New York Law Review

Tag: Banco Ambrosiano

  • Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 62 N.Y.2d 65 (1984): Quasi-in-Rem Jurisdiction and Minimum Contacts

    Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 62 N.Y.2d 65 (1984)

    Quasi-in-rem jurisdiction over a non-domiciliary defendant is permissible in New York when the defendant has minimum contacts with the state, and the cause of action is related to property located within the state, even if CPLR 302 does not authorize in personam jurisdiction.

    Summary

    Banco Ambrosiano, an Italian bank, sued Artoc Bank, a Bahamian bank, in New York to recover $15 million allegedly loaned to Artoc. Ambrosiano attached Artoc’s New York bank account. The New York Court of Appeals held that quasi-in-rem jurisdiction was proper because Artoc had sufficient minimum contacts with New York through its regular use of a New York bank account to effectuate international transactions, and because the lawsuit arose directly from transactions involving that account. The court emphasized that while CPLR 302 may not always provide for in personam jurisdiction to the full extent permitted by due process, quasi-in-rem jurisdiction could fill this gap when minimum contacts are present.

    Facts

    Banco Ambrosiano (Ambrosiano), an Italian bank, loaned $15 million to Artoc Bank & Trust Limited (Artoc), a Bahamian bank. The loan consisted of three $5 million transactions. Artoc directed Ambrosiano to deposit the funds into Artoc’s account at Brown Brothers Harriman in New York. Repayment, according to Artoc’s documentation, was to be made to Ambrosiano’s account at its New York correspondent bank. Artoc argued the loans were intended for Ambrosiano’s Peruvian subsidiary, and repayment was contingent on the subsidiary’s repayment to Artoc. Artoc’s only contact with New York was its maintenance of the correspondent bank account at Brown Brothers.

    Procedural History

    Ambrosiano commenced the action by obtaining an ex parte order restraining Brown Brothers from transferring funds in Artoc’s account. Ambrosiano moved to confirm the attachment; Artoc challenged the jurisdiction. Special Term granted Ambrosiano’s motion, finding a reasonable relationship between the property and the cause of action, sufficient for quasi-in-rem jurisdiction. The Appellate Division affirmed. The New York Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the exercise of quasi-in-rem jurisdiction over Artoc’s New York bank account is consistent with due process, given that Artoc’s sole contact with New York is the maintenance of this account and the loan transactions involved deposits into and repayments to accounts within the state.

    Holding

    Yes, because Artoc’s New York bank account was closely related to Ambrosiano’s claim, Artoc regularly used the account for international banking, and Artoc directed funds to be deposited into and repaid to New York accounts, thus establishing sufficient minimum contacts with New York to satisfy due process for quasi-in-rem jurisdiction.

    Court’s Reasoning

    The Court of Appeals analyzed the impact of Shaffer v. Heitner, which extended the minimum contacts analysis of International Shoe to quasi-in-rem jurisdiction. The court acknowledged that Shaffer limited the use of quasi-in-rem jurisdiction. However, it emphasized that a “gap” exists in New York law because CPLR 302 doesn’t extend in personam jurisdiction to the constitutional limit. The court stated that in such cases, quasi-in-rem jurisdiction is appropriate. The court found that Artoc’s contact with New York was not merely the presence of property. “This is not a case in which property is coincidentally located within the State’s borders and forms the only relevant link to defendant; rather, Artoc’s account with Brown Brothers is closely related to plaintiff’s claim.” The court also pointed out Artoc’s regular use of the account for international banking and the fact that Artoc directed funds to be deposited and repaid through New York accounts. These factors, taken together, establish sufficient minimum contacts to satisfy due process. The court further held that the lower courts did not abuse their discretion in refusing to dismiss the action on the grounds of forum non conveniens and that Ambrosiano, as a foreign banking corporation, could maintain the action under Banking Law § 200-b (subd 2, par [a]).

