Letter to the Speaker of the House and the President of the Senate Reporting on the Declaration of a National Emergency With Respect to Iran

October 31, 1984

Dear Mr. Speaker: (Dear Mr. President:)

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 since my last report of May 3, 1984, concerning the national emergency with respect to Iran 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 some progress in arbitrating the 3,848 claims which have been filed before it. In total, 330 claims have been resolved through award or withdrawal. Since my last report, the Tribunal has rendered 33 more decisions, for a total of 151 final decisions. Of these decisions, 111 have resulted in awards in favor of American claimants, of which 76 were awards on agreed terms, authorizing and approving payment of settlements negotiated by the parties, and 35 were adjudicated. Total payments to successful American claimants from the Security Account stood at just over $306 million as of September 30, 1984. Of the remaining 40 decisions, 19 dismissed claims for lack of jurisdiction, three partially dismissed claims for lack of jurisdiction, 13 dismissed claims on the merits, one approved withdrawal of a claim, three were awards in favor of the Government of Iran, and one was an award in favor of the United States Government.

2. In the past six months, the Tribunal has continued to make progress in arbitrating the claims of U.S. nationals for $250,000 or more. More than 33 percent of these claims have been disposed of through adjudication, settlement, or voluntary withdrawal, leaving 362 such claims on the docket. On August 6, 1984, the Tribunal rendered its largest non-bank award, almost $50 million, in favor of the R.J. Reynolds Co. In a significant development, Iran agreed to withdraw all of the cases that it had filed in the Dutch courts seeking to set aside certain Tribunal awards in favor of U.S. claimants. It also agreed to stay proceedings in Iranian courts against two U.S. claimants, as requested by the Tribunal, but has not yet complied with similar Tribunal requests in other cases.

3. The Tribunal has proceeded with its previously adopted test-case approach for arbitrating the claims of U.S. nationals against Iran for less than $250,000. The Department of State has submitted Supplemental Statements of Claim in 33 of these claims (including 14 of the 18 test cases selected by the Tribunal), and has filed major factual and legal memoranda in support of those claims. Supplemental Statements of Claim are being prepared for 91 additional claims. While Iran continues to resist efforts to resolve these claims expeditiously, we are pressing for early Tribunal action. A third senior legal officer has recently been hired by the Tribunal to work exclusively on these claims. Finally, the Tribunal recently issued three awards on agreed terms, reflecting settlements between U.S. claimants and Iran of these claims.

4. The Department of State continues to coordinate the efforts of concerned governmental agencies in presenting U.S. claims against Iran as well as U.S. responses to claims brought by Iran. Since my last report, the Tribunal has resolved three government-to-government claims based on contracts for the provision of goods and services. In one case, the United States received an award for costs incurred in providing instruction to Iranian students at the United States Coast Guard Academy. Of the other two claims (both brought by Iran), one (against the National Aeronautics and Space Administration) was dismissed on the merits, and the other (against the Atomic Energy Commission) resulted in an award to Iran. As in the past, these awards were rendered solely on the pleadings. The Tribunal has in addition set filing dates for pleadings in 10 government-to-government claims through the end of 1984. Although two hearings were scheduled in cases concerning the interpretation and implementation of the Algiers Accords, the Tribunal has postponed these hearings indefinitely. The United States, however, is fully prepared to proceed with these hearings and is also preparing rejoinders for submission to the Tribunal in two other cases.

5. In the last six months, there has also been a change in the composition of the Tribunal. On April 27, 1984, Gunnar Lagergren, the President of the Tribunal and Chairman of Chamber One, resigned effective October 1, 1984. Despite several rounds of discussion, the six party-appointed arbitrators were unable to agree on a successor. Accordingly, pursuant to the Tribunal's Rules of Procedure, the United States requested the independent Appointing Authority, M.J.A. Moons, the Chief Judge of the Netherlands Supreme Court, to designate a successor. On September 1, 1984, Judge Moons appointed Karl-Heinz Bockstiegel, a West German national, as a member of the Tribunal. On September 25, 1984, President Lagergren appointed Professor Bockstiegel as ``acting President'' pending a determination by the Tribunal (or, if necessary, the Appointing Authority) on whether he will serve as President. Professor Bockstiegel held the Chair of International Business Law and served as director of the Institute of Air and Space Law at Cologne University.

6. The January 19, 1981, agreements with Iran 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 $1.418 billion escrow account presently held by the Bank of England. Since my last report, only one additional settlement has been reached. Mellon Bank of Pittsburgh received $12.4 million in settlement of its claim, of which $2.8 million was subsequently paid to Iran, primarily for interest on Iran's domestic deposits with the bank. Thus, as of September 30, 1984, there have been 26 bank settlements, totaling approximately $1.4 billion. Iran has received $619 million in settlement of its claims against the banks. About 20 bank claims remain outstanding.

7. On May 21, 1984, the Department of the Treasury amended Section 535.215 of the Iranian Assets Control Regulations to prohibit any transfer, except under license from the Office of Foreign Assets Control, of blocked tangible property in which, Iran has any interest whatsoever, the export of which requires the issuance of any specific license under U.S. law. This amendment was promulgated in order to help assure compliance with the export restrictions of U.S. law, particularly those with respect to properties having potential military application.

8. Significant developments have occurred at the Tribunal since my last report. On September 3, 1984, two Iranian arbitrators, Mahmoud M. Kashani and Shafei Shafeiei, assaulted Judge Nils Mangard, a third-country arbitrator, in an attempt to exclude him from the Tribunal. This unprovoked and unprecedented attack resulted in an indefinite suspension of Tribunal proceedings from September 5. In response to the attack, the United States filed a formal challenge seeking the removal of the two Iranian arbitrators in the event that the Government of Iran does not voluntarily remove them. A special chamber has been established to consider requests for withdrawals or terminations of claims and for awards on agreed terms until regular proceedings are reestablished.

9. Although the Tribunal made some progress in arbitrating the claims before it in the first few months of this reporting period, the attack on Judge Mangard in September has seriously disrupted and delayed proceedings. Significant American interests remain unresolved. Prehearing conferences and hearings scheduled for September and October have been postponed indefinitely. However, should the status of the two Iranian arbitrators who perpetrated the attack be resolved expeditiously, we believe that the Tribunal will be restored to its full functioning.

10. 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. 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.

Sincerely,

Ronald Reagan

Note: This is the text of identical letters addressed to Thomas P. O'Neill, Jr., Speaker of the House of Representatives, and George Bush, President of the Senate.