Possible Participation by the United States in Islamic Republic of Iran v. Pahlavi

• Court: Department of Justice Office of Legal Counsel
• Decided: January 2, 1980
• Status: Published

Opinion

Possible Participation by the United States in Islamic Republic o f Iran v. Pahlavi

A s lo n g as th e g o v e rn m e n t o f Iran is reco g n iz e d by th e U n ited S tates, it is e n titled to m ain tain a law su it in an y sta te o r fed eral c o u rt; h o w e v e r, th e re is a substantial a r g u ­ m en t th a t th e Iran ian g o v e rn m e n t’s suit ag ain st th e S h ah to re c o v e r alleg ed ly m isap p ro ­ p ria te d g o v e rn m e n ta l funds sh o u ld be sta y ed o r dism issed w ith o u t p re ju d ic e in light o f I ra n 's m assive b re a c h e s o f its tre a ty o b lig atio n s to th e U n ited S tates an d in tern atio n al law .

T h e c o u r ts h av e reco g n iz e d th e a p p ro p ria te n e ss o f d e fe rrin g to th e E x e c u tiv e ’s foreign p o lic y d e te rm in a tio n s in c o n n e c tio n w ith claim s o r defenses based on d o c trin e s o f fo reig n so v e re ig n im m u n ity o r a ct o f state.

T h e G o v e rn m e n t’s c o n c e rn s o v e r th e effe ct o f th e litigation on o u r fo reig n po licy p ro v id e a su fficien t basis to su p p o rt its sta n d in g to in te rv e n e in Ira n ’s suit against th e S h ah , an d th e re is p re c e d e n t to su p p o rt its in te rv e n tio n a n d assertio n o f cross-claim s u n re la te d to th e c o n tro v e rs y in suit.

A re sp e c ta b le a rg u m e n t can be m ade th at th e S h ah e n jo y s so v e reig n im m unity from suit, u n d e r th e 1976 F o re ig n . S o v e re ig n Im m u n ities A c t as w ell as c u sto m a ry in tern atio n al law , an d th e a c tio n s c o m p la in e d o f a p p e a r to be a c ts o f state. H o w e v e r, th e p resent g o v e rn m e n t o f Ira n m ay be ab le to w a iv e th e a p p lic a tio n o f e ith e r o f th ese d o c trin e s to d e fe a t its claim s ag ainst th e S h ah , sin c e b o th exist for th e b en efit o f th e sta te in q uestion an d n o t fo r th e in d iv id u als w h o lead it.

January 2, 1980

M E M O R A N D U M O P IN IO N F O R T H E A C T IN G A S S O C IA T E A T T O R N E Y G E N E R A L

T his m em orandum responds to your questions concerning the possi­ ble role o f the United States in the recently filed suit o f the Iranian governm ent against the Shah in the Suprem e C ourt o f the State o f New York. (Islam ic Republic o f Iran v. Pahlavi, No. 79-22013, Nov. 28, 1979.) T he suit advances several causes o f action concerning alleged m isappropriations o f Iranian governm ental funds by the Shah, and claims $56 billion in dam ages against him and his wife. This m em oran­ dum, w hich has been prepared in cooperation w ith the Civil Division and the U.S. A ttorney’s Office in N ew York, analyzes tw o m ajor options for the U nited States in participating in the case. First, we m ight ask for the suit’s stay o r dismissal until the hostages are released, disclaiming any intent to intim ate a position on the merits. T he differ­ ence betw een a stay and a dismissal in this situation would be that since the Shah has departed the United States, a dismissal would term inate the co u rt’s personal jurisdiction over him, leaving Iran w ith only in rem

160 actions for his assets located h ere.1 Second, we could intervene and cross-claim for relief, conceivably even relief unrelated to Iran’s claims against the Shah. This mem orandum also forecasts the ultim ate result on the merits of Iran’s claims against the Shah. O ur conclusions are these. First, as a governm ent currently recog­ nized by the United States, Iran is entitled to maintain a lawsuit in any state or federal court o f com petent jurisdiction. Second, the United States has a sufficient interest to support its standing to participate in some fashion. Third, we have a substantial argum ent that the New York state court should defer to a request by the Executive Branch to w ithhold itself from the merits, at least tem porarily. Fourth, there is a respectable argument that we may intervene and bring unrelated cross­ claims against Iran. Fifth, if the suit survives these initial procedural hurdles, there is a strong prospect that either sovereign immunity or act of state 2 doctrines will bar recovery against the Shah.

