The Bush administration is worried about terrorism-related lawsuits and are looking at a federally funded ‘compensation fund’ that could sharply limit how much victims can recover

The Bush plan was submitted without fanfare to the Senate Foreign Relations Committee last month and public hearings are now scheduled for July 17.

But the proposed bill—dubbed the Benefits for Victims of International Terrorism Act—has stirred up a hornet’s nest of opposition from plaintiffs’ lawyers and some victims’ families. They argue the proposal is really designed to torpedo lawsuits aimed at holding foreign governments and businesses responsible for terrorist acts that kill Americans.

But administration officials argue they are trying to put some brakes—and fairness—into what has become a virtual runaway train of litigation in recent years over terrorist acts. Ever since Congress amended federal laws in 1996 to allow U.S. citizens to sue foreign governments for facilitating terrorist acts, more than 50 such lawsuits have been filed in U.S. courts—over everything from the 1979 Iranian hostage crisis to the 1993 bombing of a U.S. Marine barracks in Lebanon to the 1998 bombings of U.S. embassies in Africa.

But, as is often the case with the U.S. legal system, the cases have proceeded with highly uneven results. Some have resulted in astronomical multimillion-dollar jury awards for the victims—with lucrative contingency fees for the plaintiff’s lawyers who handled them. But others have been tossed out on arcane legal grounds or are winding their way through the courts at a snail’s pace.

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