ABA Files Amicus Brief in support of BNYM in Terrorism Risk Insurance Act Case.
INTRODUCTION
Plaintiffs ask this Court to break with conventional methods of statutory construction and, as a result, put banks in an impossible position. Plaintiffs ask this Court to adopt a tortured construction of TRIA that, if accepted by this Court, would create significant legal and monetary risks for garnishee banks, which are mere passive stakeholders in TRIA cases. At issue is whether U.S. courts can order banks to turn over sovereign assets located in a foreign jurisdiction to satisfy U.S. judgments—without any judicial process in the foreign country. If that approach were correct under U.S. law, it would potentially require banks to transfer assets that they have no legal right to seize under the laws of the nation where those assets are held. It would also create a new low in international comity. Thankfully, Congress, in enacting TRIA, did not adopt such a disruptive rule. Instead, it provided judgment creditors of foreign sovereigns that support acts of terrorism with the right to execute on the sovereign’s or its instrumentalities’ blocked assets in the United States to satisfy such judgments. But Congress did not provide for extraterritorial application. As a result, judgment creditors are not barred from pursuing or recovering a sovereign’s blocked assets overseas, but they must first ask a foreign court to recognize their U.S. judgment before demanding that banks transfer assets held overseas. 31 C.F.R. § 594.201. That outcome respects the laws of other countries and avoids putting financial institutions in an impossible position.
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