NatWest and Crédit Lyonnais End 17-Year U.S. Anti-Terrorism Act and JASTA Litigation

Cleary Gottlieb successfully represented National Westminster Bank plc (NatWest) and Crédit Lyonnais S.A. (Crédit Lyonnais) in bringing to an end 17 years of hard-fought, billion-dollar litigation under the U.S. Anti-Terrorism Act and Justice Against Sponsors of Terrorism Act (JASTA) when the U.S. Supreme Court denied petitions for certiorari from U.S. Court of Appeals for the Second Circuit decisions affirming the district court’s grant of summary judgment in favor of NatWest and Crédit Lyonnais.

The denial brings an end to 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 the plaintiffs alleged 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 UK and French governments.

The lawsuits against NatWest and Crédit Lyonnais were filed beginning in 2005, and the 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 the 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 JASTA, including the requirement that the banks be generally aware that they were substantially assisting acts of terrorism.

In April 2021, a panel of the Second Circuit unanimously affirmed, ruling 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 the 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, when there is no evidence that those services were used to further any terrorist activities that the bank’s customer was suspected of financing.

Following the Second Circuit’s ruling, the plaintiffs filed petitions for writs of certiorari to the Supreme Court in both cases, arguing that the lower courts applied the wrong test to determine the defendant banks’ secondary civil liability, and there was a circuit split that the Supreme Court needed to address on this issue. In opposition, NatWest and Crédit Lyonnais argued that review was unwarranted because the lower courts applied the correct legal standard, and the plaintiffs were trying to manufacture a circuit split where none existed. In response to the petitions, the Supreme Court called for the views of the U.S. Solicitor General. The Solicitor General filed her brief on May 24, 2022, urging the Court to deny certiorari, largely agreeing with the arguments raised by the banks. On June 27, 2022, the Court followed that recommendation and denied certiorari, thereby bringing an end to the cases.