     09-3034-cv
     Hazi v. Bank Melli Iran

 1                        UNITED STATES COURT OF APPEALS
 2
 3                             FOR THE SECOND CIRCUIT
 4
 5                                 -------------
 6
 7                               August Term, 2009
 8
 9    (Argued: February 17, 2010                   Decided: June 15, 2010)
10
11                             Docket No. 09-3034-cv
12
13   - - - - - - - - - - - - - - - - - - - - - - X
14
15    SUSAN WEINSTEIN, individually as Co-Administrator of the Estate
16    of IRA WILLIAM WEINSTEIN, and as Natural Guardian of plaintiff
17    DAVID WEINSTEIN, JEFFREY A. MILLER, as Co-Administrator of the
18      Estate of IRA WILLIAM WEINSTEIN, JOSEPH WEINSTEIN, JENNIFER
19                   WEINSTEIN, HAZI & DAVID WEINSTEIN,
20                        JENNIFER WEINSTEIN HAZI,
21
22                             Plaintiffs-Appellees,
23
24                               BANK OF NEW YORK,
25
26                                   Plaintiff
27
28                                  - against -
29
30     ISLAMIC REPUBLIC OF IRAN, IRANIAN MINISTRY OF INFORMATION AND
31      SECURITY, AYATOLLAH ALI HOSEINI KHAMENEI, ALI AKBAR HASHEMI-
32                  RAFSANJANI, ALI FALLAHIAN-KHUZESTANI,
33
34                                  Defendants,
35
36             BANK MELLI IRAN NEW YORK REPRESENTATIVE OFFICE,
37
38                             Respondent-Appellant,
39
40           BANK SADERAT IRAN, NEW YORK REPRESENTATIVE OFFICE,
41             BANK SEPAH IRAN, NEW YORK REPRESENTATIVE OFFICE
42
43                                  Respondents,
44
45   - - - - - - - - - - - - - - - - - - - - - - X
46


                                        -1-
 1   Before:     KEARSE and HALL, Circuit Judges, and RAKOFF, District
 2               Judge.*
 3
 4        Appeal by respondent Bank Melli Iran from a ruling of the
 5   United States District Court for the Eastern District of New York
 6   (Leonard D. Wexler, Judge) granting plaintiff’s motion for
 7   appointment of receiver to attach respondent’s property in
 8   satisfaction of a prior judgment.
 9
10        Affirmed.

11                         LAINA C. LOPEZ, Berliner, Corcoran & Rowe,
12                         LLP, Washington, DC (Thomas G. Corcoran, Jr.,
13                         Berliner, Corcoran & Rowe, LLP, Washington,
14                         DC, John N. Romans, Law Office of John N.
15                         Romans, Mamaroneck, NY, on the brief), for
16                         Respondent-Appellant.
17
18                         ROBERT J. TOLCHIN, Jaroslawicz & Jaros, New
19                         York, NY, for Plaintiff-Appellee.
20

21   RAKOFF, District Judge:

22        On February 25, 1996, Ira Weinstein, a United States citizen

23   and resident of New York, was severely injured during a suicide

24   bombing in Jerusalem organized by the terrorist organization

25   Hamas.    On April 13, 1996, Weinstein died from those injuries.

26   See Weinstein v. Islamic Rep. of Iran, 184 F. Supp. 2d 13, 16-17

27   (D.D.C. 2002).    On October 27, 2000, his widow, another

28   administrator of his estate, and his children brought suit for

29   wrongful death and other torts against the Islamic Republic of

30   Iran (“Iran”), the Iranian Ministry of Information and Security,

31   and three Iranian officials, alleging that these defendants had



          *
           The Honorable Jed S. Rakoff, United States District Judge
     for the Southern District of New York, sitting by designation.

                                      -2-
1    provided substantial monetary support for Hamas’s terrorist

2    attacks.   See id. at 21-22.    After defendants failed to appear,

3    the district court determined that the plaintiffs had established

4    their “claim or right to relief by evidence satisfactory to the

5    court,” 28 U.S.C. § 1608(e), and entered default judgment for

6    plaintiffs in the amount of approximately $183,200,000.      See id.

7    at 16, 22-26.

