American Intern. Group, Inc. v. Islamic Republic of Iran

Decision Date05 June 1981
Docket Number80-1891 and 80-2541,Nos. 80-1779,s. 80-1779
Citation211 U.S.App.D.C. 468,657 F.2d 430
PartiesAMERICAN INTERNATIONAL GROUP, INC., et al. v. ISLAMIC REPUBLIC OF IRAN, et al., Appellants, United States, Intervenor. PFIZER INC., et al. v. ISLAMIC REPUBLIC OF IRAN, The Ministry of Health and Welfare of the Islamic Republic of Iran, and The Ministry of Industries and Mines of the Islamic Republic of Iran, Appellants, Bank Markazi Iran, et al. United States, Intervenor. to 80-2543.
CourtU.S. Court of Appeals — District of Columbia Circuit

Michael F. Hertz, Atty., Dept. of Justice, Washington, D. C., with whom Thomas S. Martin, Acting Asst. Atty. Gen., Robert E. Kopp and John F. Cordes, Attys., Dept. of Justice, Washington, D. C., were on the brief, for United States, intervenor in Nos. 80-1779, 80-1891, 80-2541, 80-2542 and 80-2543. Charles F. C. Ruff, U. S. Atty., Royce C. Lamberth and R. Craig Lawrence, Asst. U. S. Attys., and J. Christopher Kohn, Atty., Dept. of Justice, Washington, D. C., also entered appearances for United States.

Thomas G. Shack, Jr., Washington, D. C., with whom Christine Cook Nettesheim, Thomas D. Silverstein, John D. Aldock and John Townsend Rich, Washington, D. C., were on the brief, for Islamic Republic of Iran, et al., appellants in Nos. 80-1779, 80-1891 and 80-2541.

Eric M. Lieberman, New York City, with whom Leonard B. Boudin, New York City, and Allan S. Hoffman, Washington, D. C., were on the brief, for Bank Markazi Iran, appellants in No. 80-2542. Robert A. Seefried, Washington, D. C., also entered an appearance for Bank Markazi Iran.

Daniel P. Levitt, New York City, with whom Allan S. Hoffman, Washington, D. C., was on the brief for Iranians Bank, appellant in No. 80-2543.

Monroe Leigh, Washington, D. C., with whom Daniel J. Plaine and Alice L. Mattice, Washington, D. C., were on the brief, for Pfizer, Inc., et al., appellees in Nos. 80-2541, 80-2542 and 80-2543. Valerie A. Slater, Washington, D. C., also entered an appearance for Pfizer, Inc., et al.

Walter D. Vinyard, Jr., Washington, D. C., with whom Michael K. Madden and Sidney O. Smith, Washington, D. C., were on the brief, for Continental Corp., appellee in Nos. 80-1779 and 80-1891.

David R. Hyde, New York City, with whom Donald J. Mulvihill, Washington, D. C., was on the brief for American International Group, Inc., et al., appellees in Nos. 80-1779 and 80-1891.

Joseph A. Artabane, Washington, D. C., also entered an appearance for INA Corp., appellee in Nos. 80-1779 and 80-1891.

Stephen M. Truitt, Washington, D. C., was on the brief for TCSB, Inc., et al., amici curiae urging the availability of a remedy against the United States in Nos. 80-1779 and 80-1891.

Alan Raywid and Margaret E. Rolnick, Washington, D. C., were on the brief for Sperry Corp., et al., amici curiae in support of Pfizer, Inc., in Nos. 80-1779, 80-1891, 80-2541, 80-2542 and 80-2543.

David Ginsburg, Lee R. Marks and Alan S. Weitz, Washington, D. C., were on the brief, for American Bell International, Inc., amicus curiae in Nos. 80-1779, 80-1891, 80-2541, 80-2542 and 80-2543, urging that this Court reserve decision with respect to claimants lacking an arbitral remedy.

William R. Hyde, Jr., Washington, D. C., was on the brief for Touche Ross and Co., et al., amici curiae in Nos. 80-1779, 80-1891, 80-2541, 80-2542 and 80-2543, urging that this Court reserve decision with respect to claimants lacking an arbitral remedy.

Sherman E. Katz, Washington, D. C., was on the brief for Sylvania Technical Systems, Inc., amicus curiae in Nos. 80-1779, 80-1891, 80-2541, 80-2542 and 80-2543, urging that certain claimants may be entitled to just compensation as a matter of equal protection.

Before McGOWAN and MIKVA, Circuit Judges, and JAMESON, * Senior District Judge for the District of Montana.

Opinion for the Court filed by Circuit Judge McGOWAN.

Separate Statement filed by Circuit Judge McGOWAN, in which Senior District Judge JAMESON concurs.

Separate Statement filed by Circuit Judge MIKVA.

