Flatow v. Islamic Republic of Iran (D.D.C. 1999)
Background
In 1995, a terrorist killed Alisa Flatow in the Gaza Strip. According to the U.S. State Department, Iran had sponsored the terrorist group responsible for the terrorist attack. Her family sought to bring Iran to justice. In March 1998, U.S. District Court Judge Royce C. Lamberth issued a $247.5 million judgment against Iran.
The Flatow Amendment And Punitive Damages
The Foreign Sovereign Immunities Act (FSIA) of 1976 set the rules for when a foreign country can be sued in the United States. In April 1996, Congress passed the Antiterrorism and Effective Death Penalty Act, which allowed lawsuits in U.S. courts against foreign countries designated by the State Department as sponsors of terrorism if they provided material support to terrorist organizations that killed a U.S. citizen. (28 U.S.C. § 1605A)
The Flatow Amendment, passed in September 1996, changed the new antiterrorism law to clearly allow victims to seek “punitive damages”—damages meant to punish. Congress believed that the most effective way to stop foreign governments from harming Americans abroad was to impose large financial penalties on those who supported terrorism that led to the death or injury of a U.S. citizen. (Flatow v. Islamic Republic of Iran, 999 F. Supp. 1) (D.D.C. 1999)
As noted in previous articles, when courts award hundreds of millions in damages, it is not about repaying or compensating the victim. Rather, it is about punishing the country that supported terrorism. Whether the victims actually receive that money is a different story.
A Short History of Modern Iran
The Pahlavi dynasty ruled Iran from 1925 to 1979, replacing the Qajar dynasty in 1925 after a British-backed coup.
Mohammad Moseddegh served as a democratically elected prime minister of Iran from 1951 to 1953. He introduced reforms such as the nationalization of the Iranian oil industry, which had been developed by the British on Persian lands since 1913.
With support from the United Kingdom and United States, Reza Pahlavi regained power in 1953 and shared ownership of Iranian oil production between Iran and Western companies until 1979.
CIA documents declassified in 2011 show that the CIA played a role in the overthrow of Moseddegh’s government. The CIA and British forces installed Reza Pahlavi and gave him $5 million within the first two days of his return to power. (cnn.com)
Pahlavi became the authoritarian “shah” of Iran and introduced many Western-style social reforms aimed at modernizing the country. He exiled Ayatollah Ruhollah Khomeini, a religious cleric who opposed the modernization of Iran.
In 1978, widespread demonstrations against Pahlavi broke out due to economic issues and religious opposition. Strikes in the oil industry followed, leading to economic chaos. Pahlavi responded by appointing a military government, which used brutal force to suppress dissent.
By late 1978, the military leadership was paralyzed, and many soldiers defected to the opposition. On January 16, 1979, the shah left Iran for Egypt, never to return. Shortly afterward, Khomeini returned to Iran and consolidated political power.
The Iranian Hostage Crisis
In October 1979, the shah, who was dying of cancer, was admitted to the United States for treatment. In protest of the United States harboring and treating the exiled shah, armed protesters stormed the United States Embassy in Tehran and took its staff hostage.
The hostage takers, calling themselves Muslim Student Followers of the Imam Khomeini’s Line, held over 50 American diplomats hostage for 444 days.
Failed Rescue Attempt
On April 25, 1980, President Jimmy Carter ordered the U.S. military to launch Operation Eagle Claw in an attempt to rescue the hostages in Tehran.
Eight helicopters were sent to a staging area, but only five arrived in operational condition. President Carter ordered Delta Force to abort the mission. Tragically, eight servicemen died when one of the remaining helicopters crashed into a transport aircraft carrying troops and jet fuel.
Reactions
Ayatollah Kohmeini stated that the failed U.S. rescue mission had been stopped by “an act of Heaven.” President Carter lost the 1980 presidential election and reportedly attributed his defeat to his failure to secure the hostages’ release.
The hostage crisis ended with the signing of the Algiers Accords in Algeria on January 19, 1981. The hostages were formally released to U.S. custody the following day—just minutes after Ronald Reagan was sworn in as the new American president.
The Algiers Accords: The U.S. Promised to Unfreeze Iran’s Assets
When Iran seized the U.S. Embassy in Tehran, the United States froze all Iranian assets, including cash in bank accounts and Iranian-owned real estate.
Under the Algiers Accords, the U.S. and Iran agreed to a several key provisions: (1) the U.S. would not intervene politically or militarily in Iran’s internal affairs; (2) the U.S. would unfreeze Iranian assets and lift trade sanctions; (3) the countries would refer legal disputes to international arbitration; and (4) Iran would repay debts owed to U.S. institutions. (https://www.parstimes.com/history/algiers_accords.pdf)
Billions of dollars were returned to Iran. However, the U.S. allegedly still holds billions more in Iranian assets, including cash and real estate, that remain frozen.
Executing On Flatow’s Judgment
The Flatow family sought to collect their $247 million judgment from frozen Iranian assets. However, the State Department under President Clinton opposed using those frozen funds to compensate victims of terror.
At subsequent hearings, Deputy Treasury Secretary Stuart Eizenstat—who had served as President Carter’s chief domestic policy adviser during the Iran hostage crisis—argued that if the Flatows had hypothetically collected their judgment prior to 1979, the U.S. government might have lacked the financial leverage needed to secure the release of the hostages out during the Tehran crisis.
Eventually, the executive branch released $26 million to the Flatow family, who used the funds to honor and perpetuate Alisa’s memory. It is possible that President Clinton feared that if federal judges enforced judgments against state sponsors of terrorism under the law passed by Congress, the president (and future presidents) would lose access to funds that could be used to negotiate for the release of future hostages. Failure to bring American hostages home would carry serious political consequences for any sitting president and his party.
This story highlights the complex conflicts that arise among the executive, legislative and judicial branches of the U.S. federal government.
Eliyahu Asher Prero, Esq., is a practicing lawyer and certified mohel. He graduated magna cum laude from Seton Hall Law with a concentration in intellectual property law and served as a clerk for the Honorable Thomas A. Sarlo, Superior Court of New Jersey, Civil Division—Bergen County. He is currently an associate at the law firm Schenck, Price, Smith & King, where he focuses on constitutional law and civil litigation. Please address all correspondence to The Jewish Link.
