  Review of Domestic and International Legal Implications of
            Implementing the Agreement with Iran
W hile a num ber of the presidential actions implementing the agreem ent with Iran are
  likely to be the subject o f domestic legal challenge, a review o f the authorities
  previously relied on by the Office o f Legal Counsel and by the A ttorney General in his
  January 19, 1981, opinion leads to the conclusion that those actions are well within the
  President’s pow er under the Constitution and applicable statutes and treaties.
A persuasive argum ent can be made that the agreem ent with Iran was procured by the
  threat or use o f force in violation o f principles of international law, and is thus void ab
  initio under Article 52 of the Vienna Convention on the Law of Treaties. As the party
  coerced, the United States may decide w hether it wishes to repudiate the agreement,
  though it would be desirable to seek confirmation o f the appropriateness o f that action
  from an independent legal body, such as the International C ourt of Justice. Private
  litigants would have no standing to contest in United States courts any decision that
  the President may make in this respect.
Should the United States decide to repudiate the agreem ent with Iran, a number of
  questions would arise relating to the disposition of Iranian assets already transferred to
  the escrow account pursuant to the agreement, or still frozen in dom estic accounts.
                                   January 29, 1981
 MEMORANDUM OPINION FOR THE ATTORNEY GENERAL
   This responds to your request for our views regarding certain legal
questions arising out of implementation or nonimplementation of the
agreement of January 19, 1981, between the United States and Iran,
which resulted in the release of the 52 Americans held hostage in Iran.
The first section of the memorandum discusses the legal issues that are
likely to be raised in litigation challenging the agreement. The second
section sets forth the legal basis for securing a judicial determination
that the agreement is void. The third section identifies and analyzes the
impact that nonimplementation might have on Americans with claims
against Iran and the litigation that could be expected to arise out of a
decision not to implement the agreement.1
   'T h e agreem ent adhered to by the U nited States and Iran is set forth prim arily in tw o documents,
captioned “ D eclaration of the G overnm ent o f the D em ocratic and Popular Republic of Algeria'*
(D eclaration), and “ D eclaration o f the G overnm ent o f the D em ocratic and Popular Republic of
A lgeria Concerning the Settlem ent o f Claims by the G overnm ent of the U nited States o f A m erica and
the G overnm ent of the Islamic Republic o f Iran" (Claims Settlement A greem ent). O ther docum ents
subsidiary to these docum ents will be described as necessary. T he overall agreem ent w as implemented
in most particulars through a series of executive orders issued by President C arter on January 19,
1981. Exec. O rder Nos. 12,276-12,285, 3 C .F.R . 104-118 (1982).

                                                  314
                         I. Domestic Legal Issues
   The major legal issues that we expect to be raised in litigation
challenging the implementation of the agreement, if the United States
chooses that course, concern the scope and limits of presidential power
to deal with the hostage crisis. The following presidential actions are
likely to be challenged as having been taken without legal authority:
      1. Settlement of claims of American citizens against Iran by sub­
      mission of claims to binding arbitration by an international tribunal;
      2. Nullification of outstanding attachments against property of Iran;
      3. Ordering the return of the frozen assets to Iran;
      4. Prohibition against the prosecution of any claim arising out of
      the seizure and detention of the 52 American citizens; and
      5. Blocking the transfer of the former Shah’s property located in
      the United States.
The legal authority for each of these actions and relevant legal issues
are discussed below.
A. Settlement of Claims by Submission to Binding Arbitration
   It is likely that if the agreement is implemented, a fundamental issue
will be the President’s authority to settle claims of American citizens by
agreeing to submit those claims to binding arbitration. Because of the
legal precedent and historical practice supporting this action, any chal­
lenge on this ground is not likely to prevail.
   The authority of the President under Article II of the Constitution to
enter into executive agreements with other nations to settle claims has
been explicitly upheld by the Supreme Court. United States v. Belmont,
301 U.S. 324, 330-31 (1937); United States v. Pink, 315 U.S. 203 (1942).
As Justice Frankfurter observed in his concurring opinion, “That the
President’s control of foreign relations includes the settlement of claims
is indisputable.” 315 U.S. at 240. See also Restatement (Second) of
Foreign Relations Law of the United States § 213 (1965). Belmont and
Pink upheld the Litvinov Assignment, by which outstanding Soviet
claims were assigned to the United States by a single exchange of
letters between the President and the Soviet Foreign Minister. Both
cases emphasized the Executive’s exclusive constitutional power to rec­
ognize foreign governments and to normalize diplomatic relations with
them, and viewed claims settlements as necessary incidents of the Ex­
ecutive’s foreign relations power. See generally United States v. Curtiss-
Wright Export Corp., 299 U.S. 304 (1936).
