International Court of Justice Hears Oral Arguments in Iran Sanctions Case against the United States

On August 30, 2018, the International Court of Justice concluded public hearings on the request for the indication of provisional measures submitted by the Islamic Republic of Iran in the case concerning Alleged violations of the 1955 Treaty of Amity, Economic Relations, and Consular Rights (Islamic Republic of Iran v. United States of America). The hearings opened on August 27, 2018.[1]

At the end of the hearings, Iran repeated its requests to the Court for the indication of provisional measures, while the US Agent requested that the Court reject the request for provisional measures.

Iran requested that the Court order several provisional measures, including: (i) “the United States shall immediately take all measures at its disposal to ensure the suspension of the implementation and enforcement of all of the 8 May sanctions, including the extraterritorial sanctions, and refrain from imposing or threatening announced further sanctions and measures which might aggravate or extend the dispute submitted to the Court; (ii) the United States shall immediately allow the full implementation of transactions already licensed, generally or specifically, particularly for the sale or leasing of passenger aircraft, aircraft spare parts and equipment.” ^[2]

Furthermore, Iran requested that the Court order the United States shall assure Iranian, US and non-US nationals and companies that it will comply with the Order of the Court, and shall cease any and all statements or actions that would dissuade US and non-US persons and entities from engaging or continuing to engage economically with Iran and Iranian nationals or companies.

State Department legal adviser Jennifer Newstead told the Hague-based court it “lacks prima facie jurisdiction to hear Iran’s claims” because the U.S. had a right to defend its national security among other interests, adding that the treaty “cannot, therefore, provide a basis for this court’s jurisdiction”.[3] She reiterated that the grave national security concerns are at the heart of this case. She added that the US delegation has demonstrated that the decision to re-impose the economic sanctions in dispute was taken on the basis of “well-documented, long-standing national security concerns of the United States regarding the full spectrum of threatening acts by Iran.”[4]

The hearings arose out of the lawsuit lodged by Iran in ICJ against United States. On July 16, 2018, Iran instituted proceedings against the United States ICJ with regard to a dispute concerning alleged violations of the 1955 Treaty.

Iran maintains that its Application relates to the decision of the United States of 8 May 2018 “to re-impose in full effect and enforce” sanctions and restrictive measures targeting, directly or indirectly, Iran and Iranian companies and/or nationals, which the United States had previously decided to lift in connection with the Joint Comprehensive Plan of Action (JCPOA) – an agreement on the nuclear program of Iran reached on 14 July 2015 by Iran, the five permanent members of the United Nations Security Council, plus Germany and the European Union (commonly referred to as the Iran Nuclear Deal).[5]

The 1955 Treaty requires the US to accord fair and equitable treatment to Iranian nationals and companies and to their property and enterprises and to ensure that the lawful contractual rights of Iranian nationals and companies are afforded effective means of enforcement. The treaty also prohibits unreasonable or discriminatory measures that would impair the legally acquired rights and interests of Iranian nationals and companies.

Many banks and companies have withdrawn from Iran due to threats from the US. The US has stated that companies who work in Iran would not be able to complete business in the US. The sanctions put current contracts in the energy, shipping and shipbuilding, and automotive sections of Iran’s economy at risk of not being completed.[6]

Iran argues that the International Atomic Energy Association (IAEA) has stated that Iran is meeting its commitments under the JCPOA. Iran claims that the US decision to impose the sanctions has been justified using fabricated evidence and ignoring contrary reports and that the sanctions are nothing more than economic aggression towards Iran.[7]

Iran claims that, through the “8 May sanctions” and further sanctions that have been announced, the United States “has violated and continues to violate multiple provisions” of the 1955 Treaty. Iran therefore  requests the Court to adjudge, order and declare that: (i) The USA, through the 8 May and announced further sanctions referred to in the present Application, with respect to Iran, Iranian nationals and companies, has breached its obligations to Iran under Articles IV (1), VII (1), VIII (1), VIII (2), IX (2) and X (1) of the 1955 Treaty; (ii) The USA shall, by means of its own choosing, terminate the 8 May sanctions without delay; (iii) The USA shall immediately terminate its threats with respect to the announced further sanctions referred to in the present Application.[8]

UN Special Rapporteur Idriss Jazairy called the sanctions illegitimate. He said that sanctions against Iran must be just and not harmful to innocent citizens. The sanctions re-imposed by US President Donald Trump are “destroying the economy and currency of Iran, driving millions of people into poverty and making imported goods affordable,” stressed the UN expert.[9]

