Halkbank, a state-owned Turkish bank, has petitioned the U.S. Supreme Court to overturn a lower court ruling that allowed its prosecution for violating U.S. sanctions on Iran. The bank argues that it should be granted “absolute immunity” under common law, claiming that sovereign immunity extends to state-run entities. This legal battle has garnered attention as it could have far-reaching implications for the application of sovereign immunity in U.S. courts.
The case began in 2019 when the U.S. government charged Halkbank with facilitating covert transfers of $20 billion in Iranian funds, violating U.S. sanctions. The charges include fraud, money laundering, and conspiracy. The allegations center on the use of front companies in Iran, Turkey, and the UAE to launder money through the U.S. financial system, thereby bypassing U.S. sanctions on Iran.
In 2023, the U.S. Supreme Court ruled that foreign entities are not immune from criminal prosecution under the Foreign Sovereign Immunities Act (FSIA). However, the Court did not address the issue of common law immunity, leaving the door open for Halkbank to appeal. The current petition focuses on this unresolved question, as Halkbank insists that it should be immune from prosecution due to its status as a state instrumentality.
The Turkish government has expressed concerns about the potential impact of this case on U.S.-Turkey relations. President Recep Tayyip Erdoğan has called the charges politically motivated and criticized the legal proceedings as an “unlawful” move against Turkey. The case has also attracted attention from international legal observers, who note that a ruling in favor of Halkbank could set a precedent for sovereign immunity in commercial activities by foreign state-owned entities.
As the U.S. Supreme Court prepares to review the petition, the broader legal community is watching closely. A decision to take up the case in the Court’s upcoming term, starting in October, could have significant consequences for the interpretation of sovereign immunity in U.S. courts, particularly in cases involving foreign government-controlled businesses engaged in commercial activities.
