Source: https://casetext.com/brief/ebd4c637-mashreqbank-psc-appellantvahmed-hamad-a1-gosaibi-brothers-company-respondent-ahmed-hamad-al-gosaibi-brothers-company-third-party-respondent-v-maan-abdul-waheed-al-sanea-third-party-appellant-awal-bank-bsc-third-party-defendant-brief-1
Timestamp: 2020-04-07 17:24:01
Document Index: 91110167

Matched Legal Cases: ['§ 500', '§500', '§ 1352', '§ 11', 'art 34', '§ 1352', '§ 11']

To Be Argued By: BRUCE R. GRACE Time Requested: 30 Minutes APL-2013-00007 New York County Clerk’s Index Nos. 601650/09 and 590643/09 Court of Appeals State of New York Index No. 601650/09 MASHREQBANK PSC, Plaintiff-Appellant, —against— AHMED HAMAD AL GOSAIBI & BROTHERS COMPANY, Defendant-Respondent. Index No. 590643/09 AHMED HAMAD AL GOSAIBI & BROTHERS COMPANY, Third-Party Plaintiff-Respondent, —against— MAAN ABDUL WAHEED AL SANEA, Third-Party Defendant-Appellant, —and— AWAL BANK BSC, Third-Party Defendant. BRIEF FOR DEFENDANT-RESPONDENT/ THIRD-PARTY PLAINTIFF-RESPONDENT BRUCE R. GRACE ERIC L. LEWIS LEWIS BAACH PLLC 1899 Pennsylvania Avenue, NW, Suite 600 Washington, DC 20006 Telephone: (202) 833-8900 Facsimile: (202) 466-5738 Attorneys for Defendant-Respondent/ Third-Party Plaintiff-RespondentSeptember 12, 2013 STATE OF NEW YORK COURT OF APPEALS ------------------------------------------------------------ )( MASHREQBANK PSC, New York Plaintiff-Appellant, County Clerk's Inde}( No. 601650109 v. AHMED HAMAD ALGOSAIBI & BROTHERS COMPANY, Defendant-Respondent. ------------------------------------------------------------ )( AHMED HAMAD ALGOSAIBI & BROTHERS COMPANY, Third-Party Plaintiff-Respondent, New York County Clerk's v. Inde}( No. 590643/09 MAAN ABDUL WAHEED AL SANEA, Third-Party Defendant Appellant, -and- AWAL BANK BSC, Third-Party Defendant. ------------------------------------------------------------ )( 22 NYCRR § 500.1(F) DISCLOSURE STATEMENT OF DEFENDANT­ RESPONDENT THIRD-PARTY PLAINTIFF-RESPONDENT AHMAD HAMAD ALGOSAIBI & BROTHERS COMPANY Defendant-Respondent Third-Party Plaintiff-Respondent Ahmad Hamad Algosaibi & Brothers Company ("AHAB"), by its attorneys, Lewis Baach PLLC, hereby submit the following 22 NYCRR §500.l(f) disclosure statement: 1. AHAB is a non-domiciliary general partnership organized and existing under the laws of the Kingdom of Saudi Arabia. 2. AHAB does not have any corporate parents, subsidiaries, or affiliates. Dated: Washington, DC September 12, 2013 LEWIS BAACH PLLC Bruce R. Grace Eric L. Lewis 1899 Pennsylvania Ave., Suite 600 Washington, DC 20006 Tel: (202) 833-8900 Fax: (202)-466-5738 Bruce. Grace@lewisbaach.com Eric.Lewis@lewisbaach.com Counsel for Defendant-Respondent Third-Party Plaintiff-Respondent 2 To: Robert F. Serio Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, NY 10166 Tel: (212) 351-4000 Fax: (212) 351-5246 rserio@gibsondunn.com Counsel for Third-Party Defendant-Appellant Maan Abdulwaheed AISanea Carmine D. Boccuzzi, Jr. Cleary Gottlieb Stern & Hamilton LLP One Liberty Plaza New York, NY 10006 Tel: (212) 225-2000 Fax: (212) 225-3999 cboccuzzi@cgsh.com Counsel for Plaintiff-Appellant Mashreqbank PSC David J. Molton Brown Rudnick LLP Seven Times Square New York, NY 10036 Tel: (212) 209-4800 Fax: (212) 938-2822 dmolton@brownrudnick.com Counsel for Charles Russell LLP, as External Administrator ofA WAL Bank 3 i TABLE OF CONTENTS PAGE QUESTIONS PRESENTED ...................................................................................... 1 PRELIMINARY STATEMENT ............................................................................... 3 SUMMARY OF FACTS ........................................................................................... 9 I. Al Sanea’s Worldwide Ponzi Scheme ............................................................. 9 II. Al Sanea’s Fraudulent Foreign Exchange Deals with Mashreq .................... 12 III. The F/X Scheme’s Core Nexus to New York’s Banks ................................. 14 IV. Procedural Background ................................................................................. 16 ARGUMENT ........................................................................................................... 19 I. The Appellate Division Properly Determined that AHAB’s Third-Party Complaint Should Not Be Dismissed on Forum Non Conveniens Grounds. ......................................................................................................... 21 A. The Appellate Division Properly Found New York’s Paramount Interest in Protecting This State’s Banks from Misuse as an Instrument of Fraud and Theft to be a Pivotal Forum Non Conveniens Issue. .................................................................................................... 22 1. New York’s Paramount Interest in Prevention of Misuse of this State’s Banking System ............................................................ 24 2. The Nature of the Instant Dispute and Its New York Nexus .... 31 B. The Appellate Division Properly Weighed the Other Pahlavi Factors in Retaining this New York Forum. .................................................... 38 1. The Availability of Witnesses ................................................... 42 2. The Availability of Documents ................................................. 46 3. Application of Foreign Law ...................................................... 48 4. Interests of Saudi Arabia in this Dispute .................................. 50 II. The Appellate Division Correctly Concluded that Supreme Court Engaged in Improper Sua Sponte Action in Dismissing the First-Party Claims. ............. 52 A. If the Court Affirms Retention of the Third-Party Claim, Any Argument that the First-Party Claims Should Be Dismissed Is Rendered Moot. ................................................................................... 52 ii B. Neither Mashreq Nor Al Sanea Has Standing to Appeal the Reinstatement of the First-Party Claims. ............................................ 53 C. Supreme Court Improperly Acted Sua Sponte in Dismissing the First- Party Claims. ....................................................................................... 55 1. The Procedural Record ............................................................. 55 2. The Legal Effect of this Sua Sponte Action ............................. 58 III. The Court Had Personal Jurisdiction Over Al Sanea. ................................... 63 CONCLUSION ........................................................................................................ 64 iii TABLE OF AUTHORITIES A&M Exports, Ltd. v Meridien Int’l Bank, Ltd., 207 AD2d 741, 616 NYS2d 621 (1st Dept 1994) .................................... 36 Am. BankNote Corp. v Daniele, 45 AD3d 338, 845 NYS2d 266 (1st Dept 2007) ...................................... 29 Amigo Foods Corp. v Marine Midland Banc-N.Y., 39 NY2d 391, 384 NYS2d 124 (1976)..................................................... 27 Ancile Inv. Co., Ltd. v Archer Daniels Midland Co., No 08 Civ 9492 (PAC), 2009 WL 3049604 (SDNY Sept 23, 2009) ....... 34 Atsco Ltd. v Swanson, 29 AD3d 465, 816 NYS2d 31 (1st Dept 2006) ........................................ 37 Banco Ambrosiano v Artoc Bank & Trust, 62 NY2d 65, 476 NYS2d 64 (1984) ......................................................... 38 Banco Do Estado De Sao Paulo, S.A. v Mendes Jr. Int’l Co., 249 AD2d 137, 672 NYS2d 28 (1st Dept 1998) ................................ 58, 59 Banco Nacional Ultramarino, S.A. v Chan, 169 Misc 2d 182, 641 NYS2d 1006 (Sup Ct, NY Cnty 1996), aff’d 240 AD2d 253, 659 NYS2d 734 (1st Dept 1997) ............24, 25, 28, 40, 49 Broida v Bancroft, 103 AD2d 88, 478 NYS2d 333 (2d Dept 1984) ....................................... 17 Calgarth Invs., Ltd. v Bank Saderat Iran, No. 95 Civ. 5332, 1996 WL 204470 (SDNY Apr. 26, 1996) ............ 36, 37 Citigroup Global Mkts., Inc. v Metals Holding Corp., 45 AD3d 361, 845 NYS2d 282 (1st Dept 2007) ...................................... 37 Creditanstalt Inv. Bank AG. v Chadbourne & Parke LLP, 4 Misc 3d 481, 778 NYS2d 863 (Sup Ct, NY Cnty 2004) ................. 40, 41 iv D’Ambrosio v City of New York, 55 NY2d 454, 450 NYS2d 149 (1982)..................................................... 53 Daniels v City of New York, 7 NY3d 825, 822 NYS2d 753 (2006) ....................................................... 54 Duffy v Horton Mem. Hosp., 66 NY2d 473, 497 NYS2d 890 (1985)..................................................... 55 Edwards v Erie Coach Lines Co., 17 NY3d 306, 929 NYS2d 41 (2011) ....................................................... 49 Ehrlich-Bober & Co. v Univ. of Houston, 49 NY2d 574, 427 NYS2d 604 (1980)......................................... 29, 30, 34 Factors Etc., Inc. & Boxcar Enter., Inc. v Pro Arts, Inc., 579 F2d 215 (2d Cir 1978) ....................................................................... 44 Firegreen Ltd. v Claxton, 160 AD2d 409, 553 NYS2d 765 (1st Dept 1990) .................................... 44 First Union Nat’l Bank v Paribas, 135 F Supp 2d 443 (SDNY 2001) ............................................................ 36 Gulf Oil Corp. v Gilbert, 330 US 501 (1947) ............................................................................. 21, 41 Hecht v City of New York, 60 NY2d 57, 467 NYS2d 187 (1983) ....................................................... 54 Imperial Imports Co. v Neu & Sons, 161 AD2d 411, 555 NYS2d 323 (1st Dept 1990) .................................... 59 Indosuez Int’l Fin. B.V. v Nat’l Reserve Bank, 279 AD2d 408, 720 NYS2d 102 (1st Dept 2001), aff’d 98 NY2d 238, 746 NYS2d 631 (2002) .................................................................... 28 Intertec Contr. A/S v Turner Steiner Int’l S.A., 6 AD3d 1, 774 NYS2d 14 (1st Dept 2004) .............................................. 17 v Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 478 NYS2d 597 (1984)..............................................passim J. Zeevi & Sons, Ltd. v Grindlays Bank (Uganda) Ltd., 37 NY2d 220, 371 NYS2d 892 (1975) ................................. 27, 28, 30, 63 Licci v Lebanese Can. Bank, 20 NY3d 327, 960 NYS2d 695 (2012)............................................... 29, 30 Mahmood v Gutman, 81 AD3d 792, 916 NYS2d 802 (2d Dept 2011) ....................................... 54 Matter of Smith v Miller, 237 AD2d 294, 654 NYS2d 167 (2d Dept 1997) ..................................... 59 O’Connor v Bonanza Int’l, Inc., 129 AD2d 569, 514 NYS2d 67 (2d Dept 1987) ....................................... 44 Overseas Programming Co., Ltd. v Cinematographische Commerz- Anstalt, 684 F2d 232 (2d Cir 1982) ....................................................................... 32 Padula v Lilarn Props. Corp., 84 NY2d 519, 620 NYS2d 310 (1994)..................................................... 48 Piper Aircraft Co. v Reyno, 454 US 235 (1981) ....................................................................... 21, 40, 41 R. Maganlal & Co. v M.G. Chem. Co., Inc., 942 F2d 164 (2d Cir 1991) ....................................................................... 32 Republic of Lebanon v Sotheby’s, 167 AD2d 142, 561 NYS2d 566 (1st Dept 1990) .............................. 40, 47 Rhodes v ITT Sheraton Corp., CIV A 97-4530-B, 1999 WL 26874 (Mass Super Jan 15, 1999) ............. 45 Schultz v Boy Scouts of Am., 65 NY2d 189, 491 NYS2d 90 (1985) ................................................. 48, 49 vi Shin-Etsu Chem. Co., Ltd. v 3033 ICICI Bank Ltd., 9 AD3d 171, 777 NYS2d 69 (1st Dept 2004) .............................. 39, 40, 51 Silver v Great Am. Ins. Co., 29 NY2d 356, 328 NYS2d 398 (1972)..................................................... 38 Sirius Am. Ins. Co. v Vigo Const. Corp., 48 AD3d 450, 852 NYS2d 176 (2d Dept 2008) ....................................... 53 VSL Corp. v Dunes Hotels & Casinos Inc., 70 NY2d 948, 524 NYS2d 671 (1988)..............................................passim Waterways Ltd. v Barclays Bank PLC, 174 AD2d 324, 571 NYS2d 208 (1st Dept 1991) .................................... 