The Department of Justice is preparing to reactivate maritime prize courts, a long-dormant legal mechanism that would make it easier for the U.S. government to claim Iranian oil tankers as war prizes and help offset the cost of the war, according to a new report.

The plan was first reported by Bloomberg Law, citing three people familiar with the matter.

Using prize courts would give the government a clearer legal path to claiming, as government property, ships seized by the U.S. Navy during its enforcement of a naval blockade of Iran. The process would allow the government to sell oil or other cargo from vessels that violated the blockade, with the proceeds going to the Treasury Department. The approach would mark a shift from the U.S. government's more familiar practice of using civil forfeiture actions tied to sanctions violations and terrorism-related claims to seize Iranian oil cargo in past years, applying instead a wartime framework that predates those modern sanctions regimes.

"Our national security interests may require the United States military to seize vessels or cargo supporting the enemy during military conflict," U.S. Attorney for the Southern District of Texas Aaron Reitz said in a statement provided to FOX Business by the DOJ. "If that happens, our federal courts must be ready to adjudicate the disposition of these captured vessels and cargo."

"Prize law is an ancient body of maritime law — already codified in statute but which we are now reviving — that sets the rules for how seized maritime property is condemned, returned or disposed of," Reitz continued.

Likely Legal Challenges

If the plan is put into effect, it will likely draw legal challenges from shipping companies that own vessels seized in the blockade. The Bloomberg report also noted that victims of Iranian terrorism may pursue claims against the seized assets — an established avenue, as U.S. courts have in past cases weighed competing claims by terrorism victims and other parties to seized Iranian-linked assets.

A Dormant Practice Dating to the Nation's Founding

The U.S. government has used prize courts to determine the legal status of captured ships and cargo since the nation's founding, beginning with the Revolutionary War. The practice has not been actively used since the Spanish-American War in the late 1800s.

Under the early frameworks, legally captured ships and cargo were sold, with the proceeds going to the crew of the ship that seized the condemned vessel. That practice ended in 1899 as the U.S. military sought to reduce privateering and modernize its legal frameworks for war.

Prize courts declined amid the evolution of naval warfare. The emergence of submarines in World War I, and their proliferation in World War II — when air power became another major threat to naval vessels — made it more difficult in practice for naval crews to stop and board a vessel, inspect its cargo, and return it to a port for trial.

A 2022 report by the Congressional Research Service notes that Congress has given exclusive jurisdiction over prize cases to federal district courts that are "sitting in admiralty," a legal term for when a judge is handling a specialized maritime case rather than a typical civil or criminal case. That process ordinarily requires the vessel to be physically brought into a given district court's jurisdiction. During World War II, a 1942 law gave federal courts authority over prize cases involving ships in allied ports, such as those in Australia or Great Britain, without returning to the U.S.

Despite that change, an analysis by the U.S. Naval Institute published in 2024 notes that no prize cases were adjudicated in U.S. courts in either World War I or World War II, or in the decades since. The analysis notes, however, that Congress enacted revised laws on the subject in the 1950s, which have been updated as recently as 2021 to include the Space Force, and that prize courts are acknowledged in recent editions of legal handbooks for naval commanders.

Texas District Signals Readiness

If the Trump administration attempts to use prize courts in the ongoing war with Iran, Reitz signaled that his district is prepared to address the resulting legal issues.

"The Southern District of Texas is home to the best ports in the nation along the Gulf of America and is the strategic nexus of maritime power, energy infrastructure, international commerce and federal law enforcement capacity," Reitz said. "My office is ready to represent the interests of the United States in adjudicating prizes brought to the Southern District of Texas through our federal courts in the interests of national security and justice."

The White House deferred comment to the Justice Department.