Order Code RS22094
Updated May 27, 2005
CRS Report for Congress
Received through the CRS Web
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
American victims of international terrorist acts supported by certain States designated
by the State Department as supporters of terrorism — Cuba, Iran, Libya, North Korea,
Sudan, Syria, and until recently, Iraq — to bring suit in federal court to seek monetary
damages. Holders of judgments against these States, however, have encountered
difficulties in their efforts to collect, despite congressional efforts to make blocked (or
“frozen”) assets of such States available for attachment by judgment creditors. A recent
court decision invalidating plaintiffs’ cause of action under the 1996 law raises
uncertainties about the future of lawsuits against terrorist States. This report provides
an overview of these issues, including a summary of a lawsuit against Iran by former
hostages, Roeder v. Islamic Republic of Iran, and a lawsuit against Iraq by former
prisoners of war (POWs), Acree v. Republic of Iraq, as well as a brief synopsis of
relevant legislative proposals (H.R. 1321, H.R. 865, H.Con.Res. 93). These issues are
covered in greater depth in CRS Report RL31258, Suits Against Terrorist States By
Victims of Terrorism. The report will be updated.

Ordinarily, foreign States, including their agencies and instrumentalities, may not be
sued in U.S. courts unless they waive their sovereign immunity or an exception under the
Foreign Sovereign Immunities Act (FSIA) (28 U.S.C. §§ 1602 et seq.) applies. The FSIA
provides a list of circumstances where U.S. federal courts will not recognize foreign
sovereign immunity. In these circumstances, U.S. courts may exercise jurisdiction over
a dispute and treat a foreign state as if it were a private entity. It does not establish
liability or a cause of action; it merely removes foreign sovereign immunity as a defense
to the courts’ jurisdiction. The property of foreign States is also immune from judicial
attachment to enforce judgments, unless the property is excepted under 28 U.S.C. § 1610.
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,
1 The list, established by the State Department, currently includes Cuba, Iran, Libya, North
(continued...)
Congressional Research Service ˜ The Library of Congress

---

CRS-2
such terrorist acts as torture, extrajudicial killing, aircraft sabotage, and hostage taking.
28 U.S.C. § 1605(a)(7). After a court found that the waiver of sovereign immunity did not
itself create a cause of action,2 Congress passed the “Flatow Amendment” (28 U.S.C.A.
§ 1605 note), to create a cause of action for such cases. Courts initially interpreted the
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, succeeded under the exception, resulting in awards to plaintiffs of
substantial damages.3
Future plaintiffs will likely find it more difficult to prevail in lawsuits against DSSTs
after the D.C. Circuit Court of Appeals held in Cicippio-Puelo v. Islamic Republic of
Iran4 that neither the terrorism exception to the FSIA nor the Flatow Amendment creates
a private right of action against the foreign government itself, including its agencies and
instrumentalities. Despite the language in the Flatow Amendment seemingly to the
contrary,5 the court found that agents, officials or employees retain immunity for conduct
performed in their official capacity. Under this ruling, plaintiffs seeking recovery for
state-supported acts of terrorism under the Flatow Amendment must file suit against
specific foreign officials or agents who are alleged to be responsible for the terrorist acts
causing their injuries. Additionally, judgments may be harder to collect because the
foreign State might not be liable to pay the judgment.
Victims of terrorism can continue to bring lawsuits against DSSTs, including their
agencies and instrumentalities, but they must assert causes of action arising from other
statutes or common law. Even if officials, employees and agents of DSSTs are held to be
potentially liable for their official acts, however, it appears that the most frequently
asserted cause of action, based on the provision of material support to terrorists, would
be unavailable against the officers and employees allegedly responsible.6 The Supreme
1 (...continued)
Korea, Sudan, and Syria. See 22 CFR Part 126(1)(d) (2004). Iraq was removed from the list in
2003 by the President’s Determination, see 69 Fed. Reg. 18,810 (April 9, 2004), and its
designation was officially rescinded in October of 2004, 69 Fed. Reg. 61,702 (Oct. 20, 2004).
2 Flatow v. Islamic Republic of Iran, 999 F. Supp. 1 (D.D.C. 1998).
3 See Suits Against Terrorist States By Victims of Terrorism, CRS Report RL31258.
4 353 F.3d 1024 (D.C. Cir. 2004)(remanding to allow plaintiffs to amend their complaint).
5 28 U.S.C.A. § 1605 note (“an official, employee, or agent of a foreign state designated as a
state sponsor of terrorism . . . while acting within the scope of his or her office, employment, or
agency shall be liable to a United States national . . .” for injury caused by acts for which
immunity is unavailable under the terrorism exception to the FSIA).
6 18 U.S.C.A. § 2333 creates a civil remedy for U.S. nationals injured by an act of terrorism, and
permits plaintiffs to recover threefold their damages as well as litigation costs. However, 18
U.S.C. § 2337 exempts from suit under § 2333 agencies, officers, or employees of the U.S. or any
foreign government. While the Flatow Amendment creates a cause of action against agents and
employees of DSSTs, it does so only to the extent that U.S. officers and employees are amenable
to lawsuit for similar conduct. 28 U.S.C. § 1605 note.

