No. 10-947 IN THE BANK MELLI IRAN NEW YORK REPRESENTATIVE OFFICE, Petitioner, V. SUSAN WEINSTEIN, ET AL., Respondents. On Petition for a Writ of Certiorari to the United States Court of Appeals for the Second Circuit BRIEF IN OPPOSITION TO PETITION FOR A WRIT OF CERTIORARI Robert J. Tolchin Counsel of Record BERKMAN LAW OFFICE 111 Livingston Street, Suite 1928 Brooklyn, New York 11201 718-855-3627 718-855-4696 (fax) [email protected]Counsel for Respondents
Transcript
No. 10-947
IN THE
BANK MELLI IRANNEW YORK REPRESENTATIVE OFFICE,
Petitioner,
V.
SUSAN WEINSTEIN, ET AL.,
Respondents.
On Petition for a Writ of Certiorari to theUnited States Court of Appeals for the Second Circuit
BRIEF IN OPPOSITION TOPETITION FOR A WRIT OF CERTIORARI
Robert J. TolchinCounsel of Record
BERKMAN LAW OFFICE111 Livingston Street, Suite 1928Brooklyn, New York 11201718-855-3627718-855-4696 (fax)[email protected]
Counsel for Respondents
Blank Page
QUESTIONS PRESENTED
Pursuant to Supreme Court Rule 15(2)1 Respon-dent Jennifer Weinstein Hazi2 respectfully notesthe following misstatements of fact and law con-tained in the "Questions Presented" section of theinstant Petition:
First, the argument (which is presented by Peti-tioner as if it were an established fact) that theholding of this Court in First National City Bank v.Banco Para El Comercio Exterior de Cuba, 462 U.S.611, 626-627 (1983) ("Bancec") that foreign "gov-ernment instrumentalities established as juridicalentities distinct and independent from their sover-eign should normally be treated as such" is "reflect-ed in numerous treaties that require the UnitedStates to recognize the juridical status of foreignentities" (Petition at (i)) is incorrect. As the SecondCircuit correctly held in the decision below, inreliance on this Court’s ruling in Sumitomo ShojiAmerica, Inc. v. Avagliano, 457 U.S. 176 (1982), thetreaty provisions at issue are not intended to giveseparate juridical status to instrumentalities offoreign states but only "to give corporations of each
1 Specifically, the provision that: "IT]he brief in opposi-tion should address any perceived misstatement of fact or lawin the petition that bears on what issues properly would bebefore the Court if certiorari were granted. Counsel ... havean obligation to the Court to point out in the brief in opposi-tion, and not later, any perceived misstatement made in thepetition." Supreme Court Rule 15(2).
2 As explained below, Jennifer Weinstein Hazi is the solerespondent to this Petition.
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signatory legal status in the territory of the otherparty, and to allow them to conduct business in theother country on a comparable basis with domesticfirms." Id. at 185-86.
Therefore, the phrase contained in the first ques-tion presented, "applicable treaty provisions,"improperly assumes one of the very questions indispute, i.e. whether these treaty provisions areindeed applicable. Thus, the first question present-ed actually contains two questions.
Second, the argument (again, stated as a fact)contained in the second question presented, thatCongress "retroactively revis[ed] the parties boundby a judgment" is without basis. Section 201 of theTerrorism Risk Insurance Act ("TRIA") does notchange the parties bound by a judgment; it merelyrenders judgments against a foreign state-sponsorof terrorism enforceable against agencies andinstrumentalities of the foreign state in certain cir-cumstances.
Nor is TRIA being applied to Petitioner "retroac-tively"; Petitioner became subject to the provisionsof TRIA only many years after its passage and onlyas the result of Petitioner’s own post-TRIA electiveconduct.
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PARTIES TO THE PROCEEDINGS BELOW
Pursuant to Supreme Court Rule 15(2)3 Respon-dent Jennifer Weinstein Hazi respectfully notesthat the information contained in the "Parties tothe Proceedings Below" section of the instant Peti-tion is inaccurate.
The enforcement proceedings in the district courtagainst Petitioner’s property were brought byRespondent Jennifer Weinstein Hazi only, andRespondent Jennifer Weinstein Hazi was the solerespondent in the court of appeals.
Though the names Susan Weinstein, Jeffrey A.Miller, Joseph Weinstein and David Weinsteinhave appeared in the captions in this matter as atechnical matter (because the proceeding in thedistrict court was brought under the caption of theWeinsteins’ underlying judgment against Iran) infact Susan Weinstein, Jeffrey A. Miller, JosephWeinstein and David Weinstein have not soughtany relief against the Petitioner and were notrespondents in the court of appeals.
Accordingly, Jennifer Weinstein Hazi is the onlyproper respondent to this Petition.
3 Specifically, the provision that: "IT]he brief in opposi-
tion should address any perceived misstatement of fact or lawin the petition that bears on what issues properly would bebefore the Court if certiorari were granted. Counsel ... havean obligation to the Court to point out in the brief in opposi-tion, and not later, any perceived misstatement made in thepetition." Supreme Court Rule 15(2).
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TABLE OF CONTENTS
QUESTIONS PRESENTED .....................