40 Wells Fargo Asia Ltd. v Citibank, N.A., 936 F2d 723 (2d Cir 1991) ....................................................................... 28 World Point Trading PTE, Ltd. v Credito Italiano, 225 AD2d 153, 649 NYS2d 689 (1st Dept 1996) .................................... 36 RULES CPLR 327 ...................................................................................................... 17 CPLR 5511 .................................................................................................... 53 MISCELLANEOUS 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil § 1352 (3d ed 2004)...................................................... 34 Arthur Karger, Powers of the New York Court of Appeals, § 11:6 (3d ed rev 2005) .............................................................................................. 53 1 Defendant Third-Party Plaintiff Ahmad Hamad Al Gosaibi & Brothers Co. respectfully submits this brief in opposition to the appeals of Plaintiff-Appellant Mashreqbank PSC and Third-Party-Defendant Appellant Maan Abdul Wahed Al Sanea from the September 25, 2012 decision and order of the Appellate Division. The Appellate Division properly exercised its discretion and committed no error in reversing the prior decision of Supreme Court and reinstating the instant action as properly filed in this New York forum. QUESTIONS PRESENTED 1. Does the Appellate Division properly exercise its discretion when it considers and weighs all of the recognized factors bearing on forum non conveniens in reversing Supreme Court and ruling that the action should remain in this New York forum? Yes. Where the Appellate Division considers the recognized forum factors and reasonably weighs them in reaching its decision, its action cannot constitute an abuse of discretion. 2. In considering forum non conveniens, should the Appellate Division properly recognize New York’s strong interest in protecting New York’s banks from misuse when the dispute at issue concerns the fraudulent use of this State’s banks to both structure and carry out bogus foreign exchange transactions and 2 results in the theft of funds from such transactions out of an account in one of these New York banks? Yes. New York recognizes a paramount interest in protecting this State’s banks from misuse as instruments of fraud and theft. 3. In considering the availability of an alternative forum for purposes of forum non conveniens, does the Appellate Division properly consider and weigh the extent to which the competing fora have genuine access to sources of proof and/or whether critically important proof can be presented in one of those fora? Yes. Genuine access to sources of proof is an appropriate factor for consideration in a forum analysis. 4. Does the Appellate Division properly reverse a Supreme Court dismissal on forum non conveniens grounds in circumstances where none of the parties have moved, formally or informally, for such dismissal of the claims in question and the traditional forum factors have neither been briefed nor fully considered with respect to those claims? Yes. Such dismissal constitutes sua sponte action prohibited under established precedent. 3 PRELIMINARY STATEMENT This is an action brought by a bank with a New York branch against a Saudi partnership, which accepted the forum and brought a counterclaim and third-party claim. The third-party then challenged forum and jurisdiction for the third-party claim. Supreme Court initially dismissed the entire action – first-party, counterclaim, and third-party claim – on forum grounds, but the Appellate Division reversed, finding that this action properly belongs in New York. Appellants now ask this Court to overturn the Appellate Division’s decision, but they identify no abuse of discretion or rulings of law in conflict with prior precedent that would justify such relief. The decision below broke no new legal ground; it simply applied well-recognized and long-established rules governing forum non conveniens to the specific facts in the dispute at issue. While the Appellate Division’s decision is a matter of importance to the parties, it represents no departure from settled precedent and does not otherwise merit review by this Court. Mashreqbank PSC (“Mashreq”), a Dubai-based bank with offices in New York, filed the instant action against Ahmad Hamad Al Gosaibi & Brothers Co. (“AHAB”), a Saudi Arabian family business partnership, seeking recovery on a $150 million debt arising out of U.S. dollar foreign exchange transactions conducted through New York banks. AHAB responded by filing a counterclaim 4 against Mashreq and a third-party complaint against Maan Abdul Waheed Al Sanea (“Al Sanea”), who managed a division of AHAB and who was responsible for the purported debt on which Mashreq sued. AHAB’s third-party complaint alleged that transactions that gave rise to the Mashreq debt were part of a multi- billion dollar international Ponzi scheme perpetrated by Al Sanea, in which Al Sanea fraudulently incurred the Mashreq debt, falsely misusing AHAB’s name and credit, and then wrongfully converted to his own use the funds he had obtained from Mashreq. AHAB’s counterclaim alleged that, while Mashreq obviously had not planned on itself being victimized by Al Sanea, it was nonetheless also at fault by acting in concert with Al Sanea, when it aided and abetted his unlawful scheme by assisting him to disguise the very nature of these transactions. While Al Sanea’s overall Ponzi scheme was enormous in size and international in scope, involving the systematic misuse of AHAB’s good name and credit to borrow billions in funds from lenders around the world and then pilfer the proceeds to Al Sanea’s own use, AHAB’s claim here does not seek relief for the totality of Al Sanea’s fraud. It seeks recovery only in respect of the one aspect of that fraud that occurred in New York: the series of phony foreign exchange (“f/x”) transactions that Al Sanea and Mashreq conducted through the calculated misuse of New York banks. Over a period of years, Al Sanea and Mashreq engaged in nearly $5 billion in New York based f/x transactions, with the last $150 million 5 stolen by Al Sanea in New York. The use of New York banks was not a tangential or inconsequential component of these f/x deals; it provided the essential structure that allowed Al Sanea to obtain and roll over a series of ever-increasing, short-term loans by disguising them as mere currency swaps and then diverting the proceeds of these loans to his own purposes. It was not a coincidence that Al Sanea’s f/x fraud happened here. In order to succeed, it could only happen in New York. This State is not just a proper forum for litigating this f/x fraud; it has a uniquely compelling interest in adjudicating this dispute: the protection from misuse of its banking system, on which much of international commerce depends. New York courts, moreover, are particularly well-suited to litigate this dispute due to their ability to obtain and hear the evidence concerning it. In rejecting a forum non conveniens dismissal, the Appellate Division correctly recognized the centrality of New York to the instant dispute, the critical interest of New York in protecting its banking system from abuse, and the appropriateness of New York serving as the forum for the dispute’s adjudication. In their efforts to challenge the decision below, appellants Al Sanea and Mashreq (which initiated suit in this forum and later apparently thought better of it) resort to gross mischaracterizations as to the fundamental nature of the instant dispute and the Appellate Division’s decision concerning it. In appellants’ telling, this case concerns an alleged fraud carried out entirely in Saudi Arabia and 6 elsewhere in the Middle East, with only the most tangential connection to New York. It is a case which, according to appellants, the Appellate Division could justify keeping here only by adopting a new, “bright-line” rule precluding a forum- based dismissal if the dispute involves virtually any ministerial transfer of funds through a New York bank. Even then, say appellants, the Appellate Division had to largely ignore the traditional Pahlavi factors for testing forum non conveniens motions in order to retain the case here. Appellants’ arguments founder, however, once their distortions of AHAB’s allegations are exposed. First, Al Sanea’s contention that this case centers in Saudi Arabia, because it turns on issues of authority and knowledge having nothing to do with New York, ignores AHAB’s well-pleaded allegations that Al Sanea, with Mashreq’s help, structured what were actually extraordinary short-term loans to fit the appearance of f/x transactions precisely so they would appear to comply with the form followed by New York banks for such transactions in order thereby to conceal their fraudulent nature. Second, Al Sanea’s insistence that the theft of the funds that these deals generated took place in Dubai, impermissibly and incorrectly disputes on this preliminary motion AHAB’s well-pleaded allegation that the theft occurred in New York. As the Appellate Division correctly pointed out, a motion seeking dismissal on forum grounds, like any preliminary motion, requires the court to accept the 7 truth of the non-movant’s allegations. It does not permit the movant to simply recast them into ones more to its liking. Third, AHAB did not argue for, and the Appellate Division did not adopt, any new or radically expansive “bright line” rule requiring New York courts to retain jurisdiction over all cases in which there is any use of New York banks, no matter how tangential. Tellingly, appellants are unable to quote any statement in the court’s decision below that expresses such a new rule. In fact, the decision below simply applied established precedent identifying a compelling New York interest in cases that allege fraudulent transactions that depend at their very core on misuse of bank accounts in this State, including use of such accounts to make transfers that unlawfully convert the transferred funds. The court’s decision did not in any way sanction use of New York courts to adjudicate every dispute with any tangential connection to a New York bank. Instead the court concluded that, here, the connection AHAB has alleged is anything but tangential; it is central to the bogus f/x split-value trading scheme that Al Sanea devised, and was the very vehicle by which Al Sanea stole more than $150 million from AHAB when he wrongfully transferred those funds from one New York bank account to another. Finally, appellants downplay, indeed, denigrate the critical role that New York courts’ far superior access to sources of proof plays in the circumstances of the instant case. Yet the Appellate Division properly rejected appellants’ 8 contention that the sole relevant considerations for forum non conveniens purposes on the question of whether an alternative forum exists are whether the parties are subject to service or process in that forum, and whether the subject matter of the dispute can be litigated there. As the court below recognized, the issue of whether an appropriate alternative forum exists is far more nuanced and includes evaluation of several factors, not the least of which is access to sources of proof, that help to assess whether the dispute can be “better adjudicated” there. See Islamic Republic of Iran v Pahlavi, 62 NY2d 474, 479, 478 NYS2d 597, 599 (1984). The court thus did not just examine in the abstract such matters as the location and language of witnesses and documents, but correctly considered whether these sources of proof would actually be available for use in the proposed alternative forum. In sum, the Appellate Division fully and appropriately applied the factors this Court approved in Pahlavi, and it properly refused to be misled by appellants’ mischaracterization of the claim AHAB alleged or the law by which it is measured. There is no occasion for this Court to disturb that analysis. This case