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Dames & Moore v. Regan

    Brief Fact Summary. As a result of the return of Americans held hostage in Iran, the President of the United States Ronald Reagan (President Reagan) ratified an executive agreement requiring all legal claims between the governments of either the United States or Iran and the nationals of the other to be suspended and resolved through a Claims Tribunal.

    Synopsis of Rule of Law. A systematic, unbroken, executive practice, long pursued to the knowledge of the Congress and never before questioned may be treated as actions taken in pursuance of Congress’ consent.

    Facts. In 1979 American embassy personnel were seized and held hostage in Iran. In response President of the United States Jimmy Carter (President Carter), acting pursuant to the International Emergency Economic Powers Act (“IEEPA”), froze Iranian assets in the United States. In 1981 the hostages were released pursuant to an executive agreement (the “Agreement”) that (1) terminated legal claims between the government of each party and the nationals of the other and (2) brought about the transfer of all Iranian assets held in the United States by American banks. After taking office, President Reagan issued an Executive Order ratifying the Agreement, thereby suspending Dames & Moore’s legal claims with the Iranian government.

    Issue. Does the President have the authority to transfer Iranian assets and to void legal claims against Iran?

    Held. Yes. Congress has implicitly approved the practice of claim settlement by executive agreement.
    The Presidents’ actions with regard to the transfer of assets were taken pursuant to specific congressional authorization under the IEEPA. Although the IEEPA itself did not authorize the presidential suspension of legal claims, Congress implicitly approved the practice of claim settlement by executive agreement. For example, Congress enacted the International Claims Settlement Agreement Act of 1949. Moreover, Congress has frequently amended the same act to provide for problems arising out of settlement agreements. Thus, Congress has demonstrated its acceptance of the President’s claim settlement authority.

    Discussion. The Court emphasized the narrowness of this ruling, limiting its decision to the facts of the case.


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