- Iranian-U.S. Arbitral Tribunal
- Iranian-U.S. Arbitral Tribunal (Full Tribunal)
- The Islamic Republic of Iran vs The United States of America
DISPUTE BETWEEN IRAN AND THE UNITED STATES OF AMERICA CONCERNING ALLEGED BREACH BY UNITED STATES OF ITS OBLIGATION UNDER ARTICLE VII, PARAGRAPH 2, OF THE 1981 CLAIMS SETTLEMENT DECLARATION ESTABLISHING THE IRAN-UNITED STATES CLAIMS TRIBUNAL – ACCORDING TO ARTICLE V OF THE 1981 CLAIMS SETTLEMENT DECLARATION TRIBUNAL BOUND TO “DECIDE ALL CASES ON THE BASIS OF RESPECT FOR LAW, APPLYING SUCH CHOICE OF LAW RULES AND PRINCIPLES OF COMMERCIAL AND INTERNATIONAL LAW AS THE TRIBUNAL DETERMINES TO BE APPLICABLE, TAKING INTO ACCOUNT RELEVANT USAGES OF TRADE, CONTRACT PROVISIONS AND CHANGED CIRCUMSTANCES”
UNITED STATES ORDERED TO PAY IRAN DAMAGES PLUS INTEREST – INTEREST CALCULATED “AT AN ANNUAL RATE EQUAL TO THE AVERAGE PRIME BANK LENDING RATE IN THE UNITED STATES” – TRIBUNAL SO DECIDED “[…] ALSO MINDFUL OF ARTICLE 7.4.9 (2) OF THE UNIDROIT PRINCIPLES 2010”
Article VII, paragraph 2, of the 1981 Claims Settlement Declaration establishing the Iran-United States Claims Tribunal to resolve certain claims by nationals of one State Party against the other State Party and certain claims between the State Parties provides that “[c]laims referred to the […] Tribunal shall, as of the date of filing of such claims with the Tribunal, be considered excluded from the jurisdiction of the courts of Iran, or of the United States, or of any other court.”
In a dispute between the Islamic Republic of Iran and the United States of America Iran contended that the United States of America had violated its obligation to terminate all litigation in United States courts involving claims that were also filed with the Tribunal, thereby causing Iran to incur considerable litigation costs before United States courts.
In deciding the dispute in favor of Iran, the Tribunal held that Iran was entitled to damages for the litigation costs sustained together with interest to compensate it for the losses suffered due to delay in payment.
As to the rate of interest Iran, relying on a number of decisions rendered in the mid- and late 1980s by Tribunal Chambers in official claims between Iran and the United States, claimed interest at a rate of ten percent per annum from the date it paid the litigation costs until the date of payment of the Award. In rejecting Iran’s claim on this point the Tribunal stated that, while an award of ten-percent interest might have been reasonable at the time those decisions were rendered, it would not be reasonable today in light of the steady decline in interest rates since 1990 as well as the dramatic fall in interest rates as a result of the global financial crisis of 2008. After pointing out that it intended to select a rate of interest that that is “reasonable, taking due account of all pertinent circumstances, which [it] is entitled to consider by virtue of the discretion it is empowered to exercise in this field”, the Tribunal decided to award Iran interest at an annual rate equal to the average prime bank lending rate in the United States adding that in taking this decision “[it] was also mindful of Article 7.4.9 (2) of the UNIDROIT Principles 2010, which provides [that] the rate of interest shall be the average bank short-term lending rate to prime borrowers prevailing for the currency of payment at the place for payment, or where no such rate exists at that place, then the same rate in the State of the currency of payment [...]”.
[NOTE: According to Article V of the 1981 Claims Settlement Declaration “[t]he Tribunal shall decide all cases on the basis of respect for law,applying such choice of law rules and principles of commercial and international law as the Tribunal determines to be applicable, taking into account relevant usages of the trade, contract provisions and changed circumstances”].
Fulltext at http://www.iusct.net/General%20Documents/AWARD/1-A-AWARD%20NO.%20602-A15%20(IV)A24-FT-EN.pdf}}