ExportLawBlog » Catch 22

Apr

3

Catch 22

Posted by Clif Burns at 8:54 pm on April 3, 2008

Which Came First? This post is only peripherally related to export law, but it does involve Iran, blocked assets, terrorism, Persian antiquities and a fascinating conundrum of statutory construction. So bear with me, you won’t be sorry.

The conundrum is posed by the decision of a federal district court on March 31 in Rubin v. The Islamic Republic of Iran, 2008 WL 857522* (D. Mass. 2008). The plaintiffs obtained a default judgment against Iran after being injured in a Hamas terrorist attack and are trying to levy on Persian antiquities alleged to be the property of Iran but in the custody of Harvard University and Boston’s Museum of Fine Arts. The district court held that the plaintiffs could levy against those assets under section 201 of the Terrorism Risk Insurance Act.

The antiquities at issue were initially blocked in 1979 by Executive Order 12170. After the release of the U.S. hostage, Executive Order 12281 unblocked “all uncontested and non-contingent liabilities and property interests of the Government of Iran.” The Terrorist Risk Insurance Act of 2002 provides that “blocked assets” are subject to execution in satisfaction of a judgment against the blocked party. And that’s where the fun begins.

Harvard and the MFA argued, quite reasonably, that the plaintiffs could only execute against the antiquities if it was uncontested that Iran owned them, in which case they were unblocked by Executive Order 12281 and therefore not subject to execution under the Terrorist Risk Insurance Act. The court rejected this argument, also quite reasonably, by saying that the plaintiff’s motion to execute on the antiquities made the ownership contested, meaning that the items were blocked and subject to the provisions of the Terrorist Risk Insurance Act.

In other words, Catch 22 is that the antiquities are only subject to levy if Iran’s ownership is uncontested, but Iran’s ownership isn’t uncontested because the antiquities are subject to levy. All liability for headaches caused by trying to solve this paradox is hereby expressly disclaimed.

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