Dames & Moore v. Regan

PETITIONER:Dames & Moore
RESPONDENT:Regan
LOCATION:Dames & Moore

DOCKET NO.: 80-2078
DECIDED BY: Burger Court (1975-1981)
LOWER COURT:

CITATION: 453 US 654 (1981)
ARGUED: Jun 24, 1981
DECIDED: Jul 02, 1981

ADVOCATES:
C. Stephen Howard – Argued the cause for the petitioner
Eric M. Lieberman – Argued the cause for intervenor-respondent Bank Markazi Iran
Rex E. Lee – Argued the cause for the the federal respondents
Thomas G. Shack, Jr. – Argued the cause for intervenor-respondent Islamic Republic of Iran

Facts of the case

In reaction to the seizure of the U.S. embassy and American nationals in Iran, President Jimmy Carter invoked the International Emergency Economic Powers Act (IEEPA) and froze Iranian assets in the United States. When the hostages were released in 1981, Treasury Secretary Donald Regan affirmed the agreements made the Carter administration that terminated all legal proceedings against the Iranian government and created an independent Claims Tribunal. Dames & Moore attempted to recover over $3 million owed to it by the Iranian government and claimed the executive orders were beyond the scope of presidential power.

Question

Did the president have the authority to transfer Iranian funds and to nullify legal claims against Iran?

Warren E. Burger:

We will hear arguments this morning in No. 80-2078, Dames & Moore v. The Secretary of the Treasury.

Mr. Howard, you may proceed whenever you’re ready.

C. Stephen Howard:

Mr. Chief Justice, and may it please the Court:

I’ve asked the Marshal to divide my time to 40 minutes opening and 20 minutes rebuttal.

We are here to review two orders of a federal district court denying a motion for a preliminary injunction in granting a motion to dismiss for failure to state a claim for relief.

We are here on an uncontested factual record.

The Government did not put in any factual opposition or evidence and by its motion under Rule 12(b)(6) conceded the facts as pled.

The suit below relates to an earlier lawsuit that was filed by the Petitioner, Dames & Moore, against the State of Iran, an agency of the government called the Atomic Energy Organization of Iran and several Iranian banks that I will refer to as the bank defendants.

In that lawsuit the facts of which are pled in the complaint below, the Petitioner obtained attachment orders from the United States district court.

Those attachment orders were served on third parties and property of various of the bank defendants was thereby attached as security for any–

Potter Stewart:

What was the basis of the federal district court jurisdiction, Mr. Howard?

C. Stephen Howard:

–The federal district court jurisdiction was premised on 28 USC Section 1330, and the provisions of the Foreign Sovereign Immunities Act, in particular Section 1605, the section that deals with whether or not certain states are immune from suit and sets out the grounds therein.

Section 1330 provides that if a state is not immune from suit and is otherwise served in accordance with the provisions of those sections, that personal jurisdiction and subject matter jurisdiction are automatically conveyed upon the federal district court.

Potter Stewart:

So that it is not based upon diversity of citizenship?

C. Stephen Howard:

It was not.

The diversity section was alleged in the jurisdictional allegation in that complaint and, frankly, it’s a mistake.

But the appropriate section was also alleged and that is the only section on which we claimed jurisdiction in that lawsuit.

William H. Rehnquist:

Mr. Howard, your lawsuit was not commenced until after the seizure of the hostages by Iran, was it?

C. Stephen Howard:

That is correct, that is correct.

There were some negotiations between the parties prior to that event and those negotiations were not successful.

They occurred in about September and October, if I recall correctly.

The hostages were seized in early November and the lawsuit was filed in mid-December.

William H. Rehnquist:

Was that after the blocking order?

C. Stephen Howard:

It was after the blocking order; yes.

In that lawsuit, in February of 1981, after extensive litigation below the Petitioner obtained a separate judgment against two of the defendants, the State of Iran, and the Atomic Energy Organization, and separate judgment was entered pursuant to Federal Rule of Civil Procedure 54(b).

The lawsuit went on with respect to the bank defendants.

The Petitioner commenced efforts to levy on its judgment on certain Iranian property in the State of Washington.

And the case stood in that posture when Petitioner filed the lawsuit that is now before the Court.

That lawsuit was filed in reaction to the Algerian Declarations, which the Court would be familiar with, and the executive orders that were promulgated to enforce, carry out those Declarations.

In the Declarations, which were entered into on January 19, 1981, the President agreed… and I would stress, the President, with no participation by the Congress… we’re not talking about a treaty, we’re not talking about an act of Congress.

C. Stephen Howard:

The President agreed to terminate all litigation in the United States pending against Iran.

He agreed to nullify all judgments and all attachments against the Iranians.

He agreed to set up an international tribunal which would, if the agreement was carried out, have some security for judgments that it might render.

It would have a billion dollars.

Beyond that, and whether that tribunal will in fact be set up and operate and how long it will take and how certain its results will be, none of us know.

The tribunal has an exclusion for its jurisdiction, for claims with certain forum selection clauses favoring Iran, and I have set forth in our briefs the text of that exclusionary clause and also the text of the forum selection clause that appears in the contract of Petitioner.

It is our position that Petitioner’s chances of proceeding in that tribunal are problematic.

I don’t think either the Government or Petitioner can establish with absolute certainty how that tribunal would rule, but I think that we can bring to bear our own analysis on those two provisions and conclude at a minimum that things do not look entirely bright for the Petitioner in that tribunal.

William H. Rehnquist:

Is that the one that the Government has said it would urge, and urge the American petitioners before the tribunal to urge that there has been such a change of affairs that–

C. Stephen Howard:

As I understand the Government’s position, in its way, in its brief, it’s very careful, I notice, on this.

It says that the clauses may not be binding; the word in the Government’s brief is, may not be binding, because of changed circumstances, and that the Government is urging the individual companies to take the position those are not binding clauses.

Now, it is not at all clear that the tribunal will agree with that, and I must say, it is not at all clear to me, reading the text, whether the text of the Algerian Declarations even makes that argument availing, because it talks about binding contracts with clauses providing such and such.

It doesn’t say, “contracts with binding clauses”, and I can’t tell even whether the word “binding” modifies the word “contract” or modifies the word “clause”.

So, in any event, this is a tribunal that is going to be one-third Iranian, one-third U.S., and one-third presumably some kind of neutral representatives, assuming the tribunal operates at all.

And we simply have no way of predicting whether or not we’ll be able to have our claim in that court.

Potter Stewart:

–And who picks the neutral members, the so-called neutral members?

C. Stephen Howard:

As I understand it, they have to be mutually selected.

Potter Stewart:

By the other members of the court?

C. Stephen Howard:

By the two adversary–

William J. Brennan, Jr.:

Haven’t they been selected?

C. Stephen Howard:

–The Government’s brief advises us… none of this is in the record, but the Government’s brief states that three arbitrators have been picked.

I have no independent knowledge of that one way or the other.

Potter Stewart:

Three United States arbitrators?

C. Stephen Howard:

And three neutrals, according to the Government’s brief.

William J. Brennan, Jr.:

But the other six haven’t been picked, have they?

C. Stephen Howard:

Again according to the Government’s brief, the Iranians have named their three, the United States have named their three, and the other three have been selected although nothing has happened yet.

They are going to… according to the Government’s brief, again… have a meeting shortly for organizational purposes.

In the meantime we’re almost six months from the agreement and the so-called settlements that were supposed to take place before the tribunal have not taken place at all, to my knowledge.

Now, as I indicated, it’s very unclear whether Petitioner can go to this tribunal or not.

William J. Brennan, Jr.:

Is there any suggestion that we have to decide whether they can or cannot… whether you can or cannot go?

C. Stephen Howard:

No, I don’t think that’s a question that… first of all, the Court couldn’t dispositively resolve that in any event.

As I understand it, that would be a question for the tribunal to resolve its own jurisdiction.

I simply present the Petitioner’s case to you as one in which it is hardly clear that we have any alternative remedy, although it is also my position that even if we have clear access to that tribunal that the President is without power, acting alone, to take us out of the United States district court where the Congress put us and make us go there.

Now, the executive orders–

John Paul Stevens:

Mr. Howard, before you leave the forum selection clause, has the district court in this case decided the effect of that clause on federal jurisdiction yet?

C. Stephen Howard:

–No.

The United States in its initial suggestions of interest that were filed in these cases in February stated that the courts should require the Iranians to take a position in the individual case as to whether or not it belonged in the tribunal or in the district court.

And if, for example, Iran agreed that you couldn’t go there, then the case could proceed, according to this early statement of interest.

John Paul Stevens:

Was that perfectly clear, or does Iran possibly take the position that the clause means what it says?

C. Stephen Howard:

I am confident Iran takes the position that the clause means what it says.

John Paul Stevens:

But has the district court passed on that contention of Iran?

C. Stephen Howard:

No.

The Iranians in our case and to my knowledge in all cases have steadfastly refused to accept the invitation that they take a position.

I believe… you can ask Mr. Shack, but I believe their position is that they have no requirement to take a position in district court.

There are the accords, the President has purported to suspend all claims that may possibly go to the tribunal, and that’s the end of it, for the district court.

John Paul Stevens:

No, I’m not sure I made my question clear.

Putting to one side for a moment the tribunal–

C. Stephen Howard:

Right.

John Paul Stevens:

–They might argue that instead of… say there was no tribunal, would they agree that they’d have to litigate in a United States court as opposed to an Iranian court?

C. Stephen Howard:

Oh, no.

I’m sure that the Iranians would take the position that the forum selection clause in our contract is enforceable.

We take the position that because of changed circumstances it is our position that–

John Paul Stevens:

And the federal district court has not decided one way or the other on it?

C. Stephen Howard:

–Did not decide that question, although that particular question was not contested in the hearing that took place on our judgment.

William J. Brennan, Jr.:

But, in any event, Mr. Howard, the form of your clause requires preliminary conciliation or arbitration by the three-member group?

C. Stephen Howard:

In Iran.

William J. Brennan, Jr.:

Before the clause, at least, requires you to go to the courts of Iran?

C. Stephen Howard:

That is correct.

And the United States takes the position, as I understand, that because there is a prelitigation step, admittedly, in Iran and with the third arbitrator chosen by the Iranian Government, that therefore we are not committed to the sole jurisdiction of Iranian courts.

Now, that’s an imaginative interpretation and I suppose if my client loses this case I may be someday trying to make that argument myself, but I’m not entirely confident that I’m going to succeed.

C. Stephen Howard:

The Executive has now implemented these accords by in fact promulgating a series of executive orders, and those executive orders purport to nullify all attachments and to order the property that is secured by those attachments… and property that’s not secured by attachments… back to Iran under the pain of criminal penalties.

The Executive has not simply unfrozen the property, to let it be in the marketplace and to be moved by the Iranians or attached, as the litigation process may determine, but rather the Executive has ordered the property out of the country and has set criminal penalties for anyone who does not cooperate with that.

In a later executive order the Executive has suspended… that’s the word of the order… all claims in the United States now against Iran, and indicated that… unless it’s absolutely clear that they can’t go to the tribunal and given the United States’s interpretation, no claim is absolutely, is it absolutely clear it can’t go to the tribunal.

So that, in effect, all claims against the Iranians have been suspended.

William H. Rehnquist:

Do you regard the later executive order signed by President Reagan as going further than the executive order signed by President Carter?

C. Stephen Howard:

In logic I think the answer to that is yes, because one of the issues before the Court is whether or not the Executive has the unfettered discretion to settle in his own whim, or for good reason, as he sees it, the claims of Americans against foreign states.

It seems to me that if the Executive has that power… and obviously I want to address that… if the Executive has that power to settle a claim, I suppose he can also give away the security.

So, in that sense, the order by President Reagan might be regarded as going further.

I think it goes… it certainly goes further in terms of infringements on court processes, although you get there only, I think, by an analytic process.

All that it purports to do by itself is suspend the filing.

Now, the effect of these orders together on the Petitioner and its case is frankly devastating.

We had a judgment against two parties we were in the process of trying to levy, we had a lawsuit going on against the rest of the parties with attachments; it’s all wiped out.

