Claimant has submitted evidence1 which establishes that it is a United States corporation and that over fifty per cent of its shares are owned by United States citizens, and, thus, that it is a national of the United States as that term is defined in the Claims Settlement Declaration (Article VII, paragraph 1).

Moreover, it has been established that the Claimant is the party to the Contract in issue and that Ultrasystems Incorporated, Iranian Operations, is a division of Claimant, not a separate entity.

As to the question whether the Tribunal has jurisdiction over claims against Isiran, -the Tribunal notes the following: In its submission filed on 10 September 1982 Isiran asserted that 100 per cent of its capital stock is "owned by the Government of Iran" and that "Isiran is affiliated to Iran Electronics Industries Corporation". At the hearing Isiran further explained that its stock is owned by Iran Electronics Industries Corporation, a corporation whose stock is owned by the Government of Iran. Thus it is established that Isiran is controlled by the Government of Iran so as to be subject to the jurisdiction of the Tribunal (Article II, paragraph 1, and Article VII, paragraph 3, of the Claims Settlement Declaration).

The remaining jurisdictional issue raised by the Respondents is whether the dispute lies exclusively under the jurisdiction of Iranian courts.

The September 1977 contract provides as follows:

All disputes between the parties arising out of, in relation to, or in connection with this Contract which are not settled by discussion and mutual accord shall be finally settled by arbitration in Iran, conducted in English in accordance with the rules contained in Civil Procedure Code of Iran, Article 632 through 676.

The Tribunal has held that such a clause is not one "specifically providing that any disputes sunder the contract] shall be within the sole jurisdiction of the competent Iranian courts . . .", so as to divest the Tribunal of jurisdiction over the claim under Article II, paragraph 106 1 of the Claims Settlement Declaration. See Gibbs & Hill Inc. v. TAVANIR, et al., Case No. 6, Interlocutory Award No. ITL 1-6-FT.1

In view of the foregoing the Tribunal determines that it has jurisdiction over Ultrasystems' claim.

The Claimant bases its contract claim on the alleged 20 February 1979 agreement between Isiran and Ultrasystems whereby Isiran agreed to pay the amounts specified in the Claimant's final billing. In the event that the Tribunal holds that no such binding agreement was concluded, the Claimant asserts the claim on the basis of the contract itself and services rendered under it, or on the basis of a promise in the 19 January 1979 termination agreement to pay the Claimant's final billing.

Isiran admits that the Contract was terminated as of 31 January 1979. It denies, however, that the final billing was ever approved, contending that the 20 February 1979 letter relied upon by Ultrasystems as evidence of that approval was not authentic and, in any event, that Mr. Motazed did not at that time have the authority to act for Isiran. Isiran therefore contends that: the final billing does not constitute a binding agreement.

The first question to resolve is thus whether the letter represents a valid approval of the final billing, binding on Isiran. The Claimant has presented evidence in support of the authenticity of Mr. Motazed's signature on the letter. On the other hand a number of circumstances surrounding the signing of the letter cast serious doubt on whether the letter can be considered as an approval of the final billing binding on Isiran. There are, moreover, certain admitted inaccuracies in the final billing which render it in our view an unreliable basis for any decision as to the amount of Isiran's liability. Our conclusion is therefore that the final billing is not binding on Isiran.

The Claimant argues that the above-mentioned Article 15.3 of the Contract provides a basis for Isiran's liability to Ultrasystems in this case. This Article does stipulate to what extent such liability exists in case the Contract is terminated "for convenience of Isiran, or force majeure, or breach or default by Isiran". However, as far as the documentary evidence shows, the Contract was in fact terminated by mutual agreement, without either party invoking any of the specific grounds for termination mentioned in Article 15.3. In the Tribunal's view this contract provision may nevertheless be considered as setting the appropriate standard for compensation also in a case of mutual termination; it would certainly not be reasonable to place a more 107 extensive liability on Isiran in a situation where the parties have agreed on termination than in a case where Isiran is in breach of con-tract. It should be noted that under Article 15.3 Ultrasystems is entitled to compensation-except for work performed-only for "costs", either (a) for actual costs incurred in connection with the termination and demobilization, or (b) other costs resulting directly from the termination (in an amount mutually agreed upon or established through arbitration).

