In a landmark case, the U.S. government has for the first time been denied a dismissal in a foreign claims lawsuit. The ruling by a federal judge means that the government could still be on the hook for nearly $100 million stemming from two 1980s Libyan terrorist attacks.

Three insurance companies have been trying for years to get reimbursed for claims they paid out as a result of the two Libya-sponsored terrorist attacks against airliners: EgyptAir 648 in 1985 and Pan Am Flight 103 over Lockerbie, Scotland, in 1988. The insurers, Lloyd’s of London, New York Marine and General Insurance Co. and Aviation & General Insurance Co., are seeking a combined $96 million for the two attacks ($55 million for Pam Am 103 and $41 million for EgyptAir 648).

The lawsuit is directed at the U.S. government because Congress passed the Libyan Claims Resolution Act in 2008, which took the right to oversee suits against Libya away from federal courts’ jurisdiction. “Shortly afterward, the government stopped all suits pending against Libya,” according to Benjamin Lane at Insurance Business America.

That didn’t stop the three insurers from going to court to collect monies owed to their underwriters for paying for the Libyan-sponsored attacks 30 years ago. Lawyers for the plaintiffs convinced the U.S. Court of Federal Claims to allow their lawsuit to proceed after Judge Thomas Wheeler denied a motion by government attorneys to dismiss the case. In its denial, the court said the companies have a legitimate property interest on which to base their claims and, more importantly, did something no federal court had done before.

“The case holds landmark status as the first time the government has been denied a dismissal in a foreign claims suit,” Lane wrote.

Wheeler said in his ruling: “Here, where plaintiffs were excluded from receiving any just compensation whatsoever, the court must decide whether the government violated the Fifth Amendment prohibition of takings without just compensation. Accordingly, the court finds that it is well within its jurisdiction to decide this takings claim against the United States.”

-Noel Brinkerhoff

To Learn More:

Lloyd’s $96mn Lawsuit Against US Gov. Over Terror Attacks Goes Forward (by Benjamin Lane, Insurance Business America)

US Can't Nix Insurers’ $96M Suit Over Libyan Terrorist Attacks (by Dani Meyer, Law360)