Order Code RL31258
Suits Against Terrorist States
By Victims of Terrorism
Updated December 17, 2007
Jennifer K. Elsea
Legislative Attorney
American Law Division
Suits Against Terrorist States by Victims of Terrorism
Summary
In 1996 Congress amended the Foreign Sovereign Immunities Act ( FSIA) to
allow U. S. victims of terrorism to sue certain States responsible for terrorist acts.
The terrorist State defendants have refused to appear in court, the courts have handed
down large default judgments, the Clinton and Bush Administrations have intervened
to block collection on those judgments, and Congress has repeatedly enacted
measures to facilitate payment. Further complexity has been added by attempts in
one suit to abrogate an international agreement, the enactment of retaliatory
legislation in some of the terrorist States, the war in Iraq, the suspension of Iraq’s and
Libya’s status as terrorist States, and a proposal to compensate victims through an
administrative process. A court ruled that Congress has never created a federal cause
of action against terrorist States themselves, but only against their officials,
employees and agents, and only for their private conduct, not for their official acts.
Consequently, plaintiffs have asserted causes of action based on state law.
The 107th Congress enacted as part of the Terrorism Risk Insurance Act of 2002
(“ TRIA”)( P. L. 107- 297) a provision that overrides long- standing Administration
objections and allows the blocked assets of terrorist States to be used to pay the
compensatory damages portions of court judgments against such States. That statute
also added several judgments against Iran to the ten that had previously been
designated as compensable out of U. S. funds under § 2002 of the Victims of
Trafficking and Violence Protection Act of 2000 (“ VTVPA”) ( P. L. 106- 386). In the
108th Congress, the Senate adopted several riders to appropriations bills to abrogate
the provision in the Algiers Accords barring the Iran hostages from bringing suit in
the Roeder case, but the riders were all dropped in conference. In 2003, President
Bush vested title to Iraq’s frozen assets in this country and ordered that most of the
proceeds be used for Iraq’s reconstruction rather than to compensate victims of Iraqi
terrorism. The Administration then intervened in a case against Iraq by POWs from
the first Gulf War to vacate their judgment and ensure that Iraq’s frozen assets were
not used to satisfy it. ( Acree v. Republic of Iraq). In 2006, the Supreme Court
vacated a decision allowing the attachment of a judgment owed to Iran’s Ministry of
Defense ( MOD) based on the FSIA commercial property exception, MOD v. Elahi,
but on remand, the lower court permitted attachment as a blocked asset under TRIA.
This report provides an overview of this complex issue; gives background on
the doctrine of state immunity and the FSIA; details the evolution of the terrorist
State exception enacted in 1996 and some of the judicial decisions that have
followed; describes the subsequent proposals and statutes enacted to help claimants
satisfy their judgments; sets forth some legal and policy arguments that have been
made for and against those legislative initiatives; describes the decision in the
hostages’ suit against Iran and Congress’s efforts to vitiate the Algiers Accords;
summarizes what has happened with Iraq’s assets, and summarizes proposed
legislation ( H. R. 1585, H. R. 3346, S. 1944, and H. R. 2764). The report also contains
two appendices: Appendix I provides a list of cases covered by § 2002 as amended
and the amount of compensation paid, as well as a list of cases not covered.
Appendix II lists the amount of the assets of each terrorist state currently blocked by
the United States. The report will be updated as events warrant.
Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background on State Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Anti- Terrorism and Effective Death Penalty Act of 1996:
Civil Suits Against Terrorist States by Victims of Terrorism . . . . . . . . 4
105th Congress: Enactment of Section 117 of the Treasury and
General Government Appropriations Act
for Fiscal Year 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
106th Congress: Enactment of Section 2002 of the Victims
of Trafficking and Violence Protection Act of 2000 . . . . . . . . . . . . . . 11
107th Congress: Additional Cases Added to § 2002 and Attachment
of Assets Allowed in Other Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
( 1) Directive to develop a comprehensive compensation scheme
( P. L. 107- 77) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
( 2) Coverage of additional cases under § 2002 ( P. L. 107- 228) . . . . . . 23
( 3) Attachment of frozen assets authorized ( P. L. 107- 297) . . . . . . . . . 24
Roeder v. Islamic Republic of Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Judicial proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
107th Through 110th Congresses: Efforts to Abrogate
the Algiers Accords . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Confiscation of Iraq’s Blocked Assets for Use in the Reconstruction
of Iraq ( POW Lawsuit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Acree v. Republic of Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Proposed Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Other Cases Against Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Ministry of Defense ( Iran) v. Elahi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Bush Administration’s Proposed Compensation Alternative . . . . . . . . . . . 42
109th Congress: Proposed Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Suits Against the United States for “ Terrorist” Acts . . . . . . . . . . . . . . . . . . 53
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Appendix I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Appendix II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
List of Tables
Judgments Against Terrorist States Covered By, and Payments
Made Pursuant to, § 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Judgments Against Terrorist States Not Covered By § 2002 . . . . . . . . . . . . . . . 60
Amount of Assets of Terrorist States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
1 28 U. S. C. § § 1602 et seq. The exception allows suit to be brought against the agencies and
instrumentalities of such States as well.
2 P. L. 104- 132, Title II, § 221 ( Apr. 23, 1996); 110 Stat. 1241; 28 U. S. C. A. § 1605( a)( 7).
3 “ Civil Liability for Acts of State- Sponsored Terrorism,” P. L. 104- 208, Title I, § 101( c)
[ Title V, § 589] ( Sept. 30, 1996), 110 Stat. 3009- 172; codified at 28 U. S. C. A. § 1605 note,
provides:
( a) an official, employee, or agent of a foreign state designated as a state sponsor of
terrorism designated under section 6( j) of the Export Administration Act of 1979 ( 50
App. U. S. C. 2405( j)) while acting within the scope of his or her office, employment, or
agency shall be liable to a United States national or the national’s legal representative for
personal injury or death caused by acts of that official, employee, or agent for which the
courts of the United States may maintain jurisdiction under section 1605( a)( 7) of title 28,
United States Code, for money damages which may include economic damages, solatium,
pain, and suffering, and punitive damages if the acts were among those described in
section 1605( a)( 7).
( b) Provisions related to statute of limitations and limitations on discovery that would
apply to an action brought under 28 U. S. C. 1605( f) and ( g) shall also apply to actions
brought under this section. No action shall be maintained under this action if an official,
employee, or agent of the United States, while acting within the scope of his or her office,
employment, or agency would not be liable for such acts if carried out within the United
States.
4 The FSIA provides that States are not liable for punitive damages but that such damages
may be awarded against their agencies and instrumentalities. See 28 U. S. C. A. § 1606.
Although the D. C. Circuit has found that punitive damages do not apply to agencies of
foreign governments that perform primarily governmental rather than commercial services
because such agencies are considered to be the State itself rather than an agent, Roeder v.
Islamic Republic of Iran, 333 F. 3d 228, 234 ( D. C. Cir. 2003), cert. denied, 124 S. Ct. 2836
( continued...)
Suits Against Terrorist States
by Victims of Terrorism
Overview
In 1996 Congress amended the Foreign Sovereign Immunities Act ( FSIA) 1 to
allow civil suits by U. S. victims of terrorism against certain States responsible for,
or complicit in, such terrorist acts as torture, extrajudicial killing, aircraft sabotage,
and hostage taking. 2 The amendment enjoyed broad support in Congress, but was
initially resisted by the executive branch. President Clinton signed the amendment
into law after the Cuban air force shot down a civilian plane over international
waters, an incident that resulted in one of the first lawsuits under the new FSIA
exception. After a court found that the waiver of sovereign immunity did not itself
create a cause of action, Congress passed the Flatow Amendment to create a cause
of action. 3 Numerous court judgments awarding plaintiffs substantial compensatory
and punitive damages were to follow, 4 until the D. C. Circuit in 2004 interpreted the
CRS- 2
4 (... continued)
( 2004), some courts continued to award punitive damages against foreign military and
intelligence agencies. The Supreme Court vacated and remanded a decision that had treated
the Ministry of Defense ( MOD) of Iran as an “ agency or instrumentality” for the purpose
of determining immunity of its property to execution to satisfy a judgment, but did not
explain how the court was to determine the proper characterization of an entity. Total
punitive damages awarded under the terrorism exception to the FSIA now amount to more
than $ 6.5 billion ( excluding any vacated awards). Total compensatory damages under the
exception amount to about $ 4.5 billion. See Appendix I.
provisions in a way that made further awards somewhat more difficult for plaintiffs
to win. Plaintiffs have had to rely on state law to provide a cause of action, which
has resulted in some disparity in the amount and type of relief available to different
victims of the same terrorist attacks.
Default judgments won against terrorist States have proved difficult to enforce,
and efforts by plaintiffs to attach frozen assets and diplomatic or consular property,
while receiving support from Congress, have met with opposition from the executive
branch. The total amount of judgments against terrorist States far exceeds the assets
of debtor States known to exist within the jurisdiction of U. S. courts. The use of U. S.
funds to pay portions of some judgments has drawn criticism. The Supreme Court
declined to review a case involving former prisoners of war who had won a judgment
against Iraq. The Senate passed a rider on the FY2008 National Defense
Authorization Act, H. R. 1585, to address these issues, to which the House of
Representatives has receded with an amendment.
This report provides background on the international law doctrine of state
immunity and the FSIA; summarizes the 1996 amendments creating an exception to
state immunity under the FSIA for suits against terrorist States; details the subsequent
cases and the legislative initiatives to assist claimants in efforts to collect on their
judgments; sets forth the legal and policy arguments that were made for and against
those efforts; summarizes the decision in Roeder v. Islamic Republic of Iran and
efforts to help the plaintiffs and override the Algiers Accords; describes the
Administration’s actions vesting title to Iraq’s frozen assets in the United States and
making them unavailable to former POWs in Acree v. Republic of Iraq and other
plaintiffs who have won judgments against Iraq; discusses an effort by Iran to void
a judgment against it ( Ministry of Defense v. Elahi); notes the laws in certain terrorist
States that allow suits against the U. S. for similar acts; and concludes that the issue
of providing fair compensation to victims of terrorism is not one that will likely
dissipate any time soon.
The report also contains two appendices: Appendix I lists the cases covered by
§ 2002 of the Victims of Trafficking and Violence Protection Act of 2000
( P. L. 106- 386), the amount of compensation that has been paid in each case, and the
source of the compensation. It provides a separate list of judgments handed down
more recently that are not covered by the compensation schemes set forth in earlier
legislation, whose creditors will likely compete with each other to satisfy claims out
of scarce blocked assets. Appendix II lists the amount of the assets of each terrorist
State blocked by the United States as of the end of 2006. The report will be updated
as events warrant.
CRS- 3
5 The Schooner Exchange, 11 U. S. ( 7 Cranch) 116, 137 ( 1812) ( holding a French warship
to be immune from the jurisdiction of a U. S. court). In Berizzi Bros. Co. v. S. S. Pesaro, 271
U. S. 562 ( 1926), the Court held this principle of immunity to apply as well to State- owned
commercial ships.
6 AMERICAN LAW INSTITUTE, 1 RESTATEMENT OF THE LAW THIRD: THE FOREIGN RELATIONS
LAW OF THE UNITED STATES 391 ( 1987).
7 The Acting Legal Adviser of the Department of State, Jack B. Tate, stated in a letter to the
Acting Attorney General that in future cases the Department would follow the restrictive
principle. 26 Department of State Bulletin 984 ( 1952). Previously, when a case against a
foreign state arose, the State Department routinely asked the Department of Justice to inform
the court that the government favored the principle of absolute immunity; and the courts
( continued...)
Background on State Immunity
Customary international law historically afforded States complete immunity
from being sued in the courts of other States. In the words of Chief Justice Marshall,
this immunity was rooted in the “ perfect equality and absolute independence of
sovereigns” and the need to maintain friendly relations. Although each nation has
“ full and absolute” jurisdiction within its own territory, the Chief Justice stated, that
jurisdiction, by common consent, does not extend to other sovereign States:
One sovereign being in no respect amenable to another; and being bound by
obligations of the highest character not to degrade the dignity of his nation, by
placing himself or its sovereign rights within the jurisdiction of another, can be
supposed to enter a foreign territory only under an express license, or in the
confidence that the immunities belonging to this independent sovereign station,
though not expressly stipulated, are reserved by implication, and will be
extended to him.
This perfect equality and absolute independence of sovereigns, and this common
interest impelling them to mutual intercourse, and an interchange of good offices
with each other, have given rise to a class of cases in which every sovereign is
understood to waive the exercise of a part of that complete exclusive territorial
jurisdiction, which has been stated to be the attribute of every nation. 5
During the last century, however, this principle of absolute state immunity
gradually came to be limited after a number of States began engaging directly in
commercial activities. To allow States to maintain their immunity in the courts of
other States even while engaged in ordinary commerce, it was said, “ gave States an
unfair advantage in competition with private commercial enterprise” and denied the
private parties in other nations with whom they dealt their normal recourse to the
courts to settle disputes. 6 As a consequence, numerous States immediately before
and after World War II adopted a restrictive principle of state immunity, which
preserved state immunity for most cases but allowed domestic courts to exercise
jurisdiction over suits against foreign States for claims arising out of their
commercial activities.
The United States adopted this restrictive principle by administrative action in
1952,7 and the State Department began advising courts on a case- by- case basis
CRS- 4
7 (... continued)
usually acceded to this advice. The Tate letter meant that the government would no longer
make this suggestion in cases against foreign States involving commercial activity.
8 28 U. S. C. A. § § 1602 et seq.
