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Summary:
In § 2002 of the "Victims of Trafficking and Violence Protection Act of 2000," Congress directed the Secretary of the Treasury to pay portions of eleven judgments that have been (or will be) handed down in suits against terrorist states since 1996. With respect to one judgment against Cuba, § 2002 provided that payment would be made out of the assets of Cuba in the United States that have been blocked since 1962. With respect to ten judgments against Iran, Congress directed that payment be made out of appropriated funds (up to a specified ceiling) and that the U.S. then be entitled to seek reimbursement for those payments from Iran. As a consequence, $96.7 million of the $193.5 million in Cuban assets frozen in this country has been paid in the one judgment against Cuba; and over $350 million in U.S. funds has been (or will be) paid in nine judgments against Iran, with one more case not yet decided. Judgments against terrorist states in suits other than these eleven have continued to be handed down by the courts. But § 2002 provided no procedure for claimants in other suits other than those designated to obtain satisfaction of their judgments. Moreover, other questions have been raised about the merits of the compensation program established by § 2002. Nearly six thousand claims against Cuba for death, injury, and expropriation during and after Castro's takeover were determined to be legitimate by the Foreign Claims Settlement Commission in the late 1960s. But no compensation has ever been paid in these cases; and some of these claimants now criticize the use of a substantial portion of Cuba's frozen assets to provide compensation for a single, later terrorist act. In the case of the judgments against Iran, some have questioned the use of U.S. funds to pay compensation. Also, both the Clinton and Bush Administrations have raised objections to past efforts to use diplomatic property and frozen assets to satisfy the judgments against terrorist states. This issue has its origin in amendments to the Foreign Sovereign Immunities Act enacted in 1996 which allow civil suits by U.S. victims of terrorism against the states responsible for, or complicit in, the terrorist act. It has become increasingly complex as Congress has sought to facilitate payment of the judgments rendered. The subject may well be a matter of legislative concern in the second session of the 107th Congress: In the fiscal 2002 appropriations act for the Departments of the Treasury, Justice, and State, Congress directed that the Administration submit a legislative proposal to establish "a comprehensive program to ensure fair, equitable, and prompt compensation for all United States victims of international terrorism" by the time it submits its proposed budget for fiscal 2003. Adding a further element of complexity, the appropriations act also contained a provision authorizing those who were held hostage by Iran in 1979-1981 to bring suit against that state under the terrorist state exception to the FSIA, notwithstanding the agreement in the Algiers Accord that led to their release which barred such suits. This report provides background on the FSIA; details the evolution of the terrorist state exception and subsequent amendments regarding payment of the judgments; sets forth the policy and legal arguments that have been adduced; and lists the cases covered by § 2002, the payments that have been made, and the amount of terrorist state assets frozen in the U.S. The report will be updated as events warrant.