---

CRS-3
Court may have an opportunity to decide the issue, if it agrees to hear Iran’s plea to
invalidate a default judgment against it.7
Enforcement of Judgments Against Terrorist States
When the claimants in the initial suits against Cuba and Iran in 1997 and 1998
sought to satisfy their judgments by attaching the States’ diplomatic and consular property
as well as their assets in the United States that had been blocked pursuant to the Trading
with the Enemy Act (TWEA) (50 App. U.S.C.A. § 5), or the International Economic
Emergency Powers Act (IEEPA) (50 U.S.C.A. §§ 1701 et seq.), the Clinton
Administration intervened to oppose the attachments, arguing that the United States has
international treaty obligations to protect all countries’ diplomatic and consular properties,
that the blocked assets of foreign States provide useful diplomatic leverage and should
remain available for future use, that the attachment of the blocked assets by early
claimants under the FSIA exception would mean that nothing would be left to compensate
future claimants, and that the attachment of both kinds of assets would expose U.S. assets
to reciprocal action in certain foreign States. The courts agreed.
The plaintiffs and their attorneys then sought Congress’ help in collecting on their
judgments; and Congress has repeatedly responded. In section 117 of the Treasury and
General Government Appropriations Act for Fiscal Year 1999 (P.L. 105-277), the 105th
Congress provided that victims who obtained judgments against terrorist States could
attach both the terrorist States’ frozen assets and their diplomatic and consular property.
But because of the Administration’s continuing objections, section 117 also gave the
President authority to waive these provisions in the interest of national security, which
President Clinton exercised on signing the bill into law.
In response, the 106th Congress enacted legislation to pay portions of selected
judgments largely out of U.S. funds. Section 2002 of the Victims of Trafficking and
Violence Protection Act of 2000 (VTVPA) (P.L. 106-386), directed the Secretary of the
Treasury to pay the compensatory damages portion of one judgment against Cuba8 out of
Cuba’s frozen assets. The VTVPA further directed that the compensatory damages
portions of ten judgments against Iran be made out of appropriated funds (up to a
maximum of about $400 million) and that the United States would then be obligated to
seek reimbursement for those payments from Iran. Claimants could opt to receive an
amount equal to 110 percent of their compensatory damages, but had to relinquish the
right to seek to enforce the judgment in court. Claimants could also opt to receive an
amount equal to 100 percent of the compensatory damages, in which case they could
continue to pursue enforcement of the punitive damages, but relinquished the right to
attach certain property of the DSST, including blocked assets and diplomatic property.
As a consequence, $96.7 million of the Cuban assets frozen in this country was paid to
7 Ministry of Defense and Support for Armed Forces of Islamic Republic of Iran v. Cubic
Defense Systems, Inc., 385 F.3d 1206 (9th Cir. 2004), petition for cert. filed sub nom Ministry
of Defense and Support for Armed Forces of Islamic Republic of Iran v. Elahi, 73 USLW 3498
(Feb 11, 2005)(NO. 04-1095)
8 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 “Brothers to the Rescue” planes shot
down by Cuba in 1996 a total of $187.7 million in damages against Cuba.

