## Facts

- Iran and the United States were bound by the Algiers Declarations, which required each State to implement the settlement arrangement so that Tribunal awards would be treated as valid and enforceable in domestic courts.
- In an earlier intergovernmental decision (A21), the Tribunal ruled the Declarations did not require the United States to pay Tribunal awards rendered against U.S. nationals, while still requiring enforceability in U.S. jurisdiction.
- The Tribunal issued an arbitral award in Avco (1988) in favor of Iranian interests against a U.S. company.
- Iran sought enforcement of the Avco award in U.S. courts under the New York Convention.
- The U.S. Court of Appeals for the Second Circuit refused enforcement, concluding the U.S. party had been deprived of a meaningful opportunity to present its case (a New York Convention Article V ground), and relying in substance on reasoning consistent with the dissent in the Avco arbitration.
- Iran filed an intergovernmental “A-series” claim (A27) alleging the United States breached its Declarations obligations by permitting U.S. courts to refuse enforcement of Avco and sought compensation equal to the Avco award amount plus interest.
- Iran also sought relief tied to 24 additional Tribunal awards against U.S. nationals, asserting enforcement in U.S. courts was likely to fail.
- The Full Tribunal issued a final award in 1998, accompanied by separate opinions addressing interest and costs.

## Issues

1. Whether the Algiers Declarations required the United States to ensure Tribunal awards would be treated as valid and enforceable in U.S. courts, and the scope of any permissible domestic-court review under the New York Convention.
2. Whether the Second Circuit’s refusal to enforce the Avco award constituted a breach by the United States of its obligations under the Algiers Declarations.
3. Whether the United States had a duty to satisfy or guarantee payment of other Tribunal awards in Iran’s favor against U.S. nationals, including awards not yet subjected to U.S. enforcement proceedings.
4. What reparation, including interest and costs, was owed if a breach was found.

## Decision

- The Tribunal reaffirmed that the Algiers Declarations obligate each State to ensure Tribunal awards are treated as valid and enforceable in its national courts, but do not impose a general duty on the United States to satisfy all awards against U.S. nationals.
- The Tribunal found the United States failed, in at least one material respect, to comply with its enforcement-related obligations in connection with the Avco enforcement refusal.
- The Tribunal awarded Iran monetary relief for the breach, including interest, but did not accept all categories of damages sought.
- The Tribunal rejected Iran’s attempt to obtain prospective or generalized relief requiring the United States to pay or guarantee payment of 24 additional awards based on predicted enforcement difficulties.
- The Tribunal applied an interest approach associated with the “Sylvania formula” for at least part of the relevant period and declined to award certain legal expenses claimed by Iran for U.S. court proceedings.

## Legal Principles

- Under the Algiers Declarations, each State must implement the settlement so that Tribunal awards are treated as valid and enforceable in its domestic legal system.
- The Declarations do not make a respondent State a guarantor required to pay Tribunal awards entered against its nationals absent an independent breach attributable to the State.
- A State may incur international responsibility for actions of its judiciary when domestic decisions fail to give effect to the State’s international obligations regarding recognition and enforcement.
- Domestic-court review under the New York Convention may exist in principle, but its exercise must remain compatible with the State’s specific international commitment to accord effective enforceability to Tribunal awards.
- Monetary reparation for breach may include interest calculated by a rate methodology selected by the Tribunal; recovery of litigation costs requires a demonstrated compensable loss within the governing remedial framework.

## Conclusion

The Tribunal held that the United States’ obligations under the Algiers Declarations required domestic treatment of Tribunal awards as valid and enforceable, found a compensable breach related to the non-enforcement of the Avco award, granted limited monetary relief with interest, and rejected Iran’s request to convert the enforcement obligation into a blanket duty for the United States to satisfy other awards against U.S. nationals.


Islamic Republic of Iran v. United States, Award No. 586-A27-FT (Iran-U.S. Cl. Trib. 1998)