ISTANBUL, Feb 17 (Reuters) – A U.S. judge on Tuesday agreed to dismiss a case against Turkish state lender Halkbank filed by victims of attacks by groups linked to Iran, on the condition that the sides reach an agreement to carry on with the case in Turkey.

After the move, the bank’s shares were up 9.9% at 1121 GMT on Wednesday.

A separate trial against Halkbank, in which it is accused of helping Iran evade U.S. sanctions, has been at the centre of a major dispute between Ankara and Washington.

An appeals court has granted a stay of proceedings in the case pending a review of the lender’s appeal.

U.S. District Judge Denise Cote agreed to dismiss the case brought against Halkbank by 876 plaintiffs who were victims or related to victim of “an overseas terrorist attack committed by a group linked to Iran.”

The court accepted Halkbank’s request that the case be dismissed, saying it could be handled by a court in Turkey.

It ordered the sides to submit an agreement by March 2 to litigate the case in Turkey.

“Dismissal shall be conditioned on Halkbank’s agreement to accept service in Turkey, submit to the jurisdiction of Turkish courts, and waive any statute of limitations defence that may have arisen since the filing of this action,” the court said.

Halkbank said in a statement acknowledging the dismissal of the second case that it had also appealed the main case.

The criminal case against the bank is “on hold” pending an appeal for the case to be dropped based on the Foreign Sovereign Immunities Act, the bank said.

In the main case against Halkbank, U.S. prosecutors accused it of using money service providers and front companies in Iran, Turkey and the United Arab Emirates to evade sanctions on Tehran, enabling oil and gas revenue to be spent on gold and facilitating sham food and medicine purchases.

Halkbank has pleaded not guilty to bank fraud, money laundering and conspiracy charges brought in 2019.

(Reporting by Ali Kucukgocmen and Can Sezer; Editing by Lincoln Feast and Giles Elgood)

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