October 01, 2019 Best of ABA Sections

Your Bank May Be an International Terrorist

Elizabeth Walsh Pittman

In Owens v. BNP Paribas S.A., 235 F. Supp. 3d 85, 100 (D.D.C. 2017) (hereinafter Owens II), the court dismissed a lawsuit filed against an international bank by the victims and families affected by the 1998 U.S. embassy bombings. The dismissed complaint alleged that the bank was civilly liable for the victims’ injuries under the Anti-Terrorism Act (ATA). In dismissing this claim, the court addressed the ill-defined proximate causation requirement necessary to trigger liability under the ATA, as well as secondary liability under the ATA.

After the multinational financial services company BNP Paribas, S.A., and its affiliates (collectively, BNPP), admitted in the course of 2014 sanctions litigation to violating U.S. sanctions imposed on Sudan, the same plaintiffs filed the case of Owens II to seek civil damages from BNPP under the ATA for the bank’s involvement with Sudan in relation to the 1998 terrorist attacks. The court granted the defendant’s motion to dismiss, holding that the plaintiffs failed to state a claim upon which relief could be granted. BNPP’s arguments for the court to consider when dismissing the claim included: (1) that the plaintiffs’ arguments were premised on theories of secondary civil liability, which does not exist in the ATA; and (2) that the plaintiffs did not sufficiently plead a causal connection between the bank’s actions and the plaintiffs’ injuries. The court dismissed the plaintiffs’ secondary liability claims, holding that the ATA does not provide liability for aiding and abetting primary violators.

The court interpreted Section 2333 of the ATA as requiring three elements: “(1) injury to a U.S. national; (2) [involving] an act of international terrorism; and (3) causation.” The Owens II court held that the scienter requirement of Section 2333 and the scienter requirement for the requisite act of international terrorism both must be met in order to succeed on a primary liability claim under Section 2333. So in the case of Owens II, the plaintiffs had to show (1) that the bank had at least a reckless disregard for the nature of their actions under Section 2333, and (2) that the bank intentionally or knowingly provided material support to a terrorist organization in order to establish an “act of international terrorism” to succeed on their primary liability claim.

The court next discussed whether the ATA provides liability for aiding and abetting. While courts initially held that the ATA provided such liability, recent courts have held that there is no aiding-and-abetting liability. The court discussed recent Second and Seventh Circuit decisions, which held that the ATA cannot impose civil liability for aiding and abetting because the statute itself does not provide for it. Both courts relied heavily on a Supreme Court case that precluded liability for aiders and abettors under the federal securities laws. This decision popularized the presumption that a federal civil liability statute that is silent on aiding-and-abetting liability intends not to provide aiding-and-abetting liability.

The court then addressed the parties’ dispute regarding the causation requirement of Section 2333(a), which states that a U.S. national may sue for damages if their person or property is “injured ‘by reason of’ an act of international terrorism.” Both the plaintiffs and the defendant agreed that this “by reason of” language means that proximate cause is necessary, but the parties disagreed as to what the proximate cause requirements are. The court applied proximate cause as it is “typically defined” by requiring that the plaintiffs show that their injuries were “the natural and probable consequence of the [defendant’s acts] and ought to have been foreseen in light of the circumstances.”

To prove such causation, the plaintiffs pled the following facts: (1) BNPP became the exclusive European bank providing financial services to Sudanese banks; (2) BNPP created regional satellite banks to provide further assistance to Sudan; and (3) BNPP used these satellite banks to get around the sanctions. The court reasoned that the proposed facts could only establish that BNPP had a connection to Sudan prior to 1998 but that the plaintiffs provided no facts to show that the funds processed by BNPP were being explicitly used by Sudan to support al Qaeda.

With Owens II now on appeal, it is possible that the D.C. Circuit could reverse or remand the district court’s decision. This is due to the court’s misapplication of tort law principles to the ATA. The court inconsistently applied tort concepts to interpret the ATA’s silence regarding aiding-and-abetting liability, incorrectly assumed that strict liability could not be applied to BNPP, and mischaracterized the danger of BNPP’s activities.

First, the court dealt with statutory silence within the ATA in inconsistent ways. Despite the silence of Section 2333 regarding intent, the court held that traditional tort law imputed the requirement of reckless intent to the statute. But, when discussing how the same statute is silent regarding aiding-and-abetting liability, the court did not apply the same reasoning. Generally, tort law imparts liability for aiding and abetting. As a result, applying the spirit of tort law should have resulted in the provision of aiding-and-abetting liability being imputed to Section 2333. Rather, the court deferred to federal securities case law in declining to impose aiding-and-abetting liability.

The court also applied flawed reasoning when discussing how the tort concept of aiding and abetting cannot be applied because another tenant of tort law—strict liability—cannot be applied to the ATA. The court pointed out that there is no mention of strict liability in the ATA. Further, the court notes how strict liability cannot be applied to all activities with state sponsors of terrorism, lest the court contradicts Congress. Because Congress allows some activity to occur with state sponsors of terrorism if the entity has the appropriate permission, the court reasoned that construing strict liability for BNPP’s activities would make the actions explicitly permitted by Congress illegal. However, the funds at issue in this case were not simply funds provided to a state sponsor of terrorism; the funds were provided to a state sponsor of terrorism in knowing violation of sanctions placed on that state sponsor to deter continued terrorist support. Therefore, holding such activity as abnormally dangerous would not contradict Congress’s intention to permit certain financial activities. Further, holding such activity as abnormally dangerous would not mean that any provider of U.S. currency to a state sponsor of terrorism would be strictly liable; only that illegal or non-permitted providers of U.S. currency to a state sponsor of terrorism would be strictly liable. It is this combination of both characteristics of BNPP’s fund that should be evaluated as an “abnormally dangerous activity” for strict liability.

ABA Section of International Law

This article is an abridged and edited version of one that originally appeared on page 411 of The International Lawyer, Summer 2017/ Fall 2017 (51:2).

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Elizabeth Walsh Pittman

Elizabeth Walsh Pittman, J.D., is the former editor-in-chief of The International Lawyer at SMU Dedman School of Law.