UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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GLENCORE DENREES PARIS and

GLENCORE GRAIN ROTTERDAM B.V., :

Petitioners, :

> \- against - : 99 Civ. 8607 (NRB)

\(1\) DEPARTMENT OF NATIONAL STORE :

BRANCH 1 (VIETNAM), in its own

capacity and as a state organization, :

representative and agent of the

Socialist Republic of Vietnam; and :

\(2\) TIEN GIANG EXPORT-IMPORT COMPANY

(TIGIMEX), VIETNAM, in its own :

capacity and as representative,

delegate and agent of the Ministry :

of Agriculture and Food Industry of

the Socialist Republic of Vietnam :

and the Socialist Republic of

Vietnam; and (3) the SOCIALIST :

REPUBLIC OF VIETNAM,

:

Respondents.

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[STATEMENT OF INTEREST OF THE UNITED STATES]{.underline}

MARY JO WHITE

United States Attorney for the

Southern District of New York

100 Church Street, 19th Floor

New York, New York 10007

Tel.: (212) 637-2744

> WENDY H. SCHWARTZ (WS-1862)
>
> Assistant United States Attorney

LINDA JACOBSON

Assistant Legal Adviser

STEPHEN D. McCREARY

Attorney-Adviser

Office of Diplomatic Law

and Litigation

Office of the Legal Adviser

United States Department of State

22nd and C Street, N.W.

Washington, D.C. 20520

SUSAN KLAVENS HUTNER

Senior Counsel

Office of Chief Counsel

United States Department

of the Treasury

Washington, D.C. 20220

Attorney for the Office of Foreign Assets Control

\- Of Counsel -

[TABLE OF CONTENTS]{.underline}

TABLE OF AUTHORITIES ii

PRELIMINARY STATEMENT 2

BACKGROUND 4

A. The Iraq Sanctions Program 4

B. The Oil-for-Food Programme and theUnited Nations Escrow Account 7

C. The Restraining Notice 10

ARGUMENT 13

I. All Interests In And Proceeds From TheAccount Are Blocked And May Not
Be Attached 13

II\. The Escrow Account Is Entitled to ThePrivileges and Immunities Of
The UnitedNations and Is Immune From Attachment 15

CONCLUSION 19

[TABLE OF AUTHORITIES]{.underline}

[CASES]{.underline}

[Clark v. Propper]{.underline}, 169 F.2d 324 (2d Cir. 1948),

[aff\'d]{.underline}, [Propper v. Clark]{.underline}, 337 U.S. 472
(1949) 4, 6, 15

[Consarc Corp. v. Iraqi Ministry]{.underline},

27 F.3d 695 (D.C. Cir. 1994) 14

[Consarc Corp. v. Iraqi Ministry]{.underline},

71 F.3d 909 (D.C. Cir. 1995) 14

[Dames & Moore v. Regan]{.underline},

453 U.S. 654 (1981) 4, 7

[Federal Republic of Yugoslavia v. Park-71st]{.underline}

[Corp.]{.underline}, 913 F. Supp. 191 (S.D.N.Y. 1995) 6, 15

[Foxworth v. Permanent Mission of the Republic]{.underline}

[of Uganda to the United Nations]{.underline},

796 F. Supp. 761 (S.D.N.Y. 1992) 16

[Matter of L.L.M. v. A.J.J.M.]{.underline}, 69 N.Y.2d 924

(N.Y. 1987) 18

[Shamsee v. Shamsee]{.underline}, 428 N.Y.S.2d 33 (2d Dep\'t 1980),

[aff\'d]{.underline}, 53 N.Y.2d 739 (N.Y. 1981), [cert.]{.underline}
[denied]{.underline},

