Legality of the International Agreement with Iran and Its Implementing Executive Orders

E xecutive orders providing for the establishm ent o f escrow accounts w ith the Bank of 

England and the C entral Bank o f A lgeria, directing the transfer o f previously blocked 

Iranian governm ent assets to those accounts, and nullifying all interests in the assets 

o th er than the interests o f Iran and its agents, are w ithin the P resident’s authority under 

the International E m ergency E conom ic P ow ers A ct (IE E P A ). Banks and other holders 

o f Iranian assets need not aw ait formal vacation o f court-ordered attachm ents before 

com plying w ith transfer orders, since they as well as Executive B ranch officials are 

relieved from any liability for actions taken in good faith in reliance on the IE E P A .

E xecutive o rd er prohibiting the prosecution o f any claims against Iran arising from the 

hostage seizure, and term inating any previously instituted judicial proceedings based on 

such a claim, is w ithin the President’s authority under the IE E P A and the H ostage 

A ct. T he o rd er does not purport to preclude any claim ant from petitioning Congress 

for relief in connection w ith his claim , nor could it constitutionally do so.

Provisions o f executive o rd er blocking property o f the form er Shah’s estate and that o f 

his close relatives, and requiring all persons subject to the jurisdiction o f the United 

States to submit to the S ecretary o f the T reasury inform ation about this property to be 

m ade available to the governm ent o f Iran, are w ithin the P resident’s authority under 

the IE E P A . Proposed o rd er also directs the A ttorney G eneral to assert in appropriate 

courts that claims o f Iran for recovery o f this property are not barred by foreign 

sovereign im m unity o r act o f state doctrines, and asserts that all Iranian decrees 

relating to the form er Shah and his family should be enforced in courts o f the United 

States.

T he President has constitutionally and congressionally conferred authority to enter an 

agreem ent designating the Iran-U nited States Claims Tribunal as the sole forum for 

determ ination o f claims by the U nited States o r its nationals against Iran, and to confer 

upon the Tribunal jurisdiction o ver claims against the U nited States.

January 19, 1981

T h e P r e s i d e n t

T h e W h i t e H o u s e

M y D e a r M r . P r e s i d e n t : I have been asked for my opinion concerning the legality of certain actions designed to resolve issues arising from 

the detention in Iran of 52 American hostages, including the diplomatic 

and consular staff in Tehran.

An international agreement has been reached with Iran. The agreement, which consists of four separate documents, commits the United 

States and Iran to take specified steps to free the hostages and to 

resolve specified claims between the United States and its nationals and 

Iran and its nationals. These documents embody the interdependent

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commitments made by the two parties for which Algeria has been 

acting as intermediary.

The first document is captioned “Declaration of the Government of 

the Democratic and Popular Republic of Algeria” (Declaration). The 

Declaration provides, first, for non-intervention by the United States in 

the internal political and military affairs of Iran.

Second, the Declaration provides generally for return of Iranian 

assets. The transfer utilizes the Central Bank of Algeria as escrow agent 

and the Bank of England in London as depositary: their obligations and 

powers are specified in two other documents, the “Escrow Agreement” 

and the “Depositary Agreement.” Separate timetables and conditions 

are described for assets in the Federal Reserve Bank of New York 

(Fed), in foreign branches of United States banks, and in domestic 

branches of United States banks, and for other financial assets and other 

property located in the United States and abroad. The transfer of the 

assets in the Fed and in the foreign branches to the Bank of England is 

scheduled to take place first. Upon Iran’s release of the hostages, the 

Central Bank of Algeria, as escrow agent, shall direct the Bank of 

England, under the terms of the Escrow and Depositary Agreements, 

to disburse the escrow account in accordance with the undertakings of 

the United States and Iran with respect to the Declaration.