Our judgment is nullified, our judgment levies are nullified, our attachments are nullified, we can’t even keep suing the parties who were still before the district court, and our only alternative is to go to The Hague with the time and expense that’s involved there and quite possibly be told that we’re not entitled to present our claim there, and even if we are they only have a small fraction of the money that’s necessary to pay off the claims.

For that reason, we filed an action below seeking injunctive and declaratory relief against the Secretary of the Treasury, and as indicated in the briefs the Government filed a cross-motion under 12(b)(6) to dismiss, our motion was denied, and the Government’s motion was granted, and the district court has indicated in its memorandum that he did reach the merits, if you will, of these constitutional issues presented, because he indicated that he ruled on the basis of the arguments made by the Government.

William H. Rehnquist:

Do you think the district court ruled on your takings clause claim?

C. Stephen Howard:

You mean on the forum selection clause?

William H. Rehnquist:

No, on your Fifth Amendment–

C. Stephen Howard:

We presented that argument to the district court.

It is hard for me to know what-all thoughts went through his mind; we certainly argued the taking in our memorandum.

The Government only fleetingly addressed it, as I recall, in its papers.

The argument certainly has been rejected by the district court.

William J. Brennan, Jr.:

Incidentally, Mr. Howard, your attachments were obtained based on licenses that you secured under the regulations?

C. Stephen Howard:

Well, we didn’t actually go secure them in the sense of making an application.

The Executive, I think through the Secretary of the Treasury, promulgated a series of regulations in which he said, judicial proceedings are authorized.

And then a subsequent regulation says, the authorization for judicial proceedings includes attachments.

And so we did proceed to attach with those regulations in effect, although it is our position that under the case of Zittman v. McGrath the Executive do not have the power to prevent those attachments, so why–

So you could have got them without–

C. Stephen Howard:

–That’s right.

So long as they didn’t interfere with his freezing program.

So long as they didn’t interfere with his freezing program we could get them anyway.

C. Stephen Howard:

Now–

Byron R. White:

–Then you don’t think, this is a part of your legal argument, I’m sure, you don’t think Zittman was overruled or limited by Orvis?

C. Stephen Howard:

–No, I think Orvis deals with a different question.

Byron R. White:

Yes, well, you can wait; I guess you can wait on that.

Well, both of them deal with the TWEA, don’t they, which was in effect repealed by the IEEPA?

C. Stephen Howard:

Well, they both deal with the Trading With the Enemy Act in situations in which the Alien Property Custodian exercised his power to vest, a power the President does not have–

Byron R. White:

Under the IEEPA?

C. Stephen Howard:

–under the International Emergency Powers Act.

In both cases, the Alien Property Custodian vested the property.

In one case he purported to vest only whatever the enemy had and the other, in the Orvis case he vested… it’s called a res vesting; he took it.

And the Court in Orvis… first in Zittman, they said, the attachment is good as between debtor and creditor, as long as it doesn’t interfere with the freeze program that the President is trying to carry out.

But in Orvis he did a res vesting and the Court said, when the Alien Property Custodian takes the property, when he seizes it and vests it under a power he doesn’t have now, he takes free of the attachment.

And so the creditor in Orvis was not secured, not able to get his property back under Section 9 of that Act, but became an unsecured creditor under Section 34 of that Act, none of which protections do we have in this case.

Byron R. White:

I’ll wait until the legal part of your argument.

C. Stephen Howard:

I at least understand, Mr. Justice White, where you want me to address my argument.

Byron R. White:

That’s all right; go ahead.

C. Stephen Howard:

Never before in American history has a President, acting alone without Congress, without two-thirds of the Senate, attempted to do what the President of the United States has attempted to do in this case.

Never has a President acting alone taken claims pending before United States district courts, validly and enforceably there under congressional statute, and taken them out of those courts and put them in an international tribunal.

Never.

Never before has a President acting alone or acting under any statutory authority that now exists, or acting under the Trading with the Enemy Act, even in its older form, never has a President acting alone attempted to transfer out of the country valuable assets of a foreign country that serve as potential security for the claims of American citizens, leaving them unpaid and without any practical remedy.

Byron R. White:

Well, if the President is acting pursuant to a statute, he’s hardly acting alone, is he?

C. Stephen Howard:

I agree with you completely.

Byron R. White:

But you say that even under–

C. Stephen Howard:

Just historically.

Byron R. White:

–Even with or without congressional agreement, you say this has never happened?

C. Stephen Howard:

He’s never done it.

Never happened.

Byron R. White:

How about with the aid of a treaty?

C. Stephen Howard:

With the aid of a treaty at least we have similar cases to the present case.

Byron R. White:

It has happened, hasn’t it?

C. Stephen Howard:

Certainly.

Byron R. White:

And the Schooner, how about the Schooner Peggy?

C. Stephen Howard:

Exactly.

That is a treaty case.

And then, let me quite clear about this.

We do not contend that the political departments of the Government acting together could not do everything that has been done.

They could, although they would have to pay for the taking.

But they could do everything that’s been done.

The question is whether the President can do it, acting alone, without two-thirds of the Senate, without the majority of both houses of Congress.

Byron R. White:

Well, then, I take it you say that if we construe, if the IEEPA is construed to authorize the President to take these steps, you agree that it’s constitutional in this–

–But they might have to pay.

They might have to pay.

C. Stephen Howard:

Yes.

We do not contend that the Emergency Powers Act is unconstitutional.

We do contend that it doesn’t cover this case.

And even if it does, it doesn’t cover everything that was done.

That goes to Mr. Justice Rehnquist’s question.

The order suspending the claims is not justified by that Act.

I don’t think anyone seriously contests that.

Potter Stewart:

If it does cover the claims… would you still agree that it was a constitutional statute?

C. Stephen Howard:

If, to the extent that the Emergency Powers Act–

Potter Stewart:

In other words, is this a case of only statutory construction?

C. Stephen Howard:

–Only as to the transfer of the assets, Mr. Justice, only as to the transfer of the assets.

It remains a very thorny constitutional question, whether the President can dip into the courts and pull cases out.

Because–

Potter Stewart:

Even if expressly authorized to do so by Congress, both houses of Congress?

C. Stephen Howard:

–No… well, I don’t think the Government seriously contends that the International Emergency Powers Act authorized the President to take those cases out of court.

They do contend, quite seriously, that it authorized them to send the property back.

But hypothetically–

Potter Stewart:

I thought you conceded a moment ago that if the statute clearly authorized the President to do what he did in this case–

C. Stephen Howard:

–Yes?

Potter Stewart:

–Then you wouldn’t question the constitutional power of the Congress to authorize the President to do so, but would say that the only constitutional question then remaining would be just compensation under the Fifth Amendment?

C. Stephen Howard:

A taking.

I think that’s correct.

If the statute in fact authorized everything here–

William H. Rehnquist:

Are you referring to the… you’re not referring to the Hostages Act?

You’re referring to the IEEPA?

C. Stephen Howard:

–I am, yes; if that statute were to be construed to authorize everything, although none of the courts below have adopted that argument.

What they have said is that it authorized him to send the assets back.

That’s all they have found that the International Powers Act authorizes.

William H. Rehnquist:

Judge Breyer was the first… wasn’t he?

C. Stephen Howard:

Yes, Judge Breyer did.

I’m sorry.

When I said the courts, I was referring to majorities.

That is correct.

Now, perhaps I should turn, in fact, to the International Emergency Powers Act, because that seems to be the first question, in a sense.

This statute is a very old statute, it’s been before the Court many times in prior forms.

The language of the statute is hodgepodge.

The syntactic structure, you have seven verbs in the disjunctive, followed by fourteen nouns in the disjunctive.

That’s 98 combinations of things the President can do.

And wait, let’s see what he can do them to: any property in which either the foreign country or any citizen has any interest… not a fee interest; any interest, and not only is it the foreign country or the citizen, it’s any foreign country; not just the foreign country that happens to have provoked the emergency.

This statute, if literally read, says that if I bought a house and needed a swing loan for my down payment and I had a neighbor who was a Canadian citizen and lent me some money and I put a third trust deed on my house, and we had an emergency with the Iranians, the President could make me deed the house to the Ayatollah.

That’s what the statute says.

Byron R. White:

And you agree that would be constitutional?

C. Stephen Howard:

No.

Well, maybe I went too far.

Potter Stewart:

I thought you had, with the sole exception of your right to just compensation for it.

C. Stephen Howard:

If the… it is our position that the Congress could in fact by statute–

Potter Stewart:

Have authorized precisely that.

C. Stephen Howard:

–have authorized that.

C. Stephen Howard:

Sure, that would be a taking for public use, for which I would then seek compensation.

Potter Stewart:

Right.

C. Stephen Howard:

That’s correct.

But our position is that it can’t be read literally.

That just simply doesn’t make any sense, that if you look–

John Paul Stevens:

Or as pointed in actual treaties here, you’re not questioning the constitutionality or the validity of the treaties, are you?

C. Stephen Howard:

–Absolutely not.

Absolutely not.

John Paul Stevens:

Well, then, what about, why do we worry about all these hypothetical cases?

This is not an overbreadth case.

I mean, supposing it does authorize some things that couldn’t be upheld, couldn’t uphold?

What difference does it make?

C. Stephen Howard:

The hypothetical is offered only to show that in trying to figure out what dimensions to give to the statute, you can’t just go by the words.

John Paul Stevens:

Well, we know that it authorized this freeze and you don’t contest the validity of this freeze.

C. Stephen Howard:

That’s correct.

But the freeze–

John Paul Stevens:

And therefore you don’t contest the validity of applying this statute to this bundle of assets.

C. Stephen Howard:

–That is correct.

That is correct, but this statute, our position is, this statute authorizes the President to unfreeze, to unfreeze.

He’s entitled to freeze, and he can unfreeze.

But the structure of the statute is that under the Trading With the Enemy Act, he had two broad powers, and the cases and the articles that we’ve cited, contemporaneous with that Act, I think make relatively clear that the bundle of words that we’re dealing with now was always referred to as the freezing or the blocking power.

That’s the freezing or the blocking power.

Under the Trading with the Enemy Act he was also entitled to vest, he could take the property himself and use it for the benefit of the United States, although if he did that he was obligated ultimately to distribute to the creditors of the country from whom he took it.

In enacting the Emergency Powers Act the Congress took away the power to vest.

Now, in the Trading with the Enemy Act, if you just look at that statute by itself, it seems, to me at least, inconceivable that the President could when he vested, he was required to hold the assets and ultimately distribute them to American creditors.

It seems inconceivable that the freezing power would have allowed him to simply send the assets back to the other country.

Mr. Howard–

C. Stephen Howard:

Away from the creditors.

Byron R. White:

–I suppose you agree that Congress could have passed a statute… and of course it has, in some respects in the Foreign Sovereign Immunities Act… but it could have a statute and say, property of foreign countries shall not be subject to attachment in the United States.

C. Stephen Howard:

That’s correct.

Byron R. White:

And they could also authorize the President on particular occasions to immunize foreign property from attachment.

Now, you have to argue that the powers of the President under the IEEPA, including the power to freeze, did not allow him to put out an order, an enforceable order immunizing Iranian property from attachment.

You have to argue that.

C. Stephen Howard:

No, I wouldn’t… I do argue that.

Byron R. White:

Well, I don’t know why, because–

C. Stephen Howard:

Because even if you could immunize from attachment, Mr. Justice, even if you could immunize–

Byron R. White:

–Well, I’m just talking about the attachment issue, I’m not talking about the claim.

C. Stephen Howard:

–I understand, but nevertheless, he couldn’t send the property back.

All he can do is unfreeze.

He has the power to freeze and block, and when he decides that it’s appropriate to–

Byron R. White:

I know, but that wouldn’t do you any good as far as your attachment is concerned.

If the President has immunized Iranian property from attachment and he’s done it legally pursuant to his statutory powers, your attachment isn’t worth a plug nickel, it wouldn’t seem to me.

C. Stephen Howard:

–That depends on whether or not he, in his regulatory scheme, made that attachment revocable or not.

Byron R. White:

Right.

And I know what you argue, that he… do you concede he had the power to license?

C. Stephen Howard:

Not if my attachment didn’t interfere with his freeze power.