454 U.S. 893 (1981) 18

[STATUTES, TREATIES]{.underline}

[REGULATIONS AND EXECUTIVE ORDERS]{.underline}

22 U.S.C. § 287c 5

22 U.S.C. §§ 288a 17

28 U.S.C. § 517 1

50 U.S.C. §§ 1601-1651 4

50 U.S.C. §§ 1701-1706 4

50 U.S.C. § 1701(a) 4

Pub. L. No. 101-513, §§ 586-586J,

104 Stat. 1979 5

S.J. Res. 144, P.L. 80-357,

61 Stat. 756 16

United Nations Charter, 59 Stat. 1031 16

Convention on Privileges and Immunities of

the United Nations, [adopted]{.underline} Feb. 13, 1946,

[United States accession]{.underline}, April 29, 1970,

21 U.S.T. 1418 15, 16

31 C.F.R. §§ 575.101-575.901 1, 6

31 C.F.R. § 575.201(a) 6, 13

31 C.F.R. § 575.202 6

31 C.F.R. § 575.301 6, 13

31 C.F.R. § 575.308 13

31 C.F.R. § 575.315 13

31 C.F.R. § 575.317 13

31 C.F.R. § 575.522 9

31 C.F.R. § 575.523 9

31 C.F.R. § 575.525 9

31 C.F.R. § 575.801 6

56 Fed. Reg. 2112 6

Exec. Order No. 12722, 55 Fed. Reg. 31803 4

Exec. Order No. 12724, 55 Fed. Reg. 33089 6

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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GLENCORE DENREES PARIS and

GLENCORE GRAIN ROTTERDAM B.V., :

> Petitioners, :
>
> \- against - : 99 Civ. 8607 (NRB)

\(1\) DEPARTMENT OF NATIONAL STORE :

BRANCH 1 (VIETNAM), in its own

capacity and as a state organization, :

representative and agent of the

Socialist Republic of Vietnam; and :

\(2\) TIEN GIANG EXPORT-IMPORT COMPANY

(TIGIMEX), VIETNAM, in its own :

capacity and as representative,

delegate and agent of the Ministry :

of Agriculture and Food Industry of

the Socialist Republic of Vietnam :

and the Socialist Republic of

Vietnam; and (3) the SOCIALIST :

REPUBLIC OF VIETNAM,

:

Respondents.

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[STATEMENT OF INTEREST OF THE UNITED STATES]{.underline}

The United States of America (the \"United States\") respectfully
submits this Statement of Interest pursuant to 28 U.S.C. § 517 to
express the view that the Court should vacate the restraining notice
dated April 18, 2000 served by petitioners Glencore Denrees Paris and
Glencore Grain Rotterdam B.V. (collectively \"Glencore\" or
\"Petitioners\") on Banque Nationale de Paris (\"BNP\") because the
attachment sought by the restraining notice is prohibited by the Iraqi
Sanctions Regulations, 31 C.F.R. §§ 575.101-575.901 (the \"Sanctions
Regulations\"), and violates the privileges and immunities of the United
Nations.

[PRELIMINARY STATEMENT]{.underline}

In this action, Glencore has apparently obtained a default judgment
against respondents Department of National Store Branch 1 (Vietnam),
Tien Giang Export-Import Company (TIGIMEX), Vietnam, and the Socialist
Republic of Vietnam (collectively, the \"Vietnam Judgment-Debtors\" or
\"Respondents\"). Glencore has served upon BNP a restraining notice to
garnishee (the \"Restraining Notice\"), directing BNP to refrain from
paying or transferring any funds or property in its possession belonging
to the Vietnam Judgment-Debtors or to Vietnam Northern Food Corporation
(\"Vinafood\"). BNP asserts that it has no funds or property belonging
to the Vietnam Judgment Debtors, and that its only connection with
Vinafood is its obligation to pay Vinafood under several letters of
credit issued in Vinafood\'s favor by BNP as part of the United
Nations\' Iraq Oil-for-Food Programme (the \"Oil-For-Food Programme\" or
the \"Programme\").

The Oil-for-Food Programme primarily operates as a humanitarian
exception to sanctions regimes against Iraq that have been in place in
the United States, and internationally, since 1990. Under the sanctions
regimes, Iraqi assets are \"blocked\" or frozen, and there is an embargo
on imports from and exports to Iraq. Under the Oil-For-Food Programme,
however, Iraq may, under specified circumstances, sell petroleum and
petroleum products, with the proceeds to be used solely to purchase
food, medicine and other supplies to meet the humanitarian needs of the
Iraqi people.

The Oil-For-Food Programme operates through an escrow account
established by the United Nations at BNP solely for the purposes of the
Programme, into which proceeds from Iraq\'s petroleum sales are
deposited, and from which payments for humanitarian supplies are made
(the \"Escrow Account\"). BNP is specifically licensed by the United
States Department of Treasury\'s Office of Foreign Assets Control
(\"OFAC\") to place deposits from Iraq\'s petroleum sales into the
Escrow Account and make payments to suppliers from the Escrow Account
via letters of credit. BNP may not make any payments drawn upon the
Escrow Account that do not conform with the Oil-For-Food Programme, the
license, and the Sanctions Regulations.

