APL-2013-00007 To Be Argued By:
ERIC L. LEWIS
New York County Clerk's Index Nos. 601650/09 & 590643/09
APPELLATE DIVISION-FIRST DEPARTMENT
Index No. 601650/09
AHMED HAMAD AL GoSAIBI & BROTHERS COMPANY,
Index No. 590643/09
AHMED HAMAD AL GoSAIBI & BROTHERS COMPANY,
MAAN ABDUL WAHEED AL SANEA,
AWAL BANK BSC,
BRIEF FOR DEFENDANT-APPELLANT!
ERIC L. LEWIS
BAACH ROBINSON & LEWIS PLLC
1201 F Street, NW, Suite 500
Washington, D.C. 20004
445 Park Avenue
New York, N.Y. 10022
Attorneys for Defendant-A ppellant/
REPRODUCED ON RECYCLED PAPER
TABLE OF CONTENTS
TABLE OF AUTHORITIES............................................................11i
QUESTIONS PRESENTED ............................................................ 1
PRELIMINARY STATEMENT.......................................................... 3
STATEMENT OF THE CASE............................................................ 9
1. Factual Background ......................................................... 9
11. Procedural Background.................................................... 12
ARGUMENT .............................................................................. 17
1. The Court Had No Authority to Dismiss the First-Party Actions
Sua Sponte on Forum Non Conveniens Grounds....................... 18
11. Dismissal of the Third-Party Action on Forum Grounds Was
Also Thereby Improper Since It Is Inseparably Connected to the
First-Party Actions.......................................................... 21
111. The Court Misapplied the Pahlavi Factors in Dismissing
this Case ..................................................................... 22
A. The Court Failed to Consider this State's Compelling
Interest in Policing the Misuse of New York's Banking
System ............................................................... 23
B. The Court Failed to Determine Whether There is an
Alternative Forum Where These Claims "Would be Better
C. The Pahlavi Factors Do Not Support Dismissal of the
Actions in Favor of Saudi Arabia and/or the UAE............. 29
1. The Location and Language of Witnesses ............... 31
2. The Location and Language of Documents.............. 36
3. Access to Witnesses and Documents..................... 37
4. Controlling Law ............................................. 42
D. The Court's Analysis of the Forum Non Conveniens Factors
Was Based on a False Premise as to the Nature of AHAB's
Claims ................................................................ 44
IV. The Court Improperly Precluded AHAB from Taking
Forum-Related Discovery in Advance of any Ruling on
Al Sanca's Motion.......................................................... 47
TABLE OF AUTHORITIES
Am. Banknote Corp. v Daniele, 45 AD3d 338 (1st Dept. 2007) ................ 18, 51
Am. Home Assurance Co. v. Ins. Corp of Ireland Ltd., 603 F Supp 636
(S.D.N.Y. 1984).................................................................... 21
Amigo Foods Corp. v. Marine Midland Bane-N. Y, 3 9 NY2d 3 91
(1976) ............................................................................... 23
Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 62 NY2d 65
(1984) ............................................................................... 27
Banco Nacional Ultramarino, S.A. v. Chan, 169 Misc 2d 182 (Sup.
Ct. New York Cty. 1996), aff'd 240 AD2d 25 3 (1 st Dept. 1997)....passim
Broida v. Bancroft, 103 AD2d 88 (2d Dept. 1984).................................... 18
Creditanstalt Inv. Bank v. Chadbourne & Parke LLP, 4 Misc 3 d 4 81
(Sup. Ct. New York Cty. 2004).............................................. 29, 36
Excel Shipping Corp. v. Seatrain Int'l S.A., 584 F Supp 734 (E.D.N.Y.
1984) ............................................................................... 21
Factors Etc., Inc. & Boxcar Enters. Inc. v. Pro Arts, Inc., 579 F2d 215
(2d Cir. 1978) ...................................................................... 33
Firegreen Ltd. v. Claxton, 160 AD2d 409 (1 st Dept. 1990)......................... 33
Fire quench Inc. v. Kaplan, 25 6 AD2d 213 (1 st Dept. 199 8)......................... 22
Garmendia v. O'Neill, 46 AD3 d 3 61 (1 st Dept. 2007)................................ 49
Gulf Oil Corp. v. Gilbert, 330 US 501 (1947) ..................................... 29, 30
Hayne v. Darden Jr., No. 600971/05, 2005 NY Misc LEXIS 3601
(Sup. Ct. New York Cty. Dec. 6, 2005) ......................................... 51
In re Air Crash Near Nantucket Island, No. 00-MDL-1 344, 2004 US
Dist LEXIS 16085 (E.D.N.Y. Aug. 16, 2004).................................. 28
In re Bernz (Widscht), 13 9 AD2d 444 (1 st Dept. 19 88)............................... 18
In re Daniel, 181 Misc 2d 941 (New York Civ. Ct. 1999)........................... 22
Indosuez Int'l Fin. B. V v. Nat'l. Reserve Bank, 279 AD2d 40 8 (1 st
Dept. 200 1), aff'd 98 NY2d 23 8 (2002)......................................... 24
Intertec Contracting A/S v. Turner Steiner Int'l S.A., 6 AD3d 1 (1 st
Dept. 2004)......................................................................... 18
Islamic Republic of Iran v. Pahlavi, 62 NY~d 474 (1984) .................... passim
J Zeevi & Sons, Ltd v. Grindlays Bank (Uganda) Ltd., 37 NY2d 220
(1975)....................................................................... 16, 24, 25
Kings brook Jewish Med Ctr. v. Allstate Ins. Co., 61 AD3 d 13 (2d
Dept. 2009)......................................................................... 33
Kissimmee Mem 'l Hosp. v. Wilson, 188 AD2d 802 (3d Dept. 1992) .............. 21
Martinez v. Patel, 126 Misc 2d 985 (Sup. Ct. Kings Cty. 1985).................... 50
Mionis v. Bank Julius Baer & Co., 9 AD3 d 280 (1 st Dept. 2004) .................. 18
O'Connor v. Bonanza Int'l, Inc., 129 AD2d 569 (2d Dept. 1987) .................. 33
Overseas Programming Co. v. Cinematographisce Commerz-Anstalt,
684 F2d 232 (2d Cir. 1982)....................................................... 41
Perez v. N. Y Housing Auth., 47 AD3 d 505 (1 st Dept. 2008) ....................... 33
Perkow v. Frank W, Winne & Sons, Inc., 3 6 AD3 d 1189 (3 d Dept.
2007) ............................................................................... 21
Peterson v. Spartan Indus., Inc., 33 NY2d 463 (1974) .......................... 49, 50
Piper Aircraft Co. v. Reyno, 454 US 235 (199 1) ...................................... 29
Plesch v. Ban que Nationale de la Republique d'Haiti, 273 AD 224
(1st Dept. 1948).................................................................... 43
R. Maganlal & Co. v. MG. Chem. Co., 942 F2d 164 (2d Cir. 199 1)............... 41
Republic of Lebanon v. Sotheby's, 167 AD2d 142 (1st Dept. 1990)..36, 37,38, 42
Rhodes v. ITT Sheraton Corp., No. 97-4530-B, 1999 Mass. Super.
LEXIS 2 (Mass. Super. Ct. Jan. 15, 1999) ...................................... 39
Rivera de Enamorado v. Central Am. Steamship Agency, Inc., 160
AD2d 182 (1 st Dept. 1990) .............................................. 49,50,51
Schultz v. Boy Scouts ofAm., 65 NY2d 189 (1985).................................... 43
Silver v. Great Am. Ins. Co., 29 NY2d 3 56 (1972).................................... 27
Todtman, Young, Tunic, Nachamie, Hendler, Spizz & Dro gin, PC v.
Richardson, 231 AD2d 1 (1 st Dept. 1997) ...................................... 18
Van Deventer v. CS SCF Mgmt. Ltd., 37 AD3d 280 (1 st Dept. 2007)............. 21
VSL Corp v. Dunes Hotel & Casinos, Inc., 70 NY2d 948 (1988)................ 5, 18
Waterways Ltd. v. Barclays Bank PLC, 174 AD2d 324 (1 st Dept.
Wells Fargo Asia Ltd v. Citibank, N.A., 93 6 F2d 723 (2d Cir. 199 1).............. 24
CPLR 327 ................................................................................. 18
CPLR 3214(b) ............................................................................. 49
Uniform Rules for Trial Court (22NYCRR) § 202.70 (11 (d)) ...................... 49
Uniform Rules for Trial Court Practices for Part 56 6 ............................. 49
6A Carmody-Wait 2d § 38:115 (2011).................................................. 51
7B McKinney's Consol. Laws of N.Y. Ann. Commentary CPLR
3211:03211:48 (McKinney 2011)............................................... 51
Does Supreme Court have the power to dismiss sua sponte a complaint and
counterclaim on forum non conveniens grounds where neither the plaintiff
nor the defendant/counterclaimant moves for such dismissal and no record is
developed concerning various forum factors pertinent to such a dismissal?
The court below answered (implicitly through its dismissal) in the
Appellant submits that it should have answered in the negative.
2. If Supreme Court lacks the power to dismiss sua sponte first-party actions
on forum non conveniens grounds, may it nonetheless dismiss a third-party
action on such grounds, where that action arises out of the same factual
matrix as the first-party actions?
The court below dismissed all of the actions.
Appellant submits that it should not have dismissed any of the actions.
3. Is an action properly dismissed on forum non conveniens grounds when it
alleges: (i) the massive misuse of the New York banking system as the
linchpin of a multi-billion dollar fraud, (ii) resulting in conversion of funds
in New York, (iii) where Supreme Court has far superior access to sources
of proof from the far-flung witnesses and documents pertinent to the action,
(iv) New York law would apply to the fraud and conversion alleged, and (v)
the alternative fora identified by the court could not effectively adjudicate
The court below answered the question in the affirmative.
Appellant submits that it should have answered in the negative.
4. Before ruling on a forum non conveniens motion, where the party opposing
the motion has properly put in issue facts supporting denial of the motion,
should Supreme Court allow the party to take appropriate forum-related
The court below refused to permit such discovery.
Appellant submits that forum discovery should have been permitted.
This appeal raises important issues concerning whether a forum non
conveniens dismissal is proper in circumstances where the New York banking
system is misused as the vehicle to commit massive fraud and conversion of funds
in this State.
Mashreqbank PSC ("Mashreq"), a Dubai-based bank with offices in New
York, filed the instant action against Ahmad Hamad Algosaibi & Brothers Co.
