(Adds reaction by plaintiffs' lawyer)
By Lawrence Hurley
WASHINGTON, April 24 (Reuters) - Foreign corporations cannot be sued in American courts for human rights abuses committed overseas, the U.S. Supreme Court ruled on Tuesday, refusing to revive a lawsuit claiming Jordan-based Arab Bank Plc helped finance militant attacks in Israel and the Palestinian territories.
The 5-4 decision ended a lawsuit by some 6,000 non-U.S. citizen plaintiffs, including survivors and relatives of people killed in attacks, filed under a 1789 U.S. law called the Alien Tort Statute that accused Arab Bank of being the "paymaster" to militant groups.
The court ruled along ideological lines, with its five conservatives in the majority and its four liberal justices dissenting.
Conservative Justice Anthony Kennedy, writing for the court, said the "relatively minor connection between the terrorist attacks at issue in this case and the alleged conduct in the United States" illustrates the problems of extending liability to foreign corporations.
"Arab Bank is pleased with the court's decision, which ends this litigation and affirms the bank's belief that there is no basis to hold corporations liable under international law," the bank said in a statement.
The ruling marked the second time in five years the Supreme Court curbed the ability of plaintiffs to sue corporations in U.S. courts under the Alien Tort Statute for overseas human rights violations. Other foreign-based companies that have faced such suits include Royal Dutch Shell PLC, Nestle SA and Daimler AG.
"The Supreme Court today dealt a significant blow in the fight to hold foreign corporations conducting business in the United States accountable for violations of international law that cause harm to innocent civilians worldwide," said Michael Elsner, a lawyer for the plaintiffs.
The ruling left open the possibility of U.S. corporations being sued under the Alien Tort Statute in limited circumstances.
Paul Hoffman, who represents plaintiffs in such disputes, said a current case in which Indonesian villagers sued U.S.-based Exxon Mobil Corp for alleged human rights abuses by security forces working for the company should be unaffected by Tuesday's ruling.
Hoffman said Kennedy "went out of his way to avoid a categorical ruling" shielding U.S. corporations.
The plaintiffs accused Arab Bank of deliberately financing terrorism, including suicide bombings and other attacks. They said Arab Bank used its New York branch to transfer money that helped Hamas and other Islamist militant groups fund attacks and reward perpetrators' families between 1995 and 2005.
Noting that the case has caused diplomatic tension with U.S. ally Jordan, Kennedy said the "political branches are in a better position" to extend that liability if they so choose.
Liberal Justice Sonia Sotomayor wrote in a dissent that barring suits against foreign companies ensures they "remain immune from liability for human rights abuses, however egregious they may be."
Lead plaintiff Joseph Jesner's son, a British citizen, was killed at age 19 in a 2002 suicide bombing of a bus in Tel Aviv.
Arab Bank said in court papers the U.S. government has called it a constructive partner in fighting terrorism financing.
In its 2013 ruling, the Supreme Court did not resolve the corporate liability question when it ruled in favor of Shell over a lawsuit claiming the company was complicit in a crackdown on protesters in Nigeria. That ruling narrowed the Alien Tort Statute's reach by saying claims must sufficiently "touch and concern" the United States to overcome the presumption that the law does not cover foreign conduct.
In a separate case involving U.S. citizens brought under a different law, a New York jury in 2014 found Arab Bank liable for facilitating two dozen militant attacks in Israel. That ruling was overturned on appeal in January.
Reporting by Lawrence Hurley; Editing by Will Dunham