Anti-Terrorism Legislation

Shedding Light on the Anti-Terrorism Clarification Act of 2018

By Harry Graver, Scott R. Anderson
Thursday, October 25, 2018, 12:00 PM

President Donald Trump quietly signed the bipartisan Anti-Terrorism Clarification Act of 2018 (ATCA) into law on Oct. 3. Described as a “carefully balanced approach to better ensure victims’ access to compensation and hold supporters of terrorism accountable” by its principal author, Sen. Chuck Grassley (R-Iowa), ATCA amends the civil-liability provision of the Anti-Terrorism Act (ATA) in three meaningful respects. ATCA eliminates certain legal defenses, makes more assets available for attachment, and expands the personal jurisdiction of the federal courts over related claims. Some of the mechanisms it uses to achieve these objectives, however, raise constitutional questions—and, regardless of the answers, may put certain long-standing U.S. foreign policy objectives at risk.

ATCA is the first piece of legislation to introduce substantial changes into the ATA’s civil-liability provisions since the Justice Against Sponsors of Terrorism Act (JASTA), which Congress enacted over President Barack Obama’s veto in 2016. Like JASTA, ATCA was in part the product of an active advocacy effort by plaintiffs who had received adverse decisions in existing terrorism-related civil litigation. As a result, it is primarily intended to revive those plaintiffs’ cases by amending the underlying law. ATCA also received high levels of bipartisan support, like JASTA, and ultimately passed through Congress without opposition.

This post takes a close look at the three statutory changes that ATCA implements. Section 2 of ATCA narrows the “act of war” exception to the ATA’s civil-liability provision in order to ensure that it excludes certain designated terrorist organizations. Section 3 expands the assets available for attachment by the holders to include assets seized or frozen pursuant to certain counter-narcotics authorities. And Section 4 requires foreign entities to consent to the federal courts’ personal jurisdiction for ATA claims as a condition for receiving U.S. foreign assistance—a controversial maneuver that has raised both legal and policy concerns.

Narrowing the 'Act of War' Exception

ATCA first addresses the “act of war” exception to the ATA’s civil-liability provision. The ATA normally provides a civil remedy for U.S. nationals who are injured by reason of an act of “international terrorism,” which is defined as any violent, criminal act that is intended to affect government policy or intimidate a civilian population. However, the ATA excludes injuries arising from “acts of war,” which it defines as “any act occurring in the course of” a “declared war,” an “armed conflict, whether or not war has been declared between two or more nations,” or “an armed conflict between military forces of any origin.”

Federal courts have reached conflicting conclusions on whether this exception can reach acts by designated terrorist organizations. Several have concluded that a designated terrorist organization cannot be “military force of any origin” for ATA purposes. Others, however, have taken a different approach. Most notably, in Kaplan v. Central Bank of the Islamic Republic of Iran—a case referenced during floor debate on ATCA and in its associated House report—a federal district court in the District of Columbia concluded that rocket attacks that Hezbollah launched against Israel during the 2006 Israel-Lebanon conflict constituted an “act occurring in the course of ... an armed conflict between military forces of any origin.” As a result, any resulting injuries were thus outside the scope of the ATA’s civil-liability provision.

Section 2 of ATCA corrects this latter approach by explicitly excluding two categories of government-designated terrorist organizations—“Foreign Terrorist Organizations” and “Specially Designated Global Terrorists”—from the definition of “military force” used in the ATA’s act-of-war exception. It also excludes any entity that “has been determined by the court to not be a ‘military force’”—a provision that the House report indicates was intended to “make clear a person in addition to an FTO or an SDGT may be found not to be a military force.” Notably, ATCA makes this change applicable to both pending and future civil actions—meaning that it extends to the Kaplan plaintiffs, whose case remains ongoing. While not frequently used, Congress’s authority to amend the substantive law for pending cases in this manner is reasonably well-established and has been upheld by the Supreme Court as recently as its 2016 decision in Bank Markazi v. Peterson. Therein, the court noted that the political branches are particularly entitled to deference when introducing such legislation in areas with a close nexus to their authority over foreign affairs, as is undoubtedly the case here.

Attaching Narco-Terrorism Assets

Section 3 of ATCA, meanwhile, expands plaintiffs’ ability to enforce favorable judgments they receive as a result of ATA claims. In general, enforcing an ATA judgment can be a difficult task, as defendants are often based overseas and either do not have or seek to conceal any assets they have in the United States. To ease this burden, Congress passed the 2002 Terrorism Risk Insurance Act (TRIA), Section 201 of which allows the holders of terrorism-related judgments to attach certain “blocked assets” in satisfaction of those judgements. It defines “blocked assets” to mean any assets “seized or frozen” by the United States pursuant to the Trading With the Enemy Act (TWEA) or International Emergency Economic Powers Act (IEEPA), two broad authorizations frequently used to impose economic sanctions—including on terrorist organizations and their affiliates.

