To Be Argued By: CARMINE D. Boccuzzi
Time Requested: 3 0 MINUm~s
New York County Clerk's Index Nos. 60 1650/09 & 590643/09
C~ourt of Z~ppeato
b'tate of ARetu Pork
Case No. A-PL-2013-00007
MASHREQBANK PSC,
Plaintiff-Appellant,
-against-
AHMEfD HAMAD AL (ioSA[]BI & BROTHERS COMPANY,
Defendant-Respondent
AHMED HAMAD AL GOSAIB & BROTHERS COMPANY,
Third-Party Plaintiff-Respondent,
-against-
MAAN ABDuLWAIIEED AL SAxiE.m
Third-Party Defendant-Appellant,
AXVAL BANK BSC,
Third-Party Defendant
BRIEF FOR PLAINTIFF-APPELLANT MASIIREQBANK PSC
DAviD E. BRODSKY
CARmiNE D. BoCCuzz
LiANA RozA ViTALE
DANiELLE J. LEviNE
CLEARY GoTrLiEB STEEN & HAmILTON LLP
One Liberty Plaza
New York, New York 10006
(212) 225-2000
cboccuzzi~cgsh.com
Attorneys for Plaintiff-Appellant
Mashreqbank PSC
DISCLOSURE STATEMENT
MASHREQBANK PSC
Address: Mashreqbank Building
Omar Bin Al Khattab Street
P.O. Box 1250
Dubai UAE
Tel: +971 4-424-4444
1) Mashreqbank PSC is a publicly held company listed on the Dubai Financial
Market. Mashreqbank PSC has no parent corporation, nor does any publicly
held corporation own 10% or more of its stock..
2) Below is. a list of all subsidiaries and affiliates of Mashreqbank PSC:
" Mashreq Capital - Dubai International Financial Center
" Al Yamama Services
" mInaz Services
" Roya Executive Ltd.
" Bracebridge Ltd.
* Orriston Ltd.
" Makaseb Funds Co. (Bahrain)
" Makaseb Funds Co. (Bahrain) HI
" Makaseb Funds Co.'(Bahrain) III
" Mashreq Securities
" Mashreq Al Islami Finance Co mpany
" Mindscape Information Technology
" Osool Finance
" Oman Insurance Ltd. Co. (publicly listed on the Dubai Financial Market)
TABLE OF CONTENTS
Page
DISCLOSURE STATEMENT.............................................
TABLE OF AUTHORITIES....................................................... iv
PRELIMNARY STATEMENT................................................... 1
QUESTIONS PRESENTED ....................................................... 7
STATEMENT OF FACTS AND PROCEDURAL HISTORY................. 8
A. The Parties.................................................................... 8
B. Mashreq Is Forced to File Suit in New York Following
AHAB's Payment Default ................................................... 9
C. The Third-Party Complaint and Counterclaim ........................... 10
D. Related Litigation in the UAE and in Other Jurisdictions............... 12
E. The Supreme Court's Forum Non Conveniens Dismissal............... 15
F. The September 25 Decision and Dissent.................................. 20
ARGUMIENT....................................................................... 23
1. THE APPELLATE DIVISION DECISION CONFLICTS
WITH PAHLA VI BECAUSE A PURPORTED LACK OF
ALTERNATIVE FORUM IS NOT A BAR TO DISMISSAL
FOR FOR UM NON CON VENIENS........................................ 23
II. THE MERE FACT THAT ELECTRONIC FUNDS FLOWED
THROUGH A NEW YORK BANK ACCOUNT IN
CONNECTION WITH AN OTHERWISE WHOLLY
FOREIGN DISPUTE DOES NOT COMPEL NEW YORK
COURTS TO HEAR THE CASE .......................................... 27
III. THE APPELLATE DIVISION'S INCORRECT CHOICE
OF LAW ANALYSIS FURTHER CONTRIBUTED TO ITS
ERRONEOUS REVERSAL OF THE SUPREME COURT............ 34
IV. THE APPELLATE DIVISION ERRED IN CONCLUDING
THAT THE BAR ON SUA SPONTE DISMISSALS FOR
FOR UMNON CONVIENIENS APPLIED HERE ........................ 35*
V. IN THE ALTERNATIVE, THE APPELLATE DIVISION
ABUSED ITS DISCRETION.............................................. 40
CONCLUSION..................................................................... 42
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Patriot Exploration, LLC v. Thompson & Knight LLP,
16 N.Y.3d 762 (2011)............................................................... 40,41
Schultz v. Boy Scouts of Am.,
65 N.Y.2d 189 (1985)................................................................ 34
Shin-Etsu Chem. Co., Ltd. v. 3033 ICICI Bank Ltd.,
9 A.D. 3d 171 (1lst Dep't 2004)...................................................... .25
Silver v. Great Am. Ins. Co.,
29 N.Y.2d 356 (1972) ................................................................ 5,32
Smith v. Miller,
23 7 A.D. 2d 294 (1 st Dep't 1997)..................................... 22,537,)39
Sta ndard Chartered Bank v. Gosaibi,
957 N.Y.S.2d 602 (Sup. Ct. N.Y. Cnty. 2012) ................................... 12,33
VSL Corp. v. Dunes Hotels & Casinos,
70 N.Y.2d 948 (1988) ...................... !.................................... 36, 37, 39
US. v. Approximately $2,718,665.70 Formerly on Deposit
in Pershing, LLC, No. 11 Civ. 9176 VM, 2013 WL 2393144
(S.D.N.Y. May 23, 2013) .......................................................... 26
Other Authorities
About CHIPS, http ://www.chips.org/about/pages/033 73 8.php (last visited
July 29, 2013) ..... ................................................................. 30
David Seigel, N.Y. Practice § 529 (5th ed. 2012) ................................ 4
Douwe Miedema, Cayman Judge Orders Al-S anea Freezing Order Lifted
Reuters (Sept. 22, 2011), http://www.reuters.com/article/2011/09/22/
saadgroup-idUSL5E7KL85 8201 10922 (last visited July 29, 2013)............ 12
Plaintiff-Appellant Mashreqbank PSC ("Mashreq"') respectfully
submits this brief in support of its appeal of the 3-2 September 25, 2012 decision
of the Appellate Division, First Department (the "September 25 Decision")
reversing the Supreme Court's dismissal of these proceedings for forum non
conveniens.1
PRELIINARY STATEMENT
This case exemplifies the burdens that will be visited on New York
courts arnd litigants if the September 25 Decision is allowed to stand. All of the
parties and most of the witnesses and documentary evidence are located in the
Mfiddle East, all of the transactions underlying the dispute were executed in the
Middle East, and all of the claims could be (and are being) litigated in the Middle
East and elsewhere around the world.. Not a single document, and not a single
identified witness is located in New York state, and not a single disputed act
occurred here.
In sharp contrast with the September 25 Decision's incorrect
conclusion that there is no adequate alternative forum, the claims between Mashreq
and Defendant-Appellee Ahmed Hamad Al Gosaibi & Brothers ("AHAB") are the
subject of duplicative litigation currently pending in the United Arab Emirates
1Masbreq incorporates by reference all arguments in its August 10, 2011 brief to the Appellate
Division and its February 8, 2013 letter to this Court.
("UAE") where Mashreq is headquartered. See n.9, infra; R. 26-27 (July 26, 20 10
Order) ("Mashreqbank has commenced litigation in the UAE that includes and
encompasses the alleged damages and breaches" in the New York action, and the
resulting "risk of duplication of effort, as well as of inconsistent rulings by courts
of different jurisdictions" weighed in favor of dismissal.). While AHAB waited
the full nine months to perfect its appeal -to the Appellate Division, the UAE
litigation moved forward. In January 2012, the UAE court rejected the same
theories AHAB now seeks to relitigate in New York, issuing a decision in
*Mashreq's favor, which AHAB is currently appealing. Aft of Mohamad Hamdan
in Supp. of Masbreq Mot. to Dismiss, 3, 12, Feb. 25, 2013, Dkt. No. 175.
(,HaMd=n Aff",). 2
The September 25 Decision not only requires the trial court to
adjudicate a dispute that is being litigated elsewhere, but requires it to do so even
though key witnesses - namely the individual AHAB partners and their in-law and
agent Third-Party Defendant-Appellant Maan Al Sanea ("Al Sanea"') - are
2 There is no global stay of proceedings before the Supreme Court pending this Court's review of
the tbresholdforum non conveniens issues. On February 25, 2013, Masbreq moved to dismiss
the Counterclaims asserted by AHAB as precluded by the UAE judgment Masbreq Mot. to.
Dismiss at 10-12,February 25, 2013,. Dkt. No. 177. AHAB opposed the motion, -arguing that as
a matter of UAE law the judgment is not final and therefore not entitled to preclusive effect
AHAB Opp. to Masbreq Mot. to Dismiss at 8-9, March 25, 2013, Dkt. No. 197, requiring the
trial court to become further enmeshed in issues of foreign law. On July 25, 2013, the Supreme
Court issued its order dismissing AHAB's counterclaim. While accepting AHAB's argument
that preclusion is premature because AHAB is appealing the UAB judgment in Mashreq's favor,
the Supreme Court agreed that the doctrine of in pari delicto barred AHAB's counterclaim.
