NY appeals court rules to apply Israeli law in Bank of China terror financing case

Ruling seen as victory for families of terror victims suing Bank of China; Israeli law uniquely strict on indirect aid of terror finance.

China (yen)  (photo credit: REUTERS/Jason Lee)
China (yen)
(photo credit: REUTERS/Jason Lee)
Shurat Hadin – Israel Law Center won a significant battle in its terror financing case against the Bank of China, the center announced.
Shurat Hadin convinced the New York Appellate Division to apply Israeli law and keep the case, filed on behalf on 22 families, in New York, the center told The Jerusalem Post late on Thursday night.
The most dramatic aspect of the state appeals court decision was that it both reversed the lower New York court decision to apply New York law in the case, in favor of Israeli law, and it made this decision against recent precedents by the New York-based US Court of Appeals for the Second Circuit.
The state appeals court also reaffirmed the lower court’s decision to keep the case in New York as opposed to moving it to China, and rejected outright the bank’s appeal to apply Chinese law instead of either Israeli or New York law.
The court recognized the decision as significant, as Israeli law includes a right to sue and receive damages for violation of specific statutes, including a uniquely Israeli statute that places wide liability on banks and others that even indirectly aid or facilitate terrorists financing.
New York law’s obligations on banks are more lenient regarding anything their clients may be involved in.
Certainly the entire case and chances of winning would have been radically different under Chinese law and in China than under Israeli law and in New York.
The victims and family members of victims of terrorist attacks perpetrated between 2004 and 2007 in Israel allege that starting in 2003, the Bank of China executed dozens of wire transfers for Hamas and Islamic Jihad totaling several million dollars.
The case is still far from trial or any sort of resolution, but unlike beating a regular motion to dismiss, where usually a plaintiff merely has to survive small procedural hurdles that do not impact the case later, this decision, especially in applying Israeli law, gives the plaintiffs a significant advantage at all points of the case going forward as the framework will always be one applying greater liability against the Bank of China.
The development comes shortly after another major development, where according to an exclusive report in the Post, key former Israeli government witness Uzi Shaya sent a letter out on the case that he was “inclined” to testify despite reports that China threatened to cancel Prime Minister Binyamin Netanyahu’s visit to China last spring if Israel did not prevent Shaya from testifying.
Shurat Hadin had said that Shaya’s letter would indicate that he has faced potential opposition from the Israeli government about testifying, but that he believes he can testify anyway.
Despite that belief, Shaya explained to Shurat Hadin that he wished to give the government time to formulate an official position, particularly since the government might, in the end, endorse his testifying.
In July, the bank’s lawyers said that maybe the government was withholding Shaya’s testimony because it believed his testimony would be inaccurate – though the court appeared to reject this out of hand.
The significant question of whether Shaya will testify is being reviewed by the government, according to an official letter response to the court from July 12 by deputy director of the international department of the State Attorney’s Office, Yitzhak Blum.
The court expressed frustration that the letter did not give any deadline for an answer and indicated it would be responding to Blum’s letter by requesting a deadline.