Standard Chartered Bank v. Ahmad Hamad Al Gosaibi & Bros. Co.

• Decision Date: 12 December 2012
• Citation: 38 Misc.3d 831,2012 N.Y. Slip Op. 22374,957 N.Y.S.2d 602
• Parties: STANDARD CHARTERED BANK, Plaintiff, v. AHMAD HAMAD AL GOSAIBI AND BROTHERS COMPANY, et al., Defendants.
• Court: New York Supreme Court

38 Misc.3d 831
957 N.Y.S.2d 602
2012 N.Y. Slip Op. 22374

STANDARD CHARTERED BANK, Plaintiff,
v.
AHMAD HAMAD AL GOSAIBI AND BROTHERS COMPANY, et al., Defendants.

Supreme Court, New York County, New York.

Dec. 12, 2012.

[957 N.Y.S.2d 603]

Marc J. Gottridge, Esq., Hogan Lovells U.S. LLP, New York, for Plaintiff.

David P. Stitch, Esq., New York, for Defendants.

ELLEN M. COIN, J.

[38 Misc.3d 832]This is an action brought pursuant to CPLR § 5303 to enforce a $25 million judgment entered in the Kingdom of Bahrain. Defendants move to dismiss the complaint pursuant to CPLR 3211(a)(7). Their motion is based on three contentions. First they argue that the complaint fails to allege the elements required under Article 53 of the CPLR. Secondly, they contend that the underlying judgment violated due process. Finally, they contend that Bahrain was an inconvenient forum. In response, plaintiff cross-moves for summary judgment pursuant to CPLR 3212. [38 Misc.3d 833]For the reasons state below, defendants' motion is denied and plaintiff's cross-motion is granted.

REQUISITE ELEMENTS

On a motion to dismiss pursuant to CPLR § 3211(a)(7) for failure to state a cause of action, the court must accept the facts alleged in the pleading as true, accord the plaintiff the benefit of every possible inference, and determine only whether the facts as alleged fit within any cognizable legal theory. ( See Goshen v. Mutual Life Ins. Co. of N.Y., 98 N.Y.2d 314, 326, 746 N.Y.S.2d 858, 774 N.E.2d 1190 [2002];Leon v. Martinez, 84 N.Y.2d 83, 87, 614 N.Y.S.2d 972, 638 N.E.2d 511 [1994] ).

The amended complaint alleges that the Bahrain judgment was rendered in favor of plaintiff Standard Chartered Bank (“Standard”), a banking corporation organized under the laws of England and Wales, with a New York branch, against defendants, a Saudi Arabian partnership and its partners (all of whom are citizens and residents of Saudi Arabia) in the amount of $25 million plus interest at the rate of 2% per annum from April 23, 2009, plus costs in the aggregate amount of 35,932 Bahraini Dinars. It alleges that the judgment was entered pursuant to the law of the Kingdom of Bahrain, and that it is final, conclusive and enforceable there. It further alleges that no appeal has been taken from the Bahrain judgment and that the time to take such an appeal has expired. Finally, it alleges that the Bahrain judgment remains unsatisfied.

It is undisputed that the Bahrain judgment was rendered in the Bahrain Chamber for Dispute Resolution (BCDR). It is also undisputed that all of the defendants in the instant action appeared before the BCDR through their counsel, who made motions before the tribunal, participating in the litigation. Further, it is undisputed that defendants did not avail themselves of their right to appeal from the Bahraini judgment.

[957 N.Y.S.2d 604]

Defendants argue that the amended complaint fails to meet the pleading standards enunciated in CIBC Mellon Trust Co. v. Mora Hotel Corp. N.V.¹: (1) a final judgment, conclusive and enforceable where rendered; (2) subject matter jurisdiction; (3) jurisdiction over the parties or the res; and (4) regular proceedings conducted under a system that provides impartial tribunals and procedures compatible with due process.

Defendants do not deny that the amended complaint alleges the first requisite element, i.e., that the Bahrain judgment was [38 Misc.3d 834]final, conclusive and enforceable there (Amd. Compl., para. 7). However, they contend that plaintiff fails to allege the remaining three elements necessary for enforcement of the foreign judgment.

