APL-2013-00007 To Be Argued By:
ERIC L. LEWIS
New York County Clerk's Index Nos. 60 1650/09 & 590643/09
APPELLATE DIVISION-FIRST DEPARTMENT
Index No. 601650/09
MASHREQBANK PSC,
Pla intiff-Respo nde nt,
-against-
AHMED HAMAD AL GoSAIBI & BROTHERS COMPANY,
Defendant-Appellant.
Index No. 590643/09
ARMED HAMAD AL GOSAIBI & BROTHERS COMPANY,
Third-Party Plaint iff-Appellant,
-against-
MAAN ABDUL WAHEED AL SANEA,
Third-Party Defendant-Respondent,
AWAL BANK BSC,
Third-Party Defendant.
REPLY BRIEF FOR DEFENDANT-APPELLANT/
THIRD-PARTY PLAINTIFF-APPELLANT
ERIC L. LEWIS
BAACH ROBINSON & LEWIS PLLC
1201 F Street, NW, Suite 500
Washington, D.C. 20004
(202) 833-8900
445 Park Avenue
New York, N.Y. 10022
(212) 826-7001
eric. lewis@baachrobinson.com
Attorneys for Defendant-Appellant/
Third-P arty Plaintiff-Appellant
REPRODUCED ON RECYCLED PAPER
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ............................................................ ii
1. The Pahlavi Forum Factors................................................ 3
A. This action has a powerful New York nexus, and New
York has an "overriding and paramount interest" in its
adjudication.......................................................... 3
B. The parties' superior access to proof in New York and
the foreclosure of such proof in both Saudi Arabia and
the UAE means that AHAB's claims will be "better
adjudicated" here................................................... 10
C. Litigation in New York will impose less hardship on the
parties and witnesses than any alternative forum............... 14
D. Al Sanea's and Mashreq's misconduct will be determined
Under New York law.............................................. 15
E. AHAB's opposition to aforum non conveniens dismissal
is not part of any "worldwide forum-shopping spree" or
undue multiplication of proceedings ............................. 17
11. The Supreme Court's Improper Sua Sponte Dismissal of the
First-Party Action and Its Effect on the Determination of Whether
to Retain the Third-Party Complaint in a New York Forum.......... 19
111. The Wrongful Denial of Forum Discovery ............................. 24
IV. Personal Jurisdiction over Al Sanea ..................................... 26
CONCLUSION .......................................................................... 27
TABLE OF AUTHORITIES
Pnie(s)
A&M Exports, Ltd. v. Meridien Int'l Bank, Ltd., 207 AD2d 741
(1st Dept. 1994)................................................................. 4, 19
Am. BankNote Corp. v. Dan jele, 45 AD3d 338 (1st Dept. 2007)..................... 6
A tsco Ltd v. Swanson, 29 AD3 d 46 5 (1st Dept. 2006)................................ 16
Banco do Estado de Sao Paulo S.A. v. Mendes Jr. Int'l Co., 249 AD2d 137
(1 st Dept. 1998)................................................................ 20-21
Banco Nacional Ultramarino, S.A. v. Chan, 169 Misc 2d 182
(Sup. Ct. New York Cty. 1996), aff d 240 AD2d 253
(Ilst Dept. 1997).......................................................... 3,5, 12,26
Beekmans v. JP. Morgan & Co., 945 F Supp 90 (S.D.N.Y. 1996)................. 24
Bourbon v. Bourbon, 259 AD2d 720 (2d Dept. 1999);................................ 18
Citigroup Global Jv~kts., Inc. v. Metals Holding Corp., 45 AD3d 361
(1st Dept. 2007).................................................................... 18
Creditansalt Inv. Bank A G. v. Chadbourne & Parke LLP, 4 Misc 3 d 4 81
(Sup. Ct. New York Cty. 2004) .................................................. 12
Edwards v. Erie Coach Lines Co., 17 NY3d 306 (2011).............................. 16
Ehrlich-Bober & Co. v. Univ. of Houston, 49 NY2d 574 (1980)..................... 5
Financial Guar. Ins. Co. v. 1KB Deutsche Industriebank A G, No. 0600704/0 8,
2008 WL 5478808 (Sup. Ct. New York Cty. Dec. 29, 2008)............ 12-13
First Union Nat'l Bank v. Paribas, 13 5 F Supp 2d 443 (S.D.N.Y. 200 1) ........ 3-4
Garmendia v. O'Neill, 46 AD3d 361 (1st Dept. 2007)................................ 25
Globalvest Mgmt. Co. L.P. v. Citibank, N.A., No. 603 386/04,
2005 WL 1148687 (Sup. Ct. New York Cty. May 12, 2005) ................ 12
Hart v. Gen. Motors Corp., 129 AD2d 179 (1 st Dept. 19 87)........................ 16
Imperial Imports Co., Inc. v. Hugo Neu & Sons, Inc., 161 AD2d 411
(1 st Dept. 1990).................................................................... 20
Islamic Republic of Iran v. Pahlavi, 62 NY2d 474 (1984)........................ 3, 11
Istim, Inc. v. Chemical Bank, 78 NY2d 342 (199 1) ................................... 16
J Zeevi & Sons, Ltd v. Grindlays Bank (Uganda) Ltd., 37 NY2d 220 (1975) .... 3,5S
Kuwaiti Eng'g Group v. Consortium Int'l., No. 060033/05, 2007 WvL 2175546
(Sup: Ct. New York Cty. Mar. 15, 2007)........................................ 12
Nasser v. Nasser, 52 AD3d 306 (1st Dept. 2008)...................................... 19
Navallo v. Am. Standard, Inc., 224 AD2d 599 (2d Dept. 1996)..................... 16
Otor, S.A. v. Credit Lyonnais, S.A., C.A. No. 04-6978, 2006 WVL 2613 775
(S.D.N.Y. Sept. 11, i 2006)......................................................... 25
Overseas Programming Co., v. Cinematographische Commerz-Anstalt,
684 F2d 232 (2d Cir. 1982) ..................................................... 1, 2
P. T Delami Garment Indus. v. Cassa di Risparmio di Torino, 164 Misc 2d 3 8
(Sup. Ct. New York Cty. 1994).................................................... 4
