Blogs

Commercial Division Blog

Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: March 19, 2020

Forum Non Conveniens Dismissal Upheld on Appeal

On February 25, 2020, the First Department issued a decision in Al Rushaid Parker Drilling Ltd. v. Byrne Modular Bldgs. L.L.C., 2020 NY Slip Op. 01277, upholding a forum non conveniens dismissal, explaining:

In each of the subject actions, Supreme Court, after considering all the relevant factors (see Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 479, 482 [1984], cert denied 469 US 1108 [1985]), properly exercised its discretion in granting the motion to dismiss on the ground of forum non conveniens on the condition that the defendant or defendants stipulate to accept service of process and waive any statute of limitations defense if sued in the alternative forum (Switzerland in the Pictet action, the UAE in the Byrne action). In this regard, the court properly considered the following matters, among others: (1) none of the parties to either action is a New York citizen or resident or (if an entity) is formed under New York law or has its principal place of business in New York; (2) the alleged conduct at issue primarily occurred in the UAE, Saudi Arabia and Switzerland, with the sole New York connection being the fleeting presence of the bribery funds at a nonparty New York correspondent bank while en route from the UAE to Switzerland; (3) the bulk of the relevant documentary evidence is located in the UAE, Saudi Arabia, Switzerland and BVI, and most witnesses are located outside New York and beyond New York’s subpoena power; (4) there is a likelihood that foreign substantive law will govern; (5) there are alternative fora available (Switzerland and the UAE) with greater connection to the subject matter; and (6) in the Pictet action, Switzerland has an interest in regulating the conduct of a bank operating within its borders. In view of these considerations, it cannot be said that Supreme Court improvidently exercised its broad discretion in granting the motions for forum non conveniens dismissal, still less that its discretion was abused.

The Court of Appeals’ decision in Pictet establishes that the passage of the alleged bribery funds through a New York correspondent bank sufficed to confer on the state’s courts personal jurisdiction over the parties that arranged that transfer. As Supreme Court correctly recognized, however, the Pictet holding did not abrogate the Court of Appeals’ statement less than three years earlier, in reinstating the dismissal of an action on forum non conveniens grounds, that

our state’s interest in the integrity of its banks is not significantly threatened every time one foreign national, effecting what is alleged to be a fraudulent transaction, moves dollars through a bank in New York. New York’s interest in its banking system is not a trump to be played whenever a party to such a transaction seeks to use our courts for a lawsuit with little or no apparent contact with New York.

In accordance with Mashreqbank, this Court has declined to disturb the motion court’s discretionary determination that New York is not a convenient forum in cases where the sole connection to New York was the passage of wired funds through a correspondent bank in the state.

(Internal 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.

Click here to subscribe to this or another of Schlam Stone & Dolan’s blogs.

View posts