Case of the Day: Chettri v. Nepal Bangladesh Bank

The case of the day is Chettri v. Nepal Bangladesh Bank (S.D.N.Y. 2014). Ashim Khattri Chettri did business as Tarala Internationals, Ltd. He and Wu Lixiang sued Nepal Bangladesh Bank, Ltd., Nepal Rastra Bank (Nepal’s central bank), the Nepali Department of Revenue Investigation, and Chase Manhattan Bank. Tarla, a Colorado company, was a supplier of clothing and military equipment to the Nepali government. Wu was associated with Constellation International Ltd., a Hong Kong company that acted as Tarla’s distributor. The claim was that the two Nepali banks and the Nepali government wrongfully froze funds in the plaintiffs’ bank accounts during a money laundering investigation.

Chettri and Wu served the summons and complaint on the governmental defendants (the central bank and the DRI) by delivery to Nepal’s consulate general in New York and then by personal service in Kathmandu on the offices of the two defendants. After an order to show cause, the judge entered a default judgment against the two governmental defendants, and then a writ of execution. Finally, the governmental defendants moved to vacate the default judgment under FRCP 60(b)(4) and to dismiss for want of subject matter jurisdiction.

The DRI was a political subdivision of the Nepali state, and therefore service had to be effected in strict compliance with 28 U.S.C. § 1608(a). The plaintiffs did not even attempt to comply with the statute, and therefore the judge correctly granted the motion to vacate.

The central bank was an agency or instrumentality of Nepal rather than a political subdivision. Thus service had to comply with § 1608(b) rather than § 1608(a). Again, the plaintiffs failed even to try to comply with the statute. Section 1608(b), however, requires only substantial compliance, rather than the strict compliance required by § 1608(a). The main factors are actual notice and lack of prejudice. However, the bank denied knowledge of the action, and the judge found the evidence did not support a showing of actual knowledge. The person to whom the documents were delivered in Kathmandu was a low-level employee at a branch office not authorized to receive service.

The judge went on, apparently correctly, to dismiss the claims altogether on the grounds that the governmental defendants were immune from jurisdiction. I won’t review that part of the decision.

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