WikiLeaks Document Release
http://wikileaks.org/wiki/CRS-RS22094
February 2, 2009
Congressional Research Service
Report RS22094
Lawsuits Against State Supporters of Terrorism: An
Overview
Jennifer K. Elsea, American Law Division
August 7, 2008
Abstract. A 1996 amendment to the Foreign Sovereign Immunities Act (FSIA) enables American victims
of international terrorist acts supported by certain States designated by the State Department as sponsors
of terrorism - Cuba, Iran, North Korea, Sudan, Syria, and previously Iraq and Libya - to bring suit in U.S.
courts for damages. Despite congressional efforts to make blocked (or "frozen") assets of such States available
for attachment by judgment creditors in such cases, plaintiffs encountered difficulties in enforcing the awards.
Congress passed, as part of the National Defense Authorization Act for FY2008 (NDAA) (H.R. 1585), an
amendment to the FSIA to provide a federal cause of action against terrorist States and to facilitate enforcement
of judgments. After the President vetoed the NDAA based on the possible impact the measure would have on
Iraqi assets, Congress passed a new version, P.L. 110-181 (H.R. 4986), which includes authority for the President
to waive the FSIA provision with respect to Iraq. Congress later passed a measure to exempt Libya if it agrees
to compensate victims (S. 3370). This report provides an overview of these issues and relevant legislation (H.R.
5167).
Order Code RS22094
Updated August 7, 2008
Lawsuits Against State Supporters of
Terrorism: An Overview
Jennifer K. Elsea
Legislative Attorney
American Law Division
Summary
A 1996 amendment to the Foreign Sovereign Immunities Act (FSIA) enables
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American victims of international terrorist acts supported by certain States designated
by the State Department as sponsors of terrorism -- Cuba, Iran, North Korea, Sudan,
Syria, and previously Iraq and Libya -- to bring suit in U.S. courts for damages. Despite
congressional efforts to make blocked (or "frozen") assets of such States available for
attachment by judgment creditors in such cases, plaintiffs encountered difficulties in
enforcing the awards. Congress passed, as part of the National Defense Authorization
Act for FY2008 (NDAA) (H.R. 1585), an amendment to the FSIA to provide a federal
cause of action against terrorist States and to facilitate enforcement of judgments. After
the President vetoed the NDAA based on the possible impact the measure would have
on Iraqi assets, Congress passed a new version, P.L. 110-181 (H.R. 4986), which
includes authority for the President to waive the FSIA provision with respect to Iraq.
Congress later passed a measure to exempt Libya if it agrees to compensate victims (S.
3370). This report, which will be updated, provides an overview of these issues and
relevant legislation (H.R. 5167). For more details, see CRS Report RL31258, Suits
Against Terrorist States by Victims of Terrorism, by Jennifer K. Elsea.
In 1996, Congress amended the FSIA to allow civil suits by U.S. victims of
terrorism against designated State sponsors of terrorism (DSST)1 responsible for, or
complicit in, such terrorist acts as torture, extrajudicial killing, aircraft sabotage, and
hostage taking. 28 U.S.C. � 1605(a)(7). Congress also abrogated the immunity of foreign
State assets under the FSIA to satisfy judgments awarded under the terrorism exception.
28 U.S.C. � 1610. After a court found that the abrogation of sovereign immunity did not
itself create a cause of action, Congress passed the "Flatow Amendment," 28 U.S.C.
� 1605 note, to create a cause of action for such cases. Courts initially interpreted the
1
The list, established by the State Department, currently includes Cuba, Iran, North Korea,
Sudan, and Syria. Iraq was removed from the list in 2004; Libya was removed in 2006. North
Korea is eligible to be removed from the list in August 2008 depending on progress in
dismantling its nuclear program.
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statute as creating a cause of action against foreign States and their agencies and
instrumentalities, although its plain language referred only to officials, employees, and
agents of such States. Numerous court judgments, generally rendered after the
defendants' default, ensued, resulting in substantial awards to plaintiffs.
