Plaintiff-Appellant, the official committee of unsecured creditors for the above-captioned chapter 11 action (“Committee”), began adversary proceedings in the United States Bankruptcy Court for the Southern District of New York against Defendants-Appellees Bahrain Islamic Bank (“BisB”), and Tadhamon Capital B.S.C. (“Tadha-mon,” and together with BisB, “Banks”), respectively, seeking, inter alia, the avoidance of a preferential transfer. In a single decision, the Bankruptcy Court dismissed the adversary proceedings with prejudice, finding that it lacked personal jurisdiction over the Banks. It also denied the Committee’s request to engage in jurisdictional discovery. The Committee appeals the dismissal, the decision to dismiss with (as opposed to without) prejudice, and the decision to deny the Committee’s request to engage in jurisdictional discovery.
I. Background Facts
Before filing for chapter 11 bankruptcy on March 19, 2012, Arcapita Bank B.S.C.(c) was licensed as an Islamic Wholesale bank by the Central Bank of Bahrain, and was headquartered in Bahrain. (BisB Complaint, included in Joint Appendix Vol. 1, attached to Brief for Appellant, (Case No. 15-cv-03828, ECF No. 16-1), at APP005 ¶ 12.
BisB is an Islamic commercial bank also headquartered in Bahrain. (Id. at APP005 ¶ 13.) BisB maintains correspondent ban accounts
In March 2012, Arcapita hired BisB to make one investment, and Tadhamon to make two investments, respectively, on its behalf. (See BisB Complaint at APP008 ¶¶ 27-31; Tadhamon Complaint at APP022-023 ¶¶ 27-34.) Each transaction was executed in accordance with an agreement (“Placement Agreement”) that Arcapita had entered into with each Bank.
On or around March 14, 2012, Arcapita accepted an investment offer from BisB. Pursuant to the terms of the offer, Arca-pita transferred $10 million to a BisB-des-ignated account, specifically, BisB’s JP Morgan Chase correspondent bank account located in New York. (BisB Complaint at APP008 ¶¶ 27-28.) The same day that it received the money in its New York correspondent bank account, BisB purchased 14,245 troy ounces of palladium on Arcapita’s behalf through a broker in London. (Mohammed Decl. at APP035 ¶ 10; Declaration of Nicholas A. Bassett in Support of the Objection of the Official Committee оf Unsecured Creditors to Bahrain Islamic Bank’s Motion to Dismiss the Complaint (“Bassett Decl.”), (ECF No. 16-1), Exhibits A-C, at APP081-086.) The investment was set to mature on March 29, 2012. (BisB Complaint at APP008 ¶31.) Before Arcapita made the $10 million Placement, it was already indebted to BisB in -the amount of $9,774,096.15. (Id. at APP006 ¶¶20, 22.)
On or about March 15, 2012, Arcapita accepted two investment offers from Ta-dhamon. (Tadhamon Complaint at APP022 ¶ 27.) Pursuant to the terms of the offers, Arcapita made two $10 million transfers to a Tadhamon-designated New York HSBC
On March 19, 2012, less than a week after executing all .three Placements, Arca-pita filed for bankruptcy. (BisB Complaint at APP008 ¶ 30; Tadhamon Complaint at APP022 ¶ 31.)
On each of the applicable maturity dates, the Banks failed to remit any of the proceeds owed to Arcapita. (BisB Complaint at APP008 ¶ 32; Tadhamon Complaint at APP022-023 ¶¶ 32-35.) On April 30, 2012, Arcapita delivered demand letters to the Banks, informing the Banks that the funds were property o f the bankruptcy estate of Arcapita. (BisB Complaint at APP008-009 ¶ 33; Tadhamon Complaint at APP023-024 ¶37.) In response, each Bank asserted that it was withholding all or nearly all of the funds as a setoff against the existing debts owеd by Arcapi-ta to each Bank. (BisB Complaint at APP009 ¶ 34; Tadhamon Complaint at APP024 ¶ 38.) In December 2012, Tadha-mon returned to Arcapita approximately $2 million, the difference between the antecedent debt Arcapita owed Tadhamon and the total amount that Arcapita had transferred to Tadhamon in connection with the Tadhamon Placements. (Tadha-mon Complaint at APP024 ¶ 40.) BisB has failed to return any portion of the funds Arcapita transferred in connection with the Placement it made with BisB. (BisB Complaint at APP 009 ¶ 36.)