On the same day, Iran also filed a Request for the indication of provisional measures, in order to preserve its rights under the 1955 Treaty pending the judgment of the Court on the merits of the case. According to Iran, the United States has already started to enforce some elements of the “8 May sanctions”, while it announced that others would be implemented between 90 and 180 days from 8 May 2018. Iran maintains that, in view of the above, there is “a real and imminent risk that irreparable prejudice” will be caused to its rights which form the subject of the dispute before the Court gives its final decision.[10]

In its Application, Iran demonstrates that Iranian economy and Iranian nationals and companies have already started to suffer damage from the US decision, and, in particular, from the mere announcement (and anticipation) of their extra-territorial effects. Recent international reports from the IMF and the World Bank underline that the re-imposition of sanctions would have the effect of disconnecting Iran from the global trade and financial system and would negatively affect Iran’s whole economy.[11]

Iran claims that the decision taken by the US may already have caused irreparable damages, which are becoming worse every day. As explained above, since the US announcement of the re-imposition of the sanctions, US and foreign companies have had no other option, in order to escape the extraordinary high penalties than to choose not to trade and invest in Iran. “The loss of these trading opportunities and investments will not be reparable by money since they are damaging the whole Iranian economic and social system”.[12]

It was not immediately clear why Iran chose to invoke the 1955 Treaty which entered into force in 1957, as the basis for such a lawsuit. The Iranians did not cite that treaty in attempts to stop the nuclear sanctions when they were first imposed.

The rationale behind the choice of the 1955 Treaty as a legal basis for the lawsuit seems to be explained by the fact that neither Iran nor the United States accepts the compulsory jurisdiction of the ICJ, both states having withdrawn their optional clause declarations. While the JCPOA does not contain such a clause, the Treaty of Amity stipulates in its Article XXI (2) that “[a]ny dispute between the High Contracting Parties as to the interpretation or application of the present Treaty, not satisfactorily adjusted by diplomacy, shall be submitted to the International Court of Justice, unless the High Contracting Parties agree to settlement by some other pacific means.”

One of the most controversial issues in this case is whether the dispute is about the interpretation or application of the 1955 Treaty despite the existence of the JCPOA. This question is closely related to a highly debatable nature of JCPOA, specifically whether this is a legally binding international treaty. Finally, he Court will have to address other arguments the United States has advanced to contest jurisdiction. These include the question of whether the national security exception in Art. XX (1) (d) of the Treaty of Amity potentially precludes the applicability of the treaty (and not only its substantive obligations) and whether Iran has made sufficient diplomatic efforts to meet the requirements of the compromissory clause.[13]

Experts who specialize in sanctions-related laws said the merits of the Iranian lawsuit might be weak, partly because of what they called Iran’s own transgressions of the 1955 treaty. Farhad R. Alavi, managing partner of the Akrivis Law Group in Washington said: “The move appears largely symbolic and for largely domestic consumption. Even a ruling or declaration in favor of Iran, however unlikely, would have very limited impact on the realities on the ground.”[14]

* Professor Plachta specializes in criminal law and international criminal law. He has authored numerous publications on a wide range of problems concerning law enforcement and international cooperation in criminal matters. He currently teaches criminal law and European criminal law at the University of Security in Poznan, Poland.

[1] ICJ, Press release of August 26, 2018, No. 2018/38.

[2] ICJ, Press release of August 30, 2018, No. 2018/43.

[3] Tom O’Connor, U.S. tells world court it has no power over Donald Trump’s Iran sanctions, Newsweek, August 28, 2018.

[4] ICJ, Public sitting held on August 30, 2018, Verbatim record, CR 2018/19, https://www.icj-cij.org/files/case-related/175/175-20180830-ORA-01-00-BI.pdf, at 37.

[5] ICJ, Press release of July 17, 2018, No. 2018/34.

[6] Erik Slobe, Iran urges ICJ to block US sanctions, https://www.jurist.org/news/2018/08/iran-urges-icj-to-block-us-sanctions.

[7] ICJ, Public sitting held on August 30, 2018, Verbatim record, CR 2018/16, https://www.icj-cij.org/files/case-related/175/175-20180827-ORA-01-00-BI.pdf, at 22-23.

[8] Iran, Application instituting proceedings, https://www.icj-cij.org/files/case-related/175/175-20180716-APP-01-00-EN.pdf, at 18.

[9] https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=23469&LangID=E.

[10] Iran, Request for the indication of provisional measures, https://www.icj-cij.org/files/case-related/175/175-20180716-REQ-01-00-EN.pdf.

[11] Id., at 11.

[12] Id., at 19.

[13] Paula Fischer, The Iranian Suit against the US Sanctions and the 1955 Treaty of Amity: Brilliant Plan or Aberration?, September 7, 2018, https://www.ejiltalk.org.

[14] Rick Gladstone, Iran Takes U.S. to Court Over Nuclear Deal and Reimposed Sanctions, New York Times, July 17, 2018.