Case of the Day: United States v. Assa Co.

The case of the day is United States v. Assa Co. Ltd. (2d Cir. 2019). This is one of several Iran-related FSIA decisions the Second Circuit issued last week. In Assa, the facts were these: Assa Corp. was a New York corporation formed in 1989. Its parent company is Assa Co., Ltd., a Jersey company. The Jersey parent was, in turn, owned by Harter Holdings Ltd., which Bank Melli, an Iranian state-owned bank, purchased in 1993. In 1995, the bank transferred Harter to Davood Shakeri and Fatemeh Aghamiri, but there was a dispute whether the bank continued to control Harter, and thus Assa, after the imposition of sanctions against Iran in 1995.

In 2008, the government brought a civil forfeiture action, seeking forfeiture of all of the interest of Assa and of the Bank in 650 Fifth Avenue Co., which owned the skyscraper at 650 Fifth Ave. in midtown Manhattan. There were several questions in the case, but I will focus on just one: in a civil forfeiture case, where the property is owned by a foreign state or an instrumentality of a foreign state, does the government need to show that jurisdiction exists under the FSIA?

The court said no. The defendant in a forfeiture case is not the foreign state or instrumentality. It is the property itself. Since the FSIA applies to jurisdiction exercised over foreign states, the statute doesn’t apply. QED.

The decision seems arguably correct as a matter of statutory construction. But I was surprised to see no discussion of international law and no nod to construction of the statute in light of international law. I would like to know whether customary international law permits or recognizes the distinction our law draws between jurisdiction in personam over a foreign sovereign and jurisdiction in rem over the property of a foreign sovereign. Even in admiralty, an American court’s jursidiction to enforce a maritime lien is limited to cases where the lien is connected with a commercial activity of the foreign state, or in cases to foreclose a preferred ship’s mortgage. Restatement (Fourth) of the Foreign Relations Law of the United States § 459.

2 responses to “Case of the Day: United States v. Assa Co.”

  1. […] have published a post at Just Security on United States v. Assa Co., a Second Circuit FSIA case I noted recently. Assa is the case holding that the FSIA does not forbid a court from exercising […]

  2. […] to ask me to write an introductory note about United States v. Assa Co., a case I covered here in August and that Bill Dodge and Ingrid Wuerth criticized in a paper that I covered later that month and […]

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