TWEA and IEEPA are not the only statutes under which the executive branch blocks assets. The 1999 Foreign Narcotics Kingpin Designation Act also allows federal authorities to block the assets of entities associated with the international narcotics trade, including narco-terrorist groups like the Revolutionary Armed Forces of Colombia, commonly known as FARC. As a result, plaintiffs who secure favorable judgments against these narco-terrorists cannot be able to enforce those judgments against assets frozen pursuant to the Kingpin Act. During floor debate, several ATCA supporters cited the example of the plaintiffs in Stansell v. Revolutionary Armed Forces of Colombia, four Americans who were held captive—and in one case executed—by FARC and their families. While these plaintiffs successfully secured a default judgment against FARC pursuant to the ATA, the Eleventh Circuit held that the Terrorism Risk Insurance Act did not allow them to attach and enforce their judgment against related assets blocked pursuant to the Kingpin Act.

ATCA tries to close this “loophole” by adding assets seized under the Kingpin Act to the definition of “blocked assets” under the TRIA. The sponsors of ATCA explicitly borrowed this provision from an earlier legislative proposal—the Clarifying Amendment to Provide Terrorism Victims Equity (or “Captive”) Act—which was passed by the House in 2016 but never taken up in the Senate. Unlike the Captive Act, however, ATCA—which amends the ATA’s civil-liability provision, not TRIA itself—applies this new definition only to ATA claims, not claims under other possible causes of action. As a result, it will reach the Stansell plaintiffs and those similarly situated but not others who may hold judgments against narco-terrorists based on other causes of action. Once again, Bank Markazi—which upheld an even more narrowly tailored effort to make certain assets available for attachment by specific plaintiffs—supports the conclusion that this effort to change the applicable law mid-proceedings is not constitutionally suspect or vulnerable to related legal challenges.

Consent to Personal Jurisdiction

The final and most controversial section of ATCA addresses a common obstacle for ATA claims: constitutional barriers to the federal courts’ ability to exercise personal jurisdiction over foreign defendants. A lack of personal jurisdiction has proven fatal to several ATA claims in recent years, including two specifically discussed in the ATCA’s House report: Waldman v. Palestine Liberation Organization and Livnat v. Palestinian Authority. In both, the plaintiffs or their family members were injured or killed in terrorist attacks in Israel and the West Bank that were attributed to individuals with ties to the Palestinian Authority and the Palestine Liberation Organization. The plaintiffs in turn pursued ATA claims against both organizations. In Waldman, the Second Circuit held that it lacked personal jurisdiction over both the Palestinian Authority and the PLO. First, there was no general personal jurisdiction because neither organization had the sorts of ties to New York that would qualify them as “essentially at home” there, as required by the Supreme Court’s 2014 holding in Daimler Ag v. Bauman. Second, there was also no specific personal jurisdiction because the terrorist attacks at issue did not specifically target Americans or otherwise demonstrate the sort of “purposeful availment” necessary for specific personal jurisdiction. The D.C. Circuit reached the same basic conclusion in Livnat. The Supreme Court later denied certiorari in both cases.

Section 4 of ATCA attempts to do away with this problem by establishing that, for ATA claims, any defendant “shall be deemed to have consented to personal jurisdiction” if it does one of two things 120 days after ATCA’s enactment: (1) receives U.S. foreign assistance pursuant to economic support fund (ESF) or international narcotics control and law enforcement (INCLE) authorities; or (2) establishes or maintains a headquarters or other facility in the United States while benefiting from a waiver or suspension of a statutory provision that bars “the PLO or any of its constituent groups” from operating such facilities in the United States. Such consent extends personal jurisdiction for ATA claims regardless of when the act of international terrorism on which they are predicated occurred, but ends five years after a defendant ceases the activities described in (1) and (2) above.

Of course, this assumes that ATCA’s consent provision is constitutional—something that is not at all clear, despite the House report’s strong assertion to the contrary. Under Daimler, for a defendant to be subjected to a court’s general personal jurisdiction, the Due Process Clause requires that the defendant’s ties to the forum state be “so continuous and systematic as to render it essentially at home” there. This is a purposefully high threshold that the Waldman court found to be lacking and the Livnat plaintiffs did not even argue. ATCA does nothing to strengthen these ties but, instead, seeks to compel certain defendants to implicitly consent to personal jurisdiction by making it a condition for receiving U.S. foreign assistance. But is such consent an adequate remedy to the constitutional due process concerns that Daimler raises?

