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United States v. Turkiye Halk Bankasi A.S.

United States v. Turkiye Halk Bankasi A.S.

United States Court of Appeals for the Second Circuit

April 12, 2021, Argued; October 22, 2021, Decided

No. 20-3499-cr

Opinion

 [*340]  José A. Cabranes, Circuit Judge:

This case presents two questions. First, whether a denial of a motion to dismiss a criminal indictment based on the Foreign Sovereign Immunities Act ("FSIA") is immediately appealable under the collateral order doctrine. Second, whether FSIA confers immunity on foreign sovereigns from criminal prosecutions. We answer the first question in the affirmative. As to the second, we hold that even if we were to assume that FSIA confers immunity in the criminal context, the offense conduct with which Defendant-Appellant Turkiye Halk Bankasi A.S. ("Halkbank") is charged would fall under the commercial activity exception to FSIA. Accordingly, we DENY the Government's motion to dismiss this appeal, and we AFFIRM the Decision and Order of the United States District Court for the Southern District of New York (Richard M. Berman, Judge).

 [*341]  I. BACKGROUND

Halkbank is a commercial bank that is majority-owned by the Government of Turkey.

In 2019 a grand jury returned a Superseding Indictment [**3]  (the "Indictment") charging Halkbank with participating in a multi-year scheme to launder billions of dollars' worth of Iranian oil and natural gas proceeds in violation of U.S. sanctions against the Government of Iran and Iranian entities and persons. The oil and natural gas proceeds were held in Halkbank accounts on behalf of the Central Bank of Iran ("CBI"), the National Iranian Oil Company ("NIOC"), and the National Iranian Gas Company ("NIGC").1

The Indictment alleged that Halkbank knowingly facilitated certain types of illegal transactions, including: (1) "allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold for the benefit of the Government of Iran"; (2) "allowing the proceeds of sales of Iranian oil and gas deposited at Halkbank to be used to buy gold that was not exported to Iran";2 and (3) "facilitating transactions fraudulently designed to appear to be purchases of food and medicine by Iranian customers, in order to appear to fall within the so-called 'humanitarian exception'3 to certain sanctions against  [*342]  the Government of Iran, when in fact no purchases of food or medicine actually occurred."4

Through the charged scheme, Halkbank allegedly transferred approximately $20 billion of otherwise restricted Iranian funds in order to create a "pool of Iranian oil funds . . . held in the names of front companies, which concealed the funds' Iranian nexus."5 These funds were then used to make international payments on behalf of the Government of Iran and Iranian banks, including at least $1 billion in dollar-denominated transfers that passed through the U.S. financial system in violation of U.S. law.

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16 F.4th 336 *; 2021 U.S. App. LEXIS 31806 **

UNITED STATES OF AMERICA, Appellee, v. TURKIYE HALK BANKASI A.S., AKA HALKBANK, Defendant-Appellant, REZA ZARRAB, AKA RIZA SARRAF, CAMELIA JAMSHIDY, AKA KAMELIA JAMSHIDY, HOSSEIN NAJAFZADEH, MOHAMMAD ZARRAB, AKA CAN SARRAF, AKA KARTALMSD, MEHMET HAKAN ATILLA, MEHMET ZAFER CAGLAYAN, ABI, SULEYMAN ASLAN, LEVENT BALKAN, ABDULLAH HAPPANI, Defendants.

Subsequent History: US Supreme Court certiorari granted by Turkiye Halk Bankasi A.S. v. United States, 2022 U.S. LEXIS 4151 (U.S., Oct. 3, 2022)

Prior History:  [**1] Appeal from the United States District Court for the Southern District of New York.

This case presents two questions. First, whether a denial of a motion to dismiss a criminal indictment based on the Foreign Sovereign Immunities Act ("FSIA") is immediately appealable under the collateral order doctrine. Second, whether FSIA confers immunity on foreign sovereigns from criminal prosecutions. We answer the first question in the affirmative. As to the second, we hold that even if we were to assume that FSIA confers immunity in the criminal context, the offense conduct with which Defendant-Appellant Turkiye Halk Bankasi A.S. is charged would fall under the commercial activity exception to FSIA. Accordingly, we DENY the Government's motion to dismiss this appeal, and we AFFIRM the Decision and Order of the United States District Court for the Southern District of New York (Richard M. Berman, Judge).

United States v. Halkbank, 2020 U.S. Dist. LEXIS 182312, 2020 WL 5849512 (S.D.N.Y., Oct. 1, 2020)

CORE TERMS

immunity, foreign sovereign, commercial activity, sovereign immunity, foreign state, confers, district court, Indictment, courts, oil, criminal prosecution, criminal case, motion to dismiss, laundering, sovereign, qualify, foreign sovereign immunities, common law, instrumentalities, transactions, proceeds, subject matter jurisdiction, criminal context, billion, plainly, argues, collateral order doctrine, determinations, interlocutory, conspiring

Criminal Law & Procedure, Appeals, Appellate Jurisdiction, Collateral Order Doctrine, Interlocutory Appeals, Civil Procedure, International Law, Sovereign Immunity, Foreign Sovereign Immunities Act, Appellate Review of Decisions, Constitutional Law, Fundamental Rights, Criminal Process, Speedy Trial, Preliminary Proceedings, Speedy Trial, Constitutional Right, Trials, Defendant's Rights, Right to Speedy Trial, Torts, Public Entity Liability, Immunities, Sovereign Immunity, Governments, State & Territorial Governments, Claims By & Against, Standards of Review, Clearly Erroneous Review, Findings of Fact, The Judiciary, Congressional Limits, Construction & Interpretation, Exceptions, Commercial Activities, Nexus With Cause of Action, Substantial Contacts, Jurisdiction, In Personam Jurisdiction, Subject Matter Jurisdiction, Foreign & International Immunity, Waivers, Direct Effects, Expropriation