31 Jan Revisiting the Joint Comprehensive Plan of Actions: The Role of Arbitration in Reviving a Broken International Agreement
[Naimeh Masumy is a research fellow at the Swiss International Law School and a dispute resolution expert specialized in energy and investment disputes.]
In July 2015, Iran signed the Joint Comprehensive Plan of Action (“JCPOA” or “Nuclear Deal”), an international agreement with the E3/ EU+3 (China, the Russian Federation, the United States, France, Germany, and the United Kingdom with the European Union) concluding a decade of international tension regarding Tehran’s civilian nuclear program. This 159-page agreement was the fruit of thirteen frustrating years full of negotiations in several countries under different administrations.
The Nuclear Deal marked an important milestone: it brought together various state parties (despite varying degrees of diplomatic discord and antagonistic relations) who were able to reach a multilateral accord on highly sensitive issues. From its very inception, the deal was heralded by the UN as a positive step towards advancing international peace and security through detailed and comprehensive commitments. Its main purpose was to impose restrictions on Iran’s nuclear enrichment program in exchange for substantial economic relief in the form of the lifting of sanctions.
However, it now appears that inadequate definition was given to the framework of the Nuclear Deal’s Dispute Resolution Mechanism (‘DRM’). While even the most cynical analysts might not have foreseen that barely two years after its implementation the U.S. would unilaterally withdraw from the treaty, the basic failure of the underlying protocol to head off a geopolitical escalation brought into sharp focus the viability of the DRM enshrined in the JCPOA.
With the start of a new chapter for the JCPOA, the time has come to provide a brief account of the arc of the Nuclear Deal’s DRM to underscore the complexity and uncertainty concerning the DRM. In particular, the inability of this mechanism to sufficiently address non-compliance and subsequent contention over the legal nature of this instrument. This article will demonstrate that negotiators failed to include a coherent and robust mechanism that would have potentially de-escalated the rising tension(s) and ensured the legitimacy of this instrument. This post will also explain how arbitration can be employed as a potent mechanism to, both, restore this instrument, and safeguard its longevity, provided that political realities are accounted for.
The Current Arc of DRM
The type of multi-tiered dispute resolution clause found in the JCPOA is commonly found in international treaties. The mechanism of such a clause places several alternative dispute resolution (“ADR”) methods in sequence, so that if one method is not successful, parties are directed to the next step. These clauses mostly start with soft methods like negotiation and amicable resolution and move toward adversarial methods like arbitration or adjudication.
These escalation clauses are designed to compel parties to negotiate in good faith, to abide by the stipulated procedural steps prior to initiating any designated forms of ADR mechanism, and to ensure that any potential disputes can be amicably resolved. Crucially, effective dispute resolution clauses must bar parties from interpretive drift and encourage compliance to multilateral commitments. On both points, the enshrined DRM failed to deliver on those objectives, due to its opacity and uncertainty. This, in turn, led the treaties to fall between the legal gaps as parties scrambled for effective measures which would allow them to redress grievances in a sort of contractual vacuum.
The drafters of the JCPOA set out a lengthy, detailed dispute resolution process in articles 36 and 37, respectively. They were predominately designed to maintain diplomatic channels open so as to facilitate an open dialogue between participants.
A cursory look at the main components of the DRM suggests that these provisions embody all the salient features of an effective multi-tiered dispute resolution clause. For instance, Article 36 sets out a clear process that each party must follow in case of claimed non-compliance by another party. The provision clearly identifies when the process is triggered, and it incorporates a time frame (beginning to end). The DRM also stipulates that the respective decision makers should be easily identifiable. According to Article 36, the JCPOA’s Joint Commission, a body comprised of representatives of all parties to the agreement, is given the task of overseeing the implementation of the Nuclear Deal and the issues surrounding non-compliance.
Nevertheless, the reality is that none of the parties that were entrusted with supervising the successive stages of DRM were neutral or otherwise expert in dispute resolution. More importantly, the DRM failed to mention the forms of ADR process that should be utilized in an adversarial procedure. It also failed to provide essential steps to be taken to prevent any subsequent escalation, as in fact occurred.
The following analysis will reveal that the obscurity surrounding the neutral authoritative body, coupled with the lack of appropriate form of DRM, failed to provide this mechanism with teeth, so to speak. Therefore, it was rendered functionally inoperative, unable to preserve the integrity of this instrument and prevent parties from seeking extracontractual redress.
Following the sudden withdrawal of the U.S from the treaty, each party adopted a discernibly different approach, highlighting their different understandings of the meaning of the terms and conditions set forth in the JCPOA.
The U.S withdrew from the treaty in May 2018, contending that the JCPOA was not a signed document. Authorities said that it only reflected political commitments and, therefore, was not a legally binding instrument. Some domestic scholars even went further and analogized this instrument to a gentlemen’s agreement.
It is believed that the non-binding nature of this instrument found its genesis in the parties’ intentions during the negotiation. This was later reflected in the specific title – ‘plan of action’ – which reinforced its political character.
