A cloud of smoke rises after the explosion of the Marine Corps building in Beirut
By Lawrence Hurley
WASHINGTON (Reuters) - The U.S. Supreme Court on Wednesday ruled that almost $2 billion in frozen Iranian assets must be turned over to American families of people killed in the 1983 bombing of a U.S. Marine Corps barracks in Beirut and other attacks blamed on Iran.
The court's 6-2 ruling dealt a setback to Iran's central bank, finding that the U.S. Congress did not usurp the authority of American courts by passing a 2012 law stating that the frozen funds should go toward satisfying a $2.65 billion judgment won by the families against Iran in U.S. federal court in 2007.
Bank Markazi had challenged a 2014 ruling by the New York-based 2nd U.S. Circuit Court of Appeals that the assets, bonds held in a trust account overseen by former federal judge Stanley Sporkin, should be handed over to the more than 1,000 American plaintiffs.
With the legal questions resolved, lawyers for the plaintiffs said all that is left is for a federal judge to allow Sporkin to distribute the funds.
The lead plaintiff was Deborah Peterson, whose brother, Marine Lance Corporal James Knipple, died in the Beirut bombing. Peterson said for her the legal fight has never been about the just money.
"The mission was for those responsible for the bombing to be held accountable and for the world to understand what happened in Beirut," Peterson said.
Ted Olson, the lawyer for the victims who argued the case before the Supreme Court, said the ruling brings "long-overdue relief to more than 1,000 victims of Iranian terrorism and their families, many of whom have waited decades for redress."
Jeffrey Lamken, the Iranian bank's attorney, declined to comment.
The plaintiffs have waged a long legal battle seeking compensation for attacks they say Iran orchestrated. Congress inserted itself into the dispute by passing the law to help the plaintiffs obtain the Iranian funds.
The plaintiffs accused Iran of providing material support to Hezbollah, the Iranian-backed Shi'ite Islamist political and military group responsible for the 1983 truck bomb attack at the Marine compound in Beirut that killed 241 U.S. service members.
They also sought compensation related to other attacks including the 1996 Khobar Towers truck bombing in Saudi Arabia that killed 19 U.S. service members.
Caragh Fay, a lawyer representing the victims of the Beirut attack, said it could take from three months to a year for the funds to be dispersed to plaintiffs, depending in part on recommendations Sporkin first has to make to the judge.
Money will go to the estates of service members who died in the attack, their families and to those who survived the attacks. Payouts will range from hundreds of thousands to millions of dollars, Fay said.
GINSBURG AUTHORED RULING
The ruling, written by liberal Justice Ruth Bader Ginsburg, said the U.S. Congress did not violate the separation of powers principle enshrined in the U.S. Constitution giving specific authority to the government's executive, legislative and judicial branches.
Ginsburg said the 2012 law was "no threat to the independence of the judiciary" because it did not apply simply to one case, but rather "multiple civil actions" against Iran by numerous plaintiffs.
The law simply set a new legal standard and left it to the courts to determine how that standard should be implemented, Ginsburg said. She also noted that courts generally give Congress and the White House greater leeway in foreign affairs.
Chief Justice John Roberts, a conservative, criticized the ruling, saying Congress was "commandeering the courts to make a political judgment look like a judicial one." Liberal Justice Sonia Sotomayor joined his dissent.
The ruling came during a delicate period in U.S.-Iranian relations, following January's implementation of a landmark accord reached last year by the United States and five other world powers to lift economic sanctions in exchange for Iran accepting limits on its nuclear program.
Democratic U.S. Senator Bob Menendez of New Jersey, who authored the 2012 legislation in question, called the ruling "a long-awaited victory for justice."
"So long as Iran continues its support for terrorism, its regime will be held liable for its actions," Menendez said.
The Obama administration filed court papers backing the families.
The assets held in New York were part of the Iranian bank's foreign currency reserves. They were traced to a Citibank account in New York held by Luxemburg-based Clearstream Banking, which acted as a intermediary for Banca UBAE, an Italian bank of which Bank Markazi is a customer.
(Reporting by Lawrence Hurley; Editing by Will Dunham)