09-3034-cv Hazi v. Bank Melli Iran
1 UNITED STATES COURT OF APPEALS 2 3 FOR THE SECOND CIRCUIT 4 5 ------------- 6 7 August Term, 2009 8 9 (Argued: February 17, 2010 Decided: June 15, 2010) 10 11 Docket No. 09-3034-cv 12 13 - - - - - - - - - - - - - - - - - - - - - - X 14 15 SUSAN WEINSTEIN, individually as Co-Administrator of the Estate 16 of IRA WILLIAM WEINSTEIN, and as Natural Guardian of plaintiff 17 DAVID WEINSTEIN, JEFFREY A. MILLER, as Co-Administrator of the 18 Estate of IRA WILLIAM WEINSTEIN, JOSEPH WEINSTEIN, JENNIFER 19 WEINSTEIN, HAZI & DAVID WEINSTEIN, 20 JENNIFER WEINSTEIN HAZI, 21 22 Plaintiffs-Appellees, 23 24 BANK OF NEW YORK, 25 26 Plaintiff 27 28 - against - 29 30 ISLAMIC REPUBLIC OF IRAN, IRANIAN MINISTRY OF INFORMATION AND 31 SECURITY, AYATOLLAH ALI HOSEINI KHAMENEI, ALI AKBAR HASHEMI- 32 RAFSANJANI, ALI FALLAHIAN-KHUZESTANI, 33 34 Defendants, 35 36 BANK MELLI IRAN NEW YORK REPRESENTATIVE OFFICE, 37 38 Respondent-Appellant, 39 40 BANK SADERAT IRAN, NEW YORK REPRESENTATIVE OFFICE, 41 BANK SEPAH IRAN, NEW YORK REPRESENTATIVE OFFICE 42 43 Respondents, 44 45 - - - - - - - - - - - - - - - - - - - - - - X 46
-1- 1 Before: KEARSE and HALL, Circuit Judges, and RAKOFF, District 2 Judge.* 3 4 Appeal by respondent Bank Melli Iran from a ruling of the 5 United States District Court for the Eastern District of New York 6 (Leonard D. Wexler, Judge) granting plaintiff’s motion for 7 appointment of receiver to attach respondent’s property in 8 satisfaction of a prior judgment. 9 10 Affirmed.
11 LAINA C. LOPEZ, Berliner, Corcoran & Rowe, 12 LLP, Washington, DC (Thomas G. Corcoran, Jr., 13 Berliner, Corcoran & Rowe, LLP, Washington, 14 DC, John N. Romans, Law Office of John N. 15 Romans, Mamaroneck, NY, on the brief), for 16 Respondent-Appellant. 17 18 ROBERT J. TOLCHIN, Jaroslawicz & Jaros, New 19 York, NY, for Plaintiff-Appellee. 20
21 RAKOFF, District Judge:
22 On February 25, 1996, Ira Weinstein, a United States citizen
23 and resident of New York, was severely injured during a suicide
24 bombing in Jerusalem organized by the terrorist organization
25 Hamas. On April 13, 1996, Weinstein died from those injuries.
26 See Weinstein v. Islamic Rep. of Iran, 184 F. Supp. 2d 13, 16-17
27 (D.D.C. 2002). On October 27, 2000, his widow, another
28 administrator of his estate, and his children brought suit for
29 wrongful death and other torts against the Islamic Republic of
30 Iran (“Iran”), the Iranian Ministry of Information and Security,
31 and three Iranian officials, alleging that these defendants had
* The Honorable Jed S. Rakoff, United States District Judge for the Southern District of New York, sitting by designation.
-2- 1 provided substantial monetary support for Hamas’s terrorist
2 attacks. See id. at 21-22. After defendants failed to appear,
3 the district court determined that the plaintiffs had established
4 their “claim or right to relief by evidence satisfactory to the
5 court,” 28 U.S.C. § 1608(e), and entered default judgment for
6 plaintiffs in the amount of approximately $183,200,000. See id.
7 at 16, 22-26.
