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18/01/2022

U.S. Sanctions on Companies

from Iran as Parties in ICC Arbitration Cases

 

ICC Switzerland has addressed the issue of sanctions and arbitration in a number of ways, including organizing a seminar with the leading arbitral institutions and the competent U.S. authority OFAC in 2015. Due to sanctions policies and compliance requirements, banks could not make payments to arbitral institutions and arbitrators if one or more parties had a connection to a sanctioned country. According to ICC Switzerland, this resulted in an unacceptable denial of access to justice, a fundamental right of all actors in the market. Finding a solution in the case of ICC dispute resolution is even more complicated, as various regulatory and supervisory authorities are involved.

We are pleased to announce today that a targeted solution has been found and that the ICC Court has the capability to administer payments in arbitrations involving Iran.

 

In October 2021, the U.S. Office of Foreign Assets Control (OFAC) issued a special license to the ICC. Under this license, it is permitted to receive and process most payments in ICC arbitrations involving Iran. The ICC has communicated this special license to its banks and requested whether they would be willing to review their current internal policy of refusing to accept payments to or from Iranian or Iranian-related entities.

 

The ICC has received assurances from at least one of its banks that it is now able to process payments in arbitrations conducted under the ICC Arbitration Rules. ICC banks may request further information to ensure that these transactions are covered by the license. Nevertheless, there may be delays in payments. The ICC is taking all reasonable and necessary steps to ensure that the blocked cases can proceed without delay. 

 

This is an important step notably for the Swiss arbitration community and we are pleased that such ICC cases can now be handled. ICC Switzerland remains vigilant for this challenge.