Case of the Day: AHAB v. Standard Chartered Bank

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I love the case of the day, Ahmad Hamad Al Gosaibi & Bros. v. Standard Chartered Bank (D.C. 2014), because it is pretty much exactly like the case from a few days ago, Standard Chartered Bank v. Ahmad Hamad Al Gosaibi & Bros. (Pa. Super. Ct. 2014), but it comes to precisely the opposite conclusion.

In the Pennsylvania case, recall that the holding was that a Pennsylvania court was required to accord full faith and credit to a New York judgment recognizing and enforcing a Bahrain judgment. The holding was easy, I claimed, because there was no significant difference between the law of New York and the law of Pennsylvania on the grounds for refusing recognition to foreign judgments, and because there was no evidence the judgment creditors were engaged in forum shopping.

Here, the court identified what it thought was a significant difference between the law of the District of Columbia and the law of New York on recognition of foreign judgments. As I noted in my prior post, under Lenchyshyn v. Pelko Electric, Inc., 723 N.Y.S.2d 285 (App. Div. 2001), it’s not necessary under New York law to establish personal jurisdiction over the judgment debtor. (I should say that I think the New York rule on this is the right rule, at least to the extent of the assets of the judgment debtor in the state where the judgment creditor seeks recognition, but the rule is problematic if the judgment debtor has no assets in New York). But that’s not so under D.C. law, and indeed, in Frank E. Basil, Inc. v. Guardino, 424 A.2d 70 (D.C. 1980), the court said that a sister-state judgment was not enforceable where the sister-state court had lacked personal jurisdiction. This rule is right as far as it goes, but note that in Basil the judgment debtor never appeared in the sister-state proceeding, whereas here AHAB did appear and actually litigate the personal jurisdiction issue in New York. Ordinarily, I would say that the fact that the issue was actually litigated is dispositive, but this case is tricky because the New York court didn’t hold that it had personal jurisdiction, but rather that it didn’t need personal jurisdiction. So I don’t think the DC court was wildly off-base for focusing on the difference between its law and New York law as a a potential reason to refuse to recognize the New York judgment.

But rather than say, as the court does, that a state court judgment that merely recognizes a foreign country judgment “lacks the type of interest that drives full faith and credit jurisprudence,” or to focus, as the court does, on the risk of judgment arbitrage generally, I think I would have focused on the particularity of the New York law on personal jurisdiction. The real question is whether Lenchyshyn should be read to mean that the courts of New York must have quasi in rem jurisdiction over the judgment debtor’s property in New York, i.e., you should not be able to obtain recognition of a judgment in New York if the courts lack personal jurisdiction over the judgment debtor and he has no property there. If not, then I think this is a tough case and arguably rightly decided. But if New York law requires at least quasi in rem jurisdiction, and if AHAB had property in New York, then I think this new decision is probably wrong. I would point to language from Shaffer v. Heitner that I’ve quoted before:

The primary rationale for treating the presence of property as a sufficient basis for jurisdiction to adjudicate claims over which the State would not have jurisdiction if International Shoe applied is that a wrongdoer should not be able to avoid payment of his obligations by the expedient of removing his assets to a place where he is not subject to an in personam suit.” This justification, however, does not explain why jurisdiction should be recognized without regard to whether the property is present in the State because of an effort to avoid the owner’s obligations. Nor does it support jurisdiction to adjudicate the underlying claim. At most, it suggests that a State in which property is located should have jurisdiction to attach that property, by use of proper procedures, as security for a judgment being sought in a forum where the litigation can be maintained consistently with International Shoe. Moreover, we know of nothing to justify the assumption that a debtor can avoid paying his obligations by removing his property to a State in which his creditor cannot obtain personal jurisdiction over him. The Full Faith and Credit Clause, after all, makes the valid in personam judgment of one State enforceable in all other States. (citations omitted)

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

One thought on “Case of the Day: AHAB v. Standard Chartered Bank

  1. By the way, if you’re wondering how I was able to predict the outcome of the Scottish referendum in order to have the right graphic up at 6 a.m. Eastern Time–last night before going to bed I took what “Chevronologists” (to use Michael Goldhaber’s term) would call a SWAG.

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