Because the attachment sought by the Restraining Notice does not conform
with the terms of BNP\'s license and is otherwise prohibited by the
Sanctions Regulations, it is void and should be vacated. In addition, as
an integral part of the Oil-For-Food Programme, the Escrow Account is
held by the United Nations, and enjoys the privileges and immunities of
the United Nations. Because the Restraining Notice purports to attach
payments due under letters of credit that are drawn against funds in the
Escrow Account, the Restraining Notice should also be vacated as an
improper incursion on the privileges and immunities of the United
Nations.

[BACKGROUND]{.underline}

A. [The Iraq Sanctions Program]{.underline}

Pursuant to the International Emergency Economic Powers Act (\"IEEPA\"),
50 U.S.C. §§ 1701-1706, the President of the United States has broad
powers to \"block\" the assets of foreign governments and their
nationals, and to prohibit economic transactions by or with designated
foreign nationals or foreign countries, in order to deal with \"any
unusual or extraordinary threat, which has its source in whole or
substantial part outside the United States, to the national security,
foreign policy, or economy of the United States. . . .\" 50 U.S.C. §
1701(a). The \"congressional purpose in authorizing blocking orders is
\'to put control of foreign assets in the hands of the President . . .
.\'\" [Dames & Moore v. Regan]{.underline}, 453 U.S. 654, 673 (1981)
(quoting [Propper v. Clark]{.underline}, 337 U.S. 472, 493, (1949)).

On August 2, 1990, immediately after Iraq invaded Kuwait, President Bush
declared a national emergency and invoked his authority under the
Constitution and the laws of the United States, including the IEEPA, and
the National Emergencies Act (\"NEA\"), 50 U.S.C. §§ 1601-1651, to block
\"\[a\]ll property and interests in property of the Government of Iraq,
its agencies, instrumentalities and controlled entities and the Central
Bank of Iraq that are in the United States, that hereafter come within
the United States or that are or hereafter come within the possession or
control of United States persons, including their overseas branches.\"
Exec. Order No. 12722, 55 Fed. Reg. 31803 (1990). Congress declared its
support for the President\'s freeze of Iraqi assets in the Iraq
Sanctions Act of 1990, Pub. L. No. 101-513, §§ 586-586J, 104 Stat. 1979,
2047-55.

On August 2, 1990, the United Nations Security Council also condemned
the Iraqi invasion of Kuwait and demanded that Iraq unconditionally
withdraw. Resolution 660 (Aug. 2, 1990). Shortly thereafter, pursuant to
Resolution 661 (Aug. 6, 1990), the United Nations Security Council also
implemented a program of economic sanctions against Iraq. This included
a call for all member States to, among other things prevent the import
of commodities and products originating in Iraq, [id.]{.underline} ¶
3(a), and to withhold funds and other financial and economic resources
from Iraq, with the exception of certain payments for medical or
humanitarian purposes, and food for humanitarian purposes,
[id.]{.underline} ¶ 4. Pursuant to the United Nations Participation Act,
22 U.S.C. § 287c (the \"UNPA\"),[^1] as well as the IEEPA and the NEA,
President Bush issued Executive Order No. 12724, imposing the sanctions
called for by Resolution 661. Exec. Order No. 12724, 55 Fed. Reg. 33089
(1990).

Executive Order Nos. 12722 and 12724 have been implemented by OFAC
through the Iraqi Sanctions Regulations. [See]{.underline} 56 Fed. Reg.
2112 (1991), [codified]{.underline} [at]{.underline} 31 C.F.R. §§
575.101-575.901. Pursuant to the Executive Orders and the Sanctions
Regulations, any property or interest in property of the Government of
Iraq that is within the United States, or within the possession or
control of any United States person, is considered \"blocked property,\"
[see]{.underline} 31 C.F.R. § 575.301, and may not, without
authorization from OFAC, be \"transferred, paid, exported, withdrawn or
otherwise dealt in.\" 31 C.F.R. § 575.201(a).