PARTIES TO THE PROCEEDINGSBELOW ..........................................
TABLE OF AUTHORITIES .....................
STATEMENT OF THE CASE ..................
ARGUMENT ........................................
Part I.The Finding that TRIA Does Not Conflictwith the Treaty of Amity Is Correct andDoes Not Warrant Certiorari Review ....
Part II.Alternatively, the Finding that TRIAOverrides the Treaty of AmityIs Correct and Does Not WarrantCertiorari Review ............................
Part III.The Finding that TRIA Overridesthe Bancec Presumption Is Correctand Does Not Warrant CertiorariReview ..........................................
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Part IV.The Holding That Respondent MayEnforce Her Pre-TRIA JudgmentAgainst the Assets of Petitioner WasCorrect, Does Not Conflict with Plautand Does Not Warrant CertiorariReview ..........................................
CONCLUSION .....................................
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TABLE OF AUTHORITIES
Cases Page(s)
Alejandre v. Telefonica Larga DistanciaDe Puerto Rico, Inc.,183 F.3d 1277(11th Cir. 999) .....................................21, 22, 23
Bank of Augusta v. Earle,13 Pet. (38 U.S.) 519,10 L.Ed. 274 (1839) ...........................11
Bank of New York v. Rubin,2006 WL 633315 (S.D.N.Y. 2006) .......... 6
Bank of New York v. Rubin,2007 WL 2044581 (S.D.N.Y. 2007) ........7, 20
Bank of New York v. Rubin,484 F.3d 149 (2nd Cir. 2007) ...............6, 20
Bowsher v. Merck & Co.,460 U.S. 824 (1983) ........................... 4
Branch v. U.S.,69 F.3d 1571 (Fed.Cir. 1995) ............... 26
Case Concerning The Barcelona Traction,Light & Power Co.,1970 I.C.J. 3 ........... 2
Statement of Sen. Harkin, 148 Cong. Rec.$11524, at $11528(Nov. 19, 2002) .................................. 4, 7, 19, 27
1995 Treaty of Amity, Economic Relations,and Consular Rights betweenthe United States and Iran,Article III ..................................... 8, 9, 12, 15, 16
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Page(s)
1995 Treaty of Amity, Economic Relations,and Consular Rights between the UnitedStates and Iran, Article XI.4 ...............23, 24
While the Petitioner’s "Preliminary Statement"and "Statement" provide a somewhat useful recita-tion of much of the factual, procedural and statuto-ry background to this Petition, they suffer fromvarious substantive misstatements and omissionsthat the Respondent will address below.
First, the Petition misstates the holding of thisCourt in First National City Bank v. Banco Para ElComercio Exterior de Cuba, 462 U.S. 611 (1983)("Bancec") in two respects. Contrary to Petitioner’sclaim, this Court’s holding that foreign "govern-ment instrumentalities established as juridicalentities distinct and independent from their sover-eign should normally be treated as such" (id. at626-627) was not based solely, or even primarily,on international practice, but rather on the legisla-tive history and language of the Foreign SovereignImmunities Act ("FSIA"). See id. at 627 (In enact-ing the FSIA "Congress clearly expressed its inten-tion that duly created instrumentalities of aforeign state are to be accorded a presumption ofindependent status."). This point is highly signifi-cant, because what Congress gave in the FSIA itcan take away in the Terrorism Risk Insurance Act("TRIA").
Additionally, the Petition omits this Court’sexpress holding in Bancec that "courts in the Unit-ed States and abroad, have recognized that anincorporated entity ... is not to be regarded aslegally separate from its owners in all circum-
stances." Id. at 630 (emphasis added) (footnoteomitted). In support of this conclusion, the SupremeCourt cited and quoted at length a decision of theInternational Court of Justice"
In Case Concerning The Barcelona Traction,Light & Power Co., 1970 I.C.J. 3, the Inter-national Court of Justice acknowledged that,as a matter of international law, the separatestatus of an incorporated entity may be disre-garded in certain exceptional circumstances:
"... IT]he law has recognized that theindependent existence of the legal entitycannot be treated as an absolute. It is inthis context that the process of ’liftingthe corporate veil’ or ’disregarding thelegal entity’ has been found justified andequitable in certain circumstances or forcertain purposes. The wealth of practicealready accumulated on the subject inmunicipal law indicates that the veil islifted, for instance, to prevent misuse ofthe privileges of legal personality, as incertain cases of fraud or malfeasance, toprotect third persons such as a creditoror purchaser, or to prevent the evasion oflegal requirements or of obligations.
In accordance with the principle expound-ed above, the process of lifting the veil,being an exceptional one admitted bymunicipal law in respect of an institution
of its own making, is equally admissibleto play a similar role in internationallaw .... " Id., at 38-39.
Bancec at 630 n. 20 (emphasis added).
This holding (which was omitted from the Peti-tion) is extremely salient here because it collapsesPetitioner’s entire argument that TRIA conflictswith international law.
Second, the Petition ignores the legislativerecord, which clearly and indisputably shows thatin enacting TRIA Congress intended to permit vic-tims of terrorism holding judgments against forJeign state-sponsors of terrorism to enforce thosejudgments against the blocked assets of the agen-cies and instrumentalities of such foreign statesand (2) that TRIA’s provisions apply to existingjudgments.
