Michael Bennett v. Bank Melli ( 2016 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
MICHAEL BENNETT; LINDA Nos. 13-15442
BENNETT, as Co-Administrators of 13-16100
the Estate of Maria Ann Bennett,
Plaintiffs-Appellees, D.C. No.
3:11-cv-05807-
v. CRB
THE ISLAMIC REPUBLIC OF IRAN,
Defendant, ORDER AND
AMENDED
v. OPINION
VISA INC.; FRANKLIN RESOURCES,
INC.,
Defendants-third-party-
plaintiffs–Appellees,
v.
GREENBERG AND ACOSTA
JUDGEMENT CREDITORS,
Plaintiff-third-party-
defendant–Appellee,
HEISER JUDGMENT CREDITORS,
Plaintiff-fourth-party-
defendant–Appellee,
v.
2 BENNETT V. BANK MELLI
BANK MELLI,
Plaintiff-third-party-
defendant–Appellant.
Appeals from the United States District Court
for the Northern District of California
Charles R. Breyer, Senior District Judge, Presiding
Argued and Submitted
April 15, 2015—San Francisco, California
Filed February 22, 2016
Amended June 14, 2016
Before: Sidney R. Thomas,* and Susan P. Graber, Circuit
Judges, and Dee V. Benson,** Senior District Judge.
Order;
Opinion by Judge Graber;
Partial Concurrence and Partial Dissent by Judge Benson
*
Chief Judge Thomas was drawn to replace Judge Kozinski. He has
read the briefs, reviewed the record, and listened to the audio-recording of
oral argument held on April 15, 2015.
**
The Honorable Dee V. Benson, Senior District Judge for the U.S.
District Court for the District of Utah, sitting by designation.
BENNETT V. BANK MELLI 3
SUMMARY***
Foreign Sovereign Immunity
The panel filed (1) an order amending its opinion and
partial dissent filed February 22, 2016, and denying petitions
for panel rehearing and rehearing en banc; and (2) an
amended opinion and partial dissent.
In its amended opinion, the panel affirmed the district
court’s denial of the motion of Bank Melli, the national bank
of the Islamic Republic of Iran, to dismiss claims filed against
it in an interpleader complaint seeking a determination of the
rights to blocked Iranian assets held by other parties but owed
to Bank Melli. Judgment creditors of Iran sought access to
the assets in order to collect on unsatisfied judgments for
deaths and injuries suffered in terrorist attacks sponsored by
Iran.
The panel held that the Terrorism Risk Insurance Act
permits judgment creditors to attach assets held by the
instrumentalities of state sponsors of terrorism. Accordingly,
the blocked assets of Bank Melli that were at issue in this
case could be attached. Agreeing with the Seventh Circuit,
the panel held that § 1610(g) of the Foreign Sovereign
Immunities Act also permitted attachment. The panel held
that these statutes did not impermissibly impose retroactive
liability even though the terrorist acts underlying the
judgments occurred before enactment of the statutes.
***
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
4 BENNETT V. BANK MELLI
The panel also held that under California law, the assets
were property of Bank Melli. In addition, because Bank
Melli did not enjoy sovereign immunity, and could be joined
in the action, Federal Rule of Civil Procedure 19 did not
require dismissal of the claims against Bank Melli.
District Judge Benson concurred with the majority that
§ 201(a) of the Terrorism Risk Insurance Act and § 1610 of
the Foreign Sovereign Immunities Act permitted the
judgment creditors to attach and execute against monies owed
to Bank Melli. Judge Benson dissented from the holding that
§ 1610(g) is a freestanding immunity exception. He stated
that in his view, the judgment creditors could proceed
because they had sufficiently alleged that Bank Melli was
engaged in commerce in the United States within the meaning
of the exception to attachment immunity set forth in
§ 1610(b)(3).
BENNETT V. BANK MELLI 5
COUNSEL
Jeffrey A. Lamken, Robert K. Kry (argued) and Lucas M.
Walker, MoloLamken LLP, Washington D.C., for Appellant.
Curtis C. Mechling (argued), Benjamin Weathers-Lowin, and
Patrick N. Petrocelli, Stroock & Stroock & Lavan LLP, New
York, New York; Dale K. Cathell and Richard M. Kremen,
DLA Piper LLP, Baltimore, Maryland; Jane Carol Norman
and Thomas Fortune Fay, Bond & Norman, Washington,
D.C., for Judgment Plaintiffs-Appellees.
Benjamin T. Peele, III (argued), Baker & McKenzie LLP,
Washington, D.C.; Bruce H. Jackson, Baker & McKenzie
LLP, San Francisco, California, for Appellees Visa, Inc. and
Franklin Resources, Inc.
ORDER
The opinion and partial dissent filed February 22, 2016,
and reported at 817 F.3d 1131, are amended by the opinion
and partial dissent filed concurrently with this order.
With these amendments, Judges Thomas and Graber have
voted to deny Appellant’s petition for panel rehearing and
petition for rehearing en banc. Judge Benson has voted to
grant the petition for panel rehearing and has recommended
granting the petition for rehearing en banc.
The full court has been advised of the petition for
rehearing en banc, and no judge of the court has requested a
vote on it.
6 BENNETT V. BANK MELLI
Appellant’s petition for panel rehearing and petition for
rehearing en banc are DENIED. No further petitions for
panel rehearing or for rehearing en banc may be filed.
OPINION
GRABER, Circuit Judge:
Approximately 90 United States citizens (or the
representatives of their estates) are attempting to collect on
unsatisfied money judgments that they hold against the
Islamic Republic of Iran for deaths and injuries suffered in
terrorist attacks sponsored by Iran. The assets that are the
subject of this interpleader action are monies contractually
owed to Bank Melli by Visa Inc. and Franklin Resources Inc.
(“Franklin”). Bank Melli is an instrumentality of Iran. It
asserts that Plaintiffs cannot execute on the assets (1) because
Bank Melli enjoys sovereign immunity under the Foreign
Sovereign Immunities Act of 1976 (“FSIA”), (2) because the
relevant statutory exceptions to sovereign immunity may not
be applied retroactively, (3) because the blocked assets are
not property of Bank Melli, and (4) because Bank Melli is a
required party that cannot be joined, thus requiring dismissal
under Federal Rule of Civil Procedure 19. We disagree and,
accordingly, affirm the judgment of the district court.
BACKGROUND LEGAL PRINCIPLES
The jurisdiction of the United States over persons and
property within its territory “is susceptible of no limitation
not imposed by itself.” Schooner Exch. v. McFaddon,
11 U.S. (7 Cranch) 116, 136 (1812). Accordingly, foreign
BENNETT V. BANK MELLI 7
sovereign immunity is “a matter of grace and comity rather
than a constitutional requirement.” Republic of Austria v.
Altmann, 541 U.S. 677, 689 (2004). Courts consistently
“defer[] to the decisions of the political branches” on whether
to take actions against foreign sovereigns and their
instrumentalities. Id. (quoting Verlinden B.V. v. Cent. Bank
of Nigeria, 461 U.S. 480, 486 (1983)).
The FSIA, 28 U.S.C. §§ 1330, 1602–1611, establishes a
default rule that foreign states are immune from suit in United
States courts. Id. § 1604. Congress enacted the statute to
provide a “comprehensive . . . ‘set of legal standards
governing claims of immunity in every civil action against a
foreign state or its political subdivisions, agencies, or
instrumentalities.’” Altmann, 541 U.S. at 691 (quoting
Verlinden B.V., 461 U.S. at 488). The FSIA provides the
exclusive vehicle for subject matter jurisdiction in all civil
actions against foreign state defendants. Bank Markazi v.
