THE LIBYAN ASSET FREEZE AND ITS APPLICATION TO FOREIGN GOVERNMENT DEPOSITS IN OVERSEAS BRANCHES OF UNITED STATES BANKS: LIBYAN

ARAB FOREIGN BANK v. BANKERS TRUST CO.
Corinne R. Rutzke* INTRODUCTION United States asset freezes are political weapons invoked in response to international crises.' Traditionally, United States asset freezes have blocked foreign government assets within the jurisdiction of the United States.2 Following the 1979 Iranian hostage crisis, however, United States peacetime asset freezes have attempted to block dollar-denomi4 nated accounts3 held in foreign brancheS of United States banks.5 An important legal issue associated with the use of peacetime blocking
* J.D. Candidate, 1988, Washington College of Law, The American University.
1. OFFICE OF FOREIGN ASSETS CONTROL, BLOCKED FOREIGN ASSETS IN THE UNITED STATES 1, 3 (1985) TREASURY PAMPHLET]. Historically, the

blocking control orders, promulgated pursuant to section 5(b) of the Trading with the Enemy Act, authorized the President to regulate or prohibit any property transaction involving a foreign country or national during wartime. Trading with the Enemy Act of 1917, 50 U.S.C. app. § 5(b)(1)(B) (1982). Following the entry of the People's Republic of China into the Korean War in 1950, President Truman blocked Chinese and North Korean property within the jurisdiction of the United States. The Management of Blocked Foreign Assets in the United States, 12 INT'L CURRENCY Rzv. 37, 38 (No. 6 1980). Expanding the scope of the Trading with the Enemy Act, the International Emergency Economic Powers Act of 1977 permits the President, in peacetime, to nullify or prohibit any transfer or withdrawal of property where a foreign country or national has any interest. International Emergency Economic Powers Act of 1977, 50 U.S.C. § 1702 (a)(1)(B) (1982). Blocking controls, however, are not always employed as