US Supreme Court rules in favour of Arab Bank in case brought by Israelis

Victims of attacks in Israel cannot use an 18th century law to sue the Arab Bank, a multinational financial institution, the US Supreme Court ruled on Tuesday in a precedent-setting case for other foreign businesses.

The decision rests on a legal provision almost 230 years old.

Plaintiffs accused the Jordan-based bank of facilitating transfers to Hamas, the ruling authority which controls the Gaza Strip but which Israel and the United States label a terrorist group.

A majority of five conservative judges on the top US court outnumbered four others who dissented.

The Arab Bank was founded in Jerusalem in 1930 when Palestine was under the British Mandate, and now has more than 600 branches worldwide.

It hailed the decision as a "historic victory" and insisted it would continue to carry out its activities in accordance with "international banking norms".

The bank plays a central role in the Palestinian territories where it works with major international development agencies.

The roughly 6,000 foreign claimants in the case included victims of militant attacks in Israel, the West Bank and Gaza, primarily during the second Intifada from 2000 to 2005.

They said the Bank contravened international laws by allowing financial transfers aimed at funding the violence to be made to accounts held by Hamas leaders.

The plaintiffs based their action on the Alien Tort Statute (ATS) of 1789, which was adopted following an altercation some five years earlier in which a French diplomat was assaulted by a French national in the US.

The statute was largely dormant for nearly 200 years before reemerging onto the legal scene. Various legal actions were begun against foreign dictators and multinational corporations implicated in cases outside US territory.

But the judges on Tuesday, worried over the risk of diplomatic tensions, refused to extend application of the ATS to multinationals with no link to the United States.

"The Court holds that foreign corporations may not be defendants in suits brought under the ATS," Justice Anthony Kennedy wrote for the majority.

He said it is up to Congress to revise the law if it sees fit. 

In a dissent, Justice Sonia Sotomayor said the majority ruling "absolves corporations from responsibility under the ATS for conscience-shocking behaviour" and human rights violations.

Agencies contributed to this report.