raises one further issue, one which this Court needs address only if it were to reverse the decision rejecting a forum non conveniens dismissal of the third-party complaint against Al Sanea. That issue concerns Supreme Court’s authority to act sua sponte to dismiss the first-party claims along with the third- party claims when there was no motion by the parties for such relief. Relying on 9 this Court’s decision in VSL Corp. v Dunes Hotels & Casinos, Inc., 70 NY2d 948, 524 NYS2d 671 (1988), the Appellate Division properly ruled that Supreme Court lacked such authority and thereby reversed its dismissal of these claims. Its decision was squarely in accord with controlling precedent. SUMMARY OF FACTS For purposes of conducting a proper analysis of forum non conveniens, it is critically important to appreciate the limited scope of the instant action as framed by AHAB’s pleadings rather than by Mashreq’s and Al Sanea’s tactical reconstruction of those pleadings. AHAB is the victim of a massive Ponzi scheme conducted by Al Sanea, a scheme that is worldwide in scope. The instant action, however, does not seek to adjudicate Al Sanea’s liability for the entirety of that multi-billion dollar fraud scheme. It seeks recovery only as to one aspect of that overall scheme: Al Sanea’s fraudulent foreign exchange transactions with Mashreq conducted through the misuse of New York banks. The larger scheme is thus an important backdrop to the specific fraudulent transactions here, but it is the part of that scheme that involved bogus f/x transactions with Mashreq in New York and subsequent conversion that is crucial to the forum analysis at issue on this appeal. I. Al Sanea’s Worldwide Ponzi Scheme In 1981, Maan Al Sanea, a citizen of Kuwait, married into the prominent Saudi Arabian family, the Al Gosaibis. R. 108, ¶ 12. The Al Gosaibi family 10 owned and operated AHAB, a general partnership, located in Saudi Arabia, which engaged in wide-ranging and successful businesses throughout the southern part of that country, including oil field servicing, shipping, hotels, soft drink bottling, food service, and other commercial ventures. R. 107-08, ¶ 11. As a new member of the Al Gosaibi family, Al Sanea was given a portion of AHAB’s business to manage: a division of AHAB known as the Money Exchange. As its name implies, the Money Exchange primarily provided currency remittance services to foreign workers in Saudi Arabia, conducted credit card and travel-related services and owned a portfolio of Saudi shares. R. 107-08, ¶¶ 11-12. Al Sanea returned this kindness and the trust placed in him by the Al Gosaibi family by fraudulently usurping AHAB’s credit and systematically plundering its assets in order, surreptitiously, to line his own pockets and finance his own separate business empire. R. 104-05, ¶ 3. Al Sanea’s scheme to bilk AHAB was complex and multifaceted, but it was based on a simple principle. Vested by the family with the management of the Money Exchange, Al Sanea misused that authority to enter into thousands of unauthorized financial transactions, all purportedly in AHAB’s name and all based on its credit, but emphatically not for AHAB’s benefit. Almost as a matter of routine, Al Sanea forged the signatures of AHAB’s managing partner on financial documents that authorized these various transactions, including straight term loans, 11 letters of credit for purported trade purchases, foreign exchange transactions, and numerous other banking arrangements with hundreds of banks worldwide. R. 19, R. 91 ¶ 13. He maintained a secret ledger at the Money Exchange, separate from its operating accounts, in which he kept track of his fraudulent transactions (R. 91 ¶ 12), and he instructed hand-picked subordinates loyal to him not to divulge to AHAB management anything having to do with his illicit dealings. R. 90-91 ¶ 10, R. 107 ¶¶ 9-10. Operating his scheme as a classic Ponzi structure, Al Sanea used newly raised money to pay off old debts, all the while siphoning off as much as possible to “false flag” accounts, nominally held for AHAB but actually controlled exclusively by Al Sanea, and then channeling the money into his own, separate business and personal accounts. R. 88 ¶ 2, R. 89 ¶ 8. His scheme ultimately unraveled, but not as a result of the 2009 “worldwide financial crisis,” as Al Sanea, without a shred of record support, suggests. Al Sanea Brief at 7. It collapsed because, like all Ponzi schemes, it eventually expanded in size beyond the point where it could be sustained. When the scheme finally toppled, it left Al Sanea fabulously wealthy from this massive influx of ill-gotten money and left AHAB exposed to nearly $10 billion in claims from banks and other creditors around the world. Id. 12 As might be expected with a scheme of this staggering scope, Al Sanea’s fraudulent transactions have led to litigation in a number of different countries around the world. Hundreds of lenders have sought recovery from AHAB, and AHAB, in turn, has sought to hold Al Sanea accountable for his dishonesty and faithlessness and to chase the assets he plundered and has now largely hidden. AHAB has initiated a comprehensive action in the Cayman Islands against Al Sanea and his numerous businesses incorporated in that country (R. 69 ¶ 13, R. 1454), an action in which Al Sanea fought jurisdiction, lost, and then defaulted. AHAB also has brought and defended numerous more discrete actions in other fora limited to specific fraudulent transactions. The instant action is one of those. II. Al Sanea’s Fraudulent Foreign Exchange Deals with Mashreq One of the ways that Al Sanea misused his position at the Money Exchange to borrow huge sums of money based on AHAB’s credit was to conduct what on the surface appeared to be routine and essentially risk-free foreign exchange (“f/x”) transactions. R. 94 ¶¶ 21-22. For four years, Al Sanea engaged in hundreds of these transactions with Mashreq, which became one of his favorite banking partners. R. 92 ¶ 16, R. 104 ¶ 6. Each of these purported f/x deals involved the purchase of U.S. dollars from Mashreq in New York, with payment made into a New York bank account held in AHAB’s name (but controlled by Al Sanea), balanced by a payment in Saudi riyals made, at a later date, to a Mashreq account 13 in Saudi Arabia. R. 94 ¶ 21, R. 104 ¶ 2. These deals with Mashreq, however, were not true f/x transactions. There was no exchange risk, because the Saudi Riyal is pegged to the dollar at a fixed rate. In reality, they functioned as high-cost, short- term loans, made possible by a gap of up to twelve days between what was effectively a U.S. dollar loan and a Saudi riyal repayment. R. 94 ¶ 21(b), R. 96 ¶ 23. This huge volume of transactions – totaling more than $5 billion – had no genuine currency exchange purpose for AHAB’s comparatively meager remittance business, a fact that would have been obvious to anyone at Mashreq. R. 96 ¶ 24 – R. 97 ¶ 25, R. 105 ¶ 4. Al Sanea counted on the facial regularity of these f/x deals, however, to avoid any genuine scrutiny. Like all Ponzi schemes, Al Sanea’s depended on ever-increasing access to money, both to fund his expanding misappropriations and to service the growing debt incurred to finance these misappropriations. These bogus f/x deals with Mashreq admirably accomplished both purposes, expanding in frequency and size over the four-year period. In the last of these f/x transactions, Mashreq paid $150 million into an account at Bank of America (“BOA”) in New York. R. 113 ¶ 25. Knowing that the scheme was finally crumbling under its own weight, Al Sanea initially tried to transfer the funds in the BOA account to his wife. R. 705 ¶ 11. When even his henchmen balked at this obvious theft, he stole the funds by transferring them to an account in the name of Awal Bank BSC (“Awal”) held at 14 the Hong Kong and Shanghai Banking Corporation’s (“HSBC”) New York branch. R. 704 ¶ 10 - R. 705 ¶ 14, R. 113 ¶ 26. Awal is a Bahraini bank wholly owned by Al Sanea and completely under his control. R. 113 ¶ 26. This bank-to-bank transfer in New York was intended to and did put those funds beyond AHAB’s access. As the Appellate Division correctly found, all of the f/x transactions were executed in New York, and Al Sanea’s theft of the funds that are the specific subject of the instant action took place in New York. R. 1806-07. III. The F/X Scheme’s Core Nexus to New York’s Banks To appreciate the centrality of the New York banks to this scheme, it is essential to understand how these f/x deals were designed by Al Sanea and Mashreq to work. Indeed, a proper understanding of how these f/x deals worked, how they served Al Sanea’s fraudulent purpose, and how they required the systematic misuse of New York’s banks (and only New York’s banks) in order to succeed, is critical to this appeal. We outline the structure below:  Ordinarily, a currency exchange involves almost no commercial risk. Since the exchange is usually simultaneous, there is no credit risk that one party might default on payment and no currency risk due to fluctuations in the rate of exchange. R. 93 ¶ 19 – R. 94 ¶ 20.  Here, however, Al Sanea and Mashreq engaged in “split-value” f/x deals, whereby the two currencies are not exchanged simultaneously. Such deals typically are used to accommodate the different calendars observed by different cultures, here Muslim and non-Muslim, so that a payment made during a work day in one country can be matched on the other 15 country’s next work day, resulting in a delay of only two or three days. For example, a payment from a Western country made on a Friday is typically matched by a payment from a Middle Eastern country on the following Sunday. Id.  Where the exchange is U.S. dollars for Saudi riyals, this brief delay intrinsic to “split-value” deals entails no currency risk because the Saudi riyal by law is pegged to the U.S. dollar, precluding any fluctuation between the two currencies during the interim. R. 94 ¶ 20.  By using this structure, these f/x deals therefore appeared to be low-risk liquidity management, enabling Al Sanea and Mashreq to engage in them without attracting the attention that might ____ obtain from the bank’s credit and risk management divisions. This lack of scrutiny was critical to Al Sanea’s scheme, since he knew that this volume of short-term lending could not be justified under banking standards as necessary for AHAB’s various business ventures, R. 96 ¶ 24, which were largely self- sustaining, much less for the Money Exchange’s comparatively tiny currency remittance business. R. 105¶ 4, R. 713 ¶ 6, R. 1135.  Critically, Al Sanea could accomplish this massive, scrutiny-free borrowing through split-value f/x deals only by using New York banks, because f/x deals are the purchase or exchange of currencies as commodities, and deals involving the purchase of U.S. dollars can only be done in this volume using banks in New York.  Al Sanea’s scheme was to introduce much longer split-value dates than usual for f/x transactions – even up to twelve days – and, as an incentive to look the other way, to offer Mashreq an exchange rate not pegged to the fixed riyal-dollar rate, but much higher than would have been usual even for commercial short-term loans. R. 94 ¶ 21, R. 95 ¶ 21, R. 96 ¶ 25 - R. 97 ¶ 25.  