546 US 450 Ministry of Defense and Support for Armed Forces of Islamic Republic of Iran v. Elahi

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Case TextPer Curiam

MINISTRY OF DEFENSE AND SUPPORT FOR ARMED
FORCES OF ISLAMIC REPUBLIC OF IRAN v. ELAHI

on petition for writ of certiorari to the united
states court of appeals for the ninth circuit

No. 04—1095. Decided February 21, 2006

Respondent Elahi obtained a federal-court judgment for money damages
against the Islamic Republic of Iran. He then intervened in a separate
federal suit that Iran’s Ministry of Defense had brought to confirm an
arbitration award it had obtained against a third party. Elahi sought
to impose a lien upon the award. The Ministry opposed the attachment
on the ground that the Foreign Sovereign Immunities Act (FSIA)
grants it immunity, but the District Court ruled that the Ministry had
waived its immunity. Relying on a ground not argued by the parties,
the Ninth Circuit found the Ministry’s immunity claim barred under an
FSIA section providing that the property of an “agency or instrumentality”
of a foreign state is “not . . . immune from attachment” if the
agency is “engaged in commercial activity in the United States.” 28

U. S. C. § 1610(b).

Held: The Ninth Circuit erred in implicitly concluding that the Ministry
was an agency or instrumentality of Iran under § 1610(b). FSIA’s “engaged
in commercial activity” exception applies only where the property
at issue is held by an agency or instrumentality of a foreign state, not
by a foreign state itself. The Circuit did not explain what in the record
might demonstrate that the Ministry is an agency or instrumentality of
Iran rather than an integral part of the state itself. Because that court
did not consider, and the Ministry had no opportunity to argue, this
critical legal point, the judgment is vacated and the case is remanded.

Certiorari granted; 385 F. 3d 1206, vacated and remanded.

Per Curiam.

A private citizen seeks to attach an asset belonging to
Iran’s Ministry of Defense in order to help satisfy a judgment
for money damages. The question raised is whether
the Foreign Sovereign Immunities Act of 1976 (Act), 28

U. S. C. §1602 et seq. (2000 ed. and Supp. III), forbids that
attachment.

The judgment for money damages consists of a default
judgment against the Islamic Republic of Iran (for about

Per Curiam

$300 million) that the private citizen, Dariush Elahi, obtained
in a federal-court lawsuit claiming that the Republic had
murdered his brother. Elahi v. Islamic Republic of Iran,
124 F. Supp. 2d 97, 103 (DC 2000). The asset is an arbitration
award (against a third party), which Iran’s Ministry of
Defense obtained in Switzerland. Ministry of Defense and
Support for Armed Forces of Islamic Republic of Iran v.
Cubic Defense Systems, Inc., 385 F. 3d 1206, 1211 (CA9
2004). The Ministry asked the Federal District Court for
the Southern District of California to confirm the award.

Ministry of Defense and Support for Armed Forces of Islamic
Republic of Iran v. Cubic Defense Systems, Inc., 236

F. Supp. 2d 1140 (2002). The court did so. And Elahi then
intervened, seeking to impose a lien upon the award. The
Ministry opposed the attachment on the ground that the Act
grants it immunity from such a claim.

The Federal District Court rejected the Ministry’s immunity
defense on the ground that, by suing to enforce the
award, the Ministry had waived any such immunity. On appeal
the Ninth Circuit disagreed with the District Court
about waiver. But it then found against the Ministry on a
different ground–a ground that the parties had not argued.
The Act says that under certain conditions the property of
an “agency or instrumentality” of a foreign government is
“not . . . immune from attachment” if the agency is “engaged
in commercial activity in the United States.” 28 U. S. C.
§ 1610(b) (emphasis added). The Court of Appeals found
that the Ministry engages in commercial activity and that
the other conditions were satisfied. 385 F. 3d, at 1219—1222
(applying § 1610(b)(2)). And it held that this section of the
Act barred the Ministry’s assertion of immunity. Ibid.

