In the context of Motorola Credit Corp.’s decade-long quest to collect billions of dollars from Turkey’s powerful Uzan clan, a dispute over a few million in Uzan-affiliated funds held by Standard Chartered plc might seem relatively insignificant. But the fight that erupted over Motorola’s effort to seize the funds was anything but insignificant—not only for Standard Chartered, but for the entire global financial industry centered in New York.
Now that fight is over, at least as far as New York’s highest court is concerned. In a 5-2 opinion issued Oct. 23, the New York Court of Appeals affirmed that New York’s “separate entity” rule shields foreign bank branches from restraining notices served on their branches in New York. The decision immediately sets back Motorola’s bid for $30 million deposited with Standard Chartered in the Persian Gulf. More importantly, it means other judgment creditors can’t look to New York as a shortcut to seize funds held by banks overseas.
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