In the wake of President Trump's decision to withdraw the United States from the Joint Comprehensive Plan of Action (JCPOA) and reimpose sanctions, Iran instituted proceedings against the United States before the International Court of Justice (ICJ). In its application, filed on July 16, 2018, Iran alleged that the re-imposition of sanctions constituted a violation of the 1955 Treaty of Amity, Economic Relations, and Consular Rights (Treaty of Amity) between Iran and the United States. In order to prevent “irreparable damages” to the Iranian economy, Iran simultaneously filed a request for provisional measures.Footnote 1 After the ICJ issued an order unanimously granting limited provisional measures on October 3, 2018, the United States announced its intention to terminate the Treaty of Amity. The United States issued its first phase of sanctions on August 7, 2018, and the remaining sanctions took effect on November 5, 2018.
On May 8, 2018, Trump announced the withdrawal of the United States from the JCPOA.Footnote 2 Under the JCPOA—a multilateral commitment reached in July 2015 between Iran, the five permanent members of the Security Council, Germany, and the European Union—Iran agreed to abide by verifiable limits on its nuclear program in exchange for the lifting of nuclear-related sanctions.Footnote 3 In announcing the U.S. withdrawal from the JCPOA, Trump issued a presidential memorandum re-imposing “all United States sanctions lifted or waived in connection with the JCPOA” within 180 days.Footnote 4 These sanctions included both primary and secondary sanctions on domestic and foreign entities and were to be implemented in two phases: phase one would go into effect ninety days later on August 7 for various non-energy-related sanctions, and phase two would go into effect 180 days later on November 5 for the remaining sanctions.Footnote 5
On July 16, in response to the looming sanctions, Iran initiated suit against the United States before the ICJ.Footnote 6 Iran sought a judgment declaring that the sanctions announced by the United States on May 8 were a breach of its international obligations under the Treaty of Amity and ordering the immediate termination of all sanctions and associated threats.Footnote 7 Additionally, Iran sought full compensation from the United States for violating the asserted legal obligations.Footnote 8
The Treaty of Amity between Iran and the United States was signed on August 15, 1955, and entered into force on June 16, 1957.Footnote 9 In its application, Iran alleged that the U.S. sanctions violated Articles IV(1), VII(1), VIII(1), VIII(2), IX(2), and X(1), which provide in relevant part:
Article IV(1). Each High Contracting Party shall at all times accord fair and equitable treatment to nationals and companies of the other High Contracting Party, and to their property and enterprises; shall refrain from applying unreasonable or discriminatory measures that would impair their legally acquired rights and interests. …
Article VII(1). Neither High Contracting Party shall apply restrictions on the making of payments, remittances, and other transfers of funds to or from the territories of the other High Contracting Party … .
Article VIII(1). Each High Contracting Party shall accord to products of the other High Contracting Party … and to products destined for exportation to the territories of such other High Contracting Party … treatment no less favorable than that accorded like products of or destined for exportation to any third country … .
Article VIII(2). Neither High Contracting Party shall impose restrictions or prohibitions on the importation of any product of the other High Contracting Party or on the exportation of any product to the territories of the other High Contracting Party … .
Article IX(2). Nationals and companies of either High Contracting Party shall be accorded treatment no less favorable than that accorded nationals and companies of the other High Contracting Party, or of any third country, with respect to all matters relating to importation and exportation.
Article X(1). Between the territories of the two High Contracting Parties there shall be freedom of commerce and navigation.Footnote 10
As a basis for the jurisdiction of the ICJ, Iran invoked Article XXI(2) of the Treaty of Amity, which provides:
Any dispute between the High Contracting Parties as to the interpretation or application of the present Treaty, not satisfactorily adjusted by diplomacy, shall be submitted to the International Court of Justice, unless the High Contracting Parties agree to settlement by some other pacific means.Footnote 11