I. Iran’s Right to Sue

As a preliminary matter, it seems clear that if the United States w ere to w ithdraw diplomatic recognition from the governm ent o f Iran, the suit would be dismissed. See Guaranty Trust Co. v. United States, 304 U.S. 126 (1938). In Guaranty Trust, the C ourt observed that a foreign governm ent may not maintain a suit in our courts before its recognition by the President. It cited a num ber o f federal and state cases dismissing actions by the Soviet governm ent before its recognition, am ong them a N ew York state court case, Russian Socialist Federated Soviet Republic v. Cibrario, 235 N.Y. 255, 139 N.E. 259 (1923). A lthough w ithdraw al of recognition would have the effect o f voiding the suit against the Shah, as we discuss below it does not seem a necessary expedient to that end. M oreover, derecognition could have the collateral disadvantage o f im­ periling our present treaties with Iran, upon whose force we rely to assert the illegality of the conduct o f its governm ent.3 T he Legal A dviser’s Office at the State D epartm ent has advised us that there is presently no serious contem plation o f term inating recognition o f Iran. T here is, how ever, a range o f unfriendly actions that this governm ent might take, including severing diplom atic relations. In other cases, such

‘ T he U.S. A tto rn ey ’s O ffice in N ew York informs us that service o f process in the suit was probably effective. New York law allow s any service appropriate to meet the constitutional minimum o f notice and an opportunity to appear. A fter failing to serve the Shah personally, the plaintiffs obtained an o rder allow ing service on the hospital adm inistrator, during the Shah's stay there. 2T h e “act o f state*' doctrine provides that a court may not . review the validity o f actions taken by a foreign sovereign w ithin the sovereign’s territory. See generally, e.g., L. Henkin, Foreign A ffairs and the C onstitution 59-64, 216-21 (1972). 3 It should be noted, how ever, that o u r recent w ithdraw al o f recognition o f the Republic o f C hina (R O C ) was accom panied by a presidential assertion that it w ould not have the effect o f term inating existing treaties w ith the ROC. See the President’s M em orandum for All D epartm ents and A gencies o f D ecem ber 30, 1978.

161 as our longstanding dispute with Cuba, w e have eschewed dere­ cognition in favor o f less drastic alternatives. W hile recognition continues the courts retain jurisdiction, even in a clim ate o f m arked hostility. This is made clear by Banco N acional de Cuba v. Sabbatino, 376 U.S. 398 (1964), in w hich the C ourt held that the act o f state doctrine required A m erican courts to recognize C astro’s title to Am erican sugar w hich he had expropriated, even though the act was in violation o f international law. In Sabbatino, the C ourt responded to an argum ent that the National Bank o f Cuba, an instrum entality of the Cuban governm ent, should be denied access to the Am erican courts because “Cuba is an unfriendly pow er and does not perm it nationals o f this country to obtain relief in its courts.” T he C ourt thought that the issue was one o f national policy transcending the interests o f the parties to the action, and observed that under principles of com ity governing our relations with other nations, sovereign states are allowed to sue in our courts w henever they are recognized. T he C ourt was unresponsive to argum ents based on the severance o f diplom atic relations, com m er­ cial embargo, and freezing o f Cuban assets in this country: This C ourt w ould hardly be com petent to undertake as­ sessments o f varying degrees o f friendliness o r its absence, and, lacking some definite touchstone for determ ination, we are constrained to consider any relationship, short of war, with a recognized sovereign pow er as em bracing the privilege o f resorting to United States courts. 376 U.S. at 410. T he C ourt then rem arked that its view was “buttressed by the circum stance that none o f the acts o f our G overnm ent have been aimed at closing the courts o f this country to Cuba, and m ore particularly by the fact that the governm ent has com e to the support of C uba’s act o f state claim in this very litigation.” T he effect on a court’s jurisdiction if the G overnm ent takes the opposite position is considered below.

II. Stay or Dismissal of the Proceedings

T he essence o f our substantive argum ent for a stay or dismissal w ithout prejudice w ould be that Iran’s massive breaches of both its treaty obligations to us and international law require appropriate repris­ als to force return o f the hostages and reparations. W e would urge the court that tem porarily w ithholding the aid of A m erican courts to the Iranian governm ent in its affirm ative claims against the Shah and his assets w ould be a fair reprisal for the holding o f the hostages. In support o f our submission to the court, w e could cite analogous prece­ dent for judicial deference to executive formulations o f foreign policy in sovereign immunity and act o f state cases.

