The Harvard
Corporate Governance Blog has a post
discussing a recent judgment that confers significant long-arm jurisdiction to
the New York Courts. Here is the summary:
Corporate Governance Blog has a post
discussing a recent judgment that confers significant long-arm jurisdiction to
the New York Courts. Here is the summary:
On
November 20, 2012, the New York Court of Appeals issued an opinion that is of
substantial importance to international banks and financial institutions that
maintain and use correspondent banking accounts in New York. In Licci v.
Lebanese Canadian Bank, SAL (N.Y. Nov. 20, 2012), the Court of Appeals held
that a non-U.S. bank’s maintenance and use of such an account to effect
“dozens” of wire transfers, worth millions of dollars, on behalf of a non-U.S.
client was sufficient to form the basis for personal jurisdiction under the New
York State long-arm statute, N.Y. C.P.L.R. § 302(a)(1). Due to the prevalence
of U.S. dollar-denominated financial transactions, many non-U.S. banks maintain
and use correspondent accounts in New York. As a result, the Licci decision has
the potential to increase plaintiffs’ ability to establish personal
jurisdiction over non-U.S. financial intuitions in state and federal courts in
New York.
November 20, 2012, the New York Court of Appeals issued an opinion that is of
substantial importance to international banks and financial institutions that
maintain and use correspondent banking accounts in New York. In Licci v.
Lebanese Canadian Bank, SAL (N.Y. Nov. 20, 2012), the Court of Appeals held
that a non-U.S. bank’s maintenance and use of such an account to effect
“dozens” of wire transfers, worth millions of dollars, on behalf of a non-U.S.
client was sufficient to form the basis for personal jurisdiction under the New
York State long-arm statute, N.Y. C.P.L.R. § 302(a)(1). Due to the prevalence
of U.S. dollar-denominated financial transactions, many non-U.S. banks maintain
and use correspondent accounts in New York. As a result, the Licci decision has
the potential to increase plaintiffs’ ability to establish personal
jurisdiction over non-U.S. financial intuitions in state and federal courts in
New York.
This development may be of
particular interest to Indian banks without any direct presence in New York,
but who may be dealing through correspondent banks within that state. They
could potentially be exposed to actions before a New York court.