BURIED IN the terrorism insurance bill, which President Bush recently signed into law, is a provision that gives trial lawyers everywhere reason to smile. Overwhelmingly supported by both houses of Congress despite opposition from the Bush administration, this provision was designed to make it easier for victims of terrorism suing countries that support terrorist groups to seize assets of those nations that have been frozen by the federal government. This may sound like a good idea. Why shouldn't terrorist-sponsoring states compensate the victims? But the result will be to make the patchwork of laws governing these cases even less fair and even more at odds with this country's foreign policy interests and treaty obligations.
Congress in 1966 stripped terrorist-supporting states of the normal immunity that foreign nations enjoy in U.S. courts. A spree of victims' lawsuits followed, producing huge default judgments because the countries in question generally did not appear to defend themselves. The countries also didn't rush to pay -- as, indeed, this country would not if a foreign court held it liable for an act of state. So the victims needed to go after the countries' frozen assets. But these assets are bargaining chips in U.S. foreign affairs, and some are diplomatic properties that the government is obliged to protect. So the government has been put in the unfortunate position of defending state sponsors of terrorism in court.
Congress, in turn, has responded by threatening to make frozen assets generally available and thus has forced the executive branch to ease up for some -- but only some -- claimants. The new law goes still further, clarifying that blocked assets are generally fair game in these suits. It allows the president to protect only those assets that are specifically covered by treaties that demand respect for diplomatic properties -- embassies, for example. But even here, the president's power is sharply curtailed. Under the new rules, there may be no way for the government to abide by its treaty obligations, a state of affairs that invites reciprocal violations by hostile governments
Under the 1996 law, to get a windfall judgment, plaintiffs facing no defendant need only convince a judge that the evidence is "satisfactory." So a suit this year charging Iraqi complicity in the Oklahoma City bombing -- that's not a typo -- may offer a vision of a future in which lawyers bring improbable claims knowing the defendants will default. The right answer is to get rid of these suits altogether. Not every problem can be solved with litigation. Compensating victims of terrorism is a quintessential example of one that should handled by other means.