Order Code RL31258
CRS Report for Congress
Received through the CRS Web
Suits Against Terrorist States
By Victims of Terrorism
Updated June 7, 2005
Jennifer K. Elsea
Legislative Attorney
American Law Division
Congressional Research Service ˜ The Library of Congress

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Suits Against Terrorist States by Victims of Terrorism
Summary
In 1996 Congress amended the Foreign Sovereign Immunities Act (FSIA) to
allow U.S. victims of terrorism to sue certain States responsible for terrorist acts.
The terrorist state defendants have refused to appear in court, the courts have handed
down large default judgments, the Clinton and Bush Administrations have intervened
to block collection on those judgments, and Congress has repeatedly enacted
measures to facilitate payment. Further complexity has been added by attempts in
one suit to abrogate an international agreement, the enactment of retaliatory
legislation in some of the terrorist States, the occupation of Iraq and suspension of
its status as a terrorist State, and a proposal to compensate victims through an
administrative process. Recently, a court ruled that Congress has never created a
cause of action against terrorist States themselves, but only against their officials,
employees and agents, and only for their private conduct, not for their official acts.
The 107th Congress enacted as part of the Terrorism Risk Insurance Act of 2002
(“TRIA”)(P.L. 107-297) a provision that overrides long-standing Administration
objections and allows the blocked assets of terrorist States to be used to pay the
compensatory damages portions of court judgments against such States; however, the
meaning of “blocked asset” has become an issue. That statute also added several
judgments against Iran to the ten that had previously been designated as compensable
out of U.S. funds under § 2002 of the Victims of Trafficking and Violence Protection
Act of 2000 (“VTVPA”) (P.L. 106-386). In the 108th Congress, the Senate adopted
several riders to appropriations bills to abrogate the provision in the Algiers Accords
barring the Iranian hostages from bringing suit in the Roeder case, but in all three
cases the riders were dropped in conference. On March 20, 2003, President Bush
vested title to Iraq’s frozen assets in this country and ordered that most of the
proceeds be used for Iraq’s reconstruction rather than to compensate victims of Iraqi
terrorism. The Administration then intervened in a case against Iraq by a number of
POWs from the first Gulf War to vacate their judgment and ensure that Iraq’s frozen
assets were not used to satisfy it. (Acree v. Republic of Iraq). In the meantime, Iran
has asked the Supreme Court to review a decision allowing a judgment-holder to
attach a judgment owed to its Ministry of Defense (MOD) by a U.S. company. (MOD
v. Elahi).

This report provides an overview of this complex issue; gives background on
the doctrine of state immunity and the FSIA; details the evolution of the terrorist
State exception enacted in 1996 and the judicial decisions that have followed;
describes the subsequent proposals and statutes that have been enacted to help
claimants obtain satisfaction of their judgments; sets forth the legal and policy
arguments that have been made for and against those legislative initiatives; describes
the decision in the hostages’ suit against Iran and Congress’ efforts to vitiate the
Algiers Accords; summarizes what has happened with Iraq’s assets, and summarizes
proposed legislation (H.R. 1321, H.R. 865 and H.Con.Res. 93). The report also
contains two appendices: Appendix I lists the cases covered by § 2002 as amended,
the amount of compensation that has been paid in each case, and the source of the
compensation. Appendix II lists the amount of the assets of each terrorist state
currently blocked by the United States. The report will be updated as events warrant.

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Contents
Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background on State Immunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Anti-Terrorism and Effective Death Penalty Act of 1996: Civil
Suits Against Terrorist States by Victims of Terrorism . . . . . . . . . . . . . 4
105th Congress — Enactment of Section 117 of the Treasury and
General Government Appropriations Act for Fiscal Year 1999 . . . . . . 7
106th Congress — Enactment of Section 2002 of the Victims of Trafficking
and Violence Protection Act of 2000 . . . . . . . . . . . . . . . . . . . . . . . . . 12
107th Congress — Additional Cases Added to § 2002 and Attachment of
Assets Allowed in Other Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(1) Directive to develop a comprehensive compensation scheme
(P.L. 107-77) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(2) Coverage of additional cases under § 2002 (P.L. 107-228) . . . . . . 23
(3) Attachment of frozen assets authorized (P.L. 107-297) . . . . . . . . . 24
Roeder v. Islamic Republic of Iran . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Judicial proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
107th and 108th Congresses – Efforts To Abrogate the Algiers Accords . . . 30
Confiscation of Iraq’s Blocked Assets for Use in the Reconstruction of
Iraq (POW Lawsuit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Acree v. Republic of Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Proposed Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Ministry of Defense (Iran) v. Elahi . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Bush Administration’s Proposed Compensation Alternative . . . . . . . . . . . 37
109th Congress – Proposed Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Suits Against the United States for “Terrorist” Acts . . . . . . . . . . . . . . . . . . 45
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
APPENDIX I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
APPENDIX II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

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Suits Against Terrorist States
by Victims of Terrorism
Overview
In 1996 Congress amended the Foreign Sovereign Immunities Act (FSIA)1 to
allow civil suits by U.S. victims of terrorism against certain States responsible for,
or complicit in, such terrorist acts as torture, extrajudicial killing, aircraft sabotage,
and hostage taking.2 The amendment enjoyed broad support in Congress, but was
initially resisted by the executive branch. President Clinton signed the amendment
into law after the Cuban air force shot down a civilian plane over international
waters, an incident that resulted in one of the first lawsuits under the new FSIA
exception. After a court found that the waiver of sovereign immunity did not itself
create a cause of action, Congress passed the Flatow Amendment to create a cause
of action.3 Numerous court judgments awarding plaintiffs substantial compensatory
and punitive damages were to follow,4 until the D.C. Circuit in 2004 interpreted the
1 28 U.S.C. §§ 1602 et seq. The exception allows suit to be brought against the agencies and
instrumentalities of such States as well.
2 P.L. 104-132, Title II, §221 (April 23, 1996); 110 Stat. 1241; 28 U.S.C.A. § 1605(a)(7).
3 “Civil Liability for Acts of State Sponsored Terrorism,” P.L. 104-208, Title I, §101(c)
[Title V, § 589] (Sept. 30, 1996), 110 Stat. 3009-172; codified at 28 U.S.C.A. § 1605 note,
provides:
(a) an official, employee, or agent of a foreign state designated as a state sponsor of
terrorism designated under section 6(j) of the Export Administration Act of 1979 (50
App. U.S.C. 2405(j)) while acting within the scope of his or her office, employment, or
agency shall be liable to a United States national or the national’s legal representative for
personal injury or death caused by acts of that official, employee, or agent for which the
courts of the United States may maintain jurisdiction under section 1605(a)(7) of title 28,
United States Code, for money damages which may include economic damages, solatium,
pain, and suffering, and punitive damages if the acts were among those described in
section 1605(a)(7).
(b) Provisions related to statute of limitations and limitations on discovery that would
apply to an action brought under 28 U.S.C. 1605(f) and (g) shall also apply to actions
brought under this section. No action shall be maintained under this action if an official,
employee, or agent of the United States, while acting within the scope of his or her office,
employment, or agency would not be liable for such acts if carried out within the United
States.
4 The FSIA provides that States are not liable for punitive damages but that such damages
may be awarded against their agencies and instrumentalities. See 28 U.S.C.A. § 1606.
Although the D.C. Circuit has found that punitive damages do not apply to agencies of
foreign governments that perform primarily governmental rather than commercial services
because such agencies are considered to be the State itself rather than an agent, Roeder v.
Islamic Republic of Iran, 333 F.3d 228, 234 (D.C. Cir. 2003), cert. denied 124 S.Ct. 2836
(continued...)

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provisions in a way that will make further awards significantly more difficult for
plaintiffs to win. Default judgments won against terrorist States have proved difficult
to enforce, and efforts by plaintiffs to attach frozen assets and diplomatic or consular
property, while receiving support from Congress, have met with opposition from the
executive branch. The use of U.S. funds to pay portions of some judgments has
drawn criticism. The Supreme Court has declined to review a case involving former
prisoners of war who had won a judgment against Iraq, but may address the scope of
the FSIA terrorism exception if it decides to grant certiorari in a challenge by Iran to
one of the default judgments entered against it.5 Congress may be asked to enact
legislation to provide for more even compensation for victims of terrorism.
This report provides background on the international law doctrine of state
immunity and the FSIA; summarizes the 1996 amendments creating an exception to
state immunity under the FSIA for suits against terrorist States; details the subsequent
cases and the legislative initiatives to assist claimants in efforts to collect on their
judgments; sets forth the legal and policy arguments that were made for and against
those efforts; summarizes the decision in Roeder v. Islamic Republic of Iran and
efforts to help the plaintiffs and override the Algiers Accords; describes the
Administration’s actions vesting title to Iraq’s frozen assets in the United States and
making them unavailable to former POWs in Acree v. Republic of Iraq and other
plaintiffs who have won judgments against Iraq; discusses an effort by Iran to void
a judgment against it (Ministry of Defense v. Elahi); notes the laws in certain terrorist
States that allow suits against the U.S. for similar acts; and analyzes options for
creating an alternative scheme to provide compensation to victims of terrorism.
The report also contains two appendices: Appendix I lists the cases covered by
§ 2002 of the Victims of Trafficking and Violence Protection Act of 2000
(P.L. 106-386), the amount of compensation that has been paid in each case, and the
source of the compensation. Appendix II lists the amount of the assets of each
terrorist State currently blocked by the United States. The report will be updated as
events warrant.
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
4 (...continued)
(2004), some courts continue to award punitive damages against foreign military and
intelligence agencies. Total punitive damages awarded under the terrorism exception to the
FSIA now amount to more than $5.5 billion.
5 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)(enforcement of judgment by intervenor who had
judgment against Iran based on FSIA terrorism exception).

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“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
During the last century, however, this principle of absolute state immunity
gradually came to be limited after a number of States began engaging directly in
commercial activities. To allow States to maintain their immunity in the courts of
other States even while engaged in ordinary commerce, it was said, “gave States an
unfair advantage in competition with private commercial enterprise” and denied the
private parties in other nations with whom they dealt their normal recourse to the
courts to settle disputes.7 As a consequence, numerous States immediately before
and after World War II adopted a restrictive principle of state immunity, which
preserved state immunity for most cases but allowed domestic courts to exercise
jurisdiction over suits against foreign States for claims arising out of their
commercial activities.
The United States adopted this restrictive principle by administrative action in
1952,8 and the State Department began advising courts on a case-by-case basis
whether a foreign sovereign should be entitled to immunity from the court’s
jurisdiction based on the nature of the claim. In 1978 Congress codified the principle
in the Foreign Sovereign Immunities Act (FSIA), so that the decision no longer
6 The Schooner Exchange, 11 U.S. (7 Cranch) 116, 137 (1812) (holding a French warship
to be immune from the jurisdiction of a U.S. court). In Berizzi Bros. Co. v. S.S. Pesaro, 271
U.S. 562 (1926), the Court held this principle of immunity to apply as well to State-owned
commercial ships.
7 AMERICAN LAW INSTITUTE, 1 RESTATEMENT OF THE LAW THIRD: THE FOREIGN RELATIONS
LAW OF THE UNITED STATES (1987) 391.
8 The Acting Legal Adviser of the Department of State, Jack B. Tate, stated in a letter to the
Acting Attorney General that in future cases the Department would follow the restrictive
principle. 26 Department of State Bulletin 984 (1952). Previously, when a case against a
foreign state arose, the State Department routinely asked the Department of Justice to inform
the court that the government favored the principle of absolute immunity; and the courts
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.

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depended on a determination by the State Department.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 types of claims
covered, the FSIA also provides that the commercial property of a foreign State in
the United States may be attached in satisfaction of a judgment against that State
regardless of whether the property was used for the activity on which the claim was
based.12 However, assets belonging to separate instrumentalities of a foreign
government are not generally available to satisfy claims against the foreign
government itself or against other agencies and instrumentalities in which that
government has an interest.
The Anti-Terrorism and Effective Death Penalty Act of 1996:
Civil Suits Against Terrorist States by Victims of Terrorism
In 1996 Congress added another exception to the FSIA to allow the federal and
state courts to exercise jurisdiction over foreign States and their agencies and
instrumentalities in civil suits by U.S. victims of terrorism.13 The Anti-Terrorism and
Effective Death Penalty Act of 1996 (AEDPA) amended the FSIA to provide that a
foreign State is not immune from the jurisdiction of the federal and state courts in
cases in which
money damages are sought against a foreign state for personal injury or death
that was caused by an act of torture, extrajudicial killing, aircraft sabotage,
hostage taking, or the provision of material support or resources . . . for such an
act if such act or provision of material support is engaged in by an official,
employee, or agent of such foreign state while acting within the scope of his or
her office, employment, or agency. . . .14
As predicates for such suits, the AEDPA amendment required that the foreign State
be designated as a State sponsor of terrorism by the State Department at the time the
act occurred or later so designated as a consequence of the act in question,15 that
9 28 U.S.C.A. §§ 1602 et seq.
10 Id. § 1604.
11 Id. § 1605.
12 Id. § 1610.
13 P.L. 104-132, Title II, § 221 (April 24, 1976); 110 Stat. 1241; 28 U.S.C.A. § 1605(a)(7).
14 Id.
15 The State Department identifies state sponsors of terrorism pursuant to § 6(j) of the
Export Administration Act of 1979 (50 App. U.S.C.A. § 2405(j)), § 620A of the Foreign
(continued...)

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either the claimant or the victim of the act of terrorism be a U.S. national,16 and that
the defendant State be given a prior opportunity to arbitrate the claim if the act on
which the claim is based occurred in that State. The act also provided that the
terrorist States and their agencies and instrumentalities would be liable for
compensatory damages, and the agencies and instrumentalities for punitive damages
as well.17 The act further allowed the commercial property of a foreign State in the
United States to be attached in satisfaction of a judgment against that State under this
amendment regardless of whether the property was involved in the act on which the
15 (...continued)
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,
Libya, North Korea, Sudan, and Syria. See 22 CFR §126.1(a) (2002). Iraq is no longer
subject to sanctions applicable to terrorist States. See infra note 104 and accompanying text.
16 As initially enacted, the statute provided that a terrorist State could not be sued if “either
the claimant or victim was not a U.S. national.” Concern that the provision could be read
to require that both the claimant and victim be U.S. nationals and that, which would have
excluded some of the families injured by the terrorist bombing of Pan Am 103 over
Lockerbie, Scotland, led Congress to amend the language in 1997 to bar such suits only if
“neither the claimant nor the victim was a national of the United States ....” See P.L. 105-
11, 105th Cong., 1st Sess. (April 25, 1997) and H.R. REP. NO. 105-48 (April 10, 1997).
17 28 U.S.C.A. § 1605 note.

