580 B.R. 64
Bankr. S.D.N.Y.2018Background
- Two Anguillan "offshore" banks (National Bank of Anguilla (PBT) and Caribbean Commercial Investment Bank (CCIB)) were placed into Anguilla administration/receivership after alleged upstreaming of depositors' funds to their Anguillan parent banks and further transfers to the Eastern Caribbean Central Bank (ECCB).
- The Anguillan High Court appointed an administrator (foreign representative), who obtained recognition of the Anguilla administrations as foreign main proceedings in U.S. bankruptcy court (chapter 15). The administrator thereafter filed chapter 11 cases and nearly identical adversary complaints in New York seeking to avoid and recover transfers under U.S. bankruptcy and New York law and asserting related tort and fiduciary claims.
- Parallel litigation was already pending in Anguilla: (1) the Debtor Banks sued the parent banks and NCBA in Anguilla (Anguilla Initial Proceedings); (2) depositors sued ECCB and Conservator Directors (Satay Action); and (3) the Debtors sought judicial review in Anguilla of the 2016 Resolution Plan. Anguilla courts addressed immunity and joinder issues and some rulings are on appeal.
- Defendants moved to dismiss or stay in New York raising forum non conveniens, international comity, FSIA/sovereign immunity, lack of personal jurisdiction, extraterritoriality of avoidance statutes, act of state, and failure-to-state claims under sections 548/544/550/502(d).
- The U.S. courts (two bankruptcy judges, joint opinion) concluded that the matters should be stayed (not dismissed) in deference to the Anguilla proceedings primarily on forum non conveniens and international comity grounds; most other defenses were not decided at this stage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether U.S. courts should hear the adversary proceedings or defer to Anguilla (forum non conveniens) | Plaintiffs argue New York is proper because transfers involved New York bank accounts and U.S. remedies (constructive fraudulent transfer) are unavailable in Anguilla | Defendants argue Anguilla is the natural, adequate forum; plaintiffs are forum-shopping to obtain causes of action not recognized in Anguilla | Court: Stay these proceedings on forum non conveniens grounds; New York forum choice entitled to little deference given forum-shopping and all parties/witnesses are tied to Anguilla |
| Whether international comity requires deferral to Anguilla (including the foreign main insolvency and parallel Anguilla litigation) | Plaintiffs contend they are not "reaching around" Anguilla estate and seek U.S. remedies that Anguilla law lacks | Defendants stress parallel Anguilla insolvency and litigation, Anguilla's strong interest, and prior Anguilla rulings on immunity and joinder | Court: International comity warrants a stay pending resolution of Anguilla proceedings (preserving plaintiffs' right to return if issues remain) |
| Whether ECCB is immune or outside personal jurisdiction (FSIA & minimum contacts) | Plaintiffs: ECCB's acts had U.S. commercial effect (NY accounts/transfers) and FSIA exceptions/personal jurisdiction apply | ECCB: It is an agency/instrumentality entitled to FSIA immunity; limited contacts with NY preclude personal jurisdiction | Court: Did not resolve immunity/personal jurisdiction; the stay obviated need to decide these defenses now |
| Whether avoidance/recovery statutes apply extraterritorially and whether plaintiffs stated claims (Sections 548/544/550/502(d) and NYDCL) | Plaintiffs: focus should be on where transfers occurred and title may have passed in NY; if transfers are foreign, Congress intended extraterritorial reach for avoidance; complaints adequately plead transfers | Defendants: transfers are foreign; Bankruptcy Code/NY law not extraterritorial as applied; claims fail to plead post-transfer transfers to NCBA with required specificity; 550/502(d) claims premature | Court: Declined to decide extraterritoriality or merits; directed stay and noted plaintiffs may need to amend if case returns to U.S. |
Key Cases Cited
- Sinochem Int’l Co. Ltd. v. Malaysia Int’l Shipping Corp., 549 U.S. 422 (court may dismiss on forum non conveniens without resolving jurisdictional issues)
- Gulf Oil Co. v. Gilbert, 330 U.S. 501 (framework of public/private factors for forum non conveniens)
- Piper Aircraft Co. v. Reyno, 454 U.S. 235 (alternative forum adequacy and deference to plaintiff's forum choice analysis)
- Royal & Sun Alliance Ins. Co. of Canada v. Century Int’l Arms, 466 F.3d 88 (international comity and deference to foreign insolvency proceedings)
- Altos Hornos de Mexico, S.A. v. CSX, cited as JP Morgan Chase Bank v. Altos Hornos de Mexico, 412 F.3d 418 (courts may adjudicate bona fide U.S. property disputes but generally defer to foreign bankruptcies)
- Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88 (forum non conveniens discretionary standard)
- Iragorri v. United Techs. Corp., 274 F.3d 65 (Second Circuit three-step forum non conveniens analysis)
- Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146 (deference analysis for foreign plaintiff choosing U.S. forum)
- Moses H. Cone Mem. Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (principles on abstention and balancing jurisdictional duties)
- Colorado River Water Conservation Dist. v. U.S., 424 U.S. 800 (exceptions to obligation to exercise jurisdiction; exceptional circumstances)
- Société Nationale Industrielle Aérospatiale v. U.S. Dist. Court, 482 U.S. 522 (comity as judicial cooperation in international cases)
- Abdullahi v. Pfizer, Inc., 562 F.3d 163 (public/private factor weight in forum non conveniens)
- Finanza AG Zurich v. Banco Economico, 192 F.3d 240 (factors for procedural fairness of foreign insolvency proceedings)