The key takeaways from the Judgment are as follows:
- The performance of sovereign functions, such as the handling of foreign reserves abroad, as done by Bank Markazi, Iran’s Central Bank, can deprive an entity of protections otherwise afforded under the Treaty of Amity to companies performing commercial activities.
- The Court provided a broad reading of the fair and equitable treatment standard, rejecting the U.S. position that the applicable standard for FET was merely the minimum standard of treatment under customary international law because the Treaty of Amity, Economic Relations, and Consular Rights between the United States of America and Iran did not contain such express limitation.
- The Court noted the parties’ agreement that the FET standard includes protections against the denial of justice, but its assessment imposed a high threshold, failing to find a denial of justice where Iranian companies could appear before U.S. courts to make legal submissions, even where the U.S. enacted and U.S. courts applied legislative provisions that removed defenses based on the Iranian companies’ separate legal personality from Iran.
- The Court elucidated three elements for determining the “reasonableness” of a measure: (i) a legitimate purpose, (ii) a relation between means and ends, and (iii) minimal proportionality between purpose and effects, that is, the absence of manifest excessiveness.
- The Court held that the taking of assets through judicial measures, when combined with a specific element of illegality such as a denial of justice or an unlawful exercise of regulatory powers, can amount to unlawful takings or expropriation.
- Unless expressly stated otherwise, the standard of full protection and security affords protection from physical harm only and does not include legal protections.