Chas. T. Main International, Inc. v. Khuzestan Water & Power Authority

651 F.2d 800, 1981 U.S. App. LEXIS 12963
CourtCourt of Appeals for the First Circuit
DecidedMay 22, 1981
DocketNos. 80-1027, 81-1176, 81-1251 and 81-1252
StatusPublished
Cited by6 cases

This text of 651 F.2d 800 (Chas. T. Main International, Inc. v. Khuzestan Water & Power Authority) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Chas. T. Main International, Inc. v. Khuzestan Water & Power Authority, 651 F.2d 800, 1981 U.S. App. LEXIS 12963 (1st Cir. 1981).

Opinions

LEVIN H. CAMPBELL, Circuit Judge.

Chas. T. Main International, Inc. (Main) is an engineering firm incorporated in Massachusetts and having its principal place of business in Boston. On November 20,1979, Main brought suit in the District Court for the District of Massachusetts against the government of Iran and various Iranian governmental entities to obtain payment for services it had rendered in Boston and Iran in connection with certain Iranian electrification projects. Chas. T. Main International, Inc. v. Khuzestan Water & Power Authority, No. 79-2304C (Main v. KWPA). Main’s claims in that case are for services alleged to have been performed under two contracts: one contract called for engineer[803]*803ing and consulting services to develop a hydroelectric power plant on Iran’s Karun River; this was with Mahab Consulting Engineers (though performed for the benefit of the Khuzestan Water & Power Authority and Iran’s Ministry of Energy and Natural Resources). The other contract involved miscellaneous services under a “General Services Agreement” between Mahab and “Parsmain,” an “Iranian” corporation partially owned by Main. Main’s complaint contains a further allegation that the Central Bank of Iran, now Bank Markazi Iran, wrongfully failed to transmit a payment order of $378,000 authorized by Mahab. Damages totalling $3,256,787.26 are claimed.

I.

The above suit was preceded by dramatic events. On November 4, 1979, American hostages were seized at the United States Embassy in Teheran. That hostile and unprecedented act precipitated a crisis in relations between Iran and the United States. On November 14, 1979, in response to the taking of hostages, President Carter declared a national emergency1 and ordered blocked “all property and interests in property of the Government of Iran, its instru-mentalities and controlled entities and the Central Bank of Iran which are or become subject to the jurisdiction of the United States ... . ” Exec. .Order No. 12170, 44 Fed.Reg. 65729. The President further authorized the Secretary of the Treasury to employ all powers granted to the President under the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., to carry out the blocking order. Pursuant to this authorization, the Treasury Department’s Office of Foreign Assets Control (OFAC) promulgated regulations, effective November 14, 1979, prohibiting, absent a license or authorization, injunctions, attachments, judgments, or other relief, against property in which Iran or its entities had an interest. 31 C.F.R. §§ 535.201, 535.203(e), 44 Fed.Reg. 65956.

Main moved to sue the Iranian defendants a few days after the President and OF AC had acted. On November 19,1979, it sought authority from OF AC to institute suit against the Iranian defendants, and, in conjunction therewith, to obtain injunctive relief and attachments against Iranian assets.2 On November 20, 1979, an OF AC official informed Main’s representatives over the telephone, and on November 21, 1979 Main received written confirmation, that it would be given a “special license” to “initiate and prosecute judicial proceedings” and to obtain preliminary relief against Iranian property; the license specifically provided that Main was not authorized to proceed to judgment on its claims or to receive any payment from the blocked assets. (On November 23, 1979, regulations were promulgated authorizing suits against Iran and its governmental entities on terms similar to those specified in Main’s license. 31 C.F.R. § 535.504, 44 Fed.Reg. 67617.) Effective November 19, 1979, all OFAC “rulings, licenses .. . [and] authorizations” pertaining to Iranian assets were explicitly made revocable “at any time.” 31 C.F.R. § 535.805, 44 Fed.Reg. 66834.

On November 20, 1979 — the day Main commenced its action — the district court ap[804]*804proved ex parte attachments on trastee process and issued a temporary restraining order enjoining the Iranian defendants from disposing of any of their assets located in the United States. On December 12, 1979, following a hearing, the district court entered a preliminary injunction to the same effect as its earlier TRO.3 Defendants appealed the order granting the preliminary injunction, and this court heard oral argument on October 8,.1980. Further proceedings on the appeal were stayed, however, pending the outcome of ongoing negotiations for the release of the Ameri-can hostages.4

On January 19, 1981, Iran released the hostages pursuant to an agreement with the United States, embodied in two Declarations of the Government of the Democratic and Popular Republic of Algeria.5 The agreement states that it is “the purpose of both parties ... to terminate all litigation as between the Government of each party and the nationals of the other, and to bring about the settlement and termination of all such claims through binding arbitration.” In furtherance of this goal, the agreement calls for the establishment of an Iran-United States Claims Tribunal (Tribunal), which will, with certain exceptions, arbitrate any such claims not settled within six months of the date of agreement; awards of the Tribunal will be “final and binding” and “enforceable ... in the courts of any nation in accordance with its laws.” The United States is obligated “to terminate all legal proceedings in United States courts involving claims of United States persons and institutions against Iran and its state enterprises, to nullify all attachments and judgments obtained therein, to prohibit all further litigation based on such claims, and to bring about the termination of such claims through binding arbitration.” The United States must also “act to bring about the transfer” by July 19, 1981 of all Iranian assets held in “U. S. banking institutions in the United States.” One billion dollars of these assets will go directly to a security account which will be used to fund awards of the Tribunal; Iran has agreed to maintain a minimum balance of $500 million in this account until all such awards are satisfied.

On January 19, 1981, President Carter issued a series of executive orders implementing the terms of the agreement with Iran. Exec.Order Nos. 12276-12285, 46 Fed.Reg. 7913-7932. In pertinent part, these orders revoked all licenses permitting persons to exercise “any right, power or privilege” with regard to Iranian funds, securities or deposits, “nullified” all non-[805]*805Iranian interests in such assets acquired subsequent to the November 14,1979 blocking order, and required those holding blocked Iranian assets to transfer them to the Federal Reserve Bank of New York, “to be held or transferred as directed by the Secretary of the Treasury.”6 See esp. Exec.Order No. 12279, 46 Fed.Reg. 7919. On February 24, 1981, President Reagan “ratified” the January 19 orders; he also ordered “suspended” all “claims which may be presented to the [Tribunal]” and provided that they “shall have no legal effect in any action now pending in any court of the United States.” Exec.Order No. 12294, 46 Fed.Reg. 14111.

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651 F.2d 800, 1981 U.S. App. LEXIS 12963, Counsel Stack Legal Research, https://law.counselstack.com/opinion/chas-t-main-international-inc-v-khuzestan-water-power-authority-ca1-1981.