Iran wins first appeal in terrorist victims’ attempt to collect
$71.5 million judgment
Appeals panel tells plaintiffs they must search for Iranian-owned
assets in the U.S. before making discovery requests to satisfy a
judgment against Iran.
By org jforward wisbar Joe Forward, Legal Writer,
State Bar of Wisconsin
6, 2011 – American victims of a 1997 terrorist attack in Israel
recently lost an early appeals battle to satisfy a $71.5 million
judgment obtained against the Islamic Republic of Iran.
Specifically, the U.S. Court of Appeals for the Seventh Circuit ruled
that Iran did not waive protections afforded to foreign nations with
property in the U.S. by failing to appear, and plaintiffs seeking
collection of a $71.5 million judgment against Iran must narrow their
discovery request to identifiable property, not all Iranian-owned assets
in the U.S.
In September of 1997, five people died and nearly 200 were injured in a
triple suicide bombing executed in a crowded pedestrian mall in
Jerusalem. Hamas claimed responsibility.
American victims injured in the attack later filed suit against Iran in
U.S. federal court, alleging Iran provided training and support to Hamas
and was thus responsible for the bombing. Iran was properly served but
defaulted, and the U.S. District Court for the District of Columbia
entered a default judgment of $71.5 million in favor of the American
Now seeking payment, the plaintiffs searched for attachable Iranian
assets and found some in Chicago-based museums. Specifically,
Chicago’s Oriental Institute and its Field Museum of Natural
History hold collections of Persian artifacts on academic loan from
Plaintiffs registered the federal court judgment with the U.S. District
Court of Illinois and served the museums to seize the artifacts. But the
museums intervened, arguing that such collections are immune from
attachment under the Foreign Sovereign Immunities Act of 1976
The FSIA provides that a foreign state’s property in the U.S. is
immune from attachment unless a statutory exception applies. Ultimately,
the U.S. district court ruled that immunity is an affirmative defense
and Iran waived it by failing to appear to plead the defense.
In response, plaintiffs served Iran with a discovery request to uncover
all Iranian-owned assets anywhere in the U.S., which the district court
granted. Iran appeared and appealed orders.
et al., v. Iran, No. 08-2805 (March 29, 2011), a panel for the
Seventh Circuit Court of Appeals reversed the district court. The panel
– in an opinion written by Judge Diane Sykes – concluded
that Iran was entitled to a presumption of immunity under the
FSIA regardless of whether it appeared or not, and the district
court could not issue a general-asset discovery order.
“The statute cloaks the foreign sovereign’s property with a
presumption of immunity from attachment and execution unless an
exception applies,” Judge Sykes wrote, “and immunity does
not depend on the foreign state’s appearance in the
With respect to the general-asset discovery order, the panel ruled that
plaintiffs cannot overcome the presumption of immunity without
identifying “the particular foreign-state property he seeks to
attach and then establish that it falls within a statutory
In other words, courts cannot give plaintiffs a “blank
check” entitlement to discovery, Judge Sykes explained. The
discovery request must be targeted to specific property under the
On remand, the plaintiffs will have to prove an exception applies to
pierce Iran’s presumption of immunity over Iranian assets in the
U.S. In addition, a new discovery order will place the onus on
plaintiffs to search for Iranian-owned assets.
“Nothing in the statutory scheme prevents judgment creditors from
using private means to identify potentially attachable assets of foreign
states located in the United States,” wrote Judge Sykes, who also
noted FSIA provisions allow judgment creditors to enlist the Secretary
of the Treasury and the Secretary of State in identifying assets of a