This allowed Al Sanea to engage in ever-expanding, short-term borrowing, conducted without attracting the scrutiny typically given to 16 such extensive borrowing. And it allowed Mashreq to extract profits far in excess of what it could command for genuine split-value f/x transactions. R. 95 ¶ 22, R. 96 ¶ 24 - R. 97 ¶ 25. In short, misuse of the split-value, dollar-for-riyal f/x structure, which could only be accomplished through New York banks, both to carry out and disguise this scheme, was critical to its success. Contrary to appellants contentions, New York’s banks were not a mere conduit to pass funds through, incidental or peripheral to the fraud; they were the critical component of an elaborate fraud that depended on the facial regularity of split-value f/x transactions routinely processed through New York banks and that could not be carried out through any other banking system. The Appellate Division so recognized when it identified a compelling New York interest in the protection of this State’s native banking system from such misuse. R. 1805. IV. Procedural Background The procedural posture of this case is pertinent for two reasons. First, it defines the scope of the instant appeal; second, it puts into context the Appellate Division’s determination that Supreme Court improvidently acted sua sponte in dismissing the first-party claims despite the absence of any motion by one of the parties for such relief. As to the first, this appeal arises on certification by the Appellate Division of the question whether, as a matter of law, it acted properly when it reversed 17 Supreme Court’s dismissal on forum non conveniens grounds. Appellants devote considerable argument to whether Supreme Court properly weighed the Pahlavi forum factors and whether the dissenting justices in the Appellate Division had the better argument as to how those factors should be weighed. But their argument is misplaced. It is beyond dispute that weighing the factors bearing on forum non conveniens is committed to the sound discretion of the lower courts, and, where the Appellate Division acts, it is not limited to an “abuse of discretion” standard in reviewing a forum decision by Supreme Court but may independently exercise its own discretion in determining whether dismissal is appropriate. See, e.g., Intertec Contr. A/S v Turner Steiner Int’l S.A., 6 AD3d 1, 3-4, 774 NYS2d 14, 15-17 (1st Dept 2004); Broida v Bancroft, 103 AD2d 88, 93-94, 478 NYS2d 333, 336-37 (2d Dept 1984); CPLR 327. This Court is not similarly unconstrained. Its function is to review issues of law and not to substitute its own exercise of discretion for that of the Appellate Division. Hence, the issue before this Court is whether the Appellate Division majority abused their collective discretion in rejecting a forum dismissal and not whether this Court might prefer how Supreme Court or the Appellate Division’s dissenting justices weighed the forum factors. As will be shown, the Appellate Division majority properly identified and weighed the factors pertinent to forum 18 non conveniens in the instant case, and there is no rational basis for argument that its decision represented an abuse of discretion. As to the second, it is axiomatic under this Court’s jurisprudence that a case may not be dismissed on forum non conveniens grounds based on the court’s own motion and in the absence of a motion by one of the parties. VSL Corp., 70 NY2d at 949, 524 NYS2d at 671. Here, Mashreq voluntarily selected New York as the forum for its debt action against AHAB, and Mashreq’s suggestion to this Court that it was “forced to file suit in New York” (Mashreq Brief at 9) is pure nonsense. As will be discussed more fully in the argument on this issue, at no time did Mashreq ever seek dismissal of its own claim on grounds that it had selected an improper forum. To the contrary, it repeatedly argued that its complaint could properly be adjudicated here. And at no time did Mashreq ever move to dismiss AHAB’s counterclaim on forum grounds. It only belatedly advised that if Supreme Court were to dismiss AHAB’s third-party claim against Al Sanea, Mashreq “would not object” to litigating its own claim in the UAE. R. 1453. In short, Mashreq simply volunteered that it would acquiesce if the court took it upon itself – the epitome of sua sponte action – to dismiss Mashreq’s complaint. For his part, while Al Sanea moved to dismiss AHAB’s third-party claim, he never moved to dismiss the first-party claims. At one point in oral argument, Al Sanea’s counsel, acting by his own description as an “amicus” and thus not as 19 counsel for a party making his own motion, suggested that the court might also wish to dismiss the first-party claims along with the third-party claim, again, unambiguously suggesting that the court engage in sua sponte action but not actually moving for such relief. R. 1451. Al Sanea’s only cognizable concern – as his counsel’s reference to himself as a sort of amicus showed that he understood – was with AHAB’s third-party complaint. He had and has no interest one way or the other in the first-party claims between Mashreq and AHAB. On this procedural record, it is unassailable that in dismissing the first-party claims Supreme Court acted sua sponte and not on any motion by a party. ARGUMENT The Appellate Division duly applied the factors this Court recognized in Pahlavi as controlling on the issue of forum non conveniens. Contrary to appellants’ submissions, in assessing Al Sanea’s motion to dismiss AHAB’s third- party complaint, the Appellate Division properly exercised its discretion when it decided to give significant weight to this State’s compelling interest in protecting New York’s banking system from abuse in circumstances where these banks are made the very vehicle by which fraud and theft are committed. R. 1805. The court did not determine, as appellants charge, that the existence of an adequate alternative forum to resolve the dispute is a prerequisite to any forum dismissal. Instead, it properly considered, as an important issue (albeit a non-dispositive one) 20 in any forum analysis whether there is any foreign court capable of gaining access to critical sources of proof on this dispute, and it correctly analyzed the location and language of key witnesses and documents and the possible application of foreign law as bearing on that very issue. R. 1810-12. Appellants point to nothing in the Appellate Division’s analysis that even remotely can be called an abuse of discretion. The Appellate Division also correctly concluded on the record before it that Supreme Court had improperly acted sua sponte in dismissing the first-party complaint and counterclaim. R. 1800-01. It is beyond dispute that no party ever moved, formally or informally, to dismiss the first-party claims on forum grounds. R. 1803-04. Al Sanea expressly acknowledged that he had no interest in those claims, and his counsel only suggested their dismissal, not as a movant, but as a self-appointed amicus. R. 1451. Mashreq repeatedly argued that its complaint was properly filed in a New York forum, R. 1465; it was silent as to the counterclaim; and in the end it simply advised that it would not object if the court dismissed on its own motion, which it ultimately did. R. 1466-1467. This is the very essence of sua sponte action, and this Court’s settled jurisprudence precludes it. 21 I. The Appellate Division Properly Determined that AHAB’s Third-Party Complaint Should Not Be Dismissed on Forum Non Conveniens Grounds. In its Pahlavi decision, this Court listed the traditional factors bearing on forum non conveniens, including: (i) the burden that resolution of the dispute may impose on New York courts; (ii) the potential hardship to the defendant in having to litigate here; (iii) whether an alternative forum is available in which the suit may be brought; (iv) whether the parties to the action are residents or nonresidents of this State; and (v) whether the transaction out of which the dispute arose occurred primarily here or in a foreign locale. 62 NY2d at 479, 478 NYS2d at 599-600. This Court also noted that the burden rests on the party challenging the New York forum “to demonstrate relevant private and public interest factors which militate against accepting the litigation,” factors identified by the United States Supreme Court in Piper Aircraft Co. v Reyno, 454 US 235 (1981). Pahlavi, 62 NY2d at 479, 478 NYS2d at 599-600. Piper Aircraft, in turn, referenced those factors as listed in Gulf Oil Corp. v Gilbert, 330 US 501, 508 (1947), including: (vi) relative ease of access to sources of proof; (vii) use of compulsory process to obtain the attendance of unwilling witnesses and the costs of obtaining attendance of willing witnesses; and (viii) all other practical problems that affect easy, expeditious, and inexpensive trial of the case. As this Court recognized in Pahlavi, the ultimate 22 goal is to determine whether the dispute properly belongs in New York or “would be better adjudicated elsewhere.” 60 NY2d at 479, 478 NYS2d at 599-600. Significantly, this Court also held in Pahlavi that “[t]he application of the doctrine of forum non conveniens is a matter of discretion to be exercised by the trial court and the Appellate Division.” 62 NY2d at 478, 478 NYS2d at 599. That discretion is exercised through the application and weighing of the factors identified by this Court. So long as the Appellate Division “takes these various factors into account in making its decision, there has been no abuse of discretion reviewable by [the Court of Appeals].” Id. at 479, 478 NYS2d at 600. As shown below, it is indisputable that the Appellate Division carefully considered and weighed the appropriate forum factors pertinent to the circumstances of this case. While it reached a different view from that of Supreme Court (and from that of the appellate panel’s dissenting justices), it is the weight given to those factors by the panel majority that constitutes the decision below, and that decision cannot reasonably be deemed to constitute a reversible abuse of discretion. A. The Appellate Division Properly Found New York’s Paramount Interest in Protecting This State’s Banks from Misuse as an Instrument of Fraud and Theft to be a Pivotal Forum Non Conveniens Issue. Of the various factors listed in Pahlavi, the first is whether the action imposes a burden on New York’s courts. 62 NY2d at 479, 478 NYS2d at 600. The burden issue, of course, deals with the potential complexities, including the 23 expenditure of judicial time and administrative expense, that the action is likely to entail. But the test is not whether the case imposes any burden on the New York courts. All cases impose some burden. Rather, as Al Sanea himself aptly put it, the issue is whether that burden is “unjustified” because there is an “insubstantial connection” to the interests of this State. Al Sanea Brief at 21. Appellants’ challenge to the Appellate Division’s conclusion that this Pahlavi factor strongly supports retaining this New York forum rests on a remarkable set of mischaracterizations of both the underlying facts and the Appellate Division’s construction of the controlling issues of law. They argue that the decision below turned on the court’s adoption of a new, bright-line rule precluding dismissal on forum grounds whenever the dispute has any connection, however tangential or ministerial, to New York banks. They insist that the court accept their recasting of AHAB’s allegations, disregarding the New York nexus that those allegations detail and adopting instead appellants preferred rendering of those allegations as concerning issues of authority centering in Saudi Arabia. As shown below, the Appellate Division did not adopt nor apply any such bright-line rule. Instead, it faithfully adhered to long-standing precedent in concluding that this State has a paramount interest in protecting its banking system from being used as the very instrument of fraud and theft, and finding that AHAB had alleged precisely such a nexus with that compelling state interest. Further, the 24 Appellate Division rejected appellants’ attempt to recast AHAB’s allegations into ones they feel more comfortable defending, instead properly crediting AHAB’s well-pleaded claims that these f/x deals centered in New York and depended at their core on the misuse of New York’s banks to structure the deals to avoid genuine scrutiny and to steal the funds they produced. R. 1807. AHAB’s necessary task on the instant appeal is to deconstruct the numerous mischaracterizations on which appellants’ arguments depend. Once these mischaracterizations are understood for what they are, the decision below is self- evidently correct and should be affirmed by this Court. 