Senator Harkin, a sponsor of TRIA, explained asfollows while addressing the conference reportaccompanying TRIA:
The purpose of title II is to deal comprehen-sively with the problem of enforcement ofjudgments issued to victims of terrorism inany U.S. court by enabling them to satisfysuch judgments from the frozen assets of ter-rorist parties. As the conference committeestated, this title establishes, once and for all,that such judgments are to be enforced againstany assets available in the U.S., and that theexecutive branch has no statutory authority todefeat such enforcement under standard judi-
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cial processes, except as expressly provided inthis act.
Title II expressly addresses three particularissues which have vexed victims of terrorismin this context. First, there has been a dis-pute over the availability of "agency andinstrumentality" assets to satisfy judgmentsagainst a terrorist state itself. Let there be nodoubt on this point. Title II operates to stripa terrorist state of its immunity from execu-tion or attachment in aid of execution bymaking the blocked assets of that terroriststate, including the blocked assets of any of itsagencies or instrumentalities, available forattachment and~or execution of a judgmentissued against that terrorist state. Thus, forpurposes of enforcing a judgment against aterrorist state, title II does not recognize anyjuridical distinction between a terrorist stateand its agencies or instrumentalities.
148 Cong. Rec. $11524, at $11528 (Nov. 19, 2002)(statement of Sen. Harkin) (emphasis added).
Congress’ intent as to the assets covered by TRIAcan and should be understood from this statement.See e.g., Bowsher v. Merck & Co., 460 U.S. 824, 832-33 (1983) (sponsor’s statement was "authoritativeguide" to statute’s construction).
Thus, TRIA operates to pierce the corporate veilbetween foreign state sponsors of terrorism andtheir agencies and instrumentalities, and to renderthe latter liable for judgments entered against the
former. In other words, TRIA is simply a statutoryreverse veil-piercing provision. See, generally,1 Fletcher Cyc. Corp. § 41.70.
In light of this legislative history (not to mentionthe express language of TRIA itself) it is unsur-prising that every court to have considered theissue has held that TRIA permits execution againstthe assets of agencies and instrumentalities of for-eign state judgment debtors. See e.g,. Weininger v.Castro, 462 F.Supp.2d 457, 482-488 (S.D.N.Y.2006) (Finding, after detailed analysis, that Con-gress intended TRIA to override Bancec presump-tion) and Levin v. Bank of New York, 2011 WL812032 (S.D.N.Y. 2011) (Ordering turnover ofassets of Iranian agencies under TRIA, in satisfac-tion of judgment against Iran). No court has heldotherwise.
Moreover, the Executive Branch, which has tra-ditionally acted as "the number one adversary" (Inre Islamic Republic of Iran Terrorism Litig., 659F.Supp.2d 3, 126 (D.D.C. 2009)) of American ter-rorism victims seeking to enforce judgmentsagainst Iran, has never asserted that TRIA doesnot permit the enforcement of such judgmentsagainst the assets of Iran’s agencies and instru-mentalities nor opposed such enforcement.
To the contrary, the Executive Branch has affir-matively facilitated the satisfaction of judgmentsagainst Iran from the assets of Iranian agenciesand instrumentalities. For example, in Bank ofNew York v. Rubin, American terrorism victims
holding a judgment against Iran brought turnoverproceedings under TRIA against funds belonging toPetitioner Bank Melli, and to two other Iranian-owned banks, Bank Sepah and Bank Saderat, heldby the Bank of New York. The district court deniedthe request on the grounds--asserted both. by Peti-tioner Bank Melli and the Executive Branch--thatthe Iranian banks’ funds were not "blocked assets"within the meaning of TRIA. Bank of New York v.Rubin, 2006 WL 633315 (S.D.N.Y. 2006). Duringthe pendency of an appeal of that decision, theUnited States Attorney notified the Second Cir-cuit--at his own initiative--that Bank Sepah’sassets in the United States had been blocked as aresult of its designation as a proliferator ofweapons of mass destruction. Accordingly, the Sec-ond Circuit vacated and remanded:
The government, which entered this case asamicus curiae in support of Bank Melli, notifiedthe Court prior to oral argument that theDepartment of the Treasury has recentlyfrozen the assets of interpleader-defendantBank Sepah Iran ... [W]e vacate ... andremand so that the district court may deter-mine whether the Rubin defendants may nowattach Bank Sepah’s assets deposited in theregistry of the district court.
Bank of New York v. Rubin, 484 F.3d 149, 150-151(2nd Cir. 2007) (emphasis added).
On remand, the district court granted the motionfor turnover of the Bank Sepah funds pursuant toTRIA, in satisfaction of the judgment creditors’ judg-
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ment against Iran, after the Executive Branch reiter-ated its position. Bank of New York v. Rubin, 2007 WL2044581 (S.D.N.Y. 2007).
It is not surprising, therefore, that the ExecutiveBranch declined to become involved in the instantmatter - the government simply does not agree withPetitioner’s position.
