APL-2013-00007 To Be Argued By:
CARMIN D. Boccuzzi
New York County Clerk's Index Nos. 60 1650/09 & 590643/09
njewb 19or 6uprrnnt Court
APPELLATE DIVISION-FIRST DEPARTMENT
Index No. 601650/09
MASHREQBANK PSC,
Plaintiff-Respondent,
-against-
AHMED HAMAD AL GoSAIBI & BROTHERS COMPANY,
Defendant-Appellant
Index No. 590643/09
AHMED HAMAD AL GoSAIBI & BROTHERS COMPANY,
Third -Party Plaintiff-Appellant,
--against-
MAAN ABDULWAHEED AL; SANEA
Third -Party Defendant-Respondent,
AWAL BANK Bsc,
Third -Party Defendant
BRIEF FOR PLAINTIFF-RESPONDENT MASHREQBANK, PSC
DAVID E. BRODSKY
CARMINE D. Boccuzz
CLEARY GOTTLIEB STEEN & HAMILTON LLP
One Liberty Plaza
New York, New York 10006
(212) 225-2000
cboccuzzi@cgsh.com
Attorneys for Plaintiff-Respondent Mashreqbank PSC
REPRODUCED ON RECYCLED PAPER
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ......................................................... 111
QUESTIONS PRESENTED ..........................................................
PRELIN41INARY STATEMENT .................................................... 2
STATEMENT OF THE CASE...................................................... 6
I. Factual Background and Proceedings Below ...................... 6
A. AHAB's Default on Foreign Currency Trades
with Mashreq.................................................... 6
B. The Actions Before the Supreme Court..................... 7
II. Litigation Currently Pending in UAE and
Other Jurisdictions......................................................11
III. Forum Non Conveniens Dismissal.................................. 14
ARGUMENT ......................................................................... 19
I. THE SUPREME COURT PROPERLY EXERCISED
ITS DISCRETION IN CONCLUDING THAT NEW
YORK IS AN INCONVENIENT FORUM FOR
RESOLUTION OF THE DISPUTES BETWEEN
AH-TAB AND) MASHREQ ............................................ 19
A. The UAE Is an Adequate Alternate Forum, Where
in Fact These Very Same Parties Are Litigating
This Very Same Dispute....................................... 20
B. This Case Would Burden New York Courts ............... 22
C. Duplicative Litigation in New York would be a
Hardship as All Parties are Non-Residents, and
Most Key Witnesses and Original Documents are
Located in the Middle East................................... 26
D. The Transactions Giving Rise to the Litigation
Occurred Primarily in UAE and Saudi Arabia............. 28
E. AHAB Seeks to Create a Rule, Unsupported By
Any Precedent, That Would Require New York
Courts To Hear Every Case Where A Foreigner
Alleges Misconduct Involving the Use of Bank
Accounts in New York ........................................ 29
II. THE SUPREME COURT HAD POWER AND
DISCRETION TO DISMISS ALL CLAIMS ..................... 34
CONCLUSION....................................................................... 39
TABLE OF AUTHORITIES
Page(s)
Rules and Statutes
CPLR 327 ............................................................................ passim
CPLR 1008 ............................................................................ 34
CPLR 2001 ............................................................................ 36
Cases
A&M Exports, Ltd. v. Meridien Int'l Bank, Ltd.,
207 A.D.2d 741 (1st Dep't 1994).................................................. 4, 23, 30
Abiaad v. Gen. Motors Corp.,
538 F. Supp. 537 (E.D. Pa. 1982) ................................................... 21
Banco Do Estado De Sao Paulo S.A. v. Mendes Jr. Int'l Co.,
249 A.D.2d 137 (1st Dep't 1998) .................................................. 35-36
Banco Nacional Ultramarino, S.A. v. Chan,
169 Misc. 2d 182 (Sup. Ct. N.Y. County 1996)................................... 32
Base Metal Trading SA v. Russian Aluminum,
253 F. Supp. 2d 681 (S.D.N.Y. 2003)............................................... 21
Citigrou Global Mkts. Inc. v. Metals Holding Corp.,
45 A.D.3d 3 61 (1 st Dep't 2007) ................................................... 4, 23, 28
Citigroup Global Mkts. Inc. v. Metals Holding Corn.,
820 N.Y.S.2d 84 1, No. 604205/05, 2006 WL 1594442 (Sup. Ct. N.Y.
County June 8, 2006)................................................................ 23, 29
Garmendia v. O'Neill,
46 A.D.3d 361 (1 st Dep't 2007) ..................................................... 33
George Cohen Agency, Inc. v. Donald S. Perlman Agency. Inc.,
51 N.Y.2d 358 (1980)................................................................. 35
Globalvest Mgzmt. Co. L.P. v. Citibank, N.A.,
7 Misc. 3d 1023(A) (Sup. Ct. N.Y. County 2005)................................ 30
Gryphon Domestic VI. LLC v. APP Int'l Fin. Co., B.V.,
41 A.D.3d 25 (1 Dep't 2007)....................................................... 20-2 1
Imperial Imps. Co., Inc. v. Hugo Neu & Sons, Inc.,
161 A.D.2d 411 (1lst Dep't 1990) .................................................. 34,36
In re Matthew Niko M.,
926 N.Y.S.2d 411 (1lst Dep't 2011)................................................. 38
In re Rezulin Prods. Liab. Litig.,
214 F. Supp. 2d 396 (S.D.N.Y. 2002)............................................... 27
loannides v. Marika Mar. Corp.,
928 F. Supp. 374 (S.D.N.Y. 1996) .................................................. 27
Islamic Republic of Iran v. Pahlavi,
62 N.Y.2d 474 (1984)............................................................... 17, 19,22
J. Zeevi & Sons. Ltd. v. Grindlays Bank (Ujganda) Ltd.,
37 N.Y.2d 220 (1975)................................................................. 32
Kearns v. Johnson,
655 N.Y.S.2d 498 (1 st Dep't 1997)................................................. 34
Kirschner v. KPMG LLP,'
15 N.Y.3d 446 (20 10) ................................................................. 9
Kohn v. City of New York,
69 A.D.3d 463 (1 st Dep't 2004) ..................................................... 38
Millicom Int'l Cellular S.A. v. Simon,
247 A.D.2d 223 (1lst Dep't 1998) .................................................. 29,31
Moscato v. City of New York (Parks Dep't),
183 A.D.2d 599 (1lst Dep't 1992).................................................... 35
Muniz v. Church of Our Lady of Mt. Carmel,
23 8 A.D.2d 10 1 (1 st Dep't 1997).................................................... 35
Nasser v. Nasser,
52 A.D.3d 306 (1st Dep't 2008) ..................................................... 23
Panetta v. Carroll,'
62 A.D.3d 10 10 (2d Dep't 2009).................................................... 38
Payne v. Jumneirah Hospitality & Leisure (USA), Inc.,
83 A.D.3d 518 (1st Dep't 2011)..................................................... 24
Phat Tan Nguyen v. Banque Jndosuez,
19 A.D.3d 292 (1st Dep't 2005) ..................................................... 33
Piper Aircraft Co. v. Reyno,
454 U.S. 235 (1981) .................................................................. 27
Schultz v. Boy Scouts of Am.,
65 N.Y.2d 189 (1985)................................................................. 24
Serano Ltd. v. Canadian Imperial Bank of Commerce,
287 A.D.2d 309 (1 st Dep't 2001).................................................... 23
Shiboleth v. Yerushalmi,
268 A.D.2d 3 00 (1 st Dep't 2000).................................................... 36
Shin-Etsu Chem. Co.. Ltd. v. 3033 ICICI Bank Ltd.,
9 A.D.3 d 171 (1 st Dep't 2004)..................................................... passim
Silver v. Great Am. Ins. Co.,
29 N.Y.2d 356 (1972)................................................................. 22
Smith v. Miller,
237 A.D.2d 294 (2d Dep't 1997).................................................... 35
Watts v. Swiss Bank Corp.,
27 N.Y.2d 270 (1970)................................................................. 28
Wells Fargo Asia Ltd. v. Citibank, N.A.,
936 F.2d 723 (2d Cir. 1991) ......................................................... 32
White Light Prods. v. On the Scene Prods.,
231 A.D.2d 90 (1st Dep't 1997) ..................................................... 33
World Point Trading PTE Ltd. v. Credito Italiano,
225 A.D.2d 153 (1 st Dep't 1996).................................................. 21-22, 29-30
Zaveri v. E.F. Hutton & Co.,
No. 85 Civ. 3268, 1986 WL 4063 (S.D.N.Y. Apr. 1, 1986)..................... 21
Other Authorities
McKinney's CPLR 1008 Practice Commentaries (2011)...................... 34-35
QUESTIONS PRESENTED
1. Did the Supreme Court act within its discretion when it
dismissed on grounds offorum non conveniens an action between a Dubai, UAE
bank and a Saudi partnership concerning conduct and relationships based in the
Middle East and involving foreign law, where the very claims before the Supreme
Court were then (and continue to be) the subject of a UAE litigation as well as
other litigation outside the United States?
