By Brendan Pierson
NEW YORK (Reuters) - A settlement between Arab Bank Plc and Americans who accused it of facilitating militant attacks in Israel is in jeopardy after U.S. judges said they may not have jurisdiction over an appeal that would determine how much the bank should pay.
Judges of the 2nd U.S. Circuit Court of Appeals in New York raised the jurisdiction issue during an oral argument on Tuesday.
Jordan-based Arab Bank is appealing a September 2014 jury verdict in a Brooklyn federal court finding it liable for facilitating two dozen attacks linked to Hamas by handling financial transactions.
Following the verdict, Arab Bank reached a settlement covering 527 plaintiffs. Under the deal, the bank would appeal the verdict, and the amount it would pay was left subject to whether or not the appeal was successful, lawyers for both the bank and the plaintiffs said during Tuesday's arguments.
Arab Bank said in January 2016 it had accumulated $1 billion in provisions for the case that would cover "expected obligations" under the settlement.
But 2nd Circuit Judge Lewis Kaplan said he was concerned that the court did not have the authority to decide an appeal of the merits of the jury's verdict merely to help the parties determine a settlement payment.
"We don't sit here to provide opinions to fit into some settlement agreement that the parties have," he said.
Circuit Judge Reena Raggi, sitting on the three-judge panel alongside Kaplan, also voiced skepticism, ordering both sides' lawyers to provide the court with a copy of the settlement and to submit legal briefs explaining why the court had jurisdiction over the case.
Paul Clement, a lawyer for the bank, said at one point that if the court declined to decide the appeal, the settlement could fall apart.
Most of Tuesday's arguments focused on whether the bank could be liable for processing transactions that could have helped Hamas.
Clement argued that the jury verdict must be overturned because the plaintiffs could not prove that financial services provided by Arab Bank were the direct cause of violent attacks.
"You would have to show that this was a bank that was willing to process transactions in situations where no one else would," which plaintiffs had not shown, Clement said.
Peter Raven-Hansen, arguing for the plaintiffs, said that handling transactions for people linked to an organization known to carry out violent attacks was enough to give rise to liability.
The case is Linde v. Arab Bank Plc, U.S. Court of Appeals, 2nd Circuit, No. 16-2119.
(Reporting By Brendan Pierson in New York; Editing by Tom Brown)