Trump administration favors terror victims over Boeing Iran deal

Judge Castillo’s ruling

opens up a legal mine field for Boeing, and for any other U.S. corporation seeking to do business with the Islamic regime in Iran.

The Trump administration pointedly put national security over trade when it told an Illinois District Court this week that it “does not take a position” on whether the Court should shield aerospace giant Boeing Corp from a lawsuit filed by victims of Iranian state terrorism.

As I wrote at Frontpagemag today:

The family of Shlomo Leibovitch is seeking to collect on a $67 million judgment against Iran for a 2003 terror attack that killed their seven-year old daughter, and sued Boeing to gain access to what it believed were Iranian assets in Boeing’s possession.

Boeing signed a $16 billion deal in 2016 to sell civilian airliners to the state-owned Iran Air, a defendant in numerous lawsuits by victims of Iranian state-sponsored terrorism. In any airplane deal of that size, the purchaser will make advance payments while the aircraft are being produced.

It was those payments the Leibovitch family was seeking to attach and that Boeing was seeking to conceal.

Chief Judge Ruben Castillo ruled on Tuesday that Boeing must produce the contractual documents to the terror victims, to include financial documents relating to advance payments as well as Boeing’s communications with the Treasury Department Office of Foreign Assets Control, which licensed the sale during the final weeks of the Obama administration.

Judge Castillo’s ruling is worth reading in full.

When Boeing argued that disclosure of its contract with Iran would “risk destabilizing the purpose of the JCPOA to provide for regional and international peace and security” – a dubious claim at best – Judge Castillo decided to ask the U.S. government for its opinion.

In response, the Justice Department filed a statement of interest, noting that its opinion represented that of the entire Executive Branch.

DoJ said that “the United States does not take a position on whether the Court should order the requested discovery.”

That in itself was a slap in the face to Boeing, and arguably a master step by the Trump White House, since it effectively puts the kibosh on the Boeing Iran deal without explicitly banning it.

Boeing cannot sell aircraft if the deposits its clients make during production are attached by victims of terrorism in the courts.

In his ruling, Judge Castillo examined Boeing’s arguments and found them wanting.

Boeing first argues that Plaintiffs’ motion to compel should be denied because “enforcing Plaintiffs’ [discovery] requests would require the Court to resolve nonjusticiable political questions. (p8)

… [T]he Court agrees with Plaintiffs that Boeing’s reliance on the political question doctrine in misplaced. This Court is being called to decide a discovery dispute, plain and simple. Although the discover sought certainly has “political overtones,” Japan Whaling Ass’n, 478 U.S. at 230, the Court is not deciding any issue at this juncture that is committed to some other branch of the government or for which there are no judicially manageable standards for resolving. [p10-11]

Boeing next argues that the Court should “abstain” from deciding the discovery motion under principles of international comity. But as Judge Castillo points out,

Boeing’s argument on this point is somewhat unclear, but as best as can be discerned, Boeing believes that adjudicating this discovery dispute will “frustrate the purpose” of the Iran Nuclear Deal and offend the other sovereign-nation signatories to the agreement by potentially hindering the airplane deal. [p13]

Judge Castillo finds that argument wanting as well.

In resolving this dispute, the Court will be applying well-settled American law governing discovery disputes, not the law of some other nation. [p14]

Boeing then argues that the discovery requests are “irrelevant” to [Plaintiff’s] efforts to satisfy their judgment” because at present it is unclear if the contract will result in any Iranian assets being located in the United States where they could be attached.

At bottom, Boeing’s argument appears to be that, because it will be difficult or impossible for Plaintiffs to actually collect any money as a result of these discovery requests, the Court should simply deny them as futile.

Boeing misunderstands the nature of this proceeding… Plaintiffs are not actually attaching any assets at present; they are only seeking to discover information about potential assets of Iran that may be attachable. [p16-17]

Going back to my FrontPagemag column from today, Judge Castillo’s ruling

opens up a legal mine field for Boeing, and for any other U.S. corporation seeking to do business with the Islamic regime in Iran.

U.S. courts have awarded victims of Iranian state terrorism 99 separate judgments worth more than $53 billion, nearly half of which are compensatory damages that can be collected against Iranian assets held outside the United States.

…With the Boeing sale now potentially in jeopardy, other corporations are sure to wonder if they, too, could be made to pay the price for the terrorist actions of the Iranian regime.

March 2, 2018

What will the Iran deal mean for judgment creditors?

At first blush, there’s nothing in the Iran deal that specifically relates to the scores of judgments against the Islamic Republic of Iran for its terrorist actions. Nor were there any leaks during the negotiation process that this was a subject of discussion.

However, after taking a deeper dive into the text of the agreement, a few troubling hints emerge.

First is the inclusion of Assa Corp and Assa Corp Ltd in Attachment 3, the list of individuals and entities scheduled for immediate sanction relief on “Implementation Day” (roughly 2-6 months from now).

Graph 7 on page 70 makes clear that the immediate sanctions relief offered these entities includes

 “unblocking of property and interests in property within U.S. jurisdiction for individuals set out in Attachment 3 of this Annex.”

Does that mean the 40% share in the 650 Fifth Avenue property owned by Assa Corp beneficially for Bank Melli, and currently the subject of federal foreiture proceedings, will be unblocked and released to Assa Corp and transferred back to Iran? If the law is any measure, probably not. But as Secretary Kerry pointed out in presenting this agreement, we are entering a world of new policies.

For example, in several places the agreement commits the United States government to intervening not only with Congress to repeal a broad array of sanctions laws, but also with state and local governments that have passed divestment laws.

Graph 25 of the main agreement states unequivocally:

 If a law at the state or local level in the United States is preventing the implementation of the sanctions lifting as specified in this JCPOA, the United States will take appropriate steps, taking into account all available authorities, with a view to achieving such implementation. The United States will actively encourage officials at the state or local level to take into account the changes in the U.S. policy reflected in the lifting of sanctions under this JCPOA and to refrain from actions inconsistent with this change in policy.

The agreement calls for the normalization of trade and economic relations with Iran, and spells out in great detail how and when specific sanctions will be lifted and specific laws mooted through presidential waivers pending legislative repeal.

Here’s where it gets tricky. In §29, the parties commit to:

refrain from any policy specifically intended to directly and adversely affect the normalisation of trade and economic relations with Iran…

Will Iran make a case, as allowed under the JCPOA, that monetary judgments against it under the Foreign Sovereign Immunity Act and/or TRIA “adversely affect the normalization of trade and economic relations?” If so, the agreement gives them the possibility of convening the Joint Commission, where Iran sits along with Russia and China, to seek to impose their will on the United States.

This could spell big potential trouble for judgment creditors.