Circuit 2 believes extending FSIA to criminal cases would not save Turkish bank from US lawsuits – Criminal Law
United States: Second Circuit believes extension of FSIA to criminal cases would not save Turkish bank from US lawsuits
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The second circuit recently tenuous that a dismissal of a motion to dismiss an indictment based on the Foreign Sovereign Immunities Act (“FSIA”) is immediately appealable under the Collateral Order doctrine, but has concluded that even if the FSIA granted immunity from criminal prosecution, that immunity would not extend to the business activities of a foreign sovereign or its instrument.
The United States has accused Halkbank, a majority owned bank by the Turkish government, of helping Iran escape US economic sanctions by laundering billions of dollars in Iranian oil and natural gas products held at Halkbank, and by allowing Iran to use these products to buy gold and convert it into cash for Iran’s benefit. The bank also allegedly tried to cover up these transactions by lying to US Treasury Department officials that the transactions involved the purchase of food and medicine by Iranian customers of the bank and therefore fell under the so-called “humanitarian exception” to the Bank. US sanctions.
Halkbank decided to dismiss the indictment arguing that the FSIA – which apparently only applies to civil cases – shields Halkbank from criminal prosecution because it is majority owned by the Turkish government. The district court disagreed and dismissed the petition. Halkbank immediately appealed, arguing that the district court’s denial of immunity was subject to interlocutory review under the collateral order doctrine. A Second Circuit panel agreed, holding that it had jurisdiction over the appeal because, just as in the civil context, a threshold determination of foreign sovereign immunity in criminal cases is immediately reviewable under the doctrine of the collateral order.
The panel, however, dodged the key question: whether the FSIA, which clearly grants immunity to foreign rulers from civil actions, also grants immunity in the criminal context. On the contrary, the panel concluded that even if foreign sovereigns and their instruments were immune from criminal prosecution under the FSIA, the many exceptions of the FSIA would still apply and, in that case, would prevent Halkbank from benefiting. of immunity. The panel explained that Halkbank’s impugned conduct would fall within the FSIA’s exception to sovereign immunity for commercial activities. According to the panel, Halkbank’s involvement in money laundering and other fraudulent schemes designed to evade US sanctions constitutes “an activity which could be, and in fact regularly is, carried out by private sector companies”, and therefore these acts are commercial, and not sovereign. , in nature.
The panel also rejected Halkbank’s argument that even though the FSIA did not grant foreign sovereign immunity in criminal cases, Halkbank was nonetheless immune from criminal prosecution under common law. The panel explained that if the FSIA in fact confers sovereign immunity in criminal matters, then it overrides any pre-existing common law immunity. And while the FSIA did not apply in the criminal context or replace the common law, foreign sovereign immunity at common law also included an exception for the commercial activity of a foreign state, similar to the exception of commercial activity of the FSIA. The panel thus upheld the district court order dismissing Halkbank’s motion to dismiss the indictment.
Circuit 2 believes extending FSIA to criminal cases would not save Turkish bank from US lawsuits
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