8         Plaintiffs registered the judgment in the U.S. District

9    Court for the Eastern District of New York on October 8, 2002,

10   and served an information subpoena on Bank of New York that

11   eventually led to the identification of respondent Bank Melli

12   Iran (“Bank Melli”) as a possible instrumentality of the Iranian

13   state.   See Weinstein v. Islamic Rep. of Iran, 299 F. Supp. 2d

14   63, 64-65 (E.D.N.Y. 2004).     The district court found it

15   unnecessary to determine whether Bank Belli was an “agency or

16   instrumentality” for purposes of the TRIA because the court

17   determined that Bank Melli’s accounts at the Bank of New York

18   were unattachable.   Id. at 74-76.      However, on October 31, 2007,

19   one of the plaintiff-judgment creditors, Jennifer Weinstein Hazi

20   (“Hazi”), filed a motion in the Eastern District proceeding,

21   seeking appointment of a receiver (pursuant to Rule 69 of the

22   Federal Rules of Civil Procedure and Section 5228(a) of the New

23   York Civil Practice Law and Rules), to sell real property owned

24   by respondent Bank Melli in Forest Hills, Queens, which plaintiff


                                       -3-
1    sought to attach and sell in partial satisfaction of the judgment

2    against the defendants.   Hazi argued that the Forest Hills

3    property was now subject to attachment pursuant to the Terrorism

4    Risk Insurance Act of 2002 (“TRIA”), § 201(a), Pub. L. No.

5    107-297, 116 Stat. 2322, 2337, codified at 28 U.S.C. § 1610 note,

6    because on October 25, 2007, Bank Melli had been designated by

7    the United States Department of Treasury, Office of Foreign

8    Assets Control (“OFAC”) as a “proliferat[or] of weapons of mass

9    destruction,” and its assets had been frozen.    See Executive

10   Order 13,382, 70 Fed. Reg. 38,567 (June 28, 2005).1

11        On February 21, 2008, Bank Melli moved to dismiss the

12   proceeding against it and to stay the appointment of a receiver

13   pending resolution of its motion to dismiss.    In its motion to

14   dismiss, Bank Melli argued, inter alia, that attachment and sale

15   of the Forest Hills property would violate the Treaty of Amity

16   between the United States and Iran, that attachment and sale

17   would constitute a taking not for a public purpose and without

18   just compensation in violation of the Takings Clause of both the

19   Fifth Amendment of the United States Constitution and Article


          1
           Executive Order 13,382 was issued by the President
     pursuant to the International Emergency Economic Powers Act, 50
     U.S.C. §§ 1701, 1702, and provided that all property and
     interests in property in the United States of persons and
     entities listed in the order or subsequently listed “are blocked
     and may not be transferred, paid, exported, withdrawn, or
     otherwise dealt in.” Exec. Order 13,382, 70 Fed. Reg. 38,567
     (June 28, 2005). Bank Melli was added to the list on October 25,
     2007.

                                     -4-
1    IV.2 of the Treaty of Amity, and that the blocking of its assets

2    violated the so-called “Algiers Accords” and thus attachment and

3    sale would constitute a further violation of the Accords.    On

4    June 5, 2009, after receiving submissions from both Hazi and Bank

5    Melli,2 the district court (Wexler, Judge) denied Bank Melli’s

6    motion to dismiss and granted Hazi’s motion to appoint a

7    receiver, but stayed the proceedings pending this appeal.

8                               DISCUSSION

9         A.   JURISDICTION

10        On this appeal, Bank Melli argues for the first time that

11   the district court lacked ancillary jurisdiction to entertain

12   Hazi’s motion to appoint a receiver.    According to Bank Melli,

13   Hazi’s motion was not simply a proceeding to collect on a

14   debtor’s assets, but rather “an independent controversy with a

15   new party in an effort to shift liability,” Epperson v. Entm’t

16   Express, Inc., 242 F.3d 100, 106 (2d Cir. 2001); see also Peacock

17   v. Thomas, 516 U.S. 349, 357 (1996), for which TRIA § 201(a) did

18   not provide an independent source of jurisdiction.    Although not

19   raised below, subject matter jurisdiction may be raised at any

20   point, Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567,

21   576 (2004); Cave v. E. Meadow Union Free Sch. Dist., 514 F.3d




          2
            Although the district court also invited the United
     States to file its own submission to address the issues in the
     case, the Government declined to do so.

                                    -5-
1    240, 250 (2d Cir. 2008), and so the Court must address this

2    threshold matter.3

3         The Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §

4    1602 et seq., provides the exclusive basis for subject matter

5    jurisdiction over all civil actions against foreign state

6    defendants, and therefore for a court to exercise subject matter

7    jurisdiction over a defendant the action must fall within one of

8    the FSIA’s exceptions to foreign sovereign immunity.   See, e.g.,

9    Saudi Arabia v. Nelson, 507 U.S. 349, 351 (1993); Argentine Rep.

10   v. Amerada Hess Shipping Corp., 488 U.S. 428, 434-35 (1989);

11   Verlinden B.V. v. Cent. Bank of Nig., 461 U.S. 480, 493 (1983).

12   In the underlying action that gave rise to the judgment on which

13   plaintiff now seeks to collect, the district court exercised

14   subject matter jurisdiction over Iran and the other defendants

15   under 28 U.S.C. § 1605(a)(7), which abrogates immunity for those

16   foreign states officially designated as state sponsors of

17   terrorism by the Department of State where the foreign state

18   commits a terrorist act or provides material support for the

19   commission of a terrorist act and the act results in the death or




          3
           The district court did, however, cite for other purposes
     to a lower court decision that also considered the jurisdiction
     issue. See Weininger v. Castro, 462 F. Supp. 2d 457, 490
     (S.D.N.Y. 2006) (holding that the TRIA “provides [an] independent
     basis of subject matter jurisdiction in this enforcement
     proceeding against these [foreign sovereign] entities”).

                                    -6-
1    personal injury of a United States citizen.4   See Weinstein, 184

2    F. Supp. 2d at 20-21.   When such an exception applies, “the

3    foreign state shall be liable in the same manner and to the same

4    extent as a private individual under like circumstances . . . .”

