INTERNATIONAL COURT OF JUSTICE
CERTAIN IRANIAN ASSETS
(ISLAMIC REPUBLIC OF IRAN v. UNITED STATES OF AMERICA)
COUNTER-MEMORIAL
SUBMITTED BY
THE UNITED STATES OF AMERICA
October 14, 2019
ANNEXES
VOLUME V
Annexes 109 through 120
ANNEX 109
Annex 109
WESTLAW
Annex 109
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Annex 109
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Annex 109
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Annex 109
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ANNEX 110
Annex 110
Patrick Clawson, Ph.D.
1 UNITED STATES DISTRICT COURT
2 FOR TUE DISTRICT OF COLUMBIA
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FRAN
THE
BEISER and GARY BEISER,
Plaintiffs,
v.
ISLAMIC REPUBLIC OF IRAN,
Defendants.
et al., I
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:
et 111., :
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H
MARIE CAMPBELL, et 111.,
Plnintiffe,
v.
THE ISLAMIC REPUBLIC OF
Defendants.
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:
IRAN, et al., :
'
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Page 1
Case No.
OO-CV-02329
Judge: DAR
Case No.
00-CV-02104
Judge: DAR
17 Deposition of Patrick Clawson, Ph.D.
18 Washington, D.C.
19 Tuesday, November 25, 2003
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21 Reported by: Kimberly Francie Smith
22 Job No. 156499
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November 25, 2003
9:00 11.111.
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7 Deposition of Patrick Cl11weon, Ph.D., held at the
8 offices of:
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10 Piper Rudnick
11 1200 - 19th Street, N.W.
12 Washington, D.C. 20036
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14 Pursuant to notice, before Kimberly Francis Smith,
15 a Notary Public of the District of Columbia.
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Esquire Deposition Services
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APPEARANCES:
For the Plaintiffs:
Piper Rudnick
1200 - 19th Street, N.W.
Washington, D.C. 20036
(202) 861-3900
BY: Louis J. Rouleau, Esq.
10 Also Present:
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T. J. O'Toole, Videographer
C O N T E N T S
2 EXAMINATION OF THE WITNESS
J PATRICK CLAWSON, PB.D.
4 By Mr. Rouleau
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.EX BIB ITS
Exhibits were premarked and retained by
Mr. Rouleau.
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PLAINTIFF'S
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Patrick Clawson, Ph.D.
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P R O C E E D I N G S
(9 :01 11.11..)
THE VIDEOGRAPBERt This is tape number 1
of the videotaped deposition of Dr. Patrick
Clawson taken by the plaintiffs in the matter of
Fran Beiser and Gary Beiser, et al., versus the
Islamic Republic of Iran, et al., Case Number
00-CV-02329 DAR, and Case Number 01-CV-02104 DAR
entitled Marie Campbell, et al . , versus the Islamic
Republic of Iran. These cases are in the U.S .
District Court for the District of Columbia.
Thie deposition is being held at the law
offices of Piper Rudnick located at 1200 - 19th
Street, Northwest, in Washington, D.C. on
Novelllber 25th, 2003, at approximately 9:01 a.m.
My n11111e is T, J. O'Toole. I'm
representing Esquire Deposition Services. I'm a
certified legal video specialist. The court
reporter is Kimberly Francie Smith, also
representing Esquire Deposition Services.
Will counsel please introduce himself
and indicate which party he represents.
Page6
HR. ROULEAUt Louie Rouleau of Piper
Rudnick, Washington, D.C., counsel for plaintiffs.
THE VIDEOGRAPBER: Thank you. Will the
court reporter please swear in the witness.
Thereupon,
PATRICK CLAWSON, PH.~- _ -- - ... ~
the Witness, called for examination by counsel for
the Plaintiffs and, having been sworn by the
notary, was examined and testified as follows:
EXAMINATION BY COUNSEL FOR PLAINTIFFS
BY MR. ROULEAU:
Q. Good morning.
A. Good morning.
Q. Can you please state your full name for
the record?
A. Patrick Lyle Clawson.
Q. And, Hr. Clawson, are you currently
employed?
A. Correct.
Q. And where are you employed?
A. I work at the Washington Institute for
Near East Policy which is located at 1828 L Street,
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Northwest, Washington, O.c.
Q. And what is your position at the
Washington Institute for Near East Policy?
A. I am the deputy director.
o. And can you give eoDe background about
what that position entails?
A. I supervise a ataff of approximately
30 researchers, research assistants, and
administrative staff who investigate questions of
Middle Eastern politics including the politics of
Iran and Saudi Arabia, also security issues,
economics, U.S. policy concerns.
We put on conferences, presentations.
I testify -- we testify -- excuse me -- at
Congressional hearings. We appear often in media
outlets. And we write scholarly books and
articles.
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Q. And is it fair to say that a large focus
for the institute is on the Middle East itself?
A. Correct, almost entirely focused on the
Middle East or U.S. policies towards the Middle
East.
Pagcf
Q. And, Mr. Clawson, what is your
educational background if you can take ue through
from undergrad going forwards?
A. r have a bachelor's degree in economics
from Oberlin College in Oberlin, Ohio. And I hav~
6-.- ~ ma~ter.!_!!~~d. a_rh.D. in econoDics_~rom the New
7 School for Social Research in New York City,
8 o. And have you written any books
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A. Iran has been the main or partial
subject of approximately 12 of my roughly 30 books
that I have either written or edited.
Q. And have you written any articles on
Iran?
A. I have written several dozen articles
about Iran, mostly about contemporary Iran, its
politics and economics, but also some an Iranian
history.
Q. And what languages other than English do
you speak if any?
A. My Persian or Farsi is quite good as is
my French. I also have some Spanish and German and
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Hebrew.
Q. And what language do they speak in Iran?
A. They speak -- the principal language is
Persian or Farsi.
Q. And are you able to read Persian se
well, speak it?
A. Yee. I try to read two Iranian
newspapers in Persian every day as well as one in
English. Don•t always make it, but I try.
Q. Dr. Clawson, I have what's in front ot
you a binder in which I've marked some -- premarked
some deposition exhibits. If you would turn to
what I've marked as Deposition Exhibit Number 1, do
you recognize that docwoent?
A. Yee. Thie is a brief professional
biography of myself.
Q. And is that -- is it your curriculum
vitae?
A.
Q.
A.
Q.
Yes.
le it up to date?
Yes.
Dr. Clawson, have you testified
Page 10
previously in the United States District Court for
the District of Columbia on issues relating to
Iran, Iranian sponsorship of terrorism, and the
Iranian economy?
A. Hore than ten times, yes.
Q. And do you recall in J4b.lt-c8Blls.i
A. Goodness, gracious. Let's see. Help me
on this one . I think of the first one as being the
Flatow case. Then --
Q. Did you testify in the Colonel Biggins
case?
A. In the Biggins case.
think of them chronologically.
I was trying of
And this isn't
going to work. The Ciccipio case. There was also
the Marine barracks bombing case. I don't know the
names of all the defendants in that. The Anderson
case. I'm leaving out a bunch.
Q. But about --
A. Almost all of these cases have been
about kidnappings and hostage taking in the 1990e
in Lebanon. In addition there was the Marine
barracks case which was also in Lebanon which
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wae -- excuse me -- in the 1980e, not 1990e.
Q. And those were similar PSIA cases like
these, correct?
A. Tboee were all FSIA cases. Yes.
Q. And in those cases were you qualified aa
an expert witness?
A. Yea.
Q. In what area or areae were you qualified
to testify as an expert witness, if you know?
A. Certainly about Iranian support for
terrorism, about Iran's economy, about Iran's
budget, government budget, and several other areas
depending on the case.
Q. Dr. Clawson, I'd like to talk a little
now about the Islamic Republic of Iran which I'll
refer to as Iran. Okay?
A, Yee, air.
Q. Could you pleaee describe when Iran was
created?
A. The revolution that brought to power the
current government took place in 1978, '79. And
the present system was put in place in the spring
Page 12
of 1979.
Q. And you mention -- was there an Iranian
revolution I believe you mentioned?
A.
Q.
Yes, sir.
And what international goals if any did
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A, During the course of the revolution and
particularly after the new government came to power
it made it clear in frequent statements that it
wanted to reduce American influence in the middle
east, using the slogan death to Alllerica.
And it also wanted to have Iran's
revolution taken es a model by Muslim populations
throughout the world to bring to power governments
committed to implementing this vision, this
particular vision of Islamic religious law and
this particular vision of an anti-western foreign
policy.
Q. And Iranians are Shiite Muslims,
correct?
A, About 90 percent or a little lees of
Iran's population is Shiite.
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Q. And eo it'e accurate to eay that the
government of Iran is anti-western and epecificelly
anti-American, correct?
A. Correct, eir.
Q. And does Iran uee terrorism as a means
of accomplishing ite goals of ridding the middle
east of western influence end in particular
American influence?
A. Yes. Iran has actively supported
terrorism ever since the Iranian revolution of
1978, '79. It has eupported many different typee
of terrorism directed against America end American
interests as well as directed against some of
America's friends and allies in the region.
Q. Dr. Clawson, please refer to what were
previously marked as Deposition E:,chibite 2 through
15 which I will represent are copies of Patterns of
Global Terrorism for years 1984 through 1988.
If you'd juet look through thoee and
confirm that these were authored by the office of
counterterroriem of the United States Department of
state.
Page 14
A. (Reviewing document.) Yee, sir. These
appear just looking at the cover pages to be the
Patterns of Global Terrorism reports for the years
you mention.
Q. And are you familiar with these
publications?
A. Yee, sir. The Patterns of Global
Terrorism reports issued annually are the bible of
those of us who follow terrorism. They are very
carefully prepared. Every word is fought over.
I've been consulted several times both inside -when
I wee ineide the government and outside the
government about the exact phrasing to be used.
So they are very carefully done reports
that reflect an interagency consensus about
terrorism developments in the year that they cover.
Q. I'd like to draw your attention to
Deposition Exhibit Number 5 which ie the Patterns
of Global Terrorism report for the year 1987. If
you could, go to page 35. And do you see on page
35 where there is a subheading in bold titled Iran?
A. Yes.
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Pagel{
Q. If you could, read into the record that
firet paragraph, please.
A. Of the 44 terrorist incidents in which
Iran wae identified as the sponsor we recorded 25
in the middle eaet, 10 in western Europe, and 9 in
Asia. The preferred means were bombings, 27, and
armed attacks, 13;
Tehran uses terroriem skillfully and
selectively to support its long-term objectives of
ridding the middle east of all weetern influence,
intimidating Iranian dieeidente overseas, forcing
Arab countries to end their support for Iraq, and
exporting Khomeini's vision of radical Islamic
vision to all parts of the Muslim world;
We believe that most Iranian leaders
agree that terrorism is an acceptable policy option
although some may disagree on specific operations.
Q. And, Dr. Clawson, do you agree with this
assessment?
A. Yee. It's a very careful assessment.
Q. Okay. Now, referring to Exhibit Number
13 which is the patterns of global terrorism for
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year 1995, if you would turn to page 23 of that
report just below the subtitle in bold titled
Overview of State Sponsored Terrorism, do you see
that?
A. Yee.
cs o-:--~,:~ -sfiitee in part: "The -United States
currently lists Cuba, Iran, Iraq, Libya, North
Korea, Sudan, and Syria as state sponsors of
terrorism."
Do you understand that Iran is
considered to be a state sponsor of terrorism by
the United States Government?
list?
A.
Q.
Oh, yes.
Do you know how long it's been on that
A. Since the list wee first mandated by
Congress and prepared by the State Department, Iran
was a charter member of that list.
The list -- it's a little bit unclear
exactly what year it starts. But Iran's been on
that list for more than 15 years. In other words,
at first the list was just a letter sent to
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Patrick Clawson, Ph.D.
Congress. Then it becomes an officially
established list .
Q. Ia it currently still listed -A.
Oh, yea.
Q. -- ae a member?
A. Yee. It'e still lieted.
Page 17
Q.
it states:
In the third paragraph on that same page
"Iran continued in 1995 to be the
world's moat active supporter of international
terrorism."
A.
Q.
A.
o.
Do you see that?
Sure.
And do you agree with this aeeeeement?
Yee, at that time.
Right. If you would, refer to
Deposition Exhibit Number 14, if you will . And
I've gone ahead and tabbed the page.
So you can just go to the tabbed page of
Exhibit 14 which hae a subtitle in bold titled
Overview of State Sponsored Terrorism. Deposition
Exhibit Number 14 is the patterns of globel
terrorism for the yeer 1996, correct?
A.
Q.
Correct.
And where I tebbed on the page it
states in part:
Page 18
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Q. Thank you. Dr, Clawson, I'd now like to
turn your attention or rather I'd like ue to talk
ebout the ministry of informetion and security.
Are you familier with the Iranian agency known ee
the ministry of information and security?
A, Yee, sir.
Q.
A.
And what ie the ministry?
The ministry of information and security
can be thought of as analogous to the Soviet
Union's KGB in that it has responsibilities for
surveillance of both domestic dissidents ae well as
foreign intelligence responsibilities.
It ie the successor agency to the Shah
of Iran's organization for information and security
often referred to by the initials of its Persian
name, SAVAJI, 5-A-V-A-K. The minietry ie just the
ministry of informetion end security. It ~akee
over the personnel from the Shah"s SAVAK.
It functions in the shadows for the
first few years and then is formally created as a
ministry in the early and mid-1980s -- I'd have to
go back and check whether it wee 1984 -- and
Page20
because of its role in persecuting domestic
dissidents becomes very controversial in Iran in
the late 1990a after it assessinated a number of
leading intellectuals and journalists in Iran,
"Iran, the most active state sponsor of 5 And there ie a committee appointed to
terrorism today, continues to prm4dU-c:J:fre'et.Ion,o,.o'Dil= ~ - .inveetigiilse'-'-i:t -·by "'the now president -of Iran,
support to terrorism -- terroriet groups including 7 Mohammed Khatami, K-h-a-t-a-m-i. The report of
Bezbo1lah in Lebanon.• 8 that committee is then leaked in large parts to the
And do you agree that Iran in 1996 was
the most active state sponsor of terrorism?
A. Yee . And indeed I would argue that it
continuee to be today. And that continues to be
the judgment of the U.S. Government, that it's the
~ost active state sponsor of terrorism.
You will note the wording ia e bit
different from the previous year . Some dispute
arose about non-state spooeors of terrorism. But
emong the state sponsors Iran ie clearly the most
active.
O, And do you agree that Iran provided
direction and support to terrorist groups in 1996?
A. Oh, yes,
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Irenian prees end we learn a great deal about how
the ministry has functioned over the yeare as a
reeult of that investigation.
Q. And either through that report or other
sources ie the ministry involved in Iran's
sponsorship of terrorism?
A. Yee. In a German -- a Berlin court,
Berlin, Germany, a former high official of the
ministry who defected testified about the
ministry's role in the killings of eeveral Irenian
dissidents in a Berlin restaurant.
And thet dissident provided ue with
quite a bit of specific details about how the
ministry supports terrorist activities.
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Q. And how does the ministry support
terrorist activities?
A. It provides excellent technical support.
It provides -- that is to sey the techniques that
ere to be used. It provides political direction
and it provides finances.
It is not the only Iranian agency that
does this. But it is a large agency estilllated to
have 30,000 employees. And it is one of the most
professionally competent intelligence agencies in
the world.
Q. Yon also mention -- you mentioned that
provides financing as well as political direction.
Does it provide military training?
A. I would say at least paramilitary
training, training in the use of arms and
explosives.
Q. Okay. Dr. Clawoon, ere you familiar
with the Iranian agency known as the Iranian
Islamic Revolutionary Guard Corps?
A. Yee.
Q. And I'm going to refer to that as the
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Guard Corps. Okay?
A. Fine.
Q. Is the Guard Corps known by any other
name?
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Pag.e 23t·
And after the end of that war the Guard Corpe
becomes particularly active in terrorist activities
as well as some more innocent things, drug
interdiction for instance.
Q. You mention that it got involved in
terrorist activities. And can you just elaborate
on what sort of terrorist activities it was
involved in?
A. It was very involved in supporting
the Bezbollah organization in Lebanon, in the
kidnappings of the 1990s, and in attacks on Jewish
and Israeli targets worldwide such as the bombings
of a Jewish community center in Argentina and also
the Israeli embassy in Argentina, both of which
killed many, many people.
Q. You mentioned that the Guard Corpe was
involved in supporting Bezbollah. What sort of
support -- what form did that support take?
A. The support took the form of the
dispatch of Guard personnel to Lebanon where they
provided significant training and also just
military support for Bezbollab operations, running
Page 21
1 a military camp in Lebanon for that purpose, and
2 they provided substantial financial assistance to
3 Hezbollah.
4 We don't know -- I don't know the
5 A. It's often referred to as the Pasdaran, 5 exact breakdown between how much of the financial
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7 Iran just as the Corps. Or the Iranian word for 7 information and eecurity and how much came through
8 that is Sepah, s~e-p-a-h. 9 the Guard Corpe. But both of them were very active
9 Q. And what ie the Guard Corpe? 9 in Lebanon, continue to be active in Lebanon.
10 A. After the Iranian revolution the new 10 Q. We keep on mentioning Bezbollah.
11 government is uncertain of the loyalty of the 11 Dr. Clawson, who or what is Bezbollah if you know?
12 Iranian military with good reason because the 12 A. Bezbollah is an Arabic term. It
13 Iranian military allllost overthrew the new 13 literally means the party of god. There have been
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revolutionary government in at least one major coup
attempt.
And the new government therefore forme a
revolutionary military body which ie explicitly
conceived of as a check on the military and as
directly responding to the supreme religious
leader.
This Guard Corps then expands
dramatically once the war with Iraq begins in 1980.
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a variety of different groups that have used
that name.
But particularly since the late 1980e
the name is generally associated with the largest
such group, the Bezbollah in Lebanon which is
founded by their own account at the direction of
the Iranian government where it first starts as a
faction within the larger Shia political movement
and then splits off tc become its own separate
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Patrick Clawson, Ph.D.
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organiz11tion.
And it has become the largest armed
group in Lebanon outside the government. It
engaged in many terrorist activities, kidnapping of
Americans for instance. And it also engaged in
armed struggle against the Israelis which
eventually led to the Israeli withdrawal from
Lebanon.
Is it still involved or engaged in
terrorist activities?
A. It is. Bezbollah is very much engaged
in terrorist activities. It is actively supporting
with both financial and technical mea·ns many of the
radical Palestinian groups which are engaging in
attacks on civilian targets inside Israel .
It is also by their own account actively
debating whether to resume direct attacks against
Americans and American interests abroad. And it
has established a presence inside Iraq for the
purposes of which we are not quite sure. Neither
we, the analytical community, nor by press accounts
the u.-s. Government are sure.
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o. r just want to make sure the record's
clear that both the ministry of information
eecuri-ty and the Guard Corps participated in the
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of Iran at -- through various different mechanisms .
It is possible that the members of Saudi
Bezbollah see themselves more directly as nembere
of the same organization as Bezbollah in Lebanon.
Accounts differ. And it may be that perceptions of
members of Saudi Bezbollah on this point also
differ.
o. And who comprises the membership of
Saudi Bezbollah?
10 A. So far as we know it's entirely composed
11 of Saudi Shiites. The Shi.a population of Saudi
12 Arabia is heavily concentrated in the eastern
13 provinces of Saudi Arabia along the Persian Gulf in
14 the area where the oil fields are found. And it is
15· discriminated against by the Saudi government in a
16 whole variety of different ways,
17 It is often thought to account for
18 somewhere between 10 and 15 percent of the total
19 Saudi population but fully a third or more of the
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population of the eastern province.
O, And do Shiite Saudis have a general
affinity to Iran who are majority Shiites as well?
A. The Saudi Shias have historically
regarded Iran, as you said, with an affinity.
Page28
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development of Bezbollah, correct? 4
ie a complicated relationship because the Saudi
Shias simultaneously see themeelvee as ethnically
A. Correct. Correct. The ministry of 5 Arab and therefore don't like ethnic Persians.
information ·end security brought ,.;..fl) .1-e"'if"greft·..;=---6--
many technical skills which were very useful for 7
Bezbollah's terrorist activities. And the 8
Guard Corps brought with it particularly the
revolutionary spirit and political direction as
well as some technical skills and finance.
O, Dr. Clawson, are you familiar with the
organization known as Saudi Bezbollah?
A, YeB, sir.
o. And what connection if any is there
between Hezbollah and Saudi Bezbollah?
A. Well, at the ~ery least the two
organizations are inspired by the eame ideology.
The two organizations both owe allegiance to Iran's
supreme religious leader. And that process is a
formal oath taking process. And the two
organizations receive support from the government
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::c· - .::,-Jrere .. :i"e an historic enim"oeity there yet
there is a strong religious affinity. And many of
the religious leaders of the Saudi Shia community
have been trained in Iran and have lived there for
many years.
o. You mentioned that the Shiites are a
minority in Saudi Arabia. So what are the majority
of Saudi Arabians?
A. Most Saudis are Sunni and are
particularly of a school of Sunni thought which is
usually called in the west Wahabi, W-a-h-a-b-i,
that has a particularly strict interpretation on
many of the questions that so separate the Sunnis
and the Shia.
So the division between Sunni and Shia
is particularly acute between the Wahabis and the
Shia.
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Q. And you mentioned earlier that the
Shiite Sau.dis are a repressed minority in Saudi
Arabia. What form does that repression take, or
discriminated against?
A. It takes many different forms. Some of
the more pressing are that it's very difficult for
a Saudi Shia to get jobs in the government or with
government owned enterprises such as the oil
company.
And it's very difficult for the Saudi
Shia to build new mosques, to have public
observance outeide of their mosques of their
religious events. And the education system in
Saudi Arabia includes a whole variety of elements
in the curricultllll which are explicitly anti-Shia.
Q. Okay. Thank you.
A. There are also reports of other foJCDs of
more direct repression.
Q. Such as?
A. Lots of suggestions that anybody who's
prominent in the Shia co111111unity is going to be
picked up and interrogated by the police, asked to
Page 30
inform on other people. The young Shia people are
frequently beaten up by the police.
Q. What was the state of relations between
Iran and Saudi Arabia from 1990 to, eay, about
1997?
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Historically the relationships across the
Persian Gulf have been tense for centuries between
Persians and Arabs. But this becomes particularly
acute at this time.
Then the presence of the United States
forces in Saudi Arabia after the 1990 Iraqi
invasion of Kuwait adds a whole new layer of
reasone why Iran is upset at the Sandie. It's very
upset at the preeence of American forces in Saud·i
Arabia.
Q. le that because it's antithetical to the
revolution, that is, the expulsion of western
influence?
A. Correct. It ' s also antithetical to the
interests of the Iranian state in establishing
itself as the great power in the region.
Q. Dr. Clawson, for the period 1995 to 1996
is it accurate to say that the Shiite minority in
Saudi Arabia is supported -- was sympathetic to
Iran and supported by Iran?
A. Yee, sir. This is a period of
considerable tension and turmoil in the Arab states
Page 32(
of the Gulf in which there ore large scale riots in'
the island of Bahrain, the island country of
Bahrain, B- o- h-r-a-i-n, just off the coast of Saudi
Arabia, connected to Saudi Arabia by a causeway.
And that's a mojority Shia country.
A. Terrible. --:- - - .,..:..... ~ -::,:-: -. -- · ~ an is· afterwards discovered by the
Q. Why is that? 7 Bahraini government to have been actively fomenting
A. Indeed the relationships deteriorate 8 violence end revolution there.
more sharply in the course of the 1980s with Iran's
supreme religious leader at the time, Ayatollah
Khomeini, K-h-o-m-e-i-n-i, issuing many statements
about how the Saudis are perverting Islam.
This becomes particularly acute after a
large number of Iranian pilgrims to Mecca are
killed in a horrible accident during the
pilgrimage. Khomeini blames this on the Saudi
authorities.
Be refers to the Saudi government as
occupiers of the holiest places and compares them
to Israeli occupiers of Jerusalem, which infuriates
the Saudi government.
So relationships become very bad.
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The Saudis in fact send troops to this
island to help the government there put down these
riots and to c<>Dbat the Iranian sponsored terrorist
activities being done by a Bezbo1lah organization,
Bahraini Bezbollab, in that island.
There's a tremendous flow of people back
and forth between Bahrain and the eastern province
of Saudi Arabia.
Q. Just so I understand - - so the Bahrain
Saudi - - excuee me -- the Bahrain Bezbollah, it's
well known that they were really supported by Iran
itself, correct?
A. I think -- I would say it's well
accepted that the allegations of the Bahraini
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Patrick Clawson, Ph.D.
Page 33
government along with the individuals they present
show that Iran was meddling, by the way, not very
efficiently.
Most of the troubles being caused in
Bahrain were by Bahraini based organizations
objecting to the diacrimination they faced. And
Iran's meddling was actually not very effective in
Bahrain. Their attempts were not as successful as
in some other cases.
Q. Dr. Clawson, are you familiar with the
bombing of the Khobar Towers complex in Dhahran,
Saudi Arabia, on June 25th, 1996?
A. Yes, sir. For the record Dhahran is in
the eastern province, not very far from the Saudi
end of the causeway to Bahrain.
Q. Thank you. What is the basis of your
knowledge of the bombing?
A. Well, this was extensively reported upon
both in the U.S. press and in the regional press in
Saudi Arabia, for that matter in the Iranian press.
Also at the time of the bolObing I was
working for the Defense Department at the National
Page34
Defense •.University. At that time I had a top
secret clearance and I received some classified
information and briefinge about the bombing and the
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characterize the state of that debate is that there
is a general consensus that Iran was involved.
Q. And so it's your expert opinion that
Iran wss behind the bombing, correct?
A. Yes.
Q, And do you know whether the 111inistry of
information and security and/or the Guard Corpe
participated in the bombing?
A. Well, there"s ext:eneive evidence
available in the public record about the
involvement of the Guard Corpe and in particular
of some top officials of the Guard Corpe in this·
affair.
By the way, the same top official who
was responsible for directing this affair also
directed the busineee in Bahrain. The ministry of
information, there's lees evidence -- less breadth
of evidence available.
On that score we really have to rely
upon the statements of the United States
Government, especially of Louis Freeh, the former
director of the FBI, who has on numerous occasions
Page 36
specifically identified the minietry of information
and security and stated that those who were
interrogated specifically identified the Plinistry
responsibility for the bombing. 4 of information and security as well as the
Q. And do you know who was behind the 5 Revolutionary Guard Corpe.
bombing? - - - - - -=~ · -· -:-~--F-reeh has also identttied the
A. Well, we have -- there is an excellent 7 Revolutionary Guard Corpe. It is just that we have
reason to believe that Iran directed the bombing. 8 quite a bit of support from other accounts, leaked
we have the testimony of numerous people who were 9 Saudi accounts, leaked Iranian dissident accounts
arrested by the Saudi authorities who have provided 10 suggesting that the Guard Corpe was involved.
this information on interrogation. 11 Q, Dr. Clawson, have you studied Iran"s
And the United States Government has 12 economy during your professional career?
revealed considerable amounts of intelligence
intercepts supporting this allegation. And we have
the testimony of FBI officials in this matter.
There has aleo been a lot of analytical
work done by various scholars attempting to poke
holes in the theory that Iran was responsible. And
it's been a subject of considerable debate in the
scholarly counterterroriem Saudi watching and Iran
watching press.
And I think that it's fair to
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Q.
Yes, sir.
And what information sources are
available to someone such as yourself trying to
learn about Iran's economy?
A. Iran is actually a relatively open
country. It is not a closed society the way some
authoritarian, totalitarian states are in that way.
So there are detailed reports from its central
bank, from the International Monetary Fund, and
many articles in the Iranian press.
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Patrick Clawson, Ph.D.
Page37
It is not totally open. So, for
instance, there are secret goverru11ent accounts.
And it is clear from most of these sources that
these secret accounts cover part of the financing
of the Guard Corpe and of the ministry of
information and security as well as other secret
activities such as the nuclear program .
Q. And are you familiar with Iran's current
yearly expenditures on terrorist activities?
A. It's difficult to put a precise nWDber
on Iran's spending on terrorist activities partly
because of the limitations of our information,
partly because there's a penumbra of activities of
what you might call terrorist.
These organizations like the ministry
of infonaation and security and the Revolutionary
Guard Corps engage in non-terrorist activities as
well . So exactly where one draws the line between
what one calls terrorist and what one calls not is
a little unclear.
And also Iran's economy is rather
distorted so that it is a little bard to translate
Page38
spending in their domestic currency to dollars.
All this means I'm more comfortable giving a range
of their expenditure rather than a specific number.
I can't point to a definite number of how much Iran
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years' lag.
Q. Can you compare that range of between
50 million and 150 million with the amount of money
Iran spent yearly on terrorist activities in 19967
A. In 1996 expenditures were probably
somewhat less principally because Iran at that ti111e
was having a very difficult economic situation with
the price of oil being low.
And also at that moment the
Palestinian/Israeli peace process was proceeding
rather well and so it was more difficult for Iran
to find Palestinians interested in terrorist
attacks. But Iran's expenditure was almost
certainly still within the 50 million to 150
million dollar range.
Q. Thank you. Is Iran through the ministry
of information and security and the Revolutionary
Guard Corps still engaging in terrorism today?
A. Yes.
Q. Dr. Clawson, if this Court were to award
punitive damages in order to deter Iran from
engaging in further terrorist activity and we were
Page~
to use the annual figures tor Iran'& expenditures ,
or that range that we just discussed from 1996 to
present, what multiple of that yearly figure do you
think given Iran's recent terrorist activi~ies
spends on terrorism. 5 would in fact serve to deter Iran?
Q. I understand there is ii'l5't;--;. bua;et -n:n~=-f--6- ·'°'·A~4niaii· officials pay clos'e attention to
for terrorism. So could you give a range on its 7 these cases and would interpret very carefully --
current yearly expenditures for terrorism? 8 excuse me -- would overinterpret any Court
A. I 've testified in the past that the 9 variation from the multiple that has been used in
expenditures go up and go down. We're not always
certain how much they are in a given year until
afterwards.
But I'm reasonably c onfident that the
expenditures remained within the 50 million a year
to 150 million dollar a year range that they've
been at for quite some time.
I would say that because of the upturn
in Palestinian violence which Iran is interested in
supporting that the expenditures are more likely t o
be at the upper end of that range then at the lower
end. But as usual we will really have a better
idea about Iran's expenditures only with a few
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the past, so that past judgments which have awarded
punitive damages of let us say $300 million would
be very carefully compared to what the action of
this Court is.
And if this Court were to award a lesser
amount that would be interpreted as indicating that
the United States is less concerned about Iran's
support for terrorism. So, for instance, in the
caee brought by the ex-hostages from the u.s.
Embassy seizure which for a variety of legal
reasons damages were not awarded --
Q.
correct?
You're referring to the Roeder case ,
I
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Annex 110
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Patrick Clawson, Ph.D.
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Page41
I believe that is the case. I confess I
don't remember how it's referred to legally.
Q. I will represent to you that that's
it's
A. I appreciate that. This was
interpreted -- I would say misinterpreted in Iran
as an indication of a lagging U.S. concern about
Iranian support for terrorism.
So if this Court were to vary from the
precedent of the past Courts• judgments I think
that it would be my judgment that Iranian media and
Iranian political figures would interpret that as
indication of a change in degree of U.S. concern
about Iranian support for terrorism.
Q. And in the cases where you testified as
an expert witness, do you know generally how much
the Court awarded in those cases for punitive
damages?
A. In nearly every case although not every
case the Court took the midpoint between the lower
estimate of 50 milli.on and the higher estimate of
150 million, that is to say $100 million, and used
Page42
a multiple -of three times to arrive at the figure
of $300 .m.illion.
J>r, Clawson, do you believe that a
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Page 43
debate in Iran and these cases are an important
element in that discussion.
HR. ROULEAU: Okay. Thank you,
Dr. Clawson. I have no more further questions.
THE WITNESS: Thank you.
THE VIOEOGRAPHERt This ends tape
nwnber 1 and concludes the testimony of Dr. Patrick
Clawson in the matter of Reiser versus the Islamic
Republic of Iran. The date is November 25th, 2003.
The time is 9:47 a,m. Off the record.
(Whereupon, at 9:47 a.m., signature
having been waived, the deposition was concluded.)
Page 44
CERTIFICATE OF NOTARY PUBLIC AND REPORTER
1, Kimberly Francis Smith, the officer
4 judgment,awarded in these cases will have some 4 before whom the foregoing deposition was taken, do
5 impact on Iran and its dealings with the world and 5 hereby certify that the witnees whose testimony
6 in particular with the United Sta~lr'!"--=--.._·-- - =- - . 6--llppeii'rMiF-the ·foregoing deposition-was duly sworn;
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A. We have a track record of Iranian
officials discussing theee cases, discussing their
impact on Iranian-American relations. And indeed
we have Iranian members of the parliament
complaining that these cssea are an important part
of Iran's inability to improve its relationehips
with the United States.
We also at the same time have on the
record Be%bollah in Lebanon openly discussing
whether or not to directly target Americans. And
we have a number of Iranian political figures in
their statemente and newspaper articles making
suggestions that Iran should more actively target
Americans through terrorist activities.
So the issue of how actively Irsn should
sponsor terrorist attacke against Americans is in
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that the testimony of said witness was taken in
machine stenotype and thereafter converted to
typewriting by me or under my direction; that said
deposition is a true record of the testimony given
by said witness; that I am neither couneel for,
related to, nor BJ11ployed by any of the parties to
the action in which this deposition was taken; and,
further, that lam not a relative or employee of
any attorney or counsel employed by the parties
hereto nor financially or otherwise interested in
the outcome of this action.
Kimberly Francis Smith, Notary Public
in and for the Dietrict of Columbia
My Commission Expires May 14, 2005.
11 (Pages 41 to 44)
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ANNEX 111
Annex 111
me
JH
EXHIBIT9
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
- - - - X
FRAN HEISER, et al.,
Plaintiffs,
v.
ISLAMIC REPUBLIC OF
IRAN, et al. ,
Defendants.
- - - - - - - - - - - - X
00-cv-2329
01-cv - 2104
Washington, D.C.
December 12, 2003
8:43 a.m.
Transcript of Hearing-Morning Session
Before the Honorable Deborah A. Robinson
Unites States Magistrate Judge
APPEARANCES:
For the Plaintiffs: SHALE STILLER, ESQ.
LOUIS J. ROULEAU, ESQ.
MELISSA MACKIEWICZ, ESQ.
HANK WALTHER, ESQ.
ELIZABETH R. DEWEY, ESQ.
For the Defendants: NO APPEARANCE
Court Reporter: JON HUNDLEY
Miller Reporting Company
735 8th Street, SE
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disclose what was discussed in those meetings;
however, that's one of the bases upon which he is
going to render his expert opinion on the bombing
itself.
JUDGE ROBINSON: May I assume, then, that
you are prepared, as you would with respect to any
expert witness, to elicit not only the expert's
opinion, but the underlying basis of it?
MR. ROULEAU: Correct.
JUDGE ROBINSON: Very well. Let's
proceed, then.
PATRICK L. CLAWSON, PLAINTIFFS' WITNESS, SWORN
DIRECT EXAMINATION
JUDGE ROBINSON: Dr. Clawson, good
23
morning. There is water in the pitcher next to and
a supply of clean cups, so please feel free to pour
a glass of water before Mr. Rouleau begins.
THE WITNESS: Thank you.
JUDGE ROBINSON: You're welcome.
Now, Mr. Rouleau, you may proceed.
MR. ROULEAU: Thank you.
Your Honor, before I begin, Mr. Walther
has asked permission to b e excused.
Walther.
JUDGE ROBINSON: You may be excused, Mr.
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Q
A
Q
MR. WALTHER: Thank you, Your Honor.
JUDGE ROBINSON:
BY MR. ROULEAU:
Good morning.
Good morning.
Thank you.
Could you please state your full name for
the record?
A
Q
A
Q
A
Policy.
Q
A
My name is Patrick Lisle Clawson.
Are you currently employed, Mr. Clawson?
Yes.
And where are you employed?
At the Washington Institute for Near East
And where is that located?
That's located at 1828 L Street, Suite
1050, here in Washington, D.C.
Q And what is your position at the
Washington Institute for Near East Policy?
A
Q
A
I am the Deputy Director.
And what does that position entail?
I am responsible for supervising the
day-to-day activities of the institute, including
supervising the research of a staff of
approximately 30 researchers and research
assistants.
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Q And is it fair to say that a large focu s
for institute is on the Middle East?
A Almost exclusively on the Middle East.
Q And what about the Middle East, if you can
just explain that a little bit more?
A Our focus is on U.S. policy concerns in
the Middle East and in developments in the Middle
East that are of interest to U.S. policymakers.
we do quite a lot of work, for instance, on the
Persian Gulf countries including Saudi Arabia,
Iran, Iraq, and we look at questions such as U. S.
So
security presence in the regions, threats that face
th e region and terrorism.
Arab-Israeli peace process .
We also do a lo t on the
Q Mr. Clawson, can you briefly explain your
educational background for the Court, starting with
your undergraduate work and then following that on
through?
A My bachelor's degree is from Oberlin
College in Oberlin, Ohio, and my master's and
doctorate are both from the New School for Social
Research in New York City. All of those degrees
a r e in economics.
Q And Mr. Clawson, have you written any
books concerning Iran?
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A I have written approximately I couldn't
find the exact count this morning; my apologies -twelve
books and monographs about Iran, primarily
about its current economic and security and foreign
affairs policies .
Q Have you written any articles on Iran as
well?
A I have written more than 30 articles in
scholarly magazines and journals about Iran, again
primarily about its economic policy and its foreign
affairs policy, but also a few about its history.
Q
A
Q
I'm sorry, I didn't catch that.
A few about its history as well.
And have you written any books or articles
or given any lectures on Iran's sponsorship of
terrorism?
A I have done that on numerous occasions,
and I have also testified on the subject before
several committees of the U.S. Congress.
Q Is that an area of particular interest for
you?
A It is an area that I follow quite closely .
Q What languages other than English do you
speak, if any?
A I speak Persian, which is known as Farsi,
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and French, as well as decent Spanish, German and
Hebrew.
Q And do you read Middle East newspapers
regularly as part of your research duties?
A I read one Iranian newspaper every day.
27
I
try to read two others. I think that's -- I don't
always read those every day, but I file clippings
from them.
Q Dr. Clawson, that big binder in front of
you is for you. If you could turn the tab, you'll
see it's 27, and then there's letters that follow
that. If you could turn to the tab that's marked
Plaintiffs' Exhibit 27-A? Could you identify this
document?
A
myself.
Q
A
Q
It's a brief professional biography of
And is it up to date?
Yes, sir.
And Dr. Clawson, have you testified
previously in the United States District Court for
the District of Columbia on issues relating to
Iran, Iranian sponsorship of terrorism, and the
Iranian economy?
A
Q
Yes.
About how many times?
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A Somewhere between ten and twelve. I'm not
sure.
Q In those cases, were you qualified as an
expert witness?
A Correct. In each case.
Q And in do know what areas you were
qualified as an expert?
A I was qualified in the areas of Iran in
support for terrorism, Iran's economy, and in some
cases other such issues.
MR. ROULEAU: Your Honor, at this time,
plaintiffs would offer Dr. Clawson as an expert in
the areas of Iran, Iran's sponsorship of terrorism,
and the Iranian economy.
JUDGE ROBINSON: The Court will receive
Dr. Clawson as an expert in the areas of the
Government of Iran, the support of terrorism by the
Government of Iran, and the economy of Iran.
MR. ROULEAU: Thank you, Your Honor.
BY MR. ROULEAU:
Q Dr. Clawson, can you please describe when
the Islamic Republic of Iran, which I will refer to
as Iran, was created?
A After the revolution in 1978-79, there was
a referendum which created the Islamic Republic in
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the spring of 1979.
Q And what was the impetus for the Iranian
revolution?
A Dissatisfaction with the rule of the
previous Shah of Iran led to widespread agitation
against his government, a mass popular movement.
An important element in that mass popular movement,
but not the only one, was that led by the Ayatollah
Ruhollah Khomeini, Ruhollah, R-u-h-o-1-1-a-h
Khomeini, and he and many of the clerics then
became involved in agitating for an Islamic
Republic.
Q And what international goals, if any, did
the Iranian revolution have?
A It was explicitly anti-American and it was
very explicitly aimed at reducing United States
influence in Iran and indeed throughout the Middle
East and the broader Muslim world. It was also
interested in establishing an Islamic government as
they conceived it, which meant a particularly
politicized version of Islam for which purpose they
were prepared to use violent means, including
terrorism.
Q So it's fair to say that the Government of
Iran was anti-West and then specifically
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anti-American?
A Correct, sir.
Q Did they ever use -- did they have a
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specific slogan that they would use with respect to
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America?
A "Death to America" was a very popular
slogan, particularly in the early years of the
revolution.
Q
Muslims?
A
Muslims.
And are Iranians Shiite Muslims or Suni
About 90 percent of Iranians are Shiite
It's one of the few countries in the
world which has traditionally had a
Shiite-dominated government.
Q And I believe you mentioned this, but just
to clarify, does Iran use terrorism as a means of
accomplishing its goals of ridding the Middle East
of Western influence and specifically American
influence?
A Both in the time of the revolution and
today, the Iranian Government has used terrorism
22 1 for the purpose of reducing if not eliminating
23 Western and particularly American influence in the
24 Middle East in general.
25 Q Dr. Clawson, again referring to the binder
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before you, if you would take a look at Plaintiffs'
Exhibits 27-B through 27-P? If you would just go
ahead and take a moment and look through those?
A
Q
A
Q
A
Q
A
Twenty-seven-B through 27
Through 27-P as in Paul.
Right.
[Pause.]
BY MR. ROULEAU:
Okay?
Yes, sir.
Do you recognize those documents?
Oh, yes, sir.
Q And could you identify them for the
record, please?
A Certainly. These are the annual reports
prepared by the U.S. Department of State about the
patterns of global terrorism. It's issued each
year in the spring regarding the patterns of -global
terrorism for the preceding year, and in many
conversations with the preparers of these reports
and with other terrorism experts, I can say with
great confidence that these reports are regarded as
the most definitive and careful statement by the
U.S. Government about terrorist activities. Every
word is argued about in an interagency process.
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Q And I will represent and you can verify
that Tabs 27-B through 27-P represent the patterns
of global terrorism for years 1984 through 1998,
correct?
32
A
that.
Correct, sir. My apologies for not saying
Q And if you -JUDGE
ROBINSON: Dr. Clawson, what is the
basis of your testimony that these reports
represent the most definitive and authoritative
statements of the United States regarding patterns
of global terrorism?
THE WITNESS: Both when I was in the U.S.
Government and before joining the government and
after leaving the government, I have had many
occasions to sit with the people in the State
Department and the Central Intelligence Agency who
work in terrorism issues and this is the report
that is always referred to as the statement that's
-- the publicly released statement about terrorism
that is most carefully prepared by the government
and is used to reflect the government's judgment
about what happened in preceding years. That's one
reason there is such active lobbying by people like
me outside the government to try to get certain
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phrasing and certain wording in there and vigorous
discussions that take place in an interagency
process about exactly how to evaluate the evidence
and what does it lead to
JUDGE ROBINSON: Now, you --
THE WITNESS: and whatnot.
JUDGE ROBINSON: I apologize, I didn't
mean to cut you off.
THE WITNESS: I'm sorry, Your Honor.
33
In other words, this is a document which
people look at with great interest, which everybody
in the terrorism research community regards as sort
of the definitive judgment by the United States
Government, and people in the government regard it
as the time, the opportunity for them to evaluate
what have been the trends in the preceding year and
to render a judgment as to whether certain episodes
were or were not terrorism and to present the U.S.
Government's judgment as to who is responsible for
those episodes.
JUDGE ROBINSON: Now, you used the
modifying phrase "publicly released document."
What is the distinction that you draw between the
publicly released patterns of global terrorism
reports and other reports which I conclude, based
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on your testimony, were not publicly released?
THE WITNESS: When I was working for the
United States Government and the Department of
Defense from 1993 through 1997, I had a top-secret
security clearance and I know that at that time,
there were classified versions of these reports
that were prepared that would provide more
information about the sources and methods . I do
not know if that continues to be the case, although
I would hardly be surprised if it were the case.
At least in those years, any of the
judgments that were reached in these reports were
identical with the judgments that were released in
the -- that were contained in the classified
versions. The differences would be information
that might appear in the classified versions which
it was felt would be inappropriate to release to
the public because it could reveal information
about sources and methods.
JUDGE ROBINSON: Thank you, Dr. Clawson.
You may continue, Mr. Rouleau.
MR. ROULEAU: Thank you, Your Honor.
BY MR. ROULEAU:
Q Dr. Clawson, I would like to draw your
attention to Plaintiffs' Exhibit 27-E, which is the
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Patterns of Global Terrorism for 1987. I would
like you to refer to page 35, if you would, to the
paragraph that's entitled Iran.
A Yes, sir.
Q Do you see that?
A Yes, sir.
35
MR. ROULEAU: And it should be tabbed both
in your binder as well as Your Honor's binders.
JUDGE ROBINSON: It is. Thank you.
BY MR. ROULEAU:
Q Dr. Clawson, would you kindly read out
loud that first paragraph that follows the subtitle
Iran in bold?
A "Of the 44 terrorist incidents in which I
ran was identified as the sponsor, we recorded 25
in the Middle East, 10 in Wester Europe, and 9 in
Asia. The preferred means were bombings (27) and
armed attacks (13). Tehran uses terrorism
skillfully and selectively to support its long-term
objectives of•ridding the Middle East of all
Western influence, intimidating Iranian dissidents
overseas, forcing Arab countries to end their
support for Iraq, and supporting Khomeini's vision
or a radical Islamic revolution to all parts of the
Muslim world. We believe that most Iranian leaders
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agree that terrorism is an acceptable policy
option, although some may disagree on specific
operations."
Q Dr. Clawson, do you agree with this
assessment?
A Yes. Indeed, in light of evidence
36
available now not available perhaps at the time
that this was written, I suspect that several other
judgments would be made tougher.
JUDGE ROBINSON: What is your
understanding, Dr. Clawson, of to whom the phrase
"most Iranian leaders" referred at least as of 1987
when this report was drafted - - was prepared,
excuse me.
THE WITNESS: Iranian politics has, since
the early days of the Islamic revolution, been
sharply divided between groups which are often
referred to in Iran as well as in the West as
radicals and moderates, and there has been a
continuing -- there was continuing ·debate about the
extent to which some of the prominent moderate
leaders thought that terrorism was an acceptable
policy option, and one of the things which has
emerged as a result of the election of a new
Iranian president in 1997 and the investigations
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about Iran's past intimidation of dissidents at
home was to what a remarkable extent some of those
who we thought of as moderates back in the early
1980s turn out to have been very key in supporting
terrorism against Iranian dissidents.
Similarly, the results of a Berlin court
trial about the murder of four Iranian dissidents
in Berlin at that trial, testimony by a
gentleman who hadn't previously been a high
official in Iranian's security services provided
quite a bit of information about how a number of
people generally thought of at this time that this
report was written in 1985 as moderates were, in
fact, directly ordering terrorist activities.
JUDGE ROBINSON: Thank you, Dr. Clawson.
You may continue, Mr. Rouleau.
MR. ROULEAU: Thank you, Your Honor.
BY MR. ROULEAU:
Q Dr. Clawson, referring to Plaintiffs'
Exhibit 27-M, which is the Patterns of Global
Terrorism for 1995, again if you could go to page
23, which should be tabbed in your book, and I'll
direct your attention to the subheading titled
Overview of State-Sponsored Terrorism.
A Yes, sir.
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Q In the first paragraph down below, it's
sort of the last two sentences, states, "The United
States currently lists Cuba, Iran, Iraq, Libya,
North Korea, Sudan, and Syria as state sponsors of
terrorism. 11 Do you see that?
A Yes, sir.
Q And· do you understand that Iran is
considered to be a state sponsor of terrorism by
the United States Government?
A Oh, yes, sir. It has been listed as such
ever since those lists were first prepared.
Q And could you explain a little bit for the
Court what those lists are, what the purpose is?
A Well, Congress mandated the list initially
to require that the government take a variety of
actions against countries on that list, but the
preparation of that list has over the years become
a major exercise in listing which countries provide
support for terrorism.
Q
A
Q
A
Q
correct?
And how long has Iran been on that list?
Ever since the list was first begun.
Okay. Are they currently on that list?
They are currently on that list.
And so Iran was on that list in 1996,
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Correct.
In '95?
Correct.
Okay. Again if you would indulge me,
referring to page 23 right where we were, on the
third paragraph under Overview of State-Sponsored
Terrorism, it starts with "Iran continued."
A Yes, sir.
39
Q Could you read the first two sentences out
loud, please?
A "Iran continued in 1995 to be the world's
most active supporter of international terrorism.
Although Tehran tried to project a moderate image
in the West, it continued to assassinate dissidents
abroad and maintained its support and financing of
groups that pose a threat to U.S. citizens."
Q And Dr. Clawson, do you agree with that
assessment?
A In 1995, yes. I would say for today that
we would rephrase that to say that Iran is the
world's most active state supporter of
international terrorism because there are groups
such as al Qaeda which are non-state actors that
are important in the international terrorism
business.
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JUDGE ROBINSON: Dr. Clawson, what other
non-state actors were active supporters of or
participants in international terrorism as of the
time this 1995 report was prepared?
THE WITNESS: Well, there were any number
of insurgent organizations, like the Tamil Tigers
and Sri Lanka, for instance, responsible for a
killing of an Indian prime -- a prime minister of
India, and there were a number of Latin American
groups, the Peruvian group the Shining Path, which
40
was quite active at the time. So there were a fair
number of these organizations outside the Middle
East as well as inside the Middle East.
There were some radical Palestinian groups
that were opposing Arab-Israeli peace that were
quite active that drew some support from Iran but
were not necessarily controlled and directed by any
state.
I am sure I'm leaving out other separatist
organizations that don't immediately come to mind.
JUDGE ROBINSON: What other than this 1995
Patterns of Global Terrorism report is the basis of
your opinion?
THE WITNESS: Well, certainly at this time
in 1995 when I was working for the Department of
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41
Defense, I was very involved in following Iran's
support for terrorism, receiving many briefings
about the matter from officials in the U.S .
Government as well as working with a whole set of
colleagues who were following issues of terrorism
around the world, and we would frequently -indeed,
I was preparing at this time a report that
was called The Strategic Assessment by the National
Defense University that was evaluating the threats
to the United States from all across the world and
had a team of 20 colonels and high U.S. Government
officials working for me in preparing this. So we
were looking at around the world. So that gave me,
I think, pretty good access to people following
many different terrorists and threats to the United
States and supporters of terrorism, and I don't
think there was any question in the minds of anyone
on that team that Iran was the most active
supporter.
JUDGE ROBINSON: Thank you, Dr. Clawson.
You may continue, Mr . Rouleau.
MR. ROULEAU: Thank you, Your Honor .
BY MR. ROULEAU:
Q Following up on Her Honor's discussion or
question, last question, Dr. Clawson, did you still
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have that same job that you had in 1995 with the
government in 1996?
A Correct, sir.
Q In June of 1996?
A Correct.
Q .So you were still doing the same
activities?
A And still had a top-secret security
clearance and following very closely U.S. security
presence in the region, had gone several times to
the Persian Gulf to visit with U.S. Forces in the
area and had consulted with U.S. commanders and
briefed U.S. commanders in the region and been
briefed by them.
Q Dr. Clawson
JUDGE ROBINSON: Excuse me just one
moment, Mr. Rouleau.
[Pause.]
JUDGE ROBINSON: You may continue, Mr.
Rouleau.
MR. ROULEAU: Thank you, Your Honor.
BY MR. ROULEAU:
Q Dr. Clawson, referring to Plaintiffs'
42
Exhibit 27-N, again I tabbed it and I would like to
state for the record that this is the Patterns of
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Global Terrorism for 1996. It looks a little bit
different because we had to pull it up off of the
State Department website. For some reason, it was
missing at the last minute from our library. So I
apologize. But I did tab the section that I would
like us to go to because it's not consecutively
paginated.
A
Q
Do you see that tab?
Yes, sir.
Again, it says Overview of State-Sponsored
Terrorism, and this is for 1996?
A Yes, sir.
Q If you would go down to the fourth
paragraph, can you read the first sentence of the
fourth paragraph starting with "Iran"?
A "Iran, the most active state sponsor of
terrorism today, continues to provide direction and
support to terrorist groups, including Hizbollah in
Lebanon. 11
Q Okay. And to follow up on our last line
of questions, do you agree with that statement for
1996?
A Oh, yes, sir.
Q Is it fair to say that your conclusions
with respect to Iran's sponsorship of terrorism in
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1995 are the same for 1996?
A
Q
Rouleau.
Q
Yes, sir.
Okay.
JUDGE ROBINSON: Just one moment, Mr.
[Pause.]
JUDGE ROBINSON: You may continue .
MR. ROULEAU: Thank you, Your Honor.
BY MR. ROULEAU:
Dr. Clawson, do you agree that Iran
provided direction and support to terrorist groups
in 1996?
A
Q
A
Q
Yes, sir.
And it did so also in 1995, correct?
Correct, sir.
Okay.
Dr. Clawson, are you familiar with the
44
Iranian agency known as the Ministry of Information
and Security?
A Yes, sir.
Q And could you -- I will refer to that
agency as the Ministry, okay?
A Yes.
Q And could you -- well, could you explain
what the Ministry is for the Court?
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A The Ministry is the Iranian Government
agency responsible for tracking both dissidents at
home as well as engaging in intelligence operations
abroad. in that sense, it has a mandate rather
like that of the former KGB of the Soviet Union,
covering both domestic and external issues.
It is the successor to the Shah's agency
excuse me -- the Shah's Organization for
Information and Security . The Organization for
Information and Security of the Shah was known
often by its Persian initials, SAVAK, and this now
is the Ministry instead of the Organization for
Information and Security.
In the early days after the revolution,
this large imperial agency was kept together and
tried to demonstrate its usefulness to the new
revolutionary government because of its well
respected technical skills at the job of an
intelligence agency. It then became in the early
1980s a ministry, and indeed became a vital part of
the apparatus of the Islamic Republic.
As a result of its sponsorship of -- or
its, excuse me, its carrying out of some
assassinations of Iranian dissidents in the mid
1990s which was very much opposed by the man who
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then became the president of Iran in 1997, a
commission was set up to investigate its
activities. The report of that commission was
leaked and we learned a great deal about its
organization and activities from that.
Q Let me stop you. Did you read that
report?
A I read the press accounts in the Iranian
press about that report, but the whole report has
not, to my knowledge, ever been published.
46
Q Okay. Is it fair to say that the Ministry
is involved in Iran's sponsorship of terrorism?
A Certainly. Certainly.
Q In what ways?
A Well, we know from the Berlin court trial
that I referred to earlier and the high-level
official who defected from that agency that this
agency has been the organization tasked to organize
a great many of Iran's terrorist activities abroad,
and ·in particular it has a lot of technical
expertise in things like signals intelligence,
wiretapping, surveilling people, organizing
individuals for carrying out terrorist activities
and the like.
Q Did the Ministry provide funding and
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training for terrorists?
A
Q
1995?
A
Q
A
Absolutely, sir.
And did it do so -- did it do that in
Yes, sir.
How about 1996?
Oh, yes, sir, and indeed got rather -- it
got caught doing this in the country of Bahrain by
the Bahrainian government, which arrested a number
of Bahrainians who had been in contact with the
Iranian authorities, including the Ministry, and
put them on trial.
Q And was the community that studies
terrorism, including the U.S. Government, aware of
the Ministry's activities?
A
Q
A
Oh, yes, sir.
Dr. Clawson --
I should comment that this is precisely
the moment when the German court is holding its
trial in 1996.
Q Dr. Clawson, are you familiar with the
Iranian agency known as the Iranian Islamic
Revolutionary Guard Corps?
A Yes, sir.
47
Q Okay. And will refer to them as the Guard
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Corps, okay?
A Certainly.
Q And if you could explain or describe that
agency to the Court.
A After the Iranian revolution, the new
government is concerned that the military may not
be loyal to the revolutionary government, and
therefore establishes a parallel military and
paramilitary organization, the Guard Corps, to
provide politically reliable military protection
for the new government. Then when the war with
Iraq starts in September of 1980, the Guard Corps
dramatically expands and becomes involved in that
fighting, and the Guard Corps also then becomes
involved in activities abroad, trying to exploit
the revolution abroad, and in 1982, after Israel
invades Lebanon, the Guard Corps sends units to
Lebanon which become very involved in fighting the
Israelis and also in establishing political
movement in Lebanon to carry out terrorist attacks
against Americans, other Westerners and the
Israelis.
Q
name?
All right.
Is the Guard Corps known by any other
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A It's sometimes referred to as the IRGC.
In Persian, it's usually referred to as the
Pasdaran, P-a-s-d-a-r-a-n, or the Corps, the
Persian word for which is Sepah, S-e-p-a-h.
Q And is the Guard Corps involved in Iran's
sponsorship of terrorism?
A
Q
A
Very much so.
Can you explain how?
There's a certain competition in many
49
fields of the Iranian Government between
revolutionary institutions and parallel traditional
government institutions, and the relationship
between the Ministry and the Guard Corps is a good
example of this competition in which the Guard
Corps sees itself as the guardian of revolutionary
values and brings with it revolutionary spirit and
political skills, whereas the Ministry sees itself
as the place that's technically more competent,
that brings with it more competence. So you will
find Guard Corps generals are going to be more
involved in meeting with Hizbollah recruits in
order to persuade them to become active in Iran's
behalf and Ministry people are going to be more
involved in training these individuals about the
tasks they have to carry out. That's what we've
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heard. That's the pattern we've seen in Lebanon,
the pattern we saw in Bahrain and, indeed, the
pattern that investigation suggests was also true
in Saudi Arabia.
Arabia.
May have been true in Saudi
Q Is it fair to say that the Guard Corps
provided military training to terrorists?
mentioned in the Bakka Valley in Lebanon.
You had
A Yes, sir.
the Bakka Valley.
I'm sorry if I didn't mention
But yes, the Guard Corps was
involved in providing military training, but also
training for how to carry out terrorist attacks by
these units.
Q
A
Q
And did they do so in 1995?
Before 1995, in 1995, and after 1995.
And was this well known throughout the
intelligence community, including the U.S.
Government?
50
A It was hardly a secret. The Iranian press
wrote about it, the Lebanese press wrote about it,
the officials of Hizbollah in Lebanon openly
proclaimed it and thanked Iran for its support in
doing this. The Lebanese press wrote about it,
Western journalists visited sites where this
training went on.
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Q Okay. Dr. Clawson, what or who is
Hizbollah?
A Hizbollah literally means "party of God."
The first time that we see a group by that name
that becomes really active is in the mid 1980s in
Lebanon. We now know from the accounts of its
leaders and from academic researchers and the
statements of the Iranian Government that it was
established at the order and direction of the
Government of Iran out of a more modern Shia
political movement in Lebanon, and that it was
established specifically for the purpose of using
armed attacks, including terrorist attacks, to
drive Western and U.S. influence out of Lebanon as
well as to drive the Israelis out of Lebanon.
Q So it was a terrorist organization?
A The U.S. Government has long argued that
51
Hizbollah both had a terrorist aspect and also a
military aspect, fighting the Israeli presence in
Lebanon as well as charitable and political wings,
and that they were all inseparably linked, carried
out charitable activities such as running hospitals
in schools, in large part to further its goal of
identifying terrorists and attracting people to be
terrorists or military fighters.
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Q And I understand that, but at the same
time that it may be doing something charitable, it
was also engaging in military and terrorist
activities, correct?
A Correct, sir .
Q Is it fair to say that Hizbollah is an
Iranian creation?
A By the accounts both of the Iranian
officials and Hizbollah officials and as well as
academic scholars, it is indeed and was created at
the direction of the Government of Iran.
JUDGE ROBINSON: Just one moment, Mr.
Rouleau, before you move on.
[Pause.]
JUDGE ROBINSON: Dr. Clawson, there have
been references during the course of these
proceedings by plaintiffs' counsel to an entity
known as Saudi Hizbollah.
THE WITNESS: Yes, Your Honor.
JUDGE ROBINSON: Tell us about that,
please.
THE WITNESS: Yes, Your Honor. Indeed, I
52
spent yesterday reviewing a manuscript by a scholar
for us trying to evaluate the extent to which the
-- trying among other things to evaluate the extent
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to which Saudi Hizbollah is a branch of the same
organization of Hizbollah in Lebanon or is a
fraternal organization with similar goals and
objectives that works closely with Hizbollah in
Lebanon, and --
JUDGE ROBINSON: What is your opinion
53
regarding that distinction and what are the reasons
for it and the basis upon which you reached it?
THE WITNESS: I do not know what the answer
to that question is because we don't have
sufficient information about Saudi Hizbollah to
judge to what extent the leadership of the
organization regards itself as belonging to the
exact same movement and responding to the same
leadership as those in Lebanon, and it would
certainly seem that there are inconsistent
attitudes held by some of the different members of
the organization as to whether they are a closely
allied organization sharing the same objectives or
goals or whether they are part o f the same broader
international organization.
JUDGE ROBINSON: Does that inability to
render an opinion apply to the issue of the support
of the Saudi Hizbollah, whatever the nature of that
entity may be, by the Government of Iran or the
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MOIS or the IRGC?
THE WITNESS: No, not at all. It's very
clear that the Government of Iran, at least the
Revolutionary Guard Corps I can't be as
confident about the MOIS, but it's very clear that
the Government of Iran was very involved in urging
the formation of the Saudi Hizbollah, providing it
with material assistance of recruiting for Saudi
Hizbollah among Saudi Shia students who were
studying in Iran_ So the Government of Iran was
instrumental in the creation of this organization_
54
The question is more to what extent,
because they are in Saudi Arabia rather than
Lebanon, they see themselves as a different
organization or just a different branch of the same
organization, but that they share the goal of
eliminating western, especially American, influence
in the region, of ultimately establishing Islamic
states in their countries. That, there is no doubt
about whatsoever. That they were materially and
financially supported by Iran, there is no doubt
whatsoever.
There has always been a certain ambiguity
about the extent to which these radical Islamic
movements would work within the framework of
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55
existing state boundaries or to what extent they
would work within the broader Muslim community as a
whole, and it would appear that in a group like
Saudi Hizbollah, that there are real differences of
opinion on that question, and I just -- I don't
know to what extent the leadership of that
organization sees itself as a separate group allied
with Hizbollah in. Lebanon or it sees itself as part
of the same group entirely.
JUDGE ROBINSON: Now, you answered in
response to one of Mr. Rouleau's questions, you
discussed the formation of Hizbollah. May I ask
you to do the same, please, to the extent that you
can, with respect to Saudi Hizbollah.
THE WITNESS: The formation of Saudi
Hizbollah we don't have as rich a record. It's not
as large an organization; it hasn't been as
forthcoming about its background. But certainly
the -- both from Saudi Shia political leaders who I
have spoken with in Saudi Arabia and from Iranian
accounts about their activities in Saudi Arabia and
from Saudi officials describing their perception of
the situation, it would seem -- I have very little
doubt that Saudi Hizbollah was formed at the order
of the Iranian Government, but as I say, I don't --
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we don't have the open acknowledgement by all the
sides that we have with Hizbollah in Lebanon.
JUDGE ROBINSON: Did you say that you
don't believe or that you is it your opinion
that the Saudi Hizbollah was not formed at the
direction of the Government of Iran? Is that what
you said?
THE WITNESS: No. I'm sorry if I'm
unclear, Your Honor. I think that it was --
JUDGE ROBINSON: We all in the judicial
system have the horrible habit of excessive use of
double negatives.
THE WITNESS: I think there is excellent
56
evidence to suggest that Saudi Hizbollah was formed
at the direction of the Government of Iran. The
only thing which is lacking is the open
acknowledgement of that fact by the leaders of the
organization and by the Iranian Government.
have accounts of Saudi Shiites about their
But we
political situation and how Hizbollah merged in
that situation; we have accounts of Saudi
Government officials; we have information from
individuals who were arrested who belong to Saudi
Hizbollah; we have accounts of how similar
organizations were formed elsewhere in the Gulf and
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57
their accounts of their relationship with Saudi
Hizbollah. So putting this together, I think we
have a very convincing story here. The only piece
which is lacking is the actual acknowledgement by
the leadership of Saudi Hizbollah as to who ordered
their creation.
JUDGE ROBINSON: Because there is, in your
words, some evidence that the Saudi Hizbollah was
formed at the direction of the Government of Iran,
am I correct in my assumption that there is also
some evidence that it was not?
THE WITNESS: I don't know of any.
JUDGE ROBINSON: You don't know whether
there is evidence --
THE WITNESS: Excuse me. I don't know of
any such evidence and I certainly heard people
active in the Saudi Shia community arguing that the
only way this organization could have been formed
is with Iranian involvement and direction.
JUDGE ROBINSON: What is your
understanding of when the organization entity known
as Saudi Hizbollah was formed regardless of by whom
it was formed --
THE WITNESS: It would --
JUDGE ROBINSON: -- without regard to by
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58
whom it was formed?
THE WITNESS: It would seem that it was
probably formed sometime between 1991, when U.S.
Forces show up in Saudi Arabia, and 1994, but I
don't know exactly when in that timeframe the group
was formed. In other words, there may have
there start to be individuals recruited for a cause
like this in that timeframe, but I don't know what
time the organization is formed.
JUDGE ROBINSON: Are you aware of any
reference in 1996 Patterns of Global Terrorism
Report to Saudi Hizbollah?
THE WITNESS: I am not aware of such
things, and I think that's an example of the kind
of issue which the U . S. Government analysts
preparing this report would have been very careful
about. They would not include information about
Saudi Hizbollah until they had really extensive and
convincing information, and at the time of the
Khobar Towers bombing, there was a vigorous debate
as to whether or not Iran was responsible for this
and a lot of shouting and fighting and disagreement
about that within the U.S. Government for several
years.
JUDGE ROBINSON: To what extent does that
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debate continue?
T.HE WITNESS: I don't think there is any
further debate about that matter. The issue is
quite clearly resolved by the late 1990s.
JUDGE ROBINSON: You may continue, Mr .
Rouleau.
MR. ROULEAU: Thank you, Your Honor.
JUDGE ROBINSON: Thank you, Dr. Clawson.
BY MR. ROULEAU:
Q Dr. Clawson, is it surprising that the
leadership of Saudi Hizbollah has not come out and
declared that it's a creation of Iran given
Iran-Saudi relations?
A Well, were the leadership to come out and
say that, they would suffer politically with their
potential supporter in Saudi Arabia given that
Saudi-Iranian relations have been quite tense over
the years and that the -- they would suffer. So I
59
would assume that they would try not to reveal this
fact.
Q So that's not surprising to you?
A Not at all surprising.
Q And we were talking about Saudi Hizbollah.
Who are the members of Saudi Hizbollah, if you
know?
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A
60
To a person, they are members of the Saudi
Shia community, which is a persecuted minority
present primarily in the eastern part of Saudi
Arabia, and including in the town where the Khobar
Towers building was located.
Q So Khobar Towers is in the Eastern
Province?
A Correct.
Q And are Muslims in the Eastern Province
mainly Shiites or Suni?
A Mainly Shiites, a fact which the Saudi
Government denies.
Q And do Shiite Saudis have a general
affinity to Iran?
A They have a complex relationship to Iran.
On the one hand, they regard it as in some ways
their protector, certainly as the country to which
they have to send young men to be trained to be
clerics. Yet, on the other hand, they are indeed
proud of being Arabs and not Persians. So the
relationship is quite complex. But yes, there is
an affinity and at the same time a certain desire
to establish a difference.
Q You mentioned that the Shiites in Saudi
Arabia are a repressed minority. Can you just
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explain a little bit to the Court?
A It's difficult for them to get permission
to build Mosques; it's difficult for them to hold
their religious observances in public.
few Shiites work for the government.
Very, very
I have been
in the Council General's Office, the U.S. Council
General's Of fi ce in the Eastern Province and seen
Shia notables coming to complain, asking the U.S.
Government to intervene on their behalf with the
government about the lack of employment
opportunities for young people, and there's a great
deal of social discrimination against them,
discrimination in admissions to universities, you
name it.
Q Okay. What was the state of relations
between Iran and Saudi Arabia from 1990 to about
1997?
A Terrible. The leader of the Iranian
revolution, Ayatollah Khomeini, before his death,
issued virulent, vicious statements about the
Saudis and how they were following what he called
American Islam rather than true Islam. This was
particularly inflamed by some episodes that took
place during the annual pilgrimage to Mecca where a
large number of Iranians were killed in an accident
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that the Iranians blamed on the Saudis, and
admittedly the Saudi police handled it badly.
relationships were truly horrific.
Q You previously testified that Khobar
Towers is in the Eastern Province, correct?
A Correct, sir.
But
Q Okay. So I would like to talk a little
62
bit about Khobar Towers now. Are you familiar with
the bombing of the Khobar Towers complex --
A
Q
A
Q
Yes.
-- that took place on June 25, 1996?
Yes, sir.
And what is the basis of your knowledge of
the bombing?
A I was working at the U.S. Government at
the time and had visited U.S. Forces in Saudi
Arabia beforehand. I spent many hours meeting with
the people -- the U.S. Government commission
investigating the bombing and spent many hours
after its report was issued about follow - up
activities about the bombing, spent a lot of time
with the Saudi officials discussing the bombing.
So I have a lot of information from my time within
the U.S. Government and also from academic study of
the issue.
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Q And at that time, did you have a security
clearance --
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Q
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Q
Yes, sir.
-- with the government?
I had top-secret clearance.
Okay. So were you privy to a lot of
discussions or meetings that you can't disclose
63
JUDGE ROBINSON: Let me ask you to proceed
by non-leading questions, Mr. Rouleau.
MR. ROULEAU: Certainly, Your Honor.
BY MR. ROULEAU:
Q At that time, you mentioned some of the
activities that you did. Did you have an
opportunity to meet with any of the U.S. officials
who were actually investigating the bombing?
A Oh, yes, sir. And indeed, I mentioned
earlier that there was a vigorous discussion about
who was responsible for the bombing. I
participated in that -- or I was a minor bit
participant in that discussion and received
information, classified briefings, as that
discussion proceeded.
Q And do you have an opinion as to whether
or not Iran was behind the bombing?
A Initially no, but over time, a wealth of
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evidence accumulated that -- even by the time I
lef t the government in 1997, I did not think that
the evidence was conclusive, but the wealth of
information which then became available with better
cooperation between the Saudi Government and the
FBI I think clinched the matter .
Q And what information more precisely
clinched the matter for you?
A Well, we had been hearing a story from the
Saudis -- their investigation, proceeding by
techniques which would, I suspect, shock this
Court, had come to that conclusion early on, but it
was after the Saudis cooperated much more closely
with the FBI that the FBI was able to develop on
its own and using U.S. - style investigative
techniques information which arrived at the same
conclusion, which I thought was all the more
convincing given that the initial inclinations of
many of those investigators was to be highly
skeptical of the Saudi account of what had
happened.
JUDGE ROBINSON: Dr. Clawson, you just
stated the conclusion of the FBI in response to Mr.
Rouleau's question . Perhaps Mr. Rouleau's next
question would have been to ask what your opinion
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is. If that was your next question, Mr. Rouleau,
you may proceed, or I will simply interject and ask
the question; that is, what is your opinion?
THE WITNESS: I think there is no doubt
that Iran was responsible for the Khobar Towers
bombing.
JUDGE ROBINSON: And what is the basis of
your opinion?
THE WITNESS: We have both the Saudi
evidence to suggest that this was the case, which I
thought was a pretty good case, but I wasn't
prepared to endorse, say, in 1997 when I left the
U.S. Government because I knew that the FBI was
continuing its investigations, and now we also have
the FBI coming to very, very similar conclusions as
the Saudis did.
JUDGE ROBINSON: On what evidence have you
based or on what evidence do you base your opinion?
THE WITNESS: I would base my opinion on
the - - both what I thought was quite convi~cing
evidence from the Saudis, but I was prepared to
suspend that until I saw what the FBI developed,
and once I saw that the FBI developed the same -- a
story that was almost exactly the same as the
Saudis' story, I said, look, this is two
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independent confirmations of the same account.
Furthermore, as time has passed, we have
not heard any other account which has emerged, and
yet generally with these terrorist episodes, if we
get it wrong initially, additional evidence emerges
later which suggests that this is the case, and we
have not seen that at all in this case.
So it's two accounts which come to much
the same conclusions, no other independent evidence
to suggest the contrary.
compelling.
I think that's pretty
JUDGE ROBINSON: What is the evidence to
which you refer? You refer generically to evidence
gathered by -- you didn't indicate whom by Saudi
officials and evidence amassed by the FBI, and you
said that you relied on evidence -- on both of the
two categories of evidence. What was the evidence?
THE WITNESS: Well, in the Saudi case,
their response to the bombings is to round up a
large number of people in the Eastern Province and
to interrogate them vigorously and to put a great
deal of pressure upon these individuals to tell
them who is responsible for this and what kind of
organization was there, and they come up quite
quickly with an account of how this took place.
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Then the FBI uses much more -- relies on
physical evidence and it relies on intelligence
intercepts, and so for instance there's a lucky
break about an individual who is a Saudi individual
in Canada who indiscreetly refers to his role in
the bombing and then he is delivered by the
Canadian authorities into U.S. hands and he is
interrogated here before he is returned to Saudi
Arabia because of certain complex deportation
matters.
The FBI gathers additional evidence which
is presented then in the indictment against
individuals held for their involvement in the
Khobar Towers bombing, and the former FBI director
Louis Freeh speaks eloquently and writes eloquently
about Iran's involvement in this and provides some
accounts of the information by which the FBI came
to its conclusions.
JUDGE ROBINSON: Mr. Rouleau, do you
intend to elicit the evidence from Dr. Clawson or
f r om someone else?
MR. ROULEAU: Well, I would like to try to
elicit some more from him right now with respe c t to
the specific evidence upon which he relied.
JUDGE ROBINSON: Very well.
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that, there is one further question to ensure our
common understanding regarding relevant background
and orientation.
You just testified that I believe your
words were you that you now have no doubt that the
Government of Iran was responsible for the bombing
of Khobar Towers - -
THE WITNESS: Correct, Your Honor.
JUDGE ROBINSON: -- in June of 1995.
THE WITNESS: Ninety-six, Your Honor.
JUDGE ROBINSON: What is your opinion
regarding the involvement of Saudi Hizbollah in
that bombing?
68
THE WITNESS: There is no doubt that Saudi
Hizbollah was involved in carrying out the bombing.
JUDGE ROBINSON: By ttinvolved in carrying
out the bombing, tt what do you mean?
THE WITNESS: That the people who carried
out the bombing were members of Saudi Hizbollah.
JUDGE ROBINSON: Now, Mr. Rouleau, I will
ask again whether you intend to elicit the evidence
which forms the basis of Dr. Clawson's opinion from
Dr. Clawson or is this evidence to be elicited from
some other witness?
MR. ROULEAU: We l l, I can certainly and I
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intend to ask Dr. Clawson specifically what you
have reviewed and who you spoke with that led you
to your ultimate conclusion which you have already
given to this Court expressing Iran and Saudi
Hizbollah's involvement. So if you could describe
to the extent that you can and that you're
permitted the exact evidence that you reviewed or
to whom you spoke and what you gathered to the
extent that you can in forming your opinions.
THE WITNESS: Yes, sir. I spoke with
officials of the Saudi Government.
Q
A
BY MR. ROULEAU:
Can you name who?
I'd rather not, sir. Those were in
confidential discussions when I was representing
the United States Government, so -- I spoke with
political activists in the Eastern Province of
Saudi Arabia.
JUDGE ROBINSON: Are you prepared to
identify them?
THE WITNESS: I would have to go back and
review my records of all of the individuals and see
what the character of the conversations was. I
know that one former Saudi diplomat that I spoke
with, Turki al-Hamad, that was not a confidential
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conversation.
70
Just T-u-r-k-i and his last name is
a-1 hyphen H-a-m-a-d. But I would be reluctant to
reveal the content of those conversations given the
difficult circumstances that Saudi Shia face in the
Eastern Province unless I had the permission of the
individuals involved, which I think would be quite
difficult to secure without a trip there, and I am
not sure I could find those individuals given the
passage of time .
In addition, many conversations with U.S.
Government officials who had been involved, U.S.
military officials, Air Force officials had been
involved in the investigations, and that would
include people at the general officer rank as well
as more working level people involved in the
investigation .
JUDGE ROBINSON: Are you prepared to
identify them or to testify with respect to the
conversations?
THE WITNESS: Your ·Honor, I would have to
go back and verify that with each of the
individuals involved since at that time I was U.S.
Government official and those conversations were --
could well -- did touch on classified information.
It would be quite a complicated process, frankly,
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to --
BY MR. ROULEAU:
Q Is there anything you can disclose that
would not touch on anything that would fall under
the rubric --
JUDGE ROBINSON: Well, I don't think Dr.
Clawson finished identifying generically the
evidence that led him to the opinions that he has
expressed here in the courtroom, so let's do that
first, or we will allow Dr. Clawson to do that
first and then you may ask the question regarding
what it is that he is able to discuss.
71
THE WITNESS: Your Honor, essentially they
were conversations with reporters who were
investigating the matters and trying to formulate
questions to pose either to U.S. Government
officials or Saudi officials or, for that matter,
to Iranian officials about this.
JUDGE ROBINSON: Are you able to identify
the reporters or testify regarding the dates of
your conversations with them and the information
conveyed during the discussions?
THE WITNESS: I don't think I have records
on that. I would have to go back. But certainly
it begins as early as 1996; it reaches a crescendo
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around the period of the time of Hani Sayegh's
detention in Canada and his deportation here, and
also the time that it becomes public knowledge that
President Clinton has sent a letter to Iranian
President Hatami asking for Iranian cooperation
about the investigation in this matter, in
particular for an opportunity to interrogate two
named individuals about their involvement in the
Khobar Towers bombings. At that time, there were a
lot of questions being asked by reporters about
this, and that would have been a crescendo. That
letter and my conversations about that matter,
then, with the Iranian Government officials and the
reasons why Iran did not provide those two
individuals by their accounts are another factor.
JUDGE ROBINSON: What is the other
evidence? You have named conversations with Saudi
officials, and perhaps I should say officials of
Saudi Arabia, discussions with political activists,
discussions with U.S. Government officials,
discussions with reporters. What other evidence
have you considered in formulating the opinion that
you have expressed here in the courtroom?
THE WITNESS: President Clinton's letter
to President Rafsanjani and the Iranian response to
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that letter as characterized to me by the U.S.
excuse me -- by the Swiss ambassador to Iran who
represented U.S. interests in this matter and as
characterized to me by the U.S. Government
officials who were responsible for drafting the
letter and for reviewing the response, people who
worked at the National Security Council.
73
JUDGE ROBINSON: Are you prepared to offer
or to provide either letter or testify with respect
to the contents of either letter?
THE WITNESS: No, Your Honor, I'm not,
because I only had those letters read to me. I do
not have copies of them and have not seen physical
copies.
JUDGE ROBINSON: Very well. What other
evidence
THE WITNESS: They were both described to
me by long-time friends and acquaintances who were
at the time working at the National Security
Council. One is the President's special advisor on
the Middle East, Mr. Martin Indyk, and the other is
his deputy, Mr. Bruce Reidel.
JUDGE ROBINSON: All right. In
formulating the opinions that you've expressed here
in court, what else did you review or consider?
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THE WITNESS: I also considered the
indictment in 2001 in the Eastern District of
Virginia, I believe, by the United States
Government of named individuals for their
involvement in the bombing and the speeches and
testimony -- speeches and writing by FBI Director
Freeh at that time, and also my consultations at
that time with U.S. Government experts working on
terrorism issues.
JUDGE ROBINSON: Are you prepared to
identify the individuals with whom you consulted?
THE WITNESS: I would rather not since
some of them are at U.S. Government intelligence
agencies that I was visiting for the purpose of
consultation with them.
JUDGE ROBINSON: Can we generically
74
describe the individuals as intelligence officials?
THE WITNESS: Yes. Yes, Your Honor, that
would be very accurate.
JUDGE ROBINSON: Of the U.S. Government?
THE WITNESS: That would be very accurate.
JUDGE ROBINSON: What else did you
consider or review in formulating the opinions that
you've expressed here in court?
THE WITNESS: The reports both in the
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Saudi press and in the Iranian press about the
matter, so the character of the Iranian reaction to
this and what they did not say as well as what they
did say, which is where, unlike in other
circumstances where they have felt that they could
make a good argument they were not involved and
they have presented good cases they were not to
make that argument, there is no effort in this
case, no effort in this case for them to present
that kind of information.
In the Saudi press, which admittedly is
very much co~trolled by the Saudi Government,
again, there is rather supportive statements made
about the - -
JUDGE ROBINSON: Are you able to identify
the press reports that you considered in
formulating the opinion that you have or
opinions that you've expressed in court this
morning?
THE . WITNESS: I would have to go back and
review my records very carefully, but I would think
that -- I can identify it as having been from the
major Iranian newspapers such as the newspaper
Kahan, the largest circulation newspaper at that
time that's controlled by hard-liners, and also the
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newspaper Etelaat, E-t-e-1-a-a-t, which is another
major newspaper in Iran at the time. And, as I
say, it's as much what they don't say as what they
do say and the comparison of how Iran reacts in
other terrorist episodes which I find quite
damning.
JUDGE ROBINSON: What else did you review
or consider in formulating the opinions that you've
expressed in court this morning?
THE WITNESS: Well, opinions expressed in
court, many conversations with European officials
who follow -- and Israeli officials who follow
these matters, and
JUDGE ROBINSON: Are you able to identify
them, the European --
THE WITNESS: I
JUDGE ROBINSON: these intelligence
officials of the European government?
THE WITNESS: These were intelligence
officials in Israel and intelligence officials from
the British, French and German governments, as well
as members of the foreign ministry of each of those
four countries.
JUDGE ROBINSON: Are you able to directly
the officials or to testify with respect to the
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information that you received from them?
THE WITNESS: I would really need to
consult with any of those before I did it, and I
would be very surprised if they would be prepared
to be identified.
JUDGE ROBINSON: What else did you
consider or review or evaluate in formulating the
opinions that you expressed in court this morning
regarding Khobar Towers?
THE WITNESS: Personal conversations with
77
officials of the State Department, of the National
Security Council, about what are U.S. Government
policy options in face of the evidence that Iran is
responsible.
JUDGE ROBINSON: Are you able to identify
those officials or testify with respect to the
information that you received from them?
THE WITNESS: I can certainly identify
Martin Indyk and Bruce Reidel.
JUDGE ROBINSON: Are you able to testify
regarding the information that you received from
them?
THE WITNESS: I can certainly say that
they felt that there was no doubt that Iran was
responsible by the time we get into the time frame
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of the 2000 campaign.
JUDGE ROBINSON: Okay. Is there anything
else that you considered in formulating the
opinions regarding Khobar Towers that you expressed
in court this morning?
THE WITNESS: Well, Your Honor, to be
quite blunt, after President Clinton's October 1999
letter to President Hatami becomes public knowledge
later that year, there is considerable concern on
the part of the Clinton Administration and its
political appointees that this could become an
issue in the presidential election, and I had a
number of conversations with high-level officials
and political operatives about what are the options
for U.S. policy in which it was universally assumed
by all of these people that Iran was responsible.
The only question was, okay, now what do we do
about it?
But I would be very reluctant given the
sensitivity of the issue at the time to discuss who
I had these conversations with other than to say
they were high U.S. Government officials and high
Democratic officials, Democratic party officials,
unless I checked with them, and I very much doubt
that they would like me to violate my confidence
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during those conversations.
JUDGE ROBINSON: What else did you
consider or review in formulating the opinions that
you expressed in court this morning regarding
Khobar Towers?
THE WITNESS: I think that's a pretty
comprehensive list, Your Honor.
JUDGE ROBINSON: Let me review it just to
make sure my notes are accurate: 1) officials of
the government of Saudi Arabia; 2) quote,
"political activists," close quote; 3: U.S.
government officials; 4) reporters; 5) which has
two parts, Clinton's letter to Rafsanjani and
Rafsanjani's response; 6) the indictment returned
in the Eastern District of Virginia in 2001; 7)
speeches and writings of Louis Freeh; 8)
consultations with U.S. Government intelligence
officials; 9) press accounts, press accounts in
both the Saudi press and the Iranian press; 10)
conversations with intelligence officials of the
governments of Great Britain, France, Germany and
Israel; 11) conversations with officials of the
U.S. Department of State and the National Security
Council; and 12) discussions with high-level policy
officials and policy operatives in the Clinton
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Annex 111
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Administration .
Did I omit anything?
THE WITNESS: No, Your Honor.
Earlier in your list, you had U.S.
Government officials . Perhaps it's worth noting
that that includes military officers, including at
the rank of general officers.
80
JUDGE ROBINSON: And is it correct that of
those twelve -- those are not, of course, twelve
discrete items of evidence which form the basis of
the opinions that you've expressed here, but we
have grouped them generically. Is it correct that
of that grouping of categories of evidence, that
you are prepared to testify only with respect to
the indictment returned in 2001, the speeches and
writings of Louis Freeh, and the press accounts in
the Saudi and Iranian press?
THE WITNESS: Correct, Your Honor.
JUDGE ROBINSON: Very well. Thank you.
Why don't we take a brief recess. Dr.
Clawson, I'm going to ask you to step down, please,
and counsel, I will have you remain. If you would
like to get a cup of coffee or tea in the cafeteria
on the lower level and come right back, you're free
to do so.
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ANNEX 112
Annex 112
84TH CONGRESS
edSeRsion } SENATE
{
EXECUTIVE REPl'.
No. 9
COMMERCIAL TREATIES WITH IRAN, NICARAGUA, AND
THE NETHERLANDS
MoNDAY1 Ju r,v 9, 1956.-0rdered to be printed
Mr. GEORGE, from the Committee on Foreign Relations, submitted
the following
REPORT
[To accompany Executive E1 Executive G, and Executive H, 84th Congress.
2d session)
The Committee on Foreign Relations, having had under consideration
the treati~s listed below, recommends that the Senate give its
advice and cons<mt to their ratification:
1. Treaty of Amity, Economic Relations, and Consular Rights
between the United States of America and Iran, signed at
Tehran on August 15, 1955 (Ex. E, 84th Cong., 2d sess.);
2. Treaty of Friendship, Commerce, and Navigation with the.
Republic of Nicaragua, n.nd a protorol relating thereto, signed
at ~1anagua on January 21, 1956 (Ex. G, 84th Cong., 2d sess.);
and ·
a. Treaty of Friendship, Commer<'<', and Navigation between
the United States of Amcrir.a and the Kingdom of the Netherlands,
togC'thcr with a protocol and an exchange of notes relating
t,h<'r(•to, signed at 'fbe Hague on l\tlarrh 27, 1956 (Ex. H, 84th
Cong., 2d S<'ss.).
MAIN PURPOSE
The obje.ctive of these trPaties is to est,ablish a comprehensive
reciprocal basis for the protect,ion of American commerce and citizens,
and t,heir business and otlwr interests abroad. To this end they
provide eit-her national or most-favored-nation treatment with respc•
ct to entry, travel and n~sid<:'nC(\1 basic personal freedoms, guaranties
with respect to property rights, the conduct and control of
business cnte.rprises, taxation, exchange restrictions, the exchange of
goods, and navigation. The treo.ty with Iran, in addition, has broad
provisions concerning the privilC'gcs and immunitil's of consular officers
such as are usually found in more detailed form in consular conventions.
71110
Annex 112
2 COMMERCIAL TREATI~S
The treaties with Nicaragua and the Netherlands follow in practica.
lly · all - respects the provisions of previous postwar commercial.
treaties, the most recent of which, a treaty with the Federal Republic
of Germany, was approved by the Senate on July 27, 1955,. by a vote ·
of 83 to 0. The Iranian treaty is somewhat more general and compares
closely with the treaty-of amity and economic relations with Ethio~ia,
approved by the Senate .July 21, 1954, by a vote of 86 to l. fhe
provisions of the three treaties are further summarized and discussed,
particularly in tl~e r~spectE\ -~n.-w~,c,l\~,t hey_ differ from other :ro~twar. .
commercial treaties, 1n other sect1mis• of this report. · 1
BACKGROUND AND COMMITTEE ACTION
These are the 13th, 14th, and 15th treaties ·or friendship, commerce,
and navigation entered into since World War II. Thev are a part of a
continuing program of this Government to bring earlier treaties up to
date and negotiate new ones with nations with which the United States
does not have such treaties.
The· Iran treaty replaces two provisional agreements of 1928. · l'he
Nicarag'l_1an treaty replaces one of 1867 which was tenninated in
1902. The Netherlands treaty replaces a convention of 18,52 and an
agreement on trademarks of 1883. ··-::
The latest of these three treaties was received by the Sena'4,on May
7, 1956. During the time that they have been pending before the
Foreign Relations Committ.ee, the, committee received no indication .
of opposition to their provisions. u
On July 3, 1956, the committee heard Thorsten V. Kalijarvi;
Deputy Assistant Secretary of State, on the three commercial treaties.
Although this hea.rmg was in executive session, it has been printed for
the information of the Senate along with the additional information .
requested at that tjr_.:,e and supp;Qrting statements received by the
committee from t,he American Arbitration Associatiun and the ·Bar
Associotion of the city of New York.
At the conclusion of the hearing on July 3, 1956, the committee
voted to report the treaties favorably to the Senate for action thereon.
SUMMARY OF TJIE TREATY WITH IRAN ••-
Article I states thatthere
shall be firm and enduring peace and sincere friendship :
between the United States of A.Inerica and Iran.
Article II provides for rights of entry and travel, freedom of religion
and of communication, right to en~age in trade and related commercial
activities, u.nd the right to engage m the practice of professions subject
to qualification under the applicable legal provisions governing admission
to professions. The parties, however, reserve the right to
apply measures which are necessary to maintain public ordur, and to
protect public health, morals, and safety.
Articles III, IV, V, and VI spell out the rights of nationals and companies
of one party in the teITitory of the other with n~spect to juridical
status, access to courts, protection of property, pursuit of
permis_sible enterprises, acquisition and sale of property, protection of
mvent1ons, trademarks, and trade names, an<l equal or most favored
nation treatment rega1·ding taxes, fees, or charges. .
Annex 112
Mticle' VII co);tCern$ exchang~ i;-estrictions and provides that such
shall be applied o~y ·when nec~~ry ,without discrimination and undel.?.
conditions permitting the withdrawal of specified categories of foreign-_
exchange in the currency of the other party (i. e., United States dollars,
earned or held in Iran).
Articles 'VIII and IX, relating to exports and imports of products,-•
provided for most-favored-nation treatment of such products.
Article X details the rights of vessels flying the flag of either party:
in the ports of the other and in general provides national and mostfa
vored-nation treatment, excapt for coastwise, inland, and fishing. ·
traffic.
Article XI governs the operation of publicly owned or controlled
enterprises of one party in the territory of the other party in such a..
manner as to assure them (with two exceptions) no competitive advantage
over privately owned enterprises.
Articles XII-XIX deal with the rights, privileges, immunities, and
duties of consular officials and their residences and pla~es of business.
In substance these articles provide for treatmP-nt geu,~rally accorded
by international l~w and usage tG such offici. ~s, or a~, provided for in
United States consular conventions with other states.
Article XX reserves the right of the parties (1) to regulate t,h\?. importation
and exportation of gold or silver; (2) to control fi3s1onable
materials and their radi\Jactive byproducts; (3) to regulate the traffic
in arms, ammunitions, and implements of war; and (4) to undertake
necessary measures for the maintenance or restoration of international
peace and security or for the protection of the parties' essentialsecurity
interests.
Articles XXI-X...X:111 provide the settlement of disputes, superseding
of two 1928 treaties, and the duration and termination of the treaty
which shall be as follows: the treaty will run for 10 years and continue
in force thereafter until terminated by one of the parties upon 1 year's
written notice.
SUMMARY OF THE TR~A'rY WITH NICARAGUA
Under article I each party agrees to accord equitable treatment to
the persons, property, enterprises, and other interests of nationals and
companies of the other party.
Article II provides for en try, residence, tra vol, religious freedom,
and the right to gather and disseminate information and to communicate
with other persons, subj,Jct to necessary measures to maintain
public order 0:nd protect the public health, morals1 and safety.
Article III provides for the treatment of nationals of either party.
when take0: iμto custody by the other.
Article IV extends the applicable workmen's compensation and
social-security benefits of one party to nationals of the other within
its territories.
By article V national and most-favored-nation treatment is assured
for access to courts and administrative tribunals.
Article VI guarantees property rights against unreasonable search~a.
and seizures. If anx property is expropriated for public purposes or
1·ca,sons of social utility, it shall be compensated for promptly and
fairly. ~i. -
The right of nationals of one party to do business in the territory_
of the other party is set forth in article VII, subject to limitations
Annex 112
COMMERCIAL TREATIES
~hich each party reserves t~ i.ts~lf on publi~ u~ili~ies, ~hi"tiuil.d.ing,
au- or water transport,, banking, or the explo1to.t.1on of land or of.her
natural resources.
Articles VIII and IX cover the rights to employ ae~ountants,
executive personnel, attorneys, agents, and so forth, to · engage in
scientific,· educational, religious, and philanthropic activities on the
basis of national treatment, to lease land and buildings and other·
immovable propt:-rty, to dispose of inheritances which by ·reason of
alienage cannot be retained, and to own, possess and dispose of
personal property.
