Justice for United States Victims of State Sponsored Terrorism Act: Eligibility and Funding

Justice for United States Victims of State Sponsored Terrorism Act: Eligibility and Funding

Updated April 11, 2023
Justice for United States Victims of State Sponsored Terrorism
Act: Eligibility and Funding
Since 1996, the Foreign Sovereign Immunities Act (FSIA;
Compensation Fund established by Section 405 of the Air
28 U.S.C. §§ 1602-11) has authorized U.S. courts to order
Transportation Safety and System Stabilization Act (49
state sponsors of terrorism—namely, Iran, North Korea,
U.S.C. § 40101 note). The Clarification Act also enabled
Cuba, and Syria, and previously Libya, Iraq, and Sudan—to
some previously excluded Iran Hostage claimants to receive
pay monetary damages to terrorism victims. Courts have
compensation.
since awarded billions of dollars against these states.
Although these states have largely not participated in this
Fairness for 9/11 Families Act
litigation at the merits phase, some of them have appeared
In 2022, Congress passed the Fairness for 9/11 Families Act
in court to prevent plaintiffs from collecting their assets.
(Division MM of P.L. 117-328) (Fairness Act), which
amended the Act to provide for catch-up payments for 9/11
Satisfaction of Terrorism Judgments
victims made eligible by the Clarification Act and payments
Claims against Libya, and some claims against Sudan, were
for certain victims of either the 1983 Beirut Marine
ultimately resolved through bilateral claims settlement
barracks bombing or the 1996 Khobar Towers bombing.
agreements. Congress preserved claims against Sudan
The catch-up payments allow eligible 9/11 victims to
involving victims and family members of the 9/11 attacks
receive a percentage of their claims from the Fund equal to
in the Consolidated Appropriations Act, 2021 (P.L. 116-
the percentage other 9/11 family members received in
260). Judgments against Iraq were paid through liquidating
earlier rounds. The Fairness Act appropriates sufficient
Iraqi assets frozen pursuant to the International Emergency
funds to make these one-time catch-up payments as
Economic Powers Act (IEEPA; 50 U.S.C. §§ 1701 et seq.),
assessed by the Government Accountability Office (GAO)
prior to vesting the remaining Iraqi assets in the United
pursuant to the Clarification Act—which is approximately
States for the Development Fund for Iraq.
$2.7 billion.
Some judgment holders against other state sponsors of
The Fairness Act also directs GAO to assess catch-up
terrorism received compensation through Section 2002 of
payments for certain victims of the 1983 Beirut Marine
the Victims of Trafficking and Violence Protection Act
barracks bombing and the 1996 Khobar Towers bombing
(P.L. 106-386) or by attaching frozen assets pursuant to
who obtained final judgments prior to December 29, 2022,
Section 201 of the Terrorism Risk Insurance Act (28 U.S.C.
but were never deemed eligible for compensation. The
§ 1610 note) to satisfy the judgment. Due to the scarcity of
Fairness Act establishes a $3 billion reserve fund to make
these states’ attachable assets in the United States, the vast
these catch-up payments, and the claimants must submit
majority of terrorism judgments remain outstanding.
applications to the Fund by June 27, 2023.
Congress has taken steps to enable these judgment creditors
Eligibility
to obtain at least some of the damages owed to them.
In order to be eligible for compensation from the USVSST
Passed as part of the Consolidated Appropriations Act,
Fund, a claimant must be a natural person (i.e., not a
2016 (P.L. 114-113), the Justice for United States Victims
corporation or some other legal entity), regardless of
of State Sponsored Terrorism Act (Act), 34 U.S.C. § 20144,
citizenship, who has not been found criminally culpable for
established the United States Victims of State Sponsored
an act of international terrorism and who:
Terrorism Fund (USVSST Fund or Fund) to provide a
means for creditors with terrorism judgments against
(1)(i) holds a final judgment, decree, or order on liability
designated state sponsors of terrorism to satisfy the
and damages (ii) issued by a U.S. federal district court (ii)
compensatory portion of their judgments. Congress has
against a designated state sponsor of terrorism (iv) based on
since amended the Act to expand the scope of eligibility for
an injury arising from an act of torture, extrajudicial killing,
compensation under the Fund, among other things.
aircraft sabotage, or hostage taking, or the provision of
material support for such an action (v) for which the state is
2019 Clarification Act
not immune under the FSIA’s terrorism exception (28
In 2019, Congress passed the Justice for United States
U.S.C. § 1605A or previous 28 U.S.C. § 1605(a)(7)) (vi)
Victims of State Sponsored Terrorism Clarification Act
that has not been satisfied, relinquished, espoused by the
(Title VII of P.L. 116-69) (Clarification Act). The
United States, or resolved pursuant to a bilateral claims
Clarification Act amended the Act to provide coverage for
agreement;
9/11 victims with judgments against Iran, some of whom
were prohibited under the original Act from receiving
or
compensation from the Fund because they had received
compensation from the September 11th Victim
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Justice for United States Victims of State Sponsored Terrorism Act: Eligibility and Funding
(2) was held hostage by Iran from November 4, 1979,
 using the assets distributed (about $1.7 billion) in
through January 20, 1981, or is the spouse or child of such a
Peterson v. Islamic Republic of Iran, No. 10 Civ. 4518
person if identified as a member of the proposed class in
(S.D.N.Y.) to the extent the creditors elected to
Roeder v. Islamic Republic of Iran, Docket No. 1:00-CV-
participate in the USVSST Fund.
03110 (D.D.C.);
Eligible claimants who provide information to the Attorney
or
General that leads to a forfeiture required to be paid into the
Fund may receive a reward amounting to 10% of the
(3) was held hostage by Iran during the period from
amount deposited into the Fund.
November 4, 1979, through January 20, 1981, did not have
an eligible claim before November 21, 2019, and submitted
Payments
an application for payment by February 19, 2020.
The USVSST Fund made an initial series of payments
beginning on March 10, 2017, amounting to
The USVSST Fund entitles eligible claimants to receive up
$1,040,902,501.89. The Fund allocated another $1.095
to $20 million per individual or $35 million for families.
billion for second-round payments beginning on January 2,
9/11 family members who are not spouses or dependents of
2019. The Fund authorized $1.075 billion for third-round
9/11 decedents are capped at $20 million for each family.
payments beginning May 19, 2020. A fourth round of
Qualifying victims of the Iran Hostage Crisis are eligible
payments allocating $100,045,500 began on January 4,
for compensation, up to $4.4 million per former hostage
2023. The Special Master reported that, after the fourth-
who was held hostage for the entire 441 days, or the amount
round payments, $107,824,579,332.47 will remain
of $600,000 each for their spouses and children. Hostages
outstanding. That amount will likely increase as courts
taken from the U.S. Embassy in Tehran but held for less
continue to award judgments.
than the entire period of the Iran Hostage Crisis are eligible
to receive $10,000 per day of captivity; their spouses and
Payments are made on a pro rata basis, with half of the
children remain ineligible for compensation from the
available funds to be distributed to 9/11 claimants and half
USVSST Fund. Applicants whose claims are denied may
to be distributed among non-9/11 claimants. Claimants who
request a hearing with the Special Master, but awards or
have received 30% or more of the amount of their
denials of awards are not subject to judicial review.
compensatory damages from sources other than the
USVSST Fund (including life insurance; pension funds;
Funding
death benefit programs; payments by federal, state, or local
Congress established the USVSST Fund with an initial
governments, not including the September 11 Victim
deposit of $1,025,000,000, which is the amount paid to the
Compensation Fund; and court-awarded compensation) will
United States pursuant to the June 27, 2014 plea agreement
not receive payment from the USVSST Fund until such
and settlement between the United States and the French
time as all other eligible claimants have received 30% of
bank BNP Paribas for sanctions violations. The Fund
their compensatory damages. Applicants who have received
continues to be financed:
some but less than 30% of compensatory damages from
other sources may apply for a proportionate sum.
 from all funds and the net proceeds from the sale of
property forfeited or paid to the United States as
The Act prohibits attorneys representing claimants from
criminal penalty or fine arising from the violation of
charging more than 25% of any payment made from the
regulations issued under IEEPA; the Trading with the
USVSST Fund. After November 21, 2019, no attorney
representing a 9/11-related claimant may charge fees and
Enemy Act (50 U.S.C. App. §§ 1 et seq.); or any related
costs that together exceed 15% of any award payment.
civil or criminal conspiracy, scheme, or other federal
offense related to doing business or acting on behalf of a
The United States is to be subrogated to the rights of
state sponsor of terrorism;