   This exercise of the President’s foreign relations power is also sup­
ported by the Treaty of Amity, Economic Relations, and Consular
Rights, Aug. 15, 1955, United States-Iran, Art. XXI(2), 8 U.S.T. 901,
T.I.A.S. No. 3853. In ratifying that treaty, the Senate gave its approval
for the two nations to settle disputes regarding interpretation of the
                                     315
 treaty by submission to the International Court of Justice or by any
pacific means for settling these disputes. Because the treaty provides for
peace and friendship between the two nations, trade and commercial
freedom, protection and security of nationals, prompt and just compen­
sation for the taking of property, and the absence of restrictions on the
transfer of funds, the private claims expressed by the United States and
referred to the Tribunal are disputes between the United States and
Iran “as to the interpretation or application of the . . . Treaty.”
    Support may be drawn as well from the President’s statutory power
under the International Emergency Economic Powers Act (IEEPA), 50
U.S.C. § 1701 et seq. (Supp. I 1977). That statute, which authorized the
November 14, 1979, blocking of Iranian assets, was drafted in explicit
recognition that the blocking of assets could have as a primary-purpose
their preservation for later claims settlement. H.R. Rep. No. 459, 95th
Cong., 1st Sess. 17 (1977); S. Rep. No. 466, 95th Cong., 1st Sess. 6
(1977). Thus, § 1706(a)(1) authorizes the continuation of controls after
the underlying emergency has ended, where “necessary on account of
claims involving such country or its nationals.” The need to provide a
means for orderly termination of a blocking of assets once the emer­
gency has passed implies presidential power to resolve the plethora of
claims that will invariably arise.
   The law known as the Hostage Act, 22 U.S.C. § 1732, also provides
an independent statutory authority for the settlement of claims by
executive agreement when the settlement is in connection with negotia­
tions for the release of American citizens wrongfully detained by a
foreign government. The Act confers upon the President the broad
power to “use such means, not amounting to acts of war, as he may
think necessary and proper to obtain or effectuate [their] release.”
   Historical practice also reflects the existence of presidential power to
settle claims. Although claims settlements have often been concluded
by treaty or convention, historical examples abound of settlements
through executive agreement. Numerous lump-sum agreements have
settled claims of American nationals against foreign nations. See, e.g.,
Claims Settlement Agreement, July 16, 1960, United States-Poland, 11
U.S.T. 1953, T.I.A.S. No. 4545; Claims Settlement Agreement, July 19,
1948, United States-Yugoslavia, 62 Stat. 2658, T.I.A.S. No. 1803. His­
tory also provides numerous examples of claims settlements through
executive agreements that establish international arbitrations rather than
provide a lump sum. See generally W. McClure, International Executive
Agreements 52-56 (1941). In 1935, a congressional study identified 40
arbitration agreements entered into by the Executive between 1842 and
1931 which were not submitted to the Senate for advice and consent.
79 Cong. Rec. 969-71 (1935).2
   2 T he corollary to the pow er to settle claims o f A m erican citizens by submitting the claims to
binding arbitration is the pow er to prohibit any prosecution of claims in court.

                                               316
B. Nullification of Outstanding Attachments
   Pursuant to the agreement with Iran, President Carter issued Execu­
tive Order No. 12,277, 3 C.F.R. 105 (1982), which revoked the authori­
zation for, and nullified all interests in, the frozen Iranian government
property except the interests of Iran and its agents. The effect of this
order was to void the rights of plaintiffs in any possible litigation to
enforce certain attachments and other prejudgment remedies that were
issued against the blocked assets following the original blocking order.
In implementing the agreement, the United States is likely to face
numerous challenges by the attachment holders against the transfer of
the attached funds to the Federal Reserve Bank (Fed) and ultimately to
Iran. The attachment holders can be expected to argue that with the
issuance of the attachment orders, they acquired a vested right to prove
their claims and recover against the attached property and that this
right may not be taken away by the Executive. We believe that the
attachment holders will not succeed in preventing the transfer of the
attached funds to the Federal Reserve Bank, although the litigation,
including the appeals, will make difficult compliance with the United
States’ pledge to Iran to effect the transfer within six months.
   We believe that the law is clear that the President had Nthe power to
nullify the attachments.3 Under IEEPA, the President has authority in
time of emergency to prevent the acquisition of interests in foreign
property and to nullify new interests that are acquired through ongoing
transactions. The original blocking order delegated this power to the
Secretary of the Treasury, who promulgated regulations prohibiting the
acquisition, through attachment or any other court process, of any new
interest in the blocked property. The effect of these regulations was to
modify both the substantive and the procedural law governing the
availability of prejudgment remedies to creditors of Iran. The regula­
tions contemplated that provisional remedies might be permitted at a
later date but provided that any unauthorized remedy would be “null
and void.” 31 C.F.R. § 535.203(e).
