## Facts

- In 1977, a U.S. defense contractor contracted with Iran’s Ministry of War to sell and service an air combat maneuvering range for Iran’s military.
- After the Iranian Revolution, performance ceased and U.S.–Iran relations deteriorated.
- In 1979, the parties discontinued the contracts and agreed the contractor would try to resell the equipment and later settle accounts; in 1981, the contractor resold a modified system to Canada.
- The Ministry pursued claims before the Iran–U.S. Claims Tribunal, which dismissed for lack of jurisdiction.
- The Ministry then initiated ICC arbitration in Switzerland; in 1997, the ICC issued a final award for the Ministry of $2,808,519 plus pre-award interest and costs.
- The contractor did not pay; in 1998, the Ministry sued in federal court to confirm the award under the New York Convention and also sought prejudgment interest (from award to judgment) and attorney’s fees.
- The district court confirmed the award but denied prejudgment interest and attorney’s fees.
- On appeal, the contractor argued confirmation violated U.S. public policy due to sanctions and licensing restrictions on payments to Iran; the Ministry cross-appealed the denials of prejudgment interest and fees.

## Issues

1. Whether confirmation of the foreign arbitral award was barred by the New York Convention’s public-policy exception because U.S. sanctions restrict transactions and payments involving Iran.
2. Whether an order confirming a specific monetary arbitral award is a “money judgment” that accrues postjudgment interest under 28 U.S.C. § 1961.
3. Whether a court confirming an award under the New York Convention may award prejudgment interest and attorney’s fees, and whether denial of those remedies was legally erroneous.

## Decision

- The Ninth Circuit affirmed confirmation of the award, rejecting the public-policy defense.
- The court held the confirmation order was a money judgment, entitling the Ministry to postjudgment interest under 28 U.S.C. § 1961.
- The court held district courts have discretion to award post-award prejudgment interest and attorney’s fees in Convention confirmation actions.
- The court vacated the denial of prejudgment interest and attorney’s fees and remanded for reconsideration under the correct legal standards.

## Legal Principles

- The New York Convention’s public-policy exception (Article V(2)(b)) is construed narrowly and applies only when enforcement would violate the forum’s most basic notions of morality and justice.
- U.S. sanctions and related licensing regimes may constrain payment or execution, but they do not necessarily bar judicial confirmation of a foreign arbitral award recognizing liability.
- A federal judgment confirming a specific monetary arbitral award is a money judgment subject to mandatory postjudgment interest under 28 U.S.C. § 1961.
- In a Convention confirmation action, domestic law may supply ancillary remedies; courts may award post-award prejudgment interest to compensate for delay between the arbitral award and federal judgment.
- Attorney’s fees may be awarded in the court’s discretion where refusal to comply with an arbitral award lacks adequate justification, and the Convention does not categorically preclude such fee awards for enforcement litigation.

## Conclusion

The Ninth Circuit held that U.S. sanctions did not make confirmation of an ICC award for an Iranian state entity contrary to public policy, treated the confirmation as a money judgment accruing postjudgment interest, and remanded for the district court to reconsider prejudgment interest and attorney’s fees under discretionary domestic standards.


Ministry of Def. & Support for the Armed Forces of the Islamic Republic of Iran v. Cubic Def. Sys., Inc., 665 F.3d 1091 (9th Cir. 2011)