The head of Iraq's Interim Governing Council says Iran should be paid reparations for the war that Saddam Hussein waged against it in the 1980s.
The Iran-Iraq war claimed the lives of about one million people
Abdul Aziz al-Hakim said further discussion was needed to decide what if anything Iraq would pay itself.
Iran claims $100bn in reparations for the brutal eight-year war that claimed about one million lives.
Mr Hakim's remarks may augur improving Iran-Iraq relations now Saddam Hussein is in custody.
The prominent Iraqi is also the head of the Supreme Council for the Islamic Revolution in Iraq (Sciri) the most important Shia Muslim party represented on the governing council.
Sciri has close ties with Tehran, where the party was based during Saddam Hussein's years in power.
Analysts say that with Iraq's Shia majority likely to dominate in any future democratic government, it is logical that Baghdad should now develop warmer relations with its Shia neighbours in Iran.
In 1980, after a series of border skirmishes following Iran's Islamic revolution, Iraq invaded Iran.
The ensuing war claimed the lives of at least one million people and during the conflict, Iraq used nerve gas against the Iranians.
The Iranian Government is preparing a comprehensive complaint against Saddam Hussein for "crimes" against the Islamic republic, calling for the captured former Iraqi leader to be tried before an international court.
Some Iranian observers say the US should also be in the dock with Saddam Hussein, as Washington supported him at the time of the war.
An estimated 20,000 Iranians were killed by Iraqi mustard gas or by nerve agents during the conflict.
Iran points out that Kuwait has already received billions of dollars through the UN's Iraqi oil-for-food programme in compensation for the invasion of that country.
Mr Hakim said Saddam Hussein would be tried in Iraq
Mr Hakim said: "According to the UN, Iran deserves reparations. She must be satisfied. Whether we will pay or not is something which we need to discuss further."
The council leader was speaking after talks with UK Foreign Secretary Jack Straw in London.
Mr Hakim also told a news conference that Saddam Hussein would be tried in a special Iraqi court.
International monitors could observe the trial, which would take global legal standards into account, Mr Hakim added.
He did not say whether the former Iraqi president, captured at the weekend, would face the death penalty.
"[Saddam Hussein] will be tried and after that we will do what the judge and the court will decide", Mr Hakim told reporters.
Just days before Saddam Hussein's capture, the Iraqi council announced that a tribunal would be set up to try members of the former regime.
Saddam 'still in Iraq'
Speculation over the ousted leader's whereabouts has been intense since his capture on Saturday near his home town of Tikrit. The US military has only said that Saddam Hussein is being held at "an undisclosed location" in Iraq.
Council member Mowaffaq al-Rubaie told reporters: "Saddam Hussein is present in an area of greater Baghdad... God willing... he will be tried in Iraq in public by an Iraqi court."
He was responding to media reports that had suggested that Saddam Hussein had been flown to the Gulf state of Qatar.
On Wednesday Arab League officials said a fact-finding delegation, headed by Assistant Secretary General Ahmad Bin Heley, would leave for Iraq on Thursday.
The team will meet Council members, visit mass graves and discuss human rights violations by the former regime.