2
forbidden by a travel ban from leaving their home country of Saudi Arabia. As the
Supreme Court succinctly put it at oral argument: "I want to kno-w how I'm going
to preside oVer a tial where the principal witnesses are confined to their
residential countries." R. 1470:25-1471:2 (Mar. 25, 20 10 Hr'g Tr.) (emphasis
added). Further, by AHAB's own admission, the court will be required to review
and interpret the meaning of key documents in translation s from their Arabic-
language originals, hear key witnesses' testimony through translators, and apply
foreign law. See, e.g., R. 1782 at 99:4-6 (Tr. of London Proceedings, Day 3)
(explaining AHAB's delay in producing documents and witness statements, noting
that "a vast amount of the documentation [relevant to AHAB and its banking,
relationships] was in Arabic and we -have had six agencies of translators working
on the documentation."); R_ 1784 at 145:1-4 (Tr. of London Proceedings, Day 3)
(explaining arrangements for "more than one interpreter, because there will have to
be shifts"); id. at 145:11-17 (uncontested statement by London plaintiffs' counsel
that AHAB's Managing Director Saad Al Gosaibi might testify in Arabic); AHAB
Appeal Br. at 43 (recognizing "as possibly raising an issue of foreign law is [Al
S anea' s] contention that this action will turn on principles of agency under Saudi
law."); AH{AB Appeal Reply Br- at 16 ("costrction... of the.. Mashreq loan
documents might arguably be governed by UAE law.").
The only arguable connection between this dispute and New York is
the fact that certain transactions entered into and executed by individuals in the
UAE and Saudi Arabia, where the relationship between the parties was centered
and their business dealings took place, involved electronic funds transfers through
New York bank accounts.3 The September 25 Decision erroneously ruled that this
ministerial funds transfer in New York trumps nearly every other factor in the
forum non conveniens analysis.
That ruling was one of several unprecedented constraints the
September 25 Decision - over the vigorous dissent of two Justices - imposed on
trial courts' ability to dismiss cases for forum non conveniens. Each of these
newly-minted limitations conflicts with applicable precedent, as well as this
Court's repeated instruction that flexibility rather than rulemaking is required in
this area of law. See, e.g., Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 479
3 The majority opinion contained numerous misstatements of undisputed facts that were clear
from the record. See Djavid Seigel, NY Practice § 529 (5th ed. 2012) (citing Lazarus v. Bowery
Savings Bank, 16 N.Y.2d 793 (1965) ("A record may point so compellingly to a given fact that a
failure to find it can be regarded as an error of law."). For example, the majority opinion
incorrectly states that Masbreq filed the instant action "seeking to recover $150 million in
connection with a series of financial transactions executed in New York." R. 1796 (September
25 Decision). In fact, the transaction was executed by Mashreq's headquarters in Dubai and the
related electronic funds transfer f lowed through Masbreq's New York branch with no human
involvement whatsoever in New York- Once the electronic funds transfer is initiated by
Mashreq employees in Dubai the process is completely automated. The only role of Mashreq's
New York branch in this process would be making sure its electronic funds transfer system
remains turned on. See Mashreq Mot. for Reargument or Leave to Appeal at 9. Nowhere in
AHAB's Counterclaim does it allege that these transactions were executed in New York.
Although AHAB has sought to re-characterize the transactions as being executed in New York
for purposes offorum non conveniens, there is no factual basis for such a claim.
(18)(rejecting rule that forum non convenieny not permitted absent an adequate
alternative forum, noting "[t]he great advantage of the rule of forum non
conveniens is its flexibility"); Martin v. Mieth, 3 5 N.Y.2d 4 14, 418 (1974)
(rejecting rule that forum non conveniens dismissal not permitted when-the
accident at issue in the litigation occurred in New York, noting "the touchstone of
forum non conveniens is flexibility"); Silver v. Great Am. Ins. Co., 29 N.Y.2d 3 56,
361 (1972) (overruling prior decisions holdingforum non conveniens dismissals
not permitted when one of the parties was a New York resident, noting that
"cgreater flexibility in applying the [forum non conveniens] doctrine is not only
wise but, perhaps, necessary"). Specifically, the September 25 Decision imposed
the following unjustified restrictions on forum non conveniens dismissals:
(a) An "adequate alterative forum"' requirement explicitly
rejected by this Court in Pahlavi, 62 N.Y.2d 474, along with
a rigid inquiry of the alternative forum's adequacy that is
inconsistent with precedents holding a forum is adequate
when "the defendant is amenable -to process in that
ju risdiction and the alternative forum permits litigation of
the subj ect matter o f the dispute;"
4 See, e.g., Gryphon Domestic VI, LLC v. APP Int'l Fin Co., B. V, 41 A.D.3 25, 37 (1lst Dep't
2007) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n.22 (198 1)).
5
(b) A virtually absolute rule that no case alleging a fraud that in
any way involves a New York bank account can be
dismissed for forum non conveniens - no matter how
strongly the traditionalforum non conveniens factors weigh
in favor of dismissal or how tangential the role of the New
York bank account is to the issues in dispute in the case.
(c) An inflexible and formalistic interpretation of CPLR 3 27(a)
to mean the court cannot dismiss for forum non conveniens
any claim that is not specifically enumerated in the initial
motion papers, even where the issue offorum non
conveniens is raised by a party and all parties had an
opportunity to fully brief and be heard on the issue, as
indisputably occurred here. See n.8, 10, infra.
Each of these errors merits reversal. The restrictions announced in the
September 25 Decision would force New York courts to add unnecessarily to their
already overburdened dockets, and result in parties being required to litigate in
New York, even where New York is a patently inconvenient forum, and in fact the
parties are litigating. the exact dispute in other, more appropriate fora. The
September 25 Decision thus undermines the fundamental purpose offorum non
conveniens, which exists so that a litigant like AHAB - a defaulting debtor
engaged in multiple legal proceedings around the world - cannot subject the courts
and its adversaries to unnecessarily burdensome litigation of this nature. The
September 25 Decision should also be reversed because the majority failed to
perform the "interest analysis" required for choice of 'law issues, leading it to
incorrectly conclude that New York law applied and compounding the errors in its
ruling on forum non conveniens.
Although the Justices were sharply divided on the legal issues, the
panel unanimously agreed that the September 25 Decision merited this-Court's
review. R. 1792-93 (Dec. 28, 2012 Order). In so concluding, the Justices
implicitly held that the correct resolution of these legal issues has significant
implications for New York courts. 5 The Justiceas also unanimously agreed that the
September 25 Decision "was made as a matter of law and not in the exercise of
discretion." R. 1793 (Dec. 28, 2012 Order).
QUESTIONS PRESENTED
1 . Did the Appellate Division err in reversing the Supreme Court's
dismissal, on grounds offorum non conveniens, of a dispute among Saudi parties
and a UAE bank, based on its conclusion that even though all of the same issues
are already being adjudicated- in -other jutisdictions, no single alternative
SSee 12 Jack B. Weinstein et al., New York Civil Practice: CPLR 5602.05, at -56-90 (2d ed.
2005) (leave to appeal should be granted where the case presents issues "of public importance")
(citation and internal quotation marks omitted).*
jurisdiction exists where the entire proceeding could be heard together,
notwithstanding this Court's decision in Islamic Republic of Iran v. Pahlavi, 62
N.Y.2d 474 (1984) that the purported lack of an alternative forum is not itself a bar
to a forum non conveniens dismissal?
2. Did the Appellate Division err in concluding that this Court's bar on
sua sponte dismissals for forum non conveniens applied here, wvhere the thirxd-party
defendant moved to dismiss pursuant to CPLR 327, all parties briefed and were
heard on the question offorum non conveniens, and no party challenged the court's
power to dismiss the entirety of the action?
3. Does the decision of the Appellate Division unduly limit the flexible
application of the doctrine offorum non conveniens requiredby this Court's
precedent, both in its incorrect interpretation of when a court acts "sua spohzte" and
its conclusion that the mere fact of electronic funds transfers flowing through a
New York bank ac count in connection with an otherwise wholly foreign dispute
requires the case to be heard here?
STATEMENT OF FACTS AND PROCEDURAL HISTORY
A. The Parties
Plaintiff Mashreq is a UAE bank, headquartered in Dubai. R. 109
(AHAB TPC T 14). Defendant AHAB is a Saudi Arabian partnership consisting of
20 members of the Saudi Arabian Al Gosaibi family. R. 50 (Compl. 11); R. 76
(Answer 2). The individual partners of AHAB (the "AHAB Partners") are
citizens and residents of Saudi Arabia except one AHAB partner who lives in the
UAE. R. 17 (July 26, 2010 Order); R. 622 27 (Al-S anea Aff.). Third-Party
Defendant Al Sanoa, AHAB's authorized manager and agent, is a S audi national
and married to one of the AHAB Partners. R. 401 (AHAB TPC 12). The Saudi
Arabian government has imposed a travel ban on the AHAB Partners and Al Sanea
that prevents them from leaving Saudi Arabia. R. 25 (July 26, 20 10 Order).
