To Be Argued By: CARMINE D. BOCCUZZI
Time Requested: 30 MINUTES
New York County Clerk’s Index Nos. 601650/09 & 590643/09
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 ABDULWAHEED AL SANEA
Third-Party Defendant-Appellant,
AWAL BANK BSC,
Third-Party Defendant
REPLY BRIEF FOR PLAINTIFF-APPELLANT MASHREQBANK PSC
DAVID E. BRODSKY
CARMINE D. BOCCUZZI
LIANA ROZA VITALE
DANIELLE J. LEVINE
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, New York 10006
(212) 225-2000
cboccuzzi@cgsh.com
Attorneys for Plaintiff-Appellant
Mashreqbank PSC
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .......................................................................... iii
PRELIMINARY STATEMENT .................................................................... 1
ARGUMENT .................................................................................................. 6
I. THIS CASE SHOULD BE DISMISSED FOR FORUM NON
CONVENIENS ...................................................................................... 6
A. AHAB Does Not Dispute that the UAE is an Adequate
Alternative Forum for the Claims Between Mashreq
and AHAB..................................................................................... 6
B. New York’s Liberal Discovery Rules Do Not Render
the New York Courts Convenient for Purposes of This
Dispute……………...................................................................... 8
C. Electronic Funds Transfers Through a New York Bank Account
in Connection with An Otherwise Wholly Foreign Dispute
Do Not Compel New York Courts to Hear the Case…………… 12
1. The Appellate Division’s Holding Conflicts With
New York Courts’ Repeated Holdings that Foreign
Disputes Are Not Required to be Heard in New York
Anytime a New York Bank Account is Implicated …… 12
2. The Appellate Division’s Holding Conflicts with
AHAB’s Own Allegations……………………………… 17
D. The Appellate Division’s Incorrect Choice of Law Analysis
Further Contributed to its Erroneous Holding…………………… 22
E. In The Alternative, The Appellate Division Abused
Its Discretion………………………………………………….. 25
II. THE BAR ON SUA SPONTE DISMISSALS FOR FORUM NON
CONVENIENS DOES NOT APPLY HERE ……………………… 28
ii
III. MASHREQ IS AN AGGRIEVED PARTY WITHIN THE
MEANING OF CPLR 5511 ..........………………………………. 32
CONCLUSION ............................................................................................... 36
iii
TABLE OF AUTHORITIES
Page(s)
Rules and Statutes
CPLR 327 ........................................................................................................ passim
CPLR 2001 ..................................................................................................... 34
CPLR 2211 ..................................................................................................... 34
CPLR 2214 ...................................................................................................... 34
CPLR 5511 ...................................................................................................... 32
Cases
A&M Exports, Ltd. v. Meridien Int’l Bank, Ltd.,
207 A.D.2d 741 (1st Dep’t 1994) ................................................................... 12
Banco Do Estado De Sao Paulo S.A. v. Mendes Jr. Int’l Co.,
249 A.D.2d 137 (1st Dep’t 1998) ................................................................... 29, 31
Banco Nacional Ultramarino v. Chan, 169 Misc. 2d 182 (Sup Ct. N.Y.
Cnty. 1996) ..................................................................................................... 14
Citigroup Global Mkts. Inc. v. Metals Holding Corp.,
820 N.Y.S.2d 841, No. 604205/05, 2006 WL 1594442, (Sup. Ct. N.Y. Cnty.
June 8, 2006), aff’d, 45 A.D.3d 361 (1st Dep’t 2007) .................................... 12
Creditanstalt Inv. Bank AG v. Chadbourne & Parke LLP,
4 Misc. 3d 481 (Sup. Ct. N.Y. Cnty. 2004) .................................................... 10
Edwards v. Erie Coach Lines Co.,
17 N.Y.3d 306 (2011) ..................................................................................... 24
Ehrlich-Bober & Co. v. Univ. of Houston,
49 N.Y.2d 574 (1980) ..................................................................................... 3, 15
Fin. Guaranty Ins. Co. v. IKB Deutsche Industriebank AGB,
No. 600704/08 (HC), 2008 WL 5478808 (Sup. Ct. N.Y. Cnty. Dec. 29,
2008) ............................................................................................................... 9
iv
Garmendia v. O’Neill,
46 A.D.3d 361 (1st Dep’t 2007) ..................................................................... 17
Globalvest Mgmt. Co. LP v. Citibank,
801 N.Y.S. 2d 234, 2005 WL 1148687 (Sup. Ct. N.Y. Cnty. May 12,
2005) ............................................................................................................... 9, 12-13
Gryphon Domestic VI, LLC v. APP Int’l Fin. Co., B.V.,
41 A.D.3d 25 (1st Dep’t 2007) ....................................................................... 8
Imperial Imps. Co v. Hugo Neu & Sons, Inc.,
161 A.D.2d 411 (1st Dep’t. 1990) .................................................................. 7, 29, 31
In re Herald,
--- Fed. Appx. ---, 2013 WL 5048291 (2d Cir. Sept. 16, 2013) .................. 7, 8, 9, 15
In re Herald, Primeo, and Thema Sec. Litig.,
No. 09-Civ. 289 (RMB), 2011 WL 5928952 (S.D.N.Y. 2011),
aff’d 2013 WL 5048291 (2d Cir. 2013) .......................................................... 15-16
Islamic Rep. of Iran v. Pahlavi,
62 N.Y.2d 474 (1984) ..................................................................................... 7, 8
J. Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda) Ltd.,
37 N.Y.2d 220 (1975) ..................................................................................... 13-14
Millicom Int’l Cellular S.A. v. Simon,
247 A.D.2d 223 (1st Dep’t 1998) ................................................................... 13
Mixon v. TBV, Inc.,
76 A.D.3d 144 (2d Dep’t 2010) ...................................................................... 32
Padula v. Lilarn Prop. Corp.,
84 N.Y.2d 519 (1994) ..................................................................................... 23-24
Parochial Bus Sys., Inc. v. Bd of Educ. of City of N.Y.,
60 N.Y.2d 539 (1983) ..................................................................................... 33-34
Patriot Exploration, LLC v. Thompson & Knight LLP,
16 N.Y.3d 762 (2011) ..................................................................................... 25, 27
Phat Tan Nguyen v. Banque Indosuez,
19 A.D.3d 292 (1st Dep’t 2005) ..................................................................... 17
v
Piper Aircraft Co. v. Reyno,
454 U.S. 235 (1981) ........................................................................................ 10
Republic of Lebanon v Sotheby’s,
167 A.D.2d 142 (1st Dep’t 1990) ................................................................... 10
Scharlack v. Richmond Mem’l. Hosp.,
127 A.D.2d 580 (2d Dep’t 1987) .................................................................... 33
Schultz v. Boy Scouts of Amer.,
65 N.Y.2d 189 (1985) ..................................................................................... 23
Scottish Air Int’l, Inc. v. British Caledonian Grp., PLC,
81 F.3d 1224 (2d Cir. 1996) ............................................................................ 10
Shiboleth v. Yerushalmi,
268 A.D.2d 300 (1st Dep’t 2000) ................................................................... 29-30
Shin-Etsu Chem. Co., Ltd. v. ICICI Bank Ltd.,
9 A.D.3d 171 (1st Dep’t 2004) .................................................................. 8, 9, 13, 17
Silver v Great Amer. Ins. Co.,
29 N.Y.2d 356 (1972) ..................................................................................... 14
Small v. Suffolk Cnty. Honda,
141 A.D.2d 448 (1st Dep’t 1988) ................................................................... 34
Smith v. Miller,
237 A.D.2d 294 (2d Dep’t 1997) .................................................................... 29
State of New York v. Philip Morris, Inc.,
61 A.D.3d 575 (1st Dep’t 2009) ..................................................................... 32-33
Strong v. Strong,
277 A.D.2d 533 (3d Dep’t 2000) .................................................................... 33
Tooth v. Georgiou,
69 A.D.3d 464 (1st Dep’t 2010) ..................................................................... 35
United States v. Approximately $2,718,665.70 Formerly on Deposit in
Pershing, LLC., No. 11 Civ. 9176 VM, 2013 WL 2393144 (S.D.N.Y. May
23, 2013) ......................................................................................................... 6
vi
Voorhees v. Babcock & Wilcox Corp.,
150 A.D.2d 677 (2d Dep’t 1989) .................................................................... 34
VSL Corp. v. Dunes Hotels & Casinos, Inc.,
70 N.Y.2d 948 (1988) ..................................................................................... 30
Waterways Ltd v Barclays Bank PLC,
174 A.D.2d 324 (1st Dep’t 1991) ................................................................... 10
White Light Prods. v. On the Scene Prods.,
231 A.D.2d 90 (1st Dep’t 1997) ..................................................................... 27
World Point Trading PTE Ltd. v. Credito Italiano,
225 A.D.2d 153 (1st Dep’t 1996) ............................................................... 6, 13, 31
Other Authorities
Newman, New York Appellate Practice § 3.01[1] ......................................... 32-33
8 Davies, N.Y. Prac. Series, Civil Appellate Practice § 3.3 (2012) ............... 32
Mashreq respectfully submits this reply brief in further support of its appeal
of the 3-2 September 25, 2012 decision of the Appellate Division, First
Department reversing the Supreme Court’s dismissal of these proceedings for
forum non conveniens.
