The Blocking-Date Rule: Second Circuit Holds TRIA “Agency or Instrumentality” Status Is Fixed as of the Date Assets Are Blocked, While Confirming FSIA Immunity for Central Bank Funds

Introduction

This consolidated appeal—Havlish v. Taliban; Aliganga v. Taliban—pits 9/11 and other terrorism victims against the Taliban over roughly $3.5 billion in U.S.-based reserves of Afghanistan’s central bank, Da Afghanistan Bank (DAB), held at the Federal Reserve Bank of New York (FRBNY). Two sets of plaintiffs were before the Second Circuit:

Pre-Judgment Plaintiffs (Aliganga): Victims of the 1998 East Africa embassy bombings sought confirmation of a pre-judgment attachment against DAB’s blocked FRBNY assets to secure potential future judgments against the Taliban.
Judgment Plaintiffs (Havlish and allied creditor groups): 9/11 and other judgment creditors sought turnover of those same DAB blocked assets under § 201 of the Terrorism Risk Insurance Act of 2002 (TRIA) to satisfy final judgments against the Taliban.

The central legal questions were:

Whether DAB’s property is immune from attachment and execution under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. §§ 1602–1611.
Whether TRIA § 201(a) allows turnover of blocked DAB assets to satisfy judgments against the Taliban by abrogating FSIA immunity and meeting TRIA’s prerequisites—including whether DAB is an “agency or instrumentality” of the Taliban.

The case arises in the wake of the Taliban’s August 15, 2021 seizure of Kabul. That same day, U.S. authorities blocked DAB’s assets at the FRBNY. In 2022, half of those funds (about $3.5 billion) were transferred—still blocked—into the Afghanistan-focused “Afghan Fund” account in Switzerland; the remainder (about $3.5 billion) stayed at the FRBNY. Plaintiffs targeted the FRBNY-held remainder.

Summary of the Judgment

FSIA Immunity: DAB is an “agency or instrumentality” of the foreign state of Afghanistan under FSIA § 1603(b), and its FRBNY-held assets are immune from attachment and execution under § 1609. No § 1610 exception applies. The Court affirmed the denial of pre-judgment attachment.
TRIA Overrides FSIA but Prerequisites Not Met: TRIA § 201(a) abrogates both FSIA jurisdictional and execution immunity and independently supplies subject-matter jurisdiction for post-judgment execution proceedings. Nevertheless, TRIA’s substantive predicates were not satisfied here because DAB was not an “agency or instrumentality” of the Taliban as of the date the assets were blocked (August 15, 2021). The Court affirmed denial of turnover.
New Timing Rule under TRIA: For the first time, the Second Circuit held that an entity’s “agency or instrumentality” status for TRIA purposes is assessed as of the blocking date of the assets at issue, not the filing date, turnover date, or another temporal marker.
Sua Sponte FSIA Immunity: District courts may consider FSIA attachment/execution immunity sua sponte even if the sovereign status of the property is disputed.

Judge Sullivan concurred in part and dissented in part. He agreed a court may raise immunity sua sponte, but would have held (i) Afghanistan is not a “foreign state” for FSIA purposes, (ii) DAB is not an agency or instrumentality of any foreign state, (iii) DAB’s funds are not protected by § 1611(b)(1) due to lack of central banking use, and (iv) TRIA agency/instrumentality status should be determined at the turnover date, which he believed the Taliban met by 2023.

