A US appeals court has handed down its final verdict on an old lawsuit between Iran and Cubic Defense Systems Co. obliging the American corporation to pay USD 2.8 million in compensation to the Islamic Republic, Press TV reported.
The case heard by the Ninth Circuit Court of Appeals in Pasadena, California, relates to a contract that Iran's Defense Ministry awarded to Cubic Defense back in 1977.
Based on the contract, Cubic Defense Systems Co. was supposed to deliver an air combat system to Iran in addition to necessary parts and equipment to maintain the system.
The deal was suspended following the 1979 Islamic Revolution with both sides reaching an agreement to cancel the contract and settle financial issues later.
Cubic sold the system to Canada in 1981 and the Iranian Defense Ministry asked the company to reimburse the money it had received from Iran.
The company refused to make the payment on grounds that the then US President Jimmy Carter had forbidden financial and trade exchange between Iran and US nationals.
In 1991, Iran's Defense Ministry filed a request with the International Court of Arbitration of the International Chamber of Commerce (ICC) in Switzerland.
The ICC made a final award of USD 2.8 million plus pre-award interest in favor of Iran's Defense Ministry after the completion of its proceedings in May 1997. The ICC also directed Cubic to reimburse Iran USD 60,000 for arbitration costs.
Following the judgment, Cubic Defense Systems Co. announced that due to US sanctions against Iran, payment of the award was not possible.
Iran then appealed to a US appeals court. Proceedings were later suspended pending litigation over whether certain judgment creditors of Iran could attach the Defense Ministry's judgment.
After conclusion of the litigation, the case was heard by the judges of the Ninth Circuit Court of Appeals in Pasadena on February 8, 2011.
In their final opinion, the judges ruled that despite US sanctions against Iran the award should be paid by the American company.
The court also ruled that Iran should be paid prejudgment interest and attorney's fees and returned the case to the lower court.
The US government has also issued a statement noting that the existing sanctions against Iran were no barrier to the payment of the ICC award.