To Be Argued By: ROBERT F. SERIO
Time Requested: 30 MINUTES
Court of Appeals
State of New York
Case No. APL-2013-00007
—————————
MASHREQBANK PSC,
Plaintiff-Appellant,
—against—
AHMED HAMAD AL GOSAIBI & BROTHERS COMPANY,
Defendant-Respondent.
—————————
AHMED HAMAD AL GOSAIBI & BROTHERS COMPANY,
Third-Party Plaintiff-Respondent,
—against—
MAAN ABDUL WAHEED AL SANEA,
Third-Party Defendant-Appellant,
– and –
AWAL BANK BSC,
Third-Party Defendant.
BRIEF OF THIRD-PARTY DEFENDANT-APPELLANT
GIBSON, DUNN & CRUTCHER LLP
Attorneys for Third-Party Defendant-Appellant
200 Park Avenue
New York, New York 10166
Telephone: (212) 351-4000
Facsimile: (212) 351-4035
Of Counsel:
Gabriel Herrmann
Christopher Muller
Date Completed: July 29, 2013
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ...................................................................................... 1
STATEMENT OF JURISDICTION.......................................................................... 3
PRELIMINARY STATEMENT ............................................................................... 3
FACTUAL AND PROCEDURAL HISTORY ......................................................... 6
A. The Dispute in Saudi Arabia ................................................................. 6
B. AHAB Propounds Allegations of Mr. Al-Sanea’s Purported
Fraud in Other Proceedings Outside of Saudi Arabia ........................... 9
C. This Case and Its Lack of Any Connection to New York .................. 10
D. The Proceedings Below ....................................................................... 13
STANDARD OF REVIEW ..................................................................................... 17
ARGUMENT ........................................................................................................... 17
I. THE APPELLATE DIVISION’S APPLICATION OF THE FORUM
NON CONVENIENS FACTORS TO THIS CASE WAS
PREDICATED ON FUNDAMENTAL LEGAL ERRORS ......................... 18
A. Hearing This Case in New York Would Impose an Unjustified
Burden on the Court Given Its Insubstantial Connection to This
State and AHAB’s Prosecution of Multiple Parallel Actions ............. 21
1. The Appellate Division Misconstrued J. Zeevi as
Foreclosing Forum Non Conveniens Relief in This Case ............ 25
2. The Appellate Division Erred in Finding That Ehrlich-
Bober Foreclosed Forum Non Conveniens Relief Here ............... 29
B. The Appellate Division Also Erred in Its Analysis of the
Location of the Relevant Events That Gave Rise to This Action ....... 33
1. The Appellate Division Erroneously Found That the Trial
Court Had Somehow Failed to Credit AHAB’s Allegations ........ 35
2. The Appellate Division Ignored AHAB’s Own Allegations
Revealing That This Dispute Is Not Centered in New York ........ 41
TABLE OF CONTENTS
(continued)
Page
ii
C. Saudi Arabia and the UAE Offer Superior Alternative Fora for
Resolving This Dispute—and Have a Greater Interest in Doing
So ......................................................................................................... 45
1. Both Saudi Arabia and the UAE Are Adequate and
Available ....................................................................................... 46
2. Although Not Necessary, the Entire Case Can Be Heard in
a Single Alternative Forum ........................................................... 48
3. Saudi Arabia Has a Keen Interest in This Dispute ....................... 49
4. The Appellate Division’s Ruling on This Factor Rested on
Fundamental Errors of Law .......................................................... 50
D. The Trial Court Correctly Found, and the Appellate Division
Failed to Acknowledge, That Dismissal Would Serve the
Convenience of the Parties and Witnesses .......................................... 52
E. This Case Would Require the Court to Apply the Law of Saudi
Arabia and the United Arab Emirates ................................................. 58
F. None of the Parties Resides in New York ........................................... 62
II. THE APPELLATE DIVISION ERRED IN HOLDING THAT THE
DISMISSAL OF THE FIRST-PARTY CLAIMS WAS AN
IMPROPER SUA SPONTE ACT .................................................................. 63
III. ALTERNATIVELY, THE APPELLATE DIVISION SHOULD
HAVE AFFIRMED DISMISSAL OF THE THIRD-PARTY CASE
AGAINST MR. AL-SANEA FOR LACK OF PERSONAL
JURISDICTION ............................................................................................ 70
CONCLUSION ........................................................................................................ 71
TABLE OF AUTHORITIES
Page(s)
Cases
Ahmad Hamad Algosaibi & Bros. Co. v. Standard Chartered Int’l (USA) Ltd.,
785 F. Supp. 2d 434 (S.D.N.Y. 2011) .................................................................. 10
Alberta & Orient Glycol Co. v. Factory Mut. Ins. Co.,
Index No. 603150/05, 2007 WL 6881693
(Sup. Ct. N.Y. Cnty. Apr. 24, 2007) ..................................................................... 23
AroChem Int’l, Inc. v. Buirkle,
968 F.2d 266 (2d Cir. 1992) ................................................................................. 59
Ashcroft v. Iqbal,
556 U.S. 662 (2009) ............................................................................................. 39
Atsco Ltd. v. Swanson,
29 A.D.3d 465 (1st Dep’t 2006) .............................................................. 24, 60, 61
Banco do Estado de Sao Paulo S.A. v. Mendez Junior Int’l Co.,
249 A.D.2d 137, 139 (1st Dep’t 1998) .......................................................... 66, 67
Banco Nacional Ultramarino S.A. v. Chan,
169 Misc. 2d 182 (Sup. Ct. N.Y. Cnty. 1996) ...................................................... 62
Bewers v. Am. Home Prods. Corp.,
99 A.D.2d 949 (1st Dep’t) .................................................................................... 58
Birchwood Village LP v. Assessor of City of Kingston,
94 A.D.3d 1374 (3d Dep’t 2012) ......................................................................... 68
Blais v. Deyo,
92 A.D.2d 998 (3d Dep’t 1983) ........................................................................... 38
Brinson v. Chrysler Fin.,
43 A.D.3d 846 (2d Dep’t 2007) ........................................................................... 38
Calgarth Invs., Ltd. v. Bank Saderat Iran,
No. 95 Civ. 5332, 1996 WL 204470 (S.D.N.Y. Apr. 26, 1996) .......................... 24
Cavlam Bus. Ltd. v. Certain Underwriters at Lloyd’s, London,
No. 08 Civ. 2255, 2009 WL 667272 (S.D.N.Y. Mar. 16, 2009) .......................... 58
TABLE OF AUTHORITIES
(continued)
Page(s)
iv
Citigroup Global Mkts., Inc. v. Metals Holding Corp.,
45 A.D.3d 361 (1st Dep’t 2007) .................................................................... 22, 23
Citigroup Global Mkts., Inc. v. Metals Holding Corp.,
Index. No. 604205/05, 2006 WL 1594442
(Sup. Ct. N.Y. Cnty. June 8, 2006) ............................................................... 21, 24
Copp v. Ramirez,
62 A.D.3d 23 (1st Dep’t 2009) ............................................................................. 70
de Capriles v. Lopez Lugo,
293 A.D.2d 405 (1st Dep’t 2002) ......................................................................... 70
Edgar v. MITE Corp.,
457 U.S. 624 (1982) ............................................................................................. 61
Ehrlich-Bober & Co. v. Univ. of Houston,
49 N.Y.2d 574 (1980) ............................................................ 24, 30, 31, 32, 36, 44
First Union Nat’l Bank v. Paribas,
135 F. Supp. 2d 443 (S.D.N.Y. 2001) .................................................................. 24
Forsythe v. Saudi Arabian Airlines Corp.,
885 F.2d 285 (5th Cir. 1989) ................................................................................ 47
Garmendia v. O’Neill,
46 A.D.3d 361 (1st Dep’t 2007) ........................................................................... 54
Globalvest Mgmt. Co. v. Citibank N.A.,
Index No. 603386/04, 2005 WL 1148687 (Sup. Ct. N.Y. Cnty. 2005) ........ 59, 61
Gulf Oil Corp. v. Gilbert,
330 U.S. 501 (1947) ............................................................................................. 58
Hart v. Gen. Motors Corp.,
129 A.D.2d 179 (1st Dep’t 1987) ......................................................................... 60
Hormel Int’l Corp. v. Arthur Andersen & Co.,
55 A.D.2d 905 (2d Dep’t 1977) ........................................................................... 55
Howard v. Four Seasons Hotels Ltd.,
No. 96 Civ. 4587, 1997 WL 107633 (S.D.N.Y. Mar. 10, 1997) .......................... 55
TABLE OF AUTHORITIES
(continued)
Page(s)
v
Hughes v. Farrey,
30 A.D.3d 244 (1st Dep’t 2006) ........................................................................... 68
Imaging Holdings I, LP v. Israel Aerospace Indus.,
Index No. 601061/2009, 2009 WL 5895337
(Sup. Ct. N.Y. Cnty. Dec. 11, 2009) .................................................................... 26
Imperial Imps. Co. v. Hugo Neu & Sons,
161 A.D.2d 411 (1st Dep’t 1990) .................................................................. 48, 67
In re Bancredit Cayman, Ltd.,
No. 06-11026, 2008 WL 5396618 (Bankr. S.D.N.Y. Nov. 25, 2008) ................. 57
In re Bernz (Widschi),
139 A.D.2d 444 (1st Dep’t 1988) .................................................................. 66, 68
Islamic Republic of Iran v. Pahlavi,
62 N.Y.2d 474 (1984) .................................... 18, 19, 21, 23, 25, 33, 46, 51, 53, 62
Istim, Inc. v. Chemical Bank,
78 N.Y.2d 342 (1991) ........................................................................................... 59
J. Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda) Ltd.,
37 N.Y.2d 220 (1975) .................................................................. 24, 27, 28, 29, 33
Jazini v. Nissan Motor Co.,
148 F.3d 181 (2d Cir. 1998) ................................................................................. 39
Jeha v. Arabian Am. Oil Co.,
751 F. Supp. 122 (S.D. Tex. 1990) ....................................................................... 47
Johnson v. Ward,
4 N.Y.3d 516 (2005) ............................................................................................. 70
Kamel v. Hill-Rom Co.,
108 F.3d 799 (7th Cir. 1997) ................................................................................ 47
Kearns v. Johnson,
238 A.D.2d 121 (1st Dep’t 1997) ......................................................................... 67
Kliebert v. McKoan,
228 A.D.2d 232 (1st Dep’t 1996) ........................................................................ 39
TABLE OF AUTHORITIES
(continued)
Page(s)
vi
Licci v. Lebanese Canadian Bank,
20 N.Y.3d 327 (2012) ........................................................................................... 71
Martin v. Mieth,
35 N.Y.2d 414 (1974) .............................................................................. 18, 23, 67
Mensah v. Moxley,
235 A.D.2d 910 (3d Dep’t 1997) ......................................................................... 19
Murray v. British Broad. Corp.,
81 F.3d 287 (2d Cir. 1996) ................................................................................... 55
Nasser v. Nasser,
52 A.D.3d 306 (1st Dep’t 2008) ........................................................................... 54
Navallo v. Am. Standard, Inc.,
224 A.D.2d 599 (2d Dep’t 1996) ......................................................................... 60
Nguyen v. Banque Indosuez,
19 A.D.3d 292 (1st Dep’t 2005) ........................................................................... 62
Overseas Programming Cos. v. Cinematographische Commerz-Anstalt,
684 F.2d 232 (2d Cir. 1982) .......................................................................... 39, 40
P.T. Delami Garment Indus. v. Cassa di Risparmio di Torino,
164 Misc. 2d 38 (Sup. Ct. N.Y. Cnty. 1994) ........................................................ 21
Parochial Bus Sys., Inc. v. Bd. of Educ.,
60 N.Y.2d 539 (1983) ........................................................................................... 70
Patriot Exploration, LLC. v. Thompson & Knight LLP,
16 N.Y.3d 762 (2011) ........................................................................................... 18
PDK Labs, Inc. v. G.M.G. Trans W. Corp.,
101 A.D.3d 970 (2d Dep’t 2012) ......................................................................... 70
Piper Aircraft Co. v. Reyno,
454 U.S. 235 (1981) ...................................................................................... 46, 47
Shiboleth v. Yerushalmi,
268 A.D.2d 300 (1st Dep’t 2000) .................................................................. 46, 48
TABLE OF AUTHORITIES
(continued)
Page(s)
vii
Shields v. Mi Ryung Constr. Co.,
508 F. Supp. 891 (S.D.N.Y. 1981) ....................................................................... 47
Shin-Etsu Chem. Co. v. ICICI Bank, Ltd.,
9 A.D.3d 171 (1st Dep’t 2004) ........................................ 19, 46, 47, 49, 51, 52, 58
Silver Lane Advisors LLC v. Bellatore LLC,
Index No. 600668/09, 2009 WL 2045513
(Sup. Ct. N.Y. Cnty. July 6, 2009) ................................................................ 33, 54
Silver v. Great Am. Ins. Co.,
29 N.Y.2d 356 (1972) .................................................................................... 18, 23
Smith v. Miller,
237 A.D.2d 294, 295 (2d Dep’t 1997) .......................................................... 66, 67
Sosa v. Cumberland Swan, Inc.,
210 A.D.2d 156 (1st Dep’t 1994) ......................................................................... 63
Stravalle v. Land Cargo, Inc.,
39 A.D.3d 735 (2d Dep’t 2007) ........................................................................... 48
Sussman v. Bank of Israel,
801 F. Supp. 1068 (S.D.N.Y. 1992),
aff’d, 990 F.2d 71 (2d Cir. 1993) ......................................................................... 24
Taylor v. Interstate Motor Freight Sys.,
309 N.Y. 633 (1956) ............................................................................................. 17
Tegra S.A. v. Bombardier, Inc.,
80 A.D.3d 443 (1st Dep’t 2011) ........................................................................... 26
Tilleke & Gibbins Int’l Ltd. v. Baker & McKenzie,
302 A.D.2d 328 (1st Dep’t 2003) ......................................................................... 58
Tinicum Props. Assocs. Ltd. P’ship v. Garnett,
Civ. A. No. 92-0860, 1992 WL 99590 (E.D. Pa. Apr. 29, 1992) ........................ 55
Todtman, Young, Tunick, Nachamie, Hendler,
Spizz & Drogin, P.C. v. Richardson,
231 A.D.2d 1 (1st Dep’t 1997) ............................................................................. 66
TABLE OF AUTHORITIES
(continued)
Page(s)
viii
Troni v. Banca Popolare Di Milano,
129 A.D.2d 502 (1st Dep’t 1987) ......................................................................... 22
VSL Corp. v. Dunes Hotels & Casinos Inc.,
70 N.Y.2d 948 (1988) ........................................................................................... 66
Wentzel v. Allen Mach., Inc.,
277 A.D.2d 446 (2d Dep’t 2000) ......................................................................... 19
Statutes
11 U.S.C. § 1504 ........................................................................................................ 9
11 U.S.C. § 301 .......................................................................................................... 9
11 U.S.C. § 362 .......................................................................................................... 9
Rules
22 N.Y.C.R.R. § 600.11(a)(3) .................................................................................. 15
CPLR 1008 ............................................................................................................... 67
CPLR 3211 ............................................................................................................... 37
CPLR 327 .......................................................................................................... 18, 37
CPLR 327(a) ..................................................................................................... 18, 68
CPLR 5501(b) .......................................................................................................... 17
CPLR 5602(b) ............................................................................................................ 3
CPLR 5602(b)(1) ....................................................................................................... 3
Third-Party Defendant-Appellant Maan Abdul Wahed Al-Sanea (“Mr. Al-
Sanea”) respectfully submits this brief in support of his appeal from the
September 25, 2012 decision and order of the Appellate Division (the “Decision
and Order”). For the reasons explained here, the Decision and Order should be
reversed, and this action should be remanded with directions to enter an order
reinstating the trial court’s judgment dismissing the case in its entirety or, at a
minimum, dismissing the third-party complaint of Defendant-Third-Party Plaintiff-
Respondent Ahmad Hamad Algosaibi & Bros. Co. (“AHAB”).
