IRAN-US CLAIMS TRIBUNAL

IUSCT Case No. 219

BENJAMIN R. IS
ISAIAH
AIAH V
V.. B
BANK
ANK MELLA
MELLAT
T (AS SUCCESSOR T
TOO INTERNA
INTERNATIONAL
TIONAL B
BANK
ANK OF
IRAN)

AWARD (A
(AW
WARD NO
NO.. 35-219-2)

30 March 1983

Tribunal:
Pierre Bellet (President)
Shafie Shafeiei (Appointed by the respondent)
George H. Aldrich (Appointed by the claimant)

Reproduced with the permission of the Iran-United States Claims Tribunal

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 Table of Contents

Award (Award No. 35-219-2)....................................................................................................................................................................... 0

I. THE PROCEEDINGS ................................................................................................................................................................................. 1
II. THE FACTS AND CONTENTIONS ....................................................................................................................................................... 1
III. JURISDICTION ....................................................................................................................................................................................... 2
IV. MERITS OF THE CLAIM ....................................................................................................................................................................... 3
V. INTEREST .................................................................................................................................................................................................. 6
VI. COSTS ....................................................................................................................................................................................................... 6
AWARD........................................................................................................................................................................................................... 6

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 Award (A
(Award
ward No. 35-219-2)

I. The Proceedings

[1]. The Claimant, Mr. Benjamin R. Isaiah, stating that he has been at all times relevant to the claim a
citizen of the United States, filed a Statement of Claim on 11 January 1982 against the International
Bank of Iran. The relief sought by the Claimant is the payment of U.S. $380,000, representing the
amount of a dishonored check drawn by the International Bank of Iran on the Chase Manhattan
Bank, together with interest from 2 January 1979.

[2]. The Respondent, Bank Mellat, filed its Statement of Defense on 6 May 1982, contending that the
Tribunal has no jurisdiction over this claim because the check in question was payable to someone
other than the claimant, a person whose nationality was not established, and offering some
defenses on the merits.

[3]. The Claimant filed comments on the Statement of Defense on 26 July 1982, in which he described
the circumstances surrounding the issuance of the check and submitted various documents relative
to his alleged beneficial ownership of the funds represented by the check.

[4]. The Respondent then elaborated its defenses in a Rejoinder filed on 20 October 1982.

[5]. The Claimant filed a Hearing memorial on 23 December 1982. The Hearing was held on 26 January
1983, at which the Claimant submitted his United States naturalization certificate, the original
check, and a volume of the Claimant's business records for examination by the Tribunal. The
Claimant also submitted at the Hearing copies of a letter dated 22 January 1978 from himself to Mr.
Haim Farkash, the payee of the check, and two affidavits relating to interest and costs. The Claimant
spoke at the Hearing and presented the testimony of two witnesses, Mr. Haim Farkash of Tel Aviv,
Israel, and Mr. Masoud A. Alikhani of London, England.

II. The F
Facts
acts and Contentions

[6]. In the Statement of Claim, Isaiah contended that he was the "owner and holder" of the check, which
was dated 2 January 1979. He asserted that the check was not paid because of expropriation of the
assets and properties of the Bank by the Government of Iran. He said that Mr. Farkash, the named
payee (although misspelled as Farash on the check), was an "affiliate" of his in the transaction with
respect to which the check was issued, and he attached copies of the check and of an undated
"endorsement separate from negotiable instrument," allegedly made on 9 November 1979, which
provided as follows:
ENDORSEMENT SEP SEPARA
ARATE
TE FR
FROM
OM NEGO
NEGOTIABLE
TIABLE INS
INSTR
TRUMENT
UMENT

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 I, HAIM FARKASH, hereby endorse to Benjamin R. Isaiah all of my right, title and interest in and to
the check to my order dated January 2, 1979, a copy of which is attached to this endorsement and,
by such endorsement transfer and set over to Benjamin R. Isaiah all of my right, title and interest
in and to said check and the proceeds thereof as if the check were endorsed "Pay to the order of
Benjamin R. Isaiah" and signed by me.

