7th Circuit Rejects Terrorism Victims' Bid to Seize Chicago Museums' Persian Artifacts

David Bario

The National Law Journal

04-01-2011

Victims of a brutal 1997 suicide bombing in Jerusalem lost a bid to seize Iranian assets in the United States Tuesday, when the 7th U.S. Circuit Court of Appeals ruled that a federal judge in Chicago improperly rejected Iran's sovereign immunity in the case.

In 2003 the plaintiffs -- Americans who were among 200 injured in the Iran-supported Hamas attack and their family members -- won a $71.5 million default judgment against Iran in the U.S. District Court for the District of Columbia. Their search for assets to satisfy the judgment led them to collections of ancient Persian artifacts at the University of Chicago's Oriental Institute and the city's Field Museum of Natural History.

The museums fought the plaintiffs' efforts to impose discovery and seize the collections, arguing that the loaned Iranian antiquities were protected by the Foreign Sovereign Immunities Act. But in 2006, Chicago U.S. District Judge Blanche Manning ruled that FSIA protection did not apply because Iran hadn't appeared to plead its immunity. Two years later, after Iran hired Thomas Corcoran Jr. of Washington-based Berliner, Corcoran & Rowe to fight the seizures, Manning affirmed a magistrate judge's order requiring Iran to disclose all of its U.S. assets.

Iran appealed both rulings to the 7th Circuit, and the museums (represented by Winston & Strawn and Baker & McKenzie) intervened in the appeal. The U.S. Department of Justice also made a rare appearance as an amicus curiae to Iran in the appeal, joining the appellants in arguing that the lower court had erred in requiring Iran to assert FSIA immunity as an "affirmative defense."

The 7th Circuit agreed. The panel (Judges William Bauer, Diane Sykes and Philip Simon, sitting by designation) called both of the lower court's decisions "seriously flawed" and reversed them, ruling that "the district court's approach to this case cannot be reconciled with the text, structure, and history of the FSIA."

The notion that Iran effectively waived its sovereign immunity by failing to initially appear in the case flies in the face of the core FSIA principle "that a foreign state's property in the United States is presumed immune from attachment," the panel ruled. Moreover, the panel found, "[t]his presumptive immunity, when read with other provisions of the FSIA, requires the plaintiff to identify the specific property he seeks to attach; the court cannot compel a foreign state to submit to general discovery about all its assets in the United States."

Neither Iran counsel Corcoran nor plaintiffs lawyer David Strachman of McIntyre, Tate & Lynch were immediately available for comment on Wednesday.