Levin, et al. v. Bank of New York, et al., 09 CV 5900 (RPP) (S.D.N.Y. Jan. 2011), involves claims of priority to assets blocked by the U.S. Office of Foreign Assets Control of the U.S. Treasury held by various banks to satisfy judgments obtained by various persons injured by Republic of Iran.  The Levin plaintiffs obtained a judgment based on Iran’s complicity in Hizbollah’s terrorist acts of torture and imprisonment of Jeremy Levin in Lebanon in 1983-84.  Competing judgments were held (inter alia) by the family of a woman killed in August 2001 during a terrorist attack on a restaurant in Jerusalem.

The District Court determined whether the Levin plaintiffs held a priority interest in the Blocked Assets entitling them to turnover or, instead, whether their failure to obtain an order of the court pursuant to 28 U.S.C. § 1610(c) rendered their writs of execution void.  Noteworthy rulings relating to international practice include:

First, the District Court determined that an exception to the Foreign Sovereign Immunities Act was necessary before any of the blocked assets could be attached or seized to satisfy the judgment.

Second, the Court determined that the exception in the Foreign Sovereign Immunities Act for executions of judgments based on personal injury arising from terrorist attacks applied.  Accordingly, blocked assets were subject to execution or attachment in order to satisfy a judgment to the extent of any compensatory damages.

Third, the Court found that, even though the Levin’s claims were prosecuted under the predecessor of § 1605 of the FSIA, nonetheless, the “court order” requirement of § 1610(c) was mandatory – meaning that attachment and execution to satisfy the judgment could not be accomplished by applying to the clerk or local sheriff, but an application on notice to the district court in the relevant jurisdiction was mandatory.

Fourth, concerning which local rules needed to be followed to enforce the judgment, the District Court determined that, in the absence of a federal statute, the procedure in supplementary proceedings to execute a federal court’s judgment shall be that of the forum state, here New York.  Under New York law, the “separate entity” rule dictates that each branch of a bank be treated as a separate entity for attachment purposes.  See our blog posting of Allied Maritime, Inc. v. Descatrade, S.A., 620 F.3d 70 (2d Cir. 2010).  A second judgment was therefore not entitled to priority.

Fifth, the Court’s discussion and application of the law concerning attachment of electronic funds transfers followed Second Circuit precedent described in our e-book, International Practice:  Topics and Trends.