Crédit Lyonnais and NatWest Secure Second Circuit Win in Billion-Dollar Anti-Terrorism Act Litigation

April 7, 2021

Cleary Gottlieb represented National Westminster Bank plc (NatWest) and Crédit Lyonnais S.A. (Crédit Lyonnais) in bringing to an end 16 years of hard-fought, billion-dollar litigation under the U.S. Anti-Terrorism Act and Justice Against Sponsors of Terrorism Act by winning the affirmance in the U.S. Court of Appeals for the Second Circuit of the district court’s summary judgment rulings in favor of NatWest and Crédit Lyonnais.

The Second Circuit affirmed 2019 summary judgment rulings dismissing all claims asserted against NatWest and Crédit Lyonnais brought by more than 200 victims of terror attacks in Israel and the Palestinian Territories between 2001 and 2004. These plaintiffs accused NatWest and Crédit Lyonnais under the U.S. Anti-Terrorism Act of lending material support for the attacks, which plaintiffs allege were perpetrated by the terrorist group Hamas, by providing routine banking services to two Palestinian charitable organizations in London and Paris, respectively. The U.S. government accused those charities of funding Hamas in 2003, but they were cleared of those accusations in their home jurisdictions after repeated inquiries by the U.K. and French governments.

The lawsuits against NatWest and Crédit Lyonnais were filed beginning in 2005, and plaintiffs were expected to seek more than $1 billion in damages (including automatic treble damages as provided in the Anti-Terrorism Act). After years of discovery around the globe and four rounds of dispositive motions, then-Chief Judge Dora Irizarry of the U.S. District Court for the Eastern District of New York concluded that plaintiffs had not presented any evidence on which a reasonable jury could conclude that either NatWest or Crédit Lyonnais had engaged in violent acts or acts dangerous to human life, or with terroristic intent, which are requirements for civil liability under the Anti-Terrorism Act, or that plaintiffs could satisfy the requirements for aiding and abetting liability under the Justice Against Sponsors of Terrorism Act (JASTA), including the requirement that the banks be generally aware that they were substantially assisting acts of terrorism.

A panel of the Second Circuit, in an opinion by Judge Amalya Kearse, unanimously affirmed. The Second Circuit ruled that there was no evidence in the extensive record of these cases to support a finding that the banks themselves knowingly played any role in terrorist activity or harbored any apparent terroristic intent. On the contrary, relying on key admissions Cleary obtained in expert discovery and during summary judgment briefing, the court noted that it was undisputed that the financial services NatWest and Crédit Lyonnais provided to their customers, including wire transfers, were for express charitable purposes, such as funding schools and hospitals. The court rejected plaintiffs’ attempt to expand the scope of liability under the Anti-Terrorism Act and JASTA and reaffirmed that those statutes do not reach routine banking services, even when a bank’s customer is suspected of engaging in terror financing.