II. Procedural History
In June 2013, the Bankruptcy Court confirmed the proposed plan of reorganization in Arcapita’s bankruptcy.- (See Memorandum of Decision (“Decision”), included in Joint Appendix Vol. 2, attached to Brief for Appellant, (ECF No. 16-2), at APP273.) The Bankruptcy Court subsequently entered an order granting the Committee leave, standing, and the authority to pursue claims against the Banks. (Id.)
On August 26, 2013, pursuant to the authority granted by the Bankruptcy Court, the Committee commenced these adversary proceedings against the Banks to recover the funds transferred by Arca-pita and received by the Banks. (See BisB Complaint; Tadhamon Complaint.) The adversary proceedings asserted that at the time Arcapita and the Banks entered into the Placements, Arcapita was insolvent, the Placements occurred less than ninety days before it filed for bankruptcy, and that the Placements were improperly made to pay off the debts Arcapita owed each. Bank.
On April 17, 2015, the Bankruptcy Court issued its decision concluding that the transfers to the New York correspondent bank accounts designated by each of the Banks was an insufficient basis on which to establish specific personal jurisdiction over the Banks. The Bankruptcy Court held that “while the use of the [correspondent bank] accounts were] admittedly a contact [with the United States,] it [was] too weak to satisfy due process requirements,” because the use of the correspondent bank accounts was “neither the beginning nor the end of the Placement, but rather a transitory step.” (Decision at APP278-279.) The Bankruptcy Court also emphasized that “the use of the accounts was not central to the alleged wrong” because the causes of action were all “based upon the alleged setoff by the [Banks],” and the receipt of the transfers themselves were not themselves improper at the time they occurred. (Id. at APP287-288, 288 n.12.)
III. Standard of Review
This Court reviews de novo the dismissal of a case for lack of personal jurisdiction over the defendant. See Licci IV,
Determining whether a bаnkruptcy court may exercise personal jurisdiction over a foreign defendant is a two-prong inquiry. First, the bankruptcy court must determine whether the defendant has “the requisite minimum contacts with the United States at large.” Sec. Inv’r Prot. Corp. v. Bernard L. Madoff Inv. Sec., LLC (In re Bernard L. Madoff),
Second, the court must determine whether exercising personal jurisdiction over the defendant will offend “traditional notions of fair play and substantial justice.” Asahi Metal Indus. Co. Ltd. v, Super. Ct. Cal.,
IY. Personal Jurisdiction and Correspondent Bank Accounts
A. The Lied Case
In a series of opinions, this Court, the Second Circuit, and the New York Court of Appeals all confronted a jurisdictional dispute similar to the one now before this Court on appeal: whether the use of a correspondent bank account provides a sufficient basis to exercise personal jurisdiction over a foreign" bank. See generally, Licci v. Am. Express Bank, Ltd.,
In Licci, the plaintiffs alleged that Leba-nase Canadian Bank, SAL (“LCB”), which was headquartered in Beirut, “intentionally and/or negligently provided Hizbollah with wire transfer services involving millions of dollars, and such transferred funds enabled and assisted Hizbollah to carry out terrorist attacks, including, ... rocket attacks that harmed plaintiffs [in Israel].” Licci I,
When the case first reached the second circuit, it undertook a fairly comprehensive review of New York case law to determine “whether a foreign bank’s frequent use of a correspondent account in New York to effect international wire transfers on behalf of an overseas client is an act directed with sufficient purposefulness at New York to constitute a transaction of business in that state under the long-arm statute.”
*65 (1) Does a foreign bank’s maintenance of a correspondent bank account at a financial institution in New York, and use of that account to effect “dozens” of wire transfers on behаlf of a foreign client, constitute a “transaction” of business in New York within the meaning of N.Y. C.P.L.R. § 302(a)(1)?
(2) If so, do the plaintiffs’ claims under the Anti-Terrorism Act, the [Alien Tort Statute], or for negligence or breach of statutory duty in violation of Israeli law, “arise from” LCB’s transaction of business in New .York within the meaning of N.Y. C.P.L.R. § 302(a)(1)?
Id. at 74-75 (brackets omitted).