162 T he substance o f our claim would resemble our recent presentation to the W orld Court. We could begin by referring to Iran’s treaty obligations to us under the Vienna C onvention on Diplom atic and Consular Relations; the T reaty o f Am ity with Iran; and the C onvention on the Prevention and Punishment of Crimes against Internationally Protected Persons. We could then summarize the facts, indicating breaches o f a num ber o f the provisions of these treaties. W e could then point out that these treaties and surrounding principles o f custom ary international law (which include doctrines o f reprisal) have been incor­ porated as part o f our dom estic law. A rticle V I o f the C onstitution makes treaties part o f the supreme law of the land, along with the Constitution and statutes. T he Vienna C onvention on Diplom atic R ela­ tions includes an affirmation in its preamble that rules o f custom ary law should govern questions not expressly regulated by the term s o f the Convention. And the Supreme C ourt has recognized custom ary interna­ tional law as part o f our dom estic law .4 Custom ary international law allows reprisals, which are breaches of a treaty’s term s or other unfriendly conduct in response to a breach by another party. Reprisals must, how ever, respond in a proportionate m anner to the preceding illegal act by the party against whom they are taken. See G. Schw arzenberger, A Manual of International Law 184 (5th ed. 1967). T he proportionality o f a reprisal in a particular case is a m atter largely com m itted to judgm ent and precedent. T he Iranian breaches in this case are massive and largely unprece­ dented; reprisals even m ore severe than asset freezing and a tem porary closing of forum doors would probably be appropriate, for example total embargoes and blockades. Nevertheless, the Iranians could urge that a denial of access to the courts is a particularly serious m atter under the U.S. Constitution, and that the Suprem e C ourt has refused to allow the closing o f the courts even during the domestic insurrection of the Civil War. (See E x Parte Milligan, 71 U.S. (4 W all.) 2 (1866)). Num erous rejoinders suggest themselves. First, we could emphasize that we are urging only a tem porary denial o f access to our courts while the hostages are held, and that w e would not seek to interfere with the prosecution o f a suit after their release. (Because the Shah has left the country, how ever, dismissal w ould leave Iran with only in rem claims against his assets. In that sense, even dismissal w ithout prejudice would permanently close our forum to some of Iran’s claims.) Second, we could point out that Iran has refused to follow the W orld C o u rt’s

4In The Paquete Habana, 175 U.S. 677, 700 (1900), the Suprem e C ourt held that under international law, fishing vessels belonging to enem y nationals w ere exem pt from capture and condem nation by A m erican vessels: International law is part o f o ur law, and it must be ascertained and adm inistered by the c ourts o f justice o f appropriate jurisdiction, as often as questions o f right depending upon it are duly presented for their determ ination. T h e Cibrario case, cited supra, is one example o f the N ew York C ourt o f A ppeals’ application of principles o f international law in conform ity w ith this principle.

163 o rd er to release the hostages, or otherw ise to obey the dictates of international law that they be freed. T he “ unclean hands” analogy is obvious. T hird, Sabbatino implies that a G overnm ent request to close the courts could be an appropriate response to a foreign nation’s denials o f redress—that an executive branch request could provide the “definite touchstone for determ ination” that standing should be denied. And fourth, foreign nations do not have any claim to seek the aid o f our courts w ithout the interference o f our executive branch.5 F or when they are unrecognized they may not sue at all; when they are allowed to sue, the G overnm ent may affect the outcom e on the merits by interposing or w ithdraw ing the defenses o f sovereign immunity and act o f state, as we discuss in m ore detail below.

