Hostage settlement to be weighed by Supreme Court

The agreement that freed the 52 American hostages from Iran faces its final test this week in the US Supreme Court. About $4 billion in Iranian assets and the foreign policy powers of the President hang in the balance.

Under the pact made by President Carter to release the Americans, most of the Iranian assets held here must be returned to Iran by July 19. But American companies are trying to keep the funds in the United States to repay millions of dollars that they lost during the Iranian revolution.

With only a few weeks to go before the July 19 deadline, the high court ordered a rare summer hearing for June 24, even though it already had closed hearings for the current term.

In the case before the court, the Los Angeles engineering partnership of Dames and Moore has sued Iran for an unpaid bill of $3.5 million. The firm has attached Iranian assets and wants to block their removal.

The US-Iranian agreement would cancel all such suits, return the money to Iran, and move the dispute into an international court. A fund of $1 billion in Iranian assets would be used to settle business claims.

At issue is whether the President has the power to cancel private suits as part of his role as foreign policy director.

In the hearing this week, lawyers for the US government can be expected to argue strenuously that the Constitution does give the President that power. The Iran agreement is but "the latest in a historical practice" of similar claims settlements, says a government legal brief.

Lawyers for Dames and Moore, however, challenge the President's authority to "commandeer and forfeit legal rights and property interests of private citizens" for foreign policy objectives.

Lawyers have been debating the constitutionality of the settlement ever since the deal was struck last January, and they have not reached a consensus.

In related cases brought throughout the country, two appeals courts have ruled in favor of the President. But two weeks ago a New York district court declared the agreeme nt unconstitutional.