("AHIAB"), a Saudi Arabian family business partnership. Mashreq's complaint
against AHAB sought recovery on a $150 million debt arising out of a U.S. dollar
foreign exchange transaction in New York. Subsequently, Al-AB filed a
counterclaim against Mashreq and a third-party complaint against Maan Abdul
Waheed Al Sanea ("Al Sanea"), who managed a division of AHAB and who was
responsible for the purported debt on which Mashreq was suing. AHAB's third-
party complaint alleged that the Mashreq debt was part of a multi-billion dollar
international Ponzi scheme perpetrated by Al Sanea, in which Al Sanea
fraudulently incurred the Mashreq debt, falsely misusing AHAB's name and credit,
and then wrongfully converted to his own use in New York the funds Mashreq had
loaned. AHAB also counterclaimed against Mashreq for acting in concert with Al
Sanea in furtherance of his unlawful scheme.
On Al Sanea's motion, Supreme Court, County of New York, the Honorable
Richard B. Lowe, 111, dismissed AHAB's third-party complaint on grounds of
forum non conveniens. Notwithstanding that none of the parties had moved for
dismissal of Mashreq's first-party complaint or AHAB's counterclaim, the court,
acting sua sponte, also dismissed these first-party actions on the same grounds.
AHAB hereby appeals both decisions.
The court's sua sponte dismissal of the first-party actions was plain error.
Not only had none of the parties moved for dismissal of these actions, Mashreq and
AHAB had affirmatively argued that the complaint and counterclaim were
properly brought in New York. As a consequence, none of the parties sought to
develop a record as to the forum non conveniens factors applicable to these first-
party actions!' Although Mashreq subsequently informed the court that it had
commenced a later-filed action against AHAB in the United Arab Emirates
("4UAE"), it provided the court with no evidence concerning the legal procedures
applicable to that proceeding, access to testimony and documents in that court, or
the general convenience and efficiency of the UAE as an alternative forum.
Moreover, as to AHAB's counterclaim, the only evidence before the court was that
a UA-E court would not even hear the counterclaim. Despite this evidentiary
1 Al Sanea's motion was expressly limited to the dismissal of the third-party
complaint. (R. 65 T 1).
vacuum, the court below dismissed the entire proceeding. Yet under VSL Corp v.
Dunes Hotel & Casinos, Inc., 70 NY2d 948 (1988), Supreme Court has no
authority on its own motion to dismiss an action, in whole or in part, on forum non
The court compounded this error by its erroneous dismissal of AHAB's
third-party complaint. When a first-party action is properly before the court, it is
error to dismiss on forum grounds a third-party complaint that is related to the
first-party action. Moreover, had the court properly considered the factors set out
by the Court of Appeals in Islamic Republic of Iran v. Pahiavi, 62 NY2d 474
(1984), it would have been evident that neither the first-party actions nor the third-
party action should have been dismissed.
As set out in AHAB's counterclaim and third-party complaint, Al Sanea's
Ponzi scheme, extraordinary in scope but classic in design, necessarily depended
on the wholesale use and abuse of New York banking facilities and involved
hundreds of currency transactions in New York where billions of U.S. dollars were
purchased. Virtually all of the financial conduct, including the currency
transactions and conversion of funds, took place, in whole or in part, in New York.
Al Sanea's scheme relied on forged documents bearing the apparent signatures of
AHAB's chairman. Exercising total control over the money he raised through the
improper use of AHAB's credit, Al Sanea used the funds in one of two ways -
either to repay prior improper borrowings (in a typical Ponzi arrangement) or to
misappropriate the funds to his own personal use.
This Court has previously upheld the refusal to dismiss on forum non
conveniens grounds an action involving money laundering through financial
transactions that, like this one, "span[ned] two oceans and four continents." Banco
Nacional Ultramarino, S.A. v. Chan, 169 Misc 2d 182, 185 (Sup. Ct. New York
Cty. 1996), aff'd 240 AD2d 253 (1st Dept. 1997). The lower court had recognized
that, wherever the scheme had been planned, it ultimately and necessarily was
implemented though misuse of New York bank accounts to convert funds stolen in
one country in order to transfer them to another. As the Banco Nacional court
found (id. at 188):
The allegation that Money Center used its [Bank of New York
("BONY")] account to receive and transfer the stolen funds, thus
converting the money, satisfies the statutory requirement that the tort
occur within the State.
The court then used a vivid and apt analogy in explaining its decision to keep the
case in New York (id at 188):
First, assuming the truth of the allegations, Money Center is accused
of having committed an affirmative act in New York, money
laundering, via instructions conveyed to BONY. Second, to allow a
defendant to conspire and direct tortious activities in New York, in
furtherance of that conspiracy, and then avoid jurisdiction because it
directs those activities from outside the State or country, is to ignore
the reality of modern banking and computer technology in the end of
the 20th century! A defendant with access to computers, fax
machines, etc., no longer has to physically enter New York to perform
a financial transaction which may be criminal or tortious, i.e.,
conversion. He may secrete himself and/or direct activities from
locations where jurisdiction may be impossible to acquire, including a
boat beyond the three-mile limit.
The Banco Nacional analysis could have been written for the instant action.
Although Al Sanea may have devised his scheme in Saudi Arabia, like the money
launderer in Banco Nacional, he implemented the relevant portion of it here in
New York, and New York is plainly an appropriate forum in which to hold him
liable for the damages caused by his criminal conduct in this State. As set forth in
the counterclaim, Mashreq assisted Al Sanea by funding his scheme through what
were portrayed as foreign exchange transactions but, in fact, were highly unusual
short-term loans at extraordinarily high interest rates through which Mashreq
advanced billions of U.S. dollars, over a four year period, to Al Sanea in New
York. Yet the court below, in its haste to dismiss this case, essentially ignored this
compelling New York nexus, misfocusing instead on the planning Al Sanea had
conducted outside this State, effectively fixing its gaze on Al Sanea's "boat beyond
the three mile limit," while ignoring his tortious conduct onshore in New York.
Seemingly preoccupied by the prospect of overseeing a suit involving
Middle Eastern parties, the court paid little attention to the fact that the locus of the
transaction was New York. Even before any of the opposing briefs had been filed,
the court signaled its fuindamental attitude in these words:
THE COURT: I find it really incredible. Everyone here
represents somebody over there. All of the parties involved, all of the
witnesses, all of the documents which have to be translated from
Arabic to English, and then I've got to apply in at least some of the
actions Saudi law for transactions that occurred between -- are all the
parties Saudis or --
MR. LEWIS: No.
THE COURT: -- they are Arab Emirates, right?
MR. BOCCUZZI: Mashreq is Dubai, which is United Arab
Emirates, and has a branch in New York.
THE COURT: But you heard of my stellar, you know, judicial
acumen. You've decided, hey, let's go to Judge Lowe.
(R. 657). But the fact that the parties are "somebody over there" is no basis to
dismiss an action otherwise centered in New York. This is particularly so when at
its core, the case concerns a fraudulent scheme using U.S. dollar currency
transactions, New York banking facilities and a theft from a bank account in New
The decision to dismiss the actions and send the parties somewhere else (the
lower court did not really decide where) to litigate the actions, together or
separately, as best they can, violates the Banco Nacional blueprint for forum non
conveniens analysis in circumstances where misuse of New York banks is central
to the commission of a financial crime in this state. A fraudster should not be
permitted to launder and convert billions of dollars in New York and then claim to
be "home safe" because he planned the conversion from beyond this State's shores.
The decision below should be reversed.
STATEMENT OF THE CASE
1. Factual Background
In 1981, Maan Al Sanca married into the prominent Algosaibi family. (R.
108 T 12). The Algosaibis owned AHAB, a general partnership, located in Saudi
Arabia. (R. 107-08 11). At that time, as was customary in the Algosaibi family,
Al Sanea was given a portion of AHAB's business to manage - in his case, a
division of AHAB known as the Money Exchange, which was used primarily to
provide remittance and foreign exchange services to foreign workers in Saudi
Arabia. (R. 107-08 TT 11-12). Al Sanea returned this kindness by fraudulently
usurping AHAB's credit and systematically plundering its assets in order
surreptitiously to finance his own separate business empire. (R. 104-05 3). Al
Sanea's scheme to bilk his benefactor AHAB was complex and multifaceted.
While it began in Saudi Arabia, its reach became global. When it finally
unraveled, as all Ponzi schemes ultimately do, it left AHAB exposed to nearly ten
billion dollars in claims from banks worldwide. (Id.)
The instant action concerns Al Sanea's use of foreign exchange ("fi")
transactions to obtain funding for his Ponzi scheme. Over a period of four years,
Al Sanea and his compatriots engaged in hundreds of these transactions with
Mashreq, each of which involved the purchase of U.S. dollars from Mashreq in
New York. (R. 1 11- 12 TT 21-22). Mashreq would make a payment in U. S. dollars
to an account controlled by Al Sanea (and held in ALHAB's name) in New York,
with the expectation that a payment in Saudi riyals would be made, at a later date,
to Mashreq's account in Saudi Arabia. (R. 111- 12 T 2 1). According to Mashreq's
complaint, the last of these f/x transactions was never completed. (R. 51-52 TT 5-
7). Mashreq paid $150 million into an account at Bank of America ("BOA") in
New York. (R. 51 6, 113 25). After failing to complete his part of the currency
trade by depositing equivalent Saudi riyals to Mashreq's credit, Al Sanea then stole
the funds in the BOA account, which included the funds paid by Mashreq plus an
additional $41 million that happened to be in the account, by directing the transfer
of these funds to an account in the name of Awal Bank BSC ("Awal") held at
HSBC's New York branch. (R. 113-14 TT 26-27). Awal is a Bahraini bank wholly
owned by Al Sanea.2 (R. 108 13, 114 28). This final transfer was intended to
and did put the funds completely beyond AHAB's control. (R. 113-14 TT 26-28).
Al Sanea's conversion of the funds that are the specific subject of the instant action
took place entirely in New York. (R. 114 27).
Like all Ponzi schemes, Al Sanea's depended on ever-increasing access to
funds, both to allow his continuous misappropriations and to service the growing
2 Awal is now in administration in Bahrain. (R. 223).'
debt incurred to finance earlier misappropriations. His fix deals with Mashreq
were structured to provide extremely high-cost, short-term financing to Al Sanea.
(R. 1 10 T 19). Each fix transaction involved the use of Saudi riyals to purchase
U.S. dollars in New York. In all but one instance, the U.S. dollars were paid first
(by Mashreq), with a gap of up to a week or more before the Saudi riyal payment
was due. (R. 1 11- 12 2 1). This huge volume of "split-value" deals had no
ostensible currency trade purpose for AHAB 's comparatively meager remittance
business .3 (R. 88-89 T 4, 95 22).
Mashreq, a UAE corporation with a principal place of business in the United
States at 50 Broadway in New York (R. 109 14), chose New York, where all of
these f/x transactions were based, as the forum for the instant lawsuit. 4 Throughout
the case below, Mashreq asserted repeatedly that it properly brought its complaint
3 "Split-value transactions," such as those at issue here, are typically used to
accommodate the differences between Western and Middle Eastern weekends.
