ICJ issues provisional measures in Iran sanctions case



In a high-profile decision, on October 3, 2018, the International Court of Justice ("ICJ” or the “Court”) unanimously issued provisional measures “ordering” the United States to “remove, by means of its choosing, any impediments” to the export to Iran of medicine, medical devices, foodstuffs, agricultural commodities, and spare parts, equipment and services necessary for the safety of civil aviation.1

Earlier this year, Iran brought a case to the ICJ—the “principal judicial organ of the United Nations”2—alleging that the US violated the terms of the 1955 Treaty of Amity, Economic Relations and Consular Rights (the “1955 Treaty”) between Iran and the US when it revoked the sanctions relief provided by the Joint Comprehensive Plan of Action (JCPOA). The US announced its withdrawal from the JCPOA on May 8, 2018. Iran requested that the ICJ, among other things, order the US to terminate the reinstated sanctions, “terminate its threats with respect to the announced further sanctions” and compensate Iran “in an amount to be determined by the Court at a subsequent stage of the proceedings."3 Iran also requested that the ICJ issue “provisional measures” pending a final judgment on the merits.4

The ICJ’s October 3 decision granted Iran’s request, in part, but it is unlikely to have a material practical impact on the US sanctions at issue. It may, however, play into the ongoing political dynamic between the US and the European Union about sanctions compliance and galvanize efforts to create a European “Special Purpose Vehicle” to facilitate Iran-related trade.

The October 3 decision

The ICJ’s October 3 decision evaluates the three elements at issue in any request for provisional measures, namely: (1) jurisdiction; (2) the linkage between the provisional measures and the rights invoked; and (3) the risk of irreparable prejudice and urgency if the request is denied.

As discussed below, the ICJ held that there was at least a prima facie showing of each element, and therefore a basis to order provisional measures with respect to sanctions affecting humanitarian trade—albeit not general commercial trade. 

1. Jurisdiction

The ICJ dismissed the argument by the US that it lacks jurisdiction to hear the case.

Specifically, the US argued that Iran’s claim does not relate to the “interpretation or application” of the 1955 Treaty. Rather, the US contended that the dispute is exclusively related to the JCPOA, which did not contain a compromissory clause giving the ICJ jurisdiction. The US also argued that exceptions to the 1955 Treaty that permit a party to restrict nuclear-related trade, and to impose restrictions on national security grounds, authorize the US sanctions.

The ICJ, however, considered that “… the fact that the dispute between the Parties arose in connection with and in the context of the decision of the United States to withdraw from the JCPOA does not in and of itself exclude the possibility that the dispute relates to the interpretation of application of the Treaty of Amity … [C]ertain acts may fall within the ambit of more than one legal instrument and a dispute relating to those acts may relate to the ‘interpretation or application’ of more than one treaty or other instrument.”5

The ICJ also observed that the 1955 Treaty “defines a limited number of instances in which, notwithstanding the provisions of the [1955] Treaty, the Parties may apply certain measures”6 to restrict trade. However, the ICJ found that “[w]hether and to what extent those exceptions have lawfully been relied on” is subject to judicial review and thus an integral part of the ICJ’s jurisdiction about the “interpretation or application” of the 1955 Treaty.7

Accordingly, the ICJ found that Iran’s claim was, on its face, “capable of falling within the material scope of the 1955 Treaty” and thus there is a dispute between Iran and the US as to the interpretation or application of the 1955 Treaty.8

2. Link between rights and provisional measures

In assessing whether Iran had demonstrated a link between the rights it claimed and the provisional measures it sought, the ICJ first evaluated whether Iran had “plausibly” asserted rights. At this stage of the proceedings, Iran did not need to show that it in fact has those rights, but rather that such a showing is possible and grounded in a natural reading of the 1955 Treaty.

Iran asserted broad and expansive rights under the 1955 Treaty. That accord purports to prohibit: (1) discriminatory treatment of Iranian nationals and companies; (2) restrictions on payments to or from Iran; (3) unequal treatment of goods from Iran or destined for Iran; (4) restrictions on Iranian importers and exporters obtaining marine cover from US companies; and (5) any impairment of freedom of commerce between the two countries. In essence, Iran claimed that the US sanctions against Iran returning to force following JCPOA withdrawal violated its rights under the 1955 Treaty.

The US countered that Iran was asserting rights under the JCPOA, not the 1955 Treaty, and thus could not survive the US’s sovereign decision to withdraw from the JCPOA. Further, the US stated that any rights under the 1955 Treaty are limited by the exceptions in that accord for measures relating to “fissionable materials” and those “necessary to protect its essential national security interests.”9

The ICJ accepted that the 1955 Treaty does, in fact, grant Iran broad plausible rights against commercial and financial restrictions. The ICJ also accepted the US's contention that its sanctions could relate to fissionable materials or be necessary to safeguard US essential national security interests, at least with respect to some of the rights asserted by Iran. However, the ICJ determined that Iran’s rights to import and purchase humanitarian goods and goods related to the safety of civil aviation could not be overridden by those exceptions.

In evaluating the link between the rights claimed and the requested provisional measures, the ICJ considered, in effect, whether the relief requested was narrowly tailored to protect the rights that Iran had plausibly asserted.

Iran’s request for provisional relief asked the Court to indicate, as part of its order, that the US will: (a) suspend its reimplementation and enforcement of sanctions; (b) allow completion of transactions already licensed for sale and lease of aircraft, spares and equipment; (c) report to the ICJ the steps taken in respect of (a) and (b); and (d) provide assurances that it will abide by the ordered relief and cease any statements or actions that might have a chilling effect on economic engagement with Iran.

