Republic of Iraq v. First National City Bank

Decision Date15 April 1965
Citation241 F. Supp. 567
PartiesREPUBLIC OF IRAQ, Plaintiff, v. FIRST NATIONAL CITY BANK, as Administrator of the Goods, Chattels, and Credits of His Majesty King Faisal II Ibn Ghazi Ibn Faisal I of Iraq, Deceased, Defendant.
CourtU.S. District Court — Southern District of New York

Fennelly, Douglas, Eagan, Nager & Voorhees, New York City, for plaintiff. Leo C. Fennelly, Edward P. F. Eagan, New York City, of counsel.

Lord, Day & Lord, New York City, for defendant. Woodson D. Scott, New York City, of counsel.

McLEAN, District Judge.

The brief complaint in this action alleges that defendant on October 9, 1958, was appointed by the Surrogate's Court, New York County, administrator of the goods, chattels and credits of the late King Faisal II of Iraq, who died on July 14, 1958, that plaintiff "succeeded" King Faisal II, and that the assets in the possession of defendant as administrator "are the property of the plaintiff." Plaintiff seeks recovery of these assets.

Although the complaint fails to allege the basis of this court's jurisdiction, it appears that inasmuch as this is an action involving more than $10,000 by a foreign state against a trust company having its principal office in New York, this court has diversity jurisdiction under 28 U.S.C. § 1332.

In addition to a general denial, defendant has interposed various defenses. I permitted defendant to amend its answer at the opening of the trial to include an additional defense of the three-year New York statute of limitations.

I find the facts, many of which are undisputed, to be as follows:

Until his death on July 14, 1958, King Faisal II was the sovereign of Iraq. He was a resident of, and domiciled in, Iraq.

On various dates in 1957, he caused to be transferred to an account in his name in Irving Trust Company, New York, various sums aggregating $55,925. Also in 1957, he purchased, through Guaranty Trust Company of New York, for $60,000, 4,008 shares of Canada General Fund Ltd., an investment trust. These shares were held by Irving Trust Company in a custody account in the name of King Faisal II.

On October 8, 1958, the Surrogate's Court issued letters of administration on the estate of King Faisal II to defendant, which was then known as City Bank Farmer's Trust Company.1

In October 1958, the Consul General of the Republic of Iraq in New York notified defendant and Irving Trust Company that the Government of the Republic of Iraq, by virtue of Iraqi Decree No. 23 (set forth in full hereinafter), had confiscated the property of the previous Royal Family of Iraq, including that of King Faisal II. The Consul General requested that the ownership of "all accounts and other forms of mobile property" held by the respective banks for the account of any member of the Royal Family be transferred to the Republic of Iraq. Neither bank complied with this request.

In December 1958, defendant received from Irving Trust Company the property which Irving Trust Company had held for the account of King Faisal II, consisting of cash and the 4,008 shares of Canada General Fund Ltd. Thereafter defendant sold the 4,008 shares, thereby reducing all the assets to cash, totaling $112,944.61.

After the present action was begun in this court on March 9, 1962, defendant applied to the Surrogate's Court for an order consenting to the transfer of this action to that court for trial. Plaintiff appeared specially in the Surrogate's Court to oppose the application. The Surrogate granted his consent by order dated July 2, 1962. Defendant thereupon moved in this court for an order of transfer. Judge Bonsal denied the motion by order and opinion dated August 14, 1962 (207 F.Supp. 588 (S.D.N.Y. 1962)) on the ground that the sovereign Republic of Iraq could not be compelled against its will to submit its claim for determination to a tribunal not of its own choosing.

On April 23, 1964, the Surrogate's Court entered an intermediate decree on the final accounting of defendant as administrator. Citation in this proceeding had been served upon plaintiff, but plaintiff failed to appear or participate in it. This intermediate decree determined that Al Malika Genevieve Al Iraq (also known as Genevieve Arnault), was duly married to King Faisal II on June 22, 1957, and was his lawful surviving spouse, that Prince Zeid Ibn Hussein, the great-uncle of King Faisal II, was his nearest living male heir, and that pursuant to a certain stipulation of settlement, the net estate of King Faisal II should be distributed, two-thirds to Al Malika Genevieve Al Iraq, and one-third to Prince Zeid.

