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Summary:
In 1996 Congress amended the Foreign Sovereign Immunities Act (FSIA) to allow U.S. victims of terrorism to sue designated State sponsors of terrorism for their terrorist acts. The courts have handed down large judgments against the terrorist State defendants, generally in default, and successive Administrations have intervened to block the judicial attachment of frozen assets to satisfy judgments. After a court ruled that Congress never created a cause of action against terrorist States themselves, but only against their officials, employees, and agents, plaintiffs have based claims on state law. The limited availability of defendant States' assets for satisfaction of terrorism judgments has made collection difficult. Congress passed a rider to the National Defense Authorization Act for FY2008 (H.R. 1585), to provide a federal cause of action against terrorist States and to facilitate enforcement of judgments. After the President vetoed the bill based on the possible impact the measure would have on Iraq, Congress passed a new version, H.R. 4986, this time authorizing the President to waive its provisions with respect to Iraq. P.L. 110-181. The measure, � 1083 of P.L. 110-181, is the latest in a series of actions Congress has taken over the last decade to assist plaintiffs in lawsuits against terrorist States. The 107th Congress enacted as part of the Terrorism Risk Insurance Act of 2002 ("TRIA") (P.L. 107-297) a provision that overrode Administration objections to allow the attachment of blocked assets of terrorist States to pay compensatory damages in terrorism suits. That statute also added several judgments against Iran to the ten that were eligible for compensation out of U.S. funds under � 2002 of the Victims of Trafficking and Violence Protection Act of 2000 ("VTVPA") (P.L. 106386). In 2003, President Bush vested title to Iraqi frozen assets for use in Iraq's reconstruction, making the assets unavailable to judgment creditors. The Administration then intervened in a case against Iraq by POWs from the first Gulf War to vacate their judgment. (Acree v. Republic of Iraq). The Supreme Court in 2006 vacated a decision allowing the attachment of a judgment owed to Iran's Ministry of Defense (MOD) based on the FSIA commercial property exception, MOD v. Elahi. On remand, the lower court found that the MOD is a part of Iran and not a separate agency or instrumentality, a finding that could have implications in cases against other foreign governmental agencies for assessing punitive damages and determining which of their assets are entitled to immunity. This report provides background on the doctrine of State immunity and the FSIA; details the evolution of the terrorist State exception and some of the resulting judicial decisions; describes legislative efforts to help claimants satisfy their judgments; summarizes the decision in the hostages' suit against Iran and Congress's efforts to intervene; summarizes what has happened with Iraq's assets, and provides an overview of proposed legislation (H.R. 3346, S. 1944, H.R. 394, H.R. 5167, and H.R. 2764). Appendix A provides a list of cases, including those covered by TRIA � 2002 as amended and the amount of compensation paid. Appendix B lists the amount of the assets of each terrorist State currently blocked by the United States. The report will be updated as events warrant.
