IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

)

Joseph J. Cicippio, et al., )

> )
>
> Plaintiffs, )

)

v\. ) Civil No. 96-1805 (TPJ)

) Hon. Thomas Penfield Jackson

The Islamic Republic of Iran, )

)

> Defendant. )

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_)

MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO QUASH
PLAINTIFFS' WRITS OF ATTACHMENT DELIVERED TO

BANK OF AMERICA

[INTRODUCTION]{.underline}

On or about July 18, 2000, plaintiffs delivered five writs of attachment
to Bank of America, purporting to attach Account #2086355542 and Account
#39910000120887 ("Bank of America writs"), in an effort to satisfy its
judgment against the Islamic Republic of Iran ("Iran") in this case.
Bank of America, garnishee, has responded by informing plaintiffs that,
while Iran "may have an interest" in the two accounts in question,[^1]
neither account is "subject to garnishment or attachment" for the
reasons set forth by another judge in this Court in [Flatow v. Islamic
Republic of Iran]{.underline}, 76 F. Supp. 2d 16 (D.D.C. 1999) (quashing
writ of attachment against same bank accounts served by victim of
Iranian terrorism).[^2] [See]{.underline} Answers to Interrogatories in
Attachment (Attachment A herein). On August 1, 2000, the United States
provided notice that it intended to file a statement of interest
pursuant to 28 U.S.C. § 517, regarding the Bank of America writs. The
United States hereby respectfully submits this Memorandum of Points and
Authorities in support of its motion to quash the Bank of America writs.
The United States submits this motion and accompanying memorandum, as
its statement of interest pursuant to 28 U.S.C. § 517, solely to protect
its own interests in this matter and to advise the Court of its legal
obligations with respect to the writs of attachment under both U.S. law
and international agreements. In articulating those legal obligations,
the United States does not appear on behalf of Iran and expressly
condemns the acts that brought about the judgment in this case.

In May 2000, pursuant to the same judgment, plaintiffs delivered five
writs of attachment to the Secretary of the Treasury, purporting to
seize the "Foreign Military Sales Trust Account, Identification Code
11-8242-0-7-155" ("Foreign Military Sales writs"). The government's
motion to quash these writs, filed June 27, 2000, is still pending.[^3]

While the United States is sympathetic to plaintiffs' interest in
satisfying their substantial judgments against Iran, the Bank of America
writs should be quashed immediately. The Iranian Assets Control
Regulations, 31 C.F.R. Part 535, as well as the Vienna Conventions on
Diplomatic and Consular Relations, the Foreign Sovereign Immunities Act,
and the Foreign Missions Act, make the accounts immune from attachment.
As discussed below, important foreign policy interests of the United
States lie behind the blocking of Iranian assets and preservation of
those assets free from encumbrances and attachments. Plaintiffs'
interests as private litigants cannot take precedence over the United
States' national security and foreign policy interests.

[BACKGROUND]{.underline}

As recounted in the United States' Memorandum in support of its motion
to quash plaintiffs' Foreign Military Sales writs (filed June 27, 2000),
on August 27, 1998, this Court entered judgments for plaintiffs against
Iran for a total of \$65,000,000 for compensatory damages arising out of
terrorists\' kidnapping, imprisonment, and torture of plaintiffs David
Jacobsen, Frank Reed, and Joseph Cicippio in Lebanon. [See]{.underline}
[Cicippio, et al. v. Islamic Republic of Iran]{.underline}, 18 F. Supp.
2d 62, 64, 70 (D.D.C. 1998).[^4] Jurisdiction for the judgment, which
was entered after defendants were declared in default, is predicated
upon 28 U.S.C. § 1605(a)(7). [Id.]{.underline} at 67.

On June 5, 2000, the Clerk of the Court issued five writs of attachment,
one for each plaintiff, purporting to attach "any money, property or
credits" of defendants, including specifically (1) "Bank of America
account number 3910000120887, entitled 'Blocked Iranian Diplomatic and
Consular Property Renovation Account c/o Blocked Assets Administration,
U.S. Department of Treasury,'" and (2) "'U.S. Department of State,
Office of Foreign Missions, Iranian Renovation Account,' Bank of America
Acount No. 2086355542. " [See]{.underline} Attachment B hereto. These
writs were then delivered to the Bank of America on or about July 18,
2000.

