Islamic Republic of Iran v. Pahlavi

• Decision Date: 30 June 1983
• Citation: 94 A.D.2d 374,464 N.Y.S.2d 487
• Parties: ISLAMIC REPUBLIC OF IRAN, Plaintiff-Appellant-Respondent, v. Mohammed Reza PAHLAVI, Defendant, Farah Diba Pahlavi, Defendant-Respondent-Appellant.
• Court: New York Supreme Court — Appellate Division

Page 487

464 N.Y.S.2d 487

94 A.D.2d 374

ISLAMIC REPUBLIC OF IRAN, Plaintiff-Appellant-Respondent, v. Mohammed Reza PAHLAVI, Defendant Farah Diba Pahlavi, Defendant-Respondent-Appellant.

Supreme Court, Appellate Division First Department.

June 30, 1983.

Brian O'Dwyer, New York City, of counsel (O'Dwyer & Bernstien, New York City, attorneys), for plaintiff-appellant-respondent.

Roger Boyle, New York City, of counsel (Boyle, Vogeler & Haimes, New York City, attorneys), for defendant-respondent-appellant.

Before KUPFERMAN, J.P., and CARRO, SILVERMAN, FEIN and MILONAS, JJ.

SILVERMAN, Justice.

This is an appeal from an order of Special Term, Supreme Court, granting a motion to dismiss the complaint on the ground of forum non conveniens. We affirm.

This is a suit by the Islamic Republic of Iran against the former Shah of Iran and his wife, the former Empress of Iran, based upon the alleged misconduct of the Shah in enriching himself and his family through the exercise and misuse of his powers as emperor.

If entertained, the suit will be extremely burdensome to the people, taxpayers and the courts of this state. The amounts involved are enormous--many billions of dollars. The assets referred to are numerous and enormous and located all over the world. What is sought is no less than a review by the courts of this state of the exercise by the Shah of his powers as absolute monarch of a great nation over a period of a quarter of a century to determine whether and by how much the Shah and the Empress personally and improperly profited. It would be an understatement to say that this lawsuit would be as burdensome as a total of hundreds of ordinary lawsuits. And the courts of New York are asked to assume this burden while our criminal justice system is crumbling because of inadequate facilities; prisoners sit in jails for months awaiting trials; civil litigants are delayed because our courts are so overcrowded. And, of course, the cost of this suit to the taxpayers of New York would be very great.

All of this would have to be borne if this were legitimately a New York matter. But it is not. It is an Iranian matter,--a suit by the Islamic Republic of Iran against its former ruler and his wife, nationals (and still presumably domiciliaries, never having elected a new domicile) of Iran, based on acts in Iran relating to the affairs of Iran.

The suit would presumably be governed by Iranian law. It may be questioned whether the law of Iran ever contemplated a suit against the Shah for misconduct in office; but in any event whatever the guess may be, it will have to be a guess as to Iranian law.

We doubt that the courts of this state are really competent to pass on whether an absolute monarch of a foreign country can be held responsible for personally profiting from the use of his powers as an absolute monarch.

In this state and in this country the guess as to Iranian law would have to be made by American judges brought up and trained in American law, history and political philosophy, and the mores of a democratic republic and the prevailing concepts in this country as to the responsibilities and obligations of public officials in such a republic.

For us, and perhaps generally in countries that have a constitutional government, the rule of law is that public office is a public trust, not to be used for the office holder's personal profit and subject to rules of fiduciary responsibility. (Of course we do not suggest that the use of public office for private profit is unknown in this country; however, the rules of law applicable to such cases in this country are fairly well established.) But do we have the right to impose our concepts of the responsibility of public office on the activities within a foreign country of its absolute monarch? Are we justified in applying American concepts of fiduciary responsibility to this situation, or is the case to be governed by Louis XIV's dictum "L'etat, c'est moi," or some other rule--and this under unformulated Iranian law!

Repugnant as it may be to our philosophy, there can have been very few absolute monarchs in the history of the world who did not profit personally from their powers as such monarchs. The royal families of history did not become wealthy because they were shrewd private businessmen or farmers. One thinks of Elizabeth I and monopolies; the Kings of Spain and the wealth of the New World; the Tsars of Russia; King Solomon's mines, etc., etc. And even today it is said that the King and the royal family of Saudi Arabia and the rulers of the other oil rich states of the Middle East have become enormously wealthy by the use of their powers and influence as rulers. These rulers and their families are said to have large investments and bank deposits in this country. Are the courts of New York really competent to hold these rulers responsible under our concept of fiduciary responsibilities for their use of their monarchical powers?