Instead of a more-or-less simultaneous exchange, in a split-value transaction there
is a delay between the payment "legs" usually because the first "leg" of the
exchange occurs during a weekday when the counterparty is closed for its
weekend. The length of the "split" between the delivery of U.S. dollars and
payment of Saudi riyals in the instant transactions, however, went far beyond the
usual one-to-two day term. Moreover, Mashreq frequently agreed to renew or "roll
over" the transactions, requiring no immediate payment and effectively extending
the term of the "loan," albeit at inflated interest rates. (R. 110 18, 111-12 21).
4 Mashreq also suggested that its choice to file in New York was influenced by its
understanding that AHAB maintained assets and bank accounts in New York - an
understanding no doubt fostered by Mashreq's having made hundreds of transfers
of funds to an account in AHAB' s name at BOA in New York.
in New York.5 AHAB never challenged this assertion by seeking dismissal of
Mashreq's complaint on forum non conveniens grounds.
Mashreq performed its part of these currency transactions in New York,
using its New York bank account, and New York law will apply to the fraud these
transactions implemented.6 Mashreq has no place of business in Saudi Arabia. (R.
657). AHAB's third-party complaint against Al Sanea centers on his liability for
any obligation that AH-AB may have to Mashreq and his theft of $191 million
derived in large part from these fix transactions, a theft that was accomplished by a
transfer of funds that took place entirely within New York County.
1I. Procedural Background
In May 2009, Mashreq filed its complaint seeking damages for breach of the
purported fix contract and for recovery of the U.S. dollars it delivered under that
contract. (R. 49-63). It filed a simultaneous attachment of AHAB's property in
this State, including the BOA account maintained by Al Sanea in AHAB's name.7
On July 15, 2009, AH-AB filed its answer and third-party complaint, (R. 140),
subsequently amending its answer and adding a counterclaim asserting that
Mashreq aided and abetted Al Sanea in the perpetration of his Ponzi scheme. (R.
' Mashreq's Mem. of Law in Conn. with Al Sanea Mot. to Dismiss (Mar. 9, 20 10)
at 6; Mashreq's Reply Mem. of Law in Conn. with Al Sanea Mot. to Dismiss (Mar.
23, 2010) at 4.
'AHAB~'s Opp. to Al Sanea Mot. to Dismiss (Feb. 5, 20 10) at 14.
7 Order to Show Cause for Order of Attachment (May 27, 2009).
75). Al Sanea moved to dismiss the third-party complaint on grounds of lack of
personal jurisdiction and inconvenient forum. (R. 65). The parties thereafter
briefed these jurisdictional and forum issues as to the third-party complaint.
Of fundamental significance here, no party moved to dismiss the first-party
actions on grounds of inconvenient forum. To the contrary, Mashreq and AHAB
repeatedly represented to the court that neither of them was asserting that New
York is an inconvenient forum for their dispute.8 For example, in response to Al
Sanca's motion to dismiss the third-party complaint, Mashreq stated that "New
York was and still is a natural forum for Mashreq to bring its straightforward
claims against AHAB." 9 Orally, Mashreq's counsel stated to the court that "if the
third-party defendant succeeds in finding his dispute with the defendants to be
forum nonable [sic], I don't think it would affect . .. Mashreqbank's case against
[AHAB], who [is] here [and] who would be litigating and who asserted a
counterclaim against my client. . . ." (R. 654). Although Mashreq later informed
the court that it would not object to dismissal of its first-party complaint, because it
believed it could proceed against AHAB in a later-filed action it had commenced
in the UAE, it never sought to dismiss its own complaint on forum grounds, and it
8 Mashreq moved to dismiss the counterclaim on numerous grounds, but not forum
non conveniens. Notice of Mashreq's Mot. to Dismiss the Counterclaims (Sept.
9 Mashreq's Mem. of Law in Conn. with Al Sanea Mot. to Dismiss (March 9,
2010) at 6.
continued to affirm that "New York is a proper forum" for the first-party actions.' 0
Similarly, AHAB never asserted that New York was an inconvenient forum to
adjudicate the first-party actions. Accordingly, neither Mashreq nor AHAB
provided the court with any evidentiary submissions as to whether a UAE court
would better adjudicate the counterclaim. Indeed, Mashreq represented to the
court that AHAB could not pursue its counterclaim in the UAE."1
In dismissing the action below, the court nonetheless ruled sua sponte that
the Pahlavi factors were satisfied as to the first-party actions as well as the third-
party action. (R. 24-27). With respect to the dismissal of AH-AB's third-party
action against Al Sanea, the court accepted without analysis Al Sanea's argument
that dismissal was justified because a temporary travel ban precluded the principals
(AHAB's partners and Al Sanea himself) from traveling to New York and because
witnesses were located, inter alia, in Bahrain, the UAIE, and Saudi Arabia. (R. 24).
The court below also uncritically accepted Al Sanea's contention that foreign law
would govern the fix trades with Mashreq because those trades are subject to a
UAE choice of law and forum provision. (R. 24-25). In respect of the first-party
actions, the court stated only that none of the witnesses resides in New York or the
10 Mashreq's Reply Mem. of Law in Conn. with Al Sanea Mot. to Dismiss (Mar.
23, 20 10) at 3.
'" Mashreq's Reply Mem. in Supp. of Mot. to Dismiss Counterclaim (Nov. 20,
2009) at 2-3.
United States (R. 26), a statement which was without basis in the record and
demonstrably incorrect. The court thereupon dismissed the first-party and the
third-party actions, suggesting that the cases could be tried elsewhere. (R. 26-27).
Remarkably, however, with respect to neither set of claims did the court make a
finding that an alternative forum actually existed for the trial of the claims. Even
more strikingly, the court did not consider, much less make a finding, that any
other forum exists that would permit all of the cases (complaint, counterclaim, and
third-party complaint) to be resolved in a single efficient proceeding.
Two inescapable factors point to New York as a convenient forum for
resolution of the instant dispute in its entirety. First, contrary to Al Sanea's
unsupported generalizations that this is exclusively a Saudi affair, the very
converse is true. The key witnesses to Al Sanea's fraudulent conduct with respect
to these transactions are both inside and outside of Saudi Arabia in various locales
around the world, including the United States. (R. 938-41 TT 12-14; infra fn. 22).
The financial transactions themselves conform to conventions created and well
established within the New York financial community. All of the key witnesses,
including Al Sanea himself, speak English; many of them speak it exclusively. (R.
938 T 10-1 1). The key documents are written in English, the language of
international finance. (R. 941 TT 15-18). Al Sanea's fraudulent conduct with
respect to the Mashreq f/x transactions will be governed by the law of New York,
the place where his tortious activities caused damage.'12 Moreover, New York is
more convenient than Saudi Arabia as a forum because its procedures provide
access to the sources of evidence that will permit both sides to fully present their
cases.'13 Saudi Arabia does not have procedural mechanisms for compelling
testimony from third parties, for compelling production of documents, or for
permitting cross-examination that would allow access to the proof necessary to
resolve this dispute. (R. 950 T 19, 952 T 22, 953 25). Given the court's sua
sponte disposition of the first-party actions, there is no record as to what
mechanisms are available in the UAE.
Second, New York has "an overriding and paramount interest" in litigation
involving fraudulent financial transactions implemented through the misuse of its
banking system. See J Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda) Ltd, 37
NY2d 220, 227 (1975). Al Sanea's was not a scheme with mere ancillary effects
in New York. Its implementation was dependent upon Al Sanea' s misuse of the
New York banking system to obtain U.S. dollars in foreign exchange and then
funnel those dollars to his own control. New York is plainly an appropriate forum
to adjudicate this dispute and is clearly more appropriate than Saudi Arabia, where
Mashreq has no presence, or the UAE, where Al Sanea has no presence.
1AHAB's Opp. to Al Sanea Mot. to Dismiss (Feb. 5, 20 10) at 14.
I3 d. at 1- 13.
The instant case presents a critical issue of policy for the New York state
courts. The question is whether international fraudsters who use the New York
financial system as the central and necessary mechanism for effecting that fraud
will be held accountable in New York for the consequence of those actions. In a
time when billions of dollars move with the blink of an eye and numerous
jurisdictions can be pieces of the mosaic of a multi-national fraud, with none
having the entire picture of the fraud or the tools to address it, will the New York
courts view it as a policy imperative to accept jurisdiction based upon the unique
and central role of the New York financial system? If that question is not
answered yes, then the Al Saneas of the world will be able to balkanize any fraud
into smaller national pieces, where no court has the ability to enforce
accountability and police the integrity of the dollar-based financial system. The
decision below will be interpreted as a carte blanche for scam artists and money
launderers to avoid accountability.
As an initial matter, it is essential to identify the legal framework in which a
decision on forum non conveniens must be made. There is a presumption in favor
of keeping the action in the court where the party making the claim has filed it:
here Mashreq with respect to its complaint and AHAB with respect to its
counterclaim and third-party complaint. See, e.g., Waterways Ltd. v. Barclays
Bank PLC, 174 AD2d 324, 327 (1 st Dept. 1991). The burden of proof is on the
party seeking dismissal: here Al Sanea. See, e.g., Am. Banknote Corp. v Daniele,
45 AD3d 338, 342 (1st Dept. 2007); Mionis v. Bank Julius Baer & Co., 9 AD3d
280, 282-83 (1st Dept. 2004). The Appellate Division is not limited to an "abuse
of discretion" standard in reviewing a Supreme Court decision to dismiss on forum
grounds but may independently exercise its own discretion in determining whether
dismissal is appropriate. See, e.g., Intertec Contracting A/S v. Turner Steiner Int'l
S.A., 6 AD3d 1, 3-4 (1 st Dept. 2004); Broida v. Bancroft, 103 AD2d 88, 93-94 (2d
Dept. 1984); CPLR 327.
1. The Court Had No Authority to Dismiss the First-Party Actions Sua
Sponte on Forum Non Conveniens Grounds.
The lower court committed clear error when, sua sponte and without any
developed record, it dismissed the first-party actions on grounds of forum non
conveniens. It has long been held that the court may not dismiss any part of an
action sua sponte on forum grounds. See VSL Corp v. Dunes Hotel & Casinos,
Inc., 70 NY2d 948, 948 (1988); Todtman, Young, Tunic, Nachamie, Hendler, Spizz
& Drogin, PC v. Richardson, 231 AD2d 1, 5 (1st Dept. 1997); In re Bernz
(Widscht), 139 AD2d 444, 444 (1st Dept. 1988). As these decisions recognize,
CPLR 327(a) precludes Supreme Court from dismissing an action, "in whole or in
part," on forum non conveniens grounds absent a motion seeking such relief by one
of the parties.
