This month marks the 30th anniversary of the truck bomb attack by a Hezbollah extremist that killed 241 U.S. Marines in their Beirut barracks. The massive blast on October 23, 1983, left few survivors; bent reinforced concrete columns “like rubber bands,” as a judge later described it; and seared the term “suicide bombing” into the American psyche.

Legal remedies have been slow. In October 2001, some 812 family members of the victims sued the government of Iran, which they believe directed the bombing. In 2007 the family members won a $2.65 billion default judgment in Peterson v. the Islamic Republic of Iran, with no obvious way to enforce it—until this year. On July 9 a federal district court judge in Manhattan ordered Citibank N.A. to turn over $1.9 billion in blocked Iranian assets to a trust pending resolution of Iran’s appeal. The proceeds would be shared by a now enlarged group of 1,210 claimants.

If the order withstands appeal, the Peterson case will be a rare example of a successful recovery. At least $54 billion in default judgments against state sponsors of terror have been handed down since 1996, when the Foreign Sovereign Immunities Act was amended to allow victims of state-sponsored terror to sue for damages. But few have collected on those judgments since 2000, when the last major pool of blocked Iranian assets was distributed. “The past decade of litigation under the FSIA has proved, for victims of state-sponsored terrorism, to be a journey down a never-ending road littered with barriers and often obstructed entirely,” Senior U.S. District Judge Royce Lamberth wrote in a 2011 ruling on a claim against Iran related to the 1996 Khobar Towers bombing in Saudi Arabia.

But the Peterson lawyers—Thomas Fortune Fay, a personal injury lawyer, and Steven Perles, an international reparations expert—have played both the legal and the political chess game extremely well. Perles, who helped spearhead the 1996 FSIA amendments, first teamed up with Fay in a successful test case in 1995, Flatow v. Iran, which created a template for future FSIA default judgments.

In Peterson, their primary obstacle was finding Iranian assets still in the United States. Long-running sanctions have prohibited U.S. citizens and entities from virtually all transactions with Iran, so lawyers for claimants have had to be creative. Families holding a $409 million default judgment on a similar claim, for example, have tried since 2007 to seize 2,500-year-old Persian relics from the University of Chicago. Perles and Fay went after shipping companies that owed Iran money for tanker fuel. “We crashed and burned on all those efforts,” says Perles.

But timing, and Perles’s government network, were on the Peterson claimants’ side. In 2008 the U.S. government was looking for new ways to block assets that could be used to fund Iran’s nuclear program. The Office of Foreign Assets Control learned that $2.1 billion in securities owned by an unidentified Iranian party were parked in a Citibank account in New York. The account was of an asset class then beyond OFAC’s legal reach. New York state law, though, gave creditors holding judgments the right to require a bank to freeze assets pending a court evaluation of their claim.

In June 2008, OFAC gave Perles the Citi account number, making “it pretty clear that these assets were subject to flight and we should move right away,” recalls Perles. He called Salon Marrow Dyckman Newman & Broudy’s Liviu Vogel, an expert in state judgment enforcement law. The next morning, Vogel filed an enforcement action in federal district court in Manhattan, seeking to freeze the assets on the grounds that OFAC believed they belonged to Iran.

As the court case proceeded under seal at OFAC’s request, Vogel had to prove both that the assets were located in the United States and owned by Iran’s government, making them eligible to fulfill a judgment under FSIA. That was difficult, given that the assets were so-called dematerialized securities, which only exist electronically. “They’re just blips on computers,” says Vogel.

Representing Citi, Davis Wright Tremaine’s Sharon Schneier told the judge that, as far as the bank was concerned, the account was held by its customer, Luxembourg-based Clearstream Banking S.A., an international securities intermediary. And Clearstream, tapping White & Case, asserted that it was acting on behalf of Italy’s Banca UBAE SpA, and wasn’t required to provide information about UBAE’s customers. Clearstream also argued that the court had no jurisdiction since the account had been opened in Luxembourg.

Two weeks into the case, Vogel caught a break. Clearstream offered documents to show that it had already transferred $250 million worth of the securities to UBAE. But the documents also revealed Bank Markazi, Iran’s central bank, as the customer behind the transfer.

With a temporary freeze in place, Vogel flew to Rome, where he convinced a judge to compel UBAE to turn over documents providing details on how the Iranian assets had flowed into and remained in New York. In late 2011, other claimants began to assert rival claims on the account, including those holding judgments against Iran related to kidnappings during Lebanon’s Civil War; the assassination of Rabbi Meir Kahane in New York by Islamists; the deaths of Americans in Hamas bombings in Israel; and the Khobar Towers bombing. In a court appearance, Bank Markazi finally conceded that it owned the account; via its lawyers at Chaffetz Lindsay, it asserted that it was immune because FSIA exempted central bank funds from seizure.

But that immunity was undermined in February 2012, when President Barack Obama ordered a block on all Iranian government assets, including those held by the central bank, which hadn’t previously been designated for sanctions. Under the Terrorism Risk Insurance Act, the Citi account could now be used to satisfy terror-related judgments. “It really took away all the fact issues that Clearstream had been presenting for three years,” Vogel says.

Vogel filed for summary judgment in April 2012. Two months later, the claimants—now including the new groups as well as the original Peterson plaintiffs—presented the judge with an agreement to share the proceeds. “We wanted to show the judge that we were playing nice in the sandbox,” says Vogel. That, in turn, boosted efforts to get additional help on Capitol Hill. A Peterson lobbyist, working with DLA Piper’s government relations team on behalf of the Khobar victims, pressed lawmakers to add a provision to a new Iran sanctions bill. Drafted by Vogel and passed in August 2012, it named the Citi assets as funds available to terror claimants holding judgments, preempting Uniform Commercial Code provisions that insulate indirectly held assets from judgment creditors.

In a decision unsealed in March, U.S. District Judge Katherine Forrest ruled that the court had jurisdiction over both UBAE and Clearstream, and that assets could be used to satisfy the judgment under FSIA, TRIA, and the new Iran sanctions law. On July 9 she ordered Citi to turn over the cash to a trust.

On September 9, Clearstream announced a settlement with the Peterson claimants. Iran and UBAE have appealed. The appeals delay yet again a recovery for surviving family members of the 1983 victims, 166 of whom have died since the filing.

Meanwhile, at press time there was good news for Iran claimants in another turnover action spearheaded by Stroock & Stroock & Lavan’s James Bernard, who represents the family of Kahane and others. In September, a federal district judge ruled on summary judgment that the U.S. government could seize a Manhattan office tower that prosecutors claim is partly owned by another Iranian bank via a shell company. The claimants, including many of the same groups as in Peterson, plan to ask the judge to rule on their summary judgment motion seeking a turnover of the building under FSIA and TRIA.