III. Judicial Deference to Executive Branch Formulations of Foreign Policy

This brings us to the question o f the respective roles o f the federal executive and a state court in deciding w hether Iran shall be allowed to maintain this lawsuit. H ere there is a long history o f deference by courts to executive foreign policy determ inations regarding foreign claims or defenses that are affected by doctrines o f immunity or act o f state. Since these tw o doctrines affect the outcom e o f a case on the merits, it seems likely that a court w ould treat a request for a tem po­ rary stay o r dismissal that is based on foreign policy according to the same principles. In E x Parte Republic o f Peru, 318 U.S. 578, 589 (1943), the State D epartm ent had “recognized and allow ed” the immunity o f a m erchant vessel ow ned and operated by the Peruvian governm ent. Accordingly, the C ourt held that an in rem action against the vessel should be dismissed. T he C ourt said: T he [D epartm ent o f State] certification and the request that the vessel be declared immune must be accepted by the courts as a conclusive determ ination by the political arm o f the G overnm ent that the continued retention of the vessel interferes w ith the proper conduct o f our for­ eign relations.6

5 C hief Judge K aufm an o f the Second C ircuit C o u rt o f A ppeals rem anded the case o f Electronic Data Systems v. Iran on N ovem ber 29, 1979, in part for the follow ing determ ination: O n rem and the district c o u rt m ay ascertain the position o f the D epartm ent o f Slate concerning the d efen d an t’s right o f access to U nited States courts under the extraordi­ nary circum stances now prevailing. 610 F.2d 94, 95 (2d Cir. 1979). 6T w o years later, in Republic o f M exico v. H offm an. 324 U.S. 30, 36, 38 (1945), the C ourt elaborated further: But recognition by the courts o f an im m unity upon principles w hich the political departm ent o f g o v ernm ent has not sanctioned may be equally em barrassing to it in securing the protection o f o u r national interests and th eir recognition by o th e r nations.

* * * * * C ontinued

164 T he Second Circuit C ourt o f Appeals then decided cases in much the same vein. See Bernstein v. Van Heyghen Freres, 163 F.2d 246 (2d Cir. 1947), cert, denied, 332 U.S. 772 (1947); Bernstein v. TV. V. Neder- landsche-Amerikaansche, 173 F.2d 71 (2d Cir. 1949). In the latter, after the court had applied the act o f state doctrine to bar review o f Nazi expropriations, the State D epartm ent w rote a letter to the court saying: T he policy o f the Executive, with respect to claims as­ serted in the United States for the restitution o f identifia­ ble property . . . lost through . . . duress as a result of Nazi prosecution in G erm any, is to relieve A m erican courts from any restraint upon the exercise o f their ju ris­ diction to pass upon the validity o f the acts o f Nazi officials. T he court o f appeals responded by holding that the doctrine would not apply in view o f this supervening expression o f executive policy, and revised its mandate. Bernstein v. N.V. Nederlandsche-Amerikaansche, 210 F.2d 375, 376 (2d Cir. 1954). Before the Supreme C ourt suggested that courts should defer com ­ pletely to executive discretion regarding the need to apply sovereign immunity doctrine in a particular case, the N ew York C ourt o f Appeals had taken a position that retained a m ore active judicial role. In Anderson v. N. V. Transandine Handelmaatschappij, 289 N.Y. 9, 43 N.E.2d 502 (1942), a N ew York resident sued a N etherlands firm for converting securities and monies owned by his assignor, on a cause of action arising in the Netherlands. T he defendants answ ered that a decree o f the lawful governm ent o f the N etherlands had vested title to the property in the governm ent. The question was therefore the effec­ tiveness o f the decree. T he State D epartm ent, through the U.S. A tto r­ ney, applied to the court o f appeals for leave to appear and file “A Suggestion o f the Interest o f the United States in the M atter in Litiga­ tion.” 7 T he Suggestion o f Interest began by identifying the interest o f the United States in the subject m atter as the effect o f the co u rt’s decision on the foreign policy o f the United States. T he G overnm ent outlined the applicable policy and urged the court to affirm the deci­ sion below, dismissing the suit. T o the court o f appeals, the question was w hether the action o f the Netherlands offended N ew York public policy.8 T he confiscation

We can only conclude that it is the national policy not to extend the immunity in the manner now suggested, and that it is the duty of the courts, in a matter so intimately associated with our foreign policy and which may profoundly affect it, not to enlarge an immunity to an extent which the government, although often asked, has not seen fit to recognize. 7T h e U.S. A tto rn ey stated in his application that “ in the interest o f orderly pro ced u re” the m atter was being presented by motion for leave to file, though he questioned w h e th er leave o f the court was necessary. 43 N .E .2d at 505. 8The court summarized its view of the law: “By comity of nations, rights based upon the law of a foreign State to intangible property which has a situs in this State, are recognized and enforced by the courts of this State, unless such enforcement would offend the public policy of this S tate/’ 43 N.E.2d at 506.

