Respondents in the captioned case have announced that they have recently gained access to new documentary evidence which will have a considerable impact in shedding light on the dark aspects of this case, particularly in terms of bribery, deception, the adjustment agreement and Claimant's direct claim.
Accordingly, the Arbitral Tribunal is respectfully requested to schedule a date for the filing of the said evidence and to notify it in due course.
Your concurrence to grant the above request will be highly appreciated.
This brief request offered no explanation as to why such evidence was being offered only at the eleventh hour not-withstanding Respondents' longstanding representations that the "documents supporting the illegal payment of bribery by Claimant are voluminous" and promises of "valid and specified documents" including "clear confessions" of Claimant.
The Tribunal notes Respondents' letter filed on 5 November 1985, requesting a date to be scheduled for the submission of new documentary evidence.
In view thereof, Respondents shall file such evidence by 10 December 1985. Should Claimant wish to file any evidence in rebuttal it shall do so not later than 6 January 1986.
The Order thus confirmed that the requested submission must be of "new documentary evidence."8
All of these last-minute submissions are far too late.... [I]t is inexcusable for the Parties to delay in this fashion the full articulation of their arguments and presentation of their evidence. The Tribunal could not accept such late submissions without prejudice to the opposing Party or Parties in the Case and damage to the fair and orderly conduct of the proceedings. Therefore, all of these submissions are rejected as untimely.
Id. para. 8. Accord Ford Aerospace & Communications Corporation and Air Force of the Islamic Republic of Iran, Award No. 236-159-3, para. 12 (17 June 1986) (requirement of fairness to, and equality between, the Parties obligates Tribunal to reject unscheduled filings submitted immediately prior to Hearing, to which the opposing party objects); Logos Development Corp. and Information Systems of the Islamic Republic of Iran, Award No. 228-487-3, para. 3 (30 April 1986); McCollough & Company, Inc. and Ministry of Post, Telegraph, and Telephone, Award No. 225-89-3, para. 6 (22 April 1986).
The Tribunal notes Claimant's telex received on 17 December 1985 requesting the Tribunal to strike from the record Respondents' submission of 10 December 1985.
The Parties are hereby informed that the Tribunal will take a decision regarding the admissibility of Respondents' submission of 10 December 1985 at the Hearing in this Case, scheduled for 20, 21 and 22 January 1986.
The Tribunal re-confirms its Order of 8 November 1985 and reiterates that if Claimant so wishes, it may file any evidence in Rebuttal to Respondents' above-mentioned submission not later than 6 January 1986.
Order of 19 December 1985.12
... [O]rdinary meaning [should] be given to the terms of the treaty in their context and in the light of its object and purpose.
Ownership is always... ownership of a group of rights in and to some object of these rights. The owner may, accordingly, transfer to others some or many of the rights but he remains owner so long as he retains the radical or reversionary right of getting the thing back when the other party's right has terminated; he ceases to be owner if he alienates the reversionary right and can no longer recover the thing. (Emphasis added.)
It is the purpose of both parties, within the framework of and pursuant to the provisions of the two Declarations..., to terminate all litigation as between the government of each party and the nationals of the other, and to bring about the settlement and termination of all such claims through binding arbitration.... [T]he United States agrees to terminate all legal proceedings in United States courts regarding claims of United States persons and institutions against Iran..., to nullify all attachments... obtained therein, to prohibit all further litigation based on such claims, and to bring about the termination of such claims through binding arbitration. (Emphasis added.)
A number of claims on behalf of corporations in liquidation or receivership were presented to the Commissions. In only one case was any question raised with respect to a receiver's authority.... It was urged that the claim should be dismissed because the nationality of the receiver had not been shown.... The Commission held that the nationality of the receiver was immaterial since he was only a representative of the insolvent corporation....
A. Feller, The Mexican Claims Commissions 116-117 (1935), citing U.S.A. (W. C. Greenstreet, Receiver) v. United Mexican States, Opinions of Commissioners, p. 199 (1929).
The fact that at some time in the future SHL would be entitled to the remaining assets, if any, is irrelevant.... Only if there is a surplus after all creditors had been paid, would any residue accrue to the company. A potential future interest is not an existing interest.... (Emphasis added.)