1. New York’s Paramount Interest in Prevention of Misuse of this State’s Banking System In case after case, New York courts have declared that this State has a powerful, indeed, paramount interest in protecting its banking system from misuse as an instrument of fraud. And that interest is undiminished by the fact that the defrauder keeps his own physical distance from the place where his fraud plays out, acting through subordinates and contacts through electronic means to carry out his scheme. In a case with striking parallels, New York courts previously upheld the refusal to dismiss on forum non conveniens grounds an action involving money laundering through financial transactions that, like this one, “span[ned] two oceans and four continents.” Banco Nacional Ultramarino, S.A. v Chan, 169 Misc 2d 25 182, 185, 641 NYS2d 1006, 1008 (Sup Ct, NY Cnty 1996), aff’d 240 AD2d 253, 659 NYS2d 734 (1st Dept 1997). The court recognized that, wherever the scheme had been planned, it ultimately and necessarily was implemented though misuse of New York bank accounts to convert funds stolen in one country in order to transfer them to another. As the Banco Nacional court found: The allegation that Money Center used its [Bank of New York (“BONY”)] account to receive and transfer the stolen funds, thus converting the money, satisfies the statutory requirement that the tort occur within the State. Id. at 188, 641 NYS2d at 1009. The court then used a vivid and apt analogy in explaining its decision to keep the case in New York: First, assuming the truth of the allegations, Money Center is accused of having committed an affirmative act in New York, money laundering, via instructions conveyed to BONY. Second, to allow a defendant to conspire and direct tortious activities in New York, in furtherance of that conspiracy, and then avoid jurisdiction because it directs those activities from outside the State or country, is to ignore the reality of modern banking and computer technology in the end of the twentieth century! A defendant with access to computers, fax machines, etc., no longer has to physically enter New York to perform a financial transaction which may be criminal or tortious, i.e., conversion. He may secrete himself and/or direct activities from locations where jurisdiction may be impossible to acquire, including a boat beyond the three-mile limit. Id., 641 NYS2d at 1009-10 (citations omitted). The Banco Nacional analysis could have been written for the instant action. Although Al Sanea may have devised his scheme in Saudi Arabia, like the money launderer in Banco Nacional, he implemented the relevant portion of it here in New York, and New York is 26 plainly an appropriate forum in which to hold him liable for the damages caused by his criminal conduct in this State. Appellants advance two lines of argument against application of these established principles here. First, they contend that the Appellate Division’s decision turns on that court’s adoption of a new, bright-line rule. As Al Sanea put it, this rule would require New York courts to refuse any forum non conveniens dismissal in “virtually any action alleging misconduct in relation to a New York banking transfer” or that “in any way touched New York’s banking system.” Al Sanea Brief at 1, 6. Second, they criticize the Appellate Division for relying on cases that arose outside the forum non conveniens context in support of its view that this State has a paramount interest in preventing misuse of New York’s banks. Both arguments unravel on close inspection, as the Appellate Division recognized. Contrary to appellants’ repeated assertions, the Appellate Division did not announce any new, bright-line forum non conveniens rule that precludes dismissal of any action that alleges any use of a New York bank account, regardless of how tenuous and peripheral it is to the claim in dispute. Appellants point to nothing in the opinion below that announces any such new rule. The dissenting opinion, while disagreeing with how the majority weighed the forum factors, does not accuse the majority of adopting such a new rule. And AHAB’s own brief before the Appellate Division expressly disavowed any request that the 27 court apply such a rule. There, AHAB argued: There is a crucial distinction between disputes in which New York banks play only a marginal role and disputes like this one in which the misuse of New York banks, including the implementation of tortious conversion occurring in New York, is central to the controversy. AHAB does not suggest that the incidental use of the New York banking system can suffice to establish personal jurisdiction, much less make New York the preferred forum. As held in Amigo Foods Corp. v Marine Midland Banc-N.Y., 39 NY2d 391, 396 (1976), “standing by itself, a correspondent bank relationship, without any other indicia or evidence to explain its essence, may not form the basis for long-arm jurisdiction,” and by similar logic may not support New York as the more appropriate forum. AHAB App. Div. Brief at 23-24 (emphasis in original). In short, AHAB did not advocate nor did the court below approve any departure from the principle announced in Amigo Foods. The further criticism that appellants level at the Appellate Division is that it relied on cases outside the forum non conveniens setting in identifying New York’s interest in protecting its banks from being used as instruments of fraud, theft, or other misconduct. Yet, as the Appellate Division recognized, and as this Court’s own jurisprudence confirms, the issue is the strength of this State’s interest in the underlying dispute, regardless of the context in which it arises. As this Court has recognized, when the New York banking system is instrumental to the transaction at issue and is used by the defendant as the very vehicle of his misconduct, New York’s interests have been deemed “overriding and paramount.” J. Zeevi & Sons, Ltd. v Grindlays Bank (Uganda) Ltd., 37 NY2d 28 220, 227, 371 NYS2d 892, 898 (1975). In J. Zeevi & Sons, an Israeli partnership was entitled to draw payment in U.S. dollars on a letter of credit opened in its favor by a Ugandan bank through its correspondent bank in New York but subsequently repudiated by the bank through instructions to its New York correspondent not to transfer funds. The Court stated: New York has an overriding and paramount interest in the outcome of this litigation. It is a financial capital of the world, serving as an international clearinghouse and market place for a plethora of international transactions, such as to be so recognized by our decisional law. Id. (citations omitted); see also Wells Fargo Asia Ltd. v Citibank, N.A., 936 F2d 723, 726-27 (2d Cir 1991) (citing J. Zeevi & Sons); Indosuez Int’l Fin. B.V. v Nat’l. Reserve Bank, 279 AD2d 408, 408-09, 720 NYS2d 102 (1st Dept 2001), aff’d 98 NY2d 238, 746 NYS2d 631 (2002) (also citing J. Zeevi & Sons in the personal jurisdiction setting). In J. Zeevi, this Court addressed the issue of New York’s interest in the transaction in the setting of choice of law, but its analysis is no less instructive for choice of forum. Similarly, the same analysis of New York’s interest in preventing abuses of its banking system underlies both the personal jurisdiction and the forum non conveniens decisions in Banco Nacional. The underlying factor – the strength of the New York connection and this State’s interest in the dispute – is the same in all of these settings. New York courts routinely, and quite properly, rely on cases 29 in such analogous settings in discussing the state interest factor. For example, in Ehrlich-Bober & Co. v Univ. of Houston, 49 NY2d 574, 581-82, 427 NYS2d 604, 608-09 (1980), this Court analyzed choice-of-law and long-arm jurisdiction decisions for purposes of the separate issue of comity. The Court emphasized New York’s interest as the “preeminent commercial and financial nerve center of the Nation and the world,” noting that although such issues as comity, personal jurisdiction, and forum “are analytically distinct, there is no reason in law or logic why they may not overlap, or even coincide.”1 Id. This Court recently addressed a similar issue in the personal jurisdiction setting. In Licci v Lebanese Canadian Bank, 20 NY3d 327, 960 NYS2d 695 (2012), the Court reiterated this State’s compelling public interest in assuring the integrity and transparency of the New York financial system. The Court focused on the fact the defendant did not just maintain a correspondent account in New York but used it “‘dozens’ of times” in wiring funds that were intended to support terrorist attacks against Israel. Id. at 340, 960 NYS2d at 703. Rejecting the defendant’s contention that the mere use of a New York correspondent bank account is an unimportant and incidental contact with this State, this Court unanimously held: 1 See also Am. BankNote Corp. v Daniele, 45 AD3d 338, 339-40, 845 NYS2d 266, 267-68 (1st Dept 2007) (discussing in the context of both personal jurisdiction and forum defendants’ New York bank accounts as “central” to their fraud scheme). 30 [C]omplaints alleging a foreign bank’s repeated use of a correspondent account in New York on behalf of a client – in effect, a ‘course of dealing’ … show 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, 960 NYS2d at 702 (citations omitted). The Court further ruled that this “repeated use of the correspondent account shows not only transaction of business, but an articulable nexus or substantial relationship between the transaction” and the plaintiffs’ claims. Id. at 340, 960 NYS2d at 703. The same considerations that informed the jurisdictional analysis in Licci underlie the forum analysis here. In structuring his bogus f/x deals, Al Sanea counted on the appearance of transparency offered by the New York banking system in what passed for routine foreign exchange transactions to pull off his fraud. Licci is a personal jurisdiction case. Yet the strength of New York’s interest in the impact of a massive fraudulent transfer scheme on the dependability and transparency of the banking system informs both the quality of a defendant’s contacts for jurisdictional purposes and the degree of this State’s interest in the dispute. Efforts to confine this interest to the personal jurisdiction context were repudiated in Ehrlich-Bober, 49 NY2d at 582, 427 NYS2d at 609, as cited with approval in Licci. 20 NY3d at 335-337, 960 NYS2d at 699-701. In sum, the Appellate Division properly relied on J. Zeevi and Ehrlich-Bober as articulating New York’s compelling interest in adjudicating disputes that 31 involve at their core the fundamental misuse of this State’s banking system, an interest that informs forum analysis just as much as it does jurisdictional, comity, and choice of law analyses. And it focused on that compelling interest not to promulgate a new, bright-line rule but simply to apply longstanding New York jurisprudence in assessing one of the key factors in forum non conveniens analysis: the public interest of the forum in adjudicating the dispute. 