Choice of Non-U.S. Law Informs Damages Models and Amounts in FSIA Case Against Iran

Choice of Non-U.S. Law Informs Damages Models and Amounts in FSIA Case Against Iran


By Louis M. Solomon

Oveissi v. Islamic Republic of Iran, et al., 03-cv-1197 (RCL) (D.D.C. Mar. 2011) [enhanced version available to subscribers], provides a recent example of how choice of law can inform and in some respects determine not just the categories but the actual quantum of damages available in a suit under the Foreign Sovereign Immunities Act.  The application of choice of law in this context is rather specific; the rules, however, apply to a great many types of international litigation.

Oveissi involves the efforts by the grandson of a general and high-ranking official in Iran prior to the 1979 Iranian revolution.  The grandfather fled Iran, lived briefly in the U.S. (where the plaintiff in the suit was born), and then settled in Paris - where he was gunned down by the Islamic Jihad, which the District Court found was "a cell composed of members of the terrorist organization Hezbollah", a group that was "materially supported by Iran". 

The claims brought by the grandson against Iran fell under Section 1605(a)(7) of the FSIA, which, at the time of suit, permitted claims against sovereigns for state-sponsored terrorism but on the basis of a "pass-through" to causes of action under state tort law.  To apply that law, the Court would have to apply a choice of law analysis.  Earlier in the case the D.C. Circuit had reversed a finding that California law would provide the rule of decision and ruled instead that French law would.  The Circuit did not find it sufficient that the U.S. had any "unique interest in having its domestic law apply when its citizens are injured by state-sponsored terrorist acts", which the District Court had earlier believed "elevates the interests of the United States to nearly their highest point". 

In applying French law to the plaintiff's claims, the Court looked to prior FSIA decisions for guidance, but the Court also applied the categories of damages recognized under French law.  Finding that the fundamental principle that dominates the evaluation of damages [under French law] is the principle of 'full compensation'", the Court ignored other bases of awarding damages found under U.S. state laws, such as retribution, deterrence, etc.  The Court articulated something akin to a contract measure of damages:  "to re-establish as exactly as possible the balance of things destroyed by the harm and to replace the victim, at the expense of the person held liable, in the situation in which he would have been if the harm had not occurred".    Although French law would award economic loss damages as well as damages akin to loss of companionship and pain and suffering, loss of real property was not compensated on a finding that the grandfather did not in fact possess those rights at the time of his death.

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