2. Does a third-party defendant's motion to dismiss for forum non
conveniens give the Supreme Court power and discretion to dismiss the entire
action, i.e. both the first-party action (between the plaintiff UAE bank and the
defendant Saudi partnership) and the third-party action (between the Saudi
partnership and its Saudi managing agent)?
3. Is it correct to characterize as "sua sponte" the Supreme Court's
dismissal based on forum non conveniens where the third-party defendant made a
motion to dismiss pursuant to CPLR 327, all parties briefed and were heard on the
issue, and no party challenged Supreme Court's power to dismiss the entirety of
the action?
The Supreme Court answered the first two questions in the
affirmative, correctly dismissing these cases for forum non conveniens. The third
question should be answered in the negative.
PRELIMINARY STATEMENT
This is a case between and among residents of the Middle East
involving conduct that took place in three neighboring Middle Eastern countries -
the United Arab Emirates ("UAE"), Saudi Arabia and Bahrain. Plaintiff-
respondent Mashreqbank, PSC ("Mashreq") is a bank headquartered in Dubai,
UAE and defendant-appellant Ahmed Hamad Al Gosaibi & Brothers Company
("AHAB") is a Saudi Arabian general partnership consisting of 20 members of the
Saudi Arabian Al Gosaibi family. Third-party defendant-respondent Maan Al
Sanea was AHAB's agent in Saudi Arabia, charged and authorized until 2009 with
managing the partnership's financial businesses and affairs. Al Sanea is also the
in-law and neighbor of the individual AHAB partners. Like Al Sanea, the AHAB
partners all reside in Saudi Arabia (where many were and are currently under
government travel restrictions that prevent them from leaving Saudi Arabia),
except one partner who resides in Dubai. The claims in this action are governed by
the laws of UAE and Saudi Arabia, and the parties are already resolving the exact
issues raised here in litigation pending in their home jurisdictions and elsewhere.
Despite the overwhelming connection between this dispute and the
Middle East, AHAB seeks to have the Supreme Court'sforum non conveniens
dismissal reversed so that it can pursue its counterclaim against Mashreq here,
where AH-AB believes it will be at a procedural advantage. But there is no
question that the Supreme Court properly acted within its discretion in weighing
the traditional forum non conveniens factors and concluding that they
overwhelmingly favor the UAE forum for the disputes between Mashreq and
AHAB. UAE law applies to Mashreq's claim and AHAB's counterclaim,
numerous documents relevant to AHAB's defenses and counterclaim are in Arabic,
all parties are non-residents of New York, the majority of witnesses reside in the
UAE or neighboring countries, and the center of gravity for the transactions and
relationships at issue is the UAE and/or Saudi Arabia. The superiority of the UAE
forum is especially apparent now that the action between Mashreq, AHAB and the
AHAB partners has been proceeding there for over two years while this case
remained idle pending AHAB's perfection of this appeal. AHAB's attempt to
revive this action in this forum seeks to impose on New York courts the
unnecessary burden of adjudicating a wholly duplicative action, increasing the risk
of inconsistent judgments.
At bottom, AHAB is a defaulting creditor that owes over $9 billion to
more than one hundred banks around the world. Rather than dealing responsibly
with its obligations, AHAB has launched a worldwide litigation campaign against
its former authorized agent and business manager, Al Sanea, as well as any third-
party bank, like Mashreq, that seeks re-payment on AHAB's defaulted obligations.
As to such banks, AHAB makes the far-fetched assertion that the AHAB partners
3
were somehow wholly unaware of what their in-law and chosen manager was
doing in running AHAB's financial affairs, including that AHAB was entering into
financial transactions with many of the world's leading banks, and that many of the
banks, by contrast, were aware that Al Sanea was conducting a fraud. AHAB
concludes by arguing that Mashreq "assisted" the alleged fraud by providing
AH-AB 's authorized agent the "money to steal," i.e., the money due to Mashreq
that AH-AB never paid back. Leaving aside the frivolous nature of these
allegations, all of the issues AH-AB seeks to litigate here are grounded in the
Middle East, where AHAB, its partners, its agent Al Sanea, and Mashreq are
located and did business.
Recognizing the weakness of its argument that New York is a
convenient forum, AHAB seeks to impose artificial limits on the power of the
Supreme Court to dismiss based on forum non conveniens. For example, AHAB
contends that New York courts have an obligation to hear every case where a
foreigner alleges misconduct involving the use of bank accounts in New York -
notwithstanding the fact that any such rule has long been rejected. See, e.g.,
Citigroup Global Mkts. Inc. v. Metals Holding Corp., 45 A.D.3 d 3 61 (1 st Dep't
2007); A&M Exports, Ltd. v. Meridien Int'l Bank, Ltd., 207 A.D.2d 741 (1 st Dep't
1994). AHAB otherwise argues that the Supreme Court lacked the power to
dismiss the case between Mashreq and AHAB, because Al Sanea, the third-party
4
defendant, made the motion to dismiss for forum non conveniens. As an initial
matter, AHAB did not argue below that the Supreme Court lacked power to
dismiss the entire action and so this argument is waived. But even if the argument
is considered here, it is wrong. The plain language of CPLR 327 allows the court
to dismiss a case "in whole or in part" on the motion of "any party" - here, third-
party defendant Al Sanea moved to dismiss for forum non conveniens thereby
enabling the Supreme Court to dismiss the case before it "in whole," which it
properly did. The rule AHAB seeks to impose - that the Supreme Court is
powerless to dismiss the entirety of an action if the forum non conveniens motion
is made by a third party-defendant - is accordingly unsupported by the CPLR and
is otherwise inconsistent with the Supreme Court's broad discretion in resolving
forum non conveniens issues.
In these circumstances the forum non conveniens dismissal of the
entire action was well within the Supreme Court's discretion and should be
affirmed.
STATEMENT OF THE CASE
1. Factual Background and Proceedings Below
A. AHAB's Default on Foreign Currency Trades with Mashreq
This case is one of many actions stemming from the default of
AHAB, a Saudi Arabian general partnership, and its partners on more than nine
billion dollars owed to over one hundred banks worldwide. AHAB does business
worldwide, including in the UAE, Bahrain, Switzerland, and France.' Rather than
dealing responsibly with its defaulted obligations, AHAB and its partners have
adopted a two-pronged approach of (a) arguing that AHAB and its partners have
no liability to any of their more than one hundred counterparty banks because, in
AHAB's view, any and all AH-AB transactions were part of a massive fraud
orchestrated by AHAB's own agent Maan Al Sanea; and (b) pursuing claims
against Al Sanea in multiple jurisdictions around the world - including Saudi
Arabia, Bahrain, the Cayman Islands, the United Kingdom, and Switzerland.
Plaintiff Mashreq, headquartered in Dubai, UAE, has operations
worldwide, including a branch in New York City, and is one of the banks that
suffered damages as a result of AHAB's default. R. 50 (Compl. T 1).2 Mashreq
I See Ahmad Hamad Algosaibi & Bros., Major Investments & Equity Participations,
http://www.ahalgosaibi.com/major -investments.htm (last visited August 10, 2011) (Emirates
Can Co., Dubai, UAE; Gulf Agency Co., Dubai, UAE; United Paper Industries, Manama,
Bahrain; Dar Almaal Alislami, Geneva, Switerzerland; IFA Banque, Paris, France)
2 Mashreq's complaint is cited as "Compl.," AHAB's Answer is cited as "Answer,"
AHAB's counterclaim is cited as "CC," and AHAB's Third-Party Complaint is cited as "P.
