The basic facts of the new case differed in but a few details from those of the Bankers Trust (“BT”) case. The Libyan Arab Foreign Bank (“LAFB”) opened two accounts with MHT. The first, opened with MHT’s office in New York, was a current account to be used primarily for settlements. The second account, maintained with the London office, was an investment account. MHT was required to make automatic transfers to this account if the available daily balance in New York exceeded $250,000 and was empowered to effect transfers from the London account to the New York account if the balance in that account fell to less than this figure. The main object of this somewhat complex arrangement, which was similar to LAFB’S arrangement with BT, was to enable LAFB to earn interest at the London rate, which was higher that the rate on investments effected through New York. Another reason for the introduction of the scheme was that, having noted the difficulties that arose in respect of Iranian accounts maintained in the United States during the period of the Islamic revolution, LAFB preferred to have the bulk of funds deposited by it with American banks credited to accounts maintained outside the United States.

On 8 January 1986, President Reagan made his final Order blocking all accounts maintained with American banks by bodies controlled by the Central Bank of Libya. The Order, which purported to apply to all inland as well as overseas branches of American banks, listed LAFB. Consequently, the arrangement between MHT and LAFB had to be altered. Thereafter, all transfers to and from the account maintained in London were discontinued. When the balance in