The New York Court of Appeals accepted the questions, and addressed each in turn. With regard to the first “transaction of business” question, the court engaged in an extensive analysis of Amigo Foods Corp. v. Marine Midland Bank-N.Y.,
After summarizing the holding in Amigo Foods, the court stated that the first prong of the long-arm statute is satisfied by a “defendant’s use of a correspondent bank account in New York, even if no other contacts between the defendant and New York can be established, if the defendant’s use of that account was purposeful.” Id. at 338,
The court then applied the proposition Amigo Foods stood for to the first certified question: whether use of a correspondent bank account “dozens” of times constitutes a “transaction of business” under New York’s long-arm statute. The court held that “the repeated use of a correspondent account in New York on behalf of a client — in effect, a ‘course of dealing5— show[s] purposeful availment of New York’s dependable and transparent banking system, the dollar as a stable and fungible currency, and the predictable jurisdictional and commercial law of New York and the United States.” Id. at 339,
Addressing what “arises from” means, the New York Court of Appeals first stated that the defendant’s transaction of business need not have caused the plaintiffs injury, and that “the inquiry under the statute is relatively permissive.” Id. at 339,
The court then applied these principles to the second certified question: whether the plaintiffs’ claims in Lied “ar[o]se from LCB’s transaction of business in New York.” The court held that they did: “the complaint alleges that LCB engaged in terrorist financing by using its correspondent account in New York to move the necessary dollars. Taken as true, LCB arguably thereby violated duties owed to plaintiffs under the various statutes asserted as a basis for subject matter jurisdiction.” Id. Although “[n]ot all elements of the causes of action pleaded [we]re related to LCB’s use of the correspondent account,” “[a]nd the specific harms suffered by plaintiffs flowed not from LCB’s alleged support of a terrorist organization, but rather from rockets,” these facts did not defeat jurisdiction. Id. at 341,
When the case returned to the Second Circuit, the court summarized the New
[i]t would be unusual, indeed, if a defendant transacted business in New York and the claim asserted arose from that business activity within the meaning of section 302(a)(1), and yet, in connection with the same transaction of business, the defendant cannot be found to have purposefully availed itself of the privilege of doing business in the forum and to have been able to foresee being haled into court there, or the assertion of specific jurisdiction would somehow otherwise offend traditional notions of fair play and substantial justice.
Id. In fact, the Second Circuit stated that it was unaware of any such cаse where jurisdiction had lied under New York’s long-arm statute, but the exercise of jurisdiction would violate constitutional due process. Id.
Unsurprisingly, then, the Second Circuit went on to hold that exercising personal jurisdiction over LCB was consistent with due process. The court held that LCB’s use of the correspondent account as an instrument to achieve the wrong complained of satisfied the minimum contacts’ component of the due process inquiry. Id. at 173. In reaching this conclusion, it relied on the fact that although “LCB could have processed U.S.-doUar-denominated wire transfers ... through correspondent accounts anywhere in the world,” it instead “deliberately chose to process the ... wire transfers through [an account] in New York.” Id. at 171. Accordingly, its “in-forum activity sufficiently reflected] [its] ‘purposeful availment’ of the privilege of carrying on its activities here, ... even [though] the effects of [its] entire course of conduct [we]re felt elsewhere.” Id. at 173. In sum, the court justified the assertion of jurisdiction over LCB by explaining that “[i]t should hardly be unforeseeable to a bank that selects and makes use of a particular forum’s banking system that it might be subject to the burden of a lawsuit in that forum for wrongs related to, and arising from, that use.” Id. at 171-72.
The court then analyzed whether exercising jurisdiction over LCB would nevertheless be unreasonable because doing so would offend traditional notions of fair play and substantial justice. The court concluded that it would not. Id. at 174. It explained that modern communication and transportation eased any burden of defending the case in New York. Id. at 174. Additionally, the court explained that although the plaintiffs’ injuries оccurred in Israel, the United States and New York both have a n interest in monitoring banks and banking activity to ensure that their financial systems are not used for nefarious ends. Id. Based on a consideration of these factors, and the absence of any compelling interest that outweighed them, the court held that exercising jurisdiction over LCB in New York was not unconstitutional. Id.
B. The Banks’ Selection of New York Correspondent Accounts are “Minimum Contacts” on which to Assert Personal Jurisdiction
The Lied litigation yields several insights applicable to the instant appeal. First, the use of a correspondent bank account, even if the defendant has no other contacts with New York, satisfies the
Although this is an adversary proceeding arising out of a chapter 11 bankruptcy reorganization,
The Banks’ purposeful use of correspondent bank accounts in New York constitutes a “transaction of business” within New York. The Banks, not Arcapita, set the terms of each placement transaction, and then presented those terms in an offer to Arcapita. (Mohammed Deck, Exhibit A, at APP040 ¶ 4.1; Rashdan Deck, Exhibit A, APP060 ¶ 5.1-5.2.) The Banks selected U.S. dollars as the currency in which to execute the transaction.
