Can American trial lawyers use US courts to legally blackmail foreign banks? The US Solicitor General — to whom the Supreme Court has turned for advice — is now considering whether the justices should hear a case (Arab Bank v. Linde) about just that.

In 2004, American trial lawyers sued one of the Middle East’s oldest financial institutions, Jordan-based Arab Bank, on behalf of US victims of terror attacks within Israel and their families.

The civil suit claims the bank knowingly did business with terrorists and terror-linked charities, becoming a conduit for funds financing terrorist strikes.

The charge is unlikely, to put it mildly. Arab Bank has a long history of working with Israel. After the signing of the Oslo Accords, Israel used the bank to transfer tax revenues it had collected for the Palestinian Authority. During the intifada, it depended on the bank to act as a financial intermediary for western aid to the territories.

And for decades the bank has been the region’s leader in verifying that none of its accounts belong to terrorist interests, acting well before the US or Israel required. It cooperates fully with US criminal investigators and anti-terror authorities.

But this is a civil suit, not a criminal case. The bank’s $24 billion of assets clearly made it a target of American trial lawyers, who openly admit they filed in the United States, rather than Israel, because US courts award higher damages, a high proportion of which goes to them (and their London-listed, tax-haven-domiciled, hedge-fund backer).

A major tool of mass-tort attorneys is mass discovery, vacuuming up millions of documents in search of stray sentences or awkward e-mails on which attacks can be built. In this case, though, discovery hit a wall: The lawyers demanded countless documents that Arab Bank can’t provide under Jordanian law.

But the main trial court ruled that the bank couldn’t tell the jury that the criminal law back home prevented it from complying with the lawyers’ demands. Indeed, it said jury instructions would allow jurors to infer from the bank’s mysterious-to-them refusal to comply that it had provided financial services to terrorists.

If these rulings are upheld (as higher courts have done so far), get ready for a blizzard of suits against foreign banks — litigation with vast repercussions for multi-national banking and long-standing conventions of national sovereignty.

As in much of Europe, Asia and the Middle East, banking law makes it a criminal offense to disclose customer records in civil cases. Bank officers violating these laws face heavy jail sentences; their bank, criminal penalties.

In this case, Jordan, the Palestinian Authority and Lebanon all denied privacy waivers to Arab Bank. After long legal fights, the bank was allowed to deliver 200,000 documents, but denied permission to turn over many more.

It is remarkable that the US courts have so far refused to give even minimal acknowledgment of a bank’s need to obey the laws of its own country. Instead, they stripped Arab Bank of its defenses, decreeing that jurors would be all but told to find it liable for enormous damages.

If this denial of due process stands, the US trial bar will be free to ransack the assets of an institution vital to the prosperity of a critical region. Worse, trial lawyers will have a green light to target non-US institutions wherever local laws clash with American discovery requirements.

This is not a matter of protecting banks doing business with terrorists. Criminal investigations don’t fall under these national privacy laws. The question is whether private lawsuits can enlist the power of US courts to compel foreign banks to make themselves felons in their own countries.

In its brief to the Supreme Court, Jordan called the trial court’s ruling a “grave affront to its sovereignty” and a threat to stability in the surrounding region. Still, the State, Justice and Treasury departments (the Solicitor General’s clients) are reportedly divided over whether the high court should take the case. (Treasury and Justice seem to want a nuclear weapon in their fight against Swiss bank-secrecy statutes — however great the collateral damage.)

Again, this case isn’t about the infraction of US criminal statutes. It can’t be in America’s interest to, in effect, legalize the blackmail of foreign banks by American trial lawyers — with potentially ruinous consequences for the international financial system.

If ever there was a time for the Supreme Court to take a second look, this is it.

The Rt. Hon Lord Norman Lamont is a former British Chancellor of the Exchequer.