Ultrasystems claims on the basis of six invoices, numbers 5-10, for work performed under the contract. Ultrasystems also alleges the existence of a seventh invoice, no copy of which was in its possession. As to the six numbered invoices, Isiran admits the validity of only one, No. 6, and that only to the extent of $27,785.02 out of the $49,621 invoiced, on the basis of certain deductions which it states should have been made. Isiran asserts that invoice No. 5 ($38,262) was paid by a cheque, No. 854454, dated 21 November 1978 (30 Aban 1357). As to invoices No. 7 ($46,029), No. 8 ($39,262), No. 9 ($28,703.02) and No. 10 ($20,361.44), Isiran alleges either that the invoice lacked supporting documents or had other formal defects, or that the invoice had never been received.

Ultrasystems produced evidence that the work reflected in the invoices had in fact been performed; a witness for Isiran admitted at the hearing that he could not testify that the work had not been performed. Evidence also showed that the invoices were duly prepared and presented in the normal course of business.

As for Isiran's contention that the amount due under invoice No. 5 was paid in full, the Tribunal considers it appropriate to request further comments with respect to material filed on this issue after the hearing. Accordingly, this issue is excluded from this partial award and remains open for further consideration.

With regard to invoice No. 6 the Tribunal notes that the evidentiary material related to this invoice shows that from the invoiced amount there should be deducted the sum of $5,000 as an installment on advance payments made by Isiran (see below sub E3), and also the sum of $1,725 in taxes. Ultrasystems' claims on the other invoices represent net amounts after such deductions. The Claimant is there-fore entitled only to $42,896 with regard to invoice No. 6.

As to invoice No. 7, we find from the evidence presented that, as with invoice No. 6, a deduction of $5,000 should be made from the invoiced amount as an installment on advance payment.

In conclusion, Ultrasystems is entitled to amounts under invoice Nos. 6-10 totalling $172,251.46.

As to the seventh invoice ($22,790), no convincing evidence was produced by Ultrasystems to satisfy its burden of proving either that the invoice existed, or that there was work performed justifying such an invoice. Ultrasystems' speculation that $22,790 was owing was based only on that amount being the difference between the sum of the items in the final billing which could be evidenced, and the amount alleged to have been confirmed independently by Price Waterhouse Iran in an audit of the final billing. Since Price Waterhouse Iran certified the validity of certain other items later found to have been erroneously included in the final billing, we see no reason to fill the "gap" between the audit total and the proved invoices with a hypothetical "lost invoice". The amount sought under that "invoice" is therefore denied.

Pursuant to the Contract, Isiran withheld 10 % from each payment to secure Ultrasystems' future performance, amounts which were to be paid in installments in accordance with certain contractual provisons, the last installment to be paid on full performance. Our decision with respect to Ultrasystems' full performance of the work invoiced entitling it to payment of the invoices applies as well to its entitlement to repayment of the previously withheld performance guarantee amounts. These amounts are due under Article XVI of the Contract.

Isiran asserts that it paid the greater part of the guarantee sum by a cheque, No. 184101, dated 24 September 1978 (2 Mehr 1357). As with cheque No. 854454 mentioned above we exclude this issue from this partial award to await comment on additionally supplied material.

With regard to the remaining portion of this claim the Tribunal notes the following. Although Ultrasystems in a submission claims it was paid $80,980 for Khordad 1357, it asserts, without explanation, that $24,060 was withheld, a sum which appears to be considerably more than the 10 per cent that should have been deducted under the Contract. Similarly, Ultrasystems claims that it was paid for Tir 1357 in a rial amount equivalent to $36,355.65. The amount of $18,018 it claims is also more than,10 per cent of the amount paid: Because of Ultrasystems' assertions with respect to the payments for Khordad and Tir, the Tribunal in this partial award allows the claims for those months in the amounts of $10,000 and $5,000 respectively, which are approximations. In order to give Claimant an opportunity. to explain the discrepancies for Khordad and Tir we leave open the issue of whether Claimant is entitled to more than 10 per cent of the payments made for those months.

Thus the Tribunal allows the amount of $15,000, leaving open the questions of whether more should be given in light of further explanations.

Ultrasystems has sought $2,094 in unamortized recruiting costs incurred by it as part of its "initial investment". Isiran entered into the Contract for the chief purpose of securing Ultrasystems' "expertise and know-how" through the provision of foreign personnel by Ultrasystems for work in Iran. The recruitment: costs would have been amortized in successive invoices over the life; of the contract, as part of the billing rate for work performed.

In view of the fact that the Contract was terminated by mutual agreement, the Tribunal does not consider these to be costs for which Isiran can reasonably be held responsible. This item of the claim cannot therefore be granted.

Ultrasystems has also sought $17, 583 in certain unamortized costs incurred in connection with transportation of its personnel both to and from Iran. As in item 3 above, the Tribunal finds that Isiran should not be held responsible for costs of this nature.

