Rejoinder of the United States of America

INTERNATIONAL COURT OF JUSTICE
CERTAIN IRANIAN ASSETS
(ISLAMIC REPUBLIC OF IRAN v. UNITED STATES OF AMERICA)
REJOINDER
SUBMITTED BY
THE UNITED STATES OF AMERICA
MAY 17, 2021
TABLE OF CONTENTS
PART I: THE UNITED STATES' CASE ............................................................................... 1
CHAPTER 1: Introduction .................................................................................................. 1
CHAPTER 2: The Court's Preliminary Objections Judgment and Iran's Residual Case ... 6
CHAPTER 3: Iran's Sponsorship of Terrorism ................................................................. 12
Section A: Iran's Conduct Invoked by the United States Goes Directly to Iran's
Claims in These Proceedings .................................................................... 12
Section B: The Evidence of Iran's Conduct Advanced by the United States Is
Unchallenged ............................................................................................ 13
1. Iran's Silence on the Attacks at the Heart of This Case for
Which It Has Been Found Responsible .............................................. 14
11. Iran's Egregious Conduct Continues .................................................. 16
Section C: Concluding Observations ......................................................................... 21
PART II: PRELIMINARY CONTENTIONS ....................................................................... 22
CHAPTER 4: Iran Comes to the Court with Unclean Hands ............................................ 22
Section A: Overview of the U.S. Case ....................................................................... 22
Section B: Iran's Defenses to the Unclean Hands Doctrine Are Meritless ................ 23
1. Iran Misreads the Preliminary Objections Judgment ......................... 23
11. Iran Mischaracterizes the Nature of the Nexus That Is Required
for Invocation of the Unclean Hands Doctrine and Would Have
the Court Apply Additional Criteria That Are Not Part of the
Doctrine .............................................................................................. 24
iii. Iran's Criticism of the U.S. Case-Law Analysis Is Misplaced ........... 25
1v. The Court Should Disregard Iran's Attempt to Downplay the
Significance of the Many Invocations by States of the Unclean
Hands Doctrine, Including Iran's Own Unqualified
Endorsement ....................................................................................... 26
v. Iran's Other Points Are Equally Unpersuasive .................................. 28
Section C: The Doctrine's Relevance and Application in This Case ......................... 31
CHAPTER 5: Bank Markazi Is Not a "Company" for Purposes of the Treaty of Amity 33
Section A: Iran Has Not Provided Additional Facts That Would Demonstrate
Bank Markazi Was Engaged in Activities of a Commercial Nature
as It Pertains to This Case ......................................................................... 33
Section B: The Domestic Authorities Cited by Iran Further Demonstrate That
Bank Markazi Is Responsible for Traditional Central Bank
Functions Involving Sovereign Activity That Has No Commercial
Comparator ............................................................................................... 35
i. The Specific Activities at Issue in This Case Concern the
Exercise of Sovereign Functions by Bank Markazi ........................... 3 7
1
11. Bank Markazi' s Sovereign Activity at Issue in This Case Is
Dispositive in Determining That Bank Markazi Is Not a
"Company" Under the Treaty ............................................................. 38
Section C: Concluding Observations ......................................................................... 43
CHAPTER 6: The Failure to Exhaust Local Remedies by the Companies In Respect of
Which Iran Claims ............................................................................................................. 44
Section A: Exhaustion of Local Remedies Is Required in this Case .......................... 44
1. The Indirect Elements oflran's Claims Are Preponderant ................ 44
11. This Case Is Distinct From the Avena and Ukraine v. Russian
Federation Cases ................................................................................ 46
iii. Conclusion .......................................................................................... 49
Section B: Exhaustion Is Not Futile ........................................................................... 49
1. Local Remedies Are Available ........................................................... 50
11. Local Remedies Provide a Reasonable Possibility of Redress ........... 52
Section C: Iran's Claims Excluded by the Requirement to Exhaust Local
Remedies .................................................................................................. 55
Section D: Iran Cannot Prove Its Case Without Exhausting Local Remedies ........... 56
CHAPTER 7: Article :XX(l) Bars Iran's Claims Regarding Executive Order 13599 ....... 58
Section A: Executive Order 13599 Engages Article :XX(l)(c) as it Regulates
Iranian Arms Production and Trafficking ................................................ 58
1. E.O. 13599 Is a Critical Part of a Regulatory Scheme to
Address Iranian Arms Trafficking ..................................................... 58
11. Article :XX(l)(c) Is Not Limited to Regulation of Domestic
Arms Production and Export .............................................................. 60
Section B: Executive Order 13599 Engages Article XX(l)(d) as It Was
Necessary to Protect U.S. Essential Security Interests ............................. 62
i. The Invoking State Is Entitled to Substantial Deference ................... 63
ii. There Is No Support for Iran's Alternative Standard ......................... 65
iii. Under the Article :XX(l)(d) Standard, E.O. 13599 Was
Necessary to Protect U.S. Essential Security Interests ....................... 66
Section C: The Consequences for Iran's Case of a Finding That E.O. 13599 Is
Permitted Pursuant to Article :XX(l)(c) and/or (d) of the Treaty of
Amity ........................................................................................................ 71
PART III: THE U.S. MEASURES DO NOT VIOLATE THE TREATY OF AMITY ........ 72
CHAPTER 8: The U.S. Measures ..................................................................................... 72
Section A: The U.S. Legislative and Executive Measures Were a Reasonable
Response to the Sponsorship of Terrorism by Iran and Other States ....... 73
Section B: U.S. courts Treated Iran and Iranian Entities Reasonably and Did
not Discriminate Against Them in Proceedings to Enforce
Terrorism Judgments ................................................................................ 77
i. Proceedings in Which Iranian Entities Appeared ............................... 78
11
ii. Proceedings in Which Iranian Entities Did Not Appear .................... 88
iii. Conclusion .......................................................................................... 95
Section C: The Court Has Dismissed Iran's Claims Regarding the 9/11
Judgments and, In Any Event, Its Complaints About These
Judgments Are Meritless .......................................................................... 95
1. Iran Was Properly Served ................................................................... 97
11. Plaintiffs Were Held to the Same Standard of Proof That Would
be Applicable in the Case of Any Other Sovereign Default,
Including a Default by the United States Itself .................................. 98
iii. The Court's Findings Regarding Liability and Damages ................. 101
1v. Iran Could Have Sought to Set Aside the Default Judgments
Against it in U.S. Courts .................................................................. 102
v. The 9/11 Proceedings Do Not Support a Claim Against the
United States ..................................................................................... 103
Section D: Concluding Observations ....................................................................... 103
CHAPTER 9: Iran Has Failed to Establish a Claim under Article III ............................. 104
Section A: Iran Has Failed to Establish a Violation of Article 111(1) ....................... 104
1. Iran's Interpretation of Article 111(1) Is Contradicted by Both
the Text and the Negotiating History of the Provision ..................... 105
11. The U.S. Measures Complied with Article 11l(l)'s Requirement
of Recognizing the Iranian State-Owned Companies' "Juridical
Status" .............................................................................................. 109
Section B: Iran Has Failed to Establish a Violation of Article 111(2) ....................... 111
i. Iran's Overbroad Interpretation of Article 111(2) Is Contradicted
by the Text of the Treaty As Well As the Court's Own Analysis
of That Text ...................................................................................... 112
11. The Iranian Companies Enjoyed Freedom of Access to the
Courts of the United States ............................................................... 114
Section C: Concluding Observations ....................................................................... 115
CHAPTER 10: Iran Has Failed to Establish a Claim under Article IV(l) ...................... 117
Section A: Article IV(l) Includes All the Rules of the International Minimum
Standard of Treatment Under Customary International Law That
Are Not Set Forth Elsewhere in the Treaty ............................................ 117
Section B: The International Minimum Standard of Treatment Can Evolve, but
Iran Has Adduced No Evidence That, as Reflected in the Treaty, It
Has Evolved Beyond Denial of Justice .................................................. 121
Section C: The United States Did Not Deny Justice to Any Iranian Companies ..... 126
i. Designation oflran as a State Sponsor of Terrorism ....................... 128
ii. Executive Order 13599 ..................................................................... 128
iii. Piercing the Corporate Veil Pursuant to Section 201(a) ofTRIA
and Section 1610(g) of the FSIA ...................................................... 129
111
1v. Section 8772 of Title 22 of the U.S. Code (Codifying Section
502 of the Iran Threat Reduction and Syria Human Rights Act
of 2012) ............................................................................................ 132
v. Section 1226 of the NDAA 2020 ..................................................... 136
Section D: Even Under Iran's Deeply Flawed Proposed Legal Standard, the
United States Did Not Breach Article IV(l) .......................................... 136
1. Iran's Proposed Legal Standard Is Deeply Flawed .......................... 136
ii. In Any Event, Even Under Iran's Standard, the United States
Did Not Breach Article IV(l) ........................................................... 137
Section E: Concluding Observations ....................................................................... 143
CHAPTER 11: Iran Has Failed to Establish a Claim under Article IV(2) ...................... 145
Section A: Most Constant Protection and Security .................................................. 146
1. Iran Has Failed to Establish That "Most Constant Protection
and Security" Requires Anything More Than Physical Security
and Its Claims for Breach of This Provision Must Therefore
Fail .................................................................................................... 146
11. Even If "Most Constant Protection and Security" Included
Some Form of"Legal Security," Iran's Claims Would Still Fail .... 150
Section B: Expropriation .......................................................................................... 151
1. Iran's Interpretation of Article IV(2)'s Restrictions on the
Taking of Property Remain Flawed ................................................. 152
11. Iran's Claims Under the Expropriation Provision of Article
IV(2) Fail .......................................................................................... 157
Section C: Concluding Observations ....................................................................... 160
CHAPTER 12: Iran's Subsidiary Claims -Articles X(l), V(l), and VII(l) ................... 161
Section A: Iran Has Failed to Establish a Breach of Article X(l) ............................ 161
i. The Parties Intended the Term "Commerce" in Article X(l) to
Mean Maritime Commerce .............................................................. 163
ii. In the Alternative, "Commerce" Can be No Broader Than Trade
in Goods ........................................................................................... 165
iii. Iran's Article X(l) Claim Fails to Satisfy the Territorial
Requirement ..................................................................................... 167
iv. Article X(l) Cannot Plausibly Be Interpreted to Include "Legal
Impediments" Such as the Rules Governing Terrorism-Related
Litigation in U.S. Courts .................................................................. 173
v. Concluding Observations ................................................................. 175
Section B: Iran Has Failed to Establish a Breach of Article V(l) ............................ 175
i. The Scope of This Issue Is Limited .................................................. 176
11. Iran's Failure to Show Attempts to Dispose of Property Is
Significant ........................................................................................ 176
iii. The Most-Favored-Nation Standard ................................................. 176
IV
1v. Application of Article V(l) to the Challenged Measures ................. 179
Section C: Iran Has Failed to Establish a Breach of Article VIl(l) ......................... 180
1. Iran's Reply Fails to Support Iran's Implausible,
Decontextualized Reading of Article VII( 1) .................................... 181
11. Iran's Implausible Reading of Article VIl(l) Lacks a Limiting
Principle and Is Therefore Flawed ................................................... 183
CHAPTER 13: Abuse of Rights ...................................................................................... 186
Section A: Introduction and Overview ..................................................................... 186
Section B: Abuse of Rights Is a Distinct Defense .................................................... 187
Section C: The Circumstances in Which the Doctrine May Be Applied ................. 189
Section D: Application to This Case ........................................................................ 191
PART IV: CONCLUSION AND REQUEST FOR RELIEF .............................................. 194
CHAPTER 14: Summary of U.S. Case ........................................................................... 194
CHAPTER 15: Observations on Remedies ..................................................................... 196
CHAPTER 16: Request for Relief ................................................................................... 198
LIST OF ANNEXES ACCOMPANYING THE REJOINDER .......................................... 201
APPENDIX 1: ENFORCEMENT CASES IN ATTACHMENT 2 TO IRAN'S REPLY .. A-1
V
PART I: THE UNITED STATES' CASE
CHAPTER 1: INTRODUCTION
1.1 This case is about Iran's attempt to evade compensatory damages judgments by U.S.
courts in respect of terrorist acts against U.S. nationals for which Iran bears responsibility. The
U.S. legislative measures that Iran assails were enacted for the purpose of allowing recourse
against State sponsors of terrorism-including Iran, and its agencies, instrumentalities, and
officials-before U.S. courts. Among the most egregious acts of Iran's systemic policy of
supporting terrorist acts directed at U.S. nationals and other U.S. interests that such recourse
was aimed to address was the terrorist bombing of the U.S. Marine barracks in October 1983,
which killed 241 peacekeepers and injured many more. The Peterson case, which is at the
heart oflran's claims before the Court, was brought by the victims and family members of the
U.S. peacekeepers who were killed by that bombing. Other cases cited by Iran in its claims
were similarly brought by many more such victims who have not been compensated for other
egregious conduct by Iran.
1.2 Iran attempts to distance itself from the reality at the heart of this case. During the
preliminary phase of the case, Iran, side-stepping any engagement with the allegations made
by the United States, repeatedly stated that it would address these allegations when it comes to
the merits.1 Iran's Reply, however, again fails to address the U.S. allegations in any meaningful
way. It says, moreover, that these allegations of fact are irrelevant as its claims arise under the
Treaty of Amity and that the U.S. factual allegations and contentions of law that are rooted in
Iran's terrorist conduct make no claim that Iran has violated the Treaty of Amity. Iran therefore
maintains that its claims must be addressed without regard to the Iranian conduct that stands at
the very heart of the measures enacted by the United States and the judgments of the U.S. courts
arising from those measures. In support of this contention, Iran puts forward an expansive
reading of the Court's Preliminary Objections Judgment, contending that this requires a direct
treaty-nexus between Iran's conduct invoked by the United States and the Treaty of Amity.
Absent such direct treaty-nexus, Iran contends that its conduct invoked by the United States is
irrelevant to these proceedings.
1.3 This cannot be correct. The U.S. measures that serve as a basis for Iran's claims were
enacted as a direct response to the egregious conduct that Iran, and other State sponsors of
1 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Hearing
of October 12, 2018, 3pm, p. 37, ,r 5 (Mohsen Mohebi); id., p. 38, ,r 10.
1
terrorism, engaged in against U.S. nationals and U.S. interests. The Treaty of Amity does not
address terrorist conduct, or the measures that may be taken by its Parties in response to such
conduct. It is predicated, however, on peaceful relations between the two Parties. Even without
regard to the exceptions' clause in Article XX of the Treaty, it cannot but be material to the
consideration of any claim under the Treaty that a Party has engaged in conduct that is so
fundamentally at odds with the very essence of what the Treaty was designed to promote. The
challenged U.S. measures are inextricably linked to choices that Iran made: first, to sponsor
acts of terrorism against U.S. nationals and interests; second, to refrain from appearing in U.S.
courts to contest its liability for such acts; and third, to refuse to pay the judgments ultimately
rendered against it or otherwise to provide any compensation to the victims of such acts. The
Court must assess the challenged U.S. measures in the context of these choices, not, as Iran
contends, in a vacuum.
1.4 Rather than directly confronting the heinous nature of its conduct, Iran relegates its
response to this critical aspect of the U.S. case to a short appendix included at the end of its
Reply. The appendix is inadequate to the task of addressing the serious charges against Iran
and the supporting evidence that the United States has submitted. But it is even less than meets
the eye. The appendix is little more than a cut and paste from the appendix that Iran submitted
in 2017 with its observations and submissions on the U.S. preliminary objections. The
preliminary phase is, however, long over. Iran's evident unwillingness to respond in any
material way to the U.S. allegations-even though Iran told the Court it would do so at the
merits phase-speaks volumes and should be damning to its case.
1.5 Indeed, what is most notable about Iran's appendix is what it fails to address. Critically,
Iran has nothing to say about the October 1983 bombing of the U.S. Marine barracks,
notwithstanding that it is at the heart of Iran's case. By far the largest sum obtained by the
holders of terrorism judgments against Iran was obtained by victims of the bombing and their
families in the Peterson case. The measure that receives perhaps the most attention from Iran
in its Reply2 relates solely to the Peterson enforcement proceedings and thus to the barracks
bombing. Yet, despite its place at the heart of this case, Iran makes no attempt to address the
evidence showing that it was behind the bombing.
1.6 Rather than address its conduct that gave nse to the measures, Iran engages in
distraction, with a lengthy discussion of cases that have little to do with its remaining claims,
2 Iran Threat Reduction and Syria Human Rights Act of2012 § 502, 22 U.S.C. § 8772 (2012).
2
namely cases arising out of the attacks on September 11, 2001. Iran's complaints about these
cases are utterly meritless. More importantly, following the Court's Preliminary Objections
Judgment, Iran has no surviving claim with respect to the 9/11 judgments. Iran previously
complained that the 9/11 judgments violated its sovereign immunities. The Court, however,
dismissed those claims as outside the scope of the Treaty of Amity. Moreover, none of the
enforcement proceedings discussed in the Reply that have resulted in the turnover of Iranian
assets concern the 9/11 judgments. 3
1.7 Mindful, no doubt, of the effect of the Court's Preliminary Objections Judgment on its
case, Iran attempts to salvage some part of that case in its Reply. Through updated versions of
four charts originally attached to its Memorial listing hundreds of court proceedings, Iran seeks
to convey the impression that there is a vast hinterland of judicial action that it says is in breach
of the Treaty of Amity beyond those cases that are expressly discussed in Iran's written
submissions. But the reality is very different. As the United States showed in the CounterMemorial
with respect to the original versions of these charts, and as continues to be the case
with respect to the revised versions, Iran's Attachments 1, 3, and 4 are entirely irrelevant to
this case because Iran has made only sovereign immunity claims in respect of the proceedings
listed in these attachments. With respect to the remaining attachment (Attachment 2), which
lists actions to enforce judgments obtained against Iran, Iran's Reply makes clear that its claims
are, in fact, limited to only 8 of the 106 actions listed therein. 4 And even as to those 8, over
98.5% of the funds turned over to the plaintiffs in these proceedings were turned over in a
single case (Peterson I), which, as noted, involved the enforcement of a judgment finding Iran
responsible for the 1983 Beirut Marine barracks bombing.
1.8 As this makes abundantly clear, this case is fundamentally about Iran's role in the 1983
Marine barracks bombing, its refusal to provide any compensation to the victims of that
bombing, and its attempt to use a treaty of friendship, navigation and commerce to impugn
reasonable measures that the United States took in order to hold Iran accountable for its actions
in connection with the bombing and to assist the victims and their families in their efforts to
obtain the compensation that they are due from Iran. And for all oflran's complaints about the
sanctity of the corporate form, the assets at issue in Peterson I-which, again, account for the
3 See Iran's Reply, 12.60 n.161 (listing judgments that are the subject of enforcement actions addressed in the
Reply).
4 Iran's Reply, Chapter 2, Section 2. See also iefra Chapter 8.
3
vast majority of the assets that have been turned over-are plainly assets of the Iranian State,
which were held by its central bank, Bank Markazi.
1.9 To avoid liability and damages for its support of terrorism, Iran comes to the Court with
unclean hands and on behalf of an entity that may not invoke the Treaty of Amity (i.e., Bank
Markazi) and companies that have not exhausted local remedies, making erroneous legal
interpretations of provisions of domestic and international law that the United States did not
breach. The Court should reject Iran's claims in their entirety. There are multiple reasons,
whether cumulatively or in the alternative, why the Court can and should reach this result.
First, the Court should conclude that Iran's unclean hands bar it from proceeding with its claims
in their entirety and obtaining the relief that it seeks. Second, the Court should find that Bank
Markazi is not a "company" within the meaning of the Treaty of Amity and, accordingly, reject
Iran's claims under Articles III, N, and V pertaining to the treatment of Bank Markazi-which,
as noted, account for the lion's share of potential U.S. liability. Third, with respect to those
entities that do qualify as companies, the Court should find that Iran has failed to show that
they exhausted local remedies-indeed, in most cases the companies did not bother to appear
at all in the U.S. court proceedings-and reject claims arising out of the treatment of those
entities. Fourth, the Court should exclude Iran's claims regarding Executive Order 13599 from
this case under Article XX(l)(c) and (d). Fifth, the Court should reject Iran's interpretations
of the Treaty provisions at issue as erroneous and find that the United States did not breach any
of these provisions in any event, but instead acted reasonably and consistent with its Treaty
obligations in enacting and applying the challenged measures. Sixth, if the Court were to
conclude that any of the challenged U.S. measures infringed Iran's rights under the Treaty, it
should nevertheless preclude as abusive Iran's attempt to invoke those rights in order to avoid
liability and paying compensation for the countless deaths and injuries Iran caused by
supporting these heinous acts of terrorism specifically targeting U.S. nationals and U.S.
interests.
1.10 The U.S. Rejoinder is structured as follows. In the remainder of Part I, Chapter 2
clarifies the impact of the Court's Preliminary Objections Judgment and the termination of the
Treaty of Amity on the scope of Iran's case. Chapter 3 addresses Iran's past and continuing
sponsorship of terrorism.
1.11 In Part II, the United States presents four defenses, described briefly above, showing
that each requires dismissal of some or all of Iran's claims: Chapter 4 addresses Iran's unclean
hands, Chapter 5 addresses Iran's failure to establish that Bank Markazi is a "company" for
4
purposes of the Treaty of Amity, Chapter 6 addresses the failure to exhaust local remedies,
and Chapter 7 addresses the application of Article XX(l) to Executive Order 13599.
1.12 In Part III, the United States begins by correcting Iran's portrayal of the challenged
measures in Chapter 8, before proceeding to Iran's claims under Article 111(1) and (2)
(Chapter 9), Article IV(l) (Chapter 10), Article IV(2) (Chapter 11), and finally Iran's
subsidiary claims under Articles X(l), V(l), and VII(l) (Chapter 12). The United States also
shows, in Chapter 13, that Iran's abuse of rights bars its claims, regardless of the Court's
findings on the specific Articles at issue.
1.13 In Part IV, the United States provides a brief summary of its case (Chapter 14),
observations on Iran's faulty submissions on remedies (Chapter 15), and a reiteration of its
request for relief (Chapter 16). 5
5 Documents annexed to the U.S. Rejoinder and U.S. Counter-Memorial are rendered herein as "(U.S. Annex
)." Documents annexed to Iran's Memorial are rendered herein as "(IM Annex_)" and documents annexed
to Iran's Reply as "(Iran Reply Annex_)." Finally, documents annexed to the U.S. Preliminary Objections are
rendered herein as "(U.S. P.O. Annex_)."
5
CHAPTER 2: THE COURT'S PRELIMINARY OBJECTIONS JUDGMENT
AND IRAN'S RESIDUAL CASE
2.1 Iran's Reply obfuscates the effect of the Court's Preliminary Objections Judgment,6
ignores the termination of the Treaty of Amity, and paints the false picture that this case is
about hundreds of pending judicial proceedings before U.S. courts. The effect of the Court's
Preliminary Objections Judgment was addressed in the U.S. Counter-Memorial (at paragraphs
2.1-2.18). Iran's response rests on four revised attachments (Attachments 1--4, as addressed
above) containing cases that Iran says "remain relevant" or "remain as the basis of Iran's
specific claims against the United States" or which "remain a matter of real current concern to
Iran and to Iranian companies."7 As noted above, those Attachments are actively misleading
because nearly all of the cases indicated thereon are entirely irrelevant to these proceedings. It
is an exercise by Iran in smoke and mirrors. This is addressed further below.
2.2 As regards the termination of the Treaty of Amity, the United States notified the
termination of the Treaty on October 3, 2018, and that termination accordingly took effect no
later than October 3, 2019.8 While the United States acknowledges that the Treaty's
termination does not go to jurisdiction, Iran, in its Reply, has attempted to enlarge its case by
bringing claims arising after the effective termination date of the Treaty. This it cannot do.
U.S. obligations under the Treaty of Amity ceased after termination. The United States
therefore had no obligations under the Treaty in respect of post-termination measures. As a
result, Iran cannot assert claims for breach of the Treaty based on legislative and executive
measures that the United States took after the termination of the Treaty,9 including the National
Defense Authorization Act for Fiscal Year 2020 (''NOAA 2020"), enacted on December 20,
2019.10 Likewise, judgments and decisions of U.S. courts that occurred after the termination
6 Iran has misconstrued the Preliminary Objections Judgment as it bears on the interpretation of individual Treaty
articles, including Articles III and IV, but those errors and inaccuracies will be identified in the chapters of the
Rejoinder dealing with claims under those articles.
7 Iran's Reply, ,i,r 1.21-1.23.
8 U.S. Counter-Memorial, ,r 4.9. See also Certain Iranian Assets (Islamic Republic of Iran v. United States of
America), Preliminary Objections, Hearing of October 8, 2018, 10am, p. 24, ,r 35 (Richard Visek); Press Statement
on Threats to American Personnel and Facilities in Iraq, Secretary of State Michael R. Pompeo (Sep. 28, 2018);
Remarks to the Media, Secretary of State Michael R. Pompeo (Oct. 3, 2018); Press Statement on U.S. Appearance
before the International Court of Justice, Secretary of State Michael R. Pompeo (Oct. 8, 2018); Edward Wong,
"Blaming Iran, U.S. Evacuates Consulate in Southern Iraq," N.Y. Times, Sep. 28, 2018 (U.S. Annex 427).
9 International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts,
with commentaries, Ch. III, Art. 13, U.N. Doc. A/CN.4/SER.A/2001/Add.l (Part 2) (2001) (U.S. Annex 254)
("An act of a State does not constitute a breach of an international obligation unless the State is bound by the
obligation in question at the time the act occurs.").
10 Iran's Reply, ,i,r 2.103-107.
6
of the Treaty cannot be the basis of a claim for breach of the Treaty, including the April 24,
2020 order in Bennett v. Islamic Republic of Iran directing the turnover of assets belonging to
Bank Melli, as well as subsequent developments in Peterson II, where there has been no order
to date directing the turnover of any Iranian assets. 11 Therefore, in addition to Iran's claims
failing on the merits with respect to these measures, they also fail because the measures postdate
the termination of the Treaty of Amity, when the United States was no longer bound by
its obligations.
2.3 The United States turns next to Iran's revised attachments, which form the backbone of
its case. Attachment 1 lists judgments obtained by plaintiffs holding Iran liable for its support
for acts of terrorism. Iran's claims in respect of these judgments were based on alleged
violations of its sovereign immunity. But the Court dismissed these types of claims in its
Preliminary Objections Judgment. 12 As the Court summarized its ruling:
[T]he Court finds that Iran's claims based on the alleged
violation of the sovereign immunities guaranteed by customary
international law do not relate to the interpretation or application
of the Treaty of Amity and, as a result, do not fall within the
scope of the compromissory clause in Article XXI, paragraph 2.
Thus, 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. 13
2.4 Iran argues in its Reply that the judgments listed in Attachment 1 "remain relevant"
because they are "a significant part of factual background to the U.S. measures of which Iran
complains."14 Specifically, Iran contends that the judgments are (i) relevant "as instances of
the blocking and seizure of Iran's assets in violation of the provisions of that Treaty" and (ii)
"relevant to the extent that they were solely issued against Iran but were enforced against
Iranian companies, denying their separate juridical status, in breach of Iran's rights under the
Treaty of Amity."15
2.5 As to Iran's first point, the issuance of a judgment against Iran does not itself result in
the blocking or seizure of assets. Rather, it is the efforts, if any, by plaintiffs to enforce their
judgments against Iranian assets-which are the subject of Iran's Attachment 2, discussed
11 As of May 7, 2021.
12 U.S. Counter-Memorial, ,r 2.7.
13 Preliminary Objections Judgment, ,r 80.
14 Iran's Reply, ,r 1.21.
15 Iran's Reply, ,r 1.21.
7
next-that may result in the attachment of those assets or in their turnover to plaintiffs.
Moreover, Iran's second point only serves to confirm that Iran's claims arise out of the manner
in which plaintiffs enforced the judgments, rather than the substance of the judgments or the
proceedings that produced them. The fact remains that Iran has made only immunity-related
claims with respect to the judgments listed in Attachment 1, precisely the claims over which
the Court previously denied jurisdiction. 16
2.6 Attachment 2, which lists enforcement proceedings initiated by plaintiffs holding
terrorism judgments against Iran, is relevant in part, but is also misleading. As noted above,
Iran has made particularized claims only with respect to a small fraction of the more than one
hundred proceedings listed on Attachment 2. Iran's particularized claims are 8 in number, as
follows:
# Case Caption Case Number Reply Reference
1 Peterson v. Islamic Republic of 10-cv-4518 ,r,r 2.84-96
Iran (Peterson I) (S.D.N.Y.)
2 Peterson v. Islamic Republic of 13-cv-9195 ,r,r 2.97-108
Iran (Peterson II) (S.D.N.Y.)
3 Weinstein v. Islamic Republic of 02-mc-00237 ,r,r 2.63-69
Iran (E.D.N.Y.)
4 Bennett v. Islamic Republic of 11-cv-05807 ,r,r 2. 70-78
Iran (N.D. Cal.)
5 Levin v. BankofNew York 09-cv-5900 ,r,r 2. 79-83
(S.D.N.Y.)
6 Heiser v. Islamic Republic of Iran 00-cv-2329 ,r,r 2.109-112, 2.117
(D.D.C.)
7 Heiser v. Bank of Baroda, New 11-cv-1602 il 2.114
York Branch (S.D.N.Y.)
8 Heiser v. Bank of Tokyo 11-cv-1601 il 2.115
Mitsubishi UFJ, New York Branch (S.D.N.Y.)
2. 7 It is these 8 claims that are relevant in these proceedings and only these 8 claims.
16 Iran concedes that "it does not rely on the cases in Attachment 1 in respect of its previous claim of sovereign
immunity, which was found by the Court to fall outside of its jurisdiction in its ruling of 13 February 2019 on
preliminary objections." Iran's Reply, ,r 1.21.
8
2.8 The vast majority of other entries in Attachment 2 address cases in which little or no
advancement of proceedings has occurred, let alone anything that could give rise to a claim for
breach of the Treaty. 17 Moreover, Iran has included cases that would appear to have nothing
to do with the breaches of the Treaty that it has alleged. For example, the very first entry in
Attachment 2 is a case that involves, as Iran concedes, "assets owned by Iran itself'18 rather
than the assets of an Iranian company. This case, Ministry of Defense and Support for Armed
Forces of the Islamic Republic of Iran v. Cubic Defense Systems, is not subject to Iran's
complaint about U.S. measures that permit terrorism judgments against Iran to be enforced
against the assets of Iranian companies. Iran has also included a case (Heiser v. Mashreqbank
PSC, No. 46) in which it has asserted that "Iranian funds" were turned over to plaintiffs but has
not identified any Iranian entity to which the funds allegedly belonged or even mentioned the
case in its Reply. Again, as these examples show, Iran's Attachment 2 is not an accurate
depiction of its claims in this case, which are, in reality, confined to the 8 proceedings identified
above.
2.9 In addition, as the United States demonstrates in Chapter 6, Iranian entities chose not
to appear in four of the 8 proceedings (the Levin case and the three Heiser cases) to contest the
turnover of their assets to plaintiffs, despite having notice of the proceedings and ample
opportunity to participate. These entities therefore failed to exhaust their local remedies and
Iran cannot pursue claims arising out of these four cases. Moreover, the Peterson II case
remains pending before the U.S. courts and, accordingly, there has likewise been no exhaustion.
As a result, Iran's claims are confined to at most three of the eight cases.
2.10 In any event, as the United States describes in Chapter 8 below, all 8 U.S. enforcement
proceedings that Iran has challenged were conducted in a reasonable, non-discriminatory
manner and, as detailed in Part III, do not give rise to claims for breach of the Treaty of Amity.
2.11 Attachment 3, which lists enforcement actions filed outside the United States by
plaintiffs holding U.S. court judgments against Iran, is irrelevant because decisions by foreign
courts in deciding whether to recognize and enforce U.S. court judgments are not actions
attributable to the United States and cannot therefore be the basis for claims against the United
17 See infra Chapter 6, Section C.
18 Iran's Reply, ,r 2.3.
9
States. 19 While Iran contends that plaintiffs' actions to enforce U.S. court judgments outside
the United States are "a direct, foreseeable, and intended result of the U.S. measures,"20 Iran
has not explained how this purported causal link could suffice to render Iran's claims justiciable
if, as the Court has already concluded, the only U.S. action in this chain of events-the issuance
of judgments against Iran-does not itself constitute a breach of the Treaty of Amity.
2.12 As regards Attachment 4, which lists pending liability proceedings against Iran and
Iranian State entities in U.S. courts, Iran effectively concedes that it has no direct connection
to any of its claims, explaining that it is relevant only "as a factual exhibit demonstrating the
extent to which the U.S. measures of which Iran complains remain a matter of real current
concern to Iran and to Iranian companies."21 Iran does not and cannot contest the fact that, as
the United States explained in the Counter-Memorial,22 any claims arising out of these actions,
even if they had resulted in a judgment prior to the termination of the Treaty of Amity, would
be based on an alleged violation of Iran's sovereign immunity and thus would not be actionable
under the Treaty.
2.13 In sum, Attachments 1, 3, and 4 are entirely irrelevant to this case, as is the vast majority
of Attachment 2. Iran's claims, as they relate to judicial proceedings, are limited to the 8
enforcement actions that are the subject of particularized claims in Iran's pleadings. Even as
to these actions, there has been no exhaustion of local remedies in five of the eight cases, and
Iran's claims regarding the Bennett and Peterson II cases must fail because, in the former case,
the order directing the turnover of assets to plaintiffs occurred after the termination of the
Treaty of Amity and, in the latter case, there has not yet been any such order.
2.14 Two consequences flow from Iran's overreach in the formulation of its case in its Reply.
First, the residual scope of Iran's case is far narrower than Iran contends, limited to the 8 cases
that are specifically addressed in Iran's Reply. It is these cases, and the legal and factual issues
to which they give rise, that are the focus of this Rejoinder. Second, the United States
respectfully contends that the Court cannot take Iran's case as it finds it. Iran is actively seeking
19 Critically, even iflran had viable claims with respect to the actions listed on Attachment 3, these claims remain
entirely unsubstantiated. Iran only mentions Attachment 3 in two paragraphs in its Reply and provides no further
evidence in support of its characterization of the Attachment 3 cases.
20 Iran's Reply, 1 1.22.
21 Iran's Reply, 1 1.23.
22 U.S. Counter-Memorial, 12.7.
10
to obscure the scope and the reality of the case that remains, following the Court's Preliminary
Objections Judgment.
11
CHAPTER 3: IRAN'S SPONSORSIDP OF TERRORISM
3.1 Iran sponsored terrorist acts directed against U.S. nationals and U.S. interests. As has
been made clear throughout these proceedings, the United States responded to these and other
attacks by adopting the measures that form the basis of Iran's claims, yet Iran now claims that
those measures were in breach of the Treaty of Amity. In addition to detailed submissions on
Iran's support for terrorism at the preliminary phase of the case, Iran's conduct was addressed
extensively in the U.S. Counter-Memorial. Notwithstanding its professed intention to address
these issues at the merits stage, Iran, in its Reply, fails to engage and respond in any meaningful
way to the allegations that form the basis of the U.S. measures that it seeks to impugn. The
essence oflran' s Reply on this issue is that the United States has not carried its burden of proof,
and that Iran does not intend to undertake a "detour" from the path of its case against the United
States.23
3 .2 Yet in fact, the Court expressly left open for the merits the question of whether the
egregious Iranian conduct invoked by the United States could provide a defense on the merits.24
In so doing, while observing that the United States had not argued that Iran's conduct
constituted a violation of the Treaty of Amity, the Court left open for the merits the relevance
and consequence of the linkage between the Iranian misconduct identified by the United States
and Iran's claims before the Court. It is against this background that the United States further
addresses the issue of Iran's sponsorship of terrorism-the issue that was the motivation for,
and is at the very core of, the measures adopted by the United States of which Iran complains.
3.3 Iran's conduct invoked by the United States is relevant to the U.S. unclean hands
submissions, to the U.S. submissions concerning Iran's abuse of rights under the Treaty, and
to the U.S. submissions on the application of the treatment standards in Articles III and IV,
among others, and the exceptions embodied in Article XX(l)(c) and (d) that preclude Iran's
claims with respect to Executive Order 13599.
Section A: Iran's Conduct Invoked by the United States Goes Directly to
Iran's Claims in These Proceedings
3.4 Iran, in a passing sentence, denies U.S. allegations of its involvement in terrorist
attacks. Crucially, however, Iran fails to engage with the issues and the evidence even as
regards such cases as the 1983 Marine Barracks bombing that gave rise to the Peterson
23 Iran's Reply, ,Ml A.I, A.11.
24 Preliminary Objections Judgment, ,i 123.
12
litigation, which is the central pivot of the case that Iran has brought to the Court. 25 Iran takes
the position that its conduct invoked by the United States is irrelevant to its claim. This
conduct, however, provides the essential context for the Court's consideration of whether the
U.S. measures at issue, designed to address sponsorship of terrorist activities by Iran and other
States, can possibly amount to a breach of the Treaty of Amity. Iran's failure to engage on this
point also shines a light on the true purpose of Iran's claim, which seeks to avoid the
consequences of compensatory damages judgments against Iran for unlawful acts that resulted
in the death and injury of U.S. nationals.
3.5 As discussed below, and as detailed in the U.S. Counter-Memorial,26 the evidence of
Iran's sponsorship of terrorism adduced by the United States includes, inter alia, admissions
by Iranian government officials and Iranian agents, U.S. court decisions and decisions by the
courts of Belgium, Germany, Azerbaijan, and others, and reports and findings by States and
international organizations, including the United Nations.
Section B: The Evidence of Iran's Conduct Advanced by the United
States Is Unchallenged
3.6 Iran's categorical denial of the conduct invoked by the United States rests on statements
such as that Hezbollah and Hamas "are not the proxies of Iran. •'27 In the face of the evidence
advanced by the United States, such bald assertions are not persuasive. Absent any
contradictory evidence from Iran, the evidence put forward by the United States rests
unchallenged.
3.7 Significantly, Iran's denials are contradicted by the admissions of its own officials and
agents confirming support for acts of terrorism. Iran's denial also stands in sharp contrast to
the evidence relied on by multiple courts, both in the United States and elsewhere, finding Iran
complicit in such acts of terrorism, as well as statements of multiple States and international
organizations recognizing the Iranian regime's malfeasance.28 The U.S. Counter-Memorial
addressed this in detail and, subject only to the brief observations that follow, the U.S.
accordingly refrains from repeating that review here.
25 See Iran's Reply, ,r A.I; see also U.S. Counter-Memorial, ,r,r 5.26-5.27; Peterson v. Islamic Republic of Iran,
264 F. Supp. 2d 46, 47-48 (D.D.C. 2003) (U.S. Annex 36).
26 U.S. Counter-Memorial, Chapter 5.
27 Iran's Reply, ,r,r A.I, A.6, A.I 1.
28 See generally U.S. Counter-Memorial, Chapter 5.
13
3.8 Two essential points, though, do warrant comment. The first concerns Iran's silence
on the heinous attacks for which it has been found responsible by a court and which are at the
very heart of these proceedings. The second is to note that Iran's reprehensible conduct
continues, with stark examples of which the Court should be aware even since the filing of the
U.S. Counter-Memorial.
1. Iran's Silence on the Attacks at the Heart of This Case for Which It Has Been
Found Responsible
3.9 Iran is conspicuously silent on the attack that is at the very heart of these proceedings,
the 1983 Beirut Marine barracks bombing, despite the clear evidence establishing its
responsibility.29 Following the attack, the Iranian Minister of the Islamic Revolutionary Guard
Corps ("IRGC") admitted that the explosive material used in the attack was provided by Iran, 30
and then-Speaker of the Majlis, and later President of Iran, Akbar Hashemi Rafsanjani,
acknowledged Iran's responsibility for the bombing.31 Further, statements made by the Iranian
government and Hezbollah reflect the "deep, strategic, and unbreakable" alliance between
them, including Hezbollah's public confirmation that it received assistance, training, and
weapons from Iran - estimated at $100 million or more annually in financing. 32 The United
States also detailed the evidence relied on by the U.S. court in Peterson, including testimony
of intercepted Iranian messages instructing the instigation of attacks against the United States
peacekeepers. It also included testimony of a member of the terrorist group that committed the
attack, stating that the Iranian ambassador instructed the attacks to proceed, as well as evidence
that Iran purchased the explosives used in the attack. 33
3 .10 Iran is silent on these statements of its own officials. It also has nothing to say about
the other evidence of this attack or the many further acts supported and directed by Iran,
detailed in prior U.S. submissions. This includes, for example, the confession of Manssor
Arbabsiar, who admitted to conspiring with Iranian military officials to cause the assassination
29 See id.~ 5.20-21, 5.26; Peterson, 264 F. Supp. 2d at 47-48 (U.S. Annex 36).
30 See U.S. Counter-Memorial, ,r 5.23 (citing "Speech of Our Brother Rafiqdoust at One of the Country's Factories
for Defense," Ressalat, July 20, 1987 (U.S. P.O. Annex 27)).
31 See id. ,r 5.24 (citing "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)).
32 Id. ,r,r 5.25, 11.13 (citing Finding that the Islamic Republic of Iran is a Jurisdiction of Primary Money
Laundering Concern, 76 Fed. Reg. 72756, 72757-72758 (Nov. 25, 2011) (U.S. P.O. Annex 152)).
33 Id. ,r 5.27 (citing Peterson, 264 F. Supp. 2d at 54-58 (U.S. Annex 36)).
14
of Saudi Arabia's ambassador to the United States.34 This evidence is particularly notable
given that Arbabsiar, following his arrest, made monitored phone calls with an Iranian IRGCQuds
Force member who confirmed that Arbabsiar should move forward with the assassination
attempt. The attempted assassination resulted in the Council of the League of Arab States
condemning "the criminal Iranian attempt," the EU issuing sanctions, and the UN General
Assembly calling on 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."35
3 .11 Iran also has nothing to say about the expert and eyewitness testimony U.S. courts heard
in connection with Iran's support for kidnappings like that of Terry Anderson, who testified to
seeing Iranian uniformed troops training Hezbollah recruits in Lebanon and to being
interviewed by an Iranian government agent while in captivity.36 Likewise, Iran fails to rebut
testimony and evidence cited by French, German, Kenyan, Azerbaijani, and other courts
concerning Iranian-sponsored assassinations and other criminal acts. 37 Among other
conclusions, those courts found that various attacks were "organized and executed by Iranian
government officials;"38 were not "a crime committed by lone gunmen," but were "organized
by the Iranian regime;"39 and that terrorists "had made agreements in advance with members
of the special services organizations of the Islamic Republic of Iran, doing criminal activities
with them."40
3.12 Where Iran does respond, in one isolated case, the "evidence" that it offers falls far
short. In connection with the 1996 Khobar Towers bombing, which killed 19 U.S. service
34 U.S. Preliminary Objections, 1 3.19 (citing 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)); Letter from the U.S. Dep't of Justice, U.S. Attorney, Southern District
New York, United States v. Manssor Arbabsiar, S 1 11 Cr 897 (JFK), Plea Agreement ofManssor Arbabsiar (Oct.
17, 2012) (U.S. P.O. Annex 62)).
35 See U.S. Counter-Memorial, 1 5.63.
36 See U.S. Counter-Memorial, 15.48; 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).
37 See U.S. Counter-Memorial, ,r,[ 5.3, 5.53, 5.55, 5.56.
38 Id. 15.53 (citing Elahi v. Islamic Republic of/ran, 124 F. Supp. 2d 97, 105 (D.D.C. 2000) (U.S. Annex 46)).
39 Id. 15.3 (citing Judgment of the Superior Court of Justice, Berlin, in the Mykonos trial [Kammergericht: Urteil
im 'Mykonos' - Prozess], at 188 (Apr. 10, 1997) (U.S. Annex 5)).
40 Id. 15.55 (citing Supreme Court of Azerbaijan Judgment, Case No. 63, at 18 (Apr. 14, 1997) (U.S. P.O. Annex
69)).
15
members, Iran cites a single newspaper article, dated from 1998,41 that fails to account for
subsequent statements and developments in the investigation and the U.S. court proceedings.42
The later U.S. criminal indictment described how elements of the Iranian government inspired,
supported, and supervised members of Saudi Hizballah in carrying out the attack, including by
providing Iranian-sponsored training inside Iran and directing the attackers' surveillance
activities.43 The U.S. court proceedings relied on testimony by both the Director of the U.S.
Federal Bureau of Investigation and its Deputy Counterterrorism Chief at the time of the attack,
who relayed information provided by participants in the attack. Those participants had
prepared surveillance reports for IRGC officials, and received financing, explosives, and
weapons from the Iranian government. 44
3.13 With the exception of the Khobar Towers bombing, Iran does not respond to any of the
other incidents the United States has highlighted as giving rise to the measures that are at the
core of Iran's claims. As discussed, Iran's unsubstantiated denial of its support for these
incidents asks the Court in effect to ignore not only the findings of the United States and its
courts, and the evidence they relied upon, but also the findings of courts of numerous other
countries, as well as the findings of international bodies and organizations like the Financial
Action Task Force ("FATF"), the International Atomic Energy Agency, and the United
Nations.
11. Iran's Egregious Conduct Continues
3 .14 The need for the United States to adopt measures in response to Iran's support for
terrorist acts is underlined by the fact that since filing its Application, Iran has continued to
engage in the same types of behavior that have defined its foreign policy for over four decades.
Iran's continuing misconduct provides important context to Iran's motivations in coming
before the Court. As this behavior makes clear, Iran does not seek redress for violation of its
rights, but rather to shield itself from the consequences of its actions.
41 Iran's Observations and Submissions, ,r A.10.
42 See Blais v. Islamic Republic of Iran, 459 F. Supp. 2d 40, 48 (D.D.C. 2006) (U.S. Annex 40); see also Criminal
Indictment, United States of America v. Al-Mughassil, Case No. 01-228-A (E.D. Va. June 1, 2001) (U.S. Annex
255).
43 Press Release, U.S. Dep't of Justice, Attorney General Statement (June 21, 2001) (U.S. Annex 256); Criminal
Indictment, United States of America v. Al-Mughassil, Case No. 01-228-A (E.D. Va. June 1, 2001) (U.S. Annex
255).
44 U.S. Counter-Memorial, ,r,r 5.37-5.38; see also Blais, 459 F. Supp. 2d at 48-49 (U.S. Annex 40).
16
3.15 Recently, Iran has once again reaffirmed its continuing alliance with Hezbollah.45 As
remarked upon by Iranian IRGC commander Amir-Ali Hajizadeh, Iran is responsible for
Hezbollah's missile capabilities.46 Hezbollah's leader Hassan Nasrallah also boasted that in
the last year alone Hezbollah had doubled its arsenal of precision-guided missiles.47
3.16 Significantly, during the pendency of this case, European law enforcement agencies
foiled a bomb attack on the July 2018 conference in Villepinte, France, outside Paris, of the
National Iranian Resistance Council, an Iranian political opposition group.48 The event was
attended by approximately 25,000 people, including multiple international political figures.49
Senior U.S. political figures and officials, as well as figures from other countries (including
Canada,50 the United Kingdom,51 Colombia,52 and elsewhere), attended the rally.53 Amongst
other notables were Louis J. Freeh, the former F.B.I. director who led the FBI investigation
into the Khobar Towers bombing, Bill Richardson, the former U.S. Ambassador to the United
Nations, Stephen Harper, the former prime minister of Canada, and Ingrid Betancourt, a
Colombian politician and former presidential candidate. 54
3 .17 The bomb plot was described in considerable detail by Belgian state security services
and prosecutors, and in the judgment of the Belgian court that convicted the plotters.
Assadollah Assadi, an Iranian diplomat accredited in Austria, directed the plot. 55 As detailed
by the Belgian authorities and prosecutors, Assadi carried the bomb in his diplomatic suitcase
45 Dale Gavlak, "Lebanese Bristle Over Iran Commander's Comments Regarding Hezbollah Missile Capabilities,"
Voice of America, Jan. 4, 2021 (U.S. Annex 257).
46 Id.
41 Id.
48 Corr. [Court of First Instance] Antwerp, Ct. ACS, Feb. 4, 2021, 20A003763, p. 24 (English translation) (U.S.
Annex 258).
49 Steven Erlanger, "Iranian Diplomat Is Convicted in Plot to Bomb Opposition Rally in France," N.Y. Times,
Feb. 4, 2021 (U.S. Annex 259).
50 Id.
51 Daniel Boffey, "Belgian Court Sentences Iranian Diplomat to 20 Years Over Bomb Plot," The Guardian, Feb.
4, 2021 (U.S. Annex 260).
52 See Steven Erlanger, "Iranian Diplomat Is Convicted in Plot to Bomb Opposition Rally in France," N.Y. Times,
Feb. 4, 2021 (U.S. Annex 259).
53 Samuel Petrequin, "Iranian diplomat convicted of planning attack on opposition," Associated Press, February
4, 2021 (U.S. Annex 261).
54 See Steven Erlanger, "Iranian Diplomat Is Convicted in Plot to Bomb Opposition Rally in France," N.Y. Times,
Feb. 4, 2021 (U.S. Annex 259).
55 Corr. [Court of First Instance] Antwerp, Ct. ACS, Feb. 4, 2021, 20A003763, pp. 8, 11, 33 (English translation)
(U.S. Annex 258).
17
when he boarded a commercial flight from Tehran to Vienna. 56 He then drove to Luxembourg
and handed over the explosive, a USB-drive, 18,000 Euros, and a new phone to an IranianBelgian
couple. 57 The couple-who were his co-defendants in the case-were apprehended
while driving toward Brussels, and law enforcement subsequently arrested Assadi while he was
transiting through Germany.58 Belgium's state security services have stated that intelligence
officials determined the planned bombing was a State-sanctioned operation approved by Iran. 59
Assadi himself, during interrogation, "warned that armed groups were thought to be ready to
undertake something in Belgium, in case he would be convicted."60
3 .18 Assadi' s trial, and that of the three other Iranians, commenced in Belgium in November
2020. Assadi refused to appear in court. The trial concluded in late January 2021, and on
February 4, 2021 the court found Assadi and the other three defendants guilty of the attempted
deadly bombing. 61 The court further held that Assadi and the other defendants were part of a
terrorist group located within Department 312 of Iran's intelligence service (MOIS), used
information they gathered through MOIS to organize the bombing, and intended to commit this
deadly attack. 62 The court additionally found that the bomb was "fine-tuned ... and tested
multiple times" in Iran. 63 Assadi was found to have "operated from an Iranian political cover"
and "did not perform any diplomatic activities," but instead "ran informants in Europe."64 As
the court recognized, "[ w ]orking under diplomatic status without in fact performing these
duties is only possible with the consensus of those responsible with the Iranian state."65 Due
to his role as the "operational brain behind the attack," and lack of conscience about the
56 See id. at 33; Steven Erlanger, "Iranian Diplomat Is Convicted in Plot to Bomb Opposition Rally in France,"
N.Y. Times, Feb. 4, 2021 (U.S. Annex 259).
57 Corr. [Court of First Instance] Antwerp, Ct. AC8, Feb. 4, 2021, 20A003763, p. 39 (English translation) (U.S.
Annex 258).
58 Id. at 27-28.
59 Id. at 43-45; see also Steven Erlanger, "Iranian Diplomat Is Convicted in Plot to Bomb Opposition Rally in
France," N.Y. Times, Feb. 4, 2021 (U.S. Annex 259).
6° Corr. [Court of First Instance] Antwerp, Ct. AC8, Feb. 4, 2021, 20A003763, p. 32 (English translation) (U.S.
Annex 258).
61 Id. at 45-46.
62 Id. at 44-45.
63 Id. at 33.
64 Id. at 44.
65 Id.
18
prospect of committing fatalities, Assadi was sentenced to twenty years in prison, the heaviest
sentence of all the defendants. 66
3.19 As in the present case, Iran did not attempt to counter the evidence of its involvement
in the plot before the Belgian court, but instead sought to deflect responsibility by asserting
Assadi's diplomatic immunity. The Belgian court rejected that defense on the basis that Assadi
was arrested in Germany when traveling outside his alleged diplomatic duties, and not in
Austria, the only country in which he enjoyed such status.67 Predictably, and consistent with
its response to other criminal proceedings in which its officials and agents have been found
responsible for acts of terrorism, Iran has refused to recognize the Belgian court's verdict.
3.20 Other criminal cases continue to catalogue Iran's practices. In November 2019, in a
case with disturbing implications in light of the 2018 bomb plot in Europe, two men pled guilty
in U.S. court to charges arising from their conducting surveillance activities on behalf of Iran,
including on Iranian dissidents in the United States. 68 In the same month, in Sweden,
authorities charged a man with spying on dissident communities and passing the information
to Iranian security services.69 Seven months later, a Danish court sentenced a Norwegian
citizen for spying for an Iranian intelligence service and complicity in a suspected plot to kill
an Iranian Arab opposition figure in Denmark. 70
3.21 Iran's execution of journalist Ruhollah Zam in December 2020 represents a further
reminder of how the Iranian regime operates. Iranian agents kidnapped Zam from Iraq, after
he was lured there by a prospective meeting with Grand Ayatollah Ali al-Sistani, an Iraqi cleric
with strong ties to Iran and known as a rival of Khomeini, in order to discuss financial support
for a television channel. 71 Once Zam was in Iran, he was convicted of "corruption on earth"
and sentenced to death.72 A subsequent statement released by the German Federal Foreign
Office provided that: "The Federal Government is horrified about the execution of the blogger
Ruhollah Zam carried out today in Iran . . . . We are shocked by the circumstances surrounding
66 Id. at 48, 57.
67 Id. at 9-11.
68 Press Release, U.S. Dep't of Justice, Two Individuals Plead Guilty for Working on Behalf of Iran (Nov. 6,
2019) (U.S. Annex 262).
69 "Sweden Charges Man with Spying on Ahwazi Community for Iran," Reuters, Nov. 6, 2019 (U.S. Annex 263).
70 "Norwegian Found Guilty of Spying for Iran in Denmark," Reuters, June 26, 2020 (U.S. Annex 264).
71 Elian Peltier, "Iran Issues Death Sentence for Opposition Journalist," N.Y. Times, June 30, 2020 (U.S. Annex
265).
72 Id.
19
the conviction, particularly by the preceding kidnapping from abroad."73 France, the country
in which Zam held refugee status, released a statement describing his execution as "a barbaric
and unacceptable act that is contrary to Iran's international commitments."74 The EU released
a statement stating that it "condemns this act in the strongest terms."75 Special Rapporteurs
with the UN Office of the High Commissioner for Human Rights described Iran's actions as
"a serious violation oflran' s obligations under the International Covenant on Civil and Political
Rights. "76
3.22 Iran also remains on the FATF list of High Risk Jurisdictions Subject to a Call for
Action. This is particularly noteworthy as, at oral argument, Iran responded to U.S. charges,
including that it provided financial support to terrorist groups and activities, by asserting that
its parliament "has voted for Iran to become a party to the United Nations Convention for the
Suppression of the Financing of Terrorism."77 Almost two years later, however, Iran has yet
to sign or ratify the Convention in line with Iran's FATF action plan to address strategic
deficiencies in its Anti-Money Laundering/Countering the Financing of Terrorism
("AML/CFT") system. In February 2020, FATF determined that "given Iran's failure to enact
the Palermo and Terrorist Financing Conventions in line with the FATF Standards, the FATF
fully lifts the suspension of counter-measures and calls on its members and urges all
jurisdictions to apply effective counter-measures."78 As recently as October 2020, FATF
released a statement about ''what is often externally referred to as the 'black list,"' calling on
"all members and urg[ing] all jurisdictions to apply enhanced due diligence, and in the most
serious cases, countries are called upon to apply counter-measures to protect the international
73 Press Release, Federal Foreign Office of Germany, Federal Foreign Office on the Execution of the Blogger
Ruhollah Zam (Dec. 12, 2020) (U.S. Annex 266).
74 Statement by the Ministry for Europe and Foreign Affairs Spokesperson, French Embassy in London, Iran -
Execution ofRuhollah Zam (Dec. 12, 2020) (U.S. Annex 267).
75 Press Statement, European External Action Service, Iran: Statement by the Spokesperson on the execution of
Mr. Ruhollah Zam (Dec. 12, 2020) (U.S. Annex 268).
76 Statement, U.N. Office of the High Commissioner for Human Rights, Iran: UN Experts condemn execution of
Ruhollah Zam (Dec. 14, 2020) (U.S. Annex 269).
77 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Hearing
of October 12, 2018, 3pm, pp. 38-39, 111 (Mohsen Mohebi).
78 Financial Action Task Force, High-Risk Jurisdictions Subject to a Call for Action - 21 February 2020 (Feb. 21,
2020) (U.S. Annex 270).
20
financial system from the ongoing money laundering, terrorist financing, and proliferation
financing (ML/TF/PF) risks emanating from the [listed countries]," including Iran.79
3 .23 Iran has persistently failed to provide any meaningful response to the allegations and
evidence of Iran's sponsorship of terrorist attacks, both against the United States and other
States, presented in the Counter-Memorial. In so doing, Iran continues to ignore that its acts
form the foundation for the United States' adoption of responsive measures. The Court should
accordingly understand Iran's silence for what it is-an admission that Iran cannot rebut the
charges the United States has levied against it.
Section C: Concluding Observations
3.24 Iran's conduct detailed in the preceding paragraphs, as well as in the U.S. CounterMemorial
and other pleadings in this case, are directly relevant to the proceedings before the
Court. The United States does not need to assert that this conduct constitutes a breach of the
Treaty of Amity for it to be material to the Court's consideration oflran's claims.
3 .25 It is inescapable that the relief that Iran seeks in this case is relief from measures that
the United States enacted to address Iran's conduct as here described. There is no avoiding
that the U.S. measures in issue were enacted to address conduct of State sponsors of terrorism,
including Iran, and to provide recourse against Iran and other such States for victims of terrorist
attacks. There should be no doubt about the materiality of Iran's conduct both to the
interpretation and application of the Treaty of Amity, in the face of a claim by Iran for relief
from the consequences of its egregious conduct, and to Iran's entitlement to pursue its claims
more generally.
79 Financial Action Task Force, High-Risk Jurisdictions Subject to a Call for Action - 23 October 2020 (Oct. 23,
2020) (U.S. Annex 271).
21
PART II: PRELIMINARY CONTENTIONS
In Part II, the United States responds to arguments in Iran's Reply concerning the four defenses,
initially articulated in the U.S. Counter-Memorial, that require dismissal of some or all of Iran's
claims. Chapter 4 builds on the discussion in Chapter 3 of the evidence regarding Iran's role
in numerous terrorist attacks on U.S. nationals, as well as Iran's failure to offer a substantive
response to that evidence in its Reply, to establish that Iran comes to the Court with unclean
hands and that, as a result, its claims must be rejected. Chapter 5 highlights Iran's failure, in
its Reply, to provide any additional evidence that would support Bank Markazi's classification
as a "company" under the Treaty of Amity. Chapter 6 shows that Iran's efforts to avoid the
application of the requirement to exhaust local remedies are futile and that there has been no
exhaustion in many cases. Finally, Chapter 7 addresses Iran's flawed interpretation of Article
XX(l)(c) and (d), both of which squarely apply to Executive Order 13599.
Section A:
CHAPTER 4: IRAN COMES TO THE COURT WITH UNCLEAN HANDS
Overview of the U.S. Case
4.1 In Chapter 8 of the U.S. Counter-Memorial, the United States presented its unclean
hands defense in response to Iran's claims. The essence of that defense is that Iran's own
egregious conduct lies at the heart of its claims. Iran's claims improperly target the very
measures that the United States took to mitigate the consequences of Iran's egregious conduct.
As set out in Chapter 1 and 3 above, the central Peterson litigation was one of the means by
which victims obtained redress from 1983 U.S. Marine barracks bombing, a terrorist act for
which Iran bears responsibility. Iran now endeavors to avoid paying compensation to those
victims by an attempt to hold the United States accountable for breaches of the Treaty of Amity.
There is thus an undeniable nexus between the subject-matter of Iran's claims and its conduct,
with the effect that Iran should be barred from seeking relief from this Court pursuant to the
doctrine of unclean hands.
4.2 As set out in the Counter-Memorial,80 and developed in Chapter 3 above, Iran has
sponsored a comprehensive program of terrorist acts against U.S. nationals from 1983 until the
present day. This is a fact that Iran fails to address in any credible manner in its Reply. 81
Instead, Iran seeks to marginalize its legal relevance by claiming that a direct treaty-nexus
80 See U.S. Counter-Memorial, Chapter 5.
81 See Iran's Reply, Annex A.
22
between its conduct and its claims is required by the Preliminary Objections Judgment.
However, as is addressed further below, there is no such requirement. Further, all of the
relevant criteria that have emerged from both case-law and commentary are met in this case.
In those circumstances, Iran is unable to avoid the Court's consideration oflran's misconduct
and its legal effects.
4.3 The United States deploys the doctrine of unclean hands as a shield, not a sword. It uses
the doctrine defensively, rather than a basis on which to advance a claim. This is necessary
because Iran deploys the Treaty of Amity as claimant, seeking to obtain redress for U.S.
measures directed at addressing and assuaging the effects of Iran's campaign of Statesponsored
terrorism. It seeks the Court's assistance to evade the consequences of its own
misconduct. For that reason, it is essential that the Court recognize the reality of the case before
it and reject Iran's claims in respect of the U.S. measures responsive to them. The doctrine of
unclean hands provides an avenue by which the Court can secure this just and proper outcome.
4.4 Against that background, this Chapter proceeds as follows. Section B addresses Iran's
various defenses to the application of the unclean hands doctrine. Section C summarizes the
application of the doctrine to the facts of this case.
Section B: Iran's Defenses to the Unclean Hands Doctrine Are Meritless
4.5 Iran's attack on the U.S. invocation of unclean hands ignores the facts entirely and
misstates the U.S. position. The United States first addresses Iran's core contentions
(subsections i. to iv.), before dealing with several subsidiary points that Iran has advanced
(subsection v.).
1. Iran Misreads the Preliminary Objections Judgment
4.6 Iran claims that the United States "overlooks the crucial fact"82 that unclean hands was
decided by the Court in the Preliminary Objections Judgment. As Iran reads the Judgment, the
Court has already made a "determinative finding in dismissing the United States' defense based
on the clean hands doctrine ... on the merits."83
4. 7 Iran is wrong to read the Judgment as it does. The United States accepts, of course, that
the Court dismissed the U.S. preliminary objection based on unclean hands at paragraph 122
of that Judgment. However, the Court's finding was expressly without prejudice to the position
82 Iran's Reply, ,r 11.4.
83 Iran's Reply, ,r 11.6.
23
on the merits. The Court made this clear in the paragraph immediately following that on which
Iran relies. At paragraph 123, the Court stated: "Such a conclusion is however without
prejudice to the question whether the allegations made by the United States . . . could,
eventually, provide a defence on the merits." It is precisely because of that clear indication that
the United States advances a defense on the merits at this stage of the proceedings.84 Nothing
in the Court's Preliminary Objections Judgment limits its ability to do so.85
11. Iran Mischaracterizes the Nature of the Nexus That Is Required for Invocation
of the Unclean Hands Doctrine and Would Have the Court Apply Additional
Criteria That Are Not Part of the Doctrine
4.8 As noted above, one of Iran's core contentions is that the doctrine requires the United
States to allege a breach of the Treaty of Amity, which it has failed to plead. It relies
specifically on the Court's statement at paragraph 122 of the Preliminary Objections Judgment
(since reiterated in the Jadhav case86):
The Court begins by noting that the United States has not argued
that Iran, through its alleged conduct, has violated the Treaty of
Amity, upon which its Application is based. Without having to
take a position on the "clean hands" doctrine, the Court considers
that, even if it were shown that the Applicant's conduct was not
beyond reproach, this would not be sufficient per se to uphold
the objection to admissibility raised by the Respondent on the
basis of the "clean hands" doctrine (Avena and Other Mexican
Nationals (Mexico v. United States of America), Judgment, I.C.J.
Reports 2004 (I), p. 38, para. 47; Maritime Delimitation in the
Indian Ocean (Somalia v. Kenya), Preliminary Objections,
Judgment, I.C.J. Reports 2017, p. 52, para. 142).
4.9 The Court was not suggesting that a direct treaty-nexus is a necessary requirement. Nor
could it have done so. There is no reason of logic or principle why that would be necessary in
circumstances where the doctrine is advanced as a defense on the merits. Equity does not
require such a nexus.87 Nor should the Court. Instead, when the doctrine is employed as a
84 See U.S. Counter-Memorial, ,r 8.4.
85 It is also notable that at the earliest opportunity the United States expressly reserved its right to raise the doctrine
of unclean hands as a defense on the merits; see U.S. Preliminary Objections, ,r 6.38, n.251.
86 Jadhav Case (India v. Pakistan), 2019 I.C.J. 418,435, ,r 61. See also id., Declaration of Judge lwasawa, 520, ,r
3.
87 See SNELL'S EQUITY ,r 5-010 (33rd ed. 2018) (U.S. Annex 84). See, more broadly, the nexus expressed in
Frierdich & Co, Opinion of the Umpire, 10 R.IA.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). Cf
Jadhav Case, 2019 I.C.J., Declaration ofJudge Iwasawa 520, ,r 3 (where a declaration of inadmissibility is sought
in a case involving a compromissory clause).
24
shield, a subject-matter nexus is all that must be proved. 88 This reflects a principled approach
to the question of causation, consistent with the doctrine's underlying considerations of equity
and good faith.
4.10 On any reasonable view, there is a manifest subject-matter nexus in this case. As
explained in the U.S. Counter-Memorial,89 Iran's acts are directly engaged by the case that Iran
brings to the Court. That case concerns U.S. measures directly responsive to those wrongful
acts, as explained further in Section C below. Indeed, Iran's entire case seeks to press the
alleged Treaty breaches into action to assist it in evading its responsibility for the very same
conduct that led to the U.S. measures of which it complains.
4.11 Iran further contends that there are other, strict criteria governing the application of the
unclean hands doctrine where no treaty breach is alleged, namely that (i) the breach must
concern a continuing violation; (ii) the remedy must seek protection against future violations
(i.e., specific performance, rather than damages); and (iii) there must be a relationship of
reciprocity between the States' obligations.90 In this connection, Iran purports to apply the
criteria set down in Judge Hudson's individual opinion in the Diversion from the Water Meuse
case, as summarized by the Niko Resources tribunal.