---

CRS-4
the claimants in the one judgment against Cuba; and more than $380 million in U.S. funds
was paid out with respect to the ten judgments against Iran.
The TVTPA did not satisfy all claimants. Its ad hoc coverage provided relief in only
eleven designated suits; it provided no compensation to other claimants who had obtained,
or might obtain, judgments under the terrorist state exception to the FSIA. It did not
provide any compensation for the nearly six thousand claims against Cuba for death,
injury, and expropriation during and after Castro’s takeover, which were determined to
be legitimate by the Foreign Claims Settlement Commission (FCSC) in the late 1960s,
but depleted Cuba’s frozen assets in the United States by half. Additionally, the payment
of the ten judgments against Iran out of U.S. funds seemed to some observers to
contradict one of the major justifications for enacting the terrorist state exception to the
FSIA in the first place, namely, to force terrorist States to pay a price for their actions and
to deter them from engaging in such acts in the future.
The 107th Congress directed the Administration to submit a legislative proposal to
establish “a comprehensive program to ensure fair, equitable, and prompt compensation
for all United States victims of international terrorism” with its proposed budget for
FY2003 (P.L. 107-77), but none was offered. Congress added more suits to those listed
as compensable under §2002 and sought to make more frozen assets available to satisfy
judgments. The Terrorism Risk Insurance Act of 2002 (TRIA) (P. L. 107-297) made
more frozen assets of DSSTs available for attachment by restricting the presidential
waiver authority to property protected by international treaty.
In the 108th Congress, Senator Lugar (R-IN) introduced an Administration proposal
that would establish an administrative procedure to provide compensation to victims of
international terrorism. The measure would have made DSSTs’ blocked assets unavailable
for future judgment holders, but would have established the “Benefits for Victims of
International Terrorism Program,” which would have been authorized to pay up to
$262,000 per claim. The bill was the subject of a hearing by the Senate Committee on
Foreign Relations, but no further action was taken.
The Iran Hostages
A further complication arose in connection with a suit against Iran by those who
were held hostage from 1979-81, whose previous efforts to sue Iran for their ordeal had
failed due to Iran’s sovereign immunity. In late 2000, the 52 persons who were held
hostage and their families initiated a new suit against Iran under the terrorist state
exception to the FSIA. After a federal district court held Iran to be liable but before it
assessed damages in 2001, the U.S. government intervened and argued that the case
should be dismissed because Iran had not been designated a terrorist state at the time of
the hostage incident — one of the requirements of the FSIA exception allowing suits
against terrorist States — and because one part of the Algiers Accords that led to the
hostages’ release in 1981 required the United States to bar any suits from being
adjudicated based on the incident. Congress enacted riders to pending appropriations bills
to allow the suit to proceed. Nonetheless, the federal district court in 2002 dismissed the
suit on the grounds the Algiers Accords, although entered into as a series of executive
agreements, are binding on the United States and Congress had not acted with sufficient

---

CRS-5
clarity to abrogate the provision precluding suit.9 Subsequent efforts in the 107th and 108th
Congress expressly to abrogate the Algiers Accords did not succeed.
Suits Against Iraq
The ouster of Saddam Hussein’s regime raised new issues with respect to judgments
or claims against Iraq, namely, whether Congress and the President can retroactively
restore sovereign immunity to Iraq for causes of action that arose prior to the war.
President Bush issued Executive Order 13290 providing for the confiscation and vesting
of Iraq’s $1.7 billion in frozen assets and directing that they be deposited in the
Development Fund for Iraq and used for Iraq’s reconstruction. The order excepted from
that confiscation assets already ordered attached pursuant to two existing judgments
against Iraq (which amounted to about $300 million) as well as Iraq’s diplomatic and
consular property. But it otherwise vested title to Iraq’s frozen assets in the United States
and, consequently, seemed to make those assets unavailable to those who might later
obtain judgments against Iraq under the terrorist state exception to the FSIA.
Subsequently, on the basis of a provision in the Supplemental Appropriations Act for
Fiscal 2003 (P.L. 108-11), President Bush then issued a Presidential Determination
declaring a number of provisions concerning terrorist States, including the FSIA
exception and the provision for payment of judgments out of blocked assets, inapplicable
to Iraq.10 He also issued Executive Order 13303 providing that the Development Fund
of Iraq cannot be attached or made subject to any other kind of judicial process. The
validity of these actions has been contested in two lawsuits.
World Trade Center Victims. Plaintiffs who were awarded $64 million against
Iraq in connection with the September, 2001 attacks on the World Trade Center (WTC)
were rebuffed in their effort to attach the vested Iraqi assets.11 The Second Circuit Court
of Appeals affirmed the district court’s finding that those assets, after their transfer to the
U.S. Treasury, were protected by U.S. sovereign immunity, and validated the President’s
determination making them unavailable for judicial attachment.
Former U.S. POWs in Iraq. Seventeen Americans who were held captive and
brutally tortured by Iraq during the first Gulf War and their families, who were awarded
nearly $1 billion in damages,12 initially obtained a temporary restraining order (TRO)
requiring the government to retain at least $653 million of Iraq’s assets (enough to cover
the compensatory damages) pending further decision by the court. The Justice
Department sought to intervene, arguing that Iraq was entitled to sovereign immunity in
court actions by terrorism victims after the President’s determination, and that the funds
were needed for the reconstruction of Iraq. After an expedited hearing on the matter, the
court held that the Iraqi assets were not subject to attachment by the plaintiffs and
9 Roeder v. Islamic Republic of Iran, 195 F.Supp.2d 140 (D. D.C. 2002), aff’d 333 F.3d 228 (D.C.
Cir. 2003), cert. denied 124 S.Ct. 2836 (2004).
10 See Memorandum for the Secretary of State (Presidential Determination No. 2003-23) (May
7, 2003).
11 Smith v. Federal Reserve Bank of New York, 280 F.Supp.2d 314 (S.D.N.Y), aff’d 346 F.3d 264
(2nd Cir. 2003).
12 See Acree v. Republic of Iraq, 271 F.Supp.2d 179 (D.D.C. 2003).

