A US appeals court has overturned a $1.68 billion judgment against Iran’s central bank, angering the families of US Marine Corps personnel killed in the 1983 Iran-backed truck bombing in Beirut.

The 11-year-old case was won by families of the bombing which killed 241 US personnel at a barracks in Beirut but the 2nd US Circuit Court of Appeals in Manhattan threw it out in a 3-0 decision citing issues around state law.

The panel also rejected a claim that a 2019 federal law designed to make it easier to seize Iranian assets held outside the United States waived the central bank's (Bank Markazi) sovereign immunity.

That law "neither abrogates Bank Markazi's jurisdictional immunity nor provides an independent grant of subject matter jurisdiction," Circuit Judge Robert Sack wrote.

It has now been referred back to US District Judge Loretta Preska in Manhattan to address state law questions, including whether the case can proceed at all in Bank Markazi's absence.

The case, Peterson et al v. Bank Markazi et al, accused Iran of giving material support for the Hezbollah attack by seizing bond proceeds held by Luxembourg-based Clearstream Banking in a blocked account on Bank Markazi's behalf.

However, Bank Markazi claimed immunity under the Foreign Sovereign Immunities Act, which generally shields foreign governments from liability in US courts.

The case has been a years-long battle for families seeking justice. Plaintiffs successfully sued Bank Markazi in 2013 to partially satisfy a $2.65 billion default judgment they had won against Iran in 2007. Another judge dismissed the case in 2015, but the 2nd Circuit revived it in 2017.

Then in 2020, the US Supreme Court ordered a fresh review in light of the 2019 law, which then-President Donald Trump signed as part of the National Defense Authorization Act.

The plaintiffs have said they hold more than $4 billion of judgments against Iran and have been unable to collect for decades.

(Reporting by Reuters)