The transfer from the Central Bank of Algeria to Iran of the assets 

presently in the domestic branches will take place upon Iran’s establishment with the Central Bank of Algeria of a Security Account to be 

used for the purpose of paying claims against Iran in accordance with a 

Claims Settlement Agreement set forth in the fourth document, which 

is captioned “Declaration of the Government of the Democratic and 

Popular Republic of Algeria Concerning the Settlement of Claims by 

the Government of the United States of America and the Government 

of the Islamic Republic of Iran” (Claims Settlement Agreement). The 

Claims Settlement Agreement provides for the establishment of an IranUnited States Claims Tribunal, which will have jurisdiction to decide 

three categories of claims: (1) claims by United States nationals against 

Iran and claims by Iranian nationals against the United States, and 

counterclaims arising out of the same transaction or occurrence, for 

claims and counterclaims outstanding on the date of the Agreement; 1 

(2) Official claims of the governments of the United States and Iran 

against each other arising out of contracts for the purchase and sale of 

goods and services; and (3) any dispute as to the interpretation or 

performance of any provision of the Declaration.

’ T w o categories o f claim s are specifically excluded: (1) claim s relating to the seizure o r detention 

o f the hostages, injury to U nited States property o r p roperty w ithin the com pound o f the embassy in 

T ehran, and injury to persons o r property as a result o f actions in the course o f the Islam ic R evolution 

in Iran w hich w ere not actions o f the governm ent o f Iran and (2) claim s arising under the term s o f a 

binding con tract specifically providing that any disputes thereunder shall be w ithin the sole ju risd iction o f the com petent Iranian courts.

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Third, the Declaration provides for nullification of trade sanctions 

against Iran and withdrawal of claims now pending in the International 

Court of Justice. The United States also agrees not to prosecute its 

claims and to preclude prosecution by a United States national or in the 

United States courts of claims arising out of the seizure of the embassy 

and excluded by the Claims Settlement Agreement.

Fourth, the Declaration provides for actions by the United States 

designed to help effectuate the return to Iran of the assets of the family 

of the former Shah.

A series of executive orders has been proposed to carry out the 

domestic, and some foreign, aspects of the international agreement. It is 

my opinion that under the Constitution, treaties, and laws of the United 

States you, your subordinates, the Fed, and the Federal Reserve Board 

are authorized to take the actions described in the four documents 

constituting the international agreement and in the executive orders.2

I shall first examine the proposed executive orders and consider them 

as to form and legality. Subsequently I shall consider certain questions 

which arise from other proposed actions and documents related thereto.

1. The first proposed executive order is captioned “Direction Relating to Establishment of Escrow Accounts.” Under it, the Secretary of 

the Treasury is authorized to direct the establishment of an appropriate 

escrow agreement with the Bank of England and with the Central Bank 

of Algeria to provide as necessary for distribution of funds in connection with the release of the hostages. The Escrow Agreement provides, 

among other things, that certain assets in which Iran has an interest 

shall be credited by the Bank of England to an escrow account in the 

name of the Central Bank of Algeria and transferred to Iran after the 

Central Bank of Algeria receives certification from the Algerian government that the 52 hostages have safely departed from Iran.

The International Emergency Economic Powers Act (IEEPA), 50 

U.S.C. §§ 1701-1706 (Supp. I 1977), provides you with authority, 

during a declared national emergency, to direct transactions and transfers of property in which a foreign country has an interest under such 

regulations as you may prescribe. As the proposed order recites, such 

an emergency has been declared. IEEPA was the authority for the 

blocking order of November 14, 1979, Executive Order No. 12,170, 

which asserted control over Iranian government assets. Moreover, the 

statute known as the Hostage Act, 22 U.S.C. § 1732, authorizes the 

President, when American citizens are unjustly deprived of liberty by a 

foreign government, to use such means, not amounting to acts of war, 

as he may think “necessary and proper” to bring about their release. 