1
PRELIMINARY STATEMENT
AHAB’s opposition confirms that the traditional forum non
conveniens factors overwhelmingly support the Supreme Court’s dismissal of this
action between UAE and Saudi parties – none of whom is resident in New York
and most of whom are subject to travel bans that prevent them from leaving Saudi
Arabia. AHAB cannot identify a single witness or document located in New York,
and to this day continues to assert jurisdictional defenses to this forum. Like the
parties, most of the witnesses are located in UAE or Saudi Arabia, as are any
relevant documents. The AHAB partners and third-party defendant Al Sanea will
testify in Arabic, their native language, R. 617 (Al Sanea Aff. ¶ 2), R. 1784 (Tr. of
London Proceedings, Day 3 at 145:1-4, 11-17), and AHAB admitted in the London
proceedings that six agencies of translators were necessary because of the “vast
amount of the documentation” in Arabic concerning AHAB’s banking
1
Terms not defined here have the meanings given in Mashreq’s July 25, 2013 opening brief
(“Mashreq Br.”). Citations to “AHAB Br.” refer to AHAB’s September 13, 2013 opposition
brief.
2
relationships and its partners’ knowledge of those activities. R. 1782 (Tr. of
London Proceedings, Day 3 at 99:4-6). UAE and/or Saudi law governs this dispute.
The Appellate Division’s holding that the case was not subject to
forum non conveniens dismissal reflects fundamental legal errors. Indeed, even
AHAB does not advocate all of the positions in the September 25 Decision here.
For instance, AHAB does not defend the Appellate Division’s suggestion that the
UAE was not an adequate alternative forum for the dispute between Mashreq and
AHAB. The availability of the UAE forum is beyond dispute – Mashreq and
AHAB have already litigated the very same issues AHAB seeks to relitigate here
in the UAE proceeding, resulting in a merits judgment in Mashreq’s favor, which
AHAB is currently appealing in the UAE. See Mashreq Br. at 12-14, 25-27.
AHAB urges that if New York has more liberal discovery rules than the foreign
jurisdictions where the parties reside and where the disputed conduct occurred,
then the case is “better adjudicated” in New York. By this logic, every dispute
between non-US parties would be “better adjudicated” in New York. That is not
the law.
AHAB also offers conclusory assertions about New York’s
supposedly “paramount” interest in this dispute that are not supported even by
AHAB’s own allegations, let alone by anything in the record. AHAB’s rhetoric
cannot obscure that the only arguable connection between this case and New York
3
is electronic funds transfers executed abroad. New York courts have repeatedly
held that such transfers are insufficient to justify hearing an otherwise foreign
dispute. There are good reasons for that precedent – given the large volume of
funds transfers that flow through New York banks every day, see Mashreq Br. at
30, such a rule would dramatically and needlessly increase the number of cases
New York courts are required to hear and further burden already strained judicial
resources.
The Appellate Division committed legal error in adopting AHAB’s
theory that a dispute between foreign parties in which all of the disputed conduct
occurred outside New York cannot be dismissed for forum non conveniens if part
of the financial transactions flowed through New York bank accounts. Yet again,
AHAB does not even try to defend the Appellate Division’s mistaken conclusion
that Ehrlich-Bober & Co. v. Univ. of Houston, 49 N.Y.2d 574 (1980) is
“analytically indistinguishable” from this case. Ehrlich-Bober involved
transactions that were “centered in New York” because they “arose out of
telephone calls made to the plaintiff’s New York office” or in-person visits by one
of the defendant’s employees. Ehrlich-Bober, 49 N.Y.2d at 577, 581-82. It is
undisputed that any telephone calls or visits made in this case occurred in the
Middle East. The transactions were therefore centered there, requiring dismissal
under Ehrlich-Bober’s analysis.
4
Further, AHAB, like the Appellate Division, ignores that New York
choice of law analysis requires the Court to consider and weigh the interests of the
various jurisdictions whose law may apply. AHAB in fact concedes that several
aspects of this dispute will be governed by UAE or Saudi law. The Appellate
Division certified to this Court that the September 25 Decision “was made as a
matter of law and not in the exercise of discretion,” R. 1793 (Dec. 28, 2012 Order),
but in any event the Appellate Division also abused its discretion in failing to
dismiss for forum non conveniens this foreign dispute between foreign parties,
including because in reaching its decision the Appellate Division failed to even
consider the duplicative actions that are already proceeding outside New York.
AHAB’s contention before this Court that there was no application to
dismiss the first-party claims between Mashreq and AHAB is belied by the
admission of AHAB’s counsel to the Supreme Court that there was an application
to dismiss for “forum non conveniens as to everybody,” and that AHAB was
“opposing it as to everybody.” R. 1474 at 29:13-26 (Mar. 25, 2010 H’rg Trans.).
CPLR 327 permits forum non conveniens dismissal “in whole or in part” on the
motion of “any party.” That is precisely what occurred here. Third-party
defendant Al Sanea made a motion to dismiss and, after all parties had the
opportunity to be heard on the issue, the Supreme Court dismissed the action “in
whole,” based in part on Mashreq’s position that the dispute between Mashreq,
5
AHAB and the AHAB partners could be litigated in the UAE where, unlike New
York, AHAB and its partners had not asserted jurisdictional defenses.
Finally, AHAB’s argument that Mashreq lacks standing to pursue this
appeal is similarly deficient. AHAB never argued in the Appellate Division that
Mashreq lacked standing as an aggrieved party to argue in support of the dismissal.
This Court initiated the first inquiry into Mashreq’s standing, perhaps based on a
mistake in the September 25 Decision, which stated that “Mashreqbank” had
submitted a number of documents in opposition to the forum non conveniens
motion that were in fact submitted by AHAB. September 25 Decision at 6-7. As
AHAB surely recognized in failing to raise this issue on its own, the Appellate
Division’s reversal of the Supreme Court’s forum non conveniens dismissal
aggrieves Mashreq by, inter alia, reinstating claims that Mashreq moved to dismiss
– including counterclaims by AHAB purporting to seek $2.5 billion from Mashreq
– and forcing Mashreq to engage in duplicative and unnecessary litigation of issues
that have already been resolved in the UAE proceeding.
6
ARGUMENT
I. THIS CASE SHOULD BE DISMISSED FOR FORUM NON
CONVENIENS
A. AHAB Does Not Dispute that the UAE is an Adequate Alternative
Forum for the Claims Between Mashreq and AHAB
Effectively conceding that the Appellate Division erred in holding that
“there are no facts of record to support any alternative forum,” R. 1810 (September
25 Decision at 17), AHAB makes no argument that the UAE is an inadequate
alternate forum for the claims between AHAB and Mashreq. Nor could it given
that the dispute between Mashreq and AHAB has been, and continues to be, the
subject of extensive litigation there, a fact that AHAB ignores in its briefing.
2
Mashreq Br. at 12-14, 25-27; World Point Trading PTE Ltd. v. Credito Italiano,
225 A.D.2d 153, 161 (1st Dep’t 1996) (parallel action illustrates the “obvious
availability of another forum”); see also United States v. Approximately
$2,718,665.70 Formerly on Deposit in Pershing, LLC., No. 11 Civ. 9176 VM,
2013 WL 2393144 (S.D.N.Y. May 23, 2013) (Dubai is an adequate alternate
forum).