B. Mashreq Is Forced to File Suit in New York Following AHAB's
Payment Default
Mashreq and AHAB had a commercial banking relationship for'
several years. Over the course of the relationship, Mashreq filled many of the
banking needs of AHAB and its subsidiaries, including the performance of foreign
exchange transactions. R. 94, 97-98 (AHAB CC 21, 29). On May 5, 2009,
AHAB defaulted on its end of a $150 million foreign exchange transaction. R. 52
(Compl. 8). The transaction was entered into by Mashreq in Dubai and AHAB in
Saudi Arabia. Pursuant to the terms of the parties' agreement, which was governed
by UAE law, Mashreq's UAE headquarters - at the request of AHAB - executed a
wire transfer of $150 million to AHAB's own bank account with Bank of America
in New York. R. 94-95 (AHAB CC 21 (a), 21 (d); R. 77 (Answer 5-7); R. 113
(AHAB TPC 25); K 1600 (Sept. 25, 2009 Gouldy Aff. Ex. A, July 16, 2008
Facilities Letter Agreement). AHAB failed to make its required payment of Saudi
riyals to Mashreq's account in Saudi Arabia.
Due to AHAB' s default on its end of the foreign exchange transaction,
Mashreq filed a complaint against AH{AB in New York on May 27, 2009.
Mashreq also filed a related action against the AHAB Partners based on the same
defaulted foreign exchange transaction with AHAB. Masbreq's complaint against
the individual AHAB Partners was also dismissed by the Supreme Court forforum
non conveniens. Ea contrast with AHAB's position in this appeal, neither AHAB
nor its partners made any, objection to the Supreme Court's dismissal of the AHAB
Partners action.
Mashreq filed these actions in New York because it expected that
AHAB and its partners might have assets in New York, including the $150 million
Mashreq paid into AHAB's New York bank account. R. 1453:16-20. By the time
Mashreq brought suit, AHAB had already removed the funds from the account,
and Mashreq's investigations subsequently revealed that the AHAB Partners did
not have any assets in New York. Id.; R. 1814 (September 25 Decision, Dissent).
C. The Third-Party Complaint and Counterclaim
On July 15, 2009, AHAB answered Mashreq's complaint in the New
York proceeding and asserted a variety of affirmative defenses, including lack of
personal jurisdiction. R. 87 (Answer 13). Despite contesting the Court's
jurisdiction; AHAB filed a third-party complaint against Al Sanea, alleging that Al
Sanea had engaged in a "scheme to loot" AJAB. R. 105-06 (AHAB TPC 4, 8).
AHAB and its partners assert, incredibly, that Al Sanea - who, in addition to
having been their authorized managing agent, was also their in-law and neighbor -
borrowed nine billion dollars in AHAB's name from over one hundred banks
around the world, all without AHAB's knowledge or approval. Id AHAB later
filed a counterclaim against Mashreq based on a vague and implausible theory that
Masbreq somehow aided and abetted Al Sanea's alleged misconduct by providing
him with "money to steal" (Mashreq's own) When Masbreq entered into the
foreign currency transaction defaulted on by AHAB. R. 88, 96-98 (AHAB CC
4, 23-30). That counterclaim - which sought recoveries for AHAB based on
alleged misconduct by its agent Al Sanea - was recently dismissed by the Supreme
Court as barred by the doctrine of in pari delicto. See n.2, supra; Order, dated July
25, 2013, Dkt. No 214 at 7-9 (citing Kirschner v. KPMG LLP, 15 N.Y.3d 446
(2010)).
AHAB has advanced the same far-fetched theories concerning the,
AHAB Partners' alleged ignorance of Al Sanea's business dealings on their behalf
in num erous proceedifigs outside New York. For example, AHAB made this
argument in London proceedings brought by other bank creditors, but withdrew its
defenses during the course of the trial after making a belated production of
documents showing that - contrary to its earlier assertions - the AHAB Partners
had knowledge of Al Sanea's activities. R. 1777 -at 19:2-25 ( Tr. of London
Proceedings, Day 2).6 Following this belated disclosure, the Court in a related
Caymian proceeding - where'AHAB is pursuing a $9.2 billion claim against Al
Sanea - dissolved a world-wide freezing order because the "new documents
showed [the AHAB Partners] knew more about Al-Sanea's activities than they had
hitherto said.". Douwe Miedema, Cayman Judge Orders Al-Sanea Freezing Order
Lifted, Reuters (Sept. 22, 2011),
http://wwvw.reuters-com/article/201 1/09/22/saadgroup-idUSL5E7KL85 820110922
(last visited July 29, 2013). A Bahraini tribunal also rejected AHAB's theories in
the context of a lawsuit brought by another foreign bank, and that judgment has
recently been granted recognition in New York. Standard Chartered Bank v.
AhmadHamadAl Gosaibi & Bros. Co., 957 N.Y.S.2d 602 (Sup. Ct. N.Y. Cnty.
20.12) (granting recognition of Bahraini judgment against AHAB).
D. Related Litigation in the UAE and in Other Jurisdictions
On July 8, 2009, after it became apparent that AHAB's default on the
foreign exchange transaction was not an isolated default on certain of its
obligations to, Mashreq, but rather part of a large-scale, systemic default by AHAB
6 Mr. Justice Flaux presided over the London proceedings and commented on the AHAB
Partners' purported excuse for failing to disclose the documents as "frankly, incredble ... [and]
putting it bluntly, laughable." R. 1781 at 94:8-19 (Tr. of London Proceedings, Day 3).
12
on its obligations owed to scores of banks globally, Mashreq filed a complaint
against AHAB ,and the AHAB Partners in the UAE. In its UAE action, Mashreq
sought to recover 1.4 billion UAE Dirhams (approximately $400 million), the
totality of AHAB' s defaulted bilateral obligations -to Mashreq. That amount
included the defaulted foreign exchange transaction that is the basis for Mashreq's
claims in New York. R. 1354 (Mar. 9, 20 10 Gouldy Aff. Ex. C, July 8, 2009
Statement of Claim in UAE Action); R. 26 (July 26, 2010 Order). After two and a
half years of litigation, the UAE Court in January 2012 rejected AH{AB 's
arguments - including the same fraud and forgery allegations AHAB seeks to
relitigate here - and entered a well-reasoned judgment in Masbreq' s favor, which
AHAB is currently appealing. Hamdan Aff. 3, 12.
AHAB is also litigating the same issues concerning Al Sanea's.
alleged forgeries and fraud in jurisdictions all over the world, including Saudi
Arabia, Bahrain, London, Switzerland and the Cayman Islands. R. 27 (July 26,
20 10 Order). The London proceedings include -actions against AHAB and its
partners brought by banks similarly situated to Mashreq, which have resulted in
judgment for the banks after AHAB withdrew its spurious defenses. Of relevance
to this appeal, are record admissions in these proceedings by AHAB that fur-ther
confirm the correctness of the Supreme Court's dismissal here and contradict
AHAB's assertions that New York is a convenient forum for these disputes:
e Contrary to AHAB's assertion here that "[e]very single document
that matters in this case is in English," R. 1479:9-10 (Mar. 25,
20 10 Hr'g Tr.), in London AHAB's counsel explained that "a vast
amount of the documentation [relevant to AHAB and its banking
relationships] was in Arabic and we have had six agencies of
translators working on the documentation." See R. 1782 at 99:4-7
(Tr. of London Proceedings, Day 3) (explaining AHAB's delay in
producing documents and witness statements). 7
* Contrary to AHAB's assertion here that "[a~ll of the key
witnesses . .. speak English; many of them speak it exclusively,"
AHAB Appeal Br. at 15, AHAB's London counsel also admitted
that witnesses would testify in Arabic using interpreters. See R.
1784 at 145:1-5 (Tr. of London Proceedings, Day 3) (explaining
arrangements for "more than one interpreter, because there will
have to be shifts"); see also id. at 145:11-17 (uncontested
7 AHAB's general assertion in its April 26, 2013 letter to this Court that these documents have
now been translated; thereby allegedly ameliorating this concern, merely confirms that
documents central to the dispute are not in English, but in Arabic, and otherwise avoids the fact*
that no doubt countless other Arabic-language documents exist. Even as to previously translated
documents, both the New York court and Mashreq will be put to the burden of reviewing
original documents and translations, as well as dealing with any ancillary disputes concerning the
accuracy of the translations.
statement by plaintiffs' counsel that AH{AB's Managing Director
S aad Al Gosaibi might testify in Arabic)..