Analysis

Precedents Cited and Their Influence

Walters v. ICBC (2d Cir. 2011): The FSIA’s “shall be immune” language means execution immunity inheres in the property and can be recognized by courts regardless of how the issue is raised, supporting sua sponte consideration of immunity.
Zivotofsky v. Kerry (2015): The Executive has exclusive authority over recognition determinations. The Court used this to anchor its conclusion that Afghanistan is a “foreign state” for FSIA analysis because the United States continues to recognize Afghanistan as an independent state, even while not recognizing the Taliban as its government.
S & S Machine; EM Ltd.; Chettri; Daou: A consistent line of Second Circuit authority recognizing that central banks are classic FSIA “agencies or instrumentalities.”
Weinstein v. Iran (2d Cir. 2010): TRIA § 201(a)’s “notwithstanding” clause supplies an independent basis for subject-matter jurisdiction over post-judgment execution proceedings and is not constrained by its codification location as a note to § 1610.
Bank Markazi v. Peterson (2016): The Supreme Court confirmed that TRIA’s “notwithstanding” clause overrides the FSIA’s central bank immunity provisions (§§ 1609, 1611(b)(1)).
Kirschenbaum v. 650 Fifth Ave. (2d Cir. 2016): The Second Circuit created TRIA’s operative definition of “agency or instrumentality” of a terrorist party: an entity qualifies if it (1) is a means through which a material function of the terrorist party is accomplished; or (2) provides material services to, on behalf of, or in support of the terrorist party; or (3) is owned, controlled, or directed by the terrorist party. Kirschenbaum also (in passing) tied the timing to filing, a point later revisited here.
Bartlett v. Baasiri (2d Cir. 2023) and Schansman v. Sberbank (2d Cir. 2025): FSIA immunity can attach even if status changes after filing; timing under FSIA is not rigidly tied to the complaint date. The Court relies on this evolution to reject a straight import of Kirschenbaum’s filing-date language into TRIA.

Legal Reasoning

1) FSIA: DAB’s Property Is Immune from Attachment and Execution

Executive recognition fixes “foreign state” status: The Court held that because the Executive Branch continues to recognize Afghanistan as an independent state (as confirmed by the State Department’s list of independent states), Afghanistan is a “foreign state” for FSIA purposes. The Court refused to apply a Restatement/functional “statehood” test in the face of explicit Executive recognition.
DAB is an agency or instrumentality: DAB is Afghanistan’s central bank, a separate juridical person created under Afghan law, and—based on Afghan law—wholly owned by the Afghan state. Central banks are paradigmatic FSIA agencies or instrumentalities. Thus, DAB is itself a “foreign state” under § 1603(a) and (b) for immunity purposes.
Execution immunity applies; § 1610 exceptions inapplicable: Under § 1609, a foreign state’s property in the U.S. is immune from attachment and execution except as provided in §§ 1610 and 1611. Plaintiffs did not show any § 1610 exception. The Court therefore affirmed denial of prejudgment attachment under § 1609, without needing to reach § 1611(b)(1) (central bank immunity).
District courts may act sua sponte: The FSIA’s mandatory phrasing allows courts to consider immunity on their own initiative even when the sovereign status of the property is disputed.

2) TRIA: Overrides FSIA Immunities and Confers Jurisdiction, but Prerequisites Fail

“Notwithstanding” clause is controlling: TRIA § 201(a) supersedes conflicting laws. Relying on Weinstein and Bank Markazi, the Court held TRIA abrogates both FSIA execution and jurisdictional immunity. It also independently supplies subject-matter jurisdiction for post-judgment execution proceedings against blocked assets of a terrorist party and its agencies/instrumentalities.
TRIA prerequisites: To execute on blocked assets under TRIA, a plaintiff must show:
- a judgment against a terrorist party;
- targeted “blocked assets” (as defined by TRIA) in the U.S.; and
- the assets are of the terrorist party or of its “agency or instrumentality.”
TRIA definition of “agency or instrumentality”: The Second Circuit applies its Kirschenbaum formulation—distinct from FSIA’s definition.
New timing rule—“as of blocking”: In a significant holding, the Court set the operative date for TRIA “agency or instrumentality” status as the date the assets were blocked (here, August 15, 2021). The Court reasoned that:
- Blocking freezes control; after blocking, an entity cannot wield the assets to further a terrorist party’s ends.
- TRIA’s purpose is to attach “blocked assets of” a terrorist party; assets not “of” the terrorist party (or its agency/instrumentality) on the blocking date fall outside the statutory target.
- FSIA timing doctrines are ill-suited to TRIA’s different architecture and do not supply the answer.
Application to DAB: As of August 15, 2021 (the blocking date), the record did not show DAB was:
- a means by which the Taliban accomplished a material function;
- providing material services to/on behalf of/in support of the Taliban; or
- owned, controlled, or directed by the Taliban. (The Taliban installed leadership beginning August 23, 2021—after the blocking date.)
Therefore, the TRIA predicate failed, and turnover was properly denied.

