The Bank Melli of Iran provided “creative arguments” to avoid liability for Iran’s debt to victims of terrorism, but a federal appeals court said Wednesday the bank can’t escape the obligation.
The 9th U.S. Circuit Court of Appeals said, “This is an arena in which Congress has spoken with unmistakable clarity. The law allows victims of terrorism to collect money they’re owed from “instrumentalities of the state” that sponsored the attacks.
Four groups of victims hold separate judgments obtained in U.S. courts against the Republic of Iran, based on various terrorist attacks between 1990 and 2002, according to the court.
The largest was $590 million for the 1996 bombing of the KHpbar Towers in Saudi Arabia; another $350 million for iran’s role in a mass shooting in 1990, another $20 for the 2001 bombing of a Jerusalem restaurant and $13 million for Iran’s role in the 2002 bombing of a cafeteria at Hebrew University in Jerusalem.
Winning a money judgment against a foreign state isn’t the end of the story, according to Judge Alex Kozinski. Sovereign immunity protects assets for a foreign government from being attached. But there is an exception.
The state-sponsored terrorism exception to the Foreign Sovereign Immunities Act eliminates that protect to give terror victims a remedy.
In 2007, the U.S. issued an order prohibiting certain Iranian assets in the U.S. from being transferred back to Iran, based on Iran’s illicit nuclear program, and not terrorism.
Seeing an opportunity, the victims filed to get $17 million of the awards paid by VISA and Franklin Resources, which held the money but owed it to Bank Melli, Iran’s national bank.
Fearing they might be liable to Bank Melli if they simply turned over the money, VISA and Franklin asked the courts to resolve the question.
On Wednesday, the 9th Circuit did that by upholding a lower court order that the money may go to the victims.
Case: Bennett v. Bank Melli, No 13-15442