The opinion of the court was delivered by: GRIESA
Plaintiff Chase Manhattan Bank has moved for a preliminary injunction, which would restrain defendant Bank Markazi from further prosecution of an action brought by Bank Markazi against Chase in England. The motion is denied.
Bank Markazi is the central bank of Iran. For many years it has been a customer of Chase. As of November 1979, the critical time for purposes of the present action, Bank Markazi had three types of dollar accounts with Chase:
(1) A demand deposit account with Chase's head office in New York sometimes referred to as the "operating account";
(2) A "call account" with Chase's London branch; and
(3) A time deposit account with Chase's London branch.
Bank Markazi also had various time deposit accounts with Chase's London branch in European currencies.
A call account in an English bank is similar to a demand deposit account in a United States bank. However, pursuant to English law, interest was paid to Bank Markazi on the call account at Chase's London branch. No interest was paid to Bank Markazi on the demand deposit account at Chase's head office in New York.
The time deposit accounts at Chase's London branch were governed by English law, pursuant to the express agreement of the parties.
In 1975 it was agreed between Bank Markazi and Chase that the balance in the operating account in New York would be kept generally within the range of $ 10 million to $ 15 million. It was agreed that if the balance in the New York account fell below $ 10 million, Chase would make a transfer from the London call account to make up the difference. Similarly, if the New York balance exceeded $ 15 million, Chase would transfer the excess to the call account in London. As of November 1979 the bulk of the funds which Bank Markazi had on deposit with Chase were in the London accounts.
On November 14, 1979 President Carter issued Executive Order 12170 entitled "Blocking Iranian Government Property." This order was issued pursuant to the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701 et seq., and the National Emergencies Act, 50 U.S.C. §§ 1601 et seq. and 3 U.S.C. § 301. The order provided in part:
"I hereby order blocked all property and interests in property of the Government of Iran, its instrumentalities and controlled entities and the Central Bank of Iran which are or become subject to the jurisdiction of the United States or which are in or come within the possession or control of persons subject to the jurisdiction of the United States."
The Secretary of the Treasury was authorized to implement the order.
On November 14, 1979 the Department of the Treasury issued certain regulations under the President's blocking order. 31 C.F.R. § 535.101 et seq. One of these regulations, 31 C.F.R. § 535.902, provided:
"Branches and subsidiaries in foreign countries of persons subject to the jurisdiction of the United States are licensed to set-off their claims against Iran or Iranian entities by debit to blocked ...