13‐2952‐cv
Peterson v. Islamic Republic of Iran
In the
United States Court of Appeals
For the Second Circuit
________
AUGUST TERM, 2013
ARGUED: MAY 19, 2014
DECIDED: JULY 9, 2014
No. 13‐2952‐cv
DEBORAH D. PETERSON, et al.,
Plaintiffs‐Appellees,
v.
ISLAMIC REPUBLIC OF IRAN, et al.,
Defendants‐Appellants.*
________
Appeal from the United States District Court
for the Southern District of New York.
No. 10 Civ. 4518 – Katherine B. Forrest, Judge.
________
Before: WINTER, WALKER, and CABRANES, Circuit Judges.
________
* Consistent with the order entered by this Court on October 18, 2013,
ECF No. 118, we use the short‐form caption for the purpose of publishing
this opinion.
2 No. 13‐2952‐cv
To satisfy terrorism‐related judgments against Iran, the
district court (Forrest, J.) awarded turnover of $1.75 billion in assets
under both the Terrorism Risk Insurance Act of 2002 (“TRIA”) and a
statute enacted specifically to address the assets at issue in this case,
22 U.S.C. § 8772. Although Iran argues that the TRIA ownership
requirements have not been satisfied, we need not reach this issue in
light of Congress’s enactment of § 8772. Iran concedes that the
statutory elements for turnover of the assets under § 8772 have been
satisfied, and we reject Iran’s arguments that § 8772 conflicts with
the Treaty of Amity between the United States and Iran, violates
separation of powers, and effects an unconstitutional taking. We also
conclude that the district court did not abuse its discretion in issuing
an anti‐suit injunction to protect its judgment. We AFFIRM.
________
JAMES P. BONNER, Stone Bonner & Rocco LLP,
New York, N.Y. (Liviu Vogel, Salon Marrow
Dyckman Newman & Broudy LLP, New York,
N.Y.; Patrick L. Rocco, Susan M. Davies, Stone
Bonner & Rocco LLP, New York, N.Y., on the
brief), for Plaintiffs‐Appellees.
ANDREAS A. FRISCHKNECHT (David M. Lindsey,
on the brief), Chaffetz Lindsey LLP, New York,
N.Y., for Defendants‐Appellants.
________
JOHN M. WALKER, JR., Circuit Judge:
To satisfy terrorism‐related judgments against Iran, the
district court (Forrest, J.) awarded turnover of $1.75 billion in assets
under both the Terrorism Risk Insurance Act of 2002 (“TRIA”) and a
statute enacted specifically to address the assets at issue in this case,
22 U.S.C. § 8772. Although Iran argues that the TRIA ownership
requirements have not been satisfied, we need not reach this issue in
light of Congress’s enactment of § 8772. Iran concedes that the
statutory elements for turnover of the assets under § 8772 have been
3 No. 13‐2952‐cv
satisfied, and we reject Iran’s arguments that § 8772 conflicts with
the Treaty of Amity between the United States and Iran, violates
separation of powers, and effects an unconstitutional taking. We also
conclude that the district court did not abuse its discretion in issuing
an anti‐suit injunction to protect its judgment. We AFFIRM.
BACKGROUND
Plaintiffs‐appellees are the representatives of hundreds of
Americans killed in multiple Iran‐sponsored terrorist attacks, and
they have billions of dollars in unpaid compensatory damages
judgments against Iran stemming from these attacks.1 Defendant‐
appellant Bank Markazi is the Central Bank of Iran, which is wholly
owned by the Iranian government. The assets at issue in this appeal
are $1.75 billion in cash proceeds of government bonds, currently
held in New York by defendant Citibank, N.A., in an omnibus
account for defendant Clearstream Banking, S.A., a financial
intermediary. One of the customers for whom Clearstream
maintains this account is defendant Banca UBAE S.p.A., an Italian
bank whose customer, in turn, is Bank Markazi. Bank Markazi
concedes that through this chain of parties it has at least a
“beneficial interest” in the assets at issue. Plaintiffs seek turnover of
these assets to satisfy their judgments.
When plaintiffs first learned of Bank Markazi’s interest in the
assets in 2008, they obtained restraints against transfer of the assets.