[7]. Isaiah later described the transaction that gave rise to the check by submitting documents and
testimony to show that he had entered into an agreement dated 10 January 1978 with the Karayesh
Co. for the purchase by Isaiah of beer in the United States and elsewhere and its shipment to and
sale in Iran. The agreement called for Isaiah to receive 25 percent of the profits of this enterprise.
The agreement was signed by Isaiah and by Masoud Alikhani on behalf of the Karayesh Co. Isaiah
also wrote Alikhani appointing Farkash as his representative to fulfill part of his responsibilities in
Iran.

[8]. On 3 November 1978, Alikhani wrote Isaiah stating that, to the end of October 1978, Isaiah's share
of the profit amounted to $380,000 and asking how he wished the funds paid. Isaiah replied by a
letter of 18 December 1978 asking Alikhani to arrange a bank transfer to Farkash's account in Israel
after the first of the year so the income would be recorded in 1979, rather than in 1978. On 4
January, Farkash wrote Isaiah saying that he had received and deposited the check and "will hold
the amount in my account until you tell me how to handle the transfer of these funds." On 13
January Farkash again wrote Isaiah, this time telling him that the check had been dishonored for
insufficient funds.

[9]. The Respondent raised various defenses to this claim, including the absence of legal right for Isaiah,
who was not the payee of the check, to sue on the check, the ineffectiveness of the separate undated
and unauthorized endorsement or assignment of rights by Farkash to Isaiah, the lack of jurisdiction
of the Tribunal in these circumstances, the requirements of Iranian law that any check be
reaffirmed by the drawer after six months and that any suit on the check be in Iranian courts, the
illegality of the underlying transaction and the related question whether the foreign exchange
transaction was legitimate under the applicable Bank Markazi circular.

[10]. The Claimant, in rebuttal, asserted, inter alia, that the Tribunal has jurisdiction over a claim by
Isaiah as beneficial owner of the funds represented by the check against the bank which dishonored
the check and retained the funds, that no renewal requirement exists for a dishonored check, that
the underlying transaction was legal when it occurred, that it qualified for foreign exchange under
the applicable circular, and that the bank is now estopped from asserting the contrary.

[11]. As the case developed in the pleadings and at the Hearing many of the above contentions of both
parties were not pursued or were made irrelevant by jurisdictional problems. In the end, the
principal issues were whether there was continuity of nationality of ownership of the claim so as to
give the Tribunal jurisdiction and whether the evidence was convincing to establish Isaiah's claim
for unjust enrichment.

III. Jurisdiction

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 [12]. The Claimant proved his American nationality by submitting his certificate of naturalization
showing that, while originally a citizen of India, he became a citizen of the United States in 1972.

[13]. Bank Mellat acknowledges that it is the successor to the International Bank of Iran and thus is the
successor as Respondent. The Tribunal has changed the title of the claim accordingly. Bank Mellat is
a state owned bank and is included within the term "Iran" as defined in Article VII (3) of the Claims
Settlement Declaration.

[14]. The only difficult jurisdictional question involves continuity of nationality of the claim:
"Claims of nationals" of Iran or the United States, as the case may be, means claims owned
continuously, from the date on which the claims arose to the date on which this agreement enters
into force, by nationals of that state,...

[15]. Insofar as Isaiah's claim is based upon the check -- that is, for dishonor of the check -- he faces an
obvious and insurmountable problem in that the payee is an Israeli national. Thus, at the time the
claim for dishonor of the check arose, that claim could not have been pursued directly by Isaiah, no
matter what his beneficial interest, as he was not a holder in due course. The subsequent separate
endorsement by Farkash to Isaiah, being subsequent to the date the claim arose, would not satisfy
the requirements of the Declaration for continuity of nationality of the ownership of the claim, even
if it had made Isaiah a holder in due course, which it probably did not do, since Isaiah paid nothing
for the endorsement and it was separate from the check. See Chapter II of Annex I to the Geneva
Convention on Bills of Exchange of 1932; Uniform Commercial Code, sec. 3-302. Thus, this Tribunal
has no jurisdiction over a claim by Isaiah as an alleged holder in due course on the check itself.