5    28 U.S.C. § 1606; see also Verlinden, 461 U.S. at 488-89.

6         Bank Melli was not itself a defendant in the underlying

7    action.   However, the FSIA has a separate section, Section 1609,

8    that provides that where a valid judgment has been entered

9    against a foreign sovereign, property of that foreign state is

10   immune from attachment and execution except as provided in the

11   subsequent sections, Sections 1610 and 1611.   28 U.S.C. § 1609.

12   Section 201(a) of the TRIA, codified as a note to Section 1610 of

13   the FSIA, provides as follows:

14             Notwithstanding any other provision of law, and except

15             as provided in subsection (b), in every case in which a

16             person has obtained a judgment against a terrorist

17             party on a claim based on an act of terrorism, or for

18             which a terrorist party is not immune under [28 U.S.C.

19             § 1605(a)(7)], the blocked assets of that terrorist

20             party (including the blocked assets of any agency or


          4
           In 2008, Congress repealed § 1605(a)(7) and created a new
     section specifically devoted to the terrorism exception to the
     jurisdictional immunity of a foreign state. See Pub. L. 110-181,
     Div. A, § 1803, Jan. 28, 2008, 122 Stat. 341 (repealing 28 U.S.C.
     § 1605(a)(7) and creating 28 U.S.C. § 1605A). To the extent
     relevant to this case, § 1605A provides for the same exceptions
     to foreign sovereign immunity as the repealed section.

                                      -7-
1              instrumentality of that terrorist party) shall be

2              subject to execution or attachment in the aid of

3              execution in order to satisfy such judgment to the

4              extent of any compensatory damages for which such

5              terrorist party has been adjudged liable.

6    TRIA § 201(a), 116 Stat. at 2337 (emphasis supplied).

7         The parties do not dispute that each of the elements of

8    Section 201(a) is satisfied here.     Iran has been designated a

9    terrorist party pursuant to section 6(j) of the Export

10   Administration Act of 1979, 50 U.S.C. App. § 2405(j), beginning

11   January 19, 1984, see Weinstein, 184 F. Supp. 2d at 20, and

12   therefore is a “terrorist party” as defined by TRIA § 201(d)(4),

13   116 Stat. at 2340.   The district court in the underlying action

14   found jurisdiction under 28 U.S.C. § 1605(a)(7), and thus Iran

15   was not immune from jurisdiction in the original proceeding.       See

16   id. at 20-21.   Bank Melli’s assets were “blocked” as of October

17   2007, designated as such pursuant to Executive Order 13,382 and

18   50 U.S.C. §§ 1701, 1702.   Finally, Bank Melli concedes that it is

19   an instrumentality of Iran.

20        Bank Melli contends, however, that the above-quoted language

21   of the TRIA does not provide an independent basis for

22   jurisdiction over an instrumentality of a sovereign state when

23   the instrumentality was not itself a party to the underlying tort

24   action that gave rise to judgment on which plaintiff now seeks to


                                     -8-
1    recover.   Rather, Bank Melli argues, Section 201(a) of the TRIA

2    simply provides an additional ground for abrogating immunity from

3    attachment for a party that has been the subject of a valid

4    judgment, but does not provide jurisdiction for a court to permit

5    attachment against a party that was not itself the subject of the

6    underlying judgment.

7         Although novel,5 Bank Melli’s argument is belied by the

8    plain language of Section 201(a), as well as by its history and

9    purpose.   Section 201(a) clearly states that “in every case in

10   which a person has obtained a judgment against a terrorist party

11   . . ., the blocked assets of that terrorist party (including the

12   blocked assets of any agency or instrumentality of that terrorist

13   party) shall be subject to execution or attachment . . . .”     TRIA

14   § 201(a), 116 Stat. at 2337 (emphasis supplied).   Under Bank

15   Melli’s interpretation, the parenthetical language in Section

16   201(a) of the TRIA that permits attachment of funds from agencies

17   and instrumentalities would be rendered superfluous, since the

18   agency or instrumentality would itself have been a “terrorist

19   party” against which the underlying judgment had been obtained.

20   See, e.g., Corley v. United States, 129 S. Ct. 1558, 1566 (2009)


          5
            To date, no appellate court has addressed this issue,
     although several district courts have found that the TRIA grants
     subject matter jurisdiction for execution and attachment
     proceedings over parties against whom there exist underlying
     judgments. See, e.g., Weininger, 462 F. Supp. 2d at 477-89;
     Rubin v. Islamic Rep. of Iran, 456 F. Supp. 2d 228 (D. Mass.
     2006).

                                     -9-
1    (“‘[a] statute should be construed so that effect is given to all

2    its provisions, so that no part will be inoperative or

3    superfluous, void or insignificant . . . .’” (quoting Hibbs v.

4    Winn, 542 U.S. 88, 101 (2004)).   Instead, however, the statute

5    clearly differentiates between the party that is the subject of

6    the underlying judgment itself, which can be any terrorist party

7    (here, Iran), and parties whose blocked assets are subject to

8    execution or attachment, which can include not only the terrorist

9    party but also “any agency or instrumentality of that terrorist

10   party.”   If this did not constitute an independent grant of

11   jurisdiction over the agencies and instrumentalities, the

12   parenthetical would be a nullity.