---

CRS-6
dissolved the TRO, but declined to vacate the judgment, holding that only Iraq could
assert a defense based on sovereign immunity, and that Congress and the President could
not retroactively restore Iraq’s previously abrogated sovereign immunity. Both sides
cross-appealed to the Court of Appeals for the D.C. Circuit, which held that the district
court had abused its discretion by denying the government’s motion to intervene.13
However, the court reversed the President’s Determination insofar as it nullified the FSIA
provisions with respect to Iraq, finding that Congress had not intended to permit the
President to revoke those provisions. The plaintiffs were nonetheless prevented from
collecting because the court of appeals vacated their judgment based on their failure to
state a valid cause of action against Iraq, and because Saddam Hussein retained immunity
for official conduct. The Supreme Court denied the POWs’ petition for certiorari.
Proposed Legislation. One bill was introduced in the House of Representatives
in the 108th Congress to provide relief for the former POWs. H.R. 2224, the “Prisoner of
War Protection Act of 2003,” would have allowed the plaintiffs, as well as any POWs
who might later assert a cause of action in the more recent war against Iraq, to recover
damages out of the $1.73 billion in frozen Iraqi assets that were vested by order of the
President to pay for the reconstruction of Iraq. No similar bill has yet been introduced in
the 109th Congress, but H.Con.Res. 93 would “express[] the sense of the Congress that
the Department of Justice should halt efforts to block compensation for torture inflicted
by the Government of Iraq on American prisoners of war during the 1991 Gulf War.”
H.R. 1321, introduced March 15, 2005, would authorize the payment of $1 million dollars
to each of the seventeen plaintiffs out of unobligated funds appropriated under the
heading of “Iraq Relief and Reconstruction Fund” in the 2004 Emergency Supplemental.14
Another bill, H.R. 865, would amend 28 U.S.C. § 1605(a)(7) by explicitly creating
a cause of action against foreign DSSTs themselves, which would survive that State’s
removal from the DSST list. It would allow punitive damages against the DSST and
make it vicariously liable for the actions of its officials, employees, or agents; and would
restrict appeals of actions brought under § 1605(a)(7). The bill would also alter the factors
for determining which property interests of a DSST are subject to execution on a terrorism
judgment, make U.S. sovereign immunity unavailable to protect frozen assets, and
establish liens on the property of a DSST when a terrorism suit is filed. The bill would
revive all suits dismissed prior to its enactment that would be cognizable by reason of its
amendments, tolling the 10-year statute of limitations for such suits.
13 Acree v. Republic of Iraq, 370 F.3d 41 (D.C. Cir. 2004).
14 P.L. 108-106, 117 STAT. 1209 (2003). Presumably, the “17 plaintiffs in the [Acree case]” in
H.R. 1321 refers to those plaintiffs who were actually held prisoner, but excludes 37 family
members and relatives, who also participated as plaintiffs and were awarded damages of from
$5 - 10 million each. Acree v. Republic of Iraq, 271 F.Supp.2d 179 (D.D.C. 2003), vacated by
370 F.3d 41 (D.C. Cir. 2004), cert. denied __ U.S. __ (2005).

---