Peterson, 136 S. Ct. 1310, 1317 n.1 (2016); OBB
Personenverkehr AG v. Sachs, 136 S. Ct. 390, 393 (2015);
Flatow v. Islamic Republic of Iran, 308 F.3d 1065, 1069 (9th
Cir. 2002).
The FSIA includes many exceptions to its general rule of
immunity. 28 U.S.C. §§ 1605–1607. Relevant here, in 1996,
Congress added a new exception, stripping a foreign state of
its sovereign immunity when (1) the United States officially
designates the foreign state a state sponsor of terrorism and
(2) the foreign state is sued “for personal injury or death that
was caused by an act of torture, extrajudicial killing, aircraft
sabotage, hostage taking, or the provision of material support
or resources for such an act.” Id. § 1605A.
8 BENNETT V. BANK MELLI
Iran was designated a terrorist party pursuant to section
6(j) of the Export Administration Act of 1979, 50 U.S.C. app.
§ 2405(j) (effective Jan. 19, 1984). Peterson v. Islamic
Republic of Iran, 627 F.3d 1117, 1123 (9th Cir. 2010);
Weinstein v. Islamic Republic of Iran, 609 F.3d 43, 48 (2d
Cir. 2010). That designation means that Iran is not entitled to
sovereign immunity for claims under § 1605A.
Separately, the FSIA addresses the immunity of sovereign
property from execution and attachment. Subject to
enumerated exceptions, a foreign state’s property in the
United States is immune from attachment and execution.
28 U.S.C. § 1609.
In First National City Bank v. Banco Para el Comercio
Exterior de Cuba (“Bancec”), 462 U.S. 611, 620–21 (1983),
the Supreme Court concluded that the FSIA did not control
whether and to what extent instrumentalities could be held
liable for the debts of their sovereigns. Applying
international law and federal common law, the Court held that
“government instrumentalities established as juridical entities
distinct and independent from their sovereign should
normally be treated as such.” Id. at 626–27. That rule,
referred to as the “Bancec presumption,” may be overcome
only in limited circumstances. Id. at 628–34. The federal
courts later described five “Bancec factors” that may be
considered in determining whether the presumption has been
overcome in any given case. E.g., Flatow, 308 F.3d at 1071
n.9.1
1
The five factors are:
(1) the level of economic control by the government;
(2) whether the entity’s profits go to the government;
BENNETT V. BANK MELLI 9
Even after Congress added § 1605(a)(7) (now § 1605A)
to the FSIA in 1996, successful plaintiffs struggled to enforce
judgments against Iran when they were harmed by its terrorist
activities. See, e.g., In re Islamic Republic of Iran Terrorism
Litig., 659 F. Supp. 2d 31, 49–58 (D.D.C. 2009) (describing
“The Never-Ending Struggle to Enforce Judgments Against
Iran”). Once again, Congress responded by enacting new
statutes, this time designed to facilitate the satisfaction of
such judgments by expanding successful plaintiffs’ ability to
attach and execute on the property of agencies and
instrumentalities of terrorist states. Bank Markazi, 136 S. Ct.
at 1318.
First, in 2002, Congress enacted the Terrorism Risk
Insurance Act of 2002 (“TRIA”), Pub. L. No. 107-297, 116
Stat. 2322. Section 201(a) of the TRIA provides:
Notwithstanding any other provision of
law, and except as provided in subsection (b)
[of this note, pertaining to Presidential
waiver], in every case in which a person has
obtained a judgment against a terrorist party
on a claim based upon an act of terrorism, or
for which a terrorist party is not immune
(3) the degree to which government officials manage
the entity or otherwise have a hand in its daily affairs;
(4) whether the government is the real beneficiary of
the entity’s conduct; and (5) whether adherence to
separate identities would entitle the foreign state to
benefits in United States courts while avoiding its
obligations.
Flatow, 308 F.3d at 1071 n.9 (quoting Walter Fuller Aircraft Sales, Inc.
v. Republic of the Philippines, 965 F.2d 1375, 1380 n.7 (5th Cir. 1992)).
10 BENNETT V. BANK MELLI
under section 1605A or 1605(a)(7) . . . , the
blocked assets[2] of that terrorist party
(including the blocked assets of any agency or
instrumentality of that terrorist party) shall be
subject to execution or attachment in aid of
execution in order to satisfy such judgment to
the extent of any compensatory damages for
which such terrorist party has been adjudged
liable.
TRIA § 201(a) was codified as a statutory note to 28 U.S.C.
§ 1610 on “Treatment of Terrorist Assets.”
Second, in 2008, Congress amended the FSIA as part of
the National Defense Authorization Act for Fiscal Year 2008,
Pub. L. No. 110-181, § 1083, 122 Stat. 3, 338. Among other
changes, Congress added a new subsection to the FSIA,
which provides in part that
the property of a foreign state against which a
judgment is entered under section 1605A, and
the property of an agency or instrumentality
of such a state, including property that is a
separate juridical entity or is an interest held
directly or indirectly in a separate juridical
entity, is subject to attachment in aid of
execution, and execution, upon that judgment
as provided in this section, regardless of [the
2
“Blocked assets” refers to “any asset seized by the Executive Branch
pursuant to either the Trading With the Enemy Act or the International
Emergency Economic Powers Act. See TRIA § 201(d)(2).” Bank
Markazi, 135 S. Ct. at 1318 (citations omitted).
BENNETT V. BANK MELLI 11
same five factors described by the federal
courts as the “Bancec factors”].
28 U.S.C. § 1610(g)(1); see also Bank Markazi, 136 S. Ct. at
1318 n.2. For ease of reference, we refer to this section as
“FSIA § 1610(g).”
FACTUAL AND PROCEDURAL HISTORY
Four groups of individuals sued the Islamic Republic of
Iran for damages arising from deaths and injuries suffered in
terrorist attacks sponsored by Iran; in each case, a final
money judgment was entered in favor of the plaintiffs and
against Iran. In Estate of Heiser v. Islamic Republic of Iran,
659 F. Supp. 2d 20 (D.D.C. 2009), and Estate of Heiser v.
Islamic Republic of Iran, 466 F. Supp. 2d 229 (D.D.C. 2006),
the plaintiffs secured judgments for more than $590 million
for the 1996 bombing of the Khobar Towers in Saudi Arabia.
In Acosta v. Islamic Republic of Iran, 574 F. Supp. 2d 15
(D.D.C. 2008), the plaintiffs received a judgment of more
than $350 million because of a 1990 mass shooting. In
Bennett v. Islamic Republic of Iran, 507 F. Supp. 2d 117
(D.D.C. 2007), the plaintiffs obtained a judgment for
damages of nearly $13 million for Iran’s role in the 2002
bombing of a cafeteria at Hebrew University in Jerusalem.
And in Greenbaum v. Islamic Republic of Iran, 451 F. Supp.
2d 90 (D.D.C. 2006), the plaintiffs were awarded almost $20
million for damages suffered as a result of the bombing of a
Jerusalem restaurant in 2001. Collectively, the judgments
total nearly $1 billion. Although all the judgments were
taken by default, it is undisputed that all are valid final
judgments and that Iran owes the amounts of those judgments
to the respective plaintiffs.
12 BENNETT V. BANK MELLI
Bank Melli, Iran’s largest financial institution, is wholly
owned by the government of Iran. It is undisputed that Bank
Melli qualifies as an instrumentality of Iran under the FSIA.
