Suits Against Terrorist States by Victims of Terrorism

Publication Date: July 2008

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Justice

Type:

Abstract:

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.