6
and AHAB have had a commercial banking relationship for several years, pursuant
to a series of Facilities Letter Agreements. Over the course of the relationship,
Mashreq filled many banking needs for AHAB and its subsidiaries, including the
performance of foreign exchange transactions. R. 94, 97-9 8 (CC 21, 29).
On April 28, 2009, Mashreq, in satisfaction of its obligations under a
foreign exchange agreement (governed by UAE law) with AHAB, transferred $150
million to AHAB's account at Bank of America in New York. R. 94-95; R. 76-77;
R. 113 (CC 21La, 21.d; Answer 5-7; TPC 25); R. 1600 (June 16, 2008
Facilities Letter Agreement, Affirmation of Lisa Gouldy, Ex. A, Sept. 25, 2009 at
6) ("Sept 25, 2009 Gouldy Aff."). On May 5, 2009, the contractual date for
AH{AB's performance, AHAB failed to pay to Mashreq in its account in Saudi
Arabia the agreed-upon amount of Saudi Riyals. See R. 80-81 (Answer 19).
B. The Actions Before the Supreme Court
On May 27, 2009, Mashreq filed a complaint against Al-AB seeking
to recover payment on the defaulted foreign exchange transaction. See R. 49
(Compi.); R. 104 (TPC TT 1-2).~ Subsequently, on June 30, 2009, Mashreq
3 Mashreq also brought suit in New York against AH-AB's Bahrain subsidiary The
International Banking Corporation ("TIBC"), which defaulted on a similar transaction with
Mashreq in the amount of $75 million on May 11, 2009. See Mashreqbank PSC v. The Int'I
Banking Corp., BSC, No. 601616/2009 (BJF) (Sup. Ct. N.Y. County filed May 22, 2009). That
lawsuit however has been stayed as a result of TIBC's insolvency proceeding currently pending
in Bahrain, and the recognition of that proceeding by the United States Bankruptcy Court for the
Southern District of New York. See Order, Mashreqbank PSC v. The Int I Banking Corp., No.
601616/2009 (BJF) (Sup. Ct. N.Y. County filed Jan. 21, 2010). Prior to the issuance of the stay,
7
obtained an order of attachment against AHAB's assets in New York. Mashreq
filed a second lawsuit in the Supreme Court against the individual partners of
AHAB, because as general partners of a partnership, and guarantors of AHAB
obligations under a contractual guarantee, they are liable for the debts of the
partnership. R. 1749-1769 (AHAB partners Am. Compl.).4 Mashreq filed these
actions in New York because it expected that AHAB and its partners might have
assets in New York and the United States, including the $150 million that Mashreq
had paid into AiHAB's New York bank account. R. 1465. By the time Mashreq
brought suit AH-AB had already removed the funds from the account, and
Mashreq's investigations revealed that the AH-AB partners did not have any assets
in New York. Id.
On July 15, 2009, AHAB answered the Complaint, asserting a variety
of affirmative defenses, including lack of personal jurisdiction. R. 87 (Answer at
13). Even while contesting this Court's jurisdiction, AHAB filed the Third-Party
Complaint against its authorized manager and agent, Maan Al Sanea, alleging that
TIBC was seeking dismissal of the New York action on the basis that the New York state courts
lacked personal jurisdiction over it, an issue not decided given the stay.
4 On July 29, 2011 Mashreq moved to supplement the record with certain relevant
documents that were before the court below or are otherwise subject to judicial notice. The
motion was unopposed by AHAB and Al Sanea. See Stipulation filed with the Court on August
4, 2011. The supplemental record filed herewith consists of pages R. 1587 to R. 1791.
8
he had engaged in a "scheme to loot" AHAB. R. 105-06 (TPC 4, 8).5 AHAB
and its partners maintain, incredibly, that Al Sanea - who, in addition to having
been their authorized managing agent for years was also their in-law and neighbor
- borrowed nine billion dollars in AH-AB's name from over one hundred banks
around the world, all without the AHAB partners' knowledge or approval. R. 105-
06 (TPC TT 4, 8). In addition to the Third-Party Complaint, AHAB filed a
Counterclaim against Mashreq based on a vague and implausible theory that
Mashreq somehow aided and abetted Al Sanea's alleged misconduct by providing
him with "money to steal" (Mashreq's own) when it entered into the foreign
currency transaction defaulted on by AHAB.
As demonstrated by Mashreq in its motion to dismiss the
Counterclaim for failure to state a claim (a motion rendered moot by the Supreme
Court's dismissal on forum non conveniens), the Counterclaim fails to state a claim
under both UAE and New York law. See Mem. of Law in Supp. of Mot. to
Dismiss Countercl. of Def. Pursuant to CPLR 321 l(a)(7).6 In the context of
5 AHAB also asserted third-party claims against Awal Bank, a Bahraini entity "owned and
controlled by Al Sanea." R. 114. Like TIBC, Awal Bank is currently in administration in
Bahrain due to its insolvency, and AHAB's claims against Awal Bank were stayed as a result of
the United States Bankruptcy Court for the Southern District of New York granting recognition
to the Bahraini proceeding. R.258-60 (October 28, 2009 Order recognizing the Bahraini
administration as a foreign main proceeding under Chapter 15).
6 AHAB appears to concede its failure to state a claim under UAE law, see AHAB Br. at
20, and AHAB's failure to state a claim under New York law is further shown by the Court of
Appeal's October 2010 decision in Kirschner v. KPMG LLP, 15 N.Y.3 d 446 (20 10) (in pari
delicto doctrine bars companies from asserting claims against third parties for allegedly aiding
9
Mashreq's claims against the individual partners, which the AHAB partners
improperly sought to dismiss based on their claim that the various guarantees and
other corporate documents signed by Gosaibi partners were forged, Mashreq put
before the Court materials showing the absurdity of the allegations, including:
The annual reports of SAMBA (a large bank in Saudi Arabia)
for the years 2000 through 2002 prominently featuring a full-
page photograph and signed Chairmnan's statement by the
AHAB partner who AHAB and its partners claim was too ill
during the same time period to sign documents relied on by
Mashreq. R. 16 10-1748 (Affirmation of Lisa Gouldy in Opp. to
all Defs.' (Except Sana Abdel Aziz Hamad Agosaibi) Mot. to
Dismiss Pl.'s Verified First Am. Compl., Exs. C, D, and E,
Mashreqbank PSC v. Hamad Algosaibi, No. 602171/2009
(RBL) (Sup. Ct. N.Y. Cnty. Oct. 3 0, 2009) ("Oct. 3 0, 2009
Gouldy Aff.")).
and abetting fraud committed by company's agents). In the context of litigation currently
pending in London among AHAB, its partners and other third-party lending banks, AHAB and
the partners have now acknowledged that they were not wholly ignorant of, but were in fact
aware of, borrowing being overseen by Al Sanea. See, e.g., R. 1779 at 153:8-15 (Tr. of London
Proceedings Day 2); R. 1778-1779 at 152:22-153:3 (Tr. of London Proceedings Day 2).
10
*Statements in the press made by the same allegedly ill AHAB
partner. R. 1604-1609 (Oct. 30, 2009 Gouldy Aff., Exs. A and
B).
In light of the Supreme Court's dismissal of the AHAB partners action for forum
non convenlens, the court did not need to reach these issues. While AHAB
continues to assert on this appeal the unsupported contention that New York is the
6only" single forum where all parties to these disputes can litigate, AHAB Br. at
39, see also AHAB Br. at 15, it nowhere in its brief before this Court criticizes the
parallelforum non conveniens dismissal of the action against the individual Al-AB
partners.
11. Litigzation Currently Pending In UAE and Other Jurisdictions
On July 8, 2009, Mashreq filed a complaint in the UAE against
AHAB and the AH-AB partners seeking to recover payment on the totality of
AHAB's defaulted bilateral obligations to Mashreq. R. 1354 (Mar. 9, 2010
Gouldy Aff. Ex. C (Statement of Claim in UAE Action)). In the UAE action,
Mashreq seeks 1.4 billion UAE Dirhamns, or approximately $400 million. Id. The
recovery sought in the UAE litigation includes the amounts owed on the defaulted
foreign exchange transaction with AHAB that is the subject of the New York
actions against AH-AB and the AHAB partners, as well as amounts owed by
AHAB to Mashreq on other banking facilities. R. 26 (Order, July 26, 2010 ("July
11
26 Order")). Unlike in New York, neither AHAB nor its partners disputed the
jurisdiction of the UAE courts.7 R. 1365 (Mar. 9, 2010 Gouldy Aff. Ex. D
(Answer in UAE action - no defense based on lack of personal jurisdiction
asserted by AHAB or Al-AB partners)).