QUESTIONS PRESENTED
I. Did the Appellate Division err in holding that New York’s interest in
policing its native banking system effectively bars New York courts from
dismissing on forum non conveniens grounds virtually any action alleging
misconduct in relation to a New York banking transfer, even where the dispute is
between entirely foreign parties, arises out of conduct undertaken overseas and
relationships centered overseas, and requires the application of foreign law?
Yes. New York’s interest in policing its banking system is not a dispositive
factor in forum non conveniens analysis and should not compel denial of relief in a
case such as this, where the center of gravity of the disputes is located overseas.
II. Did the Appellate Division err in holding that dismissal of an action or
claim, such as the first-party claims in this case, on forum non conveniens grounds
2
is always precluded in the absence of a formal notice of motion expressly seeking
dismissal of such action or claim, even where the litigants raised, briefed, and were
heard by the court on the question of whether that action or claim should be
dismissed on forum non conveniens grounds?
Yes. Forum non conveniens dismissal of an action or claim may be granted
if the issue of dismissal as to that action or claim is raised and briefed by the
parties, regardless of whether that issue was separately identified in the moving
party’s notice of motion.
III. Did the Appellate Division err in failing to affirm dismissal of the
claims against a third-party defendant for lack of personal jurisdiction where the
only connection between the third-party plaintiff’s claims and the forum is the
ministerial transfer of U.S. dollars from a third party through two New York bank
accounts held by parties other than the third-party defendant?
Yes. The Appellate Division failed to recognize that the ministerial bank
transfers alleged here do not constitute “purposeful availment” by the third-party
defendant of New York’s banking system, which is required to establish personal
jurisdiction under New York law.1
1 Mr. Al-Sanea hereby incorporates by reference the arguments made in his December 7, 2011
brief filed in the Appellate Division below and his February 15, 2013 letter to this Court.
3
STATEMENT OF JURISDICTION
Jurisdiction is proper pursuant to CPLR 5602(b) “by permission of the
appellate division,” which was granted on December 28, 2012, R.1792, because
the appeal is from “an order of the appellate division,” reached over the dissent of
two Justices, “which does not finally determine [the] action,” CPLR 5602(b)(1).2
PRELIMINARY STATEMENT
In this case, a divided panel of the Appellate Division erroneously reversed
the trial court’s well-reasoned decision to dismiss the entire case on forum non
conveniens grounds. That dismissal was proper under all of the factors
traditionally considered in evaluating forum non conveniens motions: the parties
are all based in the Middle East (AHAB and Mr. Al-Sanea in Saudi Arabia,
Plaintiff-Appellant Mashreqbank PSC (“Mashreq”) in Dubai), none of them has
any relevant presence in New York (or the United States), and virtually none of the
alleged acts of misconduct transpired in New York (or the United States).
Moreover, this litigation is duplicative of numerous overseas proceedings. As the
trial court recognized, R.19–24, the claims AHAB asserts against Mr. Al-Sanea
here are only a tiny subset of a much larger dispute between these Saudi owners of
two related, family-owned Saudi business concerns, headquartered less than two
2 On January 25, 2013, this Court commenced a sua sponte jurisdictional inquiry into the bases
for Plaintiff-Appellant Mashreqbank PSC’s appellate standing as a party aggrieved by the
Decision and Order. That inquiry terminated on March 12, 2013, and merits briefing
commenced.
4
miles apart in Al Khobar, Saudi Arabia. AHAB’s allegations here were also made
in proceedings before a special committee empaneled by the Saudi Government
(the “Saudi Committee”), in submissions to Bahraini, Swiss, and other criminal-
enforcement authorities, and in parallel civil litigation against Mr. Al-Sanea
commenced by AHAB in the U.K. and the Cayman Islands—where AHAB seeks
recovery of the full $10 billion of its alleged damages, including claims concerning
the same $150 million transaction at issue here—all of which are premised on the
same allegations of misconduct.
The Appellate Division erroneously disregarded these facts and reinstated
the action on two principal grounds: (a) it found forum non conveniens dismissal to
be inapplicable as a matter of law because the case involved allegations of tortious
conduct relating to electronic funds transfers that cleared through New York bank
accounts—even though all of the substantive events underlying those transactions
transpired in the Middle East, where the parties reside; and (b) it purported to find
a technical defect in the application of forum non conveniens dismissal to the first-
party action, calling it a “sua sponte” act even though the parties were all heard on
that issue, the third-party defendant made a motion to dismiss the third-party
proceedings on forum non conveniens grounds, and both the plaintiff and the third-
party defendant advised the court that dismissal of the first-party claims on similar
grounds was appropriate. Both of the Appellate Division’s rulings were in error.
5
On the first point, the Appellate Division erroneously reasoned that New
York has a “paramount” interest in policing its banking system that compelled the
application of a bright-line rule foreclosing forum non conveniens dismissal
because of the involvement of New York bank transfers in the allegedly improper
transactions. That supposed rule is contrary to settled forum non conveniens case
law—including this Court’s precedents emphasizing the fundamentally “flexible”
nature of forum non conveniens analysis—and the only purported support the
Appellate Division cited for its conclusion derives entirely from a misreading of
decisions this Court has rendered concerning matters other than forum non
conveniens (i.e., comity and choice-of-law issues). Indeed, by overlooking all of
the pertinent facts beyond those ministerial New York bank transfers, the
Appellate Division failed to appreciate that virtually every other allegation and
item of record evidence placed before the courts below demonstrates that this case
never had any business being litigated in New York. See, e.g., ; R.104; R.125;
R.139; R.1821–1822. New York is not the center of gravity of this dispute—in
fact, it is not even the center of gravity of AHAB’s worldwide litigation campaign
against Mr. Al-Sanea, which includes proceedings in the Middle East, Europe, and
the Caribbean. R.190–199; R.261–289; R.577–578; R.620–622.
The Appellate Division’s ruling was not only wrong; it was also imprudent,
because it will have the effect of compelling New York courts to hear virtually
6
every case between foreign parties involving allegations of financial misconduct
that in any way touched New York’s banking system, no matter how extensive the
foreign contacts—and how minimal the New York contacts—may be. That is no
small concern for New York, one of the “financial capitals of the world,” which
routinely facilitates foreign parties’ dollar-denominated transactions that have no
connection to this State other than the fact that dollars are involved.
On the second ground, the Appellate Division erred in finding that dismissal
of the first-party claims was an improper sua sponte act simply because Mr. Al-
Sanea’s notice of motion did not expressly seek dismissal of those claims. That
ruling was based on inapposite cases in which the issue of forum non conveniens
dismissal was never raised or addressed by the parties, and it conflicts with case
law holding that forum non conveniens dismissal does not run afoul of the rule
against sua sponte action if, as here, the litigants have been heard on the issue.
The Decision and Order below should be reversed.
FACTUAL AND PROCEDURAL HISTORY
A. The Dispute in Saudi Arabia
This case concerns just one, limited piece of a larger dispute that arose in
Saudi Arabia between Mr. Al-Sanea, a Saudi citizen, and his in-laws, members of
Saudi Arabia’s prominent Algosaibi family. AHAB, the defendant-third-party
plaintiff here, is a Saudi partnership owned by the Algosaibi family. R.107;
7
R.619–620. AHAB is headquartered in Al Khobar, Saudi Arabia, where all but
one of the AHAB partners reside; Mr. Al-Sanea also resides in Al Khobar and has
his business headquartered there. R.107; R.618–620. Mr. Al-Sanea is married to
Madame Sana Algosaibi, a nominal partner in AHAB who played no actual role in
its business affairs, R.618, and for many years Mr. Al-Sanea served as a “senior
executive of AHAB’s financial service division, the Money Exchange,” R.104.
In 2009, during the worldwide financial crisis, AHAB and other Algosaibi
businesses defaulted on some $10 billion in obligations to more than a hundred
different creditors around the world, including Mashreq, a bank organized and
headquartered in Dubai, the United Arab Emirates (“UAE”). R.19; R.51–53;
R.109–110; R.981. When AHAB’s creditors sought recovery of AHAB’s debts,
AHAB made outlandish complaints against Mr. Al-Sanea, seeking to blame him
for its financial woes by claiming that he caused AHAB’s employees to borrow
$10 billion in AHAB’s name, over many years, without AHAB’s knowledge or
authorization. R.104–107; R.620–622. The Mashreq foreign-exchange
transactions at issue here are alleged to be among the products of that supposed
scheme. R.104; R.106. AHAB claims that Third-Party-Defendant Awal Bank
BSC (“Awal Bank”), a Bahraini bank in which Mr. Al-Sanea indirectly held a
majority ownership interest, improperly refused AHAB’s demand for withdrawal
of the relevant funds from its account in Bahrain. R.114.
8
Fundamental to AHAB’s claims against Mr. Al-Sanea is its contention that
he perpetrated this “massive fraud” by “[d]irecting AHAB’s employees” to engage
in billions of dollars of transactions in the company’s name, without the knowledge
or authorization of its principals, “frequently using forged or falsified documents,”
and “then divert[ing] the funds received to his own use”—all while “conceal[ing]
his fraud from AHAB’s Board of Directors and Principals” by “control[ing] all
information reported to [them].” R.104–105; R.107. That core allegation
underlies AHAB’s third-party claims against Mr. Al-Sanea here and its defense
and counterclaims to Mashreq’s first-party complaint—as well as several other
proceedings AHAB has commenced against Mr. Al-Sanea abroad, criminal
complaints it has made against him in several countries, and other proceedings
brought by other creditors that it has sought to defend by raising its fraud and
forgery allegations against Mr. Al-Sanea (although none of those proceedings has
shielded AHAB from liability on that ground). R.114–120; R.620–622.
AHAB’s principals first prosecuted these allegations by lodging complaints
against Mr. Al-Sanea with the Saudi government. R.620–621. They claimed that
AHAB should be absolved of its debts on account of Mr. Al-Sanea’s alleged
conduct, and that Mr. Al-Sanea should be liable for them instead. In an effort to
investigate and resolve the parties’ dispute, the Saudi government formed the
Saudi Committee, a body comprising several prominent government officials—
9
including the Saudi Attorney General, several judges, and representatives of the
Saudi Arabian Monetary Agency, the Capital Market Authority, the Fraud Division
of the Ministry of the Interior, and the Ministries of Commerce and Justice. Id.
B. AHAB Propounds Allegations of Mr. Al-Sanea’s Purported Fraud
in Other Proceedings Outside of Saudi Arabia
AHAB has also sought to press its allegations against Mr. Al-Sanea in a
myriad of other foreign jurisdictions. In mid-2009, for example, members of the
Algosaibi family filed criminal complaints against Mr. Al-Sanea and others with
the Bahraini government; in the wake of those allegations, the Bahraini public
prosecutor’s office commenced an investigation and the Central Bank of Bahrain
appointed independent administrators over the affairs of both Third-Party
Defendant Awal Bank—which ultimately led to a Chapter 15 bankruptcy stay of
all proceedings against Awal Bank in this action—and The International Banking
Corporation (“TIBC”), AHAB’s Bahraini banking subsidiary. R.190; R.221;
R.258; R.621–622; see 11 U.S.C. §§ 301, 362, 1504. AHAB also sought to have
criminal charges filed against Mr. Al-Sanea in Switzerland. R.574; R.621.
Less than two weeks after it filed the third-party complaint in this action,
AHAB also commenced a multi-billion-dollar civil suit in the Cayman Islands
against Mr. Al-Sanea and several entities affiliated with his Saad Group of
companies. R.261; R.622. That action involves virtually identical allegations of
fraud and misconduct by Mr. Al-Sanea and includes claims that encompass the
10
very same allegedly unauthorized Mashreq transaction at issue here. R.273; R.622.
Among other things, AHAB capitalized on procedures available to it in the
Cayman action in order to obtain an ex parte “worldwide asset-freezing order”
against Mr. Al-Sanea, which it then filed with a court in the United Kingdom to
obtain an extension of that order. R.273; R.577; R.982.
AHAB has also sued one of Mr. Al-Sanea’s alleged “co-conspirators” in a
federal district court in California,3 and has availed itself of the New York federal
courts to obtain discovery from several financial institutions here, see Ahmad
Hamad Algosaibi & Bros. Co. v. Standard Chartered Int’l (USA) Ltd., 785 F.
Supp. 2d 434 (S.D.N.Y. 2011).
C. This Case and Its Lack of Any Connection to New York
In this case, AHAB seeks only indemnity (and punitive damages) from Mr.
Al-Sanea to cover its liability on Mashreq’s first-party claims—not the other
billions it claims to be owed by Mr. Al-Sanea as a result his supposed “massive
fraud” against AHAB. R.114–120. The specific transactions on which AHAB
focuses here were several split-value foreign exchange transactions, in which
Mashreq was to pay U.S. dollars into a New York bank account in AHAB’s name,
and AHAB was to pay Saudi riyals into Mashreq’s account at a Saudi bank a few
days later. R.109–113. On the last of those transactions, as alleged, Mashreq paid
3 Ahmad Hamad Algosaibi & Bros. Co. v. Stewart, No. 2:11-cv-02596-JGB-E (C.D. Cal.).
11
the dollar leg of the deal but AHAB failed to pay the Saudi riyals that came due
several days later. R.104; R.113. The dollars transferred to AHAB’s New York
account were transferred to another New York account held by Awal Bank, and
were then credited to AHAB’s account at Awal Bank in Bahrain, but Awal Bank
(which has been placed into involuntary insolvency proceedings) failed to tender
the funds to AHAB in Bahrain upon demand. R.113–114.
The only connection these transactions had to New York was that the dollar
transfers at issue were conducted by parties in Saudi Arabia and Dubai who sent
electronic instructions to New York banks that then executed ministerial wire
transfers of funds between New York accounts. Id. AHAB claims that these
transactions were undertaken, without its knowledge or consent, by Mr. Al-Sanea
and AHAB employees in Saudi Arabia acting at his direction. Id. On this set of
alleged facts, AHAB contends that Mr. Al-Sanea somehow “stole” its property in
New York, and that New York is the center of gravity of the dispute.