The Dissent

Judge Sullivan concurred that courts may raise FSIA immunity sua sponte but otherwise parted ways, urging:

Afghanistan is not a “foreign state” under FSIA: Applying Klinghoffer’s three-part statehood test (defined territory, population under control of its own government, and capacity for international relations), he concluded Afghanistan resembles a failed state under de facto Taliban control, with limited diplomatic capacity. He would not defer to Executive recognition for FSIA’s statutory definition.
DAB is not Afghanistan’s agency or instrumentality: On this record, the Taliban—not Afghanistan—supervised DAB by 2022–2023; thus DAB no longer qualified as an “organ” of a foreign state. He also questioned whether Afghan law proved state “ownership” sufficient to satisfy § 1603(b)(2).
§ 1611(b)(1) central bank immunity not satisfied: Even if § 1611 were reached, he believed Plaintiffs rebutted the presumption that DAB’s funds were “held for [its] own account” and used for central banking functions.
TRIA timing should be turnover-date: He rejected the majority’s new blocking-date rule as extra-textual. To advance TRIA’s purpose of maximizing assets available to terror victims, he would assess agency/instrumentality status when the court rules on turnover—by which time (in 2023) the Taliban controlled DAB.

Impact

New Second Circuit precedent fixing the TRIA timing rule: Parties must prove that, on the date assets were blocked, the entity whose property is targeted was an “agency or instrumentality” of the terrorist party under the Kirschenbaum test. Later-acquired control will not suffice for those specific blocked assets.
Practical consequences for terror-judgment enforcement:
- Where blocking preceded a terrorist party’s control, turnover under TRIA will be harder to obtain. Plaintiffs may need evidence of ownership, control, material support, or “means” functions as of the blocking date.
- If assets are newly blocked after a terrorist party consolidates control, plaintiffs may be better positioned under this timing rule.
- Multiple “blocking events” could create separate asset pools with distinct operative dates—litigants must track and plead to the precise blocking date.
Executive recognition binds FSIA “foreign state” analysis: The decision emphasizes that courts will treat Executive recognition as determinative for whether an entity is a “foreign state” under the FSIA. This constrains arguments that a state has “failed” its way out of FSIA protection absent a change in the Executive’s position.
TRIA’s jurisdictional breadth reaffirmed: The Court clarifies that TRIA independently provides subject-matter jurisdiction and overrides FSIA immunities—important for creditors facing immunity defenses in TRIA executions.
Central bank assets remain strongly protected unless TRIA predicates are met: Even though TRIA can pierce central bank immunity, plaintiffs must satisfy the blocking-date agency/instrumentality requirement to reach central bank reserves.
Potential Supreme Court interest: The dissent’s challenge to the majority’s reliance on Executive recognition for FSIA “foreign state” status and to the new TRIA timing rule could invite further review. Practitioners should watch for petitions raising these issues.