The UAE court is addressing the very same issues raised in this case,
based on the same underlying facts. Masbreq seeks judgment based on AHAB's
default on the foreign exchange transactions and other banking facilities and
AHAB and its partners assert the same defenses in the UAIE case as here - the
alleged fraud and forgeries by their agent Al Sanea. R. 1785-179 1 (UAE Docket);
R. 13 65 (Mar. 9, 20 10 Gouldy Aff. Ex. D (Answer in UAE action)). As in this
case, Al-AB seeks to implead its agent Al Sanea. R. 1788 (UAE Docket) (Nov.
25, 2010 entry concerning fee for interlocutory application motion and
summoning).
While the present action sat idle for over a year because AHAB
waited until the last possible day to perfect its appeal, the UAE case has gone
forward. The parties have presented their merits cases, the UAE Court has
7 After this case was dismissed, AHAB made a belated attempt to contest jurisdiction in
the UAE and the issue is currently before the UAE court. Apparently AHAB's position (like that
of its partners) is that it should be able to pursue claims worldwide, while at the same time
reserving the right to assert that counterparty banks cannot pursue claims against it except in
forums of its choosing. In any event, this objection is frivolous because, among other reasons,
AHAB does business in the UAE, see n.lI supra, AHAB consented to the jurisdiction of the UAE
courts in the applicable Facilities Letter Agreement, R. 1600 (June 16, 2008 Facilities Letter
Agreement, Sept 25, 2009 Gouldy Aff. Ex. A at 6), two of the AHAB partners own property in
Dubai, and AHAB failed to timely raise this defense in compliance with the proper procedures.
12
appointed an expert to consider the issues, and the expert has submitted a report.
R. 1788-1789 (UAE Docket). The UAE Court has referred the matter of the
alleged forgeries to the forensics laboratory department of the police headquarters
in Dubai, UAE. R. 1789 (UAE Docket).
AHAB is also litigating the same issues concerning Al Sanea's
alleged forgeries and fraud in jurisdictions all over the world, including Saudi
Arabia, Bahrain, London, Switzerland and the Cayman Islands. R. 27 (July 26
Order). The London proceedings include actions against AHAB and its partners
brought by similarly-situated banks, which have resulted in judgment for the banks
after AHAB withdrew its spurious defenses. Of relevance to this appeal, are
record admissions in these proceedings by AHAB, of which this Court may take
judicial notice, that further confirm the correctness of the Supreme Court's
dismissal decision here and contradict AHAB's assertions in this Court that New
York is a convenient forum for these disputes:
*Contrary to AHAB's assertion here that "[e]very single
document that matters in this case is in English," R. 1479:9-10
(Mar. 25, 2010 Hr'g Tr. ("Mar. 25 Hr'g Tr.")), in London
AHAB's counsel explained that "[a] vast amount of the
documentation [relevant to AHAB and its banking
relationships] was in Arabic and we have had six agencies of
13
translators working on the documentation." See R. 1782 at
99:4-7 (Tr. of London Proceedings Day 3) (explaining AHAB's
delay in producing documents and witness statements).
Contrary to AHAB's assertion here that "[a]lII of the key
witnesses . .. speak English; many of them speak it
exclusively," AHAB Br. at 15, AHAB's London counsel also
admitted that witnesses would testify in Arabic using
interpreters. See R. 1784 at 145:1-5 (Tr. of London
Proceedings Day 3) (explaining arrangements for "more than
one interpreter, because there will have to be shifts"); see also
id. at 145:1 1- 17 (uncontested statement by plaintiffs' counsel
that AH-AB's Managing Director Saad Al Gosaibi might testify
in Arabic)
111. Forum Non Conveniens Dismissal
On October 30, 2009, Al Sanea, the third-party defendant in the case
between Mashreq and AHAB, filed a motion to dismiss for forum non conveniens.
R. 65 (Not. of Mot. to Dismiss the Third-Party Compl.). Al Sanea cited as the
basis for the motion, inter alia, the facts that none of the parties resides in New
York, the key events occurred in the Middle East, dismissal would serve the
convenience of the parties and witnesses, the case would burden the New York
14
court, including by requiring it to interpret Saudi law, and AHAB was already
seeking relief in an alternate available forum. See Al Sanea Mem. of Law in Supp.
of Mot. to Dismiss Third-Party Compl.
At a January 5, 20 10 hearing, the Supreme Court unambiguously
indicated to the parties its understanding that Al Sanea's motion gave it the power
and discretion to dismiss the entire action. R. 659:4-7 (Jan. 5, 2010 Hr'g Tr.)
(Supreme Court addressing Mashreq's counsel: "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. All right?"); see also id. R. 653:22-25
("Would you all agree that the motion -- if the motion to dismiss for forum non
conveniens has, shall we say, legs, it affects everything else?"). All parties briefed
the forum non conveniens issue with respect to both the first and third-party
actions. Mashreq Mem. on FNC; Third-Party Def. Maan Abdul Wahed Al Sanea's
Reply Mem. of Law in Supp. of Mot. to Dismiss the Third-Party Compl. at 2 ("Al
Sanea FNC Reply"); Ahmad Hamad Al Gosaibi & Bros. Co.'s Resp. to
Mashreqbank's PSC's Mem. of Law in Connection with Mot. by Third-Party Def.
Maan Al Sanea to Dismiss the Third-Party Compl. on Grounds of Forum Non
Conveniens ("Mar. 18, 2010 AHAB Reply"); Reply Mem. of Law in Connection
with Mot. by Third-Party Def. Maan Al Sanea to Dismiss the Third-Party Compl.
on Grounds of Forum Non Conveniens ("Mashreq FNC Reply"). Both Al Sanea
15
and Mashreq made clear in their briefing and at oral argument their understanding
that the Supreme Court had the power to dismiss the entirety of the action and
AHAB never challenged those statements. See Al Sanea FNC Reply at 2 ("this
Court can dismiss the entire case (including Mashreq's action) in light of Mr. Al-
Sanea's forum motion") (citing cases); id. at 8 ("Mashreq's action itself could be
litigated in more convenient fora, such as Saudi Arabia or the UAE and, thus,
should be dismissed."); R. 145 9: 10-11 (Mar. 25 Hr'g Tr") (statement by Counsel
for Al Sanea that the Court "would be well founded to dismiss the entire thing");
Mashreq FNC Reply at 3.
At the hearing on the forum non conveniens motion the Supreme
Court again advised counsel for AHAB that "there's two parts here to that
application, you understand. One is for [Al Sanea] to be cut out. And for the
underlying case to continue. The other is for me to considerforum non conveniens
as to everybody." R. 1474:13-20 (Mar. 25 Hr'g Tr.); see also id. R. 1473:16-19
(Mar. 25 Hr'g Tr.) ("Do you oppose the forum non conveniens motion with regard
to the third-party defendant, as opposed to the application that's being made for the
entire case to be shipped?"). While AHAB expressed its opposition to any type of
dismissal because in its view New York was the proper forum for the entirety of
the dispute, it never challenged the Supreme Court's understanding that it had the
power to dismiss the entire action.
On July 26, 2010 the Supreme Court issued a decision properly
applying the factors set out by the Court of Appeals in Islamic Republic of Iran v.
Pahlavi, 62 N.Y.2d 474 (1984) and dismissing the entire action. R. 23-27 (July 26
Order). The Supreme Court found that
"the travel restrictions in place in Saudi Arabia mean that Al Sanea
and all but one of the AHAB partners are currently unable to travel to
the U.S. The large majority of witnesses are located in Bahrain, UAE,
... or Saudi Arabia. Although the alleged fraud may have taken place
with use of banks in New York the alleged fraudulent activities
occurred in Sandi Arabia . .. and the issue as to whether or not Al
Sanea was authorized to do what he did are questions to be resolved
based on evidence and documents in those nations. .. . Furthermore,
several alternative locations are available to resolve the disputes, and
indeed, AHAB has already commenced a number of actions against
Al Sanea in various countries." R. 24.
As the Supreme Court found, "these factors all favor[ed] granting the FNC
motion." Id. In addition, the Supreme Court noted the need to apply Saudi law to
"relations between AHAB and Al Sanea." Id.