8 Plaintiffs registered the judgment in the U.S. District
9 Court for the Eastern District of New York on October 8, 2002,
10 and served an information subpoena on Bank of New York that
11 eventually led to the identification of respondent Bank Melli
12 Iran (“Bank Melli”) as a possible instrumentality of the Iranian
13 state. See Weinstein v. Islamic Rep. of Iran, 299 F. Supp. 2d
14 63, 64-65 (E.D.N.Y. 2004). The district court found it
15 unnecessary to determine whether Bank Belli was an “agency or
16 instrumentality” for purposes of the TRIA because the court
17 determined that Bank Melli’s accounts at the Bank of New York
18 were unattachable. Id. at 74-76. However, on October 31, 2007,
19 one of the plaintiff-judgment creditors, Jennifer Weinstein Hazi
20 (“Hazi”), filed a motion in the Eastern District proceeding,
21 seeking appointment of a receiver (pursuant to Rule 69 of the
22 Federal Rules of Civil Procedure and Section 5228(a) of the New
23 York Civil Practice Law and Rules), to sell real property owned
24 by respondent Bank Melli in Forest Hills, Queens, which plaintiff
-3- 1 sought to attach and sell in partial satisfaction of the judgment
2 against the defendants. Hazi argued that the Forest Hills
3 property was now subject to attachment pursuant to the Terrorism
4 Risk Insurance Act of 2002 (“TRIA”), § 201(a), Pub. L. No.
5 107-297, 116 Stat. 2322, 2337, codified at 28 U.S.C. § 1610 note,
6 because on October 25, 2007, Bank Melli had been designated by
7 the United States Department of Treasury, Office of Foreign
8 Assets Control (“OFAC”) as a “proliferat[or] of weapons of mass
9 destruction,” and its assets had been frozen. See Executive
10 Order 13,382, 70 Fed. Reg. 38,567 (June 28, 2005).1
11 On February 21, 2008, Bank Melli moved to dismiss the
12 proceeding against it and to stay the appointment of a receiver
13 pending resolution of its motion to dismiss. In its motion to
14 dismiss, Bank Melli argued, inter alia, that attachment and sale
15 of the Forest Hills property would violate the Treaty of Amity
16 between the United States and Iran, that attachment and sale
17 would constitute a taking not for a public purpose and without
18 just compensation in violation of the Takings Clause of both the
19 Fifth Amendment of the United States Constitution and Article
1 Executive Order 13,382 was issued by the President pursuant to the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701, 1702, and provided that all property and interests in property in the United States of persons and entities listed in the order or subsequently listed “are blocked and may not be transferred, paid, exported, withdrawn, or otherwise dealt in.” Exec. Order 13,382, 70 Fed. Reg. 38,567 (June 28, 2005). Bank Melli was added to the list on October 25, 2007.
-4- 1 IV.2 of the Treaty of Amity, and that the blocking of its assets
2 violated the so-called “Algiers Accords” and thus attachment and
3 sale would constitute a further violation of the Accords. On
4 June 5, 2009, after receiving submissions from both Hazi and Bank
5 Melli,2 the district court (Wexler, Judge) denied Bank Melli’s
6 motion to dismiss and granted Hazi’s motion to appoint a
7 receiver, but stayed the proceedings pending this appeal.
8 DISCUSSION
9 A. JURISDICTION
10 On this appeal, Bank Melli argues for the first time that
11 the district court lacked ancillary jurisdiction to entertain
12 Hazi’s motion to appoint a receiver. According to Bank Melli,
13 Hazi’s motion was not simply a proceeding to collect on a
14 debtor’s assets, but rather “an independent controversy with a
15 new party in an effort to shift liability,” Epperson v. Entm’t
16 Express, Inc., 242 F.3d 100, 106 (2d Cir. 2001); see also Peacock
17 v. Thomas, 516 U.S. 349, 357 (1996), for which TRIA § 201(a) did
18 not provide an independent source of jurisdiction. Although not
19 raised below, subject matter jurisdiction may be raised at any
20 point, Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567,
21 576 (2004); Cave v. E. Meadow Union Free Sch. Dist., 514 F.3d
2 Although the district court also invited the United States to file its own submission to address the issues in the case, the Government declined to do so.
-5- 1 240, 250 (2d Cir. 2008), and so the Court must address this
2 threshold matter.3
3 The Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §
4 1602 et seq., provides the exclusive basis for subject matter
5 jurisdiction over all civil actions against foreign state
6 defendants, and therefore for a court to exercise subject matter
7 jurisdiction over a defendant the action must fall within one of
8 the FSIA’s exceptions to foreign sovereign immunity. See, e.g.,
9 Saudi Arabia v. Nelson, 507 U.S. 349, 351 (1993); Argentine Rep.
10 v. Amerada Hess Shipping Corp., 488 U.S. 428, 434-35 (1989);
11 Verlinden B.V. v. Cent. Bank of Nig., 461 U.S. 480, 493 (1983).
12 In the underlying action that gave rise to the judgment on which
13 plaintiff now seeks to collect, the district court exercised
14 subject matter jurisdiction over Iran and the other defendants
15 under 28 U.S.C. § 1605(a)(7), which abrogates immunity for those
16 foreign states officially designated as state sponsors of
17 terrorism by the Department of State where the foreign state
18 commits a terrorist act or provides material support for the
19 commission of a terrorist act and the act results in the death or
3 The district court did, however, cite for other purposes to a lower court decision that also considered the jurisdiction issue. See Weininger v. Castro, 462 F. Supp. 2d 457, 490 (S.D.N.Y. 2006) (holding that the TRIA “provides [an] independent basis of subject matter jurisdiction in this enforcement proceeding against these [foreign sovereign] entities”).
-6- 1 personal injury of a United States citizen.4 See Weinstein, 184
2 F. Supp. 2d at 20-21. When such an exception applies, “the
3 foreign state shall be liable in the same manner and to the same
4 extent as a private individual under like circumstances . . . .”
5 28 U.S.C. § 1606; see also Verlinden, 461 U.S. at 488-89.
