Museums win bid to keep antiquities

A federal appeals court Tuesday declined to clear the way for victims of a terrorist attack financed by Iran to use ancient Persian artifacts to help satisfy a $71.5 million judgment against that nation.

The 7th U.S. Circuit Court of Appeals held the Field Museum of Natural History and the University of Chicago’s Oriental Institute are not required to turn over the antiquities to the eight victims.

Iran does not own two of the four collections sought by the victims, a panel of the court wrote.

Iran owns a third collection, the panel wrote, but the Oriental Institute returned most of those artifacts in 1970 and the remainder within the last two years at the direction of the U.S. State Department.

The fourth collection includes about 30,000 clay tablets and fragments that Iran loaned to the Oriental Institute in 1937 for research, translation and cataloguing, the panel wrote.

The Persepolis Collection, it wrote, is owned by Iran and is in the possession of the University of Chicago.

But as the property of a foreign state, these artifacts are immune from attachment and execution, the panel held, citing the Foreign Sovereign Immunities Act.

The panel conceded there are exceptions to this general rule.

A litigant seeking to satisfy a judgment against a foreign state may take property “used for a commercial activity in the United States,” Judge Diane S. Sykes wrote for the panel, quoting Section 1610(a) of the FSIA.

However, she wrote, Iran has not used the artifacts in the Persepolis Collection for any commercial purpose.

Citing Bennett v. Islamic Republic of Iran, Nos. 13-15442 and 15-16100, 2016 WL 3257780 (9th Cir. June 14, 2016), the panel also conceded that the 9th Circuit in San Francisco last month held that Section 1610(g) of the FSIA allows victims of state-sponsored terrorism to attach assets even if they are not used for commercial purposes.

It disagrees with the 9th Circuit’s ruling that Section 1610(g) is a freestanding exception to execution immunity, the panel wrote.

The panel noted that the 9th Circuit’s majority cited two 7th Circuit decisions — Gates v. Syrian Arab Republic, 755 F.3d 568 (7th Cir. 2014), and Wyatt v. Syrian Arab Republic, 800 F.3d 331 (7th Cir. 2015) — to bolster its holding in Bennett.

“To the extent that Gates and Wyatt can be read as holding that Section 1610(g) is a freestanding exception to execution immunity for terrorism-related judgments, they are overruled,” Sykes wrote.

Joining the opinion were Judge William J. Bauer and Chief U.S. District Judge Michael J. Reagan of the Central District of Illinois, who sat on the 7th Circuit by designation.

Because its opinion overrules 7th Circuit precedent and conflicts with the 9th Circuit’s ruling on the issue, the panel wrote, it circulated its opinion to all the active judges on the court to consider the possibility of a rehearing en banc.

But Chief Judge Diane P. Wood and Judges Richard A. Posner, Joel M. Flaum, Frank H. Easterbrook and Ilana Diamond Rovner did not participate, the panel wrote, and therefore a majority of the active judges did not vote for the entire court to rehear the case.

The panel did not say why the five judges did not participate.

Judge David F. Hamilton did not serve on the panel, but he used a dissent from the denial of en banc review to object to the panel’s holding.

The text of Section 1610(g) is ambiguous and, therefore, both the 7th Circuit’s and the 9th Circuit’s interpretations of that provision are reasonable, Hamilton wrote.

“The courts must choose between two statutory readings: [O]ne that favors state sponsors of terrorism and another that favors the victims of that terrorism,” he wrote.

Congress, he wrote, has extended the remedies for such victims over the years.

“The balance here should weigh in favor of the reading that favors the victims,” he wrote.

The plaintiffs were among the 200 people who were injured when three Hamas suicide bombers blew themselves up in Jerusalem in September 1997. Five other people were killed.

The plaintiffs filed a lawsuit in federal court in Washington, D.C., seeking damages against Iran, which financed Hamas, and several individuals.

In 2003, they were awarded $71.5 million in damages in a default judgment against Iran. The judgment amounted to more than $400 million when the punitive damages the individual defendants were ordered to pay were included.

The plaintiffs have attempted to collect the judgment against Iran by seeking to attach its assets in the United States.

In the lawsuit filed in federal court in Chicago, U.S. District Judge Robert W. Gettleman held there are no exceptions in either the FSIA or the Terrorism Risk Insurance Act of 2002 that allow the plaintiffs to attach the museum exhibits.

The 7th Circuit panel agreed with Gettleman.

The insurance act, the panel wrote, allows terrorism victims who obtain a judgment against the offending nation to execute on assets that are “blocked” by executive order under certain international sanction provisions.

But there is no executive order blocking the artifacts sought by the plaintiffs, the panel wrote.

Asher Perlin of Florida Professional Law Group PLLC in Hollywood, Fla., argued the case before the 7th Circuit on behalf of the plaintiffs.

Matthew G. Allison of Baker & McKenzie LLP argued the case on behalf of the museums.

Jeffrey A. Lamken of MoloLamken LLP in Washington, D.C., argued the case on behalf of the Iranian government.

Benjamin M. Schultz of the U.S. Justice Department in Washington argued the case on behalf of the government. The United States took part in the case as amicus curiae supporting the position of Iran and the museums.

Justice Department spokeswoman Nicole A. Navas declined to comment.

Oriental Institute Director Gil J. Stein said he is pleased with the ruling.

“While the university abhors the acts of terrorism that lead to this proceeding, the artifacts at issue here are not subject to attachment under either the Foreign Sovereign Immunities Act or the Terrorism Risk and Insurance Act,” he wrote in an e-mail. “The Institute looks forward to continuing its research on the Persepolis Collection, artifacts which provide unparalleled insight into the history and languages of the Persian Empire around 500 B.C.”

The Field Museum and the attorneys either did not have an immediate comment or could not be reached for comment.

The case is Jenny Rubin, et al. v. Islamic Republic of Iran; Field Museum of Natural History, et al., Respondents, No. 14-1935.