165 involved, having occurred during the emergency of World War II, did not offend the sensibilities of the court. Having decided the issue, the court continued in dictum that it need not consider whether the State Departm ent’s formulation of policy could change judicial questions determined in the New York system into political questions which would allow the Department of State to supersede the public policy of the state. The court recognized there might be situations in which that power should exist, for example where the public policy of a State would interfere with the performance of an executive agreement (such as the assignment of Russian claims to the United States that was upheld in United States v. Pink, 315 U.S. 203 (1942)). The court thought that allowing State Department policy formulation to override the public policy of a state might involve “very serious consequences” in some cases, but could have no untoward consequences where, as here, the State Department and the state were in agreement. In its reservation concerning the conclusive effect of the State De­ partment’s formulation of policy, the New York Court of Appeals foreshadowed developments to come in the formulation of the relevant doctrines. In Banco N acional de Cuba v. Sabbatino, 376 U.S. 398 (1964), the Supreme Court placed the act of state doctrine on a new footing somewhat less deferential to Executive Branch formulations than the old immunity cases. In Sabbatino the Court’s recognition of Castro’s title to the American sugar accorded with the request of the Executive Branch. Nevertheless, the Court went out of its way to reformulate the doctrine as law created by the federal courts on their own authority, not as a direct reflection of national policy as promulgated by the Executive. The Court said: The doctrine as formulated in past decisions expresses the strong sense of the Judicial Branch that its engagement in the task of passing on the validity of foreign acts of state may hinder rather than further this country’s pursuit of goals both for itself and for the community of nations as a whole in the international sphere. . . . W hatever consid­ erations are thought to predominate, it is plain that the problems involved are uniquely federal in nature. If fed­ eral authority, in this instance this Court, orders the field of judicial competence in this area for the federal courts, and the state courts are left free to formulate their own rules, the purposes behind the doctrine could be as effec­ tively undermined as if there had been no federal pro­ nouncement on the subject. . . . [W]e are constrained to make it clear that an issue concerned with a basic choice regarding the competence and function of the Judiciary and the National Executive in ordering our relationships

166 with other members of the international community must be treated exclusively as an aspect of federal law. . . . 376 U.S. at 423-25. Thus, the decision made act of state a component of federal common law, and expressly said that this was one of those “enclaves of federal judge-made law which bind the States.” At the same time, the Court realized that New York law also accepted the doctrine, and would have reached the same result. Id. at 426. In First N ational C ity Bank v. Banco N acional de Cuba, 406 U.S. 759 (1972), the Cuban government sued to recover assets held by the bank; the bank counterclaimed for the value of its properties which Cuba had confiscated. In the lower courts, the Department of State communi­ cated a “determination by the Department of State that the act of state doctrine should not be applied to bar the counterclaim.” The Court of Appeals disregarded the Department and applied the doctrine to dis­ miss the counterclaim. The Supreme Court reversed, but only a plural­ ity of three Justices thought that the Court should give conclusive effect to State Department policy; six Justices explicitly rejected the doctrine that the courts are bound to follow the Executive in such cases. Thus, the Supreme Court’s two recent cases on act of state suggest that the earlier immunity cases, which were not strictly in point and were not mentioned, were somewhat overstated. Nevertheless, all of the cases have recognized the appropriateness of Executive Branch communications to the courts expressing foreign policy concerns over application of the defense doctrines in particular lawsuits. If the Executive may urge the courts to reach a particular outcome on the merits, surely it may urge a temporary stay or dismissal for the same kinds of reasons. At the same time, it is now difficult to argue that executive determinations are conclusively binding on the courts, even in contexts related to but not subsumed within the act of state doctrine. The courts will not promise to accede to State Department policy views; by the same token, deference is likely to occur in true crisis situations such as the present one, where the Department of State can give good reasons, grounded in the complexity of foreign policy, for urging a particular disposition. Thus, Sabbatino 's discussion of closing the forum to foreign governments suggests that a State Department request to deny standing might have received deference in that case, and should receive deference in this one. In making its decision on a stay or dismissal motion in Iran’s suit against the Shah, the New York court could draw on either of two sources of law. One would be the federal common law principles of the two recent Supreme Court cases, to the extent that they now govern beyond the act of state context. Here an argument can be made that the functional considerations the Court advanced should make federal common law govern whenever foreign policy concerns have direct

167 impact on domestic litigation, and that the Court’s deference to Execu­ tive Branch submissions should apply as well. Alternatively, we could invoke the state law public policy doctrine of Anderson, supra, to the extent it survives Sabbatino. We have not researched the New York public policy cases, but an argument to basic equity principles such as “unclean hands” seems one possibility.