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claim was based.18 After previously opposing similar proposals, the Clinton
Administration supported these changes in the FSIA.
After a court found that the waiver of sovereign immunity did not itself create
a cause of action, Congress passed the Civil Liability for Acts of State Sponsored
Terrorism (known as the “Flatow Amendment”)19 to clarify that a cause of action
18 Id. § 1610(b)(2). These amendments to the FSIA did not receive much debate or
explanation during the AEDPA’s consideration by the Senate and the House. Provisions
similar to what was enacted were included in both the Senate and the House measures as
introduced (S. 735, § 221 and H.R. 2703, § 803, respectively). But no committee report was
filed on either bill; and the only change that appears to have been made during floor debate
was a slight amendment by 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. H2166 (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.R. CONF. REP. NO. 104-518 (1996).
However, the House had adopted a similar measure during the second session of the
previous Congress (H.R. 934). The Department of State and the Department of Justice had
opposed the legislation at that time. The House Judiciary Committee explained the rationale
of the bill as follows:
The difficulty U.S. citizens have had in obtaining remedies for torture and other injuries
suffered abroad illustrates the need for remedial legislation. A foreign sovereign violates
international law if it practices torture, summary execution, or genocide. Yet under
current law a U.S. citizen who is tortured or killed abroad cannot sue the foreign
sovereign in U.S. courts, even when the foreign country wrongly refuses to hear the
citizen’s case. Therefore, in some instances a U.S. citizen who was tortured (or the family
of one who was murdered) will be without a remedy.
H.R. 934 stands for the principle that U.S. citizens who are grievously mistreated abroad
should have an effective remedy for damages in some tribunal, either in the country where
the mistreatment occurred or in the United States. To this end, the bill would add a new
exception to the FSIA that would allow suits against foreign sovereigns that subject U.S.
citizens to torture, extrajudicial killings or genocide and do not provide adequate remedies
for those harms.
H.R. REP. NO. 103-702, 103d Cong., 2d Sess. (Aug. 16, 1994), at 4.
19 “Civil Liability for Acts of State Sponsored Terrorism,” P.L. 104-208, Title I, §101(c)
[Title V, § 589] (Sept. 30, 1996), 110 Stat. 3009-172; codified at 28 U.S.C.A. § 1605 note,
provides:
(a) an official, employee, or agent of a foreign state designated as a state sponsor of
terrorism designated under section 6(j) of the Export Administration Act of 1979 (50
(continued...)

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existed against the agencies and instrumentalities of States whose sovereign
immunity was abrogated pursuant to the exception. The Flatow Amendment gives
parties injured or killed by a terrorist act covered by the FSIA exception, or their
legal representatives, a cause of action for suits against “an official, employee, or
agent of a foreign state designated as a state sponsor of terrorism” who commits the
terrorist act “while acting within the scope of his or her office, employment, or
agency ....” if a U.S. government official would also be liable for such actions. This
measure was adopted as part of the Omnibus Consolidated Appropriations Act for
Fiscal 1997 without apparent debate.20 The judge in the Flatow case held Iran liable
under a theory of respondeat superior, and awarded punitive damages. Many courts
followed the Flatow precedent, awarding both compensatory and punitive damages
against a foreign State despite the textual limitations in the FSIA exception.
However, the Court of Appeals for the District of Columbia held in 2004 that the
amendment does not provide a cause of action against terrorist States themselves,21
including governmental agencies that do not meet the definition of “agencies and
instrumentalities” under the FSIA.22
105th Congress — Enactment of Section 117 of the Treasury
and General Government Appropriations Act for Fiscal Year
1999
Several suits were quickly filed against Cuba and Iran pursuant to the new
provisions. Neither State recognized the jurisdiction of the U.S. courts in such suits,
however; and both refused to appear in court to mount a defense. The FSIA provides
that a court may enter a judgment by default in such a situation if “the claimant
establishes his claim or right to relief by evidence satisfactory to the court.”23 After
making the proper finding, several federal trial courts entered default judgments
19 (...continued)
App. U.S.C. 2405(j)) while acting within the scope of his or her office, employment, or
agency shall be liable to a United States national or the national’s legal representative for
personal injury or death caused by acts of that official, employee, or agent for which the
courts of the United States may maintain jurisdiction under section 1605(a)(7) of title 28,
United States Code, for money damages which may include economic damages, solatium,
pain, and suffering, and punitive damages if the acts were among those described in
section 1605(a)(7).
(b) Provisions related to statute of limitations and limitations on discovery that would
apply to an action brought under 28 U.S.C. 1605(f) and (g) shall also apply to actions
brought under this section. No action shall be maintained under this action if an official,
employee, or agent of the United States, while acting within the scope of his or her office,
employment, or agency would not be liable for such acts if carried out within the United
States.
20 The provision appears to have first arisen in the House-Senate conference committee on
H.R. 3610. See H.R. REP. NO. 104-863, 104th Cong., 2d Sess. (September 28, 1996).
21 Cicippio-Puleo v. Iran, 353 F.3d 1024 (D.C. Cir. 2004), followed in Acree v. Republic of
Iraq, 370 F.3d 41 (D.C. Cir. 2004), cert. denied __ U.S. __ (2005).
22 28 U.S.C. § 1603(b).
23 28 U.S.C.A. § 1608(e).

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holding Iran and Cuba to be culpable for particular acts of terrorism and awarding the
plaintiffs substantial amounts in compensatory and punitive damages.24
Neither Iran nor Cuba had any inclination to pay the damages that had been
assessed in these cases. As a consequence, the plaintiffs and their attorneys sought
to attach certain properties and other assets owned by the States in question that were
located within the jurisdiction of the United States to satisfy the judgments.
In the case of Flatow v. Islamic Republic of Iran, supra, plaintiffs sought 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 in 1979, and an award that had been rendered
by the Iran-U.S. Claims Tribunal in favor of Iran and against the U.S. government but
which had not yet been paid.25 The Clinton Administration opposed these efforts,
arguing that the diplomatic properties and the rental proceeds were essentially
sovereign non-commercial property that remained immune to attachment pursuant
to the FSIA. In addition, the Administration argued that it was obligated to protect
Iran’s diplomatic and consular properties under the Vienna Convention on
Diplomatic Relations26 and the Vienna Convention on Consular Relations27 and that
using such properties to satisfy court judgments would expose U.S. diplomatic and
consular properties around the world to similar treatment by other countries. The
Administration further argued that the funds set aside to pay an award to Iran by the
decision of the Claims Tribunal were still U.S. property and, as such, were immune
24 See Alejandre v. Republic of Cuba, 996 F.Supp. 1239 (S.D. Fla. 1997) ($50 million in
compensatory damages and $137.7 million in punitive damages awarded to the families of
three of the four persons who were killed when Cuban aircraft shot down two Brothers to
the Rescue planes in 1996); Flatow v. Islamic Republic of Iran, 999 F.Supp. 1 (D.D.C. 1998)
($27 million in compensatory damages and $225 million in punitive damages awarded to
the father of Alisa Flatow, who was killed in 1995 by a car bombing in the Gaza Strip by
Islamic Jihad, an organization which the court found to be funded by Iran); and Cicippio v.
Islamic Republic of Iran, 18 F.Supp. 2d 62 (D.D.C. 1998) ($65 million awarded in
compensatory damages to three persons (and two of their spouses) who were kidnaped, held
hostage, and tortured in Lebanon in the mid-1980s by Hezbollah, an organization which the
court found to be funded by Iran).
25 The Iran-U.S. Claims Tribunal at the Hague was created pursuant to provisions in the
Algiers Accords of 1981 that led to the release of the U.S. hostages. Claims by U.S.
nationals against Iran that were outstanding at the time of the release of the hostages as well
as claims by Iranian nationals against the United States and contractual claims between the
two governments were made subject to case-by-case arbitration by the Tribunal. Most
Iranian assets held by U.S. persons or entities at that time were transferred to the Federal
Reserve Bank of New York and were either returned to Iran or were forwarded to an escrow
account for use in satisfying judgments rendered against Iran by this Tribunal. See the
various agreements between the U.S. and Iran relating to the release of the hostages (known
as the Algiers Accords), 20 ILM 223-240 (Jan. 1981); Executive Orders 12276-12284, 46
Fed. Reg. 7913 (Jan. 19, 1981); and 31 CFR Part 535.
26 23 UST 3227 (1972).
27 21 UST 77 (1969).

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from attachment due to U.S. sovereign immunity. The court agreed and quashed the
writs of attachment.28
Efforts were also mounted in both the Flatow case and in Alejandre v. Republic
of Cuba, supra (the Brothers to the Rescue case), to attach assets of Iran and Cuba
in the United States that had been blocked by the U.S. government.29 Iran’s assets
in the United States had been frozen under the authority of the International
Emergency Economic Powers Act (IEEPA)30 at the time of the hostage crisis in
1979.31 However, under the Algiers Accords reached to resolve the crisis, most of
those assets had either been returned to Iran or placed in an escrow account in
England subject to the decisions of the Iran-U.S. Claims Tribunal, an arbitral body
set up by the Algiers Accords to resolve remaining disputes between the two
countries or their nationals. Cuba’s assets in the United States, in turn, had been
blocked since the early 1960s under the authority of the Trading with the Enemy Act
(TWEA).32 The Clinton Administration opposed the efforts to allow access to these
blocked assets as well. It argued that such assets are useful, and historically have
been used, as leverage in working out foreign policy disputes with other countries (as
in the Iranian hostage situation) and that they will be useful in negotiating the
possible future re-establishment of normal relations with Iran and Cuba. The
Administration also contended that numerous other U.S. nationals had legitimate
(and prior) claims against these countries that would be frustrated if the assets were
used solely to compensate the recent victims of terrorism.33 The Administration also
28 Flatow v. Islamic Republic of Iran, 74 F.Supp.2d 18 (D.D.C. 1999) (quashing a writ of
attachment for U.S. Treasury funds) and Flatow v. Islamic Republic of Iran, 76 F.Supp.2d
16 (D.D.C. 1999) (quashing writs of attachment for Iran’s embassy and chancery and two
bank accounts holding proceeds from the rental of these properties). For a more detailed
description of these proceedings, see Sean Murphy, Satisfaction of U.S. Judgments Against
State Sponsors of Terrorism, 94 AM. J. INT’L L. 117 (2000).
29 See Appendix II for a list of the amounts of the assets of each State on the terrorist list that
are blocked in the U.S.
30 50 U.S.C.A. §§ 1701 et seq. IEEPA gives the President substantial authority to regulate
economic transactions with foreign countries and nationals to deal with “any unusual and
extraordinary threat, which has its source in whole or substantial part outside the United
States, to the national security, foreign policy, or economy of the United States, if the
President declares a national emergency with respect to such a threat.”
31 Executive Order 12170, 44 Fed. Reg. 65729 (Nov. 14, 1979).
32 50 U.S.C.A. App. § 5. TWEA, originally enacted in 1917, gives the President powers
similar to those of IEEPA to regulate economic transactions with foreign countries and
nationals in time of war. At the time it was used to freeze Cuba’s assets in 1962, it also
applied in times of national emergency; but that authority was eliminated when IEEPA was
enacted in 1977. Sanctions previously imposed under that authority, however, were
grandfathered. See 50 U.S.C.A. § 1708.
33 In the 1960s, for instance, Congress directed the Foreign Claims Settlement Commission
to determine the number and amount of legitimate claims against Cuba resulting from Fidel
Castro’s takeover of the government and subsequent expropriation of property from 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
(continued...)

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argued that using frozen assets to compensate victims of State-sponsored terrorism
exposes the United States to the risk of reciprocal actions against U.S. assets by other
States.34
In an attempt to override these objections, the 105th Congress in 1998 further
amended the FSIA to provide that any property of a terrorist State frozen pursuant to
TWEA or IEEPA and any diplomatic property of such a State could be subject to
execution or attachment in aid of a judgment against that State under the terrorism
State exception to the FSIA.35 Section 117 of the Treasury Department
33 (...continued)
$1,851,057,358 (in 1972 valuations) to be valid. Those claims remain pending.
In the Iran Claims Settlement Act of 1985, Congress directed the Foreign Claims Settlement
Commission to determine the validity and amount of small claims against Iran (those for less
than $250,000) pending at the time of the hostage crisis and to distribute to such claimants
the proceeds of any en bloc settlement concluded by the U.S. and Iran. See P.L. 99-93,
Title V, §§ 505-505 (Aug. 16, 1985); 99 Stat. 437; 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 United
States by Iran and Iranian nationals) remained subject to case-by-case arbitration by the Iran-
U.S. Claims Tribunal.
34 Both Cuba and Iran have reportedly enacted statutes allowing suits against the United
States for acts of terrorism or “interference,” and substantial judgments against the U.S.
have been handed down pursuant to those statutes. See Law Library of Congress, Suits
Against Terrorist States: Cuba (Feb. 2002) (Rept No. 2002-11904); Law Library of
Congress, Iran: Suits Against Americans for Acts of Terrorism (July 2003) (Rept. No. 2003-
14887); Tehran Court Rules Against U.S., CHRISTIAN SCIENCE MONITOR, Feb. 3, 2003, at
6; Sean Murphy, Contemporary Practice of the United States Relating to International Law:
U.S. Judgments Against Terrorist States, 95 AM. J. INT’L L 134 (2001); Richard M. Mosk,
Picking our Own Pocket, NAT’L L.J., Sep. 17, 2001, at A20; and Iran Charges Court to
Hear Cases Against Foreign Countries, Notably US, AGENCE FRANCE PRESSE, July 10,
2001.
35 P.L. 105-277, Div. A, Title I, § 117 (Oct. 21, 1998), 112 Stat. 2681-491, codified at 28
U.S.C.A. § 1610(f)(1)(A). This section was added to the FSIA by § 117 of the Treasury and
General Government Appropriations Act for Fiscal Year 1999, as contained in the Omnibus
Consolidated and Emergency Supplemental Appropriations Act for Fiscal Year 1999, P.L.
105-277 (1998), 112 Stat. 2681. The provision, without the waiver authority, had originated
in the Senate version of the Treasury appropriations bill; but the Senate Appropriations
Committee had offered no explanation. See S. 2312 and S. REP. NO. 105-251(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. H5710 (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.R. CONF. REP. NO.
105-560 (1998), and H.R. CONF. REP. NO. 105-789 (1998). H.R. 4104 was not enacted but
its provisions were folded into the omnibus act. Both immediately prior and after the
enactment of the omnibus act, several members of the House and Senate expressed the view
that the waiver authority of § 117 should be read to apply only to the requirement that the
State and Justice Departments assist judgment creditors in locating the assets of terrorist
(continued...)

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Appropriations Act for Fiscal Year 1999 also mandated that the State and Treasury
Departments “shall fully, promptly, and effectively assist” any judgment creditor or
court issuing a judgment against a terrorist State “in identifying, locating, and
executing against the property of that foreign state. . . .”36 Because of the
Administration’s continuing objections, however, section 117 also gave the President
authority to “waive the requirements of this section in the interest of national
security.” On October 21, 1998, President Clinton signed the legislation into law and
immediately executed the waiver.37 The President subsequently explained his
reasons in the signing statement for the bill as follows:
I am concerned about section 117 of the Treasury/General Government
appropriations section of the act, which amends the Foreign Sovereign
Immunities Act. If this section were to result in attachment and execution
against foreign embassy properties, it would encroach on my authority under the
Constitution to “receive Ambassadors and other public ministers.” Moreover,
if applied to foreign diplomatic or consular property, section 117 would place the
United States in breach of its international treaty obligations. It would put at risk
the protection we enjoy at every embassy and consulate throughout the world by
eroding the principle that diplomatic property must be protected regardless of
bilateral relations. Absent my authority to waive section 117’s attachment
provision, it would also effectively eliminate use of blocked assets of terrorist
States in the national security interests of the United States, including denying
an important source of leverage. In addition, section 117 could seriously impair
our ability to enter into global claims settlements that are fair to all U.S.
claimants, and could result in U.S. taxpayer liability in the event of a contrary
claims tribunal judgment. To the extent possible, I shall construe section 117 in
35 (...continued)
States. See, e.g., 144 CONG. REC. S12696, 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. H11647 (daily
ed. Oct. 29, 1998).
36 28 U.S.C.A. § 1610(f)(1)(A).
37 Presidential Determination 99-1 (Oct. 21, 1998), reprinted in 34 WEEKLY COMP. PRES.
DOC. 2088 (Oct. 26, 1998). On the day the President exercised the waiver authority, the
White House Office of the Press Secretary issued the following explanatory statement:
...[T]he struggle to defeat terrorism would be weakened, not strengthened, by
putting into effect a provision of the Omnibus Appropriations Act for FY 1999.
It would permit individuals who win court judgments against nations on the State
Department’s terrorist list to attach embassies and certain other properties of
foreign nations, despite U.S. laws and treaty obligations barring such attachment.
The new law allows the President to waive the provision in the national security
interest of the United States. President Clinton has signed the bill and, in the
interests of protecting America’s security, has exercised the waiver authority.
If the U.S. permitted attachment of diplomatic properties, then other countries
could retaliate, placing our embassies and citizens overseas at grave risk. Our
ability to use foreign properties as leverage in foreign policy disputes would also
be undermined.
Statement by the Press Secretary (October 21, 1998).