AHAB is similarly unable or unwilling to defend the Appellate
Division’s erroneous holding that the first and third-party complaints could not be
2
AHAB also does not challenge that the UAE is an adequate alternate forum for its claim against
Al Sanea, who has agreed to jurisdiction there. AHAB Br. at 62 (noting Al Sanea’s “expressed
willingness to defend AHAB’s claims in the UAE”).
7
dismissed in favor of two separate forums. R. 1810 (September 25 Decision at 17)
(faulting Supreme Court for having “failed to identify an alternative forum that
would have jurisdiction over the dispute as framed by the complaints”). CPLR 327
explicitly authorizes a court to dismiss an action “in whole or in part” (emphasis
added) and thus clearly does not require an alternative forum that would hear the
dispute “as framed by the complaints.” See also Imperial Imps. Co v. Hugo Neu &
Sons, Inc., 161 A.D.2d 411, 412 (1st Dep’t. 1990) (severing and dismissing certain
claims only); In re Herald, --- Fed. Appx. ---, 2013 WL 5048291, at *7 (2d Cir.
Sept. 16, 2013) (affirming forum non conveniens dismissal in favor of two
alternate jurisdictions and rejecting argument that dismissal was not permitted
because “the forum non conveniens analysis assumes that these consolidated cases
will be sent to a single alternative forum, not the courts of two separate countries”).
These legal errors conceded by AHAB are alone sufficient to merit
reversal given that the “availability of another suitable forum is a most important
factor to be considered.” AHAB Br. at 39 (citing Islamic Rep. of Iran v. Pahlavi,
62 N.Y.2d 474 (1984)). Further, while noting that the availability of another forum
is an important factor, Pahlavi specifically held that an adequate alternative forum
is not a prerequisite for forum non conveniens dismissal. Islamic Republic of Iran
v. Pahlavi, 62 N.Y.2d 474, 478 (1984). Here, the availability of an adequate
alternate forum is beyond dispute, given that all parties are amenable to process in
8
the UAE, clearly an alternate forum that permits litigation of the subject matter of
this dispute, and in fact where Mashreq and AHAB are already litigating.
B. New York’s Liberal Discovery Rules Do Not Render the New
York Courts Convenient for Purposes of This Dispute
The Appellate Division further erred in using an incorrect definition
of an adequate alternative forum, which tainted its entire forum non conveniens
analysis. It is well-settled that a forum is adequate when “the defendant is
amenable to process in that jurisdiction and the alternative forum permits litigation
of the subject matter of the dispute.” Gryphon Domestic VI, LLC v. APP Int’l Fin.
Co., B.V., 41 A.D.3d 25, 37 (1st Dep’t 2007) (citing Piper Aircraft Co. v. Reyno,
454 U.S. 235, 254 n.22 (1981)); Shin-Etsu Chem. Co., Ltd. v. ICICI Bank Ltd., 9
A.D.3d 171, 179 (1st Dep’t 2004); accord In re Herald, 2013 WL 5048291, at *6
(“The availability of an adequate alternative forum does not depend on the
existence of the identical cause of action in the other forum, nor on identical
remedies.”). AHAB’s arguments misstate the factors relevant to determination of
whether an alternative forum – which indisputably exists here – is adequate. See
Pahlavi, 62 N.Y.2d at 479 (describing various factors – including the availability
of an alternative forum – for the motion court to consider when determining
whether the case “would be better adjudicated elsewhere”).
3
3
For example, as AHAB acknowledges, the First Department in Shin-Estu evaluated the
procedures that the Indian courts would follow. AHAB Br. at 39-40. But it did so in the context
of evaluating the other Pahlavi factors and not, as AHAB contends, as part of the alternate forum
9
Thus, AHAB’s arguments about New York’s liberal discovery rules
have no relevance to the adequate alternate forum analysis. Courts routinely hold
that purportedly less favorable law – including the lack of permissive New York-
style discovery rules – does not render an alternative forum inadequate and is no
bar to forum non conveniens dismissal. See Globalvest Mgmt. Co. LP v. Citibank,
801 N.Y.S. 2d 234, 2005 WL 1148687, at *9 (Sup. Ct. N.Y. Cnty. May 12, 2005)
(dismissing action on forum non conveniens grounds even though plaintiff
complained that it “could not obtain expansive U.S.-style discovery in Brazil”);
Fin. Guaranty Ins. Co. v. IKB Deutsche Industriebank AGB, No. 600704/08 (HC),
2008 WL 5478808, at *7 (Sup. Ct. N.Y. Cnty. Dec. 29, 2008) (“The fact that New
York discovery rules are more expansive and favorable will not serve as a basis to
deny a motion for forum non conveniens dismissal”); In re Herald, 2013 WL
5048291, at *9 (rejecting argument “that Ireland is not an adequate alternative
forum because Ireland’s . . . discovery procedures are more limited than those
available in the United States,” noting that an alternative forum is not “considered
inadequate merely because its courts afford different or less generous discovery
analysis. See Shin-Etsu Chem., 9 A.D.3d at 179 (reversing the denial of dismissal for forum non
conveniens despite the assertion of plaintiff’s expert “that it would take at least ten years” to
resolve the matter in an Indian court).
10
procedures than are available under American rules.”) (citation and internal
quotations omitted).
4
This is obviously correct. If the Appellate Division’s holding that the
absence of liberal New York discovery makes a forum inadequate stands, every
dispute between two individuals in Saudi Arabia (or any other jurisdiction with
less permissive discovery rules, i.e. most if not every jurisdiction outside the
United States) will be “better adjudicated” in New York.
5
New York courts are not
a haven for foreign parties who prefer to litigate half-way around the world rather
than in their home jurisdictions or neighboring countries where their counterparties
are located. The purpose of forum non conveniens is to dismiss this type of
burdensome proceeding, not to justify its retention.
4
See also Piper Aircraft v. Reyno, 454 U.S. 235, 247, 254 (1981) (“The Court of Appeals erred
in holding that plaintiffs may defeat a motion to dismiss on the ground of forum non conveniens
merely by showing that the substantive law that would be applied in the alternative forum is less
favorable to the plaintiffs than that of the present forum.”); Scottish Air Int’l, Inc. v. British
Caledonian Grp., PLC, 81 F.3d 1224, 1234 (2d Cir. 1996) (“[S]ome inconvenience or the
unavailability of beneficial litigation procedures similar to those available in federal district
courts does not render an alternative forum inadequate.”).
5
The cases AHAB relies on do not support its position. AHAB Br. at 40. Waterways Ltd v
Barclays Bank PLC, 174 A.D.2d 324, 328 (1st Dep’t 1991) found New York an appropriate
forum because “key documents are presently located in New York,” and did not adopt the
plaintiff’s arguments about liberal discovery. Here, the opposite is true – no key documents are
located in New York. In Creditanstalt Inv. Bank AG v. Chadbourne & Parke LLP, 4 Misc. 3d
481, 485-86 (Sup. Ct. N.Y. County 2004), the court had concerns about Russia as an alternate
forum because “it did not recognize the tort of legal malpractice,” not because of any issues
related to discovery. Id. at 486. See also Republic of Lebanon v Sotheby’s, 167 A.D.2d 142,
143-145 (1st Dep’t 1990) (in a dispute over the ownership of antique silver pieces located in
New York, which were crafted in the 4th or 5th century A.D. and unearthed in the 1970s, the
court found that “discovery may be essential given the mystery surrounding the discovery of the
Treasure”).
11
In any event, as discussed in Point I.E below, the dispute between
Mashreq and AHAB is unquestionably “better adjudicated” in the UAE, where the
parties have been litigating the merits for the past three years, and where – unlike
New York – neither AHAB nor its partners contested jurisdiction.