applicants who receive payment from the USVSST Fund,
from half of all funds and net proceeds from the sale of
meaning it can seek to recover from the debtor state
property forfeited or paid to the United States as a civil
sponsors of terrorism any amounts the Fund pays to eligible
penalty or fine arising out of the same types of
claimants in satisfaction of those states’ judgments. The Act
violations prior to November 19, 2019, and 75% of such
requires the President to pursue subrogation rights as claims
funds and proceeds thereafter;
or offsets of the United States in appropriate ways, such as
 using proceeds from the sale of any Iranian property
through potential negotiations surrounding the
forfeited in In re 650 Fifth Avenue and Related
normalization of relations. Judgment holders are permitted
to pursue satisfaction of any unpaid portion of their
Properties, No. 08 Civ. 10934 (S.D.N.Y. filed Dec. 17,
judgments—including punitive damages and pre- or post-
2008), minus ligation expenses and sales cost, and not
judgment interest awarded by the district court—through
including the proceeds attributable to any party
enforcement actions in court.
identified as a Settling Judgment Creditor in that case
who did not elect to participate in the USVSST Fund;
Jennifer K. Elsea, Legislative Attorney
and
IF10341

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Justice for United States Victims of State Sponsored Terrorism Act: Eligibility and Funding

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https://crsreports.congress.gov | IF10341 · VERSION 8 · UPDATED