Padula v. Lilarn Props. Corp., 84 NY2d 519 (1994).................................. 15
Panama Processes, S.A. v. Cities Serv. Co., 650 F2d 409 (2d Cir. 1981).......... 13
Piper Aircraft Co. v. Reyno, 454 US 235 (1981) ...................................... 11
R. Maganlal & Co. v. MG. Chem. Co., Inc., 942 F2d 164 (2d Cir. 199 1) ....... 1, 2
Republic of Lebanon v. Sotheby's, 167 AD2d 142, 145 (1 st Dept. 1990) .......... 12
Royal & Sun Alliance Ins. Co. of Canada v. Century t 'l Arms, Inc.,
466 F3d 88 (2d Cir. 2006) ........................................................ 18
Schultz v. Boy Scouts ofAm., Inc., 65 NY2d 189 (1985) ............................ 15
Sears Tooth v. Georgiou, 69 AD3 d 464 (1 st Dept. 20 10)............................. 22
Serano Ltd v. Canadian Imperial Bank of Commerce, 287 AD2d 309
(1st Dept. 2001).................................................................... 19
Shiboleth v. Yerushalmi, 268 AD2d 300 (1st.Dept. 2000)............................ 20
Shin-Etsu Chemical Co. v. ICIC Bank Ltd., 9 AD3d 171 (1 st Dept. 2004) ...11, 12
VSL Corp. v. Dunes Hotel & Casinos, Inc., 70 NY 2d 948 (1988) ................. 20
Waterways Ltd v. Barclays Bank PLC, 174 AD2d 3 24 (1 st Dept. 199 1) .......... 12
World Point Trading PTE, Ltd v. Credit Italiano, 225 AD2d 153
(1 st Dept. 1996)................................................................. 4, 18
Zaveri v. E.F. Hutton & Co. Inc., C.A. No. 85-3268, 1986 WL 4063 (S.D.N.Y.
April 1, 1986)....................................................................... 13
RULES
CPLR 327.......................................................................... 20, 22, 23
CPLR 3106(a) ............................................................................. 25
Defendant-Third-Party Plaintiff-Appellant Ahmad Hamad Algosaibi &
Brothers Co. ("AHAB") respectfully submits this reply brief in response to the
opposition briefs filed by Third-Party Defendant-Respondent Maan Abdul Wahed
Al Sanea ("Al Sanea") and Plaintiff-Respondent Mashreqbank PSC ("Mashreq").
Al Sanea's opposition brief is constructed upon a false premise, namely that
this action is about whether he was authorized to engage in financial transactions
on AHAB's behalf. Since that question implicates the internal operations of the
AHAB partnership and its dealings with Al Sanea as its agent, he asserts that the
entire focus of the case should be on conduct that took place in Saudi Arabia. The
key error below was Supreme Court's adoption of this tactical recasting of
AH-AB's case, as expressed in its conclusion that the issue in dispute is "whether or
not Al Sanea was authorized to do what he did." (R. 24). That formulation
provided the critical underpinning of the court's forum non conveniens dismissal.
It could not be more wrong. AHAB 's case is about fraud and theft through New
York bank accounts, not about agency. Whatever Al Sanea was authorized to do,
he was not authorized to steal AHAB's New York property.
Improper identification of the key issues in dispute can undermine a correct
analysis of forum non conveniens. See, e.g., Overseas Programming Companies,
Ltd. v. Cinematographische Commerz-Anstalt, 684 172d 232, 235 (2d Cir. 1982); R.
Maganlal & Co. v. MG. Chemical Co., Inc., 942 F2d 164, 168 (2d Cir. 1991). Al
Sanea's general authority to act for AHAB is not the principal issue here. Instead,
AHAB's third-party complaint alleges that Al Sanea caused AHAB to enter into
financial transactions not on AHAB's behalf but for Al Sanea's own benefit and
that Al Sanea stole the proceeds of those transactions. (R. 76, 88, 104-05). These
allegations are not about breach of authority and do not require parsing the internal
operations of the AHAB partnership. They are about Al Sanea's fraud and outright
theft of AHAB's funds, misconduct that occurred in New York and is subject to
New York law.
Al Sanea mischaracterizes the nature of the action against him, distorting
AHAB 's allegations into ones more to his liking, in order to misdescribe the case
as centered in Saudi Arabia rather than New York. As shown by cases like
Overseas Programming and R. Maganlal, however, on a forum motion, the
claimant's allegations must be taken as alleged. The issue is whether the claims
actually made belong in New York, not whether a different set of claims would be
better adjudicated elsewhere.
This is the central point critical to the instant appeal. Whether this action
should remain here cannot properly be determined by viewing the issues through
Al Sanea's distorted "authority" prism. It can only be judged by assessing them in
light of the fraud and theft claims actually alleged.
1. The Pahlavi Forum Factors
The factors pertinent to forum non conveniens approved in Islamic Republic
of Iran v. Pahlavi, 62 NY2d 474 (1984), appear in a different light when examined
based on the claims AHAB has alleged rather than those Al Sanea has invented.
A. This action has a powerful New York nexus, and New York has
an "overriding and paramount interest" in its adjudication.
Plainly, the most importantforum non conveniens factor in the instant case is
the strength of the dispute's nexus with New York and this state's interest in its
subject matter. It is on this factor that Al Sanea' s mischaracterization of the nature
of the specific dispute at issue most skews the analysis.
