U.S. Supreme Court Final Hurdle for Terror Victims

CEP Research Analyst


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The families of American victims of Iranian-sponsored terrorism could soon see a small measure of justice in the form of financial compensation after many years of pursuing legal action against Iran. However, as surprising as it sounds, the last hurdle preventing the potential payout could be the U.S. Supreme Court.

Iran has been found liable for billions of dollars for sponsoring terrorist attacks that killed hundreds of Americans. In 1996, Stephen Flatow, father of terror victim Alisa Flatow, lobbied to change American law in order to allow U.S. citizens to sue foreign sponsors of terrorism. His legislative success sparked a succession of terrorism lawsuits, largely against Iran.

In 2001, a lawsuit was filed against Iran by families of some of the 241 servicemen killed in the 1983 Hezbollah bombing of the United States Marine barracks in Beirut. In 2003, a federal judge found Iran guilty of financing the attack and eventually awarded the families $2.65 billion in compensatory damages. Unfortunately, collecting has been a long and arduous process that has taken the plaintiffs through Congress and now the Supreme Court.

On one side are 1,300 victims of Iranian-sponsored terrorism, including representatives of 173 of the 241 victims killed in the 1983 Marine barracks attack. At stake is $1.75 billion in Iranian funds that were frozen in 2012. On the opposing side is the Bank of Iran, arguing the constitutionality of the distribution.

Specifically at issue in this Supreme Court case, Bank Markazi (Bank of Iran) v Deborah Peterson, argued on January 13, is whether Congress unconstitutionally overstepped its bounds in writing and passing the 2012 Iran Threat Reduction and Syria Human Rights Act.

The bill greatly strengthened U.S. economic sanctions against Iran in an effort to compel Tehran to abandon its illegal nuclear weapons programs, its support for global extremist groups, and other dangerous policies. It also specifically addressed the Marine barracks victims’ lawsuit, allowing U.S. courts to seize the frozen assets of Iran’s central bank, Bank Markazi, to pay down the debt to the victims.  Lower courts have upheld the constitutionality of the 2012 law, but lawyers for the Bank of Iran argued that the law effectively directs a particular result in a single pending legal case and Congress therefore violated the Constitution by encroaching on the role of the federal judiciary.

The Supreme Court is not hearing arguments about Iran’s guilt. It will rule before the end of its term in June solely on whether Congress overstepped its authority in writing the 2012 law. A win for the victims would result in $1.75 billion being divided among the families. A win for the bank would make it more difficult, but not quite impossible, for those same American victims to collect damages.

The families of those killed by Iranian sponsored terrorism have waited a long time for justice. No amount of financial compensation can return what Iran took from them, but it does exact some form of punishment on Iran for its actions. Further, an Iranian acknowledgement of its guilt—even if forced—would shine a spotlight on Iran’s continued support for global terrorism.

Seven law professors specializing in national security issues filed a brief in support of the plaintiffs. The victims of the Beirut barracks and other Iranian horrors have also received support from the

Obama administration and both parties in Congress in their search for justice. Still, the Supreme Court will have the final say in this case based not on the certainty of Iran’s lawless behavior, but on a rather narrow constitutional question.