On June 27, 2023, Iran threw down the gauntlet and sued Canada before the International Court of Justice (“ICJ”). The crux of Iran’s Application to the Court focuses on Canada’s designation of Iran as a state sponsor of terrorism, as well as legislation allowing private plaintiffs to sue Iran in Canadian courts for terrorism-related injuries—all of which, Iran argues, violates customary international law.

The case is the latest Iranian attempt to challenge the so-called terrorism exception to foreign sovereign immunity. And while it is putatively suing Canada, Iran’s main target is likely the United States, which has created a private terrorism litigation regime that has both disproportionately targeted Iran, its agencies, and instrumentalities and also inspired the Canadian law. Assuming Iran’s claims make it to the merits stage, we are likely to get the first definitive statement from an international tribunal as to whether the terrorism exception to foreign sovereign immunity violates customary international law.

This piece sketches out some of the issues raised by Iran’s Application to the Court, including possible responses from Canada and Iran’s likely motivations for bringing suit.

The Terrorism Exception to Sovereign Immunity

In its June 27 Application to the Court, Iran argues that a “series of legislative, executive, and judicial measures adopted by Canada against Iran and its property since 2012” violates its sovereign immunity—in terms of both jurisdiction and enforcement—under customary international law. The Justice for Victims of Terrorism Act (“JVTA”) is at the heart of these claims. The JVTA was passed by the Canadian government in 2012 and amends Canada’s State Immunity Act—which governs the immunity of foreign sovereigns in Canadian courts—to add an exception to immunity for terrorist activity.

Under the JVTA, any person who has been injured as a result of terrorist activity anywhere in the world can bring a civil suit in Canadian courts, as long as their injuries occurred on or after January 1, 1985 and there is either a “real or substantial connection” to Canada or the case involves plaintiffs who are Canadian citizens or permanent residents. Importantly, plaintiffs can only use the JVTA against foreign states or entities designated as terrorists by the Canadian government. As of this writing Iran is one of only two states Canada has designated as a state sponsor of terrorism. Notably, the JVTA also contains a provision requiring Canadian courts to recognize terrorism-related judgements issued by courts in other countries, as long as those decisions meet the recognition criteria under the JVTA and other relevant Canadian laws. Finally, pursuant to the State Immunity Act, plaintiffs holding judgements against state sponsors of terrorism can execute against the property of designated state sponsors of terrorism, subject to certain exceptions.

Canada is not the only state to embrace a terrorism exception to foreign sovereign immunity. In fact, the United States was the first state to create a terrorism exception to its sovereign immunity statute—known as the Foreign Sovereign Immunities Act (“FSIA”). Indeed, the JVPA appears to be modeled after the FSIA’s terrorism exception. Together, Canada and the United States are the only two countries with legislation recognizing a terrorism exception to foreign sovereign immunity.

And this brings us to the crux of Iran’s claim before the ICJ—namely, that the terrorism exception violates customary international law, one of the primary sources of international law. To qualify as a customary international law, a rule must satisfy a relatively high bar. Specifically, it must be consistently and commonly practiced by states (commonly referred to as “state practice”) out of a sense of legal obligation (also known as opinio juris). While state practice does not require all states or a majority of states adhere with perfect consistency to a particular rule, the practice does need to be widespread and identifiable. As for opinio juris, it requires states act out of a subjective belief they are under a legal—as opposed to a political or diplomatic—obligation to do so, something which is notoriously difficult to establish.

Iran’s Customary International Law Claim

In determining whether Iran can ultimately prevail on its claims, there is a question as to what Iran needs to establish. In particular, does it need to show that the terrorism exception is not recognized as an exception to sovereign immunity under customary international law or must it demonstrate that customary international law affirmatively embraces immunity for foreign sovereigns accused of engaging in terrorist acts?

The difference is important. Under the first approach, Iran arguably must show there is no widespread state practice or opinio juris embracing such an exception. Under the second approach, Iran would need to point to state practice and opinio juris affirmatively embracing sovereign immunity for terrorist activity. The latter is arguably a heavier lift.

So which is the right approach? Some have previously argued in favor of the second view, though they have neither acknowledged the first approach nor explained why the second approach is the correct one. In its most recent case on foreign sovereign immunity—the Jurisdictional Immunities case brought by Germany against Italy—the ICJ actually engaged in both types of analysis, though it also did so inconsistently and without a clear rationale as to why both approaches were required.