In 2010, plaintiffs initiated this action against Bank Markazi, UBAE,
Clearstream, and Citibank to obtain turnover of the assets under
section 201(a) of the TRIA, which provides that “in every case in
which a person has obtained a judgment against a terrorist party . . .
the blocked assets of that terrorist party (including the blocked
assets of any agency or instrumentality of that terrorist party) shall
be subject to execution or attachment.” Terrorism Risk Insurance Act
of 2002, Pub L. No. 107‐297, § 201(a), 116 Stat. 2322, 2337 (codified at
The appellees first entered this action in various procedural postures,
1
but they are all judgment creditors of Iran and are referred to collectively
as “plaintiffs” for ease of reference.
4 No. 13‐2952‐cv
28 U.S.C. § 1610 Note “Satisfaction of Judgments from Blocked
Assets of Terrorists, Terrorist Organizations, and State Sponsors of
Terrorism”).
In February 2012, while this action was pending, President
Obama issued Executive Order 13,599, which stated:
[I]n light of the deceptive practices of [Bank Markazi] . . . to
conceal transactions of sanctioned parties . . . . [a]ll property
and interests in property of the Government of Iran, including
[Bank Markazi], that are in the United States . . . or that are or
hereafter come within the possession or control of any United
States person . . . are blocked . . . .
Exec. Order No. 13,599, 77 Fed. Reg. 6659, 6659 (Feb. 5, 2012). The
assets at issue (which were still under restraint) were blocked based
on this Executive Order. Plaintiffs then filed a motion for partial
summary judgment on their TRIA claim.
In August 2012, while that motion was pending, Congress
passed the Iran Threat Reduction and Syria Human Rights Act of
2012. That Act included a section, codified at 22 U.S.C. § 8772, which
stated that “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” “shall be subject to execution . . . in order to
satisfy any judgment to the extent of any compensatory damages
awarded against Iran for damages for personal injury or death
caused by an act of [terrorism].” Pub. L. 112‐158, § 502, 126 Stat.
1214, 1258. Plaintiffs then filed a supplemental motion for summary
judgment under § 8772.
In March 2013, the district court granted summary judgment
to plaintiffs, ordering turnover of the assets on the two independent
bases of TRIA section 201(a) and 22 U.S.C. § 8772. Peterson v. Islamic
Republic of Iran, No. 10 Civ. 4518, 2013 WL 1155576 (S.D.N.Y. Mar.
13, 2013). In July 2013, the district court issued an order directing
turnover of the blocked assets and enjoining the parties from
initiating a claim to the assets in another jurisdiction. Peterson v.
Islamic Republic of Iran, No. 10 Civ. 4518 (S.D.N.Y. July 9, 2013), ECF
5 No. 13‐2952‐cv
No. 463. Post‐judgment, plaintiffs settled with Clearstream and
UBAE, and Citibank is a neutral stakeholder, leaving Bank Markazi
as the sole appellant.
DISCUSSION
“We review de novo a district court’s grant of summary
judgment, construing the evidence in the light most favorable to the
non‐movant, asking whether there is a genuine dispute as to any
material fact and whether the movant is entitled to judgment as a
matter of law.” Padilla v. Maersk Line, Ltd., 721 F.3d 77, 81 (2d Cir.
2013) (citing Fed. R. Civ. P. 56(a)). “We [also] review de novo the
district court’s legal conclusions, including those interpreting and
determining the constitutionality of a statute,” United States v.
Stewart, 590 F.3d 93, 109 (2d Cir. 2009), or involving the
“interpretation of a treaty,” Swarna v. Al‐Awadi, 622 F.3d 123, 132 (2d
Cir. 2010).
Bank Markazi argues that the assets at issue are not “assets of”
Bank Markazi as required for turnover under TRIA section 201(a),
and that even if the assets were held to be “assets of” Bank Markazi,
then they would be “the property . . . of a foreign central bank . . .
held for its own account” and thus “immune from attachment and
from execution” under the Foreign Sovereign Immunities Act, 28
U.S.C. § 1611(b)(1). We need not resolve this dispute under the
TRIA, however, as Congress has changed the law governing this
case by enacting 22 U.S.C. § 8772. Bank Markazi concedes that
plaintiffs have satisfied the statutory elements of their § 8772 claim
but argues that turnover under this provision (1) conflicts with the
Treaty of Amity between the United States and Iran; (2) violates
separation of powers under Article III; and (3) violates the Takings
Clause. As we explain below, none of these arguments has merit. We
also reject Bank Markazi’s challenge to the district court’s anti‐suit
injunction.
