Claimant has submitted evidence, including lists of shareholders and affidavits, which establishes that, for all relevant points in time, it was organized under the laws of the State of Nevada of the United States and that natural persons who are United States citizens have held an interest in the Claimant equivalent to over 50 percent of its capital stock. Thus, Claimant is a United States national within the meaning of the Claims Settlement Declaration, Article VII, paragraph 1.

Claimant has also submitted corporate records indicating that WCCID was established as an internal operating division of Woodward-Clyde Consultants and that WCCID-Iran was registered in Iran as a branch of that division. Respondents have submitted no evidence to the contrary. Therefore, it is clear that these entities are merely parts of the same legal person and that any rights accruing to WCCID, as a party to the Agreement, and to WCCID-Iran, as successor in interest to Woodward-Noorany and WCCID under the 1978 Amendment, are rights owned by Claimant.

AEOI has argued that the 1978 Amendment is invalid because the signatory to the amendment on behalf of AEOI lacked authority to sign; because it was executed one month after work under the Agreement had "terminated"; and because, allegedly at the request of WCCID and Woodward-Noorany, subsequent payments were made to the same account which the former contract parties had jointly established.

With regard to the first contention, it is noted that the 1978 Amendment was signed on behalf of the President Of AEOI by a person acknowledged by AEOI to have been its project manager. This signature constitutes a representation by AEOI'S own project manager that he had proper authorization to act in this regard on behalf of AEOI's President. No evidence to the contrary has been submitted by the Respondents. Therefore, the Tribunal holds that the amendment cannot be regarded as invalid for lack of authorization.

The Tribunal does not consider it relevant that the amendment was executed after the Consultant's work on the project ended. AEOI in fact continued its own performance under the Agreement by making at least one additional payment after the date the 1978 Amendment was signed. Nor is it relevant that that payment was made into the same bank account as were previous payments to the original Consultant. If such payment had been made at the direction of the original contract parties subsequent to the execution of the amendment, this might, as AEOI contends, indicate that those companies continued to consider themselves as parties. However, neither the documents cited by AEOI nor any other evidence in the record indicates that such a direction was 246 given.

For the above reasons, the Tribunal holds that the 1978 Amendment is valid. In light of this holding, the Tribunal need not determine whether Claimant would be entitled to assert all of the rights accruing to both WCCID and Woodward-Noorany under the Agreement in the absence of the 1978 Amendment.

The Tribunal must also reject the contention that exclusive jurisdiction over the claim lies with the courts of Iran by virtue of the Iranian identity of the original contracting parties. As noted above, WCCID is merely an operating division of Claimant, a United States corporation, and is therefore not an Iranian national.

The remaining jurisdictional issue to be resolved is whether the dispute lies exclusively under the jurisdiction of Iranian Courts. Section 25 of the Agreement provides for settlement of disputes through arbitration. The Tribunal has held that such a clause is not one "specifically providing that any disputes [under 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 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 the claim.

The evidence establishes that Claimant performed services under the Agreement relating to twelve tasks and that invoices for these services remain unpaid. AEOI's has put forth numerous defences to liability for further payments under the Agreement. As a threshold matter, AEOI's assertion that only Woodward-Nooranyis entitled to payments under the Agreement must be rejected. Under the 1978 Amendment Claimant succeeded to all rights of Woodward-Noorany, and whatever liability for payment remains under the Agreement is, therefore, a liability to Claimant.

The Parties differ on whether all of the tasks carried out by the Consultant were properly authorized by AEOI. Claimant maintains that authorization was, in every instance, either made in writing by AEOI or made orally and confirmed in writing by the consultant. AEOI admits approving the Consultant's proposals for what AEOI terms were "peripheral studies", but asserts nonetheless that its own authorizations were invalid on the ground that the Agreement does not provide for oral authorization. AEOI also maintains that the tasks were unnecessary in any event.

It appears that nine of the twelve tasks performed by the Consultant 247 were specifically authorized in an appendix to the Agreement. Section 1 of the Agreement requires written authorization for "supplemental work", which would appear to apply to the remaining three tasks. However, the evidence discloses that AEOI made some payments in relation to all twelve of the tasks, which confirms that AEOC, in any event, conveyed to the Consultant its consent in fact that each of the tasks should be performed. Since the Consultant performed the tasks in reliance upon AEOI's explicit consent, AEOI may not now avoid liability merely because neither party observed contract formalities.