One year after the departure of the U.S, Iran was frustrated with the fact that its expected economic relief did not materialize. As a result, Iran started scaling back on its commitments under Article 24 of the treaty. In doing so, Iran maintained that the U.S withdrawal from the treaty amounted to material breach of international law and JCPOA commitments. In furtherance of its position, Iran relied on two arguments: 1) the phrase “governed by international law”, found in the agreement, denoted an intention to create obligation under international law 2) Iran contended that the term ‘called upon’ found in the US Security Council resolution of 2231 (which endorsed the JCPOA), indicated legally binding measures.
As tensions between the U.S and Iran grew, the EU found itself flanked by a rock and a hard place. Initially, the EU took the role of guardian of the JCPOA, however, as time progressed, it shied away from directly commenting on the legal nature of the treaty. Instead, the EU resorted to a declaratory statement issued by EU High Representative for Foreign Affairs. The statement only clarified that the nuclear deal ought to be considered as multilateral rather than bilateral, it then stated that the instrument belongs to the international community, and to the United Nations system.
The E3 countries took a more nuanced approach with respect to the legal nature of the treaty. They focused on the dispute settlement mechanism enshrined in the treaty, and posited that ‘[the] resolution remains as a binding international legal framework for the resolution of the dispute about the Iranian nuclear programme’.
It is evident that the argument raised by the parties to justify their conduct exhibited different understandings of the legal nature of the JCPOA as well as the application of other relevant international rules. At the center of this contention rested queries concerning the legal nature of this instrument. The answers to these queries were usually determined by reference to the text and context of the respective treaty, as recommended by Article 56 of the Vienna Convention. In examining this crucial aspect of the treaty, third party experts usually avail themselves of the fundamental rule of law when deducing the underlying nature of such treaties. In furtherance of this goal, neutral and identifiable authorities would consider circumstantial evidence surrounding the treaty including the intentions of treaty negotiators as well as conducting textual analysis of the treaty, which would include considering the preamble, and voluntary measures.
However, such a mechanism was not set forth by the JCPOA drafters. This left parties without proper recourse in the event of an interpretational drift. The current DRM framework failed to envisage a neutral and expert non-adjudicative authority that would be ideally guided by the goals of the negotiations as well as the substantive principles. Arguably, such a mechanism would have encouraged parties to restore dialogues and prevent escalation.
The Future Landscape: The Way Forward
Now that there is renewed interest to restore the deal, drafters ought to consider introducing a new, robust regime. One that not only facilitates a candid exchange of ideas, but also helps parties renegotiate during adversarial procedures. This regime should also provide a foundation for more effective and authoritative interpretations in the future.
In consideration of the foregoing analysis, this article argues that arbitration could serve as a potent dispute resolution mechanism for international treaties that are fraught with political dimensions. This form of non-adjudicative process could provide concrete benefits which would obviate issues like those encountered with the JCPOA.
- Rules of Law considerations: When dealing with disputes arising from treaties with significant political dimensions, arbitrators do not have to start with blank state. Instead, they are mostly guided by the goals of the negotiation, as well as substantive fairness and due process principles. Furthermore, in examining any disputes matters, arbitrators not only subscribe to legal and factual basis, but also consider the original goals of negotiation and other circumstantial evidence. In doing so, they are likely to achieve outcomes based on sound legal reasoning and solid base facts.
- Appropriate remedies: Effective remedies and enforcement are important in building the confidence of participants in dispute settlement procedures. It is believed that discussions about remedies in arbitration will be guided by the types of recourse that are most appropriate in politically-charged disputes. For instance, remedies may entail recognition of non-compliance or acknowledgement of wrongdoing. Such alternative, meaningful remedies will help ensure that justice can be obtained in situations which are not easily amenable to justice.
- Neutrality and expertise: An effective dispute resolution procedure should provide for the selection of competent and impartial decision makers. An arbitrator possessing the necessary expertise will provide clarity regarding procedures for submission of evidence and argument, standards of proof, and the right of third-party intervention. Mediators may go as far as proactively seeking additional evidence or explanation regarding an issue. Such facilitative processes will prevent impromptu and ill-advised declaratory statements by the parties involved and help build confidence in dispute settlement procedures.
- Efficiency and predictability: Arbitrators strive to operate in an effective manner by facilitating the adoption of conservation measures in a timely and effective manner. Arbitration accommodates a wide range of flexible procedures which allows to tailor its process to specific circumstances. In addition, World Bank statistics demonstrate that arbitrators often seek to produce reasonably predictable outcomes and provide parties with some assurance that similar disputes result in similar outcomes.
Now that there has been renewed interest in restoring the deal, the new drafters ought to pay closer attention to its DRM and ensure that it avoids all the potential pitfalls encountered with the JCPOA in its previous form. This post has proposed that arbitration may serve as a potent mechanism, one that can stipulate measures for reporting and investigating non-compliance and help resolve rising tensions through neutral and identifiable authority which relies on legal and factual bases.