Letters Blogatory

The Blog of International Judicial Assistance
By Ted Folkman

Case of the Day: Abu Dhabi Commercial Bank v. Saad Trading

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!

Ted Folkman
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3 responses to “Case of the Day: Abu Dhabi Commercial Bank v. Saad Trading”

  1. Chad Mitchell

    Thanks for the update on this case Ted. There are a couple of reasons why a party would seek recogintion of a foreign-country judgment in NY even if defendant has no executable property there. First, once you have a foreign-country judgment recognized in New York, it is then treated as a sister-state judgment. That sister-state judgment from New York can be recognized and enforced in other states under the Full Faith and Credit Clause and using the expedited registration process under the The Uniform Enforcement of Foreign Judgment Act of 1964. Second, in Koehler v. Bank of Bermuda Ltd., 911 N.E.2d 825 (N.Y. 2009) the NY Court of Appeals upheld a turnover order directing a garnishee to transfer a judgment debtor’s assets, deposited in a Bermuda bank, into New York. So even if the judgment debtor doesn’t have assets in NY and is not subject to personal jurisdiction in NY, a NY court would still have jurisdiction over R&E proceedings (Lenchyshyn v. Pelko Electric, Inc,) and be able to pull assets into NY for execution (Koehler v. Bank of Bermuda). That is crazy! Additionally, while it may be true that R&E “litigation is merely a collection mechanism, not a substantive lawsuit” in some or most cases, I don’t think that argument is very persuasive when you are dealing with a foreign-country judgment that has allegedly been procured by fraud or in a proceeding or system of laws where due process was not afforded. Those arguments seem pretty substantive to me and I find it ironic that a U.S. court would not afford a party the right to being hauled into a court in a state in which it had some dealings or property. Bottom line, I agree with you that Saad Trading was correctly decided, but the state of law in NY regarding R&E of foreign-country judgments is off the rails.

    Reply
    1. Ted Folkman

      Chad, thanks for the comment!

      You make good points. I didn’t mean to suggest that there’s never a reason to bring an action for recognition of a judgment where the judgment debtor has no assets, but only that it’s somewhat surprising and counterintuitive.

      I’ve covered actions under the New York turnover procedure a few times. I think your reaction to it is more negative than mine. That may be because my own state, Massachusetts, has a procedure, called a trustee process attachment, that seems to be of similar effect. As long as the bank is within the personal jurisdiction of the court, I don’t see any unfairness here.

      On your point regarding recognition and enforcement actions as mere collection mechanisms, I’m not disagreeing with you about the complexity of the issues they can raise. I see the rationale for a personal jurisdiction analysis in jurisdictions where the judgment debtor has no assets. But to require a personal jurisdiction analysis where the judgment debtor has assets is to suggest that those assets may be beyond the reach of creditors, which I think can’t or shouldn’t be right. And more to the point, I don’t think that Shaffer requires it.

      Reply
  2. Chevron Moves to Dismiss in Yaiguaje | Letters Blogatory

    […] While Canadians use somewhat different terminology than we do here, the gist of Chevron’s motion is that the court lacks personal jurisdiction. As Chevron puts it, Chevron “does not reside or conduct business in Ontario;” it “has no assets in Ontario;” and “there is no real and substantial connection between Ontario and Chevron Corp.” All of this seems very standard. Of more interest, to me at least, is this: “there is no real and substantial connection between … Ontario and the foreign judgment of the Provincial Court of Sucumbios in Lago Agrio, Ecuador.” I can’t really comment on the relevance of this statement in Canadian law, of course (I’ll try to dragoon the IJA Brigade into commenting on that point), but in US cases, I’ve been critical of applying ordinary rules about personal jurisdiction and forum non conveniens to actions on judgments (e.g., First Investment Corp. of the Marshall Islands v. Fujian Mawei Shipbuilding (E.D. La. 2012), Abu Dhabi Commercial Bank v. Saad Trading (N.Y. Sup. Ct. 2012)). […]

    Reply

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