[16]. Isaiah could, of course, have brought a claim against the Karayesh Co. on the underlying
transaction, that is, for his share of profits of the beer business. Assuming that the company could
be shown to be controlled by 19 January 1981 by the Government of Iran, the Tribunal would have
had jurisdiction over that claim, but Isaiah made no such claim, so it is not before us.

[17]. Isaiah argues. 2 that he has a claim against Bank Mellat for unjust enrichment on the ground that
the bank was given funds of which he was the beneficial owner and that it has retained those funds
for its own benefit and to his detriment. He points out that this check was not an ordinary check
which, in the event of dishonor, gives rise to a claim against the drawer either on the check or on
the underlying debt, but rather was a bank check, purchased by the Karayesh Co., the drawer of
which was the predecessor of Bank Mellat. Thus, in the event of dishonor (an extremely rare
occurrence with bank checks) and retention by the bank of the funds, a claim may be made by the
beneficial owner of the funds against the bank for unjust enrichment. While such a claim is novel,
the Tribunal agrees with the claimant that, if it can be proved, it is within our jurisdiction because
it arose prior to the date of the Algiers Declaration and was owned continuously thereafter by him.

[18]. Therefore, the Tribunal holds that it has jurisdiction over the claim for unjust enrichment.

IV
IV.. Merits of the Claim

2
Isaiah made this argument, not in his Statement of Claim, but later in the pleadings, after he changed counsel.

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 [19]. The Claimant submitted evidence to prove that the check in question was issued by the
International Bank on 2 January 1979 and that payment was refused by Chase Manhattan Bank in
New York on 10 January by reason of insufficient funds. Testimony at the Hearing indicated that the
check was left with Chase Manhattan for some time in the expectation that International Bank's
credit facilities with Chase would be restored and that officials of the International Bank in Tehran
repeatedly assured Mr. Alikhani that the check would soon be paid.

[20]. The Claimant submitted evidence in the form of letters exchanged between himself and Mr.
Alikhani and between himself and Mr. Farkash, as well as testimony at the Hearing by both of those
individuals, which indicated that the check was purchased with Isaiah's 25 percent of the profits of
the beer importing business through the end of October 1978 and that it was made payable to an
account in the name of Farkash at Isaiah's request.

[21]. The Claimant points out that the Respondent has been unjustly enriched at the expense of the
Claimant, because it received from the Karayesh Co. funds for the purpose of paying off its debt to
the Claimant and that it has never paid those funds to the Claimant or to anyone else. It alleges that
this detention of funds by the bank was wrongful, and the beneficial owner, Mr. Isaiah, has a right
to restitution.

[22]. Restitutionary theories such as unjust enrichment and enrichissement sans cause are found in the
laws of many nations. See J. Dawson, Unjust Enrichment: A Comparative Analysis (1951). In Iranian
law, Articles 301 and 303 of the Civil Code provide as follows:
Article 301

"Anyone who intentionally or inadvertently acquires goods to which he has no claim, is bound to
deliver such goods to the actual owner."

Article 303

"Anyone who receives any property without any right is responsible for the actual property and
for any profits that may accrue thereto, whether or not he is aware of his having no right to the
property."

[23]. In international law unjust enrichment is an important element of state responsibility. See 8
Whiteman, Digest of International Law 1035-36; 1 Schwarzenberger, International Law 577-79
(3rd.ed.). While the Tribunal is unaware of any judicial decisions holding a drawer bank of a
dishonored check liable to the beneficial owner of the funds on the grounds of unjust enrichment,
that is scarcely surprising as bank checks are rarely dishonored. In any event, the Tribunal believes
that it would be inequitable for such a bank to be able to escape liability to the beneficial owner of
the funds represented by such a dishonored check and retain the funds to which the bank has no
claim.

[24]. While it might be argued that Iranian law must be applied to this claim on the ground that the act
giving rise to the unjust enrichment took place at least partly in Iran, and that the enrichment
occurred there, 3 it might also be argued that this is unnecessarily restrictive in view of the fact that
the dishonored check was drawn on a New York bank and much of the underlying transaction

3
(See Batiffol and Lagarde, Traite de Droit International Prive, No. 561 (6e ed.); Dicey and Morris, Conflict of Laws, Rule 170 (1980).

