Nahl v. Jaoude, 354 F. Supp. 3d 489

Background

Plaintiffs Abu Nahl and Nest Investments (shareholders owning 24%) brought a derivative suit on behalf of Lebanese Canadian Bank (LCB) after LCB was liquidated and forfeited $102 million to the U.S. following alleged large-scale money‑laundering that funded Hizballah.
Alleged scheme: LCB executives (Abou Jaoude, Hamdoun, Safa) routed U.S. dollar wires through New York correspondent banks to U.S. used‑car purchasers; cars were shipped to West Africa, sold for bulk cash, and proceeds were couriered to Lebanon and deposited at LCB for Hizballah.
Plaintiffs seek to replead an Alien Tort Statute (ATS) claim that financing terror attacks on civilians violates international law (relying principally on the International Convention for the Suppression of the Financing of Terrorism) and state law claims for breach of fiduciary duty and abuse of control.
District court previously dismissed earlier complaint (Nahl I) but left open whether money‑laundering to finance terrorism is itself an ATS‑actionable tort; Plaintiffs moved to file a Second Amended Complaint.
Court grants leave to amend as to ATS claims against individual insiders (Abou Jaoude, Hamdoun, Safa) but denies amendment to add non‑insider defendants (Salhab, Joumaa, Ayash) and denies repleading of state law claims as time‑barred.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether ATA preempts ATS claims by foreign plaintiffs for financing terrorism	ATS provides an independent remedy for aliens injured by violations of the law of nations; ATA does not displace it	ATA supplies a domestic remedy and thus preempts ATS in this context (relies on Jesner)	ATA does not preempt ATS claims here; no clear congressional intent to preempt and Jesner does not require preemption
Whether money‑laundering to finance terrorism states a violation of the law of nations under Sosa (specific, universal, obligatory)	Financing civilian terror attacks violates the Terrorism Financing Convention and related instruments, satisfying Sosa	No well‑defined universal norm against "terrorism" or civil liability; Jesner bars new ATS causes of action	Court finds the Terrorism Financing Convention (and other treaties/consensus) shows a sufficiently specific, universal, obligatory norm to sustain an ATS claim
Whether ATS requires state action (i.e., can private actors be liable)	Treaties and customs reach "any person"; private actors may violate norms of universal concern	Norms apply to states; private actors insufficient absent state action	Private actors can be liable under ATS for norms of universal concern; allegations that Central Bank turned a blind eye/support suffice to plead concert with a state
Whether in pari delicto bars derivative suit by LCB/shareholders	Insider‑orchestrated fraud does not bar derivative claims against those insiders (insider exception)	LCB was the wrongdoer, so in pari delicto should bar recovery against third parties and insiders	In pari delicto does not bar claims against insider defendants (Abou Jaoude, Hamdoun, Safa); but it bars claims against non‑insiders (Salhab, Joumaa, Ayash)

Key Cases Cited

Sosa v. Alvarez-Machain, 542 U.S. 692 (2004) (establishes Sosa two‑part test for recognizing ATS causes of action)
Jesner v. Arab Bank, PLC, 138 S. Ct. 1386 (2018) (limits ATS liability for foreign corporations and counsels caution in recognizing new ATS claims)
Balintulo v. Ford Motor Co., 796 F.3d 160 (2d Cir. 2015) (articulates elements for an ATS claim)
Licci by Licci v. Lebanese Canadian Bank, SAL, 834 F.3d 201 (2d Cir. 2016) (recognizes ATS liability for financing/assisting violent international law violations)
Kadic v. Karadzic, 70 F.3d 232 (2d Cir. 1995) (private actors can violate norms of the law of nations; civil remedies available)
Kiobel v. Royal Dutch Petroleum Co., 569 U.S. 108 (2013) (presumption against extraterritoriality for ATS claims)
Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard: claims must be plausible)