Court Gutters Case by Foreign Terror Victims

MANHATTAN (CN) - Months after Arab Bank settled an anti-terrorism lawsuit filed by U.S. citizens, the Second Circuit refused today to revive a different case the bank faced by foreigners whose families were maimed or killed in attacks on Israel.

Following suicide bombings on Israeli civilians between 2000 and 2004, families of the victims brought lawsuits in U.S. federal courts against Arab Bank and other institutions they accused of supporting terrorists.

The U.S. citizen victims won a verdict holding Arab Bank liable for the attacks last year, and then reached a confidential settlement with the Amman, Jordan-based bank days before the start of another trial to determine damages.

Still keeping mum on those terms, the bank contests reports that it agreed to pay the families $1 billion.

Arab Bank still faced a lawsuit in Manhattan by foreign citizens killed in those attacks, but the Second Circuit ruled Tuesday that this case fails under the Alien Tort Statute.

Though the 1789 law was briefly reanimated toward the turn of the 20th century to sue companies for overseas atrocities, the Supreme Court all but gutted the use of this statute to redress corporate wrongs committed abroad with two decisions in the case Kiobel v. Royal Dutch Petroleum.

Nigerians brought the claims underpinning Kiobel, accusing the Netherlands-based oil giant being in league with the torture of activists who threatened their bottom line. Lack of jurisdiction ultimately kept the case from ever going to trial here.

Citing that precedent, a three-judge panel of the Second Circuit found Tuesday that Arab Bank's foreign challengers are likewise without recourse in New York.

"At a time when large corporations are often among the more important actors on the world stage, and where actions and their effects frequently cross international frontiers, Kiobel I and Kiobel II may work together to prevent foreign plaintiffs from having their day in court in a far greater proportion of tort cases than Congress envisioned when, centuries ago, it passed the ATS," the 35-page opinion by Judge Robert Sack states.

Michael Elsner, an attorney for the victims, took heart in the Second Circuit's view that there appears to be a "growing consensus" that the Kiobel precedents did not entirely obliterate the possibility of corporate liability for conduct abroad.

"While we are disappointed with the recent decision, we remain convinced that a corporation may be held liable for violations of customary international law under the ATS," Elsner said in an email. "We take solace in the panel's decision that the ATS may indeed allow for corporate liability - a reading consistent with decisions of the Supreme Court and with every other circuit court which has considered the issue."

Several human rights groups urged the Second Circuit to leave this window open.

Tyler Giannini, a professor who filed one such friend-of-the-court brief for Harvard Law School's International Human Rights Clinic, did not immediately respond to a voicemail seeking comment on the ruling.

Elsner meanwhile said the plaintiffs are examining their options to appeal.

Arab Bank said it is "pleased" with the circuit's ruling, and released a statement that quotes former U.S. Solicitor General Donald Verrilli Jr. calling it a "constructive partner" in preventing terror financing.

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