HomeMiddle EastAmid Split on Bank Case, U.S. Seeks a Middle Path

Amid Split on Bank Case, U.S. Seeks a Middle Path

WASHINGTON — Solicitor General Donald B. Verrilli Jr. faced a legal and bureaucratic dilemma this year: Obama administration officials could not agree about what he should tell the Supreme Court about a lawsuit in which American victims of terrorist attacks in Israel are suing Arab Bank, the largest financial institution in Jordan.

The plaintiffs have accused Arab Bank of providing services to terrorists responsible for the attacks. The bank asked the Supreme Court to intervene and reverse an unusual ruling that will affect a coming trial in Federal District Court in Brooklyn.

When the justices asked the administration to weigh in, the State Department pushed to side with the bank, while the Justice and Treasury Departments wanted the executive branch to stay out of the dispute. Now, in a filing to the Supreme Court, Mr. Verrilli appears to be trying to find a middle course.

Mr. Verrilli’s brief spends 14 pages arguing that lower court rulings against the bank “erred in several significant respects” and overlooked vital American foreign policy interests. Nevertheless, the brief concludes with three pages arguing that the Supreme Court should not intervene because the problems can be reviewed later if the bank loses.

“It’s very schizophrenic,” said Mark S. Werbner, the lead lawyer for the plaintiffs. “Obviously, the government is trying to have it both ways.”

The lawsuit, Arab Bank v. Linde, which was filed a decade ago, accuses Arab Bank of providing services to terrorists responsible for killing 39 Americans and injuring 102 during the second intifada. The bank contends that it did not knowingly do business with terrorists.

The crux of the dispute involves a judge’s decision to penalize the bank for refusing to turn over financial records as potential evidence. The bank said that doing so would be a crime under Lebanese, Jordanian and Palestinian Authority banking secrecy laws.

In 2010, a trial judge in Brooklyn said jurors would be instructed that they could infer that the bank “knowingly and purposefully” provided banking services to terrorists, and the bank would be barred from citing the foreign bank secrecy laws in its defense.

The bank appealed, saying that undergoing a trial under the sanctions order would be unfair and damaging. But a federal appeals court declined to intervene.

For the Obama administration, the dispute raised thorny legal and policy trade-offs involving an unusual constellation of issues, including diplomatic efforts to stabilize the Middle East, the rights of American victims of terrorism, and an otherwise unrelated effort by the United States to tear down Swiss bank secrecy laws that have long aided tax evasion.

Mr. Werbner said the plaintiffs were “pleased that at least the ultimate conclusion was that review by the Supreme Court was not warranted.” In a statement, Arab Bank focused on the first part of the brief, saying it showed that the government agreed with its arguments.

If the Supreme Court decides not to hear the appeal, the trial is scheduled to begin Aug. 11.

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(via NY Times)

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