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LESLE N SILVERMAN
ROBRT L TOSTORIELLO
JAMES . PEASLEE
ALAN L SELLER
AMEA ELSRY
STEVE N S HOROWITZ
JAMES A DUNCAN
STEVEN M LOEB
SHELDON H- ALSTER
MITCHELLA LDWENTHIAL
JOHN PALENRERS
LAWRENCE S FRIEDMAN
NICOLAS GRAHAS
WILLIAM A DROLL
JANET L EISNER
DAVID L SUSERMAN
HOWARD S ZELSO
MICHAEL R LAZERWITZ
JEFFREY A. LEWIS
ERIKA W NIENHUI
LINOSEE P CRANFIELO
ANDRES DE LA CRUZ
DAVID C LOPEZ
CARMEN A CORRALES
JAMES L BROMLEY
DAVID LEINWANO
JEFFREY A ROSENTHAL
ETHAN A KLINGSSERO
MICHAEL J VOLKOVITSCH
MICHAEL D DAYWN
CARMINE D SOOCOZZI. JR
KIMBERLY BROWN SLACALOW
SANDRA L, FLOW
FRANCISCO L CIESTERO
FRANCESCA L. ODELL
ARISTOFER W DEAR
JUAN S SiRALOE
DUANE MOLAUSULIN
RREDN A PEACE
MEREDITH E KOTLER
MAIHED ALSAN
SANDRA H RS
SLN DOUGLA RORAY
HUSNH CKCNRM a
MATHEENP SAERENOE
WACE L LARON J
SEVER H FEIA
April 8, 2013
The Honorable Andrew W. Klein
Chief Clerk and Legal Counsel to the Court
New York State Court of App eals, Clerk's Office
20 Eagle Street
Albany, NY 12207-1095
Re: Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Brothers
Company, APL-20 13-00007
Dear Mr. Klein:
This firm represents Plaintiff-Appellant Mashreqbank PSC
("Mashreq") in the above-referenced appeal.' Pursuant to Section 5 00.11 of the
Court's Rules of Practice and CPLR 5602(b), Mashreq respectfully requests that
this Court reverse the 3-2 September 25, 2012 decision of the Appellate Division,
First Department (the "September 25 Decision") and reinstate the Supreme Court's
dismissal of these proceedings for forum non conveniens.
Over the vigorous dissent of two Justices, the September 25 Decision
fashioned unprecedented constraints on trial courts' ability to dismiss cases for
IThis letter brief was initially due on April 8, 2013, but, following consultation with Mr. James
Costello, Esq., the parties agreed to an extension until April 9, 2013. Masbreq incorporates by
reference all arguments in its August 10, 2011 brief to the Appellate Division and its February 8,
2013 letter to this Court.
CLEARY GOTTLIEB STEEN & HAMILTON LLP OR AN AFFILIATED ENTITY HAS AN OFFICE IN EACH OF THE CITIES LISTED ABOVE
Andrew W. Klein, Esq., p. 2
forum non conveniens. These newly-minted limitations are in conflict with this
Court's precedents emphasizing that flexibility rather than rulemaking is required
in this area of law. See, e.g., Islamic Republic of Iran v. Pahlavi, 62 N.Y.2d 474,
479 (1984) (rejecting rule that forum non conveniens not permitted absent an
adequate alternative forum, noting "the great advantage of the rule of forum non
conveniens is its flexibility"); Martin v. Mieth, 35 N.Y.2d 414, 418 (1974)
(rejecting rule that forum non conveniens dismissal not permitted when the
accident at issue in the litigation occurred in New York, noting "the touchstone of
forum non conveniens is flexibility"); Silver v. Great Am. Ins. Co., 29 N.Y.2d 3 56,
361 (1972) (overruling prior decisions holdingforum non conveniens dismissals
not permitted when one of the parties was a New York resident, noting that
"6greater flexibility in applying the [forum non conveniens] doctrine is not only
wise but, perhaps, necessary"). The September 25 Decision erroneously imposed
the following restrictions on forum non conveniens dismissals:
(a) An "adequate alterative forum" requirement explicitly
rejected by this Court in Pahlavi, 62 N.Y.2d 474, along with
a rigid inquiry of the alternative forum's adequacy that is
inconsistent with precedents holding a forum is adequate
when "the defendant is amenable to process in that
jurisdiction and the alternative forum permits litigation of
the subject matter of the dispute."2
(b) A virtually absolute rule that no case alleging a fraud that in
any way involves a New York bank account can be
dismissed for forum non conveniens - no matter how
strongly the traditional forum non conveniens factors weigh
in favor of dismissal or how tangential the role of the New
York bank account is to the issues in dispute in the case.
(c) An inflexible and formalistic interpretation of CPLR 3 27(a)
to mean the court cannot dismiss for forum non conveniens
any claim that is not specifically enumerated in the initial
motion papers, even where the issue offorum non
conveniens is raised by a party and all parties had an
opportunity to frilly brief and be heard on the issue, as
occurred here.
2See, e.g., Gryphon Domestic VI, LLC v. APP Int'l Fin. Co., B. V, 41 A.D.3d 25, 37 (1 st Dep't
2007) (citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n.22 (198 1)).
Andrew W. Klein, Esq., p. 3
Each of these errors merits reversal. The restrictions announced in the
September 25 Decision would force New York courts to add unnecessarily to their
already overburdened dockets, and result in parties being required to litigate in
New York, even where New York is a patently inconvenient forum, and in fact the
parties are litigating the exact dispute in other, more appropriate fora. The
September 25 Decision thus undermines the fundamental purpose offorum non
conveniens. The September 25 Decision should also be reversed because the
majority failed to perform the "interest analysis" required for choice of law issues,
leading it to incorrectly conclude that New York law applied and compounding the
errors in its ruling on forum non conveniens.
Although the Justices were sharply divided on the legal issues, the
panel unanimously agreed that the September 25 Decision merited this Court's
review. Dec. 28,, 2012 Order. In so concluding, the Justices implicitly held that
the correct resolution of these legal issues has significant implications for New
York courts. 3 The Justices also unanimously agreed that the September 25
Decision "was made as a matter of law and not in the exercise of discretion.'' Dec.
28, 2012 Order.
This case exemplifies the burdens that will be visited on New York
courts and litigants if the September 25 Decision is allowed to stand. All of the
parties and most of the witnesses and documentary evidence are located in the
Middle East, all of the transactions underlying the dispute were executed in the
Middle East, and all of the claims could be (and are being) litigated in the Middle
East and elsewhere around the world. Not a single document, and not a single
identified witness is located in New York state, and not a single disputed act
occurred here.
In sharp contrast with the September 25 Decision's incorrect
conclusion that there is no adequate alternative forum, the claims between Mashreq
and Defendant-Appellee Ahmed Hamad Al Gosaibi & Brothers ("AHAB") are the
subject of duplicative litigation currently pending in the United Arab Emirates
("UAE") where Mashreq is headquartered. R. 26-27 (July 26, 20 10 Order)
("Mashreqbank has commenced litigation in the UAEF that includes and
encompasses the alleged damages and breaches" in the New York action, and the
resulting "risk of duplication of effort, as well as inconsistent rulings by courts of
different jurisdictions" weighed in favor of dismissal.") (citations omitted). While
3See 12 Jack B. Weinstein et al., New York Civil Practice: CPLR 5602.05, at 5 6-90 (2d ed.
2005) (leave to appeal should be granted where the case presents issues "~of public importance")
(citation and internal quotation marks omitted).
Andrew W. Klein,, Esq., p. 4
AHAB waited the full nine months to perfect its appeal to the Appellate Division,
the UAE litigation moved forward. In February 2012, the UAE court rejected the
same theories AHAB now seeks to relitigate in New York, issuing a decision in
Mashreq's favor, which AHAB is currently appealing. Affidavit of Mohammad
Hamdan in support of Mashreq Mot. to Dismiss, TT 3, 12, February 25, 2013, Dkt.