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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.38
106th Congress — Enactment of Section 2002 of the Victims
of Trafficking and Violence Protection Act of 2000
President Clinton’s exercise of the waiver authority conferred by section 117
blocked those with default judgments against Cuba and Iran from attaching the
diplomatic property and frozen assets of those States to satisfy the judgments.39 In
response, various Members during the 106th Congress pressed for additional
amendments to the FSIA that would override the President’s waiver of section 117
and allow the judgments against terrorist States to be satisfied out of the States’
frozen assets. Congress held hearings to consider the Justice for Victims of
Terrorism Act,40 which was adopted as revised by the House and reported in the
Senate. The Clinton Administration opposed the measure, and it was not enacted
into law. Instead, negotiations with the Administration led by Senators Lautenberg
and Mack resulted in the enactment of section 2002 of the Victims of Trafficking and
Violence Against Women Act of 2000,41 which created an alternative compensation
system for some judgment holders. It mandated the payment of a portion of the
damages awarded in the Alejandre judgment out of Cuba’s frozen assets and a
portion of ten designated judgments against Iran out of U.S. appropriated funds “not
otherwise obligated.” In the meantime, additional and substantial default judgments
38 Statement by President William J. Clinton Upon Signing H.R. 4328, 34 WEEKLY COMP.
PRES. DOC. 2108 (Nov. 2, 1998), reprinted in 1998 U.S.C.C.A.N. 576.
39 The parties in both the Alejandre and the Flatow suits sought to persuade the courts that
the President’s waiver authority did not extend to the diplomatic properties and blocked
assets of Cuba and Iran, but those efforts ultimately proved unavailing. See Alejandre v.
Republic of Cuba, 42 F.Supp.2d 1317 (S.D. Fla. 1999) (Presidential waiver authority held
to apply only to the requirement that the Departments of State and Treasury assist judgment
creditors and not to the provision subjecting blocked assets, including diplomatic property,
to attachment). This decision was eventually reversed on other grounds by the U.S. Court
of Appeals for the Eleventh Circuit — Alejandre v. Telefonica Larga Distancia de Puerto
Rico, 183 F.3d 1277 (11th Cir. 1999). A decision by a federal district court in the Flatow
litigation construed the President’s waiver authority broadly. See Flatow v. Islamic
Republic of Iran, 76 F.Supp.2d 16 (D.D.C. 1999).
40 See 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).
41 P.L. 106-386, § 2002 (Oct. 28, 2000), 114 Stat. 1541.

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continued to be handed down in other suits against Iran42; and a number of new suits
against terrorist States were filed.43
Like § 117 of the Fiscal 1999 Appropriations Act for the Treasury Department,
the Justice for Victims of Terrorism Act would have amended the FSIA to allow the
attachment of all of the assets of a terrorist State, including its blocked assets, its
diplomatic and consular properties, and moneys due from or payable by the United
States. To that end it would have repealed the waiver authority granted in § 117 and
allowed the President to waive the authorization to attach assets only with respect to
the premises of a foreign diplomatic or consular mission.
In hearings on the measure, the Clinton Administration was repeatedly criticized
for its opposition to the efforts of victims of terrorism to collect on the judgments
they had obtained. Senator Mack, cosponsor of the Justice for Victims of Terrorism
Act in the Senate, stated:
....Mr. Chairman, the President made promises to the families, encouraged them
to seek justice, calling their efforts brave and courageous. He pledged to fight
terrorism and signed several laws supporting the rights of victims to take
terrorists to court. But ultimately, he has chosen to protect terrorist assets over
the rights of American citizens seeking justice. This is simply not what America
stands for. Victims’ families must know that the U.S. Government stands with
them in actions, as well as words.44
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.45
The sister of one of the Brothers to the Rescue pilots shot down by Cuba stated:
42 See Anderson v. Islamic Republic of Iran, 90 F.Supp.2d 107 (D.D.C. March 24, 2000)
($41.2 million in compensatory damages and $300 million in punitive damages awarded to
a journalist who was kidnaped and held in deplorable conditions for seven years by
Hezbollah, which the court found to be funded by Iran) and Eisenfeld v. Islamic Republic
of Iran, 172 F.Supp.2d 1 (D.D.C. July 11, 2000) ($24.7 million in compensatory damages
and $300 million in punitive damages awarded to the families of two young Americans who
were killed when a bomb placed by Hamas operatives exploded on the bus on which they
were riding in Israel).
43 See Murphy, supra note34 .
44 Terrorism: Victims’ Access to Terrorist Assets — Hearing Before the Senate Committee
on the Judiciary, 106th Cong., 1st Sess. (Oct. 27, 1999) (S. 106-941) (statement of Sen.
Mack).
45 Id. (statement of Stephen Flatow).

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No words can possibly explain our shock when we went to court and found U.S.
attorneys sitting down at the same table as Cuba’s attorneys. How can you
explain to a mother who has lost her son, to a wife who has lost her husband, to
a daughter who has lost her father, that their own government is taking the
murderers’s side? How can one understand the claim by the U.S. that the frozen
funds are needed to promote civil society and democracy in Cuba, and then have
our country not take into account basic human rights and justice? What message
are we, the United States, sending the Cuban people and its government when we
allow a violation of the right to life to remain unpunished? The Clinton
Administration has shut its doors to us.46
Representative McCollum, sponsor of the House bill, said:
Today, the subcommittee seeks to answer why the President said one thing and
his administration insists upon doing another. It is my hope that our panel of
witnesses will help us understand why the President and administration officials
encourage victims to take terrorists to court under the 1996 Anti-Terrorism Act
yet now, in contradiction to the President’s words, the administration refuses to
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.47
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.48
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
46 Id. (statement of Maggie Alejandre Khuly).
47 Justice for Victims of Terrorism Act: Hearing Before the Subcommittee on Immigration
and Claims of the House Committee on the Judiciary, 106th Cong., 2d Sess. (April 13, 2000)
(statement of Rep. McCollum). The transcript of the hearing is available on the
subcommittee’s website.
48 Id. (statement submitted by Treasury Deputy Secretary Eizenstat, Defense Under
Secretary for Policy Slocombe, and State Under Secretary Pickering). Deputy Secretary
Eizenstat had given similar testimony in the Senate hearing as well.

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blocked property, thereby depleting the pool of blocked assets and depriving the
U.S. of a source of leverage in ongoing and office (sic) sanctions programs, such
as was used to gain the release of our citizens held hostage in Iran in 1981 or in
gaining information about POW’s and MIA’s as part of the normalization
process with Vietnam.
Second, it would cause the U.S. to violate its international treaty obligations
to protect and respect the immunity of diplomatic and consular property of other
nations, and would put our own diplomatic and consular property around the
world at risk of copycat attachment, with all that such implies for the ability of
the United States to conduct diplomatic and consular relations and protect
personnel and facilities.
Third, it would create a race to the courthouse benefiting one small, though
deserving, group of Americans over a far larger group of deserving Americans.
For example, in the case of Cuba, many Americans have waited decades to be
compensated for both the loss of property and the loss of the lives of their loved
ones. This would leave no assets for their claims and others that may follow.
Even with regard to current judgment holders, it would result in their competing
for the same limited pool of assets, which would be exhausted very quickly and
might not be sufficient to satisfy all judgments.
Fourth, it would breach the long-standing principle that the United States
Government has sovereign immunity from attachment, thereby preventing the
U.S. Government from making good on its debts and international obligations
and potentially causing the U.S. taxpayer to incur substantial financial liability,
rather than achieving the stated goal of forcing Iran to bear the burden of paying
these judgments. The Congressional Budget Office (“CBO”) has recognized this
by scoring the legislation at $420 million, the bulk of which is associated with
the Foreign Military Sales (“FMS”) Trust Fund. Such a waiver of sovereign
immunity would expose the Trust Fund to writs of attachment, which would
inject an unprecedented and major element of uncertainty and unreliability into
the FMS program by creating an exception to the processes and principles under
which the program operates.
Fifth, it would direct courts to ignore the separate legal status of States and
their agencies and instrumentalities, overturning Supreme Court precedent and
basic principles of corporate law and international practice by making state
majority-owned corporations liable for the debts of the state and establishing a
dangerous precedent for government owned enterprises like the U.S. Overseas
Private Investment Corporation (“OPIC”).
Notwithstanding these contentions, the Senate and House Judiciary Committees
reported, and the House passed, a slightly amended version of the Justice for Victims
of Terrorism Act. The bill in the Senate was reported without a committee report.
The House Judiciary Committee stated in its report:
The President’s continued use of his waiver power has frustrated the legitimate
rights of victims of terrorism, and thus this legislation is required. While still
allowing the President to block the attachment of embassies and necessary
operating assets, H.R. 3485 would amend the law to specifically deny blockage
of attachment of proceeds from any property which has been used for any non-

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CRS-16
diplomatic purpose or proceeds from any asset which is sold or transferred for
value to a third party.49
The House passed the bill by voice vote under a suspension of the rules.50
The Clinton Administration persisted in opposing the bill, however; and that led
to extensive negotiations between the Administration and interested Members of
Congress. Ultimately, these negotiations led to the addition to an unrelated bill
pending in conference of a limited alternative compensation scheme, which was
signed into law by President Clinton on October 28, 2000.51 Section 2002 of the
Victims of Trafficking and Violence Protection Act of 2000 directed the Secretary
of the Treasury to pay portions of any judgments against Cuba and Iran that had been
handed down by July 20, 2002, or that would be handed down in any suits that had
been filed on one of five named dates on or before July 27, 2000. The judgments that
had been handed down by July 20, 2000, were the Alejandre, Flatow, Cicippio,
Anderson and Eisenfeld cases.52 Six suits had been filed against Iran on the five dates
specified in the statute — February 17, 1999; June 7, 1999; January 28, 2000; March
49 H.R. REP. NO. 106-733, at 4 (2000). As initially reported, H.R. 3485 also amended the
“PayGo” provision of the Balanced Budget and Emergency Deficit Control Act of 1985 (2
U.S.C.A. § 902(d)) to bar the Office of Management and Budget from estimating any
changes in direct spending outlays and receipts that would result from enactment of the bill.
Because this provision apparently had not been discussed in committee, the committee
subsequently deleted it before the bill went to the floor. See H.R. REP. NO. 106-733 (Part
2)( 2000).
50 145 CONG. REC. H6938 (daily ed. July 25, 2000).
51 P.L. 106-386, § 2002(f)(1) (Oct. 28, 2000); 114 Stat. 1543. The statute primarily
addresses the issue of international trafficking in women and children.
52 See supra, note 24.

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15, 2000; and July 27, 2000 — and all have subsequently been decided.53 (See
Appendix I for a full list of the cases.)
Section 2002 gave the claimants in these eleven suits three options:
! First, they could obtain from the Treasury Department 110 percent
of the compensatory damages awarded in their judgments, plus
interest, if they agreed to relinquish all rights to collect further
compensatory and punitive damages;
53 These six cases are as follows:
! Higgins v. Islamic Republic of Iran, No. 1:99CV00377 (D.D.C. 2000)
($55.4 million in compensatory damages and $300 million in punitive
damages awarded to the wife of a Marine colonel who was kidnaped and
subsequently hanged by Hezbollah while serving as part of the United
Nations Truce Supervision Organization in Lebanon);
! Sutherland v. Islamic Republic of Iran, 151 F.Supp.2d 27 (D.D.C. 2001)
($46.5 million in compensatory damages and $300 million in punitive
damages awarded to a professor (and his family) who was kidnaped while
teaching at the American University in Beirut and subsequently
imprisoned in “horrific and inhumane conditions” for six and a half years
by Hezbollah);
! Jenco v. Islamic Republic of Iran, 154 F.Supp.2d 27 (D.D.C. 2001) ($14.6
million in compensatory damages and $300 million in punitive damages
awarded to the estate and family of a priest who was kidnaped while
working in Beirut as the Director of Catholic Relief Services and
imprisoned in terrible conditions for a year and a half by Hezbollah);
! Polhill v. Islamic Republic of Iran, 2001 U.S.Dist.LEXIS 15322 (D.D.C.
2001) ($31.5 million in compensatory damages and $300 million in
punitive damages awarded to the family of an American citizen who was
kidnaped while working as a professor in Beirut and held in “deplorable”
conditions for more than three years by Hezbollah);
! Wagner v. Islamic Republic of Iran, 172 F.Supp.2d 128 (D.D.C. 2001)
($16.3 million in compensatory damages and $300 million in punitive
damages awarded to the estate and family of a petty officer in the U.S.
Navy who was killed by a car bomb driven by a Hezbollah suicide
bomber); and
! Stethem v. Islamic Republic of Iran, 201 F.Supp.2d 78 (D.D.C. 2002)
($21.2 million in compensatory damages awarded to the family of a
serviceman who was tortured and killed during the hijacking of a TWA
plane in 1985, $8 million awarded in compensatory damages to six
servicemen and their families for their torture and detention during and
after the same hijacking, and $300 million in punitive damages awarded
against Iran for its recruitment, training, and financing of Hezbollah, the
terrorist group the court found to be responsible for the hijacking).
It might be noted that in Stethem only the award to the Stethem family was originally
covered by § 2002 of the Victims of Trafficking Act; the second suit filed by the six
servicemen and their families — Carlson v. Islamic Republic of Iran — which was
consolidated with Stethem was not covered by § 2002 but was later added to the list of
compensable suits by P.L. 107-228 (Sept. 30, 2002).

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! Second, they could receive 100 percent of the compensatory
damages awarded in their judgments, plus interest, if they agreed to
relinquish (a) all rights to further compensatory damages awarded by
U.S. courts and (b) all rights to attach certain categories of property
in satisfaction of their judgments for punitive damages, including
Iran’s diplomatic and consular property as well as property that is at
issue in claims against the United States before an international
tribunal. The property in the latter category included Iran’s Foreign
Military Sales (FMS) trust fund, which remains at issue in a case
before the Iran-U.S. Claims Tribunal.
! Third, claimants could decline to obtain any payments from the
Treasury Department and continue to pursue satisfaction of their
judgments as best they could.54
To pay a portion of the judgment against Cuba in the Alejandre case, the statute
directed that the President vest and liquidate Cuban government properties that have
been frozen under TWEA. For the ten designated cases against Iran, § 2002 provided
for payment out of U.S. funds, as follows:
! The statute directed the Secretary of the Treasury to use any
proceeds that have accrued from the rental of Iranian diplomatic and
consular property in the United States plus appropriated funds not
otherwise obligated (meaning U.S. funds) up to the amount
contained in Iran’s Foreign Military Sales account. (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, or is otherwise in
dispute. 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 stated that the United
States would be subrogated to the rights of the persons paid
(meaning that the United States would be entitled to pursue their
right to payment of the damage awards from Iran).
! Section 2002 further provided that the United States “shall pursue”
these subrogated rights as claims or offsets to any claims or awards
that Iran may have against the United States; and it bars the payment
or release of any funds to Iran from frozen assets or from the Foreign
Military Sales Fund until these subrogated claims have been
satisfied.
Section 2002 further expressed the “sense of the Congress” that relations
between the United States and Iran should not be normalized until these subrogated
claims have been “dealt with to the satisfaction of the United States.” It also
54 See Murphy, supra note 34, at 138.

