Harrison v. The Republic of Sudan

Background

The Harrison plaintiffs had obtained a default judgment against Sudan in an earlier case in the U.S. District Court for the District of Columbia. They registered that judgment in the Southern District of New York and sought turnover of assets, including funds held by The Bank of New York Mellon (BNY Mellon) in a blocked account ending in 51900.

The account contained the proceeds, plus interest, from a $300,000 electronic funds transfer blocked in 1992 under sanctions regulations administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). The transfer involved the Central Bank of Sudan, the Federal Reserve Bank of New York, BNY Mellon, Al Shamal Islamic Bank, and Sudanese Libyan Investment and Development Co. Ltd. (SLID), which was identified as the beneficiary.

In 2017, the court ruled that the account was subject to execution and ordered BNY Mellon to pay the funds to the Harrison plaintiffs. The Central Bank of Sudan challenged that ruling. The Supreme Court later held that the Harrison plaintiffs had not properly served Sudan under the Foreign Sovereign Immunities Act and that the District of Columbia court therefore lacked jurisdiction to enter the underlying default judgment. The District of Columbia court vacated that judgment, and the U.S. Court of Appeals for the Second Circuit vacated the New York turnover judgment and a related order.

Settlement and Proposed Transfer

The Harrison plaintiffs and Sudan subsequently settled the underlying case and jointly dismissed it with prejudice. The Central Bank of Sudan and the Federal Reserve disclaimed any interest in the blocked account. The order states that Al Shamal lacked a property interest in the account under Second Circuit law.

SLID is described as a private Sudanese company indirectly owned by the Libyan Investment Authority. Because of that ownership, SLID planned to seek OFAC guidance and, if necessary, a specific license concerning the funds. BNY Mellon agreed to transfer the funds to SLID subject to that guidance or license.

Ruling and Disposition

The court entered the parties’ stipulation as an order and judgment. BNY Mellon must transfer $513,608.19 to SLID within 20 days after SLID obtains either a written OFAC determination that no license is required or an OFAC license authorizing the payment.

After the transfer, BNY Mellon, its parent company, and its affiliates will be discharged from liability and other obligations concerning the account and its funds. SLID also releases BNY Mellon from claims relating to the account and transfer. All pending claims against BNY Mellon concerning the account are dismissed with prejudice, and future claims on the same subject are barred by the order’s permanent injunction. SLID must indemnify BNY Mellon for liability, reasonable attorneys’ fees, and costs arising from any future claim covered by the order.

The order permanently restrains the Central Bank, the Federal Reserve, the Harrison plaintiffs, Al Shamal, SLID, and all other persons or entities from bringing or pursuing claims against BNY Mellon concerning the account. It also terminates any remaining enforcement devices covering the account, states that the judgment is final and appealable, and retains jurisdiction to enforce the order.