The House report argues that it is but musters little support for this conclusion. The only relevant Supreme Court precedent it cites supports the relatively uncontroversial assertion that an entity that chooses to enter a jurisdiction may be held responsible for knowing the laws there. Two other Supreme Court decisions it cites hold that certain statutory consent requirements consent in the context of bankruptcy proceedings can be satisfied by implicit in lieu of express consent—a subject of arguably little relevance to the present scenario. Instead, the House report leans most heavily on the Second Circuit’s 2016 decision in Brown v. Lockheed Martin Corp. and a string of related state court cases, all of which reject the proposition that state laws requiring corporations to register in order to do business there provide a basis for general personal jurisdiction. Each observes that the state law at issue does not explicitly say that it will provide for general personal jurisdiction, a clear difference from ATCA. But the House report neglects to mention that none indicates that the outcome would be different if there were such a statement.

To the contrary, Brown explicitly declines to reach this issue. Noting the tension between pre-Daimler precedent allowing defendants to broadly consent to personal jurisdiction and Daimler’s “strong admonition against the expansive exercise of general jurisdiction,” it states that:

[A] carefully drawn state statute that expressly required consent to general jurisdiction as a condition on a foreign corporation’s doing business in the state, at least in cases brought by state residents, might well be constitutional. But as the Supreme Court recognized in [Goodyear v. Brown], “A state court's assertion of jurisdiction exposes defendants to the State's coercive power, and is therefore subject to review for compatibility with the Fourteenth Amendment's Due Process Clause.” ... The reach of that coercive power, even when exercised pursuant to a corporation's purported “consent,” may be limited by the Due Process clause. We need not reach that question here, however ....

Several academic commentators have similarly argued that such state law requirements impose unconstitutional conditions that raise due-process concerns. And the New York City Bar openly opposed similar legislation in New York over related constitutional concerns.

ATCA’s fate, however, is unlikely to be decided alongside these state law provisions, despite the House report’s implication to the contrary. The fact that ATCA was enacted by Congress and affects foreign entities distinguishes the constitutional issues it raises from these state registration laws. And it unavoidably implicates questions of international comity that state registration laws do not—a consideration that Daimler cites as strong support for a narrow view of general personal jurisdiction. How courts will weigh these factors in Daimler’s wake is unknown. But in the short term, the most likely outcome seems to be new round of litigation in Waldman, Livnat and other similarly situated cases—assuming that the Palestinian Authority and the PLO continue to pursue actions that trigger ATCA’s Section 4.

Whether they will do so, however, is unclear. A possible irony is that the Trump administration’s recent decisions to withdraw the waiver allowing the PLO to maintain a diplomatic mission in the United States and slash economic-support-fund assistance to the Palestinian Authority make Section 4 less likely to reach either organization. And while the United States does still provide the PA with substantial INCLE funding, policy experts have expressed concern that ATCA may lead the PA and PLO to reject this assistance outright. After all, the massive potential liability that the Palestinian Authority is facing from outstanding ATA claims—Waldman alone awarded plaintiffs $655.5 million in damages—far outweighs the approximately $60 million in INCLE funding and $30 million in remaining ESF funding that the Palestinian Authority may receive from the United States. Other major recipients of U.S. foreign assistance that are also exposed to possible ATA claims—such as the governments of Egypt, Iraq and Jordan—may face similarly difficult decisions. And few are likely to be willing to stake such massive exposure on the possibility that Section 4 will ultimately be found unconstitutional.

For the Palestinian Authority, however, rejecting INCLE funds may have even more immediate consequences: an end to the training and equipping of PA security forces that it supported. With guidance by a U.S. Security Coordinator (USSC), this assistance has fostered substantial Israeli-Palestinian security cooperation that has proven effective at reducing the threat of terrorist attacks. As a result, it is strongly supported by various policy experts—and Israeli security officials—as an important contributor to security in both Israel and the West Bank. Ending it could in turn undermine the peace and stability of both. And as INCLE funds are often used to support counter-terrorist programs, ATCA may have a similar effect on related programs in other countries as well.

Why the Trump administration chose not to pursue a waiver provision or other amendment that might have allowed it to preserve such key forms of foreign assistance is unknown. Absent such a fix, however—or possible invalidation on constitutional grounds—Section 4 of ATCA may have the tragic effect of creating conditions that allow for more of the types of attacks for which it seeks to hold perpetrators accountable.