Bank Melli was not named as a defendant in any of the four
cases described above and was not itself alleged to have been
involved in the underlying terrorist events. On October 25,
2007, the United States Department of the Treasury, Office
of Foreign Assets Control exercised its authority under
Executive Order No. 13,382, 70 Fed. Reg. 38,567 (June 28,
2005), to block Bank Melli’s assets in the United States
because of its involvement in Iran’s nuclear and missile
industries. Bank Melli’s assets also are blocked pursuant to
a 2012 Executive Order blocking the property of Iran and of
Iranian financial institutions. Exec. Order No. 13,599,
77 Fed. Reg. 6659 (Feb. 8, 2012).3
Visa and Franklin owe about $17.6 million to Bank Melli
pursuant to a commercial relationship that involves the use of
Visa credit cards in Iran. Visa and Franklin have not turned
the funds over to Bank Melli only because the funds are
blocked. The Bennett judgment creditors filed a complaint
against Visa and Franklin, seeking to attach and execute
against the blocked assets. Visa and Franklin responded by
initiating this interpleader action, naming as defendants Bank
Melli and the three other sets of judgment creditors. Visa and
Franklin sought a determination of the rights to the blocked
assets in their possession and a discharge of Visa and
Franklin with regard to those assets. After Bank Melli
entered its appearance, it moved to dismiss the action.
3
The recent lifting of a portion of the sanctions imposed on Iran does
not render this interpleader action moot, nor does it affect our analysis of
the issues raised here.
BENNETT V. BANK MELLI 13
Bank Melli made four arguments for dismissal, each of
which the district court rejected. The court held: (1) TRIA
§ 201(a) and FSIA § 1610(g) enable the judgment creditors
to attach the monies owed to Bank Melli; (2) TRIA § 201(a)
and FSIA § 1610(g) do not impose retroactive liability;
(3) the blocked assets constitute property of Bank Melli; and
(4) Bank Melli was not a required party under Federal Rule
of Civil Procedure 19. Bennett v. Islamic Republic of Iran,
927 F. Supp. 2d 833 (N.D. Cal. 2013). The district court
denied the motion to dismiss and certified the order for
interlocutory appeal under 28 U.S.C. § 1292(b). Bennett,
927 F. Supp. 2d at 845–46.
STANDARD OF REVIEW
We review de novo: questions of statutory construction,
Miranda v. Anchondo, 684 F.3d 844, 849 (9th Cir. 2012); a
district court’s ruling on a motion to dismiss for failure to
state a claim or for lack of subject matter jurisdiction, Colony
Cove Props., LLC v. City of Carson, 640 F.3d 948, 955 (9th
Cir. 2011); the question whether a statute may be applied
retroactively, Scott v. Boos, 215 F.3d 940, 942 (9th Cir.
2000); and legal determinations underlying a district court’s
decision whether an action can proceed in the absence of a
required party under Rule 19, Kescoli v. Babbitt, 101 F.3d
1304, 1309 (9th Cir. 1996).
14 BENNETT V. BANK MELLI
DISCUSSION
A. TRIA § 201(a) and FSIA § 1610(g) permit attachment
and execution of the monies owed to Bank Melli.
1. TRIA § 201(a)
We hold that TRIA § 201(a) permits judgment creditors
to attach assets held by the instrumentalities of state sponsors
of terrorism. As always, when interpreting a statute, we
begin with its text. Metro One Telecomms., Inc. v. Comm’r,
704 F.3d 1057, 1061 (9th Cir. 2012). Section 201(a) of the
TRIA applies “[n]otwithstanding any other provision of law,”
“in every case in which a person has obtained a judgment
against a terrorist party on a claim based upon an act of
terrorism, or for which a terrorist party is not immune under
section 1605A or 1605(a)(7),” and “in order to satisfy such
judgment to the extent of any compensatory damages for
which such terrorist party has been adjudged liable.” TRIA
§ 201(a) (emphases added). The statute provides that, in
cases such as this one, “the blocked assets of [the] terrorist
party (including the blocked assets of any agency or
instrumentality of that terrorist party) shall be subject to
execution or attachment in aid of execution.” Id. (emphasis
added). This wording demonstrates that Congress knew that
the blocked assets of an instrumentality might otherwise have
been excluded from the phrase “blocked assets of [the]
terrorist party” and that Congress acted to ensure that,
instead, the instrumentality’s blocked assets were included.
Cf. Alejandre v. Telefonica Larga Distancia de P.R., Inc.,
183 F.3d 1277, 1287, 1288 n.25 (11th Cir. 1999) (stating that
a proposed amendment to the FSIA that would have applied
to property that “belongs to an agency or instrumentality of
a foreign state” demonstrated that Congress “knows how to
BENNETT V. BANK MELLI 15
express clearly an intent to make instrumentalities
substantively liable for the debts of their related foreign
governments” (internal quotation marks omitted)).
Accordingly, we agree with the Second Circuit when it held
that it is “clear beyond cavil that Section 201(a) of the TRIA
provides courts with subject matter jurisdiction over post-
judgment execution and attachment proceedings against
property held in the hands of an instrumentality of the
judgment-debtor, even if the instrumentality is not itself
named in the judgment.” Weinstein, 609 F.3d at 50.
Bank Melli disputes this reading of § 201(a), arguing
instead that it applies only to instrumentalities that are alter
egos of the state; that is, Bank Melli argues that the Bancec
presumption against the attachment of assets held by state
instrumentalities applies. Bank Melli reasons that, because
“including” is a term of illustration, the words that follow are
merely an example of the main preceding principle. That
observation is true but is of no assistance to Bank Melli. By
listing “the blocked assets of any . . . instrumentality of that
terrorist party” as a specific example of assets that are
“subject to execution or attachment . . . in order to satisfy” a
money judgment obtained under § 1605A or § 1605(a)(7),
Congress clearly instructed courts to allow the
instrumentality’s blocked assets to be reached. Congress also
instructed courts to allow these assets to be reached
“[n]otwithstanding any other provision of law”—that is,
regardless of the usual fiction embodied in Bancec. Congress
purposely overrode the Bancec presumption in this context
and abrogated attachment immunity with respect to the
blocked assets of instrumentalities of designated state
sponsors of terrorism. Section 201(a) permits the judgment
creditors to attach the assets of an instrumentality of a state
16 BENNETT V. BANK MELLI
sponsor of terrorism. Accordingly, the blocked assets of
Bank Melli that are at issue in this case may be attached.
2. FSIA § 1610(g)
FSIA § 1610(g) allows attachment of and execution
against property held by a foreign terrorist state’s
instrumentality “that is a separate juridical entity,”
“regardless of” five factors. As noted above, those
enumerated factors are the same five factors identified by the
federal courts as the “Bancec factors” that may be used to
decide whether an instrumentality is an alter ego under
Bancec. E.g., Flatow, 308 F.3d at 1071–72, 1071 n.9. It is
clear from the text of the statute that Congress was referring
to, and abrogating, not just the presumption of separate
juridical status, but also Bancec specifically. Therefore,
§ 1610(g) also permits attachment in this case.
But Bank Melli contends that, because § 1610(g) makes
assets subject to attachment and execution only “as provided
in this section,” it is not an independent exception to the
immunity granted by 28 U.S.C. § 1609. Bank Melli reasons
that subsection (g) applies only if some other part of § 1610
provides for attachment and execution. Bank Melli argues
that its assets cannot be attached or executed upon because
the assets at issue in this case were not “used for a
commercial activity in the United States,” a requirement in
§ 1610(a), and Bank Melli has not itself “engaged in
commercial activity in the United States,” a requirement in
§ 1610(b). We are not persuaded.
