Owens v. Taliban

Background

Plaintiffs included surviving victims, estates of deceased victims, and family members of victims of the August 7, 1998, al-Qaeda bombings of the U.S. Embassies in Dar es Salaam, Tanzania, and Nairobi, Kenya. They sued the Taliban based on its alleged assistance to al-Qaeda. The plaintiffs sought to preserve assets that had been held by Da Afghanistan Bank, Afghanistan’s central bank, at the Federal Reserve Bank of New York.

After President Biden issued an executive order blocking transfers of those assets, the plaintiffs obtained an emergency, pre-judgment attachment order. An attachment is a court-ordered restraint on property intended to preserve it for possible payment of a future judgment. The U.S. Marshals Service later levied on the funds, and the plaintiffs moved to confirm the attachment. They sought to attach approximately $1.4 billion of the funds held at the New York Federal Reserve, plus pre-judgment interest. No judgment had yet been entered against the Taliban.

Legal framework

The Foreign Sovereign Immunities Act, or FSIA, generally protects a foreign state’s property in the United States from attachment and execution, subject to specified exceptions. The FSIA separately addresses immunity from the court’s jurisdiction and immunity from enforcement against property. The court focused on execution immunity—the protection against attaching or executing on property.

Under 28 U.S.C. § 1611(b), property of a foreign state that belongs to a central bank or monetary authority and is held for its own account is immune from attachment and execution unless an exception applies. Funds held in an account in the name of a central bank are presumed to have that protection. A party seeking attachment may rebut the presumption by showing specifically that the funds are not being used for ordinary central-banking functions.

Parties’ positions and court’s analysis

The plaintiffs argued that the Taliban had taken control of Da Afghanistan Bank, eliminated or weakened its anti-money-laundering and anti-terrorism-financing controls, and could use the bank’s resources for illicit activities. They also argued that Da Afghanistan Bank was effectively the Taliban’s alter ego rather than a protected Afghan state entity.

The court was not persuaded that the plaintiffs’ expert declarations showed that the specific funds at issue were being used outside ordinary central-banking functions. The declarations described the Taliban’s control over Da Afghanistan Bank and the removal of financial controls, but, in the court’s view, they did not establish that the bank was currently operating as an arm of the Taliban. The court also relied on President Biden’s executive order, which expressly identified Da Afghanistan Bank as Afghanistan’s central bank, and on statements from the federal government treating it as an agency or instrumentality of Afghanistan under the FSIA.

The court concluded that the Taliban’s replacement of Da Afghanistan Bank’s leadership and elimination of financial controls did not show how the specific funds frozen in the United States were being used. Those facts also did not eliminate Afghanistan’s legitimate interest in maintaining reserves abroad. Because the plaintiffs had not rebutted the presumption of central-bank immunity, the court held that the funds were immune from attachment under § 1611.

Disposition

The court concluded that the original attachment order should not have been granted and declined to confirm it. Judge Valerie Caproni denied the plaintiffs’ motion to confirm the emergency attachment order. She vacated the earlier orders granting the emergency attachment and extending the levy indefinitely, directed the Clerk of Court to vacate those orders and close the motion, and required the plaintiffs to submit a status update stating whether they still sought a default judgment. The court did not decide whether the plaintiffs satisfied New York’s statutory requirements for pre-judgment attachment, and it did not enter judgment against the Taliban.