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Saturday, July 13, 2024 | Back issues
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Terror Victims Get a Leg Up in Arab Bank Trial

MANHATTAN (CN) - The 2nd Circuit upheld an instruction that said jurors could consider whether a bank's missing records meant it knowingly supported terrorism.

In 2005, thousands of victims of the Second Intifada and their families sued Arab Bank in the Eastern District of New York.

The federal complaint alleged that Arab Bank aided Hamas and U.S.-designated terrorist groups, and that it funneled Saudi money to Palestinian families who could produce "martyr certificates" signifying involvement in suicide attacks.

The court consolidated 10 similar lawsuits that sprang up during this period.

After turning over hundreds of thousands of pages for discovery, the bank told the court that it had no power to turn over another portion of requested documents under Jordanian, Lebanese and Palestinian secrecy laws.

U.S. District Judge Nina Gershon sanctioned Arab Bank in 2010 by crafting an instruction that let jurors consider the company's failure to produce these records as evidence that it knowingly funded terrorism.

A three-judge appellate panel affirmed last week, noting first that "wide-ranging and weighty" issues were at stake.

"They include plaintiffs' and the United States' interests in seeking redress for and deterring acts of international terrorism; the bank's interests in avoiding substantial damages and the stigma of being labeled a supporter of terror; and foreign jurisdictions' interests in enforcing their bank privacy laws," Judge Susan Carney wrote for the panel.

Carney added that she and her colleagues lacked jurisdiction to consider many of these weighty issues.

The only Supreme Court precedent here, Cunningham v. Hamilton County, bars the immediate appeal of monetary sanctions, according to the opinion.

Arab Bank had also sought alternative emergency relief by filing for a writ of mandamus, arguing that this measure was necessary because the jury instruction would offend due process and upset international relations.

"Raising the specter of a 'show trial' and positing the inevitable determination of liability, Arab Bank suggests that imposing these sanctions is tantamount to entering a default judgment against the bank," Carney wrote.

But the panel rejected these "calls of alarm" by noting that the instruction allows, but does not force, the jury to infer culpability. Arab Bank can still emphasize the other disclosures it made, according to the ruling.

While the bank argued that the sanction would trample on other countries' secrecy laws, the judges argued that those countries also have an interest in combating terrorism.

The panel invited Arab Bank to appeal again after its trial ends.

"Our conclusion today should not be read... to preclude a future court from holding that the district court erred in imposing the sanctions," Carney wrote. "Because the writ of mandamus is such an extraordinary remedy, our analysis of whether the petitioning party has a 'clear and indisputable' right to the writ is necessarily more deferential to the district court than our review on direct appeal."

Arab Bank had argued that such an appeal would come too late because it would be tarred as a "terrorist sympathizer," but the circuit considered this conclusion premature.

"The sanctions order notwithstanding, it is at this point hardly certain that, after trial, the jury will find against Arab Bank," the order states.

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