Possible Participation by the United States in

Islamic Republic o f Iran v. Pahlavi

A s long as th e go v ern m en t o f Iran is recognized by th e U nited States, it is entitled to 

m aintain a law suit in any state o r federal co u rt; how ev er, th ere is a substantial a rg u ­

m ent th at the Iranian g o v ern m en t’s suit against the Shah to reco v er allegedly m isapprop riated g overnm ental funds should be stayed o r dism issed w ithout prejudice in light o f 

Iran 's m assive b reaches o f its treaty obligations to th e U nited States and international 

law .

T h e c o u rts have recognized the ap propriateness o f deferrin g to the E xecu tiv e’s foreign 

policy d eterm inations in connectio n w ith claim s o r defenses based on doctrin es o f 

foreign sovereign im m unity o r act o f state.

T h e G o v ern m en t’s co n cern s o v e r th e effect o f th e litigation on o u r foreign policy 

p ro v id e a sufficient basis to su p p o rt its standing to interv en e in Iran ’s suit against the 

Shah, and th ere is p recedent to su p p o rt its interv en tio n and assertion o f cross-claim s 

unrelated to th e co n tro v ersy in suit.

A respectable argum ent can be m ade that th e Shah en joys sovereign im m unity from suit, 

u nder the 1976 F oreign. S overeign Im m unities A ct as w ell as cu stom ary international 

law , and the actions com plained o f ap p ear to be acts o f state. H o w ev er, the present 

g o v ern m en t o f Iran m ay be able to w aive th e ap plication o f eith er o f these doctrin es to 

defeat its claim s against the Shah, since bo th exist for the benefit o f the state in question 

and n o t for the individuals w h o lead it.

January 2, 1980

M EM O RA N D U M O PIN IO N FO R T H E 

A C T IN G A SSO CIA TE A T T O R N E Y G E N E R A L

This memorandum responds to your questions concerning the possible role of the United States in the recently filed suit of the Iranian 

government against the Shah in the Supreme Court of the State of New 

York. (Islamic Republic o f Iran v. Pahlavi, No. 79-22013, Nov. 28, 

1979.) The suit advances several causes of action concerning alleged 

misappropriations of Iranian governmental funds by the Shah, and 

claims $56 billion in damages against him and his wife. This memorandum, w hich has been prepared in cooperation with the Civil Division 

and the U.S. A ttorney’s Office in New York, analyzes tw o major 

options for the United States in participating in the case. First, we 

might ask for the suit’s stay or dismissal until the hostages are released, 

disclaiming any intent to intimate a position on the merits. The difference between a stay and a dismissal in this situation would be that since 

the Shah has departed the United States, a dismissal would terminate 

the court’s personal jurisdiction over him, leaving Iran with only in rem

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actions for his assets located here.1 Second, we could intervene and 

cross-claim for relief, conceivably even relief unrelated to Iran’s claims 

against the Shah. This memorandum also forecasts the ultimate result 

on the merits of Iran’s claims against the Shah.

Our conclusions are these. First, as a government currently recognized by the United States, Iran is entitled to maintain a lawsuit in any 

state or federal court of competent jurisdiction. Second, the United 

States has a sufficient interest to support its standing to participate in 

some fashion. Third, we have a substantial argument that the New 

York state court should defer to a request by the Executive Branch to 

withhold itself from the merits, at least temporarily. Fourth, there is a 

respectable argument that we may intervene and bring unrelated crossclaims against Iran. Fifth, if the suit survives these initial procedural 

hurdles, there is a strong prospect that either sovereign immunity or act 

of state 2 doctrines will bar recovery against the Shah.

I. Iran’s Right to Sue

As a preliminary matter, it seems clear that if the United States were 

to withdraw diplomatic recognition from the government of Iran, the 

suit would be dismissed. See Guaranty Trust Co. v. United States, 304 

U.S. 126 (1938). In Guaranty Trust, the Court observed that a foreign 

government may not maintain a suit in our courts before its recognition 

by the President. It cited a number of federal and state cases dismissing 

actions by the Soviet government before its recognition, among them a 

New York state court case, Russian Socialist Federated Soviet Republic

v. Cibrario, 235 N.Y. 255, 139 N.E. 259 (1923). Although withdrawal of 

recognition would have the effect of voiding the suit against the Shah, 

as we discuss below it does not seem a necessary expedient to that end. 

