Order Code RL31258
CRS Report for Congress
Received through the CRS Web
Suits Against Terrorist States
January 25, 2002
David M. Ackerman
Legislative Attorney
American Law Division
Congressional Research Service ˜ The Library of Congress

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Suits Against Terrorist States
Summary
In § 2002 of the “Victims of Trafficking and Violence Protection Act of 2000,”
Congress directed the Secretary of the Treasury to pay portions of eleven judgments
that have been (or will be) handed down in suits against terrorist states since 1996.
With respect to one judgment against Cuba, § 2002 provided that payment would be
made out of the assets of Cuba in the United States that have been blocked since
1962. With respect to ten judgments against Iran, Congress directed that payment be
made out of appropriated funds (up to a specified ceiling) and that the U.S. then be
entitled to seek reimbursement for those payments from Iran. As a consequence,
$96.7 million of the $193.5 million in Cuban assets frozen in this country has been
paid in the one judgment against Cuba; and over $350 million in U.S. funds has been
(or will be) paid in nine judgments against Iran, with one more case not yet decided.
Judgments against terrorist states in suits other than these eleven have continued
to be handed down by the courts. But § 2002 provided no procedure for claimants
in other suits other than those designated to obtain satisfaction of their judgments.
Moreover, other questions have been raised about the merits of the compensation
program established by § 2002. Nearly six thousand claims against Cuba for death,
injury, and expropriation during and after Castro’s takeover were determined to be
legitimate by the Foreign Claims Settlement Commission in the late 1960s. But no
compensation has ever been paid in these cases; and some of these claimants now
criticize the use of a substantial portion of Cuba’s frozen assets to provide
compensation for a single, later terrorist act. In the case of the judgments against
Iran, some have questioned the use of U.S. funds to pay compensation. Also, both
the Clinton and Bush Administrations have raised objections to past efforts to use
diplomatic property and frozen assets to satisfy the judgments against terrorist states.
This issue has its origin in amendments to the Foreign Sovereign Immunities Act
enacted in 1996 which allow civil suits by U.S. victims of terrorism against the states
responsible for, or complicit in, the terrorist act. It has become increasingly complex
as Congress has sought to facilitate payment of the judgments rendered. The subject
may well be a matter of legislative concern in the second session of the 107th
Congress: In the fiscal 2002 appropriations act for the Departments of the Treasury,
Justice, and State, Congress directed that the Administration submit a legislative
proposal to establish “a comprehensive program to ensure fair, equitable, and prompt
compensation for all United States victims of international terrorism” by the time it
submits its proposed budget for fiscal 2003. Adding a further element of complexity,
the appropriations act also contained a provision authorizing those who were held
hostage by Iran in 1979-1981 to bring suit against that state under the terrorist state
exception to the FSIA, notwithstanding the agreement in the Algiers Accord that led
to their release which barred such suits.
This report provides background on the FSIA; details the evolution of the
terrorist state exception and subsequent amendments regarding payment of the
judgments; sets forth the policy and legal arguments that have been adduced; and lists
the cases covered by § 2002, the payments that have been made, and the amount of
terrorist state assets frozen in the U.S. The report will be updated as events warrant.

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Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background on State Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Anti-Terrorism and Effective Death Penalty Act of 1996 . . . . . . . . . . . 4
Amendments by the 105th Congress (1997-1998) . . . . . . . . . . . . . . . . . . . . 6
Amendments by the 106th Congress (1999-2000) . . . . . . . . . . . . . . . . . . . 10
Action by the 107th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
APPENDIX I Judgments Against Terrorist States Covered By,
and Payments Made Pursuant to, § 2002 . . . . . . . . . . . . . . . . . . . . . 22
APPENDIX II Amount of Assets of Terrorist States
Blocked by the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

