cases, which also arise out of the attack on the U.S. military barracks in Beirut.
211 Iran relies on the Heiser case in its Memorial at ¶¶ 2.26, 2.51, 2.59, 2.60, 4.32, 4.33, 5.14, 5.59 and 5.69 and
at Attachment 2, lines 2, 25, 26, 27, 28, 33, 34, 35, 36, 38, 39, 40, 41, 44, 45, 46, 48, 49, 53, 54, 57, 63, 65, 66 and
79. See also the Blais (Attachment 2, line 74), Rimkus (Attachment 2, lines 51 and 52) and Valencia (Attachment
2, line 75) cases, which also arise out of the attack on Khobar Towers.
212 In Peterson v. Islamic Republic of Iran, 264 F. Supp. 2d 46 (D.D.C. 2003) (U.S. Annex 36), the court held that
“the complicity of Iran in the 1983 attack was established conclusively” (id. at 54) and that “it was beyond question
that Hezbollah and its agents received massive material and technical support from the Iranian government” (id.
at 58). The court reached those conclusions after hearing extensive evidence from fact and expert witnesses,
including the evidence of Dr. Patrick Clawson, Dr. Reuven Paz, Dr. Michael Ledeen, Admiral James Lyons, Col.
Timothy Geraghty, Mr. Robert Baer and Mr. Warren Parker. In Heiser v. Islamic Republic of Iran, 466 F. Supp.
2d 229 (D.D.C. 2006) (U.S. Annex 41), the court concluded that “the Khobar Towers bombing was planned,
funded, and sponsored by senior leadership in the government of the Islamic Republic of Iran.” Id. at 265. The
court reached those conclusions after hearing evidence from FBI Director Louis Freeh, Mr. Dale Watson, Dr.
Patrick Clawson and Dr. Bruce Tefft and taking judicial notice of the facts that he had established in Blais v.
Islamic Republic of Iran, 459 F. Supp. 2d 40 (D.D.C. 2006) (U.S. Annex 40), which arose out of the same attack.
See also Transcript of Deposition of Dr. Patrick Clawson, Heiser v. Islamic Republic of Iran, No. 00-2329 (D.D.C.
Nov. 25, 2003) (U.S. Annex 110); Transcript of Trial (Testimony of Dr. Patrick Clawson), Heiser v. Islamic
Republic of Iran, No. 00-2329 (D.D.C. Dec. 12, 2003) (U.S. Annex 111); Transcript of Trial (Testimony of
Director Louis Freeh), Heiser v. Islamic Republic of Iran, No. 00-2329 (D.D.C. Dec. 18, 2003) (U.S. Annex 42);
Transcript of Trial (Testimony of Dr. Patrick Clawson), Heiser v. Islamic Republic of Iran, No. 00-2329 (D.D.C.
Feb. 9, 2004) (U.S. Annex 113); Transcript of Trial (Testimony of Dr. Bruce Tefft), Blais v. Islamic Republic of
Iran, No. 2003-285 (D.D.C. May 26, 2006) (U.S. Annex 114).
62
judicial processes. These include the hijackings, kidnappings and assassinations of U.S.
government officials and citizens carried out by Iran’s proxies, as set out in detail above.213
8.19 Iran has sought to suppress these inconvenient facts by arguing that the United States’
allegations of terrorism are irrelevant to the present proceedings.214 This position is untenable.
In reality, the terrorist acts invoked by the United States for the purposes of this defense on the
merits are inherently connected to Iran’s claims under the Treaty of Amity.
8.20 As a starting point, the U.S. legislative and executive measures at issue in this case
were originally conceived in part in response to the Beirut attacks, the Khobar Towers
bombings, and other state-sponsored terrorism, as well as the efforts by victims of these attacks
to obtain redress.215 Through those measures, the United States established a legislative and
judicial framework for U.S. victims of terrorism to hold Iran and other state sponsors of
terrorism to account and to seek compensation for the suffering that they and their families
endured. Had Iran not sponsored the relevant terrorist acts, or had it acted consistently with its
obligation to make reparation to its victims,216 the U.S. measures and legal proceedings now at
issue would not have been necessary. In those circumstances, Iran cannot now claim that the
question of its unclean hands has no bearing on the Court’s determination of the legality of the
impugned U.S. measures. To quote the Umpire in Frierdich, Iran is undeniably the “author of
its own misfortune.”217
8.21 This notwithstanding, Iran seeks to invoke the Treaty of Amity – a treaty premised
on the existence of “peace and friendship”218 and mutually beneficial economic relations219 –
as a defensive tool. It seeks the Court’s assistance to allow it to evade the consequences of
213 See Chapter 5.B.
214 Preliminary Objections Judgment, ¶ 118, recording Iran’s argument that the United States’ allegations of
terrorism were “irrelevant.”
215 The Beirut attack was a precursor to the United States’ designation of Iran as a state sponsor of terrorism in
January 1984. See Chapter 6.A.
216 It is notable that Iran describes the obligation to make reparation as “axiomatic” and disingenuously invokes it
in these proceedings itself. Iran’s Memorial, ¶ 7.18.
217 Frierdich & Co, Opinion of the Umpire, 10 R.I.A.A. 50, 54 (July 31, 1905) (U.S. Annex 99).
218 See Treaty of Amity, Article 1. See also, Oil Platforms (Islamic Republic of Islamic Republic of Iran v. United
States of America), 1996 I.C.J. 803, ¶ 28. See also id. ¶ 52 (“The spirit and intent set out in this Article animate
and give meaning to the entire Treaty and must, in case of doubt, incline the Court to the construction which seems
more in consonance with its overall objective of achieving friendly relations over the entire range of activities
covered by the Treaty.”).
219 See Treaty of Amity, Preamble.
63
conduct for which it has been found, on the evidence, to be liable. If the Court were to accede
to Iran’s request for relief, the result would be a denial, rather than an exercise, of equity.
8.22 Against this background, the Court should exercise its discretion, on the basis of
considerations of good faith and equity, to deny the claims that Iran brings under the Treaty of
Amity in their entirety. Iran’s misconduct to which the United States points is directly engaged
by the case that Iran brings to the Court, encompassing acts targeting U.S. nationals and U.S.
facilities, and causing the death or injury of a significant number of U.S. nationals.
8.23 For all of these reasons, the Court should view the entirety of Iran’s claims through
the prism of its unclean hands and, accordingly, should dismiss Iran’s claims on the basis that
the impugned U.S. measures are in response to Iran’s conduct. In the United States’ respectful
submission, Iran cannot be shielded from the consequences of its own misdeeds.
CHAPTER 9: APPLICATION OF THE COURT’S PRELIMINARY OBJECTIONS JUDGMENT TO
THE FACTS REQUIRES DISMISSAL OF IRAN’S CLAIMS CHALLENGING THE TREATMENT OF
BANK MARKAZI BECAUSE BANK MARKAZI IS NOT A “COMPANY” ENTITLED TO RIGHTS
UNDER ARTICLES III, IV, AND V OF THE TREATY
9.1 This chapter demonstrates that, under the framework established by the Court in its
Preliminary Objections Judgment, Bank Markazi is not a “company” within the meaning of the
Treaty. The Preliminary Objections Judgment concluded that an entity may only be
characterized as a “company” under the Treaty to the extent that the activities in which it
engaged were of a commercial nature.220 The Court took the view that, for purposes of the
Preliminary Objections Judgment, it did not have before it all the facts necessary to determine
whether Bank Markazi was carrying out, at the relevant time, activities of a commercial nature
that would permit Bank Markazi to be characterized as a “company.”221
9.2 As will be shown below, Bank Markazi’s conduct at issue in these proceedings is
manifestly to be regarded as sovereign conduct, rather than commercial conduct, by reference
to Bank Markazi’s own express characterization of its conduct in the Peterson litigation – the
very proceedings underlying Iran’s claims with respect to Bank Markazi in this case. Iran
cannot be permitted to “blow hot and cold” on the same issue in different fora. Based on its
own description of its relevant activities, Bank Markazi cannot be considered a “company”
under the Treaty. Further, Iran’s pleadings in this case make no serious effort to establish that
220 Preliminary Objections Judgment, ¶ 92.
221 Id., ¶ 97.
64
Bank Markazi was engaged in the type of commercial activity that the Court found to be
necessary for Bank Markazi to qualify as a “company.” On the contrary, like Bank Markazi in
the Peterson litigation, Iran has up until this point emphasized the sovereign nature of Bank
Markazi’s activity. If Iran is held, as it should be, to its own descriptions of Bank Markazi’s
activities in this case, then Bank Markazi does not meet the standard set out by the Court to be
considered a “company” under the Treaty. Iran’s claims concerning Bank Markazi as a
company must be dismissed.
Section A: If Bank Markazi Is Not a “Company” Entitled to Rights
under the Treaty, then Iran’s Claims Related to Bank
Markazi Must Fail
9.3 Iran alleges numerous breaches of U.S. obligations under the Treaty which are
specific to Bank Markazi and arise out of Bank Markazi’s alleged treatment in the Peterson
judicial proceedings before U.S. courts, including breaches of Articles III(1), III(2), IV(1),
IV(2), and V(1).222 As noted in the Preliminary Objections Judgment, these Treaty articles
apply solely to “nationals” and “companies” of a Contracting Party.223 Because “national”
applies to natural persons, in order for Bank Markazi to be entitled to the treatment required
under these Treaty provisions, it would need to be considered a “company” for purposes of the
Treaty.224 Iran’s claims related to the alleged treatment of Bank Markazi are therefore
predicated on Iran’s view that Bank Markazi is entitled to the treatment required to be afforded
to “companies” under these Treaty provisions.225 If Bank Markazi is not a “company” for
222 Iran’s Memorial, ¶ 4.35 (alleging violation of Iran’s entitlement to freedom of access to U.S. courts for Iranian
nationals and companies under Article III(1)); id. ¶¶ 5.14(b), 5.16 (alleging violation of Iran’s entitlement to
freedom of access to U.S. courts for Iranian nationals and companies under Article III(2)); id. ¶ 5.45 (alleging
violation of the obligation to accord fair and equitable treatment to Iranian nationals and companies under Article
IV(1)); id. ¶ 5.48 (alleging violation of the protection against unreasonable or discriminatory measures that would
impair legally required rights and interests of Iranian nationals and companies under Article IV(1)); id. ¶ 5.60
(alleging violation of Iran’s entitlement to the most constant protection and security of the property and interests
in property of Iranian nationals and companies under Article IV(2)); id. ¶ 5.69 (alleging violation of Iran’s
entitlement to freedom from expropriation of the property and interest in property of Iran’s nationals and
companies, except for a public purposes and the payment of just compensation, under Article IV(2)); id. ¶ 5.75
(alleging violation of Iran’s entitlement for Iran’s nationals and companies to be permitted to lease, acquire and
dispose of property under Article V(1)).
223 Preliminary Objections Judgment, ¶ 86.
224 The term “companies” is defined in Article III(1) of the Treaty to mean “corporations, partnerships, companies,
and other associations, whether or not with limited liability and whether or not for pecuniary profit.”
225 Notably, Iran’s Memorial at one point specifically asserts that Bank Markazi is being unfavorably treated, not
compared to other “companies,” but compared to the central banks of other States, implicitly acknowledging the
unique status occupied by central banks. Iran’s Memorial, ¶ 5.17.
65
purposes of the Treaty, then Iran’s claims concerning Bank Markazi’s alleged treatment have
no basis in these Treaty provisions.
9.4 In the Preliminary Objections Judgment, the Court established the framework for
considering whether Bank Markazi is a “company” under the Treaty. The Court made clear
that a legal person should only be “regarded as a ‘company’ within the meaning of the Treaty
to the extent that it is engaged in activities of a commercial nature, even if they do not constitute
its principal activities.”226 In doing so, the Court has already rejected Iran’s central argument
for why Bank Markazi should be considered a “company” under the Treaty, namely that any
entity with a separate juridical status from the State would be a “company” under the Treaty,
irrespective of the activities undertaken by that entity.227 The Court concluded that it “cannot
accept the interpretation put forward by Iran in its main argument, whereby the nature of the
activities carried out by a particular entity is immaterial for the purpose of characterizing that
entity as a ‘company’.”228 As the Court noted, Iran’s interpretation was inconsistent with the
clear aim of the Treaty to guarantee rights and afford protections to entities engaged in activities
of a commercial nature. And Iran, as described below, has failed in its Memorial to meet its
burden to demonstrate Bank Markazi’s commercial activities in the United States.
Section B: Iran’s 1972 Monetary and Banking Act Illustrates the
Sovereign Functions Assigned to Bank Markazi
9.5 The Court in the Preliminary Objections Judgment specifically observed that the
Parties did not discuss in detail the scope of activities in which Bank Markazi is entitled to
engage under Iran’s Monetary and Banking Act.229 Given Iran and Bank Markazi’s clear
statements with respect to Bank Markazi’s specific activities that relate to this case, the Court
need not engage in a detailed analysis of Iran’s banking law or identify the outer parameters of
activity authorized under that law. However, a review of that Act confirms the sovereign
functions assigned to Bank Markazi.
9.6 Article 10 of the Monetary and Banking Act provides that Bank Markazi “shall have
the task of formulating and implementing monetary and credit policies on the basis of the
general economic policy of the State,” and that the “objectives of the Central Bank of the
226 Preliminary Objections Judgment, ¶ 92.
227 Observations and Submissions of Iran on the Preliminary Objections of the United States, ¶¶ 4.4-4.30
228 Preliminary Objections Judgment, ¶ 90.
229 Preliminary Objections Judgment, ¶ 95.
66
Islamic Republic of Iran are to maintain the value of the currency and the equilibrium in the
balance of payments, to facilitate trade transactions, and to assist the economic growth of the
country.”230
9.7 Article 11 establishes the central bank “as the regulatory authority of the monetary
and credit system of the country,” and provides that the central bank shall fulfill functions
including: issuance of currency; supervision of banks; adoption of regulations pertaining to
foreign exchange transactions and control over foreign exchange transactions; control over
gold transactions; and control over the export and import of foreign exchange and Iranian
currency.231
9.8 Article 13 vests the central bank with specific powers, including granting loans and
credits to governmental entities, government companies and municipalities; guaranteeing
commitments made by the Government; rediscounting drafts and short-term commercial
instruments presented by other banks; purchase and sale of Treasury Bills and Government
Bonds, as well as bonds issued by foreign governments or international financial institutions;
purchase and sale of gold and silver; and opening and holding current accounts with foreign
banks and carrying out all other authorized banking operations.232 Even to the extent that some
of the specific powers in Article 13 are not unique to central banks, those powers must be
considered in the context of the sovereign tasks and objectives described above which are
assigned to the central bank.
9.9 The sovereign functions assigned to Bank Markazi under the Monetary and Banking
Act illuminate the general principle that traditional central banks are fundamentally unlike the
ordinary “companies” (whether publicly or privately owned) covered by Articles III, IV, and
V of the Treaty. Central Banks like Bank Markazi are entrusted with sovereign functions, and
are presumed to be acting on behalf of the State when acting in these governmental
capacities.233 This government role of Central Banks would have been understood at the time
of the negotiation of the Treaty, during the post-World War II period when Central Banks were
important tools for rebuilding and restructuring national economies, often under the
230 Monetary and Banking Act, art. 10 (IM Annex 73).
231 Id., art. 11 (IM Annex 73).
232 Id., art. 12 (IM Annex 73).
233 See James Crawford, Execution of Judgments and Foreign Sovereign Immunity, 75 AM. J. INT’L L. 820, 864
(1981) (“The ordinary functions of a central bank or monetary authority are quite clearly governmental for the
purposes of any distinction between ‘governmental’ and other transactions of a state.”) (U.S. Annex 115).
67
government’s close direction.234 In light of these sovereign functions carried out by Central
Banks, they occupied a different, more quintessentially governmental status from other stateowned
enterprises at the time of the negotiation of the Treaty. Indeed, this understanding was
confirmed by U.S. negotiators concerning the scope of an FCN treaty with the Netherlands:
There can be said to be a presumption . . . that a State’s “central
bank” which acts as an arm of the Government in executing the
Government’s monetary control and fiscal policy represents the
Government in its sovereign capacity, and is not a commercial
(or business) enterprise within the purview of the [immunity
waiver] provision. This presumption is, of course, rebuttable if
the evidence in the instance of a given central bank does not bear
it out.235
Section C: By Iran’s Own Characterization, the Claims in This Case
Pertain to Bank Markazi’s Sovereign Governmental Activity
9.10 While there is a strong presumption that Central Banks are carrying out sovereign
functions, the Preliminary Objections Judgment sets out a specific inquiry to determine whether
Bank Markazi may be characterized as a company under the Treaty. Acknowledging that an
entity may engage both in activities of a commercial, or business, nature and in sovereign
activities, the Court stated in the Preliminary Objections Judgment that it is the “nature of the
activity actually carried out which determines the characterization of the entity engaged in
it.”236 The Court therefore concluded that it is “necessary to determine whether Bank Markazi
was carrying out, at the relevant time, activities of the nature of those which permit
characterization as a ‘company’ within the meaning of the Treaty of Amity, and which would
have been capable of being affected by the measures complained of by Iran by reference to
Articles III, IV and V of the Treaty.”237
9.11 As such, the Court’s inquiry is now focused on whether Iran can establish that (a)
Bank Markazi carried out activities of a commercial nature and (b) that those activities are
related to the U.S. measures at issue in this case, namely those measures that affect the assets
at issue in the Peterson enforcement proceedings. It is insufficient for Iran to show only that
234 Lilia Costabile & Gerald Epstein, An Activist Revival in Central Banking? Lessons from the History of
Economic Thought and Central Bank Practice, 24 EURO. J.HISTORY OF ECONOMIC THOUGHT 1416, 1429 (2017)
(U.S. Annex 116).
235 See U.S. Preliminary Objections, ¶ 9.16 (citing Department of State Instruction A-52 to Embassy The Hague,
Aug. 4, 1953, at 2 (U.S. P.O. Annex 231)).
236 Preliminary Objections Judgment, ¶ 92.
237 Id., ¶ 97.
68
Bank Markazi may have at some point in time, in some location, engaged in commercial
activities beyond its sovereign functions.
9.12 Iran and Bank Markazi have repeatedly characterized Bank Markazi’s activities, both
generally and specifically related to this proceeding, as sovereign in nature. Iran places
particular emphasis throughout its Memorial on the sovereign functions Bank Markazi
performs as Iran’s Central Bank.238 While Iran specifically invokes Articles 11 and 13 of its
1972 Monetary and Banking Act in support of its position that “Bank Markazi is plainly
engaged in acts pertaining to or integrally related to ‘commerce’,”239 Bank Markazi cited to
these very Articles in U.S. court proceedings in order to establish that it was engaged in
sovereign conduct.240
9.13 With specific regard to Bank Markazi’s activities at issue in the Peterson
enforcement proceedings, Bank Markazi explicitly stated that it acted in a sovereign – not
commercial – capacity in all relevant aspects. Bank Markazi argued that the assets at issue
were being “used for the classic central banking purpose of investing Bank Markazi’s currency
reserves”241 and that this investment served “an important governmental purpose.”242 In Bank
Markazi’s petition for certiorari to the U.S. Supreme Court in the Peterson case, it described
its activities as follows:
Petitioner Bank Markazi is the Central Bank of Iran. Like other
central banks, it holds foreign currency reserves to carry out
monetary policies such as maintaining price stability. Like other
central banks, it often maintains the reserves in bonds issued by
foreign sovereigns or “supranationals” like the European
Investment Bank.
238 See Preliminary Objections of the United States, ¶ 9.4 (citing Iran’s Memorial, ¶¶ 1.25, 2.34, 3.23-3.25, 3.40);
Affidavit of Gholamhossein Arabeieh ¶¶ 27-37, Peterson v. Islamic Republic of Iran, No. 10-4518 (S.D.N.Y. Oct.
17, 2010) (U.S. P.O. Annex A03) (describing Bank Markazi’s various functions under its governing statute, all of
a sovereign rather than commercial nature, as well as the Bank’s role as Iran’s representative before international
organizations such as the IMF).
239 Observations and Submissions of Iran on the Preliminary Objections of the United States, ¶ 4.24.
240 Defendant Bank Markazi’s Memorandum of Law in Support of Its Motion to Dismiss the Amended Complaint
for Lack of Subject Matter Jurisdiction 29, Peterson v. Islamic Republic of Iran, No. 10-4518 (S.D.N.Y. May 11,
2011) (U.S. P.O. Annex A01); Affidavit of Gholamhossein Arabeieh ¶¶ 27-37, Peterson v. Islamic Republic of
Iran, No. 10-4518 (D.D.C. Dec. 20, 2010) (U.S. P.O. Annex A03).
241 Brief for Defendant-Appellant Bank Markazi 35-36, Peterson v. Islamic Republic of Iran, No. 13-2952 (2d
Cir. Nov. 19, 2013) (U.S. P.O. Annex 233).
242 Defendant Bank Markazi’s Reply Memorandum of Law in Further Support of Its Motion to Dismiss the Second
Amended Complaint for Lack of Subject Matter Jurisdiction 3, 29, Peterson v. Islamic Republic of Iran, No. 10-
4518 (S.D.N.Y. June 22 2012) (U.S. P.O. Annex A15).
69
As part of its foreign currency reserves, Bank Markazi held
$1.75 billion in security entitlements in foreign government and
supranational bonds at Banca UBAE S.p.A., an Italian bank.
UBAE, in turn, held corresponding security entitlements in an
account with another intermediary, Clearstream Banking, S.A.,
in Luxembourg. Clearstream then held corresponding security
entitlements in an omnibus account at Citibank, N.A., in New
York.243
9.14 Notably, Bank Markazi used very similar language in describing additional Bank
Markazi assets that the Peterson plaintiffs are now seeking to attach in proceedings outside of
the United States.244 These additional assets, which are related to the assets previously subject
to litigation before U.S. courts, consist of proceeds attributable to bonds in which Bank Markazi
is the beneficial owner.245 In Luxembourg enforcement proceedings brought by U.S. terrorism
victims different from the Peterson plaintiffs, Bank Markazi has offered the following
description via an expert declaration:
The assets seized in this specific case are part of the reserves of
Markazi Bank in its capacity as the central bank of the Islamic
Republic of Iran.
Like all central bank reserves, these assets are used to instill
confidence in the financial markets and promote price stability.
These objectives are among the key and priority objectives of
Markazi Bank as a central bank. The purposes of any central
bank include the conduct of a monetary policy with a view to
promoting the national economic objectives of the State
concerned (see supra, § 28).
It can therefore safely be argued in this particular case that the
assets in question are indeed and exclusively used, or at least
intended for use, for the purposes of the central bank, and are
therefore covered by the immunity from execution.
Indeed, within the context at issue here, the assets seized even
appear to actually be earmarked for monetary or other sovereign
purposes . . . .
243 Petition for a Writ of Certiorari 7-8, Bank Markazi v. Peterson, No. 14-770 (Dec. 29, 2014) (U.S. Annex 117)
(citations omitted).
244 See Petition for a Writ of Certiorari 7, Bank Markazi v. Peterson (“Peterson II”), No. 14-770 (May 18, 2018)
(U.S. Annex 118).
245 See Peterson v. Bank Markazi (“Peterson II”), 2015 U.S. Dist. LEXIS 20640, at **5-7 (S.D.N.Y. 2015) (U.S.
Annex 119).
70
They are certainly not earmarked in any case for economic or
commercial purposes under private Law.246
9.15 On the basis of these representations, which Iran has not disputed, two conclusions
may be reached. First, Bank Markazi has consistently claimed that its activities at issue in this
case consist of the management of its foreign currency reserves. Neither Iran nor Bank Markazi
has asserted any other activity of Bank Markazi related to the challenged U.S. measures.
Second, Bank Markazi’s purported management of its foreign currency reserves is understood
by Iran to be a sovereign activity.247 Thus, the actions by Bank Markazi at issue in this case
are, as Iran and Bank Markazi have both confirmed, sovereign. Therefore, under the standard
set out by the Court in the Preliminary Objections Judgment, Bank Markazi cannot be
characterized as a “company” within the meaning of the Treaty and, consequently, Iran may
not claim the benefit of the protections provided for in Articles III, IV, and V for Bank Markazi.
Section D: Iran’s Arguments that Bank Markazi Engages in
Commercial, or Professional, Activities Are Irrelevant to the
Case at Hand and Also Incorrect
9.16 Recognizing the difficulty of divorcing itself from its longstanding position that Bank
Markazi is carrying out sovereign functions, Iran argues that an entity carrying out sovereign
functions may at the same time, in certain respects, act exactly in the same manner as a private
company.248 While Iran asserts that this is contrary to the U.S. position, the United States
agrees with the proposition that a Central Bank may be authorized to undertake activities
beyond its sovereign remit, such as assisting private companies in their businesses, and that
those activities may be of a commercial nature. Accepting that proposition has no impact on
the outcome of this case, because Iran has not asserted, much less demonstrated, that Bank
Markazi engaged in any such activity in the United States related to the U.S. measures at issue
in this case.
246 Frédéric Dopagne, Legal Opinion on Immunity from Execution of the Central Bank of the Islamic Republic of
Iran (Markazi Bank) Under International Law as Part of the Procedure for Garnishment Validation Pending Before
the District Court of Luxembourg in Docket No 177.393, ¶¶ 60-64 (March 16 2018) (courtesy translation) (U.S.
Annex 120).
247 See Declaration of Prof. Andreas F. Lowenfeld ¶ 16, Peterson v. Islamic Republic of Iran, No. 10-4518
(S.D.N.Y. May 6, 2011) (U.S. P.O. Annex A4) (“Whether the funds consist of cash, bonds, or other instruments
of value, so long as they are used to manage the country’s reserves or the exchange rate of its currency – traditional
central bank functions – the assertion by the central bank that the funds are held ‘for the bank’s own account’
should be accepted.”).
248 Observations and Submissions of Iran on the Preliminary Objections of the United States, ¶ 4.21.
71
9.17 Iran also advances an argument that its specific activities, including concluding
contracts, owning property, and buying and selling of securities, are economic in nature and
pertain to commerce, even if they advance sovereign purposes.249 As an initial matter, the
United States again notes that Iran has not alleged, much less demonstrated, that the U.S.
measures at issue in this case pertain to any of these specific activities identified by Iran.
Further, many of the “professional” activities which, according to Iran, imbue Bank Markazi
with the qualities of a “company”, such as owning property, concluding contracts, and
appearing in court, are activities that sovereign states ordinarily undertake and are not
determinative of whether the state is performing a sovereign function. The fact that private
entities also engage in this activity does not alter the generally recognized sovereign nature of
a Central Bank’s activities, such as management of foreign currency reserves. And the
sovereign function is key: when a Central Bank engages in the purchase of securities as part of
its management of foreign currency reserves, it is acting on behalf of the State, not as a
“company” with private comparators. In arguing that Central Banks are making investments
like commercial actors, and ignoring the sovereign function behind foreign currency reserves,
Iran is simply asserting a variation of its more general argument that the sovereign nature of
the activity is irrelevant to determining whether Bank Markazi is a “company” under the
Treaty. However, the Court has already considered, and rejected, Iran’s argument, instead
holding that the sovereign functions of an entity are essential to assessing whether that entity
is a “company” under the Treaty.
9.18 Even apart from the foregoing analysis, Iran’s argument is also directly contradicted
by the positions taken by Bank Markazi in the Peterson litigation. There, Bank Markazi argued
that “a central bank’s investment of foreign currency reserves plainly serves an ‘important
governmental purpose’ and thus does not constitute ‘commercial’ activity under the Treaty.”250
Bank Markazi not only described its activities as sovereign and governmental, but it took the
position that its investment of foreign currency reserves was not commercial activity under the
Treaty.251 Thus, under Bank Markazi’s own view of the case, the distinction between the
249 Id., ¶¶ 4.24, 4.34. See also Preliminary Objections Judgment, Declaration of Judge Gaja, ¶ 2.
250 Defendant Bank Markazi’s Reply Memorandum of Law in Further Support of Its Motion to Dismiss the Second
Amended Complaint for Lack of Subject Matter Jurisdiction 29, Peterson v. Islamic Republic of Iran, No. 10-
4518 (S.D.N.Y. June 22 2012) (U.S. P.O. Annex A15). Bank Markazi went on to argue that it conducts no
“business activities” within the United States, which would also seem to be fatal to Iran’s attempt to bring a treaty
claim with respect to the Bank’s treatment. Id. at 29-30.
251 Bank Markazi advanced this position in U.S. litigation in arguing that it was not subject to the Treaty’s
immunity waiver provision in Article XI(4), further highlighting the incongruity of Iran’s position that Bank
72
commercial nature and sovereign purpose of an act should not control the Court’s analysis as
to whether Bank Markazi is properly considered a company under the Treaty.
* * * *
9.19 For all of the foregoing reasons, and in light of the standard set forth in the Court’s
Preliminary Objections Judgment, Bank Markazi is not a “company” under the Treaty for
purposes of this case. Iran and Bank Markazi have made repeated admissions before U.S. and
other domestic courts, including in the Peterson case that is the subject of Iran’s claims, that
Bank Markazi was carrying out sovereign functions. These admissions expose the fallacy of
Iran’s assertions before this Court. Iran relies merely on the general notion that a Central Bank
could carry out commercial functions, but this has no bearing on the case given that the
functions carried out by Bank Markazi of relevance to this dispute were, by Iran’s own
admission, sovereign in nature. Iran’s claims under the Treaty involving Bank Markazi
therefore should be dismissed.
CHAPTER 10: CLAIMS FOR WHICH IRAN CANNOT SHOW THAT LOCAL REMEDIES WERE
EXHAUSTED ARE INADMISSIBLE
10.1 In the opening sentence of its Memorial, Iran declares that this case arises from a
U.S. policy that “strips Iranian companies of respect for their rights including respect for their
separate corporate personality . . . .” In order for Iran to bring any claims on behalf of these
companies, international law requires that Iran first demonstrate that the companies have
exhausted their remedies in the United States. Iran cannot rely on sweeping assertions of harm
or potential harm, but must show that each company has exhausted its local remedies in each
case in order for Iran’s claims on the companies’ behalf to be admissible before the Court.
With very few exceptions, the Iranian companies have not exhausted their local remedies. The
Court should therefore find inadmissible any claim for which Iran has not demonstrated that
the relevant company exhausted its remedies in the United States. These issues are developed
further in the present chapter.
Markazi’s activities should not be considered “commercial” with respect to certain provisions of the Treaty, but
should be considered “commercial in deciding whether Bank Markazi is a “company” under the Treaty.
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Section A: Exhaustion of Local Remedies Is Required Before a State
May Institute International Proceedings on Behalf of Its
Nationals
10.2 Before a State may institute international proceedings against another State on behalf
of its national (either a natural or legal person), the national must have exhausted local remedies
in the respondent State. The requirement to exhaust local remedies is a long-standing, noncontroversial
rule of customary international law. This Court and scholars have stated, for
example, that “the rule that local remedies must be exhausted before international proceedings
may be instituted is a well-established rule of customary international law,”252 and “[t]he rule.
. . is accepted as one of the best established and, in principle, least questioned rules of
international law.”253 Article 14 of the International Law Commission’s Draft Articles on
Diplomatic Protection provides that a State “may not present an international claim in respect
of an injury to a national or other person . . . before the injured person has . . . exhausted all
local remedies.”254 Among other things, the rule acts as a measure of international judicial
economy, reserving the limited resources of international fora, such as the Court, for
controversies that conclusively have not been resolved through municipal proceedings, and
permitting facts and legal theories to be developed and clarified at the local level first.255
10.3 As stated by the Court, the national is required to use all “procedural facilities which
municipal law makes available to litigants” so as to utilize “the whole system of legal
protection.”256 Exhaustion of local remedies is excused only in relatively rare circumstances
252 Interhandel Case (Switzerland v. United States), 1959 I.C.J. 6, 27 (Mar. 21). See also Ambatielos Claim
(Greece v. U.K.), 12 R.I.A.A. 83, 118 (1956) (U.S. Annex 121); Elettronica Sicula S.p.A. (ELSI) (United. States
v. Italy), 1989 I.C.J. 15, ¶¶ 49-63; Case Concerning Ahmadou Sadio Diallo (Guinea v. Democratic Republic of
Congo), 2007 I.C.J. 582, ¶¶ 34-48.
253 2 GERALD FITZMAURICE, THE LAW AND PROCEDURE OF THE INTERNATIONAL COURT OF JUSTICE 686 (1986)
(U.S. Annex 122). See also C.F. AMERASINGHE, DIPLOMATIC PROTECTION 142 (2008) (U.S. Annex 162); JAN
PAULSSON, DENIAL OF JUSTICE IN INTERNATIONAL LAW 102 (2010) (U.S. Annex 123); ROBERT JENNINGS &
ARTHUR WATTS, OPPENHEIM’S INTERNATIONAL LAW 522-23 (1992) (U.S. Annex 124).
254 Report of the Commission to the General Assembly on the Work of Its 58th Session, “Draft Articles on
Diplomatic Protection” [2006] 2 Y.B. INT’L L. COMM’N 2, art. 14.1, U.N. Doc. A/CN.4/SER.A/2006 (U.S. Annex
125); see also Report of the Commission to the General Assembly on the Work of Its 53rd Session, [2001] 2 Y.B.
INT’L L. COMM’N 2, art. 44(b), U.N. Doc. A/CN.4/SER.A/2001 (U.S. Annex 126).
255 See, e.g., PAULSSON, DENIAL OF JUSTICE at 101-02 (U.S. Annex 123); JENNINGS &WATTS, OPPENHEIM’S
INTERNATIONAL LAW at 524 (U.S. Annex 124); ALWYN V. FREEMAN, INTERNATIONAL RESPONSIBILITY OF
STATES FOR DENIAL OF JUSTICE 416-17 (1970) (U.S. Annex 127).
256 Ambatielos Claim (Greece v. U.K.), 12 R.I.A.A. 83, 119-20 (1956) (U.S. Annex 121); see also AMERASINGHE,
DIPLOMATIC PROTECTION at 143-149 (U.S. Annex 162); Report of the Commission to the General Assembly on
the Work of Its 58th Session, “Draft Articles on Diplomatic Protection” [2006] 2 Y.B. INT’L L. COMM’N 2, art.
14.1, U.N. Doc. A/CN.4/SER.A/2006 (U.S. Annex 125) (“If the municipal law in question permits an appeal in
the circumstances of the case to the highest court, such an appeal must be brought in order to secure a final decision
74
where remedies are “obviously ineffective” or “obviously futile.”257 Commentators have noted
that this standard may be met, for example, when courts lack jurisdiction to adjudicate the
dispute, or the judicial system is pervasively corrupt or dependent on the executive.258
10.4 An applicant State is required to show that its national has, in fact, exhausted local
remedies in the respondent State. As the Court stated in the Diallo case, “it is incumbent on
the applicant to prove that local remedies were indeed exhausted or to establish that exceptional
circumstances relieve the allegedly injured person whom the applicant seeks to protect of the
obligation to exhaust available local remedies.”259
Section B: A Significant Number of Iran’s Claims Do Not Satisfy the
Exhaustion of Local Remedies Rule
10.5 As set forth in Chapter 2, following the Court’s Preliminary Objections Judgment,
the case before the Court concerns U.S. measures that allow for attachment of assets of Iranian
state-owned companies to satisfy judgments against Iran. Thus, the claims before the Court
are advanced by Iran on behalf of Iranian companies. In addition to Iran’s case in respect of
Bank Markazi, which Iran has advanced on the ground that it is a “company,” other entities on
behalf of whom Iran has raised claims include Bank Melli, the Export Development Bank of
Iran, the Iranian Telecommunication Infrastructure Company, the National Iranian Oil
Company, Iran Air, Iranohind Shipping Company, Bank Saderat, Iran Marine Industrial
Company, Behran Oil Company, and Sediran.260
10.6 As addressed above, if these entities are indeed to be regarded as “companies” for
purposes of the Treaty, international law requires them to have exhausted local remedies before
Iran is entitled to bring claims in respect of any loss allegedly suffered by them. While the
in the matter. Even if there is no appeal as of right to a higher court, but such a court has a discretion to grant
leave to appeal, the foreign national must still apply for leave to appeal to that court.”).
257 See, e.g., Ambatielos Claim (Greece v. U.K.), 12 R.I.A.A. 83, 119 (1956) (U.S. Annex 121); AMERASINGHE,
DIPLOMATIC PROTECTION at 152 (U.S. Annex 162).
258 See, e.g., AMERASINGHE, DIPLOMATIC PROTECTION at 153 (U.S. Annex 162) (courts lacking jurisdiction);
FITZMAURICE, LAW AND PROCEDURE at 692 (U.S. Annex 122) (judiciary notoriously under the influence of the
executive); EDWIN M. BORCHARD, DIPLOMATIC PROTECTION OF CITIZENS ABROAD OR THE LAW OF
INTERNATIONAL CLAIMS 332 (1919) (U.S. Annex 128).
259 Case Concerning Ahmadou Sadio Diallo (Guinea v. Democratic Republic of Congo), 2007 I.C.J. 582, ¶ 44
(citing Elettronica Sicula S.p.A. (ELSI) (United. States v. Italy), 1989 I.C.J. 15, ¶ 53).
260 See Iran’s Memorial, ¶¶ 4.7-4.15. It is important to note that not all of these entities have, in fact, had their
assets attached. Iran has included a number of attachment proceedings in U.S. courts in Attachment 2 to its
Memorial regardless of the status of those proceedings; in many cases the U.S. court has not ordered attachment
of any assets.
75
United States acknowledges that Iranian entities have exhausted local remedies in several cases
brought against them, in other cases, the Iranian entities at issue have not done so.
10.7 The critical consideration is that Iran must establish, as a threshold matter, that a
given entity has exhausted local remedies as a condition precedent to bringing a claim in respect
of any alleged injury suffered by that entity. Iran has not done so, however. On the contrary,
Iran has simply appended to its Application and Memorial summary charts in the form of
Attachments 1 to 4 without providing any context or explanation for the information apparently
contained therein. Attachment 2, which lists enforcement actions and is the only one of the
four Attachments that is still relevant to this proceeding,261 provides only basic, and in most
cases incomplete, information about the parties to and the procedural status of the 90 cases
listed therein.
10.8 It is not enough for Iran merely to provide a list of cases, leaving it to the Court and
the United States to work out whether in each case the Iranian entities have exhausted local
remedies. For Iran’s claims to be admissible before the Court, Iran must affirmatively
demonstrate for each case on which it bases its claims, that local remedies have been exhausted
10.9 Moreover, Iran cannot claim that there has been exhaustion in a case where the
relevant entity did not pursue available opportunities for legal recourse. In fact, in many cases
the entity simply did not appear to oppose attachment. A notable example is Heiser v. Iran,
where the plaintiffs were attempting to satisfy the judgment in their favor by garnishing assets
of Bank Melli, Bank Saderat, and the Iran Marine Industrial Company that were held by Bank
of America and Wells Fargo Bank. The two U.S. banks filed a third-party petition to bring the
Iranian entities into the case so that they could register objections to the garnishment of the
funds. Even so, the Iranian entities “failed to answer, plead, or otherwise defend against” the
third-party petition.262
10.10 As will be discussed later in this Counter-Memorial in Chapter 13.B, the U.S. judicial
system has always been available to Iran and its nationals to pursue their legal interests. Indeed,
many of the entities listed above have availed themselves of U.S. courts and have defended
261 See Chapter 2.
262 Clerk’s Certificate of Default, Heiser v. Islamic Republic of Iran, 00-2329, 01-2104, (D.D.C. Aug. 20, 2015),
ECF No. 272 (U.S. Annex 129); Order Granting Unopposed Motion for Judgment against Garnishees Bank of
America, N.A. and Wells Fargo Bank, N.A. for Turnover of Funds, and for Interpleader Relief for Such
Garnishees, Heiser v. Islamic Republic of Iran, 00-2329, 01-2104 (D.D.C. June 9, 2016) (U.S. Annex 130), ECF
No. 275.
76
against attachment in these proceedings, as discussed in further detail below.263 In spite of this
reality, these entities have not in all cases exhausted their remedies under U.S. law. As noted
above, it is only certain of the cases listed in Attachment 2 that remain relevant to Iran’s case
following the Court’s Preliminary Objections Judgment. The Court should hold inadmissible
any claims advanced by Iran that arise out of those cases, such as Heiser, for which Iran cannot
show that the entities have exhausted local remedies.