  • Banco Ambrosiano, S.P.A. v. Artco Bank. S.A., 54 N.Y.2d 640 (1981): Establishing Personal Jurisdiction Over Foreign Banks

    54 N.Y.2d 640 (1981)

    A correspondent bank relationship alone is insufficient to establish personal jurisdiction over a foreign bank in New York.

    Summary

    Banco Ambrosiano, S.P.A. sued Artco Bank, S.A., as guarantor of a foreign trade acceptance. The New York Court of Appeals affirmed the dismissal of the action for lack of personal jurisdiction. The court held that a correspondent bank relationship between Artco Bank and Credit Lyonnais, coupled with the trade acceptance connected to that relationship, was insufficient to establish that Artco Bank was doing business in New York and therefore subject to the court’s jurisdiction. The court also clarified that an attachment of the defendant’s New York funds after service of the summons could not establish quasi in rem jurisdiction.

    Facts

    Banco Ambrosiano, S.P.A. (plaintiff) sought to sue Artco Bank, S.A. (defendant) in New York as the guarantor of a foreign trade acceptance.

    The plaintiff attempted to establish jurisdiction over Artco Bank based on Artco’s correspondent banking relationship with Credit Lyonnais in New York.

    After serving the summons, the plaintiff attached Artco Bank’s funds held in New York.

    Procedural History

    The trial court initially heard the case.

    The Appellate Division dismissed the action for lack of jurisdiction. Specifically, the Appellate Division order dated November 3, 1978, was appealed, and the order dated August 1, 1977, was brought up for review.

    The New York Court of Appeals affirmed the Appellate Division’s dismissal.

    Issue(s)

    Whether a correspondent bank relationship and a trade acceptance connected to that relationship are sufficient to establish personal jurisdiction over a foreign bank in New York.

    Whether the attachment of a defendant’s New York funds after service of the summons can form the predicate for quasi in rem jurisdiction.

    Holding

    No, because a correspondent bank relationship and a trade acceptance, standing alone, are insufficient to demonstrate that the defendant is doing business in New York.

    No, because the attachment of funds must precede service of the summons to establish quasi in rem jurisdiction.

    Court’s Reasoning

    The Court of Appeals reasoned that merely having a correspondent bank relationship does not equate to “doing business” within the state for jurisdictional purposes. The court cited Amigo Foods Corp. v Marine Midland Bank-N. Y., 39 NY2d 391 to support this proposition.

    The Court emphasized that the plaintiff needed to show more than just a correspondent relationship to establish the defendant’s presence in New York for jurisdictional purposes. The connection to the trade acceptance, stemming from the correspondent relationship, was also deemed insufficient, as it didn’t demonstrate the defendant’s systematic and regular business activity within the state.

    Regarding the attachment of funds, the court relied on CPLR 314(3) and Pennoyer v Neff, 95 US 714, to clarify that the attachment must occur before service of the summons to establish quasi in rem jurisdiction. The attachment here, occurring after service, was ineffective for jurisdictional purposes.

    The court explicitly declined to address the scenario where the attachment precedes service of the summons, referencing Shaffer v Heitner, 433 US 186, indicating an awareness of the evolving standards for asserting jurisdiction over out-of-state defendants based on their property within the state.

    The court stated, “Nothing in the record supports the bald assertion that defendant is doing business and thus present in New York. All that appears is a correspondent bank relationship between defendant and Credit Lyonnais and the trade acceptance connected to that relationship. These factors standing alone are insufficient to support an exercise of in personam jurisdiction”.

  • Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 33 N.Y.2d 524 (1973): Forum Non Conveniens and Prior Use of New York Courts

    Banco Ambrosiano, S.P.A. v. Artoc Bank & Trust Ltd., 33 N.Y.2d 524 (1973)

    The doctrine of forum non conveniens permits a court to dismiss a case where, although jurisdiction is proper, the court determines that the matter would be better adjudicated in another forum considering the interests of justice and the convenience of the parties; a party’s prior use of New York courts is a factor to consider, but not controlling.

