Updated 11:08 a.m., 2/29/12
A decades-long case involving an Iranian dairy may finally be drawing to a close, with a federal appeals judge in Washington ruling Tuesday that Iran's government expropriated an American corporation's interest in the project and withheld dividends following the country's 1979 revolution.
Calling the case an example of the "harshest caricature of the American litigation system," a panel with the U.S. Court of Appeals for the D.C. Circuit found that the San Francisco-based pharmaceutical manufacturer McKesson Corp. is owed compensation with interest in the case, originally filed in 1982.
Under the decision, the court found that McKesson has a right of action under the 1955 Treaty of Amity between Iran and the United States when it is construed under Iranian law. Additionally, the appeals judges reversed a U.S. District Court decision to award more than $20 million in compound interest, as the appeals judges found no basis for this conclusion as a remedy under Iranian law, but ordered the payment of simple interest at a rate of 9 percent from Aug. 12, 1981 to today.
The decision also reversed an earlier District Court ruling that McKesson could base its claim on customary international law while maintaining that the Foreign Sovereign Immunities Act does not shield Iran from liability.
The case initially entered the court system in 1982, when McKesson alleged that the Iranian government gradually pushed its members from the board of directors following the 1979 Islamic Revolution and withheld dividends. By 1980, the corporation held a 31 percent share in the company.
Over the next thirty years, the case bounced between the District Court and the Court of Appeals numerous times, even making an appearance before the Iran-United States Claims Tribunal at The Hague, an arbitration panel devised to handle disputes between parties in the two countries following the revolution.
In Tuesday's opinion, written by appellate Judge Janice Rogers Brown on behalf of the three-judge panel, she referred to the constant back-and-forth as "Sisyphean labor," stating that the case must be brought to a close in "the interest of procedural fairness and judicial finality."
While the court remanded the case to re-calculate the damages, Brown referenced a 2000 decision that valued McKesson's equity and withheld dividends at $7,619,205. She wrote that, with this valuation already complete, she hopes "the district court can put an end to nearly thirty years of litigation through some simple multiplication."
According to Christopher Wright, an attorney for Iran with the D.C. firm Wiltshire & Grannis, "Iran is pleased with the court's rulings that McKesson does not have a cause of action under the Foreign Sovereign Immunities Act and is not entitled to compound interest. But Iran disagrees with the court's ruling that McKesson is entitled to damages under Iranian law and is carefully considering whether to challenge the decision."
By Rob Stigile