Moreover, derecognition could have the collateral disadvantage of imperiling our present treaties with Iran, upon whose force we rely to 

assert the illegality of the conduct of its governm ent.3 The Legal 

Adviser’s Office at the State Department has advised us that there is 

presently no serious contemplation of terminating recognition of Iran. 

There is, however, a range of unfriendly actions that this government 

might take, including severing diplomatic relations. In other cases, such

‘The U.S. A ttorney’s Office in New York informs us that service of process in the suit was 

probably effective. New York law allows any service appropriate to meet the constitutional minimum 

o f notice and an opportunity to appear. After failing to serve the Shah personally, the plaintiffs 

obtained an order allowing service on the hospital administrator, during the Shah's stay there.

2 T he “act of state*' doctrine provides that a court may not . review the validity o f actions taken by a 

foreign sovereign within the sovereign’s territory. See generally, e.g., L. Henkin, Foreign Affairs and 

the Constitution 59-64, 216-21 (1972).

3 It should be noted, how ever, that our recent w ithdrawal o f recognition of the Republic of China 

(ROC) was accompanied by a presidential assertion that it would not have the effect o f terminating 

existing treaties with the ROC. See the President’s M emorandum for All D epartm ents and A gencies of 

D ecember 30, 1978.

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as our longstanding dispute with Cuba, we have eschewed derecognition in favor of less drastic alternatives.

While recognition continues the courts retain jurisdiction, even in a 

climate of marked hostility. This is made clear by Banco Nacional de

Cuba v. Sabbatino, 376 U.S. 398 (1964), in which the Court held that 

the act of state doctrine required American courts to recognize Castro’s 

title to American sugar which he had expropriated, even though the act 

was in violation of international law. In Sabbatino, the Court responded 

to an argument that the National Bank of Cuba, an instrumentality of 

the Cuban government, should be denied access to the American courts 

because “Cuba is an unfriendly pow er and does not permit nationals of 

this country to obtain relief in its courts.” The Court thought that the 

issue was one of national policy transcending the interests of the parties 

to the action, and observed that under principles of comity governing 

our relations with other nations, sovereign states are allowed to sue in 

our courts whenever they are recognized. The Court was unresponsive 

to arguments based on the severance of diplomatic relations, commercial embargo, and freezing of Cuban assets in this country:

This Court would hardly be com petent to undertake assessments of varying degrees of friendliness or its absence, 

and, lacking some definite touchstone for determination, 

we are constrained to consider any relationship, short of 

war, with a recognized sovereign power as embracing the 

privilege of resorting to United States courts.

376 U.S. at 410. The Court then remarked that its view was “buttressed 

by the circumstance that none of the acts of our Governm ent have 

been aimed at closing the courts of this country to Cuba, and more 

particularly by the fact that the government has come to the support of 

Cuba’s act of state claim in this very litigation.” The effect on a court’s 

jurisdiction if the Governm ent takes the opposite position is considered 

below.

II. Stay or Dismissal of the Proceedings

The essence of our substantive argument for a stay or dismissal 

without prejudice would be that Iran’s massive breaches of both its 

treaty obligations to us and international law require appropriate reprisals to force return of the hostages and reparations. We would urge the 

court that temporarily withholding the aid of American courts to the 

Iranian government in its affirmative claims against the Shah and his 

assets would be a fair reprisal for the holding of the hostages. In 

support of our submission to the court, we could cite analogous precedent for judicial deference to executive formulations o f foreign policy 

in sovereign immunity and act of state cases.

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The substance of our claim would resemble our recent presentation 

to the W orld Court. We could begin by referring to Iran’s treaty 

obligations to us under the Vienna Convention on Diplomatic and 

Consular Relations; the Treaty of Amity with Iran; and the Convention 

on the Prevention and Punishment of Crimes against Internationally 

Protected Persons. We could then summarize the facts, indicating 

breaches of a number of the provisions of these treaties. We could then 

point out that these treaties and surrounding principles of customary 

international law (which include doctrines of reprisal) have been incorporated as part of our domestic law. Article VI of the Constitution 

makes treaties part of the supreme law of the land, along with the 

Constitution and statutes. The Vienna Convention on Diplomatic Relations includes an affirmation in its preamble that rules of customary law 

should govern questions not expressly regulated by the terms of the 

Convention. And the Supreme Court has recognized customary international law as part of our domestic law .4

Customary international law allows reprisals, which are breaches of a 

treaty’s terms or other unfriendly conduct in response to a breach by 

another party. Reprisals must, however, respond in a proportionate 

manner to the preceding illegal act by the party against whom they are 

taken. See G. Schwarzenberger, A Manual of International Law 184 

(5th ed. 1967). The proportionality of a reprisal in a particular case is a 

m atter largely committed to judgm ent and precedent.