BENNETT V. BANK MELLI 17
We hold that subsection (g) contains a freestanding
provision for attaching and executing against assets of a
foreign state or its agencies or instrumentalities. Subsection
(g) covers a different subject than § 1610(a) through (e): by
its express terms, it applies only to “certain actions,”
specifically, judgments “entered under section 1605A.”
(Emphasis added.) In turn, § 1605A revokes sovereign
immunity for damages claims against a foreign state for
personal injury or death caused by “torture, extrajudicial
killing, aircraft sabotage, hostage taking, or the provision of
material support” for such an act. By definition, such claims
do not arise from commercial activity; they arise from acts of
torture (and the like). Section 1610(g) requires only that a
judgment under § 1605A have been rendered against the
foreign state; in that event, both the property of the foreign
state and the property of an agency or instrumentality of that
state are subject to attachment and execution. See Peterson,
627 F.3d at 1123 n.2 (stating that § 1610(g) “expanded the
category of foreign sovereign property that can be attached;
judgment creditors can now reach any U.S. property in which
Iran has any interest, whereas before they could reach only
property belonging to Iran”). To the extent that subsection
(g) is inconsistent with subsection (a) or (b), subsection (g)
governs because the particular (judgments entered under
§ 1605A) controls over the general (all judgments entered
after a certain date). Morales v. Trans World Airlines, Inc.,
504 U.S. 374, 384–85 (1992).
When subsection (g) refers to attachment and execution
of the judgment “as provided in this section,” it is referring to
18 BENNETT V. BANK MELLI
procedures contained in § 1610(f).4 Section 1610(f), like
§ 1610(g), relates to judgments obtained under § 1605A and
its predecessor, § 1605(a)(7). Subsection (f)(1)(A) permits
attachment and execution of property that might otherwise be
blocked; subsection (f)(1)(B) prohibits attachment or
execution against property of a foreign state that it
expropriated from a natural person; and subsection (f)(2)(A)
provides that the Secretary of State and Secretary of Treasury
will make every effort to assist a court or creditor in locating
property awarded pursuant to § 1605A. In light of Congress’
mandate to the executive branch to assist in the collection of
judgments in such cases, 28 U.S.C. § 1610(f), we cannot
impute to Congress an empty statutory gesture. See Gates v.
Syrian Arab Republic, 755 F.3d 568, 576 (7th Cir. 2014)
(stating that Congress intended the 2008 amendments to the
FSIA “to make it easier for terrorism victims to obtain
judgments and to attach assets”).5 Given both the text of the
4
When Congress enacted subsection (g), subsection (f) already was in
place. Subsection (g) was added to the statute in 2008. Pub. L. No. 110-
181, div. A, tit. X, § 1083(b)(3), 122 Stat. 3, 341 (2008). Subsection (f)
was enacted in 1998. Pub. L. No. 105-277, § 101(h), 112 Stat. 2681-491
(1998).
5
In its Petition for Rehearing or Rehearing En Banc, Bank Melli argues
that our reading of the statute must be wrong because, in 2000, President
Clinton waived the enforcement of § 1610(f)(1); it reasons that “as
provided in this section” therefore cannot refer to § 1610(f). That
argument fails for at least three reasons. First, only subsection (f)(1) is
not being enforced. Pres. Determ. No. 2001-03, 65 Fed. Reg. 66,483 (Oct.
28, 2000). Several other parts of subsection (f)—described in text—have
always remained fully enforced, so subsection (g) refers, at a minimum,
to the enforced portions. Second, our search is only for congressional
intent when subsection (g) was enacted. A partial waiver does not reflect
congressional intent; if anything, it demonstrates presidential disagreement
with congressional intent. And non-enforcement by the executive branch
does not equal repeal by Congress; regardless of the partial waiver, all of
BENNETT V. BANK MELLI 19
statute and Congress’ intention to make it easier for victims
of terrorism to recover judgments, we hold that § 1610(g) is
a freestanding provision for attaching and executing against
assets to satisfy a money judgment premised on a foreign
state’s act of terrorism.
Bank Melli argues, and our colleague agrees, that our
reading of § 1610(g) renders § 1610(a)(7) and (b)(3)
superfluous.6 But the tension works in the opposite direction.
If § 1610(g) is interpreted to require that, to be subject to
attachment and execution, property must be used by the
foreign state for a “commercial activity,” § 1610(a), or that
the instrumentality must be “engaged in commercial activity
in the United States,” § 1610(b), then we would have to read
into § 1610(g) a limitation that Congress did not insert. See
United States v. Temple, 105 U.S. (9 Otto) 97, 99 (1881)
(holding that the court has “no right to insert words and
phrases, so as to incorporate in the statute a new and distinct
provision”). Section 1610(g)(1) provides that “the property
of a foreign state against which a judgment is entered under
subsection (f) remains the law. Third, the blinders-on, technical focus of
this argument loses sight of Congress’ main aim, which is for private
plaintiffs who suffered torture and obtained tort judgments to get their
money from terrorist states.
6
Our colleague gives two other reasons for disagreeing with us on this
point. The first is that § 1610(b)(3) does not require property “to be
involved in terrorism to abrogate attachment immunity.” Partial dissent
at 36. We do not suggest to the contrary. The other reason is that it would
be “an unjustified and unfortunate result,” id. at 38, to allow attachment
and execution of non-commercial property, such as museum artifacts
belonging to Iran. But it is not our province to decide whether the policy
choices embodied in a statute are wise or unwise; our task is, rather, to
discern congressional intent. Day-Brite Lighting, Inc. v. Missouri,
342 U.S. 421, 423 (1952).
20 BENNETT V. BANK MELLI
section 1605A, and the property of an agency or
instrumentality of such a state, . . . is subject to attachment in
aid of execution, and execution.” (Emphases added.) Thus,
Congress did not limit the type of property subject to
attachment and execution under § 1610(g) to property
connected to commercial activity in the United States. The
only requirement is that property be “the property of” the
foreign state or its instrumentality.
Two Seventh Circuit cases support our conclusion in this
regard. In Wyatt v. Syrian Arab Republic, 800 F.3d 331, 343
(7th Cir. 2015), cert. denied, 136 S. Ct. 1721 (2016), the court
held that the plaintiffs need not comply with § 1608(e) when
proceeding under § 1610(g). The court noted that § 1608(e)
is part of a “more general process” applicable to “suits other
than those for state-sponsored terrorism, such as more
ordinary contract or tort cases arising out of a foreign state’s
commercial activities.” Id. at 333. Section 1610(g), the court
noted, “contains provisions specific to claims for state-
sponsored terrorism.” Id. Those specific provisions allow
plaintiffs with a judgment against a state sponsor of terrorism,
obtained pursuant to § 1605A, to attach and execute the
judgment against property of the foreign state and against
property of any agency and instrumentality of the state. Id.
The other provisions of § 1610, contained in subsections (a)
through (c), establish a general process for judgments against
a foreign state not necessarily resting on state-sponsored
terrorism. Id.
Similarly, the court held in Gates that a plaintiff
proceeding under § 1610(g) need not comply with § 1610(c).
The court wrote in part:
BENNETT V. BANK MELLI 21
Sections 1610(a) and (b) are available to
satisfy a wide variety of judgments, but they
allow attachment of only specific categories
of assets to satisfy those judgments. See, e.g.,
§ 1610(a) (allowing attachment of foreign
state property located in the United States and
used for commercial activity there); § 1610(b)
(allowing attachment of property of foreign
state agency or instrumentality engaged in
United States commercial activity).