In my view, existing foreign sovereign immunity law, as practiced by most states, suggests the first approach—namely, demonstrating that the terrorism exception is not a recognized exception under customary international law—is all that is necessary.

As reflected in the FSIA, Canada’s State Immunity Act, the UN Convention on Jurisdictional Immunities of States and Their Property, and the European Convention on State Immunity, the consistent and widespread practice of states, as well as their subjective sense of legal obligation, appears to view a foreign sovereign as immune from (at least civil) suit in another state’s courts unless its actions fall under a recognized exception to immunity. In other words, in order to successfully sue a foreign sovereign, customary international law creates a presumption of immunity unless plaintiffs demonstrate their case fits into a recognized exception to immunity. Indeed, prior to the terrorism exception’s passage, U.S. litigants struggled to successfully sue foreign states for terrorism-related claims because there was no FSIA exception that existed for those cases at the time.

Under this first approach, Iran would have to establish that the terrorism exception violates customary international law because it is not a widely recognized exception to foreign sovereign immunity embraced by states out of a sense of legal obligation. Given the exception’s highly limited adoption by states, Iran can credibly argue that the terrorism exception is not a customary international law rule. This position is arguably further bolstered by the nature of the American and Canadian laws themselves. With the exception of a newer terrorism-related carve out to the FSIA passed in 2016, the Canadian and older U.S. terrorism provisions do not apply to all countries engaging in terrorism. Instead, they can only be used against states specifically designated by the Canadian and U.S. governments as sponsors of terrorism. Since these designations are often highly political and selective, Iran may be able to argue that such laws are themselves inconsistently applied and not the byproduct of opinio juris.

Iran’s position may also be strengthened by the ICJ’s decision in the Jurisdictional Immunities case. Although the Court is not generally bound by its previous opinions, in that case the ICJ concluded there was no customary international law exception to foreign sovereign immunity either for serious breaches of human rights or humanitarian law, or for jus cogens violations. While exploring this argument in depth is beyond the limitations of the analysis here, Iran has flagged it in its Application and may, indeed, have a strong case for doing so.

Even if the first approach does not apply and Iran has to establish, instead, that customary international law affirmatively embraces sovereign immunity for terrorism, it may still prevail. On state practice, Iran can underscore that in over twenty-five years since the first terrorism exception was passed into U.S. domestic law, the vast majority of states have refrained from adopting similar provisions. On the issue of opinio juris, Iran can point to various pieces of evidence to bolster its position. These include the failure of many designated state sponsors of terrorism to appear before U.S. or Canadian courts to defend themselves against terrorism claims partly because they view those cases as legally illegitimate. Iran can cite to legislation passed by some of those states retaliating against the United States for recognizing the exception and violating their sovereign immunity. Also on the issue of opinio juris, Iran can point to prominent critiques of the terrorism exception from the EU, Saudi Arabia, Russia, and the Netherlands, amongst others. In this regard, Iran can and should highlight the U.S. Executive branch’s own opposition to both FSIA terrorism exceptions prior to their enactment, based on the view that those exceptions violate international law on sovereign immunity. Finally, Iran can reference judicial decisions in other countries, such as Luxembourg, where courts have refused to enforce judgments issued under the FSIA’s terrorism exception because of the exception’s purported inconsistency with customary international law.

Compulsory Jurisdiction, Countermeasures, and Security Council Resolutions

Though they are unlikely to succeed, there are three potential obstacles to Iran’s suit that are worth addressing at this stage.

ICJ Compulsory Jurisdiction

The first obstacle relates to the ICJ’s compulsory jurisdiction clause. In its Application, Iran has invoked this clause as the basis for the Court’s jurisdiction. Though referred to as the “World Court,” the ICJ does not have jurisdiction over every claim that arises between states. Instead, its jurisdiction is circumscribed and contingent upon state consent. One way states express this consent is by acceding to the ICJ’s compulsory jurisdiction clause. Under that clause, states accept the ICJ’s jurisdiction, ipso facto, with respect to other states that have also accepted the clause.

