| NEW YORK, July 9
NEW YORK, July 9 A U.S. appeals court on
Wednesday ruled that $1.75 billion in Iranian funds be turned
over to families of the victims of the 1983 bombings of a Marine
barracks in Beirut.
The 2nd U.S. Circuit Court of Appeals in New York affirmed
U.S. District Judge Katherine Forrest's 2013 ruling that the
money, currently held in a New York Citibank account, should be
given to the families to help satisfy a $2.65 billion default
judgment they won against Iran in 2007.
The families accused Iran of providing material support to
Hezbollah, which carried out the attack that killed 241 U.S.
The lawsuit was filed in 2010 after the U.S. Treasury
Department uncovered the funds at Citibank, part of Citigroup
The plaintiffs named as defendants Iran and several banks,
including Citi, Iran's state-controlled Bank Markazi, Deutsche
Boerse AG's Clearstream Banking SA unit and
Rome-based Banca UBAE. The other banks were alleged to have
helped Iran conceal its control of the assets and transfer money
out of the bank after it was ordered frozen.
Citi did not oppose the request, but the other banks sought
to have the lawsuit dismissed. Forrest ruled in the victims'
favor in February 2013.
Clearstream and Banca UBAE settled with the plaintiffs last
year. But Bank Markazi appealed, saying a federal law passed
specifically to allow the Citi funds to be turned over violated
a U.S.-Iran treaty.
In a unanimous opinion, a three-judge panel of the 2nd
Circuit said Wednesday that assertion was without merit, as
legislative acts trump treaty-made law.
A lawyer for Bank Markazi did not immediately respond to
requests for comment. A lawyer for the families did not
immediately comment on the ruling.
Bank Markazi could still pursue an appeal to the full panel
of judges at the 2nd Circuit or to the U.S. Supreme Court.
If the funds are turned over, it would mark a rare instance
in which victims of an overseas attack have obtained monetary
relief through the U.S. court system. Typically, enforcement of
such judgments against foreign nations meets with little
In April, a filing in the case revealed a U.S. grand jury
was investigating whether Clearstream took steps to benefit Iran
and its bank in violation of U.S. law.
A Clearstream spokesman did not immediately respond to a
request for comment on Wednesday. Clearstream said in April it
was aware of the subpoena but had no further information on the
In January, in a separate case, Clearstream paid $152
million to settle U.S. government claims that the banking unit
held some $2.8 billion in securities in the United States for
Bank Markazi. The bank did not admit to violating U.S. sanctions
The case is Peterson et al. v. Islamic Republic of Iran et
al., 2nd U.S. Circuit Court of Appeals, No. 13-2952.
(Reporting by Joseph Ax; editing by Gunna Dickson)