Iran vs the US (Treaty of Amity Case)

The Eisenhower administration in Washington D.C. and the imperial state of Mohammad Reza Pahlavi in Tehran hardly would have thought that a benign bilateral treaty such as the Treaty of Amity, Economic Relations and Consular Rights would become, directly or indirectly, a disputed issue between the two countries four times before the International Court of Justice (Case Concerning US Diplomatic and Consular Staff in Tehran (1979); Case Concerning the Aerial Incident (1988); Case Concerning Oil Platforms (1996); and the present case).

The Treaty of Amity was signed between the US and Iran on 15 August 1955 to promote friendly relations and encourage bilateral trade and investment. Among other provisions, Article XXI(2) vests jurisdiction in the International Court of Justice (ICJ) in the event of a dispute between the parties.

Brief Overview of the Case

When US President Donald Trump withdrew the US from the Iran Nuclear Deal — technically called the Joint Comprehensive Plan of Action (JCPOA) — on 8th May, 2018, he also reimposed economic sanctions on Iran. Within two months, Iran approached the ICJ and challenged the reimposition of sanctions as violations of the Treaty of Amity. Iran requested the ICJ to declare that the US had

“…breached its obligations under the Treaty of Amity, that it must put an end to such breaches and that it must compensate Iran for the harm caused.”

The main contention of Iran was that the US, through reimposition of sanctions, breached Articles IV(1), V(2), V(1), VII(1), VIII(1), VIII(2), IX(2), IX(3) and X(1) of the Treaty of Amity. These articles pertain to fair and equitable treatment towards nationals and companies, freedom of commerce and navigation, and refraining the two countries from employing discriminatory market practices or putting unreasonable restrictions on remittances, transfer of funds or imports and exports. Iran argued that measures such as prohibiting exchange of US Dollar and Iranian Rial, revoking licences of entities trading with Iranian companies, and prohibiting import of Iranian products, etc., breached the US’ obligations under the Treaty of Amity.

On 3rd October, 2018, the ICJ’s Order of Provisional Measures asked the US to remove impediments for the exportation of medicine, food and aircraft parts until the final decision of the Court. On the same day, the US withdrew from the Treaty of Amity — withdrawal to be effective after one year as stipulated in the Treaty (Article XXIII, paragraph 3).

The US raised preliminary objections to the jurisdiction of the ICJ and requested the Court to dismiss Iran’s claims. After hearing oral arguments of both parties in September 2020, the ICJ delivered its judgment on the preliminary objections on 3rd February, 2020. The ICJ rejected all preliminary objections of the US and held that the application of Iran was admissible and the Court had jurisdiction to hear the case.

Preliminary Objections by the US

The US had raised five preliminary objections to argue that the ICJ did not have jurisdiction to hear the case. In response, Iran submitted its observations in writing to counter the US’ preliminary objections.

First Preliminary Objection

The first preliminary objection of the US was related to the subject matter: that the dispute was actually related to the JCPOA and not the Treaty of Amity. The US argued that while similar sanctions had been imposed on Iran before the adoption of the JCPOA in 2015, Iran had not raised the issue of breach of the Treaty of Amity. Since Iran had brought a claim only against the sanctions reimposed after 8th May, 2018, the true subject matter of the dispute appeared to be exclusively related to the JCPOA. And since the JCPOA did not contain any provision giving the ICJ jurisdiction to adjudicate a dispute among the parties, the ICJ did not have jurisdiction in the case.

Iran responded that it’s claims were ‘wholly and exclusively related to violations of the Treaty of Amity’. If some of those claims were common and overlapping with the JCPOA, the overlap would still not preclude the ICJ’s jurisdiction under the Treaty of Amity. Moreover, to rebut the US’ argument that Iran had not challenged the sanctions before the JCPOA had been adopted, Iran argued that it had protested the US’ measures diplomatically. It was up to each state to decide the point at which it would take recourse to judicial means for seeking reparation against the infringement of its rights under international law.

The ICJ held that since there was disagreement between the US and Iran as to whether the measures post 8 May constituted a violation of the Treaty of Amity, such disagreement showed that the dispute was related to the interpretation and application of the Treaty of Amity. Although the dispute had emerged in a political context when the US withdrew from the JCPOA and some of the issues might have fallen within the ambit of JCPOA, that still did not preclude the jurisdiction of the ICJ under the Treaty of Amity. Therefore, the ICJ rejected the first preliminary objection of the US.

Second Preliminary Objection

The second preliminary objection raised by the US was titled ‘third country measures’. The US argued that the Treaty of Amity only governed bilateral trade relations between Iran and the US; it did not restrict or refrain the US from taking any measures related to Iran and third countries. In other words, the Treaty of Amity only prohibited taking primary sanctions (i.e. sanctions directly against Iran), but not secondary sanctions (i.e. sanctions to restrict other countries to trade with Iran). Since most of the 8 May measures had been targeting trade relations between Iran and third countries, the ICJ did not have jurisdiction under the Treaty of Amity. While arguing its case, the US acknowledged that the second preliminary objection was only against a majority of Iran’s claims, since a few of the 8 May measures had also constituted primary sanctions in which trade licences of a few US persons had been revoked as well.