Byron R. White:

I know you have to argue that, but if we happen to disagree with you on that, then the only question is, a construction of his order as to whether the revocability part of it intended to be revocable retroactively.

C. Stephen Howard:

Yes, but there’s yet another question, Mr. Justice, which is in some sense the most paramount one.

Can he send the property back?

Because, as a practical matter, if he unfreezes, we will all be at the courthouse getting new attachments.

Byron R. White:

Well, I know, but if your attachment isn’t worth anything, you certainly haven’t been deprived of any property by the vacators of your attachments?

C. Stephen Howard:

If my attachment is not worth anything, yes.

Yes, I think that’s correct.

Byron R. White:

And that’s whether or not he can send the property back.

C. Stephen Howard:

Well, no–

Byron R. White:

If it isn’t going to do you any good as far as attachments are concerned, the property could remain here as long as his order immunizing it from attachment… your attachment isn’t worth anything.

C. Stephen Howard:

–Oh, as far as… that’s correct.

But our position is that even if he can, even if he could immunize it from attachment, the most he can do is freeze the property and keep that immunization in effect, and some day he’s got to unfreeze.

Byron R. White:

Well, now, I’m very interested in what your argument is as to whether he has the power to immunize the property from attachment, which he purports to do when he demands a license to attach.

Now, why do you think the IEEPA does not authorize the President to relieve foreign property from the burdens of attachment?

C. Stephen Howard:

Because it is the same words that are in the Trading with the Enemy Act that are construed by the Court in Zittman, and the Court in Zittman says that if the attachment doesn’t require a transfer of ownership or possession and they distinguish Propper v. Clark on that basis, it doesn’t require transfer of ownership or possession, or otherwise interfere with the freezing… for example, I suppose, if completing the attachment required moving the property in some way that the President felt took it out of his control, if the provisional remedy interferes with the freeze, then, of course, he can regulate or prohibit it.

Byron R. White:

Of course, there were licenses in Orvis, weren’t there?

C. Stephen Howard:

There may have been… the claimant in Orvis was not licensed.

The plaintiff in Orvis was not licensed.

He had an unlicensed attachment.

Had he had a licensed attachment, he would have won the case.

But he was unlicensed and the Court held that an unlicensed attachment is an junior right when the President vests; something he can’t do here; he can’t do here.

John Paul Stevens:

Mr. Howard, let me test your suggestion that there’s no power to send the assets out of the country.

What if at the time of the initial freeze order the President had also promulgated another regulation saying that on January 19 of next year I propose to do the following with the assets, which in fact he later did.

And that in the meantime attachments may take place but they will only be effective in the event that my program falls through.

But if it does go through then the assets will, pursuant to the freeze order, be taken out of the country.

Would you say that would have been invalid?

C. Stephen Howard:

Yes, he can’t… there’s nothing that allows him to send the property out of the country.

John Paul Stevens:

What if he froze and said, next week I’m going to ship all of these assets out of the country?

Could he have done that?

C. Stephen Howard:

Pardon?

John Paul Stevens:

What if he’d frozen on whatever the date of the freeze was and said, ten days from now all of these assets are going to be shipped over to the Bank of England?

C. Stephen Howard:

And anybody who doesn’t do it will go to jail?

Because that’s where it now sets.

John Paul Stevens:

Yes.

C. Stephen Howard:

He can’t do that under the freeze.

That’s not freezing, that’s not freezing, that’s moving… that’s vesting and taking the property away.

John Paul Stevens:

All he can do under your view is maintain the status quo?

C. Stephen Howard:

That’s right.

He can administer the property.

I mean, he can do the things you need to do to sell it.

John Paul Stevens:

Well, say, as a matter of administration I’m going to send it over to the Bank of England so it will be free from attachments?

And your view is he can’t do that, as I understand it.

C. Stephen Howard:

Yes.

That’s a difficult question, I must admit; that’s right around the borderline.

C. Stephen Howard:

But I’m trying to talk about a difference between freezing and controlling and blocking this property, and under the Trading with the Enemy Act he could then take step two and take it, but he can’t–

John Paul Stevens:

Yes, well, reaching the vesting question–

C. Stephen Howard:

–Right.

But he can’t.

He can’t do that, and I admit, I freely admit, that there are words in the statute to compel a transfer, just as he could compel me to transfer my house, but never was that done.

And it couldn’t have been done because that would obviously have frustrated American creditors who were to be protected if he vested.

William H. Rehnquist:

–Your answer to Justice Stevens’ question is based on the existence of the IEEPA, isn’t it?

Not just on the president’s power alone?

C. Stephen Howard:

That’s correct.

On the issue of the President’s power alone, the Government has put in a lot of historical information which they say amounts to a practice, a consistent practice of the Executive to do just what he has done here.

And our position is that these examples and these precedents, in fact, have been totally stood on their head.

That is to say, historically, Americans with claims against foreigners were disabled.

They had to deal with the sovereign immunity doctrine.

First it was absolute, then restricted but not applied very consistently.

Even if they could get around immunity they had no way of getting personal jurisdiction over the foreign states, so they had to try to work out some quasi-in-rem jurisdiction and if they ever got as far as a judgment they couldn’t enforce it, there were no execution provisions in this country for the enforcements of judgments against foreign states.

So that, before the Foreign Sovereign Immunities Act, there was no practical way to really sue a foreign state in this country.

And naturally, what happened is, individuals went to the Government and said, please help us, we have been hurt, our property has been expropriated, or they breached this contract, or whatever the claims were.

And the Executive, in service to the American citizens, has tried to settle many of those claims and to be sure, occasionally a citizen has been unhappy with the result that the Executive may have obtained.

But the history is of using diplomacy to aid the private citizen, not to sacrifice the rights of the citizen to aid a diplomatic goal.

It’s totally turned around here.

The Foreign Sovereign Immunities Act was intended to put a category of these claims into the courts and out of the process of diplomatic settlement.

Now, the Government takes the position that the Foreign Sovereign Immunities Act deals only with immunity, it doesn’t have anything to do with settlement.

I think that that really rather misses the point.

Immunity is a way of deciding which track you’re going to be in.

Are you going to litigate?

Or are you going to try to settle it diplomatically?

And immunity is the device by which that procedural choice is made, and this is not something that has escaped people in the past.

Let me quote if I may, please, from Mr. Justice Stone, Chief Justice at the time, in the very case that is the leading case on absolute sovereign immunity, Ex Parte Peru, and there the Secretary made a suggestion of immunity, and the Chief Justice says,

“When the Secretary elects, as he may and he appears to have done in this case. “

–and I might say, there’s nothing in the record other than his assertion of sovereign immunity…

C. Stephen Howard:

“when he elects to settle claims against the vessel by diplomatic negotiations between the two countries rather than by continued litigation in the courts, it is of public importance that the action of the political arm of the Government taken within its appropriate sphere be promptly recognized. “

Now, the point is that the Chief Justice recognizes that the immunity decision is a choice.

You assert it because you’re going to now try the diplomatic settlement rather than litigation.

And similarly, in testimony before the House committee, in enacting the Foreign Sovereign Immunities Act, the Justice Department… Witness: Mr. Ristau… says,

“A successful plea of sovereign immunity interposed by a state does not terminate the claim. “

“Rather, the claim is merely transferred to the diplomatic arena, which is ill-suited for the settlement of private law or commercial disputes. “

Now, the Congress has decided in the Foreign Sovereign Immunities Act that certain classes of cases shall not be transferred to the diplomatic arena, that the litigants shall be given the powers and the rights that go with litigation in this country, and they have redefined the jurisdiction of the United States district courts–

Byron R. White:

I take it that Act also recognizes attachments in certain circumstances?

C. Stephen Howard:

–It does.

Byron R. White:

Including this one?

C. Stephen Howard:

That’s certainly our position.

The Government obliquely questions that in its brief, but I take it that that issue is not here before the Court.

It does recognize attachments in certain circumstances and, more importantly, not only does it recognize attachments, for the first time in United States history it has execution provisions.

You can do something with a judgment if you get it.

The Foreign Sovereign Immunities Act accomplished four things.

It codified the restrictive principle of sovereign immunity; it put the sovereign immunity decision entirely in the courts, entirely in the courts.

The Executive was to be taken out of the process; no more politics.

The legislative history is full of this talk, we don’t want to have individuals’ claims being resolved by international policy considerations.

The case, Rich v. Naviera, the Cuban hijacking and the Eastern Airlines hijacking, was in front of them at that very time, where the Executive had traded an immunity decision to get the plane back.

And they were very unhappy with that decision.

So they put this in front of the courts, and they put in provisions for service of process, which was effectively a way of getting personal jurisdiction over a foreign citizen, which you could never do before, and they put in execution provisions.

So now there were real lawsuits–

William H. Rehnquist:

The IEEPA was passed the year after that.

C. Stephen Howard:

That’s correct.

William H. Rehnquist:

So that presumably Congress was delegating to the President some authority belonging to the political branches that might be inconsistent with the FSIA?

C. Stephen Howard:

That is theoretically possible but it’s pretty hard to read the language of the FSIA that way.

The only argument that I have heard which admittedly was accepted by one judge, although interestingly enough he said, I accept this argument because I am terrified by the Executive’s claim to this inherent settlement power which it could use at any time, not even in an emergency or not, that judge did find appealing the argument that IEEPA prohibits… I have to pick out the magic words… prohibits a citizen from exercising a right with respect to Iranian property.

And he said, I think filing a lawsuit is such an act.

Now, I guess I’d want to say two things to that.

First of all, the traditional Government argument has been that somehow the President could freeze the claim, the claim of the United States citizen.

C. Stephen Howard:

That doesn’t work out very well because it’s pretty hard to say that the claim of the U.S. citizen against Iran is property in which the Iranians have an interest.

So that one doesn’t work.

But this other one, that Judge Breyer went for, I think, is equally unavailing because a lawsuit isn’t the exercising of a right with respect to property.

If you get a judgment and you go out and try to get some property, then you’re exercising a right with respect to property.

But we do not deny that the Executive, as long as the emergency continues, could prevent execution, he could freeze and he could stop the assets from being transferred to the particular judgment creditor.

But it would be, it seems to me–

Byron R. White:

Why couldn’t he stop prejudgment attachments, then?

C. Stephen Howard:

–Because they don’t interfere with his freeze.

The execution, Mr. Justice White, would take the property away from the President.

But if the attachment simply lies there as a lien, not preventing the President his use of the property–

Byron R. White:

I take it, if there hadn’t been the freeze, if the President had taken no action, your lawsuit under the FSIA would have been perfectly proper and you could have gotten judgment and levied?

C. Stephen Howard:

–I wouldn’t be here.

Byron R. White:

But the Government says the President is authorized by the IEEPA to take it out of the judicial track and put it in the diplomatic.

C. Stephen Howard:

The Government does make that argument.

It’s made in a half–

Byron R. White:

At least, that the President is empowered to stop your lawsuit and to lift your attachments.

C. Stephen Howard:

–I think it’s pretty hard.

You’ve got to stretch the words even of that statute, to say that he’s authorized to stop the lawsuit.

The time that I had asked the Marshal to hold me to on the opening argument has expired.

Warren E. Burger:

Mr. Lee.

Rex E. Lee:

Mr. Chief Justice; may it please the Court:

There is every indication that if you look at the situation just from the standpoint of the claimants themselves in this case, the entire body of American claimants taken as a whole, that their situation today is much better than it was prior to the November 14, 1979, order before the Government ever entered this picture.

On the one hand the problems that the claimants faced absent any kind of action by the Government included these.

There were serious problems in most of the cases with respect to jurisdiction.

In many of the cases there were also both sovereign immunity and active state defenses, and with regard to the attachment or the property that might be available for the levy of execution following judgments, if any were ever entered, the November, 1979, order was made in response to reports that the Government of Iran was about to withdraw its funds.

Now, contrast that with the circumstances that exist because of the acts that were taken by the President, his January 19 orders and the subsequent order of President Reagan on February 24.

In the first place, all problems of jurisdiction, sovereign immunity, and act of state have been stripped away.

In addition, there is a settlement account in the amount of $1 billion that is established, and the Government of Iran has guaranteed to pay all of the claims, both expropriation and commercial claims, presently estimated to be on the order of about 2,500.

