Thoughts on Judgment Collection 

Judgments Against Terrorist States

Photo by Ghaith Abdul-Ahad/Getty Images News / Getty Images
Photo by Ghaith Abdul-Ahad/Getty Images News / Getty Images

Under America’s Anti-Terrorism statutes, 18 USC §2331, et seq., US citizens or their survivors/heirs may bring an action in the U.S. to recover damages for an act of terror against countries designated by the State Department as having funded terrorism.

A chart from a Congressional report issued in August 2008 details 62 such judgments, 50 against the Islamic Republic of Iran which has remained on the state department’s list since 1984. The total compensatory and punitive damages for these terrorism judgments exceed a staggering 11 billion dollars. That countries with little regard for human life would be unlikely to pay court-ordered debts has not stopped victims’ attorneys from attempting to recover assets.

Historically, Congress has assisted victims by regularly amending the legislature. In 1996 the Foreign Sovereign Immunities Acts was modified to enable American victims to file suit in Federal Court for financial damages. To further assist victim litigation, Congress passed the Flatow amendment which created a cause of action for victims of terror.

A decision in 2004, however, by the DC Circuit Court of Appeals held that neither of these amendments created a private right to sue a foreign government and that plaintiffs would need to file suit against specific individuals who caused the injury. Absent a deep pocket, terrorism judgments would become infinitely more difficult to collect.

Yet another unexpected impediment to collection has not been the debtor countries but rather the Plaintiffs’ own government.

“Now I find myself in the surreal position of being opposed by the Department of State in my attempts to enforce our judgment against Iranian assets located in the United State,” laments Stephen Flatow, whose daughter died in a terrorist attack in 1995 and obtained a $247.5 million judgment against Iran. “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.”

President Clinton came under fire for exercising his authority to block victims with judgments from attaching diplomatic properties and blocked assets. Chair of the Senate Judiciary Committee Senator Orrin Hatch noted, “…the Administration continues to fight the victims’ efforts in court – in effect taking a seat next to the terrorist states at the defense table in defending these actions. “

So what is going on here? Why the common thread amongst victims who, having prevailed at trial, are having to fight their own government to execute on their judgments? It has to do with leverage, apparently. Freezing and seizing assets of terrorist states is one of the most powerful tools available to an administration. There is concern that the wholesale seizure of blocked assets will deplete the available pool of frozen assets, thereby weakening the leverage a President may have and may need in an emergency. Moreover, there are a finite number of frozen assets. In the case of Cuba, for instance, $96 million was paid to the prevailing Plaintiff in Alejandre v. Republic of Cuba. This represents almost half of Cuba’s frozen assets in the United States. Yet there are still hundreds of Americans who have waited decades to be compensated by Cuba for loss of property and lives and have yet to receive anything.

Of the 62 judgments totaling $11 billion, only $511 million was collected –  none with a debtor country’s cooperation. The bulk of the monies were paid from assets frozen by the United States long before entry of judgment.

Section 2002 of the Victims of Trafficking and Violence Protection Act of 2000 [“VTPVPA”] provides for payment by the Secretary of the Treasury of certain anti-terrorism judgments by managing and vesting foreign assets located in the United States. There are, of course, conditions for payment. Due to the limit of blocked funds available, only compensatory damages are paid, and victims are required to subrogate the balance of their rights to collect punitive damages to the United States.

Section 2002 further bars release of any funds to Iran from frozen assets until these judgments have been satisfied. Where do victims holding unsatisfied judgments stand in light of President Obama’s nuclear agreement with Iran which calls for the release of $100 billion in frozen Iranian assets?

Attorneys representing victims holding judgments against Iran filed suit against the state department on August 5, 2015 over that very issue.  The case, however, was withdrawn after the state department pointed out that the $100 million in blocked assets were not blocked by the United States, were not within the jurisdiction of the United States and therefore could not meet the definition of a ‘blocked asset’ as defined in §201 of the Terrorism Risk Insurance Act of 2002.

While the Obama-led Joint Comprehensive Plan of Action [JCPA] is farcical on a myriad of levels, the billions of unpaid terror judgments held by Americans should have been part and parcel of any agreement (notwithstanding that any agreement with Iran is folly at the outset).

On January 16, 2016 John Kerry announced that Iran had implemented measures described in the JCPA. Banking and financial sanctions on Iran were lifted, releasing over $100 billion of overseas monies. Not only was none of that used to compensate victims holding judgments against Iran, the release now allows Iran to more effectively finance its Islamic Revolutionary Guard Crops-Quds Force to train and support terrorist operatives. President Obama’s clever incompetence and rush to secure a legacy at any price is likely to result in more human suffering… and a wave of new terrorism judgments.


 Copyright 2016 Ramona Featherby


Ramona Featherby