McGOWAN, Circuit Judge:

While these cases were before this Court on interlocutory appeal, the United States and Iran on January 19, 1981 settled by executive agreement the crisis stemming from the seizure of the American Embassy in Iran and the holding of American diplomatic personnel as hostages. To fulfill its obligations under the two agreements, the United States filed a Statement of Interest with this Court on February 26, 1981, asking that the existing attachments and other restraints upon Iranian assets be vacated, and that the underlying private claims for judicial relief be suspended. On May 22, 1981, this Court issued a judgment granting those two requests, but denying the later request of the United States to set aside the partial summary judgments in Nos. 80-1779 and 80-1891. In this opinion we explain the reasons for our actions.

I

The events following the seizure of the American Embassy in Teheran on November 4, 1979, are too familiar to require any extended recounting here. It will suffice for the purposes of this case to note that the capture of the embassy and the taking of its personnel as hostages created a foreign policy crisis of the gravest proportions. While the Government of the United States moved on many fronts to secure the hostages' release, it is the legal measures taken by the President that chiefly concern us.

On November 15, 1979, President Carter, acting under the International Emergency Economic Powers Act (IEEPA), 50 U.S.C. §§ 1701-1706 (Supp. II 1978), issued regulations that, inter alia, blocked the removal or the transfer of Iranian assets in the United States except according to the terms of licenses accompanying the blocking order or later issued pursuant to it. See 31 C.F.R. Part 535 (1980). Of especial importance to the instant case is 31 C.F.R. § 535.203(e) (1980), which states:

Unless licensed or authorized pursuant to this part any attachment, judgment, decree, lien, execution, garnishment, or other judicial process is null and void with respect to any property in which on or since the effective date there existed an interest of Iran.

Not long after that regulation became effective, the President, on November 26, 1979, did grant a general license authorizing certain judicial proceedings against Iran, with the exception of the "entry of any judgment or of any decree or order of similar or analogous effect...." 31 C.F.R. § 535.504(a), (b)(1) (1980). On December 19, 1979, the President issued another regulation intended to clarify 31 C.F.R. § 535.504 (1980). It stated: "The general authorization for judicial proceedings contained in § 535.504(a) includes pre-judgment attachment." 31 C.F.R. § 535.418 (1980).

On November 19, 1979, before any of the general licenses authorizing judicial proceedings, including pre-judgment restraints against Iranian assets, had been issued, the President also issued a regulation stating: "The provisions of this part and any rulings, licenses, authorizations, instructions, orders, or forms issued thereunder may be amended, modified, or revoked at any time." 31 C.F.R. § 535.805 (1980). Thus, before any of the appellees in this case had filed suit against Iran or its instrumentalities or enterprises, they were on notice that the regulations providing access to judicial process, including provisional remedies, could be revoked at any time pursuant to IEEPA.

On December 7, 1979, appellees in Nos. 80-1789 and 80-1891, American International Group, Inc. (AIG), the Continental Corp., and others, filed suit against Iran and Central Insurance of Iran in the United States District Court for the District of Columbia. See Joint Appendix in Nos. 80-1789 and 80-1891 at 1-2 (hereafter referred to as AIG J.A.). Plaintiffs asserted a $34 million claim for the nationalization of their Iranian ventures. AIG J.A. at 12-20. On that day, Judge Gesell entered a temporary restraining order against the defendants preventing them from removing or transferring any of their assets. AIG J.A. at 36-39. On December 19, Judge Hart, pursuant to an ex parte application of plaintiffs, attached a painting by Willem de Kooning entitled "Women Three" and five sculptures of Jean Dubuffet that were on loan to the National Gallery. AIG J.A. at 43. Later writs of attachment were also granted against other Iranian assets. See AIG J.A. at 5-7.

On July 10, Judge Hart issued two more orders. The first was a partial summary judgment in favor of plaintiff-appellees on the issue of liability. AIG J.A. at 394-401. The second was a preliminary injunction preventing Iran or Central Insurance of Iran from taking any action that would remove their assets from the jurisdiction of the court. AIG J.A. at 392. Finding that his order of partial summary judgment raised substantial and controlling questions of law, Judge Hart certified the action for interlocutory appeal pursuant to 28 U.S.C. § 1292(b) (1976) on July 11. AIG J.A. at 403. Defendants filed a notice of appeal that same day. AIG J.A. at 402.

On October 30, 1980, Pfizer, Inc. and two subsidiaries filed suit against Iran, its Ministry of Health and Welfare, its Ministry of Industries and Mines, the Bank Markazi Iran, and the Iranians Bank, seeking $23 million as compensation for the nationalization of Pfizer's Iranian enterprises. Joint Appendix in Nos. 80-2541, 80-2542 and 80-2543 at 1-2, 12-20 (hereafter referred to as Pfizer J.A.). Judge Gasch issued a preliminary injunction on November 26, 1980, similar to that issued by Judge Hart, that restrained defendants from transferring certain assets. Pfizer J.A. at 565-67. The United States urges that both preliminary injunctions be regarded as the functional equivalents of attachments, and appellees make no argument for distinguishing the injunctions from attachments. Defendants, entitled to an interlocutory appeal of the injunction, 28 U.S.C. § 1292(a)(1) (1976), filed notices of...

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