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Suits Against Terrorist States
Introduction
In § 2002 of the “Victims of Trafficking and Violence Protection Act of 2000,”1
Congress directed the Secretary of the Treasury to pay portions of eleven judgments
that have been (or will be) handed down in suits against terrorist states since 1996.
With respect to one judgment against Cuba, § 2002 provided that payment would be
made out of the assets of Cuba in the United States that have been blocked since
1962. With respect to ten judgments against Iran, Congress directed that payment be
made out of appropriated funds and that the U.S. then be entitled to seek
reimbursement for those payments from Iran. As a consequence, $96.7 million of the
estimated $193.5 million in Cuban assets frozen in this country2 has been paid to the
claimants in the suit against Cuba; and over $350 million in U.S. funds has been (or
soon will be) paid out with respect to nine judgments against Iran, with one additional
case still pending.
Judgments in suits against terrorist states other than these eleven have continued
to be handed down by the courts. But § 2002 provided no procedure for claimants
in suits other than the ones identified to obtain satisfaction of their judgments.
Moreover, other questions have been raised about the merits of the limited
compensation program established by § 2002. Nearly six thousand claims against
Cuba for death, injury, and expropriation during and after Castro’s takeover were
determined to be legitimate by the Foreign Claims Settlement Commission in the late
1960s. But no compensation has ever been paid in these cases; and some of these
claimants now question the fairness of using half of Cuba’s frozen assets to provide
compensation for a single, later terrorist act.3 With respect to the judgments against
Iran, some have questioned the use of U.S. funds to pay compensation. In addition,
both the Clinton and Bush Administrations have raised, and continue to raise,
constitutional and diplomatic objections to efforts to satisfy the judgments against
terrorist states out of frozen assets or seizure of diplomatic property.
This situation had its origin in amendments to the Foreign Sovereign Immunities
Act (FSIA)4 enacted in 1996 which allow civil suits by U.S. victims of terrorism
against the states responsible for, or complicit in, the terrorist acts; and the issue has
1P.L. 106-386, Division C, § 2002 (Oct. 28, 2000); 114 Stat. 1541.
2See Appendix II.
3In 1996 the Cuban Air Force shot down two “Brothers to the Rescue” planes notwithstanding
that the plane were outside of Cuba’s air space. In Alejandre v. Republic of Cuba, 996
F.Supp. 1239 (S.D. Fla. 1997), a federal district court awarded the families of three of the
four occupants of the planes a total of $187.7 million in damages against Cuba.
428 U.S.C.A. 1602 et seq.

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CRS-2
developed a number of complex dimensions since that time. The subject may well be
a matter of legislative concern in the second session of the 107th Congress: In the
fiscal 2002 appropriations act for the Departments of the Treasury, Justice, and State,
Congress directed that the Administration submit a legislative proposal to establish
“a comprehensive program to ensure fair, equitable, and prompt compensation for all
United States victims of international terrorism” by the time it submits its proposed
budget for fiscal 2003. In the same act Congress also added a further element of
complexity to the situation by specifying that a suit against Iran by those who were
held hostage in 1979-81 is not barred by the FSIA.5 One element of the Algiers
Accords that led to the release of the hostages in 1981 provided that Iran would be
immune from suit for the incident.
This report provides background on the doctrine of state immunity and the FSIA;
summarizes the 1996 amendments to the FSIA; details the subsequent Congressional
efforts to assist plaintiffs in obtaining satisfaction of their judgments; sets forth the
legal and policy arguments that have made for and against those efforts; lists the cases
covered by § 2002, the amount of compensation that has been paid in each case, and
the source of the compensation; and lists the amount of the blocked assets of each
terrorist state The report will be updated as events warrant.
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.6
5Roeder v. Islamic Republic of Iran, Case Number 1:00CV03110 (EGS) (D.D.C., filed
December 29, 2000).
6The 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.

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During the last century, however, this principle of total state immunity became
subject to limitation 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.7 As a consequence, numerous states immediately before and after World
War II adopted a restrictive principle of state immunity preserving state immunity for
most cases but allowing states to be sued for claims arising out of their commercial
activities.
For the United States this restrictive principle was first adopted by administrative
action in 19528 and then was generally accepted by the courts. In 1978 Congress
codified the principle in the Foreign Sovereign Immunities Act (FSIA).9 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”10 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.11 For most claims
the Act also provides that the commercial property of a foreign state in the U.S. 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.12
The Anti-Terrorism and Effective Death Penalty Act of 1996
In 1996 Congress added another exception to the FSIA which allows the federal
and state courts to exercise jurisdiction over foreign states in civil suits by U.S.
victims of terrorism.13 More specifically, one part of the “Anti-Terrorism and
7AMERICAN LAW INSTITUTE, RESTATEMENT OF THE LAW THIRD: THE
FOREIGN RELATIONS LAW OF THE UNITED STATES (1987) (Vol. 1), at 391.
8The 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
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.
928 U.S.C.A. 1602 et seq.
10Id. § 1604.
11Id. § 1605.
12 Id. § 1610.
13P.L. 104-132, Title II, § 221 (April 24, 1976); 110 Stat. 1241; 28 U.S.C.A. 1605(a)(7)
(continued...)

