## Facts

- Amoco International Finance Corp. (AIFC), a U.S. corporation, held an indirect economic interest in Kharg Chemical Company Limited (Khemco) through a non-U.S. affiliate.
- In 1966–1967, Amoco and Iran’s National Petrochemical Company (NPC) formed Khemco as a 50/50 joint venture under Iranian law to extract and sell sulfur, LPG, and related natural gas liquids from Kharg Island gas operations.
- The joint-venture arrangements provided equal ownership, joint management, and equal voting/control rights.
- After the 1979 revolution, Iran restructured control over petroleum-related enterprises, including by implementing nationalization measures such as the 1980 Single Article Act concerning nationalization of the oil industry.
- AIFC alleged that cumulative state measures removed Amoco from Khemco’s management, transferred effective control and benefits to Iranian entities, and destroyed AIFC’s ability to use and profit from its 50% participation.
- AIFC sought compensation, asserting unlawful expropriation under customary international law and the 1955 Treaty of Amity between Iran and the United States.
- Iran and related entities denied that a compensable expropriation occurred and disputed the governing law and valuation method.
- The claim was brought to the Iran–U.S. Claims Tribunal under the Algiers Declarations; the Tribunal issued a partial award addressing jurisdiction, expropriation, applicable law, and compensation principles.

## Issues

1. Whether the Tribunal had jurisdiction over a U.S. claimant asserting loss of an indirect investment held through non-U.S. subsidiaries, and whether the named Iranian entities were proper respondents.
2. Whether Iran’s post-revolution measures amounted to an expropriation (including de facto or “creeping” expropriation) of AIFC’s corporate and contractual rights in Khemco.
3. If an expropriation occurred, what law governed and what compensation standard applied under the Algiers Declarations, the Treaty of Amity, and customary international law.
4. What valuation approach should be used to determine compensation for the taking of a functioning enterprise.

## Decision

- The Tribunal held it had jurisdiction over AIFC’s claim under the Algiers Declarations, including for an indirect investment structure.
- The Tribunal found that Iran expropriated AIFC’s interest in Khemco through cumulative measures that deprived AIFC of meaningful control, participation, and economic benefits.
- The Tribunal treated the taking as lawful in principle as part of a general nationalization program serving public purposes and not shown to be discriminatory, subject to payment of compensation under international law.
- The Tribunal applied the Treaty of Amity together with customary international law to determine the standard and method of compensation.
- For compensation, the Tribunal endorsed a going-concern valuation at the time of expropriation and rejected reliance on book value as insufficient for a profit-generating enterprise.
- Because the award was partial, it set controlling compensation principles and addressed valuation methodology while leaving final quantification and related matters for later proceedings or settlement.

## Legal Principles

- Tribunal jurisdiction may extend to claims by a U.S. parent for harm to an investment held indirectly through foreign subsidiaries when the claimant’s protected economic interest is established under the Algiers Declarations.
- Expropriation under international law is determined by effects: a state commits a de facto taking when measures substantially deprive an investor of the use, control, or benefits of property, including corporate participation and contractual management rights, even without formal title transfer.
- A taking may be lawful under customary international law if it is for a public purpose, non-discriminatory, and accompanied by compensation; lawfulness of the taking is distinct from the amount and method of compensation.
- The Treaty of Amity’s property-protection obligations may be interpreted and applied in light of customary international law standards on expropriation and compensation.
- Compensation for the expropriation of a functioning enterprise generally should reflect the enterprise’s real economic value as a going concern at the time of taking, commonly assessed through market-based valuation concepts and, where appropriate, discounted cash-flow analysis.

## Conclusion

The Tribunal sustained jurisdiction, found that Iran’s post-revolution measures effected a de facto expropriation of AIFC’s 50% joint-venture rights in Khemco, treated the nationalization as lawful if compensated, and required compensation based on the going-concern value of the expropriated interest under customary international law as applied alongside the Treaty of Amity.


Amoco Int’l Fin. Corp. v. Iran, 15 Iran-U.S. Cl. Trib. Rep. 189 (Iran-U.S. Cl. Trib. 1987)