In challenge to criminal restraining order against foundation which is allegedly supporting terrorism, Fifth Circuit finds that Foreign Sovereign Immunities Act (FSIA) provisions do not trump criminal forfeiture statutes
In July 2004, the United States filed an indictment, charging the "Holy Land Foundation For Relief and Development" (HLF), inter alia, with materially supporting a terrorist organization. Some have described the HLF as the American fundraising arm of Hamas. A Texas district court issued an ex parte restraining order, indefinitely freezing HLF's assets looking toward their forfeiture.
David Strachman (plaintiff) is administering the estate of two terrorism victims, Yaron and Efrat Ungar. The Ungars were U.S. citizens who died in a Hamas terrorist attack in 1996. Plaintiff filed an unsuccessful challenge to the district court's restraining order. In February 2004, Strachman and other plaintiffs had obtained a default judgment for more than $116 million against Hamas in Rhode Island. The assets have allegedly been levied upon based on writs of execution issued by other district courts to satisfy a $116 million judgment against HLF.
Plaintiff claimed that Section 201(a) of TRIA permits attachments and executions "notwithstanding any other provisions of law," and that the legislative purpose of TRIA should trump any forfeiture provisions. This subsection of TRIA provides: "Notwithstanding any other provision of law, . . . any property with respect to which financial transactions are prohibited or regulated pursuant to section 5(b) of the Trading with the Enemy Act, section 620(a) of the Foreign Assistance Act of 1961, sections 202 and 203 of the International Emergency Economic Powers Act, or any other proclamation, order, regulation, or license issued pursuant thereto, shall be subject to execution or attachment in aid of execution of any judgment relating to a claim for which a foreign state (including any agency or instrumentality of such state) claiming such property is not immune under section 1605(a)(7)[FSIA]."
Plaintiff appealed the restraining order against HLF, arguing that the Texas district court lacked jurisdiction to issue the order. In particular, plaintiff maintained that Section 201(a) - the attachment provision of the Terrorism Risk Insurance Act of 2002 (TRIA) - overrides criminal forfeiture provisions. The Fifth Circuit disagrees but vacates, and remands to the district court for lack of compliance with the notice requirement of Fed.R.Civ.Proc. 65(a)(1).
"The purpose of the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. Sections 1330, 1602-11, is to set forth principles by which a federal court decides a foreign state's claim that its property is immune from jurisdiction. ... 28 U.S.C. Section 1602 ("Claims of foreign states to immunity should henceforth be decided by courts of the United States and of the States in conformity with the principles set forth in this chapter.'). Subject to certain international agreements involving the United States, a foreign state's property in the United States is immune from attachment arrest and execution except as provided in 28 U.S.C. Sections 1610 and 1611."
"The TRIA amended Section 1610 of the FSIA, which is titled "Exceptions to the immunity from attachment or execution' to make available assets that might otherwise be immune from execution. The TRIA's legislative history clarifies that the purpose of Section 1610(f)(1)(A) is "to strip a terrorist state of its immunity from execution or attachment in aid of execution.' 148 Cong. Rec. S11528 (daily ed. Nov. 19, 2002) (statement of Sen. Harkin) [Cite]. Thus, the purpose of Section 1610(f)(1)(A) appears to be to provide a general exception to a foreign state's immunity from execution and attachment. See TRIA, Pub. L. No. 107-297, Title II, section 201(a), 116 Stat. 2322, 2337 (2002) (where the general nature of section 201(a) is emphasized as follows: "In General. Notwithstanding any other provision of law . . . .')."
"We conclude that the "notwithstanding' language relied on by the Ungars appears to target statutory immunities to execution. The criminal forfeiture statute does not immunize HLF bank accounts from writs of execution. The challenged restraining order freezes and preserves the accounts until the claims to them can be prioritized in ancillary proceedings. The TRIA does not address these circumstances. Because the issues at bar do not involve a foreign state's or terrorist party's FSIA immunity from execution, we find no basis to conclude that Section 1610(f)(1)(A) preempts, trumps, or otherwise interferes with the operation of 21 U.S.C. Section 853 criminal forfeiture provisions." [Slip op. 10-11]
Citation: United States v. Holy Land Foundation for Relief and Development, No. 04-11282, 2006 WL 853334 (5th Cir. April 4, 2006).
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