Document Type : Original Independent Original Article
Author
Faculty Member of the Institution for Research and Development in the Humanities (SAMT)
Abstract
Highlights
Introduction
In comparison with the cases that Iran has had so far in the International Court of Justice (hereinafter, the Court), the cases of Anglo-Iranian Oil Company, Diplomatic and Consular Staff of the United States in Tehran, the Aerial Incident of 3 July 1988, and Oil Platforms, the decision of 30 March 2023, the Court in the case of "Certain Iranian Assets" in the operative part of the decision is considered a positive success for Iran; This means that in certain clauses, the US has been recognized as a violator of the obligations arising from the 1955 Treaty of Amity, Economic Relations, and Consular Rights (hereinafter, the Treaty of Amity). In the "Certain Iranian Assets", while declaring that it did not jurisdiction to entertain the issue of the central bank, in four points, the US was declared by the Court as a violator of the obligations arising from articles 3 (paragraph 1), article 4 (paragraphs 1 and 2) and article 10 (paragraph 1). It is worth mentioning that according to the Court's judgment it is necessary to negotiate between the two sides of the dispute for 24 months from the date of the judgment to reach an agreement on the amount of compensation sought by Iran, this case is still in the pending cases section of the Court. Iran and the US each considered the Court's judgment a kind of victory over the other side. The main question in this article is how the Court's approach to the issue of central bank immunity has been and what effect this will have on the general concept of central bank immunity in international law. It seems that the Court's analysis in this case has finally led to strengthening the immunity of central banks. In addition, this approach has implicitly indicated the illegality of the action of the United States in removing the immunity of the Central Bank of Iran in the courts of the US. First, we will discuss the general aspects of Iran's case in the Court and some points regarding the Court's judgment in the case of "Certain Iranian Assets". In the second part, we will focus on the specific issue of the central bank in the judgment of the Court as the main claim of Iran in this case.
Conceptual Framework
The State immunity and its property is one of the fundamental rules of international law. The rule of immunity currently has a customary aspect, and its treaty aspect, which was codified as a result of the efforts of the International Law Commission in the 2004 United Nations Convention on the Jurisdictional Immunity of States and their property, has not yet come into force. This rule guarantees the establishment of international relations between a State and other States in the international arena. In fact, the logic of creating and implementing such a rule is that States can establish relations with other international actors without fear of the possibility of encroaching on their powers and property in the territory of other States.
However, this rule has also exceptions over time. It is worth mentioning that these exceptions are also part of the rule of immunity, and when analyzing them, it should be taken into account from the logic and conditions of the same rule of immunity. The only exception currently established in international law regarding the State immunity and its property is the separation of the State's administrative actions from the sovereign actions; by stating that if the State takes the role of a businessman, the actions taken in this direction will not enjoy from immunity. In the mid-1990s, the US tried to introduce another exception to the rule of immunity, in light of terrorist acts attributed to other states, to declare that supporting or committing terrorist acts will prevent a state from benefiting from the protective shield of state immunity. This approach was supported by the Canada in 2012. But since then, there has been no other support for this exception from the international community of States. The place of dispute between Iran and the US in the case of Certain Iranian Assets also stems from this exception, which we will discuss in the next section. Some efforts are being made in the International Law Commission to insert another exception to the State immunity and officials in the form of a study " Immunity of State officials from foreign criminal jurisdiction" for committing international crimes, but with the opposition of most States and even some members of the Commission itself has been challenged.
Analysis of the Court's Approach
The first point that attracted the attention of the opposing judges was the change of the Court's emphasis from the criterion of the "nature" of the central bank's activities to the criterion of "function" of this institution. In fact, the Court has deviated from the criterion introduced in 2019 to 2023. Questions that may be raised in this context include whether this distorts the predictability of the Court's decisions. Has the Court led the Applicant astray? This is despite the fact that the Court has always tried to adhere to its judicial procedure and deviate from it only if there is a compelling reason. While the Court, in the decision of 2023, declares that Iran's perception of emphasizing the nature of the Central Bank's action compared to the Court's decision in 2019 was wrong.