13        Although Bank Melli points out that Section 201(a) of the

14   TRIA has been codified as a note to Section 1610 rather than in

15   the sections of the FSIA more directly addressed to exceptions to

16   jurisdictional immunity, the plain language of the statute cannot

17   be overcome by its placement in the statutory scheme.    See

18   Padilla v. Rumsfeld, 352 F.3d 695, 721 (2d Cir. 2003) (“No

19   accepted canon of statutory interpretation permits ‘placement’ to

20   trump text, especially where, as here, the text is clear and our

21   reading of it is fully supported by the legislative history.”),

22   rev’d on other grounds by Rumsfeld v. Padilla, 542 U.S. 426

23   (2004); see also Fla. Dep’t of Revenue v. Piccadilly Cafeterias,

24   Inc., 128 S. Ct. 2326, 2336 (2008) (noting that a statutory


                                    -10-
1    provision’s placement in a particular section “cannot substitute

2    for the operative text of the statute”).   This is even more

3    clearly true in this case where the operative language begins

4    with the phrase “[n]otwithstanding any other provision of law,”

5    thus making plain that the force of the section extends

6    everywhere.

7         Any inquiry into the meaning of a statute generally “ceases

8    ‘if the statutory language is unambiguous and the statutory

9    scheme is coherent and consistent.’”   Barnhart v. Sigmon Coal

10   Co., 534 U.S. 438, 450 (2002) (quoting Robinson v. Shell Oil Co.,

11   519 U.S. 337, 340 (1997) (other internal quotation marks

12   omitted)); see also Universal Church v. Geltzer, 463 F.3d 218,

13   223 (2d Cir. 2006).    But even if, contrary to fact, there were an

14   ambiguity here, it would be resolved in plaintiff’s favor by the

15   legislative history.   According to Senator Harkin, one of TRIA’s

16   sponsors:

17        The purpose of title II is to deal comprehensively with the

18        problem of enforcement of judgments issued to victims of

19        terrorism in any U.S. court by enabling them to satisfy such

20        judgments from the frozen assets of terrorist parties. . . .

21        Title II operates to strip a terrorist state of its immunity

22        from execution or attachment in aid of execution by making

23        the blocked assets of that terrorist state, including the

24        blocked assets of any of its agencies or instrumentalities,


                                     -11-
1         available for attachment and/or execution of a judgment

2         issued against that terrorist state.   Thus, for purposes of

3         enforcing a judgment against a terrorist state, title II

4         does not recognize any juridical distinction between a

5         terrorist state and its agencies or instrumentalities.

6    148 Cong. Rec. S11524, at S11528 (Nov. 19, 2002) (statement of

7    Sen. Harkin).   Senator Harkin further stated that TRIA

8    “establishes once and for all, that such judgments are to be

9    enforced against any assets available in the U.S., and that the

10   executive branch has no statutory authority to defeat such

11   enforcement under standard judicial processes, except as

12   expressly provided in this act.”   Id.

13        Accordingly, we find it clear beyond cavil that Section

14   201(a) of the TRIA provides courts with subject matter

15   jurisdiction over post-judgment execution and attachment

16   proceedings against property held in the hands of an

17   instrumentality of the judgment-debtor, even if the

18   instrumentality is not itself named in the judgment.

19        B.   CONSTITUTIONALITY OF TRIA

20        The underlying judgment which plaintiff seeks to satisfy was

21   obtained in February 2002, but the TRIA was not enacted until

22   November 2002 and Bank Melli was not designated a “proliferat[or]

23   of weapons of mass destruction” until 2007.   In another argument

24   raised for the first time on appeal, Bank Melli argues that the


                                    -12-
1    TRIA, as here applied, is unconstitutional because it “mandates

2    the reopening of a final judgment in violation of the separation

3    of powers doctrine of Article III of the U.S. Constitution.”

4    Thus, to avoid any constitutional problem, Bank Melli urges this

5    Court to read the TRIA as applying, prospectively, only to

6    judgments rendered final after the TRIA’s enactment, and thus not

7    to apply here.

8         Although plaintiff contends, with some force, that the

9    constitutional challenge has been waived for failure to raise it

10   below, a claim that a legislative enactment intrudes on the

11   courts’ powers is the kind of claim that appropriately may be

12   considered here, even if for the first time.   See, e.g., Freytag

13   v. Comm’r, 501 U.S. 868, 879 (1991) (rejecting waiver and

14   addressing constitutional challenge because of “the strong

15   interest of the federal judiciary in maintaining the

16   constitutional plan of separation of powers”) (internal quotation

17   marks omitted).

18        Bank Melli’s constitutional challenge is largely derived

19   from Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995), in

20   which the Supreme Court held that a section of the Securities

21   Exchange Act of 1934 violated separation of powers because it

22   required federal courts retroactively to reopen final money

23   judgments that had been dismissed as barred under the statute of

24   limitations.   See id. at 219.   “[R]etroactive legislation [that]


                                      -13-
1    requires its own application in a case already finally

2    adjudicated . . . does no more and no less than ‘reverse a

3    determination once made, in a particular case’ [and thus] exceeds

4    the powers of Congress.”   Id. at 225 (quoting The Federalist No.