The applicable legal principles are not seriously in dispute. Both this Court
and the Court of Appeals have long recognized that New York has a compelling
interest in disputes that involve the tortious misuse of the New York banking
system. J Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda) Ltd., 37 N-Y2d 220
(1975); Banco Nacional Ultramarino, S.A. v. Chan, 169 Misc 2d 182 (Sup. Ct.
New York Cty. 1996), aff'd 240 AD2d 253 (1 st Dept. 1997). Indeed, the Court of
Appeals has declared that interest to be "overriding and paramount." J. Zeevi, 37
NY2d at 227. By the same token, garden variety foreign business disputes, where
there is "little or no apparent contact with New York" and the use of this state's
banks has an "utterly tangential relationship" with the dispute, do not involve a
compelling nexus with New York. First Union Nat 'l Bank v. Paribas, 135 F Supp
3
2d 443, 453-54 (S.D.N.Y. 2001).1 The question presented here is whether this
dispute implicates this "overriding and paramount" interest in preserving the
integrity of the New York banking system or whether it is "utterly tangential" to
that interest. A fair reading of the allegations of AHAB's third-party complaint
and counterclaim can leave no doubt that this case, part of one of the largest
misuses of the New York banking system in history, is of critical interest to New
York.
Al Sanea attempts to caricature the allegations of the complaint, asserting
that AHAB's position is that "New York courts must bear the burden of
adjudicating every tort dispute among foreign parties that happens to involve some
connection to a U.S. dollar transaction" (Al Sanea Brief at 50). For its part,
Mashreq (now) asserts that "Al-AB's position boils down to the unsupportable
argument that because its authorized agent established one of AHAB's many bank
accounts in New York, the New York courts have an overriding interest in hearing
1AHAB has no quarrel with the legal proposition stated in the cases cited on this
issue by Al Sanea and Mashreq. Those cases are simply factually inapposite,
involving disputes where the supposed nexus to New York was that nothing
actually happened here. Paribas is typical of the handful of letter of credit cases
respondents cite that involve foreign issuers and foreign beneficiaries of letters of
credit securing foreign purchases of goods and a dishonor of the letter by a foreign
bank, in which the sole New York involvement is its complete non-involvement:
an anticipated reimbursement of funds that does not take place in New York
because of the foreign dishonor. See World Point Trading PTE, Ltd v. Credit
Italiano, 225 AD2d 153 (1st Dept. 1996); P.T Delami Garment Indus. v. Cassa di
Risparmio di Torino, 164 Misc 2d 38 (Sup. Ct. New York Cty. 1994); A&M
Exports, Ltd v. Meridien Int'l Bank, Ltd, 207 AD2d 741 (1 st Dept. 1994).
4
this case." (Mashreq Brief at 29). AHAB has argued nothing of the kind. To the
contrary, AHAB has explicitly denied making any argument that "marginal" or
"incidental" use of New York banks is sufficient to create a compelling nexus with
this state. (AHAB Brief at 23-24). Unable to refute AHAB's actual position, Al
Sanea and Mashreq make up ones they can refute.
Both respondents also suggest that AHAB's reliance on cases like Banco
Nacional and J. Zeevi is misplaced because these cases address different issues:
personal jurisdiction and choice of law. Yet the same analysis of New York's
interest in preventing abuses of its banking system underlies both the personal
jurisdiction and the forum non conveniens decisions in Banco Nacional. In all
events, the underlying factor - the strength of the New York connection and this
state's interest in the dispute - is the same for all of these issues. New York courts
routinely, and quite properly, cite cases in such analogous settings in discussing the
state interest factor. For example, in Ehrlich-Bober & Co. v. Univ. of Houston, 49
NY2d 574, 581-82 (1980), the Court of Appeals analyzed choice-of-law and long-
arm jurisdiction decisions for purposes of the separate issue of comity. The court
emphasized New York's interest as the "pre-eminent commercial and financial
nerve center of the Nation and the world,' noting that although the issues ''are
analytically distinct, there is no reason in law or logic why they may not overlap,
or even coincide." 2
It is on the allegations of facts and not on issues of law, however, that the
parties truly part company, and it is here that Al Sanea's mischaracterization of
AHAB 's claim must be deconstructed. Viewed through Al Sanea's prism, this is
nothing more than a business dispute about the scope of his authority to act for his
principal and involving only the most incidental connection with New York
correspondent bank accounts. This is simply wrong.
First, Mashreq did not enter into these fix transactions with AHAB based on
Al Sanea's authority. Even under Mashreq's assertion that it acted innocently and
not in conspiracy with Al Sanca, Mashreq expressly required its facilities letters to
be authorized personally by AHAB's chairman. It was thus on the basis of a
facilities letter purportedly signed by AHAB's then chairman, Suleiman Hamad
Algosaibi, but which ARAB alleges was a forgery, that Mashreq agreed to the f/x
transactions that are at issue here. (R. 91-92, 97). In short, this dispute is quite
explicitly not about Al Sanea's purported authority but about his fraudulent
conduct in submitting a forged loan document.
2 See also Am. BankNote Corp. v. Daniele, 45 AD3d 338, 339-40 (1st Dept. 2007)
(discussing in the context of both personal jurisdiction and forum defendants' New
York bank accounts as "central" to their fraud scheme).
6
Second, the fix transactions themselves, which Mashreq wishes to
characterize as routine transactions that happened to be routed through the CHIPs
system in New York simply because they involved U.S. dollars, were anything but
routine. As pleaded by Mashreq, the transactions involved the purchase and sale of
U.S. dollars - so the involvement of the U.S. banking system was hardly marginal
or incidental. As alleged in AHAB's counterclaim, these transactions were not
legitimate foreign exchange deals. They were instead a series of short-term loans,
amounting to more than $5 billion, at inordinately high interest rates disguised to
look like routine f/x transactions, bogus arrangements that Mashreq knew were
suspicious but that it willingly entered into because they were so profitable. (R.
