Iran Seeks Arbitration Against Russia for Failed Missile Deal
Arbitration agreements are everywhere in America. If you dig through your business papers, you will find that you’ve agreed to arbitrate any number of potential claims. Arbitration clauses are common in employment contracts, loan agreements, car sale contracts, mortgage papers, banking agreements and insurance contracts. By signing the agreement, you waive your right to sue the other side in court and, instead, agree to make whatever claim you have to a (hopefully) neutral arbitrator. This can have enormous implications for both sides of the case, and I could talk for hours about the pros and cons of arbitration.
Very often, one side to an arbitration clause has second thoughts about it. In fact, many arbitration cases begin with a lengthy court battle in which one party asks a court to “get it out” of the arbitration clause because the signer didn’t sign it, or read it, or didn’t understand it, or doesn’t think it’s fair.
Arbitration has also pervaded international relations. Many nations have signed agreements to bring disputes in international arbitration tribunals, rather than in national courts. But this does not make any less surprising Iran’s four billion dollar claim against Russia, recently filed in the International Court of Arbitration court in Geneva. See article here Iran claims that Russia breached its agreement to deliver to Tehran the S-300 surface to air missile system. Apparently, the delivery of the system was cancelled after Russia agreed to abide by a United Nations’ Security Counsel sanction resolution, which banned transfer of weapons to Iran.
Russia does not appear to be pleased. A source in the Russian government stated “We have already made it clear to Iran that lawsuits are not helping the development of our relations, but our requests to retract these documents from the court went unnoticed”. He stated “we will try to make our position heard once more by sending a government delegation to Tehran. And if Iran once again refuses to do so, it will have to sort out its nuclear issues in the international arena on its own”. See article here I would love to be at that meeting.
Iran already appears to be putting the brakes on. Iranian Ambassador to Russia Seyed Mahmoud Reza Sajjadi said that Tehran was looking to recover only $900 million from Russia, not $4 billion, while the extra $3 billion was a “punishment for Russia” added by the Geneva Court of Arbitration “without the knowledge of the Iranian side and against its will.” In other words, he is claiming they are only asking for $900 million, but the court just tacked an additional request for $3 billion on, just for the fun of it.
The suit will likely be “worked out” behind the scenes, after Iran finishes explaining why it is biting one of the last hands attempting to feed it. Russia will likely use its enormous power to avoid whatever arbitration agreement allowed Iran to bring the claim against it. Signers of typical American consumer arbitration agreements obviously don’t have that kind of sway. If you don’t sign the contract (which contains the arbitration clause) then you won’t get the car, job, mortgage, etc. Whether that’s good or bad is up for debate.