The phrase “necessary and proper” is, of course, borrowed from the 

Constitution, and has been construed as providing very broad discre2 D ocum ents testifying to th e adherence to the agreem ent by both the U nited States and Iran will 

also be executed; these docum ents present no substantive legal issues.

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tionary powers for legitimate ends. U.S. Const. Art. I, § 8, cl. 18; 

McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316 (1819). Establishment of 

the escrow account is directed to the release of the hostages. This order 

thus falls within your powers under these Acts.3

It is approved as to form and legality.

2. The second proposed executive order is captioned “Direction to 

Transfer Iranian Government Assets.” The Fed is directed to transfer 

to its account at the Bank of England, and then to the escrow account 

referred to in paragraph 1, the assets of the government of Iran, as 

directed by the Secretary of the Treasury. The order also revokes the 

authorization for, and nullifies all interests in, the frozen Iranian government property except the interests of Iran and its agents. The effect 

of this order will be to void the rights of plaintiffs in any possible 

litigation to enforce certain attachments and other prejudgment remedies that were issued against the blocked assets following the original 

blocking order.

I believe that this provision is lawful for several reasons. I am 

informed, first, that the Iranian funds on deposit in the Fed are funds of 

the Bank Markazi, the Central Bank of Iran. As such, they are clearly 

not subject to attachment. The Foreign Sovereign Immunities Act of 

1976 specifically states that the property of a foreign central bank held 

for its own account shall be immune from attachment and execution 

unless that immunity has been explicitly waived. 28 U.S.C. § 1611(b). It 

is my view that there has been no such waiver.

Even assuming, arguendo, that the attachments are not precluded by 

28 U.S.C. § 1611(b), there is power under IEEPA to nullify them or to 

prevent the exercise of any right under them. Under IEEPA, the 

President has authority in time of emergency to prevent the acquisition 

of interests in foreign property and to nullify new interests that are 

acquired through ongoing transactions. The original blocking order 

delegated this power to the Secretary of the Treasury, who promulgated regulations prohibiting the acquisition, through attachment or any 

other court process, of any new interest in the blocked property. The 

effect of these regulations was to modify both the substantive and the 

procedural law governing the availability of prejudgment remedies to 

creditors of Iran. The regulations contemplated that provisional remedies might be permitted at a later date but provided that any unauthorized remedy would be “null and void.” 31 C.F.R. § 535.203(e).

Subsequently, all of the attachments and all of the other court orders 

against the Iranian assets held by the Fed were entered pursuant to a 

general license or authorization given by the Secretary of the Treasury 

effective November 23, 1979. This authorization, like all authorizations 

issued under the blocking regulations, may be revoked at any time in

3 A lthough I d o not specifically discuss the applicability o f the H ostage A ct to the o th e r proposed 

orders described in this opinion, I believe that it generally supports their issuance.

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accordance with 31 C.F.R. § 535.805, which expressly provides that 

any authorization issued under the blocking order could be “amended, 

modified, or revoked at any time.” See Orvis v. Brownell, 345 U.S. 183 

(1953). The regulations did not purport to authorize any transaction to 

the extent that it was prohibited by any other law (other than IEEPA), 

such as the Foreign Sovereign Immunities A ct.4 31 C.F.R. § 535.101(b).

Upon revocation, the exercise or prosecution of any interests created 

by the outstanding attachments and other orders will be unauthorized. 

The orders themselves will no longer confer any enforceable right upon 

the creditors. Indeed, because IEEPA expressly grants to the President 

a power of nullification, the interests created by these provisional remedies are themselves subject to nullification, in addition to nullification 

by the revocation of the underlying authorization. In this respect the 

President’s power under IEEPA is analogous to his constitutional 

power to enter into international agreements that terminate provisional 

interests in foreign property acquired through domestic litigation if 

necessary in the conduct of foreign affairs. See The Schooner Peggy, 5 

U.S. (1 Cranch) 103 (1801). The nullification of these interests is an 

appropriate exercise of the President’s traditional power to settle international claims. United States v. Pink, 315 U.S. 203 (1942); United States

v. Belmont, 301 U.S. 325 (1937).