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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 ....14
To fall within the purview of this section, the amendment further required that the
foreign state be designated as a state sponsor of terrorism by the State Department
at the time the act occurred,15 that either the claimant or the victim of the act of
terrorism be a U.S. national,16 and that the state which is sued be given a prior
opportunity to arbitrate the claim if the act on which the claim is based occurred in
that state. The Act authorized the courts to award both compensatory and punitive
damages and stated that the exception to immunity applied to pertinent causes of
action that arose before, on , or after its date of enactment.17 The Act further allowed
the commercial property of a foreign state in the U.S. to be attached in satisfaction
of a judgment against that state under this amendment regardless of whether the
13(...continued)
(West Supp. 2001).
14Id.
15The State Department identifies state sponsors of terrorism pursuant to § 6(j) of the Export
Administration Act of 1979 (50 U.S.C.A. App. 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, Iraq, Libya, North Korea,
Sudan, and Syria. See 22 CFR Part 126(1)(a) (2001).
16As 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.” Because of concern that the provision could be
read to require that both the claimant and victim be U.S. nationals and that, as a consequence,
some of the families who were victimized by the terrorist bombing of Pan Am 103 over
Lockerbie, Scotland, would be excluded, Congress amended 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, 105th Cong., 1st Sess. (April 25, 1997) and H. Rept. 105-48 (April 10, 1997).
1728 U.S.C.A. 1605 note (West Supp. 2001).

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property was involved in the act on which the claim was based.18 The Clinton
Administration supported these changes in the FSIA.
Later in 1996 Congress enacted a counterpart statute giving injured parties or
their legal representatives a cause of action for suits against terrorist states.19
18Id. § 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 Rep. 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. H 2166 (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. Conf. Rept. 104-518 (April 15, 1996).
However, it might be noted that the House had adopted a similar measure during the second
session of the previous Congress. The Department of State and the Department of Justice had
opposed the legislation at that time. But the report of the House Judiciary Committee
explained its rationale 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, 103d Cong., 2d Sess. (Aug. 16, 1994), at 4.
19P.L. 104-208, Title I, § 101(c) (Sept. 30, 1996); 110 Stat. 2009-172; 28 U.S.C.A. 1605
note. The statute gives U.S. nationals and their legal representatives a cause of action for acts
of a foreign state over which the courts of the U.S. have jurisdiction under the AEDPA.

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Amendments by the 105th Congress (1997-1998)
Several suits were quickly filed against Cuba and Iran pursuant to these
provisions. Neither state recognized the jurisdiction of the U.S. courts in such suits;
and, thus, both refused to appear in court and mount a defense. Nonetheless, several
federal trial courts heard the evidence proffered by the plaintiffs and found both Iran
and Cuba to be culpable. As a consequence, several courts entered default judgments
against each state and awarded the plaintiffs substantial amounts in compensatory and
punitive damages.20
Neither Iran nor Cuba had any inclination to pay the damages that had been
assessed in these cases; and as a consequence, the plaintiffs sought to obtain certain
properties and other assets owned by the states in question which were within the
jurisdiction of the United States to satisfy the judgments. In the case of Flatow v.
Islamic Republic of Iran, supra, attempts were made to attach the embassy and
several diplomatic properties of Iran located in Washington, D.C., the proceeds that
had accrued from the rental of those properties after diplomatic relations had been
broken, and an award in favor of Iran and against the U.S. government that had been
rendered by the Iran-U.S. Claims Tribunal but had not yet been paid.21 The Clinton
Administration, however, opposed these efforts. It argued that the diplomatic
properties and the rental proceeds were essentially sovereign and not commercial in
nature and that, therefore, they could not be attached pursuant to the FSIA. The
Administration further argued that the debt owed to Iran as a result of the decision
of the Claims Tribunal and the funds which might be used to pay the award were U.S.
property and not Iranian property and, thus, were also immune from attachment. In
addition, the Administration argued that it was obligated to protect Iran’s diplomatic
20See 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).
21The Iran-U.S. Claims Tribunal at the Hague was created pursuant to provisions in the
Algiers Accord 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 U.S. 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 U.S. and Iran relating to the release of the hostages (known as the Algiers
Accord), 20 ILM 223-240 (Jan. 1981); Executive Orders 12276-12284, 46 Fed. Reg. 7913
(Jan. 19, 1981); and 31 CFR Part 535.

