High Court Takes Up Case Over Whether State-Owned Bank Is Immune From Sanctions Evasion Charges

The U.S. Supreme Court in an Oct. 3 order took up a case over whether the government can indict a foreign state-owned bank under the Foreign Sovereign Immunities Act. Turkey's state-owned bank, Halkbank, was charged in October 2019 with fraud, money laundering and conspiracy to violate the International Emergency Economic Powers Act after allegedly working with Iran to evade U.S. sanctions. The case was brought to a New York district court, where a judge allowed the prosecution to proceed, finding that the FSIA doesn't extend to criminal cases and that if it did, its commercial activity exemptions allow for prosecution of the case (Turkiye Halk Bankasi A.S. v. U.S., #21-1450).

The U.S. Court of Appeals for the 2nd Circuit upheld the ruling, finding it had the jurisdiction to hear the case (see 2110260042). The appellate court said the New York district court properly decided the matter. However, the three-judge panel stopped short of answering whether the FSIA universally confers immunity on foreign sovereigns in a criminal context. Like the district court, the 2nd Circuit said that even if the FSIA gave Halkbank immunity, the bank qualified for the commercial activity exceptions to immunity because its sanctions evasion scheme happened in the U.S.