Suhail Najim Abdullah Al Shimari, et al. v.
CACI Int'l,No. 09-1335 (4th Cir. 2011), addresses the
issue of "derivative sovereign immunity", which deserves
another look. According to the allegations, four Iraqi citizens
were seized by the U.S. military in the Iraq war zone and detained
by the military in Iraq. They allege that, while detained, the
contractor's employees and military personnel conspired among
themselves and with others to torture and abuse them and to cover
up that conduct. The District Court The district court denied the
contractor's motion, concluding: "Plaintiffs' claims
are justiciable because civil tort claims against private actors
for damages do not interfere with the separation of powers"
and that plaintiffs' claims "are not preempted by the
combatant activities exception at this stage because discovery is
required to determine whether the interrogations here constitute
'combatant activities' within the meaning of the
The Fourth Circuit reversed. Based on the "uniquely federal
interests involved in this case", the Court of Appeals
concluded that the tort claims are "preempted and displaced
under the reasoning articulated in Boyle v. United Technologies
Corp., 487 U.S. 500 (1988)". The Fourth Circuit therefore
reached the same conclusion as did the Court of Appeals for the
District of Columbia in Saleh v. Titan Corp., 580 F.3d 1
(D.C. Cir. 2009). The Fourth Circuit's reasoning included that
protecting the uniquely federal interests implicated by the federal
government's procurement from civilian contractors. Boyle
involved a government design of equipment. The current dispute does
not. Nonetheless, the Court of Appeals believed that
"potential liability under state law of military contractors
for actions taken in connection with U.S. military operations
overseas would similarly affect the availability and costs of using
contract workers in conjunction with military operations".
Circuit Judge Niemeyer filed a separate opinion concurring in
the result but adding that the claims should also have been barred
by the political question doctrine.
Circuit Judge King dissented, believing that the Court lacked
subject matter jurisdiction but, on the merits, disagreeing that
claims of torture by a military contractor are preempted.
While this clarification appears to open the door to FFIs maintaining U.S. dollar accounts on behalf of Iranian parties, the potential transfer of funds to or from such accounts continues to be severely constrained.
On December 11, 2013, the Department of the Treasury’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System (the Federal Reserve) and the New York State Department of Financial Services (NYDFS) each concluded regulatory actions against Royal Bank of Scotland Group plc (RBS or the Bank), based in the United Kingdom.
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