Commercial Division Blog

Posted: October 19, 2018 / Categories Commercial, Contracts, Standing

New York Law Applied to Question of Whether Tort Claims Passed to Belgian Assignee

On October 9, 2018, the First Department issued a decision in Royal Park Invs. SA/NV v. Morgan Stanley, 2018 NY Slip Op. 06695, holding that New York law applied to the question of whether tort claims passed to a Belgian assignee, explaining:

Unlike substantive law, matters of procedure are governed by the law of the forum state. The question of whether a plaintiff has standing is a procedural matter.

Plaintiff contends that pursuant to Sealink Funding Ltd v Morgan Stanley (2014 NY Slip Op 31031[u] at *7 [Sup Ct NY County 2014], affd 133 AD3d 458 [1st Dept 2015]), whether claim rights were transferred under a contract is a substantive question and not a procedural matter. Plaintiff's reliance on Sealink Funding is misplaced as there the parties agreed that English law governed the transfers under the applicable agreements. Here, the defendants make no such concession as to the governing law. Accordingly, the motion court properly applied New York law to determine whether plaintiff had standing.

Under New York law, where an assignment of fraud or other tort claims is intended in conjunction with the conveyance of a contract or note, there must be some language that evinces that intent and effectuates the transfer of such rights. Plaintiff does not claim that the PTA contains such language, and thus, the motion court properly found that plaintiff lacked standing to bring the claims it asserts in the instant actions.

(Internal quotations and citations omitted).

New York law allows the owner of a legal claim to assign it someone else to prosecute. However, when an entity that owns a claim by assignment attempts to enforce it, it is not unusual for there to be litigation over whether claim was properly assigned under New York law. Contact Schlam Stone & Dolan partner John Lundin at if you or a client have questions regarding a claim that has been assigned.