Noble Limits Martinez Scope in Fraud Cases

A Ukrainian bank’s lawsuit against a Panamanian auto repair chain can proceed in Delaware because the defendant allegedly formed a Delaware entity to effectuate fraud, the state’s Court of Chancery has ruled. The court denied the defendant’s request to dismiss the claim on forum non conveniens grounds, holding it has a “fundamental responsibility” to supervise Delaware entities.

Vice Chancellor John W. Noble’s decision in VTB Bank v. Navitron Projects clarified the scope of a recent controversial decision by the Delaware Supreme Court in Martinez v. E.I. du Pont de Nemours & Co. In Martinez, the Supreme Court’s majority dismissed asbestos claims alleged against an Argentinian subsidiary of Delaware corporationE.I. du Pont de Nemours & Co. on forum non conveniens grounds. The Martinez court ruled that a plaintiff’s Delaware forum choice can be trumped if the plaintiff is a foreign national residing in a foreign jurisdiction. Justice Carolyn Berger made headlines for a harshly-worded dissent in Martinez accusing the majority of reaching its decision to “protect Delaware’s corporate franchise.”