In the instant case, while Al Sanea moved to dismiss the third-party action,
neither AHAB nor Mashreq moved to dismiss either the complaint or the
counterclaim on the basis of inconvenient forum. Indeed, both Mashreq and Al-AB
agreed that New York was a convenient forum for the litigation of their dispute.
While Mashreq did advise the court that it had commenced a later-filed action
against AHAB in the UAE, 14 Mashreq did not ask that the court dismiss its
complaint here in favor of the UAE as a more convenient forum. To the contrary,
it continued to insist that New York is an appropriate forum for its complaint,
noting that AHAB had not contested New York as inconvenient. 15 Mashreq also
represented to the court that AHAB could not pursue its counterclaim in the UAE
because under the law of that country an aiding and abetting claim cannot be
brought unless Mashreq is first convicted criminally and claims for commercial
bad faith and unjust enrichment are not recognized.'16 Thus, even the dispute
between Mashreq and AHAB - claim and counterclaim -cannot be fully litigated
in the UAE.
"4 Mashreq's Mem. of Law in Conn. with Al Sanea Mot. to Dismiss (Mar. 9, 20 10)
'51d. at 6-7.
16 Mashreq's Reply Mem. in Supp. of Mot. to Dismiss Counterclaim (Nov. 20,
2009) at 2-3.
For the first time in his reply brief, Al Sanea suggested that Mashreq's
complaint could be litigated more effectively in Saudi Arabia or the UAE ,' but he
proffered no evidence in support of that suggestion, much less did he file a motion
seeking dismissal of the first-party actions. Even at oral argument on Al Sanea's
forum motion, when the court referenced the possibility of dismissal of the entire
action, Al Sanea's counsel admitted that Al Sanea's motion addressed only the
third-party complaint and that as to the first-party actions he only acted "in a sense,
as an amicus of the Court." (R. 145 1). But under New York law, an action can be
dismissed only on motion, not on the suggestion of a self- interested, and self-
described, amicus. In short, the court's dismissal of the first-party actions was
entirely on the court's own motion, and its decision must be reversed.
Because it acted on its own motion, the court dismissed the first-party
actions without any record evidence on important forum non conveniens factors
pertinent to those claims. There is nothing in the record indicating that those
claims could be brought in Saudi Arabia, and, while the record supports that the
UAE was an available forum for Mashreq's complaint, the only evidence in the
record regarding AHAB's counterclaim is that it could not be brought in that
conr.18 Even indulging the court's unsupported (and incorrect) suggestion that
17 Sanea's Reply Mem. in Supp. of Mot. to Dismiss (Mar. 9, 20 10) at 8.
1Mashreq's Reply Mem. in Supp. of Mot. to Dismiss Counterclaim (Nov. 20,
2009) at 2-3.
AHAB could elect to file its counterclaim in the UA-E, the record is devoid of
evidence as to whether the UAIE courts would have access to the testimony and
documentary evidence necessary to adjudicate AHAB 's counterclaim. Both
Mashreq and AHAB consistently argued that New York was a proper forum for the
first-party actions, and Al Sanca's motion was limited to the third-party action. As
a result, the court's sua sponte dismissal was not only procedurally improper, it
rested on no evidence.
11. Dismissal of the Third-Party Action on Forum Grounds Was Also
Thereby Improper Since It Is Inseparably Connected to the First-Party
Given that the first-party actions were not properly dismissible, the third-
party action also should not have been dismissed, since it arises from the same
transactions that are at issue in the first-party actions. Numerous decisions so
recognize. See, e.g., Van Deventer v. CS SCF Mgmt. Ltd, 37 AD3d 280, 281 (1 st
Dept. 2007); Perkow v. Frank W Winne & Sons, Inc., 36 AD3d 1189, 1190 (3d
Dept. 2007); Kissimmee Mem '1 Hosp. v. Wilson, 188 AD2d 802, 803 (3d Dept.
1992); Am. Home Assurance Co. v. Ins. Corp. of Ireland Ltd., 603 F Supp 63 6, 642
(S.D.N.Y. 1984). As the federal district court put it in Excel Shipping Corp. v.
Seatrain Int'l S.A., 584 F Supp 734, 743-44 (E.D.N.Y. 1984), dismissal is not
appropriate where there is an inseparable factual and legal connection between the
first-party and third-party claims.
AHAB 's claim against Al Sanea seeks indemnification for any liability it
may have to Mashreq. It therefore necessarily arises out of the same f/x
transaction that is the subject of Mashreq's first-party complaint and is
indisputably interrelated to its defense of Mashreq's claim and its counterclaim
against Mashreq. Indeed, AHAB's answer and counterclaim assert that Mashreq
was complicit in Al Sanea's fraud, and the same core facts must be litigated in both
the first-party and third-party actions.
Any inconveniences that may be encountered in litigating this entire case in
New York arise not as a result of any conduct by AHAB but rather from the nature
of Al Sanea's fraud and his strategy of spreading his wrongdoing around the globe.
Wherever it is litigated, some inconveniences will doubtless arise, but New York is
plainly a proper forum and is certainly far better situated than Saudi Arabia to
accommodate those inconveniences. In these circumstances, maintenance of
AHAB's third-party suit here reaffirms New York's public policy of encouraging
the consolidation of cases presenting common questions of law and fact. See
Firequench Inc. v. Kaplan, 256 AD2d 213, 213 (1 st Dept. 1998); In re Daniel, 181
Misc 2d 94 1, 953-54 (New York Civ. Ct. 1999).
Ill. The Court Misapplied the Pahlavi Factors in Dismissing this Case.
Apart from its procedural error in dismissing the first-party actions sua
sponte and its resulting error in dismissing a fundamentally intertwined third-party
action, in considering the merits of keeping this case in New York, the court
misapplied the Pahlavi factors in several critically important respects, each of
which independently requires reversal.
A. The Court Failed to Consider this State's Compelling Interest in
Policing the Misuse of New York's Banking System.
One of the five factors listed in Pahlavi is whether the action imposes a
burden on New York's courts. 62 NY2d at 479. The burden issue, of course, deals
with the potential complexities, including the expenditure of judicial time and
administrative expense, that the action is likely to entail. But the test is not
whether a case imposes any burden on the New York courts. All cases impose
some burden. Whether that burden is undue or one that New York courts should
undertake thus inherently requires a weighing of the burden posed by the case
against the State's interest in the particular dispute. Yet here, the court simply
ignored New York's overarching policy interest in the dispute and examined the
issue of burden in a vacuum.
There is a crucial distinction between disputes in which New York banks
play only a marginal role and disputes like this one in which the misuse of New
York banks, including the implementation of tortious conversion occurring in New
York, is central to the controversy. AHAB does not suggest that the incidental use
of the New York banking system can suffice to establish personal jurisdiction,
much less make New York the preferred forum. As held in Amigo Foods Corp. v.
Marine Midland Banc-NY, 39 NY2d 391, 396 (1976), "standing by itself a
correspondent bank relationship, without any other indicia or evidence to explain
its essence, may not form the basis for long-arm jurisdiction," and by similar logic
may not support New York as the more appropriate forum.
When,, however, as here, the New York banking system is instrumental to
the transaction at issue and is used by the defendant as the very vehicle of his
misconduct, New York's interests have been deemed "overriding and paramount."
J Zeevi & Sons, Ltd v. Grindlays Bank (Uganda) Ltd., 37 NY2d 220, 227 (1975).
In J Zeevi & Sons, an Israeli partnership was entitled to draw payment in U.S.
dollars on a letter of credit opened in its favor by a Ugandan bank through its
correspondent bank in New York but subsequently repudiated by the bank through
instructions to its New York correspondent not to transfer funds. The Court of
Appeals addressed the issue of New York's interest in the transaction in the setting
of choice of law, but its analysis is no less instructive for choice of forum. The
New York has an overriding and paramount interest in the outcome of
this litigation. It is a financial capital of the world, serving as an
international clearinghouse and market place for a plethora of
international transactions, such as to be so recognized by our
Id. (citations omitted); see also Wells Fargo Asia Ltd v. Citibank, NA., 936 F2d
723, 726-27 (2d Cir. 1991) (citing J1 Zeevi & Sons); Indosuez Int'l Fin. B. V v.
Nat'l. Reserve Bank, 279 AD2d 408, 408-09 (1st Dept. 2001), aff'd 98 NY2d 238
(2002) (also citing J Zeevi & Sons in the personal jurisdiction setting). In the
years since J Zeevi & Sons was decided, the ongoing technological and financial
growth of the New York banking system has made the Court of Appeals'
observation even more compelling.
Al Sanea argued that because he is alleged to have planned his scheme
outside of New York and because he asserts he never personally ventured into this
State, New York is an inconvenient forum.'9 There is no case that adopts such
perverse reasoning, and Banco Nacional precludes such an argument. Al Sanea
and his agents and Mashreq engaged in billions of dollars worth of f/x transactions,
all of which were performed in the State of New York. (R. I1 I 2 1). Mashreq's
complaint further alleges a default on the last of these transactions, in which
Mashreq delivered its "goods" - U.S. dol1lars - in New York, but failed to receive
payment for them. (R. 51-52 TT 5-7). And the third-party complaint alleges 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. (R. 113-14 TT 26-27). This case is thus indistinguishable from
Banco Nacional. As that decision teaches, New York's compelling interest in
"~ Al Sanea's Mem. of Law in Supp. of Mot. to Dismiss (Oct. 30, 2009) at 5-7, 17-
policing the use of its banking system does not come to a screeching halt because
the offender hatches his scheme offshore.
In its haste to dismiss this entire case, the court below inexplicably gave no
consideration to New York's "overriding and paramount" interest in controversies
that implicate the misuse of this State's central role in the international banking
system, much less did the court make any finding as to how that interest affected
its decision. The transaction alleged in the complaint is the sale of U.S. dollars (as
a commodity) in New York. Such a transaction must be a matter of vital interest to
New York. Yet the lower court ignored well-pleaded facts of AHAB's
counterclaim and third-party complaint, which describe in detail Al Sanea' s misuse
of New York's banking system, which was the critical instrumentality of the fraud
and conversion that occurred here.
B. The Court Failed to Determine Whether There is an Alternative
Forum Where These Claims "Would be Better Adjudicated."
Although the Court of Appeals ruled in Pahlavi that the existence of an
alternative forum is not an absolute requirement, particularly where, as in that case,
the party opposing dismissal was a foreign government that had engineered the
absence of such a forum, it made clear that a determination of whether the case
"would be better adjudicated elsewhere," 62 NY2d at 479, is "a most important
factor" in the forum analysis, id. at 481. In the instant case, the court treated the
issue as a matter of so little consequence that, in effect, it did not even bother to
decide whether an alternative forum actually existed that would have jurisdiction
over this case much less where it would be "better adjudicated."
