U.S. dismisses thousands of claims against Arab Bank

The Arab Bank building is seen as cars drive down Banks' street in Beirut. (The Daily Star/Grace Kassab)

BEIRUT: Jordan’s largest lender, the Arab Bank, announced this week that a New York federal court dismissed more than 90 percent of the claims in a long-running lawsuit accusing it of providing banking services to charities and individuals allegedly affiliated with Palestinian militants. The ruling is the most significant victory yet for the Arab Bank yet in its nine-year legal battle with 6,596 relatives of victims killed or injured in two dozen Palestinian attacks in Israel during the Second Intifada.

Most of the plaintiffs who are not U.S. citizens were seeking hundreds of millions of dollars in damages from one of the Levant’s largest financial institutions under an obscure anti-piracy law passed in 1798, the “Alien Tort Statute,” which allows foreigners to file civil claims against international companies who violate U.S. law in the nation’s federal courts.

More than 500 plaintiffs who are U.S. citizens are suing the Arab Bank under a rarely cited provision of the U.S. Anti-Terrorism Act that allows victims of international terror attacks to seek compensation in federal courts.

A statement posted on the Arab Bank’s website Sunday said that on Aug. 23, Judge Brian Cogan of the Court of the Eastern District of New York ordered the dismissal of the claims filed by over 6,000 of the plaintiffs under the Alien Tort Statute.

When contacted by The Daily Star, an Arab Bank legal representative refused to comment on whether the decision would affect the remaining 503 cases filed against the bank under the Anti-Terrorism Act.

A trial is scheduled to take place in January 2014, marking the first time a bank has been tried in the U.S. for terrorism financing under the act.

In the statement posted on its website, the Arab Bank expressed “its confidence in the outcome of the remaining claims against it,” and noted that last week’s decision was the second time in the last 12 months that terrorism financing claims against the bank had been dismissed.

In November 2012, Senior Judge Jack B. Weinstein, also of the Eastern District of New York, dismissed a separate case brought under the Anti-Terrorism Act by Mati Gill against Arab Bank PLC in its entirety after finding that the evidence did not support the claim that the bank acted with an improper state of mind or proximately caused the plaintiff’s injury.

The rest of the nine-year legal battle, however, has been riddled with defeat for the Arab Bank.

In April, the previous judge assigned to the case sanctioned the bank for failing to provide records for tens of thousands of its clients, ordered it to pay $1.3 million to the plaintiffs in legal fees, and instructed the jury to “infer” that the bank provided services to terrorists “based on the defendant’s failure to produce the required documents.”

The Arab Bank responded by petitioning the U.S. Supreme Court for dismissal, arguing that it had willingly produced 200,000 bank records and successfully sought secrecy waivers from Lebanon and the Palestinian territories, but was unable to produce the other documents without violating financial privacy laws and subjecting itself to possible criminal prosecution.

“This dispute has serious foreign relations implications, evidenced by the filings of three governments in the courts below, in which U.S. ally Jordan protested that the sanctions ‘severely infringe’ its sovereignty and ‘punish Arab Bank for not violating Jordanian law,’” the July petition said.

The bank warned that there had been an exponential increase in clashes between foreign laws and U.S. discovery demands and that the sanctions would serve as “a template by which plaintiffs can sue any foreign bank, demand documents that cannot lawfully be disclosed, and exploit that inability by demanding outcome determinative sanctions.”

A version of this article appeared in the print edition of The Daily Star on August 27, 2013, on page 5.




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