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The legal case of Dames & Moore v. Regan, Secretary of Treasury, et al was decided on July 2, 1981. The case dealt with Executive Orders and regulations related to Iranian assets in the United States, which the President nullified and directed to be transferred to Iran in compliance with an Executive Agreement. The court granted certiorari before judgment due to conflicting lower court decisions and the need to act quickly to avoid breaching the Executive Agreement with Iran. The court emphasized the need to decide the case on the narrowest possible ground due to the urgency of the issues involved. The court will not provide general guidelines for other situations not involved in this case.
The Court has rarely interfered with the day-to-day decisions made by Congress or the Executive, but tensions between the President's exercise of executive authority and the Constitution's system of checks and balances have been reflected in previous opinions by the Court. In response to the 1979 seizure of the American Embassy in Tehran, President Carter declared a national emergency and blocked the removal or transfer of property and interests in property of the Government of Iran, its instrumentalities and controlled entities, and the Central Bank of Iran subject to the jurisdiction of the United States. The Secretary of the Treasury was authorized to promulgate regulations carrying out the blocking order, which included nullifying any judicial process with respect to property in which Iran had an interest, unless licensed or authorized.
Dames & Moore sued Iran for breach of contract in 1979, and in 1981, an agreement was reached to settle all claims through binding arbitration. The US must transfer Iranian assets to a security account in the Bank of England to satisfy awards rendered against Iran by the Claims Tribunal. The petitioner sought to prevent enforcement of Executive Orders and Treasury Department regulations implementing the Agreement with Iran, but the District Court denied the motion and dismissed the complaint. The petitioner appealed, but the Court of Appeals upheld the President's authority to issue the Executive Orders and regulations challenged by petitioner. The case involves questions similar to those addressed in Youngstown Sheet & Tube Co. v. Sawyer, which recognized that the President's power to act must come from either an act of Congress or the Constitution itself. The government argues that the nullification of attachments and transfer of frozen assets are authorized by the plain language of the IEEPA statute, which allows the President to nullify any exercising of rights, powers, or privileges with respect to any property in which any foreign country has an interest by any person subject to the jurisdiction of the United States. The plaintiff argues that the IEEPA statute does not give the President the power to override judicial remedies or extinguish interests in foreign assets held by US citizens. However, the Court of Appeals found no such limitation in the language of the IEEPA.
The court upheld the President's authority to block foreign state assets during national emergencies and settle claims against foreign states without the consent of the injured national. The establishment of the Claims Tribunal enhances the opportunity for claimants to recover their claims, and Congress did not disapprove of the President's action in establishing it. The government must pay just compensation when it uses claims as bargaining chips to further foreign policy goals. The question of whether the suspension of claims constitutes a taking of property in violation of the Fifth Amendment is not ripe for review, but if a taking occurs, the petitioner may have a remedy at law in the Court of Claims under the Tucker Act.
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