Two of the tasks relate to the establishment of a seismographic monitoring network in Bushehr, Iran. After the network was installed in late 1977 malfunctions were discovered- and the Consultant made repairs as an additional task. Claimant argues that AEOI formally approved the completed installation of the network, that AEOI accepted responsibility for its subsequent maintenance and operation, that the malfunctions resulted from vandalism due to inadequate security arrangements and that the repairs were successfully completed. A part of its claim relates to invoices for the performance of those two tasks. AEOI denies approving the completed installation of the network and argues that in any event such approval would s not release the Consultant from defects in the work. It further alleges that the malfunctions were in fact caused by the Consultants defective work. Finally, it maintains that the Consultant breached its duties by failing to submit a report on its repair work. On the basis of these arguments, AEOI denies that it is obligated either to make further payments on the work or to release any of the amounts it retains under the 10% performance guarantee.

Claimant submitted a letter from the Consultant to AEOI in which the installation of the network is reported and formally turned over to AEOI. The letter is countersigned by an official of AEOI indicating acceptance of the work and must be deemed conclusive on this point.

In regard to its assertions of defective performance, AEOI denies that the malfunctions were caused by vandals and, instead, alleges that certain of the Consultant's employees responsible for the installation were unqualified and negligently failed to consider certain interfering conditions in the region of the network. However, AEOI has submitted no evidence to support this allegation except for a conclusory opinion expressed in an affidavit of one of its own officials. As such, the affidavit adds little to AEOI's original assertion. Moreover, in light of Section 28 of the Agreement, which requires that remedial work necessary to correct defects in Consultant's work be performed by the Consultant at no additional cost, AEOI's payment of some of the invoices for the repair services indicate that, at least at the time, it did not consider the malfunctions to be the fault of the Consultant. The Tribunal is thus unable to conclude that the Consultant was negligent 248 in performing this task.

Regarding the absence of a report on the repair work, it must be noted that AEOI does not deny that the repairs themselves were completed. Moreover, the Agreement requires only "oral and written reports . . . normal to consulting engineering of the type Consultant has been contracted for". No evidence has been presented which would suggest that AEOI stated such a requirement in authorizing this task. Nor has it been argued that a report for a task involving a specific action, as opposed to a study, for example, is normal to consulting engineering of this type. It is therefore evident that the Consultant fully performed these tasks and that Claimant' is therefore entitled to whatever payments remain unpaid thereon.

Also in dispute are two tasks1 which AEOI admits were performed by the Consultant and for which final reports were submitted. AEOI contends that it has not accepted the reports because the work was unnecessary and defective. As the Tribunal has ruled above, authorization was given for these tasks and the Tribunal need not, therefore, determine whether these were necessary tasks. Moreover, while AEOI suggests that, in recommending these tasks, the Consultant may have been motivated more by its own academic interests than by AEOI's needs, there is no evidence to support such a conclusion.

There has been no evidence submitted which would indicate that the work performed on these two talks was defective; indeed, AEOI does not specify the alleged defects. Furthermore, the Agreement, as amended, required AEOI to review and either accept or reject reports within 120 days of receiving them. It is clear that no such action occurred within the required periods. In view of these circumstances, AEOI's refusal now to accept the reports cannot relieve AEOI of its payment obligations under the Agreement. Therefore, this defence too must be rejected.

To support its claim for amounts retained as security for the payment of social insurance obligations, Claimant originally referred to a telex from its Iranian accountant stating that a clearance certificate had previously been issued by the Iranian Social Insurance Organization on 17 October 1979. Subsequent to the Hearing, Claimant obtained and submitted a copy of that clearance. In support of its allegation that the Claimant continues to have outstanding social insurance payment obligations, AEOI has submitted letters from the Social Insurance Organization announcing that Claimant and Woodward-Noorany owe substantial amounts as specified in the letters. No mention is made of the clearance having been granted, no reference is made to any payments having been made in the years in question and the method used to calculate the amount alleged to be due is not 249 explained.

While there is no doubt about the authenticity of either the clearance certificate presented by Claimant or the letters submitted by AEOI, they represent totally contradictory conclusions by the Social Insurance Organization which are impossible to reconcile. Given the fact that one conclusion was stated close in time to the events in issue and that the other was stated in the course of this litigation, and considering the general rule of evidence that contradictory statements of an interested party should be construed against that party, the Tribunal finds that the Claimant has obtained the clearance required by the Agreement and is entitled to payment of the amount retained under the social insurance guarantee.

In connection with AEOI's claim that invoices were not supported by adequate documentation, both parties have submitted evidence relating to two 1977 audits of invoices previously submitted. The evidence indicates that the parties reached an agreement based upon items questioned in those audits under which U.S. $68,070.34 was to be credited to AEOI for incorrect billings and U.S. $33,678.01 was to be credited to WCCID for unidentified costs which had not been billed. These credits were apparently not reflected in subsequent invoices and, therefore, AEOI continues to be entitled to a net credit of U.S. $34,392.33. AEOI has not offered evidence contradicting the invoices submitted after the audits and has failed to specify in what respect the documentation of these invoices was inadequate. In light of this, the Tribunal is unable to uphold AEOI's defence in connection with invoices which were not subject to the 1977 audits.

