Arab Bank mounts legal challenge against claims of aiding terror

9 July 2013

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Men queue in front of bank building

Arab Bank is being sued for allegedly providing material support to groups on the US-designated terrorist list.

(Mohamad Asad / APA images)

Lawyers representing the Arab Bank have petitioned the US Supreme Court to dismiss the claims of 6,500 plaintiffs who argue the Jordanian bank is liable for acts of terror perpetrated during the second Palestinian intifada. The nearly decade-long legal battle tests the limits of US law barring material support to designated foreign terrorist organizations.

In April, presiding Judge Nina Gershon ordered the case — known as Linde vs. Arab Bank — to proceed to trial in the Eastern District of New York (Brooklyn). In its current state, Linde vs. Arab Bank is a consolidation of 11 separate civil complaints, filed under a provision within the Anti-Terrorism Act that allows victims of terrorism to seek damages in US federal courts.

The majority of plaintiffs are Israeli nationals whose family members were killed or injured in suicide bombings or other attacks and are filing their claims under the Alien Tort Claims Act, a statute which allows non-US nationals to sue in a US federal court for violations of international law. A small number of the plaintiffs are suing on behalf of US citizens injured or killed while traveling in Israel and are filing the case under the Anti-Terrorism Act.

The lawsuit dates back to 2004 and argues that by providing financial and administrative services to designated foreign terrorist organizations, the Arab Bank knowingly and purposefully aided and abetted terrorists and their organizations. The groups in question are Hamas, Islamic Jihad, the Popular Front for the Liberation of Palestine and the al-Aqsa Martyrs Brigades, all placed on the US government’s list of terrorist organizations when it was first created in 1995.

In a previous 2010 ruling, Gershon harshly sanctioned the defendants for failing to produce certain bank documents during the discovery phase. The defendants claimed they were bound by foreign banking secrecy laws and had not received permission to disclose the withheld documents.

In her ruling from April this year, Gershon threw out the claims that the Arab Bank “aided and abetted” terrorist organizations, but upheld the allegation of material support. When the suit goes to trial this fall, the jury will need to assess whether the Arab Bank knowingly provided banking services to what it knew were designated terrorist organizations.

Strategic choice?

Michael Elsner, an attorney with Motley Rice, the New York law firm representing the plaintiffs, explained to The Electronic Intifada: “We’re not alleging that the Arab Bank was engaged in routine banking practices and accidentally facilitated transactions with these organizations, but that this was a sophisticated and powerful financial institution making a strategic choice to provide financial support to terrorist entities during the second intifada.”

Prosecutors allege that the Arab Bank hosted bank accounts for terrorist organizations, to which people around the world could submit donations. Plaintiffs also allege that the Arab Bank “laundered” money through what they call “front organizations”— such as the Holy Land Foundation — and to various charitable organizations, known in Arabic as zakat committees, which were affiliated with Hamas.

In addition, plaintiffs allege that the Arab Bank provided a bank account to the Saudi Committee for Support of the Intifada Al Quds, which collected more than $5,000 in funds to distribute to the families of Palestinians killed or injured during the second intifada.

Broad interpretation

Elsner pointed to past material support cases, including Boim v. Holy Land Foundation and one taken on by Eric Holder, the US attorney general, against the Humanitarian Law Project over its educational work with such groups as the Kurdistan Workers’ Party (PKK) in Turkey.

The Supreme Court found that services ordinarily protected under the First Amendment of the US Constitution, when provided to a designated foreign terror organization like the PKK, can still be regarded as violating the material support statute. According to civil rights attorneys, cases such as Holder’s established a broad interpretation of Congress’ legislative intent when passing the Anti-Terrorism Act in the mid-1990s.

Both cases found that prosecutors did not need to prove the intent of the organizations charged with material support of terrorism. “There’s not an element of purpose under the [Anti-Terrorism Act], just knowingly providing material support to an entity that you know is engaged in terrorist acts,” Elsner argued. “The reason for that is that money is fungible and Congress recognizes that anyone accused would deny they were intending to support terrorism.”

Indeed, Holder went so far as to “pit free speech rights against national security,” law professor David Cole has written. And by coming down on the side of the latter, the Supreme Court dramatically expanded the application of the Anti-Terrorism Act (“The Roberts Court’s free speech problem,” New York Review of Books, 28 June 2010).

Inconsistent rulings

However, since the case against the Arab Bank began in 2004, court rulings involving Anti-Terrorism Act litigation have not been consistent: the court’s expansion of who and what could be prosecuted has been followed by signs of a contraction.

Eric Lewis, an attorney who has previously represented the Arab Bank and Guantanamo detainees, told The Electronic Intifada by email: “I think that these are political statutes which bring complex foreign policy questions before juries and that this is not a proper way to proceed. In addition, just as Palestinians are using it, the law is being cut back.”

Lewis was referring to a complaint recently filed by a group of Palestinians against a number of US organizations who allegedly support violence by Israeli settlers.

A sign that the courts may be putting some reins on this type of litigation was indicated earlier this year. The US Court of Appeals for the Second Circuit dismissed a case in which plaintiffs alleged that UBS, a Swiss bank, was liable for acts committed by Hamas and Hizballah against Israel because UBS had transferred funds to the government of Iran which in turn provided money to the groups.