It was Al Sanea's burden to satisfy this factor by demonstrating that
litigation of AHAB's third-party action in Saudi Arabia, which he proffered as a
superior alternative forum, "will best serve the ends of justice." See Silver v. Great
Am. Ins. Co., 29 NY2d 356, 361 (1972). This burden could not be satisfied by
generalities; it required Al Sanea to provide "specific information" showing why
the alternative forum should be preferred. Banco Ambrosiano, S.P.A. v. Artoc
Bank & Trust Ltd, 62 NY2d 65, 74 (1984). Al Sanea utterly failed to do so.
Indeed, the record below unequivocally established that Saudi Arabia cannot
possibly better adjudicate this particular international dispute.
Tellingly, the court below did not find otherwise. While it listed numerous
factors, like availability of witnesses and documents and issues of foreign law, that
have a bearing on determining whether Saudi Arabia is a more suitable forum, (R.
24-27), it made no fi nding that this action could be effectively litigated in that
country. Ultimately, the court abandoned any real analysis of the suitability of
Saudi Arabia as an alternative. Instead, the court suggested a multiple-choice
approach. In respect of the first-party actions, the court offered that AHAB should
bring its counterclaim in the UAE, where Mashreq had "already commenced" an
action. (R. 27). The court made no finding, however, that the UAE was available
as a forum for the counterclaim, much less that it would be "better adjudicated"
there. The only evidence was that the counterclaim could not be adjudicated in the
UAE. With respect to the third-party complaint, the court was even more cavalier,
stating only that "several alternative locations are available to resolve the
disputes," (R. 24), and that AHAB could "decide whether it prefers to bring its
third-party action in the UAE as well, or to seek redress in Saudi Arabia," (R. 27).
The court undertook no analysis concerning whether the UAE was an available and
more convenient forum for the third-party complaint.
This proceeding, of course, involves three cases and three parties: Mashreq,
AHAB, and Al Sanea. Mashreq made no offer to submit its claims to Saudi
jurisdiction and, at the hearing on this motion, argued that it was not subject to
jurisdiction in that country. (R. 1468). Al Sanea never made an offer to submit to
UAE jurisdiction, insisting that the claims against him should only be brought in
Saudi Arabia. (R. 622-23 27). And the court made no finding, and had no record
basis for such a finding, that all three parties were subject to suit in either of these
countries. This multiple-choice solution manifestly demonstrates the lack of any
factual basis in the record for a finding that the action as a whole could be pursued
in a single alternative forum, as contemplated by In re Air Crash Near Nantucket
Island, No. O-MiDL-1344, 2004 US Dist LEXIS 16085, at * 11, * 17, * 20, * 23
(E.D.N.Y. Aug. 16, 2004).
C. The Pahlavi Factors Do Not Support Dismissal of the Actions in
Favor of Saudi Arabia and/or the UAE.
In all events, the availability of an alternative forum is not determined just
by answering the simple question whether AHAB can sue Al Sanea or Mashreq on
these claims somewhere else. As held in Pahlavi, the touchstone is whether the
dispute "would be better adjudicated" in the other forum, and this necessarily turns
on access to evidence in that forum that would allow the parties to develop their
claims and defenses. Thus Pahlavi cited with approval the "relevant private or
public interest factors" first announced in Gulf Oil Corp. v. Gilbert, 330 US 501,
508-09 (1947), and reaffirmed in Piper Aircraft Co. v. Reyno, 454 US 235, 241,
n.6 (1991). Pahlavi, 62 NY2d at 479. These factors include: "relative ease of
access to sources of proof; availability of compulsory process for attendance of
unwilling, and the cost of obtaining attendance of willing, witnesses." Gulf Oil,
330 US at 508. Numerousforum non conveniens decisions in the New York courts
have turned on precisely these factors. See, e.g., Banco Nacional, 169 Misc 2d at
192 (forum dismissal precluded by absence of discovery procedures and inability
"to marshal . . . proof' in Nigeria in connection with an action for fraud and
conspiracy); Creditanstalt Inv. Bank v. Chadbourne & Parke LLP, 4 Misc 3 d 4 81,
485-86 (Sup. Ct. New York Cty. 2004) (absence of pretrial discovery, right to jury
trial, and recognition of tort of legal malpractice as making Russia an unsuitable
Demonstrably, the court's initial review of the Gulf Oil factors was colored
by a self-serving and highly misleading affidavit submitted by Al Sanea. In that
affidavit, Al Sanea swore that "to my knowledge, all of AHAB's witnesses (except
its professional advisors) and documentary evidence are all in Saudi Arabia" and
that "[m]any if not all of the witnesses speak Arabic as a first language and many
of the relevant documents are in Arabic, necessitating extensive translations." (R.
620 T 19, 622-23 27). AHAB submitted competent evidence demonstrating
beyond doubt that Al Sanca's statements were false, but the court never wavered
from its initial view that this case belonged somewhere ''over there."~
While the court made various observations on forum non conveniens factors
dealing with location of documents and witnesses and governing law, it ultimately
made no actual findings on these factors. It is impossible to tell from the court's
opinion whether it even considered which potential witnesses are likely to have
testimony pertinent to the issues in dispute and which are makeweight. Similarly,
the court acknowledged that there are issues concerning the language of witnesses
and documents and possible questions of foreign law, (R. 18-19, 24-25), but again
it did not reveal whether or how it might have weighed the evidence on those
issues. We examine the evidence actually presented in this case with respect to
these Pahlavi factors.
1. The Location and Language of Witnesses.
The court noted that a Saudi travel ban currently precludes the attendance of
the parties at trial in New York. (R. 24). But the court took this analysis no
further, failing to consider whether the travel ban would preclude the parties'
testimony in New York and equally failing to consider whether they could testify in
Saudi Arabia. The court also found that potential non-party witnesses are located
largely in the UAE, Kuwait, Saudi Arabia, and Bahrain. (R. 24). Yet the court
made no attempt to identify who these witnesses are, to assess which of them are
likely to have testimony that is actually important to this dispute, or to evaluate
whether they will be able to testify in New York or in either of the court's two
suggested alternative fora. The court's conclusory finding that the witnesses are
largely located in the UAE, Kuwait, Saudi Arabia, and Bahrain does not speak to
the principal factor in respect of these witnesses - indeed the only matter germane
to forum non conveniens - the availability and competence to testify of witnesses
who have evidence truly pertinent to issues in dispute.
As to the parties themselves, the travel ban imposed by the Saudi
government equally precludes attendance of the parties at trial in the UAE, the
alternative forum that the court sua sponte found to be more convenient, at least for
Mashreq's debt claim. While the travel ban would not preclude attendance by the
parties at trial in Saudi Arabia, as discussed more fully below, it was uncontested
that Saudi Arabia's evidentiary rules would preclude, on grounds of bias,
testimony by the parties on their own behalf in that country as well as testimony by
the parties' present or former employees on their principals' behalf (R. 952 T 23),
a fact of foreign law that the court below simply ignored. The court also ignored
the fact that the travel ban, while it may preclude the parties' attendance, will not
preclude their testimony in New York where, unlike Saudi Arabia, there exist
procedures that will permit both party and non-party witnesses to testify live
through video-links or by depositions de bene esse. 2
As to non-party witnesses, AHAB proffered that two of the witnesses most
closely involved with Al Sanea's operation of the Money Exchange and Awal
Bank, and especially the f/x transactions here at issue, are Mark Hayley, the
Money -Exchange's General Manager, and Glenn Stewart, the CEO of The
International Banking Corporation, another central figure in Al Sanca's scheme .2 '1
Mark Hayley lives in England. (R. 936 1). Glenn Stewart, previously located in
20 AHAB's Opp. to Al Sanea Mot. to Dismiss (Feb. 5, 20 10) at 11. There is no
record as to the availability of such procedures in the UAE, and, hence, no basis
for an inference that it is a suitable alternative forum on that ground.
2AHAB's Opp. to Al Sanea Mot. to Dsis(Feb. 5, 2010) at12. Hayley, Al
Sanea's principal accomplice, later turned whistleblower, who has since moved
back to his native England, has provide an affidavit that sets forth specifically and
in detail information regarding the key witnesses in this action, their native
countries and languages, and their locations. (R. 936).
Bahrain, (R. 939 T 12b), now lives in Los Angeles. 22 Both witnesses can be
compelled to testify in New York, in person or by deposition.
AHAB listed nine other non-party witnesses with knowledge of Al Sanea's
misuse of the Money Exchange to arrange f/x and other financial transactions for
his own purposes. (R. 93 9-40 T 12c-k). Of these nine, three live in England, two
in India, and one each in Saudi Arabia, Bahrain, Canada, and Jordan. (Id.) One is
Under New York law, a defendant who seeks dismissal on forum non
conveniens grounds must specifically identify the witnesses who he anticipates
should be called to testify and describe the substance of their testimony. See
Firegreen Ltd. v. Claxton, 160 AD2d 409, 412 (1 st Dept. 1990); O'Connor v.
Bonanza Int'l, Inc., 129 AD2d 569, 569-70 (2d Dept. 1987); Factors Etc., Inc. &
Boxcar Enters. Inc. v. Pro Arts, Inc., 579 F2d 215, 218 (2d Cir. 1978).
Notwithstanding this requirement, in his opening brief, Al Sanea made no effort to
identify any witnesses. Not until he filed his reply brief below did he eventually
provide an affidavit - his own - identifying non-party witnesses he asserts may
have relevant testimony. (R. 1295-1304 5). But on close inspection of this
22 AIIAB recently filed suit against Stewart and served him at his home in Los
Angeles, California. Proof of Service (filed April 5, 2011), D.J. 7, Ahmad Hamad
Al Gosaibi & Brothers Co. v. Stewart, I1-cv-2596 (DEF). This Court may take
judicial notice of the California judicial record as to Stewart's current location.
See Perez v. N. Y Housing Auth., 47 AD3d 505, 506 (1 st Dept. 2008); Kings brook
Jewish Med Ctr. v. Allstate Ins. Co., 61 AD3d 13, 20 (2d Dept. 2009).
affidavit, few, if any, of Al Sanea's purported witnesses are represented to have
testimony germane to the Mashreq fix transactions. They are proffered instead on
a variety of irrelevant topics, such as Al Sanea's general authority to act on
AHAB's behalf, the practices of AHAB partners in executing documents, AHAB's
accounting procedures, unspecified transactions between AHAB and Awal, and the
like."3 (R. 1295-1304 T 5). That is plainly not what this case is about, suggesting
that Al Sanea prepared his makeweight list to distract from analysis of the
witnesses who likely have testimony actually relevant to these claims.