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“reaffirmed the President’s statutory authority to manage and ... vest foreign assets
located in the United States for the purpose[] ... of assisting and, where appropriate,
making payments to victims of terrorism.” In addition, § 2002 modified one
provision of § 117 of the Treasury Department appropriations act for fiscal 1999 by
changing the mandate that the State and Treasury Departments “shall” assist those
who have obtained judgments against terrorist States in locating the assets of those
States to the more permissive “should make every effort” to assist such judgment
creditors.
Finally, § 2002 modified the waiver authority that the President had been given
in § 117. It repealed that subsection and instead provided that “[t]he President may
waive any provision of paragraph (1) in the interest of national security.” (Paragraph
(1) was the subsection that allowed the frozen assets of a terrorist State, including its
diplomatic property, to be attached in satisfaction of a judgment against that State.)55
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.”56 Thus, except to the extent § 2002 allowed the blocked
assets of Cuba to be used to satisfy a portion of the Alejandre judgment, it did not
eliminate the bar to the attachment of the diplomatic property and the blocked assets
of terrorist States to satisfy judgments against those States.57
55 Paragraph (1) is codified at 28 U.S.C.A. § 1610(f)(1) and the modified waiver authority
is codified at 28 U.S.C.A. § 1610(f)(3).
56 Presidential Determination No. 2001-03 (Oct. 28, 2000); 65 Fed. Reg. 66483.
57 While the statute itself made no express mention of how the waiver was meant to be
executed, the report of the House-Senate conference committee on the “Victims of
Trafficking” bill expressed an intent that the waiver authority of § 2002 be exercised only
on a case-by-case basis, as follows:
Subsection 1(f) of this bill repeals the waiver authority granted in Section 117 of
the Treasury and General Government Appropriations Act for fiscal year 1999,
replacing it with a clearer but narrower waiver authority in the underlying statute.
The Committee hopes clarity in the legislative history and intent of subsection
1(f), in the context of the section as a whole, will ensure appropriate application
of the new waiver authority.
This is a key issue for American victims of state-sponsored terrorism who have
sued or who will in the future sue the responsible terrorism-list state, as they are
entitled to do under the Anti-Terrorism Act of 1996. Victims who already hold
U.S. court judgements, and a few whose related cases will soon be decided, will
receive their compensatory damages as a result of this legislation. The
Committee intends that this legislation will similarly help other pending and
future Antiterrorism Act plaintiffs as and when U.S. courts issue judgements
against the foreign state sponsors of specific terrorist acts ....
In replacing the waiver, the conferees accept that the President should have the
authority to waive the court’s authority to attach blocked assets. But to
(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
application for payment by those in the eleven designated cases who might want to
obtain the partial payment of their judgments afforded by § 2002.58 All of the
claimants in the designated suits chose to obtain such compensation.
In early 2001 the federal government liquidated $96.7 million of the $193.5
million of Cuban assets that had previously been blocked and paid that amount to the
claimants in the Alejandre suit and their attorneys.59 The claimants in the ten
designated cases against Iran variously chose to receive either 100 percent or 110
percent of their compensatory damages awards; and they ultimately received more
57 (...continued)
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.R. CONF. REP. NO. 106-939, at 117-118 (2000).
58 65 Fed. Reg. 70382 (Nov. 22, 2000) and 65 Fed. Reg. 78533 (Dec. 15, 2000).
59 The original judgment had been rendered in Alejandre v. Republic of Cuba, 996 F.Supp.
1239 (S.D. Fla. 1997).

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CRS-21
than $380 million in compensation out of U.S. funds.60 (See Appendix I for a listing
of the cases, the payments made, and the option chosen.)
107th Congress — Additional Cases Added to § 2002 and
Attachment of Assets Allowed in Other Cases
Subsequent to the enactment of § 2002 of the Victims of Trafficking statute in
late 2000, the courts handed down additional default judgments in suits against
terrorist States under the FSIA exception. As noted above, six of these additional
judgments were covered by the compensation scheme set forth in § 2002 because the
suits had been filed on one of the five dates on or prior to July 27, 2000 specified in
the statute.61 But other default judgments,62 as well as additional cases that were filed
60 This information has been provided by the Office of Foreign Assets Control and is current
as of July 29, 2003.
61 See the six cases summarized supra, note 53.
62 Other default judgments against Iran that were handed down after the enactment of
§ 2002 on October 28, 2000, and prior to the adjournment of the 107th Congress in late 2002
but that were not covered by § 2002 included:
! Elahi v. Islamic Republic of Iran, 124 F.Supp.2d 97 (D.D.C. 2000) ($11.7
million in compensatory damages and $300 million in punitive damages
awarded to the administrator of the estate of an Iranian dissident and
naturalized U.S. citizen killed by gunshot in Paris by the Iranian Ministry
of Information and Security);
! Mousa v. Islamic Republic of Iran, 238 F.Supp.2d 1 (D.D.C. 2001) ($12
million in compensatory damages and $120 million in punitive damages
awarded to woman who suffered severe and long-lasting injuries from a
suicide bombing of a bus in Jerusalem carried out at the instigation of
Hamas, an entity the court found to be supported by Iran);
! Hegna v. Islamic Republic of Iran, No. 1:00CV00716 (D.D.C. 2002) ($42
million in damages awarded to the family of a U.S. Agency for
International Development officer who was killed by Hezbollah militants
during a hijacking of a Kuwaiti Airlines flight in 1984);
! Weinstein v. Islamic Republic of Iran, 184 F.Supp.2d 13 (D.D.C. 2002)
($33 million in compensatory damages and $150 million in punitive
damages awarded to the family and estate of a person who was severely
injured in a bus bombing in Jerusalem carried out by Hamas, which the
court found to be funded by Iran, and who subsequently died from those
injuries);
! Cronin v. Islamic Republic of Iran, 238 F.Supp.2d 222 (D.D.C. 2002)
($1.2 million in compensatory damages and $300 million in punitive
damages awarded to an individual who, while he was a graduate student
in Lebanon in 1984, was kidnaped and tortured for four days by Hezbollah
and two other paramilitary groups which the court found to have been
organized, funded, trained, and controlled by Iran); and
! Surette v. Islamic Republic of Iran, 231 F.Supp.2d 260 (D.D.C. 2002)
($18.96 million in compensatory damages and $300 million in punitive
damages awarded to the widow and sister of CIA agent William Buckley
who was kidnaped in Beirut and tortured for 14 months by the Islamic
(continued...)

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CRS-22
and remained pending, were not covered by § 2002. As a consequence, pressure for
finding some means to compensate the additional claimants continued to grow.63 The
107th Congress enacted several pieces of legislation, as follows:
(1) Directive to develop a comprehensive compensation scheme
(P.L. 107-77). In the “Act Making Appropriations for the Departments of
Commerce, Justice, and State, the Judiciary, and Related Agencies for the Fiscal
Year Ending September 30, 2002,”64 Congress in November, 2001, directed President
Bush to submit, no later than the time he submitted the proposed budget for fiscal
2003,
a legislative proposal to establish a comprehensive program to ensure fair,
equitable, and prompt compensation for all United States victims of international
terrorism (or relatives of deceased United States victims of international
terrorism) that occurred or occurs on or after November 1, 1979.65
That directive had not been part of either the House or Senate-passed versions of
H.R. 2500. But it was added in lieu of an amendment sponsored by Senator Hollings
that the Senate had adopted, without debate, which would have authorized partial
payment of the judgments in five additional cases (including the Roeder case,
62 (...continued)
Jihad, an entity the court found to be organized and funded by Iran, and
who ultimately died while in captivity).
In addition, two default judgments were handed down against Iraq — Daliberti v. Republic
of Iraq, 146 F.Supp.2d 19 (D.D.C. 2001) ($12.8 million in compensatory damages awarded
to four U.S. citizens who were detained and tortured for varying periods of time between
1992 and 1995 by Iraq and $6 million awarded to their spouses) and Hill v. Republic of Iraq,
175 F.Supp.2d 36 (D.D.C. 2001) ($9 million in compensatory damages against Iraq and
Saddam Hussein and $300 million in punitive damages against Saddam Hussein personally
awarded to twelve U.S. citizens who were held hostage by Iraq after its invasion of Kuwait
in 1990). In the latter case, the court subsequently found that an additional 168 plaintiffs
had established their right to relief for being held hostage by Iraq; and the court awarded
them approximately $85 million in compensatory damages. See Hill v. Republic of Iraq,
2003 U.S. Dist. LEXIS 3725 (D.D.C. 2003).
63 See Shawn Zeller, Hoping to Thaw Those Frozen Funds, 33 NAT’L J. 3368-69 (Oct. 27,
2001).
64 P.L. 107-77 (November 28, 2001). The text of the act and the conference report (H.R.
CONF. REP. NO. 107-278) is printed at 147 CONG. REC. H7986-H8038 (daily ed. Nov. 9,
2001).
65 Id. § 626, reprinted at 147 CONG. REC. H8001.

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CRS-23
infra).66 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.67
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.”68 No such plan was put forward
in the second session of the 107th Congress.
(2) Coverage of additional cases under § 2002 (P.L. 107-228). On
September 30, 2002, President Bush signed into law a measure — the Foreign
Relations Authorization Act for Fiscal 2003 — that added cases filed against Iran on
June 6, 2000, and January 16, 2002 to those that can be compensated under § 2002.69
The first case — Carlson v. The Islamic Republic of Iran70 — was by six Navy
divers who were on board a TWA airliner that was hijacked in 1985 and who were
subsequently imprisoned and tortured by Lebanese Shiite terrorists. That suit had
been filed separately from a suit by the family of Robert Stethem, who was murdered
in the course of the same hijacking — Stethem v. The Islamic Republic of Iran.71
But the two suits had been consolidated for trial, and the court decided the cases
together.72 Stethem’s suit had been included as one of the cases that was
66 See 147 CONG. REC. S9365 (daily ed. Sept. 13, 2001). The Hollings amendment
generally followed the scheme of § 2002 by specifying the filing dates of four of the five
additional cases rather than identifying them by name. The specified dates were May 17,
1996; May 7, 1997; October 22, 1999; and December 15, 1999. It identified the Roeder case
only by its filing number in the federal district court in the District of Columbia — Case
Number 1:00CV03110 (ESG). For the text of the amendment, see 147 CONG. REC. S9398-
9400 (daily ed. Sept. 13, 2001).
67 H.R. REP. NO. 107-278 (2001), reprinted at 147 CONG. REC. H 8033 (daily ed. Nov. 9,
2001).
68 Office of the White House Press Secretary, “President Signs Commerce Appropriations
Bill: Statement by the President on H.R. 2500” (Nov. 28, 2001), available on the White
House website.
69 P.L. 107-228, § 686 (September 30, 2002). Various members of Congress had previously
introduced bills to add additional suits to the list compensable under § 2002. See, e.g., H.R.
4647.
70 Civil Action No. 00-1309 (D.D.C., filed June 6, 2000).
71 Civil Action No. 00-0159 (D.D.C. filed January 28, 2000).
72 Stethem v. The Islamic Republic of Iran and Carlson v. The Islamic Republic of Iran, 201
F.Supp. 2d 78 (D.D.C. 2002).

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CRS-24
compensable under § 2002 as originally enacted, but the companion suit by the Navy
divers had not been included. The amendment enacted into law as part of the foreign
relations authorization bill had been adopted by the House on May 16, 2001, by voice
vote to rectify what its sponsor termed this “inadvertent error.”73 The second case,
specified by its filing date of January 16, 2002, was added to the measure by the
conference committee and has been identified by the Office of Foreign Assets
Control as the case of Kapar v. Islamic Republic of Iran.
(3) Attachment of frozen assets authorized (P.L. 107-297). On
November 26, 2002, President Bush signed the “Terrorism Risk Insurance Act”
(TRIA) into law.74 Section 201 of TRIA overrode long-standing objections by the
Clinton and Bush Administrations and makes the frozen assets of terrorist States
available to satisfy judgments for compensatory damages against such States (and
organizations and persons) as follows:
Notwithstanding any other provision of law, and except as provided in subsection
(b), in every case in which a person has obtained a judgment against a terrorist
party on a claim based upon an act of terrorism, or for which a terrorist party is
not immune under section 1605(a)(7) of title 28, United States Code, the blocked
assets of that terrorist party (including the blocked assets of any agency or
instrumentality of that terrorist party) shall be subject to execution or attachment
in aid of execution in order to satisfy such judgment to the extent of any
compensatory damages for which such terrorist party has been adjudged liable.
Subsection (b) of § 201, in turn, narrowed the waiver authority previously afforded
the President on this subject and permits the President to waive this provision “in the
national security interest” only with respect to “property subject to the Vienna
Convention on Diplomatic Relations or the Vienna Convention on Consular
Relations.”
In addition, § 201 of P.L. 107-297 amended § 2002 of the Victims of
Trafficking Act with respect to suits against Iran:
! It added to the list of suits against Iran that are compensable under
§ 2002, without further identification, all those that were filed
before October 28, 2000 (previously the suits covered were those
that had been decided by July 20, 2000, or that had been filed on
February 17, 1999; June 7, 1999; January 28, 2000; March 15, 2000;
June 6, 2000, July 27, 2000; or January 16, 2002).
! It made 90 percent of the amount remaining in the § 2002 fund
(about $15.7 million) available to pay the compensatory damages
awarded in any judgment rendered in the cases previously added by
P.L. 107-228 and by this statute which had been entered as of the
date of this statute’s enactment (November 26, 2002) and provided
73 As with the other suits included within § 2002, the Carlson suit is not specified by name
but merely by its filing date of June 6, 2000. The amendment, sponsored by Rep. Manzullo,
was part of a group of amendments adopted by voice vote on May 16, 2001. See 147 CONG.
REC. H2224-H2239 (daily ed. May 16, 2001).
74 P.L. 107-297 (Nov. 26, 2002).

