Amicus Curiae Brief — Clearstream Banking S.A., Petitioner v. Deborah D. Peterson, et al.

Nos. 17-1529 and 17-1534

In the Supreme Court of the United States

CLEARSTREAM BANKING S.A., PETITIONER

v.

DEBORAH D. PETERSON, ET AL.

BANK MARKAZI, AKA THE CENTRAL BANK OF IRAN,

PETITIONER

v.

DEBORAH PETERSON, ET AL.

ON PETITIONS FOR WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

NOEL J. FRANCISCO

Solicitor General

Counsel of Record

JOSEPH H. HUNT

Assistant Attorney

General

EDWIN S. KNEEDLER

Deputy Solicitor General

MATTHEW GUARNIERI

Assistant to the Solicitor

General

SHARON SWINGLE

Attorney

MARIK A. STRING

Deputy Assistant Secretary

Department of State

Washington, D.C. 20520

Department of Justice

Washington, D.C. 20530-0001

SupremeCtBriefs@usdoj.gov

(202) 514-2217

QUESTION PRESENTED

Before the enactment of the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. 1330, 1602 et seq.,

the property of a foreign state was absolutely immune

from attachment and execution in U.S. courts. The FSIA

modified that regime by providing that a foreign state’s

“property in the United States” is presumptively immune from attachment and execution, 28 U.S.C. 1609,

subject to specific exceptions. The question presented

is as follows:

Whether a foreign state’s property outside the United

States is subject to attachment and execution in United

States courts.

(I)

TABLE OF CONTENTS

Page

Interest of the United States....................................................... 1

Statement ...................................................................................... 2

Discussion .................................................................................... 10

A. The court of appeals’ interlocutory decision is

flawed................................................................................ 11

B. Further review is not warranted at this time............... 15

Conclusion ................................................................................... 21

TABLE OF AUTHORITIES

Cases:

Allied Maritime, Inc. v. Descatrade SA, 620 F.3d 70

(2d Cir. 2010) ....................................................................... 18

Autotech Techs. LP v. Integral Research & Dev.

Corp., 499 F.3d 737 (7th Cir. 2007), cert. denied,

552 U.S. 1231 (2008)............................................................ 14

Bank Markazi v. Peterson, 136 S. Ct. 1310 (2016) ............ 19

Connecticut Bank of Commerce v. Republic of

Congo, 309 F.3d 240 (5th Cir. 2002) .................................. 13

Gucci Am., Inc. v. Bank of China, 768 F.3d 122

(2d Cir. 2010) ................................................................... 17

Hartford Fire Ins. Co. v. California, 509 U.S. 764

(1993) ................................................................................ 17

Koehler v. Bank of Bermuda Ltd., 911 N.E.2d 825

(N.Y. 2009) ................................................................ 8, 9, 16

Motorola Credit Corp. v. Standard Chartered Bank,

21 N.E.3d 223 (N.Y. 2014).................................................. 18

New York & Cuba Mail S.S. Co. v. Republic of

Korea, 132 F. Supp. 684 (S.D.N.Y. 1955) ..................... 2, 11

Permanent Mission of India to the United Nations

v. City of New York, 551 U.S. 193 (2007) ...................... 2, 11

(III)

IV

Cases—Continued:

Page

Persinger v. Islamic Republic of Iran, 729 F.3d 835

(D.C. Cir.), cert. denied, 469 U.S. 881 (1984) ................... 20

Peterson v. Islamic Republic of Iran,

627 F.3d 1117 (9th Cir. 2010) ............................................. 12

Republic of Argentina v. NML Capital, Ltd.,

573 U.S. 134 (2014).............................................. 8, 13, 14, 15

Republic of Mexico v. Hoffman, 324 U.S. 30 (1945) ............ 2

Republic of Phillipines v. Pimental, 553 U.S. 851

(2008) .................................................................................... 12

Rubin v. Islamic Republic of Iran:

637 F.3d 783 (7th Cir. 2011), cert. denied,

567 U.S. 944 (2012) .................................................... 12

830 F.3d 470 (7th Cir. 2016), aff ’d, 138 S. Ct. 816

(2018) ........................................................................... 12

138 S. Ct. 816 (2018) .......................................................... 5

Samantar v. Yousuf, 560 U.S. 305 (2010) ....................... 2, 14

Société Nationale Industrielle Aérospatiale v.

