Iran Oil Continental Shelf Case 2001
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This article is written by Lavish Sharma, from the Institute of Law, Nirma University. This article discusses the Iran Oil Continental Shelf Case, 2001.

Introduction

The socio-economic evolution and political culture of oil in Iran (and also in the Middle East, North Africa, and Latin America) can be divided into three periods of development: 

  • The 1901-50 colonial oil concessions, 
  • The 1950-72 transformative era, and 
  • The globalization (and decartelization) of oil after 1974. 

Currently, counter to dogma and its myriad prevalent portrayal in the newspapers, there is no longer a “cartel” or “monopoly” in the quickly globalized crude oil industry. The Islamic Republic emerged in 1979, nearly half a dozen years after the global restriction of the oil industry in the early 1970s.

History

The past of oil in Iran can be split into three periods of development: 

  • The era of imperial oil concessions;
  • The transformation phase 1950-72;
  • The era of globalization after the mid-1970s (Bina, 1985). 

Two related trends have intertwined the destiny of Iran’s economy with oil. First is a natural catastrophe and secondly, the rise of hydrocarbon imperialism in the twentieth century. The first oil lease in Iran (known as Persia until 1935) was negotiated by Mozaffar al-Din Shah (Qājār) and William Knox D’Arcy in 1901 (Ferrier, 1982; Mikdashi, 1966). The first time oil was found on May 26, 1908, in Masjid-e Suleiman, a remote village in southwestern Persia.

This concession encompassed the entire land, except for the five northern provinces which were Azzerbāijān, Gilān, Māzandarān, Astarābād, and Khorāsān were under D’Arcy’s complete control for 60 years for the discovery, processing, collection, storage and transport of oil exclusively. The term included £20,000 advance cash and upon exploration, £20,000 in the shares of the company were formed and 16% of the annual net profits went to the royalties. 

The Anglo-Persian Oil Company (APOC) was established on 19th April in 1909 and they gradually started to extract oil in large numbers in 1913. They also built pipelines, storage facilities, and what is known as the Pādān refinery.

In 1914, the British Government acquired about 53% of APOC’s stock and employed two representatives from the UK on the board of directors of the company. This was the preamble to the clandestine delivery of deeply subsidized oil to the British Admiralty, which in effect contributed to a significant decrease of the company’s net income at the detriment of the Persian government.

Facts

This situation stems from the assault and devastation that happened between 19th October 1987 and 18th April 1988. There were three offshore oil development facilities controlled and run for commercial purposes by the National Iranian Oil Company. When mentioned below, these actions represent a serious violation of the numerous clauses of the Treaty of Amity and international law. Four US guided-missile destroyers, Young, Hoel, Kidd, and Leftwich, launched an assault on Iran’s Result and Reshadat oil platforms, owned and controlled by the Iranian National Oil Company in the Persian Gulf, on 19 October 1987.

The Resalat and Reshadat Platforms are situated in the mainland and exclusive economic region of the Islamic Republic. These are part of a broader set of oil installations comprising more than 100 wells and platforms that are important to Iran’s commercial oil industry.

On 19 October 1987, the U.S Navy provided a radio alert of the strike, telling the workers on the platform that the fire would begin in 20 minutes. At 1400, U.S. warships launched their assault using 5-inch guns, the biggest military arsenal in the Persian Gulf at the moment. The assault lasted 90 minutes, and more than 1,000 rounds of ammo were used.

As a result of the assault, one platform was obliterated and the other 90% damaged. It also culminated in the full cessation of oil output from the existing oil fields to date.

In the statements made after the accident, the United States tried to explain the assault as a “lawful exercising of the right to self-defense” and as a “measured reaction” to the suspected Iranian assault on the reflagged Kuwaiti tanker Sea Isle Area, claimed to have been launched from the Fao Peninsula in the northern part of the Persian Gulf.

Through future applications, the Islamic Republic must show that such claims are free of any empirical or legal validity. Nevertheless, for the present reason, it is necessary to remember that, as a survivor of the war waged and subject to 8 years of attacks by the Iraqi powers on its oil and industrial facilities, the Islamic Republic of Iran was entirely entitled to take appropriate steps to defend itself from the aggressor state and to ensure that war contraband was not being exported to Iraq in breach of the Constitution.

Throughout the morning of 18 April 1988, and with just five minutes of notice to oil staff on the rigs, US forces targeted another collection of oil facilities in the Persian Gulf owned and run by the National Iranian Oil Company, inflicting significant harm and murdering one civilian worker and injuring seven others. One of the facilities targeted was the Nasr development facility situated on the offshore shelf and the exclusive economic zone of the Islamic Republic, of the Iranian island of Sirri. As a result of the assault, the central Nasr Platform was demolished and the surrounding Platform was badly damaged. To date, all systems remain out of service.

Overview of the case

On 2 November 1992, the Islamic Republic of Iran filed an appeal in the Registrar of the Court against the United States of America for the demolition of Iranian oil platforms. The Islamic Republic created the authority of the Court based on the Treaty of Amity, Economic Relations and Consular Rights between Iran and the United States, concluded at Tehran on 15 August 1955. In its appeal, Iran claimed that the damage incurred by many U.S. Navy warships in October 1987 and April 1988 of three offshore oil production facilities owned and run for commercial purposes by the National Iranian Oil Corporation represented a substantive violation of the numerous terms of the Treaty of Amity and international law. The time-limits for submitting written pleadings were then set and eventually expanded by two instructions from the President of the Trial. On 16 December 1993, the United States of America filed a formal challenge to the authority of the Court during the shortened time-limit for filing the Counter-Memorial.