9 Id. § 1604.
10 Id. § 1605.
11 Id. § 1610.
12 P. L. 104- 132, Title II, § 221 ( Apr. 24, 1976); 110 Stat. 1241; 28 U. S. C. A. § 1605( a)( 7).
13 Id.
whether a foreign sovereign should be entitled to immunity from the court’s
jurisdiction based on the nature of the claim. In 1978 Congress codified the principle
in the Foreign Sovereign Immunities Act ( FSIA), so that the decision no longer
depended on a determination by the State Department. 8 The FSIA states the general
principle that “ a foreign state shall be immune from the jurisdiction of the courts of
the United States and of the States” 9 and then sets forth several exceptions. The
primary exceptions are for cases in which “ the foreign state has waived its immunity
either expressly or by implication,” cases in which “ the action is based upon a
commercial activity carried on in the United States by the foreign state,” and suits
against a foreign State for personal injury or death or damage to property occurring
in the United States as a result of the tortious act of an official or employee of that
State acting within the scope of his office or employment. 10 For most types of claims
covered, the FSIA also provides that the commercial property of a foreign State in
the United States may be attached in satisfaction of a judgment against that State
regardless of whether the property was used for the activity on which the claim was
based. 11 However, assets belonging to separate instrumentalities of a foreign
government are not generally available to satisfy claims against the foreign
government itself or against other agencies and instrumentalities in which that
government has an interest.
The Anti- Terrorism and Effective Death Penalty Act of 1996:
Civil Suits Against Terrorist States by Victims of Terrorism
In 1996 Congress added another exception to the FSIA to allow the federal and
state courts to exercise jurisdiction over foreign States and their agencies and
instrumentalities in civil suits by U. S. victims of terrorism. 12 The Anti- Terrorism and
Effective Death Penalty Act of 1996 ( AEDPA) amended the FSIA to provide that a
foreign State is not immune from the jurisdiction of the federal and state courts in
cases in which
money damages are sought against a foreign state for personal injury or death
that was caused by an act of torture, extrajudicial killing, aircraft sabotage,
hostage taking, or the provision of material support or resources ... for such an
act if such act or provision of material support is engaged in by an official,
employee, or agent of such foreign state while acting within the scope of his or
her office, employment, or agency.... 13
CRS- 5
14 The State Department identifies State sponsors of terrorism pursuant to § 6( j) of the
Export Administration Act of 1979 ( 50 App. U. S. C. A. § 2405( j)), § 620A of the Foreign
Assistance Act ( 22 U. S. C. A. § 2371), and § 40( d) of the Arms Export Control Act ( 22
U. S. C. A. § 2780( d)). The list, which is published annually, currently includes Cuba, Iran,
North Korea, Sudan, and Syria. See 22 CFR § 126.1( a) ( 2002). Iraq and Libya are no longer
designated State sponsors of terrorism.
15 As initially enacted, the statute provided that a terrorist State could not be sued if “ either
the claimant or victim was not a U. S. national.” Concern that the provision could be read
to require that both the claimant and victim be U. S. nationals and that, which would have
excluded some of the families injured by the terrorist bombing of Pan Am 103 over
Lockerbie, Scotland, led Congress to amend the language in 1997 to bar such suits only if
“ neither the claimant nor the victim was a national of the United States ....” See P. L. 105-
11; H. R. REP. NO. 105- 48 ( Apr. 10, 1997).
16 28 U. S. C. § 1605 note.
As predicates for such suits, the AEDPA amendment required that the foreign State
be designated as a State sponsor of terrorism by the State Department at the time the
act occurred or later so designated as a consequence of the act in question, 14 that
either the claimant or the victim of the act of terrorism be a U. S. national, 15 and that
the defendant State be given a prior opportunity to arbitrate the claim if the act on
which the claim is based occurred in that State. The act also provided that the
terrorist States and their agencies and instrumentalities would be liable for
compensatory damages, and the agencies and instrumentalities for punitive damages
as well. 16 The act further allowed the commercial property of a foreign State in the
United States to be attached in satisfaction of a judgment against that State under this
amendment regardless of whether the property was involved in the act on which the
CRS- 6
17 Id. § 1610( b)( 2). These amendments to the FSIA did not receive much debate or
explanation during the AEDPA’s consideration by the Senate and the House. Provisions
similar to what was enacted were included in both the Senate and the House measures as
introduced ( S. 735, § 221 and H. R. 2703, § 803, respectively). But no committee report was
filed on either bill; and the only change that appears to have been made during floor debate
was a slight amendment by Representative Hyde in a manager’s amendment in the House
imposing a 10- year statute of limitations on such suits and slightly modifying the provision
concerning pre- trial arbitration. See 142 CONG. REC. H2164 ( daily ed., March 13, 1996).
The report of the conference committee simply stated as follows:
Section 221 — House section 803 recedes to Senate section 206, with modifications. This
subtitle provides that nations designated as state sponsors of terrorism under section 6( j)
of the Export Administration Act of 1979 will be amenable to suit in U. S. courts for
terrorist acts. It permits U. S. federal courts to hear claims seeking money damages for
personal injury or death against such nations and arising from terrorist acts they commit,
or direct to be committed, against American citizens or nationals outside of the foreign
state’s territory, and for such acts within the state’s territory if the state involved has
refused to arbitrate the claim.
H. Rept. 104- 518 ( 1996).
However, the House had adopted a similar measure during the second session of the
previous Congress ( H. R. 934). The Department of State and the Department of Justice had
opposed the legislation at that time. The House Judiciary Committee explained the rationale
of the bill as follows:
The difficulty U. S. citizens have had in obtaining remedies for torture and other injuries
suffered abroad illustrates the need for remedial legislation. A foreign sovereign violates
international law if it practices torture, summary execution, or genocide. Yet under
current law a U. S. citizen who is tortured or killed abroad cannot sue the foreign
sovereign in U. S. courts, even when the foreign country wrongly refuses to hear the
citizen’s case. Therefore, in some instances a U. S. citizen who was tortured ( or the family
of one who was murdered) will be without a remedy.
H. R. 934 stands for the principle that U. S. citizens who are grievously mistreated abroad
should have an effective remedy for damages in some tribunal, either in the country where
the mistreatment occurred or in the United States. To this end, the bill would add a new
exception to the FSIA that would allow suits against foreign sovereigns that subject U. S.
citizens to torture, extrajudicial killings or genocide and do not provide adequate remedies
for those harms.
H. Rept. 103- 702, 103rd Cong., 2d Sess. ( Aug. 16, 1994), at 4.
18 See Flatow v. Islamic Republic of Iran, 999 F. Supp. 1 ( D. D. C. 1998).
19 P. L. 104- 208, Title I, § 101( c) ( Sept. 30, 1996), 110 Stat. 3009- 172; codified at 28
U. S. C. A. § 1605 note ( see supra note 3).
claim was based. 17 After previously opposing similar proposals, the Clinton
Administration supported these changes in the FSIA.
After a court found that the waiver of sovereign immunity did not itself create
a cause of action, 18 Congress passed the Civil Liability for Acts of State- Sponsored
Terrorism ( known as the “ Flatow Amendment”) 19 to clarify that a cause of action
existed against the officials, employees, and agents of States whose sovereign
immunity was abrogated pursuant to the exception. The Flatow Amendment gives
CRS- 7
20 The provision appears to have first arisen in the House- Senate conference committee on
H. R. 3610. See H. Rept. 104- 863, 104th Cong., 2d Sess. ( Sept. 28, 1996).
21 Flatow v. Islamic Republic of Iran, 999 F. Supp. 1, 26 ( D. D. C. 1998).
22 Cicippio- Puleo v. Iran, 353 F. 3d 1024 ( D. C. Cir. 2004), followed in Acree v. Republic of
Iraq, 370 F. 3d 41 ( D. C. Cir. 2004), cert. denied, 544 U. S. 1010 ( 2005).
23 28 U. S. C. § 1603( b).
24 28 U. S. C. A. § 1608( e).
25 See Alejandre v. Republic of Cuba, 996 F. Supp. 1239 ( S. D. Fla. 1997) ($ 50 million in
compensatory damages and $ 137.7 million in punitive damages awarded to the families of
three of the four persons who were killed when Cuban aircraft shot down two Brothers to
the Rescue planes in 1996); Flatow v. Islamic Republic of Iran, 999 F. Supp. 1 ( D. D. C.
1998) ($ 27 million in compensatory damages and $ 225 million in punitive damages awarded
to the father of Alisa Flatow, who was killed in 1995 by a car bombing in the Gaza Strip by
Islamic Jihad, an organization which the court found to be funded by Iran); and Cicippio v.
Islamic Republic of Iran, 18 F. Supp. 2d 62 ( D. D. C. 1998) ($ 65 million awarded in
compensatory damages to three persons ( and two of their spouses) who were kidnaped, held
hostage, and tortured in Lebanon in the mid- 1980s by Hezbollah, an organization which the
court found to be funded by Iran).
parties injured or killed by a terrorist act covered by the FSIA exception, or their
legal representatives, a cause of action for suits against “ an official, employee, or
agent of a foreign state designated as a state sponsor of terrorism” who commits the
terrorist act “ while acting within the scope of his or her office, employment, or
agency ....” if a U. S. government official would also be liable for such actions. This
measure was adopted as part of the Omnibus Consolidated Appropriations Act for
Fiscal 1997 without apparent debate. 20 The judge in the Flatow case held Iran liable
under a theory of respondeat superior, and awarded compensatory as well as punitive
damages. 21 Many courts followed the Flatow precedent, awarding both compensatory
and punitive damages against a foreign State despite the textual limitations in the
FSIA exception. However, the Court of Appeals for the District of Columbia held
in 2004 that the amendment does not provide a cause of action against terrorist States
themselves, 22 including governmental agencies that are not separate commercial
“ agencies and instrumentalities” under the FSIA. 23
105th Congress: Enactment of Section 117 of the Treasury
and General Government Appropriations Act for Fiscal Year
1999
Several suits were quickly filed against Cuba and Iran pursuant to the new
provisions. Neither State recognized the jurisdiction of the U. S. courts in such suits,
however; and both refused to appear in court to mount a defense. The FSIA provides
that a court may enter a judgment by default in such a situation if “ the claimant
establishes his claim or right to relief by evidence satisfactory to the court.” 24 After
making the proper finding, several federal trial courts entered default judgments
holding Iran and Cuba to be culpable for particular acts of terrorism and awarding the
plaintiffs substantial amounts in compensatory and punitive damages. 25
CRS- 8
26 The Iran- U. S. Claims Tribunal at the Hague was created pursuant to provisions in the
Algiers Accords of 1981 that led to the release of the U. S. hostages. Claims by U. S.
nationals against Iran that were outstanding at the time of the release of the hostages as well
as claims by Iranian nationals against the United States and contractual claims between the
two governments were made subject to case- by- case arbitration by the Tribunal. Most
Iranian assets held by U. S. persons or entities at that time were transferred to the Federal
Reserve Bank of New York and were either returned to Iran or were forwarded to an escrow
account for use in satisfying judgments rendered against Iran by this Tribunal. See the
various agreements between the United States and Iran relating to the release of the hostages
( known as the Algiers Accords), 20 ILM 223- 240 ( Jan. 1981); Executive Orders 12276-
12284, 46 Fed. Reg. 7913 ( Jan. 19, 1981); and 31 CFR Part 535.
27 23 UST 3227 ( 1972).
28 21 UST 77 ( 1969).
29 Flatow v. Islamic Republic of Iran, 74 F. Supp. 2d 18 ( D. D. C. 1999) ( quashing a writ of
attachment for U. S. Treasury funds) and Flatow v. Islamic Republic of Iran, 76 F. Supp. 2d
16 ( D. D. C. 1999) ( quashing writs of attachment for Iran’s embassy and chancery and two
bank accounts holding proceeds from the rental of these properties). For a more detailed
description of these proceedings, see Sean Murphy, Satisfaction of U. S. Judgments Against
State Sponsors of Terrorism, 94 AM. J. INT’L L. 117 ( 2000).
30 See Appendix II for a list of the amounts of the assets of each State on the terrorist list that
are blocked in the U. S.
Neither Iran nor Cuba had any inclination to pay the damages that had been
assessed in these cases. As a consequence, the plaintiffs and their attorneys sought
to attach certain properties and other assets owned by the States in question that were
located within the jurisdiction of the United States to satisfy the judgments.
In the case of Flatow v. Islamic Republic of Iran, plaintiffs sought to attach the
embassy and several diplomatic properties of Iran located in Washington, DC, the
proceeds that had accrued from the rental of those properties after diplomatic
relations had been broken in 1979, and an award that had been rendered by the Iran-
U. S. Claims Tribunal in favor of Iran and against the U. S. government but which had
not yet been paid. 26 The Clinton Administration opposed these efforts, arguing that
the diplomatic properties and the rental proceeds were essentially sovereign non-commercial
property that remained immune to attachment pursuant to the FSIA. In
addition, the Administration argued that it was obligated to protect Iran’s diplomatic
and consular properties under the Vienna Convention on Diplomatic Relations27 and
the Vienna Convention on Consular Relations28 and that using such properties to
satisfy court judgments would expose U. S. diplomatic and consular properties around
the world to similar treatment by other countries. The Clinton Administration further
argued that the funds set aside to pay an award to Iran by the decision of the Claims
Tribunal were still U. S. property and, as such, were immune from attachment due to
U. S. sovereign immunity. The court agreed and quashed the writs of attachment. 29
Efforts were also mounted in both the Flatow case and in Alejandre v. Republic
of Cuba ( the Brothers to the Rescue case) to attach assets of Iran and Cuba in the
United States that had been blocked by the U. S. government. 30 Iran’s assets in the
United States had been frozen under the authority of the International Emergency
CRS- 9
31 50 U. S. C. A. § § 1701 et seq. IEEPA gives the President substantial authority to regulate
economic transactions with foreign countries and nationals to deal with “ any unusual and
extraordinary threat, which has its source in whole or substantial part outside the United
States, to the national security, foreign policy, or economy of the United States, if the
President declares a national emergency with respect to such a threat.”
