Halkbank, whose trial process continues as a defendant in the Riza Sarraf case heard in the Federal Court of the Southern District of New York, appealed the decision of the Second District Court of Appeal on October 22, which rejected its application on the grounds that it cannot be tried in the USA on the grounds that it is a public bank belonging to the Republic of Turkey. In simpler words, the appeals court rejected Halkbank’s opinion that the law on sovereign immunity applies to state-owned commercial entities.
According to the news of Can Kamiloğlu from VoA Türkçe, Halkbank, in the petition submitted to the court through its lawyers in the USA, requested a new hearing and a retrial, with the participation of the entire prosecutor’s office and the court panel. In the indictment announced in October 2019, Halkbank, which was added as a defendant in the Sarraf case, argued that it could not be tried in the USA under the Foreign Sovereign Immunity Act (FSIA).
After Halkbank’s application to the US Constitutional Court was rejected, it was sent to the Second District Court of Appeal to evaluate and decide whether it could be tried in America according to common law.
In Halkbank’s final petition of objection, consisting of 67 pages, submitted to the court, it was argued that the decision of the court panel was a “clear legal error” and “contrary to the decisions taken by the executive body”. It was also claimed that the court panel misinterpreted the customary law and that this decision was a clear interference with the authority of the executive.
It is not clear how the case proceeds from here on, but the stakes for Turkey are huge. While Halkbank disclosed that it convicted it will be liable for damages of $1 bn or less, some experts put the figure at $8-10 bn, which would bankrupt the bank. Additionally, other Turkish banks which were implicated in Reza Zarrab’s money laundering scheme may be brought to justice, and/or stricter regulatory scrutiny may be applied to all Turkish commercial banks operating in the US jurisdiction.
Under Trump’s first term, Erdogan personally appealed to the president to make the case go away to no avail. It stands to reason that one of the main topics of conversation between Ankara and the new White House will be the Halkbank mess.
For a detailed legal opinion on the case, click the link here