By contrast, § 1610(g) is available only to
holders of judgments under the § 1605A
exception for state-sponsored terrorism, but it
allows attachment of a much broader range of
assets to satisfy those judgments.
Gates, 755 F.3d at 576.
Regardless of canons of construction—such as the
principle that a specific statute takes precedence over a
general one—our ultimate search is for congressional intent.
Chickasaw Nation v. United States, 534 U.S. 84, 94 (2001).
And it is quite clear that Congress meant to expand successful
plaintiffs’ options for collecting judgments against state
sponsors of terrorism.
22 BENNETT V. BANK MELLI
We acknowledge that § 1610 as a whole is ambiguous.7
In that circumstance, we may consider legislative history. Id.
at 91–92; United States v. Pub. Utils. Comm’n, 345 U.S. 295,
315 (1953). That history suggests that § 1610(g) was meant
to allow attachment and execution with respect to any
property whatsoever of the foreign state or its instrumentality.
Senator Lautenberg, one of the sponsors of the bill that
became § 1610(g), stated that the provision would “allow[]
attachment of the assets of a state sponsor of terrorism to be
made upon the satisfaction of a ‘simple ownership’ test.”
154 Cong. Rec. S54-01 (Jan. 22, 2008) (statement of Sen.
Lautenberg). The House Conference Report for a
substantially similar earlier version of the bill noted that the
provision “would . . . expand the ability of claimants to seek
recourse against the property of that foreign state,” in part “by
permitting any property in which the foreign state has a
beneficial ownership to be subject to execution of that
7
We also acknowledge that the United States, appearing as amicus
curiae, disagrees with our interpretation. We are not required to defer to
the government’s view because, in deciding this case, we “are not being
asked to supplant a foreign policy decision of the political branches with
the courts’ own unmoored determination.” Zivotofsky ex rel. Zivotofsky
v. Clinton, 132 S. Ct. 1421, 1427 (2012). To the contrary, the executive
branch has approved the building blocks of the statutory criteria for
execution on the property in question, which we are applying in a routine
exercise of statutory interpretation: The President signed the legislation
that became § 1610(g), Pub. L. No. 110-181, President Bush Signs the
National Defense Authorization Act for Fiscal Year 2008, 2008
U.S.C.C.A.N. S3 (Jan. 28, 2008); the President has not sought to waive
enforcement as was done with respect to § 1610(f)(1); the Secretary of
State listed Iran as a terrorist state, 49 Fed. Reg. 2836-02 (Jan. 23, 1984);
and the President imposed monetary sanctions on Iran, Exec. Order No.
13,599, 77 Fed. Reg. 6659 (Feb. 5, 2012). And, finally, in “[e]nacting the
FSIA in 1976, Congress transferred from the Executive to the courts the
principal responsibility for determining a foreign state’s amenability to
suit.” Bank Markazi, 136 S. Ct. at 1329.
BENNETT V. BANK MELLI 23
judgment.” H.R. Rep. No. 11-447, at 1001 (2007) (Conf.
Rep.). The bill, it continued, “is written to subject any
property interest in which the foreign state enjoys a beneficial
ownership to attachment and execution.” Id. We have
already noted that the basic purpose of adding § 1610(g) was
to enable plaintiffs who have established a foreign state’s
liability under § 1605A and its predecessor, for terrorist acts,
to collect on their judgments. As Senator Lautenberg put it,
the bill was meant “to facilitate victims’ collection of their
damages from state sponsors of terrorism.” 154 Cong. Rec.
S54-01 (Jan. 22, 2008) (statement of Sen. Lautenberg). Our
interpretation of § 1610(g) more fully furthers that
fundamental aim.
Bank Melli also makes three other arguments regarding
§ 1610(g). We can dispose of those arguments easily.
(1) The district court’s failure to discuss expressly
whether to grant Bank Melli discretionary relief under the
“innocent party” provision of § 1610(g)(3) does not mean that
the court failed to consider whether that provision applied.
Bank Melli made its § 1610(g)(3) argument to the district
court, and we presume that the court understood its authority
but declined to exercise discretion in Bank Melli’s favor. Cf.
United States v. Davis, 264 F.3d 813, 816–17 (9th Cir. 2001)
(so holding in the context of a district court’s silence
regarding a requested downward departure under the United
States Sentencing Guidelines).
(2) There is no conflict between § 1610(g) and the 1955
Treaty of Amity between the United States and Iran, which
requires that the United States respect the juridical status of
Iranian companies, protect their property in accordance with
international law, and not discriminate against them. Treaty
24 BENNETT V. BANK MELLI
of Amity, Economic Relations and Consular Rights Between
the United States of America and Iran, Aug. 15, 1955, 8
U.S.T. 899, 902–03. As the Second Circuit held, that treaty
provision is intended simply to ensure that foreign
corporations are on equal footing with domestic corporations.
Weinstein, 609 F.3d at 53. Even if the two provisions were
inconsistent, when a treaty and a later-enacted federal statute
conflict, the subsequent statute controls to the extent of the
conflict. Breard v. Greene, 523 U.S. 371, 376 (1998) (per
curiam).
(3) Allowing the Heiser plaintiffs to obtain relief under
§ 1610(g) by converting their § 1605(a)(7) judgment to a
§ 1605A judgment does not violate separation of powers
principles. Bank Melli’s reliance on Plaut v. Spendthrift
Farm, Inc., 514 U.S. 211, 219 (1995), is misplaced. There,
the court held that Congress could not require federal courts
to reopen final judgments. But here, the judgment was not
reopened. Instead, the Heiser plaintiffs have a new collection
tool; they can enforce their final judgment against Iran by
attaching and executing on the property of Iran’s
instrumentality. In essence, the statute gives more effect to
the final judgment, rather than attempting to revise or rescind
that judgment.
B. The statutes do not impermissibly impose retroactive
liability.
Bank Melli next argues that the judgment creditors cannot
use TRIA § 201(a) or FSIA § 1610(g) because the terrorist
acts that underlie the judgments occurred before the
enactment of those statutes. The general default rule is that
a law that increases substantive liability for past conduct does
BENNETT V. BANK MELLI 25
not operate retroactively. Landgraf v. USI Film Prods.,
511 U.S. 244, 280 (1994).
But the statutes do not impose new liability on Iran.
Section 1605(a)(7) was in effect at the time of the terrorist
acts in question. Rather, the statutes simply permit additional
methods of collection. See id. at 275 (noting that the default
rule does not apply to rules of procedure because of
“diminished reliance interests”).
Even if TRIA § 201(a) and FSIA § 1610(g) are viewed as
imposing new liability retroactively, the default rule is
different for statutes that govern foreign sovereign immunity.
In Altmann, 541 U.S. at 692, the Supreme Court concluded
that the Landgraf presumption does not apply to such statutes.
To the contrary, when it comes to sovereign immunity for
both foreign states and their agencies and instrumentalities,
there is a presumption in favor of retroactivity “absent
contraindications” from Congress. Id. at 696.
Here, there are no such contraindications. In fact, the
opposite is true. The purpose of the statutes at issue was to
enable not just future litigants, but also current judgment
creditors to collect on the final judgments that they already
held—which, as a matter of logic, arose from past acts.
Congress chose to make TRIA § 201(a) applicable in “every
case in which a person has obtained a judgment” under either
the former statute, § 1605(a)(7), or the current statute,
§ 1605A. TRIA § 201(a) (emphases added). Similarly,
Congress chose to make § 1610(g) applicable to all
judgments entered under § 1605A. Accordingly, these
statutes apply even if they are seen as imposing liability
retroactively, because Congress so intended.