No. 175 ("Hamdan Aff. ,).4
The September 2 Decision not only requires the trial court to
adjudicate a dispute that is being litigated elsewhere, but requires it to do so even
though key witnesses - namely the individual AHAB partners and their in-law and
agent Third Party Defendant-Appellant Maan Al Sanea ("Al Sanea") - are
forbidden by a travel ban from leaving their home country of Saudi Arabia. As the
Supreme Court succinctly put it at oral argument: "I want to know how I'm going
to preside over a trial where the principal witnesses are confined to their
residential countries." R. 1470:25-1471:2 (emphasis added). Further, by AHAB's
own admission, the court will be required to review and interpret the meaning of
key documents in translations from their Arabic-language originals, hear key
witnesses' testimony through translators, and apply foreign law. See, e.g., R. 1782
at 99:4-6 (Tr. of London Proceedings, Day 3) (explaining AHAB's delay in
producing documents and witness statements, noting that "a vast amount of the
documentation [relevant to AHAB and its banking relationships] was in Arabic and
we have had six agencies of translators working on the documentation."); R. 1784
at 145:14 (Tr. of London Proceedings, Day 3) (explaining arrangements for "more
than one interpreter, because there will have to be shifts"); id. at 145:11-17
(uncontested statement by London plaintiffs' counsel that AHAB's Managing
Director Saad Al Gosaibi might testify in Arabic); AHAB Appeal Br. at 43
(recognizing "as possibly raising an issue of foreign law [Al Sanea's] contention
that this action will turn on principles of agency under Saudi law."); AHAB
Appeal Reply Br. at 16 ("construction ... of the ... Mashreq loan documents
might arguably be governed by UAE law.").
The only arguable connection between this dispute and New York is
the fact that certain transactions entered into and executed by individuals in the
4 There is no stay of proceedings before the Supreme Court pending this Court's review of the
thresholdforum non conveniens issues. On February 25, 2013 Mashreq moved to dismiss the
Counterclaims asserted by AHAB as precluded by the UAE judgment. Mashreq Mot. to Dismiss
at 10-12, February 25, 2013, Dkt. No. 177. AHAB opposes the motion, arguing that as a matter
of UAE law the judgment is not final and therefore not entitled to preclusive effect, AHAB Opp.
to Mashreq Mot. to Dismiss at 8-9, March 25, 2013, Dkt. No. 197, requiring the trial court to
become further enmeshed in issues of foreign law.
Andrew W. Klein, Esq., p. 5
UAE and Saudi Arabia, where the relationship between the parties was centered
and their business dealings took place, involved electronic fiands transfers through
New York bank accounts.5 TheSeptember 25 Decision's ruling that a ministerial
funds transfer in New York trumps nearly every other factor in theforum non
conveniens analysis is wrong, as are the other parameters the September 25
Decision grafted ontoforum non conveniens doctrine. The doctrine offorum non
conveniens exists so that a litigant like AHAB - a defaulting debtor engaged in
multiple legal proceedings around the world - cannot subject the courts and its
adversaries to unnecessarily burdensome litigation of this nature. The September
25 Decision conflicts with relevant precedent by erroneously curtailing such
dismissals and should be reversed.
1. Statement of Facts and Procedural History
A. The Parties
Plaintiff Mashreq is a UAE bank, headquartered in Dubai. R. 109
(AHAB TPC T 14). Defendant AHAB is a Saudi Arabian partnership consisting of
20 members of the Saudi Arabian Al Gosaibi family. R. 50 (Compl. T 1); R. 76
(Answer T 2). The individual partners of AHAB (the "AHAB Partners") are
citizens and residents of Saudi Arabia except one AHAB partner who lives in the
UAE. R. 17 (July 26, 20 10 Order); R. 622 T 27 (Al-Sanea Aff.). Third-Party
Defendant Al Sanea, AHAB's authorized manager and agent, is a Saudi national
and married to one of the AHAB Partners. R. 400-01 (AHAB TPC T 12). The
Saudi Arabian government has imposed a travel ban on the AHAB Partners and Al
Sanea that prevents them from leaving Saudi Arabia. R. 25 (July 26, 20 10 Order).
5 The majority opinion contained numerous misstatements of undisputed facts that were clear
from the record. See David Seigel, N. Y Practice § 529 (5th ed. 2012) (citing Lazarus v. Bowery
Savings Bank, 16 N.Y.2d 793 (1965) ("A record may point so compellingly to a given fact that a
failure to find it can be regarded as an error of law."). For example, the majority opinion
incorrectly states that Mashreq filed the instant action "seeking to recover $150 million in
connection with a series of financial transactions executed in New York." September 25
Decision at 3. In fact, the transaction was executed by Mashreq's Dubai headquarters and the
related electronic fimds transf r flowed through Mashreq's New York branch with no human
involvement whatsoever in New York. Once the electronic funds transfer is initiated by
Mashreq employees in Dubai the process is completely automated. The only role of Mashreq's
New York branch in this process would be making sure its electronic funds transfer system
remains turned on. See Mashreq Motion for Reargument or Leave to Appeal at 9. Nowhere in
AHAB's Counterclaim does it allege that these transactions were executed in New York.
Although AHAB has sought to re-characterize the transactions as being executed in New York
for purposes offorum non conveniens, there is no factual basis for such a claim.
Andrew W. Klein, Esq., p. 6
B. Mashreq Is Forced to File Suit in New York Following AHABs
Payment Default
Mashreq and AHAB had a commercial banking relationship for
several years. Over the course of the relationship, Mashreq filled many of the
banking needs of AHAB and its subsidiaries, including the performance of foreign
exchange transactions. R. 94, 97-98 (AHAB CC IT 21, 29). On May 5, 2009,
AHAB defaulted on its end of a $150 million foreign exchange transaction. R. 52
(Compl. T 8). The transaction was entered into by Mashreq in Dubai and AHAB in
Saudi Arabia. Pursuant to the terms of the parties' agreement, which was governed
by UAE law, Mashreq's UAE headquarters - at the request of AHAB - executed a
wire transfer of $150 million to AHAB's own bank account with Bank of America
in New York. R. 94-95 (AHAB CC TT 2l.a; 2l.d); R. 77 (Answer TT 5-7); R. 113
(AHAB TPC T 25); R. 1600 (Sept. 25, 2009 Gouldy Aff. Ex. A, July 16, 2008
Facilities Letter Agreement). AHAB failed to make its required payment of Saudi
riyals to Mashreq's account in Saudi Arabia.
Due to AHAB's default on its end of the foreign exchange transaction,
Mashreq filed a complaint against AHAB in New York on May 27, 2009.
Mashreq also filed a related action against the AHAB Partners based on the same
6defaulted foreign exchange transaction with AHAB . Mashreq filed these actions
in New York because it expected that AHAB and its partners might have assets in
New York including the $150 million Mashreq paid into AHAB's New York bank
account. R. 1453:16-20. By the time Mashreq brought suit, AHAB had already
removed the funds from the account, and Mashreq's investigations subsequently
revealed that the AHAB Partners did not have any assets in New York. Id.;
September 25 Decision, Dissent at 21.
C. The Third-Party Complaint and Counterclaim
On July 15, 2009, AHAB answered Mashreq's complaint in the New
York proceeding and asserted a variety of affirmative defenses, including lack of
personal jurisdiction. R. 87 (Answer T 13). Despite contesting the Court's
jurisdiction, AHAB filed a third-party complaint against Al Sanea, alleging that Al
Sanea had engaged in a "scheme to loot" AHAB. R. 105-06 (AHAB TPC TT 4, 8).
AHAB and its partners assert, incredibly, that Al Sanea - who, in addition to
6 Mashreq's complaint against the individual AHAB Partners was also dismissed by the Supreme
Court forforum non conveniens. In contrast with AHAB's position in this appeal, neither
AHAB nor its partners made any objection to the Supreme Court's dismissal of the AHAB
Partners action.
Andrew W. Klein,, Esq., p. 7
having been their authorized managing agent, was also their in-law and neighbor -
borrowed nine billion dollars in AHAB's name from over one hundred banks
around the world, all without AHAB's knowledge or approval. R. 105-06 (AHAB
TPC 4, 8). AHAB later filed a counterclaim against Mashreq based on a vague
and implausible theory that Mashreq somehow aided and abetted Al Sanea's
alleged misconduct by providing him with "money to steal" (Mashreq's own)
when Mashreq entered into the foreign currency transaction defaulted on by
AHAB. R. 88, 96-98 (AHAB CC TT 4, 23-30).