CHAPTER 11: ARTICLE XX(1) CATEGORICALLY BARS IRAN’S CLAIMS REGARDING
EXECUTIVE ORDER 13599
11.1 At the Preliminary Objections stage, the United States submitted that the Court
should dismiss for lack of jurisdiction any of Iran’s claims that were premised on Executive
Order 13599, which, as part of the U.S. sanctions program, blocks assets of the Iranian
government and Iranian financial institutions, on the ground that the Executive Order fell
within the scope of Article XX(1) of the Treaty and thus fell outside the scope of the Treaty,
ratione materiae. In its Preliminary Objections Judgment, the Court concluded that Article
XX(1) did not restrict its jurisdiction but rather provided a defense on the merits, and
accordingly deferred the question of Article XX(1)’s impact on the claims at issue to the merits
phase of the proceedings. The U.S. defense on the merits based on Article XX(1) of the Treaty
is accordingly developed in the present chapter. As is addressed further below, Article XX(1)
memorializes exceptions to the Treaty of Amity’s substantive obligations and explicitly
reserves to both States their sovereign right to take measures in highly sensitive areas of
national security.
11.2 It is the U.S. case that Executive Order 13599 falls within two of Article XX(1)’s
exceptions, and that Article XX(1) accordingly bars any claim by Iran premised on that
Executive Order. There can be no question that Executive Order 13599 was promulgated to
address Iran’s illicit and destabilizing activities of grave national security concern to the United
States, including arms trafficking, support for terrorism, and the pursuit of ballistic missile
capabilities. Consequently, Executive Order 13599 is both a measure regulating arms
trafficking under Article XX(1)(c) and a measure necessary to protect U.S. essential security
interests under Article XX(1)(d). Article XX(1) expressly states that nothing in the Treaty
263 See, e.g., Chapter 13.B. See Rubin v. Iran, 637 F.3d 783 (7th Cir. 2011) (U.S. Annex 131); Rubin v. Iran, 133
S. Ct 23 (2012) (U.S. Annex 132); Bank Markazi v. Peterson et al., 578 U.S. 1 (2016) (IM Annex 66).
77
precludes the Parties from taking such measures, and Iran’s attempt to bring claims based on
Executive Order 13599 must therefore be rejected.
11.3 Iran’s Memorial fails to mention Article XX(1) and likewise fails to acknowledge
that Executive Order 13599 engages national security. Instead, Iran asserts that Executive
Order 13599 violates various substantive provisions of the Treaty of Amity. As set forth in
this chapter, however, Iran’s approach collapses once Article XX(1)’s impact is appropriately
examined. Article XX(1) clearly bars any claim to the extent it is based on Executive Order
13599. Consequently, the Court need not, and should not, get to the issue of whether such a
claim impacts one of the Treaty’s substantive provisions. Article XX(1)’s exceptions provide
a straightforward path to the dismissal of any claim to the extent it pertains to Executive Order
13599. It is a matter of systemic importance going to the interpretation and application of
treaties that fundamental, national security exceptions included in a treaty should be honored.
11.4 Article XX(1) provides as follows (with the provisions relevant for purposes of this
chapter in italics):
The present Treaty shall not preclude the application of
measures:
(a) regulating the importation or exportation of gold or silver;
(b) relating to fissionable materials, the radio-active by-products
thereof, or the sources thereof;
(c) regulating the production of or traffic in arms, ammunition
and implements of war, or traffic in other materials carried
on directly or indirectly for the purpose of supplying a
military establishment; and
(d) necessary to fulfill the obligations of a High Contracting
Party for the maintenance or restoration of international
peace and security, or necessary to protect its essential
security interests.
11.5 The language of Article XX(1) is broad in scope – the chapeau establishes that
substantive obligations under the Treaty simply do not apply to, and cannot prohibit or limit,
measures falling within this exception. Thus, in accordance with the provision’s plain language,
78
and as the Court has consistently recognized, if one of Article XX(1)’s exceptions applies to a
given measure, that measure is excluded from the Treaty’s application.264
11.6 Section A of this chapter shows that Executive Order 13599 was promulgated to
address Iran’s destabilizing and illicit activities, including arms production and trafficking,
support for terrorism and terrorist financing, and the pursuit of ballistic missile capabilities.
Section B of this chapter demonstrates that Executive Order 13599 comes within
Article XX(1)’s exception under subparagraph (c), as a measure regulating arms trafficking
and production, and as a result, any claim based on Executive Order 13599 must be dismissed.
Section C of this chapter establishes that Executive Order 13599 also comes within
Article XX(1)’s exception under subparagraph (d), as a measure necessary to protect U.S.
essential security interests, which provides a second, independent basis for dismissing Iran’s
claims to the extent they are based on Executive Order 13599.
Section A: Executive Order 13599 was Promulgated to Address Iran’s
Illicit Activities, Including Arms Production and Trafficking,
Support for Terrorism and Terrorist Financing, and the
Pursuit of Ballistic Missile Capabilities
11.7 As set forth in Chapter 5, terrorist attacks sponsored and directed by Iran have killed
and severely injured many hundreds of U.S. nationals worldwide. In addition, Iran has violated
ballistic missile and arms trafficking obligations, further putting U.S. nationals and others at
risk.265 In response to Iran’s violent and destabilizing activities, the United States has
implemented sanctions and adopted other legal measures to protect its people and to deter Iran’s
sponsorship of terrorism and pursuit of increased ballistic missile capability. In so doing, the
United States has acted consistently with applicable UN Security Council resolutions and often
in alignment with the actions of other States and multilateral organizations.
264 See Military and Paramilitary Activities in Nicaragua (Nicaragua v United States of America), 1986 I.C.J. 14,
¶¶ 222, 271 (June 27); Oil Platforms (Iran v. United State), 1996 I.C.J. 803, 811, ¶ 20 (Dec. 12); Oil Platforms
(Iran v United States), 2003 I.C.J. 161, 179, ¶¶ 33-34 (Nov. 6). At the preliminary objections phase of this case,
the Court concluded that Article XX(1) affords the parties a defense on the merits. Preliminary Objections
Judgment, ¶ 47. The United States still respectfully maintains, however, that measures covered by any of the
exceptions in Article XX(1) are excluded from the Court’s jurisdiction. At the very least, measures covered by
Article XX(1) can still be addressed at a preliminary phase under Article 79(1) of the Court’s Rules, as set forth
in the United States’ Preliminary Objections in Alleged Violations of the 1955 Treaty of Amity, Economic
Relations, and Consular Relations.
265 See Chapter 5.A.
79
11.8 This measured response by the United States includes adoption of Executive Order
13599.266 Executive Order 13599 implemented the sanctions required by Section 1245(c) of
the 2012 National Defense Authorization Act by blocking the property and interests of Iran and
Iranian financial institutions when such assets are subject to U.S. jurisdiction.267 The Act and
the Executive Order were rooted in Iran’s increased efforts to mask illicit activities, using
complex financial transactions and front companies, as documented by the U.S. Treasury,268
by FATF,269 and by a series of UN Security Council findings,270 and as set forth in the U.S.
Preliminary Objections.
11.9 Of particular note, and in chronological order:
􀁸 On November 21, 2011, the U.S. Treasury issued a finding concluding that Iran was
a “jurisdiction of primary money laundering concern” on the basis of Iran’s support
for terrorism, its pursuit of nuclear and ballistic missile capability, use of deceptive
financial practices to evade sanctions, serious deficiencies in its controls to combat
money laundering and terrorist finance, and its lack of cooperation with U.S. law
enforcement and regulatory officials. The justification for this designation explained:
In recent years, many international financial institutions have
severed ties with Iranian banks and entities because of a growing
body of public information about their illicit and deceptive
conduct designed to facilitate the Iranian government’s support
for terrorism and its pursuit of nuclear and ballistic missile
capabilities. This illicit conduct by Iranian banks and companies
266 Exec. Order 13599, 77 Fed. Reg. 6659 (Feb. 5, 2012) (IM Annex 22).
267 See National Defense Authorization Act for Fiscal Year 2012, § 1245(c), Pub. L. No. 112-239, 126 Stat. 2006
(IM Annex 17).
268 Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756 (Nov. 18, 2011) (U.S. P.O. Annex 152).
269 See Chapter 5.A.
270 The UN Security Council recognized that Iranian banks were being used to pursue illicit activity, calling on all
States to exercise vigilance with respect to Iranian banks. S.C. Res. 1929, prmbl., U.N. Doc. S/RES/1929 (June
9, 2010) (U.S. P.O. Annex 110) (“recalling in particular the need to exercise vigilance over transactions involving
Iranian banks, including the Central Bank of Iran, so as to prevent such transactions contributing to proliferationsensitive
activities, or to the development of nuclear weapon delivery systems”); S.C. Res. 1803, ¶ 10, U.N. Doc.
S/RES/1803 (Mar. 3, 2008) (U.S. P.O. Annex 102) (“Calls upon all States to exercise vigilance over the activities
of financial institutions in their territories with all banks domiciled in Iran, in particular with Bank Melli and Bank
Saderat, and their branches and subsidiaries abroad, in order to avoid such activities contributing to the
proliferation sensitive nuclear activities, or to the development of nuclear weapon delivery systems” (emphasis
added)). The UN Security Council also identified certain banks that were involved in Iran’s nuclear and ballistic
missile programs. See, e.g., S.C. Res. 1929, Annex I, at 11, U.N. Doc. S/RES/1929 (June 9, 2010) (U.S. P.O.
Annex 110) (“Over the last seven years, Bank Mellat has facilitated hundreds of millions of dollars in transactions
for Iranian nuclear, missile, and defense entities.”); S.C. Res. 1747, Annex I, at 5, U.N. Doc. S/RES/1747 (Mar.
24, 2007) (U.S. P.O. Annex 101) (finding that Bank Sepah was a key provider of financial services to two Iranian
firms listed by the UN Security Council for their role in Iran’s ballistic missile programs).
80
has been highlighted in a series of United Nations Security
Council (“UN Security Council”) resolutions related to Iranian
proliferation sensitive activities. The Financial Action Task
Force (“FATF”) has also warned publicly of the risks that Iran’s
deficiencies in countering money laundering and, particularly
terrorism finance, pose to the international financial system, and
has called on FATF members and all jurisdictions to implement
counter measures to protect against these risks . . . .
[The United States] has reason to believe that Iran directly
supports terrorism and is pursuing nuclear/ballistic missile
capabilities, relies on state agencies or state-owned or controlled
financial institutions to facilitate WMD proliferation and
financial and uses deceptive financial practices to facilitate
illicit conduct and evade sanctions.
Iran also continues to defy the international community by
pursuing nuclear capabilities and developing ballistic missiles in
violation of seven UNSCRs . . . . To date Iran has not complied
with the UN Security Council resolutions regarding its nuclear
and missile activities[.]271
􀁸 Relying in part on these Treasury Department findings, Congress passed Section
1245 of the National Defense Authorization Act for Fiscal Year 2012 (“2012
NDAA”), stating:
(a) FINDINGS.—Congress makes the following findings:
(1) On November 21, 2011 the Secretary of the Treasury
issued a finding under section 5318A of title 31, United
States Code, that identified Iran as a jurisdiction of
primary money laundering concern.
(2) In that finding, the Financial Crimes Enforcement
Network of the Department of the Treasury wrote, “The
Central Bank of Iran, which regulates Iranian banks, has
assisted designated Iranian banks by transferring billions
of dollars to these banks in 2011. In mid-2011, the CBI
transferred several billion dollars to designated banks,
including Saderat, Mellat, EDBI and Melli, through a
variety of payment schemes. In making these transfers,
the CBI attempted to evade sanctions by minimizing the
direct involvement of large international banks with both
CBI and designated Iranian banks.”
(3) On November 22, 2011, the Under Secretary of the
Treasury for Terrorism and Financial Intelligence, David
271 Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756 (Nov. 18, 2011) (U.S. P.O. Annex 152) (emphasis added) (internal reference to U.N. Security Council
Resolutions 1696, 1737, 1747, 1803, 1835, 1887, and 1929.)
81
Cohen, wrote, “Treasury is calling out the entire Iranian
banking sector, including the Central Bank of Iran, as
posing terrorist financing, proliferation financing, and
money laundering risks for the global financial
system.”272
Section 1245 of the 2012 NDAA therefore directed the President, pursuant to
applicable law, to block all assets of Iranian financial institutions within the United
States or in the possession or control of U.S. persons. The Act explicitly recognized
the connection between the deceptive financial practices used by Iranian institutions
and the underlying illicit activities of the Iranian government, stating:
The financial sector of Iran, including the Central Bank of Iran,
is designated as a primary money laundering concern . . . because
of the threat to government and financial institutions resulting
from the illicit activities of the Government of Iran, including its
pursuit of nuclear weapons, support for international terrorism,
and efforts to deceive responsible financial institutions and
evade sanctions.273
􀁸 Consequently, on February 5, 2012 and explicitly pursuant to the 2012 NDAA,
President Barack Obama issued Executive Order 13599, which provides in part:
By the authority vested in me as President by the Constitution
and the laws of the United States of America, including . . .
section 1245 of the National Defense Authorization Act . . .
[p]articularly in light of the deceptive practices of the Central
Bank of Iran and other Iranian banks to conceal transaction of
sanctioned parties, the deficiencies in Iran’s anti-money
laundering regime and the weaknesses in its implementation . . .
.274
11.10 The logic of the necessary and measured approach taken by the United States is
apparent. Iran supported terrorism and violated ballistic missile and arms trafficking
obligations. Iran, with the help of Iranian financial institutions, has evaded prior U.S. and
international attempts to restrict this illicit activity by engaging in deceptive banking practices.
By late 2011, it was clear that in order to protect its essential security interests and in
furtherance of efforts to deter Iranian pursuit of ballistic military capability and arms, the
United States needed to take measures to further address avenues that enabled Iran’s
272 National Defense Authorization Act for Fiscal Year 2012, § 1245(a)-(b), Pub. L. No. 112-239, 126 Stat. 2006
(IM Annex 17) (emphasis added).
273 Id., § 1245(b) (IM Annex 17).
274 Exec. Order No. 13599, 77 Fed. Reg. 6659 (Feb. 5, 2012) (IM Annex 22).
82
development of ballistic missiles and provision of arms and support for terrorism, which
included principally Iran’s deceptive banking practices. That is precisely why the President
issued Executive Order 13599.
Section B: Executive Order 13599 and Its Implementing Provisions
Come Within the Exception Created by Article XX(1)(c) as a
Measure Regulating Arms Production, Arms Trafficking, and
Military Supplies
11.11 Subparagraph (c) of Article XX(1) excludes from the Treaty’s scope any measures
“regulating the production of or traffic in arms, ammunition and implements of war, or traffic
in other materials carried on directly or indirectly for the purpose of supplying a military
establishment.” Executive Order 13599 is a measure that the United States imposed to address
Iran’s evasion of U.S. and international sanctions relating to its development of ballistic
missiles and its provision of arms and other support to militant and terrorist groups. As such,
it is a measure within the terms of the exception in Article XX(1)(c) and therefore outside the
scope of the Treaty and this case.
11.12 Iran’s pursuit of ballistic missile capabilities is well-documented. At the time of
Executive Order 13599, it was widely known that Iran was developing ballistic missiles in
violation of multiple resolutions of the UN Security Council.275 For example, at a meeting of
the UN Security Council, the representative from France stated, “[t]he facts are overwhelming;
there is no room for doubt . . . Iran has developed a programme for missiles capable of carrying
nuclear warheads.”276 Nevertheless, Iran today persists in developing and testing ballistic
missiles.277
11.13 Iran also has a longstanding history of supplying arms and other support to militant
and terrorist groups abroad.278 As noted in Chapter 5, Iran has routinely provided arms and
ammunition, as well as funding and training, to a number of terrorist or militant organizations,
275 See Chapter 5.A. See also, e.g., S.C. Res. 1929, ¶¶ 1, 9, S/RES/1929 (June 9, 2010) (U.S. P.O. Annex 110);
Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756, 72758 (Nov. 18, 2011) (U.S. P.O. Annex 152) (“Iran also continues to defy the international community
by pursuing nuclear capabilities and developing ballistic missiles in violation of seven UNSCRs.” (emphasis
added)).
276 U.N.S.C., 65th year, 6335th Mtg., at 7, U.N. Doc. S/PV.6335 (June 9, 2010) (statement of France) (U.S. P.O.
Annex 196) (also noting that “Iran has worked on advanced military studies that are the missing link between
enrichment and the ballistic missile programme, in particular on building a delivery vehicle in which a nuclear
warhead can be placed . . . .”).
277 See Chapter 5.A.
278 See Chapter 5.
83
including the Taliban, Hezbollah, Hamas, Palestinian Islamic Jihad, and, more recently, the
Houthis in Yemen.279 Iran’s arms trafficking activities are undertaken in violation of binding
resolutions of the UN Security Council, which since 2007 has sharply restricted all sales or
transfers of conventional arms by the Iranian government and Iranian nationals.280
11.14 In particular, Iran relies on the IRGC-QF – a branch of the Iranian Revolutionary
Guards Corps and an element of the Iranian military establishment – to cultivate and support
terrorist and militant groups abroad.281 The United States blocked the assets of the IRGC-QF
pursuant to Executive Order 13224, one of its terrorism-related sanctions authorities, since
2007, in response to the unit’s provision of support, including frequent arms shipments, to the
Taliban, Hezbollah, and other terrorist or militant organizations.282 Just before the adoption of
Executive Order 13599, the U.S. Treasury Department noted that the IRGC and the IRGC-QF
nonetheless continued to use deceptive financial practices to evade sanctions, engaging “in
seemingly legitimate activities that provide cover for intelligence operations and support
terrorist groups such as [Hezbollah], Hamas, and the Taliban.”283
11.15 Executive Order 13599 builds on and complements earlier international and U.S.
sanctions addressing these illicit activities.284 Prior to Executive Order 13599, these measures
279 See, e.g., Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76
Fed. Reg. 72756, 72757-72758 (Nov. 18, 2011) (U.S. P.O. Annex 152) (“Iran remains the most active of the listed
state sponsors of terrorism, routinely providing substantial resources and guidance to multiple terrorist
organizations. Iran has provided extensive funding, training, and weaponry to Palestinian terrorist groups,
including Hamas and the Palestinian Islamic Jihad (‘PIJ’). . . . The Qods Force [of the Islamic Revolutionary
Guards Corps] reportedly has been active in the Levant, where it has a long history of supporting [Hezbollah’s]
military, paramilitary, and terrorist activities, and provides [Hezbollah] with as much as $200 million in funding
per year. Additionally, the Qods Force provides the Taliban with weapons, funding, logistics, and training in
support of anti-U.S. and anti-coalition activity. Information dating from at least 2006 indicates that Iran has
arranged frequent shipments to the Taliban of small arms and associated ammunition, rocket propelled grenades,
mortar rounds, 107 mm rockets, and plastic explosives.” (emphasis added)).
280 See, e.g., S.C. Res. 2231, ¶ 7, Annex B ¶ 6(b), U.N. Doc. S/RES/2231 (July 20, 2015) (U.S. P.O. Annex 122)
(providing that all States are to “[t]ake the necessary measures to prevent, except as decided otherwise by the UN
Security Council in advance on a case-by- case basis, the supply, sale, or transfer of arms or related materiel from
Iran by their nationals or using their flag vessels or aircraft, and whether or not originating in the territory of Iran,”
for a specified period) (Annex 122); S.C. Res. 1747, ¶ 5, U.N. Doc. S/RES/1747 (Mar. 24, 2007) (U.S. P.O. Annex
101) (deciding “that Iran shall not supply, sell or transfer directly or indirectly . . . any arms or related material,
and that all States shall prohibit the procurement of such items from Iran ”).
281 See, e.g., Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76
Fed. Reg. 72756, 72757-72758 (Nov. 18, 2011) (U.S. P.O. Annex 152).
282 U.S. Dep’t of the Treasury, “Fact Sheet: Designation of Iranian Entities and Individuals for Proliferation
Activities and Support for Terrorism” (Oct. 25, 2007) (U.S. P.O. Annex 147); see also S.C. Res. 1747, U.N. Doc.
S/RES/1747 (Mar. 24, 2007) (U.S. P.O. Annex 101) (imposing sanctions on the commander of the IRGC-QF).
283 Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756, 72762 (Nov. 18, 2011) (U.S. P.O. Annex 152).
284 See Chapter 6. In particular, Executive Order 13599 refers to the earlier Executive Order 12957, declaring a
national emergency with respect to Iran. That Order was issued “in response to actions and policies of the
84
included requirements to block the assets of specific Iranian agencies, institutions, and
individuals that engaged in or supported terrorism or Iran’s ballistic missile program.285 The
United States has long used asset blocking measures as a means to deter conduct that threatens
U.S. national security, including to prevent the use of the U.S. financial system to further, or
provide resources for, such conduct. The UN Security Council has both required States to
apply asset freezing measures in a number of circumstances and recognized in various contexts
that asset freezes are a “significant tool” for combatting activity that it has determined
constitutes a threat to international peace and security.286
11.16 In the period leading up to Executive Order 13599, the international community’s
sanctions on Iran became increasingly strict in response to Iran’s continued activities of
proliferation concern, and Iran increased its efforts to evade detection using complex financial
transactions and front companies to mask its unlawful activities. The U.S. Department of
Treasury, in the above-quoted November 2011 finding that underpinned Executive Order
13599, specified that Iran was relying on an array of agencies, instrumentalities, and financial
Government of Iran, including support for international terrorism, efforts to undermine the Middle East peace
process, and the acquisition of weapons of mass destruction and the means to deliver them.” President William
J. Clinton, Message to the Congress on Iran, 34 WEEKLY COMP. PRES. DOCS. 446 (Mar. 16, 1998) (U.S. P.O.
Annex 193).
285 See, e.g., Exec. Order 13224, 66 Fed. Reg. 186 (Sept. 25, 2001) (U.S. P.O. Annex 134) (blocking property and
prohibiting transactions with persons who commit, threaten to commit, or support terrorism); Exec. Order 13382,
70 Fed. Reg. 38567 (June 28, 2005) (U.S. P.O. Annex 197) (blocking property of those who engage in or support
proliferation of “weapons of mass destruction or their means of delivery (including missiles capable of delivering
such weapons)”). The UN Security Council also imposed asset freezes relating to these activities. See, e.g., S.C.
Res. 1737, ¶ 12, U.N. Doc. S/RES/1737 (Dec. 27, 2006) (U.S. P.O. Annex 100) (deciding that “all States shall
freeze the funds, other financial assets and economic resources . . . that are owned or controlled” by designated
persons and entities involved in the nuclear and ballistic missile program); S.C. Res. 1747, U.N. Doc. S/RES/1747
(Mar. 24, 2007) (U.S. P.O. Annex 101) (adding additional entities and persons, including IRGC affiliates, to the
list of sanctioned persons); S.C. Res. 1803, U.N. Doc. S/RES/1803 (Mar. 3, 2008) (U.S. P.O. Annex 102) (further
intensifying sanctions); S.C. Res. 1929, U.N. Doc. S/RES/1929 (June 9, 2010) (U.S. P.O. Annex 110) (similar).
286 See e.g., S.C. Res. 1373, ¶ 1, U.N. Doc. S/RES/1373 (Sep. 28, 2001) (U.S. P.O. Annex 81) (requiring States
to “freeze without delay funds and other financial assets or economic resources of persons who commit, or attempt
to commit, terrorist acts or participate in or facilitate the commission of terrorist acts; of entities owned or
controlled directly or indirectly by such persons; and of persons and entities acting on behalf of, or at the direction
of such persons and entities”); S.C. Res. 1989, prmbl. & ¶ 1, U.N. Doc. S/RES/1989 (June 17, 2011) (U.S. P.O.
Annex 199) (“Emphasizing that sanctions are an important tool under the Charter . . . and stressing in this regard
the need for robust implementation of the [asset freeze] measures in paragraph 1 of this resolution as a significant
tool in combating terrorist activity”); S.C. Res. 1807, prmbl. & ¶ 11, U.N. Doc. S/RES/1807 (Mar. 31, 2008) (U.S.
P.O. Annex 200) (determining that the situation in the DRC continues to constitute a threat to international peace
and security in the region, deciding that all States shall freeze the funds, other financial assets and economic
resources on their territories of persons and entities designated by the sanctions committee); S.C. Res. 2293, ¶ 5,
U.N. Doc. S/RES/2293 (June 23, 2016) (U.S. P.O. Annex 201) (renewing resolution 1807); S.C. Res. 2140, prmbl.
& ¶ 11, U.N. Doc. S/RES/2140 (Feb. 26, 2014) (US PO Annex 202) (determining that the situation in Yemen
constitutes a threat to international peace and security in the region, and deciding that all Member States shall
freeze without delay all funds, financial assets and economic resources which are on their territories, which are
owned or controlled, directly or indirectly, by the individuals or entities designated by the sanctions committee);
S.C. Res. 2342, ¶ 2, U.N. Doc. S/RES/2342 (Feb. 23, 2017) (U.S. P.O. Annex 203) (renewing resolution 2140).
85
institutions to evade sanctions and to further its support for terrorism abroad and its pursuit of
ballistic missiles domestically.287 These entities included a number of well-known Iranian
financial institutions, such as Bank Sepah,288 Bank Melli,289 Bank Mellat,290 Bank Saderat,291
and the Central Bank of Iran (Bank Markazi),292 among others.293
11.17 This and other evidence cited in its November 2011 finding formed the basis for the
U.S. Treasury Department conclusion that Iran and Iranian financial institutions were engaged
in a concerted effort to evade U.S. and multilateral sanctions targeting, inter alia, weapons
proliferation and the provision of support to terrorist groups. The Treasury Department stated:
As a result of the strengthened U.S. sanctions and similar
measures taken by the United Nations and other members of the
global community, Iran now faces significant barriers to
conducting international transactions. In response, Iran has used
deceptive financial practices to disguise both the nature of
transactions and its involvement in them in an effort to
circumvent sanctions. This conduct puts any financial institution
involved with Iranian entities at risk of unwittingly facilitating
transactions related to terrorism, proliferation, or the evasion of
U.S. and multilateral sanctions. Iranian financial institutions,
including the Central Bank of Iran (“CBI”), and other statecontrolled
entities, willingly engage in deceptive practices to
disguise illicit conduct, evade international sanctions, and
287 Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756 (Nov. 18, 2011) (U.S. P.O. Annex 152) (designating Iran as a “jurisdiction of primary money laundering
concern” on the basis of its support for terrorism, pursuit of nuclear and ballistic missile capability, use of
deceptive financial practices to evade sanctions, serious deficiencies in its controls to combat money laundering
and terrorist finance, and lack of cooperation with U.S. law enforcement and regulatory officials).
288 Id. at 72759 (U.S. P.O. Annex 152) (noting that Bank Sepah provided “direct and extensive financial services
to Iranian entities responsible for developing ballistic missiles,” including the Aerospace Industries Organization
and the Shahid Hemat Industrial Group).
289 Id. (U.S. P.O. Annex 152) (noting that Bank Melli “facilitated numerous purchases of sensitive materials for
Iran’s nuclear and missile programs on behalf of UN-designated entities”).
290 Id. (U.S. P.O. Annex 152) (noting public findings by the United States, the United Kingdom, and the UN
Security Council that Bank Mellat had been extensively involved in financing Iran’s ballistic missile program).
291 Id. at 72758 (U.S. P.O. Annex 152) (noting that Bank Saderat had been used to support terrorist organizations,
and that from 2001 to 2006 it “transferred $50 million from the Central Bank of Iran through its subsidiary in
London to its branch in Beirut for the benefit of [Hezbollah] fronts in Lebanon that support acts of violence”).
292 Id. at 72760 (U.S. P.O. Annex 152) (finding that the Central Bank of Iran had used a variety of payment
schemes to evade terrorism and proliferation-related sanctions and had deliberately attempted to conceal the
involvement of sanctioned Iranian banks in international transactions).
293 Id. (U.S. P.O. Annex 152) (referring to Post Bank, which operated on behalf of Bank Sepah; the Iranian-owned
German bank EIH which served Bank Mellat, Post Bank, and others; Bank Refah, which provided services to the
sanctioned Iranian Ministry of Defense and Armed Forces Logistics; the Bank of Industry and Mines, which
provided services to Bank Mellat and EIH; and Ansar Bank and Mehr Bank, which served the IRGC).
86
undermine the efforts of responsible regulatory agencies around
the world.294
11.18 In light of the foregoing, the blocking requirements imposed in Executive Order
13599 constitute measures “regulating the production of or traffic in arms, ammunition or
implements of war, or traffic in other materials carried on directly or indirectly for the purpose
of supplying a military establishment,” within the meaning of Article XX(1)(c). These
blocking measures form part of a regulatory scheme – encompassing U.S. sanctions with
respect to Iran– designed to address Iranian arms trafficking, its ballistic missile program, and
its financial support for terrorism. That regulatory regime included, for example, asset freezes
imposed by the United States on Iranian entities engaging in prohibited activities. Executive
Order 13599 was designed to further disrupt these activities by cutting off hidden or masked
sources of funding arranged under the guise of seemingly legitimate transactions. Executive
Order 13599 thus works in conjunction with other proliferation- and terrorism-related measures
to deter – and thus to “regulate” within the meaning of the Treaty – Iranian pursuit of ballistic
missiles, its traffic in such missiles or their component parts, its traffic in arms and supplies to
terrorist and militant organizations abroad, and traffic in arms and other military supplies to
sanctioned entities within the Iranian military establishment, such as the IRGC-QF. For these
reasons, the blocking measures imposed by Executive Order 13599 and challenged by Iran fall
within the exclusion in Article XX(1)(c) of the Treaty, and Iran’s claims must be dismissed to
the extent they are based on Executive Order 13599.
Section C: Executive Order 13599 Comes Within the Exception Created
by Article XX(1)(d) as a Measure Necessary to Protect the
United States’ Essential Security Interests
11.19 Subparagraph (d) of Article XX(1) excludes from the Treaty’s scope any measures
“necessary to fulfill the obligations of a High Contracting Party for the maintenance or
restoration of international peace and security, or necessary to protect its essential security
interests.” Executive Order 13599 is a measure necessary to protect the United States’ essential
security interests and is therefore not subject to the Treaty’s substantive provisions for the
independent reason that it falls within the exception under Article XX(1)(d).
11.20 The Article XX(1)(d) exception is broad and a high degree of deference is due to the
State invoking it. As the text of the provision makes clear, Article XX(1)(d) does not authorize
294 Id. (U.S. P.O. Annex 152) (emphasis added).
87
or disallow any particular measure that is necessary to protect a Party’s essential security
interests. It simply removes such measures from the scope and application of the Treaty.
11.21 The negotiating history confirms that Article XX(1)(d) excludes from the Treaty’s
application and scope a wide range of measures to protect a Party’s essential security interests.
In the treaty negotiations between Iran and the United States, Article XX(1)(d) was cited when
the Iranian negotiators proposed subjecting Article II’s right to entry to “internal safety
regulations.” The U.S. State Department instructed U.S. Embassy Tehran to explain that such
language was unnecessary because the right to enforce internal safety regulations was amply
covered by Article XX(1)(d). Further, the U.S. State Department authorized Embassy Tehran
to provide a written statement recording that the Treaty recognized the “paramount right” of a
State to “take measures to protect itself and public safety.”295 As the Court explained in the
Military and Paramilitary Activities case, “[t]he concept of essential security interests certainly
extends beyond the concept of an armed attack, and has been subject to very broad
interpretations in the past.”296
11.22 The negotiating history’s reference to a State’s “paramount right” and the United
States’ willingness to enter into a written statement to this effect confirm the wide discretion
afforded by Article XX(1)(d). The Court acknowledged the deference due to a Party invoking
Article XX(1)(d) in its 2008 Judgment in Certain Questions of Mutual Assistance in Criminal
Matters (Djibouti v. France). There, it cited the Treaty of Amity’s essential security interests
clause as an example of a provision that affords the invoking State “wide discretion”:
[W]hile it is correct, as France claims, that the terms of Article 2
[of the treaty at issue in the case] provide a State to which a
request for assistance has been made with a very considerable
discretion, this exercise of discretion is still subject to the
obligation of good faith codified in Article 26 of the 1969 Vienna
Convention on the Law of Treaties [citations omitted]; for the
competence of the Court in the face of provisions giving wide
discretion, see [citations to Military and Paramilitary Activities
in Nicaragua Merits Judgment ¶ 222, Oil Platforms Merits
Judgment ¶ 43].297
295 Telegram from U.S. Dep’t of State to U.S. Embassy Tehran (Feb. 15, 1955) (U.S. Annex 133).
296 Military and Paramilitary Activities in Nicaragua (Nicaragua v United States of America), 1986 I.C.J. 14, ¶
224 (June 27).
297 Certain Questions of Mutual Assistance in Criminal Matters (Djibouti v. France), 2008 I.C.J. 177, 229, ¶ 145
(emphasis added); see also Rejoinder Submitted by the United States of America (Mar. 23, 2001), ¶¶ 4.24-4.35,
Oil Platforms (Iran v. United States) (arguing that the Court “should allow the Party invoking Article XX(1)(d) a
measure of discretion in its application”).
88
11.23 Historical sources further confirm the wide latitude that Parties invoking Article
XX(1)(d) have been understood to have to determine their essential security interests and the
matters necessary to protect them. In 1981, Charles Sullivan issued an internal, unclassified
study of the standard draft FCN treaty for the U.S. Department of State (the “Sullivan Study”)
which provides insight into the intent of FCN treaty provisions. For many years, Mr. Sullivan
headed the U.S. State Department office that negotiated FCN treaties. The Sullivan Study
analyzed the standard draft treaty as well as all of the FCN treaties of the United States from
1946 until 1962, article by article and paragraph by paragraph.298 The Sullivan Study confirms
that the essential security clause of FCN treaties was meant to afford invoking Parties wide
latitude and explicitly notes the “broad freedom of action extended to each treaty partner by
the essential security reservation.”299
11.24 As demonstrated below, Iran’s illicit activities and Iran’s attempts to develop
deceptive and evasive ways to fund them present a serious and demonstrable security risk to
the United States and its nationals. The United States has unquestionable essential security
interests in preventing terrorist attacks and the financing of terrorist activities that threaten its
nationals and halting the advancement of Iran’s ballistic missile program. Executive Order
13599 was a measure necessary to protect these interests. The United States’ determination to
this effect warrants substantial deference and compels the dismissal of Iran’s claims to the
extent they are based on the Executive Order, as outside the scope of the Treaty.
i. The United States Has Essential Security Interests in Preventing Terrorism and
Terrorist Financing, and in Halting the Advancement of Iran’s Ballistic
Missile Program
11.25 The United States unquestionably has an essential security interest in preventing
terrorist attacks that target the United States, its nationals, and its interests abroad, including
by preventing the provision of arms, materiel, training, and funds to terrorist groups and
suppressing the use of money laundering and other deceptive financial practices to finance
terrorism. It has a similarly clear essential security interest in halting Iran from advancing its
ballistic missile program.
298 CHARLES H. SULLIVAN, U.S. DEP’T OF STATE, STANDARD DRAFT TREATY OF FRIENDSHIP, COMMERCE AND
NAVIGATION: ANALYSIS AND BACKGROUND (1981) (hereinafter “SULLIVAN STUDY”) (excerpts at U.S. P.O.
Annex 214 and IM Annex 20).
299 SULLIVAN STUDY at 308 (U.S. P.O. Annex 214).
89
11.26 Over the past decades, many U.S. nationals have been killed or wounded in terrorist
attacks carried out by groups and individuals sponsored and directed by Iran, as described in
Chapter 5. The international community has long condemned such acts of terrorism, and State
involvement in terrorism in the strongest possible terms. For example, in 1994 the UN General
Assembly adopted a resolution urging States “to take all appropriate measures at the national
and international levels to eliminate terrorism,” stating that the General Assembly was
Deeply disturbed by the world-wide persistence of acts of
international terrorism in all its forms and manifestations,
including those in which States are directly or indirectly
involved, which endanger or take innocent lives, have a
deleterious effect on international relations and may jeopardize
the security of States, . . . [and]
Convinced . . . that the suppression of acts of international
terrorism, including those in which States are directly or
indirectly involved, is an essential element for the maintenance
of international peace and security.300
11.27 The UN Security Council reaffirmed its determination that acts of international
terrorism constitute a threat to international peace and security in 2001, and declared that the
“acts, methods, and practices of terrorism are contrary to the purposes and principles of the
United Nations” and that “knowingly financing, planning and inciting terrorist acts are also
contrary to the purposes and principles of the United Nations.”301 It accordingly mandated that
States “[p]revent and suppress the financing of terrorist acts” and that they freeze “funds and
other financial assets or economic resources” of those who commit or support terrorism.302
The Council also recognized the need for States to complement international cooperation by
taking additional measures to prevent and suppress, in their territories through all lawful means,
the financing and preparation of any acts of terrorism.303 The UN Security Council has since
repeatedly recognized that terrorism poses a threat to international peace and security,304 and
300 G.A. Res. 49/60, at 1-3, U.N. Doc. A/RES/49/60 (Feb. 17, 1995) (U.S. P.O. Annex 179); see also S.C. Res.
1373, ¶ 3, U.N. Doc. S/RES/1373 (Sep. 28, 2001) (U.S. P.O. Annex 81) (“reaffirming” that acts of international
terrorism “constitute a threat to international peace and security”).
301 S.C. Res. 1373, prmbl & ¶ 5, U.N. Doc. S/RES/1373 (Sep. 28, 2001) (U.S. P.O. Annex 81).
302 Id. at ¶ 1 (U.S. P.O. Annex 81).
303 Id. prmbl. (U.S. P.O. Annex 81).
304 S.C. Res. 1455, prmbl., U.N. Doc. S/RES/1455 (Jan. 17, 2003) (U.S. P.O. Annex 207); S.C. Res. 1963, prmbl.,
U.N. Doc. S/RES/1963 (Dec. 20, 2010) (U.S. P.O. Annex 208); S.C. Res. 2129, prmbl., U.N. Doc. S/RES/2129
(Dec. 17, 2013) (U.S. P.O. Annex 209); S.C. Res. 2178, prmbl., U.N. Doc. S/RES/2178 (Sept. 24, 2014) (U.S.
P.O. Annex 210); S.C. Res. 2253, prmbl., U.N. Doc. S/RES/2253 (Dec. 17, 2015) (U.S. P.O. Annex 182); S.C.
Res. 2341, prmbl., U.N. Doc. S/RES/2341 (Feb. 13, 2017) (U.S. P.O. Annex 211).
90
that “countering this threat requires collective efforts on national, regional, and international
levels.”305
11.28 The international community also recognizes the danger of Iran’s pursuit of ballistic
missile capabilities. As discussed above, in adopting UN Security Council resolution 1929
(2010), the UN Security Council “decide[d] that Iran shall not undertake any activity related to
ballistic missiles capable of delivering nuclear weapons, including launches using ballistic
missile technology.”306 Later, in the wake of Iran’s March 2016 ballistic missile launches, the
UN Secretary General called on Iran “to refrain from conducting such launches.”307 For its
part, the United States has been clear in voicing its conviction that Iran’s ballistic missile
program poses a “fundamental threat[] to the region and beyond.”308
11.29 As the Court held in Military and Paramilitary Activities in Nicaragua, the concept
of essential security interests “certainly extends beyond the concept of an armed attack, and
has been subject to very broad interpretations in the past.”309 Moreover, the phrase “its
essential security interests” makes clear that it is the assessment of the Party invoking the
defense that is most relevant. Whether a situation implicates “its security interests” and
whether the interests at stake are “essential” to that Party are not questions in the abstract but
instead must be viewed from the perspective of the Party invoking the defense – based on its
specific circumstances, and its own perception of those circumstances. The interests identified
here – the prevention of terrorism and terrorist financing and the prevention of ballistic missile
proliferation – must on any view qualify under the provision. And while the critical point in
this case is that these are essential security interests of the United States, it is notable that the
305 S.C. Res. 2253, prmbl., U.N. Doc. S/RES/2253 (Dec. 17, 2015) (U.S. P.O. Annex 182); S.C. Res. 2341, prmbl.,
U.N. Doc. S/RES/2341 (Feb. 13, 2017) (U.S. P.O. Annex 211).