Article X concerns patents and trademarks and provides for
cooperati◊n in furthering the interchange and use of scientific and
technical knowledge, particularly in the interests of "increasing
productivity and improving standards of living."
Article XI guarantees national and most-favored-nation treatment
regarding taxation except for reserved rights to-
(a) Extend specific advantages regarding taxes, fees, and
charges to nationals, residents, and companies of other countries
on a basis of reciprocity;
(b) Accord special tax advantages by virtue of agreements for
the avoidance of double taxation or the mutual protection of
revenue; and
(c) Apply special provisions in allowing to nonresidents
exemptions of a personal nature in connection with income and
inheritance taxes.
Article XII coneerns exchange restrictions and commits the parties·
to impose them only when necessary, w:thout discrimination, and
subject to provisions for withdrt. ·· al of certain categories of fereign
exchange. .
Article XIII accords most-favored-·nat:on treat,ment to commorciai
trav«)lers, their samples, and the takinr of orders.
Articles XIV and XV provide most-favored-nation treatment by
one party to the products of the other party. This sh.all not apply,
however, to products of nati.f}nal fisheries, ad vantage.s ac~rded to
adjacent countrieFi in order to facilitate frontier traffic, or to advantages
obtained through membership in a customs union or free
trade area. Prompt puhlication of <'Uatom.s laws and regulations and
an appeaJs procedure are also specified.
National and most-favored-n.ition treatment is provided under
article XVI by each party in maUers affecting internal taxation, sale,
distribution, st )rage, and use of products of the other. The article
also d~tines "t,off ee" to designate the coffee bean or consumable
preparations made from the coffee bean and the parties agree to
continue present policies designed to prevent the commercial usage
of that term in any deceptive manner.
Articles XVII and XVIII deal with Government corpc,rations or
enterprises and monopolies and insure competitive eque1lity with
private enterprise.
Articles XIX and XX concern freedom of navit r;,tion s.nd freedom
of transit. Article XXI contains the usual exceptions relating to the
import of gold and silver, to fissionable materials, to traffic in arms,
ammunitjon and implements of war and to measure for collective or
individua} self-c~ef ense. An additional. exception . is made to r-0ver
any 0pec1al benefits or advantages wluch Nicaragua may accord to
Annex 112
comdjRCIAL TREATIES
· other Central American Republics as a result of the creation of an
integrated Central American regional economic organization.
Article XXII contains definitions; article XXIII territorial application;
artiicle X"XIV consultation and settlement of disputes; and·
article nv duration, which is set at 10 years and thereafter unless
denounced by one party after 1 year's written notice. . · '
The protocol elaborates or further defines certain provisions of the
treaty ..
SUMMARY OF TREATY w1·ra THE NETHERLANDS
-Article I provides that each party to the treaty shall at all times
accord equitable treatment to the persons, property, enterprises,
and interests of nationals of the other party and that there shall b2
freedom of commerce and navigation between them.
Article II relates to rignts of entry and travel and also covers
residence, freedom of worship· and communications. These rights are
subject to measures necessary to maintain public onLjr and to p:rotect
public health, morals, end safety.
Article III provides for national treatment in the protection ,and
security of persons of each μarty in the territory of the other and sets .
forth the rights of persons accused of crimes.
Article JV provides na.,ional treatn1ent, in regard to workmen's .
-compensf,tion and social-secm·ity .benefits.
Article V concerns access to courts .and administrative tribunals and
· provides national treatment therefor. The provisions regarding enforcement
of commercial arbitration awards .is framed in positive andeffective
language so &fl to provide for their recognition in State
courts in the United States tl,e sa.tn.u as the awards rendered in other
States &f the United States.
Article VI relates ·to the protection of the property of natior1als of
one party in the terdtory of tLe other. Such property cannot be
taken except for a public purpose and then only upon adequate compensation
.
. :\rticle VII accords national treatment with respect to business
activities, with tho usual exceptions relating to communications,
transportation, banking, and the exploitation of land or other natural
1·esources. Their right to prescribe special formalities for aliencont.<'
Ol)ed enterprises is reserved.
At·ticle VIII permits nationals and companies of either party to
· engage within the territory of the other, accountar..iis, and other technical
experts and specialists of then· choice and to engage in scientific,
educational, religious, and philanthropic activities.
Article IX concerns property rights and includes, in addition to the
usual provisions relating to personal property, inheritances, and the
leaBing <?f real property, a provision permitting United States citizens ,
to acqmre and own real property 1n the Netherlands. Dutch n&-;
tionals are accorded the same right in the United States, subject,
however, to the applicable State laws. The Netherlands, on the other
h~nd, reserves the right to accord less than national treatment to
·r1ationo.ls-of the United States domiciled in States which do not accord
Dutch citizens national treatment with respect to the right to real
pro_pert,~.
The&e provisions concerning real property are broader and more
detailed than the usual form.
Annex 112
-6 COMMERCIAL TREATIES
Article X provides national treatment with respect to obtaining
and maintaining patents and to rights in trademarks, etc.
Under article XI, regarding taxes, fees, or charges on income and
other activities and objects, national treatment is accorded .
.Ai·ticle XII concerns exchange restrictions and sets forth the usual
conditions under which they can be applied.
The national treatment of commercial travelers and their samples is
provided for in article XIII.
Article XIV relates to customs duties and quantitative restrictions
and provides for most-favored-nation treatment. The conditions
under which quantitative restrictions may be applied are set forth.
Article XV provides for prompt publication of customs laws and
regulations and for an appeals procedure.
Article XVI provides for national and most-favored-nation treatment
for products of either party within the territory of the other in
matters affecting internal taxation, sale, distribution, etc.
Articles XVII an<l XVIII concern the operations of state-owned
enterprises under conditions of competitive equality with private
enterprise .
. Article XIX related to the treatment to be given vessels of each
country in the territory of the other, providing nn.tional and mostfavored-
nation t.rratment for them except for coast\ivise and inland
navigation. Article XX provides for the treatment of seamen of such
vessels .
Article XXI prov.ides for freedom of t.ransit. through the territory
of each party for the persons or products of the other.
Article XXII eontains the usual exceptions from the trenty provisions
of measures relating to the importa.tion or exportation of gold or
silver, fi ssionnble rnatrrials n.n<l r<•lated matter, to traffic in arms,
ammunition, and implements of war, to the maintenance of international
peace or security, and to national fish eries. The mostfavored-
natiou treatment is also not to apply to special advantages
aceorde<l by the United States to its Territories or possessions, to
Cuba, tlie Philippines. t.he Trust Territory of the Pacific Islands, or to
the Panama Canal Zone, and by the Netherlands to its Benelux
partners or to Indonesia, nor to special advantages accorded eit~er
parties to adjac<•nt countries to facilitate fronti er traffic or by virtue
of a customs union or fr<'c trade nrea of which either party may become
a member.
Article XXIII contains definitions; article XX.IV defines the territory
to which it shall apply (excludes in the case of the United States,
the Canal Zone, and the Pacific Trust Territories), which in the case
of Surinam and t,he Nether lands AntillBs shall be 1 month after
receipt of notification by the United States to this effect.
By article XXV procedures for the settlement of disputes arc spelled
out. According to artid e XXVI the treaty will replace earlier treaties
of 1852 and 1883. Article XXVII sets the duration of the treaty at
10 years and thereafter, subject to termination upon 1 year's written
notice to that effect b.v oitber party.
The protocol contains provisions construing and clarifying the
trm1ty and is an integral part thereof.
The cxchu.ngt• of notes, appended as a part of the treaty, contain a
new f eaturc which is as follows :
Annex 112
COMM·ERCIAL TREATIES
It. is ·recognized in principle that tho Netherlands should
continue- to be able to participate in European regional
· arrangements which serve these aims and the broad interests 1 of both Partit}s, even though the Netherlands may there-under
be obliged to grant some reciprocal advantages to
participating countries which it is unable to grant to nonparticipating
countries.
Consultation is provided for in this event. Should such consultation
fail to lead to a satisfactory result, certain of the most-favored-nation
provisions could be suspended upon 2-n1onth notice. In that case
the United States agrees to accord the Netherlands treatment no less
favorable than that extended to other participants in a European
regior.;'.\.l arrangement and the Netherlands agrees to accord the United
States treatment no less favorable than that accorded other nonparticipating
nations in the regional arrangement.
MATTERS CONSIDERED BY THE COMMITTEE
Distrimination between American citi zens.--In view of the practice
of some nations of excluding certain American ·citizens because of
their race or creed, the committee was particularly concerned lest the
treaties now before the Senate would make such discrimination possible.
It was assured by the Department of State that the rights
accorded by treaties would apply to all American citizens regardless
of race, creed, or sex.
Practice of prof1~s8ion8 .- In previous treaties, t-he committee has
objected to ·p1·ovisions aecording national treatment to foreign nationals
in the practice of professions and recommended to the Senate
reservations to those provisions. During t.l1e considerat,ion of the
present treat,ies, tlu~ <>ommittee nscertnined from the Department
of State that such provisions are not contained in t.l,em. The Iranian
treaty in article II, pnragraph 2, provides that the nationals of one
party in the territory of the other party shall--
be permitted to engage in the practice of professio11s for which
they have qualified under the applicable legal provisions
governing admission to profrssions.
According to the Depn,rtment of Stale, "npplicttble le.gal provision"
encompasses compliflnce with State and Federal Jn.ws and regulations.
Should a State or Federal law specify United States eitizenship as a
condition precedent to the prnctice of a profession, this treaty would
not waive that requirement.
Economic integration or 'llnion.- 'l'he. eommitt.ee took note of provisions
in the treat,ies with Nicnrn.gua n.nd the Netherlands designed to
enable these countries to becomt~ members of i·egional economic
groupings, members of which would nccord to ench other more favorable
treatment in <'ertaiu mat.ters than thev would to nonmembers.
Although the provisions of the two treaties differ from each other,
their geuet·al purpose is to relense Nicaragua n.nd the Nethel'lands from
the obligation to accord the United States most-favored-nation
treatment with respect to those matters in the event that such economic
integration or union takes pince within their respective regions.
lu the case of t,he Nethel'lands, the United States would, for its part,
be released from the obligation to accord the Netherlands moskfavored-
nation treatment in those respects.
Annex 112
COMMEltC.IAL· TltEATIEB
The simplified form.-As already pointed · out in this report, the
Iranian· treaty is an abridged and simplified version of the usual type
of treaty. 'rhis form was first used in the Treaty of Amity and
Economic Relations with Ethiopia, to which reference has been made.
The simplified and more general form, ii,. the opinion of the Bar
Association of the City of New York and the ccromitt.ee, does not
accord the degree of protection for A1nerican nations and their property
:that the detailed treaties of friendship, commerce, and navigation
afford. The committee asked the State Department witn~ Mr .
. Kalijarvi, whether second usage of the simplified form signified a trend
toward this form. He stated:
I think there has been a change in respect to the approach
to these problems, especially as concerns the underdeveloped
countries where the negotiating of the longer provisions, both
of the trcatr, that is the treaties of friendship, commerce,
and navigat10n and consular arrangements, is extremely difficult,
and there is under contemplation negotiations with
some countries that is quite similar * * * to both the Ethiopian
and Iranian treaties.
The committee appreciates the negotiating difficulties of the Department
of State and the fact that the simplified treaty affords
worthwhile advantages. However, it urges the Departi:p.ent of _State
to obta.in the greatest degree of protection possible for American citizens
and their activities and enterprises abroad which is attended by
the m~re comprehensive type of commercial treaty.
Consular provisions.-1.'he consular provisions in t,he treaty \\ith
Iran, as noted above, a.re Jess detailed and full than those found
customarily in separate consular conventions. They are also less
a.dvantn.geous insofar as they do not provide as extensive coverP..ge
of rights and privileges. The Bar Association of the City of New York
has suggested tba.t a supplemental protocol be negotiated to bring
the consular provisions more closely in line with those of other consular
conventions. Although it is t.hr. view of the Dr.partment of St.ate
that thi& convention will meet the needs of Iran and tho United States
for some time, the committee hopes that the Department will undertake
to nPgotiate a full-scale consular convention as soon as circumstances
make such negotiations practicable.
Rights of entry (Iran treaty) .-Tho committee inquired why the
treaty with lro.n did not contain rights of entry and establishment
of enterprises such as are customarily included in treaties of this
nature. It was explained by the Department of State that Iran was
· not prepared to specify such rights out of the fear that this might
open the door to economic penetration by neighboring countries. The
Department of State felt that there was some justification for this fear.
E"ffect on domestic laws.-'rhe degree to which the three treaties
now under consideration would affect Federal or State laws was
closely examined by the committee. They do not deal with copyright;
the provisions on social security conform with exist~ Federal
-legislation on the subject; and there are no provisions affectmg State
· laws regulating the practice of professions. They contain no in nova.
tions which would raise other problems of reconciling them with
-domestic laws. Their effect on domestic laws, therefore, will be no
·P."eater than that of previous treaties to which the Senate hM given
its approval in the past.
Annex 112
COMMERCIAL TREATIES 9
COMMITTEE RECOMMENDATION
Treaties of friendship, commerce, and navigation, such as these,
are of considerable benefit to American businessmen and other citi.:.
zens. They guarantee certain basic rights and legal protection which
are important to international commerce, investment, and other
activities between nations.
Besides the greater certainties and benefits for our citizens which
will flow from these treaties the committee was mindful of the
Congress' injunction· to the Department of State (contained in the
Mutual Security Act of 1954, as amended) toaccelerate
a program of negotiating treaties for commerce
and trade, including tax treaties, which shall include provisions
to encourage and facilitate the flow of private investment
to nations participating in programs under this Act.
The Committee on Foreign Relations is convinced of the merits
of the three treaties now before the Senate and recmnmends that the
Senate give its advice and consent to their ratification.
0
Annex 112
ANNEX 113
Annex 113
EXHIBIT 10
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
FRAN HEISER, et al.,
Plaintiffs,
Civil Action Nos. 00-2329
v. 01-2104
Washington, D.C.
ISLAMIC REPUBLIC OF IRAN,
et al.,
Monday, February 9, 2004
2:45 p.m.
Defendants.
. . . . . . .
APPEARANCES:
DAY 3 - p.m.
TRANSCRIPT OF HEARING
BEFORE THE HONORABLE DEBORAH A. ROBINSON
UNITED STATES MAGISTRATE JUDGE
For the Plaintiffs: SHALE STILLER, ESQ.
MELISSA L. MACKIEWICZ, ESQ.
ELIZABETH R. DEWEY, ESQ.
LOUIS J. ROULEAU, ESQ.
Court Reporter:
Pi~er Rudnick
----=-------- 6225 Smith~venue
Baltimore, Maryland 21209-3600
410-580-3000
BRYAN· A. WAYNE, RPR, CRR
Official Court Reporter
U.S. Courthouse, Room 4808-B
333 Constitution Avenue, N.W.
Washington, D.C. 20001
202-216-0313
Proceedings reported by machine shorthand, transcript _produced
by computer-aided transcription.
Bryan A. Wayne, RPR, CRR
Official Court RP.nnrtPr COPV
Annex 113
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proceed?
P R O C E E D I N G S
THE COURT: Now, Mr. Rouleau, are you ready to
MR. ROULEAU: We are, Your Honor.
THE COURT: Very well.
MR. ROULEAU: Plaintiffs' call Patrick Clawson.
DR. PATRICK CLAWSON, WITNESS FOR THE PLAINTIFFS, SWORN
THE COURT: Now, Mr. Rouleau, you may proceed.
MR. ROULEAU: Thank you, Your Honor.
Direct Examination
BY MR. ROULEAU:
Q. Good afternoon, Dr. Clawson.
A. Good afternoon.
Q. Would you please state your full name for the record?
A. Patrick Lyle Clawson.
Q. What is your business address?
A. The Washington Institute for Near East Policy which is at
1828 L Street, N.W., Suite 1050, Washington, D.C.
Q. And you're currently employed by the Washington Institute
for Near East Policy?
A. Correct, sir.
Q. What is your position at the institute?
A. I am the deputy director of the Washington Institute.
Q. And, Dr. Clawson, can you give us some background as to
what that position entails?
Bryan A. Wayne, RPR, CRR
Official Court Reporter
2
Annex 113
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A. Correct, sir.
Q. And do you read Middle East newspapers regularly as part of
your research duties?
A. I try to read at least two Iranian newspapers every day.
I always make it through one, but I don't always get through the
other.
Q. And in front of you you have the binder full of some
exhibits. Would you please refer to Plaintiffs' Exhibit 27A,
and can you identify that document?
A. That is my resume, professional biography.
Q. And is it up-to-date?
A. Yes, sir.
MR. ROULEAU: Your Honor, plaintiffs offer Exhibit 27A
into evidence.
THE COURT: Plaintiffs' Exhibit 27A will be admitted
into evidence.
(Plaintiff Exhibit No. 27A
received into evidence.)
BY MR. ROULEAU:
Q. Dr. Clawson, have you testified previously in the
United States District Court for the District of Columbia on
issues relating to Iran, the Iranian government, and Iran's
sponsorship of terrorism?
A. Yes, sir.
Q. As well as the Iranian economy?
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A. Yes, sir.
Q. About how many times, if you recall?
A. At least 10, sir.
Q. And in those cases were you qualified as an expert witness
in those areas?
A. Correct, sir.
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MR. ROULEAU: Your Honor, plaintiffs offer Dr. Clawson
as an expert in the areas of the government of Iran, Iran's
sponsorship of terrorism, and the Iranian economy.
THE COURT: The Court will receive Dr. Clawson as an
expert in those three areas.
BY MR. ROULEAU:
Q. Dr. Clawson, can you please describe when the Islamic
Republic of Iran, which I'll refer to as Iran, was created?
A. The revolution of 1978-79 resulted in the overthrow of the
Shah of Iran, and shortly after that in the spring of 1979 there
was a popular referendum in which the decision was made to adopt
a constitution naming the country as the Islamic Republic of
Iran.
Q. And what international goals, if any, did the Iranian
revolution have?
A. One of the major tenets of the new government was its
opposition to the United States and its presence in the
Middle East, made particularly famous at marches where hundreds
of thousands of Iranians would chant "Death to America."
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The new Iranian government was also determined to bring
governments similar to itself to other countries in the Middle
East, including Saudi Arabia, that is to say governments under
clerical rule.
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And the new government generally wished to reduce Western
cultural and political influence throughout the Middle East and
throughout the Muslim world. It also wished to establish itself
as the leader of the world Muslim community.
Q. And what type of Muslims are Iranians?
A. Approximately 90 percent or a little less of Iranians are
members of the Shia sect of Islam.
Q. And the other 10 percent?
A. Are Sunni Muslims. There's also a small non-Muslim
minority.
Q. And you testified earlier that one of the impetuses for the
Iranian revolution was this Anti-West, and specifically
anti-American goal, if you will?
A. That was one of the major issues raised during the course
of the revolution, and one of the major complaints by the
revolutionaries against the Shah's government was its close
relations with the United States.
Q. And does Iran use terrorism as a means of accomplishing its
political goals?
A. Ever since the Iranian revolution, the Iranian government
has indeed sponsored and organized terrorist attacks in order to
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accomplish these goals of reducing Western, specifically
American, influence in the region, and also of promoting similar
clerical rule in other countries in the region.
At different times it's used terrorism also for such
purposes as opposing the existence of the state of Israel and
its presence in Lebanon.
Q. And has terrorism been an effective tool for the Iranian
government?
A. The Iranian government feels it has accomplished some
important victories through the use of terrorism; for instance,
that Iranian political leaders and newspaper commentaries have
repeatedly cited the 1983 bombing of the marine barracks in
Beirut , Lebanon, as the reason the United States withdrew its
forces in Lebanon and reduced the presence of the U.S.
Government and indeed Americans generally in Lebanon.
Iran has also cited its sponsorship of terrorist attacks
against Israel and the effect that those had on sidetracking the
Arab-Israeli peace process.
The Iranian government has been more cagey of the impact of
the Khobar Towers bombing, which it has never openly
acknowledged it was responsible for, but Iranian government
officials and Iranian newspapers have cited that bombing as
something which pressed the Saudi government to place limits on
U.S. forces in Saudi Arabia and also to reach accommodation with
Iran, which it did shortly after the bombing.
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Q. And, Dr. Clawson, what is Iran's primary goal when it
commits or sponsors terrorist acts, if you know?
A. The Iranian government, by the accounts of those who have
defected from that government and described in a German court
case in 1996 in considerable detail the thinking of the Iranian
government about terrorist activities, wishes to inspire fear on
the part of those against whom it attacks, whether they be, for
instance, Iranian dissidents abroad or whether it be attacks
against, say, the marine barracks or Khobar Towers.
The aim is not so much to kill the particular individuals
who die as it is to create fear among Americans so, for
instance, to create fear on the -- or grief amongst the fami l ies
of those who died so that they would press to see that the U.S.
presence in the area be reduced.
Q. Now, Dr. Clawson, please refer to what I've marked as
Plaintiffs ' Exhibit 27M. Can you identify this document?
A. Yes. It's the U.S. Department of State report entitled
Patterns of Global Terrorism 1995, issued in April 1996.
Q.
A.
Q.
A.
Are you familiar with this document?
Yes, sir.
How so?
The report, which is issued each year, is v ery carefully
read by those of us who follow the subject of terrorism .
Indeed, each year for the last many years on the day that the
report is issued I have avidly read it. I've often tried to get
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hold of drafts of the report beforehand, indeed, to be able to
comment about the report.
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I've appeared on numerous television and radio shows
commenting about the report the day it appears, and in numerous
Internet news groups that I belong to, various academics and
terrorism experts, on the day it appears, we all rush to comment
about exact wording.
It is the definitive report that we all look to as
establishing what terrorism occurred the year before.
Q. In referring to page 23 of Exhibit 27M, the first paragraph
under the subheading of Overview of State-Sponsored Terrorism,
do you see that?
A. Yes, sir.
Q. In the first paragraph, can you read the last line out loud
that begins with "United States currently?"
THE COURT: Let me interrupt you just one moment,
Mr. Rouleau. Is there an opinion that you intend to elicit from
Dr. Clawson, or is it your intention to ask him to read from the
Patterns of Global Terrorism reports which are of course
publicly available materials?
MR. ROULEAU: I'm going to ask him to read a couple
statements and see if he agrees with it to explain it as
background information and to see if he agrees with it and
thereby giving his opinion.
THE COURT: May I ask you to explain the basis upon
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which you suggest that that is an appropriate manner of
inquiring of an expert witness?
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MR. ROULEAU: Yes, Your Honor. He just said it is the
definitive statement upon which the people in the research
community, the research terrorism that they look to, and I want
to see if -- and to see if he agrees whether his opinion matches
up with this. What I can do is ask his opinion first and then
look to this as the basis.
THE COURT: That is the manner in which I will ask you
to proceed.
MR. ROULEAU: Certainly, Your Honor.
THE COURT: Thank you.
BY MR. ROULEAU:
Q. Dr. Clawson, did Iran sponsor terrorist activities in the
year 1995?
A.
Q.
A.
Yes, sir.
And what is your basis for that opinion?
Many statements in the Iranian press and by Iranian
political leaders welcoming terrorist acts that took place,
being rather cagey about whether or not they were responsible
for them, and overwhelming evidence provided in the Israeli and
American press about the evidence -- the Israeli and American
governments and independent journalists found that Iran was
responsible for terrorist acts that year, as well as -- I'll
leave it at that.
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Q.
A.
Would you also rely on something like Exhibit 27M?
oh, yes, sir. I would certainly regard Exhibit 27M,
Patterns of Global Terrorism report, as a very carefully
prepared, thoroughly thought out, detailed research .
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I mean, I know from personal experience that every word is
fought over in an interagency process to determine exactly the
judgments that are made here.
Q. In referring back to page 23, that first paragraph again of
Overview of State-Sponsored Terrorism, can you read the
THE COURT: Can you, Mr. Rouleau, as you did with the
two experts who were called this morning elicit testimony
regarding what Dr. Clawson considered?
MR. ROULEAU: Certainly, Your Honor.
THE COURT: You will recall, of course , that the two
expert witnesses that you called this morning identified the
documents, reports, and other materials that those witnesses
considered in formulating the opinions that they expressed in
court.
MR. ROULEAU: Yes.
THE COURT: Would you do that, please.
BY MR. ROULEAU:
Q. Dr. Clawson, with respect to your opinion that Iran
sponsored terrorism acts in 1995, what is your basis for that?
A. Statements of United States Government officials such as
this report, but also public speeches by U.S. Government
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officials; and, as well, the Iranian newspaper accounts about
terrorist actions and the U.S. and international press,
especially the Israeli press.
Q. And did you rely on Exhibit 27M?
A. Yes, sir.
THE COURT: Mr. Rouleau, do you intend to show
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Dr. Clawson any transcripts of the public speeches, the Iranian
newspaper accounts, or the accounts in the international press
so that the Court will -- so that Dr. Clawson in his testimony
will be able to identify what it was that he considered as you
did with the two expert witnesses who appeared this morning?
MR. ROULEAU: I'm just prepared to show him the
exhibit Patterns of Global Terrorism for 1995.
THE COURT: Are you prepared to ask Dr. Clawson to
identify in some other way what public speeches, Iranian
newspaper accounts, and accounts in the international press he
considered in forming the opinion that he's expressed?
MR. ROULEAU: I think I'd rather ask him, Your Honor,
if I could, whether the Patterns of Global Terrorism were the
primary source of his opinion.
THE COURT: I won't allow you to ask a leading
question. Let me ask you to answer my question before you
proceed. My question is whether you intend to show Dr. Clawson,
whether you have identified and marked as exhibits, as you've
done with your other expert witnesses, the public speeches,
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Iranian newspaper accounts, and the accounts in the
international press that Dr. Clawson considered in formulating
the opinions that he just expressed and others that I'm sure you
intend to elicit.
MR. ROULEAU: Your Honor, I am not prepared to do
that, but the Court will recall this morning with respect to in
particular Dr. Miller, he had based his opinion on several
things. I took the time to go through the military records
THE COURT: I'm asking about Dr. Clawson and not
Dr. Miller.
MR. ROULEAU: Right. My only point being, Your Honor,
is that I have the Patterns of Global Terrorism that I 'm
prepared to show him, and I do not have those other things.
However, this morning was sufficient with Dr. Miller that I just
review the military records, and he relied on tax returns; he
relied on family history reports and things of that nature.
So I would ask the Court to allow me to do the same with
Dr. Clawson here today.
THE COURT: I can consider your request if you would
first ask Dr. Clawson to identify, as your other witnesses did,
what public speeches, newspaper accounts, and international
press accounts he considered in formulating his opinion.
I'm sure you appreciate that the Court, neither this Court
nor the district judge who will consider this Court's report and
recommendation, will be unable to fully assess the weight to be
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given to the opinions without some understanding of what it was
that Dr. Clawson considered in formulating the opinions that he
has expressed.
MR. ROULEAU: Certainly.
THE COURT : Would you do that, please.
MR. ROULEAU: Yes, Your Honor.
THE COURT: Thank you.
BY MR . ROULEAU:
Q. Dr. Clawson, what speeches of government officials did you
consider?
A. It was rare for Secretary of State Warren Christopher to
address que stions of the Middle East without referring to the
issue.
Indeed, at that time , he was considered to be so fixated on
the matter that I heard repeated complaints from European
government officials that it was difficult to hold a
conversation with Secretary of State Warren Christopher without
him raising the question of Iranian support for terrorism and
objecting to it.
And it became a common standing issue among reporters
traveling with Mr. Christopher that this would .be a standard
line that he would include in any speech in which he addressed
matters in the Middle East.
I do not have a record of his speeches on that date, but I
think if I were to consult a volume of Mr. Christopher's
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official addresses during the year 1995, we would find multiple
references to Iranian sponsorship of terrorism.
Q. In what press accounts, either Iranian or Israeli, did you
rely upon?
A. I receive an Iranian translation into English of the
Iranian press Akhbaar Ruz, which is translations of articles
from the major Iranian newspapers and the news headline from
the Iranian radio, and there were repeated sermons at the
Friday prayers offered at Tehran University after terrorist
attacks against Israeli targets in which these people praised
these terrorist attacks an.d referred to Iran's support for the
organizations which carried out the terrorist attacks without
claiming direct responsibility for the terrorist attacks.
Again, I don ' t have a list of the dates, but this was a
common feature of the Friday prayer services at Tehran
University, and this was a year in which there were a great many
terrorist attacks against Israeli targets.
In the Israeli press, this was at a time when Israel's
foreign minister, Shimon Peres, would frequently speak to the
Israeli newspapers after the terrorist attacks complaining about
how Iran had sponsored these terrorist attacks.
Again, I don ' t have the dates, but Mr. Peres was -- well,
he spoke about the matter very often.
Q. And do you have an opinion as to whether Iran sponsored
terrorist acts in the year 1996?
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A. In the year 1996, early 1996, Iran sponsored a number of
terrorist attacks in Israel which led to a summit with
participation by President Clinton, the Israeli prime minister,
and numerous, numerous Middle Eastern European leaders, and
there were many speeches given there about the problem of
Iranian terrorism. So the answer is yes.
Q. And are the speeches your basis for that opinion?
A. That is one important thing, but also the Patterns of
Global Terrorism 1996 which is issued by the State Department.
Q. And if I could just stop you there. Would that be -- can
you refer to Plaintiffs' Exhibit 27N?
A. Correct. That is the Patterns of Global Terrorism 1996,
issued in April 1997.
Q. Have you reviewed this document before?
A. Yes, sir.
THE COURT: Mr. Rouleau, because one volume of
exhibits that you provided the Court has an exhibit marked 27N
and the Court was handed another exhibit marked 27N and the two
do not appear to be the same exhibit, may I ask you to elicit
testimony, please, with respect to which exhibit Dr. Clawson has
before him?
MR. ROULEAU: Certainly. I think I can explain what
happened, though, Your Honor. You will recall the last time in
December when I went over this exhibit, it was an Internet
version, and it wasn't paginated correctly.
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In the interim, before I brought back Dr. Clawson today, w\.
obtained a normal copy that reflects, for example, the Patterns
of Global Terrorism for 1995, and that's what Mr. Clawson has
before him. So it should be identical.
THE COURT: Would you ask him that, please, so the
record is clear, because I have both of them here. And if your
intention is to move in the copy which was obtained from the
State Department instead of on the Internet, then I will return
the copy obtained from the Internet to you and make the
substitution.
MR. ROULEAU: Certainly, Your Honor.
BY MR. ROULEAU:
Q. Dr. Clawson, if you could refer to the first page of
Exhibit 27N?
A. Yes, sir.
Q. And just shifting through that, does that look like a
true and accurate copy of what you normally review from the
State Department?
A. Yes, sir. I note that on the fourth page of this it's
stamped Ralph J. Bunch Library, Department of State.
Q.
A.
Correct. But this is not an Internet copy, is it?
That's correct, sir.
THE COURT: The deputy clerk will return the Internet
copy to you, Mr. Rouleau.
MR. ROULEAU: Thank you, Your Honor.
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BY MR. ROULEAU:
Q. Dr. Clawson, are the speeches of the Secretary of State,
the Iranian press, Israeli press, the types of documents --
THE COURT: Non-leading question, please, Mr. Rouleau.
BY MR. ROULEAU:
Q. The sources that you listed earlier in my response to
Iran's sponsorship of terrorism in 1995 and
THE COURT: Would you simply ask Dr. Clawson what he
reviewed, please: what speeches, articles, reports form the
basis of his opinion.
BY MR. ROULEAU:
Q. Are the speeches you listed and the things that you listed
what you relied upon with respect to your --
THE COURT: I asked would you ask Dr . Clawson to list
what documents, records, speeches, reports, and articles he
considered, please. In other words , please proceed by
non-leading questions.
BY MR. ROULEAU:
Q. Dr. Clawson, with respect to Iran's support of terrorism,
your opinion on that subject, what did you rely upon for the
year 1996?
A. I would rely upon principally Patterns of Global Terrorism.
In addition, I relied upon the statements of U.S. Government
leaders and the U.S. and international press.
Q. And are those the type of things that experts in your field
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rely upon?
A. They are the type of things that experts in the field rely
upon.
THE COURT: Would you please ask Dr . Clawson to
identify the leaders and the speeches and the articles that he
considered, please.
BY MR. ROULEAU:
Q. With respect, Dr. Clawson, to the year 1996, what speeches,
articles, did you r e ly upon?
A. In addition to the speeches of Secretary of State Warren
Christopher, also the speeches of President William Clinton with
a bit of principal speeches of U.S. Government leaders that I
would have relied upon.
As for articles, the articles around the time of the
bombings of February- March 1996 that were dominating the front
pages of the Washington Post and the New York Times and at the
time of the summit of Western to Middle Eastern leaders
condemning terrorist attacks, particularly Iranian invol vement
in the ter rorist attacks. That would be the principal articles
in the U.S. press.
As the international press, I would have relied upon the
articles that appeared in the translation from the Iranian press
that I receive every day, a service called Akhbaar Ruz that I
referred to earlier, in which Iranian leaders proudly welcomed
-- excuse me -- welcomed the attacks, both against rirael and
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the attacks against U.S. forces at Khobar Towers, and they
proudly proclaimed their support for the organizations which
carried out the attacks against Israel.
THE COURT: Can you elicit, Mr. Rouleau, whether
Dr. Clawson is referring to contemporaneous n ewspaper articles
or articles which have appeared at some point in the nearly
eight years that have intervened? I would of course ask the
same questions with respect to speeches.
BY MR. ROULEAU:
Q. Dr. Clawson, what articles are you relying on specifically
with respect to the time period?
A. My earlier response was referring to articles and speeches
which would have appeared in 1996, but if I may elaborate
further, Your Honor, certainly in the subsequent period we find
articles in the U.S. press about the Khobar Tower matter around
the time of the 2001 indictment, along with the speeches of
then-FBI Director Freeh and the attorney general.
And also, there were any number of articles in the U.S.
press around the time of the 1997 detention in Canada of
Mr. Hami El-Sayegh, and there was a report in the Canadian
Intelligence Service about Mr. El-Sayegh and his involvement in
the terrorist activities at Khobar Towers.
And then there was also the speech of then U.S. Assistant
Secretary of State for the Near East, Martin Indyk, gave to the
Aegis Society here in Washington in 1999. I believe it was May,
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which was, as far as I know, the first time that U.S. Governmerl
officials said that the Iranian government officials were
responsible for the Khobar Tower bombings.
THE COURT: Have you obtained and identified any of
those materials, Mr. Rouleau?
MR. ROULEAU: No, Your Honor.
THE COURT: So of the many items that Dr. Clawson
just identified that he considered, is it correct that it is
only the Patterns of Global Terrorism report for 1996 that
you've marked as an exhibit?
MR. ROULEAU: And the one for 1995, Your Honor,
correct.
THE COURT: One more question before you move on,
Mr. Rouleau. Do you intend to elicit any testimony regarding
what methodology or specialized knowledge Dr. Clawson has
brought to the process of formulating these opinions so that the
Court will be able to determine that there is an opinion based
upon Dr. Clawson's experience and expertise and knowledge and
that Dr. Clawson is not simply reporting what government
officials said and what was reported in the newspaper?
MR. ROULEAU: Certainly, Your Honor.
THE COURT: Very well. Could you do that, please,
regarding the opinion about which Dr. Clawson has already
testifi ed.
BY MR . ROULEAU:
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Q. Dr. Clawson, with respect to your opinions that Iran
sponsored terrorist acts in 1995 and 1996, can you explain how
you arrive at your opinions?
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A. In particular, in evaluation of Iranian government
statements about this matter, the Iranian government in many
fields of its policies and ende avors has not openly acknowl edged
what it was carrying out, but has instead used the language of
Friday prayer sermons to indicate to its people what in fact it
was doing behind the scenes.
Iran has a peculiar government structure in which much of
the power is held by revolutionary institutions and not by the
f ormal government, and those revolutionary institutions do not
openly acknowledge much of what they do .
And the Iranian religious leaders have over the years
developed a way to communicating to Irani ans and to their
support, particularly their supporters among Iranians , which
policies the gover nment is actually carrying out without open
acknowledgment.
Those of us who study Iran have spent a lot of time and
effort identifying how you c an show that the Iranian government
is in fact doing s omething, whether it be in foreign policy or
domestic policy through these indirect actions.
For instance, we at the Washington Institute for
Near East Policy published a book called Who Rules Iran by
Wilfried Buchta which was written under my direc tion which
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i discusses in great detail this process, and I 1ve spent a lot of
time over the years learning how to figure out when in fact Iran
is communicating that and, indeed, in many of the reports, the
international press which then cite what the Iranian leaders say
about a matter, reporters are not necessarily particularly adept
at understanding what it is that these Iranians are
communicating through those statements.
Similarly, the U.S. Government officials have spent a lot
of time developing the fine art of diplomatic communication
where you don 1 t want to suggest that you 1re about to go to war
with a country but you do want to indicate, even if necessarily
indirectly, that you think that the other guy's guilty as can be
but without doing it in a way that appears so threatening, that
you are in fact suggesting that there may be military
retaliation.
And a number of the speeches, Mr. Christopher, Mr. Clinton
Mr. Indyk, one had to study them in order to understand how they
were trying to get across a point about Iranian responsibility
without doing it in such a way that would suggest that the
United States was going to retaliate.
Therefore, what could appear to be indirect language is
sometimes much bolder than it might appear to the untrained eye.
THE COURT: Would you elicit, please, the methodology
by which Dr. Clawson determined that statements of u_s.
Government officials and officials of other governments should
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be interpreted other than as spoken or written?
THE WITNESS: It's a language of art, Your Honor, and
therefore what may appear to be the plain meaning is not
necessary the language of art. And after the President makes a
speech, the Secretary of State makes a speech, we'd get on the
telephone and try to find out, okay, who wrote that speech?
Talk to the speech writer and say, okay, what were you
trying to get across about this to clarify that. At least to
the Secretary of State I could usually do that. With the
President I would have to speak to somebody who would work in
the White House with those who could describe what was the
communications .
THE COURT: So is it fair to say the comments of
speech writers were taken into account in formulating the
opinions about which you have testified?
THE WITNESS: Yes, Your Honor, but I would feel more
comfortable in saying it ' s the comments of the staff working for
the President, the staff working for the Secretary of State, be
it either this -- because speech writing was often a process in
which different people would weigh in on the text.
And so I didn't usually speak to the final person who
polished the text. I would speak to the various people who
prepared the first draft that the polisher would use to polish
the text.
BY MR. ROULEAU:
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Q. Dr. Clawson, does the Department of State designate
countries as state sponsors of terrorism?
A. Yes, sir, at congressional requirement.
Q. And has the State Department designated Iran as a state
sponsor of terrorism?
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A. Yes, sir. Ever since Congress required that the State
Department designate state sponsors of terrorism, Iran has been
one of the countries so designated.
Q. And was it designated as such in 1995 and 1996?
A. Yes, sir.
Q. Dr. Clawson, are you familiar with the Iranian agency known
as the Ministry of Information and Security?
A. Yes, sir .
Q. I'll refer to that as the Ministry, okay?
A. Yes, sir .
Q. What is the Ministry?
A. The Ministry is the principal Iranian agency responsible
for collecting information, both about foreign intelligence and
also about domestic dissidents.
Q. And when was it formed, if you know?
A. Formed is a carefully chosen word in that the Ministry is
as soon as the revolution takes place in 1979, the previous
Shah's organization for information and security is taken over
by the revolutionary government, and they use its services with
its approximately 30,000 employees, but they don't give this the
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formal status of a ministry until approximately 1984, I want to
say. At some point in the early 1980s it is formally created as
a ministry. Until then it doesn't have separate ministerial
status.
Q. And is the Ministry involved in Iran's sponsorship of
terrorism?
A. Yes, sir.
Q. And can you elaborate on that?
A. We have a lot of information about the activities in the
Ministry, both from the defectors of the Ministry who testified
in the Berlin court trial, often referred to as the Mykonos
trial because that's the name of the restaurant where these
Iranian dissidents were killed.
And we also have information about the Ministry that came
from the accounts in the Iranian press about a commission that
the Iranian president established in 1997- 98 to look into the
activities of the Ministry, and that was widely leaked.
The author of the book that I referred to earlier,
Mr. Buchta, has many contacts throughout the Ministry, and he
describes the Ministry in considerable detail in that book that
we published, Who Rules Iran, that was written under my
direction.
Q. But with respect to what terrorist activities, if any, the
Ministry engages in, can you elaborate on that?
A. The Ministry, both in the 1996 court trial in Germany, as
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well as in the investigation by the Iranian president, was showl
to be involved in the assassination of Iranian dissidents, both
abroad and at home, both in the Berlin court trial and in the
Iranian president's report, as well as in Mr. Buchta's book;
there's a lot of wealth of information about its sponsorship of
terrorist activities abroad.
There's also quite a bit of information about its role in
the various hostage-takings in Lebanon in the mid-1980s that
come from Lebanese accounts.
THE COURT: Have you obtained any of these, quote,
Lebanese accounts, closed quote, or the book written under
Dr. Clawson's direction or the accounts in the Iranian press or
the transcripts of any portion of the Berlin trial or the
statements of dissidents and marked them as exhibits to show to
Dr. Clawson so that he might identify them as the materials that
he considered in formulating his opinion?
MR. ROULEAU: No, Your Honor.
BY MR. ROULEAU:
Q. Dr. Clawson, do you have a copy of the transcript of the
Berlin trial?
A. I have the four hundred-plus page German report. I'm told
the German courts typically issue such very detailed summaries
of their investigations and determinations, and I have read and
studied that in great detail. It's in German. I also have a
Persian translation.
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Q. And how about your colleague's book on Who Rules Iran?
A. Since I had to go through it word by word as the person
responsible for it and verify that each statement was backed up
by interviews and other source material, I'm intimately
acquainted with it, and I have many copies of the book.
Q. Dr. Clawson, did the Ministry engage in terrorist
activities in 1995 and 1996, if you know?
A. Yes, sir. It was involved in terrorist activities both
inside and outside Iran.
Q. And was the terrorism research community , including the
United States Government, aware of the Ministry's terrorist
activities?
A. There was broad awareness of this and broad consensus that
the Ministry was involved in these activities.
Q. And, Dr. Clawson, are you familiar with the Iranian agency
known as the Iranian Islamic Revolutionary Guard Corps? And
I'll refer to that as the Guard Corps.
A. Yes, sir.
Q. And doe s the Guard Corps go by any other name?
A. It's often referred to as Pasdaran .
Q. And what is the Guard Corps's mission?
A. The Guard Corps's mission i s to provide ideologically sound
military force that the Islamic Republic can be certain to rely
upon to carry out politically sensitive missions and to defend
the revolution. In many ways it's designed to be a check on the
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regular armed forces whose ideological soundness the regime is ,
not sure of.
Q. And when was it formed --
THE COURT: Can you establish, Mr. Rouleau, whether
you are eliciting -- whether these recent answers are opinions
of Dr. Clawson ' s or testimony other than opinion testimony?
MR. ROULEAU: With respect to, Your Honor, about
whether a certain agency is engaged in terrorist activities,
that would be an opinion. The other information is background
setting the foundation to get to that question.
THE COURT: May I ask you in your subsequent questions
to please distinguish between those intended to elicit an
opinion and those which are not.
MR. ROULEAU: Yes, Your Honor.
THE COURT: Thank you.
BY MR. ROULEAU:
Q. Dr. Clawson, backing up just briefly, do you have an
opinion as to whether the Ministry is involved in terrorist
activities?
A. Yes , sir. My opinion is that it i s.
Q. And returning back to the Guard Corps, when was it formed
or created, if you know?
A. It was created shortly after the Islamic revolution in
1 979.
Q. And do you have an opinion as to whether the Guard Corps is
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involved in Iran's sponsorship of terrorism?
A. Yes, sir, it is.
Q. And can you elaborate on its involvement? What sort of
things does it do?
A. It was particularly involved in terrorism in Lebanon. It
established a training camp in eastern Lebanon at which
terrorists were trained, who carried out terrorist activities
both in Lebanon and also where a number of the individuals who
confessed to their role in the Khobar Towers bombing said that
they were trained.
30
Q. Do you have an opinion as to whether the Guard Corps
engaged in terrorist activities specifically in 1995 and 1996?
A. Yes, sir. It was involved in terrorist activities directed
against Israel, for instance, and Israeli civilians in both 1995
and 1996, and it was involved in the attack at Khobar Towers in
1996.
Q. Was the community that studies terrorism, including the
United States Government, aware of the Guard Corps' terrorist
activities?
THE COURT: Let me interrupt you, Mr. Rouleau, would
you please elicit from Dr. Clawson the bas is of his testimony
that the IRGC was involved in the Khobar Towers b ombing in 1996?
MR. ROULEAU: Your Honor, we're not offering
Dr. Clawson with respect to specifically the Khobar Towers
event.
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THE COURT: You want to strike the testimony he just
gave, then? The testimony remains and the Court would expect
that you would elicit the basis of it.
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MR. ROULEAU: The question was with respect to whether
it was involved in terrorist activities generally.
THE COURT: I'm speaking of the answer Dr. Clawson
gave. Did you hear the answer, or do you wish the reporter to
read it back?
MR. ROULEAU: No, Your Honor. I heard it. He listed
that among examples.
THE COURT: How do you wish to proceed, then? Would
you like a moment to confer with co-counsel?
MR. ROULEAU: I would, Your Honor.
THE COURT: Very well. We'll take a brief recess.
(Recess from 3:36 p.rn. to 3:42 p.m.)
THE COURT: Now, Mr. Rouleau?
MR. ROULEAU: Yes, Your Honor. Thank you for allowing
us to confer. I've conferred with counsel, and I apologize for
any misunderstanding. We have not called Dr. Clawson to discuss
the Khobar Towers bombing incident specifically. He mentioned
that as an example in answering one of my questions, and so --
THE COURT: Do you wish to -- is it your request that
the Court strike that portion of Dr. Clawson's testimony?
MR. ROULEAU: Oh, no, Your Honor. Our request is to
move on with the questioning. He answered the question, and
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we'd like to just move on.
THE COURT: Mr. Rouleau, it appears that there are one
of two alternatives. You've indicated that you did not offer
Dr. Clawson as an expert with respect to the opinion to which -he
just testified. If that is so, you may certainly move -- or one
alternative here is that you would move to strike the opinion if
you don't wish me to consider it.
Alternatively, if your request, either now or at some point
in the future, is that this Court or Judge Jackson or both
courts rely upon the opinion, then I will expect that you will
elicit the basis of the opinion. It was for you to consider
those two alternatives that we just took the recess.
What is your preference? Or what is your request?
MR. ROULEAU: I guess, and I apologize, Your Honor, as
I'm not completely following -- and before I answer, I'd like to
make sure I fully understand.
THE COURT: Very well. You may confer with your
colleagues, then.
MR. ROULEAU: This one's for me; it's not for my
colleagues. Make sure I understand, Ypur Honor. Dr. Clawson
was qualified for the Iranian government, the Iran sponsorship
of terrori sm, and then the Iran economy as it relates to
puniti ve damages.
In asking the question with respect to the Guard Corps'
involvement in terrorist activities, he listed some examples as
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that would be evidence thereof. And then the Court asked, wel~.
what's his basis with respect to Khobar Towers?
THE COURT: Would you like to have the reporter assist
you?
MR. ROULEAU: Let me confer with counsel just one
second.
(Counsel conferring.)
MR. ROULEAU: Yes. Can you read back the question?
THE COURT: It is only the -- I'm sure the reporter
will be happy to assist you in any way he can. My question to
you, Mr. Rouleau, concerned Dr. Clawson's answer.
MR. ROULEAU: Correct. Can you read back the answer?
Thank you.
THE REPORTER: "Question: Do you have an opinion as
to whether the Guard Corps engaged in terrorist activities
specifically in 1995 and 19967
"Answer: Yes, sir. It was involved in terrorist
activities directed against Israel, for instance, and Israeli
civilians in both 1995 and 1996, and it was involved in the
attack at Khobar Towers in 1996."
MR. ROULEAU: Your Honor, I think I can clear this up
by asking drawn what the basis of his opinion is with respect to
the Guard Corps' involvement in terrorism in 1995 and 1996.
THE COURT: Very well. That was the second
alternative that I presented. Very well.
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MR. ROULEAU: Thank you.
THE COURT: You may proceed.
MR. ROULEAU: Did you understand the question?
THE WITNESS: Yes, sir. The Guard Corps' sponsorship
of attacks against Israel in 1995 and 1996 is something which is
discussed in the Patterns of Global Terrorism report in front of
us and by the and the statements of the U.S. Government
officials and the U.S. and international press that I mentioned
earlier.
As to the Khobar Towers matter, I rely on my judgment
from the statements of former FBI director Mr. Free and on
the information from the Canadian Intelligence Service about
Mr. Hami El-Sayegh
THE COURT: Have you obtained the transcripts of the
briefings or speeches by Director Freeh and the transcripts of
any speeches or briefings by the Canadian Intelligence Service
or any of the articles to which Dr. Clawson just referred which
he said formed the basis of his opinion?
MR. ROULEAU: I have some of that, Your Honor, and
some of it I do not have. Some of it has been marked and
admitted previously specifically.
THE COURT: The Court would have no way to determine
whether anything that has previously been admitted was seen and
considered by Dr. Clawson unless you show it to him and ask him
if he can identify it. Are you prepared to do that?
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MR. ROULEAU: One moment, Your Honor. I'm going to
show him what's been previously marked as an exhibit,
Your Honor. (Pause) Your Honor, may I approach the witness?
THE COURT: Yes.
BY MR. ROULEAU:
Q. Dr. Clawson, I've just handed you what's been previously
marked and admitted as Plaintiffs' Exhibit No. 23. Can you
identify that for the record?
35
A. It's the statement to Louis J. Freeh, former FBI director,
before the Joint Intelligence Committees of October 8, 2002.
Q.
A.
Q.
A.
Are you familiar with this document?
Yes, sir.
Have you reviewed and considered it?
Yes, sir.
MR. ROULEAU: Your Honor, may I approach the witness?
THE COURT: Yes.
BY MR. ROULEAU:
Q. Dr. Clawson, I've just handed you what's been previously
marked and admitted as Plaintiffs' Exhibit No. 25. Can you
identify that document?
A. It is an op-ed from The Wall Street Journal by Louis J.
Free entitled "American Justice for our Khobar Heroes."
Q.
A.
Q.
Are you familiar with that article?
Yes, sir.
Did you review and consider it in forming your opinions?
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A. Yes, sir.
Q. Dr. Clawson, did you review the trial transcripts of when
Director Freeh testified in this case in December?
A. Yes, sir.
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Q. And is the testimony, Exhibit 23, the article 25, and then
Louis Freeh's testimony the type of materials or documents
customarily and ordinarily relied upon by experts in your field?
A. Yes, sir.
THE COURT: Will you inquire, Mr. Rouleau, what else
Dr. Clawson considered in forming his opinion that the IRGC was
involved in the Khobar Towers bombing other than the statement
of Freeh before the joint committee, Freeh's op-ed article in
the newspaper, and his trial testimony here?
MR. ROULEAU: Well, he listed the things he relied
upon, Your Honor. He listed the Louis Freeh article and then
the Canadian indictment. I think that's what you're referring
to.
THE COURT: Well, would you ask, please, as well as
which newspaper reports.
MR. ROULEAU: Again, Your Honor, I would just like to
state for the record that we're not offering him with respect to
Khobar Towers, but did you rely on anything else, Dr. Clawson
THE COURT: As I said, the alternative would be that
you would either move to strike the testimony or that you the
elicit the basis of the opinion.
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BY MR. ROULEAU:
Q. Dr. Clawson, is there anything else other than the things
that you mentioned with respect to Khobar Towers upon which you
relied?
A. These three materials would be sufficient for me to come to
that conclusion that I reported earlier.
Q • Thank you.
THE COURT: Was there anything else that you
considered, Dr. Clawson, in forming the opinion?
THE WITNESS: I can think of thousands of
conversations with colleagues and other experts on this matter,
but these three pieces of material would be sufficient for me to
come to that conclusion.
THE COURT: When you say thousands of discussions, can
you be more specific with regard to with whom you had the
discussions or over what period of time?
THE WITNESS: I'm an expert in this topic. It's my
job. I discuss this with my colleagues at work; I discuss this
with other experts; I attend conferences, panels, and give
speeches and testimony about this matter.
I have raised it with reporters; I have raised it with
congressional committees. I have raised it with foreign
government officials; I have raised it at academic conferences.
I have spoken before meetings of hundreds of people, many of
whom had asked me questions about this matter.
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I would say that I discussed this matter on many, many
occasions over the last few years. It would not be possible for
me to list in a finite period of time all of the contacts that
I've had about this matter.
These three pieces of information are sufficient for me to
come to that conclusion. I regard them as definitive, and I
would say that experts in my field would regard them as
definitive.
BY MR. ROULEAU:
Q. Dr. Clawson, are you familiar with the organization known
as Saudi Hizbollah?
A. Yes, sir.
Q. And what is Saudi Hizbollah, if you know?
A. Saudi Hizbollah is an organization which was formed at the
order of Iran in order to advance the purposes of reducing the
U.S. presence, if not eliminating the U.S. presence in Saudi
Arabia and establishing a government i n Saudi Arabia similar to
that of Iran, clerical rule.
Q. And do you have an opinion as to whether Saudi Hizbollah is
a terrorist organization?
A. Yes, sir. It is, sir.
Q. And what is your basis for that opinion?
A. We have the confessions of the individuals who were
indicted for the Khobar Towers bombing as reported in the
testimony that Mr. Freeh gave to this court earlier, would be
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sufficient for me to come to that conclusion.
Q. And I believe you mentioned earlier that Iran formed -- ·
THE COURT: So the record is clear, Mr. Rouleau, would
you elicit whether Dr. Clawson's testimony is whether he has
seen the confessions or he's read about the confessions in the
op-ed piece written by Louis Freeh or the trial testimony of
Louis Freeh in this court or the statement before the joint
committee of Louis Freeh.
BY MR. ROULEAU:
Q. Dr. Clawson, more broadly, when you spoke earlier as to the
six confessions, more precisely, what are you referring to and
how did you to obtain that information?
A. My apologies for my imprecision. I was referring to the
accounts of those six confessions given by Mr. Freeh in his
testimony to this court.
Q. Thank you. And, Dr. Clawson, I want to make sure I
understood. Did you say that Iran formed Saudi Hizbollah?
A. Correct, sir.
Q. And what's the basis for that testimony?
A. There's the Canadian intelligence report that I referred to
earlier which is discussed in the indictment to Mr. El-Sayegh.
We have also the description by the members of the Bahrain
Hizbollah who were arrested and provide detailed confessions
about their activities.
Bahrain is an island kingdom roughly a hundred miles away
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from Khobar. They were arrested within six months of the Khobar
bombings, and their account is that some of the individuals who
ordered the forming of the Bahrain Hizbollah are the exact same
Iranian individuals who were said to have formed the -- what was
said in those confessions to have formed -- excuse me -- who
were said in the Canadian report to have ordered the forming of
Saudi Hizbollah.
THE COURT: Would you again elicit, Mr. Rouleau, which
of these confessions, statements, and intelligence reports
Dr. Clawson considered and also whether he read them or read
about them in something authored by Louis Freeh, please.
MR. ROULEAU: Certainly, Your Honor.
BY MR. ROULEAU:
Q. Dr. Clawson, with respect to the Canadian report and the
indictment of Al-Said, did you read that indictment?
A. I read that indictment.
Q. And with respect to Bahrain Hizbollah confessions stemming
from that, how did you obtain information regarding those
confessions?
A. What was purported to be those confessions was printed i n
the Bahrainian press and released by the Bahrainian government.
Q. And are things such as their Canadian indictment and press
reports in the Bahrainian newspaper, are those sort of things
that are reasonably relied upon by experts in your field?
A. Yes.
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Q. And, Dr. Clawson, do you have an opinion as to whether
Iran, through the Ministry and/or the Guard Corps, supports
Saudi Hizbollah?
A. I have an opinion that Iran supports the Saudi Hizbollah.
I similarly have an opinion that the Guard Corps supports
Saudi Hizbollah.
41
Q. And what is the basis for your opinion that the Guard Corps
supports Saudi Hizbollah?
A. In the Canadian document in the Bahrainian accounts, we
see the same Guard Corps general, who is acknowledged by Iran to
be a Guard Corps general, cited as the person who ordered the
formation of this organization and directed the training of
these individuals, and in the testimony of Mr. Freeh, there's
reference to the Guard Corps' involvement.
The testimony of Mr. Freeh has reference also to the
involvement of the Ministry of Information Security. That is
the only information that I have about the role of the Ministry
of Information and Security, and I g~nerally feel comfortable
relying upon only one piece of information when it comes from
such an authoritative source.
So I'm a little hesitant to go out on a limb and talk about
the Ministry of Information and Security.
Q. That's okay. My question was with respect to the
Guard Corps? Thank you.
THE COURT: Will you elicit, Mr. Rouleau, whether by
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Bahrainian reports Dr. Clawson means artic les i n the newspaper
or something else?
MR. ROULEAU: Ce rtainty, Your Honor.
BY MR. ROULEAU:
Q.
A.
What do you mean when you state Bahrainian reports?
My apologies for the imprecision. I meant the same,
what appeared to be or r eported to be the confessions of the
indivi duals involved that were printed in the Bahrainian
newspapers and distributed by the Bahrainian government.
Q. Thank you, Dr. Clawson. Dr. Clawson, is it correct that
you've studied Iran's economy during your professional career?
A. Yes, sir.
42
Q. And what information sources are available to someone such
as yourself trying to learn more about the Iranian economy?
A. There's a wealth of information available about Iran's
economy. The two most authoritative report, which I regard as
definitive and most experts in my field regard as definitive,
are the reports of the International Monetary Fund about Iran's
economy, issued approximately annually, and the reports of the
Central Bank of Iran about Iran's economy issued annually.
Perhaps I would add to that, there's a third, the
Statistical Abstract of I r an issued by the Iranian government
each year .
Q. And do you review the reports by IMF, the report by the
Central Bank of Iran, and then the last one that you mentioned,
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which was the standardized
A.
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Statistical Abstract?
Yes.
Do you review all three annually?
Yes, sir.
Did you review those in 1996?
Yes, sir.
43
Q. And are those the type of documents reasonably relied upon
by experts in your field?
A. Yes, sir.
Q. And, Dr. Clawson, are you familiar with Iran's current
yearly expenditures on terrorist activities? And let me make
this clear. Are you familiar with it, and if so, do you have an
opinion about what it is?
A. I have an opinion about what it is within a range, but
there's some considerable imprecision about that. There's not
universal agreement about what constitutes terrorist activity,
and there is not universal agreement about exactly how much Iran
is providing.
Q. And can you explain a little bit or elaborate why there's
not uniformity as to what is or is not terrorist activity?
A. Yes, sir. Under my direction, former FBI official
Matthew Levitt has just finished a study for our institute
regarding the matter of the Lebanese Hizbollah and explaining i1
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some considerable detail the debates about whether to consider
as terrorist activity the charitable and political activities of
associated - carried out, excuse me -- by the terrorist groups.
So many of these terrorist groups also have charitable or
political arms which Mr. Levitt explains are key to their role
of recruiting terrorists and are key for providing the cover
under which their terrorists act.
But, as Mr. Levitt explains in this very detailed
manuscript, there has been a debate between the United States
and other governments as to whether to classify these charitable
and political activities done by the terrorist group as also
terrorist in and of themselves.
And since especially those, as he explains, those
charitable activities like running hospitals and schools are
quite expensive, much more so than the direct terrorist
activities, much of the money that Iran provides to terrorist
groups have gone to those kind of activities.
Mr. Levitt has documented since September 11, 2001, the
U.S. Government has taken a firm stance that all of these
activities should be classified as terrorists and has vigorously
lobbied and campaigned with the European governments and at the
United Nations with an international consensus on that.
Q. What did Mr. Levitt do for the FBI, if you know?
A. Mr. Levitt was a counterterrorism analyst responsible for
analyzing the financing of Hizbollah.
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Q. And you testified that you would be comfortable giving a
range
A.
Q.
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Q.
Correct, sir.
-- as to Iran's annual expenditures on terrorism?
Yes, sir.
What would that range be?
45
A. I would like to give a range which may understate the case
of Iran's support of saying $50 million to $150 million,
although I would say some sober and cautious experts would tell
me that the number is the high end of that range and may indeed
exceed it. I would like to understate the matter, as I say,
because there is this controversy as to about what exactly
constitutes the terrorist activities and because we are not
always entirely sure.
We've gotten some surprises in the past . I have to say the
surprises have uniformly been in the direction of showing that
Iran's support for terrorism was greater than we initially had
thought. There has never been, in more than 10 years we've been
following this, a surprise that Iran provided less assistance
than we thought. In spite of all that, I'd rather be cautious
and understate the case and say $50 million to $150 million.
Q. And what is your basis for that range of $50 million to
$150 million?
A. Well, there's the study that Mr. Levitt did, another study
that Israel's leading expert on terrorism, Ely Karman, did undei
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my direction which my institute published in December a study
about Hizbollah as well, and they provided detailed information
about Iran's funding of Hizbollah in particular.
Now, Mr . Levitt has also done quite a bit of work for us
under my direction about Iran's funding of Palestinian groups
such as Barnas and Palestinian Islamic Jihad, and we had a very
long monograph about that by Israeli's leading expert on
Palestinian Islamic Jihad, Ruben Paz, which we ended up not
publishing because the English wasn't good, and those studies
provide detailed estimates of Iran's funding of those groups,
that is to say, Hizbollah, Hamas, and Palestinian Islamic Jihad,
and those be numbers would be in that range.
It's possible that Iran's supporting other terrorist groups
in addition to that which could push the number higher, but as I
say, I'd rather be cautious and stick to the 50 to $150 million
figure.
Q. Do you have an opinion as to how much Iran expended on
terrorist activities in the year 1996?
A. Yes, sir. In 1996 Iran ' s expenditures on terrorism were
within that range of 50 to $150 million. Again, there's
Q. And what is your basis for that?
Al Besides the studies that I just referred to, all of which
refer to Iran's support for terrorism, not only presently but
also in the past, there are also a variety of academic studies
about Iran's support for terrorism which make reference to that.
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For instance, there have been a number of terrorism experts who1
have testified before Congress on this issue.
Q. And, Dr. Clawson, do you know whether the Ministry of
Information and Security and the Iranian Islamic Revolutionary
Guard Corps are still engaging in terrorism today?
A. Oh, yes, sir. They are.
Q. And what is the basis for that testimony?
A. In December, I believe on the 19th, when I was in Israel I
had lunch with Uri Lubrani, who was before the 1979 revolution
Israel's de facto ambassador to Iran and is responsible for
following for the Israeli government both Iran and Hizbollah's
activities in Lebanon, and Mr. Lubrani and his large staff of
people from Israeli intelligence and Israeli defense forces and
I discussed in some considerable detail Iranian ongoing support
for terrorist activities by Palestinians against Israel.
Q. Okay. Now, Dr. Clawson, if this court were to award
punitive damages in order to deter Iran from engaging in further
terrorist activities and we were to use the range figures that
you just testified to, what multiple of that yearly figure do
you think, given Iran's recent terrorist activities
THE COURT: Would you rephrase the question, please,
so you elicit Dr. Clawson's opinion rather than what Dr. Clawson
thinks, please?
BY MR. ROULEAU:
Q. Dr. Clawson, do you have an opinion as to what multiple of
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the yearly figure or the yearly range you just gave would act as
a deterrent so that Iran would no longer engage in terrorist
activities?
A. Yes, sir.
Q. And what is your opinion?
A. I would feel comfortable with something in the range of
three to five times that as those expenditures. Indeed, I would
say that in the Iranian press accounts about similar such court
cases that have made close reference to how each court case
compares to previous court cases, the focus has been on what's
the dollar amount compared to the dollar amount in previous
court cases.
And there have been -- how shall I put it -- detailed
exercises trying to determine whether or not the courts are
signaling a greater U.S. determination against terrorism or less
determination against terrorism, and that is how these accounts
have attempted to interpret the various actions even when I
think that that's been quite clearly erroneous.
Q. And, Dr. Clawson, do you have an opinion as to whether
THE COURT: Before you move on, would you please
elicit what press accounts are the press accounts which
Dr. Clawson just referred, and if you have these with you, would
you please make sure they're marked and shown to Dr. Clawson so
that he can identify them?
BY MR. ROULEAU:
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Q. Dr. Clawson, with respect to your testimony you just gave
as to the press accounts where they're watching from one
judgment to another, can you specify which press accounts you're
referring to and when those press accounts were made?
A. The Iranian press starts paying attention to this issue
only once the payments start being made after Congress changed
the law to permit what the Iranian press recounts is the payment
for their money. I recognize that that's not what it is, but
that's how it was described. And the issue --
Q. I'm sorry. When did that take place, if you know?
A. It was a couple of years ago, but I'm afraid I'd have to
review my records to determine the exact date. And then it must
have been more than a couple years ago, because in the summer o~
2001, after the re-election of the Iranian president and he
reappoints his cabinet and the f9reign minister is reappointed,
there are a lot of press accounts in the Iranian newspapers
about parliamentary debates in which the foreign minister's
performance was attacked and his inability to stop these court
cases was cited in particular.
And in addition to the press reports, I neglected to
mention that I attended a lecture here in Washington sponsored
by the American Iranian Council at which a lawyer who represents
Iranian -- represents Iran before the U.S.-Iran claims tribunal
in the Hague, when asked to speak about the issue of
U.S.-Iranian financial disputes, chose to spend nearly all of
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the time in his remarks about these court cases and the impact
they were having on U.S.-Iranian relations.
MR. ROULEAU: Your Honor, we do not have those, and
they are not marked as an exhibit.
50
THE COURT: Could you elicit what Dr. Clawson
considered in forming the ·opinion that a multiplier of three to
five times the budgeted expenditure for terrorism would be
required to deter future acts of terrorism?
In other words, on what other than newspaper articles is
the opinion based? And to the extent that Dr. Clawson has
already said that he reads the newspaper articles or his
interpretation of the newspaper articles is based upon his
reading of nuance and implied meaning, what methodology he
applied to the task of interpreting these articles to reach this
opinion that he's just voiced.
BY MR. ROULEAU:
Q. Dr. Clawson, how did you arrive at the multiple of three to
five times with respect to punitive damages?
A. I will certainly confess that when I first testified in
these court cases I was quite uncomfortable with what precise
multiple it would be, but I noted at that time that when Iran
felt that it was -- and when the Iranian leaders said they were
paying a high price in their relationships with Europe for their
sponsorship of terrorism on European soil, that Iran backed off
from terrorism in Europe because of the pressure that the
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European governments applied after the Mykonos verdict and that!
I said that Iran had great talent in figuring out ways to comply
with the exact letter of what it is that they were being asked
to do while violating a spirit and that I was quite confident
that if the purpose of these lawsuits is to deter Iran from
engaging in terrorist attacks against American citizens and that
if Iran were persuaded that the price were too high, it would
back off from attacking American citizens, yet it would find
other ways to advance its causes of reducing American presence
in the region and embarrassing the American government by
finding other ways to engage in terrorist attacks which we would
find very upsetting.
So, for instance, now post U.S. occupation of Iraq, Iran m~
sponsor terrorist attacks in Iraq. Not something covered by
this law, as my understanding, but still something that would
embarrass U.S. foreign policy and deter us from our presence in
the region or cause us to rethink our presence in Iraq.
So it was on that basis that I said I thought that the
greater pressure we bear, the more likely it is that Iran would
back down, and then a multiple of three to five would be a real
price that Iran would have to pay and that they would therefore
reconsider how they were doing their business to see if there
wouldn't be other ways that they could accomplish their
objectives while not crossing the specific line that we had just
drawn.
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That was for the initial cases. But ever since this matter
has become something debated in the Iranian press and by Iranian
officials, I have become much more concerned about the
relationship between any one judgment and past judgments.
When I look at how the Iranians have overinterpreted any
number of small actions the United States Government has taken
in other fields in seeking to find some -- to read the tea
leaves to find some indications as to whether the U.S.
Government was taking a firmer stance against the Iranian
policies to which the U.S. Government objects, or if the U.S.
Government was taking a softer stance against those policies,
and I've been concerned that if there were to be court judgments
which had a lower multiple, Iranian leaders would interpret this
as indicating that the United States was less concerned about
the Iranian terrorism in the past, and that might be regarded as
an indication that, well, the U.S. doesn't like the terrorism,
but it's not going to take the kind of firm action that might
lead Iran to decide this is something it must stop.
THE COURT: Does that mean that your opinion has
changed during the course of the trials in which you've
testified in this court about the same issue?
THE WITNESS: Correct, Your Honor. That is to say my
opinion has been reinforced. That is to say what was initially
an opinion that I felt some trepidation and explained to the
courts that it was hard to know, now I would say that because of
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the focus that the Iranians have placed upon the precedent that
I am much more confident about the opinion than I was.
So my opinion has changed. What was previously a, as I
explained to the Court, not a very firm opinion has now become
quite a firm opinion. I had to say in the early cases that I
thought this wasn't any exact science.
Now I have to say that the pr~cedent issue has really
become quite important in how the Iranians are going to
interpret these decisions.
THE COURT: Is it still your opinion that this is an
inexact s ·cience?
THE WITNESS: I would say that now the Iranians are
looking in great detail at how much money is involved compared
to previously. So it's become quite exact. They will look at
the dollar figure very precisely compared to the previous dollar
figure to see if there's been a dimunition.
While that may not be the issue that determines the Court's
decision, I am concerned because of how the Iranians have
reacted to any number of other U.S. Government actions which
they have misinterpreted as signaling devices to Iran, I'm
concerned that the Iranians would misinterpret any decision
that -- as a signaling device about how much the U.S. Government
cares about Iranian terrorism.
THE COURT: Is that concern a part of your opinion
regarding the multiplier that would be required to deter future
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acts of terrorism?
THE WITNESS: Yes, Your Honor.
BY MR. ROULEAU:
Q. Dr. Clawson, can you identify which Iranian newspapers
report these types of cases you had mentioned earlier that
these cases were talked about on the legislative floor and
also reported about?
54
A. They would be both on the hard-line newspapers, the
principal ones being the Keyhan and Etelaat, but also reformist
newspapers which have since been shut.
And I would have to go back and dig up the names because
those reformist newspapers operate under such restrictions that
they would frequently close down and reopen under a different
name. So I'm not sure that - - the name would change although
the newspaper might actually be essentially the same staff
producing the newspaper. The name would change regularly.
Q. And,· Dr. Clawson, do you have an opinion as to whether a
judgment awarded in these cases will have some impact on Iran
and its dealings with the world, and more specifically, with the
United States?
A. Yes, sir, it would.
Q. And what's the basis of that opinion?
A. The complaints in the Iranian parliament that I referred to
earlier about the foreign minister's incompetence bec ause he was
not able to bring to an end these cases, among other matters,
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and the fact that this Iranian lawyer for Iran who was also an ,
Iranian citizen chose to concentrate on these court cases -- of
all matters. That was not at all what the audience had
anticipated that he would talk about.
MR. ROULEAU: Your Honor, Plaintiffs would offer
Exhibit 27M as in Mary and 27N as in Nancy into evidence.
THE COURT: Plaintiffs' Exhibit 27M and Plaintiffs'
Exhibit 27N will be admitted into evidence.
(Plaintiff Exhibit Nos. 27M, 27N
received into evidence.)
MR. ROULEAU: Thank you, Your Honor. I have no
further questions.
THE COURT: I do have one question, and if you have
follow- up questions, Mr. Rouleau, you'll certainly have an
opportunity to ask them.
Dr. Clawson, you 've testified that you relied upon the
statement prepared by former FBI Director Freeh, which was
marked for identification and admitted, in fact, as Plaintiffs'
Exhibit No. 23.
THE WITNESS: Yes, Your Honor.
THE COURT: An editorial or op- ed piece in The Wall
Street Journal, Plaintiffs' Exhibit 25, and finally, Director
Freeh's trial testimony in support of your opinion that the IRGC
was involved in the Khobar Towers bombing.
Would you please review those three exhibits and identify
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the portion of each of them which you took into account in
forming that opinion?
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THE WITNESS; Well, in the op-ed in the top of the
second column just before the three stars, Mr. Freeh says that
the entire operation was planned, funded, and coordinated by
Iran security services, the IRGC and MOIS acting on orders from
the highest levels of the regime in Tehran. So that's where he
says it there.
He says it repeatedly in the testimony to the Court, as I
recall that he was asked specifically about both the IRGC and
the MOIS and whether they were involved. And let me look
through the, if you'll pardon me for a moment, let me look
through the October 8, 2002, testimony.
Yes. On page 33 there, the top of the page, the second
sentence says, "The Ministry of Information and Security, MOIS,
the Revolutionary Guard Corps, IRGC, were shown to be culpable
for carrying out the operation,'' where he's referring, the
operation was referring, the previous sentence makes clear, to
the 1996 bombing at Khobar.
I'm not sure he makes other references in that last report.
I thought there was one, but I don't see it. I think that's the
only reference, that page 33 reference.
THE COURT: Now, in your t e stimony that y ou r e lied
upon, the statements of former Director Freeh, do you mean that
you s aw the same evidence to whi ch he referred and reached the
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same conclusion or that you credit Director Freeh's statements? \
THE WITNESS: I meant that I would credit Director
Freeh's statements. Having been a U.S. Government employee
myself with a security clearance, I know how difficult it is to
get things like this cleared for publication, and so therefore I
have great confidence that Director Freeh would not make such a
statement in an offhand manner, or he would not be allowed
would not get cleared to make a statement like this in an
offhand manner, that it would be a painful process for him to
get approval for such references.
THE COURT: Mr. Rouleau?
MR. ROULEAU: Yes, Your Honor. I have no further
questions.
THE COURT: Are there any follow- up questions that you
wish to ask?
MR. ROULEAU: No, You r Honor.
THE COURT : And I do have one final question of you,
Mr. Rouleau. The predicate to several questions that you asked
Dr. Clawson included the phrase "the Iranian government," or
"the government of Iran . "
May I ask you to through any questions that you wish to ask
Dr. Clawson to ensure that the record is clear with respect to
any entity or person in the government of Iran to which or to
whom you refer. If your intention is to refer to any entity or
individual rather than the government of Iran.
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BY MR. ROULEAU:
Q. Dr. Clawson, when you testified earlier today with respect
the government of Iran's involvement, or I would have referred
to that as Iran's involvement in terrorist activities, what
parts of the government or its agencies were you referring to
when you said, yes, Iran was involved in terrorist activities?
A. I was referring to the IRGC and the Ministry of Information
and Security and the National Security Council, which, as
discussed in detail in both Mr. Buchta's account and in the
German court report, was a body including those two agencies,
the IRGC and the MOIS, as their operating arms but which also
brought together other elements of the government's leadership
in the decision-making process about what it is that those two
operating arms, the IRGC and MOIS, should do.
So I was referring to the National Security Council as the
decision- making body and the IRGC and the MOIS as the two
operational agencies responsible for carrying out the decisions
of the National Security Council.
MR. ROULEAU: Thank you.
THE COURT: Dr. Clawson, you testified that among the
exhibits or among the items that you considered in formulating
some of the opinions to which you've testified were Exhibit 27M
and Exhibit 27N, which the Court has admitled.
Can you please point the Court to the portions of those two
exhibits which form the basis of any of the opinions to which
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you've testified?
THE WITNESS: Yes, Your Honor. The most important
part would be the section about Iran in the overview of
state-sponsored terrorism each year, so in Exhibit 24M, that's
on pages 24 and 25.
BY MR. ROULEAU:
Q. Do you mean 27M7
A. I'm sorry, 27M. Thank you. It's on pages 24 and 25, and
then in Exhibit 27N as in Nancy, that's page 23 and 24. Then,
in addition, in the narrative about individual -- about -- let
me see what the exact wording of the title is.
59
There's the Middle East Overview Section. There's usually
discussion about Iran in the -- pardon me. I'm just checking
because there's usually discussion of Iran in the Lebanon
section.
Q. And, Dr. Clawson, I point out there's a table of contents.
A. Certainly, sir. I'm sorry. I'm just checking in the
regional review section there's usually a mention of Iran in the
Lebanon section. I don't know if that was true in these two
years, but the state sponsor section is the overwhelming
majority of what I relied on.
Other references in there and in the chronology at the back
and in the section i n the back where there ' s a description about
individual terrorist groups where the -- for instance , in 27M on
page 48 there's a description about Hizbollah which describes it
Bryan A . Wayne , RPR, CRR
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as being closely allied with and often directed by Iran.
And I suspect Iran -- I would also rely somewhat on the
chronology which would probably make reference to Iran with
regard to a couple of attacks, but I would have to search that
to look. But it's the overview of state sponsorship that is the
most important.
THE COURT: Mr. Rouleau, will you please, in order to
ensure that the Court will be able to determine that the
opinions of Dr. Clawson can be identified and distinguished from
Dr . Cl awson ' s references to the opinions or conclusions of
others, would you please elicit the professional methodology and
judgment which govern the opinions of Dr. Clawson so that the
Court will be confident that it knows that Dr. Clawson has
expressed opinions with respect to these matters and that you
are not relying solely upon, for example, Patterns of Global
Terrorism reports and accounts in the media in Bahrain or Iran
or Saudi Arabia or Lebanon or Israel.
MR. ROULEAU: Certainly, Your Honor.
BY MR. ROULEAU:
Q. Dr. Clawson, are the items that you considered in forming
your opinions today items reasonably relied upon and customarily
and ordinarily relied upon by experts who study either the
government of Iran, the Iranian economy, or Iran's sponsorship
of terrorism?
A. Yes, sir.
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Q. And in a broad and general sense, how does an expert such
as yourself whose job it is to study the government of Iran, the
Iranian economy, and Iran's terrorism -- support of terrorism
arrive at its opinions and conclusions?
A. One evaluates the statements to see what is left out, what
one might have expected to be in there but is not in there.
One weighs it against all the other information and evidence
that you may have -- strike the word evidence -- all the other
information that you may have available. And one looks at the
opinions of your professional colleagues and their reactions to
the text.
One compares the statements made in one year to the
statements made in previous and following years to know what
kind of differences there are. One looks at the kind of
reaction that these reports elicit from other governments from
international press to try to determine the plausibility of the
statements here.
There were a couple of years in which their statements made
in Patterns of Global Terrorism that then sparked a vigorous
scholarly debate and vigorous debates with some governments
about the judgments they reached.
There was quite a brouhaha about it, and that would be one
thing which would weaken your confidence. But if the weight of
debate that takes place among scholars and in the press is not
critical and in fact somewhat supportive and if the statements
Bryan A. Wayne, RPR, CRR
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that are made are rather what you would have expected from other
accounts, you say, huh, okay. That doesn't matter. Seems to be
the case.
So we look at these reports always with ideas about, well,
what are you going to say about this? After a terrorist episode
takes place, we often ask ourselves what will the next year's
Patterns of Global Terrorism say about this episode? Will it
say who is responsible? How is that going to be worded? Will
it caveat statements about responsibilities? And we compare
from one year to the next.
MR. ROULEAU: Thank you.
THE COURT: Dr. Clawson, in your evaluation of, for
example, the Patterns of Global Terrorism reports, how do you
now consider in forming opinions that you've expressed here in
court information which was either inconclusive or to the
contrary at the time the report was published?
For example, on page 16 of Exhibit 27N, the 1996 report, I
see a reference in the column on the left which reads, "Several
groups claimed responsibility." I won't read the entire final
sentence of that paragraph which appears under Middle East
Overview.
In forming the opinions that you've expressed here in
court, how do you evaluate information closer to the time of the
event which is inconclusive or to the contrary of the opinion
that you've expressed now?
Bryan A. Wayne , RPR, CRR
Official Court Reporler
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THE WITNESS: That's the kind of statement,
Your Honor, that I just cited as an example of how cautious and
careful this report is, and then I guess as a scholar you may be
disappointed that they didn't feel there was enough evidence to
come down definitively on one side or the other of that debate.
But since, unfortunately, the State Department doesn't then
go back and say in subsequent reports its opinion about what
happened five years back, then you have to start searching for
statements by U.S. Government officials about what happened in
previous years.
And, so, if there's nothing in this report -- nothing in
this report for 1996 about what happened, let's say in 1986, and
if there's an inconsistent statement made in the report of 1986
and you want to find out later what happened, you have to do
that hard work of paying attention to every time somebody
testifies and someone from the U.S. Government testifies in
front of Congress or an intelligence committee or when they
write an op-ed article and see if they're going to make some
statement about the past because you're not going to have this
kind of a detailed report issued.
I mean, there was one occasion when the State Department
actually issued a report saying sort of like what had groups
done in the previous decade, but they haven't done that for
many, many years, and that was like years and years ago they did
that. So it becomes a very difficult process.
Bryan A. Wayne, RPR, CRR
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If this year's report can't come to a conclusion, you're
stuck. You gotta do hard work to pay attention in the future to
see when the U.S. Government can come to a conclusion about it.
There's not going to be any definitive report issued, and you
just gotta pay attention to all the details at that point.
THE COURT: Mr. Rouleau?
MR. ROULEAU: I have no further questions, Your Honor.
THE COURT: Very well. Thank you, Dr. Clawson. You
may step down, and you are excused.
THE WITNESS: Thank you, Your Honor.
(The witness steps down.)
REDACTED
Bryan A. Wayne, RPR, CRR
Official Court Reporter
l.
ANNEX 114
Annex 114
EXHIBIT 13
Paul A. Blais v. Civil Action Number 02-285 l' lU. y 2 6 / 2 0 0 6
The Islamic Republic of Iran
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
PAUL A. BLAIS,
Plaintiff,
v.
Civil No. 2003-285
Page 1
The Islamic Republic of Iran
Iranian Ministry of Information
Iranian Revolutionary Guard Corps
John Does 1-99
Washington, D.C.
Friday, May 26, 2006
11:02 a.m.
Defendants.
- - - - - - - - - - - - - - - - - X
TRANSCRIPT OF BENCH TRIAL
BEFORE THE HONORABLE ROYCE C. LAMBERTH
UNITED STATES DISTRICT JUDGE
APPEARANCES:
For the Plaintiff:
Court Reporter:
OFFICIAL COURT REPORTER
PAUL G. GASTON, ESQUIRE
1120 19th Street, N.W.
Suite 750
Washington, D.C. 20036
(202) 298-5856
[email protected]
THERESA M. SORENSEN, CVR-CM
Official Court Reporter
333 Constitution Avenue, N.W.
Washington, D.C. 20001
(202) 273-0745
[email protected]
THERESA M. SORENSEN,
United States District Court theresams@erols . com
For the District of Columbia 202-273-0745
Theresa M. Sorensen, CVR-CM
Official Court Reporter
e8c6692d-abef-47 45-8078-bed7939461 e9
Annex 114
Paul A. Blais v. Civil Action Number 02-28~
The Islamic Republic of Iran
May 26, 2006
Page 2
1 P R O C E E D I N G S
2 THE DEPUTY CLERK: The matter of Paul A. Blais
3 versus The Islamic Republic of Iran, Iranian Ministry of
4 Information and Security, the Iranian Revolutionary Guard
s Corps, John Does 1 through 99, Civil Action 2002-285. Mr.
6 Gaston for the plaintiffs.
7 MR. GASTON: Good morning, Your Honor. May it
s please the Court, I'm Paul Gaston, and I'm appearing on
9 behalf of plaintiffs in this case ..
10 Your Honor, we premarked exhibits, and I have an
11 extra copy that I have not yet handed out. To whom should I
12 give them to?
13 THE COURT: My clerk.
14 MR. GASTON: Okay. Your Honor, I have a very
1s brief opening. I would like to just set the stage for what
16 we will hear today.
17 Today, we will hear the story of a young American
1s whose life was irretrievably altered and severely damaged on
19 June 25, 1996, by a terrorist attack sponsored, supported,
20 and planned by the Islamic Republic of Iran and the Iranian
21 Revolutionary Guard Corp.
22 First, we will heard testimony from Dr. Bruce
23 Tefft, the former CIA intelligence officer with many
24 responsibilities relating to Mideast terrorism and counter-
2s terrorism.
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For the District of Columbia 202-273-0745
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Official Court Reporter
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Annex 114
Paul A. Blais v. Civil Action Number 02-28~
The Islamic Republic of Iran
May 26, 2006
1
Page 3 l
He has remained active as a consultant in counter-
2 terrorism who maintains top secret security clearances. He
3 is allowed to testify only about matters that are supported
4 in the public record and that are consistent with his
5 classified knowledge.
6 He will offer expert testimony clearly linking the
7 Islamic Republic of Iran and the IRGC to the attack on the
s Khobar Towers in 1996. He will demonstrate that there is
9 ample evidence showing that high level Iranian officials in
10 the IRGC took part in planning for the attack and in
11 providing training, funds and operational .
12 Next, we will hear from Erik Kobylarz, an eminent
13 neurologist and assistant professor of neurology and
14 neuroscience at Weill Medical College of Cornell University
in New York. 15
16 Dr. Kobylarz has conducted a careful review of Mr.
11 Blais's medical records documenting his injuries and
1s treatments since June of 1996, and has also personally
19 examined Mr. Blais.
20 Dr. Kobylarz will describe Mr. Blais's severe
21 brain injury caused by the Khobar Towers bombing, and his
22 four months of hospitalization subsequent to the injury. He
23 will offer an expert opinion that Mr. Blais's brain injury
2 4 was severe, and had a devastating effect on his ability to
25 perform the daily functions of living. He will describe
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e8c6692d-abef-4745-8078-bed7939461e9
Annex 114
Paul A. Blais v. Civil Action Number 02-285
The Islamic Republic of Iran
May 26, 2006
Page 4
1 significant impairments and limitations, even today, nearly
2 10 years later, despite intensive therapy and medical care.
3 He will express the opinion that Mr. Blais's severe brain
4 damage and present impairments are a direct result of the
5 Khobar Towers bomb blast.
6 Mr. Curtis Taylor is Paul Blais's stepfather, and
7 has been since Paul was about six and a-half years old. He
8 has been a constant, loving presence in Paul's life since he
9 married Paul's natural mother, Mrs. Taylor, who is also
10 going to be here today.
11 He will describe the devastating effect Paul's
12 injury had on him and his family. He will describe how his
13 emotions were torn in the first three days after the blast,
14 when Paul was listed as unaccounted for, a term he knew
15 usually meant dead.
16 He will describe how he left his job in Hampton,
11 Virginia, to be by Paul's side during his long
1a convalescence, first in Tampa, Florida, and then in North
19 Carolina for over three years.
20 We will also hear from Paul Blais himself. His
21 speech is slow, but he has learned to speak clearly once
2 2 again, and he can be quite articulate.
23 He will describe what happened to him on June 25,
2 4 1996, and he will describe his long road back. He will talk
25 bout his childhood dream of becoming a pilot, and his
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Annex 114
Paul A. Blais v. Civil Action Number 02-285
The Islamic Republic of Iran
May 26, 2006
Page 5
1 successes in achieving a pilot's license and being just a
2 few credits short of qualifying for a commercial pilot's
3 license at the time of his injury.
4 Paul does not like to think of himself as
s disabled, and tends to minimize his injuries and
6 limitations. He has not yet completely given up hope that
7 some day he will fly again.
s Mrs. Taylor, Paul's mother, will describe what the
9 last 10 years have been like for her family and for her as
10 Paul's primary care giver. She will compare the Paul she
11 knew before the injury against the Paul after the injury.
12 A great American writer defined courage as grace
13 under pressure. I believe that once the Court has heard the
14 story these witnesses will tell, the Court will agree that
1s Paul Blais, his mother and his father, exemplify that
16 definition of courage.
17 Your Honor, I'd like to call Dr. Bruce Tefft to
1s the stand.
19 BRUCE D. TEFFT, PLAINTIFF'S WITNESS, SWORN
20 DIRECT EXAMINATION
21 BY MR. GASTON:
22 Q. Dr. Tefft, could you state your name and address for
23 the record?
24 A. My name is Dr. Bruce Tefft, and I live in Leesburg,
2s Virginia, 42579 Locketts Road.
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Annex 114
Paul A. Blais v. Civil Action Number 02-28j
The Islamic Republic of Iran
May 26, 2006
1 Q.
Page 6
And you were formerly an officer with the Central
2 Intelligence Agency; is that correct?
3
4
A.
Q.
Yes, sir. I served from 1975 to 1995.
Can you tell us some of the responsibilities you had
s there?
6 A. The primary one relating to this case was in 1985. I
7 was assigned as one of five individuals to establish the
s CIA's counter-terrorism bureau, and I served there for two
9
10
11
and a-half years. Since then, I've worked on terrorism
matters, training people. I've trained some 12,000 state
and local police officers and first-responders. I'm now an
12 unofficial advisor to the New York Police Department's
13 counter-terrorism and intelligence divisions, and that's
14 pretty much it.
15
16
Q.
A.
And where are you currently employed?
With a company called Community Research Associates.
17 It's an Arlington, Virginia company that provides training
1s exercises and consultations to state and local governments,
19 and to the Department of Homeland Security and Department of
20 Justice and the U.S. Government on terrorism and natural
21 disasters.
22
23
Q.
A.
Q.
Do you maintain security clearances, Dr. Tefft?
Yes. I have a top secret security clearance.
24 Have you testified in similar cases and been
2s qualified as an expert witness?
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The Islamic Republic of Iran
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7
A.
Q.
A.
Q.
A.
Q.
A.
Yes, I have. In about six cases, I believe.
Did you bring your resume with you today?
Yes. It's in the exhibits.
Could I ask you to turn to Tab l?
Yes.
Is that your resume, sir?
Yes, it is.
Page 7 1
8 MR. GASTON: Your Honor, I would like to offer
9 Dr. Tefft's resume as Exhibit 1.
10
11
THE COURT: Received.
MR. GASTON: Thank you.
12 (Whereupon, Plaintiff's Exhibit Number 1 was marked for
1 3 identification and admitted into evidence.)
14 BY MR. GASTON:
15 Q. If you look at page -- at the last page of your
16 resume, it says that you have testified in a number of
11 cases. Could you name those cases?
18
19
20
A.
Q.
A.
No, I can't.
But if you look at it, perhaps --
Oh, I'm sorry. I'm sorry. Higgins versus Islamic
21 Republic of Iran, Surette versus Islamic Republic of Iran,
22 Steen versus Islamic Republic of Iran, Campuzano versus
23 Islamic Republic of Iran, Welch versus Islamic Republic of
24 Iran, and Holland versus Islamic Republic of Iran.
25 Q. And you have been qualified as an expert witness on
United States District Court [email protected]
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Annex 114
Paul A. Blais v. Civil Action Number 02-28~
The Islamic Republic of Iran
1 terrorism in each of those cases?
2 A. Yes, sir.
May 26, 2006
Page 8
3 MR. GASTON: Your Honor, I'd like to offer Dr.
4 Tefft as an expert on terrorism in this case.
5 THE COURT: We're delighted to have you.
6 THE WITNESS: Thank you, sir.
7 BY MR. GASTON:
a Q. Dr. Tefft, let's clarify the basis of your testimony
9 first. You know a lot of things from your security
10 clearances and your time at the CIA, and you're not allowed
11 to testify about those; is that correct?
12 A. No. And, in fact, I have to be very careful not to
13 say anything to avoid getting into trouble for violating
14 classifications, but I will -- because a lot of my work is
15 dealing, for example, with the local police departments and
16 people who do not have security clearances themselves, I
11 have always been able to find the necessary information in
1a open sources and the public record that I need to convey the
19 -- for whatever purposes I'm talking to, and I certainly
20 will not use or will not take any open source material that
21 I know to be false from my classified knowledge. I'm not
22 going to contradict myself in my own mind. So anything I
23 say from open sources is not contradictory to what I know
24 from classified.
25 THE COURT: Explain how you have the security
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Annex 114
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The Islamic Republic of Iran
May 26, 2006
Page 9
1 clearance now, because you have some contractual work?
2 THE WITNESS: Yes, sir. The CRA maintains a -- I
3 got it reactivated. It kind of goes dormant when you're not
4 actively involved, when you're no longer an employee, and it
5 got reactivated when I was working with New York, which is
6 up until about 2004, and then since then the company I work
7 for has contracts with the Department of Justice and the
B Department of Homeland Security on counter-terrorism
9 matters, so I'm permitted to keep it current.
10 BY MR. GASTON:
11 Q. Dr. Tefft, so what you are going to testify to today
12 is all based on open source material?
13
14
A.
Q.
Yes, sir.
Okay. What do you know about the actual event that
15 took place on June 25, 1996, at Dhahran.
16 A. Do you want me to start from the planning stages, or
17 do you want the actual incident?
18
19
Q.
A.
I'd like you to describe first the actual incident.
Basically what happened was, about 10 minutes till
20 10:00 on the night of June 25
gasoline tanker truck, a
21 large gasoline tanker truck pulled up along side the
22 perimeter wall of the Khobar Towers based in Dhahran, Saudi
23 Arabia. The driver jumped out of the truck, ran into a
24 waiting car, jumped into the car and sped off. Some of the
25 security guards at the -- sitting on top of the open tower,
th a
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Annex 114
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The Islamic Republic of Iran
May 26, 2006
Page 10
1 one of the residential barracks buildings next to the
2 perimeter wall, spotted the car and started -- or the truck
3 next to the perimeter wall and started to give warnings, and
4 the truck exploded. Afterwards, the investigation
5 determined it was about the equivalent of 20,000 pounds of
6 TNT. The Defense Department said that was the largest non-
7 nuclear explosion in the history of the world.