6
C. Electronic Funds Transfers Through a New York Bank Account
in Connection with An Otherwise Wholly Foreign Dispute Do Not
Compel New York Courts to Hear the Case
As explained in Mashreq’s opening brief, the Appellate Division erred
in effectively holding that New York courts are barred from dismissing for forum
non conveniens any dispute that arguably involves some aspect of the New York
banking system. Mashreq Br. at 27-33. AHAB now agrees that such a rule is
improper, AHAB Br. at 26-27, but then spends the vast majority of its brief
arguing that the electronic funds transfers – which are the only arguable New York
connection to this case – “constituted a powerful New York nexus,” requiring New
6
AHAB and the AHAB partners both asserted that they were not subject to personal jurisdiction
in New York. The AHAB partners steadfastly refused to concede jurisdiction – a position that
indicated to the Supreme Court that the forum non conveniens motion had merit – and AHAB
purported to withdraw its jurisdictional defenses at the forum non conveniens hearing. R. 1476-
77 (Mar. 25, 2010 H’rg Trans. at 31:10–32:17). However, on September 3, 2013, AHAB filed a
motion for leave to amend its pleadings in an attempt to plead around the trial court’s dismissal
of the counterclaim as barred by in pari delicto. See Mashreq Br. n.2. Incredibly, AHAB’s
motion attached a proposed amended answer and counterclaim including the following
jurisdictional defenses (also asserted in AHAB’s original answer, R. 87):
Eighth Affirmative Defense: The Court lacks personal jurisdiction over AHAB.
Ninth Affirmative Defense: Venue in this Court is improper.
See Grace Affirmation in Support of AHAB Motion for Leave to Replead, Dkt. No. 224 (Sept. 3,
2013), Ex. A at 13 (“AHAB Proposed Amended Counterclaim”).
12
York courts to retain the action. AHAB Br. at 37; see also AHAB Br. at 12-16,
22-38.
1. The Appellate Division’s Holding Conflicts With New York
Courts’ Repeated Holdings that Foreign Disputes Are Not
Required to be Heard in New York Anytime a New York Bank
Account is Implicated
AHAB is unable to marshal a single forum non conveniens case that
supports its position. That is because New York courts have repeatedly rejected
AHAB’s theory that New York is the proper forum for every case in which a
defendant allegedly made use of New York bank accounts. See, e.g., Citigroup
Global Mkts. Inc. v. Metals Holding Corp., 820 N.Y.S.2d 841, No. 604205/05,
2006 WL 1594442, at **5, 6 (Sup. Ct. N.Y. Cnty. June 8, 2006) (rejecting
argument that “this action clearly belongs in New York because it merely involves
the transfer, in New York, of assets from one . . . account to another” as
“insufficient to turn this dispute between two foreign residents into one of concern
to New York courts and juries”), aff’d, 45 A.D.3d 361 (1st Dep’t 2007); A&M
Exports, Ltd. v. Meridien Int’l Bank, Ltd., 207 A.D.2d 741 (1st Dep’t 1994)
(affirming forum non conveniens dismissal despite possible absence of alternate
forum where “[t]he only New York connection is defendants’ deposit of the
subject funds in correspondent accounts in New York, and plaintiff’s presentment
of drafts against these accounts, which were dishonored”); Globalvest Mgmt., 2005
WL 1148687, at **3, 5 (dismissing in favor of Brazilian action, rejecting plaintiff’s
13
argument that “this action does not belong in Brazil because it arises from a
scheme of wrongful acts orchestrated and perpetrated by Citibank in New York”
and holding that where “the action is almost entirely concerned with the events,
institution and law of a foreign nation, the action cannot be said to have a
substantial nexus with New York.”) (citation and quotation marks omitted).
7
AHAB dismisses these cases as “letter of credit cases,” but fails to
explain why that distinction is meaningful. AHAB Br. at 37. AHAB’s argument is
particularly unpersuasive in light of AHAB’s heavy reliance on J. Zeevi & Sons,
Ltd. v. Grindlays Bank (Uganda) Ltd., 37 N.Y.2d 220 (1975), itself a letter of
credit case (but not a forum non conveniens case). AHAB Br. at 27-28, 30; R.
1796, 1805-07 (September 25 Decision). J. Zeevi involved choice of law analysis.
Notably, in performing that analysis J. Zeevi relied heavily on New York’s interest
in protecting “the justified expectations of the parties to the contract” and the
court’s understanding that the parties expected New York law would apply to the
7
See also Shin-Etsu Chem., 9 A.D.3d at 178 (reversing lower court and dismissing for forum non
conveniens noting that while “in support of its ruling, Supreme Court noted the competence of
New York courts in letter of credit cases, this Court has not hesitated to dismiss, on the ground of
forum non conveniens, letter of credit cases having little to do with New York”); World Point
Trading, 225 A.D.2d 153, 159-161 (1st Dep’t 1996) (forum non conveniens dismissal was
appropriate where financial dispute with tenuous connection to New York was ancillary to
dispute over the underlying foreign commercial transaction, which was already subject to
litigation in Italy, and involved foreign parties and witnesses); Millicom Int’l Cellular S.A. v.
Simon, 247 A.D.2d 223, 223 (1st Dep’t 1998) (“notwithstanding the allegation that [the New
York] nexus was deliberately created by defendants,” a single act in New York as part of alleged
worldwide “campaign” of tortious conduct was not a sufficient nexus “where none of the parties
are residents of New York, the crucial events underlying the action occurred” elsewhere, and
sixty-four witnesses and twenty-eight actions arising out of the same allegations were elsewhere).
14
transactions at issue. J. Zeevi, 37 N.Y.2d 220 at 227. Here the opposite is true –
the Facilities Letter Agreement governing the transactions between AHAB and
Mashreq specifically states that UAE law applies and the parties submit to the
jurisdiction of the courts in Dubai, UAE. R. 1600. Thus, the concerns expressed
in J. Zeevi – protecting parties justified expectations – weigh in favor of a UAE
forum for the claims between Mashreq and AHAB.
AHAB’s reliance on caselaw involving personal jurisdiction is equally
misplaced. See AHAB Br. at 24, 25 (quoting jurisdictional analysis in Banco
Nacional Ultramarino v. Chan, 169 Misc. 2d 182 (Sup. Ct. N.Y. Cnty. 1996) aff’d
240 A.D.2d 253 (1st Dep’t 1997)); see also AHAB Br. at 29 (citing Licci v.
Lebanese Canadian Bank, 20 N.Y.3d 327 (2012)). As this Court has recognized,
every case in which a party seeks forum non conveniens dismissal has some New
York connection because the doctrine of forum non conveniens assumes
jurisdiction exists; its purpose is to permit trial courts to decline to exercise that
jurisdiction. Silver v.Great Amer. Ins. Co., 29 N.Y.2d 356, 362 (1972).
8
8
The cases AHAB relies on are distinguishable for other reasons as well. For instance, in Banco
Nacional the Court found “accounts of various codefendants in New York banks” were central to
the alleged conspiracy because “proof of such conspiracy requires the linking together of the acts
of various defendants like the hub of a wheel with many spokes.” Banco Nacional Ultramarino v.
Chan, 169 Misc. 2d 182, 183, 192 (Sup Ct. N.Y. Cnty. 1996). Here, the “hub” of any misconduct
was Saudi Arabia, where Al Sanea was located and allegedly ran AHAB’s business. Point I.C.2,
infra. Further, the involvement of “IRS, United States Secret Service, United States Customs
Service, the FBI, and the United States Drug Enforcement Agency” corroborated the existence of
a New York connection to the dispute. Id. at 185. AHAB’s invocation of Licci is particularly
inappropriate for the reasons discussed in Mashreq’s opening brief. Mashreq Br. at 32-33.
15
AHAB also abandons any pretense of defending the Appellate
Division’s incorrect conclusion that Ehrlich-Bober & Co. v. University of Houston,
49 N.Y.2d 574 (1980) is “analytically indistinguishable” from this case. Ehrlich-
Bober addressed circumstances in which transactions are “centered” in New York.
Ehrlich-Bober, 49 N.Y.2d at 581-82. That case involved a plaintiff who “ha[d] its
principal office in New York City” and concerned “transactions [which] arose out
of telephone calls made to the plaintiff’s New York office” or in-person visits by
one of the defendant’s employees. Id. at 577. AHAB cannot point to any
analogous conduct in this case, nor did the Appellate Division. Mashreq is
headquartered in UAE and any activities it took relevant to this action were
conducted from its UAE headquarters; it is undisputed that no New York
employees were involved. R. 93 (AHAB CC ¶ 17). AHAB and Al Sanea are in
Saudi Arabia, AHAB Br. at 51, and AHAB employees in Saudi Arabia and
Bahrain transacted with Mashreq employees in Dubai. Under Ehrlich-Bober, the
transactions at issue in this litigation were therefore “centered” in UAE or Saudi
Arabia, further supporting dismissal.