Aside from the dubious and unsupported characterization of SHL's rights as a "potential future interest,"22 this conclusion is utterly inconsistent with the scheme of the Claims Settlement Declaration, Article VII(2) of which permits an indirect claim notwithstanding the fact that the claiming national may never see one penny of it, i.e., its only entitlement is to dividends declared, if any, by the foreign subsidiary shareholder out of surplus, if any, or, upon liquidation of such subsidiary, to its shareholder's equity, if any.
Moreover, it appears from clause 2 of the insurance contract that Phelps Dodge may well be able to retain any amount it recovers from the present arbitration that exceeds the total of the amount of insurance payment it received from OPIC... with respect to the claims.23
Thus this very Chamber of the Tribunal expressly has confirmed the relevancy of precisely that which it now rejects as "irrelevant."24 While this finding in Phelps Dodge was, as the Award points out (para. 83), obiter dicta insofar as the issue of continuous ownership was concerned, since the transfer to OPIC was made after 19 January 1981, its mere utterance in that context necessarily refutes the charge of irrelevancy.
Legal title to the entire claim was vested continuously in Foremost from the date the claim arose to 19 January 1981 and remained so thereafter, notwithstanding the intervening settlements with OPIC. This being so, the recovery by Foremost of a measure of compensation from its insurer cannot affect its title to claim against the present Respondents.28
It would appear that despite the basic need for continuous beneficial ownership, its complete absence in regard to a specific claim may be excused where the fundamentally American character of the claim is nonetheless evident. Cf. International Schools Services, Inc. and National Iranian Copper Industries Company, Award No. ITL 37-111-FT, pp. 10-12 (6 April 1984), reprinted in 5 Iran-U.S. C.T.R. 338, 343-44 ("This interest [of natural persons in a corporation or other entity] need not amount to beneficial ownership.").29
... [After the effective date of the proposal] SHL no longer retained any legal or beneficial interest in its claims....
... [T]he Claimant [had] neither legal nor beneficial ownership during the relevant period. The issue here presented is thus... that of [Claimant's] continuous ownership, legal or beneficial, of the claim.30 (Emphasis added.)
In sum, despite the broad language of paragraphs 8 and 9 of the Amended Proposal, there was no absolute transfer of ownership from [SHL] to the trustee.... Once the creditors have been satisfied, any surplus would go to [SHL] and indirectly to its shareholders.... [SHL] (and through it, ISC) continues to beneficially own the claim against Iran.... (Emphasis added.)
Respondents' expert, too, Prof. Albert Bohemier of the University of Montreal, in his subsequent affidavit of 26 July 1984, after having "taken congnizance of" Dr. Morawetz' affidavit quoted just above, confirmed that
Under the proposal of [SHL]... the assets of the company are transferred to the trustee for the purposes of satisfying the claims of the secured, privileged and ordinary creditors.... [A]ny surplus accrues to the debtor.... (Emphasis added.)
... THE COURT
ORDERS the trustee to give access to [SHL] to the documents and exhibits necessary for the purpose of making proof of its parent company ISC's claim before the Tribunal at The Hague and to permit [SHL] to take copies of such exhibits and documents.
Thereafter, by letter of 31 January 1984, countersigned by Claimant, the trustee agreed as follows:
In my capacity as Trustee acting in and under the Proposal of [Stadler Hurter Limited], I hereby agree to cooperate with ISC in preparing its claim before the Iran-U.S. Claims Tribunal without prejudice to my rights to continue the proceedings I have instituted against Industrial Development and Renovation Organization of Iran et al in Case number 500-05-017071-794 of the files of the Superior Court for the District of Montreal (hereinafter referred to as the "Proceedings").
I hereby undertake and agree to desist from the Proceedings upon receipt of the sums necessary to pay all creditors' claims in accordance with the terms of the Bankruptcy Act, the fees and the disbursements related to the Proposal lodged by [Stadler Hurter Limited].