Upon the direction of the Secretary of the Treasury, the Fed will be 

free to transfer the Iranian assets; the attachments and other prejudgment encumbrances will have been rendered unenforceable by the 

contemporaneous change in law. Moreover, the Fed may comply with 

the Secretary’s directive without litigating in advance the issue of the 

Secretary’s authority to nullify the provisional interests. IEEPA explicitly states, and the proposed order affirms, that “[n]o person shall be 

held liable in any court . . . for anything done or omitted in good faith 

in connection with the administration of, or pursuant to and in reliance 

on, [IEEPA] or any regulation, instruction, or direction issued under 

[IEEPA].” 50 U.S.C. § 1702(a)(3). I believe that Congress intended this 

provision to relieve holders of foreign property, as well as individuals 

administering or carrying out orders issued pursuant to IEEPA, from 

any liability for actions taken in good faith in reliance on IEEPA and 

presidential directives issued under IEEPA. This provision protects not 

only the Fed and the Federal Reserve Board but Executive Branch 

officials as well. In my opinion, this provision is valid and effective for 

that purpose.

4 In New England Merchants National Bank v. Iran Power Generation and Transmission Co., 502 F. 

Supp. 120 (S.D .N .Y . 1980), th e district cou rt took the position that the freeze o rd e r under IE E P A 

took precedence o v e r th e F oreign Sovereign Im m unities A ct, thus rem oving Iran ’s im m unity. A ssum ­

ing, arguendo, the correctness o f that position, the legal effect o f the totality o f actions discussed 

herein w ould be to reinstate Iran 's im m unity, thereby rem oving the ratio decedendi o f the district 

c o u rt’s decision.

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Similarly, the Secretary himself is empowered, in my opinion, to 

nullify these provisional interests and to license the transfer of the assets 

without submitting the issue to litigation and without insisting that the 

Fed refuse any; transfer until all objections to the transfer have been 

definitively rejected by the courts. As noted, the interests, if any, 

created by these prejudgment remedies were created upon the condition that the authority for the underlying transactions might be revoked 

“at any time”; and that condition may be invoked without delay. The 

powers that the Constitution gives and the Congress has given the 

President to resolve this kind of crisis could be rendered totally ineffective if they could not be exercised expeditiously to meet opportunities 

as they arise. The primary implication of an emergency power is that it 

should be effective to deal with a national emergency successfully. 

United States v. Yoshida International, Inc., 526 F.2d 560, 573 (C.C.P.A. 

1975).

Moreover, the Fed may transfer the assets before the outstanding 

court orders have been formally vacated. When a supervening legislative act expressly authorizes a course of conduct forbidden by an 

outstanding judicial order, the new legislation need not require the 

persons subject to it to submit the matter to litigation before pursuing 

the newly authorized course. See Pennsylvania v. Wheeling & Belmont

Bridge Co., 59 U.S. (18 How.) 421 (1855). I believe that this case is 

closely on point. A valid executive order has the force of a federal 

statute, superseding state actions to the extent that it is inconsistent. 

Contractors Association o f Eastern Pennsylvania v. Secretary o f Labor, 442 

F.2d 159, 166 (3d Cir.), cert, denied, 404 U.S. 854 (1971). Thus, the 

holding of the Wheeling case applies here.

The order is approved as to form and legality, and actions taken 

consistent with and pursuant to it will be lawful and valid.

3. The third proposed executive order is captioned “Direction to 

Transfer Iranian Government Assets Overseas.” In general, it directs 

branches of United States banks outside the country to transfer Iranian 

government funds and property to the account of the Fed in the Bank 

of England. The transfer is to include interest at commercially reasonable rates from the date of the blocking order. The Secretary of the 

Treasury shall determine when the transfers shall take place. Any 

banking institution that executed a set-off against Iranian funds after 

entry of the blocking order is directed to cancel the set-off and to 

transfer the funds in the same manner as the other overseas deposits.