Parties seeking to transfer blocked property must obtain authorization
to do so from OFAC, [see]{.underline} 31 C.F.R. § 575.201(a); 31 C.F.R.
§ 575.801 (licensing procedure). Unauthorized transfers of blocked
property and interests in property, as defined by the Sanctions
Regulations, are null and void. 31 C.F.R. § 575.202. Thus, \"\'\[t\]he
judicial process cannot, without a license or other authorization from
the Secretary of the Treasury, operate to transfer or create any
interest in blocked property.\'\" [Federal Republic of Yugoslavia v.
Park-71st Corp.]{.underline}, 913 F. Supp. 191, 193 n.2 (S.D.N.Y. 1995)
(quoting [Clark v. Propper]{.underline}, 169 F.2d 324, 327 (2d Cir.
1948) (citations omitted), [aff\'d]{.underline}, [Propper v.
Clark]{.underline}, 337 U.S. 472 (1949). [See]{.underline}
[generally]{.underline} [Dames & Moore]{.underline}, 453 U.S. at 669-674
(discussing Presidential powers under IEEPA).

B. The Oil-for-Food Programme and the

[United Nations Escrow Account]{.underline}

In 1996, in recognition of the humanitarian needs of the Iraqi people,
the United Nations Security Council established an exception to the
international Iraqi sanctions regime by creating the Oil-for-Food
Programme. [See]{.underline} [generally]{.underline} Resolution 986
(April 14, 1995); Memorandum of Understanding Between the United Nations
and the Government of Iraq, dated May 20, 1996 (the \"MOU\").[^2] Under
the Programme, [inter]{.underline} [alia]{.underline}, Iraq may sell
approved quantities of petroleum and petroleum products, with the
proceeds to be used solely to purchase food, medicine and other supplies
to meet the humanitarian needs of the Iraqi people. Resolution 986, ¶¶
1, 8. The Programme operates through the Escrow Account established by
the United Nations for the sole purposes of the Programme, into which
proceeds from Iraq\'s petroleum sales are deposited, and from which
payments for humanitarian supplies are made. Resolution 986, ¶¶ 1, 7, 8.

To implement the Oil-For-Food Programme, a special committee of the
United Nations Security Council established by Resolution 661 (the \"661
Committee\") adopted specific procedures to be followed with respect to,
[inter]{.underline} [alia]{.underline}, the Escrow Account.
[See]{.underline} Procedures to be Employed By the Security Council
Committee Established By Resolution 661 (1990) Concerning the Situation
Between Iraq and Kuwait In The Discharge Of Its Responsibilities As
Required By Paragraph 12 of Security Council Resolution 986 (1995),
dated August 8, 1996 (the \"661 Committee Procedures\").[^3] In
addition, the United Nations entered into an Agreement for Banking
Services Pursuant to Security Council Resolution 986 (1995) with Banque
Nationale de Paris, S.A. (\"BNP\") (the \"Banking Agreement\"), pursuant
to which the Escrow Account is established at BNP, and BNP provides
banking services in connection with the Programme. [See]{.underline} May
12 Letter, at 2.[^4] In accordance with the 661 Committee Procedures,
payment to eligible suppliers[^5] for humanitarian goods sold to Iraq is
made through letters of credit issued by BNP against funds in the Escrow
Account. 661 Committee Procedures ¶ 35. The United States understands
that under the Banking Agreement, BNP may not issue a letter of credit
unless there are sufficient available funds in the Escrow Account to
cover the letter of credit, BNP is authorized to identify and segregate
in the Escrow Account the funds with which it is to pay any particular
letter of credit, and BNP is reimbursed for payments under these letters
of credit only from funds in the Escrow Account. May 12 Letter, at 2;
Banking Agreement ¶¶ 2.3.3(a); 2.3.6.

To ensure that the Programme would be as effective as possible, the
United Nations took steps to protect the funds in the Escrow Account
from being diverted to purposes other than those set forth in Resolution
986. To that end, the Escrow Account is denominated by the United
Nations as enjoying \"the privileges and immunities of the United
Nations.\" Resolution 986 ¶ 15. In addition, the Resolution calls upon
member States to \"take any steps that may be necessary under their
respective domestic legal systems\" to assure protection of the
petroleum and petroleum products subject to the Resolution, and to
ensure that \"the proceeds of the sale are not diverted from the
purposes laid down in this resolution.\" [Id.]{.underline} ¶ 14.

The Sanctions Regulations implement the Programme in the United States
by, among other things, authorizing licensing by OFAC on a case-by-case
basis, to permit United States persons to purchase Iraqi-origin
petroleum and petroleum products from the Government of Iraq, with
payments for such products to be made only by transfer to the Escrow
Account, 31 C.F.R. §§ 575.522; 575.523, and authorizing OFAC to issue
licenses on a case-by-case basis to permit the sale and export of
certain humanitarian aid for the benefit of the Iraqi population, 31
C.F.R. §§ 575.522; 575.525.