In the event that the sums received are not sufficient under the terms of the preceding paragraph, I hereby undertake and agree, upon receipt of a sum not less than the sum under seizure at the time of receipt, to give mainlevee of the seizure in case number 500-05-017071-794. Any lesser sum received will be applied on account of the claims made in case number 500-05-017071-794 and the Proceedings continued.
In addition, the Parties have advised the Tribunal that to to all intents and purposes the trustee has suspended prosecution of the Canadian proceedings pending our disposition of this Case. These actions, partly judicial, should have given the Tribunal comfort that the substantive premises regarding ownership of the claims asserted on the basis of which our jurisdiction is invoked are not, in the end, inimical to Canadian law.
(1) It recognizes the traditional basis of diplomatic protection, i.e., that injury to a national is injury to the State. A national's claim espoused by a State becomes the State's claim, and enters into its relations with other nations. Nationality of the claim ensures that only claims genuinely connected with a State's foreign relations are espoused.36 There can be little doubt about the connection between this claim and United States foreign policy interests. As previously recounted, this claim was one of the cases pending in United States courts prior to the conclusion of the Claims Settlement Declaration. It was suspended and transferred here pursuant to the United States' obligations under the Algiers Accords.
(2) It protects the respondent State from multiple liability by determining, in general, the one State entitled to assert a claim. In this connection it also prevents "forum shopping" by an injured person, who might otherwise attempt to have his claim brought by the government likely to be most influential over the respondent State rather than the government with which the person is most closely connected.37 Here there is no practical risk of double liability against Iran. Because of the agreement among ISC, its Canadian subsidiary, and the subsidiary's trustee, an award to ISC of its claim here will, as a practical matter, be final and determinative in the Canadian lawsuit.38 While it may be true that Canada, the State of SHL's "siege social," has the potential right to assert its diplomatic protection in SHL's behalf against Iran, such a possibility always exists in the context of indirect claims where the direct owner of the claims is a non-United States national. It is also evident here that Claimant has not engaged in forum shopping. It did not choose this forum; its claim was involuntarily transferred here by virtue of the Algiers Accords.
(3) In settlements where a "lump sum" or finite settlement fund is at stake, it protects the fund from dilution by interests extraneous to the States accepting or funding the settlement.39 Here there is no concern over access to a limited fund, given the unlimited nature of the Security Account established by Paragraph 7 of the General Declaration. To the extent that either State Party has an interest in precluding strangers from benefiting from that fund, it may be noted that originally it was funded by Iranian assets which previously were subject to attachment in litigation in the United States and were released by the Algiers Accords. Claimant's own suit in the United States against Respondents on these same claims was one of those suspended. Far from being a stranger to the fund, Claimant is an expressly anticipated beneficiary.
Although these traditional reasons for the nationality requirement in diplomatic protection are not necessarily relevant to the nationality requirement in the Claims Settlement Declaration,40 the fact that they would not be disserved by a finding that ISC's indirect claims are claims of nationals within the Tribunal's jurisdiction is supportive of its jurisdiction.
34. In summary, the Tribunal's finding that it does not have jurisdiction over the indirect claims asserted here either (1) grossly misreads the terms of the Claims Settlement Declaration, having due regard to its context and also its object and purpose, improperly rejects a wealth of historical international claims practice, and completely departs from the Tribunal's (and indeed this very Chamber's) own recent precedents; or (2) makes a finding of Canadian law unanimously and expressly rejected by all of the evidence, the one pertinent Canadian judicial act and all of the testimony on Canadian law presented to us. No decision so thoroughly and evidently unsound in law can hope to evade speculation, if not indeed suspicion, as to its actual motivations. Cf. Stein, Jurisprudence and Jurists' Prudence: The Iranian Forum Clause Decisions of the Iran-U.S. Claims Tribunal, 78 Am. J. Int'l L. 1, 39 n.177 (1984). The author's assessment of the majority opinion in Mexican Union Ry. Co. (U.K. v. Mex.), 5 R. Int'l Arb. Awards 115, 128-29 (1930) is apposite:
One balks... at ascribing so consistently dismal a record to the incompetence of presumably competent jurists. Is it not more persuasive to explain such results as attempts to avoid offense to the strongly held and irreconcilable positions of the states concerned?
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