AHAB has advanced the same far-fetched theories concerning the
AH-AB Partners' alleged ignorance of Al Sanea's business dealings on their behalf
in numerous proceedings outside New York. For example, AHAB made this
argument in London proceedings brought by other bank creditors, but withdrew its
defenses during the course of the trial after making a belated production of
documents showing that - contrary to its earlier assertions - the AH-AB Partners
had knowledge of Al Sanea' s activities. R. 1777 at 19 (Tr. of London Proceedings,
Day 2).~ Following this belated disclosure, the Court in a related Cayman
proceeding - where AHAB is pursuing a $9.2 billion claim against Al Sanea -
dissolved a world-wide freezing order because the "new documents showed [the
AHAB Partners] knew more about Al-Sanea's activities than they had hitherto
said." Douwe Miedema, "Cayman Judge Orders Al-Sanea Freezing Order Lifted"
Reuters (Sept. 22, 2011), http://www.reuters.com/article/20l11/09/22/saadgroup-
idUSL5E7KL8582Ol 10922. A Bahraini tribunal also rejected Al-AB's theories in
the context of a lawsuit brought by another foreign bank, and that judgment has
recently been granted recognition in New York. Standard Chartered Bank v.
Gosaibi, No. 653 506/2011,5 2012 WL 65 54881 (Sup. Ct. N.Y. Cnity. Dec. 12, 2012)
(granting recognition of Bahraini judgment against AHAB).
D. Related Litigation in the UAE and in Other Jurisdictions
On July 8, 2009, after it became apparent that AHAB's default on the
foreign exchange transaction was not an isolated default on certain of its
obligations to Mashreq, but rather part of a large-scale, systemic default by AHAB
on its obligations owed to scores of banks globally, Mashreq filed a complaint
against AHAB and the AHAB Partners in the UAE. In its UAE action, Mashreq
sought to recover 1.4 billion UAE Dirhams (approximately $400 million), the
totality of Al-AB 's defaulted bilateral obligations to Masbreq. That amount
7 Mr. Justice Flaux presided over the London proceedings and commented on the AHAB
Partners' purported excuse for failing to disclose the documents as "frankly, incredible ... [and]
putting it bluntly, laughable." R. 1781 at 94 (Tr. of London Proceedings, Day 3).
Andrew W. Klein, Esq., p. 8
included the defaulted foreign exchange transaction that is the basis for Mashreq's
claims in New York. R. 13 54 (Mar. 9, 20 10 Gouldy Aff. Ex. C, July 8, 2009
Statement of Claim in UAE Action); R. 26 (July 26, 20 10 Order). After two and a
half years of litigation, the UAE Court in February 2012 rejected AHAB's
arguments - including the same fraud and forgery allegations AHAB seeks to
relitigate here - and entered a well-reasoned judgment in Mashreq's favor, which
AHAB is currently appealing. Hamdan Aff. TT 3, 12.
Al-AB is also litigating the same issues concerning Al Sanea' s
alleged forgeries and fraud in jurisdictions all over the world, including Saudi
Arabia,, Bahrain, London, Switzerland and the Cayman Islands. R. 27 (July 26,
2010 Order). The London proceedings include actions against AHAB and its
partners brought by banks similarly situated to Mashreq, which have resulted in
judgment for the banks after Al-AB withdrew its spurious defenses. Of relevance
to this appeal, are record admissions in these proceedings by Ali"A that further
confirm the correctness of the Supreme Court's dismissal here and contradict
Al-AB's assertions that New York is a convenient forum for these disputes:
"Contrary to Al-AB's assertion here that "[e]very single document
that matters in this case is in English," R. 1479:9-10 (Mar. 25,
2010 Hr'g Tr.), in London AHAB's counsel explained that "[a]
vast amount of the documentation [relevant to AHAB and its
banking relationships] was in Arabic and we have had six agencies
of translators working on the documentation." See R. 1782 at
99:4-7 (Tr. of London Proceedings, Day 3) (explaining AH-AB's
delay in producing documents and witness statements).
" Contrary to AHAB's assertion here that "[alll of the key
witnesses ... speak English; many of them speak it exclusively,"
AHAB Appeal Br. at 15, AHAB 's London counsel also admitted
that witnesses would testify in Arabic using interpreters. See R.
1784 at 145:1-5 (Tr. of London Proceedings, Day 3) (explaining
arrangements for "more than one interpreter, because there will
have to be shifts"); see also id at 145:11-17 (uncontested
statement by plaintiffs' counsel that Al-AB's Managing Director
Saad Al Gosaibi might testify in Arabic).
E. The Supreme Court 's Forum Non Conveniens Dismissal
In the Supreme Court, the parties filed motions to dismiss, including
Mashreq's motion to dismiss Al-AB's counterclaim for failure to state a claim, the
Andrew W. Klein, Esq., p. 9
AH-AB Partners' motion to dismiss Mashreq's complaint for lack of personal
jurisdiction, and Al Sanca's motion to dismiss AlHAB's third-party complaint for
forum non conveniens. At the hearing on Mashreq's motion to dismiss AHAB's
counterclaims,, the Supreme Court unambiguously indicated to the parties its
understanding that Al Sanea's motion gave it the power and discretion to dismiss
the entire action on grounds offorum non conveniens. R. 659:4-7 (Jan. 5, 2010
I-r'g Tr.) (Supreme Court to Mashreq's counsel: "I also want -- I want you to
respond to a forum non conveniens argument because I am very, very concerned, if
you will, that these cases do not belong here. All right?"); see also id. at R. 653:22-
25 ("Would you all agree that the motion -- if the motion to dismiss for forum non
conveniens has, shall we say, legs, it affects everything else?").
All parties then had the opportunity to brief theforum non conveniens
issue with respect to both the first and third-party actions. 8 As noted by the
Justices dissenting from the September 25 Decision, both Al Sanea and Mashreq
made clear in briefing and at oral argument their understanding that the Supreme
Court had the power to dismiss the entirety of the action and AHAB never
challenged those statements. September 25 Decision, Dissent at 24-25. See also
Al Sanea Reply Mem. of Law in Supp. of Mot. to Dismiss the Am. Third-Party
Compl. on Grounds of Forum Non Conveniens at 2, Mar. 9, 20 10, Dkt. No. 105
("this Court can dismiss the entire case (including Mashreq's action) in light of Mr.
Al-Sanea's forum motion") (citing cases); id. at 8 ("Mashreq's action itself could
be litigated in more convenient fora, such as Saudi Arabia or the U.A.E. and, thus,
should be dismissed."); R. 1459: 10-11 (Mar. 25 Hr'g Tr.) (statement by Counsel
for Al Sanea that the Court "would be well founded to dismiss the entire thing");
Mashreq Reply Mem. of Law in Connection with Mot. by Third-Party Def. Maan
8 Mashreq accordingly submitted both an opening and reply brief addressingforum non
conveniens issues with respect to the first-party action and AHAB also submitted a brief
specifically addressing the issue offorum non conveniens as applied to the first-party action.
Mashreqbank's PSC's Mem. of Law in Connection with Mot. by Third-Party Def. Maan Al
Sanea to Dismiss the Third-Party Compi. on Grounds of Forum Non Conveniens, Mar. 9, 2010,
Dkt. No. 103; Ahmad Hamad Al Gosaibi & Bros. Co.'s Resp. to Mashreqbank's PSC's Mem. of
Law in Connection with Mot. by Third-Party Def. Maan Al Sanea to Dismiss the Third-Party
Compl. on Grounds of Forum Non Conveniens, Mar. 18, 2010, Dkt. No. 113; Reply Memn. of
Law in Connection with Mot. by Third-Party Def. Maan Al Sanea to Dismiss the Third-Party
Compl. on Grounds of Forum Non Conveniens, Mar. 9, 2010, Dkt. No. 105. The September 25
Decision erroneously states that it is "not true" that "the motion court invited submissions for
dismissal of the entire case" and that "the court only scheduled briefing for Al Sanea' s motion to
dismiss the third-party action." September 25 Decision at 10. However, as the undisputed
record shows, and the dissenting Justices correctly noted, September 25 Decision, Dissent at 24,
all parties submitted briefing concemningforum non conveniens as applied to the entire action.