These same two bank accounts previously were subject to writs of
attachment served by the plaintiff in [Flatow v. Islamic Republic of
Iran, et al.]{.underline}, CV 97-396 (RCL) (D.D.C.) on then-NationsBank.
The Court in [Flatow]{.underline} granted the United States' motion to
quash these writs, as well as writs purporting to attach three parcels
of real estate owned by Iran, finding that "the properties and accounts
are immune from attachment under the Foreign Sovereign Immunities Act."
[Flatow]{.underline}, 76 F. Supp. 2d at 18.[^5] Accordingly, Bank of
America, in responding to the writs delivered by the instant plaintiffs,
informed plaintiffs that the bank accounts in issue were not subject to
attachment. [See]{.underline} Answers To Interrogatories In Attachment
(Attachment A).[^6]

The two identified bank accounts are assets that are blocked pursuant to
Executive Order 12170 and its implementing regulations, the Iranian
Assets Control Regulations ("IACR"), [see]{.underline} 31 C.F.R. §
535.201. Declaration of R. Richard Newcomb, Director of the Office of
Foreign Asset Control ("Newcomb Decl."), ¶ 7 (Attachment C herein). The
President issued Executive Order 12170 on November 14, 1979, in response
to the taking of the U.S. embassy and hostages in Tehran.
[Id.]{.underline}, ¶ 4; Declaration of David Carpenter, Assistant
Secretary of State for Diplomatic Security and Director of the Office of
Foreign Missions ("Carpenter Decl."), ¶ 4 (Attachment D herein). Under
the Executive Order and the Regulations, all Iranian government
property, including bank accounts, which were or came within the
possession of persons subject to the jurisdiction of the United States
between November 14, 1979, and January 19, 1981, were blocked, or
frozen, except pursuant to any authorization or license issued by the
Office of Foreign Assets Control ("OFAC"). [See]{.underline} 31 C.F.R. §
535.201, .208, .579(a)(1); Newcomb Decl. ¶ 5. Following the severance of
diplomatic relations between the United States and Iran in 1980, the
U.S. Department of the Treasury authorized the transfer of funds from
certain of these blocked Iranian accounts to an account set up at
American Security Bank (Account No. 20-863-5-542, or the "Second
Account"), which was also a blocked account. Newcomb Decl. ¶ 8;
Carpenter Decl. ¶¶ 9-11.

The State Department established the Second Account in furtherance of
the United States' treaty obligations under the Vienna Conventions on
Diplomatic and Consular Relations to protect Iranian diplomatic and
consular real property in the United States, which came into the State
Department's custody in 1980. [See]{.underline} Carpenter Decl. ¶¶ 7,
9-11. The State Department had determined that the United States'
obligation to protect the real property could best be discharged by
leasing the properties to generate a source of funds to pay for
continued repair and maintenance of the properties. [Id.]{.underline} ¶
9. Initial repairs, however, would be funded from certain existing
Iranian diplomatic, consular, and other official government accounts,
rather than from U.S. taxpayer funds. [Id.]{.underline} Accordingly,
after establishing the Second Account, the State Department was licensed
to use the funds gathered therein "solely to pay appropriate charges and
expenses associated with the preservation, renovation, and operation of
properties owned by the Government of Iran . . . and located in the
United States." [Id.]{.underline}, ¶ 11 & Exh. 4.; Newcomb Decl. ¶ 9.
Arrangements were to be made by the State Department and the Treasury
Department's OFAC for eventual payback of the funds from any funds
generated by lease or other appropriate use of the property. Carpenter
Decl. ¶ 11 & Exh. 4.

As a condition of the latter license, the State Department was required
to deposit all income generated by lease or other appropriate use of the
real estate back into the Second Account. [Id.]{.underline}; Newcomb
Decl. ¶ 10. The license provided that all such income constitutes
blocked property under the Iranian Assets Control Regulations. Carpenter
Decl. ¶ 11 & Exh. 4; Newcomb Decl. ¶ 10. Any money in the Second Account
not required for "immediate disbursal" was to be kept in an
interest-bearing account or certificate of deposit. Exh. 4 to Carpenter
Decl. In addition, on a yearly basis, funds from rental proceeds, held
in the Second Account, that exceeded the anticipated maintenance costs
for the custodial properties were to be transferred to another American
Security Bank account (account number 39910000120887, or "First
Account"). Carpenter Decl. ¶ 14; Newcomb Decl. ¶ 10. The First Account
is a blocked account. Newcomb Decl. ¶¶ 7, 10.

The funds originally transferred into the Second Account came from
diplomatic and consular accounts of the Government of Iran, and also
from two accounts held in the name of the National Iranian Navy. Newcomb
Decl. ¶ 8. In February 1996, the Navy funds were transferred from the
First Account in settlement of claims to those funds by Iran against the
United States. [Id.]{.underline}, ¶ 11. At present, therefore, both the
First and Second Accounts contain only funds that originated from
diplomatic or consular accounts or that have been generated from the
lease of diplomatic or consular property.

To preserve the value of the blocked diplomatic and consular real
property, the State Department made any necessary repairs and
renovations of the Iranian real property in its custody (as listed in
Exhibit 5 to the Carpenter Declaration) except for one property.
Carpenter Decl. ¶ 12. The building on the latter property was determined
to be unsalvageable and was demolished. [Id.]{.underline} The renovated
properties were then leased out and subsequent rental proceeds deposited
back into the Second Account. [Id.]{.underline} ¶ 13. Except for
temporary interruptions between tenants, the renovated properties have
been leased since December 1985. [Id.]{.underline} On a yearly basis,
transfers of funds have been made from the Second Account to the First
Account. [Id.]{.underline} ¶ 14; Newcomb Decl. ¶ 10. When American
Security Bank was acquired by NationsBank and NationsBank was acquired
by Bank of America, the First and Second Accounts were automatically
transferred to each successive bank (retaining the same account
numbers). Carpenter Decl. ¶ 15.