The nature of lawsuits against DSSTs changed significantly after the D.C. Circuit
Court of Appeals held that neither the terrorism exception to the FSIA nor the Flatow
Amendment created a private right of action against the foreign government itself,
including its agencies and instrumentalities. Consequently, most plaintiffs asserted causes
of action under domestic state laws, which resulted in some disparity in the relief
available to victims injured due to similar or even the same acts of terrorism. Courts
nevertheless continued to award sizable judgments against DSSTs and their officials,
which now amount to more than $18 billion in damages, most of which has been assessed
against Iran. See CRS Report RL31258, Suits Against Terrorist States by Victims of
Terrorism, by Jennifer K. Elsea.
Enforcement of Judgments Against Terrorist States
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While winning judgments against terrorist States never posed insurmountable
obstacles, enforcing those judgments has proven more arduous, primarily due to the
scarcity of assets within U.S. jurisdiction that belong to States subject to economic
sanctions and the immunity from attachment that assets frozen by sanctions regulations
enjoy. Successive Administrations opposed allowing the use of frozen assets of foreign
States to satisfy judgments out of concerns for treaty obligations to protect foreign
diplomatic and consular properties, the desire to maintain the blocked assets for
diplomatic leverage, and the concern that permitting the attachment of such assets would
expose U.S. assets abroad to reciprocal action. Notwithstanding these objections,
Congress has repeatedly stepped in to make more foreign assets available for judgment
creditors, and appropriated some $400 million to pay portions of certain judgments
against Iran with the understanding that the President would seek to recover that amount
from Iran. Consequently, some plaintiffs were able to collect portions of their judgments,
while others were stymied. Some of the assets associated with DSSTs remained off-limits
because they were not "blocked" within the meaning of the relevant statute; because
plaintiffs had waived their right to attach the assets in question when they accepted
payment from U.S. funds; because the assets were not subject to the exception to
immunity or were exempted by presidential waiver; or because the United States validly
possesses the property and successfully asserted U.S. sovereign immunity.
The National Defense Authorization Act for FY2008
In order to assist plaintiffs, Congress passed � 1083 of the National Defense
Authorization Act for FY2008 (NDAA) (P.L. 110-181), to create � 1605A in title 28, U.S.
Code. Section 1083 incorporates the terrorist State exception to the FSIA previously
codified at 28 U.S.C. � 1605(a)(7), and a new cause of action against DSSTs to replace
the Flatow Amendment. It allows U.S. nationals (and non-U.S. nationals working for the
U.S. government overseas) who are harmed by terrorism to seek compensatory as well as
punitive damages (which are not otherwise available against foreign States). The
provision also seeks to make more assets associated with State sponsors of terrorism
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available for attachment in aid of execution of terrorism judgments, and to permit some
plaintiffs to refile claims.
President Bush vetoed the original version of the NDAA, H.R. 1585, on the stated
basis that the FSIA amendments would threaten Iraq's economic security. Congress
responded with the new version, H.R. 4986, which authorizes the President to waive any
provision of � 1083 with respect to Iraq. The President signed the bill and exercised the
waiver authority. Section 1083 also encourages the President to negotiate a settlement of
outstanding terrorism claims against Iraq. Pending cases have been permitted to go
forward under the previous law, but it is unclear whether any Iraqi assets will remain
available for attachment by judgment holders under other provisions of law.
New 28 U.S.C. � 1605A(g) provides for the establishment of a lien of lis pendens
with respect to all real or tangible personal property within the judicial district that is
subject to attachment in aid of execution and is titled in the name of a defendant State or
any entities listed by the plaintiff as "controlled by" that State. Ordinarily, lis pendens in
civil litigation is used to put third parties on notice that the property is the subject of
litigation, which effectively prevents the alienation of such property, although the notice
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is not technically a lien. Under the new provision, the clerk of the district court is required
to file the notice of action indexed by listing the defendant and its controlled entities.
