US Faux Pas

Lawyer at Central Bank of Iran
US Faux PasUS Faux Pas

On April 20 the US Supreme Court issued its opinion regarding the frozen assets of the Central Bank of Iran amounting to $2 billion. Those assets where originally securities deposited with Clearstream in Luxembourg. The securities had been sub-deposited with Citibank in New York where the descendants of the US marine barracks explosion in Lebanon in 1983 sought an order from the district court to attach them. The claimants first obtained a judgment from a court in the United States on 2003 against the government of the Islamic Republic of Iran and then moved to attach the assets belonging the CBIto aid the execution of that judgment.

The CBI raised its sovereign immunity before the district and appeal courts and argued that the courts lack jurisdiction to adjudicate a case which involves a foreign sovereign entity. In the meantime the US Congress intervened in the proceedings by passing an act which explicitly mentioned the case and by changing the law, directed the court to the render its judgment in a way which was in the interest of the claimants. CBI appealed before the US Supreme Court and argued that passing a law regarding a pending case before the court is not compatible with the principle of separation of powers and contravenes the principle of due process.

The recent opinion of the Supreme Court did not recognize the measure taken by the congress as a breach of the US constitution and therefore affirmed the judgment issued by the district and appeal courts.

The judgment of the US district court against Iran in 2003 was based on the allegation that the marine barracks explosion in Lebanon which killed 241 US soldiers was supported by Iran. The court held that Iran should pay $2.56 billion to the victims' families.Damages to be paid to the family of each victimis nearly $11 million which seems astonishing compared to other incidents.

For example on July 3, 1988 and Iran Air commercial flight was shot down by the American navy's guided missile cruiser the USS Vincennes instantly killing all 290 passengers and crew on board. The unprovoked attack took place in Iranian airspace, over Iran’s territorial waters and on the plane's usual flight path. According to a settlement reached between Iran and the US, each wage earning passenger was paid $300,000 and a non-wage earning victim's family got $150,000. In other words, each US soldier is going to be paid 72 times more than an Iranian non-wage earning civilian and 36 times more than an Iranian wage earning civilian.

In addition to that, the Airbus incident was directly and openly claimed by the US navy, while the Lebanon explosion was allegedly supported by Iran. This is in stark contrast to the most fundamental principles of human rights, i.e. the equality of human beings. How can they (Americans) argue that all people are equally endowed with human dignity while they say that the life of aUS soldier equals the lives of nearly 72 Iranians?

This approach is illegitimate and unacceptable in the extreme and it is the reason why even the strongest proponents of the Joint Comprehensive Plan of Action (JCPOA) condemn the path taken by the US government in this regard. This is apart from the various legal and political shortcomings of the judgment and its incompatibility with the principles of international law and sovereign equality.

In 1996, the US made some modifications to its Foreign Sovereign Immunities Act (FSIA). According to the changes, US nationals who have been injured as result of terrorist acts committed everywhere in the world or their descendants, are entitled to sue those states who are considered by the US government as supporters of those acts before US courts.

No other state has ever passed similar acts and the approach of courts in other states to seize the assets of foreign sovereigns within their own territories is regarded as infringement of the principle of sovereign immunity. In 2010, Germany and Italy referred a similar dispute to the International Court of Justice (ICJ). The case was related to an objection by Germany to the attachment of its property located on Italian territory and enforce judgments issued by its courts regarding the violation of laws of war by German officials during the World War II. Germany contended that the practice was contrary to the principles of equality of states and immunity of foreign sovereigns and should be declared by the ICJ as illegal and contrary to international customary law.

Italy, however, argued that the principles of human rights and humanitarian law should be considered as Jus Cogens rules which override every contrary rule in international law, including the sovereignty of states and their immunity before national courts.  After analyzing the arguments of both sides, the ICJ ruled in favor of Germany and explained that although human rights norms possess a pivotal plac in contemporary international law, other rules of international law should be adapted to them and construed in a way which is not incompatible with them. It noted that the principle of sovereign equality is procedural rule which should be considered by the court before dealing with the merits of the case.

In other words, courts should first make sure that they have the jurisdiction to deal with the case and only after that they may proceed to deal with the merits of the case. Since national courts do not have jurisdiction to decide about disputes involving foreign sovereigns, they should not proceed to the second phase i.e. dealing with the merits of the case and analyzing the arguments of either party. By rendering this judgment, the ICJ reaffirmed the principle of state immunity in contemporary international law and took a path quite opposite to the on taken by the US government.

The US has indeed taken another step in the wrong direction, i.e. violating the immunity of a foreign central bank. Even in the US, the FSIA provides that foreign central banks or monetary authorities possess a separate immunity from that of states. Unlike foreign states, foreign central banks could not implicitly waive their immunity by appearing before the courts and defending themselves. Only the explicit waiver of a central bank immunity is recognized in US law. In addition to that, central bankproperty cannot not be attached for pre-judgment purposes. Only a post judgment attachment with the explicit waiver of sovereignty could be recognized as the proper and legal process. Neither of these conditions were met in the case against the Central Bank of Iran and in fact the US courts belittled their own law in rendering the judgment against the Iranian bank. Not only did they violate their own law, they also changed the existing law to ensure the success of the claimants in the case before the court.

This whole practice seems completely flawed and illegitimate and explains why the Iranian people cannot and should not trust the US government even after the implementation of the landmark nuclear agreement.