The judge found that an “ ‘extended chain of inferences’ was ‘far too attenuated to provide plaintiffs with sufficient standing to bring this action under federal law,’” according to attorney Michael M. Wiseman on a Harvard Law School blog (“Anti-Terrorism Act Liability for Financial Institutions”).

Wiseman added that the Second Circuit’s ruling has the potential to have an impact on pending Anti-Terrorism Act litigation.

“No guilt by association”

Furthermore, last September, Judge Jack B. Weinstein dismissed a separate but similar case against the Arab Bank, ruling that plaintiffs failed to prove knowledge and proximate cause, indicating that the Arab Bank could not be held liable for Hamas attacks simply by providing banking services to the political organization.

“I think the touchstone must be knowing support of the goals of the organization,” said Lewis, the attorney who has represented Arab Bank and Guantanamo detainees.

“Passively processing transactions or making contributions to charities that may have political goals, and even choosing to pursue those in an aggressive manner, should not bring in peripheral players,” he added. “Those who are brought in must know the goals of the organization, support those goals and intend that the support facilitate those goals. There should be no guilt by association.”

Serious precedent

The petition filed by the defendants in Linde vs. Arab Bank asks for the trial to be dismissed on dual grounds, including that Gershon’s sanctions disregarded due process by failing to consider the Arab Bank’s obligation to obey the bank privacy laws they were subject to in Lebanon, Jordan, the West Bank and Gaza.

“If a bank has to violate their own bank privacy laws to survive charges of terrorism, that will set a serious precedent. Furthermore, it denies the bank the ability to mount a defense,” said Bob Chlopak, a spokesperson for the Arab Bank.

When issuing the sanctions in 2010, Gershon described the Arab Bank as acting with “recalcitrance” and issued severe penalties: eliminating the plaintiffs’ burden of proving that the bank had a culpable state of mind — in other words, that it intended to further the intentions of the designated foreign terrorist organizations; precluding the bank from offering certain evidence in its defense; and barring the bank from explaining to the jury why it could not produce certain records.

This alleviates the prosecutors’ most difficult task in arguing the case, and strips the defendants of an opportunity to defend themselves from that claim. According to Chlopak, Gershon essentially took away the need for plaintiffs to prove that the Arab Bank had supported organizations designated as terrorist groups “knowingly and purposefully.”

Elsner offered a different view. “We don’t have to prove that the Arab Bank executives had the intent,” he said. “The jury can look at the conduct of the parties and their behavior and find that the activities were done purposefully, they can infer this from circumstantial evidence.”

The second grounds on which the petition argues for dismissal is that, in light of recent court rulings on applicability of the Alien Tort Claims Act, federal courts have no jurisdiction over non-US citizens’ claims over the conduct of the Arab Bank.

“Sufficient force”

In the past year alone there have been a number of court decisions that limited the use of the Alien Tort Calims statute. The most recent Supreme Court decision that guides the statute’s claims involved Nigerian citizens suing Shell over allegations that it assisted the Abuja government to crush protests by the Ogoni people in the 1990s.

The Supreme Court’s opinion in that case specified that cases brought by foreign nationals concerning actions that took place outside of the US could only proceed if they “touch and concern” the United States with “sufficient force” (“Supreme Court of the United States, syllabus: Kiobel, individually and on behalf of her late husband Kiobel, et al. v. Royal Dutch Petroleum Co. et al.,” 17 April 2013 [PDF]).

In late June, a district court judge in Virginia threw out the claims brought against CACI International, a company contracted by the US government to manage the Abu Ghraib prison in Iraq. Represented by the Center for Constitutional Rights, the plaintiffs — Iraqi nationals and former detainees — claimed that the company oversaw torture and war crimes.

The Center for Constitutional Rights emphasized that CACI should be liable under the Alien Tort Claims Act because it was a “US-based company that contracted with the US government to provide interrogation services to US-occupied Iraq and conspired with US soldiers to torture and abuse detainees” (“US judge throws out Abu Ghraib detainees’ torture case,” Reuters, 26 June 2013).

As Noura Erakat explained in 2009, the case that reintroduced the 18th-century Alien Tort Claims Act into modern litigation took place in 1980, when a Paraguayan successfully sued in the Second Circuit a Paraguayan police officer for torturing the plaintiff’s son. Nevertheless, in 2013, the district court in Virginia ruled that the Alien Tort Statute does not apply to torture committed in in Iraq.

Crucial question

However, Elsner argues that the case against the Arab Bank meets the “touch and concern” threshold set forth in the case taken by Nigerian citizens against Shell: “The US government has an interest to prevent terrorist attacks because they impact our security interests and our relationships with countries around the world; so this is concerned with the US government interests and national interest.”

Considering the recently filed complaint against groups allegedly supporting Israeli settlers, it will be revealing to see which acts of violence the courts determine “touch and concern” the United States.

The Arab Bank case essentially addresses a crucial question: just how far down the chain of events from the actions of certain Palestinian organizations does one have to be in order to not be held liable for their actions? The courts’ inconsistent rulings on this question make this an important case to watch.

Charlotte Silver is a journalist based in occupied Palestine and San Francisco. Follow her on Twitter @CharESilver.