Foreign banks with branches in New York now have one less litigation headache to worry about. In a decision with major implications for New York City and its resident global financial institutions, the state’s highest court ruled Thursday that banks with New York branches needn’t turn over customers’ overseas assets to claimants attempting to enforce U.S. court judgments.
Although New York courts have long treated overseas banks and their local branches as separate legal entities in enforcing court judgments—the so-called “separate entity” rule—there’s been a fair bit of uncertainty since a decision a few years ago by the New York Court of Appeals. In Koehler v. Bank of Bermuda, the court held that a creditor could seek the turnover of assets located outside the country as long as the court had jurisdiction over the party holding the property. (Our colleagues at the New York Law Journal parsed that 2009 decision’s impact here.)
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