5    81, at 545 (J. Cooke, ed., 1961)).

6         Here, however, no such revision of the 2002 judgment is

7    effectuated by the attachment of Bank Melli’s property pursuant

8    to the TRIA.   Indeed, the judgment itself is unaffected.     What

9    the TRIA did, instead, was to override the Supreme Court’s

10   reading in First Nat’l City Bank v. Banco Para El Comercio

11   Exterior de Cuba, 462 U.S. 611, 627-28 (1983) (“Bancec”), that

12   “duly created instrumentalities of a foreign state are to be

13   accorded a presumption of independent status.”      Id. at 627.   This

14   presumption related to enforceability of judgments against state

15   instrumentalities, but it had not nothing to do with the

16   rendering of the judgment itself.     Moreover, even under Bancec,

17   the presumption could be overcome.    Id. at 629.    The effect of

18   the TRIA, therefore, was simply to render a judgment more readily

19   enforceable against a related third party.    The judgment itself

20   was in no way tampered with, and separation of powers was thus in

21   no way offended.6


          6
            It should be noted that Hazi seeks attachment of property
     in partial satisfaction only of the portion of the underlying
     judgment that awarded compensatory damages in her favor. See
     Rein v. Socialist People’s Libyan Arab Jamahiriya, 162 F.3d 748,
     762 (2d Cir. 1998) (“Where a retroactive law is civil rather than

                                    -14-
1         Bank Melli also argues that the delegation of authority to

2    the Treasury Department to determine which entities’ assets would

3    be “blocked” is, as applied here, tantamount to an

4    unconstitutional vesting of “review of the decisions of Article

5    III courts in officials of the Executive Branch.”    Plaut, 514

6    U.S. at 218; see Hayburn’s Case, 2 U.S. (2 Dall.) 409 (1792).

7    Here, however, it is clear that no official from the Executive

8    Branch stands in direct review of the district court’s decision

9    regarding execution and attachment of assets pursuant to the

10   TRIA.   OFAC simply made a factual determination that Bank Melli

11   was a proliferator of weapons of mass destruction, pursuant to

12   which Bank Melli’s assets were “blocked.”    In so doing, OFAC did

13   not in any way review or alter the district court’s original

14   entry of the default judgment.

15        Nor does the district court’s reliance on OFAC’s

16   determination for its exercise of subject matter jurisdiction run

17   afoul of separation of powers.    In Jones v. United States, 137

18   U.S. 202 (1890), the Supreme Court held that the district court

19   had subject matter jurisdiction over a murder trial where the

20   crime occurred on an island that the State Department had deemed




     criminal, it is only the imposition of punitive damages that
     might, in particular circumstances, raise a constitutional
     problem.”). Of the total judgment of approximately $183,200,000,
     approximately $33,200,000 was compensatory damages, of which
     $5,000,000 was allocated to Hazi. Weinstein, 184 F. Supp. 2d at
     22-25.

                                      -15-
1    was “appertaining to the United States.”   Id. at 224.   In that

2    case, the exercise of subject matter jurisdiction based on an

3    Executive Branch determination did not exceed the bounds of

4    Article III.   Similarly, in Matimak Trading Co. v. Khalily, 118

5    F.3d 76, 83-84 (2d Cir. 1997), overruled in part on other grounds

6    by JPMorgan Chase Bank v. Traffic Stream (BVI) Infrastructure

7    Ltd., 536 U.S. 88 (2002), this Court found that alienage

8    jurisdiction could depend on whether the Executive Branch had

9    deemed a given foreign entity a “state,” and because the foreign

10   entity in question had not been recognized as a “state,”

11   jurisdiction was deemed lacking.

12        It is true that, in Rein, 162 F.3d at 763, this Court, in

13   dicta, raised the question of whether after the passage of the

14   FSIA, designation of a foreign state as a sponsor of terrorism by

15   a branch other than Congress raised a potential issue of

16   separation of powers.   Specifically, in Rein, we rejected Libya’s

17   argument that the State Department’s designation of Libya as a

18   state sponsor of terrorism violated separation of powers, since

19   Libya had already been designated as such when section 1605(a)(7)

20   was added to the FSIA; but we queried whether a different “issue

21   of delegation might be presented if another foreign sovereign --

22   one not identified as a state sponsor of terrorism when §

23   1605(a)(7) was passed -- was placed on the relevant list by the

24   State Department and, on being sued in federal court, interposed


                                    -16-
1    the defense that Libya now raises.”   162 F.3d at 764; see also

2    Miller v. FCC, 66 F.3d 1140, 1144 (11th Cir. 1995) (noting that

3    Congress cannot delegate the power of any federal agency to “oust

4    state courts and federal district courts of subject matter

5    jurisdiction”); United States v. Mitchell, 18 F.3d 1355, 1360 n.7

6    (7th Cir. 1994) (raising doubts about whether Congress could

7    delegate its control over federal court jurisdiction to any

8    agency or commission).

