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Second Circuit Rejects Arab Bank Interlocutory Appeal in Hamas Suit

By Robyn Hagan Cain on January 22, 2013 | Last updated on March 21, 2019

Friday, a Second Circuit Court of Appeals panel unanimously ruled that it lacked standing to hear a sanctions dispute about terrorism financing allegations.

The appeal stemmed from claims brought by victims and families of victims of terrorist attacks committed in Israel between 1995 and 2004. More than 100 families and 700 individuals are seeking more than $1 billion in damages from Arab Bank in the lawsuits, Thomson Reuters News & Insight reports.

Proceeding under the Anti-Terrorism Act and the Alien Tort Claims Act, the plaintiffs sued Arab Bank, a large bank headquartered in Jordan, with branches in New York and throughout the world. They claimed that Arab Bank provided financial services and support to terrorists during this period, facilitating the attacks that caused them grave harm. A district court imposed sanctions against the bank following repeated failures -- over several years and despite multiple discovery orders -- to produce certain documents relevant to the case.

The sanctions order is a jury instruction that would permit - but not require - the jury to infer from the bank's failure to produce the documents that the bank knowingly provided financial services to designated foreign terrorist organizations. The order also precludes the bank from introducing certain evidence related to the undisclosed materials.

Arab Bank challenged the order, arguing that the documents were covered by foreign bank secrecy laws, and that their disclosure would subject the bank to criminal prosecution and other penalties in several foreign jurisdictions.

Last week, the Second Circuit announced that the sanctions against the bank would stand for now, according to Thomson Reuters News & Insight. In its ruling, the appellate court refused to address Arab Bank's claims through an interlocutory appeal or writ of mandamus, which means the jury in the case -- and the other lawsuits -- can consider the missing documents in their verdicts.

The matter will probably pop up in the Second Circuit again: The court could consider the matter once the jury hands down a verdict.

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