*

Sberbank not entitled to sovereign immunity, court rules

*

Sberbank accused of funding Donetsk People's Republic

*

Court decision allows Schansman family to pursue justice

By Jonathan Stempel

NEW YORK, Feb 4 (Reuters) - The family of an American

killed when a Malaysian Airlines plane was shot down over

Ukraine in 2014 can sue Russia's largest bank for allegedly

providing money transfers to a group blamed for downing the

plane, a U.S. appeals court ruled on Tuesday.

In a 3-0 decision, the 2nd U.S. Circuit Court of Appeals in

Manhattan said state-controlled Sberbank was not entitled to

sovereign immunity, after being accused of using the U.S.

banking system to funnel donor money to the Russia-backed

separatist group Donetsk People's Republic.

A U.S.-based lawyer for Sberbank had no immediate comment.

Sberbank was not immediately available for comment after

business hours in Moscow.

The case was brought by the family of Quinn Schansman, who was

18 when he boarded Malaysian flight MH17 to Kuala Lumpur from

Amsterdam on July 17, 2014, for a planned family vacation.

The flight was shot down over DPR-controlled territory in

eastern Ukraine by a surface-to-air missile, killing all 298

people on board.

Russia has denied involvement. Ukraine had previously

declared the DPR a terrorist organization, while the United

States had imposed sanctions on the group.

Schansman's family sued Sberbank, another Russian bank and

two U.S. money transfer companies in April 2019, saying they

should be liable for doing business with the DPR.

A year later, Russia's Ministry of Finance bought a majority

stake in Sberbank from the country's central bank.

In Tuesday's decision, Circuit Judge Joseph Bianco called

Sberbank's alleged handling of money transfers "quintessentially

commercial activity," triggering an exception to protections

under the federal Foreign Sovereign Immunities Act (FSIA).

Sberbank had argued it deserved a presumption of immunity as

a state agency or instrumentality.

The bank also said another U.S. law, the Anti-Terrorism Act,

provided immunity regardless of when it came under state

control, with no exception for commercial activity.

Bianco disagreed. He said the FSIA comprehensively governed

sovereign immunity in civil cases, and its framework was not

"silently repealed" by the anti-terrorism law.

Adopting Sberbank's position, the judge wrote, would negate

Congress' intent to give civil litigants the "broadest possible"

legal basis to sue entities that materially support foreign

entities that engage in terrorism against the United States.

Jenner & Block, a law firm representing the Schansman

family, welcomed the court's rejection of what it called

Russia's effort to immunize Sberbank by "strategically

acquiring" a majority stake.

"We look forward to pursuing further evidence of Sberbank's

wrongdoing in the district court and finally achieving justice

for the Schansman family," the firm said.

The case is Schansman et al v Sberbank of Russia PJSC, 2nd

U.S. Circuit Court of Appeals, No. 22-3097.