560 F.Supp.3d 81
D.D.C.2021Background
- In Oct. 2020 the State Department (with OFAC) designated Strait Shipbrokers Pte. Ltd. and its managing director Murtuza Basrai as SDNs under Executive Order 13,846 for allegedly engaging in significant transactions involving Iranian petroleum; penalties included asset blocking, prohibition on U.S. person dealings, and visa denial.
- Plaintiffs are a Singapore-based shipbroker and its managing director; they concede limited visibility into cargo origins and allege the designation caused severe financial harm and loss of clients and employees.
- Plaintiffs sought administrative reconsideration and, while declassification was ongoing, sued (July 2021) under the APA and the Fifth Amendment and moved for a mandatory preliminary injunction and expedited discovery of the full administrative record (including classified material).
- The government produced an unclassified administrative record, described the specific vessel transactions that underpin the designation in agency letters, and offered the classified record to the Court ex parte/in camera under 50 U.S.C. § 1702(c).
- The Court applied the heightened standard for mandatory preliminary injunctions, deferred to national-security-sensitive agency decisionmaking, and denied the motion on grounds plaintiffs failed to show likelihood of success and that equities/public interest favor injunctive relief.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a mandatory preliminary injunction (including an OFAC general license) should issue to enjoin or suspend SDN designations | Plaintiffs sought immediate relief to halt enforcement and permit U.S. persons to transact with them during delisting | Such mandatory relief is disfavored; plaintiffs face a heightened burden and cannot change the status quo absent clear showing | Denied — plaintiffs failed the heightened showing required for a mandatory injunction |
| Whether the SDN designation was arbitrary and capricious under the APA (insufficient explanation / lack of substantial evidence) | Designation was unexplained and unsupported; plaintiffs deny knowingly transacting in Iranian petroleum | Government relied on press release, Federal Register notice, correspondence, and a classified evidentiary record; national-security deference applies | Plaintiffs not likely to succeed; factual dispute and classified record make expedited relief inappropriate |
| Whether plaintiffs were denied due process (pre- and post-deprivation notice; access to classified facts) | Plaintiffs argue they received no pre-deprivation process and insufficient factual basis post-designation | Pre-deprivation notice not required given risk of asset flight; government provided unclassified evidence and opportunity to seek reconsideration | Denied — Mathews balancing and D.C. Circuit precedent permit post-deprivation process provided here |
| Whether the Court should compel production/declassification of the full classified administrative record or permit expedited discovery | Plaintiffs seek full record or justification of redactions to challenge designation | Statute allows classified material to be submitted to the court ex parte/in camera; government provided unclassified record and declassification is ongoing | Request for expedited discovery/compelled declassification denied/moot; Court declined to review classified record at this stage |
Key Cases Cited
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008) (sets the four-factor standard for preliminary injunctions and requires likelihood of success and irreparable harm)
- Zevallos v. Obama, 793 F.3d 106 (D.C. Cir. 2015) (IEEPA/OFAC designations: pre-deprivation process not always required; post-deprivation disclosure of unclassified evidence and opportunity to contest satisfies due process)
- Fares v. Smith, 901 F.3d 315 (D.C. Cir. 2018) (recognizes the severe private harms of OFAC designation and treats asset-blocking regimes with deference)
- Holy Land Found. for Relief & Dev. v. Ashcroft, 333 F.3d 156 (D.C. Cir. 2003) (affirms that classified evidence may be submitted to a reviewing court ex parte and in camera)
- Mathews v. Eldridge, 424 U.S. 319 (1976) (framework for balancing private interest, risk of erroneous deprivation, and government interests in procedural-due-process analysis)
- Humanitarian Law Project v. Holder, 561 U.S. 1 (2010) (recognizes deference to sensitive national-security and foreign-affairs judgments)
- Mazurek v. Armstrong, 520 U.S. 968 (1997) (characterizes preliminary injunctions as extraordinary relief requiring a clear showing)