Shares in the Turkish public bank Halkbank jumped a further 8% on Tuesday after the U.S. Supreme Court agreed to hear the lender's bid to avoid criminal charges for allegedly helping Iran evade economic sanctions.
The shares had ended Monday's session nearly 10% higher after news first emerged of the court's decision about a case that has strained relations between Türkiye and the U.S.
The justices took up Halkbank's appeal of a lower court's decision rejecting the bank's contention that it was immune from U.S. prosecution under a 1976 law called the Foreign Sovereign Immunities Act, which limits the jurisdiction of American courts over lawsuits against foreign countries, because the business is majority-owned by Türkiye's government.
Federal prosecutors in New York in 2019 brought charges against Halkbank, accusing it of participating in a scheme to launder about $20 billion of Iranian oil and natural gas proceeds in violation of U.S. sanctions against Iran.
Halkbank has been at the center of a major dispute between Ankara and Washington. U.S. prosecutors accused the bank of helping Iran evade U.S. sanctions in a case that has strained U.S.-Turkey relations. The Turkish bank denied any wrongdoing.
President Recep Tayyip Erdoğan has called the U.S. government's decision to charge the bank an "ugly, unlawful" step and has pushed for the case to be dropped.
Halkbank appealed to the U.S. Supreme Court, calling the prosecution "unprecedented" and saying that the 2nd Circuit's ruling "green lights future indictments of any sovereign state."
The U.S. Justice Department countered that the Foreign Sovereign Immunities Act addresses only civil cases, not criminal prosecutions, and even if it did, the case fell within the law's exceptions for cases involving commercial activities.
A trial was delayed awaiting action by the Supreme Court.
Alleged misconduct includes helping Iran secretly transfer $20 billion of restricted funds, including $1 billion laundered through the U.S. financial system, and converting oil revenue into gold and then cash to benefit Iranian interests.
Halkbank had appealed a ruling by U.S. District Judge Richard Berman, allowing it to be prosecuted.
Berman has overseen several related cases, including the conviction of former Halkbank executive Mehmet Hakan Atilla and a guilty plea by Iranian Turkish gold trader Reza Zarrab.
Atilla was convicted in January 2018 and returned to Turkey in July 2019 after leaving prison.
In an Oct. 22 decision, the 2nd Circuit said Halkbank could be prosecuted because its alleged misconduct involved commercial activity that was not covered by sovereign immunity.
Halkbank said that decision conflicted with Supreme Court precedents as it "greenlights the first criminal trial of a foreign sovereign in the nation’s history."
It also said it would suffer irreparable harm if forced to defend against "a case from which it is immune."
The Supreme Court denies most appeals. In its last term, it received 5,307 filings and heard arguments in 72 cases.