Andrew W. Klein, Esq., p. 10
Al Sanea to Dismiss the Third-Party Compi. on Grounds of Forum Non
Conveniens at 3 , Mar. 23,5 20 10, Dkt. No. 115 (statement by Mashreq that it did not
object to forum non conveniens dismissal of the first-party claims along with the
third-party claims).
To the contrary, AHAB's counsel agreed with the Supreme Court that
its "case against Al Sanea,, is completely intertwined with [its] defense to the
contract case that Mashreq has brought and also with [its] counterclaim." R.
1475:6-9 (Mar. 25, 20 10 Hr'g Tr.) and that there was an application to "consider
forum non conveniens as to everybody." Id. at R. 1474:13-26:
Supreme Court: There's two parts here to that application,,
you understand. One is for [Al Sanea] to be
cut out. And for the underlying case to
continue. The other is for me to consider
forum non conveniens as to everybody.
Counsel for AHAB: Yes.
Supreme Court: I understand you are opposing it as to
everybody....
Counsel for AHAB: Yes, your Honor, we are. We are.
Two weeks after the hearing, AHAB made yet another submission on
forum non conveniens issues as applied to the entire case, requiring Mashreq to
submit a reply brief in response. AHAB and AHAB Partners' Response to
Mashreqbank PSC's Mot. to Consolidate,, April 8, 20 10,, Dkt. No. 122; Mashreq
Mot. to Consolidate Reply, April 14,,2010, Dkt. No. 124. Even then AHAB never
argued that the Supreme Court did not have the power to dismiss the claims
between Mashreq and AHAB.-
In its briefing on forum non conveniens and at oral argument to the
Supreme Court, Mashreq expressed its willingness to pursue its claims against
Al-AB in the UAE based on the revelation that neither AHAB nor its partners had
any assets in New York. R. 1453:14-23 (Mar. 25,,2010 Hr'g Tr.); September 25
Decision, Dissent at 24-25, 27. In addition, despite AH-AB's argument that New
York was the one and only forum where the entirety of this dispute could be
litigated, the AH-AB Partners continued to resist jurisdiction in New York. See R.
1476:17-26 (Mar. 25, 2010 Hr'g Tr.) (arguing that Mashreq's action against the
Al-AB Partners could not be heard in New York and "has nothing to do with the
Mashreq v. AHAB case"); see also id. at R. 1475:18-1476:12 (Justice Lowe
Andrew W. Klein,, Esq., p. I I
addressing counsel for AHAB and the AHAB Partners: "you are asserting
jurisdictional grounds on the one hand against the plaintiffs, but you don't concede
that in fact, this is not the proper forum," and noting this "suggests to [the Court]
that there's some merit" to aforum non conveniens dismissal). The AHAB
Partners went so far as to insist that Mashreq's claims against them could only be
established by a judgment from a Saudi tribunal applying Saudi law. See Mem. of
Law in Supp. of All Defs.' (Except Sana Abdel Aziz Hamad Algosaibi) Mot. to
Dismiss Pl.'s Verified First Am. Compl., Mashreqbank PSC v. 41gosaibi, No.
602171/2009 (Sup. Ct. N.Y. Cnty. Sept. 25, 2009). In contrast, in the UAE action,
AHAB and its partners had not raised any jurisdictional objections. R. 1365 ( Mar.
9, 2010 Gouldy Aff. Ex. D, Answer in UAE action - no defense based on lack of
personal jurisdiction asserted by AHAB or AHAB partners). After the New York
action was dismissed, AHAB made a belated attempt to contest jurisdiction in the
UAE which the UAE court rejected.
The Supreme Court issued a decision properly applying the factors set
out by this Court in Pahlavi, 62 N.Y.2d 474 and dismissing the entire action. R.
23-27 (July 26, 2010 Order). The Supreme Court found that
[t]he travel restrictions in place in Saudi Arabia mean that Al Sanea
and all but one of the AHAB partners are currently unable to travel to
the U.S. The large majority of witnesses are located in Bahrain, UAE,
... or Saudi Arabia. Although the alleged fraud may have taken place
with use of banks in New York the alleged fraudulent activities
occurred in Saudi Arabia ... and the issue as to whether or not Al
Sanea was authorized to do what he did are questions to be resolved
based on evidence and documents in those nations.... Furthennore,
several alternative locations are available to resolve the disputes, and
indeed, AHAB has already commenced a number of actions against
Al Sanea in various countries.
R. 24 (July 26, 20 1 O'Order). The Supreme Court concluded that "these factors all
favor[ed] granting the FNC motion." Id. In addition, the Supreme Court noted the
need to apply Saudi law to "relations between Al Sanea and AHAB." Id.
As for the claims between Mashreq and AHAB and its partners, the
Supreme Court found that the "agreements with Mashreqbank regarding the
currency exchanges state that they are governed by UAE law and provide for the
jurisdiction of UAE courts," further supporting the Supreme Court's conclusion
that New York was not the appropriate forum for these actions. Id. at R. 24-25
(citing cases). The Supreme Court also found that "Mashreqbank has commenced
Andrew W. Klein, Esq., p. 12
litigation in the UAE that includes and encompasses the alleged damages and
breaches" in the New York action, and the resulting "risk of duplication of effort,
as well as of inconsistent rulings by courts of different jurisdictions" weighed in
favor of dismissal. Id at R. 26-27 (citing World Point Trading PTE. v. Credito
Italiano, 225 A.D.2d 153, 161 (1st Dep't 1996)). Finally, the Supreme Court held
that the deference usually afforded to a plaintiff s choice of forum was not
implicated here, given the concessions that Mashreq made on the record to have
the case dismissed in favor of the UAE. Id at R. 26, R. 1467:13-21 (Mar. 25, 20 10
Hr'g Tr.).
F. The September 25 Decision and Dissent
AHAB appealed the forum non conveniens dismissal, arguing for the
first time on appeal that the Supreme Court lacked power to dismiss the entire
action. Nowhere in its briefs before the Appellate Division did AHIAB criticize the
Supreme Court's parallelforum non conveniens dismissal of Mashreq's action
against the individual AHAB Partners.
In a 3-2 decision, the Appellate Division reversed the Supreme Court
and reinstated the entire action. The majority opinion by Justice Catterson found
that the purported lack of an alternative forum and New York's compelling interest
in its banking system required that these proceedings be litigated in New York,
even though the only New York link was in connection with certain ministerial
electronic funds transfers. September 25 Decision at 3, 17. As to the first-party
action between Mashreq and AHAB, the September 25 Decision applied the newly
created rule that even where a party raises the issue and all parties are heard, a
forum non conveniens dismissal is impermissibly "sua sponte" if no party filed a
notice of motion explicitly requesting the dismissal of those claims.
Justices Mazzarelli and Andrias dissented,, concluding that the
"Supreme Court did not exceed its authority and providently exercised its
discretion when it dismissed both the action and third-party action on forum non
conveniens grounds." September 25 Decision, Dissent at 21. The dissenting
Justices noted that
the motion court correctly considered and balanced the appropriate
factors in finding that New York is an inconvenient forum for this
dispute because it is between a foreign bank and foreign businesses,
the alleged wrongdoing took place in foreign countries even though
New York banks were its instrumentalities, documentary evidence
Andrew W. Klein,, Esq., p. 13
and witnesses are located outside of New York, and the resolution
likely requires the application of foreign law. 9
September 25 Decision, Dissent at 28-29. In response to the majority's
unsupported position that New York has a compelling interest in its banking
system that bars forum non conveniens dismissal of fraud claims involving funds
transferred through New York accounts, the dissenting Justices correctly explained
that "the fact that the proceeds of Al Sanea's fraudulent scheme passed through the
New York banking system is a peripheral and transitory contact, which, without
more, does not give New York an interest in transactions that otherwise are
foreign." Id. at 31 (citing cases).
