By Lawrence Hurley
WASHINGTON (Reuters) - The U.S. Supreme Court on Wednesday ruled that almost $2 billion (£1.3 billion) in frozen Iranian assets must be turned over to American families of people killed in the 1983 bombing of a U.S. Marine Corps barracks in Beirut and other attacks blamed on Iran.
The court's 6-2 ruling dealt a setback to Iran's central bank, finding that the U.S. Congress did not usurp the authority of American courts by passing a 2012 law stating that the frozen funds should go toward satisfying a $2.65 billion judgement won by the families against Iran in U.S. federal court in 2007.
Bank Markazi had challenged a 2014 ruling by the New York-based 2nd U.S. Circuit Court of Appeals that the money, held in a Citibank trust account in New York, should be handed over to the American plaintiffs.
The ruling, written by liberal Justice Ruth Bader Ginsburg, said the U.S. Congress did not violate the separation of powers principle enshrined in the U.S. Constitution that gives specific authority to the government's executive, legislative and judicial branches.
Ginsburg rejected the notion that the law infringed upon the role of courts by indicating how a case should be decided, saying that it instead "directs courts to apply a new legal standard to undisputed facts." It was left to the courts to determine how that standard should be implemented, she said.
The lawsuit was brought by more than 1,000 Americans who have waged a long legal battle seeking compensation for attacks they say Iran orchestrated. Congress inserted itself into the dispute by passing the law to help the American plaintiffs obtain the Iranian funds.
The plaintiffs accused Iran of providing material support to Hezbollah, the Iran-backed Shi'ite Islamist political and military group responsible for the 1983 truck bomb attack at the Marine compound in Beirut that killed 241 U.S. service members.
They also sought compensation related to other attacks including the 1996 Khobar Towers truck bombing in Saudi Arabia that killed 19 U.S. service members.
The Obama administration, the U.S. Senate and a legal group representing leaders of the House of Representatives all filed court papers backing the families.
The lead plaintiff in the case is Deborah Peterson, whose brother, Marine Lance Corporal James Knipple, died in the Beirut bombing.
The ruling came during a delicate period in U.S.-Iranian relations, following the January implementation of a landmark accord reached last year by the United States and five other world powers to lift economic sanctions in exchange for Iran accepting limits on its nuclear programme.
Chief Justice John Roberts, writing for himself and Justice Sonia Sotomayor in dissent, said he thought the law passed by Congress relating to the case violated the U.S. constitutional separation of powers.
"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," Roberts said.
The case is Bank Markazi v. Peterson, U.S. Supreme Court, No. 14-770.
(Reporting by Lawrence Hurley; Editing by Will Dunham)