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 occurred outside Iran.

[25]. Article V of the Claims Settlement Declaration leaves the Tribunal with considerable flexibility in
this regard. It provides as follows:
ARTICLE V

The Tribunal shall decide all cases on the basis of respect for law, applying such choice of law rules
and principles of commercial and international law as the Tribunal determines to be applicable,
taking into account relevant usages of the trade, contract provisions and changed circumstances.

[26]. Under this rule, the Tribunal is free to apply general principles of law in a case such as this, although
there is no reason to believe the result would be different if only Iranian law were applied.

[27]. While Bank Mellat raised many defenses in the course of the written pleadings, in the end its
defense against the unjust enrichment claim rested upon the assertion that Isaiah was not the
beneficial owner of the funds represented by the check when the check was dishonored and that
the right to the funds was later transferred to him for the purpose of giving this Tribunal
jurisdiction over the claim. The Bank did not challenge the theory of unjust enrichment per se, but
rather Isaiah's entitlement under that theory. To substantiate its defense, Bank Mellat offered no
evidence. It challenged the credibility of the testimony of the Claimant and of his two witnesses and
the authenticity of his documentary evidence, but it presented no evidence of its own. In effect, it
implied that the evidence presented by the Claimant had been fabricated to present the case as that
of an American when, in fact, the real party in interest was either Farkash or Alikhani. It pointed
out that Alikhani wrote on the letterheads of several different companies and that he was not
authorized to sign on behalf of the Karayesh Co. in making the agreement with Isaiah. Alikhani
replied that he had a power of attorney at the time to sign on behalf of Karayesh, which was one of
his family's group of companies, and that no significance should be attached to his using letterheads
of various companies in that group. He said that all his papers, including that power of attorney,
had been left in Iran and that he no longer had access to them.

[28]. The Respondent points to the endorsement separate from the check by Farkash as indicating that
the claimant received his rights only subsequent to dishonor of the check. The Claimant said at the
Hearing that the endorsement had been requested by Chase Manhattan long after the dishonor to
clarify the Claimant's interest in the question. In any event, such an endorsement by a payee of a
check is not dispositive of the question of who owned the beneficial interest in the funds
represented by the check.

[29]. The Tribunal notes that the Respondent has presented no evidence to substantiate its defense except
its suspicions. The Alikhani family's companies were allegedly among those expropriated by the
Islamic Republic of Iran, and the documents therefore were presumably available to the
Respondent.

[30]. The Tribunal has copies of (a) the agreement of 10 January 1978 between Karayesh Co. and Isaiah
for the purchase of beer abroad and its sale in Iran which allocates to Isaiah 25 percent of the
profits; (b) the agreement of 22 January 1978 appointing Farkash as Isaiah's representative to
develop and manage the beer business in Iran; (c) Alikhani's letter of 3 November 1978 informing

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 Isaiah that his share of profit to the end of October was $380,000; (d) Isaiah's letter to Alikhani
of 18 December 1978 asking that the money be sent to Haim Farkash's account in Israel as soon
as possible after the first of the year; (e) Alikhani's letter to Isaiah of 4 January 1979 saying that
the check representing Isaiah's share of the profits had been purchased from the International
Bank of Iran and had been given, as instructed, to Haim Farkash; and (f) Farkash's letter of 4
January 1979 informing Isaiah that he had received the money and would hold it in his account
pending directions from Isaiah. These documents, buttressed by credible testimony at the Hearing,
constitute a prima facie case that the money represented by the check was Isaiah's money and that
he has held the claim for that money from the time the check was dishonored. In the absence of
evidence to the contrary, that evidence is decisive.

[31]. As to the defense raised based on the prohibition of beer sales in Iran, the Tribunal notes that sales
of beer in Iran were lawful at the time these sales were made.