Third, the Petition omits clear indications in thelegislative record that Congress intended that TRIA’sprovisions would be applied to existing judgments. AsTRIA’s sponsor, Senator Harkin, explained:
Incredibly, since 1996 American victims ofstate-sponsored terrorism have been activelyencouraged to seek redress and compensa-tion in our federal courts. These long-sufferingAmerican families have complied with allrequirements of existing U.S. law and manyhave actually won court-ordered judgments,only to be denied any compensation and whatlittle justice they seek in a court of law ....
With the passage of this new legislation, theCongress is requiring that this misguidedpolicy be abandoned.
148 Cong. Rec. $11524, at $11527 (Nov. 19, 2002)(statement of Sen. Harkin) (emphasis added).
Senator Harkin specifically identified one ofthese "long-suffering American families" as thefamily of "Charles Hegna [ ] who was tortured andkilled in 1984 by Iranian-backed hijackers." Id. at$11526. The Hegnas were one of the families thathad already "won court-ordered judgments" to
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whom Senator Harkin was referring. See Hegna v.Islamic Republic of Iran, No. 1:00CV00716 (D.D.C.Feb. 7, 2002) (amended order and judgment).
It is clear, then, that Congress intended. TRIA toapply to existing judgments. Only by omitting thislegislative history is Petitioner able to claim thatthe Second Circuit improperly applied TRIAretroactively, i.e. to existing judgments.4+t~
Fourth, Petitioner’s claim (presented as a fact)that Article III. 1 of the 1955 Treaty of Amity, Eco-nomic Relations, and Consular Rights between theUnited States and Iran ("Treaty of Amity") guaran-tees the separate juridical status of Iranian corpo-rations and so prohibits the reverse veil-piercingpermitted by TRIA, conflicts directly with theprecedent of this Court. Article III(1) of the Treatyof Amity provides that:
Companies constituted under the appl:icablelaws and regulations of either High Con-tracting Party shall have their juridical sta-tus recognized within the territories of theother High Contracting Party. It is under-stood, however, that recognition of juridicalstatus does not of itself confer rights uponcompanies to engage in the activities forwhich they are organized. As used in thepresent Treaty, "companies" means corpora-
4 In any event, as discussed infra, Petitioner’.~ "retroac-
tivity" argument fails because it became subject to TRIA onlysome five years after its passage, when its assets wereblocked in 2007 as the result of its own post-TRIA conduct.
tions, partnerships, companies and otherassociations, whether or not with limited lia-bility and whether or not for pecuniary profit.
Treaty of Amity, § III(1).
The Treaty of Amity is one of approximately 20friendship, commerce, navigation ("FCN") treatiesnegotiated by the United States following WorldWar II. Significantly, most if not all of these FNCtreaties contain provisions substantively identicalto Article III(1). See e.g. Japan - U.S. FNC Treaty,4 U.S.T. 2063, T.I.A.S. No. 2863 (1953), ArticleXXII(3) ("Companies constituted under the applica-ble laws and regulations within the territories ofeither Party shall be deemed companies thereofand shall have their juridical status recognizedwithin the territories of the other Party."); Ger-many - U.S. FNC Treaty, 7 U.S.T. 1839, T.I.A.S.No. 3593 (1954), Article XXV(5) ("Companies con-stituted under the applicable laws and regulationswithin the territories of either Party shall bedeemed companies thereof and shall have theirjuridical status recognized within the territories ofthe other Party."); Korea - U.S. FNC Treaty, 8U.S.T. 2217, T.I.A.S. No. 3947 (1956), ArticleXXII(3) ("Companies constituted under the applica-ble laws and regulations within the territories ofeither Party shall be deemed companies thereofand shall have their juridical status recognizedwithin the territories of the other Party."); Israel -U.S. FNC Treaty, 5 U.S.T. 550, T.I.A.S. No. 2948(1951), Article XXII(3) ("Companies constitutedunder the applicable laws and regulations within
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the territories of either Party shall be deemed com-panies thereof and shall have their juridical statusrecognized within the territories of the otherParty."); Greece - U.S. FNC Treaty, 5 U.S.T. 1829,T.I.A.S. No. 3057 (1951), Article XXIV(3) ("Compa-nies constituted under the applicable laws and reg-ulations within the territories of either Party shallbe deemed companies thereof and shall have theirjuridical status recognized within the territories ofthe other Party."); France - U.S. Treaty, 1 1 U.S.T.2398, T.I.A.S. No. 4625 (1959) Article XXIV(5)("Companies constituted under the applicable lawsand regulations within the territories of eitherHigh Contracting Party shall be deemed companiesthereof and shall have their juridical status recog-nized within the territories of the other High Con-tracting Party."); Netherlands - U.S. FNC Treaty,8 U.S.T. 2043, T.I.A.S. No. 3942 (1956), ArticleXXIII(3) ("Companies constituted under the appli-cable laws and regulations within the territories ofeither Party shall be deemed companies thereofand shall have their juridical status recognizedwithin the territories of the other Party."); Pak-istan - U.S. FNC Treaty, 12 U.S.T. 110, T.I.A.S.No. 4683 (1959), Article XXI(3) ("Companies consti-tuted under the applicable laws and regulationswithin the territories of either Party shall bedeemed companies thereof and shall have theirjuridical status recognized within the territories ofthe other Party.").
