Supreme Court says Turkey-owned Halkbank not immune from prosecution for Iran sanctions violations

The Supreme Court ruled Wednesday that Halkbank, which is owned by the government of Turkey, is not immune from prosecution in New York federal court for allegedly violating U.S. economic sanctions on Iran.

The court rejected arguments by Halkbank that it was immune from prosecution in U.S. courts because of the Foreign Sovereign Immunities Act of 1976, and that the federal criminal statute does not allow for prosecutions of instrumentalities of foreign states such as the bank.

"On Halkbank's view, a purely commercial business that is directly and majority-owned by a foreign state could engage in criminal conduct affecting U. S. citizens and threatening U. S. national security while facing no criminal accountability at all in U. S. courts," Justice Brett Kavanaugh wrote in the majority opinion, in which he was joined by six other justices.

"Nothing in the FSIA supports that result," Kavanaugh wrote.

However, the Supreme Court told the U.S. 2nd Circuit Court of Appeals to reconsider a request by Halkbank to toss out the prosecution based on an argument of common-law immunity.

The Supreme Court previously has recognized that a civil lawsuit not governed by the FSIA law may still barred under by foreign sovereign immunity under so-called common law. The U.S. government has argued that bar would not apply to a criminal prosecution of a commercial entity such as Halkbank.

Justice Neil Gorsuch filed a separate opinion that concurred in part with the majority but also dissented in part. Justice Samuel Alito joined Gorsuch in his opinion.

Halkbank was indicted in 2019 by a grand jury in Manhattan federal court for allegedly conspiring for years to evade U.S. economic sanctions imposed on Iran by laundering billions of dollars of Iranian oil and gas money.

Halkbank did not immediately respond to a request for comment.

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