New York’s Highest Court Strengthens Forum Non Conveniens Doctrine in Cases Having Peripheral Connection to New York Banking System: Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Brothers Company

Sullivan & Cromwell LLP - April 10, 2014
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In an opinion issued on April 8, 2014, the New York Court of Appeals unanimously dismissed on forum non conveniens grounds a case arising from a foreign exchange transaction between a bank in the United Arab Emirates and a general partnership in Saudi Arabia, where the only nexus between the transaction and the State of New York was the “use of New York banks to facilitate dollar transfers.”  In reversing the Appellate Division, First Department, the Court emphasized that, although New York has a compelling interest in maintaining the integrity of its banks, that interest “is not significantly threatened” merely because a party “moves dollars through a bank in New York.” 

Going forward, the Court’s decision in Mashreqbank will provide a valuable tool for parties seeking dismissal under the doctrine of forum non conveniens in cases involving only a peripheral connection to the New York banking system.  Along with an intermediate court’s decision last year in Viking Global Equities, LP v. Porsche Automobil Holding SE, which dismissed on forum non conveniens grounds a suit brought by a collection of global hedge funds concerning stock transactions in Germany, the Court of Appeals’ decision in Mashreqbank reflects a growing trend among New York courts of refusing to hear cases involving a transaction among non-U.S. entities unless there is a strong nexus to the State.