PASADENA, Calif. (CN) - A $2.8 million judgment Iran won against a U.S. company must go to victims of Iran-sponsored terrorist attacks, the Ninth Circuit ruled Friday.
Nine of the victims in question were either injured or had relatives injured in a 1997 suicide bombing at a mall in Jerusalem.
A 10th victim, France Rafii, is the son of former Iranian prime minister Shapoir Bakhtiar, whom Iranian agents murdered in his Paris home in 1991 because of his political opposition to the Islamic regime.
While Raffi secured a $5 million default judgment against Iran, the Jerusalem bombing victims won damages ranging from $2.5 million to $15 million because a federal judge found that Iran had provided the bombers with terrorist training and other material assistance.
Despite these valid judgments against Iran, the claimants have not had success collecting, thanks to the state-sponsored terrorism exception to the Foreign Sovereign Immunities Act.
They did have one avenue available to them, however, since the Terrorism Risk Insurance Act permits the attachment of a foreign sovereign's assets.
Rafii and the nine Jerusalem bombing victims here sought to attach the $2.8 million that Iran won in arbitration with Cubic Defense Systems, a San Diego company that bills itself as "the world's leading provider of air combat training systems throughout the industry."
Commonly referred to as Air Combat Maneuvering Instrumentation or ACMI, they systems "are what aircrew rely on to train for combat missions more effectively and with less risk," Cubic says on its website.
Though Cubic agreed to sell Iran's defense ministry one such system for $17 million in the 1970s, the Iranian revolution interrupted the full performance of the sales and maintenance contracts.
After the International Chamber of Commerce found that Cubic owed Iran $2.8 million, plus interest and costs, a federal judge in San Diego confirmed the award in 1999.
When Cubic deposited the funds, the court granted an attachment motion by the claimants.
The Ninth Circuit affirmed Friday, rejecting Iran's reliance on the Algiers Accords of Nov. 14, 1979 - by which the United States and Iran resolved the Iranian Hostage Crisis.
Agreeing that the Algiers Accords committed the United States only to restoring Iran to its pre-November 1979 position, the circuit found that Iran's interest in the judgment at issue did not arise until 1998 - well after 1979.
Finding that the judgment is a "blocked asset" pursuant to President Barack Obama's 2012 Executive Order No. 13359, the court deemed it subject to attachment and execution pursuant to the TRIA.
Obama's order blocked "all property interests in property of the government of Iran ... that are in the United States," but it exempted Iranian property and interests in property that had been blocked in 1979 and were then unblocked in 1981, Judge Dorothy Nelson wrote for the court.
David Strachman, an attorney for the Jerusalem bombing victims, said in an email that the decision "represents a significant blow to Iran and should help discourage that rogue country from harming American Jews in the future."
Strachman is with McIntyre Tate in Providence, R.I.
Steven Kerekes, the ministry's lead counsel, did not return an email seeking comment by press time Friday.
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