[32]. With respect to the alleged violation of Bank Markazi Iran's circular on foreign exchange, the
Tribunal notes that Bank Mellat neither alleged nor proved any refusal by Bank Markazi of the
foreign exchange approval which it was incumbent on Bank Mellat to seek pursuant to the circular.
Moreover, the Respondent explained in its plea that the check was dishonored only because Chase
Manhattan Bank suddenly withdrew the credit facilities which it previously had made available to
Bank Mellat, and that the latter made unsuccessful efforts to restore its credit facilities with Chase
Manhattan Bank so that the check could be paid. Such explanation is inconsistent with any
impediment to payment which would allegedly have resulted from Bank Markazi Iran's position as
to the operation of foreign exchange control in this case. In any event, exchange regulations are not
relevant to a claim for unjust enrichment.

[33]. Therefore, the Tribunal holds that the Respondent Bank Mellat has wrongfully detained Mr. Isaiah's
$380,000 since 10 January 1979 and that Isaiah is entitled to an award in that amount.

V. Interest

[34]. The award of interest is certainly permissible in the discretion of the Tribunal. In this case there is
no evidence that the International Bank of Iran or its successor, Bank Mellat, deliberately deprived
the Claimant of his money; on the contrary, the evidence indicates that the Bank made unsuccessful
efforts to restore its credit facilities with Chase Manhattan Bank so that the check could be paid. In
view of the special circumstances in this case, the Tribunal declines to award interest.

VI. Costs

[35]. Each party shall be left to bear its own costs of arbitration.

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 Award

[36]. The Tribunal Awards As Follows:

The Respondent, Bank Mellat, is obligated to pay the Claimant, Benjamin R. Isaiah, U.S. $380,000,
which obligation shall be satisfied by payment out of the Security Account established by Paragraph
7 of the Declaration of the Government of the Democratic and Popular Republic of Algeria of 19
January 1981.

Each of the parties shall bear its own costs of arbitrating this claim.

This Award is hereby submitted to the President of the Tribunal for the purpose of notification to
the Escrow Agent.

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 International Centre for
Settlement of Investment Disputes
(ICSID)

In the Matter of the Arbitration between

COMPAÑÍA DEL DESARROLLO DE SANTA ELENA, S.A.

and

THE REPUBLIC OF COSTA RICA

Case No. ARB/96/1

FINAL AWARD

Date of dispatch to the parties: February 17, 2000

169
CASES 193

fair market value of the Property, i.e., what a willing buyer would
pay to a willing seller.33
74. There is, however, a dispute as to the value of the Property
derived by applying that principle. Specifically, the parties differ
with respect to the date on which the Property was expropriated
and as of which its fair market value is to be assessed, and as to the
value of the Property on that date. This difference of views lies at
the heart of the case, and will be explored in the following section
of our Award, dealing with the crucial issue of valuation.

K. Valuation

75. On the question of valuation, as noted earlier, the views of the

parties are widely divergent. The Tribunal considers it useful to
summarise the parties’ positions here:
— Claimant states that the fair market value of the Santa Elena
Property, based on its highest and best use in the market
place, is equivalent to its present day value, undiminished by
any expropriatory actions of the Government and, in partic-
ular, by any environmental statutes or regulations enacted after
1978.34
— Respondent contends that the relevant date at which the fair
market value of the Property is to be assessed is the date of the
expropriation decree, i.e., 5 May 1978.35

1) The Date as at Which the Property Must be Valued

76. As is well known, there is a wide spectrum of measures that a

state may take in asserting control over property, extending from
limited regulation of its use to a complete and formal deprivation
of the owner’s legal title. Likewise, the period of time involved in
the process may vary—from an immediate and comprehensive tak-
ing to one that only gradually and by small steps reaches a condi-
tion in which it can be said that the owner has truly lost all the
attributes of ownership. It is clear, however, that a measure or series

33
Memorial, pp. 74-77; Counter-Memorial, pp. 42-43.
34
Memorial, pp. 59-60, 81-82.
35
Counter-Memorial, pp. 39-42.
194 ICSID REVIEW—FOREIGN INVESTMENT LAW JOURNAL

of measures can still eventually amount to a taking, though the

individual steps in the process do not formally purport to amount
to a taking or to a transfer of title. What has to be identified is the
extent to which the measures taken have deprived the owner of the
normal control of his property. A decree which heralds a process of
administrative and judicial consideration of the issue in a manner
that effectively freezes or blights the possibility for the owner rea-
sonably to exploit the economic potential of the property, can, if
the process thus triggered is not carried out within a reasonable
time, properly be identified as the actual act of taking.
77. There is ample authority for the proposition that a property
has been expropriated when the effect of the measures taken by the
state has been to deprive the owner of title, possession or access to
the benefit and economic use of his property:

“A deprivation or taking of property may occur under

international law through interference by a state in the
use of that property or with the enjoyment of its benefits,
even where legal title to the property is not affected.
While assumption of control over property by a gov-
ernment does not automatically and immediately justify
a conclusion that the property has been taken by the gov-
ernment, thus requiring compensation under interna-
tional law, such a conclusion is warranted whenever
events demonstrate that the owner was deprived of fun-
damental rights of ownership and it appears that this
deprivation is not merely ephemeral. The intent of the
government is less important than the effects of the mea-
sures on the owner, and the form of the measures of con-
trol or interference is less important than the reality of
their impact.”36 [Emphasis added.]

36
Tippetts, Abbett, McCarthy, Stratton v. TAMS-AFFA, Award No. 141-7-2
(June 22, 1984), reprinted in 6 Iran-U.S. Cl. Trib. Rep. 219, 226 (1986), citing 8
Whiteman, Digest of International Law 1006-20; Christie, What Constitutes a Taking
Under International Law? 38 Brit. Y.B. Int’l. Law 307 (1962); Cf. also the Mariposa
Development Company case decided by the U.S.-Panama General Claims Commission
(6 UNRIAA 390), where the tribunal observes that legislation may sometimes be of
such a character that “…its mere enactment would destroy the marketability of pri-
vate property, render it valueless and give rise forthwith to an international claim.” See
also Claimant’s Closing Statement, pp. 13-14.
204 ICSID REVIEW—FOREIGN INVESTMENT LAW JOURNAL

Claimant and Defendant shall take all measures necessary,

including any type of protocolization that may be required, for
the registration in the name of the Republic of Costa Rica of
the 15,210 hectares of the Property on the basis of which the
Property has been valued. Upon counsel for Claimant, Arnold
& Porter, and counsel for Respondent, White & Case, each cer-
tifying in writing to Crestar Bank that the aforesaid measures
have been taken, Crestar Bank shall release to CDSE the
amount originally deposited to the benefit of CDSE, together
with any interest thereon that has accrued while the amount has
been held in the trust account. Thereafter, neither party shall
have any further claim against the other in respect of the whole
or any part of the Property or any matter relating thereto, in
particular in respect of the approximately 5400 hectares in the
northwest and approximately 590 hectares of the Property sold
by CDSE or occupied by squatters which have not been valued
in determining the compensation owed Claimant, and all issues
or claims relating to compensation for the expropriation of the
Property and the transfer of ownership thereof shall be consid-
ered to be fully and finally resolved.
6. Each party shall bear the expenses incurred by it in connection
with the arbitration. The costs of the proceeding, including the
fees and expenses of the members of the Tribunal and the
charges for the use of the facilities of the ICSID, which have
been covered by equal advance deposits by both parties, shall be
borne by the parties in equal shares.

L. Yves Fortier, C.C., Q.C.

President

Sir Elihu Lauterpacht, C.B.E., Q.C. Professor Prosper Weil

Arbitrator Arbitrator
 IRAN-US CLAIMS TRIBUNAL

IUSCT Case Nos. 44, 46 and 47

SHAHIN SHAINE EBRAHIMI AND O

OTHERS
THERS V
V.. THE GO
GOVERNMENT
VERNMENT OF THE ISLAMIC
REPUBLIC OF IRAN

FINAL A
AW
WARD (A
(AW
WARD NO
NO.. 560-44/46/47-3)

12 October 1994

Tribunal:
Gaetano Arangio-Ruiz (President)
Richard C. Allison (Appointed by the claimant)
Mohsen Aghahosseini (Appointed by the respondent)

Reproduced with the permission of the Iran-United States Claims Tribunal

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 B. Respondent's Contentions

