Bank Markazi v. Peterson

78 U.S. 212 (2016)

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Nature of the Case

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Facts

American nationals may file suit against state sponsors of terrorism in the courts of the United States. They may seek “money damages . . . against a foreign state for personal injury or death that was caused by” acts of terrorism, including “torture, extrajudicial killing, aircraft sabotage, hostage taking, or the provision of material support” to terrorist activities. §1605A(a)(1). Victims of state-sponsored terrorism may obtain a judgment against a foreign state on “establish[ing] [their] claim[s] . . . by evidence satisfactory to the court.” But the Foreign Sovereign Immunities Act of 1976 (FSIA) shields foreign-state property from execution. §When the terrorism exception was adopted, only foreign-state property located in the United States and “used for a commercial activity” was available for the satisfaction of judgments. §1610(a)(7), (b)(3). FSIA also shields from execution property “of a foreign central bank or monetary authority held for its own account.” §1611(b)(1). Congress enacted the Terrorism Risk Insurance Act of 2002 (TRIA), which authorizes the execution of judgments obtained under the FSIA’s terrorism exception against “the blocked assets of [a] terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party).” Under the Trading with the Enemy Act (TWEA) or the International Emergency Economic Powers Act (IEEPA) the President can freeze the assets of “foreign enemy state[s]” and their agencies and instrumentalities. Invoking his authority under the IEEPA, the President, in February 2012, issued an Executive Order blocking “all property and interests in property of any Iranian financial institution, including the Central Bank of Iran, that are in the United States.” Congress then passed the statute at issue here: Section 8772 was enacted as a freestanding measure, not as an amendment to the FSIA or the TRIA. In an unusual rendering, Section 8772(b) defines as available for execution by holders of terrorism judgments against Iran “the financial assets that are identified in and the subject of proceedings in the United States District Court for the Southern District of New York in Peterson et al. v. Islamic Republic of Iran et al., Case No. 10 Civ. 4518 (BSJ) (GWG), that were restrained by restraining notices and levies secured by the plaintiffs in those proceedings.” The court must determine “whether Iran holds equitable title to, or the beneficial interest in, the assets . . . and that no other person possesses a constitutionally protected interest in the assets . . . under the Fifth Amendment to the Constitution of the United States.” §8772(a)(2). P are victims of Iran-sponsored acts of terrorism, their estate representatives, and surviving family members. The group numbers more than 1,000 parties in 16 discrete groups, each of which brought a lawsuit against Iran pursuant to the FSIA’s terrorism exception. The majority of respondents sought redress for injuries suffered in connection with the 1983 bombing of the U.S. Marine barracks in Beirut, Lebanon. Ps have obtained billions of dollars in judgments against Iran, the vast majority of which remain unpaid. Although the enforcement proceeding was initiated prior to the issuance of Executive Order No. 13599 and the enactment of §8772, the judgment holders updated their motions in 2012 to include execution claims under §8772. Making the findings necessary under §8772, the District Court ordered the requested turnover. The record evidence showed that Bank Markazi (D) owned the assets. D argued the absence of subject matter and personal jurisdiction. After §8772’s passage, D changed its defense. It conceded that Iran held the requisite “equitable title to, or a beneficial interest in, the assets,” §8772(a)(2)(A), but maintained that §8772 could not withstand inspection under the separation-of-powers doctrine. D argued, “Congress effectively dictated specific factual findings in connection with a specific litigation - invading the province of the courts.” The court described §8772 as a measure that “merely changes the law applicable to pending cases; it does not usurp the adjudicative function assigned to federal courts. The Court of Appeals unanimously affirmed. D argued that §8772 violates the separation of powers “by compelling the courts to reach a predetermined result in this case.” The court responded that “§8772 does not compel judicial findings [or results] under old law”; “rather, it retroactively changes the law applicable in this case, a permissible exercise of legislative authority.” D appealed.