Background - Judgment creditors obtained multibillion-dollar default judgments against Iran and its Ministry of Intelligence and Security under the FSIA terrorism exception and sought to execute on ~$1.68 billion in bond proceeds allegedly beneficially owned by Iran’s central bank (Bank Markazi). - The disputed funds were processed through Clearstream (Luxembourg) via a JPMorgan correspondent account in New York, credited on Clearstream’s Luxembourg books to a UBAE customer account and then to a blocked “sundry” account at Clearstream (account no. 13675). - Plaintiffs contend the asset is USD cash held in Clearstream’s JPMorgan account in New York and therefore subject to turnover (including under TRIA); defendants say no segregated Markazi cash exists in New York—only book-entry rights to payment recorded in Luxembourg. - Prior litigation (Peterson I) produced settlement agreements with Clearstream and UBAE resolving many claims; those agreements’ scope and whether they bind all current plaintiffs was a central dispute. - The district court dismissed all claims, holding (a) the Clearstream/UBAE settlements released plaintiffs’ non-turnover claims, and (b) the asset is located outside the U.S. and thus immune from execution under the FSIA; the Second Circuit affirmed in part, vacated in part, and remanded. ### Issues | Issue | Plaintiff's Argument | Defendant's Argument | Held | |---|---:|---:|---| | 1. Do the Clearstream and UBAE settlement agreements bar plaintiffs’ non-turnover claims? | Settlements do not bind all Peterson II plaintiffs and do not release these claims. | Agreements released all claims against Clearstream/UBAE as written. | Clearstream release valid only as to plaintiffs who were parties to Peterson I; UBAE release ambiguous — summary judgment for UBAE reversed and remanded. | | 2. Are plaintiffs’ non-turnover claims against Markazi released by the UBAE settlement? | UBAE release covers related claims. | Markazi is a beneficiary and thus released. | UBAE agreement did not release claims against Markazi; dismissal vacated and remanded. | | 3. What is the nature and situs of the asset (cash in NY vs. book-entry right in Luxembourg)? | Asset is segregated USD cash at JPMorgan (New York). | No segregated Markazi cash in NY; asset is a right to payment recorded in Luxembourg. | Asset is a right to payment recorded/held by Clearstream in Luxembourg; JPMorgan had no segregated Markazi funds. | | 4. Can a New York court order turnover of an extraterritorial sovereign asset held by a non-sovereign garnishee (Clearstream)? | TRIA/FSIA and NY turnover law authorize execution because asset can be in NY and TRIA covers blocked assets. | FSIA bars execution of foreign sovereign property located abroad. | FSIA §1609 protects only property "in the United States." Under NML Capital and Koehler, a NY court with personal jurisdiction over a non-sovereign garnishee may order recall of extraterritorial assets; court remanded for personal-jurisdiction and comity analysis before any recall and further FSIA/TRIA analysis. | ### Key Cases Cited Republic of Argentina v. NML Capital, Ltd., 134 S. Ct. 2250 (2014) (FSIA immunity defenses must rest on statute; §1609 does not clearly immunize extraterritorial assets) Koehler v. Bank of Bermuda Ltd., 12 N.Y.3d 533 (2009) (New York Court of Appeals: CPLR Article 52 may reach out-of-state or foreign property when court has personal jurisdiction over the garnishee) Peterson v. Islamic Republic of Iran, 627 F.3d 1117 (9th Cir. 2010) (turnover jurisprudence for rights to payment; earlier enforcement attempt informing disposition) Bank Markazi v. Peterson, 136 S. Ct. 1310 (2016) (Supreme Court decision affirming turnover principles in related Peterson litigation) * Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 313 F.3d 70 (2d Cir. 2002) (state law determines situs of intangible property for turnover)