On December 14, 1964, the Surrogate's Court entered its final decree in the accounting proceeding. It charged defendant as administrator with $134,950.65 in the first instance, and credited it with the payment of administrative expenses and various miscellaneous items aggregating $18,249.08, leaving a balance on hand of $116,701.57. The decree settled and allowed the administrator's account and directed the administrator to pay various additional fees and commissions and to distribute the final net balance, amounting to $110,562.47 to Al Malika Genevieve Al Iraq and Prince Zeid Ibn Hussein, $73,708.31 to the former, and $36,854.16 to the latter. Defendant has not as yet made this distribution.

I turn now to the facts which give rise to plaintiff's claim. A revolution occurred in Iraq on July 14, 1958. King Faisal II was killed on that day, presumably by the revolutionaries, although no testimony was offered as to the circumstances of his death. Also on that day a proclamation was issued by the Commander in Chief of the Iraqi Armed Forces announcing the formation of the Republic of Iraq to be governed by a Presidential Council pending the election of a president. By a separate proclamation or "notification," also dated July 14, 1958, the names of the three members of the Presidential Council were announced. By "Republican Ordinance No. 2," issued by the Presidential Council on July 14, 1958, the Prime Minister and the other ministers of the new government were appointed.

On August 2, 1958, the American Ambassador to Iraq sent a communication to the Minister of Foreign Affairs of Iraq who had been appointed on July 14, 1958, extending the good wishes of the United States Government to the Government of the Republic of Iraq. On the same day, the United States Department of State issued a press release stating that the United States had "extended recognition to the Government of the Republic of Iraq with the expression of its good wishes." The Office of the Legal Adviser of the Department of State, by letter dated July 22, 1964, has informed plaintiff's attorney that these documents constituted the formal evidence of the recognition of the Government of the Republic of Iraq by the United States Government. Defendant does not contend otherwise.

On July 19, 1958, the Presidential Council of Iraq issued Republican Ordinance No. 23 which is the basis of plaintiff's claim. It was signed not only by the three members of the Presidential Council, but also by the Prime Minister and a number of other ministers of the government. It was published in the Weekly Gazette of the Republic of Iraq in the issue dated July 30, 1958.2

The Gazette, apparently both before and after the revolution of July 14, 1958, was an official publication in which decrees of the Government of Iraq were customarily published. Before the revolution, it was known as the "Iraq Government Gazette." Its name was changed to "The Weekly Gazette of the Republic of Iraq" after July 14, 1958.

Decrees in this publication were customarily published both in Arabic and in English. When any discrepancy between the two versions occurs, however, the Arabic text is considered more authoritative.

Ordinance No. 23 is of sufficient importance to justify quotation in full. The English text of the Ordinance as published in the Gazette dated July 30, 1958, read as follows:

"REPUBLICAN ORDINANCE NO. 23 OF 1958, REGARDING THE CONFISCATION OF THE PROPERTY OF IRAQI Ex-DYNASTY AND ITS REGISTRATION IN THE MINISTRY OF FINANCE OF THE REPUBLIC OF IRAQ.
"It is well known that the Iraqi Ex-dynasty has exerted its influence in Iraq to gain illegal wealth since its inception, as from 23rd August 1921. Consequently, in accordance with the aims of the National Movement that have been achieved by the Iraqi Army supported by the people of Iraq with their consent on 14th July, 1958, for the realization of social justice and putting an end to the illegal exploitation, we issue the following ordinance:—
"Article 1. — By the dynasty, it is meant-King Faisal I, son of King Hussein, and his linage and his wife; King Ali son of King Hussein, his linage and his wife; Abdul Ilah and inheritance of his wife; and Prime Zeid son of King Hussein and his wife.
"Article 2. — All property of the Dynasty whether moveable or immoveable and any rights that have been registered under its name over immoveable property such as Miri lands and long term leases as well as its rights over moveable property, should be confiscated and registered under the Ministry of Finance of Iraq.
"Article 3. — Any real or juristic person in the Republic of Iraq and any Iraqi residing out of Iraq, managing, supervising, custodying or possessing any of the aforementioned property and debtor or borrower to any member of the Dynasty enumerated in Article 1, should present a declaration to the Government of Iraq concerning such connections.
"Article 4. — Any contract or procedure which is contradictory to this ordinance shall be considered null and void.
"Article 5. — Any person refuses to present the declaration as mentioned in Article 3 within three months from the enforcement of this ordinance or refuses to hand over the property belonging to any member of the Dynasty mentioned in Article I or try to smuggle or help to hide it, shall be sentenced for five years' imprisonment and a fine of not less than ID.500/ — and/or either
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