INTERNATIONAL COURT OF JUSTICE CERTAIN IRANIAN ASSETS (ISLAMIC REPUBLIC OF IRAN v. UNITED STATES OF AMERICA) PRELIMINARY OBJECTIONS SUBMITTED BY THE UNITED STATES OF AMERICA MAY 1, 2017 TABLE OF CONTENTS CHAPTER 1: Introduction and Overview ........................................................................ 1 Section A: Iran’s Case ..................................................................................................... 2 Section B: The U.S. Preliminary Objections .................................................................. 3 Section C: The Preliminary Character of These Objections ........................................... 6 Section D: The Structure of These Preliminary Objections ............................................ 6 PART I: CONTEXTUAL, EVIDENTIAL, AND LEGAL FOUNDATIONS FOR THE U.S. PRELIMINARY OBJECTIONS TO ADMISSIBILITY AND JURISDICTION ...................................................................................................... 8 CHAPTER 2: The Treaty of Amity and U.S.-Iranian Relations Thereunder ............... 8 Section A: The Treaty of Amity Is a Commercial and Consular Agreement ................. 8 Section B: U.S.-Iranian Relations Around the Time of Entry into the Treaty of Amity ............................................................................................................ 9 Section C: The Seizure of the U.S. Embassy in Tehran and Subsequent Hostage Crisis Ruptured Relations Between the Parties ........................................... 10 CHAPTER 3: Iranian Sponsorship of Terrorism and Other Destabilizing Acts ........ 11 Section A: Terrorist Bombings Attributable to Iran ..................................................... 12 Section B: Assassinations, Kidnappings, and Airline Hijackings Attributable to Iran .............................................................................................................. 16 Section C: Iran Has Encouraged, Promoted, and Provided Financial and Other Support for Terrorism ................................................................................. 21 Section D: Iran Has Violated Nuclear Non-Proliferation, Ballistic Missile, and Arms Trafficking Obligations ..................................................................... 24 CHAPTER 4: The United States Has Taken Measures to Address Iran’s Sponsorship of Terrorism and Other Destabilizing Acts ...................... 30 Section A: The United States and Others Have Taken Measures to Combat Iran’s Unlawful Conduct ............................................................................. 31 Section B: The Parties No Longer Maintain Normal, Ongoing Commercial Relations ...................................................................................................... 38 CHAPTER 5: The Applicable Legal Framework ........................................................... 39 PART II: U.S. OBJECTIONS TO ADMISSIBILITY AND JURISDICTION ............... 47 CHAPTER 6: U.S. Objections to Admissibility .............................................................. 47 Section A: The Court Should Decline to Found Jurisdiction on the Treaty of Amity in the Circumstances of the Present Case ........................................ 47 Section B: Iran’s Unclean Hands, Soiled by Decades of Support for Terrorism and Other Destabilizing Actions in Violation of International Law, Render Its Claims Inadmissible .................................................................. 54 i CHAPTER 7: Measures Covered by Article XX of the Treaty of Amity Fall Outside the Jurisdiction of the Court ...................................................... 62 Section A: The Exceptions in Article XX(1) Exclude Qualifying Measures from the Court’s Jurisdiction ............................................................................... 63 Section B: Executive Order 13599 Is Excluded from the Treaty Pursuant to Article XX(1)(c) as a Measure Regulating Arms Production, Arms Trafficking, and Military Supplies .............................................................. 65 Section C: Executive Order 13599 Is Excluded from the Treaty Under Article XX(1)(d) as a Measure Necessary to Protect the United States’ Essential Security Interests ......................................................................... 71 CHAPTER 8: Iran’s Sovereign Immunity-Related Claims Fall Outside the Scope of Article XXI(2) of the Treaty ..................................................... 78 Section A: It Is Clear from the Text and Context of the Treaty of Amity That It Does Not Confer Sovereign Immunity ....................................................... 80 Section B: The Subsequent Practice of the Parties Confirms That the Treaty of Amity Is Not a Source of Sovereign Immunity Rights ............................... 