[ARGUMENT]{.underline}

The bank accounts at issue cannot be attached because they are blocked
pursuant to the IACR, which expressly prohibit attachment of blocked
funds. 31 C.F.R. § 535.203(e). In addition, because the funds in the
bank accounts are diplomatic and consular funds and funds derived from
the lease of Iran's diplomatic and consular property, attachment would
be inconsistent with the United States' obligations under the Vienna
Conventions to protect diplomatic and consular property. These
obligations remain even where diplomatic relations between two countries
have been severed. Third, again because the original funds in the bank
accounts are diplomatic and consular funds, there is no applicable
exception under the Foreign Sovereign Immunities Act ("FSIA") that would
authorize overriding the usual immunity from attachment granted to a
foreign government's noncommercial assets. [See]{.underline} 28 U.S.C.
§§ 1609, 1610. Lastly, with regard to the account in the custody of the
Office of Foreign Missions ("OFM"), [i.e.]{.underline}, the Second
Account, attachment is prohibited by the terms of the Foreign Mission
Act. [See]{.underline} 22 U.S.C. § 4308(f).

All of these prohibitions remain in place even after the 1998 amendment
to the FSIA purporting to allow attachment of, [inter]{.underline}
[alia]{.underline}, blocked property, since the President signed a
waiver of the provisions of the amendment on October 21, 1998.
[See]{.underline} Attachments E - G.

I. The Bank Accounts Are Blocked Accounts Exempt From Attachment Under
The Iranian Assets Control Regulations

The bank accounts at issue in this case were and remain blocked by
Executive Order 12170, 44 Fed. Reg. 65729 (1979) issued pursuant to the
International Emergency Powers Act ("IEEPA"), 50 U.S.C. §§ 1701 [et
seq]{.underline}. Newcomb Decl. ¶ 5; 31 C.F.R. § 535.201. With regard to
attachment of blocked property, the regulations issued pursuant to the
executive order state that

> \[u\]nless licensed or authorized pursuant to this part [any
> attachment, judgment, decree, lien, execution, garnishment, or other
> judicial process is null and void]{.underline} with respect to any
> property in which on or since the effective date there existed an
> interest of Iran.

31 C.F.R. § 535.203(e) (emphasis added). This language unequivocally
voids the writs of attachment at issue here. More generally, the
executive order and regulations prohibit [any]{.underline} dealing in
blocked property of the Government of Iran unless authorized by the
Treasury Department. 31 C.F.R. § 535.201.

Although the Court need go no further than the plain language of the
executive order and regulations before voiding the writs of attachment,
it should be noted that giving force to these prohibitions avoids
improper infringement on or interference with the President's powers in
the area of foreign policy. As the Supreme Court has recognized,
blocking is an important foreign policy tool that provides a critical
"'bargaining chip' to be used . . . when dealing with a hostile
country." [Dames & Moore v. Regan]{.underline}, 453 U.S. 654, 673
(1981). As explained by the Supreme Court in that case:

> This Court has previously recognized that the congressional purpose in
> authorizing blocking orders is 'to put control of foreign assets in
> the hands of the President . . . .' Such orders permit the President
> to maintain the foreign assets at his disposal for use in negotiating
> the resolution of a declared national emergency.

[Id.]{.underline} The Court went on to uphold a Presidential order
nullifying previously authorized prejudgment attachment on blocked
Iranian property, writing that

> it is difficult to accept petitioner's argument \[that the President
> did not have such power\] because the practical effect of it is to
> allow individual claimants throughout the country to minimize or
> wholly eliminate this 'bargaining chip' through attachments,
> garnishments, or similar encumbrances on property. Neither the purpose
> the statute was enacted to serve nor its plain language supports such
> a result.

[Id.]{.underline} at 673-74; [cf.]{.underline} [Crosby v. National
Foreign Trade Council]{.underline}, 120 S. Ct. 2288, 2296 (2000) (state
law that resulted in "less economic and diplomatic leverage" of
President was pre-empted by federal law) (citing [Dames]{.underline},
453 U.S. at 673).

The Supreme Court's admonition is particularly pertinent to the current
circumstances. The United States originally blocked all property in
which the Government of Iran had an interest in response to the 1979
hostage crisis. [See]{.underline} Executive Order 12170. The controversy
between Iran and the United States over their respective diplomatic and
consular properties has not been resolved and is now the subject of a
claim brought by Iran before the Iran-United States Claims Tribunal.
Carpenter Decl. ¶ 17. Continued blocking of Iran's property, including
the bank accounts, by the United States is important to preserving the
United States' position and its rights with regard to its own diplomatic
and consular property in Iran.[^7] [Id.]{.underline} Moreover, given
that the dispute between these two sovereign countries is before an
international tribunal, involvement by this Court in effecting a seizure
or attachment of any of the property at issue would be particularly
inappropriate. [See]{.underline} [Adams v. Vance]{.underline}, 570 F.
2d. 950, 955 (D.C. Cir. 1978) (courts must be wary of intruding into
foreign affairs to, among other things, "'. . . avoid fixing of our
government's course' by premature interposition") (quoting [Nielsen v.
Secretary of Treasury]{.underline}, 424 F.2d 833, 855 (D.C. Cir. 1970)).
For these reasons, this Court should enforce 31 C.F.R. § 535.203(e) and
quash the writs of attachment delivered to Bank of America.

