934 F.3d 191
2d Cir.2019Background
- Hundreds of terrorism victims obtained default judgments against the Islamic Republic of Iran and sought to execute those judgments by attaching property of Assa Corporation and Assa Co. Ltd. in the U.S., including a 40% stake in 650 Fifth Avenue.
- Assa Corp. is a New York corporation wholly owned by Assa Co. Ltd. (Jersey); both are ultimately owned and controlled by Bank Melli, which is owned by the Government of Iran.
- Judgment Creditors sued under the Foreign Sovereign Immunities Act (FSIA) and §201 of the Terrorism Risk Insurance Act (TRIA), seeking turnover/attachment of Assa’s U.S. property.
- The district court granted summary judgment for the Judgment Creditors, concluding Assa could be treated as Iran (via alter-ego) and that several FSIA exceptions and TRIA §201 applied, ordering turnover of substantial assets.
- Assa appealed, challenging subject-matter jurisdiction under FSIA and TRIA and the application of attachment/execution rules; the Second Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Assa is a “foreign state” under the FSIA (jurisdiction) | Assa is essentially Iran’s alter ego; Iran (through Bank Melli) owns/controls Assa, so FSIA jurisdiction applies | Assa is a private corporation (NY/Jersey); not a foreign state, agency, or instrumentality under FSIA definitions | Assa is Iran’s alter ego as a matter of law (extensive control), so FSIA jurisdiction applies; affirming alter-ego treatment under Bancec principles |
| Whether Assa’s property is subject to attachment under FSIA (immunity exceptions) | FSIA exceptions (including §1610(a)(7), §1610(b)(3), and §1610(g)) apply to permit attachment/execution | Assa contended immunity or that errors in the court’s analysis required reversal | Court found FSIA exceptions applied; but vacated district court’s reliance on §1610(g) as a freestanding ground (Rubin limits §1610(g)) — overall attachment affirmed based on other exceptions |
| Whether Assa is a “terrorist party” or treated as such under TRIA §201 | Assa, as Iran’s alter ego and an agency/instrumentality, qualifies as a terrorist party and its assets are subject to execution | Assa argued against TRIA treatment and sought discovery from OFAC; disputed characterization | Court held alter-ego doctrine applies under TRIA; Assa is also an agency/instrumentality of Iran (owned/controlled), so TRIA jurisdiction applies |
| Whether Assa’s assets are “blocked assets” under TRIA/EO 13599 and thus attachable | Assa is owned/controlled by Iran so falls within Executive Order definition of “Government of Iran”; assets are blocked | Assa argued discovery was needed and disputed the blocked-assets characterization | Court concluded Assa is covered by Executive Order 13599 (owned/controlled by Iran), so its assets are blocked and attachable; denial of discovery was harmless |
Key Cases Cited
- First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (U.S. 1983) (Bancec; alter-ego equitable disregard of corporate form)
- Kirschenbaum v. 650 Fifth Ave. & Related Props., 830 F.3d 107 (2d Cir. 2016) (prior Second Circuit decision analyzing Iran/Assa control and TRIA/FSIA issues)
- Rubin v. Islamic Republic of Iran, 138 S. Ct. 816 (U.S. 2018) (clarifies limits of FSIA §1610(g) as non-freestanding exception)
- EM Ltd. v. Banco Central de la Republica Argentina, 800 F.3d 78 (2d Cir. 2015) (tests for extensive sovereign control over an instrumentality)
- U.S. Fid. & Guar. Co. v. Braspetro Oil Servs. Co., 199 F.3d 94 (2d Cir. 1999) (application of alter-ego principles under FSIA)