United States Dist. Court for the S. Dist. of Iowa,

482 U.S. 522 (1987).............................................................. 17

The Schooner Exch. v. McFaddon,

11 U.S. (7 Cranch) 116 (1812) .............................................. 2

Verlinden B. V. v. Central Bank of Nigeria,

461 U.S. 480 (1983)................................................................ 2

Weilamann v. Chase Manhattan Bank,

192 N.Y.S.2d 469 (Sup. Ct. 1959) ....................................... 11

Statutes, regulation, and rule:

Foreign Sovereign Immunities Act of 1976,

28 U.S.C. 1330, 1602 et seq. .................................................. 2

28 U.S.C. 1604 .................................................................... 3

28 U.S.C. 1605(a)(2) ......................................................... 12

28 U.S.C. 1605(a)(7) (2006) ............................................... 3

V

Statues, regulation, and rule—Continued:

Page

28 U.S.C. 1605A ................................................................. 3

28 U.S.C. 1605A(a)(1) ........................................................ 3

28 U.S.C. 1605A(a)(2)(A)(i)(I) .......................................... 3

28 U.S.C. 1609 .................................................... 3, 8, 11, 15

28 U.S.C. 1609-1611......................................................... 15

28 U.S.C. 1610 .......................................................... 3, 5, 11

28 U.S.C. 1610(a) ............................................................. 11

28 U.S.C. 1610(a)(1) ......................................................... 13

28 U.S.C. 1610(a)(2) ......................................................... 12

28 U.S.C. 1610(a)(7) ..................................................... 4, 13

28 U.S.C. 1610(b) ............................................................. 11

28 U.S.C. 1610(b)(3) .......................................................... 4

28 U.S.C. 1610(g)(1) .......................................................... 5

28 U.S.C. 1611 .................................................................. 11

28 U.S.C. 1611(a) ............................................................... 4

28 U.S.C. 1611(b)(1) .......................................................... 4

National Defense Authorization Act for Fiscal Year

2008, Pub. L. No. 110-181, Div. A, Tit. X,

§ 1083, 122 Stat. 338.............................................................. 3

Terrorism Risk Insurance Act of 2002,

Pub. L. No. 107-297, 116 Stat. 2322 .................................... 4

§ 201(a), 116 Stat. 2337...................................................... 4

§ 201(d)(2), 116 Stat. 2339 ................................................. 4

§ 201(d)(4), 116 Stat. 2340 ................................................. 4

22 U.S.C. 8772 .................................................................... 19

N.Y. C.P.L.R. (McKinney 2014):

§ 5225 .................................................................................. 8

§ 5225(a) ............................................................................. 7

§ 5225(b) ............................................................................. 7

Exec. Order No. 13,599, 3 C.F.R. 215 (2012 comp.) ............. 4

Fed. R. Civ. P. 69(a)(1) ........................................................ 6

VI

Miscellaneous:

Page

165 Cong. Rec. S4604 (daily ed. June 27, 2019) .................. 19

Damon Paul Nelson and Matthew Young Pollard

Intelligence Authorization Act for Fiscal Years

2018, 2019, and 2020, H.R. 3494, 116th Cong.,

1st Sess. § 721(b) (July 17, 2019) ....................................... 20

Joseph Dellapenna, Suing Foreign Governments

and Their Corporations (2d ed. 2003) .............................. 11

H.R. Rep. No. 1487, 94th Cong., 2d Sess. (1976) ............ 2, 11

National Defense Authorization Act for Fiscal Year

2020, S. 1790, 116th Cong., 1st Sess.

(June 27, 2019)..................................................................... 19

§ 6206(b) ........................................................................... 19

§ 6206 (b)(1) ...................................................................... 20

§ 6206 (b)(2)(C) ................................................................ 20

Charlie Savage, Iran Wins Court Ruling in 9/11

Lawsuit, N.Y. Times, Mar. 29, 2019 ................................. 18

In the Supreme Court of the United States

No. 17-1529

CLEARSTREAM BANKING S.A., PETITIONER

v.

DEBORAH D. PETERSON, ET AL.

No. 17-1534

BANK MARKAZI, AKA THE CENTRAL BANK OF IRAN,

PETITIONER

v.

DEBORAH PETERSON, ET AL.

ON PETITIONS FOR WRITS OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

INTEREST OF THE UNITED STATES

This brief is submitted in response to the Court’s order inviting the Solicitor General to express the views of

the United States in the above-captioned cases, which

arise from the same judgment and present the same

question concerning attachment of and execution against

property of a foreign sovereign located outside the

United States. In the view of the United States, the petitions for writs of certiorari should be denied.

(1)

2

STATEMENT

1. a. For much of the Nation’s history, principles

adopted by the Executive Branch determined the immunity of foreign states in civil suits in courts of the

United States. See Republic of Mexico v. Hoffman,

324 U.S. 30, 34-36 (1945). Until 1952, the Executive

Branch adhered to the “absolute” theory of sovereign

immunity, under which foreign states could not be sued

without their consent, and foreign sovereign property

was entirely shielded from judicial seizure. See, e.g.,

Permanent Mission of India to the United Nations v.

City of New York, 551 U.S. 193, 199 (2007); Verlinden

B. V. v. Central Bank of Nigeria, 461 U.S. 480, 486

(1983); see also The Schooner Exch. v. McFaddon,

11 U.S. (7 Cranch) 116, 144 (1812).

In 1952, the Executive Branch adopted the “restrictive” theory of foreign sovereign immunity, under which

foreign states would be granted immunity from suit for

their sovereign or public acts but not their private or

commercial acts. Permanent Mission of India, 551 U.S.

at 199 (citation omitted); see Verlinden, 461 U.S. at 487.

Even after 1952, however, the “property of foreign

states [remained] absolutely immune from execution.”