The dissenting Justices also explained that the Supreme Court did not
act "sua sponte" because "although no formal motion was made ... the doctrine
was raised before the court, and the parties contested the matter." Id at 23
(quoting Smith v. Miller, 237 A.D. 2d 294, 295 (1st Dep't 1997)). See n.8, supra.
Tellingly, AHAB 's counsel "did not argue [before the Supreme Court] that the
court lacked the authority to dismiss the main action because no party had filed a
formal motion seeking that relief." Id. at 25. Moreover, the dissenting Justices
concluded that the dismissal was not sua sponte because Mashreq joined in Al
Sanea's motion and supplemented the grounds on which Mashreq sought dismissal
of AHAB's counterclaim. Id at 24-25, 27. Specifically, Mashreq indicated its
willingness to have the issues between it and Al-AB and its partners resolved in
the pending UAE proceeding where (unlike in New York), neither AHAB nor its
partners disputed the jurisdiction of the UAE courts. Id.10
9 The Majority opinion incorrectly states that Mashreq is "a [UAE] bank with its principal place
of business in New York." September 25 Decision at 3. As alleged in AHAB's Third-Party
Complaint and Counterclaim, Mashreq is a UAE bank, "with corporate headquarters in Dubai,
[UAB] and a place of business" in New York. R. 109 (AHAB TPC 14); R. 93 (AHAB CC
17).
10 The Majority misapprehended this procedural history in recounting that "[d]espite what
Mashreqbank may have ultimately stated to the motion court at oral argument, when
Mashreqbank finally briefed the forum non conveniens question with regard to Al Sanea's
motion, Mashreqbank argued against dismissal of the main action." September 25 Decision at
10. Mashreq's briefing explained that Mashreq had acted in good faith in bringing its claims in
New York, but ultimately made clear that as a result of subsequent events - the pendency of the
UAE action, the discovery that AHAB had no assets in New York and the AHAB partners'
continued insistence before the New York court that they could only be sued in Saudi Arabia -
Mashreq did not object to a forum non conveniens dismissal in favor of the UAE where Mashreq
was actively litigating against both AHAB and the AHAB partners. See Mashreq Reply Mem. of
Law in Connection with Mot. by Third-Party Def. Maan Al Sanea to Dismiss the Third-Party
Andrew W. Klein, Esq., p. 14
11. Section 500.11 Review May Not be Appropriate for This Case
"Appeals may be selected for alternative review on the basis of. (1)
questions of discretion, mixed questions of law and fact or affirmed findings of
fact, which are subject to a limited scope of review; (2) recent, controlling
precedent; (3) narrow issues of law not of statewide importance; (4) unpreserved
issues of law; (5) a party's request for such review; or (6) other appropriate
factors." 22 NYCRR § 500.11 (b). The first through fifth bases are not present in
this case; however, Mashreq believes that "other appropriate factors" warrant
alternative review. Specifically, the well-reasoned decision by the dissenting
Justices of the Appellate Division, as well as the thorough opinion of the motion
court (which followed full briefing of the issues), provide the correct legal rules of
decision and a clear rationale for reversing theSeptember 25
Decision. Accordingly, this Court has before it the straightforward bases for
reversing the September 25 Decision and the alternative review provides the Court
with the most efficient means to do so.
To the extent that the Court bases alternative review on any of
subsections (l)-(5) of 22 NYCRR § 500.1 l(b), then Mashreq objects to alternative
review because those subsections are inapplicable here. The September 25
Decision addresses legal issues subject to plenary review, as opposed to questions
subject to limited review (subsection (1)), see pages 1-3, supra; December 28,
2012 Order. This Court has not addressed similar issues for several years
(subsection (2)), this appeal does not involve any unpreserved issues (with the
possible exception of AHAB's argument that the Supreme Court's dismissal of the
first-party action was sua sponte, an argument never raised by AHAB in the trial
court) (subsection (4)), and no party requested alternative review (subsection
(5)). Significantly, subsection (3) - that the appeal involves "narrow issues of law
not of statewide importance" - is also inapplicable. The implications of the
September 25 Decision for the New York court system are of statewide
importance, see Section IILB, infra, and to the extent this Court considers
subsection (3) as relevant to the invocation of the alternative review mechanism,
then Mashreq respectfully submits that the mechanism should not be employed and
a normal course of appeal would be the best way to proceed.
Compl. on Grounds of Forum Non Conveniens, Mar. 23, 2010, Dkt. No. 115. Mashreq ftirther
advocated for dismissal in its briefing to the Appellate Division. Even if Mashreq had opposed
dismissal - and as the Supreme Court correctly noted, it did not - the more relevant inquiry is
whether the issue was raised and all parties were heard on it, as indisputably occurred here.
Andrew W. Klein,, Esq., p. 15
111. The Appellate Division Improperly Reversed the Supreme Court's
Dismissal for Forum Non Conveniens
A. The Appellate Division Decision Conflicts with Pahlavi Because a
Purported Lack ofAlternative Forum Is Not a Bar to Dismissal for
Forum Non Conveniens
The September 25 Decision must be reversed because its holding that
forum non conveniens dismissal is not appropriate due to the lack of a purported
alternative forum is in direct conflict with this Court's decision in Pahlavi. The
Majority erroneously reversed the Supreme Court because it "failed to identify an
alternative forum that would have jurisdiction over the dispute .. . , let alone
whether the dispute would be 'better adjudicated' in the alternative forum."
September 25 Decision at 17.
Contrary to the September 25 Decision, this Court explicitly held in
Pahlavi that a suitable alternative forum is not a prerequisite for applying the
forum non conveniens doctrine. 62 N.Y.2d at 481. Pahlavi explained that the
doctrine offorum non conveniens does not implicate constitutional due process
rights, and thus, it is similar to other instances in which "New York courts decline
to entertain jurisdiction even though no alternative forum may exist." Id. at 481 -
82. Describing the policy rationale behind its decision, this Court stated that proof
of the availability of another forum should not be required because "[t]hat would
place an undue burden on New York courts forcing them to accept foreign-based
actions unrelated to this State merely because a more appropriate forum is
unwilling or unable to accept jurisdiction." Id. at 48 1. Thus, while consideration
of the availability of an alternative forum is a factor within the Pahlavi analysis, it
is not dispositive of whether a case should be dismissed for forum non conveniens.
The September 25 Decision's alternative forum analysis contains
additional flaws. Even though the Majority acknowledged the Supreme Court's
finding that AHAB had several alternative locations to bring these claims, it
concluded these findings were insufficient based on the unfounded assertion that
"Pahlavi does not suggest that merely because a party may be subject to suit in a
country establishes that it would be an alternative forum." September 25 Decision
at 17-18. The September 25 Decision provides no explanation or authority for its
departure from the well-settled principle that a forum is adequate when "the
defendant is amenable to process in that jurisdiction and the alternative forum
permits litigation of the subject matter of the dispute," as is the case here. Gryphon
Donhestic VI, LLC v. APP Int'l Fin. Co., B.V., 41 A.D.3d 25, 37 (1st Dep't 2007)
(citing Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 n.22 (198 1)); Shin-Etsu
Andrew W. Klein, Esq., p. 16
Chem. Co., Ltd v. 3033 ICICI Bank Ltd., 9 A.D.3 d 171, 178, 179 (1 st Dep't 2004)
(lower court erroneously denied forum non conveniens motion based on finding
that India was an inadequate alternate forum, where "it is undisputed that
[defendant] can be sued in India and that its courts permit litigation of letter of
credit disputes").
When the proper legal standard is applied, there can be no question
that the UAE is an alternative forum for the claims between Mashreq and AH-AB -
it is undisputed that Mashreq and AHAB are litigating the exact same issues there.
Similarly, AHAB admits it could sue Al Sanea in Saudi Arabia, where both reside
and where Al Sanea's alleged misconduct occurred, and AHAB is also suing him
in the Cayman Islands. The September 25 Decision was in error when it gave this
factor near dispositive weight in reversing the Supreme Court'sforum non
conveniens dismissal. R. 24-25 (July 26, 2010 Order). There can be no question
that the parties were "amenable to process in [those] jurisdiction[s] and the
alternative forum permit[ted] litigation of the subject matter of the dispute."