87. Respondent argues that the full compensation-provision of Article IV, para. 2 of the above-
mentioned Treaty of Amity is of no avail to dual nationals like the Claimants who "take possession
of a company's shares as Iranians, and then ask for compensation." Furthermore, while the
Respondent appears to agree on the appropriateness of a fair market valuation of Gostaresh
Maskan using an asset approach, it maintains that the Company was no longer a going concern at
the valuation date. Respondent notes in support of its position that "[c]hanges of the government
policy concerning construction works and its focusing on works related to rural areas as well as
cheap housing construction works for low income classes, were greatly affecting the conditions of
companies like Gostaresh Maskan Company." This, in addition to "the Company directors'
negligence, failures and mismanagement before the Revolution until the date of the alleged
expropriation", allegedly resulted in a situation such that by the time the first Government-
appointed director arrived at Gostaresh Maskan, the Company's operations had come to a virtual
standstill and its financial condition was "critical and quite negative."

C. Tribunal's Findings

88. The Tribunal believes that, while international law undoubtedly sets forth an obligation to provide
compensation for property taken, international law theory and practice do not support the
conclusion that the "prompt, adequate and effective" standard represents the prevailing standard
of compensation. As Professor O. Schachter has pointed out, "[t]he leading European scholars--De
Visscher, Lauterpacht, Rousseau--" have concluded in that sense. See Oscar Schachter, International
Law in Theory and Practice, Academy of International Law, 178 Collected Courses 295 (1982) at 323.
Professor Schachter has further noted, accurately, that "no international judicial or arbitral decision
on compensation has adopted the "prompt, adequate and effective" rule" as a matter of
international obligation. See Oscar Schachter, Compensation for Expropriation, 78 A.J.I.L. 121,
123-127 (1984); see also Ian Brownlie, Principles of Public International Law 543-544 (Clarendon
Press-Oxford 1990). Rather, customary international law favors an "appropriate" compensation
standard. 10 See Eduardo Jimenez de Arechaga, International Law in the Past Third of a Century, 159
Recueil des Cours 1, 302 (1978); Oscar Schachter, The Question of Expropriation/Compensation in
the United Nations Code in the Light of Recent State Policy and Practice, Paper Presented at the
Symposium on the Outstanding Issues in the United Nations Code of Conduct on Trans'l
Corporations, The Hague, 15-16 September 1989, at 3; Malcolm N. Shaw, International Law 521-522
(Grotius Publications Limited-Cambridge 1991); John A. Westberg, Compensation in Cases of
Expropriation and Nationalization: Awards of the Iran-United States Claims Tribunal, 5 ICSID
Review--Foreign Investment Law Journal 256, 258, 265 (1990); Pamela B. Gann, Compensation
Standard for Expropriation, 23 Colum J.Transnat'l L. 615, 617 (1985). The gradual emergence of this

10
In this respect, reference is made, in particular, to Article 4 of Resolution No. 1803 (XVII) of 14 December 1962, on Permanent Sovereignty
over Natural Resources (G.A.Res. 1803, 17 U.N.GAOR Supp. (No. 17) at 15, U.N.Doc. A./5217 (1962), reprinted in 57 Am.J.Int'l L. 710 (1963)).
Article 4 states as follows:
Nationalization, expropriation or requisitioning shall be based on grounds or reasons of public utility, security or the national interest
which are recognized as overriding purely individual or private interests, both domestic and foreign. In such cases the owner shall be paid
appropriate compensation, in accordance with the rules in force in the State taking such measures in the exercise of its sovereignty and in
accordance with international law.

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 8.60% per annum (365-day basis) from 13 November 1979 up to and including the date on which the
Escrow Agent instructs the Depository Bank to effect payment out of the Security Account.

c. The Respondent THE GOVERNMENT OF THE ISLAMIC REPUBLIC OF IRAN is obligated to pay
to CHRISTINA TANDIS EBRAHIMI the sum of One Million One Hundred and Eight Thousand Five
Hundred and Sixty-Eight United States dollars (U.S.$1,108,568), plus simple interest at the rate of
8.60% per annum (365-day basis) from 13 November 1979 up to and including the date on which the
Escrow Agent instructs the Depository Bank to effect payment out of the Security Account.

