Phillips Petroleum Co. Iran v. Islamic Republic of Iran

Abstract

Phillips Petroleum Co. Iran, a wholly owned subsidiary of Phillips Petroleum Co., brought a claim before the Iran-United States Claims Tribunal against the Islamic Republic of Iran and the National Iranian Oil Co. (NIOC) seeking compensation for the alleged taking of its rights under a joint agreement for the exploration and exploitation of petroleum resources in the Persian Gulf. Chamber Two of the Tribunal concluded that the claimant had been deprived of its property interests during the Iranian Revolution by conduct attributable to the Government of Iran for which respondents were liable to provide compensation. Affirming earlier decisions that the 1955 Treaty of Amity between the United States and Iran requires payment of “just compensation” representing the full equivalent of the property taken, the Tribunal accepted “discounted cash flow” analysis as a central method of determining that value. After making significant adjustments to claimant’s calculations, and considering “all relevant circumstances,” the Tribunal awarded claimant $55 million as the value of the expropriated property, with simple interest at the rate of 10 percent per annum from the date of loss to the date of payment from the Security Account.