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'Powerful and dangerous' Israel firm faltering in bid to shut down phone hacking lawsuit

An Israeli woman uses her iPhone in front of the building housing the Israeli NSO group, on 28 August 2016, in Herzliya, near Tel Aviv. [JACK GUEZ/AFP/Getty Images]
Building housing the Israeli NSO group, on 28 August 2016, in Herzliya, near Tel Aviv [JACK GUEZ/AFP/Getty Images]

The "powerful and dangerous" Israeli spyware firm NSO Group has suffered a major setback in its bid to shut down a lawsuit over the hacking of WhatsApp. Facebook, which owns the popular messaging service, filed a lawsuit against the Israeli firm two years ago alleging that NSO marketed and maintained spyware used to compromise the accounts of journalists, human rights activists, and dissidents around the world.

Though interest in the case faltered, American attention over the spyware's use was raised three months ago when the Israeli firm was labelled "powerful and dangerous" in a joint legal filing. Calls were made for the company to be held liable to US anti-hacking laws.

Arguments heard yesterday before the 9th US Circuit Court of Appeals suggests that the Israeli firm is unlikely to prevail in its bid to shut down the lawsuit. All three judges on the panel seemed to be leaning against granting NSO's request to force the dismissal of the suit over the firm's Pegasus snooping software, said a report in Politico.

NSO has been arguing that it should benefit from "sovereign immunity" because it sells its software to unidentified sovereign government clients, and "were contractors of the foreign sovereigns acting within the scope of their employment".

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However, two judges on yesterday's panel suggested it would be premature or mistaken for the courts to dismiss the case based on the doctrine of sovereign immunity without the US government declaring that such action was needed to protect foreign countries relying on NSO's software.

"I find the argument that your clients are making, in this case, remarkable," Judge Danielle Hunsaker is reported saying while rejecting the diplomatic immunity claim. "Shouldn't we have some sort of a signal from the State Department, from the executive branch, about — to guide those considerations instead of just as a court sort of leaping out into a whole brand new area that from that perspective nobody's ever gone … without any lead from the executive branch?" asked Hunsaker. The second judge also pressed the NSO representative on the matter.

Dismissing NSO's defence, Facebook's attorney, Michael Dreeben, said that the Israeli firm's position in the suit was undercut by the lack of any government speaking up for the firm. "We have no foreign state that's come forward on NSO's behalf. We don't even know who those states are," he said insisting that the NSO is "a private multinational company that's selling spyware around the globe."

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If NSO comes up on the losing end of the appeal, it could ask for a review by a larger set of 9th Circuit judges or by the Supreme Court.

The Israeli-based NSO group has gained notoriety for a tool called Pegasus. Human rights groups have warned that Pegasus was being used to target rights activists, journalists, and government officials in such diverse locations as Mexico, Morocco, and India. Last month an Al Jazeera documentary revealed that the Israeli firm was secretly selling its spyware to Bangladesh through a criminal gang.

Saudi Crown Prince Mohammed Bin Salman is one of a number of authoritarian rulers that are said to have employed the Pegasus spyware to go after political opponents and critics. The Biden administration released the long-awaited report which held the crown prince responsible for the grisly 2018 murder of Washington Post columnist Jamal Khashoggi.

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