Limiting the Impact of 'Al Rushaid' Through Banking Law 200-b
This article sheds light on Banking Law 200-b, an under-utilized statute that may furnish foreign banks with arguments to dismiss suits with no connection to New York except the passage of funds through New York correspondent accounts.
May 27, 2021 at 11:45 AM
9 minute read
In 2016, the New York Court of Appeals issued its decision in Al Rushaid v. Pictet & Cie, holding that allegations of a foreign bank's intentional and repeated use of a New York correspondent bank account to facilitate a customer's kickback scheme constituted the transaction of business sufficient to confer personal jurisdiction. 28 N.Y.3d 316, 329 (2016).
The decision divided the court and garnered significant attention given the extent of correspondent bank accounts in the state. In its wake, foreign banks and their counsel have devoted considerable effort to distinguishing Al Rushaid or cabining its impact through other arguments, like forum non conveniens.
This article sheds light on an under-utilized statute that could similarly circumscribe the reach of Al Rushaid: Banking Law 200-b. Unlike its analog in the Business Corporation Law, Banking Law 200-b does not expressly make subject-matter jurisdiction over suits by non-residents against foreign banks coextensive with personal jurisdiction. Where Al Rushaid may pose obstacles to an effective personal jurisdiction challenge, 200-b may furnish foreign banks with arguments to dismiss suits with no connection to New York except the passage of funds through New York correspondent accounts.
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