Former President Jimmy Carter's last major act, the agreement that brought the 52 American hostages home from Iran, passed its final test. In a victory for presidential power in foreign policy, the US Supreme Court July 2 unanimously upheld the Iranian settlement over objections from American businesses that lost millions of dollars in Iran.
The high court's action approves the pact that unfreezes almost $4 billion in Iranian assets and cancels private lawsuits against Iran in US courts. Justice William H. Rehnquist, writing for the court, said that the case touched "fundamentally upon the manner in which our republic is to be governed." He said that Congress has "approved the practice of claim settlement by executive agreement."
In reaching that conclusion, the court followed a tradition, dating almost to the start of the nation, of standing behind the President's power to direct foreign policy. Just last week the high court backed the President's authority to revoke a citizen's passport if that person is seen to be a threat to national security or foreign policy.
The court acted on the US-Iran accord only eight days after hearing arguments in a rare emergency session called to meet the settlement's deadline. The agreement requires the Iranian assets to be transferred out of the US by July 19 .
Moreover, the justices were also pressured to complete action before Justice Stewart retires on July 3.
For some 400 businesses who lost money after the Iranian revolution, the ruling wipes out their lawsuits in American courts. Most of those cases now move into an international tribunal, a nine-member panel at The Hague, which will rule on their claims. Iran has promised to maintain a fund of $1 billion for repayment.
In the case before the Supreme Court, the engineering firm Dames and Moore of Los Angeles claimed that Iran owes it $3.5 million in consulting fees.
The firm, and other companies involved, argued that the President bargained away their property rights in the agreement signed at Algiers last January. They said that he went beyond his constitutional powers when he agreed to cancel suits in US courts.
Although President Reagan at first voiced skepticism about the settlement signed by his predecessor on his last day in office, he since has fully endorsed it.
Secretary of State Alexander Haig Jr. said in February that court approval of the agreement is essential to the "President's capacity to speak and act for the United States in the conduct of its foreign relations." Disapproval would have damaged US cre dibility abroad, according to secretary Haig.