306 S.C. Res. 1929, ¶ 9, U.N. Doc. S/RES/1929 (June 9, 2010) (U.S. P.O. Annex 110). See Chapter 5.A.
307 UN Secretary General, First Implementation Report, at 3, U.N. Doc. S/2016/589 (July 12, 2016) (U.S. P.O.
Annex 123).
308 Statement of Thomas A. Shannon, Jr., Under Secretary for Political Affairs, U.S. Dep’t of State, Before the
Senate Foreign Relations Comm., Iran’s Recent Actions and Implementation of the JCPOA, at 1 (Apr. 5, 2016),
(U.S. P.O. Annex 212) (“While we are encouraged by Iran’s adherence to its nuclear commitments thus far, I
assure you that the Administration shares your concerns about the government of Iran’s actions beyond the nuclear
issue, including its destabilizing activities in the Middle East and its human rights abuses at home. Iran’s support
for terrorist groups like [Hezbollah], its assistance to the Assad regime in Syria and the Houthi rebels in Yemen,
and its ballistic missile program are at odds with U.S. interests, and pose fundamental threats to the region and
beyond.”).
309 Military and Paramilitary Activities in Nicaragua (Nicaragua v United States of America), 1986 I.C.J. 14, 117,
¶ 224 (June 27).
91
same concerns have been recognized as essential not only by the United States, but by the UN
Security Council and the broader international community.
ii. Executive Order 13599 is Necessary to Protect the Essential Security Interests
of the United States, Particularly in Preventing and Deterring Terrorist Attacks
and the Advancement of Iran’s Ballistic Missile Program
11.30 Executive Order 13599 is a measure necessary to protect the essential security
interests identified in the preceding section, and as discussed above, the Court should accord
substantial deference to a State’s determination to that effect.
11.31 The essential security rationale for the United States issuing Executive Order 13599
is evident. As indicated above in Section A, Executive Order 13599 implements the
requirements of Section 1245(c) of the 2012 NDAA.310 Among the Congressional findings
included in Section 1245 is a reference to the U.S. Treasury Department’s November 2011
finding identifying Iran as a jurisdiction of “primary money laundering concern,” and the
statement of the Under Secretary of the Treasury for Terrorism and Financial Intelligence that
the “entire Iranian banking sector, including the Central Bank of Iran” posed “terrorist
financing, proliferation financing, and money laundering risks for the global financial
system.”311
11.32 The U.S. Treasury Department’s conclusions accorded with FATF’s findings to the
effect that Iran’s financial sector posed serious risks with regard to terrorism finance.312 Just
prior to the adoption of Executive Order 13599, on October 28, 2011, the FATF indicated “with
a renewed urgency” that it was “particularly and exceptionally concerned about Iran’s failure
to address the risk of terrorist financing and the serious threat this poses to the integrity of the
international financial system[.]”313 Iran is on FATF’s list of “high-risk and non-cooperative
310 Notably, Iran cites this authority but not the Congressional findings that underpin it. Iran’s Memorial, ¶ 2.35
n.81.
311 National Defense Authorization Act for Fiscal Year 2012, § 1245(a), Pub. L. No. 112-239, 126 Stat. 2006 (IM
Annex 17).
312 Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756, 72757-72758 (Nov. 18, 2011) (U.S. P.O. Annex 152) (“Iran remains the most active of the listed state
sponsors of terrorism, routinely providing substantial resources and guidance to multiple terrorist organizations. .
. . Iran is known to have used state-owned banks to facilitate terrorist financing.”); Financial Crimes Enforcement
Network; Amendment to the Bank Secrecy Act Regulations – Imposition of Special Measure Against the Islamic
Republic of Iran as a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg. 72878, 72879-80 (Nov.
28, 2011) (U.S. P.O. Annex 153) (discussing findings concerning Iran’s role in terrorist financing, as well as
multilateral findings or actions by the UN Security Council and the FATF).
313 Financial Action Task Force (FATF), Public Statement – 28 October 2011 (U.S. P.O. Annex 222); see Chapter
5.A (discussing the FATF’s findings and recommendations concerning Iran).
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jurisdictions”; in fact, it is one of only two jurisdictions (together with the Democratic People’s
Republic of Korea) on FATF’s “call to action” list of countries against which States are advised
to take measures.314
11.33 As this history makes clear, Executive Order 13599 was adopted to protect the United
States’ interest in combatting Iranian support for terrorism and terrorist financing, and thereby
preventing future acts of terrorism. It is a measure necessary to the achievement of that
purpose. As the UN Security Council has recognized, asset freezes are an important method
of “prevent[ing] and suppress[ing] the financing of terrorist acts” – which States are obliged to
do under UN Security Council Resolution 1373315 – “even in the absence of a link to a specific
terrorist act[.]”316
11.34 In addition to its purpose of combatting terrorism financing, Section 1245 of the 2012
NDAA makes plain that Executive Order 13599 was also adopted as a measure necessary to
protect against the “proliferation financing” risks posed by Iran and the Iranian financial
sector.317 The United States is not alone in its concern regarding Iran’s ballistic missile
program and the involvement of Iran’s financial sector in contributing to Iranian proliferation
efforts. Just prior to the adoption of Executive Order 13599, the UN Security Council called
upon States to “exercise vigilance” over transactions involving Iranian banks, including Bank
Markazi and Bank Melli, “so as to prevent such transactions contributing to Iran’s
proliferation-sensitive nuclear activities or to the development of nuclear weapon delivery
systems.”318
314 See Financial Action Task Force, High-risk and monitored jurisdictions (U.S. Annex 134).
315 See S.C. Res. 1373, ¶ 1, U.N. Doc. S/RES/1373 (Sep. 28, 2001) (U.S. P.O. Annex 81) (deciding that States
shall “[f]reeze without delay funds or other financial assets or economic resources of persons who commit, or
attempt to commit, terrorist acts or participate in or facilitate the commission of terrorist acts[.]”).
316 S.C. Res. 2253, prmbl., U.N. Doc. S/RES/2253 (Dec. 17, 2015) (U.S. P.O. Annex 182).
317 National Defense Authorization Act for Fiscal Year 2012, § 1245(a)-(b), Pub. L. No. 112-239, 126 Stat. 2006
(IM Annex 17); see also Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money Laundering
Concern, 76 Fed. Reg. 72756, 72757-72762 (Nov. 18, 2011) (U.S. P.O. Annex 152) (discussing evidence “that
organized criminal groups, international terrorists, or entities involved in the proliferation of weapons of mass
destruction or missiles, have transacted business in that jurisdiction” (emphasis added)).
318 S.C. Res. 1929, prmbl. & ¶ 23, U.N. Doc. S/RES/1929 (June 9, 2010) (U.S. P.O. Annex 110) (“recalling in
particular the need to exercise vigilance over transactions involving Iranian banks, including the Central Bank of
Iran” and calling upon States to take “appropriate measures” that prohibit financial institutions within their
territories providing certain financial services if they have reasonable grounds to believe that such services “could
contribute to Iran’s proliferation-sensitive nuclear activities or the development of nuclear weapon delivery
systems” (emphasis added)); S.C. Res. 1803, ¶ 10, U.N. Doc. S/RES/1803 (Mar. 3, 2008) (U.S. P.O. Annex 102)
(“[c]all[ing] upon all States to exercise vigilance over the activities of financial institutions in their territories with
all banks domiciled in Iran, in particular with Bank Melli and Bank Saderat . . . in order to avoid such activities
93
11.35 Furthermore, the United States adopted Executive Order 13599 only after Iran
persisted in violating, through the use of deceptive practices, an array of more targeted
sanctions relating to its support for terrorism and its pursuit of vehicles for delivering weapons
of mass destruction. Iran had also ignored repeated calls to address the serious terrorist
financing risks posed by its financial sector.319 The Executive Order thus became necessary,
and was adopted, due to Iran’s own concerted efforts to frustrate these earlier measures
targeting Iran’s illicit conduct.
11.36 In light of the above, claims challenging Executive Order 13599 are precluded under
the Treaty because the Executive Order is a measure necessary to protect the United States’
essential security interests under Article XX(1)(d), compelling the dismissal of Iran’s claims
to the extent they are based on the Executive Order.
* * * *
11.37 For all of the above reasons, Executive Order 13599 is excluded from the Treaty’s
scope and application. Article XX(1)’s applicability to the Executive Order should be a simple
inquiry, especially given the substantial evidence that demonstrates the purpose of Executive
Order 13599. Iran, however, has ignored Executive Order 13599’s national security function
and instead attempted to invoke it as a violation of the Treaty’s substantive articles. Although
Iran’s allegations can be vague, the Memorial explicitly invokes Executive Order 13599 as a
violation of three of the Treaty’s substantive articles: Article III, Article V, and Article VII.
Whether these articles could apply to Executive Order 13599 is irrelevant and the Court should
not consider such assertions because Article XX(1)’s exceptions make clear that Executive
Order 13599 falls outside the scope of the Treaty and thus cannot be found to have violated
any of the Treaty’s substantive provisions. The Court should therefore dismiss Iran’s claims to
the extent they are premised on Executive Order 13599.
contributing to the proliferation sensitive nuclear activities, or to the development of nuclear weapon delivery
systems . . . .” (emphasis added)).
319 See, e.g., Financial Action Task Force (FATF), Public Statement –28 October 2011 (U.S. P.O. Annex 222).
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PART IV: THE U.S. MEASURES DO NOT VIOLATE THE TREATY OF AMITY
CHAPTER 12: IRAN’S FLAWED APPROACH TO PLEADING ITS CLAIMS AND
INTERPRETING THE TREATY OF AMITY
12.1 Should any of Iran’s claims remain after the Court rules on the U.S. defenses
presented in Part III, Chapters 13 through 17 in this Part IV of the Counter-Memorial
demonstrate that Iran’s claims under Articles III, IV, V, VII and X fail in any event. They fail
because Iran has either misinterpreted the relevant Treaty provision or misapplied the relevant
provision to the facts. In many instances it has done both.
12.2 In the alternative, in the event that the Court were to conclude that Iran, quod non,
did indeed have any actionable rights under the Treaty, the United States contends that Iran, as
a matter of admissibility, should not be permitted to invoke those rights as to do so would
constitute an abuse of right, deploying the claimed rights in an effort to frustrate efforts by
terrorism victims to obtain compensation for the harm caused by Iran-sponsored attacks is an
abuse. This issue is addressed in Chapter 18.
12.3 Finally, in Chapter 19, the United States notes the unavailability of certain forms of
relief as a result of the termination of the Treaty of Amity and also the vague and incomplete
nature of Iran’s request for relief more generally.
12.4 Before responding to Iran’s article-by-article claims, it is important to bear in mind
two cross-cutting issues presented by the way in which Iran has pled its claims. First, as noted
in Chapter 2, Iran relies heavily on conclusory assertions and imprecise factual statements to
make its case. As a result, Iran’s submissions fall short of what is required to establish its
claims. The United States responds below to the case Iran has presented, but that effort has
been hampered by the vague and ill-defined nature of Iran’s pleading.
12.5 Second, Iran has not followed the proper approach to interpreting the Treaty
provisions at issue, as outlined in the Court’s prior decisions, including in the context of the
Treaty of Amity at issue here. As a result, Iran’s arguments are divorced from the Treaty’s text
and cannot be sustained.
12.6 As the Court observed in the Oil Platforms case, in interpreting a treaty, it must look
to the rules of customary international law reflected in Articles 31 and 32 of the 1969 Vienna
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Convention on the Law of Treaties (the “Vienna Convention” or the “VCLT”).320 Under those
rules, the Treaty of Amity
must be interpreted in good faith in accordance with the ordinary
meaning to be given to its terms in their context and in the light
of its object and purpose. Under Article 32, recourse may be had
to supplementary means of interpretation such as the preparatory
work and the circumstances in which the treaty was
concluded.321
12.7 The Court has recognized that the object and purpose of the Treaty of Amity is not
to “regulate peaceful and friendly relations between the two States in a general sense.”322
Rather, the object and purpose of the Treaty, as stated in the preamble, is “encouraging
mutually beneficial trade and investments and closer economic intercourse generally between
their peoples, and regulating consular relations.”323 In addition to the Treaty’s object and
purpose, the Court has also taken into account its context and history, including in connection
with similar FCN treaties concluded by the United States during the same time period.324
12.8 Iran’s interpretation of the Treaty’s articles strays far from the guidance provided by
the Court in past cases. For example, Iran has attempted to read words into the Treaty
provisions that simply are not there, as in the case of Article III(1). It has also, in the case of
Article IV(1), rested its interpretation primarily on a single arbitral award rendered more than
fifty years after the Parties signed the Treaty of Amity that did not engage and has no direct
bearing on the Treaty. And, in the case of Article VII, Iran has ignored negotiating history that
clearly demonstrates the intent to restrict paragraph 1 to exchange restrictions. On the basis of
these and other interpretive failings by Iran, as detailed in the chapters that follow, the Court
should reject Iran’s reading of the Treaty provisions at issue.
320 Oil Platforms, Preliminary Objections Judgment, 1996 I.C.J. at 812, ¶ 23. The International Court of Justice
concluded that Article 31 of the Vienna Convention reflects customary international law. See, e.g.,
Kasikili/Sedudu Island (Botswana v. Namibia), 1999 I.C.J. 1045, 1059 (Dec. 13). Although the United States is
not a party to the Vienna Convention, it has recognized since at least 1971 that the Convention is the “authoritative
guide” to treaty law and practice.
321 Id. See also Certain Iranian Assets, Preliminary Objections Judgment, 2019 I.C.J. ¶ 70; Immunities and
Criminal Proceedings (Equatorial Guinea v. France), Preliminary Objections Judgment, 2018 I.C.J. ¶ 91;
Legality of Use of Force (Serbia and Montenegro v. Belgium), Preliminary Objections Judgment, 2004 I.C.J. 279,
318, ¶ 100.
322 Oil Platforms, Preliminary Objection Judgment, 1996 I.C.J. at 814, ¶ 28.
323 Treaty of Amity, Preamble; Preliminary Objections Judgment, ¶ 57.
324 See, e.g., Oil Platforms, 1996 I.C.J. at 814, ¶ 29 (referring to clauses in FCN treaties concluded between the
United States and China, Ethiopia and Oman).
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CHAPTER 13: IRAN HAS FAILED TO ESTABLISH A CLAIM UNDER ARTICLE III
13.1 Iran’s Article III claims are representative of the flaws in its overall case. Iran’s
interpretation of Article III(1) and III(2) cannot be squared with the text or negotiating history
of these provisions. As detailed below, Article III(1) simply identifies the types of entities that
qualify for protection under the Treaty as “companies” and provides that each Party must
recognize the “juridical status” of such companies. From this provision, however, Iran attempts
to derive a guarantee that a company and its property will be treated separately from its owners.
Article III(1) does not provide any such guarantee, either explicitly or implicitly. Indeed, it has
nothing whatsoever to say about the relationship between a company and its owners.
13.2 Iran’s approach to Article III(2) is similarly flawed, as the Court has already
confirmed. Article III(2), like Article III(1), has a simple aim: it provides that each Party’s
companies and nationals will have the “freedom of access to the courts” of the other Party. As
with Article III(1), Iran seeks to stretch Article III(2) far beyond any interpretation that its text
or history can accommodate. Specifically, Iran attempts to transform Article III(2) from a
provision protecting “access to the courts” into a provision guaranteeing litigants a variety of
rights once they are in court. The Preliminary Objections Judgment, however, rejected Iran’s
interpretation and thus left no basis for its Article III(2) claims because Iranian companies not
only enjoyed free access to, but also appeared in, U.S. courts.
Section A: Iran Has Failed to Establish a Violation of Article III(1) of
the Treaty
13.3 Iran is asking the Court to find – without textual or other support – that Article III(1)
requires the United States to treat Iranian state-owned companies separately from Iran itself,
such that the assets of such companies are insulated from enforcement of terrorism-related
judgments obtained against Iran. Iran’s argument is premised on inserting the term “separate”
before the phrase “juridical status,” although that term is not found in Article III(1). Iran then
asserts, based on this premise, that allowing the assets of Iran’s state-owned companies to be
attached to satisfy terrorism-related judgments against Iran constitutes a breach of Article III(1)
because the attachments fail to recognize the “separate juridical status” of such companies. As
discussed in this section, Iran’s argument rests on a fundamentally flawed interpretive premise
and must fail. Article III(1) simply ensures that companies have status as legal persons (i.e.,
juridical status); it nowhere insulates companies from judgment enforcement rules under
domestic law.
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i. Iran’s Interpretation of Article III(1) is Fundamentally Flawed.
(a) Article III(1) Does Nothing More Than Require Recognition of the
Legal Status of “Companies”
13.4 Article III(1) is a simple and straightforward provision that was intended to set forth
a definition of the term “companies” in order to establish the types of entities that qualify for
the protections afforded to “companies” under the Treaty, and to require that the status of such
entities as legal persons be recognized.
13.5 Article III(1) provides as follows:
Companies constituted under the applicable laws and regulations
of either High Contracting Party shall have their juridical status
recognized within the territories of the other High Contracting
Party. It is understood, however, that recognition of juridical
status does not of itself confer rights upon companies to engage
in the activities for which they are organized. As used in the
present Treaty, “companies” means corporations, partnerships,
companies and other associations, whether or not with limited
liability and whether or not for pecuniary profit.
13.6 Thus, Article III(1) contains three elements: (1) it defines the term “companies”; (2)
it sets out what is required for a “company” to establish that it has the nationality of one of the
High Contracting Parties; and (3) it requires both Parties to “recognize” the “juridical status”
of such companies, taking into account that the concept of “recognition” is subject to the
explicit limitation that it does not confer further rights.
13.7 A straightforward reading of the text makes clear that the Parties intended Article
III(1) to identify the scope of legal persons (as opposed to natural persons) that would qualify
for the protections afforded to “companies” under the other substantive provisions of the Treaty
and to require that their status as legal persons would be recognized. This interpretation of the
scope of Article III(1) is further bolstered by the provision’s explicit limitation that
“recognition of juridical status does not of itself confer rights upon companies to engage in the
activities for which they are organized.”
13.8 A review of the Treaty’s travaux préparatoires confirms the narrow purpose of
Article III(1). During the negotiations, Iran expressed concern about the scope of entities
covered by the term “companies,” and the implications of that definition for Iran’s obligations
toward such entities. A U.S. State Department cable to Embassy Tehran provided some
clarification in order to assist the negotiators in explaining to Iran the intended scope of this
provision. The cable stated:
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Iranian comment appears [to] reflect misunderstanding.
Paragraph confers no rights [on] corporations [to] engage in
business. It merely provides their recognition as corporate
entities principally in order they may prosecute or defend their
rights in court as corporate entities. In this sense paragraph one
[is] related to paragraph two [on access to courts]. Under [the]
treaty, no U.S. corporation may engage in business in Iran except
as permitted by Iran. Corporate status should be recognized [to]
assure [the] right [of] foreign corporate entities – those that sell
goods or furnish other services to Iran as well as those permitted
[to] operate in Iran – free access [to] courts [to] collect debts,
protect patent rights, enforce contracts, etc. . . . .325
13.9 This cable makes clear that the United States understood Article III(1) to be limited
to recognizing the legal personality of the companies of the other Party, and nothing more, and
that it communicated this view to Iran. The negotiating history contains no indication that Iran
took a different view on the interpretation of this provision.
13.10 The negotiating history of other FCNs that were concluded by the United States
around the same time as the Treaty of Amity also confirms this understanding of the meaning
of Article III(1). In reference to the corresponding provision of the U.S.-Netherlands FCN, the
State Department noted that “[o]f itself, the definition only requires each Party to concede and
acknowledge that a corporation is actually existent and endowed with legal being when the law
of the other Party has created it and given it existence. The operative rights of a corporation
must be sought in the operative provisions of the body of the treaty.”326 Similarly, during
negotiations with Belgium, the Department noted that “this provision does nothing more than
require each country to acknowledge that a corporation is actually existent and endowed with
legal being when the law of the other country has created it and given it existence.”
13.11 The language of Article III(1) also appears in Article XXII(3) of the U.S. standard
draft treaty. The Sullivan Study explains that the language in the first sentence on recognition
of juridical status “establishes a definite legal rule, although essentially for definitional
325 Telegram from U.S. Dep’t of State, No. 936, to U.S. Embassy in Tehran (Nov. 9, 1954) (U.S. Annex 135).
326 Instruction from the U.S. Dep’t of State to U.S. Embassy in The Hague (Dec. 21, 1953) (U.S. Annex 136).
See also Instruction from the U.S. Dep’t of State to U.S. Embassy in Brussels (Mar. 25, 1957) (U.S. Annex 137)
(During negotiations with Belgium, the Department noted that “this provision does nothing more than require
each country to acknowledge that a corporation is actually existent and endowed with legal being when the law
of the other country has created it and given it existence.” In addition, the United States explained that any
operating rights of a company not specified in the treaty would depend upon local law.)
99
purposes.”327 The Study goes on to explain that this sentence “establishes the place of charter
or incorporation as the sole fact determining the nationality of the company.”328
13.12 Herman Walker, a State Department official who served as the principal architect of
U.S. FCN treaties, explained the purpose of these definitional provisions further. He stated:
“on the subject of juridical status of entities, these treaties have sponsored a return to the
‘classical’ theory; that is, that the mere fact of lawful creation in either country shall ipso facto
be sufficient to endow the entity with lawful being and recognition in the other, without any
additional tests, such as where it maintains its seat, the nationality of its ownership or direction,
the character of its aims or otherwise.”329 Thus, these sources confirm what is in fact clear
from a plain reading, namely that Article III(1) was intended solely to ensure that legal persons
could, on the basis of being incorporated in one of the Parties, have “legal being” in the territory
of the other Party.330
(b) Iran’s Interpretive Approach Is Untethered from the Text.
13.13 Iran’s argument on the proper interpretation of Article III(1) rests on three
propositions: (1) the definition of “companies” in the last sentence of Article III(1) is broad;
(2) the Iranian state-owned entities subject to attachment proceedings that are at issue in the
case qualify as “companies” under the Treaty; and (3) the United States has an obligation to
recognize the separate juridical status of those Iranian companies.331 It is the third prong of
Iran’s analysis, in particular, that veers significantly off-course by reading into the provision
text that simply is not there.
13.14 Iran contends that “[t]he right to recognition of a company’s juridical status is not
qualified in any way, and includes the right to recognition of that company’s separate legal
327 SULLIVAN STUDY at 318 (IM Annex 20).
328 Id. This issue arose since some countries considered the principal place of business, rather than place of
incorporation, to be the determining factor for nationality.
329 Herman Walker, Jr., The Post-War Commercial Treaty Program of the United States, 73 Pol. Sci. Q. 57, 67-
68 (1958) (U.S. P.O. Annex 2) (emphasis added).
330 Further support for this interpretation is found in U.S. Supreme Court precedent analyzing FCNs. Indeed, the
U.S. Supreme Court considering the scope of a substantively identical provision in the U.S. FCN treaty with Japan
noted that the “primary purpose of the corporation provisions of the Treaty was to give corporations of each
signatory legal status in the territory of the other party, and to allow them to conduct business in the other country
on a comparable basis with domestic firms.” Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176, 185-86
(1982) (U.S. Annex 142). This case was decided in 1982 and thus preceded the U.S. measures that Iran challenges
in this case.
331 Iran’s Memorial, ¶ 4.3.
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personality and its right to own and dispose of property.”332 Iran does not engage in a textual
analysis to support this statement of the supposed content of Article III(1). Nor does it cite to
any relevant context, negotiating history, or other sources of interpretive guidance for this
position.
13.15 Instead, Iran engages in a sleight of hand. Iran refers repeatedly to the entitlement of
Iranian companies under Article III(1) to the recognition of their “separate” or “independent”
juridical status,333 yet the words “separate” and “independent” do not appear in Article III(1).
The text simply addresses recognition of “juridical status.”
13.16 Through this sleight of hand, Iran purports to read into Article III(1) – without textual
or other support – the proposition that Iranian state-owned companies must be treated
separately from Iran itself and that they are therefore insulated from attempts to attach their
assets to satisfy judgments obtained against Iran. This is methodologically flawed and
detached from any interpretative rigor. In order to arrive at Iran’s conclusion, the Court would
have to follow Iran along an unsustainable analytical path. First, the Court would have to
accept Iran’s incorrect framing of Article III(1) as requiring recognition of “separate juridical
status.” Second, after accepting this false premise, the Court would have to endorse Iran’s
allegation that the U.S. legal framework for enforcement of terrorism-related judgments against
the agencies and instrumentalities of a state sponsor of terrorism constitutes a violation of their
“separate juridical status.” Because Iran’s allegation of a violation of Article III(1) rests on a
flawed premise regarding the meaning and scope of that provision, the Court should reject it.
13.17 Article III(1) does not speak to the issue of the rights of a company in the context of
an action to enforce a judgment obtained against one of its owners. As discussed above, Article
III(1) is limited in scope, not even guaranteeing to companies the right to engage in the
activities for which they were incorporated, let alone the right to be insulated from judgment
enforcement actions. Iran’s attempted injection of the word “separate” into the text cannot
operate to change the scope of Article III(1) into a prohibition on enforcement against Iran’s
agencies and instrumentalities of judgments obtained against Iran, especially where doing so
would enable Iran to evade responsibility for the harms caused by its support for terrorism.
13.18 Iran makes cursory mention of the Court’s rulings in Barcelona Traction and Diallo
to support its arguments regarding the scope of Article III(1). But these cases do not assist.
332 Iran’s Memorial, ¶ 4.17.
333 Iran’s Memorial, Chapter 4, § 2 heading; id., Chapter 4, § 2.A heading; id., ¶¶ 4.19, 4.29, 4.35.
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Both cases concern the parameters under which a State can, under customary international law,
pursue a claim in the exercise of diplomatic protection on behalf of individuals or corporations.
The primary issue addressed by the Court in those cases was whether the right that was being
invoked was indeed a right of a national or corporation of the claimant state in circumstances
where the corporate ownership structure was complex and involved multiple States.334 Neither
Barcelona Traction nor Diallo arose under a treaty provision similar to Article III(1), nor did
they concern the much simpler question of what it means to recognize companies’ legal
personality. These cases, therefore, provide no insight into the meaning of Article III(1).
13.19 The text of Article III(1) makes clear that it is limited in scope, ensuring that
companies of each Party are conferred with legal personality in the territory of the other Party.
Iran’s attempt to transform Article III(1) into a protection against judgment enforcement
actions cannot be sustained.
ii. The U.S. Measures Satisfy the Recognition Requirement in Article III(1)
13.20 Iran has not and cannot establish that any of the U.S. measures violate Article III(1)
when it is interpreted properly. Iran nowhere alleges that the U.S. measures at issue deny
Iranian companies legal personality. Nor could it. None of the U.S. measures in any way
interferes with or denies recognition of Iranian companies’ legal personality. To recall, the
legislative measures that Iran appears to challenge in the context of Article III(1) are TRIA, the
2008 amendments to the FSIA, and Section 502 of the Iran Threat Reduction and Syria Human
Rights Act of 2012. In addition, Iran challenges Section 7(b) of Executive Order 13599. As
set forth in Chapter 6, these legislative and executive measures taken together comprise a legal
framework that facilitates satisfaction of judgments held by U.S. persons against designated
state sponsors of terrorism, including Iran, for death or injuries resulting from their support for
terrorist acts. These measures make available for attachment certain property of States
designated as sponsors of terrorism, including the property of their agencies and
instrumentalities. In addition, Iran challenges specific attachment proceedings in U.S. courts.
The very existence of these cases against the Iranian companies – as well as their participation
334 See Lawrence Jahoon Lee, Barcelona Traction in the 21st Century: Revisiting its Customary and Policy
Underpinnings 35 Years Later, STANFORD J. INT’L LAW (2006) (U.S. Annex 138) (in Barcelona Traction, the
Court “articulated a rule, ostensibly based on custom, that a corporation is a national of a state in which it is
incorporated for the purpose of diplomatic protection.”); Alberto Alvarez-Jimenez, Foreign Investors, Diplomatic
Protection and the International Court of Justice’s Decision on Preliminary Objections in the Diallo Case, N.
CAROLINA J. INT’L LAW AND COMM. REG. (2008) (U.S. Annex 139) (“In Diallo, the ICJ ratified and further
strengthened the rule set in Barcelona Traction, holding that the State in which a company is incorporated is the
only one that can seek its diplomatic protection.”).
102
in the U.S. legal proceedings to object to attachment – shows that the companies are in fact
recognized as having legal personality.335
13.21 Iran’s claims also fail even under its own flawed reasoning of Article III(1). Iran’s
position is that the provision precludes the United States from taking steps to enable victims of
Iranian-sponsored terrorism, and their families, to obtain compensation for their injuries. This
is untenable. It is true that the general principle that a distinction between a corporation and
its shareholders should be observed is well-established, not only in the United States but
throughout much of the world.336 However, exceptions to that general principle are equally
well established. For example, it is a well-established principle in both common law and civil
law jurisdictions that it may be appropriate to pierce the corporate veil or otherwise disregard
the distinction between a corporation and its shareholders in the interests of justice.337 The
U.S. measures at issue can only be viewed as serving the ends of justice as Iran has
demonstrated no willingness to accept responsibility or provide compensation to the victims of
the terrorist acts it has supported.
13.22 As stated above, Article III(1) does not in any way address, let alone limit the
circumstances under which it is appropriate to attach the assets of a state-owned entity for
purposes of enforcing a judgment obtained against the state. Accordingly, Iran’s claims under
Article III(1) should be dismissed.
Section B: Iran Has Failed to Establish a Violation of Article III(2) of
the Treaty
13.23 Article III(2), like Article III(1), has a straightforward meaning that Iran has
attempted to distort into a basis for its claims. As the Court recognized in the Preliminary
Objections Judgment, Article III(2) protects the right of “freedom of access to the courts” but
does not provide any additional substantive or procedural rights. Iran argues that its companies
should have been able to pursue particular defenses and prevail in U.S. courts, but Article III(2)
335 If anything, the definitional provisions of Article III(1) simply build toward the right of companies to
“prosecute or defend their rights in court as corporate entities.” See Telegram from U.S. Dep’t of State, No. 936,
to U.S. Embassy in Tehran, (Nov. 9, 1954) (U.S. Annex 135).
336 Cheng-Han Tan et al., Piercing the Corporate Veil: Historical, Theoretical, & Comparative Perspectives, 16
BERKELEY BUS. L.J. 140, 140-41 (2019) (U.S. Annex 140).
337 Id. See also First Nat. City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611, 633-34 (1983)
(U.S. Annex 141) (the decision to disregard the distinction between Cuba, found to have expropriated property in
violation of international law, and its separate juridical entities is “the product of the application of internationally
recognized equitable principles to avoid the injustice that would result from permitting a foreign state to reap the
benefits of our courts while avoiding the obligations of international law.”).
103
affords no such rights. The salient facts—which Iran conveniently ignores—are that its stateowned
companies actively participated in U.S. court proceedings and thus clearly enjoyed free
access to those courts consistent with Article III(2).
i. The Court’s Rejection of Iran’s Overbroad Interpretation of Article III(2)
Confirms That the Right of “Freedom of Access to the Courts” Does Not
Guarantee Any Other Substantive or Procedural Rights
13.24 The Preliminary Objections Judgment has both narrowed the scope of Iran’s claims
under Article III(2) and established the appropriate interpretive standard for evaluating Iran’s
remaining claims. Article III(2) provides that:
Nationals and companies of either High Contracting Party shall
have freedom of access to the courts of justice and administrative
agencies within the territories of the other High Contracting
Party, in all degrees of jurisdiction, both in defense and pursuit
of their rights, to the end that prompt and impartial justice be
done. Such access shall be allowed, in any event, upon terms no
less favorable than those applicable to nationals and companies
of such other High Contracting Party or of any third country. It
is understood that companies not engaged in activities within the
country shall enjoy the right of such access without any
requirement of registration or domestication.
13.25 In its Memorial, Iran attempts to use this provision to import customary international
law principles of sovereign immunity. The Court’s Preliminary Objections Judgment rejected
this “broad interpretation suggested by Iran.”338 Specifically, the Court explained that Article
III(2) “does not seek to guarantee the substantive or even the procedural rights that a company
of one Contracting Party might intend to pursue before the courts or authorities of the other
Party, but only to protect the possibility for such a company to have access to those courts or
authorities with a view to pursuing the (substantive or procedural) rights it claims to have.”339
In other words, Article III(2) simply grants a company the right of access to the courts to protect
whatever other rights the company claims to have. It does not do anything more.
13.26 The significance of the Court’s interpretation of Article III(2) extends beyond its
specific finding that the provision does not incorporate the immunities that Iran alleged under
customary international law. First, the proper interpretation of Article III(2) leaves no room
for Iran’s sweeping generalizations about the provision. Iran asserts that Article III(2) is “cast
338 Preliminary Objections Judgment, ¶ 70.
339 Id. (emphases added).
104
in mandatory and absolute terms,” “formulated in the most comprehensive of terms,” and “an
unqualified entitlement.”340 Iran’s attempt to characterize Article III(2) in terms favorable to
its claims cannot change the fact that its text protects only “access to the courts.”
13.27 Second, the Court’s ruling exposes the baselessness of the four “entitlements” that
Iran has attempted to locate within Article III(2). Specifically, Iran argues, without citing to
any authority, that its companies and nationals have “entitlements” to (a) immunities from
customary international law; (b) recognition of juridical personality from Article III(1);
(c) separateness from “the Iranian State” for purposes of liability and damages; and (d) raising
defenses regardless of subsequent legislation.341 None of these alleged “entitlements” appear
in the text of Article III(2), as interpreted in accordance with its ordinary meaning, in its context
or in light of the object and purpose of the Treaty of Amity.
13.28 In sum, the Court properly rejected Iran’s overbroad interpretation of Article III(2)
and found that “freedom of access to the courts” does not guarantee any procedural or
substantive rights, thus leaving no basis for Iran’s claims under that provision.
ii. Consistent with Article III(2), the United States Granted Freedom of Access to
the Courts in which Iranian Companies Regularly Appeared and Participated
13.29 The Preliminary Objections Judgment dismissed the bulk of Iran’s claims under
Article III(2) because they were based on the alleged violation of sovereign immunity
protections that do not exist in the Treaty of Amity. Iran’s remaining claims under Article
III(2) fail not only because they are premised on a flawed interpretation of Article III(2), as set
out above, but also because, as a factual matter, the Iranian companies in question regularly
appeared as named defendants, were represented by experienced counsel, and made detailed
legal submissions advocating for their positions in the attachment proceedings.342 Whether or
not the companies prevailed in these court proceedings is irrelevant. The companies’ active
participation in U.S. court proceedings is, by itself, a sufficient basis for rejecting Iran’s claims
that these companies did not have “freedom of access to the courts” under Article III(2).
340 Iran’s Memorial, ¶¶ 5.3, 5.4.
341 Id., ¶ 5.5.
342 See, e.g., Bennett v. Islamic Republic of Iran, Nos. 13-15442, 13-16100, slip op. at 12-13 (9th Cir. filed Feb.
22, 2016; amended June 14, 2016) (noting that Bank Melli “entered its appearance,” “moved to dismiss the
action,” and “made four arguments for dismissal”) (IM Annex 64).
105
13.30 Ignoring these facts, Iran nevertheless argues that the United States has breached
Article III(2) in “five separate respects.”343 These allegations cannot withstand scrutiny. First,
the Court has already dismissed Iran’s argument that Bank Markazi should have been granted
immunity defenses.344 As explained above, the Court properly interpreted Article III(2) as
providing no such right to immunities. Moreover, Iran’s attempt to characterize Bank Markazi
as both a sovereign entity entitled to immunity and as a “company” entitled to protection under
Article III(2) must be rejected for the reasons set forth in Chapter 9.345
13.31 Iran’s second alleged violation of Article III(2) fares no better, as it merely repeats
Iran’s flawed Article III(1) argument in another guise. Iran asserts that the alleged “abrogation
. . . of separate juridical status” somehow violates Articles III(2),346 but it cites to no support
for the proposition that Article III(2) encompasses an obligation with regard to “separate”
juridical status (and, as noted above, no such obligation is found in Article III(1) either).
Instead, Iran seems to base this claim on the provision regarding the “defense and pursuit of . .
. rights” in Article III(2). Yet this phrase does not create any new obligation or right. To the
contrary, it simply clarifies that “freedom of access” includes access that is both defensive and
offensive, that is, the ability to both bring claims and defend against claims in the courts. As
explained above, Iran cannot argue that its companies did not enjoy this right when they in fact
defended themselves in U.S. courts. Nor can Iran overcome these facts by stating that its
companies were “denied . . . any right properly to defend their interests”347 or to “meaningfully
defend themselves.”348 Iran seems to imply that a defense can only be “properly” or
“meaningfully” made if it proves successful. But, as the Court has already found, the right of
“freedom of access” cannot be interpreted as providing other substantive or procedural rights,
much less guaranteeing any outcome as a result of court proceedings.
13.32 Iran’s third argument likewise seeks to invent a new right through the “defense and
pursuit” clause of Article III(2). Iran asserts, without any support, that this clause prohibits
default judgments against Iranian companies following proceedings to which they were not
343 Iran’s Memorial, ¶ 5.11.
344 Id., ¶¶ 5.12-5.13.
345 See also U.S. Preliminary Objections, ¶¶ 9.1-9.20.
346 Iran’s Memorial, ¶ 5.14.
347 Iran’s Memorial, ¶ 5.14(b) (emphasis added).
348 Id., ¶ 1.26.
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parties.349 A default judgment cannot by itself violate Article III(2) because such judgments
are simply a function of a party failing to appear in a proceeding. For example, Iran cannot
now seek to benefit from electing not to appear in the Peterson case to face the allegations
against it regarding serious acts of terrorism for which it has provided support. Only after such
judgments were obtained and not satisfied did proceedings commence regarding other available
means to satisfy that judgment consistent with U.S. law. At that stage, when the assets of stateowned
entities were made available to satisfy judgments against Iran for its acts, the rights of
those state-owned entities became relevant and they could, and in fact did, access the courts to
defend those rights. To the extent Iran’s grievance is with substantive provisions of U.S. law
(TRIA, E.O. 13599, and Section 502 of the Iran Threat Reduction and Syria Human Rights Act
of 2012) and with the outcome of the enforcement proceedings, those issues are outside the
scope of Article III(2) because, as the Court has found, the provision does not guarantee any
substantive or procedural rights, only a right to access the courts with a view to pursuing and
defending rights a company claims to have.
13.33 Iran’s fourth argument likewise does not relate to “freedom of access,” but instead,
like the rest of its arguments under this provision, relates to substantive and procedural rights.
Iran asserts that the U.S. measures in question had “retroactive effect that ultimately enabled
seizure of the property of [the Iranian] companies.”350 But what ultimately transpired as a result
of these court proceedings is irrelevant to whether the Iranian companies had “freedom of
access” to those proceedings. Iran asserts based on Section 502, that the change in the law
“depriv[ed] Bank Markazi of defenses upon which it had previously relied, thereby disabling
Bank Markazi from defending its rights and preventing impartial justice from being done.”351
It strains credulity for Iran to argue that Section 502 deprived access to courts when Bank
Markazi not only appeared in the courts, but also defended its interests all the way through the
appellate process, including a challenge to the constitutionality of Section 502 in the U.S.
Supreme Court. Iran’s disappointment with the outcome of court proceedings in which Iranian
companies participated cannot be a violation of “freedom of access” to the courts.
13.34 Iran’s final argument under Article III(2) points to the requirement that “access shall
be allowed, in any event, upon terms no less favourable than those applicable to national and
349 Id., ¶ 5.15.
350 Id., ¶ 5.16.
351 Id., ¶ 5.16.
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companies of . . . any third country.”352 Aside from its repeated allegations regarding
immunity, Iran has not identified any way in which Iranian companies had “less favourable”
access to the courts than comparably-situated companies of third States, nor could it. Instead,
Iran attempts again through this provision to invent a right to a particular outcome or defense
that cannot be found in Article III(2). As the Court has explained, the right of “freedom of
access” does not provide a right to any particular outcome or defense, such as immunity, and
thus cannot give rise to the breach that Iran asserts.
13.35 Iran’s claims under Article III(2), like its claims under Article III(1), therefore fail
and must be dismissed.
