By Daniel Wiessner 

ALBANY, N.Y., Nov 20 (Reuters) - A lawsuit against a Lebanese bank accused of funneling money to the Islamist group Hezbollah through a local bank account can be heard in New York, the state's top court has ruled.

The federal suit was brought by dozens of victims of two 2006 rocket attacks in northern Israel that were allegedly perpetrated by Hezbollah. The plaintiffs claim that Beirut-based Lebanese Canadian Bank used an account with American Express in New York to wire millions of dollars to the group.

In a unanimous decision, the Court of Appeals on Tuesday found that because the claims arose from an alleged transaction that took place in New York, courts in the state may hear the case.

The plaintiffs' allegations "show purposeful availment of New York's dependable and transparent banking system, the dollar as a stable and fungible currency, and the predictable jurisdictional and commercial law of New York and the United States," Judge Susan Read wrote for the court.

The decision sent the case back to federal court, where it was initiated.

The victims of the attacks and their relatives filed suit against the Lebanese bank in 2008, claiming it knew the transfers were being used to fund terrorist plots. They also sued American Express Bank for negligence.

U.S. District Judge George Daniels in 2010 dismissed the case against both banks, finding that the alleged use of the American Express account to wire funds was incidental to the attacks.

The U.S. Court of Appeals for the 2nd Circuit in March reinstated the case against the Lebanese bank and asked the Court of Appeals to weigh in on whether New York courts had jurisdiction.

The federal court asked whether the Lebanese bank's alleged wire transactions constituted a "transaction of business" under state law, and whether the plaintiffs' claim arose from them. The Court of Appeals answered both questions in the affirmative.

The court found that New York courts have jurisdiction over the case because the alleged wires h appened repeatedly, and the bank was accused of knowingly funding terrorism.

The Lebanese bank "did not (allegedly) route a transfer for a terrorist group once or twice by mistake," Read wrote. "Rather, plaintiffs allege that LCB deliberately used a New York account again and again to effect its support of (Hezbollah) and allegedly shared terrorist goals."

Chief Judge Jonathan Lippman and Judges Carmen Ciparick, Victoria Graffeo, Eugene Pigott and Robert Smith concurred.

The lawsuit was spearheaded by the Shurat HaDin Israel Law Center in Tel Aviv. In a statement on Tuesday the founder of the center, Nitsana Darshan-Leitner, said "every bank around the world, whether they have branches in New York or not, now knows that if they move terror money through New York they can be (hauled) into an American court and held liable by the terror victims."

Jonathan Siegfried, who represented Lebanese Canadian Bank, and Robert Tolchin, the lawyer for the plaintiffs, did not return requests for comment.

The case is Yaskov Licci v. Lebanese Canadian Bank, New York State Court of Appeals No. 183.

For the plaintiffs: Robert Tolchin.

For the bank: Jonathan Siegfried of DLA Piper.

Follow us on Twitter @ReutersLegal | Like us on Facebook