Mashreq filed its complaint against AHAB commencing this action on
May 27, 2009, R.50, although it also asserted claims against AHAB before a court
in the UAE. See, e.g., R.1354. On July 15, 2009, AHAB filed its Answer and
Third-Party Complaint commencing suit against Mr. Al-Sanea and Awal Bank,
and it subsequently amended its pleading on August 26, 2009. R.75–120; R.142–
170. The Third-Party Complaint alleged that Mr. Al-Sanea “ran” the AHAB
12
division in Saudi Arabia that entered into the Mashreq transaction; that he
somehow directed AHAB’s own employees to defraud it by “causing” the
company to enter into the Mashreq transaction, among others, without the
knowledge or authorization of AHAB’s principals; that he improperly transferred
the transaction proceeds to an AHAB account at Awal Bank; and that Awal Bank
refused to honor AHAB’s demands for payment of its funds on account.4 R.104–
110; R.112–114; R.116. Asserting causes of action for indemnity, breach of
fiduciary duty, conversion, unjust enrichment, and fraud, AHAB’s third-party
complaint sought to recover the amount of any judgment Mashreq might obtain
against AHAB, associated costs, and punitive damages of $1 billion. R.114–120.
It did not seek to recover any other portion of the $10 billion AHAB allegedly lost
as a result of Mr. Al-Sanea’s purported misconduct in Saudi Arabia, even though
all of its claims are premised on the same core allegations of fraudulent conduct.
AHAB does not allege that any of Mr. Al-Sanea’s supposed misconduct
took place in New York. Nor could it credibly do so, because Mr. Al-Sanea has no
relevant connections to New York. He lives and works in Al Khobar, Saudi
Arabia, has not been to New York since 2000, has not traveled to New York or
communicated with any person located in New York in connection with any of the
4 AHAB’s amended pleading also asserted counterclaims against Mashreq. R.87–103; R.239–
241. Those counterclaims, obviously pleaded for strategic reasons to defeat an order of
attachment Mashreq had obtained against AHAB, merely assert in conclusory fashion that
Mashreq “knew or was willfully blind to” Mr. Al-Sanea’s alleged misconduct.
13
alleged transactions at issue, and maintains no personal bank account in New York
that was ever used in connection with any transaction involving AHAB or
Mashreq. R.618–620. His co-defendant, Awal Bank—which, in any event, is
presently shielded by a Chapter 15 bankruptcy stay—is neither chartered,
headquartered, nor authorized to do business as a foreign corporation in New York,
and neither Awal Bank nor Mr. Al-Sanea has maintained any offices or real
property in New York at any time relevant to AHAB’s claims. R.618–619. Nor
does AHAB itself have any presence in or relevant contact with New York. R.87;
R.109; R.619–620. The sole New York contact AHAB alleges is that the
transaction involved a ministerial transfer of U.S. dollars through New York bank
accounts, R.109, a practical necessity for all such large-volume foreign-exchange
transactions involving a U.S.-dollar component. R.466–472; R.492–494; R.504–
573.
D. The Proceedings Below
After AHAB filed its amended answer, counterclaims, and third-party
complaint, Mashreq moved to dismiss the counterclaims for failure to state a claim,
R.1127, and Mr. Al-Sanea moved to dismiss the third-party complaint for lack of
personal jurisdiction and on forum non conveniens grounds, R.65–66. At a
January 5, 2010 hearing on another matter, held before opposition briefing on Mr.
14
Al-Sanea’s motion to dismiss had even been filed, a discovery objection made by
Mr. Al-Sanea brought the forum non conveniens issue to the trial court’s attention.
The trial court asked whether the forum non conveniens concerns raised in
Mr. Al-Sanea’s motion to dismiss had implications for the entire case, and Mr. Al-
Sanea’s counsel stated that, just as with the third-party claims, “there are
multiplicity of other proceedings that have far greater connection to [Mashreq and
AHAB] than does New York,” and that “the same could be true” for the first-party
claims. R.653–655. The trial court requested briefing on the application of forum
non conveniens to the entire action, R.658–659, and AHAB and Mashreq both filed
briefs on the subject of forum non conveniens as applied to the entire case—
including the first-party claims. AHAB expressly joined issue, arguing that the
first- and third-party proceedings were “inseparably connected” and should be
addressed as a “whole in New York.” AHAB MTD Opp.5 at 19 (internal quotation
omitted). And Mashreq, for its part, filed a memorandum stating that it “would not
object to litigating its dispute with AHAB and the AHAB partners in the UAE” if
the court was inclined to dismiss the third-party proceedings, R.1452–1454; 1465–
5 Third-Party Plaintiff Ahmad Hamad Algosaibi & Brothers Company’s Opposition to Third-
Party Defendant Maan Al Sanea’s Motion to Dismiss, filed in the trial court below on
February 5, 2010 (Dkt. No. 82).
15
1467; Mashreq MTD Reply6 at 2–3. AHAB, despite having affirmatively pleaded
lack of personal jurisdiction as a defense to Mashreq’s complaint, was the only
party left arguing that the case should go forward in New York. R.1465–1467.
In a memorandum decision entered on July 29, 2010, the trial court ordered
the entire action dismissed on forum non conveniens grounds. R.8; R.30; R.31.
The court found, among other things, that Saudi law would govern Mr. Al-Sanea’s
relations with AHAB, that “the alleged fraudulent activities took place in Saudi
Arabia and Kuwait,” that “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 nations,” and that AHAB ha[d] already commenced a number of actions
against Al Sanea in various countries”—“all [of which] favor[ed] granting the
[forum non conveniens] motion” as to the third-party action. R.24–25. The court
then proceeded to analyze forum non conveniens as to the first-party action, and
dismissed it as well, finding that the factors it considered similarly supported
dismissal. R.25–27. AHAB perfected an appeal on the last day of its nine-month
period to perfect. R.6; 22 N.Y.C.R.R. § 600.11(a)(3). Mr. Al-Sanea and Mashreq
both argued to the Appellate Division that the order on appeal should be affirmed.
6 See Plaintiff Mashreqbank PSC’s Reply Memorandum of Law in Connection with Third-
Party Defendant Al-Sanea’s Motion for Forum Non Conveniens Dismissal, filed in the trial
court below on March 23, 2010 (Dkt. No. 115).
16
On September 25, 2012, a divided panel of the Appellate Division reversed
over the dissent of two Justices. Then-Justice Catterson, writing for the three-
Justice majority, found that the trial court’s dismissal of the first-party proceedings
was an improper “sua sponte” act that required reversal, concluding that forum non
conveniens dismissal was precluded because no party had filed a motion to dismiss
the first-party proceedings. R.1801–1804. The majority also reversed the trial
court’s dismissal of the third-party claims, finding, on the one hand, that forum
dismissal could not be granted without a showing that another forum could
adequately adjudicate both the first-party and third-party claims in one case, and,
on the other hand, that the New York courts had an unavoidable, “paramount”
interest in adjudicating the third-party claims because they concern allegations of
misconduct involving use of the state’s “native” banking system. R.1804–1812.
Both Mr. Al-Sanea and Mashreq moved the Appellate Division for leave to
appeal to the Court of Appeals. By Order entered on December 28, 2012, the
Appellate Division granted both motions. R.1792. The parties briefed this appeal
pursuant to Rule 500.11 in accordance with this Court’s March 12, 2013 letter,
after which, on May 30, 2013, the Court terminated alternative review and ordered
the appeal to proceed in the normal course.
17
STANDARD OF REVIEW
The Appellate Division certified the following “question of law” for review:
“Was the order of [the Appellate Division], which reversed the judgment of the
Supreme Court, properly made?” R.1792–1793. It “further certifie[d] that its
determination was made as a matter of law and not in the exercise of discretion.”
R.1793. This Court exercises independent review of such questions of law. See
CPLR 5501(b); Taylor v. Interstate Motor Freight Sys., 309 N.Y. 633, 636 (1956)
(per curiam) (conducting independent review of decision rendered “‘on the law’”).
ARGUMENT
Well-settled law and undisputed record evidence demonstrate that this case
was properly dismissed on forum non conveniens grounds, and that the Appellate
Division erred in failing to affirm the trial court’s judgment in its entirety or, at a
minimum, to the extent that it dismissed the third-party complaint. The decision of
the Appellate Division should be reversed because it is infected by several legal
errors, each of which compels reversal. First, virtually all of the factors bearing on
forum non conveniens analysis favored dismissal of the case. The Appellate
Division’s contrary, erroneous analysis of those factors was tainted by several
fundamental misapprehensions of this Court’s controlling forum non conveniens
case law. Moreover, it amounted to an abuse of discretion that independently
justifies reversal. See Patriot Exploration, LLC. v. Thompson & Knight LLP, 16
18
N.Y.3d 762, 763 (2011). Second, nothing about the trial court’s decision to
dismiss this case in its entirety involved improper sua sponte action. Nor was the
trial court required to adjudicate the first- and third-party claims together; even if it
chose to hear the first-party proceedings, it could and should have dismissed the
third-party claims on forum non conveniens grounds. Third, the trial court should
have dismissed the third-party complaint for lack of personal jurisdiction, and its
dismissal of the third-party complaint should have been affirmed by the Appellate
Division in any event on that independent, alternative ground.
I. THE APPELLATE DIVISION’S APPLICATION OF THE FORUM
NON CONVENIENS FACTORS TO THIS CASE WAS PREDICATED
ON FUNDAMENTAL LEGAL ERRORS
The doctrine of forum non conveniens, codified in part in CPLR 327, affords
New York courts discretion to decline burdensome jurisdiction in cases “lacking a
substantial nexus with New York.” Martin v. Mieth, 35 N.Y.2d 414, 418 (1974).
Dismissal is warranted if, upon “balancing the interests and conveniences of the
parties and the court,” the court determines that an action “could better be
adjudicated in another forum.” Silver v. Great Am. Ins. Co., 29 N.Y.2d 356, 360
(1972); see CPLR 327(a) (authorizing dismissal if “the court finds that in the
interest of substantial justice the action should be heard in another forum”); Islamic
Republic of Iran v. Pahlavi, 62 N.Y.2d 474, 478–79 (1984).
19
A defendant seeking forum non conveniens dismissal need not actually even
prove that an alternative forum exists. Pahlavi, 62 N.Y.2d at 481–82. He need
only demonstrate that the relevant factors weigh against the exercise of jurisdiction
by a New York court. Id. at 479. To avoid dismissal, New York’s interests in
adjudicating a dispute must justify imposing on the parties, witnesses, and courts
the burdens of litigating here. Foreign plaintiffs bear a heavy burden to justify
availing themselves of a New York forum: A non-resident such as AHAB must
“demonstrate that special circumstances exist[] warranting retention of the case in
New York.” Mensah v. Moxley, 235 A.D.2d 910, 911 (3d Dep’t 1997).
New York courts typically consider several factors in evaluating forum non
conveniens motions, including (a) “the burden on the New York courts” in light of
the substantiality (or insubstantiality) of New York’s connection to the dispute and
the existence of parallel litigation in other fora; (b) the jurisdiction in which the
cause of action arose; (c) “the availability of another suitable forum” and the
relative strength of that forum’s interest in the dispute; (d) the “potential hardship
to the defendant and relevant witnesses”; (e) the “applicability of foreign law”; and
(f) the “non-residen[ce]” of “both parties to the action.” Pahlavi, 62 N.Y.2d at
479, 481; Shin-Etsu Chem. Co. v. ICICI Bank, Ltd., 9 A.D.3d 171, 178 (1st Dep’t
2004); Wentzel v. Allen Mach., Inc., 277 A.D.2d 446, 447 (2d Dep’t 2000).
Here, every one of these factors favors dismissal. As the trial court found:
20
(a) The burdens on the New York courts are unjustifiable given the
State’s insubstantial connection to the dispute, made worse because
parallel actions in other fora raise the risk of “duplication of effort”
and “inconsistent rulings by courts in different jurisdictions,” R.26–
27;
(b) All of the alleged misconduct arose overseas, R.24;
(c) Multiple jurisdictions offer suitable alternative fora for adjudicating
the claims at issue, and have far greater interests in doing so than New
York has, R.24, R.27;
(d) The hardship to the court, the parties, and the key witnesses—none of
whom resides in New York—would be severe, R.24, R.26;
(e) The New York courts would be required to interpret and apply Saudi
and UAE law, R.24–25; and
(f) None of the parties resides in New York—all are foreign citizens
located in Saudi Arabia or the UAE, R.13, R.24.
As the trial court noted, both AHAB and Mashreq have sought similar—
indeed, broader—relief in other jurisdictions, and Mashreq ultimately consented to
dismissal of its case here. R.1453–1467. Allowing AHAB’s claims to proceed in
New York would simply add yet another parallel proceeding to the multiple fora
already adjudicating AHAB’s allegations. Taken together, these factors effectively
compelled the trial court to dismiss the case. R.24. In reaching a contrary
conclusion, the Appellate Division fundamentally misapprehended the law of
forum non conveniens and misapplied this Court’s relevant precedents.
21
A. Hearing This Case in New York Would Impose an Unjustified
Burden on the Court Given Its Insubstantial Connection to This
State and AHAB’s Prosecution of Multiple Parallel Actions
Because New York has no significant interest in this lawsuit, the substantial
burden on jurors and on an already congested court system that this lawsuit would
entail cannot be justified. See, e.g., Pahlavi, 62 N.Y.2d at 479–82. The
“unauthorized” conduct in which Mr. Al-Sanea allegedly engaged—and in which
he supposedly “directed” AHAB’s employees to engage—occurred entirely
outside New York. R.104–107; R.112. AHAB has no presence in or relevant
contact with New York. R.87; R.109; R.619–620. And AHAB alleges that it was
denied access to its funds upon demand in Bahrain—not New York. R.113–114.
The sole New York contact AHAB alleges is that the transaction involved a
ministerial transfer of U.S. dollars through New York bank accounts, R.109, which
is a practical necessity for all such large-volume foreign-exchange transactions
involving a U.S.-dollar component. New York courts have repeatedly rejected the
notion that forum non conveniens dismissal is unavailable whenever the alleged
misconduct at issue relates to the ministerial use of New York accounts.7
7 See, e.g., World Point Trading PTE, Ltd. v. Credito Italiano, 225 A.D.2d 153, 160–61 (1st
Dep’t 1996) (citing P.T. Delami Garment Indus. v. Cassa di Risparmio di Torino, 164 Misc.
2d 38 (Sup. Ct. N.Y. Cnty. 1994)); A&M Exports, Ltd. v. Meridien Int’l Bank, Ltd., 207
A.D.2d 741, 741 (1st Dep’t 1994); Citigroup Global Mkts., Inc. v. Metals Holding Corp.,
Index. No. 604205/05, 2006 WL 1594442, at *6–*7 (Sup. Ct. N.Y. Cnty. June 8, 2006),
aff’d, 45 A.D.3d 361, 362 (1st Dep’t 2007).
22
Moreover, this is not a run-of-the-mill domestic civil case. AHAB’s claims
concern allegations of a massive and complex (albeit far-fetched) multi-national
fraud conducted from Mr. Al-Sanea’s Saudi headquarters. A New York court
would need to hear evidence from foreign parties and witnesses, involving foreign
languages and legal principles, and expert testimony on foreign law. R.984–986;
R.1296–1304; see, e.g., Troni v. Banca Popolare Di Milano, 129 A.D.2d 502,
503–504 (1st Dep’t 1987). Litigating the case likely will require discovery of
hundreds of thousands of documents, testimony from scores of foreign witnesses,
and years of protracted court proceedings.8 The core of this case concerns
allegations of misconduct concerning the operations of a Saudi business enterprise
by Saudi nationals and events that transpired there—not the ministerial execution
of electronic transactions by New York bank functionaries. As such, New York
faces a disproportionate burden in terms of language and logistics.