CHAPTER 14: IRAN HAS FAILED TO ESTABLISH A BREACH OF ARTICLE IV
14.1 As with Article III, Iran has attempted to read into Articles IV(1) and IV(2) a variety
of wide-ranging protections that these provisions simply do not contain. In each case, Iran
makes little effort to justify its position, citing only a handful of authorities – where it cites
authorities at all – and otherwise relying on mere assertions. Iran’s interpretations of Articles
IV(1) and IV(2) should therefore be rejected and the claims it asserts on the basis of these
flawed interpretations should be dismissed.
14.2 This Section will begin with a discussion of the minimum standard of treatment
provided under Article IV generally (in Section A), before addressing Iran’s claims under
Article IV(1) (in Section B) and Article IV(2) (in Section C).
14.3 As will be demonstrated below, Iran’s approach to Articles IV(1) and IV(2) fails to
adhere to the Court’s conclusions that the provisions of the Article must be read in the context
of Article IV as a whole. Article IV, paragraphs 1 and 2, when properly interpreted in
accordance with customary rules of treaty interpretation, describe the minimum standard of
treatment of aliens as it was understood at the time of the Treaty’s conclusion. In particular,
the Article IV(1) obligation includes the obligation not to deny justice to a Party’s companies
and nationals, while the two limbs of Article IV(2) respectively ensure that the property of a
Party’s companies and nationals will receive “most constant protection and security” and
constrain the circumstances under which such property may be taken. Considered in the proper
light, neither Article IV(1) nor Article IV(2) supports the claims that Iran is making in this case.
352 Id., ¶ 5.17.
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14.4 Iran’s claims under Article IV(1) do not meet the high threshold necessary to
establish that its companies or nationals have been denied justice by the United States. To the
contrary, the agencies and instrumentalities of Iran that have been subject to attachment and
enforcement proceedings have had a full opportunity to defend themselves in U.S. courts and
have been treated fairly throughout.
14.5 With respect to Article IV(2), Iran has sought to treat the first limb of that article as
a guarantee of legal stability. This is simply not what is meant by “most constant protection
and security,” which has traditionally been understood as having been breached when a State
fails to provide reasonable police protection against acts of a criminal nature that physically
invaded the person or property of an alien.
14.6 Iran’s interpretation of Article IV(2)’s second limb is likewise untenable. Iran asks
the Court to focus solely on the magnitude of the alleged deprivation in assessing whether a
taking has occurred and would have the Court ignore the nature and character of the challenged
measure entirely. Among other problems, Iran’s approach is incompatible with the
longstanding principle that a bona fide exercise of a State’s police power, even if it has a
significant effect on property, is not a taking.
Section A: The Minimum Standard of Treatment under Article IV
14.7 In its decision on Preliminary Objections, the Court confirmed that the provisions of
Article IV must be read in the context of Article IV as a whole, and further stated that “the
purpose of Article IV is to guarantee certain rights and minimum protections for the benefit of
natural persons and legal entities engaged in activities of a commercial nature.”353 The Court
repeated that conclusion when rejecting Iran’s argument that the reference to “international
law” in Article IV(2) included sovereign immunity. The Court observed “[t]he ‘international
law’ in question in this provision is that which defines the minimum standard of protection for
property belonging to ‘nationals’ and ‘companies’ of one Party engaging in economic activities
within the territory of the other . . . .”354 As such, the Court’s ruling recognized that the relevant
provisions of Article IV are circumscribed by the customary international rules governing the
minimum standard of treatment, contrary to the interpretation put forward by Iran.
353 Preliminary Objections Judgment, ¶ 58.
354 Id., ¶ 57.
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14.8 Article IV includes the minimum standard of treatment as it relates to the treatment
of aliens with respect to their economic activities in the territory of the other Party. The
minimum standard of treatment is an umbrella concept reflecting a set of rules that, over time,
has crystallized into customary international law in specific contexts.355 The standard
establishes a minimum “floor below which treatment of foreign investors must not fall.”356
Customary international law has crystallized to establish a minimum standard of treatment in
only a few areas, and Article IV’s first two paragraphs were intended to obligate each Party to
respect that minimum standard of treatment.
14.9 Article IV(1)’s first clause sets forth the obligation to provide “fair and equitable
treatment.” Subsumed within the term “fair and equitable treatment” is the obligation not to
deny justice in criminal, civil or administrative adjudicatory proceedings.357 Article IV(1)’s
second and third clauses, concerning “unreasonable or discriminatory measures” and “effective
means,” elucidate the denial of justice obligation, but were not independent obligations under
the minimum standard of treatment, and thus are not independent obligations under the Treaty.
Other components of the minimum standard of treatment are the obligation to provide “most
constant protection and security” and the obligation not to expropriate property (except under
specified conditions), which are found in Article IV(2).
14.10 With that framework in place, the United States will first address its alleged failure
to accord Iranian companies the elements of the minimum standard of treatment embodied in
355 A fuller description of the U.S. position is set out in Methanex Corp. v. United States, NAFTA/UNCITRAL,
Memorial on Jurisdiction and Admissibility of Respondent United States of America (Nov. 13, 2000) (U.S. Annex
143); ADF Group Inc. v. United States of America, NAFTA/ICSID Case No. ARB(AF)/00/1, Post-Hearing
Submission of Respondent United States of America on Article 1105(1) and Pope & Talbot 12-21 (June 27, 2002)
(U.S. Annex 144); Glamis Gold Ltd. v. United States of America, NAFTA/UNCITRAL, Counter-Memorial of
Respondent United States of America 216-22 (Sept. 19, 2006) (U.S. Annex 145); Grand River Enterprises Six
Nations, Ltd., et al. v. United States of America, NAFTA/UNCITRAL, Counter-Memorial of Respondent United
States of America 84-101 (Dec. 22, 2008) (U.S. Annex 146).
356 S.D. Myers, Inc. v. Government of Canada, NAFTA/UNCITRAL, First Partial Award ¶ 259 (Nov. 13, 2000)
(U.S. Annex 147); Glamis Gold Ltd. v. United States of America, NAFTA/UNCITRAL, Award ¶ 615 (June 8,
2009) (U.S. Annex 148) (“The customary international law minimum standard of treatment is just that, a
minimum standard. It is meant to serve as a floor, an absolute bottom, below which conduct is not accepted by
the international community.”); see also Edwin Borchard, The “Minimum Standard” of the Treatment of Aliens,
33 AM. SOC’Y OF INT’L L. PROC. 51, 58 (1939) (U.S. Annex 149).
357 Further, the term “fair and equitable treatment” is sometimes used as shorthand to refer to all the obligations
encompassed within the minimum standard of treatment, This is confirmed by the commentary to Article 1 of the
Organisation for Economic Co-Operation and Development’s Draft Convention on the Protection of Foreign
Property, as explained in more detail in more detail in Methanex Corp. v. United States, NAFTA/UNCITRAL,
Memorial on Jurisdiction and Admissibility of Respondent United States of America at 39-40 (Nov. 13, 2000)
(U.S. Annex 143).
110
Article IV(1), before turning to Iran’s claims under the “most constant protection and security”
and expropriation limbs of the minimum standard of treatment, as embodied in Article IV(2).
Section B: The United States Did Not Breach Article IV(1)
14.11 Article IV(1) provides as follows:
Each High Contracting Party shall at all times accord fair and
equitable treatment to nationals and companies of the other High
Contracting Party, and to their property and enterprises; shall
refrain from applying unreasonable or discriminatory measures
that would impair their legally acquired rights and interests; and
shall assure that their lawful contractual rights are afforded
effective means of enforcement, in conformity with the
applicable laws.
14.12 Although Iran argues that Article IV(1) provides “three discrete but related
protections,”358 Iran misinterprets the provision. As noted above and explained in more detail
below, the first clause of Article IV(1) encompasses the obligation not to deny justice, while
the second and third clauses inform how this obligation is to be interpreted and applied. The
three clauses are thus intimately related, not discrete.
14.13 Iran’s claims under Article IV(1) hinge on its misinterpretation of this provision and
should be dismissed for this reason alone.
i. The “Fair and Equitable Treatment” Clause in Article IV(1) Prohibits the
Denial of Justice
14.14 There is no dispute that the fair and equitable treatment obligation prohibits the denial
of justice.359 Iran, however, argues that the obligation also prohibits any conduct that is
“arbitrary, grossly unfair, unjust or idiosyncratic,” “discriminatory,” and/or “defeats the
legitimate expectations of Iranian nationals and companies.”360 Iran’s expansive reading of
this clause is wrong, however. While the obligation not to deny justice has crystallized as part
of the customary international law minimum standard of treatment, the three other obligations
that Iran seeks to ground in Article IV(1) have not.
14.15 Iran’s interpretation relies heavily on the arbitral tribunal’s decision in Waste
Management, Inc. v. United Mexican States, a decision interpreting the North American Free
358 Iran’s Memorial, ¶ 5.19.
359 Id., ¶ 5.26.
360 Id., ¶ 5.26.
111
Trade Agreement (NAFTA). Indeed, Waste Management is the only authority Iran cites for
the test that it would have the Court apply in assessing the challenged measures.361 In the
submission of the United States, the Waste Management tribunal’s test does not accurately
reflect the fair and equitable treatment obligation under customary international law’s
minimum standard of treatment.362 The decision fails to ground its test in a review of state
practice and opinio juris, relying instead on other arbitral awards issued in investor-state
dispute settlement proceedings.
14.16 As the Court has held, international law results from a general and consistent practice
of States that they follow out of a sense of legal obligation.363 Relevant State practice must be
widespread and consistent364 and accepted as law, meaning that the practice must also be
accompanied by a sense of legal obligation.365 The twin requirements of State practice and
opinio juris “must both be identified . . . to support a finding that a relevant rule of customary
international [law] has emerged.”366
361 Iran’s Memorial, ¶ 5.27 n.265.
362 NAFTA Free Trade Commission, Notes of Interpretation of Certain Chapter 11 Provisions ¶¶ B.1, B.2 (July
31, 2001) (U.S. Annex 150) (issuing a binding interpretation pursuant to NAFTA Article 1131 that “Article
1105(1) prescribes the customary international law minimum standard of treatment of aliens” and that “[t]he
concepts of ‘fair and equitable treatment’ and ‘full protection and security’ do not require treatment in addition
to or beyond that which is required by [that standard].”).
363 Jurisdictional Immunities of the State (Germany v. Italy: Greece intervening), 2012 I.C.J. 99, 122 (Feb. 3) (“In
particular . . . the existence of a rule of customary international law requires that there be ‘a settled practice’
together with opinio juris.”) (citing North Sea Continental Shelf (Federal Republic of Germany v. Denmark;
Federal Republic of Germany v. Netherlands), 1969 I.C.J. 44, ¶ 77 (Feb. 20)); Continental Shelf (Libyan Arab
Jamahiriya v. Malta), 1985 I.C.J. 13, 29-30 (June 3) (“It is of course axiomatic that the material of customary
international law is to be looked for primarily in the actual practice and opinio juris of States[.]”).
364 See, e.g., North Sea Continental Shelf, 1969 I.C.J. at 43 (noting that in order for a new rule of customary
international law to form, “State practice, including that of States whose interests are specially affected, should
have been both extensive and virtually uniform in the sense of the provision invoked; -- and should moreover have
occurred in such a way as to show a general recognition that a rule of law or legal obligation is involved”); ILC
Second Report on the Identification of Customary International Law, Draft Conclusion 9 and commentaries (May
22, 2014) (A/CN.4/672) (citing authorities).
365 North Sea Continental Shelf, 1969 I.C.J. at 44 (“Not only must the acts concerned amount to a settled practice,
but they must also be such, or be carried out in such a way, as to be evidence of a belief that this practice is
rendered obligatory by the existence of a rule of law requiring it. The need for such a belief, i.e., the existence of
a subjective element, is implicit in the very notion of the opinio juris sive necessitatis. The States concerned must
therefore feel that they are conforming to what amounts to a legal obligation. The frequency, or even habitual
character of the acts is not in itself enough. There are many international acts, e.g., in the field of ceremonial and
protocol, which are performed almost invariably, but which are motivated only by considerations of courtesy,
convenience or tradition, and not by any sense of legal duty.”); ILC Second Report on the Identification of
Customary International Law, Draft Conclusion 10 with commentaries (May 22, 2014) (A/CN.4/672) (citing
authorities) (U.S. Annex 152).
366 ILC Second Report on the Identification of Customary International Law ¶¶ 22-23 (U.S. Annex 152) (citing
these requirements as “indispensable for any rule of customary international law properly so called”) (emphasis
added).
112
14.17 The Court has articulated examples of the types of evidence that can be used to
demonstrate that a rule of customary international law exists, most recently in its decision on
Jurisdictional Immunities of the State (Germany v. Italy).367 In that case, the Court emphasized
that “[i]t is of course axiomatic that the material of customary international law is to be looked
for primarily in the actual practice and opinio juris of States,” and noted as examples of State
practice relevant national court decisions or domestic legislation dealing with the particular
issue alleged to be the norm of customary international law, as well as official declarations by
relevant State actors on the subject.368
14.18 Apart from the requirement to refrain from unreasonable or discriminatory measures
in the context of a denial of justice, Iran has identified no such State practice or opinio juris,
and the United States is aware of none, for the broad proposition that there are independent and
generalized obligations for States to refrain from arbitrary conduct, discrimination, or the
defeat of legitimate expectations in all economic contexts. Thus, to the extent Iran’s claims
rely on the United States’ alleged breach of these three supposed obligations, rather than on the
obligation not to deny justice, they must be dismissed.
14.19 Indeed, there is recent authority from the Court that casts doubt on the notion that the
supposed doctrine of legitimate expectations, referred to by some investment arbitral tribunals
as part of the fair and equitable treatment obligation, is part of general international law.
14.20 In Obligation to Negotiate Access to the Pacific Ocean (Bolivia v. Chile), Bolivia
argued that Chile had violated the supposed doctrine of legitimate expectations by not further
negotiating with Bolivia regarding the restoration of Bolivia’s access to the sea. Chile rejected
the notion that any such doctrine existed.369 The Court agreed with Chile, stating:
The Court notes that references to legitimate expectations may
be found in arbitral awards concerning disputes between a
foreign investor and the host State that apply treaty clauses
providing for fair and equitable treatment. It does not follow
from such references that there exists in general international law
a principle that would give rise to an obligation on the basis of
what could be considered a legitimate expectation. Bolivia’s
367 Jurisdictional Immunities of the State, 2012 I.C.J. at 120-22, ¶¶ 50-55.
368 Id., at 122-23 (discussing relevant materials that can serve as evidence of State practice and opinio juris in the
context of jurisdiction immunity in foreign courts).
369 Obligation to Negotiate Access to the Pacific Ocean (Bolivia v. Chile), 2018 I.C.J. 50, ¶¶ 160-61 (Judgment of
Oct. 1).
113
argument based on legitimate expectations thus cannot be
sustained.370
14.21 The United States submits that no doctrine of legitimate expectations exists as a
component element of “fair and equitable treatment”371 under customary international law that
gives rise to an independent host State obligation.372 The United States is aware of no general
and consistent State practice and opinio juris establishing an obligation under the minimum
standard of treatment not to frustrate investors’ expectations, and Iran submitted no evidence
to the contrary.
14.22 In any event, to the extent the Court would determine that such a rule does exist under
customary international law, any such rule would not apply to the United States,373 as the
United States has been a persistent objector to such a rule.374
14.23 Thus, for Iran’s claims under Article IV(1) to succeed, it must establish that the
challenged measures have resulted in a denial of justice.
ii. The Clauses Concerning “Unreasonable or Discriminatory Measures” and
“Effective Means” in Article IV(1) Are Not Independent Obligations, but
rather Are Subsumed within the Obligation Not to Deny Justice
14.24 The second and third clauses of Article IV(1) require respectively that a Party refrain
from applying unreasonable or discriminatory measures to the extent they would impair legally
acquired rights and interest, and assure lawful contractual rights are afforded effective means
of enforcement. As discussed in the following sections, these clauses do not set forth
370 Obligation to Negotiate Access, 2018 I.C.J. at ¶ 162.
371 In the expropriation context, however, the United States does recognize that “legitimate expectations” is a
factor to help distinguish between non-compensable regulatory actions and an indirect expropriation.
372 See PATRICK DUMBERRY, THE FAIR AND EQUITABLE TREATMENT STANDARD: AGUIDE TONAFTACASE LAW
ON ARTICLE 1105, at 158-59 (2013) (U.S. Annex 153) (“In the present author’s view, there is little support for
the assertion that there exists under customary international law any obligation for host States to protect investors’
legitimate expectations.”).
373 Fisheries Case (U.K. v. Norway), 1951 I.C.J. 115, 131 (Dec. 18) (“In any event the ten mile rule would appear
to be inapplicable as against Norway inasmuch as she has always opposed any attempt to apply it to the Norwegian
coast.”).
374 The United States has consistently opposed this putative rule both as a respondent and as a non-disputing Party
in investor-State proceedings. See e.g., Glamis Gold, Ltd. v. United States of America, NAFTA/UNCITRAL,
Counter-Memorial of Respondent United States of America, at 216 (Sept. 19, 2006) (U.S. Annex 145); Lone Pine
Resources Inc. v. Government of Canada, NAFTA/ICSID Case No. UNCT/15/2, Submission of the United States
of America, ¶ 26 (Aug. 16, 2017) (U.S. Annex 154); Italba Corp. v. The Oriental Republic of Uruguay, U.S.-
Uruguay BIT/ICSID Case No. ARB/16/9, Submission of the United States of America, ¶¶ 24-25 (Sept. 11, 2017)
(U.S. Annex 155).
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independent obligations, but rather inform how the obligation in the first clause is to be
interpreted. They are thus subsumed within the denial of justice obligation.
(a) The “Unreasonable or Discriminatory Measures” Clause Is Part of
the Protection against Denial of Justice
14.25 Although Iran argues that the second clause of Article IV(1), the “unreasonable or
discriminatory measures” clause, is a “further obligation” on the Parties,375 this clause, properly
interpreted, instead informs how the denial of justice obligation is to be interpreted. Indeed, it
is well-established that non-discrimination is a principle encompassed within the denial of
justice obligation, whether through access to judicial remedies or treatment by the courts.376
Further, “unreasonable,” as used in the context of the denial of justice obligation must be
understood in terms of the high threshold required to establish a violation of the denial of justice
obligation and the due regard international law gives to the principle of judicial independence,
as described in more detail below in Section B.iii.
(b) The “Effective Means” Clause Is Part of the Protection against Denial
of Justice
14.26 Iran also asserts that the third clause of Article IV(1) – which states that each Party
shall assure that the “lawful contractual rights” of the other Party’s companies and nationals
“are afforded effective means of enforcement, in conformity with the applicable laws” – “is
not merely a restatement of the prohibition on denial of justice,” but rather “is a provision of
broader scope, that requires a judicial framework that positively enables effective means of
enforcement in conformity with the applicable laws.”377 According to Iran, this in turn requires
the United States to permit Iran’s companies “effective reliance upon rights” such as
375 Iran’s Memorial, ¶ 5.37.
376 See, e.g., C.F.AMERASINGHE, STATE RESPONSIBILITY FOR INJURIES TO ALIENS 243 (1967) (U.S. Annex 151)
(“Especially in a suit between State and alien it is imperative that there should be no discrimination between
nationals and aliens in the imposition of procedural requirements. The alien cannot be expected to undertake
special burdens to obtain justice in the courts of the State against which he has a complaint.”); EDWIN M.
BORCHARD, THE DIPLOMATIC PROTECTION OF CITIZENS ABROAD OR THE LAW OF INTERNATIONAL CLAIMS 334
(1919) (U.S. Annex 128) (A national’s “own government is justified in intervening in his behalf only if the laws
themselves, the methods provided for administering them, and the penalties prescribed are in derogation of the
principles of civilized justice as universally recognized or if, in a specific case, they have been wrongfully
subverted by the courts so as to discriminate against him as an alien or perpetrate a technical denial of justice.”);
Report of the Guerraro Sub-Committee of the Committee of the League of Nations on Progressive Codification 1,
League of Nations Doc. C.196M.70, at 100 (1927) (U.S. Annex 156) (“Denial of justice is therefore a refusal to
grant foreigners free access to the courts instituted in a State for the discharge of its judicial functions, or the
failure to grant free access, in a particular case, to a foreigner who seeks to defend his rights, although in the
circumstances nationals of the State would be entitled to such access.”) (emphasis added).
377 Iran’s Memorial, ¶ 5.41.
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recognition of juridical personality “in the context of the enforcement” of their contractual
rights.378
14.27 In fact, when properly understood, the “effective means in conformity with applicable
laws” clause articulates a specific – and, for the drafters of the Treaty in 1955, an important –
element of the protection against denial of justice. The text of the clause makes clear that it
applies to “lawful contractual rights.” Enforcement of contractual rights naturally occurs
through the judicial system of a Party, and indeed Iran agrees that the clause applies to the
“judicial framework” of the host State. Moreover, as there is a variation in judicial systems
worldwide, individual States can provide for the judicial enforcement of contractual rights in
different ways; indeed, the Treaty should be assumed to respect the customary international
law principles of judicial independence and deference to the decisions of domestic courts. This
clause simply requires that the system that a State chooses “afford[s] effective means” of
enforcing such rights. As an obligation with respect to the judicial system of a Party, the
effective means clause thus is a component of the obligation not to deny justice (as further
discussed below). Iran is therefore wrong to say that the effective means clause is not a
component of the denial of justice obligation.
14.28 The applicable rules of international law establish that the Parties intended this clause
to affirm and add clarity to a subset of the principles associated with the concept of denial of
justice.379 Denial of justice includes both substantive and procedural minimum standards of
treatment.380 The tribunal in the Ambatielos case broadly described the procedural aspect of
the law on denial of justice:
378 Iran’s Memorial, ¶¶ 5.41, 5.51.
379 See Vienna Convention, art. 31(1), art. 31(3)(c) (“There shall be taken into account, together with context . . .
[a]ny relevant rules of international law applicable in the relations between the parties.”).
380 See Institut de Droit International, Resolution on the International Responsibility of States for Injuries on their
Territory to the Person or Property of Foreigners (1927), reproduced in Documents of the Eighth Session
Including The Report of The Commission to The General Assembly (1956) 2 Y.B. Int’l L. Comm’n 228, U.N. Doc
A/CN.4/SER.A/1956/Add.1 (U.S. Annex 160) (observing that denial of justice may occur where (i) tribunals that
are necessary to assure protection do not exist or do not function; (ii) such tribunals are not accessible to foreigners;
or (iii) those tribunals do not offer guarantees that are indispensable for the proper administration of justice);
Azinian v. Mexico, NAFTA/ICSID Case No. ARB(AF)/97/2, Award ¶¶ 102-103 (Nov. 1, 1999) (U.S. Annex 161)
(“A denial of justice could be pleaded if the relevant courts refuse to entertain a suit, if they subject it to undue
delay, or if they administer justice in a seriously inadequate way. . . . There is a fourth type of denial of justice,
namely the clear and malicious misapplication of the law.”). See also ALWYN V. FREEMAN, THE INTERNATIONAL
RESPONSIBILITY OF STATES FOR DENIAL OF JUSTICE 69 (1938, reprinted 1970) (U.S. Annex 127) (“The faculty of
prosecuting an action before the local courts is an inescapable and essential corollary of the alien’s substantive
rights without which they would be hopelessly incomplete and meaningless.”); RUDOLF DOLZER & CHRISTOPH
SCHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT LAW 180 (2d. ed. 2012) (“In principle, a host state is
116
The foreigner shall enjoy full freedom to appear before the courts
for the protection or defence of his rights, whether as plaintiff or
defendant; to bring any action provided or authorized by law; to
deliver any pleading by way of defence, set off or counterclaim;
to engage Counsel; to adduce evidence, whether documentary or
oral or of any other kind; to apply for bail; to lodge appeals and,
in short, to use the Courts fully and to avail himself of any
procedural remedies or guarantees provided by the law of the
land in order that justice may be administered on a footing of
equality with nationals of the country.381
As is evident from the interpretive analysis provided above, “effective means” is intended to
encapsulate many of these procedural elements of the protection against denial of justice.382
14.29 This obligation to provide “effective means” for enforcement of contractual rights
has also been historically considered a component of the customary international law protection
against denial of justice.383 For example, in 1926 the Committee of Experts for the Progressive
Codification of International Law, convened under the auspices of the League of Nations,
concluded in their report that a State’s duty to protect foreign nationals within its territory
includes the obligation to provide “the necessary means for defending their rights,” and further
noted that “these means can only be such as are made available by the laws and courts of the
under an obligation to establish a judicial system that allows the effective exercise of substantive rights granted
to foreign investors.”) (U.S. Annex 163).
381 Ambatielos Claim (Greece v. United Kingdom), 23 I.L.R. 306, 325 (March 6, 1956) (U.S. Annex 121). See
also ANDREAS ROTH, MINIMUM STANDARD OF INTERNATIONAL LAW APPLIED TO ALIENS 185 (1949) (U.S. Annex
164) (including in a list of minimum requirements that states must extend to aliens under international law, certain
“procedural rights,” including “freedom of access to court, the right to a fair, non-discriminatory and unbiased
hearing, the right to full participation in any form in the procedure, [and] the right to a just decision rendered in
full compliance with the laws of the State within a reasonable time.”)
382 The first procedural element enumerated in the Ambatielos Award, relating to access to the courts, is
encapsulated by Article III(2) of the Treaty, and is likewise a component of the more general protection against
denial of justice. See Section B.iii.
383 Indeed, as the Special Rapporteur of the International Law Commission has observed: “Denial of justice . . . is
inextricably linked with many features of the local remedies rule, including that of ineffectiveness, and as such
may be said to have a secondary character. . . . [I]t [i.e., ineffectiveness] may be seen as a secondary rule when it
excuses recourse to further local remedies and as a primary rule when it gives rise to international responsibility.
. . . [T]he local remedies rule and denial of justice are historically intertwined.” John Dugard (Special Rapporteur
on Diplomatic Protection), Third Report on Diplomatic Protection, ¶¶ 21-22 U.N. Doc. A/CN.4/523 (March 7,
2002) (U.S. Annex 168). See also FREEMAN at 407 (U.S. Annex 127) (“With respect to original violations of
international law prior to and unconnected with the administration of justice, [the local remedies rule] is a
procedural condition precedent to diplomatic interposition. With respect to wrongful acts by private persons, it
enjoys the substantive faculty of creating responsibility where local remedies function defectively, i.e., in the case
of inadequate judicial protection.”). However, the “effective means” under the local remedies rule and denial of
justice diverge in that the former standard may be met in absence of defective judicial protection, for instance,
where the courts lack personal jurisdiction, a statute of limitation applies to the claim or there is a well-established
line of precedent averse to the claimant.
117
country and by the authorities responsible for public order and security.”384 Four years later,
the United Kingdom proposed a definition of denial of justice that included where a foreign
national “is not afforded in the courts a reasonable means of enforcing his rights, or is afforded
means of redress less adequate than those afforded to nationals.”385 The same obligation is
reflected in the 1929 Harvard Law School draft codification of international law relating to the
treatment of foreigners, which provides that foreign nationals must have “effective means of
redress for injuries” that is at least on equal footing to that provided to nationals under domestic
law.386 Around the same time, Alwyn Freeman wrote that “every State is bound to possess a
judicial organization guaranteeing that lawsuits will be impartially and competently
adjudicated,” and in particular, that the “procedural apparatus which is set up must . . . provide
the alien . . . with effective means for the pursuit of his right[s].”387
14.30 More recently, the Inter-American Court of Human Rights has recognized that the
right to “effective recourse” under Article 25(1) of the American Convention on Human Rights
is closely intertwined with the protection against denial of justice.388 In a 1987 Advisory
Opinion, the court found that Article 25(1) “incorporates the principle . . . of the effectiveness
of the procedural instruments or means designed to guarantee . . . rights.”389 It further found
that recourse to the domestic judicial system is ineffective where “the Judicial Power lacks the
necessary independence to render impartial decisions or the means to carry out its judgments;
or in any other situation that constitutes a denial of justice, as when there is an unjustified
384 Committee of Experts for the Progressive Codification of International Law, Annex Report of Sub-Committee,
League of Nations Doc. reprinted in FREEMAN at 632 (1926) (U.S. Annex 127).
385 Acts of Conference for the Codification of International Law, held at The Hague from March 13th to April 12th,
1930, Minutes of the Third Committee, 9th Meeting, Consideration of Bases for Discussion Nos. 5 and 6, League
of Nations Doc. C.351(c).M145(c).1930.V. (1930), reprinted in FREEMAN at 664 (U.S. Annex 127).
386 The Law of Responsibility of States for Damage Done in Their Territory to the Person or Property of
Foreigners, 23AM. J. INT’LL. 131, 147 (No. 2 SUPPLEMENT: CODIFICATION OF INTERNATIONAL LAW) (Apr. 1929)
(hereinafter “Harvard Draft Articles”) (emphasis added) (U.S. Annex 169).
387 FREEMAN at 135 (emphasis added) (U.S. Annex 127).
388 Article 25 (1) of the Convention reads: “Everyone has the right to simple and prompt recourse, or any other
effective recourse, to a competent court or tribunal for protection against acts that violate his fundamental rights
recognized by the constitution or laws of the State concerned or by this Convention, even though such violation
may have been committed by persons acting in the course of their official duties.” American Convention on
Human Rights art. 25(1), Nov. 22, 1969, 1144 U.N.T.S. 143.
389 Judicial Guarantees in States of Emergency, Advisory Opinion (OC-9/87) Inter-Am. Ct. H.R. (ser. A) No. 3
(ser. A) No. 9, ¶ 24, (Oct. 6, 1987) (U.S. Annex 170).
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delay in the decision; or when, for any reason, the alleged victim is denied access to a judicial
remedy.”390
14.31 Given that effective means of enforcement is one of the subsidiary duties under
customary international law to protect foreign nationals against a denial of justice, a claim that
a host State has failed to provide effective means must satisfy the same requirements as a claim
for denial of justice that are described in the next section. Therefore, not only must Iran
establish the express requirements under the ordinary meaning of the Treaty’s “effective
means” clause, but Iran must also overcome the high threshold for establishing a denial of
justice claim, including the requirements of exhaustion and due deference to the decisions of
the U.S. courts in the interpretation and application of U.S. law.
14.32 The “unreasonable or discriminatory” and “effective means” clauses in Article IV(1)
are subsumed within the denial of justice obligation, and are not independent obligations. It
follows that the United States could not breach either of these clauses in the absence of a breach
of the obligation not to deny justice. For the reasons explained in the next section, Iran has
failed to establish any such breach.
iii. The United States Has Not Denied Justice to Any Iranian Nationals or
Companies
14.33 In this section, the United States demonstrates that establishing a claim for denial of
justice requires a claimant to meet a high threshold and, furthermore, that Iran has failed to
meet that threshold with respect to any of the challenged measures.
(a) Legal Standard
14.34 Denial of justice in its “customary sense” denotes “misconduct or inaction of the
judicial branch of the government” and involves “some violation of rights in the administration
of justice, or a wrong perpetrated by the abuse of judicial process.”391 A denial of justice may
occur in instances such as when the final act of a State’s judiciary constitutes a “notoriously
390 Id. (emphasis added) (U.S. Annex 170).
391 BORCHARD, DIPLOMATIC PROTECTION OF CITIZENS ABROAD 330 (U.S. Annex 128); J.L. BRIERLY, THE LAW
OF NATIONS 286-87 (Sir Humphrey Waldock ed., 6th ed.) (1963) (U.S. Annex 172) (defining a denial of justice
as “an injury involving the responsibility of the state committed by a court of justice”).
119
unjust”392 or “egregious”393 administration of justice “which offends a sense of judicial
propriety.”394
14.35 More specifically, a denial of justice exists where there is, for example, an
“obstruction of access to courts,” “failure to provide those guarantees which are generally
considered indispensable to the proper administration of justice, or a manifestly unjust
judgment.”395 A manifestly unjust judgment is one that amounts to a travesty of justice or is
grotesquely unjust.396 To be manifestly unjust a court decision must “amount[] to an outrage,
bad faith, willful neglect of duty, or an insufficiency of governmental action recognizable by
every unbiased [person].”397 Instances of denial of justice also have included corruption in
judicial proceedings, discrimination or ill-will against aliens, and executive or legislative
interference with the freedom or impartiality of the judicial process.398 However, erroneous
domestic court decisions, or misapplications or misinterpretation of domestic law, do not in
themselves constitute a denial of justice under customary international law.399
392 JAN PAULSSON, DENIAL OF JUSTICE IN INTERNATIONAL LAW 44 (2005) (hereinafter “PAULSSON”) (citing J.
Irizarry y Puente, The Concept of “Denial of Justice” in Latin America, 43 MICH. L.REV. 383, 406 (1944)) (U.S.
Annex 173); B.E. Chattin (United States v. Mexico), 4 R.I.A.A. 282, 286-87 (General Claims Commission 1927)
(U.S. Annex 174) (“Acts of the judiciary . . . are not considered insufficient unless the wrong committed amounts
to an outrage, bad faith, wilful neglect of duty, or insufficiency of action apparent to any unbiased man.”)
(emphasis omitted).
393 PAULSSON at 60 (U.S. Annex 173) (“The modern consensus is clear to the effect that the factual
circumstances must be egregious if state responsibility is to arise on the grounds of denial of justice.”).
394 The Loewen Group, Inc. v. United States, NAFTA/ICSID Case No. ARB(AF)/98/3, Award ¶ 132 (June 26,
2003) (U.S. Annex 175) (a denial of justice may arise where there has occurred a “[m]anifest injustice in the
sense of a lack of due process leading to an outcome which offends a sense of judicial propriety”); Mondev
International Ltd. v. United States, NAFTA/ICSID Case No. ARB(AF)/99/2, Award ¶ 127 (Oct. 11, 2002) (U.S.
Annex 176) (finding that the test for a denial of justice was “not whether a particular result is surprising, but
whether the shock or surprise occasioned to an impartial tribunal leads, on reflection, to justified concerns as to
the judicial propriety of the outcome[.]”); see also generally Barcelona Traction, Light and Power Co., Ltd.
(Belgium v. Spain), 1970 I.C.J. 3, 144 (Separate Opinion of Judge Tanaka) (Feb. 5) (“[D]enial of justice occurs
in the case of such acts as – ‘corruption, threats, unwarrantable delay, flagrant abuse of judicial procedure, a
judgment dictated by the executive, or so manifestly unjust that no court which was both competent and honest
could have given it, . . . But no merely erroneous or even unjust judgment of a court will constitute a denial of
justice.’”) (citations omitted).
395 Harvard Draft Articles at 134 (U.S. Annex 169).
396 Harvard Draft Articles at 178 (U.S. Annex 169) (noting that a “manifestly unjust judgment” is one that is a
“travesty upon justice or grotesquely unjust”).
397 B.E. Chattin, 4 R.I.A.A. at 295 (U.S. Annex 174).
398 Harvard Draft Articles at 175 (U.S. Annex 169).
399 Id. at 134 (U.S. Annex 169) (“An error of a national court which does not produce manifest injustice is not a
denial of justice.”); PAULSSON at 81 (U.S. Annex 173) (“The erroneous application of national law cannot, in
itself, be an international denial of justice.”); DUMBERRY at 229 (U.S. Annex 153) (noting that a simple error,
misinterpretation or misapplication of domestic law is not per se a denial of justice); EDWIN M. BORCHARD,
DIPLOMATIC PROTECTION OF CITIZENS ABROAD OR THE LAW OF INTERNATIONAL CLAIMS 196 (1919) (U.S. Annex
120
14.36 The high threshold required for judicial measures to rise to the level of a denial of
justice in customary international law gives due regard to the principle of judicial
independence,400 the particular nature of judicial action,401 and the unique status of the judiciary
in both international and municipal legal systems. Indeed, as a matter of customary
international law, international tribunals will defer to domestic courts interpreting matters of
domestic law unless there is a denial of justice. In this connection, it is well established that
international tribunals are not empowered to be supranational courts of appeal on a court’s
application of domestic law.402
128) (“[A]s a general rule the state is not liable for the acts of its judicial authorities unless there has been some
flagrant or notorious injustice or denial of justice sanctioned by the court of last resort.”); Christopher Greenwood,
State Responsibility for the Decisions of National Courts, in ISSUES OF STATE RESPONSIBILITY BEFORE
INTERNATIONAL JUDICIAL INSTITUTIONS 61 (Malgosia Fitzmaurice & Dan Sarooshi eds., 2004) (U.S. Annex 177)
(“[I]t is well established that a mistake on the part of the court or an irregularity in procedure is not in itself
sufficient to amount to a violation of international law; there must be a denial of justice.”).
400 See e.g., Barcelona Traction, 1970 I.C.J. at 154 (Separate Opinion of Judge Tanaka) (“One of the most
important political and legal characteristics of a modern State is the principle of judicial independence.”). Judge
Tanaka went on to explain that what distinguishes the judiciary from other organs of government is the “social
significance of the judiciary for the settlement of conflicts of vital interest as an impartial third party and, on the
other hand, from the extremely scientific and technical nature of judicial questions, the solution of which requires
the most highly conscientious activities of specially educated and trained experts. The independence of the
judiciary, therefore, despite the existence of differences in degree between various legal systems, may be
considered as a universally recognized principle in most of the municipal and international legal systems of the
world. It may be admitted to be a ‘general principle of law recognized by civilized nations’ (Article 38, paragraph
1(c), of the Statute).” Id. at 155.
401 See, e.g., Zachary Douglas, International Responsibility for Domestic Adjudication: Denial of Justice
Deconstructed, 63 INT’L. & COMP. L.Q. 867, 876, 878 (2014) (U.S. Annex 178) (“[The] rationality inherent in
decision-making through adjudication, coupled with the opportunity afforded to affected parties to present
reasoned arguments during the course of that decision-making process, . . . sets adjudication apart from other
institutions of social ordering within the State,” and that an authoritative decision by a domestic adjudicative body
“cannot be disturbed by an international court or tribunal simply on the basis that a more rational set of reasons
was available to that . . . body. . . . International law is deferential to the particular virtues of adjudication by
respecting the integrity of the process and the outcomes it produces.”) (footnotes omitted).
402 Apotex Inc. v. United States, NAFTA/UNCITRAL, Award ¶ 278 (June 14, 2013) (U.S. Annex 179) (“[I]t is
not the proper role of an international tribunal established under NAFTA Chapter Eleven to substitute itself for
the U.S. Supreme Court, or to act as a supranational appellate court.”); Robert Azinian et. al. v. United Mexican
States, ICSID Case No. ARB(AF)/97/2, Award ¶ 99 (Nov. 1, 1999) (U.S. Annex 161) (“The possibility of holding
a State internationally liable for judicial decisions does not, however, entitle a claimant to seek international
review of the national court decisions as though the international jurisdiction seised has plenary appellate
jurisdiction. This is not true generally, and it is not true for NAFTA. What must be shown is that the court
decision itself constitutes a violation of the treaty. Even if the Claimants were to convince this Arbitral Tribunal
that the Mexican courts were wrong with respect to the invalidity of the Concession Contract, this would not per
se be conclusive as to a violation of NAFTA. More is required; the Claimants must show either a denial of justice,
or a pretence of form to achieve an internationally unlawful end.”); Barcelona Traction, 1970 I.C.J. at 158
(Separate Opinion of Judge Tanaka) (explaining that erroneous decisions of municipal law cannot constitute a
denial of justice because the interpretation of municipal law “does not belong to the realm of international law. If
an international tribunal were to take up these issues and examine the regularity of the decisions of municipal
courts, the international tribunal would turn out to be a ‘cour de cassation,’ the highest court in the municipal law
system. An international tribunal, on the contrary, belongs to quite a different order; it is called upon to deal with
international affairs, not municipal affairs.”); Mohammad Ammar Al Bahloul v. Republic of Tajikistan, SCC Case
No. V(064/2008), Partial Award on Jurisdiction and Liability ¶ 237 (Sept. 2, 2009) (U.S. Annex 180) (“[I]t is not
121
14.37 It is equally well established that the international responsibility of States may not be
invoked with respect to non-final judicial acts,403 unless recourse to further domestic remedies
is obviously futile or manifestly ineffective. While acts of State organs, including acts of State
judiciaries, are attributable to the State,404 there will be a breach of Article IV(1) based on
judicial acts (e.g., denial of justice) only if the justice system of the State as a whole (i.e., until
there has been a decision of the court of last resort available) produces a denial of justice.405,
406
(b) Iran’s Denial of Justice Claim Fails
14.38 Iran argues that the United States breached the obligation not to deny justice to
Iranian companies on four grounds, devoting only a single sentence to each.407 As explained
below, Iran has not established a denial of justice on any of its four grounds.