6 Bank Melli was not itself a defendant in the underlying
7 action. However, the FSIA has a separate section, Section 1609,
8 that provides that where a valid judgment has been entered
9 against a foreign sovereign, property of that foreign state is
10 immune from attachment and execution except as provided in the
11 subsequent sections, Sections 1610 and 1611. 28 U.S.C. § 1609.
12 Section 201(a) of the TRIA, codified as a note to Section 1610 of
13 the FSIA, provides as follows:
14 Notwithstanding any other provision of law, and except
15 as provided in subsection (b), in every case in which a
16 person has obtained a judgment against a terrorist
17 party on a claim based on an act of terrorism, or for
18 which a terrorist party is not immune under [28 U.S.C.
19 § 1605(a)(7)], the blocked assets of that terrorist
20 party (including the blocked assets of any agency or
4 In 2008, Congress repealed § 1605(a)(7) and created a new section specifically devoted to the terrorism exception to the jurisdictional immunity of a foreign state. See Pub. L. 110-181, Div. A, § 1803, Jan. 28, 2008, 122 Stat. 341 (repealing 28 U.S.C. § 1605(a)(7) and creating 28 U.S.C. § 1605A). To the extent relevant to this case, § 1605A provides for the same exceptions to foreign sovereign immunity as the repealed section.
-7- 1 instrumentality of that terrorist party) shall be
2 subject to execution or attachment in the aid of
3 execution in order to satisfy such judgment to the
4 extent of any compensatory damages for which such
5 terrorist party has been adjudged liable.
6 TRIA § 201(a), 116 Stat. at 2337 (emphasis supplied).
7 The parties do not dispute that each of the elements of
8 Section 201(a) is satisfied here. Iran has been designated a
9 terrorist party pursuant to section 6(j) of the Export
10 Administration Act of 1979, 50 U.S.C. App. § 2405(j), beginning
11 January 19, 1984, see Weinstein, 184 F. Supp. 2d at 20, and
12 therefore is a “terrorist party” as defined by TRIA § 201(d)(4),
13 116 Stat. at 2340. The district court in the underlying action
14 found jurisdiction under 28 U.S.C. § 1605(a)(7), and thus Iran
15 was not immune from jurisdiction in the original proceeding. See
16 id. at 20-21. Bank Melli’s assets were “blocked” as of October
17 2007, designated as such pursuant to Executive Order 13,382 and
18 50 U.S.C. §§ 1701, 1702. Finally, Bank Melli concedes that it is
19 an instrumentality of Iran.
20 Bank Melli contends, however, that the above-quoted language
21 of the TRIA does not provide an independent basis for
22 jurisdiction over an instrumentality of a sovereign state when
23 the instrumentality was not itself a party to the underlying tort
24 action that gave rise to judgment on which plaintiff now seeks to
-8- 1 recover. Rather, Bank Melli argues, Section 201(a) of the TRIA
2 simply provides an additional ground for abrogating immunity from
3 attachment for a party that has been the subject of a valid
4 judgment, but does not provide jurisdiction for a court to permit
5 attachment against a party that was not itself the subject of the
6 underlying judgment.
7 Although novel,5 Bank Melli’s argument is belied by the
8 plain language of Section 201(a), as well as by its history and
9 purpose. Section 201(a) clearly states that “in every case in
10 which a person has obtained a judgment against a terrorist party
11 . . ., the blocked assets of that terrorist party (including the
12 blocked assets of any agency or instrumentality of that terrorist
13 party) shall be subject to execution or attachment . . . .” TRIA
14 § 201(a), 116 Stat. at 2337 (emphasis supplied). Under Bank
15 Melli’s interpretation, the parenthetical language in Section
16 201(a) of the TRIA that permits attachment of funds from agencies
17 and instrumentalities would be rendered superfluous, since the
18 agency or instrumentality would itself have been a “terrorist
19 party” against which the underlying judgment had been obtained.
20 See, e.g., Corley v. United States, 129 S. Ct. 1558, 1566 (2009)
5 To date, no appellate court has addressed this issue, although several district courts have found that the TRIA grants subject matter jurisdiction for execution and attachment proceedings over parties against whom there exist underlying judgments. See, e.g., Weininger, 462 F. Supp. 2d at 477-89; Rubin v. Islamic Rep. of Iran, 456 F. Supp. 2d 228 (D. Mass. 2006).
-9- 1 (“‘[a] statute should be construed so that effect is given to all
2 its provisions, so that no part will be inoperative or
3 superfluous, void or insignificant . . . .’” (quoting Hibbs v.
4 Winn, 542 U.S. 88, 101 (2004)). Instead, however, the statute
5 clearly differentiates between the party that is the subject of
6 the underlying judgment itself, which can be any terrorist party
7 (here, Iran), and parties whose blocked assets are subject to
8 execution or attachment, which can include not only the terrorist
9 party but also “any agency or instrumentality of that terrorist
10 party.” If this did not constitute an independent grant of
11 jurisdiction over the agencies and instrumentalities, the
12 parenthetical would be a nullity.