H.R. Rep. No. 1487, 94th Cong., 2d Sess. 27 (1976)

(House Report); see, e.g., New York & Cuba Mail S.S.

Co. v. Republic of Korea, 132 F. Supp. 684, 685-686

(S.D.N.Y. 1955). Judgment creditors of a foreign state

could look to the foreign state to satisfy the judgment

but could not invoke the jurisdiction of U.S. courts to

attach or execute against the state’s property.

b. In 1976, Congress “codif [ied] the restrictive theory

of sovereign immunity,” Samantar v. Yousuf, 560 U.S.

305, 313 (2010), in the Foreign Sovereign Immunities

Act of 1976 (FSIA), 28 U.S.C. 1330, 1602 et seq. The

3

FSIA governs foreign states’ immunity from suit (“jurisdictional immunity”), as well as the immunity of foreign states’ property in the United States from execution or attachment (“execution immunity”).

For jurisdictional immunity, the FSIA provides that

“a foreign state shall be immune from the jurisdiction

of the courts of the United States and of the States except as provided in sections 1605 to 1607 of this chapter.” 28 U.S.C. 1604. Section 1605A, which is known as

the “terrorism exception,” abrogates foreign sovereign

immunity for suits seeking money damages for “personal injury or death that was caused by an act of torture, extrajudicial killing, aircraft sabotage, [or] hostage taking,” if the foreign state was designated “as a

state sponsor of terrorism” by the Secretary of State

“at the time the act * * * occurred” or “as a result of

such act.” 28 U.S.C. 1605A(a)(1) and (2)(A)(i)(I). 1

For execution immunity, the FSIA provides that

“the property in the United States of a foreign state” is

“immune from attachment arrest and execution except

as provided in sections 1610 and 1611.” 28 U.S.C. 1609.

Section 1610 contains two terrorism-related exceptions

to execution immunity. The first exception provides

that “[t]he property in the United States of a foreign

state * * * used for a commercial activity in the United

States, shall not be immune from” attachment or execution upon a judgment of a U.S. court, if “the judgment

relates to a claim for which the foreign state is not immune” under the terrorism exception—i.e., Section

1605A or its predecessor—“regardless of whether the

property is or was involved with the act upon which the

A prior version of this exception was codified at 28 U.S.C.

1605(a)(7) (2006); see National Defense Authorization Act for Fiscal

Year 2008, Pub. L. No. 110-181, Div. A, Tit. X, § 1083, 122 Stat. 338.

1

4

claim is based.” 28 U.S.C. 1610(a)(7). The second exception permits attachment of, and execution against,

the “property in the United States of an agency or instrumentality of a foreign state engaged in commercial

activity,” and does not require that the property itself

have been used for commercial activity. 28 U.S.C.

1610(b)(3).

Finally, the FSIA identifies certain types of foreign

sovereign property that are immune from attachment

and execution “[n]otwithstanding the provisions of [S]ection 1610,” including the property “of a foreign central

bank or monetary authority held for its own account.”

28 U.S.C. 1611(a) and (b)(1).

c. Two additional provisions regarding execution of

terrorism-related judgments are relevant to this case.

The Terrorism Risk Insurance Act of 2002 (TRIA),

Pub. L. No. 107-297, 116 Stat. 2322, provides that, “in

every case in which a person has obtained a judgment

* * * for which a terrorist party is not immune” under

the FSIA’s terrorism exception, “the blocked assets of

that terrorist party (including the blocked assets of any

agency or instrumentality of that terrorist party) shall

be subject to execution or attachment.” § 201(a), 116 Stat.

2337; see § 201(d)(4), 116 Stat. 2340 (defining “terrorist

party” to include state sponsors of terrorism). “Blocked

assets” are assets that the United States has frozen or

seized under certain sanctions regimes. See § 201(d)(2),

116 Stat. 2339. As relevant here, the President has

blocked “[a]ll property and interests in property of the

Government of Iran, including [Bank Markazi], that are

in the United States, [or] that * * * come within the

United States.” Exec. Order No. 13,599, 3 C.F.R. 215

(2012 comp.).

5

The FSIA also permits a judgment creditor with a

terrorism-related judgment against a foreign state to

execute against the property of an agency or instrumentality of the foreign state, if that property otherwise

comes within one of the exceptions to immunity in Section 1610. 28 U.S.C. 1610(g)(1); see Rubin v. Islamic

Republic of Iran, 138 S. Ct. 816, 821-825 (2018).

2. In prior lawsuits, respondents—victims or representatives of victims—obtained default judgments totaling billions of dollars against Iran and Iran’s Ministry of Intelligence and Security for Iran’s complicity in

the 1983 terrorist bombing of the U.S. Marine barracks

in Beirut, Lebanon. Pet. App. 4a-5a. 2 Those judgments

rested on the FSIA’s terrorism exception. Id. at 5a.

The validity of the prior judgments is not at issue here.

