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Eleventh Circuit interprets the meaning of "blocked assets" under the Terrorism Risk Insurance Act and finds that assets frozen pursuant to the Foreign Narcotics Kingpin Designation Act are not "blocked assets".

The following case discusses the meaning of "blocked assets" under [section] 201 of the Terrorism Risk Insurance Act of 2002 (Terrorism Act), Pub. L. No. 107-297, 116 Stat. 2322. In particular, the Eleventh Circuit reviews whether assets frozen pursuant only to the Foreign Narcotics Kingpin Designation Act (Kingpin Act), 21 U.S.C. [section] 1901 qualify as "blocked assets" under the Terrorism Act. The Court concludes, based on the plain language of the statute, that such assets are not "blocked assets."

The Plaintiffs/Appellees in this case were held hostage by the Revolutionary Armed Forces of Colombia (FARC) in the years 2003-2008. FARC has been designated both (1) a "Specially Designated Global Terrorist" under the International Economic Emergency Powers Act (Economic Powers Act), 50 U.S.C. [section][section] 1701, 1702, as well as (2) a "Significant Foreign Narcotics Trafficker" (SFNT) under the Kingpin Act. Consequently, all FARC assets located in the U.S. are frozen.

The Plaintiffs/Appellees sued FARC in the U.S. District Court for the Middle District of Florida under the civil remedies provisions of the Anti-Terrorism Act, 18 U.S.C. [section] 2333, seeking damages from FARC for terrorist acts committed while they were held hostage in the jungles of Colombia. In 2010, the Court issued a $318 million default judgment against FARC. As victim creditors, with perfected liens on all proceeds derived from FARC's criminal activities, the Plaintiff pursued the assets of FARC associates. One such alleged FARC associate was a Colombian money exchange house, Mercurio International (Mercurio). In 2008, the Secretary of the Treasury and the Office of Foreign Assets Control (OFAC) determined that Mercurio had "act[ed] on behalf of and materially assist[ed]" FARC in laundering narcotics proceeds. Because FARC was sanctioned under the Kingpin Act, OFAC determined Mercurio should also be sanctioned as a "Specially Designated Narcotics Trafficker" (SDNTK) under the Kingpin Act and the Foreign Narcotics Kingpin Sanctions Regulations, 31 C.F.R. [section] 598.314(b). Mercurio's assets were frozen pursuant to the Kingpin Act.

The Plaintiffs/Appelless filed a motion for a Writ of Garnishment in the district court against Mercurio's Kingpin Act frozen assets. Even though Mercurio was not named in the FARC judgment, they claimed that its assets could be garnished as the "blocked assets" of an "agency or instrumentality" of FARC.

Section 201(a) of the Terrorism Act, which provides in relevant part: "[I]n every case in which a person has obtained a judgment against a terrorist party on a claim based upon an act of terrorism ... the blocked assets of that terrorist party (including the blocked assets of any agency or instrumentality of that terrorist party) shall be subject to execution or attachment in aid of execution in order to satisfy such judgment to the extent of any compensatory damages for which such terrorist party has been adjudged liable."

The Plaintiffs/Appellees alleged all four of [section] 201(a)'s elements were met: (1) the judgment being enforced was against a terrorist party--FARC; (2) the judgment was based on FARC's acts of terrorism; (3) Mercurio's assets were "blocked assets" within the meaning of the Terrorism Act; and (4) garnishment against Mercurio would partially satisfy an award of compensatory damages. Essentially, Appellees argued that, because FARC is a judgment-debtor "terrorist party" and Mercurio was designated an SDNTK under the Kingpin Act due to its alleged connection with FARC, Mercurio's assets could be garnished as the "blocked assets" of a "terrorist party."

The district court issued a writ of garnishment. Mercurio then moved to dissolve the writ of garnishment, which the district court denied. Mercurio appealed.

The U.S. Court of Appeals for the Eleventh Circuit reverses and remands. The plain language of Section 201(d)(2)(A) provides that the Terrorism Act's "blocked assets" only covers those assets frozen under specified sections of the Trading Act and the Economic Powers Act. Mercurio's assets were not frozen based on those Acts. Therefore, the district court erred in its interpretation of the Terrorism Act.

The only issue here is the interpretation of [section] 201(d)(2) of the Terrorism Act, which defines "blocked assets" for purposes of that statute.

"Appellees contend that Mercurio's assets are 'blocked assets' under the Terrorism Act because the Kingpin Act is historically connected and similar to one of the statutes expressly listed in [section] 201(d)(2) (A): the Economic Powers Act. Appellees claim the Kingpin Act's history reveals it to be a 'sub-species' of the Economic Powers Act." [...]

"In pertinent part, [section] 201(d)(2)(A) defines a 'blocked asset' to 'mean[] ... any asset seized or frozen by the United States under section 5(b) of the Trading With the Enemy Act [Trading Act] ... or under sections 202 and 203 of the International Emergency Economic Powers Act [Economic Powers Act]. ...' Terrorism Act [section] 201(d)(2)(A)."

"The plain language of [section] 201(d)(2)(A) is unambiguous. The Terrorism Act defines what a could 'include.' When a statutory definition declares what a term 'means' rather than 'includes,' any meaning not stated is excluded. ... This is because the term 'means' denotes an exhaustive definition, while 'includes' is merely illustrative. ... Section 201(d)(2)(A) declares that 'blocked asset' means an asset frozen under select provisions of the Trading Act and the Economic Powers Act. Assets frozen under the Kingpin Act, however, are absent from that definition. The unavoidable conclusion is that 'blocked assets' under the Terrorism Act does not mean assets frozen pursuant to the Kingpin Act." [...]

"Even if [section] 201(d)(2)(A)'s definition of 'blocked assets' were ambiguous, [section] 201(d)(2)(B)(i) forecloses the possibility that Kingpin Act frozen assets come within the definition of 'blocked assets.' According to [section] 201(d)(2)(B)(i), 'blocked assets' do 'not include property that is subject to a license issued by the United States Government for final payment, transfer, or disposition ... in connection with a transaction for which the issuance of such license has been specifically required by statute.' Terrorism Act [section] 201(d)(2)(B)(i) ... The Kingpin Act, however, according to its text and accompanying regulations, requires the procurement of a government-issued license before private individuals may execute against assets frozen under the Act. Thus, [section] 201(d)(2)(B)(i) further solidifies what the plain text of [section] 201(d)(2)(A) makes clear: assets frozen pursuant to the Kingpin Act are not 'blocked assets' under the Terrorism Act." [Slip op. 7-10] (Footnotes omitted).

CITATION: Stansell v. Revolutionary Armed Forces of Colombia, No. 11-11125 (11th Cir. January 9, 2013).
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Title Annotation:TERRORISM
Publication:International Law Update
Geographic Code:1USA
Date:Apr 1, 2013
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