13 Although Bank Melli points out that Section 201(a) of the
14 TRIA has been codified as a note to Section 1610 rather than in
15 the sections of the FSIA more directly addressed to exceptions to
16 jurisdictional immunity, the plain language of the statute cannot
17 be overcome by its placement in the statutory scheme. See
18 Padilla v. Rumsfeld, 352 F.3d 695, 721 (2d Cir. 2003) (“No
19 accepted canon of statutory interpretation permits ‘placement’ to
20 trump text, especially where, as here, the text is clear and our
21 reading of it is fully supported by the legislative history.”),
22 rev’d on other grounds by Rumsfeld v. Padilla, 542 U.S. 426
23 (2004); see also Fla. Dep’t of Revenue v. Piccadilly Cafeterias,
24 Inc., 128 S. Ct. 2326, 2336 (2008) (noting that a statutory
-10- 1 provision’s placement in a particular section “cannot substitute
2 for the operative text of the statute”). This is even more
3 clearly true in this case where the operative language begins
4 with the phrase “[n]otwithstanding any other provision of law,”
5 thus making plain that the force of the section extends
6 everywhere.
7 Any inquiry into the meaning of a statute generally “ceases
8 ‘if the statutory language is unambiguous and the statutory
9 scheme is coherent and consistent.’” Barnhart v. Sigmon Coal
10 Co., 534 U.S. 438, 450 (2002) (quoting Robinson v. Shell Oil Co.,
11 519 U.S. 337, 340 (1997) (other internal quotation marks
12 omitted)); see also Universal Church v. Geltzer, 463 F.3d 218,
13 223 (2d Cir. 2006). But even if, contrary to fact, there were an
14 ambiguity here, it would be resolved in plaintiff’s favor by the
15 legislative history. According to Senator Harkin, one of TRIA’s
16 sponsors:
17 The purpose of title II is to deal comprehensively with the
18 problem of enforcement of judgments issued to victims of
19 terrorism in any U.S. court by enabling them to satisfy such
20 judgments from the frozen assets of terrorist parties. . . .
21 Title II operates to strip a terrorist state of its immunity
22 from execution or attachment in aid of execution by making
23 the blocked assets of that terrorist state, including the
24 blocked assets of any of its agencies or instrumentalities,
-11- 1 available for attachment and/or execution of a judgment
2 issued against that terrorist state. Thus, for purposes of
3 enforcing a judgment against a terrorist state, title II
4 does not recognize any juridical distinction between a
5 terrorist state and its agencies or instrumentalities.
6 148 Cong. Rec. S11524, at S11528 (Nov. 19, 2002) (statement of
7 Sen. Harkin). Senator Harkin further stated that TRIA
8 “establishes once and for all, that such judgments are to be
9 enforced against any assets available in the U.S., and that the
10 executive branch has no statutory authority to defeat such
11 enforcement under standard judicial processes, except as
12 expressly provided in this act.” Id.
13 Accordingly, we find it clear beyond cavil that Section
14 201(a) of the TRIA provides courts with subject matter
15 jurisdiction over post-judgment execution and attachment
16 proceedings against property held in the hands of an
17 instrumentality of the judgment-debtor, even if the
18 instrumentality is not itself named in the judgment.
19 B. CONSTITUTIONALITY OF TRIA
20 The underlying judgment which plaintiff seeks to satisfy was
21 obtained in February 2002, but the TRIA was not enacted until
22 November 2002 and Bank Melli was not designated a “proliferat[or]
23 of weapons of mass destruction” until 2007. In another argument
24 raised for the first time on appeal, Bank Melli argues that the
-12- 1 TRIA, as here applied, is unconstitutional because it “mandates
2 the reopening of a final judgment in violation of the separation
3 of powers doctrine of Article III of the U.S. Constitution.”
4 Thus, to avoid any constitutional problem, Bank Melli urges this
5 Court to read the TRIA as applying, prospectively, only to
6 judgments rendered final after the TRIA’s enactment, and thus not
7 to apply here.
8 Although plaintiff contends, with some force, that the
9 constitutional challenge has been waived for failure to raise it
10 below, a claim that a legislative enactment intrudes on the
11 courts’ powers is the kind of claim that appropriately may be
12 considered here, even if for the first time. See, e.g., Freytag
13 v. Comm’r, 501 U.S. 868, 879 (1991) (rejecting waiver and
14 addressing constitutional challenge because of “the strong
15 interest of the federal judiciary in maintaining the
16 constitutional plan of separation of powers”) (internal quotation
17 marks omitted).
18 Bank Melli’s constitutional challenge is largely derived
19 from Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995), in
20 which the Supreme Court held that a section of the Securities
21 Exchange Act of 1934 violated separation of powers because it
22 required federal courts retroactively to reopen final money
23 judgments that had been dismissed as barred under the statute of
24 limitations. See id. at 219. “[R]etroactive legislation [that]
-13- 1 requires its own application in a case already finally
2 adjudicated . . . does no more and no less than ‘reverse a
3 determination once made, in a particular case’ [and thus] exceeds
4 the powers of Congress.” Id. at 225 (quoting The Federalist No.
