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American Bell International, Inc. v. Islamic Republic of Iran

United States District Court for the Southern District of New York
474 F. Supp. 420 (1979)


Facts

American Bell International Inc. (Bell) (plaintiff) entered a contract with the Imperial Government of Iran for the provision of communication equipment and services. Iran’s down payment to Bell was callable for repayment to Iran without cause. A letter of credit benefiting Iran was issued by Bank Iranshahr (Iranshahr) to cover a call by Iran. A second letter of credit was issued by Manufacturers Hanover Trust Co. (Manufacturers) benefiting Iranshahr, payable on demand of Iranshahr if repayment was made to Iran. An Iranian revolution caused replacement of the Imperial Government with the Islamic Republic of Iran (Republic) (defendant). The Republic repudiated the contract with Bell, failed to make payment for services performed by Bell, and demanded repayment from Iranshahr under the letter. Iranshahr then demanded payment from Manufacturers. Bell sued for a preliminary injunction to stop Manufacturers from making payment to Iranshahr.

Rule of Law

Issue

Holding and Reasoning (MacMahon, J.)

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