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US Ordered by International Court of Justice to Compensate Iran for Frozen Assets
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On March 31, 2023, the International Court of Justice (ICJ) delivered a judgment in the case of the Islamic Republic of Iran v. United States of America, ruling that the US violated a 1955 treaty with Iran by freezing Iranian assets to fulfill terrorism-related awards from the US. The court ordered the US to compensate Iran for the violations, with the compensation amount to be determined later.

The case was brought by Iran in 2016, alleging a series of treaty violations dating back to 2002. The US had adopted and amended various congressional measures, including the Terrorism Risk Insurance Act (TRIA) and the Foreign Sovereign Immunities Act (FSIA), to pursue action against Iran. These acts compensated Americans who received judicial awards against someone associated with an “act of terrorism” or someone designated as a “terrorist party” by the US government.

In US court cases, Americans were awarded judicial decisions that ordered Iranian companies to attach, execute, turn over, or distribute their assets to satisfy the award. The issue was further compounded when former President Obama signed Executive Order (EO) 13599 in 2012. The order blocked the transfer, payment, exportation, withdrawal, and all other dealings in any Iranian-owned property within the US.

  
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Iran argued to the ICJ that due to the TRIA, FSIA, and EO 13599, Iran was “deprived of the rights they enjoyed under the Treaty of Amity.” The US countered by arguing that the measures were designed to “provide redress for victims of terrorism” and applied to all designated State sponsors of terrorism. However, Iran argued that the measures did not uniquely apply to Iran and that the US had attacked Iranian enterprises engaged in commercial activities.

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The ICJ agreed with Iran, finding that the US violated several provisions of the Treaty of Amity in enacting and enforcing the TRIA, FSIA, and EO 13599. The court held that the US should compensate Iran “for the injurious consequences of the violations” and would determine the amount of compensation owed to Iran later.

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The ICJ’s judgment is legally binding, but the court cannot enforce it. Both the US and Iran have previously ignored the court’s judgments.

The judgment is significant as it highlights the impact of the Treaty of Amity, which aimed to normalize social and commercial relations between the US and Iran. Although the US formally withdrew from the treaty in 2018, the ICJ found that the disputed actions in Thursday’s case occurred while the treaty was still in force, and, therefore, the court considered the treaty’s provisions.



The judgment also raises questions about the effectiveness of the ICJ as an international legal forum. Despite its legally binding judgments, the court needs more power to enforce them, which limits its impact on state behavior.

In conclusion, the ICJ’s ruling in the case of the Islamic Republic of Iran v. United States of America has ordered the US to compensate Iran for violating the Treaty of Amity. The case highlights the significance of international treaties and the limitations of international legal forums in enforcing their provisions.



 

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