The US Supreme Court on April 19 gave a mixed ruling on the bid of Turkish government-owned lender Halkbank to be deemed immune from criminal indictment in a Manhattan federal court for allegedly violating economic sanctions imposed on Iran by Washington.

The court ruled that Halkbank was not immune under the Foreign Sovereign Immunities Act (FSIA) of 1976. However, it sent back to a federal appeals court the question of whether Halkbank can still claim sovereign immunity from prosecution under common law.

The Supreme Court instructed the US 2nd Circuit Court of Appeals to reconsider a request by Halkbank to throw out the prosecution. The instruction means that the Supreme Court could, after the reconsideration, once more be asked to rule on the legality of the indictment.

The indictment alleges that high-ranking Turkish and Iranian government officials took part in a sanctions evasion scheme with Halkbank and its officers. Questions have been raised about what Turkish President Recep Tayyip Erdogan—who on more than one occasion pressured former US president Donald Trump to try to arrange for the tossing out of the case—knew about the claimed conspiracy, though he has always denied any wrongdoing. Erdogan in late 2019 complained to reporters that US law enforcement’s pursuit of Halkbank in the case was “unlawful, ugly”.

“On Halkbank’s view, a purely commercial business that is directly and majority-owned by a foreign state could engage in criminal conduct affecting U.S. citizens and threatening U.S. national security while facing no criminal accountability at all in U.S. courts,” Supreme Court Justice Brett Kavanaugh wrote in the majority opinion on the case, in which he was joined by six other justices.

“Nothing in the FSIA supports that result,” Kavanaugh wrote.

The Supreme Court previously recognised that a civil lawsuit not governed by the FSIA law might be barred by foreign sovereign immunity under common law.

The US government, however, has contended that the bar would not apply to criminal prosecution of a commercial entity such as Halkbank.

Halkbank was indicted in October 2019 by a grand jury in Manhattan federal court. It is accused of conspiring for years to evade US economic sanctions imposed on Iran. The alleged evasion took the form of laundering billions of dollars of Iranian oil and gas money.

The bank was deemed a “fugitive” from justice by Manhattan prosecutors in October 2019 after it failed to send anyone to an initial hearing.

In October 2017, Turkish-Iranian gold trader Reza Zarrab, who turned state’s witness, pleaded guilty in a New York court to seven criminal counts related to the scheme.

In January 2018, former Halkbank deputy general m manager Mehmet Hakan Atilla was convicted at a New York trial of five of the six criminal counts he was charged with in relation to the case.

After serving a jail term and returning to Turkey in 2019, Atilla was named director of the Istanbul stock exchange, in what was taken as defiance shown by the Erdogan administration towards the US actions against Halkbank and those said to have been involved in the sanctions evasion.