The Iranian breaches in this case are massive and largely unprecedented; reprisals even more severe than asset freezing and a temporary 

closing of forum doors would probably be appropriate, for example 

total embargoes and blockades. Nevertheless, the Iranians could urge 

that a denial of access to the courts is a particularly serious matter 

under the U.S. Constitution, and that the Supreme Court has refused to 

allow the closing of the courts even during the domestic insurrection of 

the Civil War. (See Ex Parte Milligan, 71 U.S. (4 Wall.) 2 (1866)). 

Numerous rejoinders suggest themselves. First, we could emphasize 

that we are urging only a temporary denial of access to our courts 

while the hostages are held, and that we would not seek to interfere 

with the prosecution of a suit after their release. (Because the Shah has 

left the country, however, dismissal would leave Iran with only in rem

claims against his assets. In that sense, even dismissal without prejudice 

would permanently close our forum to some of Iran’s claims.) Second, 

we could point out that Iran has refused to follow the W orld C ourt’s

4In The Paquete Habana, 175 U.S. 677, 700 (1900), the Supreme Court held that under international 

law, fishing vessels belonging to enemy nationals w ere exempt from capture and condem nation by 

American vessels:

International law is part of our law, and it must be ascertained and administered by the 

courts of justice of appropriate jurisdiction, as often as questions o f right depending 

upon it are duly presented for their determination.

T he Cibrario case, cited supra, is one example of the New York C ourt of Appeals’ application of 

principles of international law in conformity with this principle.

163
order to release the hostages, or otherwise to obey the dictates of 

international law that they be freed. The “unclean hands” analogy is 

obvious. Third, Sabbatino implies that a Governm ent request to close 

the courts could be an appropriate response to a foreign nation’s denials 

of redress—that an executive branch request could provide the “definite 

touchstone for determ ination” that standing should be denied. And 

fourth, foreign nations do not have any claim to seek the aid of our 

courts without the interference of our executive branch.5 For when 

they are unrecognized they may not sue at all; when they are allowed 

to sue, the G overnm ent may affect the outcome on the merits by 

interposing or withdraw ing the defenses of sovereign immunity and act 

of state, as we discuss in more detail below.

III. Judicial Deference to Executive Branch Formulations

of Foreign Policy

This brings us to the question of the respective roles of the federal 

executive and a state court in deciding w hether Iran shall be allowed to 

maintain this lawsuit. Here there is a long history of deference by 

courts to executive foreign policy determinations regarding foreign 

claims or defenses that are affected by doctrines of immunity or act of 

state. Since these tw o doctrines affect the outcome of a case on the 

merits, it seems likely that a court would treat a request for a temporary stay or dismissal that is based on foreign policy according to the 

same principles.

In Ex Parte Republic o f Peru, 318 U.S. 578, 589 (1943), the State 

Departm ent had “recognized and allow ed” the immunity of a merchant 

vessel owned and operated by the Peruvian government. Accordingly, 

the Court held that an in rem action against the vessel should be 

dismissed. The Court said:

The [Department of State] certification and the request 

that the vessel be declared immune must be accepted by 

the courts as a conclusive determination by the political 

arm of the G overnm ent that the continued retention of 

the vessel interferes with the proper conduct of our foreign relations.6

5 C hief Judge Kaufman o f the Second C ircuit C ourt of Appeals remanded the case of Electronic

Data Systems v. Iran on N ovem ber 29, 1979, in part for the following determination:

On remand the district court may ascertain the position o f the D epartm ent of Slate 

concerning the defendant’s right o f access to United States courts under the extraordinary circum stances now prevailing.