And that when the settlement account drops below–

Potter Stewart:

2,500 claims?

Rex E. Lee:

–That is correct; that is correct.

That when this settlement account drops below one-half million dollars, then the Government of Iran is obligated to replenish it.

Warren E. Burger:

How would that be enforced if the Government of Iran?

Rex E. Lee:

Traditional ways that international obligations are enforced.

Their obligation, their stature in the community of nations is at stake.

Potter Stewart:

Well, those traditional forces didn’t seem to prevail in the seizure of the hostages themselves, did they?

Rex E. Lee:

There is another available remedy because of this settlement, Justice Stewart, that was also not available prior to the agreement itself, and that is that any of the tribunal’s awards are enforceable in the courts of any country in the world.

Potter Stewart:

But that doesn’t answer the Chief Justice’s question.

Rex E. Lee:

No, it does not, and of course this Court cannot know and no one can know to what extent any country may conform with its international obligations.

William H. Rehnquist:

And the more you read the newspapers, the more doubts you have.

Rex E. Lee:

Yes, and yet, Justice Rehnquist, I think that it would be improper for an American court to base a judgment on the assumption that a foreign nation will or will not conform to its obligations.

Potter Stewart:

We’re not dealing here with an assumption.

We’re dealing with an historical fact.

Rex E. Lee:

Historical fact also includes the fact that in addition to the settlement fund in the initial amount of $1 billion, which is more than they had in the first place–

Potter Stewart:

Yes?

Rex E. Lee:

–they do also have the right to go into the courts of any country in the world and when you take into account the fact that we’re dealing here with a country that is very active in commercial oil international transactions, the likelihood that there will be assets available in many countries of the world is rather high.

And even–

Warren E. Burger:

Unless Iran isolates itself totally from the rest of the world and?

Rex E. Lee:

–From the rest of the world, and it would be paying a very high price if it did that, of course.

Harry A. Blackmun:

Mr. Lee, how much are we really talking–

–collectibility of your judgment in terms of your right to get the judgment, do we?

Rex E. Lee:

Well, all I’m saying is, Justice Stevens, that while it is true, as this Court said in United States v. Pink, that this kind of authority in the President has a much broader use than just the assurance of the rights of American claimants.

But this is one of the bargaining chips, if you will, this is part of a leverage that the President can and should use in achieving the normalization of relations with foreign countries.

My only point is that in this case the body of American claimants taken as a whole is much better off than they were prior to the time that the Government ever entered this picture.

Now there may–

John Paul Stevens:

That goes to whether it was a good deal or not, it doesn’t go to whether the President had the power to make the deal.

Rex E. Lee:

–That is correct.

Potter Stewart:

Well, but so far in your argument, you’re just telling us what a good deal it was.

Rex E. Lee:

Well, all I am saying is, Justice Stewart, that the proposition that this was used solely as a bargaining chip for the release of the hostages does not tell the entire story.

And with respect even to the question–

Potter Stewart:

Thus far your entire argument has just been directed to what a favorable, how much all these claimants have been helped.

Rex E. Lee:

–Well, so far I’ve only been going for five minutes and I do intend to get to–

Potter Stewart:

I know.

Rex E. Lee:

–This was solely a matter of flushing out the facts.

Let me come, then, to the legal issue.

Or, let me cover one other matter insofar as the facts are concerned, and that is these forum clauses.

Even there the claimants are considerably better off because of the fact that with the agreement they do have an additional argument that was not available to them initially flowing from the combination of Article V, which refers to, specifically, to changed circumstances, and Article II, which talks about the fact that it must be a binding contract which in turn can tie back to Article V.

Turning then to the law.

In our view, there is a single issue that undergirds both of the questions, that is, both the question of power to nullify attachments and transfer assets, and also the power to settle claims.

And it concerns the power of the President to act in an international crisis whose nature and magnitude are such that if it to be resolved it has to be resolved by one person and one person alone, and under our system of argument that person is the President.

William H. Rehnquist:

Mr. Lee, is this independent of any compensation clause question?

Rex E. Lee:

That is correct, and I hope to get to the compensation–

William H. Rehnquist:

What is the Government position on that?

Rex E. Lee:

–The Government’s position on compensation is this, Justice Rehnquist, that the Petitioner’s claims for compensation are premature at this time.

The reason that they’re premature is that no one knows whether they have suffered any damage or not because we don’t know and we cannot know that unless and until the tribunal has completed its work.

William H. Rehnquist:

So the Government doesn’t concede they would have any remedy under the Just Compensation Clause of the Fifth Amendment if in fact they do suffer loss?

Rex E. Lee:

Well, I find it difficult to take the position that the exception that Judge Duffy found in the Tucker Act jurisdiction under the treaty exception could be applicable.

And the reason is that under this Court’s decision in Hughes Aircraft v. United States, that turns on whether

“plaintiff’s claim could conceivably exist independently of and separate and apart from the subject treaty. “

And this one, I think, simply doesn’t.

Byron R. White:

So, am I to conclude that you suggest it would not be inappropriate in this case, or that the issue of the remedy in the Court of Claims may be decided?

Rex E. Lee:

Well, I think–

Byron R. White:

I thought the Government’s position up to now had been that that issue was premature also.

Rex E. Lee:

–Well, I think it is premature and the reason that it’s premature is because of the fact that we don’t know as of this point in time whether or not any damage has been suffered or will be suffered by these claimants.

William J. Brennan, Jr.:

You mean that’s because of the availability of other fora?

Rex E. Lee:

That is correct.

William J. Brennan, Jr.:

The arbitration commission is one and what, the courts of Iran are another?

Rex E. Lee:

Well, principally what the–

William J. Brennan, Jr.:

And as for this Petitioner, there is, I gather, also this intermediate–

Rex E. Lee:

–Conciliation effort.

William J. Brennan, Jr.:

–Yes.

Rex E. Lee:

Because, under President Reagan’s February 24 order, all that happens to these federal claims is that they are suspended, they are not terminated, and in the event that the tribunal determines that it does not have jurisdiction, then that suspension itself is terminated and they can proceed with their claims.

William J. Brennan, Jr.:

Well, then, do I understand, the Government does not take the position that the mere availability of another forum or fora, merely that, answers the taking claim?

Rex E. Lee:

Well, it makes it–

How about steel or?

Rex E. Lee:

–It makes it premature in this case–

William J. Brennan, Jr.:

That wasn’t my question.

Do you take the position that the mere availability of these other fora in and of itself takes, answers the taking claim?

Rex E. Lee:

–No.

It does not.

It is conceivable–

William J. Brennan, Jr.:

It may be at the end of the road they’d still have a taking claim but not until they’ve gone to the end of the road.

Is that correct?

Rex E. Lee:

–That is correct, Justice Brennan.

William H. Rehnquist:

Well but then, doesn’t the Government have to answer the question, what if they go through all these steps and come back and can show a loss, then do they have a takings claim?

Rex E. Lee:

Justice Rehnquist, I think the answer to that is no, but it need not be answered in this case.

But to be–

William H. Rehnquist:

But if it does–

Rex E. Lee:

–But if it does–

Byron R. White:

–You suggest what the answer is.

Rex E. Lee:

–That is correct; that is correct.

William H. Rehnquist:

That there is no takings, and that the President can violate the Bill of Rights on his own?

Rex E. Lee:

No, no; no.

Clearly that is not.

But that rather–

Byron R. White:

If there’s still a taking, you think there’s a remedy for it?

Rex E. Lee:

–That is correct, and that remedy is the Tucker Act.

Byron R. White:

Yes.

Rex E. Lee:

Because the treaty exception simply does not apply.

Lewis F. Powell, Jr.:

Mr. Solicitor General, do I understand you to say there has been no termination provided for in this agreement?

Lewis F. Powell, Jr.:

No termination of the claims?

Rex E. Lee:

They have been suspended.

Lewis F. Powell, Jr.:

Your opening brief says there has been a termination.

Your opening brief also says the agreement provides for a termination.

Look on page 7.

Rex E. Lee:

The language of the–

Lewis F. Powell, Jr.:

It’s the first full paragraph.

“The Agreement states that “the purpose of both parties” is “to terminate all litigation”. “

and it goes on–

Rex E. Lee:

–Yes.

Those are the Algerian Declarations.

Lewis F. Powell, Jr.:

–Yes, that’s what we’re talking about, isn’t it?

Rex E. Lee:

That is correct.

That that was the purpose, was to terminate.

Lewis F. Powell, Jr.:

But you’re saying that that purpose is not accomplished?

Rex E. Lee:

Well, the implementing order did not go quite that far.

And the relevant order here is President Reagan’s order of February 24, It says that the claims are suspended, and the effect is this, that in the event that a tribunal determines that it does not have jurisdiction, then the suspension is lifted and they’re free to pursue the remedy in the courts.

Lewis F. Powell, Jr.:

If you settle a claim, Mr. Solicitor General, don’t you terminate it?

Rex E. Lee:

No, not necessarily, it’s more–

Lewis F. Powell, Jr.:

Really?

Rex E. Lee:

–Well, it is settled in the sense that, Justice Powell, that it is suspended in the courts.

That doesn’t mean that they lose the case.

Something like abstention, they simply hold onto it.

Lewis F. Powell, Jr.:

That was not my experience in practicing law.

Rex E. Lee:

To await the outcome, to await the outcome of the determination by the tribunal.

In the event that the tribunal determines that it does not have jurisdiction, then they are free to pursue their claim in the court.

In the event that the tribunal determines that they do have jurisdiction, then it is terminated.

John Paul Stevens:

I’m puzzled by perhaps the same question that Justice Powell has asked.

But I understand under the executive order they’re suspended, which means that if the tribunal says, we have no jurisdiction, they could be refiled in a federal court.

Would that not violate the treaty, the Algerian Declaration?

Rex E. Lee:

That is a question, of course, for another day.

John Paul Stevens:

You don’t have a position on that yet?

Rex E. Lee:

No, I certainly do not.

We think that the right position is that it is consistent with the general objective.

That matter of terminating the claims was a statement that was made at the beginning, a broad statement of purpose, and our position would be that the suspension, awaiting the outcome of the determination by the tribunal, is generally consistent with that–

Byron R. White:

Well, Mr. Lee, I take it then the Government position is that we certainly shouldn’t decide in this case or in any other one that the tribunal does not have jurisdiction?

Rex E. Lee:

Of course not.

And I–

Byron R. White:

Well, I don’t know, that’s not so clear.

The argument’s pretty strong, at least in some of the cases pending around, that the treaty would exclude some of these claims.

It seems to be, looks clear, and… but if the tribunal does not have jurisdiction and the claimant is remitted to the courts and he gets a judgment, what the treaty has done, since the United States promised to end all suits, in the instance I am posing, that suit wouldn’t be over.

If there was a judgment, however, it would not be enforceable anywhere else in the world, would it?

Rex E. Lee:

–That is correct.

Byron R. White:

So, just because in international law the United States will have broken its treaty obligation.

Rex E. Lee:

Well, there might conceivably be an argument to that effect, at that point in time.

I’d like to come to–

William J. Brennan, Jr.:

I’m sorry, Mr. Lee, I confess I’m a little puzzled exactly what the Government’s position is as to what if any part of the taking question we should answer?

Rex E. Lee:

–We think, Justice Brennan, well, my end of that, and here is our position.

We think that you could decide at this time that there is no taking.

William J. Brennan, Jr.:

Either as to the attachments or the?

Rex E. Lee:

Either as to the attachments or the claim settlement.

And briefly, the reason is this.

As to the attachments, it’s because the only attachments in any of the cases that are at issue here, were attachments that were secured pursuant to the revocable license.

William J. Brennan, Jr.:

So there’s no property–

Rex E. Lee:

That is correct.

They derive their life from that license and that license has now been canceled.

William J. Brennan, Jr.:

–Now, what about the claim settlement?

Rex E. Lee:

All right, now as to the claim settlement, it turns on this matter that we’ve just been talking about.

All that the President has done is to suspend those claims.

Part of them, the tribunal will determine that it has no jurisdiction.

Rex E. Lee:

As to those, there has been no taking because they can come back into court.

Sans attachment, to be sure, but those attachments also owed their life to the license.

