Case of the Day: Rubin v. Islamic Republic of Iran

The case of the day is Rubin v. Islamic Republic of Iran (1st Cir. 2013). I have written about a related and quite interesting case in the Seventh Circuit. The underlying facts are sad:

On September 4, 1997, Hamas carried out a triple suicide bombing in the crowded Ben Yehuda Street pedestrian mall in Jerusalem. Five bystanders were killed and nearly 200 were injured. Hamas claimed responsibility for the bombing, and Israeli police arrested two Hamas operatives who participated in the attack. They and other members of their Hamas cell gave Israeli authorities information about the planning, financing, and execution of this act of terrorism. The two were later convicted of multiple counts of murder and attempted murder.

Rubin, who was a victim of the attack, obtained a default judgment against Iran in the District of Columbia in 2003. She then came to Massachusetts and sought to attach, by trustee process, 1 antiquities in the possession of the Museum of Fine Arts and Harvard University that she claimed were the property of the Iranian state. In the District Court, the judge held that the objects—stone reliefs, sculptures, and archaeological specimens—were immune from attachment. The First Circuit has now affirmed.

Here are the relevant statutes. Under the FSIA (28 USC § 1609):

Subject to existing international agreements to which the United States is a party at the time of enactment of this Act the property in the United States of a foreign state shall be immune from attachment arrest and execution except as provided in sections 1610 and 1611 of this chapter.

There are potentially relevant exceptions to this immunity within the FSIA itself, but for purposes of this case, the relevant exception was Section 201(a) of the Terrorism Risk Insurance Act of 2002, which provides:

Notwithstanding any other provision of law, and except as provided in subsection (b), in every case in which a person has obtained a judgment against a terrorist party on a claim based upon an act of terrorism, or for which a terrorist party is not immune under section 1605(a)(7) of title 28, United States Code, the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party) shall be subject to execution or attachment in aid of execution in order to satisfy such judgment to the extent of any compensatory damages for which such terrorist party has been adjudged liable.

A “blocked asset” is “any asset seized or frozen by the United States … under sections 202 and 203 of the International Emergency Economic Powers Act”.

Thus the case ultimately turned on whether the antiquities were “blocked assets.” If so, then they were potentially liable to attachment and execution. If not, then not.

Following the Iranian hostage crisis of 1979, the President issued an executive order under the IEEPA, later implemented by regulation, that blocked all property subject to US jurisdiction in which Iran had “any interest of any nature whatsoever”, unless the Office of Foreign Asset Control authorized the transaction. The blocking order remains in effect today, but under the Algiers Accords between the United States and Iran, the US agreed to “revoke all trade sanctions” directed against Iran since November 1979 and to arrange for the transfer to Iran of all Iranian property located in the United States and unaddressed elsewhere in the Accords.

Following the Accords, an executive order and additional OFAC regulations required US persons “to transfer such properties held on January 19, 1981 as directed after that day by the Government of Iran.” The term “properties” was defined to mean “all uncontested and non-contingent … property interests.” A property interest is not “contested” unless “the holder thereof reasonably believes that Iran does not have title or has only partial title to the asset.” After 2001, by regulation, such a belief “may be considered reasonably only if it is based upon a bona fide opinion, in writing, of an attorney licensed to practice within the United States stating that Iran does not have title or has only partial title to the asset.”

The net effect of all this complication is this: if the antiquities were not “contested,” then they are unblocked and thus not attachable under the TRIA. If the antiquities were “contested,” then they remain blocked and could be attached.

In an amicus brief, OFAC interpreted its regulations to mean that an asset cannot be “contested” unless the Government of Iran has directed its transfer . In the absence of any claim by Iran, the property remains “uncontested.” The court, on ordinary principles of administrative law, deferred to OFAC’s reasonable interpretation of its own regulations, and thus Rubin, the victim of the terrorist attack, was unable to attach the antiquities.

Because two of the judges who decided the case (Judges Stahl and Lipez) are senior judges, a petition for rehearing en banc is not a waste of time, for the reasons I discussed in a prior Belfast Project post. So I think we should expect a petition for rehearing. I will keep an eye on this case.

Notes:

  1. Trustee process is a Massachusetts procedure for attaching a defendant’s property in the hands of another. It is most frequently used to attach amounts on deposit with a bank, but it has other uses, as this case shows.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2012), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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