Court OKs Iran Arbitration Award

Cubic Defense Systems logoIran won confirmation of an international arbitration award against a U.S. company and the right to interest in a dispute that began 34 years ago, at the dawn of Iran’s Islamic revolution.  The 9th U.S. Circuit Court of Appeals confirmed an award in favor of Iran’s Ministry of Defense and against Cubic Defense Systems, Inc., holding the award didn’t interfere with US public policy.  And the court said Iran was entitled to post-judgment interest. 

Judge Raymond Fisher said that the Iran Assets Control Regulations, put in place in response to the 1979 seizure of American hostages in Tehran, did not prohibit payment or confirmation of the arbitration award.  In fact, the U.S. government filed separate briefs in the case supporting confirmation of the award.

The 1997 award is not large, $2.8 million, plus $60,000 in arbitration costs from the International Court of Arbitration of the International Chamber of Commerce (ICC) in Switzerland.  But the appeals panel did say Iran should be entitled to post-judgment interest.  The ruling doesn’t put any money in Iran’s hands.  It simply upholds the arbitration award. 

Now Iran has to go back to federal court in Los Angeles and Judge Rudi Brewster, who originally rejected adding interest to the bill and to decide of Iran is entitled to attorney fees in the case.  Now the judge will have to recalculate.

This case stems from an ICC arbitration award favoring the Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran against Cubic Defense Systems, Inc.

Cubic contracted with Iran’s Ministry of War in 1977 to sell them an air combat maneuvering range.  Once the Iranian Revolution occurred the company did not fulfill the contract and they were discontinued in 1979.  Cubic resold the equipment to Canada in 1981.

Iran began seeking compensation from the company, first through the U.S.-Iran claims tribunal in the Hague, but by 1987 that tribunal found it lacked jurisdiction.  So Iran took its claims to the ICC in 1991 seeking arbitration.

The ICC issued an order in 1998 that Cubic should pay Iran.  Cubic responded by filing suit in federal court in Los Angeles.  Now it will owe the $2.8 million plus interest.

Joining Fisher in the opinion were Chief Judge Alex Kozinski and Judge Michael Daly Hawkins.

Mina Almassi of Los Altos Hills and Steven W. Kerekes, of Pasadena, represented Iran’s Ministry of Defense.

Charles A. Bird and Michelle A. Herrera of Luce, forward, Hamilton & Scripps in San Diego, represented Cubic Defense Systems.

Case:  Ministry of Defense v. Cubic Defense Systems, Inc., No. 99-56380

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