For the above reasons, the Tribunal holds that AEOI is liable for any unpaid amounts proven to have been invoiced, or to be otherwise due, for which the Claimant claims, less an amount reflecting the net credit to AEOI resulting from the 1977 audits. The issue of the amounts due is discussed below in Section III 3.

Claimant also makes a claim for expenses which it allegedly incurred in collecting amounts due for its services under the Agreement. While there is obviously a relationship between AEOI's failure to make payments as required by the Agreement and Claimant's collection efforts, Claimant has not put forth the legal principle on which it bases this claim. The Tribunal has not in the past awarded reimbursement for collection expenses. Moreover, it is doubtful that such expenses are generally compensable in municipal legal systems. Finally, it appears that other international claims tribunals have explicitly declined to award damages in this regard. See, e.g., China Navigation Co., Ltd. (G.B. v. U.S.) 6 R. Int'l Arb. Awards 64, 68 (legal expenses previously incurred "are damages indirectly consequent to the collision; but it is a well known principle of the law of damages that causa proxima non remota inspicitur"). Therefore, the Tribunal holds that 250 AEOI is not liable for expenses which Claimant may have incurred in the course of efforts to collect amounts due under the Agreement.

The Tribunal finds no grounds for holding Respondent Government of Iran liable under the claim. The claim is therefore to be dismissed insofar as it is directed against the Government.

Based upon an extrapolation of tasks performed, Claimant originally alleged that it had submitted invoices under the Agreement totalling U.S. $2,033,606.74 and that AEOI had made payments totalling U.S. $1,632,664.25. In response, AEOI maintained that it had actually made payments of U.S. $1,885,302.19. As a result of evidence made available by AEOI in support of its position and after discovering original documentation in its files, Claimant recalculated the amounts at issue and now admits AEOI's position on the total amount paid. Claimant further asserts, however, that its recalculation reveals that it had actually submitted invoices totalling U.S. $2,313,721.48.

Claimant's total for invoices submitted is evidenced by a list which it submitted to the Tribunal indicating invoice numbers and the total of dollars or rials either debited or credited in each invoice. To support the entries on this list, Claimant also submitted copies of what it purports to be "all invoices submitted by WCC to AEOI". On inspection, however, a number of invoices referred to an the list are not to be found among Claimant's exhibits and a tabulation of the invoices which both appear on the list and are included in the exhibits yields a total net debit to AEOI of U.S. $2,198,815.71.1 Copies of payment vouchers submitted by AEOI demonstrate that payments were made on a number of invoices, listed by Claimant but not submitted into evidence, totalling an additional U.S. $117,738.35. Also, among the Claimant's exhibits are invoices which do not appear on the Claimant's list and which total a net amount of U.S. $52,397.18. Finally, the Claimant's list includes amounts from certain credit memoranda issued to AEOI which do not appear in any exhibits and which total U.S. $49,286.15; this amount must be taken as admitted by the Claimant to be creditable against other invoices.

The evidence supports a finding, therefore, that a net amount of at least U.S. $2,319,665.04 was invoiced by the Consultant, which, when the U.S. $1,885,302.19 stipulated to have been paid by AEOI is subtracted, yields a gross amount of U.S. $434,362.90 owing on the invoices, including amounts retained under the invoices for the performance and social insurance guarantees.

In light of the Tribunal's finding that AEOI is entitled to a net credit 251 an invoices of U.S. $34,392.33, the net amount due to Claimant from AEOI is U.S. $399,970.57. The Tribunal is, however, constrained by the relief requested by Claimant and, therefore, awards U.S. $366,550.06 .on the principal amount of the claim.1

Claimant also seeks interest at commercial rates on the above amount from the date of the last payment made by AEOI in June 1978. The Tribunal finds, however, that 10% per annum is a reasonable rate and, therefore, awards interest at this rate from 1 July 1978 to the date on which the Escrow Agent instructs the Depositary Bank to pay the Award.

AEOI's first counterclaim is based upon its contentions that the Agreement's compensation formula violated applicable administrative standards and that the amended formula of the 1976 Amendment is inapplicable because the amendment itself is invalid. Under either contention, the counterclaim clearly arises out of the contract at issue which constitutes the subject matter of the claim, and is directed against Claimant, and thus comes within the jurisdiction of the Tribunal under Article II, paragraph 1, of the Claims Settlement Declaration.