92-98). Had the transactions been openly structured as high interest, short-term
loans, Mashreq could have paid the loan proceeds directly to AHAB in local
currency with no need for any connection to New York. But in order to disguise
this short-term borrowing, a New York connection was critical: these ostensible
split-value f/x transactions, trading U.S. dollars for Saudi riyals, could only be
accomplished through the New York banking system. Any other mechanism
would have made it transparent that what Al Sanea was doing, with Mashreq's
help, was engaging in non-commercial and highly suspicious borrowing.
Third, Al Sanea's ultimate conversion of the last of these f/x borrowings
indisputably had nothing to do with authority. It was outright theft, effectively a
high tech bank robbery from one New York bank, with the proceeds stashed in
another New York bank.
Al Sanea now argues that, if he stole the funds, he did so in Bahrain when
his wholly owned bank, Awal Bank, where the money ultimately ended up, refused
AHAB's demand for its return. Once again, Al Sanea prefers this version of
AHAB's claim against him because it helps to avert the focus from what happened
in New York, but this is not the claim that AHAB has made. AHAB's allegation is
that Al Sanea converted this $191 million in New York, not in Bahrain. (R. 113-
14). He did so by directing his subordinates to instruct Bank of America in New
York to transfer this sum, held in an AHAB account at BOA, to an account for
Awal Bank at HSBC in New York. New York's nexus to the dispute must be
judged based on AHAB's actual allegations, not on Al Sanea's self-serving and
erroneous revision of them.
Saudi Arabia and the UAE have considerably less interest than New York in
this dispute. To be sure, the AHAB partners and Al Sanea are Saudi citizens. But
the instant suit is limited to the f/x transactions that occurred in New York and the
theft of those funds in New York. Al Sanea invokes the investigation of the Saudi
Committee into the numerous loans and other financial commitments by Saudi
banks to AHAB that Al Sanea orchestrated, as evidence that the Committee's
involvement demonstrates Saudi Arabia's fundamental interest in the instant
action, but it does nothing of the kind. The scope of the Saudi Committee's
investigation is restricted to the parties' dealings with Saudi banks. (R. 699-702).
The Committee has eschewed any involvement in dealings by AHAB and Al
Sanea with non-Saudi banks like Mashreq.3 Whatever interest Saudi Arabia may
be said to have in disputes between Saudi citizens regarding Saudi banking
transactions, it hardly trumps the specific and concrete interest New York has in a
dispute that centers on the misuse of New York banks and the theft of funds in
New York.
The UAE may have a generalized interest in disputes involving one of its
banks. But from the UAE's perspective, its interest in the instant dispute is as a
3 One of several documents that Al Sanea submitted to supplement the record on
this appeal is a High Order (which Al Sanea misdescribes as a "Royal Decree")
based on the investigation conducted by the Saudi Committee. Al Sanea makes
two contentions based on the High Order, both of which are false and, indeed, are
inconsistent with each other. First, he argues that the High Order directs AHAB
and Al Sanea to submit the "private rights dispute" between them to the Saudi
courts for resolution, and he infers that this directive includes their dispute
concerning the Mashreq fix transactions. (Al Sanea Brief at 11). This inference is
not supported by the Order itself and is false. The Order does not direct AHAB to
dismiss the instant action or any other action. Moreover, as reflected in the first
two sections of the Order, the subject it addresses is AHAB's liability to Saudi
banks only and the settlement of that debt as between AHAB and Al Sanea. It
does not address disputes related to non-Saudi banks like Mashreq.
Second, Al Sanea argues that the Order fully resolves the instant dispute because it
"cconclusively rejects and disposes of AHAB's allegations of fraud, forgery, and
unauthorized conduct" (Al Sanea Brief at 11 n.2). This contention is fabricated of
whole cloth. The Order itself says nothing of the kind. It does not even mention
"allegations of fraud, forgery, and unauthorized conduct" much less purport to
reject such allegations.
straightforward bank collection action. According to Mashreq, UAE courts refuse
to consider any claim alleging Mashreq's complicity in concocting the fraudulent
fix transactions, unless as a prerequisite Mashreq is convicted criminally for such
misconduct. In short, Mashreq itself acknowledges that the UAE is not a forum
that can hear the counterclaim at all, and necessarily it is not a forum that can
better adjudicate that counterclaim.
Mashreq plainly did not consider that the UAE had a paramount interest in
this dispute that would require litigation in its home country, given that it filed its
complaint in New York, prominently alleging that New York was a principal place
of its business. (R. 50). It only later filed its duplicative action in the UAE, but
even then it continued to assert that New York was the proper forum for its claim
against AHAB. Not until it filed its brief in the instant appeal did Mashreq reverse
positions and argue that the UAE is the better forum.
B. The parties' superior access to proof in New York and the
foreclosure of such proof in both Saudi Arabia and the UAE
means that AHAB's claims will be "better adjudicated" here.
Al Sanea argues that Saudi Arabia and the UAE are "superior" to New York
for adjudicating these claims (Al Sanca Brief at 43), but then he abandons any
attempt to support that proposition in favor of a minimal showing that these two
countries' legal systems can be deemed "adequate" and "available" (id at 44). Al
Sanea's argument, which Mashreq now adopts for the first time on appeal,
conflates two very different concepts. Under the federal standard, an "adequate"
alternative forum is a prerequisite, but its availability "ordinarily" is "satisfied
when the defendant is amenable to process in the other jurisdiction" and the forum
will "permit litigation of the subject matter of the dispute." Piper Aircraft Co. v.
Reyno, 454 US 235, 254 n.22 (1981) (citation omitted). This is not, however, the
New York standard. An alternative forum is not an essential prerequisite in New
York, but it is considered a most important factor, and it is analyzed not in terms of
mere adequacy, but whether the dispute will be "better adjudicated" in the
proposed alternative forum. Pahlavi, 62 INY2d at 479.
Respondents cite this Court's decision in Shin-Etsu Chemical Co. Ltd. v.