Moreover, quite apart from the irrelevancy of their likely testimony, of the
27 purported witnesses he identified, 17 are (or were) Al Sanea's own employees,
either through his personal business organization (the Saad Group) or the bank he
owns (Awal), (R. 1295-1304 5b-j, r-z), and, hence, are available to him if he
wants their testimony. Five are (or were) AHAB employees, (R. 1300-01 T 5m-p),
and similarly can be expected to cooperate with a proceeding in New York if their
testimony were required. Of the remaining five, three are said to be in the UAE,
(R. 1303 T 5aa), one is an outside accountant living in Saudi Arabia, (R. 1301
5q), and the role of the fifth is not specified (R. 1303-04 T Sbb). As with the
parties themselves, it was uncontested that their respective current and former
23 Al Sanea's effort to shift the focus from the core issues of fraud and conversion
to non-issues such as his general authority to act for AHAB is discussed infra at
employees are not qualified to testify' in Saudi Arabia for reasons of potential bias.
And 24 of the 27 live outside the UAE, (R. 1295-1304 T 5), the other country that
the court below considered as a possible alternative forum.
The court also curiously conflates three different Middle East countries and
seems to suggest that the presence of a witness in one of them supports a forum
non dismissal in favor of another country. It is difficult to deduce how, on the
basis of the record in front of it, the court could have concluded that the presence
of witnesses in Saudi Arabia or Bahrain could make the UAE a convenient forum
for adjudicating these claims, or vice versa. No evidence was submitted below
concerning, for example, the ability of a UAE court to obtain or compel testimony
from a witness in Bahrain or Saudi Arabia. And yet the court below appears to
have weighed the fact that there are witnesses resident in other Middle East
countries as a factor favoring dismissal in favor of Saudi Arabia and/or the UA-E.
That each of these - the UAE, Bahrain, and Saudi Arabia - is an entirely separate
country with its own separate legal system, appears to have been either overlooked
or discounted by the court below.
Moreover, contrary to Al Sanea's sweeping claim that "many if not all of the
witnesses speak Arabic as a first language," (R. 622 27), the very reverse is true.
The key witnesses with knowledge of Al Sanea's Ponzi scheme, including Al
Sanea himself, speak English, many as their first language, and most do not speak
any Arabic. (R. 93 8 TT 10- 11). This fact also weighed in favor of keeping this
case in New York. See Republic of Lebanon v. Sotheby 's, 167 AD2d 142, 145 (1 st
Dept. 1990); Creditanstalt, 4 Misc 3d at 485.2
Unfortunately, the court never appeared to abandon its initial, but
unsupported, impression, as stated at the hearing held in advance of the forum
hearing, that this is a dispute among exclusively Arab speakers over transactions
taking place in far-off undifferentiated Middle Eastern countries. The evidence is
2. The Location and Language of Documents.
Similarly, Al Sanea's affidavit broadly asserted that "all of AHAB's
documentary evidence [is] all in Saudi Arabia" and that many of these documents
"6are in Arabic, necessitating extensive translations." (R. 620 T 19, 623 27).
These sworn statements, too, were misleading. In the proceedings below, AR-AB
provided an affidavit listing the key documents pertinent to this dispute and
identifyiing the language in which they are written. (R. 738). Al Sanea furnished
no list of documents in response, content to rest on his unsupported assertions.
While there are certain documents located in Saudi Arabia that may shed
light on Al Sanea's defalcations, as shown in the evidence of record below, many
relevant documents pertaining to the instant dispute are located in New York and
24 No evidence was adduced below concerning the language skills of Mashreq's
employees involved in the scheme.
the UAE. The BOA and HSBC records that document these transactions are all in
New York. Mashreq's records documenting the underlying fraudulently created
credit facilities are, presumably, in the UAE or at its branch in New York.
AHAB's documents relevant to the Mashreq transactions have been scanned and
can be made available in New York with little difficulty. The relevant documents
were written in English, the language of international finance .2 (R. 668 29, 738-
42, 941 15-18). Indeed, these documents would need to be translated into
Arabic in order to litigate these claims in Saudi Arabia or the UAE. This factor
strongly supports litigation here. See Sotheby 's, 167 AD2d at 145.
3. Access to Witnesses and Documents.
The current location of key witnesses and documents is pertinent to the
ultimate issue of whether and how the competing fora can actually access the
relevant evidence. Al Sanea struggled below to portray AHAB's submissions on
this issue as motivated by its desire to take advantage of New York's liberal
discovery rules, despite the fact that this lawsuit was initiated by Mashreq and not
25 See AHAB's Opp. to Al Sanca Mot. to Dismiss (Feb. 5, 20 10) at 10.
26 As is set forth in the Hayley Affidavit, the activities of the Money Exchange and
AHAB's other financial units were conducted in English, and not only the
pertinent transactional documents but all pertinent documents are written in
English, or in limited cases, side-by-side English and Arabic. (R. 941 TT 16-17)
(documents regarding fix business, operating documents, internal memoranda,
facilities and similar agreements, account statements, wire transfer and other
instructions to banks all in English); (R. 941 15) ("The [Money Exchange]
carried out [its] business almost entirely in English").
by AHAB. While the availability of discovery in the competing fora has its own
role to play in a forum analysis,27 the more important issue is a functional one -
namely which forum provides superior access to testimony and documentary
evidence for use at trial, since absent such access in the forum under consideration,
a dispute plainly cannot be "better adjudicated" there.
Since here the witnesses are scattered, no court, least of all a Saudi or UAE
court, will be able to compel all of them personally to appear for trial. New York
can compel the testimony of the parties - Mashreq, the AHAB partners, and Al
Sanea - and through the parties can obtain pertinent testimony by their present
In sharp contrast, as set forth in the expert affidavit of Professor Frank
Vogel, the former Director of the Islamic Legal Studies Program at Harvard Law
School, that AHAB submitted in the court below, Saudi Arabia cannot compel
Mashreq and its non-Saudi employees to come to Saudi Arabia for trial, since they
are not subject to process in that country. (R. 950-5 1 19). Similarly, Saudi
Arabia cannot compel BOA or HSBC employees or the former AHAB employees
who have departed Saudi Arabia and moved back to their home countries to come
to trial. (Md) Further, Saudi Arabia does not permit compulsory process to be
served on any non-party witnesses, wherever they are located, if they are unwilling
27 Eg. Banco Nacional, 169 Misc 2d at 192; Sotheby 's, 167 AD2d at 145.
to testify voluntarily. (1d.) Finally, and most importantly, because their bias is
presumed as a matter of Saudi law, the parties themselves and their employees and
agents are not deemed to be competent to testify as witnesses on their own (or their
principal's) behalf, and any statements they make to the Saudi court, if contested,
would have to be confirmed by independent evidence. (R. 952 T 23); e.g., Rhodes
v. ITT Sheraton Corp., No. 97-4530-B, 1999 Mass. Super. LEXIS 2, at *6 (Mass.
Super. Ct. Jan. 15, 1999) ("All parties [under Saudi Arabian law] are presumed to
be prejudiced in favor of themselves and therefore are not considered to be reliable
witnesses"). Thus, a Saudi court would have little, if any, access to the substantive
evidence in this complex international dispute. Al Sanea did not challenge
Professor Vogel's submissions on these procedural aspects of Saudi law.
These provisions of Saudi law also point to a fundamental fallacy in the
court's reference to the temporary travel ban Saudi Arabia has imposed on Al
Sanea and the AHAB partners. Because Saudi Arabia's evidentiary rules
admittedly would preclude, on grounds of bias, testimony by the parties on their
own behalf as well as by the parties' present or former employees, the existence of
the travel ban does not tilt the analysis in favor of a Saudi forum. In fact, it tilts the
analysis decidedly in favor of New York, which turns out to be the only forum in
which the parties - notwithstanding the travel ban - could conveniently testify (or
testify at all).2 Moreover, in New York alone are there procedures that provide for
taking their testimony live through video-links or by depositions de bene esse.2
Thus, New York, and not Saudi Arabia, is the one forum where sworn testimony
can most conveniently be taken from virtually all relevant witnesses.
Access to non-party witnesses who are no longer or never were employees
of the parties also favors New York over Saudi Arabia. Non-party witnesses
located in New York who were in charge of the correspondent bank accounts at
BOA and HSBC and who can attest to the ownership of these accounts and the
flow of funds through them can be compelled to appear here. BOA had a
significant role in operating extremely active bank accounts (more than $160
billion post-September 11) and has highly relevant testimony; this is not simply the
testimony of administrative functionaries monitoring computerized transactions,
Because the United States is a signatory to the Hague Evidence Convention
and has adopted other international procedures such as letters rogatory for taking
evidence, New York also has established facilities in place for the taking of
28 The travel ban equally precludes attendance of the parties at trial in the UAE, the
alternative forum that the court ultimately found to be more convenient, at least for
Mashreq's debt claim.
29 Again, there is no record as to the availability of such procedures in the UAE,
and, hence, no basis for an inference that it is a suitable alternative forum on that
depositions of non-party witnesses abroad. Nor is there a bar on taking voluntary
depositions in Saudi Arabia.
The most important witness to Al Sanea's fraudulent conduct, Mark Hayley,
who managed the Money Exchange's operations and implemented Al Sanea's
instructions regarding these f/x transactions, is located in London and will be
available for deposition and likely will agree to come to New York to testify.
Glenn Stewart, another Al Sanea co-conspirator, now lives in California and is
subject to process in that state at the behest of a New York court. In contrast,
Saudi Arabia is not a Hague signatory, and its courts have no procedures for
compelling the testimony of non-party witnesses by depositions outside of Saudi
Arabia. (R. 950 T 19). It is fanciful to think that these individuals would return
there. The ability of New York courts to compel testimony of foreign witnesses
via letters rogatory or international conventions, by itself, justifies retaining this
action in New York, particularly where such devices are unavailable in the
competing fora, like Saudi Arabia. See R. Maganlal & Co. v. M G. Chem. Co., 942
F72d 164, 169 (2d Cir. 1991); Overseas Programming Co. v. Cinematographisce
Commerz-Anstalt, 684 F72d 232, 235 (2d Cir. 1982).
The same is true as to documents. The documents showing the flow of
funds through the New York bank accounts are here. Wherever the originals of
other pertinent documents are located' 30 New York has procedures that can require
their production and authentication. Again, Saudi Arabia has no equivalent
procedures for accessing documents outside that country for use in trial in its
courts. (R. 952 22).
Especially in an action for fraud, where the success of the defendant's
scheme depends on his ability to shroud the fraud in secrecy, hide documents,
maneuver across national borders, and prevent its victims from learning the facts,
access to proof is essential to uncovering the full extent of the defrauder's
wrongdoing. In matters like this one involving complex facts, New York has
recognized the importance of both discovery and access to proof at trial in
retaining jurisdiction here. See, e.g., Waterways Ltd v. Barclays Bank PLC, 174
AD2d 324, 328 (1 st Dept. 199 1); Sotheby's, 167 AD2d at 145.
