International legal ruling versus sanctions.

political analyst

This article was published last September.

https://www.independent.co.uk/news/uk/home-news/nazanin-zaghari-ratcliffe-iran-tank-debt-defence-secretary-ben-wallace-a9706221.html

The complex dispute dates back to the 1970s, when the Shah of Iran ordered 1,500 British Chieftain tanks and armoured vehicles.

When the Iranian Revolution of 1979 deposed the Shah delivery of the tanks was cancelled, but Iran’s new rulers demanded their money back.

This triggered a decades-long legal battle as lawyers for the Islamic Republic tussled with those representing International Military Services (IMS), a subsidiary of the Ministry of Defence, over how much the debt was worth.

Despite an international arbitration ruling in 2008 the UK did owe millions to Iran, the government has not yet paid up.

Lawyers for the two sides continue to haggle over whether interest has accrued in the decades since the tank deal fell through. Sanctions imposed by both the EU and the United States on the Iranian defence ministry are a further complication, potentially making any payments from Britain illegal.

A ruling by an international court on one side - EU and US sanctions on the other. Which one prevails?

If sanctions must be respected, then why would an international court rule in favour of the country that is the target of the sanctions?

Peregrinus

political analyst wrote: »

This article was published last September.

https://www.independent.co.uk/news/uk/home-news/nazanin-zaghari-ratcliffe-iran-tank-debt-defence-secretary-ben-wallace-a9706221.html




A ruling by an international court on one side - EU and US sanctions on the other. Which one prevails?

If sanctions must be respected, then why would an international court rule in favour of the country that is the target of the sanctions?

The sanctions imposed on Iran don't mean that they lose rights they previously held — just that the exercise of those rights may be impeded by the sanctions.

So, let's say the UK government owes 1 million dollars to the Iranian government. Or, Mr X, a UK resident, owes 1 million dollars to Ms Y, an Iranian resident. And let's say that the sanctions forbid money transfers to Iran.

This means that the Iranian government can't be paid the $1 million owed to it, and Ms Y can't be paid the $1 million owed to her. But, in each case, the money is still owed.

A couple of things could happen. For example:

1. The parties can simply wait in the expectation that, at some point, the dispute can be resolved and the sanctions can be lifted. The question will then arise whether the debtors should pay interest on the money or whether they should be required in the meantime to deposit the money in a bank so that it will earn interest, which can in due course be paid to the creditors.

2. The creditors can require the money to be paid in ways that don't infringe the sanctions. If what the sanctions forbid is money transfers to Iran, the for example Ms Y could direct Mr X to pay the money to Mr Z, in the US, to whom she owes money.

This isn't a new problem. When war broke out between the UK and Germany in 1939, the government established a "receiver of enemy property", and if a UK resident owed money to, or was holding money for, a German resident, they paid the money or transferred the property to the receiver, with details of who was entitled to it and why. After the war the receiver settled claims from German residents who reckoned they had been owned money from someone in the UK, or were entitled to property in the UK, in 1939.

ohnonotgmail

political analyst wrote: »

This article was published last September.

https://www.independent.co.uk/news/uk/home-news/nazanin-zaghari-ratcliffe-iran-tank-debt-defence-secretary-ben-wallace-a9706221.html




A ruling by an international court on one side - EU and US sanctions on the other. Which one prevails?

If sanctions must be respected, then why would an international court rule in favour of the country that is the target of the sanctions?

Sanctions don't change the facts that court ruled on. The Iranian government paid money upfront for goods they never received. they are entitled to that money back.

Victor

There was a parallel situation with debt owed by the USA to Iran. It was (at least partially) settled with a plane load of Swiss francs.

https://www.wsj.com/articles/inside-the-37-year-standoff-over-irans-frozen-u-s-dollars-1482956855

political analyst

Victor wrote: »

There was a parallel situation with debt owed by the USA to Iran. It was (at least partially) settled with a plane load of Swiss francs.

https://www.wsj.com/articles/inside-the-37-year-standoff-over-irans-frozen-u-s-dollars-1482956855

Then Biden probably wouldn't mind if the British government gave the money to Iran to settle that debt.

Furthermore, why has the British government transferred EU sanctions on Iran to British law even though Brexit has taken place?

political analyst

Peregrinus wrote: »

The sanctions imposed on Iran don't mean that they lose rights they previously held — just that the exercise of those rights may be impeded by the sanctions.

So, let's say the UK government owes 1 million dollars to the Iranian government. Or, Mr X, a UK resident, owes 1 million dollars to Ms Y, an Iranian resident. And let's say that the sanctions forbid money transfers to Iran.

This means that the Iranian government can't be paid the $1 million owed to it, and Ms Y can't be paid the $1 million owed to her. But, in each case, the money is still owed.

A couple of things could happen. For example:

1. The parties can simply wait in the expectation that, at some point, the dispute can be resolved and the sanctions can be lifted. The question will then arise whether the debtors should pay interest on the money or whether they should be required in the meantime to deposit the money in a bank so that it will earn interest, which can in due course be paid to the creditors.

2. The creditors can require the money to be paid in ways that don't infringe the sanctions. If what the sanctions forbid is money transfers to Iran, the for example Ms Y could direct Mr X to pay the money to Mr Z, in the US, to whom she owes money.

This isn't a new problem. When war broke out between the UK and Germany in 1939, the government established a "receiver of enemy property", and if a UK resident owed money to, or was holding money for, a German resident, they paid the money or transferred the property to the receiver, with details of who was entitled to it and why. After the war the receiver settled claims from German residents who reckoned they had been owned money from someone in the UK, or were entitled to property in the UK, in 1939.

In this case, the Iranian defence ministry is a subject of the sanctions but the Iranian central bank is not.

Surely, international judges can't just wash their hands of the Iranian government's support for terrorist organisations.

ohnonotgmail

political analyst wrote: »

In this case, the Iranian defence ministry is a subject of the sanctions but the Iranian central bank is not.

Surely, international judges can't just wash their hands of the Iranian government's support for terrorist organisations.

that isn't what they were ruling on. they were ruling on a debt that Britain owes to Iran.

Peregrinus

political analyst wrote: »

In this case, the Iranian defence ministry is a subject of the sanctions but the Iranian central bank is not.

Surely, international judges can't just wash their hands of the Iranian government's support for terrorist organisations.

International judges, like domestic judges, apply the law. If the sanctions that apply to Iran don't forbid payments to the Iranian Central Bank, then they don't forbid payments to the Iranian Central Bank. If you think that amounts to "washing one's hands of the Iranian government's support for terrorist organisations" then your quarrel is not with the judges that apply the ban but with the UN Security Council and other international bodies, which adopted the various bans and decided their scope and terms.

(It's probably relevant that the ban is not a response to "the Iranian government's support for terrorist organisations" but rather to Iranian failure to comply with agreements for the supervision and control of its nuclear enrichment activities.)