Dames & Moore v. Regan, Secretary of the Treasury

Brief Fact Summary. The President of the United States, Jimmy Carter (President Carter), ordered the dismissal of pending litigation against the government of Iran in United States Courts and forced the claims into arbitration pursuant to an “executive agreement.”

Synopsis of Rule of Law. The President of the United States has the power to settle claims by United States Citizens against foreign governments, even without the consent of the United States Citizens whose claims are being compromised.

Facts. On November 4, 1979, the United States Embassy in Iran and United States diplomats were held hostage so President Carter froze all Iranian assets in the United States. In January 1981, President Carter signed an executive agreement containing a provision terminating all legal proceedings against the Iranian government in the United States Courts and requiring United States citizens to arbitrate all claims against Iran. President Carter did so under the International Emergency Economic Powers Act (IEEPA). The Plaintiff, Dames and Moore (Plaintiff) brought suit claiming that the executive agreement was unconstitutional and beyond the President’s power.

Issue. Does the President of the United States have authority to settle claims of United States citizens brought against foreign nations?

Held. Yes. An Executive Agreement has the same force and effect as a treaty and can alter the rights of the United States Citizens. The President of the United States does not have the plenary power to settle claims against foreign governments through an Executive Agreement. However, where Congress is seen to assent to the president’s action, then the president can settle such claims. Here, although what President Carter did under the IEEPA was not specifically sanctioned, Congress gave the president substantial powers to seize and handle foreign assets, so President Carter’s actions were appropriate.

Discussion. The President of the United States does have the right to terminate legal proceedings and settle claims of United States Citizens against foreign governments. In this country’s history, there has been a longstanding practice of settling such claims by executive agreement without the advice and consent of the Senate. In 1949, in fact, Congress created a procedure to implement future settlement agreements. The Supreme Court of the United States’ decision was narrow in that the President of the United States does not necessarily possess plenary power to settle claims. However, the President of the United States does have the power to settle claims where, as in this case, settlement was necessary to resolve a major foreign policy dispute and Congress has acquiesced in the President’s actions.