The Committee’s cause of action for the avoidance of a preferential transfer “arises from” the Banks’ use of the New York correspondent bank accounts. A party seeking the avoidance of a preferential transfer must show, inter alia, “(1) a transfer to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by the debtor before such transfer was made.” 11 U.S.C. § 547(b) (emphasis added). The Banks’ New York contacts— ie., the receipt of the transferred funds in New York correspondent bank accounts— are at the heart of this cause of action. The receipt of the funds in New York is precisely the conduct targeted by the Committee, and the activity that the cause of action seeks to have voided.
That specific jurisdiction may be asserted under N.Y.C.P.L.R. § 302(a)(1) is strong evidence that the assertion of jurisdiction comports with constitutional due process. This is so because the jurisdictional test to comport with constitutional due process is strikingly similar to the test under § 302(a)(Z). Licci II,
“Where the [plaintiffs] claim arises out of, or relates to, the defendant’s contacts with the forum — i.e., specific jurisdiction is asserted — minimum contacts necessary to support such jurisdiction exist where the defendant purposefully availed itself of the privilege of doing business in the forum and could foresee being haled into court there.” Id. (internal brackets omitted (quoting Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez,
Finally, asserting jurisdiction over the Banks does not somehow render “mere maintenance” of a correspondent account in the United States sufficient to support personal jurisdiction over the account-holder in connection with any controversy. Had the record demonstrated that Arcapi-ta, as opposed to the Banks, selected the U.S. dollar and the New York accounts to effectuate the Placements, the Banks’ contacts with the United States would have been adventitious, and jurisdiction would not have lied. But where, as here, the defendant’s in-forum activity reflects its “purposeful availment” of the privilege of carrying on its aсtivities here, the defendant has established minimum contacts sufficient to confer a court with jurisdiction over it, even if the effects of the defendant’s conduct are felt entirely outside of the United States. Licci IV,
C. Assertion of Personal Jurisdiction is “Reasonable”
Only by presenting “a compelling case that the presence of some other considerations would render jurisdiction unreasonable” can a defendant that has purposefully directed its activities at the forum defeat jurisdiction on due process grounds. Licci IV,
These factors support the constitutional exercise of personal jurisdiction over the Banks. With regard to the first factor, courts have held that the burden imposed on a defendant forced to litigate far from home is substantially mitigated by the conveniences of modern communication and transportation. Bank Brussels,
V. Conclusion
The Banks’ selection and use of correspondent bank accounts in New York provides a sufficient basis for a court to assert personal jurisdiction over them. Accordingly, this Court vacates the Bankruptcy Court’s orders dismissing with prejudice the Committee’s underlying adversary proceedings against each Bank, and remands them to the Bankruptcy Court.
SO ORDERED.
. Because this Court has determined that the Bankruptcy Court may exercise personal jurisdiction over the Banks, it does not opine on the Committee’s appeals of the Bankruptcy Court’s decisions to dismiss the actions with (as opposed to without) prejudice, or to deny the Committee’s alternative request to engage in jurisdictional discovery.
. The parties agree that the facts are not in dispute. (Reply Brief for Appellant, (ECF No, 20), at 1 (“As the Banks acknowledge, the facts in this case are not in dispute.” (Brackets and citation omitted)); Brief for Appellees, (ECF No. 17), at 1 ("The facts in this case are not in dispute.”).)
. All citations are to the record in Case No. 15-cv-03828 unless otherwise noted. Additionally, because the ECF bates stamp numbers printed on the documents included in this record are often unreadable, this opinion often cites to the Appendix page designation' found in the lower-right cornеr of each page.
. "A correspondent bank account is a domestic account held by a foreign bank, similar to a personal checking account used for deposits, payments and transfers of funds. Correspondent accounts facilitate the flow of money worldwide, often for transactions that otherwise have no other connection to ... the United States.” Licci v. Lebanese Canadian Bank, SAL,
. Arcapita and BisB executed their Placement Agreement on or about July 10, 2003. (BisB Complaint at APP007 ¶ 23.) Arcapita and Ta-dhamon, on the other hand, executed their Placement Agreement on March 15, 2012, the same day on which Arcapita and Tadhamon entered into the specific placement transactions at the heart of the litigation between the Committee and Tadhamon. (Tadhamon Complaint at APP021-022 ¶¶ 22-23, 27.)