Calling the US’ argument ‘an invention’ and ‘misleading’, Iran argued that the 8 May measures had been targeted at Iranian nationals and companies. It matters little whether the US revoked the licence of its own national to restrict trade with Iran, or penalized a bank in a third country to restrict Iran from buying an American product. Since the object and purpose of US’ sanctions was to cause harm to the Iranian economy, the US had breached its obligations under the provisions of the Treaty of Amity.

The ICJ stated that the aim of the 8 May measures was to weaken the Iranian economy, as was evident from the various official statements of the US. Some of the 8 May measures being related to other countries did not mean that those measures were automatically excluded from the ambit of the Treaty of Amity. The ICJ stated that the second preliminary objection of the US was related to the scope of obligations under the Treaty of Amity and raised legal and factual questions which would be analyzed when the case would be argued on merits. Therefore, the ICJ did not accept the second preliminary objection of the US.

Third Preliminary Objection

The US further argued that Iran’s application was inadmissible because it constituted an abuse of process. According to the US, Iran had been trying to seek an ‘illegitimate advantage’ for its nuclear activities and wanted to create ‘political and psychological’ pressure on the US. By bringing a claim on the basis of the Treaty of Amity, Iran had actually been seeking a decision on the JCPOA, which was altogether a different matter and out of the Court’s jurisdiction. If Iran’s claims were to be granted by the Court, Iran would get relief to pursue its nuclear-related activities. Moreover, the ICJ’s judicial integrity would be compromised if it got entangled in the political issue of the JCPOA.

Iran submitted that the threshold for abuse of process was very high and an application on such grounds could only be dismissed in exceptional circumstances. Iran argued that the two countries concluded the Treaty of Amity for protecting reciprocal rights and obligations. To hold that Iran could not bring a claim against a breach of those rights due to supposedly political implications was ‘neither tenable nor serious’.

The ICJ, citing its views from previous cases, stated that clear evidence was required to show that the conduct of the applicant amounted to an abuse of process. In other words, the threshold to prove the abuse of process was quite high. In the case at hand, the Court did not find any exceptional circumstances to dismiss Iran’s claims on the grounds of abuse of process.

Fourth and Fifth Preliminary Objections

Two further preliminary objections were raised by the US from within the Treaty of Amity. According to Article XX paragraph 1 (b) and (d), the Treaty of Amity did not restrict taking measures ‘relating to fissionable materials’ or protecting a state’s ‘essential security interests’. The US argued that the phrase ‘fissionable materials’ was a broad term and thus covered all sanctions reimposed on Iran on 8 May because the measures in question had been undertaken in relation to Iran’s nuclear activities. Similarly, as per paragraph (d), the said measures had been taken to protect the security interests of the US from Iran’s ‘violent and destabilizing acts’. Moreover, the US argued for the two preliminary objections to be decided by the Court at a preliminary stage since they encompassed all of Iran’s claims and the Court could make a determination on the basis of facts already placed before it.

Iran contended that only the objections which had been jurisdictional in nature could be raised at a preliminary stage without touching upon the substance of the merits of the case. Iran further argued that the sanctions imposed by the US had gone beyond restricting trade of ‘fissionable materials’. Moreover, the US’ claim of imposing sanctions due to security concerns was ‘unfounded and abusive’.

It is important to understand the sort of objections that can be raised at the preliminary stage. As per the Rules of Court of the ICJ (Article 79bis), three types of preliminary objections can be raised:

1. objections to the jurisdiction of the Court;
2. objections to the admissibility of the application; and/or
3. other objections, the decision upon which is requested before proceeding any further on merits.

The last two preliminary objections had been difficult for the US to argue because the ICJ, in the Case Concerning Oil Platforms (Islamic Republic of Iran vs. United States of America), had held that objections under Article XX paragraph 1 (c) and (d) of the Treaty of Amity were not preliminary objections but defenses which were to be weighed on merits. In line with the previous ruling, the ICJ held that the latter two objections concerned the merits of the case and required extensive examination of relative security interests as well as an ‘assessment of the reasonableness and necessity of the measures’ to the extent of their effect upon the Treaty of Amity. Therefore, the ICJ did not entertain the last two arguments at the preliminary stage.

Conclusion

The ICJ concluded that the dispute between the parties concerned alleged breaches of obligations under the Treaty of Amity. It also held that the dispute resolution clause within the Treaty of Amity clearly provided jurisdiction to the ICJ, rendering all preliminary objections of the US untenable.

Now that the ICJ has decided to hear the case, both parties shall be given an opportunity to submit written and oral arguments on the merits of the case. After this the ICJ shall decide whether or not the provisions of the Treaty of Amity have actually been violated through the re-imposition of US sanctions, and if so, the remedies accorded to Iran.

For international legal scholars and policy experts, one of the most important questions to ponder over is whether this preliminary judgment by the ICJ will potentially impact any future deliberations on the Iran nuclear deal.

The views expressed in this article are those of the author and do not necessarily represent the views of CourtingTheLaw.com or any organization with which he might be associated.