future unclear for those multimillion-dollar suits against Iran
Washington — While the delicate hostage talks go on, lawyers here are arguing over whether President Carter has the authority to deliver on his promise to stop all court action against Iranian assets in return for the 52 Americans.
The President probably would have few legal problems if he undertakes such a plan, announced this week, to turn over $5 billion to $6 billion of the Iranian assets when the hostages are freed. That money is largely unencumbered by lawsuits.
However, if the President tries to cancel suits against the remaining Iranian assets, legal arguments could go on for years. Already about 300 businesses have filed suits for an estimated $4 billion which they claim to have lost in the Iranian revolution.
Thomas G. Shack, a Washington lawyer who has represented the Iranian government in the US since early 1979, asserts that the President has the right to end the private suits under an "espousal" doctrine that goes back 200 years.
Under hat doctrine, the federal government would take over the claims of the private companies and negotiate with the foreign power on their behalf.
"We can't have the right to conduct foreign policy held hostage to individual litigants," says Mr. Shack.
But Don Wallace Jr., director of the International Law Institute at Georgetown University law school, argues that the presidential powers are not so clear.
Yes, the President can "espouse" the claims of the companies, but "to vitiate all right of filing suits goes way beyond espousal," says Professor Wallace. He says that the President would first have to offer some guarantee of funds to pay the claims and then "run the gamut of all these judges" involved in the 300 cases before the Iranian money could be freed.
The President "cannot do it unless there is some money on the table and a binding international forum" for deciding claims, he says. He predicts that the companies would settle for less than a dollar-for-dollar repayment, however
Twice in recent history American companies have made claims after a revolution. US businesses received limited compensation after both the Chinese and Russian revolutions. In both cases, the settlements were reached many years after the loss.
The Iranian case is unusual because American courts can attach Iranian money in this country and also because it involves the holding of Americans in Iran.
As one lawyer involved notes, American companies involved want to recoup their losses, but none wants to be seen as aspoiler holding up the return of the hostages.
Under the latest US proposal, all claims against the Iranians would be settled no by US courts but by an international tribunal, set up by some body such as the World Bank or the International Chamber of Commerce.
A lawyer who is representing a number of contractors who are suing Iran but who asked not to named says that the President could enforce that action only if "there was a fund of moeny sufficiently large" to cover the claims and "there was a pre-agreed procedure and mechanism worked out in detail."
The lawyer predicts that Iran will settle the losses to regain their "credibility in the world's financial market," but he is concerned that the settlement may take several years.
Mr. Shack says that the Iranians have stated repeatedly that they would pay legitimate claims.