Electronic Data Systems Corp. Iran v. Social Sec. Organization of Government of Iran, s. 79-2641
| Decision Date | 15 July 1981 |
| Docket Number | Nos. 79-2641,80-1641 and 81-1147,s. 79-2641 |
| Citation | 651 F.2d 1007 |
| Parties | ELECTRONIC DATA SYSTEMS CORPORATION IRAN, Plaintiff-Appellee, v. The SOCIAL SECURITY ORGANIZATION OF the GOVERNMENT OF IRAN, the Ministry of Health and Welfare of the Government of Iran, the Government of Iran, and Itel Corp., Defendants-Appellants. ELECTRONIC DATA SYSTEMS CORPORATION IRAN, Plaintiff-Appellee, v. SOCIAL SECURITY ORGANIZATION OF the GOVERNMENT OF IRAN, et al., Defendants- Appellants. ELECTRONIC DATA SYSTEMS CORP. OF IRAN, Plaintiff-Appellee, v. The SOCIAL SECURITY ORGANIZATION OF the GOVERNMENT OF IRAN, the Ministry of Health and Welfare of the Government of Iran, and the Government of Iran, Defendants, Donald T. Regan, the Secretary of the Treasury of the United States of America and the United States of America, Defendants-Appellants. . Unit A |
| Court | U.S. Court of Appeals — Fifth Circuit |
Donald L. Case, John M. Skrhak, Dallas, Tex., for defendants-appellants in 79-2641 and 80-1641.
Alice Daniel, Asst. Atty. Gen., Civil Div., Dept. of Justice, Washington, D. C., for amicus curiae in 79-2641.
Judith Levin, New York City, for amicus curiae in 79-2641 and 80-1641.
Hughes & Hill, Thomas W. Luce, III, Dallas, Tex., for plaintiff-appellee in all cases.
John L. Hill, M. David Bryant, Dallas, Tex., for plaintiff-appellee in 79-2641.
Steptoe & Johnson, Washington, D.C., for plaintiff-appellee in 79-2641 and 80-1641.
Jackson, Walker, Winstead, Cantwell & Miller, Dallas, Tex., for defendants-appellants in 80-1641.
Robert E. Kopp, Atty., Civil Div., Dept. of Justice, Michael F. Hertz, Atty., Washington, D. C., for amicus curiae in 80-1641.
Martha A. Mills, Ltd., Chicago, Ill., for plaintiff-appellee in 81-1147.
Appeals from the United States District Court for the Northern District of Texas.
Before CHARLES CLARK and RANDALL, Circuit Judges, and SHARP, * District Judge.
In consolidated causes 79-2641 and 80-1641, the Government of Iran and other Iranian organizations ask this court to vacate the attachment of Iranian funds in a New York bank, and to reverse a judgment awarded to Electronic Data Systems Corporation (EDS). In cause 81-1147, the United States seeks the suspension of these proceedings, and asks us to vacate the district court's injunction prohibiting the government from interfering with EDS's judgment or attachment. In light of executive actions taken to bring about the release of American hostages held in Iran, and in light of Dames & Moore v. Regan, --- U.S. ----, 101 S.Ct. 2972, 69 L.Ed.2d 918 (1981), we hold that all proceedings except the attachment in causes 79-2641 and 80-1641 are suspended, and that EDS must pursue its claim before the Iran-United States Claims Tribunal. The attachment, however, was accomplished prior to the 1979 freeze on Iranian assets, and the Government takes the position that it is not subject to the hostage release agreements. As a result, we hold that the injunction forbidding transfer of the attached assets shall remain in effect.
In 1976, Electronic Data Systems Corporation Iran, a subsidiary of EDS, signed a contract with "the Social Security Organization of the Government of Iran, an agency of the Ministry of Health and Social Welfare of the Government of Iran." The contract called for EDS to design and install a data processing system for the Iranian social security program. Both parties performed the contract for approximately 18 months. In June 1978, however, the Iranian parties failed to pay a monthly invoice submitted by EDS. Subsequent invoices also were ignored, and in January 1979 EDS terminated the contract.
One month later, EDS filed suit in the United States District Court for the Northern District of Texas. On June 11, 1979, the trial court entered a preliminary injunction prohibiting the transfer of some $20 million of Iranian funds in the Marine Midland Bank of New York. On May 9, 1980, after a trial on the merits, the trial court entered judgment in favor of EDS in the amount of approximately $19 million.
