Italian Court Dismisses $6b US Lawsuit Against CBI

EghtesadOnline: Iran’s central bank said an Italian court has rejected a lawsuit filed by American plaintiffs over seizure of the bank’s assets in the country worth $5.99 billion.

News ID: ۷۴۹۴۷۷

18 January 2020

According to a notice on the Central Bank of Iran website on Wednesday, the plaintiffs are families of the victims of attacks on New York City's World Trade Center on September 11, 2001.

The Italian court first issued an order on June 14, 2018, on the confiscation of the CBI assets in the country. Through “adept local lawyers” the CBI appealed the ruling, which was accepted by Rome’s Court of Appeal.  After that, the appeal court issued a verdict on October 10, 2018 nullifying the previous order, Financial Tribune reported.

Plaintiffs filed another case for seizure of the CBI assets only to be thrown out again by the Italian court on April 17, 2019.

The ruling was again appealed by the plaintiffs, but the appeals court rejected the objection on January 10, 2020, an outcome the CBI sees as an achievement.

Seven years ago, a New York court said there was evidence to show that Iran provided “material support and resources to al Qaeda for acts of terrorism”. The militant group carried out the horrific terror attacks in New York and Washington.

The victims’ families persuaded the court to hold Iran guilty for allegedly aiding the attacks by Al-Qaeda by “facilitating the travel of Al-Qaeda members through its territory.”

That court awarded the plaintiffs damages of over $7 billion. Iran has denied any links to Al Qaeda or involvement in the Sept. 11 attacks in which nearly 3,000 people died.

Under a fundamental principle in international law called state immunity, claims against a sovereign state must be pursued either in accordance with mechanisms provided for in bilateral or multilateral agreements or through international courts or tribunals, as appropriate.

Ruling by Top US Court

In a similar case, the US Supreme Court on Monday threw out a lower court ruling that revived a $1.68 billion lawsuit against Iran’s central bank by families of troops killed in the 1983 bombing of the US Marine Corps barracks in Lebanon in light of a new federal law that could help the plaintiffs recover damages.

Though the CBI as well as banks in Luxembourg and Italy were contesting the lower court ruling that the families could try to seize Iranian assets held outside the United States, the justices directed a lower court to consider the new law that could give the families access to the funds, Reuters reported.

The law, signed by President Donald Trump on Dec. 20 as part of the National Defense Authorization Act, removes hurdles for courts to seize assets held abroad to satisfy US court judgments against Iran.

The supreme court acted on the case at a time of high tensions between the United States and Iran, with Trump ordering a drone strike in Baghdad that killed a senior Iranian military commander on Jan 3, and Iran retaliating by filing missiles at bases housing US forces in Iraq.

The 1983 car bombing attack at the marine corps barracks in Beirut killed 241 US service members. The cases stem from efforts by the families of those killed to secure compensation from Iran after a federal court in Washington awarded $3.8 billion in damages.

The families in 2013 sought to seize bond proceeds allegedly owned by the CBI and processed by Clearstream Banking SA., based in Luxembourg, and Banca UBAE Spa, an Italian bank, to partially satisfy the court judgment.

Based on FSIA

The legal dispute centers on a 1976 law called the Foreign Sovereign Immunities Act (FSIA), which generally shields foreign governments from liability in American courts but carves out certain exceptions, including for claims against countries like Iran.

A federal trial court dismissed the families’ claims, saying the assets were located in Luxembourg and thus, under FSIA, immune from seizure. But in 2017 the New York-based 2nd US Circuit Court of Appeals disagreed, reviving the suit.

CBI appealed to the Supreme Court, saying that the 2nd Circuit ruling violated international law and “threatens US assets of US companies by exposing them to reciprocal treatment by foreign courts.”

The Trump administration said the 2nd Circuit decision was flawed because it was unlikely that the FSIA allowed for foreign government seizure of assets held abroad. But the administration advised the justices to send the case back to lower courts to analyze the newly passed law’s effect on the case.