Bank Markazi v. Peterson

Beginning in 1976, federal law allowed American nationals to sue foreign state sponsors of terrorism in United States courts to recover money damages for personal injury or death caused by terrorist acts. To help plaintiffs enforce their judgments against the foreign states, Congress authorized the execution of judgments against terrorist parties’ so-called blocked assets (i.e., assets seized by the executive branch for disposal in furtherance of the United States’ foreign-relations and national-security interests). In February of 2012, President Obama issued an executive order blocking all United States property and property interests held by Iranian financial institutions, including the Central Bank of Iran, Bank Markazi (defendant). Congress then passed 22 U.S.C. § 8772, which provided that upon a sufficient evidentiary showing that Iran owned the bank’s assets, the assets were subject to execution to satisfy terrorism judgments awarded against Iran. Section 8772(b) specified that financial assets that had been identified and restrained in Peterson v. Islamic Republic of Iran, a then-pending action in federal district court in New York, were available for execution. The Peterson action involved the enforcement of over 1,000 terrorism judgments obtained against Iran by Diane Peterson and others (plaintiffs). To effectuate the enforcement, the district court restrained $1.75 billion in assets held by Bank Markazi in a New York bank account. Following the enactment of § 8772, the district court ordered the turnover of the assets. Bank Markazi objected, arguing that § 8772 violated separation-of-powers principles because Congress had compelled the court to reach a predetermined outcome in the litigation. The district court rejected Bank Markazi’s argument, and the appellate court affirmed the asset turnover. The United States Supreme Court granted certiorari.