The Appellate Division held that the trial court will apply Israeli law in hearing the case. The defendant had argued that Chinese law should apply as the BOC is headquartered in Beijing. Applying Israeli law, which differs from the Chinese law, would make it easier for the plaintiffs to prove that BOC officials had illegally violated banking regulations and U.S. criminal statutes by carrying out money transfers for Palestinian terror organizations.
The civil action, brought on behalf of the victims and family members of victims of terror attacks perpetrated between 2004 and 2007 in Israel, alleges that, starting in 2003, the BOC executed dozens of wire transfers for terror groups Hamas and Palestinian Islamic Jihad totaling several million dollars. These transfers were initiated by the PIJ and Hamas leadership in Iran and Syria, were processed through BOC’s branches in the United States and were sent on to a BOC account in Beijing administered by a senior operative of Hamas and PIJ. From there, the funds were transferred to Hamas and PIJ leaders in the Gaza Strip and West Bank and used to carry out terrorist attacks.
According to the plaintiffs’ complaint, in April 2005, Israeli counter terrorism officers met with officials from the Chinese Ministry of Public Security and China’s Central Bank regarding these wire transfers. The Israelis demanded that the Chinese officials take action to prevent BOC from making any further such transfers. Despite the Israeli warnings, the BOC – with the Chinese government’s approval – continued to wire terrorist funds for Hamas and PIJ.