IN THE NAME OF GOD INTERNATIONAL COURT OF JUSTICE CASE CONCERNING ALLEGED VIOLATIONS OF THE 1955 TREATY OF AMITY, ECONOMIC RELATIONS, AND CONSULAR RIGHTS (ISLAMIC REPUBLIC OF IRAN V. UNITED STATES OF AMERICA) MEMORIAL OF THE ISLAMIC REPUBLIC OF IRAN 24 May 2019 TABLE OF CONTENTS PART I. INTRODUCTION AND FACTUAL BACKGROUND ........................................ 1 CHAPTER I. INTRODUCTION ........................................................................................... 1 SECTION 1. THE SUBJECT-MATTER OF THE DISPUTE 1 SECTION 2. PROCEDURAL HISTORY: PROVISIONAL MEASURES AND THE U.S. REACTION TO THE COURT’S ORDER DATED 3 OCTOBER 2018 6 SECTION 3. JURISDICTION 10 SECTION 4. APPLICABLE LAW 12 SECTION 5. OUTLINE OF IRAN’S ARGUMENTS AND STRUCTURE OF THE MEMORIAL 14 CHAPTER II. THE RE-IMPOSITION OF THE SO-CALLED “NUCLEAR- RELATED” SANCTIONS BY THE UNITED STATES ................................................... 18 SECTION 1. THE NUCLEAR-RELATED MEASURES RE-IMPOSED AS OF 7 AUGUST 2018 22 A. The nuclear-related measures re-imposed under E.O. 13846 and related statutory authorities 22 i. Sanctions relating to support for the Government of Iran’s purchase or acquisition of U.S. dollar bank notes or precious metals 23 ii. Sanctions on transactions with Iran in precious metals, graphite, raw, or semi-finished metals, and industrial software 24 iii. Sanctions on transactions in the Iranian Rial 29 iv. Sanctions related to the issuance of Iranian sovereign debt 31 v. Sanctions on Iran’s automotive sector 32 B. The revocation of authorizations under U.S. sanctions regarding Iran whereby the scope of permissible direct trade between the two countries had been expanded 34 i. Sanctions concerning activities related to the export or re-export to Iran of commercial passenger aircraft and related parts and services 34 ii. Sanctions prohibiting the importation into the United States of Iranian-origin carpets and foodstuffs 36 SECTION 2. THE NUCLEAR-RELATED MEASURES RE-IMPOSED AS OF 5 NOVEMBER 2018 36 A. The re-listing and listing on OFAC’s SDN List 37 B. The nuclear-related measures re-imposed under E.O. 13846 and related statutory authorities 41 - i - i. Sanctions on Iran’s port operators, and shipping and shipbuilding sectors 41 ii. Sanctions relating to petroleum-related transactions with, among others, NIOC, NICO, and NITC 44 iii. Sanctions on Iran’s energy sector 51 iv. Sanctions on transactions by foreign financial institutions with the CBI and designated Iranian financial institutions under section 1245 of NDAA 2012 55 v. Sanctions on the provision of specialized financial messaging services 58 vi. Sanctions on the provision of underwriting services, insurance, or reinsurance 60 C. The revocation of General License H issued pursuant to the JCPOA 62 CHAPTER III. THE PRACTICAL IMPACTS OF THE U.S. MEASURES ON IRAN, IRANIAN NATIONALS AND IRANIAN COMPANIES.................................................. 66 SECTION 1. THE 8 MAY SANCTIONS ARE TARGETING KEY SECTORS OF THE IRANIAN ECONOMY 67 A. Freezing the Iranian Banking and Insurance Sectors 67 i. Closing the communication channels of the Iranian financial sector 70 ii. Restrictions on international money transfers and payments involving Iranian nationals and companies 72 iii. Restrictions on international financing involving Iranian nationals and companies 73 iv. Isolation of Iranian nationals and companies from the international insurance market 74 v. “Blocking” of assets and funds of Iranian nationals and companies held abroad 76 vi. Conclusions on the practical impact of the U.S. measures on Iranian nationals and companies in the financial and banking and insurance sectors 76 B. Blockading the Iranian Energy Production 77 i. Closure of Foreign Export Markets 80 ii. Disinvestment in the Energy Sector 83 iii. Termination of Relationships with Foreign Suppliers and Service Providers 85 iv. Conclusions on the practical impact of the U.S. measures on the Iranian energy sector 87 C. Grounding Iran Civil Aviation 88 i. Termination or suspension of aircraft sale and purchase agreements 89 - ii - ii. Restrictions on commercial and operational services provided abroad 90 iii. Impediments to the operation by Iranian airline companies of their fleet 91 iv. The dire consequences of the U.S. measures on the safety of Iranian civil air transportation 93 D. The practical impact of the U.S. measures targeting the Iranian shipping, shipbuilding and port sectors 95 i. Withdrawal of foreign shipping companies from Iran 96 ii. Restrictions on the operations of Iranian maritime trade activities 97 iii. Restrictions on the operations of Iran’s ports and fleet 99 iv. Disruption of development plans for Iran’s maritime industry 100 v. Conclusions on the practical impact of the U.S. measures on the Iranian shipping and shipbuilding sectors 101 E. The practical impact of the U.S. measures on the Iranian Automotive Industry 102 i. As a result of