Nature and Status of US-Iran Claims Tribunal

By: Arpit Batra, Advocate

The Iran-United States Claims Tribunal constitutes by a wide margin the largest
arbitration ever attempted and the greatest challenge ever faced in the history of
the mechanism. It has a specialized mechanism established by bilateral
agreement. The Tribunal operates either in full, or in Chambers of three.
Chambers consist of an Iranian and an American arbitrator and are chaired by a
third-country arbitrator.
The crisis was resolved through the mediation of the Algerian government. The
Algiers Accords of 19 January 1981 comprised of two Declarations. The General
Declaration stipulated the release of the hostages and the lifting of the freeze.
The Claims Settlement Declaration established an international Arbitral Tribunal
as the exclusive authority to deal with certain types of outstanding claims. The
Tribunal has jurisdiction over three types of claims:
• Claims and counterclaims of US nationals against Iran, and claims and
counterclaims of Iranian nationals against the US, arising out of debts, contracts,
expropriations or other measures affecting property rights outstanding on the
date of the Claims Settlement Declaration
• Official claims that arise out of contractual agreements between the two nations
for the purchase and sale of goods and services
• Claims regarding the interpretation or performance of any provision of the
Algiers Declarations
One position is that the Tribunal like the ICJ was established by a treaty and that
the work of the Tribunal, like that of the court, therefore has an interstate
character. The overall purpose of the tribunal was to end the disputes between
two states and that involved inter governmental disputes and the two states had
designated arbitrators to solve them.
The traditional theory that only states are subjects of international law remains
valid, and the procedural capacity of individuals to bring these claims against the
responsible states should be viewed as an example of such exercise of states’
will. As recognized in the Hague Convention of 1899 & 1907, the original object
of international arbitration is to adjudicate disputes between states .Reflecting the
general practice of International law, the provisions of Algiers Declaration with
respect to the accessibility of the Tribunal to state parties confirms that the
Tribunal is indeed an international tribunal. In the words of Brownie (op. at supra
n 228 at p518) “the individual lacks procedural capacity under international law,
except when it is conferred on him.

Article II of the Claims Settlement Declaration gives the Tribunal jurisdiction over
two kinds of claims: private and official. With respect to private claims, Article II,
paragraph 1, of the Declaration gives the Tribunal the power to decide “claims of
nationals of the United States against Iran and claims of nationals of Iran against
the United States that arise out of debts, contracts . . . expropriations or other
measures affecting property rights ”
Article VII, paragraph 2, of the Claims Settlement Declaration further provides in
relevant part:
“Claims of nationals” of Iran or the United States, as the case may be, means
claims owned continuously, from the date on which the claim arose to the date
on which this Agreement enters into force, by nationals of that state . .”
The Tribunal is not only accessible to the state parties of the Algiers Declaration
but to their nationals. The private nationals of both Iran and US are capacitated
by the provisions of the Algiers Declaration to stand before the Tribunal as a
party to the relative proceedings. This constitutes a unique feature of the tribunal.
Such accessibility of the tribunal to private persons, per se does not affect its
international character.
Riahi v. The Government of the Islamic Republic of Iran, illustrates the scope of
the Tribunal’s jurisdiction over private claims.
Some American writers characterize the tribunal as a commercial forum without
any connection with international law. They believe that while the tribunal enjoys
a self-executing internal system, it is governed by a exterior legal system viz., the
Dutch laws as far as the validity of the Tribunal arbitral process and its awards
are concerned. ( D.Caron op.cit. supra n 24 at p 129,137,149)

The tribunal is often characterized as having a hybrid nature charged to decide

cases with private law as well as claims involving state responsibility on other
international law issues such as interpretation of treaty (D.L. Jones, ibid at
p.273).All cases before the Tribunal are decided "on the basis of respect for law".
This may be the principles of commercial law, or the general principles of
international law and including customary law and treaties. The Tribunal
conducts its business in accordance with the UNCITRAL Arbitration Rules, which
were modified to the Tribunal’s specific needs. After an initial period of tension,
untimely resignations, and some frustrating incidents, the Tribunal has functioned
in a businesslike manner and with the support of both Governments. By now, the
Tribunal has arbitrated all private claims. However, large and sensitive
intergovernmental cases, involving billions of dollars, still remain to be decided.