The Supreme Court ruled Wednesday that a 1976 federal law does not shield a Turkish bank from facing criminal charges over its alleged role in helping Iran evade sanctions.
The justices said the Foreign Sovereign Immunities Act addresses civil liability but does not govern criminal investigation and prosecution.
The largely unanimous ruling means the federal government’s prosecution against Halkbank can proceed — though there are remaining questions as to whether the bank can seek immunity through other legal arguments.
Halkbank had said that because it is largely owned by the Turkish government, it enjoys sovereign immunity from all prosecution under the 1976 law.
“FSIA is silent as to criminal matters,” Justice Brett M. Kavanaugh wrote for the court. “The Act says not a word about criminal proceedings against foreign states or their instrumentalities. If Halkbank were correct that the FSIA immunizes foreign states and their instrumentalities from criminal prosecution, the subject undoubtedly would have surfaced somewhere in the Act’s text,”
The justices noted there may still be common law protections but said that’s up for the lower courts to decide at this stage of the case.
Justice Neil M. Gorsuch said that will leave lower courts with a mess to deal with: Either they defer to the executive branch on questions of immunity or they will wade through questions of customary international law and whether it is part of the U.S. common law.
“Today’s decision overcomplicates the law for no good reason,” Justice Gorsuch said in an opinion joined by Justice Samuel A. Alito Jr.
They sided with the other justices on the question of what the FSIA says, but they said the high court should have firmly declared that the case against the bank could proceed notwithstanding common law.
The federal government charged that Halkbank was used as part of a scheme to move proceeds from Iranian oil and gas sales to Dubai through Iranian-Turkish businessman Reza Zarrab in 2012, violating U.S. sanctions.
U.S. sanctions at that time required that Iranian oil and gas proceeds to be compiled by one entity and the proceeds be used by Iran only for humanitarian relief or bilateral trade.
The federal government alleges that Zarrab, with the approval of the Turkish government, used Halkbank to divert proceeds to Iranian accounts under “front companies.”
Zarrab pleaded guilty in 2017 and became a government witness. The government also convicted a few Halkbank officials, and then set its sights on the bank itself.
The district court and the circuit court sided with the government, saying it could indict the Turkish bank. The rulings prompted Halkbank to seek review before the justices.
The federal government had argued that the president, the attorney general and other federal agencies should have authority to initiate prosecution when applicable.
The case was Turkiye Halk Bankasi A. S. v. United States.
• Alex Swoyer can be reached at aswoyer@washingtontimes.com.
Please read our comment policy before commenting.