Levin v. Bank of New York

Background

The plaintiffs were judgment creditors of Iran. Their $28,807,719 judgment arose from the 1984 kidnapping of Jeremy Levin in Beirut, Lebanon, by Hezbollah terrorists whom the plaintiffs alleged had received training, support, aid, funding, and direction from Iran. The plaintiffs filed the action in 2009 to turn over Iranian assets and later filed a supplemental complaint seeking the Melli Blocked Account to collect and partially satisfy the judgment.

The account was at JPMorgan Chase Bank, N.A.’s London branch. The parties acknowledged that the money belonged to Bank Melli, that Bank Melli was wholly owned by the Iranian government, and that Bank Melli had been held to be an instrumentality of Iran. The defendants, acting as garnishees in the collection proceeding, moved to dismiss the supplemental complaint under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). They argued that the court lacked subject-matter jurisdiction and that the complaint failed to state a legally valid claim because the account was outside the United States and immune from execution. For purposes of the motion, the defendants conceded that the court had personal jurisdiction over them.

Legal question

The court identified one controlling question: whether the Melli Blocked Account was immune from execution under the Foreign Sovereign Immunities Act because it was located outside the United States.

The plaintiffs relied on Section 1610(g) of the Foreign Sovereign Immunities Act, which concerns execution against property of a foreign state or its agency or instrumentality after certain terrorism judgments. The court explained, relying on the Supreme Court’s decision in Rubin v. Islamic Republic of Iran, that Section 1610(g) does not independently remove immunity. Instead, it identifies property that may be available for execution when another provision of the Act removes that immunity.

The plaintiffs also relied on Section 201(a) of the Terrorism Risk Insurance Act, which provides that blocked assets of a terrorist party, including assets of its agency or instrumentality, may be attached or executed against to satisfy a qualifying judgment. The court concluded that the statute did not clearly state that it applied to assets located outside the United States. Applying the general rule that a statute does not apply outside the United States without a clear indication from Congress, the court held that the Foreign Sovereign Immunities Act and the Terrorism Risk Insurance Act did not permit execution against the Melli Blocked Account.

The court noted that courts had generally treated foreign-government property located abroad as immune from execution. It also concluded that the Second Circuit decision cited by the plaintiffs allowing execution against an extraterritorial asset was no longer controlling after the Supreme Court vacated that decision and the Second Circuit declined to reinstate its earlier analysis. The court distinguished NML Capital because that case concerned discovery about foreign assets, not actual attachment or execution. It also distinguished Koehler because that case involved privately owned property and did not interpret the Foreign Sovereign Immunities Act or the Terrorism Risk Insurance Act.

Finally, the court held that New York enforcement law could not overcome the federal statutes. Even if New York law would otherwise permit execution against the account, the federal statutes would preempt conflicting state law.

Disposition

Judge Oetken granted the defendants’ motion to dismiss the supplemental complaint. The court did not decide the parties’ arguments about international comity because it concluded that the Foreign Sovereign Immunities Act and the Terrorism Risk Insurance Act independently barred execution against the account. The Clerk was directed to close the motion at Docket Number 1368.