32 Executive Order 12170, 44 Fed. Reg. 65,729 ( Nov. 14, 1979).
33 50 U. S. C. App. § 5. TWEA, originally enacted in 1917, gives the President powers
similar to those of IEEPA to regulate economic transactions with foreign countries and
nationals in time of war. At the time it was used to freeze Cuba’s assets in 1962, it also
applied in times of national emergency; but that authority was eliminated when IEEPA was
enacted in 1977. Sanctions previously imposed under that authority, however, were
grandfathered. See 50 U. S. C. § 1708.
34 In the 1960s, for instance, Congress directed the Foreign Claims Settlement Commission
to determine the number and amount of legitimate claims against Cuba resulting from Fidel
Castro’s takeover of the government and subsequent expropriation of property from Jan.
1, 1959, and Oct. 16, 1964. P. L. 88- 666, Title V ( Oct. 16, 1964), 73 Stat. 1110, codified at
22 U. S. C. A. § 1643. The program was completed in 1972 and found 5,911 claims totaling
$ 1,851,057,358 ( in 1972 valuations) to be valid. Those claims remain pending.
In the Iran Claims Settlement Act of 1985, Congress directed the Foreign Claims Settlement
Commission to determine the validity and amount of small claims against Iran ( those for less
than $ 250,000) pending at the time of the hostage crisis and to distribute to such claimants
the proceeds of any en bloc settlement concluded by the U. S. and Iran. See P. L. 99- 93,
Title V, § § 505- 505 ( Aug. 16, 1985), 99 Stat. 437, codified at 50 U. S. C. § 1701 note. The
United States and Iran concluded such an agreement in 1990. See State Department Office
of the Legal Adviser, Cumulative Digest of United States Practice in International Law
1981- 1988 ( Book III) ( 1995), at 3201. All other pre- 1981 claims against Iran ( and against
the United States by Iran and Iranian nationals) remained subject to case- by- case arbitration
by the Iran- U. S. Claims Tribunal.
35 Both Cuba and Iran have reportedly enacted statutes allowing suits against the United
States for acts of terrorism or “ interference,” and several substantial judgments against the
( continued...)
Economic Powers Act ( IEEPA) 31 at the time of the hostage crisis in 1979.32
However, under the Algiers Accords reached to resolve the crisis, most of those
assets had either been returned to Iran or placed in an escrow account in England
subject to the decisions of the Iran- U. S. Claims Tribunal, an arbitral body set up by
the Algiers Accords to resolve remaining disputes between the two countries or their
nationals. Cuba’s assets in the United States, in turn, had been blocked since the
early 1960s under the authority of the Trading with the Enemy Act ( TWEA). 33 The
Clinton Administration opposed the efforts to allow access to these assets as well.
It argued that such assets are useful, and historically have been used, as leverage in
working out foreign policy disputes with other countries ( as in the Iranian hostage
situation) and that they will be useful in negotiating the possible future re-establishment
of normal relations with Iran and Cuba. The Administration also
contended that numerous other U. S. nationals had legitimate ( and prior) claims
against these countries that would be frustrated if the assets were used solely to
compensate the recent victims of terrorism. 34 The Administration also argued that
using frozen assets to compensate victims of State- sponsored terrorism exposes the
United States to the risk of reciprocal actions against U. S. assets by other States. 35
CRS- 10
35 (... continued)
United States have been handed down pursuant to those statutes. See infra at 53.
36 P. L. 105- 277, Div. A, Title I, § 117 ( Oct. 21, 1998), 112 Stat. 2681- 491, codified at 28
U. S. C. A. § 1610( f)( 1)( A). This section was added to the FSIA by § 117 of the Treasury and
General Government Appropriations Act for Fiscal Year 1999, as contained in the Omnibus
Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year 1999, P. L.
105- 277 ( 1998), 112 Stat. 2681. The provision, without the waiver authority, had originated
in the Senate version of the Treasury appropriations bill; but the Senate Appropriations
Committee had offered no explanation. See S. 2312 ( 105th Cong.) and S. Rept. 105-
251( 1998). It had also been offered during House floor debate on the House version of the
Treasury appropriations bill by Representative Saxton but had been subject to a point of
order as legislation on an appropriations bill. 144 CONG. REC. 15,856- 59 ( 1998). In
conference with the House, the provision was retained, but waiver authority for the
President was added. The conference reports offered no further explanation. See H. R.
4104, H. R. CONF. REP. NO. 105- 560 ( 1998), and H. R. CONF. REP. NO. 105- 789 ( 1998). H. R.
4104 was not enacted but its provisions were folded into the omnibus act. Both immediately
prior and after the enactment of the omnibus act, several members of the House and Senate
expressed the view that the waiver authority of § 117 should be read to apply only to the
requirement that the State and Justice Departments assist judgment creditors in locating the
assets of terrorist States. See, e. g., 144 CONG. REC. 17,192- 93 ( 1998)( statements of Sen.
Graham and Sen. Faircloth); id. at 27,742- 43 ( 1998)( remark by Rep. Pascrell); id. at 27,749-
80 ( remarks by Rep. Meek, Rep. Forbes, Rep. Wolf, Rep. Istook, Rep. Northup, and Rep.
Aderholt); id. At 27,204 ( remark by Rep. Saxton). But at least one House member also
expressed the view that the waiver authority applied to the whole of § 117. See 144 CONG.
REC. 27,325 ( 1998).
37 28 U. S. C. A. § 1610( f)( 1)( A).
In an attempt to override these objections, the 105th Congress in 1998 further
amended the FSIA to provide that any property of a terrorist State frozen pursuant to
TWEA or IEEPA and any diplomatic property of such a State could be subject to
execution or attachment in aid of execution of a judgment against that State under the
terrorism State exception to the FSIA. 36 Section 117 of the Treasury Department
Appropriations Act for Fiscal Year 1999 also mandated that the State and Treasury
Departments “ shall fully, promptly, and effectively assist” any judgment creditor or
court issuing a judgment against a terrorist State “ in identifying, locating, and
executing against the property of that foreign state....” 37 Because of the
Administration’s continuing objections, however, section 117 also gave the President
authority to “ waive the requirements of this section in the interest of national
security.” On October 21, 1998, President Clinton signed the legislation into law and
CRS- 11
38 Presidential Determination 99- 1 ( Oct. 21, 1998), reprinted in 34 WEEKLY COMP. PRES.
DOC. 2088 ( Oct. 26, 1998). On the day the President exercised the waiver authority, the
White House Office of the Press Secretary issued the following explanatory statement:
...[ T] he struggle to defeat terrorism would be weakened, not strengthened, by putting into
effect a provision of the Omnibus Appropriations Act for FY 1999. It would permit
individuals who win court judgments against nations on the State Department’s terrorist
list to attach embassies and certain other properties of foreign nations, despite U. S. laws
and treaty obligations barring such attachment.
The new law allows the President to waive the provision in the national security interest
of the United States. President Clinton has signed the bill and, in the interests of
protecting America’s security, has exercised the waiver authority. If the U. S. permitted
attachment of diplomatic properties, then other countries could retaliate, placing our
embassies and citizens overseas at grave risk. Our ability to use foreign properties as
leverage in foreign policy disputes would also be undermined.
Statement by the Press Secretary ( Oct. 21, 1998).
39 Statement by President William J. Clinton Upon Signing H. R. 4328, 34 WEEKLY COMP.
PRES. DOC. 2108 ( Nov. 2, 1998), reprinted in 1998 U. S. C. C. A. N. 576.
40 The parties in both the Alejandre and the Flatow suits sought to persuade the courts that
the President’s waiver authority did not extend to the diplomatic properties and blocked
( continued...)
immediately executed the waiver. 38 The President subsequently explained his
reasons in the signing statement for the bill as follows:
I am concerned about section 117 of the Treasury/ General Government
appropriations section of the act, which amends the Foreign Sovereign
Immunities Act. If this section were to result in attachment and execution
against foreign embassy properties, it would encroach on my authority under the
Constitution to “ receive Ambassadors and other public ministers.” Moreover,
if applied to foreign diplomatic or consular property, section 117 would place the
United States in breach of its international treaty obligations. It would put at risk
the protection we enjoy at every embassy and consulate throughout the world by
eroding the principle that diplomatic property must be protected regardless of
bilateral relations. Absent my authority to waive section 117’ s attachment
provision, it would also effectively eliminate use of blocked assets of terrorist
States in the national security interests of the United States, including denying
an important source of leverage. In addition, section 117 could seriously impair
our ability to enter into global claims settlements that are fair to all U. S.
claimants, and could result in U. S. taxpayer liability in the event of a contrary
claims tribunal judgment. To the extent possible, I shall construe section 117 in
a manner consistent with my constitutional authority and with U. S. international
legal obligations, and for the above reasons, I have exercised the waiver authority
in the national security interest of the United States. 39
106th Congress: Enactment of Section 2002 of the Victims
of Trafficking and Violence Protection Act of 2000
President Clinton’s exercise of the waiver authority conferred by section 117
blocked those with default judgments against Cuba and Iran from attaching the
diplomatic property and frozen assets of those States to satisfy the judgments. 40 In
CRS- 12
40 (... continued)
assets of Cuba and Iran, but those efforts ultimately proved unavailing. See Alejandre v.
Republic of Cuba, 42 F. Supp. 2d 1317 ( S. D. Fla. 1999) ( Presidential waiver authority held
to apply only to the requirement that the Departments of State and Treasury assist judgment
creditors and not to the provision subjecting blocked assets, including diplomatic property,
to attachment). This decision was eventually reversed on other grounds by the U. S. Court
of Appeals for the Eleventh Circuit — Alejandre v. Telefonica Larga Distancia de Puerto
Rico, 183 F. 3d 1277 ( 11th Cir. 1999). A decision by a federal district court in the Flatow
litigation construed the President’s waiver authority broadly. See Flatow v. Islamic
Republic of Iran, 76 F. Supp. 2d 16 ( D. D. C. 1999); see also Jacobsen v. Oliver, 451 F. Supp.
2d 181, 189 ( D. D. C. 2006)( waiver was effective for subsection ( b), which would have
authorized the award of punitive damages against foreign States).
41 See Hearing Before the Senate Judiciary Committee on Terrorism: Victims’ Access to
Terrorists’ Assets, 106th Congress, 1st Sess. ( Oct. 27, 1999) and Hearing Before the
Subcommittee on Immigration and Claims of the House Judiciary Committee on H. R. 3485,
the “ Justice for Victims of Terrorists Act,” 106th Congress, 2d Sess. ( Apr. 13, 2000).
42 P. L. 106- 386, § 2002 ( Oct. 28, 2000), 114 Stat. 1541.
43 See, e. g., Anderson v. Islamic Republic of Iran, 90 F. Supp. 2d 107 ( D. D. C. March 24,
2000) ($ 41.2 million in compensatory damages and $ 300 million in punitive damages
awarded to a journalist who was kidnaped and held in deplorable conditions for seven years
by Hezbollah, which the court found to be funded by Iran) and Eisenfeld v. Islamic Republic
of Iran, 172 F. Supp. 2d 1 ( D. D. C. July 11, 2000) ($ 24.7 million in compensatory damages
and $ 300 million in punitive damages awarded to the families of two young Americans who
were killed when a bomb placed by Hamas operatives exploded on the bus on which they
were riding in Israel).
44 See Murphy, supra note 29.
response, various Members during the 106th Congress pressed for additional
amendments to the FSIA that would override the President’s waiver of section 117
and allow the judgments against terrorist States to be satisfied out of the States’
frozen assets. Congress held hearings to consider the Justice for Victims of
Terrorism Act, 41 which was adopted as revised by the House and reported in the
Senate. The Clinton Administration opposed the measure, and it was not enacted
into law. Instead, negotiations with the Administration led by Senators Lautenberg
and Mack resulted in the enactment of section 2002 of the Victims of Trafficking and
Violence Against Women Act of 2000,42 which created an alternative compensation
system for some judgment holders. It mandated the payment of a portion of the
damages awarded in the Alejandre judgment out of Cuba’s frozen assets and a
portion of ten designated judgments against Iran out of U. S. appropriated funds “ not
otherwise obligated.” In the meantime, additional and substantial default judgments
continued to be handed down in other suits against Iran43; and a number of new suits
against terrorist States were filed. 44
Like § 117 of the Fiscal 1999 Appropriations Act for the Treasury Department,
the Justice for Victims of Terrorism Act would have amended the FSIA to allow the
attachment of all of the assets of a terrorist State, including its blocked assets, its
diplomatic and consular properties, and moneys due from or payable by the United
States. To that end it would have repealed the waiver authority granted in § 117 and
CRS- 13
45 Terrorism: Victims’ Access to Terrorist Assets — Hearing Before the Senate Committee
on the Judiciary, 106th Cong., 1st Sess. ( Oct. 27, 1999) ( S. 106- 941) ( statement of Sen.
Mack).
46 Id. ( statement of Stephen Flatow).
47 Id. ( statement of Maggie Alejandre Khuly).
allowed the President to waive the authorization to attach assets only with respect to
the premises of a foreign diplomatic or consular mission.