This may relieve plaintiffs of the burden of identifying specific property in the notices,
but it is unclear what further measures might be required to ensure adequate notice is
afforded to prospective purchasers under the procedure or how it is to be determined
without further process that the property is in fact subject to attachment. In the case of
State sponsors of terror, whose property for the most part is already subject to substantial
limitations on transactions, the primary utility may be the establishment of a line of
priority among lien-holders. However, in the case of States that are no longer subject to
terrorism sanctions, such as Libya, the provision could have some impact on lawful
transactions.
New 28 U.S.C. � 1610(g) provides that the property of a foreign State against which
a judgment has been entered under �1605A (or predecessor provision), or of an agency
or instrumentality of such a foreign State, "including property that is a separate juridical
entity or is an interest held directly or indirectly in a separate juridical entity," is subject
to attachment in aid of execution and execution upon that judgment, regardless of how
much economic control over that property the foreign government exercises and whether
the government derives profits or benefits from it. The President has no waiver authority
(except with respect to Iraq). The provision may enable a plaintiff to "pierce the corporate
veil"of a corporation owned, in whole or in part, by a judgment debtor State without
having to demonstrate to the court that the presumption of independent status should be
overridden. It could also be read as an effort to make any entity in which the defendant
State (including its separate agencies and instrumentalities) has any interest liable for the
terrorism-related judgments awarded against that State. On the other hand, � 1610(g)
states that nothing in it is to be construed as superceding the court's authority to protect
the interests of a person "who is not liable in the action giving rise to a judgment."
Section 1610(g) also makes a property that is regulated by reason of U.S. sanctions
available to satisfy terrorism judgments. It does not explicitly waive U.S. sovereign
immunity, but appears designed to defeat provisions in the sanctions regulations that
make blocked property effectively immune from court action. In this respect, it echoes
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language in � 1610(f)(1) (which is not in effect because it was waived by President
Clinton), except that � 1610(g) applies only to regulated property rather than property that
is blocked or regulated pursuant to sanctions regimes,2 and it would not be subject to the
presidential waiver in � 1620(f)(3). Unlike � 201 of TRIA (28 U.S.C. � 1610 note), the
new language applies to regulated rather than blocked assets and it allows assets to be
attached in aid of enforcing punitive damages.
The new provisions apply to any claim arising under them as well as to any action
brought under former 28 U.S.C. � 1605(a)(7) or the Flatow Amendment that "relied on
either of these provisions as creating a cause of action" and that "has been adversely
affected on the grounds that either or both of these provisions fail to create a cause of
action against the state," and that is still before the courts "in any form," including appeal
or motion for post-judgment relief. In cases brought under the older provisions, the federal
court in which the claim originated is required, on motion by the plaintiffs within 60 days
after enactment, to treat the case as if it had been brought under the new provisions,
apparently to include reinstating a vacated judgment. The measure waives a defendant's
"defenses of res judicata, collateral estoppel and limitation period" in any reinstated
action. The provision also permits the filing of new cases involving incidents that are
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already the subject of a timely-filed terrorism action under the FSIA, notwithstanding the
limitation time for filing, so long as the related action is filed within 60 days after
enactment (January 28, 2008) or entry of judgment in the original action. Several actions
have been filed under this provision, including some lawsuits by plaintiffs who have
already won significant judgments under the previous law.
While � 1083(c) refers to "pending cases," it appears to cover finally adjudicated
cases in which litigants have filed a motion for relief from final judgment after appeals
are exhausted. To the extent the provision is read to require courts to reopen final
judgments or reinstate vacated judgments, it may be vulnerable to invalidation as an
improper exercise of judicial powers by Congress.3 A similar objection may be raised
regarding the waiver of legal defenses: while it seems well-established that Congress can
waive defenses in actions against the United States, an effort to abrogate legal defenses
of other parties could raise constitutional due process and separation of powers issues. It
may be that no cases qualify for reopening under this provision because the plaintiffs
would have had to have filed a motion prior to the enactment of P.L. 110-181. However,
if previous lawsuits can be filed again as "related actions" under � 1083(c)(3), then
plaintiffs who file prior to the deadline can bring new actions regardless of the reason
their original case was unsuccessful or perhaps even if their case yielded an award. It is
unclear whether such lawsuits would count as "refiled actions" for the purpose of
abrogating the defendant's legal defenses under � 1803(c)(2)(B).
