Might Jurisdiction Defense By King & Spalding In Turkey’s Halkbank Case Be Instructive For Libertad Act Lawsuits? Exxon Mobil?

From Halkbank: “Although initially the Bank had been planned to be privatized through a block sale under the resolution of the Privatization High Council in 2006, the government surprisingly cancelled the initial plan and decided to privatize 25% of the shares through an IPO in early 2007. As of 10 May 2007, 24.98% of the shares of the Bank have been sold through a very successful public offering and the shares have been listed in Istanbul Stock Exchange. Halkbank’s IPO represents the largest one that ever occurred in the Turkish capital markets. Halkbank is now celebrating its 70th anniversary of its establishment.”

Reuters- 6 December 2019 

Turkey’s majority state-owned Halkbank said on Friday that it will use all its legal rights to challenge a U.S. Federal Court ruling that it must enter a formal plea to charges that it helped Iran evade sanctions.  Halkbank said in a statement it requests the right to defend its position that the U.S. court lacks jurisdiction over the claims made on the bank as Halkbank does not have any branch or physical operation in the United States.  On Thursday, a U.S. judge ruled that Halkbank must enter a formal plea to charges that it helped Iran evade sanctions before it can challenge a U.S. court’s ability to hear the case.  

Ahval News- 6 December 2019 

A judge in New York on Thursday rejected an appeal by litigators from law firm King & Spalding to enter a special appearance on behalf of Halkbank in a money laundering and sanctions evasion case filed against it. 

U.S. Federal Judge Richard Berman once again rejected King & Spalding partner Andrew Hruska’s request to make a special appearance for the bank after he rejected the same appeal in early November.  “The court denies Halkbank’s request to enter a ‘special appearance,’” Berman said. 

Despite his rejection, Berman allowed Hruska to further make its argument by a brief. King & Spalding on Monday said Turkey’s state-owned Halkbank could not be labelled as a fugitive for failing to appear at a Manhattan court to enter a plea against criminal charges since corporations cannot be fugitives. 

“Congress has explicitly authorized the applicability of the fugitive disentitlement doctrine to corporations,” Berman wrote in response to law firm's position.  However, Berman found it irrelevant to label Halkbank a fugitive. And, he has left the bank with the choice of appearing in court for arraignment or face the risk of contempt of court.  “If the court were to reach this issue, it would almost certainly conclude that the fugitive disentitlement doctrine applies and that the doctrine’s principles would render Halkbank a fugitive,” Berman said. 

U.S. Attorney Michael D. Lockard on Oct 22. said that Halkbank was a fugitive from the charges and is in contempt after providing no representation at the proceedings against the bank.  "The judge did not yet resolve a pending motion from prosecutors to schedule a contempt hearing for Halkbank, whose King & Spalding attorney Andrew Hruska did not immediately respond to an email requesting comment," U.S. Courthouse News Service journalist Adam Klasfeld said. 

In a footnote of the ruling, Berman rattled off the top-level Turkish officials engaged in this blitz to prevent the controversy from reigniting in U.S. courts.  “This remarkable campaign involved, among others, Turkish President Recep Tayyip Erdoğan; Turkish Justice Minister Bekir Bozdag; former Turkish Deputy Prime Minister Mehmet Şimşek; Berat Albayrak, President Erdogan’s son-in-law and Turkish Minister of Finance; and Turkish Minister of Foreign Affairs Mevlut Cavusoglu,” the footnotes states. 

“Rudolph W. Giuliani, former New York City mayor and former United States attorney for the Southern District of New York, and Michael B. Mukasey, former United States attorney general & former chief district judge of the Southern District of New York, participated on behalf of defendant Reza Zarrab,” the footnotes continues. 

bne IntelliNews- 5 December 2019  

Turkey’s state-owned Halkbank must enter a formal plea to charges that it assisted Iran in evading sanctions before it can challenge a US court’s ability to hear the case, a New York judge ruled on December 5. 

“If Halkbank wishes the district court to decide its jurisdictional motion, this international bank holds the key to unlock its dilemma: travel to New York and answer the charges or have its legal counsel do so,” US District Judge Richard Berman wrote in his ruling, Reuters reported. Halkbank would not give up its right to challenge the court’s jurisdiction by appearing and entering a plea, the judge added. 

Prosecutors of the Southern District of New York (SDNY) filed the indictment on October 16, at a time when tensions between the US and Turkey were high as the latter was launching a military incursion in northeast Syria. Turkish President Recep Tayyip Erdogan, who has been implicated in the case but denies any wrongdoing, called the indictment an “unlawful, ugly” step.  Halkbank has to date refused to make a formal appearance in the case, causing prosecutors to describe it as “fugitive”. 

“We disagree with the district court’s decision denying Halkbank’s motion for a special appearance, which would have allowed the Bank to challenge the court’s jurisdiction without waiving its rights,” Ana Buling, a lawyer for Halkbank, said in an emailed statement cited by Reuters. “We will carefully review the ruling with our client and consider our legal options.” 

Prosecutors have alleged that Halkbank and its executives conspired between 2012 and 2016 to help Iran spend oil and gas sales revenues abroad using sham food and gold transactions, in violation of US sanctions. Turkish-Iranian gold trader Reza Zarrab, who turned state’s witness, and Turkish officials aided the effort, prosecutors said. 

Judge Berman presided over the trial of Mehmet Hakan Atilla, a former executive at Halkbank, lately made chief executive of the Istanbul Stock Exchange in what was widely seen as the Erdogan administration admonishing US officials for pursuing the Halkbank case, which the Turkish president behind the scenes has previously tried to persuade both US President Donald Trump and his predecessor Barack Obama to halt. Zarrab pleaded guilty and testified against Atilla, who was convicted and sentenced to 32 months in prison. 

Halkbank said in a court filing that it intends to move for Berman to recuse himself from the case. It claims the judge has “made statements both in and out of the courtroom that call into question the court’s impartiality.” The bank has not elaborated on its allegation.  Berman also ruled on December 5 that he will not consider that motion unless Halkbank formally answers the charges.  Erdogan has claimed the entire sanctions busting prosecution is the result of efforts made by his Gulenist enemies. 

Court Documents:

LINK: 5 December 2019 Court Denial Of Halkbank Application
LINK: 5 December 2019 FedEx Tracking Document
LINK: 5 December 2019 Exhibit B
LINK: 2 December 2019 King & Spalding Letter Opposing U.S. Government
LINK: 19 November 2019 King & Spalding Letter Requesting “Special And Limited Appearance”
LINK: 15 October 2019 Superseding Indictment
LINK: 7 February 2018 United States v. Atilla Decision & Order

LINK: Exxon Mobil Corporation v. Corporacion Cimex And Union Cuba-Petroleo
https://www.cubatrade.org/blog/2019/10/8/3o56g5y55n8stbsuol27xnqs3vy1ot?rq=exxon%20mobil

LINK: 11 November 2019 Exxon Mobil Plaintiff Amended Complaint
https://static1.squarespace.com/static/563a4585e4b00d0211e8dd7e/t/5de13da4e6b0e7013a5faa94/1575042469742/merged_24062_-1-1574966348.pdf