On Oct. 23, 2014, the New York Court of Appeals decided Motorola Credit Corp. v. Standard Chartered Bank,—N.E.3d—, 2014 N.Y. Slip Op. 07199 (2014), upholding the separate entity rule as it applies to a foreign bank operating branches in New York. That rule, as enunciated by intermediate New York courts for over 50 years, provides that in proceedings to enforce judgments in New York, New York branches of a bank shall be considered separate entities from all foreign branches of the bank. The rule’s application has prevented judgment creditors from forcing banks, through their New York branches, to restrain and/or turn over assets of a judgment debtor held by foreign branches of the bank.

Pursuant to the court’s ruling in Motorola, New York law is now settled, and the separate entity rule is here to stay. The decision, however, may impact the application of Koehler v. Bank of Bermuda, 911 N.E.2d 825 (N.Y. 2009), which held that a New York court could order any judgment debtor or garnishee over which it had personal jurisdiction to turn over assets owned by a judgment debtor, even if those assets were located outside of New York. The court’s attempt to distinguish its holding in Motorola from Koehler could actually result in a significant limitation of Koehler, particularly with respect to funds held in foreign bank accounts.

International Comity

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