4.12 As set out in the Counter-Memorial,91 the criteria that Judge Hudson identifies have no
application to this case. They apply to the specific maxim of exceptio non adimpleti contractus
(the exception of non-performance of a contract, codified in Article 60 of the Vienna
Convention on the Law of Treaties). 92 Iran has given no answer to this point but simply ignored
the U.S. submissions entirely.
iii. Iran's Criticism of the U.S. Case-Law Analysis Is Misplaced
4.13 Further, in an attempt to undermine the credibility of the U.S. position, Iran generally
attacks the U.S. case-law analysis. It describes that analysis as "distorted," contending that the
U.S. has provided ''truncated quotes of the selected decisions" (noticeably preferring not to
offer particulars of any claimed truncations). Iran then describes the resulting U.S. conclusion
as follows:" ... the Respondent comes to the conclusion that although many states have relied
88 See U.S. Counter-Memorial, 18.13; see also 18.8.
89 See U.S. Counter-Memorial,~ 8.16-8.23.
90 See Iran's Reply, 1111.27-11.28, l l.30(b).
91 See U.S. Counter-Memorial, 18.14.
92 See id.
25
on the unclean hands doctrine, this doctrine 'has never [been] rejected [ ... ] as a matter of
principle' .... "93 One is left with the impression that the United States has fitted its analysis
of the case-law to meet this broad proposition of fact.
4.14 This mischaracterizes the U.S. position. In its Counter-Memorial, the United States
expressly accepted that doubt has been expressed about the doctrine's status and scope. 94
Further, the United States acknowledged that the Court has never applied the doctrine. 95 It did
not put the point any more widely than that, despite the impression that Iran tries to convey.
As the U.S. Counter-Memorial states: "While the Court has not previously upheld a defense
on this basis, it has also never rejected the doctrine as a matter of principle."96 In its efforts to
undermine the U.S. position, Iran has misquoted the U.S. case.
4.15 Contrary to the impression given by Iran, the United States has been clear in its analysis
and presentation of the authorities on which it relies. The United States respectfully invites the
Court to review its submissions as advanced, rather than as asserted by Iran.
1v. The Court Should Disregard Iran's Attempt to Downplay the Significance of
the Many Invocations by States of the Unclean Hands Doctrine. Including
Iran's Own Unqualified Endorsement
4.16 Iran does not take issue with the fact that the doctrine of unclean hands has had-as
Iran puts it-"many invocations by states."97 Iran's case, rather, proceeds on the basis that
"[i]ntemational courts and tribunals have not applied the clean hands doctrine."98 In fact, Iran
goes so far as to say "there is no so-called clean hands doctrine"99 that is capable of application.
4.17 Iran's position is at odds with its own unqualified endorsement of the doctrine in
pleadings before both the Iran-U.S. Claims Tribunal100 and before the Court. 101 Of particular
93 Iran's Reply, ,r 11.9.
94 See U.S. Counter-Memorial, ,r 8.5.
95 See id., ,r,r 8.5 and 8.9.
96 Id., ,r 8.9 (emphasis added).
97 Iran's Reply, at231 (subheading A).
98 Id.
99 Iran's Reply, ,r 11.13.
100 See Aryeh v. Iran, Case Nos. 842, 843 & 844, Respondent's Hearing Memorial and Written Evidence, Vol. III,
Exhibit C (Mar. 23, 1993) (Doc. 80) (IRAN-U.S. CL. TRIB.) (U.S. P.O. Annex 187).
101 See Iran's pleadings before this Court in the Oil Platforms case, in which Iran itself appeared to invoke the
unclean hands doctrine in response to the United States' counter-claim. Oil Platforms (Islamic Republic of Iran
v. United States of America), Further Response to the United States' Counter-Claim, ,r,r 7.41-7.43 (Sep. 24, 2001).
Iran also appeared to accept the relevance of this doctrine to the merits. See Oil Platforms (Iran v. United States),
26
note is Iran's reliance on Professor Edwin Borchard's observation-also relied upon by the
United States in these proceedings 102-that "[i]t is an established maxim of all laws, municipal
and international, that no one can profit by his own wrong, and that a plaintiff or a claimant
must come into court with clean hands."103 Equally revealing are Iran's concluding remarks in
the case of Aryeh v. Iran, which contain the following passage:
The claim should be dismissed under the universal, equitable
doctrine of 'clean hands'. The doctrine, which is supported by a
vast and diverse body of international legal literature, State
practice and international case-law, states that anybody wishing
to bring a claim before an international court, must have acted
properly and correctly prior to the claim, particularly with
respect to the laws of the respondent State. Equity demands that
one who has behaved illegally in a particular State not then be
allowed to sit in judgment of that State's allegedly illegal
actions. 104
4.18 The fact that the Aryeh case-like the others in which Iran invoked the clean hands
doctrine105-arose in a different factual context is plainly no answer to Iran's volte-face on the
law.106 Its endorsement of the doctrine was general and unqualified.
4.19 Putting its own invocation of the doctrine to one side, the significance of States'
repeated reliance on the doctrine is that it demonstrates the doctrine's recognition as a general
principle of law applicable on the international plane under Article 38(1)(c) of the Court's
2003 I.C.J. 161, 179, ,r 28 (Nov. 6) ("According to Iran, as far as State-to-State claims are concerned, such
principle may have legal significance only at the merits stage, and only at the stage of quantification of damages,
but does not deprive a State of locus standi injudicio.")
102 See U.S. Preliminary Objections, ,r 6.33, citing EDWIN BORCHARD, DIPLOMATIC PROTECTION OF CITIZENS
ABROAD 713 (1915).
103 Aryeh v. Iran, Respondent's Hearing Memorial and Written Evidence, Vol. III, Exhibit C, at 34 (U.S. P.O.
Annex 187).
104 Id. at 44 ( emphasis added).
105 Mohtadi v. Iran, Case No. 271, Award No. 573-271-3 (Dec. 2, 1996), 32 IRAN-U.S. CL. TRIB. REP. 124, ,r 34
(U.S. P.O. Annex 188); Karubian v. Iran, Case No. 419, Award No. 569-419-2 (Mar. 6, 1996), 32 IRAN-U.S. CL.
TRIB. REP. 3, ,r 148 (U.S. P.O. Annex 189). See also Oil Platforms (Islamic Republic of Iran v. United States of
America), Further Response to the United States' Counter-Claim, ff 7.41-7.43 (Sep. 24, 2001).
106 Iran's Reply, ,r 11.15. Nor should the Court have the impression that the Tribunal rejected the existence of the
doctrine in any of these three cases. In Mohtadi v. Iran at ,r 92, the Tribunal found it ''unnecessary to consider the
issue." In Karubian v. Iran at ,r 161, the Tribunal barred the claimant's claim on the basis of the doctrine of abuse
of rights. In Aryeh v. Iran, the Tribunal declined to apply the unclean hands doctrine on the basis that there was
"no evidence that would support the Respondent's contentions that the claim should be barred on the basis of the
theories of clean hands, estoppel, misrepresentation, good faith or state responsibility." Case No. 266, Award No.
583-266-3 (Sep. 25, 1997), 33 IRAN-U.S. CL. TRIB. REP. 368, 386-7,r 62 (U.S. Annex 274).
27
Statute. As indicated in the Counter-Memorial, that practice is significant, and has since
developed further still. 107
v. Iran's Other Points Are Equally Unpersuasive
4.20 In addition to its core contentions addressed above, Iran's Reply makes five additional
points in an effort to resist the application of the unclean hands doctrine, which the United
States deals with below. None have merit.
4.21 First, Iran contends that the doctrine cannot be treated as a general principle of law
within the meaning of Article 38(1)(c) as the domestic jurisdictions that the United States
identifies are "significantly limited to common law countries."108 This submission overlooks
Iran's previous acceptance before this Court that "[t]he concept of 'clean hands' finds its
origins in Roman law, as an equitable doctrine, in English law and also in Islamic law."109 It
also entirely ignores the United States' reference to the manifestation of the doctrine in civil
law systems.110 Indeed, the breadth of doctrine is such that Judge Weeramantry, Vice-President
of the Court, described the doctrine of unclean hands as "a principle of equity and judicial
107 At least 25 States have relied on the doctrine in international disputes. As noted in the U.S. Counter-Memorial
at n.187, at least 13 States (Australia, Belgium, Canada, Germany, Greece, Israel, Kenya, the Netherlands,
Nicaragua, Pakistan, Portugal, the United Kingdom, and, of course, the United States) have invoked an unclean
hands-based objection before the Court. As set out in n.193 of the U.S. Counter-Memorial, 8 States-Bangladesh,
Bolivia, Ecuador, Indonesia, the Philippines, Russia and Venezuela-have invoked the doctrine in investor-State
cases. Since the Counter-Memorial was prepared, it has also been invoked by a further 5 States: the Lao People's
Democratic Republic in Sanum Investments v. Lao People's Democratic Republic, PCA Case No. 2013-13, Award
,r,r 99 and 104 (Aug. 6, 2019) (U.S. Annex 275); Republic of Colombia in Glencore International AG v. Republic
of Colombia, ICSID Case No. ARB/16/6, Award ,r 566 (Aug. 27, 2019) (U.S. Annex 276); Poland in GPF v.
Republic of Poland, SCC Arbitration V 2014/168, Final Award ,r 197 (Apr. 29, 2020) (U.S. Annex 277);
Mozambique in Patel Engineering v. Mozambique, PCA Case No. 2020-21, Respondent's Motion for Bifurcation,
at 5 (Nov. 20, 2020) (U.S. Annex 278); Spain in Landesbank Baden-Wiirttemberg v. Kingdom of Spain, ICSID
Case No. ARB/15/45, Decision on the Second Proposal to Disqualify all Members of the Tribunal ,r 40 (Dec. 15,
2020) (U.S. Annex 279).
108 Iran's Reply, ,r 11.18.
109 Oil Platforms (Islamic Republic of Iran v. United States of America), Reply and Defence to Counter-Claim, ,r
8.6 (Mar. 10, 1999). As explained in the U.S. Counter-Memorial, ,r 8.7, the doctrine also has its origins in Chinese
customary law.
110 See U.S. Counter-Memorial, ,r 8.7. Reference is made inn.184 to Switzerland: Swiss Civil Code of Obligations
of Mar. 30, 1911 (as at Apr. 1, 2017), Article 66 (U.S. Annex 85) and Germany: Biirgerliches Gesetzbuch (BGB)
(German Civil Code)§ 817 (U.S. Annex 86). See also Czech Republic: The Civil Code of the Czech Republic,
Feb. 3, 2012, §6(2) (U.S. Annex 280); Quebec: Bertout v. Saffran (2019) QCCS 4367, ,r 52 (Oct. 22) (Quebec
Superior Court) (U.S. Annex 281); U.S. Counter-Memorial, ,r 18.4, n.537.
28
procedure, well recognized in all legal systems .... "111 In any event, a principle does not
require universal application in order to be recognized under Article 38(l)(c).112
4.22 Second, Iran attempts to marginalize the seminal Mixed Claim Commission decisions
on which the United States relies (namely Frierdich & Co and Good Return and the Medea).
It observes that equity was the "exclusive basis" of both commissions, 113 and "is not a source
of public intemational law."114 If Iran's point is that these decisions do not apply international
law, but were made ex aequo et bono, that is wrong.115 In any event, Iran overlooks the fact
that equity itself may be a material source of law. 116
ni Legality of Use of Force (Serbia and Montenegro v. Belgium), 1999 I.C.J. 124 (Provisional Measures Order of
June 2), 184 (Dissenting Op. of Judge Weeramantry, Vice-President of the Court) (emphasis added).
112 M. CHERIF BASSIOUNI, "A Functional Approach to General Principles oflnternational Law," 11 MICH. J. INT'L
L. 768, 788-789 (1990) (U.S. Annex 282).
113 Iran's Reply, ,r 11.10, n.826. In the footnote, Iran also observes in passing that the cases are quoted ''very
partially" and are in fact "much less coinciding with the U.S. thesis than it alleges." This unparticularized criticism
is neither helpful nor accurate.
n4 Iran's Reply, ,r 11.10.
ns Frierdich & Co. was a decision of the French-Venezuelan Mixed Claims Commission. That Commission was
governed by the Protocol between Venezuela and France signed on February 27, 1903. This provided in Article
1 that "The Commissioners, or in case of their disagreement, the umpire, shall decide all claims upon a basis of
absolute equity without regard to objections of a technical nature, or of the provisions of local legislation." Vol.
X R.LA.A 3 (U.S. Annex 283). Umpire Plumley explained in the Aroa Mines Case (before the British-Venezuelan
Commission, governed by a materially identical Protocol), "[t]he phrase, 'absolute equity', used in the protocols,
the umpire understands and interprets to mean equity unrestrained by any artificial rules in its application to the
given case. Since this is an international tribunal established by the agreement of nations, there can be no other
law, in the opinion of the umpire, for its government than the law of nations; and it is, indeed, scarcely necessary
to say that the protocols are to be interpreted and this tribunal governed by that law, for there is no other; and that
justice and equity are to be invoked and are to be paramount is not in conflict with this position, for international
law is assumed to conform to justice and to be inspired by the principles of equity." Aroa Mines (Limited) Case
- Supplementary Claim, Vol. IX R.LA.A 402, 444 (1903) (U.S. Annex 284). Good Return and the Medea was a
decision of the Ecuadorian-United States Claims Commission made under the convention between the United
States and Ecuador on January 18, 1862. Article 1 of the convention does not refer to equity but states that
commissioners "shall make solemn oath that they will carefully examine, and impartially decide, according to
justice, and in compliance with the provisions of this Convention all Claims .... " (U.S. Annex 285). The
commissioners considered themselves bound to decide questions submitted to them "according to law and justice."
Good Return and the Medea, Opinion of the Commissioner, Mr. Hassaurek, 29 R.LA.A. 99, 102 (Aug. 8, 1865)
(U.S. Annex 98). It is also notable that this decision is cited by Professor Bin Cheng without noting the point of
distinction sought to be drawn by Iran. See BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY
INTERNATIONAL COURTS AND TRIBUNALS 156-157 (1953) (U.S. Annex 286).
ll6 See Diversion of Water from the Meuse (Netherlands v. Belgium), 1937 P.C.I.J. (ser. A/B) No. 70, at 76
(Individual Opinion of Judge Hudson) (Jun. 28) ("What are widely known as principles of equity have long been
considered to constitute a part of international law, and as such they have often been applied by international
tribunals .... A sharp division between law and equity, such as prevails in the administration of justice in some
States, should find no place in international jurisprudence."); see also id. at 77 ("It must be concluded, therefore,
that under Article 38 of the Statute, if not independently of that Article, the Court has some freedom to consider
principles of equity as part of the international law which it must apply."). Further and in any event, unclean
hands is a part of the "legal concept of equity," which the Court has recognized as a general principle. Continental
Shelf(Tunisia/LibyanArabJamahiriya), 1982 I.C.J. 18, 60, i171 (Feb. 24) ("the legal concept of equity is a general
29
4.23 Third, Iran mischaracterizes the United States' use of investment treaty awards in its
Counter-Memorial. After reading Iran's Reply, the Court would be forgiven for thinking that
a core plank of the U.S. case on unclean hands was a collection of investment treaty awards.
Iran explains that the U.S. "relies on various other investment cases in which States have raised
a clean hands objection."117 It ignores the fact that these awards are expressly cited as examples
of States' reliance on the doctrine, not as evidence of a broader proposition. 118 Regardless, to
the extent that the Court finds these awards of assistance, it should bear in mind that the points
of detail that Iran advances in respect of those cases are neither completely nor accurately
stated. 119 Nor do the awards on which Iran positively relies assist the Court. 120
principle directly applicable as law"). See also Frontier Dispute (Burkina Faso/Republic of Mali), 1986, I.C.J.
554, 633, ,r 149 (Dec. 22).
117 See Iran's Reply, ,r 11.16.
118 See U.S. Counter-Memorial, n.193 ("The doctrine has been expressly invoked by at least eight States ... ,"
followed by a list of investment decisions with the relevant State identified).
119 First, Iran refers to the award in Al-Warraq v. Indonesia, which the United States cited as an example of State
practice, explaining that the tribunal "based its use of the clean hands doctrine not on a general principle of law
but on the express text of Article 9 of the OIC Agreement." Iran's Reply, ,r 11.16. Iran omits to mention that the
doctrine of clean hands was an additional reason for the Tribunal's decision on inadmissibility. See Hesham
Talaat M Al-Warraq v. Republic of Indonesia, UNCITRAL, Final Award ,r 647 (Dec. 15, 2014) (U.S. Annex 91).
For this reasoning, Professor Patrick Dumberry has described the South American Silver v. Bolivia tribunal's
summary, quoted by Iran in its Reply at ,r 11.16, to be "misleading." PATRICK DUMBERRY, "The Clean Hands
Doctrine as a General Principle of International Law," 21 JOURNAL OF WORLD INVESTMENT AND TRADE 489, 515
(2020) (U.S. Annex 288). Second, Iran cites the case of Copper Mesa v. Ecuador, contending that it "does not
help the United States." Iran's Reply, ,r 11.17. In Iran's submission, "the defendant had invoked the clean hands
doctrine, but the tribunal did not address the argument .... " Id. In fact, the Tribunal identified various defects
in the way in which the argument had been put, before concluding that it "prefers to take into account the
Claimant's case not in the form of the doctrine of unclean hands as such, but rather under analogous doctrines of
causation and contributory fault." Copper Mesa Mining Corporation v. Republic of Ecuador, PCA Case No. 2012-
2, Award ,r,r 5.62-5.65 (Mar. 15, 2016) (U.S. Annex 92).
120 Iran relies on the reasoning of two investment treaty decisions for the proposition that the doctrine does not
apply in the absence of an express treaty clause, namely South American Silver v. Bolivia and the Yukos v. Russia
awards. See Iran's Reply, ,r,r 11.20-11.23. Neither case offers the Court much, if any, assistance. Neither tribunal
conducted an adequate analysis of State practice or domestic law to assess whether it has achieved the requisite
recognition. The South American Silver tribunal expressly lamented the insufficiency of the evidence presented
by the respondent State. See South American Silver Limited v. The Plurinational State of Bolivia, PCA Case No.
2013-15, Award ,r,r 445-446 (Nov. 22, 2018). The Yukos tribunal seemed to have no regard to the domestic law
position at all, whether on a comparative basis or otherwise. See Yukos Universal Limited v. Russia, PCA Case
No. AA 227, Final Award, ,r,r 1357-1363 (Jul. 10, 2014); See, with the same effect, Hulley Enterprises (Cyprus)
Limited v. Russia, PCA Case No. AA 226, Final Award ,r,r 1358-1363 (Jul. 18, 2014) (U.S. Annex 81). Further,
neither award considers the doctrine as a defense to the merits, which is the question that is presently before this
Court. What is more, neither award appears to have been subsequently endorsed or applied. On the contrary, the
reasoning and approach have been trenchantly criticized. See DUMBERRY, 21 JOURNAL OF WORLD INVESTMENT
AND TRADE, 501-16 (U.S. Annex 288). It is notable that the Tribunal's decision in Glencore v. Bolivia made no
reference to the Yukos award. See Glencore Finance (Bermuda) Limited v. The Plurinational State of Bolivia,
PCA Case No. 2016-39, Procedural Order No. 2 (Decision on Bifurcation), ,r,r 45-47 (Jan. 31, 2018) (U.S. Annex
95).
30
4.24 Fourth, Iran relies heavily on the fact that the unclean hands doctrine was not included
in the ILC Draft Articles as a "circumstance precluding wrongfulness."121 This does not take
it very far. The doctrine's invocation and application was recognized, but ultimately, it was
considered unnecessary to include it. 122
4.25 Fifth, and finally, according to Iran, the United States wrongly assumes that the doctrine
is capable of being translated to the international stage. 123 However, Iran identifies no reason
for which the doctrine is not perfectly adaptable to inter-State claims. Nor is there any. The
doctrine-like the equitable maxims to which it is closely connected-is easily adapted to
inter-State claims. The fact that States have consistently invoked the doctrine before
international courts and tribunals is a testament to this. So, too, is its recognition by judges and
commentators as a part ofinternational law. 124
Section C: The Doctrine's Relevance and Application in This Case
4.26 The United States acknowledges that the doctrine of unclean hands has not yet been
applied by the Court. That fact should not dissuade it from doing so in the compelling
circumstances of this case.
4.27 As set out in the U.S. Counter-Memorial125 and developed above, the doctrine has a
long and deep pedigree in a range of domestic jurisdictions, both civil and common law. It is
closely linked to equitable maxims that this Court has recognized and applied, i.e., 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
121 Iran's Reply, 1 11.10.
122 See JAMES CRAWFORD, THE INTERNATIONAL LAW COMMISSION'S ARTICLES ON STATE RESPONSIBILITY:
INTRODUCTION, TEXT AND COMMENTARIES 162, 1 9 (2002) (U.S. Annex 88) ("The so-called 'clean hands'
doctrine has been invoked principally in the context of the admissibility of claims before international courts and
tribunals, though rarely applied. It does not need to be included here."). See also JAMES CRAWFORD, BROWNLIE'S
PRINCIPLES OF PUBLIC INTERNATIONAL LAW 675 (9th ed. 2019) (U.S. Annex 289), where the same position is
articulated.
123 See Iran's Reply, 1 11.19.
124 See, e.g., 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).
125 See U.S. Counter-Memorial, fl 8.5-8.15.
31
wrong"). 126 It has been expressly accepted by Members of the Court127 and recognized by
States before international tribunals, 128 which attests to its character as a general principle of
law. By its criteria, the doctrine permits the Court to deny a State's request for relief where it
has engaged in serious misconduct or wrongdoing that has a sufficiently close connection to
the relief sought. 129
4.28 These requirements are plainly met in the extraordinary circumstances of this case. Iran
has pursued a long-established and comprehensive program of terrorist acts specifically
targeted at U.S. nationals and facilities. This resulted in (among others) the death of 241 U.S.
peacekeepers in the attack on the U.S. Marine barracks in Beirut, which gave rise to the
principal case that Iran relies on in its Reply, the Peterson case. As set out in the CounterMemorial,
U.S. courts concluded, on the basis of comprehensive fact and expert evidence, that
Iran had sponsored that attack. 130 As one judgment put it, Iran's complicity was "established
conclusively," it being "beyond question" that the Iranian government had contributed
"massive material and technical support" to Hezbollah and its agents. 131 These acts are
intimately connected to the claims that Iran now seeks to advance before the Court. Not only
were the U.S. legislative and executive measures at issue responsive to the barracks bombings
and similar attacks, but the judicial and legislative framework that the United States carefully
developed to allow the victims of terrorism to obtain redress would never have been necessary,
but for Iran's bad acts and the acts of other State sponsors of terrorism. The nexus between
those acts and Iran's claims is clear and manifest.
4.29 For all of those reasons, the United States invites the Court to dismiss Iran's claims on
the basis of its unclean hands.
126 See U.S. Counter-Memorial, 18.7. This principle has been recognized by at least one Member of the Court as
relevant to treaty interpretation. See Admissibility of Hearings of Petitioners by the Committee on South West
Africa, Advisory Opinion of June 1, 1956, I.C.J. 23, 46 (Separate Opinion of Sir Hersch Lauterpacht) ("It is a
sound principle of law that whenever a legal instrument of continuing validity cannot be applied literally owing
to the conduct of one of the parties, it must, without allowing that party to take advantage of its own conduct, be
applied in a way approximating most closely to its primary object. To do that is to interpret and to give effect to
the instrument -- not to change it.")
127 See U.S. Counter-Memorial, 18.9.
128 See id.
129 See U.S. Counter-Memorial, 18.13.
130 See U.S. Counter-Memorial, n.212 in particular. See also U.S. Counter-Memorial, Chapter 5.
131 See Peterson v. Islamic Republic of Iran, 264 F. Supp. 2d 46, 54, 58 (D.D.C. 2003) (U.S. Annex 36).
32
CHAPTER 5: BANK MARKAZI IS NOT A "COMPANY" FOR
PURPOSES OF THE TREATY OF AMITY
5.1 Iran's claims related to Bank Markazi allege violations of Treaty provisions (namely,
Articles III, IV, and V) that extend protections only to "nationals" and "companies" of a Party.
Those claims therefore can only proceed if Bank Markazi is considered a "company" under the
Treaty. The facts presented by Iran, which have not substantially changed since the Preliminary
Objections stage, do not support such a conclusion.
5.2 The only relevant activity that Iran has alleged that Bank Markazi has undertaken in the
United States involves the investment of U.S. dollar security entitlements. Iran does not contest
Bank Markazi's assertion, made on multiple occasions in U.S. litigation, that these investments
were part of its management of Iran's currency reserves. Nor does Iran contest that Bank
Markazi's management of Iran's currency reserves is a sovereign function. As a result, the
only question remaining before the Court is whether Bank Markazi' s activities related to its
management of Iran's currency reserves may nonetheless be considered commercial in nature.
They cannot. Given the sovereign nature of a central bank's responsibilities to manage a State's
currency reserves, which has no commercial comparator, Bank Markazi is not a "company"
under the Treaty, and therefore is not entitled to the protections of the specific Treaty provisions
asserted by Iran.
Section A: Iran Has Not Provided Additional Facts That Would
Demonstrate Bank Markazi Was Engaged in Activities of a
Commercial Nature as It Pertains to This Case
5.3 In its Preliminary Objections Judgment, the Court established that a State-owned entity
carrying out exclusively sovereign activities, linked to the sovereign functions of the State,
cannot be characterized as a "company" for purposes of the Treaty .132 The Court
acknowledged, however, the possibility that entities may "engag[ e] both in activities of
commercial nature (or more broadly, business activities) and in sovereign activities."133 In
such situations, the entity may be characterized as a "company" within the meaning of the
Treaty, but only "to the extent that it is engaged in activities of a commercial nature, even if
they do not constitute its principal activities."134
132 Preliminary Objections Judgment, ,r 91.
133 Id. ,r 92.
134 Id.
33
5.4 The Court took the view, for purposes of its Preliminary Objections Judgment, that it
did not have all the facts necessary to determine whether Bank Markazi was carrying out, at
the relevant time, activities of a commercial nature which would permit Bank Markazi to be
characterized as a "company" within the meaning of the Treaty. 135 Notably, there was no
factual dispute during the Preliminary Objections stage of the proceedings that Bank Markazi,
as a central bank, performs sovereign central bank functions. The Court acknowledged that
Iran conceded this point. 136 The Court also noted Iran's failure to demonstrate at the
Preliminary Objections stage that Bank Markazi was engaged in other activities of a
commercial nature that would qualify it as a company for purposes of the Treaty and afforded
Iran the opportunity to demonstrate that "alongside the sovereign functions which it concedes,
Bank Markazi engages in activities of commercial nature."137
5.5 The inquiry now is whether Iran, with its second chance, has adequately demonstrated
that Bank Markazi has engaged in activities of a commercial nature, which would allow it to
be characterized as a "company" in this case. In order to make such a showing, Iran must
demonstrate that Bank Markazi' s activities within the territory of the United States at the time
of the U.S. measures were commercial and not sovereign central bank activities. 138
5.6 Iran's Reply fails to do so. Iran has not provided substantial new information
concerning the Bank's authorities or activities that was not already before the Court at the
Preliminary Objections stage. Rather than provide factual information that would point to
relevant commercial activities in the United States at the time of the U.S. measures, Iran
attempts to recharacterize its core central bank activities as commercial. This attempt is based
on a misreading of the Court's Preliminary Objections Judgment and other authorities relied
on by Iran. Yet Iran's factual case is no more sufficient now than it was at the Preliminary
Objections stage, and does not establish that Bank Markazi's activities are of a nature that
would warrant Bank Markazi being considered a "company" under the Treaty.
135 Id. ,r 97.
136 Id. ,r 94.
137 Id. ,r 94, 97.
138 Id. ,r 93.
34
Section B: The Domestic Authorities Cited by Iran Further Demonstrate
That Bank Markazi Is Responsible for Traditional Central
Bank Functions Involving Sovereign Activity That Has No
Commercial Comparator
5.7 In arguing that Bank Markazi's activities relevant to this case were of a commercial
nature, Iran first argues that Bank Markazi can perform commercial activities under Iran's
Monetary and Banking Act of 1972. 139 Even if Bank Markazi is authorized to undertake
activities of a commercial nature, that is not sufficient for the inquiry in this case. Iran must
further demonstrate that Bank Markazi did undertake commercial activities in the United States
at the time of the relevant United States measures.
5.8 Yet, Iran falls short even on this preliminary step. While acknowledging that the
Monetary and Banking Act of 1972 unambiguously assigns expansive sovereign functions to
Bank Markazi and specific powers to execute those functions, 140 Iran points to Article 12 of
the Monetary and Banking Act, which designates Bank Markazi as "Banker to the
Government" to argue that in this capacity it performs banking activities that are identical to
those performed by a commercial bank. 141 Iran's description, however, significantly
understates the uniquely sovereign role that Bank Markazi performs as "Banker to the
Government." In addition to keeping the accounts of Iranian government entities and handling
all of their banking transactions, Article 12 assigns the following functions to Bank Markazi:
• Selling and repaying principal and interest on Government Bonds and Treasury bills,
as the agent of the Government (Article 12(b));
• Keeping all of the country's foreign exchange and gold reserves (Article 12(c));
• Keeping funds in Rial for the International Monetary Fund, the International Bank for
Reconstruction and Development, the International Finance Corporation, the
International Development Association and similar entities (Article 12(d));
• Making payment agreements in compliance with monetary, financial, commercial and
transit agreements between the State and foreign States (Article 12(e)). 142
139 Iran's Reply,~ 3.15-22.
140 Id. ,r 3.17.
141 Id. ,r 3.18.
142 Monetary and Banking Act of 1972, amended 2016 (IM Annex 73).
35
The activities of Bank Markazi as "Banker to the Government," as described in Article 12 of
the Monetary and Banking Act of 1972, are far from identical to those performed by
commercial banks and only further illustrate the broad scope of uniquely governmental
activities that Bank Markazi engages in as a result of its central bank functions.
5.9 Next, Iran notes that Bank Markazi is vested with other financial and business activities
that "are identical to those performed by private companies in a 'free and competitive
market. "'143 Iran has already made this point about Bank Markazi undertaking professional
activities that are also performed by private companies. 144 The United States does not dispute
that Iranian law empowers Bank Markazi to open accounts with foreign banks, carry out
authorized banking operations, enter into contracts, purchase and sell gold and silver, and
undertake any number of other specific activities that are necessary for Bank Markazi to carry
out the sovereign functions that are detailed in the Monetary and Banking Act of 1972. Indeed,
like any government entity, Bank Markazi would be unable to carry out its sovereign functions
without being able to perform certain basic activities, such as entering into a contract, that
private parties also undertake. But Iran has yet to demonstrate that these activities are done for
anything other than carrying out the sovereign tasks and objectives of Bank Markazi. And in
this context, Bank Markazi is operating as a central bank in a unique capacity that is vastly
different from private companies operating in a free and competitive market.
5.10 Even assuming Iran's argument that Bank Markazi pays income tax to the Iranian
government is accurate, as Iran asserts, such an argument suffers from a similar flaw in that it
does not establish that the underlying activities of the Bank are commercial in nature. Iran
admits that the profits on which Bank Markazi is taxed come from foreign currency transactions
"as part of Bank Markazi's daily operations to satisfy foreign currency needs of the market."145
The affidavit from a Bank Markazi official cited by Iran goes on to explain that any surplus
resulting from these transactions constitutes part of the reserves of Bank Markazi, which it
invests in a manner similar to other central banks, and uses "to instill market confidence, and
promote central bank's primary objective of price stability."146 The affidavit describes the type
143 Iran's Reply, ,r 3.19.
144 Iran's Observations and Submissions, ,r 4.34.
145 Iran's Reply, ,r 3.21, (quoting Affidavit of Ali Asghar Massoumi ,r 10, Peterson v. Islamic Republic of Iran,
Doc. 815, No. 1:10-Civ.-4518-KBF (S.D.N.Y. Aug. 31, 2017) (U.S. P.O. Annex A02) ("Massoumi Affidavit")).
The quote used by Iran continues to note that these transactions are also undertaken to "stabilize the exchange rate
under the managed float exchange rate regime of Iran."
146 Massoumi Affidavit, ,r 11.
36
of securities at issue in this case as part of Bank Markazi' s investment of its reserves, with
generated income being part of Bank Markazi's reserves, employed "solely for central banking
purposes" including "proper conduct of monetary policy with a view to promoting national
economic goals."147 Regardless of whether or not Iranian law requires an income tax on these
transactions, Bank Markazi has explicitly described such transactions as being in furtherance
of its purposes and objectives as a central bank. Any income tax imposed under Iranian law
would not alter the fundamentally sovereign character of Bank Markazi's activities.
1. The Specific Activities at Issue in This Case Concern the Exercise of
Sovereign Functions by Bank Markazi
5.11 In turning to the specific activities of Bank Markazi at issue in this case, Iran fails to
demonstrate that Bank Markazi's acts in the United States at the time of the U.S. measures fell
outside of the sovereign functions assigned to it by Iran under the Monetary and Banking Act
of 1972. The only activity within the United States that Iran asserts is at issue in the context of
the present case is Bank Markazi' s purchase of 22 security entitlements in dematerialized bonds
issued by foreign governments and intergovernmental organizations.148 Iran's Rejoinder does
not attempt to tie these investment activities back to the authorities under the Monetary and
Banking Act of 1972. However, in the Peterson litigation, Bank Markazi was explicit in its
assertion that these assets were being used "for the classic central bank purpose of investing
Bank Markazi's currency reserves"149 and that Bank Markazi, like other central banks, "holds
foreign currency reserves to carry out monetary policies such as maintaining price stability."150
5.12 Iran does not dispute that the transactions at issue here were undertaken by Bank
Markazi for the purpose of investing its currency reserves. Nor does Iran dispute that Bank
Markazi' s management of foreign currency reserves was in furtherance of Bank Markazi
carrying out monetary policies. Indeed, Iran does not even contest that a central bank's
management of foreign currency reserves is a sovereign function. And understandably so, as
147 Id. ,r 29.
148 Iran's Reply, ,r 3.25.
149 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).
150 Petition for a Writ of Certiorari 7-8, BankMarkazi v. Peterson, No. 14-770 (Dec. 29, 2014) (U.S. P.O. Annex
117); see also U.S. Counter-Memorial, Chapter IX.C.
37
the sovereign nature of foreign currency reserves, and a central bank's management of those
reserves, is widely recognized. 151
11. Bank Markazi' s Sovereign Activity at Issue in This Case Is Dispositive in
Determining That Bank Markazi Is Not a "Company" Under the Treaty
5.13 Because it is unable to argue that Bank Markazi was acting in anything other than a
sovereign capacity with respect to these transactions, Iran instead adopts the position that it
simply does not matter that Bank Markazi was carrying out sovereign tasks when determining
whether Bank Markazi is a company under the Treaty. Iran asserts that so long as the specific
transaction in question can be characterized as commercial, the fact that Bank Markazi was
carrying out a sovereign function in that transaction is irrelevant. 152 Yet this attempt to
reclassify Bank Markazi' s activities as commercial, rather than sovereign, is both inconsistent
with the Court's Preliminary Objections judgment and unsupported by the single other
authority referenced by Iran in support of its position.
5.14 Iran is incorrect in arguing, as it did at the Preliminary Objection stage, that Bank
Markazi' s status as a "company" under the Treaty may be determined without regard to
whether it is carrying out sovereign functions. The Court rejected this very argument in its
Preliminary Objections Judgment.153 There, the Court noted that"[ a ]ccording to Iran, whether
an entity carries out functions of a sovereign nature, i.e., acts of sovereignty or public authority
... is of no relevance when it comes to characterizing it as a 'company' ."154 The Court
disagreed with this analytical approach that ignored the functions carried out by the entity.
Instead, the Court specifically noted that an entity could not be considered a "company" under
the Treaty to the extent that the entity carried out sovereign activities linked to a sovereign
function. 155 Thus, contrary to Iran's position, the Court specifically endorsed an examination
of an entity's function in considering whether it could be characterized as a "company" under
the Treaty.
5.15 Iran is also incorrect in identifying the reason why the Court joined the question of
Bank Markazi's status to the merits. It was not, as Iran asserts, because the Court disagreed
151 See sources cited infra n.166 et seq.
152 Iran's Reply, ,r 3.6.
153 Preliminary Objections Judgment, ,r 90.
154 Id.
155 Id. ,r 91.
38
with the U.S. position that Bank Markazi's sovereign functions were relevant to the question.156
Instead, it was because the Court rejected Iran's argument that the nature of the Bank's
activities was irrelevant to the question. In rejecting that argument, the Court noted that Iran
"has made little attempt to demonstrate that, alongside the sovereign functions it concedes,
Bank Markazi engages in activities of a commercial nature."157 And so, the Court afforded
Iran an additional opportunity to demonstrate that Bank Markazi was engaged in activities of
a commercial nature in the United States at the relevant time.
5 .16 Iran has still made little attempt to demonstrate that Bank Markazi engaged in activities
of a commercial nature in the United States in addition to its sovereign functions. Instead, it
revives and revises its earlier argument to suggest a distinction between the sovereign functions
of Bank Markazi, which it seemingly concedes, and the specific acts which Bank Markazi
undertakes in carrying out those functions. Iran offers no credible support for such a distinction
in the Court's Preliminary Objections Judgment, where the Court viewed the functions of an
entity as closely related to its activities. Iran's reliance on the following sentence from the
Court's Preliminary Objections Judgment: "there is nothing to preclude, a priori, a single entity
from engaging both in activities of a commercial nature (or, more broadly, business activities)
and in sovereign activities"158 is of no avail. The United States again reiterates its agreement
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 such
additional activities may be commercial in nature. 159 It is evident from the plain language of
the Court's statement that it is referencing two separate activities - "both" commercial "and"
sovereign activities. The Court is not, as Iran appears to assert, referring to a single activity
and distinguishing between the nature and function of that activity. 160 And the activities of
Bank Markazi at issue here concern the sovereign activity of managing foreign currency
156 Iran's Reply, ,r 3.8.
157 Preliminary Objections Judgment, ,r 94.
158 Iran's Reply, ,r 3.9 (quoting Preliminary Objections Judgment, ,r 92).
159 See U.S. Counter-Memorial, ,r 9.16.
160 Iran similarly errs in referencing the hearings in the Oil Platforms case where the United States argued that,
whatever their normal function, the oil platforms in that case were used for guiding armed attacks on shipping in
the Gulf. Iran's Reply, n.296. That example just illustrates in a different context the point made by the Court,
and agreed by the United States, that central banks can engage in activities outside of their normal, sovereign,
central bank functions. But that example does not further Iran's attempt to distinguish between functions and
activities where the activity in question is undertaken in the exercise of a sovereign function.
39
reserves, not a set of separate activities taken in addition to those performed by Bank Markazi
in carrying out its central bank functions.
5.17 Iran goes on to argue that activities which do not involve the exercise of State power
are not "sovereign" activities. Far from advancing Iran's argument that Bank Markazi should
be characterized as a "company" under the Treaty, this assertion undermines Iran's attempts to
draw a distinction between functions and activities in the context of core central bank activities.
Iran relies on a single decision by an arbitral tribunal to support the distinction between the
nature and purpose of State-controlled bank activities. 161 However, the facts of that particular
case do not help Iran. In fact, the tribunal's decision usefully contrasts the type of commercial
activity that a State-owned or controlled bank might undertake to the core activities a central
bank undertakes in exercising its sovereign responsibilities.
5.18 The case concerned whether Ceskoslovenska Obchodni Banka, A.S. ("CSOB") could
be characterized as a "national of another Contracting State" for purposes of the dispute
resolution mechanism in Article 25(1) of the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States. The tribunal adopted the following test
with respect to that Convention: "'a government-owned corporation should not be disqualified
as a "national of another Contracting State" unless it is acting as an agent for the government
or is discharging an essentially governmental function. "'162 The tribunal then applied this test
to two different sets of activities of the CSOB, both of which are significantly different from
the management of foreign currency reserves at issue in this case.
5.19 First, the tribunal considered CSOB's role in "facilitating or executing the international
banking transactions and foreign commercial operations the State wished to support."
Specifically, CSOB had undertaken lending activities, which were driven by the State during
the country's command economy. The tribunal concluded that these lending activities did not
lose their commercial nature simply because they were directed by the State. 163 The United
161 Iran's Reply, ,r 3.11. Iran also discusses at some length the definition of commercial activity under the U.S.
Foreign Sovereign Immunities Act, and the case law interpreting that defmition, before concluding that neither
U.S. Code nor the U.S. case-law related to State immunity applies to these proceedings. Id. fl 3.12-3.13. The
United States agrees that the FSIA statutory defmition does not apply in determining whether Bank Markazi is
characterized as a "company" under the Treaty and notes that the Court did not distinguish between the purpose
and nature of an activity in its Preliminary Objections Judgment.
162 Ceskoslovenska Obchodni Banka, A.S. v. The Slovak Republic, ICSID Case No. ARB/97/4, Decision of the
Tribunal on Objections to Jurisdiction ,r 17 (May 24, 1999) ( quoting Aron Broches, The Convention on the
Settlement of Investment Disputes between States and Nationals of Other States, 135 HAGUE REC. D. C0URS 331,
354-55 (1972)). (U.S. Annex 290).
163 Id. ,r,r 20-21 (U.S. Annex 290).
40
States agrees with that conclusion - a State-controlled bank's lending activities to private
parties do not become sovereign in nature simply because they are directed by a State in a nonmarket
economy. Such activity is fundamentally different from the core central bank functions
of setting monetary policy and managing a State's currency reserves. Lending to commercial
entities is the type of additional activity, very different from the core sovereign functions of a
central bank at issue in this case, that could be considered as activity of a commercial nature
under the Court's Preliminary Objections Judgment.
5.20 Second, the tribunal went on to note that beginning in the early 1990s, "CSOB took
various steps to gradually throw off its exclusive economic dependence on the State and to
adopt measures to enable it to function in this new economic environment as an independent
commercial bank" and as part of that transition took steps to strengthen its books. 164 With
respect to those activities, the tribunal found that "the steps taken by CSOB to solidify its
financial position in order to attract private capital for its restructured banking enterprise do not
differ in their nature from measures a private bank might take to strengthen its financial
position" even though the governments in question had an interest in seeing CSOB survive in
a free market environment.165 Here again, the United States does not dispute the tribunal's
conclusion that this type of activity is properly considered commercial, and notes that the
activities at issue in that case are not at all similar to Bank Markazi' s management of its foreign
currency reserves.
5.21 While the decision cited by Iran dealt with activities far different from those undertaken
by Bank Markazi in this case, another arbitral decision more directly addresses the question of
whether the activities of a central bank in managing its foreign currency reserve may
nonetheless be considered commercial. In Sergei Paushok, CJSC Golden East Company and
CJSC Vostokneftegaz Company v. The Government of Mongolia, the tribunal considered
whether the activities of the central bank of Mongolia, MongolBank, in managing its reserves
of foreign currencies could be attributable to the State. 166 The tribunal noted that
MongolBank's central bank responsibilities fulfilled a role that only a State can fulfill, with
one of those responsibilities being the holding and managing of the State's reserves of foreign
164 Id. ,r 21 (U.S. Annex 290).
165 Id. ,r 25 (U.S. Annex 290).
166 Sergei Paushok, CJSC Golden East Company and CJSC Vostokneftegaz Company v. The Government of
Mongolia, UNCITRAL, Award on Jurisdiction and Liability ,r,r 574 et seq. (Apr. 28, 2011) (U.S. Annex 291).
41
currencies. 167 Mongolia advanced an argument very similar to that offered by Iran in this case,
arguing that the specific activity of MongolBank, which involved exporting and refining gold
and depositing its value in an account was a "purely commercial transaction," even while
acknowledging that the MongolBank was exercising functions related to the management of
Mongolia's foreign reserves. 168 The tribunal rejected Mongolia's argument, expressing "no
hesitation in concluding that MongolBank acted de jure imperii" in undertaking the activities
at issue for purposes of increasing the country's reserves. 169 While the specific activities in
that case-transactions of gold deposits-are certainly the type of activity private commercial
actors can perform, in the tribunal's view MongolBank's acts remainedjure imperii as those
acts were performed to carry out the bank's specific sovereign powers.
5.22 National courts have similarly held that a central bank engages in sovereign activity
when managing foreign currency reserves and performing other core central bank
responsibilities. For example, an English court found that funds comprising part of the National
Fund of Kazakhstan were not used by Kazakhstan's state bank for a commercial purpose simply
because the bank invested those funds in securities held by a third party. 170 In addressing the
argument that the trading activities at issue in the case were clearly financial transactions with
the aim of making profits, and thus could not have been transactions in the "exercise of
sovereign authority," the court indicated that those transactions must be set against the
backdrop of the fact that the transactions contained assets which were part of the National Fund
and were thus part of the overall exercise of sovereign authority of Kazakhstan. 171 Courts in
other jurisdictions have similarly recognized the sovereign character of a central bank
maintaining foreign currency reserves and performing other traditional central bank
activities. 172
167 Id. ,r 582 (U.S. Annex 291).
168 Id. ,r 587 (U.S. Annex 291).
169 Id. ,r 592 (U.S. Annex 291).
170 AIG Capital Partners v. Kazakhstan, [2005] EWHC (Comm) 2239, ,r 92 (U.S. Annex 292).
171 Id. Notably, the fact that the National Bank received a commission from the Kazakhstan government for its
investment activities did not alter the court's analysis, which noted ''the assets have to be put to use to obtain
returns which are reinvested in the National Fund, i.e. to assist the sovereign actions." Id.
172 NV Exploitatie-Maatschappij Bengkalis v. Bank Indonesia, 65 LL.R. 348 (Netherlands, Court of Appeal of
Amsterdam 1963) (U.S. Annex 293) (finding that the central bank of Indonesia was exercising a specifically
sovereign function in maintaining the monetary position of the country); Blagojevic v. Bank of Japan, 65 I.LR.
63 (France, Court of Cassation 1976) (U.S. Annex 294) (fmding the Bank of Japan was engaged in sovereign
activity in carrying out its responsibilities for foreign exchange control).
42
Section C: Concluding Observations
5.23 The Court, in its Preliminary Objections Judgment, provided Iran a second opportunity
to demonstrate that "alongside the sovereign functions which it concedes, Bank Markazi
engages in activities of commercial nature."173 Iran has failed to demonstrate that this is the
case. The factual record remains essentially the same as it was at the Preliminary Objections
stage. This confirms what the United States has asserted throughout these proceedings, and
what Bank Markazi itself repeatedly told U.S. courts, namely that, with respect to Bank
Markazi's activities in the United States at the time of the U.S. measures at issue in this case,
Bank Markazi acted solely in fulfillment of"the classic central bank purpose of investing [its]
currency reserves."174 Bank Markazi is therefore not a "company" as defined by the Treaty of
Amity and Iran's claims under Articles III, IV, and V, to the extent they are related to the
treatment of Bank Markazi, must be rejected. This necessarily includes all claims arising out
of the Peterson I and Peterson II proceedings, both of which involve Bank Markazi assets,
including claims related to legislative measures applied in those proceedings.
173 Preliminary Objections Judgment, ,r 94.
174 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).
43
CHAPTER 6: THE FAILURE TO EXHAUST LOCAL REMEDIES BY THE COMPANIES IN
RESPECT OF WmcH IRAN CLAIMS
Section A: Exhaustion of Local Remedies Is Required in this Case
6.1 In its Reply, Iran asserts that its case involves "State-to-State claims concerning U.S.
violations of obligations owed directly to Iran under the Treaty of Amity" and that its rights
"with respect to the treatment to be afforded to the Iranian State exist in parallel with the rights
of Iran with respect to the treatment to be afforded to its companies and nationals under the
Treaty." 175 As such, Iran says, its case is not one of diplomatic protection requiring exhaustion
of local remedies. 176 But even if exhaustion were required, Iran asserts that Iranian companies
are excused from pursuing local remedies because there is no "reasonable possibility of
effective redress" in U.S. courts. 177
6.2 Iran is incorrect on both points. As discussed below, the evidence demonstrates that
the alleged injury to Iranian companies caused by alleged U.S. violations of the Treaty of Amity
is the central feature of its claims. Iran's assertions of injury to itself are vague and
unsupported. Moreover, Iran has failed to show that remedies in the United States are
unavailable or do not offer a reasonable possibility of effective redress.
6.3 For these reasons, the Court should find both that exhaustion of local remedies is
required in this case and that, with the exception of three cases, it has not taken place.
i. The Indirect Elements of Iran's Claims Are Preponderant
6.4 Iran asserts that exhaustion oflocal remedies is not required because its claim "concerns
the position oflran and the protections to which it and Iranian companies are entitled under the
1955 Treaty of Amity."178 The United States does not, of course, dispute the well-established
rule of customary international law that exhaustion of local remedies is not required where a
case is founded on direct injury to the State itself. Here, however, Iran has asserted both direct
injury to itself and indirect injury through its nationals. In such circumstances, as the
International Law Commission observed, "it is incumbent upon the tribunal to examine the
different elements of the claim and to decide whether the direct or the indirect element is
175 Iran's Reply, ,r 9.3.
176 See id.
177 Iran's Reply, ,r 9.5.
178 Iran's Reply, ,r 9.19.
44
preponderant" in order to determine whether local remedies must be exhausted. 179 The
principal factors to consider include the "subject of the dispute, the nature of the claim and the
remedy claimed."180 Local remedies must be exhausted even where the State is requesting a
declaratory judgment, in circumstances in which the claim being advanced is based
preponderantly on an injury to its nationals. 181
6.5 An examination of the evidence in this case clearly shows that Iran's claim is based
preponderantly on alleged injuries to its nationals. First, Iran argued in its Memorial that the
Court should interpret certain articles of the Treaty of Amity "in light of ( and applied in
consideration of) the rules of customary international law concerning the immunities to which
States, central banks, and other State-owned properties are entitled in the context of civil
proceedings .... " 182 But after a careful review of the relevant provisions with regard to the
context and the object and purpose of the Treaty of Amity-to encourage economic activities
between the Parties-the Court in its Preliminary Objections Judgment found that it did not
have jurisdiction to consider Iran's claims concerning alleged violations of the international
law of sovereign immunities.183
6.6 Consequently, as the Court has excluded all claims based on sovereign immunity
protections, the principal subject and nature of Iran's remaining claims under the Treaty
concern the alleged injury to Iranian companies, for which Iran is requesting monetary
damages. This is a quintessential instance of an indirect claim. In its Reply, Iran has attempted
to shift its argument to put more emphasis on injury to itself in a thinly-veiled effort to avoid
the requirement to exhaust local remedies. But its assertion of "non-material or moral
damage"184 is not only vague, it is not founded on any provision of the Treaty. Iran has also
failed to state how it has been injured with the necessary specificity, nor has it provided
evidence to support such injury.
179 International Law Commission, Draft Articles on Diplomatic Protection, with commentaries, Art. 14,
commentary 11, U.N. Doc. A/CN.4/SER.A/2006/ Add. I (Part 2) (2006), (U.S. Annex 125) [hereinafter ILC Draft
Articles]. The commentary also notes the closely related sine qua non test, that is, would the claim have been
brought but for the alleged injury to the national, although it states that there is little to distinguish the two tests.
180 ILC Draft Article 14, commentary 12 (U.S. Annex 125).
181 See id., commentary 13 (U.S. Annex 125).
182 Iran's Memorial, 13.20.
183 See Preliminary Objections Judgment, 1 80.
184 Iran's Reply, 19.26.
45
6. 7 Second, one of the pillars of Iran's case is the "separate juridical status" of the Iranian
companies that have been involved in U.S. court proceedings, which it emphasizes throughout
its pleadings. It complains that the assets of Bank Melli, a State-owned company, were attached
"even though" it was not a defendant in any of the underlying court proceedings, 185 and requests
the Court to find that the United States has breached various obligations owed to specific
Iranian companies and their property under the Treaty. 186 Moreover, Iran asserts that its claims
"are not confined to one company or one incident."187 The clear line of Iran's argument is that
the property of Iranian companies-not State property-has been attached. It is the alleged
damage to these companies that "colours and pervades" Iran's claim as a whole. 188
6.8 Iran exhibited a marked disinterest in contesting claims brought against it in U.S. courts.
Iran routinely failed to appear in liability proceedings, which led to numerous default
judgments, and Iranian companies appeared only when their assets were at risk of attachment
in enforcement proceedings. It was only after the property of a handful of Iranian companies
was attached to satisfy the judgments against Iran that Iran commenced this case before the
Court. This strongly suggests that the nature of Iran's claim is not direct injury to Iran, but
rather injury to specific Iranian companies. That being the case, the rule on exhaustion of local
remedies applies.
ii. This Case Is Distinct From the Avena and Ukraine v. Russian Federation
Cases
6.9 Iran cites the Avena and Ukraine v. Russian Federation cases189 as support for its
assertion that this case is one "in which there is an injury to the State which in part consists in,
and is interdependent with, the injuries to companies that are nationals of the State." 190 Both
of those cases, however, involve multilateral treaties that embody consular or human rights
185 Iran's Reply, ,r 9.7.
186 See Iran's Reply, ,r 9.30, citing its submissions in its Application, ,r 33, and Attachment 2.
187 Iran's Reply, ,r 9.30.
188 Case concerning Elettronica Sicula S.p.A. (ELSI) (United States of America v. Italy), Judgment, I.C.J. Reports
1989, p. 15, ,r 52.
189 See Avena and Other Mexican Nationals (Mexico v. United States of America), 2004 I.C.J. 12 (Mar. 31);
Application of the International Convention for the Suppression of the Financing of Terrorism and of the
International Convention on the Elimination of All Forms of Racial Discrimination (Ukraine v. Russian
Federation), 2019 I.C.J. 558 (Nov. 8).
190 Iran's Reply, ,r 9.21.
46
obligations that are quite distinct from the bilateral obligations concerning economic relations
under the Treaty of Amity that are at issue here.
(a) In Contrast to Mexico's Rights in Avena, Iran's Claims Do Not Involve
"Interrelated Rights "
6.10 In Avena, Mexico alleged that the United States had violated its obligations to Mexico
under Article 36(1) of the Vienna Convention on Consular Relations because it had failed to
notify Mexico of the arrest and detention in the United States of Mexican nationals, thus
preventing Mexico from exercising its rights of consular access and communication. 191 The
Court first affirmed the exhaustion requirement by noting that each Mexican national would
have to fully pursue his individual rights under Article 36(1)(b) in U.S. courts before Mexico
could espouse his claims. 192 The Court then turned to Mexico's claims regarding injuries that
it had allegedly suffered directly as a result of U.S. violations of obligations to Mexico. Citing
its description in the LaGrand case of the three subparagraphs of Article 36(1) as an
"interrelated regime," the Court stated that the failure of the United States to act in conformity
with the notification obligation under Article 36(1 )(b) precluded Mexico from exercising its
rights under Article 36(1)(a) and (c) to have consular access to its nationals, communicate with
them, and arrange for legal representation. 193 That is, Mexico could realize its right to exercise
consular functions of assistance to and protection of its nationals only if the United States
fulfilled its obligation to promptly notify Mexico of the arrest or detention of a Mexican
national.
6.11 In contrast, Articles III, IV, and V of the Treaty of Amity involve only protections
required to be accorded to nationals and companies of the Parties. These articles do not in any
191 Art. 36(1) provides: With a view to facilitating the exercise of consular functions relating to nationals of the
sending State: (a) consular officers shall be free to communicate with nationals of the sending State and to have
access to them. Nationals of the sending State shall have the same freedom with respect to communication with
and access to consular officers of the sending State; (b) ifhe so requests, the competent authorities of the receiving
State shall, without delay, inform the consular post of the sending State if, within its consular district, a national
of that State is arrested or committed to prison or to custody pending trial or is detained in any other manner. Any
communication addressed to the consular post by the person arrested, in prison, custody or detention shall be
forwarded by the said authorities without delay. The said authorities shall inform the person concerned without
delay of his rights under this subparagraph; ( c) consular officers shall have the right to visit a national of the
sending State who is in prison, custody or detention, to converse and correspond with him and to arrange for his
legal representation. They shall also have the right to visit any national of the sending State who is in prison,
custody or detention in their district in pursuance of a judgement. Nevertheless, consular officers shall refrain
from taking action on behalf of a national who is in prison, custody or detention if he expressly opposes such
action.
192 See Avena, 2004 I.C.J., 140.
193 Avena, 2004 I.C.J., 199, citing LaGrand (Germany v. United States of America), 2001 I.C.J. 466,492,174
(June 27).
47
way confer protections vis-a-vis the Parties themselves, so there is no interdependence of the
rights of the Parties and their nationals and companies. Any alleged failure of the United States
to act in conformity with these articles, as well as with Articles VII and X, of the Treaty did
not preclude Iran from exercising any rights itself. There is simply no equivalence between
what the Court described in Avena as the "special circumstances of the interdependence of the
rights of the State and of individual rights" under the Vienna Convention194 and Iran's claims
under the Treaty of Amity in this case.
(b) Iran's Claims Rest on Alleged Injuries to Specific Iranian Entities, Not
a Pattern of Conduct Aimed at Entire Ethnic Groups as in Ukraine v.
Russian Federation
6.12 In contrast to Iran's claims under the Treaty of Amity concerning economic relations,
Ukraine's case is based on alleged violations by Russia of obligations under a human rights
treaty, the International Convention on the Elimination of All Forms of Racial Discrimination
(CERD).195 Unlike the Treaty of Amity that addresses the protections the nationals of one State
shall be afforded in the other State, CERD calls for action by States Parties to eliminate all
forms of racial discrimination and to protect human rights, fundamental freedoms, and equality
before the law within their own territories.
6.13 Ukraine's case was founded on alleged Russian violations of certain provisions of the
CERD that obligate States Parties to, among other things, undertake to pursue policies to
eliminate racial discrimination, guarantee equality before the law, and assure effective
remedies against certain acts of racial discrimination. 196 As the Court stated, Ukraine's case
was based on Russia's sustained campaign of discrimination against Crimean Tatars and
Ukrainian communities in Crimea, for which Ukraine had submitted evidence of individual
examples to illustrate the alleged Russian conduct. 197 The Court found that Ukraine was not
adopting the cause of any particular nationals, but rather, directly challenging a pattern of
194 Avena, 2004 I.C.J., 140.
195 Ukraine also brought claims under the International Convention for the Suppression of the Financing of
Terrorism, which are not germane here.
196 Specifically, Arts. 2, 4, 5, 6, and 7.
197 See Ukraine v. Russian Federation, 2019 I.C.J., 1130.
48
conduct by another State Party. 198 Under such circumstances, the Court concluded, the rule on
exhaustion did not apply. 199
6.14 Here, Iran alleges that the United States has violated the Treaty of Amity with respect
to a specific list of Iranian companies named as defendants in a limited number of specific
court proceedings in the United States.200 This is materially different from Ukraine's
allegations of a widespread, indiscriminate campaign by Russia against two ethnic
communities in Crimea. The case offers no support to Iran's attempt to recast its claims in
terms of direct harm to Iran in order to avoid the requirement for its companies to exhaust local
remedies.
111. Conclusion
6.15 For all of the reasons discussed above, the Court should find that the preponderant
elements of Iran's claims are indirect: they involve alleged injury to Iranian companies, not
direct injury to Iran itself. As such, the Court should dismiss Iran's claims based on alleged
injury to nationals or companies where local remedies have not been fully exhausted.
Section B: Exhaustion Is Not Futile
6.16 Iran urges the Court to excuse it from the rule on exhaustion of local remedies due to
"the absence of the reasonable possibility of effective redress in [U.S.] domestic courts for Iran
or any of its companies."201 As the commentary to ILC Draft Article 15 makes plain, however,
the exception to the rule on exhaustion is a high bar:
[I]t is not sufficient for the injured person to show that the
possibility of success is low or that further appeals are difficult
or costly. The test is not whether a successful outcome is likely
or possible but whether the municipal system of the respondent
State is reasonably capable of providing effective relief. 202
6.17 Examples of circumstances in which exhaustion is excused include cases where
exhaustion would be futile because the local courts do not have jurisdiction, local courts will
not review the relevant national legislation, or where there are well-established precedents
198 See id.
199 See id.
200 See Iran's Reply, Attachment 2.
201 Iran's Reply, ,Ml 9.5, 9.8, citing ILC Draft Article 15(a).
202 ILC Draft Art. 15, commentary 4 (U.S. Annex 295).
49
adverse to the claimant.203 As discussed below, Iran has failed to show that it is futile under
any of these bases for Iranian companies to exhaust remedies in the United States.
1. Local Remedies Are Available
6.18 Iran asserts that Bank Markazi and Bank Melli "tried to obtain redress" and that their
experience "confirms" that there is no reasonable possibility of redress in U.S. courts for Iran
or "any of its companies."204 There are three fatal flaws in Iran's argument. First, Iran
mistakenly equates the ability of Iranian companies to defend their interests in U.S. courts with
a guarantee that they will prevail. That is not, of course, what is required under either the
Treaty of Amity or international law more generally. As the United States discussed in
Chapters 13 and 14 of its Counter-Memorial and further shows in Chapters 9 and 10 of this
Rejoinder, Iranian companies have full freedom of access to U.S. courts, in conformity with
Article 111(2), and have been accorded fair and equitable treatment, in conformity with Article
IV(l). Furthermore, as noted above, the ILC stated that the exception to the rule on exhaustion
does not hinge on whether it is "likely or possible" that a company would prevail, but only on
whether the courts are "reasonably capable" of providing relief. Iran has failed to show that
U.S. courts are not capable of providing relief. Indeed, in certain instances, Iranian companies
or third parties have successfully challenged the efforts of claimants to attach Iranian property
in execution proceedings to satisfy judgments against Iran. 205
6.19 Second, Iran has extrapolated from the outcome of only a few cases to reach the
sweeping conclusion that there is no possibility of redress for any Iranian company, and
therefore they should all be excused from the requirement to exhaust local remedies. 206 This
203 See id., commentary 3 (U.S. Annex 295) (citing cases). The commentary also cites cases where exhaustion
was excused because the local courts notoriously lacked independence or were not competent to grant appropriate
and adequate remedies, or because the respondent State did not have an adequate judicial system.
204 Iran's Reply, ,r 9.5.
205 See the following section and infra Chapter 8.
206 The circumstances here are distinct from the circumstances in Ambiente v. Argentina, which Iran cites as
support for its assertion that "specific U.S. legislation as well as a Supreme Court judgment have rendered local
remedies futile." Iran's Reply, ,r 9.12, citing Ambiente Ufficio S.p.A. v. Argentine Republic, ICSID Case No.
ARB/08/09, Decision on Jurisdiction and Admissibility (Feb. 8, 2013) (U.S. Annex 296). That case involved
claims brought under the Argentina-Italy BIT by Italian holders of bonds issued by the Government of Argentina.
The tribunal determined that exhaustion of local remedies was futile on the basis of an Argentine law requiring
courts to reject any claims brought by bondholders (such as the claimants) who had not participated in an earlier
exchange offer, a law that had been challenged and found constitutional by the Argentine Supreme Court. Iran
also cites a passage from the Arbitration under Article 181 of the Treaty of Neuilly for the proposition that
exhaustion does not apply where "acts of authorized organs of the state" are implicated. Iran's Reply, ,r 9.11,
citing "Principal Question" Judgment (1934) at 789 (U.S. Annex 297). That case was brought by Greece against
Bulgaria concerning a dispute over the rights of several Greek nationals to forests in a region that had been
50
ignores the fact that, for example, Section 502 of the Iran Threat Reduction and Syria Human
Rights Act of 2012 (codified as 22 U.S.C. § 8772) applies only to assets of Bank Markazi; it
does not affect any other Iranian entity. 207 Moreover, the provision does not itself require
turnover of these assets, but requires the courts to determine whether turnover is appropriate. 208
The outcome of the litigation challenging the provision, in other words, was not preordained. 209
The same is true for attachment actions involving Section 201 of the Terrorism Risk Insurance
Act ("TRIA"), which is a complex provision that requires courts to carefully analyze whether
the sought-after assets are immune from attachment or whether they fall under any of the
exceptions to attachment. 210
6.20 Finally, many of the cases listed on Iran's Attachment 2 were commenced well before
the cases Iran relies upon for its futility argument were decided. 211 With regard to the latter,
the U.S. Supreme Court issued its decision in Bank Markazi v. Peterson on April 20, 2016,
denied Bank Melli's petition for certiorari in the Bennett v. Iran case on March 30, 2020, and
denied Bank Melli's petition for certiorari in the Weinstein v. Iran case on June 25, 2012. Yet
approximately half of the cases listed on Attachment 2 were commenced prior to 2012,212 and
thus it seems unlikely that the cases just cited would have had much impact collectively on
litigation decisions in other cases. But by generalizing based on the outcome of a few cases,
Iran is in effect arguing for some sort of "retroactive futility" to excuse the failure of Iranian
transferred from the Ottoman Empire to Bulgaria in 1913 at the end of the first Balkan War. Under the terms of
the 1913 Treaty of Constantinople, Bulgaria was obligated to respect existing private rights and titles to property,
such as the disputed forests, unless there was "legal proof to the contrary." Id. at 787. In 1918, however, the
Bulgarian Ministry of Agriculture declared that the disputed forests were in fact public property pursuant to the
1904 Bulgarian Forest Law. As the tribunal stated, "[c]onsidering that this law was not modified so as to admit
of the application ofa special regime in the annexed territories [i.e., those transferred pursuant to the 1913 treaty],
the claimants had reasons for considering as useless any action before the Bulgarian courts against the Bulgarian
Treasury." Id. at 789. Both of these cases deal with laws affecting the claims of a narrow and specific group of
claimants. Given the limited scope of these cases, they do not support Iran's sweeping assertion here that it is
futile for any Iranian company to exhaust local remedies.
207 It should be obvious that Iran's quotes from Chief Justice Roberts' dissent in Bank Markazi v. Peterson et al.
Goined only by Associate Justice Sotomayor) do nothing to bolster Iran's futility argument, since the case
addressed Section 8772 only and has no broader application. See Iran's Reply, 119.14-9.16.
208 See U.S. Counter-Memorial, 16.16.
209 See also the discussion of Peterson in infra Chapter 8, Section B.i.(a).
210 See U.S. Counter-Memorial, 16.19; infra Chapter 8, Sections A and B. See also Rubin v. Iran, discussed
below.