Respondents registered their judgments in the

Southern District of New York and, in December 2013,

initiated this proceeding against Bank Markazi, the central bank of Iran. Pet. App. 5a-6a, 78a-79a. The action

concerns $1.68 billion in bond proceeds allegedly owned

by Bank Markazi. Id. at 80a. Respondents also named

as defendants three financial institutions alleged to have

played a role in processing the bond proceeds: JPMorgan

Chase Bank, N.A., a bank headquartered in New York;

Clearstream Banking, S.A., a Luxembourg bank; and

Banca UBAE, S.p.A., an Italian bank. Id. at 78a-79a.

Respondents allege that Bank Markazi was the beneficial owner of U.S.-dollar denominated bonds, which required bondholders to receive their interest and redemption payments in New York. Pet. App. 7a. Bank Markazi

engaged Clearstream to receive those payments on its

behalf. Ibid. Clearstream received the payments in an

All petition appendix citations are to the petition appendix in

No. 17-1529.

2

6

account at JPMorgan Chase in New York. Ibid. Clearstream then made corresponding credits to an account it

maintained in Bank Markazi’s name in Luxembourg.

Ibid. In January 2008, “apparently because of increasing

scrutiny of Iranian financial transactions, [Bank] Markazi

stopped processing its bond proceeds through Clearstream directly and instead began doing so through an

intermediary bank: UBAE.” Ibid.; see id. at 85a. Thus,

Clearstream began crediting the bond proceeds to an account in UBAE’s name in Luxembourg, for the ultimate

benefit of Bank Markazi. Id. at 7a-8a.

“In June 2008, Clearstream notified UBAE that it had

blocked [UBAE’s account] and [had] transferred the balance of that account to a ‘sundry blocked account.’ ” Pet.

App. 8a (citation omitted); see C.A. J.A. 1365-1366 (letter

from Clearstream to UBAE stating that “[i]f Clearstream processes transfers of cash and U.S. Persons are

involved in such transactions, and if the transfer is for

the beneficial ownership of an Iranian party, then Clearstream runs the risk of ” violating U.S. sanctions). As of

May 2013, Clearstream had credited the sundry blocked

account with approximately $1.68 billion in bond proceeds. Pet. App. 86a.

Respondents seek to attach the $1.68 billion in assets

reflected in the sundry blocked account and to execute on

an unpaid portion of their prior judgments against those

assets, which are located in Luxembourg. Pet. App. 12a13a. In particular, respondents seek an order under New

York law requiring JPMorgan Chase, Clearstream,

UBAE, and Bank Markazi to turn over the bond proceeds.

Ibid.; cf. Fed. R. Civ. P. 69(a)(1) (“The procedure on execution [of a judgment] * * * must accord with the procedure of the state where the court is located, but a federal

statute governs to the extent it applies.”). New York law

7

permits a judgment creditor to initiate a proceeding

against a judgment debtor (or a third party in possession

of the judgment debtor’s assets), in which the court may

order the judgment debtor (or third party) to turn over

money or property in an amount sufficient to satisfy the

unpaid judgment. N.Y. C.P.L.R. § 5225(a) and (b)

(McKinney 2014).

3. In 2015, the district court dismissed the action. Pet.

App. 78a-105a. The court determined that it “lack[ed]

subject-matter jurisdiction” over the turnover claims

against Bank Markazi on sovereign immunity grounds.

Id. at 103a. In the court’s view, the bond proceeds at

issue “are in Luxembourg,” and “[t]he FSIA does not

allow for attachment of property outside of the United

States.” Ibid. The court also determined that the turnover claims against Clearstream, UBAE, and JPMorgan

Chase failed as “a matter of law” because there were

“no asset[s] in [New York] to ‘turn over.’ ” Id. at 94a;

see id. at 102a, 104a.

4. The court of appeals affirmed in part, vacated in

part, and remanded. Pet. App. 1a-63a.

a. The court of appeals agreed with the district court

that the assets that respondents seek to have turned

over are located in Luxembourg. Pet. App. 37a. Respondents had argued that the bond proceeds were received into Clearstream’s account at JPMorgan Chase

in New York and remained there. Ibid. The court explained, however, that the New York account was a

“general pool of cash” that Clearstream used to serve

multiple customers. Id. at 38a. When it received the

bond proceeds at issue, Clearstream “caused a corresponding credit to be reflected in the [Bank] Markazi,

and later UBAE, account in Luxembourg as a right to

8

payment equivalent to the bond proceeds that Clearstream received and processed in New York.” Id. at

41a. The court further explained that this “right to payment” was located in Luxembourg because Clearstream,

the party obligated to make the payment, was located in

Luxembourg. Ibid.

b. Nonetheless, the court of appeals determined that

foreign sovereign immunity did not preclude the district

court from ordering Clearstream to bring the disputed

property from Luxembourg to New York. Pet. App. 44a62a. That determination rested on the court of appeals’

understanding of this Court’s decision in Republic of Argentina v. NML Capital, Ltd., 573 U.S. 134 (2014), and

New York law—in particular, Koehler v. Bank of Bermuda Ltd., 911 N.E.2d 825 (N.Y. 2009).

In NML Capital, this Court held that the FSIA does

not “limit[] the scope of discovery available to a judgment creditor in a federal postjudgment execution proceeding against a foreign sovereign.” 573 U.S. at 136.