8 The explosives were concealed inside the gasoline
9 tanker truck. The concealment was interesting. They
10 actually had a hatch on the top where you normally would
11 inspect the contents of the container. Underneath that they
12 had a SO-gallon drum that was attached to the top of the
13 hatch, so that if anybody open the hatch and look in the
14 truck, they would see a gasoline filled drum, but they would
15 not realize it was only 50 gallons and not 20,000 gallons,
16 for example, that would normally be in the truck.
17 That's pretty much it in a nutshell.
18 Q. In the materials you consulted in preparation for
1 9 this testimony, was there a diagram of what happened?
20 A. Yes. It's one of the exhibits as well. I'm not sure
21 which.
22 (Whereupon, Plaintiff's Exhibit Number 2 was marked for
23 identification.)
24 BY MR. GASTON:
25 Q. Could you look at Exhibit 2 and describe what that
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Annex 114
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The Islamic Republic of Iran
May 26, 2006
Page 11
1 is?
2 A. Oh, okay. Yes, that's exactly -- exactly it. The
3 truck parked next to the perimeter wall. The diagram shows
4 the large crater, 54 feet across that was caused. There's
5 some photographs here as well. And then the air base
6 towers, which was a residential barracks building where
7 I'm not sure how many Air Force personnel were housed there,
a but I understand that 19 were killed and some 300 plus,
9 nearly 400 were wounded in the explosion.
10 Q. And where is this diagram contained? Could you look
11 at the first page?
12 A. This is a Department of State publication, from the
13 Bureau of Diplomatic Security. They prepared this as part
14 of their -- the Bureau of Diplomatic Security is responsible
15 for the protection of embassies all around the world, so
16 they made a study of this to enhance their application of
17 lessons learned to other U.S. Government facilities.
18 Q. And this was something you were relying on in your
19 preparation?
20 A. Yes, sir. It's a good illustration of what I knew
21 had happened.
22 MR. GASTON: Your Honor, I would like to offer
23 Exhibit 2 into evidence.
24 THE COURT: I'm sorry?
25 MR. GASTON: I'd like to offer Exhibit into
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Paul A. Blais v. Civil Action Number 02-28~
The Islamic Republic of Iran
May 26, 2006
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evidence.
THE COURT: Received.
(Whereupon, Plaintiff's Exhibit Number 2, marked for
identification, was admitted into evidence.)
BY MR. GASTON:
Q. Now, I know you've looked at a lot of sources and a
lot of materials. Before I go into what some of those were,
could you describe what you learned and what you know about
the background and the planning for the attack?
A. Okay. As with most terrorist attacks of this size,
the planning and preparation started at least two years
prior to the actual attack. Probably it began in Tehran.
The actual details of the attack and the discussion with the
people who carried out the attack took place in the Iranian
Embassy in Damascus, Syria, but that was -- obviously wasn't 1
the initiation of the planning. It was done in Tehran and
the Iranian Government.
By the time it advanced far enough to the stage
where they were actually recruiting individuals to
participate in the attack, and passing out false passports
and funds, those in the meetings with the conspirators, the
people who executed the attack, took place out of the
Iranian Embassy in Damascus, Syria.
It was largely the brain child or the master mind
behind it was the fellow named Brigadier General Ahmed
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Annex 114
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The Islamic Republic of Iran
May 26, 2006
Page 13 1
1 Sharifi, who was a very senior official in the Iranian
2 Revolutionary Guard Corps, and he was at the time -- he's
3 based in Tehran, but at the time he was doing the execution
4 and planning of it, he was at the embassy in -- at the
5 Iranian embassy in Damascus, Syria. He provided the --
6 again, I'd say he provided the passports, the paperwork, the
7 money, in coordination with some Syrian government officials
8 who actually escorted the plotters, the members of the gang,
9 to an Iranian Revolutionary Guard Corps base in the Bakkah
10 Valley of Lebanon under Syrian escort.
11 At that base, which was also shared by the
12 Hizballah terrorist organization of Lebanon. The truck bomb
13 was assembled, and all the explosives were put together, and
14 then it was driven from the Bakkah Valley and from the
15 Hizballah, the Iranian Revolutionary Guard Corps base to the
16 Saudi border under Syrian government Syrian military
17 escort. Then the -- then it was turned over to the Saudi
1s Hizballah party terrorist organization, who drove on into
19 down to Dhahran, Saudi Arabia, where the Khobar Towers' base
20 is.
21 Q. Were there higher officials in the Iranian government
22 involved?
23 A. Apart from Brigadier General Sharifi, who was sort of
24 the, I supposed, executive officer, operations commander,
25 the -- all of these types of operations are, first of all,
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1 approved by the supreme leader of Iran, Iyatollah Khomeini.
2 Under him -- he doesn't, obviously, work all the details.
3 In addition to the Iranian Revolutionary Guard Corps, he
4 used the Iranian Minister of Intelligence and Security, a
5 fellow named Ali Fallahian. He was the Minister of Interior
6 and Security (sic) for about four years, from 1993 to 1997.
7 So by virtue of his position and his support, he would have
8 been the intelligence security support for the operation.
9 His representative in Damascus was a man named
1 0 Nurani, N-u-r-a-n-I. I don't have his first name here.
11 It's somewhere in the exhibits here, but I don't have his
12 first name. He was the MOIS representative at the embassy
13 in Damascus.
14 Q. Has there been any sort of investigation by United
15 States agencies as to who was responsible for this attack?
16 A. Yes. Both the military, obviously, investigated the
17 incident and produced several reports, and then as a
18 criminal justice matter, the FBI has responsibility and
19 conducted a major investigation under Director Louis Freeh.
20 Q.
A.
And do you know what his conclusions were?
21 Basically, his conclusions were that this was carried 1
,
22 out by the terrorist organization called Saudi Hizballah,
23 which is a separate entity from the Lebanese Hizballah which
24 we've heard about so much in the press. It's a smaller
25 organization. It's a newer organization, formed about two
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1 years before the bombing, in 1993, 1994 time frame. It was
2 formed by the Iranian government, and the senior Iranian
3 officials, including the people I've mentioned, were
4 involved in the planning and preparation for the terrorist
5 act, for the Khobar Towers attack.
6 Q. Is there any information available about who chose
7 the target?
8
9
A.
of
Not -- not beyond the fact of the -- that I'm aware
beyond the fact that is was originated in Tehran, in
10 the Minister of Intelligence and Security, and then acting
11 on the orders of the supreme leader of Iran, the Ayatollah,
12 and using the agency of the Iranian Revolutionary Guard
13 Corps which was already established in the Bakkah Valley and
14 working with the Hizballah terrorists there. The actual
15 details defining the operation and everything, we don't know
16 yet.
17 Q. You mentioned the Iranian Revolutionary Guard Corps,
1s which we sometimes refer to as the IRGC. Could you tell us
19 a little bit more about that organization?
20 A. There's nothing really comparable in the world to the
21 IRGC. It's a -- after the Iranian revolution in 1979, when
22 the Shah of Iran was overthrown by Ayatollah Khomeini,
23 within weeks of taking power in Iran, because they did not
24 trust the Imperial Iranian Military, by his personal decree
25 Khomeini established the Iranian Revolutionary Guard Corps
1,
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1 to protect the revolution as a sort of private militia,
2 military force. It's grown to about 350,000 regular
3 personnel. They've got their own army, navy, air force,
4 parallel to the military, official Iranian military, plus
5 they have a one million-man reserve in Iran. They have both
6 domestic and foreign responsibilities.
7 Historically, I supposed the closest organization
B that they would compare to would be Nazi Germany's -- or the
9 Nazi Party's SA organization, which was disbanded after
10 Hitler came to power, but up to that point was the armed
11 wing of the Nazi Party. This is the armed wing of the
12 Mullahs, of the theocracy that rules Iran at the current
13 time. There isn't really any other parallel existing in the
14 world right now.
15 Q. Could you describe what the SA is as opposed to the
16 SS?
17 A. The SS became an elite -- yes. The SA was the party
1e militia, the party guard. It was made up, like the Iranian
19 Revolutionary Guard Corps, of people who, perhaps, might
20 have wished to become part of the military but were not
21 suitable for military service. They were thugs, criminals
22 and gangsters, and they certainly did not have the
23 discipline of the regular military, which is why Hitler had
24 them disband after he took power and could depend on the
25 German Wehrmacht, and then in the German military they
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1 created an elite force called the SS, which also had swore
2 personal loyalty to Hitler as opposed to the German
3 military's oath of loyalty to the State of German.
4 The Iranian Revolutionary Guard Corps's loyalty is
s to the Ayatollah, not to Iran. It's the Ayatollah, for the
6 purpose of protecting the Islamic revolution that took place
7 in Iran.
8 Q. So would you call it an instrumentality of the
9 government, or quasi-instrumentality of the government, or a
10 separate government?
11 A. It's parallel in the sense that it does parallel the
12 regular military. It's very powerful since it operates
13 under the direct control and authority of the Ayatollah.
14 It's outside of the government to the degree that it's not
1s ruled by any measure from parliament. There's nobody in the
16 government, no ministry, nobody except the Ayatollah who
11 controls it. Even the military does not control it. In
1a fact, because they have the ear and the authority of the
19 Ayatollah, they give orders to the military rather than vice
20 versa if it comes to a conflict. The Revolutionary Guard
21 Corps always wins in a bureaucratic turf battle or
22 something, if you will. I call them -- because the
23 Ayatollah is the supreme leader and is sort of part of the
24 government, you can't say they're not part of the
2s government, but they're more of an agency or a parallel. As
- .
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1
2
I said earlier, there's no comparison in the Western or
international forms of government to this organization. In
3 fact, there's no comparison to an Islamic republic outside
4 of Iran either.
5 Q. Where do the Iranian Revolutionary Guard Corps
6 receive their funding?
7 A. That's very interesting. Not from the parliament and
8 not from the regular Iranian budget. They nationalized --
9 at the revolution time, the Ayatollah took all of the Shah,
10 who was an emperor, royalty, they took all of the Shah's
11 personal property, and they took all of his charitable
12 organizations, such as the Pahlavi Foundation, for example,
13 in New York City. They took all of the property and farms
14 and factories of all of his generals, all of the middle
15 class people who fled after the revolution, and they
16 combined them into one sort of giant corporation, holding
17 company if you will, that was controlled and it's solely the
18 personal property of the Ayatollah and the Mullahs. Its
19 operating budget is about the same as the operating budget
2 0 of the government of Iran, but it's a parallel and it's not
21 subject to governmental authority.
22 Q. So when the parliament dispenses budgetary
23 consideration, this is not part of it?
24 A. No. No. This is totally independent of the regular
25 budget. They don't they're not even a line item in the
II
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1 official budget.
2 Q. Turning back for a moment to the investigation by the
3 FBI of the Khobar Towers bombing, where do you find
4 information about this investigation?
5 A. Louis Freeh has written some articles. He's given
6 some press statements since he's retired from the
7 government, and he -- and there's also the indictment and
a the press release that the FBI released about the indictment
9 of some 13 individuals as a result of the FBI's
10 investigation. They indicted a dozen, 13 individuals for
11 participation. Plus, they interviewed six members of the
12 Saudi Hizballah that the Saudi government had arrested and
13 had in custody in Saudi Arabia.
14 (Whereupon, Plaintiff's Exhibit Number 3 was marked for
15 identification.)
16 BY MR. GASTON:
17
18
19
20
Q.
A.
Q.
A.
Could I ask you to turn to tab three?
Yes.
Can you identify that document?
This is the -- this is the transcript of the trial
21 between Frank Heiser and the Islamic Republic of Iran.
22
23
24
25
Q.
A.
Q.
A.
And did former Director Freeh testify at that trial?
Yes, he did.
And is this a transcript of his testimony?
Yes, it is.
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1
2
3
4
Q.
A.
Q.
A.
Page 20
Does it appear to be?
Yes.
Did you rely on this transcript?
Yes. It was interesting, the transcripts of the
5 that become public that we can look at, as well as the
6 things that he's written and the statements that he was
7 making even as Director of the FBI. There's no
a contradiction in them. They all get the same story.
9 Q.
A.
He comes to the conclusion that this was --
10 He definitely said -- absolutely. He said it was the
11 he came to the conclusion that senior officials in the
12 Iranian government and the Iranian Revolutionary Guard Corps
13 were responsible for the actions of the Hizballah people
14 that carried out the Khobar Towers bombings.
15 MR. GASTON: Your Honor, I would like to move the
16 admission of Exhibit 3 into evidence.
17 THE COURT: Received.
1a (Whereupon, Plaintiff's Exhibit Number 3, marked for
19 identification, was admitted into evidence.)
20 (Whereupon, Plaintiff's Exhibit Number 4 was marked for
21 identification.)
22 BY MR. GASTON:
23 Q. I'd like to direct your attention to tab four,
24 please, Dr. Tefft.
25 A. Okay.
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1 This is similar testimony, is it not?
2
Q.
A. Yes. It's another trial transcript from the Fran
3 Heiser versus Islamic Republic of Iran case.
4 Q. This time the testimony is of Mr. Dale Watson. Who
5 is Mr. Watson?
6 A. Now he's a private citizen. He's a consultant. He's
7 a former senior FBI official under Louis Freeh. He was
8 involved he was the FBI agent involved with the --
9 responsible for the correct investigation of the Khobar
10 Towers incident.
11
12
Have you reviewed his testimony?
Yes, sir.
13
Q.
A.
Q.
A.
And what was Mr. Watson's conclusion?
14 He said exactly the same things that Freeh had. He
15 elaborated a little bit on the nature of his cooperation
16 with the Saudi government in interviewing the suspects that
17 the Saudis had arrested as well, and spoke with the
1s cooperation of the Saudi government. Basically, his
19 conclusions were the same as Director Freeh's.
20 MR. GASTON: Your Honor, I would like to offer
21 Exhibit 4 into evidence.
22 THE COURT: Received.
23 (Whereupon, Plaintiff's Exhibit Number 4, marked for
24 identification, was admitted into evidence.)
25 (Whereupon, Plaintiff's Exhibit Number 5 was marked for
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2
3
4
5
6
7
8
9
10
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15
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Page 22 11
identification.)
BY MR. GASTON:
Q. Please look at tab number five. This appears to be
an article published by former Director Freeh; is that
correct?
A. Yes. This was published by the actually, it's
been published in two places. One was in the Wall Street
Journal, and this is the Saudi/US Relations Information
Service, which is a Saudi government entity, kind of like
the Voice of America.
Q. Does it contain any reference to the Khobar Towers
bombing?
A. Absolutely. In fact, the whole article is about
is entitled "Remember Khobar Towers" by Louis J. Freeh, and
the whole article is about the attack and the connection
between the attack and Hizballah and Iran's government and
leadership, and it's also a description, a very general
description of the investigation that the FBI conducted.
Q. And Director Freeh wrote in that article on June 25,
1996, "Iran again attacked America at Dhahran, Saudi
Arabia." This is on the second page of that --
A. Yes, yes, " ... exploding a huge truck bomb that
devastated Khobar Towers and murdered 19 U.S. airmen, 11 yes.
Q. And do you believe this source is reliable?
A. Oh, absolutely. The FBI, since 1985, when we
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1 established the counter-terrorism center in the agency, at
2 the same time President Reagan declared the FBI to be the
3 premier -- the lead agency -- I'm sorry -- the lead agency
4 in the U.S. Government for all investigation of terrorists
5 incidents.
6 MR. GASTON: Your Honor, I offer Exhibit 5 into
7 evidence.
8 THE COURT: Received.
9 (Whereupon, Plaintiff's Exhibit Number 5, marked for
10 identification, was admitted into evidence.)
11 BY MR. GASTON:
12 Q. Let me ask you, Director Freeh has been very up
13 front about his conclusions, and some other people have been
14 as well, but the United States Government, at least today,
15 does not seem to have completely endorsed this conclusion as
16 to who was behind the Khobar Towers bombing. Can you offer
11 a suggestion why?
18 A. It's interesting. It's not a question of endorsing,
19 it's more a question of not endorsing. The -- one of the
20 reasons that Director Freeh, as well as some of us in the
21 CIA in the counter-terrorism effort as well, is the entry
22 and consideration of politics into what would otherwise be a
23 simple investigation with clear cut conclusions. The
24 problem is, since the revolution in 1979, every single U.S.
25 Administration has been operating under the premise that
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1 there is a possibility of bring Iran back from its
2 extremism. So there is a disinclination to take any harsh
3 actions or irreversible actions, such as war, against Iran.
4 If the government is forced or were to actually
5 come out and confirm or endorse Director Freeh's, or any of
6 our other observations or knowledge about Iranian
7 involvement, obviously the pressure from the American public
8 would require that the U.S. Government take some direct
9 action against Iran like we did in Iraq, for example.
10 Because they're trying to avoid this, you won't find any
11 accusations, but there's no denials of what Director Freeh
12 says, especially when you get them into specific court
13 transcripts in cases carried out by the government against
14 people that are involved with these types of things. These
15 are a matter of record. Nobody -- Director Freeh, the FBI
16 agents, investigators, nobody is lying to the Court about
17 this stuff, but the political side of the various
1s administrations is not going to do an undiplomatic thing
19 that would force them into a corner and require them to take
20 action that they're not ready to take.
21 (Whereupon, Plaintiff's Exhibit Numbers 7 and 7A were
22 marked for identification.)
23 BY MR. GASTON:
2 4 Q. Well, you mentioned a court proceeding. Could you
25 look at tab seven, and I think you will find there a press
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1 release announcing indictments against certain individuals,
2 and then I believe I have it marked as Exhibit 7, and
3 Exhibit 7A is the actual indictment. Have you had a chance
4 to review those documents?
5 A. Yes. Yes, I did, and this indictment is against some
6 13 members of the -- as they refer to it in the FBI press
7 release, of the pro-Iranian Saudi Hizballah. Well, in the
a Middle East all of the Hizballah parties, all of the
9 Hizballah terrorist organizations, the Party of God, every
10 one of them Saudi Arabia, Bahrain, Lebanon and the other
11 Gulf Coast is an Iranian proxy. They were set up by Iran to
12 carry out terrorists actions in those countries in the hopes
13 of overthrowing those governments and establishing another
14 Islamic republic in these different countries. So to call
15 it pro Iranian is true, but it doesn't go far enough. These
16 are Iranian proxies as well, and this is against 13 members
17 of the -- of the organization that they have identified
1a through their investigation.
19
20
21
Q.
A.
So they referred to Iran in the indictment?
I believe when they are yes, I believe they do
when they're talking about the meeting the the
22 meetings in Damascus at the Iranian embassy.
23 Q. And I believe, if you look at the second page of the
24 press release, around the middle paragraph, 11 In 19 95, an
25 Iranian military officer directed Al-Bahar and Al-Sayegh to
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1 conduct surveillance on the Red Sea coast of Saudi Arabia"?
2
3
A.
Q.
Yes.
"During this time, Al-Mughassil told Al-Marhoun
4 during a live-fire practice drill in Lebanon that he enjoyed
5 close ties to Iranian officials who were providing financial
6 support to the party, according to the indictment"?
7
8
9
10
A.
Q.
A.
Absolutely, yes.
And the indictment bears that out?
Yes, sir.
MR. GASTON: Your Honor, I would like to offer
11 Exhibits 7 and 7A into evidence.
12 THE COURT: My book doesn't have a 7A. Do you
13 have it?
14 MR. GASTON: I'm sorry. It should. After tab 7,
1s the first exhibit is Exhibit 7, which is the press release,
16 and then I think four pages in is the first page of the
17 indictment which should be 7A.
18
19
THE COURT: It's not in my book.
MR. GASTON: I'm sorry.
20 THE COURT: That's okay.
21 (Whereupon, Plaintiff's Exhibit Number 6 was marked for
22 identification.)
23 BY MR. GASTON:
24 Q. I believe we skipped tab six, if I could redirect
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1 your attention to that. That is a statement of Louis Freeh,
2 former FBI director, before the Joint Intelligence
3 Committees of Congress; is that correct?
4 A. Yes, sir. Yes, it is. Congress was another agency
s of the U.S. Government that also conducted its
6 investigations into the Khobar Towers bombing as well, and
1 they called Freeh and a number of other experts to testify
a about the case.
9
10
11
12
13
Q.
A.
Q.
A.
14 Honor.
15
And here he repeats his conclusions stated elsewhere?
Yes, sir.
That Iran was responsible for -Yes,
sir; he does.
MR. GASTON: I'd like to offer Exhibit 6, Your
THE COURT: It's received.
16 (Whereupon, Plaintiff's Exhibit Number 6, marked for
11 identification, was admitted into evidence.)
18 THE COURT: I see where Exhibit 7A is located.
19 It isn't tabbed. The other material is in front of it.
20 MR. GASTON: I apologize, Your Honor.
21 (Whereupon, Plaintiff's Exhibit Numbers 7 and 7A,
22 previously marked for identification, were admitted into
23 evidence.)
24 BY MR. GASTON:
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1 Q.
Page 28
Now, you didn't rely solely on Director Freeh in
2 reaching your conclusion based on publicly available
3 material, did you?
4 A. No. There's been a great deal of investigative
5 reporting and books have been written about it, and
6 congressional research services have done a study on it.
7 There's a lot of information, and very little of it is
a contradictory. That's the interesting part. This is the
9 these are the key points that there's pretty much no dispute
10 over.
11 Q. Is there another expert in the field called Matthew
12 Levitt that you're familiar with?
13 A. Yes, yes, yes. He's I consider him a senior
14 expert to me. He's done a lot of research, and he's one of
15 the people that's written a number of books on this. He's
16 often called as a congressional expert witness as well.
11 (Whereupon, Plaintiff's Exhibit Number 8 was marked for
1a identification.)
19 BY MR. GASTON:
20 Q. And if I could ask you to turn to tab eight in your
21 book?
2 2
23
A.
Q.
Okay.
Mr. Levitt apparently testified before Congress and
24 also wrote an article about his testimony; is that correct?
25 A. Yes. This is the article, "Iranian State Sponsorship
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1 of Terror: Threatening U.S. Security, Global Stability, and
2 Regional Peace."
3 Q. And does he also reach the conclusion that Iran was
4 heavily involved in the Khobar Towers bombing?
5 A. Oh, definitely. He gives a great deal -- not a great
6 deal, but he gives even more details than what Freeh,
7 Watson, and the indictments talk about.
8 MR. GASTON: Your Honor, I'd like to offer
9 Exhibit 8 into evidence.
10 THE COURT: Received.
11 (Whereupon, Plaintiff's Exhibit Number 8, previously
12 marked for identification, was admitted into evidence.)
13 BY MR. GASTON:
14 Q. The State Department publishes an annual review on
15 terrorism, does it not?
16 A. Yes. It's called the "Patterns of Global Terrorism."
17 It's a congressionally mandated, unclassified, open source
1B review of terrorism since -- in every country and in every
19 region around the world.
20 (Whereupon, Plaintiff's Exhibit Numbers 9 and 10 were
21 marked for identification.)
22 BY MR. GASTON:
23 Q. And if you look at tabs nine and ten, can you tell
24 us what those are?
25 A. Yes. These are the editions for 1996 and 1997.
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1 Q.
Page 30 I
In 1996 and 1997, did the State Department conclude
2 that Iran was a leading state sponsor of terrorism?
3 A. Yes, they do. In fact, I should clarify. These are
4 the parts relating to Iran. This is not the whole report.
5 Sure.
6
Q.
A. Yes, they do. In fact, the revolution in Iran took
7 place in 1979. I these patterns of global terrorism have
a started coming out in 1982 and 1983, and every year, every
9 single year, up to the current, present year, in the Iranian
10 section Iran is identified as the premier or the leading
11 state sponsor of terrorism in the world, in every single
12 edition every year.
13 Q. Including 1996 and 1997?
14 A. Including 1996 and 1997.
15 Q. And those are the relevant excerpts in tabs nine and
16 ten; is that correct?
17 A. Yes, sir.
18 MR. GASTON: I'd like to offer Exhibits 9 and 10
19 into evidence, Your Honor.
20 THE COURT: Received.
21 (Whereupon, Plaintiff's Exhibit Numbers 9 and 10,
22 previously marked for identification, was admitted into
23 evidence.)
24 (Whereupon, Plaintiff's Exhibit Number 11 was marked
25 for identification.)
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1 BY MR. GASTON:
2 Q. Now, Exhibit 11, can you explain proposed Exhibit 11,
3 what that is?
4 A. This is an open source -- it's a website. It's an
5 organization called the Federation of American Scientists,
6 and they have done a good deal of well researched on --
7 researched on all the different terrorists organizations in
8 the world. They also do a similar thing on counter-
9 terrorist agencies and intelligence services. This is their
1 0 research on the Iranian Revolutionary Guard Corps. It tells
11 the history, it tells the organization, it tells about the
12 domestic and the foreign responsibilities. It provides all
13 the background. It's a good summary.
14 Do you believe it's accurate and
15
16
Q.
A.
the
Yes, sir, I do. And they do identify at the end of
at the end of the small article, they do identify
17 their sources as well, which include the Library of Congress
1s and other very reputable -- it's a good -- it's a good
19 general coverage of it.
20 MR. GASTON: I would like to offer Exhibit 11
21 into evidence, Your Honor.
22 THE COURT: Received.
23 (Whereupon, Plaintiff's Exhibit Number 11, previously
24 marked for identification, was admitted into evidence.)
25 (Whereupon, Plaintiff's Exhibit Number 12 was marked
United States District Court [email protected]
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1 for identification.)
2 BY MR. GASTON:
3 Q. If I could ask you to look at source that you have
4 relied up, an article in something called the Free Muslims
5 Coalition?
6 A. Yes The Free Muslims Coalition is an interesting
7 group. It's basically people who are Muslims and who have
8 been exiled from different countries, including Iran, for
9 being reasonable and rational, I suppose you could say.
10 They do not subscribe to either terrorism or the requirement
11 that Islam should conquer the world and that sort of thing.
12 They also -- to maintain their credibility, they do a great
13 deal of research, and they've very careful with the type of
14 things they write. It's not propaganda at all. It's I
15 would put it in the context of academic research.
16 Q. And this article also identifies as a primary sponsor
17 of state terrorism?
18 A. Yes. Yes, a look at Iran's sponsorship of terrorists
19 organization and, again, some of their resources they do
20 cite both the Statement Department's patterns of global
21 terrorism reporting, as well as congressional reporting and
22 other information, other sources that can be cross checked
23 and proved their accuracy.
24 Q. And they name certain high level officials in Iran,
25 some of whom you mentioned, as being involved in the
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Annex 114
Paul A. Blais v. c:...vil Action Number 02-28..)
The Islamic Republic of Iran
1 planning of the Khobar Towers bombing?
May 26, 2006
Page 33
2 A. Yes, they do. They specifically mention the director
3 of the Ministry of Intelligence and Security, the
4 intelligence minister, Ali Fallahian, who is still a very
5 senior advisor to the Ayatollah in Iran now. He's on the
6 Council of Experts, which is a sort of cabinet, National
7 Security Council type of cabinet post that he's still in.
a And they talk about the Revolutionary Guard Corps and the
9 work that they do with Hizballah in Lebanon and on terrorist
10 issues as well.
11 MR. GASTON: Your Honor, I would like to offer
12 Exhibit 12 into evidence.
13 THE COURT: Received.
14 (Whereupon, Plaintiff's Exhibit Number 12, previously
15 marked for identification, was admitted into evidence.)
16 (Whereupon, Plaintiff's Exhibit Number 13 was marked
11 for identification.)
18 BY MR. GASTON:
19 Q. Exhibit 13 appears to be an article by the Iran
20 Press Service; is that correct?
21 Yes.
22
A.
Q.
A.
What can you tell us about that article?
23 This is a -- this is a more current report about why
24 Iran protects al-Qa'eda, and like the problems of the United
2 5 States accusing Iran publicly and diplomatically of being
United States District Court [email protected]
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The Islamic Republic of Iran
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1 involved in Khobar Towers or the Beirut Embassy bombings or
2 other terrorist incidents that we know they've been involved
3 with.
4 In case anybody wondering this is -- this is where
5 bin Laden has been since the Tora Bora fighting in
6 Afghanistan. He's been in Iran. He's not in Afghanistan,
7 he's not in Pakistan.
s This is an article addressing why it's a -- given
9 their history of supporting different terrorist groups
10 against the West, why it's perfectly natural as well that
11 they have combined or allied themselves with al-Qa'eda and
12 they're protecting al-Qa'eda now, and they give some
13 historic background, too.
14 Q. They use the 1996 Khobar Towers bombing in Saudi
1 5 Arabia as an example, if you turn to the second page, the
16 second full
17 A. Yes, yes. In fact, again, they mention also the
1s former Iranian Intelligence Minister, Ali Fallahian. They
19 say the 1996 Khobar bombing in Saudi Arabia serves as an
20 example of the past years of Iranian support and committing
21 of terrorist activities through proxies.
22 General Sharifi, the Iranian Revolutionary Guard
2 3 Corps operational leader, is mentioned in here, as well as
24
25
one of the conspirators that's also in the indictment,
Ibrahim al-Mughassil, who is a member of the Saudi
-- ---
I
.I
t
i
I
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1 Hizballah.
2
3
Q.
A.
So you believe this article is relatively accurate?
Oh, it's very accurate. There's no contradictions
4 here between any of the previous indictments or sources that
s are cited.
6 MR. GASTON: I would like to offer Exhibit 13
7 into evidence.
8 THE COURT: Received.
9 (Whereupon, Plaintiff's Exhibit Number 13, previously
10 marked for identification, was admitted into evidence.)
11 THE COURT: Why is the popular wisdom that bin
12 Laden is not in Iran, that he's in Pakistan or Afghanistan,
13 if this is accurate?
14 THE WITNESS: Well, because if we don't want to
1s admit that he's Iran, he's got to be somewhere, and we can't
16 find him. Obviously, we can't find him, my point of view,
11 because we're not looking where he's at. There's a lot of
1a circumstantial -- well, not even only circumstantial
19 information. We don't, obviously, have a great deal of
20 intelligence resources in Iran. Most of that got lost and
21 shut down after the revolution. But, for example, when the
22 last videotape was done by bin Laden outdoors, there's a --
23 from my home state of Colorado, there's a university geology
24 professor who recognized the rock formations as being in
2s southeastern Iran. As soon as that was publicized, every
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The Islamic Republic of Iran
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Page 36
1 single video presentation since then has been indoors, with
2 a gray blanket background. The last video that he put out
3 standing behind a nice wooden lectern with all the modern
4 studio facilities, if you will, he was dressed in Iranian
s cloth in his robes. It was not Saudi, like he normally was.
6 And then there's just the simple fact that if he is in or
7 was in Pakistan, or in the wilds of Afghanistan, in a
s mountain cave or something, how is he doing these studio
9 quality productions on these videotapes and audiotapes, and
10 how is it that we can't find him? We have troops on the
11 ground in both those places.
12 His second wife, which is his favorite wife, his
13 son, who he has designated as his heir, and his number two -
14 - his deputy in al-Qa'eda, an Egyptian dentist named al-
1s Zawahiri all have been positively identified as being Iran
16 at various times. He has not been -- though there are not
17 eyewitnesses saying that, it's all just sort of
1s circumstantial evidence. But there's no evidence he's
19 anywhere else either, and that's the other thing. So it's a
20 combination of the two.
21 I believe -- I don't think I'm any type of genius
22 or expert, and I think what I can see obviously the people
23 in the government can see, and they do not want to publicly
24 link Iran to al-Qa'eda because that would require us to take
2s forceful action against them. You see how careful we are
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Paul A. Blais v. c~vil Action Number 02-2bj
The Islamic Republic of Iran
May 26, 2006
Page 37
1 even on the nuclear issues about dealing with Iran now. We
2 don't -- Iran has always been the most powerful state in the
3 region, and it's been the most advanced. When the Shah of
4 Iran had essentially created a country that was the
5 equivalent to, I don't know, a small European county
6 Italy or something like that -- in terms of power, in terms
7 of industrialization and that sort of that, and a lot of
8 that has been lost after the revolution, but it's still the
9 power in the area. It's much more powerful than Saudi
10 Arabia, Kuwait, or even Iraq. If they hadn't they fought
11 a ten-year war with Iraq that was pretty much a stalemate.
12 A million people died on both sides. But if the Iranians
13 had not conducted the revolution as the Russians did and
14 decimated their army prior to World War II, the Iranians
15 would have run over the Iraqis with no problem at all. But
16 even so, they took on the fourth largest army in the world
11 and fought it to a standstill.
1a I'm sure that the political reason is that we
19 still hope that somehow we can be friends eventually with
20 Iran, and we don't want to do anything irreversible.
21 BY MR. GASTON:
22 Q. Let me ask you a more general question. What is the
2 3 purpose of a terrorist attack such as the one on the Khobar
24 Towers?
25 A. The FBI has adopted a definition of terrorism as an
- -- .
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Paul A. Blais v. c~vil Action Number 02-2bS
The Islamic Republic of Iran
May 26, 2006
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I
1 attack against civilians, non-combatants, for the purpose of
2 -- obviously terrorizing but for the purpose of
3 influencing a government to change its policies. Now, so,
4 first of all, the strategic objective is to have the
5 government of whoever citizens are being attacked to have
6 them change whatever policy, like the Madrid training
7 bombings, for example, changed its Spanish policy in Iraq,
a and they withdrew their troops where they have been
9 supporting us.
10 The London training bombings was another effort to
11 do the same thing, and the British did not cave to that type
12 of pressure.
13 The Khobar Towers, the Marine Corps barracks
14 bombing in Beirut, the embassy bombings in Beirut twice, all
15 of these are efforts to cause enough pain and suffering to
16 the population, to the -- you know, from the victims,
11 families and the victims themselves if they're survivors, to
1s put pressure on the host government, the U.S. Government,
19 the British, or the Spanish Government to do whatever it is
20 the terrorists are trying to accomplish.
21 So tactically, the immediate objective is to
22 terrorize the victims and cause them to -- or to motivate
2 3 them to pressure their government to do what the terrorists
24 want.
25 THE COURT: To withdraw from Saudi Arabia?
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1
Page 39
THE WITNESS: Yes.
2 THE COURT: And here, to withdraw from Saudi
3 Arabia, is what they were seeking to accomplish?
4 THE WITNESS: Absolutely. The true believing
5 Muslims feel that the territory of Saudi Arabia is the
6 holiest ground in Islam, and it is a great sacrilege to have
7 non-Muslims traipsing -- especially non-Muslims troops
s traipsing about in Islam. In fact, when Saddam Hussein
9 invaded
10
11
THE COURT: Not just the religious sites?
THE WITNESS: No, no. It's the whole territory,
12 absolutely. Yes, definitely, it's the whole territory.
13 When Saddam Hussein invaded Kuwait and it looked
14 like he was going to move into Saudi Arabia, bin Laden came
15 to the Saudi Government and said, "Listen, I have 15,000
16 trained fighters from the Afghan war. We beat the
17 superpower, the Soviet Union, with them. I will defend
1s Saudi Arabia against Iraq. "
19 The king looked at the ragtag bunch of holy
20 warriors, the mujahedeen, the holy warriors from
21 Afghanistan, and he looked at the U.S. military, and they
22 decided that they preferred to be protected by the U.S.
23 military. That is when bin Laden lost his citizenship and
24 started attacking the Saudi Government as well.
25 BY MR. GASTON:
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Annex 114
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The Islamic Republic of Iran
May 26, 2006
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Page 40 1
1 Q. So one of the sort of incidental but immediate
2 intents was to inflict pain and suffering on the victims and
3 their immediate families?
4 A. Oh, absolutely. That way they are terrorized. That
5 way they're motivated to stop the terror, to stop future
6 incidents like this. And if it doesn't work, they'll do it
7 again and again and again. That's as far in advance as they
s see, and then they hope that the victims, the survivors or
9 their families will go back to their home county and
10 pressure the government to do whatever it is -- in this
11 case, yes, to withdraw from Saudi Arabia, get the U.S.
12 troops out of Saudi Arabia.
13 Q. Or to make the other families, families of other
14 servicemen too fearful to allow them to go to --
15 A. Absolutely. There's a lot of ancillary things like
16 affecting moral, terrorism. That's one reason the
17 terrorists choose bombs and explosives as opposed to usually
1s attacking -- I mean, you would think if they were holy
19 warriors and fighters and everything they would launch a
20 frontal assault on a U.S. military unit. That's not the
21 objective. The objective is to cause terror, to cause pain
22 and suffering.
23 Q. What was the U.S. military doing in Saudi Arabia at
24 that time in 1996?
25 A. We were on a this was following 1990 was the
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Annex 114
Paul A. Blais v. Civil Action Number 02-285
The Islamic Republic of Iran
May 26, 2006
Page 41
1 first Gulf war. We were there enforcing the United Nations'
2 no fly zone mandate over Iraq. This was an air force base,
3 an air force facility, and obviously considerably behind
4 enemy lines, but they were supporting the flight patrol over
5 Iraq to make sure that the Iraqis did not reinitiate
6 hostilities after the first Gulf war.
7 THE COURT: There were flights from this base?
8 THE WITNESS: Yes, yes. There were elements
9 think there were 2- or 3,000 air force personnel from
1 0 different elements, from all over this country there. Now
11 they've all been consolidated into a new air base, King
12 Abdul Aziz Air Base, and much better protected. They were
1 3 not anticipating attacks here. This was not on the front
14 lines; this was considerably behind the lines, and it was
15 they were not on the war footing, if you will.
16 BY MR. GASTON:
17
18
Q.
A.
And this was essentially a residential complex?
Well, what got hit, it was definitely -- it was a
19 dormitory building. It was sort of a large apartment
2 0 building. That was the -- in fact, we shared the base as
21 well with the French and the British people too, and they
22 also had dormitory facilities there, but we were the ones
2 3 that were next to the wall where the -- we were the clear
24 target. In fact, six months prior -- I'm not sure of the
25 time. Some time prior to the actual bomb going off these
I
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Annex 114
Paul A. Blais v. c~vil Action Number 02-26J
The Islamic Republic of Iran
May 26, 2006
Page 42
1 same people had tried to run a truck through the barrier,
2 the perimeter wall, before, and they didn't destroy the
3 truck, but they -- it would be like hitting the Jersey wall
4 on the freeway. The truck bounced off. So that was why
5 they did not try to drive this truck through; they just
6 parked it next to it and hoped that the explosion would be
7 powerful enough to hit across. But they were clearly
8 targeting the American dormitory building because it was
9 right next to the American building that they tried their
10 previous penetration.
11 (Whereupon, Plaintiff's Exhibit Number 14 was marked
12 for identification.)
13 BY MR. GASTON:
14 Q. Okay. Finally, I would like to ask you to you look
15 at Exhibit 14, which is a report prepared just a few months
16 after terrorist attack on the Khobar Towers. Did you have a
11 chance to look at that?
18 A. Yes. This is the Downing Report. This was the first
19 after action report by the air force itself to determine
20 what went wrong. It talks about the history, it talks about
21
22
23
24
25
why were there, it talks about all the security
preparations, the security level and stance and what went
wrong.
Q.
A.
They refer to this as a peacetime deployment?
Yes. It's a peacetime deployment, although they were
II
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The Islamic Republic of Iran
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Page 43
1 aware of some security issues, and the air force had
2 actually requested, for example, that the perimeter wall be
3 extended, be put further away from the buildings than it
4 was, and because we were there -- again, we weren't
5 occupying Saudi Arabia. We were there in a peacetime type
6 deployment. The Saudis said, no, they didn't want to give
7 us any more territory to make a bigger perimeter. We
8 couldn't do anything about it, so we had to accept that.
9 But, yes, it was very definitely not a war zone or war time
10 deployment.
11 MR. GASTON; Your Honor, I would like to offer
12 Exhibit 14 into evidence.
13 THE COURT; Received.
14 BY MR. GASTON;
15 Q. Finally, Dr. Tefft, is it your opinion, to a
16 reasonable degree of certainty, that the Islamic Republic of
11 Iran and the Iranian Revolutionary Guard Corps were
1s responsible for the planning and supporting the attack on
19 the Khobar Towers, including providing operational and
20 financial support?
21 A. There's no question about it. It wouldn't have
22 happened without the Iranian support. This is a very
2 3 powerful, sophisticated bomb. Neither group, the larger,
24 older Lebanese Hizballah, or the relatively new Saudi
25 Hizballah could have pulled this off on their own. They
United States District Court [email protected]
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The Islamic Republic of Iran
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1 definitely had to have state sponsorship, and it was Iran.
2 Too many people have said have identified the actual
3 individuals who were -- who were doing the planning and
4 organization. There's no question that it's Iran.
5
6
Q.
7 down.
Thank you.
THE COURT: Thank you very much. You may step
e (Whereupon, the witness was excused.)
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
REDACTED
L
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ANNEX 115
Annex 115
American
Journal of
International
Law
VOLUME 75
1981
Published by
American Society of International Law
Annex 115
BOARD OF EDITORS
Editors-in~Chief
OSCAR SCHACHTER LOUIS HENKIN
Columbia University School of Law
RICHARD B . BILDER
University of Wisconsin Law School
THOMAS B UERGENTHAL
HAROLD K. JACOBSON
University of Michigan
MONROE LEIGH
Washington, D.C.
RICHARD B. LILLICH
Washington College of Law,
American University
ANTHONY A. D'AMATO
Northwestern University
of Law
University of Virginia Law School
School ANDREAS F . LOWENFELD
RICHARD A. FALK
Princeton University
TOM J. FARER
Rutgers University (Camden)
School of Law
ROGER FISHER
Harvard Law School
THOMAS M. FRANCK
New York, N.Y.
j 0HN LA WREN CE HARGROVE
Washington, D.C.
ROSALYN HIGGINS
University of
London,LSE
JOHN H. JACKSON
University of Michigan Law School
New York University School of Law
JOHN NORTON MOORE
University of Virginia Law School
W. MICHAEL REISMAN
Yale Law School
ARTHUR W. ROVINE
Washington, D.C.
PETER D. TROOBOFF
Washington, D.C.
DETLEV F. V AGTS
Harvard Law School
ROBERT VON MEHREN
New York, N.Y.
BURNS H. WESTON
University of Iowa School of Law
RICHARD YOUNG
Van Hornesville, N.Y.
Honorary Editors
WILLIAM W. BISHOP, JR.
University of Michigan Law School
HERBERT W. BRIGGS
Cornell University
HARDY C. DILLARD
University of Virginia Law School
ALWYN FREEMAN
Beverly Hills, Calif.
LEO GROSS
Fletcher School of Law and
Diplomacy, Tufts University
j OHN N. HAZARD
Columbia University School of Law
JAMES NEVINS HYDE
Newtown, Conn.
PHILIP C. JESSUP
Norfolk, Conn.
OLIVER T. LISSITZYN
Columbia University School of Law
MYRES S. McDOUGAL
Yale Law School
COVEY T. OLIVER
University of Pennsylvania Law School
STEFAN A . RIESENFELD
University of California Law School
SEYMOUR j. RUBIN
Washington College of Law,
American University
LOUIS B. SOHN
University of Georgia Law School
ERIC STEIN
University of Michigan Law School
Assistant Editor
ANNA ASCHER
Editorial Assistant
ANN W. NENNEMAN
Assistant Editor Emerita
ELEANOR H. FINCH
Annex 115
EXECUTION OF JUDGMENTS AND FOREIGN
SOVEREIGN IMMUNITY
By James Crawford*
L INTRODUCTION
The extent to which foreign sovereigns are entitled to immunity in
municipal courts has attracted a vast literature, in recent years especially.
The majority view now seems to be that immunity need not extend to
commercial transactions entered into by the state, although the precise
scope of this "exception" remains unsettled, and the role of international
law in "extending" or "withholding" immunity has not yet, pt:rhaps, been
clearly analyzed. Indeed, it has been denied that there is any international
law rule at all on the subject, a view that would presumably leave each state
free to formulate, or negotiate, its own rule.
The purpose of this paper is not to reconsider this central issue but to
examine the distinct, though related, question of the extent to ,vhich foreign
sovereigns are by international law entitled to immunity from seizure of
and execution against property pursuant to judgments of domestic courts.
Four views of the matter would seem to be possible: first, that no, measures of
execution are permissible without the foreign sovereign's corn;ent; second,
that the immunity from exe-cution is strictly correlative to immunity from
suit, so that in those cases where the foreign sovereign is not immune from
suit it is equally, and without further restriction, not immune fr<,>m execution
of any adverse judgment; third, that execution against a foreign sovereign
is permissible, but in a more restrictive class of case than that in which it is
liable to suit; and fourth, that there is no international law rule on the matter
at all.
It will be suggested that an examination of case law, treaty and statutory
provisions, state practice, and the literature supports the third view: that,
while international law permits execution against the property of foreign
sovereigns, there are distinct restrictions on such execution, apart from
general restrictions on suit. An attempt will be made to outline these restrictions,
particularly in the context of foreign government funds and those of
central banks. Finally, a brief examination will be made of the:·, largely correlative,
problem of prejudgment attachment of foreign state property
or assets.
IL A SURVEY OF AUTHORITY
There is a substantial, though rather diverse, body of authority dealing
with the questions of execution against foreign state property. A brief review
of this authority is necessary.
* DPhil (Oxon.), Senior Lecturer in Law, the University of Adelaide.
820
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 821
MULTILATERAL TREATY PROVISIONS
There is yet no comprehensive multilateral treaty on state immunity,
though the problem has been regulated functionally in a number of contexts,
and in one important regional convention.
Arrest of and Execution Against State-owned Ships
The propriety of arresting state-owned ships (other than warships and
other public ships) in aid of maritime claims is now well established.1 Article
l of the 1926 Brussels Convention for the Unification of Certain Rules
concerning the Immunity of State-owned Ships provides:
Sea-going ships owned or operated by States, cargoes owned by them,
and cargoes and passengers carried on State-owned ships, as well as the
States which own or operate such ships and own such cargoes shall be
subject, as regards claims in respect of the operation of such ships or in
respect of the carriage of such cargoes, to the same rules of liability and
the same obligations as those applicable in the case of privately-owned
ships, cargoes and equipment.2
The liability to arrest of state-owned commercial ships is affirmed, by
implication at least, in the 1952 Brussels Convention relating to the Arrest
of Sea-going Ships. 3 It is also expressly contemplated by Article 21 of the
Geneva Convention on the Territorial Sea of 1958, which applies to government
ships operated for commercial purposes the general rules applicable
to innocent passage of merchant ships in Articles 18 to 20 of the Convention.
Article 20 provides that the qualified prohibition from execution of arrest
of merchant ships engaged in innocent passage through the territorial sea
is "without prejudice to the right of the coastal State, in accordance with its
laws, to levy execution against or to arrest, for the purpose of any civil
1 It is proposed to deal only with arrest in the exercise of civil jurisdiction in ports, roadsteads,
and internal waters. Cf. Geneva Convention on the Territorial Sea and the Contiguous Zone,
1958, 15 UST 1606, TIAS No. 5639, 516 UNTS 205, Art. 20(1) & (2). The distinction is not
sufficiently attended to in the Brussels Convention relating to the Arrest of Sea-going Ships,
1952. 159 B1m. foREIGN & ST. PAPERS [BFSP] 368.
2 I LNTS 199, [ 19801 Gr. Brit. TS No. 15 (Cmnd. 7800). Article 2 subjects such ships to the
s.i.me "rights of action and procedure" as private ships. Article 3 exempts ships of war and other
ship~ used exdusi\•ely on "Go\·ernment and non-commercial sen·ice"; these are exempt from
"seizure. arrest or detention by any legal process" (including actions in rem). There are
approximately 23 parties to the Convention and its Protocol of 1934.
3 Supra note I. The Convention deals with "sea-going ships" in general. Article 2 provides for
liability to arrest in respect of a "maritime claim," but Article 3 allows arrest of any sister ship
owned by the same "person," and "person" is defined to include "Governments, their Departments,
and Public Authorities" (Art. 1(3)). In ratifying the Convention, both Yugoslavia and
the United Kingdom reserved the right not to apply it to "warships or to vessels owned by or in
the sen·ice of a State." In this respect as well, the 1952 Convention is remarkably sweeping.
S,e also the 1940 Montevideo Treaty on International Commercial Navigation Law (7 M.
HuosoN, INTERNATIONAL LEGISLATION 460 (1941)), adopting a more restrictive, but not prohibitive,
rule. The Treaty never came into force.
Annex 115
822 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
proceedings, a foreign ~hip lying in the territorial sea, or passing through
the territorial sea after leaving internal waters."4
The International Law Commission proposed that, by Artide 21, these
powers of execution and arrest be extended to state-owned commercial
vessels since the rules of the 1926 Brussels Convention "followed the pre•
ponderant practice of States"; however, the dissent of the Soviet and
Yugoslav members of the Commission was recorded.6 Sc!veral states
parties to the 1958 Convention have made reservations with re~.pect to these
provisions, on the ground that immunity extends to all government ships
irrespective of use; a similar number of states have objected to these
reservations. 6
The European Convention on State Immunity of 19727 reserves the
question of claims relating to state-owned ships, on the basis that the matter
is regulated already by these general conventions.
Other Cases of Arrest and Execution
The ,European Convention is the only multilateral convention in force
directly regulating the general issue of state immunity from execution.
Article 23 prohibits all "measures of execution or preventive measures
against the property of a Contracting State" outside its territory in the
absence of express waiver. However, the value of this provision as support
for an equivalent customary rule.is limited, for several reasons.
First, the Convention does not purport to be a codification of general
international law.8 It does not in terms embody any distinction between
governmental and commercial transactions,0 but was intended to state a
4 Geneva Convention on the Territorial Sea and Contiguous Zone, supra note 1. Virtually
identical provision is made in Articles 28-32 of the UN CLOS Draft Convention on the Law of
the Sea (Informal Text), UN Doc. NCONF.62/WP.10/Rev.3 (1980), repri11tet! in 19 ILM 1131
(1980). And see gmerally T. K. THOMMEN, LEGALS,ATUS OF GOVERNMENT Mt!RCHANTSHJPS IN
lNTERNAilONAL LAW (1962); Vitanyi, L'lmmunite des navires d'Etat, 10 NETH. ]NT.L L.R. 33-61,
156-177 (1963).
s Report of the International Law Commission on its 8th session, 11 UN GAOR, Supp. {No. 9)
22, UN Doc. Af3159 (1956). For the ILC debates, see (1954] 2 Y.B. INT'L L. CoMM'N 73-75;
1 id. at 157-59; [1955) 1 id. at 140-42; [1956) 1 id. at 207-11.
6 Reservations have been made by Bulgaria, Byelorussia, Czechoslovakia, the German Democratic
Republic, Hungary, Mexico, Romania, the Ukraine, and the USSR. Objections to the
reservations are maintained by Australia, Denmark, Fiji,Japan, Madagascar, the Nctherlamls,
Portugal (the Mexican reservation only), Thailand, Tonga, the United Kingdom, and the
United States.
7 European Convention on State Immunity, May 16, 1972, (1979) Gr. Brit. TS No, 74 (Cmnd.
7742), Art. 30. CJ. also the Brussels Convention on the Liability of Operators of Nuclear Ships,
May 25, 1962, 57 AJIL 268 (1963), Art. X(3) (phrased in terms of waiver)
8 Cf. Sinclair, The European Convention on State Immunity, 22 INT•L & COMP. L.Q. 254, 283
(1973); I. BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW 335 (3d ed. 1979). The same
is no doubt true of the Inter-American Convention on Private International L'lW (the Bustamante
Code) of 1928 (86 LNTS 246), which never came into force. Articles 3 ~3-339 enunciate
a general rule of immunity from both jurisdiction and execution, including civil and commercial
cases, excluding only real or mixed actions where a "foreign contracting State or its
head has acted as an individual or private person" (Art. 335).
9 Cf. An. 24, which allows extension by declaration (vis-a-vis another declaring state) of
further exceptions from immunity "to the extent that _its courts arc entitled to entertain proAnnex
115
1981) EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 823
minimum degree of immunity from the jurisdiction of foreign courts whose
judgments would be entitled to recognition (and, if available under local
law, enforcement) in the courts of the defendant state.10 Moreover, parties
to the Convention expressly agree to give effect to foreign judgments
against them (subject to limited exceptions).11 There is, of course, no equivalent
machinery under the general law. And, third, immunity from execution
can itself be displaced by mutual declarations made under Article 26, in
respect of "proceedings relating to an industrial or commercial activity, in
which the State is engaged in the same manner as a private person."
A few other multilateral conventions deal with the matter in a peripheral
or ancillary way. The First World War peace treaties contained a provision
disentitling the defeated party in each case from relying on "any rights,
privileges or immunities of sovereignty" in international trade. 12 More
significantly, Article 3( 1 )(a) of the Rome Convention for the Unification of
Certain Rules relating to the Precautionary Attachment of Aircraft of 1933
exempts from precautionary attachment ("saisie conseroatoire") "aircraft
assigned exclusively to a Government sen1ice, the postal service included,
commerce excepted."13 The Convention deals only with prejudgment
attachment,14 but attachment in aid of execution would appear to be an
a fortiori case. 15
On the other hand, Article 55 of the 1965 Com·ention on the Settlement
of Investment Disputes between States and Nationals of Other States16
ceeding~ against States not party to the present Convention," but stipulates that such declarations
are "without prejudice to the immunity from jurisdiction which foreign States enjoy in
re~pec:t of acts performed in the exercise of sovereign authority (acta iure imperii)." Cf. Art.
27(2). Of the four parties to the Convention, two (Belgium and the United Kingdom) have
made such declarations.
'" Cf Preamble, Arts. 2 I and 22.
11 Arts. 20 and 21. See generallJ Knierim, Sovereign Immunity from judicial Enforcement: The
Impact nf the European Convention on State Immunity, 12 CoLUM. J. TR-\NSNAT'L L. 130 (1973);
Sinclair. supra note 8, at 273-76; Krafft, La Convention europeenne sur l'immunite des Etats et son
protocole add1l1omzel, 31 ANNUAIRE SUISSE DE DROIT INT'L II, 20-23 (1975); Wiederkehr, La
Com•ent,on europiennc sur l'immunite des Etat.t du 16 mai 1972, [1974] ANNUAIRE FRANi;AIS DE
DROIT h.·r'L 924, 936-38. -
i i Treaty of Versailles,June 28, 1919, Art. 281 (Germany); Treaty of St.-Germain, Sept. 10,
1919, Art. 233 (Austria); Treaty of Neuilly, Nov. 27, 1919, Art. 161 (Bulgaria); Treaty of
Trianon.June 4, 1920. Art. 216 (Hungary); TreatyofSevres, Aug. 10, 1920, Art. 268 (Turkey,
unratified).
1·i 192 LNTS 289. As at September 1979, there were 22 parties to the Rome Convention.
1~ Cf. Art. 2. The 1952 Brussels Convention contains a somewhat similar restriction; supra
note I, Art. 1(2).
1~ Art. 30 of the Paris Air Navigation Convention of Oct. 13, 1919, 112 BFSP 931, provides:
·•AU Stale aircrafr other than military, customs, and police aircraft shall be treated as private
,urc:raft and as such shall be subject to all the provisions of the present Convention." By contrast,
the Chicago International Air Transport Agreement of Dec. 7, 1944, 171 UNTS 387,
Article 3(a), excludes all state aircraft from the Convention. The Warsaw Convention for the
Unificauon of Certain Rules relating to International Transportation by Air, 1929 applies
expressly to carriage performed by the state, but makes no reference to immunity questions;
TS No. 876, 137 LNTS 11, Art. 2. And cf. the restricted reservation allowed by Article 26 of the
Hague Protocol, 1955, 478 UNTS 371.
JR 17 UST 1270, TIAS No. 6090, 575 UNTS 159.
Annex 115
824 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
merely reserves questions of "immunity of any foreign State from execution,"
pursuant to awards under the Convention, to the law of the state
where enforcement of the award is sought. Since that question was controversial,
"the intention was not to modify the existing law on State Immunity,"
nor, indeed, to state what that law is or should be.17
BILATERAL TREATY PROVISIONS
There is quite frequent reference in the literature to the large number of
bilateral treaties dealing with foreign state immunity, and in particular with
immunity from execution.18 However, no very detailed analysis of the
bilateral treaty practice has yet been attempted: in fact, the United States
treaties, which are usually cited in this context, provide less convincing
support for a restrictive position than does the far more extensive treaty
practice of the Soviet Union.
Pre-194 5 Treaties
In the interwar years, the Soviet Union concluded a number of treaties
with other European states, for the most part regulating the activities of the
Soviet Trade Delegation in concluding commercial transactions in the other
state. Ten such treaties have been located. Although their form and content
vary significantly, the Treaty of Commerce of June 2, 1927 with Latvia
may be taken as an example. Article 5(7) of that Treaty stat€d:
Juridical acts carried out by the Commercial Delegation in Latvia which
bind the Union of Socialist Soviet Republics and also the economic
results of the said acts, shall be dealt with in accordance with Latvian
law and shall be subject to Latvian jurisdiction. Nevertheliess, in view of
the liability assumed by the Union of Socialist Soviet Republics under
paragraph 6 of the present Article in respectof transactions effected by
the Commercial Delegation, recourse shall not be had either to judicial
measures of a preventive character or to administrative measures affecting
the property of the Commercial Delegation and its branches.
The execution by attachment of judgments which have acquired
legal force shall not be admitted in the case of property belonging to the
Commercial Delegation where such property 1s intended, in accordance
with the general rules of International Law, for the e:cercise of the
sovereign rights of the State, or for the official activitie:; of the Commercial
Delegation.19
17 2 !CSID, CONVENTION ON THE SETILEMENT OF INVESTMENT DISPUTES BETWEEN STATES
AND NATIONALS OF OTHER STATES. DOCUMENTS CONCERNING THE ORICIN AND FoRMULATlON OF
THE CoNVENTION 428 (1968). For the travaux preparatoires of Art. 55, sec id. at 177, 242, 304,
343-48, and 424-31. Cf al.so the Convention on the Recognition and Enforcement of
Foreign Arbitral Awards, June 10, 1958, 21 UST 2517, TIAS No. 699i', 330 UNTS 38,
Despite the assumption to the contrary in lpitrade International S.A. v. Federal Republic of
Nigeria (465 F.Supp. 824, 826 (D.D.C. 1978)), it is doubtful whether states themselves count
as the "persons . . . physical or legal" to whom the Convention applies.
18 Cf. Claim against the Empire of Iran Case (Federal Republic of Germany, Federal Constitutional
Court, 1963, 16 BVerfGE 27 (1964)), 45 ILR 57, 73-75 (1972), per Wagner V.-P,
19 68 LNTS 321.
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 825
By Article 6, separate Soviet state enterprises, whose transactions were not
guaranteed by the Commercial Delegate, were subjected independently to
"Latvian jurisdiction and to the execution of judgments by attachment,"
without limitation.
Most of the other treaties concluded at this time contained similar provisions:
20 in al1 but one case/1 Soviet state property was expressly made liable
to final execution in respect of guaranteed transactions (though in six of the
treaties. interim attachment was excluded).22 Property used for diplomatic,
consular, or other sovereign functions was variously stated to enjoy "the
protection of customary international law,"23 or that "extended under international
law to the property of other friendly governments,"24 or to be
immune from execution "according to the general rules of international
law."25 But only two of the treaties regulated the immunity of the parties
on a mutual basis. 26
Post-1945 Treaties
Since 1945, the treaty practice has been both more widespread and more
diverse. A very few treaties involve either an express waiver27 or a nonwaiver2,..
of immunity with respect to specific transactions, but most, rather
2"Tn:.uies of the USSR with: Norway (1921), 7 LNTS 293; Austria (Ukrainian SSR also
a party) (1921), 20 LNTS 153; Denmark (1923), 18 LNTS 15; Germany (1925), 53 LNTS 85;
Sweden (1927). 127 BFSP 92:3; Greece (1929), 131 BFSP480; Britain (1934), 137 BFSP 188;
and Belgium and Luxembourg (1935), 173 LNTS 169.
~, USSR-Italy, Treaty of Commerce and Navigation, Feb. 7, 1924, 120 BFSP659. The Treaty
(Art. 3, para. 4) excludes interim attachment "in consequence" of the Trade Delegation's
as,umption of responsibility for the transactions. But the Treaty is ambiguous on the question
11f final exccmion. The Cone di Cassazione interpreted the Treaty to confer absolute immunity
frnm c.·,ecution (Russian Trade Delegation in Italy v. de Castro (1935, [1935] FoRo. IT. I,
,11 :MO), 7 A!l:!I:. D1G. PUBLIC lNT'L L. CASES [hereinafter cited as ANN. Du;.] 179, 180-82 (1940),
but 1l i~ not clear that this was intended. For other Italian cases on the Trade Delegation, see
YANN. DIG. 247-49 ( 1942).
"Treaties with: Norway, supra note 20, Art. 4( 1) (a qualified undertaking only); Denmark,
1upm note 20, Art. 3(1) (to similar effect); Italy (see note 21); I..al\•ia,supra note 19, Art. 5(7);
(,rcccc, .,upra note 20, Art. 7(4); Belgium and Luxembourg, supra note 20, Art. 14.
21 Treat}' with Austria, supra note 20, Art. 12.
H Treaties with: Norway, Art. 4(2); Denmark, Art. 3(4); both supra note 20.
Z\ Treaties with: Germany, supm note 20, Art. 7; Latvia, supra note 22, Art. 5(7); Sweden,
n,p,a note 20. Art. 6. The treaty ,,ich Greece, supra note 20, simply has 'jouissant d'extraterrnorialite";
Art. 7(5); that with Greac Britain, sllpra note 20, "necessary for the exercise of
the nghts of State sovereignty or for the official functions of the diplomatic or consular
rcprc\cntati\'es"; Art. 5(8). On the earlier limited SO\'iet-British Agreement of March 16, 1921
( I 14 BFSP 373). see Fenton Textile Assoc. Ltd."· Krassin, (1922) 38 T.L.R. 259 (C.A.).
:~ Those with Norway and Denmark, supra note 20.
27 E.g .. U.S.-the Netherlands, Exchange of Notes concerning Nonassertion of Sovereign
Immunity from Suit in respect of Air Transport Enterprises, June 19, 1953, 4 UST 1610,
TIAS No. 2828. 212 UNTS 249; U.S.-Italy, Agreement on the use ofltalian Ports by the N.~.
Sm1amzah, N'o\'. 23, 1964, 15 UST 2155, TIAS No. 5699, 532 UNTS 133, Art. VIII, para. 2.
2
K E.g .. ll.S.-Australia, Treaty concerning Maritime Claims and Litigation, l\farch 8, 1945,
,::, Bevans 159, Art. V; U.S.-Italy, Exchange of Notes relating to the Offshore Procurement
Program, March :H, 1954, 5 UST 2185, TIAS No. 3083, Art. 12(a). The latter is one of a
number of similar treaties dealing with "offshore procurement."
Annex 115
826 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
than dealing with a prior immunity assumed to exist, purport to state the
extent of state immunity inter partes; almost without exception these contain
extensive restrictions on immunity, including immunity from execution.
The post-1945 treaties fall into three classes: those made with the United
States, those (more numerous) with the Soviet Union, and a few to which
neither the United States nor the Soviet Union is a party.
United States Treaties. Between 1948 and 1956 the United States negotiated
14 Treaties of Friendship, Commerce and Navigation containing a provision
dealing with reciprocal immunity; 11 of these treaties came into force.
A representative example is Article XVIII(3) of the United States-Nicaraguan
Treaty of Friendship, Commerce and Navigation of January 21, 1956:211
No enterprise of either Party, including corporations, associations,
and government agencies and instrumentalities, which is publicly
owned or controlled shall, if it engages in commercial, industrial, shipping
or other business activities within the territories of the other Party,
claim or enjoy, either for itself or for its property, immunity therein
from taxation, suit, execution of judgment or other liability to which
privately owned arid controlled enterprises are subject therein.
This provision, it must be said, is less helpful than might at first appear: in
particular, it applies only to those "government agencies and instrumentalities"
which can be described as separate "enterprises." Some of the
treaties do not include the term "government agencies and instrumentalities"
and are probably even more restrictive.30 Apparently, the United
29 9 UST 449, TIAS No. 4024, 367 UNTS 3. The other ten treaties in force arc with; Italy,
Feb. 2, 1948, Art. 24(6) (TIAS No. 1965, 79 UNTS 171); Ireland, Jan. 21 . 1950, Art. 15(3)
(206 UNTS 269, 1 UST 785, TIAS No. 2155); Greece, Aug. 3, 1951, Art. 14(5) (224 UNTS
279, 5 UST 1829, TIAS No. 3057); Israel, Aug. 23, 1951, Art. 18(3) (5 UST 550, TIAS
No. 2948, 219 UNTS 237); Denmark, Oct. 1, 1951, Art. 18(3) (12 UST 908, TIAS No. 4797,
421 UNTS 105); Japan, April 2, 1953, Art. 18(2) (4 UST 2063, TIAS No. 2863); Federal
Republic of Germany, Oct. 29, 1954, Art. 18(2) (7 UST 1839, TIAS No. 3593, 273 UNTS 3);
Iran, Aug. 15, 1955, An. 11(4) (8 UST 899); the Netherlands, March 27, 1956, Art. 18(2)
(8 UST 2043, TIAS No. 3942, 285 UNTS 231), and Korea, Nov. 28, 1956, Art. 18(2) (8 UST
2217, TIAS No. 3947, 302 UNTS 281). The three unratified treaties were with Uraguay, Nov.
23, 1949, Art. 18(5) (96 Cong. Rec. 375 (1950)); Colombia, April 26, 1951, Art. 18(2) (97 Cong.
Rec. 6500 (1951)); and Haiti, March 3, 1955. Art. 18(2) (101 Cong. Rec. 8914 (1955)).
30 Only the treaties with Italy, Ireland, and Greece do not include the t,:rm. In its amicus
curiae brief in Electronic Data Systems Cury. Iran v. Social Security Organizatfoa of ilie Government
of Iran (610 F.2d 94 (2d Cir. 1979)), the State Department stated that "It is the view of the United
States that the treaty waiver [in the Iranian Treaty of 1955] does not apply tot.he property of the
Contracting States as such and of their non-commercial agencies and instrumentalities, but
that it applies only to the property of publicly owned or controlled commercial or business
enterprises of the Contracting States" (cited by J. R. Stevenson & J. Brown,:, United States Law
of Suvereip;n Immunity Relating to International Financial Transactions, in INTERN A1'10NAL FINANCIAL
LAW: LENDING, CAPITAL TRANSFERS AND INSTITUTIONS 85, 102 (R. S. Renddl ed. 1980). If this
is an accurate interpretation of the more extensive U.S. treaty provision, it shows just how
limited that provision is. But earlier U.S. decisions have taken a much more sweeping view
of the extent of the waiver in the Iranian Treaty, without considering the implications of the
term "enterprise": see, e.g., Irving Trust Co. v. Government of Iran, 85 F.R.D. 135 (E.D. La.
1980); Behring Int'! Inc. v. lmperial Iranian Air Force, 475 F.Supp. 383, 390 (D.N.J. 1979),
In the latter case the Iranian Air Force was held, without argument, to be an "enterprise," a
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 827
States discontinued the practice of inserting such clauses in 1958, "at the
request of the Attorney General because it made defense of suits against the
United States abroad more difficult."31 The extent to which the United
States had resiled from its earlier position is dear from the much more
limited clause in the (unratified) Trade Agreement with the Soviet Union
of October 18, 1972, which refers only to "private natural and legal persons
of the United States."32
Although this treaty practice affords some support for a restrictive
doctrine of immunity, including immunity from execution, that support
should not be overstated. Half of the treaties were negotiated before the
"Tate letter" of 1952, which marked the formal U.S. change of position on
the general question of immunity from jurisdiction (but not, as will be seen,
from execution). At no stage, therefore, were these provisions consistent
with the expressed U.S. view of the general law. As one commentator has
suggested, the commercial treaty provision and the Tate letter "were designed
for different purposes."33 Nor are the reasons for abandonment
of the commercial treaty provision encouraging.
Soviet Union Treaties. Rather more persuasive, and certainly more numerous,
is the group of Soviet treaties, 29 of which have been located. 34 All but
four are Trade Delegation treaties, along lines rather similar to those pre-
1945 treaties referred to already. However, closer analysis reveals three
distinct drafting models.
The first, which may be described as the "French treaty model," ·is a
development of the pre-1945 provisions. In the case of transactions not
guaranteed by the Soviet Trade Delegation in the country in question,
jurisdiction and execution are limited to the particular state trading agency,
and its property. On the other hand, in the case of guaranteed transactions,
final execution may be levied against "all State property" within the jurisdiction,
with the exception of property that is '"intended solely for the exercise
... of the political and diplomatic rights" of the Soviet Union. This
exemption is stated to be "in accordance with international practice." In all
cases, interim attachment and execution against Trade Delegation property
are excluded. 35
mo~t unlikely conclusion. A little more caution was shown in American lnt'l Group, Inc. v.
lslam1c Republic of Iran (493 F.Supp. 522, 525-26 (D.D.C. 1980)), but not much, since the court
treated the waiver as extending to Iran itself, as "inseparable" from its insurance enterprise.
On the problem of waiver of prejudgment attachment by the treaty, see infra note 252.
11 F. A. Weber, The Foreign Sovereign Immunities Act of 1976: Its Origin, Meaning and Effect,
m J YALE Sruon:s IN WORLD Puauc ORDER 1, 80 n.114 (1976). Cf. 6 M. WHITEMAN, DIGEST OF
INTERNATIONAL LAW 615 (1968).
32 67 Dr.P'T STA TE BULL. 595, Art. 6(2) () 972).
·Li Setser, The I mmw1ity Waiver for State-Controlled Business Enterprises in United Stales Commercial
Trtaflt>,, ASIL, 55 PROC. 89. 92-93, 104-05 (1961).
34 Br a search of the indexes to vols. 1-750 of the United Nations Trealy Series. The list is
<.ettainly not comprehensive.
J~ Agreements of this kind have been made with France (19.51), 221 UNTS 79; Denmark
( 1946), 8 UNTS 218: Japan (1957), 325 UNTS 35; Federal Republic of Germany (1958), 346
UNTS 71; Ghana (1961), 655 UNTS 171; Brazil (1963), 646 UNTS 277; and Belgium (1971),
Annex 115
828 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
The second may be described as the "Italian treaty model!136 In these
cases, there is usually no express reference to jurisdiction over or execution
with respect to separate state trading organizations (though the matter is
standardly covered by implication in the head treaty to which the Trade
Deleg!1tion provisions are annexed). In the case of guaranteed transactions,
execution is expressly restricted to "goods and claims outstanding to the
credit of the Trade Delegation"; thus, no general exclusion of execution
against property used for diplomatic or "sovereign" purposes is required.
In all cases, interim orders against the Trade Delegation are excluded. Interestingly,
in a few cases (all treaties with socialist bloc countries) the immunity
provisions are mutual.37
The third group,-the "United Arab Republic treaty modd," combines
elements of the first two. Express provision is made for jurisdiction and
execution pursuant to unguaranteed transactions with separate state trading
organizations, similar to that in the French treaty model. But transactions
by the relevant Soviet Trade Delegation are dealt with as in the Italian
treaty model: final execution is limited to the "goods and claims" of the
Trade Delegation, and interim orders against it are either expressly, or by
very clear implication, excluded.38
There remain various rather miscellaneous Soviet treaties. The restricted
provisions in the unratified Trade Agreement of 1972 witn the United
States have been referred to already: the Agreement covers only the "foreign
trade organizations" of the Soviet Union. 39 The 1965 Trade Representation
Protocol with Cyprus makes the usual provision for unguaranteed transactions
of separate state trading organizations, but (apart from an express
assumption of responsibility by the Soviet Union for Trade Representation
transactions) completely fails to deal with jurisdiction and execution in
respect to such transactions. 40
Of more interest are two merchant navigation agreements with the United
Kingdom. Although clauses relating to merchant shipping are common to
most trade agreements, usually no express provision for immunity from
UN No. 12657, as to which see Verhoeven, Immunity from Execution of Foreign States in Belgian
Law, IO NETH. Y.B. lNT0LL. 73, 75-76 (1979). The effect of the Protocol of June 14, 1961 with
Togo (though it is not in this form) is similar, or even more extensive, since i,: allows execution
against "all State property of the U.S.S.R. in Togo" without the customary qualification;
730 UNTS 187.
36 Agreements with: Italy (1948), 217 UNTS 181; Finland (1947), 217 VNTS 3; Bulgaria
(1948), 217 UNTS 97; Switzerland (1948), 217 UNTS 87 (though transactions with separate
state trading instrumentalities are expressly reserved); Lebanon (1954), 226 UNTS 148;
Austria (1955), 24 UNTS 289; German Democratic Republic (1957), 292 UNTS 75; People's
Republic of China (1958), 313 UNTS 135; Albania (1958), 313 UNTS 261; Democratic
People's Republic of Vietnam (1958), 356 UNTS 149; Democratic People's Republic of Korea
(1960), 399 UNTS 3.
37 Agreements with: German Democratic Republic, People's Republic of China, Albania,
Democratic People's Republic of Korea, supra note 36.
38 Agreements with: Romania (1947), 226 UNTS 79; Hungary (1947), 216 UNTS 247;
Czechoslovakia (1947), 21.7 UNTS 3; United Arab Republic (1956), 687 UNTS 221; Iraq
(1958), 328 UNTS ll8; Yemen (1963), 672 UNTS 315.
30 Supra note 32. ◄0 673 UNTS 25.
Annex 115
19811 EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 829
arrest of state-owned merchant ships is made, and no very dear implications
on the point can be drawn. These two agreements are exceptional in this
respect. Article 16 of the Treaty on Merchant Navigation of April 3, 1968
provides:
( 1) The judicial authorities of one High Contracting Party shall not
entertain any civil proceedings arising out of a claim of the master or a
member of the crew of a vessel of the other High Contracting Party
relating to wages or to a contract of service without first giving notice to
the consular officer of the Party, and shall decline to entertain the proceedings
if the consular officer objects.
(2) Without prejudice to the provisions of paragraph (1) of this
Article, the judicial and administrative authorities of one High Contracting
Party shall not, except at the request or with the consent of the
competent consular officer, exercise jurisdiction or intervene (as the
case may be) in respect of any matter occurring on board a vessel of
the other High Contracting Party, including, provided that it is justifiable
under the law of the former High Contracting Party, the detention
on the vessel of any person. These authorities may, however, exercise
any civil jurisdiction which is not excluded by the provisions of paragraph
(1).41
The very limited exclusion of local civil jurisdiction is taken much further
b)' the Protocol to the Treaty on Merchant Navigation of March 1, 1974.42
Article l of the Protocol provides for the exercise of civil jurisdiction in
matters concerning the operation of any vessel engaged in commercial
service, including carriage of passengers and cargo, "in accordance with the
normal legal procedures applicable . . . in cases of a private character."
Article 2 prohibits the seizure of state-owned ships and cargoes in execution
of any judgment or approved settlement under Article l; in return, the
defendant state "shall . . . take the necessary administra!ive measures to
give effect to such a judgment or settlement." But Article 3 provides only
that the parties ''shall take measures to minimize the possibility" that stateowned
ships ·will be arrested in civil proceedings. Since arrest in an action in
rem is part of the procedure by which the court's jurisdiction is established,
it is clear that even this rather unusual provision does not prevent the arrest
of a state commercial ship in an action in rem, though it does exclude forcible
execution of any resulting judgment against the ship so arrested. 43
Third State Treaties. There seem to be comparatively few treaties regulating
so\'ereign immunity between states other than those concluded by the Soviet
Union and the United States. Five such treaties, however, should be ref erred
-11 [ 1972] Gr. Brit. TS No. 67 (Cmnd. 5008).
•1 (1977) id. No. 104 (Cmnd. 7040) (inforce June 15, 1977).
•• The limitations on section 10 of the State Immunity Act, 1978 (UK) required by the Protocol
are effected by the State Immunity (Merchant Shipping) (U.S.S.R.) Order, 1978 (S.I.
1978. No. 1524). Somewhat similar provision is made by the USSR-Netherlands Agreement
on Commercial Shipping of May 28, 1969. discussed by Voskuil, The International Law of State
Immumty, a.1 Reflected in tlu Dutch Civil Law of Execution, IO NETH. Y.B. INT'L L. 245, 266-68
( 1979). See also the different provisions of four merchant shipping treaties referred to by
Bogu~lav~ky, Foreign State Immunity: Soviet Doctrine and Practice, id. at 167, 173-74.
Annex 115
830 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
to. An Exchange of Notes of 1958 subjects commercial transa,:tions of the
Romanian Commercial Agency in Iraq to Iraqi jurisdiction, but execution
is limited to "the goods, debts and other assets of the Commercial Agency
•directly relating to the commercial transactions concluded by it."44 This
provision seems to create a general fund of the Agency's commercial assets
for the purposes of execution, so that the Exchange of Notes i~ comparable
in effect to the United Arab Republic treaty model, the third. category of
Soviet treaties described above.
Two Czechoslovakian treaties provide for a comprehensive subjection
of state nationalized enterprises to local jurisdiction; no exprc!ss ref erencc
is made to execution.45
Much more comprehensive-probably the most explicit and extensive
bilateral treaties in this field-are several Swiss trade and payments agreements
with Eastern European countries. For example, Article 13 of the
Agreement with Czechoslovakia provides:
Sequestration of the property of the Swiss Confederation by the
Republic of Czechoslovakia or of the property of the Republic of
Czechoslovakia by the Swiss Confederation may only be ordered in relation
to claims in private law having a dose connection to the country in
which the property is located.
Such close connection shall exist in particular, where a claim is
governed by the law of the country in question, where its place of performance
is there or where it is bound up with a legal relationship which
came into being or is to be arranged in this country or fmally when a
provision exists for the local courts to exercise jurisdiction.
If a creditor directs0 a claim against a body corporate belonging to one
of the two countries, in particular against state enterprises, the central
bank, nationalized enterprises, national enterprises or enterprises engaged
in external trade, only that property owned by the body corporate
in its own right can be subjected to sequestration if it is located in
the other country and not the property of the state concerned, nor that
of its central bank or any third corporate body.46
44 405 UNTS 263 (pa,.ra. 3). The Notes further provide that separate Romanian commercial
organizations are directly and exclusively responsible for their own transactions, "in accordance
with the norms of the international Commercial Private Law" (para. 4-).
45 Poland-Czechoslovakia, Treaty of Commerce, July 4, 1947, 85 UNTS 212; JapanCzechoslovakia,
Treaty of Commerce, Dec. 15, 1959, 383 UNTS 277.
46 Treaty on Trade, Nov. 24, 1953, [1954] ROLF 745, cited by J.-F. Lalivc, Swiss Law and
Practice in Relation to Measures of Execution against the Property ef a Foreign Stale, 10 NETH. Y.B.
INT'L L. 153, 164 (1979). This agreement was maintained in force by a further agreement of
May 7, 1971, [1971] ROLF 855, Art. I. Similar agreements were made with Poland Uunc 25,
1949, [1949] id. at 832), Hungary Uune 27, 1950, [1950] id. at 612) and Romania (Aug. 3,
1951, [1951] id. at 827). These have been replaced by new agreements to somewhat similar
effect. In one case the longer formula of the earlier treaties is maintained (Hungary, Oct. 30,
1973, [1973] id. at 2661, Protocol, Art. 5), but in the three others a more abbreviated form,
similar to para. 3 of Art. 13 of the Czechoslovakian Treaty, is used; Bulgaria, Nov, 23, 1972,
id. at 598, Art. 9; Romania, Dec. 13, 1972,id. at 609, Exchange of Notes; Poland.June 25, 1973,
id. at 1790, Art. 4. In an official comment,.the Swiss authorities state that 1hese clauses
have their origins in the acts of nationalization which occurred in the Eastern states af tcr
the Second World War and triggered numerous seizures, in Switzerland, of property
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 831
Conclusions41
Caution is needed in drawing from this treaty practice implications for
the general law. Treaties such as these may simply constitute waivers of an
immunity to which the state would otherwise be entitled, rather than a statement
of the position under that law. On the other hand, the bulk of the treaty
practice is expressed in terms not of waiver but of ambit; taken as a whole,
it provides little or no support for the view that international law requires a
general immunity from execution of judgments against foreign state property.
It is ironic that the Soviet Union, formerly a supporter of absolute immunity,
should provide more convincing support for a restrictive position
(especially in relation to execution) than the fluctuating United States treaty
practice. In particular, the references in the pre-1945 treaties48 and in six
of the later Trade Delegation treaties49 to a partial immunity from execution
of property, which, "according to the general rules of international law"
or "in accordance with international practice," is "required for the exercise
of sovereign rights or . . . intended for the use of diplomatic or consular
representatives in their official capacity," indicate advertence to the general
international law position (in other words, opinio juris); such advertence
cannot be inferred from the U.S. treaties.
ATTEMPTS AT CODIFICATION OF SOVEREIGN IMMUNITY
Sovereign immunity has been the subject of a number of official and
unofficial attempts at codification. Draft Convention III of the Harvard
Research in International Law provides for local orders or judgments, in
matters where the defendant state is not immune from jurisdiction, to be
enforced against immovable state property (other than diplomatic or consular
property), or property used in connection with any "industrial, commercial,
financial or other business enterprise" of the state in which private
persons may engage.50 Separate corporate instrumentalities controlled by
the state are not entitled even to this degree of immunity. 51 Although these
belonging to foreign states, particularly of state-owned enterprises. These clauses
accord with the practice of the Federal Court concerning the seizure of foreign state
property . . . .
But this does not advert to the differences between the treaty provisions of 1972-1973.
~7 This survey has dealt only with treaties explicitly regulating state immunity. Many general
provisions in commercial and legal cooperation treaties are capable of being interpreted
as having this effect: e.g. , France-Cameroon, Legal Convention, Nov. 13, I 960, 741 UNTS I I 9,
Art. :35 (execution "in civil and commercial matters"). The same may be true of mostfavored-
nation clauses. Whether such provisions have this effect may well depend on the general
law, the object of inquiry here.
~• Supm notes 20-22 and 25.
~v Supra note 35.
w Draft Convention III, Competence of Courts in Regard to Foreign States, 26 A JIL Supp.
151, Art. 23 (1932). Puniti,·e orders may not be so enforced (ibid.). In addition, proceedings
m rc:m may be instituted against state propert}' where the state is not immune in respect of the
substantive claim; Art. 13.
~
1 Art. 26, referring to "such juristic persons as corporations or associations for profit
~eparately organized by or under the authority of another State, regardless of the nature and
extent of governmental interest therein or control thereof."
Annex 115
832 THE AMERICAN JOURNAL OF IN;ERNATIONAL LAW [Vol. 75
proposals were supported by an extensive citation of authority,5z the authorities
were then rather inconclusive, and it may be doubted to what extent
Draft Convention III reflected the general law at the time.
The Institut de Droit International discussed state immunity at its 1954
session, and resolved that attachment of or execution against foreign state
property (where the state is not immune from substantive jurisdiction) is
prohibited if the property is used for "governmental" purposes distinct
from any economic undertaking. 53
The American Law Institute's Restatement of Foreign Relations Law suggests
that state "property whose primary use is connected with" commercial
activity outside the territory of the state "may be attached for the purpose of
initiating such a proceeding, and may be subject to further measures of
enforcement where it is determined that the claimant is entitled to the
property."54 This is a more restrictive formulation of liability to execution
(as distinct from attachment ad fundandam jurisdictionem); the Institute
left open the question of the legitimacy of execution generally against state
commercial property, although it referred to some of the case law favoring
the broader view. 55
The International Law Commission has recently taken up the question of
"Jurisdictional Immunities of States and their Property," which has been on
its provisional agenda since 1949. However, its initial approach, at least,
has been exploratory and cautious to a degree. In particular, for the time
being, it has set aside the question of immunity from execution.:iO
MUNICIPAL STATUTE LAW
The most important legislation in this field (and the only kgislation that
articulates a general position on the permissibility of execution against foreign
state property) is the United States Foreign Sovereign Immunities Act,
1976, and the UK State Immunity Act, 1978. These Acts, and. in particular
their provisions for execution and attachment, have been fairly extensively
discussed elsewhere; the purpose of this account is to analyze their contribution
to the general law of immunity, rather than once more to describe
their provisions in detail.
52 26 AJIL Supp., supra note 50, at 689-714.
53 46 ANNUAIRE DE L'lNSTITUT DE DROIT INT'L 301-02, Art. 5 (1954). For debate, sec
id. at 200-20. The five resolutions adopted by the lnstitut are by no means •!Xplicit: proceed•
ings against foreign states and instrumentalities are allowed "whenever the grounds of the
action do not involve an act of State" (Art. 3; cf. Art. 1), but "act of State" is nowhere defined.
For the travaux, see the report by Lemonon, 44 id. at 5-136 (1952). Discussions in the
International Law Association have so far been inconclusive; see ILA, REPORT oF THE 45TH
CONFERENCE, LUCERNE 210-32 (1953). The matter is again on the Assc,ciation's agenda.
See also the views of the Afro-Asian Legal Consultative Committee (1960), in M. WHITEMAN,
supra note 31, at 572-74.
S4 RESTATEMENT (2D) OF FOREIGN RELATIONS LAW OF THE UNITED STATES §§68-69 (1965).
55 Id. at 209. For a review of authority, see id. at 215-18.
sG Report of the International Law Commission on its 31st session, 34 UN GAOR, Supp.
(No. 10) 513, UN Doc. Af34/10 (1979). Cf. Reuter's comments during the debate; (1979] I Y.B.
INT'L COMM'N 211.
Annex 115
1981) EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 833
The Foreign Sovereign Immunities Act provides certain rather extensive
exceptions to the immunity from attachment and execution of property of a
foreign state.57 The Act proclaims Congress's view that "[u]nder international
law, states are not immune from the jurisdiction of foreign courts
insofar as their commercial activities are concerned, and their commercial
property may be levied upon for the satisfaction of judgments rendered
against them in connection with their commercial activities."58 There are,
however, differences in the treatment of property of the foreign state itself,
as distinct from its agencies or instrumentalities. Only state property
actually "used for the commercial activity upon which the claim is based"
is liable to execution, whereas all property of a foreign state agency or
instrumentality is liable to execution in respect of a claim to which the agency
or instrumentality is not immune.59
The position under the UK State Immunity Act is somewhat broader.
Section 13 of the Act provides in part:
(2) Subject to subsection (3) and (4) below-
(a) relief shall not be given against a State by way of injunction or
order for specific performance or for the recovery of land or other
property; and
(b) the property of a State shall not be subject to any process for the
enforcement of a judgment or arbitration award or, in an action in rem,
for its arrest, detention or sale.
( 4) Subsection (2)( b) above does not prevent the issue of any process
in respect of property which is for the time being in use or intended for
use for commercial purposes; but, in a case not falling within section 10
above, this subsection applies to property of a State party to the European
Convention on State Immunity only if--
( a) the process is for enforcing a judgment which is final within the
meaning of section 18( l)(b) below and the State has made a declaration
under Article 24 of the Convention; or
( b) the process is for enforcing an arbitration award. 60
57 Sections 1609-1611 of the Act (28 U.S.C. §§1330, 1602-1611).
$"28 u.s.c. §1602.
59 Section 1610(a)(2) and (b)(2); and see the express exclusions from execution in §1611. On
the execution provisions of the U.S. Act, see Delaume, Public Debt and Sovereign Immunity: The
Foreig11 Sovereign Immunities Act of 1976, 71 AJIL 399, 409- 13 (1977); del Bianco,Execution and
Attachmtnt under the Foreign Sovereign Immunities Act of 1976, in 5 YALE STUDIES IN WoRLD PuBUC
ORDER 109-46 (1978); Weber, supra note 31, at 20-26, 43-45; R. von Mehren, The Foreign
Sot1ere1gn Immunities Act of 1976, 17 CoLUM.J. TRANSNAT'L L. 33, 61-65 ( 1978). And cf. Note, The
Probltm of Execution Uniformity under the Foreign Sovereign Immunities Act of 1976 and Federal Rule of
C1vzl Procedure 69, 12 VALPARAISO U.L.R. 569 (1978). For the Act's exclusion of prejudgment
attachment, i,ee infra note 252.
Ml Section 13(3) of the Act (c. 33) provides for waiver of immunity from execution. Separate
instrumentalities are onl>· immune in respect of acts "done . . . in the exercise of sovereign
authority" where the state itself would also be immune; §14(2). In that case, the execution
provisions of section 13 apply. It follows that, in respect of acts done other than "in the exercise
of sovereign authority,'" none of the property of separate instrumentalities is entitled
to immunity, irrespecti\'e of the purpose for which it is held. On the execution provisions of the
1978 Act, see Delaume, TM State Immunity Act of the United Kingdom, 73 AJIL 185, 194-99
( 1979); R. Higgins, Execution of State Property: United Kingdom Practice, 10 NETH. Y.B. lNT'L L.
35, 47-52 (1979). For the position of central banks, see infra, text to notes 234-38.
Annex 115
834 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
Originally, the State Immunity Bill provided for a general immunity
from execution except in actions in rem in respect of commercial ships and
their cargoes. This was in line with Article 23 of the European Convention, 61
but was stringently criticized in the House of Lords by the opposition spokesman
and by Lords Denning and Wilberforce.62 The Lord Chancellor,
def ending the immunity, stated: "It is . . . generally accepted that States
do not take coercive action against each other or their propert}. It is not a
good thing; it is something to be discouraged. The U.S. Act contains . . .
many safeguards and only allows execution in limited circumstances.1163
But in response to criticism, amendments were introduced that substantially
extended the restrictions to both jurisdictional immunity and immunity
from execution. 64 The result was to allow execution against state commercial
property to satisfy any final judgment in respect of which the state was not
immune.65 There is no requirement (comparable to that in the U.S. Act)
that the claim arise out of the use of that property. In the House of Commons,
the Solicitor-General stated that the new clause 13 "remov«:is immunity
from execution to the full extent to which we believe it is permissible to do so
under current international law and practice."66 Clearly enough, the Government's
position on execution changed markedly during the debate. In
respect of non parties to the European Convention, the Act now goes further
than the United States Act of 1976.67
In a number of European countries, enforcement against foreign state
property is prohibited by statute except with the consent of the E;overnment
of the forum. The implication is that execution is not prohibited in all
cases, an implication that has, on the whole, been accepted and. developed
by the courts of those countries.68
MUNICIPAL CASE LAW
The problem of execution against foreign state property has been considered
in a large number of decisions of municipal courts, panicularly in
61 Supra, text to note 8.
62 388 PARL. DEB., H.L. (5th scr.), cols. 61 (Baroness Elles), 67 (Ld. Wilberforce), 70-74
(Ld. Denning) (1978).
63 Id. at col. 76 (Ld. Elwyn-Jones L.C.). 64 389 id., cols. 1501-11, 1520-30 (1978).
Gs But parties to the European Convention are generally excluded, pursuant to its terms;
§ 13( 4)(a). For recognition in the United Kingdom of Convention judgments and settlements,
see §§18 and 19.
66 949 PARL. DEB., H.C..: (5th ser.), cols. 410-1 I (Archer) ( 1978).
67 In pcrsonam enforcement is excluded, as are measures of specific enforcem1mt; § 13(1) and
(2). For interim enforcement, see infra, text to notes 244-52.
68 See, e.g., the Italian Law No. 1263,July 15, 1926 (infra note 127). Cf the Greek, Swiss, and
Soviet legislation cited by S. SucHARITKUL, STATE IMMUNITIES AND TRADING ACTIVlTIE& IN
INTERNATIONAL LA w 349 ( 1959). On the Swiss wartime legislation, see also l Rt:PERTomE SUISSE
DE DROIT INTERNATIONAL PUBLIC 354-60, 381-87 (1975). On the Greek law, see the decision of
the Athens Court of Appeal, No. 1690 of 1949, 3 REV. HELLENIQUE DE DROIT INT'L33 l (1950).
For the Yugoslav Law on Enforcement Procedure, 1978, Art. 13, see Varady,Jmmunity of State
Property from Execution in the Yugoslav Legal System, lO NETH. Y.B. INT0L L. 85, 89, 94-95 ( 1979).
For the Soviet law (absolute immunity unless the Soviet state authorities order otherwise on
grounds of reciprocity), see Boguslavsky,supra note 43, at 170-71.
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 835
Western Europe. In a sense, these decisions constitute the primary body of
authority on the question; on the other hand, their impact on the general
international law position raises rather acute difficulties. Before these are
discussed, a succinct account of the case law is necessary.
European Case Law
In many European jurisdictions, the assumption in the 19th- and early
20th-century cases was that international law required a general immunity
from execution against foreign state property,69 no matter what the rule
was on substantive jurisdiction. This was the position consistently taken by
the French courts, from a decision of the Cour de Cassation in 1849, throughout
the 19th century, and (with less consistency) until the 1960's.70 In Germany,
the Royal (Prussian) Court for the Determination of Jurisdictional
Conflicts, in Von H ellfeld v. Russian Government ( 1910), agreed: in the absence
of submission to the jurisdiction, execution was excluded except in respect
of claims to real property within the jurisdiction.71 The prewar Czechoslovakian
Supreme Court upheld execution against local real property
owned by foreign states, but in terms that did not indicate any broader
exception. 72 The Italian Corte di Cassazione, in 1935, appears to have acted
on the view that, while immunity from jurisdiction was restricted, immunity
from execution should be absolute. 73 The Brussels Court of Appeal, in 1933,
held that any form of attachment of state property, final or interim, was
excluded; 1-1 so did the Vienna District Court of Appeal in 1952.15 The Court
of Appeal of Amsterdam, admittedly in a wartime case (1942), argued that
the impossibility of execution against foreign states supported their general
immunity from jurisdiction. 76 And, again in wartime, two decisions of the
Swedish Supreme Court involving foreign state-owned ships seem to have
•
9 With the possible exception of state-owned commercial ships; cf. the decisions of Sir
Robert Phillimore in The Charkieh, (1879) L.R. 4 A. & E. 59, and The Parlement Belge, (1879)
4 P.D. 129. The latter decision was reversed by the Court of Appeal ((1880) 5 P.D. 197), but on
the ground that the ship there was public property of the state destined to public use.
