Elmaliach v. Bank of China Ltd.
110 A.D.3d 192
N.Y. App. Div.2013Background
- Israeli citizens were injured or related to those killed in PIJ/Hamas terrorist attacks in Israel (2005–2007).
- They allege Bank of China facilitated multi‑million dollar transfers between PIJ/Hamas leadership abroad and operatives in Israel.
- U.S. designations and sanctions targeted PIJ and Hamas; BOC allegedly did not enforce those sanctions.
- Transfers allegedly involved two BOC accounts in China linked to a senior operative; funds allegedly used to plan attacks inside Israel.
- Plaintiffs asserted negligence under Israel’s Civil Wrongs Ordinance (CWO) and breach of statutory duty referencing Israeli criminal/defense regulations.
- BOC moved to dismiss on failure to state a claim and forum non conveniens; the court implicitly adopted New York law, while the appeal challenges that choice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Which law governs the negligence claim? | Israeli law governs; substantial differences from NY law affect outcome. | New York law governs; no duty difference with Israeli law; NY forum convenient. | Israeli law governs; actual conflict analyzed; Israeli duty and statutory duty pleaded. |
| Does the complaint plead a cognizable duty of care under Israeli law or NY law? | Plaintiffs pleaded foreseeability and a special duty to non-customers under Israeli law. | No general NY duty to non-customers; routine banking cannot create liability. | Under Israeli law a duty exists; NY law would not foreclose possible liability if proven. |
| Is there a cognizable breach of Israeli statutory duty (section 63 of the CWO)? | Israeli enactments prohibit providing funds to terror groups; alleged transfers breach that duty. | No adequate factual basis under NY law; statutory duty not pleaded properly. | Breach of section 63 adequately pleaded for purposes of preanswer dismissal. |
| Should the case be dismissed on forum non conveniens grounds? | New York is appropriate; substantial nexus due to NY banking activity. | China has greater nexus; case should be heard abroad; New York inconveniencing. | Forum non conveniens dismissal denied; New York retains nexus and cannot be readily dismissed. |
Key Cases Cited
- Lerner v. Fleet Bank, N.A., 459 F.3d 273 (2d Cir. 2006) (bank owes no duty to non-customers generally; exceptions exist)
- Padula v. Lilarn Props. Corp., 84 NY2d 519 (1994) (conduct vs. loss allocation in choice of law)
- Schultz v. Boy Scouts of America, 65 NY2d 189 (1985) (public policy balancing in choice of law)
- 532 Madison Ave. Gourmet Foods v. Finlandia Center, 96 NY2d 280 (2001) (foreseeability and duty limits in negligence analysis)
- Licci ex rel. Licci v. Lebanese Canadian Bank, SAL, 672 F.3d 155 (2d Cir. 2012) (conduct-regulating rule and locus of tort in choice of law)
- Devore v. Pfizer Inc., 58 AD3d 138 (1st Dept 2008) (place of injury vs. place of wrong; choice of law considerations)