   Subsequently, all of the attachments and all of the other court orders
against the Iranian assets held by the Fed were entered pursuant to a
general license or authorization given by the Secretary of the Treasury
effective November 23, 1979. This authorization, like all, authorizations
issued under the blocking regulations, was revocable at any time in
accordance with 31 C.F.R. § 535.805, which expressly provides that
   3 It is also our opinion that, in any event, the attachm ents w ere void because they w ere barred by
the Foreign Sovereign Immunities A ct o f 1976, 28 U .S .C § 1602 et seq. T w o district courts have
adopted that view. E-Systems. Inc. v. Islamic Republic o f Iran, 491 F. Supp. 1294 (N .D . Tex. 1980);
Reading & Bates Corp. v. National Iranian Oil Co.. 478 F. Supp. 724 (S.D.N.Y. 1979). Contra. Behring
Int'l Inc. v. Imperial Iranian Air Force, 475 F. Supp. 383 (D .N .J. 1979). See also New England
Merchants Nat'l Bank v. Iran Power Generation & Transmission Co.. 502 F. Supp. 120 (S.D.N.Y. 1980)
(holding that the Foreign Sovereign Immunities A ct barred prejudgm ent attachm ent o f Iranian assets
but that the operation of the A ct w as suspended by Executive O rder No. 12,170's freezing the assets).

                                                317
 any authorization issued under the blocking order could be “amended,
 modified, or revoked at any time.” Because the original authorization
 was subject to the reservation that it might be revoked at any time, the
 President could lawfully extinguish any interest created by the attach­
 ment by exercising that reservation. See Orvis v. Brownell, 345, U.S. 183
(1953).
    A related issue that may be raised by holders of attachments against
funds that have already been transferred to Iran is the legality of a
 transfer without prior hearing and judicial dissolution of outstanding
attachment orders and preliminary injunctions. We believe that no prior
hearing was required because the precarious nature of the negotiations
warranted swift presidential action to achieve the resolution of the
emergency. United States v. Yoshida Int'l, Inc., 526 F.2d 560, 573
(C.C.P.A. 1975). Moreover, because the authorization for attachments
could be revoked at any time, the attachment holders, under traditional
due process analysis, were not entitled to a prerevocation hearing. Cf.
Bishop v. Wood, 426 U.S. 341 (1976). Finally, it was not necessary for
the government to obtain a judicial dissolution of the attachments
before transferring the assets because presidential action in revoking the
authorization for the attachments removed the underlying legal predi­
cate for the attachment orders and expressly authorized the conduct
that had been previously-forbidden by the attachment order. See Penn­
sylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421
(1855).4
C. Return of the Frozen Assets to Iran
    Pursuant to the agreement, the frozen assets held by the Fed, as well
as the frozen assets held by overseas branches of United States banks
(less payments on outstanding loans and the amount held in escrow to
cover disputed amounts of unpaid principal and interest) have already
been returned to Iran. The agreement also provides that the remaining
frozen assets in the United States will be returned upon establishment of
a security account to satisfy awards made by the international arbitral
tribunal. This eventual return of the bulk of the frozen assets to Iran
will probably give rise to litigation challenging the President’s authority
to order such a return. In our opinion, presidential authority to issue
such an order is clear.
   Under IEEPA, the President is empowered to “direct and compel
. . . any . . . transfer [or] withdrawal . . . of . . . any property in
which any foreign country or national has an interest.” 50 U.S.C.
§ 1702(a)(1)(B). Upon nullification of any provisional remedies encum­
bering the assets, the President was free to exercise his power to order
    4 Because these assets have already been transferred from the control o f the United States to Iran,
litigation concerning the exercise of this pow er will be limited to defense on a show cause order issued
against federal officials involved in directing or executing these actions.

                                                318
 the transfer of the assets, which was in effect the withdrawal of the
assets by Iran.
D. Prohibition of Prosecution of Hostage Claims
   President Carter, acting pursuant to the agreement, has ordered the
Secretary of the Treasury to promulgate regulations prohibiting the
prosecution of any claims arising out of the seizure of the United States
embassy in Iran and the subsequent detention of the American hostages.
This prohibition is a sensitive issue that is likely to be challenged to be
without authority, as well as a Fifth Amendment “taking” without just
compensation and a denial of equal protection.
   As discussed above, the President has the power under IEEPA and
the Hostage Act to take steps in aid of his constitutional authority 5 to
settle claims of the United States or its nationals against a foreign
government. Thus, he has the right to license litigation involving prop­
erty in which a foreign national has an interest. That license can be
suspended by the Executive acting alone. New England Merchants Na­
tional Bank v. Iran Power Generation & Transmission Co., 508 F. Supp.
47 (S.D.N.Y. 1980) (Duffy, J.). But see National Airmotive Corp. v.
Government and State of Iran, 499 F. Supp. 401 (D.D.C. 1980)
(Greene, J.).
   The Court of Claims has suggested in dicta that if the President
settles a claim for less than “value” for unrelated foreign policy pur­
poses, a taking for public use occurs. See Gray v. United States, 21 Ct.
