In a partial victory for Iran, judges at the International Court of Justice (ICJ) ruled on Thursday that the United States had illegally allowed courts to freeze the assets of Iranian companies and ordered the US to pay compensation, the amount of which will be determined later.
However, the World Court ruled that it did not have jurisdiction over $1.75 billion in frozen assets from Iran’s central bank, by far the largest amount claimed back by Iran.
The ruling comes amid heightened tensions between the United States and Iran after tit-for-tat strikes between Iran-backed forces and U.S. personnel in Syria last week.
Relations are also strained after attempts to revive a 2015 nuclear deal between Iran and major world powers stalled, and as Iranian drones are being used by Russia against Ukraine.
The case before the ICJ, also known as the World Court, was initially brought by Tehran against Washington in 2016 for allegedly breaching a 1955 friendship treaty by allowing U.S. courts to freeze assets of Iranian companies. The money was to be given in compensation to victims of terrorist attacks.
In hearings last year the U.S. argued the whole case should be dismissed because Iran has “unclean hands” and the asset seizures were the result of Tehran’s alleged sponsoring of terrorism. The court dismissed this defence entirely and ruled the treaty was valid.
The Islamic Republic denies supporting international terrorism.
The 1950s friendship treaty was signed long before Iran’s 1979 Islamic Revolution, which toppled the U.S.-backed shah, and the subsequent severing of U.S.-Iranian relations.
Washington finally withdrew from the treaty in 2018. Nonetheless the ICJ ruled that as it was in place at the time of the freezing of the assets of Iranian commercial companies and entities, Washington violated the treaty.
The judges explained the court had no jurisdiction over the $1.75 billion in assets from Iran’s central bank held by the U.S. because that bank was not a commercial enterprise, and thus not protected by the treaty.
The rulings of the ICJ, the United Nations’ top court, are binding, but it has no means of enforcing them. The United States and Iran are among a handful of countries to have disregarded its decisions in the past.