The Iranian funds in the branches of American banks overseas were 

subject to the November 1979 blocking order. Subsequently the Secretary of the Treasury licensed foreign branches and subsidiaries of 

American banks to set off their claims against Iran or Iranian entities by 

debit to the blocked accounts held by them for Iran or Iranian entities. 

31 C.F.R. §535.902. As a result of this license, American banks with

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branches overseas set off various debts owing to them by Iran and 

Iranian entities. I understand that most of the debts were loans originally made from offices in the United States and that most of the 

overseas deposits were in branches located in the United Kingdom. The 

banks with overseas Iranian accounts set off amounts owing not only to 

them directly but to other banks with whom they were participants in 

syndicated loans. The banks have acted on the assumption that any loan 

made to Iran or an Iranian entity could be set off against any account 

of Iran or an Iranian entity or enterprise on the theory that, as a result 

of the control of the Iranian economy by the government of Iran and 

nationalization of private enterprises, all such entities and enterprises 

were the same party for purpose of setting off debts. In addition, the 

banks accelerated the amounts due on loans that were in default, and, 

under the doctrine of anticipatory breach, set off loans that had not 

come due.

The blocking order delegated to the Secretary of the Treasury the 

authority to license the set-offs to the extent that the executive order 

prevented them. The license did not, however, determine whether the 

set-offs were valid under any other law. 31 C.F.R. § 535.101(b). I 

understand that Iran and its entities are contesting in litigation overseas 

whether the set-offs are lawful. The issues include the proper situs of 

the debts, identity of the parties, the propriety of acceleration, and the 

anticipation of breach.

IEEPA authorizes the President, under such regulations as he may 

prescribe, to nullify and void transactions involving property in which a 

foreign country has an interest and to nullify and void any right respecting property in which a foreign country has an interest. 50 U.S.C. 

§ 1702. Either analysis is appropriate here: Iran had an interest in the 

original set-off transaction and continues to have an interest both in the 

amounts in the accounts which have and have not been set off. The 

latter, as noted, are the subject of litigation abroad. See 31 C.F.R. 

§§ 535.311-312. Cf. Behring International v. Miller, 504 F. Supp. 552 

(D.N.J. 1980) (holding that Iran continues to have interest in a trust 

account created to pay debt). The very use of the words “nullify” and 

“void” persuades me that Congress intended to authorize the President 

to set aside preexisting transactions.5

As noted, the order also requires the overseas banks, when transferring the Iranian assets, to include interest on those assets from November 14, 1979, at commercially reasonable rates. I understand that in 

most cases the accounts in overseas branches of American banks are 

interest-bearing. To the extent that they are not, such interest represents

51 believe that the present case is distinguishable in several respects from that in Brownell v. 

National City Bank, 131 F. Supp. 60 (S.D .N .Y . 1955). T here, the district co u rt concluded that the 

m ere revocation o f a license did not serve to void a preexisting and apparently uncontested set-off; the 

bank, m oreover, had no opportunity to recoup its potential loss by bringing the loan current.

308
the benefit realized by the banks from holding the blocked Iranian 

assets which, under the law of restitution, should accrue to the owners 

of the assets. C f Phillips Petroleum Co. v. Adams, 513 F.2d 355 (5th 

Cir.), cert, denied, 423 U.S. 930 (1975). As such, the interest or benefit 

realized by the banks is property in which Iran has an interest.6

For these reasons, I believe that you are thus authorized under 

IEEPA to compel the transfer of both principal and interest to the 

Federal Reserve account at the Bank of England as provided by the 

order and to nullify or prevent the exercise of any interests in this 

property by anyone other than Iran. I also believe, as discussed in 

paragraph 2 above, that 50 U.S.C. § 1702(a)(3) relieves from liability 

anyone taking action in good faith under this executive order.7

The proposed order is approved as to form and legality, and actions 

taken consistent with and pursuant to it will be lawful and valid.

