Released Claims Against Non-U.S. Sovereign Not Revived By Subsequent Expansion of Plaintiff’s Statutory Rights

Released Claims Against Non-U.S. Sovereign Not Revived By Subsequent Expansion of Plaintiff’s Statutory Rights


By Louis M. Solomon

We have recently been focused on how international law firms can offer more than just litigation help to clients - that is, how corporate lawyers and drafters of contracts can avoid or at least ameliorate some of the problems encountered in connection with the pursuit of an international dispute.  Recently we discussed the benefits of drafting in the context of avoiding the unintended publication of confidential information when seeking to enforce or avoid an arbitral award.  An unrelated area raising similar challenges occurs at the end of a dispute, when the dispute ends in settlement.  Invariably, the resolution by settlement includes the drafting and deliver of releases.

Hegna, et al. v. Islamic Republic of Iran, et al., 11 MC 5 (JSR)(S.D.N.Y. Mar 2011) [enhanced version available to subscribers], discusses whether statutory broadening and revival of a claim against Iran made on behalf of an American diplomat "murdered in a 1984 airplane hijacking orchestrated by Hezbollah, a terrorist organization with links to" Iran.   In earlier proceedings, the plaintiffs have accepted $8 million in partial satisfaction of a $42 million judgment.  The settlement was paid as part of the Victims of Trafficking and Violations Protection Act, which authorizes the U.S. government to make payments to certain designated sources of money to judgment holders who have obtained damage awards against countries that sponsor terrorism.  The release given as part of the settlement released, inter alia, "all rights to execute against or attach property that is at issue in claims against the United States before an international tribunal or that is the subject of awards by such tribunal" (the District Court found that the other part of the release did not justify a holding against the plaintiffs). 

The plaintiff argued that changes to the law wrought by the enactment of Section 1605A permitted them to attach additional assets notwithstanding the release.  The District Court acknowledged that the new statute "is in many ways more favorable to plaintiffs".  Relying on the District Court's decision in In re Islamic Republic of Iran Terrorism Litigation, 659 F. Supp. 2d 31 (D.D.C. 2009) [enhanced version], the District Court recognized that Section 1605A created a new federal cause of action against state sponsors of terrorism; gave remedies not available before; and "implements new measures designed to facilitate the enforcement of judgments".  The Court said that subjecting property at issue before international tribunals to attachment "could hinder the United States in its negotiations with sovereing nations and otherwise undermine its conduct of foreign affairs".  Still, the District Court found that the plaintiffs "have cited no authority for the proposition that a subsequent change in the law renders this agreement inoperative".   

Obviously, the scopes of releases are typically the subject of negotiation.  Yet could this release have been drafted in a way to preserve subsequent changes in law?  Another part of the release here was limited to being "in connection with the claim or claims I brought under" a specific statute.  Could that limitation been added to the portion of the release relied on by the District Court?

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