Under the Sanctions Regulations, OFAC has issued a license to BNP (the
\"BNP License\"), permitting BNP to, among other things, open and
maintain the Escrow Account, and administer the Escrow Account in
accordance with the Sanctions Regulations, the Banking Agreement,
Resolution 986, the MOU, other relevant United Nations Security Council
Resolutions and guidance issued by the United Nations pursuant to
Resolution 661. BNP License, at 2.[^6] The BNP License limits BNP\'s
authority to make payments from the Escrow Account to payments made in
conformity with the Programme. [Id.]{.underline} In addition, the BNP
License requires that all parties to the BNP License comply with all
regulations, rulings, orders and instructions issued by the Secretary of
the Treasury pursuant to section 203 of the IEEPA and section 5 of the
UNPA, [id.]{.underline} at 1 ¶ 2. The BNP License is expressly made
subject to the terms of Executive Order Nos. 12722 and 12724, and the
Sanctions Regulations. [Id.]{.underline} at 1 ¶ 4.

C. [The Restraining Notice]{.underline}

In this action, Glencore has obtained a default judgment in the total
amount of \$5,948,110.30, plus post-judgment interest, against the
Vietnam Judgment-Debtors. Affidavit of Jeremy J.O. Harwood, dated May
11, 2000 (\"Harwood Aff.\"), ¶ 7 and Exh. 3. The default judgment stems
from this Court\'s recognition and enforcement of two arbitration awards
issued by the ICC International Court of Arbitration in favor of
Glencore and against the Vietnam Judgment-Debtors, Harwood Aff. ¶¶ 3-7
and Exhs. 1-3.

On or about April 18, 2000, Glencore served the Restraining Notice upon
BNP. The Restraining Notice directs BNP to refrain from paying or
transferring any funds or property in its possession belonging to the
Vietnam Judgment-Debtors or to Vinafood. Harwood Aff. ¶ 8 and Exh.
4.[^7] While it does not appear that Vinafood is a judgment-debtor in
this action, Glencore alleges that \"\[o\]n information and belief,
Vinafood is merely an instrumentality, agent and/or alter ego of the
Republic of Vietnam\[,\]\" Harwood Aff. ¶ 12, and as such, can be held
responsible for the debts owed by the Vietnam Judgment-Debtors.
[See]{.underline} Glencore\'s Memorandum of Law in Response to the
Motion by Banque Nationale de Paris to Vacate the Restraining Notice,
dated May 11, 2000 (\"Glencore Opp. Mem.\"), at 10 n.2.

On or about April 27, 2000, BNP moved to vacate the Restraining Notice.
BNP asserts that Vinafood is the beneficiary of several letters of
credit issued in Vinafood\'s favor by BNP as part of the Oil-for-Food
Programme, and that this is the only connection between BNP and the
Vietnam Judgment-Debtors or Vinafood. Declaration of Isolde Novakovic,
dated April 27, 2000 (\"Novakovic Decl.\"), ¶ 4 and Exh. C. BNP contends
that its obligations to pay Vinafood under these letters of credit are
not subject to attachment because (1) the letters of credit are not the
property of the Vietnam Judgment-Debtors, or any one of them, Movant\'s
Memorandum of Law in Support of Its Motion to Vacate Petitioner\'s
Restraining Notice, dated April 27, 2000 (\"BNP Mem.\"), at 8-9; (2)
restraining a bank from honoring conforming drafts under a letter of
credit contravenes New York law and undermines the proper functioning of
letters of credit, [id.]{.underline} at 9-14; and (3) the Restraining
Notice unfairly exposes BNP to potential liability for failure to honor
conforming drafts under its letters of credit, [id.]{.underline} at
15-16. BNP also contends that, in this particular case, it is
particularly important that the Restraining Notice be vacated, as any
attachment of these particular letter of credit payments could
negatively impact on the Oil-for-Food Programme, and thus disrupt the
United Nations humanitarian program. [Id.]{.underline} at 14.