Gryphon Domestic VI7, 41 A.D.3d at 37. The Supreme Court was therefore correct
in finding that AH-AB had "several alternative locations .. , to resolve the disputes"
and that the "UAE is the more appropriate forum for determination of the primary
actions, and they will be decided in the case that Mashreqbank has already
commenced there." R. 24, 27 (July 26, 2010 Order). No further analysis of the
issue was required.
The September 25 Decision also erroneously suggests that Pahlavi
held that "the 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" are part of the alternative forum analysis, rather than
independent factors. September 25 Decision at 10. More importantly, the
September 25 Decision's assertion that the "motion court simply made no factual
findings whatsoever on any of these factors" is wrong. Id. The Supreme Court
made a series of findings, including that "the large majority of witnesses are
located in Bahrain, UAE, Kuwait, or Saudi Arabia"; many of the key witnesses -
specifically, Al Sanea and all but one of the AHAB partners - were "currently
unable to travel to the U.S."; the dispute raised "questions to be resolved based on
evidence and documents in those nations"; and that Mashreq had "commenced
litigation in the UAE that includes and encompasses the alleged damages and
breaches" at issue here. R. 24, 26 (July 26, 2010 Order). The September 25
Decision erroneously ignored these findings and then compounded its error in
reversing the forum non conveniens dismissal.
Andrew W. Klein, Esq., p. 17
B. The Mere Fact that Electronic Funds Flowed Through a New York
Bank Account in Connection with an Otherwise ff'holly Foreign
Dispute Does Not Compel New York Courts to Hear the Case
The September 25 Decision further erred in concluding that New
York courts are barred from dismissing forforum non conveniens any dispute that
arguably involves some aspect of the New York banking system - even when the
underlying dispute has no meaningful connection with New York and would
greatly burden the New York court. The September 25 Decision misapplied
several decisions of this Court to reach this incorrect result.
For instance, the September 25 Decision misapplied this Court's
decision in J Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda) Ltd., 37 N.Y.2d 220
(1975). See September 25 Decision at 3, 12-14. As an initial matter, and as
explained by the dissenting Justices, J Zeevi "addressed choice of law issues, not
forum non conveniens." September 25 Decision, Dissent at 30. Moreover, J
Zeevi involved the dishonor of a New York law governed letter of credit, where
"New York was the locus of the repudiation" and so implicated a core New York
interest as a financial center: "[fln order [for New York] to maintain its
preeminent financial position, it is important that the justified expectations of the
parties to the contract be protected." J Zeevi, 37 N.Y.2d 220 at 226-27. Here, by
contrast, the contract providing the basis for Mashreq's claims is governed by UAE
law, R. 1600 (Sept 25, 2009 Gouldy Aff., Ex. A, July 16, 2008 Facilities Letter
Agreement), and the "dominant feature of AHAB's defense to the complaint,
counterclaim, and third-party complaint," is a purported Ponzi scheme "perpetrated
in the Middle East." September 25 Decision, Dissent at 3 1.
The analysis is not tipped in AHAB's favor simply because AHAB
maintained a bank account at Bank of America in New York." Thewiringof
dollars to AHABs own account in New York did not itself represent any improper
act) but was Mashreq's agreed-to performance on the US dollar-Saudi riyal
The September 25 Decision misunderstood the bank accounts involved. The Majority opinion
states that Mashreq "filed an order of attachment against AHAB's property in New York
including the Rinds contained in the Al Sanea Bank ofAmerica account." September 25
Decision at 4 (emphasis added). In fact, as acknowledged in AHAB's Answer, the funds were in
AHAB's Bank of America account. R. 76-77 (AHAB Answer IT 5-7) ("[T]he sum of
$150,000,000 was received into a bank account in the name ofAHAB at Bank of America.. .
(emphasis added); R. 94 (AHAB CC T 21 (a)) C'Mashreq advanced U.S. dollars ... to AHAB by
making a transfer to the Money Exchange's correspondent bank account at Bank ofAmerica.")
(emphasis added). In AHAB's own telling Mashreq's money went from AHAB's account at
Bank of America to another AHAB account. R. 97 (AHAB CC T 26).
Andrew W. Klein, Esq., p. 18
transaction entered into by Mashreq and AHAB. R. 54-55 (Compi. 14-15).
AHAB'Is default - its failure to deliver Saudi riyals to Mashreq in Mashreq's
account in a bank in Saudi Arabia - does not implicate the interests of New York
as in J1 Zeevi. The fact that the money was transferred from one AHAB account to
another, R. 113 (AHAB TPC 25), R. 13 18 (March 9, 20 10 Gouldy Aff., Ex. A,
AHAB Account Statements), further puts the lie to any New York interest and in
fact raises issues of authority as between Al-AB and its designated agent, Al
Sanea, that implicate questions of foreign law in the context of foreign actors, all
unrelated to New York.
As emphasized by the dissenting Justices, "insofar as Zeevi stands for
the premise that New York is a 'financial capital of the world,' and that the
passage of global capital through New York requires that its courts be open to the
settling of commercial disputes that are transacted here, this principle is not
without its limitations, and commercial disputes that are more fuindamentally
connected to other venues are more appropriately settled there." September 25
Decision, Dissent at 30 (internal quotations and citations omitted). If allowed to
stand, the September 25 Decision would eliminate any meaningful possibility of
dismissal for forum non conveniens in a commercial banking dispute involving
dollars. Dollar transactions typically must clear through a New York-based
correspondent account with access to the Clearing House Interbank Payment
System ("CHIPS"), the international private clearing system for large dollar
transfers.'12 All wholesale international transactions involving the use of the dollar
go through CHIPS and CHIPS is responsible for 95% of US dollar cross-border
transactions. About CHIPS, http://www.chips.org/about/pages/033738.php (last
visited Oct. 25, 2012); see sources cited in n. 12, supra. These US dollar cross-
border transactions, together with nearly half of all domestic wire transactions,
totaled approximately $1.5 trillion daily in 2012. Id. The burden on New York
courts if they were required to retain every case related to these transactions in
which a plaintiff is willing to allege fraud-based claims cannot be overstated.
While the burden this rule would impose on New York courts is
patent, the benefit to the New York banking system is far from clear. Such a rule
would force business people to reconsider whether the benefit of transacting in
dollars is worth the risk of having to litigate any claims related to the transactions
12 R. 466-72 (Edmund M.A. Kwaw, The Law & Practice of Offshore Banking & Finance 15-21
(1996)); see R. 492-94 (Takatoshi Ito and David Folkerts-Landau, International Capital
Markets: Developments, Prospects, and Key Policy Issues 130-32 (1996)); R. 504-73 (Richard
Hooley and John Taylor, "Payment by Funds Transfer," in The Law of Bank Payments 49-185
(Michael Brindle & Raymond Cox eds. 2004)).
Andrew W. Klein, Esq., p. 19
halfway around the world in New York - even where, as is the case here, the
parties' contract calls for the application of foreign law and the parties clearly did
not contemplate a New York forum.
The Majority was also incorrect to characterize Ehrlich-Bober & Co.
v. University ofHouston, 49 N.Y.2d 574 (1980) as "analytically indistinguishable"
from this case. Ehrlich-Bober involved a plaintiff who "ha[d] its principal office
in New York City" and concerned "transactions [which] arose out of telephone
calls made to the plaintiff s New York office" or in-person visits by one of the
defendant's employees. Ehrlich-Bober, 49 N.Y.2d at 577. The Erlich-Bober
Court accordingly concluded that "the transactions in question, judged by any
indicator,, must be considered to be have been centered here." Id. at 5 81-82.