The Court reasoned that the FSIA is “comprehensive”

and that “any sort of immunity defense made by a foreign sovereign in an American court must stand on the

Act’s text,” id. at 141-142, which does not contain a provision for immunity from discovery in aid of execution.

The court of appeals understood NML Capital to dictate

that foreign sovereign property outside the United States

does not enjoy execution immunity in U.S. courts, because the FSIA’s provision for execution immunity applies only to “property in the United States,” 28 U.S.C.

1609, and the FSIA “supersede[d]” any immunity that

sovereign property abroad may have enjoyed before enactment of the FSIA, Pet. App. 48a; see id. at 52a-53a.

The court of appeals also determined that the New

York turnover statute, N.Y. C.P.L.R. § 5225 (McKinney

9

2014), permits a court to order a party over whom it has

personal jurisdiction “to turn over out-of-state property.” Pet. App. 52a (quoting Koehler, 911 N.E.2d at

831). In Koehler, the Court of Appeals of New York held

that the turnover statute “ha[s] extraterritorial reach,”

911 N.E.2d at 829, in the sense that the money or property to be turned over need not be located in New York.

Instead, “the key to the reach of the turnover order is

personal jurisdiction over a particular defendant.” Id. at

830. On the facts before it, the Koehler court found that

a New York court could order a bank over which it had

personal jurisdiction to deliver stock certificates to New

York from Bermuda, to be turned over to a judgment

creditor. See id. at 827-828, 831.

The Second Circuit noted that Koehler did not involve foreign sovereign property, but the court of appeals did not view that distinction as significant in light

of its earlier conclusion that the assets at issue here are

not immune from attachment or execution. Pet. App.

52a. The court therefore concluded that “NML Capital

and Koehler, when combined, * * * authorize a court

sitting in New York with personal jurisdiction over a nonsovereign third party to recall to New York extraterritorial assets owned by a foreign sovereign.” Id. at 54a.

c. The court of appeals indicated that any sovereign

property ordered to be brought to the United States

would be presumptively immune from execution under

the FSIA once the property is in the United States, unless an exception applies. Pet. App. 59a. Thus, the court

envisioned a “two-step process” of transferring the assets to the United States from Luxembourg and then

“proceeding with a traditional FSIA analysis.” Id. at

60a. The court also stated that the district court should

consider, before ordering the assets to be brought to

10

New York, whether other “barrier[s]” exist to such a

turnover order “for reasons of, inter alia, state law, federal law, [or] international comity.” Id. at 58a (footnote

omitted). The court of appeals also directed the district

court to determine whether Clearstream is subject to

personal jurisdiction in New York. Ibid.

DISCUSSION

The United States strongly condemns the Iranian regime’s complicity in the terrorist attack that gave rise

to the judgments that respondents hold. That attack

took the lives of 241 U.S. service members and wounded

many others, making it one of the deadliest single days

for United States Armed Forces in modern American

history. The United States continues to support the efforts of victims of the attack to obtain lawful redress for

the harms they and their families suffered.

In this case, the court of appeals concluded that a

foreign sovereign’s property outside the United States

is subject to attachment and execution in U.S. courts.

That conclusion likely would warrant this Court’s review in an appropriate case at an appropriate time. In

the decision below, however, the court of appeals identified several jurisdictional and other issues for the district court to address on remand, including whether

principles of international comity would independently

foreclose the turnover order sought by respondents.

See Pet. App. 58a. The resolution of those other issues

may bear on the practical significance of the decision

below and the need for this Court’s review in this particular case. In addition, both Houses of Congress have

passed separate bills that, if either becomes law, could

substantially affect the proper disposition of this case.

Accordingly, the Court should deny the petitions for

writs of certiorari at this time.

11

A. The Court Of Appeals’ Interlocutory Decision Is Flawed

1. Before the FSIA, foreign sovereign property had

absolute immunity from attachment or execution in U.S.

courts. Although the Executive Branch had adopted the

“restrictive” theory of sovereign immunity in 1952—

thus permitting a foreign sovereign to be sued for some

commercial activities in the United States, see, e.g., Permanent Mission of India to the United Nations v. City

of New York, 551 U.S. 193, 199 (2007)—the foreign sovereign’s property still enjoyed “absolute immunity from

execution,” Joseph Dellapenna, Suing Foreign Governments and Their Corporations 743 (2d ed. 2003); see

pp. 2-3, supra; New York & Cuba Mail S.S. Co. v. Republic of Korea, 132 F. Supp. 684, 685-687 (S.D.N.Y.

1955) (following the State Department’s “direct and unequivocal position” that the shift to the restrictive theory

of sovereign immunity did not affect execution immunity);

Weilamann v. Chase Manhattan Bank, 192 N.Y.S.2d

469, 472 (Sup. Ct. 1959) (similar).

