U.S. Supreme Court ends second Arab Bank case

Decision blocks suits for overseas terrorism against banks with US footprint

By
April 24, 2018 21:59
3 minute read.
The headquarters of Arab Bank in Amman, Jordan

The headquarters of Arab Bank in Amman, Jordan. (photo credit: Wikimedia Commons)

 
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The US Supreme Court on Tuesday ended one of two major Arab Bank cases, closing off any path for suits in US courts by foreign victims of overseas terrorism against banks with a US footprint.

The ruling said that foreign corporations such as Jordan’s financial juggernaut, Arab Bank, cannot be sued in American courts for allegations that they helped to finance terrorist attacks in Israel and the Palestinian territories.

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In April 2017, the landmark anti-terrorism financing suit, which was presumed dead, was surprisingly resuscitated by the US Supreme Court agreeing to hear the appeal.

That preliminary decision by the court led to speculation that if the plaintiffs won, the case could lead to a flood of anti-terrorism financing lawsuits by foreigners (including Israelis) against foreign financial entities (including those banking for Palestinian terrorist groups) that do business in the US.

This would have changed the face of international banking and affected US diplomacy in a variety of unpredictable ways.

But with Tuesday’s 5-4 vote, the decision left in place a lower court ruling that had previously thrown out the lawsuit brought by some 6,000 plaintiffs, including survivors and relatives of non-US citizens killed in attacks, filed under the 1789 US law called the Alien Tort Statute that accused Arab Bank of being terrorist groups’ “paymaster.”

Only in recent years have plaintiffs sought to bring such cases under the obscure law.

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The plaintiffs accused Arab Bank of deliberately financing terrorism, including suicide bombings and other attacks. They said Arab Bank used its New York branch to transfer money that helped Hamas and other Islamist terrorist groups fund attacks and reward families of the perpetrators between 1995 and 2005.

The lead plaintiff in the Arab Bank case was Joseph Jesner, whose British citizen son was killed at age 19 in a 2002 suicide bombing of a bus in Tel Aviv.

The bank said in court papers that the US government has called it a constructive partner in the fight against terrorism financing.

In a 2013 ruling, the Supreme Court did not resolve the corporate liability question when it ruled in favor of Royal Dutch Shell Plc over a lawsuit claiming the company was complicit in a crackdown on protesters in Nigeria.

That 2013 ruling narrowed the Alien Tort Statute’s reach, saying claims must sufficiently “touch and concern” the United States to overcome the presumption that the law does not cover foreign conduct.

But the justices had left the door open to future cases where the financial entity is on US soil and the case represents a US national interest – say, eliminating financial havens for terrorist financing.

Then in September 2014, the plaintiffs won in the other major case against Arab Bank. Unlike Tuesday’s case of foreigners, the plaintiffs who sued the Arab Bank in the other case were US citizens.

Their win came in the first public trial of a major bank on charges relating to terrorist attacks – specifically those in Israel during the Second Intifada.

There were a series of mixed rulings and appeals following the US plaintiffs’ win in the trial court, and eventually Arab Bank signed a reportedly $1 billion confidential settlement.

That gave hope to the foreigners suing Arab Bank in the second case connected to Tuesday’s ruling.

However, the court indicated that the plaintiffs did not sufficiently demonstrate that the foreign entity they were suing had a large enough US footprint and had a sufficient role, even if passive, in facilitating terrorism.

“Arab Bank is pleased with the Court’s decision, which ends this litigation and affirms the Bank’s belief that there is no basis to hold corporations liable under international law,” the organization said.  “The Bank looks forward to focusing its full attention on its business, its commitment to safe and sound banking and its dedication to the service of its customers across the globe.”

This closes off the path for Israelis or anyone else harmed by terrorism to go after large financial institutions in the Middle East or elsewhere in the world, which look the other way when their clients are funding terrorism.

Reuters contributed to this report.

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