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Media Alerts - Heiser v. Islamic Republic of Iran, et al.
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November 19, 2013
  Heiser v. Islamic Republic of Iran, et al.
Headline: D.C. Circuit says terror victims cannot attach Iranian banks' contingent future interests in funds to satisfy judgment against Iran for state-sponsored terrorism.

Area of Law:
Foreign Sovereign Immunities Act

Issue Presented: Whether, in an action to collect on a judgment against a "state sponsor of terrorism," contingent possessory interests in funds are can be attached under 28 U.S.C. § 1610(g) and § 201(a) of the Terrorism Risk Insurance Act of 2002.

Brief Summary: The estate of Michael Heiser and several other victims' families and estates won a suit against the Islamic Republic of Iran for its involvement in planning, supporting, and approving the 1996 Hezbollah terrorist attack on the Khobar Towers apartment complex in Saudi Arabia. Attempting to collect on this judgment, plaintiffs sought to attach the proceeds of electronic bank transfers that were blocked under various regulations prohibiting the transfer of "property and interests in property" of certain terrorist entities. The blocking was not based on traditional legal ownership but on the fact that the intermediary banks were Iranian, meaning the Iranian banks had a contingent future possessory interest in the funds. Plaintiffs argued that these contingent interests were sufficient for them to attach the accounts under 28 U.S.C. § 1610(g) and § 201(a) of the Terrorism Risk Insurance Act of 2002, which allows attachment of assets "of" Iran. The United States District Court for the District of Columbia rejected this argument. The district court held that the word "of" denotes ownership, and, under Uniform Commercial Code Article 4A, Iran did not own the contested accounts.

The United States Court of Appeals for the District of Columbia Circuit affirmed, agreeing with the district court that Iran lacked an ownership interest in the accounts. The court noted that nothing in the legislative history of § 1610(g) and § 201(a) suggested an intent to abrogate traditional common-law principles governing execution of judgments. The court concluded that Congress could not have intended a result that risked punishing innocent third parties and in turn reducing the terrorist state's debt. Because Congress did not supply a rule for determining ownership under § 1610(g) and § 201(a), the D.C. Circuit agreed that UCC Article 4A could provide an appropriate rule of decision. The court noted that the UCC, adopted by all fifty states and the District of Columbia, addresses ownership of electronic funds transfers, the precise issue in this case. Applying the principles of Article 4A, the court agreed with the district court that Iran does not own the contested accounts. Because the transfers were blocked and the Iranian banks never received a payment order, Iranian banks never held legal title. Under Article 4A, claims on interrupted funds transfers ultimately belong to the originator, not the beneficiary or its bank.

For the full text of this opinion, please visit

Panel (if known): Brown, Edwards, and Randolph.

Argument Date (if known): September 24, 2013

Date of Issued Opinion: November 19, 2013

Docket Number: 12-7101

Decided: Affirmed

Case Alert Author: Joseph T. Maher, Jr.

Counsel (if known): Dale K. Cathell and Richard M. Kremen for appellants. James L. Kerr and Karen E. Wagner for appellees.

Author of Opinion: Randolph

Case Alert Circuit Supervisor: Elizabeth Beske, Ripple Weistling

    Posted By: Ripple Weistling @ 11/19/2013 02:25 PM     DC Circuit  

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