The Second Circuit recently affirmed forum non conveniens dismissal
in similar circumstances. In re Herald, Primeo, and Thema Sec. Litig., No. 09-Civ.
289 (RMB), 2011 WL 5928952 (S.D.N.Y. Nov. 29, 2011), aff’d 2013 WL
5048291 (2d Cir. Sept. 16, 2013). In re Herald considered and rejected many of
16
the arguments made by AHAB and erroneously adopted by the Appellate Division.
As is also the case here, “Plaintiffs ha[d] not identified a single potential witness in
New York or within 100 miles of this courthouse,” “the core operative facts of
these cases involve[d] the operations of foreign entities outside of the United
States,” and “Plaintiffs, themselves [were] foreign,. . . , and appear[ed] to have
little or no connection to the United States.” Id. at *12. Plaintiffs claimed a New
York interest barring forum non conveniens dismissal because their claims were
based on fraud by Bernard Madoff, which was conducted from his offices in New
York (and involved any number of New York bank accounts). The court correctly
held that “[w]hile this action is peripherally related to New York through Madoff,
his involvement alone does not give New York a substantial interest in this
litigation . . . . By contrast, Ireland and Luxembourg, respectively, as evidenced in
part by the related proceedings in progress there, have an undeniably significant
interest in policing conduct within their borders by Defendants, which are mostly
investment funds and financial institutions organized and regulated under their
laws.” Id. at *16.
9
The same is true here – if any jurisdiction has a particular interest in
the dispute between Mashreq and AHAB it is the UAE. Shin-Etsu Chem., 9
9
Additionally, In re Herald noted that “ [n]umerous courts have found that the public interest
factors often favor dismissal where there is . . . parallel litigation arising out of the same or
similar facts already pending in the foreign jurisdiction.” Id. (citations omitted).
17
A.D.3d at 178 (defendant was an Indian banking institution with its principal place
of business in India and lower court should have “defer[red] to India’s interest in
resolving its own affairs.”); id. (“Indian courts are keenly interested in governing
the affairs of its financial institutions to insure uniformity and consistency in the
processing of financial transaction and in the interpretation of Indian banking
statutes and laws.”). Mashreq is a UAE banking institution headquartered in the
UAE and UAE courts have at least as great an interest as New York in any dispute
concerning Mashreq’s actions. Phat Tan Nguyen v. Banque Indosuez, 19 A.D.3d
292, 295 (1st Dep’t 2005) (reversing denial of forum non conveniens motion,
noting that “France clearly has an interest in regulating its own banking
institutions”); Garmendia v. O’Neill, 46 A.D.3d 361, 362 (1st Dep’t 2007)
(affirming forum non conveniens dismissal, noting that “Uruguay has an interest in
adjudicating claims involving its own banking institutions . . . .”) (citation omitted).
2. The Appellate Division’s Holding Conflicts with AHAB’s Own
Allegations
Although AHAB is wrong in asserting that the Court should credit its
allegations (which several other courts have already rejected, Mashreq Br. at 11-13)
for purposes of determining whether New York is a proper forum for this dispute,
an examination of AHAB’s allegations makes clear that not a single issue being
disputed in this case implicates New York or its banking system. As AHAB’s
pleadings explain, Mashreq provided a number of financial services to AHAB,
18
including foreign exchange transactions in which Mashreq paid AHAB US dollars
and received Saudi riyals in return. AHAB describes the transactions in its
counterclaim:
“The Money Exchange . . . agreed to make a deferred payment (3
days to 12 days later) of Saudi Riyals to Mashreq’s account at
National Commercial Bank in Jeddah, Saudi Arabia.” R. 94 (CC ¶
21(b)).
AHAB paid the agreed-upon amount of Saudi riyals into
Mashreq’s account in Saudi Arabia when due on every foreign
exchange transaction, R. 95 (CC ¶ 21(d)), except the final
transaction on which AHAB defaulted.
The terms of the transactions were straightforward, and the agreed-
upon payment dates and exchange rates were documented on Reuters terminals, R.
593-94 (one page Reuters screenshot memorializing terms of transaction), where
anyone who cared to look could easily perceive that information.
10
This case is not
about any disagreement as to the terms of the Mashreq-AHAB transactions or the
mechanics of how they were conducted.
11
Rather the issue that must be resolved in
this case is whether AHAB can escape liability to Mashreq by arguing that “[t]he
10
At any given time these trades provided AHAB with, at most, $150 million of liquidity for an
approximately one-week period before AHAB made a return payment of Saudi riyals to
Mashreq’s account in Saudi Arabia. By way of comparison, AHAB alleges that “[o]ver a period
of more than ten years, Al Sanea used the Money Exchange to borrow more than $9 billion from
third-party banks in AHAB’s name and to steal more than $5.5 billion, leaving AHAB liable to
the lenders.” AHAB Proposed Amended Counterclaim at ¶ 4. The “peripheral and transitory”
nature of the New York connection is apparent from AHAB’s own pleadings. R. 1824
(September 25 Decision, Dissent at 31).
11
See R. 76-77 (Answer ¶¶ 5-7) (“AHAB avers that subsequent investigation indicates that the
sum of $150,000,000 was received into a bank account in the name of AHAB at Bank of
America on or about April 28, 2009.”).
19
transaction was unauthorized,” R. 110 (TPC ¶ 17), and positing that Mashreq
somehow should have known about Al Sanea’s alleged misconduct.
That of course requires an inquiry not into any supposed “misuse of
the New York banking system,” AHAB Br. at 37, but into AHAB’s allegations that
Al Sanea was assisted in some unexplained manner by Mashreq’s agreement in
Dubai to enter into foreign exchange trades with AHAB. According to AHAB, Al
Sanea, in running the Saudi Money Exchange:
“Direct[ed] AHAB employees to cause AHAB to enter into financial
transactions . . . without recording such transactions on the books of
AHAB,” R. 90 (CC ¶ 9(e));
“Debit[ed] funds from AHAB accounts (directly and through the
issuance of fraudulent checks drawn on AHAB the accounts),” R. 90
(CC ¶ 9(b) and (c));
“Record[ed] sham . . . transactions for the purposes of inflating the
financial statements of Al Sanea and companies controlled by him,”
R. 90 (CC ¶ 9(d)); and
“Direct[ed] 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. 90 (CC
¶ 9(e)).
None of these events occurred in New York. AHAB further asserts
without citation that Appellants “impermissibly dispute AHAB’s allegation that Al
Sanea stole the funds in New York.” AHAB Br. at 49; see also id. at 34-35
(asserting without support that “the fraud and theft at issue occurred in New
York”). There is no such allegation. To the contrary, AHAB alleged that:
20
“Upon receipt of the funds, Al Sanea siphoned the funds out of the
Money Exchange by directing that virtually all of the funds in
AHAB’s account at Bank of America (which included the
$150,000,000 transferred by Mashreq) be transferred to an account
under his control (although in the name of AHAB) at Awal Bank.” R.
113 (TPC ¶ 26) (emphasis added).
Thus AHAB alleges that Al Sanea (in Saudi Arabia), gave instructions to transfer
funds from one AHAB account in New York over which Al Sanea allegedly had
complete control to another AHAB account over which Al Sanea allegedly had
complete control. Mashreq is not alleged to have any knowledge of or have
participated in this transfer, nor could it given that it is Mashreq’s money that was
allegedly stolen when the funds eventually arrived in Bahrain.
12
AHAB’s liability
to Mashreq accrued when AHAB failed to make the agreed-upon payment of Saudi
riyals to Mashreq’s account in Saudi Arabia. R. 57 (Complaint ¶¶ 4, 16, 28); R. 13
(July 26 Order at 3). There is no New York nexus.
AHAB implicitly acknowledges that the conduct at issue occurred in
the Middle East in arguing that the “key witnesses” are “the persons directly
involved in creating and operating the . . . f/x scheme, including Al Sanea and his
primary subordinates,” none of whom are or were located in New York. AHAB Br.
at 42. Putting aside the unsupported assertions in AHAB’s brief, the facts alleged
are that Al Sanea performed a variety of unauthorized transactions in AHAB’s
12
AHAB subsequently demanded return of the funds from Awal Bank (in Bahrain), but Awal,
which is in insolvency proceedings, allegedly refused AHAB’s demand. R. 114 (TPC ¶ 28).
