The U.S. Court of Appeals for the District of Columbia Circuit recently issued a decision affirming the civil forfeiture of over 700,000 barrels of Iranian crude oil seized from two (2) tankers in the Mediterranean on a novel terrorism forfeiture theory. United States v. All Petroleum-Product Cargo Onboard the M/T Arina, No. 24-5218 (D.C. Cir. April 21, 2026). The crude at issue was seized following a November 2020 ship-to-ship transfer from the sanctioned M/T Stark I to the M/T Arina in the Persian Gulf. The U.S. directed both vessels to discharge ports and filed civil forfeiture complaints against their cargos. Following seizure, the crude was sold in a court-authorized interlocutory sale. The forfeiture complaints alleged that the National Iranian Oil Company (NIOC) provides material support to the Islamic Revolutionary Guard Corps (IRGC), a U.S. federal crime for which forfeiture may be pursued under 18 U.S.C. § 981(a)(1)(G)(i). As such it provides the legal foundation that prior Iranian oil forfeiture cases, which resolved through agreed forfeitures or guilty pleas, never produced.
The decision rests on three (3) significant holdings. First, the DC Circuit overcame the legal obstacle posed by the fact that at the time of the seizure the oil was no longer property of NIOC, by applying the relation-backed doctrine. Under this theory, the Court concluded that forfeiture title vests in the United States when the predicate offense is committed, not at the time of seizure. Because NIOC’s alleged support of the IRGC is an ongoing offense going back to at least 2012, any subsequent purchaser of NIOC-origin oil, including the defendant Turkish claimant Aspan Petrokimya, acquired an interest already subject to forfeiture. The implication of this holding, although expressly stated, is that the United States holds inchoate title to all NIOC-origin oil produced during the offense period, that can be perfected by subsequent seizure and forfeiture.
The next significant aspect of the decision was the broad application of the U.S. Constitution’s Foreign Commerce Clause to reach purely foreign transactions that affect U.S. commerce through generalized impact on global commodity market prices. Building off United States v. Park, 938 F.3d 354 (D.C. Cir. 2019), the Court applied the Interstate Commerce “substantial affects” analysis to the Foreign Commerce Clause, and held that even if none of the seized oil was headed to the United States, and even if the specific transactions had no direct U.S. connection, the Foreign Commerce Clause is satisfied because NIOC’s overall oil trading affects global markets that affect U.S. energy prices. The D.C. Circuit’s approach would seem to extend congressional regulatory authority over foreign commerce to all internationally traded commodities.
Third, the Court construed the terrorism statute’s “calculated to influence” element as an intent requirement satisfiable at the pleading stage by inference from the alleged organizational integration of NIOC and the IRGC.
Notably, the decision was rendered in response to a motion to dismiss. As such all of the government’s factual allegations were accepted as true. The claimant then admitted all factual allegations and consented to judgment to provide a clean record for the appellate decision. The DC Circuit’s holdings are, therefore, purely legal: they establish allegations that satisfy requirements for forfeiture under the statutes, but they do not provide precedent that NIOC is in fact a terrorism perpetrator since that fact was admitted. A future claimant who contests the factual allegations would require the government to prove each element, a daunting task that would likely require classified intelligence evidence and test the limits of OFAC designations as proof of terrorist support.
The forfeiture is also notable for succeeding without relying on IEEPA, OFAC enforcement authority, or the U.S. financial system nexus that ordinarily anchors sanctions enforcement. OFAC’s 2020 counterterrorism designation of NIOC was a very limited factor in the decision, serving only as support for the intent allegation. The appellate decision remains subject to petition for rehearing through June 5, 2026, and to petition for certiorari at the U.S. Supreme Court through July 2026.
For more information on the US Court of Appeals for the District of Columbia and/or U.S. sanctions generally, please contact us at: info@chaloslaw.com.