As this Court has explained in detail, the pur-pose and function of these FNC corporate provi-
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sions was not to prevent veil-piercing where appro-priate, but rather simply to ensure that companiesregistered in one state would be recognized as legalpersons in the other state:
The Friendship, Commerce and NavigationTreaty between Japan and the United Statesis but one of a series of similar commercialagreements negotiated after World War II.The primary purpose of the corporation pro-visions of the Treaties was to give corpora-tions of each signatory legal status in theterritory of the other party, and to allow themto conduct business in the other country on acomparable basis with domestic firms.Although the United States negotiated com-mercial treaties as early as 1778, and there-after throughout the 19th century and early20th century, these early commercialtreaties were primarily concerned with thetrade and shipping rights ot~ individuals.Until the 20th century, international com-merce was much more an individual than acorporate affair.
As corporate involvement in internationaltrade expanded in this century, old commer-cial treaties became outmoded. Because "cor-poration[s] can have no legal existence out ofthe boundaries of the sovereignty by which[they are] created," Bank of Augusta v. Earle,13 Pet. (38 U.S.) 519, 588, 10 L.Ed. 274(1839), it became necessary to negotiate newtreaties granting corporations legal status
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and the right to function abroad. A series ofTreaties negotiated before World War II gavecorporations legal status and access to for-eign courts, but it was not until the postwarFriendship, Commerce and NavigationTreaties that United States corporationsgained the right to conduct business in othercountries. The purpose of the Treaties wasnot to give foreign corporations greater rightsthan domestic companies, but instead toassure them the right to conduct business onan equal basis without suffering discrimina-tion based on their alienage.
Sumitomo Shoji America, Inc. v. Avagliano, 457U.S. 176, 185-188 (1982) (emphasis added) (foot-notes omitted).
Thus, Article III.1 of our Treaty of Amity withIran--and the parallel provisions in the other FNCtreaties cited above--have nothing whatsoever to dowith veil-piercing, and are intended merely "to givecorporations of each signatory legal status in the ter-ritory of the other party, and to allow them to conductbusiness in the other country on a comparable basiswith domestic firms." Sumitomo, 457 U.S. at 186.
Needless to say, domestic firms are subject to hav-ing their corporate veils pierced in United Statescourts, where appropriate under governing case lawor statute. Therefore, the corporate veils of companiesregistered in Iran (and in any of the other foreignstates party to FNC treaties with the United States)can also be pierced, and nothing in any Treaty ofAmity provides to the contrary.
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Furthermore, Petitioner’s misconstruction ofArticle III. 1 is demonstrated by its very text, whichdefines "companies" as including "corporations,partnerships, companies and other associations,whether or not with limited liability . " Id. Byincluding partnerships and entities without limitedliability - i.e. entities which in many jurisdictionslack any "corporate veil" shielding the owners fromthe liability of the entity and vice versa - this def-inition makes clear that Article III. 1 has nothing todo with, much less operates to bar, veil-piercing.
F~fth, Petitioner’s claim that the Second Cir-cuit’s construction of TRIA created a "conflict" withother circuits is highly misleading at best, since thecases cited by Petitioner as evidence of this puta-tive "conflict" were not construing TRIA at all, butrather § 1610(f)(1)(A) of the FSIA.
These two provisions differ substantively. TRIA§ 201 refers to "the blocked assets of that terroristparty [against which the judgment was entered](including the blocked assets of any agency orinstrumentality of that terrorist party)," whileFSIA § 1610(f)(1)(A) governs enforcement of judg-ments on "a claim for which a foreign state (includ-ing any agency or instrumentality of such state)...is not immune under section 1605(a)(7)." 28 U.S.C.§ 1610(f)(1)(A).
Clearly, therefore, § 1610(f)(1)(A) does nothingmore than allow the enforcement of a judgmententered against an agency or instrumentality of astate-sponsor of terrorism on a claim under FSIA
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§ 1607 against that agency or instrumentality,whereas TRIA’s text permits enforcement of a judg-ment entered against the foreign state only, fromthe "assets of any agency or instrumentality" of theforeign state.
Thus, no conflict between the circuits exists.
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ARGUMENT
The instant Petition should be denied becausethe decision below was correct, neither decided animportant question of federal law that has notbeen, but should be, settled by this Court nor decid-ed such a question in conflict with relevant deci-sions of this Court, and did not create any circuitconflict.
The Finding that TRIA Does Not Conflictwith the Treaty of Amity Is Correct andDoes Not Warrant Certiorari Review
As discussed supra, Petitioner’s claim that TRIAconflicts with Article III.1 of the Treaty of Amitybecause that provision purportedly prohibits pierc-ing the corporate veil is soundly refuted by thisCourt’s decision in Sumitomo Shoji America, Inc. v.Avagliano, 457 U.S. 176 (1982) and by the fact thatArticle III.1 applies by its own terms to "partner-ships ... and other associations, whether or notwith limited liability" (id.)--i.e. to entities whichdo not have any juridical status separate from theirpartners, members and/or owners.
