Complaint dismissed sua sponte on forum non conveniens grounds

Mashreqbank PSC v Ahmed Hamad Al Gosaibi & Bros. Co., 101 AD3d 1, Decision: 2014_02381-NY-Mashrequbank-v-Gosaigi April 8, 2014

The court had held in VSL Corp. v Dunes Hotels & Casinos (70 NY2d 948 [1988]) that it was error for the Appellate Division to dismiss a complaint sua sponte on forum non conveniens grounds, adding that such a dismissal may occur “only upon the motion of a party” (id. at 949). This case represents an apparent change of heart made with a wave to VSL Corp.

“The case arises out of a transaction between Mashreqbank PSC (Mashreq), a bank located in Dubai, United Arab Emirates, and Ahmed Hamad Al Gosaibi & BrothersCompany (AHAB), a partnership with its headquarters in Khobar, Saudi Arabia. According to Mashreq’s complaint, Mashreq and AHAB agreed to a “foreign exchange swap transaction of US Dollars for Saudi Arabian riyals.” Mashreq agreed to, and did, transfer $150 million to AHAB on April 28, 2009, wiring the money to AHAB’s account at Bank of America in New York. AHAB, according to Mashreq, agreed to pay Mashreq an equivalent value in riyals on May 5, 2009, but the riyals were not paid.

Mashreq sued AHAB to collect the alleged debt. It chose to do so in New York Supreme Court, believing (mistakenly, as it turned out) that it would be able to reach AHAB assets here. AHAB filed an answer (including a counterclaim) and a third-party complaint, naming as third-party defendants a citizen of Saudi Arabia, Maan Abdul Waheed Al-Sanea (Al-Sanea), and Awal Bank BSC (Awal), a bank, headquartered in the Kingdom of Bahrain, that Al-Sanea controlled. AHAB’s pleading alleged that Al-Sanea, an AHAB employee, had “engaged in a massive scheme to loot AHAB”; that the purported foreign exchange transaction on which Mashreq sued was part of that scheme; and that by participating in that and other corrupt transactions Mashreq had aided and abetted Al-Sanea’s fraud. AHAB also alleged that the $150 million paid by Mashreq had been transferred at Al-Sanea’s direction from Bank of America to Awal’s account at the New York branch of another bank.”

The court justified the decision with these words:

“Apart from the use of New York banks to facilitate dollar transfers—a fact which, as we have said, is of minor importance here—we see nothing in this case to justify resort to a New York forum. No party is a New York resident; no relevant conduct apart from the execution of fund transfers occurred in New York; no party has identified any important New York witnesses or New York documents; New York law does not apply; no property related to the dispute is located in New York; no related litigation is pending in New York; and no other circumstance supports an argument that New York is an appropriate forum. Alternatives to a New York forum are available; indeed, the parties’ briefs refer to a number of related investigations or litigations pending in several foreign countries. This is a classic case for the application of the forum non conveniens doctrine.”

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