- - Sunday, October 8, 2017

ANALYSIS/OPINION:

Navigating the shoals of foreign policy is hard at the best times, especially in the Middle East. It becomes impossible if the courts grab hold of the steering wheel. Yet that is the prospect in a case shortly being considered by the Supreme Court.

An appeal of a collection of lawsuits now in their 13th year, Jesner vs. Arab Bank raises profound questions as to whether the courts will permit the United States to have a foreign policy that is not constantly at the mercy of opportunistic lawsuits seeking to rake in millions for trial lawyers. The case also represents a major challenge to the international financial system. Because virtually every dollar-denominated electronic transaction is cleared through New York, it risks exposing international banks located outside the United States to the rapacity of the American trial bar.

Jesner revolves around a suit brought by American lawyers on behalf of 6,000 foreign citizens over injuries they or their family members suffered from terrorist atrocities committed in Israel during the Second Intifada. These attacks are to be thoroughly condemned. Yet none of the victims has any direct relationship with the United States. And Arab Bank, which is being sued, isn’t being accused of financing these outrages. The suit doesn’t even allege a link between Arab Bank and the attacks. Instead, it alleges that the bank provided banking services to some individuals who were later put on a list of prohibited persons.

Similarly, there is no meaningful link with the United States. All the relevant conduct that is alleged to have occurred took place on foreign soil. So why did this litigation ever end up in the American courts and not in Israel, where the atrocities took place? In a moment of candor, one of the lawyers acting involved let the cat out of the bag. In addition to the damage awards available in the U.S. courts, “there are also enormous punitive awards, and I am talking millions.”

The fertility of trial lawyer ingenuity never ceases to astonish. Every week, trillions of dollars in foreign payments are automatically cleared through New York. Thus U.S. jurisdiction is claimed because some of the transactions involving these individuals happened to be processed in this way. It is, of course, utterly absurd, as this would enable American lawyers to pursue any foreign bank through the U.S. courts for activities occurring entirely overseas and obtain punitive damages if a single dollar was tainted by being cleared in New York.

Arab Bank is by far and away the most important financial institution in the kingdom of Jordan. Its success is critical to the Jordanian economy in a country of great strategic significance to Western interests. No other country in the Arab world has been as steadfast an ally as Jordan. It is a model of stability and reform in a region of turbulence and instability. Jordan has worked alongside the U.S. and coalition forces in both Iraq and Afghanistan. As regards sales of military equipment, Congress has granted Jordan similar status in law as American allies including NATO and Israel.

To punish a country which stands with America and the West and has suffered from terrorism would be extraordinarily damaging. Jordan itself has suffered numerous terrorist outrages, the worst one taking place in Jordan’s capital Amman in 2005, which killed 60 people and injured 115 others. Arab Bank itself has been described as a “constructive partner” in working to prevent terrorist financing.

The suit is being brought under the Alien Tort Statute (ATS), which the first Congress passed in 1789. It was conceived as a mechanism for adjudicating incidents which, if left unremedied, would threaten international relations. Now it is being used by trial lawyers to create foreign policy tensions where there were none. Traditionally the American courts have been highly restrictive in the matters that they consider fall under the statute.

Corporations came increasingly under attack. Over 150 suits have been brought against domestic and foreign companies. Foreign countries see these suits as attacks on their foreign policy. Often they have major foreign policy implications for the United States. At various times, friends and allies of the United States such as Britain, Canada, the Netherlands and South Africa have condemned the extraterritoriality and the infringement of their sovereignty represented by these suits.

Enabling American lawyers to pick fights with foreign countries based on the capacity of their companies to fund multi-billion dollar lawsuits would be an extremely damaging and unwelcome development. Its scope would be vastly expanded if U.S. jurisdiction could be asserted on the basis of funds being cleared through New York.

There are sound reasons why governments and not the courts are responsible for the conduct of relations between countries. Attacking an ally by letting the U.S. courts be used to extract hundreds of millions of dollars from its principal financial institution would be a foreign policy blunder of the first order.

By prejudicing the interests of foreign nations, an unfavorable decision on Jesner vs. Arab Bank would go far beyond destabilizing America’s most dependable friend in the Arab world. It would damage U.S. interests too. And extending U.S. jurisdiction to every single payment cleared in New York could result in paralyzing the international banking system with endless suits being fought in the American courts. For all our sakes, let’s hope sanity prevails.

• Lord Lamont was Britain’s Chancellor of the Exchequer.

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