In a major decision that will affect the high-profile Arab Bank terrorism finance case in the US and the future of terrorism financing cases, the US government has told the US Supreme Court that it supports the case going to trial, but potentially undermined the case’s strength.
The decision late Tuesday came in the context of the Arab Bank’s interim June 2013 appeal to the Supreme Court to reverse an April 2013 and earlier lower US court decisions that could seriously hurt the bank’s chances of winning the trial.
The case itself, which has been featured on the CBS News Sunday Morning news magazine, involves allegations that the bank facilitated massive transfers of funds to Hamas leaders and institutions, as well as to the families of imprisoned Hamas members and suicide bombers via Saudi Arabia and Hezbollah’s al-Shahid Foundation, mostly between 1998 and 2004.
The plaintiffs allege that Arab Bank knew the funds related to terrorists and terrorist groups, and is thus, civilly liable for wrongful death damages resulting from attacks perpetrated using the transferred funds.
Amman-based Arab Bank, the largest in Jordan and one of the largest in the Middle East, has said there is a lack of proof that the funds went to terrorists, that the funds contributed directly and sufficiently to attacks and that the bank had any knowledge of any possible connection to attacks.
The lower court ruling significantly penalized the bank for refusing to turn over key documents that the plaintiffs said they need to prove their case.
The bank refused on the grounds that it could incur criminal sanctions from Jordan and Lebanon for violating their bank secrecy laws.
A lower US court refused to accept this rationale and ordered that a trial jury could infer that the bank’s refusal to turn over documents was like an admission that the documents proved what the plaintiffs argued they would prove.
The bank, with help from the Jordanian government that said that its counterterrorist cooperation with the US might be at stake, made an interim appeal to the US Supreme Court.
The Supreme Court asked the US solicitor-general, who represents the government before the Supreme Court, what the US position on the issue was.
A remarkable extended battle ensued within the US government, with the Justice, State and Treasury departments fighting over what the government’s stance should be.
The Justice Department pushed to uphold the lower court ruling and sanction Arab Bank in the case, concerned foremost about progress the department has made in breaching bank secrecy laws worldwide to fight terrorism financing and money laundering.
The State Department pushed to overturn the lower court ruling, concerned that the case will undermine Jordanian counterterrorist cooperation with the US and possibly undermine the Jordanian economy sufficiently to aid Islamic radicals in gaining power in the country.
The Treasury Department had reportedly sided with the Justice Department, but in the US government’s written legal response to the Supreme Court, it appeared that the Treasury either had taken State’s side or had taken a more neutral position.
The government’s ultimate position was that while the Supreme Court should not intervene on the issue pretrial (a win for the plaintiffs), it harshly criticized the lower court for not fully considering the foreign policy consequences of disregarding Jordanian sovereign interests in the case.
It opened the door to supporting throwing out the case post-trial if those interests continue to be ignored.
The Supreme Court is likely to accept the government’s position that while letting the case go forward, could serve as a warning to the lower court not to fully implement the sanctions it ordered – or risk the court’s final judgment being later thrown out post-trial by the Supreme Court.
The government’s emphasis on worrying about foreign policy impacts of terrorism financing cases brought by private individuals could hamper future such cases, if accepted by the Supreme Court.
Alternatively, the government’s emphasis on foreign policy could be read as only saying that the lower court should have considered foreign policy more seriously, not that it trumps all considerations.
Gary Osen, one of the lead plaintiffs’ lawyers, said, “We’re pleased that the solicitor-general has recommended that Arab Bank’s petition be denied and we’re hopeful that the Supreme Court will agree.”
Mark Werbner, another of the lead plaintiffs’ lawyers said, “We are pleased with the US position that review by the Supreme Court is not warranted. This brings the long-pending case much closer to trial.”
“If the Supreme Court follows the recommendation, the trial will begin in August in federal court in New York. These families have suffered so much for so long and they will finally have their day in court,” Werner added.
Arab Bank responded to the government decision stating that it was “a comprehensive critique of the sanctions imposed on Arab Bank, concluding that the ‘lower courts erred in several significant respects,’ including by performing an ‘erroneous’ comity analysis,” as well as assuming the bank’s previous production of documents showed selective compliance and failing to consider all the foreign relations, anti-terrorism interests and foreign bank secrecy impacts.
The bank said the US decision acknowledged that the lower court decision threatened “the United States’ vital interests in maintaining close cooperative relationships...in the fight against terrorism,” and could deter foreign-government partners “from facilitating cooperation.”
It added that it will seek to capitalize on the government’s criticism of the lower court ruling to demand Supreme Court intervention and said conducting the trial based on “an erroneous legal standard” would be “fundamentally unjust.”
The trial, originally set for January 2014, is now set for August.