21
name all over the world. R. 89 (CC ¶ 7) (“Over many years . . . Al Sanea
fraudulently obtained money as a result of unauthorized, non-commercial
transactions with a variety of financial institutions in the United States, the Middle
East, and elsewhere, including Mashreq.”). The issues AHAB asks the Court to
resolve are whether Al Sanea, who was undisputedly in Saudi Arabia during the
relevant time period, forged signatures of AHAB partners to enter into
unauthorized transactions in AHAB’s name such that AHAB is not liable to
Mashreq for the $150 million transaction that AHAB defaulted on, and whether
Mashreq, in Dubai, somehow assisted him in doing so.
These are precisely the same issues that AHAB has litigated and lost
in numerous other forums, including in the UAE proceeding with Mashreq, and
have nothing to do with New York. For example, Mashreq’s UAE action against
AHAB is for the totality of bilateral obligations defaulted on by AHAB, including
the transaction at issue in this litigation. R. 1354 (Mar. 9, 2010 Gouldy Aff. Ex. C,
July 8, 2009 Statement of Claim in UAE Action); R. 25 (July 26, 2010 Order at 15).
AHAB claims that it had no knowledge or liability for any of those obligations – a
claim the UAE court correctly rejected. Hamdan Aff. ¶¶ 3, 12. AHAB also relied
on the same spurious defenses in the London proceedings brought by other bank
creditors, which it subsequently withdrew after producing documents showing the
AHAB partners’ knowledge of AHAB’s borrowing on the eve of trial. Mashreq Br.
22
at 11-12.
13
Similarly, AHAB disclaims all $9 billion worth of borrowing in its
Cayman action against Al Sanea, which encompasses AHAB’s claims against Al
Sanea in this action. R. 1454-55 (Mar. 25, 2010 H’rg Trans. at 9:18-10:3); AHAB
Br. at 12. New York has no interest in hosting duplicative litigation on those
issues solely because funds flowed through New York bank accounts in the
manner described above. R. 1824 (September 25 Decision, Dissent at 31) (“The
fact that the proceeds of Al Sanea’s fraudulent scheme passed through the New
York banking system is a peripheral and transitory contact, which, without more,
does not give New York an interest in transactions that otherwise are foreign.”).
D. The Appellate Division’s Incorrect Choice of Law Analysis
Further Contributed to its Erroneous Holding
The September 25 Decision ignored AHAB’s own concessions that
some aspects of this dispute would be governed by foreign law. See n.15, 16,
infra; R. 1822 (September 25 Decision, Dissent at 29) (noting that resolution of
this dispute “likely requires the application of foreign law”). It also failed to
consider the significant interests of the UAE and Saudi Arabia in this dispute
between UAE and Saudi parties, based on conduct that took place in those
13
Those documents, which will be equally relevant to Al Sanea’s supposedly unauthorized
transacting with Mashreq and his apparent authority to do so, required “six agencies of
translators working on the documentation” because “a vast amount of the documentation
[relevant to AHAB and its banking relationships] was in Arabic.” R. 1782 (Tr. of London
Proceedings, Day 3 at 99:4-6). Even if all of these documents were already translated – the
record shows only that the translation process was started, but AHAB subsequently conceded its
liability without a trial – the fact that these key issues would need to be resolved based on
translated documents supports dismissal.
23
countries, as New York’s interest analysis requires. Schultz v. Boy Scouts of Amer.,
65 N.Y.2d 189, 197 (1985); see also cases cited at 15-16, supra. For tort claims,
New York choice of law rules require the Court to perform an interest analysis to
determine which jurisdiction has the greater interest in having its law applied in the
litigation. This is determined by an evaluation of the facts or contacts relating to
the purpose of the particular law in conflict. Padula v. Lilarn Prop. Corp., 84
N.Y.2d 519, 521 (1994) (citation, quotations and alterations omitted).
A correct analysis of the competing interests requires the application
of UAE law to the claims between Mashreq and AHAB, as the UAE has the
greater interest in regulating the conduct of a UAE institution and in protecting
UAE institutions against meritless fraud claims. See 16-17, supra (citing cases).
The Appellate Division failed entirely to perform this analysis. Instead it
incorrectly asserted without further inquiry that “the law of the jurisdiction where
the tort occurred will generally apply.” AHAB Br. at 48-49; R. 1812 (September
25 Decision) (citing Banco Nacional Ultramarino v. Chan, 169 Misc. 2d 182 (Sup.
Ct. N.Y. Cnty. 1996), aff’d 240 A.D.2d 253 (1st Dep’t 1997)). That error merits
reversal.
Further, AHAB offers no response to Mashreq’s argument that even if
New York choice of law analysis involved rigid application of such a rule, the
“place of the tort” would be the UAE, where Mashreq is located and did business
24
with AHAB, or Saudi Arabia – where AHAB is located and its alleged injury
therefore occurred. Mashreq Br. at 35 (citing Schultz, 65 N.Y.2d at 195 (“The
place of the wrong is considered to be the place where the last event necessary to
make the actor liable occurred. Thus, the locus in this case is determined by where
the plaintiffs’ injuries occurred.”)). This is confirmed by the cases AHAB relies on.
Padula, 84 N.Y.2d at 521 (plaintiff sustained injuries in Massachusetts, and “[t]he
tort occurred in Massachusetts”); Edwards v. Erie Coach Lines Co., 17 N.Y.3d 306,
311 (2011) (place of the tort was New York where plaintiffs were injured).
14
In
any event, as explained above, there is no factual basis for AHAB’s assertion that
“Al Sanea stole the funds in New York.” AHAB Br. at 49.
AHAB also falsely asserts that Mashreq made no “showing that there
is a meaningful conflict between the laws of New York and the laws of . . . the
UAE.” In fact, Mashreq submitted an expert affidavit, whose conclusions AHAB
did not challenge, explaining the ways in which UAE law differed from New York
14
Instead AHAB argues that the law of fraud and theft is “conduct regulating.” AHAB Br. at 49.
That is not in dispute. But the conduct that AHAB complains of is Al Sanea’s alleged initiation
of funds transfers (which occurred in Saudi Arabia) and Mashreq’s agreement to enter into
foreign exchange transactions with AHAB (which occurred in Dubai), not whatever ministerial
actions may have been taken in connection with electronic funds transfers. As discussed above,
it is the UAE which has the greatest interest in having its law applied to regulate conduct by a
UAE entity that took place in UAE.
25
law with respect to AHAB’s counterclaim (and establishing that analogous claims
exist in the UAE). R. 1588-94 (Al Hashimi Aff. ¶¶ 6-29).
15
E. In The Alternative, The Appellate Division Abused Its Discretion
Reversal is merited even if the Court accepts AHAB’s position that
contrary to the Appellate Division’s own unanimous statement that the September
25 Decision “was made as a matter of law and not in the exercise of discretion,” R.
1793 (Dec. 28, 2012 Order) “the issue before [the] Court is whether the Appellate
Division majority abused their collective discretion.” AHAB Br. at 17; see Patriot
Exploration, LLC v. Thompson & Knight LLP, 16 N.Y.3d 762, 763 (2011)
(reversing the denial of forum non conveniens for abuse of discretion). AHAB’s
repeated statements that this dispute is “centered in New York,” AHAB Br. at 34,
cannot conceal the absence of any meaningful connection between these claims
and this forum.
15
Further, even while AHAB argues to this Court that any “contention that this action will turn
on principles of agency and authority under Saudi law is incomprehensible,” AHAB Br. at 50,
AHAB asks the trial court to permit new allegations about the internal structure of AHAB’s
business in its attempt to avoid dismissal for in pari delicto, such as:
“The Money Exchange was the subject of an internal partnership or shareholding agreement,
which gave Al Sanea a 25% ownership interest in the business; the Money Exchange’s other
shareholders – AHAB (with 65% shareholding) and AHAB partner Yousef Algosaibi (with 10%
shareholding) – had no role in the Money Exchange’s management. Because of this internal
agreement whereby Al Sanea had an interest in the Money Exchange, which he did not have in
AHAB as a whole, the Money Exchange was operated entirely separately from AHAB. In
addition to separate operations and organization, it had an entirely separate financial and
accounting system from AHAB’s.” AHAB Proposed Am. Counterclaim ¶ 3.
