​​In a recent decision, the Second Circuit Court of Appeals affirmed the dismissal of foreign terror victims claims against Arab Bank, PLC.   The central issue involves the use of the Alien Tort Statute, a 200-year-old United States statute, to assert claims against the bank.  The plaintiffs – most of whom are Israeli - allege that the bank aided and abetted terror attacks by maintaining bank accounts and arranging financing for the terrorist organizations primarily responsible for the attacks.   

In certain circumstances, the Alien Tort Statute allows foreign plaintiffs to bring tort claims in federal court.  In 2010, in a different matter, Kiobel v. Royal Dutch Petroleum (2d Cir. 2010) (“Kiobel I“), a panel from the Second Circuit held that the Alien Tort Statute does not provide "corporate liability" and therefore claims against corporations must be dismissed.  However, since then, other federal courts have disagreed with the Second Circuit and held that corporate liability is available under the statute.  Although the Supreme Court has not directly addressed issue, it implicitly disagreed with the Second Circuit in Kiobel I by affirming the decision on other grounds. See Kiobel v. Royal Dutch Petroleum (S. Ct. 2013) (“Kiobel II“).    

In the Second Circuit's latest decision, although affirming the dismissal of the plaintiffs’ claims, the Second Circuit recognized that its earlier decision in Kiobel I may be on shaky ground in light of the "growing consensus among our sister circuits” that corporations are proper defendants in Alien Tort Statute cases. Nevertheless, the Court was unwilling to rule in favor of the plaintiffs because of the prior panel's decision in Kiobel I.   They stated“We think that one panel’s overruling of the holding of a case decided by a previous panel is perilous,” and “[we] will leave it to either an en banc sitting of this Court or an eventual Supreme Court review to overrule Kiobel I if, indeed, it is no longer viable.”         

In raising the issue of further review en banc, i.e., by the entire Second Circuit, the Court appeared to be indicating that the Second Circuit may join its sister courts in allowing claims to proceed against corporate defendants.  If the Second Circuit law is modified, New York will likely become the preferred jurisdiction for such claims in light of its centrality as a business venue for international financial institutions and corporations.