Indeed, the burdens that would be foisted on a New York court are even less
justifiable in light of AHAB’s duplicative litigation efforts in other jurisdictions
around the world. See, e.g., Citigroup Global Mkts., Inc. v. Metals Holding Corp.,
45 A.D.3d 361, 362 (1st Dep’t 2007); World Point Trading, 225 A.D.2d at 161;
see also R.620–622. This multiplicity of parallel actions “involves duplication of
8 The Appellate Division disagreed with the trial court’s findings that foreign-language
documents and foreign witnesses would unduly burden a trial in New York, see R.1811–
1812, but it did not even acknowledge the record evidence revealing that AHAB’s own
representatives had confirmed the existence of such burdens, see R.1782, R.1784.
23
effort” and “presents the attendant risk that conflicting rulings might be issued by
courts of two jurisdictions,” which is “a powerful factor favoring dismissal.”
World Point Trading, 225 A.D.2d at 161; Alberta & Orient Glycol Co. v. Factory
Mut. Ins. Co., Index No. 603150/05, 2007 WL 6881693, at *12 (Sup. Ct. N.Y.
Cnty. Apr. 24, 2007) (R.1274); accord Citigroup Global Mkts., Inc., 45 A.D.3d at
362. The trial court expressly recognized that this key factor favored dismissal.
R.26–27. But the Appellate Division failed even to acknowledge that finding, and
thus offered nothing to explain why it should be disregarded.
Instead, the Appellate Division adopted a bright-line rule of forum non
conveniens analysis that effectively compels the New York courts to hear virtually
every dispute relating to alleged misconduct in connection with transactions that
involve a transfer of dollars through a New York bank account. Such a rule not
only runs afoul of this Court’s well-settled precedents emphasizing the
fundamental “flexibility” of forum non conveniens analysis—an analysis “based
upon the facts and circumstances of each case” in which “[n]o one factor is
controlling.” Pahlavi, 62 N.Y.2d at 479; accord, e.g., Martin, 35 N.Y.2d at 418;
Silver, 29 N.Y.2d at 361. It also contradicts settled law finding forum non
conveniens dismissal appropriate in a myriad of cases that, despite being centered
24
in another jurisdiction, nonetheless have some transitory transactional nexus to
New York (such as transfers of dollars or other assets through New York).9
The Appellate Division’s error rested on a fundamental misapprehension of
principles it purported to derive from this Court’s decisions in J. Zeevi & Sons, Ltd.
v. Grindlays Bank (Uganda) Ltd., 37 N.Y.2d 220 (1975), and Ehrlich-Bober & Co.
v. University of Houston, 49 N.Y.2d 574 (1980), neither of which concerns the
doctrine of forum non conveniens. This Court has never said that New York has a
paramount interest in forcing its courts to retain jurisdiction over every tort case
that involves alleged misconduct relating to a New York banking transaction, and
the Appellate Division plainly erred in construing those precedents as doing so.
Indeed, other courts have noted that this Court’s “paramount interest” analysis “is
not a trump to be played whenever a party to such a transaction seeks to use our
courts for a lawsuit with little or no apparent contact with New York or the United
States.” First Union, 135 F. Supp. 2d at 453; accord, e.g., World Point Trading,
225 A.D.2d at 160. The Appellate Division failed to appreciate that principle.
9 See, e.g., Atsco Ltd. v. Swanson, 29 A.D.3d 465, 465–66 (1st Dep’t 2006); World Point, 225
A.D.2d at 159–61; A&M Exports, Ltd., 207 A.D.2d at 741; Citigroup Global Mkts., 2006 WL
1594442, at *6–*7; First Union Nat’l Bank v. Paribas, 135 F. Supp. 2d 443, 453–54
(S.D.N.Y. 2001); Calgarth Invs., Ltd. v. Bank Saderat Iran, No. 95 Civ. 5332, 1996 WL
204470, at *2, *6–*7 (S.D.N.Y. Apr. 26, 1996), aff’d, 108 F.3d 329 (2d Cir. 1997); Sussman
v. Bank of Israel, 801 F. Supp. 1068, 1074 (S.D.N.Y. 1992), aff’d, 990 F.2d 71, 72 (2d Cir.
1993); R.1187–1189; R.1193–1195.
25
1. The Appellate Division Misconstrued J. Zeevi as Foreclosing
Forum Non Conveniens Relief in This Case
At its core, the Appellate Division’s forum non conveniens analysis was
indelibly colored by its erroneous reading of this Court’s decision in J. Zeevi as
supporting the notion that New York’s “compelling interest in the protection of the
native banking system from misfeasance or malfeasance,” R.1805, compels New
York courts to deny forum non conveniens dismissal in virtually every tort case
that in any way touches the instrumentalities of the New York banking system. To
begin with, the Appellate Division quoted extensively from J. Zeevi, but did not
even acknowledge that J. Zeevi concerned a dispute over choice of law, not forum
non conveniens. Ignoring this important distinction, the Appellate Division failed
to explain why the choice-of-law analysis in J. Zeevi should compel any particular
conclusion as to forum non conveniens issues in another case.
If New York’s interest in applying its law to a claim were always enough to
render forum non conveniens dismissal of such a claim improper, then forum non
conveniens analysis, in essence, would turn exclusively on whether or not foreign
law applies. Applicability of foreign law would be the only relevant factor. That,
of course, is not the law—indeed, it is antithetical to this Court’s repeated
statements that “[n]o one factor is controlling” in forum non conveniens analysis
and that “[t]he great advantage of the rule . . . is its flexibility based upon the facts
and circumstances of each case.” Pahlavi, 62 N.Y.2d at 479 (emphasis added).
26
Nothing cited in the Decision and Order, or elsewhere in the law, supports the
notion that choice-of-law and forum non conveniens analyses are coextensive—or
that dismissal on forum grounds must be denied in every case where New York
law applies. Cf. Tegra S.A. v. Bombardier, Inc., 80 A.D.3d 443, 444 (1st Dep’t
2011) (affirming dismissal on forum non conveniens grounds even though the
“subject agreement contain[ed] a choice of law provision in favor of New York
law”); Imaging Holdings I, LP v. Israel Aerospace Indus., Index No. 601061/2009,
2009 WL 5895337, at *6, *9 (Sup. Ct. N.Y. Cnty. Dec. 11, 2009) (dismissing on
forum non conveniens grounds even though some claims were “governed by New
York law”).
The Appellate Division also misapprehended the extent to which the facts of
J. Zeevi coincide with the facts of this case, and it erred in concluding that any
distinction between the two cases is “immaterial.” R.1807. J. Zeevi concerned the
enforceability of a financial instrument that called for performance entirely in New
York—an irrevocable letter of credit payable by a New York bank that was
dishonored in contravention of its terms by the payor bank—and that, accordingly,
implicated the reliability of financial commitments made by New York banks and
the commercial expectations of parties that rely on letters of credit payable in New
York. Indeed, as the J. Zeevi Court noted, the “defendant’s order countermanding
payment” on the letter of credit “took effect upon receipt by Citibank in New
27
York” and, accordingly, “New York was the locus of repudiation, whereas it
should have been a site of payment.” 37 N.Y.2d at 226. A significant factor
underlying the Court’s decision to apply New York law was its concern for
protecting “the justified expectations of the parties to the contract” that called for
the issuance of the New York letter of credit. Id. at 227.
This case is far different. The financial instruments at issue here—foreign-
exchange agreements negotiated and entered into in the Middle East, and subject to
foreign law by their terms—called for performance primarily overseas, and it was a
failure of performance in Saudi Arabia—not in New York—that gave rise to this
action. In any event, the J. Zeevi Court’s choice-of-law analysis focused on the
location where “that is done which should not be done.” Id. at 226 (internal
quotation omitted). Here, the alleged acts that “should not be done” by Mr. Al-
Sanea—contracting with Mashreq in AHAB’s name but without its knowledge or
authorization, creating and utilizing forged documents to engage in those
transactions in AHAB’s name, and directing bank transfers to divert the proceeds
to his own uses—would have been done (if at all) entirely overseas, where Mr. Al-
Sanea, AHAB, and Mashreq were all located and did business, and where the
exchange transactions were negotiated. R.13–14; R.24–27; R.104; R.107–109;
R.112–115; R.139; R.617–620.
28
The nefarious aspect of the allegedly fraudulent transactions at issue here is
not hinged to the fact that one leg of those transactions called for a payment in
dollars. Rather, it arises from allegations that Mr. Al-Sanea wielded control over
the implements of AHAB’s business—which is based in Saudi Arabia and has no
presence here—to do business with other Middle Eastern and overseas parties in
AHAB’s name but for his own benefit, and that he allegedly employed fraud,
forgery, and other unlawful practices to do so without AHAB’s knowledge or
consent. The mere fact that one of the strings Mr. Al-Sanea allegedly pulled leads
to a New York wire transfer does not render this dispute one that is centered in
New York or fundamentally concerned with the New York banking system. The
totality of the dispute in J. Zeevi concerned a foreign party’s unlawful acts to bar a
New York bank from honoring its commitment to pay money upon presentment of
appropriate documents in New York; that is nothing like the situation in this case.10
The Appellate Division also failed to recognize that, unlike here, the foreign-
law interests at issue in J. Zeevi were in direct conflict with well-settled New York
policy “against” any “acquiescence in the confiscatory and discriminatory acts” of
a foreign government and, thus, were not entitled to any respect under principles of
comity. J. Zeevi, 37 N.Y.2d at 228. The events that led the defendant in J. Zeevi
10 The Appellate Division also erroneously found similarity between this case and J. Zeevi
based on the notion that the “foreign exchange laws of Uganda” supposedly “were central to
the dispute” in J. Zeevi. R.1806. That is the opposite of what this Court held in J. Zeevi:
that Ugandan law did not apply to that dispute at all. 37 N.Y.2d at 226–28.
29
to instruct its New York agent to dishonor the letter of credit were the products of a
“confiscatory and discriminatory” policy directive of the Ugandan government that
targeted Israeli business interests and was motivated by the “strong anti-Israel and
anti-semitic” views of the Ugandan government. Id. at 227–28. In other words, J.
Zeevi held that the New York courts should not give deference to the bigoted acts
of a foreign regime that would have had the effect of vitiating well-settled
principles of due process and equal protection embodied in New York law. Here,
there is no such foreign-law interest repugnant to the public policy of New York
that compels the New York courts to embroil themselves in this dispute, and the
Appellate Division failed to acknowledge the absence of this factor in concluding
that the differences between this case and J. Zeevi were “immaterial.” R.1807.
2. The Appellate Division Erred in Finding That Ehrlich-
Bober Foreclosed Forum Non Conveniens Relief Here
The Appellate Division also misread and misapplied this Court’s decision in
Ehrlich-Bober. It not only failed to account for the panoply of facts distinguishing
that case from this one, it also misread Ehrlich-Bober’s analysis of a comity issue
as a discussion relevant to forum non conveniens. The majority found that this
case was “analytically indistinguishable” from Ehrlich-Bober, R.1810, without
explaining how one could conclude, as the Ehrlich-Bober Court expressly found,
that “the transactions in question” in this case “must be considered to have been
30
centered here” in New York. 49 N.Y.2d at 581–82 (emphasis added). That
finding in Ehrlich-Bober was based on the facts that:
the transactions in question . . . were initiated by an employee of the
defendant university in a phone call to the plaintiff’s New York
offices. They were accepted in New York by the plaintiff. The
money was paid in New York. The securities were delivered in New
York. And finally, the repurchases were to have been accomplished
in New York. Id.
The Appellate Division cited nothing to explain how, under that standard,
this case could be characterized as being “centered” in New York. Other than the
fact that one leg of the transactions involved a payment of dollars to a New York
account, none of the facts noted in Ehrlich-Bober is present. None of the parties
resides here; the transactions were not “initiated by . . . a phone call to New York,”
nor were they “accepted” by anyone “in New York”; there were no securities
“delivered in New York”; and there were no unfulfilled “repurchases,” or other
failures of performance, that “were to have been accomplished in New York.”
To the contrary, the only conclusion to be drawn about the events at issue in
this case is that they were “centered” in the Middle East—where all of the parties
are located; where Mr. Al-Sanea allegedly negotiated and entered into fraudulent
transactions in AHAB’s name; where he allegedly forged documents to seize
control of AHAB’s business operations (including by sending wire instructions
from there that gave rise to New York bank transfers in AHAB’s name); where the
proceeds of the alleged fraud supposedly ended up; and where AHAB’s liability to
31
Mashreq arose when it failed to pay Saudi riyals into Mashreq’s account in Saudi
Arabia. The Ehrlich-Bober Court never would have concluded that these events
were “centered” in New York, and the Appellate Division plainly erred in relying
on Ehrlich-Bober in the absence of facts supporting such a conclusion.
Even more important, the Appellate Division misread Ehrlich-Bober on the
law, because the analysis from that case on which the Appellate Division relied has
nothing to do with forum non conveniens. Just as it wrongly converted J. Zeevi’s
choice-of-law analysis into a forum non conveniens issue, the Appellate Division
unjustifiably spun Ehrlich-Bober’s comity analysis into support for its forum non
conveniens ruling here. The core issue in Ehrlich-Bober was “whether New York
should observe” a Texas-law sovereign-immunity statute “as a matter of comity,”
and it was only in that context that the Court discussed New York’s interest in
policing its banking system. 49 N.Y.2d at 577, 581–82. Although the Court noted
without explanation, “[p]reliminary to” its discussion of that core issue, that it
agreed with the Appellate Division’s finding that forum non conveniens was
“inapplicable” to that case, it nowhere suggested that its subsequent comity
analysis applied with equal force to forum non conveniens. Id. at 579.
Indeed, neither the Court nor the parties in Ehrlich-Bober ever asserted that
forum non conveniens dismissal was barred by some alleged “paramount” interest
in policing the native banking system; in fact, the plaintiff there, a New York-
32
based company, argued against forum non conveniens dismissal by reference to the
classic forum non conveniens factors, such as that the agreement at issue was
negotiated with “plaintiff’s New York office” and was “confirmed in a letter
mailed to plaintiff in New York,” that the defendant “received payment” in New
York and “delivered the securities [at issue] to plaintiffs in New York,” and that all
of the records and witnesses of plaintiffs and the banks that “acted for the parties”
were located in New York.11 Thus, the Appellate Division erred in concluding that
this case was “analytically indistinguishable” from Ehrlich-Bober on forum non
conveniens issues when, in fact, the Ehrlich-Bober rationale reveals exactly why
the trial court’s forum non conveniens dismissal should not have been disturbed.
* * *
If not reversed, the Appellate Division’s decision will have disastrous
consequences for future litigation in the New York courts. It will subject every
trial court in the First Department—and likely many others—to a rule that compels
them to hear virtually every tort case involving a New York banking transaction
that comes before them and satisfies the most basic prerequisites of modern
personal-jurisdiction jurisprudence. Such a rule frustrates the very purpose of the
doctrine of forum non conveniens, which serves as “a necessary antidote to the
11 See Brief for Plaintiff-Appellant at 28, Ehrlich-Bober & Co. v. Univ. of Houston, 49 N.Y.2d
574 (1980).
33
greatly expanded jurisdiction provided by ‘long-arm’ statutes such as CPLR 302.”