According to Article 79(3) of the Rules of Procedure of the Court, the proceedings on the grounds have been suspended; by order of 18 January 1994, the Court specified 1 July 1994 as the time-limit within which Iran must send a written statement of its findings and conclusions on the appeal filed within the stated time-limit. In its judgment of 12 December 1996, the Court dismissed the preliminary challenge posed by the United States of America and held that according to Article XXI, paragraph 2, of the Treaty of 1955, it had the authority to address the arguments made by Iran according to Article X, paragraph 1 of that Treaty, which guarantees freedom of trade and navigation between the territories of the Parties.

By submitting its Counter-Memorial, the United States of America filed a counterclaim urging the Court to give its decision and to conclude that, by intervening in the Persian Gulf in 1987 and 1988, Iran had already violated its commitments under Article X of the 1955 Treaty. Iran, having challenged the admissibility of the counterclaim according to Article 80, paragraph 1 of the Rules of Procedure, ruled on the matter by order of 10 March 1998. This decided that the counterclaim was admissible as well and was part of the current litigation and ordered Iran to send a reaction and the United States to file a joint request.

Those pleadings have also been lodged under the expanded time-limits. In its 1998 decision, the Court further noted that to maintain absolute parity between the states, it was appropriate to reserve the right of Iran to apply its views in writing for the second time on the counterclaim, in a supplementary petition, the submission of which may be the subject of a corresponding resolution. The order was released by the Vice-President on 28 August 2001, and Iran subsequently filed its supplementary complaint within the time limits specified. Public sittings on the assertion of Iran and the counterclaim of the United States of America were conducted from 17 February to 7 March 2003.

Judgment

The Court handed down its decision of this case on 6 November 2003. Iran claimed that, by striking on two occasions and damaging three offshore oil processing facilities owned and controlled by the National Iranian Oil Company for commercial purposes, the United States breached the freedom of trade between the lands of the Parties as assured by the 1955 Treaty of Friendship, Economic Cooperation and Consular Rights between the United States and Iran. This demanded reparation for the damage that had been incurred. In its counterclaim, the United States claimed that it was Iran that breached the 1955 Treaties by destroying Gulf vessels and by participating in military activities that were harmful and counterproductive to trade and shipping between the United States and Iran. The United States has requested reparation.

The Court also questioned that the behavior of the US Navy against Iran’s oil complexes was permissible under the 1955 Treaty as steps appropriate to safeguard the vital security interests of the United States (Article XX, para. 1(d) of the Treaty). Interpreting the Convention in the context of the applicable principles of foreign law, it decided that the United States was only allowed to have recourse to force under that article if it behaved in self-defense.

The United States could practice this right to self-defense only if it had been the target of an armed assault by Iran, and the acts of the United States would have been appropriate and proportionate to the armed attack against it. Upon a thorough review of the facts presented by the Parties, the Court decided that the United States had not succeeded in showing that the different requirements had been fulfilled and ruled that the United States was thus not eligible to rely on the protections of Article XX, paragraph 1(d) of the 1955 Treaty.

The Court then investigated how the United States had hampered its regular activity by disabling the sites, thus prohibiting Iran from obtaining the freedom of commerce “between the territory of the two High Parties” as promised by the 1955 Treaty (Art. X, para. 1). It claimed that, concerning the first strike, the platforms targeted were under maintenance and not active, and that there was, therefore, no trade-in crude oil from those platforms between Iran and the United States at that point. Consequently, the assault on these sites should not be deemed to have impaired the freedom of commerce between the domains of the two Nations.

The Court drew the same inference concerning the resulting assault on two other networks, as all trade in crude oil between Iran and the United States had been halted as a consequence of an embargo enforced by the Executive Order of the United States. The Court then ruled that the United States had not infringed its commitments to Iran under Article X, paragraph 1 of the 1955 treaty and dismissed Iran’s demand for reparation.

Concerning the counterclaim of the United States, the Court, after dismissing the argument to sovereignty and admissibility posed by Iran, examined whether the events referred to Iran by the United States infringed the freedom of trade or navigation between the territories of the Parties as assured by Article X, paragraph 1, of the 1955 Treaty. The Court noted that none of the ships claimed to have been destroyed by Iranian assaults by the United States participated in commerce or shipping between the territories of the two States. Nor did the Court embrace the common argument by the United States that the acts of Iran had made the Persian Gulf dangerous for ships, finding that, contrary to the facts before it, there was no particular barrier at that time to commerce or transportation between the territory of Iran and the United States. The Court also dismissed the US counterclaim for reparation.

Conclusion

Accordingly, the legal principle imposed by the Court can be summed up as:

(1) a State can not be the target of an armed attack unless the violence which it claims is aimed deliberately at it, as opposed to an indiscriminate assault which the perpetrator would have realized may have affected the state attacked;

(2) an operation, also by the state military, is not an armed attack unless it is appropriate.

(3) Fulfillment of the obligation provision of the theory of self-defense requires a kind of complaint from the State of protection to the State of assault, even though there is a reasonable cause to suspect whether the complaint will have some effect; and

(4) the proportionality of the action taken in self-defense shall be measured by contrast with the behavior to which it has responded, not by contrasting it with the threat.

Such findings have been blamed for refusing to conform with the rules; It is significant for the present context is that the Court did not make any reference to any state law in interpreting the above limits on what it called the CIL rules on self-defense and did not, in reality, make explicit the basis of those limits.

References


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