Stop Attaching My Iranian Asset

The Supreme Court heard oral argument on Monday in the terrorism victim asset attachment case of Iran v. Elahi. (Transcript here). The case is extraordinarily complicated but it boils down to a question of statutory construction. Elahi was one of a handful of terrorism victims who received payment from the United States government under the 2000 Victims of Trafficking and Violence Protection Act. Terrorist victims who successfully brought claims against Iran could secure payment from the United States under this statutory scheme provided they relinquished their rights to attach any Iranian property in the United States “at issue in claims against the United States before an international tribunal or that is the subject of awards by such tribunal.” Basically, the United States was willing to pay claims owed by Iran to the terrorist victims, and then subrogate those claims against Iran after payment was made. In exchange, the victim agreed not to pursue Iranian assets that the United States would use to set off military contract claims Iran was making against the United States before the Iran-United States Claims Tribunal.

Meanwhile, Iran successfully received a judgment against a third party, Cubic Systems, and sought enforcement of that judgment in the United States. Elahi immediately sought to attach the judgment to satisfy unpaid portions of its terrorist judgment. David Bederman on behalf of Iran argued that the attachment of the judgment was Iranian property “at issue” before the Iran-United States Claims Tribunal. The United States has indicated that in the event it loses a military contracts claim case before that Tribunal that it will seek to satisfy that judgment in part by setting off the $2.3 million Cubic Systems judgment. Therefore, Iran argued, Elahi has relinquished its right to attach that judgment because, to that extent, the Iranian assets are “at issue” before the Iran-United States Claims Tribunal.

Elahi, by contrast, argued that the property that is “at issue” within the meaning of the statute is not a judgment subject to attachment, but rather the actual military property that the United States was supposed to deliver prior to the Iranian Revolution but failed to do so after the Shah’s downfall. As Carter Phillips, counsel for Elahi, put it in oral argument, “Somehow in the scheme of everything that was discussed in the first 25 or so minutes of this argument, the victims of terrorism are completely shunted aside…. [T]he best way to look at the logic [of the statute] is to review how often the United States has described and Iran has described what was the property at issue before the claims tribunal …. ‘the property at issue consists of one air combat maneuvering range system and all necessary subparts.’” Transcript at 33.

From reading the transcript of the oral argument it is impossible to tell which way the Court will come out. The Justices appeared to understand that the United States was seeking a mechanism to pay terrorist victims and subrogate their claims against Iran, but also wanted to do so, in the words of Justice Breyer, “consistent with the proper running, in the interests of the United States, of the Iran-[United States] Claims Tribunal.” Transcript at 37. Justice Breyer correctly understood that the United States may have been trying to achieve two possible goals with the statute: (1) allow victims to seize any Iranian property other than military property that is subject to litigation before the claims tribunal; or (2) pay the terrorist victims with U.S. funds, but then preclude those victims from attaching assets that will affect our liability to Iran. Transcript at 47.

Chief Justice Roberts and Justice Breyer did all the talking in this oral argument and it really is anyone’s guess how this one will turn out. The weird thing is, the case appears to be totally irrelevant to anyone other than the parties to the dispute and a couple of other lienholders. As Carter Phillips put it, this case “is singular–I mean, it’s kind of unusual for this Court, but this is the only case that we can figure that this applies to.” Transcript at 49.