INTERNATIONAL COMMERCIAL ARBITRATION

RESPONSE PAPER

Topic : THE NATURE OF THE IRAN-UNITED STATES SPECIAL CLAIMS TRIBUNAL

- Karan Vyas (BA0150021)

In the International legal community, International commercial arbitration is throughoutly

promoted enthusiastically. The 1988 Tokyo conference was attended by around three hundred
delegates, the International Council for Commercial Arbitration held that conference. The New
international arbitration centers are competing for business, particularly around the Pacific Rim
area in locations like Hong Kong, Los Angeles, etc. To unabashly luring International arbitral
proceedings, many major jurisdictions are adopting new laws of arbitration. In 1979 United
Kingdom adopted revised legislations for arbitration in order to promote itself as a venue for
international arbitration in which it suceeded.1 Switzerland, France, the Netherlands and Belgium
are new jurisdictions which adopted new legislations or adopted similar changes. Even recently
new arbitration laws which are patterned on the UNCITRAL Model Law on International
Commercial Arbitration are adopted by the Federal Government of Canada and its provinces.

Its difficult to judge how the law applied by commercial arbitrators are actually determine by
them in international cases. Arbitrations are often confidential and the awards published are often
heavily summarized or edited. “How- ever, the growing body of published decisions of the Iran-
United States Claims Tribunal provides new opportunities for analyzing the choice of applicable
law in international commercial arbitration.” The Tribunal has generated over five hundred
publicly available awards since 1981. About 160 are ‘awards on agreed terms’, giving effect to
voluntary settlements. Others deciding contested cases range from a few paragraphs to hundreds
of pages. The Tribunal's arbitrators have broad discretion to determine the substantive law to be
applied in these cases, and they are largely insulated from concerns about review by national

1
See Bentil, Making England a More Attractive Venue of International Commercial Arbitration by Less judicial
Oversight, J. INT'L ARB. 49 (19)
courts. “The Tribunal is a unique international institution, has been called ‘the most significant
arbitral body in history’ and its awards, ‘a gold mine of information for perceptive lawyers’.”2
“It was created in 1981 as one element of the settlement of the 15-month hostage crisis between
the United States and Iran and its task has always been difficult as it was born out of a grave
bilateral crisis and relations between them remain unsettled for both countries, but nevertheless,
the Tribunal has successfully addressed an enormous caseload: 542 large claims brought by U.S.
or Iranian nationals against the other Government.”3 The Tribunal has rarely decided on the basis
of national rules, even in cases where the parties might arguably have agreed on them as the rule
of decision. In a recent international commercial arbitration, however, an arbitrator reportedly
stated that decisions of the Tribunal, although on point, were not persuasive because the
Tribunal, after all, involves a special type of arbitration. This arbitrator is not alone. A lecturer at
the Hague Academy of International Law, speaking on international commercial arbitration,
reportedly did not refer to the Tribunal's jurisprudence because he did not find it relevant to his
work for the same reason. Viewed as a gigantic experiment in international dispute resol ution
rather than merely a claims settlement device for this particular group of disputes, the Tribunal
thus appears (at least to some) to yield decisions of unclear precedential value. Millions of
dollars have been spent on its operation and hundreds of awards rendered, yet an apparently not
uncommon perception is that the work of this, in some respects unique, institution is not
applicable elsewhere.

The doubt on the Tribunal's relevancy of work in one sense reflects a more fundamental
uncertainty about its work within traditional categories of international dispute resolution due to
the Tribunal’s proper place. “And also like any truly nagging question, that fundamental
uncertainty comes to be phrased in various ways. a phrasing frequently used by scholars inquires
into the "nature" of the Tribunal.” 4 “The assumption apparently underlying this question is that
there are basically two distinct types of international arbitration: interstate arbitration such as the
Beagle Channel arbitration between Chile and Argentina”5 (sometimes referred to here as public

2
See Garro, Enforcement of Arbitration Agreements and Jurisdiction of Arhtral Tribunals in Latin America, I J.
INT'L ARB. 293, 310-15 (1984).
3
See Paulsson, Arbitration Under the Rules of the International Chamber of Commerce, in Car- bonneau, at 235,
237-38
4
O Stewart, The Iran-United States Claims Tribunal: Accomiplishments and Prospects, in 1984, at 525, 529
5
See, e.g. I J. G. WETTER, The International Arbitral Process-Public And Private, at xxiv (1979)
international arbitration); “and international commercial arbitration such as proceedings between
private companies before the International Chamber of Commerce (ICC) (sometimes more
broadly referred to here as private international arbitration).” 6 Practitioners often regard the
inquiry into the nature of the process as irrelevant to lawyering until it is pointed out that many
practical questions, such as the enforceability of an award and the ability to challenge an award,
turn upon the answer. When we analyse the work of this Tribunal, its nature does not from a lack
of concern but due to the positions taken makes its nature unchanged and unchecked as for
example, according to one position this Tribunal was established by treaty like ICJ and that its
work is like that of the Court, therefore has an interstate character. “Moreover, the use of
undefined terms such as "a-national," "denationalized" and "de-localized," and unclear
distinctions such as that between interstate and international commercial arbitration, further
confuse the discussion.”7 So its not only determining the requirement of Tribunal's works
significanceto be examined by the the Tribunal itself, but also that how we understand the larger
context and clarify what it means to distinguish between interstate and international commercial
arbitration.

6
Lillich & Weston, Lump Sum Agreements: Their Continuing Contribution to the Law of international Claims, 82
AJIL 69 (1988)
7
Noecker & Hentzen, New Legislation on Arbitration in Canada, 22 INT'L LAW. 829 (1988)