The International Court of Justice (ICJ) Thursday ruled that the US violated a 1955 treaty with Iran by freezing Iranian assets to fulfill terrorism-related awards from the US. In Islamic Republic of Iran v. United States of America, the court ordered the US to compensate Iran in a binding judgment, however, the court has not yet decided the amount of compensation to be awarded.

Fundamental to Thursday’s ruling is an understanding of the Treaty of Amity, Economic Relations and Consular Rights, which the US and Iran signed in 1955. The treaty aimed to normalize social and commercial relations between the two countries. While the US formally withdrew from the treaty in 2018, the ICJ found that the disputed actions in Thursday’s case occurred while the treaty was still in force. Therefore the court still considered the treaty’s provisions. 

Iran brought the case before the ICJ in 2016 alleging a series of treaty violations dating back to 2002. Since 2002, the US has adopted and amended various congressional measures to pursue action against Iran. Included among them were the Terrorism Risk Insurance Act (TRIA) and the Foreign Sovereign Immunities Act (FSIA). TRIA and FSIA built off of each other. Together, the two acts compensated Americans who received judicial awards against someone associated with an “act of terrorism” or someone designated as a “terrorist party” by the US government.

In a series of US court cases, Americans were awarded judicial decisions that ordered Iranian companies to attach, execute, turnover or distribute their assets to satisfy the award. The issue was then further compounded when former President Barack Obama signed Executive Order (EO) 13599 in 2012. The order blocked the transfer, payment, exportation, withdrawal and all other dealings in any Iranian-owned property within the US.

Iran argued to the ICJ that as a result of the TRIA, FSIA and EO 13599, Iran was “deprived of the rights they enjoyed under the Treaty of Amity.” The US countered by arguing that the measures were designed to “provide redress for victims of terrorism.” According to the US, Iran did not have clean hands, since they participated and furthered “state-sponsored” terrorism. Along that same vein, the US also said that the measures did not uniquely apply to Iran, as TRIA and FSIA apply to “all designated State sponsors of terrorism.” Iran, however, said that while the US’s reasoning may explain some of the measures, it did not explain the US’s attack on Iranian enterprises engaged in commercial activities.

The court agreed with Iran. They found that the US violated several provisions of the treaty in enacting and enforcing the TRIA, FSIA and EO 13599. As a result, the court ordered the US to compensate Iran “for the injurious consequences of the violations.” The court said it will determine the amount of compensation owed to Iran at a later date.

ICJ judgments are legally binding. However, the court has no means of enforcing them. Previously, both the US and Iran have ignored the court’s judgments.