Dames & Moore v. Regan, Secretary of the Treasury

On November 4, 1979, the Iranian hostage crisis began when the American Embassy in Tehran, Iran, was seized. In response, President Carter, acting pursuant to the International Emergency Economic Powers Act, declared a national emergency and issued an executive order that froze all Iranian assets in the United States. Carter’s administration also ordered that lawsuits against Iranian interests in US courts could not proceed without the administration’s approval. The administration granted a license for lawsuits against Iranian interests, which allowed prejudgment attachment of property but not final judgments. Pursuant to that license, Dames & Moore (plaintiff) sued Iran’s Atomic Energy Organization (AEO) for failing to pay Dames & Moore for work it had done on an Iranian nuclear power plant. On January 20, 1981, the American hostages in Iran were released pursuant to an agreement reached between the United States and Iran. The agreement stated that the US government would seek to end all pending litigation against Iran by referring cases to an Iran-United States claims tribunal that was established to facilitate settlements. President Reagan subsequently issued an executive order requiring the transfer of all pending cases to the tribunal and ordering the transfer of Iranian assets to the Federal Reserve Bank to be controlled by the United States Treasury for settlement purposes. After the issuance of the executive order, the district court stayed a final judgment in Dames & Moore’s favor in its action against the AEO. On April 28, 1981, Dames & Moore sued US government officials including the secretary of the treasury (defendants), seeking to prevent enforcement of the president’s executive order and Treasury Department regulations implementing the new agreement with Iran. The district court dismissed the action, and the United States Supreme Court granted Dames & Moore’s petition to review the case.