Presumably AHAB intends to make arguments about the scope of Al Sanea’s agency, giving rise
to additional Saudi law issues and further putting the lie to AHAB’s assertions before this Court
that New York law will govern the dispute.
26
It is undisputed that all of the conduct at issue in this case occurred in
the UAE and its neighboring country, Saudi Arabia, where Mashreq, AHAB, its
partners, and its agent Al Sanea are located and did business. R. 109 (AHAB TPC
¶ 14); R. 50 (Compl. ¶ 1); R. 76 (Answer ¶ 2); AHAB Br. at 42. UAE and/or
Saudi law applies to the dispute,
16
numerous documents relevant to AHAB’s
defenses and counterclaim are in Arabic,
17
the vast majority of witnesses reside in
the UAE or neighboring countries, and key witnesses – including Al Sanea and
AHAB Managing Director Saud Al Gosaibi – cannot leave Saudi Arabia (which is
also true of all but one of the AHAB partners who lives in Dubai) and will testify
in Arabic. R. 622 ¶ 27 (Al-Sanea Aff.); R. 1784 (Tr. of London Proceedings, Day
3 at 145:1-4); id. at 145:11-17.
AHAB’s contention that the travel ban preventing the AHAB partners
and Al Sanea from leaving Saudi Arabia “tilts the analysis decidedly in favor of
New York,” AHAB Br. at 46, as the only jurisdiction that would permit testimony
through video-links is illogical and unsupported by any authority. It is enormously
unfair to require Mashreq to defend a case in New York where the twenty AHAB
16
AHAB Appeal Reply Br. at 16 (“Mashreq loan documents might arguably be governed by
UAE law”) and Point 1.D, supra; see also AHAB Appeal Br. at 43 (recognizing “as possibly
raising an issue of foreign law [Al Sanea’s] contention that this action will turn on principles of
agency under Saudi law.”); Mashreq Br. n.2 (noting AHAB’s arguments in the trial court
concerning UAE law to determine preclusive effect of Mashreq’s UAE judgment against
AHAB).
17
R. 1782 (Tr. of London Proceedings, Day 3 at 99:4-6); R. 622 (Al-Sanea Aff. ¶ 27).
27
partners and their chosen agent Al Sanea will at most testify via translators on a
video feed from Saudi Arabia or some other mechanism that impedes Mashreq’s
ability to effectively cross-examine these key witnesses. The Appellate Division’s
suggestion that this factor did not favor dismissal absent a “finding that witnesses
subject to a travel bar in Saudi Arabia would be precluded from testifying via some
alternate means,” R. 1811 (September 25 Decision), ignores the burden on the trial
court of overseeing such a proceeding and the resulting prejudice to Mashreq.
AHAB’s brief similarly fails to address these issues.
In sum, AHAB fails to distinguish this case from Patriot Exploration,
which is directly on point and compels dismissal. 16 N.Y.3d at 763 (reversing
Appellate Division for abuse of discretion and ordering forum non conveniens
dismissal because no relevant conduct occurred in New York). The Appellate
Division further abused its discretion by applying the wrong legal standards, as
discussed above, and failing entirely to take into account the duplicative
proceedings in other jurisdictions, both with respect to the availability of an
alternative forum and with respect to the risk of inconsistent judgments. White
Light Prods. v. On the Scene Prods., 231 A.D.2d 90, 93 (1st Dep’t 1997) (“where
another action is pending, a major concern, as a matter of comity, is to avoid the
potential for conflicts that might result from rulings issued by courts of concurrent
jurisdiction”).
28
II. THE BAR ON SUA SPONTE DISMISSALS FOR FORUM NON
CONVENIENS DOES NOT APPLY HERE
At the hearing on the forum non conveniens motion, AHAB’s counsel
agreed with the Supreme Court that its “case against Al Sanea, is completely
intertwined with [its] defense to the contract case that Mashreq has brought and
also with [its] counterclaim,” R. 1475 (Mar. 25, 2010 Hr’g Tr. at 30:6-9), and that
there was an application to “consider forum non conveniens as to everybody.” Id.
at R. 1474:13-26:
Supreme Court: There’s two parts here to that application, you
understand. One is for [Al Sanea] to be cut out.
Counsel for AHAB: Right.
Supreme Court: And for the underlying case to continue. The other
is for me to consider forum non conveniens as to
everybody.
Counsel for AHAB: Yes.
Supreme Court: I understand you are opposing it as to
everybody. . . .
Counsel for AHAB: Yes, your Honor, we are. We are.
“Counsel [for AHAB] did not argue that the court lacked the authority
to dismiss the main action because no party had filed a formal motion seeking that
relief,” R. 1818 (September 25 Decision, Dissent at 25), and instead opposed the
motion on the merits. After the Supreme Court granted the application to dismiss
“everybody,” AHAB claimed for the first time, and in contrast with its above
29
statements to the Court at the hearing, that there was only an application to
consider forum non conveniens as to the third-party action and dismissal of the
first-party claims was therefore impermissible “sua sponte” action by the Court.
The issue of forum non conveniens was raised by Al Sanea’s motion,
and all parties fully briefed and were heard on it. The caselaw is uniform that
nothing more is required. See, e.g., Smith v. Miller, 237 A.D.2d 294, 295 (2d
Dep’t 1997) (“Although no formal motion was made to dismiss the proceedings on
the ground of forum non conveniens,” the family court had not erred in dismissing
the custody dispute under CPLR 327(a) because “the doctrine [of forum non
conveniens] was raised before the court and the parties contested the matter.”).
Once the issue of forum non conveniens is raised by a party the court has broad
discretion in its application. See, e.g., id.; Banco Do Estado De Sao Paulo S.A. v.
Mendes Jr. Int’l Co., 249 A.D.2d 137, 139 (1st Dep’t 1998) (“Although plaintiff
did not move for summary judgment on forum non conveniens grounds, and the
court may not sua sponte invoke this basis for dismissal, . . . forum non conveniens
had been raised by plaintiff as an affirmative defense to the counterclaims and was
a clearly articulated motif of plaintiff’s arguments in the motion proceedings.”);
Imperial Imps. Co., 161 A.D.2d at 412 (forum non conveniens motion “invoked the
court’s authority to grant such relief in full or in part . . . irrespective of whether or
not [the third-party defendant] specifically sought a severance”); Shiboleth v.
30
Yerushalmi, 268 A.D.2d 300 (1st Dep’t 2000) (affirming forum non conveniens
dismissal of entire third-party action, even though not all defendants moved to
dismiss).
18
This is consistent with the plain language of CPLR 327 which permits
forum non conveniens dismissal “in whole or in part” on the motion of “any party.”
That is precisely what occurred here. Al Sanea made a motion to dismiss and, after
all parties had the opportunity to be heard on the issue, the Supreme Court
dismissed the action “in whole.” AHAB’s reliance on this Court’s decision in VSL
Corp. v. Dunes Hotels & Casinos, Inc., 70 N.Y.2d 948 (1988) is misplaced. VSL
Corp. simply held that, consistent with CPLR 327, “a motion” was required and
the Court could not “sua sponte” dismiss an action for forum non conveniens when
the issue had not been raised by “any party.”
AHAB’s assertion that despite filing no less than four briefs devoted
to forum non conveniens issues in the Supreme Court it never had a “full and fair
opportunity” to be heard on dismissal of the first-party claims in favor of UAE,
because Mashreq “offered no evidence concerning the ability of the UAE courts”
to hear the claims is baseless. AHAB Br. at 61. As the Supreme Court noted, the
18
Further, the dissenting Justices concluded that the dismissal was not sua sponte because
Mashreq joined in Al Sanea’s motion and supplemented the grounds on which Mashreq sought
dismissal of AHAB’s counterclaim. R. 1817-18, 1820 (September 25 Decision, Dissent).
Specifically, Mashreq indicated its willingness to have the issues between it and AHAB and its
partners resolved in the pending UAE proceeding where (unlike in New York), neither AHAB
nor its partners disputed the jurisdiction of the UAE courts.
31
dispute between Mashreq and AHAB was already being litigated in a parallel
proceeding in the UAE. R. 27 (July 26, 2010 Order). Mashreq was not required to
make any additional showing concerning the adequacy of the UAE forum. World
Point Trading PTE Ltd. v. Credito Italiano, 225 A.D.2d 153, 161 (1st Dep’t 1996)
(parallel action illustrates the “obvious availability of another forum”). If AHAB
had objections to the UAE forum it had multiple opportunities to raise them. Yet
AHAB has never articulated any objection to the UAE forum, including in its brief
before this Court. There are none.