In hearings on the measure, the Clinton Administration was repeatedly criticized
for its opposition to the efforts of victims of terrorism to collect on the judgments
they had obtained. Senator Mack, cosponsor of the Justice for Victims of Terrorism
Act in the Senate, stated:
.... Mr. Chairman, the President made promises to the families, encouraged them
to seek justice, calling their efforts brave and courageous. He pledged to fight
terrorism and signed several laws supporting the rights of victims to take
terrorists to court. But ultimately, he has chosen to protect terrorist assets over
the rights of American citizens seeking justice. This is simply not what America
stands for. Victims’ families must know that the U. S. Government stands with
them in actions, as well as words. 45
Stephen Flatow, awarded $ 247.5 million in a suit against Iran for the terrorist murder
of his daughter, asserted:
The memory of Americans killed by terrorists requires us to continue to protest
against administration attempts to stifle our efforts to collect that which has been
awarded to us. If the administration will not help us, then, at least, let it get out
of our way and stop sending lawyers to court at taxpayer expense to defend the
interests of state sponsors of terrorism. 46
The sister of one of the Brothers to the Rescue pilots shot down by Cuba stated:
No words can possibly explain our shock when we went to court and found U. S.
attorneys sitting down at the same table as Cuba’s attorneys. How can you
explain to a mother who has lost her son, to a wife who has lost her husband, to
a daughter who has lost her father, that their own government is taking the
murderers’s side? How can one understand the claim by the U. S. that the frozen
funds are needed to promote civil society and democracy in Cuba, and then have
our country not take into account basic human rights and justice? What message
are we, the United States, sending the Cuban people and its government when we
allow a violation of the right to life to remain unpunished? The Clinton
Administration has shut its doors to us. 47
Representative McCollum, sponsor of the House bill, said:
Today, the subcommittee seeks to answer why the President said one thing and
his administration insists upon doing another. It is my hope that our panel of
witnesses will help us understand why the President and administration officials
encourage victims to take terrorists to court under the 1996 Anti- Terrorism Act
yet now, in contradiction to the President’s words, the administration refuses to
CRS- 14
48 Justice for Victims of Terrorism Act: Hearing Before the Subcommittee on Immigration
and Claims of the House Committee on the Judiciary, 106th Cong., 2d Sess. ( Apr. 13, 2000)
( statement of Rep. McCollum). The transcript of the hearing is available on the
subcommittee’s website.
49 Id. ( statement submitted by Treasury Deputy Secretary Eizenstat, Defense Under
Secretary for Policy Slocombe, and State Under Secretary Pickering). Deputy Secretary
Eizenstat had given similar testimony in the Senate hearing as well.
allow compensation out of the frozen assets of terrorist States against whom
judgments have been rendered. Rather than waging a war on terrorism, it appears
the administration is fighting the victims of terrorism.
...
I am concerned that the President has exercised what was intended to be a narrow
national security waiver too broadly, and as a consequence, those who have
committed acts of terror resulting in the death of American citizens are
effectively going unpunished, and Americans are not receiving just compensation
after favorable court verdicts. This is contrary to the clear intention of Congress
both in the 1996 Anti- Terrorism Act and in the fiscal year 1999 Treasury
Department appropriations bill. 48
Treasury Deputy Secretary Stuart E. Eizenstat, Defense Department Under
Secretary for Policy Walter Slocombe, and State Department Under Secretary for
Policy Thomas Pickering responded for the Administration in a joint statement. 49
While expressing support for the goal of “ finding fair and just compensation for [ the]
grievous losses and unimaginable experiences” of the victims of terrorism, they said
that the Victims of Terrorism Act was “ fundamentally flawed” and had “ five
principal negative effects,” as follows:
First, blocking of assets of terrorist States is one of the most significant economic
sanctions tools available to the President. The proposed legislation would
undermine the President’s ability to combat international terrorism and other
threats to national security by permitting the wholesale attachment of blocked
property, thereby depleting the pool of blocked assets and depriving the U. S. of
a source of leverage in ongoing and office ( sic) sanctions programs, such as was
used to gain the release of our citizens held hostage in Iran in 1981 or in gaining
information about POW’s and MIA’s as part of the normalization process with
Vietnam.
Second, it would cause the U. S. to violate its international treaty obligations to
protect and respect the immunity of diplomatic and consular property of other
nations, and would put our own diplomatic and consular property around the
world at risk of copycat attachment, with all that such implies for the ability of
the United States to conduct diplomatic and consular relations and protect
personnel and facilities.
Third, it would create a race to the courthouse benefiting one small, though
deserving, group of Americans over a far larger group of deserving Americans.
For example, in the case of Cuba, many Americans have waited decades to be
compensated for both the loss of property and the loss of the lives of their loved
ones. This would leave no assets for their claims and others that may follow.
Even with regard to current judgment holders, it would result in their competing
CRS- 15
50 H. Rept. 106- 733, at 4 ( 2000). As initially reported, H. R. 3485 also amended the “ PayGo”
provision of the Balanced Budget and Emergency Deficit Control Act of 1985 ( 2 U. S. C. A.
§ 902( d)) to bar the Office of Management and Budget from estimating any changes in
direct spending outlays and receipts that would result from enactment of the bill. Because
this provision apparently had not been discussed in committee, the committee subsequently
deleted it before the bill went to the floor. See H. Rept. 106- 733 ( Part 2)( 2000).
51 146 CONG. REC. H6938 ( daily ed. July 25, 2000).
for the same limited pool of assets, which would be exhausted very quickly and
might not be sufficient to satisfy all judgments.
Fourth, it would breach the long- standing principle that the United States
Government has sovereign immunity from attachment, thereby preventing the
U. S. Government from making good on its debts and international obligations
and potentially causing the U. S. taxpayer to incur substantial financial liability,
rather than achieving the stated goal of forcing Iran to bear the burden of paying
these judgments. The Congressional Budget Office (“ CBO”) has recognized this
by scoring the legislation at $ 420 million, the bulk of which is associated with
the Foreign Military Sales (“ FMS”) Trust Fund. Such a waiver of sovereign
immunity would expose the Trust Fund to writs of attachment, which would
inject an unprecedented and major element of uncertainty and unreliability into
the FMS program by creating an exception to the processes and principles under
which the program operates.
Fifth, it would direct courts to ignore the separate legal status of States and their
agencies and instrumentalities, overturning Supreme Court precedent and basic
principles of corporate law and international practice by making state
majority- owned corporations liable for the debts of the state and establishing a
dangerous precedent for government owned enterprises like the U. S. Overseas
Private Investment Corporation (“ OPIC”).
Notwithstanding these contentions, the Senate and House Judiciary Committees
reported, and the House passed, a slightly amended version of the Justice for Victims
of Terrorism Act. The bill in the Senate was reported without a committee report.
The House Judiciary Committee stated in its report:
The President’s continued use of his waiver power has frustrated the legitimate
rights of victims of terrorism, and thus this legislation is required. While still
allowing the President to block the attachment of embassies and necessary
operating assets, H. R. 3485 would amend the law to specifically deny blockage
of attachment of proceeds from any property which has been used for any non-diplomatic
purpose or proceeds from any asset which is sold or transferred for
value to a third party. 50
The House passed the bill by voice vote under a suspension of the rules. 51
The Clinton Administration persisted in opposing the bill, however; and that led
to extensive negotiations between the Administration and interested Members of
Congress. Ultimately, these negotiations led to the addition to an unrelated bill
pending in conference of a limited alternative compensation scheme, which was
CRS- 16
52 P. L. 106- 386, § 2002( f)( 1) ( Oct. 28, 2000); 114 Stat. 1543. The statute primarily
addresses the issue of international trafficking in women and children.
signed into law by President Clinton on October 28, 2000.52 Section 2002 of the
Victims of Trafficking and Violence Protection Act of 2000 directed the Secretary
of the Treasury to pay portions of any judgments against Cuba and Iran that had been
handed down by July 20, 2002, or that would be handed down in any suits that had
been filed on one of five named dates on or before July 27, 2000. The judgments that
had been handed down by July 20, 2000, were the Alejandre, Flatow, Cicippio,
Anderson and Eisenfeld cases. Six suits had been filed against Iran on the five dates
specified in the statute — February 17, 1999; June 7, 1999; January 28, 2000; March
CRS- 17
53 These six cases are as follows:
! Higgins v. Islamic Republic of Iran, No. 1: 99CV00377 ( D. D. C. 2000)
($ 55.4 million in compensatory damages and $ 300 million in punitive
damages awarded to the wife of a Marine colonel who was kidnaped and
subsequently hanged by Hezbollah while serving as part of the United
Nations Truce Supervision Organization in Lebanon);
! Sutherland v. Islamic Republic of Iran, 151 F. Supp. 2d 27 ( D. D. C. 2001)
($ 46.5 million in compensatory damages and $ 300 million in punitive
damages awarded to a professor ( and his family) who was kidnaped while
teaching at the American University in Beirut and subsequently
imprisoned in “ horrific and inhumane conditions” for six and a half years
by Hezbollah);
! Jenco v. Islamic Republic of Iran, 154 F. Supp. 2d 27 ( D. D. C. 2001)
($ 14.6 million in compensatory damages and $ 300 million in punitive
damages awarded to the estate and family of a priest who was kidnaped
while working in Beirut as the Director of Catholic Relief Services and
imprisoned in terrible conditions for a year and a half by Hezbollah);
! Polhill v. Islamic Republic of Iran, 2001 U. S. Dist. LEXIS 15322 ( D. D. C.
2001) ($ 31.5 million in compensatory damages and $ 300 million in
punitive damages awarded to the family of an American citizen who was
kidnaped while working as a professor in Beirut and held in “ deplorable”
conditions for more than three years by Hezbollah);
! Wagner v. Islamic Republic of Iran, 172 F. Supp. 2d 128 ( D. D. C. 2001)
($ 16.3 million in compensatory damages and $ 300 million in punitive
damages awarded to the estate and family of a petty officer in the U. S.
Navy who was killed by a car bomb driven by a Hezbollah suicide
bomber); and
! Stethem v. Islamic Republic of Iran, 201 F. Supp. 2d 78 ( D. D. C. 2002)
($ 21.2 million in compensatory damages awarded to the family of a
serviceman who was tortured and killed during the hijacking of a TWA
plane in 1985, $ 8 million awarded in compensatory damages to six
servicemen and their families for their torture and detention during and
after the same hijacking, and $ 300 million in punitive damages awarded
against Iran for its recruitment, training, and financing of Hezbollah, the
terrorist group the court found to be responsible for the hijacking).
It might be noted that in Stethem only the award to the Stethem family was originally
covered by § 2002 of the Victims of Trafficking Act; the second suit filed by the six
servicemen and their families — Carlson v. Islamic Republic of Iran — which was
consolidated with Stethem was not covered by § 2002 but was later added to the list of
compensable suits by P. L. 107- 228 ( Sept. 30, 2002).
15, 2000; and July 27, 2000 — and all have subsequently been decided. 53 ( See
Appendix I for a full list of the cases.)
Section 2002 gave the claimants in these eleven suits three options:
! First, they could obtain from the Treasury Department 110 percent
of the compensatory damages awarded in their judgments, plus
interest, if they agreed to relinquish all rights to collect further
compensatory and punitive damages;
CRS- 18
54 See Murphy, supra note 29, at 138.
55 A Foreign Military Sales Fund is a Treasury holding account established to facilitate the
sale of military items to foreign countries or international organizations, pursuant to the
Arms Control Export Act, 22 U. S. C. § 2751 et seq. Foreign purchasers place monies in the
fund under individual sub- accounts from which the Department of Defense pays for military
equipment and services provided to the purchaser by DoD or private suppliers.
56 Congress provided $ 1.353 billion in 1979 to pay for four DDG- 993 destroyers Iran had
ordered but that became available for the U. S. Navy after the revolution in Iran led to the
termination of the contract. P. L. 96- 38 ( July 25, 1979), 93 Stat. 97, 99; S. Rep. 96- 224 at
25.
! Second, they could receive 100 percent of the compensatory
damages awarded in their judgments, plus interest, if they agreed to
relinquish ( a) all rights to further compensatory damages awarded by
U. S. courts and ( b) all rights to attach certain categories of property
in satisfaction of their judgments for punitive damages, including
Iran’s diplomatic and consular property as well as property that is at
issue in claims against the United States before an international
tribunal. The property in the latter category included Iran’s Foreign
Military Sales ( FMS) trust fund, which remains at issue in a case
before the Iran- U. S. Claims Tribunal.
! Third, claimants could decline to obtain any payments from the
Treasury Department and continue to pursue satisfaction of their
judgments as best they could. 54
To pay a portion of the judgment against Cuba in the Alejandre case, the statute
directed that the President vest and liquidate Cuban government properties that have
been frozen under TWEA. For the ten designated cases against Iran, § 2002 provided
for payment out of U. S. funds, as follows:
! The statute directed the Secretary of the Treasury to use any
proceeds that have accrued from the rental of Iranian diplomatic and
consular property in the United States plus appropriated funds not
otherwise obligated ( meaning U. S. funds) up to the amount
contained in Iran’s Foreign Military Sales account. The Foreign
Military Sales ( FMS) Fund55 had, as of 2000, about $ 377 million in
funds. The account originally contained funds deposited by Iran to
pay for military equipment and services during the reign of the Shah.
