Lazare Kaplan International Inc., Plaintiffv.KBC Bank N.V. and Antwerp Diamond Bank N.V., Defendants
OPINION AND ORDER Plaintiff Lazare Kaplan International, Inc. (“Lazare”) sued Antwerp Diamond Bank N.V. (“ADB”) and KBC Bank N.V. (“KBC”) (collectively “Defendants” or “the Banks”), alleging an international conspiracy between Defendants and various entities to steal diamonds and diamond proceeds belonging to Lazare. Defendants move to dismiss Plaintiff’s complaint on grounds that (1) a forum selection clause in Plaintiff’s contract with ADB mandates that all claims against the bank be brought in Belgium; (2) under forum non conveniens this case should be litigated in Belgium; and (3) Plaintiff fails to state a claim. For the reasons that follow, Defendants’ motion to dismiss is GRANTED.BACKGROUNDI. Factual BackgroundThe following facts are taken from Plaintiffs First Amended Complaint (“FAC”) and this Court’s Findings of Fact following a hearing pursuant to New Moon Shipping Co., Ltd. v. MAN B & W Diesel AG, 121 F.3d 24 (2d Cir. 1997) (“New Moon Hearing”) (“Findings”).1Lazare is a diamond company that is headquartered in New York and which conducts business in Belgium through its subsidiary, Lazare Kaplan Belgium, N.V. (“Lazare Belgium”). Findings at 2. Its business involves buying and selling rough and polished diamonds. Id. Lazare finances these operations through working (or revolving) lines of credit that it maintains at numerous financial institutions. Id.Defendants KBC and ADB (collectively “Banks”) are Belgium bank corporations. During the relevant time period, ADB provided loans, including overdraft facilities, to participants in the diamond industry. Id. At the time of the conduct giving rise to this action, ADB was a subsidiary of KBC. Id. On July 1, 2015, after this complaint was filed, KBC absorbed ADB’s business and operations. Id. at 2-3.A. Bank Operations and AgreementsKBC operates a branch office in New York (“KBC-NY”). Id. at 3. ADB was licensed to maintain a representative office in New York (“ADB-NY”). Id. However, ADB’s New York operations were limited. The terms of ADB’s representative office license prohibited ADB-NY from providing banking services or making decisions about originating loans. Id. Such decisions were reserved for ADB’s “Head Office” in Antwerp, Belgium. Id. Accordingly, employees at ADB-NY were limited to conducting research on the United States market, marketing the bank, introducing New York-based clients to the Head Office, and monitoring those clients’ activities. Id. While employees at ADB-NY could negotiate credit arrangements with clients or potential clients, the members of ADB’s credit committee at the Head Office were ultimately responsible for actually approving credit decisions with respect to the bank’s clients. Id. at 3-4. In some instances, KBC’s credit committee also had to weigh in on the decision. Id. at 4.i. Services Agreement Between ADB and KBC-NYIn light of ADB-NY’s limited capacities, on October 15, 1999 ADB entered into a Services Agreement with KBC-NY to provide certain operational services to ADB’s New York-based clients. Id. Such services included “allowing diamond clients to open current accounts in their books and effectuating both local and international payments and other banking services on behalf of the diamond client.” Id. The arrangement was designed to allow ADB clients in New York to receive their funds during the same business day, notwithstanding the six-hour time difference between New York and Belgium. Id. Under the Services Agreement, KBC was “free to charge the diamond clients for transactions effectuated on their behalf,” and ADB was permitted to charge interest to those customers “[s]ince the credit risk [was] occurred and acted upon by ADB.” Id.Under the Services Agreement, KBC-NY would “communicate all payments effectuated by the diamond clients to ADB” so that ADB could “make internal entries to adjust the customer’s credit position.” Id. KBC-NY maintained a “pooling account” in ADB’s name to “fund the payments effectuated by KBC on behalf of the diamond clients.” Id.The Court will briefly describe how this Agreement functioned in practice. Essentially, when an ADB client in New York desired to draw down on its line of credit from ADB, the payment order went to KBC-NY. Id. at 5. KBC-NY then confirmed that the client had sufficient credit available in its ADB credit line and that there were sufficient funds in ADB’s pooling account. Id. If the client had sufficient credit and the pooling account had sufficient funds, KBC-NY would debit the client’s account and carry out the payment as directed. Id. If ADB had insufficient funds in its pooling account, however, KBC-NY could choose to effectuate the client’s payment by overdrafting the pooling account. Id. KBC-NY would then alert ADB to the payment so that ADB could “debit[] the diamond customer['s] account in its books against the KBC pooling account.” Id. KBC-NY also “accepted] and registrate[d] all incoming funds” to ADB’s customers, crediting those clients’ accounts and sending the information to ADB so that it could “credit[] the diamond clients’ accounts in