The United States and Iran entered into the Treaty of Amity long before the Iranian revolution of the late 1970s, which in turn sent relations between the United States and Iran into a dramatic decline. Since the Iranian revolution, the Treaty of Amity has been a basis for claims between the two nations at the ICJ on three previous occasions. On November 29, 1979, the United States initiated proceedings against Iran regarding the occupation of the American embassy in Tehran by Iranian militants, alleging among other things that Iran had failed to provide U.S. nationals with “‘the most constant protection and security’” within its territory.Footnote 12 On November 2, 1992, Iran in turn invoked the Treaty of Amity against the United States in the ICJ, alleging that the destruction of Iranian oil platforms caused by the U.S. Navy violated the treaty's provisions protecting freedom of commerce and navigation.Footnote 13 Most recently, on June 14, 2016, Iran instituted still-pending proceedings against the United States before the ICJ alleging violations of the Treaty of Amity with respect to the seizure of Iranian assets in the United States to satisfy U.S. domestic court judgments.Footnote 14
In challenging the U.S. sanctions as a violation of the Treaty of Amity, Iran also filed a request for provisional measures during the pendency of the case. Iran asserted “a real and imminent risk that irreparable prejudice” would follow from the implementation of U.S. sanctions prior to the ICJ's decision.Footnote 15 Accordingly, Iran requested the ICJ to impose, among other measures, “the suspension of the implementation and enforcement of all of the 8 May sanctions.”Footnote 16
In response to the request for provisional measures, on July 27 the United States submitted a letter to the ICJ that “‘strongly object[ed] to Iran's Application on a number of grounds, and consider[ed] that the Court manifestly lack[ed] jurisdiction in respect of this case.’”Footnote 17 The United States considered that Iran's underlying grievance related not to the Treaty of Amity but rather to the U.S. withdrawal from the JCPOA, which does not have a compromissory clause providing the ICJ with jurisdiction.Footnote 18 As to the Treaty of Amity, the United States argued that the sanctions fell outside its scope because of limits set forth expressly in Article XX(1), which provides:
Article XX(1). The present Treaty shall not preclude the application of measures:
…
(b) relating to fissionable materials, the radio-active by-products thereof, or the sources thereof;
…
(d) necessary to fulfill the obligations of a High Contracting Party for the maintenance or restoration of international peace and security, or necessary to protect its essential security interests.Footnote 19
Following oral proceedings in late August, the ICJ issued an order on October 3 that unanimously provided for limited provisional measures.Footnote 20 The Court concluded that it had jurisdiction over at least many of Iran's claims under the Treaty of Amity.Footnote 21 It also recognized that Article XX(1) might ultimately prove a bar to some of Iran's claims:
However, the Court considers that, in so far as the measures complained of by Iran could relate “to fissionable materials, the radio-active by-products thereof, or the sources thereof” or could be “necessary to protect … essential security interests” of the United States, the application of Article XX paragraph 1, subparagraphs (b) or (d), might affect at least some of the rights invoked by Iran under the Treaty of Amity.
Nonetheless, the Court is of the view that other rights asserted by Iran under the 1955 Treaty would not be so affected. In particular, Iran's rights relating to the importation and purchase of goods required for humanitarian needs, and to the safety of civil aviation, cannot plausibly be considered to give rise to the invocation of Article XX, paragraph 1, subparagraphs (b) or (d).Footnote 22
The ICJ thus instructed the United States to remove impediments to imports related to medicine, food, and certain goods and services relevant to civil aviation, but did not issue provisional measures with respect to other sanctions.Footnote 23
Hours after this ruling was released, Secretary of State Mike Pompeo announced that the United States would terminate the Treaty of Amity.Footnote 24 Pursuant to the terms of the treaty, termination can be done by either party after one year of written notice is given to the other party.Footnote 25 In his remarks, Pompeo asserted that the ICJ decision largely favored the United States and emphasized a preexisting U.S. intention to allow some humanitarian relief from sanctions:
Given Iran's history of terrorism, ballistic missile activity, and other malign behaviors, Iran's claims under the treaty are absurd. The court's ruling today was a defeat for Iran. It rightly rejected all of Iran's baseless requests. The court denied Iran's attempt to secure broad measures to interfere with U.S. sanctions and rightly noted Iran's history of noncompliance with its international obligations under the Treaty on the Nonproliferation of Nuclear Weapons.
With regard to the aspects of the court's order focusing on potential humanitarian issues, we have been clear: Existing exceptions, authorizations, and licensing policies for humanitarian-related transactions and safety of flight will remain in effect. The United States has been actively engaged on these issues without regard to any proceeding before the ICJ. We're working closely with the Department of the Treasury to ensure that certain humanitarian-related transactions involving Iran can and will continue.
