As funds are received by the Central Bank pursuant to Paragraph 6 [of the General Declaration], the Algerian Central Bank shall direct the Central Bank to (1) transfer one-half of each such receipt to Iran and (2) place the other half in a special interest-bearing Security Account in the Central Bank, until the balance in the Security Account has reached the level of U.S.$1 billion. After the U.S.$1 billion balance has been achieved, the Algerian Central Bank shall direct all funds received pursuant to Paragraph 6 to be transferred to Iran. All funds in the Security Account are to be used for the sole purpose of securing the payment of, and paying, claims against Iran in accordance with the Claims Settlement Agreement. Whenever the Central Bank shall thereafter notify Iran that the balance in the Security Account has fallen below U.S.$500 million, Iran shall promptly make new deposits sufficient to maintain a minimum balance of U.S.$500 million in the Account. The Account shall be so maintained until the President of the arbitral tribunal established pursuant to the Claims Settlement Agreement has certified to the Central Bank of Algeria that all arbitral awards against Iran have been satisfied in accordance with the Claims Settlement Agreement, at which point any amount remaining in the Security Account shall be transferred to Iran.
a. Article 1 (d), which provides:
(i) Whenever the balance in Account B has fallen below US $500 million, the Depositary4 shall notify the other parties to this Agreement of this fact.
(ii) As soon as such notification is received by Bank Markazi, it shall promptly make new deposits sufficient to maintain a minimum balance of US $500 million in Account B.
b. Article 18 (b), which provides:
Any dispute arising under this Agreement, which cannot be amicably resolved, may be submitted by any of the parties to the court of competent jurisdiction in Amsterdam, to a court of competent jurisdiction in any other country in which the defendant party has a permanent business establishment in its own name or to the Tribunal, except that any case in which the Depositary is a defendant shall be submitted exclusively to the court of competent jurisdiction in Amsterdam. Notwithstanding the foregoing, neither the Escrow Agent nor the Depositary shall be bound by a decision of the Tribunal which adversely affects its rights or privileges under this Agreement. In connection with the resolution of disputes arising out of this Agreement or other enforcement of this Agreement, solely in actions brought by a party hereto and solely before the courts or the Tribunal referred to above, the parties hereby waive any immunity they may have or have the power to assert in any proceeding, and the parties agree to accept the jurisdiction of the Netherlands court or, except for the Depositary, the jurisdiction of the Tribunal.
After the payment of all arbitral awards against Iran, a third and final step in the restoration of the financial position of Iran will take place, with any amount remaining in the Security Account to be transferred to Iran. Meanwhile, Iran will have to make new deposits should the balance in the Security Account fall under $500 million, in order to maintain such a minimum balance. Such a provision implies that, in any event, a substantial amount will remain in the Security Account at the end of the activity of the Tribunal (and subsequently will be transferred to Iran).
The relevant governing principles established by the Parties are a recognition of Iran's rights in its assets, along with agreement to resolve disputes by binding arbitration, and the creation of a Security Account consisting of Iranian funds in order to satisfy awards against Iran. In this context, in the Declarations, the interests of Iran, the "owner" of the funds, were set against those of the United States and its national claimants, who had the benefit of the freeze orders and, in some cases, of judicial attachments of Iranian assets. The balance was a careful one, and was premised on maintaining equilibrium between the Parties.20
Thus, given that Iran's Paragraph 7 obligation was part of the "careful" balance struck by the Parties in the Algiers Declarations, it can hardly be said that that obligation is exceptional compared to other obligations the Parties undertook in the Declarations. For example, the United States obligation in General Principle B of the General Declaration to terminate all litigation against Iran in United States courts and to lift all judicial attachments on Iranian property in the United States is no less "exceptional" than Iran's Paragraph 7 replenishment obligation. Paragraph 7 is part of the system that the Parties established for the resolution of their disputes. To say, therefore, that the obligation contained in Paragraph 7 "is of a manifestly exceptional character" is not convincing. That obligation remains part of the system and cannot unilaterally be removed or changed. Accordingly, the Tribunal cannot accept Iran's "exceptional-obligation" argument.
It is a sound principle of law that whenever a legal instrument of continuing validity cannot be applied literally owing to the conduct of one of the parties, it must, without allowing that party to take advantage of its own conduct, be applied in a way approximating most closely to its primary object. To do that is to interpret and to give effect to the instrument--not to change it.23
[T]hat status must be given effect except in so far as its application is rendered impossible, in terms of its general purpose, having regard to the attitude adopted by the Union [of South Africa ]. To that extent there are permissible such modifications in its application as are necessary to maintain--but no more--the effectiveness of that status as contemplated in the Court's Opinion of 1950.24
Iran's situation in the present Case is quite different from that discussed by Judge Lauterpacht. The application of Paragraph 7 has not been "rendered impossible." Iran does not deny that it is possible to replenish the Security Account. On the contrary, Iran declares its readiness to replenish if need be (see infra, para. 89). But for reasons it has explained, Iran has not replenished the Account at the present time. Thus, even if the Petitioners Case provided an authoritative source for the application of the doctrine of approximate performance, that doctrine as announced in Judge Lauterpacht's opinion would have no application to the present Case.
It is not necessary for the Court to determine whether there is a principle of international law or a general principle of law of "approximate application" because, even if such a principle existed, it could by definition only be employed within the limits of the treaty in question.29 In the view of the Court, Variant C30 does not meet that cardinal condition with regard to the 1977 Treaty.31
I have been instructed by my government to make a pledge to alleviate any possible concern that the balance of the Security Account might be insufficient to pay the prospective awards.
I hereby commit my government [ ] in the most unlikely event that the balance of the [S]ecurity [A]ccount [ ] proves to be inadequate to immediately replenish the Security Account to the necessary extent for the payment of the awards.
THE TRIBUNAL DECIDES AS FOLLOWS:
A. Paragraph 7 of the General Declaration requires that Iran replenish the Security Account promptly whenever it falls below the level of U.S.$500 million until such time as the President of the Tribunal has certified to the Central Bank of Algeria that all arbitral awards against Iran have been satisfied.
B. Iran has been in non-compliance with this obligation since late 1992. The Tribunal expects that Iran will comply with this obligation. Consequently, the requests by the United States for an order to Iran for replenishment and for additional relief are denied.
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