Originally from:
The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
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Enforceability of Iran-U.S. Claims Tribunal Awards
Lawrence W. Newman and Michael Burrows
The international crisis resulting from Iraq’s invasion of Kuwait may not
be resolved for years. A useful model, however, for the resolution of the
commercial disputes between both states and private parties that necessarily
arise from such crises is provided by the Iran-United States Claims Tribunal
(the Tribunal), established in 1981 pursuant to the Algiers Accords (the
Accords) that freed the U.S. diplomatic personnel held hostage in Iran
from 1979 to 1981. A decision of the U.S. Court of Appeals for the Ninth
Circuit, Ministry of Defense of the Islamic Republic of Iran v. Gould et al. (Gould),
enhanced the Tribunal’s status as a useful model for the resolution of crisisrelated
commercial disputes by holding that its awards are enforceable in
U.S. Courts under the United Nations Convention on the Recognition and
Enforcement of Foreign Arbitral Awards (the New York Convention).
This chapter discusses the issues decided in the Gould opinion relating to
the enforceability of Tribunal awards under the New York Convention.
Background of Gould Case
Since its inception in 1981, the Tribunal has awarded over $1.7 billion to
U.S. claimants. These awards have been paid out of a security account
established solely to satisfy Tribunal awards rendered in favor of U.S.
claimants. No such account, however, was established to satisfy the other
types of claims heard by the Tribunal. With respect to claims by Iranian
nationals against the other, the accords provide that any award rendered by
the Tribunal shall be enforceable against either government in the courts of
any nation in accordance with its laws. The Accords contain no provisions
whatsoever governing the enforcement of awards in favor of Iran or its
nationals against non-government claimants.
In July 1983, in connection with two claims brought by Claimant Gould
Marketing Inc. against the Ministry of Defense of Iran, the Tribunal issued
an interlocutory award that held that it had jurisdiction over affirmative
counterclaims by Iran that exceed the amount of the U.S. party’s claim.
On June 23, 1984, the Tribunal issued a final combined award of $3.6
million in favor of the ministry.
Iran petitioned the United States District Court for the Central District
of California to enforce the Tribunal’s award rendered in its favor. In
January 1988, the district court held that Tribunal awards are enforceable by
Iran in U.S. courts under the New York Convention. The district court’s
opinion was upheld by the U.S. Court of Appeals for the Ninth Circuit and
certiorari was recently denied by the Supreme Court.
Lawrence W. Newman has been a partner in the New York office of Baker & McKenzie since 1971, when, together with the late Professor Henry deVries, he founded the litigation department in that office. He is the author/editor of 4 works on international litigation/arbitration.
Michael Burrows, Formerly, Of Counsel, Baker & McKenzie, New York.
