The tentative deal announced Wednesday whereby Tehran will transfer about three-quarters of its nuclear fuel out of the country for enrichment in Russia came after nearly three days of talks between senior U.S. and Iranian officials. Even before those discussions, the face-to-face meeting this month between senior U.S. and Iranian officials in Geneva was much ballyhooed — but not unprecedented. Since 1981, officials of the two countries have been quietly meeting in The Hague to resolve billions of dollars in claims arising from the Iranian revolution and the resulting rupture of diplomatic relations between the two countries.
The meetings are held under the auspices of the Iran-U.S. Claims Tribunal, which was established by the agreement that resolved the 1979 hostage crisis. While it has done important work, the tribunal has largely outlived its utility for both sides — and the Obama administration could face a significant international legal challenge if the tribunal orders the United States to make large monetary payments to the Iranian government.
The tribunal behaves much like a court. Iran and the United States submit, brief and argue cases before nine judges: three appointed by each country and three third-country judges mutually agreed upon or appointed by a neutral authority. Its hearings, held in a converted hotel on a residential street, have allowed U.S. and Iranian legal advisers and their teams to speak directly on a range of issues.
When it was set up under the Algiers Accords, the tribunal was expected to resolve all outstanding claims in a few years. It has labored for nearly three decades, conducting more than 300 hearings and issuing more than 20,000 orders. The tribunal has made 600 awards resolving claims by nationals of the two countries, or by one government against the other, including more than $2.5 billion in awards to U.S. nationals or the U.S. government and roughly $1 billion to the Iranian government. It is still working on some of the most complicated cases: disputes relating to contracts for sales and services of military equipment produced by U.S. companies for Iran before 1979.
Matters have long been complicated by the consistently bad behavior of the Iranian government. For more than a decade, Iran failed to pay hundreds of millions of dollars into a security account established for judgments in favor of U.S. claimants. It has repeatedly filed challenges to the third-country judges who have ruled against Iranian claims. Iran even denounced the tribunal’s appointing authority, a former chief justice of the Dutch Supreme Court, after he rejected its demand to remove tribunal President Krzysztof Skubiszewski, a former Polish foreign minister. Last year, all three Iranian judges resigned en masse, citing disagreements with the other judges.
Iran’s strategy appears to be seeking to force out the third-country judges so they can be replaced by judges more to Tehran’s liking, or to provoke the U.S. administration into a dramatic overreaction. So far, neither has happened. (And the 83-year-old Skubiszewski, who grew up resisting Nazi and Communist oppression, appears unlikely to bow to bullying.)
In July, the tribunal dismissed, 5 to 4, Iran’s claim for $2.2 billion in compensation for military equipment that had been ordered by Shah Mohammad Reza Pahlavi but that the U.S. government had refused to allow U.S. companies to deliver after the hostage crisis. Had the tribunal ordered Washington to pay Iran even a fraction of what it had sought, the administration would have been forced to choose between complying with U.S. obligations under the Algiers Accords, and thus paying millions of dollars (or more) to a government that has been supporting terrorism and secretly building uranium enrichment facilities, or ignoring an international court.
But the Obama administration still faces a threat. The tribunal left the door open for Iran to relitigate aspects of this dispute, and Tehran still has claims worth billions of dollars in other cases.
The administration must decide what approach to take toward the tribunal. Under international law, the administration has a reasonable basis for suspending U.S. participation in the dispute-resolution body because of Iranian efforts to undermine it. But this administration has emphasized its commitment to international law, and choosing this option could incur international criticism and further legal challenges.
The tentative deal announced Wednesday is expected to buy time to establish a diplomatic solution to the impasse over Iran’s nuclear ambitions. Rather than continuing to hope for the best, the Obama administration should add the future of the tribunal and remaining bilateral claims to the list of issues to be discussed with Iran. U.S. negotiators might suggest that the tribunal be dissolved, with outstanding Iranian claims withdrawn in exchange for U.S. payment for enrichment of Iranian uranium outside of Iran. Issues concerning diplomatic properties of both governments, which have been the subject of claims before the tribunal, could also be resolved, paving the way for the gradual resumption of diplomatic ties.
If it does nothing, the administration may lose an opportunity to close down a diplomatic vestige and risk future tribunal awards that the United States would be legally required to pay but find it politically impossible to do so.
John B. Bellinger III, a partner in Arnold & Porter LLP and an adjunct senior fellow in international and national security law at the Council on Foreign Relations. He served as State Department legal adviser from April 2005 to January 2009. In that capacity he appeared before the tribunal.