Reviewing attempt to enforce judgment against Iran by levying on its U.S. property, Second Circuit rules that plaintiffs had relinquished such rights by accepting payments under Victims of Trafficking and Violence Protection Act
The following case concerns the fourth attempt by the family of Charles Hegna to enforce their judgment against the Government of Iran. Members of Hezbollah had killed Hegna, an American diplomat, during a 1984 airplane hijacking. See 2004 International Law Update 108.
The plaintiffs brought an action in April 2000 pursuant to a provision of the 1996 Antiterrorism and Effective Death Penalty Act which amended the Foreign Sovereign Immunities Act (FSIA) of 1976 to revoke the sovereign immunity of nations that sponsor terrorism. See 28 U.S.C. Section 1605(a)(7). Eventually, the plaintiffs won a $375 million judgment against Iran and the Iranian Ministry of Information and Security.
The plaintiffs then sought to attach, among other Iran-related properties, the former New York residence of the Consul General of Iran. They also filed a claim under the Victims of Trafficking and Violence Protection Act (VTVPA), as amended by the Terrorism Risk Insurance Act (TRIA), which permits the U.S. to disburse funds belonging to Iran or Cuba to judgment-creditors. See VTVPA, Pub.L. No. 106-386, Section 2002; 114 Stat. 1464, 1541-43 (2000); TRIA, Pub.L. No. 107-297, Section 201; 116 Stat. 2322, 2337-40 (2002).
The district court, however, decided that plaintiffs had given up their right to levy on Iranian assets as a condition of accepting a payment from the U.S. government under the VTVPA and the TRIA. It also held that the Iranian property is "at issue" before the Iran-United States Claims Tribunal that the nations set up after the Iranian hostage crisis. The plaintiffs appealed.
The U.S. Court of Appeals for the Second Circuit affirms with some modifications. "Two aspects of [the VTVPA and the TRIA] are noteworthy for purposes of this appeal. First, because Congress understood that the pool of funds from which payments would be made would not suffice to cover in their entirety claims by potential beneficiaries of the VTVPA as amended by the TRIA, the TRIA authorizes pro rata payments to judgment-creditors based on the size of their compensatory damage awards relative to the overall pool of available funds. ..."
"Second, in exchange for receiving payments from the United States, Congress required that judgment-creditors give up some of their rights to enforce their judgments through other means. In particular, the TRIA requires that the creditors relinquish their rights to collect punitive damages, as well as rights to execute against or attach property "that is at issue in claims against the United States before an international tribunal.' ..." [Slip op. 4-5]
Here, the Hegnas had gotten payments totaling $8 million from the U.S. Government pursuant to the VTVPA and the TRIA. Thus, the Court agrees with the district court that the Hegnas have given up their right to levy. Moreover, the Court points out that this approach comports with the opinions of three other Circuits. The Court then modifies the district court's decision so that it is "without prejudice" in case the Iran-United States Claims Tribunal resolves its pending matters and allows levies on Iranian property.
Citation: Hegna v. Islamic Republic of Iran, No. 04-1230-cv, 2005 WL 535141 (2d Cir. March 8).
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