RAI Reynolds American (delisted)

By Brent Kendall And Jess Bravin 

WASHINGTON--The Supreme Court on Thursday agreed to consider an appeal by Iran's central bank seeking to prevent terrorism victims from collecting nearly $2 billion in frozen Iranian banking assets.

The appeal was one of 13 new cases the Supreme Court added to its docket Thursday, its first such action since the justices returned from a three-month summer break.

Among the other cases, the court stepped into a long-running dispute between Reynolds American Inc. and the European Union. The EU has accused subsidiaries of the tobacco giant of orchestrating an international money-laundering operation to finance the sale of cigarettes through what it says are "organized crime, sanctioned regimes and terrorist groups."

In the Iran case, the court said it would consider an appeal by Bank Markazi, which held an interest in the frozen funds. The bank is challenging lower U.S. court rulings that allowed the money to be turned over to more than 1,300 American victims or surviving family members who won civil judgments holding Iran liable for sponsoring terrorist attacks.

The attacks included the 1983 Marine barracks bombing in Beirut and the 1996 Khobar Towers bombing in Saudi Arabia.

The Iranian bank argued in its petition to the Supreme Court that Congress acted improperly by passing legislation in 2012 specifically allowing victims to seize the money. The bank argued lawmakers violated the separation of powers by legislating the outcome of a court case.

The victims urged the Supreme Court to reject the appeal, saying high-court precedent made clear Congress could change the governing law that is applicable to a pending case.

The court's decision to hear the case rejected the advice of U.S. Solicitor General Donald Verrilli, who on behalf of the Obama administration urged the court not to intervene.

Bank Markazi said the funds were part of its foreign-currency reserves. The money was held in a Citibank account maintained by a Luxembourg financial intermediary doing business with an Italian bank that in turn did business with Iran's central bank. The funds are being supervised by a court-appointed trustee.

In the Reynolds case, the justices will review an appellate-court ruling allowing the EU to pursue claims against the maker of Camel and Lucky Strike cigarettes under the Racketeer Influenced and Corrupt Organizations Act. Reynolds argues that the RICO Act cannot be applied outside the U.S., and therefore the EU suit should be dismissed.

Reynolds cited a 2010 Supreme Court opinion holding investors can't sue under the Securities Exchange Act of 1934 for alleged misconduct on foreign exchanges.

The Second U.S. Circuit Court of Appeals, in New York, ruled that aspects of the racketeering law can be applied to foreign activity affecting the U.S. In addition, the court said some of the allegations, such as the use of a "Russian organized crime syndicate" in Queens, N.Y., to launder money, occurred within the U.S.

An attorney for Reynolds declined to comment. A company spokesman didn't immediately return a request for comment.

Other new cases include an Alaska moose hunter's challenge to National Park Service regulatory control of state-owned lands; a challenge to a judge's involvement in a Pennsylvania death penalty case; and a case examining whether Puerto Rico has a sovereign right to prosecute alleged criminal conduct that was also prosecuted by the U.S. government.

The court, which opens its new term next week, will hear arguments in the new cases this winter, with rulings expected by July 2016.

The justices took no action on a Justice Department appeal of a lower-court ruling that upended prosecutors' crackdown on Wall Street insider trading. The court will issue more orders on pending cases next Monday.

Write to Brent Kendall at brent.kendall@wsj.com and Jess Bravin at jess.bravin@wsj.com

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(END) Dow Jones Newswires

October 01, 2015 13:18 ET (17:18 GMT)

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