. Shortly before each of these dates, Tadha-mon "roll[ed]-over” each of the $10 million Placements for an additional one-month term. The Placements' maturity dates then became ' April 30, 2012 and May 16, 2012, respectively. (Tadhamon Complaint at APP023 ¶ 36.)
. The Committee also asserted claims for breach of contract, turnover, violation of the automatic stay, and claim disallowance. (BisB Complaint at APP003 ¶ 1; Tadhamon Complaint at APP017 ¶ 1.)
. In addition to asserting specific jurisdiction, ''[a] court may assert general jurisdiction over foreign (sister-state or foreign country) corporations to hear any and all claims against them when their affiliations with the State are so "continuous and systematic" as to render them essentially at home in the forum State.” Licci IV, 732 F.3d at 169 n.6 (quoting Goodyear,
. "Determining personal jurisdiction over a foreign defendant in a federal-question case .., requires [a court to first] look to the law of the forum state to determine whether personal jurisdiction will lie." Licci IV,
. The Second Circuit had also focused on Amigo Foods and its progeny in its initial attempt to discern how to apply the “transaction of business” prong. Licci II,
. Indeed, it has long been recognized that "proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant’s [New York] activities ... were purposeful and there is a substantial relationship between the transaction and the claim asserted.” Chloe v. Queen Bee of Beverly Hills, LLC,
. Compare Madoff,
. Furthermore, as the Bankruptcy Court noted,, many of the cases cited by the parties involved jurisdictional analysis under § 302(a)(1)
. The Bankruptcy Court noted that "[t]he Banks had claimed that the correspondent accounts were used to accommodate Arcapi-ta’s desire to transfer the funds in U.S. dollars, but there was no evidence of that in the record.” (Decision at APP282 n. 10.) This Court is mindful of its obligation to construe all pleadings and affidavits in the light most favorable to the plaintiff and to resolve all doubts in the plaintiffs favor. See Penguin Grp.,
. Neither party contends that the purposeful selection and use of a correspondent bank account in New York to receive millions of dollars is a particularly rare case.
. The Banks argue that, pursuant to the terms of the Placement Agreements, they were acting as Arcapita's agent, and so the New York correspondent bank accounts are not the Banks’ contacts, but Arcapita’s. (Brief for Appellees at 12-14.) Although the Banks’ acted as Arcapita’s agent when purchasing commodities and securities on its behalf, the Banks made the decision on where to receive the funds to make those purchases in their sole discretion. They could have received the funds elsewhere and still performed their duties under the Placement Agreements and offers. The Banks’ decisions to utilize New York correspondent bank accounts were made independently, and therefore properly attributable to the Banks.
. The Bankruptcy Court found that "Tadha-mon’s use of a third party's correspondent bank account is insufficient to establish specific jurisdiction," because "Tadhamon made a conscious decision to forgo maintenance of a correspondent account in the United States and has clearly not benefitted from the privilege of doing business here under these circumstances.” This Court disagrees. The fact that Tadhamon utilized Khaleeji's correspondent account, rather than its own, does not alter the fact that Tadhamon is the entity that instructed Arcapita to make two wire transfers, totaling $20 million, to accounts located in New York, Contrary to the Bankruptcy Court’s suggestion, Tadhamon sought to, and in fact, did take advantage of the United States's dependable and transparent banking system by receiving the funds into a New York аccount before transferring them to its own account in Bahrain. Because Tadhamon directed the wire transfers to a specifically designated New York account for its own advantage, the receipt of the funds in New York is a "contact" properly attributed to Tadhamon. In any case, as the Bankruptcy Court noted, Khaleeji acted as Tadhamon’s agent when it received the funds, and thus, Khaleeji's receipt of the funds in New York can be imputed to Tadhamon.
. The Bankruptcy Court also concluded that the Banks’ "mere knowing receipt of funds at a correspondent bank account is insufficient to establish jurisdiction.” (Decision at APP 280-81.) As this record makes clear, however, the Banks’ did not merely knowingly receive the funds in a correspondent account, but actively selected the corrеspondent bank accounts in New York and directed the funds to these accounts. Thus, the Banks’ connection to New York was not passive, but active and volitional.
. In a footnote, the Bankruptcy Court stated that the Banks’ use of the New York correspondent bank accounts could not serve as the basis to assert jurisdiction over the Banks for the Committee's preferential transfer