Sovereign immunity

• Pages: 90-93

90 Volume 21, July–September 2015 international law update

© 2015 International Law Group, LLC. All rights reserved. ISSN 1089-5450, ISSN 1943-1287 (on-line) | www.internationallawupdate.com

SOVEREIGN IMMUNITY

In the context of enforcing judgments

against Iran for terrorist acts it

allegedly sponsored, Ninth Circuit

reviews whether victims of terrorism

can collect on money judgments

against the sponsoring states or their

instrumentalities that were not parties

to the underlying lawsuit

Four separate groups, the Bennett, Greenbaum,

Acosta and Heiser creditors, hold separate

judgments obtained in U.S. courts against the

Republic of Iran, based on various terrorist attacks

that occurred between 1990 and 2002. e Bennett

creditors were owed almost $13 million in damages

for Iran’s role in the 2002 bombing of a cafeteria at

Hebrew University in Jerusalem. e Greenbaum

creditors were owed almost $20 million for a 2001

bombing of a Jerusalem restaurant. e Acosta

creditors were owed over $350 million for Iran’s

part in a 1990 mass shooting. Finally, the Heiser

creditors were owed over $590 million for a 1996

bombing in Saudi Arabia. All judgments were by

default and no one disputes that all four creditors

are owed money by Iran.

e Foreign Sovereign Immunities Act (FSIA)

is the basis for jurisdiction over foreign states in

U.S. courts. 28 U.S.C. § 1330. Under the FSIA,

foreign sovereigns are immune from jurisdiction,

except for a few exceptions. One such exception

is for claims arising out of acts of state-sponsored

terrorism.

However, winning a money judgment is

only half the battle because sovereign immunity

separately protects the assets of a foreign sovereign

from attachment. erefore, Congress enacted two

statutes to address this problem: section 201(a)

of the Terrorism Risk Insurance Act (TRIA) and

28 U.S.C. § 1610(g). Section 201 was enacted

to “deal comprehensively with the problem of

enforcement of judgments rendered on behalf of

victims of terrorism by enabling them to satisfy

such judgments through the attachment of blocked

assets of terrorist parties.” H.R. Rep. No. 107-779,

at 27 (2002) (Conf. Rep). e TRIA provides

that “the blocked assets of a terrorist party shall be

subject to execution.” Terrorism Risk Insurance Act

of 2002, Pub L. No. 107-297, § 201(a), 116 Stat.

2322, 2337 (codied at 28 U.S.C. § 1610 Note

“Satisfaction of Judgments from Blocked Assets

of Terrorists, Terrorist Organizations, and State

Sponsors of Terrorism”).

Section 1610(g), enacted in 2008 provides

that “the property of a foreign state against which

a judgment is entered under this statute, and the

property of an agency or instrumentality of such a

state, including property that is a separate juridical

entity or is an interest held directly or indirectly in

a separate juridical entity, is subject to attachment

in aid of execution upon that judgment as provided

in this section.” 28 U.S.C. § 1610(g).

ese two statutes provide creditors an

opportunity to collect on the judgments they

have obtained. Such opportunity arose when the

Department of Treasury issued an order prohibiting

certain Iranian assets in the United States from

being transferred back to Iran. at blocking order

was based on Iran’s illicit nuclear program, not its

state-sponsored terrorism. Nonetheless, it meant

that various nancial institutions had money owed

to Iran sitting in accounts within the United States.

e creditors seized their chance to collect on their

judgments and led a complaint seeking access to

$17.6 million in blocked assets held by Visa and

Franklin,but owed to Bank Melli, Iran’s national

bank. Fearing they might be liable to Bank Melli

if they handed the money over to the creditors,

Visa and Franklin responded by ling a third-party

complaint to interplead Bank Melli and obtain nal

resolution of who was entitled to the funds. Visa

and Franklin subsequently deposited the funds into

the district court’s registry. Bank Melli moved to

dismiss. e district court denied that motion but

certied its order for interlocutory appeal under 28

U.S.C. § 1292(b).

Bank Melli oered four arguments why the

creditors should be barred from collecting the

funds. First, it argued that the assets are protected by

sovereign immunity notwithstanding the TRIA and

section 1610(g) since those statutes waive sovereign

immunity only for the “terrorist party”, Iran, and