83 Section C: Iran’s Theories for Converting Sovereign Immunity into a Treaty Right Are Untenable ................................................................................... 87 CHAPTER 9: Iran Cannot Rebrand Bank Markazi as a “Company” Entitled to Rights Under Articles III, IV, and V of the Treaty ................................ 95 Section A: On Iran’s Own Case, Bank Markazi Is a Sovereign Entity Exercising Sovereign Functions, Including in the Context of These Claims ............... 97 Section B: As an Entity Purportedly Exercising Exclusively Sovereign Functions, Bank Markazi Cannot Claim Protections as a “Company” Under the Treaty ......................................................................................... 99 CHAPTER 10: Concluding Observations..................................................................... 104 SUBMISSIONS .................................................................................................................... 107 CERTIFICATION ............................................................................................................... 109 ii CHAPTER 1: INTRODUCTION AND OVERVIEW 1.1 On June 14, 2016, the Islamic Republic of Iran (“Iran”) submitted an Application Instituting Proceedings against the United States pursuant to the compromissory clause, Article XXI(2), in the 1955 Treaty of Amity, Economic Relations and Consular Rights between the United States and Iran (“Treaty of Amity” or “the Treaty”).1 Iran challenges measures the United States has adopted to deter Iran’s support for terrorist attacks against the United States and others, as well as to respond to other internationally destabilizing actions taken by Iran. These measures include blocking Iranian assets in the United States and allowing victims of terrorism to recover damages from Iran and Iranian entities in U.S. courts. Pursuant to an Order of the Court,2 Iran filed its Memorial on the merits on February 1, 2017. In accordance with Article 79(1) of the Rules of Court (“Rules”), the United States hereby submits preliminary objections to the admissibility of the Application and the jurisdiction of the Court, and requests the Court to decide on these objections before any further proceedings on the merits. 1.2 On March 30, 2017, resting on principles of fundamental fairness and equality, the United States submitted a request to the Court to require Iran to disclose certain pleadings and related documents filed in a U.S. judicial proceeding that Iran places at the center of its case. This proceeding concerned funds in which Iran’s Central Bank, Bank Markazi, had an interest and which were sought by plaintiffs holding judgments against Iran related to the 1983 bombing of the U.S. Marine barracks in Lebanon (Deborah Peterson, et al. v. Islamic Republic of Iran, et al., case no. 10-cv-4518 (S.D.N.Y.), hereinafter the “Peterson enforcement proceeding”). Iran resisted that request, asserting, among other things, that the documents requested were not relevant to Iran’s claims, and that Iran does not have access to the documents because it is not a party to the Peterson enforcement proceeding. In the light of Iran’s response, the Court declined to order Iran to produce the documents in question. 1.3 The reality is that Iran was a party to the Peterson enforcement proceeding, even if it elected not to appear. And – as set forth later in this pleading – the United States has reason to believe that the documents in question would demonstrate that Iran, through Bank 1 Treaty of Amity, Economic Relations, and Consular Rights between the United States of America and Iran, Aug. 15, 1955, 8 U.S.T. 899, T.I.A.S. 3853, 284 U.N.T.S. 93, Appendix A to these Preliminary Objections. 2 Certain Iranian Assets (Iran v. United States), Order, July 1, 2016. Markazi, advanced arguments before the U.S. court that are inconsistent with what Iran is saying to the Court in the present case about the status of Bank Markazi, issues of sovereign immunity, and the Treaty. It is a matter of regret that, given the decision not to order the disclosure of the documents in question, the United States’ ability to address inconsistencies at the heart of Iran’s claims, potentially amounting to declarations against interest by Iran, has been hampered. Nonetheless, as set out below, the United States demonstrates that Iran’s case is fatally flawed. Section A: Iran’s Case 1.4 Iran seeks to focus the Court’s attention on just one chapter of the deeply troubled bilateral history between Iran and the United States, and within that chapter on the conduct of just one Party, the United States. Though Iran cannot rationally expect the Court to be unaware of its litany of international transgressions, which have earned