5 81, at 545 (J. Cooke, ed., 1961)).
6 Here, however, no such revision of the 2002 judgment is
7 effectuated by the attachment of Bank Melli’s property pursuant
8 to the TRIA. Indeed, the judgment itself is unaffected. What
9 the TRIA did, instead, was to override the Supreme Court’s
10 reading in First Nat’l City Bank v. Banco Para El Comercio
11 Exterior de Cuba, 462 U.S. 611, 627-28 (1983) (“Bancec”), that
12 “duly created instrumentalities of a foreign state are to be
13 accorded a presumption of independent status.” Id. at 627. This
14 presumption related to enforceability of judgments against state
15 instrumentalities, but it had not nothing to do with the
16 rendering of the judgment itself. Moreover, even under Bancec,
17 the presumption could be overcome. Id. at 629. The effect of
18 the TRIA, therefore, was simply to render a judgment more readily
19 enforceable against a related third party. The judgment itself
20 was in no way tampered with, and separation of powers was thus in
21 no way offended.6
6 It should be noted that Hazi seeks attachment of property in partial satisfaction only of the portion of the underlying judgment that awarded compensatory damages in her favor. See Rein v. Socialist People’s Libyan Arab Jamahiriya, 162 F.3d 748, 762 (2d Cir. 1998) (“Where a retroactive law is civil rather than
-14- 1 Bank Melli also argues that the delegation of authority to
2 the Treasury Department to determine which entities’ assets would
3 be “blocked” is, as applied here, tantamount to an
4 unconstitutional vesting of “review of the decisions of Article
5 III courts in officials of the Executive Branch.” Plaut, 514
6 U.S. at 218; see Hayburn’s Case, 2 U.S. (2 Dall.) 409 (1792).
7 Here, however, it is clear that no official from the Executive
8 Branch stands in direct review of the district court’s decision
9 regarding execution and attachment of assets pursuant to the
10 TRIA. OFAC simply made a factual determination that Bank Melli
11 was a proliferator of weapons of mass destruction, pursuant to
12 which Bank Melli’s assets were “blocked.” In so doing, OFAC did
13 not in any way review or alter the district court’s original
14 entry of the default judgment.
15 Nor does the district court’s reliance on OFAC’s
16 determination for its exercise of subject matter jurisdiction run
17 afoul of separation of powers. In Jones v. United States, 137
18 U.S. 202 (1890), the Supreme Court held that the district court
19 had subject matter jurisdiction over a murder trial where the
20 crime occurred on an island that the State Department had deemed
criminal, it is only the imposition of punitive damages that might, in particular circumstances, raise a constitutional problem.”). Of the total judgment of approximately $183,200,000, approximately $33,200,000 was compensatory damages, of which $5,000,000 was allocated to Hazi. Weinstein, 184 F. Supp. 2d at 22-25.
-15- 1 was “appertaining to the United States.” Id. at 224. In that
2 case, the exercise of subject matter jurisdiction based on an
3 Executive Branch determination did not exceed the bounds of
4 Article III. Similarly, in Matimak Trading Co. v. Khalily, 118
5 F.3d 76, 83-84 (2d Cir. 1997), overruled in part on other grounds
6 by JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure
7 Ltd., 536 U.S. 88 (2002), this Court found that alienage
8 jurisdiction could depend on whether the Executive Branch had
9 deemed a given foreign entity a “state,” and because the foreign
10 entity in question had not been recognized as a “state,”
11 jurisdiction was deemed lacking.
12 It is true that, in Rein, 162 F.3d at 763, this Court, in
13 dicta, raised the question of whether after the passage of the
14 FSIA, designation of a foreign state as a sponsor of terrorism by
15 a branch other than Congress raised a potential issue of
16 separation of powers. Specifically, in Rein, we rejected Libya’s
17 argument that the State Department’s designation of Libya as a
18 state sponsor of terrorism violated separation of powers, since
19 Libya had already been designated as such when section 1605(a)(7)
20 was added to the FSIA; but we queried whether a different “issue
21 of delegation might be presented if another foreign sovereign --
22 one not identified as a state sponsor of terrorism when §
23 1605(a)(7) was passed -- was placed on the relevant list by the
24 State Department and, on being sued in federal court, interposed
-16- 1 the defense that Libya now raises.” 162 F.3d at 764; see also
2 Miller v. FCC, 66 F.3d 1140, 1144 (11th Cir. 1995) (noting that
3 Congress cannot delegate the power of any federal agency to “oust
4 state courts and federal district courts of subject matter
5 jurisdiction”); United States v. Mitchell, 18 F.3d 1355, 1360 n.7
6 (7th Cir. 1994) (raising doubts about whether Congress could
7 delegate its control over federal court jurisdiction to any
8 agency or commission).