(emphasis added). Here, by contrast Mashreq is headquartered in UAE and any
activities relevant to this action were conducted from its UAE headquarters. R. 93
(AHAB CC T 17). AHAB is located in Saudi Arabia, as is Al Sanea, and actions
by AHAB or Al Sanea were performed in Saudi Arabia. R. 107-8 (AHAB TPC TT
11 - 12); R. 8 8 (AHAB CC T 4) ("Whenever it is alleged in this Counterclaim that
the Money Exchange or AHAB did or omitted to do a thing or act, such allegation
[means] ... that the Money Exchange or AHAB was caused to do the thing or act
by Al Sanea."). Even AHAB never argued that theforum non conveniens analysis
in Ehrlich-Bober had any relevance to this case. The only citation to Ehrlich-
Bober in all of the parties' appellate briefing is AHAB's passing suggestion in its
reply brief that Ehrlich-Bober supported AHAB's reliance on cases that do not
addressforum non conveniens issues. AHAB Appeal Reply Br. at 5 ("For
example, in [Ehrlich-Bober], the Court of Appeals analyzed choice-of-law and
long-arm jurisdiction decisions for purposes of the separate issue of comity.").
AHAB may argue this Court's recent decision on personal jurisdiction
in Licci v. Lebanese Canadian Bank, 20 N.Y.3d 327 (2012) supports affirmance
here. But Licci held that a foreign bank's "repeated use of a correspondent account
in New York7' is sufficient to establish personal jurisdiction under New York's
long-arm statute. Id. at 338-39. As this Court has recognized, the doctrine of
forum non conveniens assumes jurisdiction exists; its purpose is to permit trial
courts to decline to exercise that jurisdiction. See Silver, 29 N.Y.2d 356, at 362
("The fact that litigants may more easily gain access to our courts ... stemming
from enactment of the long-arm statute (CPLR 302). . . , requires a greater degree
of forebearance in accepting suits which have but minimal contact with New
York."). Licci did not in any way suggest that New York courts should retain
cases that would otherwise be dismissed forforum non conveniens if the case
involves fund transfers through New York bank accounts.
Andrew W. Klein,, Esq., p. 20
Any invocation of Licci by AHAB would be inappropriate for
additional reasons. Another bank creditor of AHAB - Standard Chartered Bank -
obtained a judgment in Bahrain against AHAB and has since had that judgment
recognized in New York. See Decision and Order, Standard Chartered Bank v.
Gosaibi, No. 653506/2011 (Sup. Ct. N.Y. Cnty. Dec. 12, 2012). AHAB has
apparently refused to pay that New York judgment, meaning that while AHAB
demands the right to have recourse to the New York courts on its claim against Al
Sanea and its purported Counterclaim against Mashreq, AH-AB is simultaneously
resisting the judgment that a New York court entered against it. AHAB is further
resisting complying with the asset discovery subpoena served on it by Standard
Chartered Bank, arguing that Licci provides no basis for jurisdiction over AHAB
because Licci involved the movement of funds "to terrorists." Mem. in Supp. of
Judgment Debtors' Mot. to Quash Subpoenas at 8, Standard Chartered Bank v.
Gosaibi, No. 653506/2011 (Sup. Ct. N.Y. Cnty. Apr. 1, 2013). The state of New
York has no interest in allowing a party with nearly no connection to New York,
that otherwise resists the application of New York law, to use the courts of New
York to further its own agenda in the context of a dispute that has no connection to
New York and is in fact being litigated elsewhere.
C. The Appellate Division 's Incorrect Choice of Law Analysis Further
Contributed to its Erroneous Reversal of the Supreme Court
The September 25 Decision failed to perform the required choice of
law analysis, compounding the other errors in its forum non conveniens decision.
The conclusory statement that "it is patent that New York law will apply [because
t]he law of the jurisdiction where the tort occurred will generally apply,"
September 25 Decision at 19 (citing Banco Nacional Ultramarino v. Chan, 169
Misc.2d 182 (Sup. Ct. N.Y. Cnty. 1996), affd 240 A.D.2d 253 (1 st Dep't 1997)) is
not supported by the Banco Nacional case - which does not even address choice of
law issues - and is inconsistent with New York choice of law analysis. This Court
rejected precisely this type of formulaic approach in favor of a more flexible
"interest analysis." See Schultz v. Boy Scouts ofAm., 65 N.Y.2d 189, 196 (1985).
The interest analysis requires that "[t]he law of the jurisdiction having the greatest
interest in the litigation will be applied and the only facts or contacts which obtain
significance in defining State interests are those which relate to the purpose of the
particular law in conflict." Id. at 197 (alterations and citation omitted).
The September 25 Decision failed to consider the significant interests
of UAE and Saudi Arabia in this dispute between UAE and Saudi parties, based on
conduct that took place in those countries. AH-AB itself acknowledged the
relevance of UAE and Saudi law. See, e.g., AHJAB Appeal Br. at 43 (recognizing
Andrew W. Klein,, Esq., p. 21
"as possibly raising an issue of foreign law [Al Sanea's] contention that this action
will turn on principles of agency under Saudi law."); AHAB Appeal Reply Br. at
16 ("constuction ... of the ... Mashreq loan documents might arguably be
governed by UAE law.").
Moreover,, the September 25 Decision's choice of law analysis is
incorrect on its own terms:
Under traditional rules, the law of the place of the wrong governs ..
but when the defendant's ... conduct occurs in one jurisdiction and
the plaintiff's injuries are suffered in another, the place of the wrong
is considered to be the place where the last event necessary to make
the actor liable occurred. Thus, the locus in this case is determined by
where the plaintiffs' injuries occurred.
Schultz, 65 N.Y.2d at 195 (citations omitted). Here, even assuming that the choice
of law issue could be resolved by applying "the law of the jurisdiction where the
tort occurred," September 25 Decision at 19, the result would be the application of
the law of the place where AHAB's alleged injuries occurred, i.e. Saudi Arabia.
D. The Appellate Division Erred in Concluding that the Bar on Sua
Sponte Dismissals for Forum Non Conveniens Applied Here
The Appellate Division' s also erred in holding - contrary to all
precedent and the plain language of CPLR 3 27(a) - that a court cannot dismiss for
forum non conveniens any claim that is not specifically enumerated in the initial
motion papers. 13 This inflexible and formalistic reading of CPLR 327(a) and VSL
Corp. v. Dunes Hotels & Casinos, 70 N.Y.2d 948 (1988), imposes unprecedented
limitations on the discretion of the trial court to consider questions offorum non
conveniens and case management when forum non conveniens issues are otherwise
raised and responded to by the parties.
CPLR 3 27(a) permits a court to dismiss an action for forum non
conveniens, "in whole or in part ... on the motion of any party." A third-party
defendant,, like Al Sanea here,, has "the rights of a party adverse to the other parties
13 The Majority's opinion may have been driven by its misunderstanding of the proceedings
before the Supreme Court. See n. 8, 10 supra, discussing incorrect statements in the September
25 Decision suggesting that Mashreq did not brief theforum non conveniens issue and/or
opposed a forum non conveniens dismissal.
Andrew W. Klein, Esq., p. 22
in the action." CPLR 1008. AHAB does not dispute that a first-party action is
properly dismissed on the basis of a motion made by a third-party defendant.' 4
Once the issue offorum non conveniens was raised by Al Sanea, the
court had broad discretion in its application to the entire action, including the first-
party claims. AHAB never argued otherwise before the Supreme Court, even
when the Court repeatedly advised AHAB that dismissal of the entire action was
contemplated. R. 1474:13-20 (Mar. 25 Hr'g Tr.) (Supreme Court addressing
counsel for AHAB: "[tlhere's two parts here to that application, you understand.
One is for [Al Sanea] to be cut out.... And for the underlying case to continue.
The other is for me to consider forum non conveniens as to everybody. Mr. Grace
(counsel for AHAB): Yes. The COURT: I understand you are opposing it as to
eveybody .... Mr. Grace: Yes, your Honor, we are. We are."); see also id. at R.
1473:16-21 (The COURT: "Do you oppose the forum non conveniens motion
with regard to the third-party defendant, as opposed to the application that's being
made for the entire case to be shipped .. .. Mr. Grace: Yes.").