However, Congress also provided funds for the account in order to
continue to pay contractors for goods and services after Iran
terminated contracts under the FMS program. 56 Disposition of
military equipment procured for Iran through the FMS fund and the
money remaining in the FMS account is an unresolved issue
between the United States and Iran before the U. S.- Iran Claims
Tribunal, where Iran has filed claims seeking billions of dollars
primarily for alleged overcharges and nondeliveries of military
equipment, as well as for allegedly unjustified charges billed to Iran
for terminating its FMS program and the associated contracts. The
CRS- 19
57 Paragraph ( 1) is codified at 28 U. S. C. A. § 1610( f)( 1) and the modified waiver authority
is codified at 28 U. S. C. A. § 1610( f)( 3). It applies to “ property with respect to which
financial transactions are prohibited or regulated pursuant to [ IEEPA, TWEA, or any other
law or regulation].”
58 Presidential Determination No. 2001- 03 ( Oct. 28, 2000); 65 Fed. Reg. 66,483.
59 While the statute itself made no express mention of how the waiver was meant to be
executed, the report of the House- Senate conference committee on the “ Victims of
( continued...)
United States has filed counterclaims to recover amounts it claims
Iran owes on the contracts.
! If payments are paid out of U. S. funds, § 2002 stated that the United
States would be subrogated to the rights of the persons paid
( meaning that the United States would be entitled to pursue their
right to payment of the damage awards from Iran).
! Section 2002 further provided that the United States “ shall pursue”
these subrogated rights as claims or offsets to any claims or awards
that Iran may have against the United States; and it bars the payment
or release of any funds to Iran from frozen assets or from the Foreign
Military Sales Fund until these subrogated claims have been
satisfied.
Section 2002 further expressed the “ sense of the Congress” that relations
between the United States and Iran should not be normalized until these subrogated
claims have been “ dealt with to the satisfaction of the United States.” It also
“ reaffirmed the President’s statutory authority to manage and ... vest foreign assets
located in the United States for the purpose[] ... of assisting and, where appropriate,
making payments to victims of terrorism.” In addition, § 2002 modified one
provision of § 117 of the Treasury Department appropriations act for fiscal 1999 by
changing the mandate that the State and Treasury Departments “ shall” assist those
who have obtained judgments against terrorist States in locating the assets of those
States to the more permissive “ should make every effort” to assist such judgment
creditors.
Finally, § 2002 modified the waiver authority that the President had been given
in § 117. It repealed that subsection and instead provided that “[ t] he President may
waive any provision of paragraph ( 1) in the interest of national security.” ( Paragraph
( 1) was the subsection that allowed the frozen assets of a terrorist State, including its
diplomatic property, to be attached in satisfaction of a judgment against that State.) 57
Immediately after signing the legislation into law on October 28, 2000,
President Clinton exercised the substitute waiver authority granted by § 2002 and
waived “ subsection ( f)( 1) of section 1610 of title 28, United States Code, in the
interest of national security.” 58 Thus, except to the extent § 2002 allowed the blocked
assets of Cuba to be used to satisfy a portion of the Alejandre judgment, it did not
eliminate the bar to the attachment of the diplomatic property and the blocked assets
of terrorist States to satisfy judgments against those States. 59
CRS- 20
59 (... continued)
Trafficking” bill expressed an intent that the waiver authority of § 2002 be exercised only
on a case- by- case basis, as follows:
Subsection 1( f) of this bill repeals the waiver authority granted in Section 117 of the
Treasury and General Government Appropriations Act for fiscal year 1999, replacing it
with a clearer but narrower waiver authority in the underlying statute. The Committee
hopes clarity in the legislative history and intent of subsection 1( f), in the context of the
section as a whole, will ensure appropriate application of the new waiver authority.
This is a key issue for American victims of state- sponsored terrorism who have sued or
who will in the future sue the responsible terrorism- list state, as they are entitled to do
under the Anti- Terrorism Act of 1996. Victims who already hold U. S. court judgements,
and a few whose related cases will soon be decided, will receive their compensatory
damages as a result of this legislation. The Committee intends that this legislation will
similarly help other pending and future Antiterrorism Act plaintiffs as and when U. S.
courts issue judgements against the foreign state sponsors of specific terrorist acts....
In replacing the waiver, the conferees accept that the President should have the authority
to waive the court’s authority to attach blocked assets. But to understand the view of the
committee with respect to the use of the waiver, it must be read within the context of other
provisions of the legislation.
A waiver of the attachment provision would seem appropriate for final and pending
Anti- Terrorism Act cases identified in subsection ( a)( 2) of this bill. In these cases, judicial
attachment is not necessary because the executive branch will appropriately pay
compensatory damages to the victims and use blocked assets to collect the funds from
terrorist States.
Of particular significance, this section reaffirms the President’s statutory authority, inter
alia, to vest blocked foreign government assets and where appropriate make payments to
victims of terrorism. The President has the authority to assist victims with pending and
future cases.
The Committee’s intent is that the President will review each case when the court issues
a final judgement to determine whether to use the national security waiver, whether to
help the plaintiffs collect from a foreign state’s non- blocked assets in the United States,
whether to allow the courts to attach and execute against blocked assets, or whether to use
existing authorities to vest and pay those assets as damages to the victims of terrorism.
When a future President does make a decision whether to invoke the waiver, he should
consider seriously whether the national security standard for a waiver has been met. In
enacting this legislation, Congress is expressing the view that the attachment and
execution of frozen assets to enforce judgements in cases under the Anti- Terrorism Act
of 1996 is not by itself contrary to the national security interest. Indeed, in the view of the
Committee, it is generally in the national security interest of the United States to make
foreign state sponsors of terrorism pay court- awarded damages to American victims, so
neither the Foreign Sovereign Immunities Act nor any other law will stand in the way of
justice. Thus, in the view of the committee the waiver authority should not be exercised
in a routine or blanket manner, but only where U. S. national security interests would be
implicated in taking action against particular blocked assets or where alternative recourse
— such as vesting and paying those assets — may be preferable to court attachment.
H. Rept. 106- 939, at 117- 118 ( 2000).
In November and December, 2000, the Office of Foreign Assets Control in the
Department of the Treasury issued a notice detailing the procedures governing
application for payment by those in the eleven designated cases who might want to
CRS- 21
60 65 Fed. Reg. 70,382 ( Nov. 22, 2000) and 65 Fed. Reg. 78,533 ( Dec. 15, 2000).
61 The original judgment had been rendered in Alejandre v. Republic of Cuba, 996 F. Supp.
1239 ( S. D. Fla. 1997).
62 See the six cases summarized supra, note 53.
63 Other default judgments against Iran that were handed down after the enactment of
§ 2002 on Oct. 28, 2000, and prior to the adjournment of the 107th Congress in late 2002
but that were not covered by § 2002 included:
! Elahi v. Islamic Republic of Iran, 124 F. Supp. 2d 97 ( D. D. C. 2000)
($ 11.7 million in compensatory damages and $ 300 million in punitive
damages awarded to the administrator of the estate of an Iranian dissident
and naturalized U. S. citizen killed by gunshot in Paris by the Iranian
Ministry of Information and Security);
! Mousa v. Islamic Republic of Iran, 238 F. Supp. 2d 1 ( D. D. C. 2001) ($ 12
million in compensatory damages and $ 120 million in punitive damages
awarded to woman who suffered severe and long- lasting injuries from a
suicide bombing of a bus in Jerusalem carried out at the instigation of
Hamas, an entity the court found to be supported by Iran);
! Hegna v. Islamic Republic of Iran, No. 1: 00CV00716 ( D. D. C. 2002) ($ 42
million in damages awarded to the family of a U. S. Agency for
International Development officer who was killed by Hezbollah militants
during a hijacking of a Kuwaiti Airlines flight in 1984);
! Weinstein v. Islamic Republic of Iran, 184 F. Supp. 2d 13 ( D. D. C. 2002)
($ 33 million in compensatory damages and $ 150 million in punitive
damages awarded to the family and estate of a person who was severely
injured in a bus bombing in Jerusalem carried out by Hamas, which the
court found to be funded by Iran, and who subsequently died from those
injuries);
( continued...)
obtain the partial payment of their judgments afforded by § 2002.60 All of the
claimants in the designated suits chose to obtain such compensation.
In early 2001 the federal government liquidated $ 96.7 million of the $ 193.5
million of Cuban assets that had previously been blocked and paid that amount to the
claimants in the Alejandre suit and their attorneys. 61 The claimants in the ten
designated cases against Iran variously chose to receive either 100 percent or 110
percent of their compensatory damages awards; and they ultimately received more
than $ 380 million in compensation out of U. S. funds. ( See Appendix I for a listing
of the cases, the payments made, and the option chosen.)
107th Congress: Additional Cases Added to § 2002
and Attachment of Assets Allowed in Other Cases
Subsequent to the enactment of § 2002 of the Victims of Trafficking statute in
late 2000, the courts handed down additional default judgments in suits against
terrorist States under the FSIA exception. As noted above, six of these additional
judgments were covered by the compensation scheme set forth in § 2002 because the
suits had been filed on one of the five dates on or prior to July 27, 2000 specified in
the statute. 62 But other default judgments, 63 as well as additional cases that were filed
CRS- 22
63 (... continued)
! Cronin v. Islamic Republic of Iran, 238 F. Supp. 2d 222 ( D. D. C. 2002)
($ 1.2 million in compensatory damages and $ 300 million in punitive
damages awarded to an individual who, while he was a graduate student
in Lebanon in 1984, was kidnaped and tortured for four days by Hezbollah
and two other paramilitary groups which the court found to have been
organized, funded, trained, and controlled by Iran); and
! Surette v. Islamic Republic of Iran, 231 F. Supp. 2d 260 ( D. D. C. 2002)
($ 18.96 million in compensatory damages and $ 300 million in punitive
damages awarded to the widow and sister of CIA agent William Buckley
who was kidnaped in Beirut and tortured for 14 months by the Islamic
Jihad, an entity the court found to be organized and funded by Iran, and
who ultimately died while in captivity).
In addition, two default judgments were handed down against Iraq — Daliberti v. Republic
of Iraq, 146 F. Supp. 2d 19 ( D. D. C. 2001) ($ 12.8 million in compensatory damages awarded
to four U. S. citizens who were detained and tortured for varying periods of time between
1992 and 1995 by Iraq and $ 6 million awarded to their spouses) and Hill v. Republic of Iraq,
175 F. Supp. 2d 36 ( D. D. C. 2001) ($ 9 million in compensatory damages against Iraq and
Saddam Hussein and $ 300 million in punitive damages against Saddam Hussein personally
awarded to twelve U. S. citizens who were held hostage by Iraq after its invasion of Kuwait
in 1990). In the latter case, the court subsequently found that an additional 168 plaintiffs
had established their right to relief for being held hostage by Iraq; and the court awarded
them approximately $ 85 million in compensatory damages. See Hill v. Republic of Iraq,
2003 U. S. Dist. LEXIS 3725 ( D. D. C. 2003).
64 See Shawn Zeller, Hoping to Thaw Those Frozen Funds, 33 NAT’L J. 3368- 69 ( Oct. 27,
2001).
65 P. L. 107- 77 ( Nov. 28, 2001). The text of the act and the conference report ( H. R. CONF.
REP. NO. 107- 278) is printed at 147 CONG. REC. H7986- H8038 ( daily ed. Nov. 9, 2001).
66 Id. § 626, reprinted at 147 CONG. REC. H8001 ( daily ed. Sept. 13, 2001).
and remained pending, were not covered by § 2002. As a consequence, pressure for
finding some means to compensate the additional claimants continued to grow. 64 The
107th Congress enacted several pieces of legislation, as follows:
( 1) Directive to develop a comprehensive compensation scheme
( P. L. 107- 77). In the “ Act Making Appropriations for the Departments of
Commerce, Justice, and State, the Judiciary, and Related Agencies for the Fiscal
Year Ending September 30, 2002,” 65 Congress in November, 2001, directed
President Bush to submit, no later than the time he submitted the proposed budget for
fiscal 2003,
a legislative proposal to establish a comprehensive program to ensure fair,
equitable, and prompt compensation for all United States victims of international
terrorism ( or relatives of deceased United States victims of international
terrorism) that occurred or occurs on or after November 1, 1979.66
That directive had not been part of either the House or Senate- passed versions of
H. R. 2500. But it was added in lieu of an amendment sponsored by Senator Hollings
that the Senate had adopted, without debate, which would have authorized partial
CRS- 23
67 See 147 CONG. REC. S9365 ( daily ed. Sept. 13, 2001). The Hollings amendment
generally followed the scheme of § 2002 by specifying the filing dates of four of the five
additional cases rather than identifying them by name. The specified dates were May 17,
1996; May 7, 1997; Oct. 22, 1999; and Dec. 15, 1999. It identified the Roeder case only by
its filing number in the federal district court in the District of Columbia — Case Number
1: 00CV03110 ( ESG). For the text of the amendment, see 147 CONG. REC. S9398- 9400
( daily ed. Sept. 13, 2001).
68 H. Rept. 107- 278 ( 2001), reprinted at 147 CONG. REC. H 8033 ( daily ed. Nov. 9, 2001).
69 Office of the White House Press Secretary, “ President Signs Commerce Appropriations
Bill: Statement by the President on H. R. 2500” ( Nov. 28, 2001), available on the White
House website.
70 P. L. 107- 228, § 686 ( Sept. 30, 2002). Various members of Congress had previously
introduced bills to add suits to the list compensable under § 2002. See, e. g., H. R. 4647
( 107th Cong.).