Finally, AHAB’s suggestion that because “no party requested, and
Supreme Court did not consider . . . the dismissal of the first-party claims
separately from and independent of the third-party claim” the first-party action can
only be dismissed if the third-party action is dismissed is wrong. AHAB Br. at 52.
As explained above, once a party raises the issue of forum non conveniens the
Court has discretion to dismiss the action “in whole or in part,” CPLR 327(a), and
New York Courts regularly grant forum non conveniens relief that differs from the
precise relief requested in the motion papers. See, e.g., Imperial Imps. Co., 161
A.D.2d at 412 (forum non conveniens motion “invoked the court’s authority to
entertain the granting of such relief in full or in part, based upon any consideration
that might be just, irrespective of whether or not [movant] specifically sought”
such relief) (citing CPLR 327(a)); see also Banco Do Estado, 249 A.D.2d at 139.
32
III. MASHREQ IS AN AGGRIEVED PARTY WITHIN THE MEANING
OF CPLR 5511
Mashreq is an aggrieved party within the meaning of CPLR 5511.
The Appellate Division’s reversal of the Supreme Court’s forum non conveniens
dismissal reinstated claims between Mashreq and AHAB, including claims by
AHAB purporting to seek $2.5 billion from Mashreq. The Appellate Division’s
decision aggrieves Mashreq by, inter alia, reinstating claims that Mashreq moved
to dismiss and forcing Mashreq to engage in duplicative and unnecessary litigation
of issues that have already been resolved in the UAE proceeding.
The purpose of CPLR 5511 is to prevent parties who won or who
have no stake in the controversy from appealing. 8 Davies, N.Y. Prac. Series,
Civil Appellate Practice § 3.3 (2012). A party is “aggrieved” by an order where
the party “has a direct interest in the controversy which is affected by the result and
. . . the adjudication has a binding force against the rights, person or property of the
party . . . seeking to appeal.” State of New York v. Philip Morris, Inc., 61 A.D.3d
575, 578 (1st Dep’t 2009) (quoting Matter of Richmond Cnty Soc. for Prevention
of Cruelty to Children, 11 A.D. 2d 236, 239 (2d Dep’t 1960)), aff’d 9 N.Y.2d 913
(1961); Newman, New York Appellate Practice § 3.01[1] (same). Otherwise
stated, “a person is aggrieved when he or she asks for relief but that relief is denied
in whole or in part.” Mixon v. TBV, Inc., 76 A.D.3d 144, 156 (2d Dep’t 2010). A
party that does not obtain the full relief sought is an aggrieved party within the
33
meaning of CPLR § 5511. Parochial Bus Sys., Inc. v. Bd of Educ. of City of N.Y.,
60 N.Y.2d 539, 544-45 (1983). The Second Department has held that a defendant
was an “aggrieved” party “despite the fact that the relief it requested in the
alternative . . . was granted,” because “[t]he relief it clearly sought was dismissal of
the complaint . . . and the denial of so much of its motion as was for dismissal
involved a substantial right.” Scharlack v. Richmond Mem’l. Hosp., 127 A.D.2d
580 (2d Dep’t 1987) (citing Parochial Bus Sys. v. Bd. of Educ., 60 N.Y.2d at 539).
Mashreq is an aggrieved party because it has a direct interest in this
controversy and the Appellate Division’s reinstatement of these claims is binding
against it. Mashreq moved to dismiss AHAB’s claims, and eventually advocated
dismissal of all claims between Mashreq and AHAB in favor of the UAE
proceeding. The Appellate Division’s reversal of the forum non conveniens
dismissal aggrieves Mashreq because it forces Mashreq to relitigate duplicative
claims between itself and AHAB in New York – including defending against
AHAB’s counterclaim. See Strong v. Strong, 277 A.D.2d 533, 534 (3d Dep’t
2000) (a plaintiff “is an aggrieved party as to the adverse judgment rendered
against [it] on defendant’s counterclaims.”); Parochial Bus Sys., 60 N.Y.2d at 544-
45 (party aggrieved if it did not receive complete relief); Scharlack, 127 A.D.2d at
580 (same). Further proceedings in New York will result in unnecessary litigation
34
costs to Mashreq and create a risk that Mashreq may be subject to inconsistent
judgments.
New York courts take a practical approach to determining whether a
party requested relief and is aggrieved by its denial. See Small v. Suffolk Cnty.
Honda, 141 A.D.2d 448, 449 (1st Dep’t 1988) (plaintiff aggrieved by order that
technically granted the relief requested but as a practical matter failed to provide
any meaningful relief). In Voorhees v. Babcock & Wilcox Corp., 150 A.D.2d 677,
678 (2d Dep’t 1989), the appellant’s codefendant moved for a discretionary change
of venue. The appellant “did not make any cross motion,” but an affidavit of its
counsel supporting a previous motion for change of venue was annexed as an
exhibit to the codefendant’s motion, “and was thus before the court.” Under these
circumstances, the Court “consider[ed] the appellant to have joined in the
codefendant’s motion, and hence to have been aggrieved by the denial of this
motion.” This is consistent with New York courts’ general power to take a
practical, rather than formalistic, view of the issues before them. See CPLR 2001,
2211, 2214.
Here, there is no question that Mashreq’s dismissal request was before
the Supreme Court. All parties briefed the issue of whether the entire action –
including the claims between Mashreq and AHAB – should be dismissed for forum
non conveniens. Mashreq made a formal motion to dismiss AHAB’s counterclaim
35
for failure to state a claim and then subsequently sought dismissal of all claims
between Mashreq and AHAB for forum non conveniens. See Tooth v. Georgiou,
69 A.D.3d 464, 465 (1st Dep’t 2010) (affirming motion to dismiss defendant’s
counterclaim on forum non conveniens grounds when plaintiff was also seeking to
discontinue the whole action). Thus, even if the Appellate Division’s unduly
formalistic view that neither Mashreq nor Al Sanea moved for forum non
conveniens dismissal of the claims between Mashreq and AHAB (and
corresponding holding that the forum non conveniens dismissal was impermissibly
“sua sponte”) were correct – and it is not – that would not affect the “aggrieved
party” analysis, which looks to the practical realities of the circumstances.
CONCLUSION
In conclusion and based upon the foregoing, Mashreq respectfully
requests that the Court reverse the Appellate Division's September 25 Decision.
Dated: New York, New York
October 1, 2013
Of Counsel:
Liana Roza Vitale
Danielle J. Levine
Respectfully submitted,
CLEARY GOTTLIEB STEEN & HAMILTON
LLP ~
By: ____ -r~----~7-----------------
David . Brodskyi
Carmine D. Boccuzzi
One Liberty Plaza
New York, NY 10006
(212) 225-2000
Attorneys for Plaintiff-Appellant Mashreqbank PSC
36
New York County Clerk's Index Nos. 601650/09 & 590643/09
C!Court of ~peal~
~tate of ~etu ~ork
Case No. APL-2013-00007
MASHREQBANK PSC,
-against-
Plaintiff-Appellant,
AHMED HAMAD AL GOSAffii & BROTHERS COMPANY,
Defendant-Respondent
AHMED HAMAD AL GOSAffii & BROTHERS COMPANY,
Third-Party Plaintiff-Respondent,
-against-
MAAN ABDUL W AHEED AL SANEA
Third-Party Defendant-Appellant,
A WAL BANK Bsc,
Third-Party Defendant
AFFIRMATION OF SERVICE
Richard V. Conza, an attorney admitted to practice before the courts
ofthe State ofNew York, affirms under penalty of perjury, as follows:
That on the 30th day of September 2013, three true copies of the Reply
Brief for Plaintiff-Appellant Mashreqbank PSC are being served by Federal
Express, for overnight delivery upon:
David J. Molton
Brown Rudnick LLP
Seven Times Square
New York, NY 10036
Bruce R. Grace
Eric L. Lewis
Lewis Baach PLLC
1899 Pennsylvania Avenue, NW, Suite 600
Washington, DC 20006
Robert F. Serio
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Dated: New York, New York
September 30, 2013
2
~--~onza