211 See Iran's Reply, fl 9.6-9.7.
212 See Iran's Reply, Attachment 2, column 5, "Date of Action."
51
companies to contest enforcement actions. For all of these reasons, the Court should reject
Iran's assertion that local remedies are unavailable.
11. Local Remedies Provide a Reasonable Possibility of Redress
6.21 Iran has also failed to show that the complained-of measures have created a
"discriminatory and comprehensive regime" that, in practice, is not reviewable in U.S. courts
or makes the courts incapable of granting appropriate remedies. 213 Even though Iran very
rarely appeared to defend its interests in U.S. court proceedings at the liability stage, Iran goes
so far as to assert that U.S. courts "openly acknowledge[]" that they are prevented from
fulfilling their functions,214 citing the district court opinion in the Levinson v. Iran case.215 Iran
cites a passage that comes near the end of the opinion, leading to a distorted impression that
the findings against Iran were inevitable. However, a full reading of the opinion reveals that:
• The court, first noting that "strong policies favor resolution of disputes on their
merits, and so the default judgment must normally be viewed as available only when
the adversary process has been halted because of an essentially unresponsive party,"
carefully reviewed the legal standards for a default judgment, including that it is
"not automatic" and the court has an "affirmative obligation to determine whether
it has subject matter jurisdiction";216
• The court held a two-day evidentiary hearing, which included the testimony of three
expert witnesses;
• The court stated that it must reach its "findings of fact and conclusions of law from
admissible testimony in accordance with the Federal Rules of Evidence," and that
"uncontroverted factual allegations that are supported by admissible evidence may
be taken as true"·217 and '
• The court thoroughly reviewed the evidence to determine whether the plaintiffs had
satisfied each of the four elements of the Foreign Sovereign Immunities Act
("FSIA")'s terrorism exception (28 U.S.C. § 1605A), including that they made an
offer to Iran to arbitrate the claim and had submitted sufficient evidence to support
their allegations. 218
213 Iran's Reply, ,r 9.13
214 Id.
215 See Levinson et al. v. Islamic Republic of Iran, 443 F. Supp. 3d 158 (D.D.C. 2020) (Iran Reply Annex 82).
The case was brought by the family of retired FBI Special Agent Robert Levinson under the terrorism exception
to the Foreign Sovereign Immunities Act, §1605A, for the kidnapping, torture, and death of Mr. Levinson.
216 Levinson, 443 F.Supp.3d at 166 (Iran Reply Annex 82) (internal quotes and citations omitted).
217 Id. (Iran Reply Annex 82).
218 See id. at 167-176 (Iran Reply Annex 82). The remaining two elements are (1) the foreign state was a
designated State sponsor of terrorism, and (2) the plaintiffs are U.S. citizens.
52
6.22 Only after the court had determined that the plaintiffs had met all of the statutory
requirements for jurisdiction, including that they had properly served Iran with the summons
and complaint, and carefully examined the merits of the claim did it conclude that Iran was
liable and the plaintiffs were entitled to relief. Contrary to Iran's lament that the Levinson
ruling is illustrative of the "hopelessness" of Iran's and its companies' position under U.S.
law,219 the court's opinion shows that even in the absence of participation by the defendant, the
plaintiffs were nevertheless required to prove every element of their case, in keeping with
relevant law and procedure. It was not a foregone conclusion that they would prevail, which
would be equally true in any other case. Iran cannot now point to the outcome of this one
case-which was decided only in March 2020-as proof that it has been "hopeless" for Iran
and Iranian companies to appear in U.S. court proceedings, especially when Iran made no effort
in that case to defend its interests. It is not a court's responsibility to defend Iran, and Iran's
failure to participate in proceedings has resulted in numerous default judgments. 220 And when
Iranian companies finally do appear at attachment proceedings, it is usually too late to
challenge the finding of facts in the underlying judgment, and the company is therefore limited
to arguing that the enforcement is contrary to applicable law.
6.23 In fact, both Iran and other States have prevailed in enforcement cases, which further
contradicts Iran's assertion of futility. The Rubin v. Iran case, for example, involved a suit to
execute a $71.5 million default judgment against Iran for the 1997 suicide bombings in
Jerusalem carried out by Hamas. The petitioners sought to attach the Persepolis Collection of
artifacts,221 which Iran had loaned to the University of Chicago in 1937, under Sections 1610(a)
and (g) of the FSIA and Section 201 of TRIA. Iran filed a motion for summary judgment, 222
which the district court granted223 and the court of appeals affirmed, 224 holding that the
collection was immune from attachment because (1) Iran was not using it for commercial
activity in the United States, as required under Section 1610(a) of the FSIA; (2) it was not
blocked property, as required under Section 201 of TRIA; and (3) FSIA Section 1610(g) did
219 Iran's Reply, ,r 9.14.
220 See infra Chapter 8, in particular Section B.ii and Section C, regarding the adversarial nature of the U.S. judicial
system and the protections afforded defaulting sovereigns in U.S. courts.
221 The petitioners included three other collections of artifacts in their suit, but the court dismissed those claims
because the items were either no longer within the court's judicial district or were not Iranian property.
222 The museums holding the collections were named as respondents and also moved for summary judgment.
223 See Rubin v. Islamic Republic of Iran, 33 F. Supp. 3d 1003 (N.D. Ill. 2014) (U.S. Annex 184).
224 See Rubin v. Islamic Republic of Iran, 830 F.3d 470 (7th Cir. 2016) (U.S. Annex 185).
53
not create an independent exception to the collection's immunity from attachment and
execution. The petitioners then appealed to the U.S. Supreme Court, asserting that Section
1610(g) of the FSIA stripped the property of its immunity. In affirming the lower court's
ruling, the U.S. Supreme Court made it clear that not all property of a foreign State is subject
to attachment and execution by holders of judgments under Section 1605A.225 In addition, as
discussed in Chapter 8 below and as shown on the table attached at Appendix 1, in a number
of cases other parties to the proceedings participated and asserted defenses that would have
been available to the Iranian companies, had they chosen to defend their interests. 226
6.24 In the Harrison v. Sudan case, victims of the 2000 bombing of the USS Cole sued Sudan
under Section 1605A(a)(l) and (c) of the FSIA, alleging that Sudan had provided material
support to al Qaeda for the attack. After the plaintiffs obtained a default judgment for $314
million, they brought a successful enforcement action for the turnover of Sudanese assets at
several New York banks. At that point, Sudan filed an appeal contesting jurisdiction, alleging
that the default judgment was invalid because Sudan had not been properly served under FSIA
Section 1608(a)(3). After losing in the lower courts, Sudan appealed the case to the U.S.
Supreme Court, which found in favor of Sudan and reversed the lower court's judgment.227
6.25 In addition, claimants in various cases against Cuba were unsuccessful in their efforts
to enforce default judgments. Examples include Alejandre v. Republic of Cuba228 ( assets were
not subject to attachment); Hausler v. Cuba229 (under New York state law, electronic funds
transfers (EFTs) did not belong to Cuba or its agencies or instrumentalities and therefore could
not be attached under TRIA); Villoldo v. Castro Rui130 (upholding the general rule that U.S.
courts will not give extraterritorial effect to a foreign State's confiscatory law); and Jerez v.
Republic of Cuba231 (Cuba was not designated a State sponsor of terrorism at the time of the
225 See Rubin v. Islamic Republic of Iran, 138 S. Ct. 816; 583 U.S._ (2018) (U.S. Annex 75). Specifically, the
Supreme Court ruled that "28 U. S .C. § 161 0(g) does not provide a freestanding basis for parties holding a judgment
under § 1605A to attach and execute against the property of a foreign state, where the immunity of the property is
not otherwise rescinded under a separate provision within §1610." Id. at 827; 15.
226 See, for example, Cases 3, 4, and 19, where the court granted the Internet Corporation of Assigned Names and
Numbers (ICANN)'s motions to quash writs of attachment; and Case 7, where the court of appeals affirmed the
lower court's decision to grant the U.S. motion to void the writ of attachment and execution.
227 See Sudan v. Harrison, 139 S. Ct. 1048 (2019) (U.S. Annex 298).
228 See Alejandre v. Telefonica Larga Distancia de Puerto Rico, 183 F.3d 1277 (11th Cir. 1999) (U.S. Annex 71).
229 See Hausler v. J.P. Morgan Chase Bank NA., 770 F.3d 207 (2d Cir. 2014) (U.S. Annex 299).
230 See Villoldo v. Castro Ruz., 821 F.3d 196 (1st Cir. 2016) (U.S. Annex 300).
231 See Jerez v. Republic of Cuba, 775 F.3d 419 (D.C. Cir. 2014) (U.S. Annex 301).
54
act of torture). In sum, Iran has failed to show that U.S. courts do not provide Iranian nationals
and companies a reasonable possibility of redress. Indeed, the reality is that the courts have
provided Iran, and other States such as Sudan and Cuba, meaningful procedural protections.
Coupled with Iran's failure to show that local remedies are not available, the Court should find
that Iran has not demonstrated that exhaustion of local remedies is futile.
Section C: Iran's Claims Excluded by the Requirement to Exhaust Local
Remedies
6.26 To show the cases in which local remedies have or have not been exhausted, the United
States prepared a chart based on the cases on Iran's Attachment 2. This chart, which is attached
as Appendix 1, has five columns: (1) numbers from 1 through 106, matching the numbering of
cases on Iran's Attachment 2; (2) the case caption and docket number; (3) whether an Iranian
entity appeared; (4) the status of the case (as of February 15, 2021); and (5) whether any assets
have been turned over to plaintiffs. The United States gathered the information in the last three
columns from an examination of the court docket for each case. A review of Columns 3 and 4
shows that Iranian entities exhausted local remedies in only three cases: Peterson v. Islamic
Republic of Iran, No. 38 on the chart; Bennett v. Islamic Republic of Iran, No. 54 on the chart;
and Weinstein v. Islamic Republic of Iran, No. 63 on the chart.232 Some cases were dismissed,
but that was as a result of arguments advanced by third parties, including the United States. 233
In none of the remaining cases, with the exception of the Peterson II case, which is pending
and thus not yet exhausted, have Iranian entities made any effort to defend their interests, let
alone exhaust local remedies.
6.27 What also becomes clear in a review of the chart is that over 70 percent of the listed
cases involve nothing more than plaintiffs registering their judgments. This is evident from the
entries in Column 4 noting that, for example, judgments were registered, writs of attachment
were issued or served, or notices of lis pendens were filed, but that no further action has
232 The Government of Iran appeared in two cases, Ministry of Defense and Support for Armed Forces of the
Islamic Republic of Iran v. Cubic Defense Systems (No. 1 on the chart) and Rubin v. Islamic Republic of Iran (No.
12 on the chart). Iran did not exhaust its local remedies in the first case, but did in the second.
233 See, for example, Cases 3 and 4 (courts granted ICANN's motion to quash writ of attachment) and Case 7
(court granted U.S. government's motion to void writ of attachment).
55
occurred. The registration of a judgment234 or notice of !is pendens235 is just the first step in an
enforcement proceeding; Iran cannot possibly base a claim on cases at such a preliminary stage
where nothing of substance has happened, let alone any turnover of assets. Iran has not even
made an effort to articulate a claim regarding these cases.
6.28 In sum, all but the three cases noted above should be excluded from the Court's
consideration because of the failure of Iran and Iranian companies to exhaust local remedies.
SectionD: Iran Cannot Prove Its Case Without Exhausting Local
Remedies
6.29 Iran's case, as recast in its Reply, is built upon an unstable foundation. Following the
Court's exclusion of Iran's sovereign immunity claims and on the basis of the results of a very
limited number of enforcement cases, Iran has altered the emphasis of its claims to assert
sweeping damage to the Iranian economy in an effort to keep its case alive. But there is a large
chasm in the middle of Iran's case. Of the cases listed on Iran's Attachment 2, assets have
been turned over in only a small fraction of them. Furthermore, although in its Reply Iran
234 The proceedings for enforcing a judgment are governed by state law in the United States, but in general the
process has a number of steps:
( 1) The judgment creditor registers the judgment with a court in any judicial district where there may be assets.
(2) Once assets are located, the judgment creditor must identify all third parties with an actual or possible interest
in those assets.
(3) The judgment creditor may request the court to issue writs of attachment or liens on the assets to prevent them
from being sold or transferred pending the court's decision on disposition.
( 4) The judgment creditor must serve all parties notice of the enforcement proceeding and file proof of service
with the court.
(5) The judgment debtor and third parties with an interest in the assets have the right to appear in the enforcement
proceeding and can contest the judgment creditor's right to the assets on various grounds, e.g., by seeking vacatur
of a default judgment, contesting the judgment debtor's ownership, or asserting a secured interest in the assets.
( 6) After a lower court decision and all appeals are exhausted, and if the final decision is in favor of the judgment
creditor, the court orders distribution of the assets.
Such cases can involve dozens of potential third parties and take years to resolve. For example, the Levin v. Bank
of New York case, discussed in detail in Chapter 8, involved hundreds of defendants, third party defendants,
counterclaimants, cross claimants, and cross defendants. See, e.g., Levin v. Bank of New York, Case No. 09-cv-
5900, 2011 L 812032, at *1-4 (S.D.N.Y. Mar. 4, 2011) (U.S. Annex 323) (describing procedural steps leading
from registration of the judgment in April 2009 to fmal turnover order with respect to "Phase One" assets); Levin
v. Bank of New York, Case No. 09-cv-5900, 2013 WL 5312502, at *2 (S.D.N.Y. Sep. 23, 2013) (U.S. Annex 331)
(describing additional steps leading to turnover of "Phase Two" assets). See also Heiser v. Bank of Tokyo
Mitsubishi UFJ, New York Branch, 919 F. Supp. 2d 411, 413-15 (S.D.N.Y. 2013) (U.S. Annex 334) (describing
similar steps, beginning with the registration of plaintiffs' judgments in September 2008 and December 2010 and
concluding with a January 2013 court order directing the turnover of assets).
235 In contrast to a registration of a judgment, a lis pendens is an official notice that a claim to a property has been
filed. It generally serves as notice to the owner (or a potential buyer) of the property thats/he must assume any
litigation associated with it.
56
states that the cases listed on Attachment 2 "remain as the basis oflran' s specific claims against
the United States,"236 it articulated claims for only eight cases, including the pending
Peterson II case that has yet to result in the turnover of assets. As for the remaining cases, Iran
has utterly failed to articulate the alleged injury to Iranian companies. And the Court must base
its analysis of alleged injury to Iran only on the cases in which assets have actually been turned
over, as alleged injury in the remaining cases is nothing more than speculation.
6.30 Consequently, the scope of the alleged damage to the Iranian economy has not been
even remotely established. This is not a matter that can be deferred to a damages phase. The
Court cannot simply presume that U.S. claimants, assuming they even proceed with their
enforcement efforts, will prevail in such cases. Cases may be dismissed or overturned on
jurisdictional grounds, and TRIA is a complex statute; it is not possible to generalize about
whether a specific property can be attached or would be subject to one of its exceptions unless
the matter is fully litigated.
6.31 Iran is trying to have it both ways-relying on Treaty provisions addressing the rights
of Iranian nationals and companies to assert injuries to companies without showing how, in the
vast majority of cases, the companies have been injured, while at the same time relying on
these alleged injuries to assert direct injury to itself in order to circumvent the exhaustion
requirement. Iran cannot prove its case in the abstract. It must prove it through specific
evidence of injury.
6.32 For all of the reasons discussed above, the Court should find that Iran's claim is indirect
and remedies in U.S. courts are reasonably available. As such, the Court must dismiss all
elements of the claim involving alleged injuries to companies that have not exhausted local
remedies.
236 Iran's Reply, ,r 1.22.
57
CHAPTER 7: ARTICLE XX(l) BARS IRAN'S CLAIMS REGARDING
EXECUTIVE ORDER 13599
7.1 In its Counter-Memorial, the United States demonstrated that Executive Order 13599
("E.O. 13599" or "the Executive Order") falls within two of the exceptions set out in Article
XX(l) of the Treaty of Amity, thus barring Iran's claims with respect to the Executive Order.
First, under subparagraph ( c ), the Executive Order "regulat[ es] 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." Second, under subparagraph
( d), the Executive Order was "necessary to protect" the United States' "essential security
interests." As will be explained below, nothing in Iran's Reply demonstrates otherwise.
Section A: Executive Order 13599 Engages Article XX(l)(c) as it
Regulates Iranian Arms Production and Trafficking
7.2 Iran's claims with respect to E.O. 13599 fail because the Executive Order falls under
the exception provided for in Article XX( 1 )( c) as a measure that regulates arms production and
trafficking. Iran argues that E.O. 13599 does not regulate arms production or trafficking.237
As explained in the U.S. Counter-Memorial, and below, this is simply not true. Iran further
suggests that Article XX(l)(c) only applies to a Party's regulation of its own domestic
production and export in arms,238 an assertion that has no support in the treaty text and history.
1. E.O. 13599 Is a Critical Part of a Regulatory Scheme to Address Iranian Arms
Trafficking
7.3 Article XX(l)(c) states that the Treaty shall not preclude the application of 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." The Court has not previously had occasion to interpret the meaning of
subparagraph (c). The term "regulate" is not defined in the Treaty. However, the ordinary
meaning of "regulate" is to "control or supervise by means of rules and regulations."239
"Traffic" means "the commercial movement of goods or people" or "to deal or trade in
something illegal."240 Therefore, this exception ensures the Treaty does not preclude measures
237 Iran's Reply, ,Ml 10.5, 10.9.
238 Iran's Reply, ,r 10.13.
239 CONCISE OXFORD ENGLISH DICTIONARY 1212 (11th ed. 2008) (U.S. Annex 302).
24° CONCISE OXFORD ENGLISH DICTIONARY 1528 (11th ed. 2008) (U.S. Annex 302).
58
that, inter alia, control by rule or regulation the production of, commercial movement of, or
illegal trade in arms.
7.4 In its Counter-Memorial, the United States set forth evidence of Iran's pursuit of
ballistic missile capabilities and history of supplying arms and other support to militant and
terrorist groups abroad. 241 Iran does not dispute that the pursuit of ballistic missile capabilities
and supply of arms to militant and terrorist groups abroad constitutes the "production of or
traffic in arms, ammunition and implements of war." Rather, Iran argues that E.O. 13599 does
not regulate arms production or trafficking. 242 When the Executive Order is examined in
context, it is clear that this argument has no basis.
7.5 The United States has long sought to contain, by rules and regulations, Iran's
international arms trafficking, ballistic missile production, and financial support for terrorism.
It has done this through a regulatory regime that provides for, inter alia, freezing the U.S.based
assets of Iranian governmental entities, Iranian financial institutions, and Iranian entities
sanctioned for engaging in illicit activities, such as the provision of arms to terrorist groups,
that are in the United States or the possession or control of a U.S. person. 243
7.6 Executive Order 13599 followed a U.S. Treasury Department finding that Iran and
Iranian financial institutions were using deceptive financial practices to evade U.S. and
multilateral sanctions, including those targeting weapons proliferation and the provision of
support to terrorist groups. 244 The finding highlighted practices such as the formation of front
companies to obtain dual-use items that could be used in Iran's missile programs, the
falsification of end-user information on export forms to allow prohibited items to be exported
into Iran, and fund transfers to local banks to conceal the Iranian origin of funds. 245 The finding
cautioned that Iran's deceptive financial practices put any financial institutions involved with
them at risk of ''unwittingly facilitating transactions related to terrorism, proliferation, or the
evasion of U.S. and multilateral sanctions."246 In light of this risk, the U.S. Congress passed
241 See, e.g., U.S. Counter-Memorial, ,r,r 11.12-11.14.
242 Iran's Reply, ,r,r 10.5, 10.9.
243 See, e.g., Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010, P .L. 111-195 (U.S. P. 0.
Annex 198). See also U.S. Counter-Memorial, ,r,[ 11.16-11.17.
244 See, e.g., U.S. Counter-Memorial, ,r,[ 11.16-11.17.
245 Finding that the Islamic Republic oflran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756, 72760-72761 (Nov. 18, 2011) (U.S. P.O. Annex 152).
246 Id. at 72760 (U.S. P.O. Annex 152).
59
Section 1245 of the National Defense Authorization Act for Fiscal Year 2012 ("NDAA 2012"),
which directed the President to block the assets of Iranian financial institutions within the
United States or in the possession or control of U.S. persons.247 The President did so through
E.O. 13599, noting in the Executive Order "the deceptive practices of the Central Bank of Iran
and other Iranian banks to conceal transactions of sanctioned parties .... "248 The Executive
Order was designed to stop sanctioned entities from engaging in international arms trafficking
by cutting off hidden or masked sources of funding arranged under the guise of seemingly
legitimate transactions.
7.7 Iran suggests that the Executive Order can have nothing to do with Article XX(l)(c)
because its text lacks an explicit reference to "arms," "weapons," or "ammunition."249
Measures do not need to contain the precise words of the exception in order to be covered by
it. It is clear from the Executive Order's history, detailed in the Counter-Memorial,250 that the
Executive Order works in conjunction with other measures to address Iran's production of and
traffic in arms that support Iranian terrorism.251 Adding an explicit reference to arms, for
example, would not change the Executive Order's effect of making it more difficult for Iran to
finance its international arms trafficking through deceptive financial practices.
11. Article XX(l)(c) Is Not Limited to Regulation of Domestic Arms Production
and Export
7.8 Iran contends that Article XX(l)(c) is limited to a Party's right to regulate its own
production of or export or import of arms.252 Iran supports this proposition by inaptly
referencing a U.S. domestic law supposedly in force at the time of conclusion of the Treaty of
Amity253 and citing the Court's Military and Paramilitary Activities (Nicaragua v. United
States) judgment.254 Iran does not, however, provide textual support for its argument-and
none exists. While the United States (like Iran) agrees that Article XX(l)(c) covers U.S.
controls on arms and dual use exports and re-exports to Iran, on a proper interpretation, Article
247 National Defense Authorization Act for Fiscal Year 2012, § 1245(a)-(b), Pub. L. No. 112-239, 126 Stat. 2006
(IM Annex 17).
248 U.S. Counter-Memorial, ,r 11.9; Exec. Order 13599, 77 Fed. Reg. 6659 (Feb. 5, 2012) (IM Annex 22).
249 Iran's Reply, ,r,r 10.8-10.9.
250 U.S. Counter-Memorial, ,r,r 11.7-11.18.
251 Exec. Order 13599, 7 Fed. Reg. 6659 (Feb. 5, 2012) at Preamble (IM Annex 22).
252 Iran's Reply, ,r,r 10.13, 10.15.
253 Iran's Reply, ,r 10.12.
254 Iran's Reply, ,r 10.15.
60
XX(l)(c) is not limited to the regulation of domestic manufacturing or trade in arms. This is
apparent from its language which, unlike the exception for the "importation or exportation" of
gold or silver provided for in Article XX(l)(a), is not limited to "importation or exportation"
of arms. Rather it addresses the "traffic in arms," which refers to a broader international trade
of munitions, including any transactions that enable or facilitate their international trade and
result in their proliferation across borders to dangerous actors, and not just the physical crossing
of the borders of such munitions between the parties to the Treaty. In that context, the word
"production" directly next to the phrase ''traffic in arms" is not naturally read as limited to
domestic production. Thus, the text may also cover sanctions and other financial tools designed
to regulate the production of or traffic in arms.
7.9 Iran argues that Article XX(l)(c) is limited to the U.S. right to regulate its own
production, manufacturing, or export of arms because it is an extension of the U.S. Munitions
Control Act of 1947.255 This is erroneous. As an initial matter, the specific Act cited by Iran,
which Iran states was concerned with "supervising this country's international traffic and trade
in arms and munitions ofwar,"256 was proposed, but never enacted into law. Regardless, Iran
does not point to any negotiating history or other evidence to show that subparagraph ( c) of
Article XX(l) of the Treaty was intended to be confined to such measures alone.
7.10 To the contrary, U.S. law in force at the time the Treaty was negotiated was aimed at
controlling arms trade by the United States and by others. For example, only four years before
the Treaty of Amity went into effect, Congress enacted the Mutual Defense Assistance Act of
1951,257 commonly known as the Battle Act, to "secure the cooperation of friendly foreign
nations in the maintenance of a multilateral embargo on strategic exports to Communist
countries."258 The Battle Act established an Administrator who published a list of embargoed
items, such as arms, ammunition, and implements ofwar,259 and authorized the termination of
certain forms of assistance to any nation knowingly permitting the shipment of arms,
ammunition, implements of war, or other embargoed items, irrespective of origin, to any nation
255 Iran's Reply, 110.12.
256 Iran's Reply, 110.12.
257 Pub. L. 213, 22 U.S.C. 1611 et seq. (1964) [hereinafter "Battle Act"] (U.S. Annex 303).
258 Harold J. Berman & John R. Garson, United States Export Controls - Past, Present, and Future, 67 COLUM.
L. REV. 791, 810 (1967) (U.S. Annex 304).
259 Battle Act,§§ 102-103 (U.S. Annex 303).
61
threatening the security of the United States.260 Against this contemporaneous background, it
would be highly surprising for the U.S. to negotiate and conclude a treaty exception focused
only on domestic production or export of arms.
7 .11 This appreciation is supported by another example. Two years prior to the entry into
force of the Treaty of Amity, the United States promulgated regulations pursuant to the Trading
with the Enemy Act of 1917. These prohibited any person subject to the jurisdiction of the
United States from purchasing, transporting, importing, or engaging in any other transaction
with respect to merchandise outside the United States whose country of origin was in China or
North Korea.261 Thus, the U.S. legislative landscape at the time the Treaty was negotiated and
concluded focused on regulation of transactions outside the United States by persons subject
to U.S. jurisdiction that affected U.S. national security, not just domestic export regulation.
7.12 Iran cites Military and Paramilitary Activities to support its argument that Article
XX(l)(c) "only applies to measures that are directed to the production of or traffic in arms -
not to any measures that could have an impact on" Nicaragua's (and thus Iran's) own
production of arms.262 However, the Court made no broadly applicable conclusions regarding
the scope of the arms exception in Military and Paramilitary Activities. Rather, the Court's
statement was specific to the facts of the case, where it found it did not need to examine the
exception because it had not found the allegations regarding the U.S. supply of arms to the
Contras to breach the Treaty in the first place. 263 Thus, nothing in Military and Paramilitary
Activities undermines the application of Article XX(l)(c) to E.O. 13599.
Section B: Executive Order 13599 Engages Article XX(l)(d) as It Was
Necessary to Protect U.S. Essential Security Interests
7.13 Article XX(l)(d) provides that the Treaty shall not preclude a Party's application of
measures "necessary to protect its essential security interests." E.O. 13599 was promulgated
as a measure necessary to protect the U.S. essential security interests in addressing Iran's
support for arms trafficking, terrorism, and ballistic missile capabilities, and thus falls within
Article XX(l)(d). Iran disputes whether E.O. 13599 was sufficiently timely and tailored to
260 Battle Act,§ 103(b) (U.S. Annex 303).
261 18 Fed. Reg. 2079 (April 14, 1953) (U.S. Annex 305); see also Berman & Garson, at 791, 793 (U.S. Annex
304).
262 Iran's Reply, 110.15.
263 Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States of America), 1986
I.C.J. 14, 1 280 (June 27).
62
have been "necessary" to protect the identified U.S. essential security interests. As the
following discussion of the text and context of the Executive Order confirms, however, E.O.
13599 was "necessary" within the meaning of the Treaty's essential security exception, and
thus Article XX(l)(d) bars Iran's claims regarding E.O. 13599.
1. The Invoking State Is Entitled to Substantial Deference
7 .14 The essential security exception is broad. The United States accepts in these
proceedings that the Court may interpret the exception, but a high degree of deference is
nonetheless due to the State invoking it. As the Court has remarked previously, "[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."264 The United States, too, made clear
during negotiations of the Treaty of Amity that the Treaty recognized the "paramount right" of
a State to "take measures to protect itself and public safety."265 Like other, similar essential
security exceptions, Article XX(l)(d) extends "broad freedom of action ... to each treaty
partner. ,,266
7.15 The essential security exception at issue in the present proceedings leaves each party,
acting in good faith, a wide discretion to determine the measures necessary to protect its
security interests. For that reason, the Court has accepted that it should afford substantial
deference to a State Party's determination that a measure is "necessary to protect its essential
security interests."267 In Certain Questions of Mutual Assistance, the Court characterized the
essential security provision in the Treaty of Friendship and Co-operation in issue in that case
as "giving wide discretion."268 Given that, the term "necessary" does not mean that the measure
is the only way for the United States to exercise the discretion afforded it under the Treaty, but
rather requires that the Court accord careful regard and appropriate weight to U.S. good faith
perceptions of its circumstances.
7.16 Iran's Reply attempts to undermine the relevance of Certain Questions of Mutual
Assistance. In particular, Iran criticizes the United States for "only retain[ing] two words,
264 Military and Paramilitary Activities, 1986 I.C.J. 14, 1224.
265 Telegram from U.S. Dep't of State to U.S. Embassy Tehran (Feb. 15, 1955) (U.S. Annex 133).
266 Charles H. Sullivan, U.S. Dep't of State, Standard Draft Treaty of Friendship, Commerce and Navigation:
Analysis and Background 308 (1981) ( describing essential security exceptions in treaties like the Treaty of Amity
during the same period) (U.S. P.O. Annex 214).
267 See id. at 308 (U.S. P.O. Annex 214).
268 Mutual Assistance in Criminal Matters (Djibouti v. France), 2008 I.C.J. 177, 229, 1 145 (June 4).
63
'wide discretion' from the relevant passage" of the judgment.269 This critique is misguided.
The phrase ''wide discretion," which the Court used in characterizing the essential security
provisions in the Treaty of Amity and the U.S.-Nicaragua Friendship, Commerce, and
Navigation Treaty, is the part of the judgment that is apposite to the present dispute.270 The
judgment was otherwise dealing with a differently phrased provision. 271
7 .17 Iran indeed notes the differences in the essential security exception language of the
treaty at issue in Certain Questions of Mutual Assistance and the Treaty of Amity in an attempt
to distinguish that case.272 The variation in the provisions, however, is relevant to this dispute
only insofar as the Court pointed to the Treaty of Amity's more narrowly phrased essential
security provision as an example of "the competence of the Court in the face of provisions
giving wide discretion."273 In other words, the Court's "wide discretion" language in Certain
Questions of Mutual Assistance is entirely applicable to the Treaty of Amity and the
circumstances of this case. The Court's interpretation in Certain Questions of Mutual
Assistance was clear and remains uncontradicted in its jurisprudence.
7.18 Finally, Iran's suggestion that the United States is seeking to transform Article
XX(l )( d) into a self-judging provision is wrong. 274 As the United States said at the Preliminary
Objections phase, "the essential security clause in this Treaty is not self-judging, [but] its
history and context, taken together with the Court's own view as expressed in Mutual
Assistance, indicate that invocation of the clause calls for a deferential review."275 The United
States maintains this position.
269 Iran's Reply, ,r 10.23.
270 Article XXI(l)(d) of the U.S.-Nicaragua Treaty provides that "the present Treaty shall not preclude the
application of measures ... necessary to fulfill the obligations of a Party for the maintenance or restoration of
international peace and security, or necessary to protect its essential security interests."
271 The relevant provision in the Convention Concerning Judicial Assistance in Criminal Matters of 1986 differs
from Article XX(l )( d) of the Treaty of Amity as it states: "judicial assistance may be refused ... [i]f the requested
State considers that execution of the request is likely to impair its sovereignty, security, public policy or other
essential interests."
272 Iran's Reply, ,r 10.23.
273 Certain Questions of Mutual Assistance in Criminal Matters (Djibouti v. France), 2008 LC.J. 177, 229, ,r 145
(June 4).
274 See, e.g., Iran's Reply, ,r 10.19. Iran spends several pages of its Reply arguing that the United States "does not
straightforwardly assert" that the provision is self-judging, but that the U.S. arguments in its Counter-Memorial
"amount[] to such a contention."
275 See U.S. Preliminary Objections, ,r 7.30.
64
11. There Is No Support for Iran's Alternative Standard
7.19 There is no support for Iran's alternative standard that the test is whether a measure is
"objectively required in order to achieve that protection, taking into account whether the state
had reasonable alternatives, less in conflict or more compliant with its internal obligations."276
Iran's reliance for this rule on the award in the investor-State dispute Deutsche Telekom v. India
is flawed for several key reasons.
7.20 First, Iran's selective quotation of the Deutsche Telekom award obscures the deference
that the tribunal in fact afforded to the invoking State in that case. In the paragraph that
immediately precedes that quoted by Iran, the tribunal provided important context, which, read
in full, stated:
In [its] review, the Tribunal will undoubtedly recognize a margin
of deference to the host state's determination of necessity, given
the state's proximity to the situation, expertise and competence.
Thus, the Tribunal would not review de novo the state's
determination nor adopt a standard of necessity requiring the
state to prove that the measure was the "only way" to achieve the
stated purpose. On the other hand, the deference owed to the
state cannot be unlimited, as otherwise unreasonable invocations
of [ the essential security exception] would render the substantive
protections contained in the Treaty wholly nugatory.277
The tribunal's emphasis on deference and the State's "proximity to the situation, expertise, and
competence" is obscured in Iran's formulation but is fundamental to a widely-accepted
consideration in applying an essential security exception. 278
7 .21 Second, in the application of its rule, the Deutsche Telekom tribunal did not repeat the
phrase "objectively required." Nor did the tribunal analyze other putative alternatives to the
challenged measures. 279 Instead, the tribunal's focus in application of the exception was on
whether the measures were "principally targeted" at the security interests. After finding that
India was motivated by a mix of interests including essential security interests, the tribunal
provided this shorthand: "[t]he question is thus whether the ... decision was 'necessary' to
protect those interests, in the sense that it was principally targeted to safeguard 'to the extent
276 Iran's Reply, 110.24 (quoting Deutsche Telekom v. India, PCA Case No. 2014-10, Interim Award 1239 (Dec.
13, 2017) (emphasis added in Iran's Reply)).
277 Deutsche Telekom, Interim Award 1238.
21s Id.
279 The Tribunal makes just one passing reference to reasonable alternatives. Id. 1 290.
65
necessary' the defense and other strategic needs that fall within the purview of 'essential
security interests. "'280 The tribunal then concluded that India failed to establish a "nexus"
between the measure and the interests pursued.281
7 .22 Third, the Deutsche Telekom tribunal included no citation for its assertion. In sum, the
Deutsche Telekom award does not provide any authority, let alone compelling authority, for
applying an "objectively required" standard to the essential security provision in the Treaty of
Amity. Further, even if the Court were to take the Deutsche Telekom award at face value, the
tribunal's application does not support the "objectively required" standard that Iran would have
the Court apply.
111. Under the Article XX(l)(d) Standard, E.O. 13599 Was Necessary to Protect
U.S. Essential Security Interests
7.23 Executive Order 13599 blocked all property of the Iranian government and financial
institutions within U.S. jurisdiction (i.e., within the United States or the possession or control
of a U.S. person) in an effort to target "the deceptive practices of the Central Bank of Iran and
other Iranian banks to conceal transactions of sanctioned parties."282 Iran cannot and indeed
does not contest that preventing terrorism, terrorist financing, or halting the advancement of a
hostile State's ballistic missile program constitute essential U.S. security interests. Rather, Iran
argues that "the key question is whether U.S. essential security interests were engaged in 2012
when it issued E.O. 13599 to block the assets of all Iranian financial institutions."283 Thus
conceding the U.S. formulation of its essential security interests, Iran challenges only whether
the Executive Order was "necessary" in light of the circumstances.
7.24 Under any definition of the Treaty's use of the term "necessary," E.O. 13599 was and
remains necessary to protect U.S. essential security interests. The Executive Order is an
incremental and methodical escalation of U.S. efforts to protect its essential security interests
from the threats posed by Iran's support for terrorism, terrorist financing, and its ballistic
missile program. The Executive Order built on and complemented earlier international and
U.S. sanctions addressing illicit Iranian activities following the United States' recognition that
then-existing measures had not adequately addressed the threat caused by Iran's concerted
280 Deutsche Telekom, Interim Award 1284 (emphasis added).
281 Id. 1 288.
282 Exec. Order No. 13599, 77 Fed. Reg. 6659 (Feb. 5, 2012) (IM Annex 22).
283 Iran's Reply, 1 10.29.
66
efforts. As has been detailed before the Court on numerous occasions, the United States and
the international community noted with alarm Iran's support for terrorism and its ballistic
missile program over the course of many years. There is no need to repeat the extensive set of
facts that accumulated over time, but the following discussion highlights some salient
developments that precipitated the issuance ofE.O. 13599.284
7.25 The United Nations has urged States to take measures to eliminate terrorism and, in
particular, suppress the financing of terrorist acts. 285 With respect to Iran, in the years prior to
the issuance of E.O. 13599, the U.N. Security Council warned Iran against developing its
ballistic missile program and called on States to "exercise vigilance" over transactions
involving "all banks domiciled in Iran," 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."286 The multilateral Financial Action
Task Force ("FATF") includes Iran on its short list of "high-risk and non-cooperative
jurisdictions," and it is one of only two States included on the "call to action" list of countries
against which States are advised to take measures. 287
7.26 Several successive developments in the months immediately preceding the February
2012 issuance of E.O. 13599 further contributed to the necessity of the measure. In late
October 2011, F ATF raised "urgent concern" about the risks Iran's financial sector posed to
terrorism finance, stating 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 finance system. "288
7.27 Then, on November 21, 2011, the U.S. Treasury, in consultation with the U.S.
Departments of State and Justice, found Iran to be a jurisdiction of"primary money laundering
concern."289 The published finding detailed the support for this conclusion, stating:
284 See U.S. Counter-Memorial, Chapters 5, 6, & 11.
285 SC Res. 1373, U.N. Doc. S/RES/1373, prmbl & ,r 5 (Sept. 28, 2001) (U.S. P.O. Annex 81).
286 SC Res. 1929, prmbl. & ,r 23, U.N. Doc. S/RES/1929 (June 9, 2010) (U.S. P.O. Annex 110); SC Res. 1803, ,r
10, U.N. Doc. S/RES/1803 (Mar. 3, 2008) (U.S. P.O. Annex 102).
287 Financial Action Task Force (FATF), High-risk an monitored jurisdictions (U.S. Annex 134).
288 Financial Action Task Force (FATF), Public Statement- 28 October 2011 (U.S. P.O. Annex 222).
289 Finding that the Islamic Republic oflran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
72756, 72757-72758 (Nov. 21, 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.").
67
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 faced 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 state-controlled entities,
willingly engaged in deceptive practices to disguise illicit
conduct, evade international sanctions, and undermine the
efforts of responsible regulatory agencies around the world. 290
7.28 The U.S. Treasury also stated that the Islamic Revolutionary Guard Corps and IRGCQuds
Force 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 Hizballah, Hamas, and the Taliban."291
7 .29 In addition, Treasury found that "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 UNSC resolutions regarding its
nuclear and missile activities."292
7.30 Treasury further found that Iran had provided arms and financing to the Taliban to target
Coalition Forces, including the U.S. military. Specifically, since 2006, Iran had "arranged
frequent shipments to the Taliban of small arms and associated ammunition, rocket propelled
grenades, mortar rounds, 107 mm rockets, and plastic explosives."293 In April 2011, Afghan
forces intercepted a shipment of ammunition, supplied by Iran to the Taliban. 294 In August
2011, three months before the Treasury finding was published, a Taliban commander claimed
to have been trained in Iran and offered $50,000 by Iran officials to destroy a dam in
Afghanistan. 295
290 Id.
291 Id. at 72762.
292 Id.
293 Id. at 72758.
294 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).
295 Finding that the Islamic Republic oflran is a Jurisdiction of Primary Money Laundering Concern, 76 Fed. Reg.
at 72757-72758 (U.S. P.O. Annex 152).
68
7.31 Following these determinations, the U.S. Congress passed the NDAA 2012 with
findings that the Central Bank of Iran transferred billions of dollars to evade sanctions and that
the "entire Iranian banking sector, including the Central Bank of Iran . . . pos[ ed] terrorist
financing, proliferation financing, and money laundering risks for the global financial
system."296 Section 1245(c) of the NDAA 2012 accordingly required the President to block all
assets of Iranian financial institutions within the United States or in possession or control of
U.S. persons.
7.32 The Executive Order soon followed this legislation. It included provisions tailored to
address the threat posed to the United States by the Iranian government and financial
institutions. Asset freezes are recognized by the United Nations as an important method to
"prevent and suppress the financing of terrorist acts," as States are required to do under U.N.
Security Council Resolution 1373, "even in the absence of a link to a specific terrorist act."297
Here, E.O. 13599 was aimed at the Iranian government and Iranian financial institutions, which
had supported these threats to U.S. essential security interests and evaded existing U.S.
sanctions.
7.33 In light of these developments, Iran's arguments that the Executive Order was neither
timely nor tailored enough to have been "necessary" cannot stand. To support its argument
that the United States has failed to show why the Executive Order was necessary in 2012, Iran
cites Military and Paramilitary Activities for the principle that, under Article :XX(l)(d),
measures "must have been, at the time they were taken, ... necessary to protect [ the invoking
State's] essential security interests."298 The events now before the Court, however, are far
closer in time to E.O. 13599 than those in Military and Paramilitary Affairs, where the Court
found the United States criticized certain policies for four years before it implemented
measures. Here, by contrast, the United States had responded incrementally to ongoing threats
from Iran for years. The weeks specifically preceding E.O. 13599 were marked by a flurry of
new pronouncements from the FATF, the U.S. Treasury, and Congress chronicling the
evolving threat posed by Iran (including illicit Iranian arms trafficking that very year) and the
need for an enhanced U.S. response. Indeed, contrary to Iran's characterization, the Executive
296 National Defense Authorization Act for Fiscal Year 2012, § 1245(a), Pub. L. 112-239, 126 Stat. 2006 (IM
Annex 17).
297 S.C. Res. 1373, U.N. Doc. S/RES/1373, 11 (Sept. 28, 2001) (U.S. P.O. Annex 81); S.C. Res. 2253, U.N. Doc.
S/RES/2253, prmbl. 124 (Dec. 17, 2015) (U.S. P.O. Annex 182).
298 Military and Paramilitary Activities, 1986 I.C.J. 14, 1281.
69
Order issued immediately after a U.S. government determination that Iran persisted in the use
of deceptive practices to violate an array of more targeted sanctions.
7.34 In addition, the breadth of the Executive Order is not disqualifying, as Iran suggests.
Rather, E.O. 13599 was broad because it was determined to be necessary to address the
deceptive Iranian conduct at issue. Having tried more narrow measures, the United States was
forced by Iran's repeated attempts to evade these measures to target all Iranian financial
institutions.299 Iran argues that the Executive Order "concerns the assets of untargeted and
irrelevant Iranian institutions,"300 but in reality it targeted all Iranian financial institutions
because the entire sector was determined to pose a cumulative risk.
7.35 Iran further speculates in its Reply that "no State and no international organization has
considered it necessary (let alone lawful and appropriate) to take measures equivalent to those
indicated in E.O. 13599."301 Even under the standard set forward by Iran in Deutsche Telekom,
however, a measure need not be the only option available to satisfy the essential security
exception. 302 The United States is likewise under no obligation to show that any other State or
international organization adopted measures identical to those it deemed necessary to protect
its essential security interests in its unique circumstances. Article XX(l)(d) provides flexibility
to the Parties to adopt responses, including incrementally increasing responses, in response to
their own essential security interests. It does not require that the Parties follow other States'
decisions to act or not to act.
7.36 Thus, Article XX(l)(d) bars Iran's claims regarding E.O. 13599. The essential security
exception is broad and affords a high degree of deference to the invoking State. Iran has put
forward an overly constrained treaty standard that conflicts with the Court's existing
jurisprudence on the interpretation of Article XX(l)(d). Still, even under Iran's restrictive
standard, it is evident that E.O. 13599 was necessary as an incremental, strategic escalation of
U.S. efforts to protect its essential security interests from the threats posed by Iran's continued
support for terrorism, financing of nuclear weapons proliferation, and pursuit of its ballistic
missile program, all furthered by Iran's money laundering.
299 UNSC Res. 1803 warned States about transactions with "all banks domiciled in Iran." S.C. Res. 1803, 1 10,
U.N. Doc. S/RES/1803 (Mar. 3, 2008) (U.S. P.O. Annex 102).
300 Iran's Reply, 1 10.34.
301 Iran's Reply, 1 10.32.
302 See Deutsche Telekom, Interim Award 1238.
70
Section C: The Consequences for Iran's Case of a Finding That E. 0.
13599 Is Permitted Pursuant to Article XX(l)(c) and/or (d) of
the Treaty of Amity
7.37 Should the Court conclude that Iran cannot assert claims with respect to E.O. 13599
under the Treaty of Amity, the primary consequence would be with respect to Iran's assertion,
in the context of some Treaty articles, that the blocking of assets under E.O. 13599 alone
constitutes a breach, even if those assets were not turned over to plaintiffs holding judgments
against Iran. 303 Iran has not particularized its claims in this regard (by, for example, identifying
specific assets that would be subject to such claims), and they are accordingly deficient for that
reason alone. A finding by the Court that E.O. 13599 is within the scope of Article XX(l)(c)
and/or ( d) would be yet another reason to reject this category of claim.
303 See, e.g., Iran's Reply, 110.2 ("Only a small part of its complaints is linked to E.O. 13599, which blocks the
property of Iran and Iranian financial institutions. By denying the separate juridical status of Iranian companies,
E.O. 13599 constitutes a breach of Article III(l), V and X(l) of the Treaty of Amity, among many other breaches
claimed by Iran.").
71
PART III: THE U.S. MEASURES DO NOT VIOLATE THE TREATY OF AMITY
In Part III, the United States addresses Iran's misinterpretation and misapplication of each of
the Treaty of Amity articles at issue to the challenged measures and the failure of Iran's Reply
to remedy the flaws in its claims. The United States begins in Chapter 8 with a detailed
discussion of the challenged measures. Next, the United States shows that the challenged
measures do not breach Articles 111(1) and 111(2) (Chapter 9), Article IV(l) (Chapter 10),
Article IV(2) (Chapter 11), or Articles X(l), V(l), and VIl(l) (Chapter 12). Finally, in Chapter
13, the United States addresses Iran's misguided attempt in its Reply to avoid the conclusion
that Iran has abused its rights under a treaty of friendship and commerce by invoking its
provisions against a framework designed to provide recourse to victims of Iran-sponsored
terrorism.
CHAPTER 8: THE U.S. MEASURES
8.1 The purpose of this chapter is to provide additional information about the legislative,
executive, and judicial measures that Iran has challenged under the Treaty of Amity in order
both to correct the record as to the nature of these measures and to clarify which of the U.S.
measures remain at issue. This chapter provides essential context for the chapters that follow
regarding Iran's claims under the individual Treaty articles.
8.2 In Section A of this chapter, the United States builds on the discussion of the legislative
and executive measures in Chapter 6 of the Counter-Memorial to show that these measures
were a reasonable response to sponsorship of terrorism by Iran and other States. The United
States also demonstrates that, with respect to the 8 judgment enforcement actions on which
Iran bases its claims, only a small number of measures apply across multiple actions and certain
measures only apply to a single action.
8.3 In Section B, the United States addresses in detail the 8 judgment enforcement actions
discussed in Iran's Reply. By reference to the detailed, publicly available records from these
cases, the United States establishes that in the actions where Iranian entities chose to appear in
court, they were given a full opportunity to present their defenses, including challenges to the
same statutes that Iran attempts to challenge here. Moreover, even in the actions where Iranian
entities chose not to participate, the U.S. courts took great pains to ensure that they had notice
of plaintiffs' claims and an opportunity to appear. In addition, other parties to the proceedings,
sometimes with the support of the U.S. government, asserted arguments regarding, inter alia,
statutory interpretation that were aligned with the Iranian entities' interests.
72
8.4 In Section C, the United States addresses the complaints-which are both irrelevant
and meritless-that Iran has raised in the Reply concerning the judgments against it arising out
of the 9/11 attacks. As already explained in Chapter 2, Iran's claims with respect to these and
other liability judgments were based on alleged violations of its sovereign immunity and the
Court dismissed those claims in its Preliminary Objections Judgment. Accordingly, no claims
remain in this case relating to the 9/11 judgments, and the Reply's discussion of the 9/11
judgments is therefore irrelevant to Iran's case as it now stands. The United States nevertheless
feels compelled to respond to Iran's complaints about the 9/11 judgments to address important
omissions in Iran's account and show why the complaints are meritless.
Section A: The U.S. Legislative and Executive Measures Were a
Reasonable Response to the Sponsorship of Terrorism by Iran
and Other States
8.5 The United States implemented the measures that Iran has challenged in these
proceedings in response to extensive and ongoing support for terrorist attacks against U.S.
citizens and interests by Iran and, in some cases, other State sponsors of terrorism. As has
already been discussed, Iran seeks to avoid reckoning before the Court with its role in
supporting terrorism against the United States, just as it did before U.S. courts. Iran is free to
plead its claims how it wishes, but the Court cannot ignore the factual backdrop to the U.S.
measures.
8.6 In particular, it is critically important for the Court to keep two points in mind regarding
the three legislative measures that remain in dispute,304 namely, Section 201 of the Terrorism
Risk Insurance Act ("TRIA"), Section 1610(g) of the Foreign Sovereign Immunities Act
("FSIA"), and Section 502 of the Iran Threat Reduction and Syria Human Rights Act of 2012,
codified as Section 8772 of Title 22 of the U.S. Code ("Section 8772").305
8. 7 The first point is that the application of these measures against agencies and
instrumentalities of the Iranian State is predicated on plaintiffs having obtained a valid
judgment from a U.S. court against Iran under the terrorism exception to the FSIA. Section
201 of TRIA, enacted in 2002, authorized plaintiffs with judgments obtained under the
terrorism exception to the FSIA to execute against "the blocked assets of [a] terrorist party
304 The United States addresses the sole executive measure that remains in dispute, Executive Order 13599, below.
305 In its Memorial, Iran also purported to challenge the terrorism exception to the FSIA, codified as 28 U.S.C. §
1605(a)(7), and certain amendments to the exception enacted in 2008 as 28 U.S.C. § 1605A, but Iran's claims as
to these measures were grounded on alleged violations of Iran's sovereign immunity and were therefore dismissed
by the Court's Preliminary Objections Judgment. Preliminary Objections Judgment, ,i 80.
73
(including the blocked assets of any agency or instrumentality of that terrorist party)."306
Section 161 0(g) of the FSIA, enacted in 2008, permitted plaintiffs with terrorism judgments to
attach the property of a foreign State agency or instrumentality to satisfy the judgment against
the foreign State, regardless of whether the agency or instrumentality is juridically separate
from the State and whether the assets are blocked. 307 Finally, Section 8772 made certain assets
at issue in an action to enforce judgments arising primarily out of the 1983 bombing of the U.S.
Marine barracks-Peterson v. Islamic Republic of Iran-available for attachment if the court
concluded that the assets were:
(A) held in the United States for a foreign securities intermediary
doing business in the United States;
(B) a blocked asset (whether or not subsequently unblocked)
... ; and
(C) equal in value to a financial asset of Iran, including an asset
of the central bank or monetary authority of the Government of
Iran or any agency or instrumentality of that Government, that
such foreign securities intermediary or a related intermediary
holds abroad, ... 308
8.8 The second point is that, as already discussed, Iran did not contest the numerous
judgments that plaintiffs obtained in U.S. courts, either in the liability proceedings or in the
subsequent enforcement proceedings, and Iran likewise has almost nothing to say in these
proceedings about the merits of the judgments or its role in the terrorist attacks at issue in those
case.309
8.9 The Court must therefore assess the reasonableness of the U.S. measures in light of the
valid, unpaid judgments against Iran. Specifically, the Court must consider whether the Treaty
of Amity permits one Party that has supported terrorist attacks on the nationals of the other
Party to avoid paying compensation to the victims of those attacks by placing its assets in
separate juridical entities. Put another way, the Court must decide whether Treaty provisions
that were intended to facilitate friendship and commerce between the Parties prescribe a
306 U.S. Terrorism Risk Insurance Act of 2002, § 201(a), Pub. L. No. 107-297, 116 Stat. 2322 (2002) (IM Annex
13). See also U.S. Counter-Memorial, 116.11-6.12.
307 U.S. Counter-Memorial, 116.13-6.15. See also 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).
308 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). See also U.S. Counter-Memorial, 16.16.
309 The only judgments that Iran addresses in any depth in its Reply-which arise out of the 9/11 attacks-are
irrelevant to Iran's claims here, as discussed below in Section C.
74
corporate veil so inviolable that, in the name of "amity," it shields Iran from actions responding
to its own State-sponsored terrorism.
8.10 The choice before the Court regarding the sole executive measure in dispute, Executive
Order 13599, is equally stark. As the Executive Order states, it was predicated on
the deceptive practices of the Central Bank of Iran [i.e., Bank
Markazi] and other Iranian banks to conceal transactions of
sanctioned parties, the deficiencies of Iran's anti-money
laundering regime and the weaknesses of its implementation,
and the continuing and unacceptable risk posed to the
international financial system by Iran's activities.310
8.11 Executive Order 13599 thus arose out of serious concerns about the Iranian financial
system, which were and continue to be shared by numerous other members of the international
community.311 The justifications for Executive Order 13599 are explored in more detail in
other sections of this Rejoinder, particularly Chapter 7, relating to the application of Article
XX(l ). The crucial point, though, is that Iran is again inviting the Court to find a breach of the
Treaty in connection with a measure taken by the United States in response to conduct that
cannot possibly deserve the Treaty's protection.
8.12 lrI addition to keeping in mind the factual backdrop for the challenged measures, it is
equally important for the Court to consider how the measures have been applied in specific
cases to specific assets. As discussed above, Iran has only articulated claims with respect to 8
enforcement actions and the challenged legislative and executive measures are only implicated
in certain of these actions. The table below summarizes the relationship between the
enforcement actions that are at issue in this case and the challenged measures:
# Case Caption Case Number
1 Peterson v. Islamic Republic of 10-cv-4518
Iran (Peterson I) (S.D.N.Y.)
310 Exec. Order 13599, 77 Fed. Reg. 6659 (Feb. 5, 2012) (IM Annex 22).
311 See, e.g., U.S. Counter-Memorial, ,r,r 11.7-11.10.
75
Measures implicated
TRIA § 201
E.O. 13599
Section 8772
# Case Caption Case Number Measures implicated
2 Peterson v. Islamic Republic of 13-cv-9195 TRIA § 201
Iran (Peterson 11) (S.D.N.Y.)
E.O. 13599312
3 Weinstein v. Islamic Republic of 02-mc-00237 TRIA § 201
Iran (E.D.N.Y.)
4 Bennett v. Islamic Republic of l l-cv-05807 TRIA § 201
Iran (N.D. Cal.)
FSIA § 1610(g)
5 Levin v. BankofNew York 09-cv-5900 TRIA § 201
(S.D.N.Y.)
FSIA § 1610(g)
6 Heiser v. Islamic Republic of Iran 00-cv-2329 TRIA § 201
(D.D.C.)
FSIA § 1610(g)
7 Heiser v. Bank of Baroda, New 11-cv-1602 TRIA § 201
York Branch (S.D.N.Y.)
FSIA § 1610(g)
8 Heiser v. Bank of Tokyo 11-cv-1601 TRIA § 201
Mitsubishi UFJ, New York Branch (S.D.N.Y.)
FSIA § 1610(g)
8.13 Four important observations can be made based on this table. First, the assets at issue
in the Weinstein and Bennett cases-which belonged to Bank Melli-were blocked and made
available for attachment not under E.O. 13599, which Iran has challenged here, but under an
earlier Executive Order, E.O. 13382, which was issued in 2007.313 Iran has not challenged
E.O. 13382 in these proceedings (indeed, it is not mentioned at all in Iran's Memorial and
mentioned only in passing in a footnote of Iran's Reply). As a result, the only question before
the Court in these proceedings is whether a judgment obtained against Iran could be enforced
312 Section 1226 of the NOAA 2020, enacted in December 2019, affects Peterson II, but because it was enacted
after the termination of the Treaty of Amity, it cannot be subject to claims in this case. See supra Chapter 2. In
addition, the Peterson II case remains pending, and the applicability ofE.O. 13599 and Section 201 ofTRIA to
the assets at issue has not been resolved by the U.S. courts. See, e.g., Peterson v. Islamic Republic of Iran, Case
No. 15-0690, slip op. at 67-70 (2d Cir. Nov. 21, 2017) (Iran Reply Annex 58).
313 See infra Section B.i.(c) and (d).
76
against the assets of a State-owned bank (Bank Melli) that had been blocked pursuant to E.O.
13382.
8.14 Relatedly, the Levin and Heiser actions were all initiated before the issuance of
Executive Order 13599 and concerned assets that were either not blocked or blocked on other
bases. While some of these assets may also have been subject to Executive Order 13599 after
it was issued, it did not cause them to be available for attachment and execution.
8.15 Second, Section 8772 applies only in Peterson I. Moreover, as will be discussed in
further detail below, there was and is nothing egregious about Section 8772. It made available
for attachment assets that (i) Bank Markazi repeatedly claimed as its own, and (ii) had been
blocked due to Bank Markazi's deceptive practices. Though Iran attempts to depict Section
8772 as an effort by the U.S. Congress to legislate a win for plaintiffs in a case they otherwise
would have lost, plaintiffs argued that these assets were also subject to attachment under
preexisting law (namely, TRIA). Section 8772 provided an alternative route to attachment of
the assets in the event that the District Court had found TRIA inapplicable due to Bank
Markazi's interposition of intermediaries between itself and the assets (while continuing to
claim ownership of them). The District Court, however, ultimately concluded that plaintiffs
could attach the assets under either TRIA or Section 8772.
8.16 Third, the two legislative measures that are relevant to multiple actions-Section 201
ofTRIA and Section 1610(g) of the FSIA-apply to all State sponsors of terrorism, not solely
to Iran.
8.17 Fourth, while plaintiffs invoked both Section 201 of TRIA and Section 161 0(g) of the
FSIA in a number of the actions, every single one involved blocked assets except plaintiffs'
attempt to attach a debt owed by Sprint to an Iranian telecommunications company in Levin
(which is discussed in further detail below). Accordingly, the fact that Section 1610(g) of the
FSIA applies regardless of whether the assets at issue are blocked is only relevant to the
outcome of one of the enforcement proceedings at issue.
Section B: U.S. courts Treated Iran and Iranian Entities Reasonably and
Did not Discriminate Against Them in Proceedings to
Enforce Terrorism Judgments
8.18 In this section, the United States addresses the 8 judgment enforcement actions that Iran
has identified in its Reply as the basis for its claims in this case. The United States begins with
(i) the four proceedings in which Iranian entities appeared, namely the two Peterson
proceedings (where Bank Markazi appeared) and the Weinstein and Bennett proceedings
77
(where Bank Melli appeared), before turning to (ii) the four proceedings in which Iranian
entities chose not to appear, namely the Levin action and the three Heiser actions.
8.19 As this review will show, in each of the cases in category (i), the Iranian entities that
appeared had a full opportunity to present their defenses to attachment of their assets and the
U.S. courts thoroughly considered those defenses. The United States also addresses certain
gaps and inaccuracies in Iran's account of these cases.
8.20 As to the category (ii) cases, the United States establishes that the courts made extensive
efforts to ensure that Iranian entities with an interest in the assets at issue had notice of the
proceedings and an opportunity to appear. By contrast to Bank Markazi and Bank Melli, which
appeared in the category (i) cases, the Iranian entities implicated in the category (ii) cases chose
not to appear. As already discussed in Chapter 6, this choice bars Iran's claims with respect to
the category (ii) cases because, in declining to contest the attachment of their assets in U.S.
courts, these entities failed to exhaust their local remedies. In any event, the United States
shows how the U.S. courts, even in the absence of any Iranian participation, proceeded to weigh
the plaintiffs' evidence and to consider arguments by other parties to the proceedings in
opposition to plaintiffs' applications, including arguments that would have been available to
Iranian entities, had they chosen to participate.
i. Proceedings in Which Iranian Entities Appeared
8.21 Two of the four proceedings discussed in this section involve Bank Markazi (Peterson
J and JI) and two involve another State-owned Iranian bank, Bank Melli (Weinstein and
Bennett). The discussion of Peterson I and II is without prejudice to the point, already
established above, that Bank Markazi is not a "company" within the meaning of the Treaty of
Amity and, accordingly, that the Court need not reach the merits oflran's claims under Articles
111(1 ), 111(2), IV(l ), IV(2), and V(l) as they relate to these two cases. Likewise, the discussion
of Bennett and Peterson II is without prejudice to the point that Iran cannot assert claims with
respect to judicial action, such as the April 2020 order in Bennett directing the turnover of the
funds at issue and any potential future turnover order in Peterson II, that has occurred or will
occur after the termination of the Treaty of Amity.314
314 See supra Chapter 2.
78
(a) Peterson I
8.22 As has already been discussed, the plaintiffs in Peterson v. Islamic Republic of Iran
were victims of the 1983 bombing of the U.S. Marine barracks in Beirut, Lebanon and their
families. In finding for the plaintiffs, the court concluded based on extensive evidence and
testimony that
MOIS [i.e., the Iranian Ministry of Information and Security],
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. Specifically, the deaths of these servicemen
were the direct result of an explosion of material that was
transported into the headquarters of the 24th MAU [i.e., the 24th
Marine Amphibious Unit of the U.S. Marines] and intentionally
detonated at approximately 6:25 a.m., Beirut time by an Iranian
MOIS operative.315
8.23 After obtaining a judgment against Iran for its role in the bombing, the Peterson
plaintiffs sought to attach the proceeds of bonds owned by Bank Markazi, which were being
held in an account maintained by Clearstream Banking, S.A. ("Clearstream") in New York.316
At some point in 2008, Bank Markazi transferred the bond proceeds to an account that Banca
UBAE, an Italian bank, had opened at Clearstream. Bank Markazi, however, continued to
claim sole ownership of the bond proceeds.317
8.24 Plaintiffs initially proceeded under the FSIA's terrorism judgment execution provisions
but amended their complaint in 2012 to assert claims under TRIA after Bank Markazi's assets,
including the assets at issue in Peterson I, were blocked pursuant to Executive Order 13599.318
As discussed elsewhere, Bank Markazi's assets were blocked as a result of its own deceptive
financial practices and, in particular, its role in facilitating transactions with sanctioned
parties.319
315 Peterson v. Islamic Republic of Iran, 264 F. Supp. 2d 46, 61 (D.D.C. 2003) (U.S. Annex 36). See also U.S.
Counter-Memorial, ,r,r 5.22-5.33 (detailing evidence oflran's role in the bombing).
316 Other groups of plaintiffs holding unsatisfied judgments against Iran eventually joined the Peterson
enforcement action, but, as the U.S. Supreme Court noted, "[t]he majority ... sought redress for injuries suffered
in connection with the 1983 bombing of the U.S. Marine barracks in Beirut, Lebanon." BankMarkazi v. Peterson,
136 S. Ct. 1310, 1319-20 (2016) (U.S. Annex 109).
317 Peterson v. Islamic Republic of Iran, Case No. 10-cv-4518, 2013 WL 1155576, at **2-5 (S.D.N.Y. Mar. 13,
2013) (U.S. Annex 108).
318 BankMarkazi v. Peterson, 136 S. Ct. 1310, 1320 n.10 (2016) (U.S. Annex 109).
319 See supra Chapter 7, Section B.iii.
79
8.25 Bank Markazi opposed plaintiffs' TRIA claims on various grounds, including that the
assets at issue were not "blocked assets of' an agency or instrumentality of Iran, as required
under TRIA, because the assets were being held in an account maintained by Clearstream,
rather than Bank Markazi, in New York.320 In other words, Bank Markazi did not contest that
it was the "sole beneficial owner of the assets"-indeed, it asserted several times during the
course of the litigation that the assets "belong[ed] to" it and repeatedly described them as "the
property of Bank Markazi"-but claimed nevertheless that the assets were not subject to
attachment under TRIA due to the way in which Bank Markazi had structured its holding of
the assets. 321
8.26 Bank Markazi also argued that permitting the plaintiffs to attach the assets would
violate the Treaty of Amity,322 and that the assets were immune from attachment under Section
1611(b) of the FSIA, because they constituted "an investment of the Bank's foreign currency
reserves-a classic central banking function," and plaintiffs had failed to demonstrate
otherwise.323 As already noted in Chapter 5, Bank Markazi's position in the Peterson litigation
is entirely at odds with Iran's position in this case, where it argues that the assets were being
held for a commercial purpose in a futile effort to bring Bank Markazi within the Treaty of
Amity's definition of "company."324
8.27 While plaintiffs' TRIA claims were pending, the U.S. Congress passed Section 8772,
which provided an alternative avenue to attach the assets at issue. Plaintiffs accordingly sought
turnover under this new provision as well. 325
8.28 Courts at every level of the U.S. judiciary provided Bank Markazi a full opportunity to
present its arguments in opposition to plaintiffs' attempt to attach the funds at issue under TRIA
320 Peterson v. Islamic Republic of Iran, Case No. 10-cv-4518, 2013 WL 1155576, at **23-24 (S.D.N.Y. Mar. 13,
2013) (U.S. Annex 108).
321 Peterson v. Islamic Republic of Iran, Case No. 10-cv-4518, 2013 WL 1155576, at *23 & n.10 (S.D.N.Y. Mar.
13, 2013) (U.S. Annex 108).
322 Defendant Bank Markazi's Memorandum of Law in Support of Its Motion to Dismiss the Second Amended
Complaint for Lack of Subject Matter Jurisdiction 22-24, Peterson v. Islamic Republic of Iran, No. 10-4518
(S.D.N.Y. Mar. 15, 2012) (U.S. P.O. Annex A05).
323 Defendant Bank Markazi's Memorandum of Law in Support of Its Motion to Dismiss the Second Amended
Complaint for Lack of Subject Matter Jurisdiction 3, Peterson v. Islamic Republic of Iran, No. 10-4518 (S.D.N.Y.
Mar. 15, 2012) (U.S. P.O. Annex A05). See also 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) ("[T]he record is entirely
consistent with Bank Markazi' s position throughout this litigation that the Assets at Issue were used for the classic
central banking purpose of investing Bank Markazi's currency reserves."); U.S. Counter-Memorial, 119.12-13.
