S&C Co-Chair Bob Giuffra spoke with the New York Law Journal on the potential impact of shareholder derivative lawsuits against foreign companies being litigated in New York instead of in their home jurisdictions. The Securities Industry and Financial Markets Association, the Institute of International Bankers and other groups are urging the New York Court of Appeals to establish that derivative litigation against non-U.S. companies like Bayer and Barclays occur in their home jurisdictions. An amicus brief on the matter was submitted by Sullivan & Cromwell.
“If the Court of Appeals rules in favor of the plaintiffs and allows these cases to go forward in New York courts, it will open the floodgates to more litigation,” Bob said. “And so, as we say in the brief, New York courts will become the Shangri-La for all these corporate governance disputes against non-U.S. companies.”
Bob noted the requirements for bringing a derivative case is generally a matter of substantive, rather than procedural, law. “New York judges are not experts in European law or Asian law or Latin American law, and you also have the problem of, where are the witnesses, where are the documents, where did the transaction occur? I think it could be very disruptive to U.S. capital markets," he added.
Read: “Sullivan & Cromwell Urges Top Court to Resist Making NY the 'Shangri-La' for Derivative Shareholder Suits”