Sperry Corp. is challenging a decision by the Treasury Department to seize 2 percent of all money awarded to U.S. corporations by the international tribunal that is considering their claims against Iran.
Treasury is taking the money as a fee to offset the cost of the claims process. The Federal Reserve Bank of New York, on Treasury's instructions, withheld $56,000 of a $2.8 million settlement Sperry reached with the Iranians in July. Sperry has sued in United States Claims Court to get the money back.
John D. Seiver, Sperry's Washington attorney, argued that Treasury had no right to withhold the money in the absence of legislation authorizing the deduction. The 2 percent fee was really a tax, he argued, and could not be taken without an act of Congress permitting it. A bill to do that was introduced at the administration's request last week.
The government says the deduction is justified even without legislation because the claims process benefits only the claimant companies, not the general public. In a letter to Sperry's attorneys, Russell L. Munk, Treasury's assistant general counsel for international affairs, said costs associated with the tribunal "are expected to total approximately $8 million a year over the next 10 years," an expense he said was "not incurred for the benefit of the taxpaying public in general" but only on behalf of the corporate claimants.
But Seiver argued that the claimants are only taking part in the Hague process because the government forced them to, and therefore they should not have to pay for it. The Algiers agreement of 1981, which led to the release of the American hostages, required the claimants to give up all other forums and therefore "this deduction is an arbitrary and capricious tax which is being levied to finance the procedure which the parties objected to orginally and resisted," Seiver argued. The Algiers agreement was upheld by the U.S. Supreme Court.
Chief Claims Court Judge Alex Kozinski is expected to rule early this summer. He declined to certify the Sperry case as a class action, in which Sperry would represent all other claimants. This means that, even if Sperry wins, the other corporations from which money has been withheld will have to litigate separately unless Treasury accepts the precedent.