By A federal appeals court on Wednesday overturned a $1.68 billion judgment against Iran’s central bank in a case brought by families of U.S. service members killed or injured in the 1983 Beirut Marine barracks bombing.
The 2nd U.S. Circuit Court of Appeals in Manhattan ruled unanimously that the lower court should have addressed state law questions before ruling against Bank Markazi and Luxembourg-based Clearstream Banking, a Deutsche Boerse subsidiary.
Circuit Judge Robert Sack, writing for the three-judge panel, rejected arguments that a 2019 federal law designed to facilitate seizure of Iranian assets held outside the United States waived Bank Markazi’s sovereign immunity. The law “neither abrogates Bank Markazi’s jurisdictional immunity nor provides an independent grant of subject matter jurisdiction,” Sack wrote.
The case, which has spanned 11 years, will return to U.S. District Judge Loretta Preska in Manhattan to address state law questions and determine whether proceedings can continue without Bank Markazi’s participation.
The victims’ families sought to hold Iran accountable for providing material support to the October 23, 1983, suicide attack that killed 241 U.S. service members. Their strategy involved attempting to seize bond proceeds held by Clearstream in a blocked account on Bank Markazi’s behalf.
Bank Markazi claimed protection under the Foreign Sovereign Immunities Act, which typically protects foreign governments from U.S. court liability. Lawyers for both the plaintiffs and defendants did not immediately respond to requests for comment.
The ruling highlights the ongoing challenges faced by terrorism victims seeking compensation through U.S. courts. Iran and other U.S.-designated sponsors of terrorism, along with banks accused of providing services to terrorists, face thousands of similar claims, though collecting judgments often proves difficult.
The plaintiffs initiated this case in 2013 to partially satisfy a $2.65 billion default judgment they had secured against Iran in 2007. While the case was dismissed in 2015, the 2nd Circuit revived it in 2017. The U.S. Supreme Court later ordered a fresh review following the passage of the 2019 law, which was signed by then-President Donald Trump as part of the National Defense Authorization Act.
The plaintiff families claim they hold more than $4 billion in uncollected judgments against Iran, spanning decades of unsuccessful collection attempts.
The case is Peterson et al v. Bank Markazi et al, 2nd U.S. Circuit Court of Appeals, No. 15-690.
