Attachment of Blocked Assets

Attachment of Blocked Assets Under Tria and the FSIA (heiser) in 2013

United States views on international law [1] in relation to Attachment of Blocked Assets Under Tria and the FSIA (heiser): (As reviewed in this legal encyclopedia in relation to international law issues in the year 2012) at 305, the United States submitted statements of interest in separate proceedings brought by the same plaintiffs in U.S. district courts in the District of Columbia and the Southern District of New York, attempting to execute on a judgment against Iran and Iranian entities. These filings were among several made in 2012 on the issue of whether attachment under the Terrorism Risk Insurance Act (“TRIA”) and under sections 1610(g) and 1610(f)(1) of the FSIA is predicated on demonstrating an ownership interest by the terrorist party. After the district court in the District of Columbia agreed with the U.S. position that only assets which the terrorist party actually owns—not all assets that are blocked—may be attached, plaintiffs appealed. On March 11, 2013, the United States filed its amicus brief with the Court of Appeals for the District of Columbia. Excerpts from the U.S. amicus brief follow (with footnotes omitted). The brief is available in full at (Secretary of State website) state.gov/s/l/c8183.htm. On November 19, 2013, the Court of Appeals issued its decision in the case, affirming the district court's holding that plaintiffs could not attach the contested accounts under either TRIA or the FSIA without an Iranian ownership interest in the accounts, and that Iran lacked an ownership interest in the accounts. Heiser v. Iran, 735 F.3d. 934 (D.C. Cir. 2013).

Some Aspects of Attachment of Blocked Assets Under Tria and the FSIA (heiser)

A. 1. TRIA provides that “[n]otwithstanding any other provision of law,” a victim of terrorism who has obtained a judgment against a terrorist party may attach “the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party).” TRIA § 201(a).6 Thus, if plaintiffs could demonstrate that the funds in the intermediary banks' possession are the blocked assets “of Iran,” or the blocked assets “of” one of its agencies or instrumentalities, plaintiffs would be able to attach the assets notwithstanding provisions of the Foreign Sovereign Immunities Act that might otherwise preclude such action.

Developments

Similarly, Section 1610(g) allows certain terrorism victims to attach “the property of a foreign state” subject to a judgment under 28 U.S.C. § 1605A, and “the property of an agency or instrumentality of such a state.” 28 U.S.C. § 1610(g). Thus, as with TRIA, plaintiffs could pursue an attachment under this section if they could demonstrate that the targeted assets were “of Iran,” or “of” one of its agencies or instrumentalities.

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The district court found that neither Iran, nor any of the Iranian banks, owns the assets in question. The United States takes no position on the question of ownership.

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Plaintiffs are wrong, however, insofar as they claim that they may attach the blocked assets even if they are not owned by Iran or its affiliated banks. Assets subject to OFAC blocking regulations are not, as plaintiffs urge, perforce within the scope of TRIA or Section 1610(g).

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TRIA authorizes attachment against “the blocked assets of [a] terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party).” TRIA § 201(a) (emphases added). And Section 1610(g) similarly applies to the property “of” a foreign state or “of” its agency or instrumentality. See 28 U.S.C. § 1610(g). OFAC regulations, by contrast, typically contain far broader language. See, e.g., 31 C.F.R. § 515.201 (Cuban Assets Control Regulations, which apply to property in which Cuba or a Cuban national has had “any interest of any nature whatsoever”); id. §§ 538.201, 538.307 (Sudan sanctions, which apply to property in which the Sudanese government has “an interest of any nature whatsoever”); id. §§ 595.201, 595.307 (Middle East terrorism sanctions, which apply to property in which various terrorist entities have “an interest of any nature whatsoever”). Congress was presumably aware of the language used in regulations like these, and there is no sound basis for amending the statute to supply the language that Congress omitted.

Attachment of Blocked Assets Under Tria and the FSIA (heiser) in 2013 (Continuation)

United States views on international law [1] in relation to Attachment of Blocked Assets Under Tria and the FSIA (heiser): 2. The assets “of” Iran are not naturally understood to include all assets in which Iran has “any interest of any nature whatsoever.” The Supreme Court has repeatedly observed that the “'use of the word “of” denotes ownership.'” Bd. of Trustees of the Leland Stanford Junior Univ. v. Roche Molecular Sys., Inc., 131 S. Ct. 2188, 2196 (2011) (quoting Poe v. Seaborn, 282 U.S. 101, 109 (1930)); see also Stanford, 131 S. Ct. at 2196 (describing Flores–Figueroa v. United States, 556 U.S. 646, 648, 657 (2009), as treating the phrase “identification [papers] of another person” as meaning such items belonging to another person (internal quotation marks omitted)); Ellis v. United States, 206 U.S. 246, 259 (1907) (interpreting the phrase “works of the United States” to mean “works belonging to the United States” (internal quotation marks omitted)).

More about Attachment of Blocked Assets Under Tria and the FSIA (heiser)

Applying that understanding to a disputed provision of patent law, the Court in Stanford concluded that “invention owned by the contractor” or “invention belonging to the contractor” are natural readings of the phrase “'invention of the contractor.'” 131 S. Ct. at 2196. In contrast, in United States v. Rodgers, 461 U.S. 677 (1983), the Court held that the IRS could execute against property in which a tax delinquent had only a partial interest when the relevant statute permitted execution with respect to “any property, of whatever nature, of the delinquent, or in which he has any right, title, or interest.” 26 U.S.C. § 7403(a) (emphases added); see also Rodgers, 461 U.S. at 692-94.

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The Court found it important that the statute explicitly applied not only to the property “of the delinquent,” but also specifically referred to property in which the delinquent “has any right, title, or interest.” See Rodgers, 461 U.S. at 692 (emphasis removed). TRIA and Section 1610(g) omit that additional phrase; the former only applies to the blocked assets “of” a terrorist party, see TRIA § 201(a), and the latter only applies to the property “of” a terrorist state, see 28 U.S.C. § 1610(g)(1).

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Plaintiffs urge that the word “of” can have multiple meanings. They note, for example, that TRIA refers to an “agency or instrumentality of [a] terrorist party,” TRIA § 201(a) (emphasis added), and observe that an agency or instrumentality need not be “owned” by the terrorist party. This misses the point of the Supreme Court's reasoning. The word “of” is a preposition whose meaning depends on context. Sovereigns do not own their agencies. They do, however, own assets, including deposited funds. TRIA and Section 1610(g) apply to bank funds that are owned by the sovereign (or its agency or instrumentality). But they do not purport to allow plaintiffs to attach assets that the terrorist party does not own in the first place.

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Indeed, plaintiffs' reading would expand these statutes well beyond common law execution principles. It “is basic in the common law that a lienholder enjoys rights in property no greater than those of the debtor himself; . . . the lienholder does no more than step into the debtor's shoes.” Rodgers, 461 U.S. at 713 (Blackmun, J., concurring in part and dissenting in part); see also id. at 702 (majority op.) (implicitly agreeing with this description of the traditional common law rule); 50 C.J.S. Judgments § 787 (2012). Congress enacted TRIA and Section 1610(g) against the background of these principles, and the statutes should be interpreted consistent with those common-law precepts. See Staples v. United States, 511 U.S. 600, 605 (1994); Astoria Fed. Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 107-10 (1991).

Resources

Notes

1. Attachment of Blocked Assets Under Tria and the FSIA (heiser) in the Digest of United States Practice in International Law

Resources

Notes

1. Attachment of Blocked Assets Under Tria and the FSIA (heiser) in the Digest of United States Practice in International Law