As recognized by the dissenting Justices, the Majority's holding is in
conflict with prior case law uniformly holding that a forum non conveniens
dismissal is appropriate so long as "the doctrine of forum non conveniens was
squarely before the court and the parties had a full and fair opportunity to litigate
the issue." September 25 Decision, Dissent at 26. For example, in Smith v. Miller,
237 A.D.2d 294, the Second Department held that the forum non conveniens
dismissal was proper because "[a]lthough no formal motion was made to dismiss
the proceedings on the ground offorum non conveniens, the doctrine was raised
before the court,, and the parties contested the matter." Id at 295 (citing CPLR
327(a) and VSL Corp., 70 N.Y.2d 948). Similarly, in Banco do Estado de Sao
Paulo S.A. v. Mendes Junior International Co., the court foundforum non
conven lens dismissal appropriate where "plaintiff did not move for summary
14 See also Imperial Imps. Co., Inc. v. Hugo Neu & Sons, Inc., 161 A.D.2d 411, 412 (1 st Dep't
1990) (third-party defendant's motion to dismiss on the ground offorum non conveniens
"invoke[s] the court's authority to entertain the granting of such relief in fall or in part, based
upon any consideration that might be just"); see also Kearns v. Johnson, 655 N.Y.S.2d 498, 499
(I1st Dep't 1997) (" [t]he fact that she was brought into the action as a third-party defendant does
not diminish her right to move for a change of venue as of right"); McKinney's CPLR 1008
Practice Commentaries (2011) ("In addition to defenses that can be asserted in pleadings, the
third-party defendant may employ any other 'procedural weapons which the law gives to the
original defendant for defeating plaintiff s claim."') (quoting N.Y. Jud. Council, Twelfth Ann.
Rep. 211 (1946)); id (CPLR 1008 "entitles a third-party defendant to raise whatever defenses
that could have been, but were not, asserted by the defendant/third-party plaintiff in the main
action).
Andrew W. Klein,, Esq., p. 23
judgment on forum non conveniens grounds. . -, [but] forum non conveniens has
been raised by plaintiff as an affirmative defense to the counterclaims and was a
clearly articulated motif of plaintiff s arguments in the motion proceedings." 249
A.D.2d 13 7 13 9 (1 st Dep't 1998).
The Majority made no effort to distinguish Smith, see September 25
Decision,, Dissent at 26, which is directly on point, presumably due to its
misapprehension that the parties here had not had an opportunity to brief theforum
non conveniens issue. See n. 13,, supra. Trying to distinguish Banco do Estado, the
Majority found Banco do Estado inapposite because "both plaintiff and defendants
in that motion fully briefed the forum non conveniens issues as a 'clearly
articulated motif of the motion." September 25 Decision at 11. That, however, is
precisely what occurred here - althoughforum non conveniens was originally
raised by the third-party defendant, all parties briefed the issue, resulting in the
submission of no fewer than six briefs devoted to the issue offorum non
conveniens, including with respect to the first-party action. Smith and Banco do
Estado demonstrate that that there is no requirement that a formal motion be made
as to each and every part of the case ultimately dismissed - it is sufficient that a
party raised the issue and all parties had the opportunity to be heard, as occurred
here.
The September 25 Decision also misapplies this Court's decision in
VSL Corp., which held that CPLR 327(a) does not permit dismissal forforum non
conveniens where the issue was not raised by any of the parties. VSL Corp. in no
way hamstrung the court's power under CPLR 327(a) to dismiss an action "in
whole or in part" where the issue was raised by "any party." To the contrary, the
Second Department relied on this Court's guidance in VSL Corp. when it
recognized in Smith that "no formal motion" was required. Smith v. Miller, 237
A.D.2d at 294 (citing VSL Corp., 70 N.Y.2d 948).
Here, just as in Smith and Banco do Estado, a party (Al Sanea) raised
forum non conveniens, and all parties - Mashreq, AHAB, and Al Sanea - had an
opportunity to fully brief and argue before the Supreme Court whether the entire
case should be dismissed. As explained by the dissenting Justices:
[W]here the third-party defendant moved to dismiss the third-party
complaint on forum non conveniens grounds, placing the doctrine
before the court,, and the dismissal of the [first-party] action on that
ground was addressed by the parties at oral argument, the court had
the discretion to dismiss the entire action in whole or in part,
especially where AHAB's third-party complaint, counterclaims and
Andrew W. Klein,, Esq., p. 24
defenses to the complaint are admittedly intertwined and plaintiff
stated its position that if the third-party complaint was dismissed, the
[first-party] complaint should be dismissed as well.
September 25 Decision, Dissent at 25-26. In contrast with the Dissent's well-
reasoned opinion, Smith, and Banco do Estado, the September 25 Decision placed
a procedural straitjacket on the trial court, forcing it to hear a case that has no
business being litigated in New York simply because the third-party defendant's
motion papers focused on the third-party complaint. This was error.
E. In the Alternative, the Appellate Division Abused its Discretion
In addition to the legal errors, the September 25 Decision also merits
reversal for abuse of discretion given the absence of any meaningful connection
between the claims and New York. See Patriot Exploration, LLC v. Thompson &
Knight LLP, 16 N.Y.3d 762, 763 (2011) (reversing the denial offorum non
conveniens for abuse of discretion). All of the issues Al-AB seeks to litigate (or
relitigate) here are grounded in the UAE and its neighboring country Saudi Arabia,
where Mashreq, AHAB, its partners, and its agent Al Sanea are located and did
business.'15 The superiority of the UAE forum for the claims between Mashreq and
AHIAB and its partners is especially apparent now that the UAE action has
proceeded to a judgment while this case remained idle pending AHAB's perfection
of its appeal. UAE law applies to Mashreq's claim and AlHAB's counterclaim, 16
numerous documents relevant to AHAB's defenses and counterclaim are in
Arabic,'17 the majority of witnesses reside in the UAE or neighboring countries and
key witnesses - including Al Sanea and AHAB Managing Director Saud Al
Gosaibi - cannot leave Saudi Arabia and will testify in Arabic.' 8
1" R. 109 (AHAB TPC 14); R. 50 (Compi. T 1); R. 76 (Answer 2).
16 AHAB Appeal Reply Br. at 16 ("Mashreq loan documents might arguably be governed by
UAE law") and Point III.C., supra; see also AHAB Appeal Br. at 43 (recognizing "as possibly
raising an issue of foreign law [Al Sanea' s] contention that this action will turn on principles of
agency under Saudi law."); n.4, supra (noting AHAB's arguments in the trial court concerning
IJAB law to determine preclusive effect of Mashreq's UAE judgment against AHAB ).
"~ R. 1782 at 99:4-6 (Tr. of London Proceedings, Day 3); R. 622 27 (AI-Sanea Aff.).
18 R. 622 27 (Al-Sanea Aff.); R. 1784 at 145:1-4 (Tr. of London Proceedings, Day 3); id at
145:11-17. The September 25 Decision improperly faulted the trial court for having made "no
finding that witnesses subject to a travel bar in Saudi Arabia would be precluded from testifying
via some alternate means." Id at 18. Whether alternative means of testifying were available is
beside the point. Any alternative means would burden the trial court and be particularly
prejudicial to Mashreq because Mashreq would be unable to effectively cross-examine critical
Andrew W. Klein, Esq., p. 25
In Patriot Exploration, the defendant in that case maintained an office
in New York, but none of the New York employees were involved in the events
underlying the case. In reversing the lower court's holding that the case must
proceed in New York, this Court noted that the "case involves the alleged
malpractice by Texas lawyers representing Alaskan clients, whose principal places
of business are in Connecticut, in a transaction with Texas companies- that involves
land in Texas. Further, the documentary evidence is located in defendant's Texas
office, as are the attorneys who allegedly committed the malpractice and most of
the potential witnesses." Patriot Exploration, 16 N.Y.3d at 763. The same logic
requires dismissal here.
The Appellate Division further abused its discretion by failing entirely
to take into account the duplicative proceedings in other jurisdictions, both with
respect to the availability of an alternative forum and with respect to the risk of
inconsistent judgments.
In conclusion and based upon the foregoing, Mashreq respectfully
requests that the Court reverse the Appellate Division's September 25 Decision.
Respec5 fully submitted,
C me Bo 9cuzzi, Jr.
Enclosures
cc: Eric L. Lewis, Esq. (without enclosures)
Robert F. Serio, Esq, (without enclosures)
David J. Molton, Esq. (without enclosures)
AHAB witnesses, while AHAB would face no similar challenge in cross-examining Mashreq's
witnesses.