2
TRIA � 201(d)(2) defines "blocked asset" to mean property seized or frozen pursuant to certain
sanctions, but not property that may be transferred pursuant to a license that is required by statute
other than the International Emergency Economic Powers Act (IEEPA) or the United Nations
Participation Act of 1945. It also excludes diplomatic or consular property being used solely for
diplomatic or consular purposes from the definition of "blocked asset." TRIA does not refer to
regulated assets, so it is unclear whether "blocked" and "regulated" are mutually exclusive terms,
or whether "blocked" assets would be considered to be "regulated" as well. Assets regulated
pursuant to IEEPA presumably mean those that are licensed for transfer.
3
See Plaut v. Spendthrift Farms, 514 U.S. 211 (1995).
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The new federal cause of action may make judgments against DSSTs heftier and
easier to obtain, but whether such judgments will be easier to enforce seems less certain.
The result may be an increase in debts owed by those States without a sufficient increase
in assets available to cover them, which could amplify competition among plaintiffs and
lead to calls for further congressional action. Transactions with debtor States are likely
to increase only with respect to States that are no longer subject to anti-terrorism
sanctions, in which case the use of their assets to satisfy judgments may act as a barrier
to trade despite the lifting of sanctions. The presidential waiver for Iraq permits the
President to protect Iraqi assets from attachment to satisfy any outstanding judgments.
H.R. 5167 has been introduced in the House to repeal the presidential waiver provision.
Effect of the Waiver of � 1083 on Cases Pending Against Iraq
Section 1083(d) authorizes the President to waive any provision of �1083 with
respect to Iraq if he determines that a waiver serves U.S. national security interests and
promotes U.S.-Iraq relations, the waiver will promote reconstruction and political
development in Iraq, and Iraq continues to be a reliable ally and partner in combating
terrorism. The waiver applies retroactively regardless of its effect on pending cases.
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On the day the President signed the FY2008 NDAA into law, the White House
signed a waiver,4 apparently foreclosing any refiling of the lawsuit by former prisoners
of war against Iraq and Saddam Hussein for their mistreatment during the first Gulf War.5
However, pending claims against Iraq under the FSIA terrorism exception (as previously
in force) have been permitted to go forward.6 Final judgments against Iraq are not
affected, but will remain difficult to enforce. Iraqi government assets used for commercial
purposes in the United States that are not subject to the protection of E.O. 13303, which
covers the Development Fund for Iraq and all interests associated with Iraqi petroleum
and petroleum products, may be subject to attachment and execution on terrorism
judgments against Iraq under 28 U.S.C. � 1610. The President could, however, issue
another executive order to protect all Iraqi assets from attachment to satisfy judgments.
Administration Proposal to Waive � 1083 for Libya
U.S. businesses seeking to establish a commercial relationship with Libya expressed
concern that � 1083 will harm U.S.-Libya trade.7 The Bush Administration, which has
touted renewed U.S. investment in Libya and growth in bilateral trade as beneficial to the
4
Presidential Determination No. 2008-9 of January 28, 2008, Waiver of Section 1083 of the
National Defense Authorization Act for Fiscal Year 2008, 73 Fed. Reg. 6,571 (2008) (waiving
all provisions of � 1083 with respect to Iraq).
5
Acree v. Republic of Iraq, 370 F.3d 41 (D.C. Cir. 2004), cert. denied, 544 U.S. 1010 (2005).