The Ministry filed a petition for certiorari asking us to
review that decision. The Solicitor General agrees with
the Ministry that we should grant the writ but limited to the
Ministry’s Question 1, namely, whether “the property of a
foreign state stricto sensu, situated in the United States,”
is “immune from attachment . . . as provided in the For

452 MINISTRY OF DEFENSE AND SUPPORT FOR ARMED
FORCES OF ISLAMIC REPUBLIC OF IRAN v. ELAHI
Per Curiam

eign Sovereign Immunities Act.” Pet. for Cert. i (citing
§§ 1603(a), 1610(a)). The Solicitor General also asks us to
vacate the judgment of the Court of Appeals and remand the
case for consideration of whether the Ministry is simply a
“foreign state” (what the Ministry calls “a foreign state
stricto sensu”) or whether the Ministry is an “agency or instrumentality”
of a foreign state (as the Ninth Circuit held).
Brief for United States as Amicus Curiae 15—17. We grant
the writ limited to Question 1.

The Act, as it applies to the “property in the United States
of a foreign state,” § 1610(a) (emphasis added), does not contain
the “engaged in commercial activity” exception that the
Ninth Circuit described. That exception applies only where
the property at issue is property of an “agency or instrumentality”
of a foreign state. Compare § 1610(b) (“property
. . . of an agency or instrumentality of a foreign state
engaged in commercial activity”) with § 1610(a) (“property
. . . of a foreign state . . . used for a commercial activity”
(emphasis added)). The difference is critical. Moreover, in
the Solicitor General’s view a defense ministry (unlike, say,
a government-owned commercial enterprise) generally is not
an “agency or instrumentality” of a foreign state but an inseparable
part of the state itself. Brief for United States as
Amicus Curiae 8—11; see also Transaero, Inc. v. La Fuerza
Aerea Boliviana, 30 F. 3d 148, 153 (CADC 1994) (“hold[ing]
that armed forces are as a rule so closely bound up with the
structure of the state that they must in all cases be considered
as the ‘foreign state’ itself, rather than a separate
‘agency or instrumentality’ of the state”).

We shall not now determine whether the Solicitor General
is correct about the status of the Ministry, for the Ninth Circuit
did not address the question nor did the parties argue
the matter before the Circuit. Neither can we fault the
Ministry for that failure. As we said, supra, at 451, the District
Court based its denial of immunity upon waiver. The

Per Curiam

parties’ Ninth Circuit briefs focused on matters not relevant
here (such as the waiver question), with one exception. The
exception consists of a footnote in Elahi’s brief mentioning
the Act’s “agency and instrumentality” provision. That
footnote, however, does not ask for affirmance on that basis;
nor did it provide the Ministry with clear notice that a reply
was necessary. Answering Brief for Appellee in No. 03—
55015 (CA9), p. 45, n. 27 (stating that “[i]f [the Ministry] is
considered ‘an agency or instrumentality of a foreign state,’
rather than the foreign state itself, Mr. Elahi’s attachment
still is valid” (emphasis added)).

The Ninth Circuit said that it was free to affirm on “any
ground supported by the record.” 385 F. 3d, at 1219, n. 15.
But the court did not explain what in the record might demonstrate
that the Ministry is an “agency or instrumentality”
of the state rather than an integral part of the state itself.
The court noted that “Elahi appears to concede” that the
Ministry is an “agency and instrumentality,” id., at 1218,

n. 13, but any relevant concession would have to have come
from the Ministry, not from Elahi, whose position the concession
favors. Thus, in implicitly concluding that the Ministry
was an “agency or instrumentality” of the Republic of Iran
within the meaning of § 1610(b), the Ninth Circuit either mistakenly
relied on a concession by respondent that could not
possibly bind petitioner, or else erroneously presumed that
there was no relevant distinction between a foreign state and
its agencies or instrumentalities for purposes of that subsection.
See §§ 1603(a), (b). Either way, the Ninth Circuit
committed error that was essential to its judgment in favor
of respondent.

Because the Ninth Circuit did not consider, and the Ministry
had no reasonable opportunity to argue, the critical legal
point we have mentioned, we vacate the judgment of the
Ninth Circuit, and remand the case for further proceedings
consistent with this opinion.

It is so ordered.

546 U.S. 450 - Ministry of Defense and Support for Armed Forces of Islamic Republic of Iran v. Elahi

546 US 450 Ministry of Defense and Support for Armed Forces of Islamic Republic of Iran v. Elahi

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