The fate of a $655 million judgment against the Palestinian Authority (PA) is in the hands of a federal appellate court.

Judges at New York's 2nd U.S. Circuit Court of Appeals heard arguments Tuesday in the case of Sokolow v. PLO, et al., in which jurors found the PA and the Palestine Liberation Organization liable for a series of terrorist attacks in 2001-2004 that were part of the Palestinian intifada.

Those attacks killed or wounded members of 11 American families who filed the lawsuit under the Anti-Terrorism Act (ATA). During a six-week trial last year, jurors saw internal PLO and PA records showing payments to terror cells that were part of the Al-Aqsa Martyrs Brigades, which was created by the PLO. Families of PA and PLO employees killed carrying out terrorist attacks, or who were imprisoned after attacks, also received monthly payments.

The PA's defense hinges on an argument that U.S. courts do not have the jurisdiction to hear such a lawsuit. The United States does not recognize Palestine as a sovereign state, they argued, and the PA's activities here fail to meet the standard for being "at home."

In arguments Tuesday, PA attorney Mitchell Berger said the Manhattan district court was "plainly wrong" to hear the case.

"Their own experts said the brunt of the injury, which is the key question, was on Israel, not the United States," he said. In his brief, Berger also pointed to three similar lawsuits that were dismissed by federal judges in Washington, D.C. for a lack of jurisdiction.

Attorneys for the victims say the PA is within reach of U.S. courts because of its activities here. They also point to internal records which made it clear that the attacks were waged in part to influence American policy. In addition, the PA "chose to enter" the United States and "can be charged with knowledge of its laws" because it appointed a representative under the Foreign Agent Registration Act ('FARA')."

Overturning the judgment threatens to turn the ATA into "a dead letter, inapplicable to the very fact pattern Congress designed it to address. Under Defendants' theory, they may come to the United States to extract funds from our government on the understanding that they will live up to their promise to renounce terror, open a lobbying office in Washington, D.C., then murder U.S. citizens and support U.S. designated FTOs to provide teeth to their U.S. lobbying efforts— and yet avoid facing justice in the U.S. courts. That position is as meritless as it is offensive, and this Court should reject it."

Read the full plaintiffs' brief here. The PA's appeal is here.