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CRS-25
that, if the total amount of damages awarded exceeded the amount
available, each claimant is to receive a proportionate amount.75
! It set aside the remaining 10 percent of the § 2002 fund for
compensation under the same formula of the final judgment entered
in the case filed against Iran on January16, 2002 (Kapar v. Islamic
Republic of Iran).
! It provided that persons who receive less than 100 percent of the
compensatory damages awarded in their judgments against Iran
under the foregoing scheme do not have to relinquish their right to
obtain additional compensatory damages, as was required of those
previously compensated under § 2002, but only to relinquish their
right to obtain punitive damages.
These amendments derived from provisions that had been added to the terrorism
risk insurance bill in both the House and the Senate. On November 7, 2001, the
House Committee on Financial Services by voice vote adopted an amendment by
Representative Watt to its terrorism risk insurance bill (H.R. 3210) that would have
allowed the frozen assets of terrorists or terrorist organizations to be used in
satisfaction of judgments against them.76 That amendment was substantially
modified in a floor substitute to apply to terrorist States, organizations, and
individuals and to allow the President to waive the requirement with respect to
diplomatic and consular property (but only if the property had not been rented or sold
to a third party), which was adopted by the House on November 29, 2001.77 On June
18, 2002, the Senate by a vote of 81-3 adopted a broader rider proposed by Senator
Allen to S. 2600, the Terrorism Risk Insurance Act of 2002.78 Like the House
provision, the Senate rider authorized the use of frozen assets to satisfy judgments
against terrorist States, organizations, and individuals and allowed the President to
waive that authorization only with respect to diplomatic and consular property. But
it also added all suits against Iran filed by October 28, 2000, to the list of those
75 The Director, Office of Foreign Assets Control determined that the total compensable
awards exceeded 90 percent of the available funds as of June 3, 2003, and directed his office
to propose an appropriate pro rata distribution for Iran-related applications that were
received by April 7, 2003. See Memorandum, Department of the Treasury, Determination
of Insufficiency of Funds Victims of Trafficking and Violence Protection Act of 2000,
Public Law No. 106-386, as Amended (June 3, 2003), available at
[http://www.treasury.gov/offices/enforcement/ofac/legal/notices/insf_funds.pdf]. All
judgment creditors of Iran eligible for compensation under § 2002 have received their
payments.
76 H.R. REP. NO. 107-300, Part I , at 17 (2001).
77 147 CONG. REC. H8596, 8629 (daily ed. Nov. 29, 2001). However, one court has since
ruled that diplomatic property rented out by the United States was excepted under the
definition of “blocked assets” in subsection (d)(2), and that the waiver therefore was not
applicable to it. See Hegna v. Islamic Republic of Iran, 376 F.3d 485 (5th Cir. July 19,
2004).
78 147 CONG. REC. S5509-S5513 (daily ed. June 13, 2002) and S5575 (daily ed. June 14,
2002). The rider replicated a bill the Senate Judiciary Committee had reported on June 27,
2002 (S. 2134, the “Terrorism Victim’s Access to Compensation Act of 2002”). With the
enactment of the rider into law, the Senate took no further action on S. 2134.

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CRS-26
compensable under § 2002 and set forth a proportional payment scheme for the added
suits. On September 10, 2002, the House by a vote of 373-0 adopted a motion
instructing its conferees on the terrorism risk insurance bills to accept the Senate
rider.79
Roeder v. Islamic Republic of Iran
Judicial proceedings. In late 2000 a suit was filed in federal district court
on behalf of the 52 embassy staffers who had been held hostage by Iran from 1979-81
and on behalf of their families. Roeder v. Islamic Republic of Iran80 sought both
compensatory and punitive damages from Iran. In August, 2001, the trial court
granted a default judgment to the plaintiffs and scheduled a hearing on the damages
to be awarded. But in October, 2001, a few days before the scheduled hearing, the
U.S. government intervened in the proceeding and moved that the judgment be
vacated and the case dismissed. The government contended that the suit did not meet
all of the requirements of the terrorist State exception to the FSIA (notably, that Iran
had not been designated as a State sponsor of terrorism at the time the U.S. personnel
were held hostage) and that the suit was barred by the explicit provisions of the 1981
Algiers Accords that led to the release of the hostages.81
While that motion was pending before the court, the Senate approved as part of
the Hollings amendment to the FY2002 Appropriations Act for the Departments of
Commerce, Justice, and State noted in #1 of the preceding section a provision
specifying that Roeder should be deemed to be included within the terrorist State
exception to the FSIA; and the conference agreement on that bill retained that portion
of the Hollings amendment. Thus, as amended, the pertinent section of the FSIA
excludes suits against terrorist States from the immunity generally accorded foreign
States but directs the courts to decline to hear such a case (with the amendment in
italics)
79 148 CONG. REC. H6138-39 (daily ed. Sept. 10, 2002).
80 Case Number 1:00CV03110 (ESG) (D.D.C., filed December 29, 2000).
81 The Algiers Accords contain the following provision:
...[T]he United States ... will thereafter bar and preclude the prosecution against
Iran of any pending or future claim of the United States or a United States
national arising out of events occurring before the date of this declaration related
to (A) the seizure of the 52 United States nationals on 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).

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CRS-27
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.82
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.83
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 1981.84
Subsequently on December 13, 2001, the judge in Roeder (Judge Emmet G.
Sullivan) heard arguments on the government’s earlier motion to dismiss. The
government continued to argue, inter alia, that the suit is barred by the Algiers
Accords and ought to be dismissed; and during the course of the proceeding Judge
Sullivan expressed concern regarding the lack of clarity of the recent Congressional
enactment with respect to that contention. A week later in the fiscal 2002
appropriations act for the Department of Defense, the 107th Congress included a
provision making a minor technical correction in the reference to the Roeder case.85
But the conference report also elaborated on what it said was the effect and intent of
the earlier amendment of the FSIA with respect to Roeder, seemingly in response to
Judge Sullivan’s expression of concern. The conference report stated as follows:
Sec. 208. — The conference agreement includes Section 208, proposed as
Section 105 of Division D of the Senate bill, making a technical correction to
82 P.L. 107-77, Title VI, § 626(c) (Nov. 28, 2001), amending 28 U.S.C.A. § 1605(a)(7)(A).
83 H.R. REP. NO. 107-278 (2001).
84 Statement on Signing the Departments of Commerce, Justice, and State, the Judiciary and
Related Agencies Appropriations Act, 2002, 37 WEEKLY COMP. PRES. DOC. 1723, 1724
(Nov. 28, 2001).
85 The amendment inverted two letters in the case reference to Roeder that had been
contained in P.L. 107-17, changing “1:00CV03110 (ESG)” to “1:00CV03110 (EGS).” See
P.L. 107-117, Title II, § 208 (Jan. 10, 2002). This technical correction had originally been
included in the DOD appropriations bill as reported and adopted by the Senate but without
explanation. See H.R. 3388 as reported by the Senate Appropriations Committee (S. REP.
NO. 107-109 (2001) and Senate floor debate at 147 CONG. REC. S12476-12529 (daily ed.
Dec. 6, 2001), S12586-12676 and S12779-12812 (daily ed. Dec. 7, 2001).

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CRS-28
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).86
Nonetheless, in signing the Department of Defense appropriations measure into
law on January 10, 2002, President Bush continued to insist as follows:
Section 208 of Division B makes a technical correction to subsection 626(c) of
Public Law 107-77 (the FY2002 Commerce, Justice, State, the Judiciary and
Related Agencies Appropriations Act), but does nothing to alter the effect of that
provision or any other provision of law. Since the enactment of sub-section
626(c) and consistent with it, the executive branch has encouraged the courts to
act, and will continue to encourage the courts to act, in a manner consistent with
the obligations of the United States under the Algiers Accords that achieved the
release of U.S. hostages in 1981.87
After two additional hearings, Judge Sullivan on April 18, 2002, granted the
government’s motion to vacate the default judgment against Iran and to dismiss the
suit.88 In a lengthy opinion the court concluded that:
! at the time it entered a default judgment for plaintiffs on August 17,
2001, it did not, in fact, have jurisdiction over the case and, thus,
should not have entered a judgment89;
! the cause of action which Congress had adopted in late 1996 did not,
in fact, apply to suits against terrorist States but only against the
86 S. REP. NO. 107-109 (2001).
87 Remarks on Signing the Department of Defense and Emergency Supplemental
Appropriations for Recovery from and Response to Terrorist Attacks on the United States
Act, 2002, in Arlington, Virginia, 38 WEEKLY COMP. PRES. DOC. 44 (Jan. 10, 2002).
88 Roeder v. Islamic Republic of Iran, 195 F.Supp.2d 140 (D.D.C. 2002).
89 The court said that it did not have jurisdiction over the suit until Congress amended the
FSIA by means of § 626(c) of the FY2002 appropriations act for the Departments of Justice,
Commerce, and State, which was signed into law on November 28, 2001. Prior to that
amendment, it said, the suit did not fall within the terrorist state exception to the FSIA
because Iran had not been declared to be a terrorist state at the time it seized and held the
American personnel hostage. The court said also that, absent an “express statement of intent
by Congress,” it could not apply § 626(c) retroactively.

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CRS-29
officials, employees, and agents of those States who perpetrate
terrorist acts90; and
! the provision of the Algiers Accords committing the United States
to bar suits against Iran for the incident constitutes the substantive
law of the case, and Congress’ two enactments specifically
concerning the case were too ambiguous to conclude that it
specifically intended to override this international commitment.91
In addition, the court in dicta suggested that Congress’ enactments on the Roeder
case might have interfered with its adjudication of the case in a manner that raised
constitutional separations of powers concerns.92 It also chastised the plaintiffs’
90 The court stressed that the terrorist state exception which Congress had added to the FSIA
in 1996 meant only that U.S. courts could exercise jurisdiction over such cases. Traditional
State immunity, in other words, was eliminated as a jurisdictional barrier. But that
amendment to the FSIA did not in itself, the court said, provide a cause of action for such
suits. The specific statute providing for such a cause of action which Congress enacted later
in 1996, it said, provided only for a cause of action against an official, employee, or agent
of a terrorist State, not against the terrorist State itself. (See P.L. 104-208, Div. A, Title I,
§ 101(c) (Sept. 30, 1996); 110 Stat. 3009-172; 28 U.S.C.A. § 1605 note.)
91 The court stressed that an act of Congress “ought never to be considered to violate the law
of nations, if any other possible construction remains.” None of the statutes Congress had
adopted relating to a cause of action generally or to Roeder itself, the court said,
unambiguously declared an intent to override the Algiers Accords. Nor, it said, did they
unambiguously declare an intent not to override the Accords. They, and their “scant”
legislative history, were ambiguous on the question, it held, and, consequently, must be
construed not to conflict with the Accords:
Neither the Anti-Terrorism Act, the Flatow Amendment, Subsection 626(c), or
Section 208 contain the type of express statutory mandate sufficient to abrogate
an international executive agreement. Furthermore ..., the legislative histories
of these statutes contain no clear statements of Congressional intent to
specifically abrogate the Algiers Accords. Therefore, ... unless and until
Congress expresses its clear intent to overturn the provisions of a binding
agreement between two nations that has been in effect for over twenty years, this
Court can not interpret these statutes to abrogate that agreement.
Roeder v. Islamic Republic of Iran, supra, at 177.
The court also rejected the argument that because the U.S. entered into the Algiers Accords
under duress, the Accords constituted “an unenforceable illegal contract.” “Whatever
emotional appeal and rhetorical flourish this argument contains,” the court said, “it is
absolutely without basis in law.” Id. at 168.
92 The court did not base its decision on any separation of powers considerations. But it did
say that if it had construed § 626(c) to apply retroactively, Congress’ “post-judgment
retroactive imposition of jurisdiction [would raise] serious separations of powers concerns”
and might be “an impermissible encroachment by Congress into the sphere of the federal
courts ....” Id. at 161. “By expressly directing legislation at pending litigation, Congress
has arguably attempted to determine the outcome of this litigation,” it said. Id. at 163. The
court also suggested that the narrowness of Congress’ enactments, i.e., their application only
to this one case and not to any others, raised possible Article III concerns. Id. at 165-66.

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attorneys for what it said were serious breaches of their professional and ethical
responsibilities.93
The U.S. Court of Appeals for the District of Columbia affirmed the decision
of the lower court, placing emphasis on the fact that the legislative history plaintiffs
sought to use– joint explanatory statement prepared by House and Senate conferees–
is not part of the Conference Report voted on by both houses of Congress and thus
does not carry the force of law.94
Executive agreements are essentially contracts between nations, and like
contracts between individuals, executive agreements are expected to be honored
by the parties. Congress (or the President acting alone) may abrogate an
executive agreement, but legislation must be clear to ensure that Congress - and
the President - have considered the consequences. The “requirement of clear
statement assures that the legislature has in fact faced, and intended to bring into
issue, the critical matters involved in the judicial decision.” The kind of
legislative history offered here cannot repeal an executive agreement when the
legislation itself is silent.(citations omitted)
The court denied that its interpretation rendered any act of Congress futile. On
the contrary, it stated that, “[i]f constitutional ... the amendments had the effect of
removing Iran's sovereign immunity, which the United States had raised in its motion
to vacate.”95
107th and 108th Congresses – Efforts To Abrogate the Algiers
Accords
Subsequent to the trial court’s decision in Roeder, efforts have been made in
both the 107th and the 108th Congresses to enact legislation that would explicitly
abrogate the provision of the Algiers Accords barring the hostages’ suit. On July 24,
2002, the Senate Appropriations Committee reported the “Fiscal 2003
Appropriations Act for the Departments of Commerce, Justice, and State” (S. 2778).
Section 616 of that bill proposed to amend the FSIA as follows:
SEC. 616. Section 1605 of title 28, United States Code is amended by adding a new
subsection (h) as follows:
93 In commenting on what it called the “repeated ethical failures by class counsel,” the court
stated that “[p]laintiffs’ counsel in this case repeatedly presented meritless arguments to this
Court, repeatedly failed to substantiate their arguments by reference to any supporting
authority, and repeatedly failed to bring to the Court’s attention the existence of controlling
authority that conflicted with those arguments.” Id. at 185.
94 Roeder v. The Islamic Republic of Iran, 333 F.3d 228, 238 (D.C. Cir. 2003)(“While
legislative history may be useful in determining intent, the joint explanatory statements here
go well beyond the legislative text of § 208, which did nothing more than correct a
typographical error.”).
95 The court noted, but did not decide whether the amendments were an impermissible
intrusion by Congress into the role of the courts. Id. at 237 & n.5.

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(h) CAUSE OF ACTION FOR IRANIAN HOSTAGES- Notwithstanding any
provision of the Algiers Accords, or any other international agreement, any United
States citizen held hostage in Iran after November 1, 1979, and their spouses and
children at the time, shall have a claim for money damages against the government
of Iran. Any provision in an international agreement, including the Algiers Accords
that purports to bar such suit is abrogated. This subsection shall apply retroactively
to any cause of action cited in 28 U.S.C. 1605(a)(7)(A).
In explaining the provision, the report of the Committee simply stated that “Section
616 clarifies section 626 of Public Law 107-77 that the Algiers Accord is abrogated
for the purposes of providing a cause of action for the Iranian hostages.”96 The
measure received no further action prior to the adjournment of the 107th Congress,
however.
In the 108th Congress the Senate added the same or a similar amendment to three
appropriations bills, but in each case the amendment has been deleted in conference.
On January 15, 2003, the same amendment was included in a managers’ amendment
offered by Senator Stevens to the House-passed version of the consolidated
appropriations resolution for fiscal 2003, H.J.Res. 2. The Senate adopted the
amendment by voice vote without comment on the provision.97 But the provision
was deleted in conference98 and did not become law.99 The Senate on April 3, 2003,
adopted without debate a managers’ amendment offered by Senator Stevens to the
“Emergency Wartime Supplemental Appropriations Act, 2003” (S. 762, H.R. l559)
which included a similar provision.100 The bill primarily provided substantial
additional funding for the military action against Iraq and for the Department of
Homeland Security. But § 606 of the managers’ amendment provided as follows:
Sec. 606. Section 1605 of title 28, United States Code, is amended by adding at the
end the following new subsection:
(h) CLAIMS FOR MONEY DAMAGES FOR DEATH OR PERSONAL INJURY
— (1) Any United States citizen who dies or suffers injury caused by a foreign
state’s act of torture, extrajudicial killing, aircraft sabotage, or hostage taking
committed on or after November 2, 1979, and any member of the immediate family
of such citizen, shall have a claim for money damages against such foreign state, as
authorized by subsection (a)(7), for death or personal injury (including economic
damages, solatium, pain and suffering). (2) A claim under paragraph (1) shall not
be barred or precluded by the Algiers Accords.
96 S. REP. NO. 107-218, at 167 (2002).
97 149 CONG. REC. S839 (daily ed. Jan. 15, 2003).
98 H.R. CONF. REP. NO. 108-10 (2003).
99 P.L. 108-7 (Feb. 20, 2003).
100 The managers’ amendment was adopted by voice vote with no debate on this particular
provision. See 149 CONG. REC. S4806-08 (daily ed. April 3, 2003). The text of the
amendment can be found at id. S4866-67.

