Court of Appeals Finds Personal Jurisdiction Over Foreign Bank Based on Use of U.S. Bank Account For Alleged Transfer to Terrorist Organization

The World in U.S. Courts: Winter 2014 - Personal Jurisdiction | October.18.2013

Licci v. Lebanese Canadian Bank, SAL, U.S. Court of Appeals for the Second Circuit, Oct. 18, 2013

This litigation was brought by victims of Hezbollah rocket attacks in 2006 against Lebanese Canadian Bank (LCB), which allegedly used a U.S. bank account to transfer millions of dollars to Hezbollah, with the knowledge that it would be used to fund terrorism. The defendant bank is a Lebanese corporation with no employees or operations in the United States. It does, however, maintain a dollar-denominated account with American Express Bank in the U.S. which was alleged to be the source of the transfers.

The Court of Appeals bypassed the usual step of asking whether personal jurisdiction over LCB was proper under New York law because that issue had already been answered in the affirmative by New York state courts. Instead, the court analyzed only whether allowing personal jurisdiction comported with constitutional due process requirements, and concluded that it did. Most significantly, the court held that LCB's "selection and repeated use" of the U.S. bank account to effectuate the alleged transfers constituted "purposeful availment" of doing business in New York, and thus met the standard required by the Due Process Clause of the Constitution. It mattered that this was an affirmative choice: LCB need not have used a U.S. bank account to effectuate U.S. dollar transfers, as the bank maintained numerous U.S. dollar bank accounts around the globe which could have been used instead. However, the court of appeals was careful to delineate that "mere maintenance" of an account is not sufficient to establish personal jurisdiction. Rather, what mattered in this case was that the U.S. account was used "achieve the very wrong alleged." and was done so repeatedly and intentionally.

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