7
" For the earlier French cases, see 9 ANN. Die. 242 (1942). Twentieth-century cases supporting
a general immunit}' from execution include: Spanish State & Bank of Spain v. Banco de
Bilbao (1937). [1938) S. Jur. II 23, 8 id. at 229 (Rouen, C.A.) (1941); Officina <lei Aceite v.
Domenech ( 1938). [ 1939) D.P. II 65, 70, 9 id. at 239 (Aix, C.A.); Socifros v. U.S.S.R. (1938),
[ 1939) D.P. II 65, 66, id. at 236 (Aix, C.A.); and Aget v. French State & Spanish State (1939),
Gazette du Palab,June29, 1939, I I id. at 144 (Perpignan, Civ. Trib.) (1947). Tothecontrary,cf.
the rather strange (wartime) decision of the Ci\'il Tribunal of the Seine, Russian Trade
Delegation\'. Societc Fran\;aise Industrielle et Commerciale des Petrolcs (Groupe l\lalopolska)
(1940), [1940] D. heh. 68, 9 id. at 245.
71 5 AJIL 490(1911).
7' Enforcement of International Awards (Czechoslo\'akia) Case (1928), 4 ANN. DIG. 174
( 193 l ); alw reporti>d in 64 J. DROIT J:.n'L 394 ( 1937).
7 ' Russian Trade Delegation in Italy v. de Castro (1935), [1935] Foro It. I 240, 7 ANN. DIG.
179 ( 19-10).
71 Brasseur ct Cic v. Republic of Greece (1933), 59 J. DR0IT INT'L 1088 (1932), 6 ANN.
DIG, 164 (1938). For other Belgian decisions to similar effect, see Verhoeven, supra note 35,
at 76-77.
1~ Garnishee Proceedings against Occupant (Austria) Case (1952), 19 ILR 211 (1957).
7" Weber\'. U.S.S.R. (1942), 11 ANN. Dre. 140 (1947).
Annex 115
836 THE AMERICAN ]OURNAL OF INTERNATIONAL LAW [Vol. 75
assumed that immunity from execution should be quite general (unless
governed by treaty). 77
Since 1918, this relatively constant jurisprudence has gradually been
eroded. It seems that now no European jurisdiction dearly adheres to
absolute immunity from execution.
The Swiss Cases. 78 Swiss courts, in particular the Federal Tribunal, were
the first to adopt a restrictive rule of immunity from execution: the doctrine
evolved in a series of cases after 1918 not only is interesting in itself, as a
reconciliation of the conflicting considerations, but also set:ms to have
strongly influenced the terms of the Swiss treaties, which have been referred
to already.
The Dreyfus case (1918) involved the provisional sequestration.by Swiss
bondholders of assets of the Austrian Minister of Finance, against the repayment
of unredeemed Austrian bonds, which was due to be made in
Switzerland in Swiss francs. The Federal Tribunal upheld the sequestration
on the basis that no unqualified principle of immunity from jurisdiction
was generally admitted; therefore, with respect to obligations of a private
law nature that were to be performed in Switzerland, "the State may be sued
(and submitted to provisional measures such as sequestration) before Swiss
courts at least as the forum most closely connected with the contract, if not
also as a result of submission to the jurisdiction."79 Here the suggestion of
waiver or election, and the assumption that enforcement is correlative to
jurisdiction, combined to bring about an extension of local competence.
The suggestion that Austria would not be immune from final execution if it
defaulted on its bonds was qualified only by the requirement of a close
connection with the jurisdiction.
These elements have been affirmed, and more clearly articulated, in a
series of decisions of the Federal Tribunal (all but one involving foreign
state bonds). In Greek Republic v. Walder, the Federal Tribunal refused to
uphold the Greek Government's submission of complete immunity from
execution, but distinguished Dreyfus on the ground that there was no sufficient
jurisdictional nexus here. 80 In Sogeifi,n S.A. v. State ef Yugoslavia, sequestration
orders against Yugoslavian bank credits were upheld as having the
force of res judicata, since the defendant state had failed to appeal the orders
within the time allowed by Swiss law. The rule prohibiting execution against
state property was not so peremptory or absolute as to rendt·r the seizure
void ab initio: "according to the practice of the Swiss Federal Tribunal the
immunity of foreign States is not-of this absolute nature where public loans
are concerned."81 Moreover, the Government's failure to appeal the orders
within the time allowed amounted to a form of submission.
77 The Rigmor (1942), 37 AJIL 141 (1943), 10 ANN. DIC. 240 (1945); Russiall Trade Delega•
tion v. Carlbom (No. 2) (1944), 12 id. at l 12 (1949). And see E. W. ALLEN, THE POSITION OF
FOREIGN STATES BEFORE NATIONAL COURTS 47-49 (1933).
18 See Lalive, supra note 46, at 153-62.
79 Austrian Minister of Finances v. Dreyfus, 44 ATF I 49 (1918), in l Ri.PERTOIRE su1ssE
DE DROIT INTERNATIONAL PUBLIC 352, 353 (1975).
80 (1930), 58 BGE I 237, 5 ANN. D1G. 131 (1935).
81 (1938), 61 Semjud. 327 (1939), 10 ANN. DIG. 232, 234 (1945).
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 837
This jurisprudence82 was considered and affirmed in Kingdom cf Greece v.
Julius Biir & Co. 83 (on facts very similar to Walder's case), in United Arab
Republic v. Dame X, 84 where precise designation of funds to a public purpose
was required to secure immunity from attachment of those funds, and in
Italian MinisterforStateRailwaysv. BetaHoldingsS.A.,85 where Italian Government
shares in a company established by intergovernmental arrangement
to replenish rolling stock in European state railways were held immune
from seizure, since they were "administrative assets" "set aside for a public
function assumed by the Italian State."86 Finally, in Banque Centrale de la
Republique de Turquie c. Weston Cie. de Finance et d'Investissement S.A.,87 assets
of the Turkish Central Bank in Zurich were seized in another bond repayment
claim. The Federal Tribunal upheld the sequestrations, in accordance
with its by now well-established doctrine, and without regard to the purposes
to which the Central Bank assets were being, or intended to be, put.
To summarize, Swiss doctrine allows the attachment of assets of a foreign
state or foreign state instrumentality, 88 in respect of claims of a private law
nature. where those claims have a sufficiently close connection with the
jurisdiction (for example, where payment is required by the contract to be
made in Switzerland), and provided that the assets in question have not been
definitively set aside for diplomatic, consular, or other "public" purposes.
The (West) German Cases. 89 Although the Royal Court for the Determination
of Judicial Conflicts had adhered to absolute immunity from jurisdiction
in 1910,90 its position was modified to some extent by a willingness to find a
waiver of that immunity by the setting aside in advance of some fund out
of which claims were to be satisfied. Thus, the same court, in the Turkish
Purchases Commission case, 91 held that, while contractual submission to the
jurisdiction did not entail submission to execution,
in individual cases a foreign State or its representative may be deemed
by its conduct to have submitted to the specific jurisdiction of German
courts even in the matter of enforcement. This took place in the present
case. . . . The only purpose of the banking account . . . was to
satisfy the claims of German private firms. This being so, the Commission
must be held as having impliedly agreed to measures of execution
by German courts in regard to the banking account opened by it.92
•i Applied by lower couns in two decisions reported as State Immunity (Switzerland) (No. 1)
Ca~e (1937), 37 BIZR 319 ( 1938), IO ANN. D1G. 230 (cf. Bid. at 246(1941)), and State Immunity
(S\•,itzerland) (No. 2) Case (1939-40), 39 BIZR 318 (1940), id. at 235, both decisions of
the Superior Court of Zurich. The latter decision was affirmed by the Federal Tribunal.
kJ (1956), 82 ATF I 75 (1956), 23 ILR 195 (1960).
•i (1960), summarized in 55 AJIL 167 (1961).
~~ An unreported decision of 1966, now in 31 ANNUAIRE SuJSSE DE DROIT INT'L 219 (1975).
M Id. at 225.
k
7 (1978), 104 ATF Ia 367, 35 id. at 143 (1979).
k ~ There is no clear suggestion in the cases of a distinction between state and instrumentality
asSt'tS, but cf Lali\'e, supra note 46, at 156.
•~ Generali; see Seidl-Hohenveldern, State lmmuniJy: Federal Republic of Gennany, in 10
NETH. Y.B. INT'L L. 55-72 (1979), with references to the earlier German literature.
~
0 Von Hellfeld v. Russian Government, 5 AJIL 490 (191I).
~1 (1920). [1921JJ.W. 773, I ANN. D1G. 114 (1932).
"'2 l ANN. DIG. at 115. And see The Ice King (1921), id. at 150 (Reichsgericht).
Annex 115
838 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
These earlier cases have been displaced, in West Germany, by decisions
applying, though with careful qualifications, the restrictive rule of immunity
to execution as well as jurisdiction. The Landgericht of Stuttgart, in a
decision of September 21, 1971, held that there could be no execution
against state funds used for public purposes, and presumed that a general
bank account in the name of the state was so used. 93 However, the assumption
was that, in the absence of some element of public purpose, execution
against the funds would have been ·possible. More cavalierly, the District
Court of Frankfurt, in a case concerning the Central Bank of Nigeria,
treated immunity from jurisdiction and execution as strictly correlative.
The court said:
The restrictive immunity of the foreign state which appli<:s to a suit on a
debt in Germany applies also to the petition for a preliminary attachment
which is sought by the petitioner .... If exercise of jurisdiction
is permissible, attachment on the local assets of a foreign state is also admissible.
Only those assets which are dedicated to the public service of the state
are exempted from forcible attachment and execution. J:n the present
case, petitioner's attachment seeks to reach respondent's cash and
securities accounts, i.e., assets which are not "in the public service" of
the respondent. . . . A possible use of these assets in the future to
finance state business cannot serve to establish their present immunity. 04
The potential conflict here has been resolved by the decision of the
Federal Constitutional Court of December 13, 1977,95 which is by far the
most comprehensive and authoritative discussion of the problem in the case
law. The case involved the attempted seizure, in execution of a default
j~dgment against the Republic of the Philippines for unpaid rent, of fun9s
in two bank accounts in the name of the Philippine Embassy. The accounts
were used at least partly for general Embassy purposes. The Court held that
it was bound by Article 25 of the West German Constitution to apply general
international law in deciding the question. After a very full examination
of the authorities, it concluded unanimously that
there is no sufficiently general practice, supported by the necessary
opinio juris, to establish a general rule of customary international law
prohibiting the State of the forum absolutely from compulsory execution
against the assets of a foreign State situated in the State of the
forum. A number of States, in their judgments, legislation or treaty
practice, do not exclude security and execution measures against
foreign States, at least not when such measures are bas,~d upon activities
of the foreign State which areiure gestionis, and when such measures
are taken against assets which do not serve governm<;mtal purposes.
93 No. 129 in Dn: DEUTSCHE RECHTSI'RECHUNG AUF DEM GEBIETE DES lNTERNATIONALEN
PRJVATRECHTS IMjAHRE 1971. at 389-93 (1973).
94 Non-resident Petitioner v. Central Bank of Nigeria (Decision of Dec. 2, 1975), 16 ILM 501,
503 (1977) (emphasis supplied).
9
• In re Republic of the Philippines, 46 BVerfGE 342 (1977), reprinted in 38 ZEITSCHRIIT FUR
AUSLANDISCHES OFFENTLICHES RECHT UND VoLKERRECHT (ZAoRV) 242 (1978); for a summary,
see 73 AJIL 295, 305, 703 (1979).
Annex 115
1981) EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 839
The attitudes of these States are of such weight that there can be no
question of a general practice pursuant to international law which
prohibits compulsory execution, whatever the requirement of generality
of a practice before it can become the basis of a rule of customary
international law. 96
Howe,,er, this general conclusion was subject to specific exceptions recognized
by international law: in particular, property used for diplomatic
purposes was immune, and the court could not investigate, without impermissible
interference in the domestic affairs of the state and its Embassy,
what proportion of the bank accounts was used for nonimmune purposes.97
The attempted attachment of the funds was accordingly void.
The French Cases. 96 \Vith one notable, but controversial, exception, 99
French case law before 1945 clearly favored a general immunity from
execution, even in cases where there was no immunity from jurisdiction.100
Postwar decisions seem to have modified this position substantially, but for
a number of reasons the present law is by no means clear.
In Procurtur-General c. Vestwig, 101 the Norwegian Government, acting as
··agent" for a Norwegian citizen, Robertson, had placed money belonging
Lo Robertson in a French bank account held in its own name. Apparently,
this was done at the request of Robertson, and of a co-contracting French
companr, in order to safeguard the funds in view of the German occupation
of Norway. A number of Robertson's creditors sought to attach the funds,
judgment was given, but the Norwegian Government claimed immunity
from final execution. The Cour de Cassation held that, in the circumstances,
Robertson remained entitled to the funds, which meant that their seizure
was not directed against the state. The state, in holding the funds, was acting
only as a private law agent, "sans recourir a l'exercise d'une parcelle de
puissance publique."102 Execution against the fund was accordingly upheld.
!00> 38 ZArJRV at 275.
v> Id. at 279-83. Cf. at p. 282:
for lhe authorilies executing a judgment lo insisl that without its consent the parent State
,-.hould disclose the existence of the past, present or future purposes of assets in such an
acwunc would constirute an imen·ention in matters which are exclusively the domain of
thr patent State, contrary to international law.
:\urhcntication of rhe diplomatic purposes of the account by the defendant state would be
c ondmi,·e ( ibid.). For funher comment, see infra note 229.
"s,,,. ,dHJ Paulsson, Sovereign Immunityfrom Execution in France, 11 lNT'L LAW. 673 (1977).
•• U.S.S.R v. Association France Export ( 1929), [1930] S.Jur. I 49, 5 ANN. Die. 18 (1935), 56
J. D,wn ll'•.T'L I 042 ( 1929), where the Gourde Cassation held that the Soviet Trade Delegation's
Jc In Ilic:~ were only "acts of commerce entirely distinct from the principle of State sovereignty,"
and allowed an interim attachment against the delegation's assets.
rou Sn• Gtscs cited at note 70supra. On the earlier case law, see also 3 REPERTOIRE OE LA PRATl<~UE
tRA1'.<,,\l',E EN '-1\TllRE DE DROJT INTERN.\TlONAL PUBLIC 191,206, 210-12, 235 (1965).
1111 (l 946), 73-76 J. DRO!T lNT.L l (l 952).
M Id. at 3. Cf. the not dissimilar issue at stake (in the context of domestic state immunity) in
Bank \oor Sheepvaart en Handel"· Administrator of Hungarian Property, [1954] A.C. 584
(which went the other way).
Annex 115
840 THE AMERICAN JOURNAL OF INTERNATIONAL I.AW [Vol. 75
Although decided on very special facts, Procureur-General c. Vestwig
showed at least some tendency to restrict immunity from eKecution.103
But lower courts continued to act on the basis of a "privilege d'immunite
d'execution qui est absolu,"104 despite criticism on the part of commentators.
105 In two cases in 1969 and 1971, the Cour de Cassation effectively,
though cryptically, reopened the question. Englander c. Statni Banka CeslwsM
lovenka involved final execution against funds held by the Ba.nque Commerciale
pour !'Europe du Nord in the name of the Czechoslovakian State
Bank. The Court of Appeal granted immunity, basing itself on the risk that
the attachment might affect assets used for state (as distinct from State Bank)
purposes.106 The Cour de Cassation quashed the decision: the mere risk of
detriment to state property was not sufficient to justify conferring immunity.
Further inquiry was necessary, and the case was remitted to a lower court.107
In rather sharp contrast, in Clerget c. Representation Commerciale de la
·Republi,que democratilJ.ue du Vietnam, 108 the plaintiff attempted to execute a
default judgment for salary and damages under a contract of employment
as director of mines, by attaching funds held by the Banque Commerciale
pour les Pays de l'Europe du Nord for the account of the Democratic Republic
of Vietnam and its Foreign Trade Bank. The Court agreed that
immunity from execution, as a matter of "comity," was not Ctf a general or
absolute character, since the execution had to be examined by reference to
the nature of the assets sought to be seized, and could be justified if no
direct impact on the "diplomatic activities" of the defendant state was
established. It followed that, in failing to investigate whether the assets were
of commercial origin, the lower court had not adequately justified its deci-
103 The Cour de Cassation has been criticized for allowing execution again-;t a general govern•
mental account; even if the government was acting as Robertson's agent, the funds were not
segregated. See Castel, Immunity of a Foreign State from Execution: French Pmctice, 46 AJIL 520,
524-25 (1952). The criticism does not seem warranted. The Court stressed that the money
was held in a special account "au profit de Robertson" pursuant to :;pecific agreements
with creditors to this effect. At least, the funds seem to have been distin-:tly traceable.
104 Rossignol c. Etat Tchecoslovaque (1949), 73-76 J. DROlT INT'L 4, 5 (1952) (where the
Tribunal Civil de la Seine held that immunity from execution extended to real property within
the jurisdiction, the subject of the action, even though it was used for private law purposes):
Soc. Bauer-Marchal et Cie. c. Ministre de Finances de Turquie (1965), 54 'REv. CRITIQUE Dao1T
lNT'L PRIVE 565 (1965) (where the Court of Appeal of Rouen held the Turkish Minister of
Finances immune from interim and final attachment of funds in an action on Ottoman
bonds; see the critical note by Y.L., id. at 568).
10~ In Repu.blique sociale fidirale de Yugoslavie c. Societe europeenne <l'eludes el d'enlreprises
( 1971) (98 J. DaotT lNT'L 131 (1971)), the Tribunal de Grande Instance de Paris, acting e:< parle,
pointed out that waiver of immunity from jurisdiction did not entail waiver of immunity from
execution, but granted exequatur to an arbitral award on the basis that this was merely a preliminary
to execution, not execution itself (at pp. 132-33). The decision was affirmed on
appeal (Paris, Courd'appel, 1975) {103id. at 136 (1976)), but overturn(d on other grounds by
the Cour de Cassation (June 14, 1977) (105 id. at 864 (1978)). Neither court referred to the
immunity from execution point.
106 (1966), 93 j. DROIT lNT'L 846 (1966), 47 ILR 157 (1974).
101 (1969), 96 J. Daorr lNT'L 923 (1969) (but see Kahn's criticism, id. at 924-27).
108 (1971), 99 id. at 267 (1972), aff'g the Paris Court of Appeal (1969), 74 REV. GENERAL£
DROlT lNT'L PUBLIC 522 (1970), 52 ILR 310 (1979).
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 841
sion. Nonetheless, the Cour de Cassation upheld the lower court's decision,
on the ground that the funds could not be attached, even to enforce payment
of a private law obligation, since "their origin and their destination" had
not been determined.
The two decisions, apparently contradictory, are by no means easy to
interpret. In particular, in Clerget the Cour de Cassation, while criticizing
the lower court for failing to investigate the origin and destination of the
assets, seems to have upheld the plea of immunity for want of just such information.
It has been suggested that the cases are distinguishable because
assets of a separate instrumentality (such as Statni Banka Ceskoslovenka)
wiII be presumed not to be immune as in use for public purposes unless the
contrary is shown; whereas the reverse presumption applies to assets of the
state itself.109 But on this view, Clerget was deprived (as the Cour de Cassation
held, wrongfully) of any opportunity to adduce such proof. It may be
that in the circumstances, the Court was prepared to hold that no such proof
could have been forthcoming. But an alternative interpretation might be
that what was required was proof that the assets were set aside for use by the
Vietnam Foreign Trade Bank; such proof not being forthcoming, it was to be
presumed that the assets were held by the state itself and were thus absolutely
immune. 11° Clearly enough, whether modern French law adheres to absolute
immunity for state, as distinct from state instrumentality, assets, depends
on which view is taken. 111
The only subsequent decision of the Cour de Cassation, though supporting
the position taken in Englander with regard to separate state enterprises,
does little to settle this central question. In Caisse algerienne d' assurance
t1ieillesse des non-salaries c. Caisse nationale des barreaux fran<;.ais, 112 an Algerian
pension fund (CA VN OS), which had taken over the rights and liabilities of a
preindependence private fund (CBA), was sued by a French fund subrogated
to the rights of French contributors to the preindependence fund.
Its assets having been attached, the Algerian fund pleaded immunity from
execution on the ground that its functions were of a public service character.
The Cour de Cassation upheld the lower court: it found that the funds
at the disposal of CAVNOS were distinct from those of the Algerian state
and concluded that CA VNOS was not entitled to immunity.
1"" P. Lagarde, cited by Paulsson, supra note 98, at 677.
11
" A third possibility, suggested by Bourel (67 REV. CRITIQUE DROIT INT'L PRIVE 534, 538
( 1978)), i~ that the Court applied a "practical disturbance" rule, according immunity on the
hasi~ that the attachment would seriously affect the foreign state and thus endanger the forum
~late'!. rdations with it. It is difficult to see how a court could judge such matters, or why
a principle of immunity should depend on the susceptibility of the particular defendant. For
rejection of a somewhat similar argument, see the Philippines decision of the Federal Consti1utional
Court, 38 ZAoRV at 284.
111 The decision of the Tribunal de Grande Instance of Paris in Braden Copper Co. c. Graupemmt
d'lmportatio11 des Mitaux (1972, 12 ILM 182 (1973)) does not help to clarify the problem.
The court allowed an interim attachment of funds of the Chilean Copper Corp. (a separate state
m~trumentality). but reser\'ed the question of final execution (id. at 189). See also Paulsson,
iupra note 98, at 677-79.
m Decision of Dec. 7, I 977, 67 REV. CRITIQUE DROIT INT'L PRIVE 532 ( 1978).
Annex 115
842 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
The decision has been criticized for failing to consider whether CBA's
assets, in the hands of CAVNOS, were distinguishable from the latter's
general assets devoted to the public purpose of payment of social security
benefits.113 The point, however, was expressly referre~ to by the Court in its
outline of the arguments, and cannot be assumed to have been overlooked.
Consistently with Englander, the Court seems to have held that property of
separate instrumentalities not exclusively engaged in public functions is presumed
not to be immune from seizure.114 If so, this leaves the question of
central government immunity from execution very much open.
Two later cases in lower courts, both ex parte decisions involving state
funds, should also be noted. In Procureur de la Republique c. S.A. Ipitrade
International, orders had been made that in effect garnisheed money due to the
Federal Republic of Nigeria, in respect of a commercial claim. The First
Vice-President of the Tribunal de Grande Instance de Paris postponed
vacating these orders solely on the ground that a subsequent agreement
settling the dispute between the parties constituted a waiver of Nigeria's
immunity from execution.115 Reference was made to the "absolute character
of immunity from execution enjoyed by the Federal Republi,: of Nigeria."
The willingness of the court to find a waiver of immunity only partly offsets
this underlying assumption.
In Procureur de la Republique c. Societe Liamco, 116 money owed to the Libyan
Arab Republic and a number of Libyan state instrumentalities (including
the Central Bank of Libya) was garnisheed in satisfaction of an arbitral award
for some U.S. $80 million arising from the disputed termination of a
LIAM CO oil concession by Libya. Interestingly, Libya and the Central Bank
sought to set aside the orders on the ground of the absolute immunity from
execution of foreign states, but the 11 other state instrumentalities involved
sought the order on the ground that the arbitral award, made against
the Libyan state only, was not opposable to them. The Tribunal de Grande
Instance de Paris, acting on the motion of the Procureur de h Republique,
vacated all the attachments. The tribunal said:
Given that . . . no distinction can presently be made between the
funds affected by an activity of sovereignty or public service and those
resulting only from economic or commercial activities of private law, it is
evident that . . . the mere invocation of the privileg(:, based upon
domestic and international public order, is enough to justify lifting the
attachments. . . .117
It was therefore not necessary to consider the argument of nonopposability
raised by the separate instrumentalities. At the same time, the tribunal
ordered an investigation into the nature, destination, and use of the assets
of the instrumentalities involved, to enable it to determine whether these
113 P. Bourel, id. at 536-39.
114 This is not inconsistent with a theory of functional immunity (cf. the decision of the Cour
de Cassation of May 19, 1976, Blagojevic c. Banque du Japon, 66 id. at 359 (1977)), but it
does depend on a degree of personalization of instrumentalities also criticized by Bourel.
115 (1979), 106 J. DRoIT INT'L 857 (1979). 118 Id. at 859.
117 Id. at 861.
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 843
were not immune from execution and might be available to meet claims
against the Libyan Arab Republic. The tribunal's willingness to order such
an inquiry may well have been a response to the criticism of the Paris Court
of Appeal, in Clerget, for failing to do so. At the same time, lifting the attachments
was consistent with Clerget in that no present indication was available
that the state funds had been set aside for nonimmune purposes. Indeed,
it is not clear whether state funds could ever have been attached in this
claim, 118 or whether the tribunal intended only to leave open the possibility
of attachment of instrumentality funds. The ambiguity present in Englander
and Clerget remains unresolved.
To summarize, French law allows the attachment of assets of separate state
instrumentalities unless these assets are themselves set aside for immune
purposes or can be shown to be inextricably mixed with assets that are. In
the case of state funds, it is still uncertain whether execution will ever be
permitted: though the weight of doctrine favors the possibility, the jurisprudence
is by no means so clear. At any rate, attachment will only be possible
against assets or a separate fund shown to be clearly devoted to nonimmune
purposes.
Other Europeanjurisdictions. The tendency since 1945, in cases from other
European jurisdictions, has been to reject absolute immunity from execution,
though in no other jurisdiction does the case law approach that of
Switzerland, West Germany, and France in extent or depth of analysis. In
the Netherlands, the Hague Court of Appeal held in I 968 that liability to
execution is (subject to the exemption of "public service assets") correlative
to liability to jurisdiction; 119 this reasoning was supported, rather cavalierly,
by the Supreme Court in 1973.120
Although earlier Belgian decisions tended to support general immunity
from execution, the Tribunal Civil de Bruxelles, in Socobelge v. Greek State
(1951), rejected a Greek claim to immunity from execution: garnishee
orders against Greek State debts were upheld as an interim measure, pursuant
to a claim under an arbitral award that had not yet become enforceable
before Belgian courts. 121 The Tribunal Civil emphasized that the
Belgian Government would accept the competence of Greek courts in similar
circumstances, so that reciprocity required similar Greek subjection to
the jurisdiction here. The view that immunity from execution was only
limited had "steadily been gaining ground" since 1885.122 As it happened,
UH Libya and its Central Bank claimed absolute immunity from execution. Libya also
\'igoromly prott"sted to France against the attachments, as the tribunal noted; id. at 860.
II¼ N. V. Cabolent v. National Iranian Oil Co. (1968), 9 ILM 152 (1970). For an Iranian
ca~e (1963) arising from the award here, see id. at II 18. The decision perhaps assumes
.ib,olutc immunity, but the reasoning is expressed to be on other grounds.
12" Socit'·tc furopcennc d'Etudes ct d'Entreprises v. Socialist Federal Republic of Yugoslavia
(Sup. Ct. 1973), in 5 NETH. Y.B. hdL L. 290 (1974), a/f'g Hague C.A., 4 id.
,lt 390 (1973). Se(' further Kingdom of Morocco v. Stichting Revaliditie Ccntrum "de Trappcnbcrg"
(Amsterdam D.C. 1978), IO id. at 444-45 (1979); Voskuil,supra note 43, at 270-89.
1~1 (1951 ). 18 !LR 3 (1957). For earlier cases, see supra note 74.
w Id. at 6. See also Suy, Immunity of States before Belgian Courts and Tribunals, 27 ZA6RV
66U, 684-92 ( 1967); P. de Visscher & J. Verhoeven, L'lmmunite de juridiction de l'Etat etranger
Annex 115
844 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
the funds in question were part of Marshall Plan aid to Greece, and as a result
of U.S. pressure the matter was settled out of court.123 The few later
decisions have also tended to a similar conclusion, but with no more detailed
or substantial consideration of the problems, and there has been no decision
of the Cour de Cassation. 124
The Austri~n Administrative Court, in 1954, upheld in principle the
administrative confiscation of state commercial property (though the confiscation
was quashed on the facts). The court made no reference to execution
of civil judgments, but the possibility of distinguishing that problem
from administrative confiscation gains no support in the reasoning, and,
indeed, seems unsupportable.125 And in Neu.stein v. Republic of Indonesia
(1958), the Supreme Court, while lifting an injunction over Indonesian
property, pending further inquiries, stated:
the mere fact that the bank account was held by the Republic of Indonesia
through the legation thereof, does not necessarily lead to the conclusion
that . . . the account serves exclusively for the exercise of the
sovereign rights (representation abroad) of a foreign State, and could
not possibly constitute assets serving private law purposes,126
This clearly implies that "private" assets might be liable to execution.
Finally, the Italian Corte di Cassazione, in 1963, upheld the constitutionality
of the law of 1926, which prohibits interim attachment or final
execution against foreign state property unless either that for,eign state does
not (according to the Ministry of Justice) grant reciprocal treatment to
Italian state property, or the Ministry of Justice specifi.call y approves. Article
10 of the Italian Constitution provides that Italian legislation must conform
to generally recognized rules of international law. The Court held that the
possibility, envisaged by the law. of execution against foreign state property,
did not contravene Article 10, since "in the legislation and in the jurisprudence
and doctrine of different countries, there is no agreement in the
clans la jurisprudence beige et le projet de convention du Conseil de /'Europe, in L'IMMUNITE DE
JURIDICTION ET D'EXECtrrION DES ETATS. A PROPOS DU PROJET DE CONVENTION DU CoNS£1L DE
L'EuROPE. ACTES DU COLLOQUE 35-71 (Bruxelles, lnstitut de Sociologie, 1971); Verhoeven,
supra note 35.
123 Cf. Bachrach, Sovereign Immunity in Belgium, IO INT'L LAW. 459, 465 (1976).
124 See Szczesniak v. Backer et consorts, [I 957] Pasicrisie beige II, at 38 (Brussels C.A.);
N. V. Filmpartners, [1971] id. III, at 80; Universite nationale de Zaire v. Vigneron et S.A.
Banque belgo-congolaise, [1975] id. III, at I. :Verhoeven, supra note 35, at 84, concludes that
"recent decisions tend to limit immunity to property intended for use in the E:eneral interest, although
it is too early to draw definite conclusions from isolated judgment,."
1
~ Soviet Distillery in Austria Case (1954), 9 VwGH(F) 5 (1954), 21 ILR 101 (1957). This
followed Dralle v. Republic ofCzechoslcvakia (1950) (5 OJZ 341 (1950), 17 II.R 155 (1956)), reestablishing
for Austrian courts the principle of restrictive immunity from jurisdiction. JJut cf.
the decision of the District Court of Appeal of Vienna in the Garnishee Proceedings against
Occupant (Austria) Case (1952) (8 OJZ 21(1953), 19 ILR 211 (1957)), appatently holding that
restrictive immunity was not applicable to proceedings for the execution of judgments.
126 Decision of Aug. 6, 1958, cited by Seidl-Hohenveldcrn, Stale Immunity: Amtria, in 10
NETH. Y.B. INT'LL. 97, 107-08 (1979). To similar effect is a dictum of the Supreme Court in a
decision of Feb. 10, 1961; 84 JB 43 (1962), 40 ILR 73, 78 (1970).
Annex 115
198 l] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 845
approaches to, or systems for, exempting from interim attachment or execution
assets of foreign States which are not set aside for functions related to
the exercise of sovereignty.''127 The only qualification to this bold assertion
of constitutionality was that decisions of the Ministry should be subject to
review by the competent judicial or administrative organs pursuant to
Article 113 of the Constitution; only one paragraph of the law, which purported
to exclude such review, was struck down. The Court did not discuss
whether such review would be available only to the private party affected by
a declaration of reciprocity or by a refusal of authorization to proceed to
execution, or whether it would also be available (on international law grounds
implied or imposed by Article 10) to a foreign state against whose property
permission to execute had been given. Condorelli and Sbolci suggest
that the courts have the power to determine "the conformity of Government
decisions with international law, thus setting bounds to the unrestricted
monopoly of power which the 1926 Law had sought to confer on the
Government," and that they could exercise this power at the instance of
either the foreign state or the private party. But no challenge has yet succeeded,
despite the vagueness or inaccuracy of many of the decrees issued
under the 1926 law .128
The United States Cases
The provisions of the Foreign Sovereign Immunities Act of 1976 allowing
execution against foreign state property in certain circumstances have been
described already. 129 For U.S. courts, those provisions effectively conclude
the general issue of restrictive immunity from execution. However, it is
becoming dear that there are a number of defects in the 1976 Act, which
give the courts considerable opportunity to develop the law.130 What is important
here is the extent to which they are doing so by reference to perceptions
of general international law. But first the earlier United States decisions
on immunity from execution must be considered.
United States Case Law Before 1976. From an early stage, U.S. courts adhered
to a quite general immunity from jurisdiction, even in cases where
127 Amministrazione del Governo brittanico, Republico Ministero, Commune di Venezia c.
Gucrrato (decision of July 4, I 963), in 46 RIVISTA DIRITIO INT£RNAZIONALE 451,456 ( 1963). For
1he 1959 decision of the Tribunal of Venice referring the matter to the Corte Costituzionale,
~ee 28 ILR 156 ( 1963). See further Condorelli & Sbolci, Measures of Executi.on against the Property of
Fureign Stales: The Law and Practice in Italy, 10 NETH. Y.B. INT'L L. 197 ( 1979); Gori-Montanelli &
Botwinik, Sovemgn ImmunitJ-ltaly. 10 lNT'L LA w. 451 ( 1976). On the reciprocity requirement
under the 1926 law, see Condorelli & Sbolci, supra, at 218-23; Bernardini, LaReciprocita rispecto
aglr alti ExecuJnre e Caute/ari contro SLati esteri, 43 R1v1STA DIRITIO INTERNAZIONALE 449 (1960).
ux CondorelJi & Sbolci, supra note 127, at 224-28. For example, a decree of March 3, 1978
certifies reciprocity in relation to the United States without mentioning the Act of 19761 See
1he Note by Sbolci, 61 R1v1STA DIRITTO INTERNAZIONALE 949 (1978); Condorelli & Sbolci,
mpra, at 218, 223.
u• Supra, text to notes 57-59.
i:,o See espmally Smit, The Foreign Sovereign Immunities Act of 1976: A Pu:a for Drastic Surgery,
A.SIL, 74 PRoc. 49 (1980); Brower, Bistline, & Loomis, The Foreign Sovereign Immunilies Act
of 1976 in Practice, 73 AJIL 200 (1979).
Annex 115
846 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
commercial or trading transactions were involved.131 In some cases this position
was adopted independently; in others, as a result of executive suggestion.
132 As a concomitant, the courts recognized as a rule of international
law a general immunity from execution. Thus, waiver of immunity from
jurisdiction did not constitute waiver of immunity from e,,ecution, for
which a distinct submission was required.133 From this strict position the
courts never formally departed, although a considerable degree of ingenuity
was sometimes shown in distinguishing execution against state property
from the case at hand.134 The well-known Tate letter of 1952, marking the
change in the Executive's position to one of restrictive immunity from
jurisdiction, made no reference to problems of execution, 135 but it soon
became clear that the State Department intended a sharp disdnction to be
drawn between the two: immunity from execution remained general,
despite restrictive immunity from jurisdiction. This was the position taken
by the Department, and accepted by the courts, in New York & Cuba Mail S.S.
Co. v. Republic of Korea, 136 and in Weilamann v. Chase Manhattan Banh. 137 This
distinction attracted some adverse comment, but it was adhered to by the
courts, both independently and as a matter of deference to executive
suggestion.138 It is true that qualifications were introduced by way of further
131 The Schooner Exchange v. M'Faddon, 11 U.S. 116 (7 Cranch) (1812); Buizzi Bros. v. S.S.
Pesaro, 271 U.S. 1088 (1926).
132 E.g., Ex parte Republic of Peru, 3i8 U.S. 578 (1943).
133 Dexter & Carpenter, Inc. v. Kungligjarnvagsstyrelsen, 43 F.2d 705 (2d. Cir. 1930). Abo
affirming immunity from execution, Bradford v. Chase Nat'l Bank, 24 F.Supp. 28 (S,D.N,Y.
1938). On the Dexter & Carpenter case, see Bishop, International Law-Sovereign ImmunityWaiver-
Execution, 29 MICH. L.R. 894 (193l);Jessup & Deak,Dexter& Carpemer, Inc. v. Km1glig
Jamvagsstyrelsen et al., 25 AJIL 335 (1931); Kuhn, Immunity of the Property of Foreign States
against Execution, 28 id. at 119 ( 1934).
134 Cases of "ingenuity" included: Mexico v. Rask, 118 Cal. App. 21 ( 1931) (possessery lien
over Mexican patrol boat for repairs allowed); Lamont v. Travellers Insurance Co., 281 N.Y.
362 (1938) (distribution of fund between private parties; held, Mexican claim to fund did not
preclude distribution unless fund shown to be held for Mexico rather than bondholders):
National City Bank of New York v. Republic of China, 348 U.S. 356 (1954) (unrelated counterclaim
against Government allowed).
135 26 DEP'T STATE BULL. 984 (1952).
136 132 F.Supp. 684 (S.D.N.Y. 1955); noted by Zilber, International Law-Sovereign I111•
munity-Seizure of Property under Restrictive Immunity Doctrine, 54 MtcH, LR. 1008 (1956).
Metzger, Immunity of Foreign Stale Property from Attachment of Execution in the USA, in 10 NETH,
Y.B. INT'L L. 131, 136 (1979), criticizes the State Department, which "erron~ously supposed"
immunity from execution to be a rule of international law.
137 192 N.Y.S. 2d 469 (1959), and see M. WHITEMAN, supra note 31., at 709-26; Griffin,
Execution against the Foreign Sovereign's Property: The Current Scene, ASH,, 55 PROC. 105
( 1961); Delson, Applicability of Restrictive Theory of Sovereign Immunity to Actions to Perfect Attachment,
id. at l 2 l.
138 See Loomis v. Rogers, 254 F.2d 941, cert. denied, 359 U.S. 928 (1958) (rule described as
"well-established"); Et Ve Balik Kurumu v. B. N. S. Int'l Sales Corp., 204 N.Y.S.2d 971,
980-82 (1960); Stephen v. Zivnosenska Banka, Nat'I Corp., 222 N.Y.S.2d 128 (1961), aff'd,
235 N.Y.S.2d 1 (1962); State of Florida, ex rel. National Inst. of Agrarian Reform v. Dekle,
137 So.2d 581 (1962); National Inst. of Agrarian Reform v. Kane, 153 So.2<1 (1963): Hellenic
Lines Ltd. v. Embassy of South Viet Nam, Commercial Div., 275 F.Supp. 86(1 (S.D.N.Y. 1967);
New York World's Fair 1964-1965 Corp. v. Republic of Guinea, 159 N.Y.LJ. 15 (1968),summariud
in 63 AJIL 343 (1969) (immunity granted notwithstanding contrary State Department
suggestion).
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 847
exercises in 'judicial ingenuity." For example, immunity from execution
could no longer be asserted once the property had been sold, even if the
resulting fund remained in the hands of the court.139 Claiming, without
reservation, particular property that had already been arrested or attached
amounted to waiver of immunity from execution against that property in any
counterclaim arising in the case. 140 But these were relatively minor
qualifications of a general position which was maintained until the passage of
the 1976 Act.
Case Law Under the Foreign Sovereign Immunities Act. Despite a growing body
of case law on the 1976 Act, there has, not surprisingly, been no tendency
to question the extent of restrictive immunity from execution it established.
The problems so far have been of a discrete kind: for example, the jurisdictional
ambit of the Act, 141 the extent of waiver of jurisdiction by previous
treaties, 142 and the problem of waiver of prejudgment attachment.143 The
courts have accepted the Act's clear intention to exclude in rem and quasi in
rem jurisdiction, 144 despite criticism of that exclusion.145 But no very clear
pattern of decision has yet emerged. 146
British and Commonwealth Cases
The earlier history of sovereign immunity from execution in British
courts closely parallels that in the United States. A quite general doctrine
of immunity was adopted extending both to actions in personam and in rem,
whether or not related to commercial or "private law" transactions. In a few
cases, similar ingenuity was shown in excluding from immunity funds in the
control of the court, or property to which the foreign state's title was manifestly
defective.147 Nonetheless, the basic rule was strict: it was canonically
stated by Lord Atkin in Compania Naviera Vascongado v. S.S. Cristina, where
he referred to
two propositions of international law engrafted into our domestic
law which seem to me to be well established and to be beyond dispute.
The first is that the courts of a country will not implead a foreign
sovereign, that is, they will not by their process make him against his
t:i~ United States v. Harris & Co. Advertising Inc., 149 So.2d 384 (1963).
140 Flota Maritima Browning de Cuba S.A. v. M. V. Ciudad de la Habana, 335 F.2d 619
(4th Cir. 1964), aff'g 218 F.Supp. 938 (D. Md. 1963). Cf also Three Stars Trading Co. v.
Republic of Cuba, 222 N.Y.S.2d 675 (1961) (warrant of attachment of debts issued to obtain
jurisdiction; question of immunity deferred); Stephen v. Zivnosenska Banka, Nat'} Corp.,
222 N.Y.S.2d 128 (1961) (attachment maintained pending judicial determination of ownership
of disputed propeny).
141 Set cases cited infra at note 197.
w Su cases cited supra at note 30 and infra at note 218.
w Su cases cited infra at note 252.
tH Jet Line Services Inc.\'. h-UV Marsa el Hariga, 462 F.Supp. 1165 (D. Md. 1978); Geveke
& Co. Int'}, Inc.\'. Kompania Di Awa I Elektrisidat Di Korsou N.V., 482 F.Supp. 660 (S.D.N.Y.
1979). .
us Smit, supra note 130, at 64-66.
146 For execution against mixed funds, see infra, text to notes 227-33.
ur As to the former, see Lariviere v. Morgan, (1872) L.R. 7 Ch. App. 550, aff'd, (1875)
LR. 7 H.L. 423. As to the latter.Juan Ysmael & Co. Inc. v. Government of the Republic of
Indonesia, (1955] A.C. 72 (P.C.).
Annex 115
848 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
will a party to legal proceedings whether the proceedings involve
process against his person or seek to recover from him spedfic property
or damages.
The second is that they will not by their process, whether the sovereign
is a party to the proceedings or not, seize or detain property which is
his or of which he is in possession or control. There has been some
difference in the practice of nations as to possible limitations of this
second principle as to whether it extends to property only used for the
commercial purposes of the sovereign or to personal private property.
In this country it is in my opinion well settled that it applies to both.148
As a result, the courts required a clear submission to execution against
state property (though whether an unequivocal submission to the substantive
jurisdiction of the court amounted to submission to execution was never
conclusively settled149). Nor would they allow proceedings directly relating
to state property, between third parties.150
On the other hand, at no stage was the distinction between jurisdiction
and execution as clearly drawn as in the United States cases. Moreover,
the courts were not subject to the regime of executive sugge.5tion, and the .
question of applying restrictive immunity at least to actions in rem against
state commercial ships was left open by the House of Lords.151 In The Philippine
Admiral, the Privy Council applied the restrictive theory to actions in
rem, with the result that the arrest and eventual sale of state commercial
ships in execution of judgment became possible, without any further jurisdictional
restriction.152 That left the more general problem of actions in
personam: when, in Trendtex Trading Corp. v. Central Bank of Nigeria,ir,a
148 [1938] A.C. 485, 490. Among earlier decisions, see the cases cited suprn at note 69, And
see Higgins, supra note 60, at 35-41.
149 That a separate waiver from execution was required was established for the (cognate)
Jaw of diplomatic immunity by In re Suarez, [1917] 2 Ch. 131. Submission as a defendant
was held not to amount to waiver of immunity with respect to property involved in the action;
Vavasseur v. Krupp, (1878) 9 Ch. D. 351. Cf. also South African Republic v. La Compagnie
France-Beige du Chemin de Fer du Nord, [1898) 1 Ch. 190. InDuff DeveloJm1e11t Co, v. Government
of Kelantan ([1924] A.C. 797), consent to arbitration was held not to constitute a waiver
of immunity from the jurisdiction of the courts to enforce the resulting award: the House of
Lords left open the position of an execution pursuant to a submission to the jurisdiction of the
courts (see per Viscount Caveat 810; Viscount Finlay at 819; Lord Dunedin at 821; Lord Sumner
at 830). Lord Carson dissented on the point (at 834-35). In Compania Naviera Vascongado
v. S.S. Cristina ([1938] A.C. 485,517), Lord Maugham described the point as "not yet settled."
But it is likely to have been decided in the same way as In re Suarez (subject, of course, to
interpretation of the terms of the waiver or submission).
150 U.S.A. v. Dollfus Mieg et Cie S.A., [1951) I All E.R. 572.
151 Compania Naviera Vascongado v. S.S. Cristina, [1938] A.C. 485, in which Lords Thankerton
(at 496), Macmillan (at 498) and Maugham (at 519-23) reserved the correctness of The
Porto Alexandre, [1920) P. 30, to that effect. Lords Atkin (at 490) and Wright (ar: 512) thought the
matter settled.
152 [1976) 2 W.L.R. 214, [1976) I All E.R. 78, [1977) A.C. 373, notcd47 BtuT. Y.B. IN,'LL. 365
(1974-75). The decision was followed by Robert Goff J. in l° Congreso del Partido, [1978) I All
E.R. 1169, [1978) Q.B. 500. Neither in England nor in Commonwealth jurisdictions where
Privy Council decisions are applied, therefore, is The PorloAlexandre ([1920] P. 30) still good law.
1~ [1977) W.L.R. 356, [1977) I All E.R. 881, [1977) Q.B. 529, noted in 48 BRIT, Y.B. INT'L L.
353 ( 1976-77).
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 849
the Court of Appeal purported to extend the restrictive theory of immunity
to such actions, following what it perceived to be the changed international
law on the matter, the question of immunity from execution was distinctly
exposed for the first time in a Commonwealth court.
Trendtex involved not final execution but an interim ("Mareva") injunction
restraining the removal from the jurisdiction of funds in a Central Bank
account. 154 These funds were stated to be "part of the external reserves of
Nigeria."155 In view of the formidable earlier authority denying the competence
to seize state property, the point was rather glossed over in the Court
of Appeal. Lord Denning M.R. said only that the question depended "on
precisely the same grounds" as liability to suit.156 Shaw L.J. thought seizure
a "reasonable corollary" of maintaining the action.157 Stephenson L.J. (who
dissented on the general immunity point) found the problem more difficult:
he alone referred to some of the contrary authority, although he did not,
in the end, dissent on the injunction.158 Possibly, this aspect of the decision
should be explained not as upholding execution of state funds but as based
on the finding that the Central Bank was not a state department or agency.159
But this is by no means clear. and in any event the status of the Central Bank
and the title to funds in its keeping were by no means the same thing.
Subsequent cases have also involved Mareva injunctions rather than final
execution. For example, in Hispano Americana Mercantil S.A. v. Central Bank
of Nigeria, it was argued that seizure of Central Bank assets was contrary to
international law, but no general argument as to immunity from seizure or
execution was maintained.160 It seems that, having earlier treated immunity
from execution as a reflex of absolute immunity from jurisdiction, the Court
of Appeal has continued to make the same assumption under the new regime
of restricted immunity.
Trendtex Trading Corp. v. Central Bank of Nigeria, in its bold extension of
restricted immunity to actions in personam, has not yet been considered in
any Commonwealth jurisdiction.161 Dicta in several cases in the Canadian
Supreme Court indicate that it may well adopt the same view, and the
154 On the Mareva injunction, see infra note 249.
m 11977) Q.B. at 572. 156 Id. at 561.
m Id. at 580. ,ss Iq. at 572.
,s~ Higgins, supra note 60, at 4 I.
180 [ 1979) 2 Lloyd's L.R. 277. See further infra, text to notes 234-38.
161 Donaldson]. at first instance in Uganda Co. (Holdings) Ltd. v. Government of Uganda ([ 1979] l
Lloyd's LR. 481) rejected Trendttx as per incuriam, though for reasons that are not entirely
con\·incing (cf. 50 BRIT. Y.B. INT'L L. 218 (1979)); Higgins, The Death Throes of Absolute lmmunily:
The Government of Uganda Before the English Courts, 73 AJIL 465 (1979). The Court of
Appeal rejected his decision, so far as it was based on this point, in Hispano Americana
Mercantil S.A. v. Central Bank of Nigeria ([1979] 2 Lloyd's L.R. 277). And cf. Planmount v.
Republu of Zarrt ([1980] 2 id. 393). If Lord Wilberforce's comments are representative of
the views of his fellow Lords of Appeal, the House of Lords would not have overruled the
Trendtex case; ste INTERNATIONAL LAW AssocIATION, STATE IMMUNITY: LAw AND PRACTICE IN
THr. UNITED STATES AND EUROPE (Proceedings of Conference held on November 17, 1978) at
25. Unfortunately, both Trt!ndtex and Hispano Americana were sett1ed before reaching the House
of Lords.
Annex 115
850 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
Quebec Court of Appeal has actually done so.162 In addition, two South
African courts have accepted the Trendtex rule in actions in personam. Both
cases involved attachment of property ad Jundandam jun~dictionem: in
neither, despite a fairly thorough review of Anglo-American authority,
- was it suggested that seizure of and execution against property stood on
any different basis than amenability to suit.163 It is no doubt stm open to the
House of Lords. or the Privy Council, to overrule Trendtex on this point by
applying a rule of absolute immunity at least to seizure of property and
execution and reaffirming the earlier authorities. In view of developments
such as the State Immunity Act, 1978, it is rather unlikely th.at they would
now do so (unless they could be persuaded that international :law does, after
all, require such a general immunity).164
Other jurisdictions
Very few decisions of courts of other jurisdictions seem to have been
reported: the virtual restriction of the case law to European and AngloAmerican
countries is a marked, and troublesome, feature c,f the practice.
The few decisions that have been reported are not in themselves particularly
helpful. The Commercial Court of Alexandria, in 1943, upheld
execution proceedings against property of a state commercial enterprise,
but the decision cannot be assumed to represent the modern law of Egypt. io:;
The Supreme Court of Argentina in 1958 treated a submissil)n to the jurisdiction
as entailing submission to subsequent execution, but the decision
is equivocal since it concerned the service of a writ of execution rather than
the forcible seizure and sale of property.166 Japanese courts have adopted
the absolute immunity rule, but since the leading decision of the Court of
162 The Quebec decision is Zodiak lnt'l Products Inc. v. Polish People's Republic, 81 D.L.R.3d
656 (I 977) (in which no question of execution arose). The other Canadian cases are Flota
Maritima Browning de Cuba S.A. v. Republic of Cuba, (1962) Can. S. Ct. 598; Government
of the Democratic Republic of the Congo v. Venne, 22 D.L.R.3d 699 (l 9'i'2): Harold W. M.
Smith v. U.S. Securities and Exchange Commission, (1976) 12 Ont.2d ~'.44 (though in all
three, the transaction was held to be immune).
163 The cases are Inter Science Research and Development Services (Pty.:, Ltd. v. Republica
Popular de Mocambique, [1980) 2 S. Af. L.R. 111 (T.P.D.), per Margo J. at 124-25, followed
by the Eastern Cape Division in Kaffraria Property Co. (Pty.) Ltd. v. Government of the
Republic of Zambia, (1980) 2 S. Af. L.R. 709. This is in line with earlier Sc,uth African dicta:
see Lendalease Finance Co. (Pty.) Ltd. v. Corporation de Mercadeo Agricola, (1976] 4 S,A. 464
(A.); Prentice Shaw & Schiess Inc. v. Government of the Republic C>f Bolivia, [ 1978)
3 S.A. 938 (T).
164 Since this article was written, this assessment has been confirmed by the House of Lords
in I° Congreso del Partido ([1981) 3 W.L.R. 328). There have been no substantive decisions
reported so far on the 1978 Act (which is not retrospective). On the position of central banks
under the Act, see infra, text to notes 234-38. For interim injunctions, see infra note 251.
165 Egyptian Delta Rice Mills Co. v. Comisaria General de Abastecimentos y Transportes de
Madrid (1943), 55 Bull. Leg. & Jur. Egypt. 114 (1942-1943), 12 ANN, DIG. 103 (1949).
Cf also the dicta to this effect of the same court in a case in 1951, cited by J.-F. Lalive, l'lmmunite
de juridicti<m des Etats et des urgani.satiuns internatioruzles, 84 RECUEIL DES Couns 205,
278 (1953 III). ,
166 Government of Peru v. S.A. Sociedad Industria Financiera Argentina SIFAR (1958),
240 F. Corte Suprema 93, 26 ILR 195 (1963).
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 851
Cassation in 1928, none of the cases has involved a clearly commercial
transaction. 167
The most that can be said is that there is no body of municipal case law in
opposition to the case law of the jurisdictions already discussed.166 The effect
of this remains to be assessed.
,-lssessment
Considerable caution is needed in assessing the effect of these municipal
decisions on the international law of sovereign immunity from execution.
International law is a law between, rather than within, jurisdictions, and
municipal courts necessarily play only a subordinate role in the international
lawmaking process. Moreover, the reasoning in some of the cases is not particularly
thorough or consistent: one can detect in at least a few jurisdictions
an approach that first accords limited immunity from jurisdiction by denying
any connection with the more sensitive problem of execution, then
extends limited immunity to execution on the grounds of its intimate relation
with jurisdiction! There is a tendency, for example in the earlier Swiss
cases, to overstate the strength or consistency of the support for restrictive
immunity, or to treat generally supported rules as negated by a few contrary
instances. Similarly, while the difficulties of distinguishing acts jure imperii
from acts ju re gestionis, or public from private use of property, are generally
admitted, no very convincing analysis of the basis for such distinctions is
offered. And support for restrictive immunity is largely confined to the
courts of Western Europe and (only very recently) the United Kingdom;
before 1976, United States courts generally failed to adopt an independent
position in the matter.
On the other hand, whatever the position may have been in 1918, or in
1955, now there is little in the way of clear decisional authority contradicting
restrictive immunity from execution. There is no denying the general
tendency of the case law towards a restrictive position, in relation to both
jurisdiction and execution. And, although municipal decisions may only be
··subsidiary means" for determining international law, 169 in this context they
have a particular importance. For immunity issues characteristically, primarily,
arise in municipal courts: the immunity rule is about their role in
deciding cases involving foreign states.110 Whatever the rule of immunity,
M Ser l\fatsuyama & Sano, .. Republic of China (1928), 7 Dai-han Minroku l 128; and Kirobe,
/mmu111I) of Stall' Propnty: Japanese Practice, 10 NETH. Y.B. INT0L L. 233, 233-39 (1979). He
pr<c'.dicts that Japanese courts would now permit "the exercise of jurisdiction if the case related
to i:ommercial acli\'ities" (at p. 244).
'"" There ha\'e been no decisions of Thai courts, but Sucharitkul suggests that they would
adopt a rule of restrictive immunity at least from jurisdiction; Sucharitkul, Immunity from
. 4t1arl1mmt rmd Exrcution of the Property of Foreign States: Thai Practice, IO NETH. Y.B. INT'L L. 143
( 1979); also in 22 MAL\YA L. REv. 185 (1980).
1
"" Statute of the International Court of Justice, Art. 38(1)(d) (a position shared with decision~
of internatiorwl courts and tribunals).
i;u Note that Sucharitkul, the ILC"s special rapporteur on Jurisdictional Immunities of
Fordgn States and Their Property, treats municipal decisions as synonymous with "State
practice"; .,er, e.g .• his Second Report, UN Doc. A/CN.4/331, at 17 (1980).
Annex 115
852 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
it imposes itself on a municipal court as a direct, in a sense self-executing,
responsibility. The same cannot be said, for example, for rules about expropriation
of foreign property, or the use of force in international relations.
An assessment of the international law of immunity that ignored the '
context in which the question primarily arises would be of little value.
A second characteristic is that the question arises in a context where, at
least generally speaking, the principle of territorialtty of jurisdictionitself
a principle of international law-operates, and must be· displaced by
some clear countervailing rule. Unless international law does otherwise
require, foreign state assets and claims, properly within tht~ jurisdiction,
are presumed to be subject to municipal competence. In view of what
amounts to an onus of proof, and of the substantial practice now supporting
restrictive immunity, it is not surprising if municipal courts conclude that no
such (general) countervailing rule exists.
Municipal case law would be less significant if it proceeded only by ref erence
to domestic considerations, to the needs of local litigants. In contrast
with some of the literature, this is not a characteristic of the cases, which
almost invariably attempt to determine, and to apply, the international law
rule. Such decisions are more than brute facts: they are assessments of the
general law. International law is not simply an unwieldy album of single
instances, but a rationalization of practice in the light of authority; in other
words, a more or less structured exercise of reason. To the extent that the
cases provide convincing reasons for restricting immunity, their assessments
will be influential in determining the law. But. of course, that determination
must. take account of other elements, and in particular, state practice and
doctrine. ·
OTHER STATE PRACTICE
Much of the "state practice" in this area occurs in the context of claims
to immunity before municipal courts by states or state instrumentalities.
Willingness to claim immunity is an indication of a position, but it may be
based on the view that the particular transaction is jure imperii, or it may be
adopted for immediate litigious purposes. Argument before a court is only
state practice in a restricted or secondary way.
On the other hand, vigorous diplomatic protests have sometimes been
made in cases of attachment of state property,171 and it is clear that the
question of execution is a very sensitive one. The United States support for
absolute immunity from execution did not change until 1976. The United
Kingdom Government actually changed its position during the passage of
the State Immunity Bill through Parliament.172 The French Government
still apparently adheres to general immunity, as does the Soviet Union
171 E.g., the Libyan protest in the UAMCO case (supra note 118), and the U.S. protest at the
seizure of Marshall Plan funds in the Socobelge case (Bachrach, supra note 123), Cf. also the
observations of the West German Government before the Federal Constitutional Court in the
Philippines case, 38 ZAoRV 251 (1978). But the Government nonetheless ccncluded that only
restrictive immunity from execution was required; id. ~t 251-52.
172 Supra, text to note 66.
Annex 115
19811 EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 853
(though its treaty practice is not consistent with that view).173 No comprehensive
account of the practice can be given, but it seems clearly to be conflicting
and still far from unanimous.174
DOCTRINE
Although the literature is of uneven quality, the predominant view,
especially in recent years, favors restrictive immunity from execution for
the same reasons and to much the same extent as restrictive immunity from
jurisdiction.175 A number of commentators are equivocal or reserved,176
but only a very few adhere to absolute immunity from execution.177
11JSupra, text to notes 19-26, 34-43. And see Boguslavsky, supra note 43, who does not
mention the contrary treaty practice.
m For earlier Swiss practice, see 1 REPERTOIRE SUISSE DE DROIT INTERNATIONAL PUBLIC
340-436 ( I 97 5) (covering the years 1914-1939). The modern Swiss view (restrictive immunity
from e>..ecution) is stated in a Government opinion of 1976, published in 33 ANNUAIRE SUISSE DE
DR0IT INTERN.-\TIONAL 163 ( 1977). On UK practice, see Higgins, supra note 60, at 52-54. The
position of Eastern European states is interesting in this context. Yugoslavia seems to favor
absolute immunity from execution (as distinct from jurisdiction), but this is subject to reciprocit}',
and in an}' e\'ent the point is not clear; Varady, supra note 68, at 91-95. The German
Democratic Republic clearly does support absolute immunity in principle, but this is mitigated
b}' a marked manipulation of waiver, especially in the case of separate instrumentalities but
also of immunity from execution; F. Enderlein, The Immunity of State Property from Foreign
]"mdittwn and Execution: Doctrine and Practice of the Gemuin Democratic Republic, IO NETH.
Y.B. h-n'L L. 125 (1979).
m Apart from works already cited, writers in favor of restricted immunity from execution
mdude: Van Praag, La Question de l'immunite de juridictwn des Etals etrangers et celle de la pos-
11b1/1te de l'execuJion des jugements qui !es condamnent, 16 REV. DROJT INT'L & LEGISLATION
CoMPAREE l 00, 129-37 (1935); H. Lauterpacht, The Problem of jurisdictional immunities of foreign
Stat,..,, in 3 COLLECTED PAPERS 315, 318, 338-40 (1951); Carda-Mora, The Doctrine of Sovereign
lmmumty of Stales and zt.s Recent Modijicatiom, 42 VA. L. REV. 335, 354-59 (l 956); Note,Sovereign
lmmunily-Wan,erand Execulion: Argument.~from Continentaljurisprodence, 74 YALE L.J. 887-918
( 1965); Note, Collecllon of a Foreign Nation Debt by Attachment of an International Bank Loan,
69 Cow \f. L. Rn. 886 ( 1969) (though the argument must be regarded as extremely doubtful
m relation to IBRD loans); Venneman, L'ImmuniJe d'execution de l'Etai etranger, in L'IMMUNITE DE
IL'Rll>KTlON ET o'ExECUTION DES ETATS, supra note 122, at 119; Dumon, id. at 181; Ripple,
Sot>t>mg:11 lmmumiy vs. Execution of Judgment: A Need to Reappraise our National Policy, 13 BOSTON
C. J11;ou~. & Cm,1. L REv. 369 (1971): Triggs, Restrictive Sovereign Immunity: The State as Internatw11alTrader,
53 Aosn. L.J., pt. I, 244, pt. II, 296, 299-301 (1979); Bouchez, The Nature and
Srnpe ,if State lmmuniJ.yfromJurisdiction and Execution, IO NETH. Y.B. INT'L L. 3, 17-32 (1979).
Cf also Schroer, On the Application of Staie Immunity from Enforcement Measures to International
Orgrrnizatton.s, 30 Rn·. EGYPrIENNE DROIT INT't 76 (1974). For a survey of earlier practice
relating to real property, see E. Loewenfeld, Some Legal Aspects of the Immunity of State Property,
GRoTrn~ Soc'Y, 34 TRANS. I l I (1949).
17" E.g., I. BROWNLIE, supra note 8, at 343-44; Lalive, supra note 165, at 272-81 (though
fa\'orable to the de\'eloping restrictive rule). In his standard monograph (supra note 68,
at 3-17-50), Sucharitkul seems to favor restrictive immunity from execution; but cf. the cursory
and negati,·e treatment in Immunities of Foreign States before National Authorities, 149 RECUEIL
Dt'> CouRs 87, 122-23 (1976 I). Cf. also sources cited supra at note 167.
177 To this effect, Freyria, Les Limites de l'immunite de juridiction et d'execuJion des Etats
,trrmgm, 40 REV. CRJTJQUE DROIT INT"t PRIVE 449, 465-69 (1951) (with hesitation); D. H. N.
Johm.on, The puzzle of sovereign immunity, 6 AUSTL. Y.B. INT'L L. l, 2-3 (1974-75); Note,Execut1011
of Judgments agamst the Property of Foreign StaJes, 44 HARV. L. REv. 963 (1931); Boguslavsky,
1upra note 43, at 167-7 I (with references to other Soviet literature).
Annex 115
854 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
Ill. THE INTERNATIONAL LAW RULE
THE CENTRAL PROBLEM OF RESTRICTIVE IMMUNITY
The purpose of this article is to elucidate the rule of immunity from
execution, but this cannot be achieved entirely in isolation from the central
problem of immunity from jurisdiction. Clearly, if the latter immunity is
general, so is the former: immunity from execution may be available on a
wider basis than immunity from jurisdiction, but it has never been suggested
that it is any less available.
In fact, there are reasonably good grounds for treating a rule of restrictive
immunity from execution as, in principle at least, entailed by restrictive
immunity from jurisdiction (though this does not exclude th(• possibility of
further, more precise, exceptions from execution). The basicjurisdictional
distinction in international law is between jurisdiction to pn:scribe and to
enforce.178 It has never been suggested that, in their activities within the
territory of a state, foreign states operate outside the local law. 170 Jurisdictional
immunities relate to the power of the forum not to prescribe, but to
enforce its rules. To exercise substantive jurisdiction over a foreign state is
not to prescribe the rule, it is to apply it, with the consequence that the
matter becomes res judicata, that the substantive claim of the st2.te (as plaintiff
or defendant) is, under the local law, definitely disposed of.180 This may
not have the same obvious effect as attachment, seizure, or sale, but within
the framework of the established dichotomy it is still an eKercise of the
jurisdiction to enforce. In other words, if jurisdiction to enforce is conceded
at this first level, it should be presumed to continue at the level ofimplementing
the order of the court (subject to any specific or "positive" exceptions
that may exist). It would be a strange jurisdiction to enforce which could
only be fully exercised in favor of one of the parties; which (in a case adverse
to a foreign state) could only be exercised on condition that it not be made
effective. To this extent, restrictive immunity from execution (with whatever
qualification) is, in the words of the International Court,181 an "inherent"
or "entailed" rule, once a restrictive jurisdictional rule has becm estabished.
The central problem of restrictive immunity from jurisdiction can be
stated in few words. There is general agreement that in s•:>me situations
international law requires the immunity of a foreign state from local jurisdiction.
There is a considerable body of opinion that in other c:ases (variously
described as "commercial," ''jure gestionis," or "private law'' transactions)
immunity is not required. Yet it is frequently denied that international law
178 Cf. 2 D. P. O'CONNELL, INTERNATIONAL I.Aw 602-03 (2d ed. 1970). Similarly, F. A. Mann,
The Doctrine of Jurisdiction in International Law (1964), in STUDIF.S IN INTERNATIONAL I.Aw 1
(1973), distinguishes "legislative" from "enforcement" jurisdiction.
179 Sucharitkul, Second Report, supra note 156, at 12. The same is true, of course, for
diplomatic and other immunities.
180 Some judgments also have a law-prescribing effect, but for preser1t purposes this is
subsidiary.
181 North Sea Continental Shelf Cases, {1969] !CJ REP. 3, 29-32.
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 855
contains, or even can contain, criteria for distinguishing immune from nonimmune
transactions. 182 The incoherence needs no demonstration. Either
drawing the distinction is ref erred to the discretion of the forum (in which
case the immunity rule disappears), or the validity of any such distinction
is denied on a priori grounds, in which case the exception disappears. 183
Alternative approaches, based on reciprocity or assimilation with the immunity
of the forum state, lead to unsatisfactory subjectivity, 184 and have
attracted virtually no support. In particular, the "assimilationist" approach
ignores the real differences between the forum state and the foreign state,
as has of ten been noted. 185
Now, there is no good reason why international Jaw could not specify
the grounds for distinguishing immune from nonimmune transactions, but
it is significant that the distinction in each jurisdiction tends to be drawn,
to some extent at least, in terms indigenous to the forum, terms that are
often hardly susceptible to translation. The difficulties Anglo-American
courts have had with restrictive immunity may be explained, in part at least,
by the absence of any developed distinction between "private" and "public"
Jaw, 1116 or acta Jure imperii and acta jure gestionis, in these jurisdictions. To
illustrate, the term "Jure gestionis" is quite often mistranslated as "commercial
transactions." The (nonexclusive) distinction between "governmental" and
"commercial" transactions, sometimes employed, in this and other contexts,
in common law jurisdictions, has its own difficulties.187
The better view, surely, is that while international law allows a measure of
discretion to municipal courts or legislatures in prescribing the distinction
between immune and nonimmune transactions, this distinction is a limited
or controlled one, in the sense that municipal courts may not exercise
jurisdiction in matters where immunity from local jurisdiction is required.
As in other areas where international law regulates the application of
municipal law to cases with foreign elements, it prescribes a minimum, not
1•i Su, r.g., Claim against the Empire of Iran Case (1963), 16 BVerfGE 27 (1964), 45 ILR
57, 80 (1972): repeated by the German Federal Constitutional Court in its Philippines decision
of Dec. 13, 1977, 38 ZAoRV at 278, where the Court stated that "the classification of a State's
function (according to the legal nature of the act) as governmental or non-governmental
must be determined according to current domestic law, as international law does not, as a rule,
include criteria for such a delineation." Similarly, Article 3 of the resolution of the Institut de
Droit International (supra note 53) stated that "la question de savoir si un acte n'est pas de
puissance publique releve de la lex fori." And cf Seidl-Hohenveldern,supra note 89, at 65-66.
1"-' I. BROWNLIE, supra note 8, at 330-31 and references. Similarly, Ushakov, [1979] I Y.B.
INT'L L. CoMM'N, at 213.
1
"
4 As Condorelli and Sbolci amply demonstrate in their analysis of practice under the Italian
law of 1926; supra note 127, at 218-23, 230-31.
1"~ The approach was advocated by Lauterpacht in 1951 (supra note 175, at 315-73), but
has been generally rejected. A rule of reciprocity would be no better since it would not avoid
the need for an initial or underlying approach. Cf I. BROWNLIE, supra note 8, at 340.
1
"" For a recent critique of the distinction in English law generally, see Harlow, "Public" and
"Primtr-'' Lau•: Definition with<rut Distinction, 43 Moo. L. REv. 241 ( 1980).
1"
7 But Sucharitkul, in his Second Report, proposes a (circular) definition of"trading or commc:
rcial acti\'ity"; supra note 170, at 14, I 6.
Annex 115
856 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
a maximum, standard. 188 What has been lacking in the literature so far is
any.very clear account of the fundamental considerations by reference to
which this discretion is controlled. In particular, though it is commonly
assumed that a single distinction is involved, no less than three separate
considerations may be found. This is not the place for a full analysis, but
briefly, these seem to be as follows:
(1) There are certain transactions which international law, as an autonomous
system of law, purports to govern as between the parti(:s. In a sense,
in those cases international law is the proper law of the transaction. For
example, questions of the validity or termination of a treaty, or the location
of an international boundary, are matters that international law integrally
governs. These can be contrasted with the cases where international law
merely sets standards of (minimum) performance for municipal law systems,
for example, in areas of human rights or the protection of aliens. (The
distinction is rather like that between self-executing and non-:;elf-executing
rules, familiar in other contexts.) In these ("non-self-executing'') contexts,
international law operates not integrally but at one remove.
· Now, of course, the sovereign immunity rule is a choice-of-forum rule
rather than a choice-of-law rule (it would be no excuse, for example, ifin an
immune transaction a municipal court applied international law to a foreign
state). But it is not often emphasized that international law contains its own,
fundamentally important, choice-of forum rule-that is, the rule that states
are not subject to compulsory process without their consent.180 That rule
cannot be restricted to compulsory process in an international forum: categorization
of a tribunal as "municipal" rather than international should not,
in such cases, matter. Indeed, if anything, the derogation from equality is
greater in a municipal forum, where the defendant state lacks the usual
safeguards provided in international courts. If a matter is integrally governed
by international law, it is governed by a legal system which contains that
choice-of-forum rule, and municipal courts, if they are to ctct consistently
with international law, must accord immunity to a foreign state in proceedings
involving it in respect to such matters.199
(2) A second, less obvious, consideration is to be found in the notion of
"domestic jurisdiction." The term is ambiguous, but in this context it refers
to those transactions-usually, transactions within the community of a particular
state-which international law refers exclusively to the competence
of that state. Typical examples are the conferral of nationality on persons
sufficiently connected with the state, the disposition of armed forces within
the jurisdiction, and the exercise of legislative power over nationals resident
188 It is accepted that the forum may accord a more extensive immunity th,m that requiredeven
an absolute or general immunity. It would not be a denial of justice to refer a private
litigant, in cases involving a foreign state, to the courts of the foreign state or to another forum
with a doser connection to the transaction. In this sense, state immunity is a lex specia/is to the
lex generalis of the minimum standard of treatment in municipal courts.
189 Described by the International Court in the Western Sahara Advisory Opinion ({1975] ICJ
REP. 12, 23) as a "fundamental rule, repeatedly reaffirmed in the Court's jurisprudence."
180 This rule only protects states (or their agents or organs). There is no prohibition preventing
a municipal court, if it has access to international law, from applying it to determine
questions arising between private parties.
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 857
within the state. The exercise of ordinary civil jurisdiction over private persons
and companies js not such a matter, at least where some "transnational"
element is involved, since in such cases civil jurisdiction may be
exercised in the courts of different states in accordance with their rules of
private international law. Although such matters might (apart from any
international minimum standard) be "domestic" vis-a-vis an international
forum such as the United Nations, they are not exclusive to a particular
jurisdiction. There is no rule that private transactions are to be governed
exclusively by the law of the state of nationality.
The point is that, where a particular transaction is positively referred to
the jurisdiction of a state, then neither international bodies nor foreign
courts can intervene in the transaction, at least in a case where the state is
involved as party but possibly in other cases as well.191 In a distinct way.
international law requires immunity in such cases no less than in the first
category. The two categories, taken together, help to reconcile the state
immunity rule with the equally important exhaustion of local remedies
rule-a reconciliation that, as Brownlie has pointed out, is necessary to
the coherence of the law in this area. 192
(3) Finally, international law probably requires that a court not exercise
jurisdiction over a case having no significant connection with the forum,
without the defendant's consent. The nature and extent of this jurisdictional
requirement. or, indeed, whether it applies to civil trials at all, are contro\'
ersia1, 193 but obviously enough, any such requirement must apply to the
exercise of jurisdiction over a foreign state. \1/hether, in this latter case, some
closer or more direct connection is required than for ordinary ~ivil proceedings
is also unclear. The European Convention goes to some pains to
spell out the necessary, relatively close, jurisdictional connection (though
in the context of a regime for recognition and enforcement of decisions).194
The same closer connection is required, as we have seen, in Swiss case law
and treaty practice. 195 The Foreign Sovereign Immunities Act also embodies
M For an example of this category, cf. Buck v. Attorney-General, [1965] Ch. 745. To similar
dlc:ct h the reference to the principle of permanent sovereignty over natural resources, in
lnt<.'rnational As~·n of MachinisL'> & Aerospace Workers v. Organization of Petroleum Exponing
Countries, 477 F.Supp. 553 (C.D. Cal. 1979): "In determining whether the activities
of the OPEC members are governmental or commercial in nature, the court can and should
examine the standards recognized under international law .. . . " See Lagod, Note, 13 VAND.
J. TRA"N~N n'L L. 835 ( 1980).
JYl I. BRowl'.tff, supra note 8, at 324, 333. And see generally the discussion at 321-44, to
which the \\ riter i!> indebted.
1~• Cf Akehurst.Jurisdiction in International Law, 46 BRIT. Y.B. INT'L L. 145, 170-77 (1972-
73), 1,•llh Mann, supra note 164, at 127 ff. But Akehurst seems to concede (at p. 177) that state
unmunity cases may constitute an exception to his suggested rule that there is no international
I,{\\' limit on the exercise of ci\'il jurisdiction. In addition to the authorities cited by Akehurst,
~ec I. BROWNLIE, supra note 8, at 298-99; L. HENKIN, R. C. PtrGH, 0. SCHACHTER, & H. SMIT,
l~n:RNATIONAL L.\w 420-25 (2d ed. 1980), agreeing with Mann and Akehurst, respectively.
And for a recent U.S. restatement, sec Zenith Radio Corp. \', Matsushita Electric Indus.
Co., Ltd., 494 F.Supp. l 161 (E.D. Pa. 1980).
1"4 Supra note 7.
1"5 Sn• mpra note 46, and text to notes 79-88. On this problem, see also Lalive, supra note 46,
at 162-64. On 1hc position in 1hc Federal Republic of Germany, see Seidl-Hohenveldern,
supra nott· 89, at 71-72.
Annex 115
858 · THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
the "minimum contacts" requirement of due process, which, though a
domestic constitutional requirement, is underpinned by many of the same
considerations as the suggested international law rule.196 Indeed, the
jurisdictional links required under section 1605(2), in the absence of waiver,
are "much narrower" than with many long-arm statutes: "there must be a
close connection between the cause of action asserted, and the jurisdictional
facts on which it is based."197
The UK Act, following in this respect the European Convendon, includes
various requirements of jurisdictional connection that are more restrictive
than the ordinary jurisdictional requir.ements of the forum. But there are
several important exceptions: the ordinary jurispictional requirements of
the forum apply to a "commercial transaction entered into by the State"
(section 3(l)(a)) and to an action relating to a state-owned commercial ship
(section 10). In the latter respect the Act follows the European Convention;
in the former it does not.198 Whether some closer connection was required
at common law was also a matter of dispute in the English cases.199 It is not
necessary for present purposes to go into the question in more detail; at
least, the principle at stake is clear enough.
EXECUTION AGAINST FOREIGN SOVEREIGNS: A GENERAL RULE?
It is suggested, then, that a defensible theory of restrictive immunity from
jurisdiction can be elaborated along these lines. Exactly how the distinction
196 See, e.g., Reese, Legislalive Jurisdiction, 78 CoLUM. L. R£v. 1587 (1978).
197 Verlinden B.V. v. Central Bank of Nigeria, 488 F.Supp. 1284, 1295-96 (S,D.N,Y. 1980).
The court went on to hold that the "direct effect" limb of section 1605(2) required a substantial
direct effect not present on the facts; id. at 1297-1300. A large number of cases have
dealt with these jurisdictional requirements, with rather divergent results. Thus, failure to
compensate the U.S. owner of property expropriated in Iran was held a dirc:ct effect (American
Int'l Group v. Islamic Republic of Iran, 493 F.Supp. 522 (D.D.C. 1980)); as was the injury
to plaintiff's reputation of a libel printed in the USSR and published in the United States without
the defendant's knowledge or control (Yessenin-Volpin v. Novosti Press Agency, 443
F.Supp. 849 (S.D.N.Y. 1978)). But cf. Upton v. Empire of Iran, 459 F.Supp. 264 (S.D.N.Y.
1978),aff'd, 607 F.2d 494 (1979); Harris v. VAO Intourist, Moscow, 481 F.Supp. 1056 (E.D.N.Y.
1979) (consequences of injuries suffered to U.S. citizens abroad not "direct"). And see also:
Carey v. National Oil Corp., 453 F.Supp. 1097 (S.D.N.Y. 1978), aff'd, 592 r.2d 673 (2d Cir.
1979); East Europe Domestic Int'! Sales Corp. v. Terra, 467 F.Supp. 383 (S.D.N.Y. 1979);
Waukesha Engine Div., Dresser Americas, Inc. v. Banco Nacional de Fommto Cooperativo,
485 F.Supp. 490 (E.D. Wis. 1980); Paterson, Zochonis (U.K.) Ltd. v. Compariia United Arrow,
S.A., 493 F.Supp. 621 (S.D.N.Y. 1980); T. P. Gonzalez Corp. v. Consejo Nacional de Produccion
de Costa Rica, 614 F.2d 1247 (9th Cir. 1980); Decor by Nikkei ln1'1, Inc. v. Federal
Republic of Nigeria, 497 F.Supp. 893 (S.D.N.Y. 1980).
l9ll See also §9 (arbitrations). And cf. Higgins, supra note 60, at 41-46 for the legislative
history of §3(l)(a).
199 A connection requirement was formulated by Lord Denning in Rahi 71toola v. Niwm of
HJderabad ([1958] A.C. 379, 422), and applied by him in Thai-Europe Tapioca Service Ltd. v.
Government of Pakistan ([1975] 1 W.L.R. 1485) (decided by Lawton and Scarman L.JJ. on
grounds of general immunity). But in 1° Congreso delPartido ([1978] Q.B. 5G0), Robert Goff].
thought that there was "no international consensus on the requirement of territorial connexion,"
at least with respect to the "arrest of an ordinary trading ship" (al pp. 534-35). On
this point the Court of Appeal agreed ([1980] 1 Lloyd's L.R. 23, 30, per Lo1d Dennin~ M.R.).
It does not, of course, follow that a court will necessarily exercise this jurisdiction, if it holds
thatitisforumnonconveniens;The]upiter (No. 2), [1925] P. 69; The Atlantic Star, [1974] A.C. 436.
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 859
between immune and nonimmune transactions is drawn will vary, and does
in fact vary, between one state and another. Domestic legal concepts, such
as "private law" (privatrecht~ droit prive) may incorporate the requirements,
in particular, of the first two principles outlined above. The categories
acta jure gestionis!imperii may be employed to the same effect. Common law
systems, which share neither of these categories, may have more difficulty:
there is an inherent danger, in particular, in using terms such as "tort" to
define amenability to jurisdiction, since many acts indisputably of a "public
law" nature, or jure imperii, will also constitute "torts. "200 The need for careful
drafting is obvious, but so long as the principles outlined above are not
infringed, the municipal system will be consistent with international law.
The point is that the international law requirement of immunity from local
jurisdiction is not an arbitrary or isolated one, but is to a considerable extent
entailed by established principles of general international law. 201 For present
purposes it is enough to assume that restrictive immunity exists, and can be
justified, in this way.
On this assumption, the question becomes whether international law requires
general or absolute immunity from execution against state (or state
instrumentality) property. That it could do so by a rule established through
"positive law processes" is clear; on the other hand, as has been pointed out,
restrictive immunity from execution is the more natural or likely consequence
of restrictive immunity from jurisdiction. And in fact, as the survey undertaken
in this article shows, the substantial weight of modern authority rejects
any such positive prohibition of execution, supporting instead a restricted
form of immunity. Important factors tending to this conclusion are
the bilateral treaty practice, in particular the Soviet treaty practice with its
advertence, in a number of cases, to the general international law position;202
the codifications prepared by private and official bodies;203 a considerable
body of statutory law;204 the case law at least of European jurisdictions;205
and the substantial weight of juristic opinion. 206 General acceptance of the
arrest of state commercial vessels adds considerable analogical support: a
distinction between state-owned ships and other state property could only be
an arbitrary one. 207 It is significant that the few modern treaties denying
the possibility of execution against state property-in particular, the European
Convention on State Immunity of 1972 and the British-Soviet Protocol
~,,., The problem was identified by O'Connell in ILA, supra note 161, at 13, a passage cited
by Waller L.J. in/° Congreso de! Partido ([1979] 2 Lloyd's L.R. at 584). It is exemplified by the
facts of Letelier i1. Chile (488 F.Supp. 665 (D.D.C. 1980)). Cf also Perez v. The Bahamas,
482 F.Supp. 1208 (D.D.C. 1980) (the incident referred to by O'Connell).
=01 Excluded for present purposes are questions of seizure of state property in time of war,
and related issues of reprisals and sanctions. It was on the basis of reprisal that the court in
New England MerchantsNat'lBankv. lranPowerGenerationandTransmission Co., etal. (502 F.Supp.
120 (S.D.N.Y. 1980), 19 ILM 1298, 1312-27 (1980)) acted in allowing prejudgment attachment
of Iranian assets. Contra, E.-Systems Inc. v. Islamic Republic of Iran, 491 F.Supp.
1294, 1302-03 (N.D. Tex. 1980).
202 Supra notes 25 and 35.
204.Supra, text to notes 57-68.
200supra, text to notes 175-77.
203 Supra, text to notes 50-56.
20s Supra, text to notes 69-128.
207 As the Privy Council conceded in The Philippi.ne Admiral, [1977] A.G. at 402-03.
Annex 115
860 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
of 1974 on Merchant Shipping-contain compensatory p:rovisions for
implementation of local judgments obtained against the state, and in any
event do not preclude attachment of state property without qu.alification.208
The claim to immunity, in these two cases, is not a generally applicable one.
RESTRICTIONS ON EXECUTION AGAINST FOREIGN STATES
It may be concluded, then, that international law contains no general
rule prohibiting execution of domestic judgments against foreign states.
But the practice supports what general principle would suggest, a number of
restrictions upon such execution.
Enforcement in Personam
Enforcement of judgments against foreign state officials presents practically
insuperable difficulties. The head of state and his entourage, and diplomatic
and (with respect to their official functions) consular personnel are,
in general, immune from civil process;209 itis hard to envisage circumstances
in which this "remedy" would be available in practice. In the case of separate
agencies or instrumentalities of a foreign state, the matter may be different,
although in many cases the major administrative officers are hkely not to be
present within the forum.
Execution Against State Property
This is, of course, the way execution of judgments against foreign states
will normally be attempted. Several distinct issues arise.
Cases in Which Substantive Jurisdiction is Founded on Waiver. It is clear law
that sovereign immunity can be waived by the appropriate official of the
foreign state. However, it is also clear that waiver of immunity from jurisdiction
does not per se entail waiver of immunity from execution of any
resulting judgment; for that a separate waiver is required. This rule seems
to have been established at common law,210 and is adopted by the U.S.
Foreign Sovereign Immunities Act,211 the UK State Immunity Act,212 and
the European Convention on State Immunity.213 It is also the :rule applied in
the analogous context of diplomatic and consular immunity.214
208 Supra, text to notes 8-l l and 41-43.
203 Vienna Convention on Diplomatic Relations, 1961, 500 UNTS 95, Art. 31; Vienna Convention
on Consular Relations, 1963, 596 UNTS 262, Art. 43. On the position of a foreign
head of state, cf. 7 BRITISH DIGEST OF INTERNATIONAL LAW 96-120 (1965); State Immunity
Act, 1978 (UK), §20.
210 Supra note 149.
211 28 U.S.C. §1610(a)(l) and (b)(l). Unlike waiver of immunity from pn:judgmcnt attachment,
this waiver may be implied. But the Act, in distinguishing waiver of jurisdictional immunity
from waiver of immunity from execution, does not encourage the argument that the
former entails or implies the latter. Nonetheless, in Birch Shipping Corp. v. Embassy of Tanzania
(Misc. No. 80-247 (D.D.C., Nov. 18, 1980)} it was held that submission to arbitration in the
United States entailed waiver of immunity from execution of the resulting award.
212 Section 13(3). 213 Supra note 7, Art. 23.
m Vienna Convention on Diplomatic Relations.supra note 209, Art. 32(4): Vienna Convention
on Consular Relations, supra note 209, Art. 45(4).
Annex 115
1981) EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 861
The point is expressly accepted in Sompong Sucharitkul's Second Report
on Jurisdictional Immunities of States and Their Property:
It is clear that while 'jurisdiction" covers "execution", the immunities
of States from one are entirely distinguishable and separate from the
other. Thus, waiver of immunity from jurisdiction does not imply con~
ent or submission to measures of execution. Similarly, the court of the
territorial State may in a given situation decide to exercise jurisdiction
in a suit against a foreign State on different grounds, such as the commercial
nature of the activities involved, the consent of the foreign
State, voluntary submission, or waiver, but will have to reconsider and
re-examine the question of its own competence when it comes to execute
the judgment so rendered. It will be seen that at a later stage of
execution, the immunities attributable to State property will vary with
further distinctions to be made of the types of State property which may
or may not be susceptible to measures of execution.215
The proposition that waiver of immunity from jurisdiction does not entail
waiver of immunity from execution is thus well established.216 It is also
acceptable in principle. A state not subject to local jurisdiction might reasonably
be prepared to have a dispute settled by the courts and to comply
with any resulting judgment, without subjecting itself to the risk of losing
control over important assets through attachment or execution. In any
event, under a regime of restricted immunity the problem of waiver is greatly
reduced. A state is much less likely to concede foreign jurisdiction over acts
strictly Jure imperii. Similarly, the pressure, sometimes evident under the
older doctrine, to manipulate waiver to achieve an erratic form of restrictive
immunity disappears.217 Reduced to its proper dimensions, waiver should
become a problem of drafting and construction rather than policy.218
Diplomatic and Consular Immunities. Clearly, execution is not available
against property or persons to the extent that they are protected by diplomatic
or consular immunity.219
m Sucharitkul, supra note 170, at 15. Despite its caution, the passage suggests an approach
10 immunity from execution consistent with that advocated here.
-n• Bouchez, supra note 175, at 21-25 agrees, though he is critical of the rule. Earlier accounL~
of wai\'er include Dickinson, Waiver of Stale Immunity, 19 AJIL 555 (1925); Waring,
Wafr•er of Soi1ereign Immunity, 6 HARV. INT'L L. CLUB J. 189 (1964-65).
m Ct: Enderlein, supra note 174.
~1" A~ WeinsteinD.J.saidinHarrisii. VAOlntQUristMoscow(481 F.Supp. 1056, 1058(E.D.N.Y.
I 979)), implicit waiYers by the performance of commercial conduct are not consistent with the
1976 Act. But problems of waiver have continued to arise, in some cases with disconcerting
rt:~u)h. In lpitrade Int'! S.A. v. Federal Republic of Nigeria (465 F.Supp. 824 (D.D.C. 1978)) the
court seems to ha\'e held that a waiver of immunity from Swiss jurisdiction entailed a waiver
from U S. jurisdiction to enforce the Swiss award. This decision was criticized in Verlinden
B.1'. v. Central Bank of Nigeria (488 F.Supp. 1284, 1300-02 (S.D.N.Y. 1980)), but was follo,\
·ed in rather different circumstances in Libyan American Oil Co. v. Socialist People's Libyan
.111ihjamah1rya (482 F.Supp. 1175, 1178 (D.D.C. 1980)). On another point, seelnre ... Amoco
Cadiz (491 F.Supp. 161 (N.D. Ill., E.D. 1979) (suing as plaintiff deemed waiver of sovereign
immunity in respect of separate actions arising from same facts)). On the problem of waiver of
immunity from prejudgment attachment, see infra note 252. See al.so supra note 21 I.
.m Vienna Convention on Diplomatic Relations, supra note 209, Arts. 22, 30; Vienna ConH:-
ntion on Consular Relations, supra note 209, Art. 31 (a more restricted immunity). For
discussion, see the Philippine decision of the German Federal Constitutional Court, 38 ZAoRV
Annex 115
862 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
State-owned Commercial Ships. As has been seen, there is a considerable body
of authority, international as well as domestic, permitting the attachment of
foreign state-owned commercial ships in actions relating to the ship, without
any further jurisdictional restrictions than the presence of the ship within a
port, roadstead, or the internal waters of the forum. 220 If international
law allows a state to exercise civil jurisdiction over matters arising out of the
commercial use of a state-owned trading ship, then it seems likely that it also
allows that jurisdiction to be enforced by the arrest of and executi'on against
such a ship. This would be so irrespective of whether any more general
immunity from execution is required or recognized.221
Warships and Other Public Ships. By contrast, the immunity from civil arrest
or execution of warships and other (noncommercial) public ships is well
established.222
State Property Used for "Public Purposes." A substantial body of practice
supports the proposition that state property or funds set aside for purposes
that would be immune from jurisdiction (if a dispute arose concerning the
use of the property or funds for those purposes) will also be immune from
execution in the absence of waiver. This is the position taken in the Soviet
treaties, which (with one, possibly inadvertent, exception) restrict execution
either to property used and funds acquired by the relevant Trade Delegation
in the course of its nonimmune trading functions,223 or which. while
allowing execution against Soviet property generally, except property that
"in accordance with international practice" is "intended solely for the exercise
... of the political and diplomatic rights" of the Soviet Union.224
Similarly, section 13(4) of the UK State Immunity Act allows execution
against "property which is for the time being in use or intended for use for
commercial purposes." The U.S. Foreign Sovereign Immunities Act is, in
one sense, at least, more restrictive: execution is available only against the
state property actually "used for the commercial activity upon which the
claim is based."225 The Swiss and West German case law are in general agree·
at 279-80, concluding that "property which a sending State uses to carry out its diplomatic
functions has the protection of sovereign immunity even if it is not included in the property
or located in the premises described as entitled to [diplomatic] immunity in Art, 22 of the
Vienna Convention." And see Salmon, Les Relations entre l'immv.nile de juridicliun de l'Etal et /es
immunites diplomatiques et consulaires, in L'IMMUNITE DEJURIDICTION IT o'EXECUTION DES ETATS,
supra note 122, at 73 passim.
220 Supra, text to notes 1-7.
221 Of the bilateral treaties discussed above, only a few Soviet merchant shipping treaties
limit arrest of state commercial ships; supra note 43. The matter is not expres.;ly covered by the
U.S.-USSR Agreement on Maritime Matters, Oct. 14, 1972, 23 UST 3573, TIAS No. 7513,
though the effect of the parties' stated policies on immunity of ships would be that the restrictive
rule would apply; cf. TIAS No. 7513 at 74-75, 97. = Brussels Convention concerning the Immunity of State-owned Ships (l!J26), supra note 2,
Art. 3; Geneva Convention on the Territorial Sea, supra note 1, Arts. 22-23. CJ. T. K. THOM•
MEN, supra note 4, at 3-8; Seidl-Hohenveldem, supra note 89, at 56-57.
223 Supra, text to notes 34-43. The exception is the Protocol of 1961 with To;Jo,supra note 35.
224 Supra notes 25, 35.
2
2.s Supra note 59. This requirement might cause difficulty if the property in question had
been converted to public use. CJ. Flota Maritima Browning de Cuba S.A. v, Republk of Cuba,
(1962] Can. S. Ct. 598. For the treatment of instrumentality property, sec infra, text to
notes 239-42.
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 863
ment on this point (though there is, it seems, a difference in presumption
of use). If one interprets the French cases as allowing "private" state assets
to be seized if they are sufficiently distinguished from assets or property
used for public purposes, then they support the West German position.226
This restriction on execution is supported also by the underlying rationale
of immunity, and by the arguments outlined already on the relation between
jurisdiction and execution. It is strengthened by the established analogy of
public ships. For these reasons, I suggest, it can be regarded as established.
