Bloomberg News

AmEx Transfers Didn’t Aid Hezbollah in Attacks, Court Says

March 05, 2012

American Express Bank Ltd. isn’t liable for Hezbollah rockets attacks on Israel in 2006 because of financial transactions, an appeals court ruled, affirming a lower court’s dismissal of a suit brought by families of U.S., Israeli and Canadian victims.

The federal appeals court in New York today affirmed U.S. District Judge George Daniels’s 2010 dismissal of a negligence claim against American Express. The plaintiffs “failed plausibly to allege that AmEx’s conduct was the proximate cause of the plaintiffs’ injuries,” the appeals court said.

The victims and family members alleged that New York-based American Express and Lebanese Canadian Bank helped the terrorist group attack targets in northern Israel in July and August 2006 by handling wire transfers of millions of U.S. dollars.

The appeals court said it may later review claims of personal jurisdiction against Lebanese Canadian Bank, a Beirut- based lender that merged with Societe Generale Lebanon last year. Daniels dismissed the claims saying he didn’t have jurisdiction.

The plaintiffs alleged that Lebanese Canadian Bank, which had no branches, offices or employees in the U.S., “knowingly maintained” bank accounts of alleged Hezbollah affiliates.

The appeals court said it will seek a determination from the New York Court of Appeals, the state’s highest court, on whether the plaintiffs’ claims for negligence and breach of duty can be applied to a foreign bank’s maintenance of correspondence under New York law.

U.S. High Court

The U.S. appeals court is awaiting a U.S. Supreme Court ruling in a case in which Royal Dutch Shell Plc (RDSA) argues it can’t be sued by Nigerians seeking damages from torture and murders committed by their government in the early 1990s.

The Supreme Court heard arguments in the case, Kiobel v. Shell Petroleum, on Feb. 28. A decision may be issued this year.

“Should the Supreme Court reverse our decision in Kiobel, and the Court of Appeals indicate that we have personal jurisdiction over the Lebanese Canadian Bank in this case, the Alien Tort statute claims will likely require further proceedings in the district court,” the panel of appeals judges ruled today.

“We will therefore await decision on one or both of those courts before reaching a conclusion.”

Money-Laundering Suit

The U.S. government also sued the bank for laundering money for Hezbollah in December 2011 after the U.S. Treasury Department identified the bank as a “financial institution of primary money laundering concern.” That case is pending in federal court in New York.

Marina Norville, a spokeswoman for American Express, declined to comment on the ruling, saying it was the company’s policy not to comment on litigation.

American Express “enabled, facilitated, supported and assisted Hezbollah to carry out the acts of terrorism which harmed the plaintiffs,” according to a complaint filed July 11 in New York state Supreme Court in Manhattan.

The case is Licci v. Lebanese Canadian Bank, 10-1306, 2nd U.S. Circuit Court of Appeals (New York). The U.S. Supreme Court case is Kiobel v. Royal Dutch Petroleum Co., 10-1491, U.S. Supreme Court (Washington).

To contact the reporter on this story: Patricia Hurtado in New York Supreme Court at pathurtado@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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