When it enacted the FSIA, Congress only “partially

lower[ed] the barrier of immunity from execution,”

House Report 27, by providing for carefully limited exceptions to execution immunity for property in the

United States. Section 1609 prescribes a general rule

of immunity from execution for “the property in the

United States of a foreign state.” 28 U.S.C. 1609. Section 1610, in turn, provides exceptions to execution immunity for “[t]he property in the United States of a foreign state * * * used for a commercial activity in the

United States,” and “any property in the United States

of an agency or instrumentality of a foreign state engaged in commercial activity in the United States,” subject to the additional limitations imposed by Section

1611. 28 U.S.C. 1610(a) and (b).

12

Those exceptions to execution immunity “are narrower than the exceptions to jurisdictional immunity.”

Rubin v. Islamic Republic of Iran, 637 F.3d 783, 796

(7th Cir. 2011), cert. denied, 567 U.S. 944 (2012). For

example, the FSIA abrogates jurisdictional immunity

for suits “based upon a commercial activity carried on

in the United States by the foreign state,” 28 U.S.C.

1605(a)(2), but the corresponding execution-immunity

exception applies only to property that “is or was used

for the commercial activity” in the United States,

28 U.S.C. 1610(a)(2). The statute thus contemplates

that some judgment creditors will “have to rely on foreign states to voluntarily comply with U.S. court judgments,” Peterson v. Islamic Republic of Iran, 627 F.3d

1117, 1128 (9th Cir. 2010), as was true before the FSIA.

The narrower scope of the immunity exceptions reflects

a judgment that authorizing execution against a sovereign’s property is a greater intrusion on state sovereignty than merely exercising jurisdiction. See Republic

of Philippines v. Pimental, 553 U.S. 851, 866 (2008)

(discussing the “specific affront that could result” to a

state from seizing its property “by the decree of a foreign court”).

Accordingly, every court of appeals to have addressed

the issue before the decision below had treated the presence of the disputed foreign sovereign property in the

United States as a prerequisite to attachment or execution in U.S. courts. See Rubin v. Islamic Republic of

Iran, 830 F.3d 470, 475 (7th Cir. 2016) (identifying as

one of the “basic criteria” for attachment that the property “must be within the territorial jurisdiction of the

district court”), aff ’d, 138 S. Ct. 816 (2018); Peterson, 627

F.3d at 1131-1132 (concluding that foreign-state property located in France is “not ‘property in the United

13

States’ ” and is therefore “immune from execution”)

(quoting 28 U.S.C. 1610(a)(7)); Connecticut Bank of

Commerce v. Republic of Congo, 309 F.3d 240, 247

(5th Cir. 2002) (stating that U.S. courts “may execute

only against property that meets” specified criteria, including that the property be “ ‘in the United States’ ”)

(quoting 28 U.S.C. 1610(a)(1)).

2. The court of appeals concluded that this Court’s

decision in Republic of Argentina v. NML Capital, Ltd.,

573 U.S. 134 (2014), “vitiated” any prior consensus that

foreign sovereign property outside the United States is

not subject to attachment and execution in U.S. courts.

Pet. App. 53a. NML Capital, however, presented the

“single, narrow question” whether the FSIA limits the

scope of post-judgment discovery in aid of execution

“when the judgment debtor is a foreign state.” 573 U.S.

at 140. Argentina had argued that discovery of its assets outside the United States was inappropriate because those assets could not be subject to execution in

U.S. courts. Pet. Br. at 28-29, NML Capital, supra (No.

12-842). This Court concluded that the FSIA does not

speak to the scope of discovery and therefore that the

usual rules governing discovery apply, rather than a

special rule for foreign sovereigns. See NML Capital,

573 U.S. at 142.

In finding that the FSIA does not confer immunity

from “discovery of information concerning extraterritorial assets,” NML Capital, 573 U.S. at 145 n.4, the

Court did not hold that such assets are subject to execution in U.S. courts. The Court instead appeared to

view discovery as a means of uncovering the location of

foreign sovereign property abroad in order to determine whether it might be “executable under the relevant jurisdiction’s law.” Id. at 144. That understanding

14

accords with the usual practice for seeking to enforce

the judgment of a U.S. court in a foreign jurisdiction.

See, e.g., Autotech Techs. LP v. Integral Research &

Dev. Corp., 499 F.3d 737, 751 (7th Cir. 2007) (“If assets

exist in another country, the person seeking to reach

them must try to obtain recognition and enforcement of

the U.S. judgment in the courts of that country.”), cert.

denied, 552 U.S. 1231 (2008).

The court of appeals focused on two other passages

in NML Capital, neither of which compels the result the

court reached. See Pet. App. 48a, 51a-53a. In the first

passage, this Court observed that “any sort of immunity

defense made by a foreign sovereign in an American

court must stand on the Act’s text. Or it must fall.”

NML Capital, 573 U.S. at 141-142. But that statement

was made to explain why the FSIA itself should not be

read to confer implicit immunity from discovery, given

its express provisions for jurisdictional and execution immunity. See id. at 142-143. The Court has previously

recognized, in a case involving official immunity, that

“[e]ven if a suit is not governed by the [FSIA], it may

still be barred by foreign sovereign immunity under the

common law.” Samantar v. Yousuf, 560 U.S. 305, 324

(2010).