26 BENNETT V. BANK MELLI
C. The blocked assets are property of Bank Melli.
Bank Melli also contends that TRIA § 201(a) and FSIA
§ 1610(g) do not permit attachment of the assets here because
Visa and Franklin own the blocked assets; Bank Melli does
not. Under TRIA § 201(a), to be subject to execution or
attachment, the blocked assets must be “assets of” the
instrumentality. Similarly, § 1610(g) applies to “the property
of” the instrumentality.
Like most courts, we look to state law to determine the
ownership of assets in this context. Peterson, 627 F.3d at
1130–31; see also Calderon-Cardona v. Bank of N.Y. Mellon,
770 F.3d 993, 1000–01 (2d Cir. 2014) (looking to New York
law to determine what type of interest rendered property
attachable under § 1610(g)), cert. denied, 136 S. Ct. 893
(2016); Walker Int’l Holdings, Ltd. v. Republic of Congo,
415 F.3d 413, 415 (5th Cir. 2005) (applying Texas law to
determine attorney fees award in FSIA action); Hegna v.
Islamic Republic of Iran, 380 F.3d 1000, 1007 (7th Cir. 2004)
(applying Illinois law to decide whether property interest was
open to challenge in action under FSIA); Karaha Bodas Co.
v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara
(“Pertamina”), 313 F.3d 70, 83 (2d Cir. 2002) (applying
New York law to determine what actions are subject to
enforcement and available to judgment creditors). Here,
California law applies. As we held in Peterson, California
law authorizes a court to order a judgment debtor to assign to
the judgment creditor a right to payments that are due or will
become due, even if the right is conditioned on future
developments. 627 F.3d at 1130–31; Cal. Civ. Proc. Code
§ 482.080(a)(2) (providing that a court may order a defendant
subject to a writ of attachment to turn over either “evidence
of title to property of or a debt owed to the defendant”); id.
BENNETT V. BANK MELLI 27
§ 680.310 (“’Property’ includes real and personal property
and any interest therein.”); id. § 708.210 (permitting a
judgment creditor to bring an action against a third party to
whom the judgment debtor owes money “to have the interest
or debt applied to the satisfaction of the money judgment”);
id. § 708.510(a) (authorizing a court to “order the judgment
debtor to assign to the judgment creditor . . . all or part of a
right to payment due”). That is precisely the situation in the
present case: Bank Melli has a contractual right to obtain
payments from Visa and Franklin. Under California law,
those assets are property of Bank Melli and may be assigned
to judgment creditors.
But even if federal law should govern this question, see
Heiser v. Islamic Republic of Iran, 735 F.3d 934, 940 (D.C.
Cir. 2013) (creating federal rule of decision to interpret
ownership requirements in FSIA, based in part on U.C.C.
Article 4A and common law principles), Bank Melli would
not succeed. Federal law and California law are aligned.
First, we note that Congress has used expansive wording
to suggest that immediate and outright ownership of assets is
not required. In the TRIA, Congress provided that “[n]othing
in this subsection shall bar . . . enforcement of any judgment
to which this subsection applies . . . against assets otherwise
available under this section or under any other provision of
law.” TRIA § 201(d)(4) (emphasis added). In FSIA
§ 1610(g), Congress specified that “the property of a foreign
state against which a judgment is entered under section
1605A, and the property of an agency or instrumentality of
such a state, including property that is a separate juridical
entity or is an interest held directly or indirectly in a separate
juridical entity, is subject to attachment in aid of execution,
and execution, upon that judgment as provided in this
28 BENNETT V. BANK MELLI
section.” (Emphases added.) Thus, interests held by the
instrumentality of a terrorist state, as is the case here, are
subject to attachment under federal law.
Second, in Heiser, only foreign nationals, and not a
foreign country, had an interest in the blocked funds held by
intermediary banks. “Iranian entities were not the originators
of the funds transfers. Nor were they the ultimate
beneficiaries.” Heiser, 735 F.3d at 936 (footnote omitted).
By contrast, here, Bank Melli is the ultimate beneficiary; Visa
and Franklin owe money to Bank Melli for services rendered
pursuant to an agreement between them. Accordingly, Bank
Melli has an interest in the blocked assets.
In summary, California law applies. Under California
law, money owed to Bank Melli may be assigned to judgment
creditors. Even if federal law applies, under the Heiser
court’s rationale, attachment and execution are allowed here
because Bank Melli is the intended contractual beneficiary of
the contested funds.
D. Because Bank Melli does not enjoy sovereign
immunity, Rule 19 presents no barrier.
Finally, Bank Melli relies on Federal Rule of Civil
Procedure 19 to support its request for dismissal. That rule
provides that a person must be joined as a party if the person
“claims an interest relating to the subject of the action and is
so situated that disposing of the action in the person’s absence
may . . . impair or impede the person’s ability to protect the
interest.” Fed. R. Civ. P. 19(a). And, if the “person who is
required to be joined if feasible cannot be joined, the court
must determine whether, in equity and good conscience, the
BENNETT V. BANK MELLI 29
action should proceed among the existing parties or should be
dismissed.” Fed. R. Civ. P. 19(b).
Bank Melli argues that this case must be dismissed
because it is a required party that cannot be joined and,
further, that the action cannot proceed without it “in equity
and good conscience.” But, because TRIA § 201(a) and
FSIA § 1610(g) confer jurisdiction by creating exceptions to
sovereign immunity, Bank Melli can be joined in this action.
Thus it does not matter whether Bank Melli is otherwise a
required party under Rule 19(a); dismissal is not required.
See 28 U.S.C. § 1330 (providing jurisdiction over a foreign
state or its instrumentality when it is not entitled to
immunity); Weinstein, 609 F.3d at 49–50 (holding that TRIA
§ 201(a) removes jurisdictional immunity, as well as
immunity from attachment and execution).8
According to Bank Melli, Republic of the Philippines v.
Pimentel, 553 U.S. 851 (2008), requires dismissal. We
disagree. A class of victims of human rights abuses in the
Republic of the Philippines won a $2 billion default judgment
against the Estate of Ferdinand Marcos, the former president
of that country. Id. at 857–58. The class attempted to
enforce the judgment by attaching assets owed to Merrill
8
Bank Melli’s citations to Ministry of Defense & Support for Armed
Forces of Islamic Republic of Iran v. Cubic Defense Systems, Inc.,
385 F.3d 1206 (9th Cir. 2004), vacated and remanded on other grounds
sub nom. Ministry of Def. & Support for Armed Forces of Islamic
Republic of Iran v. Elahi, 546 U.S. 450 (2006) (per curiam); and Peterson
v. Islamic Republic of Iran, 627 F.3d 1117 (9th Cir. 2010), are inapposite.
Neither of those cases addressed the question whether TRIA § 201(a) or
FSIA § 1610(g) confers jurisdiction when property owned by a terrorist
state’s instrumentality is subject to execution in satisfaction of judgments
entered against that terrorist state.
30 BENNETT V. BANK MELLI
Lynch by a bank incorporated by Marcos personally. Id. at
858. The Philippines claimed ownership of the bank, and
therefore the disputed assets, because the bank had been
incorporated through a misuse of public office. Id. The
Philippines also claimed immunity from the suit. Id. Merrill
Lynch initiated an interpleader action naming, among other
parties, the Republic of the Philippines and one of its
agencies. Id. at 845–55. The Supreme Court held that the
case should be dismissed because “it was improper [for the
district court] to issue a definitive holding regarding a
nonfrivolous, substantive claim made by an absent, required
entity that was entitled by its sovereign status to immunity
from suit.” Id. at 868.
