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

May 2, 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 November 1, 1982, and mid-April, 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, is now making significant progress in arbitrating the 3,730 claims before it. Having resolved the initial interpretive disputes described in my last report, the Tribunal is giving primary attention to individual claims. As of April 1, it had held 84 prehearing conferences and 44 hearings on the merits and had rendered 35 decisions. Twenty-five of these decisions were awards in favor of American claimants. Of the awards, 17 approve and authorize the payment of settlements negotiated by the parties; eight were adjudicated. (Total payments to American claimants stood at just over $37 million, as of mid-April.) Of the remaining 10 decisions, seven dismissed claims for lack of jurisdiction, and three dismissed claims on the merits; all but one of the claims dismissed had been brought by Iran.

2. The Department of State, with the assistance of the Departments of the Treasury and Justice and other concerned government agencies, continues to coordinate the presentation of U.S. claims against Iran, as well as the U.S. response to claims brought by Iran. In the last six months, the United States has filed requests for clarification of the Tribunal's jurisdiction with respect to Iranian claims against U.S. nationals based on standby letters of credit and other bank claims. There remain pending 18 United States Government claims against Iran arising out of contracts for the provision of goods and services. Last October, Iran filed a major interpretive claim against the United States, alleging 18 separate violations of the Algiers Accords. On March 21, the United States filed the first in a series of responses to these allegations. It has also responded to all of the 60 official contract claims filed by Iran. While the Tribunal has now received pleadings from both sides in a large number of official claims, it does not appear to be close to deciding any of them on the merits.

3. Since my last report, the Tribunal has rendered a number of interlocutory decisions on jurisdictional and procedural matters which are significant for claimants generally. Last November, it decided that claims arising under contracts specifically designating Iranian courts as the sole forum for dispute settlement were not within its jurisdiction. This decision was based on exclusionary language in the Claims Settlement Agreement and was contrary to the interpretation urged by the United States. Nevertheless, it leaves U.S. claimants having such contract clauses with the possibility of establishing Tribunal jurisdiction on non-contractual grounds not subject to the exclusion. Other decisions have set clear and workable standards for demonstrating United States nationality by corporations and precedents for the award of interest and attorneys' fees. The Tribunal has also found that its jurisdiction over matters assigned to it by the Claims Settlement Agreement is not exclusive, and that under some circumstances other bodies may hear disputes which could be brought before it. The practical effects of this decision cannot be assessed at the present time.

4. In the last six months, the Tribunal has taken steps to arbitrate the 2,742 claims for less than $250,000 each presented by the United States Government on behalf of U.S. nationals. All of these claims have been served on Iran, and the Tribunal has recently authorized the hiring of three additional staff members to help prepare the claims for arbitration.

5. The United States and Iran are presently engaged in seeking a successor to Judge Pierre Bellet, a third-party arbitrator who will be leaving the Tribunal on August 1. The Iranian and American arbitrators have met a number of times in the past several months in an effort to select a replacement, but no agreement has been forthcoming. As a result, on March 1, the United States asked the Appointing Authority previously selected by the two countries to name a successor to Judge Bellet. It is hoped that a candidate will soon emerge who will prove acceptable to both parties.

6. The January 19, 1981 agreements with Iran also provided for direct negotiations between U.S. banks and Bank Markazi concerning the payment of nonsyndicated debt claims of U.S. banks against Iran from the $1.418 billion escrow account presently held by the Bank of England. As of mid-April, 1983, eight settlements, totaling approximately $171 million, have been reached and paid to U.S. banks from the escrow account. Each bank settlement also provides for the settlement of Iran's claims, if any, for interest on any deposits held by that U.S. bank. Iran has filed claims against the United States in the Tribunal for interest and other damages in connection with the same deposits that are the subject of these settlements. The Department of the Treasury, in December 1982, amended the Iranian Assets Control Regulations. According to this amendment, if the Tribunal determines that a rate of interest higher than the rate of interest agreed on between a U.S. bank and Iran should be paid to Iran under the January 1981 agreements, the higher rate will be the ``commercially reasonable rate'' which the bank is required to transfer under the Regulations. The Federal Register notice of this amendment dated January 4, 1983 is attached.

7. Also in December 1982, the Department of the Treasury extended for one year, through December 31, 1983, the revocation of any authorization for the permanent disposition, by means of a final judicial judgment or order, of interests of Iran in any standby letter of credit or similar instrument. The Federal Register notice of this extension dated December 10, 1982 is attached.

8. Several financial and diplomatic aspects of the relationship with Iran have not yet been resolved and continue to present an unusual challenge to the national security and foreign policy of the United States. 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,

May 2, 1983.

Note: The attachments transmitted with the report, and included in the White House press release, are printed in the Federal Register (47 FR 55481 and 48 FR 252).