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The amendment was deleted in conference, however, and was not part of the measure
as enacted into law (P.L. 108-11).101
Similarly, the Senate passed, without debate,102 an amendment to the Emergency
Supplemental Appropriations Act for Defense and for the Reconstruction of Iraq and
Afghanistan, 2004 (S. 1689, H.R. 3289), as follows:
Sec. 5006. Section 1605 of title 28, United States Code, is amended by adding at
the end the following new subsection:
(h) Notwithstanding any provision of the Algiers Accords, or any other international
agreement, any United States citizen held hostage during the period between 1979
and 1981, and their spouses and children at the time, shall have a claim for money
damages against a foreign state for personal injury that was caused by the foreign
state's act of torture or hostage taking. Any provision in an international agreement,
including the Algiers Accords that purports to bar such suit is abrogated. This
subsection shall apply retroactively to any cause of action cited in section
1605(a)(7)(A) of title 28, United States Code.
This amendment was stripped from the bill at conference without explanation
(P.L. 108-106).103
Thus, no legislation has been enacted as yet specifically abrogating the Algiers
Accords.
Confiscation of Iraq’s Blocked Assets for Use in the
Reconstruction of Iraq (POW Lawsuit)
On March 20, 2003, immediately after the U.S. and its coalition partners initiated
military action against Iraq, President Bush issued an executive order providing for
the confiscation and vesting of Iraq’s frozen assets in the U.S. government and
placing them in the Development Fund for Iraq for use in the post-war reconstruction
of Iraq.104 According to the Terrorist Assets Report 2002 published by the Office of
Foreign Assets Control, Iraq’s blocked assets totaled approximately $1.73 billion at
the end of 2002. However, the President’s order excluded from confiscation and
vesting Iraq’s diplomatic and consular property as well as assets that had, prior to
March 20, 2003, been ordered attached in satisfaction of judgments against Iraq
rendered pursuant to the terrorist suit provision of the FSIA and § 201 of the
101 See P.L. 108-011 (April 16, 2003). Neither the conference report nor the House or Senate
debates on acceptance of the conference agreement made any mention of the deletion of this
provision. See H.R. REP. NO. 108-76 (2003), reprinted at 149 CONG. REC. H3357 et seq.
(daily ed. April 12, 2003), id. H3385-3404 (House debate), and id. S 5392 (daily ed. April
11, 2003) (unanimous consent agreement in the Senate providing for automatic approval of
the conference report when received from the House).
102 S12682 October 16, 2003
103 H.R. REP. NO. 108-337 (2003).
104 E.O. 13290, 68 Fed. Reg. 14305-08 (March 24, 2003).

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Terrorism Risk Insurance Act (which reportedly total about $300 million).105 The
President stated that the remaining assets “should be used to assist the Iraqi people
....” Thus, notwithstanding the enactment of § 201 of TRIA, the President’s action
appeared to make Iraq’s frozen assets unavailable to those who, after March 20,
2003, obtain judgments against that State for its sponsorship of, or complicity in, acts
of terrorism.
Subsequently, the President took several additional actions complementing and
reinforcing this executive order. In the “Supplemental Appropriations Act for Fiscal
2003,” Congress provided that “the President may make inapplicable with respect to
Iraq section 620A of the Foreign Assistance Act of 1961 or any other provision of
law that applies to countries that have supported terrorism.”106 On the basis of that
authority, President Bush on May 7, 2003, declared a number of provisions
concerning terrorist States, including the FSIA exception and the section of the
Terrorism Risk Insurance Act making their blocked assets available to victims of
terrorism, inapplicable to Iraq.107 On May 22, 2003, he issued another executive
order providing that the Development Fund of Iraq cannot be attached or made
subject to any other kind of judicial process.108
Acree v. Republic of Iraq. Whether the President has the legal authority to
restore Iraq’s sovereign immunity and make its assets unavailable to victims of
terrorism who obtain judgments against Iraq was contested in Acree v. Republic of
Iraq.109 In that case a federal district court on July 7, 2003 – two and half months
after the President’s order – handed down a default judgment against Iraq for its
imprisonment and torture of 17 American prisoners of war (POWs) during the first
Gulf War in 1991. After detailing the treatment given the POWs, the court awarded
them and their families $653 million in compensatory damages and added a punitive
damages award of $306 million for the benefit of the POWs against Saddam Hussein
105 See Tom Schoenberg, Fights Loom for Iraqi Riches, LEGAL TIMES (March 31, 2003).
Judgment creditors were paid about $140 million from the vested assets.
106 P.L. 108-11, § 1503 (April 16, 2003).
107 See Memorandum for the Secretary of State (Presidential Determination No. 2003-23)
(May 7, 2003). This Determination simply replicated the general language of the
Supplemental Appropriations Act provision. But in a subsequent message to Congress,
President Bush stated:
... [B]y my memorandum to the Secretary of State and Secretary of Commerce
of May 7, 2003, (Presidential Determination 2003-23), I made inapplicable with
respect to Iraq section 620A of the Foreign Assistance Act of 1961, Public Law
87-195, as amended, and any other provision of law that applies to countries that
have supported terrorism. Such provisions of law that apply to countries that
have supported terrorism include, but are not limited to, 28 U.S.C. 1605(a)(7),
28 U.S.C. 1610, and section 201 of the Terrorism Risk Insurance Act.
President George Bush, Message to the Congress of the United States (May 22, 2003),
available on the White House website.
108 E.O. 13303, 68 Fed. Reg. 31931 (May 28, 2003).
109 Acree v. Republic of Iraq, 276 F.Supp.2d 95 (D.D.C. 2003).

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and the Iraqi Intelligence Service. Upon request by the plaintiffs, Judge Roberts on
July 18, 2003, issued a temporary restraining order (TRO) requiring the government
to retain at least $653 million of Iraq’s assets vested in the United States by President
Bush’s executive order pending further decision by the court.
The Justice Department then sought to intervene in the case, arguing that Iraq’s
sovereign immunity had been restored by Presidential Determination pursuant to
authority granted by Congress. The court denied the government’s motion to
intervene as untimely because the Justice Department had waited 75 days past the
Determination before it intervened, knowing that the Acree case was pending before
the court.110 Additionally, the court found that the government’s interest in
promoting a new, democratic Iraqi government did not constitute a cognizable
interest warranting intervention as of right, especially absent any showing of how the
default judgment impaired such interest. The court also held that only Iraq could
assert a defense based on sovereign immunity, and that Congress and President could
not retroactively restore Iraq’s previously waived sovereign immunity.
While the Presidential Determination did not retroactively restore Iraq’s
sovereign immunity, it was held to effectively preclude the plaintiffs from enforcing
their judgment against the $1.73 billion in frozen Iraqi assets that had been vested by
the President for the restoration of Iraq.111 After an expedited hearing on the matter,
the court on July 30, 2003, held that none of the assets in question could be attached
by the plaintiffs; and the court dissolved the TRO.112 In reaching that conclusion, the
court relied primarily on the Supplemental Appropriations Act provision noted above
and the subsequent actions by President Bush rather than on his March 20, 2003,
executive order. The court concluded:
The Act is Congressional authorization for the President to make TRIA
prospectively inapplicable to Iraq, and the President exercised that authority when
he issued the Determination on May 7, 2003. As a result, at the time the plaintiffs
obtained their judgment against Iraq on July 7, 2003, TRIA was no longer an
available mechanism for plaintiffs to use to satisfy their judgment.113
The Justice Department appealed the decision denying its motion to intervene,
while plaintiffs appealed the decision that frozen Iraqi funds were unavailable to
satisfy their judgment. On appeal, the Court of Appeals for the D.C. Circuit held that
the district court had abused its discretion by denying the government’s motion to
intervene.114 However, the court reversed the President’s Determination insofar as
it nullified the FSIA provisions with respect to Iraq, finding that Congress had not
110 Id. at 98.
111 Acree v. Snow, 276 F.Supp.2d 31 (D.D.C.), aff’d 78 Fed.Appx. 133 (D.C.Cir.
2003)(unpublished opinion); Smith v. Federal Reserve Bank of New York, 280 F.Supp.2d
314 (S.D.N.Y), aff’d 346 F.3d 264 (2nd Cir. 2003)(judgment against Iraq by victims of Sep.
11, 2001, terrorist attacks).
112 Id.
113 Id. at 33.
114 Acree v. Republic of Iraq, 370 F.3d 41 (D.C. Cir. 2004).

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CRS-35
intended to permit the President to revoke those provisions. The plaintiffs were
nevertheless prevented from collecting, because the court of appeals vacated their
judgment based on their failure to state a cause of action against Iraq, and because
Saddam Hussein retained immunity for official conduct. The court followed its
precedent in Cicippio-Puelo v. Islamic Republic of Iran115 to hold that the terrorism
exception to the FSIA combined with the so-called Flatow Amendment create a
private right of action against officials, employees and agents of a foreign
government for their private conduct, but not against the foreign government itself,
including its agencies and instrumentalities, nor agents, officials or employees in
their official capacity. The Supreme Court declined to review the decision.
Proposed Legislation. Two bills were introduced during the 108th Congress
in the House of Representatives to provide relief for the plaintiffs. H.Con.Res. 344
would have expressed the sense of the Congress that the POWs and their immediate
family members should be compensated for their suffering and injuries as the court
had decided, notwithstanding section 1503 of the Emergency Wartime Supplemental
Appropriations Act of 2003. The bill would also have expressed Congress’ resolve
to continue its oversight of the application of § 1503 “in order to ensure that it is not
misinterpreted, including by divesting United States courts of jurisdiction, with
respect the POWs and other victims of Iraqi terrorism.”116 Additionally, the Senate
passed language in § 325 of its version of the Emergency Supplemental
Appropriations for Iraq and Afghanistan Security and Reconstruction Act, 2004
(H.R. 3289) that would have found that
the Attorney General should enter into negotiations with each such citizen, or the
family of each such citizen, to develop a fair and reasonable method of providing
compensation for the damages each such citizen incurred, including using assets of
the regime of Saddam Hussein held by the Government of the United States or any
other appropriate sources to provide such compensation.
The language was not enacted.117
The other House bill from the 108th Congress, H.R. 2224, the “Prisoner of War
Protection Act of 2003,” would have allowed the plaintiffs, as well as any POWs
who might later assert a cause of action in the more recent war against Iraq, to
recover damages out of the $1.73 billion in frozen Iraqi assets that were vested by
order of the President to pay for the reconstruction of Iraq.
Nothing similar to the Prisoner of War Protection Act 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
115 353 F.3d 1024 (D.C. Cir. 2004).
116 H.Con.Res. 344.
117 See P.L. 108-106, 117 Stat. 1209 (2003).

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Emergency Supplemental118 It is possible that Congress may be asked to pass
legislation to resolve some of the issues in order to reinstate the judgment and
provide for its satisfaction.
Ministry of Defense (Iran) v. Elahi
Although Iran has not appeared in court to defend itself in any of the terrorism
cases brought against it, it is nonetheless challenging a decision that allows a
judgment-holder to collect part of an award against Iran out of an award owed to Iran
by a third party.119 The Ministry of Defense and Support for the Armed Forces of the
Islamic Republic of Iran (MOD) has asked the Supreme Court to overturn a decision
that allowed the respondent, Dariush Elahi to attach a $2.8 million arbitral award
issued in Iran’s favor by the International Chamber of Commerce for a breach of
contract that occurred in 1979. Elahi had been awarded a default judgment of $311.7
million in a lawsuit against Iran and its Ministry of Intelligence and Security (MOIS)
based on the 1990 the assassination of his brother, Dr. Cyrus Elahi, a dissident who
was shot to death in Paris by agents of the Iranian intelligence service.120 Dariush
Elahi and another judgment-holder, Stephen Flatow, both attempted to intervene in
MOD’s suit against Cubic Defense Systems, Inc. to attach the award in partial
satisfaction of their judgments against Iran. Flatow’s petition was denied after the
court found that he had waived his right to attach the award by accepting payment
under section 2002 of the Victims of Trafficking and Violence Protection Act of
2000.121
Elahi’s lawsuit was one of those cases added later to section 2002 of the VTVPA,
however; and since he was only able to collect a portion of the compensatory
damages from U.S. funds, he retained the right to pursue satisfaction of the rest of the
compensatory portion of his claim from Iranian blocked assets. Iran argued that its
judgment retained immunity under the FSIA as military property.122 The court
118 Id. 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).
119 Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran,
v. Cubic Defense Systems, 385 F.3d 1206 (9th Cir. 2004), petition for cert. filed sub nom
Ministry of Defense and Support for the Armed Forces of the Islamic Republic of Iran v.
Elahi,, 73 USLW 3498 (Feb 11, 2005)(NO. 04-1095).
120 Elahi v. Islamic Republic of Iran, 124 F.Supp.2d 97 (D.D.C. 2000).
121 Flatow chose to receive 100 percent of his compensatory damages from U.S. funds, but
in return was required to relinquish “all rights to execute against or attach property that is
at issue in claims against the United States before an international tribunal, that is the
subject of awards rendered by such tribunal, or that is subject to section 1610(f)(1)(A) of
title 28, United States Code.” The court found that the award was covered by section
1610(f)(1)(A) because it is property regulated (although not blocked) by the Office of
Foreign Assets control.
122 28 U.S.C. § 1611(b) exempts from the exception to immunity in § 1610 property that “is,
(continued...)

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rejected Iran’s contention, noting that MOD did not assert that the judgment would
be used for military purposes, but instead stated the money would be deposited in
Iran’s central bank.123 The court also rejected Iran’s contention that the judgment is
protected as “the property . . . of a foreign central bank or monetary authority held for
its own account” within the meaning of section 1611(b)(1), because it found that
language to apply only to money held by a foreign bank “to be used or held in
connection with central banking activities.”124 MOD also sought to invoke the
blocking regulations as a bar to the attachment of the judgment, but the court rejected
that argument as well, pointing out that the transaction was permitted under a general
license.
Finally, MOD sought to bring a collateral attack against Elahi’s default judgment,
contesting the jurisdiction of the court that issued it on the basis of the alleged
invalidity of the FSIA terrorism exception under the Cicippio-Puleo decision, supra.
The court, construing the jurisdictional question as one of personal jurisdiction rather
than subject-matter jurisdiction, found that MOD could have attempted to void the
judgment on this basis at the district court level, but had waited too long to raise the
issue during appellate proceedings. Because MOD was unable to show that the
district court that issued the default judgment in favor of Elahi acted in a manner
inconsistent with due process, or that the district court lacked subject-matter
jurisdiction over the case, the court affirmed the decision in favor of Elahi.
MOD has petitioned for certiorari to the Supreme Court to review the decision
on several bases. MOD challenges the 9th Circuit’s finding that MOD is an “agency
or instrumentality” of Iran rather than an integral part of the Iranian government
without separate juridical status. This distinction has bearing under the FSIA as to
how its assets are treated and whether it can be held liable for the debts of MOIS.
MOD also challenges the assessment that the judgment due it on a military contract
is not military property under the FSIA. As to the collateral attack on Elahi’s
judgment, Iran argues that in the context of the FSIA, questions of personal
jurisdiction and subject-matter jurisdiction over a foreign sovereign are so intimately
linked as to be inseparable, which would allow MOD to dispute the validity of
Elahi’s default judgment by asserting it was founded on an invalid cause of action.
If the Supreme Court decides to take this case, it could potentially review a wide
range of issues affecting lawsuits against State sponsors of terrorism, including which
entities may be sued, which causes of action plaintiffs may assert, what kinds of
damages may be awarded, which foreign assets are available for attachment in
enforcement of any resulting judgments, and whether default judgments may be
reopened and possibly vacated during proceedings to enforce those judgments.
Bush Administration’s Proposed Compensation Alternative
122 (...continued)
or is intended to be, used in connection with a military activity and (A) is of a military
character, or (B) is under the control of a military authority or defense agency.”
123 383 F.3d at 1222-23.
124 Id. at 1223.