As plaintiff correctly notes, all of these elements are matters of defense. (CPLR § 5304 subds.(a)(1)and(2),(b)(1)). ( See, e.g., Chevron Corp. v. Naranjo, 667 F.3d 232, 240 [2d Cir.2012];S.C. Chimexim S.A. v. Velco Enter. Ltd., 36 F.Supp.2d 206, 211 [S.D.N.Y.1999];Blacklink Transp. Consultants PTY Ltd. v. Von Summer, 18 Misc.3d 1113(A) at *2, 2008 WL 89958 [Sup. Ct., N.Y. County 2008] [“Under CPLR 5303 a conclusive judgment from a foreign country which meets the requirements of CPLR 5302 is enforceable in New York unless one of the factors set forth by CPLR 5304 applies”] ). Indeed, § 5304 lists a total of nine elements (including those defendants cite), any one or more of which may or may not be applicable in a given case (CPLR § 5304(a)(1)(2),(b)(1)-(7)). Thus, plaintiff's failure to plead defendants' selected CPLR § 5304 elements (subds.(a)(1),(2), (b)(1)) forms no basis for dismissal of the amended complaint.

FUNDAMENTAL DUE PROCESS

Defendants contend that the BCDR proceeding in which the decision was rendered was the functional equivalent of compulsory arbitration, in that the decision makers were not professional judges, evidence was unreasonably curtailed, and rights of appeal were so limited as to be non-existent. Thus, they claim, the procedures employed by the Bahrain tribunal were not compatible with due process and require that this Court deny recognition of the judgment pursuant to CPLR § 5304(a)(1).

Plaintiff, in opposition and in support of its instant cross-motion for summary judgment, contends that the procedures of the Bahrain tribunal meet the due process requirement of the statute. Plaintiff bears the burden on its cross-motion of proving that no mandatory basis for non-recognition pursuant to CPLR 5304(a) exists. ( Blacklink Transp. Consultants PTY Ltd. v. Von Summer, 18 Misc.3d 1113(A) at *2, citing Dresdner Bank AG v. Haque, 161 F.Supp.2d 259, 263 [S.D.N.Y.2001] ).²

CPLR § 5304(a)(1) bars recognition of a foreign country judgment if the judgment was rendered under a system which does [38 Misc.3d 835]not provide impartial tribunals or procedures compatible with the requirements of due process of law. However, that section

[957 N.Y.S.2d 605]

does not demand that the foreign tribunal's procedures exactly match those of New York. ( CIBC Mellon Trust Co., 100 N.Y.2d at 222, 762 N.Y.S.2d 5, 792 N.E.2d 155). If a defendant is afforded notice and an opportunity to be heard in the underlying litigation, the basic requisites of due process are met. ( Society of Lloyd's v. Grace, 278 A.D.2d 169, 718 N.Y.S.2d 327 [1st Dept.2000] ).

According to Standard's expert, Hassan Ali Radhi, whose law firm represented Standard in the Bahraini action, the BCDR Law was decreed to create procedures for adjudicating significant commercial disputes. Section 1 of chapter 2 of the BCDR Law creates a commercial court (the BCDR Tribunal), while section 2 of chapter 2 of the BCDR Law creates a commercial arbitration institute to administer domestic and international arbitration pursuant to agreement of the parties (Affidavit of Hassan Ali Radhi sworn to April 1, 2012 paras. 17, 18).

Defendants do not allege that there was any agreement to arbitrate. Moreover, although their attorney in the Bahrain proceeding submits on this motion a lengthy affidavit describing aspects of the proceedings and the Tribunal's purported errors, nowhere in her affidavit does she opine that the Bahrain proceeding was in effect an arbitration. In fact, when testifying on behalf of defendant Ahmad Hamad Al Gosaibi and Brothers Company (“AHAB”) in a federal court action, she stated the opposite: that the BCDR tribunal in which the proceeding underlying the instant action was held “is not an arbitration tribunal ..., but a judicial body” (Exh. 3 at p. 306, annexed to the Affirmation of Marc J. Gottridge dated April 2, 2012).

Standard's Bahrain lawyer notes—and defendants do not deny—that the civil justice system in Bahrain is...