WASHINGTON >> A federal judge in New York on Tuesday rejected the effort by relatives of victims of the Sept. 11 attacks to seize $3.5 billion in frozen Afghan central bank funds to pay off judgment debts owed by the Taliban, dealing a sharp blow to a high-stakes bid to compensate the families for their losses in the worst terrorist attack in U.S. history.

In a 30-page opinion, Judge George B. Daniels of the Southern District of New York ruled that federal courts lacked legal jurisdiction to seize the funds. He also said that awarding them to the families would be unconstitutional because it would mean effectively recognizing the militants as the legitimate government of Afghanistan.

The Sept. 11 families and insurance companies “are entitled to collect on their default judgments and be made whole for the worst terrorist attack in our nation’s history, but they cannot do so with the funds of the central bank of Afghanistan,” Daniels wrote.

Under federal law and the Constitution, he added, “the Taliban — not the former Islamic Republic of Afghanistan or the Afghan people — must pay for the Taliban’s liability in the 9/11 attacks.”

Daniels’ opinion was the first definitive ruling in a complex saga at the intersection of foreign policy, international economics, counterterrorism and domestic politics, a situation arising from a country being seized by a terrorist organization and left without a government that is recognized as legitimate.

In a statement, Lee Wolosky, a lawyer for the lead group of relatives who had sought those funds, said they would appeal the ruling.

When the government of Afghanistan collapsed as the Taliban took over in August 2021, there was about $7 billion in Afghan central bank funds deposited at the Federal Reserve Bank of New York. A group of Sept. 11 families that years earlier had sued the Taliban for their losses, winning a default judgment when the militants failed to show up in court, then moved to seize the funds to pay off the judgment debt.

Last February, President Joe Biden froze the funds, reserving about half to be spent on helping the Afghan people while leaving the remaining $3.5 billion for the families to keep going after in court.