Huge blow to Donald Trump as US fails to halt Iran bid to free frozen billions

An international court Wednesday ruled Iran can proceed with a bid to unfreeze assets in the United States, rejecting Washington's claims the case must be halted because of Tehran's alleged support for international terrorism. Washington had argued that Iran's "unclean hands" - a reference to Tehran's suspected backing of terror groups -- should disqualify its lawsuit to recover USD 2 billion in assets frozen by the US Supreme Court in 2016.

But the International Court of Justice in The Hague threw out the US challenges, and said that it had the right to hold full hearings at a later date as to whether Tehran will get the money back. Chief judge Abdulqawi Ahmed Yusuf said the UN's top court "unanimously rejects the preliminary objections to admissibility raised by the United States of America".

The court also "finds that it has jurisdiction" in the case, Yusuf said at the end of an hour-long reading of the decision. Tehran said the United States had illegally seized Iranian financial assets and those of Iranian companies -- and with Iran's clerical regime facing economic difficulties after sanctions and a fall in its currency resolving the case remains crucial.

The US Supreme Court had said Iran must give the cash to survivors and relatives of victims of attacks blamed on Tehran, including the 1983 bombing of a US Marine barracks in Beirut and the 1996 Khobar Towers bombing in Saudi Arabia. Iran said the freezing of the funds breached the 1955 Treaty of Amity with the United States, an agreement signed before Iran's 1979 Islamic Revolution severed relations between the countries.

The United States announced in October that it was pulling out of the Treaty of Amity after the ICJ in a separate case ordered Washington to lift nuclear-related sanctions on humanitarian goods for Iran. The ICJ is the top court of the United Nations and was set up after World War II to resolve disputes between member states. Its rulings are binding and cannot be appealed, but it has no means of enforcing them.

Tensions between Tehran and Washington are already high around the 40th anniversary of the Iranian revolution and a Middle East meeting in Warsaw starting Wednesday where the United States aims to pile pressure on Iran.

Relations have been strained ever since US President Donald Trump's decision last year to pull out of a "terrible" international nuclear deal with Iran and reimpose sanctions. The 2015 nuclear deal had unblocked billions of dollars in other Iranian funds.