Moreover, if Petitioner’s construction of ArticleIII.1 were correct, the courts of the United Stateswould be prohibited from piercing the corporateveils of any company registered in Japan, Ger-many, Korea, France, Israel, the Netherlands, Pak-istan, Greece or any of the other numerous foreignstates party to an FNC Treaty containing a provi-sion substantively similar to Article III.1 of the
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FNC Treaty with Iran. Plainly, such an outcomewould not only be absurd and unprecedented, butwould render foreign corporations and their ownersfree to abuse the corporate form in the UnitedStates to the detriment of American suppliers,creditors and investors, which in turn would wreaksevere havoc with commerce between the UnitedStates and those countries.
Notably, the Executive Branch declined the invi-tation of the district court to submit a statement ofinterest in this case--which it surely would havedone if it believed that a violation of a treaty provi-sion was at issue.
Therefore, the Second Circuit’s ruling on thispoint was clearly correct and does not warrant cer-tiorari review.
II. Alternatively, the Finding that TRIAOverrides the Treaty of Amity Is Correctand Does Not Warrant Certiorari Review
Because TRIA clearly does not conflict with theTreaty of Amity, this Court does not need to exam-ine Petitioner’s claim that the Second Circuit’salternative finding that TRIA would trump theTreaty of Amity if such a conflict existed.
In any case, the Second Circuit’s alternativeholding that TRIA trumps the Treaty of Amity wascorrect and does not warrant certiorari review.That holding was based on TRIA’s "Notwithstand-ing any other provision of law" language.
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A treaty is a "law." Treaties are the "supreme lawof the land" U.S. Const. Art. VI, sec. 2. A treaty is"to be regarded in courts of justice as equivalent toan act of the legislature, whenever it operates ofitself without the aid of any legislative provision."Valentine v. United States ex rel. Neidecker, 299U.S. 5, 10 (1936). See also Washington State Char-terboat Ass’n v. Baldrige, 702 F.2d 820, 823 (9thCir. 1983) (holding that the phrase "any otherapplicable law" includes treaties); Gorton v. Ameri-can Cyanamid Co., 533 N.W.2d 746, 751 (Wis.1995) ("Obviously, federal law includes the UnitedStates Constitution and all of the federal statutesand treaties promulgated by Congress.").
Here, again, it is worth noting that the ExecutiveBranch did not come to the defense of the Treaty ofAmity.
III. The Finding that TRIA Overrides theBancec Presumption Is Correct and DoesNot Warrant Certiorari Review
The Second Circuit’s holding that TRIA overridesBancec presents no grounds for review by thisCourt.
Bancec expressly held that under both U.S. andinternational law corporate form could--andshould--be disregarded when it would otherwise"work ... injustice," when it is "interposed todefeat legislative policies," when "the notion oflegal entity is used to defeat public convenience"and then it would "prevent the evasion of legal
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requirements or of obligations." Id. at 629-630(citations omitted).
Congress was therefore perfectly within itsrights to determine that use of the corporate formto prevent American victims of terrorism fromenforcing their unsatisfied judgments against theblocked assets of agencies and instrumentalities ofthe state-sponsors of terrorism who harmed themwould "work ... injustice," "defeat legislative poli-cies," "defeat public convenience" and "prevent theevasion of legal requirements or of obligations"--and to enact TRIA as a remedy.
In other words, TRIA did nothing more than cod-ify the exception to the presumption of separate-ness recognized in Bancec, and apply it to a certainset of circumstances.
The Petitioner may disagree with Congress’ con-sidered judgment--reflected in TRIA--that itwould be unjust to allow deadbeat foreign state-sponsors of terrorism to hide their U.S.-basedassets behind the corporate form, beyond the reachof the American victims of those foreign states, butthere is no basis whatsoever for its claim that Con-gress somehow acted against the letter or spirit ofBancec or international law. On the contrary, thenarrow exception to the presumption of separate-ness codified in TRIA--which is limited to a veryspecial set of cases involving great injustice--squares perfectly with both Bancec or internation-al law.
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Petitioner argues, engaging in rather exhaustiveverbal gymnastics, that the term "including" usedin TRIA was not actually meant to "include" agencyand instrumentality assets in those assets subjectto execution in satisfaction of judgments againstthe foreign state itself.
But Congress’ use of the word "including" simplyreflects the fact that a corporation is nothing morethan "an artificial being, invisible, intangible, andexisting only in contemplation of law" (Bancec at629, citation omitted) and that property held in thename of a corporation ultimately and actually(notwithstanding the legal fiction of corporateform) belongs to the owner of the corporation.
Moreover, the legislative history, quoted atlength above, clearly shows that Congress intendedTRIA to render agency and instrumentality assetssubject to execution in satisfaction of judgmentsagainst the foreign state itself. See 148 Cong. Rec.at $11528 (TRIA "does not recognize any juridicaldistinction between a terrorist state and its agenciesor instrumentalities’~; Weininger v. Castro, 462F.Supp.2d 457, 482-488 (S.D.N.Y. 2006) (Legisla-tive history proves that Congress intended TRIA tooverride Bancec presumption).
