Court Orders U.S. Defense Contractor to Pay Hefty Interest On top of $2.8 Million Debt … to Iran

Friday, January 18, 2013


After avoiding payment for decades, a U.S. defense contractor has been ordered by a federal appellate judge to pay Iran nearly $3 million it owes, plus hundreds of thousands of dollars in interest.


Cubic Defense Systems signed a contract in 1977 to sell and service an air combat maneuvering range for the Iranian regime, then ruled by the Shah. When the Iranian revolution unfolded two years later, both sides agreed to cancel the contract. Cubic then sold the equipment to Canada.


But the new Iranian government wanted an accounting of the canceled deal, which Cubic refused to provide.


Iran took its case to the International Chamber of Commerce (ICC) in 1991, where the Iranian government was awarded $2.8 million.


Cubic, however, ignored Iran's payment demands. So its defense ministry filed a petition with the U.S. District Court in San Diego, which upheld the ICC award owed to Iran.


Seeking enforcement of that award plus interest, Iran appealed to the Ninth Circuit Court of Appeals. There, Cubic argued that the court should not side with Iran because it is a rogue state that sponsors terrorism. Furthermore, claimed Cubic, the Iranian defense ministry had been added to a WMD blacklist in 2007, causing its property in the U.S. to be frozen.


Unfortunately for Cubic, both the U.S. State Department and Treasury Department filed legal briefs with the court stating that the contractor should indeed pay its outstanding debt to Iran.


In deciding the case, a federal judge ruled that Iran not only is entitled to the $2.8 million, but also $316,000 in interest and $131,000 in attorneys' fees.

-Noel Brinkerhoff


To Learn More:

Iran Awarded Interest on 1977 Defense Contract (by William Dotinga, Courthouse News Service)

U.S. Court Supports Iran…about Artifacts in Chicago Museums (by Noel Brinkerhoff and David Wallechinsky, AllGov)

Sprint Ordered to Pay Terror Victims Money Owed to Iran (by Noel Brinkerhoff, AllGov)


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