Message to the Congress Reporting on Developments Concerning the Declaration of a National Emergency With Respect to Iran

November 4, 1983

To the Congress of the United States:

Pursuant to Section 204(c) of the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. Section 1703(c), I hereby report to the Congress with respect to developments between my last report of May 2, 1983, and mid-October 1983, concerning the national emergency with respect to Iran that was declared in Executive Order No. 12170 of November 14, 1979.

1. The Iran-United States Claims Tribunal, established at The Hague pursuant to the Claims Settlement Agreement of January 19, 1981, continues to make progress in arbitrating the claims of U.S. nationals against Iran. Since my last report, the Tribunal has rendered 42 more decisions for a total of 82 final decisions. Sixty-two of these decisions have been in favor of American claimants. Forty-two were awards on agreed terms, authorizing and approving payment of settlements negotiated by the parties and 20 were adjudicated. Total payments to successful American claimants from the Security Account stood at just under $88 million, as of October 1. Of the remaining 20 decisions, 12 dismissed claims for lack of jurisdiction, seven dismissed claims on the merits and one approved withdrawal of a claim. As of October 1, the Tribunal had held 111 prehearing conferences and 68 hearings on the merits and scheduled another eight prehearings and nine hearings through mid-November. In addition, two full Tribunal sessions of five days each were scheduled for October and early November.

2. The Department of State continues to coordinate the efforts of the concerned government agencies in presenting U.S. claims against Iran, as well as U.S. responses to claims brought by Iran. The Department has devoted a great deal of time to responding to cases brought by Iran under Articles II(3) and VI(4) of the Claims Settlement Agreement, which establish Tribunal jurisdiction over questions of interpretation and implementation of the Algiers Accords. In the last six months, the United States has replied to all of the allegations raised by Iran in a major interpretive dispute concerning the United States' implementation of the Algiers Accords. The Tribunal has scheduled eight prehearing conferences or hearings on these issues. In addition, Iran has filed three more interpretive disputes, requesting clarification of: the Tribunal's jurisdiction over dual national claims; its authority to grant interest on awards; and the criteria for determining corporate nationality. Each of these questions had previously been decided by the Tribunal or a chamber thereof. The United States has filed replies in these three cases.

3. Since my last report, there has been further activity in resolving the government-to-government claims based on contracts for the provision of goods or services. Of the 64 claims filed by Iran against the United States, nine have been withdrawn or terminated and one has resulted in an award on agreed terms. The Tribunal has received pleadings from both sides in the remaining cases and in almost all of the 18 claims which the United States filed against Iran. Since, in many instances, the tribunal has announced its intention to decide the official claims on the pleadings, only one prehearing conference and one hearing have been scheduled.

4. Since my last report, the Tribunal has rendered a number of significant decisions. In at least six instances, Iran has filed suit in Iranian courts against claimants at the Tribunal on issues similar to those before the Tribunal. In each case, the Tribunal has requested Iran to stay the Iranian court proceedings in Iran until the Tribunal has had a chance to determine its jurisdiction over the claims. Iran, however, has yet to comply with any of these requests. On other matters, the Tribunal has found a contract to exist between a United States claimant and Iran in the absence of a formal written document, and it continues to award successful claimants interest on their awards. The Tribunal has begun to enforce more vigorously its filing deadlines, rejecting a number of Iranian counterclaims on the grounds that they were filed too late and refusing to consider pleadings filed after the established deadline.

5. In the last six months, the United States has proposed to the Tribunal that it adopt a test case approach in arbitrating the 2,742 remaining claims for less than $250,000 each. The United States has categorized all these claims according to the type of loss involved. Under this approach, the Tribunal would select a few cases in each category for a full hearing. Based on the decisions in each category, claims experts would then arbitrate the remaining cases in each category, subject to tribunal ratification of their decisions.

6. In the period since my last report, there have been several changes in the Tribunal's composition. The resignation of Judge Pierre Bellet, one of the three third-party arbitrators, became effective on August 1. Because the six party-appointed arbitrators were not able to agree on a successor, the Appointing Authority, previously designated by the Secretary General of the Permanent Court of Arbitration in The Hague, appointed Professor Willem Riphagen of the Netherlands to replace Judge Bellet. Professor Riphagen, a former legal adviser to the Netherlands Ministry of Foreign Affairs, was a professor of international law at the University of Rotterdam. He has served as an ad hoc judge on the International Court of Justice, has presided over an arbitration between the United States and France, and has acted as Special Rapporteur for the International Law Commission.

7. On September 5, the Tribunal accepted the resignation of M. Jahangir Sani, one of the Iranian-appointed arbitrators, effective upon the availability of a successor. On September 14, Iran announced that it was appointing Parviz Ansari Moin to replace Mr. Sani. Mr. Ansari has worked in the Iranian Ministry of Justice for approximately ten years.

8. The Algiers Accords also provided for direct negotiations between U.S. banks and Bank Markazi Iran concerning the payment of nonsyndicated debt claims of U.S. banks against Iran from the escrow account established at the Bank of England in January 1981 with the deposit of $1.418 billion. Significant progress has been made in the past six months in settling these claims. As of mid-October, 24 settlements, totaling approximately $919 million, had been reached. From the $919 million paid to U.S. banks, the banks paid $327 million to Iran in settlement of Iran's claims against them, primarily for interest on domestic deposits. The Export-Import Bank received $419 million. About 25 bank claims remain outstanding.

9. During the past six months, the Department of State has begun to renovate and prepare for rental diplomatic and consular properties of Iran in the United States. In the absence of diplomatic relations between the United States and Iran, these properties have remained vacant and in many instances have deteriorated. To preserve them and to generate income for their upkeep, the Department of State, pursuant to a license granted in September by the Department of the Treasury, will sell moveable property left in or around Iranian premises following the break in diplomatic relations with Iran on April 7, 1980.

10. The Treasury Department's Office of Foreign Assets Control has established procedures authorizing the sale of blocked Iranian property in the United States and the eventual disposition of the proceeds of such sales. Much of this property is tangible property, including property which has not been authorized to be exported from the United States because of its potential military applications. In the six-month period preceding this report, three sales of such tangible property have been licensed. No sales had taken place as of mid-October. Several direct settlements of disputes between holders of such tangible property and Iran have occurred recently.

11. Despite the progress made by the Tribunal in the past six months, significant American interests remain unresolved. Iran has challenged five of the Tribunal's awards in the District Court of The Hague, seeking to invalidate them. Thus, financial and diplomatic aspects of the relationship with Iran continue to present an unusual challenge to the national security and foreign policy of the United States. By separate action of this date, I am extending the emergency with respect to Iran beyond the November 14, 1983 anniversary. I shall continue to exercise the powers at my disposal to deal with these problems and will continue to report periodically to the Congress on significant developments.

Ronald Reagan

The White House,

November 4, 1983.