Ninth Circuit Misses on Iran

I once appeared in court to ask that three additional defendants be held liable on a judgment.

The judge was skeptical — until I showed him that the additional defendants had forged both a set of articles of incorporation and a doctor’s business license.

The judge looked at the forged documents. He looked at the evidence that proved the documents were forged. Then, he exploded.

He gestured and yelled: "I don’t like it when people play fast and loose with the law." And with a stroke of a pen, he held the additional defendants liable.

I wonder what that judge thinks of the 9th Circuit Court of Appeals’ refusal last week to allow a terrorist victim’s family to hold an Iranian national bank in California liable on a judgment against Iran.

In Flatow v. Bank Saderat Iran the 9th Circuit decided whether heirs of American Alisa Flatow ("Flatow"), a New Jersey native who was murdered when the bus she was riding on in Israel in 1995 was bombed, could enforce their judgment against property owned by Bank Saderat Iran in Carlsbad.

Flatow had already won a judgment against the Islamic Republic of Iran: Iran had provided material support and resources to the terrorists. The sole question was whether the property held by an Iranian national bank could be used to satisfy the judgment.

The 9th Circuit relied upon a 1983 case where Citibank recovered assets from a Cuban national bank as a setoff against property seized by Cuba.

In the case, the court had found a nationalized Cuban bank to be wholly owned by Cuba, but would only hold the bank liable on the Cuban regime’s debts if the claimant could show either that the bank was acting as an agent of the Cuban government, or that the claimant was entitled to recover the money to prevent fraud and injustice.

In Flatow, the 9th Circuit found the Iranian bank to be wholly owned by the government — it was nationalized in 1979 — but rejected the contention that the Iranian national bank was a principle-agent of the Iranian government, or that justice required payment to Flatow.

I have some sympathy for the 9th Circuit. It, like many Western legal and government institutions, is now struggling to address the right to recover from Islamic terrorists within the Western framework of jurisprudence.

But the apology the court makes to Flatow at the end of the opinion "expressing regret" that the holding "forestalls" recovery is an admission of the court’s mistake.

The court’s own opinion shows that the Iranian national bank in question was supervised entirely by government ministers on various committees. In addition, the Iranian constitution mandates central control of the banking industry as part of the state sector of the economy.

Just like the former Soviet Union, where the state pushed every industry into the struggle against the West, terrorist states like Iran

utilize every component of society in support of jihad.

Other terrorist states similarly use their national institutions for terror. For example, recovery of Palestinian Authority documents by Israel over the past several months shows an entire state apparatus aiding and abetting terror. The Iraqi regime also uses various government entities to advance its nefarious goals.

In sponsoring worldwide terrorist attacks, Iran has done more than just "play fast and loose with the law." Iran has murdered and maimed innocent people.

This is not a case about two forged documents; it’s a case about continuing Islamic terror.

And since the Iranian regime has assets, the victims should be compensated.

At this point, Flatow’s case is not over; Flatow may ask for a rehearing of the 9th Circuit’s decision to a wider panel of 11 judges in the 9th Circuit.

The 9th Circuit made a mistake by not taking the Islamic Republic of Iran at its word and deed, namely, that the Islamic state directs both terrorist operations and the banking industry.

The 9th Circuit should reverse its initial decision, recognize Iran as a terrorist entity and order full recovery from the Islamic Republic of Iran’s nationalized bank.

Nathan D. Wirtschafter is a co-chair of the Israel Speaker’s Bureau for The Jewish Federation of Greater Los Angeles.