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In order for a court to grant a preliminary injunction, there must be a showing of possible irreparable injury and either (1) probable success on the merits, or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.
Plaintiff American Bell International Inc. contracted to provide services to the Imperial Government of Iran Ministry of War (Imperial Government), who could call its down payment at any time. The down payment was secured by a letter of credit from Bank Iranshahr, which was secured by defendant Manufacturers Hanover Trust Company. The Imperial Government was overthrown and failed to pay substantial invoices pursuant to the contract. Subsequently, plaintiff moved for a preliminary injunction pursuant to Rule 65(a), Fed.R.Civ.P., and the All Writs Act, 28 U.S.C. § 1651, enjoining defendant Manufacturers from making any payment under the Letter of Credit to the foreign bank.
Under the circumstances, should plaintiff be granted the preliminary injunction?
The court denied plaintiff’s request for a preliminary injunction prohibiting payment under the letter of credit, holding that there was no showing of irreparable harm where the trust company could pay money damages for wrongful payment, and where the plaintiff could invoke the Sovereign Immunity Act, 28 U.S.C.S. §§ 1605(a)(2), 1610(b)(2), against the Islamic Republic, successor to the Imperial Government's interest, and the foreign bank. The court found no probable success on the merits where there was a conforming demand for payment, and there was a weak showing of fraud. The balance of hardships weighed in favor of the trust company, which would likely have incurred additional expenses for wrongfully withholding payment under its letter of credit.