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Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts
Posted: September 1, 2015

Court of Appeals Grants Leave To Appeal In Case Concerning “Safe Harbor” Exception To Champerty Statute

On August 27, 2015, the Court of Appeals granted leave to appeal in Justinian Capital SPC v. WestLB AG, a case involving the interpretation of a “safe harbor” provision that exempts from invalidation under New York’s champerty statute “the purchase of certain debts and related claims so long as there is an aggregate purchase price of at least five hundred thousand dollars.” The First Department, in a decision we blogged about here, unanimously affirmed the decision of Justice Kornreich of the New York County Commercial Division dismissing the complaint on champerty grounds, and finding that the safe harbor provision was inapplicable where the purchase price, although set at an amount above $500,000, was never actually paid. A reversal by the Court of Appeals could significantly narrow New York’s champerty statute, since under the plaintiff’s proposed interpretation of the safe harbor provision, “the mere recitation of payment, or a promise to pay, is sufficient” to trigger the exemption.

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