Case No. A27: The Iran-United States Claims Tribunal’s First Award of Damages for a Breach of the Algiers Declarations – Vol. 10 No. 2

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AuthorAnuj Desaf*

Published: June 1999

United States
Commercial Disputes
Arbitral Awards
Indemnity, Damages, Punitive Damages

Description: In 1981, the United States and Iran signed the Algiers Declarations, a series of agreements that resulted in the creation of the Iran-United States Claims Tribunal. The Tribunal’s primary purpose was to resolve disputes between the two governments and disputes between nationals of one country and the government of the other. The overwhelming majority of such cases before the Tribunal involved disputes “aris[ing] out of debts, contracts, expropriations or other measures affecting property rights.” In addition to these commercial cases, however, the Tribunal’s jurisdiction also includes the authority to decide disputes between the two governments “as to the interpretation or performance” of the Declarations themselves — in effect, claims that the other party had violated the Declarations — and, if necessary, to award monetary damages for any breach. In the Tribunal’s nearly eighteen years of existence, it has rendered over 500 awards, granting more than U.S. $2 billion, and yet, it was not until June 1998, in its opinion in Case No. A27, that the Tribunal issued its first award of damages for a violation of the Algiers Declarations. Given the Tribunal’s important place in the history of international adjudication, it is regrettable that this first award of monetary damages for a breach of the Declarations contained two significant errors: the Tribunal’s disregard of a long-standing doctrine of customary international law regarding the admissibility of claims in an international forum, and its usurpation of jurisdiction beyond that which was granted to it by its constituent documents, the Algiers Declarations. This Casenote describes the Tribunal’s opinion in Case No. A27 and then explores the two ways in which the tribunal erred.

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*Associate, Davis Wright Tremaine LLP, Seattle, Washington. Former Legal Assistant at the Iran-United States Claims Tribunal. The author wishes to thank David Bederman, David Aaron, Nancy Combs and Sam Hirsch for their comments on earlier drafts of this piece. The views expresses herein are those of the author in his individual capacity and do not reflect the views of any of those individuals who made comments or of any organization with which the author has been affiliated or for which he has worked.