E. The Supreme Court's Forum Non Conveniens Dismissal
In the Supreme Court, the parties filed motions to dismiss, including
Mashreq's motion to dismiss AHAB's counterclaim for failure to state a claim, the
AHAB Partners' motion to dismiss Mashreq's complaint for lack of personal
jurisdiction, and Al Sanea's motion to dismiss AHAB's third-party complaint for
forum non conveniens. At the hearing on Mashreq's motion to dismiss AHAB's
counterclaim, the Supreme Court unambiguously indicated to the parties its
understanding that Al Sanea's motion gave it the power and discretion to dismiss
the entire action on grounds offorum non conveniens. R 659:4-7 (Jan. 5, 2010
Hr'g Tr.) (Supreme Court to Mashreq's counsel: "I also want -- I want you to
respond to a forum non convemens argument because I am very, very concerned, if
you will, that these cases do not belong here. All right?"); see also id. at R. 653:22-
25 ("Would you all agree that the motion -- if the motion to dismiss for forum non
conveniens has, shall we say, legs, it affects everything else?").
All parties then had the opportunity to brief theforum non conveniens
issue with respect t& both the first and third-party actions!8 As noted by the
8 Masreq accordingly submitted both an opening and reply brief addressing forum non
conveniens issues with respect to the first-party action and AHAB also submitted a brief
specifically addressing. the issue offorum non conveniens as applied to the first-party action.
S15
Justices dissenting from the September 25 Decision, both Al Sanea and Mashreq
made clear in briefing and at oral argument their understanding that the Supreme
Court had the power to dismiss the entirety of the action and"AHAB never
challenged those statements.' R. 1817-18 -(September 25 Decision, Dissent). See
also Al Sanea Reply Mem. of Law in Supp. of Mot. to Dismiss the Am. Third-
Party Compl. on Grounds of Forum Non Conveniens at 2, Mar. 9, 2010, Dkt. No.
105 ("this Court can dismiss the entire case (including Mashreq' s action) in light of
Mr. A1-Sanea's forum motion") (citing cases); id at 8 ("Mashreq's action itself
could be litigated in more convenient fora, such as Saudi Arabia or the U.A.E. and,
thus, should be dismissed."); R. 1459: 10-11 .(Mar. 25 Hrg Tr.) (statement by
Counsel for Al Sanea that the Court "would be well- founded to dismiss the entire
thing"); Mashreq Reply Mem. of Law in Connection with Mot. by Third-P arty
Def. Maan Al Sanea to Dismiss the Third-Party Compi. on Grounds of Forum Non
Conveniens at 3, Mar. 23, 20 10, Dkt. No. 115 (statement by Masbreq that it did not
Mashreqbank's PSC's Mem. of Law in Connection with Mot. by Third-Party Def. Maan Al
Sanea to Dismiss the Third-Party Compi. on Grounds of Forum Non Conveniens, Mar. 9, 20 10,
Did. No. 103; Abmad Hamad Al Gosaibi & Bros. Co.'s Resp. to Mashreqbank's PSC's Mem. of
Law in Connection with Mot by Third-Party Def. Maan Al Sanea to Dismiss the Third-Party
Compi. on Grounds of Forum Non Conveniens, Mar. 18, 2010, Did. No. 113; Reply Mem. of
Law in Connection with Mot by Third-Party Def. Maan Al Sanea to Dismiss the Third-Party
Compi.- on Grounds of Forum Non Conveniens, Mar.-9,2010, Did. No. 105. The September 25
Decision erroneously states that it is "not true" that "the motion court invited submissions for
dismissal of the entire case" and that "the court only scheduled briefing for Al Sanea' s motion to
dismiss the third-party action." K. 1803 (September 25 Decision). However, as the undisputed
record shows, and the dissenting Justices correctly noted, R. 1817 (September 25 Decision,
Dissent), all parties submitted briefing concerningforum non conveniens as applied to the entire
action.
object to forum non conveniens dismissal of the first-party claims along with the
third-party claims).
To the contrary, AHAB's counsel agreed with the Supreme Court that
its "ccase against Al Sanea, is completely intertwined with [its] defense to the
contract case that Mashreq has brought and also with [its] counterclaim," R.
1475:6-9 (Mar. 25, 2Q 10 H-r'g Tr.), and that there w as an application to "consider
forum non conveniens as to everybody." Id. at R. 1474:13-26:
Supreme Court: TIhere's two parts here to that application, you
- understand. One is for [Al Sanea] to be cut out.
And for the underlying case to continue. -The other.
is for me to consider forum non conveniens as to
everybody.
Counsel for AHBAB: Yes.
Supreme Court: I understand you are opposin it as to
everybody....
Counsel for AHAB: Yes, your Honor, we are. We are.
Two weeks after the hearing, AHAB made yet another subm ission on
forum non conveniens issues as applied to the entire case, requiring Mashreq to
submit a reply brief in response. AHAB and AHAB Partners' Resp. to
Mashreqbank PSC's Mot. to Consolidate, April 8, 2010, Dkt. No. 122; Masbreq
Mot. to Consolidate Reply, April 14, 20 10, Dkt. No. 124. Even then AHAB never
argued that the Supreme Court did not have the power to dismiss the claims
between Mashreq and AHAB.
In its briefing on forum non conveniens and -at oral argument to the
Supreme Court, Mashreq expressed its willingness to pursue its claims against
AHAB in the UAE based on the revelation that neither AHAB nor its partners had
any assets in New York. R. 1453:14-23 (Mar. 25, 20 10 Hr'gTr.); R. 1817-18,
1820 (September 25 Decision, Dissent). In addition, despite AHAB's argument
that New York was the one and only forum where the entirety of this dispute could
be litigated, the AHAB Partners continued to resist jurisdiction in New York. See
R. 1476:17-26 (Mar. 25, 2010 Hr'g Tr.) (arguing that Mashreq's action against the
AHAB Partners could not be heard in New York and "has nothing to do with the
Masbreq [v. AHAB] case"); see also id. at R. 1475:18-1476:12 (Justice Lowe
addressing counsel for AHAB and the AHAB Partners: "you are asserting
jurisdictional grounds on the one hand against the plaintiffs, but you don't concede
that in fact, this is not the proper forum," and noting this "suggests to [the Court]
that there's some merit" to a forum non conveniens dismissal), While AHAB
insisted, implausibly, that New York was the most appropriate forum for the
resolution of this dispute, the AHAB Partners simultaneously argued that
Mashreq' s claim against them - which stemmed from the same foreign exchange
transaction as Mashreq's claims against AHAB --could only be established by a
judgment from a Saudi tribunal applying Saudi law. See Mem. of Law in Supp. of
All Defs.' (Except Sana Abdel Aziz Hamad Algosaibi) Mot. to Dismiss Pl.'s
Verified First Am. Compi., Mashreqbank PSC v. Algosaibi, No. 602171/2009
(Sup. Ct. N.Y. Cnty. Sept. 25, 2009). In contrast, in the UAE action, AHAB and
its partners had not raised any jurisdictional objections. R. 13 65 ( Mar. 9, 2010
Gouldy Aft. Ex. D, Answer in UAE action - no defense based on lack of personal
jurisdiction asserted by AHAB or AHAB partners). After the New York action
was dismissed, AHAB made a belated attempt to contest jurisdiction in the UAE
which the UAE court rejected.
The Supreme Court issued a decision properly applying the factors set
-out by this Court in Pahlavi, 62 N.Y.2d 474 and dismissing the entire action. K
23 -27 (July 26, 20 10 Order). The Supreme Court found that
[t]he travel restrictions. in place in Saudi Arabia mean that Al Sanea
and all but one of the AHAB partners are currently unable to travel to
the U.S. The large majority of witnesses are located in Bahrain, UAE,
..or Saudi Arabia. Although the alleged fraud may have taken place
with use of banks in New York, the .alleged fraudulent activities
occurred in Saudi Arabia . .. and the issue as to whether or not Al
Sanea was authorized to do what he did are questions to be resolved
based on evidence and documents in those nation.... Furthermore,
several alternative locations are available to resolve the disputes, and,
indeed, AHAB has already commenced a number of actions against
Al Sanea in various countries.
R. 24 (July 26, 2010 Order). The Supreme Court concluded that "these factor's all
favor[ed] granting the FNC motion." Id. In addition, the Supreme Court noted the
need to apply Saudi law to "relations between Al Sanea and AHAB." Id.
As for the claims between Masbreq and AHAB and its partners, the
Supreme Court found that the "agreements with Mashreqbank regarding the
currency exchanges state that they are governed by UAE law and provide for the
jurisdiction of UAE courts," further supporting the Supreme Court's conclusion
that New York was not the appropriate forum for these actions. Id. at R. 24-25
(citing cases). The Supreme Court also found that "Masbreqbank has commenced
litigation in the UAE that includes and encompasses the alleged damages and
breaches" in the New York action, and the resulting "risk of duplication of effort,
as well as of inconsistent rulings by courts of different jurisdictions" weighed in
favor of dismissal. Id at R- 26-27 (citing World Point Trading PTE. v. Credito
Italiano, 225 A.D.2d 153, 161 (1 st Dep't 1996)). Finally, the Supreme Court held
that the deference usually afforded to a plaintiff's choice of forum was not
implicated here, given the concessions that Masbreq made on the record to have
the case dismissed in favor of the UAE. Id at R. 26; R. 1467:13-21 (Mar. 25, 2010
H-r'g Tr.).
