Iran and Libya Sanctions Act of 1996:Congress Exceeds Its Jurisdictionto Prescribe Law

I. Introduction On August 5, 1996, Congress enacted the Iran and Libya Sanctions Act of 1996 (ILSA).1 Congress passed ILSA based on findings that Iran and Libya, and their acts in support of international terrorism, endanger the national security and foreign policy interests of the United States.2 Section 5 of ILSA requires the President to sanction3 any person4 who, with actual knowledge,5 invests $40 million or more in either Iran or Libya, so long as that investment directly and significantly contributes to the development of either country's petroleum resources.6 Congress reasoned that limiting the development of Iran's and Libya's petroleum resources would deny them the revenues produced by such resources and thereby deprive them of the financial means to support acts of international terrorism.7 ILSA has engendered a significant amount of criticism. Critics claim that, by purporting to govern "any person," ILSA exceeds the limits imposed by international law on the United States's jurisdiction to prescribe law.8 "Jurisdiction to prescribe" is a state's authority to make its laws applicable to certain persons or activities.9 This criticism is not surprising given that prior legislation and regulation based on national security and foreign policy typically contained rules applicable only to "persons" somehow affiliated with the United States.10 This Note examines whether the United States possesses the jurisdiction to prescribe and enforce ILSA against a person abroad who lacks affiliation with the United States. Part II analyzes ILSA in detail and sets the stage for a critical analysis of its legitimacy.11 Part III discusses how international law impacts domestic legislation such as ILSA and foreign policy decisions of states.12 Part IV reviews the generally recognized principles of prescriptive jurisdiction in international law and concludes that ILSA violates these principles.13 Finally, Part V addresses the separate question of whether the United States has the jurisdiction to enforce ILSA.14 II. The Iran and Libya Sanctions Act of 1996 Section 5(a) of ILSA provides that: [T]he President shall impose 2 or more of the sanctions . . . [listed in] section 6 if the President determines that a person has, with actual knowledge, . . . made an investment of $40,000,000 or more . . . that directly and significantly contributed to the enhancement of Iran's ability to develop petroleum resources of Iran.15 Section 5(b)(2) provides an identical provision regulating investments in Libya.16 Possible sanctions for a Section 5 violation include: (1) denying Export-Import bank financing; (2) denying export licenses; (3) prohibiting U.S. financial institutions from making loans worth over $10 million per year to sanctioned persons; (4) prohibiting sanctioned financial institutions from serving as primary dealers of U.S. government bonds or as repositories of U.S. government funds; (5) banning U.S. government procurement of any goods or services from sanctioned persons; and (6) Presidential import sanctioning in accordance with the International Economic Powers Act.17 The President must impose two or more of these sanctions against any person 18 who, with actual knowledge,19 violates Section 5, regardless of the person's nationality or residency. The unusually broad scope of the statute's applicability raises a difficult question: What authority does Congress have to impose its law on persons abroad having no connection to the United States? The answer to this question depends largely on the scope of the United States's jurisdiction to prescribe law, an issue addressed in Part IV. III. Relevance of International Law International law is part of our federal law and must be ascertained and administered by our courts.20 As with all American federal law, however,. Congress may modify or repeal its force and effect within the United States through subsequent legislative acts.21 Such a congressional modification or repeal, of course, does not relieve the United States of its obligation to obey international law. …