9 In effect, Bank Melli now raises, albeit obliquely, the kind
10 of issue left unaddressed in Rein. Like Libya, Iran was already
11 deemed a state sponsor of terrorism when the relevant provision
12 of the FSIA was applied to abrogate foreign sovereign immunity in
13 the district court. However, here, the district court’s
14 jurisdiction over a proceeding to attach Bank Melli’s assets
15 depended, at least in part, on OFAC’s subsequent determination
16 that Bank Melli was a proliferator of weapons of mass
17 destruction. Reaching only the instant variation on the issue
18 alluded to in the dicta in Rein, we hold that Congress, by virtue
19 of providing subject matter jurisdiction over execution and
20 attachment proceedings based in part on OFAC’s determination of
21 what assets are blocked, has not unconstitutionally delegated its
22 authority to the Executive Branch.
23 The TRIA provides jurisdiction for execution and attachment
24 proceedings to satisfy a judgment for which there was original
-17- 1 jurisdiction under the FSIA (which is not challenged here) if
2 certain statutory elements are satisfied. The fact that
3 satisfaction of one of those statutory elements -- that Bank
4 Melli’s assets were blocked -- was based on the factual
5 determination by a coordinate branch that Bank Melli supported
6 terrorist activity is not, on its own, a delegation of Congress’s
7 authority over the courts’ subject matter jurisdiction that
8 exceeds the boundaries of Article III. The TRIA only delegates
9 to the Executive the authority to make a factual finding upon
10 which jurisdiction turns in part. See, e.g., Owens v. Rep. of
11 the Sudan, 531 F.3d 884, 891 (D.C. Cir. 2008) (rejecting Sudan’s
12 argument that the FSIA unconstitutionally delegated subject
13 matter jurisdiction to Executive Branch because the FSIA only
14 granted “authority to make a factfinding upon which jurisdiction
15 partially rests”). That factfinding, moreover, is one peculiarly
16 within the expertise of the Executive, a fact Congress itself
17 implicitly recognized in creating the TRIA.
18 In short, none of Bank Melli’s belatedly-raised
19 constitutional arguments persuades the Court that there has been
20 any defect in the application of the TRIA in this case.
21 C. TRIA & TREATY OF AMITY
22 We next turn to the arguments that Bank Melli did raise in
23 the district court, the first of which concerns the Treaty of
24 Amity (the “Treaty”) that the United States and Iran (then
-18- 1 governed by the Shah) signed in 1955, which took effect in 1957
2 and still remains in place. Treaty of Amity, Economic Relations,
3 and Consular Rights, U.S.-Iran, Aug. 15, 1955, 8 U.S.T. 899.
4 Article III.1 of the Treaty provides that “[c]ompanies
5 constituted under the applicable laws of either High Contracting
6 Party shall have their juridical status recognized within the
7 territories of the other High Contracting Party.” Id., art.
8 III.1. Article IV.2 adds that “[p]roperty of nationals and
9 companies of either High Contracting Party, including interest in
10 property, shall receive the most constant protection and security
11 within the territories of the other High Contracting Party, in no
12 case less than that required by international law.” Id., art.
13 IV.2.
14 Bank Melli asserts that these provisions, read together,
15 require that Iranian companies be treated as distinct and
16 independent entities from their sovereign. But this is not
17 correct. As the district court noted, the key provision, Article
18 III.1., is “substantively identical” to a provision in a number
19 of Friendship, Commerce, and Navigation (“FCN”) treaties
20 negotiated by the U.S. following World War II. In Sumitomo Shoji
21 America, Inc. v. Avagliano, 457 U.S. 176 (1982), the Supreme
22 Court held that these provisions are designed, not to give
23 separate juridical status to instrumentalities of the sovereign
24 entity, but simply “to give corporations of each signatory legal
-19- 1 status in the territory of the other party, and to allow them to
2 conduct business in the other country on a comparable basis with
3 domestic firms.” Id. at 185-86.
4 Bank Melli argues that Sumitomo only addressed the language
5 in the provision of the U.S.-Japan FCN Treaty that a company
6 “constituted under the applicable laws and regulations within the
7 territories of either Party shall be deemed companies thereof,”
8 but did not address the rest of the provision, “and shall have
9 their juridical status recognized within the territories of the
10 other Party.” While it is true that the Court focused its
11 analysis on the phrase “shall be deemed companies thereof,” it
12 went on to explain that the intent behind the FCN treaties as a
13 whole was simply to grant legal status to corporations of each of
14 the signatory countries in the territory of the other, thus
15 putting the foreign corporations on equal footing with domestic
16 corporations. 457 U.S. at 185-86. There is, therefore, no
17 conflict between the TRIA and the Treaty.
18 Moreover, even assuming, arguendo, that there were a
19 conflict between the two, the TRIA would have to be read to
20 abrogate that portion of the Treaty. Although a “‘treaty will
21 not be deemed to have been abrogated or modified by a later
22 statute unless such purpose on the part of Congress has been
23 clearly expressed,’” Trans World Airlines, Inc. v. Franklin Mint
24 Corp., 466 U.S. 243, 252 (1984) (quoting Cook v. United States,
-20- 1 288 U.S. 102, 120 (1933)), Section 201(a) of the TRIA expressly
2 states that it permits attachment of the assets of a foreign
3 sovereign’s instrumentalities in satisfaction of a terrorism-
4 related judgment against the foreign sovereign “[n]otwithstanding
5 any other provision of law” (emphasis supplied). See Cisneros v.
