In a setback for terror victims, a French court lifted a freeze on Iranian state funds.

Victims of Iranian-sponsored attacks in Israel in 1995 and 1997 are suing Iran for compensation.

While the Paris Court of Appeal this week released the $117 million held in the Natexis Banques Populaire, it did not seek interest and court fees from the plaintiffs, their Paris-based attorney Christoph Martin Radtke told the JTA in a telephone interview.

The court told the attorneys to reapply for the Iranian funds once a decision is made on whether funds in the Iranian Central Bank may be confiscated to pay the damages in a U.S. court decision.

Federal judges in Washington ordered Iran to pay damages and interest of $87.5 million to 12 U.S. citizens injured in the two terrorist attacks in Israel. The U.S. courts determined that Iran was liable for the damages due to its sponsorship of Hamas, which orchestrated the attacks.

Radtke said the French court decided to release the Iranian funds because "the law that protects state accounts does not allow an exception for provisional seizure measures."

In January, Radtke in another Paris court sought the enforcement of the U.S. court judgments. He told JTA he hoped for a decision within a few months.

In an e-mail to the JTA, the plaintfffs' U.S.-based attorney, David Strachman of Rhode Island, said they "are really disappointed with the outcome" in the French court.