4. The fourth proposed executive order is captioned “Direction to 

Transfer Iranian Government Assets Held by Domestic Banks.” The 

proposed order directs American banks in the United States with Iranian deposits to transfer them, including interest from the date of 

blocking at commercially reasonable rates, to the Fed, which will hold 

the funds subject to the direction of the Secretary of the Treasury.

As discussed in paragraphs 2 and 3, the President has power under 

IEEPA to direct the transfer of funds of Iran, including interest, and to 

nullify or prevent the exercise of any interests of anyone other than 

Iran in Iranian property. Actions taken in good faith pursuant to this 

order will be, as discussed above, immune from liability.

The order is approved as to form and legality, and actions taken 

consistent with and pursuant to it will be lawful and valid.

5. The fifth proposed executive order is captioned “Direction to 

Transfer Iranian Government Financial Assets Held by Non-Banking 

Institutions.” This order is similar to the order described in paragraph 4 

except that it requires the transfer to the Fed of funds and securities 

held by non-banking institutions. The President has the power to direct 

the transfer of funds and securities of Iran held by non-banking institutions, and actions taken in good faith pursuant to this order shall 

likewise enjoy the immunity from liability as reflected in 50 U.S.C. 

§ 1702(a)(3).

The proposed order is approved as to form and legality, and actions 

taken consistent with and pursuant to it will be lawful and valid.

6See also A rt. V II(2)(b) o f the T reaty o f A m ity, E conom ic Relations, and C onsular R ights, A ug. 15, 

1955, U nited States-Iran, 8 U .S.T. 901, 905, T.I.A .S! N o. 3853.

1Cf. Cities Service Co. v. McGrath. 342 U.S. 330, 334-36 (1952). It is my opinion that a person w ho 

has taken action in com pliance w ith this executive o rd er and is subsequently finally required by any 

court to pay am ounts w ith respect to funds transferred pursuant to this executive o rd er will have the 

right as a m atter o f due process to recover such am ount from the U nited States to the extent o f any 

double liability.

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6. The sixth proposed executive order is captioned “Direction to 

Transfer Certain Iranian Government Assets.” The order would require 

anyone in possession or control of property owned by Iran, not including funds and securities, to transfer the property as directed by the 

Iranian government. The order recites that it does not relieve persons 

subject to it from existing legal requirements other than those based on 

IEEPA. It does, however, nullify outstanding attachments and court 

orders in the same manner as does the order discussed in paragraph 2.

For the reasons discussed in the preceding paragraphs, the President 

has power under IEEPA to order the transfer of property owned by 

Iran as directed by Iran and to nullify outstanding attachments and 

court orders related to such property. Actions taken in good faith 

pursuant to this order shall likewise enjoy the immunity from liability 

as reflected in 50 U.S.C. § 1702(a)(3).

The order is approved as to form and legality, and actions taken 

consistent with and pursuant to it will be lawful and valid.

7. The seventh proposed executive order is captioned “Revocation of 

Prohibitions against Transactions Involving Iran.” It revokes the prohibitions of Executive Order No. 12,205 of April 7, 1980; Executive 

Order No. 12,211 of April 17, 1980; and Proclamation 4702 of November 12, 1979. The two executive orders limited trade with and travel to 

Iran. The proclamation restricted oil imports from Iran. It is my understanding that although the prohibitions are revoked, the underlying 

declarations of emergency remain in effect.

The order is approved as to form and legality.

8. The eighth proposed executive order is captioned “NonProsecution of Claims of Hostages and for Actions at the United States 

Embassy and Elsewhere.” The order directs the Secretary of the Treasury to promulgate regulations prohibiting persons subject to U.S. jurisdiction from prosecuting in any court or elsewhere any claim against 

Iran arising from the hostage seizure on November 4, 1979, and the 

occupation of the embassy in Tehran, and also terminating any previously instituted judicial proceedings based upon such claims.