14.39 First, Iran argues that Bank Markazi was denied the right to raise and be granted an
immunity defense.408 As discussed in Chapter 2, the Court rejected this argument in its
the role of this Tribunal to sit as an appellate court on questions of Tajik law. Suffice it to say, we do not find the
Tajik court’s application of Tajik law on this issue to be malicious or clearly wrong, and therefore find no basis
for Claimant’s claim of denial of justice.”); PAULSSON at 82 (U.S. Annex 173).
403 See PAULSSON at 108 (U.S. Annex 173) (“For a foreigner’s international grievance to proceed as a claim of
denial of justice, the national system must have been tested. Its perceived failings cannot constitute an
international wrong unless it has been given a chance to correct itself.”); DOUGLAS at 868 (U.S. Annex 178)
(“[I]nternational responsibility towards foreign nationals for acts and omissions associated with an adjudicative
procedure can only arise at the point at which the adjudication has produced its final result; it is only at that point
that a constituent element of that responsibility has been satisfied, which is the existence of damage to the foreign
national.”).
404 Int’l Law Comm’n Articles on Responsibility of States for Internationally Wrongful Acts, art. 4(1) (U.S. Annex
181) (“The conduct of any State organ shall be considered an act of that State under international law, whether
the organ exercises legislative, executive, judicial or any other functions, whatever position it holds in the
organization of the State, and whatever its character as an organ of the central Government or of a territorial unit
of the State.”).
405 Int’t Law Comm’n, Draft Articles on State Responsibility for Internationally Wrongful Acts, With
Commentary, Ch. II, cmt. 4, U.N. Doc. A/56/10 (U.S. Annex 182) (noting that the fact that conduct can be
attributed to the State “says nothing . . . about the legality or otherwise of the conduct”) (emphasis added); James
Crawford (Special Rapporteur on State Responsibility), Second Rep. on State Responsibility, ¶ 75, U.N. Doc.
A/CN.4/498 (July 19, 1999) (U.S. Annex 183) (“There are . . . cases where the obligation is to have a system of a
certain kind, e.g. the obligation to provide a fair and efficient system of justice. There, systematic considerations
enter into the question of breach, and an aberrant decision by an official lower in the hierarchy, which is capable
of being reconsidered, does not of itself amount to an unlawful act.”) (emphasis in original).
406 In this regard, the need to exhaust local remedies as part of a denial of justice claim is a requirement that a
claimant must prove as part of the merits of its claim, unlike the exhaustion requirement discussed above in
Chapter 10, which is a procedural requirement necessary to bring a claim. The Loewen Group, Inc v. United
States of America, NAFTA/ICSID Case No. ARB(AF)/98/3, Award ¶¶ 143, 156 (June 26, 2003) (U.S. Annex
175).
407 Iran’s Memorial, ¶ 5.46.
408 Id., ¶ 5.46(a).
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Preliminary Objections Judgment, explaining that “the Court does not consider that the
requirements of Article IV, paragraph 1, include an obligation to respect the sovereign
immunities of the State and those of its entities which can claim such immunities under
customary international law.”409 Thus, this argument for a denial of justice must be dismissed
for lack of jurisdiction. Indeed, given the Court’s decision that Article IV(1) does not include
an obligation with respect to Iran’s sovereign immunities,410 none of the portions of the statutes
Iran invokes dealing with sovereign immunity may serve as a ground for any alleged breach of
Article IV(1) or (2).411
14.40 Iran’s second and third grounds are related. Iran argues that certain Iranian
companies were denied the right to raise and be granted a defense based on the recognition of
having separate juridical personalities412 and were “made liable” for the wrongful acts of the
Iranian State in proceedings to which the companies were not a party.413 First, as a technical
matter, the relevant companies were not subject to liability imposed on the Iranian State; rather,
the measures in question simply meant that the companies’ assets could be attached and
executed against to satisfy the Iranian State’s liability under terrorism judgments. In any event,
Iran has not shown how the U.S. courts’ application of legislation allowing the assets of
agencies and instrumentalities of a state sponsor of terrorism such as Iran to satisfy a terrorismrelated
judgment rendered against the State amounts to a denial of justice. Specifically, Iran
has not shown that any of the proceedings about which it complains amounted to (i) an
obstruction of access to courts; (ii) a failure to provide those guarantees which are generally
considered indispensable to the proper administration of justice; or (iii) a manifestly unjust
judgment. Nor could it.
14.41 To the contrary, Iran hired U.S. counsel and made arguments carefully considered by
the courts, as reflected in their decisions. Iran ignores this, resorting to broad brush arguments,
without regard to the facts of specific cases. For example, Iran fails to acknowledge that U.S.
courts denied attachments in some cases, such as Rubin v. Islamic Republic of Iran, which was
409 Preliminary Objections Judgment, ¶ 74.
410 Id., ¶¶ 74, 80.
411 Thus, the immunity provisions that Iran complains about in the following statutes are no longer part of Iran’s
claim: the (i) Antiterrorism and Effective Death Penalty Act (Iran’s Memorial, ¶¶ 2.4-2.8) (ii) Terrorism Risk
Insurance Act of 2002 (TRIA) (Id., ¶¶ 2.11-2.15); (iii) National Defense Authorization Act for Fiscal Year 2008
(Id., ¶¶ 2.16-2.33); (iv) Iran Threat Reduction and Syria Human Rights Act of 2012 (Id., ¶¶ 2.38-2.43).
412 Iran’s Memorial, ¶ 5.46(b).
413 Id., ¶ 5.46(c).
123
brought before the U.S. District Court for the Northern District of Illinois (a trial court). In
Rubin, plaintiffs sought to attach and execute against property that consisted of artifacts held
by the University of Chicago, to satisfy a default judgment entered against Iran. Applying
relevant U.S. law, including some of the measures Iran has invoked as the basis for its claims,
the court ruled in Iran’s favor and denied the attachment effort.414 The plaintiffs then appealed
to the U.S. Court of Appeals for the Seventh Circuit, and that court also ruled in Iran’s favor.415
Finally, the plaintiffs appealed to the U.S. Supreme Court, which also ruled in Iran’s favor, and
property was later transported back to Iran.416 It is inconceivable that Rubin could give rise to
a denial of justice claim, and yet Iran is nevertheless pursuing a claim based on this case (as is
evident from its inclusion in Iran’s Attachment 2).
14.42 Iran has submitted no authority suggesting that it is a denial of justice to allow
plaintiffs with terrorism-related judgments against a state sponsor of terrorism such as Iran to
attach the assets of one of the State’s agencies or instrumentalities in order to satisfy that
judgment.
14.43 To the contrary, the corporate form is not inviolable, as this Court ruled in Barcelona
Traction when it was discussing a claim brought in the context of diplomatic protection:
Forms of incorporation and their legal personality have
sometimes not been employed for the sole purposes they were
originally intended to serve; sometimes the corporate entity has
been unable to protect the rights of those who entrusted their
financial resources to it; thus inevitably there have arisen
dangers of abuse, as in the case of many other institutions of law.
Here, then, as elsewhere, the law, confronted with economic
realities, has had to provide protective measures and remedies
in the interests of those within the corporate entity as well as of
those outside who have dealings with it: the law has recognized
that the independent existence of the legal entity cannot be
treated as an absolute. It is in this context that the process of
‘lifting the corporate veil’ or ‘disregarding the legal entity’ has
been found justified and equitable in certain circumstances or
for certain purposes. The wealth of practice already
accumulated on the subject in municipal law indicates that the
veil is lifted, for instance, to prevent the misuse of the privileges
414 Rubin v. Islamic Republic of Iran, 33 F. Supp. 3d 1003, 1005-06 (N.D. Ill. 2014) (U.S. Annex 184).
415 Rubin. v. Islamic Republic of Iran, 830 F.3d 470, 489 (7th Cir. 2016) (U.S. Annex 185).
416 Rubin v. Islamic Republic of Iran, 138 S. Ct. 816, 827 (2018) (U.S. Annex 75). At the time Iran filed its
Memorial the first two courts had ruled in Iran’s favor, although the U.S. Supreme Court had yet not ruled. Now
that the U.S. Supreme Court has ruled in Iran’s favor, the United States expects that Iran will withdraw all its
claims with respect to the Rubin litigation.
124
of legal personality, as in certain cases of fraud or malfeasance,
to protect third persons such as a creditor or purchaser, or to
prevent the evasion of legal requirements or of obligations.417
14.44 Indeed, both common law and civil jurisdictions allow for the corporate veil to be
pierced.418 As Mr. Albert Badia (a lawyer in Spain and a solicitor in England and Wales) writes
in his treatise entitled Piercing the Veil of State Enterprises in International Arbitration, veilpiercing
has a long history in municipal law,419 including not just by courts but by legislation.420
In municipal law, “[t]he concept of ‘piercing the corporate veil’ is equitable in nature and courts
will pierce the corporate veil ‘to achieve justice, equity, to remedy or avoid fraud or
wrongdoing, or to impose a just liability.’”421 When it occurs, it can result in the assets of one
entity being used to satisfy a liability that resulted from the malfeasance of another entity,422
which is what the relevant U.S. measures authorized.
14.45 In the present case, the measures taken by the United States provide redress for
victims of terrorism by allowing the attachment of assets of state-owned agencies and
instrumentalities to satisfy judgments against state sponsors of terrorism – in this case against
Iran. As set out in Chapter 5, Iran supported and directed acts of terrorism targeted against
U.S. nationals and U.S. interests. It has failed to provide redress for the victims of these acts
and avoided being held accountable. Iran failed to appear in the proceedings leading to the
liability decisions, and has failed to pay any portion of the judgments obtained by its victims.
Under these circumstances, it was both reasonable and justified to allow victims holding
terrorism-related judgments against Iran to attach assets of Iran’s agencies and instrumentalities
“to achieve justice, equity, to remedy or avoid fraud or wrongdoing, or to impose a just
liability.”423
417 Barcelona Traction, 1970 I.C.J. at 39, ¶ 56 (emphasis added).
418 Cheng-Han Tan et al., Piercing the Corporate Veil: Historical, Theoretical & Comparative Perspectives, 16
BERKELEY BUS. L.J. 140, 140 (2019) (U.S. Annex 140) (discussing piercing the corporate veil in England,
Singapore, Germany, China and the United States); ALBERT BADIA, PIERCING THE VEIL OF STATE ENTERPRISES
IN INTERNATIONAL ARBITRATION 48-49 (2014) (U.S. Annex 186).
419 BADIA at 55-59 (U.S. Annex 186).
420 Id., at 58 (U.S. Annex 186).
421 In re Cambridge Biotech Corp., 186 F.3d 1356, 1376 (Fed. Cir. 1999) (quoting 1 William M. Fletcher, Fletcher
Cyclopedia of the Law of Private Corporations, § 41.20, at 598-601, 603 (Perm. Ed. 1999)) (U.S. Annex 187).
422 Cheng-Han Tan et al., Piercing the Corporate Veil: Historical, Theoretical & Comparative Perspectives, 16
U.C. BERKELEY BUS. L.J. 140, 140-41 (2019) (U.S. Annex 140).
423 In re Cambridge Biotech Corp., 186 F.3d at 1376 (U.S. Annex 187).
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14.46 The fourth and final ground Iran relies on in an attempt to establish its denial of justice
claim is that Iran’s ability to rely on three defenses (res judicata, limitation of actions and
collateral estoppel) in U.S. courts was removed retroactively.424 As a preliminary matter, these
defenses were eliminated only to the extent that they are brought in an action under the Foreign
Sovereign Immunities Act (FSIA) under Section 1605A of Title 28 of the U.S. Code, as
expressly acknowledged by Iran.425 This provision involves an exception to immunity from
suit in U.S. courts for state sponsors of terrorism. Thus, this ground can no longer be part of
Iran’s claims, given the Court’s earlier ruling that sovereign immunity is not included within
the scope of Article IV(1).426
14.47 In any event, Iran has provided no basis for its position that a State is obligated under
customary international law to provide these three defenses to litigants in connection with a
denial of justice claim or otherwise. In addition, merely because a measure has retroactive
application does not make the measure a denial of justice.
14.48 This is demonstrated by the National & Provincial Building Society et al. v. United
Kingdom case from the European Court of Human Rights (ECtHR), which rejected claims by
three building societies that the United Kingdom had, through retroactive legislation
concerning tax rates: (i) deprived them of their right of access to a court for a determination of
their civil rights in violation Article 6(1) of the Convention for the Protection of Human Rights
and Fundamental Freedoms (Convention);427 (ii) sought to legalize an expropriation by
depriving the societies of their legal rights to recover expropriated funds in violation of Article
1 of Protocol No. 1 to the Convention;428 and (iii) had further violated both these provisions in
conjunction with Article 14 of the Convention, which provides that the rights of the Convention
shall be secured without discrimination.429 With respect to the last claim, the three building
societies noted that a fourth building society had not been made subject to the retroactive
legislation,430 and argued that this fourth building society was in a materially identical situation.
424 Iran’s Memorial, ¶ 5.46(d).
425 Id., ¶ 2.26 (relying on the National Defense Authorization Act (NDAA) for Fiscal Year 2008, and noting
(correctly) that this provision operates in FSIA cases).
426 Preliminary Objections Judgment, ¶¶ 74, 80.
427 See National & Provincial Building Society et al. v. United Kingdom (117/1996/736/933-935), Judgment ¶ 93
(Oct. 23, 1997) (U.S. Annex 188).
428 Id., ¶ 52 (U.S. Annex 188).
429 Id., ¶ 49 (U.S. Annex 188).
430 Id., ¶¶ 33-34 (U.S. Annex 188).
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As such, the three building societies contended that the United Kingdom had breached Article
14 (anti-discrimination) in conjunction with Articles 6(1) and Article 1 to Protocol No. 1.431
14.49 The ECtHR rejected all these claims,432 even though all three building societies had
already commenced legal proceedings, including judicial review, before the U.K. legislation
had entered into force.433 The ECtHR ruled that the U.K. authorities had “compelling publicinterest
motives” in enacting the legislation at issue because the challenge to the measures in
question “created substantial uncertainty over . . . substantial amounts of revenue . . . .”434
Further, the ECtHR determined that Article 6(1)’s mandate that “everyone is entitled to a fair
and public hearing . . . by an independent and impartial tribunal established by law”435 could
not be interpreted as meaning that the authorities had no right to take legislative action during
pending legal proceedings.436
14.50 In sum, Iranian companies were not denied justice as a result of the challenged
measures. Again, Iran has submitted no support for the proposition that it is a denial of justice
to provide redress for victims of terrorism holding unpaid judgments against a state sponsor of
terrorism by allowing them to enforce their judgments against the State’s agencies and
instrumentalities.
iv. In Any Event, the U.S. Measures Were neither Unreasonable nor
Discriminatory, and Iranian Nationals and Companies Had Effective Means to
Enforce Their Lawful Contractual Rights
14.51 Even if the second and third clauses of Article IV(1) could be read as independent
obligations (rather than as components of the obligation not to deny justice), as Iran argues,
Iran’s claims would still fail because the challenged measures were neither unreasonable nor
discriminatory, and Iranian nationals and companies were afforded effective means to enforce
their lawful contractual rights, as discussed below.
431 Id., ¶¶ 84-85, 114-15 (U.S. Annex 188).
432 Id., ¶ 39 (U.S. Annex 188).
433 Id., ¶¶ 31-32, 38-41 (U.S. Annex 188).
434 Id., ¶ 112 (U.S. Annex 188).
435 Id., ¶ 93 (U.S. Annex 188).
436 Id., ¶ 112 (U.S. Annex 188).
127
(a) U.S. Measures Were Not Unreasonable: They Were a Peaceful
Response to Iran’s Support for Violent Terrorist Acts
14.52 By any standard the United States measures were not unreasonable. As explained in
more detail in Chapter 5, Iran has a history of sponsoring terrorist bombings, assassinations,
kidnappings and airline hijackings; and providing financial and other support for terrorism
specifically targeting U.S. nationals and U.S. interests. The violence that Iran sponsored and
directed has left many U.S. victims in its wake. The victims and their estates ultimately
obtained judgments against Iran as a result, but Iran thwarted the satisfaction of the judgments.
The U.S. measures that Iran complains of were a restrained response to Iran’s sponsorship of
these violent acts and evasion of its obligations as judgment-debtor, which enabled victims to
be compensated for the harm caused by Iran’s conduct.
14.53 Iran’s Memorial makes only a cursory effort to show otherwise. Iran’s argument that
the challenged measures were unreasonable amounts to little more than a reiteration of the
positions from the “fair and equitable treatment” argument in its Memorial, namely that the
United States singled out Iran by (i) denying Iran an immunity defense, and (ii) disregarding
the separate juridical personality of Iran’s agencies and instrumentalities.437 First, with respect
to Iran’s immunity argument, the Court has already ruled that a guarantee of sovereign
immunity is not included within Article IV(1), and thus the lack of an immunity defense may
not serve as a ground for a breach of this article.438 Second, there is nothing unreasonable about
permitting victims of Iran-sponsored terrorism to attach the assets of Iran’s agencies and
instrumentalities to enforce a lawfully obtained judgment against Iran where Iran itself has
refused to satisfy the judgement or otherwise compensate its victims. Third, as discussed in
the next section, the United States has not singled out the state-owned entities at issue in this
case, but has instead accorded them treatment consistent with the treatment it has accorded to
agencies and instrumentalities of other state sponsors of terrorism.
437 Iran’s Memorial, ¶ 5.48.
438 Iran further argued that U.S. measures were arbitrary because as a consequence thereof, Iranian companies had
been subject to the enforcement proceedings outside the United States. Iran’s Memorial, ¶ 5.44(e). If anything,
to the extent such actions are successful, this simply shows that the international community regards the judgment
Iran complains about as valid. In any event, here Iran is complaining of measures from other States, for which
the United States cannot be held responsible. See Bridgestone Licensing Service & Bridgestone Americas v.
Panama, ICSID Case No. ARB/16/34, Decision on Expedited Objections ¶¶ 352-54 (Dec. 13, 2017) (U.S. Annex
189).
128
(b) U.S. Measures Were Not Discriminatory: Companies of All State
Sponsors of Terrorism Are Subject to Having Their Assets Used to
Satisfy Judgments against the State
14.54 The policy goal behind the measures Iran challenges was to allow victims of terrorism
to obtain compensation for their injuries. Although Iran variously contends that its companies
were “singled out” or “targeted,” this is simply not the case. For example, one measure Iran
complains about is TRIA, and yet TRIA applies not just to Iran, but to any “terrorist party,”439
which is defined to include any terrorists, terrorist organization (as that term is further defined
in the Immigration and Nationality Act) and foreign states designated as state sponsors of
terrorism.440 Further, the 2008 NDAA applied to all state sponsors of terrorism, not just Iran.441
14.55 Indeed, for purposes of the U.S. provisions allowing agency and instrumentality
assets to be attached to satisfy judgments against a state sponsor of terrorism, the United States
treats Iranian agencies and instrumentalities the same as agencies and instrumentalities of other
state sponsors of terrorism.442 They are subject to the same legislative provisions setting out
the legal framework for attachment in satisfaction of judgments against terrorist parties and
state sponsors of terrorism in particular.
14.56 The only exception to this is Section 502 of the Iran Threat Reduction and Syria
Human Rights Act of 2012, which did not include state sponsors of terrorism other than Iran.
The policy goal of this measure was, however, the same as the policy goal of all the other
relevant measures, which was to allow victims of terrorist acts to obtain compensation from
terrorist parties. Section 502 was one element of the overall legal regime, and the
circumstances that led to this statute involved questions of New York law that were unique to
assets at issue in the Peterson litigation, and Iran’s deceptive financial conduct, including
conduct involving assets in the Peterson litigation. The measure was not needed to obtain
compensation for victims of any other terrorist party, and there is no reason to think that if
439 TRIA, § 201(a) (IM Annex 13).
440 TRIA, § 201(d)(4) (IM Annex 13).
441 2008 NDAA § 1083 (amending title 28 of the U.S. Code by adding § 1605A thereto, which applies to any state
designated as a state sponsor of terrorism) (IM Annex 15).
442 That Iran was treated the same as other state sponsors of terrorism is exemplified by the case of Weininger v.
Fidel Castro, where a U.S. district court ruled that judgments against the Republic of Cuba (designated as a state
sponsor of terrorism at the time) could be enforced against Cuban agencies or instrumentalities. Weininger v.
Fidel Castro, 462 F. Supp. 2d 457, 495-97 (S.D.N.Y. 2006) (U.S. Annex 193).
129
other terrorist parties were similarly situated, that a similar measure would not be applied to
them.
14.57 Further, it is beyond dispute that not all differential treatment constitutes
discrimination. Iran conceded this very point in its Memorial, stating that “there is an important
distinction to be drawn between ‘discrimination’ and ‘differential treatment.’ . . . However,
any differential treatment must not be based on unreasonable distinctions and demands.”443
14.58 Investor-State arbitral tribunals interpreting the word “discriminatory” have also
concluded that not all differential treatment constitutes discrimination. As one tribunal stated:
“Treating different categories of subjects differently is not unequal treatment.”444 And as
another tribunal reasoned when rejecting a claim of discrimination: “The Tribunal does not
find that there has been any capricious, irrational or absurd differentiation in the treatment
accorded to the Claimants as compared to other entities or sectors.”445
14.59 In the present case, the initial relevant category of subjects are all terrorist parties as
defined above. Within this group States designated as sponsors of terrorism were subject to a
different legal regime with respect to immunity from jurisdiction than other States. This
difference is also reflected in the 2008 NDAA, which applied to all state sponsors of terrorism
(not just Iran), and furthered the goal that applied to all terrorist parties, which was to require
them to compensate their victims.
(c) Iran Has Failed to Prove that U.S. Measures Denied Its Companies
Effective Means of Enforcement of Their Contract Rights
14.60 Finally, with respect to the “effective means” clause of Article IV(1), Iran has offered
little guidance on what this clause would require if it were, in fact, an independent obligation,
rather than a component of the obligation not to deny justice. Iran asserts that the “effective
means” clause “is not merely a restatement of the prohibition on denial of justice,” but rather
“it is a provision of broader scope, that requires a judicial framework that positively enables
effective means of enforcement in conformity with the applicable laws.”446 Yet, Iran does not
443 Iran’s Memorial, ¶ 5.31.
444Metalpar S.A. &Buen Aire S.A. v. Argentine Republic, ICSID Case No. ARB/03/5, Award ¶ 162 (June 6, 2008)
(interpreting the bilateral investment treaty between Chile and Argentina) (U.S. Annex 191).
445 Enron Corp. & Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Award ¶ 282 (May
22, 2007) (interpreting the bilateral investment treaty between the United States of America and Argentina) (U.S.
Annex 192).
446 Iran Memorial, ¶ 5.41.
130
articulate in what respect this clause is “broader” than the protection against denial of justice
under customary international law. But even if the Court were to accept Iran’s contention that
the “effective means” clause is somehow broader than the protection against denial of justice,
Iran still must establish each element of this clause based upon the ordinary meaning of its text.
Specifically, Iran must (1) identify the specific contractual rights that are at issue, prove that
(2) those rights belong to an Iranian company; (3) those rights comply with U.S. law; and (4)
the Iranian company sought to enforce those rights in proceedings before the U.S. courts and
was denied the ability to do so as a result of one of the challenged measures. Iran has failed to
do this.
14.61 To conclude the discussion of Article IV(1), Iran has misconstrued this provision as
granting a host of protections that are not part of the customary international law minimum
standard of treatment. Properly interpreted, the three clauses of Article IV(1) are limited to the
obligation that each Party not deny justice to the other Party’s companies and nationals. Iran’s
claims under Article IV(1) therefore fail because it has not established that any of the
challenged measures meets the high threshold necessary to establish a denial of justice. In any
event, even if the Court were to accept Iran’s argument that the second and third clauses of
Article IV(1) establish independent obligations beyond the obligation not to deny justice, Iran
has not established that any of the challenged measures are in breach of such obligations.
Section C: The United States Did Not Breach Article IV(2)
14.62 Turning now to Article IV(2), Iran has asserted claims under each of its two limbs,
neither of which has merit. First, Iran argues that the measures taken by the United States
violate its obligation to provide Iranian companies with “the most constant protection and
security.”447 Second, Iran contends that the measures constitute takings in breach of the
conditions imposed by Article IV(2).448 As will be discussed below, both of Iran’s claims are
based on a misinterpretation of Article IV(2). In particular, Iran seeks to have the Court read
the obligation to provide “most constant protection and security” as barring changes to a Party’s
legal system that might affect property, an area far removed from the traditional scope of these
types of provisions, which is the protection of property from physical harm. Iran has also
misconstrued the takings limb of Article IV(2) as prohibiting the measures at issue here, which
are, to the contrary, the type of non-discriminatory regulatory measures that are not ordinarily
447 Id., ¶¶ 5.58-5.59.
448 Id., ¶ 5.69.
131
deemed expropriatory. Finally, with respect to both limbs of Article IV(2), Iran’s application
of the treaty text to the challenged measures is comprised primarily of conclusory assertions
that are insufficient to establish a breach. Accordingly, the Court should dismiss Iran’s claims
under Article IV(2).
14.63 The text of Article IV(2) is set out below:
Property of nationals and companies of either High Contracting
Party, including interests in property, shall receive the most
constant protection and security within the territories of the other
High Contracting Party, in no case less than that required by
international law. Such property shall not be taken except for a
public purpose, nor shall it be taken without the prompt payment
of just compensation. Such compensation shall be in an
effectively realizable form and shall represent the full equivalent
of the property taken; and adequate provision shall have been
made at or prior to the time of taking for the determination and
payment thereof.
i. Iran’s Interpretation of Article IV(2)’s Most Constant Protection and Security
Obligation Is Flawed
14.64 Iran’s claim under the “most constant protection and security” prong of Article IV(2)
hinges on an expanded interpretation of that language that goes far beyond its intended scope
and traditional bounds, which are limited to the level of police protection required under
customary international law. Iran would have the Court find that “most constant protection
and security” guarantees both “physical and legal protection,” and in particular protection
“against any executive or legislative measures formulated specifically to remove legal
protections.”449 Iran’s interpretation of the first sentence of Article IV(2) is ill-founded and the
single authority that Iran provides in support of its position is inapposite. The Court should
therefore reject Iran’s attempt to expand “most constant protection and security” far beyond its
intended scope and traditional bounds.
14.65 Provisions extending “most constant protection and security” or “full protection and
security” to the persons or property of foreign nationals have traditionally been understood to
require States to provide protection against physical harm.450 Thus, awards and judicial
449 Id., ¶ 5.57.
450 Suez, Sociedad General de Aguas de Barcelona, S.A. & Vivendi Universal, S.A. v. Argentina, ICSID Case No.
ARB/03/19, Decision on Liability ¶ 162 (July 3, 2010) (U.S. Annex 194) (“Traditionally, courts and tribunals
have interpreted the content of [the full protection and security] standard of treatment as imposing a positive
obligation upon a host State to exercise due diligence to protect the investor and his property from physical threats
and injuries, not as imposing an obligation to protect covered investments and investors from all injuries from
whatever sources.”); BG Group Plc. v. Argentina, Final Award ¶¶ 324, 326 (Dec. 24, 2007) (U.S. Annex 195)
132
decisions finding a breach of the customary international law obligation of full protection and
security have typically involved a State’s failure to provide reasonable police protection against
acts of a criminal nature that physically invaded the person or property of an alien.451
14.66 Iran’s sole support for its more expansive interpretation of Article IV(2)’s “most
constant protection and security” provision is the Court’s judgment in Elettronica Sicula S.p.A.
(ELSI).452 Iran contends that the ELSI judgment “confirmed” the extension of “most constant
protection and security” to “legal as well as physical protection.”453 The ELSI judgment,
however, did nothing of the kind: the Court neither sustained a claim for breach of the “most
constant protection and security” provision of the applicable treaty, the 1948 Treaty of
Friendship, Commerce and Navigation between Italy and the United States (the “U.S.-Italy
FCN”), nor expressed a view on whether that provision required the parties to guard against
threats other than physical harm.454 The Court simply did not decide the interpretive issue that
Iran has put before it here. ELSI is therefore no help to Iran.
(“The Tribunal observes that notions of ‘protection and constant security’ or ‘full protection and security’ in
international law have traditionally been associated with situations where the physical security of the investor or
its investment is compromised. . . . The Tribunal is mindful that other tribunals have found that the standard of
‘protection and constant security’ encompasses stability of the legal framework applicable to the investment. . . .
However, . . . the Tribunal finds it inappropriate to depart from the originally understood standard of ‘protection
and constant security’.”); Saluka Investments B.V. v. Czech Republic, Partial Award ¶ 484 (Mar. 17, 2006) (U.S.
Annex 196) (“The practice of arbitral tribunals seems to indicate, however, that the ‘full security and protection’
clause is not meant to cover just any kind of impairment of an investor’s investment, but to protect more
specifically the physical integrity of an investment against interference by use of force.”); JESWALD W. SALACUSE,
THE LAW OF INVESTMENT TREATIES 236 (2015) (U.S. Annex 197) (“Traditionally, tribunals have interpreted
provisions guaranteeing protection and security as protecting investors and their investments from physical injury
caused by the actions of host governments, their agents, or third parties.”) (emphasis in original); REDFERN AND
HUNTER ON INTERNATIONAL ARBITRATION ¶ 8.114 (6th ed. 2015) (U.S. Annex 198) (“Arbitral tribunals have
traditionally found breaches of the ‘full protection and security’ obligation in situations in which the host state
failed to prevent physical damage to qualifying investments by not taking measures that fell within the normal
exercise of governmental functions of policing and maintenance of law and order.”).
451 See, e.g., United States Diplomatic and Consular Staff in Tehran (United States v. Iran), 1980 I.C.J. 3, 32, ¶
67 (May 24) (failure to protect foreign nationals from being taken hostage); American Manufacturing & Trading,
Inc. v. Zaire, ICSID Case No. ARB/93/1, Award ¶ 3.04 (Feb. 21, 1997) (U.S. Annex 199) (failure to prevent
“destruction of property located in [an] industrial complex . . . and the looting . . . by certain members of the
Zairian armed forces,” who “broke into the commercial complex and the stores, destroyed, damaged and carried
away all the finished goods and almost all the raw materials and objects of value found on the premises.”); Wena
Hotels Ltd. v. Egypt, ICSID Case No. ARB/98/4, Award ¶ 82 (Dec. 8, 2000) (U.S. Annex 200) (failure to prevent
seizure of and damage to two hotels); Asian Agricultural Products Ltd. (AAPL) v. Sri Lanka, ICSID Case No.
ARB/87/3, Final Award ¶ 3 (Jun. 27, 1990) (U.S. Annex 201) (failure to prevent destruction of claimant’s farm).
452 Iran’s Memorial, ¶ 5.57.
453 Id., ¶ 5.57.
454 Elettronica Sicula S.p.A. (ELSI) (United States of America v. Italy), 1989 I.C.J. 15, 63-67, ¶¶ 102-112 (July
20).
133
14.67 The claims in ELSI arose out of actions taken by the Italian government in relation to
a manufacturing plant in Palermo, Sicily, after the plant’s owners decided to close it.455 In
response to concerns about the effect that the closure would have on “general economic public
interest . . . and public order,” the Mayor of Palermo issued an order requisitioning the plant.456
Subsequent to the requisition order, ELSI’s employees occupied the plant.457 ELSI appealed
the Mayor’s requisition order to the Prefect of Palermo, who ruled that the requisition was
illegal – but only after a delay of sixteen months, by which point ELSI had been forced to
initiate bankruptcy proceedings and sell off its assets.458
14.68 The United States made two claims under the U.S.-Italy FCN’s “most constant
protection and security” provision, both of which the Court rejected.459 First, the United States
alleged that the Italian authorities committed a breach by failing to prevent ELSI’s employees
from occupying its plant. Second, the United States alleged an “unreasonable and
unwarranted” delay by the Prefect of Palermo in ruling on ELSI’s appeal from the requisition
of the plant.460 With respect to the Prefect’s delay, the Court opined that “[i]t must be doubted
whether in all the circumstances, the delay . . . can be regarded as falling below [the minimum
international] standard.”461 Likewise, after noting that the requirement to provide constant
protection and security “cannot be construed as the giving of a warranty that property shall
never in any circumstances be occupied or disturbed,” the Court concluded that the United
States had failed to “establish[] that any deterioration in the plant and machinery was due to
the presence of the workers.”462 Accordingly, “the protection provided by the authorities could
455 Id., at 30, ¶ 27.
456 Id., at 32, ¶ 30.
457 Id., at 33, ¶ 33.
458 Id., at 33, ¶ 32; 38-39, ¶¶ 41-42.
459 The relevant treaty provision, Article V(1), reads: “The nationals of each High Contracting Party shall receive,
within the territories of the other High Contracting Party, the most constant protection and security for their
persons and property, and shall enjoy in this respect the full protection and security required by international law.
To these ends, persons accused of crime shall be brought to trial promptly, and shall enjoy all the rights and
privileges which are or may hereafter be accorded by the applicable laws and regulations; and nationals of either
High Contracting Party, while within the custody of the authorities of the other High Contracting Party, shall
receive reasonable and humane treatment. In so far as the term ‘nationals’ where used in this paragraph is
applicable in relation to property it shall be construed to include corporations and associations.” See ELSI, 1989
I.C.J. at 63, ¶ 103.
460 ELSI, 1989 I.C.J. at 65-66, ¶¶ 109-110.
461 Id., at 66, ¶ 111.
462 Id., at 65, ¶ 108.
134
not be regarded as falling below ‘the full protection and security required by international
law.’”463
14.69 As this discussion makes clear, the Court did not sustain a claim for breach of the
“most constant protection and security” provision of the treaty between the United States and
Italy and did not rule on whether that provision required the parties to protect against something
more than physical harm. Accordingly, Iran’s attempt to use ELSI as support for its
interpretation of Article IV(2)’s first limb must fail.
14.70 To the extent Iran is suggesting that the Court implicitly endorsed an expansion of
the “most constant protection and security” provision beyond its traditional scope, there is
likewise no merit to that argument. Both aspects of the U.S. claim were rooted in an alleged
failure to protect ELSI’s physical assets, namely its plant and equipment. The Mayor of
Palermo expressly justified his actions in requisitioning the plant and appointing a temporary
manager, at least in part, as an effort to prevent “damage to the equipment and machinery” on
the plant’s premises464 and the U.S. complaint was that these actions were inadequate – as
shown by the plant’s subsequent occupation by ELSI’s employees – and also that it was
effectively denied an opportunity to have them reviewed by the Italian authorities.
14.71 Nothing in ELSI could be read to support the expansive interpretation of Article
IV(2)’s first sentence that Iran is putting forward in this case. Iran does not delineate the precise
scope of its reading of the “most constant protection and security” provision, but the crux of its
argument appears to be that this provision prohibits “any executive or legislative measures
formulated specifically to remove legal protections.”465 In other words, Iran contends that any
reduction or removal of “legal protections” that would otherwise apply to Iranian property
should be considered a breach of Article IV(2)’s first sentence.
14.72 Iran’s reading of the provision would effectively transform it into a guarantee that the
legal framework applying to Iranian property must forever remain unchanged. This would
allow for neither the natural evolution of the law – essentially an impossibility in any legal
system – nor changes made as a result of intervening actions taken by Iran and its nationals.
The ELSI judgment provides no support for the standard of protection that Iran is advocating.
463 Id.
464 Id., at 33, ¶ 31.
465 Iran’s Memorial, ¶ 5.57.
135
14.73 In sum, Iran’s sole authority – the ELSI judgment – simply does not support its effort
to expand the first sentence of Article IV(2) far beyond the traditional scope of protection from
physical harm. The Court should therefore reject Iran’s interpretation of this provision.
ii. The U.S. Measures Do Not Amount to a Denial of Most Constant Protection
and Security under Article IV(2)
14.74 There is no allegation in this case that the property of Iranian companies has been
subjected to physical invasion by criminal actors, let alone that any of the challenged U.S.
measures exposed Iranian property to such an invasion. Accordingly, the challenged measures
do not violate the traditional interpretation of the “most constant protection and security”
standard. Thus, unless this obligation extends further, as Iran contends, Iran’s claims must fail.
14.75 For the reasons explained in the previous section, however, the Court should reject
Iran’s attempt to expand “most constant protection and security” far beyond its traditional
bounds. Iran has not referenced any authority that would justify the Court in concluding that
the first sentence of Article IV(2) prohibits “any executive or legislative measures formulated
specifically to remove legal protections.”466
14.76 The Court should therefore dismiss Iran’s claims under the first limb of Article IV(2)
in their entirety.
iii. Iran’s Interpretation of Article IV(2)’s Restrictions on the Taking of Property
is Flawed
14.77 Iran’s interpretation of Article IV(2)’s second limb, which imposes restrictions on
the taking of property, is both flawed and supported almost entirely by bare assertions, rather
than any authority. The Court should therefore reject it.
14.78 There are two primary flaws in Iran’s interpretation of Article IV(2)’s second limb.
The first is Iran’s insistence that the Court must ignore the “nature of” the challenged measures
in favor of focusing exclusively on their “impact.”467 This is not what Article IV(2) requires.
To the contrary, while the degree of impact of a measure is part of the analysis under this limb
of Article IV(2), it is also critically important for the Court to take into account the nature of
the challenged measures and, in particular, to consider whether they are an expression of U.S.
466 Id.
467 Id., ¶ 5.65(b), (c).
136
police powers.468 It has long been understood that a bona fide, non-discriminatory regulation,
enacted as an exercise of a State’s police powers, will not be deemed expropriatory:
State measures, prima facie lawful, may affect foreign interests
considerably without amounting to expropriation. Thus foreign
assets and their use may be subjected to taxation, trade
restrictions such as quotas, revocation of licenses for breach of
regulations, or measures of devaluation. While special facts may
alter cases, in principle such measures are not unlawful and do
not constitute expropriation.469
468 UNCTAD Report, Expropriation: A Sequel at 78 (2012) (U.S. Annex 202) (“[i]t has long been accepted in
international law that State acts are in principle not subject to compensation when they are an expression of the
police powers of the State.”).
469 JAMES CRAWFORD, BROWNLIE’S PRINCIPLES OF PUBLIC INTERNATIONAL LAW at 621 (8th ed. 2012) (internal
citations omitted) (U.S. Annex 203). Similar language has appeared in PRINCIPLES OF PUBLIC INTERNATIONAL
LAW since the first edition, see IAN BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW at 432 (1st ed. 1966)
(U.S. Annex 204). See also Louis B. Sohn and R.R. Baxter, Responsibility of States for Injuries to the Economic
Interests of Aliens, 55 AM. J. INT’L L. 545, 554 (1961) (U.S. Annex 205) (providing in Article 10(5) of the draft
convention: “An uncompensated taking of property of an alien or a deprivation of the use or enjoyment of property
of an alien which results from the execution of the tax laws, from a general change in the value of currency; from
the action of the competent authorities of the State in the maintenance of public order, health, or morality; or from
the valid exercise of belligerent rights; or is otherwise incidental to the normal operation of the laws of the State
shall not be considered wrongful . . . .”); id. at 561 (noting in the comment to Article 10(5) that “[b]y a taking or
deprivation of property which is ‘otherwise incidental to the normal operation of the laws of the State’ is meant
the carrying out of a judgment of a court in a civil case or a fine or penalty in criminal proceedings.”).
