September 22, 2014 – Arab Bank released the following statement in response to today’s verdict by the jury in Linde v. Arab Bank, PLC finding the Bank liable for plaintiffs’ injuries.
“Arab Bank predicted that any proceeding conducted under the district court’s improper sanctions, which the U.S. government found to be ‘erroneous,’ would be nothing more than a show trial. Once the Court eliminated the Bank’s defenses, permitted weeks of inadmissible and inflammatory testimony of plaintiffs’ witnesses, and rejected the Supreme Court’s binding causation standard, the verdict against the Bank was inevitable. Under these circumstances, today’s verdict, finding the Bank liable for legitimate and routine financial services, comes as no surprise.
“Taken together, the Court’s rulings excluded nearly all evidence about banking and put Hamas on trial, but as Judge Weinstein found in dismissing the related Gill case, ‘Hamas is not the defendant; the Bank is.’
“Arab Bank believes it will ultimately prevail in this case. The trial was infected by scores of errors, and the Bank has very strong grounds for appeal. It will seek prompt review by the Second Circuit. In addition to the deeply flawed sanctions, the Court gagged the Bank by excluding many of its witnesses, severely restricting the ability of other witnesses to testify, and precluding all evidence of its innocent state of mind. These errors were compounded by rulings including permitting plaintiffs to introduce hearsay evidence of dubious reliability, and jury instructions that dispensed with the Supreme Court requirement that plaintiffs prove that the Bank’s services were a direct cause of their injuries.
“According to the U.S. government, the district court’s sanctions, which penalized the Bank for its cooperation with U.S. counterterrorism investigations and its compliance with foreign law, ‘will warrant close scrutiny on appeal.’
“The significant errors made by the Court include:
Sanctions Prevented the Bank from Defending Itself
“In a May 23, 2014 amicus brief requested by the Supreme Court, the Solicitor General of the U.S. government concluded that the Court ‘erred in several significant respects’ by imposing sanctions that severely penalized the Bank for its compliance with the laws of the foreign jurisdictions in which it operated. Although the government suggested the sanctions could be modified or reconsidered prior to trial, the district court dismissed this recommendation out of hand.
“At trial, the sanctions precluded the Bank from producing any evidence of its rigorous policies and practices to combat terrorism financing, its extensive cooperation with the law enforcement and intelligence communities of the U.S., among other nations, and the fact that the Israel Defense Forces determined that neither the Bank nor its employees were involved in any way in financing terrorism – all conclusive evidence of its innocent state of mind. The practical effect of these sanctions was best illustrated by the Court’s refusal to permit the Bank’s most senior officer, Chairman Sabih Al-Masri, as well as other Bank employees, to testify about the Bank’s condemnation of terrorism and the measures it had taken to prevent the provision of services to terrorists.
Plaintiffs’ Experts Testified about the Saudi Committee; Bank Experts were Excluded
“The district court also excluded all of the Bank’s witnesses who were prepared to testify that the Saudi Committee, a foreign aid agency of the Kingdom of Saudi Arabia, was a lawful humanitarian aid program for a Palestinian population impoverished by the conflict of the Second Intifada. The jury never heard that the Saudi Committee’s humanitarian purpose was confirmed by senior U.S. government officials, as well as other nations, and it was never designated by the U.S. The Bank was precluded from telling the jury that the Saudi Committee was overseen by Saudi Arabia’s chief counterterrorism official, who was praised upon his death in 2012 by President Obama for his cooperation with the U.S. and his leadership in counterterrorism in the region. The plaintiffs’ witnesses, whom the Court permitted to testify, had never visited Saudi Arabia or met with any of its officials. By comparison, the Bank’s witnesses, whose testimony the jury was not permitted to hear, were internationally recognized experts on Saudi Arabia who had acquired substantial personal knowledge of its charitable practices and anti-terrorism policies.
Failure to Apply the Well-Established Causation Standard
“The district court’s instruction that the Anti-Terrorism Act (ATA) requires only proof that the Bank’s services were a substantial contributor to plaintiffs’ reasonably foreseeable injuries was profoundly flawed. The ruling conflicts with two very recent decisions of the Second Circuit Court of Appeals in ATA cases involving financial institutions, as well as two recent Supreme Court decisions that state unequivocally that proof of a direct causal relationship between the defendant’s alleged conduct and plaintiffs’ alleged injury is an essential requirement of any federal tort claim. In defiance of this binding precedent, the Court’s instruction permitted the jury to reach a liability verdict for injuries that had no direct connection to the Bank’ services, instead of requiring the direct and ‘but for’ causal connection that the law requires.
Improper Exclusion of Evidence of the Bank’s Compliance with Foreign Law
“The district court also excluded evidence of the Bank’s strict compliance with applicable foreign anti-terrorism and money laundering laws and regulations. This decision stands in sharp contrast to the ruling issued by Senior Judge Weinstein, who found the Bank’s compliance with foreign law to be highly probative of its state of mind and then dismissed a similar ATA case brought against it by the same plaintiffs’ lawyers.
“The full evidentiary record concerning the Bank’s practices and procedures, substantially all of which was excluded by the Court, shows that Arab Bank complied with applicable laws and regulations in each of the jurisdictions where it operates as a responsible and law-abiding institution. Neither the Saudi Committee nor the 11 Palestinian charities that the plaintiffs placed at issue in this case were designated by the U.S., the U.N. or the E.U. during the period in question. All of these charities operated openly, in full view of the international community, and many received funding from the U.S. and prominent non-governmental organizations like ANERA. Similarly, none of the 100 operatives who allegedly committed the attacks that caused plaintiffs’ injuries were on these government designation lists, and with few exceptions, they did not receive any financial services from the Bank whatsoever. In short, Arab Bank did not knowingly bank for terrorists, and it did not cause the plaintiffs’ injuries.
“Today’s decision, if it stands, exposes the banking industry to enormous liability for nothing other than the processing of routine transactions and the provision of conventional account services even if all governmental requirements are followed and the parties receiving services were in good standing with these governments. This precedent would create vast uncertainty and risk in the international finance system and accelerate de-risking activities already underway that are reducing the availability of financial services in certain areas of the world and to certain populations.”
While it pursues its appellate remedies, the Bank’s commitment to its global customer base will remain uninterrupted, and it will continue to operate as one of the Middle East’s preeminent financial institutions. It will also continue to work as a cooperative partner with governments and other financial institutions in combating the financing of terrorism and establishing best practices to do so.
The U.S. government described Arab Bank as “a constructive partner with the U.S. in working to prevent terrorist financing.” Arab Bank plays a vital role in the Middle East region, promoting economic development, growth and modern financial services. It is the bank of choice for delivering humanitarian aid to the Middle East from the U.S. and other governments, as well as leading NGOs. Arab Bank opened its branches in the Palestinian Territories following the Oslo Peace Accords, with the permission of the Central Bank of Jordan and the Israeli Central Bank. For more than a decade, the government of Israel has remitted all of the funds collected on behalf of the Palestinian Authority into to a Central Treasury Account maintained at Arab Bank.