ICIC Bank Ltd., 9 AD3 d 171 (1 st Dept. 2004), as supporting their contention that
all they need to show is that Saudi Arabia and the UAE meet the minimal federal
standard. It does not. In Shin-Etsu, the Court noted that the lower court had
recited the Piper Aircraft decision, but it did not hold that it supplanted the Pahlavi
rule. Indeed, far from limiting its inquiry to India's "adequacy" and "availability"
as a forum, this Court went on to explore whether the dispute would be subject to
undue delays in India, ruling on the basis of expert submissions that it would not.
Id. at 178-80. Thus Shin-Etsu does not reject but supports examination of the
processes and procedures of the proposed alternative forum as part of the inquiry
into whether the dispute will be "better adjudicated" there.
Like Shin-Etsu, numerous cases examine whether the rules applied in the
proposed alternative forum limit access to proof in a manner that compels the
conclusion that the dispute cannot be "better adjudicated" there. See Waterways
Ltd. v. Barclays Bank PLC, 174 AD2d 324, 328 (1st Dept. 1991); Republic of
Lebanon v. Sotheby's, 167 AD2d 142, 145 (1st Dept. 1990); Banco Nacional, 169
Misc 2d at 192; Creditansalt Inv. Bank AG. v. Chadbourne & Parke LLP, 4 Misc
3d 481, 485-86 (Sup. Ct. New York Cty. 2004). The cases cited by respondents do
not hold otherwise. For instance, in Globalvest Mgmt. Co. L.P. v. Citibank, N.A.,
No. 603386/04, 2005 WL 1148687, at *9 (Sup. Ct. New York Cty. May 12, 2005),
in the absence of any proffer as to what evidence might be foreclosed, the Supreme
Court rejected the plaintiffs non-specific contention that it would not have access
to U.S. style discovery in Brazil. And in Kuwaiti Eng'g Group v. Consortium Int'l,
No. 060033/05, 2007 WVL 2175546, at *23 (Sup. Ct. New York Cty. March 15,
2007), the court did not refuse to inquire into differences in rules and procedures of
the proposed foreign fora but determined as fact that the absence of punitive
damages in one alternative forum and of jury trials in another did not disqualify
them as better suited to adjudicate the claim.
To be sure, not every difference or procedural disadvantage makes an
alternative forum inadequate. Respondents cite Financial Guar. Ins. Co. v. 1KB
Deutsche Industriebank AG, No. 0600704/08, 2008 WvL 5478808, at *7 (Sup. Ct.
New York Cty. Dec. 29, 2008), as so holding. But the notion that the very
different rules with respect to access to proof that Al-AB would face in Saudi
Arabia or the UAE are analogous to the relatively minor differences that exist
between the U.S. and the U.K., as noted in Financial Guar., is specious. The
unrebutted record below established that access to proof of AHAB's claims of
fraud, forgery, and theft involving these f/x transactions would be highly
circumscribed in Saudi Arabia and wholly disallowed in the UAE. In Saudi
Arabia, the parties and their employees are not deemed competent witnesses.4
Mashreq affirmatively asserts that AHAB is foreclosed from making any claim in
the UAE that it was complicit in the fraud without the prerequisite of a successful
criminal prosecution of Mashreq by the UAE government, a matter wholly beyond
AHAB's control. Thus, unlike the case cited by Mashreq, Zaveri v. E.F. Hutton &
Co. Inc., C.A. No. 85-3268, 1986 WVL 4063, at *2 (S.D.N.Y. April 1, 1986), where
the plaintiff could present "the essence of his position-fraud" in the UAE, even
though he could not "literally" pursue such claims under a U.S. securities statute
4 Al Sanca's assertion that this is "precisely the sort of procedural difference that
courts have specifically rejected as grounds for opposing forum non conveniens
dismissal" (Al Sanea Brief at 33 n. 17) has no support in the one case he cites.
While the dissenter in Panama Processes, S.A. v. Cities Serv. Co., 650 F2d 409,
416 (2d Cir. 1981), referred to such procedural differences as a reason to reverse
dismissal, the majority opinion does not even address the issue much less
specifically reject the proposition that such differences may be pertinent to forum
non conveniens.
there, AHAB has no opportunity to pursue any fraud claim against Mashreq in the
UAE, in "essence" or otherwise.
In these circumstances, any conclusion that AHAB's claims could be "better
adjudicated" in Saudi Arabia or the UAE is insupportable.
C. Litigation in New York will impose less hardship on the parties
and witnesses than any alternative forum.
Once again exploiting his "authority" straw man, Al Sanea argues that
litigation in New York would pose an undue hardship on the parties and non-party
witnesses. But a full evidentiary trial of the fraud, forgery, and theft issues in New
York will impose no undue hardship on the persons who have genuine evidence on
these issues. If the parties remain subject to a travel ban, they can all testify by
deposition or videoconference from their home countries. So, too, can non-party
witnesses, the most critical of whom are English speakers and no longer reside in
Saudi Arabia. Al Sanea makes out his case for purported hardship only by stuffing
his witness list with his own and AHAB's current and ex-employees who, at most,
may have testimony on Al Sanea's non-issue of authority. Yet Al Sanea makes no
response whatsoever to the witness-by-witness assessment in AHAB's opening
brief identifying those who have testimony genuinely relevant to the fraud claims.
The key witnesses in connection with Al Sanea's implementation of the f/x
scheme with Mashreq and his subsequent theft of $191 million in New York are
persons who were his main subordinates at the Money Exchange (Mark Hayley)
14
and at TIBC (Glenn Stewart). Both are English speakers; one lives in the U.S. and
the other in the U.K. The documents pertaining to the fix scheme are likewise
almost entirely in English.5
D. Al Sanea's and Mashreq's misconduct will be determined under
New York law.
