Starrett Housing Corp v Iran Interlocutory award US v Iran Iran US CTR

In 1974 the claimant American company entered into an agreement with an Iranian development bank to buy land in Iran and build houses upon it. The project was proceeding on the schedule when the harassment during the 1979 revolution cause the withdrawal of most of the Americans, the Iranian government place the company under the control of a temporary manager. The claimants sought compensation for the expropriation of their property rights, the tribunal determined that there had been a ‘taking’ of the claimants property and appointed experts to evaluate loss Resolution It is undisputed in this case that the government or Iran did not issue any law or decree according to which the project was nationalised or expropriated. However, it is recognised in international law that measures taken by a state can interfered with property rights to such an extent that these rights are rendered so useless that they must be deemed to have been expropriate even though the state does not purport to have expropriate them and the legal title to the property formally remains with the original owner. [Meaning of taking property]

The situation in the case is comparatively simple. There can be little doubt that at least at the end of January 1980 claimant has been deprived of the effective use, control and benefits of their property rights. By that time the Ministry of Housing has appointed a Temporal Manager, pursuant to a decree of revolutionary council July 1979 The appointing of Temporary Manager deprived the shareholders of their right to manage the company, as a result the claimants were deprived of their possibilities of effective use and control of it. the government of Iran cannot possible rely on any withdrawal of personnel as a justification for the appointment of a new manager; the evidence shows that Starret maintained staff in Iran longer than most other American companies, obviously in an attempt to secure future possibilities to complete the project. Investors in Iran, like investors in all other countries, have to assume a risk that the country might experience strikes, lockouts, disturbances. A revolution as such does not entitle investors to compensation under international law. When considering the events prior to January 1980 to which the claimants have referred [the revolution] the tribunal does not find that any of these events individually or taken together can be said to amount to a taking of claimants contractual rights and shares. The tribunal concludes that 30 January 1980 must be considered as the date of the taking The next question is to determine the exact nature of the property rights that were taken. In this case it appears from the nature of the measures taken that these measure were aimed at the taking of the company, and it comprise the physical property as well as the right to manage the project and to complete the construction in accordance with the basic project agreement, and to deliver the apartments and collect the proceeds of the sale.