Hogan Lovells wins Second Circuit appeal over $42.5 million seized by Ukraine for defense funding

Hogan Lovells argued, and the Second Circuit agreed, that the assets held in New York bank accounts by Prominvestbank (PIB), a formerly Russian-owned bank in Ukraine, couldn’t be seized under the Terrorism Risk Insurance Act of 2002 (TRIA).

Under the TRIA, terrorist attack victims can satisfy judgments obtained against the perpetrators through any assets blocked by the U.S. government. Here, plaintiffs, who held judgments against the Taliban for terrorist-related activities, sought to satisfy their judgments by executing against the assets of Prominvestbank in New York.

But the assets in this case could not be considered “blocked,” a three-judge panel of the Second Circuit ruled, upholding a July 2023 ruling from the District Court for the Northern District of New York (NDNY).

Hogan Lovells had argued that the U.S. Treasury Department took PIB off the “blocked assets” list after Ukraine nationalized the bank and seized its assets to fund its defense against Russian aggression, and that the assets were not subject to execution by the plaintiffs, and the panel agreed.

The underlying case was brought by seven U.S. government contractors injured in a 2016 Taliban terrorist attack. The contractors won a $134.5 million default judgment for their injuries against the Taliban and affiliated terrorist groups in a case before the Northern District of Texas.

In September 2022, the contractors sought to seize the PIB assets, currently held by BNY Mellon, by filing a writ of execution in NDNY. They argued PIB was an instrumentality of Russia and that Russia had provided material support to the Taliban. Hogan Lovells intervened in the case and secured the assets on behalf of Ukraine’s Deposit Guarantee Fund (DGF), which was appointed to liquidate the PIB’s assets and direct the funds to the Ukrainian government.

The Hogan Lovells’ legal team is led by partner Dennis Tracey and counsel Matthew Ducharme, both based in New York.