610 F.2d 94, 95 (2d Cir. 1979).

6T w o years later, in Republic o f Mexico v. Hoffman. 324 U.S. 30, 36, 38 (1945), the Court 

elaborated further:

But recognition by the courts o f an immunity upon principles which the political 

departm ent o f governm ent has not sanctioned may be equally embarrassing to it in 

securing the protection o f our national interests and their recognition by other nations.

* * * * *

Continued

164
The Second Circuit Court o f Appeals then decided cases in much the 

same vein. See Bernstein v. Van Heyghen Freres, 163 F.2d 246 (2d Cir. 

1947), cert, denied, 332 U.S. 772 (1947); Bernstein v. TV. V. Nederlandsche-Amerikaansche, 173 F.2d 71 (2d Cir. 1949). In the latter, after 

the court had applied the act of state doctrine to bar review of Nazi 

expropriations, the State Departm ent wrote a letter to the court saying: 

The policy of the Executive, with respect to claims asserted in the United States for the restitution of identifiable property . . . lost through . . . duress as a result of 

Nazi prosecution in Germany, is to relieve American 

courts from any restraint upon the exercise of their jurisdiction to pass upon the validity of the acts of Nazi 

officials.

The court of appeals responded by holding that the doctrine would not 

apply in view of this supervening expression of executive policy, and 

revised its mandate. Bernstein v. N.V. Nederlandsche-Amerikaansche, 210 

F.2d 375, 376 (2d Cir. 1954).

Before the Supreme Court suggested that courts should defer com ­

pletely to executive discretion regarding the need to apply sovereign 

immunity doctrine in a particular case, the New York Court of Appeals 

had taken a position that retained a more active judicial role. In 

Anderson v. N. V. Transandine Handelmaatschappij, 289 N.Y. 9, 43 

N.E.2d 502 (1942), a New York resident sued a Netherlands firm for 

converting securities and monies owned by his assignor, on a cause of 

action arising in the Netherlands. The defendants answered that a 

decree of the lawful government of the Netherlands had vested title to 

the property in the government. The question was therefore the effectiveness of the decree. The State Department, through the U.S. A ttorney, applied to the court of appeals for leave to appear and file “A 

Suggestion of the Interest of the United States in the M atter in Litigation.” 7 The Suggestion of Interest began by identifying the interest of 

the United States in the subject m atter as the effect of the court’s 

decision on the foreign policy of the United States. The Governm ent 

outlined the applicable policy and urged the court to affirm the decision below, dismissing the suit.

To the court of appeals, the question was w hether the action of the 

Netherlands offended New York public policy.8 The confiscation

We can only conclude that it is the national policy not to extend the immunity in the 

manner now suggested, and that it is the duty of the courts, in a matter so intimately 

associated with our foreign policy and which may profoundly affect it, not to enlarge an 

immunity to an extent which the government, although often asked, has not seen fit to 

recognize.

7T he U.S. A ttorney stated in his application that “in the interest o f orderly procedure” the m atter 

was being presented by motion for leave to file, though he questioned w hether leave of the court was 

necessary. 43 N.E.2d at 505.

8The court summarized its view of the law: “By comity of nations, rights based upon the law of a foreign 

State to intangible property which has a situs in this State, are recognized and enforced by the courts of this 

State, unless such enforcement would offend the public policy of this State/’ 43 N.E.2d at 506.

165
involved, having occurred during the emergency of World War II, did 

not offend the sensibilities of the court. Having decided the issue, the 

court continued in dictum that it need not consider whether the State 

Department’s formulation of policy could change judicial questions 

determined in the New York system into political questions which 

would allow the Department of State to supersede the public policy of 

the state. The court recognized there might be situations in which that 

power should exist, for example where the public policy of a State 

would interfere with the performance of an executive agreement (such 

as the assignment of Russian claims to the United States that was 

upheld in United States v. Pink, 315 U.S. 203 (1942)). The court thought 

that allowing State Department policy formulation to override the 

public policy of a state might involve “very serious consequences” in 

some cases, but could have no untoward consequences where, as here, 

the State Department and the state were in agreement.

