The U.S. Court of Appeals for the D.C. Circuit ruled on August 4, 2026, that all criminal proceeds from a case involving British American Tobacco (BAT) must be deposited into the United States Victims of State Sponsored Terrorism Fund. This decision affects victims of terrorism, particularly those with claims against the Fund, as it ensures more money will be available for their compensation.

The case, Joseph Englehardt and Yvonne Wade v. Todd Blanche, No. 24-5297, centers around the allocation of over $629 million collected from BAT for criminal penalties related to conspiracies involving North Korea. The court's ruling is significant as it clarifies how funds should be allocated to support victims of state-sponsored terrorism.

Background

Joseph Englehardt and Yvonne Wade are victims of terrorist attacks against the U.S. Embassy in Beirut, Lebanon, in the early 1980s. Englehardt, a U.S. Army soldier, was injured in the 1983 bombing, while Wade, a civilian employee, suffered injuries in a 1984 bombing of the Embassy Annex. Both have secured judgments against Iran for their injuries under the Foreign Sovereign Immunities Act (FSIA) and are eligible for compensation from the Victims of State Sponsored Terrorism Fund.

The Fund was established to assist victims like Englehardt and Wade, who have difficulty obtaining compensation from foreign states involved in terrorism. It is financed by criminal penalties and forfeitures related to violations of U.S. laws concerning state sponsors of terrorism, including the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA).

The dispute arose when the Department of Justice allocated only a small portion of the BAT proceeds to the Fund. The Department argued that only funds directly linked to actions involving a state sponsor of terrorism should be deposited into the Fund. This interpretation was challenged by Englehardt and Wade, who argued that all proceeds from the BAT case should be included.

The Ruling

The D.C. Circuit Court, led by Circuit Judge Rao, ruled that the Department of Justice erred in its allocation of funds. The court stated, "We hold that the Department erred in its allocation and that the Justice for United States Victims of State Sponsored Terrorism Act requires that these criminal proceeds be deposited into the Fund." The court reversed the district court's summary judgment in favor of the Department and instructed that summary judgment be entered for the plaintiffs.

The court's opinion clarified the interpretation of the Funding Provision of the VSST Act. It determined that proceeds from violations of IEEPA and TWEA must be deposited into the Fund, regardless of whether they have a direct connection to a state sponsor of terrorism. This ruling emphasizes the importance of ensuring that victims of terrorism receive the compensation they are entitled to.

Impact

This ruling has significant implications for victims of state-sponsored terrorism. By mandating that all criminal proceeds from the BAT case be deposited into the Fund, the court ensures that more resources are available for victims like Englehardt and Wade, who have been waiting for compensation. The decision also sets a precedent for how similar cases will be handled in the future, potentially increasing the funds available for victims of terrorism.

The ruling clarifies that the interpretation of the law should prioritize the needs of victims rather than the Department's previous restrictive allocation practices. This decision could lead to a reevaluation of how the Department of Justice allocates funds from other cases involving state sponsors of terrorism, potentially benefiting many more victims.

What's Next

Following this ruling, the Department of Justice may consider appealing the decision, although details were not available in the court filing. The outcome may also influence other pending cases related to the allocation of funds for victims of terrorism.