Now, with regard to the others, where the tribunal either determines that to make an award or not to make an award, then the only way that you could say that there has been a taking is to say that by settlement of a dispute through another alternative means of dispute resolution is a taking.

And particularly in today’s world, with all the attention that is being given to the matter of alternative means of dispute resolution, it would be very unfortunate for this Court to enter a judgment that settlement through alternative means of dispute resolution raise Article III problems.

William H. Rehnquist:

How do you distinguish your answer to Justice Brennan from the decision in the railroad reorganization cases?

Rex E. Lee:

Well, it may be… those of course are… the difference there is differences in degree.

And it’s a question of imminence and the Court may well want to say.

The way I distinguish it is, that we simply cover the waterfront, in my view, with all of the actions that the President did and that there is a solid basis for this Court to say that under no circumstance can there be a taking, because you have both the attachments covered by the license point and you also have the claim settlement authority covered by the fact of the suspension.

Byron R. White:

Well, at least, Mr. Lee, it seems to me your very assertion that the taking question is premature with respect to the claims is an assertion that as of right now there has been no taking.

You have to at least say that, don’t you?

Rex E. Lee:

Yes, as of right now, there certainly has not been a taking.

Now, to finish it on out, what you could not do today is to say that there has been a taking.

I think you can today say there has not.

What you could not do today is to say that there has, and that would bring you to the question that everyone wants me to answer and that I think I have answered, and that is, in that event is there a remedy?

And the answer to that is, it seems to me, as I read that treaty exception to the Tucker Act, that there is.

Byron R. White:

That’s the United States position, not just Mr. Lee’s, I take it?

Rex E. Lee:

That is correct.

Now coming to the question of the authority of the President to transfer the assets and nullify the attachments, it is agreed on all sides that that is covered by the IEEPA, and I think little more need be said by that.

That puts it in Category One of Justice Jackson’s three categories.

I understand Mr. Howard’s statement that it is very broad language, but I think that relates only to the taking question, which I’ve already covered, and does not pertain to the President’s power.

Moreover, coming out of this Court’s declarations in United States v. Pink and the Curtiss-Wright case, there is certainly a great deference in these matters of delegations of broad authority to the President.

And indeed, in the IEEPA itself, it says that this power will be exercised only with respect to an unusual and extraordinary threat which amounts to a national emergency.

Let me come then to what I regard as the hardest problem in the case, and that is, this power of the President to settle outstanding claims.

There is no question that this aspect of the case does not fit as neatly within any identifiable congressional statute as does the first powers.

We think, for openers, that the Court of Appeals for the District of Columbia was exactly right, or at least the two judges who agree with us on this issue, that it falls within the Hostage Act.

Let me say just briefly that it falls squarely within the exact language of the Hostage Act.

There is some question whether this old 1868 statute was really intended to deal with this particular–

Byron R. White:

Are you speaking of the 1868 statute?

Rex E. Lee:

–Yes, sir.

William J. Brennan, Jr.:

The District of Columbia Court of Appeals?

William J. Brennan, Jr.:

I thought only Judge McGowan took that?

Rex E. Lee:

Judge McGowan, but also Judge Jameson agreed with him on that issue.

There was a separate opinion, but–

Potter Stewart:

By Judge Mikva, who explicitly disagreed.

Rex E. Lee:

–That is correct.

Judge Mikva was on the other side of that one.

Potter Stewart:

And is this Hostage Act, is that what it’s always been called?

Rex E. Lee:

Well, there’s some dispute about that also.

That is one of the raging debates as to whether it’s always been called the–

William H. Rehnquist:

But there’s no doubt that it was enacted in terms by Congress in 1868, was it not?

Rex E. Lee:

–That is correct.

And whatever else Congress did or did not intend to do, it’s clear that Congress intended to give to the President the kind of power that they gave him, and to express their view in the exact language that they used, and that–

Potter Stewart:

That’s an extraordinary power.

It gives him, according to your submission, it gives him anything short of the war power.

In other words, last fall, the President could have made a deal and put you as a hostage and exchanged you for one of the hostages and brought him home, according to your argument, you or me.

Not Justice Marshall, perhaps.

Rex E. Lee:

–And that is the argument against using this statute in this instance.

But if there is no question that if there is a defect in that respect, it is a defect essentially with Congress, particularly when you take into account what this Court said in Curtiss-Wright and United States v. Pink about the way you approach the congressional authorizations in the area of foreign affairs.

But let me go on, now, to what I think is an even more significant point in this respect.

And that is, that even if you can’t fit it within… even if you were to decide that the Hostage Act does not apply, Justice Jackson in the guidelines that he gave indicated that you get the additional force of Article I power added to Article II power when you have the implied approval of Congress.

This simply is not an area in which the interbranch relationships between Congress and the President have been characterized by contention and by interbranch struggle.

Rather, it has been an area in which there has been a continuing recognition by Congress of the existence of claims settlement authority and periodic enactments to support it.

For example, at the time that the IEEPA was enacted, the Congress observed that one of the reasons that it authorized blocking orders was that they are

“generally the most effective means of achieving settlement of United States claims. “

And in addition, in such enactments as the International Claims Settlement Act and the work of the Foreign Claims Settlement Commission and the periodic reenactment by Congress reflecting the work of that Commission, in the reports that are made to Congress under the IEEPA, and generally just across the boards, this has been an area in which the Legislative Branch has recognized the existence of claims settlement authority and has periodically acted to implement and to support it.

Now, the–

William H. Rehnquist:

Well, Mr. Lee, let me quote to you, if I may, Article V of the China Settlement Agreement, signed by Secretary Kreps and her corresponding Chinese official, which is heavily relied on in the Government because it’s a 1979 document.

And it says,

“After the date of the signature of this agreement neither Government will present to the other on its behalf or on behalf of another any claim encompassed by this agreement. “

“If any such claim is presented directly by a national of one country to the Government of another, that Government will refer it to the Government of the national who presented the claim. “

William H. Rehnquist:

Now, that doesn’t strike me as ousting the United States courts of jurisdiction of a claim.

Rex E. Lee:

–I agree.

William H. Rehnquist:

So, does that support your claims?

Rex E. Lee:

Oh, no.

It does not get us to the Article III question.

All it gets us to is the fact that the claims settlement authority does exist, that it is an authority that is of longstanding recognition and practice, and that it is one that has long been recognized by Congress.

I intend to come to the Article III question in just a moment.

I just would like to… well, I’d like to say before I get there, that in addition to congressional recognition this is an authority that in the language of the Court of Appeals for the District of Columbia, quoting Professor Henkin,

“is an established international practice reflecting traditional international theory. “

But this Court in United States v. Pink characterized it as a modest implied power of the President as to which effectiveness in handling the delicate problems of foreign relations requires no less.

And finally, it is a practice so well established that it is reflected as black-letter law in Section 213 of the Second Restatement of the Foreign Relations Law of the United States.

So we’re not dealing here with something that is just a newcomer in this particular case, and the proposition–

William H. Rehnquist:

We aren’t governed by the Restatement though, are we?

Rex E. Lee:

–No, no, of course not.

But all I’m saying is that it is a practice that is well recognized, well established, recognized not only by the decisions of this Court in Pink, and it has a long paragraph on the importance of claims settlement authority by scholars and by Congress itself.

And that is as a prelude to this point, Justice Rehnquist, that the proposition that a bill that was drafted and lobbied by the two Executive Branch departments that most depend and utilize that claims settlement authority, would have had as its purpose to take away that very authority without ever saying so, almost borders on the absurd.

And indeed, the few references in the Foreign Sovereign Immunities Act to claims settlement authority are to the effect that it exists.

Even the quote from Mr. Ristau, which Mr. Howard referred to, acknowledges the existence of the claims settlement authority.

And that brings me to the question, what about jurisdiction and what about settlement of the claims through submitting them to arbitration?

The Court of Appeals… both of them… for the 1st Circuit and the District of Columbia correctly reasoned that this was an effort not to modify the power of the courts, the jurisdiction of the courts, to decide this case, but rather the substantive rule of law that the courts are to apply.

All the focus of all of the executive orders is very careful on the claim, on the nature of the claim that is held by the claimants and not on the power of the courts.

And as a consequence, the judge in this case correctly dismissed this case, dismissed the complaint for failure to state a claim on which relief could be granted.

Now, the fact is, of course, that as a result of something that the Government has done, American courts will not be deciding some of these cases.

But there are a number of instances in which that circumstance is true, that has never been thought to give rise to Article III problems.

For example, the Government may settle a case after it is pending in court.

In addition, prior to 1976, the Government frequently appeared in court and suggested that sovereign immunity applied, and that had the effect of taking the case away from the courts.

And finally, it persists to this day that the Government may take a position with respect to act of state that has the effect of taking the case out of the courts.

Now, on this issue, Schooner Peggy is absolutely dispositive.

When Mr. Howard takes the position that with respect to the basic issue of claims settlement authority Schooner Peggy is distinguishable because it was a treaty, parenthetically, my answer to that is this.

That it’s true that Schooner Peggy did involve a treaty, but when by the time you combine the holding and the rationale in Schooner Peggy with the rationale, with the statement by this Court in Pink concerning settlement authority, that those two taken together make a pretty powerful argument for the existence of settlement authority.

Rex E. Lee:

But with regard to the–

William J. Brennan, Jr.:

Even by the President himself?

Rex E. Lee:

–By the President himself; that is correct, as a matter of his Article II power.

William H. Rehnquist:

Well, how do you… do you disagree, then, with Justice Frankfurter’s statement in the steel seizure cases that just because the power does not reside in the President doesn’t mean that the Government as a whole doesn’t have it, and just because the Government as a whole has it doesn’t mean that the President by himself can exercise it?

Rex E. Lee:

I do agree with that statement, Justice Rehnquist, and it is of course consistent with the trichotomy, if you will, by Justice Jackson in that same case, that it’s simply a matter, if you have both the President acting with his Article II power and Congress acting with its Article I power, then it’s all the stronger.

And if you have the Congress taken away, then it’s weaker.

But coming back to the point of claims settlement authority, Justice Frankfurter also said… this is the clearest statement that you have anywhere… in United States v. Pink, that it is simply indisputable that the President has the claims settlement authority.

But, coming back to the question of jurisdiction, Schooner Peggy may or may not be distinguishable on the basic issue of the President’s claims settlement authority.

We think that Peggy plus Pink makes a pretty powerful combination in that respect.

But on the issue of jurisdiction Schooner Peggy is absolutely dispositive, and a ruling could not come down by this Court that what the President did here amounts to an Article III violation without overruling Schooner Peggy for this reason: Schooner Peggy is an a fortiori case from Dames & Moore on this issue, because what you had in Schooner Peggy was a final judgment, which we do not have in this… excuse me… there was a judgment out of the circuit court entitling the claimants in that case to their prize.

Byron R. White:

Why don’t you have… you have that here.

Rex E. Lee:

Well, except that–

Byron R. White:

You have a judgment of a district court.

Rex E. Lee:

–But that judgment was entered in violation of the President’s freeze order and–

Byron R. White:

Well, That just begs the question.

Rex E. Lee:

–All right; all right.

Maybe it’s not a fortiori.

I think it is, but I’ll concede for the moment that it’s not.

The point is this that while that judgment was pending, or while review of that judgment was pending before this Court, the President entered into a treaty which was approved by the Senate depriving this Court of jurisdiction.

Byron R. White:

Well, it didn’t really, did it?

It just said, it just said it changed the rule of law.

Rex E. Lee:

That’s right.

It changed the rule of law.

Byron R. White:

The Court said that the appellate court should apply the law as it finds it on appeal, and the law then changed.

Rex E. Lee:

That is correct.

Byron R. White:

It wasn’t a jurisdictional decision, was it?

Rex E. Lee:

I stand corrected.

It changed the rule of law.

And that’s exactly what has happened–

William H. Rehnquist:

And that was a treaty, not any executive agreement.

Rex E. Lee:

–That is right.

And that brings me to the point.

William J. Brennan, Jr.:

Well, Mr. Lee, I think it’s rather important, and jurisdiction strikes me as quite the wrong approach, based on Schooner Peggy.

