U.S. Secretary of State Mike Pompeo blamed Iran on Wednesday for threats to American missions in Iraq and said the United States was terminating a historic treaty with Tehran on consular and economic rights.
"The decision proved once again that the Islamic Republic is right and the US sanctions against people and citizens of our country are illegal and cruel", Iran's foreign ministry answered in a statement.
The White House's move came after the International Court of Justice's unanimous ruling that the U.S.
The treaty, which was signed in Tehran, established consular and economic relations between the US and Iran.
The Iranians have ignored the treaty "for an awfully long time, " Pompeo told reporters.
Pompeo said the practical fallout from the U.S. decision to withdrawal remains to be seen.
"Iran has attempted to interfere with the sovereign rights of the United States to take lawful actions as necessary to protect our national security, and Iran is abusing the ICJ for political and propaganda purposes", Pompeo charged.
The move is a largely symbolic gesture that highlights deteriorating relations between Washington and Tehran.
The court case is legally binding, but Pompeo said the administration would proceed with sanctions enforcement with existing exceptions for humanitarian and flight safety transactions.
He adds this is just another diplomatic full court press by Iran, using a 1950s treaty to isolate the United States today.
The 2015 nuclear deal saw Iran agree to limit its nuclear programme and let in global inspectors in return for an end to years of sanctions by the West. "He said it was imperative for other countries 'to collectively counter malign United States unilateralism" and he accused the USA of being an "outlaw regime".
Iran's foreign ministry welcomed the court decision.
Announcing the decision, the court's president, Judge Abdulqawi Ahmed Yusuf, said USA sanctions on goods "required for humanitarian needs.may have a serious detrimental impact on the health and lives of individuals on the territory of Iran".
"The court considers that the United States must, in line with its obligations under the 1955 treaty, remove by means of its choosing any impediment arising from the measures announced on 8 May 2018", Reuters quoted Presiding Judge Abdulqawi Yusuf, reading a summary of a ruling by the 15-member panel of justices.
Wednesday's ruling could set up another clash between the Trump administration and a Hague-based court.
On Friday, Pompeo pulled all US diplomats out of the American consulate in Basra, Iraq, after several violent incidents near the facility and elsewhere in the country.
Pompeo told reporters that Iran's claims made under the treaty lacked merit and were "absurd".
"The United States has been actively engaged on these issues without regard to any proceeding before the ICJ".
The other parties to the deal - the UK, France, Germany, China and Russian Federation - have pledged to abide by their commitments under the existing deal.
The ruling comes one month before the Trump administration is due to impose another round of sanctions on Iran, on November 4.