Experience

National Westminster Bank Wins Summary Judgment in Anti-Terrorism Act Lawsuit

May 07, 2013

Cleary Gottlieb won summary judgment for its client National Westminster Bank resulting in the dismissal of two lawsuits against the bank under the Anti-Terrorism Act by over 200 plaintiffs who are victims of terrorist attacks in Israel between 2002 and 2005 that have been attributed to Hamas. The Anti-Terrorism Act provides U.S. citizens who are injured by a terrorist attack with a civil damages claim against the attack’s perpetrators and any other person or entity who provided material support or financing for the attack. In their lawsuits against NatWest, the plaintiffs allege that the bank provided material support for the attacks by which they were injured as the result of the routine banking services that the bank provided to a London-based charity, named Interpal, which states it provides humanitarian support for the population in the Palestinian Territories, but which the United States and Israel have accused of raising money to fund Hamas terrorism. UK authorities have conducted several investigations of Interpal, and have declined to sanction it under UK law, and therefore it continues to operate today as a lawfully registered charity.

After seven years of fact and expert discovery, NatWest moved for summary judgment on the ground that plaintiffs could not prove three elements of their claims – that NatWest knew or deliberately disregarded that Interpal was funding Hamas terrorism, that the routine banking services NatWest had provided to Interpal proximately caused the attacks by which the plaintiffs claim to have been injured, and that Hamas perpetrated the attacks at issue.

U.S. District Judge Dora Irizarry granted NatWest summary judgment, agreeing with NatWest that the plaintiffs could not prove that NatWest knew or deliberately disregarded that Interpal was funding Hamas terrorism, thus mooting the other grounds for dismissing the plaintiffs’ claims. The court concluded that, contrary to the plaintiffs’ allegations, NatWest was diligent in monitoring Interpal’s account, it repeatedly reported its suspicions about Interpal to UK law enforcement authorities and the Bank of England, and it was assured by the authorities that they had no plans to charge Interpal with any wrongdoing, and therefore NatWest could continue to provide banking services to it.

The plaintiffs have appealed the District Court’s dismissal order to the Second Circuit Court of Appeals.

The firm is also representing Crédit Lyonnais in parallel lawsuits by the same plaintiffs and arising from the same terrorist attacks. Those lawsuits arise from the routine banking services that Crédit Lyonnais provided to a Paris-based Palestinian charity. Judge Irizarry recently denied Crédit Lyonnais’s summary judgment motion, and the parties expect these lawsuits will soon be scheduled for trial.

These lawsuits have generated substantial interest among international banking regulators and banks, because they are likely to yield precedents that will define the scope of banks’ obligations to investigate suspicions concerning possible customer misconduct and their responsibility for that misconduct.