I. Treaty of Amity
Bank Markazi argues that turnover of the assets under § 8772
would conflict with obligations of the United States under the Treaty
6 No. 13‐2952‐cv
of Amity, which is a self‐executing treaty between the United States
and Iran that was signed in 1955. Treaty of Amity, Economic
Relations and Consular Rights between the United States and Iran,
Aug. 15, 1955, 8 U.S.T. 899; see also McKesson Corp. v. Islamic Republic
of Iran, 539 F.3d 485, 488 (D.C. Cir. 2008) (“The Treaty of Amity, like
other treaties of its kind, is self‐executing.”). But even if there were a
conflict, the later‐enacted § 8772 would still apply: “The Supreme
Court has held explicitly that legislative acts trump treaty‐made
international law, stating that ‘when a statute which is subsequent in
time [to a treaty] is inconsistent with a treaty, the statute to the
extent of conflict renders the treaty null.’” United States v. Yousef, 327
F.3d 56, 110 (2d Cir. 2003) (alteration in original) (quoting Breard v.
Greene, 523 U.S. 371, 376 (1998)); see also Whitney v. Robertson, 124
U.S. 190, 194 (1888) (“By the constitution, a treaty is placed on the
same footing, and made of like obligation, with an act of legislation
. . . . [and] if the two are inconsistent, the one last in date will control
the other.”). Indeed, when Iran raised a similar argument against
turnover under TRIA section 201(a) in a different case, we concluded
that even if this provision conflicted with the Treaty of Amity, “the
TRIA would have to be read to abrogate that portion of the Treaty.”
Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 53 (2d Cir. 2010).2
In any event, we see no conflict between § 8772 and the Treaty
of Amity. Bank Markazi first contends that Congress’s inclusion of
Bank Markazi in its definition of “Iran” in § 8772(d)(3) violates
Article III.1 of the Treaty, which states that Iranian companies “shall
have their juridical status recognized within” the United States. But
as Bank Markazi acknowledges, this argument has been rejected by
our Court in the context of a similar provision in the TRIA. See
Weinstein, 609 F.3d at 53 (concluding that Iran’s argument was
Additionally, § 8772, like TRIA section 201(a), contains a broad
2
provision stating that it applies “notwithstanding any other provision of
law,” 22 U.S.C. § 8772(a)(1), and “the Courts of Appeals have regularly
interpreted such ‘notwithstanding’ provisions ‘to supersede all other
laws,’” Weinstein, 609 F.3d at 53 (quoting Cisneros v. Alpine Ridge Grp., 508
U.S. 10, 18 (1993)).
7 No. 13‐2952‐cv
foreclosed by the Supreme Court’s analysis of similar provisions in
Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176 (1982)).
Bank Markazi also argues that § 8772 violates Articles IV.1
and V.1, which require that treatment of Iranian companies and
their property interests be “fair and equitable” and no “less
favorable than that accorded nationals and companies of any third
country.” But the provision of § 8772 that Bank Markazi points to
contains no country‐based discrimination; rather, it simply states
that “[n]othing in this section shall be construed . . . to affect the
availability, or lack thereof, of a right to satisfy a judgment in any
other action against a terrorist party in any proceedings other than
[these] proceedings.” 22 U.S.C. § 8772(c). Contrary to Bank
Markazi’s argument, this provision is expressly non‐discriminatory.
Finally, Bank Markazi argues that turnover under § 8772
violates Article III.2, which accords Iranian companies “freedom of
access to [U.S.] courts,” and Article IV.2, which states that Iranian
“property shall not be taken except for a public purpose” and upon
“prompt payment of just compensation.” As discussed below,
however, § 8772 neither usurps the adjudicative role of the courts
nor effects an unconstitutional taking of Bank Markazi’s assets.
