Lebanon bombing victims’ Iran judgment overturned by US appeals court

The 2nd US Circuit Court of Appeals in Manhattan said a lower court judge should have addressed questions of state law before ruling against Bank Markazi and Luxembourg intermediary Clearstream Banking, a unit of Deutsche Boerse.

In a 3-0 decision, the panel also rejected a claim that a 2019 federal law designed to make it easier to seize Iranian assets held outside the United States waived Bank Markazi’s sovereign immunity.

That law “neither abrogates Bank Markazi’s jurisdictional immunity nor provides an independent grant of subject matter jurisdiction”, Circuit Judge Robert Sack wrote.

The court returned the case to US District Loretta Preska in Manhattan to address state law questions in the 11-year-old case, and whether the case can proceed at all in Bank Markazi’s absence.

Bombing victims sought to hold Iran liable for providing material support for the Oct. 23, 1983, suicide attack that killed 241 US service members, by seizing bond proceeds held by Clearstream in a blocked account on Bank Markazi’s behalf.

Bank Markazi claimed immunity under the Foreign Sovereign Immunities Act, which generally shields foreign governments from liability in US courts.

In the Bank Markazi case, the plaintiffs sued in 2013 to partially satisfy a $2.65 billion default judgment they had won against Iran in 2007.

Another judge dismissed the case in 2015, but the 2nd Circuit revived it in 2017.

Then in 2020, the US Supreme Court ordered a fresh review in light of the 2019 law, which then-President Donald Trump signed as part of the National Defense Authorization Act.

The plaintiffs have announced they hold more than $4 billion of judgments against Iran and have been unable to collect for decades.