The argument that the judiciary was stripped of jurisdiction, finding it in the executive, was answered by saying, no, it didn’t.

Rex E. Lee:

That is correct.

William J. Brennan, Jr.:

It just created a new rule of law which it was the duty of the appellate court to apply.

Rex E. Lee:

And that is exactly the point that I’m trying to make.

William J. Brennan, Jr.:

Then are you withdrawing all this jurisdictional?

Rex E. Lee:

What I’m saying is that it is not a jurisdictional point.

William J. Brennan, Jr.:

I should say not.

Rex E. Lee:

That what the Court said in Schooner Peggy is that it was not a matter of jurisdiction.

Chief Justice Marshall made it very clear that all that they were doing there–

William J. Brennan, Jr.:

No intrusion on the judicial power.

Rex E. Lee:

–That is correct.

And now my point is this, that if you did look at what happened in Schooner Peggy, as a jurisdictional matter, the President could no more do it with the advice and consent of the Senate than he could do it on his own.

And that’s the only point that I’m making, I apologize for that confusion, but our point is not that they were dealing with jurisdiction, and in fact the Court made it very clear in that Schooner Peggy case that if subsequent to the judgment and before the decision of the appellate court a law intervenes and positively changes the rule of law which governs, the law must be obeyed.

Byron R. White:

And your position, I take it, is that the President by himself under his Article II powers may change the law of the land that the Court must apply?

Rex E. Lee:

In a case where he is exercising–

Byron R. White:

Well, in this case.

In this case.

Rex E. Lee:

–In this case, that’s right, under the facts and circumstances–

Byron R. White:

And without a treaty or without acting pursuant to any statute.

And there Schooner Peggy doesn’t support you because it was a treaty.

Rex E. Lee:

–It was a treaty, that is correct.

But I think that the treaty distinction is irrelevant insofar as the distinction between the dispositive rule of law, supplying the rule of law is concerned.

William H. Rehnquist:

Well, why do you think the Constitution talks about–

–We’re getting into two quite separable and different issues here.

Rex E. Lee:

That is correct.

Potter Stewart:

One is, did the President have power to do this?

And secondly, if as you say he did, then all he did was change, all that happened was, not the ousting of the jurisdiction of the federal courts, but a change in the substantive law.

Rex E. Lee:

That is correct.

And it is our position–

Potter Stewart:

They’re two separate issues.

Rex E. Lee:

–That is absolutely correct, and it is our position that he has the power to do that, pursuant to his Article II power, but in this particular case, for reasons that I’ve discussed just a moment ago, that he also had the support of The Article I power behind him for the reasons–

William J. Brennan, Jr.:

Primarily the 1868 statute?

Rex E. Lee:

–That’s one.

And the other is the implied authority that comes from the continuing pattern of cooperation between Congress and the President.

Warren E. Burger:

On foreign policy, foreign relations matters.

You’re limiting that, aren’t you?

Rex E. Lee:

Oh, without any question, without any question, in these foreign relations matters.

Warren E. Burger:

But what you’re saying is that what the President did has the same ultimate consequence as though Congress and the President in the usual legislating function adopted new substantive law.

Rex E. Lee:

That is correct.

Warren E. Burger:

It’s binding.

Rex E. Lee:

That is correct, Mr. Chief Justice.

Except that we’re saying, in addition, that in this case you also have the additional force of the congressional directive behind it.

Significant in that respect, that in enacting the IEEPA Congress clarified that nothing in that Act was intended

“to impede the settlement of claims of United States citizens against foreign countries. “

And that brings me back to where I started, and that is that the principle that has to govern both of the questions in this case is this, that a crisis such as that which we underwent in this country for 14 months does not occur often.

But on those rare occasions when it does occur, followed by the opportunity for settlement on honorable and reasonable terms, then someone has to have the authority to decide whether to settle it or not.

And this is your point, Mr. Chief Justice, that it does fall within the foreign affairs powers.

Someone has to be able to act, to act without delay, and to act with authority.

Under our system of government that has to be the President.

I submit that it would simply be unacceptable for this nation or any other to lack that kind of power under that kind of circumstance.

It would, as this Court said in Pink, be in derogation of sovereignty itself.

William H. Rehnquist:

Well, on the steel seizure cases, President Truman’s order was posited on the emergency that he felt existed and he shut down the steel mills in the Korean conflict.

And yet this Court decided against him.

Rex E. Lee:

Oh the… there was one proposition, Mr. Justice Rehnquist, on which all opinions in the steel seizure case were in agreement and that is that this was one of the cases that Justice Jackson would have said fell within the category three; that is where he had acted against the will of Congress and in our view, this is either a category two or a category one case, because of the fact that he has acted with power of something more than just his own Article II power, but that in any event his Article II power would have been sufficient.

For these reasons, we respectfully submit that on those rare occasions when a crisis such as that that occurred does occur and the opportunity for settlement occurs, then someone has to have the power to act.

That is what the President did in this case.

Fortunately, he acted with the authority of Congress as well as his own behind him.

Rex E. Lee:

The other issues concerning possible taking are completely separate, but what he did in connection with the settlement of claims, the nullification of attachments, and the transfer of assets, fell well within his powers, both as supported by Congress and also under Article II.

Warren E. Burger:

Mr. Shack.

Thomas G. Shack, Jr.:

Mr. Chief Justice; may it please the Court:

Despite the plethora of briefs and the numerous parties in amici, the questions presented to the Court in this proceeding are not particularly abstruse.

They do not require broad sweeping pronouncements from the Court.

I would submit that the attachment issues are essentially and simply issues of statutory construction and should be governed by the basic principle that statutes should be construed so as to avoid conflicts between them and in terms of international law statutes should be construed in such a way as not to cause a breach of an international agreement or international law.

I have in the limited time four simple points which I would like to address.

The first, the Government of the United States and the Government of the Islamic Republic of Iran executed an international agreement between the parties on January 19, 1981.

Both of the sovereigns are in the process of implementing their obligations under the agreement and each expects the other sovereign to continue to fulfill those obligations.

As a matter of international law it is a well recognized principle that an international agreement is binding despite any contrary domestic law.

William H. Rehnquist:

Well, Mr. Shack, what if that agreement had included a provision sending Justice Stewart to Teheran indefinitely?

Now that he’s resigned–

–Do you think that would still be binding?

Thomas G. Shack, Jr.:

Well, I think that Justice Stewart would probably have to pack a bag and… the short answer is, to whatever extent such an agreement would infringe upon the constitutional rights of a citizen and was struck down as being unconstitutional, it would not be binding as a matter of domestic law, and I doubt that anyone would try to put Justice Stewart on a plane.

But whether the United States would be in violation of such an agreement and thus answerable for damages in such an event, I think that under international law it would be.

William H. Rehnquist:

But that isn’t the question that we’re facing here, is it?

Thomas G. Shack, Jr.:

No, that is not the question that we are faced with here today.

The basic question is, there is an agreement between the two countries, the United States is under an obligation to accomplish, to restore Iran to its financial position as it existed prior to November 14, 1979, and to accomplish that the United States has to assure the free mobility of Iran’s assets within this jurisdiction.

If the United States does not in fact accomplish the restoration of Iran’s financial position, and if it in fact does not accomplish satisfaction of the obligations imposed under paragraphs 4 through 9 of the Declarations, specifically the transfer of specific categories of assets to Iran, then the United States would arguably be in violation of the agreement and under international law liable for damages.

Since the international tribunal which has been referred to today does in fact exist, and since it does in fact have jurisdiction over disputes of this nature between the parties, then the tribunal would be in a position and arguably has the authority to impose a damage judgment against the United States in the full amount of Iran’s assets as they exist in this country.

William H. Rehnquist:

What if part of the agreement had provided that for one year no one should criticize the Ayatollah in this country?

Would the United States be liable for damages if any person in this country criticized the Ayatollah?

Thomas G. Shack, Jr.:

Well, again, despite the inconsistency with domestic law, the United States would be obligated by virtue of its good faith commitment to attempt to accomplish the objectives of the agreement.

It is unlikely that any Executive would knowingly or willfully attempt to deliberately circumscribe the rights of a citizen or citizens.

William H. Rehnquist:

But you’re saying that under international law they are bound to carry out an agreement if such an Executive would have done so.

Thomas G. Shack, Jr.:

Yes, I would suggest that that is true.

If the Executive had made such an agreement, the United States would be obligated to attempt to carry out the obligations of the agreement.

I observe that this international principle which says that international law is binding regardless of domestic law also leads me to the fourth point, which is that the courts of this country have traditionally construed domestic law in such a way as wherever possible not to cause a breach of an international agreement with a foreign sovereign.

Under the Algerian Declarations, as I mentioned a moment ago in answer to your question, Justice Rehnquist, the United States is obligated to restore Iran’s financial position as it existed prior to November 14, 1979, and to assure the free mobility of its assets within this jurisdiction by that date.

As I said, that’s paragraphs 4 through 9 and the trigger date on that requirement is July 19 of this year.

Thomas G. Shack, Jr.:

Additionally, the United States has other obligations under the agreement.

It’s obligated under General Principle B of the General… there are two basic declarations.

There’s a General Declaration which sets forth the general rights and responsibilities or obligations of the parties, and the second declaration which essentially establishes the international arbitral tribunal and which sets forth the basic operating procedures for that tribunal.

But under the general principles, general agreement or general principles, the United States is also obligated to terminate all legal proceedings in the United States, in the courts of the United States.

It’s obligated to nullify all attachments and judgments.

It’s obligated to prohibit all further litigation on the claims which are the subject of the agreement, and it’s obligated to bring about the termination of the claims through binding arbitration.

Those are the general principles which bind the United States.

There are others, but those are the salient ones for purposes of this proceeding.

Both parties, as I’ve said, have agreed to the establishment of an international tribunal for the satisfaction of the American claimants, or claims of the respective nationals against the others.

Iran, however, has–

John Paul Stevens:

May I ask a question on that point?

What is your understanding of the obligation of the United States with respect to claims now pending in American courts, which will not be received by the tribunal?

Thomas G. Shack, Jr.:

–Mr. Justice Stevens, what is my understanding of the obligation of the?

John Paul Stevens:

The United States.

The suspension of those claims in compliance with its obligation under the treaty?

Thomas G. Shack, Jr.:

Yes, the clear language of the agreement seems to require that.

John Paul Stevens:

No, I’m not… I didn’t say that it would require, is that satisfaction of the American obligation under the treaties, to have the claims suspended, merely suspended subject to reinstatement if the arbitration tribunal refuses jurisdiction?

Thomas G. Shack, Jr.:

Well, the tribunal itself will probably be the ultimate judge of that since it has jurisdiction on such matters, but the clear language requires termination rather than suspension.

Presumably the United States in any dispute on that matter would submit to the tribunal that suspension has accomplished the same thing and that termination will follow adjudications or awards by the tribunal.

But until–

John Paul Stevens:

No, I’m talking about cases in which the tribunal declines jurisdiction.

And as I understand your position, they should decline jurisdiction of some of these claims.

Is that not correct?

Thomas G. Shack, Jr.:

–The agreement provides that where there is a specific forum clause containing specific language with respect to Iran’s jurisdiction that those cases will not go to the jurisdiction of the tribunal; yes.

John Paul Stevens:

And does it satisfy the United States’ obligation under the treaty, merely to suspend those claims pending the decision of whether the tribunal takes jurisdiction?

Thomas G. Shack, Jr.:

Yes.

Byron R. White:

Is it fair to ask you a more technical question?

You’ve addressed it in your main brief.

In the Orvis case… you’re familiar with it?

Thomas G. Shack, Jr.:

Yes.

Byron R. White:

If the President had not vested the assets in that case, there had been no vesting order, just the freeze followed by an attachment, would the Trading with the Enemy Act have allowed the President to unfreeze the assets and return the assets to the foreign nation free of the attachment?

Thomas G. Shack, Jr.:

I believe that it would.

Byron R. White:

Well, Orvis said that the attachment was good against the foreign country.

It wasn’t good against the President’s vesting, but it was perfectly good despite the freeze against the foreign debtor.

Now, how can you say what you’ve just said?

