By: Allan M. Siegel
The U.S. Supreme Court recently ruled that victims of terror allegedly
sponsored by Iran may recover almost $2 billion. The case arose from a
lawsuit filed against the government of Iran by families of American military
members killed in the 1983 Beirut bombing, which was carried out by Hezbollah
suicide bombers. The Iranian government was alleged to have funded Hezbollah’s
activities. The families’ claims were filed under 28 U.S. Code §
1605A – the terrorism exception to the jurisdictional immunity of
foreign countries. Iran did not file an answer to the federal lawsuit
and the families won a $2.67 billion default judgment.
Since winning the default judgment, the families have attempted to enforce
the judgment upon Iranian government assets in the U.S. The collection
effort proved difficult and the plaintiffs did not find Iranian government
assets until 2008 when they located $1.75 billion held by Citibank for
Banca UBAE, S. p. A, an Italian bank, which also held funds on behalf
of the Iran central bank Bank Markazi. The $1.75 billion had already been
frozen by the U.S. government as economic sanctions for funding terrorism
In 2010, the families filed a claim in New York federal court seeking to
collect on their judgment. Their lawsuit cited the Terrorism Risk Insurance
Act (TRIA), which permits collection upon assets of a terrorist party.
It was not clear whether the $1.75 billion in funds held by Citibank met
the TRIA’s statutory definition of a terrorism party’s assets.
So Congress stepped in and passed the Iran Threat Reduction and Syria
Human Rights Act of 2012 (ITRSHRA), which clearly provided that the frozen
assets were subject to collection efforts by the families of the Beirut
bombing victims. Based on the new law and the TRIA, the New York federal
court ruled in favor of the plaintiff families.
The Central Bank of Iran subsequently appealed the case to the U.S. Supreme
Court. The Bank argued that Congress violated separation of powers by
passing a law that determined the outcome of pending litigation. On April
20, 2016, the U.S. Supreme Court held that Congress may pass laws dictating
to the judicial branch how it ought to interpret a law that Congress passed,
as long as that law does not dictate fact finding or an interpretation
of the Constitution, which are the exclusive province of the judicial branch.
“Congress, our decisions make clear, may amend the law and make the
change applicable to pending cases, even when the amendment is outcome
determinative,” Justice Ruth Bader Ginsburg wrote in a 6-2 majority
(Chief Justice Roberts and Justice Sotomayor dissented).
The message from
Peterson is clear: if you sponsor terrorism and have money or assets based in the
United States, you can be held accountable. The case is
Bank Markazi v. Deborah Peterson et al., case number 14-770.