4. Controlling Law.
New York law will apply to the Mashreq fraud because it involves a tort that
occurred within this state - the misuse of New York banks in carrying out
fraudulent f/x transactions resulting in the theft of the proceeds of a New York
30 One reason AHAB sought Al Sanea's deposition in advance of the disposition of
his forum motion was to explore whether he has removed or arranged for the
removal of original documents from files previously maintained in Saudi Arabia,
Bahrain, Switzerland, and the Cayman Islands and to determine where he has
secreted them. For example, an important finding in the Hibis report to the Public
Prosecutor of Bahrain, who is investigating criminal charges against Al Sanea in
that country, is that Al Sanea removed loan files from Awal in order to hide
evidence of his fraudulent activity there. (R. 840-4 1).
bank account. The law of the jurisdiction where the tort occurred will generally
apply because that jurisdiction has the greatest interest in regulating behavior
within its borders. Schultz v. Boy Scouts ofAm., 65 NY2d 189, 195 (1985). Under
New York law, a tort occurs "where the last event necessary to make the actor
liable occurred." Id In the final throes of his elaborate Ponzi scheme, Al Sanea
stole $191 million from AHAB, and this theft occurred entirely in New York. (R.
114 T 27). This last event necessary to Al Sanca's liability therefore occurred in
New York, and New York law will apply to Al Sanea's tortious conduct. See, e.g.,
Banco Nacional, 169 AD3d at 187; Plesch v. Banque Nationale de la Republique
d'Haiti, 273 AD 224, 227 (1 st Dept. 1948).1
The one issue identified by Al Sanea as possibly raising an issue of foreign
law is his contention that this action will turn on principles of agency under Saudi
law. This manufactured contention is incomprehensible particularly at this stage of
the proceedings where the allegations of the third-party complaint must be
accepted as true. Whatever authority Al Sanea had under Saudi law as AHAB's
agent, there is no basis for the suggestion that Saudi law conferred on him
authority to plunder the assets of the partnership as is alleged in the complaint. He
provided no evidence below as to how Saudi law on agency might differ from New
3 1 Al Sanea's conversion was complete when he caused the funds on deposit in
AHAB's account at BOA to be transferred to Awal's account at HSBC and thereby
placed them beyond AHAB's control.
York law on any issues actually in dispute. This is hardly surprising. No system
of law permits an agent to loot his employer's company, and, in any event, New
York courts would never apply such a rule.
In sum, the court below ultimately made no finding that this dispute would
be "better adjudicated" (or even could be adjudicated at all) in Saudi Arabia or the
UAE. Nor would there have been a basis for such a finding. As to the UA-E, the
parties did not address, and the court did not attempt to analyze, the Pahlavi factors
in respect of whether AHAB's counterclaim and third-party complaint could be
pursued in that country. The court simply noted that Mashreq had a later-filed
action on its own claim there, but it did not inquire whether the UAE was an
available, much less a better, forum for adjudicating AHAB's claims. Mashreq
conceded the counterclaim could not be litigated there. As to Saudi Arabia, there
was substantial evidence presented concerning its unsuitability as an alternative
forum. But the court never weighed this evidence. Its failure to make any finding
on this "most important" factor constitutes reversible error.
D. The Court's Analysis of the Forum Non Conveniens Factors Was
Based on a False Premise as to the Nature of AHAB's Claims.
It is the complaint's well-pleaded allegations against which the forum
evidence must be measured. It is plainly not open to the party seeking a forum
dismissal to unilaterally recast the claim, conjuring up allegations more to his
liking, and then proffer forum evidence that is only pertinent to those imagined
allegations. Yet that is precisely what Al Sanea did here, and the court below
accepted it, improperly deciding what was pertinent to its forum analysis based on
Al Sanea's mischaracterization of AHAB's claims. This alone is reversible error.
AiHAB's third-party complaint alleges fraud, forgery, improper use of
AHAB's credit to borrow money not for AHAB's benefit but to line Al Sanea's
pockets, and outright theft of funds from a bank account at BOA in New York.
This is not a case about a simple breach of authority. But in Al Sanea's remaking,
the complaint focuses solely on his having engaged in these financial transactions
without first receiving proper authority from AHAB as his principal. Undoubtedly,
he prefers that made-up claim to the fraud and theft claims actually pleaded.
That the court accepted Al Sanea's recharacterization of AHAB's claims is
evident in the way it framed the issue in its written opinion: for the court the
question was "whether or not Mr. Al Sanea was authorized to do what he did." (R.
24). Rather than define the claim by the well-pleaded allegations of the third-party
complaint, the court instead adopted Al Sanea's self-interested recasting of that
complaint. The court's acquiescence in this distortion was a fundamental error that
affected its entire analysis.
Thus, Al Sanea's motion to dismiss presented a truncated version of the case
where, according to Al Sanea, the only issue that mattered was his authority and
the only basis to determine it was through application of Saudi law. But the third-
party complaint asserts that Al Sanea defrauded AHAB and stole its money,
conduct that can never be authorized, no more in Saudi Arabia than in New York.
Viewed through the correct lens, the most important witnesses whose testimony
will be essential are Al Sanea's confederates within the Money Exchange and other
nominal AHAB business units with whom he conspired to plan and implement his
scheme. As shown in AHAB 's submission,, these witnesses include Mark Hayley
and Glenn Stewart, Al Sanea's primary co-conspirators, as well as their main
subordinates, who helped Al Sanea orchestrate his fraud, virtually none of whom is
still in Saudi Arabia and who could not, in any event, provide evidence in Saudi
To put the issue in perspective, a claim of embezzlement hardly turns on
whether the defalcating employee had authority to write checks on his employer's
account. His check-writing authority is typically a given. In the absence of such
authority, he likely would have had no opportunity to embezzle funds by writing
checks to his own use. The same holds true here, where Al Sanea wrote more than
$2 billion in checks payable to himself and his companies. The activities of
interest for forum purposes are those pertinent to Al Sanea's use of bogus f/x
transactions to line his own pockets and not those pertinent to his general authority
to act in AHAB's name and on its behalf in carrying out legitimate AHAB
business. In adopting Al Sanca's "authority" straw man, the court below thus
focused on the wrong set of activities and drew a correspondingly incorrect
conclusion concerning the significance of foreign law in AHAB's case.
IV. The Court Improperly Precluded AHAB from Taking Forum-Related
Discovery in Advance of any Ruling on Al Sanea's Motion.
Al Sanea relied on his own affidavit in support of his highly fact-intensive
motion to dismiss on personal jurisdiction and forum non conveniens grounds.
Promptly after Al Sanea filed his motion, AHAB noticed his deposition in order to
take jurisdictional and forum discovery. (R. 1507). Al Sanea responded with a
motion for a protective order to preclude AHAB from taking his deposition or
pursuing any other such discovery. (R. 1481). At a scheduling conference on
January 5, 2010, the court ordered that "at this juncture, all discovery stops." (R.
659). Thereafter, the court left this prohibition of discovery in place while all
briefing and oral argument on the merits of the motion to dismiss were completed,
and the court issued its decision dismissing on forum grounds without ever lifting
its prohibition of discovery. Ironically, in its forum decision, the court ultimately
denied Al Sanea's motion for a protective order as "moot." (R. 28).
The court's refusal to permit AHAB to take forum discovery in advance of
any decision on the motion to dismiss was clear error. Many of the facts relevant
to the forum analysis were within Al Sanea's personal knowledge. These included:
(i) Al Sanea's directions to his agents to cause the transfer of hundreds of millions
of dollars between New York City bank accounts; (ii) his knowledge of the
location of documents and witnesses; (iii) his knowledge about the ownership,
control, and operations of the Money Exchange, other AHAB business units over
which he exercised control, and his own bank Awal in their dealings with New
York banks. The need for such discovery became even more acute when Al Sanea
later supplemented his initial affidavit to list numerous witnesses he asserted had
important evidence. (R. 1295-1304 T 5). Absent AHAB's ability to cross-examine
Al Sanea to explore how little information, if any, many of these so-called key
witnesses had about the matters in genuine dispute, its ability to refute Al Sanea's
assertion was improperly handicapped. The same was true with respect to
documents. Al Sanea swore that the key documents were all located in Saudi
Arabia, (R. 620 19), yet the consultant retained by the Public Prosecutor of
Bahrain found that Al Sanea had removed files in order to hide evidence of his
fraudulent conduct in that country. (R. 840-41). Plainly, Al Sanea's affidavit as to
the location of documents in Saudi Arabia was not entitled to go untested.
Even taken at face value, Al Sanea's affidavits were carefully crafted to
disclose only one extraordinarily narrow slice of the factual picture, and to conceal
numerous important facts. The most efficient and least burdensome way to obtain
critical information pertinent to the issue of forum was for the court to require Al
Sanea to appear in Saudi Arabia for a deposition. Yet it improperly refused such
relief and decided the motion based on Al Sanea's untested assertions.
The Rules of the Commercial Division allow for discovery to proceed while
a motion to dismiss is pending. Uniform Rules for Trial Court (22NYCRR) §
202.70 (11 (d)); Practices for Part 56 6. The Commercial Division has modified
the general presumption of an automatic stay of discovery once a motion to dismiss
is filed. Compare CPLR 32 14(b) with Commercial Division Rule 11(d)
(22NYCRR § 202.70 (11(d)) and Practices for Part 56 6. This modification
permitted AHAB to proceed with discovery in aid of its opposition to Al Sanea's
Defendants are routinely required to submit to jurisdictional and forum
discovery, including depositions, while their motions to dismiss on these grounds
are pending. See, e.g., Peterson v. Spartan Indus., Inc., 33 NY2d 463, 467 (1974).
The most frequently cited decision on the point in this Court is Rivera de
Enamorado v. Central Am. Steamship Agency, Inc., 160 AD2d 182 (1st Dept.
1990). As Rivera de Enamorado recognized, permitting discovery prior to a
decision on forum non conveniens is entirely proper where the plaintiff makes "the
minimal required showing that the requested discovery of [defendant] could
adduce facts establishing New York as a proper forum for this action." Id.
Compare Garmendia v. O'Neill, 46 AD3d 361, 362 (1st Dept. 2007) (court
properly declined to adjourn motion to permit discovery where plaintiff failed to
make this minimal showing).
