Metropolitan News-Enterprise


Monday, February 29, 2016


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Panel: Terror Victims Can Attach Judgment Won by Iran


From Staff and Wire Service Reports


Victims of Iran-sponsored terrorist attacks are entitled to attach a $2.8 million judgment the Iranian Defense Ministry won against a U.S. company, the Ninth U.S. Circuit Court of Appeals ruled Friday.

A 2012 executive order by President Obama makes clear that the judgment is a “blocked asset” that can be attached under the Terrorism Risk Insurance Act, or TRIA, the court ruled.

The judgment arose out of an international arbitration proceeding over a missile system that was left undelivered and not completely paid for after the U.S.-allied government was overthrown. The creditors seeking to attach it included nine people who were either injured or had relatives injured in a 1997 suicide bombing at a mall in Jerusalem.

Former Leader’s Son

A tenth victim, France Rafii, is the son of onetime Iranian Prime Minister Shapoir Bakhtiar, whom Iranian agents murdered in his Paris home in 1991 because of his political opposition to the Islamic regime.

While Raffi secured a $5 million default judgment against Iran, the Jerusalem bombing victims won damages ranging from $2.5 million to $15 million because a federal judge found that Iran had provided the bombers with terrorist training and other material assistance.

“Despite these valid judgments against Iran, Lien Claimants initially lacked any means to collect because the state-sponsored terrorism exception to the [Foreign Sovereign Immunities Act] created an anomaly,” Senior Judge Dorothy W. Nelson explained Friday. “While the exception abrogated a foreign sovereign’s immunity from judgment, it left in place the foreign sovereign’s immunity from attachment of its assets.”

They did have one avenue available to them, however, since TRIA, enacted in 2002, permits the attachment of a foreign sovereign’s assets to satisfy terrorism-related judgments.

Rafii and the nine Jerusalem bombing victims here sought to attach the $2.8 million that Iran won in arbitration with Cubic Defense Systems, a San Diego company that bills itself as “the world’s leading provider of air combat training systems throughout the industry.”

Commonly referred to as Air Combat Maneuvering Instrumentation or ACMI, they systems “are what aircrew rely on to train for combat missions more effectively and with less risk,” Cubic says on its website.

Revolution Comes

Though Cubic agreed to sell Iran’s defense ministry one such system for $17 million in the 1970s, the Iranian revolution interrupted the full performance of the sales and maintenance contracts.

After the International Chamber of Commerce found that Cubic owed Iran $2.8 million, plus interest and costs, a federal judge in San Diego confirmed the award in 1999.

When Cubic deposited the funds, the court granted an attachment motion by the claimants. The amount has grown to $9.4 million with interest, Nelson said in a footnote.

An earlier attempt to attach the funds, by Cyrus Elahi—who won a $300 million judgment based on his brother having been murdered in France by Iranian agents—was unavailing. The Supreme Court ruled in 2009 that Elahi had waived his claim by accepting payment from the federal government under a provision of TRIA that allowed persons with terrorism-related judgments against Iran to receive partial payment.

The court Friday rejected Iran’s reliance on the Algiers Accords of Nov. 14, 1979, by which the United States and Iran resolved the Iranian hostage crisis.

Agreeing that the Algiers Accords committed the United States only to restoring Iran to its pre-November 1979 position, the panel found that Iran’s interest in the judgment at issue did not arise until 1998.

‘Blocked Asset’

Finding that the judgment is a “blocked asset” pursuant to 2012 Executive Order No. 13359, the court deemed it subject to attachment and execution pursuant to TRIA.

Obama’s order blocked “all property interests in property of the government of Iran ... that are in the United States,” but it exempted Iranian property and interests in property that had been blocked in 1979 and were then unblocked in 1981, Nelson wrote for the court. Judges Consuelo M. Callahan and N. Randy Smith joined the opinion.

David Strachman, an attorney for the Jerusalem bombing victims, said in an email that the decision “represents a significant blow to Iran and should help discourage that rogue country from harming American Jews in the future.”

Strachman is with McIntyre Tate in Providence, R.I.

Steven Kerekes of Pasadena, the ministry’s lead counsel, did not return an email seeking comment by press time Friday.

The case is Ministry of Defense v. Frym, 13-57182 .


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