That said, we're disappointed that the court failed to recognize it has no jurisdiction to issue any order relating to these sanctions measures with the United States, which is doing its work on Iran to protect its own essential security interests.Footnote 26
In these remarks, Pompeo neither expressly stated that the United States would abide by the provisional measures nor expressly denied that the United States would do so.Footnote 27 As suggested by his remarks, the United States already formally provided an exemption to sanctions “for the sale of agricultural commodities, food, medicine, or medical devices … or for the provision of humanitarian assistance.”Footnote 28 Nor did Pompeo discuss the implications of the future U.S. withdrawal from the Treaty of Amity for the pending ICJ case. This withdrawal would presumably not affect the ICJ's jurisdiction over the case.Footnote 29 Indeed, following the United States’ announcement that it will withdraw from the Treaty of Amity, on October 10 the ICJ fixed time limits for the filing of pleadings, with Iran's memorial due on April 10, 2019, and the U.S. counter-memorial due on October 10, 2019.Footnote 30 The withdrawal would also not prevent a finding on the merits that the United States had violated its international legal obligations to Iran.Footnote 31 Should the ICJ come to reach such a finding, however, then the circumstance that the treaty will no longer be in force at the time of judgment might prove relevant for establishing the duration of the U.S. breach and for identifying the remedy.Footnote 32
Amidst the ongoing ICJ proceedings and the threatened and effectuated U.S. sanctions against Iran, tensions between the countries’ leaders escalated during the summer and fall of 2018. In a televised speech from Tehran on July 22, Iranian President Hassan Rouhani warned Trump not to “play with the lion's tail or else you will regret it” and, after asserting that the United States could not prevent Iran from exporting its crude oil, stated: “Peace with Iran would be the mother of all peace and war with Iran would be the mother of all wars.”Footnote 33 In response, Trump sent the following warning to Rouhani via Twitter:
To Iranian President Rouhani: NEVER, EVER THREATEN THE UNITED STATES AGAIN OR YOU WILL SUFFER CONSEQUENCES THE LIKES OF WHICH FEW THROUGHOUT HISTORY HAVE EVER SUFFERED BEFORE. WE ARE NO LONGER A COUNTRY THAT WILL STAND FOR YOUR DEMENTED WORDS OF VIOLENCE & DEATH. BE CAUTIOUS!Footnote 34
Iranian officials responded with scorn and further threats.Footnote 35 Although Trump has repeatedly indicated his willingness to engage in discussions with the Iranian president, Iranian leaders have rejected this possibility, citing the Trump administration's hostility and unreliability.Footnote 36 At the UN General Assembly in New York on September 24, President Rouhani asserted that he would negotiate only if the United States were to begin abiding again by the terms of the JCPOA.Footnote 37
On August 6, Trump issued an executive order announcing the initiation of the first phase of sanctions against Iran.Footnote 38 These sanctions, which included many secondary sanctions, took effect on August 7, and targeted Iran's automotive sector, its trade in gold and precious metals, and the Iranian rial.Footnote 39 In a statement accompanying his Executive Order, Trump announced:
The United States is fully committed to enforcing all of our sanctions … . Individuals or entities that fail to wind down activities with Iran risk severe consequences.
I am pleased that many international firms have already announced their intent to leave the Iranian market, and several countries have indicated that they will reduce or end imports of Iranian crude oil. We urge all nations to take such steps to make clear that the Iranian regime faces a choice: either change its threatening, destabilizing behavior and reintegrate with the global economy, or continue down a path of economic isolation.Footnote 40
Notwithstanding the stark effects of the first phase of U.S. sanctions on Iran's national economy,Footnote 41 Iran continued to comply with the JCPOA according to the International Atomic Energy Agency's certification of August 30.Footnote 42 In turn, the remaining signatories to the JCPOA issued a joint statement at the UN General Assembly meeting in New York on September 24 in which they confirmed their commitment to the JCPOA and “underlined their determination to protect the freedom of their economic operators to pursue legitimate business with Iran.”Footnote 43 This position was reaffirmed in a joint statement issued by European Union foreign policy leader Federica Mogherini and the foreign and finance ministers of Britain, France, and Germany on November 2.Footnote 44 This statement also noted that European efforts to “preserv[e] and maint[ain] … effective financial channels with Iran” and “continu[e] … Iran's export of oil and gas” have “been intensified in recent weeks.”Footnote 45 It placed particular emphasis on a “European initiative” designed to bypass the reach of sanctions on Iran and European exporters and importers by creating a “Special Purpose Vehicle.”Footnote 46
Over the summer of 2018, a State Department official indicated that the United States might grant “case-by-case” extensions to countries with regard to its re-imposition of secondary sanctions.Footnote 47 On November 2, the Trump administration announced that it would grant “temporary allotments” to eight jurisdictions, “but only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts and have made important moves towards getting to zero crude oil importation.”Footnote 48 These eight jurisdictions—China, India, Greece, Italy, Taiwan, Japan, Turkey, and South Korea—will receive temporary waivers from the secondary sanctions with respect to their nation's oil imports.Footnote 49
The second phase of United States sanctions against Iran went into effect on November 5, signaling the “complet[ion]” of “the termination of United States participation in the Iran nuclear deal.”Footnote 50 In announcing this second phase, Trump noted that “we reiterate today that the sale of food, medicine, medical devices, and agricultural commodities to Iran has long been, and remains, exempt from the sanctions.”Footnote 51 He emphasized, however, that all remaining sanctions that had been lifted pursuant to the JCPOA were re-imposed, including those related to “Iran's energy, shipping, and shipbuilding sectors, and sanctions targeting transactions with the Central Bank of Iran and sanctioned Iranian banks.”Footnote 52 In addition, the United States added hundreds of targets to the Specially Designated Nationals and Blocked Persons List.Footnote 53
In remarks on November 5, Pompeo stated that “[t]he Iranian regime has a choice. It can either do a 180-degree turn from its outlaw course of action and act like a normal country, or it can see its economy crumble.”Footnote 54 Rouhani responded defiantly, asserting “[w]e should break the sanctions very well, and we will do that.”Footnote 55 He said that Iran is engaged in an “economic war” with the United States and that the Americans “must be punished once and for all” for their “language of force, pressure, and threats to speak to the great Iranian nation.”Footnote 56 On November 12, 2018, the IAEA once again reported that Iran remained compliant with the JCPOA.Footnote 57