IV. Cross-claims

Instead of seeking to delay or dismiss the suit, we could attempt to intervene in the lawsuit as a party, seeking affirmative relief. Interven­ tion as a party might allow us to assert a cross-claim against the plaintiff “Islamic Republic” under the doctrine of Republic o f China v. First N ational C ity Bank, 348 U.S. 356 (1955). In allowing a party sued by an otherwise immune sovereign to assert any claim of its own against that sovereign, R epublic o f China emphasized considerations of “fair dealing.” Thus, Iran has waived its immunity from suit to at least some extent by invoking the aid of our courts. Republic o f China held explicitly that a counterclaim need not be related to the subject matter of the plaintiffs claim. The case does not provide direct precedent, however, for third party intervention to assert claims, some of which might bear no relation to the controversy in suit. Nevertheless, the emphasis on “fair dealing” in Republic o f China suggests that the G ov­ ernment might have a special argument that Iran’s use of our courts to pursue its case against the Shah should subject Iran to all claims the United States may have against it. Such an argument would derive from the Government’s power to deny Iran a forum entirely (by with­ drawing recognition) or partially (by urging the courts to allow the interposition of defenses). Therefore, by bringing a lawsuit that depends for its success on cooperation by our Government, Iran may open itself to our own claims against it. Perhaps, however, our rights in the matter would be limited to any of the Shah’s assets the court may decide to be those of Iran.

V. The Interest of the United States in this Litigation

In order to participate in Iran’s suit against the Shah, the Govern­ ment must demonstrate a sufficient interest in the litigation to support its standing. The nature of the interest asserted would depend on the nature of the Government’s position. If we decide to ask for stay or dismissal of the case, our concerns about the effect of the litigation on our foreign policy would provide a sufficient interest. That is implicit in the numerous cases receiving government communications on the sov­ ereign immunity and act of state doctrines. Also, at least some support could be drawn from cases recognizing the Government’s standing to sue to enforce its treaties (e.g., Sanitary D istrict v. United States, 266 168 U.S. 405 (1925)). Here we would be seeking to enforce a treaty reprisal through the judicial process. On the other hand, if we seek to intervene and cross-claim ordinary standards for intervention in New York would probably apply. These are discussed below.

VI. The Government’s Strategy Choices

The Government might eventually take any of a number of policy positions with regard to this lawsuit. Therefore, it is important to avoid a hasty submission to the court that might foreclose later options. There are at least the following possibilities: 1) Request for a temporary stay. 2) Request for dismissal without prejudice. 3) A request that the court honor the Shah’s sovereign immu­ nity and act of state defenses. 4) A request that the court disregard the Shah’s defenses. 5) Intervention with a cross-claim against Iran. 6) Our substitution as plaintiff for Iran pursuant to an assign­ ment of its claims against the Shah. (This presently seems remote, but it has occurred in the past. E.g., United States v. Pink, 315 U.S. 203 (1942).) 7) Expansion of the current freeze to include the assets of the Shah or all Iranian nationals. This could be accomplished without communicating with the court, but with indirect effect on the litigation. First, a temporary stay could be sought without foreclosing our other options. Since the court is likely to be expecting a communication from us on the applicability of the defense doctrines, we could and should be explicit that our stay request intimates no position on the merits. A request for dismissal without prejudice, however, could lead to the foreclosure of our opportunity to counterclaim, if the request is granted and Iran does not file an in rem action. Submissions to the court regarding the defense doctrines are not fully consistent with a cross-claim. For if the Government were to intervene, claiming the assets insofar as they .are adjudged to belong to Iran, we would be in no position to file suggestions that immunities or act of state should be waived to our pecuniary benefit. Perhaps, however, the situation would be different were we asking for a general judgment against Iran, without regard to the ownership of these assets. An early submission suggesting that the defense doctrines be applied in the Shah’s favor might prevent the Government from taking a later assignment of Iran’s claim. It therefore seems best to avoid taking any position on the applicability of the defenses for the time being. 169 An expansion of the freeze to include these assets does not seem inconsistent with any of the possible actions to be taken in the litiga­ tion. It should not be necessary to take a position on the ultimate ownership of the Shah’s assets in order to freeze them as property in which Iran or an Iranian national has an interest. VII. Modes of Participating in the Lawsuit