On or about May 17, 2000, Vinafood joined in BNP\'s motion and requested
compensatory damages from Glencore. [See]{.underline} Memorandum of Law
of the Vietnam Northern Food Corporation In Support of its Joinder in
the Motion By Banque Nationale de Paris to Vacate Petitioners\'
Restraining Notice and In Support of its Request for Damages For
Wrongful Restraint, dated May 17, 2000 (\"Vinafood Mem.\"). Vinafood
contends that the Restraining Notice is improper because (1) Vinafood is
not an agency or instrumentality of the Government of Vietnam, is not
the alter ego of the Vietnam Judgment-Debtors and is not responsible for
their debt, Vinafood Mem. at 9, (2) even if Vinafood is considered to be
an agency or instrumentality of the Government of Vietnam, the
Restraining Notice is invalid under the Foreign Sovereign Immunities
Act, [id.]{.underline} at 15, and (3) Vinafood is not subject to this
Court\'s jurisdiction, [id.]{.underline} at 17.

For the reasons discussed herein, the United States agrees that the
Restraining Notice should be vacated.

[ARGUMENT]{.underline}

I. All Interests In And Proceeds From The

[Account Are Blocked And May Not Be Attached]{.underline}

As discussed above (at 4-7), pursuant to the Executive Orders and
Sanctions Regulations, all interests in property of the Government of
Iraq that are in the United States or are in the possession or control
of a United States person are \"blocked,\" [see]{.underline} 31 C.F.R. §
575.301, and may not, without authorization from the United States, be
\"transferred, paid, exported, withdrawn or otherwise dealt in.\" 31
C.F.R. § 575.201(a). The Sanctions Regulations broadly define a
\"transfer\" of property to include \"the issuance, docketing, filing,
or the levy of or under any judgment, decree, attachment, injunction,
execution, or other judicial or administrative process or order, or the
service of any garnishment . . . .\" 31 C.F.R. § 575.317. The term
\"interest\" when used with respect to property \"means an interest of
any nature whatsoever, direct or indirect.\" 31 C.F.R. § 575.308. The
terms \"property\" and \"property interest\" are expansive, and include,
among other things, \"money . . . bank deposits . . . debts,
indebtedness, obligations . . . \[and\] letters of credit and any
documents relating to any rights or obligations thereunder . . .
present, future or contingent.\" 31 C.F.R. § 575.315. As the seller of
the petroleum and petroleum products, the sales of which fund the
account, and the \"account party\" ([i.e.]{.underline} the party that
received the humanitarian supplies for which payment is due) under the
letters of credit, Iraq has property interests in the Escrow Account
that fall within the terms of the Sanctions Regulations, meaning funds
from the Escrow Account cannot be transferred without OFAC\'s
authorization. [See]{.underline}, [e.g.]{.underline}, [Consarc Corp. v.
Iraqi Ministry]{.underline}, 71 F.3d 909, 914-916 (D.C. Cir. 1995) and
[Consarc Corp. v. Iraqi Ministry]{.underline}, 27 F.3d 695, 701-02 (D.C.
Cir. 1994) (upholding blocking of funds that Iraqi bank had deposited
with Bank of New York to secure letters of credit [and]{.underline}
upholding blocking of goods under contract to be sold to Iraq).

A ruling permitting Glencore to attach blocked property would contravene
the President\'s authority under IEEPA and his exercise of that
authority through the Sanctions Regulations. Moreover, in this
particular case, a ruling permitting attachment would interfere with an
important United Nations humanitarian program that is specifically
licensed by OFAC to operate within the sanctions program. As discussed
above (at 7-9), in connection with the Oil-for-Food Programme, the
United Nations and the international community, including the United
States, have carved out a targeted exception to the sweeping sanctions
against Iraq, aimed at addressing the humanitarian needs of the Iraqi
people. [See]{.underline} [generally]{.underline} Resolution 986.
Through the Programme, Iraq is permitted to engage in sales of petroleum
and petroleum products that would be otherwise prohibited, but any money
it garners must be placed in the Escrow Account, and may only be used to
make payments of the type contemplated by Resolution 986, which includes
payments to approved suppliers of humanitarian aid to the Iraqi people.
Resolution 986 ¶¶ 1, 8. Thus, a judgment has been made by the United
Nations and the United States (along with the other member States to the
United Nations), that these transfers may be made, but only for the
defined purposes of the Oil-for-Food Programme, as specified by
Resolution 986.