Cl. 340 (1886); Meade v. United States, 2 Ct. Cl. 224 (1866), affd on
other grounds, 76 U.S. (9 Wall.) 691 (1869). Some of the former hostages
or their families may rely on this dicta to seek compensation from the
United States, arguing that prohibiting them from prosecuting their
claims against Iran amounts to a taking without just compensation.
Whatever the vitality of the Meade and Gray dicta, the hostage claims
are distinguishable because they are held by persons whose benefit was
a prime purpose of the Administration’s negotiations to settle the crisis.
Even though that settlement has been reached, the courts are not likely
to question whether release could have been secured without settlement
or extinction of the tort claims in return. Cf. Aris Gloves, Inc. v. United
States, 420 F.2d 1386 (Ct. Cl. 1970).
   The foregoing conclusion regarding the difficulty of identifying loss
to the hostages and their families as a result of a claims settlement is
reinforced by analysis of their prospects for tort recovery absent an
agreement. It seems unlikely that they could recover damages against
Iran in United States courts. The Foreign Sovereign Immunities Act, 28
U.S.C. § 1605(a)(5), provides for jurisdiction for an award of tort dam­
ages against a foreign state only “for personal injury or death . . .
  *See. e.g., Restatem ent (Second) of Foreign Relations Law o f the United States § 213 (1965).
                                             319
occurring in the United States.” Torts to the hostages have not oc­
curred in the United States. In support of claims by their families for
such torts as intentional infliction of emotional distress, it could be
argued that the statute is ambiguous regarding whether it is enough for
the injury to occur here even if the tortious actions do not. The Act’s
legislative history, however, emphasizes that the immunity of foreign
states for their “public” acts as opposed to “commercial or private”
acts is to be maintained and that the exception for torts in the United
States “is directed primarily at the problem of traffic accidents,” sug­
gesting that the wrong must occur here to be actionable. H.R. Rep. No.
 1487, 94th Cong., 2d Sess. 7, 20 (1976).
   Finally, the “takings” question may become moot. If the Hostage
Compensation Commission recommends that Congress compensate the
hostages and their families and Congress acts upon such a recommenda­
tion, there will be no taking.
   If the hostages and their families receive no compensation for their
claims, they may also argue that in obtaining satisfaction from Iran for
the commercial claims but not for the hostage claims, the government
denied them equal protection in violation of the Fifth Amendment. In
our view, that argument will not prevail. Prohibiting prosecution of the
hostage claims can be justified for equal protection purposes as the best
“deal” that could be struck with Iran for their release. As such, it is
rationally related to and it furthers a legitimate governmental interest
and thus does not deny equal protection. The determination by the
President that precluding prosecution of the hostage claims facilitated
the release of the hostages will not be second-guessed by the courts. See
 United States v. Curtiss-Wright Export Corp., 299 U.S. 304 (1936);
Narenji v. Civiletti, 617 F.2d 745 (D.C. Cir. 1979), cert, denied, 446 U.S.
957 (1980); Miller v. United States, 583 F.2d 857, 865 (6th Cir. 1978);
Aris Gloves, Inc. v. United States, supra, 420 F.2d at 1393.
E. Freezing the Assets of the Former Shah
   As part of the agreement, President Carter prohibited the transfer of
all property and assets located in the United States of the former Shah
of Iran, his estate and his close relatives until litigation involving such
property is terminated.6 Although the Shah’s family may well challenge
this blocking order, we believe that the President’s authority to block
the Shah’s assets is not open to serious question. IEEPA authorizes the
President to block transfers of “any property in which any foreign
country or a national thereof has any interest,” 50 U.S.C. § 1702(a)(1).
    6 A lthough the United States will not be directly involved in the litigation, Executive O rder No.
 12,284 directs the A ttorney G eneral pursuant to the agreem ent to present to the court at the request of
Iran's counsel a suggestion of interest stating it is the United States' position that Iran's claim against
that property is not barred by either principles o f sovereign imm unity or the act o f state doctrine and
that Iranian decrees and acts relating to the assets o f the form er Shah should be enforced by the courts
in accordance w ith our laws.

                                                 320
 The application of this language in the predecessor Trading with the
 Enemy Act to the assets of foreign nationals was firmly established by
 the time that IEEPA was enacted and has repeatedly survived constitu­
 tional challenge. See, e.g., Sardino v. Federal Reserve Bank of New York,
 361 F.2d 106 (2d Cir.), cert, denied, 385 U.S. 898 (1966) (upholding the
 blocking of assets of Cuban nationals).
F. Conclusion
    Although we fully expect legal challenges to be brought to the major
actions discussed above, our review of the legal authorities previously
relied upon by this Office and the Attorney General in his January 19,
 1981, opinion to the President regarding the legality of the actions
taken by President Carter convinces us that these actions were well
within the power conferred on the President by the Constitution, stat­
utes, and treaty.
       II. Status of the Agreements with Iran under International Law
A. The Relevance of “Duress"
    You have asked us to consider whether the agreement reached with
Iran is enforceable under international law, a question not previously
addressed by this Office or your predecessor as Attorney General.
