The opinion of the court was delivered by: MOTLEY
This is an action for breach of contract. Plaintiff Continental Grain Export Corporation (Continental), a corporation organized and existing under the laws of the State of Delaware with its principal place of business in the State of New York brings this action to recover demurrage costs against defendants Ministry of War-Etka Co. Ltd. (Etka) and The Islamic Republic of Iran (Iran). Jurisdiction is asserted under 28 U.S.C. § 1603 and 28 U.S.C. § 1602 et seq.
This action is now before the court on defendants Etka's and Iran's motion to dismiss on the ground that the court is without subject matter jurisdiction to hear the action under an international agreement. Defendants raise the motion to dismiss pursuant to an order to show cause in order to preserve their rights to move against the complaint on other grounds. For the reasons stated below, defendants' motion to dismiss is denied.
Continental alleges that in May and June of 1978, it entered into two contracts with Etka to sell rice. Each contract provided that demurrage at the port of discharge would be for the buyer's account. Continental alleges that it incurred demurrage costs in the amount of $408,691.33. It contends that Etka has refused to pay this claim. Iran has guaranteed the payment of Etka's debts and obligations pursuant to a statute entitled the "Law Concerning the Guarantee of Payment of Installments of Contracts for Consumption Cooperatives and the Iranian Armed Forces [ETKA] and Foreign Sellers by the Ministry of Finance."
On November 4, 1979, the American Embassy in Tehran was seized. A national emergency was declared on November 14, 1979 by President Carter and resulted in the blocking of the removal or transfer of "all property and interests in property of the Government of Iran, its instrumentalities and controlled entities which were subject to the jurisdiction of the United States" pursuant to the International Emergency Economic Powers Act. Executive Order No. 12170, 3 C.F.R. 457 (1980). The Secretary of the Treasury promulgated implementing regulations, which provided, that "[U]nless licensed or authorized. . . an attachment, judgment, decree, lien, execution, garnishment, or other judicial process is null and void with respect to any property in which on or since [November 14, 1979] there existed an interest of Iran." 31 C.F.R. § 535.203 (e)(1980).
On January 19, 1981, the governments of the United States and Iran entered into an agreement called the Declarations of the Democratic and Popular Republic of Algeria and Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the United States of America and the Government of the Islamic Republic of Iran (Accords). The purpose served by the Accords was "to terminate all litigation as between the Government of each party and the nationals of the other, and to bring about the settlement and termination of all such claims through binding arbitration."
Under the Accords, the United States agreed:
to terminate all legal proceedings in the United States courts involving claims of United States persons and institutions against Iran and its state enterprises, to nullify all attachments and judgments obtained therein, to prohibit all further litigation based on such claims, and to bring about the termination of such claims through binding arbitration.
On February 24, 1981, President Reagan issued an Executive Order in which he ratified the Executive Orders issued by President Carter. Executive Order No. 12294, 46 Fed. Reg. 14111. Moreover, he "suspended" all claims which may be presented to the Tribunal and provided that such claims "shall have no legal effect in any action now pending in any court of the United States." Dames & Moore, 453 U.S. 654 at 662-66, 101 S. Ct. 2972, 69 L.Ed 2d 918 (1980). The suspension of any particular claim terminates if the Claims Tribunal determines that it has no jurisdiction over that claim; claims are discharged for all purposes when the Claims Tribunal either awards some recovery and that amount is paid, or determines that no recovery is due. Id. (footnotes omitted).
Executive Order 12294 provides:
Section 1. All claims which may be presented to the Iran-United States Claims Tribunal under the terms of Article II of the Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the Islamic Republic of Iran, and all claims for equitable or other judicial relief in connection with such claims, are hereby suspended, except as they are presented to the Tribunal. During the period of this suspension, all such claims shall have no legal effect in any action now pending in any court of the United States, including the courts of any state or any locality thereof, the District of Columbia and Puerto Rico, or in any action commenced in any such court after the effective date of this Order. Nothing in this action precluded the commencement of an action after the effective date of the Order for the purpose of tolling the period of limitations for commencement of such action.
Section 3. Suspension under this Order of a claim or a portion thereof submitted to the Iran-United States Claims Tribunal for adjudication shall terminate upon a determination by the Tribunal that it does not have jurisdiction over such claim or such portion thereof. (Emphasis added).
On October 19, 1981, Continental commenced an arbitration proceeding before the Tribunal. The Tribunal dismissed the action on the ground that it lacked jurisdiction under Article ...