432 F.Supp.3d 401
S.D.N.Y.2020Background
- Qatar sued First Abu Dhabi Bank, Samba Financial Group, and unnamed defendants in New York state court alleging New York common‑law fraud, conspiracy, and aiding-and-abetting (filed Apr. 8, 2019).
- Complaint alleges the banks, working with Saudi Arabia and the UAE amid a diplomatic blockade of Qatar, submitted fraudulent FX quotes in New York that pressured the Qatari riyal and forced Qatar to liquidate assets to defend its dollar peg.
- Defendants removed to federal court asserting (1) they are "foreign states" (agencies/instrumentalities) under the FSIA and thus removable, and (2) Grable federal‑question jurisdiction because adjudication would implicate U.S. foreign‑policy neutrality.
- District Court treated complaint facts as true for remand motion, considered extra‑pleading evidence submitted by parties, and placed burden of establishing removability on defendants.
- Court applied the Second Circuit’s Filler five‑factor framework for FSIA organ status and the four‑part Grable test for federal‑question removal; it found neither basis satisfied and remanded the case to New York Supreme Court.
Issues
| Issue | Plaintiff's Argument (Qatar) | Defendant's Argument (Banks) | Held |
|---|---|---|---|
| Whether defendants are "foreign state[s]" under FSIA (agency or instrumentality) | Qatar: Banks are private commercial entities, not organs of Saudi/UAE; FSIA removal improper | Banks: They act at the behest of their home sovereigns and thus are organs/ instrumentalities entitled to FSIA removal | Court: Banks are not organs; none of the Filler factors (national purpose, supervision, public employees, exclusive rights, treatment under foreign law) supported organ status; FSIA removal denied |
| Whether state‑law claims "necessarily raise" a federal issue under Grable (federal‑question removal) | Qatar: Claims are classic state‑law fraud causes that do not require applying federal law | Banks: Litigation would force a U.S. court to "pick a side" in an international dispute, implicating U.S. neutrality and thus raise substantial federal issues | Court: Grable first three prongs fail—no federal rule of decision is necessary, the asserted foreign‑policy issue is not actually disputed in the required way; overall Grable removal denied |
| Whether remand fees and costs should be awarded under 28 U.S.C. §1447(c) | Qatar: Removal was improper; seek fees for unnecessary federal litigation | Banks: Removal arguments were colorable, not frivolous | Held: Fees denied—the Banks had an objectively reasonable, colorable basis for removal and no bad faith shown |
Key Cases Cited
- Verlinden B. V. v. Central Bank of Nigeria, 461 U.S. 480 (1983) (FSIA removal and sovereign immunity principles)
- Samantar v. Yousuf, 560 U.S. 305 (2010) (textual limits on FSIA definitions of foreign state and instrumentalities)
- Filler v. Hanvit Bank, 378 F.3d 213 (2d Cir. 2004) (five‑factor test for "organ" status under FSIA)
- In re Terrorist Attacks on Sept. 11, 2001, 538 F.3d 71 (2d Cir. 2008) (application of Filler factors and agency/instrumentality analysis)
- Grable & Sons Metal Prods., Inc. v. Darue Eng'g & Mfg., 545 U.S. 308 (2005) (federal‑question jurisdiction for state‑law claims that necessarily raise federal issues)
- Gunn v. Minton, 568 U.S. 251 (2013) (clarifying Grable four‑part test)
- Empire HealthChoice Assurance, Inc. v. McVeigh, 547 U.S. 677 (2006) (narrow scope of federal jurisdiction for state‑law claims raising federal issues)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (2005) (standards for awarding fees on remand)
- Peninsula Asset Mgmt. (Cayman) Ltd. v. Hankook Tire Co., 476 F.3d 140 (2d Cir. 2007) (FSIA organ analysis guidance)
- NASDAQ OMX Grp., Inc. v. UBS Sec., LLC, 770 F.3d 1010 (2d Cir. 2014) (constraining Grable; substantiality and federal‑state balance considerations)