Bill S-7 Suing Terror Sponsors

Case Studies

From C-CAT Testimony before the Special Senate Committee on Anti-terrorism – July 5, 2010

The Chair: We are pleased to have witnesses from the Canadian Coalition Against Terror with us. C-CAT is a strong citizen advocacy group that has been working on this issue…. Please proceed with your opening statement, Mr. Blumenfeld.

Aaron Blumenfeld, Counsel, Canadian Coalition Against Terror: …There are good reasons why leading American lawyer are suing and exposing terrorist sponsors: the litigation is powerful, and they have been successful.

The United States enacted similar legislation to Bill S-7 in the 1990s after requests from victims groups. This allowed family members of the victims of Pan American World Airways’ Flight 103, known as Pan Am Flight 103, which exploded over Lockerbie, to sue Libya. After the negative publicity over Libya’s involvement, Libya ultimately agreed to pay the families $10 million each. Libya made an initial payment, over time, of $2.3 billion to those victims, and, in 2008, made a further payment of $1.5 billion to compensate these victims and other terror victims. … Arguably, the suit, the publicity and the sanctions led Libya to change its state policy, end its nuclear program and leave the terrorism business. This was an enormous victory in the war on terrorism, and victims were key drivers. Ultimately, state sponsors are rational and can be deterred, which is a key objective.

By way of other examples, according to the Congressional Research Service, U.S. terror victims received $97 million from blocked Cuban assets; $377 million from an Iranian foreign military sales account; and over $90 million from Iraqi government assets, all held by the U.S. government.

The amount collected by plaintiffs’ lawyers, other than from foreign assets held by the government, is unknown. We have a couple of examples of that, but plaintiffs’ lawyers typically keep this information guarded because if one discovers, for example, an Iranian asset that may be in a different name in one court district, any publicity may result in that being shared with other judgment holders.

…A few months after this legislation was passed, the victims of the 1983 bombing of the U.S. marine barracks in Lebanon, which killed 241 servicemen, tied up $2 billion in a clearing house account called Clearstream, which was held with Citibank in New York. The U.S. Department of the Treasury, with court permission, provided information to the plaintiffs that linked the money to Iran, which the court had earlier found sponsored the attack. This court file is under seal and almost no information is publicly available, but in your package you will find an article from late last year in The Wall Street Journal entitled “U.S. Freezes $2 Billion in Iran Case,” which describes this.

You may wonder why Iran would be transferring $2 billion through the U.S., assuming that it is Iranian money, which, as far as I know, has not been found by a court at this point. If you want to exchange U.S. dollars into another currency, you must generally go through the large clearing houses in the U.S. It is not easy to operate in global markets without the ability to trade in U.S. dollars.

Imagine the impact that this approach could have if it were exported to other major currencies, for example, the Canadian dollar, the euro, the British pound, and so on.

Finally, we have distributed one other letter from the head of the Israel Law Center, which specializes in this type of litigation. That one firm placed $600 million in liens on terrorist assets or state assets and collected $72 million for victims of terror….