Case: Libyan Arab Foreign Bank vs. Bankers Trust Company
Queen’s Bench Division, Commercial Court

Facts: US President Ronald Reagan places a Presidential order to freeze money that was deposited in the Bankers Trust Company. The Libyan Arab Foreign Bank sought to recover the funds.

Procedure: Queen’s Bench Division, Commercial Court

Issue: Can the Bankers Trust Company pay the Libyan Arab Foreign Bank the money that was withheld due to the freeze President Reagan put on the money in 1986? Can one government block assets held by bank branches in another country?

Holding: (Vote: 1-0) Yes, however this puts the Bankers Trust Company in a conundrum because although British law requires them to pay back the Libyan Arab Foreign Bank, they will violate the US Presidential order (Bennett, 1987).

Reasoning: (Staughton, J.)
A. Rule: The London court rules in favor of the Libyan Arab Foreign Bank in the amount of $292 million, which the Bankers Trust Company has to pay. The money was frozen be US Presidential order in 1986.

B. Application: The London courts ruled the money belonged to the Libyan Arab Foreign Bank and had to be refunded. The London courts ruled the money belonged to the Libyan Arab Foreign Bank and that the agreement under which the money was deposited entitled them to receive the deposit bank and the Bankers Trust Company would be held accountable for not refunding the money. This conflict is complex due to the nature of the rulings given by the US and London courts. Bankers Trust Company has the right to get permission from the US to release the money or file an appeal in the London courts.

Concurring / Dissenting Opinions Reasoning: The London courts ruled the money belonged to the Libyan Arab Foreign Bank and had to be refunded. The money was deposited by the Libyan Arab Foreign Bank and therefore belonged to them, the US