Originally from:
The Practice of International Litigation - 2nd Edition - Looseleaf
The Practice of International Litigation - 2nd Edition - Electronic
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The Pursuit of Claims Against Iraq
Lawrence W. Newman and Michael Burrows
A new specialty has emerged within the field of international litigation—
the prosecution and defense of claims against the Government of Iran. In
late 1978, as the days of the Shah appeared to be numbered, companies that
had caused standby letters of credit to be established on their behalf in
favor of Iranian governmental entities, became uneasy over possible abuses
of rights granted by those instruments through unjustified demands for
payment. Thereupon began our personal involvement with litigation
involving Iran. It has continued to the present, involving, initially, suits to
obtain prejudgment attachments in this country and abroad and, thereafter,
arbitration proceedings before the Iran-United States Claims Tribunal in
The Hague, which continues to hear cases against Iran.
Beginning in August of 1990, lawyers who had been involved in Iranian
litigation must have experienced vivid sensations of déjà vu after President
Bush imposed economic sanctions against Iraq (and Kuwait) in almost the
same way as President Carter had imposed a freeze on Iranian assets in
November 1979. What is the likelihood that claims based on the harm
done recently by Iraq can be pursued in a manner which will lead to the
recovery of damages? This question does not have a definitive answer.
It became clear, shortly after the onset of the Iraq-Kuwait crisis, that
there is an important difference between potential claims against Iraq and
the cases which were commenced in the courts of this country against Iran
after the taking of the hostages in the U.S. embassy in Tehran in November
1979. That difference is the extent of blocked funds in the United States. In 1979,
more than $10 billion in Iranian bank deposits and gold holdings were in
this country. In contrast, frozen Iraqi assets in the United States today have
been estimated to have a value of between $1 billion and $1.5 billion.
Perhaps the most important difference between claims against Iran more
than a decade ago and claims against Iraq today is that Iranian claims were
initially a bilateral affair—between the United States and Iran. The Iran-
United States Claims Tribunal was a by-product of the January 20, 1981,
release of the embassy hostages. Although citizens of many other countries
besides the United States suffered losses in the Iranian Revolution, as the
result of expropriation of property and businesses and breaches of
contracts, only American citizens ended up being able to have their cases
heard in a tribunal in The Hague, whose awards are funded primarily by
Iranian assets previously frozen in the United States.
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.
