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A federal appeals court has blocked King & Spalding's request to enter a special appearance on behalf Halkbank, the Turkish state-run bank accused of orchestrating a massive scheme to help Iran evade more than $20 billion in U.S. economic sanctions.

The one-paragraph order, entered Friday afternoon, also lifted an administrative stay on Halkbank's criminal case in federal district court, paving the way for a contempt hearing against the bank in the coming days.

Halkbank has yet to be arraigned on the Oct. 15 indictment, charging the bank with six counts of fraud, money laundering and other sanctions-related offenses, and it has so far refused to show up in court, despite the threat of court-imposed sanctions if it does not comply with two summonses.

Attorneys from King & Spalding, the Atlanta-based law firm that represented Halkbank amid a two-year government probe, instead asked a Manhattan district court judge for permission to appear for the "limited and special purpose" of challenging the court's jurisdiction, without formally acknowledging the charges.

Andrew Hruska, who is representing Halkbank, has said that the court's jurisdiction is a "threshold issue" in the case, and in December petitioned the Second Circuit for mandamus.

Prosecutors, however, have decried Halkbank's strategy as a mere delay tactic, tainted by an "air of gamesmanship," and last month asked Berman to hold the bank in contempt for its refusal to appear in court. A hearing on the government's motion had been set for Feb. 25, but was taken off the court's calendar pending a ruling from the Second Circuit.

An attorney for King & Spalding said earlier in the day that briefing was not yet complete, and scheduling would depend on the timing of the appellate court's ruling.

U.S. District Judge Richard M. Berman of the Southern District of New York in December denied King & Spalding's request to enter a special appearance in the case, saying the move ran counter to Second Circuit precedent. In his ruling, Berman rejected Halkbank's "efforts to avoid and delay" and said he would have no problem declaring the bank a fugitive, if necessary.

"If Halkbank wishes the district court to decide its jurisdictional motion, this international bank holds the key to unlock its dilemma: travel to New York and answer the charges or have its legal counsel do so," Berman wrote.

On Friday, a three-judge panel that considered the petition on an expedited basis said that Halkbank had not shown that it "lacks an adequate, alternative means of obtaining relief, that its right to the writ is clear and indisputable, or that granting the writ is appropriate under the circumstances."

The ruling marked the latest development in Halkbank's four-month standoff with the Manhattan U.S. Attorney's Office, which has charged the bank with six counts of fraud, money laundering and other sanctions-related offenses in the record-breaking scheme.

Prosecutors in the Southern District have alleged that Halkbank, which is majority-owned by the Turkish government, used a series of money service businesses and front companies in Iran, Turkey and the United Arab Emirates to transfer billions of dollars' worth of Iranian oil revenue in violation of prohibitions barring Iran from accessing the U.S. financial system.

High-ranking officials in Iran and Turkey allegedly participated in the scheme, and some officials took tens of millions of dollars in bribes to shield it from the scrutiny of U.S. regulators and banks, prosecutors said.

In total, nine defendants have been charged, including Reza Zarrab, the Turkish-Iranian gold dealer who pleaded guilty and later testified against Mehmet Hakan Atilla, a top Halkbank executive who was sentenced to 32 months in prison after a federal jury convicted him on five counts of conspiracy, money laundering and related counts.

Berman said the arrests of Zarrab and Atilla kicked off an "extraordinary, sustained" campaign by Turkish officials to persuade U.S. leaders, lobbyists and attorneys to secure Zarrab's release ahead of trial.

In a footnote, Berman said that Rudy Giuliani, the former New York City mayor and Manhattan U.S. attorney, and Michael B. Mukasey, a former chief judge of the Southern District, both acted on Zarrab's behalf, and that President Donald Trump, former Vice President Joe Biden and former U.S. Attorney General Loretta Lynch and others had been on the "receiving end" of the overtures.

"More recently," he said, "the objective of the campaign, following the conviction of Mr. Atilla on January 3, 2018, appears to have been to avoid Halkbank being indicted and, relatedly, to avoid Halkbank having to pay a potential fine."

"This effort appears to have failed prior to the Halkbank indictment on October 15, 2019," Berman said.

Read More:

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US Judge Blocks King & Spalding's Bid for 'Special Appearance' in Criminal Case Against Turkish Bank