Considerable problems of implement1ltion remain. The clearest case of
availability of assets for execution will be where specific state property has
been used for the nonimmune activity that is the subject of suit (indeed,
in the United States this is the only case of availability). The more removed
the property from the activity, the more difficult it may be to show liability to
execution. A brief account will be given of some of the problems that occur.
Mixed Government Accounts. The most frequent practical problem is that of
mixed funds, or of property put to mixed use. In the West German decision
of 1977, the bank accounts were said to contain funds used for trading
purposes and others used for general diplomatic purposes. It has been
suggested that in such a case the fund ought to be liable to attachment to
the extent it can be shown to have been used for purposes that are not immune.
227 This presents obvious difficulties in the case of indivisible property,
and it creates evidentiary problems that might well be insoluble without
extensive discovery, including discovery of noncommercial documents.228
The better view may be that only state property that can be shown to be substantially
devoted to nonimmune use should be liable to execution. This was
the view taken by the West German Federal Constitutional Court.229 It is
also consistent with the position of the Cour de Cassation in Clerget and subsequent
cases. On the other hand, the Swiss cases, perhaps because of their
requirement of a specific jurisdictional link, require some precise designation
of the fund to public purposes. A general fund not so designated is
thus available for attachment.230 The same view has been taken by a United
States district court, which allowed the attachment of a mixed embassy fund
on the ground that to allow immunity would permit a foreign state to avoid
lib Supra, text to notes 98-118. The English cases have not confronted the problem with any
clarity, but the courts are unlikely to take a different position.
ii7 Del Bianco, supra note 59, at 117.
u~ The problem of procegural immunities of foreign states is a neglected one. On the U.S.
position, see Brower, Bistline, & Loomis, supra note 130, at 207-08. On the UK, cf. State
Immunity Act, 1978, §13(1). For the problem of foreign state privilege from disclosure in
litigation between other parties in England, see Buttes Gas & Oil Co. v. Hammer (No. 3), [1980)
3 W.L.R. 668 (C.A.).
%%
9 Supra, text to notes 95-97. For commentary, see Ress, Entwicklungstendemen der
Jmm1mitat auslandisclur Staaten, 40ZA6RV217, 271-75 (1980) (English summary), who regards
thi: Court's decision as "cautious and aimed at avoiding an eventual erosion of the legal institution
ot immumty as a whole." Seidl-Hohenveldern, supra note 84, at 70-71, criticizes the
Court's adoption of a "purpose" test, which should be restricted to the context of diplomatic
property. It is suggested that the formula proposed here to a large extent overcomes that
difficulty.
" '
0 Supra, text to notes 78-88.
Annex 115
864 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
all execution against funds by maintaining mixed accounts.231 On what basis
this justified attaching the whole fund is not clear.232
I would suggest that this view is satisfactory only to the <;·xtent that it
relates to property or assets not in use for any particular purpose at all
(for example, vacant land or fixed term deposits). Once assets are shown to
be used in some part for immune purposes, then unless the nonimmune
portion can be ascertained and severed, the whole item or fund is immune.
Whether a liquid fund can be severed in this way will depend as much on
availability of evidence and the problems of discovery as on any underlying
principle. But as O'Connell pointed out, the effect is likely to be that, in
proceedings against a foreign state (as distinct from a separate state instru~
mentality), execution will only be available in restricted cases.233
Central Banks. Section 14(4) of the UK State Immunity Act exempts from
execution "property of a State's central bank or other monetary authority."
Section 161 l(b)(l) of the U.S. Foreign Sovereign Immunities Act similarly
exempts property "of a foreign central bank or monetary authority held for
its own account." The ordinary functions of a central bank or monetary
authority are quite clearly governmental for the purposes of any distinction
between "governmental" and other transactions of a state. Since central
bank property and funds are likely to be of a mixed or undivided character,
it follows that they would usually be immune, whatever rule of immunity
might be adopted. To this extent, it seems that these provisions represent
the general position rather than an arbitrary exception.234
As we have seen, in Trendtex Trading Corp. v. Central Bank qf Nigeria, the
Court of Appeal upheld an interim injunction restraining the removal from
the jurisdiction of funds in a Central Bank account.235 No very explicit
consideration was given to the enforcement problem in that case, but in
Hispano Americana Mercantil S.A. v. Central Bank of Nigerz'a, it was argued
that the statutory provisions exempting central banks had in some way
changed international law on the matter. Lord Denning M.R., in rejecting
this argument, pointed out that the United States Act excluded only property
held by a central bank or monetary authority "for its own account,"
and cited the congressional Explanatory Memorandum, which states that
the term includes only
231 Birch Shipping Corp. v. :Embassy of Tanzania, Misc. No. 80-247 (D.D.C. Nov. 18, 1980).
232 The attachment would not have been available under§ 1610(a)(2), since the fund was not
"used for the commercial activity upon which the claim was based," but was justified under
§1610(a)(l), pursuant to the finding that the defendant state had waived iti. immunity from
execution (supra note 211). But this substantially answers the argument from effectiveness:
there is no rule that a waiver should be "effective" beyond its terms.
233 ILA, supra note 161, at 27-28, 30. And cf. Higgins, supra note 60, at E,O.
234 Thus, in Blagojcvic c. Batl.lJUe du japan (1976), 66 REV. CRITIQUE Dno1T INT'L PRIVE 359
(1977), the Cour de Cassation accorded immunity to the Bank of Japan in an action arising
out of the bank's exercise of exchange control functions. Cf the United Kingdom AttorncyGeneral,
Sir Michael Havers, 949 PARL. DEB., H.C. (5th ser.), col. 417 ( I 978): '''It has always been
accepted that for the purposes of enforcement of judgments the funds belonging to a State's
central bank are regarded as the property of that State .... " On the U.S. Act, cf. del Bianco,
supra note 59, at 116-18.
~ Supra, text to notes 153-59.
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 865
funds used or held in connection with central banking activities, as
distinguished from funds used solely to finance the commercial transactions
of other entities or of foreign states. If execution could be levied
on such funds without an explicit waiver, deposit of foreign funds in
the United States might be discouraged. Moreover, execution against
the reserves of foreign states could cause significant foreign relations
problems. 236
On the other hand, the English Act was only prospective in effect. He
concluded:
I would say that the English Act is not applicable to the transactions in
this case. So far as the American statute is concerned, it seems to me
that it does not apply to this case at all because it can be ar~ued that
these funds are not being held by the Central Bank of Nigeria "for its
own account''. They are held not for its own central banking activities
but for the activities of Government departments in Nigeria.
Apart from these two grounds, it seems to me that the international
law remains as I stated it in the Trendtex case. We had before us a decision
of the Provincial Court of Frankfurt in which (in a precisely similar
case to ours) an injunction had been granted: and in the Trendtex case
(operating as we thought in accordance with international law as it then
stood) we granted an injunction. It seems to me that the latest statutes of
the U.S. and of our Parliament are not sufficient to alter the international
law as we stated it. 237
Despite appearances, it could not seriously be argued that the two municipal
statutes had the effect of changi,ng international law. But they do support
the view that, at least in most cases, property or funds of central banks or
monetary authorities must be immune from jurisdiction under general
principles of immunity, since such property or funds are ordinarily in use
for public or governmental purposes. In practice, foreign central bank
funds are usually mixed funds (i.e., bulk accounts not earmarked for any
specific purpose), and it is likely to be difficult to distinguish central bank
funds as set aside for commercial purposes.238 On the other hand, no magic
attaches to the label "central bank"; the question must always be whether
a particular function or use of property is immune in accordance with the
criteria suggested here. There is no reason why a special or earmarked fund
held for nonimmune purposes by a central bank should not be liable to
execution. This is, however, an unlikely possibility.
Other State Instrumentalities. Both reason and practice support the suggestion
that property or funds of separate state instrumentalities, engaged
in nonimmune transactions, should be more generally available for execution
in respect of transactions of the instrumentality. When an instrumentality
is substantially engaged in trade, its property is presumptively set aside
~_,,. (1979) 2 Lloyd's L.R. 277, 278-79 (quoting [1976] U.S. CoDE CONG. & Ao. NEWS 6604).
rn Id. at 279. Waller L.J., rather more tentatively, agreed, as did Cumming-Bruce L.J.
1
·"' Cf. the Libyan State Bank's position in the UAMCO case, supra note I 18. And see the
Note in 50 BRIT. Y.B. INT0L L. 221 (1979). See also Arts. 12 and 15 of the Swiss-Hungarian
treaty of 1950, supra note 46. Article 15 precludes attachment of Central Bank assets in actions
agaimt ~eparate state instrumentalities. Article 12 prohibits attachment of funds in specified
Central Bank accounts.
Annex 115
866 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
for that purpose. No such presumption exists in the case of state property,
hence the requirement that the dispute relate to the property, or that the
property be set aside independently for nonimmune use. It is on this basis
that the two leading decisions of the French Cour de Cassation can be
reconciled. 239 The same distinction is evident in the U.S. and Soviet treaties,
and in the Foreign Sovereign Immunities Act. Under the Act, all property
of a foreign state instrumentality is liable to execution, in respect of a nonimmune
transaction by the instrumentality.240
It should be emphasized that this distinction, which is fully :mpported in
the case law, does not depend on the corporate personality of the state
instrumentality but on the fact of its separate organization. It is not an
exception to the "public use" rule but an application of it. Obviously, the
"fact" of separate legal personality must be taken into account, but that "fact"
is easily manipulated and cannot be decisive. Cases such as Krajina v. Tass
Agency241 demonstrate this clearly. If the Tass Agency had been separately
incorporated, it would almost certainly not have been held to be immune
in that case-but its incorporated status, or lack of it, was nc,t relevant to
any real issue there.
Whether the assets of a separate state corporation should be available
for execution pursuant to claims against the state itself or other instrumentalities,
is a different question. In the first instance, it must depend upon the
status and organization of the instrumentalities, and upon the extent to
which the ordinary law of the forum allows recourse to assets in this way.
It might be thought that the objection of nonopposability, raised by the 11
Libyan instrumentalities in the UAMCO case, was a cogent one.242
Cases Not Involving Execution Against State Property. Finally, and for the
sake of completeness, it should be noted that certain cases of execution may
not directly involve state property. For example, a set-off in an allowable
counterclaim in proceedings with a state does not to that extent involve any
execution: it simply defeats, pro tanto, the state's competing claim. Equally,
payment out of a fund in the control of the court, even where the payment
is adverse to a state's claim, does not involve execution against the state unless
it is the owner of the fund.243
239 Supra, text at note 110.
240 Supra note 59. And see J. Thompson, The Status of Legal Entities in Soe1alist Countn'es as
Defendants under the Foreign Sovereign Immunities Act of 1976, 12 VAND. J. TR.\NSNAT'L L, 165
(1979). On the question whether separate instrumentalities arc exclusively covered by the 1976
Act or are subject to a cumulative jurisdiction under other provisions (e.g., as a "subject ofa
foreign state"), see Icenogle v. Olympic Airways, S.A., 82 F.R.D. 36 (D.D.C. 1979): Rex. v.
Cia. Peruana de Vapores, S.A., 493 F.Supp. 459 (E.D. Pa. 1980).
241 [1949) 2 All E.R. 274 (C.A.).
242 Supra, text to notes l 16-18. Cf. Art. 15 of the Swiss-Hungarian treaty, Jupra note 46, to
this effect. See also Huberlant & Delperee, Les Personnes de droit public beneficiGires de l'immunite
d'execution, in L'IMMUNITE DE JURIDICTION rr o'EXECUTIO'N DES ETATS, supra note 122, at
211-56; Bouchez,supra note 175, at 28; United Euram Corp. v. U.S.S.R., 461 F.Supp. 609
(S.D.N.Y. 1978).
243 Cf. Lariviere v. Morgan, (1872) L.R. 7 Ch. App. 550; United States v. Harris & Co.
Advertising, Inc., 149 So.2d 384 (1963); Procureur-Generale c. Vestwig, 73-76 J. DROlT
lNT'L 4 (1952).
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 867
THE PROBLEM OF PREJUDGMENT ATTACHMENT
Prejudgment attachment of state property presents complex problems
requiring further study: however, the availability of such attachment must
be al least generally dependent on the conclusions already reached as to
final execution.
Prejudgment attachment, for our purposes, takes at least three distinct
forms; and the immunity rule may differ for each.
( 1) Attachment of Property ad fundandam jurisdictionem
In some jurisdictions, property of a defendant may be seized and made
the basis for jurisdiction against that defendant even where in personam
jurisdiction would not be available. This is the case in the law of Scotland
and South Africa (both influenced by the civil law); its U.S. equivalent is
quasi in rem jurisdiction. However, it has no direct analogue at common law
(apart from actions in rem against ships, to be discussed shortly). So far
as the law of sovereign immunity is concerned, the permissibility of such
seizure would seem to depend upon whether state property is immune from
seizure for the purposes of execution.244 Still, there is a further possible
restriction, a matter of the international law of jurisdiction: it is by no means
clear that a state could properly claim to exercise jurisdiction over a defendant
in respect of acts unconnected with that state, simply on the basis that
some property of the defendant happened to be within the state. At least,
the action might have to relate to the property in question.245
To the extent, then, that attachment ad fundandam jurisdictionem has a
merely notional or transient effect on the state's enjoyment of the property,
it would appear to be subject only to the rules relating to the acquisition and
exercise of jurisdiction over (as distinct from execution against) a foreign
state. To the extent that it allows a more permanent arrest of property (with
consequent deprivation of use), it is harder to justify on purely jurisdictional
grounds, and the rules relating to execution may well become relevant.246
m Unless the attachment is purely notional, without effective seizure and detention of the
property. Under the Scots procedure of arrestment, the propeny is released as soon as the
defendant enters an appearance. At a time when the United States still adhered to the rule of
immunity against execution, quasi in rem attachment of state property was nonetheless alk.
wed in order to attract substantive jurisdiction; M. WHITEMAN, supra note 31, at 711-12.
The Foreign So\'ereign Immunities Act abolishes prejudgment attachment in all cases(§§ 1609-
16 I I), pro\'iding instead more extensive methods of obtaining in personam jurisdiction by
!>crvin· of process (§ 1608).
i~ Cf Ibrahim Shanker & Co. v. Distos Compania Naviera S.A. (TheSi.tkina), (1978) I Lloyd's
LR. I, 5-8, per Lord Diplock.
t4'- Cf Brasseur v. Republic of Greece (1933), 59J. DROIT INT'L 1088 (1932), 6 ANN. DIG. 164,
167 (Hl:i8) (Ci\'i[ Tribunal of Brussels). However, the U.S. position after 1952 allowed quasi
m rem proceedings against foreign states (with consequent interim attachment of property),
e\'en though final execution was precluded; see M. WHITEMAN, supra note 31, at 709-15.
And cf. Braden Copper Co. ,,. Groupement d'Importation des Metaux (Trib. Gr. Inst. 1972),
I~ ILM 187 (1973).
Annex 115
868 THE AMERICAN JOURNAL OF INTERNATIONAL LAW [Vol. 75
(2) Attachment of Government-owned Trading Ships
Attachment of ships serves the d.ual purpose of attracting; jurisdiction
over a foreign defendant who otherwise may not be amenable to suit, and
of placing a fund (the ship or a bond given in substitution for r.t) in the custody
of the court, out of which any eventual judgment may be obtained.247
This form of attachment of state trading ships has been seen to be generally,
though not universally, accepted.248 It seems to be a concomitant of the very
liberal rule of jurisdiction that the claim in question should relate to the use
of the ship (or a sister ship).
(3) Attachment in Aid of Execution,
The procedure of interim attachment of property in aid of execution is
found in a number of legal systems. Perhaps the best known example is
the French procedure of saisie conservatoire. Until recently, no common
law equivalent existed, but since 197 5 the remedy of an interim injunctionthe
so-called Mareva injunction-restraining removal of assets from the
jurisdiction has been developed. 249 Although this operates formally in personam,
its effect on property is very similar to a conditional attachment, and
it should probably be assessed on this basis.
If particular state property is liable to final execution in a matter, then,
unless some positive rule to the contrary can be established, it would seem
to follow that the property should be liable to prejudgment attachment in
aid of execution (subject to suipible guarantees such as the payment of costs
if the plaintiff is unsuccessful, respect for other jurisdictional immunities,
and the availability of judicial machinery to scrutinize claims for bona fides).
There is at least some practice in favor of a positive rule pn:cluding prem
For the related machinery of maritime liens, cf. the decision of the Privy Council in
Bankers Trust Int'l Ltd. v. Todd Shipyards Corp., [19801 3 W.L.R. 400.
248 Supra, text to notes 1-7, 41-43.
249 On the Mareva injunction, see generally Mareva Compania Naviera S.A. v. International
Bulk Carriers Ltd., [1975] 2 Lloyd's L.R. 509; Rasu Maritima S.A. v. Perusahaan
Pertambangan Minyakdangas Bumi Negara, [1977] 3 W.L.R. 518; Ibrahim ~-hanker&: Co, v.
Distos Compania Naviera S.A. (The Siskina), (1978] l Lloyd's L.R. l; and Bin Turki v. AbuTaha,
[19801 1 W.L.R. 1268. Despite a critical tendency in the speeches of Lc,rds Diplock and
Hailsham in The Siskina, the procedure seems to be well established. TherE· arc difficulties,
however, in its application to state property. Since it operates in personam, it may not be
available in respect of state property held by the state itself (as distinct from property held by a
state instrumentality or third person), if only because of the difficulty of finding an appropriate
person to enjoin. Secondly, even if, at common law, final execution is available against
state property, a Mareva injunction cannot be obtained unless there is some <·vidence that the
defendant will default. It could not simply be assumed, against a foreign state or instrumentality,
that it intended to defeat the forum's jurisdiction by removing property or assets. As
Lord Denning M.R. said in Etahlissement Esejka et Cie v. Central Bank of Nigerici, in the absence
of evidence to the contrary, "it would not be right to say that the government of Nigeria would
not honour its obligations or that there is any risk of its dishonouring its obligations if it is
found to be liable by this Court." [1979] 1 Lloyd's L.R. 445, 445. Lawton L.J. agreed.
Apparently, the point was not taken by counsel in the Hispano Americana case. But a similar
position was-taken by the District Court of Amsterdam in 1978; Kingdon of Morocco v.
Stichting Revaliditie Centrum "de Trappenberg,'' 10 NETH. Y.B. lNT'L L. 444 (1979),
Annex 115
1981] EXECUTION OF JUDGMENTS AND SOVEREIGN IMMUNITY 869
judgment attachment: most of the Soviet Union's treaties expressly exclude
it,250 and it seems not to be available under the UK State Immunity Act.251
The Foreign Sovereign Immunities Act excludes prejudgment attachment
in aid of execution in the absence of a distinct, explicit waiver.252 However,
if international law does not preclude final execution against state property,
it would seem strange that it should preclude a state from taking interim
measures, in case of need, to make that final execution effective. The point
is by no means settled, but the same structural argument applies here as in
relation to final execution: it is doubtful whether a domestic court would be
persuaded, on the limited material available, that it was required to refrain
from preserving its (ex hypothesi, accepted) power of final execution. This
view has certainly been taken in the European cases, very many of which
have involved interim attachment or saisie conseroatoire. In general, considerations
of immunity from execution have been applied without distinction
to interim attachment and final execution, and it is suggested that this
is the preferable view. ,
= Supra, text to notes 21-22, 35-38.
: 51 Section l3(2)(a) of the Act prevents relief from being given "against a state by way of
injunction or order for specific performance or for the recovery of land or other property,"
and the exceptions to immunity from execution in section 13(4) do not apply to section l3(2)(a).
Clearly enough, this prevents a Mareva injunction against a state as such; the question is
whether it prevents such an injunction against a nonstate defendant (other than a central bank)
in respect of state property. That depends on whether an (indirect) restraint on state property
is relief "against a state," since it is clearly not "for the recovery of land or other property.''
During the parliamentary debates on the State Immunity Bill, Lord Wilberforce proposed the
insertion of "(a) or" in what is now section 13(4) of the Act, to achieve this result; 389 PARL.
Drn., H.L. (5th ser.), cols. 1935-38 (1978), on the ground that "the courts ought not to be
deprived of the power to freeze assets in this country where there is a genuine and properly
constituted dispute in which a State may be involved." His concern was mainly with cases in
which the person enjoined was not the state (col. 1937). There was support for this view (e.g.,
Havers, 949 PARL DEB., H.C. (5th set.), col. 417 ( 1978)), but the amendment was not passed.
m 28 U,S.C. U610(d). Cf. del Bianco,supra note 59, at 143-44; Smit, supra note 130, at 67.
It is still unclear whether the Iranian treaty (supra notes 29-30) entails waiver of prejudgment
attachment. The reference to "immunity . . • from . . . execution of judgment, or other
hability to which privately owned and controlled enterprises are subject" has been agreed
not to constitute an "explicit waiver," but the statutory requirement of an explicit waiver does
not appl)' to "existing international agreements" waiving immunity(§ 1609). In Behring lnt'l lnc.
t r, Impmal Iranian Air Force (475 F.Supp. 383, 394-95 (1979)) the court held that on "ordinary
principles of construction" Article Xl(4) of the Iranian treaty did waive immunity from preJUdgment
attachment. But in three other cases it was held that the exceptional nature of prejudgment
attachment against state property, in the context of the treaty, entailed its own
standard of explicitness which Article Xl(4) failed to meet; Reading & Bates Corp. v. National
Iranian Oil Co., 478 F.Supp. 724, 727-29 (S.D.N.Y. 1979); E-Systems Inc. v. Islamic Republic
of Iran, 491 F.Supp. 1294, 1300-01, 1303-04 (N.D. Tex. 1980); New England Merchants
Nat'! Bank\·, Iran Power Generation & Transmission Co., 502 F.Supp. 120 (S.D.N.Y. 1980),
I 9 ILM 1298, 1307-1 I (1979), Clear anal)'Sis has not been assisted by the failure to see the
limited extent, ratione personae, of the treaty waiver; supra note 30.
ANNEX 116
An activist revival in central
banking? Lessons from the history
of economic thought and central
bank practice
Lilia Costabile and Gerald Epstein
1. Introduction
The financial crisis of 2008 has shaken up the world of central banking.
Not only were central bankers in the United States, United Kingdom, and
Europe widely criticised for failing to prevent the meltdown, but they have
been also roundly denounced for spending billions of dollars to bail out
financial institutions, while the mass of citizens and many businesses have
been severely damaged by the crisis with little apparent help from their
governments.1
In response to the criticism and crisis, as well as to the grim reality of a
crashing economy, central banks, especially in the crisis epi-centres of the
United States, United Kingdom, and Europe, have had to throw out their
old rule books that governed monetary policy, and engage in some previously
unthinkable policies. Starting with the widespread bail-outs of banks
and other financial institutions and markets, central banks implemented
experimental programmes including Quantitative Easing, new lending
Address for correspondence
Political Economy Research Institute (PERI), University of Massachusetts Amherst,
Amherst, MA, USA; tel: 413-577-0822; fax: 413-577-0261; e-mail: gepstein@econs.
umass.edu
1 The term “bail-out” might seem misplaced, since the Bagehot Rule for lender of
last resort activities prescribe lending only to illiquid but not insolvent institutions.
But in the case of the US in 2007–2008, this prescription was not always
followed. Charles Kindelberger suggests that blurring this distinction is not
unusual and he is probably correct when he wrote that, when it comes to central
bank lender of last resort activities, “the only rule is that there are no rules”
(Kindleberger 1978, p. 23).
2017 Informa UK Limited, trading as Taylor & Francis Group
Euro. J. History of Economic Thought, 2017
Vol. 24, No. 6, 1416–1439, https://doi.org/10.1080/09672567.2017.1378691
Annex 116
1') Check for updates
facilities for various financial institutions, and are now pursuing the highly
controversial policy of negative nominal interest rates.
All of these experiments are a far cry from the conventional wisdom governing
central bank policy just prior to the crisis. As Olivier Blanchard, former
chief economist at the IMF, put it:
Before the crisis, mainstream economists and policymakers had converged on a beautiful
construction for monetary policy.… we had convinced ourselves that there was
one target, inflation. There was one instrument, the policy rate. And that was basically
enough to get things done. If there is one lesson to be drawn from this crisis, it
is that this construction wasn’t right, that beauty is unfortunately not always synonymous
with truth.
Blanchard concludes: The fact is that there are many targets and there are many
instruments (emphasis added).2
Thus, in response to the crisis, the issues, both of central bank objectives
and central bank instruments, have been put squarely on the agenda – not
out of choice, but out of necessity. This experimentation and search for
new targets and instruments are not unprecedented in the world of central
banking. In fact, we argue that there has been a long-standing movement
in the world of central banking –both in theory and in practice – between
two poles: minimalism and activism. Even within the twentieth and the very
short twenty-first century, we can see the outlines of this spectrum and
movements back and forth along it: from the commitment to the maintenance
of the international gold standard at the turn of the twentieth century
and following the “rules of the gold standard game” presumed during
that period, to the neo-Keynesian interpretations of Paul Samuelson,
James Tobin, Franco Modigliani, and Robert Solow, which called for monetary
policy “fine-tuning”, to the “monetarist” counter-revolution of Milton
Friedman and followers. Parallel to this dance in the developed countries,
was a trend towards “developmental”, activist central banking in the developing
world, exemplified by the work of Arthur Bloomfield at the New
York Federal Reserve, Robert Triffin in the U.S. Treasury Department and
Albert Hirschman of the Institute for Advanced Study in Princeton.3
In the second half of the twentieth century and early twenty-first century,
we have had a second movement and reaction along this spectrum:
the minimalist approach embodied in Inflation Targeting (IT) – which
won the day in many developed and developing countries as the dominant
approach to monetary policy. And now, this minimalist approach has been
2 Blanchard (2011).
3 See Epstein (2007), Helleiner (2003, 2014), Alacevich and Asso (2009).
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strongly challenged by the radical responses to the great financial crisis.
Where this movement will come to rest is completely unclear.
In this paper, we suggest that one particular subset of activist policies,
namely those aimed at the promotion of economic growth, may be of particular
interest for central banks today. We illustrate the scope of these policies
both in theory and practice, through an investigation combining the
history of economic thought perspective with historical analysis.
To do this, we first introduce the “minimalist – activist” spectrum as an
analytical prism through which to view some key aspects of central banking
theory and practice, and show how the concepts of minimalism and activism
emerge from the history of monetary thought. Then we adopt this distinction
as an organising principle for the analysis of some historical
episodes in monetary policy and central banking practices that better illustrate
the activist approach we propose in this paper.
To keep things manageable, we concentrate on three aspects of this
larger set of issues.
First, we focus on the “activist” end of the spectrum, with the minimalist
approach only serving as a term of comparison.
Second, we focus on one activist goal: economic growth. Although “activism”
in central banking has multiple goals, in this paper, we select growth
because we wish to call attention to this relatively unexplored objective of
central bank policies. For instance, the Monetarist–Keynesian controversies
mainly focused on other objectives such as full employment, the stabilisation
of cycles, or balance of payments equilibrium. By contrast, one of our
main objectives here is to show that at some important historical junctures,
central banks have been prime actors of development and growth. They
pursued growth strategies through combinations of macroeconomic policies
and specific actions for promoting priority sectors and/or geographical
areas, including through banking allocation techniques and their influence
on banking policies. Thus, after illustrating the meaning of activism and
minimalism in their wider sense, in this paper, we adopt a restrictive definition
of “activism” as limited to growth and developmental objectives.
From this, our choice to concentrate on the work of one economist,
Dennis Holme Robertson, follows naturally. Robertson’s theory provides
the best rationale for the central bank policies we focus on. He contemplated
full employment and wanted to put people to work, but he always
thought of this objective as part of the wider goal of promoting growth.
Also, he was aware that this goal requires that central banks and the banking
system combine macroeconomic policies with selective measures of
credit allocation in order to privilege basic or dynamic sectors in the real
sector of the economy. Thus, not merely for space reasons, but mainly
because Robertson is the most congenial author to our objectives in this
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paper, do we deal in some detail with his approach to “activism”. We leave
to another occasion the illustration of other architects of “activism” in the
wider sense of our term.
This paper is organised as follows. In Section 2, we first define what we
mean by the minimalist and activist spectrum. In Section 3, we take up the
main focus of the paper: the “activist” approach, and discuss some key
aspects of Dennis Robertson’s theory as an example of theoretical foundations
for an activist approach to central banking. By way of comparison, we
also discuss briefly the work of von Mises as an example of the minimalist
approach. We next turn from theory to practice. In Section 4, we show
how activist approaches oriented towards growth and development motivated
central banks in the early post-First World War period, and illustrate
the specific techniques they adopted. Section 5 concludes.
2. Minimalism vs. activism in central banking
As is well known, “minimalism” has a long pedigree in the history of thinking
about monetary policy, going back at least to the writings of David
Hume, and represented, most recently, in the perspectives of advocates
for inflation targeting. The key idea is that the capitalist economy maintains
full employment and economic stability and achieves maximum economic
growth through market mechanisms, with no room or need for
policies by the central bank. In the absence of a commodity standard, however,
there is one and only one role for the central bank: namely anchoring
the price level. According to subscribers to “minimalism”, attempts by
the central bank to be active in achieving other goals – with the possible
exception of acting as a lender of last resort (which we mention below) – is
most likely to lead to inefficiency, instability, and even crisis.
“Activism” in central bank theory and policy, on the other hand, also has
a significant historical trail. Its roots go back to the seventeenth and eighteenth
centuries, when economists started to learn the new possibilities
opened up by credit systems, paper money, and monetary management.
Limiting ourselves to the English-speaking world, and to authors already
acquainted with central banks, we may go back at least to John Law.4 In
the same line, we may also mention the “populist” theorists in the late
nineteenth century in the United States, while a thicker history started in
the turn of the twentieth century.5
From a theoretical perspective, advocates of a more activist central bank
have a dimmer view of the efficiency, stability, development, equity, and
4 Murphy (1997), Schumpeter (1954, pp. 321–2).
5 See Goodwyn (1976).
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growth characteristics of capitalist market processes, in general, and private
finance in particular, than do most of the “minimalist” theorists.
Active central banks, according to these theorists, can play an important
role in promoting employment, economic growth, and development, with
more stability and, in some case, more equality. These activist central
banks’ functions include their ability to create liabilities that are accepted
as money “by manipulating their own balance sheets”; their ability to channel
liquidity either to individual banks or, through open market operations,
to the market as a whole; their traditional role in financing public
expenditures and, at the same time, disciplining State finances; their function
as selective credit allocators (Goodhart 2010). This wide spectrum of
objectives and functions contrasts sharply with the one-objective oneinstrument
policy structure proposed by minimalists.
One area where there is some overlap between some minimalist and
activist theorists is on the question of “lender of last resort” activities by
central banks and their role in promoting financial stability. This is an
important topic, but is one that requires a separate paper.
Here, for the reasons stated above, we focus on one version of activism:
pro-growth activism. Our study of Dennis Robertson’s thought in the next
section proposes to clarify the theoretical foundations of this approach.
3. Robertson’s activist approach to central banking
3.1 Monetary policy, growth, and cycles
Capitalist economies are dynamic economies: their very essence is a continuous
push towards change and progress. And “the explosive forces of
industrial progress” inevitably generate “industrial instability”, that is, business
cycles, as Robertson argued both in his A Study of Industrial Fluctuation
written in 1915, and in Banking Policy and the Price Level, 1926.
Coherent with his approach to cycles as quintessential to growth, Robertson’s
prescriptions for central bank policy were innovative if not heretical,
if judged with the lenses of monetary orthodoxy. He rejected
monetary neutrality, and argued that the monetary authorities should not
be fixed on the objective of stabilising prices (Robertson 1928b). Rather,
they should expand the money supply to let prices rise as new productive
capacity is built during expansions, via either capital widening (i.e. the
absorption of a growing population into employment) or capital deepening
(the production of new instrumental goods, usually embodying technical
progress). And then they should keep the money supply constant when
the increased output reaches the market, so as to let prices fall and induce
some desirable distributional effects, to be described below.
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Robertson also argued that in each historical episode, some specific sectors
or firms work as the engine of growth. It follows that, if growth has to
take place, resources have to be moved towards these expanding sectors
and firms. Monetary policy should accommodate these re-allocations, for
instance, encouraging banks to lend to firms in the dynamic sectors.
Let us analyse the theoretical foundations of these policy prescriptions
in some detail.6
The following features of Robertson’s model are relevant here.
First, growth involves a complex relationship between saving and investment.
We must contemplate two cases, as growth may occur either in
“equilibrium” or in “disequilibrium”. 7
Growth in equilibrium requires that the share of GDP that households
decide to save is equal to and grows at exactly the same rate as the share
that firms decide to devote to capital formation. This condition, if
respected, also guarantees price stability. But, because firms and households
are independent decision-makers, saving and investment decisions
are not normally in equilibrium. Growth in equilibrium is the exception
rather than the norm. Indeed, according to Robertson, “the preservation
of even a stationary equilibrium would be something of a miracle” (Robertson
1954 [1956], p. 77).
If growth is normally a disequilibrium process, how are saving and
investment brought into equality in growing economies? Robertson’s
answer was that individual saving decisions are not generally a binding constraint
on growth, given that the production of capital goods is not normally
financed by savings, but by bank credit. Saving adapts. Normally, if
banks respond elastically to firms’ demand for loans, the new injections of
money raise the price level and reduce the real purchasing power of wages
and other sticky incomes: income is redistributed in favour of profits. This
process of inflation-cum-redistribution only stops when firms’ savings out
of inflation-induced profits equal their investment decisions. This clarifies
why Robertson objected to a monetary policy aimed at the preservation of
price stability. By imposing a restrictive stance on banks (for instance,
through higher reserve coefficients), central banks would hamper the
6 Because our objective in this paper is to focus on Robertson’s prescriptions for
central bank policy in fully developed monetary economies, we leave out of our
presentation some features of Robertson’s approach, including his “type-ofeconomies”
analysis, where he distinguished between co-operative and noncooperative
economies, barter and monetary economies. In terms of these distinctions,
we concentrate on non-cooperative monetary economies.
7 Costabile (2005) presents a simple formal model encapsulating Robertson’s
ideas on growth. See also Costabile (1985, 1997) and the literature cited in
these essays.
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process of growth and hinder the increase in capacity and output that new
capital goods bring about.8
Robertson was aware of the social costs of these policies of “forced levying”
in the interests of capital accumulation. Consequently, he argued
that they should not be pushed too far in “putting on the necks of economic
subjects a heavier yoke than they have consciously consented to
bear” (Robertson 1965, p. 361), because they have welfare costs and may
cause political unrest. But Robertson’s fundamental recommendation concerning
these welfare issues was that, after facilitating growth in the
ascending phase of the cycle with their expansionary monetary policies,
central banks then keep the money supply constant and let prices fall after
the increase in capacity and output has materialised, so as to promote a
new redistribution of income, this time in favour of wage earners and
other “fixed incomists”. Thus, the sacrifices imposed on these classes and
groups in order to make capital accumulation possible, would eventually
be compensated by their participation in the fruits of economic growth.
By contrast, firms’ owners would reap all the benefits of economic progress
if the money supply grew at the same rate as output.
In the light of his complex analysis, Robertson rejected price stabilisation
as the overriding objective of monetary policy, both during the expansion
and in the subsequent stage when the fruits of economic sacrifices
appear in the form of a larger output. The “more scientific view”, he
argued, calls for a monetary policy aimed at stabilising “the price of productive
capacity” rather than the price level (Robertson 1965, p. 356).
Moreover, very interestingly, he even had doubts that price stabilisation
was a feasible objective.9
The second feature of Robertson’s model of interest here is his emphasis
on structural change in the process of growth. In his view, the most
8 Notice that the interest rate as an equilibrating factor between saving and investment
does not make its appearance in Robertson’s work until the Thirties, particularly
in his famous 1934 article (Robertson, 1934). From 1915 to the early
Thirties, he worked with price variations as the equilibrating factors instead
(see also Danes, 1979; Fellner, 1952; Robinson, 1946). Moreover, already in
1915, Robertson contemplated falls in the level of prices and the level of activity
below full capacity in the course of downswings. Activity levels, he argued, adapt
to changes in the demand for goods, not the other way around. He criticised
the Law of Markets on this basis (Robertson 1915, pp. 5 and 200; see also
Robertson [1926, pp. xii–xiii]). However, the capacity created in the upswing is
never completely destroyed in the downswing. This is why economies grow and
this is why Robertson’s model is different from the Austrian model, as we will
see below.
9 See his analysis of the reasons why the FED Governor, Strong, was unable to
control the price level in the second half of the Twenties (Robertson, 1928b).
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important key to growth is shifts in demand conditions for instrumental
goods, giving rise to bursts of investment. These shifts may be due to various
causes: a change in their expected yields, as a consequence of product
innovation (“the railway, electric power, the diesel engine”), or “the wearing
out of an unusually large number of the instruments of production in
some important trade or groups of trades”, or simply a revision in industrialists’
“estimates” of future rewards (Robertson 1915, p. 157). Another
cause of structural change is relative price effects. For example, when an
increase in the “bounty of nature” lowers agricultural prices relative to
industrial prices, industrialists may react to the rise in the relative price of
their product by producing more in order to buy more “wheat” (Robertson
1915, p. 131). What all these cases show is that investment typically concentrates
in some sectors or firms, while others lag behind. The implication is
that pro-growth monetary policies should accommodate these movements,
allowing the most dynamic firms and sectors to realise their desired investment
projects.
Summing up, central banks have wide economic and social responsibilities,
and for this reason they should not target price stabilisation under all
circumstances. This is the foundation of Robertson’s activist approach to
central banking. By making investment independent from the general
public’s saving decisions, expansionary monetary policies finance growth
out of equilibrium. It is a good thing if rising prices accompany the initial
stages of economic expansions, because they provide finance for investment;
and it is also a good thing if monetary policies let prices fall in the
subsequent downturn, because falling prices in the presence of sticky
wages raise the working classes’ purchasing power. Moreover, selective policies
may be needed to accommodate structural transformations.
This is Robertson’s renderings of his own approach:
I have tried not to take it for granted that the preservation of monetary equilibrium
should be in all circumstances the overriding objective of policy in the wider strategic
sense. Indeed, my little book on Banking Policy and the Price Level was written thirty
years ago partly in order to suggest the contrary. Looking back on the history of capitalism,
I should myself find it difficult to say dogmatically that such episodes as the
English railway mania of the 1840s, or the American railway boom of 1869–71, or the
German electrical boom of the 1890s, each of which drenched the country in question
with valuable capital equipment at the expense of inflicting inflationary levies
and adding to the instability of employment, were on balance a ‘bad thing’. And in
these more enlightened days if a community, even though making modest but steady
progress, feels itself under an urgent need to equip itself rapidly with fixed capital
instruments for purposes of defence, or for reaping the harvest of technical improvements
in which it has for some reason lagged behind the rest of the world, the fact
that a certain policy will involve monetary un-neutrality or disequilibrium cannot in
my view be taken to be a decisive argument against it (…) we are far from being able
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to say that the amount of provision for the future which will be made by a free enterprise
economy which preserves monetary equilibrium in any absolute sense is the
‘right amount’. Thus the sort of analysis I have been conducting does not enable us
to condemn off-hand Russian five-years plans, or Indian five-years plans, or any other
nation’s x- or y-year plans on the grounds that they are inflationary. (Robertson
1965, pp. 360–1)
3.2 Robertson and Mises
Robertson’s innovative, farsighted stance of monetary policy becomes
clearer if compared with the views of some of his contemporaries.
Here, a comparison with Ludwig von Mises, one of the champions of
minimalism, will help us better clarify the novelty of Robertson’s
approach.
Mises’s main objective was price stability. Actually, his main preoccupation
was “to erect safeguards against the inflationary misuse of the monetary
system by the government and against the extension of the circulation
of the fiduciary media by the banks” (Mises 1971, p. 410). In his view,
expansionary monetary and banking policies were the main cause of economic
cycles.
Thus, the first difference between the two authors is that, while Robertson
viewed cycles as rooted in the technical and institutional structure of
market economies, and indeed as a symptom of the system enduring propulsive
force; by contrast Mises thought that growth in a market economy
would be an equilibrium process if undisturbed by “arbitrary political
influences” originating in governments, central banks, and banking systems
(Mises 1971 [1924], p. 226).
Mises regarded a purely metallic monetary system as “the modern monetary
ideal” (Mises 1971 [1924], p. 238), and praised the gold standard as
exempt from destabilising political interferences. With a money supply
exogenous to national policies, and depending only upon the world production
of the precious metal, price stability would be higher than under
alternative monetary regimes, he argued. Historical experience, he went
on to say, demonstrated that “the biggest variations in the value of money
that we have experienced during the last century have not originated in
the circumstances of gold production, but in the policies of governments
and banks of issue”. And “the dependence of the value of money on the
production of gold does at least mean its independence on the politics of
the hour” (Mises 1971 [1924], p. 17).
In existing monetary systems, however, metallic money was complemented
by many other categories of money, whose supply was directly
or indirectly managed by the monetary authorities in accord with
governments. Mises categorised money into money proper (fiat money
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and credit money,10 in addition to specie), money substitutes (banknotes,
cash deposits, and token coins), and fiduciary money (i.e. money certificates
that are accepted merely on account of the trustworthiness of their
issuing bodies).11 By managing the supply of these moneys in their own
interests, he argued, governments, central banks, and banking systems
impose instability on the private sector.
This is where we find other momentous differences with Robertson.
Robertson did not assign any special status to metallic money. Money, in
his view, was “everything that is universally acceptable within a given political
area” (Robertson 1928a, p. 42). Coherently with this inclusive definition
of money, he thought that monetary authorities and banks should, as
part of their pro-growth strategies, use their ability to create money regardless
of the gold supply. Expansionary monetary policies were not only legitimate,
but indeed necessary to promote growth in output and welfare.
Mises, by contrast, put metallic money at the top of his monetary hierarchy.
He wanted monetary policies to be disciplined into mimicking the
operation of a pure metallic money system, leaving no room for the
money-creation function of banks and central banks. Borrowing the language
that Hicks reserved for early nineteenth-century economists, we
may say that Mises’s was a late attempt at treating “the monetary system as
if it was a metallic system, or could be forced into the mould of a metallic
system” (Hicks 1979, p. 164).
But what were the consequences of undisciplined monetary policies
according to Mises?
In his answer, he distinguished between alternative monetary systems. In
a system with metallic money plus fiat money only, the deviation from the
metallic “ideal” arises when the supply of fiat money increases beyond
the limits set by the supply of gold. In this case, monetary policies impose
(i) an inflation tax on the private economy, the tax being appropriated by
the issuing authority (Hicks 1979, pp. 202, 210); (ii) a redistribution of
income disfavouring all agents whose money incomes lag behind prices
(Hicks 1979, p. 211); and (iii) a redistribution from creditors to debtors
(Hicks 1979, pp. 195–201, 221).
But these “bad social consequences” of inflation are greatly exacerbated
when, in addition to money proper, there is also fiduciary money. Being
10 What Mises meant by “credit money” is different from common usage. By credit
money he meant the mere transference of already existing purchasing power
from one person to another (as in debt/credit contracts), rather than the creation
of new purchasing power by banks.
11 Consistent with his metallist credo, he refused to consider banknotes and
deposits as money, and preferred to consider them as money substitutes. All
went well if money substitutes did not exceed the reserves.
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created out of nothing, fiduciary money would neither be “backed” by any
reserve of money proper, let alone gold, nor have a fixed quantitative relationship
with it. Under these circumstances, monetary instability would be
magnified as banks, in their capacity as the issuers of fiduciary money,
interfere with the process of capital accumulation.
More precisely, banking systems, according to Mises, generate instability
when they artificially reduce interest rates below the level corresponding
to the equality between saving and investment, and channel new loans
into the hands of entrepreneurs, who demand these loans because they
are fooled by the banks’ interest policy into believing that the profitability
of investment in capital goods has increased; or, in Mises’s “Austrian” language,
they believe that a “lengthening” of the production process is profitable.
Therefore, they move resources from the consumption goods
sector to the capital goods sector. But this allocation of resources is not
maintainable because it does not respect consumers’ intertemporal
choices (i.e. their preferred allocation of income between consumption
and saving). Sooner or later entrepreneurs will have to learn their mistake,
and will have to abandon these longer production processes, with the consequent
abandonment of the new plants in making. Economic resources
run to waste because the bank-induced lengthening of production process
is not “maintainable”. His conclusion was that the monetary interference
with capital accumulation is, at one and the same time, ineffective and disruptive
of economic values, because banks do not respect the spontaneous
equilibrium of capital markets where savings meet investments.
Mises’ approach, which deploys many ad hoc assumptions, can be
criticised under several respects.12 For our present purposes, suffice it to
say that, according to Robertson and many respectable growth models
such as the post-Keynesian models by Kaldor, Harrod, and Domar, the
maintainable rate of investment is not constrained by the existing amount
of spontaneous savings when new profit opportunities are opened up by
population growth and technical progress.13 When these profits opportunities
manifest themselves, monetary and credit policies may work powerfully
in favour of growth, provided their welfare effects are duly remedied
through egalitarian redistributions.
Summing up, price stability was conceived of by Mises as a sort of
“central banks’ discipline device” aimed at constraining their operations
into a strict monetary rule in order to hinder their “etatist”, exploitative
power. By contrast, Robertson believed that monetary policy can positively
12 See Costabile (2005).
13 Robertson considered himself as a precursor of the Harrod-Domar model (Robertson,
1954 [1956].
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affect the allocation of economic resources, particularly in the intertemporal
dimension. This idea receives support from the experience of central
banking in a number of historical periods.
In the remaining part of this paper, we analyse some of these historical
experiences and show how the principles of activist monetary policy have
been translated into practice and put to work when central banks have
embraced developmental objectives.
4. Activist central banking in practice
4.1 Activist policy in the post-independence developing world14
Economic growth is a central goal of many societies, and it certainly
became a dominant concern for many developed and developing countries
in the aftermath of the Great Depression of the 1930s and the Second
World War. The Great Depression itself had called into serious question
the efficiency and stability of capitalist economies overall, and of liberalised
financial markets more specifically. More to the point, developed and
developing countries faced massive challenges of economic reconstruction
and structural change. These challenges, in fact, are of the type that Dennis
Robertson discussed. How could these economies generate “economic
booms” and the kinds of structural transformations that were required to
develop these economies? As Robertson suggested, a central bank policy
directed primarily at controlling inflation was very unlikely to facilitate the
development and growth that would be required.
And in fact, after the Second World War, there was a major transformation
of central banking in the developing world. In developing countries,
central banks were seen by key economists and policy-makers as agents of
economic development.15 As described by renowned monetary historian of
the New York Federal Reserve, Arthur I. Bloomfield, in 1957:
During the past decade there has been a marked proliferation and development of
central banking facilities in the underdeveloped countries of the world, along with
an increasing resort to the use of monetary policy as an instrument of economic control.
Since 1945, central banks have been newly established and pre-existing ones
thoroughly reorganized, in no less than some twenty-five underdeveloped countries.
In other cases, the powers of pre-existing central banks have been broadened …in
large part the recent growth of central banking in the economically backward areas
has…reflected a desire on the part of the governments concerned to be able to
14 For more details, see Epstein (2007).
15 As we describe in more detail, most of the analysis of “development” during this
period had in mind a model of rapid capital accumulation leading to high productivity
growth and high economic growth.
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pursue a monetary policy designed to promote more rapid economic development
and to mitigate undue swings in national money incomes. (Bloomfield 1957, p. 190)
Bloomfield goes on to describe the functions, powers, and goals of these
central banks:
Many of the central banks, especially those established since 1945 with the help of Federal
Reserve advisers (emphasis added) are characterized by unusually wide and flexible
powers. A large number of instruments of general and selective credit control,
some of a novel character, are provided for. Powers are given to the central bank to
engage in a wide range of credit operations with commercial banks and in some cases
with other financial institutions…..These and other powers were specifically provided
in the hope of enabling the central banks…to pursue a more purposive (emphasis
added) and effective monetary policy than had been possible for most….that had
been set up …during the twenties and thirties…(and that) for the most part (had)
been equipped with exceeding orthodox statutes and limited powers which permitted
little scope for a monetary policy designed to promote economic development and internal
stability (emphasis added)…. (Bloomfield 1957, p. 191)
In line with Robertson’s thinking, these policies were oriented to jump
starting and sustaining economic growth.
We can illustrate with a specific example. The central bank plan that
Robert Triffin helped to write for Paraguay in the early 1940s is instructive
here (Helleiner 2014, pp. 142–5). Criticising the highly unstable and procyclical
impacts of the gold standard for countries like Paraguay, Triffin
argued for a central bank with more tools and policy space to promote stability
and growth. Triffin proposed a new structure for the Paraguayan
Central Bank that equipped the bank with the ability to conduct activist
monetary management (Helleiner 2014, p. 142). Among other things,
Triffin argued that the central bank had to become an active banker to the
public. He proposed that the central bank have two departments that
would engage in regular banking activities: a banking department and a
savings and mortgage department. He argued that these activities would
be useful in helping to address “the inadequacy of credit facilities for production
and developmental loans” (quoted in Helleiner 2014, p. 143).
These production and developmental loans were designed to spur productivity
and economic growth.
Triffin and others sent out by the Federal Reserve developed plans for
more activist central banks using a variety of tools to promote stability and
development. And by development, these economists meant a broad conception
of economic growth (Helleiner 2014).
Perhaps even more surprisingly, following the Second World War, similar
activist policies also became widespread in the core countries of the
developed world.
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4.2 Activist policy in the aftermath of the Great Depression: developed countries
It is well known that following the disasters of the Great Depression and
the Second World War, governments in the United Kingdom, Europe,
Japan, and even the United States asserted much greater control over central
banks and the banking industry (Capie 1999). Central banks became
important institutions for financing and managing government debts
accumulated during the war, and after the war, central banks also became
important tools for rebuilding and restructuring national economies and
providing for social needs, often under the government’s direction. Central
banks utilised a variety of credit allocation techniques to accomplish
these goals, and in most cases, these techniques were supported by capital
and sometimes exchange controls.
The types of controls central banks used, the goals they were directed to,
and their degree of success varied from country to country and time to
time. No matter how successful, however, virtually all of these central
banks had ended or severely limited their use of these controls by the mid-
1980s. Under the neo-liberal play book, these controls, despite their long
histories and many successes, were seemingly thrown into the dust bin of
history, at least, that is, until the Great Financial Crisis of 2007–2008.
4.3 Developed country central banks as agents of development during the “Golden
Age of Capitalism” 16
The Great Depression of the 1930s and then the Second World War were a
watershed for central banks in the industrialised world. Virtually all were
brought under more government control and were reoriented to facilitate
government priorities. In the United States, the Federal Reserve was
brought under tighter government control in the late 1930s, and then, at
the start of the Second World War was required to help the Treasury
finance the war effort at relatively low interest rates.17 It remained under
Treasury control until 1951, but even after that, was subject to significant
government pressures to support the market for US government debt that
had been accumulated during the war. In addition, the Humphrey–
Hawkins full employment bill obligated the Federal Reserve to pursue
polices to support high employment while controlling inflation. The era
of Keynesian policies was at hand (Epstein and Schor 1990).
16 Most of this material, with the exception of the case study of Italy, has been
drawn from U.S. Congress (1972); U.S. Congress, Joint Economic Committee
(1981); Zysman (1983); Hodgman (1973). Also see Epstein (2007).
17 Epstein and Schor (1995).
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In Europe and England, central banks that had been politically independent
before the War found themselves subject to state control after
1945 (Capie et al. 1994, p. 72). During the War, monetary policy was often
implemented through direct controls while interest rates were held low
and constant. Direct controls continued in the aftermath of the war with
various credit allocation techniques (Capie et al. 1994, p. 25.) These policies
were designed to keep the cost of capital as low as possible to promote
investment, growth, and recovery in these mostly war-ravaged countries. In
some cases, the strategy was designed to promote leading and strategic sectors
that would have higher productivity growth and more export potential,
thereby allowing for a more sustainable high growth path.
These central banks used a variety of techniques to promote these goals.
Often this tool box included credit allocation techniques. Credit allocation
techniques or controls are commonly defined as measures by which
the authorities seek to modify the pattern and incidence of cost and availability
of credit from what markets would generate on their own.18 To the
extent that in recovering Europe some key resources were scarce, sometimes
these controls were used to reduce resources availability in some sectors,
while re-allocating them to priority sectors. These were sometimes
designed to promote social goods such as housing, but in other ways to
promote investment and the growth of priority sectors or regions. In
Europe, credit controls served at various times and places (1) to finance
government debt at lower interest rates; (2) to reduce the flow of credit to
the private sector without raising domestic interest rates; (3) to influence
the allocation of real resources to priority uses; (4) to block channels of
financial intermediation and thus to assist restrictive general monetary policy;
and (5) to strengthen popular acceptance of wage–price controls by
holding down interest income.
In Japan, government savings institutions were used to capture personal
savings flows and these were channelled by the finance ministry (of which
the Bank of Japan is a part) to industries that were perceived to most preserve
economic growth.
European experiences with credit controls varied from country to country.
In Germany, controls were used only briefly after the Second World
War. In the Netherlands and the United Kingdom, extensive use was made
of them, but they were always seen as temporary and short-run expedients.
In the Netherlands, credit controls were used to support macroeconomic
policy, rather than credit allocation. In the United Kingdom, the principal
aim of controls was to facilitate low-cost government debt. The government
was concerned about the impacts of high interest rates on the bond
18 Hodgman (1973).
Lilia Costabile and Gerald Epstein
1430
Annex 116
market, on income distribution and on the balance of payments. A more
limited aim of the quantitative ceilings was to guarantee a flow of shortterm
credit at favourable interest rates to high-priority activities such as
ship building and the finance of exports and productive investment in
manufacturing. Credit ceilings were put into place, and exemptions were
sometimes made for priority sectors such as industry or housing. Moreover,
the Bank of England identified sectors for which credit should be
limited, such as consumption and the financing of imports. In England, as
elsewhere, these credit controls were accompanied by exchange and capital
controls.
France, Italy, and Belgium were a different story. There, the principle of
controlling credit flows and interest rates to serve national interests was
widely accepted. France had, perhaps, among the most extensive and successful
sets of controls, that were part of the government’s overall
approach to industrial policy. The Bank of France was nationalised in
1945, and placed under the National Credit Council, the institution in
charge of implementing the financial aspects of the government plan. The
broad aim of credit policy in France was to contribute to the modernisation
of the French economy and its ability to compete in international
markets. These aims were clearly designed to contribute to more rapid
economic growth.
To influence the volume and allocation of credit, the Bank of France
used various methods.19 Variable “asset-based reserve requirements” were
widely used. These require banks have to observe minimum reserve
requirements based on the assets they hold, but the central banks vary
these to promote lending to desired sectors. They do this by allowing lower
required reserve rates on privileged assets. A second technique – ceilings
on credit extension – has been used as well. The ceilings were used to
reduce credit expansion without raising interest rates, and also to allocate
credit: priority sectors were exempted from the ceilings. These included
short-term export credits, medium-term loans for construction, and
others. These ceilings applied to a large range of financial institutions,
and were accompanied, as well, by capital and exchange controls as an
important concomitant. A third tool was the scrutiny of individual credits
made by banks. This allowed the Bank of France, for example, to approve
loans for privileged purposes. Another approach to affecting the allocation
of credit involved the use of rediscounting of bills at lower interest
rates for priority purposes. While some of these purposes were to protect
social goods such as housing, in many cases they were to support investment
in leading industries.
19 See Hodgman (1973) and John Zysman (1983).
An activist revival in central banking?
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Annex 116
Zysman has emphasised the role of these credit allocation techniques in
helping to revive the French economy and help it adjust to structural challenges
in the post-war period. Italy and Belgium also used similar policies.
In the case of Italy, a major goal was to help develop the southern part of
the country.20
4.3.1 Italy. The case of Italy is particularly interesting and instructive.21
Italy offers a paradigmatic case of central banks’ policies in favour of
growth, particularly under Donato Menichella, Governor of the Bank of
Italy between 1947 and 1960.22
Menichella was particularly concerned with three basic problems with
the Italian economy, namely the historically insufficient supply of private
capital; the high propensity to import, due to lack of raw materials; the
underdevelopment of Southern Italy (Mezzogiorno d’Italia). After the Second
World War, he acted together with a group of far-sighted Italian Ministers,
including prime ministers, state officials, central bank operators, and
economists. Their macroeconomic strategy was centred on investment promotion,
balance of payment equilibrium, and the development of Southern
Italy. More specifically, the ingredients of their pro-growth strategy
were, first, creating the conditions for industrial investment by supplementing
the scarce supply of private capital with public capital to promote
infrastructure, but later also agriculture and basic industries such as steel,
chemicals etc. Second, a strictly related goal was curbing the balance of
payments tensions originating in the imports of raw materials, which
would inevitably accompany the planned investment programs. Last, but
not least, their goal was developing the backward Mezzogiorno. Eminent
development economists (including Rosenstein Rodan,Tinbergen, Chenery
and Hirschman) were involved in the discussion.
Menichella himself negotiated with the World Bank (International Bank
for Reconstruction and Development) a decennial loan of one hundred
billion Italian Liras per year intended to promote the development of
Southern Italy. Technically, the loan would be devoted to paying for
20 U.S. Congress, House of Representatives (1972).
21 See D’Antone (1995); Alacevich (2009); Costabile (2014); Costabile and Gambardella
(2016).
22 Menichella had also been General Director of IRI, the Institute for Industrial
Reconstruction, founded in 1933. In the Thirties, this institute saved the Italian
industrial and banking systems after the great banking crisis of the late 20s.
Menichella had also been one of the main contributors to the Bank Law of
1936, which separated commercial and investment banking in an attempt to
sever the links between the banks’ management of deposits and their involvement
in highly risky investments.
Lilia Costabile and Gerald Epstein
1432
Annex 116
imported raw materials. Also, Menichella wrote the articles of the law
establishing the Cassa per il Mezzogiorno, the Italian regional development
agency founded in 1950 on the blueprint of the Tennessee Valley
Authority.23 The Cassa received and administered the World Bank’s funds
(Menichella 1961; Barucci 1978, p. 338). In this context, Governor Menichella
thought of price stability not as an end in itself, but as a means to
preserve the real value of pro-growth expenditures (Menichella 1953, in
Cotula et al. 1997, p. 475).
Also interesting in our present perspective is Menichella’s action to
influence the banking system’s loans policy to favour the poorer Southern
Italian regions, which were less able to generate savings. This redistribution
was necessary to avoid a self-perpetuating, cumulative divergence in
the rates of growth between the country’s areas (Menichella 1955, in
Cotula et al. 1997, p. 590). In the same direction went Menichella’s proposal
to redirect capital to the southern regions via lower interest rates on
loans to southern peasants, compared to the terms of credit in other Italian
regions (Menichella 1955, in Cotula et al. 1997, pp. 597–9). These ideas
should also be seen against the background of Agrarian Reform in the
Fifties.
Summing up, the policies of the Bank of Italy under Menichella consisted
of three elements: promotion of regional development within the
context of national growth; credit allocation techniques in favour of targeted
regions and sectors; monetary policies aiming at price stability and
external equilibrium as a general framework for development and growth
policies.
4.3.2 The United States. In the United States, after the Great Depression of
the 1930s, as with other central banks discussed in this section, the Federal
Reserve was convinced by the government, in this case the Roosevelt
administration, to develop new tools and engage in more activities to
directly support other sectors of the economy besides finance. A little
known example of this is the “Industrial Advances Act” passed by Congress
and signed into law by FDR in 1934, which added section 13(b) to the Federal
Reserve Act.24 This act allowed Federal Reserve Banks to make loans
for working capital to private non-financial companies, if they could not
find credit from the financial markets. This bill was passed, NOT as an
emergency measure, like the other section 13 measures, but as a
23 In his capacity as Roosvelt’s economic adviser and assistant director of the
World Bank’s economic department, Rosenstein-Rodan was the “grey matter”
behind the World Bank decision to finance the Cassa per il Mezzogiorno.
24 Fettig (2002, 2008).
An activist revival in central banking?
1433
Annex 116
permanent feature of the Federal Reserve policy. The Regional Federal
Reserve Banks were encouraged to set up Regional Industrial Advisory
Committees made up of local business people to give advice on how to
allocate the credit to non-financial businesses in their districts. No limitation
was placed on the quantity of each loan. $280 million or 0.43% of
GDP was made available for these loans. That would equal about 68 Billion
dollars in the US’ 16 trillion-dollar economy. Not all of this lending capacity
was utilised but millions of dollars for industrial and commercial products
were lent out by the Regional Federal Reserve Banks to non-financial
commercial entities. These activities continued as a part of the war effort
in the early 1940s and helped to fund companies in the war effort.
During the Second World War, the Federal Reserve, under great pressure,
agreed to hold short and long term interest rates at a relatively low
level (3/8% on Treasury bills and 2 1/2% on longer term loans. The Fed
also had numerous roles in marketing war bonds and helping to manage
other wartime finances.
The President also issued a series of executive orders to insure working
capital for war industries. These required the Federal Reserve and its
branches to analyse “the integrity of loan applications” and to expedite
loans.25 As with the 13(b) facilities, the Federal Reserve got very much
involved in the “business” of allocating credit to companies.
While the emergency war powers lapsed after the war ended, the 13(b)
facilities were meant to be a permanent feature of the Federal Reserve.
But in the end, they were closed down. After the Federal Reserve – Treasury
Accord of 1951 which ended the Fed peg of interest rates, the Federal
Reserve was very anxious to restore the Federal Reserve’s independence
from the government. The Federal Reserve was trying to “regularise” its
operations, that is, go back to a situation in which it was relatively independent
from the government. Federal Reserve officials, who wanted to
restore a more minimalist conception of Federal Reserve Policy, fought
for the elimination of the 13(b), “Industrial Advances” programme. They
achieved their goal with the passage of the 1958 “Small Business Investment
Act,” which, among other things, repealed section 13(b) of the Federal
Reserve Act.26
After the War, the US had a myriad of public or highly regulated financial
institutions, moreover, that supported national goals, notably housing.
27 During this period, the Federal Reserve policy was quite sensitive to
the needs of the housing market concerns and even tailored its monetary
25 Gary Richardson (2013).
26 Fettig (2008).
27 Dymski (1993, pp. 101–31).
Lilia Costabile and Gerald Epstein
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Annex 116
policy to avoid significantly harming it. In the case of the United States, the
focus of the policy was to protect important social sectors, especially housing,
and to maintain high employment. These policies were thought to
provide a good monetary framework for growth, but were not seen to
directly promote growth in and of themselves. In Europe and Japan in the
aftermath of the Second World War, the growth goal was more direct.
5. Conclusion
In this paper, we have introduced the distinction between “minimalism”
and “activism” in central banking, with special focus on one specific subcategory
of activism, namely activism devoted to the promotion of growth.
Our main objective has been to illustrate the meaning and scope of this
pro-growth approach both in theory and practice.
On the theoretical front, we have argued that Robertson’s analysis of
money, cycles, and capital formation provides a coherent theoretical
framework within which factual historical examples of central bank activism
can be interpreted and conceptualised. Robertson was not an advocate
of price stabilisation because he regarded this objective as not useful, and
even counterproductive, for the purposes of economic growth. We have
illustrated his alternative recommendations for central bank policies in
the light of his theory of growth. We have also investigated the allocational
function of money and credit flows in light of the links that he established
between growth and structural change. Our “robertsonian” analysis has
been supplemented by a brief exposition of the contrasting approach of
an architect of minimalism, Ludwig von Mises.
Having thus established our theoretical framework, in terms of central
banking practice, we investigated some phases during the Second World
War and in the post-Second World War period in which central banks in
the developed and in the developing world pursued activist policies
focused on direct and indirect methods of allocating credit to priority sectors.
In a nutshell, our analysis shows that during this period, the principles
of minimalism had been abandoned in favour of an activist
philosophy when central banks have embraced developmental objectives
in their economic strategies.
We also argued that minimalist and activist approaches to central banking
derive from different conceptions of market economies. Robertson
did not believe in either the automatic realisation of the objectives of full
employment, growth, and other desirable objectives, or in a spontaneous
harmony between social classes. Rather, he considered markets to be the
place where the contrasting interests of social classes and groups confront
An activist revival in central banking?
1435
Annex 116
each other; and argued that activist monetary policies, if well-calibrated,
can be instrumental in promoting growth and welfare, thus reconciling
those contrasting interests to some extent.
Our analysis also provides some elements for distinguishing between the
minimalist/activist spectrum that we have proposed here, and the better
known distinction between “rules” and “discretion”. The minimalist/activist
spectrum has to do mainly with goals. As we saw above, activists consider
a wide variety of goals for monetary policies, including employment,
growth, sectoral and territorial balance, employment, and price-level management.
In this context, means are instrumental, and vary according to,
among other factors, the specific objectives pursued in a given historical
period. Our post-Second World War historical examples illustrate this
point. Minimalists, by contrast, consider price stability to be the only legitimate
objective of monetary policy in all historical circumstances. By contrast,
the “rules vs. discretion” debate had to do mainly with means, not
goals. The contestants, in the 70s and after, for the most part took a common
stance on central bank objectives, that is, the control of the business
cycle and financial stability (we may think of Friedman vs. the Keynesians
for illustration). The debate mainly concerned the most appropriate
instruments, with one side recommending rules and the opposite side proposing
a wider set of policy instruments and the possibility of “fine tuning”
for achieving that common goal. Thus, we may argue that the rules vs. discretion
debate provides a truncated version of the wider minimalist/activist
spectrum, with major if not exclusive attention put on instruments
rather than goals.
Summing up, we submit that our analysis in this paper provides
a suggestive case for the usefulness of the “minimalist–activist”
spectrum as an analytical prism to shed light on some key aspects of central
banking theory and practice, admittedly with a focus here on the
“activist” end of the spectrum and the objectives of growth and development.
We plan to explore other aspects of this continuum in the near
future.
Acknowledgements
The authors thank, without implicating, Antoin Murphy, participants at
the Paris ESHET Conference, and two anonymous referees for helpful
comments. They also thank ESHET and the European Central Bank for
financial support (“ECB research grant for research projects on the history
of monetary theories, policies, and institutions”), sponsored by the European
Central Bank.
Lilia Costabile and Gerald Epstein
1436
Annex 116
Disclosure statement
No potential conflict of interest was reported by the authors.
Funding
The authors thank ESHET and the European Central Bank for financial
support (“ECB research grant for research projects on the history of monetary
theories, policies, and institutions”), sponsored by the European Central
Bank
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Abstract
We introduce the “minimalist–activist” spectrum as an analytical prism
through which to view key aspects of central banking theory and practice.
We focus on the activist end of this spectrum, concentrating on economic
growth. We explore the theoretical roots of these ideas in the writings of
Dennis Robertson. We illustrate central banking practice by detailing
some approaches followed by central banks pursuing economic growth
and development in the decades following the Second World War. History
of monetary thought, monetary theory, and analysis of central bank
practices blend together to illuminate key principles and practices of
central banking.
Keywords
Central banking, monetary thought, Robertson, credit allocation
techniques
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ANNEX 117
Annex 117
No.
IN THE
~upreme ~ourt of tbe Wniteb ~tate.s
BANKMARKAZI,
THE CENTRAL BANK OF IRAN,
Petitioner,
v.
DEBORAH D. PETERSON, et al.,
Respondents.
On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Second Circuit
PETITION FOR A WRIT OF CERTIORARI
DAVID M. LINDSEY
ANDREAS A. FRISCHKNECHT
CHAFFETZ LINDSEY LLP
505 Fifth Ave., 4th Floor
NewYork, N.Y. 10017
(212) 257-6960
JEFFREY A. LAMKEN
Counsel of Record
ROBERT K. KRY
MOLOLAMKEN LLP
The Watergate, Suite 660
600 New Hampshire Ave., N.W.
Washington, D.C. 20037
(202) 556-2000
[email protected]
JUSTIN M. ELLIS
MOLOLAMKEN LLP
540 Madison Ave.
NewYork, N.Y. 10022
(212) 607-8160
Counsel for Petitioner
WILSON-EPES PRINTING Co., INC. - (202) 789-0096 - WASHINGTON, D.C. 20002
Annex 117
QUESTION PRESENTED
This case concerns nearly $2 billion of bonds in which
Bank Markazi, the Central Bank of Iran, held an interest
in Europe as part of its foreign currency reserves. Plaintiffs,
who hold default judgments against Iran, tried to
seize the assets. While the case was pending, Congress
enacted § 502 of the Iran Threat Reduction and Syria
Human Rights Act of 2012, 22 U.S.C. § 8772. By its
terms, that statute applies only to this one case: to "the
financial assets that are identified in and the subject of
proceedings in the United States District Court for the
Southern District of New York in Peterson et al. v. Islamic
Republic of Iran et al., Case No. 10 Civ. 4518 (BSJ)
(GWG)." Id. §8772(b). "In order to ensure that Iran is
held accountable for paying the judgments," it provides
that, notwithstanding any other state or federal law, the
assets "shall be subject to execution" upon only two findings-
essentially, that Bank Markazi has a beneficial interest
in them and that no one else does. Id. §8772(a)(l),
(2). The question presented is:
Whether § 8772-a statute that effectively directs a
particular result in a single pending case-violates the
separation of powers.
(i)
Annex 117
ii
PARTIES TO THE PROCEEDINGS BELOW
Due to its length, the list of parties to the proceedings
below is set forth in full in the appendix (App., infra,
130a-144a).
Annex 117
TABLE OF CONTENTS
Page
Opinions Below............................................................. 1
Statement of Jurisdiction........................................... 1
Constitutional, Statutory, and Treaty
Provisions Involved ....... .. .......... .. ........... .. .......... .. .. 2
Preliminary Statement ............................................... 2
Statement...................................................................... 3
I. Statutory Framework..................................... 3
A. The Foreign Sovereign Immunities
Act................................................................ 3
B. The Terrorism Amendments to
the FSIA..................................................... 4
C. Article 8 of the Uniform
Commercial Code ...................................... 5
II. Proceedings Below.......................................... 7
A. Proceedings Before the District
Court........................................................... 7
1. The Restraints and Blocking
Order..................................................... 7
2. Congress's Enactment of§ 8772 ....... 9
3. The District Court's Decision............ 11
B. The Court of Appeals' Opinion................ 12
Reasons for Granting the Petition............................ 14
I. This Case Presents Important
Separation-of-Powers Questions
Left Open in Robertson.................................. 15
A. Klein Prohibits Congress from
Dictating the Outcome of a
Particular Case.......................................... 15
B. Klein's Scope Remains Uncertain.......... 18
(iii)
Annex 117
iv
TABLE OF CONTENTS-Continued
C. This Case Squarely Presents
Important Issues Left Open in
Page
Robertson.................................................... 19
II. The Constitutional Issues Are Important
and Recurring.................................................. 22
A. The Question Presented Raises
Fundamental Separation-of-Powers
Issues.......................................................... 22
B. Congress Has Repeatedly
Disregarded Separation-of-Powers
Principles in This Context........................ 23
III. This Case Has Important International
Ramifications.................................................... 25
A. The Decision Below Puts the United
States in Violation of I ts Treaty
Obligations.................................................. 25
B. The Decision Below Undermines
the President's Authority over
Foreign Affairs .......................................... 27
C. The Decision Undermines
Confidence in U.S. Financial
Markets....................................................... 29
D. The Decision Invites Retaliation by
Foreign Governments............................... 30
IV. This Case Is an Excellent Vehicle................. 31
Conclusion..................................................................... 33
Appendix A - Opinion of the Court of Appeals
(July 9, 2014)............................................................ la
Appendix B - Order of the District Court
Entering Partial Final Judgment
(July 9, 2013) ............................................................ 13a
Annex 117
V
TABLE OF CONTENTS-Continued
Page
Appendix C - Order of the District Court
Denying Reconsideration (May 20, 2013)............ 31a
Appendix D - Opinion and Order of the
District Court (Feb. 28, 2013) ............................... 52a
Appendix E - Order of the District Court
(June 23, 2009) ......................................................... 125a
Appendix F - Order of the Court of Appeals
Denying Rehearing (Sept. 29, 2014) ..................... 128a
Appendix G - Order of the Court of Appeals
Staying the Mandate (Oct. 29, 2014) .................... 129a
Appendix H - Parties to the Proceedings
Below ........................................................................ 130a
Appendix I - Relevant Constitutional,
Statutory, and Treaty Provisions ......................... 145a
Annex 117
vi
TABLE OF AUTHORITIES
CASES
Bank Melli Iran N.Y. Representative
Office v. Weinstein, 131 S. Ct. 3012
Page(s)
(2011).................................................................... 31
Benjamin v. Jacobson, 124 F.3d 162
(2d Cir. 1997), vacated, 172 F.3d 144
(2d Cir. 1999), cert. denied, 528 U.S. 824
(1999).................................................................... 18
Biodiversity Assocs. v. Cables,
357 F.3d 1152 (10th Cir. 2004),
cert. denied, 543 U.S. 817 (2004) ................... 18, 32
Bond v. United States, 131 S. Ct. 2355
(2011).................................................................... 23
CFTC v. Schor, 478 U.S. 833 (1986)...................... 23
Cheney v. U.S. Dist. Court, 542 U.S. 367
(2004).................................................................... 23
Christopherv. Harbury, 536 U.S. 403
(2002).................................................................... 31
The Clinton Bridge, 77 U.S. 454 (1870) ............... 32
Dames & Moore v. Regan, 453 U.S. 654
(1981).................................................................... 28
First Nat'l City Bank v. Banco Para
El Comercio Exterior de Cuba,
462 U.S. 611 (1983)........................................... 5, 26
Free Enter. Fund v. Pub. Co. Accounting
Oversight Bd., 561 U.S. 477 (2010) .................. 23
Freytagv. Comm'r, 501 U.S. 868 (1991).............. 23
Heiser v. Islamic Republic of Iran,
735 F.3d 934 (D.C. Cir. 2013) ........................... 5
Annex 117
vii
TABLE OF AUTHORITIES-Continued
Page(s)
In re Islamic Republic of Iran Terrorism
Litig., 659 F. Supp. 2d 31 (D.D.C. 2009) ......... 25
Janka v. Gates, 741 F.3d 136 (D.C. Cir. 2014),
petition for cert. filed, No. 14-650
(Nov. 26, 2014) .................................................... 18
JPMorgan Chase Bank v. Traffic Stream
(BVI) Infrastructure Ltd., 536 U.S. 88
(2002).................................................................... 31
Kumar v. Republic of Sudan,
No. 2:lOcvl 71, 2011 WL 4369122
(E.D. Va. Sept. 19, 2011), rev'd on other
grounds sub nom. Clodfelter v. Republic
of Sudan, 720 F.3d 199 (4th Cir. 2013)............ 25
Lindh v. Murphy, 96 F.3d 856
(7th Cir. 1996) (en bane), rev'd on
other grounds, 521 U.S. 320 (1997)........ 18, 21, 32
Ministry of Def & Support for the Armed
Forces of the Islamic Republic of I ran
v. Elahi, 552 U.S. 1176 (2008)........................... 31
Nat'l Coal. To Save Our Mall v. Norton,
269 F.3d 1092 (D.C. Cir. 2001),
cert. denied, 537 U.S. 813 (2002) ................... 18, 19
NML Capital, Ltd. v. Banco Central de la
Republica Argentina, 652 F .3d 172
(2d Cir. 2011), cert. denied,
133 S. Ct. 23 (2012)............................................. 29
Oil Platforms (Iran v. U.S.),
2003 I.C.J. 161 (Nov. 6) ..................................... 27
Pennsylvania v. Wheeling & Belmont
Bridge Co., 59 U.S. 421 (1856).......................... 16
Annex 117
viii
TABLE OF AUTHORITIES-Continued
Page(s)
Plaut v. Spendthrift Farm, Inc.,
514 U.S. 211 (1995) .......................................... 23, 24
Robenson v. Seattle Audubon Soc'y,
503 U.S. 429 (1992) ....................................... passim
Roeder v. Islamic Republic of Iran,
333 F.3d 228 (D.C. Cir. 2003),
cert. denied, 542 U.S. 915 (2004) ...................... 24
Rubin v. Islamic Republic of Iran,
132 S. Ct. 1619 (2012)......................................... 31
Stern v. Marshall, 131 S. Ct. 2594 (2011) ............ 23
Sumitomo Shoji Am., Inc. v. Avagliano,
457 U.S. 176 (1982)............................................. 27
United States v. Klein, 80 U.S. 128 (1872) .... passim
United States v. Padelford, 76 U.S. 531
(1870).................................................................... 16
VerlindenB.V. v. Cent. Bank of Nigeria,
461 U.S. 480 (1983)............................................. 3
CONSTITUTIONAL PROVISIONS,
STATUTES, AND RULES
U.S. Const. art. III ........................................... passim
Foreign Sovereign Immunities Act of 1976,
Pub. L. No. 94-583, 90 Stat. 2891
(codified as amended at 28 U.S.C.
§§ 1602 et seq.) ............................................... passim
28 U.S.C. § 1603(a) ........................................ 3
28 u.s.c. § 1604 ............................................. 3
28 u.s.c. § 1605 ............................................. 3
28 U.S.C. § 1605A ........................................ 5, 24
28 U.S.C. § 1605A(a)(l)................................. 4
28 U.S.C. § 1605A(a)(2)(A)(i)(I) ................... 4
Annex 117
ix
TABLE OF AUTHORITIES-Continued
Page(s)
28 U.S.C. § 1605A(a)(2)(B) ........................... 24
28 U.S.C. § 1609 ............................................. 3
28 U.S.C. § 1610(a) ........................................ 4
28 U.S.C. § 1610(a)(7).................................... 4
28 U.S.C. § 1610(b) ........................................ 4
28 U.S.C. § 1610(b)(3).................................... 5
28 u.s.c. § 1610(g) ........................................ 5
28 U.S.C. § 1611(b) .................................. 4, 9, 29
28 U.S.C. § 1611(b)(l).................................... 4
Pub. L. No. 101-121, 103 Stat. 701 (1989):
§ 318(b )(3), 103 Stat. at 7 46 ............................... 17
§318(b)(5), 103 Stat. at 746-747........................ 17
§318(b)(6)(A), 103 Stat. at747.......................... 17
Antiterrorism and Effective Death
Penalty Act of 1996, Pub. L. No.
104-132, §221, 110 Stat. 1214, 1241.................. 4
Pub. L. No. 107-77, §626(c), 115 Stat. 748,
803 (2001)............................................................. 24
Pub. L. No.107-117, §208, 115 Stat. 2230,
2299 (2002)........................................................... 24
Terrorism Risk Insurance Act of 2002,
Pub. L. No.107-297, §201,
116 Stat. 2322, 2337 ...................................... passim
28 U.S.C. § 1610 note §201(a) ...................... 5
National Defense Authorization Act for
Fiscal Year 2008, Pub. L. No.110-181,
§ 1083, 122 Stat. 3, 338 .... .. ............ .......... ........... 5
§ 1083(c)(2), 122 Stat. at 342......................... 24
Annex 117
X
TABLE OF AUTHORITIES-Continued
Page(s)
Iran Threat Reduction and Syria Human
Rights Act of 2012, Pub. L. No. 112-158,
§ 502, 126 Stat. 1214, 1258
(codified at 22 U.S.C. §8772) ...................... passim
22 U.S.C. §8772(a)(l) .................................. 2, 11
22 U.S.C. § 8772(a)(l)(C) ........................... 26, 30
22 U.S.C. §8772(a)(2) .............................. passim
22 U.S.C. § 8772(a)(2)(A) .............................. 20
22 U.S.C. § 8772(b) .................................. passim
22 U.S.C. § 8772(c)(l) .......................... 10, 19, 22
28 u.s.c. § 1254(1) .................................................. 1
28 U.S.C. § 2403(a) .................................................. 1
Ch. 120, 12 Stat. 820 (1863):
§ 1, 12 Stat. at 820............................................... 16
§3, 12 Stat. at 820............................................... 16
Ch. 251, 16 Stat. 230 (1870).................................... 16
Fed. R. Civ. P. 54(b) ............................................... 12
Uniform Commercial Code .............................. passim
U.C.C. art. 8 prefatory note (1994).................. 6
U.C.C. §8-112(c)................................................. 6, 8
U.C.C. §8-112 cmt. 3.......................................... 7
U.C.C. § 8-504(a)................................................. 6
U.C.C. §§ 8-505 to 8-508 .................................... 6
TREATY PROVISIONS
Treaty of Amity, Economic Relations,
and Consular Rights, U.S.-Iran,
Aug. 15, 1955, 8 U.S.T. 899 ......................... passim
Art. III.1, 8 U.S.T. at 902............................. 26
Art. IV.1, 8 U.S.T. at 903 ........................... 25, 26
Art. XXI.2, 8 U.S.T. at 913........................... 27
Annex 117
xi
TABLE OF AUTHORITIES-Continued
Page(s)
United Nations Convention on
Jurisdictional Immunities of States
and Their Property, G.A. Res. 59/38,
art. 21(1)(c), U.N. Doc. NRES/59/38
(Dec. 2, 2004)....................................................... 29
LEGISLATIVE MATERIALS
H.R. Rep. No. 94-1487 (1976) ............................. 29, 30
158 Cong. Rec. H5569 (Aug. 1, 2012) ................ 10, 33
158 Cong. Rec. S3321 (May 21, 2012)................... 32
Justice for Victims of Terrorism Act:
Hearing on H.R. 3485 Before the
Subcomm. on Immigration and
Claims of the H. Comm. on the
Judiciary, 106th Cong. (Apr. 13, 2000)........... 31
Benefits for U.S. Victims of International
Terrorism: Hearing Before the
S. Comm. on Foreign Relations,
S. Hr'g No. 108-214 (July 17, 2003) ................. 27
Jennifer K. Elsea, Congressional
Research Service, Suits Against
Terrorist States by Victims of
Terrorism (Aug. 8, 2008)................................. 4, 25
Menendez Hails Banking Committee
Passage of Iran Sanctions Legislation
(Feb. 2, 2012) ...................................................... 32
EXECUTIVE MATERIALS
Executive Order No. 13,599,
77 Fed. Reg. 6659 (Feb. 5, 2012) ................... 9, 20
63 Fed. Reg. 59,201 (Oct. 21, 1998)....................... 28
65 Fed. Reg. 66,483 (Oct. 28, 2000)....................... 28
Annex 117
xii
TABLE OF AUTHORITIES-Continued
Page(s)
79 Fed. Reg. 4522 (Jan. 28, 2014) ......................... 28
79 Fed. Reg. 45,228 (Aug. 4, 2014)........................ 28
79 Fed. Reg. 73,141 (Dec. 9, 2014) ........................ 28
1998 Pub. Papers 1843 (Oct. 23, 1998).................. 28
2002 Pub. Papers 1697 (Sept. 30, 2002)................ 28
2007 Pub. Papers 1592 (Dec. 28, 2007) ................. 30
2014 Daily Comp. Pres. Doc. 14
(Jan. 12, 2014) ..................................................... 28
National Security Strategy (May 2010) .............. 28
OTHER AUTHORITIES
Kate Ackley, Rival Groups of Terror
Victims Square Off, Roll Call,
May 22, 2012 ..................................................... 9, 32
The Federalist No. 78 (Cooke ed., 1977)
(Hamilton) .. .. .......... ... .......... .. .......... .. . .. ........ .. ..... 23
W. Hawkland, et al., Uniform
Commercial Code Series (2013) ....................... 6, 7
Restatement (Third) of the Foreign
Relations Law of the United
States (1987)........................................................ 26
Julie Triedman, Can U.S. Lawyers Make
IranPayfor 1983 Bombing?,
Am. Law., Oct. 28, 2013 ..................................... 20
Herman Walker, Jr., Provisions on
Companies in United States
Commercial Treaties, 50 Am. J.
Int'l L. 373 (1956) ............................................... 27
Annex 117
IN THE
~upreme ~ourt of tbe Wniteb ~tates
BANK MARKAZI,
THE CENTRAL BANK OF IRAN,
Petitioner,
v.
DEBORAH D. PETERSON, et al.,
Respondents.
On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Second Circuit
PETITION FOR A WRIT OF CERTIORARI
Petitioner Bank Markazi, the Central Bank of Iran,
respectfully petitions for a writ of certiorari to review the
judgment of the United States Court of Appeals for the
Second Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals (App., infra, la-
12a) is reported at 758 F.3d 185 (2d Cir. 2014). The opinions
and orders of the district court (App., infra, 13a-
127a) are unreported.
STATEMENT OF JURISDICTION
The court of appeals entered judgment on July 9, 2014.
It denied rehearing and rehearing en bane on September
29, 2014. App., infra, 128a. This Court has jurisdiction
under 28 U.S.C. § 1254(1). Although 28 U.S.C. § 2403(a)
Annex 117
2
may apply, the court of appeals did not invoke that provision.
The United States is being served with this petition.
CONSTITUTIONAL, STATUTORY, AND
TREATY PROVISIONS INVOLVED
Relevant provisions of Article III of the U.S. Constitution,
the Iran Threat Reduction and Syria Human Rights
Act of 2012, 22 U.S.C. § 8772; the Foreign Sovereign Immunities
Act of 1976, 28 U.S.C. §§ 1602 et seq.; the Terrorism
Risk Insurance Act of 2002, 28 U.S.C. § 1610 note;
the Treaty of Amity, Economic Relations, and Consular
Rights, U.S.-Iran, Aug. 15, 1955, 8 U.S.T. 899; and Article
8 of the Uniform Commercial Code are set forth in the
appendix. App., infra, 145a-186a.
PRELIMINARY STATEMENT
This case concerns nearly $2 billion of bonds in which
Bank Markazi, the Central Bank of Iran, held an interest
in Europe as part of its foreign currency reserves. Plaintiffs,
who hold default judgments against Iran, tried to
seize the assets. Under ordinary legal principles, the assets
would not have been attachable.
Plaintiffs, however, persuaded Congress to enact a
statute to dictate a contrary result in this one case. By
its terms, the statute applies only to "the financial assets
that are identified in and the subject of proceedings in
the United States District Court for the Southern District
of New York in Peterson et al. v. Islamic Republic of
Iran et al., Case No. 10 Civ. 4518 (BSJ) (GWG)." 22
U.S.C. §8772(b). "In order to ensure that Iran is held
accountable for paying the judgments," the statute provides,
the assets "shall be subject to execution" upon only
two findings-essentially, that Bank Markazi has a beneficial
interest in them and that no one else does. Id.
§ 8772(a)(l), (2).
Annex 117
3
Relying on that statute, the district court ordered the
assets turned over to plaintiffs. The Second Circuit affirmed.
Conceding that there may be "little functional
difference" between § 8772 and a statute that simply directed
the court to rule in plaintiffs' favor, the court upheld
§8772 as a valid exercise of Congress's authority.
App., infra, 10a. The question presented is whether such
a statute-which effectively directs a particular result in
a single pending case-violates the separation of powers.
STATEMENT
I. STATUTORY FRAMEWORK
A. The Foreign Sovereign Immunities Act
For most of this Nation's history, foreign sovereigns
were completely immune from suit. See Verlinden B. V.
v. Cent. Bank of Nigeria, 461 U.S. 480, 486 (1983). In
1952, however, the State Department adopted the "restrictive"
theory of immunity that recognized limited exceptions.
Id. at 486-487. Two decades later, Congress
codified the exceptions in the Foreign Sovereign Immunities
Act of 1976 ("FSIA"), Pub. L. No. 94-583, 90 Stat.
2891 (codified as amended at 28 U.S.C. §§ 1602 et seq.).
The FSIA preserves the general rule that "a foreign
state shall be immune from the jurisdiction of the courts
of the United States and of the States." 28 U.S.C. § 1604.
A "foreign state" includes any "agency or instrumentality
of a foreign state." Id. § 1603(a). Section 1605 then lists
narrow exceptions to that immunity. Id.§ 1605.
The FSIA separately addresses the immunity of sovereign
property from attachment or execution. Generally,
"property in the United States of a foreign state
shall be immune from attachment arrest and execution."
28 U.S.C. § 1609. Section 1610 lists narrow exceptions,
Annex 117
4
but only for certain categories of "property in the United
States." Id. § 1610(a)-(b).
Section 1611(b) provides an additional, special immunity
for central bank assets. Under that section, "[n]otwithstanding
the provisions of section 1610 of this chapter,
the property of a foreign state shall be immune from
attachment and from execution, if * * * the property is
that of a foreign central bank or monetary authority held
for its own account." 28 U.S.C. § 1611(b)(l).
B. The Terrorism Amendments to the FSIA
In 1996, Congress created an exception to immunity
for terrorism-related claims. See Antiterrorism and Effective
Death Penalty Act of 1996, Pub. L. No. 104-132,
§ 221, 110 Stat. 1214, 1241. That exception allows suits
for "torture, extrajudicial killing, aircraft sabotage, hostage
taking, or the provision of material support or resources
for such an act." 28 U.S.C. § 1605A(a)(l). It applies
only if the Executive Branch has designated the
sovereign a "state sponsor of terrorism" prior to, or as a
result of, the act at issue. Id. § 1605A(a)(2)(A)(i)(I).
In the years since, scores of suits have been filed.
Typically, the sovereign does not appear, and plaintiffs
are awarded default judgments for tens or hundreds of
millions of dollars. See Jennifer K. Elsea, Congressional
Research Service, Suits Against Terrorist States by Victims
of Terrorism 67-74 (Aug. 8, 2008). Plaintiffs, however,
have faced difficulty collecting. See id. at 5-68.
Congress has responded by repeatedly amending the exceptions
to immunity from execution. See ibid.
The 1996 amendments added two exceptions. Under
the first, a foreign state's property "used for a commercial
activity in the United States" is not immune from
execution of a terrorism-related judgment. 28 U.S.C.
Annex 117
5
§ 1610(a)(7). A similar exception applies to certain property
of agencies or instrumentalities. Id. § 1610(b)(3).
In 2002, Congress enacted § 201 of the Terrorism Risk
Insurance Act of 2002 ("TRIA"), Pub. L. No. 107-297, 116
Stat. 2322, 2337, to permit execution against assets the
President had "blocked" (i.e., frozen) under certain economic-
sanctions statutes. It provides:
Notwithstanding any other provision of law, * * * 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 1605A * * * ,
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***.
28 U.S.C. § 1610 note § 201(a). By its terms, TRIA applies
only to "blocked assets of that terrorist party"-i. e.,
property owned by that party. See Heiser v. Islamic Republic
of Iran, 735 F.3d 934, 937-941 (D.C. Cir. 2013).
In 2008, Congress amended the FSIA yet again. See
National Defense Authorization Act for Fiscal Year 2008,
Pub. L. No. 110-181, §1083, 122 Stat. 3,338. It expanded
the remedies available under the terrorism exception. 28
U.S.C. § 1605A. It also expanded the assets available for
execution. Id. § 1610(g).
C. Article 8 of the Uniform Commercial Code
The FSIA generally addresses only immunity, not
substantive law. See First Nat'l City Bank v. Banco Para
El Comercio Ext,erior de Cuba, 462 U.S. 611, 620 (1983).
The relevant substantive law here is Article 8 of the Uniform
Commercial Code and its foreign equivalents.
Annex 117
6
In modern financial markets, securities owners rarely
possess physical certificates. Instead, they own a "security
entitlement" against an intermediary such as a bank
or broker. See U.C.C. art. 8 prefatory note (1994); 7A
W. Hawkland, et al., Uniform Commercial Code Series
§8-101 (2013). U.C.C. Article 8 defines the property
rights in those entitlements.
The holder of a security entitlement has the right to
receive interest, cast votes, and exercise other incidents
of ownership. U.C.C. §§ 8-505 to 8-508. Rather than interacting
with the issuer directly, however, the owner
holds those rights against its securities intermediary.
Ibid. The intermediary, in turn, must either own the underlying
financial asset or own a security entitlement in
that asset through yet another intermediary, so that it
can provide the benefits of ownership to its customer. Id.
§ 8-504(a). In that manner, Article 8 enables widespread
holding and transfer of securities without physical transfers
of the underlying securities.
Because Article 8 is built on potentially lengthy chains
of ownership from intermediary to intermediary, it carefully
defines attachable property rights. Section 8-112(c)
provides that "[t]he interest of a debtor in a security entitlement
may be reached by a creditor only by legal process
upon the securities intermediary with whom the
debtor's securities account is maintained." U.C.C. § 8-
112(c) (emphasis added). In other words, if a debtor
holds a security entitlement in a bond with Bank A, which
in turn holds an entitlement with Bank B, the debtor's
only property is the entitlement he holds with Bank A.
Creditors may be able to seize the debtor's holdings at
Bank A, but they cannot go beyond that and attach Bank
A's holdings at Bank B to satisfy the debtor's debts. The
official comment explains:
Annex 117
7
Process is effective only if directed to the debtor's
own security intermediary. If Debtor holds securities
through Broker, and Broker in turn holds
through Clearing Corporation, Debtor's property
interest is a security entitlement against Broker.
Accordingly, Debtor's creditor cannot reach Debtor's
interest by legal process directed to the Clearing
Corporation.
U.C.C. §8-112 cmt. 3 (emphasis added); see also 7A
Hawkland, supra, §8-112:01 ("Since [the debtor's] property
interest is 'located' at [its intermediary], * * * the
only proper subject of legal process by [the debtor's]
creditors would be [that intermediary]. [The intermediary's
intermediary] does not have possession of some
item of property in which [the debtor] has a direct property
interest * * * .").
