Ministry for Economic and Financial Affairs (Iran) v Socit Framatome

JurisdictionFrance
CourtCourt of Cassation (France)
France, Court of Cassation (First Civil Chamber).

(Jouhaud, President; Lemontey, Rapporteur; Dontonwille, Advocate-General)

Ministry for Economic and Financial Affairs of the Islamic Republic of Iran
and
Socit Framatome and Others

State immunity Attachment and execution Debt owed to foreign State France Iran agreements for construction and financing of nuclear reactors and enriched uranium production facility Loans made to French Atomic Energy Commission and other undertakings by Iran Repudiation of construction agreements by Iran Claim for compensation by French companies involved Whether construction of nuclear reactors and enriched uranium production facility constituting commercial activity Whether companies entitled to attach funds representing loan repayments due to Iran Whether such funds to be regarded as allocated for commercial activity governed by private law Absence of express contractual stipulation concerning funds Guarantee of repayment by French State Whether such guarantee could be regarded as allocated for an identical purpose to that of the loan and therefore having a commercial character

State responsibility For debts State corporations Circumstances in which State may be liable for their debts Test of whether corporation functionally identical with State and simply acting as its instrument The law of France

Summary: The facts:In 1974 a framework was established for cooperation between France and Iran for the development, construction and operation of enriched uranium-fuelled nuclear reactors in Iran. Within this framework, a contract was concluded between the Iranian Atomic Energy Organization (IAEO) and a number of French companies (the Framatome Group) for the construction in Iran of two nuclear reactors. In 1975, also within the framework of this cooperation, Iran made loans to the French Atomic Energy Commission (AEC) whose repayment was guaranteed by the French State.

In 1979 the Iranian Government and its agencies defaulted on various payments which should have been made under these arrangements, following a decision by the new Iranian regime not to proceed with the programme of development of nuclear energy decided upon by its predecessor. Framatome invoked the arbitration procedure provided for in the contract. Following an arbitral award, rendered on 25 July 1985, Framatome applied to the French courts to obtain the conservatory attachment, against the IAEO and the Iranian State, of sums held by the French AEC and the French State allocated for repayment of the loan granted within the framework of the cooperation in question. Similar proceedings for conservatory attachments were also instituted by Eurodif and other companies involved in a joint venture for the construction of an enriched uranium production plant, the arrangements for which were also repudiated by...

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