United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 4, 2011 Decided April 26, 2011
No. 10-7068
PAN AM FLIGHT 73 LIAISON GROUP,
APPELLEE
v.
GIATRI DAVE AND GARGI DAVE,
APPELLANTS
Appeal from the United States District Court
for the District of Columbia
(No. 1:10-mc-00077)
Kathryn Lee Boyd argued the cause and filed the briefs for
appellants.
Edward J. Shapiro argued the cause for appellee. With him
on the brief were Gabriel K. Bell and Abid R. Qureshi.
Before: GARLAND and BROWN, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
RANDOLPH.
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RANDOLPH, Senior Circuit Judge: The issue in this appeal
is whether the district court properly granted a motion to compel
arbitration under § 4 of the Federal Arbitration Act. The issue
arises in the following setting.
Sisters Giatri and Gargi Davé are United States citizens,
residing in California. In September 1986, when they were
children, they were traveling together aboard Pan Am Airways
Flight 73. Libyan terrorists hijacked the plane and held it for
sixteen hours on the tarmac in Karachi, Pakistan. The hijackers
killed twenty of the passengers; 120 others, including the Davés,
suffered injuries.
Nearly twenty years later, in an effort to normalize relations
with the United States, the Libyan government admitted
responsibility for sponsoring several acts of international
terrorism. On September 20, 2004, President George W. Bush
lifted sanctions against Libya. Libya was later removed from
the State Department’s list of state sponsors of terrorism.
While this normalization process was ongoing, a group of
passengers from Flight 73, including the Davés, signed what
they termed a “Joint Prosecution Agreement.” The Agreement
declared that the parties to it had a common interest in pursuing
legal remedies against Libya and the individuals responsible for
the hijacking. Five of the passengers—the “Liaison
Group”—were designated “managing agents” of the litigation,
with the law firm of Crowell & Moring LLP serving as litigation
counsel. The Agreement set up a pooling mechanism for
recovered funds and contained an arbitration clause providing
that “[i]n the event a dispute arises under this Agreement
between any Parties either regarding the construction and
enforceability of the Agreement or any actions or disputes
arising under or in connection with the Agreement, the Parties
agree that any such dispute shall be submitted for confidential
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arbitration under the provisions of the American Arbitration
Association (‘AAA’) and shall be venued in the District of
Columbia.”
In 2006, the parties to the Agreement filed a lawsuit against
the Libyan government. While the lawsuit was pending, the
United States and Libya reached a diplomatic settlement relating
to claims against the Libyan government for acts of terrorism.
Under the settlement, the United States agreed to bring about the
termination of all then-pending terrorism-related litigation
against Libya in American courts and to preclude all such future
suits. In return, Libya agreed to deposit $1.5 billion into a
settlement fund for distribution by the United States to U.S.
national victims of Libyan terrorism.
Congress provided for the implementation of the settlement
through legislation. The Libyan Claims Resolution Act granted
immunity to Libya from terrorism-related suits brought in
United States’ courts. See Pub. L. No. 110-301, § 5, 122 Stat.
2999 (2008) (codified at 28 U.S.C. § 1605A). The Act gave the
Secretary of State authority “to designate 1 or more entities to
assist in providing compensation to nationals of the United
States,” pursuant to the settlement agreement. Id. § 4(a)(1).
Section 4 also contained an immunity provision, central to the
Davés’ appeal:
(b) IMMUNITY.—
(1) PROPERTY.—
(A) IN GENERAL.—Notwithstanding any
other provision of law, if the Secretary
designates any entity under subsection
(a)(1), any property described in subpara-
graph (B) of this paragraph shall be im-
mune from attachment or any other judi-
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cial process. Such immunity shall be in
addition to any other applicable immunity.
(B) PROPERTY DESCRIBED.—The property
described in this subparagraph is any
property that—
(i) relates to the claims agreement; and
(ii) for the purpose of implementing
the claims agreement, is—
(I) held by an entity designated
by the Secretary under subsection
(a)(1);
(II) transferred to the entity; or
(III) transferred from the entity.
(2) OTHER ACTS.—An entity designated by the
Secretary under subsection (a)(1), and any
person acting through or on behalf of such
entity, shall not be liable in any Federal or
State court for any action taken to implement a
claims agreement.
Pursuant to the Act and to Executive Order No. 13477, 73
Fed. Reg. 65,965 (Nov. 5, 2008), which implemented it, the
lawsuit by the parties to the Joint Prosecution Agreement was
dismissed.
The Davés timely submitted their claims against Libya to a
commission the State Department established for administering
the settlement. Before receiving settlement funds, the Davés
brought an action in California state court against Crowell &
Moring and the Liaison Group. Their suit asked for a declara-
tion that the Joint Prosecution Agreement did not cover money
obtained under the settlement agreement and was otherwise
invalid. It also alleged that the Joint Prosecution Agreement
was in conflict with the federal policies embodied in the
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settlement agreement, the Claims Resolution Act and the related
Executive Order.
The Liaison Group filed this action in the United States
District Court for the District of Columbia seeking to compel
arbitration under § 4 of the Federal Arbitration Act, 9 U.S.C.
§ 4. Section 4 provides that “a party ‘aggrieved’ by the failure
of another party ‘to arbitrate under a written agreement for
arbitration’ may petition a federal court ‘for an order directing
that such arbitration proceed in the manner provided for in such
agreement.’” Rent-a-Center, W., Inc. v. Jackson, 130 S. Ct.
2772, 2776 (2010) (quoting 9 U.S.C. § 4). The Liaison Group
argued that the Davés’ California claims should be submitted to
arbitration under the Joint Prosecution Agreement’s arbitration
clause. The district court agreed and granted the motion to
compel arbitration.
The Davés’ main argument on appeal is that the Libyan
Claims Resolution Act grants them immunity from an arbitration
order in the circumstances presented here. The immunity
provision they rely upon, § 4(b)(1)(A), states that “any property
described in subparagraph (B) of this paragraph shall be immune
from attachment or any other judicial process.” Whatever the
precise scope of the immunity thus granted, it protects only
“property.” An order compelling arbitration under the Federal
Arbitration Act does not work against property held by the
Davés or anyone else. The order requires only that the Davés
submit their dispute with the Liaison Group to arbitration. The
district court’s order compelling arbitration therefore did not
violate the terms of the Libyan Claims Resolution Act’s grant of
immunity.
The Davés raise other arguments against the Joint Prosecu-
tion Agreement. These go to the validity of the underlying
contract, not to the enforceability of the arbitration clause. As
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such, they are properly left to the arbitrator, at least in the first
instance. See Rent-a-Center, 130 S. Ct. at 2778. We decide
only that the Libyan Claims Resolution Act did not prevent the
district court from ordering arbitration of the underlying dispute.
On these grounds, the order is
Affirmed.