As for the claims between Mashreq and AHAB and its partners, the
Supreme Court found that the "agreements with Mashreqbank regarding the
currency exchanges state that they are governed by UAE law and provide for the
jurisdiction of UAE courts," leading it to conclude that New York is not the
appropriate forum for these actions. R. 24-25 (citing cases). The Supreme Court
also found that "Mashreqbank has commenced litigation in the UAE that includes
and encompasses the alleged damages and breaches" in the New York action, and
the resulting "risk of duplication of effort, as well as inconsistent rulings by courts
of different jurisdictions" weighed in favor of dismissal. R. 26-27 (citing World
Point Trading PTE. v. Credito Italiano, 225 A.D.2d 15 3, 161 (1 st Dep't 1996)).
Finally, the Supreme Court held that the deference usually afforded a plaintiff s
choice of forum was not implicated here, given the willingness of Mashreq, the
plaintiff, to have the case dismissed in favor of UAE. R. 26.
In the UAE action, as of the date of theforum non conveniens
dismissal, AHAB and its partners had answered the complaint and were litigating
that action, the existence of which was noted by the Supreme Court. R. 26 (July 26
Order); R. 13 65 (Mar. 9, 20 10 Gouldy Aff. Ex. D (Answer in UAE action - no
defense based on lack of personal jurisdiction asserted by AHAB or AHAB
partners)). This was in contrast to New York, where, notwithstanding its
arguments that New York was the one forum where the entirety of this dispute
could be litigated, see AHAB Br. at 22, the AHAB partners resisted the assertion
of New York jurisdiction over them. See AHAB partners Motion to Dismiss; R.
1476:17-26 (Mar. 25 H-r'g Tr.) (arguing that Mashreq's action against the AHAB
partners could not be heard in New York and "has nothing to do with the Mashreq
v. AHAB case"). As observed by the Supreme Court, the AH4AB partners'
resistance to the jurisdiction of New York "suggests to [the Court] that there's
some merit" to a forum non conveniens dismissal. R. 1475:18-1476:12 (Mar. 25
18
H~r'g Tr. ("Cyou are asserting jurisdictional grounds on the one hand against the
plaintiffs, but you don't concede that in fact, this is not the proper forum."). 8
Throughout the nine-month period during which AHAB waited to perfect the
current appeal the UAE action has been ongoing. R. 1785-1791 (UAE Docket).
Mashreq is also litigating against Al Sanea in UAE based on other banking
facilities.
ARGUMENT
I. THE SUPREME COURT PROPERLY EXERCISED ITS
DISCRETION IN CONCLUDING THAT NEW YORK IS AN
INCONVENIENT FORUM FOR RESOLUTION OF THE
DISPUTES BETWEEN AHAB AND MASHREQ
In Islamic Republic of Iran v. Pahiavi, 62 N.Y.2d 474, 481 (1984) the
Court of Appeals set out factors to be considered in resolving a forum non
conveniens motion: the availability of an alternative forum, the burden on the New
York courts, that both parties to the action are non-residents, that the transaction
out of which the cause of action arose occurred primarily in a foreign jurisdiction,
and the potential hardship to the defendant. No one factor is controlling. Id. As
the Supreme Court properly concluded, each of these factors weighs in favor of
dismissal.
8 In addition, while AHAB argues that Saudi Arabia is an inappropriate forum for disputes
concerning its obligations to Mashreq, AHAB Br. at 28, 32, the AHAB partners have argued that
they have no liability for the very same obligations unless and until Mashreq first obtains a
judgment against AHAB from a commercial tribunal in Saudi Arabia. AHAB partners Motion
to Dismiss at 11-13.
19
A. The UAE Is an Adequate Alternate Forum, Where in Fact These
Very Same Parties Are Litigating This Very Same Dispute
The UAE is an indisputably adequate alternative forum. 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.3 d 25, 3 7(1 Dep't 2007)
(citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n. 22 (198 1); Shin-Etsu
Chem. Co., Ltd. v. 3033 ICICI Bank Ltd., 9 A.D.3 d 171, 179 (1lst Dep't 2004)
(lower court erroneously deniedforum non conveniens motion based on finding
that India was an inadequate alternate forum, where "it is undisputed that
[defendant] can be sued in India and that its courts permit litigation of letter of
credit disputes").
Both requirements are satisfied here. AHAB is amenable to process
in the UAE, where AHAB does business and has consented to jurisdiction, and
where both AHAB and its partners are already litigating with Mashreq. See n. 1,
supra; R. 1600 (June 16, 2008 Facilities Letter Agreement, Sept 25, 2009 Gouldy
Aff. Ex. A at 6); R. 13 54 (Mar. 9, 20 10 Gouldy Aff. Ex. C (Statement of Claim in
UAE Action)); R. 13 65 (Mar. 9, 2010 Gouldy Aff. Ex. D (Answer in UAE action);
R. 1785-179 1 (UAiE Docket). As the Supreme Court properly held, "[tlhe UAE is
the more appropriate forum for determination of the primary actions, and they will
be decided in the case that Mashreqbank has already commenced there." R. 27
20
(July 26 Order).9 See also World Point Trading PTE Ltd. v. Credito Italiano, 225
A.D.2d 153, 161 (1 st Dep't 1996) (parallel action illustrates the "obvious
availability of another forum").
AHAB has no grounds for upsetting the Supreme Court's conclusion
that UAE is an available, adequate forum. AHAB asserts, as to its counterclaim,
"[tjhe only evidence was that the counterclaim could not be adjudicated in the
UAE." AHAB Br. at 28. This is a misstatement of the record and the law. The
affidavit concerning UAE law submitted by Mashreq below demonstrated that
UAE courts do hear claims such as those asserted by AHAB, but that AHAB's
Counterclaim failed to state a claim under UAE law Ojust as it failed to state a
claim under New York law). R. 1587-1594 (Al Hashimi Aff.). That does not
mean UAE is "unavailable" as a forum. Gryphon Domestic VI, LLC, 41 A.D.3d at
37 (citation omitted) (forum is adequate when its courts generally permit litigation
of the subject matter of the dispute); Shin-Etsu Chem. Co., Ltd, 9 A.D.3d at 179
(same).'10 Accepting AHAB's logic would mean that an alternative forum is
9 In Zaveri v. E.F Hutton & Co., No. 85 Civ. 3268, 1986 WL 4063 (S.D.N.Y. Apr. 1,
1986), the court dismissed the case in favor of related litigation between the same parties already
pending in Dubai. The court rejected arguments that Dubai was an inadequate forum because the
plaintiff would be unable to "literally pursue" certain statutory claims, noting that he could
present "the essence of his position - fraud" and that the "claims of fraud. ... which are the basis
of the action in the federal court in New York, could be presented as defenses or counterclaims
in the Dubai action." Id. at **1 2. See also Abiaad v. Gen. Motors Corp., 538 F. Supp. 537
(E.D. Pa. 1982) (grantingforum non conveniens dismissal in favor of UAE).
10 See also Base Metal Trading SA v. Russian Aluminum, 253 F. Supp. 2d 681, 702-03
(S.D.N.Y. 2003) (rejecting argument that Russian courts were not an adequate forum because
21
"available" only if the party asserting claims is guaranteed to prevail on its claims.
That is clearly not the law. In any event, the alleged forgery issues raised by
AHAB's Counterclaim are in fact being litigated in the ongoing UAE proceeding,
with the allegedly forged documents having been referred by the UAE court to a
forensics expert. R. 1785-1791 (UAE Docket).
Finally, the subject matter of the Counterclaim - the relationship
among AHAB, its Saudi partners and their authorized agent Al Sanea, is so
grounded in the Middle East, and has such an attenuated connection to New York,
that a dismissal based on forum non conveniens would be appropriate even in the
absence of an adequate alternate forum. Pahlavi, 62 N.Y.2d at 484; see also Silver
v. Great Am. Ins. Co., 29 N.Y.2d 35 6, 3 61 (1972) ("courts should not be under any
compulsion to add to their heavy burdens by accepting jurisdiction of a cause of
action having no substantial nexus with New York").