    The primary source for international treaty law is the Vienna Con­
vention on the Law of Treaties (the Convention), which entered into
force in 1980. It has been signed by both the United States and Iran,
but neither has yet become a party.7 It is frequently cited by nonparties,
however, as a statement of customary international law. At the time
that the Secretary of State sent the Convention to the President for
transmittal to the Senate, he said: “Although not yet in force, the
Convention is already generally recognized as the authoritative guide to
current treaty law and practice.” Ex, L., 92d Cong., 1st Sess. 1 (1971).
The Executive did not recommend any reservations to the Convention
at the time that it was submitted for advice and consent. This action
strongly suggests acceptance by the Executive of the Convention’s
rules.8
   The Convention includes a number of articles concerning the invalid­
ity of treaties, the most pertinent of which is Article 52. It addresses the
issue of coercion of a state by the threat or use of force:
   7 It was signed for the United States in 1970 and transm itted to the Senate by President Nixon on
N ovem ber 22, 1971. Ex. L., 92d Cong., 1st Sess. (1971), reproduced at 8 I.L.M . 679.
   8 Hearings on ratification o f the C onvention w ere held before the Senate Foreign Relations Com ­
mittee in 1972 (unpublished), but the Convention was never reported out. T he problem w as prim arily
a disagreement betw een the Senate and President over the authority to make international agreem ents
rather than disagreement about the substance of the Convention.

                                                321
            A treaty is void if its conclusion has been procured by
         the threat or use of force in violation of the principles of
         international law. embodied in the Charter of the United
         Nations.
   At the outset, we would observe that the agreement concluded with
Iran is a “treaty” within the meaning of the Convention even though it
is designated as an executive agreement for purposes of domestic law.
The Convention applies to any written international agreement con­
cluded between states which is governed by international law. Art.
2(l)(a).
   The principle expressed in Article 52 is of relatively recent origin.
Prior to the establishment of the League of Nations, the use of force in
international law was generally accepted. Thus, its use to procure
treaties was not considered unlawful. Experience under the League and
the U.N. Charter led to a fundamental change.9 Thus, the International
Law Commission (ILC), which drafted the Convention, concluded in
 1966 that' Article 52 stated an existing norm of international law. Re­
ports of the Commission to the General Assembly, [1966] 2 Y.B. Int’l
L. Comm’n 169, U.N. Doc. A/6309/Rev. 1/1966, at 246 (hereafter 1966
I.L.C. Yearbook).
   We believe that a persuasive argument can be made that the agree­
ment with Iran was “procured by the threat or use of force in violation
of the principles of international law” in the U.N. Charter, within the
meaning of Article 52. The International Court of Justice (ICJ) found
that the initial seizure was privately planned, Case Concerning United
States Diplomatic and Consular Staff in Tehran (US. v. Iran) ,1980 I.C'J.
3, 1J59, but that the government of Iran failed to take any steps to
correct the situation. U 68. The continued holding of the hostages by
force enjoyed the “seal of official governmental approval.” H 73. It was
carried on “for the purpose of exerting pressure on the United States,”
H 74, and “forcing” the United States “to bow to certain demands,”
H 91. Thus, the initially private action was transmuted into an act of
state. H 74 During this period, three of the hostages were held by the
Foreign Ministry itself. U 78. In addition, Iran constantly used threats to
put the hostages on trial. U 79
   The Court did not have occasion to address directly whether Iran’s
activity was an illegal use of force under U.N. Charter Article 2(4),10 or
whether the United States’ attempt to rescue the hostages was proper
self-defense to an “armed attack” under Article 51 of the Charter. The
Court’s opinion, however, uses words such as “armed,” “attack,” and
   9T . O. Elias, T he M odern Law of Treaties 170 (1974); M cN air, T he Law of Treaties 209 (1961);
Restatem ent of Foreign Relations Law of the United States (Revised), tentative draft No. 1, §338
(1980).
   10 "A ll M embers shall refrain in their international relations from the threat or use o f force against
the territorial integrity or political independence o f any state, or in any other m anner inconsistent with
the Purposes o f the United Nations.**

                                                  322
“overrun” in describing both the February and November 1979 take­
overs, 14, 17, which strongly suggests that it views Iran’s activity as
an illegal use of armed force.
   The formulation in Article 52 goes beyond the prohibitions embodied
in Article 2(4) of the Charter. The Vice President of the ICJ has
written: “By emphasizing the principles of the Charter, the Article
implies all those rules and practices of international law which underlie
the Charter provisions and which are of general application today.”
T.O. Elias, supra, at 170-71 (emphasis in original). Thus, use of force to
violate other basic Charter provisions is relevant.
   One such provision is Article 94, under which each member under­
takes to comply with the decision of the ICJ in any case to which it is
a party. Since May 24, 1980, Iran has used force to defy such a decision
and has therefore used force to violate the principles of the Charter.