2. The Nature of the Instant Dispute and Its New York Nexus As described in detail in AHAB’s allegations, Al Sanea’s misuse of the New York banking system was anything but incidental, tangential, or ministerial. It was wholly dependent upon Al Sanea’s fraudulent use of the split-value, f/x structure that only New York banks could provide. It went to the core of the fraud and was the sole vehicle for the ultimate theft. Appellants’ strategy here, as it was below, is to miscast AHAB’s allegations as ones centering not in New York but in the Middle East. In appellants’ telling, this dispute is not about fraudulent misuse of New York banks but about whether Al Sanea was authorized by AHAB to engage in financial transactions on the partnership’s behalf. Supreme Court adopted this false premise, announcing that the core dispute is “whether or not Al Sanea was authorized to do what he did.” R. 24. The Appellate Division, however, saw through Al Sanea’s attempt to misportray this dispute. R. 1807. This dispute is not about what authority AHAB 32 gave Al Sanea as its agent to act on AHAB’s behalf, and it does not require parsing the internal operations of a Saudi Arabian business partnership to determine the extent of that authority. Indeed, it is conceded that AHAB granted Al Sanea general authority to operate the Money Exchange and to engage in transactions concerning its operation on AHAB’s behalf. Rather, this dispute is about Al Sanea’s fraudulent use of New York bank accounts to structure and carry out bogus f/x transactions, not on AHAB’s behalf or for its benefit, but for Al Sanea’s own purposes. Whatever Al Sanea was authorized to do, he was not authorized to borrow money on the strength of AHAB’s credit so he could steal it. Such conduct can never be authorized, no more in Saudi Arabia than in New York. As the Appellate Division recognized, improper identification of the key issues in dispute can undermine a correct analysis of forum non conveniens. R. 1807-08. See, e.g., Overseas Programming Co., Ltd. v Cinematographische Commerz-Anstalt, 684 F2d 232, 235 (2d Cir 1982); R. Maganlal & Co. v M.G. Chem. Co., Inc., 942 F2d 164, 168 (2d Cir 1991).2 Here, Al Sanea mischaracterizes the nature of the action against him, distorting AHAB’s allegations into ones more to his liking, in order to portray the case as centered in Saudi Arabia rather than in New York. The issue is whether the claims actually 2 Al Sanea criticizes AHAB’s reliance on Overseas Programming on grounds that the case makes clear that it is the trial court’s obligation to construe the operative claims and not just accept plaintiff’s characterization of them. 684 F2d at 235 n. 7. AHAB has no quarrel with that formulation. What is clear is that the issues are determined by plaintiff’s actual claims and not by defendant’s mischaracterization of them. 33 made belong in New York, not whether a different set of claims would be better adjudicated elsewhere. Appellants nonetheless contend that the Appellate Division should not have credited AHAB’s allegations concerning the centrality of the bogus f/x deals and their reliance upon misuse of New York bank accounts, arguing that on a forum non conveniens motion the court is not obliged to accept the claimant’s well- pleaded factual allegations as true. Appellants cite no authority for this proposition. It is dead wrong. On any preliminary motion to dismiss, the claimant’s allegations must be accepted as true. What distinguishes a motion to dismiss for forum non conveniens (like motions challenging personal jurisdiction and other preliminary motions) from motions to dismiss for failure to state an actionable claim is that on the former the parties are not limited to the allegations of the complaint. The complaint’s allegations must be deemed true, but the parties are permitted to submit evidence, typically by sworn affidavits, bearing on facts specifically pertinent to the forum or other preliminary issues that are not fully developed in the complaint’s allegations. In the forum setting, this may include evidence concerning the location of witnesses and documents, identification of issues of foreign law, the availability of an alternative forum to hear the dispute, access to evidence in the alternative forum, and similar matters that typically are not addressed within the four corners of the complaint’s allegations. But apart 34 from the submission of such evidence bearing on these forum factors, the well- pleaded allegations of the complaint must be taken as true, as this Court has repeatedly recognized. This is precisely the rule applied by this Court in Ehrlich-Bober in the comity setting and by the federal court in Ancile Inv. Co, Ltd. v Archer Daniels Midland Co., No. 08 Civ 9492 (PAC), 2009 WL 3049604, at *1 n1 (SDNY Sept. 23, 2009), in the setting of forum non conveniens. In dealing with venue and forum motions, it is standard federal practice to accept “[a]ll well-pleaded allegations in the complaint bearing on the venue question generally . . . as true, unless contradicted by the defendant’s affidavits.” 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure: Civil § 1352 at 324 (3d ed 2004). The same practice is followed in New York’s courts. Appellants are therefore wrong in their assertion that the Appellate Division erroneously accepted AHAB’s contention that its claims in the instant action deal with wrongdoing centered in New York and instead should have credited appellants’ reformulation of those claims as principally involving issues of authority centered in Saudi Arabia. The court was obliged to accept AHAB’s formulation of its own claims and not appellants’ self-serving revision of those claims. In considering the issue of forum non conveniens, the Appellate Division thus properly focused on AHAB’s allegations that the fraud and theft at issue 35 occurred in New York, made possible by the systematic misuse of New York banks, and refused to be diverted by Al Sanea’s unsupported assertion that issues of authority and conduct in Saudi Arabia will predominate. R. 1807-08. The nature of the wrongful conduct at issue and the strength of its connection to New York, moreover, are not matters that depend on AHAB’s characterizations of its claims, but on the factual allegations that squarely assert this nexus. As detailed in the above Summary of Facts, AHAB has alleged that New York’s banks did not simply serve as a conduit for transfer of funds, with no other role in these transactions. The success of Al Sanea’s fraud was dependent upon the facial appearance of regularity conferred by conducting it as a foreign exchange transaction routinely carried out through New York banks. New York banks regularly process such transactions, including split-value deals (R. 470), another aspect of the structure that was essential to Al Sanea’s fraud, and it is through New York banks alone that such split-value f/x deals involving U.S. dollars for Saudi riyals can be conducted in such volume. It was through these same New York banks, moreover, that Al Sanea ultimately stole the U.S. dollar funds provided in the last of these f/x transactions, when he transferred the funds from a BOA account that was at least nominally held in AHAB’s name to an HSBC account in Awal’s name over which Al Sanea had complete control. R. 14, R. 113 ¶ 26. That Al Sanea’s objective in making this 36 transfer was to gain exclusive control of the funds as against AHAB is underscored by Al Sanea’s earlier abortive attempt to transfer them directly to his wife. R. 705 ¶ 11. Al Sanea now argues that the only actionable theft took place in Bahrain, when Awal refused AHAB’s demands for the funds, but AHAB’s complaint alleges otherwise, that Al Sanea’s own liability arose when he ordered the funds moved from the BOA account to the HSBC account in New York. R. 113 ¶ 26 - R. 114 ¶ 27-28. AHAB’s separate claim against Awal – which is no longer a party here due to its insolvency – does not negate its theft claim against Al Sanea, and the Appellate Division properly treated that claim as centering in New York.3 The instant dispute’s nexus with New York’s banks thus has nothing in common with the sort of tangential connection resulting from ministerial use of the banks to conduct routine transfers of funds that characterize the cases on which appellants rely. Cases like World Point Trading PTE, Ltd. v Credito Italiano, 225 AD2d 153, 649 NYS2d 689 (1st Dept 1996), A&M Exports v Meridien Int’l Bank, 207 AD2d 741, 616 NYS2d 621 (1st Dept 1994), First Union Nat’l Bank v Paribas, 135 F Supp 2d 443 (SDNY 2001), and Calgarth Invs., Ltd. v Bank 3 In yet another mischaracterization, Al Sanea asserts that AHAB “insist[s] that this case is about nothing more than a ‘theft of funds in New York’” (Al Sanea Brief at 40), yet the full sentence from AHAB’s earlier brief out of which Al Sanea plucked this quote shows the assertion to be false. There, AHAB contended, as it contends here, that New York has a specific and concrete interest “in a dispute that centers on the misuse of New York banks and the theft of funds in New York.” AHAB App. Div. Reply Brief at 9 (emphasis supplied). While theft of funds in New York, standing alone, is a sufficient nexus justifying retention of the dispute in this forum, AHAB’s allegations lay out a far more elaborate structural misuse of the split-value foreign exchange transactions that New York banks uniquely provide. 37 Saderat Iran, No. 95 Civ. 5332, 1996 WL 204470 (SDNY Apr. 26, 1996), are typical of the handful of letter of credit cases that involve foreign issuers and foreign beneficiaries of letters of credit securing foreign purchases of goods and a dishonor of the letter by a foreign bank, in which the sole New York involvement is its complete non-involvement: an anticipated reimbursement of funds by a confirming bank in New York that does not take place because of the foreign dishonor.4 Indeed, it is a stretch even to describe the role of these New York banks as “utterly tangential.” Appellants’ other cases are of the same stripe. In contrast, a fair reading of the allegations of AHAB’s third-party complaint and counterclaim can leave no doubt that Al Sanea’s misconduct here, part of one of the largest misuses of the New York banking system in history, fundamentally depended on New York banks for its structure and implementation and, accordingly, is of critical interest to New York. In sum, misuse of the New York banking system, both in structuring the f/x deals and in the ultimate theft of funds, was the core vehicle by which this scheme was accomplished. The Appellate Division was therefore indisputably correct in concluding that this constituted a powerful New York nexus in which this State’s 4 AHAB has no quarrel with the legal proposition stated in the cases cited on this issue by Al Sanea and Mashreq. Those cases are simply factually inapposite, involving disputes where the supposed nexus to New York was that nothing actually happened here. See Citigroup Global Mkts., Inc. v Metals Holding Corp., 45 AD3d 361, 845 NYS2d 282 (1st Dept 2007) (no New York bank involvement; assets held by a corporate stakeholder in interpleader action); Atsco Ltd. v Swanson, 29 AD3d 465, 816 NYS2d 31 (1st Dept 2006) (fraudulent conveyance in Malaysia with funds sent to New York). 38 interests are paramount, and its decision as to this important Pahlavi factor did not amount to an abuse of discretion. B. The Appellate Division Properly Weighed the Other Pahlavi Factors in Retaining this New York Forum. The Appellate Division engaged in a rigorous analysis of the other Pahlavi factors, especially those bearing on whether another forum exists where the instant dispute “would be better adjudicated.” 