II. PROCEEDINGS BELOW
A. Proceedings Before the District Court
1. The Restraints and Blocking Order
Petitioner Bank Markazi is the Central Bank of Iran.
Like other central banks, it holds foreign currency reserves
to carry out monetary policies such as maintaining
price stability. C.A. App. 1330. Like other central banks,
it often maintains the reserves in bonds issued by foreign
sovereigns or "supranationals" like the European Investment
Bank. Id. at 1331, 1146-1149.
As part of its foreign currency reserves, Bank Markazi
held $1. 75 billion in security entitlements in foreign government
and supranational bonds at Banca UBAE S.p.A.,
an Italian bank. App., infra, 2a; C.A. App. 1329-1332,
1779. UBAE, in turn, held corresponding security entitlements
in an account with another intermediary, Clearstream
Banking, S.A., in Luxembourg. App., infra, 2a,
Annex 117
8
57a-59a. Clearstream then held corresponding security
entitlements in an omnibus account at Citibank, N .A., in
New York. Id. at2a.1
Plaintiffs hold billions of dollars of default judgments
against the Islamic Republic of Iran arising out of terrorist
attacks by organizations that allegedly received support
from Iran. App., infra, 2a, 52a-53a n.1, 116a. Bank
Markazi is not a party to any of those judgments and is
not alleged to have been involved in the attacks. See id.
at 52a-53a n.1.
Upon learning of Bank Markazi's assets, plaintiffs did
not try to attach them in Italy or Luxembourg. Instead,
in June 2008, they served restraining notices on Clearstream
and Citibank in New York. App., infra, 3a, 62a.
Clearstream moved to vacate the restraints. On June 23,
2009, the district court "agree[d] with Clearstream that
the assets * * * are governed by NY UCC 8-112(c)" and
that, "[u]nder the plain meaning of NY UCC 8-112(c),
Clearstream is not a proper garnishee" because "Clearstream
does not currently carry on its books * * * an account
in the name of the Islamic Republic of Iran." Id. at
126a. Nonetheless, the court left the restraints in place
so plaintiffs could pursue their theory that the transfer to
UBAE was a fraudulent conveyance. Ibid.; see n.l, supra.
In June 2010, plaintiffs commenced this action against
Bank Markazi, UBAE, Clearstream, and Citibank for
turnover of the restrained assets under TRIA. App., in-
1 Until February 2008, Bank Markazi held the security entitlements
directly with Clearstream in Luxembourg; the parties dispute
whether the transfer to UBAE was a fraudulent conveyance. App.,
infra, 57a-59a & n.2; C.A. App. 1331-1332. During the proceedings
below, moreover, the bonds matured so that Citibank then held the
cash proceeds. App., infra, 61a. At the time of judgment, the assets
were worth $1.895 billion. Id. at 23a.
Annex 117
9
fra, 3a, 62a-63a. Later, in February 2012, the President
issued an order blocking all "property and interests in
property of the Government of Iran, including the Central
Bank of Iran, that are in the United States," citing
purported "deceptive practices" and "deficiencies in
Iran's anti-money laundering regime." Executive Order
No. 13,599, 77 Fed. Reg. 6659, 6659 (Feb. 5, 2012). Citibank
then reported the restrained assets as blocked by
that order. App., infra, 64a.
Bank Markazi moved to dismiss, and plaintiffs moved
for summary judgment. App., infra, 3a, 55a. Bank Markazi
urged that the security entitlements Citibank held
for Clearstream were not Bank Markazi's property under
U.C.C. Article 8 and thus were not "assets of" Bank
Markazi under TRIA. Id. at 96a-97a. Even if they were,
it argued, the assets were entitled to central bank immunity
under FSIA § 1611(b). Id. at 102a. Bank Markazi
also invoked the Treaty of Amity between the United
States and Iran, which prohibits discrimination against
Iranian companies. Id. at 101a (citing Treaty of Amity,
Economic Relations, and Consular Rights, U.S.-Iran,
Aug. 15, 1955, 8 U.S.T. 899).
2. Congress's Enactment of§ 8772
Plaintiffs' lawyers then lobbied Congress to change
the law governing the case. Press coverage reported that
"lawyers and lobbyists for victims of terrorist attacks
were quietly jockeying" over the legislation, and that
Senator Bob Menendez was "'working with all of the
plaintiff groups to ensure that the approximately $2.5 billion
in Iranian blocked assets located in New York are
available.'" Kate Ackley, Rival Groups of Terror Victims
Square Off, Roll Call, May 22, 2012. The House
sponsor explained that the bill sought "to change a specific
part of Federal law to allow assets seized from the
Annex 117
10
Iranian Government to be allocated to [plaintiffs] to recover
the judgments owed to them." 158 Cong. Rec.
H5569 (Aug. 1, 2012).
The result was § 502 of the Iran Threat Reduction and
Syria Human Rights Act of 2012, Pub. L. No. 112-158,
126 Stat. 1214, 1258 (codified at 22 U.S.C. §8772). Section
8772 specifically targets the assets in this case. It
applies only to "the financial assets that are identified in
and the subject of proceedings in the United States District
Court for the Southern District of New York in Peterson
et al. v. Islamic Republic of Iran et al., Case No. 10
Civ. 4518 (BSJ) (GWG)." 22 U.S.C. §8772(b). It adds:
"Nothing in this section shall be construed * * * to affect
the availability, or lack thereof, of a right to satisfy a
judgment * * * in any proceedings other than [those]
proceedings***." Id. §8772(c)(l).
As to those assets, § 8772 fundamentally changes the
governing law. It provides:
[N]otwithstanding any other provision of law, including
any provision of law relating to sovereign
immunity, and preempting any inconsistent provision
of State law, a financial asset that is-
(A) held in the United States for a foreign securities
intermediary doing business in the United
States;
(B) a blocked asset (whether or not subsequently
unblocked) * * * ; and
(C) equal in value to a financial asset of Iran, including
an asset of the central bank or monetary
authority of the Government of Iran * * * , that
such foreign securities intermediary or a related
intermediary holds abroad,
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11
shall be subject to execution or attachment in aid of
execution in order to satisfy any judgment * * * .
22 U.S.C. § 8772(a)(l).
The statute prescribes two "determination[s]" the
court must make. 22 U.S.C. § 8772(a)(2). "In order to
ensure that Iran is held accountable for paying the judgments,"
the court must determine (1) "whether Iran
holds equitable title to, or the beneficial interest in, the
assets," and (2) "that no other person possesses a constitutionally
protected interest in the assets." Ibid.
3. The District Court's Decision
On February 28, 2013, the district court denied Bank
Markazi's motion to dismiss and granted summary judgment
to plaintiffs. App., infra, 52a-124a.
The court held that §8772 rendered U.C.C. Article 8
irrelevant: Section 8772 "specifically trumps 'any other
provision of law' and specifically permits execution on the
assets specifically at issue in this litigation." App., infra,
97a. Nonetheless, the court deemed the assets attachable
regardless, relying partly on purported statements
of ownership by Bank Markazi and partly on its view that
Bank Markazi's U.C.C. argument was "sophistry." Id. at
97a-98a & n.10, 101a.
With respect to the Treaty of Amity, the court again
ruled that § 8772 rendered the issue moot. App., infra,
102a. But it also found the Treaty inapplicable because,
in its view, the Treaty could not be used to "circumvent
congressional acts or authorized legal actions." Ibid.
As for central bank immunity, the court ruled that
§ 8772 "expressly preempt[s] any immunity." App., infra,
103a. But it also held that TRIA trumps central bank
immunity and that the blocking order's reference to "deAnnex
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12
ceptive practices" "suggests that the activities of Bank
Markazi are not central banking activities." Ibid.
The court next turned to § 8772's required findings.
"On this record and as a matter of law," it held, "no other
entity could have an equitable or beneficial interest" in
the assets. App., infra, 111a. "Clearstream does not allege
* * * that it has legal title or the right to acquire that
title for the Blocked Assets." Id. at 112a. "UBAE disclaims
any 'legally cognizable interest' in the Citibank
proceeds." Ibid. And Citibank simply "maintain[s] [an]
account on behalf of another." Ibid. In short, "[t]here
simply is no other possible owner of the interests here
other than Bank Markazi." Id. at 113a.
Bank Markazi argued that § 8772 violated the separation
of powers by effectively dictating the outcome of a
single case. App., infra, 114a. But the court disagreed.
"The statute does not itself 'find' turnover required," the
court asserted; "such determination is specifically left to
the Court." Id. at 114a-115a. The statutory findings, it
opined, were not "mere fig leaves" but left "plenty for
this Court to adjudicate." Id. at 115a.
On May 20, 2013, the district court denied reconsideration.
App., infra, 31a-5la. On July 9, 2013, it entered a
Rule 54(b) judgment directing turnover of the assets
(while retaining jurisdiction over a different dispute involving
other assets). Id. at 13a-30a. The judgment released
Citibank and Clearstream from liability to Bank
Markazi and enjoined Bank Markazi from asserting
claims against them. Id. at 24a-26a.
B. The Court of Appeals' Opinion
The court of appeals affirmed. App., infra, la-12a.
The court acknowledged Bank Markazi's arguments
that the assets at issue were not "assets of" Bank
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13
Markazi under TRIA and that, even if they were, they
were protected by central bank immunity. App., infra,
5a. But the court declined to reach those issues. "Congress,"
it explained, "has changed the law governing this
case by enacting 22 U.S.C. § 8772." Ibid.
The court then turned to Bank Markazi's separationof-
powers challenge. It recognized that United States v.
Klein, 80 U.S. 128 (1872), had struck down a statute that
directed courts to treat pardons of Confederate sympathizers
as conclusive evidence of disloyalty. App., infra,
8a. Congress, Klein declared, may not "prescrib[ e] a rule
of decision to the courts." Ibid. But the court of appeals
also noted that this Court had distinguished Klein in Robertson
v. Seattle Audubon Society, 503 U.S. 429 (1992).
App., infra, 8a-9a. Robertson upheld a statute passed to
resolve two environmental suits by deeming management
of forests according to the statute's terms to satisfy applicable
requirements. Ibid.
The court of appeals found §8772 similar to the statute
in Robertson. "[Section] 8772 does not compel judicial
findings under old law," it held, but rather "changes the
law applicable to this case." App., infra, 9a. And like the
statute in Robertson, it "explicitly leaves the determination
of certain facts to the courts." Ibid.
Bank Markazi argued that § 8772 "effectively compels
only one possible outcome, as Iran's beneficial interest in
the assets had been established by the time Congress enacted
§ 8772." App., infra, 10a. The court did not deny
that § 8772 had that effect. But it believed the argument
foreclosed by Robertson, "as the statute there was specifically
enacted to resolve two pending cases" as well. Ibid.
"Indeed," the court added, "it would be unusual for there
to be more than one likely outcome when Congress
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14
changes the law for a pending case with a developed factual
record." Ibid.
The court thus conceded that "there may be little functional
difference between § 8772 and a hypothetical statute
directing the courts to find that the assets at issue in
this case are subject to attachment under existing law."
App., infra, 10a. But it held that, under Robertson,
"§ 8772 does not cross the constitutional line." Ibid.
The court also rejected Bank Markazi's reliance on the
Treaty of Amity. "[E]ven if there were a conflict" between
the Treaty and § 8772, it ruled, "the later-enacted
§ 8772 would still apply * * * ." App., infra, 5a. The court
also denied the existence of any conflict. Although the
Treaty requires treatment of Iranian companies to be
"'fair and equitable' and no 'less favorable than that accorded
nationals and companies of any third country,'"
the court asserted that § 8772 "contains no country-based
discrimination" and in fact is "expressly non-discriminatory"
because it applies only to this case. Id. at 7a.
The court of appeals denied rehearing and rehearing
en bane on September 29, 2014. App., infra, 128a. On
October 29, 2014, the court granted Bank Markazi's motion
to stay the mandate. Id. at 129a.
REASONS FOR GRANTING THE PETITION
By enacting § 8772, Congress legislated the outcome of
a single case to ensure that nearly $2 billion of disputed
assets would be turned over to plaintiffs. In doing so,
it repudiated binding treaty obligations, ignored longstanding
international law, and overturned substantive
state property law. The Second Circuit upheld the statute
as consistent with the separation of powers, even
though it applies solely to this one case and effectively
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15
dictated its outcome. No court has ever upheld such a
blatant intrusion on judicial power.
If United States v. Klein, 80 U.S. 128 (1872), still has
any force, Congress cannot enact such legislation. Congress
passed a targeted statute to change the outcome of
one case. Although it purported to require two findings,
they were makeweights; the Second Circuit never suggested
otherwise. And this case squarely presents the
issue left open in Robertson v. Seattle Audubon Society,
503 U.S. 429 (1992): whether a statute is unconstitutional
if it "swe[eps] no more broadly * * * than the range of
applications at issue in [one] pending case[]." Id. at 441.
Section 8772 is merely the latest of several instances
of Congress's disregard for separation-of-powers principles
to favor sympathetic plaintiffs. The statute not only
violates United States treaty obligations and imperils the
United States' reputation as a safe custodian for central
bank reserves. It also threatens the judiciary's ability to
operate as an independent branch rather than a mere adjunct
resolving property disputes as the legislature may
direct. This Court should grant review.
I. THIS CASE PRESENTS IMPORTANT SEPARATION-0FP0WERS
QUESTIONS LEFT OPEN IN ROBERTSON
Klein made clear that Article III prohibits Congress
from exercising judicial power by legislating the outcome
of a particular case. This Court, however, has not clearly
defined the scope of that prohibition. This case tests
Klein's limits.
A. Klein Prohibits Congress from Dictating the
Outcome of a Particular Case
1. In Klein, this Court addressed a post-Civil War
statute designed to prevent pardoned Confederate sympathizers
from prevailing in suits against the governAnnex
117
16
ment. An 1863 statute had authorized the Secretary of
the Treasury to seize and sell abandoned or captured
property during the war. Ch. 120, § 1, 12 Stat. 820, 820
(1863). The owner could sue in the court of claims after
the war to recover the proceeds, but had to prove his loyalty
to the United States. Id. §3.
In United States v. Padelford, 76 U.S. 531 (1870), this
Court held that acts of disloyalty would be disregarded if
the claimant had been pardoned. Id. at 541-543. A few
months later, Congress included a rider in an appropriations
bill stating that a pardon was not "admissible in evidence
on the part of any claimant"; to the contrary, if the
pardon recited acts of disloyalty that the recipient had
not denied upon being pardoned, the statute required
that it be deemed "conclusive evidence that such person
did take part in and give aid and comfort to the late rebellion."
Ch. 251, 16 Stat. 230, 235 (1870).
This Court held the statute unconstitutional. Congress,
it concluded, had "passed the limit which separates
the legislative from the judicial power." Klein, 80 U.S. at
147. The statute purported to dictate the outcome of
pending cases "founded solely on the application of a rule
of decision * * * prescribed by Congress." Id. at 146.
That was impermissible: Congress may not "prescribe
rules of decision to the Judicial Department of the government
in cases pending before it." Ibid.
Klein distinguished the Court's earlier decision in
Pennsylvania v. Wheeling & Belmont Bridge Co., 59
U.S. 421 (1856). In Wheeling Bridge, the Court had found
a bridge to be an obstruction to navigation and ordered
its removal. Id. at 429. Congress responded by passing a
statute declaring the bridge to be a federal post-road.
Ibid. That statute, Klein explained, left the Court "to
apply its ordinary rules to the new circumstances created
Annex 117
17
by the act." 80 U.S. at 146-147. In Klein, by contrast,
Congress had "prescribe[d] a rule in conformity with
which the court must [decide the case]." Id. at 147.
2. This Court revisited Klein's scope in Robenson v.
Seattle Audubon Society, 503 U.S. 429 (1992). Robenson
arose out of two suits alleging that the government's
plans to allow certain timber harvesting violated federal
environmental statutes. Id. at 432. While the suits were
pending, Congress enacted legislation that "established a
comprehensive set of rules to govern harvesting within a
geographically and temporally limited domain." Id. at
433-434 & n.1 (citing Pub. L. No. 101-121, §318(b)(3), (5),
103 Stat. 701, 746-747 (1989)). The statute provided that
"management of areas according to [the new rules] * * *
is adequate consideration for the purpose of meeting the
statutory requirements that are the basis for [the suits]."
Pub. L. No. 101-121, §318(b)(6)(A), 103 Stat. at 747.
The Court rejected the claim that the statute violated
Klein. The statute, it explained, "compelled changes in
law, not findings or results under old law." 503 U.S. at
438. The Court "f[ound] nothing in [the statute] that
purported to direct any particular findings of fact or applications
of law." Ibid. Rather, the statute "expressly
reserved judgment upon 'the legal and factual adequacy'
of the administrative documents authorizing [certain]
sales" and "expressly provided for judicial determination
of the lawfulness of [other] sales." Id. at 438-439.
An amicus argued that "even a change in law, prospectively
applied, would be unconstitutional if the
change swept no more broadly, or little more broadly,
than the range of applications at issue in the pending
cases." 503 U.S. at 441. But "[t]his alternative theory
was neither raised below nor squarely considered by the
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18
Court of Appeals, nor was it advanced by respondents in
this Court," so the Court "decline[d] to address it." Ibid.
B. Klein's Scope Remains Uncertain
Confusion over Klein's scope is pervasive. The D.C.
Circuit has described Klein as "a bit of a constitutional
Sphinx." Janko v. Gates, 741 F.3d 136, 146 (D.C. Cir.
2014), petition for cert. filed, No. 14-650 (Nov. 26, 2014).
The Tenth Circuit has observed that "Klein is a notoriously
difficult decision to interpret." Biodiversity Assocs.
v. Cables, 357 F.3d 1152, 1170 (10th Cir. 2004)
(McConnell, J.), cert. denied, 543 U.S. 817 (2004). And
the Second Circuit has agreed that "[w]hether a statute
provides only the standard to which courts must adhere
or compels the result that they must reach can be a vexed
question." Benjamin v. Jacobson, 124 F.3d 162, 174 (2d
Cir. 1997), vacated, 172 F.3d 144 (2d Cir. 1999), cert. denied,
528 U.S. 824 (1999).
Courts of appeals have articulated Klein's scope in
varying ways. The Seventh Circuit has interpreted the
case to mean that, while Congress "may make rules that
affect classes of cases," it "cannot tell courts how to decide
a particular case." Lindh v. Murphy, 96 F.3d 856,
872 (7th Cir. 1996) (en bane) (emphasis added), rev'd on
other grounds, 521 U.S. 320 (1997). Thus, while Congress
"may prescribe maximum damages for categories of
cases," it "cannot say that a court must award Jones
$35,000 for being run over by a postal truck." Ibid.
The D.C. Circuit, by contrast, has reached the question
reserved in Robertson and held that it is "unobjectionable"
for Congress to target a particular case. Nat 'l
Coal. To Save Our Mall v. Norton, 269 F.3d 1092, 1097
(D.C. Cir. 2001), cert. denied, 537 U.S. 813 (2002). While
conceding that "Klein's exact meaning is far from clear,"
the court saw "no reason why the specificity should sudAnnex
117
19
denly become fatal merely because there happened to be
a pending lawsuit." Id. at 1096-1097.
C. This Case Squarely Presents Important Issues
Left Open in Robertson
This case presents the important questions about
Klein's scope that the Court left open in Robertson. And
it does so in a context-where Congress sought to compel
the transfer of nearly $2 billion from one litigant to another-
that calls out for resolution.
Section 8772 applies to one case and one case alone. It
governs only "the financial assets that are identified in
and the subject of proceedings in the United States District
Court for the Southern District of New York in Peterson
et al. v. Islamic Republic of Iran et al., Case No. 10
Civ. 4518 (BSJ) (GWG)." 22 U.S.C. §8772(b). For good
measure, it adds that "[n]othing in this section shall be
construed * * * to affect * * * any proceedings other than
[those] proceedings." Id. §8772(c)(l). The statute thus
not only identifies this case by caption and docket number,
but expressly disclaims any broader effect.
The Second Circuit nonetheless upheld the statute
because it purported to require two judicial "findings"
before the assets were awarded to plaintiffs: (1) that
"Iran holds equitable title to, or the beneficial interest in,
the assets"; and (2) that "no other person possesses a constitutionally
protected interest." 22 U.S.C. § 8772(a)(2).
Neither finding, however, left anything meaningful for the
court to decide-indeed, both were forgone conclusions.
The Second Circuit never held otherwise. To the contrary,
it conceded that "there may be little functional
difference" between § 8772 and a statute that simply
decided the case. App., infra, 10a. Indeed, the court
thought it "unusual for there to be more than one likely
Annex 117
20
outcome when Congress changes the law for a pending
case with a developed factual record." Ibid. The court
thus held § 8772 constitutional even if, as Bank Markazi
contended, it left no meaningful role to the courts.
There was good reason for the court not to dispute
that premise. The statute effectively directed that plaintiffs
prevail-collecting almost $2 billion-so long as
Bank Markazi had an interest in the assets and no one
else did. That is like directing judgment for a plaintiff on
the sole condition that the judgment runs only against
the defendant. That is practically no condition at all.
Moreover, there was never any serious question that
Bank Markazi had a "beneficial interest" in the assets.
Plaintiffs first learned of the assets in June 2008 only because
the Treasury Department's Office of Foreign Assets
Control advised them that an Iranian government
entity had an interest in the assets. See Julie Triedman,
Can U.S. Lau.;yers Make Iran Pay for 1983 Bombing?,
Am. Law., Oct. 28, 2013; C.A. App. 1386. And by the time
Congress enacted § 8772, the President had blocked the
assets precisely because they were "interests in property"
of Bank Markazi. 77 Fed. Reg. at 6659.
The finding that no other person had an interest in the
assets likewise was not a meaningful reservation of judicial
authority. The statute excluded a "custodial interest
of a foreign securities intermediary * * * that holds
the assets abroad for the benefit of Iran." 22 U.S.C.
§ 8772(a)(2)(A). It thus excluded interests of UBAE or
Clearstream-the only other parties with plausible claims.
By the time Congress enacted § 8772, moreover, Citibank
had filed its interpleader complaint disclaiming any interest.
See App., infra, 54a; C.A. App. 1362. It was thus
abundantly clear that no other party had a cognizable interest.
And if someone did have a "constitutionally proAnnex
117
21
tected interest," of course, courts would have to consider
the claim even without the statute.2
The Second Circuit thought that Roberison precluded
any inquiry into whether the findings were meaningful.
App., infra, 10a. But nothing in Roberison suggests that
Congress can avoid Klein merely by requiring "findings"
on collateral uncontested issues. Roberison upheld the
statute there because it "expressly reserved judgment
upon 'the legal and factual adequacy' of the administrative
documents" and "expressly provided for judicial determination
of the lawfulness of * * * sales." 503 U.S. at
438-439. There was no suggestion those findings were
makeweights.
If Article III prevents Congress from "say[ing] that a
court must award Jones $35,000 for being run over by a
postal truck," Lindh, 96 F.3d at 872, it surely also prevents
Congress from awarding the same amount conditioned
on findings that the $35,000 is the defendant's and
not someone else's. Yet that is effectively what Congress
did here-to the tune of almost $2 billion. By upholding
that law, the Second Circuit divested Klein of all force.
The correctness of that holding is a critical issue for
the separation of powers. The federal courts are an independent
branch of government, not mere handmaidens
to legislative directives. As a result, Congress cannot enact
a law that directs the entry of judgment for a plaintiff.
Congress cannot avoid that prohibition by directing
2 The district court asserted that the statute left "plenty for [it] to
adjudicate." App., infra, 115a. But that claim is hard to square with
the court's actual analysis, which occupied only two paragraphs of its
lengthy opinion and largely just recited various admissions about the
assets' status. See id. at llla-113a. In any event, the court of appeals
did not rely on that assertion, much less agree with it. And it is
the court of appeals' holding that this Court would review.
Annex 117
22
judgment conditioned only on a finding that the assets do
not belong to someone other than the defendant.
Even if the findings § 8772 required were meaningful,
the statute would still offend the separation of powers by
purporting to change the governing law for this one case
alone. Section 8772 could not be more targeted. It not
only identifies this case by caption and docket number,
but expressly declares that it has no effect beyond this
one case. 22 U.S.C. §8772(b), (c)(l). Congress's intent to
interfere with the adjudication of one particular case is
thus explicit. The decision below thus presents the question
this Court reserved in Robertson-whether a change
in law is unconstitutional if it "swe[eps] no more broadly
* * * than the range of applications at issue in [a] pending
case[]." 503 U.S. at 441.
Even where a statute does not conclusively resolve a
case, it offends basic norms of legislative and adjudicative
process for Congress to change the governing law solely
for purposes of one case, and solely to benefit the preferred
litigant. If Klein forbids Congress from directing
judgment for a party, it likewise must prohibit Congress
from achieving the same result by dramatically changing
the law to favor that party, solely for purposes of that one
case. Either way, Congress arrogates to itself the role of
resolving specific cases and controversies that the Constitution
reserves to the judiciary.
II. THE CONSTITUTIONAL ISSUES A.RE IMPORTANT AND
RECURRING
A. The Question Presented Raises Fundamental
Separation-of-Powers Issues
The importance of protecting the authority and independence
of the judicial branch cannot be overstated.
The Framers "lived among the ruins of a system of interAnnex
117
23
mingled legislative and judicial powers" in which impartial
judicial administration was often marred by "abuses
of legislative interference with the courts at the behest of
private interests and factions." Plaut v. Spendthrift
Farm, Inc., 514 U.S. 211, 219-221 (1995). The Framers
felt the "sense of a sharp necessity to separate the legislative
from the judicial power." Id. at 221. Article III is
thus an "'inseparable element of the constitutional system
of checks and balances' that 'both defines the power
and protects the independence of the Judicial Branch.'"
Stern v. Marshall, 131 S. Ct. 2594, 2608 (2011).
Article III "safeguards the role of the Judicial Branch
in our tripartite system." CFTC v. Schor, 478 U.S. 833,
850 (1986). It is also essential to individual liberty.
"'[T]here is no liberty,'" the Framers knew, "'if the power
of judging be not separated from the legislative and
executive powers."' The Federalist No. 78, at 561 (Cooke
ed., 1977) (Hamilton) (quoting Montesquieu). The separation
of powers thus not only "protect[s] each branch of
government from incursion by the others," but "protect[
s] the individual as well." Bond v. United States, 131
S. Ct. 2355, 2365 (2011).
Given that critical importance, this Court has not hesitated
to review separation-of-powers cases, even absent a
clear circuit conflict. See, e.g., Free Enter. Fund v. Pub.
Co. Accounting Oversight Bd., 561 U.S. 477 (2010); Cheney
v. U.S. Dist. Court, 542 U.S. 367 (2004); Freytag v.
Comm'r, 501 U.S. 868 (1991). The issues are no less important
here.
B. Congress Has Repeatedly Disregarded Separation-
of-Powers Principles in This Context
The question presented is not merely important, but
recurring as well. In recent years, Congress has repeatedly
intervened in lawsuits to help one particular set
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24
of plaintiffs-terrorism victims-prevail against foreign
governments.
In 2000, for example, individuals detained during the
1979 Iran hostage crisis tried to sue Iran, notwithstanding
the United States' settlement with Iran in the Algiers
Accords. See Roeder v. Islamic Republic of Iran, 333
F.3d 228 (D.C. Cir. 2003), cert. denied, 542 U.S. 915
(2004). While the suit was pending, Congress enacted a
new exception to sovereign immunity that applied solely
to that case, identified by docket number in the statute.
See Pub. L. No. 107-77, §626(c), 115 Stat. 748, 803 (2001)
(adding the words "or the act is related to Case Number
1:00CV03110(ESG) in the United States District Court
for the District of Columbia" to existing immunity exception),
amended by Pub. L. No. 107-117, §208, 115 Stat.
2230, 2299 (2002) ( correcting typo in docket number)
(currently codified at 28 U.S.C. § 1605A(a)(2)(B)).
On appeal, the D.C. Circuit recognized that "it is open
to question whether Congress may dictate the outcome of
a particular judicial proceeding" and reserved judgment
as to "whether the amendments, relating as they did
specifically to a pending action, violated separation-ofpowers
principles by impermissibly directing the result
of pending litigation." 333 F.3d at 237 & n.5 (citing Plaut
and Robertson); see also id. at 231 (quoting district
court's observation that "Congress' intent to interfere
with this litigation was clear"). Ultimately, the court did
not reach the issue, because it held the claims barred by
the Algiers Accords. Id. at 237-238.
Congress disregarded the separation of powers again
when it expanded the FSIA's terrorism exception in 2008.
28 U.S.C. § 1605A. Congress included a provision allowing
plaintiffs who had already litigated their case to judgment
to refile their claims under the new statute. Pub. L.
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25
No. 110-181, § 1083(c)(2), 122 Stat. 3, 342 (2008). The
Congressional Research Service observed that the statute
"may be vulnerable to invalidation as an improper
exercise of judicial powers by Congress." Elsea, supra,
at 61. And courts have disagreed over its constitutionality.
Compare Kumarv. Republic of Sudan, No. 2:10cv171,
2011 WL 4369122, at *11 (E.D. Va. Sept. 19, 2011) (finding
constitutional violation), rev'd on other grounds sub
nom. Clodfelter v. Republic of Sudan, 720 F.3d 199 (4th
Cir. 2013), with In re Islamic Republic of Iran Terrorism
Litig., 659 F. Supp. 2d 31, 68-70 (D.D.C. 2009) (upholding
statute despite "legitimate question of whether this enactment
offends deeply entrenched constitutional principles
relating to the separation of powers and the ability
of the judiciary to function independently without interference
from the political process" (citing Klein)).
Now, Congress has done it again. This case is just the
latest-and most extreme-example of Congress's willingness
to test the constitutional boundary between itself
and the judicial branch.
Ill. THIS CASE HAS IMPORTANT INTERNATIONAL RAMIFICATIONS
A. The Decision Below Puts the United States in
Violation of Its Treaty Obligations
The Second Circuit's decision is also important because
it puts the United States in breach of its solemn
treaty obligations. Article IV.1 of the Treaty of Amity
requires the United States to "accord fair and equitable
treatment to nationals and companies of [Iran]," and to
"refrain from applying unreasonable or discriminatory
measures that would impair their legally acquired rights
and interests." Treaty of Amity, Economic Relations,
and Consular Rights, U.S.-Iran, art. IV.1, Aug. 15, 1955,
8 U.S.T. 899, 903 (emphasis added). Section 8772 plainly
Annex 117
26
violates that provision. It is hard to imagine a more "unreasonable
or discriminatory" measure than one that allows
seizure of an Iranian entity's assets, because the entity
is Iranian, and orders them paid over to private plaintiffs
notwithstanding any state, federal, or international
legal principle that would otherwise bar the seizure.
The Second Circuit saw "no country-based discrimination."
App., infra, 7a. But it ignored the statute's plain
terms. Section 8772 applies only to assets "equal in value
to a financial asset of Iran"; it requires the court to find
that "Iran holds equitable title to, or the beneficial interest
in, the assets"; and its purpose is "to ensure that Iran
is held accountable for paying the judgments." 22 U.S.C.
§8772(a)(l)(C), (2) (emphasis added). While the court
emphasized that the statute applies only to this case,
App., infra, 7a, that makes no difference. Whether a
statute singles out one Iranian instrumentality for arbitrary
treatment or all of them, it is still a "discriminatory
measure[]" that singles out an Iranian instrumentality
because it is Iranian. Art. IV.1, 8 U.S.T. at 903.3
The Second Circuit also held that § 8772 would abrogate
any inconsistent Treaty provision. App., infra, 5a-
6a. But an abrogation is still a breach. "That a*** provision
of an international agreement is superseded as
domestic law does not relieve the United States of its in-
3 Bank Markazi, moreover, is not even a party to the underlying
judgments. See App., infra, 52a-53a n.1. Article III.I of the Treaty
requires the United States to respect the "juridical status" oflranian
entities. 8 U.S.T. at 902; see App., infra, 6a-7a. And this Court has
made clear that "government instrumentalities established as juridical
entities distinct and independent from their sovereign should
normally be treated as such." First Nat'l City Bank v. Banco Para
El Comercio Exterior de Cuba, 462 U.S. 611, 626-627 (1983). By allowing
seizure of Bank Markazi's purported assets to satisfy Iran's
debts, Congress violated those principles as well.
Annex 117
27
ternational obligation or of the consequences of a violation
of that obligation." Restatement (Third) of the Foreign
Relations Law of the United States § 115(1)(b) (1987).
That breach could expose the United States to claims
in the International Court of Justice, which has authority
to resolve Treaty disputes. Art. XXI.2, 8 U.S.T. at 913;
see, e.g., Oil Platforms (Iran v. U.S.), 2003 I.C.J. 161
(Nov. 6). The State Department has warned that, when
Iranian property is distributed to private plaintiffs, the
United States may confront claims in international tribunals,
''where we will have to account for it." Benefits for
U.S. Victims of International Terrorism: Hearing Before
the S. Comm. on Foreign Relations, S. Hr'g No. 108-
214, at 8 (July 17, 2003).
The decision below also calls into question the United
States' commitment to its treaty obligations generally.
The Treaty of Amity is but one of more than a dozen similar
treaties the United States has signed. See Sumitomo
Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 185-186 &
n.13 (1982); Herman Walker, Jr., Provisions on Companies
in United States Commercial Treaties, 50 Am. J.
Int'l L. 373, 373 n.1 (1956). The Nation's repudiation of
its obligations here gives other treaty partners reason to
doubt its commitment. In Sumitomo, this Court cited
the fact that "treaty provisions similar to that invoked by
[petitioner] are in effect with many other countries" as a
reason the question there was "clearly of widespread importance."
457 U.S. at 182 n.7. The same reasoning applies
here.
B. The Decision Below Undermines the President's
Authority over Foreign Affairs
Section 8772 also interferes with the President's ability
to conduct foreign affairs. As this Court has explained,
"the congressional purpose in authorizing blockAnnex
117
28
ing orders is 'to put control of foreign assets in the hands
of the President."' Dames & Moore v. Regan, 453 U.S.
654, 673 (1981). "The frozen assets serve as a 'bargaining
chip' to be used by the President when dealing with a
hostile country." Ibid. The Court has thus been reluctant
to "allow individual claimants throughout the country
to minimize or wholly eliminate this 'bargaining chip'
through attachments." Ibid.
For the same reason, the Executive Branch has repeatedly
opposed using blocked assets to pay judgments.
The President twice invoked statutory authority to waive
provisions permitting such payments, finding that they
would "impede [his] ability* * * to conduct foreign policy
in the interest of national security." 63 Fed. Reg. 59,201
(Oct. 21, 1998); 65 Fed. Reg. 66,483 (Oct. 28, 2000). Using
blocked assets to pay plaintiffs, he warned, would "eff ectively
eliminate" an "important source of leverage," "seriously
affect our ability to enter into global claims settlements,"
and threaten liability in international tribunals.
1998 Pub. Papers 1843, 1847 (Oct. 23, 1998); see
also 2002 Pub. Papers 1697, 1699 (Sept. 30, 2002) (invoking
"prerogatives * * * in the area of foreign affairs").
The need to preserve that authority is especially acute
today. The President has questioned the wisdom of
"[m]any years of refusing to engage Iran." National Security
Strategy 26 (May 2010). The United States is thus
currently involved in ongoing multilateral negotiations
with the country. 79 Fed. Reg. 4522 (Jan. 28, 2014); 79
Fed. Reg. 45,228 (Aug. 4, 2014); 79 Fed. Reg. 73,141 (Dec.
9, 2014). As part of that process, Iran will "gain access, in
installments, to $4.2 billion of its restricted revenues now
held in overseas accounts." 79 Fed. Reg. at 4522. "Imposing
additional sanctions now," the President has
warned, ''will only risk derailing our efforts* * * ." 2014
Annex 117
29
Daily Comp. Pres. Doc. 14, at 1 (Jan. 12, 2014). The decision
below threatens those negotiations. Other statutes
such as TRIA may already impair the President's authority
to some degree. But § 8772-which directs turnover
of nearly $2 billion without regard to customary standards-
raises that interference to a whole new level.
C. The Decision Undermines Confidence in U.S.
Financial Markets
The Second Circuit's decision also undermines the
United States' reputation as a safe custodian for central
bank reserves. Congress enacted central bank immunity
in § 1611(b) to avoid "significant foreign relations problems"
and to encourage the "deposit of foreign funds in
the United States." H.R. Rep. No. 94-1487, at 31 (1976).
"[F]oreign central banks are not treated as generic
'agencies and instrumentalities' of a foreign state under
the FSIA; they are given 'special protections' befitting
the particular sovereign interest in preventing the attachment
and execution of central bank property." NML
Capital, Ltd. v. Banco Central de la Republica Argentina,
652 F.3d 172, 188 (2d Cir. 2011), cert. denied, 133 S.
Ct. 23 (2012). That special treatment tracks international
norms. See United Nations Convention on Jurisdictional
Immunities of States and Their Property, G.A. Res.
59/38, art. 21(1)(c), U.N. Doc. NRES/59/38 (Dec. 2, 2004)
(immunity for "property of the central bank or other
monetary authority").
Section 8772 defies those goals. Foreign central banks
can hardly be expected to deposit reserves at U.S. institutions
if the funds are at risk of being seized whenever
Congress wants to favor plaintiffs with well-connected
lawyers. The impact is not limited to politically unpopular
nations. The assets seized here were not Bank Markazi's
foreign reserves, but rather assets deposited at
Annex 117
30
Citibank by Clearstream, a European securities intermediary,
that were merely "equal in value to a financial
asset of Iran* * * that [a] foreign securities intermediary
* * * holds abroad." 22 U.S.C. §8772(a)(l)(C). The district
court effectively allowed plaintiffs to circumvent territorial
limitations by treating the New York assets as a
proxy for Bank Markazi's unattachable holdings in Europe.
The decision thus discourages not just countries
like Iran from holding reserves here, but also intermediaries
in friendly nations like Luxembourg.
D. The Decision Invites Retaliation by Foreign
Governments
A key justification for the FSIA's enactment was to
promote U.S. interests by encouraging reciprocal treatment
under foreign law. See H.R. Rep. No. 94-1487, at
31 (exemption for military property encourages "reciprocal
application" under foreign law); cf. id. at 29-30 ("If
U.S. law did not respect the separate juridical identities
of different agencies or instrumentalities, it might encourage
foreign jurisdictions to disregard the juridical
divisions between different U.S. corporations * * * .").
The Executive Branch has thus opposed efforts to restrict
immunity, citing the potential for retaliatory measures
that would imperil U.S. property abroad. See, e.g.,
2007 Pub. Papers 1592, 1593-1594 (Dec. 28, 2007) (vetoing
provision that ''would be viewed with alarm by the international
community and would invite reciprocal action
against United States assets abroad").
Section 8772 raises precisely such concerns. By dictating
the outcome of a case against a foreign sovereign, the
statute invites other countries to intervene in litigation
against the United States in their own courts. If this sort
of legislation passes muster in a country with a supposedly
well-developed legal system and commitment to the
Annex 117
31
rule of law, it is hard to see why countries with more developing
systems should feel any compunction about
changing the rules for their own preferred litigants.
The United States will ultimately be worse off. "U.S.
citizens, corporations, the United States government, and
taxpayers have far more money invested abroad than
those of any other country, and thus have more to lose if
investment protections * * * [are] eroded." Justice for
Victims of Terrorism Act: Hearing on H.R. 3485 Before
the Subcomm. on Immigration and Claims of the H.
Comm. on the Judiciary, 106th Cong. 54 (Apr. 13, 2000)
(joint statement of the State, Treasury, and Defense Departments)
(emphasis omitted). For that reason too, the
case warrants review.
* * * * *
This Court often grants certiorari due to a case's impact
on foreign relations. See, e.g., Christopher v. Harbury,
536 U.S. 403, 412 (2002) (citing "importance of th[e]
issue to the Government in its conduct of the Nation's
foreign affairs"); JPMorgan Chase Bank v. Traffic Stream
(BVI) Infrastructure Ltd., 536 U.S. 88, 91 (2002). At a
minimum, the Court should invite the Solicitor General to
express the views of the United States, as it has done in
similar cases. See, e.g., Rubin v. Islamic Republic of
Iran, 132 S. Ct. 1619 (2012); Bank Melli Iran N.Y. Representative
Office v. Weinstein, 131 S. Ct. 3012 (2011);
Ministry of Def & Support for the Armed Forces of the
Islamic Republic of Iran v. Elahi, 552 U.S. 1176 (2008).
IV. THIS CASE IS AN EXCELLENT VEHICLE
This case is also an excellent vehicle for review. It
presents the Klein issue in its starkest form: a private
suit for money. Sometimes, Klein arguments are raised
in administrative challenges to government action. See,
Annex 117
32
e.g., Robenson, 503 U.S. at 432. But Klein might not apply
to such suits involving "public rights." See Biodiversity
Assocs., 357 F.3d at 1170-1171. This case, however,
involves paradigmatic private rights: a demand for money
as compensation for losses. "[V]ery different considerations"
arise when Congress tries to prescribe the outcome
of an "action * * * at common law for damages."
The Clinton Bridge, 77 U.S. 454, 463 (1870). This is the
proverbial case where Congress has "sa[id] that a court
must award Jones $35,000 for being run over by a postal
truck." Lindh, 96 F.3d at 872.
Congress, moreover, could not have been more explicit
about its intent to direct the outcome of a single case. It
identified this case by caption and docket number in the
statutory text. 22 U.S.C. § 8772(b). The statute's express
purpose is "to ensure that Iran is held accountable for
paying the judgments." Id. §8772(a)(2). And the only
findings the statute requires-that Bank Markazi rather
than someone else has a beneficial interest in the assets-
are so anemic that the Second Circuit all but conceded
they are makeweights. See App., infra, 10a.
The statute's author, Senator Menendez, issued a
press release explaining that the bill "makes it so that the
[plaintiffs] will be able to attach two billion in Iranian
Central Bank assets being held at a New York Bank."
Menendez Hails Banking Committee Passage of Iran
Sanctions Legislation (Feb. 2, 2012). News reports confirmed
that he was "'working with all of the plaintiff
groups to ensure that the approximately $2.5 billion in
Iranian blocked assets located in New York are available.'"
Ackley, supra. And he reiterated on the Senate
floor that he "wanted to be sure that there was understanding
on the record that Iran * * * should not be able
to avoid having its assets attached." 158 Cong. Rec.
Annex 117
33
83321 (May 21, 2012). The House sponsor agreed that
the statute sought to "allow assets seized from the Iranian
Government to be allocated to [plaintiffs] to recover
the judgments owed to them." 158 Cong. Rec. H5569
(Aug. 1, 2012). "It is time that Iran is held accountable,"
he opined, and the statute would "offer [plaintiffs] the justice
that they have long been denied." Ibid. Congress's
intent to make plaintiffs prevail was thus unmistakable.
Finally, the issue's importance is underscored by the
massive amount of money at stake. Congress effectively
directed that nearly $2 billion held by Citibank, for another
bank, ultimately for Bank Markazi's benefit be paid
over to plaintiffs. Such a huge wealth transfer in violation
of ordinary legal principles sets a very high-profile-and
very bad-precedent for the predictability of the Nation's
financial markets and the integrity of its judicial
system. This Court should grant review.
CONCLUSION
The petition for a writ of certiorari should be granted.
Annex 117
DAVID M. LINDSEY
ANDREASA FRISCHKNECHT
CHAFFETZ LINDSEY LLP
505 Fifth Ave., 4th Floor
NewYork, N.Y. 10017
(212) 257-6960
Respectfully submitted.
JEFFREY A. LAMKEN
Counsel of Record
ROBERT K. KRY
MOLOLAMKEN LLP
The Watergate, Suite 660
600 New Hampshire Ave., N.W.
Washington, D.C. 20037
(202) 556-2000
[email protected]
JUSTIN M. ELLIS
MOLOLAMKEN LLP
540 Madison Ave.
NewYork, N.Y. 10022
(212) 607-8160
Counsel for Petitioner
DECEMBER 2014
ANNEX 118
Annex 118
No.
IN THE
$>uprtme ~ourt of tbe Wniteb $>1ate~
BANKMARKAZI,
THE CENTRAL BANK OF IRAN,
Petitioner,
v.
DEBORAH D. PETERSON, et al.,
Respondents.
On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Second Circuit
PETITION FOR A WRIT OF CERTIORARI
DONALD F. LUKE
JAFFE & ASHER LLP
600 Third Avenue
New York, New York 10016
(212) 687-3000
LISA W.BOHL
MOLOLAMKEN LLP
300 N. LaSalle Dr.
Chicago, Illinois 60654
(312) 450-6700
JEFFREY A. LAMKEN
Counsel of Record
ROBERT K. KRY
LAUREN M. WEINSTEIN
WILLIAM J. COOPER
MOLOLAMKEN LLP
The Watergate, Suite 660
600 New Hampshire Ave., N.W.
Washington, D.C. 20037
(202) 556-2000
[email protected]
Counsel for Petitioner
WILSON-EPES PRINTING CO., INC. - (202) 789-0096 - WASHINGTON, D.C. 20002
Annex 118
QUESTION PRESENTED
Traditionally, a foreign sovereign's assets were absolutely
immune from execution, wherever located. Congress
modified that rule in the Foreign Sovereign Immunities
Act of 1976 ("FSIA"), Pub. L. No. 94-583, 90
Stat. 2891, by providing that a foreign sovereign's "property
in the United States" is immune from execution unless
it falls within certain narrowly defined exceptions.
28 U.S.C. §§ 1609-1610. In the decision below, the Second
Circuit held that the FSIA places no limits at all on the
seizure of a foreign sovereign's property outside the
United States, and in fact displaces any common-law immunity
that would otherwise apply. Applying that rule,
the Second Circuit held that the district court could order
a foreign bank to transfer $1.68 billion of sovereign
assets from Luxembourg to New York to satisfy default
judgments. The question presented is:
Whether a foreign sovereign's property outside the
United States is entitled to sovereign immunity.
(i)
Annex 118
ii
PARTIES TO THE PROCEEDINGS BELOW
Due to its length, the list of parties to the proceedings
below is set forth in full in the appendix (App., infra,
83a-95a).
Annex 118
TABLE OF CONTENTS
Page
Opinions Below............................................................. 1
Statement of Jurisdiction........................................... 1
Statutory Provisions Involved ................................... 2
Preliminary Statement ............................................... 2
Statement...................................................................... 3
I. Statutory Framework..................................... 3
A. The Foreign Sovereign Immunities
Act................................................................ 3
B. This Court's Decision in NML ................ 5
II. Proceedings Below.......................................... 7
A. Proceedings Before the District
Court........................................................... 7
B. The Court of Appeals' Opinion ......... .. . .. .. 10
Reasons for Granting the Petition ............................ 13
I. This Case Presents an Important
Question with Drastic Foreign Relations
Consequences................................................... 13
A. For Decades, Courts Unanimously
Agreed That Sovereign Assets
Abroad Were Not Subject to
Execution.................................................... 13
B. The Decision Below Will Have FarReaching
Consequences for
Sovereign Property................................... 16
C. The Decision Below Threatens
Serious Foreign Relations
Consequences............................................. 18
D. The Second Circuit's Decision
Violates International Law...................... 21
(iii)
Annex 118
iv
TABLE OF CONTENTS-Continued
E. The Decision Below Conflicts with
the Position of the Executive
Page
Branch......................................................... 23
II. The Decision Below Is Incorrect................... 24
A. The Decision Below Produces an
Incoherent Immunity Regime That
Flouts the FSIA's Structure and
History........................................................ 24
B. This Court's Decision in NML
Confirms the Need for Review................ 29
III. This Case Is an Appropriate Case for
Review............................................................... 31
Conclusion..................................................................... 32
Appendix A - Opinion of the Court of Appeals
(Nov. 21, 2017) ......................................................... la
Appendix B - Opinion and Order of the
District Court (Feb. 19, 2015) ............................... 56a
Appendix C - Order of the Court of Appeals
Denying Rehearing (Feb. 7, 2018)........................ 80a
Appendix D - Order of the Court of Appeals
Denying Rehearing En Banc (Feb. 7, 2018) ....... 82a
Appendix E - Parties to the Proceedings
Below ........................................................................ 83a
Appendix F - Relevant Statutory Provisions.......... 96a
Annex 118
V
TABLE OF AUTHORITIES
Page(s)
CASES
Aurelio v. Camacho,
No. 2011-SCC-0023-CIV, 2012 WL
6738437 (N. Mar. I. Dec. 31, 2012)................... 17
Aurelius Capital Partners, LP v. Republic
of Argentina, 584 F.3d 120 (2d Cir. 2009)....... 14
Autotech Techs. LP v. Integral Research &
Dev. Corp., 499 F.3d 737 (7th Cir. 2007) ....... 5, 14
Bank Markazi v. Peterson:
135 S. Ct. 1753 (2015)......................................... 24
136 S. Ct. 1310 (2016)....................................... 8, 22
Bank Melli Iran N. Y. Representative Office
v. Weinstein, 131 S. Ct. 3012 (2011) ................ 24
Bolivarian Republic of Venezuela v.
Helmerich & Payne Int'l Drilling Co.,
137 S. Ct. 1312 (2017)...................................... 20, 21
Cent. Va. Cmty. Coll. v. Katz,
546 U.S. 356 (2006)............................................. 30
Certain Iranian Assets (Iran v. United
States) (I.C.J. filed June 14, 2016)................... 22
Clark v. Allen, No. 95-2487, 1998 WL 110160
(4th Cir. Mar. 13, 1998) ..................................... 17
Clinton v. City of New York,
524 U.S. 417 (1998)............................................. 25
Colella v. Republic of Argentina,
No. C 07-80084, 2007WL 1545204
(N.D. Cal. May 29, 2007) ................................... 20
Conn. Bank of Commerce v. Republic
of Congo, 309 F.3d 240 (5th Cir. 2002) ......... 14, 19
Corbett v. Nutt, 77 U.S. 464 (1871) ....................... 17
Annex 118
vi
TABLE OF AUTHORITIES-Continued
Page(s)
Dalton v. Meister, 239 N.W.2d 9 (Wis. 1976)...... 17
Estates of Ungar ex rel. Strachman v.
PalestinianAuth., 715 F. Supp. 2d 253
(D.R.I. 2010)........................................................ 17
Fall v. Eastin, 215 U.S. 1 (1909) ........................... 17
Fid. Partners, Inc. v. Philippine Exp. &
Foreign Loan Guar. Corp., 921 F. Supp.
1113 (S.D.N.Y. 1996).......................................... 14
Hodes v. Hodes, 155 P.2d 564 (Or. 1945) ............. 18
Holder v. Humanitarian Law Project,
561 U.S. 1 (2010)................................................. 23
Inter-Reg'l Fin. Grp. v. Hashemi,
562 F.2d 152 (2d Cir. 1977) ............................... 17
Int'l Legal Consulting Ltd. v. Malabu Oil &
Gas Ltd., No. 651773/11, 2012 WL 1032907
(N.Y. Sup. Ct. Mar. 15, 2012)............................ 14
Kiobel v. Royal Dutch Petrol. Co.,
569 U.S. 108 (2013)............................................. 19
Kirtsaeng v. John Wiley & Sons, Inc.,
568 U.S. 519 (2013)............................................. 30
Kiyemba v. Obama, 559 U.S. 131 (2010) ............. 24
Koehler v. Bank of Bermuda Ltd.,
12 N.Y.3d 533 (2009) .................................... passim
Lozano v. Lozano, 975 S.W.2d 63
(Tex. App. 1998) ................................................. 17
Lyons Hollis Assocs. v. New Tech. Partners,
Inc., 278 F. Supp. 2d 236
(D. Conn. 2002) ................................................... 17
In re Martin, 145 B.R. 933
(Bankr. N.D. Ill. 1992)....................................... 17
Annex 118
vii
TABLE OF AUTHORITIES-Continued
Page(s)
Ministry of Def & SupportfortheArmed
Forces of the Islamic Republic of Iran v.
Elahi, 552 U.S. 1176 (2008)............................... 24
Mitchell v. Bunch,
2 Paige Ch. 606 (N.Y. Ch.1831)....................... 18
Mitchell v. Forsyth,
472 U.S. 511 (1985)............................................. 31
Morrison v. Nat'lAustl. Bank Ltd.,
561 U.S. 247 (2010)............................................. 19
Murray v. Schooner Charming Betsy,
6 U.S. (2 Cranch) 64 (1804) ............................... 28
Persinger v. Islamic Republic of Iran,
729 F.2d 835 (D.C. Cir. 1984) ........................... 20
Peterson v. Islamic Republic of Iran:
264 F. Supp. 2d 46 (D.D.C. 2003) ..................... 7
627 F.3d 1117 (9th Cir. 2010).................. 13, 14, 31
No. 10 Civ. 4518, 2013 WL 1155576
(S.D.N.Y. Mar. 13, 2013) .............................. 8
Philippine Exp. & Foreign Loan Guar.
Corp. v. Chuidian, 267 Cal. Rptr. 457
(Ct. App. 1990).................................................... 14
Quaestor Invs., Inc. v. State ofChiapas,
No. CV-95-6723, 1997WL 34618203
(C.D. Cal. Sept. 2, 1997) .................................... 14
Raccoon Recovery, LLC v. Navoi Mining &
Metallurgical Kombinat,
244 F. Supp. 2d 1130 (D. Colo. 2002) ............... 14
Reeves v. Fed. Sav. & Loan Ins. Corp.,
732 S.W.2d 380 (Tex. App. 1987)...................... 17
Republic of Argentina v. NML Capital, Ltd.,
134 S. Ct. 2250 (2014) ................................... passim
Annex 118
viii
TABLE OF AUTHORITIES-Continued
Page(s)
Republic of Iraq v. Beaty,
555 U.S. 1092 (2009)........................................... 23
Republic of Mexico v. Hoffman,
324 U.S. 30 (1945)............................................... 18
Republic of Philippines v. Pimentel,
553 U.S. 851 (2008)............................................. 18
Richmark Corp. v. Timber Falling
Consultants, 959 F.2d 1468
(9th Cir. 1992) ..................................................... 14
RJR Nabisco, Inc. v. European Cmty.,
136 S. Ct. 2090 (2016)......................................... 26
Rubin v. Islamic Republic of Iran:
132 S. Ct. 1619 (2012)......................................... 24
137 S. Ct. 708 (2017)........................................... 24
138 S. Ct. 816 (2018)................................. 19, 26, 27
637 F.3d 783 (7th Cir. 2011).............................. 31
830 F.3d 470 (7th Cir. 2016) ........................... 19, 20
Samantarv. Yousuf, 560 U.S. 305 (2010)............ 27
Sargeant v. Al-Saleh, 137 So. 3d 432
(Fla. Dist. Ct. App. 2014) .................................. 16
Schaheen v. Schaheen, 169 N.W.2d 117
(Mich. Ct. App. 1969) ......................................... 17
Societe N ationale I ndustrielle Aerospatiale
v. U.S. Dist. Court, 482 U.S. 522 (1987) .......... 24
Sosa v. Alvarez-Machain,
542 U.S. 692 (2004)............................................. 24
Stephens v. Nat'l Distillers & Chem. Corp.,
69 F.3d 1226 (2d Cir. 1995) ............................... 32
Tomlinson & Webster Mfg. Co. v. Shatto,
34 F. 380 (C.C.D. Minn. 1888) .......................... 18
Annex 118
ix
TABLE OF AUTHORITIES-Continued
Page(s)
Utah Republican Party v. Cox,
885 F.3d 1219 (10th Cir. 2018).......................... 31
Verlinden B. V. v. Cent. Bank of Nigeria,
461 U.S. 480 (1983)............................................. 3
Wilson v. Columbia Gas. Co.,
160 N.E. 906 (Ohio 1928)................................... 18
Zivotofsky ex rel. Zivotofsky v. Kerry,
135 S. Ct. 2076 (2015)......................................... 23
STATUTES AND RULES
Foreign Sovereign Immunities Act of 1976,
Pub. L. No. 94-583, 90 Stat. 2891
(codified as amended at 28 U.S.C.
§§ 1602 et seq.) ............................................... passim
28 U.S.C. § 1602 ............................................. 25
28 U.S.C. § 1603(a) ..................................... 27, 28
28 u.s.c. § 1604 ........................................... 3, 25
28 u.s.c. § 1605 ........................................... 3, 25
28 U.S.C. § 1605(a)(2).................................. 3, 26
28 U.S.C. § 1609 ....................................... passim
28 U.S.C. § 1610 ....................................... passim
28 U.S.C. § 1610(a) .................................. passim
28 U.S.C. § 1610(a)(2).................................... 4
28 U.S.C. § 1610(a)(7).................................. 5, 14
28 U.S.C. § 1610(b) .................................. passim
28 U.S.C. § 1610(b)(3).................................... 5
28 U.S.C. § 1610(c)......................................... 28
28 u.s.c. § 1611 ..................................... 5, 25, 28
28 U.S.C. § 1611(b)(l).................................... 5
Annex 118
X
TABLE OF AUTHORITIES-Continued
Page(s)
Antiterrorism and Effective Death
Penalty Act of 1996, Pub. L. No.
104-132, §221(a), 110 Stat. 1214, 1241
(codified at 28 U.S.C. § 1605A) ......................... 5
Terrorism Risk Insurance Act of 2002,
Pub. L. No. 107-297, §201(a),
116 Stat. 2322, 2337
(28 U.S.C. § 1610 note)....................................... 32
Iran Threat Reduction and Syria Human
Rights Act of 2012, Pub. L. No. 112-158,
§ 502, 126 Stat. 1214, 1258
(codified at 22 U.S.C. §8772) ............................ 8
28 U.S.C. § 1254(1) .................................................. 1
Fed. R. Civ. P. 69(a)................................................ 10
Ariz. Rev. Stat.§ 12-1634 ....................................... 16
Cal. Civ. Proc. Code § 708.205 ............................... 16
Conn. Gen. Stat. § 52-356b ..................................... 16
Idaho Code § 11-506 ....... ... .. .......... .. . .. .......... .. ......... 16
Ill. Comp. Stat. 5/2-1402(c) .................................... 16
Ind. Code § 34-25-3-12 ...... .. ... .......... ... .. ........... .. ... .. 16
Iowa Code § 630.6.................................................... 16
Kan. Stat. §61-3604 ................................................ 16
14 Me. Stat. § 3131 .................................................. 16
Mich. Comp. Laws § 600.6104................................ 16
Minn. Stat. §575.05................................................. 16
Mont. Code §25-14-107 .......................................... 16
Neb. Rev. Stat. §25-1572....................................... 16
Nev. Rev. Stat. §21.320.......................................... 16
N.C. Gen. Stat.§ 1-360.1........................................ 16
Annex 118
xi
TABLE OF AUTHORITIES-Continued
Page(s)
N.Y. C.P.L.R. §5225(b).......................................... 9
Ohio Rev. Code § 2333.21 ....................................... 16
12 Okla. Stat. §850.................................................. 16
Or. Rev. Stat. § 18.268 ............................................ 16
R.I. Gen. Laws § 9-28-3 .......................................... 16
S.C. Code § 15-39-410 ............................................. 16
S.D. Codified Laws§ 15-20-12............................... 16
Tex. Civ. Prac. & Rem. Code §31.002.................. 16
Va. Code §8.01-507 ................................................. 16
Wash. Rev. Code §6.32.080 ................................... 16
W. Va. Code §38-5-15............................................. 16
Wis. Stat. § 816.08 ................................................... 16
Wyo. Stat.§ 1-17-411 .............................................. 16
Ill. Rev. Stat. ch. 21, §§ 36-37 (1845) ..................... 16
1881 Ind. Laws ch. 38, § 226................................... 16
1872-1873 W. Va. Acts ch. 218, §§ 10-11............... 16
1856 Wis. Gen. Acts ch. 120, § 208......................... 16
TREATY PROVISIONS
Geneva Convention on the High Seas
art. 23(2), Apr. 29, 1958, 13 U.S.T. 2312.......... 22
Treaty of Amity, Economic Relations,
and Consular Rights, U.S.-Iran,
Aug. 15, 1955, 8 U.S.T. 899 ............................... 22
Art. IV.1, 8 U.S.T. at 903.............................. 22
Art. IV.2, 8 U.S.T. at 903.............................. 22
Art. XXI.2, 8 U.S.T. at 913........................... 22
Annex 118
xii
TABLE OF AUTHORITIES-Continued
Page(s)
United Nations Convention on
Jurisdictional Immunities of States
and Their Property, G.A. Res. 59/38,
art. 19(c) (Dec. 2, 2004)...................................... 21
LEGISLATIVE MATERIALS
H.R. Rep. No. 94-1487 (1976) .......................... passim
S. Rep. No. 94-1310 (1976)..................................... 28
Jurisdiction of U.S. Court;s in Suits
Against Foreign States: Hearings on
H.R. 11315 Before the Subcomm. on
Administrative Law & Governmental
Relations of the H. Comm. on the
Judiciary, 94th Cong. (June 2, 1976) .............. 28
Justice for Victims of Terrorism Act:
Hearing on H.R. 3485 Before the
Subcomm. on Immigration and
Claims of the H. Comm. on the
Judiciary, 106th Cong. (Apr. 13, 2000)........... 21
Benefits for U.S. Victims of International
Terrorism: Hearing Before the
S. Comm. on Foreign Relations,
S. Hr'g No.108-214 (July 17, 2003) .............. 22, 23
EXECUTIVE MATERIALS
Executive Order No. 13,599,
77 Fed. Reg. 6659 (Feb. 5, 2012) ...................... 32
2007 Pub. Papers 1592 (Dec. 28, 2007) ................. 20
Brief for the United States as Amicus
Curiae Supporting Petitioner in
Republic of Argentina v. NML
Capital, Ltd., No. 12-842 (Mar. 2014).............. 23
Annex 118
xiii
TABLE OF AUTHORITIES-Continued
Page(s)
Brief for the United States as Amicus
Curiae Supporting Petitioner in
Republic of Iraq v. Beaty, No. 07-1090
(Dec. 2008)........................................................... 23
Brief for the United States as Amicus
Curiae Supporting Respondents in
Rubin v. Islamic Republic of Iran,
No. 16-534 (Oct. 2017)........................................ 20
OTHER AUTHORITIES
Institut de Droit International,
Contemporary Problems Concerning
the Immunity of States in Relation to
Questions of Jurisdiction and
Enforcement (1991) ........................................... 21
Report of the International Law
Commission on the Work of Its FortyThird
Session, U.N. Doc. A/46/10
(1991), reprinted in [1991] 2 Y.B. Int'l
L. Comm'n 1, U.N. Doc.
A/CN .4/SER.A/1991/ Add.l (Part 2) ................ 21
Herman Walker, Jr., Provisions
on Companies in United States
Commercial Treaties,
50 Am. J. Int'l L. 373 (1956).............................. 22
Annex 118
IN THE
~uprtme QCourt of tbe Wniteb ~tates
BANKMARKAZI,
THE CENTRAL BANK OF IRAN,
Petitioner,
v.
DEBORAH D. PETERSON, et al.,
Respondents.
On Petition for a Writ of Certiorari
to the United States Court of Appeals
for the Second Circuit
PETITION FOR A WRIT OF CERTIORARI
Petitioner Bank Markazi, the Central Bank of Iran,
respectfully petitions for a writ of certiorari to review the
judgment of the United States Court of Appeals for the
Second Circuit in this case.
OPINIONS BELOW
The opinion of the court of appeals (App., infra, la-55a)
is reported at 876 F.3d 63 (2d Cir. 2017). The opinion of
the district court (App., infra, 56a-79a) is unreported but
available at 2015 WL 731221 (S.D.N.Y. Feb. 20, 2015).
STATEMENT OF JURISDICTION
The court of appeals entered judgment on November
21, 2017. It denied rehearing and rehearing en bane on
February 7, 2018. App., infra, 80a-82a. This Court has
jurisdiction under 28 U.S.C. § 1254(1).
Annex 118
2
STATUTORY PROVISIONS INVOLVED
Relevant provisions of the Foreign Sovereign Immunities
Act of 1976, 28 U.S.C. §§ 1602 et seq., are set forth in
the appendix. App., infra, 96a-125a.
PRELIMINARY STATEMENT
The Foreign Sovereign Immunities Act prohibits plaintiffs
from executing against a foreign sovereign's property
in the United States, subject only to narrow exceptions.
In the decision below, however, the Second Circuit
held that the Act places no limits at all on the seizure of
property outside the United States-and in fact displaces
any common-law immunity that would otherwise apply.
Applying that rule, the Second Circuit held that the district
court could order a foreign bank to transfer $1.68
billion of sovereign assets from Luxembourg to New
York to satisfy default judgments.
The disastrous foreign policy implications of that rule
are obvious. The seizure of another sovereign's property
raises concerns under any circumstances. But a rule that
permits the seizure of sovereign property outside the
United States, without regard to any customary immunity
standards, is destined to embroil the Nation in international
disputes. It also threatens the U.S. assets of
U.S. companies by exposing them to reciprocal treatment
by foreign courts.
The Second Circuit acknowledged that the rule it
adopted "abrogated decades of pre-existing sovereign
immunity common law." App., infra, 2a. It nonetheless
deemed its holding compelled by this Court's decision in
Republic of Argentina v. NML Capital, Ltd., 134 S. Ct.
2250 (2014). But NM L's brief discussion of the topic was
not necessary to the decision and rested on a mistaken
premise. The question is important and warrants full
consideration. As the Second Circuit observed, the "probAnnex
118
3
lem is one for the Supreme Court * * * to resolve." App.,
infra, 52a. The Court should grant review.
STATEMENT
I. STATUTORY FRAMEWORK
A. The Foreign Sovereign Immunities Act
For most of this Nation's history, foreign sovereigns
were completely immune from suit. See Verlinden B. V.
v. Cent. Bank of Nigeria, 461 U.S. 480, 486 (1983). In
1952, however, the State Department adopted the "restrictive
theory" of immunity, which denies immunity for
a state's "strictly commercial acts." Id. at 486-487. Two
decades later, Congress codified the restrictive theory in
the Foreign Sovereign Immunities Act of 1976 ("FSIA"),
Pub. L. No. 94-583, 90 Stat. 2891 (codified as amended at
28 U.S.C. §§ 1602 et seq.).
The FSIA addresses both (1) the immunity of foreign
sovereigns from suit; and (2) the immunity of sovereign
property from attachment and execution. With respect
to immunity from suit-commonly known as "jurisdictional"
immunity-the FSIA confirms the general rule
that "a foreign state shall be immune from the jurisdiction
of the courts of the United States and of the States."
28 U.S.C. § 1604. The Act then lists carefully circumscribed
exceptions. Id. § 1605. For example, under the
"commercial activity" exception, a foreign sovereign is
not immune from actions "based upon a commercial activity
carried on in the United States by the foreign state; or
upon an act performed in the United States in connection
with a commercial activity of the foreign state elsewhere;
or upon an act outside the territory of the United States in
connection with a commercial activity of the foreign state
elsewhere and that act causes a direct effect in the United
States." Id. § 1605(a)(2).
Annex 118
4
The FSIA separately addresses the immunity of sovereign
property from attachment and execution. Even
after the State Department adopted the restrictive theory
of immunity in 1952, U.S. courts continued to accord
absolute immunity to sovereign property. As Congress
observed: "Under existing law, a foreign state in our
courts enjoys absolute immunity from execution, even in
ordinary commercial litigation where commercial assets
are available for the satisfaction of a judgment." H.R.
Rep. No. 94-1487, at 8 (1976). Plaintiffs who obtained
judgments thus had to rely on sovereign grace for their
satisfaction.
In enacting the FSIA, Congress chose to "modify this
rule by partially lowering the barrier of immunity from
execution, so as to make this immunity conform more
closely with the provisions on jurisdictional immunity."
H.R. Rep. No. 94-1487, at 27. Section 1609 thus codifies
the general rule that "property in the United States of a
foreign state shall be immune from attachment arrest
and execution." 28 U.S.C. § 1609. Section 1610 then lists
narrow exceptions for certain types of "property in the
United States." Section 1610(a) provides that "[t]he
property in the United States of a foreign state*** used
for a commercial activity in the United States, shall not
be immune from attachment in aid of execution, or from
execution," if one of certain additional conditions is met.
Id. § 1610(a). Under § 1610(a)(2), for example, property in
the United States of a foreign state used for commercial
activity in the United States is not immune if the property
"is or was used for the commercial activity upon which
the claim is based." Id. § 1610(a)(2). Section 1610(b) lists
additional exceptions for "property in the United States
of an agency or instrumentality of a foreign state enAnnex
118
5
gaged in commercial activity in the United States." Id.
§ 1610(b).
Section 1611 sets forth additional immunities that
are not subject to the exceptions in § 1610. Under
§ 1611(b)(l), for example, property of a "foreign central
bank or monetary authority held for its own account" is
immune unless the central bank or its parent government
specifically waives the immunity. 28 U.S.C. § 1611(b)(l).
In 1996, Congress added an exception to jurisdictional
immunity for certain claims based on acts of terrorism.
See Antiterrorism and Effective Death Penalty Act of
1996, Pub. L. No. 104-132, §221(a), 110 Stat. 1214, 1241
(currently codified at 28 U.S.C. § 1605A). Congress also
added exceptions for execution of the resulting judgments.
Section 1610(a)(7) provides that, with respect to
such terrorism judgments, a foreign sovereign's "property
in the United States*** used for a commercial activity
in the United States" is not immune, "regardless of
whether the property is or was involved with the act upon
which the claim is based." 28 U.S.C. § 1610(a)(7). Section
1610(b)(3) provides a similar exception for "property in
the United States of an agency or instrumentality of a
foreign state engaged in commercial activity in the United
States." Id. § 1610(b )(3). Both exceptions thus apply only
to "property in the United States."
B. This Court's Decision in NML
For 35 years, no appellate court held that the FSIA
permits execution against property outside the United
States. Courts uniformly understood the Act to leave intact
the traditional absolute immunity accorded to property
abroad. See, e.g., Autotech Techs. LP v. Integral
Research & Dev. Corp., 499 F.3d 737, 750 (7th Cir. 2007)
("The FSIA did not purport to authorize execution against
Annex 118
6
a foreign sovereign's property ***wherever that property
is located around the world."); pp. 13-15, infra.
This Court then decided Republic of Argentina v.
NML Capital, Ltd., 134 S. Ct. 2250 (2014). NML did not
present any question of execution immunity. It concerned
only whether the Republic of Argentina was immune
from discovery into its foreign assets. Id. at 2254.
The Court held that it was not. Argentina had waived its
jurisdictional immunity in certain bond indentures. Id.
at 2256. And while execution immunity might ultimately
restrict the plaintiffs' ability to seize assets, it was no bar
to discovery. Id. at 2256-2257.
NML addressed execution immunity in passing. Argentina
claimed that discovery into foreign assets was
inappropriate because Congress could not have intended
to allow discovery into assets the plaintiff had no power
to execute against. 134 S. Ct. at 2257. The Court rejected
that argument on multiple grounds.
First, the Court identified no pre-FSIA precedent
recognizing any common-law immunity for assets outside
the United States. 134 S. Ct. at 2257. "Our courts generally
lack authority in the first place to execute against
property in other countries," the Court noted, "so how
could the question ever have arisen?" Ibid. The FSIA
did not itself grant such immunity, the Court added, because
§ 1609 by its terms "immunizes only foreign-state
property 'in the United States.'" Ibid.
Second, the Court held that any consideration of execution
immunity was premature. "[T]he reason for these
subpoenas," it noted, "is that NML does not yet know
what property Argentina has and where it is, let alone
whether it is executable under the relevant jurisdiction's
law." 134 S. Ct. at 2257. That the subpoenas might
sweep in information about property that was arguably
Annex 118
7
immune was not a basis to foreclose discovery. Id. at
2258. Accordingly, the Court refused to quash the subpoenas.
Ibid.
II. PROCEEDINGS BELOW
A. Proceedings Before the District Court
1. Petitioner Bank Markazi is the Central Bank of
Iran. App., infra, 2a. Like other central banks, it holds
foreign currency reserves to carry out monetary policies,
such as maintaining price stability. C.A. Confid. App.
425-426. Like other central banks, it often maintains
those reserves in bonds issued by other sovereigns.
App., infra, 5a; C.A. Confid. App. 426.
To carry out those central banking activities, in 1994
Bank Markazi opened an account in Luxembourg with
Clearstream Banking, S.A., a Luxembourg-based bank
that specializes in bonds and equities. App., infra, 5a;
C.A. Confid. App. 426. Clearstream maintained its own
accounts at banks in New York, including JPMorgan
Chase Bank, N .A. and Citibank, N .A., which it used to
process bond proceeds for customers. App., infra, 5a. In
2008, Bank Markazi stopped holding bonds at Clearstream
directly and started doing so through an intermediary
bank, Banca UBAE, S.p.A. Id. at 5a-6a.
2. This case arises out of efforts to seize those holdings
to pay off default judgments against the Iranian
government. Plaintiffs obtained those judgments in suits
concerning terrorist attacks by organizations that allegedly
received support from Iran. App., infra, 56a-57a;
see, e.g., Peterson v. Islamic Republic of Iran, 264 F.
Supp. 2d 46 (D.D.C. 2003). Bank Markazi, an entity separate
from the Iranian government, is not a party to any
of those judgments and is not alleged to have been involved
in the attacks.
Annex 118
8
In June 2008, plaintiffs sought to satisfy a portion of
the judgments by restraining nearly $2 billion in bonds
that Clearstream held at Citibank in New York for the
ultimate benefit of Bank Markazi. App., infra, 6a. Bank
Markazi resisted those efforts on multiple grounds, including
that Clearstream's holdings in New York could
not be seized to satisfy debts of Iran and that the assets
were immune under the FSIA. See Peterson v. Islamic
Republic of Iran, No. 10 Civ. 4518, 2013 WL 1155576, at
*19-26 (S.D.N.Y. Mar. 13, 2013). While those proceedings
were unfolding, Congress enacted the Iran Threat Reduction
and Syria Human Rights Act of 2012, Pub. L. No.
112-158, 126 Stat. 1214, which abrogated Bank Markazi's
defenses solely for that one case. See id. § 502, 126 Stat.
at 1258 (codified at 22 U.S.C. §8772). The district court
ordered the assets distributed to plaintiffs, and the Second
Circuit affirmed. App., infra, 6a-7a & n.3. This Court
granted review but ultimately affirmed, holding that the
statute did not violate the separation of powers. See
Bank Markazi v. Peterson, 136 S. Ct. 1310 (2016).
3. This case concerns an additional $1.68 billion in
bond proceeds not at issue in the prior proceedings.
App., infra, 9a-10a. In December 2013, plaintiffs filed a
complaint against Bank Markazi, Clearstream, UBAE,
and JPMorgan alleging that Clearstream was holding
bond proceeds in a JPMorgan account in New York for
the benefit of Bank Markazi. Id. at 9a, 56a-57a. Plaintiffs
sought, among other relief, a "turnover" order directing
Clearstream and JPMorgan to turn over the proceeds
to satisfy the judgments. Id. at 10a. They relied
on New York's turnover statute, which provides:
Upon a special proceeding commenced by the
judgment creditor, against a person in possession
or custody of money or other personal property in
Annex 118
9
which the judgment debtor has an interest * * * ,
the court shall require such person to pay the money,
or so much of it as is sufficient to satisfy the judgment,
to the judgment creditor * * * .
N.Y. C.P.L.R. §5225(b). The district court initially issued
an ex part;e order restraining the funds, but it later
vacated the order. App., infra, 10a.
Plaintiffs moved to reinstate the order, while defendants
moved to dismiss. App., infra, lOa-lla. Defendants
urged, among other things, that the assets were located
in Luxembourg rather than New York and were therefore
immune from execution. Id. at lla. The district
court agreed and dismissed the complaint. Id. at 56a-79a.
Reviewing the evidence, the court found that the assets
were located in Luxembourg, not New York. "[T]he
records before the Court are clear: JPM received proceeds
relating to the Remaining Bonds, which it credited
to a Clearstream account at JPM. * * * Clearstream in
turn credited amounts attributable to the Remaining
Bonds to the UBAE/Bank Markazi account in Luxembourg."
App., infra, 69a-70a. "The JPM records are
clear that whatever happened to the proceeds, they are
gone. There are numerous days in which the Clearstream
account at JPM showed a zero or a negative balance.
As a matter of law, there is no asset in this jurisdiction
to 'turn over."' Id. at 70a (citation omitted).
Because the proceeds were in Luxembourg, the court
held, they were immune from execution. "The evidence
in the record is clear that any assets in which Bank Markazi
has an interest, and which are at issue in this action,
are in Luxembourg." App., infra, 77a. "The FSIA does
not allow for attachment of property outside of the United
States." Ibid. Accordingly, "the Court cannot entertain
the instant claims against Bank Markazi." Id. at 78a.
Annex 118
10
B. The Court of Appeals' Opinion
The Second Circuit vacated in relevant part. App.,
infra, la-55a.
The court of appeals agreed with the district court
that the assets were located in Luxembourg, not New
York. App., infra, 32a. The JPMorgan account in New
York was "a general 'operating account' used to service
transactions on behalf of many customers," and it was "not
segregated by customer." Id. at 33a (citation omitted).
The account "frequently had a near-zero or negative endof-
day balance." Ibid. When "Clearstream received cash
payments into [that] general pool," it "caused a corresponding
credit to be reflected in the Markazi, and later
UBAE, account in Luxembourg as a right to payment
equivalent to the bond proceeds that Clearstream received
and processed in New York." Id. at 35a. Because
"the situs of an intangible property interest * * * is 'the
location of the party of whom performance is required,"'
the court held, "the asset the plaintiffs seek-a right to
payment-is located in Luxembourg." Id. at 35a-36a.
Nonetheless, the court of appeals rejected the district
court's conclusion that assets located outside the United
States are immune. The court conceded that "the district
court's assumption was reasonable in light of many judicial
decisions suggesting as much." App., infra, 38a. But
it deemed the assumption "incorrect" after NML, which
it characterized as "abrogat[ing] decades of pre-existing
sovereign immunity common law." Id. at 2a, 38a.
Under Federal Rule of Civil Procedure 69(a), the Second
Circuit explained, "'a district court has the authority
to enforce a judgment by attaching property in accordance
with the law of the state in which the district court
sits' "-in this case, New York. App., infra, 42a. In Koehler
v. Bank of Bermuda Ltd., 12 N.Y.3d 533 (2009), the
Annex 118
11
New York Court of Appeals construed New York's turnover
statute to authorize turnover orders even for property
outside the country. App., infra, 45a. So long as the
court has personal jurisdiction over the property's custodian,
Koehler held, the court can order the custodian to
bring the property into New York: "'[T]he key to the
reach of the turnover order is personal jurisdiction over
a particular defendant,'" and thus "a court sitting in
New York with personal jurisdiction over a party may
order that party 'to bring property into the state.'" Ibid.
(quoting 12 N.Y.3d at 540).
The Second Circuit saw nothing in the FSIA that precluded
applying the same statute to sovereign assets
abroad. "Following NML Capital," it held, "the FSIA
appears to be no impediment to an order issued pursuant
to Koehler directing Clearstream * * * to bring the
Markazi-owned asset held in Luxembourg to New York
State." App., infra, 45a. The Second Circuit acknowledged
the "many cases cited by the defendants for the
proposition that a foreign sovereign's extraterritorial
assets are absolutely immune from execution." Id. at
46a. But the court deemed them "no longer binding"
because they were "decided before the Supreme Court's
decision in NML Capital." Ibid. "Following NML Capital,
this body of former case law is of no help to the
defendants." Ibid. "NML Capital and Koehler, when
combined, * * * authorize a court sitting in New York
* * * to recall to New York extraterritorial assets owned
by a foreign sovereign." Id. at 47a.
The court of appeals directed the district court on remand
to "determine in the first instance whether it has
personal jurisdiction over Clearstream." App., infra,
50a. The district court would also consider other potential
barriers to recalling the assets, whether under "state
Annex 118
12
law, federal law, international comity, or for any other
reason." Id. at 50a-51a (footnotes omitted). Once the
assets were recalled, the district court would determine
whether they "qualif[ied] as an asset 'in the United
States of a foreign state' * * * afforded execution immunity
as such." Id. at 51a. But "[w]hether [an] extraterritorial
asset is owned by a foreign sovereign is of no
moment," because "the FSIA's grant of execution immunity
does not extend to assets located abroad." Id. at 52a.
The court of appeals confessed that it was "cognizant
of the conundrum apparently posed by NML Capital and
Koehler when read in tandem." App., infra, 51a. "The
FSIA 'aimed to facilitate and depoliticize litigation
against foreign states and to minimize irritations in foreign
relations arising out of such litigation.'" Ibid. The
court was "not at all sure that NML Capital when read in
light of the law established by Koehler furthers that
goal." Id. at 52a. "But if we are correct in our analysis,"
the court concluded, "any such problem is one for the Supreme
Court or the political branches-not this Courtto
resolve." Ibid. 1
On February 7, 2018, the court of appeals denied rehearing
and rehearing en bane. App., infra, 80a-82a. On
March 1, 2018, the court stayed its mandate pending this
Court's review. C.A. Dkt. 352.
1 The Second Circuit also vacated the district court's ruling that certain
settlement agreements from earlier proceedings precluded other
claims. App., infra, 17a-31a. That ruling is not at issue here.
Annex 118
13
REASONS FOR GRANTING THE PETITION
The Second Circuit held that sovereign immunity
places no limits on execution against a foreign sovereign's
property outside the United States. That holding upends
decades of practice, creates an incoherent regime that
Congress could not have intended, puts the United States
in violation of international law, and threatens disastrous
consequences for the Nation's foreign relations. While
the Second Circuit's ruling rests on language from Republic
of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250
(2014), the stark result in this case confirms the need for
this Court to confront directly an issue it considered only
obliquely in NML.
I. THIS CASE PRESENTS AN IMPORTANT QUESTION
WITH DRASTIC FOREIGN RELATIONS CONSEQUENCES
Categorically denying immunity to all sovereign property
outside the United States defies longstanding precedent
and threatens grave foreign relations consequences.
The issue warrants review.
A. For Decades, Courts Unanimously Agreed That
Sovereign Assets Abroad Were Not Subject to
Execution
The law was once well settled: Sovereign assets were
subject to execution under the FSIA only if they were
located in the United States and one of § 1610's narrow
exceptions applied. Assets outside the United States
were-for that reason alone-immune.
Courts applied that rule to the plaintiffs in this very
case. A decade ago, plaintiffs sought to execute their
judgment against a French shipping company's debt to
Iran. See Peterson v. Islamic Republic of Iran, 627 F.3d
1117, 1122 (9th Cir. 2010). The Ninth Circuit rebuffed
the claim: "[T]he debt obligation [the respondent] owes
Annex 118
14
to Iran is located in France. Iran's rights to payment
from [the respondent] are not 'property in the United
States' and are immune from execution." Id. at 1131-
1132 (quoting 28 U.S.C. § 1610(a)(7)).
Every court of appeals to confront the issue agreed.
See Autotech Techs. LP v. Integral Research & Dev.
Corp., 499 F.3d 737, 750 (7th Cir. 2007) ("The FSIA did
not purport to authorize execution against a foreign sovereign's
property*** wherever that property is located
around the world."); Conn. Bank of Commerce v. Republic
of Congo, 309 F.3d 240, 247 (5th Cir. 2002) ("courts in
the U.S. may execute only against property that meets
the[] two statutory criteria," including that it be "'in the
United States'"); Richmark Corp. v. Timber Falling
Consultants, 959 F.2d 1468, 1477 (9th Cir. 1992) ("[S]ection
1610 does not empower United States courts to levy
on assets located outside the United States."); cf. Aurelius
Capital Partners, LP v. Republic of Argentina, 584
F.3d 120, 130 (2d Cir. 2009) ("[P]roperty that is subject to
attachment and execution must be 'property in the United
States of a foreign state' * * * ."). District courts and
state courts followed the same rule.2
2 See, e.g., Fid. Partners, Inc. v. Philippine Exp. & Foreign Loan
Guar. Corp., 921 F. Supp. 1113, 1119 (S.D.N.Y. 1996) ("Under the
FSIA, assets of foreign states located outside the United States retain
their traditional immunity from execution to satisfy judgments
entered in United States courts."); Raccoon Recovery, LLC v. Navoi
Mining & Metallurgical Kombinat, 244 F. Supp. 2d 1130, 1142-1143
(D. Colo. 2002); Quaestor Invs., Inc. v. State of Chiapas, No. CV-95-
6723, 1997 WL 34618203, at *6 (C.D. Cal. Sept. 2, 1997); Philippine
Exp. & Foreign Loan Guar. Corp. v. Chuidian, 267 Cal. Rptr. 457,
476 (Ct. App. 1990); Int'l Legal Consulting Ltd. v. Malabu Oil &
Gas Ltd., No. 651773/11, 2012 WL 1032907, at *10-11 (N.Y. Sup. Ct.
Mar. 15, 2012).
Annex 118
15
As those courts explained, the immunity of overseas
assets flows directly from the history and structure of
the statute. Before the FSIA, sovereign property was
absolutely immune from execution, wherever located.
See H.R. Rep. No. 94-1487, at 8 (1976) ("Under existing
law, a foreign state in our courts enjoys absolute immunity
from execution, even in ordinary commercial litigation
* * * ."). Congress decided to "modify this rule by
partially lowering the barrier of immunity from execution,
so as to make this immunity conform more closely
with the provisions on jurisdictional immunity." Id. at 27.
It did so by creating new immunity rules for property in
the United States. Specifically, Congress confirmed a
presumption of immunity for "property in the United
States" in § 1609, while creating exceptions for certain
"property in the United States" in § 1610. Congress did
not purport to address or alter the traditional treatment
of sovereign property abroad-much less eliminate immunity
for such property entirely. Rather, the provisions
addressing sovereign property-both the one granting
immunity and the one creating exceptions-speak only to
property in the United States.
The Second Circuit conceded that state of the law below.
It acknowledged the "many cases cited * * * for the
proposition that a foreign sovereign's extraterritorial
assets are absolutely immune from execution." App.,
infra, 46a; see also id. at 38a ("many judicial decisions
suggesting as much"); id. at 2a ("decades of pre-existing
sovereign immunity common law"). The court could not
cite a single case to the contrary from the first 35 years
of the FSIA's history. Its decision was a dramatic break
from decades of precedent.
Annex 118
16
B. The Decision Below Will Have Far-Reaching
Consequences for Sovereign Property
The Second Circuit held that, under NML, foreign
sovereign property abroad has no immunity from execution
under U.S. law-not even the immunity applicable to
property in the United States. App., infra, 38a-42a. As a
result, a custodian of sovereign assets abroad could be
ordered to bring them here for execution. Id. at 42a-47a.
The Second Circuit relied on New Y ark's turnover statute
and the construction of that statute in Koehler v.
Bank of Bermuda Ltd., 12 N.Y.3d 533 (2009). But there
is nothing unique about New York law. The decision
below thus invites other courts across the country to
seize foreign sovereign assets outside the United States.
Dozens of States have turnover statutes like New
York's.3 Some have been around for more than a century.
See, e.g., Ill. Rev. Stat. ch. 21, §§36-37 (1845); 1856
Wis. Gen. Acts ch. 120, § 208; 1872-1873 W. Va. Acts ch.
218, §§10-11; 1881 Ind. Laws ch. 38, §226. Those statutes
typically contain no express territorial limitation on
the property's location.
Some courts have construed those statutes to apply
only to property within the State. See, e.g., Sargeant v.
Al-Saleh, 137 So. 3d 432, 435 (Fla. Dist. Ct. App. 2014)
3 See, e.g., Ariz. Rev. Stat. § 12-1634; Cal. Civ. Proc. Code § 708.205;
Conn. Gen. Stat. § 52-356b; Idaho Code § 11-506; 735 Ill. Comp. Stat.
5/2-1402(c); Ind. Code §34-25-3-12; Iowa Code §630.6; Kan. Stat.
§ 61-3604; 14 Me. Stat. § 3131; Mich. Comp. Laws § 600.6104; Minn.
Stat. §575.05; Mont. Code §25-14-107; Neb. Rev. Stat. §25-1572;
Nev. Rev. Stat. §21.320; N.C. Gen. Stat. §1-360.1; Ohio Rev. Code
§ 2333.21; 12 Okla. Stat. § 850; Or. Rev. Stat. § 18.268; R.I. Gen. Laws
§ 9-28-3; S.C. Code § 15-39-410; S.D. Codified Laws § 15-20-12; Tex.
Civ. Prac. & Rem. Code §31.002; Va. Code §8.01-507; Wash. Rev.
Code § 6.32.080; W. Va. Code § 38-5-15; Wis. Stat. § 816.08; Wyo.
Stat. §1-17-411.
Annex 118
17
(declining to follow Koehler). But others have rejected
that limitation, holding that a court with in personam
jurisdiction may compel a party to turn over property
outside the State-even outside the country. See, e.g.,
Inter-Reg'l Fin. Grp. v. Hashemi, 562 F.2d 152, 154-155
(2d Cir. 1977) (requiring party to "bring [stock] certificates
into the State of Connecticut from their locations
in other states, and indeed, even in other countries");
Lozano v. Lozano, 975 S.W.2d 63, 68 (Tex. App. 1998)
( ordering "turnover of appellants' property located in
Mexico"); Schaheen v. Schaheen, 169 N.W.2d 117, 118
(Mich. Ct. App. 1969) (enforcing order to transfer property
in Lebanon because "a court may compel execution
of a deed to land located outside a court's jurisdiction by
acting in personam").4
More than a century ago, this Court observed that "[a]
court of equity acting upon the person of a defendant
may control the disposition of real property belonging to
him situated in another jurisdiction, and even in a foreign
country." Corbett v. Nutt, 77 U.S. 464, 475 (1871) (emphasis
added); see also Fall v. Eastin, 215 U.S. 1, 8 (1909)
("A court of equity having authority to act upon the
4 See also Aurelio v. Camacho, No. 2011-SCC-0023-CIV, 2012 WL
6738437, at *3 (N. Mar. I. Dec. 31, 2012) (ordering transfer of real
property in the Philippines); Reeves v. Fed. Sav. & Loan Ins. Corp.,
732 S.W.2d 380, 381 (Tex. App. 1987) (real estate in Portugal); Estates
of Ungar ex rel. Strachman v. Palestinian Auth., 715 F. Supp. 2d
253, 257-264, 269 (D.R.I. 2010) (funds in Israel); Clark v. Allen,
No. 95-2487, 1998 WL 110160, at *7 (4th Cir. Mar. 13, 1998) ("Under
West Virginia law, appellants could be required to turn over property
in their possession * * * in Florida."); Dalton v. Meister, 239
N.W.2d 9, 14 (Wis. 1976) (''Wisconsin courts may issue in personam
orders which may operate on out-of-state property."); Lyons Hollis
Assocs. v. New Tech. Partners, Inc., 278 F. Supp. 2d 236, 246 (D.
Conn. 2002); In re Martin, 145 B.R. 933,948 (Bankr. N.D. Ill.1992).
Annex 118
18
person may indirectly act upon real estate in another
State."). Courts issued such orders long before the
FSIA's enactment. See, e.g., Hodes v. Hodes, 155 P.2d
564, 566, 570 (Or. 1945) (ordering turnover of stock certificates
in Washington); Wilson v. Columbia Gas. Co., 160
N.E. 906, 908 (Ohio 1928) (funds in Pennsylvania); Tomlinson
& Webster Mfg. Co. v. Shatto, 34 F. 380, 381 (C.C.D.
Minn. 1888) (real estate in Dakota territory); Mitchell v.
Bunch, 2 Paige Ch. 606, 607, 615 (N.Y. Ch. 1831) (ordering
defendant to turn over property located in Colombia
because, "[a]lthough the property of a defendant is
beyond the reach of the court, so that it can neither be
sequestered nor taken in execution, the court does not
lose its jurisdiction in relation to that property, provided
the person of the defendant is within the jurisdiction").
Because New York is the Nation's financial capital, the
Second Circuit's ruling would be important even if confined
to that jurisdiction. But State turnover statutes
are ubiquitous, and the decision below invites plaintiffs
across the country to invoke those statutes to seize sovereign
property abroad. The question presented is thus a
matter of nationwide importance.
C. The Decision Below Threatens Serious Foreign
Relations Consequences
This Court has long recognized that "[t]he judicial seizure
of the property of a friendly state may be regarded
as such an affront to its dignity" as to "affect our relations
with it." Republic of Mexico v. Hoffman, 324 U.S.
30, 35-36 (1945); see also Republic of Philippines v.
Pimentel, 553 U.S. 851, 866 (2008) (noting "affront that
could result * * * if property * * * is seized by the decree
of a foreign court"). "[A]t the time the FSIA was passed,
the international community viewed execution against a
foreign state's property as a greater affront to its sovAnnex
118
19
ereignty than merely permitting jurisdiction over the
merits of an action." Conn. Bank of Commerce, 309 F.3d
at 255-256; see also Rubin v. Islamic Republic of Iran,
830 F.3d 470, 480 (7th Cir. 2016), aff'd, 138 S. Ct. 816
(2018). For that reason, the FSIA's exceptions to execution
immunity are "narrower" than its exceptions to
jurisdictional immunity. NML, 134 S. Ct. at 2256.
