Themes:
On the Linde Verdict
Global Support for Arab Bank
On International Comity
On The Consequences Of Applying Broad Legal Standards That Subject Banks And Others To Liability For Operating In Conflict Zones
On Tort Liability
On the Linde Verdict:
What is without doubt is that the bank has impeccable credentials. In the Palestinian territories it has been the bank of choice for the international development and donor community, helping to process payments for the US and European governments, the United Nations and major charities.”
– Jennie Mathew, AFP
“Arab Bank, respected multi-national in dock for terror,” August 19, 2014
…Arab Bank was not able to appeal [the sanctions order] but it will now have the opportunity to show that the sanctions were incorrectly imposed and that they significantly prejudiced the Arab Bank’s ability to defend itself, resulting in an unjust and legally unsound verdict.”
– Central Bank of Jordan
“Press Release by the Central Bank of Jordan Regarding the Arab Bank,” September 23, 2014
The verdict is expected to have a strong impact on similar legal efforts to hold financial institutions responsible for wrongdoing by their clients, even if the institutions followed banking rules, and could be seen as a deterrent for banks that conduct business in violent areas.”
– Stephanie Clifford, The New York Times
“Arab Bank Liable for Supporting Terrorist Efforts, Jury Finds,” September 22, 2014
As a result of the Arab Bank decision, banks may no longer be able to rely solely on lists provided by government agencies for counter-terrorism efforts. They must now theoretically treat every customer as a potential terrorist organization or person and make a judgment call on whether they may pose a terrorist risk and whether to bank them.”
– Christine Duhaime, Duhaime Law,
“Crystal ball theory of liability – How banks and financiers became liable for terrorist acts of their non-terrorist listed customers,” September 24, 2014
While terrorism is a major issue in modern times, the labeling of Arab Bank as a terrorist is ridiculous…by the same set of rules I could accuse UBS of being a war criminal and Wells Fargo as being a Cocaine trafficker.”
– Shayne Heffernan, HEFFX
“Arab Bank a Terrorist?” September 23, 2014
Global Support for Arab Bank:
Everything the Arab Bank has ever done under any and all circumstances has been ultra professional… It is inconceivable that the Arab Bank would have done anything like it is being charged with.”
– Riad al Khouri, Economist, AFP
“Arab Bank, respected multi-national in dock for terror,” August 19, 2014
[Arab Bank] is responsible for processing financial assistance through various United States foreign aid programs… [and] is a constructive partner with the United States in working to prevent terrorist financing…”
– U.S. Solicitor General’s Amicus Brief to the U.S. Supreme Court
May 23, 2014
… As much a part of Jordanian history as any other institution, civil or otherwise, the Arab Bank occupies an important role in Jordan, commercially, financially, and culturally, so much so that the Bank’s stability plays a role in the stability of the country and the region as a whole.”
– Report on the Bank to State Department Headquarters from U.S. Ambassador to Jordan, Edward Gnehm, Jr.,
November 2002
The Embassy does not have any information that [Arab Bank] or [its] investors have known ties to terrorists, money laundering, corruption, or violations of the law or commercial/developmental considerations.”
– Report on the Bank to State Department Headquarters from U.S. Ambassador to Jordan, David Hale,
July 1, 2008
On International Comity:
The court failed to give adequate weight to United States and foreign sovereign interests that weighed in favor of a lesser sanction than the one the court imposed in this private litigation.”
– U.S. Solicitor General’s Amicus Brief to the U.S. Supreme Court
May 23, 2014
If a foreign financial institution’s previous cooperation with governmental authorities may be used against it when it resists production in private litigation, those institutions may restrict their cooperation with governmental authorities in the first place. And the United States’ foreign-government partners may similarly be deterred from facilitating cooperation with government requests if their financial institutions may later have cooperation weighed against them in private litigation.”
– U.S. Solicitor General’s Amicus Brief to the U.S. Supreme Court
May 23, 2014
The District Court’s sanctions order threatens the close U.S.-Jordan partnership by punishing Jordan’s largest financial institution for its decision not to violate Jordanian law.”
– Kingdom of Jordan’s Amicus Brief to the U.S. Supreme Court
July 25, 2013
The court’s [sanctions] rulings also threaten to propel the United States into a serious diplomatic entanglement. Foreign policy is—for good reason—not the province of the courts. …The rulings, if not set aside, would be an affront to the sovereignty of foreign states, including one of the United States’ closest allies, and could cause irreparable damage to ongoing international negotiations over data privacy. This harm cannot be unwound on appeal of final judgment years from now.”
– Union of Arab Bank’s Amicus Brief to the U.S. Supreme Court
July 25, 2013
…the UAB is intimately aware of the importance of banking privacy laws to Arab banking customers – and Arab culture – and is concerned (and confident) that many honest, law-abiding customers will be unwilling to continue to transact business through the regulated banking system as a consequence of the Sanctions Order’s nullifying effect on those laws. The resulting exodus of customers and their funds from regulated banking systems in the Arab world will have a destabilizing effect on the banking and financial sectors of the world and on the economy of the region as a whole, which necessarily would have an adverse effect on the world economies.”
– Union of Arab Banks’ Amicus Brief to the Second Circuit Court of Appeals,
November 4, 2010
Perhaps even more disconcerting than the threat of ATA litigation running amuck against non-terrorist companies, individuals, and friendly entities is the danger that other countries will create their own version of the ATA. These foreign versions of the ATA are certain to be far less favorable to U.S. interests than the ATA itself has been.”