This case plainly is distinguishable. In Pimentel, the
Republic was a required party that could not be joined
because of sovereign immunity. Here, Bank Melli does not
enjoy sovereign immunity, so it can be joined as a party,
whether or not it is a required party. Unlike the Republic in
Pimentel, therefore, Bank Melli is able to adjudicate its claim
to the contested assets.
CONCLUSION
We hold: (1) TRIA § 201(a) and FSIA § 1610(g)
authorize attachment and execution of the monies owed to
Bank Melli. (2) Those statutes do not impose liability
retroactively but, even if they are viewed as doing so,
Altmann establishes a presumption in favor of retroactivity
for statutes governing sovereign immunity, which is not
rebutted here. (3) California law governs the ownership
question; the blocked assets are property of Bank Melli under
principles of California law and, thus, are subject to
attachment and execution under TRIA § 201(a) and FSIA
BENNETT V. BANK MELLI 31
§ 1610(g). The same result would obtain even if federal law
governed. (4) Because Bank Melli can be joined in this
action, the dismissal provision of Federal Rule of Civil
Procedure 19 does not apply.
AFFIRMED.
BENSON, Senior District Judge, concurring in part and
dissenting in part:
I concur with the majority that § 201(a) of the Terrorism
Risk Insurance Act (“TRIA”) and § 1610 of the Foreign
Sovereign Immunities Act (“FSIA”) permit the judgment
creditors in this case to attach and execute against monies
owed to Bank Melli. However, I respectfully believe the
majority erred in finding § 1610(g) to be a freestanding
immunity exception under FSIA. In my view, judgment
creditors relying on § 1610(g) are able to proceed, regardless
of Bank Melli’s sovereign immunity, because the judgment
creditors have sufficiently alleged Bank Melli is engaged in
commerce in the United States within the meaning of
§ 1610(b)(3) of FSIA.
FSIA contains “extensive procedural protections for
foreign sovereigns in United States courts.” Wyatt v. Syrian
Arab Republic, 800 F.3d 331, 333 (7th Cir. 2015).
Specifically, § 1609 of FSIA provides a general presumption
that property of a foreign state and the property of an
instrumentality or agency of a foreign state is immune from
execution and attachment in United States courts. See
28 U.S.C. § 1609; 28 U.S.C. § 1603(a). In turn, § 1610
provides a series of exceptions to this general rule.
32 BENNETT V. BANK MELLI
Prior to 2008, § 1610 provided different rules for
attachment immunity depending on whether the party was
seeking immunity as the foreign state or as an agency or
instrumentality of a foreign state. Regarding foreign states,
§ 1610(a) denied immunity where: (1) a judgment creditor
obtained a judgment against the foreign state; (2) the property
of the foreign state is located in the United States; (3) the
property is used for “a commercial activity” in the United
States; and (4) one of § 1610(a)’s seven avenues for
abrogating immunity applied. See 28 U.S.C. § 1610(a).
Similarly, with respect to agencies and instrumentalities,
§ 1610(b) denied immunity where: (1) a judgment creditor
obtained a judgment against an agency or instrumentality of
foreign state; (2) the agency or instrumentality is engaged in
commercial activity in the United States; (3) the property of
the agency or instrumentality is located in the United States;
and (4) one of § 1610(b)’s three avenues for abrogating
immunity applied. See 28 U.S.C. § 1610(b).
Prior to 2008, the judgment creditors in this case would
have been required to obtain a judgment against Bank Melli
to utilize the immunity waiver provisions under § 1610(b) to
attach Bank Melli’s property.
In 2008, Congress amended FSIA, adding § 1610(g) and
§ 1605A. National Defense Authorization Act for Fiscal
Year 2008, Pub. L. No. 110-181, § 1083, 122 Stat. 3, 338
(2008). The purpose of the amendments was to relax the
protections of § 1610 in cases of state sponsored terrorism to
“make it easier for terrorism victims to obtain judgments and
to attach assets.” Gates v. Syrian Arab Republic, 755 F.3d
568, 576 (7th Cir. 2014); In re Islamic Republic of Iran
Terrorism Litig., 659 F. Supp. 2d 31, 62 (D.D.C. 2009)
(noting, “these latest additions to . . . FSIA demonstrate that
BENNETT V. BANK MELLI 33
Congress remains focused on eliminating those barriers that
have made it nearly impossible for plaintiffs in these actions
to execute civil judgments against Iran or other state sponsors
of terrorism”).
Under § 1610(g), if a judgment creditor obtains a
judgment under § 1605A, the property of the foreign state and
“the property of an agency or instrumentality of such a state,
including property that is a separate juridical entity . . . is
subject to attachment . . . and execution, upon that judgment
as provided in this section, regardless” of five factors.
28 U.S.C. § 1610(g)(1) (emphasis added). The five factors
enumerated in § 1610(g)(A) through (E) reflect the Bancec
presumption, which requires this Court to treat government
entities established as separate juridical entities distinct from
their sovereigns. See First Nat’l City Bank v. Banco Para el
Comercio Exterior de Cuba, 462 U.S. 611, 620–21 (1983);
Flatow v. Islamic Republic of Iran, 308 F.3d 1065, 1071 n.9
(9th Cir. 2009) (outlining the Bancec factors (citing Walter
Fuller Aircraft Sales, Inc. v. Republic of the Philippines,
965 F.2d 1375, 1380 n.7 (5th Cir.1992))).
Section 1610(g) leads to two straightforward conclusions
under FSIA. First, if a party obtains a § 1605A judgment
against a state sponsor of terror, the Bancec presumption is
eliminated, which permits a court to attach and execute
against the property of the agency or instrumentality to satisfy
the judgments against the foreign state. See Estate of Heiser
v. Islamic Republic of Iran, 885 F. Supp. 2d 429, 442 (D.D.C.
2012) (“Section § 1610(g) subparagraphs (A)–(E) explicitly
prohibit consideration of each of the five Bancec
factors.”); aff'd sub nom. Heiser v. Islamic Republic of
Iran, 735 F.3d 934 (D.C. Cir. 2013). Second, the language
“as provided in this section” requires a judgment creditor to
34 BENNETT V. BANK MELLI
find an existing mechanism of attachment under § 1610.
Section 1610(g) does not create a new avenue for attachment
under FSIA; rather, § 1610(g) broadens the force of § 1610’s
existing avenues for attachment by eliminating the legal
fiction that Bank Melli is a separate juridical entity from Iran.
In this case, judgment creditors relying on § 1610(g) may
proceed to attach Bank Melli’s property because Bank Melli’s
property is not immune from attachment by virtue of
§ 1610(b)(3). Section 1610(b)(3) eliminates attachment
immunity if an agency or instrumentality is “engaged in
commercial activity in the United States” and “the judgment
relates to a claim for which the agency or instrumentality is
not immune by virtue of section 1605A of this chapter . . .
regardless of whether the property is or was involved in the
act upon which the claim is based.” 28 U.S.C. § 1610(b)(3).
The judgment creditors can attach Bank Melli’s property
because: (1) the judgment creditors have obtained a judgment
against Iran pursuant to § 1605A; (2) § 1610(g) eliminates the
Bancec presumption, allowing this Court to attach and
execute against Bank Melli’s assets to satisfy the judgment
against Iran; and (3) the judgment creditors have sufficiently
plead that Bank Melli is engaged in commercial activity in
the United States.