Thomas G. Shack, Jr.:

Well, I believe the… I believe that the power of the Executive… or the power of the Congress to attach the assets of the foreign sovereign is, when it’s specifically enunciated, prevails.

Warren E. Burger:

Your time has expired.

Thomas G. Shack, Jr.:

Thank you, Mr. Chief Justice.

With one moment, I’d just like to conclude.

Iran is in fact fulfilling its obligations under the agreement by appointing arbitrators and the arbitral tribunal is in existence and operating, and as of July 1 will be meeting with respect to establishing new procedures.

Warren E. Burger:

Mr. Lieberman.

Eric M. Lieberman:

Mr. Chief Justice and may it please the Court:

No litigant nor lower court has challenged the existence of an undisputed emergency crisis situation which prompted the Executive’s action here.

Thus the issue before this Court is not whether the Executive generally may settle the claims of United States nationals against foreign states, although historically he’s done so.

Rather the question is a narrower one dealing with whether he may do so in such an international crisis.

Put this way, the question highlights the reason why the Executive’s power to settle claims both historically and doctrinally has been held to be a necessary element of the foreign affairs power.

The claims are more than mere bargaining chips in the sense that one might… the suggestion was, send somebody over to a foreign state in exchange for some other benefit that the Government of the United States might obtain from the foreign state.

Rather, the claims themselves create an impediment, a barrier, to normal foreign relations.

Potentially they do, historically they have, and in this instance they have.

You have in effect a confrontation between citizens of this country and a foreign state.

William H. Rehnquist:

Are you saying this power exists in the President without any congressional delegation?

Eric M. Lieberman:

Absolutely.

However–

William H. Rehnquist:

What if Congress said that the President shall not in the future settle any foreign claims?

Eric M. Lieberman:

–That would raise substantial constitutional questions.

William H. Rehnquist:

And the President signed the bill?

Eric M. Lieberman:

The President… that President may have signed the bill but the question is whether constitutionally that Congress and that President can limit the power of the Presidency as an institution.

Fortunately, that is a question, that kind of constitutional confrontation is not before this Court.

What you have is a pattern, an historical pattern, of congressional acquiescence in approval of and facilitation of the President’s foreign claims settlement power.

And this pattern continued contemporaneously with the enactment of the Foreign Sovereign Immunities Act and afterward.

Eric M. Lieberman:

The very Congress which considered the Foreign Sovereign Immunities Act and enacted it in 1976 considered amendments to something called the Case Act, which required the Executive to make reports to Congress whenever he entered into executive agreements.

Several Congressmen introduced amendments to the Case Act which would have given Congress the right to override executive agreements by concurrent resolution or otherwise.

The Executive Branch… the State Department, the Justice Department… at the same time they were asking the Congress to pass the Foreign Sovereign Immunities Act, which after all the Executive Branch drafted, at the very same time they appeared before the committees in Congress and said, don’t pass this act limiting the executive agreement power.

They canvassed the historical exercise of it, they focused particularly on the claims settlement power, on this Court’s opinions in Belmont and Pink, and they argued that it would be unconstitutional for the Congress to limit the executive power in this way, particularly with respect to claims settlement agreements.

They focused on that in their arguments to Congress.

Congress, of course, did not enact the act, the very same Congress which did enact the Foreign Sovereign Immunities Act, without a word that it was doing anything to undermine the historical claims settlement power.

Thurgood Marshall:

Well, under your theory they didn’t really need to enact the Act, did they?

Eric M. Lieberman:

I’m not sure I understand the question.

Thurgood Marshall:

Well, on what you’ve been saying up to now, with the broad general powers of the President, they didn’t need the Act, did they?

Eric M. Lieberman:

The Foreign Sovereign Immunities Act?

Thurgood Marshall:

Yes.

The President didn’t need it, did he?

Eric M. Lieberman:

The Foreign Sovereign Immunities Act did not deal with the claims settlement power.

That’s my point.

One year later Congress did not think that it had done anything to undermine the Claims Settlement Act when it enacted the International Economic Powers Act, because that Congress, while it limited some of the Trading with the Enemy Act powers in times of peacetime national emergency, it specifically said these limitations do not affect the President’s power to settle the claims of United States nationals against foreign states.

Now, if the Congress had thought that it had taken that power away a year earlier when it enacted the Sovereign Immunities Act, it wouldn’t have bothered to say that when we’re enacting the Emergency Economic Powers Act, we’re not taking that power away.

There’s another point about the Emergency Economic Powers Act that is worth emphasis.

Pursuant to that Act the President must make reports to the Congress when he invokes his IEEPA powers.

He must say what he has done and why he’s done it.

And the Congress may then consider whether he has acted improperly and by concurrent resolution, not a statute, it can override the President’s actions.

And that was done precisely here.

The President, both Presidents, made reports to the Congress as to what they did.

The Congress held hearings, three different committee hearings; they are mentioned in our brief.

The Senate Committee issued a report; there was no resolution.

Some of the claimants came in and asked the Congress to exercise its powers to block the implementation of the Algerian Declarations.

If the Congress didn’t think there was a problem, as a matter of fact, the Senate report indicated a continuing recognition of the executive power to settle claims and a feeling among the Committee that this power was necessary if the United States Executive was to deal with an equal with foreign states.

So that what you have here are both political branches of the United States Government recognizing this power.

Congress has set the terms for its review of executive implementation of the IEEPA powers.

And it has found that there hasn’t been a problem there.

I think under those circumstances it becomes a political question, it’s a question committed to the political branches.

Eric M. Lieberman:

Congress is not disenabled from acting here.

It can exercise its power if it feels that there has been a violation and if it doesn’t feel that there has been a violation.

William H. Rehnquist:

Well, then, you’re not relying just on the President acting all by himself.

You are deriving some support from the IEEPA end?

Eric M. Lieberman:

Oh, absolutely.

What I meant before is that even in the absence of any kind of Congressional facilitation, approval, acquiescence, the President would have the power.

But here you have an historical pattern going back to the earliest days of the Republic, of both political branches acting together, recognizing the power, approving the power, Congress enacting statutes to facilitate the President’s exercise of the power, congressional hearings in which Congress continually… it echoes throughout the entire history of the country, Congressmen recognizing the executive power, stating, of course the Executive… this is all detailed in the Appendix B to our brief.

William J. Brennan, Jr.:

Mr. Lieberman, does your… this is a political question… argument go also to the taking issue?

Eric M. Lieberman:

In a sense, yes, Mr. Justice Brennan, but–

William J. Brennan, Jr.:

In that the whole works should be dismissed out of the courts?

Eric M. Lieberman:

–Well, the question of compensation.

If there is going to be compensation for a taking, of course, Congress has to provide the funds and it has to provide the mechanism for the determination of whether or not there’s been a taking and how much.

So in that sense it’s a political question.

But here… and this is the second point that I wanted to raise… here there has been a remedy created; there is the Tucker Act.

I agree with the Government, it took a while for them to come around to our point of view, but finally they have, that the Tucker Act is no bar, I mean that Section 1502 is no bar to a Tucker Act… I believe your question before as to whether, isn’t that a complete answer?

, is yes, absolutely, it’s a complete answer.

The Tucker Act provides a remedy at law.

A remedy at law if available precludes equitable relief.

That’s one of the oldest principles of law there is.

William J. Brennan, Jr.:

A Court of Claims remedy doesn’t solve the takings question.

You still have to decide there was a taking.

Eric M. Lieberman:

Oh, I’m not saying there was a taking.

William J. Brennan, Jr.:

Well, you were.

Eric M. Lieberman:

Then, I’ll correct myself.

I am not saying there was a taking.

As a matter of fact, with respect to the attachments, our position is the same as the Government’s.

There was no taking.

Byron R. White:

Whether there was a taking still remains to be decided.

Eric M. Lieberman:

That’s right.

But if there was a taking–

Byron R. White:

But that’s a remedy there.

If we don’t decide that there was a taking, that would be on the threshold in the Court of Claims.

Eric M. Lieberman:

–That’s correct.

My point is–

William J. Brennan, Jr.:

My problem on your political question argument is going to suggest that we couldn’t, it’s none of our business to decide whether there was a taking or not.

Eric M. Lieberman:

–Well, I don’t think–

William J. Brennan, Jr.:

You don’t go that far?

Eric M. Lieberman:

–I don’t think the question is before this Court.

William J. Brennan, Jr.:

That’s not my question.

I’m asking whether your political question submission embraces whether or not we should decide whether it’s… or even address the taking issue.

Eric M. Lieberman:

I think to the extent that the Court addresses the taking issue, it should hold that there is a Tucker Act remedy.

William J. Brennan, Jr.:

All right.

Then we do address it, you suggest?

Eric M. Lieberman:

Yeah.

And that that is a complete answer.

Potter Stewart:

The claim is that there has been a taking right now, and that the taking question is not premature, so it is at least… something that is before us.

Eric M. Lieberman:

I agree with the position of the Government, the attachment issue is–

Potter Stewart:

Of course you do.

I know–

Eric M. Lieberman:

–there is no taking by the attachment issue because, for the very reason stated by the Government, the attachment of the Petitioner came secondarily to the Government’s assertion of a paramount federal interest over these assets.

Potter Stewart:

–But one of the issues in this case is whether there’s been a taking like–

Eric M. Lieberman:

Yes, and clearly there has not been a taking at this time.

Potter Stewart:

–Well, that’s your submission; yes.

I understand that.

Eric M. Lieberman:

I think this means my time is up.

Warren E. Burger:

Your time has expired now, Mr. Lieberman.

Mr. Howard, somewhere, at your own convenience in your rebuttal time, for my part I’d like to have you touch on something which we have touched on the periphery but not the core, at least in my view.

And that is, how the President of the United States exercising his Article II powers to conduct foreign relations can do so if he cannot have regulatory power over suits, just hypothetically, relations, negotiations, very sensitive negotiations, whether hostages or some other problems being conducted and 250 or 2,500 or 25,000 American citizens are going to bring suits against that other government.

Obviously that would impair, have an impact on the negotiations.

Now, if the President can’t do that under his Article II powers, how can he carry out those powers?

C. Stephen Howard:

I’d like to start immediately with that, Mr. Chief Justice.

I think that there are two points to be made.

First of all, there are lots of things that impair the President’s ability to negotiate with a hostile foreign country.

He can’t write a check on the Treasury.

He can’t send the assets of my client over directly.

He can’t even send Mr. Justice Stewart.

There are many things that he might want to do, there are many things that might solve the problem, that might make negotiation easier, which are outside of his power.

But the second answer is, if it is important for the President to have this particular power, to have this particular power to regulate suits against the foreign hostile power party while negotiating with him, then the place to address that need is the Congress, not the Supreme Court.

He should go to Congress and say, I can’t conduct foreign relations without this power and the Congress–

Warren E. Burger:

Meanwhile, in the situation we have here, the hostages wait until Congress acts, or some delicate negotiations with the People’s Republic of China, for example, must mark time?

C. Stephen Howard:

–First, there’s a systematic matter.

If the Executive believes he needs this authority I think he ought to go to Congress and get it, although in the hearings in the Foreign Sovereign Immunities Act enactment, the Executive said he didn’t need it.

The Executive specifically said, the pressures that we get from foreign powers to settle these kinds of disputes, and particularly these commercial disputes, are a problem for us.

Please take this away.

This isn’t a question of conflict between Congress and the Executive.

They agreed that this kind of claim should be in the courts and not before the Executive.

If the Executive needs the power, let’s say in this particular case he needs the power, now, to deal with these lawsuits.

In fact, let me tie this together with Mr. Shack’s talking about the agreement and whether it’s enforceable or not.

And what would be the consequences if this Court were to find that these Acts were outside the power of the President?

First of all, the Reagan Administration has very carefully never taken a position as to whether this is an enforceable agreement under international law.

And quite frankly, one of the many principles of international law is that agreements entered into under duress with a gun at your head aren’t enforceable, just as they aren’t in many civilized countries.

So that if this agreement is struck down, they may very well defend on that ground.

Now, they may very well make arguments like, damages, your man isn’t entitled to all this $4 billion back.

They would have to prove that they wouldn’t lose it again in the tribunal.

Warren E. Burger:

Who would raise this duress defense?

C. Stephen Howard:

The United States.

