By Jonathan Stempel
NEW YORK (Reuters) -Victims of the September 11, 2001 attacks and the August 7, 1998 bombings of two U.S. embassies in East Africa cannot seize $3.5 billion of Afghanistan central bank assets to address the Taliban's role in the attacks, a divided federal appeals court ruled on Thursday.
The 2nd U.S. Circuit Court of Appeals in Manhattan said Da Afghanistan Bank (DAB) was shielded under the Foreign Sovereign Immunities Act (FSIA) from having to give up assets blocked at the Federal
Reserve Bank of New York, because it qualified as an agency or instrumentality of Afghanistan.
Attack victims also failed to show DAB was liable as a Taliban agency or instrumentality under the federal Terrorism Risk Insurance Act, though that law abrogated immunity that DAB had under the FSIA.
Thursday's 2-1 decision is a defeat for several groups of victims that sued many defendants including al-Qaeda over the attacks, and sought half of the $7 billion of DAB funds that U.S. President Joe Biden froze in August 2021.
Some victims sought to attach the assets, while others obtained default judgments after the defendants failed to show up in court.
Circuit Judge Jose Cabranes said that as of August 15, 2021, the day Kabul fell and the assets were blocked, there was no evidence DAB was aiding or controlled by the Taliban. Only later did the Taliban install new leadership at the bank, he said.
Lawyers for many of the plaintiffs had no immediate comment.
Circuit Judge Richard Sullivan dissented, saying the decision defeated TRIA's objective of making "any assets available" to terrorism victims.
He also said Afghanistan no longer qualified as a foreign state under the FSIA, and thus DAB funds were not covered.
Two lower court judges had ruled against the plaintiffs in 2023.
The U.S. government considers the Taliban a Specially Designated Global Terrorist. Biden ordered that the other $3.5 billion of frozen DAB funds be set aside for the Afghan people.
Nearly 3,000 people died on September 11, 2001, when planes were flown into New York's World Trade Center, the Pentagon in northern Virginia, and a Pennsylvania field.
Two hundred and twenty-four people died on August 7, 1998 when truck bombs exploded in front of the U.S. embassies in Nairobi, Kenya and Dar es Salaam, Tanzania.
The cases are Havlish et al v The Taliban, 2nd U.S. Circuit Court of Appeals, Nos. 23-258, 23-263, 23-304, 23-346 and 23-444; and Estate of Aliganga et al v Taliban in the same court, Nos. 23-354 and 23-797.
(Reporting by Jonathan Stempel in New York; Editing by Alistair Bell)