the U.S. measures, foreign operators withdrew from the Iranian automotive sector 104 ii. The U.S. measures have resulted in a downturn in the Iranian automotive industry 105 SECTION 2. THE ADVERSE CONSEQUENCES OF THE U.S. MEASURES FOR THE IRANIAN ECONOMY 106 A. The U.S. measures resulted in a reversal of the growth trend of Iranian importations and exportations 108 B. The U.S. measures have resulted in a dramatic depreciation of the Iranian currency 111 C. The U.S. measures have resulted in disinvestment of the Iranian economy by foreign operators 113 SECTION 3. THE ADVERSE CONSEQUENCES OF THE U.S. MEASURES FOR THE IRANIAN POPULATION 116 A. The adverse practical impact of the U.S. measures on the health of the Iranian population 116 i. The previous U.S. measures had been shown to have jeopardised the health of the Iranian people 117 ii. The Direct Link between U.S. Measures and Impairments to Healthcare 119 iii. The adverse consequences of the U.S. measures on the health safety of the Iranian population 122 B. The U.S. measures have resulted in deteriorating living conditions for the Iranian people 125 i. The Increase of Consumer Prices 125 - iii - ii. Decrease in the availability of basic commodities 127 iii. Rise in unemployment 130 C. The impairment of humanitarian relief and of the environmental safety of the Iranian population 131 i. As a result of the U.S. measures, the implementation of humanitarian relief in Iran is being undermined 131 ii. The deterioration of the environmental situation in Iran 133 PART II. THE BREACHES OF THE TREATY OF AMITY BY THE USA ............... 136 CHAPTER IV. BREACH OF ARTICLES IV(1), IV(2) AND V(1) OF THE TREATY OF AMITY ................................................................................................ 136 SECTION 1. INTRODUCTION 136 SECTION 2. LEGAL OBLIGATIONS OF THE USA UNDER ARTICLES IV(1), IV(2) AND V(1) OF THE TREATY OF AMITY 136 A. The USA’s obligation to accord fair and equitable treatment (“FET”) 138 i. Treatment that is arbitrary, grossly unfair, unjust or idiosyncratic 143 ii. Treatment that is discriminatory 145 iii. Treatment that leads to an outcome which offends juridical propriety 146 iv. Protection of legitimate expectations 147 B. The USA’s obligation under Article IV(1) to refrain from unreasonable or discriminatory measures 147 C. The USA’s obligation under Article IV(1) to assure effective means of enforcement for lawful contractual rights 149 D. The USA’s obligations under Article IV(2) with respect to constant protection and security and the prohibition on taking 150 i. Iran’s entitlement to the most constant protection and security of the property and interests in property of its nationals and companies 151 ii. Iran’s entitlement to freedom from expropriation of the property and interests in property of its companies and nationals 152 E. The USA’s obligations under Article V(1) with respect to permitting the purchase and disposal of personal property of all kinds 153 SECTION 3. BREACHES OF ARTICLE IV(1), IV(2) AND V(1) OF THE TREATY OF AMITY 154 A. Breach of the fair and equitable treatment obligation in Article IV(1) 154 i. Breach of the FET standard through conduct that is arbitrary, grossly unfair, unjust and idiosyncratic 155 - iv - ii. Breach of the FET standard through conduct that is discriminatory 184 iii. Breach of the FET standard through treatment leading to an outcome that offends juridical propriety 185 iv. Breach of the FET standard through conduct that defeats the legitimate expectations of Iranian nationals and companies 185 v. Conclusion 186 B. Breach of the obligation under Article IV(1) to refrain from unreasonable or discriminatory measures 186 C. Breach of the obligation to assure effective means of enforcement of contractual rights 186 D. Breaches of Article IV(2) by the United States 187 i. Breach by the USA of the obligation under Article IV(2) to accord most constant protection and security 187 ii. Breach by the USA of the Article IV(2) prohibition on the taking of property 187 E. Breach of Article V(1) by the United States 189 CHAPTER V. ARTICLE VII(1) OF THE TREATY OF AMITY: BREACH BY THE USA OF ITS OBLIGATION NOT TO APPLY RESTRICTIONS ON MAKING PAYMENTS, REMITTANCES, AND OTHER TRANSFERS OF FUNDS ................. 190 SECTION 1. THE PROHIBITION OF FINANCIAL RESTRICTIONS SET FORTH BY ARTICLE VII(1) OF THE TREATY OF AMITY 190 A. The prohibition of any financial restriction to or from the territories of the Parties 191 B. The exceptions to the prohibition are of no application regarding the United States’ measures 192 SECTION 2. THE U.S. RE-IMPOSED AND AGGRAVATED MEASURES IMPOSING RESTRICTIONS ON THE MAKING OF PAYMENTS, REMITTANCES, AND TRANSFERS OF FUNDS FROM OR TO IRAN’S TERRITORY 194 A. The exclusion of Iran from the international banking system and from the transfers of funds 195 i. The measure 195 ii. The breaches of Article VII(1) of the Treaty of Amity 197 B.