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Cyrus Dugger

Civil Liability is Crucial in the War on Terrorism: A Response to the Wall Street Journal.

The following blog post on the Counterterrorism Blog is a resounding rebuttal to Ted Frank's recent op-ed "Follow the Money," in which he argues that it should be made harder to find third party institutions liable in connection with terrorist attacks.

Civil Liability is Crucial in the War on Terrorism: A Response to the Wall Street Journal.
By Victor Comras


Ted Frank’s provocative Op-ed in Friday’s Wall Street Journal questions the rationale for allowing victims of terrorism to hold third-party institutions potentially liable for their own contributory actions. He wants Congress to enact new restrictions on attorneys and on the judicial system to lessen the risk that banks and other financial institutions might run if they provide financial and other services to those associated with terrorism. “Plaintiffs' attorneys,” he writes, “are weaving creative legal theories to hold legitimate third parties liable for the intentional acts of terrorists. This friendly fire could end up doing almost as much financial damage as the terrorists themselves, with the lawyers getting rich in the process.” But his conclusions are based on false premises and on his prejudging the facts and outcome of cases yet to be litigated. His proscription that civil lawyers stay clear of the war on terrorism, and leave it to criminal prosecutors and regulators may sound good; but it would truly constitute a major setback to holding terrorists, and those that finance and support them, accountable.

The fact is that most major terrorism’s financial abettors and supporters, whether for al Qaeda, Hamas, Hizbollah or other terrorist entities, have successfully avoided criminal prosecution. Witness Youssef Nada, Ahmed Nasreddin, Wael Hamza Julaidan, and Yasin Al Qadi, to name only a few internationally designated terrorism financiers. The record on closing down entities and institutions feeding terrorism is even more dismal. The failure of the international community to come to terms with a universal definition of terrorism shouldn’t provide an excuse, as it seems to be doing, for institutions here or abroad to do business with known terrorist groups. Yet, it is still business as usual in many countries with at least some of these terrorist groups. The fact that civil liability cases in US courts may now be able to reach out beyond our borders to individuals and entities associated with terrorism may constitute the best constraints we have against their activities and our best chances to hold them accountable.

Mr. Frank’s op-ed is keyed to recent Federal District Court decisions denying motions to dismiss lawsuits against NatWest and Credit Lyonnais. Those suits allege that both institutions provided banking services for charities and other entities known to fund Hamas. He also cites in justification of his thesis an earlier case involving the 1993 World Trade Center bombing. He derides NY Supreme Court Justice Nicholas Figueroa's instructions in that case which he characterizes as persuading the jury” …that the terrorists who planted a truck bomb in the World Trade Center garage in 1993 were only 32% responsible, while the Port Authority of New York and New Jersey was 68% responsible.” That statement is really off the mark given that the allegations against the Port Authority in that case dealt with their alleged negligence and not any complicity with terrorism.

Senior Federal District Court Judge Charles Sifton’s legal opinion and order in the NatWest case (mirrored subsequently in the Credit Lyonnais case) was solidly grounded on common law rules of procedure and tort law, and on US Anti-Terrorism legislation which provides civil remedies, including treble damages, for the victims of terrorism. The key questions for liability in these cases, the Judge held, was whether plaintiffs could ultimately show that the banks knowingly provided material support or resources to, or for the benefit of, a foreign terrorist organization (FTO) and/or whether they knowingly collected or provided funds to or for the benefit of an FTO. This preliminary ruling means only that plaintiffs will be allowed to present facts to the judge and jury on these points. But, Mr. Frank seems to view even this preliminary ruling as “baseless.” And he suggests that it’s a sign that the courts are now acting irresponsibly in carrying out their mandate under the Anti-terrorism legislation. It leads him to conclude that “Congress should amend {these laws} to make clear that civil liability is limited to those who commit criminal acts of international terrorism, and those who aid and abet with specific intent to commit terror.” This would equate the standard for civil cases to that for criminal conviction. And just how does Mr. Frank think that any civil lawyer could handle that subjective burden which has already defeated so many legitimate criminal prosecutions?

Mr. Frank also has problems with Judge Sifton’s rejection of NatWest’s contention that they are protected here by international comity. He buys-in completely to NatWest’s argument that since the accounts and transactions were both outside of the United States they should be governed exclusively by local rules in the banks home jurisdiction. In other words let’s leave it completely to foreign governments to set their own standards here on who is a terrorist and who isn’t. But, as Judge Sifton recognized, such an approach would give institutions around the world free passes to fund terrorist groups so long as their own governments had not designated the groups for what they are. Imagine leaving such a determination to the likes of Iran, Syria and other terrorism supporting countries. Judge Sifton’s reasoned that “Although British Law does not require that NatWest cease to provide banking services to Interpal {a British Charity linked with funding Hamas} or that it cease transactions with HLF, Al-Aqsa, the Jenin Committee and the Tulkarem Committee, it also does not mandate that NatWest {which also has a presence, and does business in the United States} continue providing such services. Accordingly, NatWest is free, and, indeed, obligated, to follow the more stringent American law. Principles of international comity do not demand otherwise.”

And, by the way, what does Mr. Frank think about British Courts and British libel laws being used to silence American and other investigative reporters and writers that are digging into terrorism and terrorism financing. Perhaps that should be the subject of another Wall Street Journal op-ed.

(link)

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Posted at 1:36 PM, Nov 01, 2006 in
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Comments

I'll split the difference and say I think they both get it partly wrong, partly right.


Victor says:
The fact that civil liability cases in US courts may now be able to reach out beyond our borders to individuals and entities associated with terrorism may constitute the best constraints we have against their activities and our best chances to hold them accountable.


I have a real problem with what I see as a suggestion that the civil justice system be used as a tool to fight crime where traditional crime-fighting methods prove unsatisfactory. The civil justice system should not be used as an end-run around due process.


While I'm sympathetic to Ted's notion that
The banking system will grind to a halt if a bank must scrutinize every customer to the degree plaintiffs argue should have been done for CBSP and Interpal--a degree of scrutiny greater than their own home countries have established.
I don't agree that
Congress should amend them to make clear that civil liability is limited to those who commit criminal acts of international terrorism, and those who aid and abet with specific intent to commit terror.
Here I agree with Victor that
This would equate the standard for civil cases to that for criminal conviction.
This case, as I understand it anyway, is not about whether or not the bank conspired with criminal organizations, but whether or not they failed in their duty to ensure that their clients were not engaged in and using their services to further illegal activities.


After a quick (albeit incomplete) scan of Judge Sifton's decision, my immediate impression is that there seem to be some questions that probably need to be sorted out by a court, and that letting the case proceed is not a death-knell for the global economy.


I do think that we should tread carefully in how we define "material support" to terrorists. I was particularly troubled by the repeated mention in the decision of acts such as
These entities are also said to assist with the provision of housing subsides to the families of suicide bombers when their homes are demolished by the Israeli army after the bomber’s identity has been confirmed.
HAMAS, by all accounts, is engaged in terrorist activity. But rebuilding homes of the family members of criminals is not the same as aiding a criminal. Neither should we hold banks responsible for the acts of their clients. After all, we in the US consider punishing people other than the responsible party to be inherently unjust. That's not to say that the banks and the family members don't have duties that they should be expected to uphold, but that's a different question.


If NatWest showed due diligence in determining whether or not their clients were involved in illegal activity, they should not be liable. If they were negligent in that duty, they should.

Posted by: Seth | November 1, 2006 4:12 PM