This raises two potential issues when it comes to Iran’s suit: reciprocity and the details of Canada’s compulsory jurisdiction acceptance. On the first issue, reciprocity is key to any suit based on compulsory jurisdiction. As the ICJ has previously held, reciprocity effectively means that all litigants have filed declarations accepting the Court’s compulsory jurisdiction on the date the petitioner’s application is filed and that those declarations cover the subject-matter of the suit. Reciprocity does not, however, require that the terms of each state’s declarations be identical. As applied here, the declarations of Iran and Canada meet these terms, as of the date of Iran’s Application.

On the second issue, Canada has appended several reservations to its acceptance of the Court’s compulsory jurisdiction. Two seem most relevant here. First, Canada has excluded “disputes with regard to questions which by international law fall exclusively within the jurisdiction of Canada.” This reservation is unlikely to defeat the Court’s jurisdiction in this case. As the ICJ has held, “even though the State possesses sovereignty over its own territory and there flows from that sovereignty the jurisdiction of the State over events and persons within that territory,” sovereign immunity law “occupies an important place in international law and international relations” and “is one of the fundamental principles of the international legal order.” As this language suggests, foreign sovereign immunity is not a body of international law falling exclusively within the domestic jurisdiction of Canada, as required by its reservation.

Canada’s declaration also states that it “reserves the right at any time… and with effect as from the moment of such notification, either to add to, amend or withdraw any of the foregoing reservations….” Even if Canada were to invoke this provision in response to Iran’s suit, it would not retroactively apply to defeat jurisdiction in this case.


The second possible, though likely unsuccessful, obstacle to Iran’s suit relates to countermeasures. Countermeasures are actions that are otherwise unlawful under international law, but are permitted, under certain circumstances, to be taken by states against other countries that have violated their international legal rights. In this case, Canada might argue that the JVTA is a lawful countermeasure against Iran. Without getting too into the weeds, valid countermeasures must comply with certain legal requirements, including being responsive to injuries inflicted directly or indirectly against the state itself and proportional to the legal breach suffered. As others have argued, the terrorism exception to sovereign immunity is unlikely to satisfy these and other requirements for valid countermeasures.

UN Security Council Resolution

The final possible obstacle to Iran’s claim relates to a UN Security Council resolution. Security Council resolutions are binding on all UN members and trump most other international laws with which they conflict, including customary international law. Here, Canada could argue that, even if the terrorism exception violates customary international law, it is mandated by Security Council Resolution 1373, which is cited in the JVTA’s preamble. Passed shortly after 9/11, Resolution 1373 calls upon states to take various measures to suppress and combat terrorism. In this regard, the resolution lists various specific measures states should take. None of the specified measures, however, explicitly include allowing private parties to sue foreign states for terrorism-related injuries. And while Canada may claim that a terrorism exception is nevertheless consistent with other specified actions—like “cooperat[ing] [with other states]… to take action against perpetrators of [terrorist] acts”—as well as the resolution’s object and purpose—including its insistence on the need to “combat [terrorism] by all means”—those arguments are far from a slam dunk.

Iran’s Motivations for Bringing Suit: The Americans

While Canada is the putative target of the ICJ suit, Iran is quite clearly also going after the FSIA’s terrorism exception. Indeed, Iran attempted to do just this a few years ago in an ICJ case brought against the United States, the Certain Iranian Assets case. In that suit, the Court did not reach the merits of Iran’s argument that the FSIA’s terrorism exception violated customary international law, concluding it did not have jurisdiction to consider the claim.

For several reasons, the FSIA’s terrorism exception looms large over Iran’s current ICJ case. FSIA terrorism litigants were, for example, at the forefront of lobbying for the JVTA. As noted in Iran’s Application, these litigants have since used the JVTA and Canadian courts to enforce their FSIA judgments against Iran. Indeed, as one Canadian lawyer has observed, “many U.S. victims of Iran-sponsored terrorist attacks have flocked to Canada with U.S. court judgments in hand to have them recognized by Canadian courts in order to enforce them on assets of Iran in Canada.”

Iran is now fighting back against these practices—an unsurprising move given the enormous sums U.S. courts have entered in default judgments against the country often on highly dubious claims. If Iran succeeds, it could serve to hamstring these plaintiffs—who already face an uphill battle in enforcing their judgments—and prevent them from attaching the assets of Iran and other state-sponsors of terrorism in both Canadian and other foreign courts, as earlier ICJ case law suggests.

IMAGE: THE HAGUE, NETHERLANDS: Judges of the International Court of Justice.