its books against the KBC pooling account.” Id.The Services Agreement provides that “[e]ach day, KBC clears the customer’s account via ADB’s pooling [account].” Id. Typically, this final reconciliation between a client’s KBC account and the ADB pooling account happened at the end of the day, rather than intra-day. Id. This process was referred to as “clearing,” “zeroing-out,” or “sweeping” the customer’s credit or debit activity into ADB’s pooling account with KBC. Id. at 5-6. For this reason, KBC and ADB representatives referred to clients’ accounts at KBC-NY as “zero balance accounts.” Id. at 6. As a result of this process, during the course of a given day either the client’s or KBC-NY’s funds were being used to satisfy ADB clients’ payment requests. Id. However, by the end of the day, KBC-NY would be made whole via funds from ADB’s pooling account – unless the bank chose to allow ADB to overdraft the pooling account. Id.B. Lazare’s ADB Credit FacilityOn December 14, 2000, ADB and Lazare entered into an agreement (“Credit Agreement”) by which ADB extended Lazare a $10 million credit line. Id. At this time, Lazare-Belgium had a line of credit with ADB, but Lazare did not. Id. The credit limit was extended several times, ultimately reaching $45 million by the time the parties terminated their relationship ten years later. Id. at 6-7.Section 2 of each Credit Agreement provided that the credit was to only be utilized for overdrafts in current accounts. Id. at 7. “Current accounts” referred to accounts that ADB’s clients had with the bank in Belgium, and they were the means by which ADB extended credit to its customers. Id. A client could not have an overdraft facility with ADB without also being an account holder at ADB. Id. As a general matter, a customer with a line of credit from ADB in the form of an overdraft facility accessed that credit by overdrafting its ADB account, meaning by withdrawing more funds than were deposited. Id.Each Credit Agreement provides that the credit is governed by two sets of conditions: (1) General Conditions for Banking Operations (“Banking Conditions”) and (2) General Credit Granting Conditions (“Credit Conditions”). Id. The documents were registered in Antwerp on November 2, 2000 and March 11, 1999 respectively. Id.C. Lazare’s Accounts at ADB and KBC-NYAround the same time that Lazare entered into the 2000 Credit Agreement with ADB, Lazare applied to open accounts at ADB and KBC-NY. Id. at 9. Sometime after March 29, 2001, Lazare signed KBC-NY’s Account Agreement and General Terms and Conditions. Id. at 12. The KBC-NY account became operational on November 16, 2001. Id. at 11.With the exception of certain “straight loans,” there is no dispute that, from the time that Lazare’s KBC account became operational, Lazare used the KBC account as the exclusive vehicle for all payments and disbursements under its credit facility with ADB. Id. at 12. Indeed, on May 31, 2001, William H. Moryto, the Vice President and Chief Financial Officer of Lazare, signed a letter on behalf of Lazare requesting that “all disbursements and payments under our credit facility with [ADB] shall be effected through our account with [KBC-NY] and shall result in a same day debit or credit to our loan balance with ADB.” Id. The letter also allowed KBC and ADB to exchange all credit, financial, and any other information concerning Lazare and its accounts. Id. Nothing in the record states that a KBC-NY zero-balance account was required for a credit line with ADB; rather, to the extent that a client based in New York wanted convenient access to their credit line during New York business hours, ADB preferred that all debits and credits went exclusively through a single account (the KBC-NY account) rather than through both their KBC-NY and ADB accounts. Id. at 12-13.D. Forum Selection ClausesLazare’s agreements with KBC-NY and ADB each contained a forum selection clause (“FSC”).i. ADB Forum Selection ClauseArticle 37 of ADB’s Banking Conditions provides that “Each of the account holder, any correspondent, surety, guarantor, third-party pledgor and other third party hereby further agree that the courts of Antwerp, Belgium shall have exclusive jurisdiction with respect to any action brought against the Bank.” Id. at 9 (quoting ECF No. 193-38 at 6 (“Antwerp FSC”)).ii. KBC-NY Forum Selection ClauseArticle 35 of the KBC-NY General Terms provides:Any claim or action you bring must be brought before the courts of the County of New York, State of New York, or the Federal Courts situated in the Southern District of New York, which you agree shall have exclusive jurisdiction over these Terms and Conditions or any other agreements you have with KBC Bank relating to any accounts or disputes arising thereunder.Id. at 12 (citing ECF No. 190-31 at 6 (“New York FSC”)).E. Alleged Unlawful SchemePlaintiff contends that KBC and ADB engaged in racketeering and other fraudulent and corrupt practices. See Amended Complaint (ECF No. 251) (“FAC”). From around 2007 to 2010, KBC and ADB, their customer Erez Daleyot (“Daleyot”), and various other individuals associated with them, engaged in a systemic money laundering scheme. Id.
