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Sudan and Iran May Get Relief From Terrorism Default Judgment

The countries of Sudan and Iran may finally be getting some relief from an over $14 billion judgment entered against them in the U.S. Federal District Court. The judgment is the result of an action filed against the nations for harboring the terrorists, members of al Qaeda, responsible for a coordinated attack on two U.S. embassies abroad in 1998.

Unfortunately for the two nations, neither lodged an appearance before the judgment was made final. Since that time, the nation of Sudan has appealed the judgment, and lost. However, the most recent order trimmed the $4 billion plus award of punitive damages off the total judgment.

Punitive Damages Fail, Federally

Sudan tried to plea ignorance of the U.S. legal system as well as of the severity of the consequences for not showing up. The nation's attorney attempted to explain that the country was in turmoil and unable to defend itself at the time of default. Neither the lower court, nor the appellate court found Sudan's excuses for failing to appear to be convincing. But, the appeals court did find that the punitive damages awarded failed as a matter of federal law.

Basically, the punitive damages were awarded under the 2008 National Defense Authorization Act, which the court found could not be retroactively applied to conduct that occurred a decade in the past.

The court essentially is heeding the warning of the Supreme Court, which stated: "retroactive imposition of punitive damages would raise a serious constitutional question." The appellate court found that the retroactive imposition of punitive damages, along with the issue of foreign diplomacy and relations, and the large size of the award, merited review.

The Question of Punitive Damages Under State Law

While the court vacated the punitive damages, it did not provide Sudan with any other relief, holding that the nation is not entitled to relief from default. However, the issue of whether punitive damages may be available on a state law claim was remanded to the D.C. Federal District Court for further proceedings.

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