Ultrasystems submitted evidence of actual costs in the amount of $25,386 incurred in hiring guards, building security fences, procuring emergency travel arrangements, and installing; armour plate. and bullet proof glass in a company vehicle, in order to assure the safety of its expatriate personnel in Iran from 8 September 1978 to 31 January 1979, the date the Contract was terminated. In justification of such costs, Ultrasystems presented testimony that during this period there was considerable civil- unrest in Tehran leading, on 8 November 1978, ,to an attack on the Isiran offices where Ultrasystems personnel worked and the destruction of certain property there. During the course of that attack, one of Ultrasystems' employees sustained personal injuries.

Isiran's response is that paragraph 11 of the Declaration of the Democratic and Popular Republic of Algeria dated 19 January 1981 (the "General Declaration") together with the related jurisdictional bar in Article II(1) of the Claims Settlement Declaration, relieves Iran of liability for "injur[iesl to the United States nationals or their property as a result of popular movements in the course of the Islamic Revolution in Iran which were not an act of the Government of Iran". 110 However, even if the Tribunal had jurisdiction over this part of the claim, Isiran contends that the security measures in question could not be charged to it because the Contract contains no provision obligating it to protect Ultrasystems' personnel.

With respect to Isiran's argument based on paragraph 11 of the General Declaration, we find it inapplicable to the claim for security costs. Such costs were incurred not as the result of any injuries caused by popular movements in the course of the Revolution, but in order to prevent such injuries. While it is evident that the existence of such movements prompted Ultrasystems to take the measures, the exclusionary provisions of paragraph 11 can hardly have been intended to cover more than claims arising directly out of actual injuries. The claim therefore lies within the Tribunal's jurisdiction since it allegedly "arise[s] out of" the termination provisions of the Contract. Article II(1), Claims Settlement Declaration.

With respect to Isiran's second objection, the Tribunal notes the following. The costs for security measures cannot reasonably be said to have been incurred in connection with the termination of the Contract. In view of this, there is no ground for allowing this portion of the claim.

As noted in item 5 above, one of Ultrasystems' employees sustained personal injuries as the result of an attack on Isiran offices. Ultra-systems claim on the point is $657. Isiran's objections are the same as with respect to item 5.

The Tribunal need not reach the jurisdictional questions since, in any event, the amount was not incurred in connection with the termination of the Contract.

Ultrasystems seeks $158,482.84 in lost income due to the premature termination of the contract, a sum calculated as 8 1/2 % of the gross billing rate for 15 persons working 360 man-months under the Contract, with deductions for man-months already invoiced. The 8 1/2 % represents what Ultrasystems viewed as a "fair net profit" for such work; the number of persons and man-months are based on the full projected term of the Contract.

In applying the standard of compensation laid down in Article 15.3 of the Contract it is clear that lost income is not part of "actual costs incurred in connection with the termination . . . " and therefore not compensable under point (a) of that Article. The issue then arises whether lost income comes under point (b) of Article 15.3 as part of Ultrasystems' "other costs resulting from . . . termination"; if so, it 111 would be within the Tribunal's discretion to determine whether and to what extent such costs area recoverable. In the Tribunal's view it is doubtful whether the language of Article 15.3(b) can be interpreted so as to include lost income: In yew of this and the fact that the Contract was terminated by mutual agreement and not on the basis of breach of contract on either side, the tribunal holds that Ultrasystems is not entitled to compensation for profits it could have gained had the Contract not been terminated. This part of the claim shall therefore be denied.

Ultrasystems submitted an allegedly unpaid invoice for $4,645.46, setting forth in detail charges for consulting and other work related to the Contract. Evidence showy that the work was performed at Isiran's request. Isiran denies receiving the invoice; it does not deny that the work was performed, but states that it was performed outside the Contract and therefore is not payable thereunder. We think it is likely that the invoice was sent and received, but remained unpaid as part of the general break in contractual relations. Nevertheless, the request for work, and the performance provided pursuant to that request, rendered Isiran liable at least in quantum meruit, without regard to the Contract. The best measure of liability is the invoice itself. We therefore allow the invoiced amount to Ultrasystems.

Ultrasystems seeks $1,878.50 in transportation costs incurred in connection with transporting) its employees to and from work during the period 8 September 1978 to 31 January 1979. For reasons set forth under the related item 5 above, the Tribunal does not allow this part of the claim.

The total amount thus due to Ultrasystems for its work performed and termination costs incurred is $191,896.92.

Ultrasystems presented evidence that it had to borrow monies at rates of between 12 per cent and 21 per cent in order to compensate for its inability to obtain payment from Isiran.