Complex Concepts Simplified

FSIA (Foreign Sovereign Immunities Act): The federal statute that sets rules for when foreign states (including their political subdivisions and agencies/instrumentalities) can be sued and when their property can be attached/executed upon in U.S. courts. It provides two distinct immunities:
- Jurisdictional immunity (immunity from being sued), § 1604.
- Execution immunity (immunity of property from attachment/execution), § 1609, with special rules for central banks in § 1611(b)(1).
Agency or Instrumentality (FSIA): Defined in § 1603(b) as (1) a separate legal person, (2) that is an organ of the foreign state or majority-owned by it, and (3) not a U.S. citizen and not created under third-country law. Central banks typically qualify.
TRIA § 201(a): Allows judgment creditors against “terrorist parties” to execute against their “blocked assets,” including assets of any “agency or instrumentality” of the terrorist party, “notwithstanding any other provision of law,” i.e., overriding FSIA immunities.
Blocked Assets: Property “seized or frozen by the United States” under enumerated sanctions authorities. Once blocked, the owner cannot use or control the assets without authorization.
“Agency or Instrumentality” (TRIA): Not defined by statute; under Kirschenbaum, an entity qualifies if it is a means to accomplish a material function of the terrorist party; provides material support; or is owned/controlled/directed by the terrorist party. The Second Circuit now fixes the timing of that determination at the blocking date.
“Notwithstanding” Clause: A statutory signal that the provision applies regardless of conflicting law—here, it means TRIA can override FSIA immunities.
Subject-Matter Jurisdiction: A court’s authority to hear a type of case. Weinstein confirms TRIA itself supplies jurisdiction over post-judgment execution proceedings against blocked assets of a terrorist party’s agency or instrumentality.

Practice Notes and Strategic Pointers

Plead the blocking date precisely: Identify the exact date the targeted assets were blocked and tailor your TRIA “agency or instrumentality” evidence to that date.
Build a contemporaneous record: For TRIA executions, assemble evidence showing ownership/control, material support, or functional “means” relationships as of the blocking date—leadership appointments, directives, public statements, or transactions on or before that date.
Consider new or subsequent blocking: If an entity falls under a new designation or sanctions order after a terror group consolidates control, new blocking could reset the operative date and improve collectability prospects under TRIA.
Don’t assume FSIA recognition arguments will prevail: Where the Executive recognizes a state, courts in the Second Circuit will treat that as dispositive for FSIA “foreign state” status, regardless of de facto governance gaps.
Central bank funds remain difficult targets: TRIA can pierce central bank immunity, but only if the blocking-date agency/instrumentality link is proved. Without it, § 1609 immunity will block attachment/turnover.
Expect sua sponte immunity scrutiny: District courts may raise FSIA immunity on their own, even amid disputes over sovereign ownership; be prepared to brief FSIA immunity early and comprehensively.

Unresolved Questions and Future Litigation Risks

Multiple blockings and changing facts: If assets are re-blocked or moved among blocked accounts, does each event create a new “blocking date” for TRIA analysis?
Scope of “blocked assets of” a terrorist party: How far does “of” extend to indirect or beneficial interests, particularly with complex reserve or sovereign-wealth arrangements?
Inter-circuit alignment: Other circuits may adopt different timing rules for TRIA; watch for divergence and potential Supreme Court review.
Application to non-state terrorist organizations: The case clarifies timing but not evidentiary standards in borderline “control” scenarios; litigants will test what qualifies as “owned, controlled, or directed by” on the blocking date.

Conclusion

The Second Circuit’s decision sets two consequential guideposts for terrorism-related judgment enforcement:

FSIA Baseline: When the Executive recognizes a state, courts will treat that recognition as determinative for FSIA “foreign state” status. Central banks like DAB will typically be “agencies or instrumentalities,” and absent a § 1610 exception, their U.S. assets are immune from attachment/execution under § 1609. District courts may—and likely will—raise these immunities sua sponte.
TRIA Overlay with a New Timing Rule: TRIA § 201(a) abrogates FSIA immunities and grants jurisdiction, but plaintiffs must satisfy the statute’s prerequisites. Critically, the Court adopted a new “blocking-date” rule: an entity’s status as an “agency or instrumentality” of a terrorist party is determined as of the date the assets were blocked. Here, because DAB was not the Taliban’s agency or instrumentality on August 15, 2021, turnover failed.

This framework balances the “special protection” historically afforded sovereign (and central bank) property with Congress’s directive to render terrorist assets collectible under TRIA. The blocking-date rule will sharpen factual and temporal disputes in future TRIA cases, particularly where control is dynamic or sanctions evolve. For now, plaintiffs seeking to reach blocked sovereign or central bank assets must align their proof to the precise moment those assets entered blocked status—and anticipate rigorous judicial scrutiny of that snapshot in time.