Metropolitan News-Enterprise


Thursday, May 31, 2007


Page 1


Ninth Circuit: Brother Of Slain Dissident Can Attach Award to Iran




The brother of a victim of Iranian terrorism can collect $2.8 million from a California company that owes Iran for a cancelled weapons shipment, the Ninth U.S. Circuit Court of Appeals ruled yesterday for the second time.

The panel ruled in favor of Dariush Elahi, the brother of Cyrus Elahi, an Iranian-born U.S. citizen murdered in Paris in 1990, reportedly by agents of Iran’s Islamist regime. The panel’s first ruling was handed down in October 2004, but the U.S. Supreme Court ordered reconsideration.

The high court directed the judges to determine whether Iran’s Ministry of Defense is a “core” part of the Iranian government, and thus immune from being sued in this country under the Foreign Sovereign Immunities Act. In an unusual twist, the panel concluded yesterday that FSIA immunity indeed applies, but said that a law enacted by Congress in 2002 allows Elahi to attach the money anyway.

U.S. District Judge Rudi M. Brewster of the Southern District of California allowed Dariush Elahi to attach the $2.8 million awarded the ministry in an International Chamber of Commerce arbitration proceeding on Iran’s claim for undelivered military hardware sold by Cubic Defense Systems, Inc. of San Diego in the 1970s.

Contract Dispute

Cubic’s dispute with Iran goes back to 1977, when it entered into a contract to sell and service an Air Combat Maneuvering Range for use by the Iranian Air Force. Like other military items, however, the system went undelivered after the Iranian revolution of 1979.

In 1991, Iran invoked the arbitration clauses of its contracts with Cubic and called for proceedings before the Zurich-based International Chamber. The panel ruled in favor of Iran, and in 1998 Iran petitioned the Southern District court to confirm the award.

Judgment confirming the award, entered in December 1998, was appealed by Cubic. Elahi filed a lien against the award to enforce a judgment obtained under the Antiterrorism and Effective Death Penalty Act of 1996.

AEDPA allows Americans to sue a foreign state if it committed a terrorist act that injured or killed a U.S. citizen, or provided material support to the person or entity that did.

Cyrus Elahi was an official of Flag of Freedom, a group that favors restoring the Iranian monarchy. He was shot six times in the head in his Paris apartment building, and authorities in France and in the United States have linked the killers to the Iranian government.

Dariush Elawi was awarded more than $11 million in compensatory damages, and $300 million in punitive damages. He later accepted partial payment of that judgment from the U.S. government under the Terrorism Risk Insurance Act of 2002.

Among other things, TRIA amended the Victims Protection Act enacted two years earlier, which created a $400 million fund to compensate victims of Iran- and Cuba-sponsored terrorism.

Statutory Cutoff

Recipients of the money were given two options—accept 110 percent of their compensatory damages in full satisfaction of their judgments, or accept 100 percent of their compensatory damages from the fund while pursuing collection of punitive damages against the defendants.

Elahi was not eligible for payment under the VPA because he received final judgment three weeks after the July 2000 cutoff date established by the statute.

TRIA, however, amended the VPA by allowing Elahi and others in his position to receive pro rata payments of compensatory damages from the fund, conditioned upon their giving up all rights to punitive damages, as well as the right to execute against or attach “property that is at issue in claims against the United States before an international tribunal.”

Elahi accepted $2.3 million as his pro rata share of the compensation fund, but continued to pursue his claim to attach the $2.8 million held by Cubic.

In supplemental briefing to the Ninth Circuit, the Iranian government and the Bush administration both argued that Elahi’s waiver under TRIA extended to the Cubic funds because Iran is currently seeking damages from the United States as a result of the non-delivery of the Cubic ACMR, in a proceeding before the Iran-U.S. Claims Tribunal.

The divided appellate panel disagreed with the two governments.

Senior Judge Betty B. Fletcher, writing for the court, explained that the wrong for which Iran seeks damages before the claims tribunal is the failure of the United States to export the ACMR, not the breach by Cubic that was already adjudicated by the International Chamber of Commerce.

Thus, the judge wrote, the property sought by Elahi is not “at issue” before the tribunal.

Judges Kim M. Wardlaw agreed, but Judge Raymond C. Fisher, who had sided with Elahi earlier, did not.

“Although the Cubic judgment will affect the amount of money damages the United States will have to pay, the majority concludes that the Cubic judgment is not ‘at issue’ in [tribunal] Case B/61 and can be attached by Elahi,” Fisher wrote. “As a result, the government — if found liable in Case B/61 — will no longer have the benefit of the $2.8 million Cubic judgment that otherwise would be deducted by offset. Because the majority’s interpretation of ‘at issue’ contradicts the term’s plain meaning and Congress’ intent in passing TRIA, I respectfully dissent.”

The case is Ministry of Defense of Iran v. Elahi, 04-1095.


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