The precedents cited above indicate a number of alternative means by which the Government’s position can be communicated to the court: A. L etter

A letter can be written to the Administrative Judge, First Judicial District, Supreme Court of the State of New York. (Under New York procedure, this case will not be assigned to an individual Justice until it requires some form of judicial action, as when a party files a motion requiring adjudication.)

B. Suggestion o f Interest

A “Suggestion of Interest of the United States” can be filed, as was done in Anderson, supra. See also Federal Republic o f G erm any v. Elicofon, 358 F. Supp. 747 (E.D.N.Y. 1972), affirm ed on opinions below, 478 F.2d 231 (2d Cir. 1973) (expressing the Government’s non­ recognition of East Germany and recognition of West Germany). C. Am icus Curiae

New York law neither forbids nor generally defines amicus curiae submissions, except for the Court of Appeals, which specifically permits them under general criteria which this case would satisfy. New York Court Rules § 500.9(e) (1978). The amicus vehicle is, however, fre­ quently employed in both the Supreme Court and the Appellate Divi­ sion by means of a motion on notice for permission to file. It is recognized indirectly, e.g. N.Y. Civ. Prac. Law § 1012(c) (McKinney 1980), and in all likelihood would not be rejected. Of course, our appearance amicus would not accord the Government the right to appeal. D. Intervention

The Government could intervene as of right, N!Y. Civ. Prac. Law § 1012, or by permission, § 1013. Intervention must be “timely.” We have found no cases of intervention by the United States in New York courts under the modern rules, and no discussions Of.early intervention. Understandably, the cases have focused on tardy intervention, and have allowed it as late as the eve of trial or even post-judgment, unless intervention would delay the case unnecessarily or confuse the issues. 170 See Stanford Associates v. Board o f Assessors, 39 A.D.2d 800, 332 N.Y.S.2d 286 (3d Dep’t 1972); Auerbach v. Bennett, 64 A.D.2d 98, 408 N.Y.S.2d (2d Dep’t 1978). The standards for intervention as of right are as follows: Upon timely motion, any person shall be permitted to intervene in any action: 1) when a statute of the state confers an absolute right to intervene; or 2) when the representation of the person’s interest by the par­ ties is or may be inadequate and the person is or may be bound by the judgment; or 3) when the action involves the disposition or distribution of, or the title or a claim for damages for injury to, property and the person may be affected adversely by the judgment. N.Y. Civ. Prac. Law § 1012(a). To intervene as of right the Government can argue that it may be “bound” by the judgment due to its effects on foreign policy; we can notify the court that we may make a submission later concerning whether immunity or act of state doctrines should bar the claim. Alter­ natively, we could argue that this action involves the disposition of property, i.e. the Pahlavi Foundation building in New York and any other such assets, and that the United States would be affected by a judgment in that we might claim the assets ourselves, if held to belong to Iran. There appears to be no precedent in New York law for arguments not based on our own claims to these assets (indeed, the New York courts have interpreted this provision largely in terms of commercial interests, see Cavages, Inc. v. Ketter, 56 A.D.2d 730, 392 N.Y.S.2d 755 (4th Dep’t 1977)). Still, it is difficult to imagine that intervention in some form will not be allowed in view of the circum­ stances. Moreover, New York’s rules were adapted from the federal rules, and were meant to broaden their scope and to liberalize them. See 12 N.Y. Jud. Council Rep., 163, 218-32 (1946); see also 2 Weinstein, Korn & Miller, New York Civil Practice 1012.04 (1978). Thus, in view of New York’s general inclination to take guidance from the Federal Rules of Civil Procedure, and the liberal interpretation given Rule 24, Fed. R. Civ. P. and its predecessors, intervention as of right might have a good chance of success. See, e.g., S E C v. U.S. Realty, 310 U.S. 434 (1940) (permitting the SEC to intervene to protect the integrity of its regulatory framework). If at this point in the litigation the Government decides to make arguments for stay or dismissal that are essentially unrelated to the property involved in the lawsuit, it may be more politic to invoke the