   Although the basic principles are clear, there is a dearth of judicial
interpretation of Article 52 and state practice under it. The ICJ consid­
ered it briefly in the Fisheries Jurisdiction Case (U.K. v. Ice.), 1973
I.C.J. 1, Iceland, which refused to participate in the case, challenged
the validity of an exchange of notes with the United Kingdom confer­
ring jurisdiction on the ICJ. It sent a letter to the Court stating that the
exchange took place “under extremely difficult circumstances,” when
the British navy had been using force to oppose Iceland’s fishing limit.
The ICJ noted that this could be interpreted as a “veiled charge of
duress,” 1) 24, but said that the Court could not consider an accusation
of that kind without evidence to support it. It said that the history of
the jurisdictional agreement revealed that those instruments were freely
negotiated by the parties on the basis of “perfect equality and freedom of
decision on both sides." Id. (emphasis added). The Court recognized that
Article 52 represented “contemporary international law” and that “an
agreement concluded under the threat of or use of force is void.” This
statement was made seven years before the Convention came into
force.
   The Court’s finding that the agreement was not void is not conclu­
sive here.11 Unlike Iceland, which failed to produce evidence to sup­
port its charge, we believe that the United States can convincingly
establish the presence of duress in procuring the agreement. Indeed, as
we have noted, the ICJ has already found that the illegal acts were “for
the purpose of exerting pressure on the United States,” H 74, and used
the words “coercing” and “coercive” in this context. 11 87. There would
appear to be no reason why, for example, the United States should have
dropped its claim for compensation and the claims of the hostages
(Declaration U 11)—claims which had already been established in the
   11 The Fisheries Jurisdiction Case can also be viewed as a situation in which the ICJ was, understand­
ably, protecting its own jurisdiction. In this case, by contrast, the Court would protect its jurisdiction
by voiding our agreement to withdraw our case against Iran from the ICJ.
                                                 323
 ICJ (Judgment of May 24, 1980)—except for the threat against the
 hostages.
B. The Consequences of Duress
    If one accepts this reading of Article 52 and the proposition that it
 applies to the agreement with Iran, then the conclusion that would
 follow is not that the United States has to break its agreement but that
 there never was an agreement: it was void ab initio. The question
 whether such an agreement should be void or merely voidable was
considered by the ILC, which indicated the need, as a matter of
 international policy, to eliminate the consequences of coercion:
        The prohibitions on the threat or use of force contained in
         the Charter are rules of international law the observance
        of which is legally a matter of concern to every State.
         Even if it were conceivable that after being liberated from
        the influence of a threat or of a use of force a State might
        wish to allow a treaty procured from it by such means,
        the Commission considered it essential that the treaty
        should be regarded in law as void ab initio. This would
        enable the State concerned to take its decision in regard
        to the maintenance of the treaty in a position of full legal
        equality with the other State. If, therefore, the treaty
        were maintained in force, it would in effect be by the
        conclusion of a new treaty and not by the recognition of
        the validity of a treaty procured by means contrary to the
        most fundamental principles of the Charter of the United
        Nations.
 1966 I.L.C. Yearbook at 247.
   The ILC analysis raises several pertinent points. First, by clear impli­
cation it recognizes that negotiating a treaty under duress is not a
violation of international law insofar as the state being subjected to
duress is concerned. Thus, the negotiation of the agreement by the
United States was proper as a matter of domestic and international law.
   The ILC analysis also points out that once the coercion has been
removed, the coerced party is free, as a matter of international law, to
adhere to that treaty. Thus, the President would act in full accord with
international law were he now to decide to maintain the agreement. It
is not clear what procedure would be preferable to implement a deci­
sion to maintain the agreement. Because concluding the agreement was
within the Executive’s power, a simple statement acknowledging that
the United States wishes to maintain the agreement, even after the
release of the hostages, should suffice.12
   12 An example o f confirm ing state practice is the 1973 treaty betw een the Federal Republic of
G erm any and Czechoslovakia, w hich replaced the 1938 M unich A greem ent and stated it to be “void”
because imposed under threat o f force. T.O. Elias, supra, at 176.

                                              324
   Finally, the President may act, also fully consistent with international
(and domestic) law, to repudiate the agreement. If the President wishes
to treat the agreements as void, he must treat them as completely so.
Article 44(5) of the Convention provides that in cases falling under
Article 52, no separation of the provisions of the treaty is permitted.
The ILC took the position that this rule was necessary to permit the
coerced State to act in a position of full freedom from coercion. 1966
I.L.C. Yearbook at 239.
   The consequence of repudiation would be that the United States
could, in theory, demand that Iran establish the position that would
have existed prior to the agreement. Thus, the United States could ask
for return of the money paid over to Iran. Iran, as the party to which
coercion is imputable, does not have a similar right. See Article 69 of
the Convention. Thus, it cannot demand return of the hostages. The
United States would then be left with the means of redress available
elsewhere through self-help or international adjudication for both the
coercive acts and their consequences. 1966 I.L.C. Yearbook at 264. See
Part III(B), infra.