F. The September 25 Decision and Dissent
AHAB appealed the forum non conveniens dismissal, arguing for the
first time on appeal that the Supreme Court lacked power to dismiss the entire
action. Nowhere in its briefs before the Appellate Division did AHAB criticize the
Supreme Court's parallelforum non conveniens dismissal of Mashreq's action
against the individual AHAB- Partners.
In a 3-2 decision, the Appellate Division reversed the Supreme Court
and reinstated the entire action. The majority opinion by Justice Catterson found
that the purported lack of an alternative forum and New York's compelling interest
in its banking system required that these proceedings be litigated in New York,
even though the only New York link was in connection with cert-ain ministerial
electronic funds transfers. R. 1796, 1800 .(September 25 Decision). As to the first-
party action between Mashreq and AHAB, the September 25. Decision applied the
newly created rule that even where a party raises the issue and all parties are heard,
a forum non conveniens dismissal is impermissibly "sua sponte" unless a party
filed a notice. of motion explicitly requesting dismissal of those claims.
Justices Mazzarelli and Andrias dissented, concluding that the
"Supreme Court did not exceed its authority and providently exercised its
discretion when it dismissed both the action and third-party action on forum non
conveniens grounds." R. 1814 (September Decision, Dissent). The dissenting
Justices noted that
the motion court correctly considered and balanced the appropriate
factors in finding that New York is an inconvenient forum for this
dispute because it is between a foreign bank arnd foreign businesses,
the alleged wrongdoing took place in foreign countries even though
New York banks were its instrumentalities, documentary evidence
and witnesses are located outside of "New York, and the resolution
likely requires the application of foreignlaw?
R. 1821-22 (September 25 Decision, Dissent). In response to the majority's
unsupported position that New York has a compelling interest in its banking
system that bars forum non conveniens dismissal of fraud claims involving funds
transferred through New York accounts, the dissenting Justices correctly -explained
that "the fact that the proceeds of Al Sanea's fraudulent scheme passed through the
.New York banking system is a peripheral and transitory contact, which, without
more, does not give New York an interest in transactions that otherwise are
foreign." R. 1824 (September 25 Decision, Dissent) (citing cases).
The dissenting Justices also explained that the Supreme Court did not
act "csua sponte" because "although no formal motion was made ... the doctrine
was raised before the-court, and the parties contested the matter." R. 1816
(September 25 Decision, Dissent) (quoting Smith v. Miller, 237 A.D. 2d 294,295
(1 st Dep't 1997)). See. n. 8, supra. Tellingly, AHAB's counsel "did not argue
[before thei Supreme Court] that the court lacked the authority to dismiss the main
action because no party had, filed a formal motion seeking that relief." R. 18 1.
Moreover, the dissenting Justices concluded that the dismissal was not sua sponte
9 The Majority opinion incorrectly states that Mashreq is "a WUAR] bank with its principal place
of business in New York." K 1796 (September 25 Decision). As alleged in AHAB's Third-
Party Complaint and Counterclaim, Masbreq is a UAB bank, "with corporate headquarters in
-Dubai, [UAE] and a place of business" in New York. K. 109 (AHAB TPC 14); R. 93 (AHAB
CC 17).
because Mashreq joined in Al Sanea's motion and supplemented the grounds on
which Mashreq sought dismissal of AH{AB I's counterclaim. R. 1817-18, 1820
(September 25 Decision, Dissent). Specifically, Masbreq indicated its willingness
to have the issues between it and AHAB and its partners resolved in the pending
UAE proceeding where (unlike in New York), neither AHAB nor its. partners
disputed the jurisdiction of the UAE courts. Id.'0
ARGUMENT
1. THE APPELLATE DIVISION DECISION CONFLICTS WITH
PAHLA VI BECAUSE A PURPORTED LACK OF ALTERNATIVE
FORUM IS NOT A BAR TO DISMISSAL FOR FOR UMNON
CONVENIENS
The September 25 Decision must be reversed because its holding that
forum non conveniens dismissal is not appropriate due to the lack of a purported
alternative forum is in direct conflict with this Court's decision in Pahlavi. The
10 The Majority misapprehended this procedural history in recounting that "[diespite what
Masbreqbank may have ultimately stated to the motion court at oral argument, when
Mashreqbank finally briefed the forum non conveniens question with regard to Al Sanea's
motion, Masbreqbank argued against dismissal of the main action." R. 1796 (September 25
Decision). Masbreq's briefing explained that Mashreq had acted in good faith in bringing its
claims in New York but ultimately made clear that as a result of subsequent events - the
pendency of the UAE action, the discovery that AHAB had no assets in New York and the
AHAB partners' continued insistence before the New York court that they could only be sued in
Saudi Arabia - Mashreq did not object to a forum non conveniens dismissal in favor of the UAE
where Masbreq was actively litigating against both AHAB and the AHAB partners. See
Mashreq Reply Mem. of Law in Connection with Mot. by Third-Party Def. Maan Al Sanea to
Dismiss the Third-Party Compl. on Grounds of Forum Non Conveniens, Mar. 23, 2010, Dkt No.
115. Mashreq further advocated for dismissal in its briefing to the Appellate Division. Even if
Mashreq had opposed dismissal - and as the Supreme Court correctly noted, it did not - the more
relevant inquiry is whether the issue was raised and all parties fuly briefed and were heard on it,
as indisputably occurred here.
Majority erroneously reversed the Supreme Court because it "failed to identify an
alternative forum that would have jurisdiction over the dispute . .. , let alone
whether the dispute would be 'better adjudicated' in the alternative forum." R.
18 10 (September 25 Decision).
Contrary to the September 25 Decision, this Court explicitly held in
Pazhlavi that a suitable alternative forum is not a prerequisite for applying the
forum non conveniens doctrine. 62 N.Y.2d at 48 1. Pahlavi explained that the
doctrine offorum non conveniens does not implicate constitutional due process'
rights, and thus, it is. similar to other instances in which "New York courts decline
to entertain jurisdiction even though no alternative forum may exist." Id. at 481 -
82. Describing the policy rationale behind its decision, this Court stated that proof
of the availability of another forum should not be required because "[tihat would
place an undue burden on Ne w York courts forcing them to accept foreign-based
actions unrelated to this State merely because a more appropriate forum is
unwilling or unable. to accept jurisdiction." Id. at.48 1. Thus, while consideration
of the availability of an alternative forum -is a factor within the Pahlavi analysis, it.
is not dispositive of whether a case should be dismissed for forum non conveniens.
The September 25 Decision's alternative forum analysis contains
additional flaws. Even though the Majority acknowledged the Supreme Court's
finding that AHAB had several alternative locations to bring, these claims, it
concluded these findings were insufficient based on the unfounded assertion that
"Pahiavi does not suggest that merely because a party may be subject to suit in a
country establishes that it would be an alternative forum." R. 1810- 11 (September
25 Decision). The September 25 Decision provides no explanation or authority for
its departure from the well-settled principle that a forum is adequate when "the
defendant is amenable to process in that jurisdiction and the alternative forum
permits litigation of the subject matter of the dispute," as is the case here. Gryphon
Domestic V, LLC v. APP Int'l Fin. Co., B.V., 41 A.D;3d 25, 37 (1st Dep't 2007)
(citing-Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n.22 (1981)); Shin'-Etsu
Chem. Co., Ltd. v. 3033 ICICI Bank Ltd., 9 A.D.3 d 171, 179 (1 st Dep't 2004)
(lower court erroneously deniedforum non conveniens motion based on finding
that India was an inadequate alternate forum, where "it is undisputed that
[defendant] can be sued in India and that its courts permnit litigation of letter of
credit disputes").
When the proper legal standard is applied, there can be no question
that the UAE is an alternative forum for the claims between Mashreq and AHAB3 -
it is undisputed that Masbreq and AH{AB are litigating the exact same issues there.
Similarly, AHAB admits it could sue Al Sanea in Saudi Arabia, where both reside
and where Al Sanea's alleged misconduct occurred, and AHAB is also suing him
in the Cayman Islands. The September 25 Decision was in error when it gave this
factor near dispositive weight in reversing the Supreme Court's forum non
conveniens dismissal. R. 24-25 (July 26, 2010 Order). There can be no question
that the parties were "amenable to process in [those] jurisdiction[s] and the
alternative forum permit[ted] litigation of the subject matter of the dispute."