In the second passage, the Court observed that,

“even if ” a foreign state’s extraterritorial assets were

immune from execution under pre-FSIA law, “then it

would be obvious that the terms of [Section] 1609 execution immunity are narrower, since the text of that

provision immunizes only foreign-state property ‘in the

United States.’ ” NML Capital, 573 U.S. at 144. But

that statement was made in response to the argument

that Ҥ 1609 execution immunity implies coextensive

discovery-in-aid-of-execution immunity.” Ibid. The

15

Court reasoned that, because the FSIA itself, in Section

1609, does not establish immunity for foreign sovereign

assets abroad, then neither does the FSIA itself confer

immunity from discovery about those assets. The Court

did not say that the FSIA abrogated whatever immunity from actual execution those assets would have enjoyed prior to enactment of the FSIA, nor that the

FSIA forecloses whatever immunity from actual execution those assets now would enjoy independent of the

FSIA. In context, moreover, a critical assumption of

the Court’s reasoning was that U.S. courts “generally

lack authority * * * to execute against property in

other countries.” Ibid. No party appears to have raised

the possibility that a U.S. court might leverage its exercise of personal jurisdiction over a litigant in the United

States to require the litigant to bring foreign sovereign

property to the United States for execution. The Court

accordingly had no occasion to address that possibility.

3. Other than NML Capital, the court of appeals did

not identify any basis for its conclusion that U.S. law

provides greater immunity when a foreign state’s property is located in this country than when the property is

located abroad, including in the foreign state’s own territory. It is unlikely that Congress, in providing for

only limited inroads on execution immunity for certain

foreign sovereign property in the United States, see

28 U.S.C. 1609-1611, intended to subject foreign sovereign property abroad to the kind of turnover order contemplated here.

B. Further Review Is Not Warranted At This Time

Although the court of appeals’ decision is flawed, this

Court’s review is not warranted at this time for several

reasons.

16

1. a. The court of appeals identified several significant unresolved issues for the district court to address

on remand, including threshold jurisdictional questions.

See Pet. App. 58a, 63a.

First, the court of appeals directed the district court

to determine whether Clearstream is subject to the district court’s personal jurisdiction. Pet. App. 58a. Personal jurisdiction is the linchpin under New York law

for ordering a debtor or third-party garnishee to turn

over out-of-state property. See id. at 52a (discussing

Koehler v. Bank of Bermuda Ltd., 911 N.E.2d 825, 829831 (N.Y. 2009)). If Clearstream is not subject to personal jurisdiction in New York, then the district court

cannot order it to turn over any property. Such a finding

could obviate any practical need to address execution immunity on the facts of this particular case.

Second, the court of appeals acknowledged that the

FSIA’s execution-immunity provisions may apply after

foreign sovereign property is brought into the United

States. Pet. App. 59a. The court indicated that a “twostep process” should occur on remand, first “recalling

the asset at issue” and then “proceeding with a traditional FSIA analysis.” Id. at 60a. Elsewhere, however,

the court appeared to leave open the possibility that the

district court can and should address the second step—

whether the assets would be entitled to execution immunity in U.S. courts if brought to the United States—

before ordering any turnover. See id. at 63a (directing

the district court to “determine whether any provision

of * * * federal law prevents the court from recalling,

or the plaintiffs from receiving, the asset[s]”).

The two-step process contemplated by the court of

appeals creates uncertainty about the import and effect

of the decision below. Petitioners argue that, under

17

state law, the property need not necessarily first be

brought to the United States but could instead be transferred directly to the judgment creditor abroad. See

Bank Markazi Pet. 17. If such an order were permissible under state law, the second step contemplated by

the decision below would be inapplicable, and the

FSIA’s carefully crafted provisions for and exceptions

to execution immunity would never come into play. And

even if such an order were not permissible, ordering a

foreign state’s property to be transferred from abroad

into the United States at step one could affect the legal

status of the assets at step two; the decision below

leaves unclear how the district court should account for

that possibility. See Br. in Opp. 14; Bank Markazi Pet.

32 n.10. Those issues would need to be resolved by the

district court on remand.

Third, the court of appeals invited the district court

to consider whether principles of international comity

should bar the contemplated turnover order. Pet. App.

58a. This Court has described international comity as

“the spirit of cooperation in which a domestic tribunal

approaches the resolution of cases touching the laws

and interests of other sovereign states.” Société Nationale Industrielle Aérospatiale v. United States Dist.