137
14.79 This proposition is supported by state practice,470 commentators,471 and a number of
arbitral awards.472 Moreover, a State is entitled to significant deference in determining what
measures are necessary to serve its chosen purpose, whether that is protecting public health,
safety or some other legitimate end.473
470 See, e.g., Ministerial Statement on the Multilateral Agreement on Investment, ¶ 5 (April 28, 1998) (“Ministers
confirm that the MAI [Multilateral Agreement on Investment] must be consistent with the sovereign responsibility
of governments to conduct domestic policies. The MAI would establish mutually beneficial international rules
which would not inhibit the normal non-discriminatory exercise of regulatory powers by governments and such
exercise of regulatory powers would not amount to expropriation.”), quoted in UNCTAD Report, Expropriation:
A Sequel at 81-82 (2012) (U.S. Annex 202); Convention Establishing the Multilateral Investment Guarantee
Agency, Article 11(a)(ii) (U.S. Annex 206) (permitting the Agency to guarantee investments against a loss
resulting from “Expropriation and Similar Measures,” which the Convention defines as “any legislative action or
administrative action or omission attributable to the host government which has the effect of depriving the holder
of a guarantee of his ownership or control of, or a substantial benefit from, his investment, with the exception of
nondiscriminatory measures of general application which governments normally take for the purpose of regulating
economic activity in their territories;”); RESTATEMENT (THIRD) OF FOREIGN RELATIONS OF THE UNITED STATES §
712, Comment (g) (1987) (U.S. Annex 207) (“A state is not responsible for loss of property or for other economic
disadvantage resulting from bona fide general taxation, regulation, forfeiture for crime, or other action of the kind
that is commonly accepted as within the police power of states, if it is not discriminatory, . . . and is not designed
to cause the alien to abandon the property to the state or sell it at a distress price.”).
471 See, e.g., JESWALD W. SALACUSE, THE LAW OF INVESTMENT TREATIES at 327 (2d ed. 2015) (U.S. Annex 197)
(“As numerous cases have indicated, in evaluating a claim of expropriation it is important to recognize a state’s
legitimate right to regulate and exercise its police power in the interests of public welfare. Such actions should
not be confused with acts of expropriation.”); KATIA YANNACA-SMALL, ARBITRATION UNDER INTERNATIONAL
INVESTMENT AGREEMENTS – A GUIDE TO THE KEY ISSUES ¶ 22.09 (2d ed. 2018) (U.S. Annex 208) (“It is an
accepted principle of customary international law that, where economic injury results from a bona fide nondiscriminatory
regulation within the police powers of the state, compensation is not required.”); G.C. Christie,
What Constitutes a Taking of Property Under International Law, 38 BRIT. Y.B. INT’L L. 307, 338 (1962) (U.S.
Annex 209) (“If, however, such prohibition can be justified as being reasonably necessary to the performance by
a State of its recognized obligations to protect the public health, safety, morals or welfare, then it would normally
seem that there has been no ‘taking’ of property.”); “Indirect Expropriation” and the “Right to Regulate” in
International Investment Law, OECD Working Papers on International Investment, 2004/04, at 18 (U.S. Annex
210) (“The notion that the exercise of the State’s ‘police powers’ will not give rise to a right to compensation has
been widely accepted in international law.”).
472 See, e.g., Chemtura Corp. v. Canada, Ad Hoc Tribunal (UNCITRAL), Award ¶ 266 (Aug. 2, 2010) (U.S.
Annex 211) (“[T]he Tribunal considers in any event that the measures challenged by the Claimant constituted a
valid exercise of the Respondent’s police powers. . . . [T]he [Pest Management Regulatory Agency (of Canada)]
took measures within its mandate, in a non-discriminatory manner, motivated by the increasing awareness of the
dangers presented by lindane for human health and the environment. A measure adopted under such circumstances
is a valid exercise of the State’s police powers and, as a result, does not constitute an expropriation.”); Saluka
Investments B.V. v. Czech Republic, Partial Award ¶ 255 (Mar. 17, 2006) (U.S. Annex 196) (“It is now established
in international law that States are not liable to pay compensation to a foreign investor when, in the normal exercise
of their regulatory powers, they adopt in a non-discriminatory manner bona fide regulations that are aimed at the
general welfare.”); Marvin Roy Feldman Karpa v. United Mexican States, ICSID Case No. ARB(AF)/99/1, Award
¶ 103 (Dec. 16, 2002) (U.S. Annex 212) (“[G]overnments must be free to act in the broader public interest through
protection of the environment, new or modified tax regimes, the granting or withdrawal of government subsidies,
reductions or increases in tariff levels, imposition of zoning restrictions and the like. Reasonable governmental
regulation of this type cannot be achieved if any business that is adversely affected may seek compensation, and
it is safe to say that customary law recognises this.”).
473 See Louis B. Sohn and R.R. Baxter, Responsibility of States for Injuries to the Economic Interests of Aliens,
55 AM. J. INT’L L. 545, 555-56 (1961) (U.S. Annex 205) (“It is not without significance that what constitutes a
‘public purpose’ has rarely been discussed by international tribunals and that in no case has property been ordered
restored to its former owner because the taking was considered to be other than for a public purpose. This
unwillingness to impose an international standard of public purpose must be taken as reflecting great hesitancy
138
14.80 Iran itself acknowledges this proposition but notes that it is not expressly reflected in
the text of Article IV(2).474 Whatever inference Iran seeks to have the Court draw from the
absence in Article IV(2) of language articulating the boundary between compensable takings
and non-compensable regulatory action, it is of no significance. Such a boundary is inherent
in the concept of expropriation as it has developed in international law. Indeed, it could not be
otherwise. If a State had an absolute duty to provide compensation for any action that affected
the value of property or interests in property, the duty would effectively bar a wide range of
critical governmental actions like taxation and regulations to promote public health.475
14.81 In considering the nature of the government action, the Court should also take into
account the branch of government responsible for the act. In its Memorial, Iran attempts to
erase any meaningful line between acts of the executive and legislative branches of government
and acts of the judiciary in the Court’s analysis of whether a taking has occurred in breach of
Article IV(2), claiming they should all be treated the same.476 Again, Iran has offered no
authority for this reading of Article IV(2)’s second limb. To the contrary, decisions of domestic
courts acting in the role of neutral and independent arbiters of legal rights should be considered
separately from legislative and executive branch actions. Such decisions do not give rise to a
claim for expropriation.
14.82 The second major flaw in Iran’s interpretation of the takings provisions in Article
IV(2) is that it understates the severity of the economic impact that a challenged measure must
have on a property holder in order to support a successful expropriation claim. Specifically,
while Iran concedes that “Article IV(2) requires some form of actual or substantial taking,”477
this does not accurately state the applicable principle. Rather, Iran must demonstrate that the
government measure at issue destroyed all, or virtually all, of the economic value of the
upon the part of tribunals and of States adjusting claims through diplomatic settlement to embark upon a survey
of what the public needs of a nation are and how these may best be satisfied.”); G.C. Christie, What Constitutes a
Taking of Property Under International Law, 38 BRIT. Y.B. INT’L L. 307, 332 (1962) (U.S. Annex 209) (“But it
certainly would seem that if the facts are such that the reasons actually given are plausible, search for unexpressed
‘real’ reasons is chimerical. No such search is permitted in municipal law, and the extreme deference paid to the
honour of States by international tribunals excludes the possibility of supposing that the rule is different in
international law.”).
474 Iran’s Memorial, ¶ 5.71.
475 Louis B. Sohn and R.R. Baxter, Responsibility of States for Injuries to the Economic Interests of Aliens, 55
AM. J. INT’L L. 545, 561 (1961) (U.S. Annex 205) (noting that, if exercises of a State’s police power were deemed
expropriatory, “a State would be denied the means of depriving an alien of property, without compensation, under
circumstances which are universally recognized as properly calling for such action.”).
476 Iran’s Memorial, ¶ 5.64.
477 Iran’s Memorial, ¶ 5.65(b).
139
affected property, or interfered with it to such a similar extent and so restrictively as “to support
a conclusion that the property has been ‘taken’ from the owner.”478 Put another way, the Court
must first determine “if the [property holder] was radically deprived of the economical use and
enjoyment of its [property], as if the rights related there . . . had ceased to exist.”479
14.83 In sum, Iran’s interpretation of Article IV(2)’s second limb ignores key elements that
the Court must consider in assessing the challenged measures and understates the test for
evaluating a measure’s economic impact. For these reasons, the Court should reject it.
iv. The U.S. Measures Do Not Amount to an Unlawful Expropriation
14.84 Iran challenges a wide array of U.S. measures taken to respond to Iran’s support for
international terrorism and to provide redress for victims of such terrorism. These include a
variety of U.S. legislative acts, executive acts, and certain judicial decisions. In its memorial,
Iran merely asserts, in conclusory fashion, that all of these acts are expropriatory, without any
support or analysis. The thrust of Iran’s argument is that the legislative and executive acts are
themselves expropriatory and that, as a result, any judicial decisions giving effect to those acts
must also be deemed expropriatory. Iran is wrong on both points.
14.85 The legislative and executive acts do not, standing alone, deprive Iranian nationals or
companies of any property. Moreover, even when these acts are relied on by courts in
permitting plaintiffs to attach property of Iranian nationals or companies or to enforce
judgments against such property, this does not constitute an expropriation because the
challenged legislative and executive acts, together with the judicial decisions relying on them,
are bona fide, non-discriminatory exercises of U.S. police power. Accordingly, they do not
trigger a right to compensation against the United States.
478 Glamis Gold Ltd. v. United States of America, NAFTA/UNCITRAL, Award ¶ 357 (June 8, 2009) (U.S. Annex
148). See also Elettronica Sicula S.p.A. (ELSI) (United States of America v. Italy), 1989 I.C.J. 15, 63-67 (July 20,
1989) (noting in dicta that the “requisition . . . could not, in the Chamber’s view, amount to a ‘taking’ contrary to
Article V unless it constituted a significant deprivation of Raytheon and Machlett’s interest in ELSI’s plant”);
Grand River Enterprises Six Nations, Ltd., et al. v. United States of America, NAFTA/UNCITRAL, Award ¶ 147
(Jan. 12, 2011) (U.S. Annex 214) (noting “the conception of expropriation applied in numerous cases—that
expropriation involves the deprivation or impairment of all, or a very significant proportion of, an investor's
interests.”); Total S.A. v. Argentine Republic, NAFTA/ICSID Case No. ARB/04/1, Award ¶ 195 (Dec. 27, 2010)
(U.S. Annex 215) (an expropriation requires “a total loss of value of the property such as when the property
affected is rendered worthless by the measure, as in case of direct expropriation, even if formal title continues to
be held. This is supported by the general direction of the case law under BITs, other international jurisprudence
and scholarly legal opinions.”); UNCTAD Report, Expropriation: A Sequel at 63 (2012) (U.S. Annex 202) (in
order for an expropriation to be found, “[t]he impact of the measure or degree of interference must be such as to
render the property rights useless, i.e. to deprive the owner of the benefit and economic use of the investment.”).
479 Glamis Gold Ltd. v. United States of America, NAFTA/UNCITRAL, Award ¶ 357 (June 8, 2009) (U.S. Annex
148).
140
(a) Legislative and Executive Measures
14.86 As an initial matter, Iran’s challenges with respect to two significant categories of
legislative acts can be dismissed out of hand. The first category comprises measures that
affected the scope of Iran’s sovereign immunity or created rights of action against Iran –
measures that the Court has, in any event, dismissed from this case on other grounds.480 These
measures did not deprive Iranian nationals or companies of any property or any interest in
property at all, let alone to the extreme degree required for a measure to be judged
expropriatory. Accordingly, these measures did not violate the second limb of Article IV(2).
Second, measures that solely affected Bank Markazi – such as the Iran Threat Reduction and
Syria Human Rights Act of 2012 – do not give rise to a claim under Article IV(2) because it
only applies to the “[p]roperty of nationals and companies of either High Contracting Party”
and, as explained in Chapter 9 above, Bank Markazi is not a “company.”481
14.87 The remaining legislative measures are those that allow for claimants with terrorismrelated
judgments against Iran to execute those judgments against the assets of Iran’s agencies
and instrumentalities or to attach those assets in aid of execution. Iran asserts that these
measures are “expropriatory . . . as they are expressly directed at the taking of the property of
Iranian companies.”482 Iran is wrong – again, the measures are directed at enforcing judicial
judgments, thereby satisfying a debt owed by Iran, and at achieving legitimate regulatory
purposes – but in any event it is not sufficient, even under Iran’s own flawed reading of Article
IV(2), for a measure to be “directed” at the taking of property. Rather, as even Iran concedes,
the measure must result in “some form of actual or substantial taking.”483 Iran has not even
attempted to show that any of the challenged legislative or executive measures, standing alone,
deprived Iranian companies of property or interests in property. While these measures created
the possibility that an Iranian company, to the extent it was judged to be an agency or
instrumentality of Iran, might someday be subject to an enforcement action, this impact is far
too contingent and tenuous to constitute an expropriation under international law. In any event,
as discussed further below, the attachments of assets at issue in this case are not takings of
property requiring compensation by the government.
480 See Chapter 2.
481 See Chapter 9.
482 Iran’s Memorial, ¶ 5.69.
483 Id., ¶ 5.65(b).
141
14.88 Turning to Executive Order 13599, Iran’s claims are equally meritless. First, as
explained in Chapter 11 above, Article XX(1) bars any claim with respect to Executive Order
13599. Second, the Executive Order is directed, in part, at Iran’s central bank, Bank Markazi.
Again, Bank Markazi is not a “company” within the meaning of Article IV(2) and, as a result,
any blocking of Bank Markazi’s property is not actionable under this provision. Likewise, the
blocking of Iranian state property is not actionable because Article IV(2) only applies to the
property of Iranian companies and nationals. Third, blocking orders – specifically including
orders issued, like Executive Order 13599, pursuant to the International Emergency Economic
Powers Act (IEEPA) – are not expropriatory, including because they are by nature temporary
and do not themselves alter ownership of the blocked assets.484 For these reasons, the Court
should conclude that Executive Order 13599 is not expropriatory under international law and
therefore not a breach of Article IV(2).
14.89 Accordingly, Iran’s challenges to the legislative and executive acts at issue in this
case fall at the first hurdle because they do not have the level of impact required under
international law for a measure to be deemed expropriatory.
14.90 Iran’s challenges to these measures must also be dismissed because each and every
one was a bona fide, non-discriminatory exercise of U.S. police powers. The United States
enacted the challenged legislation to provide victims of terrorist acts with the ability to obtain
redress from the sponsors of those acts, including Iran.485 Likewise, Executive Order 13599
was promulgated to address Iranian activities that caused grave national security concern to the
484 U.S. courts have repeatedly found that blocking orders are not expropriatory for this reason. See, e.g.,
Paradissiotis v. United States, 304 F.3d 1271, 1274 (Fed. Cir. 2002) (U.S. Annex 216) (“On several occasions,
this court has addressed Fifth Amendment takings claims raised by persons or entities that have been adversely
affected by actions taken for national security reasons to freeze the assets of, or prohibit transactions by, foreign
entities, and on each occasion we have held that the actions have not violated the Takings Clause.”); Zarmach Oil
Servs., Inc. v. U.S. Dep’t of the Treasury, 750 F. Supp. 2d 150, 159 (D.D.C. 2010) (U.S. Annex 217) (“It is wellestablished
that the blocking of assets pursuant to an executive order is not a taking within the meaning of the
Fifth Amendment.”); Islamic Am. Relief Agency v. Unidentified FBI Agents, 394 F. Supp. 2d 34, 51 (D.D.C. 2005),
aff’d in part and remanded sub nom. Islamic Am. Relief Agency v. Gonzales, 477 F.3d 728 (D.C. Cir. 2007) (U.S.
Annexes 218, 219) (“[T]o the extent that the plaintiff seeks to challenge the blocking of assets pursuant to an
Executive Order, such an order is not, as a matter of law, a takings within the meaning of the Fifth Amendment.”);
Holy Land Found. for Relief & Dev. v. Ashcroft, 219 F. Supp. 2d 57, 77-78 (D.D.C. 2002), aff’d, 333 F.3d 156
(D.C. Cir. 2003) (U.S. Annex 220) (“The case law is clear that blockings under Executive Orders are temporary
deprivations that do not vest the assets in the Government. Therefore, blockings do not, as a matter of law,
constitute takings within the meaning of the Fifth Amendment. Accordingly, courts have consistently rejected
these claims in the IEEPA and TWEA context.”); Glob. Relief Found., Inc. v. O’Neill, 207 F. Supp. 2d 779, 802
(N.D. Ill. 2002), aff’d, 315 F.3d 748 (7th Cir. 2002), (U.S. Annex 221) (“Takings claims have often been raised—
and consistently rejected—in the IEEPA context.”).
485 See Chapter 6.
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United States, including arms trafficking, support for terrorism, and the pursuit of ballistic
missile capabilities.486
14.91 Iran is not entitled to any compensation for these sorts of measures under Article
IV(2). Indeed, to conclude otherwise would place the cost of Iran’s wrongful acts on the United
States and would also deprive Executive Order 13599, and any other similar blocking orders
or asset freezes, of any force as a deterrent to illicit conduct.487 Such an interference with a
State’s regulatory prerogative is precisely the sort of outcome that international law forecloses
by excluding exercises of police power from the scope of compensable takings.
14.92 Moreover, for the reasons discussed in Section B above, the measures at issue are
also not discriminatory, unreasonable or otherwise in breach of international law.
14.93 The factors that the Court must assess in determining whether any of the challenged
legislative and executive measures violate Article IV(2) therefore weigh against finding that
the United States has committed a compensable taking and Iran’s claims with respect to these
measures must fail.
(b) Judicial Decisions
14.94 Turning to the judicial decisions that Iran has challenged, Iran’s claims should be
dismissed because the legislative and executive measures on which these decisions rely in
permitting plaintiffs to enforce judgments against agencies and instrumentalities of Iran are
proper exercises of U.S. police powers, as explained in the preceding section. Thus, the
legislative and executive measures themselves are not in breach of Article IV(2) and,
accordingly, decisions by a neutral and independent judiciary applying those measures cannot
be deemed treaty breaches.
14.95 In addition, while the full or partial satisfaction of a judgment against an agency or
instrumentality of Iran results in the transfer of that entity’s assets to the judgment creditor, it
also has the corresponding effect of reducing Iran’s outstanding liability under the judgment.
For example, if a court directs a state-owned Iranian bank to turn over $1 million to a plaintiff
in satisfaction of a $3 million judgment against Iran, Iran’s liability under the judgment drops
to $2 million. Thus, where, as here, it is appropriate for holders of judgments against Iran to
486 See Chapter 11.
487 See, e.g., Paradissiotis, 304 F.3d at 1278 (U.S. Annex 216) (“Economic sanctions would hardly be sanctions
if the foreign targets of the sanctions could simply stand in line to be compensated for the losses those sanctions
caused them.”).
143
look to Iran’s agencies and instrumentalities for satisfaction,488 the overall impact of the
measures should be considered economically neutral: the reduction in assets held by Iran’s
agencies and instrumentalities is offset by a $1 million reduction in Iran’s liabilities. This is
not the type of radical deprivation that is required for Iran to establish a breach of Article IV(2)
– it is no deprivation at all.
14.96 The Court should therefore dismiss Iran’s expropriation claims under Article IV(2)
in their entirety.
CHAPTER 15: IRAN HAS FAILED TO ESTABLISH ABREACH OF ARTICLE V(1)
15.1 Turning now to Article V(1) of the Treaty of Amity, Iran’s claims under this
provision are likewise groundless and must be dismissed. Article V(1) protects property
ownership rights, but only when those rights change hands through lease, acquisition, or
disposition. Iran’s claim, which is brought only under the paragraph’s disposition element,
must fail because Iran has failed to show that any owners of the properties at issue were
attempting to dispose of those properties, let alone that any such attempt was prevented by the
challenged U.S. measures. Iran’s claim must also fail because Iran cannot pass the provision’s
most-favored-nation (“MFN”) test, having failed to point to a single comparator for the
purposes of satisfying that test.
Section A: Iran’s Article V(1) Claim Invokes Only a Limited Subset of
That Paragraph’s Provisions
15.2 Article V(1) addresses a specific, circumscribed set of economic activities, namely
the acquisition and disposition of property:
Nationals and companies of either High Contracting Party shall
be permitted, within the territories of the other High Contracting
Party: (a) to lease, for suitable periods of time, real property
needed for their residence or for the conduct of activities
pursuant to the present Treaty; (b) to purchase or otherwise
acquire personal property of all kinds; and (c) to dispose of
property of all kinds by sale, testament, or otherwise. The
treatment accorded in these respects shall in no event be less
favorable than that accorded nationals and companies of any
third country.
15.3 Clauses (a) through (c) of Article V(1) obligate the Parties to permit each other’s
companies and nationals to lease “real property,” to purchase or acquire “personal property of
488 See supra Section B.iii.
144
all kinds,” and to dispose of “property of all kinds,” all subject to the most-favored-nation
standard of treatment specified in the provision’s final sentence. Article V(1) thus imposes
obligations only with respect to certain specific events impacting the property of a Party’s
companies or nationals: a lease, a purchase or other acquisition, or a disposition. Each of those
events involves a change in ownership of, or rights with respect to, the property. This list of
specific events notably excludes the holding and use of property, aspects of property ownership
which are thus outside the scope of Article V(1). Iran’s claims in this case rely solely on clause
(c), regarding disposition of property.
15.4 Applying principles of treaty interpretation based in customary international law as
reflected in the Vienna Convention, the phrase stating the crucial requirement of Article V(1),
“shall be permitted,” must be read in terms of the ordinary meaning of its words. Synonyms
of permit, from a leading U.S. legal dictionary, include allow; to permit an activity is to allow
it to happen.489 Conversely, to permit an activity does not mean to facilitate it, to make it as
easy as possible, or to leave it entirely unregulated or unencumbered. Article V(1), therefore,
is not violated by rules and procedures related to the transfer of property that impose some sort
of burden, obstacle, or requirement (for example, requirements that transfers of real property
must be recorded and give rise to a tax or fee, or the burden that transferred property is subject
to zoning restrictions), so long as the measures do not entirely bar the transfer of property.
15.5 Furthermore, Article V(1) must be read as a whole, with each of its terms considered
in context. In particular, the Court should read the two sentences of Article V(1) together and
use each one to help interpret the other. The MFN standard stated in the second sentence of
Article V(1) establishes the threshold applicable to the requirements stated in its first sentence.
It means that those requirements apply to conduct that is nationality-based rather than to
universally applicable aspects of ordinary property law.
Section B: Iran Has Not Stated a Claim under Article V(1)(c)
15.6 Iran’s claims under Article V(1)(c) fail for two independent reasons. First, the
provision of Article V(1) invoked by Iran applies only to the disposition of property, but Iran
has put forward no evidence whatsoever of any attempt by its companies to dispose of property,
much less evidence that such an attempt was prevented by the U.S. measures.
489 Permit, BLACK’S LAW DICTIONARY (11th ed. 2019) (U.S. Annex 157).
145
15.7 The second reason Iran’s Article V(1) claim fails is that the provision imposes a
nationality-based test, but Iran fails to establish how the challenged measures single out Iran’s
companies for treatment inconsistent with that standard.
15.8 The MFN test is a relative standard that requires the claimant to identify a similarlysituated
person or company that received more favorable treatment on the basis of its
nationality. As one tribunal held while interpreting an MFN provision in an investment treaty,
in order to establish a “claim for relief for an alleged breach of the MFN clause,” “a claimant
must normally establish the existence of a comparator and then demonstrate that such
comparator has received better treatment.”490 A viable claim under Article V(1), therefore,
requires a comparator – some other company that received better treatment in like
circumstances on the basis of its nationality.
15.9 Iran, however, has failed to meet this straightforward and fundamental requirement
applicable to an MFN claim; it has failed to identify any comparator. Specifically, Iran has not
specified any third-country company in a like situation – that is, an agency or instrumentality
of a state sponsor of terrorism – that received better treatment than the companies that are the
subject of its Article V(1) claims.
15.10 For the two reasons set out above, Iran has not established any viable claim to relief
under Article V(1).
CHAPTER 16: THE U.S. HAS NOT VIOLATED ARTICLE VII(1)
16.1 Iran’s Article VII claim must be dismissed because Iran misinterprets the text of the
provision. Iran contends that Article VII prohibits any conceivable restrictions on payments,
remittances, and other transfers of funds. But in advancing its position, Iran improperly isolates
a few words, ignoring their immediate context, the text of the Article as a whole, and the
relevant negotiating history, contrary to the applicable rules of treaty interpretation. As
demonstrated in this Chapter, Iran is wrong. Article VII must be read as an exchange control
provision, addressing the standards to be observed in the event either Party found it necessary
to control the availability of foreign exchange. The relevant portion of Article VII(1) can only
be understood in its context as establishing a general prohibition on exchange restrictions, with
490 European American Investment Bank AG v. The Slovak Republic, PCA Case No. 2010-17, Award on
Jurisdiction ¶ 435 (Oct. 22, 2012) (U.S. Annex 224); see also ANDREW NEWCOMBE & LLUIS PARADELL, LAW
AND PRACTICE OF INVESTMENT TREATIES: STANDARDS OF TREATMENT 224-225 (2009) (“the comparison made
between the treatment of two investors or investors requires the identification of the applicable comparator . . . .”)
(U.S. Annex 225).
146
a series of exceptions set out in the text. Moreover, the Treaty’s negotiating history reflects
significant discussion surrounding Article VII, with both parties characterizing it as an
exchange control provision and nothing more.
16.2 The United States further contends that even under Iran’s overly broad interpretation
of Article VII, its claim still fails. Iran alleges that the United States violated Article VII by
restricting payments, remittances, and other transfers of funds, but the U.S. measures at issue
are simply designed to enable the enforcement of valid court judgments. As a result, Iran’s
Article VII claim does not pass muster.
16.3 The text of Article VII reads as follows:
1. Neither High Contracting Party shall apply restrictions on the making
of payments, remittances, and other transfers of funds to or from the
territories of the other High Contracting Party, except (a) to the extent
necessary to assure the availability of foreign exchange for payments
for goods and services essential to the health and welfare of its people,
or (b) in the case of a member of the International Monetary Fund,
restrictions specifically approved by the Fund.
2. If either High Contracting Party applies exchange restrictions, it shall
promptly make reasonable provision for the withdrawal, in foreign
exchange in the currency of the other High Contracting Party of:
(a) the compensation referred to in Article IV, paragraph 2, of the
present Treaty, (b) earnings, whether in the form of salaries, interest,
dividends, commissions, royalties, payments for technical services, or
otherwise, and (c) amounts for amortization of loans, depreciation of
direct investment and capital transfers, giving consideration to special
needs for other transactions. If more than one rate of exchange is in
force, the rate applicable to such withdrawals shall be a rate which is
specifically approved by the International Monetary Fund for such
transactions or, in the absence of a rate so approved, an effective rate
which, inclusive of any taxes or surcharges on exchange transfers, is
just and reasonable.
3. Either High Contracting Party applying exchange restrictions shall in
general administer them in a manner not to influence
disadvantageously the competitive position of the commerce,
transport or investment of capital of the other High Contracting Party
in comparison with the commerce, transport or investment of capital
of any third country; and shall afford such other High Contracting
Party adequate opportunity for consultation at any time regarding the
application of the present Article.
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Section A: Article VII(1) Applies to Exchange Restrictions and Iran
Fails to Identify Any Exchange Restriction Imposed by the
U.S.
16.4 The Paragraphs of Article VII all work together to form a comprehensive whole.
Paragraph 1 imposes a general prohibition on restricting payments, remittances, and other
transfers of funds to or from the territories of the Parties, subject to two exceptions. Under the
first exception, Parties are relieved of their general obligation when necessary to assure
availability of foreign exchange for the health and welfare of their people. Under the second
exception, Parties are relieved of their general obligation when the International Monetary
Fund (“IMF”) specifically approves the restriction. These two exceptions, which form the
immediate context for the general prohibition in Paragraph 1 (“Neither High Contracting Party
shall apply restrictions”), indicate that “restrictions” means the kinds of restrictions to which
these sorts of exceptions would apply, namely exchange restrictions.
16.5 Paragraphs 2 and 3 confirm this interpretation. Paragraphs 2 and 3 apply in the event
a High Contracting Party imposes exchange restrictions pursuant to the exceptions in Paragraph
1. Under Paragraph 2, when exchange restrictions are applied, a Party has to reasonably furnish
foreign exchange in the currency of the other Party for certain priority payments. Paragraph 2
also sets methods for determining the proper exchange rate for these priority payments when
more than one exchange rate is in force. Under Paragraph 3, when exchange restrictions are
applied, they must not competitively disadvantage the other Party. Paragraph 3 also obliges
the Party imposing the exchange restrictions to consult with the other Party at that Party’s
request. Paragraphs 2 and 3 clearly apply to exchange restrictions and refer back to Paragraph
1 in its entirety. When reading Article VII as a whole, as one must do, it is clear that the Article,
including Paragraph 1’s general prohibition, addresses exchange restrictions.
16.6 It is well understood that “special words, according to elementary principles of
interpretation, control . . . general expressions.”491 Thus, in Payment of Various Serbian Loans
Issued in France, the Permanent Court of International Justice interpreted bonds that referred
both to “gold francs” and to “francs” without the specification of gold.492 The Court held that
both terms referred to a promise to pay in gold because “[t]he special words, according to
elementary principles of interpretation, control the general expressions” and because the text
491 Payment of Various Serbian Loans Issued in France (France v. Kingdom of the Serbs, Croats, and Slovenes),
1929 P.C.I.J. (ser. A) No. 20, at 30 (July 12).
492 Id.
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of the bonds had to be read as a whole. The same principle applies here. The special reference
to “exchange restrictions” in Paragraphs 2 and 3 informs the meaning of the general expression
“restrictions” in Paragraph 1, and Article VII must be read as a whole. Iran’s attempt to take
terms out of their context contorts the provision.
16.7 The Treaty’s negotiating history confirms that Article VII addresses exchange
restrictions, not all restrictions on payments, remittances and other transfers.493 During
negotiations, there were significant discussions about Article VII, with both the U.S. and Iran
characterizing the provision as imposing a general prohibition on exchange restrictions.494
When the U.S. Department of State sent the Embassy in Tehran the first draft of a potential
treaty, the draft included a table of contents meant to facilitate discussion. The table of contents
labeled Article VII as “Exchange Control,”495 and the draft was delivered to Iranian officials
on August 3, 1954.496
16.8 Along with this first draft, the Department also sent to the U.S. Embassy in Tehran
explanations of certain provisions to assist the Embassy officials in negotiating with their
Iranian counterparts. Regarding Article VII, State Department officials explained that
Article VII, relating to exchange restrictions, is considered by
the Department to be of importance in relation to the general
treaty objective of improving conditions for foreign investment.
It provides rules of conduct which would not impose undue
hardship on parties to the treaty, assuming a country accepts the
principle that exchange controls should not be unnecessarily
discriminatory or applied for protectionist reasons . . . .
Foreign officials sometimes argue that it is undesirable to
include provisions on exchange restrictions in a bilateral treaty,
since to do so might appear to derogate from the Articles of
Agreement of the IMF. However, the IMF was not intended to
deal with the specific questions covered by the type of treaty here
considered, and exchange control provisions adapted to the
specific purposes of the bilateral treaty are in no sense a
reflection on the IMF. A member of the Fund might be
authorized by the IMF, for example, under the Fund’s Article
VIII, to impose exchange restrictions, and under this general
493 Vienna Convention, art. 32 (“Recourse may be had to supplementary means of interpretation, including the
preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting
from the application of article 31[.]”).
494 Telegram from U.S. Embassy Tehran to U.S. Dep’t of State, at 6 (Oct. 16, 1954) (U.S. Annex 226).
495 Instructions from U.S. Dep’t of State to U.S. Embassy Tehran, A-18 (July 23, 1954) (U.S. Annex 227).
496 Telegram from U.S. Embassy Tehran to U.S. Dep’t of State (Sept. 15, 1954) (U.S. Annex 228). The text of
Article VII(1) in this draft is identical to the text of Article VII(1) in the signed Treaty.
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authorization might allocate exchange generously for luxury
imports but deny exchange for the service of capital. The treaty
seeks to establish agreed principles with respect to the
application of restrictions, both those authorized by the IMF and
those not coming under the jurisdiction of the IMF as in the case
of restrictions on capital transfers. The proposed Article VII in
no sense overrides or is in conflict with the IMF. 497
It is clear that Article VII was viewed as addressing exchange restrictions and that the United
States had considerable experience with the provision. Further, the U.S. State Department
pointed out that although the IMF’s jurisdiction was related, it was distinct from the application
of the Treaty’s Article VII.
16.9 After Iran and the United States began treaty negotiations, Iranian officials expressed
many reservations about Article VII. Initially, Dr. Abdoh from the Ministry of Foreign Affairs
informed the U.S. embassy of several concerns. For example, Bank Melli was concerned about
the role of the IMF:
Abdoh, Ministry Foreign Affairs, informed Embassy that in
inter-ministerial committee studying draft treaty amity and
economic relations certain objections to Article 7 re[garding]
exchange restrictions had been raised, particularly by Bank Melli
representative. Apparently one objection concerned [the]
requirement that proposed exchange restrictions should be
specifically approved by IMF. Bank Melli believed this
provision could not (repeat not) be met when exchange crises
arose, e.g., September 1954, which required bank to impose
restrictions on certain currency transactions immediately.498
While the Bank Melli representative’s concern reflected a misunderstanding of the role of IMF
approval, it also demonstrated an understanding that Article VII covered exchange
restrictions.499
16.10 Dr. Abdoh reported other initial reservations to U.S. officials at the same time,
including the concern that if Iran agreed to Article VII, Iran’s obligation not to impose
exchange restrictions would extend to other countries that had MFN guarantees with Iran,
497 Instructions from U.S. Dep’t of State to U.S. Embassy Tehran, A-18 (July 23, 1954) (U.S. Annex 227).
498 Telegram from U.S. Embassy Tehran to U.S. Dep’t of State (Oct. 2, 1954) (U.S. Annex 229).
499 The misunderstanding was later clarified as U.S. representatives explained that Article VII did not impose any
independent IMF approval requirement. The exception based on specific IMF approval was inserted as a
precaution to avoid “any implication [that the] treaty seeks [to] encroach [on] IMF authority and [the exception]
does not impose any new obligations on Iran.” See Telegram from U.S. Dep’t of State to U.S. Embassy Tehran
(Oct. 26, 1954) (U.S. Annex 230).
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potentially enabling non-American foreign investments to acquire priority access to Iran’s
foreign exchange. Indeed, as a general matter, Iranian officials expressed considerable concern
about the order of priority to be given to foreign exchange requests should there be a shortage
of exchange.
Another objection mentioned by Abdoh concerned [the]
requirement that in [the] event exchange restrictions [were]
imposed, reasonable provisions would be made for withdrawal
of foreign exchange to cover charges connected with foreign
loans and investments. Some Iranian officials expressed [the]
view that if in [the] treaty with [the] US such commitment [was]
made, it would be extend[ed] to other countries with which Iran
has treaties with MFN clause. Implication that servicing charges
on certain non-American foreign investments might acquire
priority on Iran’s foreign exchange appeared to be sensitive
subject with some Iranian officials with experience on
compensation issue in oil negotiations. Abdoh also implied that
Bank Melli did not (repeat not) want [to] assume treaty
responsibility to furnish foreign exchange to meet Plan
Organization and other Government commitment to foreign
suppliers. Amount [of] such commitments still not (repeat not)
known.500
All of these initial reservations were clearly based on the Parties’ understanding of Article VII
as an exchange control provision.
16.11 On October 13, 1954, U.S. embassy officials and Iranian officials met to further
discuss specific provisions of the draft treaty. U.S. embassy officials summarized the meeting
in a dispatch to the U.S. State Department as follows, seeking advice, inter alia, on how to
respond to Iranian concerns about Article VII:
It was apparent that the scope, intent and standards of execution
of Article VII in its entirety had given rise to much concern on
the part of the Iranian representatives. The difficulties which the
Iranian officials made explicit included: (a) the conditions which
would have to be met before either party could apply restrictions
on foreign exchange; (b) the question of who would be the judge
as to the extent to which restrictions on foreign exchange
transactions could be applied; and (c) in the event restrictions on
foreign exchange were applied, the order of priority that would
be given to various requirements for the foreign exchange which
was being rationed by either contracting party.
With regard to the conditions which would have to be met before
either contracting party could apply restrictions on foreign
500 Telegram from U.S. Embassy Tehran to U.S. Dep’t of State (Oct. 2, 1954) (U.S. Annex 229).
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exchange, Mr. Mohamed Nemazee, in particular, stressed his
understanding that either party could impose restrictions on
foreign exchange whenever it felt that it did not have sufficient
exchange to cover the financing of essential imports and to cover
the other requirements such as servicing of foreign obligations
and transfers relating to foreign investment.
Mr. Nemazee stated that his interpretation of paragraph 1 which
would govern the interpretation of paragraphs 2 and 3 of Article
VII, was that [a] country should be enabled to cover its
requirements for the financing of essential imports and
thereafter, to the extent that exchange was available, make
reasonable provision for the servicing of loans and other
obligations.501
Thus, discussions regarding Iran’s concerns about Article VII were all within the context of
foreign exchange. Further, it is apparent that the Parties specifically interpreted Paragraph 1
as addressing foreign exchange, and that Article VII was generally viewed as a cohesive unit,
with one paragraph informing the meaning of the others.
16.12 The same dispatch from the U.S. Embassy in Tehran summarized other Article VII
concerns expressed by Iranian officials:
The question of who was to be the judge as to the need for
imposing exchange restrictions and the compatibility of those
restrictions with the requirements of Article VII seemed to be
uppermost in the minds of the Iranian officials. . . .
The Iranians had given considerable thought to the order of
priority among the various requirements for foreign exchange in
the event such exchange had to be restricted. As indicated above,
they made it clear that the essential import requirements of each
country would have overriding priority on available foreign
exchange.502
The U.S. Embassy in Tehran also reported that Iranian officials expressed a number of other
concerns, including that the provision would require Iran to make scarce foreign exchange
available to facilitate “hot money” transfers.503 Again, all of the concerns that Iranian officials
expressed emanated from the understanding that Article VII applied to exchange controls and
Paragraph 1’s general prohibition applied to exchange restrictions.
501 Telegram from U.S. Embassy Tehran to U.S. Dep’t of State, at 6 (Oct. 16, 1954) (internal reference omitted)
(U.S. Annex 226).
502 Id. at 6-7 (U.S. Annex 226).
503 Id. at 7 (U.S. Annex 226).
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16.13 Other historical sources confirm the understanding that Article VII applied to
exchange controls. Like the table of contents in the first draft of the Treaty, the Sullivan Study
characterizes Article VII as a provision on “Exchange Controls.”504 Further, the Sullivan Study
specifically correlates Article VII, Paragraph 1 to the standard Article XII, Paragraph 2, which
addresses “Exchange Restrictions.”505
16.14 In sum, Iran’s attempt to read Article VII(1)’s “restrictions” as applying to anything
other than exchange restrictions is an improper and opportunistic reading of the Treaty. To
interpret Article VII(1)’s general prohibition as covering any conceivable restrictions on
payments, remittances and other transfers would ignore text, context, negotiating history, and
other historical sources. The Court should reject such an approach and should likewise reject
Iran’s Article VII claim.
Section B: Even If Article VII Prohibited Restrictions on Payments,
Remittances, and Transfers Other than Exchange
Restrictions, Iran’s Claim Still Fails
16.15 In the alternative, even under Iran’s broad interpretation of Article VII(1), Iran’s
claim still fails. Iran asserts that all of the challenged U.S. measures constitute prohibited
restrictions on transfers, in violation of Article VII, as Iran interprets the provision. But Iran
fails to support this sweeping claim and the claim is fatally overbroad.
16.16 As discussed in Chapter 6, the United States has enacted a series of measures that
govern terrorism-related litigation in U.S. courts and that enable victims of terrorism with
unpaid judgments against Iran to enforce those judgments against the property of Iran’s
agencies and instrumentalities. Such measures do not constitute restrictions on payments,
remittances or other transfers to or from the territories of the other High Contracting Party.
Rather, they are designed to enable the enforcement of valid court judgments. Indeed, under
Iran’s approach, judgments against any Iranian national or company could never be enforced
against the assets of that national or company if it refused to pay the judgment: Iran’s
interpretation would make such enforcement a prohibited transfer. But there is nothing to
suggest that when the Parties concluded the Treaty, they intended to displace the Parties’
judicial mechanisms for enforcing judgments. (Commercial relations in fact depend in part on
the existence of a system of contract law, courts to adjudicate disputes, and mechanisms to
504 SULLIVAN STUDY at 206 (IM Annex 20).
505 Id., at 206, 370 (IM Annex 20).
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ensure enforcement of the judgments issued by those courts.) To interpret Article VII as
prohibiting judicial attachments in furtherance of satisfaction of valid court judgments would
expand Article VII’s reach far beyond the intended scope and purpose.
