Read the Libyan Arab Foreign Bank v. Bankers Trust Company case:
Prepare a case brief:
U.S. Bank In Squeeze On Libya:
A London court ruled yesterday that the Bankers Trust Company must pay $292 million to the Libyan Arab Foreign Bank. The money consists of deposits that were ordered frozen by President Reagan in 1986.
The ruling puts Bankers Trust in a difficult position because if it obeys the court order in Britain, it will be violating a Presidential order in the United States. Bankers Trust has two choices: It can get permission from the United States Government to pay the money (which is considered highly unlikely), or it can appeal the decision in Britain.
''We're considering the court's decision with our lawyers,'' said Thomas Parisi, a spokesman for Bankers Trust. No Comment by Treasury
A United States Treasury spokesman said yesterday that the Government had not seen the ruling - described as about 100 pages long -and that it would not be appropriate to comment at this time.
The money involved comprises two chunks. Some $131 million is on deposit in Bankers Trust's London branch. The other $161 million is on deposit in the United States, but the British judge ruled that it should be counted as part of the Libyan bank's account at the Bankers Trust branch in London.
The Libyan Arab Foreign Bank is owned by the central bank of Libya.
When President Reagan froze Libyan deposits, Bankers Trust was believed to be holding more than any other American bank. The action was similar to the freeze imposed by President Carter on Iranian assets in 1979. Unresolved Delicate Issue
The main issue in both cases is whether one government, in this instance the United States, has the right to block assets held by bank branches in another country that has not imposed a freeze. It is a sensitive question, affecting national sovereignty.
In the case of Iran, the dispute was never settled in court because the funds were unblocked as part of the deal reached between the United States and Iran to free the American hostages who had been held inside the Embassy in Teheran.
If the Bankers Trust case goes through the entire process of court appeals, an important legal precedent could result.