II\. Attachment Would Be Contrary To The Principles Of The Vienna
Conventions Regarding Treatment Of Diplomatic And Consular Property

Attachment of the bank accounts in issue, in addition to being
foreclosed by Executive Order 12170, would be contrary to U.S.
obligations to protect and respect diplomatic and consular property
pursuant to the Vienna Conventions on Diplomatic and Consular Relations.
Article 45(a) of the Vienna Convention on Diplomatic Relations provides
that, "\[i\]f diplomatic relations are broken off between two States . .
. (a) the receiving State must, even in the case of armed conflict,
respect and protect the premises of the mission, together with its
property and archives." T.I.A.S. 7502, 23 U.S.T. 3227 (1961). Article 27
of the Vienna Convention on Consular Relations contains the same
obligation with respect to consular premises and property. T.I.A.S.
6820, 21 U.S.T. 77 (1967).

Thus, the United States has an international legal obligation under the
Vienna Conventions to protect foreign missions, consular premises, and
their property in the United States in the event that diplomatic
relations between the United States and a foreign country, such as Iran,
are severed. The International Court of Justice has described the
obligations codified by these treaties as "vital for the security and
well-being of the complex international community" and held that
"scrupulous\[\]" respect for these obligations is "essential" to the
ordered progress of international relations. [Case Concerning U.S.
Diplomatic and Consular Staff in Tehran (Judgment)]{.underline}, 1980
I.C.J. 3, 43. Additionally, the President explained in the context of
signing the 1999 appropriations bill which amended the Foreign Sovereign
Immunity Act, [see]{.underline} [infra]{.underline} at Part V, that
attachment and execution against foreign diplomatic and consular
property "would place the United States in breach of its international
treaty obligations" and "would put at risk the protection we enjoy at
every embassy and consulate throughout the world by eroding the
principle that diplomatic property must be protected regardless of
bilateral relations." Statement by the President on Omnibus
Appropriations Act, at 7-8 (Oct. 24, 1998) ("Statement by President"),
[reprinted at]{.underline} 1998 WL 743759.

Certainly, the "property" which the United States has an interest in
protecting pursuant to the Vienna Conventions includes the diplomatic
and consular funds left behind by Iran upon the severance of relations
between the two countries, and funds from the lease of Iran's diplomatic
and consular real properties. [See]{.underline} Carpenter Decl. ¶ 16.
Accordingly, under the Vienna Conventions, the funds are immune from
attachment to satisfy a civil judgment. [See]{.underline} [Liberian
Eastern Timber Corp. v. Government of the Rep. of Liberia]{.underline},
659 F. Supp. 606, 608 (D.D.C. 1987) ("[LETCO]{.underline}") (Article 25
of the Vienna Convention on Diplomatic Relations prohibits attachment of
embassy bank account); [Foxworth v. Permanent Mission of the Rep. of
Uganda to the United Nations]{.underline}, 796 F. Supp. 761, 763
(S.D.N.Y. 1992) (attachment of bank account of Uganda's permanent
mission to United Nations would conflict with U.S. obligations under
Vienna Convention on Diplomatic Relations). The funds are immune from
attachment for the additional reason that, in the instant case, the
United States uses the funds to meet its obligations under the Vienna
Conventions to protect the diplomatic and consular real estate that is
also now in the United States' custody.

In addition to interfering with the United States' ability to comply
with its obligations under the Conventions, attachment of the bank
accounts would impair the United States' ability to obtain reciprocal
compliance from Iran. The United States continues to block the Iranian
property at issue so as to be able to use the property as a "bargaining
chip" in negotiations with

Iran, including negotiations over U.S. diplomatic and consular property
in Iran. Carpenter Decl. ¶¶ 16-17. Allowing attachment of this property
will interfere with the United States' ability to negotiate on this
issue.

