The government moved yesterday for immediate Supreme Court consideration of a dispute over Iranian assets to prevent a breakdown of the hostage release agreement.
Solicitor General Wade McCree asked the court to uphold summarily the power of the president to transfer to Iran and to an international claims tribunal $4 billion in Iranian assets held by American banks. If it won't do so, McCree asked the court instead to rush ahead with oral arguments and a full Supreme Court opinion within the next month.
The procedure used by the government yesterday generally is reserved for the most urgent of issues, such as the Pentagon Papers dispute 10 years ago.
The deadline for implementation of the transfer phase of the agreement is July 19. Some companies are claiming part of the assets as compensation for debts owed them by Iran, and if the government can't resolve its disagreements with these companies by the July 19 deadline, some banks are considering refusing to transfer the funds, banking sources said. That could throw a wrench into the agreement.
But everyone involved expressed confidence yesterday that such a standoff would be avoided. As a safety precaution in case the Supreme Court does not act quickly, the government also has asked the U.S. Second Circuit Court of Appeals to nullify attachments on the money in New York, where the bulk of the money is being held.
President Carter had agreed to the transfer of assets in exchange for release in January of the American hostages in Iran. At the same time, hundreds of companies claiming overdue bills from Iran went to court and obtained attachment of the assets in the banks. That left the banks with conflicting orders. One could not be obeyed without disobeying the other.
The power of the president to nullify those attachments is the issue the justices are being asked to consider. The specific case chosen for the confrontation is an attachment of $3.7 million obtained by a California engineering company, Dames and Moore, which had a contract with the Iranian government for atomic energy work.
A U.S. District Court in California rejected the company's bid to override the president's order. Normally the next step would be an appeals court. But yesterday's motion by the government and by Dames and Moore would bypass the appeals level and go directly to the high court.
Roughly $1.5 billion of the assets are held in 10 major New York banks, including Citibank, Chase Manhattan and Manufacturers Hanover Trust. In a friend-of-the-court brief filed yesterday, the 10 banks also asked for a speedy ruling. They said they were "caught directly between conflicting mandates of the judicial and executive branches" and face lawsuits, contempt of court and even criminal actions whichever way they turn.
In their request to the court, the banks did not take a side for the attachments or for the transfer. They simply asked the justices for a ruling. a
Banking sources said individual institutions were divided in their strategies if -- as is considered unlikely now -- there is no resolution. Some have decided tentatively not to transfer the money and to hope that the government will postpone any actions against them until the courts can rule. Others have opted to transfer the money in the expectation that the court eventually will side with the U.S. government.
Dames and Moore argues that the president usurped the authority of the courts with the agreements and unconstitutionally took property rightfully due the companies. The government responds that the president's order, his power to settle foreign claims and authority granted by Congress under the International Emergency Economic Powers Act authorize his actions.
The United States has argued that the government is not usurping judicial authority to interpret the law but that it simply has changed the law.