In support of its first contention, AEOI argues that, under both Iranian law and Article 25 of the Agreement, the Iranian Plan and Budget Organization ("PBO") "exercises direct supervision and control" over the Agreement. AEOI submitted a letter from PBO to AEOI dated 26 January 1981 which states that the "multiplier for overhead charges" of the Consultant "could have varied between a minimum 1.70 to maximum of 2.50". On the basis of the above, AEOI maintains that both the multiplier of 2.9 found in the Agreement and the amended multiplier of 3.5 found in the 1976 Amendment were excessive and that it is therefore entitled to a refund of U.S. $506,300.50 in excess payments made on the basis of these multipliers.

AEOI cites no legal authority for the proposition that the terms of the Agreement were subject to retroactive review by PBO, nor does either AEOI or the PBO letter refer to the regulations upon which the letter's conclusion is based.

Moreover, Article 25 of the Agreement accords to PBO only the power to appoint a third arbitrator in the event either of the parties invokes the Agreements arbitration clause, which neither Claimant nor AEOI has alleged to have occurred. In addition, the letter by its terms refers to the multiplier for "overhead charges" whereas the 252 multipliers at issue relate to variable personnel costs. Finally, it should be noted that the PBO letter was prepared in the course of this litigation by an agency of the Respondent Government of Iran. The Tribunal is unable to see any basis upon which the PBO letter is relevant to the rights asserted by the Claimant or how, even if relevant, it could serve to prove AEOI's contention, which must thus be rejected.

AEOI'S second contention appears to be based upon a misapprehension of the effect of the 1976 Amendment. While it is true, as AEOI points out, that the amendment increased the applicable multiplier from 2.9 to 3.5, it is equally true that the amendment also altered the base figure to which the multiplier was to be applied; the Consultant was thereafter to be compensated according to a multiple of "the hourly base salary cost" rather than the much larger "hourly personnel cost" as defined in the Agreement. The evidence indicates that, were AEOI to prevail on the point, the effect would only be to increase Claimant's entitlement under the Agreement. Because the contention could thus not support the counterclaim in any event, the Tribunal need not determine whether the 1976 Amendment was validly entered into. Based on the above, the Tribunal dismisses the first counterclaim for a refund of payments and interest thereon.

AEOI'S second counterclaim seeks consequential damages for expenses which it allegedly incurred in conducting an audit of Claimant's records in the United States after Claimant refused to make them available in Iran, allegedly in violation of Article 5.5 of the Agreement. The counterclaim clearly arises out of the contract which constitutes the subject matter of the claim, is directed against Claimant and thus comes within the Tribunal's jurisdiction. However, AEOI has not described the records which it sought to audit so as to allow the Tribunal to determine whether they were records "necessary for audit of fees related to work performed" as required by Section 5.5 of the Agreement. Nor has AEOI submitted any evidence of the expenses it incurred in conducting the audit. The Tribunal must therefore dismiss the second counterclaim for lack of proof.

AEOI bases its third counterclaim upon the contention that the taxes paid by the Claimant on its activities under the Agreement were improperly calculated at rates applicable to Iranian companies rather than to foreign companies. The Tribunal has not yet determined whether its jurisdiction under Article II, paragraph 1, of the Claims Settlement Declaration extends to counterclaims under which affirmative relief is sought for unpaid tax obligations. Nor need we determine this issue here. AEOI has presented no evidence to support the allegations upon which the counterclaim is based and which Claimant denies. Such evidence should have been readily available to agencies of the Respondent Government of Iran. In the absence of such evidence, the counterclaim must be dismissed for lack of proof.

The three counterclaims submitted on the day of the Hearing all raise claims not previously presented by AEOI. The counterclaim for taxes allegedly owed is distinct from the tax counterclaim filed with AEOI'S Statement of Defence since it is based upon an alleged failure to make payments due either as an Iranian or as a foreign company. Moreover, while AEOI defended against Claimant's claim for amounts retained for the social insurance guarantee on the basis that payments were due and that no clearance has been issued, AEOI did not previously bring a counterclaim to recover the amounts allegedly due. Finally, the counterclaim for refund of payments made on the two tasks the reports for which have not been formally approved by AEOI had not been presented prior to the Hearing.

Article 19, paragraph 3, of the Tribunal Rules provides that a respondent may make a counterclaim in its Statement of Defence "or at a later stage in the arbitral proceedings if the arbitral tribunal decides that the delay was justified under the circumstances". No circumstances have been brought to the Tribunals attention which would justify the filing of these three counterclaims as late as on the day of the Hearing. These three counterclaims are therefore dismissed.

In the circumstances of this case, and applying Articles 38 and 40 of the Tribunal Rules, the Tribunal holds that Claimant is entitled to U.S. $25,000 as its costs of arbitration.