Interpretation of Implication: Some Observations on the Recent ICJ Decision in the Case of Certain Iranian Assets

[Katayoun Hosseinnejad is a PhD graduate from Graduate Institute of International and Development Studies and a university lecturer of international law in Iran and Pouria Askary is an assistant professor of international law at Allameh Tabataba’i University.]

This post highlights some of the inconsistencies in the ICJ’s recent judgment on preliminary objections in the case of Certain Iranian Assets, which resulted in rejecting the relevance of customary international law on state immunity for interpretation and application of the specific provision of the Treaty of Amity between Iran and the United States.

The dispute concerned the adoption by the United States of a series of measures (especially Executive Order 13599 blocking all assets of the Government of Iran, including those of the Central Bank of Iran (Bank Markazi)) allegedly in violation of the Treaty of Amity. Faced with three objections to its jurisdiction raised by the United States (here), the Court had to decide, among other issues, whether claims with regard to the failure to accord immunities to Iranian State entities relates to interpretation or application of the Treaty Amity as provided in Article XXI (2). For this purpose, the Court was called to determine the implications of Article XI (4) of the Treaty of Amity, which reads as follows:

“No enterprise of either High Contracting Party, including corporations, associations, and government agencies and instrumentalities, which is publicly owned or controlled shall, if it engages in commercial, industrial, shipping or other business activities within the territories of the other High Contracting Party, claim or enjoy, either for itself or for its property, immunity therein from taxation, suit, execution of judgment or other liability to which privately owned and controlled enterprises are subject therein.”

The parties disagreed as to whether this paragraph implies the incorporation of customary international law on state immunities. While Iran argued that the existence of an obligation that such immunity must be upheld confirmed by “strong implication” (para 5.13.), the United States claimed that “[h]ad the Parties chosen to codify sovereign immunity protections in this commercial treaty, they would have done so simply and directly.” (here, para. 8.7).

The Court’s brief reasoning for separating this Article from the customary rules on state immunity starts by emphasizing that, in line with its previous decisions, an a contrario reading is only warranted if the object and purpose of the treaty so requires. (Judgment, para 64). In light of such an argument, one would expect the next step to be the consideration of the text in light of its object and purpose to determine what the text implies as the Court did, for example, in Delimitation of the Continental Shelf between Nicaragua and Colombia to reject the a contrario reading of the provision which provides for proceedings initiated prior to the transmission of the notification of denunciation and not after that (paras 35-46). In the Certain Iranian Assets case, however, the Court seems to use this argument as a sole ground to reject Iran’s interpretation.

The Court finds it sufficient to refer to the text of Article XI (4) in holding that it cannot adopt the interpretation put forward by Iran (that a contrario interpretation is part of the text), because this view is “not supported by the text or context of the provision” without making any attempt to determine its implications (Judgment, para 64).

This approach is different from its previous cases in which the Court interpreted a treaty provision in terms of its unspoken meanings by reference to the nature of obligations at issue and the purpose the rule aims to serve. For example, in the LaGrand case, the Court went beyond the text to determine whether an individual right to consular assistance was implied in Article 36 of the Vienna Convention on Consular Relations. Thus, against the clear statement in the preamble of the Convention providing that the Convention “is not to benefit individuals” (here), the Court, by analyzing the nature of the obligations of the receiving State towards the detained person, announced that Article 36 (1) (b) creates individual rights (Judgment, para 77). Along the same line, in the case concerning the Obligation to Prosecute or Extradite, the Court declared that notwithstanding the silence in Article 7(1) of the Convention against Torture and other Cruel, Inhuman or Degrading Treatment or Punishment in regard to the time frame for performance of the obligation, “it is necessarily implicit in the text that it must be implemented within a reasonable time”. (Judgment, para 114).

The same approach, going beyond the text, can be seen in the practice of the European Court of Human Rights, which has to determine the silence of the Convention’s provisions more frequently. It was due to this approach, that for example, in the James v. UK case, the ECtHR found that the right to compensation is inherent in the right to property under Article 1 of Protocol 1 (para 54), or in the landmark Golder case, by referring to the nature of the rule and general principle of law, the Court found the right to access to courts to be inherently implied in the right to fair trial under article 6(1) (para 36), or in the case of Sigurður v. Iceland, it found that the right not to join an association was found to be implied in the freedom of association under Article 11 of the Convention. (para 35). In referring to these cases, our point is not to disregard the differences in the judicial rationality of two Courts. The emphasis is rather to show that in the practice of international judicial organs the implication cannot be determined by looking at the text alone.

Interestingly, despite rejecting the implied meaning of Article XI (4), the Court found an objective “to preserve fair competition among economic actors” to be implied in the text of Article XI (4) as it holds:

“If Article XI, paragraph 4, mentions only publicly owned enterprises which engage in ‘commercial, industrial, shipping or other business activities’, this is because, in keeping with the object and purpose of the Treaty, it pertains only to economic activities and seeks to preserve fair competition among economic actors operating in the same market.” (Judgment, second part of para 65).

The Court, however, did not determine the logical consequences of its finding. For example, the United State holds the view, as expressed by one of its courts, that the property subject to attachment according to its regulations is not limited to commercial activity, but that the “only requirement is that property be ‘the property of the foreign State or its instrumentality’”, (here, p 18). The question that naturally arises here, since the enterprises of parties enjoy no immunity in case of engagement in activities mentioned in Article XI (4), and, as interpreted by the Court, there is no obligation on state parties to respect the immunity of those enterprises in other circumstance: how can fair competition among economic actors be preserved when one party, by using its sovereign power, blocks the entities of the other party from engaging in any activity?

The Court could have avoided all these deficiencies by characterizing the question about the relevance of customary international law as a matter related to the applicable law. Instead of relying on the text to reject one implication and to bring in another one, the Court could have followed its approach in the Oil Platforms case in which the applicability of customary rules on the use of force was discussed at the merit phase. By holding that the waiver from immunities provided in Article XI (4) has no relation with the relevant customary international law, the Court, unfortunately, missed this important opportunity to clarify the scope of state immunity.