Whatever friction may result from restraining a foreign
state's property within the United States, ordering
foreign state property outside the United States to be
seized and brought here for execution is profoundly more
provocative. Foreign sovereigns will inevitably perceive
such orders to be a serious overreach. Cf. Kiobel v. Royal
Dutch Petrol. Co., 569 U.S. 108, 124 (2013) (noting potential
for "diplomatic strife" and "serious foreign policy
consequences" from extraterritorial application of U.S.
law); Morrison v. Nat'l Austl. Bank Ltd., 561 U.S. 247,
269 (2010) (same). The court below candidly admitted
that it was "not at all sure" its decision could be reconciled
with the FSIA's goal of "'minimiz[ing] irritations in
foreign relations.'" App., infra, 51a-52a. That was an
understatement. The decision increases the risk of international
discord exponentially.
The decision below, moreover, permits such orders in
total disregard of the property's nature or use. Congress
strictly limited execution against sovereign property in
the United States by imposing a "commercial activity"
requirement as well as other conditions. 28 U.S.C.
§ 1610(a), (b). That limitation reflects the settled view
that a sovereign's commercial property is entitled to
lesser protection than property used for traditional sovereign
functions. See Rubin v. Islamic Republic of Iran,
138 S. Ct. 816, 821-822, 825 (2018). Under the decision
below, however, property outside the United States
Annex 118
20
would be fair game even if used for core sovereign functions.
The threat to foreign relations is self-evident. Cf.
Colella v. Republic of Argentina, No. C 07-80084, 2007
WL 1545204, at *l, *6 (N.D. Cal. May 29, 2007) (rejecting
attempt to seize Argentina's equivalent of Air Force One
because "transport[ing] the president of Argentina" is
not a "commercial activity").
Novel departures from traditional immunity principles
threaten United States interests by encouraging reciprocal
or retaliatory action by other nations. See Bolivarian
Republic of Venezuela v. Helmerich & Payne Int'l Drilling
Co., 137 S. Ct. 1312, 1322 (2017) (rejecting rule that
would "produc[e] friction in our relations with [other] nations
and lead[] some to reciprocate by granting their
courts permission to embroil the United States in 'expensive
and difficult litigation'"). Those concerns apply with
special force to execution immunity. "[J]udicial seizure of
a foreign state's property carries potentially far-reaching
implications for American property abroad." Rubin, 830
F.3d at 480; see also U.S. Br. in Rubin, No. 16-534, at 31
(Oct. 2017) (urging that "execution could provoke serious
foreign policy consequences, including impacts on the
treatment of the United States' own property abroad");
2007 Pub. Papers 1592, 1593-1594 (Dec. 28, 2007) (vetoing
amendment that would "invite reciprocal action against
United States assets abroad").5
Under the approach adopted below, foreign courts
could order the custodians of U.S. government property
to transfer the property to a foreign country for execution,
whether the property was located in the United
5 Indeed, "some foreign states base their sovereign immunity decisions
on reciprocity." Persinger v. Islamic Republic of Iran, 729
F.2d 835, 841 (D.C. Cir. 1984). Denying immunity may thus impair
United States interests even absent specific retaliatory measures.
Annex 118
21
States or in any third country. The disruption that would
result is obvious. "U.S. citizens, corporations, the United
States Government, and taxpayers have far more money
invested abroad than those of any other country, and
thus have more to lose" if traditional protections are
eroded. Justice for Victims of Terrorism Act: Hearing
on H.R. 3485 Before the Subcomm. on Immigration and
Claims of the H. Comm. on the Judiciary, 106th Cong. 54
(Apr. 13, 2000) (joint statement of the State, Treasury,
and Defense Departments). The threat to United States
interests is thus particularly acute.
D. The Second Circuit's Decision Violates International
Law
The decision below also puts the United States in violation
of international law. The U.N. Convention on Jurisdictional
Immunities of States and Their Property,
G.A. Res. 59/38 (Dec. 2, 2004), imposes an express territorial
limitation on execution against sovereign property:
Absent consent, execution is allowed only if "the property
is specifically in use or intended for use by the State for
other than government non-commercial purposes and is
in the territory of the State of the forum." Id. art. 19( c)
(emphasis added). This Court has looked to that Convention
for "basic principles of international law." Helmerich,
137 S. Ct. at 1320. The Convention's territorial limitation
reflects settled law.6
6 See, e.g., Report of the International Law Commission on the
Work of Its Forty-Third Session, U.N. Doc. N46/10 (1991), reprinted
in [1991] 2 Y.B. Int'l L. Comm'n 1, 12, U.N. Doc. NCN.4/SER.N
1991/Add.1 (Part 2) (execution must be "instituted before a court of
the State where the property is located"); Institut de Droit International,
Contemporary Problems Concerning the Immunity of States
in Relation to Questions of Jurisdiction and Enforcement art.
4(3)(b) (1991) (limiting execution to "property of the State within the
Annex 118
22
Violations of those principles could have serious consequences.
The Treaty of Amity between the United
States and Iran, for example, requires that property of
Iranian entities receive protection "in no case less than
that required by international law." Treaty of Amity,
Economic Relations, and Consular Rights, U.S.-Iran, art.
IV.2, Aug. 15, 1955, 8 U.S.T. 899, 903; see also id. art.
IV.1, 8 U.S.T. at 903 (requiring "fair and equitable treatment"
and proscribing "unreasonable * * * measures").
Similar provisions appear in the United States' commercial
treaties with many countries. See Herman Walker,
Jr., Provisions on Companies in United States Commercial
Treaties, 50 Am. J. Int'l L. 373, 386 (1956).
Denying immunity where required by international
law violates those protections and exposes the United
States to claims for reparations in international tribunals.
In the treaty with Iran, for example, the United States
agreed to resolve disputes in the International Court of
Justice. Treaty of Amity art. XXI.2, 8 U.S.T. at 913. The
United States is already a party to ongoing ICJ proceedings
seeking reparations for, among other things,
the statute this Court upheld in Bank Markazi v. Peterson,
136 S. Ct. 1310 (2016). See Certain Iranian Assets
(Iran v. United States) (I.C.J. filed June 14, 2016).
The State Department has cited such proceedings in
urging restraint. "Virtually all of the Iranian blocked
property that has been the subject of attachments," it
notes, "is the subject of claims against the U.S. government
before the Iran-United States Claims Tribunal in
The Hague, where we will have to account for it." Beneterritory
of the forum State"); cf. Geneva Convention on the High
Seas art. 23(2), Apr. 29, 1958, 13 U.S.T. 2312 (prohibiting maritime
seizures where ship "enters the territorial seas of its own country or
a third State").
Annex 118
23
fits for U.S. Victims of International Terrorism: Hearing
Before the S. Comm. on Foreign Relations, S. Hr'g No.
108-214, at 8 (July 17, 2003). "And when the time comes
for the United States to demand from Iran or other
states reimbursement for the amounts it has paid on
their behalf, it will no doubt be confronted with offsetting
claims to cover judgments against the United States rendered
in other national courts." Ibid.
E. The Decision Below Conflicts with the Position
of the Executive Branch
Finally, the Second Circuit's decision contradicts the
considered views of the Executive Branch. The United
States has made its position clear: Assets outside the
United States are immune. "The FSIA provides that
only foreign-state property that is * * * situated 'in the
United States' * * * is subject to execution* * * ." U.S.
Br. in NML, No. 12-842, at 24 (Mar. 2014). "The FSIA
therefore does not authorize U.S. courts to order execution
against sovereign property located outside the United
States." Id. at 24-25.
The decision below thus conflicts with the views of the
Executive Branch-the branch with primary responsibility
for the Nation's foreign relations. This Court regularly
grants review where a decision threatens the Executive's
ability to conduct foreign affairs, even absent a
clear circuit conflict. See, e.g., Republic of Iraq v. Beaty,
555 U.S. 1092 (2009) (granting review of sovereign immunity
ruling despite concession that "[t]here is no circuit
conflict," U.S. Br. in No. 07-1090, at 17 n.l (Dec. 2008)).7
7 Other examples abound. See, e.g., Zivotofsky ex rel. Zivotofsky v.
Kerry, 135 S. Ct. 2076, 2081 (2015) ("difficult and complex [question]
in international affairs"); Holder v. Humanitarian Law Project, 561
U.S. 1, 33-34 (2010) ("sensitive and weighty interests of national seAnnex
118
24
At a minimum, given the weighty foreign relations repercussions
and the United States' prior submissions, the
Court should invite the Solicitor General to file a brief
expressing the views of the United States, as it has done
in many similar cases. See, e.g., Rubin v. Islamic Republic
of Iran, 137 S. Ct. 708 (2017); Bank Markazi v. Peterson,
135 S. Ct. 1753 (2015); Rubin v. Islamic Republic of
Iran, 132 S. Ct. 1619 (2012); Bank Melli Iran N.Y. Representative
Office v. Weinstein, 131 S. Ct. 3012 (2011);
Ministry of Def & Support for the Armed Forces of the
Islamic Republic of Iran v. Elahi, 552 U.S. 1176 (2008).
II. THE DECISION BELOW IS INCORRECT
The Second Circuit's ruling produces an incoherent
statutory regime that Congress could not plausibly have
intended. Those issues, not fully explored in NML, warrant
thorough consideration here.
A. The Decision Below Produces an Incoherent
Immunity Regime That Flouts the FSIA's
Structure and History
1. The Second Circuit's decision creates an irrational
immunity regime. The FSIA sharply limits execution
against sovereign property in the United States by requiring
both commercial activity and one of several other
conditions. 28 U.S.C. § 1610(a), (b). Under the decision
below, however, the statute leaves no immunity at all
from execution against property outside the United
States. That makes no sense. Execution against assets
abroad raises far more serious foreign relations concerns
curity and foreign affairs" that raised "acute foreign policy concerns");
Kiyemba v. Obama, 559 U.S. 131 (2010) (Guantanamo detainees);
Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) (Alien Tort
Statute); Societe Nationale Industrielle Aerospatiale v. U.S. Dist.
Court, 482 U.S. 522, 528 (1987) (international comity).
Annex 118
25
and presents a much weaker case for the involvement of
U.S. courts. There is no rational reason why Congress
would impose sharp limits on seizure of domestic assets
while declaring open season on assets elsewhere throughout
the world. The decision below thus produces an
"'absurd * * * result which Congress could not have intended'
"-something this Court strives to avoid. Clinton
v. City of New York, 524 U.S. 417,429 (1998).
The decision also completely unmoors execution immunity
from the principles Congress sought to adopt.
Congress passed the FSIA to codify the restrictive theory
of immunity. The statute declares: "Under international
law, states are not immune from the jurisdiction of
foreign courts insofar as their commercial activities are
concerned, and their commercial property may be levied
upon for the satisfaction of judgments rendered against
them in connection with their commercial activities." 28
U.S.C. § 1602. Congress codified jurisdictional immunity
rules consistent with that theory. Id. §§ 1604-1605. And
it "partially lower[ed]" the absolute immunity from execution
that previously prevailed in U.S. courts "to make
this immunity conform more closely with the provisions
on jurisdictional immunity." H.R. Rep. No. 94-1487, at
27; see 28 U.S.C. §§ 1610-1611.
Under the Second Circuit's holding, however, property
outside the United States can be seized whether it is
commercial or not. Far from "conform[ing]" execution
rules "more closely with the provisions on jurisdictional
immunity," that approach abrogates them entirely. In
Rubin, this Court refused to construe another provision
to authorize execution against non-commercial property,
citing Congress's "historical practice of rescinding attachment
and execution immunity primarily in the conAnnex
118
26
text of a foreign state's commercial acts." 138 S. Ct. at
825. The decision below does the opposite.
By permitting execution against property with no
connection to the United States, moreover, the decision
inverts the ordinary relationship between jurisdiction
and execution. Traditionally, the execution exceptions to
sovereign immunity are "narrower" than the jurisdictional
exceptions. NML, 134 S. Ct. at 2256. The Act's
commercial activity exception to jurisdictional immunity
carefully specifies the required nexus to the United
States. See 28 U.S.C. § 1605(a)(2) (allowing actions
"based upon a commercial activity carried on in the United
States," "an act performed in the United States in connection
with a commercial activity" elsewhere, or an act in
connection with a commercial activity that causes a "direct
effect in the United States"). By contrast, the decision
below permits execution against property with no nexus
to the United States whatsoever, sweeping far beyond
the jurisdictional exception. That ruling stands the statutory
structure on its head.
2. Nothing in the FSIA supports those results. It is
true, as this Court observed in NML, that § 1609 refers
to the immunity of "property 'in the United States."'
134 S. Ct. at 2257 (quoting 28 U.S.C. § 1609) (emphasis
omitted). But it is equally true that § 1610's exceptions to
immunity apply only to "property in the United States."
28 U.S.C. § 1610(a), (b). The most reasonable inference
from that domestic focus is not that Congress meant to
declare open season on sovereign assets abroad. Rather,
Congress was legislating only for domestic assets, leaving
the pre-existing rules for foreign assets in place.
"'Congress generally legislates with domestic concerns
in mind."' RJR Nabisco, Inc. v. European Cmty.,
136 S. Ct. 2090, 2100 (2016). It did precisely that here.
Annex 118
27
Congress created a statutory immunity regime for property
in the United States. It reaffirmed the presumption
of immunity for sovereign "property in the United States."
28 U.S.C. § 1609. And it created exceptions for certain
"property in the United States." Id. § 1610(a), (b). The
point of those territorial references was not to imply that
property outside the United States is completely up for
grabs. It was to mark out the scope of the issue Congress
was addressing.
This Court construed the FSIA in precisely that fashion
when addressing the immunity of foreign officials in
Samantar v. Yousuf, 560 U.S. 305 (2010). The FSIA provides
immunity to '"agenc[ies] or instrumentalit[ies] of a
foreign state"' but does not mention officials. Id. at 313-
319 (quoting 28 U.S.C. § 1603(a)). Finding "nothing in
the [FSIA's] origin or aims to indicate that Congress
* * * wanted to codify the law of foreign official immunity,"
the Court held that claims against foreign officials
remained "governed by the common law" that predated
the FSIA. Id. at 325. So too here. Extraterritorial property
is beyond the scope of the issues the FSIA addresses.
It thus retains the absolute immunity it enjoyed before
the statute.8
3. If the FSIA were meant to expose extraterritorial
assets to execution, with no limitation on the type of
8 Reading § 1609's reference to "property in the United States" to
create an immunity-free zone outside the United States would also
render other language in the FSIA superfluous. If property outside
the United States categorically lacked immunity, Congress would
have had no reason to limit § 1610's exceptions to "property in the
United States." 28 U.S.C. § 1610(a), (b). The Act would have the
same effect without that language. "'[O]ne of the most basic interpretive
canons [is] that [a] statute should be construed so that effect
is given to all its provisions, so that no part will be inoperative or superfluous,
void or insignificant.'" Rubin, 138 S. Ct. at 824.
Annex 118
28
property that may be seized, there would be some evidence
Congress intended that result. There is none. The
FSIA's history belies any such design.
The House Report's description of § 1609 does not
even mention the "in the United States" language. It
simply explains that "section 1609 states a general proposition
that the property of a foreign state, as defined in
section 1603(a), is immune from attachment and from
execution, and then exceptions to this proposition are
carved out in sections 1610 and 1611." H.R. Rep. No. 94-
1487, at 26; see also S. Rep. No. 94-1310, at 26 (1976)
(identical language in Senate Report). If Congress had
intended the phrase "in the United States" to work a
fundamental transformation by lifting the immunity of
assets abroad, the legislative history would have mentioned
it.9
Finally, as explained above, denying immunity to sovereign
property abroad violates international law. See
pp. 21-23, supra. "[A]n act of Congress ought never to be
construed to violate the law of nations if any other possible
construction remains." Murray v. Schooner Charming
9 Hearing testimony described the Act as subjecting to execution
"some property of foreign states located here." Jurisdiction of U.S.
Courts in Suits Against Foreign States: Hearings on H.R. 11315
Before the Subcomm. on Administrative Law & Governmental
Relations of the H. Comm. on the Judiciary, 94th Cong. 98 (June 2,
1976) ("1976 House Hearings") (Michael M. Cohen, Maritime Law
Ass'n) (emphasis added). Other passages discuss concerns about
sovereigns frustrating execution by removing assets from the jurisdiction-
concerns that make little sense if assets lack any immunity
once outside the United States. See R.R. Rep. No. 94-1487, at 30
(stating that courts may consider whether a "foreign state is about to
remove assets from the jurisdiction" in deciding how much notice to
give under § 1610(c)); 1976 House Hearings 76 (N.Y.C. Bar Ass'n);
id. at 81 (Cecil Olmstead, Rule of Law Comm.).
Annex 118
29
Betsy, 6 U.S. (2 Cranch) 64, 118 (1804). That, too, is a
powerful reason to reject the interpretation.
B. This Court's Decision in NML Confirms the
Need for Review
The Second Circuit's holding rested almost entirely
on language from this Court's decision in NML. App.,
infra, la, 38a-55a. But the question here was not directly
presented or properly briefed in NML; the discussion
was not necessary to the Court's decision; and the matter
did not receive careful attention.
NML concerned immunity from discovery, not execution.
The question presented was whether the plaintiff
could obtain discovery into Argentina's foreign assetsnot
whether it could ultimately execute against them in a
U.S. court. 134 S. Ct. at 2254. Although the Court's
opinion contains one paragraph discussing execution immunity,
id. at 2257, that question simply was not presented
in the case. The parties' briefs barely touched it.
The Court's discussion of execution immunity was not
even necessary to its decision. Discovery into foreign
assets may be appropriate even if a plaintiff must commence
a proceeding in the country where the assets are
located to execute against them. Thus, while the Court
invoked the scope of execution immunity, the decision
also rests on a separate rationale: "[T]he reason for
these subpoenas," the Court noted, "is that NML does
not yet know what property Argentina has and where it
is, let alone whether it is executable under the relevant
jurisdiction's law." 134 S. Ct. at 2257. The plaintiff was
entitled to "ask for information about Argentina's worldwide
assets generally, so that [it] can identify where
Argentina may be holding property that is subject to
execution." Id. at 2258.
Annex 118
30
NML's discussion of execution immunity, moreover,
misapprehends a key fact. This Court assumed there
were no pre-FSIA cases recognizing execution immunity
for extraterritorial assets because the issue was wholly
theoretical: "Our courts generally lack authority in the
first place to execute against property in other countries,
so how could the question ever have arisen?" 134 S. Ct.
at 2257. That was the basis for the Court's suggestion
that there was no common-law immunity for such assets.
See ibid. But plaintiffs have often sought extraterritorial
assets by means of in personam turnover orders directed
to the custodians of the assets, and courts had issued
such orders decades before Congress enacted the FSIA.
See pp. 16-18, supra. Had that history been brought to
the Court's attention in NML, the Court may well have
concluded that the more persuasive explanation for the
dearth of pre-FSIA precedent concerning the seizure of
extraterritorial sovereign assets was that everyone understood
that such assets were immune-just like assets
in the United States.
This Court is not bound by prior statements concerning
a matter that was not at issue in the case, not fully
briefed, and not necessary to the decision. See Kirtsaeng
v. John Wiley & Sons, Inc., 568 U.S. 519, 548 (2013)
(declining to follow language from prior case where "[t]he
language * * * was not at issue in [the case]" and "the
point before us now was not then fully argued"); Cent.
Va. Cmty. Coll. v. Katz, 546 U.S. 356, 363 (2006) (same
where "the point now at issue was not fully debated" and
"[c]areful study and reflection have convinced us * * *
that th[e] assumption was erroneous"). The question
warrants careful consideration in a case that actually
presents the issue.
Annex 118
31
Ill. THIS IS AN APPROPRIATE CASE FOR REVIEW
This case squarely presents the issue. Both courts
below issued thorough opinions finding that the assets at
issue were located in Luxembourg. App., infra, 32a-38a,
69a-70a. And New York's highest court has authoritatively
construed that State's turnover statute to reach
assets abroad. See Koehler, 12 N.Y.3d at 540. This case
is thus unlike others where there are doubts over the
location of the assets or the content of state law. See,
e.g., Peterson, 627 F.3d at 1131-1132 (dispute over situs of
intangible property).
There is no reason to wait for further decisions from
the courts of appeals. Whatever the merits of NML's
statements regarding extraterritorial execution immunity,
those statements are clear enough. 134 S. Ct. at
2257. While they do not bind this Court, it is highly unlikely
that lower courts would feel free to disagree. See,
e.g., Utah Republican Party v. Cox, 885 F.3d 1219, 1231
(10th Cir. 2018) (lower courts are '"bound by Supreme
Court dicta almost as firmly as by the Court's outright
holdings'"). As the Second Circuit observed, the problem
is thus "one for the Supreme Court * * * to resolve."
App., infra, 52a.
The nature of the issue favors immediate review. A
denial of sovereign immunity, like other immunities, is
"effectively unreviewable on appeal from a final judgment"
because the immunity includes "an entitlement not
to be forced to litigate." Mitchell v. Forsyth, 472 U.S.
511, 527 (1985); see also Rubin v. Islamic Republic of
Iran, 637 F.3d 783, 790 (7th Cir. 2011) (denial of execution
immunity immediately appealable because "[t]he
FSIA protects foreign sovereigns from court intrusions
on their immunity in its various aspects"). Further delay
simply exacerbates the intrusion on immunity.
Annex 118
32
Whether or not the district court ultimately distributes
the assets to plaintiffs, an order directing that $1.68
billion of Bank Markazi's property be transferred from
Luxembourg to the United States and then kept here for
years while the parties litigate further is a serious infringement
on immunity. See Stephens v. Nat'l Distillers
& Chem. Corp., 69 F.3d 1226, 1229-1230 (2d Cir. 1995)
(prohibiting order requiring sovereign to post security
because it would "force [the] foreign sovereign * * * to
place some of [its] assets in the hands of the United
States courts for an indefinite period"). Bringing the
assets to the United States also threatens to alter the
immunity analysis substantially.10 For those reasons too,
this case warrants review at this time.
CONCLUSION
The petition for a writ of certiorari should be granted.
10 The Terrorism Risk Insurance Act ("TRIA'') provides that
"blocked assets" are subject to execution. 28 U.S.C. § 1610 note
§201(a). Under Executive Order No.13,599, 77 Fed. Reg. 6659 (Feb.
5, 2012), "[a]ll property and interests in property of the Government
of Iran, including the Central Bank of Iran, that are in the United
States, [or] that hereafter come within the United States, * * * are
blocked." Id. § l(a), 77 Fed. Reg. at 6659 (emphasis added). Thus,
plaintiffs may argue that bringing the assets to the United States
defeats immunity under TRIA.
Annex 118
DONALD F. LUKE
JAFFE & ASHER LLP
600 Third Avenue
New York, New York 10016
(212) 687-3000
LISA W.BOHL
MOLOLAMKEN LLP
300 N. LaSalle Dr.
Chicago, Illinois 60654
(312) 450-6700
Respectfully submitted.
JEFFREY A. LAMKEN
Counsel of Record
ROBERT K. KRY
LAUREN M. WEINSTEIN
WILLIAM J. COOPER
MOLOLAMKEN LLP
The Watergate, Suite 660
600 New Hampshire Ave., NW.
Washington, D.C. 20037
(202) 556-2000
[email protected]
Counsel for Petitioner
MAY2018
ANNEX 119
Peterson v. Islamic Republic of Iran
United States District Court for the Southern District of New York
February 19, 2015, Decided; February 20, 2015, Filed
13-cv-9195 (KBF)
Reporter
2015 U.S. Dist. LEXIS 20640 *; 2015 WL 731221
DEBORAH D. PETERSON et al., Plaintiffs, -v- ISLAMIC
REPUBLIC OF IRAN; BANK MARKAZI a/k/a CENTRAL
BANK OF IRAN; BANCA UBAE SpA; CLEARSTREAM
BANKING, S.A.; and JP MORGAN CHASE BANK, N.A.,
Defendants.
Subsequent History: Motion granted by, in part, Motion
denied by, in part, Judgment entered by, Costs and fees
proceeding at Peterson v. Islamic Republic of Iran, 2015
U.S. Dist. LEXIS 73917 (S.D.N.Y., June 3, 2015)
Decision reached on appeal by, Remanded by Peterson
v. Islamic Republic of Iran, 876 F.3d 63, 2017 U.S. App.
LEXIS 23456 (2d Cir., Nov. 21, 2017)
Decision reached on appeal by, Remanded by Olson v.
UBAE, S.p.A., 703 Fed. Appx. 46, 2017 U.S. App.
LEXIS 23445 (2d Cir. N.Y., Nov. 21, 2017)
Prior History: Peterson v. Islamic Republic of Iran,
2013 U.S. Dist. LEXIS 40470 (S.D.N.Y., Mar. 13, 2013)
Counsel: [*1] For Deborah D. Peterson, personal
representative of the Estate of James C. Knipple,
Plaintiff: James Patrick Bonner, Patrick Louis Rocco,
Susan M. Davies, Stone Bonner & Rocco LLP, New
York, NY; Liviu Vogel, Mark Nathan Antar, Salon
Marrow Dyckman Newman BroudyLLP, New York, NY.
For Bank Markazi, also known as Central Bank of Iran,
Defendant: Bension Daniel De Funis, Donald F. Luke,
Eli Joshua Kirschner, Jaffe & Asher LLP, New York, NY.
For Banca UBAE SpA, Defendant: John J. Zefutie, JR.,
Thompson Hine LLP (NYC), New York, NY; Ugo Alfredo
Colella, PRO HAC VICE, Thompson Hine LLP(DC),
Washington, DC.
For Clearstream Banking, S.A., Defendant: Gerald
Michael Moody, Jennifer Gillian Newstead, Jonathan
1 Plaintiffs filed an amended complaint, dated April 25, 2014, on
July 24, 2014. (ECF No. 104 ("Am. Compl.").)
David Martin, Karen E Wagner, LEAD ATTORNEYS,
Benjamin S. Kaminetzky, Davis Polk & Wardwell L.L.P.,
New York, NY.
For JP Morgan Chase, NA, Garnishee: Gregory Phillip
Feit, Steven B. Feigenbaum, Levi Lubarsky &
Feigenbaum LLP, New York, NY.
Judges: KATHERINE B. FORREST, United States
District Judge.
Opinion by: KATHERINE B. FORREST
Opinion
OPINION & ORDER
KATHERINE B. FORREST, District Judge:
On December 30, 2013, plaintiffs—judgment-creditors of
the Islamic Republic of Iran ("Iran") and the Iranian
Ministry of Information and [*2] Security ("MOIS")—
commenced the instant action against Iran, Bank Markazi
a/k/a Central Bank of Iran ("Bank Markazi" or "Markazi"),
Banca UBAE S.p.A. ("UBAE"), Clearstream Banking,
S.A. ("Clearstream"), and JP Morgan Chase Bank, N.A.
("JPM"). (ECF No. 1.)1 Deborah Peterson, the first listed
plaintiff, is just one of the numerous plaintiffs who were
victims, or are family members of victims, of the 1983
bombing of the U.S. Marine Barracks in Beirut,
Lebanon.2 Each plaintiff group has obtained a judgment
against Iran and MOIS as sponsors of the Beirut
bombing, in amounts ranging from more than $800
million to over $2 billion. Each of the judgments has been
duly registered in this district. (See Am. Compl. ¶¶ 39-
43.)
2 The full list of plaintiffs is set forth at Exhibit A to the Amended
Complaint.
Annex 119
Page 2 of 10
Peterson v. Islamic Republic of Iran
Plaintiffs assert the following claims in the Amended
Complaint:
Count One: against Bank Markazi for a declaratory
judgment;
Counts Two and Three: against all defendants
except for JPM for rescission of fraudulent
conveyances;
Counts Four, Five, and Six: against all defendants
for turnover; [*3]
Count Seven: against Clearstream and Bank
Markazi for rescission of fraudulent conveyance; and
Count Eight: against all defendants for equitable
relief.
Plaintiffs allege that Clearstream is in possession of
assets valued at over $1.6 billion, representing proceeds
of bonds beneficially owned by Bank Markazi. (See Am.
Compl. ¶ 3; Declaration of Liviu Vogel dated July 11,
2014 ("Vogel Decl.") ¶ 3.) According to plaintiffs, JPM in
New York received the bond proceeds into one of its
accounts, and these proceeds legally remain on deposit
with JPM and are therefore subject to turnover.
Defendant JPM alleges that it never knew that any
proceeds with which it credited Clearstream were
connected to Bank Markazi, and that in any event the
money is long gone and JPM has no role in this dispute.
Clearstream argues that plaintiffs previously settled with
Clearstream whatever claims they may have had as to
these funds and the account against which they were
credited, and that in all events, it does not maintain any
of the funds with which JPM once credited it in New
York—all funds have been transferred and all client
transactions relating to the proceeds are on
Clearstream's books in Luxembourg. [*4] Bank Markazi
asserts that its account is with UBAE outside of the
United States and that this Court therefore lacks
jurisdiction over Bank Markazi under the Foreign
Sovereign Immunities Act ("FSIA"). Finally, UBAE argues
that it also previously entered into a settlement releasing
the instant claims, and that while it holds an account for
Bank Markazi's benefit with Clearstream, such account is
maintained in Luxembourg, and this Court lacks any
basis for personal jurisdiction over UBAE in this district.
3 The Peterson Judgment Creditors immediately sought and
obtained issuance of an Execution upon these bonds (the "First
Execution"); a Second Execution was served on Clearstream
on October 27, 2008. (See Am. Compl. ¶¶ 48, 50.)
Plaintiffs [*6] served Clearstream with a restraining notice in
June 2008; that restraining notice was extended in July 2009
and remains in effect. (See id. ¶¶ 51, 52.) The effect of the First
and Second Executions and restraining notices was to restrain
Before the Court are motions by each defendant for
dismissal. While the parties raise numerous arguments,
there is really little complexity to this matter: plaintiffs
released the instant claims against Clearstream and
UBAE, there is nothing left in the Clearstream account at
JPM for JPM to "turn over," and this Court lacks subjectmatter
jurisdiction over Bank Markazi as to assets located
abroad. Accordingly, as set forth below, defendants'
motions are GRANTED.
I. FACTUAL BACKGROUND
Plaintiffs have substantial outstanding judgments against
Iran and MOIS. They have been pursuing collection on
those judgments in this and other courts in various
jurisdictions since those judgments were
obtained. [*5] This action arises from these ongoing
collection efforts.
In June 2008, the U.S. Department of the Treasury's
Office of Foreign Assets Control ("OFAC") responded to
a subpoena served in connection with plaintiffs' efforts to
collect on their judgments against Iran. (Am. Compl. ¶
46.) OFAC's response indicated that "an Iranian
government client" maintained an interest in bonds with
a face amount of $2,003,000,000. (Id.) Referred to as the
"Original Assets" in this litigation, the subject bonds were
held on Clearstream's books and records and maintained
in a sub-custodial account with Citibank.3 (See id.)
Subsequent information provided by OFAC in April 2010
indicated that the subject bonds were "apparently owned
by the Central Bank of Iran." (Id. ¶ 47.) Plaintiffs sought
and obtained turnover of the Original Assets (amounting
to approximately $1.75 billion) in a judgment entered by
this Court on July 9, 2013, and affirmed by the Second
Circuit on July 9, 2014.
The instant lawsuit relates specifically to additional
assets plaintiffs allege are also present in New York,
referred to here as the "Remaining Assets." Plaintiffs
assert that the Remaining Assets amount to over $1.6
billion in proceeds attributable to bonds (the "Remaining
Bonds") which Bank Markazi maintained with
Clearstream and which Clearstream had in turn subcustodized
with JPM in New York. (See Am. Compl. ¶ 3.)
the Original Assets. (See id. ¶ 53.) Plaintiffs obtained a turnover
order as to the Original Assets in 2013, affirmed by the Second
Circuit on July 9, 2014. See Peterson v. Islamic Republic of Iran,
No. 10 CIV. 4518 KBF, 2013 U.S. Dist. LEXIS 40470, 2013 WL
1155576 (S.D.N.Y. Mar. 13, 2013) ("Peterson I"), recons.
denied, 2013 U.S. Dist. LEXIS 73852, 2013 WL 2246790
(S.D.N.Y. May 20, 2013); Peterson v. Islamic Republic of Iran,
758 F.3d 185 (2d Cir. 2014).
Annex 119
Page 3 of 10
Peterson v. Islamic Republic of Iran
The parties do not contest that the Remaining Assets
exist in approximately the amount alleged, that Bank
Markazi is the Central Bank of Iran, that it was also the
beneficial owner of the Remaining Bonds and is now the
beneficial owner of the Remaining Assets. Finally, the
parties do not dispute [*7] that UBAE has an account
with Clearstream in Luxembourg which it maintains for
Bank Markazi.4 The parties vigorously dispute whether
the Remaining Assets are in a Clearstream account
maintained by JPM in New York; whether the Remaining
Assets are anything more than book entries maintained
by Clearstream in Luxembourg; and finally, whether if,
once JPM credited Clearstream with the Remaining
Assets (which occurred at various times) Clearstream did
in fact manage to transfer them from New York to
Luxembourg via book entry, it should now be required to
reverse those entries. The mechanics of the actions
relating to the Remaining Assets are as follows:
Prior to February 2012, approximately $1.4 billion in
proceeds relating to the Remaining Bonds was paid to
JPM and JPM in turn credited that amount to
Clearstream. Approximately $104 million was later also
transferred [*8] in the same manner. (See Vogel Decl. ¶
12.) The banking transactions occurred in various steps.
As an initial matter, the Remaining Bonds were issued by
sovereigns such as the European Investment Bank. (Am.
Compl. ¶ 137.) Owners of beneficial interests in the types
of bonds that constituted the Remaining Assets generally
do not receive physical certificates evidencing their
interest. (Id. ¶ 139.) Rather, the owner's interest is
reflected in book-entry form. (Id.)
The prospectuses for the Remaining Bonds required
Clearstream, as custodian for its customers who held the
beneficial interests in those bonds, to accept payment of
interest and redemption proceeds into an account at a
bank located in New York. (Vogel Decl. ¶ 3(a).) The
prospectus for one of the Remaining Bonds states:
Beneficial interests in the Global Notes will be shown
on, and transfers thereof will be effected only
through, records maintained in book-entry form by .
. . Clearstream, Luxembourg . . . .
4 Plaintiffs allege that Clearstream, Bank Markazi, and UBAE
agreed to transfer the Remaining Assets from Bank Markazi to
UBAE prior to changes in U.S. law which restricted the
movement and transfer of Iranian assets. According to plaintiffs,
Clearstream opened an account for UBAE in Luxembourg for
this purpose. (See Am. Compl. ¶¶ 10-11.)
5 Prior to this instruction, [*10] UBAE had maintained a single
account with Clearstream which it had opened in 1973. (Vogel
Payments shall be made in U.S. dollars by cheque
drawn on a bank in New York City and mailed to the
holder . . . .
Each of the persons in the records of . . .
Clearstream, Luxembourg . . . as the holder of a Note
represented [*9] by a Global Note must look solely
to . . . Clearstream, Luxembourg . . . for his share of
each payment made by H.M. Treasury to the holder
of such Global Note and in relation to all other rights
arising under the Global Note . . . .
(Id. ¶ 38.)
Clearstream maintains an account at JPM into which it
receives funds on behalf of numerous clients; over the
course of a four-year period spanning from 2008 into
2012, proceeds relating to the Remaining Bonds went
into this account. (See Declaration of Gauthier
Jonckheere dated August 5, 2014 ("Jonckheere Decl.") ¶
4.)
On January 17, 2008, Markazi opened an account with
UBAE to act as its custodial bank in connection with its
securities positions at Clearstream. (See Vogel Decl. ¶
19.) The next day, UBAE sent an "URGENT" electronic
message to Clearstream instructing it to open a new
account in UBAE's name.5 (Id.) Clearstream opened
account no. 13061 for UBAE that same day. (Id.)
Thereafter, Markazi instructed Clearstream to transfer
$4.6 billion in securities from its account at Clearstream
to UBAE's 13061 account.6 (Id.) Among the assets
transferred in this manner were those which are the
subject of the instant lawsuit. (Id.)
On June 16, 2008, plaintiffs served a restraining notice
on Clearstream, which should have had the effect of
preventing Clearstream from transferring any property in
which Bank Markazi had an interest out of the United
States. (See Am. Compl. ¶¶ 51, 53.)
On June 5, 2009, Clearstream informed UBAE that, due
to laws passed in the United States, it could no longer
process transactions for bonds held on behalf of Iran
Decl. ¶ 19.)
6 Plaintiffs assert that such transfer was made free of any
payment by UBAE. (See Am. Compl. ¶ 11; Vogel Decl. ¶ 19.)
As UBAE does not contest that the securities in the UBAE
account are held for Markazi's benefit (see UBAE's Objections
and Responses to Plaintiffs' Interrogatories ¶ 8, Vogel Decl. Ex.
25), the existence of payment or other form of consideration is
irrelevant to the instant motions.
Annex 119
Page 4 of 10
Peterson v. Islamic Republic of Iran
using the services of a U.S. person—that is, JPM. (Vogel
Decl. ¶ 29.) Clearstream stated that, as a result, it had
opened up a "sundry blocked account 13675" and that
this account would hold cash payments received by
Clearstream in connection with the Markazi securities it
held. ( [*11] See id.)
Thereafter, Clearstream credited the 13675 account with
proceeds relating to the Remaining Bonds—totaling
$1,683,184,679.47 as of May 2013. (See id. ¶ 32.) It is
evident from records produced by Clearstream that these
proceeds are denominated in U.S. dollars. (See id.) No
party disputes that in the absence of the block that
Clearstream had imposed, Clearstream would have
credited UBAE's 13061 account with the same proceeds.
But nor can any party dispute that this is counterfactual;
proceeds from the Remaining Bonds were never credited
to the 13061 account and were instead credited and
blocked in the 13675 account. No party disputes that
neither UBAE nor Markazi has received any of these
funds and that Clearstream's obligation with respect to
the underlying financial assets associated with the
Remaining Bonds remains outstanding. (See id. ¶ 42.)
UBAE is organized under the laws of Italy and operates
principally as a trade bank. (Declaration of Mario Sabato
dated July 18, 2014 ("Sabato Decl.") ¶ 2.) As of
December 2013, when this lawsuit was first filed,7 UBAE
did not transact business, have customers, advertise,
solicit business, or market services in New York or
anywhere else [*12] in the United States. (Id. ¶ 3.) As of
that date, it did not have any employees, officers, or
directors in the United States. (Id.) UBAE was not listed
on any U.S. stock exchange. (Id.) Until 2009, UBAE had
maintained an account with HSBC in New York and used
that account to facilitate international transactions or
money transfers for itself and its customers. (Id. ¶ 5.) This
HSBC account was one of the bases for this Court's
determination in Peterson I that UBAE was amenable to
jurisdiction. See Peterson, 2013 U.S. Dist. LEXIS 40470,
2013 WL 1155576, at *16-18; Peterson, 2013 U.S. Dist.
LEXIS 73852, 2013 WL 2246790, at *6. The HSBC
account was closed on September 25, 2009. (Sabato
Decl. ¶ 6.) None of the transactions at issue in the
7 Personal jurisdiction is determined as of the date the original
complaint was served. See Indymac Mortgage Holdings, Inc. v.
Reyad, 167 F. Supp. 2d 222, 232 (D. Conn. 2001) ("It is well
established that jurisdiction is to be determined by examining
the conduct of the defendants as of the time of service of the
complaint." (quoting Greene v. Sha-Na-Na, 637 F. Supp. 591,
595 (D. Conn. 1986)) (internal quotation marks omitted)); see
also Ginsberg v. Gov't Properties Trust, Inc., No. 07 CIV. 365
Amended Complaint occurred via the HSBC account. (Id.
¶ 5.) All of UBAE's acts in relation to the Remaining
Bonds and Remaining Assets have occurred with
Clearstream in Luxembourg. (Id.)
On January 23, 2012, UBAE opened a
correspondent [*13] account with JPM in New York. (Id.
¶ 6.) None of the transactions at issue in the instant
lawsuit went through that account. (Id.)
II. DISCUSSION
Clearstream and UBAE seek dismissal on the basis that
plaintiffs' claims were released as part of separate
settlements in connection the Peterson I litigation. They
are correct. While the settlement agreements entered
into between plaintiffs and these two parties differ in
certain respects, the ultimate result is the same: plaintiffs'
claims here are foreclosed. As to UBAE, plaintiffs
released it from any action save a turnover action. Since
the Remaining Assets are no longer in this district,
turnover is not an available remedy. As to Clearstream,
plaintiffs entered into a covenant not to sue with regard
to any assets in the 13675 account; they may only sue
for turnover and a ministerial action in connection
therewith—which is far from the claims pursued here.
A. Clearstream
On October 23, 2013,8 Clearstream and the plaintiffs
settled all claims, with a limited exception discussed
below. The Clearstream Settlement Agreement contains
the following WHEREAS clauses:
WHEREAS, on June 16, 2008, Citibank moved for
an order to show cause why the
Restraints [*14] should not be vacated, and on June
27, 2008, the Court vacated the Restraints with
respect to certain Assets nominally valued at
approximately $250,000,000 that were no longer in
the possession of Citibank (the "Transferred
Assets"), but left the Restraints in place with respect
to assets valued at approximately $1,750,000,000
(the "Restrained Assets"); and
...
CSHECF, 2007 U.S. Dist. LEXIS 75771, 2007 WL 2981683, at
*6 (S.D.N.Y. Oct. 11, 2007).
8 The Clearstream Settlement Agreement was signed earlier,
but it became effective on October 23, 2013, after being ratified
by a specified number of plaintiffs. (Memorandum of [*15] Law
in Support of Clearstream's Motion to Dismiss the Amended
Complaint at 2 n.1, ECF No. 98.)
Annex 119
Page 5 of 10
Peterson v. Islamic Republic of Iran
WHEREAS, on June 8, 2010, the Peterson Plaintiffs
filed a complaint . . . seeking, inter alia, turnover of
the Restrained Assets . . .
...
WHEREAS, certain Plaintiffs have asserted claims
in Peterson for avoidance or damages against
Clearstream with regard to the Transferred Assets,
including, but not limited to, claims for fraudulent
conveyance, tortious interference with the collection
of a money judgment, and prima facie tort (the
"Peterson Direct Claims"); and
...
WHEREAS, on February 28, 2013, the Court issued
an Opinion and Order that, inter alia, granted the
Turnover Motion . . .
(See Settlement Agreement ("Clearstream Agr.") at 1-2,
Vogel Decl. Ex. 6.)
The Clearstream Settlement Agreement also recited the
then-pending appeal to the Second Circuit of the Court's
February 28 Opinion & Order (as well the Court's denial
of a motion for reconsideration). (Id. at 2-3.) The final
WHEREAS clause states:
WHEREAS, Plaintiffs and Clearstream wish to
resolve all of the disputes and claims between them
for good and valuable consideration
. . .
(Id. at 3.)
Paragraph 1 of the Agreement contains provisions
relating to the termination of the litigation to which the
Agreement referred in the WHEREAS clauses. (See id. ¶
1.) Paragraph 2 of the Agreement is entitled "Ratification
By Plaintiffs and Covenant Not To Sue." (See id. ¶ 2.)
This section consists of a series of provisions reciting that
each plaintiff is to execute a "Ratification Agreement." By
executing a Ratification Agreement, each plaintiff "ratifies
and agrees to be legally bound by the terms" of the
Clearstream Settlement Agreement. (Id. ¶ 2(i).) (The
UBAE Settlement Agreement contains no equivalent
procedure.9 In addition, each plaintiff agrees not to sue
Clearstream in law or in equity for any claims other than
certain [*16] defined "Direct Claims." (See id. ¶ 2(ii).) The
covenant not to sue concerns enumerated "Covered
Subjects." The Covered Subjects include claims in the
Peterson I litigation, and:
9 The UBAE Settlement Agreement states that it "is entered into
by and among the judgment creditors in the actions listed on
(b) any account maintained at Clearstream . . . by or
in the name of or under the control of any Iranian
Entity . . . or any account maintained at Clearstream
or at any Clearstream Affiliate by or in the name of
or under the control of UBAE, including but not
limited to, accounts numbered . . . 13061 . . . 13675
. . . (each an "Account") or any asset or interest held
in an Account in the name of an Iranian Entity (an
"Iranian Asset"); [as well as]
(c) any transfer or other action taken by or at the
direction of any Clearstream Party, Citibank, or any
Iranian Entity, including any transfer or other action
in any account, including a securities account or
cash account or omnibus account or correspondent
account maintained in Clearstream's name or under
its control, that in any way relates to any Account or
any Iranian Asset.
(Id. ¶ 2(ii)(b), (c).) Paragraph 2 further provides that each
plaintiff, independently or through counsel, performed "an
independent inquiry as to the facts and law upon which
the Actions are [*17] based" and "nevertheless wishes to
resolve any dispute or claim with the Clearstream
Parties," and such resolution will be unaffected by later
discovery of any new facts. (Id. ¶ 2(iii).) The key issue
here is whether this broad covenant encompasses the
claims in the instant action. This is resolved by reference
to the carve-out provision contained in paragraph 4 of the
Agreement. That paragraph provides:
Garnishee Actions. Notwithstanding the provisions
of paragraph 2 of this Agreement, the Covenant shall
not bar any action or proceeding regarding (a) the
rights and obligations arising under this Agreement,
or (b) efforts to recover any asset or property of any
kind, including proceeds thereof, that is held by or in
the name, or under the control, or for the benefit of,
Bank Markazi or Iran . . . in an action against a
Clearstream Party solely in its capacity as a
garnishee (a "Garnishee Action.") Such a Garnishee
Action may include, without limitation, an action in
which a Clearstream Party is named solely for the
purpose of seeking an order directing that a
Clearstream Party perform an act that will have the
effect of reversing a transfer between other parties
that is found to have [*18] been a fraudulent transfer
under any legal or equitable theory, provided
however that such a Garnishee Action shall not
seek an award of damages against a Clearstream
Annex A (the 'Plaintiffs'), by their attorneys." (Confidential
Settlement Agreement ("UBAE Agr.") at 1, Declaration of John
J. Zefutie, Jr. dated July 22, 2014 ("Zefutie Decl.") Ex. 2.)
Annex 119
Page 6 of 10
Peterson v. Islamic Republic of Iran
Party.
(Id. ¶ 4 (emphasis in original).)
Plaintiffs argue that the Clearstream Settlement
Agreement specifically carves the claims against
Clearstream in the instant action out of the settlement.
Paragraph 4 carves out one type of claim—a "Garnishee
Action." As defined in that Agreement, such an action
could include a request for an order that Clearstream take
an action to reverse a transfer between other parties that
is found to have been a fraudulent conveyance. This
provision does not allow plaintiffs to bring a fraudulent
conveyance or equitable action.10 Indeed, the wording
with respect to the fraudulent conveyance action is in the
past tense—indicating that a Garnishee Action, with the
requested order, would follow [*19] a prior determination
of fraudulent conveyance. Accordingly, the claims
plaintiffs assert against Clearstream in Counts Two,
Three, Seven, and Eight must be dismissed for this
reason alone.11
The turnover claims against Clearstream—asserted in
Counts Four, Five, and Six—also fail. As a matter of law,
a turnover action must be brought against a party who is
"in possession or custody" of money or other personal
property in which a creditor has an interest. See N.Y.
C.P.L.R. § 5225; Commonwealth of N. Mariana Islands
v. Canadian Imperial Bank of Commerce, 21 N.Y.3d 55,
990 N.E.2d 114, 116-17, 967 N.Y.S.2d 876 (N.Y. 2013).
It is a classic in rem action. See RCA Corp. v. Tucker,
696 F. Supp. 845, 851 n.4 (E.D.N.Y. 1988) ("[T]urnover
proceedings . . . are in fact actions in rem."). The Court
may not direct an entity to "turn over" assets that are not
in its actual possession or custody, even if the assets may
be said to be within its "control." See Commonwealth of
N. Mariana Islands, 990 N.E.2d at 116-17. An action
which seeks an order granting relief with regard to
potential assets, including to reverse transfers which
would result in the presence [*20] of assets, is not a
turnover action.
In the instant case, the records before the Court are clear:
JPM received proceeds relating to the Remaining Bonds,
which it credited to a Clearstream account at JPM.
Whether it should have or should not have, Clearstream
in turn credited amounts attributable to the Remaining
Bonds to the UBAE/Bank Markazi account in
10 Count Eight asserts a claim for equitable relief.
11 Notably, the language regarding plaintiffs' ability to seek an
order directing Clearstream to reverse a transfer refers to a
fraudulent conveyance found between "other parties." In the
Luxembourg. The JPM records are clear that whatever
happened to the proceeds, they are gone. There are
numerous days in which the Clearstream account at JPM
showed a zero or a negative balance. (See Jonckheere
Decl. ¶ 5.) As a matter of law, there is no asset in this
jurisdiction to "turn over." Could this Court require
Clearstream to reverse its own transfer? Not under the
Settlement Agreement; such an action is not the type of
action as to "others" anticipated by paragraph 4 of the
Clearstream Settlement Agreement.
Plaintiffs have a slightly more nuanced argument with
regard to proceeds which JPM received on Clearstream's
behalf subsequent to issuance of Executive Order
("E.O.") 13599 on February 5, 2012.12 Section 1 of that
E.O. states, in relevant part:
(a) All property and interests in property of the
Government of Iran, including the Central [*21] Bank of
Iran, that are in the United States, that hereafter come
within the United States, or that are or hereafter come
within the possession or control of any United States
person, includingany foreign branch, are blocked and
may not be transferred, paid, exported, withdrawn, or
otherwise dealt in.
(b) All property and interests in property of any Iranian
financial institution, including the Central Bank of Iran,
that are in the United States, that hereafter come within
the United States, or that are or hereafter come within the
possession or control of any United States person,
including any foreign branch, are blocked and may not be
transferred, paid, exported, withdrawn, or otherwise dealt
in.
Exec. Order. No. 13599, 77 Fed. Reg. 6659, 6659 (2012).
There is no dispute that $104 million of the Remaining
Proceeds was credited by JPM to Clearstream
subsequent to the issuance of this Executive Order. It
may be, therefore, that when Clearstream received that
$104 million, which related to interests of Iran (via its
central bank, Bank Markazi), it should not have credited
account 13675 outside of the United States, and that in
so doing it violated this Executive Order. However,
plaintiffs have [*22] no private right of action for a
violation of this Executive Order. Section 12 of the E.O.
explicitly states that it does not "create any right or
instant lawsuit, plaintiffs seek to assert fraudulent conveyance
claims against Clearstream itself.
12 The E.O went into effect on February 6, 2012.
Annex 119
Page 7 of 10
Peterson v. Islamic Republic of Iran
benefit, substantive or procedural, enforceable at law or
in equity" against any person. Exec. Order. No. 13599,
77 Fed. Reg. at 6661. The Second Circuit has also held
that "Executive Orders cannot be enforced privately
unless they were intended by the executive to create a
private right of action." Zhang v. Slattery, 55 F.3d 732,
748 (2d Cir. 1995) (citations omitted). In any event, an
action to enforce E.O. 13599 is not a type of action
anticipated by paragraph 4 of the Clearstream Settlement
Agreement. The Agreement is unambiguous that
plaintiffs released all claims to accounts 13061 and
13675 except for a Garnishee Action. A claim as to a
violation of the E.O. is not that.
Plaintiffs also assert that because of the existence of E.O.
13599, the book entries Clearstream made on its
Luxembourg books for the benefit of UBAE and Bank
Markazi are void; and—the argument goes—since they
are "void," that $104 million is, as a matter of law, deemed
to be within Clearstream's JPM account in New York.
Plaintiffs refer to 31 C.F.R. § 560.212(a), which provides
that transfers of blocked property shall be deemed null
and void.13 However, if a transferor meets certain
requirements [*23] set forth in subpart (d) of that section,
they are not null and void. See id. § 560.212(d).14
Whether plaintiffs may sue for a declaration that such
transfers are void, or sue based on the assumption that
such transfers are void, is irrelevant to the outcome of this
motion because the covenant not to sue encompasses
such claims. In effect, [*24] plaintiffs want to assert an
action against Clearstream in two steps: (1) seek a
declaration that any transfer made to UBAE's account in
Luxembourg is void, and (2) once the transfer is deemed
void, the assets would revert to the United States and be
subject to turnover. The first of these two steps is
necessary—and it is foreclosed by the covenant not to
sue. The first step directly implicates the transfer into
account 13675—the very account as to which plaintiffs
agreed not to sue. (See Clearstream Agr. ¶ 2(ii)(b).) The
Direct Claims which are released are those concerning
account 13675. Moreover, paragraph 2(ii)(c) of the
Clearstream Settlement Agreement explicitly grants a
13 31 C.F.R. § 560.212(a) states:
Any transfer after the effective date that is in violation of
any provision of this part or of any regulation, order,
directive, ruling, instruction, or license issued pursuant to
this part, and that involves any property or interest in
property blocked pursuant to § 560.211, is null and void
and shall not be the basis for the assertion or recognition
of any interest in or right, remedy, power, or privilege with
respect to such property or property interests.
release concerning "any transfer or other action taken by
or at the direction of any Clearstream Party . . . including
any transfer or other action in any account . . . maintained
in Clearstream's name or under its control, that in any
way relates to any Account or any Iranian Asset." (Id. ¶
2(ii)(c).)
To the extent plaintiffs seek to simply assert, without any
legal declaration, that a Clearstream transfer violated §
560.212 and the Court may assume that is correct, that
is wishful thinking. To establish how the
transfer [*25] occurred, to what it related and where it
occurred as a matter of law, are all aspects of what would
need to be reviewed in connection with such a
legal/judicial determination. Plaintiffs released their right
to seek such a declaration. Only after a legal
determination has been made that Clearstream in fact
violated E.O. 13599 could such a Garnishee Action be
ripe. As it stands, the number of steps to arrive at the
point at which Clearstream would have to unwind—or be
deemed to unwind—any transfer are many and are
outside of the scope of the carve-out provision.
In addition, insofar as plaintiffs' claim would then be one
for damages against Clearstream—for violating the E.O.
and removing the $104 million from this jurisdiction—
plaintiffs specifically settled that claim as well. In this
regard, paragraph 4 of the Clearstream Settlement
Agreement states, "provided however that such a
Garnishee Action shall not seek an award of damages
against a Clearstream Party." (Clearstream Agr. ¶ 4.)
Following full briefing and oral argument on this motion,
plaintiffs raised a new argument with regard to the
Clearstream Settlement Agreement: that certain plaintiffs
herein have not signed the required [*26] Ratification
Agreements. This argument is clearly an afterthought and
is without merit. Counsel for all plaintiffs signed the
Clearstream Settlement Agreement. As of the date of this
Opinion & Order, plaintiffs have informed Clearstream
that they have received Ratification Agreements from
93% of all plaintiffs. (See Letter from Liviu Vogel dated
October 2, 2014, ECF No. 150.) Counsel for plaintiffs and
14 In accordance with § 560.212(d), JPM sent a letter to OFAC
"reporting its limited knowledge of the circumstances underlying
the transfer of the Blocked Proceeds out of Clearstream's
operating account on October 15, 2012, and explaining why
[JPM] could not have known that that transfer may have been
subject to Iranian sanctions regulations." (Jonckheere Decl. ¶
14.) As of December 12, 2014, OFAC has not responded to
JPM's letter.
Annex 119
Page 8 of 10
Peterson v. Islamic Republic of Iran
Clearstream have both represented to the Court that
while all plaintiffs have not yet executed the Ratification
Agreements, none of them has declined to do so. (See
Letter from Karen E. Wagner dated September 29, 2014,
ECF No. 140; Stipulation and Order at 3 ("[C]ounsel for
plaintiffs has represented and warranted to Clearstream
that no Plaintiff . . . has indicated that he or she does not
intend to execute a Ratification Agreement."), ECF No.
552 in 10-cv-4518.) Several months have passed since
the last letter on this subject, and the Court has not
received any different information. Receipt of fully
executed Ratification Agreements appears to be a matter
of logistics. It is clear is that the parties to the Clearstream
Settlement Agreement are proceeding on the assumption
that the Agreement [*27] is binding—though the instant
dispute indicates a difference of view as to scope.
Plaintiffs have not so much as suggested that a single
plaintiff has refused to sign the Ratification Agreement,
and it is undisputed that the percentage of Ratification
Agreements which needed to have been received in
order for the settlement to become effective has been
received.
B. UBAE
Plaintiffs settled with UBAE on November 28, 2013. The
UBAE Settlement Agreement does not contain a
provision for separate ratification; it was entered into by
counsel on behalf of their respective clients. The
Agreement was effective upon execution.
The UBAE Settlement Agreement also contains a series
of WHEREAS clauses. Importantly, it specifically
acknowledges that "the Parties agree that certain assets
remain in an account at Clearstream in a UBAE customer
account, that are beneficially owned by Bank Markazi
(the 'Remaining Assets')." (UBAE Agr. at 2.) In this
Agreement, plaintiffs agreed to release:
15 Plaintiffs have entitled these counts as claims for "rescission"
for fraudulent conveyance, presumably to try and fit within
paragraph 4 of the Clearstream Settlement Agreement (which
allows for a claim that Clearstream take an action to reverse a
transfer). Rescission is a remedy, not an independent cause of
action. See Zola v. Gordon, 685 F. Supp. 354, 374 (S.D.N.Y.
1988). Read liberally, these counts instead assert claims for
fraudulent conveyance. Such an action is not a "Garnishee
Action" as defined in paragraph 4. As explained above, the
"action" that plaintiffs may seek to require Clearstream to take
under paragraph 4 must follow a separate judicial determination
of fraudulent conveyance. (See Clearstream Agr. ¶ 4 (permitting
an action to direct a Clearstream Party to "perform an act that
will have the effect of reversing a transfer between other parties
UBAE and all of its past, present, and future
affiliates, owners, directors, members, officers,
employees, law firms, attorneys, predecessors,
successors, beneficiaries, assigns, agents, and
representatives from any and all
liability, [*28] claims, causes of action, suits,
judgments, costs, expenses, attorneys' fees, or other
incidental or consequential damages of any kind,
whether known or unknown, arising out of or related
to the Plaintiffs' Direct Claims against UBAE, except
for the obligations stated in this Settlement
Agreement.
(Id. ¶ 1.) There is no dispute that Bank Markazi
constitutes a "beneficiary" of UBAE. Plaintiffs have made
that assertion repeatedly. (See, e.g., Am. Compl. ¶ 12
("UBAE's sole value was its willingness to serve as a front
for Markazi."); id. ¶ 33 ("UBAE opened [the
UBAE/Markazi Account] exclusively for Markazi's benefit
and at the direction of Markazi and Iran.").) Thus, the
release encompasses Bank Markazi to the same extent
that it does UBAE. Moreover, in the UBAE Settlement
Agreement, plaintiffs further agreed that "any future claim
against UBAE for the Remaining Assets shall be limited
to turnover only, and Plaintiffs waive all other claims
against UBAE for any damages regarding the Remaining
Assets whether arising in contract, tort, equity, or
otherwise." (UBAE Agr. ¶ 5.)
The instant lawsuit contains numerous claims not
purporting to be turnover: Count One seeks a declaratory
judgment; [*29] Counts Two, Three, and Seven seek
rescission of fraudulent conveyances;15 Count Eight
seeks equitable relief. These counts are explicitly barred
by the UBAE Settlement Agreement. Only Counts Four
through Six are denominated as turnover claims.
As a matter of law, a turnover action is one in which an
asset is both within the jurisdiction [*30] of the Court16
that is found to have been a fraudulent transfer").)
16 The fact that "turnover actions" are carved out of the UBAE
Settlement Agreement cannot eliminate the requirement that
sufficient facts support this Court's subject-matter jurisdiction.
As discussed in Section II.C infra with regard to the FSIA, the
fact that the Remaining Assets are credited to an account
located in Luxembourg places those assets outside of the reach
of the FSIA. See 28 U.S.C. § 1609; EM Ltd. v. Republic of
Argentina, 695 F.3d 201, 208 (2d Cir. 2012), aff'd sub nom.,
Republic of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250, 189
L. Ed. 2d 234 (2014); Aurelius Capital Partners, LP v. Republic
of Argentina, 584 F.3d 120, 130 (2d Cir. 2009). The same fact—
a lack of assets in this jurisdiction—is a basis for dismissal of
the turnover claims against UBAE.
Annex 119
Page 9 of 10
Peterson v. Islamic Republic of Iran
and in the possession or custody of the party against
whom turnover is sought. There is no assertion that
UBAE maintains any bank account within this Court's
jurisdiction into which any of the Remaining Assets were
deposited or against which they were credited. The facts
in this regard are quite clear: whatever account UBAE
maintains for Bank Markazi is in Luxembourg. Thus, any
Remaining Assets which it may possess or as to which it
has rights or an interest, are in Luxembourg. Plaintiffs'
assertions to the contrary are without merit and without
basis in fact. Thus, on this basis alone, UBAE is
dismissed from this lawsuit.
C. Bank Markazi
Plaintiffs seek a [*31] variety of relief against Bank
Markazi. As discussed above, the release that plaintiffs
provided to UBAE covers Bank Markazi (as UBAE's
beneficiary). Thus, plaintiffs' claims must be dismissed as
to Bank Markazi for this reason alone.
But perhaps more importantly, this Court lacks subjectmatter
jurisdiction over Bank Markazi. It is undisputed
that Bank Markazi is the Central Bank of Iran. Thus, the
Court's subject-matter jurisdiction must be found within
the FSIA. One fact alone disposes of claims against Bank
Markazi: it does not maintain the assets that plaintiffs
seek in the United States. The evidence in the record is
clear that any assets in which Bank Markazi has an
interest, and which are at issue in this action, are in
Luxembourg. The FSIA does not allow for attachment of
property outside of the United States. See 28 U.S.C. §
1609 ("[T]he 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." (emphasis added)); Republic of
Argentina, 695 F.3d at 208 ("We recognize that a district
court sitting in Manhattan does not have the power to
attach Argentinian property in foreign countries.");
Aurelius, 584 F.3d at 130 ("[T]he property that is subject
to attachment and execution [*32] must be property in
the United States of a foreign state." (internal quotation
17 Further, it is undisputed that JPM does not have an account
for UBAE or Bank Markazi. The account at issue is in
Clearstream's name and the evidence is unrebutted that
Clearstream uses the account into which the Remaining Assets
were credited in its own name as a general-purpose account.
So far as JPM is concerned, as a matter of law, any assets it
may have in an account for Clearstream are Clearstream's and
no one else's. See NML Capital, Ltd. v. Banco Cent. de la
Republica Argentina, 652 F.3d 172, 192 (2d Cir. 2011)
("'[U]nder fundamental banking law principles, a positive
balance in a bank account reflects a debt from the bank to the
marks omitted)). Accordingly, the Court cannot entertain
the instant claims against Bank Markazi.
D. JPM
Plaintiffs assert claims against JPM in Counts Four
through Six for turnover and in Count Eight for equitable
relief. JPM has proffered records which make it clear that
it has no assets in which Bank Markazi has an interest.
(See Jonckheere Decl. ¶¶ 5-11, 13 & Exs. A, B, C.)
Indeed, in their complaint, plaintiffs acknowledge this fact
in all practical respects by referring to the fact that
Clearstream credited the 13675 account with the
Remaining Assets. (See Am. Compl. ¶ 61, 66.) Plaintiffs
assert that if one accepts the legal proposition that
Clearstream's transfer of such proceeds out of its account
with JPM was in violation of E.O. 13599, then any such
transfer is void, and therefore JPM still has the assets.
This is fiction. If the transaction is ever, in some other
action, found to be void, that will be at some future point
in time. As matters stand now, there is simply nothing for
JPM to turn over.
Plaintiffs spend a significant amount of briefing on
whether, as a matter of law, Clearstream's
account [*33] at JPM must be deemed to have within it
the Remaining Assets. The rather intricate way in which
plaintiffs assert this could be so is creative—but mind
numbing. The reality is far simpler: JPM simply lacks that
as to which plaintiffs seek turnover. JPM must therefore
be dismissed—and this Court need not reach the series
of banking law and U.C.C.-related questions which
plaintiffs raise.17
III. CONCLUSION
For the reasons set forth above, defendants' motions are
GRANTED. Plaintiffs' motion for writs of execution is
DENIED as moot, and this action is dismissed. The Clerk
of Court is directed to terminate the motions at ECF Nos.
97, 109, and 116, and to terminate this action.
SO ORDERED.
depositor' and no one else." (citation omitted)). Further, for
funds to be considered those of a foreign central bank, they
must be in the name of the foreign central bank. Cf. id. Finally,
the law is clear that a judgment creditor may not reach assets
in which a judgment [*34] debtor has no legal interest. See
Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan
Gas Bumi Negara, 313 F.3d 70, 83 (2d Cir. 2002). If a judgment
debtor cannot assign or transfer an asset, then a creditor of the
judgment debtor may not enforce a judgment against such
asset. See Bass v. Bass, 140 A.D.2d 251, 253, 528 N.Y.S.2d
558 (N.Y. App. Div. 1988).
Annex 119
Page 10 of 10
Peterson v. Islamic Republic of Iran
Dated: New York, New York
February 19, 2015
/s/ Katherine B. Forrest
KATHERINE B. FORREST
United States District Judge
End of Document
Annex 119
ANNEX 120
Annex 120
. ~en
,.,, ...
C ;;.:
~ '.7 ~,:,
CASE N° 9
Avis juridtque sur l'immunite d'executlon de la Banque Centrale de la Republtque
islamique d'lran (Banque Markazi) en verbl du droit international dans le cadre de la
procedure en validation de saisie-arret pendante devant le Tribunal d'arrondissement de
Luxembourg dans le role n° 177 .393
16mars2018
Frederic Dopagne
Annex 120
2
Table des matieres
Paoe
I. Introduction ................................................................................ , .................................. :.... 3
II. Contexte et portee du present avis ....................................... ,.. ......................................... 4
Ill. Analyse.................................... .................................. ........................................................ 5
A. L'etendue de l'immunite d'execution .................. ....................................... ................ 8
1. Une immunite d'execution absolue couvrant !'ensemble des biens de la
banque centrale ................................................................................. ...... .............. 9
a) Examen de la pratique intemationale ........................................................... 9
b) Application dans le cas d'espece .................................................................... 15
2. Une immunite d'execution couvrant a tout le moins !es bi ens utilises ou
destines a etre utilises aux fins de la banque centtale ........................................ 16
a) Examen de la pratique internationale ............................................................ 16
b) Discussion du critere vise dans l'avis du professeur Reinisch ..................... 20
c) Le critere des biens utilises OU destines ~ ~tre utilises aux
fins de la banque centrale ................................................................................ 22
d) Charge de la preuve .......................................................................................... 24
e) Application dans le cas d'espece ...................................................................... 26
B. La renonciation a l'immunite d'execution ................................................................... 28
1. Principes applicables .............................................................................................. 28
2. Application dans le cas d'espece ............................................................................ 37
C. L'incidence, sur l'immunite d'execution, du droit d'acces au juge ............................. 38
IV. Conclusions ........................................................................................................................... 43
Annex 120
3
I. INTRODUCTION
1. Je soussigne, Dr. Frederic Dopagne, declare etre depuis 2008 professeur, avec le rang de
charge de cours, au Centre Charles De Vlsscher pour le droit international et europeen
au sein de la Faculte de droit et de criminologie de l'Universite catholique de Louvain
(UCL).
2. J'ai etudie le droit a l'Universite de Namur et a !'UCL. ]'ai ensuite obtenu un Diplame
d'Etudes Specialisees en droit international de J'Universite libre de Bruxelles. Puis un
doctorat en sciences juridiques de !'UCL.
3. Apres avoir ete durant sept ans {2001-2008) assistant en droit international public et
droit de !'Union europeenne a l'UCL, j'y enseigne depuis dix ans dans Jes matieres du
drolt international public, en particulier le droit des immunltes (de l'Etat, de
!'organisation internationale et de leurs organes et agents respectifs), le droit
diplomatique, le droit des organisations internationales et le droit de la responsabilite
internationale. J'y suis par ailleurs actuellement le Directeur du Advanced Master (LL.M.J
in International Law-Master de specialisation en droit international.
4. Je suis egalement, depuis 2012, professeur invite en droit des organisations
internationales a l'Universite de Liege, et, depuis 2016, professeur invite en droit
international public a !'Ecole Royale Militaire (Bruxelles). j'ai en outre enseigne a
l'Universite catholique de Lille (France) (2013-2015), a l'Universite de Leiden (PaysBas)
(2008), a l'Universite du Burundi (2006), et a l'lnstitut Royal Superieur de Defense
(Bruxelles) (2001-2005).
5. A c6te de mon activite academtque, j'ai ete, durant deux ans (2009-2011), conselller du
President de la Commission du Senat de Belgique chargee du suivi des missions
militaires a l'etranger.
6. Je suis par ailleurs avocat au barreau de Bruxelles depuis huit ans. Ma pratique se
concentre sur le conseil et la representation d'Etats et d'organisations intemationales
devant !es tribunaux intern es - avec un accent particulier sur Jes questions d'immunites
- et sur les litiges de droit de la fonctlon publique internatlonale devant Jes tribunaux
administratifs internationaux.
7. En 2017, j'ai ete elu Secretalre general de la Societe beige de droit international. Je fais
partie du Comite de redaction de la Revue beige de droit international et de celui de
Oxford International Organizations.
8. Une liste de publications figure en annexe au present avis.
Annex 120
4
II. CONTEXT£ ET PORTEE DU PRESENT AVIS
9. A la suite des attentats terroristes du 11 septembre 2001, Jes proches de certaines
victimes ont obtenu, des tribunaux americains, plusieurs jugements condamnant par
defaut la Republique islamique d'Iran, certains de ses ministeres ainsi que sa Banque
centrale (Banque Markazi) a leur payer des dommages et inter@ts a concurrence de
montants importants.
10. Dans le cadre de !'execution forcee de ces jugements, ils ont fait pratiquer, au GrandDuche
de Luxembourg, une saisie•arr@t a charge de la Banque Markazi, entre Jes mains
de Clearstream Banking SA, et ont assigne la Banque Markazi en validation de ladite
saisie.
11. Une procedure d'exequatur des jugements americains a par ailleurs ete diligentee
devant Jes tribunaux luxembourgeois. Elle est toujours pendante.
12. Une action en mainlevee de la saisie a ete portee par la Banque Markazi devant le Juge
des referes. Elle a, jusqu'a ce jour, ete rejetee en premiere instance puis en degre d'appel.
13. Le 19 janvier 2018, j'ai re~u une demande de Me Fabio Trevisan, du cabinet Bonn
Steichen & Partners, representant la Banque Markazi dans les procedures susvisees, en
vue de la redaction d'un avis juridique portant sur l'immunite d'execution dont beneficie
la Banque Markazi en vertu du droit international dans le cadre de la procedure precitee
en validation de la saisie-arr!t1• Dans ce cadre, j'ai reyu cople d'un avis juridique redige
par le professeur August Reinisch a la demande des conseils des demandeurs dans cette
m~me procedure2 (ci-apres « l'avis du professeur Reinisch »).
14. Le present avis, compte tenu de son objet ltmite conformement a la demande de Me
Trevisan (voy. ci-avant), n'evoque pas Jes questions relatives a l'imrnunite de juridiction
de la Banque Markazi dans le cadre de la procedure en validation, ni Jes questions
d'immunite - de juridiction ou d'execution - de la Banque Markazi dans le cadre de la
procedure d'exequatur ou de !'action en refere. Le present avis n'aborde pas davantage
Jes aspects de droit luxembourgeois.
Trib. arr. Lux., n° 177.393, Tara Bane et csm, Succession de Donald l Havlish, Jr. et csm c. Banque
Centrale de la Rdpublique lslamlque d'lran et csrts.
« Legal Opinion on The Scope of Enforcement Immunity under Customary lntemitional Law
Relevant to the Proceedings before Courts in Luxembourg in Havlish, et al. v. Banque Centrale de la
Republique Jslamtque d'lran (Bank Markazi) », 11 d~cembre 2017.
Annex 120
5
III. ANALYSE
15. Le present avis traite des questions suivantes : l'etendue de l'immunite d'execution de
la Banque Markazi (A), la renonciation a son immunite d'execution (B) et )'incidence, sur
cette immunite, du droit d'acces au juge garantl aux particuliers par certains
instruments internationaux (C). Ces aspects sont abordes dans cet ordre car, d'une part,
ii n'y a de sens a s'interroger sur la renonciation a une immunite que si cette immunite
est dument applicable3, d'autre part, ii n'y a de sens a s'interroger sur l'impact du droit
d'acces au juge sur une immunite que si cette immunite est dO.ment applicable et qu'il
n'y a pas ete renonce (valablement).
16. Sur ces trois questions, ii convient d'identifier le droit international cout umier en faisant
application des deux criteres bien etablis que sont, dans Jes termes de la Cour
internationale de Justice (CJJ), la pratique effective et I' opinio juris des Etats 4• A cet egard,
ii faut relever que, dans l'affaire des lmmunitAs jurldictionnelles de /'Etat (Allemagne c.
ltalie; Grece (intervenant))5. a l'occaslon de laquelle la C)J etalt appelee specifiquement
a determiner !'existence et la portee des regles de droit international coutumier
regissant Jes immunites de juridiction et d'execution de !'~tat, la Cour a, dans son
examen de la pratique etatique, accorde une importance significative aux lois
promulguees par Jes .Etats ayant legifere en la matlere, ainsi qu'aux decisions des
tribunaux nationaux s'etant prononces sur l'immunite d'un Etat etranger6 ; ii y a la en
En ce sens, voy. par ex. Tribunal f6deral sulsse, Moscow Center for Automawd Air Traffic Control c.
Commission de surveillance des offices des poursuites et des /al/lites du canton de Geneve, n°
7B.2/2007, 15 aoflt 2007, § 5.3.3, BGB 134 Ill 122 S. 132, aussi disponible sur
http:/[www.seryat.unibe ch /dfr/bgc/c3134122,html.
4 Plateau continental de la mer du Nord (Republlque federate d'Allemagne/Danemark : Rt!publique
ft!derale d'Allemagne/Pays-Bas), arr!t du 20 fevrier 1969, C.JJ. Recueit 1969, p. 44, § 77.
Arn~t du 3 fevrier 2012, C./.J. Recueil 2012, p. 99, aussl dlsponible sur http• //www,jcjcij,
ore/fiJes/case-ceiated/143/143-20120203-IUD-01-00 -FR,pdf. Cl-apres « l'arret Allema.gne c.
ltalfe ,. ,
6 Ibid., not. p. 123, § 55. Le juge national peut egalement utllement s'inspirer, dans la determination
du drolt International coutumler, des « Draft conclusions on ldentil\cation of customary
international Jaw ,. adoptes en premiere lecture par la Commission du droit internadonal des
Nations Unies tors de sa 68• session en 2016, disponibles sur
http; I Oe11al.un.or11/docs /?path::,./ilc/reports /2016 ten11Hsb /chp5.pdfflcJan11=EFSRAC {pp. 76 et s .,
§ 62) : en particulier, la Draft conclusion 8 prevoit ce qui suit:
« 1. The relevant practice must be general, meaning that It must be sufficiently widespread
and representative, as well as consistent.
Z. Provided that the practice is general, no particular duration is required ».
Et la Draft conclusion 9, § 1, se lit comme suit :
« The requirement, as a constituent element of customary international law, that the
general practice be accepted as law (oplnlo Juris) means that the practice In question must
be undertaken with a sense of legal right or obligation ».
Annex 120
10
11
12
13
6
effet une pratique d'Etats qui sont a considerer comme des « Etats particulierement
interesses », dont la pratique est tout specialement pertinente dans la determination du
droit international coutumier7•
17. Par ailleurs, la Convention des Nations Unies sur les immunites juridictionnelles des
Etats et de leurs biens, ouverte a la signature le 17 janvier 20058 (la Convention des
Nations Unies), revet une importance particuliere dans la determination du droit
international coutumier. Bien qu'elle ne soit pas a ce jour entree en vigueur sur le plan
international faute d'un nombre suffisant de ratlfications9, Jes juges nationaux, y compris
ceux d'Etats n'ayant pas ratifie la Convention, s'y referent de maniere croissante, et de
nombreuses decisions de tribunaux internes, y compris de juridictions supremes, ont
deja considere que plusieurs dispositions de la Convention refletaient en reallte des
regles de droit international coutumier ou en constituaient une preuve recente
particulierement fiablelO 11. n en va de meme de la Cour europeenne des droits de
l'homme12 (voy. infra,§§ 100-101), Et de la doctrine autoriseet3• Ace titre, ii faut done
Voy. CIJ, Plateau continental de la mer du Nord {Repub/ique federa/e d'Alfemagne/Danemark ;
Republique federale d'Allemaone/Pays-Bas), arret du 20 fevrier 1969, C./J. Recueil 1969, p. 42, § 73.
Annexe a A/RF.S/59/38 du 2 decembre 2004, disponible sur
http: /fwww.u n,org/fr /documents/view doc.asp ?symbol=A /RES /59 /3 s.
L'article 30, § ter, de la Convention exige 30 ratifications. Voy. l'etat des ratifications au 14 mars
2018 sur !)ttps;//treaties,un,org/J?ages{ViewQetai!s.a§px?src-lND&mullii no=UJ-
13&cham,er.~.3.&Jan11=tm#EndUet,: 21 Etats sont parties a la Convention (et 28 l'ontsignee).
Outre la jurisprudence specifique a J'immunite d'execution citee par ailleurs dans le present avis,
voy. entre autres :
UK House of Lords, Jones v Saudi Arabia (2006] UKHL 26, 14 juin 2006: « Despite its
embryonic status, this Convention is the most authoritative statement available on the
current international understanding of the lim!t.s of state immunity in civil cases » (§ 26,
per Lord Bingham) : « It Is the result of many years work by the International Law
Commission and codifies the law of state immunity» (§ 47, per Lord Hoffmann).
Disponible sur
htn:,s;//pubHcations.padiament,uk/pafld200506/ldjud&:rot{id060614/jones,pdf.
New Zealand High Court, Fang and Ors v Jiano and Ors, {2007] NZAR 420, 21 decembre
2006, § 65: « This Convention is a very recent expression of the consensus of nations on
this topic ». Disponible sur
http; //opil,oupJaw com/yjew/1 o.1093 /law:Hrlc/l 226nzo6,case,1 /law-ildc-1226nzo6.
Sur ce phenomene de maniere generale, voy. not. H. FOX et Pb. WEBB, The Law of State Immunity,
3• ed. revi.see etaugmentee, Oxford University Press, 2015, pp, 294-295.
C'est d~s lors, a notre estime, quelque peu restrictivement que l'avis du professeur Reinisch
indique pour sa part que « some domestic courts have considered [the] provisions [of the UN
Convention] when analyzing customary international law» (§ 23) : ]'attitude des tribunaux
intemes vis-a-vis de la Convention des Nations Unies paratt nettement plus engagee.
Manoile$CU et Dobrescu c. Roumanie et Russie, 3 mars 2005, n° 60861/00, §§ 75, 80-81; Cudak c.
Lituanie, 23 mars 2010, n° 15869/02, §§ 66-67: Sabeh El Leil c. France, 29 juin 2011, n° 34869/05,
§§ 57-58; Wallishauser c. Autriche, 17 juillet 2012, n° 156/04, § 69: Oleynikov c. Russie, 14 mars
2013, n° 36703/04, §§ 66 et68; Radunovic etautres c. Montenegro, 25 octobre 2016, n•• 45197 /13,
53000/13 et 73404/13, § 73 ; Naku c.. Lituanie et Suede, 8 novembre 2016, n° 26126/07, § 89. Tous
dlsponibles sur https;.{/hudoc,ecbr.coe,int.
En Introduction A leur ouvrage de reference, R. O'l<EEFE et Chr. TAMS ecrivent que Ia Convention
des Nations Unies est « largely declarat-0ry » du « modem customary international law of State
Annex 120
7
voir, dans la Convention des Nations Unies, une source indirecte potentielle, etant
entendu qu'il faut sans doute se garder ace jour d'affirmer que !'ensemble du texte de la
Convention serait le retlet du drolt international coutumier en bloc, et qu'il s'indique
plutot d'apprehender de ce point de vue chaque disposition individuelle de la
Convention.
18. La Cl} elle-meme, dans l'arr@t Allemagne c. Jtalie, a substantiellement analyse les
dispositions de la Convention des Nations Unies relatives aux divers points litigieux, et
s'agissant de l'immunite d'execution specifiquement, a meme juge qu'a tout le moins !es
elements essentiels de !'article 19 de la Convention etalent effectivement !'expression
du droit international coutumier en vigueur14• A noter que dans cette affaire Allemagne
c. Jtalie, aucun des deux Etats n'avait ratifie, ni meme signe, la Convention15 ; en
comparaison, ii ya, dans le cas d'espece, d'autant plus de raisons d'accorder une autorite
toute particuliere a la Convention puisque l'Etat etranger en cause, la Republique
islamique d'Jran, a pour sa part be! et bien ratifle la Convention en date du 29 septembre
2008.
19. Quant au Grand-Duche de Luxembourg, s'il n'a jusqu'a present ni signe ni ratifie la
Convention des Nations Unies, ii ne semble pas, a tout le moins, avolr d'objection de
principe sur le texte dans son ensemble. En effet, le Grand-Duche a, le 30 octobre 2015,
signe la Declaration sur Jes immunites juridictionnelles des biens culturels appartenant
a un Etat, elaboree dans le cadre du Comlte des conselllers juridlques sur le droit
international public du Conseil de !'Europe (CAHDJ), ouvertement presentee comme un
instrument jutidiquement non contraignant en tant que tel mais qui, de maniere
remarquable, indique que le ri6gime d'immunite d'executlon qu'elle prevoit au profit des
biens culturels appartenant a un Etat est« [e]n confonnite avec le droit international
coutumier tel que codifie par la Convention [des Nations Unies] »16: en signant cette
Declaration, le Grand-Duche exprime done son op/nlo Juris quanta la valeur coutumiere,
a tout le moins, des dispositions de la Convention portantsur l'immunite d'execution des
immunity» {in R. O'KEEFE et Chr.J. TAMS (eds), The United Nations Convention on Jurisdict ional
Immunities of States and Their Property. A Commentary, Oxford University Press, 2013, p. xlil). G.
HAFNER krit pour sa part que « [o ]ne may conclude that the new convention reflects the generally
accepted state of affairs regarding state immunity» («Accountability and Immunity : The United
Nations Convention on Jurisdictional (mm unity of States and Their Property and the Accountability
of States», Pro~edings of the American Society of International Law, 2005, p. 242.
t♦ P.148,§§ 117-118.
1s Arret, p. 122, § 54.
16 Ital. aj. Texte fran~is de la Declaration disponible sur https;//rm.coe.jnt/1680305d82, et texte
anglais slgne par le ministre luxembourgeois des Affaires etrang~res et europeennes disponible
sur h W)S; (/rm.coe.int/1680491 Sa 1. Au 14 mars 2018, 20 filats, y comprls le Grand-DucU, avalent
signe la Declaration.
Annex 120
8
biens culturels 17 (et nous ne sommes pas au courant de motifs qui permettraient de
penser que le Grand-Duche tient a adopter une approche distincte vis-a-vis des
dispositions de la Convention portant sur l'immunite d'execution des banques
centrales) . Par ailleurs, bien que nous ne possedons pas d'informations quanta une
eventuelle ratification prochaine de la Convention par les autorites luxembourgeoises
competentes, ii peut etre rel eve que, lors de la deuxieme reunion informelle des Parties
a la Convention europeenne sur J'immunite des Etats du 16 mai 1972, qui s'est tenue le
13 septembre 2006, « la plupart des Etats parties» a ladite Convention europeenne -
Etats parties parmi lesquels figure le Grand-Duche - ont en tout cas « conflrme qu'ils
s'acheminaient vers une ratification de la Convention des Nations Unies »18 •
A. L'etendue de l'immunite d'execution
20. II peut sans guere d'hesitation etre affirme qu'en droit international coutumier,
l'immunite d'execution de l'Etat etranger, consideree de maniere generale, n'est plus
aujourd'hui con~ue comme absolue. A la suite de l'evolution qu'a connu l'immunite de
juridiction, et bien que plus tardlvement que cette derniere, l'immunite d'execution
generale de l'Etat est passee d'un regime d'immunite absolue - protegeant !'ensemble
des biens de l'Etat - a un regime d'immunite restreinte ou relative - couvrant alors les
biens de l'Etat utilises ou destines a etre utilises A des fins souveraines, a !'exclusion de
ceux qui sont affectes a des fins commerciales. La CIJ, eminemment:, a consacre cette
evolution dans son arr~tAllemagne c. ltafie19,
21. JI serait cependant excessif de soutenir que la limitation de l'immunite d'execution
generale de l'Etat a ete poussee aussi loin que celle de l'immunite de juridlction. Le droit
international coutumier demeure, aujourd'hui, plus exlgeant lorsqu'il s'agit d'adopter
des mesures de contralnte sur !es biens d'un f;tat etranger que lorsqu'il s'agit de
soumettre celui-ci au pouvoir de juridiction des tribunaux du for. La raison en est
simple : « En effet, Jes mesures de contrainte contre un ~tat sont pe~es comme des
atteintes plus importantes a la souverainete de l'Etat etranger que la simple soumisston
17 La Declaration a d'ailleurs ete decrite par les Etats l'ayant inltialement promue comme
« temoign(ant] d'une vision commune (opinlo Juris) de ses signataires »:Annexe~ la lettre du 27
janvier 2017 des Representants permanents de l'Autriche et de la Republique tch~que aupres des
Nations Untes, adressee au Secretaire general, doc. A/71/772, 31 Janvier 2017, disponlble sur
https:J/diaitamhracy.un,ore:trecord /SSBZQ3 /files/A 21 772 -ER.pdf.
18 « Rapport de la deuxi~me reunion lnformelle des Etats Parties a la Convention europeenne sur
l'tmmunite des Etats », Annexe V au Rapport de la 32• reunion du CAHO!, doc. CAHO! (2006) 32,
22 mars 2007, disponible sur ht;tps://rm.coejnt/16B00528fe.
19 P. 148, § 118.
Annex 120
9
a la juridiction. C'est pour cette raison que Jes restrictions a l'immunite admises en
matiere de juridiction ne se retrouvent pas apropos de )'execution, qui apparatt comme
'le dernier bastion des immunites' »20 •
22. En outre, le passage a une regle d'immunite d'execution restreinte concerne l'immunite
d'executiongenerale de J'Etat, mais est sans prejudice de regles specijiques applicables a
certaines categories particulieres de biens de l'Etat, regles specifiques qui peuvent avoir
maintenu une immunite plus etendue au profit des biens relevant de ces categories
particulieres. Comme developpe ci-apres, ii peut etre avance que tel est le cas des biens
des banques centrales etrangeres, dont l'immunite d'execution, aux termes du droit
international coutumier, peut i!tre tenue comme s'etendant en effet a )'ensemble des
biens de la banque centrale, a la difference de l'immunite d'execution generale de l'Etat
qui ne porte que sur !es biens utilises ou destines a Atre utilises a des fins souveralnes.
Dans ce contexte, Jes developpements et Jes references qui, dans les sections 3 .B et 3.C
de l'avis du professeur Reinischzi, se rapportent a !'etendue de l'immunite d'execution
generale de l'Etat ou a l'etendue de l'immunite d'execution de categories particulieres
de bi ens autres gue les biens des banques centrales - notamment Jes comptes bancaires
des missions diplomatiques22 - nous paraissent ne pas etre veritablement et
directement pertinents dans le cas d'espece, lequel concerne exclusivement la situation
specifique des biens d'une banque centrale.
1. Une iromunite d'execution absolue couvrant l'ensemb)e des biens de la banque
centrale
a) Examen de la pratique internatlonale
23. L'id~ selon laquelle l'ensembJe des biens de la banque centraJe etrangere beneficient
en tout etat de cause et en toutes clrconstances de l'immunlte d'executlon se retrouve a
!'article 21, § 1", c), de la Convention des Nations Unies, lequel se lit comme suit :
zo G. HAFNER et L. LANGE,« La convention des Nations Unles sur Jes !mm unites juridictionnelles des
~tats et de leurs biens », Annuaire franfais de droit international, 2004, p. 68 (Jes derniers mots
et.ant empruntes a la Commission du droit international : point 2 du commentaire du projet
d'article 18, « Rapport de la Commission du drolt international sur les travaux de sa 43• session »,
Annuaire de la Commission du droit International, 1991, vol. II (2e partie), p. 59).
21 §§ 52-60, 61•65, 81-94 et 96·108 de l'avls du professeur Relnlsch.
22 Point sur lequel )'expose de la jurisprudence n'est d'ailleurs pas tout a falt a jour, en particulier la
jurisprudence beige evoquee aux§§ 103-104 de l'avis du professeur Relnisch: aucune reference
n'y est falte entre autres aux lmportants developpements que representent en Ia mati~re : Cass.,
22 novembre 2012, Journal des trlbunaux, 2013, p. 290; Cass., 11 decembre 2014, R.G. n°
C.13.0537 .F, disponlble sur www cass,bc; et !'article 1412qulnquies du Code judiciaire.
Annex 120
23
H
25
10
« Les categories de biens d'Etat ci-apres ne sont notamment pas consideree s com me des
bi ens specifiquement utilises OU destines a etre utilises par l'Etat autrement qu'a des fins
de service public non commerclales au sens des dispositions de J'alinea c) de !'article 19 :
( ... )
c) Les biens de la banquc centrale ou d'une autre autolite monetaire de l'Etat ».
24. Comme le souligne le commentaire du projet d'article 19 elabore par la Commission du
droit international (CDI), qui est devenu !'article 21 de la Convention des Nations Unies,
le but du§ 1 er de la disposition est d' « eviter toute interpretation selon laquelle Jes biens
classes comme appartenant a l'une quelconque des categories indiquees seraient en fait
des bi ens specifiquement utilises OU destines a etre utilises par l'Etat autrement qu'a des
fins de service public non commerciales »23, a savoir des bl ens sur lesquels des mesures
de contrainte peuvent etre prises. Et le commentaire d'ajouter :
« Cette protection est jugec necessaire et opportune, eu egard a la tendance de certalncs
juridictlons a salsir ou a gel er !es avoirs des Etats etrangers, notamment les (, .. ) avoirs des
banques centrales ( .. ,) et categories particulieres de blens melitant egalement d'etre
proteges. Chacune de ces cate9ories, par defin ition, doit Otre consideree com me etant utilisee
ou destinee a etre utilisee a des fins publiques d'ou est exclue toute consideration
commerciale »24 (ital. aj.).
25. Les seules limites a l'lmmunite d'execution absolue ainsi reconnue aux biens relevant
des categories particulieres visees a !'article 21, § 1 er, sont des !ors, comme le confirme
l'article 21, § 2, la renonciation expresse a l'immunite (voy. a cet egard infra, section B),
ou le fait pour l'Etat d'avoir « reserve ou affecte des bi ens a la satisfaction de la demande
qui fait l'objet de [la] procedure »2s.
26. Cette immunite d'execution absolue est accordee, selon le littera c) de l'article 21, § 1 er,
aux « biens de la banque centrale », sans autre distinction. Le contraste est frappant,
notamment, avec le littera a) de J'article 21, § 1 •r, qui, s'agissant des biens des missions
diplomatiques et assimilees, n'accorde la protection absolue qu'aux biens effectivement
« utilises ou destines a @tre utilises dans l'exercice des fonctions de la mission»; et avec
son littera b), qui, a c8te des « biens de caractere militaire », n'accorde la protection
Point 1 du commentaire, « Rapport de la Commission du droit International sur Jes travaux de sa
43c session •• Annuatre de fa Commission du drott international, 1991, vol. 11 (2e partle), p. 61, aussi
disponible sur
bllP:Weaal-uo ore(docs/jndex,asi,?path=,,(lk/publicatlons/yearbooks/frguch/!lc 1991 v2 p2,p
df&lao,i=EFSRAC&referer=btta,;J/le1:aLun,oratUc/puhlicatioostyearhooks/1990 1222,sbtml.
Point 2 du commentaire, Ibid.
Nous comprenons que cette seconde limlte n'est pas en d6bat entre Jes parties dans le cas d'espece.
Elle ne sera done pas dlscutee dans le present avls.
Annex 120
11
absolue qu'aux biens effectivement « utilises ou destines a etre utilises dans l'exercice
de fonctions militaires »26. Le littera c), n'e:xige pas, pour sa part, qu'afin de joulr de la
protection absolue ii soit etabli que !es blens de la banque centrale sont - pour
paraphraser le /ittera a) ou b) - « utilises ou destines a etre utilises dans l'exercice des
fonctions de la banque centrale »21.
27. Si !'Intention des auteurs de la Convention avait ete d'lntroduire une telle restriction
dans le cas des biens des banques centrales egalement, eel a aurait ete fait, en alignant le
libelle du littera c) sur celui du /ittera a) ou b). Dans le cadre des travaux de la CDI, le
Rapporteur special avait certes, a la demande de l'Allemagne (soutenue par l'Australie,
le Qatar et Jes cinq pays nordiques), propose d'ajouter Jes termes « et utilises a des fins
monetaires »ala fin du littero c), mais certains membres de la CD! se sont opposes a une
relle insertion si bien que ces termes n'ontpas ete incl us« faute d'avotr recuellli un appui
suffisant »28• Ce rejet de l'amendement propose confirme, en realite, que le libelle
finalement rerenu, qui est aujourd'hut celui de !'article 21, § 1cr, c), a pour effet
d'immuniser automatiquement tous Jes biens de la banque centrale, et non seulement
ceux qui sont specifiquement utilises a des « fins monetaires ».
