Palestinian Authority Granted New Trial in Terrorism Damages Suit

By Glenn Kessler
Washington Post Staff Writer
Friday, March 28, 2008

The Palestinian Authority won a major legal victory when a federal judge, in a ruling made public yesterday, agreed to set aside a judgment of nearly $200 million awarded to American victims of Palestinian terrorist attacks in Israel and allow a new trial.

Such rulings are rare, and the judge, U.S. District Judge Victor Marrero, said that he would vacate the previous legal victory only if the Palestinian Authority put up a $192.7 million bond to ensure that it does not default again if it loses in court. In a ruling Wednesday, he also ordered the Palestinians to reimburse the plaintiffs for previous legal expenses.

But Marrero's decision gives the Palestinian government hope that it can escape from lawsuits that its officials said threatened to bankrupt it. Top Palestinian officials, including Palestinian Authority President Mahmoud Abbas, had urged Secretary of State Condoleezza Rice to intervene in the case.

Marrero had earlier sought the Bush administration's opinion on the case, confronting it with a choice between supporting compensation for victims of terrorism and bolstering the Palestinian government as the United States presses for a breakthrough in Israeli-Palestinian peace talks. The administration ultimately declined to offer an opinion, but noted in a statement to the court that it was concerned that lawsuits by victims of terrorism could harm the "financial and political viability" of the Palestinian Authority -- a statement that Marrero noted in making his decision.

Leslye Knox, a 46-year-old mother of six children and widow of Aharon Ellis, had sued under a law passed by Congress in 1990 after the murder of Leon Klinghoffer by terrorists who seized the Achille Lauro cruise ship. Ellis, a U.S. citizen, was shot and killed along with five other people by a Palestinian militant in 2002 in Hadera, Israel.

The Palestinian Authority initially argued that it had sovereign immunity, meaning that as a state it was beyond the reach of the U.S. legal system. But U.S. courts rejected that claim, noting that Palestine is not a state.

With the Palestinian Authority refusing to defend itself in court, a federal judge in 2006 ordered the PLO and the Palestinian Authority to pay Knox and other Ellis relatives nearly $174 million. Nothing has been paid. Marrero ordered a $192.7 million bond to also cover interest.

With a new set of lawyers, the Palestinian Authority last year said the Knox judgment should be nullified because the authority was now prepared to litigate the case and offer a vigorous defense.

The plaintiffs have argued that testimony in Israeli courts has connected senior Palestinian leaders -- such as the late Yasser Arafat -- to specific terrorist attacks involved in the lawsuits. But, after reviewing the evidence, Marrero ruled that the defendants "have sufficiently demonstrated evidence of facts that, if proven at a trial, would constitute a complete defense to plaintiffs' aiding and abetting" the attack. Marrero also said that the size of the judgment warranted a new trial.

Mark J. Rochon of the Washington firm Miller & Chevalier, who represented the Palestinian Authority, could not be reached for comment. Knox's attorney, David J. Strachman, also could not be reached for comment.

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