– Geoffrey Sant, “So Banks are Terrorists Now?: The Misuse of the Civil Suit Provision of the Anti-Terrorism Act,” Arizona State Law Journal, Summer 2013
If customers are discouraged from utilizing the banking system… the impact on the banking system and the economy in the Palestinian Territories will be dramatic, the means of eliminating illegal banking activity will be thwarted, and the potential risk of that activity will be elevated.”
– Letter from Dr. Jihad Khalil Al Wazir, Governor of the Palestinian Monetary Authority to the Eastern District Court of New York, August 25, 2010
Conflict over foreign bank secrecy laws may give foreign governments and the general public the impression that U.S. courts are requesting international financial institutions to violate laws in the countries in which they do business…In this way, lawsuits brought under the ATA against banks have the potential to promote conflict between the U.S. and its partners and damage productive relationships in the Middle East.”
– Michael Deluca, Georgetown Public Policy Review
“Using the Courts to Combat Terrorism: Arab Bank and Beyond,” June 1, 2015
Over the past 10 years, there have been more than 20 times as many decisions ordering document productions that violate foreign law as there were in the previous decade. This extraordinary increase is not easily explained by a sudden change in the discovery ‘needs’ of litigants. A more likely explanation is that the willingness of courts to order violations of foreign law has encouraged litigants to make these requests. If this is correct, then courts themselves have encouraged the phenomenon of court-ordered law-breaking.”
– Geoffrey Sant, New York Law Journal
“Aerospatiale’ Factors on Discovery in Violation of Foreign Laws,” December 8, 2014
On The Consequences Of Applying Broad Legal Standards That Subject Banks And Others To Liability For Operating In Conflict Zones:
What worries me is that [the verdict against Arab Bank] will also add to the likelihood of ‘de-risking’ – where banks exit customers and services… The transactions will continue because there’s a need. But it may be underground or offshore, creating a fertile environment for illicit finance that’s outside the scope of the United States to detect or control.”
– Rob Rowe, the American Bankers Association, Reuters
“Arab Bank verdict risks erosion of anti-terror controls –industry,” September 24, 2014
Left unchecked, the process of derisking may leave some countries with absolutely no access to international finance… That, in turn, is likely to exacerbate the conditions of poverty and exclusion that fuel the terrorism and crime these rules were designed to prevent”
– The Economist
“Poor Correspondents,” June 14, 2014
Litigation against banks operating in the Middle East could contribute to further regional destabilization by discouraging financial institutions from operating in areas heavily impacted by terrorism for fear of civil penalties. Setbacks in these areas may increase the vulnerability of the US and its allies to acts of terrorism.”
– Michael Deluca, Georgetown Public Policy Review
“Using the Courts to Combat Terrorism: Arab Bank and Beyond,” June 1, 2015
Developing regions, small businesses, and charities are most negatively impacted. There is concern that similar de-risking could occur as a result of ATA litigation.”
– Michael Deluca, Georgetown Public Policy Review
“Using the Courts to Combat Terrorism: Arab Bank and Beyond,” June 1, 2015
Plaintiffs’ interpretation of the ATA… ignores principles of international comity, well-established requirements of standing and causation and reflects a fundamental misunderstanding about the manner in which the international banking system operates.”
– The Institute of International Bankers, The Europeans Banking Federation and The French Banking Federation Amicus Brief in Support of Credit Lyonnais’ Motion for Summary Judgment, Strauss v. Credit Lyonnais, CV No. 06-702 (EDNY)
It’s important for the U.S. to have strong financial ties to these areas …It’s counterproductive to increase compliance hurdles so high that banks stop routing transactions through the U.S.”
– Jeffrey Alberts of Pryor Cashman LLP, Law360
“Arab Bank Verdict Injects Risk Into Compliance Landscape,” September 24, 2014
A withdrawal by multiple institutions in an already vulnerable area, such as Yemen or Palestine, might hinder economic development and potentiate the draw of extremist organizations. Furthermore, direct damages to banks operating in the Middle East from a verdict in an ATA case could impact the ability of those banks to issue loans and credit. Legitimate investors may withdraw their funds from institutions due to concerns over the perceived vulnerability of banking privacy laws. These factors all have the potential to decrease access to credit and destabilize the region economically.”
– Michael Deluca, Georgetown Public Policy Review
“Using the Courts to Combat Terrorism: Arab Bank and Beyond,” June 1, 2015
On Tort Liability:
The clear, present, and serious dangers now posed to the nation by terrorist acts cannot excuse a lack of due process in applying civil law, in properly shaping the contours of the new [Anti-Terrorism Act] tort, and in providing adequate procedural tools and protections to all parties.”
– Senior Judge Jack B. Weinstein, Memorandum and Order Granting in Part Motion to Dismiss, Gill v. Arab Bank, PLC, — F.Supp.2d —, 2012 WL 4960358 (E.D.N.Y. Oct. 12, 2012)
The expansion of ATA liability to punish banks for not recognizing and halting transfers of money to terrorists is highly problematic given that these wire transfers generally do not carry any overt signs of being connected to terrorists. Terrorists take great precautions to disguise the flow of money.”
– Geoffrey Sant, “So Banks are Terrorists Now?: The Misuse of the Civil Suit Provision of the Anti-Terrorism Act,” Arizona State Law Journal, Summer 2013
Interpreting the ATA to reach not only terrorists but also third-party companies and banks violates the clear language and intent of the statute. If Congress wishes for the ATA to extend to non-terrorist third parties, it should be given the opportunity to amend the ATA in this way.”
– Geoffrey Sant, “So Banks are Terrorists Now?: The Misuse of the Civil Suit Provision of the Anti-Terrorism Act,” Arizona State Law Journal, Summer 2013