WASHINGTON (CNN) -- Libya has offered $2.7 billion to settle claims by the families of those killed in the Pan Am 103 bombing, with payments tied to the lifting of U.S. and U.N. sanctions, according to lawyers representing some families.
The proposed settlement would work out to $10 million per family, according to a letter from the families' lawyer detailing the offer. It includes relatives of those killed on the ground in the Scottish town of Lockerbie. But compensation would be paid piecemeal, with installments tied to the lifting of sanctions.
The letter says 40 percent of the money would be released when U.N. sanctions are lifted; another 40 percent when U.S. commercial sanctions are lifted; and the remaining 20 percent when Libya is removed from the State Department's list of state sponsors of terrorism.
Jim Kreindler, of Kreindler & Kreindler, the firm representing 118 victims' families said the families are "seriously considering" the Libyan offer.
"These are uncharted waters," Kreindler said. "It is the first time that any of the states designated as sponsors of terrorism have offered compensation to families of terror victims. "
Kreindler said the families "have spent the last 13 years seeking closure and justice, and are eager to move on." But Jack Shultz, whose 21-year-old son Thomas died in the bombing, said Libyan leader Moammar Gadhafi must accept responsibility before any settlement is reached.
"He has to get out of the terrorism business and take responsibility," Shultz said. "The money isn't the issue. It's his taking responsibility and swearing off terrorism. Now he has to come clean and help us."
The State Department has maintained the matter of compensation is an issue to be decided between Libya and lawyers for the victims' families.
"The U.S. is not directly involved," one State Department official said, adding that while "some families want cash, others say it is blood money."
Pan Am Flight 103 exploded over Lockerbie on December 21, 1988, killing all 259 people aboard and 11 on the ground. Former Libyan intelligence agent Abdel Baset Ali Mohmed Al-Megrahi was convicted of blowing up the airliner and sentenced to life in prison in 2001.
Sanctions against Libya were suspended -- but not lifted -- in 1999, after Libyan leader Moammar Gadhafi turned Al-Megrahi over to a Scottish court convened at a former military base in the Netherlands.
Compensation for the families of the Pan Am victims is among the steps set by the United Nations for lifting its sanctions against Tripoli. Other requirements include a formal denunciation of terrorism, which Libya says it has made; and accepting responsibility for the actions of its intelligence agents.
The United States says it will only lift its unilateral sanctions once Libya complies with the U.N. resolutions.