B. This Case Would Burden New York Courts
Given the UAE litigation, this case would impose a significant burden
on the New York courts in the form of a "duplication of effort," presenting "the
attendant risk that conflicting rulings might be issued by courts of two
jurisdictions." World Point Trading, 225 A.D.2d at 161 ("factors that militate
"previously issued decisions of the Russian courts will prevent any availability for relief in this
case because those actions must be overturned to obtain relief' noting that "this is a curious
argumnent because this Court would also owe deference to decisions of foreign courts..
22
against retaining suit in New York [included] the burden the litigation would
impose on the courts of this State because of the multiplicity of actions");
Citigroup Global Mkts. Inc. v. Metals Holding Corp., 820 N.Y.S.2d 841 (Table),
No. 604205/05, 2006 WL 15 94442, at * 6 (Sup. Ct. N.Y. County June 8, 2006)
(related litigation pending in a foreign jurisdiction would place undue burden on
New York courts and risk inconsistent results), aff'd, 45 A.D.3d 3 61, 3 62 (1 st
Dep't 2007) (dismissal is proper when "the very issue that is already being litigated
abroad" underlies the New York action, and thus "there is a risk of conflicting
rulings"); A&M Exports, Ltd. v. Meridien Int'l Bank, Ltd., 207 A.D.2d 741 (1 st
Dep't 1994); Serano Ltd. v. Canadian Imperial Bank of Commerce, 287 A.D.2d
309 (1 st Dep't 2001) (noting that "the Taiwanese courts have already litigated the
parties' claims").'" This is even more true now than it was when the case was
dismissed over one year ago, because the UAE action has advanced as this case
remained inactive while Al-AB waited until the last possible day to perfect the
present appeal.
Moreover, this case would impose on the New York courts the burden
of determining and applying foreign laws. The choice of law clause in the relevant
agreement requires the application of UAE law to Mashreq's claims against AHAB
11See also Nasser v. Nasser, 52 A.D.3d 306, 308 (1 st Dep't 2008) (forum non conveniens
dismissal was called for because "requiring the parties to litigate in the context of the Brazilian
action the claims asserted by [plaintiff] in her New York action avoids the possibility that the
Brazilian and New York courts will issue inconsistent findings") (citation omitted).
23
and New York choice of law rules dictate that AHAB's counterclaims against
Mashreq must also be analyzed under UAE law. R. 1600 (June 16, 2008 Facilities
Letter Agreement, Sept 25 Gouldy Aff., Ex. A, at 6); Schultz v. Boy Scouts ofAm.,
65 N.Y.2d 189 (1985) (performing interest analysis and holding that New-Jersey
law applied to alleged tortious conduct in New York by New Jersey resident when
parties' relationship was centered in New Jersey). And AH-AB's relationship with
its agent Al Sanea is governed by the law of Saudi Arabia. R. 24 (July 26 Order).
It will be burdensome for the New York court to apply these foreign laws. Id.
(citing Fox v. Fusco, 4 A.D.3d 313, 313 (1st Dep't 2004) ("the need to apply
foreign law is an appropriate concern on a forum non conveniens motion")
(citations omitted)); Payne v. Jumeirah Hospitality & Leisure (USA), Inc., 83
A.D.3 d 518, 519 (1 st Dep't 2011) ("dismissal was warranted since ... litigating
the matter in New York would involve the applicability of foreign law") (citing
Shin-Etsu Chem., 9 A.D.3d at 178).
The litigation practicalities further support the Supreme Court's
conclusion that litigation here would unduly burden the parties as well as the court.
As AH-AB's attorney admitted in a similar proceeding brought by others banks
against AHAB in London (and in contrast with statements by AHAB in this
appeal): "A vast amount of the documentation was in Arabic and we have had six
agencies of translators working on the documentation." See R. 1782 at 99:4-6 (Tr.
24
of London Proceedings Day 3) (explaining AH-AB's delay in producing documents
and witness statements).'12 The documents referenced in the London proceeding
were said to show the AHAB partners' knowledge of Al Sanea's borrowing and
the Bank of America account they here claim to know nothing about. See R. 1773
at 105:17-25 (Tr. of London Proceedings Day 1). Such documents would be
critical both to the third-party action here between AHAB and Al Sanea as well as
to AHAB's purported defense to Mashreq's claim and its counterclaim, all of
which are based on the assertion that the AHAB partners knew nothing about their
own partnership's extensive borrowing.'13 Also in contrast to AHAB's assertions
here that all testimony could easily be taken in English, AHAB's London counsel
acknowledged that "more than one interpreter" would be needed because AHAB
12 Cf R. 1479:9- 10 (Mar. 25 Hr'g Tr.) (Counsel for AHAB in New York stating that
"[je]very single document that matters in this case is in English."). This revelation by AHAB
counsel to the London court occurred in the context of the discovery in the "cupboard" of
AHAB's current Managing Director, Saud Al Gosaibi, of many documents relevant to the
AHAB partners' knowledge of AHAB's borrowing. R. 1781 at 94:23-95:7 (Tr. of London
Proceedings Day 3) (MR. JUSTICE FLAUX: . .. a large number of investigation team, who
are part of a forensic accounting team on the one hand, together with a number of representatives
of your instructing solicitors on the other, and I am expected to believe that between them they
are unable to explain what the provenance of these documents is.... It just beggars belief.").
13 See also R. 1771 at 30:23-25 (Tr. of London Proceedings Day 1) (correspondence with
auditors in Arabic); R. 1772 at 60:23-24 (Tr. of London Proceedings Day 1) ("Again, it is an
Arabic document which has been translated."); R. 1774 at 2:19-21, 3:1-3 (Tr. of London
Proceedings Day 2) (plaintiff "banks were served by the AHAB defendants with a 400 page
Arabic version of the Bahraini public prosecutor's report [concerning TIBC]." The English
translation, however, was not yet available.); R. 1775 at 5:2-20 (Tr. of London Proceedings Day
2).
witnesses would testify in Arabic. See R. 1784 at 145:1-17 (Tr. of London
Proceedings Day 3).
C Duplicative Litigation in New York would be a Hardship as All
Parties are Non-Residents, and Most Key Witnesses and
Original Documents are Located in the Middle East
Allowing duplicative litigation to proceed in New York would
similarly impose hardship on the parties, further supporting affirmance. 14 Both
Mashreq and AH{AB are non-residents. Mashreq is headquartered in UAE and the
relationship with AHAB was handled entirely by the main office in Dubai. All of
the Mashreq employees with relevant testimony are located in the UAE or the
Middle East. AHAB's assertion that Bank of America employees in New York
have "highly relevant testimony" is inaccurate. AHAB Br. at 40. It is undisputed
that Mashreq paid the money into AHAB's Bank of America account in New York.
BOA's involvement was ministerial and its testimony will have minimal (if any)
importance to this case.
The AHAB partners and Al Sanea are located in Saudi Arabia and are
subject to travel bans which do not permit them to leave the country. Most of the
other witnesses identified by AHAB and Al Sanea are in Saudi Arabia or nearby in
other Middle Eastern countries. R. 24 (July 26 Order). Relevant documents are
14 AHAB is the defendant for purposes of the Mashreq's claim, and Mashreq is situated as
defendant with respect to AHAB's counterclaim so the hardship to both parties should be
considered.
26
also located in the Middle East at Mashreq's Dubai headquarters and at AHAB's
headquarters in Al Khobar, Saudi Arabia. R. 1783 at 107:14-15 (Tr. of London
Proceedings Day 3) (statement by AHAB's London counsel in response to court's
request to see the originals that "the originals are in Alkhobar," Saudi Arabia).
Many original documents have already been lodged with the Dubai court in
connection with the proceeding there. See R. 1785-1791 (UAE Docket). The
hardships involved in transporting these witnesses and documents half-way across
the world for a trial in New York are exacerbated by the duplicative nature of this
action. It is a burden on all parties Ojust as it is a burden on New York courts) to
expend additional resources relitigating here the very same issues that are already
being litigated in more convenient jurisdictions.
