First Circuit Ruling Prevents Persian Antiquities from Being Attached under Terrorism Risk Insurance Act
Audet, Mark, Suffolk Transnational Law Review
Rubin v. Islamic Rep. Of Iran, 709 F.3d 49 (1st Cir. 2013).
The 2002 Terrorism Risk Insurance Act (TRIA) provides an exception to the Foreign Sovereign Immunities Act (FSIA) rule that property of a foreign state is immune from attachment and execution in U. S. courts. (1) TRIA permits attachment and execution of foreign property that has been blocked by the United States and is owned by a designated state sponsor of terrorism. (2) In Rubin v. Islamic Republic of Iran, (3) the United States Court of Appeals for the First Circuit ruled against a group of judgment creditors attempting to utilize TRIA's exception to the FSIA, and in turn prevented a default judgment against Iran from being satisfied through attachment of Persian antiquities held in U.S. museums. (4) The First Circuit's decision to dissolve the creditors' attachment relied on the 1981 Algiers Accords which unblocked nearly all Iranian property in the United States; more notably, the court relied on the amicus brief filed by the U.S. Department of Treasury's Office of Foreign Asset Control (OFAC). (5)
On September 4, 1997, Hamas carried out a terrorist attack at the Ben Yehuda marketplace in Jerusalem, Israel. (6) Jenny Rubin and other American citizens seriously injured in the attack initiated a civil suit against Iran, alleging Iran was liable for the terrorist attacks based on its material support to Hamas. (7) In 2003, a default judgment was entered against Iran and the plaintiffs' were awarded USD71,500,000 in compensatory damages and USD37,500,000 in punitive damages. (8) This award prompted the plaintiffs to pursue Iranian property within the United States to satisfy the default judgment. (9)
After identifying Persian antiquities housed at the Museum of Fine Arts in Boston and Harvard University (collectively, museums), the plaintiffs registered the default judgment in the U.S. District Court of Massachusetts and petitioned to attach the antiquities. (10) The museums moved to quash the attachment asserting Iran did not own the antiquities, and claiming even if the antiquities were property of Iran, the items were immune from attachment under FSIA. (11) The plaintiffs then sought partial summary judgment asserting, inter alia, that the antiquities were "blocked assets" and were exposed to attachment under section 201 (a) of TRIA. (12)
The district court concentrated its review on Executive Order 12,170 (1979 Order) and the subsequent Executive Order 12,281 (1981 Order) issued in resolution of the Iranian hostage crisis and as part of the Algiers Accords. (13) The court found that the 1981 Order, which unblocked "uncontested" property interests of Iran, created a situation where TRIA's attachment power was triggered only where ownership of Iranian property was contested. (14) The district court held the museums had claimed ownership of the antiquities, thereby nullifying the unblocking effect of the 1981 Order, and bringing the property within the reach of TRIA. (15) Despite this favorable ruling for the plaintiffs, the district court dissolved the attachment, holding the plaintiffs had failed to show that Iran had an attachable interest in the antiquities in question. (16) On appeal, the First Circuit upheld the order to dissolve the plaintiffs' attachments. (17) The First Circuit, however, ruled ownership of the antiquities was not contested, and the antiquities remained unblocked per the 1981 Order and not attachable under TRIA. (18)
In 2002, Congress enacted TRIA and added an exception to the FSIA allowing attachment of blocked assets of state sponsors of terrorist groups. (19) The goal of TRIA is not only to deter state sponsored terrorism through expanded authority to attach the property in the face of the FSIA, but also provide victims of terrorist attacks a means to satisfy judgments against the terrorist nations liable for their injuries. (20) Blocked assets under TRIA are those assets "seized or frozen by the United States . …