Applicability of the Obligation to Arbitrate under § 21 of the United Nations Headquarters Agreement of 26 June 1947

In 1947 the United States (defendant) entered into an agreement with the United Nations (plaintiff) to act as host of the United Nations Headquarters. The Headquarters Agreement contained a dispute-resolution clause known as § 21, which obligated the parties to enter into arbitration for settlements of disputes concerning the interpretation or application of the agreement that could not be resolved through negotiation or another agreed mode of settlement. In 1974 the United Nations invited the Palestinian Liberation Organization (PLO) to participate as an observer, and thereafter, the PLO maintained an office in the United States, near the United Nations Headquarters. Several years later, the United States enacted the Anti-terrorism Act of 1987, which declared illegal the establishment or maintenance of a PLO office within the United States. The secretary-general of the United Nations became concerned that the law would prevent the PLO from maintaining its observer office and raised these concerns with United States officials, who engaged in informal discussions regarding the resolution of the potential dispute. Early discussions failed to yield a solution. The United States attorney general filed an action in United States district court for a final determination as to whether the PLO would be required to shut down its observer office. The United States declared that it would not take any action to close the office until completion of the litigation. In the meantime, the General Assembly of the United Nations sought an advisory opinion from the International Court of Justice as to whether the United States was obligated, under § 21 of the Headquarters Agreement, to participate in arbitration to settle the dispute with the United Nations regarding the PLO observer office.