Détente with Iran?: Abolishing the Iran-US Claims Tribunal

By Kristen McCannon

In 1981, the United States and Iran signed the Algiers Accords, ending the Iranian Hostage Crisis and providing a framework for the countries’ post-diplomatic relations. Among its other provisions, the Algiers Accords created a mechanism in which the governments of US and Iran, as well as their respective citizens, could resolve financial, contractual and property disputes. The Iran-US Claims Tribunal began hearing cases in The Hague later that year.

The Tribunal was a novel form of dispute resolution between states that had terminated previously existing diplomatic relations. And unlike similar mechanisms created to handle the United States’ relations with communist China and Cuba, the Tribunal also proved to be a rousing success. Since 1981, judges on the Tribunal have granted roughly $3 billion in awards after resolving 4700 claims at a success rate of 95%.

The Tribunal was initially only intended to last for a few years, quickly wrapping up all outstanding claims. Many of those initial cases dealt with the seizure of American property after the fall of the Shah, and the freezing of Iranian assets in the United States during the Hostage Crisis. These cases were relatively easy to settle based on the Algiers Accords, which required the release of all such assets.

However, thirty years later, the Tribunal is still trudging onwards, struggling to resolve a small handful of large, complex cases that remain on its docket. The simple requests for unfreezing assets have largely disappeared, replaced by more politically contentious cases. The difficulty of these cases is further multiplied by the long passage of time since the disputes. The Tribunal relies on first person accounts and testimony, as well as financial and real estate documents, all of which are now at least three decades old and difficult to locate.

One such example of a complex recent case is Rubin v. Islamic Republic of Iran. The plaintiffs in Rubin sought compensation from Iran for a Hamas suicide bombing in Israel in 1997. The plaintiffs won by proving that Iran has financed Hamas, but Iran refused to pay the settlement. The plaintiffs then moved to federal court, requesting to attach Persian cultural artifacts on loan to the University of Chicago, and seeking discovery of all Iranian assets located in the United States. The Seventh Circuit’s opinion denying both requests clearly expressed frustration with the “numerous motions” and “multiple rulings” that had left the parties “embroiled in litigation.”

Another series of recent cases was filed by the government of Iran, alleging that the United States blocked the sale of military equipment purchased by the shah in the 1970s. As John Bellinger has written in the Wall Street Journal, this series of cases is enormously contentious and has caused Iran to employ expensive and burdensome delay tactics, including refusing to make payments to joint accounts as mandated. These cases therefore have also contributed to a sense that the Tribunal has become a cumbersome and expensive mechanism.

The Iran-US Claims Tribunal is already regarded as a success, and its procedures and methods have been validated in the eyes of the international community. Abolishing the Tribunal will preserve this perception, and prevent a successful exercise of international law from going down in history as having ultimately devolved into an expensive and contentious mess. Furthermore, the political climate for abolishing the Tribunal is as favorable as it has been since 1979. The administrations of President Obama and President Rouhani should continue their move towards rapprochement by abolishing the tribunal and agreeing to resolve any other disputes through regular legal channels.