Iran contended that it was seeking a suspension of the reimposition of sanctions set to return after JCPOA withdrawal and a continuation in force of already-licensed transactions, and tied the requested relief to specific rights under the 1955 Treaty or measures necessary to ensure those rights are being preserved. The US characterized the requested relief as a restoration of the sanctions relief afforded under the JCPOA. The ICJ agreed with Iran that the measures were sufficiently linked to the rights Iran sought to protect.

3. Irreparable prejudice and harm

The ICJ has authority to grant provisional relief when it is necessary to prevent irreparable prejudice and harm. The Court also requires a showing of urgency. Iran asserted that the reimposition of sanctions met both these criteria. It cited the predictable consequences of losing access to humanitarian goods and goods relating to the safety of civil aviation. It also cited the empirical consequences to date due to the US withdrawal from the JCPOA—notably, that both US and non-US companies have announced that they would pull out of Iran and terminate contracts with Iranian companies and nationals since the May 8 announcement.

The US disputed Iran’s contentions that Iran faced prejudice relating to its rights to humanitarian goods and goods relating to civil aviation safety. The US cited the humanitarian exemptions and general licenses that are already part of its Iran sanctions program, and noted that secondary sanctions would not apply to activities within the scope of these exemptions and general licenses. The US further contended that it maintains a case-by-case licensing policy with respect to transactions to ensure safety of civil aviation and the safe operation of US-origin commercial passenger aircraft, and that it has licensed humanitarian activity (to the extent not covered by existing general licenses).10 It also assured the Court that it would use its “best endeavors” to ensure that licensing requests relating to humanitarian aid or civil aviation safety would receive expedited consideration from the relevant agencies.

The Court accepted that impediments to humanitarian aid and civil aviation safety goods would present irreparable prejudice and harm to Iran. It also rejected the US’s arguments regarding exclusion or exemption of the goods at issue from its sanctions regulations. The ICJ noted the chilling effect of sanctions on trade in humanitarian goods—that, while in principle such goods may be exempted from those sanctions, in practice trade and associated financial transactions had become “difficult if not impossible.”11 The Court also expressed overt skepticism at the US’s promise to use its “best efforts” to expedite licenses for subject goods, specifically citing the limitations of interagency cooperation.

Impact of the decision: unintended consequences?

The October 3 ICJ decision is limited to Iran’s request for provisional measures. It is not a final judgment on the merits of Iran’s claim, nor does the decision “make definitive findings of fact.”12 In addition, shortly after the decision, the US withdrew from the 1955 Treaty on which the ICJ decision was based. Notwithstanding the significant media coverage, the ICJ’s order is far more limited in scope than the full reinstatement of sanctions relief that Iran had requested—among other things.

Moreover, the ICJ’s order—limited as it may be—appears unlikely to have much practical effect, because the US has taken the position that its sanctions already include humanitarian exceptions (e.g., general licenses) to enable exports to Iran of medicine, food, and items, and provide for a favorable licensing policy with respect to transactions related to the safety of commercial aviation. Thus, it remains to be seen what, if anything, the US intends to do to address what the ICJ said was the result of the reinstatement of US sanctions, including that the reinstatement “appears to have already had an impact on import and export of products originating from the two countries as well as on payments and transfer of funds between them.”13

The ICJ order, however, may have a political impact, especially given the disconnect between the US and the European Union, which has remained committed to the JCPOA. Several of the ICJ’s observations may exacerbate calls within the European Union to develop a payment mechanism (or so-called “Special Purpose Vehicle”) to finance Iran-related trade, especially the ICJ’s observations that:

  • pre-May 8, 2018 contracts for Iranian airlines to buy spare parts that “appear to have been cancelled or adversely affected”;14
  • “companies providing maintenance for Iranian aviation companies have been prevented from doing so when it involved the installation or replacement of components produced under United States licenses”;15
  • it has “become more difficult in practice”16 for Iran to import food and medical supplies; and
  • “certain foreign banks have withdrawn from financing agreements or suspended co-operation with Iranian banks” and “[s]ome of these banks also refuse to accept transfers or provide corresponding services.”17

Accordingly, while the ICJ order itself may have limited, if any, direct, practical impact on US sanctions, the Court’s commentary about practical challenges may spur the European Union to develop a workaround that enables continued trade with Iran—at least with respect to humanitarian goods.

1. Alleged violations of the 1955 Treaty of Amity, Economic Relations and Consular Rights (Islamic Rep. of Iran v. U.S.), Order, (Oct. 3, 2018), https://www.icj-cij.org/files/case-related/175/175-20181003-ORD-01-00-EN.pdf
2. The Court, International Court of Justice, https://www.icj-cij.org/en/court (last accessed Oct. 11, 2018).
3. Islamic Rep. of Iran v. U.S., Order, ¶ 2.
4. “Provisional measures” in the context of the ICJ are similar to a preliminary injunction or protective order, such as might be issued by a US court.
5. Islamic Rep. of Iran v. U.S., Order, ¶ 38.
6. Islamic Rep. of Iran v. U.S., Order, ¶ 42.
7. Id.
8. Islamic Rep. of Iran v. U.S., Order, ¶ 43-44.
9. Islamic Rep. of Iran v. U.S., Order, ¶ 40.
10. Islamic Rep. of Iran v. U.S., Order, ¶ 86.
11. Islamic Rep. of Iran v. U.S., Order, ¶ 89.
12. Islamic Rep. of Iran v. U.S., Order, ¶ 79.
13. Islamic Rep. of Iran v. U.S., Order, ¶ 88.
14. Id.
15. Id.
16. Islamic Rep. of Iran v. U.S., Order, ¶ 89.
17. Id.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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