In its reservation concerning the conclusive effect of the State Department’s formulation of policy, the New York Court of Appeals 

foreshadowed developments to come in the formulation of the relevant 

doctrines. In Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398 (1964), 

the Supreme Court placed the act of state doctrine on a new footing 

somewhat less deferential to Executive Branch formulations than the 

old immunity cases. In Sabbatino the Court’s recognition of Castro’s 

title to the American sugar accorded with the request of the Executive 

Branch. Nevertheless, the Court went out of its way to reformulate the 

doctrine as law created by the federal courts on their own authority, 

not as a direct reflection of national policy as promulgated by the 

Executive. The Court said:

The doctrine as formulated in past decisions expresses the 

strong sense of the Judicial Branch that its engagement in 

the task of passing on the validity of foreign acts of state 

may hinder rather than further this country’s pursuit of 

goals both for itself and for the community of nations as a 

whole in the international sphere. . . . Whatever considerations are thought to predominate, it is plain that the 

problems involved are uniquely federal in nature. If federal authority, in this instance this Court, orders the field 

of judicial competence in this area for the federal courts, 

and the state courts are left free to formulate their own 

rules, the purposes behind the doctrine could be as effectively undermined as if there had been no federal pronouncement on the subject. . . . [W]e are constrained to 

make it clear that an issue concerned with a basic choice 

regarding the competence and function of the Judiciary 

and the National Executive in ordering our relationships

166
with other members of the international community must 

be treated exclusively as an aspect of federal law. . . .

376 U.S. at 423-25. Thus, the decision made act of state a component of 

federal common law, and expressly said that this was one of those 

“enclaves of federal judge-made law which bind the States.” At the 

same time, the Court realized that New York law also accepted the 

doctrine, and would have reached the same result. Id. at 426.

In First National C ity Bank v. Banco Nacional de Cuba, 406 U.S. 759 

(1972), the Cuban government sued to recover assets held by the bank; 

the bank counterclaimed for the value of its properties which Cuba had 

confiscated. In the lower courts, the Department of State communicated a “determination by the Department of State that the act of state 

doctrine should not be applied to bar the counterclaim.” The Court of 

Appeals disregarded the Department and applied the doctrine to dismiss the counterclaim. The Supreme Court reversed, but only a plurality of three Justices thought that the Court should give conclusive 

effect to State Department policy; six Justices explicitly rejected the 

doctrine that the courts are bound to follow the Executive in such 

cases.

Thus, the Supreme Court’s two recent cases on act of state suggest 

that the earlier immunity cases, which were not strictly in point and 

were not mentioned, were somewhat overstated. Nevertheless, all of 

the cases have recognized the appropriateness of Executive Branch 

communications to the courts expressing foreign policy concerns over 

application of the defense doctrines in particular lawsuits.

If the Executive may urge the courts to reach a particular outcome 

on the merits, surely it may urge a temporary stay or dismissal for the 

same kinds of reasons. At the same time, it is now difficult to argue that 

executive determinations are conclusively binding on the courts, even 

in contexts related to but not subsumed within the act of state doctrine. 

The courts will not promise to accede to State Department policy 

views; by the same token, deference is likely to occur in true crisis 

situations such as the present one, where the Department of State can 

give good reasons, grounded in the complexity of foreign policy, for 

urging a particular disposition. Thus, Sabbatino's discussion of closing 

the forum to foreign governments suggests that a State Department 

request to deny standing might have received deference in that case, 

and should receive deference in this one.

In making its decision on a stay or dismissal motion in Iran’s suit 

against the Shah, the New York court could draw on either of two 

sources of law. One would be the federal common law principles of the 

two recent Supreme Court cases, to the extent that they now govern 

beyond the act of state context. Here an argument can be made that the 

functional considerations the Court advanced should make federal 

common law govern whenever foreign policy concerns have direct

167
impact on domestic litigation, and that the Court’s deference to Executive Branch submissions should apply as well. Alternatively, we could 

invoke the state law public policy doctrine of Anderson, supra, to the 

extent it survives Sabbatino. We have not researched the New York 

public policy cases, but an argument to basic equity principles such as 

“unclean hands” seems one possibility.

IV. Cross-claims

Instead of seeking to delay or dismiss the suit, we could attempt to 

intervene in the lawsuit as a party, seeking affirmative relief. Intervention as a party might allow us to assert a cross-claim against the 

plaintiff “Islamic Republic” under the doctrine of Republic o f China v. 

