New York Court of Appeals Finds Personal Jurisdiction Over Swiss Bank Due to Intentional and Repeated Use of Correspondent Accounts
December 2, 2016
On November 22, 2016, the New York Court of Appeals held in Rushaid v. Pictet & Cie that plaintiffs alleged sufficient facts to justify the exercise of personal jurisdiction over a foreign bank which was alleged to have intentionally and repeatedly used New York correspondent bank accounts in order to launder its customers’ illegally obtained funds.
In so holding, the Court relied heavily on the reasoning in its recent decision in Licci v. Lebanese Canadian Bank, SAL, which also involved New York correspondent bank accounts, and engaged in a fact-intensive analysis of the allegations in the complaint, in which, according to the Court, plaintiffs had alleged that the foreign bank played a central role in the illegal scheme. The dissenting judges, however, criticized the majority as having misread and misapplied Licci, and as having upended forty years of precedent. It remains to be seen whether the Rushaid decision will further expand plaintiffs’ ability to establish personal jurisdiction over foreign banks in New York courts, and whether such banks can succeed in having suits against them dismissed based on other legal principles, such as forum non conveniens.