Terror Victims Eye Thawing With Iran

The nuclear deal between the U.S. and Iran doesn’t address a key source of tension: the billions of dollars U.S. courts say Iran owes to terrorism victims.

Over the past two decades, terrorism victims have filed about 100 lawsuits against Iran in U.S. courts, accusing the government of sponsoring attacks around the world, including the Sept. 11, 2001, attack. Federal judges have awarded victims a total of approximately $45 billion, including $21.6 billion in compensatory damages, according to calculations by Crowell & Moring LLP. Iran has refused to pay.

A State Department official said there were no discussions of terrorism victims during the nuclear talks, but the U.S. remains committed to looking for ways for victims to seek compensation. Victims’ lawyers are hoping that a thawing of relations with Iran could pave the way for an eventual resolution of the terrorism claims.

“To really have a rapprochement with Iran, the terrorism sanctions and judgments have to be dealt with one way or another,” said Stuart Newberger, a partner at Crowell & Moring who represents terrorism victims, including the Americans who were killed in U.S. embassy bombings in Kenya and Lebanon.

Terror victims and their families have limited options to seek compensation through the legal system. New laws passed in recent decades, such as the 1996 Antiterrorism and Effective Death Penalty Act, have allowed victims to sue countries like Iran in U.S. courts for monetary damages. Enforcing the judgments is an entirely separate challenge.

Victims’ lawyers have scoured the globe for Iranian assets and sought out creative solutions to get paid. They have gone after Iranian central bank funds deposited at Citibank, a case that is awaiting potential review by the U.S. Supreme Court. They are among the parties trying to win the proceeds generated by the potential forfeiture and sale of a 36-story office building in New York City, which a federal court found to be owned by the Iranian government. That case is currently on appeal with the Second U.S. Circuit Court of Appeals.

Victims are also trying to win a portion of the approximate $9 billion penalty paid by French bank BNP Paribas SA to the U.S. government last year for facilitating illegal transactions for Iran and other sanctioned countries.

The agreement reached three weeks ago pertains strictly to nuclear sanctions, leaving the sanctions related to terrorism and human rights intact for now. However, even lifting just the nuclear sanctions could free up billions of Iranian assets in Europe and elsewhere that victims may attempt to seize as part of their judgments, victims’ lawyers say.

“If [the nuclear deal] goes through, resolving terror cases inevitably comes up next,” said James Kreindler, who specializes in terrorism litigation at Kreindler & Kreindler LLP and represents the 9/11 victims, among others. “Iran doesn’t want to see sanctions lifted and lawyers for hundreds of plaintiffs attaching their bank funds all around the world.”

Many lawyers point to Libya’s resolution of its terrorism claims under former President George W. Bush as a potential model for how the Obama administration could deal with Iran’s terrorism bill. The U.S. began lifting economic sanctions and normalizing relations with Libya around 2003, after Libya agreed to eliminate its nuclear-weapons program.

As part of the deal, Moammar Gadhafi agreed to pay approximately $4 billion to victims of Libyan-sponsored terrorism, including $2.7 billion to victims of the 1988 bombing of a Pan Am flight that crashed in Lockerbie, Scotland. The final number was reached using a formula that gave $10 million to each wrongful death and $3 million for each personal-injury victim.

Among the dozens of plaintiffs’ groups with judgments against Iran, the biggest judgments have been the $6.1 billion awarded to victims of 9/11 and the $9 billion awarded to victims of the 1983 bombing of a Marine barracks in Beirut. Lynn Smith Derbyshire, whose brother was killed in the Beirut attack, says many victims are closely following the Iran deal to see if it will help their cause. “It’s a constantly open wound,” said Ms. Derbyshire, who is the national spokeswoman for the Beirut families. “You don’t really get to close the book and move on because you’re constantly being reminded of it.”

—Felicia Schwartz contributed to this article.

http://www.wsj.com/articles/terror-victims-eye-thawing-with-iran-1438556669