16.17 With respect to Executive Order 13599, which operates as part of the U.S. sanctions
program and blocks specified categories of Iranian assets for national security reasons,506 the
United States contends that it falls within Article XX(1) and is therefore outside the Treaty’s
application, as demonstrated in Chapter 11. Consequently, any claims premised on Executive
Order 13599 must be dismissed.
CHAPTER 17: THE U.S. LEGAL REGIME THAT ALLOWS VICTIMS OF TERRORISM TO
ENFORCE JUDGMENTS DOES NOT VIOLATE ARTICLE X(1)
17.1 Turning now to Article X, Iran’s claims under this provision are premised on an
improper and overly broad interpretation of the relevant text. Iran contends that everything
from judicial liens to central banking falls under Article X(1), which provides, in its entirety,
that “[b]etween the territories of the two High Contracting Parties there shall be freedom of
commerce and navigation.” Though Iran advances a nearly limitless interpretation of the
phrase “freedom of commerce,” in the Preliminary Objections Judgment this Court ruled that
the violations of sovereign immunity alleged by Iran did not fall within the scope of Article
X(1).507
17.2 The United States will demonstrate herein that Iran’s other alleged violations of
Article X(1) likewise must fail, for three reasons. First, Article X(1)’s reference to
“commerce” must be interpreted in its context to mean commerce that is related to navigation.
To the extent this interpretation conflicts with the Court’s ruling in Oil Platforms, the United
States respectfully requests that the Court revisit its prior conclusion. In the alternative, if
Article X(1)’s reference to “commerce” extends beyond the navigational context, it must be
read to mean trade in goods, including ancillary activities integrally related to that trade, in
accordance with the Oil Platforms judgment. Iran’s Article X(1) claim, however, does not
identify any underlying trade in goods that was disrupted by the challenged measures. Second,
Iran’s Memorial plainly disregards Article X(1)’s important territorial limitation, which this
Court addressed in the Oil Platforms judgment, and Iran’s Article X claim should be dismissed
for that reason alone. Third, Article X(1) cannot properly be read to apply to the rules
506 Exec. Order 13599, 77 Fed. Reg. 6659 (Feb. 5, 2012) (IM Annex 22).
507 Preliminary Objections Judgment, ¶ 79.
154
governing terrorism-related litigation in U.S. courts as those rules simply have too tenuous a
connection, if any connection, to the commercial relations between the Parties.
17.3 Article X reads as follows:
1. Between the territories of the two High Contracting Parties, there shall
be freedom of commerce and navigation.
2. Vessels under the flag of either High Contracting Party, and carrying
the papers required by its law in proof of nationality, shall be deemed
to be vessels of that High Contracting Party both on the high seas and
within the ports, places and waters of the other High Contracting
Party.
3. Vessels of either High Contracting Party shall have liberty, on equal
terms with vessels of the other High Contracting Party and on equal
terms with vessels of any third country, to come with their cargoes to
all ports, places and waters of such other High Contracting Party open
to foreign commerce and navigation. Such vessels and cargoes shall
in all respects be accorded national treatment and most-favored-nation
treatment within the ports, places and waters of such other High
Contracting Party; but each High Contracting Party may reserve
exclusive rights and privileges to its own vessels with respect to the
coasting trade, inland navigation and national fisheries.
4. Vessels of either High Contracting Party shall be accorded national
treatment and most-favored-nation treatment by the other High
Contracting Party with respect to the right to carry all products that
may be carried by vessel to or from the territories of such other High
Contracting Party; and such products shall be accorded treatment no
less favorable than that accorded like products carried in vessels of
such other High Contracting Party, with respect to: (a) duties and
charges of all kinds, (b) the administration of the customs, and
(c) bounties, drawbacks and other privileges of this nature.
5. Vessels of either High Contracting Party that are in distress shall be
permitted to take refuge in the nearest port or haven of the other High
Contracting Party, and shall receive friendly treatment and assistance.
6. The term “vessels”, as used herein, means all types of vessels, whether
privately owned or operated, or publicly owned or operated; but this
term does not, except with reference to paragraphs 2 and 5 of the
present Article, include fishing vessels or vessels of war.
Section A: Article X(1)’s “Commerce” Must be Interpreted as Commerce
Related to Navigation
17.4 As its full text makes clear, Article X creates a detailed, inter-connected system for
non-discriminatory access to ports and for other commercial shipping matters, which must be
155
construed together in context. Aside from Paragraph 1, every paragraph in Article X explicitly
focuses on vessels.508 Paragraph 1 and Paragraph 3 are the only paragraphs that even mention
commerce, and both do so alongside the term navigation, in the phrase “commerce and
navigation.” Moreover, Paragraph 3’s “commerce” can only relate to a navigational context,
and it would be incongruous to read “commerce” differently in Paragraphs 1 and 3.
17.5 The Treaty’s negotiating history confirms that Article X(1)’s reference to
“commerce” must be understood in the context of navigation. On June 23, 1954, the U.S.
Department of State sent the U.S. Embassy in Tehran a summary of the various intended Treaty
of Amity provisions. The summary explained the U.S. intent behind Article X as follows:
Article X: In view of the present, and the presumably greater,
future interests of Iran as a maritime state, it has been thought
appropriate to propose the navigation provisions of the standard
FCN treaty[.]509
The negotiating history further shows that both Parties generally understood Article X as a
navigation provision. A July 23, 1954 cable to the U.S. Embassy in Tehran – which was also
discussed in Section A of this chapter – included the first draft of a potential treaty, with a table
of contents meant to facilitate discussion. The table of contents labeled Article X
“Navigation,”510 and the draft was delivered to Iranian officials on August 3, 1954.511
17.6 Moreover, the negotiating history demonstrates that under no circumstances can
Article X(1) have the broad meaning that Iran attributes to it. During negotiations, Iranian
officials expressed initial reservations about the requirements for the nondiscriminatory
treatment of vessels that pervade Article X. Rather than agreeing to a treaty provision that
might have tolerated discriminatory treatment, the United States determined it would prefer to
abandon Article X. The State Department wrote to the U.S. Embassy in Tehran that if Iran
maintained its reservations, the United States should simply drop the provision from the Treaty
508 See also Oil Platforms, 1996 I.C.J. at 60, ¶ 40, (Separate Opinion of Judge Higgins) (“[I]n the context of the
paragraphs that follow in Article X itself, it does seem to me that the commerce there referred to is maritime
commerce or – as in the Oscar Chinn case – commerce integral to, closely associated with, or ancillary to maritime
commerce.”); Id., at 87-88 (Dissenting Opinion of Vice-President Schwebel) (“[W]hen the Treaty means to
address more than freedom of maritime commerce, it does so in other articles . . .”).
509 Instructions from U.S. Dep’t of State to U.S. Embassy Tehran, A-18, at 7 (July 23, 1954) (emphasis added)
(U.S. Annex 227).
510 Id. at 17.
511 Telegram from U.S. Embassy Tehran to U.S. Dep’t of State (Sept. 15, 1954) (U.S. Annex 228).
156
altogether.512 If Article X(1)’s “commerce” had the breadth and importance that Iran now
claims, the United States would not have been so ready to drop the provision.
17.7 As part of the circumstances of the conclusion of the Treaty, a Senate Report prepared
in connection with ratification likewise emphasized that Article X(1)’s “commerce”
cannot have the broad meaning Iran now reads into it. The Senate Report summarized Article
X as a provision that “details the rights of vessels flying the flag of either party in the ports of
the other and in general provides national and most-favored-nation treatment, except for
coastwise, inland, and fishing traffic.”513 If Article X(1)’s “freedom of commerce” were
understood as a limitless guarantee of unimpeded commercial activity, as Iran presently
submits, the U.S. Senate’s summary certainly would have mentioned the fact.
17.8 Other historical sources similarly reflect the understanding of Article X as a
navigation provision focused on the nondiscriminatory treatment of vessels. The Sullivan
Study correlates Article X to the “Navigation” provision in the Standard Draft FCN treaty,
explaining that the article “contains all of the provisions needed in order to prevent the
discriminatory treatment of vessels and cargoes.”514 A principal U.S. negotiator of FCN
treaties similarly interprets Article X.515 Moreover, with respect to Paragraph 1 specifically,
the Sullivan Study explains that it “is considered as having special relevance to seaborne
traffic.”516
17.9 In light of Article X’s textual focus on vessels and navigation, and especially given
that the Parties understood Article X as a navigation provision, Article X(1)’s “commerce”
should be understood in its context to mean commerce that is related to navigation. The United
States recognizes that in Oil Platforms, the Court rejected the U.S. argument that Article X(1)’s
“commerce” was limited to maritime commerce. To the extent the Oil Platforms Judgment
conflicts with the position of the United States set forth herein, the United States respectfully
512 Telegram from U.S. Dep’t of State to U.S. Embassy Tehran, at 2 (Nov. 4, 1954) (U.S. Annex 231) (“Interests
international commerce served best by policy permitting free competition vessels all countries for carriage
commercial cargoes. If Iranians maintain position, only alternative is deletion Article X.”).
513 S. REP. No. 84-9, at 3 (1956) (U.S. Annex 112).
514 SULLIVAN STUDY at 283-284 (IM Annex 20).
515 Herman Walker, Jr., The Post-War Commercial Treaty Program of the United States, 73 POL. SCI. Q. 57, 73
(1958) (“[I]t may be noted that a navigation article reaffirms a liberal regime of treatment to be applied to
international shipping. The rules set forth reflect the practices which have historically been developed by leading
maritime nations[.]”) (U.S. P.O. Annex 2). See also Don C. Piper, Navigation Provisions in United States
Commercial Treaties, 11 Am. J. Comp. L. 184 (1962) (U.S. Annex 234).
516 SULLIVAN STUDY at 286 (IM Annex 20).
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requests that the Court revisit its prior conclusion for the reasons above. The circumstances of
Oil Platforms differ from those of the present case in many respects. In particular, the factual
allegations in Oil Platforms focused on activity in the Persian Gulf, ensuring that Iran’s
Article X claim at least retained some connection to a navigational context. Here, however,
neither Iran’s interpretation of Article X nor its factual allegations have anything to do with
navigation, maritime trade, or even the coast. In effect, Iran has simply read the term
“navigation” out of Article X. Iran should not be permitted to do so, and the Court should
reject the Article X claim.
Section B: In the Alternative, Article X(1)’s “Commerce” Means Trade
in Goods
17.10 If the Court nevertheless determines that “commerce” in Article X(1) extends beyond
the navigational context, the term “commerce” must still have a carefully circumscribed
meaning. In the Oil Platforms Judgment, the Court interpreted Article X(1)’s reference to
“commerce” to mean purchase and sale, including ancillary activities integrally related to such
purchase and sale.517 As the Court explained, freedom of commerce under Article X(1) could
be impeded with respect to “goods destined to be exported, or capable of affecting their
transport and their storage with a view to export.”518 Thus, with its Oil Platforms analysis, the
Court explicitly grounded Article X(1) “commerce” in the movement of goods between the
territories of the Parties. The United States therefore submits, in the alternative, that Article
X(1)’s reference to “commerce” must mean trade in goods.
17.11 The text of Article X demonstrates that it is a navigation provision, focusing on the
non-discriminatory treatment of vessels. Each paragraph other than Paragraph 1 addresses
vessels. Paragraph 6 generally excludes fishing vessels and vessels of war from the definition
of “vessels,” highlighting that the article focuses on commercial vessels and commercial
navigation. Thus, taken in context, the type of commerce that Article X(1) refers to is the type
of commerce that can take place via vessel: trade in goods.
517 Oil Platforms, 2003 I.C.J. at 43, ¶ 80 (commerce “includes commercial activities in general – not merely the
immediate act of purchase and sale, but also the ancillary activities integrally related to commerce”) (quoting Oil
Platforms, 1996 I.C.J. at 20, ¶ 49).
518 Oil Platforms, 1996 I.C.J. at 20, ¶ 50. See also Oil Platforms, 2003 I.C.J. at 46, ¶ 89 (“[W]here a State destroys
another State’s means of production and transport of goods destined for export, or means ancillary or pertaining
to such production or transport, there is in principle an interference with the freedom of international commerce.”)
(emphasis added); Oil Platforms, 2003 I.C.J. at 156, ¶ 25 (Separate Opinion of Judge Owada) (quoting The Shorter
Oxford Dictionary (10th ed.) definition of commerce as “mercantile transaction” and submitting that it refers to
the “unimpeded flow of mercantile transactions in goods and services between the territories of the Contracting
Parties”) (emphasis in original).
158
17.12 The shipping of goods was the prevalent means of commerce between the Parties at
the time they negotiated the Treaty. According to the Sullivan Study, Article X “contained
detailed provisions on the treatment of vessels, for shipping was the most important service
needed by traders in order to do business with foreign countries[.]”519 Further, specifically
with respect to Paragraph 1, Mr. Sullivan explains that it uses “traditional terminology” and is
“directed against mercantilist restrictions of the kind commonplace in the Nineteenth
Century.”520
17.13 Iran has provided no examples of an instance in which Article X(1) or its equivalent
has been interpreted to mean anything other than the movement of goods between countries,
and in the present case, Iran has failed to identify any underlying trade in goods at issue.
Nothing in the text of the Treaty supports the application of Article X(1)’s “commerce” to the
broad financial transactions, untethered to trade, that are at issue in the present case. In sum,
Iran’s claim takes “commerce” significantly beyond what is provided for in the text of Article
X, what was contemplated when the Parties negotiated the Treaty of Amity, and what was
contemplated in Oil Platforms. The Court must therefore reject it.
Section C: Iran’s Article X(1) Claim Fails to Satisfy the Provision’s
Territorial Requirement
17.14 Iran’s Article X(1) claim should also be dismissed for the independent reason that it
fails to address, much less to satisfy, the provision’s territorial requirement. The plain text of
Article X(1) provides for freedom of commerce and navigation “[b]etween the territories of the
two High Contracting Parties.” As the Court recognized in Oil Platforms, this is an important
territorial limitation.521 “In order to enjoy the protection provided by that text, the commerce
or the navigation is to be between the territories of the United States and Iran.”522 Thus, in Oil
Platforms the Court held that Article X(1) would not protect Iranian oil exports in general, but
would protect Iranian oil that was exported to the United States. Furthermore, any protected
commerce and navigation must implicate direct trade between the territories of the Parties.
Correspondingly, the Court held that Article X(1) did not protect “indirect commerce” in
519 SULLIVAN STUDY at 283 (IM Annex 20).
520 SULLIVAN STUDY at 286-87 (IM Annex 20).
521 Oil Platforms, 2003 I.C.J. at 43, ¶ 82; Id., at 57, ¶ 119.
522 Oil Platforms, 2003 I.C.J. at 57-58, ¶ 119 (emphasis in original.)
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Iranian oil between Iran and the United States when it passed through Western European
refineries.
17.15 Iran’s Memorial does not even attempt to address Article X(1)’s important territorial
limitation. This is a serious omission. The international financial transactions that Iran
construes as “commerce” cannot be assumed to have taken place directly between the territories
of Iran and the United States, given the inherent complexity of the modern financial system.
17.16 Moreover, in the specific case of Iran and the United States, since 1995, Iranian and
U.S. banks have been largely prohibited from dealing directly with each other, and while there
were mechanisms in place that allowed for indirect transactions for a period of time, those were
subsequently eliminated.523 In U.S. federal court, Bank Markazi’s Head of Foreign Exchange
Negotiable Securities, Ali Ashgar Massoumi, submitted an affidavit explaining the obstacles
to conducting direct financial transactions between Iran and the United States.524
The following year, however [1995], the U.S. enacted new
sanctions in an attempt to restrict Iranian access to U.S. dollar
markets. The relevant executive order provided, among other
things, that Iranian banks could not have direct dealings with
U.S. banks. Bank Markazi and others successfully avoided the
most harmful portion of these new sanctions through the use of
so-called “U-turn” transactions. The U-turn transaction
exemption allowed U.S. banks to indirectly process transactions
involving Iran or the Iranian Government if they began and
ended with a non-Iranian bank and only passed through the U.S.
financial system on their way between the two offshore non-
Iranian financial institutions.525
17.17 Mr. Massoumi explained that since 1995, these U-turn transactions had allowed Bank
Markazi to have “indirect access to dollar services” via Clearstream Banking S.A.
(“Clearstream”) a licensed European bank specializing in custody and settlement operations,
based in Luxembourg.526 Then on November 6, 2008, this type of indirect transaction was
523 Exec. Order 12959, 60 Fed. Reg. 24757 (May 9, 1995) (U.S. P.O. Annex 131).
524 Affidavit of Ali Asghar Massoumi ¶ 20, Peterson v. Islamic Republic of Iran, No. 10-4518 (S.D.N.Y. Aug. 31,
2017) (U.S. P.O. Annex A02).
525 Id. (U.S. P.O. Annex A02).
526 Id., ¶¶ 15, 21 (U.S. P.O. Annex A02) (emphasis added). It appears, however, that by late 2007, Clearstream
informed Bank Markazi that it would soon not be able to handle U-turn transactions for Iran and indeed not do
business of any kind with Bank Markazi. Id., ¶ 22 (U.S. P.O. Annex A02).
160
prohibited by the United States with the issuance of a new rule barring U.S. banks from
processing U-turn transactions.527
17.18 The specific facts underlying the Peterson case are further illustrative of Iran’s
indirect relationship with U.S. markets and are all the more salient since Iran bases much of
the present case on Peterson. In seeking Iranian assets to attach for purposes of enforcing the
Peterson judgment, the judgment holders became aware of dollar-denominated bonds owned
by Iran and custodied in New York. Iran did not directly purchase these bonds, however. Iran
instead used many intermediaries, as Bank Markazi explained in its Petition for a Writ of
Certiorari before the U.S. Supreme Court:
As part of its foreign currency reserves, Bank Markazi held
$1.75 billion in security entitlements in foreign government and
supranational bonds at Banca UBAE S.p.A., an Italian bank.
UBAE, in turn, held corresponding security entitlements in an
account with another intermediary, Clearstream Banking, S.A.,
in Luxembourg. Clearstream then held corresponding security
entitlements in an omnibus account at Citibank, N.A., in New
York.528
17.19 Thus, it appears that Iran had an account with an Italian bank, which had an account
with a Luxembourg intermediary, which then had an account in New York. Iran has not
explained how its dealings with an Italian bank qualify as direct commerce between the
territories of Iran and the United States. Nor has Iran explained how the specific sovereign and
supranational bonds at issue here qualify as direct commerce between the territories of Iran and
the United States.
17.20 Iran’s failure to address the territorial requirement of Article X(1) at all dooms its
claims.
Section D: Article X(1) Cannot Properly Be Read to Apply to the Rules
Governing Terrorism-Related Litigation in U.S. Courts
17.21 Iran’s unbounded Article X(1) claims also fail because its theory extends to cover the
measures applying to terrorism-related litigation in U.S. courts. There is no basis in the Treaty
for such an application, nor can Article X(1) make sense in that context. Like the alleged
violations of sovereign immunity addressed during the Preliminary Objections phase, measures
527 Iranian Transactions Regulations, 73 Fed. Reg. 66541 (Nov. 10, 2008) (U.S. Annex 232).
528 Petition for a Writ of Certiorari at 7-8, Bank Markazi v. Peterson, 136 S. Ct. 1310 (2014) (No. 14-770) (internal
citations omitted) (U.S. Annex 117).
161
applying to terrorism-related litigation have too tenuous a connection to the commercial
relationship between the Parties to be covered by Article X(1), if they have any connection at
all.
17.22 Iran argues that any impediment to commerce violates Article X(1)’s “freedom of
commerce.” Iran concedes that it is adopting a novel approach to Article X(1), in that the
provision has previously been considered in the context of physical impediments to commerce,
whereas Iran’s present claims are based on “legal” impediments to commerce.529 But Iran finds
this distinction meaningless, and there appears to be no limit as to what Iran construes as a
potential impediment to commerce.
17.23 It cannot be, however, that any impediment to commerce violates the Treaty. Taking
the rules that govern the enforcement of judgments against the assets of Iranian companies as
an example, enforcing judgments against Iranian companies must be appropriate in some
circumstances. For example, if an Iranian company were found to have breached a commercial
contract with a U.S. company, if the court awarded damages to the U.S. company, and if the
Iranian company did not pay, a reasonable legal system would look to the available assets of
the Iranian company to enforce the damages award. Nothing suggests that such an approach
would violate the Treaty. According to Iran, however, any enforcement action against an
Iranian entity would impede freedom of commerce between the Parties in violation of Article
X(1).
17.24 Furthermore, Iran’s expansive interpretation of Article X(1) does not align with the
text of the Treaty as a whole. Many other parts of the Treaty clearly contemplate and allow for
certain impediments to commerce under specified conditions. For example, Article VIII
addresses the entry and treatment of goods, and Article IX addresses customs administration.
Under Iran’s limitless interpretation, Article X(1) would swallow up these other provisions.
17.25 Thus, reading Article X(1) to cover the rules governing terrorism-related litigation in
the U.S. courts is unsupported, unworkable, and misaligned both with the text of the Treaty as
a whole and with the Treaty’s object and purpose. Consequently, and for the other reasons in
this Section, the Court should reject Iran’s Article X(1) claim.
529 Preliminary Objections Hearings, Day 2, 3pm (Oct. 10, 2018) at ¶ 40.
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CHAPTER 18: TO THE EXTENT THAT THE COURT FINDS THAT IRAN’S SUBSTANTIVE
RIGHTS UNDER THE TREATY OF AMITY ARE ENGAGED, THEIR EXERCISE IS AN ABUSE OF
IRAN’S RIGHTS
18.1 In the event that the Court concludes that Iran does have rights under the Treaty of
Amity, quod non, Iran’s claims under the Articles in question constitute an abuse of right, and
Iran is therefore precluded from exercising any of its rights under the Treaty in this case on that
basis.
18.2 The present submission is distinct from the United States’ primary contention that
the Court should apply the doctrine of unclean hands to deny Iran’s claims. Like the doctrine
of unclean hands, the doctrine of abuse of rights has its genesis in the principle of good faith
and is another application of that principle.530 However, the prohibition on a party’s abuse of
its rights is concentrated on that party’s invocation of its substantive rights, not on its
entitlement to the relief requested or the admissibility of its application as a whole. Nor does
the invocation of the prohibition involve a discretionary assessment in the same way. Instead,
it requires the Court to consider Iran’s exercise of the substantive treaty right on which it relies
to assess whether it offends the prohibition on the abuse of rights.
18.3 There are two distinct but complementary reasons for which Iran runs afoul of that
prohibition. First, Iran impermissibly seeks to stretch the rights under the Treaty of Amity to
apply to factual circumstances that the Parties obviously never intended them to address.
Second, it is an abuse of rights for Iran to seek to prosecute rights as a shield against its
accountability for its wrongful acts. The rights under the Treaty cannot be invoked to protect
Iran from its unlawful conduct outside the framework of the Treaty. Against the background
of the extraordinary circumstances of this case, either ground provides a sufficient basis for the
Court to dismiss Iran’s claims.
530 See BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY INTERNATIONAL COURTS AND TRIBUNALS 121
(1953) (U.S. Annex 87). See also Chapter 8.
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Section A: The Doctrine of Abuse of Rights and the Circumstances in
which It May Be Applied
18.4 The doctrine’s status as a general principle of law has been widely recognized as such
by eminent scholars531 and by Members of this Court.532 It has also been frequently invoked
by States before this Court.533 Moreover, the Court has accepted the potential application of
the prohibition, both in the Court’s judgments534 and in separate and dissenting opinions of
individual Members of the Court.535 Further, the doctrine of abuse of rights is commonly
531 See BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY INTERNATIONAL COURTS AND TRIBUNALS 121
(1953) (U.S. Annex 87); Report of the International Law Commission Covering the Work of its Fifth Session, 1
June – 14 August 1953, 2 Y.B. INT’L L. COMM’N 200, 218-219, UN Doc. A/2456 (1953) (U.S. Annex 235);
International responsibility: Fifth report by F.V. García Amador, Special Rapporteur, 2 Y.B. INT’L L. COMM’N
41, 58, UN Doc. A/CN.4/125 (1960) (U.S. Annex 236); G. D. S. Taylor, The Content of the Rule against Abuse
of Rights in International Law, 46 BRIT. Y.B. INT’L L. 323, 352 (1972-73) (U.S. Annex 237); Michael Byers,
Abuse of Rights: An Old Principle, A New Age, 47 MCGILL L.J. 389, 431 (2002) (U.S. Annex 238); CHARLES
KOTUBY & LUKE SOBOTA, GENERAL PRINCIPLES OF LAW AND INTERNATIONAL DUE PROCESS 108 (2017) (U.S.
Annex 240). (The citation to the sources in this section supports the general proposition that the abuse of rights
doctrine has been widely recognized and may not reflect U.S. endorsement of all of the views expressed by these
authors, States, or decisions.)
532 Conditions of Admission of a State to Membership in the United Nations (Article 4 of the Charter), 1948 I.C.J.
57, 79, ¶ 6 (Individual Opinion of Judge Azevedo) (May 28) (“the doctrine of relativity of rights [is] already
accepted in international law . . . a long-established principle”); Competence of the General Assembly for the
Admission of a State to the United Nations, 1950 I.C.J. 4, 15 (Dissenting Opinion of Judge Alvarez) (Mar. 3)
(“But in no case may the exercise of these rights degenerate into a misuse of right . . . . This concept [abuse of
right] is relatively recent in private law, but it is already generally accepted . . . . [I]t is necessary to-day to find a
place for this concept, and the International Court of Justice must take its share in this evolution”); 􀀪􀁄􀁅􀃾􀁴􀁎􀁒􀁙􀁒-
Nagymaros Project (Hungary/Slovakia), 1997 I.C.J. 7, 95 (Separate Opinion of Vice-President Weeramantry)
(Sep. 25) (the abuse of rights is a “well-established area of international law”).
533 See, e.g., Nottebohm Case (Liechtenstein v. Guatemala), Memorial submitted by the Government of the
Principality of Liechtenstein, ¶ 52 (May 14, 1952); Land and Maritime Boundary between Cameroon and Nigeria
(Cameroon v. Nigeria: Equatorial Guinea intervening), Preliminary Objections of the Federal Republic of
Nigeria, ¶¶ 1.17-1.18 (Dec. 18, 1995); Application of the Convention on the Prevention and Punishment of the
Crime of Genocide (Bosnia and Herzegovina v. Serbia and Montenegro), Transcript 54-71 (May 1, 1996, 10am
session); id., Transcript 80 (May 3, 199, 3pm session); see also id., 1993 I.C.J. 325, 336, ¶ 19 (Order of Sep. 13);
Aerial Incident of 10 August 1999 (Pakistan v. India), 2000 I.C.J. 12, 30, ¶ 40 (June 21, 2000); Legality of Use of
Force (Yugoslavia v. Belgium), Preliminary Objections of the Kingdom of Belgium, ¶¶ 479-80 (July 5, 2000);
Whaling in the Antarctic (Australia v. Japan: New Zealand intervening), Memorial of Australia, ¶¶ 4.60, 5.135-
36 (May 9, 2011); Immunities and Criminal Proceedings (Equatorial Guinea v. France), Transcript 53, ¶ 21 (Feb.
19, 2018, 10am session); id., Judgment, ¶ 139 (June 6, 2018); Jadhav Case (India v. Pakistan), Judgment, ¶¶ 51-
52, 122 (July 17, 2019).
534 See Certain German Interests in Polish Upper Silesia (Merits), 1926 P.C.I.J. (ser. A) No. 7, at 30, 37-38; Free
Zones of Upper Savoy and the District of Gex (Second Phase), 1930 P.C.I.J. (ser. A) No. 24, at 12 (Order of Dec.
6); Free Zones of Upper Savoy and the District of Gex, 1932 P.C.I.J. (ser. A/B) No. 46, at 167 (Judgment of June
7); Fisheries (United Kingdom v. Norway), 1951 I.C.J. 116, 141-142 (Dec. 18). See also Immunities and Criminal
Proceedings (Equatorial Guinea v. France), Judgment ¶¶ 146-151 (June 6, 2018); Jadhav Case (India v.
Pakistan), Judgment ¶¶ 54-58 and 121-124 (July 17, 2019).
535 See Voting Procedure on Questions relating to Reports and Petitions concerning the Territory of South West
Africa, 1955 I.C.J. 67, 120 (Separate Opinion of Judge Lauterpacht) (June 7); Nottebohm Case (Liechtenstein v.
Guatemala), 1955 I.C.J. 4, 37 (Dissenting Opinion of Judge Read) (Apr. 6); Maritime Delimitation in the Area
between Greenland and Jan Mayen (Denmark v. Norway), 1993 I.C.J. 38, 217, ¶ 17 (Separate Opinion of Judge
Weeramantry) (June 14); Fisheries Jurisdiction (Spain v. Canada), 1998 I.C.J. 432, 509, ¶ 48 (Dissenting Opinion
of Vice-President Weeramantry) (Dec. 4); 􀀪􀁄􀁅􀃾􀁴􀁎􀁒􀁙􀁒-Nagymaros Project (Hungary/Slovakia), 1997 I.C.J. 7, 231,
164
recognized in other international tribunals536 and has been reflected in various legal regimes at
both the domestic537 and international level.538
18.5 In the United States’ submission, and as relevant to this case, the prohibition has at
least the following scope: it prohibits a State exercising a right in a manner other than that in
which it was intended to be exercised.539 Furthermore, invocation of an abuse of rights defense
requires a showing that four conditions are met: first, there is an identified right; second, the
applicant State has abused that right; third, the respondent has presented “clear” evidence in
¶ 22 (Sep. 25), Dissenting Opinion of Judge Parra-Aranguren; Certain Questions of Mutual Assistance in Criminal
Matters (Djibouti v. France), 2008 I.C.J. 177, 279, ¶ 5 (Declaration of Judge Keith) (June 4).
536 See, e.g., the WTO (Appellate Body Report, United States – Import Prohibition of Certain Shrimp and Shrimp
Products, ¶ 156, WT/DS58/AB/R (Oct. 12, 1998) (U.S. Annex 239); Panel Report, European Communities –
Measures Affecting Asbestos and Asbestos-Containing Products, ¶ 8.259, WT/DS135/R (Sep. 18, 2000) (U.S.
Annex 241); inter-State arbitrations; Case Concerning Filleting within the Gulf of St. Lawrence between Canada
and France, 19 R.I.A.A. 225, ¶ 28 (July 17, 1986) (U.S. Annex 243); Award in the Arbitration Regarding the
Iron Rhine (Ijzeren Rijn) Railway between the Kingdom of Belgium and the Kingdom of the Netherlands, 27
R.I.A.A. 35, ¶¶ 202-205 (May 24, 2005) (U.S. Annex 242); investor-State arbitrations (successful applications of
the doctrine include, e.g., Philip Morris Asia Ltd. v. Commonwealth of Australia, PCA Case No. 2012-12, Award
on Jurisdiction and Admissibility ¶ 585 (Dec. 17, 2015) (U.S. Annex 244) and Capital Financial Holdings
Luxembourg SA v. Cameroon, ICSID Case No ARB/15/18, Award ¶ 366 (June 22, 2017) (U.S. Annex 245).
537 See, e.g., Swiss Civil Code of 10 December 1907 (as at 1 January 2019), Art. 2 (U.S. Annex 246) (“(1) Every
person must act in good faith in the exercise of his or her rights and in the performance of his or her obligations.
(2)The manifest abuse of a right is not protected by law”); Bürgerliches Gesetzbuch (BGB) (German Civil Code)
§ 226 (U.S. Annex 247) (“The exercise of a right is not permitted if its only possible purpose consists in causing
damage to another”); Québec Civil Code, Article 7 (U.S. Annex 248) (“No right may be exercised with the intent
of injuring another or in an excessive and unreasonable manner, and therefore contrary to the requirements of
good faith.”). See also CHARLES KOTUBY &LUKE SOBOTA, GENERAL PRINCIPLES OF LAW AND INTERNATIONAL
DUE PROCESS 110 n.128 (2017) (U.S. Annex 240).
538 See, e.g., United Nations Convention on the Law of the Sea, art. 300, Dec. 10, 1982, 1833 U.N.T.S. 397 (U.S.
Annex 249) (“States Parties shall fulfil in good faith the obligations assumed under this Convention and shall
exercise the rights, jurisdiction and freedoms recognized in this Convention in a manner which would not
constitute an abuse of right”); European Convention on Human Rights, art. 17, Nov. 4, 1950, 213 U.N.T.S. 221
(U.S. Annex 250) (“Nothing in this Convention may be interpreted as implying for any State, group or person
any right to engage in any activity or perform any act aimed at the destruction of any of the rights and freedoms
set forth herein or at their limitation to a greater extent than is provided for in the Convention”); International
Covenant on Civil and Political Rights, art. 5(1), Dec. 16, 1966, 999 U.N.T.S. 171 (U.S. Annex 252): Universal
Declaration of Human Rights (1948), art. 30 (U.S. Annex 253). See also Agreement on Port State Measures to
Prevent, Deter and Eliminate Illegal, Unreported and Unregulated Fishing, art. 4(5) (U.S. Annex 251).
539 See, e.g., Free Zones of Upper Savoy and the District of Gex (Second Phase), 1930 P.C.I.J. (ser. A) No. 24, at
12 (Order of Dec. 6); Free Zones of Upper Savoy and the District of Gex, 1932 P.C.I.J. (ser. A/B) No. 46, at 167
(Judgment of June 7) (where the Court observed that France would not be permitted to invoke its right to establish
a police cordon around a particular area, as a guise for a customs barrier, given the existence of its obligation to
maintain the zones). See BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY INTERNATIONAL COURTS AND
TRIBUNALS 131 (1953) (U.S. Annex 87) (“[T]he reasonable and bona fide exercise of a right implies an exercise
which is genuinely in pursuit of those interests which the right is destined to protect . . .”) .
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support of any underlying factual allegations;540 and fourth, there are “exceptional
circumstances” justifying the application of the doctrine.541
18.6 The usual consequence is that the holder of the right is precluded from exercising that
specific right in the asserted abusive manner. This may require that the applicant State’s claim
is circumscribed or even dismissed outright, depending on the precise relationship between the
abused right and the claim advanced by the applicant State.
Section B: Iran Is Precluded from Exercising Substantive Rights under
the Treaty of Amity
18.7 Iran seeks to invoke the substantive protections of seven provisions of the Treaty of
Amity: Articles III(1), III(2), IV(1), IV(2), V(1), VII(1) and X(1).
18.8 This submission operates in the event that the Court were to find that Iran has a right
to substantive protection under any of these provisions in the circumstances of this case. In
such circumstances, the United States contends that it would be an abuse of Iran’s rights for it
to be permitted to invoke any of the protections contained in Articles III(1), III(2), IV(1), IV(2),
V(1), VII(1) and X(1) of the Treaty of Amity. This is because Iran seeks to exercise those
substantive rights to protection under the Treaty in a manner manifestly apart from that in
which they were intended to be exercised. This is contrary to the aspect of the prohibition
against abuse of rights discussed above.
18.9 Iran’s abuse of its substantive rights under the Treaty has two relevant and distinct
aspects.
18.10 The first is the Parties did not intend the substantive protections set out in the Treaty
of Amity to be available for exercise in the factual circumstances and legal context present in
this case. The Treaty is a commercial and consular agreement. It sought to protect the Parties’
interests in those limited fields of activity by conferring the specific rights to substantive
protection. This is confirmed both by the title of the Treaty542 and by its stated object, by which
“mutually beneficial trade and investments and closer economic intercourse generally” was
encouraged and by which consular relations were regulated. It sought to achieve bilateral
540 See Immunities and Criminal Proceedings (Equatorial Guinea v. France), Judgment ¶ 150 (June 6, 2018);
Preliminary Objections Judgment ¶ 113; Jadhav (India v. Pakistan) Judgment ¶ 49 (July 17, 2019).
541 See Immunities and Criminal Proceedings (Equatorial Guinea v France), Judgment ¶ 150 (June 6, 2018);
Preliminary Objections Judgment ¶ 113; Jadhav (India v. Pakistan), Judgment ¶ 49 (July 17, 2019).
542 See Oil Platforms (Islamic Republic of Iran v. United States of America), 1996 I.C.J. 803, ¶ 27 (Dec. 12).
166
friendship in the specific fields of trade and investment, economic intercourse and consular
relations,543 as the circumstances of its conclusion544 and the Treaty’s plain preambular terms
reinforce. It is this “spirit and intent” which “animate[s]” the interpretation of each provision
of the Treaty.545
18.11 However, Iran does not seek to invoke its substantive rights for the purposes of
commerce or consular relations. Instead, by its application to this Court, Iran purports to
challenge U.S. measures directed at providing a meaningful forum for U.S. victims to obtain
reparation for acts of terrorism that Iran itself has sponsored. On any reasonable view, the
impugned U.S. measures bear no relation whatsoever either to commerce or to consular
relations as protected under the Treaty. Neither the object and intended scope of Treaty of
Amity nor the substantive provisions on which Iran relies bear any “common point of reference
with the facts as claimed by Iran,” as Judge Higgins recognized in analogous circumstances in
the Oil Platforms case.546 To the extent that its substantive rights under the Treaty are engaged
in this case, Iran cannot properly exercise them in circumstances so far beyond the parties’
contemplation. The doctrine of abuse of rights precludes it from doing so.
18.12 The second relevant aspect of Iran’s conduct is that it seeks to exercise its substantive
rights for an improper purpose. Iran plainly attempts to circumvent its obligations to make
reparation to victims of its state-sponsored terrorist acts, as has been explained in detail
above.547 It does so by challenging the very steps that the United States has taken to provide a
forum for victims to obtain compensation for Iran’s wrongful acts, under the “guise”548 of
invoking its substantive rights to protection. In this way, it seeks to use its substantive Treaty
rights as a shield against its accountability for those wrongful acts. This is a manifest abuse of
Iran’s substantive rights which cannot be endorsed or permitted by the Court.
18.13 This is an “exceptional” case in which the doctrine of abuse of rights may be applied
by the Court. This exceptional character lies in the fact that it was Iran’s own conduct which
led to the measures that the United States has adopted. Iran seeks to use that wrongful conduct
543 See id., ¶ 28.
544 See Chapters 4.
545 See Oil Platforms, 1996 I.C.J. at ¶¶ 28, 52.
546 Id., at 858, ¶ 39 (Separate Opinion of Judge Higgins).
547 See Chapter 6.
548 See Free Zones of Upper Savoy and the District of Gex, 1932 P.C.I.J. (ser. A/B) No. 46, at 167 (Judgment of
June 7).
167
to its own advantage, in order to circumvent its responsibility to make reparation to victims of
its State-sponsored terrorism. This is egregious and wrongful conduct that cannot be
countenanced by the Court.
18.14 For all of the reasons set out above, Iran is precluded from exercising any right to
substantive protection that the Court may find that Iran holds under the Treaty of Amity.
CHAPTER 19: IRAN IS NOT ENTITLED TO ANY REMEDY
19.1 For the reasons set out in the foregoing chapters, Iran’s claims should be dismissed
in their entirety, and, accordingly, it is not entitled to any remedy.
19.2 The United States will, nevertheless, briefly address the three forms of relief that Iran
has requested. First, regardless of the merits of Iran’s claims, its request for an order directing
the United States to cease conduct in breach of the Treaty of Amity549 must be rejected because
the Treaty is terminated. Second, for the same reason, the Court should reject Iran’s request
for an order directing the United States to “provide Iran with an assurance that it will not repeat
its unlawful acts.”550
19.3 Third, with respect to Iran’s claim for reparation, Iran has declined to specify the
quantum of its losses, explaining that this calculation is “a matter reserved in the Application
for a later stage in these proceedings.”551 Thus, there is nothing that requires a response from
the United States at this stage.
19.4 Iran has also failed to identify the full universe of entities that have allegedly been
affected by the U.S. measures or the specific harms that they have suffered. Iran instead pleads
in generalities such as “Iranian companies have also suffered, and continue to suffer, losses
that are less easily quantifiable” and “restrictions upon the transfer of funds to or from the
United States entail trading costs for affected companies, which are real and quantifiable
losses.”552 Such assertions are simply too vague to merit a response.
