Treaties and the Constitution

Case: Dames & Moore v. Regan (1981; US)

Facts: In 1979, the American embassy in Tehran was seized and Americans captured
and held hostage. In response to this crisis, President Carter issues an Executive
Order, which froze Iranian assets in the United States. Later that year,
petitioner Dames & Moore filed suit in CA district court against the gov't of
Iran, the Atomic Energy Org. of Iran, and a number of Iranian banks, for services
already performed under a K, which Atomic had terminated. District court issued
ordered of attachment of D's property, to secure judgment against them. In 1981,
the American held hostage were released, pursuant to an agreement that stated that
all litigations would be terminated, and to bring about the settlement and
terminations of all such claims through binding arbitration. President Carter
nullified all rights to Iranian assets, ordered transfer of these assets to Iran,
and suspended all claims which may be presented in an International court of
justice. Petitioner then filed this action against U.S. seeking injunctive
relief, to prevent enforcement of the Executive Orders and the other regulations.

Issue: Whether the executive order was valid. -Yes.

Holding: Executive order upheld.

Reasoning: The Court upheld these presidential actions against challenges that
they were unauthorized by law. The Court concluded that the International
Emergency Economic Powers Act (IEEPA) authorized the president to nullify the
attachments and to transfer Iranian assets. It also approved the suspension of
claims filed in U.S. courts even though no specific statutory provision authorized
that step. In so doing the Court relied on inferences drawn from related
legislation, a history of congressional acquiescence in executive claims
settlement practices, and past decisions recognizing broad executive authority.

This decision has been criticized for applying a too‐undemanding standard to the
question of presidential power, in particular by relying on inferences from
statutes that do not directly deal with certain subjects at hand and, especially,
on legislative acquiescence in executive activity. On any view, this decision is
an important recognition of broad presidential power in foreign relations.

Notes
• Facts:
○ Iranian gov't terminated K with Dames (business K)
○ Dames wants Iran to pay for work already performed, and brought suit
○ B/c Iran holding Americans hostage, President entered into agreement with
Iranian gov't to get hostages back. Agreement:
§ nullified rights to Iranian assets (the attachments)
§ Terminated all present litigation, and go to arbitration instead
○ Now all attached property going back to Iran, and Dames cant get
litigation, has to go through arbitration
○ So Dames says US gov't doesn’t have authority to make this sort of
agreement.
§ Has President been given too much power?
• Court held that executive order is ok.
○ Youngstown case - limited the power of the President to seize private
property in the absence of either specifically enumerated authority under Art II
of the Constitution or statutory authority conferred on him by Congress.
 § 3 prong test here:
□ President & Congress in agreement - If yes, then strong
presumption that President's actions are constitutional
□ Congress is silent - muddy. Court may look at practice, as they
did in Dames case (see below)
□ Disagreement - Maybe President has overstepped his authority;
President has burden to prove otherwise
○ IEEPA authorized the President to nullify attachment & to transfer Iranian
assets
§ Falls under Youngstown's 1st category - president & Congress in
agreement. So heavy presumption that executive agreement is valid. (like Curtiss-
Wright)
○ IEEPA does not speak about issue of termination of litigation/arbitration
§ Congress is silent here (more like Belmont case)
§ Looks at practice - has Congress been a persistent objector? No.
President has done this in the past and Congress has acquiesced (agree to
something passively). Implicit consent here.