The purpose of jurisdictional and forum discovery is to "protect the party
to whom essential jurisdictional facts are not presently known, especially where
those facts are within the exclusive control of the moving party." Peterson, 33
NY2d at 466. Only after conducting jurisdictional and forum discovery and
thereby testing the facts within defendant's knowledge is a plaintiff in a fair
position to oppose the defendant's motion. See Rivera de Enamorado, 160 AD2d
at 182. Jurisdictional discovery is useful to a plaintiff precisely because the
plaintiff is able to incorporate the results of its discovery into its opposition to a
defendant's motion to dismiss. See Martinez v. Patel, 126 Misc 2d 985, 985-86
(Sup. Ct. Kings Cty. 1985) (discovery appropriate to assist with response to
Al Sanea argued below that early jurisdictional and forum discovery is
justified only in extraordinary circumstances. The very opposite is true. The legal
standard that governs whether a plaintiff is entitled to such discovery is purposely
low. The Court of Appeals has held that whenever a plaintiff makes a "sufficient
start," i.e., a non-frivolous showing that facts pertinent to an acceptable basis for
jurisdiction may exist, a plaintiff is entitled to discovery and thus need not make a
prima facie showing at the pre-discovery stage. Peterson, 33 NY2d at 467. The
plaintiff must show that such facts may exist, not that they do exist. Id.; see also
6A Carmody-Wait 2d § 38:115 (2011); 7B McKinney's Consol. Laws of N.Y.
Ann. Commentary CPLR 3211:C32 11:48 (McKinney 2011).
This Court has made clear that it does not permit a defendant to slam shut
the door to the courthouse without giving the plaintiff the opportunity to develop a
proper factual record on the issue of forum non conveniens. In Rivera de
Enamorado, 160 AD2d at 182, this Court ruled as follows:
Plaintiff made the minimal required showing that the requested
discovery of Victory could adduce facts establishing New York as a
proper forum for this action. Since such facts would aid plaintiff in
[its] opposition to the motion to dismiss, the court properly adjourned
that motion until after completion of discovery.
AHAB plainly made more than a "sufficient start" to establish that Al Sanea
likely had information pertinent to showing that New York is the proper forum for
adjudicating this dispute. See, e.g, Am. BankNote, 45 AD3d at 340; Hayne v.
Darden Jr., No. 600971/05, 2005 NY Misc LEXIS 3601, at *4-.5 (Sup. Ct. New
York Cty. Dec. 6, 2005). The lower court's refusal to allow AHAB to depose Al
Sanea or take any other forum discovery before deciding the motion to dismiss was
For the foregoing reasons, appellant AHAB respectfully submits that the
decision below dismissing this action on grounds of forum non conveniens should
be reversed and the action reinstated. This case concerns fraud and theft that
occurred in the County of New York. It raises the critical issue of whether New
York as a matter of policy will intervene in international fraud where the
transactions that constitute the fraud are centered in New York.
In the alternative, the decision should be reversed and remanded with
instructions that AHAB be permitted to take forum discovery followed by
reconsideration of themotion on a fuller record.
BAACH ROBINSON & LEWIS PLLC
/5/ Eric L. Lewis
Eric L. Lewis
1201 F Street, NW, Suite 500
Washington, DC 20004
445 Park Avenue
New York, NY 10022
Attorneys for Defendant-Appe/lant/
Dated: May 27, 2011
PRINTING SPECIFICATION STATEMENT
This computer generated brief was prepared using a proportionally spaced
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compliance is 12,846.
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
Plaintiff, Index No. 601650/2009
- against - IAS Part 56
AHMED HAMAD AL GOSAIBI & BROTHERS CO.,
--------------------------------- - -- ------- x
AHMED HAMAD AL GOSAIBI & BROTHERS
Index No. 590643/2009
Third Party Plaintiff IAS Part 56
MAAN ABDULWAHEED AL SANEA and
AWAL BANK BSC,
Third Party Defendants
1 . TITLE OF THE ACTION:
Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Brothers Co. v. Maan Abduiwaheed
Al Sanea and Awal Bank BSC.
2. FULL NAME OF ORIGINAL PARTIES:
As stated in caption, except that the correct spelling of defendant / third party plaintiff s
name is Ahmad Hamad Al Gosaibi & Brothers Co.
3. NAME, ADDRESS. & TELEPHONE NUMBER OF COUNSEL FOR APPELLANT:
521 Fifth Avenue, 1 7 'h Floor
New York, New York 10 175
Eric L. Lewis
BAACH ROBINSON & LEWIS PLLC
1201 F Street, NW, Suite 500
Washington, D.C. 20004
4. NAME. ADDRESS. & TELEPHONE NUMBER OF COUNSEL FOR
Carmine D. Boccuzzi, Jr.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
Counselfor Plaint iff
Robert F. Serio
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10166
Counsel for Third Party Defendant
Maan AbduiwaheedAl Sanea
5. COURT AND COUNTY FROM WHICH APPEAL IS TAKEN:
Supreme Court of the State of New York, County of New York.
6. DECISION AN) ORDER APPEALED FROM:
This is an appeal from an order dated July 26, 2010, and filed on July 29, 2010,
that granted third party defendant Maan Abduiwaheed Al Sanea's motion to
dismiss the third party complaint pursuant to CPLR 3 27(a) and the common law
doctrine offorum non conveniens and dismissed, sua sponte on the same grounds,
the principal action and counterclaim in this matter; and Judgment entered on
August 11, 2010.
7. NATURE AND OBJECT OF THE CASE:
The original complaint filed by plaintiff Mashreqbank PSC ("Mashreq") against
defendant and third party plaintiff Alimad Hamad Al Gosaibi & Brothers Co.
("AHAB") sought recovery of $150 million that Mashreq allegedly transferred to a New
York bank account in the name of AHAB pursuant to a foreign exchange transaction.
In addition to answering the complaint and asserting affirmative defenses, AHAB filed
a third party complaint against Maan Al Sanea ("Al Sanea") and Awal Bank BSC
("AWAL Bank"'), a bank that is owned and controlled by Al Sanea, for indemnification
and damages if AHAB were to be found liable to Mashreq. AHAB also filed a
counterclaim against Mashreq. The third party claim and counterclaim allege that the
transaction which forms the subject of the principal claim is part of a massive fraudulent
scheme that Al Sanca perpetrated, and Mashreq aided and abetted, through which Al
Sanea caused unauthorized borrowing of more than $10 billion in the name of AHAB
and then transferred the bulk of those funds to the accounts of companies that he owned
and controlled. The foreign exchange transaction at issue in Mashreq's complaint was
carried out by Al Sanea as part of a sequence of billions of dollars of fraudulent foreign
exchange deals through New York over a five year period to hide disguised short term
borrowing to keep the enormous Ponzi scheme in operation. The funds received from
Mashreq in that exchange were transferred from the Bank of America account in New
York to another bank account in New York under Al Sanea's control at AWAL Bank
BSC for Al Sanea's personal benefit, which prevented AHAB from having access to
funds to close out the transaction on which Mashreq claims an underlying debt. The
vast majority of these transactions, and the multi-billion dollar fraud of which this is a
part, all took place through the New York financial system and the funds paid into the
Bank of America account by Mashreq were converted by Al Sanea to his own use in
8. RESULT REACHED IN THE COURT BELOW:
The Court below found that it had jurisdiction over Al Sanea but granted Al Sanea's
motion to dismiss the third party complaint pursuant to CPLR 327(a) and the common
law doctrine of forum non conveniens. The court ruled sua sponte that the principal
action and counterclaim should also be dismissed on the same grounds.
9. GROUNDS FOR SEEKING REVERSAL:
The court below improperly dismissed AHAB's claims against Al Sanea, as well as the
principal action and counterclaim, even though (i) the Court found that the transactions
at issue in the complaint, counterclaim and third party claim constituted the transaction
of business in New York sufficient to permit the exercise of jurisdiction over Al Sanea;
ii) Al Sanea's overall fraud was accomplished through his enormous and necessary
misuse of the New York banking system, and through hundreds of foreign exchange
transactions worth billions of dollars carried out in New York; (iii) the transaction at
issue in Mashreq's complaint involved the remittance by Mashreq of $150 million to an
account in AHAB's name at Bank of America in New York; (iv) Al Sanea converted
the $150 million by transferring it from the account in AH-AB's 'name at Bank of
America in New York to another account in New York at HSBC; (v) no party moved to
dismiss either the principal action or the counterclaim; and (vi) while the instant case
would allow the dispute to be decided in a single proceeding in a single forum, the
court's ruling fails to consider that there is no single alternative forum for this dispute
and that resolution of the dispute would require at least three separate proceedings in
separate jurisdictions, if those jurisdictions are able to hear this dispute at all. The
Court of Appeals has held that New York has an "overriding and paramount" interest in
this type of transaction, to which the New York banking system was instrumental. See
J Zeevi and Sons, Ltd. v. Grindlays Bank (Uganda) Ltd., 33 3 N.E.2d 168, 172 (1975).
Dated: New York, New York
August 27, 2010
DAVID P. STICH, E
5f 1 Fift A--venue, 17h Floor
New York, New York 10 175
Eric L. Lewis
MAACH ROBINSON & LEWIS PLLC
1201 F Street, NW, Suite 500
Washington, D.C. 20004
Counsel for Defendant IThird Party Plaintiff
Clerk of the Supreme Court of the State of New York
County of New York
60 Centre Street
New York, New York 10007
Carmine D. Boccuzzi, Jr.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, NY 10006
Counselfor Plaint iff
Robert F. Serio
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, NY 10 166
Counsel for Third Party Defendant
Decades of Expefience QCutt~ng Edge Technology
229 West 36th Street, New York, N.Y. 10018 - Tel: (212) 619-4948 - Fax: (2121 608-3141
STATE OF NEW YORK,I
SS: AFFIDAVIT OF SERVICE
COUNTY OF NEW YORKI
Daniel Vinci being duly sworn, deposes and says that deponent is not party to the action, and is over
1 8 years of age.
That on the 27th day of May 2011 deponent served 2 copies of the within
BRIEF FOR DEFENDANT-APPELLANT!
upon the attorneys at the addresses below, and by the following method:
BY HAND DELIVERY AND ELECTRONIC MAIL
Carmine 0. Boccuzzi, Jr.
Cleary Gottlieb Steen & Hamilton LLP
One Liberty Plaza
New York, N.Y. 10006
Attorneys for Plaintiff-Respondent
Robert F. Serio
Gibson, Dunn & Crutcher LLP
200 Park Avenue
New York, N.Y. 10166
Attorneys for Third-Party Defendant-Respondent
/s/ Nadia R. Oswald Hamnid
Sworn to me this
May 27, 2011 Is/ Daniel Vinci
NADIA R. OSWALD HAMID Case Name: Mashreqbank PSC v. Ahmed
Notary Public, State of New York Hamad Al Gosaibi & Brothers Company
No. Ol0S6101 366
Qualified in Kings County
Commission Expires November 10, 2011