19.5 Iran has been similarly vague in its Memorial about injuries that it has allegedly
suffered as a result of the challenged U.S. measures. To the extent that any of this alleged harm
is related to the purported failure by the United States to recognize the sovereign immunity of
549 Iran’s Memorial, ¶ 7.13.
550 Id., ¶ 7.15.
551 Id., ¶ 7.6.
552 Id., ¶¶ 7.4, 7.5.
168
Iran, its Central Bank or other state entities, this harm is not cognizable under the Treaty of
Amity, as the Court has held in its Preliminary Objections Judgment.553 But in any event, Iran
has not identified with any specificity the harm that it has allegedly suffered, resorting again to
generalities. For example, Iran refers to “the loss of commercial opportunities” without
providing any indication as to what these commercial opportunities might be, how they were
lost or how this loss might be connected to the challenged U.S. measures.554
19.6 In sum, the Court should reject Iran’s request for remedies because its claims are
meritless but, regardless, Iran has not come close to justifying its request in its vaguely pled
Memorial.
553 See Chapter 2.
554 Iran’s Memorial, ¶ 7.7.
169
SUBMISSIONS
On the basis of the facts and arguments set out above, the United States of America
requests that the Court, in addition or in the alternative:
1. Dismiss all claims brought under the Treaty of Amity on the basis that Iran comes
to the Court with unclean hands.
2. Dismiss as outside the Court’s jurisdiction all claims brought under Articles III, IV,
and V of the Treaty of Amity that are predicated on treatment accorded to Bank
Markazi.
3. Dismiss as outside the Court’s jurisdiction all claims brought under Articles III, IV,
and V of the Treaty of Amity that are predicated on treatment accorded to
companies that have failed to exhaust local remedies.
4. Dismiss on the basis of Article XX(1)(c) and (d) of the Treaty of Amity all claims
that U.S. measures that block or freeze assets of the Iranian government or Iranian
financial institutions (as defined in Executive Order 13599) violate any provision
of the Treaty.
5. Dismiss all claims brought under Articles III, IV, V, VII, and X of the Treaty of
Amity on the basis that the United States did not breach its obligations to Iran under
any of those Articles.
6. To the extent the Court concludes that Iran, notwithstanding the foregoing
submissions, has established one or more of its claims brought under the Treaty of
Amity, reject such claims on the basis that Iran’s invocation of its purported rights
under the Treaty constitutes an abuse of right.
170
171
172
LIST OF ANNEXES ACCOMPANYING THE COUNTER-MEMORIAL
VOLUME I
ANNEX DESCRIPTION
1.
Commercial Treaties with Iran, Nicaragua, and The
Netherlands: Hearing Before the Senate Committee on Foreign
Relations, 84th Cong. (1956) (statement of Thorsten V.
Kalijarvi, Department of State)
2.
Treaties of Friendship, Commerce and Navigation Between the
United Sates and Colombia, Israel, Ethiopia, Italy, Denmark,
and Greece: Hearing Before the Subcommittee of the Senate
Committee On Foreign Relations, 82d Cong. 4 (1952)
(Statement of Harold F. Linder, Deputy Assistant Secretary for
Economic Affairs)
3.
KENNETH J. VANDEVELDE, THE FIRST BILATERAL INVESTMENT
TREATIES: U.S. POSTWAR FRIENDSHIP, COMMERCE, AND
NAVIGATION TREATIES (2017).
4. Parliamentary Human Rights Group, Iran: State of Terror, An
account of terrorist assassinations by Iranian agents (1996)
5. Judgment of the Superior Court of Justice, Berlin, in the
Mykonos trial [Kammergericht: Urteil im ‘Mykonos’ – Prozess]
(Apr. 10, 1997) [translated excerpt]
6. “France expels Iranian diplomat over failed bomb plot: sources,”
Reuters (Oct. 26, 2018)
7. “Exclusive: France restricts travel by diplomats to Iran,” Reuters
(Aug. 28, 2018)
8. “Iranian Diplomat Extradited to Belgium to Face Charges in
Bomb-Plot Case,” RadioFreeEurope (Oct. 10, 2018)
9. Letter from Stef Blok, the Minister of Foreign Affairs, and Kajsa
Ollongren, the Minister of the Interior and Kingdom Relations,
to the President of the House of Representatives on sanctions
against Iran on the grounds of undesirable interference (Jan. 8,
2019)
10. “E.U. Imposes Sanctions on Iran Over Assassination Plots,”
N.Y. Times (Jan. 8, 2019)
11. “In shift, EU sanctions Iran over planned Europe attacks,”
Reuters (Jan. 8, 2019)
12. “Read statement by foreign Minister Samuelsen on Illegal
Iranian intelligence activities in Denmark,” Ministry of Foreign
Affairs of Denmark (Oct. 31, 2018)
13. “Netherlands recalls ambassador to Iran,” Deutsche Welle (Mar.
4, 2019)
173
ANNEX DESCRIPTION
14. “Bahrain court overturns stripping of 92 Shiites’ citizenship:
judicial source,” Business Standard (June 30, 2019)
15. “Bahrain arrests 116 on charges of terrorism, Iran collusion,”
Deutsche Welle (Mar. 3, 2018)
16. “Bahrain arrests four linked to pipeline blast: ministry,”
Reuters (Feb. 7, 2018)
17. “Bahrain says deadly bus attack engineered by Iran,” Reuters
(Nov. 15, 2017)
18. “Bahrain accuses Iran of harboring 160 ‘terrorists’,” Times of
Israel (Oct. 18, 2017)
19. RONEN BERGMAN, THE SECRET WAR IN IRAN: THE 30-YEAR
CLANDESTINE STRUGGLE AGAINST THE WORLD’S MOST
DANGEROUS TERRORIST POWER (2008) [excerpts]
20. “Hezbollah’s 1992 Attack in Argentina Is a Warning for
Modern-Day Europe,” The Atlantic (Mar. 19, 2013)
21. MARK SULLIVAN & JUNE BEITEL, CONGRESSIONAL RESEARCH
SERVICE, RS21049, LATIN AMERICA: TERRORISM ISSUES (2016)
22. ISRAEL MINISTRY OF FOREIGN AFFAIRS, REPORT: HIZBULLAH
AND IRAN BEHIND BUENOS AIRES BOMBINGS (Oct. 26, 2006)
23. INVESTIGATIONS UNIT OF THE OFFICE OF THE ATTORNEY
GENERAL, REPORT; REQUEST FOR ARRESTS (Oct. 25, 2006)
[translated excerpts]
24. “Argentina: Macri Wants Those Behind AMIA Attack To Be
Tried in Argentina,” MercoPress (July 19, 2019)
25. Report of the Secretary-General on the implementation of
Security Council resolution 2231, S/2016/1136 (June 20, 2017)
26. Report of the Secretary-General on the implementation of
Security Council resolution 2231, S/2017/1030 (Dec. 8, 2017)
27. Report of the Secretary-General on the implementation of
Security Council resolution 2231, S/2018/602 (June 12, 2018)
28. Report of the Secretary-General on the implementation of
Security Council resolution 2231, S/2018/1089 (Dec. 6, 2018)
29. Report of the Secretary-General on the implementation of
Security Council resolution 2231, S/2019/492 (June 13, 2019)
30. “Iranian support of Afghan Taliban targeted by new US
sanctions,” Deutsche Welle (Oct. 25, 2018)
31. Brian H. Hook, “The Iranian Regime’s Transfer of Arms to
Proxy Groups and Ongoing Missile Development,” U.S
Department of State (Nov. 29, 2018)
174
ANNEX DESCRIPTION
32. “Treasury and the Terrorist Financing Targeting Center Partners
Sanction Taliban Facilitators and their Iranian Supporters,” U.S.
Department of Treasury (Oct. 23, 2018)
VOLUME II
ANNEX DESCRIPTION
33. Press Release, U.S. Department of Treasury, Treasury
Sanctions Iran’s Central Bank and National Development Fund
(Sep. 20, 2019)
34. Financial Action Task Force, Public Statement – June 2019
(June 21, 2019)
35. “SWIFT says suspending some Iranian banks’ access to
messaging system,” Reuters (Nov. 5, 2018)
36. Peterson v. Islamic Republic of Iran, 264 F. Supp. 2d 46 (D.D.C.
2003)
37. Transcript of Trial, Peterson v. Islamic Republic of Iran, No. CA
01-2094 (D.D.C. Mar. 17, 2003), ECF No. 23
38. Holland v. Islamic Republic of Iran, 496 F. Supp. 2d 1 (D.D.C.
2005)
39. Fact Sheet: Designation of Iranian Entities and Individuals for
Proliferation Activities and Support for Terrorism, U.S.
Department of Treasury (Oct. 25, 2007)
40. Blais v. Islamic Republic of Iran, 459 F. Supp. 2d 40 (D.D.C.
2006)
41. Heiser v. Islamic Republican of Iran, 466 F. Supp. 2d 229
(D.D.C. 2006)
42. Transcript of Trial, Heiser v. Islamic Republic of Iran, No. 00-
2329 (D.D.C. Dec. 18, 2003)
43. Gordon Thomas, “William Buckley: The Spy who never came
in from the cold,” Canada Free Press (Oct. 25, 2006)
44. Jenco v. Islamic Republic of Iran, 154 F. Supp. 2d 27 (D.D.C.
2001)
45. Anderson v. Islamic Republic of Iran, 90 F. Supp. 2d 107 (2000)
46. Elahi v. Islamic Republic of Iran, 124 F. Supp. 2d 97 (D.D.C.
2000)
47. Court of Cassation, Criminal Division [Cour de Cassation],
Judgment (July 9, 1998)
175
ANNEX DESCRIPTION
48. “Iranians planned to assassinate Israeli ambassador,” YNet
(Aug. 17, 2012)
49. “Supreme Court overturns decision to free two Iranian terror
suspects,” Capital News (Mar. 15, 2019)
50. “Iran recalls ambassador to Kenya over court case involving two
Iranians,” Reuters (Mar. 17, 2019)
51. “Tehran sets up terror cells in Africa as Western sanctions bite,”
The Telegraph (June 24, 2019)
52. Owens v. Republic of Sudan, 826 F. Supp. 2d 128 (D.D.C. 2011).
53. Weinstein v. Islamic Republic of Iran, 184 F. Supp. 2d 13
(D.D.C. 2002)
54. Stern v. Islamic Republic of Iran, 271 F. Supp. 2d 286 (D.D.C.
2003)
55. “New Hamas leader says it is getting aid again from Iran,”
Associated Press (Aug. 28, 2017)
VOLUME III
ANNEX DESCRIPTION
56. General Assembly resolution 73/305, U.N. Doc. A/RES/73/305
(Jul. 2, 2019)
57. “Revised Guidelines of the Committee of Ministers of the
Council of Europe on the protection of victims of terrorist acts”
(May 19, 2017)
58. Section 620A(a) of the Foreign Assistance Act of 1961, as
amended (P.L. 87-195, 22 U.S.C. § 2371)
59. Section 40(d) of the Arms Export Control Act, as amended
(P.L. 90-629; 22 U.S.C. § 2780)
60. Section 1754(c)(1) of the Export Controls Act of 2018 (title
XVII of the John S. McCain National Defense Authorization
Act for Fiscal Year 2019; P.L. 115-232; 50 U.S.C. § 4813)
61. Annual Country Reports on Terrorism, 22 U.S.C. § 2656f
(2017)
62. U.S. DEPARTMENT OF STATE, COUNTRY REPORTS ON
TERRORISM 2017
176
ANNEX DESCRIPTION
63. Rescission of Determination Regarding Cuba, 80 Fed. Reg.
31945 (June 4, 2015)
64. Rescission of Determination Regarding Libya, 71 Fed. Reg.
39696 (June 13, 2006)
65. Rescission of Determination Regarding Iraq, 69 Fed. Reg.
61702 (Oct. 20, 2004)
66. Libyan Claims Resolution Act (P. L. 110-301) (Aug. 4, 2008)
67. Executive Order No. 13477, 73 Fed. Reg. 65965 (Oct. 31,
2008)
68. Determination of the President of the United States, No. 2008-
09 (Jan. 28, 2008)
69. Section 1768 of the Export Controls Act of 2018 (50 U.S.C.
§ 4826)
70. Unusual and extraordinary threat; declaration of national
emergency; exercise of Presidential authorities, 50 U.S.C. §
1701
71. Alejandre v. Telefonica Larga Distancia de Puerto Rico, Inc.,
183 F.3d 1277 (11th Cir. 1999)
72. Statement of Sen. Lautenberg, 154 Cong. Rec. S55 (Jan. 22,
2008)
73. In re Islamic Republic of Iran Terrorism Litig., 659 F. Supp. 2d
31 (D.D.C. 2009)
74. CONFERENCE REPORT, NATIONAL DEFENSE AUTHORIZATION
ACT FOR FISCAL YEAR 2008, H.R. REP. 110-477 (2007)
[excerpt]
75. Rubin v. Islamic Republic of Iran, 138 S. Ct. 816 (2018)
76. Judgment, Peterson v. Islamic Republic of Iran, Nos. 01-2094,
01-2684 (D.D.C. Sept. 7, 2007)
77. Memorandum Opinion, Peterson v. Islamic Republic of Iran,
Nos. 01-2094, 01-2684 (D.D.C. Sept. 7, 2007)
177
ANNEX DESCRIPTION
78. Order Entering Partial Final Judgment Pursuant to Fed. R. Civ.
P. 54(b), Directing Turnover of the Blocked Assets, Dismissal
of Citibank with Prejudice and Discharging Citibank from
Liability, Peterson v. Islamic Republic of Iran, No. 10-4518
(S.D.N.Y. July 9, 2013), ECF No. 462
79. Order Authorizing Distribution of Funds, Peterson v. Islamic
Republic of Iran, No. 10-4518 (S.D.N.Y. June 6, 2016), ECF
No. 651
VOLUME IV
ANNEX DESCRIPTION
80. Award in the arbitration regarding the delimitation of the
maritime boundary between Guyana and Suriname, 30
R.I.A.A. 1 (Sept. 17, 2007)
81. Hulley Enterprises Limited (Cyprus) v. Russia, UNCITRAL,
PCA Case No. AA 226, Final Award (July 18, 2014)
82. STEPHEN M. SCHWEBEL, Clean Hands, Principle, in 2 MAX
PLANCK ENCYCLOPEDIA OF PUBLIC INTERNATIONAL LAW 232
(R􀁘􀡇 diger Wolfrum ed., 2012)
83. R. A. NEWMAN, EQUITY AND LAW: A COMPARATIVE STUDY
(1961) [excerpt]
84. SNELL’S EQUITY (33rd ed. 2018) [excerpt]
85. Swiss Civil Code of Obligations, Art. 66
86. Bürgerliches Gesetzbuch (BGB) (German Civil Code) § 817
87. BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY
INTERNATIONAL COURTS AND TRIBUNALS (1953) [excerpt]
88. JAMES CRAWFORD, THE INTERNATIONAL LAW COMMISSION'S
ARTICLES ON STATE RESPONSIBILITY: INTRODUCTION, TEXT AND
COMMENTARIES (2002) [excerpt]
89. Niko Resources (Bangladesh) Ltd v. People’s Republic of
Bangladesh, ICSID Case No. ARB/10/11 and 10/18, Decision
on Jurisdiction (Aug. 19, 2013) [excerpt]
90. Fraport AG Frankfurt Airport Services Worldwide v. Republic
of the Philippines, ICSID Case No. ARB/11/12, Award (Dec.
10, 2014) [excerpt]
178
ANNEX DESCRIPTION
91. Hesham Talaat M. Al-Warraq v. Republic of Indonesia,
UNCITRAL, Final Award (Dec. 15, 2014) [excerpt]
92. Copper Mesa Mining Corporation v. Republic of Ecuador, PCA
Case No. 2012-2, Award (Mar. 15, 2016) [excerpt]
93. Rusoro Mining Ltd. v. Bolivarian Republic of Venezuela, ICSID
Case No. ARB(AF)/12/5, Award (Aug. 22, 2016) [excerpt]
94. Blusun S.A v. Italian Republic, ICSID Case No. ARB/14/3,
Award (Dec. 27, 2016) [excerpt]
95. Glencore Finance (Bermuda) Limited v. The Plurinational State
of Bolivia, PCA Case No. 2016-39, Procedural Order No. 2
(Decision on Bifurcation) (Jan. 31, 2018) [excerpt]
96. Plama Consortium Ltd. v. Bulgaria, ICSID Case No
ARB/03/24, Award (Aug. 27, 2008) [excerpt]
97. Gustav F W Hamester GmbH & Co KG v. Republic of Ghana,
ICSID Case No. ARB/07/24, Award (June 18, 2010) [excerpt]
98. Good Return and the Medea, 29 R.I.A.A. 99 (Aug. 8, 1865)
99. Frierdich & Co. Case, 10 R.I.A.A. 45 (July 31, 1905)
100. Gilead Sciences Inc. v. Merck & Co., Inc., 888 F.3d 1231 (2018)
101. Royal Bank of Scotland Plc v. Highland Financial Partners LP
[2013] EWCA (Civ) 328 (Eng.)
102. Official Trustee in Bankruptcy v. Tooheys Ltd. (1993) 29
NSWLR 641 (Mar. 18, 1993)
103. Volkswagen Canada Inc. v. Access International Automotive
Ltd. [2001] 3 FC 311 (Mar. 21, 2001)
104. Société Générale de Surveillance SA v. Pakistan (Minister of
Finance, Revenue Division and Islamabad), Civil Appeal No.
459/2002 (Jul. 3, 2002)
105. South Africa v. Mahala and Mahala, Determination of
Jurisdiction, 1992 SACR 305 (E) (May 21, 1992)
106. Gerald G. Fitzmaurice, The General Principles of International
Law Considered from the Standpoint of the Rule of Law, 92
Collected Courses of the Hague Academy of International Law
117 (1957) [excerpt]
107. Opinion of Alberto Nisman, Attorney General (May 29, 2013)
[translated excerpt]
108. Peterson v. Islamic Republic of Iran, 2013 WL 1155576
(S.D.N.Y. Mar. 13, 2013)
179
VOLUME V
ANNEX DESCRIPTION
109. Bank Markazi v. Peterson, 136 S.Ct. 1310 (2016)
110. Transcript of Deposition, Heiser v. Islamic Republic of Iran,
Nos. 00-02329 & 00-02104 (D.D.C. Nov. 25, 2003)
111. Transcript of Trial, Heiser v. Islamic Republic of Iran, Nos. 00-
02329 & 00-02104 (D.D.C. Dec. 12, 2003)
112. Senate Report, Commercial Treaties with Iran, Nicaragua, and
The Netherlands, S. Rep. No. 84-9 (1956)
113. Transcript of Trial, Heiser v. Islamic Republic of Iran, Nos. 00-
02329 & 00-02104 (Feb. 9, 2004)
114. Transcript of Trial, Blais v. Islamic Republic of Iran, No. 2003-
285 (D.D.C. May 26, 2006)
115. James Crawford, “Execution of Judgments and Foreign
Sovereign Immunity,” 75 AM. J. INT’L L. 820 (1981)
116. Lilia Costabile & Gerald Epstein, “An Activist Revival in
Central Banking? Lessons from the History of Economic
Thought and Central Bank Practice,” 24 EURO. J.HIST. OF ECON.
THOUGHT 1416 (2017)
117. Petition for a Writ of Certiorari, Bank Markazi v. Peterson, 2014
WL 7463968 (2d Cir. Dec. 29, 2014) (No. 14-770)
118. Petition for a Writ of Certiorari, Bank Markazi v. Peterson
(“Peterson II”), 2018 WL 2176301 (2d Cir. May 18, 2018) (No.
17-1534)
119. Peterson v. Bank Markazi (“Peterson II”), 2015 U.S. Dist.
LEXIS 20640 (S.D.N.Y. Feb. 20, 2015)
120. Frédéric Dopagne, Legal Opinion on Immunity from Execution
of the Central Bank of the Islamic Republic of Iran (Markazi
Bank) Under International Law as Part of the Procedure for
Garnishment Validation Pending Before the District Court of
Luxembourg in Docket No. 177.393 (Mar. 16 2018)
VOLUME VI
ANNEX DESCRIPTION
121. Ambatielos Claim (Greece v. U.K.), 12 R.I.A.A. 83 (1956)
122. GERALD FITZMAURICE, THE LAW AND PROCEDURE OF THE
INTERNATIONAL COURT OF JUSTICE (1986) [excerpt]
123. JAN PAULSSON, DENIAL OF JUSTICE IN INTERNATIONAL LAW
(2010) [excerpt]
180
ANNEX DESCRIPTION
124. ROBERT JENNINGS & ARTHUR WATTS, OPPENHEIM’S
INTERNATIONAL LAW (9th ed. 1992) [excerpt]
125. International Law Commission, DRAFT ARTICLES ON
DIPLOMATIC PROTECTION WITH COMMENTARIES, Art. 14 (2006)
126. International Law Commission, DRAFT ARTICLES ON THE
RESPONSIBILITY OF STATES FOR INTERNATIONALLY WRONGFUL
ACTS WITH COMMENTARIES, Art. 44 (2001).
127. ALWYN V. FREEMAN, INTERNATIONAL RESPONSIBILITY OF
STATES FOR DENIAL OF JUSTICE (1970) [excerpt]
128. EDWIN M. BORCHARD, DIPLOMATIC PROTECTION OF CITIZENS
ABROAD OR THE LAW OF INTERNATIONAL CLAIMS (1919)
[excerpt]
129. Clerk’s Certificate of Default, Heiser v. Islamic Republic of
Iran, Nos. 00 Civ. 2329, 01 Civ. 2104 (D.D.C. Aug. 20, 2015),
ECF No. 272
130. Order Granting Unopposed Motion for Judgment against
Garnishees Bank of America, N.A., and Wells Fargo Bank, N.A.
for Turnover of Funds, and for Interpleader Relief for Such
Garnishees, Heiser v. Islamic Republic of Iran, No. 00 Civ.
02329 (D.D.C. June 9, 2016), ECF No. 275
131. Rubin v. Islamic Republic of Iran, 637 F.3d 783 (7th Cir. 2011)
132. Rubin v. Islamic Republic of Iran, 133 S. Ct. 23 (2012)
133. Telegram from U.S. Department of State to U.S. Embassy,
Tehran (Feb. 15, 1955)
134. High-Risk and Other Monitored Jurisdictions, Financial Action
Task Force (FATF), June 2019
135. Telegram from U.S. Department of State, No. 936, to U.S.
Embassy, Tehran (Nov. 9, 1954)
136. Instruction from U.S. Department of State to U.S. Embassy, The
Hague (Dec. 21, 1953)
137. Instruction from U.S. Department of State to U.S. Embassy,
Brussels (Mar. 25, 1957)
138. Lawrence Jahoon Lee, Barcelona Traction in the 21st Century:
Revisiting its Customary and Policy Underpinnings 35 Years
Later, 42STAN. J. INT’L L. 237 (2006)
139. Alberto Alvarez-Jimenez, Foreign Investors, Diplomatic
Protection and the International Court of Justice’s Decision on
Preliminary Objections in the Diallo Case, 33N.C. J. INT’L L.
&COM. REG. 437 (2008)
181
ANNEX DESCRIPTION
140. Cheng-Han Tan et al., “Piercing the Corporate Veil: Historical,
Theoretical, & Comparative Perspectives,” 16 BERKELEY BUS.
L.J. 140 (2019)
VOLUME VII
ANNEX DESCRIPTION
141. First Nat. City Bank v. Banco Para El Comercio Exterior de
Cuba, 462 U.S. 611 (1983)
142. Sumitomo Shoji America Inc. v. Avagliano, 457 U.S. 176 (1982)
143. Methanex Corp. v. United States, NAFTA/UNCITRAL,
Memorial on Jurisdiction and Admissibility of Respondent
United States of America (Nov. 13, 2000)
144. ADF Group Inc. v. United States of America, NAFTA/ICSID
Case No. ARB(AF)/00/1, Post-Hearing Submission of
Respondent United States of America on Article 1105(1) and
Pope & Talbot (June 27, 2002)
145. Glamis Gold Ltd. v. United States of America,
NAFTA/UNCITRAL, Counter-Memorial of Respondent United
States of America (Sept. 19, 2006) [excerpt]
146. Grand River Enterprises Six Nations, Ltd., et al. v. United States
of America, NAFTA/UNCITRAL, Counter-Memorial of
Respondent United States of America (Dec. 22, 2008) [excerpt]
147. S.D. Myers, Inc. v. Government of Canada,
NAFTA/UNCITRAL, First Partial Award (Nov. 13, 2000)
[excerpt]
148. Glamis Gold Ltd. v. United States of America,
NAFTA/UNCITRAL, Award (June 8, 2009) [excerpt]
149. Edwin Borchard, The “Minimum Standard” of the Treatment of
Aliens, 33 AM. SOC’Y OF INT’L L. PROC. 51 (1939)
150. NAFTA Free Trade Commission, Notes of Interpretation of
Certain Chapter 11 Provisions (July 31, 2001)
151. C.F. AMERASINGHE, STATE RESPONSIBILITY FOR INJURIES TO
ALIENS (1967) [excerpt]
152. International Law Commission, Second Report on the
Identification of Customary International Law (May 22, 2014)
153. PATRICK DUMBERRY, THE FAIR AND EQUITABLE TREATMENT
STANDARD: A GUIDE TO NAFTA CASE LAW ON ARTICLE 1105
(2013) [excerpt]
182
ANNEX DESCRIPTION
154. Lone Pine Resources Inc. v. Government of Canada,
NAFTA/ICSID Case No. UNCT/15/2, Submission of the United
States of America (Aug. 16, 2017)
155. Italba Corp. v. The Oriental Republic of Uruguay, U.S.-
Uruguay BIT/ICSID Case No. ARB/16/9, Submission of the
United States of America (Sept. 11, 2017)
156. Report of the Guerraro Sub-Committee of the Committee of the
League of Nations on Progressive Codification, League of
Nations Doc. C.196M. (1927) [excerpt]
157. BLACK’S LAW DICTIONARY (11th ed. 2019) [excerpt]
158. Revocation of Acceptance in Whole or in Part, U.C.C. § 2-
608(2)
159. J. Steven Jarreau, “Anatomy of a BIT: The United States -
Honduras Bilateral Investment Treaty,” 35 U.MIAMI INTER-AM
L. REV. 429 (2004)
160. Institut de Droit International, Resolution on the International
Responsibility of States for Injuries on their Territory to the
Person or Property of Foreigners [1927], reproduced in Y.B.
INT’L L. COMM’N, vol. II
VOLUME VIII
ANNEX DESCRIPTION
161. Robert Azinian et. al. v. United Mexican States, ICSID Case No.
ARB(AF)/97/2, Award (Nov. 1, 1999)
162. C.F. AMERASINGHE, DIPLOMATIC PROTECTION (2008) [excerpt]
163. RUDOLF DOLZER & CHRISTOPH SCHREUR, PRINCIPLES OF
INTERNATIONAL INVESTMENT LAW (2012) [excerpt]
164. ANDREAS ROTH, MINIMUM STANDARD OF INTERNATIONAL LAW
APPLIED TO ALIENS (1949) [excerpt]
165. Sir Gerald Fitzmaurice, Hersch Lauterpacht – The Scholar as
Judge, 37 Y.B. INT’L L. COMM’N 1 (1961) [excerpt]
166. Claim of Finnish ship powers against Great Britain in respect
of the use of certain Finnish vessels during the war (Finland v.
Great Britain), 2 R.I.A.A. 1479 (May 9, 1934) [excerpt]
167. B. Schouw Nielsen v. Denmark, Application No. 343/57
(European Commission on Human Rights) [1958-1959],
ECtHR, vol. 2 [excerpt]
183
ANNEX DESCRIPTION
168. John Dugard, Special Raporteur, International Law
Commission, Third Report on Diplomatic Protection, Doc.
A/CN.4/523 (Mar. 7, 2002) [excerpt]
169. The Law of Responsibility of States for Damage Done in Their
Territory to the Person or Property of Foreigners, 23 AM. J. INT’L
L. 147 (No. 2 SUPPLEMENT: CODIFICATION OF INTERNATIONAL
LAW) (Apr. 1929) [excerpt]
170. Judicial Guarantees in States of Emergency, Advisory Opinion
(Case No OC-9/87) IACtHR 6 October 1987, Series A No. 9
171. Duke Energy Electroquil Partners, et al. v. Republic of Ecuador,
ICSID Case No. ARB/04/19 (Aug. 18, 2008) [excerpt]
172. J.L. BRIERLY, LAW OF NATIONS (1963) [excerpt]
173. JAN PAULSSON, DENIAL OF JUSTICE IN INTERNATIONAL LAW
(2010) [excerpt]
174. B.E. Chattin (United States v. Mexico), 4 R.I.A.A. 282 (1927)
175. The Loewen Group, Inc. and Raymond L. Loewen v. United
States of America, NAFTA/ICSID Case No. ARB(AF)/98/3,
Award (June 26, 2003)
176. Mondev Int’l Ltd. v. United States of America, ICSID Case No.
ARB(AF)/99/2, Award (Oct. 11, 2002) [excerpt]
177. Christopher Greenwood, State Responsibility for the Decisions
of National Courts, in ISSUES OF STATE RESPONSIBILITY BEFORE
INTERNATIONAL JUDICIAL INSTITUTIONS (Malgosia Fitzmaurice
& Dan Sarooshi eds., 2004)
178. Zachary Douglas, International Responsibility for Domestic
Adjudication: Denial of Justice Deconstructed, 63(4) INT’L. &
COMP. L.Q. 867 (2014)
179. Apotex Inc. v. United States of America, NAFTA/UNCITRAL,
Award on Jurisdiction and Admissibility (June 14, 2013)
[excerpt]
180. Mohammad Ammar Al Bahloul v. Republic of Tajikistan, SCC
Case No. V(064/2008), Partial Award on Jurisdiction and
Liability (Sept. 2, 2009) [excerpt]
181. International Law Commission, Articles on Responsibility of
States for Internationally Wrongful Acts, art. 4(1)
182. International Law Commission, Draft Articles on State
Responsibility for Internationally Wrongful Acts, With
Commentary, U.N. Doc. A/56/10 [excerpt]
184
VOLUME IX
ANNEX DESCRIPTION
183. James Crawford (Special Rapporteur on State Responsibility),
Second Report on State Responsibility, U.N. Doc. A/CN.4/498
(July 19, 1999) [excerpt]
184. Rubin v. Islamic Republic of Iran, 33 F. Supp. 3d 1003 (N.D.
Ill. 2014)
185. Rubin v. Islamic Republic of Iran, 830 F.3d 470 (7th Cir. 2016)
186. ALBERT BADIA, PIERCING THE VEIL OF STATE ENTERPRISES IN
INTERNATIONAL ARBITRATION (2014) [excerpt]
187. In re Cambridge Biotech Corp., 186 F.3d 1356 (Fed. Cir. 1999)
188. National & Provincial Building Society et al. v. United Kingdom
(117/1996/736/933-935), Judgment (Oct. 23, 1997)
189. Bridgestone Licensing Service & Bridgestone Americas v.
Panama, ICSID Case No. ARB/16/34, Decision on Expedited
Objections (Dec. 13, 2017) [excerpt]
190. Section 6(i) of the Export Administration Act of 1979 (Public
Law 96-72) (Sept. 29, 1979)
191. Metalpar S.A. & Buen Aire S.A. v. Argentine Republic, ICSID
Case No. ARB/03/5, Award (June 6, 2008)
192. Enron Creditors Recovery Corporation (formerly Enron
Corporation) & Ponderosa Assets, L.P. v. Argentine Republic,
ICSID Case No. ARB/01/3, Award (May 22, 2007) [excerpt]
193. Weininger v. Fidel Castro, 462 F. Supp. 2d 457 (S.D.N.Y. 2006)
194. Suez, Sociedad General de Aguas de Barcelona, S.A. & Vivendi
Universal, S.A. v. Argentina, ICSID Case No. ARB/03/19,
Decision on Liability (July 3, 2010) [excerpt]
195. BG Group Plc. v. Argentina, UNCITRAL, Final Award (Dec.
24, 2007) [excerpt]
196. Saluka Investments B.V. v. Czech Republic, UNCITRAL, Partial
Award (Mar. 17, 2006) [excerpt]
197. JESWALD W. SALACUSE, THE LAW OF INVESTMENT TREATIES
(2015) [excerpt]
198. REDFERN AND HUNTER ON INTERNATIONAL ARBITRATION (6th
ed. 2015) [excerpt]
199. American Manufacturing & Trading, Inc. v. Zaire, ICSID Case
No. ARB/93/1, Award (Feb. 21, 1997)
200. Wena Hotels Ltd. v. Egypt, ICSID Case No. ARB/98/4, Award
(Dec. 8, 2000)
185
ANNEX DESCRIPTION
201. Asian Agricultural Products Ltd. (AAPL) v. Sri Lanka, ICSID
Case No. ARB/87/3, Final Award (Jun. 27, 1990)
202. UNCTAD Report, Expropriation: A Sequel (2012) [excerpt]
VOLUME X
ANNEX DESCRIPTION
203. JAMES CRAWFORD, BROWNLIE’S PRINCIPLES OF PUBLIC
INTERNATIONAL LAW (8th ed. 2012) [excerpt]
204. IAN BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW
(1st ed. 1966) [excerpt]
205. Louis B. Sohn and R.R. Baxter, Responsibility of States for
Injuries to the Economic Interests of Aliens, 55 AM. J. INT’L L.
545 (1961)
206. Convention Establishing the Multilateral Investment Guarantee
Agency, Art. 11 (Nov. 14, 2010)
207. RESTATEMENT (THIRD) OF FOREIGN RELATIONS OF THE UNITED
STATES § 712 (1987)
208. KATIA YANNACA-SMALL, ARBITRATION UNDER
INTERNATIONAL INVESTMENT AGREEMENTS – A GUIDE TO THE
KEY ISSUES (2d ed. 2018) [excerpt]
209. G.C. Christie, What Constitutes a Taking of Property Under
International Law, 38 BRIT. Y.B. INT’L L. 307 (1962)
210. “Indirect Expropriation” and the “Right to Regulate” in
International Investment Law, OECD Working Papers on
International Investment, 2004/04
211. Chemtura Corp. v. Canada, Ad Hoc Tribunal (UNCITRAL),
Award (Aug. 2, 2010) [excerpt]
212. Marvin Roy Feldman Karpa v. United Mexican States, ICSID
Case No. ARB(AF)/99/1, Award (Dec. 16, 2002) [excerpt]
213. Swisslion DOO Skopje v. Macedonia, ICSID Case No.
ARB/09/16, Award (July 6, 2012) [excerpt]
214. Grand River Enterprises Six Nations, Ltd., et al. v. United States
of America, NAFTA/UNCITRAL, Award (Jan. 12, 2011)
[excerpt]
215. Total S.A. v. Argentine Republic, ICSID Case No. ARB/04/1,
Award (Dec. 27, 2010) [excerpt]
216. Paradissiotis v. United States, 304 F.3d 1271 (Fed. Cir. 2002)
186
ANNEX DESCRIPTION
217. Zarmach Oil Servs., Inc. v. U.S. Dep’t of the Treasury, 750 F.
Supp. 2d 150 (D.D.C. 2010)
218. Islamic Am. Relief Agency v. Unidentified FBI Agents, 394 F.
Supp. 2d 34 (D.C. 2005)
219. Islamic Am. Relief Agency v. Gonzales, 477 F.3d 728 (D.C. Cir.
2007)
220. Holy Land Found. for Relief & Dev. v. Ashcroft, 219 F. Supp. 2d
57 (D.D.C. 2002)
221. Glob. Relief Found., Inc. v. O’Neill, 207 F. Supp. 2d 779 (N.D.
Ill.)
222. U.S. Department of Justice Press Release, “Manssor Arbabsiar
Sentenced in New York City Federal Court to 25 Years in Prison
for Conspiring with Iranian Military Officials to Assassinate the
Saudi Arabian Ambassador to the United States” (May 30, 2013)
223. Richard Gardiner, “The Vienna Rules on Treaty Interpretation,”
in DUNCAN HOLLIS, ED., THE OXFORD GUIDE TO TREATIES
(2012) [excerpt]
224. European American Investment Bank AG v. The Slovak
Republic, PCA Case No. 2010-17, Award on Jurisdiction (Oct.
22, 2012) [excerpt]
225. ANDREW NEWCOMBE & LLUIS PARADELL, LAW AND PRACTICE
OF INVESTMENT TREATIES: STANDARDS OF TREATMENT (2009)
[excerpt]
226. Telegram from U.S. Embassy, Tehran to U.S. Department of
State (Oct. 16, 1954)
227. Instructions from U.S. Department of State to U.S. Embassy,
Tehran, A-18, (July 23, 1954)
228. Telegram from U.S. Embassy, Tehran to U.S. Department of
State (Sept. 15, 1954)
229. Telegram from U.S. Embassy, Tehran to U.S. Department of
State (Oct. 2, 1954)
230. Telegram from U.S. Department of State to U.S. Embassy,
Tehran (Oct. 26, 1954)
231. Cable from U.S. Department of State to U.S. Embassy, Tehran
(Nov. 4, 1954)
232. Iranian Transactions Regulations, 73 Fed. Reg. 66541 (Nov. 10,
2008)
233. Peterson v. Islamic Republic of Iran, 758 F.3d 185 (2d Cir.
2014)
187
ANNEX DESCRIPTION
234. Don C. Piper, Navigation Provisions in United States
Commercial Treaties, 11 AM. J. COMP. L. 184 (1962)
VOLUME XI
ANNEX DESCRIPTION
235. Report of the International Law Commission Covering the Work
of its Fifth Session, 1 June – 14 August 1953, 2 Y.B. Int’l L.
Comm’n 200, UN Doc. A/2456 (1953) [excerpt]
236. International responsibility: Fifth report by F.V. García Amador,
Special Rapporteur, 2 Y.B. INT’L L. COMM’N 41, UN Doc.
A/CN.4/125 (1960) [excerpt]
237. G. D. S. Taylor, The Content of the Rule against Abuse of Rights
in International Law, 46 BRIT. Y.B. INT’L L. 323 (1972-73)
238. Michael Byers, Abuse of Rights: An Old Principle, A New Age,
47MCGILL L.J. 389 (2002)
239. Appellate Body Report, United States – Import Prohibition of
Certain Shrimp and Shrimp Products,WT/DS58/AB/R (Oct. 12,
1998) [excerpt]
240. CHARLES KOTUBY & LUKE SOBOTA, GENERAL PRINCIPLES OF
LAW AND INTERNATIONAL DUE PROCESS (2017) [excerpt]
241. Panel Report, European Communities – Measures Affecting
Asbestos and Asbestos-Containing Products, WT/DS135/R
(Sep. 18, 2000) [excerpt]
242. Award in the Arbitration Regarding the Iron Rhine (Ijzeren Rijn)
Railway between the Kingdom of Belgium and the Kingdom of
the Netherlands, 27 R.I.A.A. 35 (May 24, 2005) [excerpt]
243. Case Concerning Filleting within the Gulf of St. Lawrence
between Canada and France, 29 R.I.A.A. 225 (July 17, 1986)
[excerpt]
244. Philip Morris Asia Ltd. v. Commonwealth of Australia, PCA
Case No. 2012-12, Award on Jurisdiction and Admissibility
(Dec. 17, 2015) [excerpt]
245. Capital Financial Holdings Luxembourg SA v. Cameroon,
ICSID Case No. ARB/15/18, Award (June 22, 2017) [excerpt]
246. Swiss Civil Code of 10 December 1907, Art. 2 (as at 1 January
2019)
247. Bürgerliches Gesetzbuch (BGB) (German Civil Code) § 226
248. Québec Civil Code, Art. 7
188
ANNEX DESCRIPTION
249. United Nations Convention on the Law of the Sea, Art. 300, Dec.
10, 1982, 1833 U.N.T.S. 397
250. European Convention on Human Rights, Art. 17, Nov. 4, 1950,
213 U.N.T.S. 211
251. Agreement on Port State Measures to Prevent, Deter and
Eliminate Illegal, Unreported and Unregulated Fishing, Article
4(5)
252. International Covenant on Civil and Political Rights
253. Universal Declaration of Human Rights