In light of the language of the statute and thislegislative history, Petitioner’s argument that Con-gress intended TRIA to apply to agency and instru-mentality assets only when a court finds that aBancec exception should be applied (which hasnever happened in respect to any terrorism judg-
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ment and, indeed, rarely if ever happens at all) isstretched far past the bounds of any reasonablerules of construction.
Also, as discussed above, the Executive Branch--which has actively and vigorously opposed enforce-ment of terrorism judgments whenever it believedthat such enforcement was improper, as the Peti-tion itself repeatedly emphasizes--not onlydeclined an invitation to support Petitioner’s posi-tion on this issue, but actively facilitated executionof judgments against Iran from assets of Iranianagencies and instrumentalities under TRIA. SeeBank of New York v. Rubin, 484 F.3d 149, 150-151(2nd Cir. 2007); Bank of New York v. Rubin, 2007WL 2044581 (S.D.N.Y. 2007).
Petitioner’s claim that the Second Circuit’s con-struction of TRIA created a conflict with c, ther cir-cults is completely meritless. The other cases citedby Petitioner did not address TRIA b~Jt FSIA§ 1610(f)(1)(A). As discussed supra, the text of§ 1610(f)(1)(A) merely allows the enforcement of ajudgment entered against an agency or instrumen-tality from certain of its assets, while TRIA’s textpermits enforcement of a judgment entered againstthe foreign state, from the "assets of any agency orinstrumentality" of the foreign state.
Indeed, the very claim now made by Petitionerhas been examined and rejected--for reasons thatshould be endorsed by this Court--by the lower fed-eral courts:
21
The Court notes that the Eleventh Circuithas rejected the argument that § 1610(f)(1)-(A), a provision of the FSIA worded similarlyto TRIA § 201(a), legislatively overruledBancec’s presumption of separate juridicalstatus for liability purposes. However, whilesimilar, TRIA § 201(a) is worded differentlyfrom § 1610(f)(1)(A) and, as indicated, is sup-ported by legislative history suggesting anintent to override the Bancec presumption ofindependent status for the agencies andinstrumentalities of terrorist parties ....
Alejandre held that [§ 1610(f)(1)(A)] did notoverride the Bancec presumption of separatejuridical status for liability purposes. See 183F.3d at 1287. Instead, the effect of § 1610(f)(1)(A) was merely to allow plaintiffs to executeupon property claimed by the foreign govern-ment without first obtaining a license from theCACR. Id. However, in reaching this conclu-sion, the Circuit Court noted,
Congress has previously demonstratedin the FSIA context that it knows how toexpress clearly an intent to make instru-mentalities substantively liable for thedebts of their related foreign govern-ments. Absent such a clear expression,which does not appear in section 1610(f)(1)(A), we see no reason to interpret thatsection as contravening Congress’ origi-nal understanding that the FSIA "[is]not intended to affect the substantive
22
law determining the liability of a foreignstate or instrumentality, or the attribu-tion of liability among instrumentalitiesof a foreign state."
Id. at 1287-88 (emphasis added) (quotingBanco, 462 U.S. at 620, 103 S.Ct. 2591). Seealso Flatow v. Islamic Republic of Iran, 308F.3d at 1071 n. 10 (agreeing with Alejandreanalysis).
In contrast, in the plain language of TRIAand its legislative history there is such aclear expression to make the instrumentali-ties substantively liable for the debts of theirrelated foreign governments, in certain cir-cumstances... TRIA... expressly providesthat where a judgment against a terroristparty exists, not only its assets, but theassets of its agencies and instrumentalitiescan be used to satisfy the judgment. In con-trast, § 1610(f)(1)(A) states that if a creditorseeks to execute on assets claimed by anagency or instrumentality of a foreign state,that agency or instrumentality must alreadynot be "immune under § 1605(a)(7)." 28 U.S.C.§ 1610(f)(1)(A).
Further support for this interpretation isgleaned from a comparison provided by thecourt in Alejandre. There, the court notedthat in 1988, a bill was introduced i~a theHouse of Representatives that would haveamended § 1610(a) to deprive a foreignstate’s U.S. property of immunity from. exe-
23
cution if "the property belongs to an agencyor instrumentality of a foreign state engagedin a commercial activity in the United Statesand the judgment relates to a claim for whichthe foreign state is not immune from juris-diction by virtue of section 1605 or 1607." SeeAlejandre, 183 F.3d at 1287 n.25 (quotingH.R. Res. 3763, 100th Cong. § 3(1)(D) (1988),134 Cong. Rec. H6484-01) (emphasis added).TRIA’s language is similar and operates tomake the agency or instrumentality of a ter-rorist party liable for judgments against theterrorist party itself. Finally, a clear expres-sion of such congressional intent consistentwith this reading is found in the statement ofSenator Harkin on the Senate floor, as quot-ed above.
Thus, this Court finds that TRIA allows forexecution of the blocked assets of "juridicallyseparate" entities to satisfy a judgmentagainst a designated terrorist party, asdefined by TRIA, when such entities areagencies or instrumentalities of that terror-ist party.
Weininger, 462 F.Supp.2d 457 at 486-487.
Thus, no conflict between the circuits exists.