62 NY2d at 479, 478 NYS2d at 599. It was Al Sanea’s burden to demonstrate that litigation in his proposed alternative forum “will best serve the ends of justice.” See Silver v Great Am. Ins. Co., 29 NY2d 356, 361, 328 NYS2d 398, 402 (1972). His burden could not be satisfied by generalities; it required Al Sanea to provide “specific information” showing why his alternative forum, Saudi Arabia, should be preferred. Banco Ambrosiano v Artoc Bank & Trust, 62 NY2d 65, 74, 476 NYS2d 64, 68 (1984). Al Sanea utterly failed to make this showing. Indeed, the record below unequivocally established that Saudi Arabia cannot better adjudicate this particular international dispute. Appellants criticize the Appellate Division for even considering this factor, arguing variously that: (i) the availability of an adequate alternative forum is not a prerequisite under Pahlavi; (ii) in any event, the test for availability is simply whether the defendant is subject to process in the proposed forum and the subject matter can be litigated there; and (iii) issues concerning genuine access to sources of proof are federal court factors not to be applied in New York courts or, at least, 39 not “slavishly.” Each of these criticisms is baseless, and the Appellate Division acted properly in assessing whether an adequate alternative forum is both available and capable of deciding the instant dispute. AHAB did not argue nor did the Appellate Division rule that identification of an available alternative forum is an absolute prerequisite. The Pahlavi Court was clear, however, that “[w]ithout doubt, the availability of another suitable forum is a most important factor to be considered in ruling on a motion to dismiss . . ..” Id. at 481, 478 NYS2d at 601 (emphasis added). The Appellate Division properly considered this factor. R. 1810-11. Moreover, as Pahlavi recognizes, there is much more to the analysis of this factor than simply whether the defendant is amenable to suit and the foreign court permits litigation of disputes of the type in issue. As Pahlavi put it, the question is not just whether a foreign forum would entertain the dispute but whether it “would be better adjudicated” in that forum. Id. at 479, 478 NYS2d at 599. Al Sanea relies heavily on the First Department’s decision in Shin-Etsu Chem. Co., Ltd. v 3033 ICICI Bank Ltd., 9 AD3d 171, 777 NYS2d 69 (1st Dept 2004), as supporting his contention that availability of an alternative forum is determined solely by amenability to process and subject matter jurisdiction. In fact, in Shin-Etsu, the court did not confine its inquiry to these two issues. Indeed, the court expressly considered the procedures that the Indian courts would follow, exploring whether 40 the dispute would be subject to undue delays in that country and ruling on the basis of expert submissions that it would not. Id. at 178-80, 777 NYS2d at 74-76. Thus Shin-Etsu does not reject, but instead affirmatively supports, examination of the processes and procedures of the proposed alternative forum as part of the inquiry into whether the dispute will be “better adjudicated” there. Like Shin-Etsu, numerous cases examine whether the rules applied in the proposed alternative forum limit access to proof in a manner that compels the conclusion that the dispute cannot be “better adjudicated” there. See Waterways Ltd. v Barclays Bank PLC, 174 AD2d 324, 328, 571 NYS2d 208, 211 (1st Dept 1991); Republic of Lebanon v Sotheby’s, 167 AD2d 142, 145, 561 NYS2d 566, 568 (1st Dept 1990); Banco Nacional, 169 Misc 2d at 192, 641 NYS2d at 1012; Creditanstalt Inv. Bank AG. v Chadbourne & Parke LLP, 4 Misc 3d 481, 485-86, 778 NYS2d 863, 866-867 (Sup Ct, NY Cnty 2004). In making this nuanced determination, this Court frequently invokes the various private and public interest factors recited in the United States Supreme Court’s decisions in Piper and Gulf Oil, including the pivotal factor whether the foreign court will have access to necessary sources of proof. Numerous forum non conveniens decisions in the New York courts have turned on precisely this factor. See, e.g., Banco Nacional, 169 Misc 2d at 192, 641 NYS2d at 1012 (forum dismissal precluded by absence of discovery procedures and inability “to marshall . . . proof” in Nigeria in connection 41 with an action for fraud and conspiracy) (sic); Creditanstalt, 4 Misc 3d at 485-86, 778 NYS2d at 866-867(absence of pretrial discovery, right to jury trial, and recognition of tort of legal malpractice as making Russia an unsuitable alternative forum). Rather than make any real attempt to evaluate this factor, Al Sanea instead erects another straw man, arguing that there is no requirement that the access to sources of proof factor recognized in Piper and Gulf Oil “must be applied slavishly by every New York court.” Al Sanea Brief at 50-51. The Appellate Division adopted no rule of slavish application. It merely concluded that genuine access to sources of proof – the actual ability to obtain the testimony of witnesses so the dispute can be properly adjudicated – is highly significant to the forum analysis in the instant case. In assessing this issue, the Appellate Division properly credited the uncontroverted affidavit of AHAB’s expert in Saudi law showing that virtually all of the witnesses with pertinent testimony on the issues in dispute (i) could not be compelled personally to appear in Saudi Arabia, (ii) could not be required to appear by deposition for use in Saudi proceedings, or (iii) would be prohibited from testifying because of their personal interests in the dispute. R. 950-51 ¶ 19, R. 1811. As will be discussed more fully below, this submission established that it would be impossible to fairly and fully adjudicate this dispute in Saudi Arabia. 42 1. The Availability of Witnesses The Appellate Division correctly found that Supreme Court “simply made no factual findings whatsoever” on the ability to obtain testimony from witnesses with knowledge of the dispute and who are legally competent to testify about it. R. 1811. As the court concluded (id.): There is no finding that witnesses subject to a travel bar in Saudi Arabia would be precluded from testifying via some alternate means. Similarly, and perhaps more importantly, there is no finding that the witnesses could even testify in Saudi Arabia, Bahrain or the UAE. AHAB proffered that two of the witnesses with the most knowledge of the Al Sanea scheme reside in England and Los Angeles. Al Sanea identified no witnesses in his moving brief. It was only in reply that he listed a series of witnesses but failed to link their proposed testimony to the allegations of the third-party complaint. The ease of access to the testimony of key witnesses is determined by several different considerations. First, and foremost, it required the actual identification of who those witnesses are. Here, they are the persons directly involved in creating and operating the bogus f/x scheme, including Al Sanea and his primary subordinates. AHAB proffered a witness list that included the two Al Sanea subordinates most closely involved with his operation of the Money Exchange and especially with the f/x transactions here at issue: Mark Hayley, the Money Exchange’s General Manager, and Glenn Stewart, the CEO of The International Banking Corporation, which Al Sanea established to assist in his scheme. The most important witness to Al Sanea’s fraudulent conduct, Mark 43 Hayley, lives in London, will be available for deposition, and likely will agree to come to New York to testify.5 Glenn Stewart, another Al Sanea co-conspirator, now lives in California and is subject to deposition in that state at the behest of a New York court. Both are native English speakers, and neither speaks Arabic. While Al Sanea is currently under travel restrictions in Saudi Arabia, he is subject to jurisdiction in New York and therefore can be compelled to testify at least by deposition or video-link. Despite his protestations, Al Sanea is a fluent English speaker and routinely conducted these very f/x transactions in English, the language of international finance. In addition to these three, AHAB listed nine other non-party witnesses with knowledge of Al Sanea’s misuse of the Money Exchange to arrange and cover up these f/x transactions. All of these witnesses are fluent English speakers, and many speak no Arabic.6 Three live in England, two in India, two in Bahrain and one each in Saudi Arabia, Canada, and Jordan. R. 939-40 ¶ 12c-k. One is now deceased. At least five of these witnesses are subject to giving evidence in a U.S. 5 Hayley, Al Sanea’s principal accomplice, later turned whistleblower, who has since moved back to his native England, has provided an affidavit that sets forth specifically and in detail information regarding the key witnesses in this action, their native countries, languages, and current locations. R. 936-941. 6 Grasping at straws, appellants repeatedly refer to certain English court proceedings involving loans made to AHAB by various English banks, arguing that AHAB sought to introduce voluminous documents in Arabic that required translation and represented that various witnesses would need to testify through translators. But appellants made no attempt to show that the evidence in the English proceedings had anything to do with the unrelated currency transactions with Mashreq, and AHAB expressly denied its relevancy. 44 action through the Hague Evidence Convention. Id. In contrast, Saudi Arabia is not a Hague signatory, and its courts will not compel the testimony of non-party witnesses by depositions outside of Saudi Arabia. R. 950-51 ¶ 19. The ability of New York courts to compel testimony of foreign witnesses via letters rogatory or international conventions is another factor that justifies retaining this action in New York, particularly where such devices are unavailable in the competing forum. Under New York law, a defendant who seeks dismissal on forum non conveniens grounds must specifically identify the witnesses who he anticipates should be called to testify and describe the substance of their testimony. See Firegreen Ltd. v Claxton, 160 AD2d 409, 412, 553 NYS2d 765, 767 (1st Dept 1990); O’Connor v Bonanza Int’l, Inc., 129 AD2d 569, 569-70, 514 NYS2d 67, 67-68 (2d Dept 1987); Factors Etc., Inc. & Boxcar Enters, Inc. v Pro Arts, Inc., 579 F2d 215, 218 (2d Cir 1978). Notwithstanding this requirement, when he moved to dismiss, Al Sanea made no effort to identify any witnesses. Not until he filed his reply brief in Supreme Court did he identify non-party witnesses he asserts may have relevant testimony. R. 1295-1304 ¶ 5, R. 1811. But few, if any, of Al Sanea’s purported witnesses are said to have testimony germane to the Mashreq f/x transactions. They are proffered instead on a variety of irrelevant or peripheral topics, such as Al Sanea’s general authority to act on AHAB’s behalf, 45 the practices of AHAB partners in executing documents, AHAB’s accounting procedures, unspecified transactions between AHAB and Awal, and the like. Id. More important than the mere location and language of the key witnesses is whether they will be deemed legally competent to testify on the issues in dispute. Plainly, all of these witnesses would be competent to testify in New York. But in sharp contrast, as set forth in the expert affidavit of Professor Frank Vogel, the former Director of the Islamic Legal Studies Program at Harvard Law School, because their bias is presumed as a matter of Saudi law, the parties themselves and their employees and agents are not deemed to be competent to testify as witnesses on their own (or their principal’s) behalf, and any statements they make to the Saudi court, if contested, would have to be confirmed by independent evidence. R. 952 ¶ 23; see, e.g., Rhodes v ITT Sheraton Corp., CIV.A. 97-4530-B, 1999 WL 26874, at *2 (Mass Super Jan. 15, 1999). (“All parties [under Saudi Arabian law] are presumed to be prejudiced in favor of themselves and therefore are not considered to be reliable witnesses”). Thus, a Saudi court would have little, if any, access to the substantive evidence in this complex international dispute. Al Sanea did not challenge Professor Vogel’s submissions on these procedural aspects of Saudi law.7 7 Al Sanea recites that Prof. Vogel opined that Saudi Arabia “maintains an effective judicial system to adjudicate commercial disputes” (Al Sanea Brief at 47), but Al Sanea misleadingly omits the balance of Prof. Vogel’s sentence: “yet good reasons can still exist why, for particular 46 Moreover, because Saudi Arabia’s evidentiary rules preclude testimony by the parties on their own behalf on grounds of bias, the existence of the travel ban on Al Sanea and AHAB’s partners does not tilt the analysis in favor of a Saudi forum. In fact, it tilts the analysis decidedly in favor of New York, which turns out to be the only forum in which the parties – notwithstanding the travel ban – could testify at all. Given its ability to secure testimony through video-links or by depositions de bene esse, New York is the one forum where sworn testimony can most conveniently be taken from virtually all relevant witnesses. 