A federal court in Manhattan dismissed a suit earlier this month that was brought by victims of Hizballah terrorist attacks. The case, Tamam v. Fransabank Sal, is the most recent in a line of civil suits against terrorist supporters, and its dismissal dealt a blow to holding terrorist financiers liable.

The suit, brought under the Alien Tort Claims Act, named several Lebanese banks for their support of Hizballah, a designated Foreign Terrorist Organization. According to the complaint, the financial institutions provided Hizballah with:

"regular, systematic, and unfettered access to U.S. currency, thus enabling Hizbullah to rapidly access funds to purchase missiles and other weapons."

Without addressing the merits of the case - for instance, whether or not the banks were in fact holding accounts open for Hizballah, and whether or not those activities were subject to liability - the court dismissed the case on a technicality.

As the court explained, there was a "lack of personal jurisdiction," preventing the court from exercising judicial authority over the foreign banks. Although personal jurisdiction traditionally exists where a party "transacts any business within the state," the court refused to find defendants' correspondent bank accounts to be sufficient. The plaintiffs have until February 5 to amend their complaint and allege facts that would sufficiently support jurisdiction over the parties.

Or, they could choose to take the issue to the Second Circuit Court of Appeals. If the ruling stands, the public policy in favor of destroying the terrorists' support network has been dealt a setback.

There is a long history of holding banks liable for providing financial services to designated foreign terrorist groups. While these suits have traditionally been brought under the Anti-Terrorism Act, cases such as the instant one are testing the limits for destroying the terrorists financial support structure.