Could a jury decision on terror financing trigger #WTO liability for the US?
Earlier this week, a New York jury found a Jordanian bank liable for damages under the 1990 US Anti-Terrorism Act (ATA). According to the Times, it was “the first time a bank has ever been held liable in a civil suit under a broad antiterrorism statute.” The Bank plans to appeal the case, which could produce a damage award in the billions of dollars.
Allegedly, the Arab Bank (Jordan’s largest bank and a major conduit of US and Israeli foreign aid money) ran a life insurance program for suicide bombers. US victims of suicide bombing attacks in Israel invoked the ATA to claim civil damages. According to Fortune, the US courts have jurisdiction over the case because some of the transfers were conducted through Arab Bank’s New York affiliate – although the New York link is pretty tenuous from the available records.
The Arab Bank claims innocence, but has also refused to hand over documents proving this – saying it would violate financial secrecy laws of several countries where it conducts business. Here is Fortune again:
The Arab Bank’s prospects of successfully defending itself have been hobbled, if not foreclosed, by U.S. District Judge Nina Gershon’s July 2010 order imposing stiff sanctions on the bank for its failure to turn over records, an act that would have—according to both the bank and the Kingdom of Jordan, which filed papers on the bank’s behalf—violated the country’s bank secrecy laws…
Judge Gershon’s controversial sanctions order relates to document requests the plaintiff made in 2005, seeking bank records of certain named individuals and organizations. Most of the records were located in Jordan, Lebanon, or Palestinian territories, where they were protected by bank secrecy laws, meaning that the bank would have risked criminal prosecution in those countries for complying with Judge Gershon’s order.
The general U.S. rule is that, even under such circumstances, U.S. judges do have the power to order records to be turned over, but they must first perform a balancing test, examining all the equities of the situation and taking into account considerations of international “comity”—i.e., respect for foreign countries’ laws. Given the interests that both the U.S. and Jordan had expressed in fighting terrorism, Judge Gershon ordered the records turned over and, when they weren’t, imposed a crushing and, potentially, case-dispositive sanction order.
Under that order the jury would be instructed that it may (though it need not) infer solely from the bank’s failure to turn over those records that the bank did, indeed, “knowingly and purposefully” aid the financing of terrorists. Equally devastating, the order forbids the bank from introducing any evidence of its allegedly innocent state of mind if that evidence might have been contradicted by the records that were never turned over.
In other words, the judge made a decision that US interests trump foreign laws and that a jury was to be instructed to disregard much of Arab Bank’s argument. This does not put the Arab Bank in a strong position.