March 5, 2018 / 6:05 PM / 4 months ago

U.S. top court turns away dispute involving Iran's Bank Melli

WASHINGTON, March 5 (Reuters) - The U.S. Supreme Court on Monday declined to take up Iranian government-owned Bank Melli's appeal of a lower court ruling that allowed victims of militant attacks allegedly backed by Iran to seek millions of dollars in compensation from the bank.

The justices left in place the lower court's ruling that allowed some plaintiffs, trying to satisfy part of nearly $1 billion in court judgments against Iran, to go after roughly $17.6 million that Visa Inc and Franklin Resources Inc owed to Bank Melli related to credit card use in Iran.

This marked the second time in two weeks the justices have acted in a case in which Iran has refused to pay judgments won in American courts by U.S. plaintiffs who have accused Tehran of complicity in various militant attacks.

The high court on Feb. 21 rejected a bid by another set of plaintiffs to seize priceless Persian artifacts held at a Chicago museum to satisfy a separate $71.5 million court judgment against Iran.

Both disputes center on the reach of a 1976 federal law called the Foreign Sovereign Immunities Act that largely shields foreign governments from liability in American courts, except for countries like Iran that have been designated by the U.S. government as state sponsors of terrorism.

In the case in which the court acted on Monday, about 90 plaintiffs in four lawsuits won nearly $1 billion in court judgments against Iran for its alleged complicity in various attacks between 1990 and 2002.

The plaintiffs include people injured or relatives of people killed in attacks including the 1996 bombing of the Khobar Towers residence at a U.S. military base in Saudi Arabia, the 1990 killing of militant U.S.-born rabbi Meir Kahane in New York City, and two bombings in Jerusalem in 2001 and 2002.

Bank Melli appealed to the Supreme Court, arguing that the $17.6 million, funds frozen due to U.S. sanctions against Iran, cannot be seized because the bank does not actually own it. Rather, it is owed to the bank by Visa and Franklin.

The San Francisco-based 9th U.S. Circuit Court of Appeals ruled in 2016 that Bank Melli had no immunity because a 2002 law known as the Terrorism Risk Insurance Act allows victims to access certain frozen assets of a country designated as a terrorism sponsor or one of its banks.

The 9th Circuit also said the Foreign Sovereign Immunities Act included a right for victims of militant attacks to collect on judgments regardless of commercial activity or other exemptions. The Supreme Court effectively overruled that finding in its Feb. 21 decision.

Reporting by Andrew Chung; Editing by Will Dunham

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