U.N. court rules U.S. must compensate Iran over frozen assets but leaves $1.8B on ice

Darryl Coote

March 30, 2023

Both the United States and Iran are claiming victory after the U.N.'s World Court ordered Washington to pay compensation over freezing Iranian assets though it is allowing nearly $2 billion to remain out of reach of Tehran.

The International Court of Justice in The Hague handed down its ruling, which is final and binding, Thursday in a case brought by Iran in 2016, accusing the United States of violating the Treaty of Amity by freezing assets of Iranian companies to recompense U.S. victims of Tehran's state-sponsored terrorism.

In its ruling, the court found that the United States violated the treaty, which it withdrew from in 2018, as the 1955 documents states the property of nationals and companies will not be confiscated without prompt payment. Compensation to Iran is to be determined at a later date.

However, the court sided with the United States by stating the panel of judges does not have jurisdiction concerning the roughly $1.8 billion in bonds frozen in a New York Citibank belonging to the Central Bank of the Islamic Republic of Iran, better known as Bank Markazi.

Both countries celebrated the ruling Thursday as a win, with the U.S. State Department saying it was "a major victory for the United States and victims of Iran's state-sponsored terrorism," while Iran's foreign ministry on Twitter called it "another proof of the Islamic Republic of #Iran's righteousness and the violations by the U.S. government."

Iran brought the case to the court in 2016 against the United States for violating the treaty by instituting laws that permitted lawsuits to be filed against Tehran seeking recompense for terrorism, specifically for the October 1983 bombing that killed 241 U.S. service members in Lebanon and the 1996 bombing that killed 19 U.S. service members in Saudi Arabia. Tehran has rejected the allegations.

State Department principal deputy spokesman Vedant Patel described Thursday's ruling concerning Bank Markazi as "a significant blow" to Iran's attempts to avoid responsibility to the families of those it has killed.

He added that they, however, are "disappointed" with the court's decision for the United States to turnover assets to other Iranian agencies, saying those funds have gone to compensate victims "for the grave losses that they and their families have suffered."

He was quick to add that the ruling makes clear it has no impact on U.S. laws allowing victims of terrorism to seek compensation from Iran or any other state sponsor of terrorism in U.S. courts going forward due to the treaty's termination.