Pahlavi, 62 N.Y.2d at 491. A bright-line rule against dismissal of any tort action
with any tie to a New York banking transaction would pervert that fundamental
purpose, at great expense both to the overburdened New York court system and to
foreign parties the world over. Indeed, New York’s status as a “financial capital of
the world,” J. Zeevi, 37 N.Y.2d at 227, is the very fact that gives rise to the need
for “flexibility” in applying New York’s forum non conveniens doctrine, Pahlavi,
62 N.Y.2d at 479. If the Appellate Division’s ruling stands, it will deprive the
New York courts of the discretion that they need—and that this Court has afforded
them—to manage the overburdened dockets that are an unavoidable by-product of
modern litigation in a long-arm jurisdictional regime.
B. The Appellate Division Also Erred in Its Analysis of the Location
of the Relevant Events That Gave Rise to This Action
That the “‘transaction[s] out of which the cause of action arose occurred
primarily in a foreign jurisdiction’” also “weighs strongly in favor of dismissal.”
Silver Lane Advisors LLC v. Bellatore LLC, Index No. 600668/09, 2009 WL
2045513, at *3 (Sup. Ct. N.Y. Cnty. July 6, 2009) (quoting Pahlavi, 62 N.Y.2d at
479); accord, e.g., World Point Trading, 225 A.D.2d at 158–59. Here, virtually all
of the relevant alleged events transpired in the Middle East, but the Appellate
Division inexplicably adopted AHAB’s baseless argument that the existence of
34
ministerial New York bank transfers somehow suffices to prove that the dispute
actually arose entirely in New York.
The first-party claims here concern the breach of a currency-exchange
agreement, in which AHAB failed to make payment of Saudi riyals to Mashreq’s
account in Saudi Arabia. R.104; R.125; R.139. AHAB has never contended that
those claims arose in New York. The alleged basis of AHAB’s third-party claims
is that Mr. Al-Sanea, in his position at AHAB, “directed employees of AHAB”—
all of whom were in Saudi Arabia (or Bahrain)—“to agree to, and to implement the
transaction” at the center of this case.12 R.112; see, e.g., R.24. AHAB nowhere
alleges that any of that claimed conduct occurred in New York. As the trial court
found, “[a]lthough the alleged fraud may have taken place with use of banks in
New York, the alleged fraudulent activities occurred in Saudi Arabia.” R.24.
That some of the funds at issue passed through New York bank accounts
changes none of this, nor does it support the characterization of this case as
involving a “theft” in New York. Such a New York connection “at best is only
marginal,” A&M Exports, Ltd., 207 A.D.2d at 741–42 (1st Dep’t 1994), and has
nothing to do with the substance of this case. Courts have repeatedly dismissed
similar cases on forum non conveniens grounds where, as here, the crux of the
12 The Appellate Division erroneously found that the transactions at issue had been “executed
in New York.” R.1796. In reality, the transactions were executed entirely overseas by
Mashreq personnel in the UAE and AHAB personnel in Saudi Arabia, and AHAB has never
contended anything to the contrary.
35
dispute concerned events that transpired outside of New York. See id.; World
Point Trading, 225 A.D.2d at 160–61 (finding “locus of the asserted breach” in
dispute between foreign entities to be outside of New York even though breach
involved failure to make payment to a New York bank).
1. The Appellate Division Erroneously Found That the Trial
Court Had Somehow Failed to Credit AHAB’s Allegations
The Appellate Division’s erroneous ruling as to where this dispute is
“centered” was based on another fundamental misreading of the Ehrlich-Bober
case. The court relied on that flawed reading to find support—when none actually
exists—for AHAB’s straw-man argument that the trial court “erred in not
accepting as true AHAB’s allegations that Al Sanea used for its own purposes, and
then looted, AHAB’s New York bank accounts.” R.1808. In reality, there is no
support for the contention that all of AHAB’s factual allegations must be taken as
true in evaluating a forum non conveniens motion—but, in any event, the trial court
was guilty of no such charge.
The Appellate Division thought that Ehrlich-Bober “was unequivocal” in
holding that AHAB’s allegations must be accepted as true for purposes of forum
non conveniens analysis, but the language on which that conclusion was based
comes from a statement of this Court’s rationale for affirming a ruling on personal
jurisdiction—not forum non conveniens. The last sentence of the paragraph the
Appellate Division quoted from Ehrlich-Bober—which was omitted from the
36
Appellate Division’s block quotation but is included below—makes clear that the
Ehrlich-Bober Court applied two separate rationales in finding that it agreed with
the Appellate Division’s rulings on jurisdiction and forum non conveniens:
Preliminary to our consideration of the comity issue, we note our
agreement with the conclusions reached by the Appellate Division
that there was a proper basis for the exercise of long-arm jurisdiction
and that the doctrine of forum non conveniens is inapplicable here.
Although “standing by itself, a correspondent bank relationship,
without any other indicia or evidence to explain its essence, may not
form the basis for long-arm jurisdiction under CPLR 302 (subd. (a),
par 1)” (Amigo Foods Corp. v. Marine Midland Bank-New York, 39
N.Y.2d 391, 396), the facts alleged here, which we accept as true for
this purpose, show substantially more (compare Longines-Wittnauer
Co. v. Barnes & Reinecke, 15 N.Y.2d 443). Nor may it be said in this
case that the Appellate Division in its conclusion that forum non
conveniens would not obtain in this case abused its discretion as a
matter of law (Epstein v. Sirivejkul, 48 N.Y.2d 738).
49 N.Y.2d at 579 (emphasis added). The “purpose” referred to by this Court was
the purpose of assessing long-arm jurisdiction described in that sentence—not the
forum non conveniens ruling addressed in the subsequent sentence. Thus, although
Ehrlich-Bober found that factual allegations must be accepted as true in assessing
personal jurisdiction on the pleadings, it drew no such conclusion as to forum non
conveniens. Rather, its ruling on forum non conveniens was simply that the court
below had not abused its discretion in refusing to dismiss on that ground. See id.
The Appellate Division wrongly read this passage from Ehrlich-Bober—a
passage that AHAB itself never relied on, even though it cited the case for another
purpose—as a justification for accepting AHAB’s complaints about the supposed
37
“recasting” of its factual allegations. That argument is a red herring. The standard
applicable to a pure CPLR 3211 motion—to determine, for example, whether a
plaintiff could establish jurisdiction over the defendant or entitlement to relief as a
matter of law if all of his allegations were proven true—simply has no bearing on
the core question underlying the doctrine of forum non conveniens (set forth in
CPLR 327 and the common law): whether a New York court is the appropriate
forum for adjudicating a given case. The former question asks whether the law
supports the case a plaintiff intends to prove—and, thus, the only way to test the
plaintiff’s pleading for that purpose is to accept his allegations as true. The latter
question, however, is not about the merits of a case; it asks whether a New York
court is the right forum to conduct a trial that will decide whether the plaintiff is
entitled to relief, whether the defendant has valid defenses, and which party’s
version of the facts will be credited.
The Appellate Division cited no case holding that a plaintiff’s allegations
must be accepted as true for purposes of forum non conveniens analysis—because
such a holding has no basis in law or logic. Whether an allegation is true (or not)
has no bearing on whether a court is well-positioned to verify it—i.e., whether the
court has sufficient access to information and adequate experience in applying the
governing law, and would not be unduly burdened by hearing the case. The factors
that bear on whether a New York court should assume the burden of hearing a
38
particular case are, of course, the forum non conveniens factors that this Court and
others have recited time and time again. See supra at 18–19. Analysis of those
factors does not turn upon whether a plaintiff’s allegations are true or not, and
proof bearing on those factors is routinely presented by affidavit or documentary
evidence beyond the four corners of a plaintiff’s complaint.13 In other words, a
plaintiff’s allegations do not control the analysis. Indeed, if that were not the case,
any plaintiff could insulate itself from a potential forum non conveniens motion
simply by pleading “facts” bearing on the relevant forum factors, such as that the
parties, witnesses, and documents are all located in New York. That is not the law.
More important, even if it were true that the trial court was obliged to
“accept AHAB’s allegations,” its decision to dismiss the actions did not run afoul
of that purported rule. Neither AHAB nor the Appellate Division ever identified a
single factual allegation that the trial court disregarded. Rather, the Appellate
Division (echoing AHAB’s rhetoric) purported to find error in how the trial court
13 See, e.g., Brinson v. Chrysler Fin., 43 A.D.3d 846, 847–48 (2d Dep’t 2007) (trial court
improvidently exercised discretion in denying forum non conveniens dismissal where, inter
alia, defendant “produc[ed] the affidavits of 11 [foreign] witnesses” whose testimony was
“essential” to its defense, “all of whom . . . indicated that traveling to New York for a trial
would constitute a hardship); World Point Trading, 225 A.D.2d at 160–61 (affirming forum
non conveniens dismissal where, inter alia, defendant’s “affidavit in opposition names two
individuals in Italy who have personal knowledge of the letter of credit (as opposed to no
United States personnel) and contends that some relevant documents are located there,”
which was “opposed only by plaintiff’s allegation that all necessary documents are located in
New York and that the testimony is immaterial”); Blais v. Deyo, 92 A.D.2d 998, 998–99 (3d
Dep’t 1983) (plaintiff failed to rebut “defendant’s attorney’s affidavit” concerning foreign
location of evidence and witnesses).
39
“characterize[d] the dispute,” and in its supposed failure to accept the facts as
“framed” by AHAB. R.1807, R.1810. Accepting AHAB’s characterization of the
dispute—in essence, a legal conclusion as to the case’s “center of gravity”—is a
far cry from accepting its well-pleaded factual allegations. The Appellate Division
cited no precedent for the notion that the trial court was obliged to credit AHAB’s
argumentative characterization of its own claims, which self-servingly focused on
dollar-denominated transfers in New York to the exclusion of every other factual
allegation AHAB itself has pleaded.14 As the dissent understood, nothing in the
doctrine of forum non conveniens compels any court to accept a plaintiff’s self-
serving assertion that one issue is more central or important to his claims than
other issues raised in his pleading, and the Appellate Division strayed from settled
forum non conveniens law in imposing that erroneous legal standard. R.1824.
In fact, the case law AHAB itself cited on appeal—which the Appellate
Division did not even address—actually demonstrates that the trial court should not
have accepted AHAB’s self-serving characterization of this dispute. In Overseas
Programming Cos. v. Cinematographische Commerz-Anstalt, 684 F.2d 232 (2d
14 The ruling also contradicted settled law governing pleading motions, which holds that,
although “the facts pleaded are presumed to be true[,] . . . allegations consisting of bare legal
conclusions . . . are not entitled to such consideration.” Kliebert v. McKoan, 228 A.D.2d
232, 232 (1st Dep’t), leave to appeal denied, 89 N.Y.2d 802 (1996); accord Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009); Jazini v. Nissan Motor Co., 148 F.3d 181, 185 (2d Cir. 1998).
40
Cir. 1982) (cited in AHAB App. Div. Reply Br.15 at 1–2), the Second Circuit
reversed a forum non conveniens dismissal in part because it found that the trial
court had “failed to identify the basic issue in the lawsuit,” which concerned a
question of contract interpretation “governed by New York law,” id. at 235. The
Second Circuit expressly noted, however, that it was for the district court below to
assess how the plaintiff’s claims should properly be construed—regardless of
contrary characterizations offered by the plaintiff—and to decide whether those
claims, as properly construed, should be dismissed. Id. at 235 n.7 (“Although the
complaint could be read to assert infringement claims, [plaintiff] insists in its brief
that it is not presenting such claims. We do not decide whether, should the District
Court construe the complaint to include any infringement claims, such claims
should be dismissed on the ground of forum non conveniens.”).
AHAB’s insistence that this case is about nothing more than a “theft of
funds in New York,” AHAB App. Div. Reply Br. at 9, which the Appellate
Division adopted, is not a well-pleaded factual allegation that any court must
accept as true for any purpose. Rather, it is precisely the sort of conclusory
characterization that is entitled to no weight. Although the Appellate Division
found that Mr. Al-Sanea had improperly “recast[]” AHAB’s allegations to suit his
forum non conveniens argument, R.1807, in reality it was AHAB that improperly
15 Reply Brief for Defendant-Appellant/Third-Party Plaintiff Appellant Ahmed Hamad Al
Gosaibi & Brothers Co., filed in the Appellate Division below on September 16, 2011.
41
recast its own allegations—ignoring any inconvenient facts that did not support its
effort to play up the significance of this case’s marginal connection to New York—
and the Appellate Division failed to see through AHAB’s charade.
2. The Appellate Division Ignored AHAB’s Own Allegations
Revealing That This Dispute Is Not Centered in New York
The Appellate Division also erred in failing to acknowledge AHAB’s own
allegations confirming that this dispute is centered outside of New York. In its
pleading, AHAB (a Saudi partnership) alleged that “Maan Al Sanea, [a Saudi
citizen and resident, and] a senior executive of AHAB’s financial service division,
the Money Exchange, had organized a massive fraud in which he had entered into
transactions largely through the Money Exchange and purportedly in AHAB’s
name with third parties . . . frequently using forged or falsified documents,” all as
part of a “scheme to loot the Money Exchange.” R.104–105. AHAB further
alleged that the Mashreq transaction “was a recent part of this more extensive
fraud” involving allegedly “unauthorized, noncommercial transactions with a
variety of financial institutions in the United States, the Middle East, and
elsewhere.” R.106 (emphases added). “Among the fraudulent acts by which Al
Sanea misappropriated funds,” AHAB claimed, were the following:
(a) “[d]irecting AHAB employees to cause AHAB to enter into financial
transactions . . . with third party financial institutions without
recording such transactions on the books of AHAB”;
42
(b) “[d]ebiting funds from AHAB accounts,” including “through the
issuance of fraudulent checks drawn on AHAB accounts,” and
“transferring those funds to entities, persons and accounts controlled
directly or indirectly by Al Sanea”;
(c) “[d]ebiting funds from AHAB accounts for the purpose of paying
unrelated expenses of Al Sanea or companies controlled by him”;
(d) “[r]ecording sham foreign exchange and other transactions for the
purposes of inflating the financial statements of Al Sanea and
companies controlled by him”; and
(e) “[d]irecting AHAB employees to falsify AHAB’s books and records to
conceal these fraudulent transactions and to provide false
confirmation of balances to auditors of his companies.”
R.106–107 (emphases added).
AHAB further alleged that, to “conceal his fraud from AHAB’s Board of
Directors and principals,” Mr. Al-Sanea “controlled all information reported to the
Board and principals.” R.107. In particular, it alleged that he “sought to prevent
the Board and principals from receiving any communications from the Money
Exchange’s trading partners, banks or other counter parties” and “directed all
Money Exchange employees to deal solely with him in respect of matters requiring
principal or Board approval.” R.107. Those assertions all focus on activities that
transpired—if at all—entirely overseas, where AHAB and Mr. Al-Sanea reside.
Even in stating its specific causes of action, AHAB emphasized the extent to
which its claims arise out of events that would have unfolded, if at all, entirely in
the Middle East, where it and Mr. Al-Sanea have their offices and do business:
43
(a) Its indemnification claim alleged that the Mashreq transactions were
“unauthorized” transactions executed by AHAB employees “acting
solely at the direction of . . . al Sanea,” and that Mr. Al-Sanea
“directed” AHAB personnel to transfer the proceeds “to an account
. . . at Awal Bank,” and that those funds were not returned to AHAB
upon demand against AHAB’s account at Awal Bank in Bahrain.
