Matt Stolper, director of the Persepolis Fortification Archive at the University of Chicago's Oriental Institute, holds a large Persepolis Fortification tablet with cuneiform text on Oct. 16, 2008. The U.S. Court of Appeals for the Seventh Circuit ruled on July 19 that victims of a 1997 terrorist bombing in Israel can't claim the tablets and other artifacts to satisfy a multimillion-dollar judgment against Iran.
Matt Stolper, director of the Persepolis Fortification Archive at the University of Chicago’s Oriental Institute, holds a large Persepolis Fortification tablet with cuneiform text on Oct. 16, 2008. The U.S. Court of Appeals for the Seventh Circuit ruled on July 19 that victims of a 1997 terrorist bombing in Israel can’t claim the tablets and other artifacts to satisfy a multimillion-dollar judgment against Iran. (Photo: M. Spencer Green/AP)

American victims of a 1997 terrorist bombing can’t claim ancient Persian artifacts held at the University of Chicago to satisfy a multimillion-dollar judgment against Iran for its role in the attack, the U.S. Court of Appeals for the Seventh Circuit ruled.

A three-judge panel found on July 19 that there is no “freestanding” exception in state-sponsored terrorism cases to the immunity that shields foreign governments under U.S. law. The Seventh Circuit’s decision conflicts with the Ninth Circuit, which held earlier this year that there was such an exception.

The circuit split sets the stage for possible review by the U.S. Supreme Court. Last year, the justices ruled in a state-sponsored terrorism case, finding that victims with judgments against Iran could collect nearly $2 billion in Iranian assets held in a U.S. bank.

At issue in the Seventh Circuit case is a collection of approximately 30,000 clay tablets from the ancient Persian city of Persepolis. Iran in 1937 loaned the Persepolis Collection to the University of Chicago’s Oriental Institute, where it remains.

The plaintiffs — victims of a 1997 bombing in Jerusalem and their families — won a $71.5 million default judgment in federal court in Washington, D.C. Iran doesn’t usually participate in terror litigation in U.S. courts and did not pay the judgment. Iran owes hundreds of billions of dollars in judgments in state-sponsored terrorism cases.

Lawyers for the plaintiffs went to the U.S. District Court for the Northern District of Illinois to claim what they contended were Iranian assets within the court’s jurisdiction — the Persian artifacts at the University of Chicago. They claimed other collections at the university and the Field Museum of Natural History in Chicago as well, but those are no longer part of the case.

Foreign governments are generally granted immunity against civil claims in U.S. courts, but there are exceptions, including in terrorism cases. The Seventh Circuit panel said the federal Foreign Sovereign Immunities Act did not include a “freestanding” exception in terrorism cases, agreeing with arguments advanced by lawyers for the University of Chicago, Iran and the U.S. government.

Judge Diane Sykes, writing for the panel, said plaintiffs had to meet the criteria of other exceptions under the immunities law. The plaintiffs argued the artifacts fell under a “commercial activity” exception, but the court disagreed, finding that the Iranian government wasn’t using the artifacts for commercial purposes in the United States.

Seventh Circuit Judge William Bauer and Chief Judge Michael Reagan of the U.S. District Court for the Southern District of Illinois, sitting by special designation, joined the decision.

Asher Perlin of Florida Professional Law Group in Hollywood, Florida, who argued for the plaintiffs, said in an email that they are weighing options for “further review.”

“Obviously we are disappointed with the majority’s decision,” Perlin said.

Baker & McKenzie partner Matthew Allison argued for the University of Chicago. MoloLamken founding partner Jeffrey Lamken argued for Iran. Neither was reached for comment on Wednesday.

A full sitting of the Seventh Circuit won’t hear the case. Given the split with the Ninth Circuit and the fact that the court reversed earlier precedent, the case went before all active judges for a vote. But five of the 10 active judges recused — Chief Judge Diane Wood and Judges Richard Posner and Frank Easterbook teach at the University of Chicago; Judges Ilana Rovner and Joel Flaum had other conflicts — so an en banc sitting was not possible.

Judge David Hamilton dissented from the denial of en banc review. He wrote that the immunities law was ambiguous and that the Ninth Circuit reached the right conclusion.

“We must choose one side or the other,” Hamilton wrote. “The balance here should weigh in favor of the reading that favors the victims. We should not attribute to Congress an intent to be so solicitous of state sponsors of terrorism, who are also undeserving beneficiaries of the unusual steps taken by the Rubin panel.”