Iraq v. Armamenti & Aerospazio Spa
ICC · Investment (ICSID and treaty) · France · 1 Feb 2022
Why it matters
This decision clarifies the relationship between UN sanctions and international arbitration. It confirms that a tribunal may declare a claim admissible despite embargoes, as long as it does not enforce a prohibited claim. The ruling also addresses the inconciliability of decisions and the scope of international public policy in annulment proceedings, providing guidance on how French courts review arbitral awards involving mandatory sanctions.
Summary
In 1983, the Iraqi Ministry of Defence contracted with an Italian company (later Armamenti) to supply five naval helicopters. The contract was governed by French law and contained an ICC arbitration clause. In 1986, Italy suspended the export license due to UN resolutions, and in 1990, the UN imposed a comprehensive embargo on Iraq following its invasion of Kuwait. The helicopters were never delivered. In 2013, Iraq initiated ICC arbitration seeking damages for non-performance. The tribunal issued a partial award in 2016, finding it had jurisdiction and that Iraq's claims were admissible despite the embargo. Armamenti sought to annul the partial award in the Paris Court of Appeal, arguing that the award violated international public policy because it was irreconcilable with a prior Italian court decision and a separate ICC award (Fincantieri) that had applied the embargo to bar similar claims. The court rejected these arguments. It held that the Italian decision was not entitled to recognition in France because it violated the competence-competence principle. The Fincantieri award involved different parties and contracts, so no inconciliability arose. The court also found that the partial award did not violate the UN embargo because it only declared the claims admissible, not enforceable. The tribunal had not yet ruled on the merits. The court emphasized that examining a claim does not contravene sanctions; only enforcing a prohibited claim would. The annulment was dismissed, and Armamenti was ordered to pay costs. The final award later held the contract void for lack of export license, dismissing Iraq's damages claim.
The detail
Parties: Iraq v. Armamenti & Aerospazio Spa
Case number: ICC Case No. 19540/MCP
Outcome: The Paris Court of Appeal rejected Armamenti's application to annul the partial award, confirming the tribunal's jurisdiction and the admissibility of Iraq's claims.
Applicable law: ICC Rules; French law (contract); UN Security Council Resolutions 661 (1990) and 687 (1991); EU Regulation 3541/92; French Code of Civil Procedure
Issues in play: The case involved a conflict between UN sanctions/embargoes against Iraq and the principle of arbitrability. The court held that the partial award did not violate international public policy because it only addressed admissibility, not the merits, and the embargo did not bar the tribunal from examining the claim.
Read the full decision at italaw ↗
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