The Tribunal holds that Ultrasystems is entitled to compensation for Isiran's failure to pay t e monies owing and determines the damages in this respect to be $95,000. The Tribunal leaves open the question of damages on any mount found to be owing hereafter.

Claimant submitted evidence that Isiran has been credited with the full amount of the letter of credit (see below at paragraph E3). Accordingly, Isiran's call o the letter of credit was improper. Thus, Claimant is entitled to $4,40 for its costs in maintaining the letter of credit.

Moreover, Isiran ,must take steps to release. the letter of credit. The Tribunal will issue a declaratory judgment to this effect, as part of the award in this case. See below at paragraph IV 2.

1

With respect to social insurance premiums, Isiran submitted as evidence a letter to Isiran from the Social Insurance Organization dated 26.10.1360 (16 January 1982). The letter shows an amount of 26, 258 767 rials in insurance premiums due in connection with the 15 May 1976 contract; the computation of the premium amount how-ever also appears to over a later period of time when the 1 September 1977 contract was in effect.

The claim in this case is not related to the 15 May 1976 contract. Therefore, to the extent that the counterclaim arises out of that contract, it is doubtful whether the Tribunal has jurisdiction over the counterclaim. Article II, paragraph 1, of the Claims Settlement Declaration. The Tribunal, however, need not reach this jurisdictional issue for the follows g reasons. The letter from the Social Insurance Organization cannot eo ipso be regarded as sufficient evidence of Ultrasystems being liable for any social insurance premiums. In this regard it is noted that the letter, which is not accompanied by any supporting material, in no satisfactory way explains the basis for the calculation made.

Moreover, by a telex of 10 August 1977 during negotiations of the 1 September 1977 contract, Isiran stated that "if Iranian social insurance payments are subsequently required, .they will be added to the billing rates". It has not been alleged that such changes were made with regard to the billing rates. It can thus be assumed that any liability for Ultrasystems to pay social insurance premiums in regard to the 1977 contract was to be ultimately borne by Isiran.

For the foregoing reasons the Tribunal does not find sufficient grounds for allowing the counterclaim for social insurance premiums.

Isiran claims that it paid Ultrasystems $21,346 for termination of employment of staff, whose contracts were not terminated. Ultrasystems denies that it ever received such amount.

The evidence shows that an invoice for such amount was sent but not processed and that the expected terminations did not take place. Had the payment been made, the form in Isiran's file would have indicated approval for payment, including the cheque number. That the file did not include such material, supports the conclusion that Ultrasystems did not receive payment. Isiran provided no other evidence of such payment.

Consequently, Isiran's counterclaim for such over-payment must be rejected.

It is undisputed that Isiran aid $100,000 in advance payments to Ultrasystems, an amount secured through a bank guarantee. This amount was to be paid back in installments through deductions from the amounts invoiced by Ultrasystems. Isiran claims that there is a remaining balance of $40,000 which has not been repaid and seeks recovery of this amount. Invoices presented to the Tribunal however show that deductions equivalent to the full amount of $100,000 were made in the invoices; the last deduction of $30,000 was contained in invoice No. 10 mentioned above. This part of the counterclaim therefore cannot be granted.

Isiran's counterclaim for 17,04,177 rials for certain taxes was not filed until 5 November 1982. Isiran gave no explanation as to why this counterclaim was not asserted earlier. Accordingly, under Article 19, paragraph 3 of the Tribunal Rules, the Tribunal must deny this counterclaim, since based on the record, the Tribunal cannot decide that the delay in filing the counterclaim "was justified under the circumstances".

Ultrasystems has claimed its arbitration costs in the amount of $111,800.

Although the amount lacks some specificity, it would appear that close to $30,000 were expended on non-attorney fee costs (travel and translation costs) which are covered by Article 38 1(a) and (b) of the Tribunal Rules. In determining reasonable attorney's fees the Tribunal takes into account the fact that extra costs were incurred by the Claimant through Isiran's failure to provide information as to its status until a late stage of the proceedings.

Applying Articles 38 and 40 of the Tribunal Rules, the Tribunal determines that the costs of arbitration shall be apportioned in such a way that Isiran shall bear Ultrasystems costs in the amount of $70,000.

In accordance with the above holdings in this partial award, we find Isiran liable to Ultrasystems in the amount of $361,136.92.

In this award we do not find the Respondent, the Islamic Republic of Iran liable for any portion of the claim. Thus the Government of Iran is not responsible except by virtue of the Declaration of the Democratic and popular Republic of Algeria dated 19 January 1981.