In February 1997, Hamas carried out a double suicide bombing on the Ben Yehuda pedestrian mall in downtown Jerusalem, resulting in 5 deaths and many injured.
In 2001, Shurat HaDin brought a suit against the Iranian government pursuant to the state-sponsored terrorism exception to the Foreign Sovereign Immunity Act (FSIA), on behalf of 5 American families of those injured in the Hamas terror attack, based on the material support and resources Iran supplied to the terrorists. In 2003, a DC court awarded the families more than $70 million in damages.
Iran had gone into the arbitration claiming that Cubic Defense owed it either the military equipment it had purchased or the value of the contracts. The terror victims sued Cubic Defense to turn over the money, ironically agreeing with Iran in the San Diego court that the money did indeed belong to the Islamic regime. Since Iran and its Ministry of Defense still had an unpaid $70 million judgment against them, the funds needed to be turned over to terror victims. Shortly after this, the families placed a lien on funds being held by Cubic Defense Systems Inc., a San Diego defense contractor.
The government of Iran, under the Shah, had been doing business with Cubic Defense before the Iranian revolution in 1979. We contended that funds it had on account there had been frozen by the US government and actually belonged to the Iranian Ministry of Defense, one of the judgment debtors. Cubic Defense was in arbitration with the Iranian government over the money pursuant to the Algiers Accords, signed between the US and Iran, which were supposed to provide a framework to settle these types of disputes between US and Tehran.
Defending themselves against our enforcement efforts, the Iranians alleged that they had sovereign immunity and the funds could not be executed against by the victims’ families. However, the victims’ families prevailed and the judge was convinced they were right. More than ten years after they filed suit against Cubic Defense to turn over the money, the court finally awarded the money to the families.
On February 26, 2016, the 9th Circuit Court of Appeals rejected the Iranian Ministry of Defense’s appeal and affirmed the district court’s grant of a lien in favor of our clients on the Cubic Defense arbitration award. The 9th Circuit held: (1) granting plaintiffs’ lien here does not violate U.S. obligations under the Algiers Accords and (2) the Cubic Defense arbitration award is a “blocked” asset under the Terrorism Risk Insurance Act. This long awaited decision clears away one more hurdle on our clients’ path to collecting these $9.4 million in funds in partial satisfaction of their judgment. While, the Ministry of Defense is determined to exhaust the appeals process all the way to the Supreme Court, we are confident that the terror victims’ rights to these funds will be upheld.