324 See also U.S. Counter-Memorial, 119.10-15.
325 Bank Markazi v. Peterson, 136 S. Ct. 1310, 1320 (2016) (U.S. Annex 109).
80
and Section 8772, 326 and gave those arguments careful consideration before ultimately
rejecting them. As to Bank Markazi's arguments that the Treaty of Amity "entitle[d] it to
separate juridical status from Iran and, as such, its assets cannot be seized to satisfy a judgment
against the sovereign state," both the District Court and the Court of Appeals held that the
Treaty did not act as an absolute bar to piercing the corporate veil. 327
8.29 In the Supreme Court, Bank Markazi chose to focus on the argument that Section 8772
violated the principle of separation of powers under the U.S. Constitution.328 Justice Ginsburg,
writing for the six-member majority of the Court, concluded that Section 8772 "does not
transgress constraints placed on Congress and the President by the Constitution."329 In its
account of Peterson I, Iran emphasizes Chief Justice Roberts' dissenting opinion, but the
majority of the Court considered and rejected the Chief Justice's arguments regarding the
statute's purported unconstitutionality.330 As to the point quoted in Iran's Reply that Section
8772 "guarantee[d] that [plaintiffs] win,"331 Justice Ginsburg noted that "the District Court,
closely monitoring the case, disagreed" and quoted the lower court's statement that the
determinations required by Section 8772 were "not mere fig leaves," but instead required the
court to answer questions contested by Bank Markazi, Clearstream, and Banca UBAE about
the ownership of the assets, including whether other parties might have an interest in them, and
whether the assets "were located in Luxembourg, not New York."332
8.30 As a final point on Peterson I, though Iran repeatedly invokes Section 8772 in the Reply
in support of its claims arising out of the Peterson I proceedings, the District Court concluded
that plaintiffs would also have been able to attach the assets at issue under TRIA, which had
been in place for a decade prior to the enactment of Section 8772. First, the court concluded
that "Bank Markazi [was] the only owner" of the assets, as it had "repeatedly conceded at a
326 Bank Markazi was joined by Clearstream and Banca UBAE in opposing plaintiffs' turnover requests at the
District Court level, but these other parties settled with plaintiffs before the Court of Appeals rendered its decision
affirming the District Court's opinion. Bank Markazi v. Peterson, 136 S. Ct. 1310, 1322 n.15 (20 l 6)(U.S. Annex
109).
327 Peterson v. Islamic Republic of Iran, Case No. 10-cv-4518, 2013 WL 1155576, at *25 (S.D.N.Y. Mar. 13,
2013) (U.S. Annex 108). See also Peterson v. Islamic Republic of Iran, 758 F.3d 185, 190-91 (2d Cir. 2014)
(U.S. Annex 233) ("[W]e see no conflict between§ 8772 and the Treaty of Amity.").
328 Bank Markazi v. Peterson, 136 S. Ct. 1310, 1317 (2016) (U.S. Annex 109).
329 Id. at 1317 (U.S. Annex 109).
330 See, e.g., id. at 1326 (U.S. Annex 109).
331 Iran's Reply, ,r 2.96(c).
332 Bank Markazi v. Peterson, 136 S. Ct. 1310, 1325 & n.20 (2016) (U.S. Annex 109).
81
variety of times."333 Thus, because the United States had blocked the assets under E.O.
13599,334 the assets constituted blocked assets of an agency or instrumentality of a terrorist
party and were subject to attachment under Section 201(a) ofTRIA.335 Second, as the District
Court noted, "TRIA's 'notwithstanding' clause ... preempts central bank immunity" under
Section 1611 (b )( 1) of the FSIA, independent of any provision of Section 8772. 336 The Court
of Appeals and the U.S. Supreme Court ultimately declined to rule on the applicability ofTRIA,
choosing instead to rest their opinions on Section 8772,337 but the District Court's analysis
demonstrates that while Section 8772 might have lessened the uncertainty regarding whether
the assets at issue were subject to attachment, Iran has not and cannot establish that it changed
the ultimate outcome.
(b) Peterson II
8.31 Iran also purports to assert claims regarding a separate action initiated by the Peterson
plaintiffs, which it refers to as Peterson II. As Iran concedes, this action is ongoing and has
not resulted in the turnover of any assets to plaintiffs.338 To the extent the U.S. courts order
assets to be turned over to plaintiffs in Peterson II in the future, this would occur long after the
termination of the Treaty of Amity and would not, therefore, give rise to a claim of breach of
the Treaty.339 In any event, Iran's claims are as meritless with respect to Peterson II as with
respect to Peterson I. The U.S. courts have given detailed consideration to Bank Markazi's
arguments, and those of its codefendants, in the more than seven years since plaintiffs initiated
the case. 340
333 Peterson v. Islamic Republic of Iran, Case No. 10-cv-4518, 2013 WL 1155576, at *23 (S.D.N.Y. Mar. 13,
2013) (U.S. Annex 108).
334 Id. at *22 (U.S. Annex 108).
335 Id. at *23 (U.S. Annex 108).
336 Id. at *25 (U.S. Annex 108).
337 BankMarkazi v. Peterson, 136 S. Ct. 1310, 1322 n.16 (2016) (U.S. Annex 109); Peterson v. Islamic Republic
of Iran, 758 F.3d 185, 188 (2d Cir. 2014) (U.S. Annex 233).
338 Iran's Reply, ,r 2.108.
339 See supra Chapter 2. Likewise, Iran cannot assert any claim under the Treaty with respect to Section 1226 of
the NOAA 2020, regardless of any effect it may have on the Peterson II proceedings, because it was enacted in
December 2019, after the Treaty's termination.
340 See, e.g., Opinion & Order, Peterson v. Islamic Republic of Iran, Case No. 13-cv-9195 (S.D.N.Y. Feb. 20,
2015), ECF 166 (Iran Reply Annex 50); Peterson v. Islamic Republic of/ran, Case No. 15-0690, slip op. (2d Cir.
Nov. 21, 2017) (Iran Reply Annex 58).
82
(c) Weinstein
8.32 Weinstein v. Islamic Republic of Iran involved claims by the family of Ira Weinstein, a
U.S. citizen who died as a result of severe injuries sustained in the suicide bombing of a bus in
Jerusalem carried out by Hamas, which, the court found, had received "massive material and
technical support" from Iran. 341 As the court explained,
[T]he defendants [i.e., Iran, the Iranian Ministry of Information
and Security, and three senior Iranian officials] not only
provided the terrorists with the technical knowledge required to
carry out the February 26, 1996 attack on the Number 18 Egged
bus, but also gave HAMAS the funding necessary to do so. 342
8.33 Iran provides an incomplete account of the plaintiffs' efforts to enforce the Weinstein
judgment. While Iran focuses on the turnover of assets that occurred in 2012, it neglects to
mention plaintiffs' earlier unsuccessful attempt to attach funds belonging to three Iranian banks
(Bank Melli, Bank Sepah, and Bank Saderat) in accounts at the Bank of New York. In a
January 2004 opinion, the District Court determined, consistent with the arguments made by
the Iranian banks, that the funds at issue were not "blocked assets" under TRIA and, therefore,
were not subject to attachment under TRIA.343 Importantly, the U.S. government submitted a
statement of interest, which the court quoted extensively in its opinion, siding with the Iranian
banks' interpretation of TRIA. 344
8.34 In 2007, the Weinstein plaintiffs made another attempt to enforce their judgment, this
time with respect to real property owned by Bank Melli in Forest Hills, New York. As a result
of Bank Melli's designation by the United States as "a proliferator of weapons of mass
destruction under Executive Order 13,382"345-which Bank Melli did not challenge in the
District Court346 and does not challenge here-all of Bank Melli's "property and interests in
property" in the United States had been blocked, including the Forest Hills property. 347 Bank
341 Weinstein v. Islamic Republic of Iran, 184 F. Supp. 2d 13, 21 (D.D.C. 2002) (U.S. Annex 53).
342 Weinstein v. Islamic Republic of Iran, 184 F. Supp. 2d 13, 21-22 (D.D.C. 2002) (U.S. Annex 53).
343 Weinstein v. Islamic Republic of Iran, 299 F. Supp. 2d 63, 76 (E.D.N.Y. 2004) (U.S. Annex 307).
344 Id. at 71 (U.S. Annex 307) ("The [U.S.] government supports the Banks' assertion that the Banks' assets in
question are not 'blocked assets' under the TRIA and, therefore, not subject to attachment under the TRIA."); id.
at 73 ("The [U.S.] government disagrees with plaintiffs' arguments and largely agrees with Bank Melli's
arguments.").
345 Weinstein v. Islamic Republic of Iran, 624 F. Supp. 2d 272,273 (E.D.N.Y. 2009) (U.S. Annex 306).
346 Id. at 278 (U.S. Annex 306).
347 Id. at 273 (U.S. Annex 306).
83
Melli was providing banking services to entities involved in Iran's nuclear and ballistic missile
programs and international terrorism, which included disguising transactions with entities
identified in U.N. Security Council Resolution 1747.348 Bank Melli conceded that the Forest
Hills property was a "blocked asset" subject to attachment under TRIA and also that it is an
"agency or instrumentality" of Iran, but opposed plaintiffs' attempt to attach the property on
the basis that, inter alia, it would violate the Treaty of Amity and the U.S. Constitution.
8.35 The District Court rejected Bank Melli's arguments. With respect to Article 111(1) of
the Treaty, the court explained that, as the U.S. Supreme Court had already recognized, "the
primary purpose" of provisions like Article III( 1) "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. "349 Thus, "nothing in the language or
purpose of Article 111(1) of the Treaty of Amity ... precludes the veil-piercing authorized by
TRIA § 201(a)."350
8.36 The court also considered and rejected Bank Melli's argument that attachment and sale
of the Forest Hills property would be a "'taking' not for public purpose and without just
compensation in violation of Article IV(2) of the Treaty of Amity and the Fifth Amendment of
the United States Constitution."351 The court relied on a past opinion issued by the Court of
Appeals for the Federal Circuit, which had explained that "valid regulatory measures taken to
serve substantial national security interests may adversely affect individual contract-based
interests and expectations, but those effects have not been recognized as compensable takings
for Fifth Amendment purposes."352 The court also noted that:
Bank Melli's property in the United States was placed in
jeopardy because the bank itself acted to proliferate weapons of
mass destruction, which in tum lead to its designation and the
blocking of its assets . . . . Bank Melli took the risks that its
involvement with Iran's proliferation of weapons of mass
348 Fact Sheet: Designation of Iranian Entities and Individuals for Proliferation Activities and Support for
Terrorism, hp-644, U.S. Dep't of the Treas. (Oct. 25, 2007) (U.S. P.O. Annex 147).
349 Weinstein v. Islamic Republic of Iran, 624 F. Supp. 2d 272,275 (E.D.N.Y. 2009) (U.S. Annex 306) (quoting
Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 185-86 (1982)).
350 Id. at 2 7 5 (U.S. Annex 306). The court also noted that, in the event of a conflict between TRIA and the Treaty
of Amity, TRIA, as a subsequent legislative act, would prevail. However, that statement was unnecessary to the
outcome because the court had already concluded that there was no conflict between TRIA and the Treaty. Id.
351 Id. at 276 (U.S. Annex 306).
352 Id. at 277 (U.S. Annex 306) (quoting Paradissiotis v. United States, 304 F.3d 1271, 1274-75 (Fed. Cir. 2002)).
84
destruction would result in the very consequences it now faces
under the Iranian sanctions program. 353
8.37 The District Court stayed proceedings after its ruling in order to allow Bank Melli an
opportunity to appeal, first to the Court of Appeals for the Second Circuit and then to the U.S.
Supreme Court. The Court of Appeals affirmed the District Court's ruling, but there can be no
question that it gave Bank Melli a fair hearing. Among other things, the Court of Appeals
considered two arguments, one regarding subject matter jurisdiction and one regarding the
constitutionality of TRIA, that Bank Melli had not raised before the District Court. 354
8.38 After the Court of Appeals had affirmed the District Court's ruling, the District Court
granted Bank Melli's motion to stay proceedings again pending its petition for certiorari to the
U.S. Supreme Court. The case remained stayed for nearly 18 months, from January 3, 2011
until shortly after the U.S. Supreme Court rejected Bank Melli's petition on June 25, 2012, and
the District Court ordered the distribution of funds to plaintiffs on December 20, 2012.355
(d) Bennett
8.39 Bennett, like Weinstein, involved a bombing carried out by Hamas, this one in the
cafeteria of Hebrew University in Jerusalem, with the material support of Iran and its Ministry
of Information and Security.356 The bombing resulted in the deaths of, among others, five U.S.
citizens, including Marla Ann Bennett, a 24-year-old student from Califomia.357
8.40 As already noted, Bennett is irrelevant to Iran's claims in this case because the court
did not direct assets to be turned over to plaintiffs until April 24, 2020,358 long after the United
States terminated the Treaty of Amity on October 3, 2018.
8.41 But even if the Bennett enforcement proceedings were relevant to any claim before the
Court, Iran's Reply provides a misleadingly incomplete description of the proceedings.
353 Id. at 278 (U.S. Annex 306). See also Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 54 (2d Cir. 2010)
(U.S. Annex 308) ("Here, where the underlying judgment against Iran has not been challenged, seizure of Bank
Melli's property, as an instrumentality oflran, in satisfaction of that liability does not constitute a 'taking' under
the Takings Clause. Instead, Bank Melli's own conduct as a funder of weapons of mass destruction opened it to
liability for judgments already entered against Iran.").
354 Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 47, 50 (2d Cir. 2010) (U.S. Annex 308).
355 Excerpts from docket for Weinstein v. Islamic Republic of Iran, Case No. 12-cv-03445 (S.D.N.Y.), at 15-18
(U.S. Annex 309).
356 Bennett v. Islamic Republic of Iran, 604 F. Supp. 2d 152, 154 (D.D.C. 2009) (U.S. Annex 310).
357 Id. (U.S. Annex 310).
358 Order, Bennett v. Islamic Republic of Iran, Case No. 11-cv-5807 (N.D. Cal. Apr. 24, 2020), ECF 210 (U.S.
Annex311).
85
Following its refusal to participate in the proceedings that led to the judgment, Iran received
notice of the judgment on November 26, 2007. 359 After an earlier unsuccessful effort to enforce
their judgment in the District of Columbia, the Bennett plaintiffs initiated an enforcement
action in the U.S. District Court for the Northern District of California to attach blocked assets
of Bank Melli being held by U.S. financial institutions, including Visa and Franklin
Templeton.360 As with the property at issue in Weinstein, these assets were blocked under
Executive Order 13382 of June 28, 2005, as a result of Bank Melli's role in the proliferation of
weapons of mass destruction. 361 The financial institutions holding Bank Melli's blocked assets
promptly took procedural steps to include Bank Melli in the enforcement proceedings. On
March 12, 2012, Bank Melli was served a summons related to the enforcement action in the
U.S. District Court for the Northern District of California.362
8.42 Both the trial and appellate courts made numerous reasonable accommodations to
ensure that Bank Melli was fully heard and able to fully present its defenses on the merits.
Bank Melli initially failed to appear in the Bennett enforcement proceedings.363 Over the
opposition of the Bennett plaintiffs, 364 the trial court vacated the default of Bank Melli, 365 which
allowed Bank Melli to participate fully in the proceedings. Every request by Bank Melli for
an extension was granted by the appellate court, as were Bank Melli's request to file briefs that
exceeded the page limits and to file additional replies not typically permitted under the rules of
the court. 366
359 Affidavit of Service of Judgment upon Defendant, Bennett v. Islamic Republic of Iran, Case No. 03-cv-1486
(D.D.C. Jan. 24, 2011), ECF 51-1 (U.S. Annex 312).
36° Complaint, Bennett v. Islamic Republic of Iran, Case No. 11-cv-5807 (N.D. Cal Dec. 2, 2011), ECF 1 (U.S.
Annex313).
361 See 72 Fed. Reg. 62,520 (Nov. 5, 2007) (U.S. Annex 314). Bank Melli's assets within U.S. jurisdiction were
blocked on October 25, 2007 because it was providing banking services to entities involved in Iran's nuclear and
ballistic missile programs and international terrorism, including by disguising transactions with entities targeted
by UN Security Council Resolution 1747 for nuclear or ballistic missile activities. Fact Sheet: Designation of
Iranian Entities and Individuals for Proliferation Activities and Support for Terrorism, hp-644, U.S. Dep't of the
Treas. (Oct. 25, 2007) (U.S. P.O. Annex 147).
362 Summons, Bennett v. Islamic Republic of Iran, Case No. 11-cv-5807 (N.D. Cal. Mar. 21, 2012), ECF 45 (U.S.
Annex315).
363 Clerk's Notice of Entry of Default, Bennett v. Islamic Republic of Iran, Case No. l 1-cv-5807 (N.D. Cal. Apr.
26, 2012), ECF 79 (U.S. Annex 316).
364 Bennett v. Islamic Republic of Iran, Case No. 11-cv-5807 (N.D. Cal. June 2012), ECF 100, 101, 103, 106, 107
(U.S. Annex 317).
365 Order, Bennett v. Islamic Republic of Iran, Case No. l 1-cv-5807 (N.D. Cal. July 5, 2012), ECF 109 (U.S.
Annex318).
366 See, e.g., Orders, Bennett v. Islamic Republic of Iran, 13-15442 (9th Cir.), ECF 16, 46, 87 (U.S. Annex 319).
86
8.43 Apart from this process provided by the U.S. judiciary, the executive branch of the
United States participated in Bennett-related enforcement proceedings on multiple occasions
in a manner that benefited Iran. For example, on March 31, 2009, a writ of attachment by the
Bennett plaintiffs for five Iranian properties in the District of Columbia was quashed with the
participation of the United States at both the trial and appellate levels in U.S. courts.367 Central
to the U.S. legal argument were its international obligations with regard to diplomatic
property.368 The United States appeared in the litigation despite significant criticism and
pressure from the Bennett plaintiffs, which ultimately drew a rebuke of the plaintiffs from the
court.369 Ironically, the United States has now been impleaded before this Court by Iran-the
other party of interest to the Bennett proceedings-to defend baseless assertions that it violated
international obligations based on enforcement efforts related to the same judgment.
8.44 The United States maintained its even-handed approach when asked to participate in
the part of the Bennett enforcement efforts that Iran now complains of before this Court. For
example, during the appeal of the enforcement decision of the Northern District of California,
the United States expressed views on the proper interpretation of Section 1610(g) of the FSIA
that were consistent with the arguments offered by Bank Melli370 and ultimately found
persuasive by the U.S. Supreme Court.371 The United States also raised concerns about the
application of California law in assessing whether the assets at issue could be attached under
TRIA and/or Section 1610(g).372 Iran may not like the (post-Treaty termination) outcome of
the Bennett enforcement proceedings, but it has no reasonable complaints about the process
afforded Bank Melli to present its case before the U.S. judiciary or the actions taken by the
367 See Bennettv. Islamic Republic of Iran, 604 F. Supp. 2d 152 (D.D.C. 2009) (U.S. Annex 310); see, e.g., Motion
to Quash Writs of Attachment by United States of America, Bennett v. Islamic Republic of Iran, Case No. 03-cv-
1486 (D.D.C. July 18, 2008), ECF 34 (U.S. Annex 320); Corrected Brief for Appellee United States, Bennett v.
Islamic Republic of Iran, Case No. 09-5147 (D.C. Cir. Dec. 1, 2009), Doc. 1218295 (U.S. Annex 321).
368 See Bennett v. Islamic Republic of Iran, 604 F. Supp. 2d at 156 (U.S. Annex 310).
369 See id. at 168 (U.S. Annex 310) ("This Court recognizes that plaintiffs believe that the United States is
misguided in its conduct of foreign policy in this instance. To all the victims in these actions, it must certainly feel
as if the United States has turned against them in favor of state sponsors of terrorism. Nonetheless, counsel's
rhetoric is neither accurate nor fair, ... ").
370 See, e.g., Brief for the United States as Amicus Curiae, Bennett v. Islamic Republic of Iran, 825 F .3d 949 (9th
Cir. 2016) (No. 13-15442), ECF 82 (U.S. Annex 322).
371 See Rubin v. Islamic Republic of Iran, 138 S. Ct. 816 (2018) (U.S. Annex 75).
372 See, e.g., Brief for the United States as Amicus Curiae, Bennett v. Islamic Republic of Iran, 825 F .3d 949 (9th
Cir. 2016) (No. 13-15442), ECF 82 (U.S. Annex 322).
87
United States during the litigation, for which the United States was criticized by the plaintiffs
as protecting Iran's interests.
11. Proceedings in Which Iranian Entities Did Not Appear
8.45 Even with respect to those enforcement proceedings in which Iranian entities chose not
to appear-several actions brought by the Heiser plaintiffs and Levin v. Bank of New Yorkthe
U.S. judicial system again took care to protect those entities' interests. The Heiser plaintiffs
were families of the servicemen killed in the Khobar Towers bombing, which the United States
discussed extensively in the Counter-Memorial.373 The Levin case involved the kidnapping
and torture of Jeremy Levin, the bureau chief for CNN in Beirut, by Hezbollah during a period
when, the court concluded, Iran ''was using . . . Hizbollah directly and indirectly to commit
terrorist acts against American civilians."374
8.46 The United States makes three primary points regarding the Heiser and Levin cases.
First, the courts made efforts to ensure that Iran and the Iranian companies whose property was
subject to attachment and execution had notice of the proceedings and had ample time to
appear. Second, even though the Iranian companies chose not to appear, in many cases other
parties to the proceedings-often the banks holding the assets that the plaintiffs were seeking
to attach-asserted defenses that would have been available to those companies. Third,
regardless of the Iranian companies' failure to appear, the courts nevertheless required
plaintiffs to support their claims to the assets with evidence.
8.47 The United States has already shown that Iran cannot assert claims with respect to the
Heiser and Levin cases because the Iranian entities at issue failed to appear and exhaust their
local remedies. 375 But even if the Iranian entities had done so, or if exhaustion were not
required, Iran's claims would still fail, as demonstrated below and in subsequent chapters.
(a) Iran and Iranian Companies Had Notice and Ample Time to Appear
8.48 Beginning with the first point, Section 1610(c) of the FSIA provides that attachment
and execution cannot proceed ''until the court has ordered such attachment and execution after
having determined that a reasonable period of time has elapsed following the entry of judgment
373 U.S. Counter-Memorial, 115.34-5.43.
374 Levin v. Bank of New York, Case No. 09-cv-5900, 2011 WL 812032, at *1 (S.D.N.Y. Mar. 4, 2011) (U.S.
Annex323).
375 See supra Chapter 6, Section C.
88
and the giving of any notice required under 1608( e) of this chapter."376 Section 1608( e)
provides in relevant part that "[a] copy of any ... default judgment shall be sent to the foreign
state or political subdivision in the manner prescribed for service in this section."377
Accordingly, before seeking to enforce a judgment, plaintiffs were required not only to serve
the judgment on Iran but also to seek a court order confirming that sufficient time had passed
following such service.
8.49 The importance of complying with these procedures was emphasized by the court in
the Levin v. Bank of New York case. In that case, multiple groups of plaintiffs claimed priority
with respect to the same pool of assets, which were held at several New York banks. The court
concluded that one plaintiff group's writs of execution were invalid because the plaintiffs had
not obtained a court order pursuant to Section 1610(c) prior to seeking to enforce their
judgment. 378 As the court explained:
The order referred to in 1610( c) has been found to be mandatory
by a number of courts reviewing attachments of the assets of
foreign sovereigns. According to a House Report on the FSIA,
the procedures mandated by 1610( c) are in place to ensure that
sufficient protection is afforded to foreign states that might be
defendants in actions in United States Courts[.]379
8.50 By contrast, the court upheld writs of execution obtained by two other groups of
plaintiffs, finding that they had priority to the assets at issue because they had timely obtained
the necessary order under Section 1610(c).380
8.51 The same is true for the Heiser enforcement actions. The Heiser case involved two
judgments, and plaintiffs gave notice of both to Iran pursuant to Section 1608(e).381
8.52 In addition to ensuring that Iran had notice of the judgments against it before permitting
plaintiffs to pursue enforcement of those judgments, the courts in Levin v. Bank of New York
and the Heiser actions also took steps to provide notice to all parties-including Iranian
376 28 U.S.C. § 1610(c) (IM Annex 6).
377 28 U.S.C. § 1608(e) (IM Annex 6).
378 Levin v. Bank of New York, Case No. 09-cv-5900, 2011 WL 812032, at *11 (S.D.N.Y. Mar. 4, 2011) (U.S.
Annex 323). Plaintiffs had, however, served their judgment on Iran "through the court and diplomatic channels"
on October 14, 2009. Id., at *2.
379 Levin, 2011 WL 812032, at *7 (citations omitted) (U.S. Annex 323).
380 Levin, 2011 WL 812032, at *13 (U.S. Annex 323).
381 Order ,r 2, Heiser v. Islamic Republic of Iran, 00-cv-2329 (D.D.C. Feb. 7, 2008), ECF 137 (U.S. Annex 324);
Order ,r 2, Heiser v. Islamic Republic of Iran, 00-cv-2329 (D.D.C. May 10, 2010), ECF 158 (U.S. Annex 325).
89
parties-with a potential interest in the assets that plaintiffs sought to attach m aid of
enforcement.
8.53 In Levin v. Bank of New York, the proceedings were separated into multiple phases.
The Phase One assets were held by three financial institutions: JPMorgan Chase Bank, N.A.,
Bank of New York Mellon ("BNY Mellon"), and Citibank, N.A. (together, the "New York
Banks"). On January 11, 2010, just weeks after plaintiffs' commencement of the action, the
court entered an order authorizing the New York Banks to initiate "third-party actions in order
to bring before the Court as Third-Party Defendants certain persons who are not now parties.
. . but who may have an interest in the [ assets at issue]. "382 According to BNY Mellon, the
purpose of the third-party actions was to ensure that individuals and entities with an interest in
the Phase One assets "had notice of this proceeding and an opportunity to appear and advise
the Court of any objections they might have to turnover of the funds ... in Phase 1 to the
Plaintiffs or to other judgment creditors of the Islamic Republic of Iran. "383
8.54 Though the New York Banks served "third-party complaints on all those individuals
and/or entities who they had reason to believe may assert or have an interest in the Phase 1
assets,"384 no Iranian entities appeared to contest plaintiffs' efforts to attach the assets at issue
or the evidence that they had submitted in support of those efforts. 385 The same process
382 Order Regarding Notice and Service of Process at 1-2, Levin v. Bank of New York, Case No. 09-cv-5900
(S.D.N.Y. Jan. 25, 2010), ECF 40 (U.S. Annex 326); Levin, 2011 WL 812032, at *2 (U.S. Annex 323). See also
Order Regarding Notice and Service of Process at 3-6, Levin v. Bank of New York, Case No. 09-cv-5900 (S.D.N.Y.
Jan. 25, 2010), ECF 40 (U.S. Annex 326) (specifying the documents to be served and the acceptable modes of
service).
383 Declaration of J. Kelley Nevling, Jr. in Support of the Bank of New York Mellon's Response to Plaintiffs'
Motion for Partial Summary Judgment ,r 7, Levin v. Bank of New York, Case No. 09-cv-5900 (Sep. 15, 2010),
ECF 264 (U.S. Annex 327). See also JP Morgan's Third-Party Complaint against Wire Transfer Parties ,r,r 28-
29, Levin v. Bank of New York, Case No. 09-cv-5900 (Dec. 31, 2009), ECF 61 (U.S. Annex 328) (explaining that
the third-party actions were necessary because such persons might be able to establish, for example, that they "are
not agencies or instrumentalities of Iran" or that the assets "are not subject to execution under applicable law.");
Bank ofNew York Mellon's Third-Party Complaint against Wire Transfer Parties ,r,r 19-20, Levin v. Bank of New
York, Case No. 09-cv-5900 (Dec. 31, 2009), ECF 62 (U.S. Annex 329) (same).
384 Memorandum of Law of Citibank, N.A. and JPMorgan Chase Bank, N.A. in Response to Plaintiffs' Partial
Motion for Summary Judgment at 10-11, Levin v. Bank of New York, Case No. 09-cv-5900 (Sep. 15, 2010),
ECF 265 (U.S. Annex 330). See also Declaration of J. Kelley Nevling, Jr. in Support of the Bank of New York
Mellon's Response to Plaintiffs' Motion for Partial Summary Judgment ,r 7, Levin v. Bank of New York, Case No.
09-cv-5900 (Sep. 15, 2010), ECF 264 (U.S. Annex 327); Levin, 2011 WL 812032, at *4 (U.S. Annex 323).
385 Levin, 2011 WL 812032, at *4 (U.S. Annex 323); Memorandum of Law of Citibank, N.A. and JPMorgan
Chase Bank, N.A. in Response to Plaintiffs' Partial Motion for Summary Judgment at 10-11, Levin v. Bank of
New York, Case No. 09-cv-5900 RPP (Sep. 15, 2010), ECF 265 (U.S. Annex 330).
90
repeated in Phase Two of the Levin action, with the same result. 386 While no Iranian entities
appeared to oppose plaintiffs' motion for turnover of the Phase Two assets, the central bank of
another State (Nigeria)-which was the originator of one of the electronic fund transfers
("EFTs") that plaintiffs were attempting to attach-did appear387 and, as will be discussed
below, successfully contested the attachment.
8.55 Iranian entities also had notice of the Heiser enforcement proceedings prior to the
turnover of assets. For example, in Heiser v. Bank of Tokyo Mitsubishi UFJ, New York Branch,
Bank of Tokyo Mitsubishi made a joint motion with plaintiffs in August 2011 to establish
procedures for serving notice (including Farsi translations of relevant documents) on third
parties who may have a claim to the assets at issue.388 As the court reported in a January 2013
opinion, "[t]hese entities all have been served with notice of petitioners' claims, but have filed
no responses and have not appeared in this action."389
386 Levin v. Bank of New York Mellon, Case No. 09-cv-5900, 2013 WL 5312502, at *1 (S.D.N.Y. Sep. 23, 2013)
(U.S. Annex 331) (The New York Banks (together with Societe General, which also held assets at issue in Phase
Two) identified "over two hundred ... persons or entities with potential rights or claims to the [Phase Two assets]"
and "served each of these potential third-party Defendants.").
387 Id. (U.S. Annex 331).
388 Order Concerning Notice To and Service On Third-Parties at 2, Heiser v. Bank of Tokyo Mitsubishi UFJ, New
York Branch, Case No. 1 l-cv-1601 (S.D.N.Y. Aug. 24, 2011), ECF 25 (U.S. Annex 333).
389 Heiser v. Bank of Tokyo Mitsubishi UFJ, New York Branch, 919 F. Supp. 2d 411, 414 (S.D.N.Y. 2013) (U.S.
Annex 334). As to the other Heiser actions: (i) in Heiser v. Bank of Baroda, New York Branch, the bank sought
in April 2011 to interplead entities (including Iranian fmancial institutions) and individuals who might have an
interest in the blocked EFTs that plaintiffs had attempted to attach and, in August 2011, the court entered an order
specifying procedures for service. Third-Party Petition in Interpleader ,i,i 6-7, Heiser v. Bank of Baroda, New
York Branch, Case No. 11-cv-1602 (S.D.N.Y. Apr. 11, 2011), ECF 11 (U.S. Annex 335); Heiser v. Bank of
Baroda, New York Branch, Case No. 11-cv-1602, 2013 WL 4780061, at *1 (S.D.N.Y. July 17, 2013) (U.S. Annex
336); Order Concerning Notice to and Service on Third-Parties ,i,i 1-2, Heiser v. Bank of Baroda, New York
Branch, Case No. 11-cv-1602 (S.D.N.Y. Aug. 9, 2011), ECF 39 (U.S. Annex 337); (ii) in proceedings against
Bank of America, N.A. and Wells Fargo, N.A. that occurred as part of Heiser v. Islamic Republic of Iran, the
court granted the banks' request to interplead Iranian entities with a potential interest in the assets at issue in
August 2012 and, subsequent to this ruling, the parties went through an elaborate service exercise that was not
completed until May 2015. 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 at 2-3,
Heiser v. Islamic Republic of Iran, Case No. 00-cv-2329 (D.D.C. June 9, 2016), ECF 275 (U.S. Annex 130); and
(iii) in proceedings against Sprint Communications Company LP ("Sprint") that also occurred in Heiser v. Islamic
Republic of Iran, plaintiffs sought to attach a debt owed by Sprint to the Telecommunications Infrastructure
Company of Iran ("TIC"). Though the court denied Sprint's request to interplead TIC on the grounds that such a
procedure was not available under applicable law, it noted that TIC was "surely on notice" of the proceedings due
to Sprint's failure to pay TIC the funds it owed since January 2010. Heiser v. Islamic Republic of Iran, 807 F.
Supp. 2d 9, 24 (D.D.C. 2011) (U.S. Annex 338).
91
(b) Even Though Iranian Companies Chose Not to Appear, Other Parties
Often Asserted Defenses That Would Have Been Available to Those
Companies
8.56 Turning to the second point, even though the Iranian companies chose not to appear in
these enforcement proceedings, the holders of the assets at issue ( or other interested parties)
raised defenses that would have been available to such companies, sometimes with support
from the U.S. government. Frequently, the asset holders either urged the court to consider
whether plaintiffs had satisfied all necessary prerequisites for obtaining turnover of the assets
at issue and/or argued that they had not done so. For example, Bank of Baroda asserted that
"the Court should consider whether Petitioners have established all of the elements necessary
to obtain relief under [TRIA]" and "[t]he Court should determine whether the Judgments were
entered on default and if so, whether copies were served on Iran in the manner required by
FSIA § 1608(a) in order to comply with FSIA § 1608(e)."390
8.57 In both Heiser and Levin actions, the banks also argued that many of the EFTs at issue
could not be attached under applicable law. In Levin, the New York Banks unsuccessfully
made the argument in the first phase of the proceedings391 and then reiterated the argument in
the second phase, taking the position that developments in the law mandated a different
outcome.392 While the District Court again rejected the New York Banks' argument in a
390 Answer of Bank of Baroda ,r,r 41-42, Heiser v. Bank of Baroda, New York Branch, Case No. 1 l-cv-1602
(S.D.N.Y. Apr. 8, 2011), ECF 10 (U.S. Annex 339). See also Answer of Sprint ,r 9, Heiser v. Islamic Republic
of Iran, Case No. 00-cv-2329 (D.D.C. June 21, 2010), ECF 165 (U.S. Annex 340) (Sprint arguing that "TIC was
not an agency or instrumentality of the Iranian government or any of the Iranian government defendants at the
time of service of the Writ [of Attachment], while the debt which is sought to be garnished was incurred, or at the
time the underlying suit was commenced, and thus is not subject to levy for the debts of the defendants under the
Foreign Sovereign Immunities Act."). Societe Generale, Citibank, JPMorgan, and BNY Mellon all raised
defenses questioning whether plaintiffs had fulfilled the requirements ofTRIA and the FSIA. Answer of Citibank
,r,r 64-65, Levin v. Bank of New York, Case No. 09-cv-5900 (S.D.N.Y. Oct. 23, 2009), ECF 44 (U.S. Annex 341);
Answer ofSociete Generale ,r,r 61-62, Levin v. Banko/New York, Case No. 09-cv-5900 (S.D.N.Y. Oct. 23, 2009),
ECF 45 (U.S. Annex 342); Answer of JP Morgan ,r,r 63-65, Levin v. Bank of New York, Case No. 09-cv-5900
(S.D.N.Y. Oct. 23, 2009), ECF 54 (U.S. Annex 343); Answer of BNY Mellon ,r,r 63-65, Levin v. Bank of New
York, Case No. 09-cv-5900 (S.D.N.Y. Oct. 23, 2009), ECF 56 (U.S. Annex 344).
391 Levin v. Bank of New York, Case No. 09-cv-5900, 2011 WL 812032, at *14 (S.D.N.Y. Mar. 4, 2011) (U.S.
Annex 323) ("In their joint response Memorandum of Law and at oral argument, Citibank and JP Morgan suggest
that under the applicable Second Circuit precedent and state law, these intercepted EFTs are not the property of
the originator or the beneficiary, and therefore are not susceptible to attachment."), *18 ("Based on this Court's
reading of TRIA, section 1610(f)(l)(A) and the applicable sanctions regulations, the [EFTs] are subject to
attachment.").
392 Levin v. Banko/New York Mellon, Case No. 09-cv-5900, 2013 WL 5312502, at *3 (S.D.N.Y. Sep. 23, 2013)
(U.S. Annex 331) ("[T]he banks argue that the Court should reconsider the holding of its Phase One Opinion with
respect to the proceeds of blocked wire transfers held by intermediary banks in light of the Supreme Court's
subsequent decision in Board of Tr. Of Leland Staeford Junior Univ. v. Roche Molecular Sys., Inc., 131 S.Ct.
2188 (2011) ('Stanford'), and application of that decision by other district courts.").
92
September 2013 opinion, 393 the Second Circuit Court of Appeals had the opportunity the
following year to consider the circumstances under which midstream EFTs could be attached
and, in two 2014 opinions, Calderon-Cardona and Hausler, 394 the Court of Appeals reached a
different conclusion than the Levin court. The Court of Appeals held that midstream EFTs
could only be attached where "either the state itself or an agency or instrumentality thereof ...
transmitted the EFT directly to the bank where the EFT is held pursuant to the block."395 The
Court of Appeals' rulings had three important consequences for the Levin case.
8.58 First, while the New York Banks chose not to appeal the District Court's September
2013 decision, the Central Bank of Nigeria-which, as noted, was the originator of one of the
EFTs at issue-did so, and its appeal was still pending when the Court of Appeals issued its
opinions in Calderon-Cardona and Hausler. On the basis of these opinions, the Court of
Appeals reversed the judgment of the District Court, preventing plaintiffs from attaching the
EFT originated by the bank. 396
8.59 Second, in August 2015, the District Court relied on Calderon-Cardona and Hausler in
denying plaintiffs' motion for summary judgment as to a single Phase Two asset that remained
in dispute.397 Importantly, the U.S. government brought the two 2014 Court of Appeals
opinions to the District Court's attention in connection with the briefing on plaintiffs'
motion.398
8.60 Third, in October 2017, the District Court rejected an effort by plaintiffs to amend their
complaint to assert a claim to an EFT in which Bank Saderat allegedly had an interest. The
court reasoned that such an amendment would be futile ( as JPMorgan, the bank holding the
EFT, had argued) because, under Calderon-Cardona and Hausler, the proceeds of the EFT did
not belong to Bank Saderat, even though it may have had an interest falling short of ownership.
393 Levin v. Bank of New York Mellon, Case No. 09-cv-5900, 2013 WL 5312502, at *8 (S.D.N.Y. Sep. 23, 2013)
(U.S. Annex 331).
394 Calderon-Cardona v. Bank of New York Mellon, 770 F.3d 993 (2d Cir. 2014) (U.S. Annex 345); Hausler v.
JP Morgan Chase Bank, N.A., 770 F.3d 207 (2d Cir. 2014) (U.S. Annex 299).
395 Calderon-Cardona v. Bank of New York Mellon, 770 F .3d 993, 1002 (2d Cir. 2014) (U.S. Annex 345); Hausler
v. JP Morgan Chase Bank, N.A., 770 F.3d 207,212 (2d Cir. 2014) (U.S. Annex 299).
396 Levin v. Bank of New York, 602 F. App'x 37 (May 11, 2015) (U.S. Annex 346).
397 Order,r 3,Levin v. Bank of New York Mellon, Case No. 09-cv-5900 (S.D.N.Y. Aug. 20, 2015), ECF 1065 (U.S.
Annex347).
398 Letter from U.S. Department of Justice to Hon. Robert P. Patterson, Levin v. Bank of New York Mellon, Case
No. 09-cv-5900 (S.D.N.Y. Oct. 28, 2014), ECF 1035 (U.S. Annex 348).
93
Instead, the EFT was deemed to belong to the entity (Lloyd's Bank) that transmitted the funds
to JP Morgan.399 The Court of Appeals affirmed the District Court's ruling.400
8.61 In Heiser, Bank of America and Wells Fargo successfully made a similar argument
about certain of the EFTs at issue in that case. The United States government also submitted a
statement of interest that sided with the banks on the question of whether TRIA Section 201(a)
and FSIA Section 1610(g) require that the judgment debtor (here, Iran) or one of its agencies
or instrumentalities own the property that plaintiffs had targeted for attachment or execution.401
Ultimately, the District Court gave weight to the U.S. statement of interest402 and ruled in the
banks' favor, concluding that plaintiffs could not attach the challenged EFTs because the
Iranian entities' interest in the funds fell short of ownership.403 The Court of Appeals for the
D.C. Circuit subsequently affirmed the District Court's ruling.404
(c) Plaintiffs Were Obligated to Come Forward With Evidence to Support
the Elements of Their Claims
8.62 As to the third and final point, the U.S. courts also made clear that, even where banks
or other third parties did not contest plaintiffs' enforcement efforts, plaintiffs were still
obligated to come forward with evidence to support the elements of their claims for relief. For
example, when the plaintiffs in Heiser v. Bank of Tokyo Mitsubishi sought summary judgment
in their favor and an order compelling the bank to turn over the funds at issue, the court
explained that "[i]t is the burden of a movant on a summary judgment motion to come forward
with evidence on each material element of his claim or defense, sufficient to demonstrate that
he or she is entitled to relief as a matter oflaw."405 Accordingly, "[t]he Court must view the
evidence in the light most favorable to the non-moving party and draw all reasonable inferences
399 Levin v. Bank of New York Mellon, Case No. 09-cv-5900, 2017 WL 4863094, at **3-4 (S.D.N.Y. Oct. 27,
2017) (U.S. Annex 349).
400 Levin v. JPMorgan Chase Bank, NA., 751 F. App'x 143 (2d Cir. 2018) (U.S. Annex 350).
401 Statement of Interest of the United States, Heiser v. Islamic Republic of Iran, 00-cv-2329 (D.D.C. Aug. 3,
2012), ECF 230 (U.S. Annex 351). Plaintiffs argued "that the United States' assertions with respect to TRIA and
section 1610(g)(l) should be afforded little weight given the Executive Branch's well-documented efforts to
thwart the good faith efforts of terrorism victims to collect upon their judgments." Response to the Statement of
Interest of the United States at 2, Heiser v. Islamic Republic of Iran, 00-cv-2329 (D.D.C. Aug. 17, 2012), ECF 231
(U.S. Annex 352).
402 Heiser v. Islamic Republic of Iran, 885 F. Supp. 2d. 429,441 (D.D.C. 2012) (U.S. Annex 353).
403 Heiser v. Islamic Republic of Iran, 885 F. Supp. 2d. 429, 437-49 (D.D.C. 2012) (U.S. Annex 353). Specifically,
the Iranian entities were acting as banks for the beneficiaries of the blocked EFTs. Id. at 447-48.
404 Heiser v. Islamic Republic of Iran, 735 F.3d 934 (D.C. Cir. 2013) (U.S. Annex 354).
405 Heiser v. Bank of Tokyo Mitsubishi UFJ, New York Branch, 919 F. Supp. 2d 411, 415 (S.D.N.Y. 2013) (U.S.
Annex334).
94
in its favor, and may grant summary judgment only when no reasonable trier of fact could find
in favor of the nonmoving party."406 The court emphasized that plaintiffs' burden must be
fulfilled even where their motion was unopposed:
Though the respondent does not oppose the motion, petitioners
still must establish that they are entitled to judgment as a matter
of law. If the evidence submitted in support of the summary
judgment motion does not meet the movant's burden of
production, then summary judgment must be denied even if no
opposing evidentiary matter is presented. 407
111. Conclusion
8.63 As the foregoing sections have shown, U.S. courts treated Iranian entities fairly when
they chose to appear and, when those entities did not appear, took precautions to ensure that
such entities had adequate notice of the proceedings and to assess whether plaintiffs' claims
were supported by sufficient evidence. Moreover, in several cases where Iranian entities chose
not to appear, other parties to the proceedings successfully resisted the turnover of assets by
asserting arguments that would have been available to such Iranian entities. These points bear
on a number of aspects of the U.S. case, including the exhaustion of local remedies, discussed
above, and Iran's claims under Articles III and IV, which will be discussed in the chapters that
follow.
8.64 Before leaving the topic of U.S. judicial proceedings, the United States turns now to
address the 9/11 proceedings, to which Iran has devoted significant attention in its Reply
despite being entirely peripheral to the claims that remain before the Court.
Section C: The Court Has Dismissed Iran's Claims Regarding the 9/11
Judgments and, In Any Event, Its Complaints About These
Judgments Are Meritless
8.65 As noted at the outset of this chapter, Iran's surviving claims relate to plaintiffs'
attempts to enforce their judgments against the assets of Iran's agencies and instrumentalities,
which were the subject of the preceding Section B. Iran has nevertheless devoted a significant
portion of its Reply to complaints about a particular set of judgments against it, namely those
relating to the September 11, 2001 terrorist attack. The Court should disregard these
406 Id. (U.S. Annex 334).
407 Id. (U.S. Annex 334). See also Levin v. Bank of New York, Case No. 09-cv-5900, 2011 WL 812032, at *19
(S.D.N.Y. Mar. 4, 2011) (U.S. Annex 323); Levin v. Bank of New York Mellon, Case No. 09-cv-5900, 2013 WL
5312502, at *9 (S.D.N.Y. Sep. 23, 2013) (U.S. Annex 331).
95
complaints because they are not connected to any of Iran's remaining claims. In any event,
Iran's complaints are meritless.
8.66 As an initial matter, some of Iran's complaints relate less to the specifics of particular
proceedings than to the type of judicial system in the United States, a common-law jurisdiction
where "courts are constrained by the principle of party presentation, which is 'basic to our
adversary system. "'408 In the 9/11 litigation, as in all the litigation that resulted in terrorism
judgments against Iran, Iran did not appear and present its case. Yet, Iran's complaints about
U.S. judicial proceedings never address the effects of Iran's failure to participate.
8.67 Iran's discussion of the 9/11 proceedings is primarily focused on Havlish v. bin
Laden,409 a case brought by the family members and legal representatives of victims of the 9/11
attacks against various persons and foreign sovereigns, including Iran and several Iranian
entities, for providing material support to Al Qaeda.410
8.68 Contrary to Iran's characterizations, U.S. judges did not find Iran liable for perpetrating
or sponsoring the 9/11 attacks.411 As an initial point, contrary to Iran's assertions,412 U.S.
judges do not make accusations. Parties bring and defend cases. In the Havlish case, a U.S.
court entered a default judgment of liability based on uncontroverted evidence that Iran
provided material support to Al Qaeda that was reasonably connected to the 9/11 attacks.413
The alleged support varied depending upon the Iranian entity concerned but included activities
such as facilitating trainings and obscuring the travel of Al Qaeda operatives to and from
Afghanistan.414 Beyond mischaracterizing the judgment, Iran uses its Reply to collaterally
408 Maaloufv. Islamic Republic of Iran, 923 F.3d 1095, 1109 (2019) (U.S. Annex 355) (citing Wood v. Mi/yard,
566 U.S. 463, 472 (2012)); see also Greenlaw v. United States, 554 U.S. 237, 243-44 (2008) (U.S. Annex 356)
(quoting Castro v. United States, 540 U.S. 375, 386 (2003)) (Scalia, J., concurring in part and concurring in the
judgment)) ("[W]e rely on the parties to frame the issues for decision and assign to courts the role ofneutral arbiter
.... 'Our adversary system is designed around the premise that the parties ... are responsible for advancing the
facts and arguments entitling them to relief."').
409 No. 03-cv-9849-GBD-SN (S.D.N.Y); see also In re Terrorist Attacks on September 11, 2001, No. 03-md-
01570-RCC (S.D.N.Y.).
410 Iran also makes passing reference to other 9/11 proceedings, primarily to note that they were somehow deficient
because the courts permitted the plaintiffs to rely on the same evidence that established Iran's guilt in Havlish.
See Iran's Reply, 12.55. Iran does not explain why this is problematic or how it affected these proceedings in
light of Iran's decision to default.
411 See Iran's Reply, 12.42.
412 Id.
413 Havlish v. bin Laden (In re Terrorist Attacks on September 11, 2001), Case No. 03-cv-9849-GBD-SN, 2011
WL 13244047, at **39-41 (S.D.N.Y. Dec. 22, 2011) (U.S. Annex 357).
414 Id.
96
attack the Havlish proceedings based on propriety of service, the standard of liability, and the
sufficiency of and type of evidence admitted by the U.S. court in the proceedings. Each of
these topics is taken in turn below.
1. Iran Was Properly Served
8.69 Iran's claims concerning a lack of or improper service in various instances are both
misleading and misplaced.415 In reality, Iran was served in both English and Farsi, by
international courier and through diplomatic channels, with summons and notice of process.
The summons included a copy of the complaint and notified Iran "that a failure to appear and
defend will result in a default judgment against the defendant for the relief demanded in the
complaint."416 Consistent with special rules that the United States has put in place to protect
foreign sovereigns from inadvertent defaults,417 the Foreign Interest Section of the Embassy of
Switzerland in Tehran served Iran and its applicable political subdivision with the summons
and complaint in Havlish on October 9, 2002.418 Iran was served through diplomatic channels
yet again in 2005.419
8. 70 To comply with yet another protective measure for foreign sovereign defendants in U.S.
civil litigation,420 the Havlish plaintiffs mailed the default judgment and a notice of rights to
appeal in both English and Farsi to Iran and the Iranian entities (along with the court's earlier
memorandum decision and the report and recommendation by the magistrate judge) by
international courier (DHL) on November 15, 2012,421 and then again through diplomatic
415 See, e.g., Iran's Reply, 12.48.
416 FED. R. CIV. P. 4(a)(l)(E) (U.S. Annex 428). See also Havlish v. bin Laden (In re Terrorist Attacks on
September 11, 2001), Case No. 03-cv-9849-GBD-SN, 2011 WL 13244047, at **37-39 (S.D.N.Y. Dec. 22, 2011)
(U.S. Annex 357) (describing plaintiffs' service of process on Iranian defendants).
417 The Federal Rules of Civil Procedure require that "[a] foreign state or its political subdivision, agency, or
instrumentality must be served in accordance with 28 U.S.C. § 1608," a section of the Foreign Sovereign
Immunities Act. FED. R. CIV. P. 4(j)(l) (U.S. Annex 428). Section 1608(a) of the Foreign Sovereign Immunities
Act requires a foreign sovereign to be served a summons and complaint ( 1) by special arrangements consented to
by the foreign sovereign, (2) in accordance with an applicable international convention, (3) by mail requiring a
signed receipt from the court clerk to the foreign minister of the foreign sovereign, or (4) through diplomatic
channels between the U.S. Department of State and the foreign sovereign. See 28 U.S.C. § 1608(a) (IM Annex
6).
418 Affidavit of Service, Exh. C., Havlish v. bin Laden, Case No. 1:02-cv-00305-JR (D.D.C. Nov. 1, 2002), ECF
35-3 (U.S. Annex 358).
419 Clerk's Certificate of Mailing of Summons & Complaint, Havlish v. bin Laden, Case No. 03-cv-09848-GBDSN
(S.D.N.Y. Mar. 18, 2005), ECF 21 (U.S. Annex 359).
420 See 28 U.S.C. § 1608(e) (IM Annex 6) (requiring service of a default judgment in the same manner as the
service of summons before such judgment can be enforced); see also supra 18.48.
421 See Clerk's Certificates of Mailing, Havlish v. bin Laden, Case No. 03-cv-09848-GBD-SN (S.D.N.Y. Nov. 15,
2012), ECF 319-334 (U.S. Annex 359).
97
channels on January 14-15, 2013,422 after Iran and the Iranian entities chose to not accept
delivery from the international courier.
8.71 In addition to being factually inaccurate, Iran's assertions about improper service are
misplaced. Iran could have challenged the Havlish judgment in U.S. court on the basis of
improper service but chose not to do so. To the extent that Iran believes that such a challenge
would have been futile, recent precedent shows that belief to be unreasonable. In 2019, after
Sudan re-evaluated its decision to default and began participating in the litigation, the U.S.
Supreme Court upheld a challenge by Sudan to a default judgment that was based on the
plaintiffs' alleged failure to properly serve Sudan with notice of the proceedings. 423 In short,
with the heightened service protections afforded to foreign sovereigns, a lack of notice is not
the issue when a foreign sovereign defaults. Further, as demonstrated by the case of Sudan,
defaulting sovereigns have ample protections in the U.S. system if service was improper.
11. Plaintiffs Were Held to the Same Standard of Proof That Would be Applicable
in the Case of Any Other Sovereign Default, Including a Default by the United
States Itself
8.72 Also contrary to Iran's assertions,424 the standard for liability in theHavlish proceedings
was not substantially and retroactively relaxed by the enactment of Section 1605A of the FSIA.
Iran argues that differences between the second and third amended complaints in the Havlish
proceedings demonstrate that enactment of Section 1605A allowed victims of the 9/11 attacks
to add claims based on "aircraft sabotage, hostage taking and generally the provision of
material support or resources for terrorist acts," which had not been available under the Torture
Victims Protections Act. 425 However, Iran fails to acknowledge that the second amended
complaint expressly makes claims for provision of "material support and resources to Al
422 See Clerk's Certificates of Mailing, Havlish v. bin Laden, Case No. 03-cv-09848-GBD-SN (S.D.N.Y. Jan. 14,
2013), ECF 340-354 (U.S. Annex 359).
423 See Republic of Sudan v. Harrison, 139 S. Ct. 1048 (2019) (U.S. Annex 298). At the time of the decision,
Sudan remained designated as a state sponsor of terrorism under U.S. law and ruled by a dictator with a long
history of animosity toward the United States. The Solicitor General of the United States submitted briefs that
were generally consistent with the positions taken by Sudan at both the petition (May 22, 2018) and merits (August
22, 2018) stages of the proceeding before the Supreme Court. See Brief for the United States as Amicus Curiae,
Harrison, 139 S. Ct. 1048 (2019) (No. 16-1094) (U.S. Annex 360); Brief for the United States as Amicus Curiae
Supporting Petitioner, Harrison, 139 S. Ct. 1048 (2019) (No. 16-1094) (U.S. Annex 360). The United States also
participated in oral arguments in support of Sudan's position on the proper interpretation of 28 U.S.C. § 1608.
See Motion of the Solicitor General for Leave to Participate in Oral Argument as Amicus Curiae and for Divided
Argument, Harrison, 139 S. Ct. 1048 (No. 16-1094) (U.S. Annex 361).
424 See Iran's Reply, fl 2.42-2.47.
425 See id. ,r 2.47.
98
Qaeda, Bin Laden and the Hijackers" and "air piracy" and other claims with substantially
similar coverage as Section 1605A based on other federal and state laws.426 Even assuming,
arguendo, that Iran's characterization of the difference between the second and third amended
complaints were correct, Iran fails to explain how this would be a violation of the Treaty.
8. 73 Iran also suggests that a judicial acknowledgement of a substantial overlap between the
evidence required to establish jurisdiction and liability in terrorism-related cases under Section
1605A proves that the standard for liability was lax or insufficient. 427 However, the substantial
overlap between the elements required to establish jurisdiction and liability under Section
1605A demonstrates the robust protections provided by the former and not, as Iran suggests,
the laxity of the latter. Aside from Iran's faulty understanding of the evidence required, Iran's
critique generally ignores the evidence-uncontroverted by Iran-that provided the factual
basis for a judgment against Iran for providing material support for terrorism.
8.74 Contrary to Iran's suggestions,428 the court found that the plaintiffs presented sufficient,
admissible evidence to support the default judgment in Havlish. Again, Iran's description of
the 9/11 cases fails to account for Iran's decision to default, which in the normal course would
be an admission of plaintiffs' well-pled allegations.429 As such, even if the judgments against
426 See, e.g., Second Amended Complaint ,r,r 384, 404, Havlish v. bin Laden, Case No. 03-cv-09848-GBD-SN
(S.D.N.Y. Sept. 7, 2006), ECF 214 (U.S. Annex 362). Iran also confusingly associates what it describes as the
ability of plaintiffs ''to avail themselves with the more advantageous 28 U.S.C. § 1605A" in an amended complaint
with dicta from the damages recommendation of a magistrate judge, which Iran characterizes as "commend[ing]"
the impact of§ 1605A. See Iran's Reply, ,r 2.46. Leaving aside the fact that the claims in the new complaint
substantively overlapped with those in the old complaint, the magistrate judge's description of the effect of§
1605A at most highlights the judicial efficiency of having a single federal cause of action for all claims. See R.
& R. to the Hon. George B. Daniels at 5, Havlish v. bin Laden, Case No. 03-cv-09848-GBD (S.D.N.Y. July 30,
2012), ECF 314 (U.S. Annex 363).
427 Id. ,r 2.50 n.129.
428 See, e.g., Iran's Reply, ,r 2.53. The gravamen of Iran's claim that the judgments were not based on evidence
is that Iran did not agree that about the appropriateness or sufficiency of the evidence. Iran found particularly
problematic the willingness of U.S. courts to accept affidavits and expert testimony. See id. ,r 2.52. Had Iran
participated in the litigation, it could have challenged these or other aspects of the proceedings that it found
problematic. For example, the U.S. judicial system has transparent rules governing the admissibility of evidence,
including expert testimony. The Federal Rules of Evidence, which govern the general admissibility of evidence
in U.S. courts, are publicly available and readily accessible athttps://www.uscourts.gov/. Article VII of the Rules
governs the qualification of an expert witness, the admissibility of expert testimony, and the disclosure of what
may be the otherwise inadmissible basis for an expert's testimony. See also FED. R. EVID. 602 (U.S. Annex 428).
429 Under Federal Rule of Civil Procedure 8(b)(6) "[a]n allegation ... is admitted if a responsive pleading is
required and the allegation is not denied." This rule is not specific to the U.S. judicial system; in the normal
course in common-law jurisdictions, the entry of default is an admission by the defaulting party of the wellpleaded
allegations in the complaint. See, e.g., D.H Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 107 (2d Cir.
2006) (U.S. Annex 364) ("Rule 55 'tracks the ancient common law axiom that a default is an admission of all
well-pleaded allegations against the defaulting party."' ( quoting Vt. Teddy Bear Co. v. 1-800 Beargram Co., 373
F.3d 241,246 (2d Cir. 2004)). Courts have explained that the rationale for this treatment of defaulting parties "is
99
Iran were not based on evidence, this would be typical in the default context. Regardless, Iran's
suggestion that the judgments in the 9/11 cases were not based on evidence is incorrect. Section
1608( e) of the FSIA provides heightened protections to defaulting foreign sovereigns, such as
Iran, by imposing an evidentiary burden on plaintiffs who are seeking default judgments. 430
The additional protections provided to foreign sovereigns by Section 1608( e) "is the same
standard that applies to default judgments against the United States under [Federal Rule of
Civil Procedure] 55(d)."431
8.75 Written evidence was provided to the trial court on May 19, 2011, July 13, 2011, and
August 19, 2011. 432 The trial court then had an evidentiary hearing on December 15, 2011. 433
The findings of facts by the trial court summarizes and extensively cites to this evidence. To
the very limited extent that Iran's Reply addresses the voluminous evidence presented of its
material support for terrorism, the gravamen of Iran's complaint appears to be that the Court
accepted as evidence affidavits or testimony from persons not immediately involved in
providing material support to the terrorists.434 However, Iran identifies no bias or other
impropriety with respect to the process by which the evidence was admitted. Consistent with
typical practice for admitting such evidence in civil litigation in U.S. courts, the court made
specific findings as to the admissibility of affidavits and expert evidence. Iran was therefore
to prevent absentee defendants from escaping liability by refusing to participate in judicial proceedings." See,
e.g., Amaya v. Logo Enterprises, LLC, 251 F. Supp. 3d 196, 199 (D.D.C. 2017) (U.S. Annex 365).
430 Section 1608(e) of the Foreign Sovereign Immunities Act specifies that "[n]o judgment by default shall be
entered by a court of the United States or of a State against a foreign state, a political subdivision thereof, or an
agency or instrumentality of a foreign state, unless the claimant establishes his claim or right to relief by evidence
satisfactory to the court." (IM Annex 6). As U.S. courts have noted, "[t]his provision's 'protection against an
unfounded default judgment' does not altogether 'relieve[] the sovereign from the duty to defend' but, nonetheless,
requires that the plaintiff offer 'admissible evidence' sufficient to 'substantiate [the] essential element[s]' of her
claim." Force v. Islamic Republic of Iran, 464 F. Supp. 3d 323, 357 (D.D.C. 2020) (U.S. Annex 366). The
heightened standard for defaulting foreign sovereigns pursuant to 28 U.S.C. § 1608(e) "does not require a court
to step into the shoes of the defaulting party and pursue every possible evidentiary challenge," see Owens v.
Republic of Sudan, 864 F.3d 751, 785 (D.C. Cir. 2017) (U.S. Annex 367), but it does require plaintiffs to present
admissible evidence to a court prior to obtaining a default judgment, which is not the case in the context of nonsovereign
defaulting parties.
431 Force v. Islamic Republic of Iran, 464 F. Supp. 3d 323, 336 (D.D.C. 2020) (U.S. Annex 366); see also Jerez
v. Republic of Cuba, 775 F.3d 419, 423 (D.C. Cir. 2014) (U.S. Annex 301) (Section 1608(e) "provides foreign
sovereigns a special protection akin to that assured the federal government."). FED. R. CN. P. 55( d) specifies that
"[a] default judgement may be entered against the United States, its officers, or its agencies only if the claimant
establishes a claim or right to relief by evidence that satisfies the court." (U.S. Annex 428).
432 See, e.g., List of Exhibits, Plaintiffs' First Memorandum of Law in Support of Motion for Entry of Judgment
by Default Against Sovereign Defendants, Havlish v. bin Laden, Case No. 03-cv-09848-GBD-SN (S.D.N.Y. May.
19, 2011), ECF 276 (U.S. Annex 368).
433 Havlish, 2011 WL 13244047, at *2 (U.S. Annex 357).
434 See, e.g., Iran's Reply, ,r,r 2.50-.52.
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treated no differently than any other litigant in this regard.435 To the extent that the U.S. court
did not consider all of the objections that Iran seeks now to raise in these proceedings, it is
solely because Iran chose not to appear and raise them.
111. The Court's Findings Regarding Liability and Damages
8.76 In addition to its admissibility-related critiques of the Havlish proceedings, Iran asserts
that the plaintiffs did not mention or sufficiently demonstrate the material support for terrorism
provided by the Iranian agencies and instrumentalities that were found liable.436 In reality, the
plaintiffs submitted extensive evidence concerning the material support provided by Iranian
entities and, in the case of non-ministry entities and government officials, whether such entities
were acting as agencies and instrumentalities of Iran.437
8.77 Moving beyond the liability judgment, Iran's contention that the damages awarded in
Havlish lacked a factual and legal basis is also demonstrably false and fails to assert a claim
under the Treaty.438 The magistrate judge who made the initial damages assessment expressly
described the basis for his recommendation as the "legal principles found in the Restatement
of Torts and other leading treatises."439 With respect to the factual basis, although Iran
identifies the October 3 and October 12, 2012 Orders concerning damages for 9/11 victims,440
Iran omits to mention that the October 3, 2012 Memorandum Decision and Order, from which
the October 12, 2012 Order and Judgment was calculated, adopted and summarized the
contents of a 19-page report and recommendation from a magistrate judge that explained the
evidentiary basis for the District Court accepting the report and recommendation.441 The
magistrate's report and recommendation was itself based on a legal analysis and hundreds of
435 See, e.g., Havlish, 2011 WL 13244047, at *36 (U.S. Annex 357) ("1. The Court finds the affidavits offered by
plaintiffs[] as expert testimony to be admissible pursuant to FED. R. EVID. 702 and 703. Each of the proffered
witnesses are qualified experts by their knowledge, skill, experience, training and/or education on the subject
matters of terrorism, the Iran-Hizbollah-al Qaeda connection, and the 9/11 terrorist attacks.")
436 See Iran's Reply, ,r 2.50-2.51.
437 See, e.g., Havlish, 2011 WL 13244047, at **3-4, ,r,r 6-20, 34 (U.S. Annex 357) (concerning individuals acting
as officials, employees, or agents); id. at **4-7, ,r,r 22-37, 39-43 (concerning political subdivisions); id. at **6-9,
,r,r 38, 44-56 (concerning the other entities acting as agencies and instrumentalities oflran).
438 See Iran's Reply, ,r 2.54.
439 R. & R. to the Hon. George B. Daniels at 5, Havlish v. bin Laden, Case No. 03-cv-09848-GBD (S.D.N.Y. July
30, 2012), ECF 314 (U.S. Annex 363).
440 See Iran's Reply, ,r 2.54 n.147. The orders were issued in the 9/11 multi-district litigation that includes, among
numerous other cases, the Havlish proceedings.
441 Memorandum Decision and Order at 2, Havlish v. bin Laden, Case No. 03-cv-09848-GBD (S.D.N.Y. Oct. 3,
2012), ECF 316 (U.S. Annex 369); see R. & R. to the Hon. George B. Daniels, Havlish v. bin Laden, Case No.
03-cv-09848-GBD (S.D.N.Y. July 30, 2012), ECF 314 (U.S. Annex 363).
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pages of factual evidence documenting the horrors experienced by the victims, including their
economic losses and pain and suffering. 442
1v. Iran Could Have Sought to Set Aside the Default Judgments Against it in U.S.
Courts
8.78 Even after a judgment (with damages) has been issued by the court, defendants who
initially default have an opportunity to have a court set aside a default judgment based on
meritorious defenses because, in general, in U.S. courts, "strong policies favor resolution of
disputes on their merits."443 Once again, defaulting foreign sovereigns, like Iran, are afforded
heightened protections by the U.S. judicial system because "[ c ]ourts go to great lengths ... to
permit [default judgments against foreign sovereigns] to be set aside."444 Given the relatively
generous standard afforded to the arguments of defaulting parties who seek to have a default
judgment set aside, and Iran's many complaints about the judgments at issue in this case, it is
notable that Iran has not sought to have any of these judgments set aside by U.S. courts, as
other sovereigns, including sovereigns designated as State sponsors of terrorism, have
successfully done. Just as Iran's efforts in this case to avoid discussing the merits of the
Peterson proceedings shine a light on Iran's inability to address claims concerning its
complicity in the Marine barracks bombings, its failure to request set aside of the other default
judgments against it shows the emptiness of Iran's collateral attacks on the propriety of these
judgments. 445
442 R. & R. to the Hon. George B. Daniels, Havlish v. bin Laden, Case No. 03-cv-09848-GBD (S.D.N.Y. July 30,
2012), ECF 314 (U.S. Annex 363). See also Plaintiffs' Proposed Findings of Fact and Conclusions of Law With
Respect to Damages, Plaintiff's Amended Damages Inquest Memorandum, and Addendum, Havlish v. bin Laden,
Case No. 03-cv-09848-GBD (S.D.N.Y. Feb. 2012), ECF 302-303 & 306 (U.S. Annex 370). The magistrate's
report and recommendation and much of the supporting evidence is readily accessible from the same docket and
proximate in both time and docket placement to the items that Iran has annexed to its Reply.
