Dames & Moore v. Regan

Brief Fact Summary.

The petitioner sued in the U.S district court against the Iranian government and other entities alleging that its wholly owned subsidiary was in a contract with the Iranian entity and the subsidiary’s entire interest in the contract was assigned to the petitioner. However, the U.S made an agreement with the Iranian government to terminate all legal proceedings in U.S courts involving claims of U.S persons against Iran and its enterprises for the return of hostage.

Synopsis of Rule of Law.

Where the settlement of claims has been determined to be a necessary incident to the resolution of a major foreign policy dispute and Congress accepted the President’s action, the President has the power to make settlements with foreign nations.

Facts.

In 1979, the American Embassy in Iran was seized and American citizens were held hostage. In response, President Carter declared a national emergency and blocked the transfer of all property of the Iranian government and its controlled entities that are subject to the U.S. jurisdiction. Through the Executive Orders and regulations, the President nullified attachments and liens on Iranian assets in the U.S. In return for the U.S. hostage, the President agreed with the Iranian government to terminate all legal proceedings in U.S courts involving claims of U.S persons against Iran and its enterprises.

Issue.

Does the President have the authority to suspend claims pending in American courts?

Held.

Yes, the President have the authority to suspend claims pending in American courts because Congress has implicitly approved the practice of claim settlement by executive agreement. Because the President’s action in nullifying the attachments and ordering the transfer of the assets was taken pursuant to specific congressional authorization, such action is supported by the widest latitude of judicial interpretation.

Discussion.

Congress has demonstrated its acceptance of the authority of the Executive to enter into settlement agreements by enacting the International Claims Settlement Act of 1949. Also, IEEPA, which delegates broad authority to the President to act in times of national emergency with respect to property of foreign country, reveals that Congress accepted the authority of the Executive to settle with foreign nations and that Congress had no intention to interfere with the authority of the President to block assets and impede the settlement of claims of U.S citizens against foreign countries. Under Justice Jackson’s tripartite approach in Youngstown, a systematic and long pursued executive practice to the knowledge of Congress that had never before questioned may be treated as executive power vested in the President.