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9th Circuit Upholds Iran vs. Cubic Arbitration, Attorneys Fees Pending

Thursday, December, 22, 2011

Commercial arbitration is not just a process on the local level. One major case in point of international arbitration is the long-standing dispute between Iran and Cubic Defense Systems, Inc. Recently, the 9th Circuit Court upheld the ruling of their 1991 international arbitration. Attorneys fees and payment will be decided in district courts.


The Complex History of This Dispute


Back in 1977, Iran's Ministry of Defense contracted Cubic for air combat equipment for their military. Cubic Defense did not deliver due to the Iranian Revolution in 1978, and sold these products to Canada. Both parties agreed to settle the accounts some time later.


Iran brought this case to the International Court of Arbitration of the International Chamber of Commerce in 1991. They were awarded 2.8 million dollars plus expenses. Cubic Defense did not pay, so Iran brought the case to California district court. Both parties appealed the case to the 9th Circuit court.


Iran was satisfied with being awarded the arbitration award, but not the attorney fees. Cubic Defense was not satisfied with having to pay the award in light of US sanctions on Iran regarding transition of wealth. With testimony from the US Government, it was decided that current sanctions did not absolve Cubic of this debt. The 9th Circuit did not award the attorney fees to Iran, but deferred that to district courts.


What This Case Shows About Arbitration Awards


This case is a large-scale example of how arbitration awards are enforceable by law. They can be every bit as legally binding as a trial ruling. Taking an arbitration ruling to appeals can require vast amounts of proof to overturn, regardless of the current political climate.