Collecting Iranian assets in France


BERLIN (JTA) – In a case that may set a precedent for seizing funds from terrorist sponsors, attorneys are fighting to have Iranian assets in France confiscated and handed over to American victims of terrorism.

A French appellate court is due to consider on Feb. 25 whether to continue holding $117 million in Iranian funds that have been frozen in France’s Natexis Banques Populaire.

At issue is whether these funds, part of the Central Bank of the Islamic Republic of Iran, are state funds, which are immune from seizure, or commercial funds, which may be subject to seizure.

The fight to obtain the money follows two U.S. court decisions, on Sept. 16, 2003 and March 24, 2006, in which U.S. district judges in Washington ordered Iran to pay dmages and interest of $87.5 million to 12 U.S. citizens injured in terrorist attacks in Israel in 1995 and 1997.

The courts in Washington determined that Iran was liable for the damages due to its sponsorship of Hamas, which orchestrated the attacks. The incidents included the 1995 bombing of an Israeli bus in the Gaza Strip and a 1997 triple suicide bombing in downtown Jerusalem by Hamas terrorists who planted rat poison in their bombs to maximize damage.

Iran never sent a representative to the court to provide a defense.

The lead plaintiff in the 1997 case is Jenny Rubin, who was injured in that attack. The lead plaintiff in the 1995 case is Seth Klein Ben Haim. His was the same bombing that killed Alisa Flatow, whose father, New Jersey attorney Stephen Flatow, collected about $26 million of a separate $248 million judgment against Iran for its sponsorship of the Palestinian terrorists who perpetrated the attack.

In the Rubin case, Judge Ricardo Urbina found in favor of the victims, noting that Iran’s Ministry of Terrorism “spends between $50 million and $100 million a year sponsoring terrorist activities of various organizations such as Hamas.”

Unable to find qualifying Iranian assets in the United States from which to collect, the plaintiffs’ attorneys turned their sights overseas. The question now is whether they can collect from Iranian assets in France.

“We have been seeking to enforce the judgment in many countries for several years,” said attorney David Strachman, a Rhode Island-based lawyer representing plaintiffs in the case.

In the United States, plaintiffs have had some successes collecting on judgments against Iran for sponsoring terrorism. In perhaps the most famous of these cases, Flatow collected the compensatory portion of the judgment against Iran for his daughter’s death.

To pursue Iranian assets, attorneys in the cases stemming from the 1995 and 1997 bombings are relying in part on precedent set in the Flatow family’s legal fight. One notable development of that fight was the passage in the U.S. Congress of the Flatow Amendment to the Foreign Sovereign Immunities Act. That legislation removed sovereign immunity, which protects states from lawsuits in foreign courts, in cases of state-sponsored terrorism.

Iran has responded harshly to efforts to freeze its assets overseas.

Last fall, Iranian Central Bank Governor Tahmasb Mazaheri called such actions “psychological warfare.” He was quoted by Reuters as saying, “The world is big and having no cooperation with one country does not stop Iran’s banking activities.”

In December 2007, Christoph Martin Radtke, the Paris-based lawyer working with Strachman’s firm, succeeded in having funds from the Central Bank of Iran frozen at Bank Melli and Natexis Banques Populaire. Today, only the funds at Natexis remain frozen.

Radtke told JTA that banking secrecy laws present a major obstacle in determining the nature of transactions and whether the assets in the bank qualify for seizure. He argues that the Central Bank of Iran’s assets qualify because the bank is controlled by Iran’s president and regime, does not have a floating currency, and exists merely to collect debts, receive payments and issue letters of credit to Iranian companies.

The bank “is in reality not a central bank or a bank that has normal commercial operations,” he said.

Maintaining the current freeze on assets would bring “security for our clients that they will get paid once we have the U.S. judgment enforced in France,” Radtke said. “Of course, if the money is unfrozen it will probably leave France and go back to Iran or somewhere else. And then it will be difficult or even impossible for the victims to get paid.”

The Central Bank of Iran has demanded through French attorney Bertrand Moreau that the freeze be lifted. Moreau told JTA in an email he could not comment on the case.

Radtke said this is the first time Iranian funds have been frozen in French banks for as long as several months. The case could become a precedent in Europe for holding a non-E.U. country accountable for terrorist acts, he said.

In late December 2007, the French Ministry of Justice Ministry argued on Iran’s behalf – the U.S. Justice Department has done the same in cases in which U.S. citizens have tried to seize Iranian assets in the United States – and on Jan. 24 the French court decided to lift the freeze, based on the argument that central bank funds are diplomatic assets and therefore entitled to immunity from civil lawsuits.

But Radtke appealed the decision Jan. 27, and the next hearing in the case is scheduled for Feb. 25.

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