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properties by the Vienna Convention on Diplomatic Relations22 and the Vienna
Convention on Consular Relations23 and that using the properties to pay court
judgments would expose U.S. diplomatic and consular properties to similar treatment
by other countries. The courts agreed and quashed the writs of attachment that had
been filed.24
Efforts were also mounted in both the Flatow case and in Alejandre v. Republic
of Cuba, supra (the Brothers to the Rescue case), to obtain the assets of Iran and
Cuba in the U.S. that had been blocked by the U.S. government.25 Iran’s assets in the
U.S. had been ordered frozen under the authority of the International Emergency
Economic Powers Act (IEEPA)26 at the time of the hostage crisis in 197927; but most
had been returned to Iran or placed in an escrow account in England subject to the
decisions of the Iran-U.S. Claims Tribunal that had been created by the Algiers
Accord.28 Cuba’s assets in the U.S., in turn, had been blocked since the early 1960s
under the authority of the Trading with the Enemy Act (TWEA).29 The Clinton
Administration opposed the efforts to obtain 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 the countries in question and that they will be useful in
negotiating the possible future re-establishment of normal relations with the countries
in question. The Administration also noted that numerous other U.S. nationals had
legitimate (and prior) non-terrorist claims against these countries that would be
frustrated if the assets were used solely to compensate the victims of terrorism.30
2223 UST 3227 (1972).
2321 UST 77 (1969).
24For a more detailed description of these proceedings, see Sean Murphy, Satisfaction of U.S.
Judgments Against State Sponsors of Terrorism, 94 AMERICAN JOURNAL OF
INTERNATIONAL LAW 117 (2000).
25See 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.
2650 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.”
27Executive Order 12170, 44 Fed. Reg. 65729 (Nov. 14, 1979).
28See n. 20.
2950 U.S.C.A. App. 5. TWEA gives the President powers similar to those of IEEPA to
regulate economic transactions with foreign countries and nationals in time of war. When it
was used to freeze Cuba’s assets in 1962, it also applied in times of national emergency.
30In the 1960s 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 January 1, 1959, and
October 16, 1964. P.L. 88-666, Title V (Oct. 16, 1964); 73 Stat. 1110; 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.
(continued...)

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More generally, it contended that using frozen assets to compensate victims of state-
sponsored terrorism exposes the United States to the risk of reciprocal actions using
U.S. assets by other states.31
In an attempt to override these objections, 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 a judgment against that state pursuant to the terrorist
exception to the FSIA.32 Section 117 of the Treasury Department appropriations act
for fiscal 1999 further mandated that the State and Treasury Departments “shall fully,
promptly, and effectively assist” any judgment creditor or court issuing a judgment
30(...continued)
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; 50 U.S.C.A. 1701 note. In
1990 the U.S. and Iran concluded such an agreement. 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 U.S. by
Iran and Iranian nationals) remained subject to case-by-case arbitration by the Iran-U.S.
Claims Tribunal.
31Both Cuba and Iran have reportedly enacted statutes allowing suits against the United States
for acts of terrorism or “interference.” See Sean Murphy, Contemporary Practice of the
United States Relating to International Law: U.S. Judgments Against Terrorist States, 95
AMERICAN JOURNAL OF INTERNATIONAL LAW.134 (2001); Mosk, Richard M.,
Picking our Own Pocket, NATIONAL LAW JOURNAL, September 17, 2001, at A20; and
Iran Charges Court to Hear Cases Against Foreign Countries, Notably US, AGENCE
FRANCE PRESSE, July 10, 2001.
32P.L. 105-277, Div. A, Title I, § 117 (Oct. 21, 1998); 112 Stat. 2681-491; 28 U.S.C.A.
1610(f)(1)(A) (West Supp. 2001). 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 and S. Rept. 105-
251(July 15, 1998). It had also been offered during House floor debate on the House version
of the Treasury appropriations bill by Rep. Saxton but had been subject to a point of order
as legislation on an appropriations bill. 144 CONG. REC. H 5710 (July 16, 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. Conf.
Rept. 105-560 (Oct. 1, 1998), and H. Conf. Rept. 105-789 (Oct. 7, 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. S 12696, 12705-06 (daily ed. October 29, 1998)
and E 2314 (daily ed. Nov. 12, 1998). But a couple of House members also expressed the
view that the waiver authority applied to the whole of § 117. See 144 CONG. REC. H 11647
(daily ed. Oct. 29, 1998).

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against a terrorist state “in identifying, locating, and executing against the property
of that foreign state ....”33 Because of the Administration’s continuing objections,
however, the amendment also gave the President authority to “waive the
requirements of this section in the interest of national security.” On October 21,
1998, the day the legislation was signed into law, President Clinton did so.34 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
33Id.
34Presidential 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 (October 21, 1998).
But 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). Another decision by a
federal district court construed the President’s waiver authority broadly. See Flatow v.
Islamic Republic of Iran, 76 F.Supp.2d 16 (D.D.C. 1999).

