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High Court Dismisses Arab Bank Case With Sledgehammer

By George Khoury, Esq. | Last updated on

A decision handed down by the conservative majority of the High Court this week was criticized by Justice Sotomayor as using "a sledgehammer to crack a nut."

Notably, the case involved claims under the Alien Tort Statute seeking to hold Arab Bank, a corporation located in Jordan (with a branch in New York), liable for deaths and injuries caused by terrorist acts committed abroad. The majority affirmed the holding of the lower courts that a foreign corporation cannot be held liable under the ATS if all the conduct occurred abroad, and went a step further, ruling that foreign corps can't be sued at all under the ATS.

Foreign Corporation Cooperation

While the lawsuit alleged that Arab Bank was involved in financial transactions related to terrorism, the majority didn't see anything more than a "relatively minor connection" between the attacks and activity in the United States. As reported by Reuters, the court filings contain documents stating Arab Bank is actually a partner in fighting against terrorism.

Regardless, it seems the majority was reluctant to take action as it believed foreign policy was too heavily implicated, thereby forcing Congress to act as if liability under ATS is to be extended. As noted in the opinion, the case has caused "considerable diplomatic tensions" with a "critical ally" that is offended by the litigation.

Curiously, the Alien Tort Statute came to be in 1789 and states:

The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States.

Apparently, any civil action no longer applies to civil actions against corporations.

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