C. Litigating the Issue of Duress
   If the United States were to repudiate the agreement, it would be
desirable, for reasons of self-protection and international relations, to
seek confirmation from an independent body, particularly the ICJ. It
should be possible to present the issue to the ICJ relatively quickly. In
its judgment of May 24, 1980, the ICJ decided that the form and
amount of reparation to be paid by Iran “shall be settled by the Court.”
Because the Court thus reserved its jurisdiction in the case, the United
States could simply move for the designation of a master or other
appropriate method for taking evidence of damages. Under the Decla­
ration, the United States agreed to withdraw the case. Iran would thus
be forced to raise the Declaration as a bar to halt the case, and the ICJ
would be directly presented with the issue of duress.13
   Iran might choose to secure a determination of this matter from the
Iran-United States Claims Tribunal, as established under the Claims
Settlement Agreement, by proving our default with regard to paying
the balance due to Iran. If the agreement is void and its provisions are
inseparable, then the United States would take the position that the
Tribunal has no authority. Iran could in theory designate three mem­
bers and, failing designation by the United States, apply under Article 7
of the UNCITRAL rules, 15 I.L.M. 705, for designation of the remain­
ing arbitrators. See Claims Settlement Agreement, Art. 111(2). We doubt

    13 W e note that, under 28 U.S.C. §§516 and 519, conduct o f this litigation is reserved to the
A ttorney General. T he Legal A dviser o f the D epartm ent of State is, o f course, an active participant in
such litigation.

                                                  325
 that Iran could quickly constitute the Tribunal and obtain a judgment,
 given both the technical and legal problems and the time factors built
 into the agreement. The Tribunal is given jurisdiction “over any dispute
 as to the interpretation or performance of any provision” of the Decla­
 ration, which conceivably includes whether nonperformance by the
 United States based on a defense of duress was justified. There may be
 some way that the United States could make this point to the Tribunal
 without conceding its authority. If the ICJ ruled first and held the
 agreement to be a nullity, the Tribunal would be bound by that deci­
 sion.14
    A further issue is whether the issue of duress can be adjudicated in
 our domestic courts. Litigants may attempt to argue that the agree­
 ments are void even if the President decides to carry out the agree­
 ments; conversely, Iran may argue their validity as a bar to litigation
 even if the government decides that they are void. We believe that any
 decision made by the President as to duress is solely his to make and
 will not be reviewed by the courts, which can be expected to view it as
 a political question. A plurality of the Supreme Court held that Presi­
 dent Carter’s decision to terminate the Taiwan Defense Treaty was a
 political question. Goldwater v. Carter, 444 U.S. 996 (1979). We believe
 that the reasons for that decision are even more compelling here be­
cause, as explained in the Attorney General’s opinion of January 19, the
agreement with Iran was an executive agreement, which is the Execu­
tive’s to make and to terminate and which does not require participa­
 tion by the Senate. Cf. Charlton v. Kelly, 229 U.S. 447, 476 (1913);
 Restatement (Second) of Foreign Relations Law of the United States
 § 163 (1965).
D. Conclusion
    For the reasons set forth above, we conclude that: (1) a persuasive
case can be established that the agreement with Iran is void ab initio
under international law; (2) the negotiation of the agreement was not a
violation of international laws; (3) the President may, fully consistent
with international law, either repudiate or maintain the agreement; (4) if
the President decides to repudiate the agreement, confirmation of the
appropriateness of that action should be sought in the ICJ; and (5)
private litigants have no standing to contest in our courts any decision
that the President may make.

   14 T he agreem ent by the United States to arbitrate does not mean that w e have to present the case
for voidness to the Tribunal rather than make that decision ourselves. T he Tribunal is not given
exclusive jurisdiction over these questions. If the agreem ent is void, the Tribunal has no authority.
M oreover, the existence o f an arbitration agreem ent does not preclude measures o f self-help taken in
good faith. See L. D am rosch, Retaliation or Arbitration— or Both? The 1978 United States-France
Aviation Dispute. 74 Am. J. Int'l L. 785 (1980).

                                                326
    III. Legal Considerations Arising from Nonimplementation of the
                   International Agreement with Iran
   Three important questions that would arise from a decision not to
implement the executory portions of the international agreement with
Iran are:
        1) What would become of the $1,418 billion in the escrow
          account at the Bank of London (currently being held under
          the terms of the “Undertakings” for payment of disputed
          amounts between the Bank Markazi and the United States
          banks);
        2) Can the still frozen domestic assets, including bank assets,
          other financial assets, and other Iranian governmental assets,
          be used to satisfy claims by United States nationals against
          Iran; and
        3) What rights will the hostages and their families have to sue
          Iran for damages, and what possibility exists for collection of
          any award made?