The obligations of the Vienna Conventions cannot be construed narrowly
because, in the final analysis, international legal obligations are
observed on the basis of reciprocity. In the present circumstances, the
United States has an interest in protecting the diplomatic and consular
property pursuant to the Vienna Conventions, and, as found by the
President, [see]{.underline} [infra]{.underline}, it is in the national
security interest of the United States to protect such property from
attachment and execution. The Court should respect these
determinations.[^8]

III\. The Bank Accounts Are Exempt From Attachment Under The Foreign
Sovereign Immunities Act

The FSIA, in conjunction with a Presidential waiver of certain of its
provisions as authorized by the 1999 appropriations bill,
[see]{.underline} [infra]{.underline} Part V, also prohibits attachment
of the Bank of America accounts. Under the FSIA, the property of a
foreign state in the United States is immune from attachment or
execution, unless otherwise provided by one of the statute's enumerated
exceptions. 28 U.S.C. § 1609; [Flatow v. Islamic Republic of
Iran]{.underline}, 76 F. Supp. 2d 16, 20 (D.D.C. 1999). Here -- in the
light of the President's decision to waive the provisions of 28 U.S.C. §
1610(f)(1)(A), [see]{.underline} [infra]{.underline} Part V -- the FSIA
does not provide an exception allowing attachment or execution of the
bank accounts; the accounts are therefore immune from attachment under
the statute.

The exception contained in 28 U.S.C. § 1610(a)(7) does not allow
attachment of the bank accounts in issue. Section 1610(a)(7) states,
"\[t\]he property in the United States of a foreign state . . . used for
a commercial activity in the United States, shall not be immune from
attachment . . . if . . . the judgment relates to a claim for which the
foreign state is not immune under \[28 U.S.C. § 1605(a)(7)\]." Assuming
disputed property actually belongs to a "foreign state," as the United
States has argued,[^9] it is the foreign state's own activities, not
those of the United States, that determine whether particular property
is "used for a commercial activity" within the meaning of section
1610(a). As the Supreme Court stated in discussing the waiver of
jurisdictional immunity in the FSIA in [Republic of Argentina v.
Weltover]{.underline}, 504 U.S. 607, 614 (1992), actions are
"commercial" within the meaning of the FSIA "when [a foreign government
acts]{.underline}, not as a regulator of a market, but in the manner of
a private player within it" (emphasis added). "The issue is whether the
particular actions that [the foreign state performs]{.underline} . . .
are the type of actions by which a private party engages in 'trade and
traffic or commerce\[.\]'" [Id.]{.underline} (emphasis added). Although
the Court was not addressing the precise issue involved here, this
language suggests that it would hold that only the actions of the
foreign state itself could operate to waive immunity. This
interpretation comports with the rationale behind the FSIA's exceptions
to jurisdictional immunity and attachment and execution immunity -- a
foreign state should be found to have waived these immunities only when
[it]{.underline} has taken some action outside the realm of sovereign
actions and itself acts as a private party.

The operative inquiry in the instant case, therefore, is not whether the
United States used the accounts at issue for a commercial activity, but
whether the original funds were used by [Iran]{.underline} for
commercial activities. The original Iranian accounts from which the
funds still in the Bank of America account were transferred were
diplomatic and consular accounts.[^10] Newcomb Decl. ¶¶ 8, 11. Such
diplomatic and/or consular accounts are in general immune from
attachment under the FSIA. [See]{.underline} [LETCO]{.underline}, 659 F.
Supp. at 610 (holding that the fact that the embassy account was used
for some "incidental" or "auxiliary commercial purposes did not cause
the entire account "to lose its mantle of sovereign immunity") (refusing
to follow [Birch Shipping Corp. v. Embassy of the United Rep. of
Tanzania]{.underline}, 507 F. Supp. 311 (D.D.C. 1980)); [but
see]{.underline} [Birch Shipping Corp.]{.underline}, 507 F. Supp. at
512.[^11] Because Iran did not use the original funds which are now
located in the bank accounts for a commercial activity, the FSIA forbids
attachment of these accounts.[^12]

Even were the activities of the United States relevant for purposes of
determining whether the "commercial activity" exception contained in
section 1610(a)(7) was met, the exception still would not apply to the
bank accounts in issue. As the District Court recently found in the
[Flatow]{.underline} case with respect to the Second Account, this
account was licensed by the Treasury Department to the State
Department's OFM for the payment of maintenance and repair expenses
relating to diplomatic properties of the Government of Iran.
[See]{.underline} [infra]{.underline} at Part IV. The United States' use
of the funds in the Second Account to preserve and protect diplomatic
properties, pursuant to the United States' responsibilities under the
Foreign Missions Act, "is more properly characterized as sovereign than
commercial." [Flatow]{.underline}, 76 F. Supp. 2d at 24.

Moreover, construing the FSIA's "commercial activity" attachment
exception to apply to the bank accounts would make little sense as a
matter of statutory construction, in light of Congress's provision for
potential attachment of these accounts under 28 U.S.C. § 1610(f)(1)(A).
As discussed below, because the accounts are regulated pursuant to the
IEEPA, Executive Order 12170, and the IACR, section 1610(f)(1)(A)
contemplates that the accounts may be subject to attachment, absent
Presidential waiver of the requirements of this provision.
[Infra]{.underline} at Part V. Thus, if the President decided not to
exercise his authority to waive the requirements of section §
1610(f)(1)(A) -- a situation which does not present itself in the
instant case[^13] -- a construction of section 1610(a)(7) that
"permit\[s\] the attachment of blocked Iranian accounts . . . would
render Section 1610(f)(1)(A) superfluous." [Flatow]{.underline}, 76 F.
Supp. 2d at 24. As the [Flatow]{.underline} court noted, it is "unlikely
that Congress enacted two separate provisions of the same statute in
order to achieve the same result. That is, if blocked accounts were
already subject to attachment under Section 1610(7), Congress would have
had no need to enact an entirely new provision, Section 1610(f)(1)(A),
to authorize the attachment of these very same funds." [Id.]{.underline}