Finally, Petitioner’s arguments on this scoreignore Article XI.4 of the Treaty of Amity, whichprovides in relevant part that:
No enterprise of either High ContractingParty, including corporations ... which is
24
publicly owned or controlled shall, if itengages in commercial, industrial, shippingor other business activities within the terri-tories of the other High Contracting Party,claim or enjoy, either for itself or for its prop-erty, immunity therein from taxation, suit,execution of judgment or other liability towhich privately owned and controlled enter-prises are subject therein.
Treaty of Amity at Article XI.4
Article XI.4 deprives the instant Petitioner of theprotections of the FSIA and places it exactly on parwith any other non-governmental owned--i.e, pri-vate--corporation. See Harris Corp. v. .NationalIranian Radio and Television, 691 F.2d 1344, 1350(11th Cir. 1982) (Finding that Article XI.4 of theTreaty of Amity stripped Petitioner Bank Melli ofthe protections of the FSIA).
As noted supra, this Court’s holding ir~ Bancecwas based primarily on the language and. legisla-tive history of the FSIA. Id. at 627 (In the FSIA"Congress clearly expressed its intention that dulycreated instrumentalities of a foreign state are tobe accorded a presumption of independent sta-tus."). Since Article XI.4 removes the Petitionerfrom the ambit of the FSIA, the Bancec presump-tion does not apply to it in the first place. Notably,the Petitioner failed to alert the Court to eitherArticle IX.4 or the decision against it in Harris.
25
IV. The Holding That Respondent MayEnforce Her Pre-TRIA Judgment Againstthe Assets of Petitioner Was Correct, DoesNot Conflict with Plaut and Does Not War-rant Certiorari Review
Petitioner’s assertion that certiorari review isrequired because the Second Circuit improperlyapplied TRIA "retroactively" and "reopened" Respon-dent’s judgment in violation of Plaut v. SpendthriftFarm, Inc., 514 U.S. 211 (1995) is without merit.
In enacting TRIA, Congress did not "reopen" theRespondent’s judgment in any manner. In TRIA,Congress did nothing more than eliminate the pre-sumption of separateness between a foreign stateand its agencies and instrumentalities which Con-gress itself created in the first place. See Bancec at627 (Noting that in enacting the FSIA "Congressclearly expressed its intention that duly createdinstrumentalities of a foreign state are to beaccorded a presumption of independent status.").
Nor does TRIA change the identity of the parties"bound" by the judgment, as Petitioner claims.There is a fundamental difference between beingbound by a judgment and being liable for payingthat judgment. For example, the parties to a judg-ment are bound by the judgment (e.g., for purposesof res judicata and merger, etc.) but a third party--who is no way "bound" by the judgment--maynonetheless be liable to pay the judgment underveil-piercing or alter ego rules. As shown supra,TRIA creates a statutory reverse veil-piercing rule.
26
Nothing in Plaut prevents Congress from extend-ing the liability imposed on Iran by Respondent’sjudgment to agencies and instrumentalities ofIran. Indeed, the Financial Institutions Reform,Recovery and Enforcement Act and ERISA containsimilar "liability shifting" provisions, which haverepeatedly been found constitutional. See e.g.Branch v. U.S., 69 F.3d 1571, 1582 (Fed.Ci~r. 1995);Meriden Trust and Safe Deposit Co. v. F.D.I.C., 62F.3d 449 (2nd Cir. 1995).
Furthermore, the effect of TRIA on the instantPetitioner resulted from its malevolent conductafter the passage of TRIA in 2002, which led to itsassets being blocked in 2007. Prior to that time,Petitioner was not subject to TRIA at all. See Wein-stein v. Islamic Republic of Iran, 299 F.Supp.2d 63,(E.D.N.Y. 2004) (holding that instant Petitioner isnot subject to TRIA because its assets were notblocked).
Prospective legislation, i.e. that governing futureconduct, does not run afoul of Plaut. See e.g. EcoMfg. LLC. v. Honeywell Intern., Inc., 357 F.3d 649,652 (7th Cir. 2003) ("Changing the rules governingfuture behavior ... is a prospective application.Honeywell does not want damages or any otherremedy on account of conduct that predated Pub. L.105-330. It wants prospective relief. Applying the1998 law to Eco’s conduct in 2003 and beyond isentirely prospective."). See also, generally, Miller v.French, 530 U.S. 327 (2000).
27
Since--in respect to the instant Petitioner specif-ically--TRIA’s application is entirely prospective,this Court need not even address Petitioner’s argu-ments in this regard.
Finally, Petitioner’s claim that "the TRIA containsno hint of any intent to reach prior judgments" (id. at32) is incorrect. As shown above, the legislative histo-ry shows clearly that Congress intended TRIA toreach existing judgments. See 148 Cong. Rec. at$11536-$11527 (referencing the Hegna judgmentcreditors and other families already holding judg-ments against Iran).
CONCLUSION
The petition for a writ of certiorari should bedenied.
Dated: New York, New YorkMay 9, 2011
BERKMAN LAW OFFICE
By:Robert J. Tolchin
Counsel of Record111 Livingston Street, Suite 1928Brooklyn, New York 11201718-855-3627718-855-4696 (fax)[email protected]
