DEUTSCHE BÖRSE AG FRANKFURT (Reuters) - German exchange operator Deutsche Boerse (>> Deutsche Boerse AG) faces a renewed legal battle in the United States over dealings by its Clearstream subsidiary with the central bank of Iran, U.S. court documents show.
Hundreds of U.S. plaintiffs are seeking access to $1.7 billion (1 billion pounds) in assets belonging to Iran's central bank, Bank Markazi, and held by Clearstream, owned by Deutsche Boerse, in Luxembourg, the documents show.
The potential tug of war may test the reach of U.S. law in Europe. "This could be a precedent," said Stephane Ober, who heads the Luxembourg office of law firm Simmons&Simmons.
The plaintiffs are the families of U.S. soldiers who were killed or wounded in the bombing of the Marine barracks in Beirut, Lebanon in 1983. A U.S. court ordered Iran to pay $2.65 billion in compensation to the families, who blamed Iran for the attack.
In a similar case in late 2013, Clearstream agreed to transfer to the plaintiffs $1.8 billion of Bank Markazi's funds held in a Clearstream account at Citigroup (>> Citigroup Inc) in the United States.
The plaintiffs hope they can use U.S. law to force Clearstream in Luxembourg to do the same.
Patrick Rocco, a lawyer for the plaintiffs, said the U.S. Congress made clear when it passed the Terrorism Risk Insurance Act (TRIA) that the law should apply also to assets blocked outside the United States if there was a U.S. connection.
"It was meant to have extraterritorial reach," Rocco said at a hearing on the case in the New York in September, according to a transcript seen by Reuters on Tuesday.
IMMUNE IN LUXEMBOURG
Gaining access to the Luxembourg-held funds, which were frozen in 2012 as part of European sanctions, will require the plaintiffs to demonstrate a connection to the United States, Simmons&Simmons' Ober said.
Lawyers for the families have argued that Clearstream has an office in New York and that the Iranian assets are denominated in dollars, with proceeds from the assets arriving in a Clearstream account at JP Morgan (>> JPMorgan Chase & Co.) in New York.
But Clearstream argues that the case should be dismissed, saying the funds in the New York account belonged exclusively to Clearstream and that the U.S. court has no jurisdiction in Luxembourg, the company's lawyers said in a court statement.
"The sovereign assets targeted by Plaintiffs are in Luxembourg ... and thus are categorically immune from execution under U.S. law," Clearstream's lawyers wrote.
Deutsche Boerse and Clearstream declined further comment.
It is now up to U.S. District Judge Katherine Forrest to decide whether to allow the case to proceed.
Legal analysts said they expected the case to last years, a prediction that could disappoint Deutsche Boerse, which had hoped to consign its tussles with U.S. authorities to the past.
In early 2014, the company agreed to a $152 million settlement with the Office of Foreign Assets Control (OFAC), the Treasury office enforcing U.S. sanctions on Iran.
A few months after reaching that agreement, the U.S. Attorney for the Southern District of New York launched a new investigation into the sanctions affair.
Sources close to the company said it had not yet set aside reserves for the latest cases.
The case is Peterson v. Islamic Republic of Iran, U.S. District Court, Southern District of New York, No. 13-9195.
(Additional reporting by Joseph Ax in New York; Writing by Jonathan Gould; Editing by Thomas Atkins and David Holmes)
By Andreas Kröner