71 Civil Action No. 00- 1309 ( D. D. C., filed June 6, 2000).
72 Civil Action No. 00- 0159 ( D. D. C., filed January 28, 2000).
73 Stethem v. The Islamic Republic of Iran and Carlson v. The Islamic Republic of Iran, 201
( continued...)
payment of the judgments in five additional cases ( including the Roeder case,
infra). 67 In explaining the conference substitute for that provision, the conference
report stated:
Objections from all quarters have been repeatedly raised against the current ad
hoc approach to compensation for victims of international terrorism. Objections
and concerns, however, will no longer suffice. It is imperative that the Secretary
of State, in coordination with the Departments of Justice and Treasury and other
relevant agencies, develop a legislative proposal that will provide fair and prompt
compensation to all U. S. victims of international terrorism. A compensation
system already is in place for the victims of the September 11 terrorist attacks;
a similar system should be available to victims of international terrorism. 68
In signing the measure into law, President Bush cited the directive regarding
submission of a comprehensive plan and stated that “ I will apply this provision
consistent with my constitutional responsibilities.” 69 No such plan was put forward
in the second session of the 107th Congress.
( 2) Coverage of additional cases under § 2002 ( P. L. 107- 228). On
September 30, 2002, President Bush signed into law a measure — the Foreign
Relations Authorization Act for Fiscal 2003 — that added cases filed against Iran on
June 6, 2000, and January 16, 2002 to those that can be compensated under § 2002.70
The first case — Carlson v. The Islamic Republic of Iran71 — was by six Navy
divers who were on board a TWA airliner that was hijacked in 1985 and who were
subsequently imprisoned and tortured by Lebanese Shiite terrorists. That suit had
been filed separately from a suit by the family of Robert Stethem, who was murdered
in the course of the same hijacking — Stethem v. The Islamic Republic of Iran. 72 But
the two suits had been consolidated for trial, and the court decided the cases
together. 73 Stethem’s suit had been included as one of the cases that was
CRS- 24
73 (... continued)
F. Supp. 2d 78 ( D. D. C. 2002).
74 As with the other suits included within § 2002, the Carlson suit is not specified by name
but merely by its filing date of June 6, 2000. The amendment, sponsored by Representative
Manzullo, was part of a group of amendments adopted by voice vote on May 16, 2001. See
147 CONG. REC. H2224- H2239 ( daily ed. May 16, 2001).
75 P. L. 107- 297 ( Nov. 26, 2002), 116 Stat. 2322.
76 The term “ blocked asset” is defined in § 201( d) of TRIA to mean
( A) any asset seized or frozen by the United States under [ TWEA or IEEPA]; and
( B) does not include property that —
( i) is subject to a license issued by the United States Government for final
payment, transfer, or disposition by or to a person subject to the jurisdiction of
the United States in connection with a transaction for which the issuance of such
license has been specifically required by statute other than [ IEEPA] or the United
Nations Participation Act of 1945 ( 22 U. S. C. 287 et seq.); or
( ii) in the case of property subject to the Vienna Convention on Diplomatic
Relations or the Vienna Convention on Consular Relations, or that enjoys
equivalent privileges and immunities under the law of the United States, is being
used exclusively for diplomatic or consular purposes.
compensable under § 2002 as originally enacted, but the companion suit by the Navy
divers had not been included. The amendment enacted into law as part of the foreign
relations authorization bill had been adopted by the House on May 16, 2001, by voice
vote to rectify what its sponsor termed this “ inadvertent error.” 74 The second case,
specified by its filing date of January 16, 2002, was added to the measure by the
conference committee and was identified by the Office of Foreign Assets Control as
the case of Kapar v. Islamic Republic of Iran.
( 3) Attachment of frozen assets authorized ( P. L. 107- 297). On
November 26, 2002, President Bush signed the “ Terrorism Risk Insurance Act”
( TRIA) into law. 75 Section 201 of TRIA overrode long- standing objections by the
Clinton and Bush Administrations to make the frozen assets of terrorist States
available to satisfy judgments for compensatory damages against such States ( and
organizations and persons) as follows:
Notwithstanding any other provision of law, and except as provided in subsection
( b), 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 section 1605( a)( 7) of title 28, United States Code, 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 of any
compensatory damages for which such terrorist party has been adjudged liable. 76
Subsection ( b) of § 201, in turn, narrowed the waiver authority previously afforded
the President on this subject and permits the President to waive this provision “ in the
national security interest” only with respect to “ property subject to the Vienna
Convention on Diplomatic Relations or the Vienna Convention on Consular
Relations.”
CRS- 25
77 The Director, Office of Foreign Assets Control determined that the total compensable
awards exceeded 90 percent of the available funds as of June 3, 2003, and directed his office
to propose an appropriate pro rata distribution for Iran- related applications that were
received by Apr. 7, 2003. See Memorandum, Department of the Treasury, Determination
of Insufficiency of Funds Victims of Trafficking and Violence Protection Act of 2000,
Public Law No. 106- 386, as Amended ( June 3, 2003), available at [ http:// www. treasury. gov/
offices/ enforcement/ ofac/ legal/ notices/ insf_ funds. pdf]. All judgment creditors of Iran
eligible for compensation under § 2002 have received their payments.
78 H. R. REP. NO. 107- 300, Part I , at 17 ( 2001).
79 147 CONG. REC. H8596, 8629 ( daily ed. Nov. 29, 2001). However, one court has since
( continued...)
In addition, § 201 of P. L. 107- 297 amended § 2002 of the Victims of
Trafficking Act with respect to suits against Iran:
! It added to the list of suits against Iran that are compensable under
§ 2002, without further identification, all those that were filed
before October 28, 2000 ( previously the suits covered were those
that had been decided by July 20, 2000, or that had been filed on
February 17, 1999; June 7, 1999; January 28, 2000; March 15, 2000;
June 6, 2000, July 27, 2000; or January 16, 2002).
! It made 90 percent of the amount remaining in the § 2002 fund
( about $ 15.7 million) available to pay the compensatory damages
awarded in any judgment rendered in the cases previously added by
P. L. 107- 228 and by this statute which had been entered as of the
date of this statute’s enactment ( November 26, 2002) and provided
that, if the total amount of damages awarded exceeded the amount
available, each claimant is to receive a proportionate amount. 77
! It set aside the remaining 10 percent of the § 2002 fund for
compensation under the same formula of the final judgment entered
in the case filed against Iran on January16, 2002 ( Kapar v. Islamic
Republic of Iran).
! It provided that persons who receive less than 100 percent of the
compensatory damages awarded in their judgments against Iran
under the foregoing scheme do not have to relinquish their right to
obtain additional compensatory damages, as was required of those
previously compensated under § 2002, but only to relinquish their
right to obtain punitive damages.
These amendments derived from provisions that had been added to the terrorism
risk insurance bill in both the House and the Senate. On November 7, 2001, the
House Committee on Financial Services by voice vote adopted an amendment by
Representative Watt to its terrorism risk insurance bill ( H. R. 3210) that would have
allowed the frozen assets of terrorists or terrorist organizations to be used in
satisfaction of judgments against them. 78 That amendment was substantially
modified in a floor substitute to apply to terrorist States, organizations, and
individuals and to allow the President to waive the requirement with respect to
diplomatic and consular property ( but only if the property had not been rented or sold
to a third party), which was adopted by the House on November 29, 2001.79 On June
CRS- 26
79 (... continued)
ruled that diplomatic property rented out by the United States was excepted under the
definition of “ blocked assets” in subsection ( d)( 2), and that the waiver therefore was not
applicable to it. See Hegna v. Islamic Republic of Iran, 376 F. 3d 485 ( 5th Cir. 2004).
80 147 CONG. REC. S5509- S5513 ( daily ed. June 13, 2002) and S5575 ( daily ed. June 14,
2002). The rider replicated a bill the Senate Judiciary Committee had reported on June 27,
2002 ( S. 2134, the “ Terrorism Victim’s Access to Compensation Act of 2002”).
81 148 CONG. REC. H6138- 39 ( daily ed. Sept. 10, 2002).
82 Case Number 1: 00CV03110 ( ESG) ( D. D. C., filed Dec. 29, 2000).
83 The Algiers Accords contain the following provision:
...[ T] he United States ... will thereafter bar and preclude the prosecution against Iran of
any pending or future claim of the United States or a United States national arising out of
events occurring before the date of this declaration related to ( A) the seizure of the 52
United States nationals on Nov. 4, 1979, ( B) their subsequent detention, ( C) injury to
United States property or property of the United States nationals within the United States
embassy compound in Tehran after Nov. 3, 1979, and ( D) injury to the United States
nationals or their property as a result of popular movements in the course of the Islamic
Revolution in Iran which were not an act of the Government of Iran. The United States
will also bar and preclude the prosecution against Iran in the courts of the United States
of any pending or future claims asserted by persons other than the United States nationals
arising out of the events specified in the preceding sentence.
20 ILM 227 ( 1981).
18, 2002, the Senate by a vote of 81- 3 adopted a broader rider proposed by Senator
Allen to S. 2600, the Terrorism Risk Insurance Act of 2002.80 Like the House
provision, the Senate rider authorized the use of frozen assets to satisfy judgments
against terrorist States, organizations, and individuals and allowed the President to
waive that authorization only with respect to diplomatic and consular property. But
it also added all suits against Iran filed by October 28, 2000, to the list of those
compensable under § 2002 and set forth a proportional payment scheme for the added
suits. On September 10, 2002, the House by a vote of 373- 0 adopted a motion
instructing its conferees on the terrorism risk insurance bills to accept the Senate
rider. 81
Roeder v. Islamic Republic of Iran
Judicial proceedings. In late 2000 a suit was filed in federal district court
on behalf of the 52 embassy staffers who had been held hostage by Iran from 1979- 81
and on behalf of their families. Roeder v. Islamic Republic of Iran82 sought both
compensatory and punitive damages from Iran. In August, 2001, the trial court
granted a default judgment to the plaintiffs and scheduled a hearing on the damages
to be awarded. But in October, 2001, a few days before the scheduled hearing, the
U. S. government intervened in the proceeding and moved that the judgment be
vacated and the case dismissed. The government contended that the suit did not meet
all of the requirements of the terrorist State exception to the FSIA ( notably, that Iran
had not been designated as a State sponsor of terrorism at the time the U. S. personnel
were held hostage) and that the suit was barred by the explicit provisions of the 1981
Algiers Accords that led to the release of the hostages. 83
CRS- 27
84 P. L. 107- 77, Title VI, § 626( c) ( Nov. 28, 2001), amending 28 U. S. C. A. § 1605( a)( 7)( A).
85 H. R. REP. NO. 107- 278 ( 2001).
86 Statement on Signing the Departments of Commerce, Justice, and State, the Judiciary and
Related Agencies Appropriations Act, 2002, 37 WEEKLY COMP. PRES. DOC. 1723, 1724
( Nov. 28, 2001).
87 The amendment inverted two letters in the case reference to Roeder that had been
contained in P. L. 107- 17, changing “ 1: 00CV03110 ( ESG)” to “ 1: 00CV03110 ( EGS).” See
( continued...)
While that motion was pending before the court, the Senate approved as part of
the Hollings amendment to the FY2002 Appropriations Act for the Departments of
Commerce, Justice, and State noted in #( 1) of the preceding section a provision
specifying that Roeder should be deemed to be included within the terrorist State
exception to the FSIA; and the conference agreement on that bill retained that portion
of the Hollings amendment. Thus, as amended, the pertinent section of the FSIA
excludes suits against terrorist States from the immunity generally accorded foreign
States but directs the courts to decline to hear such a case ( with the amendment in
italics)
if the foreign state was not designated as a state sponsor of terrorism ... at the
time the act occurred, unless later so designated as a result of such act or the act
is related to Case Number 1: 00CV03110 ( ESG) in the United States District
Court for the District of Columbia. 84
The conference report on the bill explained the provision as follows:
Subsection ( c) quashes the State Department’s motion to vacate the judgment
obtained by plaintiffs in Case Number 1: 00CV03110 ( ESG) in the United States
District Court for the District of Columbia. Consistent with current law,
subsection ( c) does not require the United States government to make any
payments to satisfy the judgment. 85
In signing the appropriations act into law on November 28, 2001, however,
President Bush took note of this provision and commented as follows:
[ S] ubsection ( c) ... purports to remove Iran’s immunity from suit in a case
brought by the 1979 Tehran hostages in the District Court for the District of
Columbia. To the maximum extent permitted by applicable law, the executive
branch will act, and will encourage the courts to act, with regard to subsection
626( c) of the Act in a manner consistent with the obligations of the United States
under the Algiers Accord that achieved the release of U. S. hostages in 1981.86
Subsequently on December 13, 2001, the judge in Roeder ( Judge Emmet G.
Sullivan) heard arguments on the government’s earlier motion to dismiss. The
government continued to argue, inter alia, that the suit is barred by the Algiers
Accords and ought to be dismissed; and during the course of the proceeding Judge
Sullivan expressed concern regarding the lack of clarity of the recent Congressional
enactment with respect to that contention. A week later in the fiscal 2002
appropriations act for the Department of Defense, the 107th Congress included a
provision making a minor technical correction in the reference to the Roeder case. 87
CRS- 28
87 (... continued)
P. L. 107- 117, Title II, § 208 ( Jan. 10, 2002). This technical correction had originally been
included in the DOD appropriations bill as reported and adopted by the Senate but without
explanation. See H. R. 3388 as reported by the Senate Appropriations Committee ( S. REP.
NO. 107- 109 ( 2001) and Senate floor debate at 147 CONG. REC. S12476- S12529 ( daily ed.
Dec. 6, 2001), S12586- S12676 and S12779- S12812 ( daily ed. Dec. 7, 2001).
