The Iranian government has racked up nearly $18 billion in court judgments in Washington since 2008 for support of terrorist attacks. But Iran has yet to pay a dime, and victims’ lawyers are expressing frustration at their lack of options.
Congress approved legislation five years ago to raise the stakes in civil terrorism lawsuits and make it easier to collect on judgments. Since then, the dollar amounts have gone up, but judgments remain largely unsatisfied.
The amendment to the Foreign Sovereign Immunities Act was widely credited with pushing the Libyan government to reach a $1.5 billion settlement in late 2008 in a group of civil terrorism cases. Still, lawyers report that their hands are often tied when going after assets belonging to Iran and other foreign governments.
A review of records in the U.S. District Court for the District of Columbia, the venue where most cases against alleged state sponsors of terrorism are filed, showed $23.3 billion in judgments entered against Iran, North Korea, Sudan and Syria since 2008; several billion dollars more in pre-2008 judgments were pending. Of the judgments, all but a handful were against Iran.
Earlier this month, U.S. District Judge John Bates ordered Iran to pay $8.4 billion to victims of bombings at U.S. embassy buildings in Beirut in 1983 and 1984. It was the single largest judgment entered in a terrorism case since 2008.
Absent participation from Iran, victims’ lawyers have gone after Iranian assets held by companies that do business in the United States, with limited success. Lawyers also are trying to convince foreign courts to recognize the judgments, allowing them to seek Iranian assets abroad.
Crowell & Moring partner Stuart Newberger, who has represented victims in terrorism cases, said he’s working with other victims’ advocates and lawmakers on legislation to put the U.S. Department of the Treasury in charge of hunting down assets to satisfy court judgments. "Congress has set up this tremendous system, the federal judges in this district have spent an inordinate amount of time handling these cases…and yet, it’s sort of a right without a remedy," he said.
PRIVATE CAUSE OF ACTION
In 1996, Congress amended the Foreign Sovereign Immunities Act to strip litigation immunity from foreign governments that sponsored terrorist activity. Lawmakers continued to amend the law over the next decade as victims found it difficult to bring cases, victims’ lawyer Robert Tolchin of The Berkman Law Office in New York said. "The courts have…displayed a timidity of stepping on the toes of other countries," he said. "And Congress keeps saying, ‘No, that’s what we meant.’ "
At the urging of plaintiffs lawyers, Congress approved the 2008 amendment to the immunities law. President Bush vetoed the measure, expressing concern that lawsuits against Iraq would jeopardize rebuilding efforts; a compromise allowed the administration to waive cases involving Iraq.
The changes created a private federal cause of action against state sponsors of terrorism, making it easier for victims to sue and opening the door to punitive damages. They broadened the scope of assets eligible for collection and allowed foreign citizens working for the U.S. government — employees of U.S. embassies, for instance — to sue in U.S. courts.
Gibson, Dunn & Crutcher’s Michael Edney, a former legal adviser to the National Security Council who helped organize Bush’s veto, said the changes were effective when it came to Libya, which was re-establishing ties with the U.S. government at the time. The Libyan government faced billions of dollars in judgments for supporting the 1988 bombing of a plane over Lockerbie, Scotland, and other attacks.
The $1.5 billion settlement took Libya out of court, but judgments piled up against Iran and the other countries. Newberger, a lead attorney in the Beirut embassy bombings case, said much of Bates’ $8.4 billion award represented interest. Still, court records show punitive damages made up the largest share of awards since 2008, a sign the immunities law changes upped the financial pressure.
SEARCHING FOR ASSETS
Strict sanctions against Iran left few options for finding money within the United States, Edney said. Victims made some progress in tracking down eligible assets. In the U.S. District Court for the Southern District of New York, lawyers are fighting for $1.8 billion in Iranian assets held in a New York bank. In August 2011, U.S. District Chief Judge Royce Lamberth in Washington ordered Sprint Nextel Corp. to turn over $613,587 owed to an Iranian state telecommunications agency.
The money went toward a $586 million judgment for victims of a 1996 bombing at a U.S. Air Force residential facility in Saudi Arabia. The award included $300 million in punitive damages entered in 2009, in light of the 2008 amendment. Lamberth wrote he wished the ruling represented "renewed hope," but the "bleak reality" was that the decision "results in a turnover of funds amounting to less than one-tenth of one-percent of what plaintiffs are entitled."
Steven Perles of the Perles Law Firm in Washington, a victims’ lawyer, said the difficulty reaching Iranian assets through companies doing business in the United States was a "disappointment." He’s involved in a court fight in Italy seeking recognition of a U.S. terrorism judgment, another area in which victims’ lawyers haven’t had much success, he said. Perles said he’d like more partnerships between U.S. government agencies and the plaintiffs’ bar, citing past cooperation that led to the Libyan settlement.
Lamberth, in an interview, said he still thought there was value in ­entering high-dollar judgments, even if victims were unlikely to collect in the near fut­ure. "There is satisfaction for victims that someone has been held accountable," he said. "Beyond money, some of the victims have testified before me…about just having their day in court and their opportunity to prove the senselessness of the murder of their loved one."
Zoe Tillman can be contacted at email@example.com.