(CN) - Relatives of U.S. soldiers killed in the 1983 Marine barracks bombing in Beirut can't collect portions of their $2.6 billion judgment against Iran from French shipping companies that owe Iran money for oil and the use of its ports, the 9th Circuit ruled Friday.
The federal appeals court in San Francisco held that Iran's rights to the port payments are immune under the Foreign Sovereign Immunities Act (FSIA), because the debts are "located" in France, not the United States.
The 1983 suicide bombing killed 241 U.S. soldiers and injured many more. Survivors and relatives of those killed in the bombing sued Iran in 2001 for its role in the attack.
After a federal judge ruled that Iran had bankrolled and planned the bombing with Hezbollah, the nearly 1,000 plaintiffs won a multibillion-dollar default judgment in 2007.
Unable to collect from Iran, which failed to answer the complaint or appear at the trial, the families asked a federal judge in California to assign them Iran's rights to payment from the French shipping firm CMA CGM and others. CMA CGM allegedly owed Iran money for its frequent use of Iranian ports and oil, according to the shipping routes on the company's website.
U.S. District Judge Jeffrey S. White rejected the motion, saying FSIA only allowed the plaintiffs to collect on Iranian property in the United States, but not in other countries.
On appeal, the plaintiffs argued that if the principle of foreign sovereign immunity applied, it should have been raised earlier by Iran, not at trial by Judge White.
The 9th Circuit disagreed.
"This case turns on the question of whether immunity from execution is an affirmative defense that must be raised by a foreign state," Judge Betty Fletcher wrote for the three-judge panel.
She said the judge's decision to raise the issue, even though Iran never did, "is appropriate and serves the dual goals of the FSIA: affording American plaintiffs with a means for bringing suit against foreign states and ensuring that their disputes will not be resolved based on political considerations, and also demonstrating a proper respect for foreign states and sparing them the inconvenience of litigation."
Fletcher added that, under the FSIA's narrow exceptions to immunity for countries that support terrorism, Iran's right to payment from the shipping companies "is assignable only if that right is located in the United States."
"CMA CGM is a French corporation, therefore the debt obligation it owes to Iran is located in France," she wrote. "Iran's rights to payment from CMA CGM are not 'property in the United States' and are immune from execution."
Dissenting Judge Norman Randy Smith said the courts were wrong to grant Iran immunity, because immunity is an "affirmative defense."
"As such, it must be affirmatively pleaded by the defendant," he wrote.
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