In sum, turnover of the blocked assets under § 8772 is entirely
consistent with the United States’ obligations under the Treaty of
Amity. And, assuming arguendo that it is not, § 8772 would have to
be read to abrogate any inconsistent provisions in the Treaty.
II. Separation of Powers
Bank Markazi next challenges § 8772 as violating the
separation of powers between the legislative branch and the
judiciary under Article III by compelling the courts to reach a
predetermined result in this case. We conclude, however, that § 8772
does not usurp the judicial function; rather, it retroactively changes
the law applicable in this case, a permissible exercise of legislative
authority.
In the leading case to find a separation‐of‐powers violation,
United States v. Klein, 80 U.S. (13 Wall.) 128 (1872), Congress had
8 No. 13‐2952‐cv
passed a statute requiring courts to treat pardons of Confederate
sympathizers as conclusive evidence of disloyalty, and the Supreme
Court found the statute invalid for prescribing a rule of decision to
the courts. But while Klein illustrates that Congress may not “usurp[]
the adjudicative function assigned to the federal courts,” later cases
have explained that Congress may “chang[e] the law applicable to
pending cases,” even when the result under the revised law is clear.
Axel Johnson Inc. v. Arthur Andersen & Co., 6 F.3d 78, 81 (2d Cir. 1993).
In Robertson v. Seattle Audubon Society, 503 U.S. 429 (1992),
Congress had passed legislation to resolve two environmental suits
challenging logging in the Pacific Northwest. The result of the cases
under the new law was clear: the statute stated that “Congress
hereby determines and directs” that if the forests at issue were
managed under the terms of the new statute, it would “meet[] the
statutory requirements that are the basis for” the plaintiffs’
environmental law challenges in those particular cases. 503 U.S. at
434‐35 (quoting Department of the Interior and Related Agencies
Appropriations Act, Pub. L. No. 101‐121, § 318(b)(6)(A), 103 Stat.
701, 747 (1989)). The Ninth Circuit held this statute to be
unconstitutional under Klein as directing a particular decision in the
two cases. Id. at 436. But the Supreme Court rejected this position,
concluding instead that “[t]o the extent that [the statute] affected the
adjudication of the cases, it did so by effectively modifying the
provisions at issue in those cases,” not by compelling findings or
results under those provisions. Id. at 440.
Our court rejected a similar separation‐of‐powers challenge to
section 27A(a) of the Securities Exchange Act of 1934, which was
enacted to preserve pending securities law claims that would
otherwise have been dismissed as untimely. Axel Johnson, 6 F.3d at
80‐82. We noted that, like the statute in Robertson, section 27A(a)
does not compel findings or results under old law, but rather
“constitutes a change in law applicable to a limited class of cases”
that “leaves to the courts the task of determining whether a claim
falls within the ambit of the statute.” Id. at 82.
9 No. 13‐2952‐cv
Similarly, § 8772 does not compel judicial findings under old
law; rather, it changes the law applicable to this case. And like the
statutes at issue in Robertson and Axel Johnson, § 8772 explicitly
leaves the determination of certain facts to the courts:
[T]he court shall determine whether Iran holds equitable title
to, or the beneficial interest in, the assets [at issue] and that no
other person possesses a constitutionally protected interest in
the assets . . . under the Fifth Amendment to the Constitution
of the United States. To the extent the court determines that a
person other than Iran holds—
(A) equitable title to, or a beneficial interest in, the
assets . . . (excluding a custodial interest of a foreign
securities intermediary or a related intermediary that
holds the assets abroad for the benefit of Iran); or
(B) a constitutionally protected interest in the assets . . . ,
such assets shall be available only for execution or attachment
in aid of execution to the extent of Iran’s equitable title or
beneficial interest therein and to the extent such execution or
attachment does not infringe upon such constitutionally
protected interest.
22 U.S.C. § 8772(a)(2).
Bank Markazi argues that while § 8772(a)(2) may formally
give discretion to the courts, it effectively compels only one possible
outcome, as Iran’s beneficial interest in the assets had been
established by the time Congress enacted § 8772. But this argument
is foreclosed by the Supreme Court’s decision in Robertson, as the
statute there was specifically enacted to resolve two pending cases,
and the Supreme Court found no constitutional violation. Indeed, it
would be unusual for there to be more than one likely outcome
when Congress changes the law for a pending case with a developed
factual record.