R.115.
(b) Its fiduciary-duty claim alleged that, as a “senior executive” of the
Money Exchange, Mr. Al-Sanea owed AHAB a “duty of loyalty,” and
that he breached that duty by “causing AHAB” to enter into
“unauthorized transactions,” by “misappropriating” funds derived
from those transactions, and by “concealing” those transactions from
AHAB and its principals. R.116–117.
(c) Its conversion claim—which it disingenuously later recast as a
conversion that AHAB purports took place entirely in New York—
alleged that, “[a]s a senior executive of the Money Exchange,” Mr.
Al-Sanea “caused AHAB to enter [into] transactions solely for his
own benefit” and “directed” that the transactions “should not be
properly recorded in AHAB’s books and records or disclosed to
AHAB’s principals,” and that he then “misappropriated” the proceeds
of those transactions and “conspired with and/or directed . . . Awal
Bank to retain the funds at issue and to refuse to return them to
AHAB.” R.117–118 (emphasis added).
(d) In its unjust-enrichment claim, AHAB relied upon the same
allegations supporting its conversion claim, and further alleged that,
“[a]s a result of th[o]se actions, Al Sanea and Awal Bank have
obtained funds that do not belong to them.” R.118–119.
(e) Finally, in its fraud claim, AHAB alleged that Mr. Al-Sanea and Awal
Bank “fraudulently obtained AHAB’s funds for their own benefit,
[by] intentionally creating and executing documents and making other
representations . . . that disguised the transfer of such funds to
defendants,” and “deliberately concealed from AHAB” the allegedly
fraudulent transactions undertaken in AHAB’s name. R.119–120.
44
As the dissent below recognized, none of those allegations, read fairly and in
their entirety, describes conduct that transpired entirely—or even principally—in
New York. See R.1820–1821. Rather, they reveal that the key components of Mr.
Al-Sanea’s alleged misconduct were his supposed efforts to enter into
unauthorized transactions in AHAB’s name, to direct AHAB’s employees to take
unauthorized action and conceal the true facts from AHAB’s principals, to falsify
the books and records of AHAB and forge AHAB documents, and to
misappropriate the proceeds of those unauthorized transactions by transferring
them to Awal Bank in Bahrain, which refused to return them to AHAB. Those
actions transpired overseas and have no connection to New York other than the
ministerial involvement of New York bank transfers.
In the words of the Ehrlich-Bober Court, those allegations cannot possibly
be read to describe a dispute that “must be considered to have been centered here’”
in New York. 49 N.Y.2d at 582. Although the relevant events undoubtedly
involved some incidental contact with New York, clearly they were centered where
the parties lived and worked; where the alleged fraud, forgery, and
misrepresentations transpired; where employees were directed to engage in
unauthorized activity in AHAB’s name; where documents and records allegedly
were falsified; and where fiduciary duties allegedly were violated. Thus, even if
the analysis in Ehrlich-Bober had any bearing on the scope of forum non
45
conveniens analysis, there was no basis for the Appellate Division’s flawed finding
that Ehrlich-Bober supported AHAB’s position on the facts alleged here.
Indeed, the Appellate Division not only ignored AHAB’s own allegations
when conducting its analysis, it also ignored the record in faulting the trial court
for supposedly failing to “accept[] as true AHAB’s allegations that Al Sanea used
for its own purposes, and then looted, AHAB’s New York bank accounts.”
R.1808. In reality, the trial court made clear in its opinion that it had credited
those allegations—it simply found that they did not outweigh the other components
of AHAB’s case that placed the focal point of this dispute in Saudi Arabia:
“Although the alleged fraud may have taken place with the use of banks in New
York, the alleged fraudulent activities occurred in Saudi Arabia . . . .” R.24
(emphasis added). The Appellate Division failed to address that finding; rather, it
reversed the judgment below based on the perceived failings of a straw-man
analysis upon which the trial court never relied. That was error.
C. Saudi Arabia and the UAE Offer Superior Alternative Fora for
Resolving This Dispute—and Have a Greater Interest in Doing So
Perhaps the most critical factor compelling dismissal of this case is the ready
availability of alternative—indeed, superior—fora for resolving the disputes
underlying this case. As the trial court found, “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. Mashreq has also
46
asserted its claims elsewhere. R.1467. Indeed, both Saudi Arabia and the UAE
offer available and adequate alternatives to litigation in New York. See R.27.
In New York, forum non conveniens dismissal may be granted even in the
absence of an alternative forum, e.g., Shin-Etsu, 9 A.D.3d at 178 (citing Pahlavi,
62 N.Y.2d at 478–81, 484), although the availability of another forum is an
“important factor,” Pahlavi, 62 N.Y.2d at 481. A forum is “adequate” if—as in
this case—the defendant is “‘amenable to process’” there and the forum
“‘permit[s] litigation of the subject matter of the dispute.’” Shin-Etsu, 9 A.D.3d at
178–79 (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n.22 (1981)). A
forum need not entertain the entirety of a dispute to be an adequate alternative for
those portions it does adjudicate. See Shiboleth v. Yerushalmi, 268 A.D.2d 300,
300 (1st Dep’t 2000) (dismissing third-party claims in favor of Israel while
maintaining first-party claims). Thus, whether heard together or separately, the
disputes at issue here easily could be litigated in an adequate alternative forum.
1. Both Saudi Arabia and the UAE Are Adequate and
Available
This suit can be adequately litigated in either Saudi Arabia or the UAE.
There can be no dispute that Mr. Al-Sanea, a Saudi citizen and resident, is
amenable to process in Saudi Arabia. Nor is there any doubt that Saudi Arabia
offers an adequate forum to litigate a dispute involving claims such as AHAB’s, as
Mr. Al-Sanea’s expert opined. R.628; R.635–637. That opinion has repeatedly
47
been confirmed. See, e.g., Kamel v. Hill-Rom Co., 108 F.3d 799, 802–03 (7th Cir.
1997); Forsythe v. Saudi Arabian Airlines Corp., 885 F.2d 285, 290 (5th Cir.
1989); Shields v. Mi Ryung Constr. Co., 508 F. Supp. 891, 896 (S.D.N.Y. 1981);
see also Jeha v. Arabian Am. Oil Co., 751 F. Supp. 122, 125–26 (S.D. Tex. 1990).
Indeed, AHAB’s own expert stated that “Saudi Arabia maintains an effective
judicial system to adjudicate commercial disputes” that “discharges effective
justice on a routine basis.” R.947 (internal quotation omitted); R.955.
Likewise, there can be no dispute that the courts of the UAE are available to
adjudicate the dispute between Mashreq and AHAB. Indeed, Mashreq has already
sued AHAB (as well as Mr. Al-Sanea) there and has consented to dismissal of this
case in favor of that one. R.1467. Although AHAB has complained that, as a
matter of substantive law, it could not state a claim against Mr. Al-Sanea in the
UAE, it does not argue that the UAE refuses to “permit[] litigation of the subject
matter of the dispute,” Shin-Etsu, 9 A.D.3d at 178–79 (internal quotation marks
omitted); it merely quarrels with the form of litigation there. Such complaints fail
to render the forum inadequate. See, e.g., Piper Aircraft Co., 454 U.S. at 247, 254
(“The possibility of a change in substantive law should ordinarily not be given
conclusive or even substantial weight in the forum non conveniens inquiry.”).
48
2. Although Not Necessary, the Entire Case Can Be Heard in a
Single Alternative Forum
AHAB also claimed below—and the Appellate Division apparently accepted
the notion—that Saudi Arabia and the UAE offer inadequate fora because those
jurisdictions could not adjudicate the first-party and third-party claims in this case
together. That argument is not only legally irrelevant—there is no requirement that
Mashreq’s first-party claims be heard in the same forum as AHAB’s third-party
claims—it is factually unsupported.
New York courts routinely divide cases on forum non conveniens grounds,
for example, by dismissing third-party claims—including indemnity claims such as
AHAB’s—while maintaining related first-party claims. See, e.g., Stravalle v. Land
Cargo, Inc., 39 A.D.3d 735, 735–36 (2d Dep’t 2007); Shiboleth, 268 A.D.2d at
300; Imperial Imports Co. v. Hugo Neu & Sons, 161 A.D.2d 411, 412 (1st Dep’t
1990). Mashreq’s routine commercial claims against AHAB, seeking enforcement
of a financial transaction, and AHAB’s claims against Mr. Al-Sanea, concerning
an alleged global fraud involving the conduct of AHAB’s internal affairs and
global business activities, as well as billions of dollars in excess of the Mashreq
transaction, are entirely severable disputes. Indeed, AHAB’s own conduct
confirms this: It has asserted the same allegations in a multitude of duplicative
proceedings—including in the Cayman Islands, where the Mashreq transaction is
at issue, and in California, where AHAB sued Glenn Stewart for allegedly aiding
49
and abetting Mr. Al-Sanea’s supposed fraud, see AHAB App. Div. Br.16 at 32–33
& n.22, 46—without ever claiming that they should all be consolidated in one
forum.
In any event, this entire case can be heard in a single alternative forum.
Nothing precludes AHAB from suing Mashreq and Mr. Al-Sanea in Saudi Arabia,
for example. Saudi courts have jurisdiction over “cases filed against a Saudi,” as
well as over “cases filed against an alien” if either “the lawsuit involves . . . an
obligation” that “originated or is enforceable in the Kingdom,” or “the lawsuit is
against more than one person and one of them has a place of residence in the
Kingdom.” R.1119. Likewise, the parties are already litigating in the UAE, where
Mashreq has sued both AHAB and Mr. Al-Sanea, R.1467, and nothing precludes
AHAB from asserting its claims against Mr. Al-Sanea there.
3. Saudi Arabia Has a Keen Interest in This Dispute
Dismissal under these circumstances also permitted the trial court to give
deference—as New York courts should—to Saudi Arabia’s critical interest in
“resolving its own affairs.” Shin-Etsu, 9 A.D.3d at 178. “[W]here a foreign forum
has a substantial interest in adjudicating an action”—such as where that forum is
“keenly interested in governing the affairs of its financial institutions”—that
interest is yet another factor “weighing in favor of dismissal.” Id.; Garmendia v.
16 Brief for Defendant-Appellant/Third-Party Plaintiff-Appellant Ahmed Hamad Al Gosaibi &
Brothers Co., filed in the Appellate Division below on May 27, 2011.
50
O’Neill, 46 A.D.3d 361, 362 (1st Dep’t 2007). Saudi Arabia has made clear that
the dispute between AHAB and Mr. Al-Sanea is matter of significant public
concern with substantial implications for the Saudi economy at large. The Saudi
Government went so far as to form the Saudi Committee—staffed by its Attorney
General and other high-ranking officials—to investigate the dispute. R.620–621.
There could be no clearer expression of Saudi Arabia’s interest in this dispute. Yet
the Appellate Division ignored that critical interest of the Saudi courts.
4. The Appellate Division’s Ruling on This Factor Rested on
Fundamental Errors of Law
The Appellate Division’s decision also relied on an erroneous conception of
the analysis relevant to assessing the adequacy of an alternative foreign forum.
Rather than evaluating whether the parties were amenable to process in alternative
fora, and whether those fora permitted the litigation of the disputes at issue here,
the Appellate Division misread Pahlavi as adopting wholesale all of the factors
federal courts have articulated under the federal common law of forum non
conveniens—and as somehow compelling New York courts to make findings on all
of those factors before finding that any particular foreign forum is “adequate.”
R.1811. Although this Court has acknowledged doctrinal parallels between New
York and federal forum non conveniens law, it has never held that the particular
factors set forth in any federal decision must be applied slavishly by every New
51
York court entertaining a forum non conveniens motion.17 See Pahlavi, 62 N.Y.2d
at 479–83. Rather, this Court has repeatedly stressed that “[t]he great advantage of
the rule of forum non conveniens is its flexibility based upon the facts and
circumstances of each case.” E.g., id. at 479.
Thus, in discussing whether the existence of an alternative forum had been
established, the Appellate Division erred in reversing based on the trial court’s
perceived failure to make specific findings as to “‘the relative ease of access to
sources of proof’” or the “‘availability of compulsory process for attendance of
unwilling, and the cost of obtaining attendance of willing, witnesses.’” R.1811.
No such specific findings are required under New York’s “flexible” forum non
conveniens analysis. See, e.g., Pahlavi, 62 N.Y.2d at 479 (“No one factor is
controlling.”). In holding the trial court to this erroneous standard, the Appellate
Division failed to acknowledge the settled principle that a forum is “adequate” if,
as in this case, the defendant is “amenable to process” there and the forum
“permit[s] litigation of the subject matter of the dispute.” E.g., Shin-Etsu, 9
A.D.3d at 178–79 (internal quotation omitted).
More to the point, though, the Appellate Division simply ignored the record
when it concluded that the trial court had “made no factual findings whatsoever”
17 In fact, Pahlavi specifically held that New York law does not require the existence of an
available alternative forum as a prerequisite to forum non conveniens dismissal, even though
such a prerequisite has been imposed under federal common law. See 62 N.Y.2d at 480–83.
52
on the relevant forum factors. R.1811. In reality, the trial court did make findings
relating to its forum non conveniens analysis, including that “Al Sanea and all but
one of the AHAB partners are currently unable to travel to the U.S.”; that the
“large majority of witnesses are located in Bahrain, UAE, . . . or Saudi Arabia”
and, in fact, “[n]one of the scores of witnesses [the parties] identified reside in
New York or in the U.S.”; that the case 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 in the first-party claims. R.24; R.26. The Appellate Division
appears to have disagreed with those findings, but it did not hold that the trial court
abused its discretion in making them—rather, it simply acted as though those
findings did not exist. That cannot justify reversal of the trial court’s judgment.18
D. The Trial Court Correctly Found, and the Appellate Division
Failed to Acknowledge, That Dismissal Would Serve the
Convenience of the Parties and Witnesses
The Appellate Division also misapprehended the legal significance of the
undisputed record concerning the location of relevant witnesses and documents.
18 The Appellate Division also based its erroneous holding about the lack of an adequate forum
on the notion that “Al Sanea maintained that he was only subject to jurisdiction in Saudi
Arabia.” R.1810. Leaving aside that Mr. Al-Sanea’s subjective belief about where he may
be sued is of no moment to forum non conveniens analysis, the Appellate Division’s
statement is erroneous as a matter of fact. No such assertion by Mr. Al-Sanea exists in the
record—and, in fact, Mashreq has already sued him in the UAE. R.1467. Moreover, if the
Appellate Division had wished to confirm Mr. Al-Sanea’s amenability to suit in the UAE, it
easily could have conditioned dismissal on his consent to jurisdiction there, see, e.g., Shin-
Etsu, 9 A.D.3d at 180, which would have been given—yet it never bothered to do so.
53
Virtually all of the key evidence germane to AHAB’s allegations is in the Middle
East. As the trial court recognized, this factor strongly favors dismissal. R.26–27;
see, e.g., Pahlavi, 62 N.Y.2d at 482.
Witnesses. The likely witnesses in this case are almost all in the Middle
East or elsewhere overseas, and many of them cannot be compelled to testify here.
R.1296–1304. AHAB is a Saudi partnership, and almost all of its partners reside in
Saudi Arabia, as does Mr. Al-Sanea. R.618–620. Mashreq is based in Dubai.