First National City Bank, 348 U.S. 356 (1955). In allowing a party sued 

by an otherwise immune sovereign to assert any claim of its own 

against that sovereign, Republic o f China emphasized considerations of 

“fair dealing.” Thus, Iran has waived its immunity from suit to at least 

some extent by invoking the aid of our courts. Republic o f China held 

explicitly that a counterclaim need not be related to the subject matter 

of the plaintiffs claim. The case does not provide direct precedent, 

however, for third party intervention to assert claims, some of which 

might bear no relation to the controversy in suit. Nevertheless, the 

emphasis on “fair dealing” in Republic o f China suggests that the Government might have a special argument that Iran’s use of our courts to 

pursue its case against the Shah should subject Iran to all claims the 

United States may have against it. Such an argument would derive 

from the Government’s power to deny Iran a forum entirely (by withdrawing recognition) or partially (by urging the courts to allow the 

interposition of defenses). Therefore, by bringing a lawsuit that depends 

for its success on cooperation by our Government, Iran may open itself 

to our own claims against it. Perhaps, however, our rights in the matter 

would be limited to any of the Shah’s assets the court may decide to be 

those of Iran.

V. The Interest of the United States in this Litigation

In order to participate in Iran’s suit against the Shah, the Government must demonstrate a sufficient interest in the litigation to support 

its standing. The nature of the interest asserted would depend on the 

nature of the Government’s position. If we decide to ask for stay or 

dismissal of the case, our concerns about the effect of the litigation on 

our foreign policy would provide a sufficient interest. That is implicit in 

the numerous cases receiving government communications on the sovereign immunity and act of state doctrines. Also, at least some support 

could be drawn from cases recognizing the Government’s standing to 

sue to enforce its treaties (e.g., Sanitary District v. United States, 266

168
U.S. 405 (1925)). Here we would be seeking to enforce a treaty reprisal 

through the judicial process.

On the other hand, if we seek to intervene and cross-claim ordinary 

standards for intervention in New York would probably apply. These 

are discussed below.

VI. The Government’s Strategy Choices

The Government might eventually take any of a number of policy 

positions with regard to this lawsuit. Therefore, it is important to avoid 

a hasty submission to the court that might foreclose later options. There 

are at least the following possibilities:

1) Request for a temporary stay.

2) Request for dismissal without prejudice.

3) A request that the court honor the Shah’s sovereign immunity and act of state defenses.

4) A request that the court disregard the Shah’s defenses.

5) Intervention with a cross-claim against Iran.

6) Our substitution as plaintiff for Iran pursuant to an assignment of its claims against the Shah. (This presently seems 

remote, but it has occurred in the past. E.g., United States v. 

Pink, 315 U.S. 203 (1942).)

7) Expansion of the current freeze to include the assets of the 

Shah or all Iranian nationals. This could be accomplished 

without communicating with the court, but with indirect 

effect on the litigation.

First, a temporary stay could be sought without foreclosing our other 

options. Since the court is likely to be expecting a communication from 

us on the applicability of the defense doctrines, we could and should be 

explicit that our stay request intimates no position on the merits. A 

request for dismissal without prejudice, however, could lead to the 

foreclosure of our opportunity to counterclaim, if the request is granted 

and Iran does not file an in rem action.

Submissions to the court regarding the defense doctrines are not fully 

consistent with a cross-claim. For if the Government were to intervene, 

claiming the assets insofar as they .are adjudged to belong to Iran, we 

would be in no position to file suggestions that immunities or act of 

state should be waived to our pecuniary benefit. Perhaps, however, the 

situation would be different were we asking for a general judgment 

against Iran, without regard to the ownership of these assets.

An early submission suggesting that the defense doctrines be applied 

in the Shah’s favor might prevent the Government from taking a later 

assignment of Iran’s claim. It therefore seems best to avoid taking any 

position on the applicability of the defenses for the time being.

169
An expansion of the freeze to include these assets does not seem 

inconsistent with any of the possible actions to be taken in the litigation. It should not be necessary to take a position on the ultimate 

ownership of the Shah’s assets in order to freeze them as property in 

which Iran or an Iranian national has an interest.

VII. Modes of Participating in the Lawsuit

The precedents cited above indicate a number of alternative means 

by which the Government’s position can be communicated to the court:

A. Letter

A letter can be written to the Administrative Judge, First Judicial 

District, Supreme Court of the State of New York. (Under New York 

procedure, this case will not be assigned to an individual Justice until it 

requires some form of judicial action, as when a party files a motion 

requiring adjudication.)