Al Sanea's insistence that Saudi agency and partnership law will have a
prominent role in this action is another argument premised on his "authority" straw
man. His further assertion that AHAB's "fraud-based claims" will also turn on
Saudi law is not supported by the authorities he cites.
Contrary to Al Sanea's contention, AHAB has not analyzed choice-of-law
under outmoded principles. Schultz v. Boy Scouts of Am., Inc., 65 NY2d 189
(1985), on which AHAB relies, is a modern "interest analysis" case. In Padula v.
Lilarn Props. Corp., 84 NY2d 519, 521-22 (1994), the Court of Appeals
reaffirmed Schultz, ruling that, in addition to examining relevant contacts, "interest
analysis" in the tort context depends on whether the tort law is "conduct
5 The transcripts from the London action that Al Sanea included in his
supplementation of the record on appeal involve a consolidated bank action against
AHAB in London. Al Sanea here argues that they refer to documents that show
that AHAB 's partners had knowledge of allegedly unauthorized transactions by Al
Sanea in AHAB's name (Al Sanea Brief at 13-14). There is nothing in the
proffered transcripts, however, that shows what the documents contain, much less
that they have anything to do with AHAB' s claims regarding the Mashreq
transactions. If the documents themselves were before the Court, AHAB proffers
that it would be apparent that they predate the Mashreq transactions, have nothing
to do with those bogus f/x deals, and do not otherwise vitiate the claims of fraud
against Al Sanea in the instant action in any material respect.
15
regulating" or "loss allocating" and, if the former, the "law of the place of the tort
governs." Accord, Edwards v. Erie Coach Lines Co., 17 NY3d 306 (201 1).
The cases cited by Al Sanea do not support application of Saudi law here.
Atsco Ltd. v. Swanson, 29 AD3d 465, 466 (1 st Dept. 2006), dealt with a fraudulent
conveyance claim - a conduct-regulating law - and ruled that Malaysian law
would govern the substantive tort because the wrongful conveyance occurred in
Malaysia. AHAB alleges that Al Sanea's theft of funds occurred in New York.6
Theft quintessentially involves a conduct-regulating rule of New York law.
Similarly, while any construction required of the forged Mashreq loan
documents might arguably be governed by UAE law, respondents have identified
no conflict between New York and UAE law on matters of construction. The
fraudulent scheme between Mashreq and Al Sanea to use bogus fix deals to hide
excessive-interest short-term loans has nothing to do with construction of the loan
documents. The scheme was implemented through New York banks, it was in
New York that AHAB suffered injury, and it is under New York law that it must
be judged.
6 The other cases cited by Al Sanea are wholly inapposite. Istim, Inc. v. Chemical
Bank, 78 NY2d 342 (1991), dealt with rights to a settlement fund, not with a tort.
Navallo v. Am. Standard, Inc., 224 AD2d 599 (2d Dept. 1996), concerned choice
of law in respect of indemnification and contribution issues, both loss-allocating,
not conduct-regulating rules. And Hart v. Gen. Motors Corp., 129 AD2d 179 (1 st
Dept. 1987), involved directors' duties in the internal management of a Delaware
corporation.
E. AHAB's opposition to a forum non conveniens dismissal is not
part of any "worldwide forum-shopping spree" or undue
multiplication of proceedings.
Respondents charge that AHAB has engaged in a "worldwide forum
shopping spree" (Al Sanea Brief at 4) that has improperly multiplied proceedings
seeking to adjudicate the same dispute and has thereby risked inconsistent results.
Respondents' hyperbole notwithstanding, AHAB has not multiplied proceedings,
the so-called risk of inconsistent results is a canard, and the cases they cite do not
support a forum non conveniens dismissal on these grounds.
The proceedings by AHAB seeking to hold Al Sanea accountable number
precisely two - hardly a worldwide campaign: (i) AHAB brought the third-party
claim against Al Sanea in the instant action because of its close connection to New
York; and (ii) AHAB sued Al Sanea in the Cayman Islands, along with numerous
Cayman Island companies that he incorporated in that jurisdiction as conduits for
receipt of his non-Saudi assets, the product of funds he stole from AHAB. Al
Sanea's theft of funds in connection with the Mashreq deals has miniscule overlap
with the much broader Cayman proceeding, and the pendency of these two actions
can scarcely be described as undue multiplication of proceedings.7
7~ The action in London does not involve Mashreq or its fix deals with Al Sanea,
and neither Al Sanea nor Mashreq is a party to that action. The investigation by
the Saudi Committee also has nothing to do with the Mashreq f/x deals; from the
outset, it was limited to dealings with Saudi banks. AHAB has sued Glenn
Stewart, Al Sanea's top henchman, in California because he is subject to process
17
Nor does the existence of these two actions pose a risk of inconsistent
results. As is common in the setting of international comity, when duplicate
actions are pending here and abroad, both are typically allowed to proceed
simultaneously until one reaches a judgment that is res judicata in respect to the
other. See, e.g., Bourbon v. Bourbon, 259 AD2d 720, 722 (2d Dept. 1999); Royal
& Sun Alliance Ins. Co. of Canada v. Century Int'l Arms, Inc., 466 F3d 88, 92 (2d
Cir. 2006).
It is Al Sanea who chose various venues in which to carry out his scheme,
and now he runs away from them when called to account. He picked New York
because it allowed him to engage in bogus f/x transactions. He picked the Cayman
Islands as the place to secrete his principal non-Saudi assets. He incurred massive
debts around the world. He sought the benefits of manipulating the global
financial system and now complains when his victims seek remedies in the places
where their losses were sustained and where he has hidden his assets.
The authorities Al Sanea cites have no bearing on the instant action.
Citigroup Global M~kts., Inc. v. Metals Holding Corp., 45 AD3d 361 (1st Dept.
