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decision of the Chamber rendered pursuant to [the Agreement]."

19/

parties thus decided to use the ICJ as a binding arbitration panel.

The

Iran

In recent years, the most well-known example of a claims 21/ commission is the Iran-U.S. Claims Tribunal ("Tribunal").

The Tribunal

20/

In a passage describing the use of claims settlement tribunals, the Supreme Court has stated:

Not infrequently in affairs between nations, outstanding claims by nationals of one country against the government of another country are "sources of friction" between the two sovereigns. United States v. Pink, 315 U.S. 203, 225 (1942). To resolve these difficulties, nations have often entered into agreements settling the claims of their respective nationals. As one treatise writer puts it, international agreements settling claims by nationals of one state against the government of another "are established international practice reflecting traditional international theory." L. Henkin, Foreign Affairs and the Constitution 262 (1972). Consistent with that principle, the United States has repeatedly exercised its sovereign authority to settle the claims of its nationals against foreign countries Under [executive agreements settling claims], the President has agreed to renounce or extinguish claims of United States nationals against foreign governments in return for lump-sum payments or the establishment of arbitration procedures. But it is also undisputed that the "United States has sometimes disposed of the claims of its citizens without their consent, or even without consultation with them, usually without exclusive regard for their interests, as

distinguished from those of the nation as a whole." Henkin, supra, at 262-263.

Dames & Moore v. Regan, 453 U.S. 654, 679-80 (1981).

21/ For a general description of the Iran-U.S. Claims Tribunal, see Note, The Iranian Hostage Agreement Under International and United States Law, 81

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was established to settle various disputes between Iran and the U.S. The Tribunal was formed in the following manner:

22/

(Footnote continued from previous page)

Col. L. Rev. 822 (1981); Stewart & Sherman, Developments at the Iran-United States Claims Tribunal: 1981-1983, 24 Va. J. Int'l L. 1 (1983).

22/ See Settlement of Claims Agreement, January 19, 1981, United States-Iran, Article II, reprinted in 81 Col. L. Rev. 898-901 (1981); Commitments of Iran and U.S., January 19, 1981, United States-Iran, reprinted in 81 Col. L. Rev. 894-98 (1981). Both of the agreements were made through the government of Algeria's declaration that the U.S. and Iran had formally adhered to the agreements.

The Settlement of Claims Agreement stated that the Tribunal would decide the following claims:

1.

An International Arbitral Tribunal (the Iran-United States Claims Tribunal) is hereby established for the purpose of deciding claims of nationals of the United States against Iran and claims of nationals of Iran against the United States and any counterclaim which arises out of the same contract, transaction or occurrence that constitutes the subject matter of the national's claim, if such claims and counterclaims are outstanding on the date of this agreement, whether or not filed with any court, and arise out of debts, contracts (including transactions which are the subject of letters of credit or bank guarantees), expropriations or other measures affecting property rights, excluding claims described in Paragraph 11 of the Declaration of the Government of Algeria of Jan. 19, 1981, [i.e., claims relating to the seizure of the American Embassy in Tehran and subsequent detention of American citizens] and claims arising out of the actions of the United States in response to the conduct described in such paragraph, and excluding claims arising under a binding contract between the parties specifically providing that any disputes thereunder shall be within the sole jurisdiction of the competent Iranian courts in response to the Majlis position.

2.

The Tribunal shall also have jurisdiction over official claims of the United States and Iran against each other arising out of contractual arrangements between them for the purchase and sale of goods and service.

Article II at ¶¶ 1-2. The Tribunal thus had jurisdiction over both claims of U.S. nationals and contractual claims of the U.S. government.

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The Tribunal shall consist of nine members or such
larger multiple of three as Iran and the United States may
agree are necessary to conduct its business

expeditiously. Within 90 days after the entry into force
of this agreement, each Government shall appoint one-third
of the members. Within 30 days after their appointment,
the members so appointed shall by mutual agreement select
the remaining third of the Tribunal. Claims may be
decided by the full Tribunal or by a panel of three
members of the Tribunal as the President shall determine.
Each such panel shall be composed by the President and
shall consist of one member appointed by each of the three
methods set forth above.