Gryphon Domestic V/, 41 A.D.3d at 37. The Supreme Court was therefore correct
in finding that AHAB had "s everal alternative locations ... to resolve the disputes"
and that the "UAE is the more appropriate forum for determination of the primary
actions, and they will be decided in the case that Mashreqbank has already
commenced there." R. 24, 27 (July-26, 2010 Order). No further analysis of the
issue was required. See also United States v. Approximately $2, 718,665.70
Formerly on Deposit in Pershing, LLC, No. 11 Civ. 9176 VM, 2013 WL 2393144
(S.D.N.Y. May 23, 2013) (§Dubai is an adequate alternative forum).
The September 25 Decision also.erroneously suggests that Pahlavi
held that "the relative. ease of access to sources of proof; availability of compulsory
process for attendance of unwilling, and the cost of obtaining attendance of
willing, witnesses" are part of the alternative forum analysis, rather than
independent factors. R. 1811 (September 25 Decision). More importantly, the
September 25 Decision's assertion that the "motion court simply made no factual
findings whatsoever on any of these factors" is wrong. Id.' The Supreme Court
made a series of findings, including that "the large majority of witnesses are
located in Bahrain, UAE, Kuwait, or Saudi Arabia"'; many of the key witnesses -
specifically, Al Sanea and all but one of the AHAB partners - were "currently
unable to travel to the U.S."; the dispute raised "questions to be resolved based on
evidence and documents in those nations"; and that Mashreq had "commenced
litigation in the UAE that includes and encompasses the alleged damages and
breaches" at issue here. R. 24, 26 (July 26, 2010 Order). And all of those findings
were made in the context of a case where not a single identified document, witness
or transaction is located or took place in New York. The September 25 Decision
erroneously ignored these findings and then compounded its error in reversing the
forum non conveniens dismissal.
II. THE MERE FACT THAT ELECTRONIC FUNDS FLOWED
THROUGH A NEW YORK BANK ACCOUNT IN CONINECTION
WITH AN OTHERWISE WHOLLY FOREIGN DISPUTE DOES NOT
COMPEL NEW YORK COURTS TO HEAR THE CASE
The September 25 Decision Rfther erred in concluding that New
York courts are barred from dismissing for forum non conveniens any dispute that
arguably involves some aspect of the New York banking system - even when the
underlying dispute has no meaningful connection with New York and would
greatly burden the New York court. The September 25 Decision misapplied
several decisions of this Court to reach this incorrect result.
For instance, the September 25 Decision misapplied this Court's
decision in J1 Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda) Ltd, 37 N.Y.2d 220
27
(1975). See R. 1796, 1805-07 (September 25 Decision). As an initial matter, and
as explained by the dissenting Justices, J Zeevi "addressed choice-of-law issues,
not forum non conveniens." R. 1823 (September 25 Decision, Dissent).
Moreover., J1 Zeevi involved the dishonor of a New York law governed letter of
credit, where "New York was the locus of the repudiation"' and so implicated a
core New York interest as a financial center: "[fln order [for New York] to
maintain its preeminent financial position, it is important that the justified
expectations of the parties to the contract be protected." J Zeevi, 37 N.Y.2d 220 at
226-27. Here, by contrast, the contract providing the basis for Mashreq's claims is
governed by UAE law, R. 1600 (Sept 25, 2009 Gouldy Afft, Ex. A, July 16, 2008
Facilities Letter Agreement), and the "dominant feature of AH{AB 's defense to the
complaint, counterclaim, and third-party complaint," is a purported Ponzi scheme
"'perpetrated in the Mddle East." R. 1824 (September 25 Decision, Dissent).
The analysis is not tipped in AHAB's favor simply because AHAB
maintained a bank account at Bank of America in New York.'" The wiring of
~The September 25 Decision misunderstood the bank accounts involved. The Majority opinion
states that Masbreq "filed an order of attachment against AHAB s property in New York
icluding the funds contained in the Al Sanea Bank ofAmerica account." R. 1797 (September
25 Decision) (emphasis-added). in fact, as acknowledged in AHAB's Answer, the funds were in
AHAB's Bank of America account. R. 76-77 (AHLAB Answer 5-7) ("[T~he sum of
$150,000,000 was received into a bank account in the name of AHA.B at Bank of America. ..
(emphasis added); R. 94 (AHAB CC 21 (a)) ("Mashreq advanced U.S. dollrs... to AHAB by
making a transfer to the Money Exchange 's correspondent bank account at Bank ofAmerica.")
(emphasis added). In AHAB's own telling Mashreq's money went from AHAB'Is account at
Bank of America to another AHAB account. R. 97 (AHAB CC 26).
28
dollars to AHAB's own account in New York did not itself represent any improper
act, but was Mashreq' s agreed-to performance on the US dollar-S audi riyal
transaction entered into by Mashreq and AHAB.. R. 54-55 (Compi. 14-15).
AHAB' s default - its failure to deliver Saudi riyals to Mashreq in Mashreq s
account in a bank in Saudi Arabia - does not implicate the interests of New York
as in J Zeevi. The fact that the money was transferred from one-AHAB account to
another, R. 113 (AHAB TPC 25), R. 1318 (March 9,2010 Gouldy Aff., Ex. A,
AHAB Account Statements), further puts the lie to any New York interest and in
fact raises issues -of authority as between AHAB and its designated agent, Al
S anea, that implicate questions of foreign law in the context of foreign actors, all
unrelated to New York.
As emphasized by the 'dissenting Justices, "insofar as Zeevi stands for
the premise that New York is a 'financial capital of the world,' and that the
passage of global capital through New York requires that its courts be open to the
settling of commercial disputes that are transacted here, this principle is not
without its limitations, and commercial disputes that are more fundamentally
connected to other venues are more appropriately settled there." R. 1823
(September 25 Decision, Dissent) (internal quotations and citations omitted). If
allowed to stand, the September 25 Decision would elimiate any meaningful
possibility of dismissal forforum non conveniens in a commercial banking dispute
involving dollars. Dollar transactions typically must clear through a New York-
based correspondent account with access to the Clearing House Interbank Payment
System ("CHIPS"), the international private clearing system for large dollar
transfers. 12 All wholesale international transactions involving the use of the dollar
go through CHIPS, and CHIPS is responsible for 95% of US dollar cross.-border
transactions. About CHIPS, http://www.chips.org/about/pages/033738.php (last
visited July 29, 2013); see sources cited in n. 12, supra. These US dollar cross-
border transactions, together with nearly half of all domestic wire transactions,
totaled approximately $1.5 trillion daily in 2012. About CHIPS. The burden on
New York courts if they were required to retain every case related to these
transactions in which a plaintiff is willing to allege fraud-based claims cannot be
overstated.
While the burden this rule would impose on New York courts. is
patent, the benefit to the New York banking system is far from clear. Such a rule
would force business people to reconsider whether the benefit of transacting in
dollars is worth the risk of having to litigate any claims related to the transactions
halfway around the world in New York - even where, as is the case here, the
12 R. 466-72 (Edmund M.A. Kwaw, The Law & Practice of Offshore Banking & Finance 15-21
(1996)); see R. 492-94 (Takatoshi Ito and David Folkerts-Landau, International Capital
Markets: Developments, Prospects, and Key Policy Issues 130-32 (1996)); R:. 504-73 (Richard
Hooley and John Taylor, "Payment by Funds Transfer," in The Law of Bank Payments 49-185
(Michael Brindle & Raymond Cox eds. 2004)).
parties' contract calls for the application of foreign law arnd the parties clearly did
not contemplate a New York forum.
The Majority was also incorrect to characterize Ehrlich-Bober & Co.
v. University of Houston, 49 N.Y.2d 574 (1980) as "analytically indistinguishable"
from this case. Ehrlich-Bober involved a plaintiff who "ha[d] its principal office
in New York City" and concerned "transactions. [which] arose out of telephone
calls made to the plaintiff's New York office" or in-person visits by one of the
defendant's employees. Ehrlich-Bober, 49 N.Y.2d. at 577. The Erlich-Bober
Court accordingly concluded that "the transactions in question, judged by any
indicator, must be considered to be have been centered here." Id. at 581-82
(emphasis added). Here, by contrast Masbreq is headquartered in UAE and any
activities relevant to this action were conducted from its UAE headquarters. R,. 93
(AHAB CC 17). Mashreq's injury occurred when AHAB failed to deliver
millions of Saudi Riyals into Masbreq's account in Saudi Arabia. And of course
AHIAB is located in Saudi Arabia, as is Al Sanea, and actions by AHAB or Al
Sanea were performed in Saudi Arabia. R. 107-08 (AHAB TPC 11-12); R. 88
(AHAB CC 3) ("Whenever it is alleged in this Counterclaim that the Money
Exchange or AHAB did or omitted to do a thing or act, such allegation [means] ...
that the Money Exchange or AHAB was caused to do the thing or act by Al
Sanea."). Even AHAB never argued that the forum non conveniens analysis in
Ehrlich-Bober had any relevance to this case. The only citation to Ehrlich_ Bober
in all of the parties' appellate briefing is AHAB's passing suggestion in its reply
brief that Ehrlich-Bober supported AHAB' s reliance on cases that do not address
forum non conveniens issues. AHAB Appeal Reply Br. at 5 ("For example, in
[Ehrlich-Bober], the Court of Appeals analyzed choice-of-law and long-arm
jurisdiction decisions for purposes of the separate issue of comity.").-
AHAB argued in its letter submitted to this Court on April .26, 2013
that this Court's recent decision on personal jurisdiction in Licci v. Lebanese
Canadian Bank, 20 N.Y.3d 327 (201-2) supports affirmance here. But Licci held
that a foreign bank's "repeated use of a correspondent account in New-York"' is
sufficient to establish personal jurisdiction under New York's long-arm statute. Id.
at 33 8-39. As this Court has recognized, the doctrine offorum non conveniens
assumes jurisdiction exists; its purpose is to permnit trial courts to decline to
exercise that jurisdiction. See Silver, 29 N.Y.2d 356, at 362 ("The fact that
litigants may more easily gain access to our cors ... stemming from enactment
of the long-arm statute (CPLR 302).., requires a greater degree of forebearance
in accepting suits which have but minimal contact with New York."). Licci .did not
in any way suggest that New York courts should retain cases that would otherwise
be dismissed forforum non conveniens if the case involves fund transfers through
New York bank accounts.