9         In effect, Bank Melli now raises, albeit obliquely, the kind

10   of issue left unaddressed in Rein.    Like Libya, Iran was already

11   deemed a state sponsor of terrorism when the relevant provision

12   of the FSIA was applied to abrogate foreign sovereign immunity in

13   the district court.   However, here, the district court’s

14   jurisdiction over a proceeding to attach Bank Melli’s assets

15   depended, at least in part, on OFAC’s subsequent determination

16   that Bank Melli was a proliferator of weapons of mass

17   destruction.   Reaching only the instant variation on the issue

18   alluded to in the dicta in Rein, we hold that Congress, by virtue

19   of providing subject matter jurisdiction over execution and

20   attachment proceedings based in part on OFAC’s determination of

21   what assets are blocked, has not unconstitutionally delegated its

22   authority to the Executive Branch.

23        The TRIA provides jurisdiction for execution and attachment

24   proceedings to satisfy a judgment for which there was original


                                    -17-
1    jurisdiction under the FSIA (which is not challenged here) if

2    certain statutory elements are satisfied.     The fact that

3    satisfaction of one of those statutory elements -- that Bank

4    Melli’s assets were blocked -- was based on the factual

5    determination by a coordinate branch that Bank Melli supported

6    terrorist activity is not, on its own, a delegation of Congress’s

7    authority over the courts’ subject matter jurisdiction that

8    exceeds the boundaries of Article III.     The TRIA only delegates

9    to the Executive the authority to make a factual finding upon

10   which jurisdiction turns in part.     See, e.g., Owens v. Rep. of

11   the Sudan, 531 F.3d 884, 891 (D.C. Cir. 2008) (rejecting Sudan’s

12   argument that the FSIA unconstitutionally delegated subject

13   matter jurisdiction to Executive Branch because the FSIA only

14   granted “authority to make a factfinding upon which jurisdiction

15   partially rests”).   That factfinding, moreover, is one peculiarly

16   within the expertise of the Executive, a fact Congress itself

17   implicitly recognized in creating the TRIA.

18        In short, none of Bank Melli’s belatedly-raised

19   constitutional arguments persuades the Court that there has been

20   any defect in the application of the TRIA in this case.

21        C.   TRIA & TREATY OF AMITY

22        We next turn to the arguments that Bank Melli did raise in

23   the district court, the first of which concerns the Treaty of

24   Amity (the “Treaty”) that the United States and Iran (then


                                    -18-
1    governed by the Shah) signed in 1955, which took effect in 1957

2    and still remains in place.   Treaty of Amity, Economic Relations,

3    and Consular Rights, U.S.-Iran, Aug. 15, 1955, 8 U.S.T. 899.

4    Article III.1 of the Treaty provides that “[c]ompanies

5    constituted under the applicable laws of either High Contracting

6    Party shall have their juridical status recognized within the

7    territories of the other High Contracting Party.”   Id., art.

8    III.1.   Article IV.2 adds that “[p]roperty of nationals and

9    companies of either High Contracting Party, including interest in

10   property, shall receive the most constant protection and security

11   within the territories of the other High Contracting Party, in no

12   case less than that required by international law.” Id., art.

13   IV.2.

14        Bank Melli asserts that these provisions, read together,

15   require that Iranian companies be treated as distinct and

16   independent entities from their sovereign.   But this is not

17   correct.   As the district court noted, the key provision, Article

18   III.1., is “substantively identical” to a provision in a number

19   of Friendship, Commerce, and Navigation (“FCN”) treaties

20   negotiated by the U.S. following World War II.   In Sumitomo Shoji

21   America, Inc. v. Avagliano, 457 U.S. 176 (1982), the Supreme

22   Court held that these provisions are designed, not to give

23   separate juridical status to instrumentalities of the sovereign

24   entity, but simply “to give corporations of each signatory legal


                                    -19-
1    status in the territory of the other party, and to allow them to

2    conduct business in the other country on a comparable basis with

3    domestic firms.”   Id. at 185-86.

4         Bank Melli argues that Sumitomo only addressed the language

5    in the provision of the U.S.-Japan FCN Treaty that a company

6    “constituted under the applicable laws and regulations within the

7    territories of either Party shall be deemed companies thereof,”

8    but did not address the rest of the provision, “and shall have

9    their juridical status recognized within the territories of the

10   other Party.”   While it is true that the Court focused its

11   analysis on the phrase “shall be deemed companies thereof,” it

12   went on to explain that the intent behind the FCN treaties as a

13   whole was simply to grant legal status to corporations of each of

14   the signatory countries in the territory of the other, thus

15   putting the foreign corporations on equal footing with domestic

16   corporations.   457 U.S. at 185-86.   There is, therefore, no

17   conflict between the TRIA and the Treaty.

18        Moreover, even assuming, arguendo, that there were a

19   conflict between the two, the TRIA would have to be read to

20   abrogate that portion of the Treaty.    Although a “‘treaty will

21   not be deemed to have been abrogated or modified by a later

22   statute unless such purpose on the part of Congress has been

23   clearly expressed,’” Trans World Airlines, Inc. v. Franklin Mint

24   Corp., 466 U.S. 243, 252 (1984) (quoting Cook v. United States,


                                    -20-
1    288 U.S. 102, 120 (1933)), Section 201(a) of the TRIA expressly

2    states that it permits attachment of the assets of a foreign

3    sovereign’s instrumentalities in satisfaction of a terrorism-

4    related judgment against the foreign sovereign “[n]otwithstanding

5    any other provision of law” (emphasis supplied).    See Cisneros v.