In connection with the Oil-For-Food Programme, OFAC has, through the BNP
License, provided authorization for BNP to transfer monies from the
Escrow Account in specified circumstances. BNP\'s authority to make such
transfers is strictly confined to the terms of the BNP License, which
requires that all transfers conform with the restrictions of the
Oil-For-Food Programme, the Executive Orders and the Sanctions
Regulations. This Court has no authority to interfere with these
restrictions. [Park-71st Corp.]{.underline}, 913 F. Supp. at 193 n.2;
[Clark v. Propper]{.underline}, 169 F.2d at 327.

II\. The Escrow Account Is Entitled to The

Privileges and Immunities Of The United

[Nations and Is Immune From Attachment]{.underline}

While the Restraining Notice purports to attach payments due from BNP
under letters of credit, the letters of credit at issue are intended to
be drawn solely against funds in the Escrow Account held by the United
Nations. Therefore, the Restraining Notice should also be vacated as an
improper incursion on the privileges and immunities of the United
Nations.

The United States has entered into treaties that establish its
obligation to accord certain privileges and immunities to the United
Nations. These treaties include the United Nations Charter, 59 Stat.
1031 (1945) (the \"UN Charter\") and the Convention on Privileges and
Immunities of the United Nations, [adopted]{.underline} Feb. 13, 1946,
[United States accession]{.underline}, April 29, 1970, 21 U.S.T. 1418
(the \"General Convention\"). These treaties have the same force of law
as statutes of the United States. [Foxworth v. Permanent Mission of the
Republic of Uganda to the United Nations]{.underline}, 796 F. Supp. 761,
762 (S.D.N.Y. 1992).

The UN Charter was ratified by the President of the United States, with
the advice and consent of the Senate, on August 8, 1945, and came into
force on October 24, 1945. [See]{.underline} UN Charter, Intr.; S.J.
Res. 144, P.L. 80-357, 61 Stat. 756 (1947). Article 105(1) of the UN
Charter provides that \"\[t\]he Organization shall enjoy in the
territory of each of its Members such privileges and immunities as are
necessary for the fulfillment of its purposes.\" [Id.]{.underline} The
UN Charter thus provides the framework for the privileges and immunities
to be provided to the United Nations. More specific parameters of those
privileges and immunities with respect to property of the United Nations
are set forth in the General Convention:

The United Nations, its property and assets wherever located and by
whomever held, shall enjoy immunity from every form of legal process
except insofar as in any particular case it has expressly waived its
immunity. It is, however, understood, that no waiver of immunity shall
extend to any measure of execution.

Art. II, sec. 2.

> The premises of the United Nations shall be inviolable. The property
> and assets of the United Nations, wherever located and by whomever
> held, shall be immune from search, requisition, confiscation,
> expropriation, and any other form of interference, whether by
> executive, administrative, judicial or legislative action.

Art. II, sec. 3. [See]{.underline} [also]{.underline} International
Organizations Immunities Act (\"IOIA\"), 22 U.S.C. §§ 288a(b) and (c)
(granting certain immunities to international organizations, including
the United Nations).

In Security Council Resolution 986, the United Nations expressly
affirmed that the Escrow Account \"enjoys the privileges and immunities
of the United Nations.\" [Id.]{.underline} ¶ 15. Moreover, in this
action, by the May 12 Letter, the United Nations has confirmed its
interests in the Escrow Account, and has made clear that it does not
waive the immunities to which the Escrow Account is entitled. In
particular, the United Nations points out that (1) the United Nations is
the account holder of the Escrow Account; (2) the letters of credit at
issue are intended to be funded exclusively from the Escrow Account; and
(3) BNP may not issue a letter of credit unless there are sufficient
available funds in the Escrow Account to cover the letter of credit, is
entitled to identify and segregate in the account the funds with which
it will pay any particular letter of credit, and may be reimbursed for
its payments under these letters of credit only from funds from the
Account. [See]{.underline} May 12, 2000 Letter, at 3; Banking Agreement
¶¶ 1.3.2; 1.4; 2.3.3(a); and 2.3.6. Therefore, any diversion of, or
interference with, BNP\'s payments on letters of credit under the
Oil-For-Food Programme would necessarily interfere with the use of funds
from the Escrow Account, and thus encroach on the privileges and
immunities of the United Nations.

