By Jeff Schervone, September 1, 2016
Terror victims in the United States seeking relief against State and non-State actors should expect to stand alone in the face of resistance from the Executive and Judicial branches.
On August 31, 2016, the 2d Circuit U.S. Court of Appeals issued an opinion that vacated a $655.5 million judgment awarded to US citizen-victims of terror attacks in Israel during the Second Intifada. The defendants Palestinian Liberation Organization (“PLO”) and Palestinian Authority (“PA”) appealed to the 2d Circuit.
A jury awarded $218.5 million in damages following a trial in the District Court. The damages were trebled under the Anti-Terrorism Act (“ATA”). In a strained analysis under recent U.S. Supreme Court and other Circuit Court decisions, the 2d Circuit deemed the PA and PLO as mere “unincorporated associations” without sufficient ‘minimum contacts’ in the US and concluded that the PA and PLO were not subject to personal jurisdiction under the ATA. As a result, the Court vacated the judgment and ordered that the case be dismissed.
The PA does not have sovereign State status under U.S. law. But as a result of the Oslo process, the PA is recognized as a non-sovereign governmental entity, not subject to sovereign immunity laws. This ambiguous status, according to the 2d Circuit, confers due process rights upon the PA by a sort of process of elimination. That means the applicable jurisdictional test is the same test used for foreign corporations that ‘purposefully avail’ themselves to engaging in commerce in the US.
Under that test, the PA is only an unincorporated association ‘not at home in the US’ and the Court concluded there is no specific jurisdiction. If, for example, the PA/PLO raised funds and engaged in legitimate or illicit financial activities here in the U.S., they might be subject to jurisdiction and the judgments could be collected.
Even if judgments overcome a jurisdiction threshold, it is doubtful that the Executive branch would permit foreign assets held or located in the US to be used to satisfy civil judgments. According to an AP report, the Obama administration opposed paying the $655 million because it would apparently fell the PA, and that is somehow against U.S. interests.
Executive branch opposition to civil judgments against foreign governments is not new. Successive administrations have repeatedly reserved the right to hold onto seized assets in case foreign relations can be restored. In the case of Iran terror victims, it didn’t help. Still listed as a State Sponsor of Terrorism, Iran also has judgments against it for terror attacks against U.S. citizens, including the 1982 Beirut Marine barracks bombing by Iran proxy, Hezbollah. Attorneys for the plaintiffs targeted Iranian assets frozen in 1979 but were blocked by the Executive branch.
Not only were Iranian assets unavailable to judgment-creditors, the administration had other ideas. On January 17, 2016 – Implementation Day of the Joint Comprehensive Plan of Action (“JCPOA”) – the Obama administration released and transferred to Iran $1.7 billion in frozen assets ($400 million in cash via an unmarked plan in exchange for 4 U.S. hostages; $1.3 billion wired 2 days later). Those funds were disbursed from judgment accounts located in the U.S., thereby thwarting an avenue of collection sought by those terror victim judgment-creditors.
Despite opposition from the US government, all is not lost for terror victims. There is one prominent example of successful collection of terror victim judgments. In 2010, the Libyan government of Muammar Qaddafi agreed to settle and pay terror victims of the Lockerbie bombing to the tune of $2.7 billion, partly in exchange for improved relations with the US.
Given the fate of Qaddafi one year later in 2011, it seems unlikely that the Libyan model will be followed. But there may come a day when the US government chooses to stand with its citizen-victims of international terrorism instead of opposing the collection of civil judgments at every turn. Until then, terror victims will continue to stand alone, holding nothing more than a paper judgment.
JHS
SCHERVONE LAW 