Section 1603(c) of FSIA defines commercial activity as:
“either a regular course of commercial conduct or a particular
commercial transaction or act. The commercial character of
an activity shall be determined by reference to the nature of
the course of conduct or particular transaction or act, rather
than by reference to its purpose.” 28 U.S.C. § 1603(c)
(emphasis added). Bank Melli entered into a contract with an
American company to provide an American company a
commercial service. [ER, p. 82–83, ¶ 2; ER, p. 64, ¶ 16
BENNETT V. BANK MELLI 35
(“Visa holds the Blocked Assets, funds due and owing by
contract to Bank Melli pursuant to a commercial relationship
with that bank . . .”).] At this stage in the litigation, the Court
can conclude that the judgment creditors relying on § 1610(g)
have sufficiently alleged Bank Melli is engaged in
commercial activity in the United States.
The majority disagrees with the aforementioned
interpretation and concludes that § 1610(g) creates a
freestanding immunity exception under FSIA. The majority
believes a § 1605A judgment creditor may attach Bank
Melli’s property regardless of any commercial component
under § 1610(a) or § 1610(b). In my view, respectfully, the
majority misses the mark in three important respects.
First, the majority erroneously finds that § 1610(g) is a
freestanding exception to immunity by concluding:
Subsection (g) covers a different subject than
§ 1610(a) through (e): by its express terms, it
applies only to ‘certain actions,’ specifically,
judgments ‘entered under section 1605A.’
(Emphasis added.) In turn, § 1605A revokes
sovereign immunity for damages claims
against a foreign state for personal injury or
death caused by ‘torture, extrajudicial killing,
aircraft sabotage, hostage taking, or the
provision of material support’ for such an act.
By definition, such claims do not arise from
commercial activity; they arise from acts of
torture (and the like).
[Maj. Op., p. 17.] In doing so, the majority misinterprets the
operation of § 1610(a) and (b) waivers in the context of
36 BENNETT V. BANK MELLI
§ 1605A judgments. Under § 1610(b)(3), a judgment creditor
can attach property where the instrumentality is engaged in
commercial activity in the United States. Furthermore,
§ 1610(b)(3) provides that attachment immunity is eliminated
“regardless of whether the property is or was involved with
the act upon which the claim is based.” 28 U.S.C.
§ 1610(b)(3) (emphasis added). Therefore, a § 1605A
judgment allows a judgment creditor to get immunity waived
for any property where the instrumentality is engaged in
commerce in the United States, regardless whether the
property was involved in the actions that gave rise to the
§ 1605A waiver of immunity against the foreign state.
Therefore, Bank Melli’s property does not need to be
involved in terrorism to abrogate attachment immunity under
§ 1610(b)(3).
Second, the majority concludes that the “as provided in
this section” language found in § 1610(g) refers to the
procedural aspects of § 1610, namely § 1610(f). Fair enough.
But, the majority’s conclusion does not mean the language
“as provided in this section” refers only to § 1610(f). Indeed,
the majority’s piecemeal reading of § 1610(g) renders other
portions of § 1610 inoperable. “It is ‘a cardinal principle of
statutory construction’ that ‘a statute ought, upon the whole,
to be so construed that, if it can be prevented, no clause,
sentence, or word shall be superfluous, void, or
insignificant.’” TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001)
(quoting Duncan v. Walker, 533 U.S. 167, 174 (2001)). This
Court should adopt the interpretation of § 1610 that “‘gives
effect to every clause and word.’” Marx v. Gen. Revenue
Corp., ___U.S.___, 133 S. Ct. 1166, 1177 (2013) (citing
Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91 (2011)).
BENNETT V. BANK MELLI 37
The majority ignores the avenues for exemption under
§ 1610(a)(7) and § 1610(b)(3). Section 1610(a)(7) and
§ 1610(b)(3) provide immunity, in addition to requiring some
interplay with commerce, where “the judgment relates to a
claim for which the foreign state is not immune under section
1605A . . . .” If a § 1605A judgment creditor can waive
attachment immunity under § 1610(g) without proving the
property is used in commerce or the instrumentality is
engaged in commerce in the United States, § 1610(a)(7) and
§ 1610(b)(3) are rendered superfluous and obsolete.
Conversely, recognizing § 1610(g)’s limited purpose was to
eliminate the Bancec presumption ensures this Court gives
effect to every clause and word in § 1610 while honoring the
purpose of the 2008 FSIA amendments.
Finally, the majority’s holding ignores the practical
limitation the commerce requirement places on § 1605A
judgments. Reading § 1610(g) as a freestanding immunity
exception does not just relax FSIA in the context of
terrorism—it eliminates any immunity protection under FSIA
for state sponsors of terror and their instrumentalities. For
example, in Rubin v. Islamic Republic of Iran, American
citizens sued and obtained default judgments against Iran for
injuries and losses that arose out of a suicide bombing carried
out by Hamas in Israel. 33 F. Supp. 3d 1003, 1006 (N.D. Ill.
2014). The Rubin plaintiffs sought to “attach and execute on
numerous ancient Persian artifacts” in possession of two
museums in the United States to satisfy their default
judgments against Iran. Id. Like the judgment creditors in
this case, the Rubin plaintiffs argued that § 1610(g) is a
freestanding immunity exception and, therefore, the plaintiffs
may attach Iran’s artifacts to satisfy their judgments. Id. at
1013.
38 BENNETT V. BANK MELLI
The court disagreed, finding: “The plain language
indicates that Section 1610(g) is not a separate basis of
attachment, but rather qualifies the previous subsections.” Id.
The court concluded, “the purpose of Section 1610(g) is to
counteract the Supreme Court’s decision in Bancec, and to
allow execution against the assets of separate juridical entities
regardless of the protections Bancec may have offered.” Id.
Currently, the Rubin case is pending appeal in the Seventh
Circuit. Rubin v. Islamic Republic of Iran, 33 F. Supp. 3d
1003 (N.D. Ill. 2014), appeal docketed, No. 14-1935 (7th Cir.
Apr. 25, 2014).
Surely this Court’s holding will be argued as precedent to
allow the Rubin plaintiffs to seize Persian artifacts to be
auctioned off to satisfy the Rubin plaintiffs’ default
judgments. This would be an unjustified and unfortunate
result. When Congress amended FSIA, the intention was to
eliminate the Bancec presumption and relax the rigidity of
§ 1610 to make it easier for victims of terrorism to satisfy
judgments against state sponsors of terror. Congress did not,
however, intend to open the floodgates and allow terrorism
plaintiffs to attach any and all Iranian property in the United
States. Rather, Congress intended the commerce limitation
to remain in place.1 If a foreign state is designated as a state
sponsor of terror, the state and the instrumentalities and
agencies of the state lose the privilege of doing business in
1
TRIA § 201 similarly contains a limitation on attachment and
execution. TRIA § 201 requires attachable assets to be defined as
“blocked assets.” Section 201(d)(2)(A) defines a “blocked asset” as any
asset “seized or frozen by the United States under section 5(b) of the
Trading With the Enemy Act (50 U.S.C. App. 5(b)) or under sections 202
and 203 of the International Emergency Economic Powers Act (50 U.S.C.
1701; 1702).”
BENNETT V. BANK MELLI 39
the United States without running the risk of property being
seized to satisfy judgments.
In sum, I would require judgment creditors relying on
§ 1610(g) to satisfy one of § 1610’s existing avenues for
abrogating attachment immunity. In this case, the judgment
creditors have done that. The judgment creditors have
sufficiently alleged Bank Melli is engaged in commerce in
the United States within the meaning of § 1610(b)(3).