In sum, the accounts at issue include diplomatic and consular funds,
plus the rental proceeds from the lease by the United States of the
diplomatic and consular real properties, generated to provide additional
funds for maintenance and upkeep on the real properties in furtherance
of the United States' international obligations to protect the property.
In these circumstances, the funds have not been used by
[Iran]{.underline} for a commercial purpose, and are immune from
attachment under the FSIA.

IV\. The Foreign Missions Act Explicitly Prohibits Attachment Of The
Second Account Because It Constitutes Property Being Held By The Office
Of Foreign Missions For The Use Of A Foreign Mission

Finally, the "Second" Bank of America Account is also subject to the
prohibition against attachment of property held by OFM set out in the
Foreign Missions Act, 22 U.S.C. §§ 4301, [et]{.underline}
[seq.]{.underline} Section 4305(c) of the Foreign Missions Act
authorized OFM to "protect and preserve any property of \[a\] foreign
mission" if that mission has ceased conducting diplomatic, consular and
other governmental activities and has not designated a protecting power
(or other agent) approved by the Secretary to be responsible for the
property of that foreign mission. 22 U.S.C. § 4305(c). OFM has control
over Iran's diplomatic and consular property, including the funds in the
Second Account, according to this provision. Carpenter Decl. ¶¶ 4, 14,
15. Another provision of the Foreign Missions Act, section 4308(f),
prohibits the attachment of or execution upon such mission property
being held by the Department of State. Specifically, 22 U.S.C. § 4308(f)
provides that

> \[a\]ssets of or under the control of the Department of State,
> wherever situated, which are used by or held for the use of a foreign
> mission [shall not be subject to attachment, execution]{.underline},
> injunction, or similar process, whether intermediate or final.

(emphasis added). The funds at issue are solely funds of the Iranian
mission being held by the United States as a response to Iran's breach
of its obligations under Vienna Conventions. The sole use of the funds
made by the United States is to preserve and maintain other mission
property. For these reasons, the funds fall within the exception of
section 4308(f) and are immune from attachment.

V. The 1998 Amendment To The Foreign Sovereign Immunities Act Allowing
Attachment of Blocked Property In Certain Circumstances Is Inapplicable
Here Because The President Has Waived The Effect Of The Amendment.

The Omnibus Appropriations Bill for Fiscal Year 1999 (Public Law No.
105-277), signed by the President on October 21, 1998,
[supra]{.underline} at Parts II & III, contains, among other things, the
appropriations for the Treasury Department. A provision of this
enactment amends the FSIA to provide that certain property, including
property blocked pursuant to IEEPA, may now be subject to attachment.
Pub. L. No. 105-277, § 101(h), Title I, § 117 ("Section 117\")
(Attachment E hereto, at 1199-1201). In pertinent part, Section 117
provides that,

> \[n\]otwithstanding any other provision of law, including but not
> limited to section 208(f) of the Foreign Missions Act (22 U.S.C. §
> 4308(f), . . . any property with respect to which financial
> transactions are prohibited or regulated pursuant to . . . sections
> 202 and 203 of \[IEEPA\] . . . shall be subject to execution or
> attachment in aid of execution of any judgment relating to a claim for
> which a foreign state . . . claiming such property is not immune under
> \[28 U.S.C. §\] 1605(a)(7).

[See]{.underline} Attachment E, at 1199; [see]{.underline}
[also]{.underline} 28 U.S.C. § 1610(f)(1)(A). This new provision would,
absent other action, allow attachment of certain property, including
property blocked pursuant to IEEPA and/or held by the State Department's
OFM pursuant to 22 U.S.C. § 4305(c), in cases where a foreign state has
been found liable for certain terrorist actions.

In a signing statement addressing the entire 1999 appropriations bill,
the President explained that, by allowing attachment and execution
against foreign diplomatic and consular property,

> section 117 would place the United States in breach of its
> international treaty obligations. It would put at risk the protection
> we enjoy at every embassy and consulate throughout the world by
> eroding the principle that diplomatic property must be protected
> regardless of bilateral relations. Absent my authority to waive
> section 117\'s attachment provision, it would also effectively
> eliminate use of blocked assets of terrorist states in the national
> security interests of the United States, including denying an
> important source of leverage. In addition, section 117 could seriously
> affect our ability to enter into global claims settlements that are
> fair to all U.S. claimants, and could result in U.S. taxpayer
> liability in the event of a contrary claims tribunal judgment.

Statement by President, at 7-8, [reprinted at]{.underline} 1998 WL
743759.