443 Republic of Kazakhstan v. Stati, 325 F .R.D. 507, 509 (D.D.C. 2018) (U.S. Annex 371) ( citing Jackson v. Beech,
636 F.2d 831, 835 (D.C. Cir. 1980)). The Federal Rules of Civil Procedure expressly provide that a "court may
set aside an entry of default for good cause" and default judgments for, inter alia, "any ... reason that justifies
relief." See FED. R. CN. P. 55(c) & 60(b)(6) (U.S. Annex 428). A primary consideration for a court deciding
whether to set aside a default judgment is the existence of any meritorious defenses, and "any doubts must be
resolved in favor of the party seeking relief from the default." Republic of Kazakhstan v. Stati, 325 F.R.D. at 509
(citing Jackson v. Beech, 636 F.2d at 837).
444 First Fidelity Bank, NA. v. Government of Antigua & Barbuda-Permanent Mission, 877 F.2d 189, 196 (2d
Cir. 1989) (U.S. Annex 372).
445 See Friends Christian High School v. Geneva Financial Consultants, 321 F.R.D. 20, 22 (D.D.C. 2017) (U.S.
Annex373).
102
v. The 9/11 Proceedings Do Not Support a Claim Against the United States
8.79 In sum, Iran's complaints about the 9/11 proceedings are as meritless as they are
irrelevant. Iran presents the court with a story about Havlish and the other 9/11 proceedings
that neither accurately identifies the nature of Iran's liability nor accounts for the legal and
practical effects of Iran's decision to default. In fact, Iran received the heightened protections
typically afforded defaulting foreign sovereigns by the U.S. judicial system, which are similar
to those afforded to the United States when it defaults in U.S. courts. Accurately described and
contextualized, the 9/11 proceedings provide no support for any claim that the United States
violated the Treaty of Amity.
SectionD: Concluding Observations
8.80 In the preceding chapter, the United States has shown the reasonableness of its
legislative, executive, and judicial actions. First, the United States showed that the legislative
measures at issue in this case were reasonably enacted and reasonably applied in light of the
numerous uncontested and unpaid judgments that plaintiffs have obtained against Iran as a
result of its support for terrorism. Second, the sole executive measure at issue, Executive Order
13599, was a reasonable response to the deceptive conduct of Bank Markazi and other Iranian
financial institutions. Third, the United States addressed in detail the 8 judgment enforcement
actions that are the subject of Iran's claims to demonstrate that the Iranian entities involved,
whether they chose to appear or not, were treated fairly by the U.S. courts. Fourth, the United
States responded to Iran's complaints about the 9/11 judgments, establishing that not only are
these complaints entirely unrelated to any of Iran's surviving claims, they are also entirely
without merit.
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CHAPTER 9: IRAN HAS FAILED TO ESTABLISH A CLAIM UNDER ARTICLE III
9.1 The deficiencies of Iran's claims under Article III are symptomatic of its flawed
interpretations of the Treaty, contrary to its terms. Iran's claim under Article 111(1) is that the
Treaty requires that Iranian companies be recognized as "separate from their shareholders
including the Iranian State," and that the United States violated this alleged "separateness"
requirement by allowing the attachment of assets oflranian companies for judgments rendered
against the Iranian State.446 Iran's claim under Article 111(2) is that, by "abrogating defences
which would otherwise have been available to [Iranian] companies"-namely, the defense of
immunity-the United States has violated the right of those companies to have "freedom of
access to the courts" of the United States.447 In its Counter-Memorial, the United States
explained that the text and negotiating history of the Treaty make clear that it does not give rise
to the rights of "separateness" or immunity, which Iran claims to have been violated under,
respectively, Article 111(1) and 111(2).448 The correct interpretation of Article III, as applied to
the undisputed facts, must therefore lead to the dismissal oflran's claims.
9.2 In response to the United States' detailed explanation of Article Ill's meaning, Iran
attempts in its Reply to salvage its claims by creating new, even broader interpretations of
Article III, but in doing so Iran only underscores its baseless efforts to read words into the
Treaty that are not there. Rather than offer any textual analysis or negotiating history to support
its invention of new requirements of "separateness" and "independence" rights under Article
111(1), Iran's Reply argues for a vague, self-defining standard under which Iranian law is
somehow the source of these rights. Iran's strained interpretation of Article 111(2) fares even
worse, as its broad and non-textual standard of "meaningful" access to the courts contradicts
the Court's own interpretation of the provision. None oflran's new arguments can sustain its
claims under Article III.
Section A: Iran Has Failed to Establish a Violation of Article Ill(l)
9.3 In its Memorial, Iran argued that its claim under Article 111(1) arose from its alleged
entitlement to "the recognition of the separate juridical status of its companies .... "449 The
United States demonstrated in its Counter-Memorial, through analysis of the text and
446 Iran's Reply, ,MJ 4.11, 4.13.
447 Iran's Reply, ,r 5.39.
448 U.S. Counter-Memorial, Chapter 13.
449 Iran's Memorial, ,r 4.1 (emphasis added).
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negotiating history, that Article 111(1) simply requires that "companies" have their ''juridical
status" be recognized such that they qualify for the protections afforded under the other
substantive provisions of the Treaty, and that Iran's interpretation is flawed because it
invents-without citing to any support-a "separateness" requirement that is not provided for
by Article 111(1).450 The United States also explained that Article 111(1) includes an explicit
limitation that precludes the creation of implicit rights, such as Iran's alleged "separateness"
right. This provision of Article 111(1) states: "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."451
9.4 In its Reply, Iran does not disavow its invention of the "separateness" requirement, but
instead goes even further in inventing new requirements. Iran now argues that the phrase
''juridical status" not only guarantees that a company and its property be treated separately and
independently from its owners, but also that this phrase somehow incorporates the entire range
of rights afforded under Iranian law to Iranian companies. This baseless expansion reveals
Iran's willingness to advance any argument, however divorced from the text of the Treaty, in
an attempt to advance its claim.
1. Iran's Interpretation of Article 111(1) Is Contradicted by Both the Text and the
Negotiating History of the Provision
9.5 Iran's Reply presents for the first time the argument that Article 111(1) somehow
"provides that Iranian companies shall have their juridical status, i.e. the juridical status they
possess under Iranian laws and regulations, recognised within the U.S. territory, i.e. given
legal effect within this territory."452 Iran now relies upon this assertion-rather than upon the
text of the Treaty-as alleged support for its argument that Article 111(1) requires that corporate
entities be treated as "separate from their shareholders including the Iranian State."453 This
attempt to use domestic law to override the terms of the Treaty, contrary to the very terms of
the Treaty, defies fundamental principles of treaty interpretation and cannot sustain Iran's
claim.
450 U.S. Counter-Memorial, 11 13.13-13.17.
451 Treaty of Amity, Art. III(l) (emphasis added).
452 Iran's Reply, 14.7 (emphasis in original).
453 Iran's Reply, 1 4.11.
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9.6 In building to its central new argument regarding Iranian law, Iran asserts in its Reply
that the United States failed to interpret Article 111(1) properly "on four basic points."454 None
of these four interrelated arguments withstand scrutiny.
9.7 First, Iran creates a strawman-and a distraction from the text of Article 111(1}-by
arguing that the United States has conflated ''juridical status" with "legal personality."455 In its
Memorial, Iran itself referred to "separate legal personalities" when discussing ''juridical
status."456 More importantly, Iran's argument about terminology wholly ignores the context of
the United States' explanation regarding the meaning of "juridical status," namely that the
Treaty's travaux preparatoires-a communication sent directly from the United States to Iran
during the negotiations-set forth the Parties' understanding that "juridical status" required
merely recognition of "corporate entities" or "corporate status" with legal personality on the
same footing as individuals. 457 Iran nowhere engages with this important context.
9.8 Moreover, Iran makes only passing reference to the negotiation of parallel friendship,
commerce, and navigation ("FCN") treaties, arguing that these "hardly find a place in the
application of any sound method of treaty interpretation to the Treaty of Amity."458 This bare
assertion is incorrect and contradicted by Iran's own prior arguments. Consistent with the
customary international law principle reflected in Article 32 of the Vienna Convention of the
Law of Treaties, both the United States and Iran have previously relied on these types of
materials in interpreting the Treaty of Amity,459 as has the Court.460 Specifically, the Court
referred in Oil Platforms to a U.S. State Department memorandum regarding the FCN treaty
with China and "discussions in the United States Senate that preceded the ratification" ofFCN
treaties with China, Ethiopia, Iran, and Oman and Muscat.461 The Court's decision to reference
454 Iran's Reply, ,r 4.6.
455 Iran's Reply, ,r 4.6(a).
456 Iran's Memorial, ,r 4.23.
457 U.S. Counter-Memorial, ,r,r 13.8-13.9.
458 Iran's Reply, ,r 4.2.
459 See, e.g., Iran's Memorial, Oil Plaiforms (Iran v. United States), ,r,r 2.25-2.27 & n.190; Iran's Observations
and Submissions on the U.S. Preliminary Objections, Oil Plaiforms (Iran v. United States), ,r,r 1.27, 3.09, 3.14;
Oil Plaiforms (Iran v. United States), Preliminary Objections Judgment, 1996 I.C.J. 803, 882 (Dec. 12) (Diss. Op.
Schwebel).
460 Oil Plaiforms (Iran v. United States), Preliminary Objections Judgment, 1996 I.C.J. 803, 814-15, ,r 29 (Dec.
12).
461 Id.
106
such materials in its Oil Platforms judgment supports the conclusion that they are also relevant
to the Court's analysis of the same Treaty here.
9.9 In any event, it is Iran that turns interpretive principles on their head by largely ignoring
the text and context of the Treaty itself, and instead relying on wholly separate and distinct
international treaties as alleged support for its interpretation. The shortcomings of Iran's
arguments are obvious. While taking issue with the United States for referring to the travaux
preparatoires, and to the contemporaneous negotiation of other FCN treaties with terms closely
paralleling the Treaty, Iran cites to the 1961 Convention Relating to the Status of Refugees and
the international law of the sea. 462 Iran does not even attempt to explain why these inapposite
areas of law have any relevance to interpreting a bilateral Treaty of Amity. It is self-evident
that the "juridical status" of refugees under a multilateral treaty-relating to matters such as
"artistic rights"-and the "juridical status of waters" or "of the EEZ" are irrelevant to the proper
interpretation of Article 111(1) of this now-terminated Treaty. The weakness of these arguments
is only clearer in light oflran's near silence regarding the negotiating history of the very Treaty
at issue in this case.
9 .10 Iran's second, third, and fourth arguments each relate to its new theory that Article
111(1) requires the United States "to give legal effect to Iranian laws on its territory governing
the establishment oflranian companies .... "463 The Treaty, however, says no such thing. Nor
do the travaux preparatoires or other context support such an interpretation. Iran therefore
again resorts to inventing new terms out of whole cloth. Iran argues that "the juridical status
of an entity that is recognised as a legal being under its domestic law is broader than the mere
establishment of the legal personality of this entity, since it also provides for the essential legal
rights and duties attached to this legal person. "464 Article 111(1) nowhere mentions or even
implies a protection of "essential legal rights." To the contrary, Article 111(1) expressly states
that "recognition of juridical status does not of itself confer rights upon companies to engage
in the activities for which they are organized" ( emphasis added). Iran attempts to portray this
statement as a "qualification" that is only necessary because ''juridical status" does not have an
identical meaning with "legal personality,"465 but this only proves the United States' point: the
express disavowal of conferring any right as part of "juridical status" leaves no doubt,
462 Iran's Reply, ,r 4.6(a)(i).
463 Iran's Reply, ,r 4.6(b)-(d).
464 Iran's Reply, ,r 4.6(a)(ii) (emphasis added).
465 Iran's Reply, ,r 4.6(a)(iii).
107
consistent with the Parties' negotiation history, that recognition of ''juridical status" does not
imply a host of other rights. In other words, the Treaty states that ''juridical status" does not
confer rights upon companies-whether "essential legal rights" or "basic rights" or "basic legal
features," as Iran variously alleges. The phrase ''to engage in activities for which they are
organized" does not limit the express exclusion of additional rights in Article 111(1 ); instead,
this phrase encompasses a broad range of corporate purposes.
9.11 Iran also argues that because the Treaty refers to "their juridical status" rather than "a
juridical status," this somehow means that the "United States commits to give legal effect to
Iranian laws on its territory governing the establishment of Iranian companies .... "466 If,
however, the Parties had intended to incorporate domestic law in the sweeping way that Iran
argues, they could have done so easily in express terms. They did not do so by a single-word
substitution, and accordingly did not leave the meaning of the Treaty-and particularly the
rights of companies-to be self-defined by one party's own domestic law. It is also beside the
point that the companies in question must be constituted under Iranian law-that baseline
requirement cannot be expanded into a catch-all that "encompass[es] independence and
separateness,"467 much less a guarantee that companies be insulated from judgment
enforcement actions.
9.12 Iran repeats its reliance on Barcelona Traction and Diallo but wholly fails to address
the United States' observation that these cases did not relate to any treaty, much less the Treaty
at issue. As the United States has already explained (and which Iran largely ignores), both
Barcelona Traction and Diallo arose under very different circumstances from the instant case,
and are entirely irrelevant to Iran's Article 111(1) claim. Those cases concern the parameters
under which a State can, under customary international law, file a claim for diplomatic
protection on behalf of individuals or corporations. The primary issue addressed by the Court
in those cases is 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 and structure
were complex and involved multiple States. Neither Barcelona Traction nor Diallo arose
under a treaty provision similar to Article 111(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 111(1).
466 Iran's Reply, ,r 4.6(b)-(c).
467 Iran's Reply, ,r 4.8.
108
9.13 Moreover, Iran has failed to muster evidence of Iranian law in support of its sweeping
and flawed reasoning. Iran offers only cursory citations for its position that Bank Markazi and
the Export Development Bank of Iran are "independent" institutions.468 Iran also asserts
without support or analysis that "all other Iranian companies concerned" have the same status
with 'juridical personality" pursuant to the Iranian Commercial Code. 469 This is beside the
point and cannot change the meaning of the Treaty.
9 .14 In sum, Iran's Reply has failed to put forward any argument that can salvage its attempt
to add new terms such as "independence and separateness" to Article Ill( 1 ). If anything, Iran's
new arguments only illustrate its willingness to ignore the text and context of the Treaty.
11. The U.S. Measures Complied with Article 11l(l)'s Requirement of
Recognizing the Iranian State-Owned Companies' "Juridical Status"
9.15 Once Iran's flawed interpretation of Article 111(1) is set aside, the only question that
remains is whether the United States has complied with its obligation to recognize the 'juridical
status" of the Iranian companies in the territory of the United States. The answer is yes, it has
so complied. As the United States explained in its Counter-Memorial, none of the U.S.
measures interferes with or denies recognition of the Iranian companies' juridical status as
companies.470
9 .16 Iran's Reply offers no rebuttal to this straightforward application of Article III( 1 ), other
than to repeat its flawed interpretation by asserting that Iranian companies were not treated as
"separate and independent" from Iran.471 In other words, Iran's argument is that the United
States violated Article 111(1) by holding the Iranian companies "liable for execution of a
judgment against its shareholders, including when the shareholder is the State or Iran .... "472
As explained above, however, the Treaty cannot be distorted to impose any such prohibition
against an execution of judgment.
9 .17 Moreover, Iran has failed to address the point that nothing in Article III prohibits or
limits the well-settled practice of piercing the corporate veil for the ends of justice. Iran has no
real answer to the authorities relied upon by the United States in its Counter-Memorial in
468 Iran's Reply, ,r 4.12.
469 Iran's Reply, ,r 4.12 & n.367.
470 U.S. Counter-Memorial, ,r 13.20.
471 Iran's Reply, ,r,r 4.11-4.17.
472 Iran's Reply, ,r 4.13.
109
support of this practice. Iran claims that the Bancec decision by the U.S. Supreme Court is
irrelevant except in that the U.S. measures were intended to "override the five Bancec
factors."473 Iran misses the point. The fact that the U.S. measures pursued equity for terrorist
victims by directly allowing enforcement against Iranian companies is in principle no different
than courts applying the Bancec factors to reach the same result. The issue, as Iran's own
quotation of Senator Specter makes clear, is "the legal standard of the Bancec doctrine" under
which "families of the brave servicemen who died at the Marine Corps Barracks in Beirut,
Lebanon, [ could] collect court-ordered damages against state-sponsors of terrorism such as
Iran."474 The fundamental point remains unaltered: the U.S. measures served the ends of justice
to compensate victims of Iran's terrorist acts consistent with well-established principles of
piercing the corporate veil, which is in no way limited by Article 111(1 ).
9 .18 Iran also fails in its Reply to grapple with the comprehensive academic article cited in
the U.S. Counter-Memorial, which summarized the international law regarding veil-piercing.
This article cannot, as Iran argues, be dismissed as having "no relation at all with [the practice]
of the United States with respect to Iranian companies."475 Rather than engage with this
principle of international law, Iran's Reply argues only that the Court's holding in Barcelona
Traction was limited to "'lifting the corporate veil' or 'disregarding the legal entity' ... when
'forms of corporation and their legal personality' have 'not been employed for the sole purposes
they were originally intended to serve."'476 The Court's analysis, however, had no need to
address other circumstances in which lifting the corporate veil might be appropriate and instead
stated the broad principle that "the law has recognized that the independent existence of the
legal entity cannot be treated as an absolute."477 In the underlying cases at issue here, and
consistent with that broad principle, the assets of the Iranian companies were attached due to
Iran's support of terrorist activity.478 Nothing in Article 111(1) prevents measures to enable
such attachment, which as explained below in Section B, were reasonable in these
circumstances.
473 Iran's Reply,, 4.23.
474 Iran's Reply,, 4.24 (quoting Iran Reply Annex 5).
475 Iran's Reply, n.376.
476 Iran's Reply,, 4.28.
477 Barcelona Traction, Light and Power Company, Judgment, 1970 I.C.J. 3, 39,, 56 (Feb. 5).
478 As the United States noted in its Preliminary Objections, the Financial Action Task Force (F ATF) had issued
a series of warnings regarding the risk of terrorism-finance posed by Iran. U.S. Preliminary Objections, , 4.9-
4.11.
110
9 .19 Against the backdrop of this equitable principle, and the facts of this case, it is clear
that Article III in no way prevents the United States from taking measures directing that the
corporate form oflran's State-owned companies be set aside in order to facilitate recovery of
compensation for victims of Iranian-sponsored terrorism. Ultimately, Iran's Reply only
highlights the reasonableness of the U.S. measures by completely ignoring its own support of
terrorism that gave rise to those measures.
Section B: Iran Has Failed to Establish a Violation of Article Ill(2)
9.20 Iran's claim under Article 111(2) cannot stand following the Court's Preliminary
Objections Judgment, and nothing in Iran's Reply alters this inevitable conclusion. In its
Memorial, which was submitted prior to the Preliminary Objections Judgment, Iran attempted
to interpret Article 111(2)-and its requirement of "freedom of access to the courts"-as an
"essentially procedural" provision that protected Iranian companies' right to assert immunity
"as a matter of customary intemational law."479 On the basis of that interpretation, Iran argued
that the United States' alleged "abrogation of the entitlement of Iranian companies (i) to raise
and (ii) to be granted immunities from jurisdiction and/or enforcement that are applicable as a
matter of customary international law" violated the companies' right to freedom of access. 480
The United States explained the flaws oflran's argument in the Counter-Memorial, following
from the Court's conclusion in its Preliminary Objections Judgment, that Article 111(2) "does
not seek to guarantee the substantive or even the procedural right that a company of one
Contracting Party might intend to pursue before the courts or authorities of the other Party ...
• " 481 Accordingly, in light of the undisputed facts that the Iranian companies not only had
access to but also did in fact appear and present arguments in U.S. courts, no basis remains for
Iran's claim under Article 111(2).
9.21 In its Reply, Iran attempts to sidestep the significance of the Court's Preliminary
Objections Judgment by arguing that international case law supports a broad interpretation of
Article 111(2) such that the United States is allegedly "prohibited from interfering with such
access, including by abrogating defences which would otherwise have been available to those
companies .... "482 Iran's Reply, however, is notably silent as to which "defense" has allegedly
479 Iran's Memorial, 15.6.
480 Iran's Memorial, 15.9.
481 U.S. Counter-Memorial, 113.25 (quoting Preliminary Objections Judgment, 170 (emphasis added)).
482 Iran's Reply, 15.39.
111
been violated, because the only relevant defense is immunity, which the Court has already
found not to be engaged by the Treaty. Moreover, the case law that Iran presents is either
inapposite here or in fact supports the U.S. interpretation of Article 111(2), as discussed further
below. The fact remains that the Iranian companies in question enjoyed and availed themselves
of "access to the courts" of the United States, and Iran's claim should therefore be dismissed.
1. Iran's Overbroad Interpretation of Article 111(2) Is Contradicted by the Text of
the Treaty As Well As the Court's Own Analysis of That Text
9.22 Iran effectively ignores the Court's reasoning in its Preliminary Objections Judgment.
In sustaining the U.S. objection that Article 111(2) does not provide a basis for claims predicated
on the denial of sovereign immunity, the Court concluded that Article 111(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."483
9.23 In its Reply, Iran attempts to confine this interpretation to a "specific and limited
context,"484 but the Court's analysis plainly has broader impact, as by its own explanation the
Court found that Article 111(2) "does not seek to guarantee the substantive or even the
procedural rights" of a company-regardless of which rights a company invokes. 485 As the
U.S. Counter-Memorial explained, this reasoning leaves no margin of doubt that Article 111(2)
simply grants a company the right of access to the courts to protect whatever other rights the
company claims to have, and it does not do anything more. 486
9.24 To attempt to sidestep the text of Article 111(2), and the Court's reasoning, Iran now
invokes in its Reply certain international arbitral and judicial decisions to argue that "freedom
of access" must be "meaningful" and somehow includes a "prohibit[ion] from interfering with
such access, including by abrogating defences which would otherwise have been available to
those companies .... "487 None of these cases support Iran's interpretation.
483 Preliminary Objections Judgment, ,r 70.
484 Iran's Reply, ,r 5.13 n.401.
485 Preliminary Objections Judgment, ,r 70.
486 U.S. Counter-Memorial, ,r,r 13.25-13.27.
487 Iran's Reply, ,r 5.39.
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9.25 First, the cases from the European Court of Human Rights ("ECtHR") are clearly
inapposite. The applicable provision in these cases is Article 6(1) of the European Convention
on Human Rights ("ECHR"), which provides that: "In the determination of his civil rights and
obligations or of any criminal charge against him, everyone is entitled to a fair and public
hearing within a reasonable time by an independent and impartial tribunal established by law"
( emphasis added). Article 111(2) of the Treaty does not include any of the type of procedural
rights enumerated in ECHR Article 6, such as the right to "a fair and public hearing within a
reasonable time." Moreover, even if these decisions of the ECtHR were relevant, they do not
support Iran's position. In National & Provincial Building Society, for example, the ECtHR
found no breach because the State had "compelling public-interest motives,"488 just as the
United States does here-regardless of how studiously Iran attempts to ignore the facts that
gave rise to the U.S. measures. In Stran Greek Refineries, the ECtHR found a violation with
respect to Greece's legislation to void a final arbitration award that had been rendered against
it. The ECtHR found that this self-dealing did not satisfy "the notion of fair trial enshrined in
[ECHR] Article 6."489 The case Iran has brought involves no such self-dealing to avoid
liability, nor questions of a "fair trial" under the ECHR. Accordingly, the decisions of the
ECtHR provide no support to Iran's flawed interpretation of Article 111(2).
9.26 Second, the decisions in Van Bokkelen and Ambatielos involve distinct treaties and
inapposite facts, and thus have little to no relevance in this case. If anything, Van Bokkelen
serves only to illustrate the extreme circumstances that might sustain a violation of a "freedom
of access" provision. The case involved an individual who suffered from "harsh treatment and
protracted imprisonment" following the courts of Haiti misapplying the relevant law to the
individual.490 By contrast, in this case the U.S. courts properly applied U.S. law after
consideration of the Iranian entities' arguments submitted in the court proceedings (where they
chose to appear). The analysis of the Arbitral Commission in Ambatielos in fact supports the
United States' interpretation of Article 111(2), and shows the error of Iran's interpretation,
because it confirms that "free access to the courts" in no way ensures a particular outcome or
guarantees a company's immunity from enforcement. Instead, as the Commission explained,
488 National & Provincial Building Society v. the United Kingdom, App. No. 21319/93, ,r 112 (Oct. 23, 1997),
http://hudoc.echr.coe.int/fre?i=001-58109.
489 Stran Greek Refineries v. Greece, App. No. 13427/87, ,r 49 (Dec. 9, 1994), http://hudoc.echr.coe.int/eng?i=001-
57913.
490 J.B. MOORE, HISTORY AND DIGEST OF THE INTERNATIONAL ARBITRATIONS TO WHICH THE UNITED STATES HAS
BEEN A PARTY 1852 (1898) (Iran Reply Annex 112).
113
"[t]he modem concept of 'free access to the Courts' represents a reaction against the practice
of obstructing and hindering the appearance of foreigners in Court," and such "appearance"
entails basic legal advocacy such as "to deliver any pleading ... to engage Counsel; to adduce
evidence ... ; [and] to lodge appeals .... "491 Iran omits this pivotal text from its quotation of
Ambatielos, which confirms the United States' interpretation of and compliance with Article
111(2).
9.27 In sum, Iran's new case law arguments cannot salvage its erroneous interpretation of
Article 111(2), particularly in light of the Court's holding regarding that provision in its
Preliminary Objections Judgment.
11. The Iranian Companies Enjoyed Freedom of Access to the Courts of the
United States
9.28 The facts remain undisputed regarding the Iranian companies' access to the U.S. courts.
Iran has never contested, nor could it, that the Iranian companies not only enjoyed "access to"
but also in numerous instances actively participated in the U.S. court proceedings at issue.
Even applying Iran's invented standard, the Iranian companies had "meaningful" access to the
courts in that the companies appeared in the proceedings with representation of counsel and
submitted written and oral arguments in accordance with applicable procedural law.
9.29 Notwithstanding these uncontested facts, Iran's Reply suggests that the United States
somehow violated Article 111(2) by "interfering with such access."492 There is no foundation
to this new argument. First, the Treaty contains no right against "interference." This is merely
another backdoor attempt by Iran to add new terms to the "freedom of access" provision.
Second, the United States did not interfere with the Iranian companies' access to the U.S.
courts, as demonstrated in Chapter 8 and as proven by the companies' continued participation
in the courts after the U.S. measures in question had been adopted. To the extent that Iranian
entities chose not to appear in the proceedings against them, notwithstanding the
comprehensive notice procedures adopted by the U.S. courts to try to engage them, their
absence is obviously not the result of any wrongdoing by the United States. Iran's grievance
with the substantive provisions of U.S. law, and with the outcome of some of the enforcement
491 The Ambatielos Claim (Greece, United Kingdom of Britain, and Northern Ireland), XII R.I.A.A. 111 (Mar. 6,
1956) (U.S. Annex 121).
492 Iran's Reply, ,r 5.39.
114
proceedings, are outside the scope of Article 111(2) because, as the Court has explained, Article
111(2) does not "guarantee the substantive or the procedural rights" of Iranian companies.
9.30 Finally, Iran seeks to shield itself from scrutiny for its terrorist activities by arguing that
the most-favored nation provision should not involve an assessment of companies in "like
circumstances" but instead is without qualification. This argument makes no sense whatever.
If Iran were correct, the Treaty would bar the United States from treating companies differently
regardless of whether they in fact differed in fundamental ways, including, for example,
companies that engaged in fraud or other criminal behavior versus law-abiding companies.493
In addition, Iran's suggestion that Bank Markazi has been treated differently from any other
central bank ignores the facts. 494 Both TRIA and Section 161 O(g) of the FSIA are applicable
to central banks (among other agencies and instrumentalities) of all State sponsors of terrorism,
not solely to Bank Markazi.495 While Section 8772 applied only to the Bank Markazi assets at
issue in Peterson I, these were assets that Bank Markazi had repeatedly claimed as its own but
was attempting to shield from attachment based on the way in which it had structured its
holding.496 Section 8772 did not, therefore, represent a fundamental break from the framework
established in TRIA and Section 1610(g). Section 8772 simply sought to extend this
framework to ensure that certain Bank Markazi assets would not effectively retain their
immunity from attachment and execution, contrary to the goals of TRIA and Section 161 O(g),
as a consequence of being held through an intermediary. Nor, in any event, has Iran identified
another situation in which the central bank of a State sponsor of terrorism sought to protect
assets from attachment and execution in a similar way. In the absence of a similarly situated
central bank, Iran cannot establish a breach of the most-favored nation provision.
Section C: Concluding Observations
9 .31 In sum, Iran's interpretation of Article 111( 1) is untenable and unsupported by the text
of the Treaty. Article 111(1) obligates each Party to recognize the juridical status of the other's
companies but expressly states that this recognition of status does not itself confer any rights,
let alone the purported right to "separateness" on which Iran's claims hinge. Iran's Reply does
493 See also infra Chapter 12, Section B.iii.
494 Iran's Reply, ,r 5.40.
495 U.S. Counter-Memorial, ,r,r 6.11-6.15. See also supra Chapter 8, Section A.
496 See supra Chapter 8, Sections A and B.i(a). See also U.S. Counter-Memorial, ,r 6.16.
115
nothing to remedy the flaws in its Article 111(1) claims, nor could it. The right that Iran seeks
to invoke under Article 111(1) is nonexistent and Iran's claims must therefore be rejected.
9.32 Iran's Article 111(2) claims are similarly flawed. Again, Iran attempts to expand this
provision well beyond the ordinary meaning of its terms. As the Court has already recognized,
Article 111(2) protects a company's access to courts but does not "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 .... "497 Iran cannot circumvent this
dispositive ruling. Nor are the arbitral awards and ECtHR decisions that Iran has identified in
its Reply, which involved different treaties and different facts, any help to its case.
Accordingly, Iran's claims under Article 111(2) must likewise fail.
497 Preliminary Objections Judgment, ,r 70.
116
CHAPTER 10: IRAN HAS FAILED TO ESTABLISH A CLAIM UNDER ARTICLE IV(l)
10.1 There are two primary disputes between the Parties concerning the interpretation of
Article IV(l). The first is whether Article IV(l) reflects the international minimum standard
of treatment under customary international law or an autonomous standard. The second is
whether, if the applicable standard is the international minimum standard, it includes
obligations in addition to denial of justice and the other international minimum standard of
treatment obligations set forth expressly in Articles 111(2) and IV(2) of the Treaty of Amity.
10.2 In addressing the first question in Section A below, the United States shows that the
standard applicable under Article IV ( 1) is the international minimum standard of treatment and
that Iran has failed in its Reply to establish otherwise. In addressing the second question in
Section B, the United States responds to Iran's argument that the international minimum
standard of treatment has evolved to encompass a panoply of obligations that go beyond denial
of justice. As the United States demonstrates, Iran has not provided the evidence of State
practice and opinio juris that would be necessary to substantiate such a radical evolution. In
Section C, the United States shows that none of the measures Iran has challenged constitute a
denial of justice and, therefore, none are in breach of Article IV(l).
10.3 In Section D, the United States identifies the many flaws m the eight-pronged
autonomous standard that Iran has purportedly derived from Article IV(l)'s three clauses.
Next, the United States shows why even under Iran's proposed standard the challenged
measures nevertheless do not breach the article.
10.4 Finally, in Section E, the United States offers concluding observations on the proper
interpretation and application of Article IV(l).
Section A: Article JV(l) Includes All the Rules of the International
Minimum Standard of Treatment Under Customary
International Law That Are Not Set Forth Elsewhere in the
Treaty
10.5 Article IV(l )'s fair and equitable treatment obligation includes all the rules of the
international minimum standard of treatment under customary international law that existed at
the time the Treaty was concluded but are not set forth elsewhere in the Treaty, plus any rules
falling under the international minimum standard of treatment proven to have crystallized
under customary international law through State practice and opinio juris after the Treaty was
concluded. While the obligation not to deny justice had crystallized as part of the customary
international law minimum standard of treatment at the time the Treaty was concluded, Iran
117
has not shown that additional obligations have since crystallized to form part of the minimum
standard of treatment under customary international law. Specifically, although Iran contends
that the fair and equitable treatment obligation contains four additional distinct obligations
beyond the obligation not to deny justice, it has provided no evidence of State practice or opinio
juris to support the existence of these purported rules.
10.6 The Court has already ruled that Article IV reflects the international minimum
standard of treatment,498 making this observation twice in its Preliminary Objections
Judgment.499 To recall, when addressing whether sovereign immunity was included within the
scope of the term "international law," as used in Article IV, the Court rejected Iran's argument
that it was, and explained that "[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 ...
• " 500 That is unmistakably a reference to the international minimum standard of treatment. And
shortly following that statement, the Court reiterated 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."501 In response to these statements, Iran
argues in cursory fashion that the Court was not referring to the international minimum standard
of treatment, but rather to autonomous protections in the Treaty. 502 It provides no rationale for
such a reading, notwithstanding the Court's explicit statement that the "international law" in
question refers to the "minimum standard of protection for property." The Court's meaning
was clear: Article IV sets forth the international minimum standard of treatment under
customary international law.
10. 7 Historical materials further confirm the conclusion that the fair and equitable treatment
provision found in Article IV(l)'s first clause was intended to reflect the international
minimum standard of treatment, and that the remaining clauses were intended to inform the
interpretation of any rules falling within the scope of the fair and equitable treatment obligation,
but not to set forth independent obligations.
498 U.S. Counter-Memorial, ,r 14.7.
499 Preliminary Objections Judgment, fl 57, 58.
500 Preliminary Objections Judgment, ,r 57 ( emphasis added).
501 Preliminary Objections Judgment, ,r 58.
502 Iran's Reply, ,r 6.8.
118
10.8 Not long after the Treaty was concluded, the Organisation for Economic Co-operation
and Development ("OECD") published a Draft Convention on the Protection of Foreign
Property, which was first proposed in 1963 and revised in 1967. The commentary to Article 1
of the OECD Draft Convention, which incorporated the standard of "fair and equitable
treatment," noted that the standard reflected the ''well-established general principle of
international law that a State is bound to respect and protect the property of nationals of other
States"503 :
The phrase fair and equitable treatment' . . . indicates the
standard set by international law for the treatment due by each
State with regard to the property of foreign nationals. The
standard requires that . . . protection afforded under the
Convention shall be that generally accorded by the Party
concerned to its own nationals, but, being set by international
law, the standard may be more exacting where rules of national
law or national administrative practices fall short of the
requirements of international law. The standard required
conforms in effect to the 'minimum standard' which forms part
of customary international law. 504
10.9 In addition, in 1984 the OECD's Committee on International Investment and
Multinational Enterprises surveyed the OECD member States on the meaning of the phrase
"fair and equitable treatment." The committee confirmed that the OECD's members continued
to view the phrase as referring to principles of customary international law. 505
10.10 Thus, historically the term "fair and equitable treatment," as used in international
agreements governing investment, was intended as a shorthand reference to the principles of
customary international law governing the responsibility of a State for its treatment of the
nationals of another State with respect to their economic rights or interests. It was not intended
as an articulation of some other, free-standing concept of uncertain content. It is in this sense,
moreover, that the United States has incorporated "fair and equitable treatment" into not only
503 OECD, 1967 Draft Convention on the Protection of Foreign Property, reprinted in 7 I.L.M. 117, 119 (1968)
(U.S. Annex 374).
504 See id. at 120 (U.S. Annex 374) (emphases added).
505 OECD, Committee on International Investment & Multinational Enterprises, Intergovernmental Agreements
Relating to Investment in Developing Countries, at 12 (136), Doc. No. 84/14 (May 27, 1984) (U.S. Annex 375)
("According to all Member countries which have commented on this point, fair and equitable treatment introduced
a substantive legal standard referring to general principles of international law even if this is not explicitly
stated .... ").
119
its FCN treaties, but also its various bilateral investment treaties and trade agreements with
investment chapters.
10.11 International materials with respect to the "effective means" clause, 506 both historic and
more recent, also support the U.S. interpretation that the clause is not an independent
obligation, but rather subsumed within the denial of justice obligation within the fair and
equitable treatment provision. Iran simply had no response to much of the evidence the United
States introduced in its Counter-Memorial demonstrating this point.507
10.12 Instead of addressing these authoritative sources, Iran quibbles with the language of
another similar source, a 1926 report of the Committee of Experts for the Progressive
Codification of International Law, convened under the auspices of the League of Nations. Iran
argues that the Committee was discussing a different obligation than "effective means,"
because the report refers to "necessary means" instead of "effective means." It makes the same
argument regarding the views expressed by the United Kingdom in commenting on the
Committee's report in 1930, which also used the term "reasonable means."508 But "reasonable
means" was referring to the same concept as "effective means." In certain instances, concepts
falling within the international minimum standard of treatment are expressed using somewhat
different words without changing the meaning. Iran itself has cited to arbitral awards
interpreting the term "full protection and security" to interpret the differently-worded term
"constant protection and security" used in Article IV(2),509 and further criticizes the United
States (wrongly) for allegedly not interpreting the "arbitrary and discriminatory measures"
provision of the U.S.-Italy FCN treaty consistently with Article IV(l)'s differently-worded
506 As a preliminary matter, the United States notes that Iran has mischaracterized the U.S. position on the proper
interpretation of the "effective means" and "unreasonable or discriminatory measures" clauses. Iran argues that
it is "common ground between the Parties" that the ''protection afforded by the obligation to assure effective
means for lawful contractual rights" and the "protection against 'unreasonable or discriminatory measures"' both
include an obligation not to deny justice. Iran's Reply, ,r,r 6.50, 6.45. The United States' position is just the
opposite of how it is described by Iran. The denial of justice obligation does not fall within the scope of the
unreasonable or discriminatory measures and effective means clauses; rather, those clauses (which do not provide
independent obligations) inform the proper interpretation of any customary international law rules included within
the scope of the fair and equitable treatment provision.
507 To recall, the United States introduced evidence of Alwyn Freeman's 1938 treatise entitled "The International
Responsibility of States for Denial of Justice," the Special Rapporteur on Diplomatic Protection of the
International Law Commission from 2002, as well as the 1987 Advisory Opinion from the Inter American Court
of Human Rights, all supporting the U.S. position that "effective means" was a component of denial of justice.
U.S. Counter-Memorial, ,r,r 14.29, 14.30.
508 Iran's Reply, ,r 6.55(a).
509 E.g., Iran's Reply, at 172, n.616 (citing to paragraph 482 of the Award in Anglo American PLC v. Bolivarian
Republic of Venezuela, which interprets Article 2(2) of the bilateral investment treaty between the United
Kingdom and Venezuela, which refers to "full protection and security").
120
"unreasonable or discriminatory measures" provision in the Treaty. 510 There is no merit to
Iran' argument that the 1926 Committee Report and the 1930 United Kingdom comments
thereon were referring to a concept other than the effective means one.
10.13 With respect to Article IV(l)'s ''unreasonable or discriminatory measures" clause, Iran
argues that the U.S. position that this clause is encompassed by the fair and equitable treatment
obligation is somehow inconsistent with the U.S. position interpreting the "arbitrary and
discriminatory measures" provision in the ELSI case. 511 That is wrong. In ELSI, the United
States was interpreting its FCN treaty with Italy, which does not have a general investment
"fair and equitable treatment" provision. Rather, the FCN treaty with Italy has three fair and
equitable provisions, all of which are directed to specific areas: two are related to where a Party
maintains a monopoly or agency related to specific activities, and the third relates to the
awarding of concessions and other contracts and the purchasing of supplies. 512 Thus, the
arbitrary and discriminatory measures provision could not inform a general, investment-wide
fair and equitable treatment obligation in the FCN treaty with Italy, because there was no such
obligation in that treaty.
Section B: The International Minimum Standard of Treatment Can
Evolve, but Iran Has Adduced No Evidence That, as
Reflected in the Treaty, It Has Evolved Beyond Denial of
Justice
10.14 Customary international law, including the international mm1mum standard of
treatment, has the capacity to evolve. As the Court has held, new rules of law form or
"crystallize" over time through a general and consistent practice of States that is adhered to
from a sense oflegal obligation (opinio juris).513 To the extent that any new rules relating to
the international minimum standard of treatment are proven to have crystallized through this
process, then those rules would fall within the scope of the fair and equitable treatment
obligation in Article IV(l).
510 Iran's Reply, 16.48.
511 Iran's Reply, 16.48.
512 Treaty of Friendship Commerce and Navigation, arts. XVIII(l) and XVII1(2), U.S.-Italy, Feb. 2, 1948, TIAS
1965, 79 U.N.T.S. 171 (U.S. Annex 376).
513 U.S. Counter-Memorial, 1114.16, 14.17.
121
10.15 As such, Iran is wrong when it argues that the U.S. position is that the fair and equitable
treatment clause "must" be interpreted as it was understood at the time it was concluded. 514
That is not the U.S. position. Rather, the U.S. position is that this clause must be interpreted
as including the denial of justice rule that fell within the scope of the clause at the time the
Treaty was concluded plus any additional rules falling under the international minimum
standard of treatment that have been proven to have crystallized under customary international
law through State practice and opinio juris since the Treaty was concluded.
10.16 The burden is on the claimant to establish the existence of a rule of customary
international law.515 "The Party which relies on a custom," therefore, "must prove that this
custom is established in such a manner that it has become binding on the other Party."516 The
claimant also bears the burden of demonstrating that the State has engaged in conduct that has
violated that rule.517
10.17 It is not sufficient for a claimant merely to assert that a new rule of customary
international law has crystallized. As the tribunal in Cargill, Inc. v. Mexico, for example,
acknowledged,
514 Iran's Reply, ,r 6.25. Iran points to two statements in the U.S. Counter-Memorial in its attempt to support its
mischaracterization of the U.S. position, but selectively quotes the relevant U.S. statements thereby distorting the
meaning. Iran first points to a statement that the United States made describing the international minimum
standard of treatment as it existed at the time the Treaty was concluded, but this passage nowhere states that this
standard could not evolve. The United States was simply describing how the Treaty came to include the
obligations that the Parties agreed to, but nowhere denied that the relevant customary international law could
evolve. Id. (citing U.S. Counter-Memorial, ,r 14.3). Second, Iran alleges that the United States argued that the
international minimum standard of treatment had "crystallized" and could thus not evolve. Id. ,r 6.29 (citing U.S.
Counter-Memorial, ,r 14.8). The United States made no such statement. Rather, the statement regarding
"crystallization" simply referred to the formation of individual customary international law rules that fell within
the umbrella concept that is the international minimum standard of treatment, not to the overall international
minimum standard of treatment concept itself.
515 Rights of Nationals of the United States of America in Morocco (France v. United States), 1952 I.C.J. 176, 200
(Aug. 27).
516 Asylum (Colombia v. Peru), 1950 I.C.J. 266,276 (Nov. 20).
517 See, e.g., Tradex Hellas S.A. v. Albania, ICSID Case No. ARB/94/2, Award ,r 74 (Apr. 29, 1999) (U.S. Annex
377) ("[I]t is the claimant who has the burden of proof for the conditions required in the applicable substantive
rules oflaw to establish the claim .... A Party having the burden of proof must not only bring evidence in support
of his allegations, but must also convince the Tribunal of their truth, lest they be disregarded for want, or
insufficiency, of proof.") (internal quotation marks omitted); BIN CHENG, GENERAL PRINCIPLES OF LAW As
APPLIED BY INTERNATIONAL COURTS AND TRIBUNALS 334 (1987) (U.S. Annex 378) ("[T]he general principle
[is] that the burden of proof falls upon the claimant[.]"); Marvin Roy Feldman Karpa v. United Mexican States,
NAFTA/ICSID Case No. ARB(AF)/99/1, Award ,r 177 (Dec. 16, 2002) (U.S. Annex 379) ("[I]t is a generally
accepted canon of evidence in civil law, common law and, in fact, most jurisdictions, that the burden of proof
rests upon the party, whether complaining or defending, who asserts the affirmative of a claim or defence."
(quoting United States -Measures Affecting Imports of Woven Wool Shirts and Blouses from India, Adopted 23
May 1997, WT/DS33/AB/R, at 14)).
122
the proof of change in a custom is not an easy matter to establish.
However, the burden of doing so falls clearly on Claimant. If
Claimant does not provide the Tribunal with proof of such
evolution, it is not the place of the Tribunal to assume this task.
Rather the Tribunal, in such an instance, should hold that
Claimant fails to establish the particular standard asserted. 518
10.18 The Court has previously described in some detail what is required to establish new
rules of customary international law, which the United States reviewed in its CounterMemorial.
519 In sum, the relevant State practice must be widespread and consistent, and
accompanied by a sense of legal obligation. These two requirements must both be identified
to support a finding that a relevant rule of customary international law has emerged. 520
10.19 Although Iran's primary argument is that the fair and equitable treatment provision is
an autonomous one, as is discussed below, Iran argues in the alternative that in the event the
provision reflects customary international law, customary international law contains the exact
same obligations that purportedly exist under Iran's proffered autonomous standard.521
Specifically, Iran argues that under customary international law the fair and equitable treatment
provision sets forth rules concerning the following kinds of conduct: (a) arbitrary, grossly
unfair, unjust or idiosyncratic; (b) discriminatory; ( c )(i) lacking in due process and leading to
an outcome which offends judicial propriety including (but not limited to) through (ii) a denial
of justice; and ( d) legitimate expectations. 522 And yet, in this case Iran has made no effort to
identify any State practice or opinio juris for its purported rules. Rather, Iran seeks to escape
the Court's judgments on how customary law is to be identified.
10.20 While the United States readily agrees that the denial of justice obligation is part of the
international minimum standard of treatment, Iran has introduced no evidence of any State
practice or opinio juris for its four other purported rules, flouting this Court's rulings on how
customary international law is to be identified as well as the Court's Statute.523 Rather, Iran
attempts to excuse this failure by simply citing to arbitral awards to support its five-obligation
518 Cargill Inc. v. United Mexican States, NAFTA/ICSID Case No. ARB(AF)/05/2, Award 1273 (Sept. 18, 2009)
(U.S. Annex 380) (emphases added).
519 U.S. Counter-Memorial, 1114.16, 14.17.
520 U.S. Counter-Memorial, 114.16.
521 Compare Iran's Reply, 16.9 (setting forth Iran's proffered autonomous legal standard), with Iran's Reply, 1
6.21 (setting forth Iran's proffered legal standard under customary international law).
522 Iran's Reply, 16.21.
523 Article 38(l)(b) of the Court's Statute.
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test.524 When discussing the Waste Management II arbitral decision, Iran readily concedes that
that decision did not review the two requirements to establish a change in international custom,
but attempts to excuse this failure by explaining that the tribunal's conclusion "was based on a
careful survey ofNAFTA arbitral awards."525 That is no answer. Citing to arbitral decisions
that do not identify State practice or opinio juris, but rather merely cite to other arbitral
decisions that likewise do not identify State practice or opinio juris, simply compounds the
problem. This approach would render irrelevant the Court's judgments on the requirements of
proving custom, and mean that ad hoc arbitrators would in effect have authority to establish
rules of law that bind States in the name of custom.
10.21 Iran attempts to justify this approach by arguing that it is authorized under Article
3 8(1 )( d) of the Court's statute, which includes 'judicial decisions" as a "subsidiary means."
Iran points to the International Law Commission's Draft Conclusion 13(1) on identification of
customary international law, which states that decisions of international courts and tribunals
qualify under Article 38(1) as "subsidiary means for the determination of such rules."526
However, Comment 1 to Draft Conclusion 13 clarifies that such decisions may only serve as
subsidiary means "when they themselves examine the existence and content of [ customary
international law] rules."527 Further, Comment 3 states that "[t]he value of such decisions
varies greatly, however, depending both on the quality of the reasoning (including primarily
the extent to which it results from a thorough examination of evidence of an alleged general
practice accepted as law) . ... "528
10.22 Arbitral awards relying on other arbitral awards that do not examine the existence of
State practice or opiniojuris do not qualify as subsidiary sources of law under Article 38(1)(d)
of the Statute of the Court, whereas arbitral awards which provide adequate direct evidence of
State practice and opinio juris will. 529 The alternative approach of allowing arbitral tribunals
524 Iran's Reply, ,r,r 6.22-24.
525 Iran's Reply, ,r 6.24(b).
526 Iran's Reply, ,r 6.24(c).
527 International Law Commission, Draft Conclusions on Identification of Customary International Law, with
commentaries, Draft Conclusion 13, Comment 1, U.N. Doc. A/73/10 (2018) (U.S. Annex 381).
528 International Law Commission, Draft Conclusions on Identification of Customary International Law, with
commentaries, Draft Conclusion 13, Comment 3, U.N. Doc. A/73/10 (2018) (U.S. Annex 381) (emphasis added).
529 See THE STATUTE OF THE INTERNATIONAL COURT OF JUSTICE 854 (Andreas Zimmerman et al. eds., 2d ed.
2012) (U.S. Annex 382) ("[I]n marked contrast to the sources listed in the previous sub-paragraphs,jurisprudence
and doctrine are not sources of law---or, for that matter, of rights and obligations for the contesting States; they
are documentary 'sources' indicated where the Court can find evidence of the existence of the rules it is bound to
apply by virtue of the three other sub-paragraphs.").
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to decide what customary international law should be without examining the existence of the
two requirements of custom as stated by this Court would not only eviscerate the Court's
jurisprudence and requirements, but would also, as a practical matter, open the door to a
potentially enormous universe of decisions to be considered. In contrast, requiring evidence
of State practice and opinio Juris-as the Court has done-provides concrete parameters within
which parties and the Court can operate.
10.23 Because Iran is unable to adduce any evidence to show that State practice and opinio
Juris exist for its four other purported rules of customary international law, the Court should
reject Iran's claims based on these purported rules.530
10.24 In this regard, in Obligation to Negotiate Access to the Pacific Ocean (Bolivia v. Chile),
the Court stated that the purported "legitimate expectation" rule in particular was not part of
general international law simply because arbitral tribunals had concluded that it was.531 And
yet, Iran construes the Court's statement to mean the opposite: that the Court should apply
legitimate expectations in this case as if it were a settled principle of intemational law.532 The
Court should reject Iran's invitation to revisit the Court's conclusion on this matter.
10.25 However, even if the Court were to revisit the issue and conclude that "legitimate
expectations" is part of general international law, the Court would have to reject its opposability
to the United States, as the United States has been a persistent objector to this so-called rule.
This point was demonstrated in the U.S. Counter-Memorial and has drawn no response from
Iran.s33
10.26 Moreover, the United States is not the only State that has objected to the proposition
advanced by Iran that the purported "legitimate expectations" rule is part of customary
530 In the event that the Court concludes that Iran has established that these four rules form part of the international
minimum standard of treatment, the United States' defense is set forth in Section D below.
531 U.S. Counter-Memorial, ,r 14.20.
532 Iran's Reply, ,r 6.43.
533 U.S. Counter-Memorial, ,r 14.22.
125
international law. For example Argentina 534 Canada 535 Costa Rica 536 El Salvador 537
' ' ' ' '
Honduras, 538 and Mexico539 have all made submissions ( either as a respondent or a nondisputing
Party) that no such obligation exists under customary international law. Further,
eleven States (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru,
Singapore, and Vietnam) have signed the Comprehensive and Progressive Agreement for
Trans-Pacific Partnership ("CPTPP"), which explicitly rejects the notion that merely because
a State acts in a manner inconsistent with an investor's expectation that the international
minimum standard of treatment has been breached.540 Additionally, the United Kingdom has
formally requested to commence accession negotiations to the CPTPP.541
Section C: The United States Did Not Deny Justice to Any Iranian
Companies
10.27 The United States discussed the standard for denial of justice in detail in its CounterMemorial.
In sum, the standard is a high one requiring conduct related to the administration
of justice that is notoriously unjust or egregious for a breach to be established. 542 There is
nothing unreasonable, let alone unjust or egregious, about a law that ensures that innocent
victims of violent terrorist acts are able to enforce valid judgments against the assets of a State
that is complicit in those acts, including assets of agencies and instrumentalities of that terrorist
State with a different juridical personality, thereby piercing the corporate veil.
534 National Grid PL.C v. Argentine Republic, UNCITRAL/Agreement between the Government of the United
Kingdom of Great Britain and Northern Ireland and the Government of the Argentine Republic for the Promotion
and Protection of Investments, Award ,r 163 (Nov. 3, 2008) (U.S. Annex 383).
535 Eli Lilly & Co. v. Government of Canada, ICSID Case No. UNCT/14/2, Counter-Memorial of Canada ,r 275
(Jan. 27, 2015) (U.S. Annex 384).
536 Aven v. Costa Rica, ICSID Case No. UNCT/15/3, Respondent's Post-Hearing Brief,r,r 742-747 (Mar. 13, 2017)
(U.S. Annex 385).
537 Spence Int'l Invs. v. Costa Rica, ICSID Case No. UNCT/13/2, Submission of El Salvador ,r,r 8-12 (Apr. 17,
2015) (U.S. Annex 386).
538 Teco Guatemala Holdings, LLC v. Guatemala, ICSID Case No. ARB/10/23, Non-Disputing Party Submission
of Honduras, ,r 10 (2012) (U.S. Annex 387).
539 Eli Lilly & Co. v. Government of Canada, Case No. UNCT/14/2, Submission of Mexico ,r 15 (Mar. 18, 2016)
(U.S. Annex 388).
54° Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Chapter 9 (Investment),
art. 9 .6(2) & ( 4), Mar. 8, 2018 (U.S. Annex 389). Article 9 .6 of CPTPP expressly states that the minimum standard
of treatment provision of the treaty is intended to be coextensive with the minimum standard of treatment under
customary international law. The CPTPP is in force for Australia, Canada, Japan, Mexico, New Zealand,
Singapore, and Vietnam. UNCTAD, Investment Policy Hub, Status ofCPTPP (last visited on March 25, 2021)
(U.S. Annex 390).
541 Formal Request to Commence UK Accession Negotiations to CPTPP, Feb. 1, 2021 (U.S. Annex 391).
542 U.S. Counter-Memorial, ,r,r 14.33-14.37.
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10.28 Yet in the cases where Iran complains that its companies were denied justice, the Iranian
companies were fully able to engage in the same legal process available to all other litigants in
the United States. The laws in question did not prevent Iranian companies from examining
witnesses, presenting documentary evidence, hiring counsel, or pursuing appeals. And Iran
does not allege otherwise. Indeed, the courts systematically went through and carefully
considered the evidence that was presented, and often took steps to ensure Iran's rights were
protected even when Iran or an Iranian entity chose not to participate, as detailed in Chapter 8.
And of course, when Iran or Iranian entities did participate, they had some successes. 543
10.29 Iran does not complain that U.S. courts somehow misapplied the law in any way, let
alone an egregious way, an argument frequently raised in denial of justice cases, and it
concedes that it can no longer ground its denial of justice claims in an alleged non-recognition
of sovereign immunity by U.S. courts.544 Rather, Iran sets out "[t]hree aspects" ofits remaining
denial of justice claims: Iranian companies were allegedly (a) denied a so-called right to raise
a defense based on separate juridical status; (b) subject to enforcement proceedings and
execution to satisfy liability judgments rendered against the Iranian State in relation to which
the companies were allegedly not parties and to which no findings of liability were made
against them; and ( c) retroactively denied the right to rely on three defenses (res judicata,
limitations of actions, and collateral estoppel). 545 The first two theories are both a variation on
the theme that the United States could not pierce the corporate veil.
10.30 Not all the measures Iran complains of include all these aspects, nor were all the
measures relevant in every case Iran lists in Attachment 2 to its Reply. To the contrary, as
demonstrated in more detail in Chapters 2 and 8, there are only 8 enforcement actions on which
Iran bases its claims, and as demonstrated by the chart in paragraph 8.12, none of these cases
involved all of the measures that Iran challenges. Indeed, some only involve one such measure.
Further, Iran has not provided the Court with a clear statement of which cases are subject to its
Article IV(l) claim.546 When the Court considers whether a denial of justice occurred in any
543 Supra Chapter 8, Section B.i(c) (the Weinstein case) and U.S. Counter-Memorial, ,r 14.41 (the Rubin case).
544 Iran's Reply, ,r 1.2.
545 Iran's Reply, ,r 6.60.
546 In response to the United States pointing to the Rubin case as an example where Iran hired lawyers, participated
in the proceedings, and won the case as a result (U.S. Counter-Memorial, ,r 14.41), Iran argues this was irrelevant
because "Iran's Memorial does not refer to Attachment 2 with respect to its claims under Article IV(l) of the
Treaty[.]" Iran's Reply, at 158, n.572. But none of Iran's four Attachments are referred to in Iran's discussion of
the alleged breaches of Article IV(l) in its Memorial. Iran's Memorial, ,r,r 5.42-5.51.
127
particular case, it will need to ascertain (i) whether any of the relevant measures were applied,
and (ii) if these measures actually caused the outcome of the case to change in a way that meets
the denial of justice standard. If the answer to either of these questions is no, then no denial of
justice occurred. To help with this assessment, the United States addresses below each measure
invoked by Iran as a basis for its claims and shows how, either standing alone or in combination
with the others, the measures did not result in a denial of justice.
1. Designation of Iran as a State Sponsor of Terrorism
10.31 In January 1984, the United States designated Iran as a State sponsor of terrorism
following the Secretary of State's determination that Iran repeatedly provided support for
international acts of terrorism. 547 This measure applied only to the Iranian State, not to any
Iranian nationals or companies. Because Article IV(l) does not apply to the Iranian State, Iran
may not ground any of its denial of justice claims in the application of this measure.
11. Executive Order 13599
10.32 In 2012, as a further response to the national emergency declared with respect to Iran,
taken in light of deceptive conduct by Bank Markazi and other Iranian banks to conceal
transactions prohibited by international and U.S. sanctions, the President of the United States
issued Executive Order 13599. The Executive Order blocked all property and interests in
property of the Government of Iran, including Bank Markazi, as well as of Iranian financial
institutions subject to U.S. jurisdiction.548 As it applies to Iran, including Bank Markazi, the
Executive Order may not serve as grounds for any of Iran's denial of justice claims, because
Bank Markazi is not a "company" under Article IV(l ), and the provision imposes no obligation
on the United States with respect to the Iranian State. Further, as noted above in Chapter 7, to
the extent the Executive Order is a basis for any of the rest oflran's claims, it addresses matters
which fall within the exceptions created by Treaty Article XX(l)(c) because it regulates arms
production, arms trafficking, and military supplies, and Article XX(l)(d) because it is
necessary to protect U.S. essential security interests.
10.33 There are three additional reasons why the Executive Order cannot serve as a basis for
asserting a denial of justice claim. First, the measure does not purport to deny the Iranian
institutions any right to a defense, either based on their juridical status or otherwise. Rather,
547 U.S. Counter-Memorial, ,r,r 6.3-6.6.
548 U.S. Counter-Memorial, ,r,r 6.7, 6.8 and Chapter 11.
128
the measure simply blocked (i.e., froze on a non-permanent basis) assets of the financial
institutions. Had Iran ceased the conduct that gave rise to the measure, the designation could
have been lifted without Iran experiencing the consequences of the measure. Second, although
Iran argues that this measure "targets" Iranian companies, 549 the United States has imposed
financial sanctions on other non-Iranian persons that support foreign terrorists, a point
discussed in the Counter-Memorial,550 but not addressed by Iran. Third, there is nothing about
blocking assets of entities that posed an unacceptable risk of terrorist financing, proliferation
financing, and money laundering that engages the administration of justice in a notoriously
unjust or egregious manner, and would thus meet the denial of justice standard. In fact, this
measure does not implicate the administration of justice in any fashion whatsoever.
111. Piercing the Corporate Veil Pursuant to Section 20l(a) ofTRIA and Section
161 0(g) of the FSIA
10.34 Section 201(a) of TRIA authorizes blocked assets to be attached and executed against
for compensatory damages in judgments against "terrorist parties," including blocked assets of
agencies or instrumentalities of terrorist parties. 551 Terrorist parties are defined to include State
sponsors of terrorism, such as Iran, but also individual terrorists as well as terrorist
organizations. Thus, the measure did not "target" Iranian companies, but rather applied to a
wide range of terrorist actors. Further, the measure was not retroactive.
10.35 Section 1610(g) of the FSIA was passed as part of the 2008 National Defense
Authorization Act. 552 It helps facilitate enforcement of judgments against a State sponsor of
terrorism, including by authorizing enforcement against such a State's agencies or
instrumentalities. Since it applies to all States designated as sponsors of terrorism, it does not
"target" Iranian companies. Nor is it retroactive. The measure allows the corporate veil to be
pierced in circumstances similar to Section 201(a) ofTRIA. There is nothing unlawful about
this aspect of these measures, for the reasons discussed below.
10.36 Piercing the corporate vei1553 exists in numerous contexts, and yet Iran has submitted
no authority even hinting that piercing the corporate veil has ever given rise to a denial of
549 Iran's Reply, 16.85(a).
550 U.S. Counter-Memorial, 16.7.
551 U.S. Counter-Memorial, 116.11, 6.12.
552 U.S. Counter-Memorial, 116.13-6.15.
553 "Piercing the corporate veil" is sometimes referred to as "lifting the corporate veil" or "disregarding the legal
entity." Barcelona Traction, Light and Power Company, Limited, 1970 I.C.J. 3, 39,156 (Feb. 5, 1970).
129
justice claim in any context. As a threshold matter, Iran argues that the United States has the
burden of proving that there "is an established basis for the application of the doctrine" of
piercing the corporate veil in this case. 554 This argument fails for two reasons. First, it turns
burden of proof on its head. As discussed above, Iran, as the claimant, has the burden of
proving its claim, including that any measure which it complains of is contrary to applicable
international law. The burden is not on the United States to prove that its measures are lawful.
Second, Iran's argument fundamentally mischaracterizes how international law functions. A
State is allowed to engage in any conduct that is not prohibited under applicable international
law. It does not need to first find an "established basis" to engage in specific conduct in order
to lawfully engage in such conduct. Rather, as long as the conduct is not prohibited, the conduct
is lawful. 555
10.37 When it comes to piercing the corporate veil, States engage in this conduct in a variety
of contexts without the suggestion that it constitutes a denial of justice. In Barcelona Traction,
the Court held that piercing the veil is lawful in a diplomatic protection context. 556
Additionally, it is permissible in circumstances of (i) fraud, illegality, contravention of contract,
public wrong, inequity; (ii) failure to maintain separate identities of the company and its
owners/shareholders; (iii) failure to adequately capitalize the company; and (iv) failure to
follow corporate formalities, among other circumstances. 557 In international investment
arbitration under the auspices of the International Centre for Settlement of Investment Disputes
("ICSID"), it has also been used to determine whether foreign control of an investment exists
such that jurisdiction is proper under Article 25 of the ICSID Convention, sometimes to the
extent that even more than one layer of the corporate form will be pierced. 558 In both
554 Iran's Reply,, 6.76; see also, id., 6.71.
555 E.g., Draft articles on Responsibility of States for Internationally Wrongful Acts, with commentaries, Art. 2(b)
& cmt. 1 (2001) (U.S. Annex 254) (explaining that a State cannot commit a wrongful act in the absence of an
obligation); Methanex Corp. v. United States of America, NAFTA/UNCITRAL, Final Award on Jurisdiction and
Merits, Part IV, Chapter C at 11, , 25 (Aug. 3, 2005) (U.S. Annex 392) ("In the absence of a contrary rule of
international law binding on the States parties, whether of conventional or customary origin, a State may
differentiate in its treatment of nationals and aliens.").
556 U.S. Counter-Memorial,, 14.43 (discussing the relevant portion of from Barcelona Traction).
557 Fletcher Cyclopedia on the Law of Corporations§ 41 (2020) (U.S. Annex 393).
558 E.g., TSA Spectrum de Argentina S.A. v. Argentine Republic, ICSID Case No. ARB/05/05, Award,, 147-48,
160 (Dec. 19, 2008) (U.S. Annex 394).
130
intemational559 and domestic arbitration,560 it may be used in certain circumstances to require
entities to arbitrate disputes even if the entities are not parties to the arbitration agreement. As
one of the leading treatises on international arbitration notes, "'[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. "'561 To give
another example, the Court of Justice of the European Union ("CJEU") ruled in the Vantaan
kaupunki case that damages for violation of European Union ("EU") competition law were the
responsibility of a group of companies which had not themselves violated EU competition law,
but which had acquired certain other companies that had gone through a liquidation process
and which had violated EU competition law.562 The CJEU ruled as such notwithstanding that
the acquiring companies were legally independent from the companies they had acquired and
the claim for damages had not been lodged during the liquidation proceedings.563
10.38 With so many examples, it is no wonder that a treatise on piercing the veil of State
enterprises has stated that the principle is sufficiently widespread that it is considered a general
principle of international law as that term is used by Article 38(1)(c) of the Court's statute.564
Against this backdrop, Iran attempts to excuse its inability to find a single instance of a denial
of justice resulting from the corporate veil being pierced by arguing that"[ t ]he absence of direct
authority merely highlights the extreme nature of the U.S. measures .... "565 But it is Iran's
extreme conduct ofrepeatedly sponsoring violent terrorist attacks on U.S. and other citizensbombings
such as the Marine barracks in Lebanon and the Khobar Towers in Saudi Arabia,
kidnappings, assassinations and aircraft hijackings566-which forced the United States to
consider other ways in which victims could obtain justice, namely, through enforceable
damages claims before U.S. courts. Far from being "extreme," as Iran alleges, this response to
559 GARY BORN, INTERNATIONAL COMMERCIAL ARBITRATION,§ 10.02(0), 1431-44 (2nd ed. 2014) (U.S. Annex
395).