Settlement of Claims Agreement, Article III at ¶ 1.

23/

In examining

various claims, the Tribunal is to "decide all cases on the basis of respect for law, applying such choice of law rules and principles of commercial and international law as the Tribunal determines to be applicable, taking into account relevant usages of the trade, contract provisions and changed 24/

circumstances."

The U.S. and Iran agreed that following the filing of a claim with the Tribunal, a claim "shall . . be considered excluded from the jurisdiction of the courts of Iran, or of the United States, or any other court."

25/

23/ The agreement also specified that "the Tribunal shall conduct its business in accordance with the arbitration rules of the United Nations Commission on International Trade Law (Uncitral) except to the extent modified by the parties or by the Tribunal to insure that this agreement can be carried out." Id. at Article III, 2.

25/ Id. at Article VII, ¶ 2. Both President Carter and President Reagan issued Executive Orders implementing the Agreements. In Dames & Moore v. Reagan, 453 U.S. 654 (1981), the Supreme court described those orders by

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Regarding the finality of the Tribunal's decisions, the Agreement stated

the following:

1. All decisions and awards of the Tribunal shall be final and binding.

*

*

*

3. Any award which the Tribunal may render against
either Government shall be enforceable against such

Government in the courts of any nation in accordance with
its laws.

On January 19, 1981, President Carter issued a series of Executive Orders implementing the terms of the agreement. Exec. Orders Nos. 12276-12285, 46 Fed. Reg. 7913-7932.

On February 24, 1981, President Reagan issued an Executive
Order in which he "ratified" the January 19th Executive Orders.
Exec. Order No. 12294, 46 Fed. Reg. 12111. Moreover, he "suspended"
all "claims which may be presented to
Tribunal" and provided

that such claims "shall have no legal effect in any action now
pending in any court of the United States." Ibid. The suspension
of any particular claim terminates if the Claims Tribunal determines
that it has no jurisdiction over that claim; claims are discharged
for all purposes when the Claims Tribunal either awards some
recovery and that amount is paid, or determines that no recovery is
due. Ibid.

Id. at 665-66.

26/ The Tribunal also was given jurisdiction to decide disputes arising under the Commitments of Iran and U.S. Agreement. That Agreement stated:

16. If any dispute arises between the parties as to whether the United States has fulfilled any obligation imposed upon it by paragraphs 12-15, inclusive, 'Iran may submit the dispute to binding arbitration by the tribunal established by, and in accordance with the provision of, the Claims Settlement Agreement. If the tribunal

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27/

In Dames & Moore v. Reagan,

the Supreme Court held that the

suspension of claims by the President was neither unconstitutional nor in

28/

violation of any statute.
In the course of its discussion, the Court
made a statement which is relevant to the issues raised by the FTA.

The

Court stated:

(Footnote continued from previous page)

determines that Iran has suffered a loss as a result of the failure by the United States to fulfill such obligation, it shall make an appropriate award in favor of Iran which may be enforced by Iran in the courts of any nation in accordance with its laws.

Settlement of Disputes

17. If any other dispute arises between the parties as to the interpretation or performance of any provision of this declaration, either party may submit the dispute to binding arbitration by the tribunal established by, and in accordance with the provision of, the Claims Settlement Agreement. Any decision of the tribunal with respect to such dispute, including any award of damages to compensate for a loss resulting from a breach of this declaration of the Claims Settlement Agreement, may be enforced by the prevailing party in the courts of any nation in accordance with its laws.

Commitments of Iran and U.S. Agreement at ¶¶ 16-17 (emphasis added). The Tribunal is therefore empowered to make binding arbitration decisions regarding the interpretation of that Agreement.

27/ 453 U.S. 654 (1981).

28/ The Court stated:

Finally, we re-emphasize the narrowness of our decision. We do not decide that the President possesses plenary power to settle claims, even as against foreign governmental entities But where, as here, the settlement of claims has been determined to be a necessary incident to the resolution of a major foreign policy dispute between our country and another, and where, as here, we can conclude that Congress acquiesced in the President's action, we are not prepared to say that the President lacks the power to settle such claims.