April 20, 2016

Supreme Court Decides Bank Markazi v. Peterson

On April 20, 2016, the Supreme Court decided Bank Markazi v. Peterson, No. 14-770, holding that Congress did not unconstitutionally infringe on the role of the judiciary when it passed the Iran Threat Reduction and Syria Human Rights Act of 2012, a statute that allowed victims of Iran-sponsored terrorism to seize certain assets of Iran’s national bank to satisfy their judgments.

Foreign states, as a general matter, enjoy sovereign immunity against suits brought by individuals. But Congress may create exceptions to sovereign immunity, and it has done so to allow American nationals to recover damages from state sponsors of terrorism in the courts of the United States for injuries and deaths caused by acts of terrorism.

Respondents are victims of Iran-sponsored acts of terrorism, their estate representatives, and surviving family. Collectively, they obtained billions of dollars in judgments against Iran, the vast majority of which remain unpaid. To make it easier for Respondents to collect on their judgments, Congress enacted the Iran Threat Reduction and Syria Human Rights Act of 2012, 22 U.S.C. § 8772, which allows judgment holders to seize certain assets held for Bank Markazi, the Central Bank of Iran, at a bank in New York, provided that the court found certain criteria to be met.

Bank Markazi contended that section 8772 violated the separation-of-powers doctrine, interfering in a sphere given exclusively to the judicial branch, by directing a particular result in the enforcement proceeding. Both the district court and the court of appeals rejected the challenge, and the Supreme Court affirmed, holding that section 8772 does not violate the separation-of-powers doctrine of the Constitution.

The Court reasoned that Article III of the Constitution establishes an independent Judiciary, which prevents Congress, among other things, from commanding courts to reopen final judgments. But Congress may amend a law, and it may also make the amended prescription retroactively applicable in pending cases, provided it is a civil law and does not violate specific limitations, such as the Takings Clause of the Fifth Amendment. The Court thus held that section 8772 requires courts to apply a new legal standard in a pending post-judgment enforcement proceeding, consistent with the limits on legislative power.

The Court rejected Bank Markazi’s argument that section 8772 was invalid because it prescribed a rule for a single pending case. Sixteen cases involving over 1,000 victims were at issue, and legislating for a small number of individuals is not constitutionally suspect for that reason alone. To be a Bill of Attainder, there must be punishment.

Finally, the Court stressed that section 8722 was an exercise of congressional authority regarding foreign affairs, a domain in which the controlling role of the political branches is both necessary and proper.

Justice Ginsburg delivered the opinion of the Court, in which Justices Kennedy, Breyer, Alito, and Kagan joined, and in all but Part II-C of which Justice Thomas joined. Chief Justice Roberts wrote a dissenting opinion, in which Justice Sotomayor joined.

Download Opinion of the Court

The Faegre Drinker Biddle & Reath LLP website uses cookies to make your browsing experience as useful as possible. In order to have the full site experience, keep cookies enabled on your web browser. By browsing our site with cookies enabled, you are agreeing to their use. Review Faegre Drinker Biddle & Reath LLP's cookies information for more details.