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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: April 2, 2020

Court Grants Forum Non Conveniens Motion Based on Parties’ Limited Connection to New York

On March 17, 2020, Justice Cohen of the New York County Commercial Division issued a decision in BSR Fund, S.A. v. Jagannath, 2020 NY Slip Op. 30810(U), granting a forum non conveniens motion based on the parties’ limited contacts with New York, explaining:

The doctrine of forum non conveniens permits a court to dismiss an action when, although it may have jurisdiction over a claim, the court determines that in the interest of substantial justice the action should be heard in another forum. This doctrine reflects the basic principle that our courts need not entertain causes of action lacking a substantial nexus with New York.

For purposes of the forum non conveniens analysis here, the Court presumes, without deciding, jurisdiction over Defendants. Where personal jurisdiction is difficult to determine, and forum non conveniens considerations clearly militate in favor of dismissal, a court may dismiss on the latter ground.

To determine whether an action should be dismissed for forum non conveniens, the Court must consider several factors, including the residence of the parties, the situs of the underlying transaction, the existence of an adequate alternative forum, the location of potential witnesses and relevant evidence, potential hardship to the defendant, and the burden on New York courts. No one factor is controlling. At bottom, the analysis is about whether the action has a substantial connection to this State.

In weighing these considerations, the plaintiff’s choice of forum is entitled to strong deference, but it is not dispositive. However, where none of the plaintiffs is a New York resident, which is the case here, dismissal on forum non conveniens grounds may be appropriate.

The forum non conveniens factors weigh in favor of dismissal here. First, many of the parties to this action, including the alleged masterminds behind the Fund as well as its alleged victims, are located outside New York. The predominance of foreign residents is entitled to substantial weight in the forum non conveniens analysis. Daskaleas and Litinas live in Greece, while Plaintiffs are Greek residents and Marshall Islands and Liberian corporations. One individual Defendant – Mr. Cunningham – allegedly resided in New York, but Plaintiffs make only vague allegations about his role in the scheme: he is alleged to have, for example, furthered the conspiratorial scheme, corresponded from New York in furtherance of the conspiracy, facilitated the use of the demo accounts, and assisted the other Defendants in the theft of the Plaintiffs’ funds. Cunningham’s presence in New York alone does not suggest that New York is an appropriate forum for this action.

Second, the underlying transaction here exhibits a strong foreign nexus largely attributable to Plaintiffs’ sophisticated business dealings abroad. At bottom, this was a scheme allegedly hatched by a pair of Greek residents to swindle other Greek residents. And the Fund at the center of that scheme worked its alleged fraud primarily through entities and accounts outside New York. The subscription agreements which purported to lock up Plaintiffs’ investments in the Fund were entered into with British Virgin Islands corporations, at the urging of the Greek Defendants. The Fund was allegedly administered by a company in Cyprus. Defendants sought to wire money in the Fund to accounts in Europe, and helped disperse the Plaintiffs’ funds to other accounts at other banks in various other countries, including Belize, Montenegro, St. Lucia, Switzerland, Germany, and others. In addition, the majority of investment funds stolen from the Plaintiffs passed through accounts held by Ikon at Harris Bank in Chicago as well as HSBC Bank, PLC in London.

Third, and as a consequence, material witnesses, relevant documents, and other evidence for Plaintiffs’ claims, as well as the defenses thereto, are likely to be located outside of the United States. The basis for Plaintiffs’ common-law fraud and fraudulent inducement claim, for example, are representations made by Daskaleas and Litinas to Restis. All the parties to those critical communications live in Greece. Similarly, Plaintiffs’ conversion claim likely depends on the foreign account transfers described above, along with communications to Restis and Resti in Greece.

Fourth, adequate alternative fora for this dispute not only exist, but are currently in use. Related civil suits are pending against Ikon and Daskaleas in England, while in Greece another civil action is pending against Daskaleas’s daughter (who allegedly received funds from her father) and Restis. Also in Greece, criminal charges have been filed against Restis, Daskaleas, and Ikon.

In short, there must be some factual connection between New York and the dispute. That connection, in Plaintiffs’ view, rests in large part on the activities of Jagannath and Ikon. Plaintiffs allege that Defendants Ikon Global Holding Company, LLC, Ikon Global Markets, Ftechnics, Inc., Patrick Cunningham, and Diwakar Jagannath all transact or transacted business in New York relevant to the allegations in this Complaint. But Plaintiffs’ vague references to business conducted in New York is not enough. Unlike in Banco Nacional Ultramarino, S.A. v. Chan, 641 N.Y.S.2d 1006 (Sup. Ct. N.Y. Cty. 1996), on which Plaintiffs rely, New York was not the hub of Defendants’ activities and New York banks were not the means of disbursing the ill-gotten gains.

That some communications were allegedly sent by Jagannath from New York to other parts of the world, fails to create a substantial nexus with New York. At most, assuming Plaintiffs’ allegations are true, Jagannath was aiding a foreign scheme to deceive Greek residents. Even where some portion of the dispute- or the evidence- can be found in New York, dismissal on forum non conveniens grounds is still appropriate if the underlying transaction occurred primarily abroad.

(Internal quotations and citations omitted).

Disputes regarding commercial contracts involving out-of-state and international parties end up being heard in New York courts. Even if the court has the power to assert jurisdiction of the parties, it can, under the forum non conveniens doctrine discussed above, dismiss the dispute so it can be heard in a forum that is more convenient for the parties. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client face a situation where you are unsure whether New York is the appropriate forum in which a dispute should be heard.

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