This surely looks like the "political thicket" out of which courts should stay.

The dispute is as we say an Iranian dispute to be governed by the laws of Iran. What connection does New York have with it? That the Shah spent a few weeks in a hospital in New York may be a basis for in personam jurisdiction. It is irrelevant to forum non conveniens considerations. (Incidentally, the Shah spent more time, after leaving Iran, in Mexico, Panama and Egypt than he did in New York, so why are we favored with this litigation?)

Although the list of assets does include some assets with a relation to New York, this is not a case of a dispute as to the ownership of specific property in this state. The complaint asks to impress a constructive trust on assets of the defendants throughout the world; it asks for an accounting of all monies and property of any kind received by the defendants from the Government of Iran, together with all profits derived therefrom; it asks for general compensatory damages totalling $35 billion, and total damages of over $55 billion. This is plainly a transitory action arising in Iran.

All of the foregoing is recognized by our brother who would retain jurisdiction in New York, but he asks if this lawsuit cannot be brought in New York, where else can it be brought? Where is the more appropriate forum?

The obvious answer--in a civilized world and society--would be Iran, which has all the relevant contacts. The defendants would of course contend that they cannot get a fair trial before an impartial tribunal in Iran; and they may well be right. And implicit in the plaintiff's position is that at least the prevailing perception in non-Iranian countries is that the present regime in Iran is "a system which does not provide impartial tribunals or procedures compatible with the requirements of due process of law" (CPLR § 5304), and thus the judgment of its courts would not be entitled, either as a matter of comity or of absolute right, to recognition in jurisdictions having principles similar to New York.

For almost any other plaintiff, this would be a sound and fair reason for bringing a suit outside Iran. But this plaintiff is the Islamic Republic of Iran--the Government of Iran. It is a fundamental obligation of every civilized government to provide a system of impartial courts which can fairly adjudicate disputes involving its citizens. As plaintiff is the Government of Iran, that is plaintiff's own obligation. And if this plaintiff has failed in that fundamental obligation, we do not see why the citizens, taxpayers and courts of this state should be subjected to the enormous burden of this lawsuit at the behest of the government which has failed to meet this fundamental obligation.

There are of course also questions as to personal jurisdiction.

The Uniform Foreign Money-Judgments Recognition Act, CPLR Article 53, requires as conditions for conclusive recognition of a foreign country judgment that the judgment not only be rendered under a system which provides impartial tribunals or procedures compatible with due process of law, but also that the foreign court shall have had personal jurisdiction over the defendant. CPLR § 5304(a). Such jurisdiction may exist because the defendants are domiciliaries of the foreign state (CPLR § 5305), or indeed because they are nationals of that state. Restatement, Second, Conflict of Laws § 31; Thirteenth Annual Report, Judicial Conference, State of New York (1968) p 221; and see Blackmer v. United States, 284 U.S. 421, 52 S.Ct. 252, 76 L.Ed. 375. With respect to jurisdiction based on nationality, the Restatement provides:

§ 31. Nationality and Citizenship

A state has power to exercise judicial jurisdiction over an individual who is a national or citizen of the state unless the nature of the individual's relationship to the state makes the exercise of such jurisdiction unreasonable. At 127.

Comment c under this statement includes as examples of qualifications on the jurisdiction of a foreign state over its nationals:

extent, if any, to which the national's life or liberty would be endangered if he were to return to the nation.

.... The judgment is also likely to be denied recognition and enforcement if the national has been forced to flee from the nation because of a political regime that is hostile to him, even though he may hope to return to the nation once the regime has been overthrown. At 128.

These qualifications obviously apply to the Empress and applied to the Shah after his flight. But again the personal danger, and the unfairness to the defendants of recognizing the exercise of personal jurisdiction by the courts of Iran over the defendants, is little more than another facet of the failure of the Government of Iran to provide fair and impartial tribunals in which the property and money claims against the Shah can be fairly determined.

It may well be that it is wholly unrealistic to ask this of a revolutionary regime like that of Iran. Robespierre's regime in France,...