NEW YORK (Reuters) - Citigroup ( C/PN ) can force military personnel to arbitrate claims that its Citibank unit charged unfairly high interest rates on their credit card balances after they returned to civilian life, a federal appeals court panel ruled on Monday.

Reversing a trial judge, the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, said Congress did not intend when adopting the Servicemembers Civil Relief Act (SCRA) to override a federal law providing enforcement of arbitration agreements.

With roots dating to the Civil War, the act relieves military personnel of mortgage foreclosures, default judgments and other burdens while they serve their country.

Four plaintiffs sought to pursue a class action against Citibank after it began charging civilian interest rates on card balances they accumulated during active duty, when rates were capped at 6%.

One plaintiff, Army Sergeant Jeremy Bell, saw his rate jump to 25.99%, court records show.

Circuit Judge Paul Niemeyer, however, wrote for the three-judge panel that because the SCRA was silent on arbitration, the Federal Arbitration Act required the plaintiffs to arbitrate disputes individually.

The panel directed the North Carolina trial judge to review whether the federal Military Leave Act, which caps some rates and overrides arbitration agreements, applies to the plaintiffs' card accounts.

Leah Nicholls, a lawyer at the nonprofit Public Justice representing the plaintiffs, said they may seek a rehearing. She said the decision conflicted with how the U.S. Supreme Court has assessed Congress' intent to displace arbitration agreements.

"We are obviously disappointed," she said.

Citigroup ( C/PN ), based in New York, declined to comment.

Class actions let groups of plaintiffs seek potentially higher recoveries at lower cost than if members arbitrated claims individually.

A similar case is pending against American Express in the North Carolina court. It was put on hold until the appeals court could rule.

In March 2023, the U.S. Department of Justice sided with the plaintiffs in both cases, saying the SCRA gave servicemembers an "unwaivable right" to pursue class actions even if they agreed to arbitrate.

Consumer protection had been a focus of then-Democratic U.S. President Joe Biden's domestic agenda.

The case is Espin et al v Citibank NA, 4th U.S. Circuit Court of Appeals, No. 23-2083.