World ECR | Court of Appeal: US can sue Türkiye’s Halkbank

A U.S. federal appeals court has ruled that Turkey’s state-owned Halkbank can be prosecuted for allegedly evading U.S. sanctions on Iran, rejecting the bank’s argument that it is protected by sovereign immunity.

The U.S. Court of Appeals for the Second Circuit has ruled that Turkiye Halk Bankasi AS (“Halkbank”) is not immune from prosecution because of its “business activities,” which the court said include alleged involvement in “money laundering and other fraudulent schemes designed to evade sanctions.” U.S. sanctions.

In an opinion ruled on October 22, the court wrote that under common law, foreign state-owned enterprises do not enjoy absolute immunity in all criminal cases.

While immunity may protect foreign governments and their agencies in the performance of governmental functions, the court held that “there is no basis at common law for concluding that a foreign state-owned company is absolutely immune from prosecution … for alleged crimes related to its business activities.” Behavior.”

The case centers on what prosecutors describe as a multi-year plan to “evade and violate” U.S. sanctions. The indictment accuses Halkbank of “utilizing money services businesses and front companies” and “engaging in multiple types of illegal transactions for the benefit of Iran,” the court said.

The decision came on partial remand from the U.S. Supreme Court, which had previously ruled that the Foreign Sovereign Immunities Act did not provide immunity in criminal cases but asked lower courts to consider common-law immunity arguments.

“Because Halkbank is under prosecution in the United States for alleged criminal activity related to the business activities charged in the indictment, we respect the Executive Branch’s decision, through the U.S. Department of Justice, that Halkbank should not be granted immunity in this case.” the appeals court wrote.

It rejected Halkbank’s argument that its conduct was governmental rather than commercial, noting that the transactions “were conducted through private commercial banking channels and therefore “more closely resembled private commercial conduct than public or political conduct.”

The ruling sends the case back to district court for further proceedings. Halkbank faces charges including bank fraud, money laundering and conspiracy to violate U.S. sanctions on Iran. The bank was first sued in 2019.