Case of the Day: Abu Dhabi Commercial Bank v. Saad Trading
Posted on June 1, 2012
The case of the day is Abu Dhabi Commercial Bank PSJC v. Saad Trading, Contract and Financial Services Co. (N.Y. Sup. 2012). The bank had sued Saad, a Saudi Arabian firm, for breach of contract in the Queen’s Bench Division of the High Court and won a judgment of more than $33 million. Although Saad had entered in appearance in the English case, its solicitors ultimately withdrew from the case before trial, and Saad did not appear at trial. The English judge found that the bank had proved its case on the merits and entered judgment; Saad never appealed.
The bank then sought recognition and enforcement of the judgment in New York. Saad claimed that the New York court lacked personal jurisdiction. The bank asserted that the Court did not have to have personal jurisdiction when ruling on a claim for recognition and enforcement. The judge agreed, citing Lenchyshyn v. Pelko Elec., Inc., 281 A.D.2d 42 (2001).
The judge focused on Shaffer v. Heitner, 433 U.S. 186 (1977), which as I have previously noted, stands for the proposition that the due process constraints on quasi in rem jurisdiction do not arise when the plaintiff is not seeking to litigate a claim on the merits against the defendant, but instead is only seeking recognition and enforcement of a judgment that resulted from a litigation on the merits.
It seems strange that a plaintiff might seek recognition and enforcement of a judgment in a state where the defendant has no property to seize. But in such a case, I can see an argument in favor of requiring a showing of personal jurisdiction. But I agree with the view that where the defendant does have property in the state where enforcement is sought, the presence of the property is sufficient to vest the court with jurisdiction. For one thing, judgment debtors’ property should be liable to execution wherever it is located. For another thing, the litigation is merely a collection mechanism, not a substantive lawsuit.
The judge also properly rejected Saad’s forum non conveniens defense on the grounds that there was no hardship: “Here, defendant bears no hardship, since there is nothing to defend. The merits were decided in England, and plaintiff seeks no new relief.”
This case is a welcome antidote to cases we have seen imposing jurisdictional or venue limitations in actions for recognition and enforcement of judgments or awards. Way to go, Judge Kornreich!