560 GE Energy Power Conversion France SAS Co,p. v. Outokumpu Stainless USA, LLC, 140 S. Ct. 1637, 1643-
44 (2020) (U.S. Annex 396).
561 BORN at 1431-32 (U.S. Annex 395).
562 See Case C-724/17, Vantaan kaupunki v. Sansk Industrial Solutions Oy, NCC Industry Oy, Asfaltmix Oy,
ECLI:EU:C:2019:204 (March 14, 2019) (U.S. Annex 397).
563 See id. ,Ml 7-9, 11, 49-51 (U.S. Annex 397).
564 ALBERT BADIA, PIERCING THE VEIL OF STATE ENTERPRISES IN INTERNATIONAL ARBITRATION 48-49 (2014)
("In our view, we can affirm that veil-piercing is a general principle oflaw.") (U.S. Annex 186).
565 Iran's Reply, 16.68.
566 U.S. Counter-Memorial, Chapter 5.
131
Iran's repeated attacks on innocent victims and its unwillingness to compensate them for the
deaths and injuries caused by its conduct, was restrained.
1v. Section 8772 of Title 22 of the U.S. Code (Codifying Section 502 of the Iran
Threat Reduction and Syria Human Rights Act of2012)
10.39 Section 8772 facilitated the attachment of certain assets that Bank Markazi was holding
through intermediaries to satisfy certain terrorism related judgments under certain
conditions. 567 Because this measure applies only to Bank Markazi, which is part of the State
oflran,568 Iran may not ground a breach of Article IV(l) in Section 8772 because the provision
does not apply to the Iranian State. As such, the Court should not consider this measure in the
context of Article IV(l). Further to this point, Iran grounds its Article IV(l) claims in
allegations that this and the other challenged measures target both Iran and Iranian
companies. 569 Iran is wrong on both accounts. However, even if a measure did "target" Iran,
such a measure could not serve as a ground for Iran's claim, because Article IV(l) does not
apply to the Iranian State. Thus, the ''targeting" discussion below is limited to explaining why
Iranian companies were not targeted.
(a) Section 8772 Did Not Deny Justice to Any Iranian Entity
10.40 Even if, quad non, Bank Markazi could be considered a company for purposes of
Article IV ( 1 ), Section 8772' s application would nevertheless not constitute a denial of justice.
Iran can point to no flaw in the proceedings; it simply dislikes the substance of the law that the
U.S. Congress passed. The statute required a different substantive legal standard be applied by
the U.S. District Court to determine whether certain assets could be attached. It did not,
however, direct the court to order the assets in question to be turned over to the plaintiffs.
Rather, it simply required the U.S. District Court to apply the law to the facts to determine
whether or not the new legal standard was satisfied. 570 As discussed in Chapter 8, the statute
left "plenty" of issues to litigate, as the U.S. Supreme Court concluded. Key terms in the statute
("beneficial interest" and "equitable title") were left undefined, and the statute required the
U.S. District Court to determine who the owner of the assets was, whether a party other than
the owner had a constitutionally protected interest in the assets, and whether the assets were
567 Section 8722 is discussed in Chapter 8 above; see also U.S. Counter-Memorial, 16.16.
568 U.S. Counter-Memorial, Chapter 9 and supra Chapter 5 (explaining that Bank Markazi does not qualify as a
"company" under the Treaty).
569 Iran's Reply,~ 9.14, 9.31, 12.3; Iran's Memorial,~ 1.19, 6.20.
570 BankMarkazi v. Peterson, 136 S. Ct. 1310, slip op. at 18 (Apr. 20, 2016) (IM Annex 66).
132
located in the United States.571 All these issues were disputed,572 and although Bank Markazi
ultimately lost on these points there were no procedural improprieties that might call into
question whether a denial of justice occurred. The statute did not prevent Bank Markazi from
calling or cross-examining witnesses, presenting documentary evidence, hiring counsel, or
making legal argument.
(b) Iranian Entities Were Not Targeted
10.41 Iran argues that Section 8772 targets its Central Bank because there is no analogous
provision that applies to the Central Banks of other State Sponsors of Terrorism.573 But not
every measure that applies to a single entity constitutes targeting or unlawful discrimination,
and Iran has offered no support for such a proposition. To the contrary, different conduct
justifies different treatment, as has been held by various international tribunals.
10.42 As the Urbaser tribunal put it:
The Tribunal basically agrees with a position stating that
measures affecting an investor are discriminatory if they are
clearly less favourable tha[ n] those accorded to other investors
operating under the same or similar circumstances, they intend
to harm the foreign investor and cause actual damage, and if they
are not justified by sufficient reasons. 574
10.43 As another tribunal stated: "Treating different categories of subjects differently is not
unequal treatment."575 And as a third 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."576
10.44 Indeed, even Iran has conceded that differential treatment 1s not the same as
discrimination. 577
571 See supra Chapter 8, Section B.i.(a).
572 Id., slip op. at 17 n.20 (Apr. 20, 2016) (IM Annex 66).
573 Iran's Reply,, 6.95.
574 Urbaser S.A. v. Argentine Republic, Spain-Argentina BIT/ICSID Case No. ARB/07/26, Award, 1088 (Dec.
8, 2016) (U.S. Annex 398) (emphasis added).
575 Metalpar S.A. v. Argentine Republic, Chile-Argentina BIT/ICSID Case No. ARB/03/5, Award, 162 (June 6,
2008) (U.S. Annex 191).
576 Enron Creditors Recovery Corp. v. Argentine Republic, U.S.-Argentina BIT/ICSID Case No. ARB/01/3,
Award, 282 (May 22, 2007) (U.S. Annex 192).
577 Iran's Memorial,, 5.31.
133
10.45 In this case, Iran has continued to avoid satisfying valid judgments against it, and
Congress's focus was ensuring that victims of Iran's brutal terrorism with valid judgments
could have these judgments satisfied, thereby making Iran accountable for its conduct and
providing victims compensation. Had another State engaged in the acts that Iran did-killing
and maiming peacekeepers and civilians, avoiding satisfying its resulting court judgments, and
structuring its investments in an effort to evade its judgment creditors578-the same measures
would have undoubtedly been imposed on that State as well.
(c) Retroactivity Does Not Render Section 8772 Contrary to the Denial of
Justice Obligation
10.46 Undoubtedly recognizing the weakness of its claims, when discussing the retroactive
aspect of Section 8772 Iran continues to ground its claims in the allegation that sovereign
immunity was abrogated retroactively.579 And yet the Court has already ruled that it has no
jurisdiction to consider Iran's immunity claims.
10.47 Moreover, with respect to the three technical defenses that Section 8772 addresses (res
judicata, limitations of actions, and collateral estoppel), Iran's theory of the case is that because
the United States allegedly "prevented [Iranian entities] from raising applicable defenses"
"from which there can be no departure as a matter of intemational law,"580 the United States
was thus in breach when it removed them from an active case. But notwithstanding that it has
cloaked its claims in the language ofjus cogens,581 Iran has produced no authority suggesting
these are required to be provided under international law or cannot be removed, let alone are
jus cogens. The National & Provincial Building Society ("NPBS'') decision undercuts Iran's
position that once a case is active changes cannot be made to the governing law.
10.48 In NPBS, the ECtHR rejected claims by three building societies that retroactive tax
legislation imposed by the United Kingdom had violated various provisions of the ECHR
(including regarding denial of access to court in breach of a right to a fair trial).582 Iran takes
great pains to try to distinguish the case, to no avail.583 In NPBS the three applicants were
578 See supra Chapter 8, Section B.i(a).
579 Iran's Reply, 16.8l(a).
580 See Iran's Memorial, 15.33.
581 Vienna Convention on the Law of Treaties, art. 53, May 23, 1969, 1155 U.N.T.S. 331 ("a peremptory norm of
general international law is a norm accepted and recognized by the international community of States as a whole
as a norm from which no derogation is permitted[.]").
582 U.S. Counter-Memorial, 1114.48-14.49.
583 Iran's Reply, ~ 6.82-6.85.
134
given less favorable tax treatment than a fourth building society, which was not made subject
to the retroactive legislation, and yet the ECtHR still concluded that this was not a case of
unlawful targeting, as Iran is forced to admit. 584
10.49 Iran also attempts to distinguish the case on the grounds that the measure at issue in
NPBS was a mere "technical deficiency" and what was at stake (the finances of the United
Kingdom) was a "compelling public interest."585 But, if even a technical deficiency regarding
public finances can give rise to a compelling public interest, then surely providing
accountability and redress for innocent victims of brutal terrorist attacks must also qualify as a
compelling public interest, and much more so. Iran also relies on the fact that the ECtHR states
that the three applicants in NPBS were attempting to frustrate the U.K. Parliament's intent
regarding the statute. 586 But here too, Iran was attempting to frustrate the purpose of the
relevant court judgments by structuring transactions to avoid satisfying its liabilities. The
NPBS case is highly persuasive authority that the retroactivity in this case does not effect a
denial of justice.
10.50 As the tribunal in Mondev Int 'l Ltd. v. United States also concluded, it is "normally a
matter for local courts to determine whether and in what circumstances to apply new decisional
law retrospectively."587 In the Peterson case, Iran was able to challenge the retroactivity aspect
of Section 8772, and it litigated this aspect of the legislation all the way to the U.S. Supreme
Court. As that court noted, absent certain exceptions grounded in the U.S. Constitution,
"congressional power to make valid statutes retroactively applicable to pending cases has often
been recognized .... "588 It further stated that "a statute does not impinge on judicial power
when it directs courts to apply a new legal standard to undisputed facts." 589 Were the law
otherwise, the international law reporters would be littered with denial of justice cases
stemming from all comers of the globe. Iran's argument cannot be sustained.590
584 Id. ,r 6.82.
585 Id. ,r 5.20.
586 Id. ,r 6.84.
587 Mondev Int'l Ltd. v. United States of America, NAFTA/ICSID Case No. ARB(AF)/99/2, Award ,r 137 (Oct.
11, 2002) (U.S. Annex 176).
588 Bank Markazi v. Peterson, 136 S. Ct. 1310, slip op. at 16 (Apr. 20, 2016) (IM Annex 66).
589 Id., at 17 (IM Annex 66).
590 Regarding Iran's piercing the corporate veil arguments, they do not lead to the conclusion that a denial of
justice occurred for Section 8772 for the same reasons that Section 20l(a) ofTRIA and Section 1610(g) of the
FSIA do not.
135
v. Section 1226 of the NDAA 2020
10.51 In its Reply, Iran introduces a new measure in which it grounds its claims, Section 1226
of the NDAA 2020. 591 The Court has no jurisdiction to consider this measure because, as
explained in Chapter 2, the measure entered into force after the Treaty had already been
terminated. Further, no court has ordered any Iranian assets to be turned over to plaintiffs
pursuant to Section 1226, which would also necessarily occur, if ever, after the Treaty was no
longer in force. 592
SectionD: Even Under Iran's Deeply Flawed Proposed Legal Standard,
the United States Did Not Breach Article IV(l)
Iran's Proposed Legal Standard Is Deeply Flawed
10.52 Iran's proffered interpretation of Article IV(l) is at odds with the ordinary meaning of
Article IV(l). Iran argues that a provision with three clauses actually contains eight discrete
obligations, some of which exactly or substantially duplicate each other. It is inconceivable
that this was intended or agreed to by the Parties.
10.53 Beginning with the first clause of Article IV(l) ("fair and equitable treatment"), Iran
argues that it contains five discrete obligations regarding the following types of treatment: (a)
arbitrary, grossly unfair, unjust, or idiosyncratic; (b) discriminatory; (c)(i) lacking in due
process and leading to an outcome which offends judicial propriety including (but not limited
to) through (c)(ii) a denial ofjustice;593 and (d) legitimate expectations.594 Next, Iran contends
that Article IV(l)'s second clause (''unreasonable or discriminatory measures") contains two
discrete obligations: one prohibiting unreasonable conduct, and the other prohibiting
discriminatory conduct. Finally, Iran's eighth proffered obligation is the "effective means"
provision in Article IV(l)'s third clause.
10.54 Iran's interpretation of Article IV(l) is flawed for a number of reasons. First, Iran
interprets the purported discrimination obligation contained within the fair and equitable
treatment provision to be exactly the same as the discrimination obligation within the
591 Iran's Reply, 16.83(b); id.~ 2.103, 2.107, 2.108.
592 In any event, even if the Treaty had still been in force on the date Section 1226 entered into force, it would not
have effectuated a denial of justice for the same reasons that Section 8772 did not effectuate one.
593 Iran clarified in its Reply that it considers prong (c) to constitute two separate obligations. Iran's Reply,
,, 6.34-6.36, 6.58.
594 Id. 16.9.
136
unreasonable or discriminatory measures provisions. 595 But there is no reason why the Parties
would ever have agreed to include the exact same obligation in two different clauses.
10.55 Second, Iran interprets the fair and equitable treatment clause to contain two obligations
related to the judiciary, one being denial of justice and the other being an obligation which
"might not be as grave as" the standard for denial of justice yet still "might equally qualify as
a kind of conduct resulting in liability."596 Although Iran does not explain when the described
conduct "might" or might not constitute a violation of its proffered lower standard, Iran is clear
that this undefined standard includes conduct that is not serious enough to constitute a denial
of justice. But if that were the case, what would be the purpose of a denial of justice obligation?
If less egregious judicial conduct would breach Iran's lower standard, there is no reason to have
the denial of justice obligation as well.
10.56 Third, Iran's interpretation of the "effective means" clause as being yet another
independent standard related to the judiciary, but one that is "potentially less demanding ...
compared to denial of justice," means that Iran considers that Article IV(l) contains three
judicial obligations. This further reinforces the point that there would simply be no purpose in
having the denial of justice obligation included within Article IV(l) if the provision included
two other judicial obligations with lower legal standards.
10.57 Fourth, and finally, Iran interprets the purported "unreasonable" obligation in Article
IV(l)'s second clause to be less stringent than the purported "arbitrary, grossly unfair, unjust
or idiosyncratic" standard obligation in the first clause. 597 But if a lower standard of conduct
would breach Iran's "unreasonable" obligation, the purportedly higher "arbitrary" standard
would be completely superfluous.
10.58 Iran's interpretation of Article IV(l) is utterly flawed. The Court should reject Iran's
invitation to revisit its prior ruling that Article IV provides for the international minimum
standard of treatment.
11. In Any Event. Even Under Iran's Standard. the United States Did Not Breach
Article IV(l)
10.59 Though Iran's primary argument is that Article IV(l) imposes an eight-part autonomous
standard, Iran's alternative argument is that customary international law also includes this exact
595 Id. ,r 6.33.
596 Id. ,r 6.35 (emphases added) (footnote and internal quotation omitted).
597 Iran's Memorial, ,r 5.38(b).
137
same eight-part standard. 598 For the reasons explained above, both these contentions are wrong.
However, in the event the Court adopts one of these positions, the United States demonstrates
below why there is still no breach of Article IV(l).
(a) Fair and Equitable Treatment
10.60 As discussed above, Iran argues that Article IV(l)'s first clause, containing the fair and
equitable treatment provision, contains five discrete obligations regarding the following types
of treatment: (a) arbitrary, grossly unfair, unjust, or idiosyncratic; (b) discriminatory; (c)(i)
lacking in due process and leading to an outcome which offends judicial propriety including
(but not limited to) through (ii) a denial of justice;599 and (d) legitimate expectations.600
1. Arbitrary. Grossly Unfair. Unjust. or Idiosyncratic Treatment
10.61 Iran argued in its Memorial that the definition of "arbitrariness" the Court set forth in
ELSI should govern how the purported "arbitrary, grossly unfair, unjust or idiosyncratic"
obligation should be understood. 601 However, Iran apparently has concluded that its claims do
not meet that standard, and in its Reply Iran has jettisoned that standard and relies instead on
one that is more lenient. Iran now argues that there is a two-part test for arbitrariness, and that
a measure will not be arbitrary "[1] if is reasonably related to [2] a rational policy."602 Further,
Iran contends the Court is required to "consider the proportionality of the given measure" when
determining the reasonableness in the first step. 603 Iran points to investment arbitral awards,
as well as administrative law courts and human rights courts, in support of the "proportionality"
test.604
10.62 As a threshold matter, the measures that Iran complains about were all part of a response
to global terrorism, including Iran's unrelenting support for terrorist acts directed at U.S.
598 Compare Iran's Reply, ,r 6.9 (setting forth Iran's proffered autonomous legal standard), with Iran's Reply,
,r 6.21 (setting forth Iran's proffered legal standard under customary international law); see also Iran's Memorial,
,r 5.26 (stating that "on any view" the same five-part standard applies autonomously or under customary
international law).
599 Iran clarified in its Reply that it considers prong (c) to constitute two separate obligations. Iran's Reply, ,r,r 6.21,
6.34-6.36, 6.58.
600 Id. ,r 6.9.
601 Iran's Memorial, ,r 5.29 (quoting the Court's decision in ELSI for the standard being "not so much something
opposed to a rule of law, as something opposed to the rule of law. . . . It is a wilful disregard of due process of
law, an act which shocks, or at least surprises, a sense of juridical propriety.").
602 Iran's Reply, ,r 6.31.
603 Id.
604 Id. ,r 6.32.
138
nationals and U.S. interests. Iran first contends that the U.S. policy behind the measures is not
rational because it was "underpinned" by the State sponsor of terrorism designation, which it
contends was "unilateral and political."605 But contrary to Iran's position, a unilateral measure
is not per se arbitrary. Moreover, the designation of Iran as a State sponsor of terrorism was
based on an objective statutory standard and overwhelming evidence. The designation and all
other measures adopted by the United States were perfectly rational responses to Iran's
sustained conduct supporting terrorism aimed at U.S. nationals and interests. Regarding the
second prong of its test, Iran contends that the measures were not reasonably related to the
policy because the Iranian companies were not alleged to have had any involvement in Iran's
terrorist acts. 606 But the Iranian entities at issue were all agencies or instrumentalities of the
Iranian State. The measures in question did not authorize the assets of private Iranian
companies to be attached to satisfy the judgments. The assets that were attached were thus
indirectly owned by the Iranian State (and in the case of Bank Markazi, directly owned). As
such, the measures were reasonably related to the policy, because Iran was the ultimate owner
of the assets.
10.63 Finally, with respect to whether the measures were proportionate, Iran has not
addressed this aspect of its test. However, in light of the fact that the funds in question were
subject to attachment and execution pursuant to valid court judgments, and because the
judgments themselves were for horrific violence, resulting in the killing and maiming of
individuals, there can be no question that the measures were proportionate. Iran's theory of
breach rests on an assumption that the United States should have had no response to Iran's
sustained support for acts of terrorism directed at the United States, which resulted in the killing
of its citizens.
10.64 For all the reasons described above, none of the challenged measures were arbitrary,
grossly unjust, unfair, or idiosyncratic.607
605 Id. ,r 6.89.
606 Id. ,r 6.91.
607 As for the "discrimination" component of its fair and equitable treatment claim, Iran argues that it is the same
as "discrimination" claim under Article IV(l)'s ''unreasonable or discriminatory" clause, and it has not briefed
the two separately. Thus, the United States addresses this claim when addressing Article IV(l)'s second clause.
Iran's Reply, ,r 6.33.
139
2. (i) Lack of Due Process Leading to an Outcome Which Offends
Judicial Propriety (ii) Including Through Denial of Justice
10.65 As discussed above, Iran clarified in its Reply that it considers the fair and equitable
treatment obligation to contain two distinct obligations related to the judiciary, (i) one of which
is related to due process that is a less serious violation than denial of justice, and (ii) the second
of which is denial of justice. 608
10.66 When discussing the lower standard, Iran has provided virtually no guidance on how to
determine when it would be satisfied. Aside from citing to an investment arbitration decision
stating that measures which "interfere[] with the legitimate exercise of rights of the protected
individual might equally qualify as a kind of conduct resulting in liability[,]"609 Iran provides
no guidance. Nor does Iran explain when such interference "might" or might not lead to
liability. There is simply no way for the United States to respond to this entirely undeveloped
standard, and the Court should dismiss Iran's claim under this standard for vagueness.
10.67 In any event, none of the measures in question prevented Iranian companies from
examining witnesses, presenting documentary evidence, hiring the counsel of their choice, or
pursuing appeals. Rather than complain about some procedural defect, Iran's complaint relates
to the substance of the laws in question. Thus, Iran's "lack of due process" claim should be
rejected as failing on its face under any standard, as Iranian companies were not denied any
process. 610
3. Legitimate Expectations
10.68 As noted above, there is no doctrine of legitimate expectations that is part of the fair
and equitable treatment obligation. But even if international law had evolved to include such
a rule, the United States has been and is a persistent objector to any such rule. 611 Any such rule
would not apply to the United States. Iran chose not to address the U.S. "persistent objector"
argument in its Reply, and the U.S. position is therefore uncontested. The Court could dispose
of Iran's "legitimate expectations" claim on this ground alone.
608 Id. ,r,r 6.34-6.36, 6.58.
609 Id. ,r 6.35 ( emphasis added).
610 The United States denial of justice discussion in Section C applies to Iran's claims whether under a customary
international law standard or an autonomous one.
611 Iran contends that the Treaty has evolved under both its "autonomous" and customary international law
theories, such that legitimate expectations is part of the fair and equitable treatment obligation under either theory.
Id. ,r,r 6.25-6.29. Thus, the United States' persistent objector argument applies in either event. U.S. CounterMemorial,
,r 14.22.
140
10.69 In any event, Iran has failed to make out a "legitimate expectations" claim as an
evidentiary matter even under its own purported standard. There are two components to such
a claim under Iran's theory: first, the Iranian nationals or companies must have actually had
subjective expectations; and second, these expectations would have to be "legitimate," or
reasonable under all the circumstances.612 Iran's claim fails for two reasons.
10.70 First, as a factual matter, Iran has not established that any of the relevant companies
had any relevant expectations with regards to the measures it now complains about. There are
no contemporaneous documents reflecting alleged expectations. Iran has submitted arguments
in litigation as to what the alleged expectations were, but that is insufficient to establish a
claim.613 Thus, Iran's claim fails for a lack of evidence.
10.71 Second, arbitral tribunals applying the legitimate expectations doctrine have ruled that,
for the doctrine to apply the host State must have made a specific representation to the investor
regarding a particular matter with which a subsequent measure interfered. Without such a
representation by the State, there can be no breach of legitimate expectations under such a
theory.614 Iran has identified no such representations by the United States in this case, and thus
even if the Iranian companies had submitted evidence of their expectations, those expectations
would not have been protected under this so-called doctrine.
(b) Unreasonable or Discriminatory Measures
10.72 In Article IV(l)'s second clause, Iran considers there to be two discrete obligations:
prohibitions on (a) unreasonable measures, and (b) discriminatory measures.615 Iran's claims
under both these theories fail for the reasons discussed below.
10.73 In its Reply, Iran argues that the test to determine whether a measure is "reasonable"
contains two parts: (i) whether there was a rational policy, and (ii) whether the U.S. measures
were reasonably connected to that policy. 616 This is the same test that Iran proffers for its
612 Saluka, Investments BVv. Czech Republic, UNCITRAL, Partial Award ,r 304 (Mar. 17, 2006) (U.S. Annex
399) (explaining that an investor's subjective expectations were not enough to make out a claim, but rather that
the expectations also had to be reasonable) (cited to by Iran in its Memorial, ,r 5.36 n.274).
613 Iran's Memorial, ,r,r 5.36, 5.47.
614 E.g.,PSEG Global/nc. v. Republic of Turkey, U.S.-TurkeyBIT/ICSID Case No. ARB/02/5, Award ,r241 (Jan.
19, 2007) (U.S. Annex 400); Micula v. Romania, Sweden-Romania BIT/ICSID Case No. ARB/05/20, Award ,r
688 (Dec. 11, 2013) (U.S. Annex 401); Total, S.A. v. Argentine Republic, France-Argentina BIT/ICSID Case No.
ARB/04/01, Decision on Liability ,r 121 (Dec. 27, 2010) (U.S. Annex 402).
615 Iran's Memorial, ,r 5.38(a).
616 Iran's Reply, ,r 6.87.
141
"arbitrary" standard under the fair and equitable treatment clause, except that unlike its standard
for arbitrariness, Iran does not contend that "proportionality" is a part of the second prong of
the test.617 As such, for the same reasons that the challenged measures are not arbitrary
(discussed above in Section D.ii.(a).l), the measures are not unreasonable.
10.74 With respect to Iran's discrimination claim, the United States explained why it was
baseless in its Counter-Memorial.618 Iran's response is nothing more than three short sentences,
effectively abandoning its claim for most of the challenged measures. 619 The only measures
that Iran specifically refers to in its section discussing the alleged breaches of the
"discrimination" obligation are Section 8772 and Section 1226 of the NDAA 2020. 620 With
respect to Section 8772, the United States explained above in Section C.iv why this measure
did not unlawfully target or discriminate against Iran, and those reasons apply here. With
respect to Section 1226 of the NDAA 2020, as the United States explained above in Chapter 2,
the Court has no jurisdiction to consider this measure as it post-dated the termination of the
Treaty of Amity. In any event, as noted above, it would not constitute discriminatory treatment
for the same reasons that Section 8772 does not. Additionally, in cursory fashion Iran generally
refers to the measures which purportedly "abrogated the Bancec presumption" in its
discrimination section, although it does not identify for the Court in this section which
measures it considers to be the offending ones. Earlier in its Reply, Iran alleges that Section
201(a) of TRIA and Section 1610(g) of the FSIA abrogated the Bancec factors. 621 However,
as discussed in Section C.iii above, these measures do not constitute unlawful targeting or
discrimination because they are applicable to all States similarly situated and are not limited to
Iran.
(c) The United States Did Not Deny Effective Means of Contract Rights
10.75 As noted in the U.S. Counter-Memorial, Iran has provided very little guidance to the
Court or to the United States regarding the content of its claimed autonomous legal standard of
Article IV(l)'s third clause.622 In its Reply, Iran provides virtually no additional guidance in
this regard, arguing that the effective means obligation is "a distinct and potentially less
617 See supra Section D.ii.(a).l.
618 U.S. Counter-Memorial, ,r,r 14.54-14.59.
619 Iran's Reply, ,r,r 6.95-6.96.
620 Id.
621 Iran's Reply, ,r,r 2.74(b), 4.25.
622 U.S. Counter-Memorial, ,r 14.60.
142
demanding test, compared to denial of justice in customary international, which requires both
that the host State establish a proper system of laws and institutions and that those systems
work effectively in any given case."623 As a preliminary matter, it is simply of no help to the
Court or to the United States for Iran to say that the test is "potentially" less demanding, but
then not explain under what circumstance it is less demanding and under what circumstances
it is not. And if it is less demanding, what would the legal standard be? Again, Iran's claim
should be dismissed for vagueness of the purported legal standard on which it seeks to rely.
10.76 In any event, as has already been demonstrated in Chapter 8, the United States has a
system of laws and institutions which worked effectively in the cases Iran invokes as the basis
of its claims. U.S. courts went out of their way to ensure Iran's interests and the interests of
Iranian entities were protected even when they did not appear in proceedings.
10. 77 Moreover, although the effective means clause explicitly applies only to "contractual
rights," Iran's argument is that the United States breached this provision by allowing the
corporate veil to be pierced and not providing Iranian entities with sovereign immunity. 624 But
nowhere does it allege that Iranian companies were precluded from using U.S. courts to enforce
lawful contract rights, or even that they attempted to do so. Instead, Iran provides three short
paragraphs claiming in cursory fashion that it has made out an effective means claims, but not
citing to a single piece of evidence. 625 This is not a serious claim.
SectionE: Concluding Observations
10.78 As demonstrated above, Article IV(l), along with other relevant parts of the Treaty, set
forth the international minimum standard of treatment as provided by customary international
law, as this Court has already ruled. The "fair and equitable treatment" clause contained in
Article IV(l) is a shorthand reference to this standard, and thus requires the Parties to adhere
to any rules contained within this umbrella concept not found elsewhere in the Treaty. While
any obligations that evolved as a matter of customary international law would fall within the
provision, Iran has failed to establish that the minimum standard of treatment extends beyond
the obligation not to deny justice. The United States has not denied justice to any Iranian
623 Iran's Reply, 16.53 (emphasis added) (internal quotations and citation omitted).
624 Iran's Memorial, 1 5.41 (arguing that the effective means clause "entails an obligation to permit effective
reliance upon rights such as the entitlements to recognition of juridical personality, and to sovereign immunity in
the context of the enforcement of 'lawful contract rights."').
625 Iran's Reply, 116.98-6.100. For example, Iran has not even submitted the alleged contracts at issue into the
record.
143
entities; moreover, none of the measures which apply to the Iranian State may serve as grounds
for Iran's claims because Article IV(l) does not apply to the Iranian State. Finally, even under
Iran's purported legal standard, Iran has failed to establish any breach by the United States.
144
CHAPTER 11: IRAN HAS FAILED TO ESTABLISH A CLAIM UNDER ARTICLE IV(2)
11.1 Iran has asserted breaches of both the "most constant protection and security"
obligation in Article IV(2)'s first sentence and the conditions imposed in the remainder of the
article on the taking of property. The United States showed in the Counter-Memorial that Iran's
expansive reading of the "most constant protection and security" obligation is unsupported and
incorrect.626 In its Reply, Iran attempts to shore up its position by reference to a handful of
arbitral awards, but these awards are no help to Iran, as discussed in Section A below. Iran's
reading of the clause must be rejected, and so must Iran's claims, as they are entirely dependent
on its overbroad interpretation.
11.2 With respect to Article IV(2)'s expropriation provisions, the U.S. Counter-Memorial
demonstrated that the challenged legislative and executive measures do not "take" Iranian
property and that, even if they did, they are bona fide, non-discriminatory regulations, enacted
as an exercise of U.S. police powers, and are therefore not in breach of Article IV(2). 627 In its
Reply, Iran appears to acknowledge the existence of the police powers doctrine, but argues that
the U.S. has not satisfied its requirements. Iran's argument, however, is based on bare
assertions, rather than evidence. By contrast, the United States has explained in detail why the
measures it has enacted were a justified and, as discussed in the preceding chapter, a nondiscriminatory
response to Iran's longstanding support for terrorism and other destabilizing
acts.
11.3 As to Iran's claim that the U.S. judiciary expropriated the property of Iranian
companies, the United States pointed out in the Counter-Memorial that decisions by domestic
courts acting in the role of neutral and independent arbiters of legal rights do not give rise to a
claim for expropriation. 628 In its Reply, Iran identifies instances in which arbitral tribunals
have sustained claims of judicial expropriation, but Iran fails to acknowledge that these few
examples all involved an element of illegality either in the conduct of the court or the events
leading to the court's decision, which is entirely absent here. Accordingly, even if the Court
were to accept Iran's argument that judicial expropriation may occur in certain circumstances,
Iran has not established such a claim in this case.
626 U.S. Counter-Memorial, 1114.64-14.73.
627 U.S. Counter-Memorial, 1114.87-14.93.
628 U.S. Counter-Memorial, 1114.81, 14.94.
145
11.4 As discussed in further detail in Section B, Iran's expropriation claims, whether with
respect to legislative, executive, or judicial measures, therefore fail.
Section A: Most Constant Protection and Security
11.5 The key question for the Court concerning the "most constant protection and security"
obligation in Article IV(2)'s first sentence is whether, as Iran contends, it requires a State to
provide something more than protection from physical harm. lfit does not, Iran's claims must
be rejected because Iran has not alleged any failure by the United States to provide physical
security to the property of its companies and nationals.
11.6 But even if the Court were to accept that Article IV(2)'s first sentence could, in certain
circumstances, require a State to provide some form of legal-in addition to physicalsecurity,
this would not save Iran's claims because the challenged U.S. measures do not breach
the standards for legal security, such as they are, articulated in the few authorities that Iran has
supplied in support of its position.
1. Iran Has Failed to Establish That "Most Constant Protection and Security"
Requires Anything More Than Physical Security and Its Claims for Breach of
This Provision Must Therefore Fail
11.7 Iran contends that Article IV(2)'s first sentence requires more than protection against
physical harm, either because the international law minimum standard of treatment entails a
wider scope of protection or because the Article's text goes beyond what is required under
international law. Iran is wrong on both counts.
11.8 Beginning with the international law minimum standard of treatment, there is no dispute
that it "require[s] States to provide protection against physical harm."629 The burden is on Iran
to establish, through evidence of State practice and opinio juris, that it extends further. 630 Iran
has manifestly failed to carry this burden.
11.9 Iran references three arbitral decisions as purported evidence of the evolution of the
standard to encompass more than protection against physical harm, 631 but they are entitled to
little weight in assessing the state of customary international law. The reasoning in each case
629 U.S. Counter-Memorial, 1 14.65.
630 See supra Chapter 10, Section B.
631 Anglo American PLC v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/14/1, Award 1482 (Jan.
18, 2019); AES Summit Generation Limited and AES-Tisza Eromii KFTv. Republic of Hungary, ICSID Case No.
ARB/07/22, Award 1 13.3.2 (Sep. 23, 2010); Mohammed Ammar Al-Bahloul v. Republic of Tajikistan, SCC
Arbitration No. V (064/2008), Partial Award on Jurisdiction and Liability 1246 (Sep. 2, 2009). See also Iran's
Reply, at 172 n.616.
146
is brief and summary, and none of the decisions engages in any analysis of State practice and
opinio juris. 632
11.10 Iran also relies on the Court's judgment in ELSI but this reliance is misplaced, as the
United States showed in its Counter-Memorial.633 First, Iran's reading of ELSI draws
unwarranted implications from the judgment rather than resting on any express statements by
the Court about the scope of the "most constant protection and security" obligation. The Court
did not accept that this obligation extended beyond physical security and, indeed, rejected the
U.S. claims for breach of this obligation in their entirety. Second, the Court did not conduct
any review of State practice or opinio juris in rejecting the U.S. claims.634 Thus, ELSI does
not, standing alone, provide evidence of customary international law.
11.11 In any event, even Iran does not contend that its position on the scope of the "most
constant protection and security" obligation was universally accepted at the time that the Parties
signed the Treaty or that it has become so now.635 Indeed, as Iran acknowledges,636 the United
States identified in its Counter-Memorial a number of arbitral awards that have rejected the
expansion of this obligation beyond physical security. 637 Given what is, at most, partial support
632 International Law Commission, Draft Conclusions on Identification of Customary International Law, with
commentaries, Draft Conclusion 13, Comment 3, U.N. Doc. A/73/10 (2018) (U.S. Annex 381) ("The value of
such decisions [i.e., decisions of courts and tribunals] varies greatly ... depending both on the quality of the
reasoning (including primarily the extent to which it results from a thorough examination of evidence of an alleged
general practice accepted as law) and on the reception of the decision, in particular by States and in subsequent
case law.").
633 U.S. Counter-Memorial, 1114.66-14.73.
634 See, e.g., Elettronica Sicula S.p.A. (ELSI), 1989 I.C.J. 15, 65, 1108; id., 66, 1111.
635 Indeed, the failure of efforts under the auspices of the League of Nations in the 1920s and 193 Os and the
International Law Commission in the 1950s to codify the standard of treatment that States owe to foreign nationals
in their territory suggests to the contrary an enduring lack of consensus on this and other elements of the standard.
See, e.g., Pitman B. Potter, International Legislation on the Treatment of Foreigners, 24 AM. J. INT'LL. 748, 749
(1930) (U.S. Annex 403) ("At Paris last winter, at The Hague in March, in Geneva this spring, the story has been
the same: the nations find it almost impossible either to codify the old law or replace it with new."); Edwin M.
Borchard, "Responsibility of States," at the Hague Codification Coeference, 24 AM. J. INT'LL. 517,540 (1930)
(U.S. Annex 404) ("[T]he conclusion seems inescapable that the subject of international responsibility of states
for injuries to aliens is not ripe for codification[.]"); JAMES CRAWFORD, STATE RESPONSIBILITY: THE GENERAL
PART 36 (2013) (U.S. Annex 405) ("Work began in 1956 .... At this time, the ILC ... was particularly focused
on state responsibility for injury to aliens and their property, that is to say the content of the substantive rules of
law in that sub-field. Six reports were submitted between 1956 and 1961, but the ILC barely considered them ..
. . It was felt that the disagreement and division that this conception of the field of responsibility attracted would
stunt progress, and the topic was set aside . . . . This false start was reversed in 1962, when an intercessional
subcommittee of the ILC ... recommended a focus not on injuries to aliens in particular, but rather on 'the
definition of the general rules governing the international responsibility of the state'.").
636 Iran's Reply, 17.4.
637 U.S. Counter-Memorial, 1 14.65 n.450.
147
by international tribunals-and no support in the form of State practice and opinio juris-the
Court cannot conclude that this position has crystallized as customary international law.
11.12 Thus, Iran has not established that the international law minimum standard of treatment
extends beyond physical security. Iran's claims under Article IV(2)'s first sentence must
therefore be rejected unless it can show that the text of the provision requires protection in
excess of the international law standard. Iran has attempted to do so, but its arguments likewise
fail.
11.13 Iran's primary argument is based on the wording of Article IV(2)'s first sentence. Iran
notes that the last clause of the sentence-specifying that the protection afforded must be "in
no case less than that required by international law"-indicates that international law "operates
as a floor" and also observes that the phrase "most constant protection and security" is ''without
any qualification. "638
11.14 There is, however, nothing in the phrase "most constant protection and security" that
indicates or implies a standard of treatment in excess of international law. To the contrary, a
cable sent during the negotiation of the FCN treaty with Ethiopia-which served as the model
for the Treaty of Amity639-shows that the United States considered the phrase "most constant
protection and security" to be declaratory of international law and did not believe that it
required anything more:
QTE Most constant protection and security UNQTE timehonored
treaty language. . . . [C]lause to be given reasonable not
strictest interpretation. In DEPT'S view, provision declaratory
of INTERNATL law, not more severe rule than INTERNATL law
.... RE liability, DEPT'S view is that party obligated exercise
QTE due diligence UNQTE make assurance effective, and that
liability arises in case failure exercise due diligence. 640
11.15 As for Iran's argument that the Parties would have included an express qualification
limiting the protection in Article IV(2)'s first sentence to physical security if they had intended
such a limitation, there is no basis for this whatever. The meaning of the phrase was clear and
well understood when the Treaty was concluded. The Parties intended the meaning that was
638 Iran's Reply, ,r 7.2.
639 Commercial Treaties with Iran, Nicaragua, and The Netherlands: Hearing Before the S. Comm. on Foreign
Relations, 84th Cong. 3 (1956) (statement of Thorsten V. K.alijarvi, Dep't of State) (U.S. Annex 1).
640 Telegram from U.S. Department of State to U.S. Embassy, Addis Ababa, at2 (Aug. 28, 1951) (emphasis added)
(U.S. Annex 406).
148
understood. Iran is now endeavoring to bootstrap a different meaning into the phrase with
hindsight. The debate about whether this type of protection extends to legal security as well as
to physical security is a twenty-first century development641 and nothing should be read into
the Parties' failure to anticipate it when negotiating the Treaty of Amity in the 1950s.
11.16 Finally, Iran also argues that the inclusion of"interests in property" in the definition of
"property" in Article IV(2)'s first sentence supports extending protection beyond physical
security. Specifically, Iran contends that "interests in property" equates to "intangible
property," and that because the latter "cannot be subjected to physical interference"642 the scope
of protection afforded by Article IV(2)'s first sentence must extend to some form of legal
security. Iran does not, however, provide any justification for equating interests in property
and intangible property in this context. An interest in property may be an interest in physical
property, which obviously can be subject to physical interference. Physical security therefore
remains a meaningful concept, even where interests in property are concerned. Indeed, the
travaux show that the inclusion of "interests in property" was intended to ensure that indirect,
as well as direct, investments were covered. 643 There is nothing to suggest that it was meant to
alter the type of protection the Parties were required to provide to property.
11.17 This is further supported by the authorities that the United States submitted with its
Counter-Memorial in which the tribunals adopted the "traditional" interpretation of the "most
constant protection and security" obligation as limited to physical security. All of these awards
involved treaties that contained definitions of "investment" that included a wide range of
intangible rights and interests.644 Accordingly, there is no dispositive connection of the sort
641 See, e.g., JESWALD W. SALACUSE, THE LAW OF INYESTMENT TREATIES 236 {2d ed. 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 .... At the beginning of the twenty-first century, a few cases have sought to expand the term's scope to
include protection against allegedly unjustified governmental actions that injure an investor's legal rights but
cause no physical injury." (second emphasis added)).
642 Iran's Reply, ,r 7.2.
643 Telegram from U.S. Department of State to U.S. Embassy, Tehran at 1 (Nov. 13, 1954) (U.S. Annex 407).
644 U.S. Counter-Memorial, ,r 14.65, n.450. The United States relied upon (i) Suez and Vivendi Universal v.
Argentine Republic, which proceeded under the France-Argentina BIT (Agreement on the reciprocal promotion
and protection of investments, art. 1(1), France-Argentina, July 3, 1991, 1728 U.N.T.S. 298), the Argentina-Spain
BIT (Agreement on the reciprocal promotion and protection of investments, art. 1(2), Argentina-Spain, Oct. 3,
1991, 1699 U.N.T.S. 202), and the U.K.-Argentina BIT (Agreement for the Promotion and Protection of
Investments, art. l(a), United Kingdom-Argentina, Dec. 11, 1990, 1765 U.N.T.S. 34); (ii) BG Group Pie v.
Argentina, which proceeded under the U.K.-Argentina BIT at issue in Suez; and (iii) Saluka Investments B. V. v.
Czech Republic, which proceeded under the Czech Republic-Netherlands BIT (Agreement on encouragement and
reciprocal protection of investments, art. l(a), Netherlands-Czech and Slovak Federal Republic, Apr. 29, 1991,
2242 U.N.T.S. 224). The relevant excerpts from the treaties are compiled in U.S. Annex 408.
149
that Iran asserts between the scope of property that is protected by a given treaty and the scope
of protection that a State party to that treaty is obligated to provide.
11.18 Thus, Iran has failed to establish that Article IV(2)'s first sentence requires anything
more than physical security and Iran's claims under this provision must be rejected because
Iran has not alleged a failure by the United States to provide physical security to Iranian
companies and nationals.
11. Even lf"Most Constant Protection and Security" Included Some Form of
"Legal Security," Iran's Claims Would Still Fail
11.19 In the alternative, if the Court were to accept that Article IV(2)'s first sentence requires
something more than physical security, those few authorities that Iran has referenced in its
Reply provide no support for-and, in at least one case, contradict-the novel "legal security"
standard that Iran has proposed, which would bar "any executive or legislative measures
formulated specifically to remove legal protections."645 Iran's authorities accordingly do not
support a finding of breach by the United States.
11.20 To briefly summarize the authorities in Iran's Reply, (i) Anglo American PLC v.
Venezuela articulates no specific standard for legal security, let alone the standard that Iran
advocates;646 (ii) AES Summit Generation Ltd. v. Hungary makes clear that legal security does
not imply stabilization of the applicable legal regime, as Iran argues, but instead leaves room
for changes in the law including for the purpose of reasonable regulation;647 (iii) Al-Bahloul v.
Tajikistan suggests that a "miscarriage of justice" might constitute a breach of a legal security
obligation;648 and (iv) ELSI, at most, supports the notion that a delay in providing legal relief
for an interference with physical property might breach such an obligation.
11.21 The Anglo American award is thus no help to Iran (or the Court); the analysis in AlBahloul
is questionable because it would imply that a denial of justice is actionable under both
Article IV(l) and the first sentence of Article IV(2) (and, in any event, as the United States has
established in connection with Article IV(l), there has been no denial of justice); and, with
645 Iran's Reply, ,r 7.10 (emphasis in original; quoting Iran's Memorial, ,r 5.57; internal quotation marks omitted).
646 Anglo American PLC v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/14/1, Award ,r 482 (Jan.
18, 2019).
647 AES Summit Generation Limited and AES-Tisza Eromu KFT v. Republic of Hungary, ICSID Case No.
ARB/07/22, Award ,r,r 13.3.2, 13.3.5 (Sep. 23, 2010).
648 Mohammed Ammar Al-Bahloul v. Republic of Tajikistan, SCC Arbitration No. V (064/2008), Partial Award
on Jurisdiction and Liability ,r 246 (Sep. 2, 2009).
150
respect to the ELSI judgment, Iran has not identified any physical invasion of its companies'
property or any delay by the U.S. courts in ruling on claims arising out of such an invasion, as
would be necessary to establish the sort of breach alleged (but not sustained) in ELSI.
11.22 Even more problematic for Iran, the AES Summit award directly undermines its
position. As the AES Summit tribunal explained, a "most constant protection and security"
clause "certainly does not protect against a state's right ... to legislate or regulate in a manner
which may negatively affect a claimant's investment, provided that the state acts reasonably in
the circumstances and with a view to achieving objectively rational public policy goals."649
The tribunal also expressly rejected claimants' attempt to transform this provision into a
stability clause: "To conclude that the right to constant protection and security implies that no
change in law that affects the investor's rights could take place, would be practically the same
as to recogniz[ e] the existence of a non-existent stability agreement as a consequence of the
full protection and security standard."650
11.23 Accordingly, even accepting that "most constant protection and security" requires the
Parties to provide some form oflegal protection and taking Iran's authorities at face value, the
challenged measures do not breach that obligation. As discussed further in Chapter 10 in
connection with Article IV(l), the United States has acted reasonably to provide victims of
Iran-sponsored terrorism with a legal avenue to enforce judgments that Iran itself has refused
to pay.
Section B: Expropriation
11.24 Following the submission of Iran's Reply, there are two doctrinal issues for the Court
to decide in connection with Article IV(2)'s provisions on expropriation:.fzrst, the standard for
a non-compensable exercise of a State's police power and, second, whether decisions made by
a State's courts, when acting as neutral and independent arbiters of legal rights, may
nevertheless be expropriatory.
11.25 As to the first issue, the Parties are in agreement that, for an exercise of the police power
to fall within this doctrine, it must be non-discriminatory and must have a legitimate policy
aim. The Parties, however, disagree on whether the Court should also consider the
proportionality of the challenged measure as part of its assessment. As demonstrated below,
649 AES Summit Generation Limited and AES-Tisza Eromu KFT v. Republic of Hungary, ICSID Case No.
ARB/07/22, Award 113.3.2 (Sep. 23, 2010).
650 Id., at 1 13.3.5.
151
Iran has not established that proportionality, however conceived, is part of the test under
international law for a compensable talcing. Moreover, Iran has offered no support whatsoever
for its uniquely strict conception of proportionality.
11.26 Turning to the second issue, Iran contends that there is no meaningful distinction
between acts by the judiciary, on the one hand, and acts by the executive and the legislature,
on the other, in assessing whether an expropriation has occurred. The authorities that Iran has
referenced in its Reply, however, support a contrary conclusion, namely that a claimant alleging
a judicial expropriation must show an element of illegality-either in the court proceedings or
the events leading to the challenged court decision-in addition to the other elements necessary
to establish that a talcing has occurred.
11.27 Beyond these doctrinal issues, the Parties also disagree on the application of the police
powers doctrine to the challenged measures and the assessment of whether the judicial
decisions at issue are expropriatory. As the United States demonstrated in its CounterMemorial
and further substantiates below, Iran's positions on these issues are untenable. The
challenged U.S. measures do not constitute breaches of the restrictions on takings in Article
IV(2).
1. Iran's Interpretation of Article IV(2)'s Restrictions on the Taking of Property
Remain Flawed
11.28 As noted, there remain two critical flaws in Iran's interpretation of Article IV(2)'s
expropriation provision:first, Iran's view of the police powers doctrine is misconceived; and
second, Iran ignores the restrictions that its own authorities place on claims for judicial
expropriation.
152
(a) The Police Powers Doctrine
11.29 Beginning with the standard for invoking the police powers doctrine, 651 the Parties
agree that the doctrine requires showing that the challenged measure is non-discriminatory652
and has "a legitimate policy aim"653 (or, as the United States put it in its Counter-Memorial,
the measure must be a "bona fide, non-discriminatory regulation").654 However, Iran attempts
to establish the existence of an additional element: proportionality. Iran's sole support for this
element is a line of arbitral awards tracing back to a single source (the award in Tecnicas
Medioambientales Teemed S.A. v. United Mexican States) ("Tecmed''),655 which itself relied
exclusively on decisions of the ECtHR. The Teemed award, and the underlying ECtHR
decisions, required "a reasonable relationship of proportionality between the charge or weight
651 Iran vaguely suggests in its Reply that the police powers doctrine may not, in fact, be part of the expropriation
inquiry under Article IV(2). Iran's Reply, ,r 7.14. The United States has, however, supplied citations to State
practice, arbitral awards, and scholarly commentary establishing that the police powers doctrine is a key part of
international law on expropriation. U.S. Counter-Memorial, ,r 14.79. Iran has not contradicted any of this
authority or supplied any of its own. Instead, Iran relies on the purported silence of State Department witnesses
regarding the doctrine in their congressional testimony about expropriation provisions in FCN treaties. But Iran
ignores the context of this testimony. First, Harold Linder provided only the basic outline of the ''protection
against nationalization" in U.S. FCN treaties and did not go into any detail about the potential impact of this sort
of treaty provision on a State's right to regulate. 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. 8 (1952) (statement of Harold F. Linder, Deputy Assistant Sec'y for
Economic Affairs) (U.S. Annex 2). Second, the testimony of Thorsten K.alijarvi and his colleague Vernon Setser
was in response to questions about language specific to the FCN treaty with Nicaragua, which limited the right to
expropriate property to takings for "public purposes and reasons of social utility as defmed by law." In particular,
the questions concerned the meaning of the phrase "social utility." Commercial Treaties with Iran, Nicaragua,
and The Netherlands: Hearing Before the S. Comm. on Foreign Relations, 84th Cong. 21 (1956) (statement of
Thorsten V. K.alijarvi, Dep't of State) (U.S. Annex 1). This testimony is no help to Iran.
652 Iran's Reply, ,r 7.14.
653 Iran's Reply, ,r 7.15(a) ("The first question is whether there exists a legitimate policy aim.").
654 U.S. Counter-Memorial, ,r 14.78.
655 Tecnicas Medioambientales Teemed S.A. v. United Mexican States, ICSID Case No. ARB(AF)/00/2, Award ,r
122 (May 29, 2003). See also Fireman's Fund Insurance Co. v. United Mexican States, ICSID Case No.
ARB(AF)/02/01, Award ,r 1760) (July 17, 2006) (citing Teemed); Corn Products International, Inc. v. United
Mexican States, ICSID Case No. ARB(AF)/04/01, Decision on Responsibility ,r 87 (Jan. 15, 2008) (citing
Fireman's Fund); Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/12, Award ,r 311 (July 14, 2006)
( citing Teemed); Occidental Petroleum Corp. and Occidental Exploration and Production Co. v. Republic of
Ecuador, ICSID Case No. ARB/06/11, Award ,r,r 404-409 (Oct. 5, 2012) (citing Teemed, but considering
proportionality in the context of a fair and equitable treatment-not expropriation-claim); Philip Morris Brands
Sari, Philip Morris Products S.A., and Ahal Herman's S.A. v. Oriental Republic of Uruguay, ICSID Case No.
ARB/10/7, Award ,r 305 n.404 (July 8, 2016) (citing Teemed). Iran also references Burlington Resources Inc. v.
Republic of Ecuador, but the tribunal in that case did not assess proportionality in applying the police powers
doctrine. Burlington Resources Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision on Liability
,r 529 (Dec. 14, 2012).
153
imposed to the foreign investor and the aim sought to be realized by any expropriatory
measure. "656
11.30 To the extent that these awards provide evidence of State practice at all, it is from a
single source, namely ECtHR decisions. Other State practice, however, in particular by nonECHR
States, does not support a conclusion that either the ECtHR decisions or the Teemed
award rest on a settled principle of customary international law. On the contrary, while such
practice shows consistent support for the non-discrimination and "legitimate policy aim" limbs
of the police powers test, it does not provide support for the purported proportionality limb.
For example, the sources that the United States cited in the Counter-Memorial from the
Convention Establishing the Multilateral Investment Guarantee Agency and negotiations of the
Multilateral Agreement on Investment are consistent with this approach and do not reference
proportionality.657 Likewise, the longstanding U.S. formulation of the test does not incorporate
proportionality: "[u]nder international law, where an action is a bona fide, non-discriminatory
regulation, it will not ordinarily be deemed expropriatory."658 Accordingly, the 2004 and 2012
U.S. Model BITs, as well as the expropriation annexes to the investment chapters of modem
U.S. free trade agreements, clarify that:
Except in rare circumstances, non-discriminatory regulatory
actions by a Party that are designed and applied to protect
legitimate public welfare objectives, such as public health,
safety, and the environment, do not constitute indirect
expropriations. 659
11.31 Thus, the ECtHR decisions underlying the Teemed line of awards is not sufficient to
establish the type of widespread, consistent State practice that would be necessary to conclude
that proportionality has crystallized as a component of the test under customary international
law for applying the police powers doctrine. 660
656 Tecnicas Medioambientales Teemed S.A. v. United Mexican States, ICSID Case No. ARB(AF)/00/2, Award
,r 122 (May 29, 2003).
657 Convention Establishing the Multilateral Investment Guarantee Agency, art. ll(a)(ii), Oct. 11, 1985, TIAS
12089, 1508 U.N.T.S. 99 (U.S. Annex 206); Ministerial Statement on the Multilateral Agreement on Investment
(April 28, 1998), quoted in UNCTAD Report, Expropriation: A Sequel at 81-82 (2012) (U.S. Annex 202).
658 Lone Pine Resources Inc. v. Government of Canada, NAFTA/ICSID Case No. UNCT/15/2, Submission of the
United States of America, ,r 16 (Aug. 16, 2017) (U.S. Annex 154).
659 2004 U.S. Model BIT, Annex B, Expropriation, ,r 4(b) (U.S. Annex 409); 2012 U.S. Model BIT, Annex B,
Expropriation, ,r 4(b) (U.S. Annex 410). See also United States-Mexico-Canada Agreement, Annex 14-B,
Expropriation, ,r 3(b), U.S.-Can.-Mex., Nov. 30, 2018 (U.S. Annex 411).
660 International Law Commission, Draft Conclusions on Identification of Customary International Law, with
commentaries, Draft Conclusion 8(1), U.N. Doc. A/73/10 (2018) (U.S. Annex 381).
154
11.32 Critically, the proportionality inquiry envisioned in the ECtHR decisions is far more
deferential to the State's regulatory prerogatives than the proportionality test that Iran is
advocating in this case. In Iran's view, establishing proportionality requires the Party relying
on the police powers doctrine to show that the measure at issue is "suitable and necessary to
achieve the legitimate policy aim (including the unavailability of alternative measures)" and
does not subject the other Party's nationals and companies to "undue burden."661 However,
the necessity element of this test is pure invention, supported by inapposite caselaw interpreting
unrelated treaty provisions (i.e., Article XX( d) of the GATT and Article XX( 1 )( d) of the Treaty
of Amity).662 As with the purported scope of"legal security" in connection with Article IV(2)'s
first sentence-and, indeed, the concept of judicial expropriation discussed in the next
section-there is a wide gulf between the law as Iran wants it to be and the law that its
authorities actually support. Again, the ECtHR decisions underlying the Teemed line of awards
require only "a reasonable relationship of proportionality between the means employed and the
aim sought to be realised. "663
11.33 Recent European Union investment treaties likewise set a very high bar for finding a
measure disproportionate: "For greater certainty, except in the rare circumstance when the
impact of a measure or series of measures is so severe in light of its purpose that it appears
manifestly excessive, non-discriminatory measures of a Party that are designed and applied to
protect legitimate public welfare objectives, such as health, safety and the environment, do not
constitute indirect expropriations."664 Canada has included similar language in some of its
recent agreements. 665
11.34 Accordingly, Iran has not established that proportionality is part of the test for applying
the police powers doctrine and, in any event, even Iran's own authorities do not support the
extreme version of proportionality that Iran has urged the Court to adopt here.
661 Iran's Reply, ,r 7.15(b) (emphasis added).
662 Iran's Reply, ,r 7.15(b) & nn.641-42.
663 Tecnicas Medioambientales Teemed S.A. v. United Mexican States, ICSID Case No. ARB(AF)/00/2, Award
,r 122 (May 29, 2003) (quoting European Court of Human Rights, In the case of James and Others, judgment of
February 21, 1986, pp. 19-20).
664 EU-Canada Comprehensive Economic and Trade Agreement, Annex 8-A, Expropriation, ,r 3, Oct. 30, 2016
(U.S. Annex 412) ( emphasis added). See also EU-Singapore Investment Protection Agreement, Chapter 4, Annex
1, Expropriation, ,r 2, Oct. 19, 2018 (U.S. Annex 413); Modernisation of the Trade Part of the EU-Mexico Global
Agreement, Annex on Expropriation, ,r 3 (U.S. Annex 414).
665 Canada-Colombia Free Trade Agreement, Article 811, ,r 2(b), Can.-Col., Nov. 21, 2008 (U.S. Annex 415).
155
(b) Judicial Expropriation
11.35 The United States argued in the Counter-Memorial that "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" and that they "do not give rise to a
claim for expropriation. "666
11.36 Iran attempts to minimize the distinction betweenjudicial and executive/legislative acts
in the expropriation context. The arbitral awards on which it relies, however, do not support
Iran's position. To the contrary, in finding a judicial expropriation, each award identified an
additional element of illegality, either in the act of the judiciary itself or in the chain of events
leading to that act, beyond the elements necessary to establish an expropriation in other
contexts.667 Other arbitral awards beyond those referenced in Iran's Reply have also
666 U.S. Counter-Memorial, ,i 14.81.
667 Saipem S.p.A. v. People's Republic of Bangladesh, ICSID Case No. ARB/05/7, Award ,iii 134, 155, 159 (June
30, 2009) (noting that, in addition to a "substantial deprivation," "both parties consider that the actions of ( or the
actions attributable to) Bangladesh must be 'illegal' in order to give rise to a claim of expropriation" and ultimately
concluding that the Bangladeshi court decision at issue was illegal in that it constituted an abuse of right and a
violation of Bangladesh's obligations under the New York Convention.); Karkey Karadeniz Elektrik Uretim A.S.
v. Islamic Republic of Pakistan, ICSID Case No. ARB/13/1, Award ,i,i 550-61, 645, 649 (Aug. 22, 2017)
(concluding that the court decision at issue was "arbitrary" and inconsistent with international law); Rumeli
Telekom A.S. and Telsim Mobil Telekomikasyon Hizmetleri A.S. v. Republic of Kazakhstan, ICSID Case No.
ARB/05/16, Award ,iii 707-708 (July 29, 2008) (concluding that "the court process which resulted in the
expropriation of Claimants' shares was brought about through improper collusion between the State, acting
through the Investment Committee, and Telcom Invest" and that the "decision of the Investment Committee was
... unfair and inequitable in itseltl]"); Sistem Muhendislik Insaat Sanayi ve Ticaret A.S. v. Kyrgyz Republic,
ICSID Case No. ARB(AF)/06/1, Award ,iii 72, 74, 107, 112, 117-18 (Sep. 9, 2009) (concluding that decisions by
a series of Kyrgyz courts invalidating a "valid and legally binding" share purchase agreement, leading to
claimants' deprivation of its rights in a hotel, were expropriatory).
156
recognized the need for an additional element of illegality to support a finding of judicial
expropriation, 668 as have commentators. 669
11.3 7 The need for something more than a court decision that has negatively affected a
claimant's economic interests to establish a judicial expropriation is obvious: courts frequently
affect such interests in the ordinary course of enforcing the law, including in the fields of
contract, tort, and real property. If all such decisions could lead to claims for compensation
against the State, the court system could not function. 670
11.38 Iran's own authorities therefore do not support its attempt to erase the distinction
between judicial and executive/legislative actions in the expropriation context and the Court
should reject it.
11. Iran's Claims Under the Expropriation Provision of Article IV(2) Fail
11.39 The United States now turns to applying the expropriation provision of Article IV(2),
properly interpreted, to the measures at issue. The United States begins with the challenged
legislative and executive measures, before addressing the judicial decisions. As the United
States will show, neither the legislative or executive measures, nor the judicial decisions are
expropriatory.
668 See, e.g., Krederi Ltd. v. Ukraine, ICSID Case No. ARB/14/17, Award ,r 713 (July 2, 2018) (U.S. Annex 416)
("In order to avoid a situation whereby any title annulment would constitute indirect expropriation or a measure
tantamount to expropriation it is therefore necessary to ascertain whether an additional element of procedural
illegality or denial of justice was present. Only then may a judicial decision be qualified as a measure constituting
or amounting to expropriation."); Garanti Koza LLP v. Turkmenistan, ICSID Case No. ARB/11/20, Award ,r 365
(Dec. 19, 2016) (U.S. Annex 417) ("A seizure of property by a court as the result of normal domestic legal process
does not amount to an expropriation under international law unless there was an element of serious and
fundamental impropriety about the legal process."); Swiss/ion DOO Skopje v. Former Yugoslav Republic of
Macedonia, ICSID Case No. ARB/09/16, Award ,r 314 (July 6, 2012) (U.S. Annex 213) ("[T]he courts'
determination of breach of the Share Sale Agreement and its consequential termination did not breach the Treaty
and therefore was not unlawful. The internationally lawful termination of a contract between a State entity and
an investor cannot be equated to an expropriation of contractual rights simply because the investor's rights have
been terminated; otherwise, a State could not exercise the ordinary right of a contractual party to allege that its
counterparts breached the contract without the State's being found to be in breach of its international obligations.
Since there was no illegality on the part of the courts, the first element of the Claimants' expropriation claim is
not established.").
669 CAMPBELL MCLACHLAN ET AL., INTERNATIONAL INvESTMENT ARBITRATION - SUBSTANTIVE PRINCIPLES
,r 8.85 (2d ed. 2017) (U.S. Annex 418) ("[N]ot all actions by State courts unfavourable to investor-claimants are
expropriatory. In order to constitute expropriation, the actions of the State courts must be illegal.").
67° Krederi Ltd. v. Ukraine, ICSID Case No. ARB/14/17, Award ,r 709 (July 2, 2018) (U.S. Annex 416) ("While
it is possible that judicial action amounts to expropriation, it is the exception rather than the norm. In any kind of
private law dispute over ownership of movable or immovable property, courts will make a decision which of the
disputing parties claiming ownership rights prevails. This will result in a finding that one party will be entitled to
ownership whereas the other ( or others) will not. Such judicial determinations do not constitute expropriation.
Similarly, where property transfers are held to be invalid, the resulting transfers of ownership do not amount to
expropriation.").
157
(a) Legislative and Executive Measures
11 .40 Before addressing the Parties' disagreements regarding the challenged legislative and
executive measures, there are at least three points that are not in dispute. First, Iran does not
contest that those legislative and executive measures that affected Iran's sovereign immunity
or created rights of action against Iran have either been dismissed from the case on other
grounds or are not expropriatory.671 Second, Iran does not dispute that if the Court rejects its
argument that Bank Markazi is a "company" within the meaning of the Treaty, those measures
that are directed at Bank Markazi, whether in whole or in part, must be excluded from the
Article IV(2) analysis (as they apply to Bank Markazi).672 Third, it is uncontested that if the
Court concludes that Executive Order 13599 is within the scope of Article :XX(l)(c) or (d),
Iran's expropriation claim with respect to this measure must fail.
11.41 Turning to the points of disagreement, Iran has little to say in response to the U.S.
argument that legislative measures enabling plaintiffs to collect on their terrorism judgments
against Iran do not, on their own, "take" Iranian property. Iran argues that "the intended result
of the U.S. measures is that the property oflranian companies be taken,"673 but that is not the
test. Regardless of the motive Iran attempts to assign to the measures, Iran cannot establish a
breach of Article IV(2) without showing that they constituted "some form of actual or
substantial taking."674 The reality is that the legislative measures did not constitute a taking of
any sort and Iran cannot establish otherwise. That ends the inquiry as to these measures.
11.42 With respect to Executive Order 13599, the U.S. Counter-Memorial included references
to numerous U.S. court decisions concluding that similar blocking orders are not expropriatory
because they are temporary and do not change ownership of blocked assets.675 Iran has not
addressed these decisions in its Reply, nor has it explained why the Court should second guess,
let alone overrule, this well-established line of U.S. precedent.
11.43 In any event, Iran's claims as to all of the legislative and executive measures must fail
because these measures are bona fide, non-discriminatory exercises of U.S. police powers. Iran
contends that the United States has not established a "sound basis for invocation of police
671 U.S. Counter-Memorial, 1 14.86.
672 U.S. Counter-Memorial, 1114.86, 14.88. See also Iran's Reply, 17.19.
673 Iran's Reply, 17.21 (emphasis added).
674 U.S. Counter-Memorial, 114.82 (quoting Iran's Reply, 15.65(b); internal quotation marks omitted).
675 U.S. Counter-Memorial, 1 14.88, n.484.
158
powers,"676 but nowhere does Iran explain why (i) establishing a framework for holders of
terrorism judgments to collect on those judgments where the judgment debtor, Iran, refuses to
pay; or (ii) blocking assets to address threats such as arms trafficking, support for terrorism,
and the pursuit of ballistic missile capabilities are not legitimate policy aims. Moreover, the
legislative and executive measures are neither discriminatory nor unreasonable for the reasons
established in the U.S. discussion of Article IV(l).
11.44 Iran argues that the United States should be barred from invoking the police powers
doctrine with respect to the challenged measures because they are disproportionate but, as
explained above, Iran has not established that proportionality is part of the applicable test.
Regardless, the U.S. measures are proportional, whether under the Tecmed/ECtHR "reasonable
relationship" standard677 or the "manifestly excessive" standard used in recent European Union
investment treaties. The measures allow victims of terrorism with valid judgments against
Iran-which Iran has refused to pay-to enforce those judgments against property held by
Iran's agencies and instrumentalities. The United States has not permitted plaintiffs to satisfy
their judgments against Iranian companies with no connection to the Iranian State, nor has it
allowed them to collect more than they have been awarded against Iran. In light of (i) the
unchallenged findings by U.S. courts regarding Iran's role in the terrorist acts that gave rise to
the judgments, (ii) Iran's recalcitrance in the face of the judgments, (iii) the absence of Iranian
State assets in the United States, and (iv) Iran's close connection with the companies at issue,
the U.S. measures are plainly reasonable and not manifestly excessive.