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During 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 as an alternative to suits under the terrorist State
exception to the FSIA. S. 1275 would have amended § 201 of the Terrorism Risk
Insurance Act to provide that claimants who obtain judgments against terrorist States
after the date of the bill’s introduction can no longer collect on the compensatory
damages portions of those judgments out of the States’ blocked assets. As an
alternative, the bill would have created a new compensation scheme called the
“Benefits for Victims of International Terrorism Program.” Administered by the
State Department, the program would have been able to authorize the payment of up
to $262,000 to those who have been killed, injured, or held hostage by an act of
international terrorism.125 A person who accepted benefits under the program would
be barred from bringing or maintaining a suit against a terrorist State for the same
act.
In a hearing on the bill by the Senate Committee on Foreign Relations on July 17,
2003,126 William Taft, then State Department Legal Adviser, asserted that “[t]he
current litigation-based system of compensation is inequitable, unpredictable,
occasionally costly to the U.S. taxpayer, and damaging to foreign policy and national
security goals of this country.” Stuart Eizenstat, now in private practice but formerly
the Clinton Administration’s point man on this issue, claimed that the amount of
compensation that would be provided under the bill was insufficient to make the
scheme a viable alternative to litigation. Allan Gerson, a professor and trial lawyer
involved in suits under the FSIA exception, charged that the proposal would deny
plaintiffs their day in court and do nothing to hold terrorist States accountable for
their actions. No further action was taken on the bill.
109th Congress – Proposed Legislation
In addition to the bills addressing the Acree decision, (H.R. 1321 and H.Con.Res.
93, discussed supra), one other bill in the 109th Congress would make an effort to
untangle the state of litigation against terrorist States. H.R. 865 would repeal the
Flatow Amendment and enact a new subsection (h) after the current 28 U.S.C. §
1605 to provide an explicit cause of action against foreign terrorist States as well as
their agents, officials and employees, making them liable “for personal injury or
death caused by acts of that foreign State, or by that official, employee, or agent
while acting within the scope of his or her office, employment, or agency, for which
the courts of the United States may maintain jurisdiction under subsection (a)(7) for
money damages.” New subsection (h)(1)(A) would also state that the removal of a
125 The proposal used as its standard the amount available to the families of public safety
officers who are killed in the line of duty under subpart 1 of part L of title I of the Omnibus
Crime Control and Safe Streets Act of 1968, 42 U.S.C.A. §§ 3796 et seq. That act originally
set the death benefit at $50,000; in 2001 Congress increased the death benefit to $250,000,
adjusted annually for inflation. See P.L. 107-56, § 613(a) (Oct. 26, 2001); 115 Stat. 369.
As adjusted, the amount of the benefit now is about $262,000.
126 Benefits for U.S. Victims of International Terrorism: Hearing Before the Senate
Committee on Foreign Relations, 108th Cong. (July 17, 2003).

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foreign State from the list of designated foreign State sponsors of terrorism would not
terminate a cause of action that arose during the period of such designation.
H.R. 865 would state that the discovery limitations in 28 U.S.C. §1605(g) would
apply to the new cause of action, as the current Flatow Amendment also provides.127
Subsection (g) provides that, in case of discovery requests on the United States
involving actions allowed under subsection (a)(7), a court may issue a stay if the
Attorney General requests one and certifies such discovery “would significantly
interfere with a criminal investigation or prosecution, or a national security operation,
related to the incident that gave rise to the cause of action. . .” until the Attorney
General advises the court that the risk of interference has passed.
New subsection (h)(1)(C) would limit the cause of action in new subsection
(h)(1)(A) to exclude those arising out of acts of foreign States and their officials,
employees, and agents when neither the claimant nor the victim was a U.S. national
at the time the act occurred. The Flatow Amendment does not include such a
limitation, but similar language contained in 28 U.S.C. § 1605(a)(7)(B)(ii), which
limits the abrogation of immunity to cases where either the claimant or the victim
was a U.S. national, would seem to produce the same effect.
New subsection (h)(2) would authorize money damages for such actions to
include economic damages, solatium, damages for pain and suffering, and punitive
damages. The foreign State would also be made vicariously liable for the actions of
its officials, employees, or agents.
H.R. 865 would limit appeals applicable to suits under the terrorism exception
to the FSIA. Under new subsection (h)(3), appeals in federal courts would have to
be filed within 30 days from the entry of a final decision. Interlocutory appeals
would be allowed only to challenge a decision denying the immunity of a State, in
accordance with appellate rules governing such rulings (28 U.S.C. § 1292). The bill
would not appear to restrict appeals in state courts, which are only infrequently the
venue for lawsuits under the terrorism exception to the FSIA.128
Section 2 of H.R. 865 addresses property of foreign States that can be levied on
under execution of terrorism judgments against those States. It would add a new
subsection (g) to 28 U.S.C. § 1610 to provide that a property interest of a foreign
127 This may seem somewhat redundant, inasmuch as an action under the new subsection
(h)(1)(A) is by definition one that is allowed under subsection (a)(7), and would already be
covered by subsection (g).
128 At least three such suits have yielded default judgments. In Martinez v. Republic of
Cuba, No. 13-1999-CA 018208 (Miami-Dade Co., Fla., Cir. Ct. decided March 9, 2001), a
woman was awarded $27.1 million by the Miami-Dade Court, Florida, for sexual battery
based on her marriage by fraud to a Cuban spy. In Weininger v. Republic of Cuba, No.
03-22920 CA 20 (Miami-Dade Co., Fla., Cir. Ct. decided Nov. 11, 2004), the same court
awarded $136.5 million to the daughter of a CIA pilot who was shot down over Cuba during
the Bay of Pigs invasion and subsequently executed. The court also awarded $67 million
to the daughter of a U.S. businessman who was tried as a spy and executed in the aftermath
of the Cuban Revolution, McCarthy v. Republic of Cuba, No. 01-28628 CA04 (Miami-Dade
Co., Fla., Cir. Ct. decided Apr. 17, 2003).

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CRS-40
State (or its agencies or instrumentalities) against which a judgment has been entered
under 1605(a)(7) is “subject to execution upon [a terrorism] judgment”129 regardless
of how much control over that property interest the foreign government actually
exercises and whether the government derives profits or benefits from it. It would
also allow execution on the property interest where “establishing the property interest
as a separate entity would entitle the foreign State to benefits in [U.S.] courts while
avoiding its obligation.”130 It would not provide the President any waiver authority.
The purpose and ramifications of the proposed language are not entirely clear.
The FSIA does not define the term “property interest.”131 The proposed language
suggests that it applies to a commercial entity in which the foreign government has
an interest. The proposed language would render subject to execution any property
interest of the defendant foreign State regardless of five criteria set forth in proposed
subsection (g)(1):
(A) The level of economic control over the property interest by the government of
the foreign state;
(B) whether the profits of the property interest go to that government;
(C) the degree to which officials of that government manage the property interest
or otherwise have a hand in its daily affairs;
129 The bill would not allow the attachment of such property in aid of execution prior to the
award of a judgment.
130 This clause appears designed to avoid the application of the Supreme Court decision in
First Nat’l City Bank v. Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (1983)
(“Bancec”) to judgments against designated terrorist States. Bancec held that duly-created
instrumentalities of a foreign State are to be accorded a presumption of independent status,
but that this presumption may be overcome where such recognition would permit the foreign
State to pursue a claim in United States courts while itself escaping liability by asserting
immunity. The proposed language could allow a judgment creditor to “pierce the corporate
veil”of a corporation owned by a judgment debtor State without having to demonstrate to
the court that the presumption of independent status should be overridden.
131 In the context of transactions that are prohibited or subject to license, Treasury
regulations define property and property interest quite broadly. See 31 C.F.R. § 575.315
(Iraq Sanctions Regulations):
The terms property and property interest include, but are not limited to, money, checks,
drafts, bullion, bank deposits, savings accounts, debts, indebtedness, obligations, notes,
debentures, stocks, bonds, coupons, any other financial instruments, bankers acceptances,
mortgages, pledges, liens or other rights in the nature of security, warehouse receipts, bills
of lading, trust receipts, bills of sale, any other evidences of title, ownership or
indebtedness, letters of credit and any documents relating to any rights or obligations
thereunder, powers of attorney, goods, wares, merchandise, chattels, stocks on hand,
ships, goods on ships, real estate mortgages, deeds of trust, vendors sales agreements, land
contracts, leaseholds, ground rents, real estate and any other interest therein, options,
negotiable instruments, trade acceptances, royalties, book accounts, accounts payable,
judgments, patents, trademarks or copyrights, insurance policies, safe deposit boxes and
their contents, annuities, pooling agreements, services of any nature whatsoever, contracts
of any nature whatsoever, and any other property, real, personal, or mixed, tangible or
intangible, or interest or interests therein, present, future or contingent.
“Interest,” according to the regulations, means “an interest of any nature whatsoever, direct
or indirect.” 31 C.F.R. § 500.312

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CRS-41
(D) whether that government is the real beneficiary of the conduct of the property
interest; or
(E) whether establishing the property interest as a separate entity would entitle the
foreign state to benefits in [U.S.] courts while avoiding its obligation.
Courts might consider these criteria in determining whether an entity is an
“agency or instrumentality” of a foreign government for purposes of immunity,132 or
whether it is an “alter ego” of the foreign government for liability purposes.133 An
entity that is not an agency or instrumentality of a foreign government is not entitled
to sovereign immunity, but neither are its assets subject to attachment in execution
of a judgment awarded against that foreign government, not due to immunity, but
because a judgment creditor may not levy against a third-party’s property in order to
satisfy a money judgment against a judgment debtor.134 The language does not
purport to extinguish the rights of persons who have an interest in the same property
to contest the levy of execution. The proposed language does not explicitly abrogate
immunity, unlike other subsections of 1610 (except for subsection (f)), but a court
might interpret it as an abrogation of immunity in keeping with the rest of § 1610.
Proposed subsection (g) could be read as an effort to make third-party assets
available to judgment creditors by making any entity in which the foreign State has
any interest whatsoever, regardless of whether it qualifies as an agency or
instrumentality of the foreign State, liable for debts of that foreign State related to
actions brought under section 1605(a)(7). However, the proposed bill would not alter
the definition of agency or instrumentality of a foreign State under the FSIA, which
is any entity:
132 See Flatow v. Islamic Republic of Iran, 67 F.Supp.2d 535, 539 (D.Md. 1999)(holding “a
principal-agent relationship has been created for the purposes of the FSIA when the foreign
sovereign exercises day-to-day control over its activities”(citing McKesson Corp. v. Islamic
Republic of Iran, 52 F.3d 346, 351-52 (D.C.Cir.1995); see also Hester Int'l Corp. v. Federal
Republic of Nigeria, 879 F.2d 170, 178-80 (5th Cir.1989) (holding that an entity in which
Nigeria held 100% of its stock was not an agent because there was no showing of day-to-day
control); Baglab Ltd. v. Johnson Matthey Bankers Ltd., 665 F.Supp. 289, 297
(S.D.N.Y. 1987) (holding that the plaintiff failed to overcome the presumption of
separateness because it failed to prove that the Bank of England exercised “general control
over the day-to-day activities” of an entity so that the entity could be deemed an agent).
133 See Alejandre v. Telefonico Larga Distancia de Puerto Rico, 183 F.3d 1277, 1283 & n.
13 (11th Cir. 1999)(noting the court “conduct[s] exactly the same inquiry in order to
determine both whether an exception to the Cuban Government’s immunity from
garnishment also applies to [Empresa de Telecomunicaciones de Cuba, S.A. (“ETECSA”)]
and whether ETECSA can be held substantively liable for the Government’s debt to the
plaintiffs: namely, whether the plaintiffs have overcome the presumption that ETECSA is
a juridical entity separate from the Government”).
134 See 67 F.Supp.2d at 538 (“In order to levy against a third-party’s property, the judgment
creditor must prove that the property of a third-party can be seized because: (1) the
third-party is an agent, alter ego, or instrumentality of the judgment debtor; (2) the
third-party is a garnishee of the judgment debtor; or (3) there was a conveyance of property
between the judgment debtor and the third-party which was motivated by the intent to
defrauding creditors.”).

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CRS-42
(1) which is a separate legal person, corporate or otherwise, and
(2) which is an organ of a foreign state or political subdivision thereof, or a majority
of whose shares or other ownership interest is owned by a foreign state or political
subdivision thereof, and
(3) which is neither a citizen of a State of the United States as defined in section
1332 (c) and (d) of this title, nor created under the laws of any third country.135
Thus, only the property of the foreign State or its agencies and instrumentalities
would be subject to attachment, and any assets associated with a separate-entity
“property interest” that are not owned by the foreign State or its agencies or
instrumentalities could not be levied against by judgment creditors; stripping such
assets of immunity they do not enjoy would not make them available to judgment
creditors of the foreign State for attachment. On the other hand, if the proposed
language were interpreted to make assets of third parties available for execution by
judgment creditors, constitutional questions regarding due process may arise.
Proposed subsection (g)(2), captioned “U.S. sovereign immunity inapplicable,”
would make a property interest described in (g)(1) that is regulated by reason of U.S.
sanctions not immune by reason of such regulation from execution to satisfy a
judgment rendered under section 1605(a)(7). It would not explicitly waive U.S.
sovereign immunity,136 but appears designed to defeat provisions in the sanctions
regulations that make blocked property effectively immune from court action.137 In
this respect, it echoes language in current § 1610(f)(1), except that it applies only to
regulated property interests rather than property that is blocked or regulated pursuant
to sanctions regimes, and it would not be subject to the presidential waiver in
§ 1620(f)(3). Unlike § 201 of TRIA (28 U.S.C. § 1610 note), the new language
would apply to regulated rather than blocked assets,138 and it would allow assets to
be attached in aid of enforcing punitive damages.
135 28 U.S.C. § 1603(b).
136 For a court to recognize a waiver of U.S. sovereign immunity, it must be “unequivocally
expressed in the statutory text” and “is to be strictly construed, in terms of its scope, in favor
of the sovereign.” See Weinstein at 56 (citing Dep't of the Army v. Blue Fox, Inc., 525 U.S.
255, 261 (1999)).
137 See, e.g., 31 C.F.R.§ 335.203(e) (“Unless licensed or authorized pursuant to this part any
attachment, judgment, decree, lien, execution, garnishment, or other judicial process is null
and void with respect to any property in which on or since the effective date there existed
an interest of Iran.”); 31 C.F.R. § 575.203(e)(same, with respect to Iraq).
138 TRIA § 201(d)(2) defines ‘blocked asset’ to mean property seized or frozen pursuant to
certain sanctions, but not property that may be transferred pursuant to a license that is
required by statute other than IEEPA or the United Nations Participation Act of 1945. It
also excludes diplomatic or consular property being used solely for diplomatic or consular
purposes, from the definition of ‘blocked asset.’ This definition explicitly applies only
within TRIA § 201, and may not have any bearing on the meaning of ‘regulated property
interest’ in the context of the FSIA, which does not define ‘property’ or ‘property interest.’
TRIA does not refer to regulated assets, so it is unclear whether ‘blocked’ and ‘regulated’
are mutually exclusive terms, or whether ‘blocked’ assets would be considered to be
‘regulated’ as well.