In other circumstances, courts have respected the privileges and
immunities of the United Nations in bank accounts held by it,
[see]{.underline}, [e.g.]{.underline}, [Matter of L.L.M. v.
A.J.J.M.]{.underline}, 69 N.Y.2d 924 (N.Y. 1987) (affirming denial of
petition of contempt order against garnishee bank; assets of United
Nations Staff Pension Fund held by bank as drawee-payor are immune from
seizure); [Shamsee v. Shamsee]{.underline}, 428 N.Y.S.2d 33, 36 (2d
Dep\'t 1980) (assets of United Nations Pension Fund are immune from
sequestration), [aff\'d]{.underline}, 53 N.Y.2d 739 (N.Y. 1981),
[cert.]{.underline} [denied]{.underline}, 454 U.S. 893 (1981). The
Escrow Account, as an account held by the United Nations, is likewise
immune from the attachment sought. The United States urges this Court to
recognize this immunity and vacate the Restraining Notice.

[CONCLUSION]{.underline}

For the foregoing reasons, the United States respectfully requests that
the Court grant BNP\'s motion to vacate the Restraining Notice.

Dated: New York, New York

May 26, 2000

Respectfully submitted,

MARY JO WHITE

United States Attorney for the

Southern District of New York

By: \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_

WENDY H. SCHWARTZ (WS-1862)

Assistant United States Attorney

100 Church Street, 19th Floor

New York, New York 10007

Tel.: (212) 637-2744

Attorney for the United States

of America

Of counsel:

LINDA JACOBSON

Assistant Legal Adviser

STEPHEN D. McCREARY

Attorney-Adviser

Office of Diplomatic Law

and Litigation

Office of the Legal Adviser

United States Department of State

22nd and C Street, N.W.

Washington, D.C. 20520

Attorneys for the United States

Department of State

SUSAN KLAVENS HUTNER

Senior Counsel

Office of Chief Counsel

United States Department

of the Treasury

Washington, D.C. 20220

Attorney for the Office of

Foreign Assets Control

**[CERTIFICATE OF SERVICE]{.underline}**

I, Wendy H. Schwartz, an Assistant United States Attorney for the
Southern District of New York, hereby certify that on May 26, 2000, I
caused a copy of the foregoing Statement of Interest of the United
States to be served, by overnight delivery, upon the following counsel:

Jeremy J.O. Harwood, Esq.

Healy & Baillie, LLP

29 Broadway

New York, New York 10006

Counsel for Petitioners

Jonathan I. Blackman, Esq.

Cleary, Gottlieb, Steen & Hamilton

One Liberty Plaza

New York, New York 10006

Counsel for Banque Nationale de Paris

Neil P. Forrest, Esq.

Freeman Forrest & Levy LLP

415 Madison Avenue

New York, New York 10017

Counsel for Vietnam Northern Food

Corporation

Dated: New York, New York

May 26, 2000

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

WENDY H. SCHWARTZ

Assistant United States Attorney

Tel.: (212) 637-2744

[^1]: ^?^ The UNPA authorizes the President to implement measures that
    the Security Council adopts under Article 41 of the United Nations
    Charter. Specifically, whenever the Security Council calls upon the
    United States to act with respect to a UN Resolution:

    > the President may, to the extent necessary to apply such measures,
    > through any agency which he may designate, and under such orders,
    > rules, and regulations as may be prescribed by him, investigate,
    > regulate, or prohibit, in whole or in part, economic relations or
    > rail, sea, air, postal, telegraphic, radio, and other means of
    > communication between any foreign country or any national thereof,
    > or any person therein and the United States or any person subject
    > to the jurisdiction thereof, or involving any property subject to
    > the jurisdiction of the United States.

    22 U.S.C. § 287c.

[^2]: ^?^ The United Nations provided these documents to the Court as
    attachments to the United Nations\' letter to the Court, dated May
    12, 2000 (the \"May 12 Letter\").

[^3]: ^?^ The United Nations provided this document to the Court as an
    attachment to the May 12 Letter.

[^4]: ^?^ The United States understands that BNP will provide relevant
    portions of the Banking Agreement to the Court.

[^5]: ^?^ The 661 Committee reviews all contracts and determines whether
    specific suppliers are eligible for payment from the Escrow Account.
    [See]{.underline} 661 Committee Procedures ¶¶ 26-38.

[^6]: ^?^ The United States understands that BNP will provide a copy of
    the BNP License to the Court.

[^7]: ^?^ At the same time it served the Restraining Notice, Glencore
    also apparently served BNP with an Information Subpoena and
    Questions and Answers in Connection with an Information Subpoena, to
    which BNP apparently responded on or about May 1, 2000. Harwood Aff.
    ¶ 8, 9 and Exhs. 4 and 5.