171 liberal standard for permissive intervention,9 although New York ap­ pears to make little distinction between the two standards. We could identify common questions of law or fact as those bearing on any submission to be made in the litigation concerning immunities or act of state doctrine. VIII. Iran’s Prospects on the Merits

The complaint alleges that the Shah was the de facto ruler and head of state of Iran from 1941 until January 1979. The acts complained of are alleged to have taken place in Iran during the period that the Shah was the ruling monarch. The complaint is devoid of allegations that the Shah engaged in any of the acts complained of in the territory of the United States or at a time subsequent to January 1979 when he presum­ ably ceased to be the head of state of Iran.10 Based on these allegations, the acts alleged appear to constitute acts of state. A respectable argument can also be made that the Shah enjoys sovereign immunity from suit.11 Restatement (Second) of the Foreign Relations Law of the United States, §66 (1965), states in pertinent part: §66. Applicability of Immunity of Foreign State The immunity of a foreign state under the rule stated in § 65 extends to (a) the state itself; (b) its head of state and any person designated by him as a member of his official party; (c) its government or any governmental agency; . . . The 1976 Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et seq., does not expressly address the privileges and immunities of reigning monarchs, but talks only in terms of “foreign states.” Nevertheless, under the Restatement formulation, supra, it is arguable that a reigning monarch enjoys the immunities of a “foreign state” as codified in the Act.

9T o intervene by permission: Upon timely motion, any person may be perm itted to intervene in any action w hen a statute o f the state confers a right to intervene in the discretion o f the court, or when the person's claim o r defense and th e main action h ave a com m on question o f law or fact. In exercising its discretion, the court shall consider w hether the intervention will unduly delay the determ ination o f the action o r prejudice the substantial rights o f any party. N.Y. Civ. Prac. Law § 1013. 10 It is not clear w h eth er the Shah did, in fact, cease to be head o f state o f Iran after he left Iran in January 1979. T h e Shah him self has never abdicated; the U nited States governm ent has never pronounced that it no longer recognizes the Shah as the reigning m onarch o f Iran. A lth o u g h it is manifest that the Shah no longer exercises de facto governm ental pow ers, it is not unusual in international law to treat fictions as realities. Thus, the U nited States recognized as the de jure governm ent o f Russia from 1917 until 1933 the K erensky governm ent, even though Mr. K erensky had fled the Soviet Union in 1921. 11 In Hatch v. Baez. 14 N.Y. (7 H un) 596 (1876), the c o u rt held that the acts w hile in office o f a form er head o f state w ere immune from judicial scrutiny. T h e c o u rt’s decision is phrased in terms suggestive o f both act o f state and sovereign im m unity doctrines.

172 Section 1605(a)(5) preserves the immunity of foreign states from suit with respect to— (A) any claim based upon the exercise or performance or the failure to exercise or perform a discretionary func­ tion regardless of whether the discretion be abused, or (B) any claim arising out of malicious prosecution, abuse of process, libel, slander, misrepresentation, deceit, or interference with contract rights. The tortious and wrongful acts alleged in the complaint would prob­ ably fall within the above exceptions of the Act. Alternatively, if the Act were construed not to apply to personal monarchs, the Shah would be entitled to immunity under generally recognized doctrines of customary international law. See 1 Oppenheim’s International Law 676 ff. (Lauterpacht ed., 7th ed. 1953). Since either act of state or sovereign immunity may defeat Iran’s claims against the Shah if applied in this case, it is important to con­ sider whether the present Iranian government may waive the applica­ tion of these doctrines to the acts of its predecessor. There appears to be a paucity of authority on point. As an a priori matter, it seems that Iran might be able to waive the doctrines, at least if our submission to the court urges allowing them to do so.12 Both doctrines exist for the benefit of the state in question, not for the individuals who lead it. Therefore it seems incongruous to apply the doctrines to defeat a claim by a state for its own assets converted by a former monarch.

L arry A. H am m ond

D eputy Assistant Attorney General Office o f L egal Counsel

12 A nalogy may be taken to the pattern o f diplom atic immunities and then w aiver. U nder the Vienna C onvention on D iplom atic Relations, the sending state may w aive a diplom at's im m unity (art. 32). A bsent w aiver, how ever, im m unity for the exercise o f official functions subsists after the d iplo­ m at's appointm ent has term inated (art. 39.2).