   The following discussion proceeds on the assumption that the United
States, following an executive decision against implementation, secures
a judgment from the ICJ or otherwise determines that the agreement is
void.
A. The Escrow Account
   The Undertakings provide that $1,418 billion of the Fed and foreign
bank assets previously transferred to the escrow account at the Bank of
London shall be retained for the purpose of paying to U.S. banks any
unpaid principal or interest on loans to Iran and paying to Iran any
deposits, assets, or interest owing on Iranian deposits. The division is to
be made by the agreement of the Bank Markazi and the appropriate
U.S. bank; or, failing agreement on the amount, by reference to an
international arbitration panel as the parties might agree; or failing
agreement on a panel, by the Iran-United States Claims Tribunal. No
other provision is made for distribution of the account.
   The agreement between the banks—and the obligations and rights
thereunder—is arguably severable from the international agreement.
But the overall context of the bank agreement, as well as the provision
of terms and conditions for the escrow account in the Undertakings
document, signed by the United States, may well make this argument
unpersuasive. Thus, as discussed in Part II above, the Technical Ar­
rangement between the banks, which implements .the Undertakings,
might well fall within the international agreement.'In the time available,
we have been unable to assess the consequences of such failure.
                                    327
B. Claims of United States Nationals
    The domestic bank assets, valued at approximately $2.2 billion, and
 other Iranian assets, valued at approximately $1 billion, remain in this
 country. The first step of the two-step transfer process—to the Fed and
 then to Iran—is underway, subject to litigation. The second step de­
 pends upon adherence to the Claims Settlement Agreement, including
 establishment of a Claims Settlement Tribunal. The Security Account is
 to be opened at $1 billion (taken from the $2.2 billion in domestic bank
 assets) and replenished by Iran with “new” money if it drops below
 $500 million as awards are made.
   Nonimplementation would preclude funding of the Security Account.
 Presumably, the domestic assets could be used directly for settling the
claims. The claims settlement procedure would require legislation to
 vest the assets and confer jurisdiction on the Foreign Claims Settlement
Commission or a comparable body to hear and determine claims and
 make awards. One theoretical difference is that the amount that the
 Claims Tribunal can award has no upper limit, while the total of
awards against the domestic assets would of course be limited to about
$3.2 billion. It is also possible that damages assessed by the ICJ in the
course of that litigation could, with congressional approval by statute,
be made available for the satisfaction of private claims. The only claims
now pending, however, relate to the embassy seizure and not to com­
mercial disputes. We would add, however, that if the United States
prevails in the ICJ we could expect difficulty in collecting anything on
any judgment other than by self-help. Judgments of the ICJ are not
directly enforceable in domestic courts.
   Iran ignored the ICJ’s judgment in May 1980, which ordered Iran to
cease its illegal acts. The Security Council has power under Article 94
of the U.N. Charter to enforce ICJ judgments and could, in theory,
impose economic sanctions, a break in diplomatic relations, or other
penalties on Iran for failure to pay. Experience has shown, however,
both in this case and in others, that the Security Council, for political
reasons, has generally failed to support the ICJ.
   As noted in Part II, if the ICJ were to confirm that the agreement is
void, the United States may, in theory, ask for return of the assets paid
over to Iran as well as damages to the United States and its nationals.
Iran can be expected to reply, if it participates, that the assets were
theirs in any event and that the United States has no right to return of
the assets. There is a question whether any judgment will exceed what
we already control. An ICJ judgment would serve, however, to give
legitimacy to any action we may take in vesting Iranian assets already
in our control.

                                  328
 C. The Hostage Claims
    In H 11 of the Declaration, the United States agreed to preclude
 prosecution of any claim related to the seizure and detention of the
hostages. We have previously expressed the view that recovery against
 Iran on a tort claim seemed unlikely in the absence of an amendment to
the Foreign Sovereign Immunities Act, which presently provides for
 tort damages for personal injury or death occurring in the United States
and not resulting from a discretionary function. 28 U.S.C. § 1605(a)(5).
We also believe, however, that an amendment to that Act could impose
retroactive tort liability on Iran. Presumably, funds to pay out on any
judgments secured would have to come out of the frozen assets after
vesting or out of funds, if any, collected under an ICJ judgment.
    It should be noted that during the period in which the United States
was pressing its claim that the agreement is void before the ICJ, we
might not meet certain of our obligations under the agreement. Such
“breaches” could then lead to awards against the United States by the
Claims Tribunal in the unlikely event that the ICJ ultimately ruled
against the United States.
D. Conclusion
   In the short time available, we have identified three of what we
believe would be the most important issues to be confronted if the
agreement with Iran were not implemented. We are concerned, how­
ever, that other problems may arise, particularly the possibility of
claims brought against the United States which might result in the
imposition of liability on the government. We are exploring these po­
tential problems as quickly as possible.
                                         L a r r y L . S im m s
                                 Acting Assistant Attorney General
                                      Office of Legal Counsel




                                  329
