Banks Tied to 1983 Terror Attack Must Give Victims $1.68 Billion

Victims of the 1983 attack on a US Marine barracks in Beirut, Lebanon, got closer to recovering their $1.68 billion judgment against Iran for sponsoring the attack, when a federal court ordered two financial institutions to turn over funds held for Iran.

Bank Markazi and Clearstream Banking SA said that the US District Court for the Southern District of New York didn’t have jurisdiction over them and that a statute amended by Congress to address the case was unconstitutional. But the opinion by Judge Loretta A. Preska rejected both arguments Wednesday.

Clearstream is a Luxembourg securities depository that has an office in New York. Markazi is Iran’s central bank and has accounts traceable to it with Clearstream.

At issue are blocked securities proceeds Clearstream is holding for Markazi in a JPMorgan Bank account in New York.

The court said it had jurisdiction over Clearstream under New York’s long-arm statute because Clearstream does business in New York, the transactions at issue took place in the state, New York has an interest in protecting its banking system, and New York is a convenient location for the parties.

Asserting jurisdiction over Markazi was proper because it’s the beneficial owner of the assets at issue and 22 U.S.C. § 8772 specifically provides for jurisdiction over it, the court said.

Clearstream’s and Markazi’s constitutional challenges to Section 8772 were rejected. The statute furthers US interests by carrying out the government’s policies toward Iran, and doesn’t single out Clearstream, the court said. It added that although part of the statute was adopted to address this case, it leaves the ultimate decision-making to a neutral, objective court.

Because there were “no other possible owners of the interests here other than Bank Markazi, those assets are not immune from execution, and there is no triable issue of fact,” the court granted the plaintiffs’ motion for summary judgment against Markazi and Clearstream.

Fleischman Bonner & Rocco LLP, Salon Marrow Dyckman Newman & Broudy LLC, and Belkin Burden Goldman LLP represented the plaintiffs. Jaffe & Asher LLP and Mololamken LLP represented Markazi. Davis Polk & Wardwell LLP represented Clearstream.

The case is Peterson v. Islamic Republic of Iran, S.D.N.Y., No. 1:13-cv-9515, 3/22/23.