Any invocation of Licci by AHAB would be inappropriate for
additional reasons. Another bank creditor of AHAB - Standard Chartered Bank -
obtained a judgment in Bahrain against AHAB and has since had that judgment
recognized in New York. See Standard Chartered Bank v. Ahmad HamhadAl
Gosaibi & Bros. Co., 957 N.Y.S.2d 602 (Sup. Ct. N.Y. Cnty. 2012). AHAB has
apparently refused topay that New York judgment, meaning that while AHAB
demands the right to have recourse to the New York courts on its claim against Al
Sanea and its purported (and now dismissed) Counterclaim against Mashreq,
AHAB is simultaneously resisting the judgment that a New York court entered
against it. AHAB is fur-ther resisting complying with the asset discovery subpoena
served on it by Standard Chartered Bank, arguing that Licci provides no basis for
jurisdiction over AHAB because Licci involved the movement of funds "to
terrorists." Mem. in Supp. of Judgment Debtors' Mot. to Quash Subpoenas at 8,
Standard Chartered Bank v. Gosaibi, No. 653 506/2011 (Sup. Ct. N.Y. Cnty. Apr.
1, 2013). The state of New York has no interest in allowing a party with nearly no
connection to New York, that otherwise resists the application of New York law, to
use the courts of New York to further its own agenda in the context of a dispute
that has no connection to New York and is in fact being litigated elsewhere.
III. THE APPELLATE DIVISION'S INCORRECT CHOICE OF LAW
ANALYSIS FURTHER CONTRIBUTED TO ITS ERRONEOUS
REVERSAL OF THE SUPREME COURT
The September 25 Decision failed to perform the required choice of
law analysis, compounding the other errors in its forum non conveniens decision.
The conclusory statement that "it is patent that New York law will apply [because
t]he law of the jurisdiction where the tort occurred will generally apply," R. 1812
(September 25 Decision) (citing Banco Nacional Ultramarino v. Chan, 169
Misc.2d 182 (Sup. Ct. N.Y. Cnty. 1996), affd 240 A.D.2d 253 (1lst Dep't 1997)) is
not supported by the Banco Nacional case - which does not even address choice of
law issues - and is inconsistent with New York choice of law analysis. This Court
rejected precisely this type of formulaic approach in favor of a more flexible
"interest analysis." See Schultz v. Boy Scouts of Am., 65 N.Y.2d 189, 196 (1985).
The interest analysis requires that " [tihe law of the jurisdiction having the greatest
interest in the litigation will be applied and the only facts or contacts which obtain
significance in defining State interests are those which relate to the purpose of the
particular law in conflict." Id at 197 (alterations. and citation omitted).
The September 25 Decision failed to consider the significant interests
of the UAE and Saudi Arabia in this dispute between UAE and Saudi parties,
based on conduct that took place in those countries. AHAB itself acknowledged
the relevance of UAE and Saudi law. See, e.g., AHAB Appeal Br. at 43
(recognizing "as possibly raising an issue of foreign law is [Al Sanea' s] contention
that this action will turn on principles of agency under Saudi law."); AHAB
Appeal Reply-Br. at 16 ("construction ... of the ... Mashreq loan documents
might arguably be governed by UAE law.").
Moreover, the September 25 Decision's choice of law analysis is
incorrect on its own terms:
Under traditional rules, the law of the place of the wrong governs. ..
but when the defendant's . . . conduct occurs in one jurisdiction and
the Pilaintiff s injuries are suffered in another, the place of the wrong
is considered to be the place where the last event necessary to make
the actor liable occurred. Thus, the locus in this case is determined by
where the plaintiffs' injuries occurred.
Schultz, 65 N.Y.2d, at 195 (citations omitted). Here, even assuming that the choice
of law issue could be resolved by applying "the law of the jurisdiction where the
tort occurred,." R. 1812 (September 25 Decision), the result would be the
application of the law of the place where AHAB's alleged injuries occurred,. i.e.
Saudi Arabia.
IV. THE APPELLATE DIVISION ERRED IN CONCLUDING THAT
THE BAR ON SUA SPONTE DISMISSALS FOR FORUM NON
CON VENVIENS APPLIED HERE
The Appellate Division also erred in holding - contrary to all
precedent and the plain language of CPLR 3 27(a) - that a court cannot dismiss for
forum non conveniens any claim that is not specifically enumerated in the initial
motion papers.'13 This inflexible and formalistic reading of CPLR 327(a) arnd VSL
Corp. v. Dunies Hotels & Casinos, Inc., 70 N.Y.2d. 948 (1 988), imposes
unprecedented limitations on the discretion of the trial court to consider questions
of forum non conveniens and case management when forum non conveniens issues
are otherwise raised and responded to by the parties.
CPLR 3 27(a) permits a court to, dismiss an action forforum non
conveniens, "in whole or in part... on the motion of any party." A third-party
defendant, like Al S anea here, has "the rights of a party adverse to the other parties
in the action." .CPLR 1008. AHAB does not dispute that a first-party action is
properly dismissed. on the basis of a motion made by a third-party defendant 14
Once the issue offorum non conveniens was raised by Al Sanea, the
Court had broad discretion in its ~application to the entire action, including the first-,
party claims. AHAB never argued otherwise before the Supreme Court, even
13 The Majority's opinion may have been driven by its misunderstanding of the proceedings
before the Supreme Court See n.8, 10 supra, discussing incorrect statements in the September
25 Decision suggesting that Mashreq did not brief theforum non conveniens issue and/or
opposed a forum non conveniens dismissal.
14 See-also Imperial Imps. Co. v. Hfugo Neu & Sons, Inc., 161 A.D.2d 411, 412 (1st Dep't 1990)
(third-party defendant's motion to dismiss on the ground offorum non conveniens "invoke[s] the
court's authority to entertain the granting of such relief in fMl or in part, based upon any
consideration that might be just"); see also Kearns-v. Johnson, 655 N.Y.S.2d 498, 499 (1st Dep't
1997) C_'[t]he fact that she was- brought into the -action as a third-party defendant does not
diminish her fight to move for a change of venue as of right"); McKinney's CPLR 1008 Practice
Commentaries (2011) ("In addition to defenses that can be asserted in pleadings, the third-party
defendant may employ any other 'procedural weapons which the law gives to the original
defendant for defeating plaintiff's claim."') (quoting N.Y. Jud. Council, Twelfthl Ann. Rep. 211
(1946)); id. (CPLR 1008 "entitles a third-party defendant to raise whatever defenses that could
have been, but were not, asserted by the defendant/third-party plaintiff in the main action).
when the Court repeatedly advised AHAB that dismissal of the entire action was
contemplated. k. 1474:13-20 (M~ar. 25 H-r'g Tr.) (Supreme Court addressing
counsel for Al-AB: "[t~here's two parts here to that application, you understand.
One is for [Al Sanea] to be cut out.... And for the underlying case to continue.
The other is for me to consider forum. non conveniens as to epverybody. Mr. Grace
(counsel for AHAB): Yes. The COURT: I understand you are opposing it as to
eveybody .... M~r. Grace: Yes, your Honor, we are. We are."); see also id. at R.
1473:1-6-21 (The COURT: "Do you oppose the forum non conveniens motion
with regard to the third-party defendant, as opposed to the application that's being
'made for the entire case to be shipped .... Mr. Grace: Yes.").
As recognized-by the dissenting Justices, the Majority's holding is in
conflict with prior case law uni formly holding that a forum non conveniens
dismissal is appropriate so long as "the doctrine of forum non conveniens was
squarely before the court and the parties had a full and fair opportunity to litigate
the issue." R. 1819 (September 25 Decision, Dissent). For example, in Smith v.