(b) Judicial Decisions
11.45 As the United States argued in its Counter-Memorial, "decisions of domestic courts
acting in the role of neutral and independent arbiters of legal rights . . . do not give rise to a
claim for expropriation."678 Iran contends in its Reply that the United States is wrong because
"conduct of all State organs discharging judicial functions is automatically attributable to the
State" and, accordingly, "if those organs act in a manner which is contrary to international law
676 Iran's Reply, ,r 7.23.
677 Tecnicas Medioambientales Teemed S.A. v. United Mexican States, ICSID Case No. ARB(AF)/00/2, Award
,r 122 (May 29, 2003).
678 U.S. Counter-Memorial, ,r 14.81.
159
(including the provisions of the Treaty), this will give rise to international responsibility on the
part of the State."679
11.46 Iran's argument misses the point. Courts acting as "neutral and independent arbiters of
legal rights" are not "act[ing] in a manner which is contrary to international law," even if their
decisions have a negative impact on a claimant's economic interests. Indeed, even in the rare
instances identified in Iran's Reply where a tribunal has sustained a claim of judicial
expropriation, it has done so on the basis of some illegal act either by the court (e.g., the
"grossly unfair" court decision in Saipem)680 or in the circumstances leading to the court's
decision (e.g., the collusive, improper, and inequitable conduct of the State that led to the
Kazakh court decisions in Rumeli Telekom). 681
11.47 Here, Iran has not alleged any misconduct by the U.S. courts independent of their
application oflegislative and executive measures that are allegedly in breach of various articles
of the Treaty of Amity. However, for the reasons set out in the preceding section and other
sections of this Rejoinder, the U.S. legislative and executive measures are not in breach of the
Treaty. Accordingly, even if, as Iran contends, judicial acts can be expropriatory in certain
circumstances, the actions of the U.S. courts in this case do not constitute expropriations of
Iranian property.
Section C: Concluding Observations
11.48 As the preceding analysis has shown, Iran's interpretations of both limbs of Article
IV(2) are unsupported by either the Treaty text or the authorities on which Iran relies. There
is simply no basis to stretch the "most constant protection and security" provision in Article
IV(2)'s first sentence beyond its traditional boundaries, which are limited to the protection
against physical harm. Likewise, as to its expropriation claims, Iran's interpretation of the
police powers doctrine is flawed and its application is cursory, and Iran fails to acknowledge
limitations that its own authorities place on judicial expropriation. The Court should therefore
reject Iran's claims under Article IV(2) in their entirety.
679 Iran's Reply, ,r 7.17.
680 Saipem S.p.A. v. People's Republic of Bangladesh, ICSID Case No. ARB/05/7, Award ,r,r 134, 155, 159 (June
30, 2009).
681 Rumeli TelekomA.S. and TelsimMobil TelekomikasyonHizmetleriA.S. v. Republic of Kazakhstan, ICSID Case
No. ARB/05/16, Award ,r,r 707-708 (July 29, 2008).
160
CHAPTER 12: IRAN'S SUBSIDIARY CLAIMS-ARTICLES X(l), V(l), AND Vll(l)
12.1 Iran's Reply devotes little attention to its claims under Articles X(l), V(l), and VIl(l)
and these claims are plainly peripheral to the main part of its case. As shown in this chapter,
Iran has failed in its Reply to justify the expansive interpretations that it has attempted to apply
to each of these articles and has also, in many instances, failed to provide a factual basis for its
claims. Accordingly, Iran's claims under Articles X(l), V(l), and VIl(l) must fail.
Section A: Iran Has Failed to Establish a Breach of Article X(l)
12.2 Article X(l) states: "Between the territories of the two High Contracting Parties there
shall be freedom of commerce and navigation."682 In its Counter-Memorial, the United States
demonstrated that, in context, Article X(l) applies only to maritime commerce or, at most,
trade in goods, and that in any event, Iran has failed to establish as a factual matter that the U.S.
measures it challenges actually impeded any "commerce" between the territories of the United
States and Iran.
12.3 In its Reply, Iran asserts that the term "commerce," as used in Article X(l), has some
expansive meaning that Iran does not define, but purportedly can include "debts" and "modem
682 The full text of 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.
161
financial operations."683 It also asserts a generic case that the existence of the U.S. measures
has "rendered impossible commerce between the territories of the two Treaty Parties,"684 and
makes allegations with respect to specific measures, in particular the execution against assets
in the Peterson litigation. 685
12.4 In Sections A.i and A.ii below, the United States shows that Iran's interpretation of
"commerce" is faulty and at odds with the plain text of Article X(l) and its context. Rather,
the term can only refer to maritime commerce, and at its broadest is limited to trade in goods.
In Section A.iii, the United States shows that, even assuming that "commerce" could have a
meaning beyond maritime commerce or trade in goods, Iran's Article X(l) claim would still
fail as Iran has not and cannot satisfy the territorial requirement. Iran has failed to identify any
bilateral commerce between the territories oflran and the United States affected by the specific
U.S. measures about which it complains. Instead, as the United States has shown, Iran took
pains to structure its investments so as not to be engaged in such "commerce" with the United
States. In Section A.iv, the United States shows that Iran's theory of the case is also faulty
because "legal impediments" to commerce, such as the rules governing enforcement of
judgments in domestic courts, do not implicate Article X(l). Finally, in Section A.v, the United
States offers some concluding observations.
12.5 As background for the remainder of the discussion in this Section, the United States
notes that the Court has previously considered Article X(l) and the meaning of commerce, in
the Oil Platforms litigation. In its Judgment on Preliminary Objections in that case, the Court
interpreted Article X(l)'s "commerce" to include "commercial activities in general-not
merely the immediate act of purchase and sale, but also the ancillary activities integrally related
to commerce."686 Although the Court considered that "commerce" was not limited to maritime
commerce, 687 Oil Platforms shows that "commerce" nevertheless requires some underlying
trade in goods. 688 Further, in its Judgment on the merits, the Court made clear that the party
683 Iran's Reply, ff 8.13, 8.28.
684 Iran's Reply, ,r 8.34.
685 Iran's Reply, ,r 8.34.
686 Oil Platforms (Islamic Republic of Iran v. United States of America), 1996 I.C.J. 803, 819, '1[ 49 (Dec. 12).
687 Oil Platforms, 1996 I.C.J. at 817, ff 41-43. As noted in the Counter-Memorial, for the reasons already detailed
in paragraphs 17 .4-17 .9 therein, and below in Section A.i, the United States is requesting that the Court reconsider
this conclusion.
688 In its reasoning, the Court stated that the "possibility must be entertained that [commerce] could actually be
impeded as a result of acts entailing the destruction of goods destined to be exported, or capable of affecting their
162
alleging a violation of Article X(l) bears the burden of demonstrating that a measure had the
effect of impeding commerce "between the territories" of the Parties.689 Accordingly, Oil
Platforms establishes that there must be actual incidents of commerce that have been impeded,
in order to show a violation of Article X(l ).
1. The Parties Intended the Term "Commerce" in Article X(l) to Mean Maritime
Commerce
12.6 Although, in its Reply, Iran argues that the "ordinary meaning" of Article X(l) requires
some broad, unqualified interpretation of "freedom of commerce,"690 this interpretation,
reading Article X(l) in isolation from the remainder of Article X and its wider Treaty context,
is flawed and incorrect.
12. 7 Article X concerns principally the non-discriminatory access to ports for vessels and
their products. For instance, Article X(3) provides that vessels of either Party shall be able to
come on a non-discriminatory basis ''with their cargoes" to all ports and waters of the other
Party "open to foreign commerce and navigation." Article X( 4) provides that vessels of either
Party are to receive non-discriminatory treatment "with respect to the right to carry all products
that may be carried by vessel to or from the territories" of the other Party.691 Articles VIII, IX,
and X are collectively the Treaty articles concerning trade in goods between the Parties, with
Article X specifying the treatment of vessels and their products.
12.8 Given the position of Article X(l) at the head of an Article focusing on treatment of
vessels and their cargoes, and the position of Article X in a grouping with other trade-related
articles, the reference to "commerce" in Article X(l) cannot properly be read as encompassing
anything beyond the maritime trade in goods.692 Rather, interpreting the term "commerce" in
Article X(l) in accordance with its ordinary meaning, in its "context and in light of [the
transport and their storage with a view to export." Oil Platforms, 1996 I.C.J. at 819-820, ~ 50. The Court also
considered whether "commerce" could include antecedent activities like procurement and production.
689 Oil Platforms (Islamic Republic of Iran v. United States of America), 2003 I.C.J. 161, 214-215, 217-218, ~~
119, 123 (Nov. 6).
690 Iran's Reply,~~ 8.14-8.17.
691 Per Article X(4) such products are to receive treatment no less favorable than that accorded to "like products
carried in vessels" of the other Party with respect to duties and customs. Articles X(2) and (6) serve to defme
''vessels" covered by Article X. Article X(5) does not deal with maritime trade in goods, but still concerns vessels
and their safe harbor.
692 Further, as noted in the U.S. Counter-Memorial(~ 17.4), the term "commerce" as used in Article X(3) can only
refer to maritime commerce; it could not have been the intention for the term "commerce" to have different
meanings within the same Article.
163
Treaty's] object and purpose,"693 indicates the Parties intended it to be limited to maritime
commerce, and not to have a distinct meaning wholly unrelated to commerce by navigation. 694
12.9 If Article X(l) had been anything other than an introduction to the maritime trade
provisions, and had the term "commerce," as used therein, some distinct meaning unrelated to
maritime trade, the travaux preparatoires would undoubtedly have reflected extensive
discussions on that meaning and any qualifications to such a broad grant of freedom. They do
not. Rather, the travaux uniformly shows that Article X was understood by the Parties to be a
standard navigation provision, nothing more. 695 Iran attempts to dismiss the travaux as "selfserving"
696 because it cannot point to anything in the negotiating history to contradict the clear
implication of that evidence: the Parties understood Article X as a navigation provision, and
accordingly could only have intended "commerce," as used in that context, to mean maritime
commerce.
12.10 As noted, the United States recognizes that in Oil Plaiforms the Court considered that
"commerce" was not limited to maritime commerce. Unlike Oil Plaiforms, however, the
instant case involves challenges to measures and underlying financial transactions that have no
relation to navigation. The United States accordingly considers that the Court's Oil Plaiforms
dicta should not be controlling in the circumstances of this case and requests that the Court
revisit its interpretation in the context of the present case. Iran, in its Reply, notes that in Oil
Plaiforms the Court considered the fact that the Treaty as a whole relates to commerce in
general, not purely maritime commerce. 697 That is correct-the Treaty is an FCN treaty.
However, the instant question is the meaning of the term "commerce" as used in Article X(l).
693 Vienna Convention on the Law of Treaties, art. 31(1), May 23, 1969, 1155 U.N.T.S. 331.
694 If that had been the intention, such a general "freedom of commerce" provision would certainly have merited
its own article containing the parameters of such freedom.
695 Instructions from U.S. Dep't of State to U.S. Embassy Tehran, A-18, at 7 (July 23, 1954) (U.S. Annex 227)
(indicating Article X was proposed by the United States to Iran as containing "the navigation provisions" of the
standard FCN treaty, given the interests of Iran as a "maritime state"). Article X was labeled as ''Navigation" in
the table of contents included in the first draft. Id. at 17. In its Reply Iran argues that the final Treaty of Amity
does not label Article X as ''Navigation"; however, that the final Treaty does not contain headers, does not change
the fact that a draft labeling Article X as "Navigation" is highly relevant to show it was understood to be a
navigation provision. See also U.S. Counter-Memorial, ,Ml 17.4-17 .6. Other historical sources likewise reflect
that Article Xis a navigation provision only, concerned with the non-discriminatory treatment of vessels and their
cargos. See id., ml 17.7-17.8 and sources cited in footnotes.
696 Iran's Reply, ,r 8.21 (stating the United States invokes a "self-serving" account of its "own understanding"
during Treaty negotiations). Although the United States has not located any written correspondence directly
between the Parties, if that is Iran's complaint, the correspondence reflects conversations and communications
between Iran and the United States, along with drafts exchanged.
697 Iran's Reply, ,r 8.19 (quoting Oil Platforms, 1996 I.C.J. at 817, ,r,r 41-43).
164
The context and placement of Article X(l), along with the negotiating history, indicate the
Parties' intention that "commerce," as used therein, refer only to maritime commerce.
11. In the Alternative. "Commerce" Can be No Broader Than Trade in Goods
12.11 If the Court considers that the term "commerce," as used in Article X(l), cannot be
confined to maritime commerce, the term at the very least must be confined to trade in goods
and certain ancillary activities integrally related thereto. 698 In its Reply, Iran states that if the
Parties had meant to limit Article X(l) to trade in goods, they would have said so "expressly,"
using the same language as in Articles VIII and IX, and goes on to accuse the United States of
asserting that Article X( 1) is somehow "inconsistent" with Articles VIII and IX. 699 On the
contrary, as set out in the U.S. Counter-Memorial, it is Iran's expansive interpretation of the
term "commerce" as used in Article X(l) that is inconsistent with the restrictions on trade in
goods allowed by Articles VIII and IX, 700 and which also does not align with the remainder of
Article X, its terminology, or its location in the Treaty.
12.12 As noted, Article X, together with Articles VIII and IX, are collectively the Treaty
articles concerning trade in goods between the Parties. Articles VIII and IX concern,
respectively, non-discriminatory treatment in the import/export of a Parties' products, and
customs regulations for importation/exportation of products. Article X, in turn, specifies the
non-discriminatory treatment of the other Party's vessels and products carried therein. In this
context, it could not have been the Parties' intent for the term "commerce," as used anywhere
in Article X, to be broader than trade in goods-which are what constitute "products" and
"cargoes." Services, and intangibles like financial instruments, are not vessel-borne cargoes.
Further, it would not make sense to give the term, as used in Article X(l ), a broader meaning
than its meaning elsewhere in these trade-related articles. The only other times "commerce" is
698 Although Iran asserts in the Reply that this is nothing more than a "recast[ing]" of the United States' argument
with respect to the term being restricted to maritime commerce (Iran's Reply, ,r 8.24), that is incorrect. As is
apparent from the discussion, this is a distinct argument, presented in the alternative.
699 Iran's Reply, ,r 8.26.
700 U.S. Counter-Memorial, ,r 17 .24.
165
used in Articles VIII, IX, or X-in Article VIII(4)701 and X(3)7°2-it clearly only relates to
trade in goods.
12.13 Although Iran intimates in its Reply that the Court in Oil Platforms interpreted
"commerce" in Article X(l) broadly, to include financial operations,7°3 this is incorrect. As
discussed in the Counter-Memorial and above in Section A.i, there must be some underlying
trade in goods for "commerce" to be affected,704 and Oil Platforms does not support Iran's
position that "commerce" can apply to a purely financial transaction having no connection, or
a highly tenuous one, to trade in goods. 705
12.14 Iran's reliance on the Court's decision in Dispute Regarding Navigational and
Related Rights (Costa Rica v. Nicaragua), for the proposition that "commerce" must be
interpreted to have a modem meaning that can encompass sophisticated financial operations,
is inappropriate.706 Any presumption from Navigational and Related Rights that treaty parties
intend generic terms to have an evolutive meaning in instances where a treaty is entered into
for a very long period of time or is of continuing duration 707 should not apply to this case. The
1858 Treaty of Limits at issue in Navigational and Related Rights, which, following a war
between Costa Rica and Nicaragua, set the territorial boundary between the countries, had an
unlimited duration and was intended to create a legal regime "characterized by its
perpetuity."708 That in no way describes the Treaty of Amity. Regardless of the aspirational
701 "Either [party] may impose prohibitions or restrictions on sanitary or other customary grounds of a noncommercial
nature . . . provided such prohibitions or restrictions do not arbitrarily discriminate against the
commerce of the other [party]."
702 "Vessels of either [party] shall have liberty ... to come with their cargoes to all ports, places and waters of
such other [party] open to foreign commerce and navigation."
703 Iran's Reply, 18,27 (quoting Oil Platforms, 1996 I.C.J. at 818,145).
704 See U.S. Counter-Memorial, 117.10 and associated footnotes.
705 Iran again notes that in Oil Platforms the Court considered the Treaty of Amity to be a treaty related to "trade
and commerce in general" and that other articles do not relate to trade in goods. Iran's Reply, 18.27 (quoting Oil
Platforms, 1996 I.C.J. at 817,141). As noted the United States does not dispute that the Treaty as a whole relates
to the parties' commercial relationship. However, the instant question is the extent of "commerce" as used in
Article X(l); the context of Article X(l) indicates a logical limit to the ambit of the word "commerce" as used
therein.
706 Iran's Reply, 18.28 (citing Dispute Regarding Navigational and Related Rights (Costa Rica v. Nicaragua),
2009 I.C.J. 213,244, 1170-71 (July 13)).
707 Navigational and Related Rights, 2009 I.C.J. at 243,166.
708 Id. at 242-243, 11 65-68. In addition to setting the territorial boundary, which established the San Juan River
to be in Nicaragua, the 1858 Treaty of Limits gave Costa Rica "perpetual" rights of navigation on the San Juan
River, for purposes of commerce. Id. at 236, 244, 1144, 69. The Court noted that the object of the Treaty was to
achieve a "permanent settlement" of the parties' territorial disputes, and that the territorial rules established in
such treaties are "marked in their permanence." Id. at 243,168.
166
language in Article I common to FCN treaties, Article XXIII provides for a ten-year initial
term, and after that the Treaty was terminable by either Party on notice. This is not a case in
which it would be appropriate to presume the Parties intended "commerce" to have a meaning
it could not have had at execution.709 Further, any such presumption would be rebutted by the
ample evidence of the Parties' actual intention that Article X( 1)' s "commerce" be restricted to
trade in goods. 710
111. Iran's Article X(l) Claim Fails to Satisfy the Territorial Requirement
12.15 Iran has again failed to engage with Article X(l)'s territorial limitation. Article X(l)
protects "freedom of commerce" only "between the territories of the High Contracting Parties,"
but Iran has failed to identify any commerce "between the territories" of the United States and
Iran that was impeded by the measures at issue. Iran's only response is to deny that the Court
in Oil Platforms pronounced a general finding that "only direct trade or direct commerce" is
covered by Article X(l),711 and to argue-incorrectly-that the United States has not engaged
with its supposed responses.712 But, as explained below, the Court's decision in Oil Platforms
forecloses Iran's argument on this point.
12.16 The Court in Oil Platforms made clear that the party alleging a violation of Article X(l)
bears the burden of demonstrating that a measure had the effect of impeding commerce
"between the territories" of the parties.713 Significantly, both parties in Oil Platforms claimed
breaches of Article X(l), and the Court looked to the specific acts alleged by each party and
determined, on the facts of each, that it did not implicate any commerce between the parties.
709 The United States notes that, even were it appropriate to interpret "commerce" in an evolutive manner that
could somehow include modern fmancial transactions, it is not at all clear what that meaning would be, or how
the Court would decide its parameters in this case. To provide for "freedom" of financial transactions would
require detailed rules and provisions with respect to banking, in the same way such rules are already included with
respect to trade in goods in Articles VIII, IX, and X. Such are wholly absent from the Treaty, and should not be
read into it.
710 As the Court noted in Navigational and Related Rights, treaty terms should be interpreted in accordance with
the parties' intention as reflected in the text and other relevant factors, which may mean using the meaning a term
had when the treaty was drafted. Navigational and Related Rights, 2009 I.C.J. at 242, '1[ 63.
711 Iran's Reply, ,r,r 8.30-8.31.
712 Iran asserts that paragraphs 6.15-6.18 of its Memorial addressed this issue. Iran's Reply, 'I[ 8.30. But these
paragraphs do not support Iran's case. On the contrary, paragraph 6.15 of the Memorial concedes both that Article
X(l) includes is a territorial limitation and, quoting Oil Platforms, that a series of transactions with Iran at one
end and the United States at the other is not commerce "between Iran and the United States." Iran does not,
however, identify any commerce "between the territories" allegedly impeded by the measures challenged here.
713 Oil Platforms, 2003 I.C.J. at 215,217, ,r,r 119, 123.
167
12.17 With regard to Iran's claims that two U.S. attacks on Iranian oil platforms, on October
19, 1987 and April 18, 1988, had impeded commerce between the parties in the products of the
platforms, the Court found that no such commerce existed. The Court found that by the time
of the April 18 attack, all commerce between the parties in Iranian oil products had ceased as
a result ofa U.S. embargo.714 Although the October 19 attack preceded the embargo, the Court
found that the platform that was the subject of that attack was already out of commission at the
time of the attack, due to a previous Iraqi strike. There was no oil being produced at the time
of the attack, and no prospect of production in the ten days before the embargo would have cut
off all commerce between the parties in any event.715 Thus there was no commerce in the
products of either platform at the time of the attacks that the U.S. attacks could have
"infringed."716 With regard to the U.S. claims, the Court analyzed each of the ten Iranian
attacks on shipping identified by the United States, and concluded that none of the ships
attacked were "engaged in commerce or navigation between the territories" of the parties, so
the Iranian attacks likewise did not breach Article X(l). 717 Last, the Court rejected the U.S.
"generic" argument that "the cumulation of [Iran's attacks on shipping] made the Gulf unsafe,
and thus breached its obligation with respect to freedom of commerce," ruling that such a claim
"cannot be made out independently of the specific incidents."718
12.18 The Court's analysis in Oil Platforms compels the same conclusion here.
(a) Iran Cannot Establish a Violation of Article X(l) Based on Generic
Allegations of Interference With Unspecified "Commerce"
12.19 Neither in its Memorial nor in its Reply does Iran explain how any of the specific
measures it identifies affected commerce between the territories of the United States and Iran.
Instead, Iran argues generically that "U.S. measures 'blocking' and/or seizing the assets of
Iranian companies ... have rendered impossible commerce between the territories of the two
Treaty Parties."719 This argument is analogous to the "generic" case that the Court rejected in
714 Oil Platforms, 2003 I.C.J. at 205,194. The United States imposed an embargo on October 29, 1987 on the
import of most goods (including oil) and services of Iranian origin. After that date, the Court held, "all direct
commerce" between the territories of the parties "was halted." Oil Platforms, 2003 I.C.J. at 250,193.
715 Oil Platforms, 2003 I.C.J. at 204-05, fl 92-93.
716 Oil Platforms, 2003 I.C.J. at 207, 198.
717 Oil Platforms, 2003 I.C.J. at 217, fl 121.
718 Oil Platforms, 2003 I.C.J. at 217-218, fl 122-123.
719 Iran's Reply, 1 8.34
168
Oil Platforms, and fails for the same reason: Iran cannot identify any specific incident of
commerce affected by the U.S. measures.720
12.20 Iran attempts to circumvent this requirement by analogizing the rules govemmg
terrorism-related litigation in U.S. courts to the 1984 laying of mines in Nicaraguan ports at
issue in Military and Paramilitary Activities in and against Nicaragua, which Iran claims
demonstrates "the breadth of acts that may interfere with commerce."721 Iran suggests that the
Nicaragua case stands for the proposition that by physically impeding access to ports, the
mining inherently interfered with commerce between the parties, and that the U.S. measures
resulting in the blocking or seizure of Iranian assets are analogous in that they legally impede
commerce with the United States. 722
12.21 Iran's position fails to account for the Court's merits decision in Oil Platforms. In
rejecting the U.S. "generic" claim based upon Iran's attacks on shipping in the Persian Gulf
absent "specific incidents" of interference with bilateral commerce, the Court in Oil Platforms
necessarily rejected the argument that an activity's potential to interfere with commerce was
sufficient to implicate Article X(l).723 In view of Oil Platforms, the Nicaragua case can only
be read as relying on the factual premise-not in dispute there-that there was commerce
between the territories of United States and Nicaragua at the time of the mine-laying,724 and
the Court's express factual finding that such commerce was impeded by the mining of
Nicaraguan ports. 725
12.22 The Nicaragua analogy is thus inapposite to the present case, because the premise that
commerce existed between the parties to be impeded by the U.S. measures in dispute is without
support in the factual record. As Oil Platforms makes clear, a measure that supposedly "renders
commerce impossible" does not violate Article X(l) if the commerce affected was only ever
720 Oil Platforms, 2003 I.C.J. at 217, ,r,r 122-123.
721 Iran's Reply, ,r 8.32.
122 Id.
723 Oil Platforms, 2003 I.C.J. at 217, ,r 123 ("It is for the United States [as the party asserting an Article X(l)
claim] to show that there was an actual impediment to commerce or navigation between the territories[.]")
( emphasis in original).
724 That this premise was factual in the Military and Paramilitary Activities case is clear from the Court's remark
that a U.S. trade embargo was imposed on May 1, 1985, more than a year after the mining of the Nicaraguan ports,
and that the Executive Order imposing that embargo took pains to prohibit the entry of Nicaraguan vessels into
U.S. ports, i.e., that such commerce via navigation was then ongoing. Military and Paramilitary Activities in and
against Nicaragua (Nicaragua v. United States), 1986 I.C.J. 14, 140-141, ,r 280 (June 27).
725 See Military and Paramilitary Activities, 1986 I.C.J. at 128-129, ,r 253.
169
hypothetical.726 Thus, as in Oil Platforms, Iran has the burden to identify a specific measure
that interfered with actual, bilateral commerce between the Parties. This it has not done.
(b) The Only Specific Actions as to Which Iran Has Alleged a Violation of
Article X(l) Do Not Relate to Commerce Between the Territories of the
Parties
12.23 Iran has not provided any evidence of actual interference with bilateral commerce. On
the contrary, Iran's effort to demonstrate that there was bilateral commerce between Bank
Markazi and the United States with respect to the assets executed against in the Peterson
litigation-the only case for which Iran even attempts to draw this connection---only
demonstrates that there was no such commerce. 727
12.24 Iran's complaint as it relates to Bank Markazi involves the execution against certain
financial assets-the cash proceeds of matured bonds-held in a New York-based Citibank
account owned by Clearstream Banking, S.A. ("Clearstream"), a Luxembourg intermediary
that is neither owned nor controlled by Bank Markazi. 728 Bank Markazi had an account with
Banca UBAE S.p.A., an Italian bank, and Banca UBAE had an account with Clearstream in
Luxembourg. Prior to the bonds' maturing in 2012, Clearstream made credits to UBAE's
account corresponding to interest payments it received on the bonds; and UBAE remitted those
payments to Bank Markazi. 729 These activities do not constitute commerce "between the
territories" of the United States and Iran.
12.25 As the Court explained in Oil Platforms, a "series of commercial transactions" with
Iran at one end and the United States at the other "is not 'commerce' between Iran and the
United States."730 The facts at issue in Peterson precisely describe such a "series of
transactions"---except that, as already noted, transactions carried out for a sovereign purpose,
as these were, cannot plausibly be described as "commercial" in any sense. 731 Bank Markazi
726 Oil Platforms, 2003 I.C.J. at 205,217, 1192-93, 123.
727 By its own admission, the investments in question were not undertaken for any commercial purpose, but rather
for ''the classic central banking purpose of investing [its] currency reserves." Brief for Defendant-Appellant Bank
Markazi at 35-36, Peterson v. Islamic Republic of Iran (No. 13-2952) (2d Cir. Nov. 19, 2013) (U.S. P.O. Annex
233). See supra Chapter 5.
728 Petition for a Writ of Certiorari 7-8, BankMarkazi v. Peterson, No. 14-770 (Dec. 29, 2014) (U.S. Annex 117);
see BankMarkazi v. Peterson, 136 S. Ct. 1310, 1321 & n.11 (2016) (U.S. Annex 109).
729 Petition for a Writ of Certiorari 7-8, BankMarkazi v. Peterson, No. 14-770 (Dec. 29, 2014) (U.S. Annex 117);
Peterson v. Islamic Republic of/ran, Case No. 15-0690, slip op., at 8-9 (2d Cir. Nov. 21, 2017) (Iran Reply Annex
58).
730 Oil Platforms, 2003 I.C.J. at 207, 197.
731 See supra Chapter 5.
170
engaged in transactions with UBAE in Italy; UBAE engaged in intermediate transactions with
Clearstream in Luxembourg; and Clearstream engaged in transactions with Citibank and/or
bond depositories in New York. At no point did Bank Markazi interact with Citibank or the
bond depositories, take title to any bonds, or receive any payment from an entity based in the
United States.
12.26 Iran offers three responses to this argument: first, Iran argues that this differs from the
"series of commercial transactions" in Oil Platforms because Bank Markazi's intention was to
invest in U.S. securities, and it "instruct[ ed] an agent for the specific purpose of completing the
transaction."732 This argument fails for three reasons:
12.27 First, it is factually incorrect. Iran has identified, by International Securities
Identification Number (ISIN), the 22 securities in which Bank Markazi claimed entitlements, 733
none of which were issued by U.S. issuers. Rather, Bank Markazi invested in the securities of
European governments, international financial institutions (such as the World Bank), and
certain European State-owned banks.734 There is no connection between these issuers and the
United States, except for their choice to issue dollar-denominated securities. Bank Markazi's
"intention" with respect to these 22 investments was not to invest in the U.S. market-which
it in fact studiously avoided-but rather to manage its exchange risk by investing (to some
extent) in dollar-denominated securities.
12.28 Second, it is a distinction without a difference. Nothing in Oil Platforms turned on
whether the U.S. buyers of petroleum products specifically intended to obtain products derived
from Iranian oil through intermediaries. Rather, as the Court explained, it was the "nature of
the successive commercial transactions" themselves that was determinative. 735
12.29 Third, it ignores the reason why Bank Markazi utilized this convoluted structure
involving two foreign cut-outs in the first place: because U.S. regulations not at issue in the
present case prohibited it from engaging in commerce with an issuer or bank in the United
732 Iran's Reply, 18.36.
733 Iran's Reply, 13.25.
734 Iran's Reply, 13.25; see also Bloomberg extracts regarding Bank Markazi Security Entitlements (U.S. Annex
419) (screenshots of Bloomberg terminal entries for each security identified by ISIN at paragraph 3.25 of Iran's
Reply, with summary table).
735 Oil Platforms, 2003 I.C.J. at 207, 197.
171
States.736 At least from 2008, when the United States barred the processing of "U-turn"
transactions-and certainly at the time the assets were ordered turned over to satisfy the
outstanding judgment-Iranian companies were explicitly prohibited from transacting with
U.S. banks directly or indirectly.737 lfClearstream had been acting as Bank Markazi's "agent,"
as Iran now suggests, the transactions would not have been possible. Having structured its
investments specifically to avoid engaging in prohibited "commerce" with the United States,
Iran cannot credibly argue now that its intention was to engage in such commerce.
12.30 Iran next argues that ''until 2008 the United States allowed commerce between the
territories of the parties which made use of the U-turn arrangement,"738 but this only
undermines its case. The U.S. measures at issue that resulted in the turnover of the Peterson
assets were taken in or after 2012,739 by which time the United States, by Iran's own admission,
no longer allowed such transactions between Bank Markazi and the United States. 740
12.31 Iran's third response is that the United States treated the Peterson assets-bond
proceeds then in the possession of Citibank in the United States-as property of Bank Markazi,
"with the U.S. courts making a finding to this effect," and argues that Bank Markazi's
ownership of those assets, regardless of the intermediaries used, was therefore commerce
between Bank Markazi and the United States.741 But even if Bank Markazi had a beneficial
interest in those assets, the fact remains that the method it used to invest in them-through two
foreign intermediaries-was chosen precisely because U.S. regulations prohibited Bank
Markazi from transacting in securities issued and held in the United States. 742 And Bank
Markazi relied on this convoluted structure in arguing to the U.S. courts that the assets were
not Bank Markazi's, but rather "'of' a financial intermediary which held them in the United
736 See Petition for a Writ of Certiorari 7-8, Bank Markazi v. Peterson, No. 14-770 (Dec. 29, 2014) (U.S. Annex
117). Indeed, prior to 2008, Bank Markazi held an account directly with Clearstream. UBAE was inserted into
the process because new U.S. regulations in 2008 - also not at issue in this case -would have preclude Clearstream
from transacting with the U.S. financial system iflran were involved in the transaction. Id. at n.1; Affidavit of
Ali Asghar Massoumi, ,r,r 22-23, Peterson v. Islamic Republic of Iran, No. 10-4518 (S.D.N.Y. Aug. 31, 2017)
(U.S. P.O. Annex A02).
737 Iranian Transactions Regulations, 73 Fed. Reg. 66541 (Nov. 10, 2008) (U.S. Annex 232). See also Affidavit
of Ali AsgharMassoumi, ,r 21, Peterson v. Islamic Republic of Iran, No. 10-4518 (S.D.N.Y. Aug. 31, 2017) (U.S.
P.O. AnnexA02); U.S. Counter-Memorial, ,r,r 1.16-17.17.
738 Iran's Reply, ,r 8.36.
739 Iran's Memorial, ,r 2.34 ("This immunity [of central bank property from execution] was recognised in relation
to the Central Bank oflran, until 2012.").
740 Iran's Reply, ,r 8.36.
741 Iran's Reply, ,r 8.36.
742 See supra ,r 12.29.
172
States on Bank Markazi' s behalf. "743 Iran structured its investments specifically to avoid
engaging in prohibited "commerce" with the United States, and the Court should reject Iran's
invitation to disregard that structuring now in an effort to couch its claim in some form of
"commerce. "744
12.32 Although Iran mentions certain other assets allegedly "blocked" or "seized" in
accordance with the U.S. measures, it has not sought to show that any such assets were related
to, or impeded, commerce "between the territories" of the Parties. Rather, Iran argues
generically that the U.S. measures have "rendered impossible" commerce "so far as concerns
the Iranian companies" affected. 745 But without coming forward with evidence that there was
commerce "between the parties" to be affected by U.S. measures-and except as to Bank
Markazi Iran has not even attempted to present such evidence-Iran cannot meet its burden
under Article X(l).746
1v. Article X(l) Cannot Plausibly Be Interpreted to Include "Legal Impediments"
Such as the Rules Governing Terrorism-Related Litigation in U.S. Courts
12.33 As the U.S. has explained,747 Iran's theory of the case would extend Article X(l) to
apply, not merely to a physical obstacle, but to legal rules and procedures that govern terrorismrelated
litigation in U.S. courts,748 on the theory that such rules impede commerce between the
Parties by depriving Iranian State-owned banks and other companies of assets that may be used
to engage in such commerce. Iran candidly acknowledges that this argument is novel. 749 No
court has interpreted Article X(l) or any analogous provision of a FCN Treaty as applying to
so-called "legal impediments" to commerce, much less "legal impediments" that consist of
rules governing satisfaction of outstanding judgments in local courts. But Iran declines to
grapple with the objection that its theory would render almost any rule or procedure that poses
743 BankMarkazi v. Peterson, 136 S. Ct. 1310, 1318 n.3 (2016) (U.S. Annex 109).
744 See Bank Markazi v. Peterson, 136 S. Ct. 1310, 1321 (2016) (U.S. Annex 109).
745 Iran's Reply,, 8.34.
746 Oil Platforms, 2003 I.C.J., at 214-215, 217, ,, 119, 123.
747 U.S. Counter-Memorial,,, 17.21-17.25.
748 Iran's surviving claims challenge three categories of provisions: (1) those enabling the enforcement of court
judgments entered against Iran against the property of Iranian agencies, instrumentalities, or state-owned
companies, notwithstanding their "separate juridical personality"; (2) those allowing property of such entities to
be attached before judgment; and (3) those "[r]emoving generally applicable defences," such as res judicata,
limitations periods, and limitation of actions, and collateral estoppel. Iran's Memorial,, 6.19(c), (d), (f); see id.
, 2.26.
749 Iran's Reply, , 8.32.
173
any "impediment" to commerce a Treaty violation. Rather than offer a limiting principlelikely
because any plausible limiting principle would exclude its claim here-Iran dismissively
labels the United States' critique a "diver[sion]."750 But in fact this objection is fatal to Iran's
overbroad construction of Article X(l), as two illustrations show.
12.34 First, as the United States has explained, if enforcement of a judgment against an
Iranian company "impede[s] freedom of commerce," then it makes no difference whether
enforcement flows from legislation specific to terrorism-related conduct or from any other
principle of U.S. law.751 The effect of enforcement on "freedom of commerce" is the same in
either case. Thus, if Iran's interpretation were correct, Article X(l) would give Iranian
companies complete immunity from execution of judgments, an absurd result and one that the
Parties could not plausibly have intended from the bare declaration, "there shall be freedom of
commerce[.]"
12.35 Second, Iran's interpretation of Article X(l) would render unlawful a number of
regulations and restrictions that are expressly contemplated and permitted under other
provisions of the Treaty. For example, customs regulations (Art. IX), restrictions on
importation of goods (Art. VIII), and restrictions on currency exchange (Art. VII) constrain
freedom of commerce, yet all are expressly permitted under certain circumstances-for
example on the condition that they be imposed without discrimination-by the express terms
of the Treaty. The same must also be true of measures that are not expressly permitted by the
treaty but are consistent with its more specific provisions-such as the enforcement of validly
entered judgments. Iran effectively concedes this point, but protests that a "good faith
interpretation of Article X(l)" would not yield such a result. 752 But Iran again offers no
principle by which the Court could conclude that Article X(l) prohibits a measure not
inconsistent with any other provision of the Treaty. Iran's novel argument should be rejected.
12.36 Indeed, the Court's disposition of Iran's sovereign immunity claims in its Preliminary
Objections Judgment compels the rejection oflran's argument as to its remaining claims. If,
as Iran argues, any legal impediment to commerce whatsoever constitutes a breach of Article
X(l ), then surely the denial of sovereign immunity to Iranian agencies and instrumentalities,
resulting in the entry and execution of a judgment against them, would be such an impediment.
750 Iran's Reply, 18.32.
751 U.S. Counter-Memorial, 117.23.
752 Iran's Reply, 1 8.26.
174
Yet the Court rejected this conclusion, noting that it was "not convinced that the violation of
the sovereign immunities to which certain State entities are said to be entitled ... is capable of
impeding freedom of commerce, which by definition concerns activities of a different kind."753
This logic applies equally to Iran's claims based upon U.S. rules and procedures permitting the
enforcement against Iranian State-controlled entities of judgments against the Iranian State.
Like Iran's sovereign immunity claim, they have "too tenuous a connection, with the
commercial relations between the States Parties to the Treaty" to come within the language of
Article X(l).754
v. Concluding Observations
12.37 The interests allegedly implicated by U.S. measures involve neither maritime
commerce nor trade in goods, and so fall outside the scope of Article X(l) as understood by
the Parties. Further, Article X(l) only imposes obligations on the Parties with respect to
commerce and navigation between their territories; Iran's claims concern no transactions of
any kind between the territories of the Parties. Iran has thus not established a breach of any
obligation owed to it or its nationals or companies under Article X(l).
Section B: Iran Has Failed to Establish a Breach of Article V(l)
12.3 8 Iran's arguments in support of its claim for breach of Article V ( 1) were cursory in its
Memorial, and its Reply does nothing to strengthen them. Rather than explain the basis for its
claim in detail, Iran's Memorial puts forward the ungrounded assertion that "a specific and
targeted regime has been imposed with respect to Iranian properties."755 The U.S. CounterMemorial,
in addition to clarifying points about the scope of the Article and Iran's claim under
the Article, identified two fatal shortcomings in Iran's claim, both symptomatic of the limited
attention that Iran has paid to it: Iran's failures,.first, to show any attempt by its companies to
dispose of property, and, second, to identify a comparator as required for any most-favorednation
("MFN") claim.756 Iran's Reply wrongly accuses the United States of misreading the
Treaty provision, incorrectly claiming, for example, that the first sentence of Article V(l)
753 Preliminary Objections Judgment, ,r 79.
754 Preliminary Objections Judgment, ,r 79.
755 Iran's Memorial, ,r,r 5.75-5.76.
756 U.S. Counter-Memorial, ,r,r 15.1-15.10.
175
imposes a separate and distinct obligation from the MFN standard stated in in its second
sentence.757 The assertions in Iran's Reply are, as addressed below, manifestly wrong.
1. The Scope of This Issue Is Limited
12.39 As a preliminary matter, Iran's claim is limited to clause (c) of Article V(l), on
disposition of property, as the United States pointed out in its Counter-Memorial and Iran has
not disputed. 758 Furthermore, the provision's key phrase, "shall be permitted," does not require
States to facilitate transactions, or make them as easy as possible.759 As Iran conceded in its
Reply, measures that may regulate or encumber the disposition of property, without flatly
prohibiting it, are not in violation of this Treaty provision. 760
11. Iran's Failure to Show Attempts to Dispose of Property Is Significant
12.40 To make a compensable claim, Iran must show an attempt by an Iranian owner to
dispose of property that was prevented by one of the challenged measures, and it has failed to
do so. Iran's general assertion that disposition is "impossible"761 is insufficient to make a
claim. For example, there are many court cases identified in Iran's Attachment 2 in which no
property was subject to successful attachment and execution. These cases plainly did not affect
the disposition of Iranian property at all, let alone in a manner that would breach Article V(l),
and Iran has produced no evidence to the contrary, either in Attachment 2 to its Reply or
elsewhere. 762
iii. The Most-Favored-Nation Standard
(a) MFN Treatment Is the Key Standard of Article V(l)
12.41 Iran incorrectly asserts that Article V ( 1) encompasses "two related but distinct
obligations," a "shall be permitted" obligation and an MFN obligation. 763 Treatment of the
757 Iran's Reply, ,r 7.27.
758 U.S. Counter-Memorial, ,r 15.3.
759 The provision reads in full: "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."
760 U.S. Counter-Memorial, ,r 15.4; Iran's Reply, ,r 7.26.
761 Iran's Reply, ,r 7.26.
762 See supra Chapter 6, Section C.
763 Iran's Reply, ,r 7.27.
176
provision's first sentence as a separate, standalone obligation ignores the second sentence's
language that "[t]he treatment accorded in these respects shall ... ," which ties the two
sentences of Article V(l) together. This phrase indicates that the second sentence is elucidating
the first sentence, explaining it and giving it specific content-a measurable standard, as a
minimum level that must be met. The two sentences are thus linked, with the second sentence
providing a method for concrete measurement of the first, rather than creating an additional
obligation. Iran's interpretation would ignore this essential context, in violation of the
customary international law principles of treaty interpretation embodied in Article 31 of the
Vienna Convention on the Law of Treaties.
12.42 Moreover, treatment of the first sentence as a "distinct obligation[]" from the second,
as Iran urges, would entail interpreting the first sentence as a requirement to permit transactions
without any limiting principle. If the first sentence were, in fact, so broad, the second sentence
with its narrower MFN standard would be superfluous. Again, such an interpretation would
only be plausible if the provision's two sentences were read in isolation, rather than in context,
as required under customary international law.
12.43 The fundamental flaw of Iran's interpretation is also evident from common sense and
practicality. Were the first, "shall be permitted," sentence to state an absolute requirement to
permit any disposition of any property in any circumstances, it would negate States' wellrecognized
authority to establish universally applicable rules of contract law and to regulate
commerce, as well as their authority to prohibit certain types of property transactions involving
illicit conduct, such as those in stolen or smuggled goods. Interpreting the Treaty as negating
such laws, and authorizing Iranian nationals to engage in transactions that would be illegal for
U.S. and other foreign nationals, would be an absurd and socially harmful result. Thus, Iran's
interpretation of the first sentence of Article V(l) as imposing an unbounded obligation cannot
be sustained.
12.44 Instead, reading the two sentences in light of each other, the MFN provision in the
second sentence supplies the clear standard for the first sentence's obligation. Iranian nationals
and companies in the United States are entitled to MFN treatment in this regard. The "in no
event" language means that at least MFN treatment is required, and that better treatment is
177
permissible. In sum, the key, measurable standard provided in Article V(l) is the MFN
standard stated in its second sentence. 764
(b) Iran Must Identify a Similarly Situated Comparator
12.45 As a crucial element of any MFN claim, a claimant must identify a similarly situated
comparator that has received more favorable treatment. Instead of doing so for its Article V(l)
claim, Iran has posed arguments as to why it need not do so. These arguments should not
prevail.
12.46 MFN clauses are described (as are national treatment clauses) as "relative standards"
of treatment, because their test relies on comparison to treatment of another person or entity: a
comparator. 765 The ordinary meaning of the Treaty text, particularly the words "no less
favorable than," underscores that the MFN standard is comparative, and thus requires a
comparator to determine what treatment is due.
12.4 7 Furthermore, as logic dictates, a comparator must be comparable, rather than
completely different. As a common-sense example, much different forms and degrees of
regulation would be appropriate for a large automotive plant in a major city than for a small
grocery store in a remote rural area, so an investor in one of those businesses is not entitled,
under an MFN or national treatment clause, to the same sort of regulation accorded to the other
business.
12.48 Iran claims that the lack of "in like circumstances" ( or a similar phrase) in the Treaty
of Amity's MFN provision justifies Iran's failure to identify a comparator.766 To the contrary,
much evidence supports the conclusion that a comparator must be similarly situated even where
764 This reading is further supported by the history of the Treaty, as illuminated by other treaties in the FCN
program. Of the roughly two dozen post-World War II U.S. FCN treaties, each has analogous provisions that
address property transactions, but the structure of Article V(l), with its "shall be permitted" introduction, occurs
in only one other treaty, between the United States and Ethiopia. All of the others state either MFN or national
treatment standards for each clause addressing the lease, purchase, or disposition of property. As the United
States contemporaneously explained, its Iran and Ethiopia treaties were intended as shorter versions of the
"standard FCN" treaty that contained fewer obligations, but with no significant change in the nature of the
obligations that they kept. Commercial Treaties with Iran, Nicaragua, and The Netherlands: Hearing Before the
S. Comm. on Foreign Relations, 84th Cong. 3 (1956) (statement of Thorsten V. K.alijarvi, Dep't of State) (U.S.
Annex 1); 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. 2 (1952) (statement of Harold F. Linder, Deputy Assistant Sec'y for Economic Affairs) (U.S. Annex 2).
The correct way to read Article V(l) in light of its history, then, is as setting an MFN test for the described
transactions.
765 See U.S. Counter-Memorial, 115.8 & n.490.
766 Iran's Reply, 17.28.
178
a treaty's MFN clause does not include "in like circumstances" language. The investment
treaty practice of many States, although no longer that of the United States, is not to include
"in like circumstances" in MFN provisions; a 2004 OECD paper pointed to the "European
model BIT" (Bilateral Investment Treaty) as an example of treaties whose MFN clauses lack
"in like circumstances" language, in contrast to "US and Canadian BITs."767 Some State
delegations, in the unsuccessful 1995-98 negotiations of a Multilateral Agreement on
Investments, asserted that "in like circumstances" is unnecessary in the draft's MFN clause
because it is implicit.768 The conclusion that "in like circumstances" is implicit where not
explicitly stated was also reached by the International Law Commission in its 1978 conclusions
on MFN clauses (regarding trade in goods),769 work done under the auspices ofUNCTAD,770
academic publicists,771 and arbitral tribunals interpreting provisions in the 1992 NorwayLithuania
BIT772 and the 1995 Turkey-Pakistan BIT.773
12.49 Accordingly, Iran needs to provide a comparator in like circumstances in order to make
an MFN claim under Article V(l).
1v. Application of Article V(l) to the Challenged Measures
12.50 In addition to the fact that Iran's claims under Article V(l) related to the treatment of
Bank Markazi must be dismissed because Bank Markazi is not a "company" within the
meaning of the Treaty of Amity, and is therefore outside the Article's scope,774 Iran's Article
V(l) claims must also fail for other reasons related to the specific U.S. measures that Iran has
767 Organisation for Economic Co-operation and Development [OECD], Directorate for Financial and Enterprise
Affairs, Most-Favoured-Nation Treatment in International Investment Law, OECD Working papers on
International Investment 2004/2, at 4 (2004) (U.S. Annex 420).
768 Organisation for Economic Co-operation and Development [OECD], Negotiating Group on the Multilateral
Agreement on Investment (MAI), The Multilateral Agreement on Investment: Commentary to the Consolidated
Text, at 11, OECD Doc. DAFFE/MAl(98)8/REV1 (April 22, 1998) (U.S. Annex 421).
769 International Law Commission, Draft Articles on Most-Favoured-Nation Clauses, Arts. 9 & 10, Comment 18,
U.N. Doc. A/33/10 (1978) (U.S. Annex 422).
770 U.N. Conf. on Trade and Development [UNCTAD], UNCTAD Series on Issues in International Investment
Agreements II: Most-Favoured-Nation Treatment, at xiii, 26, 53-54, U.N. Doc. UNCTAD/DIAE/IA/2010/1
(2010) (U.S. Annex 423).
771 KENNETH J. VANDEVELDE, BILATERAL INVESTMENT TREATIES 340-341 (2010) (U.S. Annex 424).
772 Parkerings-Compagniet AS v. Lithuania, ICSID Case No. ARB/05/8, Award 11362, 369,430 (Sep. 11, 2007)
(U.S. Annex 425).
773 Bayindir Insaat Turizm Ticaret Ve Sanayi A.$. v. Pakistan, ICSID Case No. ARB/03/29, Award (Merits)
11386, 389-390, 411 (Aug. 27, 2009) (U.S. Annex 426).
774 See supra Chapter 5.
179
challenged. The challenged U.S. measures, legislative, judicial, and executive, are addressed
separately below.
12.51 The legislative measures at issue in this case are part of a framework that is intended to
allow victims of terrorism to obtain, and collect on, judgments against State sponsors of
terrorism. Those legislative measures were applied by the U.S. courts in judicial proceedings
that Iran has likewise challenged, in particular proceedings by judgment holders attempting to
enforce their judgements against the assets of agencies or instrumentalities of Iran. In the
circumstances of this case, therefore, an appropriate comparator would be a company that is an
agency or instrumentality of another State sponsor of terrorism. Iran has not, however,
identified such a comparator, let alone shown that it was accorded better treatment than an
Iranian company. Iran's Article V(l) claim as to the legislative measures must therefore fail.
12.52 Turning to Executive Order 13599, this measure was necessitated by, among other
things, the United States' security interests in protecting against the deceptive practices of Bank
Markazi and other Iranian financial institutions.775 Iran's claims must fail because it has not
identified any foreign financial institutions that have been accorded more favorable treatment
than their Iranian counterparts despite engaging in similarly deceptive practices, such as
concealing transactions with sanctioned parties and facilitating terrorist activities and ballistic
missile capabilities.
12.53 In sum, Iran has failed to establish that any of the challenged measures are in breach of
Article V(l).
Section C: Iran Has Failed to Establish a Breach of Article VII(l)
12.54 Iran's Reply does not support its claim that the United States violated Article VII(l) of
the Treaty of Amity. Iran continues to assert a decontextualized, implausible reading of
paragraph 1 of Article VII. In addition, Iran's allegation in its Reply that the practical effects
of certain measures violate Article VII is untethered from any reading or legal analysis of the
article and unsustainable as a practical matter. These shortcomings are fatal to Iran's claims,
as addressed in greater depth below.
775 See, e.g., U.S. Counter-Memorial, ,r,r 11.8-11.10, 11.16.
180
1. Iran's Reply Fails to Support Iran's Implausible, Decontextualized Reading of
Article VII(l)
12.55 In the Counter-Memorial, the United States argued that Iran misinterpreted Article VII
by ignoring the provision's context and negotiating history.776 The United States argued that
Article VII, when read in the context of the paragraph 1 exceptions and paragraphs 2 and 3,
demonstrates that Article VII is limited in scope to exchange restrictions and that the measures
objected to by Iran were not exchange restrictions.777 The United States presented numerous
examples from the negotiating history of the Treaty to demonstrate that both Parties understood
Article VII to only concern exchange restrictions.778 Iran's Reply neither engages
meaningfully with the evidence presented by the United States nor provides a plausible context
for Iran's implausible reading of Article VIL This section first highlights Iran's failure to
address the ordinary meaning of Article VII in context before turning to the inadequacies of
Iran's treatment of the negotiating history.
(a) Iran Does Not Address the Ordinary Meaning of Article VII in Context
or the Negotiating History of Article VII
12.56 Iran's Reply fails to explain how Iran's interpretation of paragraph 1 of Article VII is
consistent with the rest of the article or the Treaty. Although Iran's Reply relies on only a
snippet of Article VII, paragraph 1 must be read in context, 779 with the full article. Article VII
of the Treaty provides 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,
776 U.S. Counter-Memorial, 116.1.
777 U.S. Counter-Memorial, 1 16.5.
778 U.S. Counter-Memorial, 11 16.7-.14.
779 As the Court observed in the Oil Plaiforms 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 Convention on the Law of Treaties. Oil
Plaiforms (Islamic Republic of/ran v. United States of America), 1996 I.C.J. 803,812,123 (Dec. 12).
181
dividends, commissions, royalties, payments for technical services, or
otherwise, land ( c) amounts for amortization of loans, depreciation of
direct investments 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.
12.57 In its Reply, Iran maintains its position that the ordinary meaning of paragraph 1 covers
any restriction on transfers of funds and is not limited in scope by the subsequent two
paragraphs, which only address exchange restrictions. 780 Iran does not explain or otherwise
contextualize why the Parties would only address exchange restrictions in paragraphs 2 and 3
of Article VII given the full range of potential restrictions on transfers of funds under Iran's
reading of paragraph 1. Nor does Iran explain why the clarifications found in paragraphs 2 and
3 would only be sensible for a subset of the restrictions that would be permitted by
subparagraphs (a) and (b) of paragraph 1 under Iran's preferred reading. Rather than provide
an interpretation that accounts for the context of the full Article VII, Iran suggests that its
preferred reading of a snippet of Article VII should be accepted as the ordinary meaning merely
because it, however implausible, is not absolutely precluded by logic.
12.58 Iran also fails to provide a plausible explanation in its Reply for the negotiating history
of the Treaty, which on its face reinforces the U.S. reading and provides no support for Iran's
overly broad interpretation of Article VIL Iran argues that there is nothing surprising or
material about the absence of anything in the negotiating history that supports its interpretation
of Article VII.781 For example, Iran offers no explanation for why the header "exchange
controls" was used to describe the relevant provisions during the negotiations. Iran merely
states that this header was not included in the final draft of the treaty. However, this was the
780 See Iran's Reply, 18.2.
781 See Iran's Reply, 1 8.5.
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case for all the discussion headers used during the negotiations and does not explain why the
Article VII portion of the negotiations were described as addressing exchange controls.
(b) Iran Does Not Provide a Plausible Account for its Implausible Reading
of Article VII
12.59 Taken together, Iran's efforts to refute discrete aspects of the U.S. interpretation of
Article VII aggregate to an entirely implausible account. Iran's assertions imply that, despite
the decision to establish an extraordinarily broad scope for the restrictions and exceptions in
paragraph 1, the Parties saw no need to address the alleged extraordinary scope of paragraph 1
in the subsequent paragraphs. Iran merely notes that there is no logical necessity to do so. Iran
does not explain why, despite spending a disproportionate amount of time (as compared to the
length of the text) discussing Article VII during treaty negotiations,782 the Parties saw no need
to discuss the extraordinary scope it claims for Article VII(l ). Nor does Iran provide an
explanation, sensible or otherwise, for why the Parties did not consider the possibility of
analogous provisions for non-exchange restrictions when discussing the subsequent paragraphs
of Article VII, which extensively address the application of the Treaty to exchange restrictions.
12.60 In sum, Iran's reading of Article VII(l) is implausible in the context of the article's
remaining provisions and contradicted by the article's negotiating history. For this reason,
Iran's claim that the United States violated Article VII of the Treaty should be rejected.
ii. Iran's Implausible Reading of Article VII(l) Lacks a Limiting Principle and Is
Therefore Flawed
12.61 In the Counter-Memorial, the United States pointed out that, even if Article VII(l) were
interpreted as Iran urges, Iran's claim would still fail because the challenged legislative
measures are not, in any sense, restrictions on the transfer of funds and Executive Order 13599
is excluded from the application of the Treaty of Amity pursuant to Article :XX(l )( c) and ( d).
Although, as discussed in Chapter 7 above, Iran has responded on the application of Article
XX(l) to Executive Order 13599, Iran has made little effort in its Reply to show how the
legislative measures could be a breach of Article VII(l), however it is read. Iran's sole
argument is the "practical point" that the measures purportedly have the effect of violating
Article VII. This point is, however, without textual support in the Treaty and proves too much.
12.62 Several activities that no reasonable person would argue violate Article VII have the
practical effect of restricting transfers of funds. As already pointed out in the U.S. Counter-
782 See, e.g., U.S. Counter-Memorial, ,r,r 16.7-16.12.
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Memorial, Iran's practical point would impugn the enforcement of any judgment under any
circumstances against an Iranian company.783 Iran suggests that this "hypothetical" case is "no
assistance,"784 but the U.S. argument does not present a hypothetical. The enforcement of
judgments is a standard part of the U.S. judicial process and, under Iran's application of Article
VII(l), Iranian companies would be entirely excluded from its operation in every circumstance,
regardless of the type of court judgment involved. This cannot be correct. And there are many
other examples of the absurdity of Iran's application of Article VII(l). Under Iran's
interpretation, Article VII would prohibit all manner of banking regulations, including criminal
anti-money-laundering laws, which have the practical effect ofrestricting transfers of funds to
jurisdictions and persons that raise red flags when banks engage in standard customer due
diligence. U.S. cooperation with anti-money laundering efforts by intergovernmental entities
such as the F ATF would also be problematic under Iran's practical effects standard, 785 as would
any law targeting the financing of international crimes. Iran does not (and cannot) offer any
justification for such a broad restriction.
12.63 Iran attempts to salvage its position on Article VII( 1) in the last sentence of the relevant
section of its Reply by asserting that general (i.e., non-Iranian-specific) restrictions on transfers
are not prohibited by Article VIL 786 But Iran cannot simply create a limiting principle from
whole cloth in order to save itself from the absurd consequences of its reading of Article VII( 1 ).
As an initial matter, Section 201 of TRIA and Section 1610(g) of the FSIA apply to all State
sponsors of terrorism, not solely to Iran, and so Iran's limiting principle would exclude them
from Article VII(l).787 More importantly, there is no basis in the text of Article VII(l) to
distinguish between judgment enforcement provisions of "general application" and those that
apply to Iranian companies. Either both are restrictions on the transfer of funds in breach of
Article VII(l )-which cannot be the case, for the reasons discussed---or neither is.
783 U.S. Counter-Memorial, ,i 16.16.
784 Iran's Reply, ,i 8.11.
785 F ATF has identified Iran as a high-risk jurisdiction for money laundering. Financial Action Task Force, HighRisk
Jurisdictions subject to a Call for Action (Feb. 21, 2020) (U.S. Annex 270). F ATF recommends that member
countries "apply enhanced due diligence, and in the most serious cases, . . . counter-measures to protect the
international financial system from the ongoing money laundering, terrorist financing, and proliferation financing
... risks emanating from [high-risk jurisdictions]." Id.
786 Iran's Reply, ,i 8.11.
787 See supra Chapter 8, Section A.
184
12.64 For all the foregoing reasons, Iran's claims concemmg an alleged violation of
Article VII of the Treaty should be rejected.
185
CHAPTER 13: ABUSE OF RIGHTS
Section A: Introduction and Overview
13 .1 As explained in the U.S. Counter-Memorial, 788 there are two grounds for the application
of the doctrine of abuse of rights in this case. The first is that Iran seeks to extend its rights
under the Treaty, a consular and commercial agreement, to circumstances that the Parties
plainly never intended them to address. The second is that Iran seeks to assert these rights for
an improper purpose. It invokes the Treaty to circumvent its obligations to make reparation to
U.S. victims of its State-sponsored terrorist acts.
13 .2 Iran advances narrow submissions in response to the United States' defense of abuse of
rights. It does not take issue with the existence of the doctrine or its status as a general principle
oflaw. 789 Nor does it appear to dispute the U.S. analysis of the conditions for its application, 790
merely adding glosses of its own.791 Instead, Iran focuses on the way in which the United
States seeks to invoke and apply the doctrine of abuse of rights in this particular case.
13 .3 Iran's principal contentions are two-fold. First, it argues that the United States' abuse
of rights defense is identical to its preliminary objection on abuse of process grounds, which
has been rejected by the Court.792 Second, Iran claims that the United States cannot overcome
the high evidential threshold for the doctrine's application. According to Iran, the U.S. defense
of abuse of rights is ''just as unsubstantiated" as its earlier preliminary objection.793 Both
arguments proceed on the express basis that the right in question is Iran's "procedural right" to
refer specific categories of disputes to the Court under Article XXI(2) of the Treaty of Amity. 794
13.4 These submissions are directed at the wrong target. The U.S. defense does not turn on
the proper scope or application of Article XXI(2) of the Treaty. It exclusively concerns Iran's
purported exercise of its substantive rights under the Treaty. A treaty party can only defend
based on an "abuse of rights" if and to the extent that the Court concludes that its counter-party
has rights under any or all of the provisions that are allegedly engaged in the circumstances of
788 U.S. Counter-Memorial, 1118.3, 18.10 and 18.12.
789 See Iran's Reply, fl 11.42-11.49.
790 See Iran's Reply, 111.51.
791 See, in particular, Iran's Reply, fl 11.44-11.46, addressed infra in Section C.
792 See, in particular, Iran's Reply, fl 11.33-11.34.
793 Iran's Reply, 111.40.
794 Iran's Reply, 1 11.39.
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the case.795 As noted above, both of the grounds justifying the U.S. invocation of the abuse of
rights defense require the Court to assess whether Iran's assertion of its substantive Treaty
rights engages the prohibition on exercising a right in a manner or for a purpose for which it
was not intended. They are "properly a matter for the merits. "796
13 .5 Against this background, the United States deals with the limited points made by Iran
in the sections that follow. Section B further addresses Iran's submission that the United States'
defense is indistinguishable from its abuse of process objection. Section C responds to Iran's
analysis of the circumstances in which the doctrine of abuse of rights is applicable. Section D
rebuts Iran's argument that the Court should reject the application of the doctrine on the facts.
Section B: Abuse of Rights Is a Distinct Defense
13.6 Iran seeks to characterize the United States' abuse of rights defense as a mere
"relabelling"797 of its preliminary objection on abuse of process grounds. In Iran's submission,
the United States now advances "the very same argument" that has already been rejected by
this Court at the preliminary objections phase.798 It seeks to draw parallels between the two
grounds on which the United States' defense is advanced in the present phase of the case, and
the arguments as originally advanced in the U.S. Preliminary Objections. 799 Iran also appears
to take issue with the United States' refinement of those arguments in its oral pleadings, in the
light of the Court's judgment in the Immunities and Criminal Proceedings case. 800
13.7 Once again, the Court should assess the arguments as advanced by the United States,
rather than as characterized by Iran. As was recognized in the Court's Preliminary Objections
Judgment,801 the United States took exception to Iran's invocation of the compromissory clause
of the Treaty of Amity in the extraordinary circumstances of this case. The United States
795 U.S. Counter-Memorial, 1118.1 and 18.8.
796 Immunities and Criminal Proceedings (Equatorial Guinea v. France), Preliminary Objections Judgment, 2018
I.C.J. 292, 1151 (June 6).
797 Iran's Reply, 1 11.33.
798 Iran's Reply, 111.34.
799 Iran's Reply, 111.34.
800 Iran's Reply, 1 11.35.
801 Preliminary Objections Judgment, 1 100 ("The Court notes that the United States initially raise two objections
to the admissibility of the Application, namely, first, that Iran's reliance on the Treaty to found the Court's
jurisdiction in this case is an abuse of right ... " (which was later clarified to be an objection ofabuse of process))
(emphasis added) and 1104 (" ... the United States submitted that the dispute did not fall within the scope of the
Treaty of Amity and that Iran could not therefore seek to found the jurisdiction of the Court on that instrument .
. . ") (emphasis added).
187
clarified that this took the form of an abuse of process objection, as the Court accepted. 802 In
the United States' submission, there was a "threshold issue of whether Iran can properly invoke
the Treaty for purposes of founding the jurisdiction of the Court in respect of a dispute that has
no proper roots in the Treaty."803 This issue turned on the proper scope of application of the
compromissory clause, as the United States expressly accepted in oral submissions:
It is our contention that the dispute that Iran brings to the Court
is a dispute that falls outside the intended scope of the
compromissory clause of the Treaty. Iran's endeavour to invoke
the compromissory clause to afford the Court jurisdiction to
address the dispute is thus an abuse of process. Iran's case
should accordingly be dismissed at this preliminary stage on
grounds of inadmissibility. 804
13.8 The United States accepts that Iran's assertion of jurisdiction under the Treaty's
compromissory clause was dispositively determined in the Court's Preliminary Objections
Judgment. But that is beside the point. The U.S. abuse of rights defense does not concern
Iran's exercise of its right to refer a dispute to the Court under Article XX:1(2) of the Treaty.
Rather, it concerns Iran's assertion of its rights to substantive protection under each of
Articles 111(1), 111(2), IV(l), IV(2), V(l), Vll(l), and X(l) of the Treaty, none of which was
engaged by the United States' abuse of process objection.805 This is not least because the
Court's assessment of their scope and operation in the circumstances of this case is plainly a
matter for the merits. 806
13.9 Iran nonetheless insists that "[t]he United States does not argue that the substantive
provisions invoked by Iran ... have been abused by Iran and that it should be held responsible
for such abuse, or even that Iran should be deprived of the benefit of such treaty rights."807 In
802 Preliminary Objections Judgment, ,r 104.
803 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Hearing
of October 8, 2018, 10am, p. 58, ,r 90 (Sir Daniel Bethlehem QC).
804 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Hearing
of October 8, 2018, 10am, p. 59, ,r 94 (Sir Daniel Bethlehem QC).
805 Certain Iranian Assets (Islamic Republic of Iran v. United States of America), Preliminary Objections, Hearing
of October 8, 2018, 10am, p. 59, ,r 92 (Sir Daniel Bethlehem QC) ("We do not here address individual provisions
of the Treaty.").
806 See Immunities and Criminal Proceedings (Equatorial Guinea v. France), Preliminary Objections Judgment,
2018 I.C.J. 292, ,r 151 (June 6) ("The Court considers that abuse of rights cannot be invoked as a ground of
inadmissibility when the establishment of the right in question is properly a matter for the merits. Any argument
in relation to abuse of rights will be considered at the stage of the merits of this case.").
807 Iran's Reply, ,r 11.38 ( emphasis in original).
188
so asserting, Iran both misapprehends the United States' position and the doctrine's true
operation.
