Iran should defend itself in U.S. courts
By Babak Movahedi
November 29, 2000
Diplomatic relations between the United States and Iran were severed
after the hostage crisis in 1979 and all Iranian assets in the U.S. were
The surprise election of moderate President Mohammad Khatami brought
speculation amongst Iran scholars that relations between the United States
and Iran would enter a new chapter. In fact, in 1998, President Khatami
took a major political step by proposing that the two countries break the
"wall of mistrust" by people-to-people contacts and cultural
and sports exchanges. Some steps in this direction have taken place. However,
due to the lack of a consistent policy toward Iran, progress has been very
Although foreign countries are usually protected from lawsuits by U.S.
parties under the Foreign Sovereign Immunities Act, countries such as Iran
that are deemed by the U.S. Department of State to be state sponsors of
terrorism are excepted from such immunity. As a result, there have been
a number of cases filed and judgments entered against the government of
Iran. In each case, Iran chose not to enter an appearance in court. But
the plaintiffs, nevertheless, had to show "clear and convincing"
evidence that Iran was liable for the victims' wrongful deaths in order
for the court to enter default judgment.
On October 28, 2000, President Clinton signed the Victims of Trafficking
and Violence Prevention Act. This law, amongst other things, provides
authority to compensate American victims of terrorism and their families
who have obtained judgments in the U.S. courts. Although the major part
of these judgments is punitive damages, the Act provides two options.
Plaintiffs can elect to receive 110% of the awarded compensatory damages
with statutory interest and court-awarded sanctions as full compensation
for their entire judgments or they can elect to receive 100% of the awarded
compensatory damages with statutory interest and court-awarded sanctions
and to look elsewhere to satisfy other parts of their judgments. However,
if they elect the second option, they are prohibited from attaching or
executing against certain types of property in order to satisfy other parts
of judgments such as punitive damages.
The payments of these awards relating to Iran were capped at $400 million,
reflecting the dollar amount kept by the Pentagon for military orders placed
by the Shah. Payments are made from the U.S. Treasury and the U.S. will
seek to compensate the treasury through the Iran-US Tribunal at The Hague,
in other international forums or through negotiations with Iran.
Early on, the Clinton Administration had opposed the Act. But a compromise
was reached between Congress and the Administration in that the attachment
of Iranian assets would be prohibited. While this compromise was delicately
negotiated to meet congressional pressure, it was also negotiated to limit
the expected political damage with Iran. In cases involving judgment against
the government of Cuba, for example, the Act authorizes the President to
vest Cuban assets to pay for these awards. A move that is immensely important
and sharply different to the handling of the judgments against Iran.
Still, Iran feels it must respond in kind. Believing that the U.S. is
using frozen Iranian assets to pay for dubious judgments, the Iranian
Majlis passed an emergency bill to allow Iranian citizens to sue the United
States government, amongst other things, for emotional damage. The Iranian
Judiciary has also established a special court to handle these cases.
Unfortunately for both sides, the general understanding in Iran has
been that U.S. law provides for payment to U.S. plaintiffs from frozen
Iranian assets. In response, the Majlis passed its own legislation. However,
the delicate compromise reached by the Administration and Congress in which
Iranian assets were, in fact, protected, has been overlooked.
One can accurately conclude that the Act leaves the door open for future
U.S. presidents to waive the collection of the amounts paid out of the
U.S. Treasury, if the White House is satisfied that these claims have been
dealt with to the satisfaction of the United States. The "satisfaction"
test is at the President's discretion.
While Congress has to respond to domestic pressures, foreign policy
issues and U.S. obligations under international treaties are matters in
which the President has vast authority. In total contrast to the vesting
of the Cuban assets, Iranian assets have been left alone, at least for
the time being.
Tit-for-tat diplomacy, while providing temporary psychological relief,
is not effective. Iran does not hold any major U.S. assets and therefore,
any judgments obtained in Iranian courts would not be taken seriously in
negotiations with the U.S. Under these circumstances, an alternative for
Iran would be to preserve the defense of lack of jurisdiction by U.S. courts
and enter an appearance in cases filed against it. The result would be
that at the very least, Iran would defend itself in the public relations
war. Without a defense, the "clear and convincing" standard
can easily be overcome.
Babak Movahedi is an international lawyer in Washington, DC. See