d. The Respondent THE GOVERNMENT OF THE ISLAMIC REPUBLIC OF IRAN is obligated to pay
to SHAHIN SHAINE EBRAHIMI, CECILIA RADENE EBRAHIMI and CHRISTINA TANDIS EBRAHIMI,
jointly, the aggregate sum of Fifty Thousand United States dollars (U.S.$50,000) in respect of their
costs of arbitration.

e. The above-stated obligations shall be satisfied by payment out of the Security Account established
pursuant to Paragraph 7 of the Declaration of the Government of the Democratic and Popular
Republic of Algeria dated 19 January 1981.

f. The Secretary-General of the Tribunal shall dispose as follows of the balance of the amounts
advanced by the Parties for the fees of the Expert and presently held in a special account of
the Tribunal: (i) one-half jointly to the Claimants SHAHIN SHAINE EBRAHIMI, CECILIA RADENE
EBRAHIMI and CHRISTINA TANDIS EBRAHIMI, and (ii) one-half to the Respondent THE
GOVERNMENT OF THE ISLAMIC REPUBLIC OF IRAN.

This Award is hereby submitted to the President of the Tribunal for notification to the Escrow Agent.

View the document on jusmundi.com 49

 INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES

In the Matter of the Arbitration between

EL PASO ENERGY INTERNATIONAL COMPANY

Claimant

and

THE ARGENTINE REPUBLIC

Respondent

ICSID Case No. ARB/03/15

AWARD

Members of the Tribunal:

Prof. Lucius Caflisch

Prof. Piero Bernardini
Prof. Brigitte Stern

Secretary of the Tribunal: Ms. Natalí Sequeira

Representing the Claimant: Representing the Respondent:

Mr. Tom Sikora Dra. Angelina María Esther Abbona

El Paso Corp. Procuradora del Tesoro de la Nación

Mr. R. Doak Bishop

Mr. Craig Miles
Mr. Roberto Aguirre Luzi
Ms. Sarah Vasani
King & Spalding LLP

Mr. José Martínez de Hoz (h)

Ms. Valeria Macchia
Pérez Alati, Grondona, Benites, Arntsen
& Martínez de Hoz (h)

Date of dispatch to the Parties: 31 October 2011

 (i) The Tr ibunal’s Legal Analysis of the Applicable Pr inciples

233. Much has been said about the concept of indirect expropriation in the written
and oral submissions of the Parties in this case, as well as in contemporary legal
writings. The Tribunal will endeavour to clarify that concept and present first
its analysis in a nutshell, before developing it in more detail. In summary, it is
the Tribunal’s view that:

1. Some general regulations can amount to indirect expropriation

a. As a matter of principle, general regulations do not

amount to indirect expropriation.

b. By exception, unreasonable general regulations can

amount to indirect expropriation.

2. A necessary condition for expropriation is the neutralisation of the

use of the investment

a. This means that at least one of the essential components

of the property rights must have disappeared.

b. This means also, a contrario, that a mere loss in value of

the investment, even an important one, is not an indirect
expropriation. 160

(a) Some Gener al Regulations Can Amount to Indir ect Expr opr iation

234. No absolute position can be taken in such delicate matters, where contradictory
interests have to be reconciled. In this sense, the Tribunal subscribes to the
decisions which have refused to hold that a general regulation issued by a State
and interfering with the rights of foreign investors can never be considered
expropriatory because it should be analysed as an exercise of the State’s
sovereign power or of its police powers. This Tribunal is, for example, in
agreement with the following statement made in Tecmed:

160
Charles Leben summarised the practice of ICSID tribunals in relation to indirect expropriation in the
following manner: “1. Les éléments essentiels du droit de propriété doivent avoir disparu. 2. Une simple perte
de valeur de l’investissement ne peut être assimilée à une expropriation.” See “La liberté normative de l’Etat et
la question de l’expropriation indirecte,” in Ch. Leben (ed.), Le contentieux arbitral international relatif à
l’investissement, Louvain-la-Neuve, Arthemis, 2006, 163, at 173-174.

72
 President

Date:2;t adober »11

~I~' l ~_~_
" _
Professor Brigitte Stern
Arbitrator

Date: 3 1)~~ ~ C'l ll Date: 2 S-" ()d-o~-u W I(