In what is being described as an unprecedented Canadian civil action, a Lebanese bank is being accused of being complicit in terrorism against Israeli civilians by virtue of providing financial services to Hezbollah.

The Beirut-based Lebanese Canadian Bank (LCB), which has a Montreal office, is being sued in Quebec Superior Court by four Canadian citizens living in northern Israel for damages they say they suffered during the war between Israel and Hezbollah in 2006.

The plaintiffs are seeking a total of more than $6 million from the LCB, which they hold liable because they allege it knowingly and unlawfully did extensive business during and for two years prior to the conflict with two Lebanese groups that have been identified by the United States as financial arms of Hezbollah.

“LCB, in providing banking services to Hezbollah-related finance companies, has facilitated Hezbollah’s terrorist activities,” the suit alleges. “In so acting, LCB facilitated and lent support to the violent acts of Hezbollah, and violated the rights of the plaintiffs whose injuries were caused by LCB in providing the financial infrastructure and facilities for the funding of those violent acts.”

The suit further claims that the rockets fired by Hezbollah from southern Lebanon into Israel during the war targeted civilians and that their firing constitutes terrorism as defined by Canadian and international law.

“We deny all allegations,” said the LCB’s Montreal representative, Tina Al-Hattouni.

The suit was filed July 2 by Sarah Yefet and her daughter Shoshana Sappir of Safed, and a couple, Rochelle and Oz Shalmoni of Karmiel. All are Canadian-born, except Oz, who came to Canada as a child.

They are represented by professor Ed Morgan of the University of Toronto’s International Law and Counter-Terrorism Project (he is also immediate past president of Canadian Jewish Congress); Montreal lawyer Jeffrey Boro, immediate past president of CJC’s Quebec region, and Nitsana Darshan-Leitner, founder and director of the Israel Law Center (Shurat Hadin), an independent organization whose mission is to take the perpetrators and financial supporters of Islamic terrorism to court in democratic countries.

While the 2001 Terrorism Act allows the government of Canada to prosecute acts of terrorism against Canadian citizens that occur anywhere in the world, this is the first time a private civil action has been taken on behalf of Canadians harmed by terrorism in Israel, Morgan said.

The claim alleges that, since 2004, the LCB permitted the Yousser Company for Finance and Investment and the Martyrs Foundation to maintain accounts and “to freely transfer substantial amounts of Hezbollah funds and to carry out significant financial transactions, within and without Lebanon, by means of wire transfers, letters of credit, checks and credit cards provided by LCB.”

The amounts are said to have been “many millions of dollars,” according to the Israel Law Center.

The centre was also involved in a similar lawsuit filed July 7 in the United States against several other Lebanese banks on behalf of a group of Israeli victims of Hezbollah attacks during the war, which lasted 33 days during July and August 2006.

The LCB, originally the Lebanese branch of the Royal Bank of Canada, according to the Quebec claim, is listed by the federal government’s Office of the Superintendent of Financial Institutions as a regulated financial institution, and is therefore subject to Canadian law. The plaintiffs are not implicating the Royal Bank.

The suit details that several Hezbollah rockets struck the property of the plaintiffs, making them uninhabitable, and that they suffered psychological stress and that one of the women’s health was seriously jeopardized.

Sappir, who was five months pregnant at the time, went into early labour, had to be hospitalized, and gave birth prematurely. She and her mother were relocated to a shelter for bombing victims for several months.

The Shalmonis were visiting Canada in July 2006 when a Hezbollah rocket partly destroyed their home, delaying their return to Israel by several weeks. They then had to live in a small apartment in Tel Aviv with 12 other people for several more weeks and lost employment income. They say their three children have been especially traumatized by the attack.

The $6.15-million sought includes $1 million in “punitive, exemplary and aggravated damages” for all the plaintiffs.

The Lebanese-based Hezbollah is identified by the federal government as an “Islamist terrorist organization” and, since 2002, it has been a criminal offence to directly or indirectly support it materially, including, as is specifically spelled out, provide financial services.

While Canada has not specifically named the Yousser and Martyr groups in its legislation, Morgan said, U.S. officials have drawn a clear link between them and Hezbollah.

The U.S. Treasury Department has identified Yousser as “Hezbollah’s unofficial treasury, holding and investing its assets and serving as intermediaries between the terrorist group and mainstream banks.” The department described Martyrs as “an Iranian parastatal organization that channels financial support from Iran to several terrorist organizations in the Levant, including Hezbollah.”

Moreover, the plaintiffs claim it is “public knowledge” in Lebanon that these two groups are associated with Hezbollah.

The suit states that the LCB had “full knowledge that Yousser and Martyrs are part of Hezbollah’s financial arm and that the financial services were being provided to Hezbollah… LCB and its management, officers and employees were grossly negligent in omitting to take measures to comply with section 83.03 and 83.08 of the Criminal Code and failed to take any reasonable steps to satisfy themselves that accounts and funds in LCB were owned or controlled by or on behalf of a listed terrorist group.”

Darshan-Leitner said in a press release that the lawsuit “is only the beginning of the uncovering of Hezbollah’s extensive financial network in Canada.” However, it’s not alleged that any of the financial transactions took place in this country.

Morgan said he expects the first court appearance to take place in August.

“This is very much a test case,” he said, but he added that he’s confident it will be heard by the Superior Court, because the defendant, the LCB, is operating in Canada, and its Montreal branch is, in fact, its only overseas outlet.

Suing Hezbollah directly would not be possible, because it has no official representation here, and civil action against a foreign government, such as Lebanon, is not possible under Canadian law as it currently stands.

A group of more than 50 Israeli citizens injured by Hezbollah bombings or who had relatives killed by Hezbollah attacks two years ago have filed a lawsuit in a Manhattan federal court against five other Lebanese banks.

These institutions are alleged to have provided financial services to Hezbollah’s fundraising arm, the Islamic Resistance Support Organization, and it’s alleged that U.S. currency was made made available to Hezbollah through unidentified U.S. banks.