The district court rejected recently the plaintiffs' motion to reopen the case. Acree v. Iraq, 2008
WL 2764858 (D.D.C. 2008).
6
Simon v. Iraq, 529 F.3d 1187 (D.C. Cir. 2008).
7
Correspondence from the U.S.-Libya Business Association, the National Foreign Trade Council,
the National Association of Manufacturers, and the United States Chamber of Commerce to U.S.
Secretary of State Condoleezza Rice, February 28, 2008 (urging the Administration to seek
waiver authority with respect to Libya). For more information about U.S.-Libya relations, see
CRS Report RL33142, Libya: Background and U.S. Relations, by Christopher M. Blanchard.
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U.S. economy and as important tools for reestablishing relations with a reformed state
sponsor of terrorism, appears to share their view.
To relieve Libya from the possible effects of � 1083 in the event Libya agrees to
compensate victims of terrorism, Congress enacted S. 3370, the "Libyan Claims
Resolution Act." S. 3370 exempts Libya from the terrorism exception to the FSIA if
Libya signs a claims agreement with the United States to settle terrorism-related claims
and provides funds to compensate claimants. S. 3370 authorizes the Secretary of State
to designate one or more "entities" to assist in the provision of compensation. Entities
would be immune from lawsuits related to this function. It appears that the government
is to receive funds from Libya, which it would then turn over to the designated entity for
dispersal to claimants, although there is no express requirement to this effect in the
statute.
If the Secretary of State certifies to Congress that sufficient funds have been received
under the claims agreement to cover settlements Libya has agreed to pay to victims of the
Pan Am 103 airliner bombing and the La Belle Disco bombing, as well as to provide "fair
compensation" to some other U.S. nationals who have pending cases against Libya, the
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statute will provide immunity to Libya, including its agencies and instrumentalities, as
well as its officials, employees, and agents, for all claims pending under the terrorism
exception to the FSIA, and for all property sought to be attached to satisfy existing
terrorism judgments. It appears that the amount of fair compensation is left to the
discretion of the Secretary of State. The provision may not include all pending cases
against Libya under � 1605A. It appears to cover claims for wrongful death or physical
injury arising under 28 U.S.C. � 1605A (including previous actions that have been given
effect as if they had been filed under � 1605A), but not cases for non-physical injuries8
or for cases filed under the previous version of the FSIA exception that have not been
given effect as if they had been filed under � 1605A.9 It appears that finally adjudicated
cases are not covered, in which case unsatisfied judgments against Libya and its officials
will likely be unenforceable.10 Claimants do not appear to have any recourse in court to
dispute the amount or a denial of compensation, although a claim against the United
States for an uncompensated "taking" in violation of the Fifth Amendment would not be
foreclosed.
8
28 U.S.C. � 1605A provides a cause of action for "personal injury or death," which appears to
cover a broader scope of injuries than "wrongful death or physical injury." Claims for wrongful
death under the FSIA amendment have been limited to the decedent's estate, while close relatives
of a victim have recovered in their own right based on claims of solatium, intentional infliction
of emotional distress, and pain and suffering, depending on the applicable state law. See, e.g.,
Pugh v. Libya, 530 F. Supp. 2d 216 (D.D.C. 2008).
9
NDAA � 1083(c) provides that pending cases originally brought under previous 28 U.S.C.
� 1605(a)(7) are to be given effect as if they had been filed under � 1605A if the action was
"adversely affected on the grounds that [the previous] provisions fail to create a cause of action
against the state" and the plaintiff makes a motion to the court asking for such treatment.
10
Price v. Libya, 384 F. Supp. 2d 120 (D.D.C. 2005)(approximately $18 million judgment
against Libya for injuries suffered during plaintiffs' imprisonment pending trial for allegedly
taking unlawful photographs); Pugh v. Libya, 530 F. Supp. 2d 216 (D.D.C. 2008)(nearly $7
billion judgment against Libya and six named officials for bombing of a French airliner over
Africa in 1989).