2007), was an interpleader action in which the ownership of the interpleaded funds
was already subject to extensive litigation outside New York. World Point
Trading was an action concerning non-reimbursement under a letter of credit
there. Again, Al Sanea is not a party in California, and that action cannot properly
be described as duplicative of this one.
where the connection with New York was deemed "tenuous at best" and the letter
of credit was issued and the underlying transaction it secured took place in Italy,
where the parties were already engaged in litigation. These and Al Sanea's other
cases are all characterized by the complete absence of any meaningful connection
with New York .8 They do-not involveforum non conveniens dismissals based on a
conclusion that there was an unwarranted multiplication of proceedings.
11. The Supreme Court's Improper Sua Sponte Dismissal of the First-Party
Action and Its Effect on the Determination of Whether to Retain the
Third-Party Complaint in a New York Forum
AHAB is not pressing a mere technical point in challenging the Supreme
Court's sua sponte dismissal of the first-party action. The statutory requirement of
a motion ensures that the parties will have the opportunity to develop a factual
record and provide supporting arguments as to whether the action should be
retained where it was filed. Here, none of the parties filed a forum motion seeking
dismissal of Mashreq's complaint against AHAB or of AiHAB's counterclaim
against Mashreq. As a consequence, none of the parties submitted evidence or
briefs addressing the first-party claims, and the court had no record on which to
base the dismissal of these claims.
8 In Nasser v. Nasser, 52 AD3d 306 (1st Dept. 2008); Serano Ltd v. Canadian
Imperial Bank of Commerce, 287 AD2d 3 09 (1 st Dept. 200 1); and A&M Exports,
Ltd, 207 AD2d 741, also cited by respondents, there is not even any mention of
improper multiplication of proceedings.
Indisputably, the only forum motion before the Supreme Court was Al
Sanea's, and his motion sought dismissal only of the third-party complaint.
Although CPLR 327 gives the court authority to dismiss an action, in whole or in
part, on the motion of a party, it does not give the court authority to dismiss a
complaint as to which no motion has been filed. Al Sanea's motion was expressly
limited to the third-party complaint; it did not confer authority on the court to
dismiss the first-party complaint and counterclaim. VSL Corp. v. Dunes Hotel &
Casinos, Inc., 70 NY 2d 948, 949 (1988).
Respondents suggest that any forum motion, regardless of its scope, is
sufficient to allow the court to dismiss the case in its entirety. But this Court's
decision in Imperial Imports Co., Inc. v. Hugo Neu & Sons, Inc., 161 AD2d 411
(1 st Dept. 1990), which respondents cite, does not support that proposition. In that
case, unlike the instant action, the third-party defendant moved to dismiss both the
first- and third-party complaints, and the court dismissed the third-party complaint
alone. Imperial Imports thus stands for the unremarkable proposition that the court
is empowered to grant less relief than the movant has requested, not that it can
grant more.9
9Respondents' other authorities are similarly inapposite. In Shiboleth v.
Yerushalmi, 268 AD2d 300 (1st Dept. 2000), the Court upheld the dismissal of a
third-party complaint on the motion of some, but not all, of the third-party
defendants. The Court did not consider, much less rule, that it could sua sponte
expand that motion to include the first-party complaint. And in Banco do Estado
20
Faced with the absence of an actual motion to dismiss the first-party claims,
respondents offer a number of arguments why this statutory requirement does not
matter. None of respondents' "motion-lite" arguments withstands scrutiny.
First, Al Sanea trumpets that "his counsel raised in open court the
proposition" that the entire case might be dismissed on forum grounds. (Al Sanea
Brief at 25). This observation, of course, simply reconfirms that Al Sanea made no
actual motion. At the ultimate hearing on the motion, moreover, Al Sanea's
counsel acknowledged that "my interest is really only in having my piece of it
dismissed." (R. 1459).
Second, Al Sanea argues that the Supreme Court called for submissions
addressing the forum dismissal of the entire case. Even if such a call could
substitute for a motion by a party - which it cannot - the record does not support
Al Sanea's contention. The court did express "concern" that "these cases don't
belong here," but it set a briefing schedule only on the motion that Al Sanea had
filed. (R. 659). Mashreq's counsel immediately pointed out that "no one has made
a forum non motion against my client Mashreqbank." (R. 660). Since there was
de Sao Paulo S.A. v. Mendes Jr. Int'l Co., 249 AD2d 137, 139 (1st Dept. 1998),
while the motion at issue was styled as for summary judgment, both the plaintiff
and the defendant had asserted the defense of forum non conveniens to each other's
claims and had briefed the propriety of the forum as "a clearly articulated motif' of
the summary judgment motion.
no motion with respect to the first-party claims, Mashreq was not to participate in
the initial briefing of the motion to dismiss the third-party complaint but was
directed to file its views as to Al Sanea's motion when Al Sanea filed his reply
brief. (R. 660).
Third, Mashreq makes the remarkable assertion that "all parties briefed the
forum non conveniens issue with respect to both the first and third-party actions."
Mashreq then lists the parties' briefs without any page cites to submissions
concerning the first-party action. In fact, Mashreq's brief is the only one that
examined any forum factors regarding its own complaint, and it argued against
dismissal on this ground.10 While Al Sanea's brief contained the observation that
the court would be justified in dismissing the entire action, it did not brief the
private and public interest factors pertinent to the first-party claims or address the
suitability of a UAE forum. And AHAB did not brief the issue because no party
had sought a forum dismissal of the complaint and counterclaim. Even at oral
argument, Mashreq did not offer to dismiss its complaint voluntarily much less
move to dismiss AHAB's counterclaim."
10 Mashreq's Mem. of Law in Conn. with Al Sanea's Mot. to Dismiss (March 9,
2010) at 1, 6-8.