The Iranian defendants appealed both the attachment and the final judgment to this court in causes 79-2641 and 80-1641. Before the cases could be heard, however, the United States entered into an agreement with Iran to bring about the release of American hostages held by Iranians. The agreement took the form of two declarations by the government of Algeria. See Declaration of the Government of the Democratic and Popular Republic of Algeria (hereinafter cited as First Declaration), Jan. 19, 1981; 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 (hereinafter cited as Claims Declaration), Jan. 19, 1981. The Declarations provided, inter alia, for an international tribunal, the Iran-United States Claims Tribunal, which would settle contract claims between American companies and the Iranian government. See Claims Declaration, art. II(1). In an effort to avoid relitigation of its claim before the Claims Tribunal, EDS filed cause 81-1147 against the United States, seeking an injunction prohibiting the Government from interfering in any way with the attached funds or the final judgment. The district court granted the injunction, and the Government appealed. All appeals in the case were consolidated.
In order to meet the nation's international obligations under the Declarations, President Reagan issued Executive Order 12294, 46 Fed.Reg. 14111 (Feb. 24, 1981). Section 1 of the executive order provides that "(a)ll claims which may be presented to the Iran-United States Claims Tribunal ... are hereby suspended." See also 31 C.F.R. § 535.222(a) (1981). The United States argues that, pending litigation of the claim before the Claims Tribunal, the executive order requires the immediate suspension of all proceedings in courts of the United States by EDS against Iran. EDS apparently concedes that the order, if valid, suspends its judgment. The company argues, however, and the district court found, that the President had neither statutory nor constitutional power to issue the order, and that the company was entitled to the full benefit of its judgment in the court below.
Our task in resolving this delicate constitutional issue has been eased considerably by the Supreme Court's recent decision in Dames & Moore v. Regan, --- U.S. ----, 101 S.Ct. 2972, 69 L.Ed.2d 918 (1981). In Dames & Moore, the Court ruled that the President acted constitutionally in suspending claims against Iranian defendants. According to the Court, the President's power to suspend claims arises, not from a specific grant of congressional power, but from "the inferences to be drawn" from legislation such as the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-1706 (Supp. II 1978), and the so-called Hostage Act, 22 U.S.C. § 1732 (1979), and from Congress' "history of acquiescence in executive claims settlement." See --- U.S. at ----, 101 S.Ct. at 2991. The Court emphasized the narrowness of its holding, but held that
where, as here, the settlement of claims has been determined to be a necessary incident to the resolution of a major foreign policy dispute between our country and another, and where, as here, we can conclude that Congress acquiesced in the President's action, we are not prepared to say that the President lacks the power to settle such claims.
EDS has argued that its case presents a starker constitutional issue than the one raised in Dames & Moore. The company notes that its trial court judgment was entered on May 9, 1980, long before the Algerian Declarations were signed. By contrast, the trial court judgment in the Dames & Moore case was not entered until after signing of the Declarations. See --- U.S. ----, 101 S.Ct. 2979. EDS argues that, in its case, the President's order would have the effect of suspending a judgment, while in Dames & Moore the order merely suspended a claim in litigation.
Even if EDS is correct in its assertion that judgment in Dames & Moore had not been entered prior to the President's order, 1 there is nothing in the Supreme Court's opinion to indicate that this distinction has any significance. Dames & Moore upheld the President's power to suspend claims, not because the claims were insufficiently final or because the parties had notice that...
To continue reading
Request your trial
-
O'Hara v. Kovens
...Falkland Islands belong, that determination is "conclusive" upon judicial branch); Electronic Data Systems v. Social Security Organization of Government of Iran, 651 F.2d 1007, 1011 (5th Cir.1981) ("It is for the United States Government [the Executive], not the court, to determine in the f......
-
Kellogg Co. v. Mattox
...Iran v. Social Security Organization of the Government of Iran, 508 F.Supp. 1350, 1357 (N.D.Tex.), aff'd in part, vacated in part, 651 F.2d 1007 (5th Cir.1981); Hunt v. United States Securities & Exchange Commission, 520 F.Supp. 580, 609 (N.D.Tex.1981); 11 WRIGHT & MILLER, above, Federal Pr......
-
Memorial Hosp. v. Heckler
...created by Congress after the Supreme Court's judgment, but during the time for rehearing); Electronic Data Systems v. Social Security Organization, 651 F.2d 1007, 1011 (5th Cir.1981); De Rodulfa v. United States, 461 F.2d 1240, 1250 (D.C.Cir.), cert. denied, 409 U.S. 949, 93 S.Ct. 270, 34 ......
-
Islamic Republic of Iran v. Boeing Co.
...they are not self-executing, either in whole or in part. This result is consistent with Electronic Data Systems Corp. Iran v. Social Security Organization, 651 F.2d 1007, 1009-10 & n. 1 (5th Cir.1981), in which the Fifth Circuit concluded, without analysis, that the relevant provisions of t......