U.S. court struggles over Iran bank's bid to block payout to attack victims

Reuters News
Posted: Jan 13, 2016 12:48 PM

By Lawrence Hurley

WASHINGTON (Reuters) - The Supreme Court's chief justice on Wednesday expressed strong concern about a U.S. law that virtually dictated to courts that nearly $2 billion in frozen Iranian funds be turned over to families of Americans killed in attacks blamed on Iran, while other justices signaled support for the victims.

The court heard an appeal brought by Bank Markazi, Iran's central bank, contesting a 2014 lower-court ruling that stated the money should be handed over to plaintiffs representing hundreds of Americans killed or injured in the 1983 bombing of a U.S. Marine Corps barracks in Beirut and other attacks.

Chief Justice John Roberts, seizing on an argument made by Bank Markazi, appeared troubled by the U.S. Congress improperly dictating the outcome of legal disputes by passing a 2012 law specifically relating to this case to help the families obtain the money.

During a one-hour oral argument in a case that comes before the top U.S. court at a delicate time in U.S.-Iranian relations, Roberts used the analogy of a "strongman" leader of a foreign country calling the judiciary to tell judges how to rule.

"I’m not sure I see what the difference is here," Roberts said.

The money would go toward satisfying a $2.65 billion judgment against Iran that the families won in U.S. federal court in 2007. The money is held in New York in a trust account at Citibank, part of Citigroup Inc.

It was not clear how many of the other eight justices shared Roberts' concerns. Some said little to indicate how they would vote, while others asked tough questions of both sides.

At issue before the justices is whether Congress violated the separation of powers principle enshrined in the U.S. Constitution by passing the law that specified the funds held in the trust account go toward paying off the judgment.

Questions asked by other justices indicated they did not see the law as infringing upon the judiciary's independence in the same way Roberts did.

Justice Antonin Scalia said Congress regularly enacts laws that are narrow in focus and affect ongoing cases. It is legal so long as it does not undo a court case that has already been decided, Scalia said.

Justice Ruth Bader Ginsburg noted that the case before the court on Wednesday actually concerned judgments in 19 different lawsuits that were consolidated.


Justices Elena Kagan and Stephen Breyer suggested the case should be viewed from a foreign policy perspective. Generally, in foreign policy disputes, courts give more deference to the executive branch. In the Iran case, President Barack Obama and congressional leaders support the plaintiffs.

In that vein, Justice Anthony Kennedy, who often casts the deciding vote in close cases, wondered if Congress has more leeway when the U.S. has "very delicate relations" with the country in question, as it does with Iran.

But Kennedy grilled lawyers on both sides, at one point criticizing the argument made by the Obama administration's lawyer, Edwin Kneedler, in support of the families.

The plaintiffs accused Iran of providing material support to Hezbollah, the Iran-backed Shi'ite Islamist political and military group responsible for the 1983 truck bomb attack at the Marine compound in Beirut that killed 241 U.S. servicemen. They are also seeking compensation on behalf those killed or injured in other attacks they linked to Iran, including the 1996 Khobar Towers truck bombing in Saudi Arabia that killed 19 U.S. service members.

The lead plaintiff in the case is Deborah Peterson, whose brother, Marine Lance Corporal James Knipple, was killed in the Beirut bombing.

A ruling is due by the end of June.

The landmark accord reached by the United States and five other world powers last July to lift economic sanctions in exchange for Iran accepting limits on its nuclear program is expected to be implemented in the coming days.

Earlier on Wednesday, Iran released 10 U.S. Navy sailors after holding them overnight, saying it had determined that their two U.S. Navy patrol boats had entered Iranian territorial waters in the Gulf by mistake.

(Reporting by Lawrence Hurley; Editing by Will Dunham)