B. Suggestion o f Interest

A “Suggestion of Interest of the United States” can be filed, as was 

done in Anderson, supra. See also Federal Republic o f Germany v. 

Elicofon, 358 F. Supp. 747 (E.D.N.Y. 1972), affirmed on opinions below,

478 F.2d 231 (2d Cir. 1973) (expressing the Government’s nonrecognition of East Germany and recognition of West Germany).

C. Amicus Curiae

New York law neither forbids nor generally defines amicus curiae

submissions, except for the Court of Appeals, which specifically permits 

them under general criteria which this case would satisfy. New York 

Court Rules § 500.9(e) (1978). The amicus vehicle is, however, frequently employed in both the Supreme Court and the Appellate Division by means of a motion on notice for permission to file. It is 

recognized indirectly, e.g. N.Y. Civ. Prac. Law § 1012(c) (McKinney 

1980), and in all likelihood would not be rejected. Of course, our 

appearance amicus would not accord the Government the right to 

appeal.

D. Intervention

The Government could intervene as of right, N!Y. Civ. Prac. Law 

§ 1012, or by permission, § 1013. Intervention must be “timely.” We 

have found no cases of intervention by the United States in New York 

courts under the modern rules, and no discussions Of.early intervention. 

Understandably, the cases have focused on tardy intervention, and have 

allowed it as late as the eve of trial or even post-judgment, unless 

intervention would delay the case unnecessarily or confuse the issues.

170
See Stanford Associates v. Board o f Assessors, 39 A.D.2d 800, 332 

N.Y.S.2d 286 (3d Dep’t 1972); Auerbach v. Bennett, 64 A.D.2d 98, 408 

N.Y.S.2d (2d Dep’t 1978).

The standards for intervention as of right are as follows:

Upon timely motion, any person shall be permitted to intervene

in any action:

1) when a statute of the state confers an absolute right to 

intervene; or

2) when the representation of the person’s interest by the parties is or may be inadequate and the person is or may be 

bound by the judgment; or

3) when the action involves the disposition or distribution of, 

or the title or a claim for damages for injury to, property 

and the person may be affected adversely by the judgment.

N.Y. Civ. Prac. Law § 1012(a).

To intervene as of right the Government can argue that it may be 

“bound” by the judgment due to its effects on foreign policy; we can 

notify the court that we may make a submission later concerning 

whether immunity or act of state doctrines should bar the claim. Alternatively, we could argue that this action involves the disposition of 

property, i.e. the Pahlavi Foundation building in New York and any 

other such assets, and that the United States would be affected by a 

judgment in that we might claim the assets ourselves, if held to belong 

to Iran. There appears to be no precedent in New York law for 

arguments not based on our own claims to these assets (indeed, the 

New York courts have interpreted this provision largely in terms of 

commercial interests, see Cavages, Inc. v. Ketter, 56 A.D.2d 730, 392 

N.Y.S.2d 755 (4th Dep’t 1977)). Still, it is difficult to imagine that 

intervention in some form will not be allowed in view of the circumstances. Moreover, New York’s rules were adapted from the federal 

rules, and were meant to broaden their scope and to liberalize them. See

12 N.Y. Jud. Council Rep., 163, 218-32 (1946); see also 2 Weinstein, 

Korn & Miller, New York Civil Practice 1012.04 (1978). Thus, in view 

of New York’s general inclination to take guidance from the Federal 

Rules of Civil Procedure, and the liberal interpretation given Rule 24, 

Fed. R. Civ. P. and its predecessors, intervention as of right might have 

a good chance of success. See, e.g., SE C v. U.S. Realty, 310 U.S. 434 

(1940) (permitting the SEC to intervene to protect the integrity of its 

regulatory framework).

If at this point in the litigation the Government decides to make 

arguments for stay or dismissal that are essentially unrelated to the 

property involved in the lawsuit, it may be more politic to invoke the

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liberal standard for permissive intervention,9 although New York appears to make little distinction between the two standards. We could 

identify common questions of law or fact as those bearing on any 

submission to be made in the litigation concerning immunities or act of 

state doctrine.

