U.S. Eyes 18th-Century Law to Seize and Sell Iranian Oil

The United States is considering utilizing a 18th-century legal doctrine to obtain and sell Iranian oil as part of its ongoing blockade of the nation. According to Bloomberg, the Justice Department, in collaboration with the Pentagon, is preparing to employ prize law, a mechanism that has not been actively utilized in American courts since the conclusion of World War II.

This approach could streamline the process of acquiring captured oil and ships, thereby enabling the expeditious sale of the goods, with the resulting revenue being directed towards the US Treasury.

Houston is being identified as a potential central location for these legal proceedings, given the city's strategic advantages. The Southern District of Texas, where Houston is situated, possesses both jurisdiction over a significant port and proximities to vast petrochemical infrastructure. This provides the capability to store and process considerable quantities of crude oil.

Attorney Aaron Reitz, representing the US Attorney's office, has described the revival of prize courts as the utilization of an "ancient body of maritime law." The administration is pursuing this legal avenue amid its efforts to exert additional economic pressure on Iran. Since the imposition of the blockade in April, US forces have intercepted vessels owned or linked to Iran on multiple occasions.

Proponents of this strategy assert that it would not only provide a more efficient financial tool to deny Iran valuable exports but also serve a strategic purpose. By reinstating the system, the US could reinforce the perception that the blockade is a serious wartime measure, rendering it more challenging for neutral commercial vessels to transport goods that Washington deems supportive of Iran.

However, there are significant uncertainties regarding the application of this centuries-old framework under contemporary international law. Maritime attorney Allison Luzwick has pointed out that this area of law has not been tested in modern times, and courts might need to ascertain whether the ongoing conflict provides sufficient legal justification for invoking prize authority, particularly considering the question of congressional authorization for the hostilities.

Moreover, there are substantial practical challenges associated with implementing this approach. Federal judges, prosecutors, and the Navy lack contemporary experience in managing prize cases, necessitating the redevelopment of procedures for modern shipping and warfare. Additionally, disputes may arise from shipowners and other parties who possess financial claims to the seized vessels and their cargo.

Critics also argue that normalizing prize law could set a precedent that the US might later regret. A rival power, such as China, could potentially leverage US practice when attempting to seize American or neutral merchant vessels during a future conflict. Consequently, this proposal could enable Washington to convert captured Iranian oil into government revenue and intensify economic pressure on Tehran, but it would entail reopening an area of wartime law that has remained dormant for over a century.