6    Alpine Ridge Group, 508 U.S. 10, 18 (1993) (noting that the

7    Courts of Appeals have regularly interpreted such

8    “notwithstanding” provisions “to supersede all other laws”); see

9    also Ministry of Defense and Support for the Armed Forces of the

10   Islamic Rep. of Iran v. Elahi, 129 S. Ct. 1732 (2009); Hill v.

11   Rep. of Iraq, No. 99 CV 03346TP, 2003 WL 21057173, at *2, 2003

12   U.S. Dist. LEXIS 3725, at *10-11 (D.D.C. Mar. 11, 2003) (holding

13   that the “notwithstanding provision” is “unambiguous and

14   effectively supersedes all previous laws”).

15        D.   TAKINGS CLAUSE

16        In the next of the arguments raised below, Bank Melli argues

17   that the attachment here in issue constitutes a per se taking of

18   physical property, not for a public purpose and without just

19   compensation, and therefore offends the Takings Clause of the

20   Fifth Amendment of the U.S. Constitution, as well as Article IV.2

21   of the Treaty of Amity.    See U.S. Const., amend V (“nor shall

22   private property be taken for public use, without just

23   compensation”); Treaty, art. IV.2 (property of Iranian companies




                                     -21-
1    “shall not be taken except for a public purpose, nor shall it be

2    taken without the prompt payment of just compensation”).

3         The argument is without merit.   Bank Melli was added to the

4    OFAC list because of its unlawful actions in support of

5    terrorism.   In so doing, it had clear notice from the TRIA,

6    enacted five years earlier, that such actions could result in the

7    designation and blocking of its assets under the TRIA, which

8    could in turn subject them to attachment.   See Paradissiotis v.

9    United States, 304 F.3d 1271, 1275-76 (Fed. Cir. 2002) (rejecting

10   a takings clause claim that OFAC’s freezing of the plaintiff’s

11   stock options, which eventually became valueless, constituted a

12   taking without just compensation); see also Branch v. United

13   States, 69 F.3d 1571, 1576 (Fed. Cir. 1995) (noting that seizure

14   of assets to offset tax liability or pay a civil penalty would

15   not constitute a taking).

16        Here, where the underlying judgment against Iran has not

17   been challenged, seizure of Bank Melli’s property, as an

18   instrumentality of Iran, in satisfaction of that liability does

19   not constitute a “taking” under the Takings Clause.   See Branch,

20   69 F.3d at 1577 (noting absence of “any principle of takings law

21   under which an imposition of liability is deemed a per se taking

22   as to any party that cannot pay it”).   Instead, Bank Melli’s own

23   conduct as a funder of weapons of mass destruction opened it to

24   liability for judgments already entered against Iran.   See, e.g.,


                                    -22-
1    Meriden Trust and Safe Deposit Co. v. FDIC, 62 F.3d 449, 455 (2d

2    Cir. 1995) (citing cases holding that deprivation of property

3    resulting from voluntary conduct cannot constitute a “taking”).

4         As the Supreme Court has noted, the Takings Clause is

5    designed “to prevent the government ‘from forcing some people

6    alone to bear public burdens which, in all fairness and justice,

7    should be borne by the public as a whole.’”   E. Enters. v. Apfel,

8    524 U.S. 498, 522 (1998) (quoting Armstrong v. United States, 364

9    U.S. 40, 49 (1960)).   Here, where Bank Melli’s assets are subject

10   to attachment to satisfy a judgment against its foreign

11   sovereign, the underlying purpose of the Takings Clause is in no

12   way violated by attachment of Bank Melli’s assets.

13        Finally, Bank Melli does not advance any argument to find

14   that the Takings Clause in the Treaty of Amity would require a

15   different analysis.    Cf. Kahn Lucas Lancaster v. Lark Int’l, 186

16   F.3d 210, 215 (2d Cir. 1999) (treaties are construed in much the

17   same manner as statutes and district court interpretations are

18   subject to de novo review).