To the extent AHAB suggests that litigating in the UAE is a hardship
because AHAB perceives it has some advantage under New York law, this is not a
factor in the forum non conveniens analysis. In re Rezulin Prods. Liab. Litig., 214
F. Supp. 2d 396, 400 (S.D.N.Y. 2002) ("[P]laintiff seeks to justify litigating here in
part by noting that Canada does not permit punitive damages ... a point
immaterial to the forum non conveniens analysis but one that underscores the fact
that plaintiff s suit here is the product of forum shopping.",)' 5 In any event,
15 Piper Aircraft Co. v. Reyno, 454 U.S. 235 (198 1); loannides v. Marika Mar. Corp., 928
F. Supp. 374, 378 (S.D.N.Y. 1996) (fact that United States court provided more liberal attitudes
toward damages than Greece was not entitled to substantial weight in forum non conveniens
27
AHAB's argument that its partners' inability to give live testimony in New York
does not matter because their testimony may be given little weight in a foreign
proceeding misses the point - in such a proceeding all parties would be situated
equally, while in New York Mashreq will be seriously disadvantaged if it is forced
to cross-examine these key witnesses via videoconference.
D. The Transactions Giving Rise to the Litigation Occurred
Primarily in UAE and Saudi Arabia
The transaction out of which Masbreq's cause of action arose
occurred primarily in a foreign jurisdiction - the only link to New York is that one
leg of the transaction defaulted on by AH-AB was paid by Mashreq into AHAB's
New York bank account. R. 51-52 (Compl. 5-7). All of the relevant and
disputed acts, including the agreement to enter into the transaction, any interactions
between Mashreq and AH-AB or Al Sanea, and any alleged fraud, took place in the
UAE or Saudi Arabia. See, e.g., Citigroup Global Mlkts. Inc. v. Metals Holding
Corp., 45 A.D.3d 361, 362 (1st Dep't 2007) (action "lacks a substantial connection
to New York, as it primarily concerns the disputed ownership by ... a foreign
national and a foreign corporation, respectively, of assets in an investment account
that is the subject of extensive litigation in forums outside New York State.
Furthermore, the .. . action cannot be determined without reference to the
analysis). As to substantive law, it is also incorrect as a factual matter because New York choice
of law rules direct that UAE law applies, and a New York court would also owe deference to the
UAE court's decisions in the parallel proceeding. Watts v. Swiss Bank Corp., 27 N.Y.2d 270,
278-79 (1970).
28
underlying issue of ownership-the very issue that is already being litigated
abroad."); World Point Trading, 225 A.D.2d 153, 160-161 (1 st Dep't 1996)
("Among the factors that militate against retaining suit in New York are the foreign
residence of the pertinent parties, the foreign locus of the asserted breach, the
pendency of an action in Italy and the burden the litigation would impose on the
courts of this State because of the multiplicity of actions"); Millicom Int'l Cellular
S.A. v. Simon, 247 A.D.2d 223, 223 (1 st Dep't 1998) (forum non conveniens
dismissal proper "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).
E. AHAB Seeks to Create a Rule, Unsupported By Any Precedent,
That Would Require New York Courts To Hear Every Case
Where A Foreigner Alleges Misconduct Involving the Use of
Bank Accounts in New York
At the end of day, AHAB's position boils down to the unsupportable
argument that because its authorized a gent established one of AHAB's many bank
accounts in New York, the New York courts have an overriding interest in hearing
this case. AHAB Br. at 23-26. But 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 Mlkts, 2006 WL 1594442, at *6 (rejecting argument that "this action clearly
belongs in New York because it merely involves the transfer, in New York, of
29
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"),
affd, 45 A.D.3d 361 (1st Dep't 2007); A&M Exports, 207 A.D.2d at 741
(affirmingforum non conveniens dismissal despite possible absence of alternate
forum where "[tlhe 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. Co.
L.P. v. Citibank, N.A., 7 Misc. 3d 1023(A), at **3, 5 (Sup. Ct. N.Y. County 2005)
(dismissing in favor of Brazilian action, rejecting plaintiff s argument that "this
action does not belong in Brazil because it arises from a scheme of wrongfuil 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); see also 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);
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
30
competence of New York courts in letter of credit cases, this Court has not
hesitated to dismiss, on the ground offorum non conveniens, letter of credit cases
having little to do with New York); 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).'1
6
The cases AHAB relies on to show New York's "compelling interest"
in hearing this dispute are inapposite. AHAB Br. at 23-25. Most do not even
involve aforum non conveniens analysis. See AHAB Br. at 24-25 (citing J Zeevi
& Sons, Ltd. v. Grindlays Bank (Uganda) Ltd., 37 N.Y.2d 220 (1975) (choice of
law); Wells Fargo Asia Ltd. v. Citibank, N.A., 936 F.2d 723 (2d Cir. 199 1) (choice
of law); Indosuez Int'l Fin. B. V v. Nat 'l Reserve Bank, 279 A.D.2d 408 (1 st Dep't
2001), aff'd, 98 N.Y.2d 238 (2002) (choice of law)). Notably, in performing the
choice of law analysis both J Zeevi and Wells Fargo relied heavily on New York's
16 Nor is the court required to accept AHAB's demonstrably false assertion that "Al Sanea
stole the 'goods' delivered by Mashreq (along with another $41 million) in New York - by
transferring these funds from one New York bank to another New York bank." AHAB Br. at 25.
As AHAB's bank statements show, the money was transferred to the account of AHAB's
subsidiary TIBC. See R. 1318, 1342 (Mar. 9, 2010 Gouldy Aff. Exs. A (AHAB Bank of
America Account Statement), B (TIBC HSBC Account Statement).
31
interest in protecting "the justified expectations of the parties to the contract" and
the courts' understanding that the parties expected New York law would apply to
the transactions at issue. J Zeevi, 37 N.Y.2d 220 at 227; Wells Fargo, 936 F.2d at
726. Here the opposite is true - the Facilities Letter Agreement governing the
transactions between AHAB and Masbreq specifically states that UAE law
applies.'17
Further, if any jurisdiction has a particular interest in this dispute it is
the UAE. Shin-Etsu Chem., 9 A.D.3d at 178 is instructive. In Shin-Etsu, this
Court reversed the trial court and dismissed the case for forum non conveniens.
-The defendant was an Indian banking institution with its principal place of
business in India. While the reversal focused on the Supreme Court's improperly
heightened standard for showing an adequate alternate forum, the decision also
chastised the lower court for its "fail[ure] to defer to India's interest in resolving its
own affairs." Id. ("Indian courts are keenly interested in governing the affairs of
17 The sole case cited by AHAB on this point that even addressed the issue offorum non
conveniens is Banco Nacional Ulftramarino, S.A. v. Chan, 169 Misc. 2d 182 (Sup. Ct. N.Y.
County 1996), aff'd, 240 A.D.2d 253 (1 st Dep't 1997) (affirming without comment the Supreme
Court's decision as within the range of discretion). AHAB relies on quotes from the Supreme
Court's jurisdictional analysis that have no relevance to the forum non conveniens issue. In any
event Banco Nacional's brief discussion offorum non conveniens does not support AHAB's
position. Unlike this case, in Banco Nacional New York was "the hub of defendant's activities."
Id. at 192. Here the "hub" of the parties' activities and interactions was the Middle East. The
Banco Nacional court also expressed its concern as to the absence of any alternative forum,
something that is not an issue here in light of the litigations in UAE and other jurisdictions.
32
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 this dispute
concerning Mashreq's actions. This factor favors dismissal. Id. ("New York
courts have recognized that where a foreign forum has a substantial interest in
adjudicating an action, such interest is a factor weighing in favor of dismissal.")
(citation omitted); Phat Tan Nguyen v. Banque Indosuez, 19 A.D.3 d 292, 295 (1 st
Dep't 2005) (reversing denial offorum non conveniens motion, noting that "France
clearly has an interest in regulating its own banking institutions and plaintiffs have
utterly failed to establish that France is not a suitable adequate forum");
Garmendia v. O'Neill, 46 A.D.3d 361, 362 (1st Dep't 2007) (affirmingforum non
conveniens dismissal, noting that "Uruguay has an interest in adjudicating claims
involving its own banking institutios. .. .") (citation omitted); see also White
Light Prods. v. On the Scene Prods., 231 A.D.2d 90, 93 (1 st 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").
II. THE SUPREME COURT HAD POWER AND DISCRETION
TO DISMISS ALL CLAIMS
No doubt sensing the weakness of its challenge to the Supreme
Court'sforum non conveniens analysis, AHAB wrongly argues that the court
lacked the power to dismiss the AIIAB-Mashreq dispute because the motion to
dismiss was made by third-party defendant Al-Sanea. AHAB Br. at 18-21. This
argument is wrong as a matter of law.