VIII. Iran’s Prospects on the Merits

The complaint alleges that the Shah was the de facto ruler and head 

of state of Iran from 1941 until January 1979. The acts complained of 

are alleged to have taken place in Iran during the period that the Shah 

was the ruling monarch. The complaint is devoid of allegations that the 

Shah engaged in any of the acts complained of in the territory of the 

United States or at a time subsequent to January 1979 when he presumably ceased to be the head of state of Iran.10 Based on these allegations, 

the acts alleged appear to constitute acts of state.

A respectable argument can also be made that the Shah enjoys 

sovereign immunity from suit.11 Restatement (Second) of the Foreign 

Relations Law of the United States, §66 (1965), states in pertinent part: 

§66. Applicability of Immunity of Foreign State

The immunity of a foreign state under the rule stated in 

§ 65 extends to

(a) the state itself;

(b) its head of state and any person designated by him 

as a member of his official party;

(c) its government or any governmental agency; . . .

The 1976 Foreign Sovereign Immunities Act, 28 U.S.C. § 1602 et seq.,

does not expressly address the privileges and immunities of reigning 

monarchs, but talks only in terms of “foreign states.” Nevertheless, 

under the Restatement formulation, supra, it is arguable that a reigning 

monarch enjoys the immunities of a “foreign state” as codified in the 

Act.

9T o intervene by permission:

Upon timely motion, any person may be perm itted to intervene in any action when a 

statute of the state confers a right to intervene in the discretion o f the court, or when 

the person's claim or defense and the main action have a common question of law or 

fact. In exercising its discretion, the court shall consider w hether the intervention will 

unduly delay the determ ination o f the action or prejudice the substantial rights of any 

party.

N.Y. Civ. Prac. Law § 1013.

10 It is not clear w hether the Shah did, in fact, cease to be head of state o f Iran after he left Iran in 

January 1979. T he Shah himself has never abdicated; the United States governm ent has never 

pronounced that it no longer recognizes the Shah as the reigning m onarch o f Iran.

A lthough it is manifest that the Shah no longer exercises de facto governm ental powers, it is not 

unusual in international law to treat fictions as realities. Thus, the United States recognized as the de

jure governm ent of Russia from 1917 until 1933 the Kerensky governm ent, even though Mr. Kerensky 

had fled the Soviet Union in 1921.

11 In Hatch v. Baez. 14 N.Y. (7 Hun) 596 (1876), the court held that the acts while in office of a 

form er head o f state w ere immune from judicial scrutiny. T he court’s decision is phrased in terms 

suggestive o f both act of state and sovereign immunity doctrines.

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Section 1605(a)(5) preserves the immunity of foreign states from suit 

with respect to—

(A) any claim based upon the exercise or performance 

or the failure to exercise or perform a discretionary function regardless of whether the discretion be abused, or

(B) any claim arising out of malicious prosecution, 

abuse of process, libel, slander, misrepresentation, deceit, 

or interference with contract rights.

The tortious and wrongful acts alleged in the complaint would probably fall within the above exceptions of the Act.

Alternatively, if the Act were construed not to apply to personal 

monarchs, the Shah would be entitled to immunity under generally 

recognized doctrines of customary international law. See 1 Oppenheim’s 

International Law 676 ff. (Lauterpacht ed., 7th ed. 1953).

Since either act of state or sovereign immunity may defeat Iran’s 

claims against the Shah if applied in this case, it is important to consider whether the present Iranian government may waive the application of these doctrines to the acts of its predecessor. There appears to 

be a paucity of authority on point. As an a priori matter, it seems that 

Iran might be able to waive the doctrines, at least if our submission to 

the court urges allowing them to do so.12 Both doctrines exist for the 

benefit of the state in question, not for the individuals who lead it. 

Therefore it seems incongruous to apply the doctrines to defeat a claim 

by a state for its own assets converted by a former monarch.

L a r r y A . H a m m o n d

Deputy Assistant Attorney General

Office o f Legal Counsel

12 Analogy may be taken to the pattern of diplomatic immunities and then waiver. Under the 

Vienna C onvention on Diplom atic Relations, the sending state may waive a diplom at's immunity (art. 

32). Absent waiver, how ever, immunity for the exercise o f official functions subsists after the diplomat's appointment has term inated (art. 39.2).

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