Ministry of Defense & Support for the Armed Forces of the Islamic Republic ex rel. Iran v. Frym - Ninth Circuit

Headline: Ninth Circuit rejects Iran’s claim of foreign-state immunity from attachment of an Iranian judgment pursuant to exceptions under the Algiers Accords and confirmed the District court’s ruling that the judgment qualifies as a “blocked asset” within the meaning of the Terrorism Risk Insurance Act.

Area of Law: National Security Law; Judgments and Liens

Issue Presented: Whether, under the Algiers Accords or President Obama’s 2012 Executive Order No. 13359, a judgment granted in favor of Iran by a U.S. district court in 1999 qualifies as a “blocked asset” within the meaning of the Terrorism Risk Insurance Act and is therefore attachable for the purpose of enforcing default judgments obtained against Iran on terrorist-related claims.

Brief Summary: Under the Terrorism Risk Insurance Act (“TRIA”), an exception to a foreign state’s immunity from attachment of a judgment pursuant to the Foreign Sovereign Immunities Act (“FSIA”), Lien Claimants moved to attach a judgment awarded to the Republic of Iran (“Iran”) in 1999 by the U.S. District Court for the Southern District of California. Iran opposed the motion, arguing that a resolution to the Iranian Hostage Crisis (the Algiers Accords) protects the judgment from attachment and that the judgment did not fall within the meaning of a “blocked asset” as defined under TRIA.

The district court granted the attachment, concluding that the Algiers Accords served only to restore Iran’s position prior to November of 1979, and as of 1979, Iran lacked an interest in the judgment at issue. The district court also ruled that the judgment constituted a blocked asset for purposes of TRIA pursuant to “President Obama’s 2012 Executive Order No. 13359” and “President Bush’s 2005 Executive Order No. 13382.” The district court alternatively found that a sub-group of the Lien Claimants (the Rubin Claimants) could have attached the judgment pursuant to a terrorism-related judgment exception under 28 U.S.C. § 1610(g).

The Ninth Circuit panel affirmed although the panel declined to address the district court’s decision regarding “President Bush’s 2005 Executive Order No. 13382” and the terrorism-related judgment exception under 28 U.S.C. § 1610(g). According to the panel, Iran misidentified the asset at issue by arguing that the FISA exceptions applied to Iran’s property interest in certain equipment that gave rise to the claim on which Iran procured its judgment. The panel held that the relevant asset at issue was not Iran’s property interest in the equipment, but rather Iran’s property interest in the judgment, which was not granted until twenty years after the date before which the Algiers Accords may have rendered the judgment immune from attachment. Because both of Iran’s arguments premised on its property interest in the equipment rather than its property interest in the judgment, Iran failed to show that the judgment does not constitute a blocked asset within the meaning of TRIA and therefore is immune from attachment.

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