Iran Loses Appeal on $1.75B Verdict for Beirut Bombing

MANHATTAN (CN) - The 2nd Circuit on Wednesday upheld a law that helps victims of the 1983 Beirut Marine barracks bombing collect a $1.75 billion judgment against Iran's central bank.

Nearly 300 U.S. and French service members were killed in the Oct. 23, 1983, attack on U.S. Marine Barracks in Beirut, Lebanon. The chief federal judge in Washington, D.C., held Iran and its intelligence agency liable for the attack in 2007 but could not award punitive damages at the time because the laws did not allow it.

After Congress tweaked the legislation to allow for that outcome, the court awarded large money judgments in a series of cases, including a $2.1 billion judgment in Peterson v. Islamic Republic of Iran. The plaintiffs in that case then turned to the Southern District of New York, where a judge previously ordered Citibank to freeze almost $2 billion in debt securities allegedly owned by Iran.

The lawsuit also accused the Luxemburg-based bank Clearstream and the Rome-based Banca UBAE of helping Bank Markazi, an agency of Iran, move $250 million in frozen assets outside the United States.

Clearstream and Banca UBAE later settled their cases with the plaintiffs separately.

Bank Markazi asserted that the remaining $1.75 in frozen assets could not be turned over to Deborah Peterson and her co-plaintiffs under the governing statute, the Terrorism Risk Insurance Act of 2002.

Congress removed that hurdle two years ago in passing the Iran Threat Reduction and Syria Human Rights Act of 2012.

A provision of the law says "the financial assets that are identified in and the subject of proceedings in the United States District Court for the Southern District of New York in Peterson et al. v. Islamic Republic of Iran et al... shall be subject to execution."

Early last year, two weeks before the 30th anniversary of the attack, U.S. District Judge Katherine Forrest ordered the turnover of the assets and denied immunity to the bank.

Iran argued in its appeal that Congress violated the separation of powers by compelling a predetermined outcome, but a three-judge panel of the 2nd Circuit affirmed Wednesday.

The statute did "not usurp the judicial function; rather, it retroactively changes the law applicable in this case, a permissible exercise of legislative authority," Judge John Walker Jr. wrote for the court.

Lawyers for both parties did not immediately respond to requests for comment.

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