88 S. Rept. 107- 109 ( 2001).
89 Remarks on Signing the Department of Defense and Emergency Supplemental
Appropriations for Recovery from and Response to Terrorist Attacks on the United States
Act, 2002, in Arlington, Virginia, 38 WEEKLY COMP. PRES. DOC. 44 ( Jan. 10, 2002).
90 Roeder v. Islamic Republic of Iran, 195 F. Supp. 2d 140 ( D. D. C. 2002).
But the conference report also elaborated on what it said was the effect and intent of
the earlier amendment of the FSIA with respect to Roeder, seemingly in response to
Judge Sullivan’s expression of concern. The conference report stated as follows:
Sec. 208. — The conference agreement includes Section 208, proposed as
Section 105 of Division D of the Senate bill, making a technical correction to
Section 626 of Public Law 107- 77. The language included in Section 626( c) of
Public Law 107- 77 quashed the Department of State’s motion to vacate the
judgment obtained by plaintiffs in Case Number 1: 00CV03110( EGS) and
reaffirmed the validity of this claim and its retroactive application. Nevertheless,
the Department of State continued to argue that the judgment obtained in Case
Number 1: 00CV03110( EGS) should be vacated after Public Law 107- 77 was
enacted. The provision included in Section 626( c) of Public Law 107- 77
acknowledges that, notwithstanding any other authority, the American citizens
who were taken hostage by the Islamic Republic of Iran in 1979 have a claim
against Iran under the Antiterrorism Act of 1996 and the provision specifically
allows the judgment to stand for purposes of award damages consistent with
Section 2002 of the Victims of Terrorism Act of 2000 ( Public Law 106- 386, 114
Stat. 1541). 88
Nonetheless, in signing the Department of Defense appropriations measure into
law on January 10, 2002, President Bush continued to insist as follows:
Section 208 of Division B makes a technical correction to subsection 626( c) of
Public Law 107- 77 ( the FY2002 Commerce, Justice, State, the Judiciary and
Related Agencies Appropriations Act), but does nothing to alter the effect of that
provision or any other provision of law. Since the enactment of sub- section
626( c) and consistent with it, the executive branch has encouraged the courts to
act, and will continue to encourage the courts to act, in a manner consistent with
the obligations of the United States under the Algiers Accords that achieved the
release of U. S. hostages in 1981.89
After two additional hearings, Judge Sullivan on April 18, 2002, granted the
government’s motion to vacate the default judgment against Iran and to dismiss the
suit. 90 In a lengthy opinion the court concluded that:
CRS- 29
91 The court said that it did not have jurisdiction over the suit until Congress amended the
FSIA by means of § 626( c) of the FY2002 appropriations act for the Departments of Justice,
Commerce, and State, which was signed into law on Nov. 28, 2001. Prior to that
amendment, it said, the suit did not fall within the terrorist state exception to the FSIA
because Iran had not been declared to be a terrorist state at the time it seized and held the
American personnel hostage. The court said also that, absent an “ express statement of intent
by Congress,” it could not apply § 626( c) retroactively.
92 The court stressed that the terrorist state exception which Congress had added to the FSIA
in 1996 meant only that U. S. courts could exercise jurisdiction over such cases. Traditional
State immunity, in other words, was eliminated as a jurisdictional barrier. But that
amendment to the FSIA did not in itself, the court said, provide a cause of action for such
suits. The specific statute providing for such a cause of action which Congress enacted later
in 1996, it said, provided only for a cause of action against an official, employee, or agent
of a terrorist State, not against the terrorist State itself. ( See P. L. 104- 208, Div. A, Title I,
§ 101( c) ( Sept. 30, 1996)(“ Flatow Amendment”); 110 Stat. 3009- 172; 28 U. S. C. A. § 1605
note; supra note 3)
93 The court stressed that an act of Congress “ ought never to be considered to violate the law
of nations, if any other possible construction remains.” None of the statutes Congress had
adopted relating to a cause of action generally or to Roeder itself, the court said,
unambiguously declared an intent to override the Algiers Accords. Nor, it said, did they
unambiguously declare an intent not to override the Accords. They, and their “ scant”
legislative history, were ambiguous on the question, it held, and, consequently, must be
construed not to conflict with the Accords:
Neither the Anti- Terrorism Act, the Flatow Amendment, Subsection 626( c), or Section
208 contain the type of express statutory mandate sufficient to abrogate an international
executive agreement. Furthermore ..., the legislative histories of these statutes contain no
clear statements of Congressional intent to specifically abrogate the Algiers Accords.
Therefore, ... unless and until Congress expresses its clear intent to overturn the provisions
of a binding agreement between two nations that has been in effect for over twenty years,
this Court can not interpret these statutes to abrogate that agreement.
Roeder v. Islamic Republic of Iran, supra, at 177.
The court also rejected the argument that because the United States entered into the Algiers
Accords under duress, the Accords constituted “ an unenforceable illegal contract.”
“ Whatever emotional appeal and rhetorical flourish this argument contains,” the court said,
“ it is absolutely without basis in law.” Id. at 168.
! at the time it entered a default judgment for plaintiffs on August 17,
2001, it did not, in fact, have jurisdiction over the case and, thus,
should not have entered a judgment91;
! the cause of action which Congress had adopted in late 1996 did not,
in fact, apply to suits against terrorist States but only against the
officials, employees, and agents of those States who perpetrate
terrorist acts92; and
! the provision of the Algiers Accords committing the United States
to bar suits against Iran for the incident constitutes the substantive
law of the case, and Congress’s two enactments specifically
concerning the case were too ambiguous to conclude that it
specifically intended to override this international commitment. 93
CRS- 30
94 The court did not base its decision on any separation of powers considerations. But it did
say that if it had construed § 626( c) to apply retroactively, Congress’s “ post- judgment
retroactive imposition of jurisdiction [ would raise] serious separation of powers concerns”
and might be “ an impermissible encroachment by Congress into the sphere of the federal
courts....” Id. at 161. “ By expressly directing legislation at pending litigation, Congress has
arguably attempted to determine the outcome of this litigation,” it said. Id. at 163. The
court also suggested that the narrowness of Congress’s enactments, i. e., their application
only to this one case and not to any others, raised possible Article III concerns. Id. at 165-
66.
95 In commenting on what it called the “ repeated ethical failures by class counsel,” the court
stated that “[ p] laintiffs’ counsel in this case repeatedly presented meritless arguments to this
Court, repeatedly failed to substantiate their arguments by reference to any supporting
authority, and repeatedly failed to bring to the Court’s attention the existence of controlling
authority that conflicted with those arguments.” Id. at 185.
96 Roeder v. The Islamic Republic of Iran, 333 F. 3d 228, 238 ( D. C. Cir. 2003)(“ While
legislative history may be useful in determining intent, the joint explanatory statements here
go well beyond the legislative text of § 208, which did nothing more than correct a
typographical error.”).
97 The court noted, but did not decide whether the amendments were an impermissible
intrusion by Congress into the role of the courts. Id. at 237 & n. 5.
In addition, the court in dicta suggested that Congress’s enactments on the Roeder
case might have interfered with its adjudication of the case in a manner that raised
constitutional separation of powers concerns. 94 It also chastised the plaintiffs’
attorneys for what it said were serious breaches of their professional and ethical
responsibilities. 95
The U. S. Court of Appeals for the District of Columbia affirmed the decision
of the lower court, placing emphasis on the fact that the legislative history plaintiffs
sought to use — the joint explanatory statement prepared by House and Senate
conferees — is not part of the Conference Report voted on by both houses of
Congress and thus does not carry the force of law. 96
Executive agreements are essentially contracts between nations, and like
contracts between individuals, executive agreements are expected to be honored
by the parties. Congress ( or the President acting alone) may abrogate an
executive agreement, but legislation must be clear to ensure that Congress - and
the President - have considered the consequences. The “ requirement of clear
statement assures that the legislature has in fact faced, and intended to bring into
issue, the critical matters involved in the judicial decision.” The kind of
legislative history offered here cannot repeal an executive agreement when the
legislation itself is silent. [ Citations omitted].
The court denied that its interpretation rendered any act of Congress futile. On
the contrary, it stated that, “[ i] f constitutional ... the amendments had the effect of
removing Iran’s sovereign immunity, which the United States had raised in its motion
to vacate.” 97
CRS- 31
98 S. Rept. 107- 218, at 167 ( 2002).
99 149 CONG. REC. S839 ( daily ed. Jan. 15, 2003).
100 H. Rept. 108- 10 ( 2003).
101 P. L. 108- 7 ( Feb. 20, 2003).
102 The managers’ amendment was adopted by voice vote with no debate on this particular
provision. See 149 CONG. REC. S4806- 08 ( daily ed. Apr. 3, 2003). The text of the
amendment can be found at id. S4866- 67.
107th Through 110th Congresses: Efforts
to Abrogate the Algiers Accords
Subsequent to the trial court’s decision in Roeder, efforts have been made in the
107th, the 108th, and the 109th Congresses to enact legislation that would explicitly
abrogate the provision of the Algiers Accords barring the hostages’ suit. On July 24,
2002, the Senate Appropriations Committee reported the “ Fiscal 2003
Appropriations Act for the Departments of Commerce, Justice, and State” ( S. 2778).
Section 616 of that bill proposed to amend the FSIA as follows:
SEC. 616. Section 1605 of title 28, United States Code is amended by adding a
new subsection ( h) as follows:
( h) CAUSE OF ACTION FOR IRANIAN HOSTAGES- Notwithstanding any
provision of the Algiers Accords, or any other international agreement, any
United States citizen held hostage in Iran after November 1, 1979, and their
spouses and children at the time, shall have a claim for money damages against
the government of Iran. Any provision in an international agreement, including
the Algiers Accords that purports to bar such suit is abrogated. This subsection
shall apply retroactively to any cause of action cited in 28 U. S. C. 1605( a)( 7)( A).
In explaining the provision, the report of the Committee simply stated that “ Section
616 clarifies section 626 of Public Law 107- 77 that the Algiers Accord is abrogated
for the purposes of providing a cause of action for the Iranian hostages.” 98 The
measure received no further action prior to the adjournment of the 107th Congress,
however.
In the 108th Congress the Senate added the same or a similar amendment to three
appropriations bills, but in each case the amendment was deleted in conference. On
January 15, 2003, the same amendment was included in a managers’ amendment
offered by Senator Stevens to the House- passed version of the consolidated
appropriations resolution for fiscal 2003, H. J. Res. 2. The Senate adopted the
amendment by voice vote without comment on the provision. 99 But the provision
was deleted in conference100 and did not become law. 101 The Senate on April 3, 2003,
adopted without debate a managers’ amendment offered by Senator Stevens to the
“ Emergency Wartime Supplemental Appropriations Act, 2003” ( S. 762, H. R. l559)
which included a similar provision. 102 The bill primarily provided substantial
additional funding for the military action against Iraq and for the Department of
Homeland Security. Section 606 of the managers’ amendment provided as follows:
CRS- 32
103 See P. L. 108- 11 ( Apr. 16, 2003). Neither the conference report nor the House or Senate
debates on acceptance of the conference agreement made any mention of the deletion of this
provision. See H. Rept. 108- 76 ( 2003), reprinted at 149 CONG. REC. H3357 et seq. ( daily
ed. Apr. 12, 2003), id. H3385- 3404 ( House debate), and id. S. 5392 ( daily ed. Apr. 11, 2003)
( unanimous consent agreement in the Senate providing for automatic approval of the
conference report when received from the House).
104 149 CONG. REC. S12682 ( daily ed. Oct. 16, 2003).
105 H. Rept. 108- 337 ( 2003).
Sec. 606. Section 1605 of title 28, United States Code, is amended by adding at
the end the following new subsection:
( h) CLAIMS FOR MONEY DAMAGES FOR DEATH OR PERSONAL
INJURY — ( 1) Any United States citizen who dies or suffers injury caused by
a foreign state’s act of torture, extrajudicial killing, aircraft sabotage, or hostage
taking committed on or after November 2, 1979, and any member of the
immediate family of such citizen, shall have a claim for money damages against
such foreign state, as authorized by subsection ( a)( 7), for death or personal injury
( including economic damages, solatium, pain and suffering). ( 2) A claim under
paragraph ( 1) shall not be barred or precluded by the Algiers Accords.
The amendment was deleted in conference, however, and was not part of the measure
as enacted into law ( P. L. 108- 11). 103
Similarly, the Senate passed, without debate, 104 an amendment to the Emergency
Supplemental Appropriations Act for Defense and for the Reconstruction of Iraq and
Afghanistan, 2004 ( S. 1689, H. R. 3289), as follows:
Sec. 5006. Section 1605 of title 28, United States Code, is amended by adding
at the end the following new subsection:
( h) Notwithstanding any provision of the Algiers Accords, or any other
international agreement, any United States citizen held hostage during the period
between 1979 and 1981, and their spouses and children at the time, shall have a
claim for money damages against a foreign state for personal injury that was
caused by the foreign state’s act of torture or hostage taking. Any provision in an
international agreement, including the Algiers Accords that purports to bar such
suit is abrogated. This subsection shall apply retroactively to any cause of action
cited in section 1605( a)( 7)( A) of title 28, United States Code.