R.50. The employees of all the relevant entities reside principally in Saudi Arabia,
Bahrain, or the UAE. R.1296–1304. Mr. Al-Sanea and most of the AHAB
partners are currently prohibited from leaving Saudi Arabia. R.1296.
In total, there are at least forty-eight potential witnesses residing in the
Middle East—thirty-seven in Saudi Arabia alone. R.1296–1304. AHAB has never
disputed the residence of any of them—and that fact alone demonstrates why this
factor supports dismissal. The key question posed by this factor of the forum non
conveniens analysis is where the witnesses are to be found and the extent to which
they would be burdened by an appearance in New York. The key witnesses
concerning the core issues here—whether Mr. Al-Sanea wielded unauthorized
control over AHAB’s affairs to undertake the disputed transactions in AHAB’s
name, and what knowledge AHAB had of his alleged actions—are Mr. Al-Sanea,
the AHAB partners, and relevant current and former personnel of AHAB and Saad
54
entities. The vast majority of the witnesses located outside of Saudi Arabia (many
of whom lived there at the time) reside in other Middle Eastern states—primarily
Bahrain and the UAE. R.974–977. Moreover, none of the parties or key witnesses
identified by Mashreq, AHAB, or Mr. Al-Sanea is located in New York. R.967–68.
Compelling these witnesses and the parties to appear and produce evidence
in New York would impose substantial burdens on them—and on the court as well.
See, e.g., Nasser v. Nasser, 52 A.D.3d 306, 306–07 (1st Dep’t 2008); Garmendia,
46 A.D.3d at 362; Silver Lane Advisors, 2009 WL 2045513, at *3. Requiring
Saudi nationals, for example, to travel more than 6,500 miles in order to appear in
New York—assuming they are not barred from doing so, see R.1296—would be
extraordinarily burdensome. Furthermore, many of the witnesses do not speak
English as a first language—including Mr. Al-Sanea and the AHAB partners—
which will burden the courts with the need for translations. R.1296; R.1299–1300.
Even AHAB conceded that fact, admitting in court filings elsewhere that some of
its own witnesses will “require an interpreter” in order to testify in English. R.985.
In the U.K. trial of the related consolidated bank actions against AHAB, for
example, AHAB’s counsel “insisted that arrangements be made for . . . more than
one interpreter” to translate testimony of potential AHAB witnesses. R.1784.
Moreover, many of the witnesses are foreign non-parties who cannot be
compelled to testify in New York—such as former AHAB employees who are
55
beyond the trial court’s subpoena power—which further weighs against litigation
here. See Hormel Int’l Corp. v. Arthur Andersen & Co., 55 A.D.2d 905, 906 (2d
Dep’t 1977); see also Murray v. British Broad. Corp., 81 F.3d 287, 294–95 (2d
Cir. 1996); Howard v. Four Seasons Hotels Ltd., No. 96 Civ. 4587, 1997 WL
107633, at *2–*3 (S.D.N.Y. Mar. 10, 1997). Saudi witnesses, in particular, are not
subject to the Hague Convention on Service of Process. See Tinicum Props.
Assocs. Ltd. P’ship v. Garnett, Civ. A. No. 92-0860, 1992 WL 99590, at *1 (E.D.
Pa. Apr. 29, 1992). In contrast, Saudi Arabia, Bahrain, and the UAE are parties to
a Gulf Cooperation Council agreement concerning cross-border judicial assistance.
R.951. Deposing Saudi nationals within Saudi Arabia in aid of foreign
proceedings is significantly complicated by Saudi law. R.1495-97. Even if their
testimony could be obtained via video conference or similar means, that in itself—
a trial in which all of the principal witnesses testified only by video link or
deposition transcript—would constitute an undue burden on the courts.19 These
facts also favor dismissal. See World Point Trading, 225 A.D.2d at 161.
The Appellate Division premised its contrary ruling on fundamental
misunderstandings of the law and the record below. Although the Appellate
19 Although the Appellate Division claimed there was no showing that the key travel-banned
witnesses could not testify “via some alternate means,” it cited no authority supporting its
proposition, and Mr. Al-Sanea is aware of none. R.1811. Forum non conveniens dismissal
does not require any showing that the relevant witnesses would be entirely precluded from
testifying; such a requirement would foreclose courts from considering at all the onerous
burden imposed on them by, for example, conducting a trial entirely by video conference or
deposition transcript.
56
Division criticized the trial court for not “finding that the witnesses [identified by
Mr. Al-Sanea] could even testify in Saudi Arabia, Bahrain, or the UAE,” R.1811, it
cited no authority requiring such a finding, or any evidence that the witnesses’
testimony would somehow be precluded. And although the Appellate Division
apparently believed that Mr. Al-Sanea had “identified no witnesses” until his reply
brief, and then “failed to link their proposed testimony to the allegations of the
third-party complaint,” R.1811, quite the opposite is true. Mr. Al-Sanea, both in
his opening papers and his reply, contended that the witnesses with the most
relevant knowledge were AHAB’s Saudi partners and the foreign employees of the
Money Exchange. See Sanea MTD Br.20 at 3–4, 16, 18–20; Sanea MTD Reply21 at
4–6; R.619–620; R.622–623. And he submitted a detailed affidavit with his reply
listing each witness and the subjects he expected each to have knowledge of. See
R.1295–1304.
Documents. Like the witnesses, the key documents relevant to this dispute
are likely located almost entirely in the Middle East—in Saudi Arabia, Bahrain, or
the UAE, where the parties are based—and many are in Arabic. AHAB concedes
that there are relevant documents in Saudi Arabia, AHAB App. Div. Br. at 36—
20 Third-Party Defendant Maan Abdulwaheed Al-Sanea’s Memorandum of Law in Support of
His Motion to Dismiss the Third Amended Complaint, filed in the trial court below on
October 30, 2009 (Dkt. No. 44).
21 Third-Party Defendant Maan Abdulwaheed Al-Sanea’s Reply Memorandum of Law in
Support of His Motion to Dismiss the Third Amended Complaint, filed in the trial court
below on March 9, 2010 (Dkt. No. 105).
57
and, indeed, it was forced to disclose to the plaintiffs in the consolidated U.K. bank
cases certain additional documents its counsel allegedly discovered at the eleventh
hour in a “cupboard” in the Saudi office of one of its partners. R.1781–1782.
Additionally, many of the key documents concerning Mr. Al-Sanea’s
authority to act on AHAB’s behalf (or the lack thereof), and AHAB’s knowledge
of his activities, consist of Arabic-language legal instruments governed by Saudi
law, as to which the only legally operative text is the Arabic original, see, e.g.,
R.989–1024—and the parties may dispute whether contemporaneously prepared
translations of the documents accurately express the operative terms. Documents
evidencing what AHAB’s partners knew or did not know, and what alleged actions
by Mr. Al-Sanea they authorized or ratified, are also likely to include Arabic
documents. AHAB itself conceded in the related U.K. bank litigation that a “vast
amount” of relevant “documentation was in Arabic,” necessitating “six agencies of
translators.” R.1782. Even when available, translations of foreign-language
documents are not free from ambiguity. See, e.g., In re Bancredit Cayman, Ltd.,
No. 06-11026, 2008 WL 5396618, at *6–*7 (Bankr. S.D.N.Y. Nov. 25, 2008).
These facts all show that the burdens associated with the relevant documentary
evidence here weigh in favor of forum non conveniens dismissal.
In ruling otherwise, the Appellate Division found that Mr. Al-Sanea had
supposedly failed to “specif[y] which documents were necessary” to the dispute,
58
R.1812, but only by ignoring Mr. Al-Sanea’s submissions below. Sanea MTD
Reply at 5–6; R.989–1024. And the court imposed a burden on Mr. Al-Sanea—to
specify at the outset of a case all of the specific documents that will be “necessary”
to adjudicate the other party’s claims—that has no support in forum non
conveniens law. No litigant could ever identify all of the key documents necessary
to a lawsuit without first completing the entire discovery process—which the law
of forum non conveniens certainly does not require. These fundamental errors
warrant reversal.
E. This Case Would Require the Court to Apply the Law of Saudi
Arabia and the United Arab Emirates
The Appellate Division also erred in finding it to be “patent” that New York
law—and, apparently, only New York law—would govern this dispute. As the
trial court correctly held, AHAB’s claims against Mr. Al-Sanea are governed by
Saudi law, and Mashreq’s claims against AHAB are governed by UAE law. R.24–
25. The applicability of foreign law is yet another “important consideration . . .
weigh[ing] in favor of dismissal.” Shin-Etsu, 9 A.D.3d at 178 (citing Gulf Oil
Corp. v. Gilbert, 330 U.S. 501, 509 (1947), and Bewers v. Am. Home Prods. Corp.,
99 A.D.2d 949, 950 (1st Dep’t), aff’d, 64 N.Y.2d 630 (1984)); accord, e.g., Tilleke
& Gibbins Int’l Ltd. v. Baker & McKenzie, 302 A.D.2d 328, 329 (1st Dep’t 2003).
Indeed, the “mere likelihood that foreign law will apply weighs in favor of
dismissal.” Cavlam Bus. Ltd. v. Certain Underwriters at Lloyd’s, London, No. 08
59
Civ. 2255, 2009 WL 667272, at *8 (S.D.N.Y. Mar. 16, 2009) (emphasis added);
accord Globalvest Mgmt. Co. v. Citibank N.A., Index No. 603386/04, 2005 WL
1148687, at *8 (Sup. Ct. N.Y. Cnty. 2005).
Even AHAB did not dispute that UAE law controls Mashreq’s claims.
Foreign law—namely, the law of Saudi Arabia—likewise governs AHAB’s fraud-
based claims against Mr. Al-Sanea.22 Under New York choice-of-law rules, a
claim is governed by the law of the jurisdiction that, “because of its relationship or
contact with the occurrence or the parties, has the greatest concern with the
specific issue raised in the litigation.” Istim, Inc. v. Chem. Bank, 78 N.Y.2d 342,
347 (1991) (internal quotation omitted). Although New York courts at one point
“applied a traditional, ‘territorially oriented’ approach to choice-of-law issues
which applied the law of the geographical place where one key event occurred,
such as the place of the wrong in tort cases,” this State has since “abandoned such
rules” in favor of “interests analysis.” Id.; see also AroChem Int’l, Inc. v. Buirkle,
968 F.2d 266, 270–71 (2d Cir. 1992). Today, New York courts look to factors like
those set out in section 145 of the Restatement (Second) of Conflicts of Laws: the
22 Indeed, AHAB has actually admitted in other proceedings that Saudi law governs the
question of whether its debts are the product of unauthorized conduct by Mr. Al-Sanea; in the
consolidated U.K. bank cases, for example, AHAB asserted that it planned to establish its
defense of unauthorized conduct by presenting evidence regarding Mr. Al-Sanea’s “authority
. . . to act on behalf of AHAB,” including expert evidence on “Saudi law . . . in relation to
issues of authority.” R.984–986 (emphasis added). Even before the trial court below, AHAB
acknowledged the applicability of Saudi law to its own internal affairs. R.214; R.237 (“Just,
your Honor, that -- you’re right. Saudi law does apply.”).
60
“place where the injury occurred,” the “place where the conduct causing the injury
occurred,” the “domicil, residence, nationality, place of incorporation and place of
business of the parties,” and the “place where the relationship, if any, between the
parties is centered.”
None of those considerations implicates New York here. AHAB, a Saudi
partnership, alleges fiduciary misconduct by a Saudi citizen that transpired in
Saudi Arabia, that concerns the exercise of managerial control over a Saudi
partnership, that involves alleged forgery and falsification of documents
undertaken in Saudi Arabia, and that caused injury in Saudi Arabia where AHAB
is located (and where AHAB’s liability arose when it failed to pay Saudi riyals into
Mashreq’s Saudi bank account). AHAB’s claims arose in Saudi Arabia, and Saudi
law will apply to them. See, e.g., Atsco Ltd., 29 A.D.3d at 465–66; Navallo v. Am.
Standard, Inc., 224 A.D.2d 599, 599–600 (2d Dep’t 1996); see also Hart v. Gen.
Motors Corp., 129 A.D.2d 179, 181–83, 185 & n.3 (1st Dep’t 1987).23
The ministerial involvement of New York bank transactions does not render
New York the jurisdiction with the “greatest concern” over AHAB’s claims.
Under similar circumstances, the First Department held in Atsco Ltd. v. Swanson,
for example, that Malaysian law applied to fraudulent conveyance claims involving
23 For similar reasons, AHAB’s counterclaims against Mashreq would be governed by UAE or
Saudi law. Mashreq’s alleged involvement in Mr. Al-Sanea’s supposed scheme would have
transpired from the UAE and would have related to Mr. Al-Sanea’s alleged acts in Saudi
Arabia, and AHAB’s injury would have arisen in Saudi Arabia.
61
the transfer of Malaysian assets into New York and subsequent New York
transactions designed to shield those assets from enforcement of a Malaysian
judgment. 29 A.D.3d at 465–66; R.1187–1189; R.1193–1195. Here, as in Atsco,
the fact that some limited aspects of the alleged misconduct touched New York is
not enough to justify applying New York law. Indeed, the regulation of the
internal affairs of AHAB, a Saudi partnership company, is entrusted to Saudi law
as a matter of public policy. See Globalvest, 2005 WL 1148687, at *8 (citing
Edgar v. MITE Corp., 457 U.S. 624, 645 (1982)).
Nevertheless, the Appellate Division erroneously concluded that only New
York law would apply to this action—a conclusion that apparently was driven by
its uncritical acceptance of AHAB’s characterization of the case as alleging only a
“theft” of property in New York. As previously explained, that self-serving
characterization does not even square with AHAB’s own pleading, which alleges
(among other things) breach of fiduciary duty by an executive of a Saudi business
entity, unjust enrichment of a Bahraini bank and its Saudi owner arising from the
bank’s refusal to turn over funds held in Bahrain on AHAB’s account, and various
acts of forgery and corporate misfeasance and malfeasance undertaken in Saudi
Arabia. R.114–120. Even if New York law might apply to some of AHAB’s
claims—which Mr. Al-Sanea disputes—it surely would not apply to all of those
claims, and the trial court thus appropriately concluded that “the need to apply
62
foreign law” was “an appropriate concern” supporting its ruling. R.24 (internal
quotation omitted). Even AHAB has conceded the existence of some issues that
are governed by foreign law. See, e.g., AHAB App. Div. Br. at 43; AHAB App.
Div. Reply Br. at 16. Yet the Appellate Division seems to have concluded that
there were no issues in the case that required application of foreign law, finding it
to be “patent that New York law will apply.” R.1812. Indeed, the Appellate
Division cited only Banco Nacional Ultramarino, S.A. v. Chan, 169 Misc. 2d 182
(Sup. Ct. N.Y. Cnty. 1996), aff’d sub nom., Banco Nacional Ultramarino v.
Moneycenter Trust Co., 240 A.D.2d 253 (1st Dep’t 1997), in support of its
contrary ruling, see R.1812—a case in which choice of law was not even at issue.
That was yet another reversible error.
F. None of the Parties Resides in New York
Finally, it bears noting that neither the Appellate Division nor AHAB has
ever disputed the unavoidable fact that none of the parties to this case resides in
New York. Where no party to a dispute resides in New York, the balance
powerfully favors dismissal. See, e.g., Pahlavi, 62 N.Y.2d at 479; Nguyen v.
