US Supreme Court overturns lower court ruling on Halkbank

WASHINGTON

The U.S. Supreme Court has given Türkiye’s state-owned lender Halkbank another chance to avoid criminal charges in the United States for allegedly helping Iran evade American economic sanctions, but rejected a key defense mounted by the bank.

The justices in a 7-2 decision threw out a lower court’s ruling that had let the prosecution proceed. The court’s majority ordered the Manhattan-based 2nd U.S. Circuit Court of Appeals to reconsider Halkbank’s effort to dismiss the case, but ruled out the bank’s contention that was is protected under a 1976 U.S. law called the Foreign Sovereign Immunities Act (FSIA).

Halkbank, an entity owned by the Turkish state, was charged in New York in 2019 and has pleaded not guilty to bank fraud, money laundering and conspiracy charges over its alleged use of money servicers and front companies in Iran, Türkiye and the United Arab Emirates to evade U.S. sanctions.

The Supreme Court rejected the bank’s view that it has immunity under the Foreign Sovereign Immunities Act, which limits the jurisdiction of American courts over lawsuits against foreign countries.

“We disagree because the Act does not provide foreign states and their instrumentalities with immunity from criminal proceedings,” wrote conservative Justice Brett Kavanaugh, who authored the ruling for the court’s majority.

The majority, however, found that the 2nd Circuit did not fully consider whether the bank has immunity under “common law” principles.

Justice Neil Gorsuch, in a dissent joined by fellow conservative Justice Samuel Alito, said the Foreign Sovereign Immunities Act does apply but that the bank’s prosecution would still be allowed to proceed under the law’s exceptions for commercial activity in or affecting the United States.

April 19’s decision, Gorsuch wrote, “overcomplicates the law for no good reason.”

Gorsuch said that lower courts do not have guidance on how to resolve immunity disputes using the common law, including whether to apply norms of international law, which he said supply “no easy answer.”