Bankruptcy

• Author: International Law Group

This case involves the bankruptcy of Dr. Jawad Hashim, his wife, and his two sons. Hashim was the first President and Director General of the "Arab Monetary Fund" (AMF), an international organization similar to the International Monetary Fund (IMF). In addition, Hashim also served as planning minister under Saddam Hussein. In 1982 or 1983, Hashim defected to Canada and Saddam Hussein allegedly froze the family's Iraqi assets.

When the AMF audited its accounts, it charged Hashim and others with "massive misappropriation and embezzlement." In December 1988, the AMF sued Hashim and his family in Canada and England. The Chancery Division of the English High Court of Justice ordered Hashim to repay approximately $50 million plus $80 million in interest. The court also held the Hashims liable to the AMF for its litigation costs including attorneys' fees. In August 1999, the English court set the cost award at approximately $960,000.

The Hashims moved to Arizona after the English litigation and petitioned the federal court there for Chapter 7 bankruptcy protection. AMF filed a proof of claim in June 1995, requesting "in excess of $10,000,000" to satisfy the English court's award of costs. In 1996, the U.S. Bankruptcy Court disallowed the AMF claim in the Hashim bankruptcies, stating that the amount of the award was so disproportionate to AMF's successful claims that it was "repugnant to American jurisprudence." [See Restatement (Third) of Foreign Relations Law, Section 482(2)(d) (1987) (a court need not recognize a foreign judgment if that judgment is repugnant to U.S. public policy)]. The U.S. Court of Appeals for the Ninth Circuit, however, reverses the bankruptcy court's order and remands.

The...