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CRS-43
Despite its caption, new section (g)(2) would not likely make funds in the U.S.
Treasury, such as any funds set aside to pay a debt to Iran139 or those held in the
Foreign Military Sales (FMS) trust fund account presently under dispute between Iran
and the United States, reachable by judgment creditors. To allow attachment of the
FMS trust fund would eliminate the U.S.’ ability to claim a right to claim those funds
in subrogation of payments made pursuant to VTVPA § 2002 in the event the Iran-
U.S. Claims Tribunal issues an award in Iran’s favor. It is also unclear whether the
proposed language would enable judgment creditors to levy against property held by
others in the United States that is contested before the Iran-U.S. Claims Tribunal. To
make such assets available to holders of terrorism judgments could affect the rights
of other persons who claim an interest in the property, and could also breach U.S.
obligations under the Algiers Accords. New section (g)(2) would not likely affect the
rights of those who received U.S. funds in partial payment of their judgments against
Iran, who would likely remain barred by the applicable provisions of VTVPA § 2002
from attaching certain property or attempting (in certain cases) to collect the punitive
portions of their damages.

Sec. 3 of H.R. 865 would amend the Victims of Crime Act by changing the
effective date to October 23, 1988 (instead of December 21, 1988), and would
expressly include investigations in civil matters. This would make available funds
under the Victims of Crime Act, 42 U.S.C. § 10603(c), to pay costs associated with
appointment of a special master to determine civil damages for the bombing of the
Marine barracks in Lebanon in 1983. Subsection (b) would direct the Attorney
General to make such funds available for that purpose in the matter of Person v.
Islamic Republic of Iran, Case No. 01CV02094 (RCL), probably a reference to
Peterson v. Islamic Republic of Iran,140 a suit brought by those injured as a result of
the 1983 bombing of the Marine barracks in Lebanon.
Section 4 of H.R. 865 would provide for the establishment of an automatic lien
of lis pendens with respect to all real or tangible personal property located within the
judicial district that is titled in the name of a defendant State sponsor of terrorism or
any entities listed by the plaintiff as “controlled by” that State (not further defined),
upon the filing of a notice of action in complaints that rely on the terrorism exception
to the FSIA. There are no federal procedures for establishing lis pendens; the rules
vary by state. Ordinarily, the doctrine of lis pendens applies to specific property at
issue in a dispute, which must be described with sufficient specificity to enable a
prospective purchaser to identify it. Lis pendens applies with respect to only the
property described in the notice, and cannot affect other property of a defendant.141
It is not ordinarily available in suits seeking money judgments over matters unrelated
139 See Flatow v. Islamic Republic of Iran, 74 F.Supp.2d 18 (D.D.C. 1999)(holding that FSIA
terrorist State provisions exceptions did not authorize attachment of United States Treasury
funds owed to Iran in accordance with an award of the Iran-United States Claims Tribunal,
as such funds remained the property of the United States, and the amendments did not
contain the express and unequivocal waiver required to abrogate the United States’
sovereign immunity).
140 264 F.Supp.2d 46 (D.D.C. 2003).
141 54 C.J.S. Lis Pendens § 31 (1987).

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CRS-44
to the property unless and until a valid judgment has been awarded.142 It does not
generally apply to negotiable instruments.143
Ordinarily, the purpose of filing a lis pendens in civil litigation is to put third-
parties on notice that the property is the subject of litigation, which effectively
prevents the alienation of such property, although it is not technically a lien. Its
effect is to bind a person who acquires an interest in property subject to litigation to
the result of the litigation as if he or she were a party to it from the outset.144
However, in the case of State sponsors of terror, whose property for the most part is
already subject to substantial limitations on transactions, the primary utility may be
the establishment of a line of priority among lien-holders, to determine which
successful plaintiffs have priority in collecting from the defendant’s assets. In the
case of suits filed under 28 U.S.C. § 1605(a)(7), H.R. 865 would direct the clerk of
the district court to file the notice of action “indexed by listing as defendants and all
entities listed as controlled by any defendant.” This would appear intended to relieve
plaintiffs of the burden of identifying specific property in the notices,145 but it is
difficult to see how adequate notice could be afforded to purchasers under the
procedure. Due process implications may arise both with respect to entities alleged
to be controlled by the defendant State and third parties who acquire an interest in
their property after notice of an action is filed. The proposed language would have
no effect on actions in state court, and would not explicitly exclude diplomatic or
consular property.
Section 5 would establish that the above amendments would apply retroactively
and that in the case of any action that was dismissed before the enactment of the bill
that would be made cognizable by the bill, the 10-year statute of limitations would
be tolled from the time the action was first filed to 60 days after the enactment of the
bill. It does not appear that the bill would enable plaintiffs whose cases were not
dismissed, but who suffered some other adverse ruling (for example, denying
punitive damages), to reopen their case. To the extent that this provision would
reopen any cases that have already been finally adjudicated (no longer subject to
appeal), it may be viewed as an unconstitutional usurpation of a judicial function.146
142 Id. § 11.
143 Id. § 10.
144 Id. § 34.
145 Section 4’s limitation to property located within the judicial district where the complaint
is filed may limit its usefulness to plaintiffs in this respect. It is typical for judgment-holders
in these cases to seek to attach assets in multiple jurisdictions, while venue is generally
available to bring such actions against a foreign State only in the D.C. Circuit or in “any
judicial district in which a substantial part of the events or omissions giving rise to the claim
occurred, or a substantial part of property that is the subject of the action is situated.” 28
U.S.C. § 1391(f).
146 Plaut v. Spendthrift Farm, Inc., 514 U.S. 211 (1995)(invalidating a statute that
retroactively extended the statute of limitations for certain claims under the Securities
Exchange Act of 1934).

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Suits Against the United States for “Terrorist” Acts
At least two of the States affected by the FSIA exception appear to have enacted
legislation allowing their citizens to file suit against the United States for violations
of human rights or interference in the countries’ internal affairs. Cuba reportedly
allows such suits for violations of human rights; and two judgments assessing
billions of dollars in damages against the U.S. have apparently been handed down.147
Iran reportedly has authorized suits against foreign States for intervention in the
internal affairs of the country and for terrorist activities resulting in the death, injury,
or financial loss of Iranian nationals; and at least one judgment for half a billion
dollars in damages has been handed down against the U.S.148
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 in Congress. But subsequent difficulties in obtaining payment of the
substantial damages assessed in default judgments by the courts and subsequent
efforts in Congress to facilitate or allow such payment out of the assets of such States
located in the United States have raised issues fraught with both emotion and
complexity. Matters of effectiveness, fairness, diplomacy, and possible reciprocal
action against U.S. assets abroad have all entered the debate. In addition, the issue
has pitted the compensation of victims of terrorism against U.S. compliance with
specific international obligations and, most recently, against the use of funds for the
reconstruction of Iraq.
As the situation stands now, claimants in a first tier of cases designated under
§ 2002 of the Victims of Trafficking Act were able to obtain either 100 percent or
110 percent of their compensatory damages awards – nearly $100 million in one case
against Cuba out of Cuba’s blocked assets, more than $380 million in ten cases
against Iran out of U.S. funds. Claimants in a second tier of cases designated under
§ 2002 received a smaller percentage of their compensatory damages awards – about
20 percent. Under § 201 of the Terrorism Risk Insurance Act, claimants in other
cases not covered by § 2002 may now compete with each other to lay claim to the
blocked assets of terrorist States to satisfy the compensatory damages portions of
their judgments. But in the case of Iran – the defendant in the largest number of suits
filed, those blocked assets are virtually non-existent; and Presidential Determination
2003-23 has made Iraq’s blocked assets unavailable as well. Disagreement among
the courts as to whether a cause of action exists to sue terrorist States themselves, as
opposed to their employees, officials, and agents, casts the status of many of such
cases in doubt. Confusion about the definition of an “agency or instrumentality” of
a foreign State also lends uncertainty to these lawsuits. Iran’s petition in the Elahi
case may provide the Supreme Court with an opportunity to address some of the
147 Law Library of Congress, Suits Against Terrorist States: Cuba (Feb. 2002) (Rept No.
2002-11904).
148 Law Library of Congress, Iran: Suits Against Americans for Acts of Terrorism (July
2003) (Rept. No. 2003-14887) and Christian Science Monitor, “Tehran Court Rules Against
U.S.” (Feb. 3, 2003), at 6.

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CRS-46
myriad issues raised by the terrorism exception to the FSIA, if it decides to take the
case.
Thus, notwithstanding Congress’ enactments, the compensation of victims of
terrorism who have brought suit, or will bring suit, under the terrorist State exception
to the FSIA seems likely to continue in an ad hoc fashion, with substantial benefits
for some and little or none for others. The issue seems certain to continue to draw
Congressional attention.

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CRS-47
APPENDIX I
Judgments Against Terrorist States Covered By,
and Payments Made Pursuant to, § 2002
Amount Paid
Compensatory
Punitive
Pursuant to
Procedure
Judgment
Damages
Damages
§ 2002
Used
Awarded
Awarded
(Including
Interest)
Alejandre v. Republic of Cuba, 996
$50 million
$137.7 million
$96,708,652.03
Paid from liquidated Cuban
F.Supp. 1239 (S.D. Fla. 1997)
assets
Flatow v. Islamic Republic of Iran, 999
$22.5 million
$225 million
$26,002,690.15
100% option
F.Supp.2d 1 (D.D.C. 1998)
(appropriated funds)
Cicippio v. Islamic Republic of Iran, 18
$65 million
$0
$73,260,501.72
100% option
F.Supp. 2d 62 (D.D.C. 1998)
(appropriated funds)
Anderson v. Islamic Republic of Iran,
$41.2 million
$300 million
$47,315,791.80
110% option
90 F.Supp.2d 107 (D.D.C. 2000)
(appropriated funds)
Eisenfeld v. Islamic Republic of Iran,
$24.7 million
$300 million
$27,365,288.83
100% option
172 F.Supp.2d 1 (D.D.C. 2000)
(appropriated funds)
Higgins v. Islamic Republic of Iran,
$55.4 million
$300 million
$57,086,233.16
100% option
2000 WL 33674311 (D.D.C. 2000)
(appropriated funds)
Sutherland v. Islamic Republic of Iran,
$53.4 million
$300 million
$56,084,467.27
One claimant chose the
151 F.Supp.2d 27 (D.D.C. 2001)
110% option, the others the
100% option
(appropriated funds)
Polhill v. Islamic Republic of Iran,
$31.5 million
$300 million
$35,041,877.36
110% option
2001 WL 34157508 (D.D.C. 2001)
(appropriated funds)
Jenco v. Islamic Republic of Iran, 154
$14.64 million
$300 million
$14,865,685.76
100% option chosen
F.Supp.2d 27 (D.D.C. 2001)
(appropriated funds)

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CRS-48
Amount Paid
Compensatory
Punitive
Pursuant to
Procedure
Judgment
Damages
Damages
§ 2002
Used
Awarded
Awarded
(Including
Interest)
Wagner v. Islamic Republic of Iran, 172
$16.28 million
$300 million
$18,032,569.00
110% option chosen
F.Supp.2d 128 (D.D.C. 2001)
(appropriated funds)
Stethem v. Islamic Republic of Iran, 201
$21.2 million
$300 million (jointly with
$21,579,737.64
100% option chosen
F.Supp.2d 78 (D.D.C. 2002)
Carlson)
(appropriated funds)
Carlson v. Islamic Republic of Iran,
$7.8 million
$300 million (jointly with
$ 8,784,584.90
110% option chosen
201 F.Supp.2d 78 (D.D.C. 2002)
Stethem)
(appropriated funds)
Martinez v. Republic of Cuba, No.
$7.1 million
$20 million
at least $7.1 million*
Paid from Cuban assets
13-1999-CA 018208 (Miami-Dade Co.,
Fla., Cir. Ct. decided March 9, 2001)
Cases added by P.L. 107-228 and
TRIA:
Elahi v. Islamic Republic of Iran, 124
$11.7 million
$300 million
$ 2,342,729.89
Pro rata payment
F.Supp.2d 97 (D.D.C. 2000)
(appropriated funds)
Mousa v. Islamic Republic of Iran, 238
$12 million
$120 million
$ 2,394,606.04
Pro rata payment
F.Supp.2d 1 (D.D.C. 2001)
(appropriated funds)
Weinstein v. Islamic Republic of Iran,
$33 million
$150 million
$ 6,634,687.87
Pro rata payment
184 F.Supp.2d 13 (D.D.C. 2002)
(appropriated funds)
Hegna v. Islamic Republic of Iran, No.
$42 million
$333 million
$ 8,387,121.10
Pro rata payment
1:00CV00716 (D.D.C. 2002)
(appropriated funds)
Kapar v. Islamic Republic of Iran, C.A.
$13.5 million
$0
approx. $2.5 million*
Pro rata payment
No. 02-CV-78- HHK (D.D.C. 2004)
(appropriated funds)
Note: Information on the amounts paid under § 2002 has been provided by the Office of Foreign Assets Control (OFAC) and is current as of July, 2003 (*these figures have not been
confirmed by OFAC but are estimates of amounts payable under the statute). Claimants in the first tier (Flatow through Carlson) choosing the 100 percent option were entitled to receive

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CRS-49
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 who chose the 110 percent option were 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. The claimants in the second tier (added by P.L. 107-228 and TRIA) divided the amount
remaining in the fund on a pro rata basis and were not required to give up their right to recover additional compensatory damages, except from property at issue before an international
tribunal. Our research shows that at least 14 additional judgments have been awarded in cases not covered under § 2002, with a total value of $2.44 billion ( $575,264,848.19 of this
figure is compensatory damages, the remaining $1,865,000,000.00 represents punitive damages. This figure does not include the vacated award in the Acree case). Judgment creditors
in this category of cases may attempt to collect compensatory (but not punitive damages) from all blocked assets of the defendant State under TRIA § 201, except for diplomatic and
consular property where the President has issued a waiver and property that does not fall under an exception in 28 U.S.C. § 1610.

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CRS-50
APPENDIX II
Amount of Assets of Terrorist States
State
Blocked Assets
Non-blocked
Assets
in millions of
in millions of
dollars
dollars
Cuba
$ 192.0
$0
Iran
$ 23.2
$59.0
Libya*
$1247.9
$0
North Korea
$ 31.7
$0
Sudan
$ 60.5
$0
Syria
$ 0.0
$58.0
Total
$1555.3
$117
Note: This information is from the Calendar Year 2004 Thirteenth
Annual Report to the Congress on Assets in the United States of Terrorist
Countries and International Terrorism Program Designees (September,
2004), which was prepared by the Office of Foreign Assets Control in the
Department of the Treasury. These values may fluctuate. *Libya’s assets
are no longer blocked as of September 21, 2004, pursuant to E.O. 13357
(terminating national emergency with respect to Libya).

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