19        E.   ALGIERS ACCORDS

20        In the last of the arguments it raised below, Bank Melli

21   argues that the attachment here in issue violates the so-called

22   Algiers Accords (the “Accords”).   In 1980, the United States and

23   Iran, under the auspices of the Government of Algeria, entered

24   into the Accords to settle a number of a disputes between the two


                                     -23-
1    countries, in particular, matters arising out of the hostage

2    crisis that occurred on November 4, 1979 in Tehran in which the

3    Iranian Government seized the U.S. Embassy and held captive 52

4    U.S. citizens.7   Previously, in response to the hostage crisis,

5    President Carter had issued Executive Order 12,170, which

6    “blocked all property and interests in property of the Government

7    of Iran, its instrumentalities and controlled entities and the

8    Central Bank of Iran which are or become subject to the

9    jurisdiction of the United States . . . .”    Exec. Order 12,170,

10   44 Fed. Reg. 65,729 (Nov. 14, 1979).    As part of the Accords, the

11   United States agreed to “restore the financial position of Iran,

12   in so far as possible, to that which existed prior to November

13   14, 1979,” and to “commit[] itself to ensure the mobility and

14   free transfer of all Iranian assets within its jurisdiction.”      20

15   I.L.M. at 224.    The United States also agreed, subject to some

16   exceptions to “arrange, subject to the provisions of U.S. law

17   applicable prior to November 14, 1979, for the transfer to Iran




          7
           The Accords are comprised primarily of two documents: the
     Declaration of the Government of the Democratic and Popular
     Republic of Algeria (Jan. 19, 1981), and The 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 (Jan. 19, 1981), reprinted in 20 I.L.M. 223
     (1981); 81 Dep’t of State Bull. No. 2047, Feb. 1981 at 1. See
     Iran Aircraft Industries v. Avco Corp., 980 F.2d 141, 143 (2d
     Cir. 1992).

                                     -24-
1    of all Iranian properties which are located in the United States

2    and abroad.”   Id. at 227.

3         Bank Melli argues that, because the obligations of the

4    United States under the Accords are ongoing, and the Forest Hills

5    property at issue was owned by Bank Melli prior to November 14,

6    1979 (making it a blocked asset under Executive Order 12,170) the

7    property is subject to these ongoing Accords and therefore the

8    subsequent “blocking” of the asset under Executive Order 13,382

9    violated the Accords.

10        This argument confuses the United States’s obligation to

11   unblock assets that had been blocked based on pre-Accords

12   violations with post-Accords blocking based on post-Accords

13   violations.    As the district court noted in an earlier decision,

14   after the United States and Iran entered into the Accords most

15   Iranian assets were automatically unblocked.   See Weinstein, 299

16   F. Supp. 2d at 67-68.   Since the Forest Hills property was no

17   longer blocked after the Accords, Bank Melli was entitled to

18   exercise any and all rights of ownership, including sale of the

19   property, until it was subsequently blocked on October 25, 2007.

20   Although Bank Melli argues that no specific expiration date was

21   given in the Accords, and therefore the obligations of the U.S.

22   are ongoing, nothing in the Accords suggests that the United

23   States is precluded from blocking Iranian assets based on

24   subsequent events unrelated to the hostage crisis.   Indeed, the


                                     -25-
1    United States has implemented several sanctions programs against

2    Iran, subsequent to the Accords, that have had the effect of

3    limiting the mobility of Iranian property.   See, e.g., Executive

4    Order 12,613, 52 Fed. Reg. 41940 (Oct. 29, 1987) (prohibiting,

5    pursuant to 3 U.S.C. § 301 and Section 505 of the International

6    Security and Development Cooperation Act of 1985, 22 U.S.C. §

7    2349aa-9, certain Iranian imports); see also Weinstein, 299 F.

8    Supp. 2d at 68 (providing overview of executive orders imposing

9    sanctions that affected property controlled or owned by Iran).

10        Nor is Roeder v. Islamic Rep. of Iran, 333 F.3d 228 (D.C.

11   Cir. 2003), upon which Bank Melli heavily relies, to the

12   contrary.   In Roeder, the D.C. Circuit found that, despite a

13   Congressional amendment to the FSIA specifically intended to

14   abrogate Iran’s sovereign immunity for that particular case,

15   plaintiff’s action was still nevertheless barred because it was

16   based on the events of the November 4, 1979 hostage crisis and

17   the Accords “bar[red] and preclude[d] the prosecution against

18   Iran of any pending or future claim of . . . a United States

19   national arising out of the events” of the seizure and detention

20   of the 52 U.S. citizens.   Id. at 236 (internal quotation marks

21   omitted).   It concluded that the specific amendment to the FSIA

22   in no way addressed the Accords and, given the express statement

23   in the Accords barring such actions, refused to interpret the

24   amendment to the FSIA, despite its being passed specifically to


                                    -26-
1    permit plaintiffs to go forward with their case, as abrogating or

2    modifying that agreement without an express statement from

3    Congress to that effect.    Id. at 237-38.   While the Accords

4    prevent suits arising out the hostage crisis, the language

5    regarding Iranian assets in no way suggests that Iranian assets

6    would be immunized from blocking for all time.     The blocking of

7    assets undertaken by President Carter in his Executive Order was

8    done in response to the particular events of November 1979, and

9    the Accords unblocked those assets.    Since nothing in the Accords

10   suggests that the United States has a limitless obligation to

11   ensure that Iranian assets remain free from attachment based on

12   events unrelated to the 1979 hostage crisis, Bank Melli’s

13   arguments that blocking its assets and subsequent attachment of

14   those assets would violate the Accords are simply unavailing.

15                                CONCLUSION

16        The Court has considered Bank Melli’s other arguments and

17   finds them without merit.    Accordingly, for the foregoing

18   reasons, the Court affirms the district court’s decision to grant

19   plaintiff’s motion and appoint a receiver to attach Bank Melli’s

20   property in partial satisfaction of the judgment against Iran and

21   to deny Bank Melli’s motion to dismiss.




                                     -27-
