A US federal appeals court on Wednesday threw out a $655.5 million verdict against the Palestinian Authority and the Palestine Liberation Organization for damages suffered by Americans killed and wounded in six attacks in Israel.
The Second US Circuit Court of Appeals in New York ruled that the lower court which issued the February 2015 verdict did not have jurisdiction over the case and ordered it dismissed.
"The terror machine gun attacks and suicide bombings that triggered this suit and victimized these plaintiffs were unquestionably horrific," Judge John Koeltl, writing for the three-member court panel, said in a 61-page ruling.
"But the federal courts cannot exercise jurisdiction in a civil case beyond the limits prescribed by the due process clause of the Constitution, no matter how horrendous the underlying attacks or morally compelling the plaintiffs' claims," it said.
"We vacate the judgment of the district court and remand the case to the district court with instructions to dismiss the case for want of jurisdiction."
The attacks, which took place between January 2002 and January 2004, left 33 people dead and wounded more than 390 others.
Later in 2004, 11 American families filed a civil suit in federal court under a US anti-terrorism law that allows victims of international attacks to pursue foreign entities in the US courts for damages.
In February 2015, after seven weeks of testimony, a jury unanimously found the two Palestinian entities liable on 25 separate counts related to the attacks, initially awarding victims and their families more than $218 million.
They apportioned individual damages ranging from $1 million to $25 million to Americans who were injured or lost loved ones.
The sum was automatically tripled in accordance with US anti-terrorism law to $655.5 million.
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The bombings and shootings were carried out by Hamas and the Al-Aqsa Martyrs Brigades -- an armed offshoot of Palestinian president Mahmud Abbas's Fatah party -- during the second Palestinian uprising against Israel.
Both are blacklisted as terrorist organizations in the United States.
- 'Cruel decision' -
Last year's initial ruling fell well short of the $1 billion sought by lawyers for the 11 plaintiff families.
At the time, their attorney Kent Yalowitz nevertheless said it was a "great day for our country, it's a great day for those who fight terror."
On Wednesday, after the initial verdict was thrown out, Yalowitz lamented the "cruel decision" of the appeals court.
"The very terrorists who prompted the law have now hidden behind the US Constitution to avoid responsibility for their crimes," Yalowitz said in a statement to The New York Times.
"This cruel decision must be corrected so that these families may receive justice."
The attorney said the families were considering taking the case to the full appeals court, or even asking the Supreme Court to hear it.
At the time of last year's initial ruling, the Palestinian Authority -- facing serious financial problems -- expressed concern about the ramifications of the judgment, and said the charges were without merit. It immediately appealed.
The Palestinians said the case was politically motivated by "anti-peace factions" in Israel to block a two-state solution to the Israeli-Palestinian conflict.
In August 2015, a US judge ordered Palestinian authorities to pay $10 million in cash or bond while the appeal was pending, even though the US government had expressed worries about the PA's precarious finances.