CPLR 327 grants the court discretion "on the motion of any party, [to]
... dismiss the action in whole or in part." Id. (emphasis added). A third-party
defendant, like Al Sanea here, has "the rights of a party adverse to the other parties
in the action," CPLR 1008, and a first-party action is properly dismissed on the
basis of a motion made by a third-party defendant. Imperial Imps. Co., Inc. v.
Hugo Neu & Sons, Inc., 161 A.D.2d 411, 412 (1st Dep't 1990) (third-party
defendant's motion dismiss on the ground offorum non conven lens "invoke[s] the
court's authority to entertain the granting of such relief in full or in part, based
upon any consideration that might be just") (citation omitted); see also Kearns v.
Johnson, 655 N.Y.S.2d 498, 499 (1st Dep't 1997) ("I[tlhe fact that she was brought
into the action as a third-party defendant does not diminish her right to move for a
change of venue as of right"); McKinney's CPLR 1008 Practice Commentaries
(2011) ("In addition to defenses that can be asserted in pleadings, the third-party
defendant may employ any other 'procedural weapons which the law gives to the
34
original defendant for defeating plaintiff s claim."') (quoting N.Y. Jud. Council,
Twelfth Ann. Rep. 211 (1946)); id. (CPLR 1008 "entitles a third-party defendant to
raise whatever defenses that could have been, but were not, asserted by the
defendant/third-party plaintiff in the main action."); Muniz v. Church of Our Lady
of Mt. Carmel, 238 A.D.2d 101, 102 (1st Dep't 1997) ("the third-party defendant
was entitled to seek summary judgment as against the plaintiff') (citing CPLR
1008)."8
Here, once the issue offorum non conveniens was raised by Al Sanea,
the Supreme Court had broad discretion in its application to the entire action. See,
e.g., Banco Do Estado De Sac 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."); Smith v. Miller, 237 A.D.2d
294, 294 (2d Dep't 1997) ("Although no formal motion was made to dismiss the
is See also George Cohen Agency, Inc. v. Donald&S Perlnan Agency, Inc., 51 N.Y.2d 3 58,
365 (1980) ("one of the main purposes of third-party practice is the avoidance of multiplicity and
circuity of action, and the determination of the primary liability as well as the ultimate liability in
one proceeding.") (emphasis added, citation and quotation marks omitted); Moscato v. City of
New York (Parks Dep't), 183 A.D.2d 599, 600-60 1 (1st Dep't 1992) (third-party actions are
allowed "so that all parties may establish their rights and liabilities in one action") (emphasis
added and citation omitted)
35
proceedings on the ground offorum non conveniens," the family court had not
erred in dismissing the custody dispute under CPLR 327(a) because "the doctrine
[offorum non conveniens] was raised before the court and the parties contested the
matter."); 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. Yerushalmi, 268 A.D.2d 3 00 (1 st Dep't 2000) (affirmingforum non
conveniens dismissal of entire third-party action, even though not all defendants
moved to dismiss). R. 23 (July 26 Order) ("The great advantage of the rule of
FNC is its flexibility based upon the facts and circumstances of each case.") (citing
Pahlavi, 62 N.Y.2d at 479) (alterations omitted). 19
AHAB cites no case holding that the court's discretion in deciding a
forum non conveniens motion by a third-party defendant is limited to dismissal of
the third-party action. The cases AHAB relies on are inapposite as they merely
held that a court may not dismiss a case on forum non conveniens grounds where
19 Application of this rule is especially appropriate here because AHAB appears to
acknowledge that Al Sanea could have moved to dismiss the entire action, and thus its only
complaint is that Al Sanea's initial notice of motion stated that he sought dismissal of the third-
party action (and did not mention the first-party action). This however provides no basis for
challenging the Supreme Court's dismissal. Banco do Estado, 249 A.D. 2d at 139 (affirming
forum non conveniens dismissal of counterclaims even where plaintiff had not moved for that
relief where forum non conveniens a "motif' in the briefing and defendant itself had raised as a
defense to main claims). In any event, if deemed necessary, Al Sanea could simply "correct" his
motion to direct it to the entire action with the same result. The Supreme Court also has the
power to disregard such a purported mistake where no party is prejudiced, as is the case here.
CPLR 200 1.
36
no party has raisedforum non conveniens as an issue. 20 That is manifestly not the
case here.
Both in briefing and at oral argument counsel for Al Sanea made clear
that his motion was directed at both the first-party and third-party claims. Al
Sanea's motion papers expressly argued that "this Court can dismiss the entire case
(including Mashreq's action) in light of Mr. Al-Sanea's forum motion," Al Sanea
FNC Reply at 2 (citing cases), and that "Mashreq's action itself could be litigated
in more convenient fora, such as Saudi Arabia or the UAE and, thus, should be
dismissed." Id, at 8 (emphasis added). Similarly, at oral argument the Court
specifically questioned whether Al Sanea sought to dismiss the third-party
complaint or the entire action. Id. R. 145 0:24-26 (Mar. 25 Hr'g Tr.). Counsel for
Al Sanea responded that although his primary interest was in obtaining dismissal
of the action against his client, there "is really no basis ... for the underlying case
to be brought here," id. R. 1454:6-8 (Mar. 25 H-r'g Tr.), and that the Court "would
be well founded to dismiss the entire thing." Id. R. 1459: 10-11 at (Mar. 25 Hr'g
Tr.). Al Sanea's motion was thus clearly applicable to the entire action, and the
20 See AHAB Br. at 24-25 (citing VSL Corp v. Dunes Hotels & Casinos, Inc., 70 N.Y.2d
948 (1988) ("a court does not have the authority to invoke the doctrine [of forum non
conveniens] on its own"); Todtman, Young, Tunic, Nachamie, Hendler, Spizz & Dro gin, PC v.
Richardson, 231 A.D.2d 1 (1 st Dep't 1997) (lower court erred by "invok~ing] the doctrine of
forum non conveniens on its own"); In re Bernz (Widscht), 139 A.D.2d 444 (1 st Dep't 1988)
(remanding "for fturther proceedings without prejudice to a motion by any party to dismiss the
proceeding on the ground offorum non conveniens," because "[t]he doctrine offorum non
conveniens may only be employed by a court on the motion of a party") (emphasis added)).
37
Court stated as much to AHAB's counsel at the hearing. Id. R. 1458:13-20 (Mar.
25 Hr'g Tr.) ("There's two parts here to that, application, you understand. One is
for [Al Sanea] to be cut out. And for the underlying case to continue. The other is
for me to considerforum non conveniens as to everybody."); see also id R.
1473:16-19 (Mar. 25 Hr'g Tr.). Accordingly, AHAB is wrong in characterizing
Supreme Court as acting "sua sponte" and in claiming that, despite the language of
CPLR 327, the court somehow lacked the power to dismiss "in whole" the action.
Indeed, AHAB's argument is not well taken on this point, and should
not be considered here, as it was not raised below. See, e.g., Kohn v. City of ew
York, 69 A.D.3 d 463, 464 (1 st Dep't 2004) (issue was "improperly raised for the
first time on appeal"); Panetta v. Carroll, 62 A.D.3 d 10 10, 10 10 (2d Dep't 2009)
("None of the arguments raised by the petitioner on appeal were raised before the
Supreme Court prior to its determination. Thus the arguments are not properly
before this Court on appeal."); In re Matthew Niko M, 926 N.Y.S.2d 411, 412 (1st
Dep't 2011) (issue "was raised for the first time on appeal, and therefore is
unpreserved").
As indicated above, all parties participated in extensive briefing on the
issue of whether the court should dismiss the entire case for forum non conveniens,
and AHAB never challenged the court's ability to do so. Nor did AHAB dispute
the Supreme Court's stated understanding that there was an application to
38
"considerforum non conveniens as to everybody." Id. at 29:15-20. Al-AB's
attempt to raise this argument now is gamesmanship and this Court should refuse
to hear it.
CONCLUSION
For all the foregoing reasons, plaintiff-respondent Mashreq
respectfully requests this Court to affirm the Supreme Court's decision.
Dated: New York, New York
August 10, 2011
Respectfully submitted,
CLEARY GOTITLIEB STEEN & HAMIHLTON
Carmine D. Boccuzzi
One Liberty Plaza
New York, NY 10006
(212) 225-2000
Attorneys for PlaintiffRespondent Mashreq bank
Psc
Of Counsel:
Lisa M. Gouldy
Liana Roza Vitale
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