As we have noted, “[t]he conceptual line between a valid
legislative change in law and an invalid legislative act of
adjudication is often difficult to draw,” Axel Johnson, 6 F.3d at 81,
10 No. 13‐2952‐cv
and 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, which
might raise more concerns. But we think it is clear that under the
Supreme Court’s guidance in Robertson, § 8772 does not cross the
constitutional line.
III. Takings Clause
Bank Markazi’s final challenge to § 8772 is that it effects an
unconstitutional taking. See U.S. Const., amend. V (‘‘[N]or shall
private property be taken for public use, without just
compensation.’’). As we have already stated in a similar case against
another Iranian bank, however, “where the underlying judgment
against Iran has not been challenged, seizure of [the bank’s]
property, as an instrumentality of Iran, in satisfaction of that liability
does not constitute a ‘taking’ under the Takings Clause.” Weinstein,
609 F.3d at 54.
Bank Markazi argues that this case raises retroactivity
concerns that were not present in Weinstein because § 8772 was
enacted after the assets were first restrained. But this is not a case in
which legislation “imposes severe retroactive liability on a limited
class of parties that could not have anticipated the liability.” E.
Enters. v. Apfel, 524 U.S. 498, 528‐29 (1998) (plurality opinion). Iran—
the 100% owner of Bank Markazi—had already been found liable to
plaintiffs for billions of dollars in uncontested judgments, and § 8772
simply helps plaintiffs reach Iranian assets in partial satisfaction of
these judgments. “Here, where Bank [Markazi’s] assets are subject to
attachment to satisfy a judgment against its foreign sovereign, the
underlying purpose of the Takings Clause is in no way violated by
attachment of Bank [Markazi’s] assets.” Weinstein, 609 F.3d at 54.
IV. Anti‐Suit Injunction
Bank Markazi’s final argument on appeal challenges the
district court’s order that it “shall be permanently restrained and
enjoined from instituting or prosecuting any claim or pursuing any
actions against Clearstream in any jurisdiction or tribunal arising
11 No. 13‐2952‐cv
from or relating to any claim (whether legal or equitable) to the
Blocked Assets.” Peterson v. Islamic Republic of Iran, No. 10 Civ. 4518,
slip op. at 12 (S.D.N.Y. July 9, 2013), ECF No. 463. Bank Markazi
argues that the district court lacked jurisdiction to issue this
impermissible restraint on its property outside the United States.
As this court has explained, however, “federal courts . . . have
inherent power to protect their own judgments from being
undermined or vitiated by vexatious litigation in other
jurisdictions.” Karaha Bodas Co. v. Perusahaan Pertambangan Minyak
Dan Gas Bumi Negara, 500 F.3d 111, 124 (2d Cir. 2007) (emphasis
omitted). “The standard of review for the grant of a permanent
injunction, including an anti‐suit injunction, is abuse of discretion.”
Id. at 118‐19. We see no abuse of discretion here, especially as Bank
Markazi expressly consented to this language in the district court. At
the hearing on this order, Bank Markazi’s counsel objected to the
anti‐suit injunction as overly broad, the district court modified the
language in response to this objection, and Bank Markazi’s counsel
then expressly stated, “That’s fine with us as well, your Honor.”
Transcript of Conference at 24, Peterson v. Islamic Republic of Iran, No.
10 Civ. 4518 (S.D.N.Y. July 9, 2013), ECF No. 466. Because this issue
does not involve jurisdictional concerns, Bank Markazi has no basis
to now object to this injunction on appeal. See Kraebel v. N.Y. City
Dep’t of Hous. Pres. & Dev., 959 F.2d 395, 401 (2d Cir. 1992) (“We have
repeatedly held that if an argument has not been raised before the
district court, we will not consider it.”).
CONCLUSION
For the reasons stated above, we AFFIRM the judgment of the
district court.
Peterson v. Islamic Republic of Iran
Combined Opinion