Civil War-Era Law Returns in Iranian Oil Dispute

Judge writing at desk with gavel and Lady Justice statue — Photo: sebra / Shutterstock

The Justice Department is dusting off a Civil War-era legal tool, last used in World War II, to let the U.S. Navy seize Iranian oil tankers and sell the oil for the government’s own profit.

Quick Take

The Justice Department is reviving “prize courts,” a wartime legal system dormant since World War II, to claim Iranian oil tankers as U.S. property.
Officials say seized ships and cargo could be sold, with the money going straight to the U.S. Treasury.
Legal experts warn the plan faces a major problem: Congress never declared war on Iran.
Critics say using this old law could backfire, giving rivals like China an excuse to seize American ships later.

Justice Department Revives a Civil War-Era Court

Aaron Reitz, a U.S. attorney working with Justice Department headquarters in Houston, said the government is “now reviving” prize courts, calling prize law an “ancient body of maritime law”. Bloomberg reported on August 26 that the department is preparing to activate this “long-dormant maritime war court” to make it easier for the military to capture Iranian oil tankers and treat them as spoils of war.

Fox Business reported the plan would let the government legally claim ships the Navy seizes, then sell the oil cargo with the proceeds handed over to the Treasury Department. This would fund enforcement of a U.S. blockade against Iran and help cover the cost of ongoing military operations, according to people familiar with the internal discussions.

How the Old Legal Process Would Work

Prize law is already written into federal statute, and legal analysis from the firm Holland & Knight says district courts with admiralty authority would handle the cases. A judge in one of these courts would decide whether the capture was legal and who owns the ship. Once a tanker is “condemned” under this process, the government can use it, sell it, or pocket the proceeds almost immediately.

Forbes reported in April that an Iranian-flagged vessel, the M/V Touska, was captured for allegedly breaking a U.S. blockade on Iranian ports, an example of the kind of case prize law is built to handle. Supporters argue this path moves faster than normal civil forfeiture, where owners can fight seizures for years in court before the government gets a final ruling.

Legal Experts Say the Plan Has Serious Holes

Legal experts told Fortune that reviving prize law could speed up seizures on paper, but they expect “ample legal complications” that will slow it down in practice. The biggest issue: prize law only works during a declared war, and Congress has never declared war on Iran. That gap could let ship owners challenge every seizure in court, dragging the process out anyway.

CBS: DOJ is reviving Civil War-era "prize law" (dormant since the Spanish-American War) to seize Iran-linked oil tankers/cargo, proceeds to Treasury. Maritime law expert Ian Ralby: "a make-it-up-as-we-go-along kind of situation." No US prize case since 1898. #Hormuz

— Hormuz Watch (@HormuzWatch) September 4, 2026

Legal scholar Allison Luzwick said international maritime law and the rules of war have changed so much since the last prize case that using this old framework now is “highly problematic”. Jill Goldenziel warned the move could set a dangerous precedent, potentially giving China legal cover to seize American or allied ships during a future conflict. Oil price analysts also noted that federal judges, prosecutors, and the Navy have almost no living experience running prize cases, meaning the whole process would have to be rebuilt from scratch.

No formal Justice Department memo, court filing, or presidential order confirming the plan has surfaced publicly yet. The reporting so far rests on officials speaking anonymously and one attorney’s public comments, not a finished legal document. Still, the underlying facts — that officials are actively working on this idea and describing it as already “reviving” — are not in dispute.

For Americans already skeptical of how Washington wields power at home and abroad, this story lands in familiar territory. A government agency is reaching for an obscure, centuries-old legal tool, largely out of public view, to grab foreign assets and route the money to federal coffers — all without a war declaration or a public vote in Congress. Whether courts ultimately allow it remains an open question.