Sovereign Immunity

• Pages: 15-17

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international law update Volume 22, January–March 2016

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and the Kibliskys—is suciently direct to overcome

FSIA immunity.”

e Court armed district court’s order

denying SK Fund’s motion to dismiss on FSIA

grounds.

citation: Atlantica Holdings v. Sovereign Wealth

Fund, 813 F3d 98 (2nd Cir. 2016).

SOVEREIGN IMMUNITY

Ninth Circuit reviews case of 10

American citizens who are trying to

collect on their judgments against Iran

for their terrorism-related injuries

Ten American citizens (Lien Claimants),

claimant France M. Rai, and a group of nine

individuals (the Rubin Claimants) attempt to

collect on valid judgments they hold against the

Islamic Republic of Iran (Iran) for their injuries

arising out of terrorism sponsored by Iran. ey

seek to attach a $2.8 million judgment that the

Ministry of Defense of Iran (the Ministry) obtained

in an underlying arbitration with Cubic Defense

Systems, Inc. (Cubic), an American company.

Rai’s father, Dr. Shapoir Bakhtiar, a former

prime minister of Iran, was murdered in 1991, by

Iranian agents in his home in Paris, France. In 2001,

Rai sued Iran under the state-sponsored terrorism

exception to the FSIA. As Iran did not appear at

the two-day bench trial, the district court entered

default judgment against Iran for $5 million in

compensatory damages.

e Rubin Claimants are individuals who

either were themselves injured or whose relatives

were injured in the 1997, suicide bomb at the

pedestrian mall in Jerusalem. In 2001, they sued

Iran under the state-sponsored terrorism exception

to the FSIA. Iran also did not appear at the four-

day evidentiary hearing. e district court entered

default judgment against Iran and ordered Iran to

pay the damages ranging from $2.5 million to $15

million.

Initially, the Lien Claimants lacked any means

to collect because the state-sponsored terrorism

exception to the FSIA left in place the foreign

sovereign’s immunity from attachment of its assets.

However, in 2002, Congress enacted the Terrorism

Risk Insurance Act (TRIA) which permits the

attachment of a foreign sovereign’s assets. Section

201 (a) provides:

“Notwithstanding any other provision of law .

. ., in every case in which a person has obtained a

judgment against a terrorist party on a claim based

upon an act of terrorism, or for which a terrorist

party is not immune under [28 U.S.C. § 1605(a)

(7) (2000)], the blocked assets of that terrorist

party (including the blocked assets of any agency

or instrumentality of that terrorist party) shall

be subject to execution or attachment in aid of

execution in order to satisfy such judgment to the

extent any compensatory damages for which such

terrorist party has been adjudged liable.”

“’Blocked’ assets include assets ‘seized or frozen

by the United States’ under the International

Emergency Economic Powers Act (IEEPA), 50

U.S.C. §§ 1701-1706. See TRIA § 201(d)(2).”

In 1977, Cubic entered into an agreement with

Ministry to sell an air combat maneuvering range

system (ACMR) for $17 million and a separate

service contract. Although by October 1978, Iran

had paid over $12 million of the purchase price

and modest sums on the service contract, the full

performance of the contracts was prevented by

the November 1979, Iranian revolution which

disrupted relations between Iran and the United

States. Iran and Cubic then entered into a modied

agreement, under which Cubic had to attempt to

sell the ACMR to another country. When in 1982,

Cubic sold the equipment to Canada it ignored

Iran’s requests for reimbursement of the payments

it made to Cubic.

In 1991, Iran initiated arbitration proceedings

with the International Chamber of Commerce

(ICC) to recover from Cubic. In 1997, the ICC