Terror victims can collect $2b from Iran, says US

Iran must hand over nearly $2 billion in frozen assets to survivors and relatives of those killed in attacks blamed on the Islamic republic, the US Supreme Court has rule.

In a 6-2 decision, the court upheld rulings in favour of victims and relatives of the 241 US service members killed in the 1983 bombing of US Marine barracks in Beirut, the 1996 Khobar Towers bombing that killed 19 Americans in Saudi Arabia, and other attacks blamed on Iran.

More than 1000 Americans are affected by the decision.

Justice Ruth Bader Ginsburg wrote the court's opinion rejecting the Iranian central bank's efforts to block payments to victims and relatives.

"We are extremely pleased with the Supreme Court's decision, which will bring long-overdue relief to more than 1000 victims of Iranian terrorism and their families, many of whom have waited decades for redress," said Theodore Olson, a former US solicitor general who represented the relatives of the victims.

Matthew McGill, a partner at Olson's firm, said his legal team will "promptly" ask the lower court supervising the funds to carry out the Supreme Court ruling and distribute the award.

It was also a win for President Barack Obama's administration and for Congress, which passed a 2012 law ordering Iran's Bank Markazi to turn over frozen bond assets it held in a New York account at Citibank.

"Today's decision is a long-awaited victory for justice and in recognising that the survivors are entitled to this compensation," Senator Robert Menendez, who helped author the legislation, said in a statement.

Iran argued the law was unconstitutional as it violated separation of powers, with US lawmakers ordering a particular result in a legal case, but federal courts rejected that claim and backed the law.

The lower courts also denied the central bank's request for legal immunity.

The Supreme Court agreed.

The 2012 law "does not transgress constraints the Constitution places on Congress and the president," Ginsburg wrote in the majority opinion.

"We perceive in (the statute) no violation of separation-of-powers principles, and no threat to the independence of the judiciary."

Instead, she said, the law "directs courts to apply a new legal standard to undisputed facts."

Chief Justice John Roberts filed a dissenting opinion, in which Justice Sonia Sotomayor joined.

"Contrary to the majority, I would hold that (the law) violates the separation of powers" between the executive, legislative and judicial branches of government, Roberts wrote.

"The authority of the political branches is sufficient; they have no need to seize ours."

He added: "No less than if it had passed a law saying 'respondents win,' Congress has decided this case by enacting a bespoke statute tailored to this case that resolves the parties' specific legal disputes to guarantee respondents victory."

Several months before signing the 2012 bill into law, Obama signed an executive order freezing all Iranian assets, potentially freeing them up for seizure.

At the time, he pointed to the "deceptive practices of the Central Bank of Iran and other Iranian banks."

The case before the court had marked a rare alliance between Obama and both houses of Congress, which are controlled by his Republican foes.

"We continue to condemn Iran's past and continued support for international terrorism," State Department spokesman John Kirby told reporters.

"We don't turn a blind eye to their continued willingness to do exactly that."

The court's decision comes at a time of hopes for better ties between longtime foes Tehran and Washington, following a nuclear agreement last year between Iran, the United States and five other major powers.

It also coincides with growing controversy over a draft bill in Congress that could allow families of the September 11 attacks to sue the Saudi government in US courts. Nearly 3000 people died in the 2001 attacks.

There are only eight justices currently sitting on the court following the death in February of Justice Antonin Scalia. So far, Senate Republicans have refused to schedule hearings on Obama's nominee to fill the ninth seat.

That leaves the court short-handed and evenly split between justices who lean conservative and those who tend to back liberal positions.

Since Scalia's death, the top court has already deadlocked in three decisions, meaning their rulings set no new national precedents and leave lower court rulings intact.