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Congressional Power to Provide for the Vesting of Iranian Deposits in Foreign Branches of United States Banks


Congress has the power under Article I, § 8 of the Constitution to authorize the peacetime vesting of assets of a foreign government in the control of foreign branches of American-owned and incorporated banks, at least insofar as such power may be enforced by courts of the United States.

The Just Compensation Clause of the Fifth Amendment does not prohibit the United States from effecting uncompensated seizures of the assets of foreign nations.

While United States courts will ordinarily make every effort to construe statutes to accord with our treaty obligations and general international law principles, Congress may, by clearly expressing its intent to do so, legislate in derogation of international law or contrary to prior treaty obligations.  Therefore, a United States court would likely enforce a vesting order directed at overseas deposits of a foreign government that was clearly authorized by Congress notwithstanding contrary treaties or principles of international law.

Congress could provide for the seizure in this country of Iran’s overseas deposits by permitting vesting orders to be served against the New York office of the banks involved; however, foreign courts may refuse to give effect to what would appear to be the United States’ uncompensated extraterritorial appropriation of non-enemy assets in any suit brought by Iran to recover its deposits.

Updated July 9, 2014