Banque Indosuez, 19 A.D.3d 292, 294–95 (1st Dep’t 2005) (reversing denial of
forum non conveniens dismissal where, inter alia, “[o]nly one of seven named
plaintiffs lives in New York”). As the trial court correctly found, dismissal was
proper given that none of the parties resides here—or anywhere in the United
63
States. R.13, R.24. The Appellate Division inexplicably disregarded this key
element of the forum non conveniens analysis.
II. THE APPELLATE DIVISION ERRED IN HOLDING THAT THE
DISMISSAL OF THE FIRST-PARTY CLAIMS WAS AN IMPROPER
SUA SPONTE ACT
The Appellate Division also erred in ruling that dismissal of the first-party
claims somehow amounted to sua sponte action by the trial court, and that the first-
and third-party actions had to be either dismissed in their entirety or all retained
and litigated together before the New York courts. Those rulings were founded on
an erroneous reading of the relevant case law and on a clear misunderstanding of
the proceedings below, and they constitute a further error justifying reversal.
There was no doubt during the trial court proceedings that forum non
conveniens dismissal of the first-party action had been briefed by the parties and
properly raised before the court—among other things, AHAB certainly never
expressed any claim to the contrary.24 The Appellate Division mistakenly believed
that the trial court had not ever “invited submissions for dismissal of the entire
case” on forum non conveniens grounds. R.1803. But that is precisely what
happened when the subject of forum non conveniens dismissal was first made
known to the trial court, as the dissent below recognized. R.1816.
24 Indeed, because AHAB never raised this objection to the trial court, it has waived the right to
complain of any allegedly sua sponte action now. See, e.g., Sosa v. Cumberland Swan, Inc.,
210 A.D.2d 156, 157 (1st Dep’t 1994).
64
The issue first arose during a January 5, 2010 hearing. R.653. That hearing,
which was held after Mr. Al-Sanea filed his forum non conveniens motion, but
before AHAB filed opposition papers, concerned a protective-order motion in
which Mr. Al-Sanea’s counsel referenced the pending motion to dismiss on forum
non conveniens grounds. The trial court inquired at that hearing whether “all”
counsel “agree[d] that . . . if the motion to dismiss for forum non conveniens has,
shall we say, legs, it affects everything else?” R.653. Mr. Al-Sanea’s counsel
responded:
I do think that your Honor is onto something in that the first-party
action, if you will, filed by Mashreq is also subject to duplicative
proceedings. I understand that Mashreq has filed a suit in the United
Arab Emirates against AHAB; and so in fact, just as with respect to
my forum non motion where we contend that there are multiplicity of
other proceedings that have far greater connection to the parties than
does New York and that this is an imposition, I think the same could
be true.
R.654–655. The trial court then specifically called for the completion of briefing
on Mr. Al-Sanea’s motion, as well as for the submission of additional briefing on
the issue of forum non conveniens as applied to all of the proceedings before it:
THE COURT: What we are going to do is you will have this forum
non conveniens fully briefed, and if any of – I know you have to
respond – no, it’s against –
MR. SERIO: It’s against AHAB, your Honor.
THE COURT: Right.
MR. SERIO: And I – we submit that it should be briefed by –
65
THE COURT: I also want – I want you to respond to a forum non
conveniens argument because I am very, very concerned, if you will,
that these cases do not belong here.
R.658–59 (emphasis added); see also R.660.
After the January 5, 2010 hearing, AHAB and Mr. Al-Sanea completed the
initial briefing on his motion, and AHAB and Mashreq both filed additional briefs
on the subject of forum non conveniens as applied to the entire case—including the
first-party proceedings. AHAB expressly joined issue, arguing that the first- and
third-party proceedings were “inseparably connected” and should be addressed as a
“whole.” AHAB MTD Opp. at 19 (internal quotation marks omitted). And
Mashreq, for its part, filed a memorandum stating that it “would not object to
litigating its dispute with AHAB and the AHAB partners in the UAE” if the court
was inclined to dismiss the third-party proceedings. Mashreq MTD Reply at 2–3.
Thus, by the time the trial court heard argument on Mr. Al-Sanea’s forum
non conveniens motion at a later hearing on March 25, 2010, the subject of forum
non conveniens dismissal as applied to the entire action—including both first- and
third-party claims—had already been raised and briefed. At argument, the trial
court noted that forum non conveniens dismissal was being addressed both “with
regard to the third-party defendant” and “for the entire case to be shipped.”
R.1473. And AHAB acknowledged those “two parts” of the issue before the court,
stating that it opposed forum non conveniens dismissal both “as to everybody” and
66
as to a more limited dismissal to have the third-party proceedings “cut out” of the
case. R.1473–1474. Contrary to its self-serving position on appeal, AHAB never
objected at the time to the fact that the trial court would “consider forum non
conveniens as to everybody”—it merely opposed dismissal on the merits.
Given these facts, the Appellate Division erred by mischaracterizing the trial
court’s ruling as an improper sua sponte action. An action is properly dismissed
on forum non conveniens grounds where its dismissal is raised and briefed by the
parties, even if the moving party did not separately request that action’s dismissal
in its notice of motion. See Banco do Estado de Sao Paulo S.A. v. Mendez Junior
Int’l Co., 249 A.D.2d 137, 139 (1st Dep’t 1998); Smith v. Miller, 237 A.D.2d 294,
295 (2d Dep’t 1997). It is undisputed here that the parties briefed and were heard
on the issue of whether the first-party proceedings should be dismissed—which
distinguishes this case from every precedent the Appellate Division relied upon in
reaching its erroneous conclusion. See VSL Corp. v. Dunes Hotels & Casinos, Inc.,
70 N.Y.2d 948, 949 (1988); Todtman, Young, Tunick, Nachamie, Hendler, Spizz &
Drogin, P.C. v. Richardson, 231 A.D.2d 1, 5 (1st Dep’t 1997); In re Bernz
(Widschi), 139 A.D.2d 444, 444 (1st Dep’t 1988). This Court’s decision in VSL
Corp., for example, did not involve any of the facts here, as the dissenting Justices
below correctly recognized. See R.1815–1820. Both the parties and the trial court
here considered and squarely addressed the application of forum non conveniens to
67
dismissal of the entire case as a “clearly articulated motif of . . . the motion
proceedings.” Banco do Estado, 249 A.D.2d at 139. As the dissent correctly
found, the relevant feature authorizing forum non conveniens dismissal is not the
mere technicality of what a formal notice of motion says; rather, it is the
substantive question of whether the issue was placed before the court and
addressed by the parties. See id.; Smith, 237 A.D.2d at 295; accord R.1815–1820.
Indeed, the Appellate Division did not ultimately take issue with the concept
that Mr. Al-Sanea’s motion could serve as the legal instrument placing the issue of
forum non conveniens before the court, even as to the first-party proceedings. See
R.1802 (distinguishing Imperial Imps. Co., 161 A.D.2d 411, only on the ground
that, “in the instant case,” Mr. Al-Sanea “made no . . . motion to dismiss the entire
case”). Nor could it have done so, because a third-party defendant “shall have the
rights of a party adverse to the other parties in the action.” CPLR 1008; see also,
e.g., Kearns v. Johnson, 238 A.D.2d 121, 122 (1st Dep’t 1997).
Rather, the Appellate Division’s analysis boils down to the formalistic
conclusion that dismissal of the first-party claims was an unauthorized sua sponte
act simply because Mr. Al-Sanea’s notice of motion did not expressly demand
dismissal of both the first- and third-party proceedings. That cannot possibly be
the law applicable to motions sounding in forum non conveniens—a doctrine the
“touchstone” of which is its “flexibility,” Martin, 35 N.Y.2d at 418, and one that
68
the legislature has authorized courts to apply “in whole or in part” on the motion of
“any party,” and on “any conditions that may be just,” CPLR 327(a).
Moreover, it could not possibly be an appropriate result here, where Mr. Al-
Sanea’s forum non conveniens motion expressly requested both dismissal of the
third-party complaint and “such other and further relief as the Court deems just
and proper.” R.65–66 (emphases added). Clearly, dismissal of the first-party
claims along with the third-party claims constitutes “other and further relief”
within the scope of that motion. And it is well-settled that a prayer for such “other
and further relief” empowers the motion court to exercise its discretion in granting
relief beyond what the movant specifically articulates in its notice. See, e.g.,
Birchwood Village LP v. Assessor of City of Kingston, 94 A.D.3d 1374, 1376 (3d
Dep’t 2012); Hughes v. Farrey, 30 A.D.3d 244, 248 (1st Dep’t 2006). The trial
court was not precluded from dismissing the first-party proceedings here simply
because Mr. Al-Sanea’s notice did not explicitly request that it do so.
In any event, even if the trial court had run afoul of a proscription against
sua sponte acts—and it did not—at most the Appellate Division should have
treated the trial court’s action as harmless error. As explained by the very
authority the Appellate Division relied upon, the appropriate remedy for such a
“sua sponte” dismissal is to reverse “without prejudice to a motion by any party to
dismiss the proceeding on the ground of forum non conveniens.” In re Bernz, 139
69
A.D.2d at 444. Here, Mashreq and Mr. Al-Sanea have consistently advocated in
favor of forum non conveniens dismissal, so there would be no point in remanding
just to see whether they would file such a formal motion. Thus, the Appellate
Division’s outright reversal of the decision below was unwarranted and merely
engenders a needless waste of judicial and party resources.
Moreover, the Appellate Division erroneously—and inexplicably—rejected
another alternative disposition: upholding dismissal of the third-party complaint
and reversing only with respect to dismissal of the first-party claims, which was
the only ruling supposedly made sua sponte. The Appellate Division appears to
have instead accepted AHAB’s erroneous assertion that forum non conveniens
dismissal could not be granted as to the third-party complaint if the first-party
action were retained because of some supposed rule requiring the first- and third-
party proceedings to be adjudicated in a single forum. For one thing, that is not the
law; the trial court very well could have retained jurisdiction over the first-party
claims and still dismissed the third-party complaint. See supra at 48. And, in any
event (as discussed previously), there are alternative fora that are more than
capable of adjudicating both the first- and third-party claims in this case. See
supra Part I.C.2.
70
III. ALTERNATIVELY, THE APPELLATE DIVISION SHOULD HAVE
AFFIRMED DISMISSAL OF THE THIRD-PARTY CASE AGAINST
MR. AL-SANEA FOR LACK OF PERSONAL JURISDICTION
Finally, even leaving aside the clear-cut forum non conveniens issues in this
case, the Appellate Division, at a minimum, should have affirmed the dismissal of
at least the third-party complaint on the alternative ground that the New York
courts lack jurisdiction over the person of Mr. Al-Sanea. The burden of proving
jurisdiction “rests on [AHAB], as the part[y] asserting jurisdiction.” Copp v.
Ramirez, 62 A.D.3d 23, 28 (1st Dep’t 2009). It must allege facts establishing a
prima facie basis for jurisdiction. See de Capriles v. Lopez Lugo, 293 A.D.2d 405,
405–406 (1st Dep’t 2002). AHAB failed to meet that burden here, where the only
connection between its claims against Mr. Al Sanea and this forum is the
ministerial transfer of U.S. dollars from Mashreq through two New York bank
accounts held by parties other than Mr. Al-Sanea.25 There simply is no “substantial
relationship” between Mr. Al-Sanea’s alleged “transactions in New York and
[AHAB]’s cause of action” that would suffice to support personal jurisdiction over
Mr. Al-Sanea here. Johnson v. Ward, 4 N.Y.3d 516, 519 (2005) (internal
quotation omitted). Precedent from this Court since the Appellate Division
25 The Appellate Division wrongly gave the jurisdictional issues in this case only cursory
consideration in a footnote, noting that they were “not on appeal” even though Mr. Al-Sanea
properly raised jurisdiction as an alternative ground for affirmance. See, e.g., PDK Labs, Inc.
v. G.M.G. Trans W. Corp., 101 A.D.3d 970, 974–75 (2d Dep’t 2012) (citing Parochial Bus
Sys., Inc. v. Bd. of Educ., 60 N.Y.2d 539, 548 (1983)).
rendered its decision makes this clear. See Ricci v. Lebanese Canadian Bank, 2Q
N.Y.3 d 3 27, 3 3 8-3 9 (2012) ("coincidental" or "adventitious" contact with New
York is not enough to established personal jurisdiction).
CONCLUSION
For all of these reasons, Third-Party Defendant-Appellant Mr. Al-Sanea
respectfully requests that. this Court reverse the decision of the Appellate Division,
remand this action with instructions to reinstate the judgment rendered by the trial
court below or, in the alternative, with instructions to enter a judgment dismissing
the third-party complaint, and award such other relief as is just.
Dated: New York, New York
July 2 9, 2 013
Respectfully submitted,
ghe~~mann~~gibsondunn. com
Christopher Muller
cjnulle~~~gibsondunn. com
200 Park Avenue
New York, New York 10166
Tel.: (212) 351-4000
Fax: (212) 3 51-403 S
14ttorneys for Thud-Party Defendant-
Appellant ltlaanAbdul T~ahed Al-Sanea
71
PRINTING SPEC~FICATI4NS STATEMENT
I hereby certify pursuant to 22 T1YCI~:R. § 600.10(d)(1)~v) that this brief was
prepared, using Microsoft Office fiord 2010, to the following specifications:
Typeface: Times New Roman, a proportionally spaced typeface
~'oint Size: 14, except footnotes which are 12 point
Line Spacing: Double, in accordance with Rule 5 40.10)
Woad Count: The body of this brief, inclusive o~ point headings and
footnotes, and exclusive of those pages containing the table of
contents, the table of authorities, the prQOf of service and this
Statement, contains 18,053 words.
Dated: New York, New York
July 2 9, 2 013
Respectfully submitted,
GIB S ON, DLJ~Nf N & CRUTC~-~R LLP
~se~io~~gibsondunn. com
Gabriel Her~:~mann
gher~mann~~gibsondunn. com
Christopher Muller
cmuller~~gibsondunn. com
200 Park Avenue
New York, New York 10166
Tel.: (212) 351-4000
Fax: (212) 3 S 1-4a3 5
Attorneys fog Thud-Pasty Defendant-
~4ppellant Maan Abdul ~ahed Al-Sanea
AFFIRMATION OF SERVICE
GABRIEL HERRMANN, 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 an attorney associated with the law firm of Gibson, Dunn &
Crutcher LLP, 200 Park Avenue, New York, New York, (212) 351-4000,
gherrmann@gibsondunn.com, Attorneys for Third-Party Defendant-Appellant
Maan Abdul Wahed Al-Sanea. I am not a party to this proceeding and I am over
18 years of age.
2. On the 29th day of July, 2013, I caused three (3) true and correct
copies of the Brief of Third-Party Defendant-Appellant Maan Abdul Wahed Al-
Sanea, with Printing Specifications Statement, to be served by overnight delivery
upon each of the following counsel of record:
Carmine D. Boccuzzi, Jr.
CLEARY GOTTLIEB STEEN & HAMILTON
One Liberty Plaza
New York, New York 10006
Counsel for Plaintiff-Appellant Mashreqbank PSC
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
BROV~JN RUDNICK L~,P
Seven Tunes Square
New York, New York 10036
Counsel fog Third-Pauly Defendant Awal Bank BSC
Dated: New York, New York
July 2 9, 2 013