A U.S. judge will not rescind his decision ordering the PLO to pay $116 million to the family of victims of a terrorist attack.

Ronald Lagueux, a federal judge in Providence, R.I., said Wednesday that the Palestine Liberation Organization was liable because of its refusal during the trial early in this decade to mount a defense; PLO leader Yasser Arafat refused to recognize U.S. sovereignty in the matter.

Yaron Ungar, a U.S. citizen, and his wife Efrat were shot dead as they traveled with their infant son near Beit Shemesh, a town near Jerusalem that also adjoins the West Bank...