6 Alpine Ridge Group, 508 U.S. 10, 18 (1993) (noting that the
7 Courts of Appeals have regularly interpreted such
8 “notwithstanding” provisions “to supersede all other laws”); see
9 also Ministry of Defense and Support for the Armed Forces of the
10 Islamic Rep. of Iran v. Elahi, 129 S. Ct. 1732 (2009); Hill v.
11 Rep. of Iraq, No. 99 CV 03346TP, 2003 WL 21057173, at *2, 2003
12 U.S. Dist. LEXIS 3725, at *10-11 (D.D.C. Mar. 11, 2003) (holding
13 that the “notwithstanding provision” is “unambiguous and
14 effectively supersedes all previous laws”).
15 D. TAKINGS CLAUSE
16 In the next of the arguments raised below, Bank Melli argues
17 that the attachment here in issue constitutes a per se taking of
18 physical property, not for a public purpose and without just
19 compensation, and therefore offends the Takings Clause of the
20 Fifth Amendment of the U.S. Constitution, as well as Article IV.2
21 of the Treaty of Amity. See U.S. Const., amend V (“nor shall
22 private property be taken for public use, without just
23 compensation”); Treaty, art. IV.2 (property of Iranian companies
-21- 1 “shall not be taken except for a public purpose, nor shall it be
2 taken without the prompt payment of just compensation”).
3 The argument is without merit. Bank Melli was added to the
4 OFAC list because of its unlawful actions in support of
5 terrorism. In so doing, it had clear notice from the TRIA,
6 enacted five years earlier, that such actions could result in the
7 designation and blocking of its assets under the TRIA, which
8 could in turn subject them to attachment. See Paradissiotis v.
9 United States, 304 F.3d 1271, 1275-76 (Fed. Cir. 2002) (rejecting
10 a takings clause claim that OFAC’s freezing of the plaintiff’s
11 stock options, which eventually became valueless, constituted a
12 taking without just compensation); see also Branch v. United
13 States, 69 F.3d 1571, 1576 (Fed. Cir. 1995) (noting that seizure
14 of assets to offset tax liability or pay a civil penalty would
15 not constitute a taking).
16 Here, where the underlying judgment against Iran has not
17 been challenged, seizure of Bank Melli’s property, as an
18 instrumentality of Iran, in satisfaction of that liability does
19 not constitute a “taking” under the Takings Clause. See Branch,
20 69 F.3d at 1577 (noting absence of “any principle of takings law
21 under which an imposition of liability is deemed a per se taking
22 as to any party that cannot pay it”). Instead, Bank Melli’s own
23 conduct as a funder of weapons of mass destruction opened it to
24 liability for judgments already entered against Iran. See, e.g.,
-22- 1 Meriden Trust and Safe Deposit Co. v. FDIC, 62 F.3d 449, 455 (2d
2 Cir. 1995) (citing cases holding that deprivation of property
3 resulting from voluntary conduct cannot constitute a “taking”).
4 As the Supreme Court has noted, the Takings Clause is
5 designed “to prevent the government ‘from forcing some people
6 alone to bear public burdens which, in all fairness and justice,
7 should be borne by the public as a whole.’” E. Enters. v. Apfel,
8 524 U.S. 498, 522 (1998) (quoting Armstrong v. United States, 364
9 U.S. 40, 49 (1960)). Here, where Bank Melli’s assets are subject
10 to attachment to satisfy a judgment against its foreign
11 sovereign, the underlying purpose of the Takings Clause is in no
12 way violated by attachment of Bank Melli’s assets.
13 Finally, Bank Melli does not advance any argument to find
14 that the Takings Clause in the Treaty of Amity would require a
15 different analysis. Cf. Kahn Lucas Lancaster v. Lark Int’l, 186
16 F.3d 210, 215 (2d Cir. 1999) (treaties are construed in much the
17 same manner as statutes and district court interpretations are
18 subject to de novo review).
19 E. ALGIERS ACCORDS
20 In the last of the arguments it raised below, Bank Melli
21 argues that the attachment here in issue violates the so-called
22 Algiers Accords (the “Accords”). In 1980, the United States and
23 Iran, under the auspices of the Government of Algeria, entered
24 into the Accords to settle a number of a disputes between the two
-23- 1 countries, in particular, matters arising out of the hostage
2 crisis that occurred on November 4, 1979 in Tehran in which the
3 Iranian Government seized the U.S. Embassy and held captive 52
4 U.S. citizens.7 Previously, in response to the hostage crisis,
5 President Carter had issued Executive Order 12,170, which
6 “blocked all property and interests in property of the Government
7 of Iran, its instrumentalities and controlled entities and the
8 Central Bank of Iran which are or become subject to the
9 jurisdiction of the United States . . . .” Exec. Order 12,170,
10 44 Fed. Reg. 65,729 (Nov. 14, 1979). As part of the Accords, the
11 United States agreed to “restore the financial position of Iran,
12 in so far as possible, to that which existed prior to November
13 14, 1979,” and to “commit[] itself to ensure the mobility and
14 free transfer of all Iranian assets within its jurisdiction.” 20
15 I.L.M. at 224. The United States also agreed, subject to some
16 exceptions to “arrange, subject to the provisions of U.S. law
17 applicable prior to November 14, 1979, for the transfer to Iran
7 The Accords are comprised primarily of two documents: the Declaration of the Government of the Democratic and Popular Republic of Algeria (Jan. 19, 1981), and The Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the United States of America and the Government of the Islamic Republic of Iran (Jan. 19, 1981), reprinted in 20 I.L.M. 223 (1981); 81 Dep’t of State Bull. No. 2047, Feb. 1981 at 1. See Iran Aircraft Industries v. Avco Corp., 980 F.2d 141, 143 (2d Cir. 1992).