The President has the power under IEEPA and the Hostage Act to 

take steps in aid of his constitutional authority 8 to settle claims of the 

United States or its nationals against a foreign government.9 Thus, he 

has the right to license litigation involving property in which a foreign 

national has an interest, as described in paragraph 2. That license can be 

suspended by the Executive acting alone. New England Merchants National Bank v. Iran Power Generation and Transmission Co., 508 F. Supp. 

47 (S.D.N.Y., 1980) (Duffy, J.). But see National Airmotive Corp. v.

*See, ££., R estatem ent (Second) o f F oreign Relations L aw o f the U nited States § 213 (1965).

9 IE E P A w as drafted and enacted w ith th e explicit recognition that the blocking o f assets could be 

d irectly related to a later claim s settlem ent. H . R. Rep. N o. 459, 95th C ong., 1st Sess. 17 (1977); S. 

Rep. N o. 466, 95th C ong., 1st Sess. 6 (1977). See 50 U.S.C. § 1706(aXl) (authorizing continuation of 

controls, after the em ergency has ended, w here necessary for claim s settlem ent purposes).

310
Government and State o f Iran, 499 F. Supp. 401 (D.D.C., 1980) 

(Greene, J.).10

The order is approved as to form and legality.

9. The final proposed executive order is captioned “Restrictions on 

the Transfer of Property of the Former Shah of Iran.” It invokes the 

blocking powers of IEEPA to prevent transfer of property located in 

the United States and controlled by the Shah’s estate or by any close 

relative until litigation surrounding the estate is terminated. The order 

also invokes the reporting provisions of IEEPA, 50 U.S.C. § 1702(a)(2), 

to require all persons subject to the jurisdiction of the United States to 

submit to the Secretary of the Treasury information about this property 

to be made available to the government of Iran. The property involved 

is property in which “[a] foreign country or a national thereof” has an 

interest. Restrictions on transfer and reporting requirements therefore 

fall within the authority provided by IEEPA.

The order would further direct me, as Attorney General, to assert in 

appropriate courts that claims of Iran for recovery of this property are 

not barred by principles of sovereign immunity or the act of state 

doctrine. I have previously communicated to you and to the Department of State my view to this effect (based on advice furnished to me 

by the-Office of Legal Counsel and the Civil Division of this Department) and will so assert in appropriate proceedings. The proposed 

order also recites that it is the position of the United States that all 

Iranian decrees relating to the assets of the former Shah and his family 

should be enforced in our courts in accordance with United States law.

The proposed order is approved as to form and legality.

10. The other questions relate to the Claims Settlement Agreement. I 

conclude that you have the authority to enter an agreement designating 

the Iran-United States Claims Tribunal as the sole forum for determination of claims by United States nationals or by the United States itself 

against Iran and to confer upon the Tribunal jurisdiction over claims 

against the United States, including both official contract claims and 

disputes arising under the Declaration.

The authority to agree to the establishment of the Tribunal as an 

initial matter cannot be challenged. The Claims Settlement Agreement 

falls squarely within powers granted to the Executive by the Constitution, by treaty, and by statute.

As a step in the reestablishment of diplomatic relations with Iran, the 

Claims Settlement Agreement represents an appropriate exercise of the 

President’s powers under Article II of the Constitution to conduct 

foreign relations. Moreover, by Article XXI(2) of the 1957 Treaty with

101 note that the issue of appropriate compensation for the hostages will be considered by a Commission on Hostage Compensation established by separate executive order. Moreover, this eighth order does not, of course, purport to preclude any claimant from presenting his claim to Congress and petitioning for relief; nor could it constitutionally do so.