In paragraph 51, the court held: " Contrary to Iran’s contentions (see paragraph 38 above), it does not follow from the 2019 Judgment that, in order to determine whether an activity is commercial, it is necessary only “to focus on the activity as such, and not on the function with which that activity has a link of some kind”. In its 2019 Judgment, the Court merely indicated that the decisive question was whether Bank Markazi was carrying out, alongside its sovereign activities, other activities, of a commercial nature. It did not state that, in determining whether particular activities were of a commercial nature, there was no need to take into account any link that they may have with a sovereign function. On the contrary, the Court considers this latter criterion to be relevant. Indeed, in establishing whether a given entity may be characterized as a “company”, consideration cannot be limited to a transaction — or series of transactions — “as such”, carried out by that entity. That transaction — or series of transactions — must be placed in its context, taking particular account of any links that it may have with the exercise of a sovereign function.”
As can be seen, the Court has clearly deviated from what it said in its 2019 judgment and in its 2023 judgment, it has sought to justify its argument that the Central Bank is not a company in the realm of Treaty of Amity. In fact, the question is whether the Court was not aware of the sovereignty of the central bank's actions or whether Iran was hiding it? The Court clearly in the 2019 decision, despite acknowledging the sovereignty of an entity, believes that the entity can also have commercial activities. If the Court was supposed to emphasize the sovereignty of the central bank's actions from the beginning, why should it ask Iran to provide more reasons and justifications regarding the commercial nature of the central bank's discussed action in buying bonds at the merit phase?
The Court has implicitly considered immunity of Iran’s Central Bank. This interpretation comes from the opposite concept under paragraph 52 of the 2023 judgment: " The Court nevertheless considers that the assertions made by Bank Markazi in the judicial proceedings in the Peterson case, which are cited above, accurately reflect the reality of the bank’s activities». (emphasis added) In fact, with this wording, which seems to have been unnecessary, the Court wanted to convey the point that despite not declaring the central bank as a company in this case, the Court believes that the central bank was basically immune from any domestic proceedings and it is obvious that when the central bank sought to defend himself in the United States courts, the Court considered this immunity as a certain fact.
In other words, it appears that the Court is in the middle of the conflicting claims of the Central Bank and the US at two points in time in the defense of the Peterson case before the United States courts (where the Central Bank believes that its actions are immune from domestic proceedings and the political authorities and the US courts believe that their actions were commercial) and the defenses of Iran and the US before the Court in this case (Iran believed that the central bank's activity in buying bonds was commercial and, as a result, it was a company, and the US believed that the actions of the central bank were sovereign), the opposite concept under paragraph 52 of the Court's decision 2023 shows that the Central Bank enjoys immunity. However, Judge Robinson believes that the court should not have entered into this game without the result of the litigants changing their positions in the US courts and the Court. In general, it seems that the meaning of this view of the court is, on the one hand, to invalidate the previous decision issued by the US courts in Peterson v. Central Bank and, on the other hand, a guiding light for the Luxembourg courts in their future decision.
Conclusion
The decision of the Court in the case of Certain Iranian Assets showed that the Court still pays attention to the traditional function of central banks and considered the protective shield of immunity based on customary international law and treaties still raised over these institutions. Although this approach of the Court caused Iran to not be able to meet its financial claim of obtaining an amount of around one billion and eight million dollars, the final result of the Court was a reconfirmation of the immunity of important State institutions such as the Central Bank. In fact, the other side of this view of the Court is that the domestic laws and the proceedings of the courts of the United States to remove the immunity of the central bank are also an illegal action.
The next point brought by the Court in this case regarding the Central Bank is that perhaps in order to equip the defense in the case of Alleged Violations of the Treaty of Amity, one should not necessarily be satisfied with the points that the Court considered in Certain Iranian Assets Case and all the arguments that seem to be effective in advancing the case must be discovered. This comprehensive approach can avoid surprises that the Court creates in determining the course of the case such as the criteria of nature to purpose in determining the central bank as a company. In fact, if in the case of Certain Iranian Assets, Iran's efforts were focused on all the aspects related to the central bank being as a company, whether it is by the criterion of nature or by the criterion of purpose, it would be a kind of authority for the Court to choose the necessary reasoning to issue a decision through diversity of arguments that Iran provided to the Court in the form of written memorials and oral hearings was created in a comprehensive way. In this way, the Court would not be able to issue a judgment after changing the composition of the judges who issued the 2019 decision and now in the 2023 decision with a somewhat different composition, to face Iran with a kind of surprise.
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