The U.S. Justice Department, working with the Pentagon, is preparing to revive "prize law", a centuries-old wartime system that let courts hand captured ships and cargo to the government. The goal is to seize and sell captured crude and vessels taken during the blockade of Iran, sending proceeds to the U.S. Treasury. The approach faces untested legal ground and could set a precedent rivals like China might later use against American shipping.
A faster route than civil forfeiture
The Justice Department is exploring prize law as an alternative to civil forfeiture, the mechanism the government currently relies on to take ownership of vessels accused of sanctions violations. Civil forfeiture cases can become complicated and slow when shipping companies, creditors, terrorism victims, or other parties assert competing claims to a ship or its cargo. Prize law, which historically let courts decide whether vessels and cargo captured in armed conflict could become U.S. property, largely disappeared from American practice after the 19th century and has been dormant since World War II.
A prize proceeding could narrow those disputes and let captured oil be sold more quickly, with proceeds going to the Treasury. Washington has intercepted Iranian-owned or Iran-linked vessels since the blockade began in April, and using prize law would turn those captures into a more direct financial tool. Supporters also see the move as a signal that the U.S. treats the blockade as a wartime measure rather than an ordinary sanctions regime.
Houston seen as the venue
Houston is being considered as a central venue for these cases, since the Southern District of Texas has jurisdiction over a major port alongside the country's largest concentration of petrochemical infrastructure. US Attorney Aaron Reitz, whose office is working with Justice Department officials in Washington, said the department is reviving prize courts, describing the concept as an ancient body of maritime law.
Untested law, real risks
But applying a framework last used generations ago carries considerable uncertainty. Maritime attorney Allison Luzwick said: "This really is a historical area of law that is not tested in modern times". Courts could be asked to weigh whether the current conflict provides sufficient legal grounds for prize authority at all, particularly given questions over congressional authorization for the hostilities.
Federal judges, prosecutors, and the Navy have almost no contemporary experience administering prize cases, so procedures would effectively need rebuilding for modern shipping and warfare. Shipowners and other parties with financial claims are also expected to contest seizures. Critics also warn that normalizing prize law could set a precedent a rival power such as China could later cite to justify seizing American or neutral merchant vessels in a future conflict.
Source: Oilprice.com
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