For these reasons, on the same day he signed Section 117 into law, the
President executed a waiver of the requirements of Section 117 pursuant
to express congressional authority. [See]{.underline}
[Flatow]{.underline}, 76 F. Supp. 2d at 25-27 (holding that Section 117
did not allow attachment of same Bank of America accounts). Subsection
(d) of Section 117 provides that "\[t\]he President may waive the
requirements of this section in the interest of national security."
[See]{.underline} Attachment E, at 1201. The President's waiver pursuant
to Section 117(d) stated that allowing attachment and execution on
certain property of terrorist-list states, including property blocked
pursuant to IEEPA, "would impede the ability of the President to conduct
foreign policy in the interest of national security and would, in
particular, impede the effectiveness of such prohibitions and
regulations upon financial transactions." Attachment F;
[see]{.underline} [also]{.underline} Statement by the Press Secretary
(Oct. 21, 1998) (Attachment G hereto). The President's waiver applies to
all of the substantive provisions of Section 117, Attachment F;
[Flatow]{.underline}, 76 F. Supp. 2d at 26, and is not subject to
judicial review, [see]{.underline} [Dalton v. Specter]{.underline}, 511
U.S. 462, 476 (1994) ("How the President chooses to exercise the
discretion Congress has granted him is not a matter for \[judicial\]
review.").

Any argument that the President's waiver under Section 117 should be
narrowly construed and, therefore, does not apply to the substantive
provisions contained in Section 117(a) (codified at 28 U.S.C. §
1610(f)(1)(A)), must be rejected, because Congress has provided no clear
statement that it intended to circumscribe the President's traditionally
broad power over the nation's foreign relations. Pursuant to IEEPA and
his general authority over foreign relations, the President has
considerable discretion to order the blocking of foreign assets. [See
generally]{.underline}, [Palestine Information Office v.
Schultz]{.underline}, 853 F.2d 932, 937 (D.C. Cir. 1988) ("'\[m\]atters
relating "to the conduct of foreign relations . . . are so exclusively
entrusted to the political branches of government as to be largely
immune from judicial inquiry or interference"'") (quoting [Regan v.
Wald]{.underline}, 468 U.S. 222, 242 (1984)). As in any area in which
the Constitution's separation of powers establishes a particular balance
of power between the Executive and Legislative Branches, Congress must
enact a particularly clear statement when it seeks to alter that
delicate balance. [See]{.underline} [Armstrong v. Bush]{.underline}, 924
F.2d 282, 289 (D.C. Cir. 1991) ("When Congress decides purposefully to
enact legislation restricting or regulating presidential action, it must
make its intent clear."). Here, in enacting Section 117, Congress
provided no affirmative evidence of intent to restrain the President's
foreign affairs powers, specifically the President's authority to
establish and maintain blocking programs. On the contrary, the presence
of the waiver provision reflects Congress's recognition of the need for
Executive flexibility over the conduct of foreign relations and the
protection of national security. In the absence of a clear textual
statement to the contrary, any ambiguity in the statute's language
should be construed in favor of Executive power over foreign relations
and national security.

For all of these reasons, the Court should decline to act contrary to
the will of the President in this area.

**[CONCLUSION]{.underline}**

For the foregoing reasons, the two identified accounts at Bank of
America are immune from attachment and execution and the Court should
quash the writs of attachment delivered to Bank of America.

Respectfully Submitted,

DAVID W. OGDEN

> Acting Assistant Attorney General
>
> WILMA A. LEWIS
>
> United States Attorney

THOMAS J. PERRELLI

Deputy Assistant Attorney General

> VINCENT M. GARVEY

DAVID S. MENDEL

> Attorneys, Department of Justice
>
> Civil Division
>
> 901 E Street, N.W., Rm 866
>
> Washington, D.C. 20530
>
> Tel: (202) 514-5079

Fax: (202) 616-8460

> Attorneys for the United States

Dated: August 16, 2000

[^1]: One of the account numbers contained in the writs delivered to
    Bank of America (#3910000120887), [see]{.underline}
    [infra]{.underline}, is different than the number of the bank
    account in issue in this proceeding (#39910000120887). Because Bank
    of America, in its Answers To Interrogatories In Attachment, states
    that Iran "may have an interest" in Account #39910000120887, and
    does not contend that plaintiffs' instant writs are defective
    because they identify the wrong account number, the United States
    does not herein state a technical objection to plaintiffs' writs.

[^2]: An appeal of that decision is pending before the United States
    Court of Appeals for the District of Columbia Circuit.
    [See]{.underline} [Flatow v. Islamic Republic of Iran, et
    al.]{.underline}, No. 00-5011, consolidated with No. 99-5398.

[^3]: Plaintiffs and the United States stipulated to extend the deadline
    for plaintiffs' response to the United States' motion to quash the
    Foreign Military Sales writs until July 28, 2000. Plaintiffs
    subsequently moved, unopposed, to extend the deadline further until
    September 5, 2000.