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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.35
Amendments by the 106th Congress (1999-2000)
During the 106th Congress various Members continued to press for additional
amendments to the FSIA that would allow the judgments against terrorist states to be
satisfied; and the Clinton Administration continued its opposition.36 During this time
a number of additional judgments were handed down, all against Iran and all involving
substantial awards of damages37; and a number of other suits against terrorist states
were filed.38
More specifically, a measure entitled the “Justice for Victims of Terrorism Act”
was introduced in both the House (by Rep. McCollum) and the Senate (by Senators
Lautenberg and Mack).39 Hearings were held on the proposal in both bodies; and a
slightly revised version of the bill was adopted by the House and reported in the
Senate. But the measure was never enacted. Instead, negotiations with the
Administration reportedly led by Senators Lautenberg and Mack resulted in the
addition of § 2002 to the “Victims of Trafficking and Violence Against Women Act
of 2000.”40 Section 2002, as noted above, mandates the payment of a portion of the
damages awarded in one suit against Cuba and ten judgments against Iran, with
payment of the former to be taken from Cuba’s frozen assets in this country and of
the latter from appropriated funds “not otherwise obligated.”
35Statement 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.
36See Hearing Before the Senate Judiciary Committee on Terrorism: Victims’ Access to
Terrorists’ Assets, 106th Congress, 1st Sess. (October 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. (April 13, 2000).
37See 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, 2000
U.S.Dist.LEXIS 9545 (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).
38See Contemporary Practice of the United States Relating to International Law: U.S.
Judgments Against Terrorist States,supra n. 23 and Sean Murphy, Contemporary Practice
of the United States Relating to International Law: U.S. Judgments Against Terrorist
States, 95 AMERICAN JOURNAL OF INTERNATIONAL LAW.134 (2001).
39S. 1796, H.R. 3382, and H.R. 3485, 106th Cong., 1st Sess. (1999).
40P.L. 106-386, § 2002 (Oct. 28, 2000); 114 Stat. 1541.

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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 blocked assets
and including moneys due from or payable by the United States. It would have
repealed the waiver authority granted in § 117 of the fiscal 1999 appropriations act
for the Treasury Department and allowed the President to waive an authorization to
attach assets only with respect to the premises of a foreign diplomatic mission.
In hearings on the measure, the Clinton Administration was repeatedly pilloried
for its opposition to the efforts of victims of terrorism to collect on the judgments
awarded. Senator Hatch, chair of the Senate Judiciary Committee, stated:
Unfortunately for the families of the “Brothers to the Rescue” victims and the
family of Alisia Flatow, 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. Now, not only must these families fight the terrorist states
– they must also fight the Administration that had promised to support their efforts
to obtain just compensation.41
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.42
The sister of one of the “Brothers to the Rescue” pilots shot down by Cuba
declaimed:
No words can possibly explain our shock when we went to court and found US
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 US 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.43
Rep. McCollum, sponsor of the House bill, said:
41Terrorism: Victims’ Access to Terrorist Assets – Hearing Before the Senate Committee on
the Judiciary, 106th Cong., 1st Sess. (Oct. 27, 1999) (statement of Sen. Hatch) (unprinted).
Testimony given at the hearing is available at the Committee’s web site.
42Id. (statement of Shephen Flatow).
43Id. (statement of Maggie Alejandre Khuly).

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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 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.44
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.45
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.
44Justice for Victims of Terrorism Act: Hearing Before the Subcommittee on Immigration
and Claims of the House Committee on the Judiciary, 106th Cong., 2d Sess. (April 13, 2000)
(statement of Rep. McCollum). The transcript of the hearing is available on the
subcommittee’s web site.
45Id. (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.

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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 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'').
Nonetheless, 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. In the House
the report of the House Judiciary Committee stated:
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.46
The House passed the bill by voice vote under a suspension of the rules47
46H. Rept. 106-733, 106th Cong., 2d Sess. (July 13, 2000), at 4. 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), 106th Cong., 2d Sess. (July 18, 2000).
47145 CONG. REC. H 6938 (daily ed. July 25, 2000).