28. Une telle protection absolue des biens de la banque centrale etrangere, renforcee par
rapport a l'immunite d'execution generale de l'Etat, peut etre justiflee par le caractere
typiquement souverain des biens en cause29, la banque centrale d'un Etat etant en effet,
de maniere inherente, associee au plus pres a l'exercice des fonctions regaliennes de
26 Voy. ~alement le littera d), n'accordant la protection absolue qu'aux biens falsent partie du
patrimoine culture! de l'Etat ou de ses archives « qui ne sont pas mis ou destines a etre mis en
vente », et le /ittera e), n'accordant la protection absolue qu'aux biens faisant partie d'une
exposition d'objets d'interet scientlfique, culture} ou historlque « qui ne sont pas mis ou destines a
etre mis en vente » {ce que le point 7 du commentalre oppose aux blens « exposes a des fins
industrielles ou commercial es »: « Rapport de la Commission du drolt International sur Jes travaux
de sa 43• session », preclte, p. 62).
27 Contrairement au professeur Relnisch (voy. §§ 98 et 108 de son avis), nous ne pensons des lors pas
qu.e !'ensemble des biens vises dans la llste de !'article 21, § 1 ", soient mis sur un pied d'egalite et
sotent tous assujettis l une presomption refragable : le /ittsra c) est redlgi de manil!re speclfique
en ce qu'il ne requiert, aux fins de l'octroi de l'lmmunlte absolue, que l'etablissement de la qualite
des biens concemes en t.ant que biens d'une banque centrale. Encore une fois, !'on peut partant
douter de la pertinence en l'esp~ce de la jurisprudence exlstante en mati~re de saisies de comptes
bancaires des missions diplomatiques (avis du professeur Relnlsch, §§ 99 ets.).
28 Point S du commentalre du projet d'article 19, « Rapport de la Commission du droit International
sur Jes travaux de sa 43• session», preclte, p. 62; Ch. BROWN et R. O'KEEPE, « Article 21 », in R.
O'KEEFE et Chr.J. TAMS (eds), The United Nations Convention ... , op. cit, p. 337.
29 Voy. A. REINISCH, « European Court Practice Concerning State Immunity from Enforcement
Measures », European Journal of International Law, 2006, p. 826 : « That central bank funds, as
typically non-commercial property, are immune from enforcement measures is reflected in the UN
Convention ».
Annex 120
.
12
l'Etat puisqu'elle remplit un role essentlel dans l'economie nationale30• En ce sens, !es
avoirs de toute nature d'une banque centrale sont, « par definition » comme l'indique la
· CD! (voy. supra, § 24), utilises ou destines a ~tre utilises a des fins publiques non
commerciales, et participent meme a l'exercice des responsabtlites fondamentales de
l'Etat, dans le cadre d'une mission de service public. Par ailleurs, la protection des biens
de la banque centrale s'avere particulierement necessalre lorsque, de maniere
parfaitement legitime - par exemple grace aux revenus tires de !'exploitation de
ressources naturelles nationales -, des reserves sont constituees par l'Etat au-dela des
besoins immediats de sa population : ces reserves detenues par la banque centrale
doivent ~tre mises a l'abri des creanciers. De maniere generale, au demeurant, le lien
indissociable qui unit Jes biens des banques centrales a la souverainete de l'Etat entraine
le risgue que toute saisie ou autre mesure de contrainte sur ces biens « would never be
regarded by the defendant state as a purely judicial matter but would instead be viewed
as an unfriendly act at the state-to-state. level and would therefore have serious
diplomatic and political consequences »31.
29. L'immunite d'execution absolue des biens de la banque centrale, telle que cons;ue a
)'article 21, § 1 ~•, c), de la Convention des Nations Unies - laqueJle n'est, pour rappel, pas
encore en vigueur -, est par ailleurs consacree dans plusieurs legislations nationales en
matiere d'immunites de l'Etat. De telles legislations nationales, on l'a dit, jouent
potentiellement un role important dans la formation et l'identlfication du droit
international coutumier (voy. supra, § 16). En outre, plusieurs des Etats dont la
legislation est mentionnee ci-apres sont en l'occurrence d'importants centres financiers
internationaux, ce qui rend leur pratique d'autant plus pertinente en tant gue pratique
d' « Etats particulierement interesses » (voy. supra, § 16). Sans qu'il s'agisse d'une
recension exhaustive, les lois suivantes peuvent etre cit~es a cet egard :
• Africaμe du Sud - Foreign States Immunities Act 198132, Section 15(3) :
311 Les fonctions d'une banque centrale sont tres diverses (elles peuvent du reste varier dans une
certaine mesure d'une banque centrale a l'autre) et revetent une importance fondamentale pour
l'economie de l'ttat concerne: emission de monna!e, definition de la politlque monetaire (en vue
d'assurer la stabilite des prix, des taux d'interet et des taux de change), supervision du systeme
bancaire national, gestion des reseJVes d'or, gestion des reserves de change, etc. Pour une llste non
exhaustive des« functions or activities» d'une banque centrale, voy. X. YANG, State Immunity in
International Law, Cambridge University Press, 2012, p. 413 et note 270 (p. 669).
31 X. YANG, « Immunity from execution», in A. ORAKHELASHVILI (ed.), Research Handbook on
Jurisdiction and Immunities in International Law, Blgar Publishing, 2015, p. 410.
3z Disponible sur
http; //www.djrco,10v.za/chiefstatelawadyicer/documents /acts /forelimstatesjmmunjtiesact,pdf.
Annex 120
33
34
n
!6
37
13
" Property of the central bank or other monetary authority of a foreign state shall not be
regarded( .. ,) as in use or intended for use for commercial purposes».
■ Argentine - Ley 26.961 (6 aout 2014) 33, art 2:
« Los activos de un Banco Central extranjcro o una autoridad monetaria extranjera gozan
de inmunidad de ejecucion y/o embargo en los Tribunales Argentinos respecto a
cualquler medida coercitiva que pudlera afectar a dlchos actlvos »34•
Tr aduction libre : « Les actifs d'une Banque centrale etrangere ou d'une autorite
monetaire etrangere beneficient de l'immunite d'ext'!cution et/ou de saisie devant les
Tribunaux argentlns a J'egard de toute tnesure de contrainte qui pourrait affecter de tels
actifs ».
• lrulim -Act on Civil Jurisdiction over Foreign States 200935, art 19, § 2 :
« Paragraph 1 of the preceding article shall not apply to Foreign Centra l Bank».
Art 18, § 1 er: « Foreign States shall not be immune from Jurisdiction as respects the
proceedings on enforcement of Judgments against property in use or intended for use by
the Foreign States for other than government non-commercial purpos es ».
En somme, !'exclusion de l'immuni~ d'execution A l'egard des biens affectes a
des fins commerciales n'est pas de mise s'agissant des biens des banques
centrales etrangeres36,
• Pakistan - State lmmunU;y Ordinance 198137, Section 15(4):
•
« Property of a State's central bank or other monetary authority shall not be regarded
( ... ) as In use or intended for use for commercial purposes ».
Repubiigue populalre de Chine (y comprisles Beiions administratiyes speciales
de Hona Kong et de Macao) - Law on Judicial Immunity from Measures of
Constraint for the Property of Foreign Central Banks (25 octobre 2005), art 1er:
« The People's Republic of China grants judicial immunity from measures of constraint
such as the attachment of property and execution to the property of foreign central
Disponible sur bttn; //seryjcjos,infolee,'9b,ar/info)e~Jnternet/anexos/2300QQ·
234999/233217/norma.htm.
Sous r~serve toutefols de r~ciprodte (art. 3).
Reproduit dans Japanese Yearbook of International Law, 2010, pp. 830-837.
Voy. T. NOBUM0RI, « Recent Sovereign Immunity Legislation In Japan from a Perspective of Central
Banks »,Japanese Yearbook of International Law, 2010, pp. 294, 296-297.
Reprodulte dans Documentation concernant les fmmunites Juridictionnelles des £tats et de leurs
biens, Nations Unies, 1982, ST/LEG/SER.B/20, p. 20, disponible sur
http;//lcgal un.onitlr~lslativesecies/documents/untlei50020,pdf.
Annex 120
14
banks, unless the foreign central banks or the governments of their States waive in
written form, or the property Is allocated to be used for the attachment of property and
execution »3a.
• RQyaume-Uni -State Immunity Act 197839, Section 14(4):
« Property of a State's central bank or other monetary authority shall not be regarded
( ... ) as in use or intended for use for commercial purposes».
Le caractere absolu de l'immunite ainsi reconnue est largement confirme dans
la jurisprudence du Royaume-Unj4o.
• Siniapour-State Immunity Act 197941, Section 16(4):
« Property of a State's central bank or other monetary authority shall not be regarded
( ... ) as in use or intended for use for commercial purposes».
30. JI convient de preciser que ces legislations nationales sont, a J'exceptlon de la Joi
chinoise, celles d'Etats qui par ailleurs reconnaissent aujourd'hui que l'immunlte
d'execution generale des Etats etrangers est quanta elle effectivement limltee aux biens
utilises ou destines a ~tre utilises a des fins souveralnes42 • Ce qui montre bien le
caractere specifique du regime des biens de la banque centrale, sur le plan de l'etendue
de l'immunite.11 parait des lors audacieux d'affirmer, comme le fait l'avis du professeur
Reinlsch, que l'etendue de l'immunite d'execution generale de l'Etat serait purement et
simplement transposable a l'lmmunite d'execution de sa banque centrale43 : au
contraire, des Etats prennent le soin de prevoir dans leur droit interne gue l'immunite
d'execution des banques centrales etrangeres est singuliere et dlffere, quant a son
38 Traduction libre de L. ZHU, « State Immunity from Measures of Constraint for the Property of
Foreign Central Banks: The Chinese Perspective», Chinese Journal of International Law, 2007, p.
75. Sous reserve toutefois de reclprocite (art. 3: voy. ibid., p. 80).
39 Disponible sur http:J/www,Je~is)ation.w,uk/u)<i.l(:all 978/33.
40 Voy ainsi Comdex International Ltdv Bank of Zambia (1997) 1 All ER 728 (CA): Barica Carige SpA
Cassa Di Risparmio Di Genova E lmperla v Banco Nacional De Cuba and another [2001) EWHC 562
(Ch); AIC Ltd v Federal Government of Nioeria (2003) EWHC 1357 (QB) ; AIG Capital Partners Inc &
Anr v Kazakhstan [National Bank of Kazakhstan intervening) [2005] EWHC 2239 (Comm): Taurus
Petroleum Ltdv State 011 Marketing Ca of the Ministry of Oil, Republic of Iraq (2015] EWCA Civ 835.
41 Dlsponible sur bttps; //sso,aw;riQY,se;/Act/SIAJ979.
• 2 On l'a dit, II y a I~ une rl!gle desormais etablie du droit international coutumier, et en reallte tous
Jes Etats semblenta present la reconnaitre dans leur legislation, jurisprudence ou pratique lnterne,
la Republlque populalre de Chine etant precisement sur ce plan !'exception la plus nototre : voy.
Hong Kong Court of Final Appeal, Democratic Republic of Congo and Ors v. FG Hemisphere Associates
LLC, 8 juln 2011, FACV 5-7/2010, International Law Reports, vol. 147, p. 376.
43 Avis du professeur Reinlsch, § 78 : « [T]he customary standard of a sovereign purpose also applies
to distinguish between central bank property that enjoys immunity from execution and property
that does not because it serves commercial purposes ».
Annex 120
15
etendue, de l'immunite d'execution generate de l'Etat Cette derniere n'est done pas
transposable en tant que telle a l'immunlte d'execution de la banque centrale.
31. II resulte de ce qui precede que, dans la pratique etatique, attestee par !'adoption de la
Convention des Nations Unies et Jes lois nationales precitees - dont la promulgation
s'etend de 1978 a 2014 et qui relevent d'Etats de diverses regions du monde -, la
tendance observee est done d'accorder une immunite d'execution absolue couvrant en
toutes circonstances /'ensemble des biens des banques centrales etrangeres, quitte a
reputer ceux-ci affectes a des fins souveraines du seul fait qu'ils ont, precisement, la
nature de bi ens d'une banque centrale - et a exclure, contrairement a ce qui se passe pour
l'immunite d'execution generale de I'Etat, qu'une destination commerciale soit a leur
egard demontree. 11 y a par consequent de bonnes raisons de penser que tel est,
aujourd'hui, l'etat du drolt international coutumier s'agissant de l'immunite d'execution
des biens de la banque centrale d'un Etat etranger.
32. A noter que la tend.ance ainsl observee dans la pratique etatique - dont decoule le droit
international coutumier - est encore confirmee et renforcee par l'approche d'autres
Etats, dont soit le legislateur a adopte une legislation ayant pour objectif specifique et
explicite de proteger davantage Jes biens des banques centrales etrangeres (ffit-ce par
le biais de conditions procedurales strictes entourant la saisie de tels bi ens, plus que par
le biais d'une definition absolue de l'etendue de leur imrnunite d'execution), soit !es
cours et tribunaux ont effectlvement reconnu l'immunite d'execution de tels biens. La
pratique de ces autres Etats est specifiquement examinee plus loin dans le present avis
(voy. infra,§§ 34 et s.). Globalement, la tendance fondamentale est en direction d'une
protection jurldique accrue des biens de la banque centrale etrangere.
b) Application dons le cas d'espece
33. Dans ce contexte, !'application des principes dans le cas d'espece ne devrait pas susciter
de difficulte, des !ors qu'il est etabli que !es avoirs saisis sont ceux d'une banque centrale
etrangere, la Banque Markazl. En cette qualite, ces demlers beneficlent en effet, selon le
droit international coutumier, d'une immunite d'execution absolue de plein droit, sans
qu'il faille s'interroger plus avant sur leur affectation - ou sur tout autre parametre dont
l'objet serait de limiter l'etendue de l'lmmunite.
Annex 120
16
2. Une immunlte d'execution couvrant a tout le moins )es biens utilises ou
destines a etre utilises aux fins de la bangue centraie
a) Examen de la pratique internationa/e
34. Les legislations d'un certain nombre d'Etats, s'ecartant comme tell es de celles recensees
dans la rubrique qui precede, prevoient, au profit des biens des banques centrales, un
regime d ' immunite dans une certaine mesure restreinte, etant entendu, primo, qu'il ne
s'agittoutefois pas necessairement d'un regime assimile purement et simplement a celui
de J'immunite d'execution generale de l'Etat, et, secundo, que l' etendue limitee de
l'immunite se voit dans certaines legislations largement contrebalancee par les
conditions procMurales strictes auxquelles la saisie est assujettie (necessite d'une
autorisation prealable du juge, charge de la preuve du caractere saisissable imposee au
creancier, etc.), Les lois suivantes peuvent @tre cltees a cet egard:
• BeI~gue - Code judiciaire, art. 1412quater44 :
« § ] •r, Sous reserve de !'application des dispositions Imperatives d'un instrument
supranational, !es avoirs de toute nature, dont Jes reserves de change, que des banques
centrales etrangeres ou des autorites monetaires internationales detiennent ou gcrent
en Belgique pour leur propre compte ou pour compte de tiers sont insaisissables.
§ 2. Par derogation au § 1 " , le creancier muni d 'un titre executoire peut introduire une
requete aupres du juge des saisies afin de demander l'autorisatlon de saisir Jes avoirs
vises au§ 1 e, a condition qu'II demontre que ceux-ci sont exclusivement affectes a une
activite economique ou commerciale de droitprive ».
• Cana.d.a,-StatelmmunitJrAct198S•s,section 12(4) :
« ( ... ) [P]roperty of a foreign central bank or monetary authority that ls held for its own
account and is not used or intended for a commercial activity is immune from
attachment and execution ».
• Espairoe - Ley Organica 16/2015 sobre prlvilegios e inmunidades de los Estados
extranjeros, las Organizaclones lnternacionales con sede u oficina en Espana y las
Insere par la Loi du 24 juillet 2008 modifiant le Code Judiciaire en vue d'instituer une lmmunite
d'execution a l'egard des avoirs de banques centrales etrangeres et d'autorites monet:aires
lnternationales, Moniteur befse, 14 aollt 2008, aussi disponlble sur
http; J/www.eJustice Just,wov,he ti Pi /Jol,htrn.
45 Disponible sur http; //laws-lois ,jystice,ic,ca/eni:Lacts/S-1.fll.
Annex 120
♦6
47
48
49
17
Conferencias y Reuniones intemacionales celebradas en Espafia (27 octobre
2015)46, art. 20, § 1cr, c):
« De los bienes propiedad del Estado extranjero ( ... ), se consideran en todo caso
especificamente utilizados o destinados a ser utilizados para fines publicos no
comerciales las siguientes: ( ... ) c) Los bienes de) banco central u otra autoridad
monetarla de) Estado que sc destlnen a los fines proplos de dichas instituciones ».
Traduction libre : « Parmi les bi ens propriete de l'Etat Hranger ( ... ), sont dans tous Jes
cas consideres specifiquement comme utilises OU destines a etre utilist?s a des fins
publiques non commercfales Jes biens suivants: ( ... ) c) Les b!ens de la banque centrale
ou autre autorite monetaire de l'Etat qui sont destines aux fins propres desdites
institutions ».
• Etats-Unjs d' Amerlque - Foreign State Immunity Act 197641, Section 161 l(b)(l):
« Notwithstanding the provisions of section 1610 of this chapter, the property of a
foreign state shall be Immune from attachment and from execution, if -
(1) the property is that ofa foreign central bank or monetary authority held for its own
account( ... ) ».
Le rapport legislatif precise que Jes termes « held for its own account» visent les
« funds used or held in connection with central banking activities, as
distinguished from funds used solely to finance the commercial transactions of
other entities or of foreign states »48,
La jurisprudence recente a pour sa part interprete Jes tennes « held for its own
account • comme incluant necessairement Jes biens de la banque centrale
etrangere utilises pour des activites commerciales, jugeant que Jes fonds
deposes sur un compte ouvert au nom de la banque centrale etaient presumes
couverts par l'immunite, et que le creancler devait renverser la presomption en
etablissant que Jes fonds n'etaient pas utilises pour !es fonctions - commerciales
ou non - de la banque centrale•9•
Bolettn Ojiclal de/ Estado, n° 258, 28 octobre 2015, p. 101299, dlsponible sur
bttps• //www.boe.es/boc/dias/2015/10/28/pdfs/BOE-A-201s-11 s4s,pdf.
Disponible sur httJ>s; //wwwJaw,coml!ll,cdu /uscode/text/281.
Voy. X. YANG, State Immunity in International Law, op. cit., pp. 411-412.
United States Court of Appeals for the Second Circuit, NML Capital Ltd v Banco Central de la
RepublicaArgentina, 5 julllet 2011, 652 F.3d 172, 193-194.
Annex 120
50
51
52
53
54
18
• Federation de Russje - Federal Law No. 297-FZ on Jurisdictional Immunities of a
Foreign State and the Property of a Foreign State in the Russian Federation (3
novembre 2015)SO, art. 16, § 1 er, 5) :
« Immunity in respect of measures aimed at securing a claim and immunity in respect of
execution of a court decision shall be enjoyed by the following property of a foreign state
which is under ownership thereof and intended for use ()r being used by It in Its own
name in the activities connected with the exercise of sovereign powers thereof: ( ... ) 5)
property of the central bank or of other supervisory body of the foreign state whose
functions comprise banking supervision »51 •
• ~ - Code mon~taire et financier, art. L. 153.1 s2:
« Ne peuvent etre saisls !es biens de toute nature, notamment les avoirs de reserves de
change, que les banques centrales ou Jes autorltes monetaires etrangeres detlennent ou
gerent pour leur compte ou celui de l'Etat ou des Etats etrangers dont clles relevent.
Par exception aux dispositions du premier alinea, le creancier muni d'un titre executoire
constatant une creance liquide et exigible peut solliciter du juge de !'execution
l'autorisation de poursuivre !'execution forcee dans Jes conditions prevues par la partie
legislative du code des procedures civiles d'executlon s'il etablit que les biens detenus
ou geres pour son propre compte par la banque centralc ou l'autorite monetairc
etrangere fontpartie d'un patrimolne qu'elle affecte a une activite principale relevant du
droit prive ».
35. A ces lois nationales peut etre ajoutee la jurisprudence de la RepubHque fMerale
d' AlleroalP)e. Le Bundesgerichtshof considere que Jes biens d'une banque centrale
etrangere beneficient de l'immunite d'execution s'ils servent a des fins souveraines
(« hoheitlichen Zwecken »)S3, II a juge a cet egard que « [d]ie auf auslandlschen Konten
verwalteten Wahrungsreserven eines Staates dienen hoheitlichen Zwecken »54•
Traduct!on Ubre en notre possession ; texte original russe disponible sur
http;{/ptaYQ,iAY,CYtPCPX)l{ips{Zdoi;bodx=Biod::,:102381335&1:1HTEJJCEAPUX=.
Sous reserve toutefois de reciproclte (art. 4).
Dlsponible sur
bttPs:/{wwwJe~lfcance,!loYY.fc/affichCode,do?cidToxte=LEGJTEXTo0ooo6012026&dateTexte=2
0180212 . Insere par la Loin• 2005-842 du 26 juillet 2005 pour la confiance et la modernisation de
l'economie,Journal ojJicfel de la Republiquefran9aise, n• 173, 27 juillet 2005.
BGH, 4 juillet 2013, n° Vil ZB 63/12, §§ 10-14, disponlble sur
bttps,//dejure,ora{dienste(Yemetzun~trechtsprechuniacerlcht=BGH&Patum=04,07,2Q13&Akt
enzejcheo=YIJ%20ZB%ZQ63%2Fl2, via« bundesgerichtshof.de ».
Ibid., § 13. Voy. egalement § 15 : « Die von elner Zentralbank gehaltenen Gelder eines Staates
dienen auch dazu, die internationale Handlungsfiihigkeit des Staates als Hoheitstriiger zu
gewahrleisten ( ... ), Wahrungsreserven sind sowohl nach natlonaler als auch nach lnternatlonaler
Anschauung maBgeblich fiir die Fihigkeit eines St:aates zur Stiitzung der eJgenen Wiihrung auf den
Devisenmarkten. Sie stehen zur Abwicklung des Zahlungsverkehrs in das Ausland sowie letztlich
Annex 120
19
36. Sur le point ici en cause, !es legislations precitees, qui n'accordent pas a l'immunite
d'execution de la banque centrale une etendue absolue, sont cependant a manier avec
precaution lorsqu' elles emanent d'Etats ayant signe voire ratifie la Convention des
Nations Unies - celle-ci ne fut-elle pas encore en vigueur. La Convention prevoit en effet,
comme explique plus haut, une immunite d'execution absolue au profit de !'ensemble
des biens de la banque centrale (art. 21, § 1•', c)). L'on peut done s'lnterroger sur la
portee et la valeur des dispositions precitees des legislations beige, espagnole, francaise
et russe qui instaurent au contraire un regime d'immunite restreinte, vu que la Belgique
a signe la Convention des Nations Unies en 2005 (et, selon !es informations dont nous
disposons de la part du Service Public Federal Affaires etrangeres, se prepare a la
ratifier), que l'Espagne a depose son instrument d'adhesion en 2011, que la France a
depose son Instrument d'approbatlon en 2011, et que la Federation de Russie l'a signee
en 2006. II y a apparemment une discordance dans la pratique de ces Etats, entre
!'attitude qu'ils adoptent vis-a-vis de la Convention des Nations Unies et celle qu'ils
adoptent dans leur legislation interne - ce qui reduit le potentiel de la pratique de ces
Etats sur le plan de la determination du droit international coutumier55•
37 Par ailleurs, force est de constater que le critere employe par les lois et decisions
judiciaires nationales precltees afin de delimiter les biens de la banque centrale qui sont
immunises et ceux qui ne le sont pas varie d'un Etat a l'autre. Les biens susceptibles de
faire l'objet de mesures de contrainte licites sont en effet definis respectivement com me
ceux que la banque centrale affecte a des fins autres que des « fins souveraines »
(Allemagne), « affecte exclusivement a une activite economique ou commerciale de droit
prive » (Belgique),« utilise ou destine a une activite commerciale » (Canada), affecte a
des fins autres que les « fins propres de la banque centrale » (Espagne), detient
autrement que « pour son propre compte » (Etats-Unls), utilise ou entend utlliser dans
des activites autres que « Jes activites liees a l'exercice des pouvoirs souverains » de
l'Etat etranger (Federation de Russle ), ou « affecte a une activite princtpale relevant du
droit prive » (France). JI y a, entre ces formulations, des nuances lndeniables, qui
manifestement ne sont pas dues au hasard et ont au contraire ete voulues par !es
legislateurs ou juges nationaux respectifs.
Im Ernstfall der gesamten Volkswirtschaft bei einer Verknappung privater Devisenbestinde filr
den Import !ebensnotwendiger Gilter zur Verffigung ( ... ) ».
55 La Draft conclusion 7, § 2, des « Draft conclusions on identification of customary International law »,
precitees, prevoit .\ cet egard ce qui suit: « Where the practice of a particular State varies, the
weight to be given to that practice may be reduced »,
Annex 120
20
38. Dans ce contexte, meme en acceptant qu'il puisse etre soutenu que le droit international
coutumier reconnai't un principe d'immunite d'execution restreinte dans le cas des biens
des banques centrales, il faudrait en revanche admettre que, compte tenu des
divergences sur ce point dans la pratique des Etats (favorables a la these de l'immunite
restreinte ), le droit international coutumier ne fournit pas a ce jour de reponse claire et
bien etablie quant au critere specijique appele a definir !es limites de cette immunite
restreinte.
b} Discussion du crit~re vise dans /'avis du professeur Reinisch
39. Dans son avis, le professeur Reinisch defend l'idee selon laquelle, aux termes du droit
international coutumier, l'immunite d'execution couvre les « central bank assets that
serve public purposes such as 'monetary purposes'» (§ 66), ou encore !es « assets held
for monetary or other sovereign purposes» (§ 110-D).
40. Ce critere n'est cependant pas davantage ex:plicite. En particulier, la notion de « fins
monetaires » («monetary purposes ») n'est pas definie, al ors qu'elle ne parart pas en
tant que telle constituer une notion etabl!e dans le droit des immunites de l'Etat.
41. Plus fondamentalement, la reference a ce critere particulier n'est fondee sur aucune
pratique etatique relative a l'immunite d'execution des banques centrales, et notamment
sur aucune legislation ou jurisprudence nationale en la matiere. A dire vrai, parmi les
lois et decisions judiciaires examinees ci-avant (voy. supra, §§ 34-35), aucune ne fait
allusion a un concept de « fins monetaires ».
42. Ce dernier concept semble avoir ete inspire par !es commentaires de certains Etats a
!'occasion des travaux de la COi ayant conduit a !'adoption de la Convention des Nations
Unies. Comme indique precedemment, l'Allemagne (soutenue par l'Australie, le Qatar et
!es cinq pays nordiques) avait en effet demande au Rapporteur special qu'il propose
d'ajouter Jes termes « et utilises a des fins monetaires » a la fin du littera c) du projet
d'article 19, § 1 er, de la CDI - un ajout qui ne fut finalement pas adopte par la CDI (voy.
supra, § 27). En ce sens, le concept de « fins monetaires » traduirait l'opinio Juris
exprimee a un certain moment par les huit Etats precites. Force est toutefois de
constater que le concept ne semble pas consacre en revanche dans la pratique effective
Annex 120
56
57
SB
21
de ces Etats, la en tout cas ou une telle pratique existe - et est connue - en rapport avec
l'immunite d'execution des banques centrales etrangeres56.
43. En outre, la notion de« fins monetaires » n'est pas utilisee par la Resolution de l'lnstitut
de droit international sur « Les aspects recents de l'immunite de juridiction et
d'execution des Etats >>57, ni par Jes Revised Draft Articles for a Convention on State
Immunity de l'lntemational Law Associotion58• Elle ne paraft pas non plus avancee
comme telle en doctrine.
44. En conclusion, l'on peut done difficilement conclure A !'existence d'une regle de droit
international coutumier consacrant un critere des « fins monetaires » afin de delimiter
les biens immunises et Jes bien non immunises des banques centrales- pour autant que,
fondamentalement, par ellle delimitation s'impose, ce qui n'est le cas que sl !'on n'est pas
pr~t a accepter la these, presentee plus haut, de l'immunite d'execution absolue des
banques centrales.
45. Pour le surplus, l'avis du professeur Reinisch soutient que « the securities entitlements
held by Bank Markazi at Clearstream are non-governmental assets» et« should not be
regarded as immune from execution » vu que « [t]hey stem from principal and interest
payments received from bonds acquired by Bank Markazi, i.e., from commercial
transactions and not from any activities that relate to 'monetary purposes'» (§ 95). Une
telle reference a l'origine des biens en cause, en tant que parametre cense determiner
l'etendue de l'immunite d'execution, est quasiment inconnue de la pratique
internationale, qu'il s'agisse d'ailleurs de l'immunite d'execution generale de l'~tat, de
celle de sa banque centrale ou de celle d'autres categories particulieres de biens : seule
)'affectation ou la destination des blens est a cet egard determinante. Aucune source ou
element pouvant venir au soutien d'un critere tire de l'origine des biens n'est d'ailleurs
avance dans l'avis du professeur Reinisch. Et nulle explication n'est donnee de cette
Alnsi, en Allemagne, voy. BGH, 4 julllet 2013, n° VII ZB 63/12, precite, qui n'y falt pas allusion; en
Australie, voy. Sections 35(1), 30, 32(1) et 32(3)(a) du Foreign States Immunities Act 1985
(disponible sur https://www.leilslatjon,goy.au/DetajJs/C2016C00947). qui n'y font pas plus
allusion: la prat!que eventuelle du Qatar ne nous est pas connue; celle des pays nordiques non
plus mais la Pinlande, la Norv~ge et la Suede sont parties a la Convention des Nations Unles, l'on
peut done supposer qu'elles appliqueraient son prescrlt, or, comme expose plus haut, la
Convention, loin d'introduire un critere restrictif (« fins monetaires », « fins souveraines » ou
autre), prevoit une immuniu absolue au profit de )'ensemble des biens des banques centrales;
enfin, le Danemark et l'lslande ont stgne la Convention des Nations Uni es, l'on peut done supposer
qu'lls n'adopteralent pas une pratlque qui trait directement II son encontre, ne serait-ce qu'en
raison de l'obligatlon de ne pas priver un tralte signe de son objet et de son but en attendant la
ratification (art 18, a), de la Convention de Vienne sur le droit des traites, du 23 mai 1969).
Session de Bale, 2 septembre 1991, Ann. JDJ, vol. 64 (1992-11), p. 389, aussi disponible sur
http;/lwww,idf-lJl.01:atapp/upJoads/201110611221 bal 03 Ctpdf.
Report of the Sixty-Sixth Conference held at Buenos Aires, Argentina - 14 to 20 August 1994, p. 21.
Annex 120
22
soudaine reference a un tel critere, alors que le reste des developpements de l'avis porte
sur un critere d'af]ectation ou de destination des biens. La reference a des« commercial
transactions », dans lesquelles !es avoirs concernes puisent pretendument Jeur source,
semble introduire une confusion avec l'immunite de juridiction, dont l'etendue est en
effet a determiner en fonction de la nature de l'acte en cause. Ce passage de l'avis est
done pour le molns ambigu.
c) Le critere des biens utilises OU destines a ~tre utilises aux fins de la banque
centrale
46. Comme indique ci-avant (voy. supra,§§ 37-38), la pratique des Etats defendant la these
de l'immunite restreinte de la banque centrale connait des divergences quant au critere
specifique definissant Jes biens proteges - ce qui emp~che d'affinner )'existence sur ce
point d'une regle claire et bien etablie du droit international coutumier.
47 Neanmoins, parmi Jes sources - sensu lato - favorables a un princlpe d'immunite
restreinte59, deux textes, qui contiennent d'importantes prises de position doctrinales
revetant une autorite toute particuliere, doivent etre mentionnes, d'autant plus que, sur
)'aspect en cause, ils convergent de maniere remarquable.
48. JI s'agit, d'une part, de la Resolution precitee de 1991 de l'lnstitut de droit international
sur « Les aspects recents de l'immunite de juridiction et d'execution des ~tats », dont
!'article 4, § 2, c ), se lit comme suit:
« ( ... ) [L]es categories suivantes de biens d'un Etat benefident de l'immunite d'execution:
( ... )
c) Jes biens de la Banque centrale ou de l'autorite monetaire de 1•atat utilises pour leurs
besoins propres ou dont )'utilisation a ces fins est prevue ».
Texte anglais original faisant fol :
« The following categories of property of a State (c .. ) are immune from measures of
constraint :
( ... )
c) property of the central bank or monetary authority of the State in use or set aside for
use for the purposes of the central bank or monetary authority ».
sq Ou en tout cas qui ne se satisfont pas purement et simplement de la quallte de biens de la banque
centrale pour accorder aux biens concern6s le benefice de l'immunite d' execution ( com me dans la
these de l'immunite d'execution absolue de la banque centrale).
Annex 120
60
23
49. Il s'aglt, d'autre part, des Revised Draft Articles for a Convention on State Immunity
adoptes en 1994 par l'lnternational Law Association, precites, dont !'article VIII.C.3 se lit
commesuit:
« Attachment or execution shall not be permitted if:
( ... )
3. The property is that of a State central bank held by it for central banking purposes ».
50. Dans ces deux textes, depourvus de valeur contraignante en eux-memes mais qui
vehiculent une doctrine particulierement autorisee, le critere commun mis en evidence
est celui des biens utilises ou destines a etre utilises aux fins de la banque centrale
(« purposes of the central bank», « central banking purposes» )60• Ce qui para1t sense
car ii ya sans doute la une exigence minimale : la banque centrale doit en effet pouvolr
compter sur la disponibilite - et done la non-saisissabilite - de !'ensemble des biens
qu'elle utilise ou entend utiliser en vue de la realisation de ses fins propres, a defaut de
quoi elle se trouverait dans l'impossibili~ de remplir sa mission de service public
etatique.
51. Un critere identique a du reste ete choisi recemment par le legislateur espagnol : l'article
20, § t••, c), de la Ley Oryanica 16/2015 se refere aux« bienes del banco central u otra
autoridad monetarla de! Estado que se destinen a los fines propios de dichas
instituciones » (voy. supra, § 34) (traduction libre: « biens de la banque centrale ou
autre autorite monetalre de l'Etat qui sont destines aux fins propres desdites
institutions »).
52. C'est l!galement A un tel critere que reference a ete faite deja a l'epoque des travaux
parlementaires relatifs au Foreign State Immunity Act 1976 (FSIA) aux Etats-Unis. La
Section 1611(b)(l) du FSIA prevoit ce qui suit :
« Notwithstanding the provisions of section 1610 of this chapter, the property of a foreign
state shall be immune from attachment and from execution, if-
(1) the property is that of a foreign central bank or monetary authority held for its own
account( ... ) "·
Comme indique precedemment. le rapport legislatif precise que Jes termes « held for its
own account » visent Jes ~ funds used or held in connection with central banking
Dans la R6solution de l'lnstltut, Ja premi~re traduction de « purposes » par « besolns » est sans
doute molns heureuse que la seconde, traduisant cette fois par« fins "·
Annex 120
24
activities », et la jurisprudence emploie le test des « central banking functions »61 (voy.
supra,§ 34).
53. Si, plutOt qu'une immunite d'execution absolue, c'est une immunite dans une certaine
mesure restreinte qui doit etre reconnue au profit des biens de la banque centrale
etrangere, les elements qui precedent tendent a montrer que les biens couverts par
l'immunite sont ceux qui sont utilises OU destines a etre utilisl!s aux fins de la banque
centrale - ce qui est plus large que !'affectation aux seules « fins monetaires »
poursuivies par celle-ci62
d) Charge de la preuve
54. Ce n'est pas a la banque centrale de demontrer que les biens en cause sont d'une nature
telle que l'immunite d'execution est applicable - a savoir, demontrer que ces biens sont
utilises OU destines a etre utilises aux fins de la banque centrale. C'est, a !'inverse, au
creancier qu'il revient d'etablir que Jes biens qu'il entend saisir sont d'une nature telle
qu'ils ne sont pas couverts par l'immunite - a savoir, etablir que ces biens sont utilises
OU destines a etre utilises a des fins etran9~res aux fins de la banque centrale.
55. Cette regle relative a la charge de la preuve est expllcitement consacree dans des
legislations nationales et des decisions de tribunaux internes portant specifiquement
sur l'immunite d'execution de banques centrales etrangeres63• Le critere employe dans
ces legislations et decisions afin de delimiter l'immunite peut ne pas !tre, en lui-m@me,
celui, suggere plus haut, de )'affectation« aux fins de la banque centrale »; ce qui lmporte
ici est toutefois la seule question de la charge de la preuve dans la mise en reuvre du
critere, quelle que soit l'exacte definition de ce dernler.
56. Ainsi, en France, l'article L. 153-1, allnea 2, du Code monetaire et financier prevolt, pour
rappel, que le creancier peut solliciter du juge de !'execution l'autorisation de saislr « s'il
etablit » que Jes biens de la banque centrale font partie d'un patrimoine qu'elle affecte a
une activite principale relevant du droit prive. La Cour de cassation, dans un arr~t du 11
61 United States Court of Appeals for the Second Circllit, NML Capital Ltd v Banco Central de la
Republica Argentina, 5 julllet 2011, 652 F.3d 172, 195.
62 Sur !es fonctions d'une banque centrale, voy. supra, § 28.
63 Une tres abondante jurisprudence lnteme (voy. par ex. Cass. fr., NML Capital Ltd c. Rdpublique
arg,mtine, 28 septembre 2011, n° 09-72057), ainsi que certaines dispositions legislatives (voy. par
el(. art.1412quinquies, § 2, in ltmine, du Code judiciatre beige), vont dans le meme sens s'agissant
de l'immunite d'execution des comptes bancaires des missions dlplomatiques. Elles ne dolvent
toutefois pas etre examinees lei compte tenu de la specificiM de l'immunlte des banques centrales
sur le plan de l'etendue de l'tmmunite (voy. supra,§ 22).
Annex 120
64
65
66
67
68
69
25
janvier 201864, a du reste confirme la decision de la Cour d'appel de Versailles qui avait
juge a cet egard que « si !'article L. 153-1 met a la charge du creancier une preuve
difficile, quant a la nature des fonds et leur affectation, ii n'instaure pas une preuve
impossible, et des lors n'apporte pas une restriction disproportionnee a !'article 6 de la
Convention europeenne des droits de !'Homme »6s.
57 En Belgique, l'article 1412quoter, § 2, du Code judiciaire prevoit. pour rappel, que le
creancier peut demander au juge des salsies l'autorisation de saisir « a condition qu'il
demontre » que Jes avoirs de la banque centrale sont exclusivement affectes a une
activiM economique ou commerciale de droit prive. Appliquant cette disposition, la Cour
d'appel de Bruxelles a rejete un appel contre une ordonnance par laquelle le juge des
saisies avait refuse d'accorder l'autorisation de saisir Jes fonds deposes sur un compte
en banque ouvert au nom d'une banque centrale etrangere, au motif que l'appelant- le
creancier - n'avait pas apporte « une preuve suffisante de !'affectation exclusive a une
activite commerciale ou economique des fonds vises »66•
58. En outre, )'article 1412quinquies du Code judiclaire belge67 instaure une insaisissabilite
des « biens appartenant a une puissance etrangere >> (§ 1 er), y compris tout
« demembrement » de cette derniere (§ 3, al. l "•)611• Les blens des banques centrales
etrangeres, vises specifiquement par !'article 1412quater, relevent done ega!ement du
champ d'application de !'article 1412quinquies69. Celui-ci, sur le modele de )'article
1412quater, prevoit que le cr~ancier peut demander au juge des saisies l'autorisation de
saisir « a condition qu'il demontre » que, entre autres, les biens sont specifiquement
utilises ou destines a etre utilises autrement qu'a des fins de service public non
commerclales (§ 2, 3°). La Cour constltutionnelle de Belgique, dans un arret du 27 avrll
2017, a juge qu'il n'y avaitla aucun « renversement injustifie de la charge de la preuve »,
Cass. fr., Novoparc Healthcare International Ud c. Central Bank of Iraq, 11 janvier 2018, n° 16·
10.661, dlsponible sur https;/lwww.doctrjne.fr/.d/CASS/201B/C36A1247B7B9DF9H7379C.
Versailles (16• ch.), 1« octobre 2015, La Semaine Juridique, Ed. gen. n° 15, 11 avril 2016, p. 442.
Bruxelles (17• ch.), 19 septembre 2011,Journal des trlbunaux, 2012, p. 95,
lnsere par la Loi du 23 aotlt 2015 inserant dans le Code judlclalre un article 1412quinqui11s
reglssant la satsle de biens appartenant a une pulssance etrangere ou i\ une organisation
supranationale ou Internationale de droit public, Moniteur beige, 3 septembre 2015, disponlble sur
htt;p;f/www,cjustjccjustfgov.be/qp Joi/chani:c !1:,pl?!aoeua==fr&la;:F&tabJe name;:Joi&&o=-20
15082313 (ignorer la note ajoutee par l'ed1teur concernant l'arr~t de la Cour constitutionnelle,
cette note n'iHant pas correcte).
A savoir « un organlsme qui aglt pour compte d'une puissance etrangere ou d'une de ses entites
federees A la condition que cet organlsme dispose d'une parcelle de souverainete » {art 1412ter, §
3, al. 2, du Code judicialre, auquel renvoie l'art 1412quinquies, § 3, al. 2).
Fr. OOPAGNE, « L'immunite de saisie des biens de l'Etat etranger et de !'organisation
Internationale: notes sur !'article 1412quinqulu du Code Judlclalre »,Journal des trlbunaux, 2016,
p. 59.
Annex 120
70
26
et a refuse de considerer que « la preuve pesant sur Jes creanciers serait impossible a
administrer ». « Ainsi par exemple », selon la Cour, « la preuve de l'utilisation de biens,
de nature immoblliere ou mobiliere, a des fins etrangeres au service public ne paratt pas
impossible a rapporter dans tous Jes cas ». La Cour en a conclu qu'il n'y avait, de ce chef
en tout cas, aucune violation de !'article 6 de la Convention europeenne des droits de
l'homme qui result.ait de !'article 1412quinquies70•
59. L'avis du professeur Reinisch lui-meme, qui defend l'idee d'une immunite restreinte des
biens des banques centrales, reconnait que ceux-ci beneficient neanmoins d'une
presomption refragable d'affectation a des fins monetaires ou autres fins publiques (§§
66, 110-1 et 110-J) - !'affectation qui, dans l'avis du professeur Reinisch, est presentee
comme justifiant l'immunite. C'est done loglquement qu'il indique que la preuve a
rapporter - afin de renverser ladite presomption - consiste en« evidence demonstrating
that [Bank Markazi's) funds or parts of them in fact do not serve sovereign purposes»
(§ 109). La charge de la preuve incombe done bien en tout et.at de cause au creancier.
Nous pensons simplement, comme explique ci-avant, que l'objet precis de cette preuve
est plutot la demonstration de ce que les avoirs en cause sont utilises ou destines a etre
utilises a des fins etrangeres aux fins de la banque centrale.
e) Application dans le cos d'espece
60. Les avoirs saisis dans le cas d'espece font partie des reserves de la Banque Markazi en
sa qualite de banque centrale de la Republique islamique d'Iran.
61. Com me toutes les reserves d'une banque centrale, ces avoirs sont utilises afin d'instiller
la conflance sur les marches financiers et de promouvoir la stabilite des prix. Ces
objectifs figurent parml les objectifs essentiels et priorit.aires de la Banque Markazi en
t.ant que banque centrale. Les fins de toute banque centrale comprennent en effet la
condulte d'une politique monetaire en vue de la promotion des objectifs economiques
nationaux de l'Etat conceme (voy. supra,§ 28),
62. ll peut done sans risque ~tre avance en l'espece que les avoirs en cause sont
effectivement et exclusivement utilises, ou' a tout le moins destines a etre utilises, aux
fins de la banque centrale, et sont done couverts par l'immunite d'execution.
C. const b., NML Capital Ltd et Yukos Universal Limit.ed, 27 avril 2017, n° 48/2017, §§ B.25.2, B.27.1,
B.2 7 .2 et B.28, disponible sur www.const-court.be.
Annex 120
71
72
27
63. A dire vrai, dans le contexte ici en cause, Jes avoirs saisis paraissent meme etre affectes
en realite a des fins monetaires OU autres fins souveraines, au sens du critere suggere
dans l'avis du professeur Reinisch.
64. Jls ne sont certainement pas affectes en tout cos a des fins economiques ou commerciales
de droit prive. JI ya lieu de relever en ce sens l'arret de la Cour d'appel de Paris du 10
mars 2008, dans une affaire concernant la saisie conservatoire de comptes bancalres de
la Banque Markazi en France71 : l'arret a considere que Jes creanciers n'avaient pas
demontre que les fonds en cause faisaient << partie d'un patrimoine qu[e la banque
centrale] affecte a une activite principale relevant du drolt prive », au sens de )'article L.
153-1 du Code monetaire et financier fran~ais (voy.supra, § 34).
65. A cet egard, ii convient d'eviter une confusion entre, d'une part, les fins de la banque
centrale, qui seules sont determinantes pour apprecier l'immunite d'execution, et,
d'autre part, les modalites concretes selon Jesquelles la banque centrale a9it en vue de
la realisation de ces fins, qui pour leur part ne concourent pas a !'appreciation de
l'immunite d'execution. Ainsi, ii n'est pas conteste qu'une banque centrale, comme
d'ailleurs d'autres entites exer~ant des fonctions de puissance publique, peut a certains
egards agir comme une entreprise privee, c'est-a-dire accomplir des actes et recourir a
des form es ou instruments juridiques accessibles dans le« commerce » de droit prive. JI
ne s'ensuit evidemment pas que Jes avoirs de la banque centrale perdent alors leur
affectation specifique aux fins - proprement publtques - de la banque centrale. De
maniilre generale, d'ailleurs, l'immunite d'execution de J'Etat en droit international
depend des fins auxquelles le bien est affecte, par opposition a l'immunite de juridiction
de l'Etat qui depend de la nature de l'acte en causen.
66. En tout etat de cause, c'est aux demandeurs dans le cas d'espece qu 'il appartient de
demontrer que Jes biens saisis seralent utilises OU destines a etre utilises a des fins
etran~res aux fins de la Banque Markazi en tant que banque centrale, conformement a
ce qui a ete dltplushautquanta la charge de la preuve. Ce n'est pas a la Banque Markazl
d'etablir qu'elle se trouve dans !es conditions pour beneficier de l'immunite d'execution,
ses biens beneficlant en effet d'une presomption d'affectation lui valant le benefice de
l' immunite.
Paris (1• ch.), 10 mars 2008, n° 08/01119, disponible sur
bttps;//www,doctrtne.fr/d/CA/Pacjs/2008/SK1P12JBPD46A4A1C3l;:119.
Voy. gen. X. YANG, State Immunity in International Law, op. cit., pp. 392-394.
Annex 120
73
28
6 7. Pour le surplus, comme indique precedemment, l'origine des biens saisis est lndifferente
(voy. supra,§ 45). Pour autant que de besoin, cependant, ii convient de souligner que Jes
avoirs saisis dans le cas d' espece ont ete acquis par la Banque Markazi grace aux revenus
generes par la vente, par la National Iranian Oil Company contr6lee par le Ministere
iranien du Petrole, de petrole iranien - a savoir une ressource naturelle nationale sur
laquelle la Republique islamique d'lran jouit bien evidemment d'une pleine et entiere
« souverainete permanente », et dont elle decide done souverainement et librement de
!'usage« dans l'interet du developpement national et du bien-etre de la population »73•
II n'y a done en tout etat de cause, a l'origine des avoirs saisis en l'espece, aucune
transaction commerciale de droit prive, mais tout au contraire une operation consistant
en l'exercice, par un Etat souverain, et dans le cadre meme de cette souverainete, du
droit de libre disposition qu'il detientsur ses ressources naturelles nationales.
B. La renonciation a l'immunite d'execution
1. Principes a.pp)icables
68. 11 n'est pas conteste que l'Etat etranger, y compris sa banque centrale, peut renoncer a
son immunite d'execution, rendant par la-meme licites des mesures de contrainte sur
ses biens couverts par l'immunite ( dans Jes limites eventuelles fixees par la renonciation
elle-meme).
69. Selon le droit international coutumier en vigueur, cette renonciation doit
imperativement etre expresse, ce qui signitle que l'Etat concerne doit avoir
explicitement et cla!rement manifeste son consentement a ce que des saisies ou autres
mesures de contrainte soient pratiquees sur ses biens jouissant en principe de
l'immunite d'execution. La renonciation ne peut done etre simplement implicite, c'est-a•
dire deduite du comportement plus general de !'Et.at concerne. A defaut d'etre expresse,
la renondation n'est pas juridiquement valable, et ne peut partant produ!re son effet
propre de justification des mesures de contrainte. Le juge du for qui donnerait effet a
une renonciation alleguee qui ne serait pas expresse, et qui sur cette base autoriserait
ou validerait une mesure de contrainte sur des biens immunises, meconnaftrait
l'immunite d'execution de l'Etat etranger et engagerait de ce fait la responsabilite
Internationale de l'Etat dont ii est l'organe.
Voy. Resolution 1803 (XVIJ) de l'Assemblee generale des Nations Unies du 14 decembre 1962
(« Souverainete permanente sur Jes ressources naturelles »), spec. § ter, Dlsponible sur
bttp; /fwww.un,org/fr/documentslview doc.asp?s,ymbo!=A/RES/1803()CVU).
Annex 120
74
75
76
77
78
29
70. ))exigence d'une renonciation expresse a J'immunite d'execution en tant que regle de
droit international coutumier a, fondamentalement, ete reconnuc par la Cour
internationale de Justice dans l'arret precite Allemag11e c. /talie :
« [l]I cxiste au minimum unc condition qui doit ~tre remplic pour qu ' une mesure de
contrainte puisse etre prise a l'egard d'un bien appartenant a un Etat etranger: que le bien
en cause soit ut!lise pour les besoins d'une activite ne poursuivant pas des fins de service
public non commcrciales, ou que l'Etat proprietaire ait expressement consenti a
!'application d'une mesure de contralnte, ou encore que cet Etat ait reserve le bien en
cause a la satisfaction d'une demande en justice 1174•
Appliquant cette regle, la Cour a juge ce qui suit :
« [LJ'Allemagne n'a d'aucune man I ere exprassement consenti a l'application d'une mesure
telle que l'hypotheque en cause »75.
71. Ce prononce de la CIJ se situe sur le plan du droit international coutumier. La Cour etait
en effet, pour rappel, appelee a se prononcer sur la base de ce drolt76.
72. Un examen de la pratique Internationale - au-dela m@me des quatre decisions de cours
supremes nationales auxquelles la Cour fait reference77 - confirme au demeurant sans
ambiguite que la regle de droit international coutumier identiflee par la CJ] est en effet
solidement ancree dans la pratfque effective des Etats dans leur immense majorite, et
correspond a leur opinio juris.
73. En premier lieu, )'exigence d'une renonciation expresse a l'immunite d'execution est
explicitement consacree dans Jes principaux instruments internationaux multilateraux
regissant la matiere :
• Convention des Nations Unies78, art. 19, a) :
« Aucune mesure de contrainte posterI~ure au jugement. telle que saisle, saisle-arri!t ou
saisie-exkution, ne peut ~tre prise contre des biens d'un Etat en relation avec une
procedure intentee devant un tribunal d'un autre Etat excepte si et dans la mesure oil :
a) L'Etat a expressement consenti a !'application de telles mesures dans Jes termes
indiques: I) Par un accord international ; ii) Parune convention d'arbitrage ou un contrat
P. 148, § 118 (ital. aJ.). L'avls du professeur Relntsch ne cite ce passage determinant de l'arrit qu'en
note de bas de page n° 7.
P. 148, § 119 (ital. aj.).
Voy. p. 122, §§ 54-55, de l'arr~t.
P. 148,§118.
Sur son statut et sa prise en compte dans le cas d'espece, voy. supra, §§ 17-19.
Annex 120
79
80
81
30
ecrit; ou iii) Par une declaration devant le tribunal ou une communication ecrite faite
apr.!!s la survenance du diff-erend entre Jes parties »1~.
• Convention europeenne sur l'immunite des Etats du 16 mai 197280, art 23 :
« II ne peut etre procede sur le territoire d'un Etat Contractant ni a !'execution forcee, ni
a une mesure conservatoire sur Jes biens d'un autre Etat Contractant, sauf dans lcs cas
et dans la mesure ou celui-ci ya expressement consenti par ecrit ».
• Declaration sur Jes immunites juridictionnelles des biens culturels appartenant
a un Etat - qui pour rappel prevoit explicitement que ses dispositions sont « [ e ]n
conformite avec le droit international coutumier tel que codifie par la
Convention r des Nations Uni es] »BJ :
« [L]es blens d'un Etat faisant partic de son patrimoine culture! ou de ses archives ou
faisant partie d'unc exposition d'objets d'interet scientifiquc, culture! ou historique qui
ne sont pas mis ou destines a etre mis en vente ne peuvent etre soumis a aucune mesure
de contrainte telle que saisie, saisie-arret ou saisie-execution, dans un autrc Etat; et
par consequent, de telles mesures de contrainte peuvent seulement etre prises si les
autorites nationalcs competentes de l'Etat proprietaire des biens renonccnt
expressement A l'immunlte pour des biens dairement specifies, ou si Jes biens ont ete
reserves ou affectes par cet Etat a la satisfaction de la demande qui fait l'objet de la
procedure concernee ».
74. En deuxieme lieu, )'exigence d'une renonciation expresse a l'immunit~ d'execution est
consacree dans la tres grande majorit~ des le~slations nationales existant dans le
domaine des immunites de l'Etat:
• Afrjgue du Sud - Foreign States Immunities Act 1981, Section 14(2) :
« Subsection (l) [la regle generale d'immunite d'execution] shall not prevent the giving
of any relief or the issue of any process with the written consent of the foreign state
concerned, and any such consent, which may be contained in a prior agreement, may be
expressed so as to apply to a limited extent or generally, but a mere waiver of a foreign
state's immunity from the jurisdiction of the courts of the Republic shall not be regarded
as a consent for the purposes of this subsection ».
L'art. 18, a), prevolt mutatis mutandfs la meme regle s'agissant des mesures de contrainte
antlirieures au jugement.
STE n° 074, ratlflee par le Grand-Duche de Luxembourg le 11 decembre 1986, disponible sur
https:{/www.c;oc.jnt/fr/wcb/cunyentjons/fu))-Hst/-/conyentions/nns/09000D16800730da. En
tant que telle, cette Convention n'est blen sOr pas applicable dans le cas d'espece, la Republlque
islamique d'lran n'y ~tant pas partie.
Voy. supra,§ 19,
Annex 120
82
B3
84
85
86
31
• Australie - Foreign States Immunities Act l 98S8 2, Section 31 (1) ·
« A foreign State may at any time by agreement waive the application of section 30 [la
reg!e generale d'immunite d'executionJ in relation to property, but it shall not be taken
to have done so by reason only that it has submitted to the jurisdiction ».
Les travaux preparatoires ne laissent aucun doute sur le fait que !'intention du
legislateur etait d'exlger une renonciatlon expresse :
« Unlike immunity from jurisdiction, there should be no scope for waiver of immunity
from execution arising by implication »113•
• Belgique - Code Judicialre, art. 1412quinqules, § 2, 1 °114 :
« [L]e creander ( ... ) peut introdufre une requ~te aupres du juge des saisies afin de
demander l'autorisation de saislr Jes avoirs d'une pulssance etrangere ( ... ) ii condition
qu'il demontrc qu'une des conditions suivantes est remplie: 1 ° si la pulssance etrangere
a expressement ( ... ) consenti a la saisissabilite de ce blen ».
• Federation de Russje - Federal Law No. 297-FZ on Jurisdictional Immunities of a
Forei9n State and the Property of a Foreign State in the Russian Federation (3
novembre 2015), art 15, 1) :
« A foreign state shall enjoy immunity In respect of execution of a court decision. except
if: 1) the foreign state has explicitly expressed its consent to taking the appropriate
measures( .. ,) »as.
• ~ - Code des procedures civiles d'execution, art L. 111-1-2, al. 1••, 1 °)86 :
« Des mesures conservat.olres ou des mesures d'executlon forcee vlsant un bien
appartenant A un Etat etranger ne peuvent etre autorlsees par le juge que sf l'une des
conditions suivantes est remplie : 1° L'Etat concerne a expressement consenti a
l'appllcation d'une telle mesure ».
Disponible sur https:J/www,lei:islatjon,i:ov,ay /Details /C2016C00947,
Voy, X. YANG, State Immunity in International Low, op. cit., pp. 391-392 et note 186 (p. 663).
Qui pour rappel couvre Jes avolrs des banques centrales blen que ceux-cl solent par allleurs vises
speclfiquement par !'article 1412quater (lequel n'evoque pas pour sa part la question de Ia
renonciation).
Voy. egalement, dans le m~me sens, art. 14, 1), s'agissant des « measures aimed at securing a
claim».
Dlsponible sur
httos:{lwww.legifrance,iiouy.fr/affichcode,do?cidTexte=LEGJTEXT000025024948. lnsere par la
Loin• 2016-1691 du 9 decembre 2016 relative a Ia transparence, A la Jutte contre la corruption et
a la modernisation de la vie economique, dlte « Loi Sapin 2 », Journal officiel de Ia Republique
Jran~aise, n° 287, 10 decembre 2016. Voy. gen. B. TRANCHANT, « L"immunlte etatique et
I'execution en France des sentences arbitrales lntematlonales. Observations suite a l'entree en
vigueur de la loi 'Sapin 2' », Revue genera le de droit international public, 2017, pp. 837-862.
Annex 120
32
Voy. aussi art L. 111-1-3 : « Des mesures conservatoires ou des mesures d'execution
forcee ne peuvent etre mises en reuvre sur les biens, y compris Jes comptes bancaires,
utilises ou destines a etre utilises dans l'exerclcc des fonctions de la mission
diplomat!que des Etats etrangers ou de leurs postes consulaires, de !curs missions
speciales ou de !curs missions aupres des organisations intemationales qu'en cas de
renonciation expresse et spcklale des Etats concernes ».
• ).ru2Qn -Act on Civil Jurisdiction over Foreign States 2009, art 17, § 1 •r:
« Foreign States shall not be Immune from Jurisdiction as respects the proceedings on
provisional measures or enforcement of Judgments against their property if they have
expressly consented to the taking of such measures ( ... ) ».
• Pakistan - State Immunity Ordinance 1981, Section 14(3) :
« Subsection (2) [la regle generale d'lmmunite d'execution] does not prevent the giving
of any relief or the issue of any process with the written consent of the State concerned;
and any such consent, which may be contained In a prior agreement, may be expressed
so as to apply to a limited extent or generally: Provided that a provision merely
submitting to the jurisdiction of the courts shall not be deemed to be a consent for the
purposes of this subsection».
• RepubHque populaire de Chine (y compris Jes Be~ions admjnistratives specia)es
de Hon& Kone: et de Macao) - Law on Judicial Immunity from Measures of
Constraint for the Property of Foreign Central Banks (25 octobre 2005), art. 1er:
•
« The People's Republic of China grants judicial Immunity from measures of constraint
such as the attachment of property and execution to the property of foreign central
banks, unless the foreign central banks or the governments of their States waive In
written form, or the property is allocated to be used for the attachment of property and
execution ».
Royaume-Uni -State Immunity Act 1978, Section 13(3), et
Sinppour- State Immunity Act 1979, Section 15(3):
« Subsection (2) above [la regle generale d'immuniM d'execution) does not prevent the
giving of any relief or the Issue of any process with the written consent of the State
concerned; and any such consent (which may be contained in a prior agreement) may be
expressed so as to apply to a limited extent or generally; but a provision merely
submitting to the jurisdiction of the courts is not to be regarded as a consent for the
purposes of this subsection».
Annex 120
33
75. En Espagne, si la Ley Organica 16/2015, precitee, envisage une renonciation implicite a
)'article 17, § 1 Qr, elle precise aussitOt en son article 18, § 2, que la seule hypothese de
renonciation implicite en realite admise est celle de l'Btat ayant reserve des biens a la
satisfaction de la demande objet de la procedure87 • Quant a la Ley 26.961 argentine,
precitee, elle n'evoque pas la question de la renonciation a l'immunite.
76. L'avis du professeur Reinisch (§ 31) se refere a la legislation canadienne et a la
legislation americaine, presentees comme autorisant une renonciation implicite. Ces
legislations sont cependant Iargement minoritaires sur ce point, en comparaison des
legislations mentionnees ci-avant Plus fondamentalement, ii convient de noter qu'elles
prevoient en tout etat de cause toutes deux, en derogation a. leur regle glmerale
prevoyant effectivement la possibilite d'une renonciation implicite, une regle speciale
concernant l'immunite d'execution des banques centrales etrangeres, et cette regle
speciale, qui n'est pas mentionnee dans l'avis du professeur Reinisch, exige be/.et bien
une renonciation expresse:
• ~ -State lmmunizy Act 1982, Section 12(5):
« The immunity conferred on property of a foreign central bank or monetary authority
by subsection (4) does not apply where the bank, authority or Its parent foreign
government has explicitly waived the immunity ( ... ) ».
• Etat5-Unis - Forei9n State Jmmunizy Act 1976, Section 1611(b)(l) :
« Notwithstanding the provisions of sectio.n 1610 of this chapter, the property of a
foreign state shall be immune from attachment and from execution, If - (1) the property
is that of a foreign central bank or monetary authority held for Its own account, unless
such bank or authority, or its parent foreign government, has explicitly waived its
immunity from attachment in aid of execution, or from execution ( ... ) ».
87 Art 17, § 1 er : « Los 6rganos Jurlsdicc:ionales espaftoles se abstendran de adoptar medldas de
ejecuci6n u otras medidas coercitlvas contra bienes de! Estado extranjero, tanto antes coma
despues de la resoluci6n judicial, salvo que dicho Estado lo haya consentldo, de manera expresa o
tacita ». Traduction llbre: « Les organes juridictionnels espagnols s'abstiendront d'adopter des
mesures d'execution ou d'autres mesures de contrainte contre Jes biens de l':Etat etranger, aussi
bien avant qu'apr~ le reglement Judlcialre, sauf IA ou un tel atat y a consenti, de man I ere expresse
OU tacite».
Art. 18, § 2 : « Se considera que exfste consentlmlento tacito a los efectos del articulo anterior
unlcamente cuando el Estado extranjero ha asignado bienes de su propiedad a la satisfacci6n de la
demanda objeto del proceso ». Traduction libre : « II est considere qu'il existe un consentement
tacite aux fins du pricedent article uniquement lorsque l'ttat etranger a affecte des blens Jul
appartenant a la satisfaction de la demande objet de la procedure ».
Annex 120
34
La jurisprudence confirme d'ailleurs que c'est blen cett.e re gle speciale de la
Section 161 l(b)(l) qu'il ya lieu d'appliquer en matiere d'immunite d'execution
des banques centralesoo.
77. En troisleme lieu. l'exigence d'une renonciation expresse a l'immunite d'execution est
largement consacree dans la jurisprudence des cours et tribunaux jnternes. Pour se
limiter aux decisions de cours supremes, et a la jurisprudence recente, les arrets
suivants peuvent etre cites, qui tous trois ont juge que la Convention des Nations Unies,
en tantqu'elle exigeait une renonciation expresse (art. 19, c)), refletait une r egle de droit
international coutumier :
• Cour constitutionnelle de Belgique, NML Capital Ltd et Yukos Universal Limited,
27 avril 2017, n° 48/2017, §§ B.13.389 (jugeant d'ailleurs que !'exigence d'une
renonciation expresse n'emporte pas de violation du droit d'acces au juge
protege par !'article 6 de la Convention europeenne des droits de l'homme : §§
B.13.1, B.18.1 et B.28);
• Cour supreme des Pays-Bas (Hoge Raad), Morning Star International
Corporation c. Republique du Gabon et Etat neerlandais, 30 septembre 2016, n°
16/01153, § 3.4.690;
• Cour de cassation de France, NML Capital c. Republique argentine, 28 mars 2013,
n°• 10-25.938, 11-10.450 et 11-13.32391 Ougeant d'ailleurs, dans Jes deuxieme
ettroisieme arrets, que )'exigence d'une renonciation expresse n'emporte pas de
violation du droit d'acces au juge protege par !'article 6 de la Convention
europeenne des droits de l'homme).
78. II convient sans doute d'accorder plus de poids a ces trois decisions recentes de cours
supremes qu'aux deux decisions de 1980 citees dans l'avis du professeur Reinisch en
88 United States Court of Appeals for the Second Circuit NML Capital Ltd v Banco Central de lo
Republica Argentina, 5 juillet 2011, 652 F.3d 172, 190 : « [T]he analysis of the immunity of a foreign
central bank's property begins withs 1611(b)(1) ».
89 Dlsponible sur www.const-court.be.
90 Dlsponible sur
https: //uftspraken,rechtSlJraak.n I {inzlendocument?id=ECW • NL:HR:2016·2236&showbutton=tru
e&keyword=(Ulbon.
91 Journal du droit international, 2013, p. 899, aussi dlsponibles respectivement sur:
- bttps;t/www.tei=ifcancc,iwuv.fr/aftjchJurlfudi,do?oldActton=rechJurlJudi&ldText…\lBJIEXT
0000212s16ot&fastRegJd=1za1s211 SJ&fastPosc.3
- htt;ps;/{Www,leiifcance,eouy,frtaffichJurUudt,do?oJdAct;on=recbJurUudj&ldTexte=JURIIEXJ'
0000212s1609&fastRegJd=9ZQS04478&fasrPos=2
- bttgs;//www.)cfllfr:aocc.~uv,fr/affichJurHudLdo?oJdAction=rech(urUudi&JdTexte=JtJBIIEXI
00002n5 J 612&fastReqld= 1477662302&fastPos::1.
Annex 120
35
faveur de l'admissibilite d'une renonciation implicite, decisions emanant pour l'une
d'une district court { des Etats-Unis)92 et pour l'autre d'une cour d'appel ( de Suede)93•
79. Quant a l'arr~t Creighton c. Qatar de 2000 de la Cour de cassation de France94 - un arret
rendu avant !'adoption de la Convention des Nations Unies -, sur lequel s'appuie
egalement l'avis du professeur Reinisch (§ 34), s'il est exact qu'il peut etre Ju comme
s'etant fonde sur une renonciation implicite a I'immunite d'execution - inferee en
J'occurrence de « !'engagement pris par l'Etat signataire de la clause d'arbitrage
d'executer la sentence dans les termes de l'article 24 du reglement d'arbitrage de la
Chambre de commerce international » -, force est en revanche de constater que son
enseignement sur ce point n'a pas prospere dans la jurisprudence fran~aise
subsequente, tout au contraire9s. 11 a meme fait l'objet recemment d'un revirement net a
)'occasion d'un arret de la Cour de cassation du 13 mai 2015, rendu dans un contexte
similaire d'execution d'une sentence arbltrale que l'Etat s'etait contractuellement
engage a executer96. Dans cet arret, dit « Commissinpex », la Cour juge en effet que « le
droit international coutumier n'exlge pas une renonclation autre qu'expresse a
l'immunite d'execution ». Cet attendu est principalement destine a rejeter !'argument -
invoque par l'Etat debiteur et accepte par la Cour d'appel dans l'arret querelle - selon
lequel la renonciation a l'lmmunitl! d'execution devralt. dans le cas des biens affectes au
fonctionnement de la mission diplomatique, etre non seulement expresse mais aussi
« speciale » - une question qui n'est pas en cause ici. ll n'en demeure pas moins que, en
statuant dans Jes termes precltes, la Cour de cassation afflrme clalrement que le droit
international coutumier exige une renonciation expresse a l'immunite d'execution - futce
en jugeant dans le meme temps que ce droit n'exige pas que la renonciation rev~te un
autre caractere. Des commentateurs experts de la matiere ont du reste soullgne qu'll y
avait la en effet un revirement par rapport a l'arret Creighton c. Qatar ayant admis la
possibllite d'une renonciation implicite97• L'avis du professeur Reinisch se revele, de ce
92 Note 27 de l'avis du professeur Reinisch.
9~ Note 34 de l'avis du professeur Reinisch.
94 Cass. fr., Societe Creighton Ltd c. Minlstre des Finances de l'Etat du Qatar et autre, 6 Juillet 2000, n°
98-19068, Journal du drolt international, 2000, p. 1054, aussi dlsponible
sur hltl)S; //www.Jedfrance wuv.fr/affich)uri)udj.do ?oJdActlon=rechJudJudj&jdTexte=JUBIIEXT
000001043014&fastRegld=513084311 &fastPos= 1.
95 Voy. sp6c. les trois arr~ts du 28 mars 2013 de la Cour de cassation, cites supra,§ 77, qui exigent
une renonclation expresse.
96 Cass. fr., Societe Commissions import-export c. Rlpublique du Congo, 13 mal 201S, n° 13-17751,
Journal du droit intematfonal, 201S, p. 141, aussi disponible sur
bttp~;//www,le~ifrancc,i:ouy,fr/affichiuri)udi,do?oldActionz::rechJurnudi&idiexte=IURITEXT000
030600444& f,astReQJd= J 46447995&fastPos=l.
97 Note de S. BL SAWAH et Ph. LEBOULANGER sous l'arrft,Journa/ du drolt International, 2015, p.
150.
Annex 120
36
point de vue, ambigu lorsqu'il decrit l'arret Commissimpex comme « no longer
demand[ing] an express and specific waiver» (§ 36) : en effet, c'est uniquement
/'exigence d'une renonciation specia/e qui est abandonnee par la Cour de cassation, celle
d'une renonciation expresse se voit tout au contra ire affirmee98• Telle est au demeurant,
pour rappel, la position prise depuis lors par le legislateur fran~ais, qui a prevu que la
renonciation devait en tout etat de cause etre expresse99• Et cela n'a pas en soi ete remis
en cause dans l'arret du 10 janvier 2018 rendu par la Cour de cassation de France dans
cette rneme affaire Commissinpex a la suite de l'entree en vigueur de ces nouvelles
dispositions legislatives100.
80. En gyatrieme lieu. l'exigence d'une renonciation expresse a l'immunite d'execution est
consacree dans la Resolution precitee de 1991 de l'Institut de droit international sur
« Les aspects recents de l'irnmunite de juridiction et d'execution des Etats » (art. 5, § ter).
81. Pour leur part, les Revised Draft Articles for a Convention on State Immunity adoptes en
1994 par I' International Law Association, precites. admettent une renonciation impliclte
( art VIII.Al). II s'agit toutefois d'un texte non contraignant, de nature doctrinale tout au
plus. et qui manifestement s'avere extremement isole a la lumiere de !'ensemble des
sources precitees.
82. De la pratique recensee cl-avant, il peut sans conteste etre conclu, vu l'unanimlte des
diverses sources, qu'a ce jour le droit international coutumier exige que la renonciation
A l'immunite d'execution de l'Etat etranger, y compris sa banque centrale, soit expresse
afin d'etre valable.
83. Une consequence immediate de cette exigence est que, comrne l'enonce la CIJ dans l'arret
Allemaone c. ltalie, au titre done du droit international coutumier, « l'eventuelle .
renonciation par un Etat A son immunite de juridiction ( ... ) ne vaut pas par elle-meme
renonciation a son immunit:e d'execution »101.
98 En outre, le§ 38 etla note 41 de l'avls du professeur Reinisch contiennentune meprise par rapport
a la lecture de l'arr@t Commissinpex: ce qui yest ecrlt et cite est presente comme etant la position
de la Cour de cassatlon, alors qli'il s'agit en fa!t de }'expose d'un moyen du demandeur en cassatlon
(comme le confirme le fait quele texte cite en note 41 commence parl'expression « ALORS QUE»).
99 Voy.art. L.111·1·2, al.1er, 1°),etart L.111·1·3 du Code des procedures civiles d'execution,supra,
§74.
10° Cass. fr .• Repubiique du Congo c. Societe Commissions import-export, 10 janvler 2018, n° 16-22.494,
disponible sur
https;//www.oourdecassatton,fr/iurjsprudencc 2/premlere chamhr:e ciyjle 568/3 10 38342,ht
ml- L'arret ne discute que la question de !'exigence d'une renonclation speciale, non en cause dans
le cas d'esp~ce.
10 1 Pp. 146-147, § 113. Voy. aussf not art. 20 de la Convention des Nations Unies.
Annex 120
37
2. Application dans le cas d'espece
84. Les demandeurs dans le cas d'espece (a savoir la procedure en va lidation de saisie-arret)
soutiennent que la Banque Markazi a renonce a son immunite d'execution. lls deduisent
une telle renonciation du falt que la Banque Markazi a introduit une action devant le
Juge des referes afin de contester la saisie, sans, afflrment-ils, invoquer d'emblee
l'immunite d'execution.
85. Avant tout, force est de constater que la renonciation alleguee en l'espece s'inscrit dans
le cadre de la procedure en refere. Des !ors, son effet, si fondamentalement elle devait
en avoir un, devrait a notre avis reste limite a cette procedure (pour autant que cela ait
quelque sens), sans qu'il puisse s'etendre a d 'autres Instances - notamment la procedure
en validation ici en cause -, ces autres instances fussent-elles Jiees d'une certaine
maniere a la procedure en refent
86. En tout etat de cause, ii nous parait clair qu'en application de la regle de droit
international coutumier exigeant que la renonciation a l'immunite d'executlon soit
expresse, la renonciation vantee en l'espece, qui ne repond pas a cette condition, ne
saurait etre tenue pour valable, et partant ne saurait se voir reconnaitre un effet
justificatif de la saisie en cause.
87. De maniere plus specifique, ii peut etre observe que la Banque Markazi n'a accompli
aucun acte ou demarche qui figure parmi ceux classiquement regardes comme
manifestant le consentement expres a !'adoption de mesures de contrainte sur Jes biens
prote~s par l'lmmunlte. AinsL s'agissant de la renondation expresse effectuee une fois
le litige ne, !'article 19, c), iii), de la Convention des Nations Unies prevoit qu'elte doit
prendre la forme, soit d'une « declaration devant le tribunal »102 Jorsque celui-ci est deja
saisl, soit a tout le moins d'une « communication ecrite faite apres la survenance du
differend entre les parties ». D'apres les informations dont nous disposons, ni l'une ni
l'autre n'a ete faite en !'occurrence.
88. II faut en tout cas se garder de toute confusion avec l'lmmunlte de juridictlon, qui dans
certaines circonstances precises - qui ne doivent pas@tre examinees dans le present avis
car elles ne relevent pas de son objet- peut en effet pour sa part ~tre consideree comme
ayant falt l'objet d'une renonciation du fait de l'lnltiation d'une procedure par le titulaire
102 Une « declaration expresse » : J. PINGEL-LENUZZA, Les immunites des ttats en droit international,
Bruylant, 1998, p. 314.
Annex 120
38
de l'immunite. JI n'en va pas de meme de l'immunite d'execution, ce qui se comprend
aisement puisque celle-ci se situe sur un autre plan - la protection des biens - et ne
saurait done etre impactee directement par !'attitude que I'Etat prend par rapport a
l'immunite de juridiction.
89. En tout etat de cause, ii faut rappeler que, selon le droit international coutumier, une
renonciation eventuelle a l'immunite de juridiction n'implique pas en soi qu'il a aussi ete
renonce a l'lmmunite d'execution.
90. Par ailleurs, ii serait surprenant, voire illoglque, qu'une renonciation a l'immunite
d'execution puisse etre deduite specifiquement de !'introduction d'une action destinee,
precisement, a obtenir la mainlevee d'une saisie, fftt-ce en ne s'appuyant explicitement
dans un premier temps que sur une autre base juridique. En effet, la renonciation
impliquerait par definition que le titulaire de l'immunlte est pret a voir la saisie sortir
ses effets, ce qui par hypothese n'a pas pu etre l'fntention puisqu'une action est tout au
contraire mue a fin de contester cette saisie. Ence sens, ii semble que ce qui compte n'est
pas tant le fait que l'immunite d'execution soit explicltement invoquee comme telle in
limfne litis, que le fait que son titulaire diligente effectivement Jes procedures
appropriees en temps utile afin de faire liberer !es avoirs saisis, quitte a soulever
l'immunite d'execution a un stade ulterieur en cours de procedure. En conclusion, i1 n'y
a selon nous pas eu renonciation implicite, m@me en admettant - en arnont - qu'une
renoncia.tion implicite a l'immunite d'execution peut par principe etre valable.
C, L'incldence, sur l'immuntte d'executton, du droit d'acces au juge
91. Le Pacte international relatif aux droits civils et politiques du 16 decembre 1966
(PIDCP), auquel sont parties le Grand-Duche de Luxembourg ainsi que la Republique
islamique d'lran, garantit le droit de toute personne d'avoir acces a un juge, dans le cadre
du drolt a un proces equitable protege par !'article 14, § 1e,,
92. 11 en est de meme de la Convention europeenne de sauvegarde des droits de l'homme et
des libertes fondamentales du 4 novembre 1950 (CEDH), dans le cadre du droit a un
proces equitable protege par !'article 6, § 1 er, La Republlque islamique d'lran n'y est
cependant pas partie, et ne peut done se voir imposer le respect d'obllgations qui
decouleraient specifiquement de la CEDH.
93, La question se pose de savoir si le droit d'acces au juge ainsi garanti aux particuliers est
susceptible d'avolr un impact sur l'applicabilite de l'lmmunite d'execution de la Banque
Annex 120
103
1114
39
Mark.azi, au cas ou ii serait etabli que !es demandeurs dans le cas d'espece peuvent
effectivement se prevaloir, devant !es tribunaux luxembourgeois, dudit droit d'acces au
juge - ce qui suppose, pour le PIDCP, qu'ils relevent de la ~< competence » du GrandDuche
au sens de !'article 2, § 1°,, du PIDCP, ct, pour la CEDH, qu'ils relevent de la
« juridiction » du Grand-Duche au sens de )'article l•r de Ia CEDH.
94. Des lors en effet que l'on admet que le droit d'acces au juge inclut le droit a !'execution
des decisions de justice en tant que prolongement necessaire de l'acces au juge
proprement dit - ce qui est en tout cas la position de la Cour europeenne des droits de
l'homme dans le cadre de l'article 6 CEDH103 -, il par aft e,cister un conflit entre
l'immunite d'execution et le droit d'acces au juge.
95. II est difficile d'identifier, dans le droit international, une regle qui se pr!ter ait
specifiquement a la resolution d'un tel conflit entre la norme de droit International
coutumier qu'est l'immunite d'execution et la norme de droit international
conventionnel qu'est le droit d'acces au juge, m!me dans l'hypothese (qui est celle du
PIDCP) ou Jes deux Eta ts sont parties au traite prevoyant le droit d'acces au juge.
96. Dans un tel contexte, ii peut a tout le moins etre renvoye a la jurisprudence pertinente
relative a ce conflit sptkifique.
97. En premjer lieu, la Cour internationaJe de Ju stjcg a decide, dans son arr@t Allema9ne c.
ltalie, qu'
« [e]lle ne volt, dans la pratlque des Etats dont decoule le droit international coutumier,
aucun element permettant d'afflnner que le droit international feralt dependre le droit
d'un Etat a l'lmmunite de !'existence d'autres voles effectives permettant d'obtenir
reparation. Ni le droit lnteme relatif a ces questions ni la jurisprudence des trlbunaux
internes qui ont eu a connaftre d'exceptions fondees sur l'immunite ne permettent de
conclure que le droit a une telle immunite serait subordonne a pareille condition
prealable. Les Etats n'ont pas davantage enonce une telle condition dans la convention
europeenne ou la convention des Nations Unies »10•.
98. Cette decision concerne, formellement, l'immunite de juridlctlon de l'Etat.11 nous semble
que rien n'empeche de l'etendre a l'immunit.e d'execution de )'£tat La Cour de cassation
de Belgique s'est du reste prononcee en ce sens (meme si, a la difference de la CIJ, la Cour
de cassation paratt ne pas avoir statue sur le terrain du drolt International coutumler,
Voy. not. Hornsby c. Grece, 19 mars 1997, n° 18357 /91, § 40, disponible sur
bttps; {/hudoc.echr.coe.int.
P. 143, § 101 .
Annex 120
105
106
107
40
mais au titre d'un contr61e de compatibilite de l'immunite d'execution avec !'article 6
CEDH):
« Le droit d'acces aux tribunaux garanti par !'article 6, § 1•• [CEDH], tel qu'II est interprete
par la Cour europcennc des drolts de l'homme, ne peut avoir pour effet de contraindre un
Etat de passer outrc contre son gre a la regle de l'immunite d'execution des Etats, qui vise
a assurer le fonctionnement optimal des missions diplomatiques et, plus generalement, a
favoriser la courtoisie et les bonnes relations entre Etats souverains.
Le moyen, qui soutlent que l'attelnte portee aux droits fondamentaux par l'immunite
d'execution des Etats n'est admissible au regard dudit article 6, § ler, que si la personne
contre laquellc l'immun!te est invoquee dispose d'autres voies raisonnables pour proteger
efficacement Jes droits que Jui garantit la Convention, manque en droit »105•
La Cour constitutionnelle de Belgique a adopte la meme position :
« [L]e respect des articles l 0 et 11 de la Constitution, combines avec !es dispositions
lnvoquees par Jes parties requerantes, n'impose pas au legislateur de prevoir que
l'immunite d'executlon des biens des puissances etrangeres n'est effective que lorsqu'il
est demontre que le creancier dispose d'une autre vole ralsonnable pour faire valoir ses
droits, des !ors qu'une telle exigence n'est, en l'etat actuel, lmposee ni par la Convention
europeenne des droits de l'homme, ni par la coutume Internationale, ni par la Convention
des Nations Unies du 2 decembre 2004 » 106•
99. Sur la base de ce qui precede, J'immunite d'execution de la Banque Markazi, com me toute
immunite etatique, doit etre reputee indifferente a l'existence de voies alternatives a la
disposition des demandeurs, et ne saurait partant etre ecartee meme s'il devait etre
etabli que de tell es voies sont inexistantes.
100.En deyxjeme Heu, la jurisprudence de la Cour europeenne des drojts de J'homme. Celleci,
en realite, ne fait pas elle-meme dependre l'admissibilite des immunites de !'~tat au
regard de ]'article 6 CEDH de !'existence de voles alternatives raisonnables a la
disposition du particulier - alors qu'elle accorde generalement de I'« import[ance] » a
de telles voies alternatives s'agissant de l'immurtite de juridiction des organisations
internationales101• Plutot, elle considere que l'immunite de l'Etat, qui « poursuit le but
legitime de respecter le droit international afin de favoriser la courtoisie et les bonnes
Cass. b., NML Capital Ltd c. Republfque d'Argentine, 11 decembre 2014, C.13 .0537.F, dlsponible sur
http: //jure,jurjdat,jusr,mov,be/pdra12p{downJoad blob?ldpdf=F-20111211-1.
C. const b., NML Capital Ltd et Yukos Universal Limited, 27 avril 2017, n• 48/2017, § 8.14.5,
dlsponible sur www.const-court,be.
Voy, not. Waite et Kennedy c. Allemagne, 18 fevrier 1999, n° 26083/94, § 68; K/ausecker c.
Alfemagne, 6 janvier 2015, n° 415/07, § 64. Disponibles sur bttps;//hudoc,echr,coe,jnt
Annex 120
108
109
110
4-1
relations entre Etats grace au respect de la souverainete d'un autre Etat », n'entratne pas
de restriction disproportionnee au droit d'acces au juge, ni n'implique que ce droit soit
« atteint dans sa substance m&me », aussi longtemps que l'immunite « refletre] des
principes de droit international generalement reconnus en matiere d'immunite des
Etats », ou encore appartient aux « limitations generalement admises par la
communaute des nations comme relevant de la doctrine de l'immunite des Eta ts ». Cette
approche est fermement etablie concernant l'immunite de juridiction de l'Etat10u. Elle
!'est egalement, bien que dans un nombre ace jour plus restreint d'affaires, concemant
l'immunite d'execution de l'Etat109,
101.En somme, le critere qu'utilise la Cour europeenne, afin de s'assurer de la compatibilite
de l'immunite de l'Etat avec le droit d'acces au juge, est celui de la conformite de
l'immunite reconnue par le juge national aux « principes de droit international
generalement reconnus en matlere d'immunite des Etats », a savoir en substance le droit
international coutumier : le juge national ne peut, sans violer !'article 6 CEDH, octroyer
a l'Etat etranger une immunite plus large que ce que commande le droit international
coutumier. Dans ce schema, c'est, ultlmement, a la Gour de Strasbourg qu'il revient de
determiner le contenu et la portee du droit international coutumier. Dans ce cadre, la
Cour europeenne accorde un poids considerable au texte de la Convention des Nations
Unies (et du projet d'articles de la CDI ayant servi de base a son adoption) en tant
qu'indicateur fiable de l'etat du droit international coutumier, meme si cette orientation
dans sa jurisprudence a a ce jour surtout ete appliquee a des dispositions de la
Convention des Nations Unies relatives a J'immunite de juridictionu0•
102.En troisleme Heu, Jes decisions des trjbunaux internes. L'on se limlte ici aux cours
supremes s'etant prononcees recemment sur le conflit entre immunite d'execution de
l'Etat etranger et article 6 CEDH. Leur jurisprudence s'insplre largement de celle de la
Voy.AI-Adsani c. Royaume-Uni, 21 novembre 2001, n° 35763/97, § 56; Fogarty c. Royoume-Uni, 21
novembre 2001, n°37112/97, § 36: McElhinneyc. Jrlande, 21 novembre 2001, n° 31253/96, § 37;
Cudak c. Lituanle, 23 mars 2010, n° 15869/02, § 57; Sabeh El Leil c. Fronce, 29 juin 2011, n°
34869/05, § 49; Wallishauser c. Autrlche, 17 julllet 2012, n° 156/04, § 59; Oleynfkov c. Russfe, 14
mars 2013, n° 36703/04, § 57; Radunovicetautres c. Montlnlgro, 25 octobre 2016, n°• 45197 /13,
53000/13 et73404/13, § 64; Nakuc. LituanieetSuede, 8 novembre 2016, n° 26126/07, § 86. Tous
disponibles sur https://hudoc.echr.coe.int.
Voy. Kalogeropoulou e.a. c. Grece et A//emagne, 12 decembre 2002, n• S90Z1/00, p. 9 ; Manoilescu
et Dobrescu c. Roumanle et Russie, 3 mars 2005, n° 60861/00, § 80, Disponibles sur
hm,s;//hudoc.echr,coe.jnt Dans Jes deux affalres, l'lmmunlte d'executlon est finalement jugee
compatible avec !'article 6 CEDH; et dans le premier cas, alors meme que Jes actes de l'Etat a
l'origine de la proc&iure etaient constitutifs de crimes de droit international.
Voy. supra, les ref. en note 12. Voy. neanmoins la mention de )'art 19 de la Convention des Nations
Unies, relatif a l'immunlte d'execudon, dans Manoflescu et Dobrescu c. Roumanfe et Russle, precite,
§§ 75, 80-81.
Annex 120
111
112
113
114
115
42
Cour de Strasbourg et fait ainsi application du critere de confonnite de l'immunite au
droit international general afin de verifier l'atteinte ou non au droit d'acces au juge. Pour
rappel, ont ainsi ete explicitement jugees compatibles avec !'article 6 CEDH, car refletant
le droit international coutumler :
• la regle imposant au creancier Ia charge de la preuve du caractere saisissable des
biens (voy. supra,§§ 54 et s.) :
Cass. fr., Novoparc Healthcare International Ltd c. Central Bank of Iraq, 11 janvier
2018111 (du reste specifiqucment dans le cas de l'immunite d'execution d'une
banque centrale) ;
- C. const. b., NML Capital Ltd et Yukos Universal Limited, 27 avril 2017112•
• la regle exigeant que la renonciation a l'immunite d'execution soit expresse
(voy. supra,§§ 68 et s.):
- Cass. fr., NML Capital c. Republique argentine, 28 mars 2013113 ;
C. const b., NML Capital Ltd et Yukos Universal Limited, 27 avril 2017114 ;
- voy. egalement, bien que le controle soit opere au regard du drolt a !'execution
des decisions jurldictionnelles resultant de !'article 16 de la Declaration de
1789, Cons. canst. fr., 8 decembre 2016, decision n° 2016•741 DC115•
103.En conclusion, dans le cas d'espece, vu que l'immunite d'execution dont jouit la Banque
Markazi a l'egard des biens saisis, y compris )'absence de validite de Ia renonciation
implicite alleguee, refletent effectivement « des princlpes de drolt international
generalement reconnus en matiere d'immuni~ des Etats », a savoir en substance le droit
international coutumier (voy. supra, sections A et B), la verification du critere de
conformite utilise dans la jurisprudence strasbourgeoise et celle des cours supremes
nationales ne devrait pas susciter de probleme, et l'immunlte devrait done @tre regardee
N° 16-10.661, disponible sur
https;//www,doctrjne.fr/d/CASS/201s1ca6Al2426ZB2PE2B2379C.
N° 48/2017, §§ B.25.2, B.27.1, B.27.2 et B.28, dlsponible sur www.const-court,be.
N°• 11·10.450 et 11·13.323, dlsponlbles respectlvementsur:
- https;//www.Jeeifrance.~uy.fr/affich[urjJudj.da?oldAction=recbJuriludj&jdTexte=…
0000222s1609&fastRegJd=2ZPSP447B&fastPas=2
• https; //www,le~france,e:ouv.fr/affichJur[Judj.do?oldActlon=rechJur) [udJ&irliexre=JUR)TEXI
00002 225 l 612&fastReg lo=l 42Z6623Q2&rastpos=1.
N° 48/2017, §§ B.13.1, B.18.1 et B.28, disponible sur www.const-court,be.
§§ 61·74, disponible sur http; //www,consejl-constitutjonnel.fr/consenconstitutfpnneJ
tfrancais {les-dedsions/acces-par-date/decisions-rlepyjs-12s212016 /2016-741 •
dc/decisjan-n-2016· 24l •dc-du-8-decembre-2016,14831 o,htmi.
Annex 120
43
comme n'emportant pas de restriction disproportionnee au droit d'acces au juge puise
dans !'article 6 CEDH .
JV. CONCLUSIONS
104.Nos conclusions peuvent etre synthetisees comme suit:
A. S'il est vrai que l'immunite d'execution generale de l'Et at est aujourd'hui restreinte
aux biens affectes a des fins souveraines, l'immunite d'execution des banques
centrales est en revanche, selon le droit international coutumier, absolue, dans le
sens ou elle s'etend a l'ensemble des biens de la banque centrale en toutes
circonstances.
B. La limitation de l'immunite d'execution generale de l'Etat ne peut done etre
appliquee en l' espece. L'ensemble des biens de la Banque Markazi, y compris Jes
avoirs saisis en l'espece, beneficient au Grand-Duche de Luxembourg de l'immunite
d'execution en leur qualite de blens d'une banque centrale etrangere.
C. S'il devait neanmoins etre considere que le droit international coutumier prevoit
plutot un principe d'immunite d'execution restreinte dans le cas des biens des
banques centrales, II y auralt alors lieu de faire application, afln de d~limiter
l'etendue de l'immunite, du critere des biens utilises OU destines a etre utilises awe
fins de la banque centrale.
D. Un critere d'affectation aux « fins monetaires » de la banque centrale ne correspond
pas, a cet egard, a la pratique des Etats.
E. L'origine des avoirs en cause ou la nature des transactions sous-jacentes ne sont pas
davantage reconnues par le droit international coutumier comme des criteres
pertinents en la matiere.
F. La charge de la preuve incombe au creancier, a qui ii revient d'etablir que Jes biens
qu'il entend saisir ne sont pas couverts par l'immunlte d'execution. Ce n'est pas a la
banque centrale de demontrer qu'elle se trouve dans les conditions pour pouvoir
revendiquer l'immunlte, ses biens jouissant en effet d'une presomptlon d'affectation
lui valant le benefice de l'immunite.
Annex 120
44
G. En tant que biens affectl?S a la realisation des objectifs essentiels de la Banque
Markazi dans le cadre de sa mission de service public, les avoirs saisis en l'espece
sont utilises OU a tout le moins destines a etre utilises aux fins de la banque centrale,
et done couverts en tout etat de cause par l'immunite d'execution.
H. Selon le droit international coutumier, la renonciation a l'immunite d'execution de
l'Etat, y compris sa banque centrale, dolt etre expresse, a defaut de quoi elle n' est pas
valable.
I. La renonciation alleguee en l'espece n'est done pas valable et ne peut justifier la
saisle pratiquee.
). Le droit d'acces au juge, garanti aux particuliers par !'article 14 PIDCP et !'article 6
CEDH, pour autant qu'il puisse etre invoque en l'espece, ne suppose aucunementque,
pour que J'immunite d'execution de l'Etat -y compris sa banque centrale - soit jugee
compatible avec lui, le particulier ait a sa disposition des voies alternatives
raisonnables.
K. JI n'estpas porte atteinteau droit d'acces au juge des !ors que l'immunite d'execution
de l'Etat -y compris sa banque centrale - reflete des principes de droit international
generalement reconnus en matiere d'immunite des Etats. Tel est le cas en l'espece, si
bien que l' immunite d'execution de la Banque Markazi n'emporte pas violation du
droit d'acces au juge.
BruxeJles, le 16 mars W11J~
/
Annex 120
Annexe
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2
Annex 120
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tribunaux, 2010, pp.153-156
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3
Annex 120
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2000, pp. 189-244
4
Volume V - Annexes 109-120