[^4]: The judgments against Iran were entered as follows: David
    Jacobsen, \$9,000,000; Frank Reed, \$16,000,000; Joseph Cicippio,
    \$20,000,000; Elham Cicippio, \$10,000,000; and Fifi Delati-Reed,
    \$10,000,000.

[^5]: With respect to the first of the two accounts, account
    #39910000120887, the Court in [Flatow]{.underline} found that this
    account was "properly characterized as United States property, which
    is immune from attachment by virtue of sovereign immunity."
    [Flatow]{.underline}, 76 F. Supp. 2d at 24. Bank of America, in its
    answers to plaintiffs' interrogatories, specifically referred to the
    Court's reasoning in [Flatow]{.underline} in contending that the
    first account is not subject to attachment. Attachment A. The United
    States, as discussed below, agrees that the first account is not
    subject to attachment, but for reasons other than those found by the
    Court and advanced by Bank of America. [See]{.underline}
    [infra]{.underline} Part III.

[^6]: The two bank accounts also are subject to writs of attachment
    served on Bank of America by plaintiffs in [Anderson, et al. v.
    Islamic Republic of Iran, et al.]{.underline}, Civ. No. 99-698
    (TPJ), on April 21, 2000. The United States' motion to quash the
    Bank of America writs in [Anderson]{.underline}, filed on July 7,
    2000, is still pending.

[^7]: As Mr. Carpenter discusses in his declaration (¶ 18), the United
    States' management of the Iranian diplomatic and consular property
    in the present case is consistent with its management of Vietnamese
    property under similar circumstances. As in the present case, the
    United States blocked and took custody of Vietnamese diplomatic and
    consular real property and accounts, renovated and rented out the
    real properties, and deposited the rental proceeds back into blocked
    accounts. [Id.]{.underline} These assets were faithfully maintained
    by the United States for over 20 years. Eventually, a global
    agreement was reached with Vietnam involving both the real
    properties and the accounts. [Id.]{.underline} As Mr. Carpenter
    states, the excellent condition in which the United States had
    maintained the Vietnamese property provided leverage for obtaining
    an advantageous settlement for the United States, and funds in the
    blocked accounts that the United States had been maintaining were
    used by Vietnam to compensate the United States for property it was
    unable to return. [Id.]{.underline} Such an advantageous settlement
    would probably not have been reached if the accounts had been
    encumbered or reduced to pay off unrelated court judgments.

[^8]: With regard to the proper interpretation of the Vienna
    Conventions, the United States notes that, in construing treaties,
    the courts must give great weight to the interpretation given the
    treaty by the Executive Branch. [See]{.underline} [Sumitomo Shoji
    America, Inc. v. Avagliano]{.underline}, 457 U.S. 176, 184-85
    (1982); [Kolovrat v. Oregon]{.underline}, 366 U.S. 187, 194 (1961).

[^9]: In [Flatow]{.underline}, the court disagreed with the United
    States' characterization of the First Account as Iranian property
    which was "blocked" and regulated by the Iranian Assets Control
    Regulations. [Flatow]{.underline}, 76 F. Supp. 2d at 24. Rather, the
    court found that the "First Account is more properly characterized
    as United States property, which is immune from attachment by virtue
    of the doctrine of sovereign immunity." [Id.]{.underline} (citing
    [Buchanan v. Alexander]{.underline}, 45 U.S. (4 How.) 20, 21 (1846),
    and other cases); [supra]{.underline} note 6. Accordingly, the court
    did not reach the issue of whether the FSIA provided for attachment
    of the First Account.

[^10]: Any funds relating the National Iranian Navy accounts were
    withdrawn pursuant to settlement agreement in February 1996. Newcomb
    Decl. ¶ 11.

[^11]: [Birch]{.underline} may be distinguished from [LETCO]{.underline}
    and from the present case because, in [Birch]{.underline}, the
    embassy admitted that the embassy account was used solely to pay
    salaries and "incidental purchases and services." 507 F. Supp. at
    312.

[^12]: The United States has never acted as an agent for Iran with
    respect to the real properties for which the bank accounts were
    established. Indeed, Iran objected to the leases of the real
    properties and sought to have them terminated in the Iran-U.S.
    Claims Tribunal. In denying Iran's request, the Tribunal noted the
    United States' position that Iran's diplomatic and consular property
    had been leased at various periods since 1983, "in order to prevent
    their falling into an irreversible state of disrepair."
    [See]{.underline} [Islamic Republic of Iran v. United States, Case
    Nos. A4/A7/A5 (I:F and III)]{.underline}; Dec. 129-A4/A7/A15-FT, at
    1-2 (June 23, 1997, Iran-United States Claims Tribunal) (Attachment
    H hereto).

[^13]: On the same day that the President signed Public Law No. 105-277,
    which amended the FSIA to include, [inter]{.underline}
    [alia]{.underline}, the provision found at 28 U.S.C. §
    1610(f)(1)(A), he also signed a waiver pursuant to the authority
    conferred on him by the amending section. Accordingly, the
    requirements of § 1610(f)(1)(A) are currently inoperative due to
    Presidential waiver. [Infra]{.underline} at Part V.