The U.S. Court of Appeals for the Second Circuit Friday reversed and remanded a 2014 jury verdict that found the Jordan-based Arab Bank liable for 24 terrorist attacks committed by the Palestinian group Hamas in Israel.

Even with the loss at the appellate level, the 597 plaintiffs in the original suit are set to take part in a substantial settlement, the terms of which remained undisclosed by the panel. One key detail that is revealed in court documents is that the settlement amounts are pegged to the appellate court's order, providing various payouts to plaintiffs depending on whether the certified judgment was affirmed, reversed or vacated.

While the terms remain secret, public statements by Arab Bank indicate it has set aside at least $1 billion to cover its obligations under the settlement agreement.

In its order, the panel of Circuit Judges Reena Raggi and Susan Carney, with U.S. District Judge Lewis Kaplan of the Southern District of New York, sitting by designation, found that the jury instructions incorrectly allowed for a guilty verdict under the Antiterrorism Act of 1990 simply because Arab Bank handled financial transactions for Hamas and its supporters.

Notably, the panel refused to accept the argument by the plaintiffs in the case that the later-enacted Justice Against Sponsors of Terrorism Act, which allows for those that aid and abet terrorist acts to be held liable, made the jury instructions harmless.

The action was brought in 2004 by victims and their families injured during three separate Hamas-associated attacks in Israel between 2002 and 2003. During trial, Arab Bank was found to have been a significant conduit for funds by both Hamas leaders and allies, some of whom sent payments through the bank to families of suicide bombers. The bank was ultimately connected to dozens of terrorists attacks.

At trial, the bank requested that U.S. District Judge Brian Cogan of the Eastern District of New York instruct the jury on the particular requirements on the act of international terrorism language in the ATA. According to the panel, the district court declined. The jury was instructed that finding Arab Bank violated the act's provision against material support of a terrorist organization necessarily proved it was guilty of an act of international terrorism.

The Second Circuit found this was in error. Finding material support was provided can qualify that part of the statutory definition, the panel said. But the person providing the support must also be involved in an act that's actual terrorism. Absent the full statutory definition of an act of international terrorism under the ATA—violence, would violate U.S.-based laws, done for politically motivated reasons, and occurring outside of the United States—it's not possible to find liability.

“[T]he provision of material support to a terrorist organization does not invariably equate to an act of international terrorism,” the panel wrote.

The plaintiffs argued on appeal that if the jury instructions were, in fact, in error, the error was ultimately harmless. Most notably, they pointed to the Justice Against Sponsors of Terrorism Act, which passed after the commencement of the trial and was meant as an expansion of ATA liability, arguing that the need to prove direct violence or political motivation was no longer present.

The panel agreed that JASTA extended liability to backers of terrorism, and that, under the newer act, the process of proving discrete elements required under the ATA wouldn't have been needed. But, the panel found, since specific charges of aiding and abetting weren't offered and decided upon at trial, it wasn't possible to conclude that Arab Bank's secondary liability was proved as a matter of law.

Certainly, the panel notes, there is evidence in the record that the bank satisfied portions of the aiding and abetting requirements already. And insofar as it would be required to show that the bank was generally aware of its role in facilitating terrorists acts, some evidence—for example, the memos related to making specific payments to the families of suicide bombers—could help a jury, if properly instructed, reach the conclusion. But at this point, it would be up to a retrial on remand to answer that question.

However, that appears all but unlikely to happen. After the verdict and judgment, the parties in the case entered into a settlement agreement, the terms of which have remained undisclosed. However, the panel noted that one of the terms of the agreement is that the parties forgo any potential future trial.

For the plaintiffs, represented by Osen LLC name attorney Gary Osen, Friday's decision was still a win.

“We would have liked a sweeping victory, but we're still very satisfied with the result,” Osen said in a statement. “The plaintiffs will receive meaningful and very substantial compensation for their injuries, and today's decision doesn't diminish the fact a jury found Arab Bank liable for knowingly supporting Hamas. For other victims of terrorism, this ruling makes clear that the Antiterrorism Act can still provide the justice and accountability they deserve.”

The opposing side also claimed victory. Kirkland & Ellis partner Paul Clement represented Arab Bank on appeal. He declined to comment, but the firm provided a statement from the bank.

“Arab Bank is pleased with the court's decision, and continues to believe that the district court's errors at trial all but dictated an adverse outcome,” the bank said. “The bank is pleased to put this case behind it and focus on its business, its commitment to safe and sound banking and its dedication to the service of its customers across the globe.”