This amendment was stripped from the bill at conference without explanation
( P. L. 108- 106). 105
The 109th Congress did not take up any legislation to abrogate the Algiers
Accords. One bill, H. R. 3358, would have declared the Algiers Accords abrogated
and inapplicable, and would have directed the Secretary of the Treasury to pay the
Roeder plaintiffs $ 1,000 per day of captivity ( family members were to be awarded
$ 500 per day of captivity of the hostages), to be paid out of the FMS fund and frozen
assets belonging to Iran. No action was taken on the bill, but it has been re-introduced
in the 110th Congress as H. R. 394. In addition, H. R. 6305/ S. 3878 would
CRS- 33
106 E. O. 13290, 68 Fed. Reg. 14,305- 08 ( March 24, 2003).
107 See Tom Schoenberg, Fights Loom for Iraqi Riches, LEGAL TIMES ( March 31, 2003).
Judgment creditors were paid about $ 140 million from the vested assets to cover the
unsatisfied portions of judgments and interest. Judgments satisfied from Iraqi assets include
Dadesho v. Government of Iraq, D. C. No. CV- 92- 05491- REC ( E. D. Cal. 1995)($ 1.5 million
for 1990 foiled assassination plot), appeal dismissed, 139 F. 3d 766 ( 9th Cir. 1998); Hill v.
Republic of Iraq, 175 F. Supp. 2d 36 ( D. D. C. 2001)($ 94,110,000.00 in compensatory
damages for civilians detained in Iraq); Daliberti v. Republic of Iraq, 146 F. Supp. 2d 19
( D. D. C. 2001)($ 18,823,289.00 for civilian contractors held hostage in Iraq).
have provided up to $ 500,000 for victims of hostage- taking, including specifically
the Iran hostages and family members named in the Roeder case, who would have
been eligible for additional compensation from the FMS account. The bill did not
mention the Algiers Accords, and it would have prohibited recipients from
commencing or maintaining a civil action in U. S. court against a foreign State.
However, payment of compensation out of Iran’s FMS fund could arguably violate
the Algiers Accords in the event the U. S.- Iran Claims Tribunal finds that those funds
are the property of Iran. Similar legislation has been introduced in the 110th Congress
as H. R. 3369 and H. R. 3346 ( see infra).
Thus, no legislation has been enacted as yet specifically abrogating the Algiers
Accords.
Confiscation of Iraq’s Blocked Assets for Use
in the Reconstruction of Iraq ( POW Lawsuit)
On March 20, 2003, immediately after the U. S. and its coalition partners
initiated military action against Iraq, President Bush issued an executive order
providing for the confiscation and vesting of Iraq’s frozen assets in the U. S.
government and placing them in the Development Fund for Iraq for use in the post-war
reconstruction of Iraq. 106 According to the Terrorist Assets Report 2002
published by the Office of Foreign Assets Control, Iraq’s blocked assets totaled
approximately $ 1.73 billion at the end of 2002. However, the President’s order
excluded from confiscation and vesting Iraq’s diplomatic and consular property as
well as assets that had, prior to March 20, 2003, been ordered attached in satisfaction
of judgments against Iraq rendered pursuant to the terrorist suit provision of the FSIA
and § 201 of the Terrorism Risk Insurance Act ( which reportedly total about $ 300
million). 107 The President stated that the remaining assets “ should be used to assist
the Iraqi people....” Thus, notwithstanding the enactment of § 201 of TRIA, the
President’s action appeared to make Iraq’s frozen assets unavailable to those who,
after March 20, 2003, obtain judgments against that State for its sponsorship of, or
complicity in, acts of terrorism.
Subsequently, the President took several additional actions complementing and
reinforcing this executive order. In the “ Supplemental Appropriations Act for Fiscal
2003,” Congress provided that “ the President may make inapplicable with respect to
Iraq section 620A of the Foreign Assistance Act of 1961 or any other provision of
CRS- 34
108 P. L. 108- 11, § 1503 ( Apr. 16, 2003).
109 See Memorandum for the Secretary of State ( Presidential Determination No. 2003- 23)
( May 7, 2003). This Determination simply replicated the general language of the
Supplemental Appropriations Act provision. But in a subsequent message to Congress,
President Bush stated:
... [ B] y my memorandum to the Secretary of State and Secretary of Commerce
of May 7, 2003, ( Presidential Determination 2003- 23), I made inapplicable with
respect to Iraq section 620A of the Foreign Assistance Act of 1961, Public Law
87- 195, as amended, and any other provision of law that applies to countries that have
supported terrorism. Such provisions of law that apply to countries that have supported
terrorism include, but are not limited to, 28 U. S. C. 1605( a)( 7), 28 U. S. C. 1610, and
section 201 of the Terrorism Risk Insurance Act.
President George Bush, Message to the Congress of the United States ( May 22, 2003),
available on the White House website.
110 E. O. 13303, 68 Fed. Reg. 31931 ( May 28, 2003).
111 Acree v. Republic of Iraq, 276 F. Supp. 2d 95 ( D. D. C. 2003).
112 Id. at 98.
law that applies to countries that have supported terrorism.” 108 On the basis of that
authority, President Bush on May 7, 2003, declared a number of provisions
concerning terrorist States, including the FSIA exception and the section of the
Terrorism Risk Insurance Act making their blocked assets available to victims of
terrorism, inapplicable to Iraq. 109 On May 22, 2003, he issued another executive
order providing that the Development Fund of Iraq cannot be attached or made
subject to any other kind of judicial process. 110
Acree v. Republic of Iraq. Whether the President has the legal authority to
restore Iraq’s sovereign immunity and make its assets unavailable to victims of
terrorism who obtain judgments against Iraq was contested in Acree v. Republic of
Iraq. 111 In that case a federal district court on July 7, 2003 — two and half months
after the President’s order — handed down a default judgment against Iraq for its
imprisonment and torture of 17 American prisoners of war ( POWs) during the first
Gulf War in 1991. After detailing the treatment given the POWs, the court awarded
them and their families $ 653 million in compensatory damages and added a punitive
damages award of $ 306 million for the benefit of the POWs against Saddam Hussein
and the Iraqi Intelligence Service. Upon request by the plaintiffs, Judge Roberts on
July 18, 2003, issued a temporary restraining order ( TRO) requiring the government
to retain at least $ 653 million of Iraq’s assets vested in the United States by President
Bush’s executive order pending further decision by the court.
The Justice Department then sought to intervene in the case, arguing that Iraq’s
sovereign immunity had been restored by Presidential Determination pursuant to
authority granted by Congress. The court denied the government’s motion to
intervene as untimely because the Justice Department had waited 75 days past the
Determination before it intervened, knowing that the Acree case was pending before
the court. 112 Additionally, the court found that the government’s interest in
promoting a new, democratic Iraqi government did not constitute a cognizable
CRS- 35
113 Acree v. Snow, 276 F. Supp. 2d 31 ( D. D. C.), aff’d 78 Fed. Appx. 133 ( D. C. Cir.
2003)( unpublished opinion); Smith v. Federal Reserve Bank of New York, 280 F. Supp. 2d
314 ( S. D. N. Y), aff’d 346 F. 3d 264 ( 2nd Cir. 2003)( attempted enforcement of default
judgment of $ 64,002,483.19 against Iraq by plaintiff victims of Sept. 11, 2001, terrorist
attacks).
114 276 F. Supp. 2d at 33.
115 Id.
116 Acree v. Republic of Iraq, 370 F. 3d 41 ( D. C. Cir. 2004), cert. denied, 544 U. S. 1010
( 2005).
117 353 F. 3d 1024 ( D. C. Cir. 2004).
interest warranting intervention as of right, especially absent any showing of how the
default judgment impaired such interest. The court also held that only Iraq could
assert a defense based on sovereign immunity, and that Congress and the President
could not retroactively restore Iraq’s previously waived sovereign immunity.
While the Presidential Determination did not retroactively restore Iraq’s
sovereign immunity, it was held effectively to preclude the plaintiffs from enforcing
their judgment against the $ 1.73 billion in frozen Iraqi assets that had been vested by
the President for the restoration of Iraq. 113 After an expedited hearing on the matter,
the court on July 30, 2003, held that none of the assets in question could be attached
by the plaintiffs; and the court dissolved the TRO. 114 In reaching that conclusion, the
court relied primarily on the Supplemental Appropriations Act provision noted above
and the subsequent actions by President Bush rather than on his March 20, 2003,
executive order. The court concluded:
The Act is Congressional authorization for the President to make TRIA
prospectively inapplicable to Iraq, and the President exercised that authority
when he issued the Determination on May 7, 2003. As a result, at the time the
plaintiffs obtained their judgment against Iraq on July 7, 2003, TRIA was no
longer an available mechanism for plaintiffs to use to satisfy their judgment. 115
The Justice Department appealed the decision denying its motion to intervene,
while plaintiffs appealed the decision that frozen Iraqi funds were unavailable to
satisfy their judgment. The Court of Appeals for the D. C. Circuit held that the
district court had abused its discretion by denying the government’s motion to
intervene. 116 However, the court reversed the President’s Determination insofar as
it nullified the FSIA provisions with respect to Iraq, finding that Congress had not
intended to permit the President to revoke those provisions. The plaintiffs were
nevertheless prevented from collecting, because the court of appeals vacated their
judgment based on their failure to state a cause of action against Iraq, and because
Saddam Hussein retained immunity for official conduct. The court followed its
precedent in Cicippio- Puelo v. Islamic Republic of Iran117 to hold that the terrorism
exception to the FSIA combined with the Flatow Amendment create a private right
of action against officials, employees and agents of a foreign government for their
private conduct, but not against the foreign government itself, including its agencies
and instrumentalities, nor agents, officials or employees in their official capacity.
The Supreme Court declined to review the decision.
CRS- 36
118 H. Con. Res. 344 ( 108th Cong.).
119 See P. L. 108- 106, 117 Stat. 1209 ( 2003).
120 Id. Presumably, the “ 17 plaintiffs in the [ Acree case]” in H. R. 1321 meant those plaintiffs
who were actually held prisoner, but would have excluded 37 family members and relatives,
who also participated as plaintiffs and were awarded damages of from $ 5 - 10 million each.
Acree v. Republic of Iraq, 271 F. Supp. 2d 179 ( D. D. C. 2003), vacated by 370 F. 3d 41
( D. C. Cir. 2004), cert. denied, 544 U. S. 1010 ( 2005).
121 262 F. Supp. 2d 217 ( S. D. N. Y. 2003) .
Proposed Legislation. Two bills were introduced during the 108th Congress
in the House of Representatives to provide relief for the plaintiffs. H. Con. Res. 344
would have expressed the sense of the Congress that the POWs and their immediate
family members should be compensated for their suffering and injuries as the court
had decided, notwithstanding § 1503 of the Emergency Wartime Supplemental
Appropriations Act of 2003. The bill would also have expressed Congress’s resolve
to continue its oversight of the application of § 1503 “ in order to ensure that it is not
misinterpreted, including by divesting United States courts of jurisdiction, with
respect the POWs and other victims of Iraqi terrorism.” 118 Additionally, the Senate
passed language in § 325 of its version of the Emergency Supplemental
Appropriations for Iraq and Afghanistan Security and Reconstruction Act, 2004
( H. R. 3289) that would have found that
the Attorney General should enter into negotiations with each such citizen, or
the family of each such citizen, to develop a fair and reasonable method of
providing compensation for the damages each such citizen incurred, including
using assets of the regime of Saddam Hussein held by the Government of the
United States or any other appropriate sources to provide such compensation.
The language was not enacted. 119
The other House bill from the 108th Congress, H. R. 2224, the “ Prisoner of War
Protection Act of 2003,” would have allowed the plaintiffs, as well as any POWs
who might later assert a cause of action in the more recent war against Iraq, to
recover damages out of the $ 1.73 billion in frozen Iraqi assets that were vested by
order of the President to pay for the reconstruction of Iraq.
Nothing similar to the Prisoner of War Protection Act was introduced in the
109th Congress, but H. Con. Res. 93 would have “ express[ ed] the sense of the
Congress that the Department of Justice should halt efforts to block compensation
for torture inflicted by the Government of Iraq on American prisoners of war during
the 1991 Gulf War.” H. R. 1321 proposed the payment of $ 1 million to each of the
seventeen plaintiffs out of unobligated funds appropriated under the heading of “ Iraq
Relief and Reconstruction Fund” in the 2004 Emergency Supplemental. 120 Neither
provision was enacted into law.
Other Cases Against Iraq. Smith v. Islamic Emirate of Afghanistan121 was
initially a lawsuit against Al Qaeda, Afghanistan, and the Taliban for damages related
to the terrorist attacks on the World Trade Center in 2001. The plaintiffs
subsequently amended their complaints to add Iraq and Saddam Hussein as
CRS- 37
122 Id. at 228 ( citing Nixon v. Fitzgerald, 457 U. S. 731, 749, 102 S. Ct. 2690, 73 L. Ed. 2d 349
( 1982) for the proposition that a claim against a U. S. president for the such conduct would
be barred because of “ the president’s absolute immunity from damages for conduct
associated with the exercise of his official duties”).
123 Id. at 232 ( finding expert testimony sufficient).
124 Smith v. Federal Reserve Bank of New York, 280 F. Supp. 2d 314 ( S. D. N. Y), aff’d 346
F. 3d 264 ( 2nd Cir. 2003). Section 201 of TRIA provides that “ the blocked assets of [ a
judgment debtor] 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” of compensatory damages. See supra note 76 for TRIA § 201 definition of
“ blocked asset.”
125 346 F. 3d at 272.
126 175 F. Supp. 2d 36 ( D. D. C. 2001).
127 Congress defined “ hostage status” in § 599C( d)( 1) of P. L. 101- 513, with respect to U. S.
hostages in Iraq or Kuwait, as the status of being held “ in custody by governmental or
military authorities of a country or taking refuge within that country in fear of being taken
into such custody ( including residing in any diplomatic mission or consular post in the
country)....” Congress allocated $ 10 million to pay the per