Dames & Moore v. Regan

Brief Fact Summary.

Through executive order, the President suspended legal claims between the government of the United States and Iranian nationals, and the government of Iran and American nationals. He also nullified attachments and judgments in legal proceedings in American courts involving claims of American nationals against Iran and its state enterprises, and ordered the transfer of all Iranian assets held in American banks.

Synopsis of Rule of Law.

Congressional consent to an executive action does not have to be explicit, and can instead be surmised from the character of Congress’ legislation, and Congress’ historical practices. Under this rule, Congress consented to the President’s suspension of legal claims between the governments of Iran and the United States and the nationals of the other country.

Facts.

On November 15, 1979, the Treasury Department issued a regulation nullifying attachments of any properties in which Iran had an interest. On December 19, 1979, Dames & Moore sued the Government of Iran and other entities for $3,436,694.30 plus interest for services performed under contract. The District Court issued orders of attachment.

On January 20, 1981, Iran released American hostages pursuant to an Executive Agreement between Iran and America. The agreement called for the termination of litigation between the government of the United States and Iranian nationals, and the government of Iran and American nationals. It also called for the establishment of a claims tribunal to arbitrate the claims. President Carter also issued executive orders establishing the terms of the agreement. The agreement also required the United States to nullify attachments and judgments obtained in legal proceedings in American courts involving claims of American nationals and institutions against Iran and its state enterprises, and to transfer all Iranian assets held in American banks.

On February 24, President Reagan issued an executive order ratifying President Carter’s executive orders. President Reagan also suspended all claims that may be presented to the claims tribunal, and established that those claims would have no legal effect in any actions pending in American courts.

Issue.

1. Did the President have the authority to nullify attachments and order the transfer of frozen assets?
2. Did the President have the authority to suspend claims pending in American courts between the government of the United States and Iranian nationals, and the government of Iran and American nationals?

Held.

1. Yes, the President had the authority to nullify attachments and order the transfer of frozen assets.
2. Yes, the President had the authority to suspend claims in American courts between the governments of Iran and the United States and the nationals of the other country.a

Discussion.

1. There was explicit Congressional authorization for the nullification of the attachments and the transfer of frozen assets. This authorization created a high burden of persuasion for the petitioner, and he did not meet it.
2. The President argued that he nullified the legal claims under the authority of two statutes: the International Emergency Economic Powers Act (IEEPA) and the Hostage Act. The Court held that neither of these statutes specifically authorized the President’s actions, but that they indicated congressional acceptance of a broad scope of Presidential action in the present circumstances. According to the Court, the IEEPA gives the President broad authority to act in times of national emergency regarding a foreign country’s property, and the Hostage Act indicates Congress’ willingness for broad Presidential discretion in response to hostile acts by foreign countries. The Court also cited the International Claims Settlement Act of 1949 to show that Congress has implicitly approved of claim settlement by executive agreement. According to the Court, if Congress does not explicitly delegate a specific authority, that does not mean that the President does not have that authority. The Court held that the inferences drawn from the IEEPA and the Hostage Act, as well as Congress’s historical approval of executive claims settlement were sufficient to show that Congress consented to the President’s suspension of the claims, and the President therefore did not exceed his authority.