United States.

Warren E. Burger:

Surely not Iran?

C. Stephen Howard:

No.

The United States would.

Warren E. Burger:

Yes.

C. Stephen Howard:

But if the Administration believes that it’s in its interest, in its foreign policy interest to go through with this agreement, it can do it.

Warren E. Burger:

But realistically, when a great sovereign has negotiated an agreement, even under duress or pressure, but having reached an agreement, can the sovereign then question it on that kind of a ground?

C. Stephen Howard:

That, I think, is a question for neither the Court nor for me.

That’s a question for the President and the Congress.

If the Congress wants the Administration to go through–

Warren E. Burger:

Are you talking about Congress or the President?

Not just the President, you say?

C. Stephen Howard:

–If we are correct that some of the things that the President agreed to do are outside of his power acting alone, then he needs the Congress.

He can do one of two things.

He can go across the street and convince two-thirds of the Senate to ratify a treaty.

He can do this if he can get two-thirds of the Senate to go along with him.

He can do this if he can get a majority of the Congress–

John Paul Stevens:

Are you saying you’d have no case if he had done that?

C. Stephen Howard:

–That’s right, I believe that, unfortunately, fortunately or unfortunately, either one is quite clear.

A treaty, properly enacted treaty can override a prior Act of Congress.

I think the Foreign Sovereign Immunities Act could be overridden by a treaty, but not by an executive agreement, and in fact–

William H. Rehnquist:

Not the Bill of Rights, can’t be overridden like–

C. Stephen Howard:

–No, I’m not talking about the taking of it.

I’m just talking about the powers.

One of the problems here is that there is a suggestion, I think, that goes through the questioning, that this problem all goes away if it’s a taking, and that we can just go to the Court of Claims.

Unfortunately, there’s a big catch.

There is no remedy for an unauthorized taking.

If we are right on the power questions, then we have no remedy, because no one is liable for an unauthorized taking.

That is the law which is cited in our brief.

Byron R. White:

–Mr. Howard, I’m not sure I asked you when you were first up, but the question I asked one of your colleagues, in Orvis if there had been no vesting, the lien, the attachment, would always have been good against the foreign sovereign?

C. Stephen Howard:

Even an unlicensed attachment.

The attachment in Orvis was unlicensed.

Byron R. White:

Yes, and doesn’t… the President could, your position is, could not have transferred those assets free of that attachment?

C. Stephen Howard:

That is correct.

Byron R. White:

And that’s what… and Orvis did say that the attachment was good against the–

C. Stephen Howard:

That’s absolutely correct.

Byron R. White:

Now, do you have any further argument about that?

Is there any case or any other cases that indicate the same thing?

Zittman, I guess.

C. Stephen Howard:

Well, that’s the Government’s best case.

Orvis is the jewel in their crown.

Byron R. White:

Well, I know, but Orvis… but Orvis said that the lien was good against a foreign sovereign.

C. Stephen Howard:

That’s right, that’s right.

And our position is that–

Byron R. White:

Williams said it wasn’t good against the President, once he had vested.

C. Stephen Howard:

–Under the Trading with the Enemy Act, and this gets back to some of the questions that Mr. Justice Stevens was asking.

Under the Trading with the Enemy Act the President was not empowered to take away, to undercut, to remove the rights of American citizens.

He was entitled to undercut rights of foreign powers.

Byron R. White:

Your argument about the Trading with the Enemy Act is no stronger than it is under the IEEPA, is it?

It’s the same language, isn’t it?

C. Stephen Howard:

It’s the freezing–

Byron R. White:

Except for the vesting?

C. Stephen Howard:

–The freezing language is the same.

The vesting language is not there.

Byron R. White:

What authority, do you say, what authority?

Is Orvis your best case for saying that he would have no authority… in Orvis… to have transferred the assets to the foreign nation without a vesting free of the attachment?

C. Stephen Howard:

I would say two things.

Number one, no President ever did it.

And that ought to tell us something.

No President ever did it or tried it.

But secondly, wouldn’t it have been crazy to have a rule that said, if the President takes the property, he has to hold it for the American creditors?

He takes it under his vesting power; he has to hold it for American creditors.

But under the freeze he can send it back free and clear?

That doesn’t make any sense.

Byron R. White:

Well, that’s just your argument in this respect.

Shouldn’t you make the same crazy-sort-of-a-notion argument as you do with the IEEPA?

C. Stephen Howard:

No, I say that since he couldn’t do it under Trading with the Enemy Act, because that would have made the statute crazy.

John Paul Stevens:

Well, wait a minute.

Are you suggesting the only possible purpose of a freeze order under the Trading with the Enemy Act is to protect American creditors?

C. Stephen Howard:

No, no.

Obviously, it was–

John Paul Stevens:

There are many other purposes.

C. Stephen Howard:

–First, was to thwart the enemy, and to make sure the enemy couldn’t get access to its own property.

John Paul Stevens:

And support the war effort in various different ways, too.

C. Stephen Howard:

That’s right.

But if the President–

John Paul Stevens:

It may have nothing to do with American creditors, and that could be true of freezes as well as vesting orders.

C. Stephen Howard:

–Although once he vested he had to… yeah, there was a whole claims procedure set up to satisfy even unsecured creditors, people who didn’t have property at all but who had a claim against that particular nation.

William H. Rehnquist:

Well, Mr. Howard, don’t you think there’s something to Professor Henkin’s statement in his treatise on international law, or international agreements, in 1972, that the Court of Appeals for the District of Columbia Circuit adopted, that these things really don’t fit neatly into black and white fields, and that it’s kind of a skewed situation.

Belmont and Pink came up in connection with a lump sum settlement case.

Youngstown Sheet and Tube came up in connection with an entirely different situation.

This comes up with an entirely different situation, that to try to piece together a very neat set of precedents each of which is reconcilable with one another may just be impossible.

And that since each case that comes here kind of comes out of a particular event, there just may not be much jurisprudence that we can rely on or lay down here.

Witness Zittman and Orvis.

C. Stephen Howard:

I’m sorry.

I haven’t heard a question I can answer.

William J. Brennan, Jr.:

That was just a tag end.

C. Stephen Howard:

Mr. Justice Rehnquist, I couldn’t agree more with the fundamental proposition.

There isn’t any precedent here.

You, the Justices of the Supreme Court, are going to make new law in this case, that no matter what you decide, you’re going to make new law.

And that is the state of the record.

As far as Mr. Henkin’s treatise is concerned, the first and foremost thing about it is what you said, it was written in 1972.

So it was written before the Foreign Sovereign Immunities Act, it was written before the Executive and the President agreed to take certain claims and put them in American courts.

And I don’t think that the Schooner Peggy rule of law analogy is quite appropriate, putting apart the treaty issue.

C. Stephen Howard:

In Schooner Peggy there was a new rule of law, and it was, the plaintiff loses.

That was the new rule of law.

There’s no… tell me what the new rule of law here is?

The new rule of law is, you can’t be in this Court–

William J. Brennan, Jr.:

The new law here is the plaintiff loses.

C. Stephen Howard:

–No, the Government won’t concede that.

The rule of law is the plaintiff goes to another court.

If it’s not–

Potter Stewart:

Well, the rule of law is you lose in this case.

C. Stephen Howard:

–But it’s not a substantive rule of law.

It’s not a substantive rule of law.

It says, you go someplace else and try.

John Paul Stevens:

No, but you’re arguing with Schooner Peggy now, saying that’s not a substantive rule of law.

C. Stephen Howard:

No, no.

Schooner Peggy wasn’t, go to another court; it is, you lose.

John Paul Stevens:

That’s right, if you lose.

But the only reason you lose is we’ve decided you should lose; you can’t have this prize money–

–The President so far hasn’t quite decided that my client should lose.

I don’t know whether that’s so different from saying, you can’t have this attachment.

C. Stephen Howard:

No, I’m saying, the President is saying, I’m not going to decide whether you win or lose but I’m going to make you go to a different court than the one the Congress put you in.

Byron R. White:

Well, if the Government also, though, defends the dismissal?

Of this case, isn’t it?

On the grounds that there’s no cause of action.

C. Stephen Howard:

I believe that is their position.

Byron R. White:

Which means that there’s a new rule of law.

The principle of the action brought after–

C. Stephen Howard:

The Government’s position is that our judgment, our final judgment, which surmounted all these alleged difficulties that we’ve been relieved of, has been annulled.

That’s the Government’s position.

John Paul Stevens:

–Well, they say it’s converted into a claim, which is what was in the Schooner Peggy case too.

They’re saying it’s really no more than a claim because the appellate process hasn’t run its course yet.

C. Stephen Howard:

I think perhaps that it was a mistake for me to engage in dialogue about whether it’s a new rule of law or not, because it does obscure the most important point.

We concede that by treaty the President and two-thirds of the Senate could say, we changed our minds, we don’t want these commercial cases, at least not this bunch or these kinds or these situations, have to watch out for attainder problems.

But they could, in fact, alter the rules of the Foreign Sovereign Immunities Act.

But it wasn’t done.

It wasn’t done by treaty.

William J. Brennan, Jr.:

It might be a taking, but they–

C. Stephen Howard:

It would still be a taking; you would still have to pay for it.

But at least it would be authorized.

But in the current situation our position is that if the present Administration wants to go through with this, they’ve got to get two-thirds of the Senate or get the majority of each house of Congress and appropriate the money.

Warren E. Burger:

–Let me go back to my original hypothetical, somewhat.

If the President is negotiating in some delicate, sensitive foreign relations matter, whether like the hostages or others, and you prevailed in this case, would not the other sovereign in negotiation say, well, we are glad to treat with your ambassador, your envoy, but before we conclude anything we want your Supreme Court to pass on whether the President has exceeded his powers.

Isn’t that a natural consequence of your position?

C. Stephen Howard:

If the Court were to rule for the Petitioner, and there are future negotiations going on in which the other power wants to achieve some results in courts, I’d say the President had better go to the Congress first and get that authority.

Warren E. Burger:

I’m putting you in the negotiation, and the foreign sovereign doesn’t say, go to Congress.

The foreign sovereign having heard from this Court once or perhaps on several occasions says, we want to get an opinion from your Supreme Court before we come to any agreements with you because they’re the last word.

C. Stephen Howard:

I think if the Court were to rule our way, that it would be rather clear, then, that the President couldn’t do that, and that’s not something that he could bargain with.

Warren E. Burger:

And you suggest that would not impair the President’s power to conduct foreign relations and national defense problems?

C. Stephen Howard:

The President’s inability to compromise or give away claims pending in court would of course be… if he couldn’t do that, that’s one less thing that he can’t do… it’s one more thing that he can’t do.

But he also can’t write a check on the Treasury.

William H. Rehnquist:

Well, he can’t conscript or raise and support armies either.

C. Stephen Howard:

There are a lot of them.

Pardon?

William H. Rehnquist:

He can’t raise and support armies.

That’s a power entrusted to Congress.

C. Stephen Howard:

That’s right.

And many things that a President can’t do in trying to deal with a foreign power.

He has limitations.

Byron R. White:

And of course, one of your arguments is that he’s been forbidden to do this.

C. Stephen Howard:

Forbidden, I think, is too strong a word.

I think–

Byron R. White:

All right, it’s been, that it’s inconsistent with the Foreign Sovereign Immunities Act.

C. Stephen Howard:

–The two, the Executive and the Congress got together, and they agreed that this should be outside of the Executive.

They should be free of pressure.

Now, if the Executive were, if the arguments made by my adversaries were correct, the Executive is right back in the box.

Every time a suit called a commercial suit now is filed, the foreign power who doesn’t like it has the same kind of opportunity that he had before to come to the State Department and now, he doesn’t say, would you suggest immunity?

It’s, would you mind settling my case?

I think we’ll able to conclude that other matter much more expeditiously.

And that’s precisely what both branches of the Government, the President and the Congress, said they didn’t want to happen.

Here we had an emergency; no one doubts that.

And it happened.

But it’s in emergencies that lines get crossed that shouldn’t be crossed and that this Court should draw.

I’ll conclude.

Warren E. Burger:

Thank you, counsel.

The case is submitted.

The honorable Court will now adjourn until tomorrow at 10 o’clock.