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Because the Clinton Administration continued to oppose the bill, extensive
negotiations ensued between the Administration and interested Members of Congress;
and ultimately these negotiations led to the enactment of a statute further amending
the FSIA which was signed into law by President Clinton on October 28, 2000.48
Section 2002 of the “Victims of Trafficking and Violence Protection Act of 2000"
directs the Secretary of the Treasury to pay portions of eleven designated judgments
against terrorist states. The designated judgments include any judgments against
Cuba and Iran that had been handed down by July 20, 2000 (the Alejandre, Flatow,
Cicippio, Anderson and Eisenfeld cases) and the suits which had been filed against
either country on one of five named dates on or prior to July 27, 2000, and which
would obtain a final judgment after July 27, 2000 (see Appendix I). The law gives the
designated claimants three options:
First, they may obtain from the Treasury Department 110 percent of the
compensatory damages awarded in their judgments, plus interest, if they relinquish
all rights to compensatory and punitive damages awarded by U.S. courts. Second,
they may obtain 100 percent of the compensatory damages awarded in their
judgments, plus interest, if they relinquish (a) all rights to compensatory damages
awarded by U.S. courts and (b) all rights to execute against or attach certain
categories of property, including property that is at issue in claims against the
United States before an international tribunal. The property in (b) would include
Iran’s Foreign Military Sales (FMS) trust fund, which is at issue in a case before
the Iran-U.S. Claims Tribunal. Third, claimants may decline to obtain any
payments from the Treasury Department and then continue to pursue their
judgments as best they can.49
To pay the judgment in the Alejandre case against Cuba, the statute directs that the
President vest and liquidate Cuban government properties that have been frozen under
TWEA. To satisfy the ten judgments against Iran in the designated cases (see
Appendix I), § 2002 provides as follows:
! The statute directs the Secretary of the Treasury to use any proceeds that have
accrued from the rental of Iranian diplomatic and consular property in the U.S.
plus appropriated funds not otherwise obligated (meaning U.S. funds) up to
the amount contained in Iran’s Foreign Military Sales account.50 (That account
contains slightly more than $400 million paid in advance by Iran for military
equipment that, because of the takeover of Iran by Khomeini and the hostage
crisis , has never been delivered. In a claim filed with the U.S.-Iran Claims
Tribunal, Iran contends that it is entitled to the return of this money; but no
judgment has yet been rendered by the arbitral tribunal.)
! If payments are paid out of U.S. funds, § 2002 states that the U.S. is
subrogated to the rights of the persons who were paid (which means that the
48 The statute is entitled the “Victims of Trafficking and Violence Protection Act of 2000” and
primarily addresses the issue of international trafficking in women and children. The FSIA
amendments were added to this measure in the House-Senate conference. See P.L. 106-386,
§ 2002(f)(1) (Oct. 28, 2000); 114 Stat. 1543.
49“Contemporary Practice of the United States Relating to International Law: U.S. Judgments
Against Terrorist States,” supra n. 12, at 138.
50Id. at n. 31.

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U.S. is entitled to pursue their entitlement to payment of the damage awards
from Iran.)
! Section 2002 further provides that the U.S. “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 expresses the “sense of the Congress” that relations
between the U.S. and Iran should not be normalized until these subrogated claims
have been “dealt with to the satisfaction of the United States.” It also “reaffirms 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 modifies the 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 modifies the waiver authority that the President had been given
in § 117. It repeals that subsection and instead provides that “[t]he President may
waive any provision of paragraph (1) in the interest of national security.” (Paragraph
(1), it might be noted, is the subsection that allows the frozen assets of a terrorist
state, including its diplomatic property, to be attached in satisfaction of a judgment
against that state.)51
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.”52 Thus, except as otherwise provided in § 2002, the bar to the
attachment of the diplomatic property and the blocked assets of terrorist states to
satisfy judgments against those states continues to be in place.53
51Paragraph (1) is codified at 28 U.S.C.A. 1610(f)(1) (West Supp. 2001) and the modified
waiver authority is codified at 28 U.S.C.A. 1610(f)(3) (West Supp. 2001).
52Presidential Determination No. 2001-03 (Oct. 28, 2000); 65 Fed. Reg. 66483.
53The report of the House-Senate conference committee on the “Victims of Trafficking” bill
appears to express 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
(continued...)

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In November and December, 2000, the Office of Foreign Assets Control in the
Department of the Treasury issued a notice detailing the procedures governing
53(...continued)
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. Conf. Rept. 106-939, 106th Cong., 2d Sess. (Oct. 5, 2000), at 117-118.

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CRS-17
application for payment by the claimants in the eleven designated cases (if they chose
to do so).54
In early 2001 the federal government liquidated $96.7 million of the $193.5
million of Cuban assets that had previously been frozen and paid that amount to the
claimants in Alejandre v. Republic of Cuba.55 The claimants in nine of the ten
designated cases against Iran have been given more than $350 million in compensation
out of U.S. funds so far.56 The tenth case remains pending. (See Appendix I for a
listing of cases and payments made.)
Action by the 107th Congress
Suits against terrorist states under the FSIA exception have continued to be
decided subsequent to the cutoff date of July 27, 2000, set in § 2002 of the Victims
of Trafficking statute.57 Some of these decisions are covered by the compensation
5465 Fed. Reg.70382 (Nov. 22, 2000) and 65 Fed. Reg. 78533 (Dec. 15, 2000).
55996 F.Supp. 1239 (S.D. Fla. 1997).
56This information has been provided by the Office of Foreign Assets Control and is current
as of January 24, 2001.
57“Contemporary Practice ...,” supra n. 21. The decisions so far include 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 hung 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); 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); 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); and Hegna v. Islamic Republic of Iran, ___ F.Supp.2d ___ (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
(continued...)