    Summary

    Banco Ambrosiano, an Italian bank, sued Artoc Bank, a Swiss corporation, in New York regarding a dispute over bills of exchange. Artoc Bank moved to dismiss based on forum non conveniens, arguing Switzerland was a more appropriate forum. The lower court denied the motion, but the Appellate Division reversed. The New York Court of Appeals affirmed the Appellate Division’s decision, holding that while Artoc’s prior attempt to sue Banco Ambrosiano in New York was a factor to consider, it was not determinative. The court emphasized the Swiss connections to the underlying agreement, the location of witnesses and documents, and a forum selection clause favoring Swiss courts, making New York an inconvenient forum.

    Facts

    Banco Ambrosiano, an Italian bank, and Artoc Bank, a Swiss corporation, entered into an agreement in 1971. The agreement was designed to recapitalize Artoc Bank, which was experiencing financial difficulties. Banco Ambrosiano agreed to take a minority stock position in Artoc, take over Artoc’s stock in two Spanish subsidiaries, and draw five bills of exchange against itself to Artoc’s order. When Banco Ambrosiano refused to pay the first bill of exchange, Artoc Bank initiated a motion for summary judgment in lieu of complaint in New York. Banco Ambrosiano opposed, claiming defenses and counterclaims arising from breaches of the 1971 agreement. The lower court denied Artoc’s motion and directed it to serve a formal complaint. Instead, Artoc attempted to discontinue the action. Banco Ambrosiano then commenced this action, leading to Artoc’s motion to dismiss based on forum non conveniens.

    Procedural History

    Artoc Bank initially moved for summary judgment in lieu of complaint in New York, which was denied. Subsequently, Banco Ambrosiano initiated this action. Artoc moved to dismiss based on lack of jurisdiction and forum non conveniens. Special Term (trial court) denied the motion. The Appellate Division reversed, granting the motion to dismiss based on forum non conveniens. Banco Ambrosiano appealed to the New York Court of Appeals.

    Issue(s)

    Whether the Appellate Division abused its discretion by dismissing the action on the ground of forum non conveniens, considering that Artoc Bank had previously sought relief in New York courts for the same underlying claim.

    Holding

    No, the Appellate Division did not abuse its discretion because while Artoc Bank’s prior use of New York courts is a factor to consider in a forum non conveniens analysis, it is not controlling; the overall focus must be whether New York is an inconvenient forum and whether another forum is available that better serves the ends of justice and the convenience of the parties.

    Court’s Reasoning

    The Court of Appeals acknowledged that the Appellate Division has broad discretion in forum non conveniens determinations, and the Court of Appeals will only interfere if there’s an abuse of discretion or failure to consider all relevant factors. The court stated that the fact that Artoc Bank initially chose New York courts to pursue a claim was a factor to be considered, but not the only one. The court emphasized that the “court’s overall focus must relate to the question of whether New York is an inconvenient forum and whether another is available ‘which will best serve the ends of justice and the convenience of the parties.’” (Silver v Great Amer. Ins. Co., 29 NY2d 356, 361, supra.) The Appellate Division properly considered the following factors: Banco Ambrosiano dealt extensively with foreign corporations in Europe, while Artoc Bank did no business in the United States; the 1971 agreement was negotiated and executed in Switzerland; one party to the agreement was not subject to jurisdiction in New York; the agreement provided for Swiss jurisdiction; performance occurred in Europe and North Africa; and the trial and discovery would primarily involve European witnesses and documents located in Switzerland. The court concluded that, given these factors, the Appellate Division did not abuse its discretion in determining that New York was an inconvenient forum. In sum, the court reinforced that forum non conveniens requires a holistic analysis weighing multiple factors related to convenience and the interests of justice, even when a party previously invoked the jurisdiction of the forum court.