New York Law Review

Tag: Foreign Bank

  • 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”.

  • Public Administrator of the County of New York v. Royal Bank of Canada, 19 N.Y.2d 127 (1967): Establishing Jurisdiction Over Foreign Branches of a Bank

    Public Administrator of the County of New York v. Royal Bank of Canada, 19 N.Y.2d 127 (1967)

    A foreign bank’s branch operating in New York subjects the entire bank, including its separately incorporated foreign branches, to the jurisdiction of New York courts, provided the foreign branch is essentially an alter ego of the main bank.

    Summary

    The case addresses whether service of process on the New York branch of the Royal Bank of Canada (RBC) confers jurisdiction over its separately incorporated French branch, Royal Bank of Canada (France). The court held that it does. Given the high degree of operational integration between RBC and its French branch, including shared management, standardized banking practices, and consolidated financial reporting, RBC (France) was effectively doing business in New York through RBC’s presence. Therefore, service on the New York branch established jurisdiction over the entire entity, including its French branch.

    Facts

    The Royal Bank of Canada (RBC) operated a branch in New York. RBC also had a branch in France, the Royal Bank of Canada (France), which was separately incorporated. All stock in the French corporation was owned by RBC. The assets and liabilities of the French branch were carried on RBC’s books as part of its own. RBC advertised that France was one of many countries in which it had branches. The French branch was established “to conduct the business of the Bank in Paris.” The French branch’s staff were recruited and trained by RBC in Montreal, and personnel were frequently shifted between Paris and RBC’s home office. The French branch was merely notified and not consulted on accounts which were transferred to it from other RBC branches, and the moneys in those accounts were reflected only in bookkeeping entries rather than by an actual transfer of the funds to France.

    Procedural History

    The plaintiff served process on the New York branch of Royal Bank of Canada, attempting to establish jurisdiction over both Royal Bank of Canada and its French branch, Royal Bank of Canada (France). The lower courts held that jurisdiction was properly obtained over the French branch. The Appellate Division affirmed this decision and certified a question to the New York Court of Appeals. The Court of Appeals then reviewed the case.

    Issue(s)

    Whether service of process on the New York branch of a foreign (Canadian) bank suffices to give New York courts jurisdiction over an incorporated branch of the same bank located in France.

    Holding

    Yes, because the Royal Bank of Canada (France) was not merely a subsidiary of the Royal Bank of Canada but was, in fact, if not in name, the Royal Bank of Canada itself. Since the two defendants are one and the same corporation, there is realistically no basis for distinguishing between them for the purposes of this suit.

    Court’s Reasoning

    The court reasoned that the Royal Bank of Canada (France) was essentially the same entity as the Royal Bank of Canada, despite its separate incorporation. The court focused on the degree of control and integration between the two entities. The court noted that the French branch was wholly owned by the Royal Bank of Canada, operated under the bank’s name, and conducted the bank’s business in Paris. The staff were trained and transferred by the Royal Bank of Canada. Deposits and bookkeeping entries were standardized and controlled by the Royal Bank of Canada. "In short, then, the facts detailed tend to establish that the Royal Bank of Canada (France) is not merely a subsidiary of the Royal Bank of Canada but is, in fact, if not in name, the Royal Bank of Canada itself." Because the Royal Bank of Canada was doing business in New York, its French branch was also subject to jurisdiction there. The court distinguished between “doing business” jurisdiction under CPLR 301 and “long-arm” jurisdiction under CPLR 302. CPLR 301 allows jurisdiction over a foreign corporation doing business in New York for any cause of action, regardless of where it arose. CPLR 302, the long-arm statute, allows jurisdiction only if the cause of action arises from the defendant’s transaction of business in New York.