13.10 Contrary to Iran's submission, the United States does indeed argue that Iran's
invocation of its substantive rights is abusive, as just explained and as the Counter-Memorial
makes perfectly clear. The United States similarly claims that Iran should not be permitted to
enjoy the benefit of those rights in the circumstances of this case. It is correct that the United
States does not rely on the doctrine of abuse of rights in support of a claim against Iran. If Iran
means to suggest that this fact renders the doctrine somehow irrelevant or unavailable, it is
incorrect to do so.
13 .11 While in some circumstances an abuse of rights may give nse to international
responsibility, an abuse of rights may not have that effect in all cases. Instead, as in this case,
it may operate as a fetter on the exercise of a right or privilege afforded under a treaty, whether
as an independent limitation on that right or privilege, or as a matter of the good faith
performance or interpretation of the treaty in question. 808 There is no limit on the use of the
prohibition of abuse of rights in a defensive manner, nor has Iran identified any. 809 It
accordingly does not follow from the fact that the United States has not sought to invoke Iran's
international responsibility that the prohibition is not directly engaged in the circumstances of
this case.
Section C: The Circumstances in Which the Doctrine May Be Applied
13.12 In its Reply, Iran does not take issue with any of the submissions advanced in the U.S.
Counter-Memorial as to the status or scope of the doctrine. 810 Instead, it confines itself to
making several short points in support of the broader-and uncontroversial-submission that
808 See, e.g., 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"). As to the principle of
pacta sunt servanda more broadly, see Gabcikovo-Nagymaros Project (Hungary/Slovakia), 1997 I.C.J. 7, 75, ,i
142 (Sep. 25).
809 See, e.g., France's invocation of the principle of abuse of rights as a defense to Equatorial Guinea's claim in
Immunities and Criminal Proceedings (Equatorial Guinea v. France), France's Counter-Memorial, December 6,
2018, Chapter 4.
810 Save for noting that the successful application of the doctrine in two cases in the investor-State context (Philip
Morris Asia Ltd. v. Commonwealth of Australia and Capital Financial Holdings Luxembourg SA v. Cameroon)
did "not demonstrate that this doctrine has evolved towards a broader application," which was a submission that
the United States had not in fact made. See Iran's Reply, ,i 11.48; U.S. Counter-Memorial, at 164 n.536.
189
the doctrine of abuse of rights has not been previously applied in an inter-State dispute. 811 The
following points are notable.
13 .13 First, Iran at no point contests the proposition that the doctrine of abuse of rights is a
general principle oflaw.812 Further, it expressly accepts that it is an application of the general
principle of good faith. 813
13.14 Second, as to its content, Iran recognizes that an abuse of rights encompasses a State's
exercise of its right "for an end different from that for which the right was created. "814 It is this
principle that has been recognized by the Permanent Court, 815 by Members of the Court, 816 and
by eminent scholars.817
13.15 Third, Iran refers to "strict conditions" that have been set by the Court, referring to the
judgment of the Permanent Court in Certain German Interests in Polish Upper Silesia
(Merits). 818 The United States accepts that there is a high threshold for an allegation of this
kind, which is reflected in the requirements of "clear evidence" and "exceptional
circumstances" that it directly acknowledged and applied in the Counter-Memorial.819 It
811 Iran's Reply, ,r 11.43.
812 Instead, it refers with apparent approval to the conclusion of an article in which it is argued that "abuse of
rights is a long-standing general principle oflaw .... " Michael Byers, Abuse of Rights: An Old Principle, A New
Age, 47 McGILL L.J. 389, 431 (2002) (U.S. Annex 238). See Iran's Reply, at 247 n.888.
813 Iran's Reply, ,r 11.43.
814 Iran's Reply, ,r 11.42. For the avoidance of doubt, the United States does not accept, if it be suggested, that
injury is a pre-condition to a State's reliance on the doctrine in all cases (as opposed to cases in respect of which
reparation for breach of the prohibition is sought).
815 See Free Zones of Upper Savoy and the District ofGex, 1932 P.C.I.J. (ser. A/B) No. 46, at 167 (Judgment of
June 7). See also Certain German Interests in Polish Upper Silesia (Merits), 1926 P.C.I.J. (ser. A) No. 7, at 30,
37-38 (May 25).
816 See, e.g., Certain Questions of Mutual Assistance in Criminal Matters (Djibouti v. France), 2008 I.C.J. 177,
279, ,r 6 (June 4) (Declaration of Judge Keith) ("Those principles [including the abuse of rights] require the State
agency in question to exercise the power for the purposes for which it was conferred and without regard to
improper purposes or irrelevant factors.").
817 See, e.g., BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY INTERNATIONAL COURTS AND TRIBUNALS
131 (1987) (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 .... ").
818 Iran's Reply, ,r 11.46.
819 U.S. Counter-Memorial, ,r,r 18.5-18.14. See Immunities and Criminal Proceedings (Equatorial Guinea v.
France), Preliminary Objections Judgment, 2018 I.C.J. 292, ,r 150 (June 6) and Separate Opinion of Judge
Donoghue, ,r 18; Preliminary Objections Judgment, ,r 113; Jadhav Case (India v. Pakistan), 2019 I.C.J. 418, ,r 49
(July 17); Immunities and Criminal Proceedings (Equatorial Guinea v. France), 2020 I.C.J., Separate Opinion of
Judge Sebutinde, ,r 34 (Dec. 11); Alleged Violations of the 1955 Treaty of Amity, Economic Relations and
Consular Rights (Islamic Republic of Iran v. United States of America), 2021 I.C.J., ,r 93 (Feb. 3); see also
Separate, Partly Concurring and Partly Dissenting, Opinion of Judge ad hoc Brower, 2021 I.C.J., ,r,r 9-10, 13 (Feb.
3).
190
equally accepts that an abuse must be proved and not presumed. It does not accept, however,
that the Permanent Court purported to lay down any general test in the passage on which Iran
relies, where the Court merely analyzes the facts pertaining to that particular case. 820
Moreover, the objective nature of the Court's inquiry in that case also underlines that proof of
bad faith or malice is not required. 821
Section D: Application to This Case
13.16 Iran's primary submission under this heading is that the United States has failed to
identify either "clear evidence in support of any underlying factual allegations" or any
"exceptional circumstances justifying the application of the doctrine. "822
13 .17 This surprising submission is made in complete disregard of the clear and compelling
evidence submitted with the U.S. Counter-Memorial of Iran's acts in breach of international
law.823 It also ignores the exceptional circumstances specifically identified in that connection,
namely that it is Iran's own wrongful conduct which led to the measures adopted by the United
States and which now Iran seeks to use to its own advantage before this Court. 824
13.18 Iran instead makes a range of points that seek to grapple with the two U.S. arguments
on abuse of rights. None of them is effective.
a. Iran begins with the U.S. argument that it asserts substantive rights under the Treaty
of Amity in circumstances far beyond the Parties' contemplation. It repeats the point
that the United States seeks to advance a jurisdictional objection at the merits phase.
On this occasion, Iran contends that the United States' argument replicates the
position that it took in the Oil Platforms case, rather than in the preliminary
objections phase of the present case. 825 However, the answer is no different. As
820 Iran's Reply, 1 11.46, referring to Certain German Interests in Polish Upper Silesia (Merits), 1926 P.C.I.J.
(ser. A) No. 7, at 37-38.
821 See farther Philip Morris Asia Ltd. v. Commonwealth of Australia, PCA Case No. 2012-12, Award on
Jurisdiction and Admissibility 1539 (Dec. 17, 2015) (U.S. Annex 244) ("It is equally accepted that the notion of
abuse does not imply a showing of bad faith. Under the case law, the abuse is subject to an objective test .... ");
Michael Byers, Abuse of Rights: An Old Principle, A New Age, 47 McGILL L.J. 389, 412 (2002) (U.S. Annex
238).
822 Iran's Reply, 111.51.
823 U.S. Counter-Memorial, Chapter 5.B.
824 U.S. Counter-Memorial, 118.13.
825 Iran's Reply, 1 11.54.
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already explained, the defense of abuse of rights asserted by the United States on the
merits of this case is of an entirely different character. 826
b. Iran argues that its claim cannot be alien to the commercial purposes of the Treaty
given that the Court has linked the definition of "companies" under the Treaty to
commercial and business activities.827 However, the relevant consideration is not
the manner in which the Treaty could be invoked, but the manner in which it is
actually invoked. As already explained in detail above, the assets at the heart of
Iran's claim were being used-as Bank Markazi has expressly admitted-"for the
classic central bank purpose of investing [its] currency reserves."828 There is no
basis on which Iran can credibly assert that it is invoking the Treaty for commercial
purposes.
c. Iran appears to assert that the nature and purpose of the U.S. measures is irrelevant
to an assessment of Iran's exercise of its substantive rights. 829 This is both artificial
and unprincipled. One cannot divorce Iran's exercise of its rights from the very
measures at issue.
d. In connection with the United States' second argument that its substantive Treaty
rights are invoked for an improper purpose, Iran argues that "the U.S. courts which
have been seised by Iranian companies never suggested that their intent was to
circumvent Iran's obligations vis-a-vis the United States."830 This is beside the
point. It is Iran's responsibility that is engaged, and it is Iran that seeks to circumvent
its obligations before this Court.
e. Iran seeks to draw a distinction between the Iranian State and the assets owned by
the companies at issue. 831 This is unconvincing. As already illustrated above, the
assets at issue in the main U.S. case relevant to Iran's claim, Peterson I, were the
currency reserves of Iran's Central Bank. Iran cannot credibly seek to create distance
between State instrumentalities and the State itself for this purpose.
826 See supra ,r,r 13.6-13.7.
827 Iran's Reply, ,r 11.56.
828 See supra Chapter 5, ,r 5.11. See also U.S. Counter-Memorial, ,r 9.13.
829 Iran's Reply, ,r 11.58.
830 Iran's Reply, ,r 11.61.
831 Iran's Reply, ,r 11.62.
192
f. Iran concludes by seeking to paint the United States' invocation of the doctrine of
abuse of rights as a cynical attempt to circumvent its own breaches of the Treaty. 832
This submission is entirely at odds with the factual circumstances of this case. Iran
has sponsored numerous terrorist attacks against U.S. nationals. Iran is now seeking
to avoid the consequences of those actions by relying on Treaty rights that were
plainly never intended for such use. It is difficult to conceive of a plainer abuse of
rights.
13.19 For all of these reasons, the United States submits that Iran is precluded from exercising
any right to substantive protection that the Court may find to be engaged in the circumstances
of this case.
832 Iran's Reply, ,r 11.63.
193
PART IV: CONCLUSION AND REQUEST FOR RELIEF
In Part IV, the United States briefly summarizes its case (Chapter 14), before explaining that
Iran's Reply has done nothing to address the flaws in its request for remedies (Chapter 15),
and, finally, reiterating the U.S. request for relief (Chapter 16).
CHAPTER 14: SUMMARY OF U.S. CASE
14.1 At the heart of this case is Iran's decades-long sponsorship of terrorist attacks on U.S.
nationals, including in particular the bombing of the U.S. Marine barracks in Beirut in 1983.
When victims sought to hold Iran accountable for its role in these attacks through litigation in
U.S. courts, Iran chose not to appear. When the victims eventually obtained judgments against
Iran and began seeking to enforce them, Iran never sought to have them set aside. Finally,
when Iran brought this case-which is predicated on the claim that the legal framework
underlying victims' efforts to obtain compensation is internationally wrongful-Iran had
almost nothing to say about its role in the attacks underlying the victims' judgments. Nor has
Iran deviated from its strategic silence in its Reply-most notably, it has nothing to say about
its role in the U.S. Marine barracks bombing.
14.2 This is not the conduct of a party that believes it has been wrongly accused. Rather, it
is a strategy intended to avoid accountability. Iran simply does not want to answer for its
actions yet audaciously hopes, by bringing this case, to recover funds that have been turned
over to the victims oflran-sponsored terrorism in U.S. courts without ever having to defend its
conduct on the merits. The Court must not let Iran get away with it.
14.3 Nor is there any reason for the Court to do so, because Iran's claims fail for multiple
reasons. First, Iran has only particularized claims with respect to 8 judgment enforcement
actions, and the Court should disregard its reference to numerous other judicial proceedings in
Attachments 1-4 to its Reply. Second, while Iran has attempted to add various measures
postdating the termination of the Treaty of Amity to its claims, the Court should reject this
effort because the Treaty's obligations ceased to be binding on the United States when
termination became effective. Thus, post-termination measures cannot be the basis of claims
for breach of the Treaty. Third, Iran's role in sponsoring the terrorist attacks that underlie the
judgments plaintiffs have enforced in Peterson, Weinstein, and other actions fundamentally
taints its claims under the doctrine of unclean hands. Fourth, Iran's claims under Articles III,
IV, and V with respect to Peterson I and II fail because those actions involved the assets of
Bank Markazi, which does not qualify as a "company" under the Treaty of Amity and is
194
therefore outside the scope of those articles. Fifth, the entities in five of the 8 enforcement
actions at issue did not exhaust their local remedies. Sixth, Iran's claims regarding Executive
Order 13599 are excluded from the treaty under Article :XX(l). Seventh, and finally, Iran's
claims are based on the misinterpretation and misapplication of Articles III, IV, V, VII, and X
of the Treaty of Amity (and, in any event, even if the Court were to find that Iran's rights under
these articles were infringed, allowing Iran to invoke such rights in these circumstances would
be to permit an abuse of rights).
14.4 For all these reasons, the Court should reject Iran's attempt to invoke a commercial and
consular treaty to impugn reasonable measures that the United States took to allow victims of
Iran-sponsored terrorism to hold Iran accountable and to obtain compensation for their injuries.
195
CHAPTER 15: OBSERVATIONS ON REMEDIES
15.1 In its Counter-Memorial, the United States highlighted the vagueness of Iran's
submissions on remedies. 833 Iran has done nothing to address the weaknesses in its pleaded
case. The United States will briefly address each of the three remedies that Iran is now
requesting from the Court: (i) cessation; (ii) reparation; and (iii) satisfaction.
15.2 Beginning with cessation, Iran acknowledges that the United States terminated the
Treaty of Amity but refuses to recognize that the termination of the Treaty prevents it from
seeking an order from the Court directing the United States to ''undo" the challenged
measures. 834 While Iran contends that the alleged ''wrong must cease" and argues that this
"obligation is unaffected by any termination of the Treaty,"835 Iran is wrong. Iran's sole
purported support for its position is Article 30 and the accompanying commentaries in the
International Law Commission's Articles on Responsibility of States for Internationally
Wrongful Acts ("State Responsibility Articles"). The first paragraph of the commentary to
Article 30, however, entirely undermines Iran's argument. Specifically, it provides that "[t]he
continuation in force of the underlying obligation is a necessary assumption of both [cessation
and assurances and guarantees of non-repetition], since if the obligation has ceased following
its breach, the question of cessation does not arise and no assurances and guarantees can be
relevant."836 This conclusion flows naturally from Article 13 of the State Responsibility
Articles, which provides that "[ a ]n act of State does not constitute a breach of an international
obligation unless the State is bound by the obligation in question at the time the act occurs."
The United States ceased to be bound by the Treaty of Amity after its termination and,
accordingly, there is no basis for the Court now to order the United States to withdraw the
challenged measures, however it rules on the merits of Iran's claims.
15.3 With respect to Iran's request for reparation, it remains entirely vague and
unsubstantiated. Iran has made no attempt to fill the holes in its case that the United States
833 U.S. Counter-Memorial, Chapter 19.
834 By contrast, Iran does appear to recognize that it is no longer entitled to the assurance of non-repetition that it
sought in its Memorial. Iran's Memorial, ,r 7 .15. Iran does not reiterate its request for such a remedy in its Reply.
835 Iran's Reply, ,r 12.13.
836 International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts,
with commentaries, Ch. I, Art. 30, Commentary ,r 1, U.N. Doc. A/CN.4/SER.A/2001/Add.l (Part 2) (emphasis
added). See also id. ,r 3 ("The tribunal in the 'Rainbow Warrior' arbitration stressed 'two essential conditions
intimately linked' for the requirement of cessation of wrongful conduct to arise, 'namely that the wrongful act has
a continuing character and that the violated role is still in force at the time in which the order is issued'." ( emphasis
added)).
196
identified in its Counter-Memorial, including the "fail[ure] to identify the full universe of
entities that have allegedly been affected by the U.S. measures or the specific harm that they
have suffered."837 At most, Iran's Reply identifies 8 actions by plaintiffs to enforce their
judgments against the assets of certain Iranian entities. While Iran has "reserved the right to
introduce and present to the Court in due course a precise evaluation of the reparations owed
by the United States,"838 this evaluation, should it prove necessary, must pertain to the breaches,
if any, that Iran has substantiated in its submissions on the merits and that the Court identifies
in its Judgment on the merits (including with respect to the nature of the breach, the measure(s)
at issue, and the Iranian entity(ies) implicated). Iran cannot use a further submission on the
quantum of reparation to seek to prove additional breaches (including with respect to different
Iranian entities) beyond any breaches that the Court identifies explicitly in this phase of the
case. Iran has had its opportunity to submit evidence in support of its claims of breach and it
is not entitled to another.
15.4 Turning to satisfaction, Iran contends that this remedy is necessary because "[t]here
is ... a great moral injury done to Iran that cannot be made good by restitution or
compensation."839 Iran's bare assertion of moral injury is, however, no substitute for evidence
or argument substantiating such an injury. 840 Again, it is essential for the Court to keep in mind
the context of the challenged measures. The judgments that plaintiffs have enforced in U.S.
courts against the property oflran's agencies and instrumentalities arose out of Iran-sponsored
acts of terrorism. Iran did not contest its sponsorship of these terrorist acts in U.S. courts and,
as discussed above, barely engages with the issue in this case. Accordingly, regardless of how
the Court views the merits of Iran's claims, it is inconceivable that the legislative and executive
measures the United States implemented to facilitate the efforts of victims of terrorism to obtain
compensation from the agencies and instrumentalities of Iran, where Iran itself refused to
provide such compensation, did a "great moral injury" to Iran.
837 U.S. Counter-Memorial, 1119.3-19.5.
838 Iran's Reply, 112.16.
839 Iran's Reply, 112.15.
840 Iran provided no more support for this assertion in its Memorial, where it likewise addressed the justification
for its request for satisfaction in a single sentence. Iran's Memorial, 17.25.
197
CHAPTER 16: REQUEST FOR RELIEF
16.1 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(l)(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.
198
Respectfully submitted,
Richard C. Visek
Agent of the United States of America
May 17, 2021
199
CERTIFICATION
I, Richard C. Visek, Agent of the United States of America, hereby certify that the copies of
this pleading and all documents annexed to it are true copies of the originals and that all
translations submitted are accurate.
-----
Richard C. Visek
Agent of the United States of America
May 17, 2021
200
LIST OF ANNEXES ACCOMPANYING THE REJOINDER
May 17, 2021
VOLUME I
ANNEX DESCRIPTION
254. International Law Commission, Draft Articles on Responsibility
of States for Internationally Wrongful Acts, with commentaries,
U.N. Doc. A/CN.4/SER.A/2001/Add.1 (Part 2) (2001) [excerpt]
255. Criminal Indictment, United States of America v. Al-Mughassil,
Case No. 01-228-A (E.D. Va. June 1, 2001)
256. Press Release, U.S. Dep't of Justice, Attorney General
Statement (June 21, 2001)
257. Dale Gavlak, "Lebanese Bristle Over Iran Commander's
Comments Regarding Hezbollah Missile Capabilities." Voice of
America (Jan. 4, 2021)
258. Corr. [Court of First Instance] Antwerp, Ct. AC8, Feb. 4, 2021,
20A003763 (U.S. Dep't of State trans., 2021)
259. Steven Erlanger, "Iranian Diplomat Is Convicted in Plot to Bomb
Opposition Rally in France," N.Y. Times (Feb. 4, 2021)
260. Daniel Boffey, "Belgian Court Sentences Iranian Diplomat to
20 Years Over Bomb Plot," The Guardian (Feb. 4, 2021)
261. Samuel Petrequin, "Iranian Diplomat Covicted of Planning
Attack on Opposition, (Feb. 4, 2021)
262. Press Release, U.S. Department of Justice, Two Individuals
Plead Guilty for Working on Behalf oflran (Nov. 6, 2019)
263. "Sweden Charges Man with Spying on Ahwazi Community for
Iran," Reuters (Nov. 6, 2019)
264. "Norwegian Found Guilty of Spying for Iran in Denmark,"
Reuters (June 26, 2020)
265. Elian Peltier, "Iran Issues Death Sentence for Opposition
Journalist," N.Y. Times (June 30, 2020)
266. Press Release, Federal Foreign Office of Germany, "Federal
Foreign Office on the Execution of the Blogger Ruhollah Zam,"
(Dec. 12, 2020)
201
ANNEX DESCRIPTION
267. Statement by the Ministry for Europe and Foreign Affairs
Spokesperson, French Embassy in London, Iran - Execution of
Ruhollah Zam (Dec. 12, 2020)
268. Press Statement, European External Action Service, "Iran:
Statement by the Spokesperson on the execution of Mr.
Ruhollah Zam," (Dec. 12, 2020)
269. Statement, U.N. Office of the High Commissioner for Human
Rights, "Iran: UN Experts condemn execution of Ruhollah
Zam," (Dec. 14, 2020)
270. Financial Action Task Force, High-Risk Jurisdictions Subject to
a Cal/for Action -21 February 2020 (Feb. 21, 2020)
271. Financial Action Task Force, High-Risk Jurisdictions Subject to
a Call for Action - 23 October 2020 (Oct. 23, 2020)
272. U.N. Security Council, Eighth Report of the Secretary-General
on the Implementation of Security Council Resolution 2231
(2015), U.N. Doc. S/2019/934 (Dec. 20, 2019)
273. U.N. Security Council, Ninth Report of the Secretary-General
on the Implementation of Security Council Resolution 2231
(2015), U.N. Doc. S/2020/531 (June 11, 2020)
274. Aryeh v. Iran, Case No. 266, Award No. 583-266-3 (Sep. 25,
1997), 33 IRAN-U.S. CL. TRIB. REP. 368
275. Sanum Investments v. Lao People's Democratic Republic, PCA
Case No. 2013-13, Award (Aug. 6, 2019) [excerpt]
276. Glencore International AG v. Republic of Colombia, ICSID
Case No. ARB/16/6, Award (Aug. 27, 2019) [excerpt]
277. GPF v. Republic of Poland, SCC Arbitration V 2014/168, Final
Award (Apr. 29, 2020) [excerpt]
278. Patel Engineering v. Mozambique, PCA Case No. 2020-21,
Respondent's Motion for Bifurcation (Nov. 20, 2020)
202
VOLUME II
ANNEX DESCRIPTION
279. Landesbank Baden-Wiirttemberg v. Kingdom of Spain, ICSID
Case No. ARB/15/45, Decision on the Second Proposal to
Disqualify all Members of the Tribunal (Dec. 15, 2020)
[excerpt]
280. Civil Code of the Czech Republic (Feb 3, 2012) [excerpt]
281. Bertout v. Saffran (2019) QCCS 4367 (Oct. 22) (Quebec
Superior Court)
282. M. CHERIF BASSIOUNI, "A Functional Approach to General
Principles of International Law" 11 MICH. J. INT'L L. 768, 788-
789 (1990)
283. Protocol, France-Venezuela, Feb. 27, 1903, Vol. XR.I.A.A. 3
(1903-1905)
284. Aroa Mines (Limited) Case - Supplementary Claim, Vol. IX
RI.A.A. 402 (1903) [excerpt]
285. Convention on Adjustment of Claims, U.S.-Ecuador, Nov. 25,
1862, 13 Stat. 631
286. BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY
INTERNATIONAL COURTS AND TRIBUNALS (1987) [excerpt]
287. John Dugard, Special Rapporteur, International Law
Commission, Sixth Report on Diplomatic Protection, U.N. Doc.
NCN.4/546 (Aug. 11, 2004)
288. PATRICK DUMBERRY, "The Clean Hands Doctrine as a General
Principle oflnternational Law," 21 J. WORLD INv. & TRADE 489
(2020)
289. JAMES CRAWFORD, BROWNLIE'S PRINCIPLES OF PUBLIC
INTERNATIONAL LA w (9th ed. 2019) [excerpt]
290. Ceskoslovenska Obchodni Banka, a.s. v. The Slovak Republic,
ICSID Case No. ARB/97/4, Decision of the Tribunal on
Objections to Jurisdiction (May 24, 1999) [excerpt]
291. Sergei Paushok, CJSC Golden East Company and CJSC
Vostokneftegaz Company v. The Government of Mongolia,
UNCITRAL, Award on Jurisdiction and Liability (Apr. 28,
2011) [excerpt]
203
ANNEX DESCRIPTION
292. AIG Capital Partners v. Kazakhstan, [2005] EWHC (Comm)
2239
293. NV Exploitatie-Maatschappij Bengkalis v. Bank Indonesia, 65
I.LR. 348 (Netherlands, Court of Appeal of Amsterdam 1963)
294. Blagojevic v. Bank of Japan, 65 I.LR. 63 (France, Court of
Cassation 197 6)
295. International Law Commission, Draft Articles on Diplomatic
Protection, with commentaries, U.N. Doc. A/61/10 (2006)
[excerpt]
296. Ambiente Ufficio S.p.A. v. Argentine Republic, ICSID Case No.
ARB/08/09, Decision on Jurisdiction and Admissibility (Feb. 8,
2013) [excerpt]
297. Arbitration under Article 181 of the Treaty ofNeuilly, Principal
Question Judgment, etc., 28 AM. J. INT'L L 773 (1934)
298. Republic of Sudan v. Harrison, 139 S. Ct. 1048 (2019)
299. Hausler v. JP. Morgan Chase Bank NA., 770 F.3d 207 (2d Cir.
2014)
300. Villoldo v. Castro Ruz, 821 F.3d 196 (1st Cir. 2016)
301. Jerez v. Republic of Cuba, 775 F.3d 419 (D.C. Cir. 2014)
302. CONCISE OXFORD ENGLISH DICTIONARY 1212 (11 th ed. 2008)
[excerpt]
303. Mutual Defense Assistance Act of 1951, Pub. L 213, 22 U.S.C.
1611 et seq. (1964)
304. Harold J. Berman and John R. Garson, United States Export
Controls -Past, Present, and Future, 67 COLUM. L REV. 791
(1967)
VOLUME III
ANNEX DESCRIPTION
305. 18 Fed. Reg. 2079 (Apr. 14, 1953)
306. Weinstein v. Islamic Republic of Iran, 624 F. Supp. 2d 272
(E.D.N.Y. 2009)
204
ANNEX DESCRIPTION
307. Weinstein v. Islamic Republic of Iran, 299 F. Supp. 2d 63
(E.D.N.Y. 2004)
308. Weinstein v. Islamic Republic of Iran, 609 F.3d 43 (2d Cir.
2010)
309. Docket, Weinstein v. Islamic Republic of Iran, 12-cv-03445
(E.D.N.Y. Jul.12, 2012) [excerpt]
310. Bennett v. Islamic Republic of Iran , 604 F. Supp. 2d 152
(D.D.C. 2009)
311. Order, Bennett v. Islamic Republic of Iran, Case No. 11-cv-5807
(N.D. Cal. Apr. 24, 2020), ECF No. 210
312. Affidavit of Service of Judgment upon Defendant, Bennett v.
Islamic Republic of/ran, Case No. 03-cv-1486 (D.D.C. Jan. 24,
2011), ECFNo. 51-1
313. Complaint, Bennett v. Islamic Republic of Iran, Case No. 11-cv-
5807 (N.D. Cal. Dec. 2, 2011)
314. Federal Register Notice, 72 Fed. Reg. 62,520 (Nov. 5, 2007)
315. Summons, Bennett v. Islamic Republic of Iran, Case No. 11-cv-
5807 (N.D. Cal. Mar. 21, 2012), ECF No. 45
316. Clerk's Notice of Entry of Default, Bennett v. Islamic Republic
of Iran, Case No. 11-cv-5807 (N.D. Cal. Apr. 26, 2012), ECF
No. 79
317. Bennett v. Islamic Republic of Iran, Case No. l 1-cv-5807 (N.D.
Cal. June 2012), ECF Nos. 100, 101, 103, 106, 107
318. Stipulation & Order Vacating Default, Bennett v. Islamic
Republic of Iran, Case No. 11-cv-5807 (N.D. Cal. July 5, 2012),
ECFNo. 109
319. Orders, Bennett v. Islamic Republic of Iran, 13-15442 (9th Cir.),
ECF Nos. 16, 46, 87
320. Motion to Quash Writs of Attachment by United States of
America, Bennett v. Islamic Republic of Iran, Case No. 03-cv-
1486 (D.D.C. July 18, 2008), ECF No. 34
321. Corrected Brief for Appellee United States, Bennett v. Islamic
Republic of Iran, Case No. 09-5147 (D.C. Cir. Dec. 1, 2009),
Doc. 1218295
205
ANNEX DESCRIPTION
322. Brief for the United States as Amicus Curiae, Bennett v. Islamic
Republic of Iran, 825 F.3d 949 (9th Cir. 2016) (No. 13-15442),
ECFNo. 82
323. Levin v. Bank of New York, Case No. 09-cv-5900, 2011 WL
812032 (S.D.N.Y. Mar. 4, 2011)
324. Order Granting Motion Authorizing Judgment Creditors to
Pursue Attachment in Aid of Execution and Execution of
December 22, 2006 Judgment, Heiser v. Islamic Republic of
Iran, 00-cv-2329 (D.D.C. Feb. 7, 2008), ECF No. 137
325. Order Granting Motion Authorizing Judgment Creditors to
Pursue Attachment in Aid of Execution of September 30, 2009
Judgment, Heiser v. Islamic Republic of Iran, 00-cv-2329
(D.D.C. May 10, 2010), ECF No. 158
326. Order Re Notice & Service of Process, Levin v. Bank of New
York, Case No. 09-cv-5900 (S.D.N.Y. Jan. 25, 2010), ECF No.
40
327. Declaration of J. Kelley Nevling in Support of Bank of New
York Mellon's Response to Plaintiffs' Motion for Partial
Summary Judgment, Levin v. Bank of New York, Case No. 09-
cv-5900 (Sep. 15, 2010), ECF No. 264
328. JP Morgan's Third-Party Complaint Against Wire Transfer
Parties, Levin v. Bank of New York, Case No. 09-cv-5900 (Dec.
31 , 2009), ECFNo. 61
329. Bank of New York Mellon's Third-Party Complaint against
Wire Transfer Parties, Levin v. Bank of New York, Case No. 09-
cv-5900 (Dec. 31, 2009), ECF No. 62
330. Memorandum of Law of Citibank, N.A. and JPMorgan Chase
Bank, N .A. in Response to Plaintiffs' Partial Motion for
Summary Judgment, Levin v. Bank of New York, Case No. 09-
cv-5900 (Sep. 15, 2010), ECF No. 265
VOLUMEIV
ANNEX DESCRIPTION
331. Levin v. Bank of New York Mellon, Case No. 09-cv-5900, 2013
WL 5312502 (S.D.N.Y. Sep. 23, 2013)
206
ANNEX DESCRIPTION
332. Amended Scheduling Order Authorizing Additional Pleadings
and Governing and Scheduling Further Proceedings, Levin v.
Bank of New York Mellon, Case No. 09-cv-5900, (Sep. 16,
2011), ECF No. 764-1
333. Order Concerning Notice To and Service On Third-Parties,
Heiser v. Bank of Tokyo Mitsubishi UFJ, New York Branch,
Case No. l 1-cv-1601 (S.D.N.Y. Aug. 24, 2011), ECF No. 25
334. Heiserv. BankofTokyoMitsubishi UFJ, New York Branch, 919
F. Supp. 2d 411 (S.D.N.Y. 2013)
335. Third-Party Petition in Interpleader, Heiser v. Bank of Baroda,
New York Branch, Case No. 11-cv-1602 (S.D.N. Y. Apr. 11,
2011), ECF No. 11
336. Heiser v. Bank of Baroda, New York Branch, Case No. 11-cv-
1602, 2013 WL 4780061 (S.D.N.Y. July 17, 2013)
337. Order Concerning Notice to and Service on Third-Parties,
Heiser v. Bank of Baroda, New York Branch, Case No. 11-cv-
1602 (S.D.N.Y. Aug. 9, 2011), ECF No. 39
338. Heiser v. Islamic Republic of Iran, 807 F. Supp. 2d 9 (D.D.C.
2011)
339. Answer of Bank of Baroda, Heiser v. Bank of Baroda, New
York Branch, Case No. 11-cv-1602 (S.D.N.Y. Apr. 8, 2011),
ECFNo. 10
340. Answer of Sprint, Heiser v. Islamic Republic of/ran, Case No.
00-cv-2329 (D.D.C. June 21, 2010), ECF No. 165
341. Answer of Citibank, Levin v. Bank of New York, Case No. 09-
cv-5900 (S.D.N.Y. Oct. 23, 2009), ECF No. 44
342. Answer of Societe Generale, Levin v. Bank of New York, Case
No. 09-cv-5900 (S.D.N.Y. Oct. 23, 2009), ECF No. 45
343. Answer of JP Morgan, Levin v. Bank of New York, Case No. 09-
cv-5900 (S.D.N.Y. Oct. 23, 2009), ECF No. 54
344. Answer ofBNY Mellon, Levin v. Bank of New York, Case No.
09-cv-5900 (S.D.N.Y. Oct. 23, 2009), ECF No. 56
345. Calderon-Cardona v. Bank of New York Mellon, 770 F.3d 993
(2d Cir. 2014)
346. Levin v. Bank of New York, 602 F. App'x 37 (May 11, 2015)
207
ANNEX DESCRIPTION
347. Order, Levin v. Bank of New York Mellon, Case No. 09-cv-5900
(S.D.N.Y. Aug. 20, 2015), ECF No. 1065
348. Letter from U.S. Department of Justice to Hon. Robert P.
Patterson, Levin v. Bank of New York Mellon, Case No. 09-cv-
5900 (S.D.N.Y. Oct. 28, 2014), ECF No. 1035
349. Levin v. Bank of New York Mellon, Case No. 09-cv-5900, 2017
WL 4863094 (S.D.N.Y. Oct. 27, 2017)
350. Levin v. JPMorgan Chase Bank, NA., 751 F. App'x 143 (2d
Cir. 2018)
351. Statement of Interest of the United States, Heiser v. Islamic
Republic of Iran, 00-cv-2329 (D.D.C. Aug. 3, 2012), ECF No.
230
352. Response to the Statement of Interest of the United States,
Heiser v. Islamic Republic of Iran, 00-cv-2329 (D.D.C. Aug.
17, 2012), ECF No. 231
353. Heiser v. Islamic Republic of Iran, 885 F. Supp. 2d 429 (D.D.C.
2012)
354. Heiser v. Islamic Republic of Iran, 735 F.3d 934 (D.C. Cir.
2013)
355. Maaloufv. Islamic Republic of/ran, 923 F.3d 1095 (D.C. Cir.
2019)
356. Greenlaw v. United States, 554 U.S. 237 (2008)
357. Havlish v. bin Laden (In re Terrorist Attacks on September 11,
2001), 2011 WL 13244047 (S.D.N.Y. 2011)
358. Affidavit of Service, Exhibit C, Havlish v. bin Laden, Case No.
1:02-cv-00305-JR (D.D.C. Nov. 1, 2002), ECF No. 35-3
VOLUMEV
ANNEX DESCRIPTION
359. Clerk's Certificates of Mailing of Summons & Complaint,
Havlish v. bin Laden, Case No. 03-cv-09848-GBD-SN
(S.D.N.Y. Mar. 18, 2005), ECF Nos. 21, 319-334, 340-354
208
ANNEX DESCRIPTION
360. Briefs for the United States as Amicus Curiae Supporting
Petitioner, Sudan v. Harrison, 139 S. Ct. 1048 (2019) (No. 16-
1094)
361. Motion of the Solicitor General for Leave to Participate in Oral
Argument as Amicus Curiae and for Divided Argument, Sudan
v. Harrison, 139 S. Ct. 1048 (No. 16-1094)
362. Second Amended Complaint, Havlish v. bin Laden, Case No.
03-cv-09848-GBD-SN (S.D.N.Y. Sept. 7, 2006), ECF No. 214
[excerpt]
363. Report and Recommendation to the Hon. George B. Daniels,
Havlish v. bin Laden, Case No. 03-cv-09848-GBD (S.D.N.Y.
July 30, 2012), ECFNo. 314
364. D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006)
365. Amaya v. Logo Enterprises, LLC, 251 F. Supp. 3d 196 (D.D.C.
2017)
366. Force v. Islamic Republic of/ran, 464 F. Supp. 3d 323,357
(D.D.C. 2020)
367. Owens v. Republic of Sudan, 864 F.3d 751 (D.C. Cir. 2017)
368. List of Exhibits, Havlish v. bin Laden, Case No. 03-cv-09848-
GBD-SN (S.D.N.Y. 2011), ECF No. 276
369. Memorandum Decision and Order, Havlish v. bin Laden, Case
No. 03-cv-09848-GBD (S.D.N.Y. Oct. 3, 2012), ECF No. 316.
VOLUME VI
ANNEX DESCRIPTION
370. Havlish v. bin Laden, Case No. 03-cv-09848-GBD (S.D.N.Y.
Feb. 2012), ECF Nos. 302,303,306
371. Republic of Kazakhstan v. Stati, 325 F.R.D. 507 (D.D.C. 2018)
372. First Fidelity Bank, NA. v. Government of Antigua & Barbuda-
Permanent Mission, 877 F .2d 189 (2d Cir.1989)
373. Friends Christian High School v. Geneva Financial
Consultants, 321 F.R.D. 20 (D.D.C. 2017)
209
ANNEX DESCRIPTION
374. Organisation for Economic Co-operation and Development
[OECD], 1967 Draft Convention on the Protection of Foreign
Property, reprinted in 71.L.M. 117 (1968) [excerpt]
375. Organisation for Economic Co-operation and Development
[OECD], Committee on International Investment &
Multinational Enterprises, Intergovernmental Agreements
Relating to Investment in Developing Countries, Doc. No. 84/14
(May 27, 1984) [excerpt]
376. Treaty of Friendship, Commerce and Navigation between the
United States and Italian Republic, Feb. 2, 1948, T.I.A.S. 1965;
79 U.N.T.S. 171 (entered into force, 26 July 1949)
377. Tradex Hellas S.A. v. Albania, ICSID Case No. ARB/94/2,
Award (Apr. 29, 1999) [excerpt]
378. BIN CHENG, GENERAL PRINCIPLES OF LAW AS APPLIED BY
INTERNATIONAL COURTS AND TRIBUNALS (1987) [excerpt]
379. Marvin Roy Feldman Karpa v. United Mexican States,
NAFTA/ICSID Case No. ARB(AF)/99/1 , Award (Dec. 16,
2002) [excerpt]
380. Cargill Inc. v. United Mexican States, NAFTA/ICSID Case No.
ARB(AF)/05/2, Award (Sep. 18, 2009) [excerpt]
381. International Law Commission, Draft Conclusions on
Identification of Customary International Law, with
commentaries, U.N. Doc. A/73/10 (2018) [excerpt]
382. THE STATUTE OF THE INTERNATIONAL COURT OF JUSTICE
(Andreas Zimmerman et al. eds., 2d ed. 2012) [excerpt]
383. National Grid PL.C v. Argentine Republic,
UNCITRAL/ Agreement between the Government of the United
Kingdom of Great Britain and Northern Ireland and the
Government of the Argentine Republic for the Promotion and
Protection oflnvestments, Award (Nov. 3, 2008) [excerpt]
384. Eli Lilly & Co. v. Government of Canada, Case No.
UNCT/14/2, Counter-Memorial of Canada (Jan. 27, 2015)
[excerpt]
385. Aven v. Costa Rica, ICSID Case No. UNCT/15/3, Respondent's
Post-Hearing Brief (Mar. 13, 2017) [ excerpt]
210
VOLUME VII
ANNEX DESCRIPTION
386. Spence Int 'l Investments, et al. v. The Republic of Costa Rica,
ICSID Case No. UNCT/13/2, Submission of El Salvador, (Apr.
17, 2015)
387. TECO Guatemala Holdings, LLC v. Guatemala, ICSID Case
No. ARB/10/23, Non-Disputing Party Submission of Honduras,
(Oct. 5, 2012) (U.S. Dep't of State trans., 2021) [excerpt]
388. Eli Lilly and Company v. Government of Canada, Case No.
UNCT/14/2, Submission of Mexico (Mar. 18, 2016)
389. Comprehensive and Progressive Agreement for Trans-Pacific
Partnership, Mar. 8, 2018 [excerpt]
390. UNCTAD, Investment Policy Hub, Status of Comprehensive
and Progressive Agreement for Trans-Pacific Partnership
391. U.K. Department for International Trade, Formal Request to
Commence U.K. Accession Negotiations to Comprehensive and
Progressive Agreement for Trans-Pacific Partnership (Feb. 1,
2021)
392. Methanex Corporation v. United States of America,
NAFTA/UNCITRAL, Final Award on Jurisdiction and Merits,
(Aug. 3, 2005) [excerpt]
393. 1 FLETCHER CYCLOPEDIA OF THE LAW OF CORPORA TIO NS § 41
(2020)
394. TSA Spectrum de Argentina S.A. v. Argentine Republic, ICSID
Case No. ARB/05/05, Award (Dec. 19, 2008) [excerpt]
395. GARY BORN, INTERNATIONAL COMMERCIAL ARBITRATION (2nd
ed. 2014) [excerpt]
396. GE Energy Power Conversion France SAS Corp. v. Outokumpu
Stainless USA, LLC, 140 S. Ct. 1637 (2020)
397. Vantaan Kaupunki v. Sansk Industrial Solutions Oy, NCC
Industry Oy, Asfaltmix Oy, Case C-724/17, Judgment of the
European Court of Justice (Mar. 14, 2019)
398. Urbaser S.A. and Consorcio de Aguas Bilbao Biskaia, Bilbao
Biskaia Ur Partzuergoa v. Argentine Republic, Spain-Argentina
BIT/ICSID Case No. ARB/07/26, Award (Dec. 8, 2016)
[excerpt]
211
ANNEX DESCRIPTION
399. Saluka Investments BV (The Netherlands) v. The Czech
Republic, UNCITRAL, Partial Award (Mar. 17, 2006) [excerpt]
400. PSEG Global Inc. and Kanya Ilgin Electrik Uretim ve Ticaret
Sirketi v. Republic of Turkey, U.S.-Turkey BIT/ICSID Case No.
ARB/02/5, Award (Jan. 19, 2007) [excerpt]
401. Joan Micula, et al. v. Romania, Sweden-Romania BIT/ICSID
Case No. ARB/05/20, Award (Dec. 11, 2013) [excerpt]
402. Total, S.A. v. Argentine Republic, France-Argentina BIT/ICSID
Case No. ARB/04/01, Decision on Liability (Dec. 27, 2010)
[excerpt]
VOLUME VIII
ANNEX DESCRIPTION
403. Pitman B. Potter, International Legislation on the Treatment of
Foreigners, 24 AM. J. INT'L L. 748 (1930)
404. Edwin M. Borchard, "Responsibility of States, " at the Hague
Codification Conference, 24 AM. J. INT'L L. 517 (1930)
405. JAMES CRAWFORD, STATE RESPONSIBILITY: THE GENERAL PART
(2013) [excerpt]
406. Telegram from U.S. Department of State to U.S. Embassy,
Addis Ababa (Aug. 28, 1951)
407. Telegram from U.S. Department of State to U.S. Embassy,
Tehran (Nov. 13, 1954)
408. Agreement on the Reciprocal Promotion and Protection of
Investments, art. 1(1), France-Argentina, July 3, 1991, 1728
U.N.T.S. 298; Agreement on the Reciprocal Promotion and
Protection oflnvestments, art. 1(2), Argentina-Spain, Oct. 3,
1991, 1699 U.N.T.S. 202; Agreement for the Promotion and
Protection for Investments, art. l(a), United Kingdom-
Argentina, Dec. 11, 1990, 1765 U.N.T.S. 34); and Agreement
on Encouragement and Reciprocal Protection of Investments,
art. l(a), Netherlands-Czech and Slovak Federal Republic, Apr.
29, 1991, 2242 U.N.T.S. 224
409. U.S. Model Bilateral Investment Treaty (2004) [excerpt]
410. U.S. Model Bilateral Investment Treaty (2012) [excerpt]
212
ANNEX DESCRIPTION
411. United States-Mexico-Canada Agreement, Annex 14-B,
Expropriation, U.S.-Can.-Mex., Nov. 30, 2018
412. EU-Canada Comprehensive Economic and Trade Agreement,
Annex 8-A, Expropriation, Oct. 30, 2016, 2017 O.J. (L 11)
413. EU-Singapore Investment Protection Agreement, Annex 1,
Expropriation, Oct. 19, 2018, COM(2018) 194 final, 2019 O.J.
(L 294)
414. Modernisation of the Trade Part of the EU-Mexico Global
Agreement, Annex on Expropriation, Apr. 21, 2018
415. Canada-Colombia Free Trade Agreement, Annex 811, Can.-
Col., Nov. 21, 2008, Can. T.S. 2011 No. 11
416. Krederi Ltd. v. Ukraine, ICSID Case No. ARB/14/17, Award
(July 2, 2018) [excerpt]
417. Garanti Koza LLP v. Turkmenistan, ICSID Case No.
ARB/11/20, Award (Dec. 19, 2016) [excerpt]
418. CAMPBELL MCLACHLAN ET AL., INTERNATIONAL INVESTMENT
ARBITRATION - SUBSTANTIVE PRINCIPLES (2d ed. 2017)
[excerpt]
419. Extracts from Bloomberg regarding Bank Markazi Security
Entitlements
420. Organisation for Economic Co-operation and Development
[OECD], Directorate for Financial and Enterprise Affairs, Most-
Favoured-Nation Treatment in International Investment Law,
OECD Working papers on International Investment 2004/2
421. Organisation for Economic Co-operation and Development
[OECD], Negotiating Group on the Multilateral Agreement on
Investment (MAI), The Multilateral Agreement on Investment:
Commentary to the Consolidated Text, OECD Doc.
DAFFE/MA1(98)8/REV1 (Apr. 22, 1998)
422. International Law Commission, Draft Articles on Most-
Favoured-Nation Clauses, U.N. Doc. A/33/10 (1978) [excerpt]
423. U.N. Conf. on Trade and Development [UNCTAD], UNCTAD
Series on Issues in International Investment Agreements II:
Most-Favoured-Nation Treatment, U.N. Doc.
UNCTAD/DIAE/IA/2010/1 (2010) [excerpt]
213
ANNEX DESCRIPTION
424. KENNETH J. VANDEVELDE, BILATERAL INvESTMENT TREATIES
(2010) [excerpt]
425. Parkerings-Compagniet AS v. Lithuania, ICSID Case No.
ARB/05/8, Award (Sep. 11, 2007) [excerpt]
426. Bayindir Insaat Turizm Ticaret Ve Sanayi AS v. Pakistan,
ICSID Case No. ARB/03/29, Award (Aug. 27, 2009) [excerpt]
427. Press Statement on Threats to American Personnel and
Facilities in Iraq, Secretary of State Michael R. Pompeo (Sep.
28, 2018); Remarks to the Media, Secretary of State Michael R.
Pompeo (Oct. 3, 2018); Press Statement on U.S. Appearance
before the International Court of Justice, Secretary of State
Michael R. Pompeo (Oct. 8, 2018); Edward Wong, "Blaming
Iran, U.S. Evacuates Consulate in Southern Iraq," N.Y. Times,
Sep.28,2018
428. Excerpts from U.S. Federal Rules of Civil Procedure and
Federal Rules of Evidence
214
APPENDIX 1:
ENFORCEMENT CASES IN ATTACHMENT 2 TO IRAN'S REPLY
The 8 enforcement cases with respect to which Iran has made particularized claims are in bold.
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
1. Ministry of Defense and Ministry of Supreme Court Court ordered
Support for Armed Defense granted Ministry turnover of
Forces of the Islamic of Defense's $9,462,750.81
Republic of Iran v. Cubic request to extend derived from an
Defense Systems time to file arbitration award in
petition for favor of the Iranian
3:98-cv-01165 (S.D. certiorari in May Ministry of Defense.
Cal.) 2016. No
petition ever
filed.
2. Heiser v. Islamic None No appeal filed Court ordered
Republic of Iran by Iranian turnover of
entities. $613,587.38 that
1:00-cv-02329 (D.D.C.) Sprint
Communications
Company LP owed
to Telecommunications
Infrastructure
Company of Iran,
$59,031.92 in assets
of Iranian entities
(Iran Marine and
Industrial, Sediran
Drilling Company,
Iran Air, and Bank
Melli PLC U.K.),
and $249,365.44 in
assets of Iranian
Navy.
3. Stem v. Islamic Republic None Court granted None
of Iran garnishee
ICANN's motion
1:00-cv-02602 (D.D.C.) to quash writ of
attachment,
affirmed by
court of appeals.
A-1
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
4. Weinstein v. Islamic None Court granted None
Republic of Iran garnishee
1 :00-cv-02601 (D.D.C.)
ICANN's motion
to quash writ of
attachment,
affirmed by
court of appeals.
5. Peterson v. Islamic None Numerous None
Republic of Iran et al. garnishees filed
motions to quash
1:01-cv-02094 (D.D.C.) writs of
attachment.
6. Bakhtiar v. Islamic None Writs of None
Republic of Iran garnishment
issued to
1:02-cv-00092 (D.D.C.) multiple banks.
7. Hegna v. Islamic None Court of Appeals None
Republic of Iran affirmed district
court decision
5:02-mc-00042 (N.D. granting U.S.
Tex.) motion to void
writ of
attachment and
execution as to
property in
Lubbock, TX
owned by Iran.
8. Bennett v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
4:12-mc-00633 (S.D.
Tex.)
9. Davis v. Islamic None Court issued None
Republic of Iran order authorizing
enforcement of
1:07-cv-01302 (D.D.C.) judgment.
A-2
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
10. Stem v. Islamic Republic None Registration of None
of Iran judgment only;
no further action.
8:03-mc-00371 (D. Md.)
11. Havlish v. Bin Laden None Court issued None
writs of
1 :03-cv-09848 execution; no
(S.D.N.Y.) further action.
12. Rubin v. Islamic Government Supreme Court None
Republic of Iran of Iran issued decision
1:03-cv-09370 (N.D. Ill.)
on Feb. 21,
2018, affirming
ruling of court of
appeals that 28
U.S.C. 1610(g)
does not provide
a freestanding
basis for parties
to attach and
execute against
the property of a
foreign state.
13. Ellis v. Islamic Republic None Court issued None
of Iran order authorizing
enforcement of
1 :05-cv-00220 (D.D.C.) judgment.
Iran identifies plaintiff as
Goldberg-Botvin
14. Rubin v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
2:05-mc-70974 (E.D.
Mich.)
A-3
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
15. Levin v. Bank of New None No appeal filed Court ordered
York by Iranian turnover of assets,
entities. but amounts and
1:09-cv-05900 Iranian entities are
(S.D.N.Y.)
redacted in court
documents.
16. Levin v. Islamic None Writs of None
Republic of Iran execution served
1: l 1-mc-00283
on garnishee
banks; no further
(S.D.N.Y.)
action.
17. Murphy v. Islamic None Registration of None
Republic of Iran judgment, writs
of execution
1: 11-mc-00423 served on
(S.D.N.Y.) garnishee banks;
no further action.
18. Leibovitich v. Syrian None Court granted None
Arab Republic garnishee banks'
1:08-cv-01939 (N.D. Ill.)
motions to quash
plaintiffs'
motions for
discovery; court
granted
plaintiffs'
motion to
dismiss
subpoenas issued
to Boeing Corp.
for discovery.
A-4
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
19. Ben Haim v. Islamic None Court granted None
Republic of Iran garnishee
ICANN's motion
1 :08-cv-00520 (D.D.C.) to quash writ of
attachment,
affirmed by
court of appeals.
20. Bodo ff v. Islamic None Court affirmed None
Republic Of Iran prior awards for
1:08-cv-00547 (D.D.C.)
compensatory
and punitive
damages; not an
enforcement
action.
21. Peterson v. Islamic None Registration of None
Republic of Iran judgment; no
further action.
4:08-mc-00016 (N.D.
Okla.)
22. Ben-Rafael v. Islamic None Court granted None
Republic of Iran plaintiffs'
motion
1:08-cv-00716 (D.D.C.) authorizing
enforcement of
judgment; no
further action.
23. Peterson v. Islamic None Registration of None
Republic of Iran judgment; no
further action.
2:08-mc-00098 (E.D.
Cal.)
24. Wamai v. Republic of None Plaintiffs None
Sudan pursuing
enforcement
1:08-cv-01349 (D.D.C.) against Sudan
only.
A-5
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
25. Heiser v. Islamic None Registration of None
Republic of Iran judgment; no
further action.
2:08-mc-00109 (E.D.
Cal.)
26. Heiser et al v. Islamic None Garnishee banks None
Republic of Iran dismissed from
1:08-mc-00212,
case; proceeding
against
reclassified as 1: 11-cv- ..
00137 (D. Md.), No. 40
remammg
garnishee stayed.
below
27. Heiser v. Islamic None Registration of None
Republic of Iran judgment and
writs of
3:08-mc-00491 (S.D. attachment
Cal.) issued; no
further action.
28. Heiser v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
3:08-mc-00323 (D.
Conn.)
29. Peterson v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
0:08-mc-00062 (D.
Minn.)
30. Peterson v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
3:08-mc-09256 (D. Or.)
A-6
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
31. Acosta v. Islamic None Registration of None
Republic of Iran judgment; no
2:09-mc-00101 (E.D.
activity since
2011.
Cal.)
32. Greenbaum v. Islamic None Registration of None
Republic of Iran judgment; no
further action.
2:09-mc-00104 (E.D.
Cal.)
33. Heiser v. Islamic None Notice of lis None
Republic of Iran pendens filed
only; no further
4:09-mc-00559 (S.D. action.
Tex.)
34. Heiser v. Islamic None Notice of lis None
Republic of Iran pendens filed
only; no further
8:09-mc-00373 (D. Md.) action.
35. Heiser v. Islamic None Notice of lis None
Republic of Iran pendens filed
only; no further
3:09-mc-00941 (S.D. action.
Cal.)
36. Heiser v. Islamic None Notice of lis None
Republic of Iran pendens filed
only; no further
2:09-mc-00105 (E.D. action.
Cal.)
37. Khaliq v. Republic of None Notice of lis None
Sudan pendens and
certificates of
1: 11-mc-00036 service of
(S.D.N.Y.) garnishee banks
filed; no further
action.
A-7
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
38. Peterson v. Islamic Bank Bank Markazi Court authorized
Republic of Iran Markazi petitioned for distribution of
writ of $1,895,600,513 to
1:10-cv-04518 certiorari. plaintiffs on June
(S.D.N.Y.) Supreme Court 6, 2016.
affirmed lower
court decision
on Apr. 20,
2016.
39. Heiser v. Islamic None Registration of Unknown whether
Republic of Iran judgment and any assets have been
writs of turned over because
1: 1 0-mc-00005 execution served court documents are
(S.D.N.Y.) on garnishee sealed.
banks; currently
seeking same
assets at issue in
No. 79 below,
Peterson v. Iran,
1: 13-cv-09195
(S.D.N.Y.).
40. Heiser v. Islamic None Garnishee banks None
Republic of Iran dismissed from
1:11-cv-00137 (D. Md.)
case; proceeding
against . .
(see also No. 26 above) remammg
garnishee stayed.
41. Heiser v. Islamic None Plaintiffs None
Republic of Iran voluntarily
dismissed case
1: 11-cv-00998 on July 3, 2018.
(S.D.N.Y.)
42. Owens v. Republic of None Notice of lis None
Sudan pendens and
certificates of
1:11-mc-00037 service on
(S.D.N.Y.) garnishee banks
filed; no further
action.
A-8
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
43. Bennett v. Islamic None Registration of None
Republic of Iran judgment and
writs of
1: 11-mc-00035 execution issued;
(S.D.N.Y.) no further action.
44. Heiser v. Bank Of None No appeal filed Court ordered
Baroda, New York by Iranian turnover of
Branch entities. $119,827.68 in
assets of Iranian
1:11-cv-01602 entities (Bank
(S.D.N.Y.) Saderat, Export
Development Bank
of Iran, Behran Oil
Company, and
Bank Melli).
45. Heiser v. The Bank Of None No appeal filed Court ordered
Tokyo-Mitsubishi UFJ, by Iranian turnover of
Ltd. entities. $359,689.75 in
assets of Iranian
1:11-cv-01601 entities (Bank
(S.D.N.Y.) Sepah
International PLC,
Azores Shipping
Company LL FZE,
lranohind
Shipping
Company, IRISL
Benelux NV,
Export
Development Bank
of Iran, and Bank
Melli).
46. Heiser v. Mashreqbank None No appeal filed Court ordered
PSC by Iranian turnover of
entities. $123,202.32, but
1:11-cv-01609 Iranian entities are
(S.D.N.Y.) redacted in court
documents.
A-9
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
47. Val ore v. Islamic None Registration of None
Republic of Iran judgment, writs
served; no
1 :11-mc-00217 further action.
(S.D.N.Y.)
48. Heiser v. Islamic None Court granted None
Republic of Iran plaintiffs'
application for
1: 11-mc-00295 issuance of writs
(S.D.N.Y.) of execution; no
further action.
49. Heiser v. Islamic None Registration of None
Republic of Iran judgment and
writ of execution
3:11-mc-00116 issued; no
(W.D.N.C.) further action.
50. Greenbaum v. Islamic None Case related to None
Republic of Iran Bennett v. Iran,
No. 54 below.
3:11-mc-80283 (N.D.
Cal.)
51. Rimkus v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1 :l 1-mc-00413
(S.D.N.Y.)
52. Rimkus v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1 :l 1-mc-00412
(S.D.N.Y.)
53. Heiser v. Franklin None Proceeding None
Templeton Fiduciary stayed pending
Trust judgment in the
following case,
1: 11-cv-08446 which involves
(S.D.N.Y.) the same assets.
A-10
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
54. Bennett v. Islamic Bank Melli Supreme Court Court ordered
Republic of Iran denied Bank turnover of
( after third- Melli's petition $17,324,832.16 in
3:11-cv-05807 (N.D. party for certiorari on assets of Bank
Cal.) garnishees March 30, 2020. Melli held by Visa,
deposited Inc. and Franklin
$17.6 Resources, Inc. to
million in Bennett, Heiser
blocked (#53 above),
assets with Greenbaum (#50
court) above), and Acosta
plaintiffs.
55. Bennett v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
0:12-mc-00004 (D.
Minn.)
56. Rafii v. Islamic Republic None Registration of None
of Iran judgment only;
no further action.
3:12-mc-00093 (S.D.
Cal.)
57. Marthaler v. Islamic None Registration of None
Republic of Iran judgment; court
issued order
3:12-mc-00003 (W.D. authorizing
Wis.) attachment and
Iran identifies plaintiff as
execution; no
further action.
Heiser
58. Bodo ff v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1: 12-mc-00 154
(S.D.N.Y.)
A-11
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
59. Rubin v. Islamic None Registration of None
Republic of Iran judgment and
writs of
1:12-mc-00153 execution
(S.D.N.Y.) served; no
further action.
60. Stem v. Iranian Ministry None Registration of None
of Information and judgment only;
Security no further action.
1:12-mc-00151
(S.D.N.Y.)
61. Ben Haim v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1:12-mc-00152
(S.D.N.Y.)
62. Stethem v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1: l 2-mc-00203
(S.D.N.Y.)
63. Weinstein v. Islamic Bank Melli; Supreme Court Court ordered
Republic of Iran Bank denied Bank distribution of
Saderat Melli's petition $1,021,736.39 to
2: 12-cv-03445 for writ of Weinstein plaintiffs
(E.D.N.Y.) certiorari on and $333,776.67 to
See also Weinstein v.
June 25, 2012. Heiser plaintiffs
from proceeds of
Islamic Republic of sale of Bank Melli's
Iran, real property.
2:02-mc-00237
(E.D.N.Y.); case
converted to 2:12-cv-
03445 after denial of
certiorari petition.
A-12
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
64. Owens v. Republic of None Notice of lis None
Sudan pendens filed
only; no further
1: 12-mc-00243 action.
(S.D.N.Y.)
65. Heiser v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
2:12-mc-00391 (C.D.
Cal.)
66. Heiser v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
2:12-mc-00392 (C.D.
Cal.)
67. Bland v. Islamic None Registration of None
Republic of Iran judgment and
writ of execution
1:12-mc-00373 issued (but not
(S.D.N.Y.) served); no
further action.
68. Bakhtiar v. Islamic None Registration of None
Republic of Iran judgment and
writs of
1: 12-mc-00403 execution
(S.D.N.Y.) served; no
further action.
69. Holland v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
l :13-mc-00149
(S.D.N.Y.)
70. Davis v. Islamic None Garnishee bank None
Republic of Iran filed notice of
appearance; no
1: 13-mc-00046 further action.
(S.D.N.Y.)
A-13
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
71. Brown v. Islamic None Registration of None
Republic of Iran judgment and
writ of execution
1:13-mc-00113 served on
(S.D.N.Y.) garnishee bank;
no further action.
72. Havlish v. Royal Dutch None Plaintiffs None
Shell P.C. appealed district
court's grant of
1: 13-cv-07074 Shell's motion to
(S.D.N.Y.) dismiss for lack
of personal
jurisdiction;
pursuant to
parties'
stipulation, court
of appeals
remanded to
lower court for
dismissal of
plaintiffs'
petition.
73. Brewer v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1: 13-mc-00 148
(S.D.N.Y.)
74. Blais v. Islamic Republic None Registration of None
of Iran judgment only;
no further action.
1: 13-mc-00145
(S.D.N.Y.)
75. Valencia v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
l :13-mc-00150
(S.D.N.Y.)
A-14
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
76. Botvin v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1: 13-mc-00322
(S.D.N.Y.)
77. Botvin v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1: 13-mc-00323
(S.D.N.Y.)
78. Wultz v. Islamic None Registration of None
Republic of Iran judgment and
writ of execution
1: 13-mc-00055 served; no
(S.D.N.Y.) further action.
79. Peterson v. Islamic Bank Supreme Court None
Republic of Iran Markazi remanded case
to court of
1:13-cv-09195 appeals, which
(S.D.N.Y.) remanded to
district court in
June 2020.
Case pending.
80. Goldberg-Botvin et al v. None Registration of None
Islamic Republic of Iran judgment;
citations to
1:14-cv-03002 (N.D. Ill.) discover assets
served on thirdparty
financial
institutions; no
further action.
81. Botvin v. Islamic None Registration of None
Republic of Iran judgment;
citations to
1:14-cv-03010 (N.D. Ill.) discover assets
served on thirdparty
financial
institutions; no
further action.
A-15
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
82. Levin v. Islamic None Plaintiffs' None
Republic of Iran request for
issuance of writs
1: 14-mc-00041 of execution
(S.D.N.Y.) granted; writs
served; no
further action.
83. Relvas v. Islamic None Notice of lis None
Republic of Iran pendens filed
only; no further
1:14-mc-00359 action.
(S.D.N.Y.)
84. Levin v. Islamic None Case filed and None
Republic of Iran terminated on
the same day.
1:14-mc-01389
(E.D.N.Y.)
85. Oveissi v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
3:15-mc-00005 (D.
Alaska)
86. Oveissi v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
2:15-mc-0050 (C.D.
Cal.)
87. Bakhtiar v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
3: 15-mc-00099
(W.D.N.C.)
88. Havlish v. bin-Laden None Registration of None
judgment only;
1:15-cv-04055 (N.D. Ill.) no further action.
A-16
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
89. Bodoffv. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1: 15-mc-00234
(S.D.N.Y.)
90. Ben Haim v. Islamic None Registration of None
Republic of Iran judgment and
writ of execution
1: 16-mc-00094 issued; no
(S.D.N.Y.) further action.
91. Leibovitch v. Syrian None Registration of None
Arab Republic judgment,
issuance and
1: 16-mc-00097 service of writs
(S.D.N.Y.) of execution; no
further action.
92. Havlish v. Clearstream None Seeking same None
Banking, S.A. assets at issue in
No. 79 above,
1:16-cv-08075 Peterson v. Iran,
(S.D.N.Y.) 1: 13-cv-09195
(S.D.N.Y.).
93. Wultz v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
3:17-mc-00009 (D.V.1.)
94. Bayani v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
3:17-mc-00154 (D.P.R.)
95. Wultz v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
3:17-mc-00153 (D.P.R.)
96. Heiser v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
2:17-mc-00114 (W.D.
Wash.)
A-17
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
97. Gill v. Islamic Republic None Registration of None
of Iran judgment only;
no further action.
1: 17-mc-00500
(S.D.N.Y.)
98. Braun v. Islamic None Registration of None
Republic of Iran judgment;
citation to
1:18-cv-01681 (N.D. Ill.) discover assets
served on
Boeing Corp.; no
further action.
99. Rubin v. Islamic None Registration of None
Republic of Iran judgment;
citation to
1:18-cv-01689 (N.D. Ill.) discover assets
served on
Boeing Corp.; no
further action.
100. Weinstein v. Islamic None Registration of None
Republic of Iran judgment;
citation to
1:18-cv-01691 (N.D. Ill.) discover assets
served on
Boeing Corp.; no
further action.
101. Bodo ff v. Islamic None Registration of None
Republic of Iran judgment;
citation to
1:18-cv-01686 (N.D. Ill.) discover assets
served on
Boeing Corp.; no
further action.
102. Khaliq v. Republic of None Registration of None
Sudan judgment only;
no further action.
1: 19-mc-00289
(S.D.N.Y.)
A-18
Iran's Case Caption and Docket Appearances Status Assets Turned Over
Att. 2 Number (Court) by Iranian (as of February to Plaintiffs
Case Entities 15, 2021) Following Court
No. Order
103. Mwila v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1: 19-mc-00290
(S.D.N.Y.)
104. Owens v. Republic of None Registration of None
Sudan judgment only;
no further action.
1: 19-mc-00288
(S.D.N.Y.)
105. Leibovitch v. Islamic None Registration of None
Republic of Iran judgment only in
both cases; no
1: 19-mc-0 1590 further action.
(E.D.N.Y.)
1:19-mc-01586
(E.D.N.Y.)
106. Braun v. Islamic None Registration of None
Republic of Iran judgment only;
no further action.
1 :19-mc-01618
(E.D.N.Y.)
A-19