Court for the S. Dist. of Iowa, 482 U.S. 522, 543 n.27

(1987). Among other things, principles of comity counsel special caution when there may be a “conflict between domestic and foreign law,” such that a litigant

faces the prospect of conflicting legal obligations. Hartford Fire Ins. Co. v. California, 509 U.S. 764, 798 (1993)

(citation omitted); cf. Gucci Am., Inc. v. Bank of China,

768 F.3d 122, 139 (2d Cir. 2010) (stating that a “comity

analysis” is “appropriate before ordering a nonparty

18

foreign bank to freeze assets abroad in apparent contravention of foreign law to which it is subject”). Here,

Clearstream may face such a prospect because the assets that respondents seek to have turned over are also

the subject of litigation in Luxembourg brought by U.S.

victims of the 9/11 terrorist attacks and their families,

who are also judgment creditors of Iran. 3

Fourth, the court of appeals directed the district court

to consider any potential “state law” barriers to a turnover order under the circumstances, and it noted that New

York recognizes a limitation on turnover orders known as

the “ ‘separate entity’ doctrine.” Pet. App. 58a & n.22 (citation omitted). Under that doctrine, “even when a bank

garnishee with a New York branch is subject to personal

jurisdiction, its other branches are to be treated as separate entities for certain purposes, particularly with respect to [N.Y. C.P.L.R.] article 62 prejudgment attachments and article 52 postjudgment restraining notices

and turnover orders.” Motorola Credit Corp. v. Standard

Chartered Bank, 21 N.E.3d 223, 226 (N.Y. 2014). Thus, “a

restraining notice or turnover order served on a New

York branch will be effective for assets held in accounts at

that branch but will have no impact on assets in other

branches” outside of New York. Ibid.; see id. at 226 n.2

(explaining that the separate-entity doctrine generally

operates to “prevent[] the restraint of assets held in foreign branch accounts”); accord Allied Maritime, Inc. v.

Descatrade SA, 620 F.3d 70, 74 (2d Cir. 2010). The application of that doctrine could stand as a state-law barrier

to a turnover order here. Respondents initially sought a

A Luxembourg court declined to enforce the 9/11 plaintiffs’

judgments, but the litigation is ongoing. See Charlie Savage, Iran

Wins Court Ruling in 9/11 Lawsuit, N.Y. Times, Mar. 29, 2019, at

A10.

3

19

turnover order for assets they alleged to be held by a

branch of JPMorgan Chase in New York, but the courts

below determined that the assets are in fact located in an

account maintained by Clearstream in Luxembourg. See

Pet. App. 37a-44a.

b. The question presented would be better addressed,

if necessary, after those issues are resolved on remand.

Doing so would ensure that the question arises in a more

concrete setting, in which a turnover order is not merely

hypothetical. If, for example, the lower courts determine

that principles of comity generally foreclose turnover orders like the one sought here, the practical import of the

court of appeals’ decision regarding foreign sovereign immunity may be significantly lessened. If, however, the

lower courts ultimately order the restraint of the assets in

Luxembourg, this Court will be able to consider the permissibility of such an order as a matter of both foreign

sovereign immunity and comity. Either way, the Court’s

review of the immunity question could benefit from a full

development of those issues in the lower courts.

2. This dispute is also the subject of pending legislation that may bear on the proper disposition of the case.

Cf. Bank Markazi v. Peterson, 136 S. Ct. 1310, 1317

(2016). On June 27, 2019, the Senate passed the National Defense Authorization Act for Fiscal Year 2020,

S. 1790, 116th Cong., 1st Sess. (June 27, 2019). See 165

Cong. Rec. S4604 (daily ed. June 27, 2019). Section

6206(b) of that bill would amend 22 U.S.C. 8772—the

provision at issue in Bank Markazi, see 136 S. Ct. at

1318-1319—to state that, notwithstanding any other

provision of law, certain financial assets that would be

blocked under U.S. sanctions if they “were located in

the United States” shall be subject to “an order directing that the asset[s] be brought to the State in which the

20

court is located * * * without regard to concerns relating to international comity.” S. 1790, § 6206(b)(1). The

bill would further direct that the financial assets subject

to those amendments include the assets that are the

subject of this case. S. 1790, § 6206(b)(2)(C). The House

of Representatives has passed an identical proposal in a

separate bill. See Damon Paul Nelson and Mathew

Young Pollard Intelligence Authorization Act for Fiscal

Years 2018, 2019, and 2020, H.R. 3494, 116th Cong., 1st

Sess., § 721(b) (July 17, 2019).

3. Finally, the decision below implicates important

foreign-policy interests of the United States. The court

of appeals determined that foreign sovereign property

is unprotected by execution immunity in U.S. courts as

long as the property is located outside the United

States. If, after the resolution of the unresolved procedural and jurisdictional questions described above, the

district court were to issue an order restraining foreign

sovereign property located abroad, such an order could

in turn put U.S. property at risk. “[S]ome foreign states

base their sovereign immunity decisions on reciprocity.” Persinger v. Islamic Republic of Iran, 729 F.3d

835, 841 (D.C. Cir.), cert. denied, 469 U.S. 881 (1984). In

view of the full range of U.S. foreign-policy interests,

the considered view of the United States is that this

Court’s review is, nevertheless, not warranted at this

time.

21

CONCLUSION

The petitions for writs of certiorari should be denied.

Respectfully submitted.

MARIK A. STRING

Deputy Assistant Secretary

Department of State

DECEMBER 2019

NOEL J. FRANCISCO

Solicitor General

JOSEPH H. HUNT

Assistant Attorney

General

EDWIN S. KNEEDLER

Deputy Solicitor General

MATTHEW GUARNIERI

Assistant to the Solicitor

General

SHARON SWINGLE

Attorney