Miller, 237 A.D.2d. 294, the Second Department held that the forum non
conveniens dismissal was proper because "[a]lthough no formal motion was made
to dismiss the proceedings on the ground of forum non conveniens, 'the doctrine
was raised before the court, and the parties contested the matter." Id. at 295 (citing'
CPLR 327(a) and' VSL Corp., 70 N.Y.2d 948). Similarly, in Banco do Estado de
Sac Paulo S.A. v. Mendes Junior International Co., the court found forum non
conveniens dismissal appropriate where "plaintiff did not move for summary
judgment on forum non conveniens grounds . .. , [but] forum non conveniens had
been raised by plaintiff as an affirmative defense to the counterclaims and was a
clearly articulated motif of plaintiff's arguments in the motion proceedings." 249
A.D.2d 13 7, 13 9 (1lst Dep't 1998).
The Majority made no effort to distinguish Smith, see R. 1819
(September 25 Decision, Dissent), which is directly on point, presum ably due to its
misapprehension that the parties here had not had an opportunity to brief theforum
non conveniens issue. See n.l10, supra. Trying to distinguish Banco do Estado, the
Majority found Banco do Estado inapposite because "both plaintiff and defendants
in that motion fully briefed the forum non conveniens issue as a 'clearly articulated
motif of the motion." R. 1804 (September 25 Decision). That, however, is
precisely what occurred here - althoughforum non conveniens was originally
raised by the third-party defendant, all parties briefed the issue, resulting in the
submission of no fewer than six briefs devoted almost exclusively to the issue of
forum non conveniens, including with respect to the first-party action. Smith and
Banco do Estado demonstrate that there is no requirement that a formal motion be
made as -to each and every part of the case ultimately dismissed - it is sufficient
that a party raised the issue and all parties had the opportunity to be heard, as
occurred here.
The September 25 Decision also misapplies, this Court's decision in
VSL Corp., which held that CPLR 327(a) does not permit dismissal forforum non
conveniens where the issue was not raised by any of the parties. VSL Corp. in no
way hamstrung the trial court's power under CPLR 3 27(a) to dismiss an action "in
whole or in part" where the issue. was raised by "any party." To the contrary, the
Second Department relied on this Court's guidance in VSL Corp. when it
recognized in Smith that "no formal motion" was required. Smith v. Miller, 237
A.D.2d. at 294 (citing VSL Corp., 70 N.Y.2d 948).
Here, just as in Smith and Banco do Estado, a party (Al Sanea) raised
forum non conveniens, and all parties - Mfashreq, AHAB, and Al Sanea - had an
opportunity to fully brief and argue before the Supreme Court whether the entire
case should be dismissed. As explamied by the dissenting Justices: -
[W~here the third-party defendant moved to dismiss the third-party
complaint on forum non conveniens grounds, placing the, doctrine
before the court, and the dismissal of the [first-party] action on that
ground was addressed by the parties at oral argument, the court had
discretion to dismiss the entire action in whole or in part, especially
where AHAB's third-party complaint, counterclaims and defense to
* the complaint are admittedly intertwined and plaintiff stated its
position that if the third-party complaint was dismissed, the [first-
party] complaint should be dismissed as well.
R. 1818-19 (September 25 Decision, Dissent). In contrast with the Dissent's well-
reasoned opinion, Smith, and Banco do Estado, the September 25 Decision placed
a procedural straitjacket on the trial court, forcing it to hear a case that has no
business being litigated in New York simply because the third-party defendant's
motion papers focused on the third-party complaint. This was error.
V. IN THE ALTERNATIVE, THE APPELLATE DIVISION ABUSED
ITS DISCRETION
In addition to the legal errors, the September 25 Decision also merits
reversal for abuse of discretion given the absence of any meaningful connection
between the claims and New York. See Patriot Exploration, LLC v. Thompson &
Knight LLP, 16 N.Y.3d 762, 763 (2011) (reversing the denial offorum non
conveniens for abuse of discretion). All of the issues AHAB seeks to litigate (or
relitigate) here are grounded in the UAE and its neighboring country, Saudi
*Arabia, where Mashreq, AHAB, its partners, and its agent Al Sanea are located'and
did business. 15 The superiority of the UAE forum for the claims between Mashreq
and AHAB and its partners is especially apparent now that the UAE action has
proceeded to a judgment while this case remained idle pending AHAB's perfection
of its appeal. IJAE law applies to the dipt, 16 numerous documents relevant to
1R. 109 (AHAB TPG 14); R. 50 (Compi. 1 1); R. 76 (Answer 2).
16 AHAB Appeal Reply Br. at 16 ( 'Mashreq loan documents might arguably be governed by
UAE law") and Point III, supra; see also AHAB Appeal Br. at 43 (recognizing "as possibly
raising anl issue of foreign law [Al Sanea's] contention that this action will turn on principles of
40
AHAB's defenses and counterclaim are in Arabic, 17 the majority of witnesses
reside in the UAE or neighboring countries, and key witnesses - including Al
Sanea and AHAB Managing Director Saud Al Gosaibi - cannot leave Saudi
Arabia and will testify in Arabic.'18
In Patriot Exploration, the defendant in that case maintained an office
in New York, but none of the New York employees were involved in the events
underlying the case. In reversing the lower court's holding that the case must
proceed in New York, this Court noted that the
case involves the alleged malpractice by Texas lawyers representing
Alaskan clients, whose principal places of business are. in
Connecticut, in a transaction with Texas companies that involves land
in Texas. Further, the documentary evidence is located in defendant's
Texas office, as are the attorneys who allegedly committed the
malpractice and most of the potential witnesses.
Patriot Exploration, 16 N.Y.3 d at 763. The same reasoning requires dismissal
here. The Appellate Division ftuther abused its discretion by failing entirely to
take into account the duplicative proceedings in other jurisdictions, both with
agency under Saudi law."); n.2, supra (noting AHAB's arguments in the trial court concerning
UAE law to determine preclusive effect of Mashreq's UAE judgment against AHAB ).
'~R. 1782 at 99:4-6 (Tr. of London Proceedings, Day 3); R. 622 27 (Al-Sanea Afft).
KSR 622 27 (AI-Sanea AffC); R. 1784 at 145:1-4 (Tr. of London Proceedings, Day 3); id. at
145:11-17. The September 25 Decision improperly faulted the trial court for having made "no
finding that witnesses subject to a travel bar in Saudi Arabia would be precluded from testifying
via some alternate means." R. 1811 (September 25 Decision). Whether alternative means of
testifying were available is beside the point. Any alternative means would burden the trial court
and be particularly prejudicial to Masbreq because Maslireq would be unable to effectively
cross-examine critical AHAB witnesses, while AHAB would'face no similar challenge in cross-
examining Masbreq's witnesses.
respect to the availability of an alternative forum and with respect to the risk of
inconsistent judgments.
CONCLUSION
In conclusion and based upon the foregoing, Mashreq respectfully
requests that the Court reverse the Appellate Division's September 25 Decision.
Dated: New York, New York
July 29, 2013
Respectfully submitted,
CLEARY GOTTLIEB STEEN & HAMILTON
LLP
David E. Brodsky
Carmine D. Boccuzzi
One Liberty Plaza
New York, NY 10006
(212) 225-2000
Attorneys for Plaintiff-Appellant Mashreqbank PSC
Of Counsel:
Liana Roza Vitale
Danielle J. Levine
AFFIRMATION OF SERVICE
RICHLARD V. CONZA, an attorney duly admitted to practice law in the
Courts of this State, hereby subscribes and affirms as true, under penalty of perjury
pursuant to CPLR 2106, as follows:
1 . I am the Managing Attorney of the law firm of Cleary Gottlieb Steen
& Hamilton LLP, One Liberty Plaza, New York, New York, (212) 225-2000,,
Attorneys for Plaintiff-Appellant Mashreqbank. I am not a party to this proceeding
and I am over 18 years of age.
2. On the 29th day of July, 2013, 1 caused three (3) true and correct
copies of (a) the Record on Appeal, with Plaintiff-Appellant's CPLR 5531
Statement and Certification Pursuant to CPLR 2105; and (b) the Brief of Plaintiff-
Appellant; to -be served by federal express upon the following counsel of record:
Robert F. Serio
GIBSON DuNN & CRUTCIIER LLP
200 Park Avenue
New York,, New York 10 166
Tel.: (212) 351-4000
Fax: (212) 351-4035
Attorneys for Third-Party Defendant-Appellant Maan Abdul Wahed Al-
Sanea
Bruce R. Grace
LEWIS BAAcH PLLC
1899 Pennsylvania Avenue, NW
Suite 1600
Washington, D.C. 20006
Counsel for Defendant-Third-Party-Plaintiff-Appellee Ahmed Hamad Al
Gosaibi & Brothers Company
David J. Molton
BROWN RuiDNICK LLP
Seven Times Square
New York, New York 10036
Counsel for Third-Party Defendant Awal Bank BSC
Dated: New York, New York
July 29, 2013