-24- 1 of all Iranian properties which are located in the United States
2 and abroad.” Id. at 227.
3 Bank Melli argues that, because the obligations of the
4 United States under the Accords are ongoing, and the Forest Hills
5 property at issue was owned by Bank Melli prior to November 14,
6 1979 (making it a blocked asset under Executive Order 12,170) the
7 property is subject to these ongoing Accords and therefore the
8 subsequent “blocking” of the asset under Executive Order 13,382
9 violated the Accords.
10 This argument confuses the United States’s obligation to
11 unblock assets that had been blocked based on pre-Accords
12 violations with post-Accords blocking based on post-Accords
13 violations. As the district court noted in an earlier decision,
14 after the United States and Iran entered into the Accords most
15 Iranian assets were automatically unblocked. See Weinstein, 299
16 F. Supp. 2d at 67-68. Since the Forest Hills property was no
17 longer blocked after the Accords, Bank Melli was entitled to
18 exercise any and all rights of ownership, including sale of the
19 property, until it was subsequently blocked on October 25, 2007.
20 Although Bank Melli argues that no specific expiration date was
21 given in the Accords, and therefore the obligations of the U.S.
22 are ongoing, nothing in the Accords suggests that the United
23 States is precluded from blocking Iranian assets based on
24 subsequent events unrelated to the hostage crisis. Indeed, the
-25- 1 United States has implemented several sanctions programs against
2 Iran, subsequent to the Accords, that have had the effect of
3 limiting the mobility of Iranian property. See, e.g., Executive
4 Order 12,613, 52 Fed. Reg. 41940 (Oct. 29, 1987) (prohibiting,
5 pursuant to 3 U.S.C. § 301 and Section 505 of the International
6 Security and Development Cooperation Act of 1985, 22 U.S.C. §
7 2349aa-9, certain Iranian imports); see also Weinstein, 299 F.
8 Supp. 2d at 68 (providing overview of executive orders imposing
9 sanctions that affected property controlled or owned by Iran).
10 Nor is Roeder v. Islamic Rep. of Iran, 333 F.3d 228 (D.C.
11 Cir. 2003), upon which Bank Melli heavily relies, to the
12 contrary. In Roeder, the D.C. Circuit found that, despite a
13 Congressional amendment to the FSIA specifically intended to
14 abrogate Iran’s sovereign immunity for that particular case,
15 plaintiff’s action was still nevertheless barred because it was
16 based on the events of the November 4, 1979 hostage crisis and
17 the Accords “bar[red] and preclude[d] the prosecution against
18 Iran of any pending or future claim of . . . a United States
19 national arising out of the events” of the seizure and detention
20 of the 52 U.S. citizens. Id. at 236 (internal quotation marks
21 omitted). It concluded that the specific amendment to the FSIA
22 in no way addressed the Accords and, given the express statement
23 in the Accords barring such actions, refused to interpret the
24 amendment to the FSIA, despite its being passed specifically to
-26- 1 permit plaintiffs to go forward with their case, as abrogating or
2 modifying that agreement without an express statement from
3 Congress to that effect. Id. at 237-38. While the Accords
4 prevent suits arising out the hostage crisis, the language
5 regarding Iranian assets in no way suggests that Iranian assets
6 would be immunized from blocking for all time. The blocking of
7 assets undertaken by President Carter in his Executive Order was
8 done in response to the particular events of November 1979, and
9 the Accords unblocked those assets. Since nothing in the Accords
10 suggests that the United States has a limitless obligation to
11 ensure that Iranian assets remain free from attachment based on
12 events unrelated to the 1979 hostage crisis, Bank Melli’s
13 arguments that blocking its assets and subsequent attachment of
14 those assets would violate the Accords are simply unavailing.
15 CONCLUSION
16 The Court has considered Bank Melli’s other arguments and
17 finds them without merit. Accordingly, for the foregoing
18 reasons, the Court affirms the district court’s decision to grant
19 plaintiff’s motion and appoint a receiver to attach Bank Melli’s
20 property in partial satisfaction of the judgment against Iran and
21 to deny Bank Melli’s motion to dismiss.
-27-