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CRS-18
scheme set forth in § 2002. But other judgments, as well as additional cases that have
been filed but not decided as yet, are not covered. As a consequence, pressure for
finding some means to compensate the additional claimants has begun to build.58
Congress has not as yet made specific provision for further compensation. But 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,
2001,”59 Congress directed President Bush to submit, no later than the time he
submits 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, 1979.60
No comparable provision had been in either the House or Senate-passed versions of
H.R. 2500. But the Senate had adopted, without debate and as part of a package of
amendments offered by Sen. Hollings, the floor manager for the bill, an amendment
to § 2002 of the Victims of Trafficking Act that would have authorized partial
payment of the judgments in five additional cases.61 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.62
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.”63
57(...continued)
Airlines flight in 1984). The last three cases are not covered by § 2002.
58See Shawn Zeller, “Hoping to Thaw Those Frozen Funds,” 33 National Journal 3368-69
(Oct. 27, 2001).
59P.L. 107-77 (November 28, 2001). The text of the Act and the conference report (H. Rept.
107-278) is printed at 147 CONG. REC. H 7986-H8038 (daily ed. Nov. 9, 2001).
60Id. § 626, reprinted at 147 CONG. REC. H8001.
61See 147 CONG. REC. S 9365 (daily ed. Sept. 13, 2001).
62H. Rept. 107-278, 107th Cong., 1st Sess. (Nov. 9, 2001), reprinted at 147 CONG. REC. H
8033 (daily ed. Nov. 9, 2001).
63Office of the White House Press Secretary, “President Signs Commerce Appropriations Bill:
Statement by the President on H.R. 2500" (November 28, 2001), available on the White
House web site.

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In addition, the conference agreement on the appropriations measure retained a
Senate provision that attempts to extend the waiver of state immunity for suits against
terrorist states in the FSIA to a case that has been brought in federal district court on
behalf of the 52 embassy staffers who were held hostage by Iran from 1979-81 and
their families. That case – Roeder v. Islamic Republic of Iran64 – was filed in late
2000 and seeks both compensatory and punitive damages. In August, 2001, the trial
court reportedly granted a default judgment to the plaintiffs. But in October, 2001,
the U.S. government intervened in the proceeding prior to the determination of
damages and asked that the judgment be vacated and the case dismissed. The
government’s contention is that the suit is barred by the provisions of the 1981
Algiers Accord that led to the release of the hostages65; and it was this intervention
that precipitated the Senate amendment to the FSIA concerning the case. 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.66
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.67
64Case Number 1:00CV03110 (ESG) (D.D.C., filed December 29, 2000).
65Neely Tucker, “U.S. Seeking to Vacate Judgment Against Iran,” Washington Post (October
16, 2001), at A2. The Algiers Accord contains 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 November 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 November 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).
66P.L. 107-77, Title VI, § 626 (Nov. 28, 2001), amending 28 U.S.C.A. 1605(a)(7)(A).
67H. Rept. 107-278, supra n. 56.

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CRS-20
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 1981.68
Subsequently on December 13, 2001, the judge in Roeder heard arguments on
the government’s motion to dismiss; and the government continued to argue that the
suit is barred by the Algiers Accord and ought to be dismissed. A week later in the
fiscal 2002 appropriations act for the Department of Defense, Congress included a
provision making a technical correction in the reference to the Roeder case.69 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, 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).70
Nonetheless, in signing the Department of Defense appropriations measure into law
on January 10, 2002, President Bush stated as follows:
Section 208 of Division B makes a technical correction to subsection 626(c) of
Public Law 107-77 (the FY 2002 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.
68The President’s signing statement is available on the White House web site.
69The 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 107-117,
Title II, § 208 (Jan. 10, 2002). The amendment 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. Rept. 107-109 (Dec. 5, 2001)
and Senate floor debate at 147 CONG. REC. S 12476-12529 (daily ed. Dec. 6, 2001), S
12586-12676 and S 12779-12812 (daily ed. Dec. 7, 2001).
70S. Rept. 107-109, 107th Cong., 1st Sess. (Dec. 5, 2001).

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CRS-21
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 1981.71
The judge in Roeder heard additional argument on the matter on January 14, 2002,
and will reportedly hold a final hearing on February 20, 2002.72
Conclusion
The 1996 amendments to the FSIA allowing victims of terrorism to sue the
state(s) responsible for damages in U.S. courts were enacted with broad political
support. But subsequent difficulties in obtaining payment of the substantial damages
assessed in default judgments by the courts and subsequent enactments to facilitate
or allow such payment have raised issues that are fraught with both emotion and
complexity. Matters of effectiveness, fairness, diplomacy, and possible reciprocal
action against U.S. assets abroad have all come to the fore; and most recently the
question of U.S. compliance with a specific international obligation has become part
of the debate. In the meantime, judgments against terrorist states continue to be
handed down; and the Bush Administration has been directed to produce a
comprehensive compensation plan. That plan likely will be the next focal point of the
ongoing debate.
71The President’s signing statement is available on the White House web site.
72Neely Tucker, Hostages’ Suit Against Iran Gets a Boost, WASHINGTON POST, January
15, 2002.