11 Al Sanea' s assertion that Mashreq's statement at oral argument that it would
have no objection to dismissal of the first-party action satisfies the CPLR 327
requirement has no support. In Sears Tooth v. Georgiou, 69 AD3d 464, 465 (1st
Dept. 2010), the plaintiff had affirmatively withdrawn his complaint and moved to
dismiss the counterclaim based on forum non conveniens, so the court acted on a
22
The consequence is that this Court is now being asked to uphold the
Supreme Court's dismissal of the first-party claims without the benefit of a record
on where those claims are best litigated. The sole record basis for the lower
court's ruling that those claims should be tried in the UAE is that Mashreq is
headquartered there, AHAB is amenable to service in that country, and Mashreq
initiated a later-filed action in the UAE courts, an action in which Mashreq asserts
AHAB is precluded from filing its counterclaim. Passing over the record fact that
AHAB's counterclaim cannot possibly be "better adjudicated" or, indeed,
adjudicated at all in the UA-E, there are also no findings concerning the burden or
convenience of the UAE as a forum for the parties and witnesses, the nature of
civil justice in the UAIE and access to critical evidence in its courts, or any other
considerations typically weighed in determining a forum motion.'12
The court's erroneous sua sponte dismissal of the first-party action had a
further knock-on effect on its disposition of the third-party claim. Had the court
properly dealt solely with the third-party claim in a setting where the first-party
claim would not be dismissed, it would have had to consider the interrelationship
fully briefed motion precisely as CPLR 327 requires. Here, Mashreq did not
withdraw its complaint or move to dismiss the counterclaim on forum grounds.
12 Respondents' last-gasp contention that AHAB somehow waived any objection to
dismissal in the absence of a motion is nonsensical. AHAB had no obligation to
anticipate an unauthorized sua sponte ruling by the court. Since the court had no
statutory authority to make a sua sporne dismissal, inaction by AHAB could not
confer authority expressly prohibited by CPLR 327.
23
of the two sets of claims as an additional factor supporting retaining both in the
same forum in New York. Given its sua sponte dismissal, however, the court
never considered this interrelationship.
111. The Wrongful Denial of Forum Discovery
While Al Sanea argues that Supreme Court's denial of discovery is reviewed
for abuse of discretion and that there is a higher standard for determining whether
international discovery is appropriate, he is silent on the merits of whether the
forum discovery sought by AHAB met the required standard. In its opening brief,
AHAB set forth in detail the forum information it sought in discovery and the
reasons why that discovery was critical to the proper assessment of various forum
factors. Al Sanea offers no response to that submission because he has none. Nor
did the court below. At the outset, it called a halt to discovery without articulating
any reasons for its decision (R. 659), and it never revisited the issue when it
ultimately denied Al Sanea's motion for protective order as "moot" (R. 28). This
was error under any standard.
The cases Al Sanea cites for denying such discovery stand in stark contrast
to the instant action. Thus, in Beekmans v. JP. Morgan & Co., 945 F Supp 90, 95
(S.D.N.Y. 1996), Al Sanea's lead case, the court declined to order the "peripheral"
forum discovery plaintiff requested into whether defendant had engaged in any
conduct in the U.S. in deciding to transmit an allegedly defamatory email. The
plaintiffs own complaint, however, had alleged that the email that caused him
injury and the decision to send it occurred outside the United States. The court
properly concluded that even if the discovery produced the very information that
the plaintiff hoped it would, it would not alter its conclusion that the action
belonged in the Netherlands. Similarly, in Garmendia v. O'Neill, 46 AD3d 361,
362 (1st Dept. 2007), this Court upheld the denial of a general request for
discovery where the plaintiff "failed to show that the requested discovery could
adduce facts establishing New York as a proper forum for the action." 13
In short, AHAB did not seek "detailed development of the entire case"
through "extensive" discovery, as Al Sanea charges (Al Sanea Brief at 53), but
limited discovery through a single deposition - that of Al Sanea - into facts
directly pertinent to his forum and personal jurisdiction motions, facts which he
himself had put in issue in his own affidavit.'14
13 The court denied forum discovery in Otor, S.A. v. Credit Lyonnais, S.A., C.A.
No. 04-6978, 2006 WL 2613775, at *6 (S.D.N.Y. Sept. 11, 2006), without
discussion of what discovery was sought or how it related, or failed to relate, to the
forum issues.
14 Al Sanea's further argument that AHAB's attempt to depose him violated the
normal discovery priority required by CPLR 3106(a) is equally flawed. AHAB
plainly sought leave of court, as required by the rule, when it opposed Al Sanea's
motion for a protective order.
IV. Personal Jurisdiction over Al Sanea
Reprieving his forum arguments, Al Sanea attacks the Supreme Court's
finding that it has personal jurisdiction over him (R. 19-2 1), insisting that his only
involvement in New York was in connection with "the ministerial transfer of U.S.
dollars through New York correspondent accounts" (Al Sanea Brief at 54). But
this characterization is false for personal jurisdiction purposes for the same reasons
that it is false for forum non conveniens purposes. AHAB has not alleged a mere
"6ministerial" use of New York bank accounts but intentional conduct by Al Sanea
through implementation of bogus fix deals that were necessarily dependent upon
the misuse of New York banks and that concluded with the theft of funds from a
New York bank. However Al Sanea tries to recast the allegations into ones more
to his liking, the actual allegations place him, through directions to his agents,
squarely in New York, just like the offshore miscreants in Banco Nacional.
CONCLUSION
For all the foregoing reasons, the dismissal below on grounds of forum non
conveniens should be reversed and the action remanded for further proceedings on
the merits.
Respectfully submitted,
BAACH ROBINSON & LEWIS PLLC
/s/ Eric L. Lewis
Eric L. Lewis
1201 F Street, NW, Suite 500
Washington, DC 20004
(202) 833-8900
445 Park Avenue
New York, NY 10022
(212) 826-7001
eric.lewis@baachrobinson.com
Attorneys for Defendant-Appellant!
Third-Party Plainti~ff-Appellant
Dated: September 16, 2011
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Case Name: Mashreqbank PSC v. Ahmed
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