311
Iran, the Senate gave its agreement for the two nations to settle disputes as to the interpretation or application of the treaty by submission 

to the International Court of Justice or by any “pacific means.” 11 

Arbitration by the Iran-United States Claims Tribunal is a pacific means 

of dispute settlement. Finally, by the Hostage Act, 22 U.S.C. § 1732, 

Congress has conferred upon the President specific statutory powers 

applicable to this crisis. The agreement to resolve by arbitration the 

disputes now obstructing the release of the hostages is a proper exercise 

of this power.

I note in conclusion the congruence of your constitutional powers 

and the congressionally conferred authority. In this situation, of course, 

your authority is at its maximum. Youngstown Sheet & Tube Co. v. 

Sawyer, 343 U.S. 579, 635-36 (1952) (Jackson, J., concurring).

The specific jurisdiction conferred upon the Tribunal must be further 

examined. The first category of claims, the private claims based on 

debts, contracts, expropriations, or other measures affecting property 

rights, includes both claims by United States nationals against Iran and 

claims by Iranian nationals against the United States. The former are 

referrable to the Tribunal under the constitutional authority to settle 

claims recognized in United States v. Pink, 315 U.S. 203 (1942), and 

United States v. Belmont, 301 U.S. 324 (1937). See also Restatement 

(Second) of Foreign Relations Law of the United States § 213 (1965).12

From these claims are excluded claims arising out of the seizure of 

the embassy and claims on binding contracts providing for dispute 

resolution solely by Iranian courts. Again, the power to settle claims 

includes the power to exclude certain claims from the settlement process. Cf. Aris Gloves, Inc. v. United States, 420 F.2d 1386 (Ct. Cl. 1970). 

Moreover, the exclusion is not intended to be a final settlement or 

determination of these claims. I understand that the claims based on the 

seizure will be given separate consideration, see note 10 supra. I note 

also that the exclusion of the claims on binding contracts that provide 

the exclusive procedure for dispute resolution does not adversely affect 

any option that these claimants would have had prior to the hostage 

crisis and all the actions taken in response to it. These claimants are not 

disadvantaged by the Claims Settlement Agreement; as to them, the 

status quo as of the time that the hostages were taken is merely 

preserved.

n Art. XXI(2) provides: Any dispute between the High Contracting Parties as to the interpretation or application of the present Treaty, not satisfactorily adjusted by diplomacy, shall be submitted 

to the International Court of Justice, unless the High Contracting Parties agree to settlement by some other pacific means. Because the Treaty provides for peace and friendship between the two nations, trade and commercial 

freedom, protection and security of nationals, prompt and just compensation for the taking of property, and the absence of restrictions on the transfer of funds, the disputes to be referred to the Tribunal are disputes “as to the interpretation or application of the . . . Treaty.”

13 Here again, your constitutional powers are supplemented by statute. See note 9 supra.

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The latter claims in the first category, the claims by Iranian nationals 

against the United States, and also the official claims in the second 

category by Iran against the United States, are referrable to the Tribunal for adjudication under the same authority. The President’s power to 

refer these claims to binding arbitration as part of an overall settlement 

of our disputes with Iran is within the authority conferred on him by 

the Treaty and the Hostage Act and is also within his sole authority 

under Article II of the Constitution. Any award made by the Tribunal 

against the United States would create an obligation under international 

law. Such obligations have invariably been honored by the Congress in 

our constitutional system.

The remainder of the claims in this second category are official 

claims of the United States against Iran. The submission of the claims to 

the Tribunal is a matter for the Executive’s sole determination in the 

conduct of foreign relations.

Finally, jurisdiction over the third category of claims, consisting of 

disputes as to the interpretation or performance of the Declaration, is 

appropriately conferred upon the Tribunal incident to the exercise of 

the power to agree to the Declaration in the first instance.

For these reasons, I conclude that the United States may enter into 

the international agreement and that you have legal authority to issue 

all of these documents and executive orders.

Respectfully,

B e n j a m i n R. C i v i l e t t i

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