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CRS-22
APPENDIX I
Judgments Against Terrorist States Covered By,
and Payments Made Pursuant to, § 200273
JUDGMENT
COMPENSATORY
PUNITIVE
AMOUNT PAID
PROCEDURE
DAMAGES
DAMAGES
PURSUANT TO
USED
AWARDED
AWARDED
§ 2002
(INCLUDING
INTEREST)
Alejandre v. Republic
$50 million
$137.7 million
$96,708,652.03
Liquidation of
of Cuba, 996 F.Supp.
blocked Cuban assets
1239 (S.D. Fla.
1997)
Flatow v. Islamic
$27 million
$225 million
$26,002,690.15
100% option
Republic of Iran, 999
million
(appropriated funds)
F.Supp.2d 1 (D.D.C.
1998)
Cicippio v. Islamic
$65 million
$73,260,501.72
100% option
Republic of Iran, 18
(appropriated funds)
F.Supp. 2d 62
(D.D.C. 1998)
73Information on the amounts paid in the designated cases under § 2002 has been provided by the Office of Foreign Assets Control and
is current as of January 24, 2002. Claimants choosing the 100 percent option are entitled to receive 100 percent of the compensatory
damages awarded plus post-judgment interest on condition that they relinquish any further right to compensatory damages and any right
to satisfy their punitive damages award out of the blocked assets of the terrorist state (including diplomatic property), debts owed by
the United States to the terrorist state as the result of judgments by the Iran-U.S. Claims Tribunal, and any property that is at issue in
claims against the United States before that and other international tribunals (such as Iran’s Foreign Military Sales account). Claimants
choosing the 110 percent option are entitled to receive 110 percent of the compensatory damages awarded plus post-judgment interest
on condition they relinquish any further right to obtain compensatory and punitive damages.

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CRS-23
JUDGMENT
COMPENSATORY
PUNITIVE
AMOUNT PAID
PROCEDURE
DAMAGES
DAMAGES
PURSUANT TO
USED
AWARDED
AWARDED
§ 2002
(INCLUDING
INTEREST)
Anderson v. Islamic
$41.2 million
$300 million
$47,315,791.80
110% option
Republic of Iran, 90
(appropriated funds)
F . S u p p . 2 d 1 0 7
(D.D.C. 2000)
Eisenfeld v. Islamic
$24.7 million
$300 million
$27,365,288.83
100% option
Republic of Iran,
(appropriated funds)
2000 U.S.Dist.
LEXIS 9545 (D.D.C.
2000)
Higgins v. Islamic
$55.4 million
$300 million
$57,086,233.16
100% option
Republic of Iran, No.
(appropriated funds)
1:99cv00377 (D.D.C.
2000)
Sutherland v. Islamic
$53.4 million
$300 million
$56,084,467.27
One claimant chose
Republic of Iran, 151
the 110% option, the
F.Supp.2d 27
others the 100%
(D.D.C. 2001)
option
(appropriated funds)
Polhill v. Islamic
$31.5 million
$300 million
$35,041,877.36
110% option
Republic of Iran,
(appropriated funds)
2001 U.S.Dist.
LEXIS 15322 (D.D.
C. 2001)

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CRS-24
JUDGMENTS
COMPENSATORY
PUNITIVE
AMOUNT PAID
PROCEDURE
DAMAGES
DAMAGES
PURSUANT TO
USED
AWARDED
AWARDED
§ 2002
(INCLUDING
INTEREST)
Jenco v. Islamic
$14.64 million
$300 million
Not yet paid
100% option chosen
Republic of Iran,
(appropriated funds)
154 F.Supp.2d 27
(D.D.C. 2001)
Wagner v. Islamic
$16.28 million
$300 million
Not yet paid
110% option chosen
Republic of Iran,
(appropriated funds)
172 F.Supp.2d 128
(D.D.C. 2001)
Stenholm v. Islamic
Republic of Iran --
case not yet decided

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CRS-25
APPENDIX II
Amount of Assets of Terrorist States
Blocked by the United States74
STATE
AMOUNT OF BLOCKED ASSETS
Cuba
$193.5 million (prior to § 2002 payment)
Iran
$347.5 million
Iraq
$1587 million
Libya
$1072.2 million
North Korea
$24 million
Sudan
$33.3 million
Syria
$249 millio
74This information is from the Calendar Year 2000 Annual Report to the Congress on Assets in the United States Belonging to
Terrorist Countries or International Terrorist Organization (January, 2001), which was prepared by the Office of Foreign Assets
Control in the Department of the Treasury.

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