2. The Availability of Documents Al Sanea asserted that the documents pertinent to AHAB’s claim are in Saudi Arabia and many are in Arabic, but he proffered no list of documents in support of his assertion.8 In contrast, AHAB provided an affidavit listing the key disputes, forums outside Saudi Arabia would be more appropriate or ‘better equipped,’” and opining that this is just such a case. R. 947 ¶ 11. Al Sanea also cites several cases that have upheld Saudi Arabia as an adequate alternative forum. These cases concerned such local matters as breach of contract relating to construction at Riyadh International Airport, medical malpractice at a Saudi hospital, and employment disputes in that country. None of these cases raised issues concerning impediments to access to proof in any of those proceedings. 8 In a remarkably disingenuous statement, Al Sanea contests the Appellate Division’s observation that he failed to specify which documents were necessary to the dispute, arguing that the court simply “ignor[ed]” his submission of documents included at R. 989-1024. Al Sanea Brief at 57-58. In fact, the documents he references consist solely of several powers of attorney whereby AHAB’s principals appointed various persons to represent their interests in various matters, only one of such powers of attorney appointing Al Sanea, and none of them concerning the f/x transactions with Mashreq. These apparently are the documents that constitute Al Sanea’s list. 47 documents actually pertinent to this dispute and identifying the language in which they are written. While there may be documents located in Saudi Arabia that shed light on Al Sanea’s defalcations, as shown in the evidence of record below, many relevant documents pertaining to the instant dispute are located in New York and the UAE. The BOA and HSBC records that document the f/x transactions are all in New York. Mashreq’s records documenting the underlying fraudulently-created credit facilities are, presumably, in the UAE or at its branch in New York. AHAB’s own documents relevant to the Mashreq transactions have been scanned and can be made available in New York with little difficulty. The relevant documents were written in English, the language of international finance.9 (R. 668 ¶ 29, R. 738-43, R. 941 ¶¶ 15-18). Indeed, all of these documents would need to be translated into Arabic in order to litigate these claims in Saudi Arabia or the UAE. This factor strongly supports litigation here. See Sotheby’s, 167 AD2d at 145, 561 NYS2d at 567. 9 As is set forth in the Hayley Affidavit, the activities of the Money Exchange and AHAB’s other financial units were conducted in English, and not only the pertinent transactional documents but all pertinent documents are written in English, or in limited cases, side-by-side English and Arabic. R. 941 ¶¶ 15-17. 48 3. Application of Foreign Law Both Al Sanea and Mashreq take aim at the Appellate Division’s conclusion that New York law will govern this dispute. That conclusion is unassailable.10 Crediting AHAB’s well-pleaded allegations that the misuse of New York’s banking system to structure and carry out the f/x fraud and that AHAB suffered injury from this fraud and the subsequent conversion of funds stolen from its New York bank account, and applying a traditional “interest analysis,” the Appellate Division’s conclusion that New York law will apply to these torts is patently correct. The law of the jurisdiction where the tort occurred will generally apply because that jurisdiction has the greatest interest in regulating behavior within its borders. Schultz v Boy Scouts of Am., 65 NY2d 189, 195, 491 NYS2d 90, 93-94 (1985). Under New York law, a tort occurs “where the last event necessary to make the actor liable occurred.” Id., 491 NYS2d at 94. In Padula v Lilarn Props. Corp., 84 NY2d 519, 521-22, 620 NYS2d 310, 311-312 (1994), the Court reaffirmed Schultz, ruling that, in addition to examining relevant contacts, “interest analysis” in the tort context depends on whether the tort law is “conduct regulating” or “loss allocating” and, if the former, the “law of the place of the tort 10 Indeed, when Mashreq filed its complaint, it told the court that it was “entitled to the protections of the laws of New York State.” Affirmation of Adam Finkel, Esq., in Support of Mashreqbank’s Complaint, Dkt. No. 1, ¶ 13. 49 governs.” Accord, Edwards v Erie Coach Lines Co., 17 NY3d 306, 929 NYS2d 41 (2011). The law of fraud and theft is indisputably “conduct regulating.” In the final throes of his elaborate Ponzi scheme, Al Sanea stole $191 million from AHAB, and this theft occurred entirely in New York. R. 114 ¶ 27. This last event necessary to Al Sanea’s liability therefore occurred in New York, and New York law will apply to Al Sanea’s tortious conduct. See, e.g., Banco Nacional, 169 Misc 2d at 187, 641 NYS2d at 1009. Appellants challenge this ruling only by improperly contesting AHAB’s allegations concerning the centrality of the New York banking system to this fraud, even going so far as to impermissibly dispute AHAB’s allegation that Al Sanea stole the funds in New York. Tellingly, the Appellate Division dissenters did not take issue with the majority’s conclusion that New York law would apply to this dispute. Appellants’ arguments on choice of law also founder on the absence of any showing that there is a meaningful conflict between the laws of New York and the laws of Saudi Arabia, the UAE, or any other candidate forum. They muse that issues could arise concerning Al Sanea’s agency and authority to act for AHAB that would be governed by Saudi law. They raise the possibility that construction of the Mashreq loan documents might be required and assert that they would be governed by UAE law. These arguments are disingenuous, manufactured contentions. 50 Al Sanea’s contention that this action will turn on principles of agency and authority under Saudi law is incomprehensible. Whatever authority Al Sanea had under Saudi law as AHAB’s agent, there is no basis for the suggestion that Saudi law conferred on him authority to plunder the assets of the partnership. Indeed, he provided no evidence below as to how Saudi law on agency might differ from New York law on any issues actually in dispute. This is hardly surprising. No system of law permits an agent to loot his employer’s company, and, in any event, New York courts would never apply such a rule. Similarly, Mashreq made no attempt to identify peculiar UAE rules of contract construction that would come into play in interpreting the loan documents under which the f/x deals were conducted. Indeed, those loan documents were specifically drafted and written in English to follow form to New York law governing foreign exchange transactions. In supporting his motion, it was incumbent upon Al Sanea to show an actual conflict with New York law and that the New York court would have to apply foreign law. He did not even attempt such a showing. In short, there are no issues of foreign law that would provide support for dismissal on grounds of forum non conveniens. 4. Interests of Saudi Arabia in this Dispute Finally as to forum non conveniens factors, Al Sanea urges that the Appellate Division ignored Saudi Arabia’s critical interest in this dispute in 51 “resolving its own affairs,” again citing Shin-Etsu, 9 AD3d at 178, 777 NYS2d at 74. Al Sanea points to the fact that the Saudi government formed a special committee to investigate the dispute, demonstrating that this is a “matter of significant public concern with substantial implications for the Saudi economy at large.” Al Sanea Brief at 49-50. There is utterly no record support for these overblown statements. To be sure, the AHAB partners and Al Sanea are Saudi citizens. But the instant suit is limited to the f/x transactions that occurred in New York and the theft of those funds in New York. Neither the Saudi government nor its special committee has expressed any concern with this dispute. The scope of the Saudi committee’s investigation is restricted to the parties’ dealings with Saudi banks. R. 699 ¶ 14-702. Indeed, the committee eschewed any involvement in dealings by AHAB and Al Sanea with non-Saudi banks like Mashreq. Id. Whatever interest Saudi Arabia may be said to have in disputes between Saudi citizens regarding Saudi banking transactions, it hardly trumps the specific and concrete interest New York has in a dispute that centers on the misuse of New York banks and the theft of funds in New York. In sum, the Appellate Division addressed the proper factors under Pahlavi and exercised its discretion in weighing them. Its decision that AHAB’s third- 52 party complaint against Al Sanea should be retained in the New York courts was in no sense an abuse of its discretion, and it should be affirmed. II. The Appellate Division Correctly Concluded that Supreme Court Engaged in Improper Sua Sponte Action in Dismissing the First-Party Claims. When it dismissed the third-party claim on forum grounds, Supreme Court decided, on its own initiative, also to dismiss the first-party claims. The Appellate Division properly ruled that Supreme Court’s sua sponte action violated this Court’s decision in VSL Corp., 70 NY2d at 949, 524 NYS2d at 671; R. 1801. The Appellate Division’s decision should be sustained on multiple grounds. A. If the Court Affirms Retention of the Third-Party Claim, Any Argument that the First-Party Claims Should Be Dismissed Is Rendered Moot. The Court need not reach the issue of sua sponte action if it affirms the decision below to keep the third-party claim in this forum. This is because it is undisputed that no party requested, and Supreme Court did not consider on its own initiative or otherwise, the dismissal of the first-party claims separately from and independent of the third-party claim. In his self-appointed role as an amicus, Al Sanea’s counsel suggested that Supreme Court might wish to consider dismissing the whole case if it decided to dismiss the third-party claim. For its part, Mashreq ultimately advised that it would have no objection to having its complaint dismissed if the third-party complaint were also dismissed. No consideration was 53 asked or given to dismissing the first-party claims alone. Hence, if this Court affirms the retention in New York of AHAB’s third-party claim, no issue will remain in respect of the first-party claims. B. Neither Mashreq Nor Al Sanea Has Standing to Appeal the Reinstatement of the First-Party Claims. In all events, appellants have no standing to challenge the Appellate Division’s decision to retain the first-party claims in this forum. CPLR 5511 provides that only “[a]n aggrieved party or a person substituted for him may appeal from any appealable judgment or order.” Mashreq is not aggrieved by a decision finding that its own complaint was properly filed in a New York court. Sirius Am. Ins. Co. v Vigo Const. Corp., 48 AD3d 450, 451, 852 NYS2d 176, 177 (2d Dept 2008). And since Al Sanea is not a party to the first-party claims, he also is not aggrieved by the Appellate Division’s disposition of those claims. D’Ambrosio v City of New York, 55 NY2d 454, 459-60, 450 NYS2d 149, 150-151 (1982); see Arthur Karger, Powers of the New York Court of Appeals, § 11:6 (3d ed rev 2005). Mashreq, which consistently argued in Supreme Court that its complaint should not be dismissed on forum grounds, was undoubtedly “aggrieved” in the sense utilized in the CLPR by Supreme Court’s original dismissal of its complaint. Mashreq was no longer an “aggrieved party” within the meaning of CPLR 5511, however, when the Appellate Division reversed Supreme Court’s dismissal. To the contrary, that decision upheld the very position Mashreq took in Supreme Court. 54 The fact that Mashreq felt that subsequent developments in the parallel proceedings it instituted in Dubai appeared to be favorable and caused it to reconsider its forum preferences did not turn Mashreq into an aggrieved party for purposes of this appeal. Whether a party is aggrieved for purposes of the right to appeal is determined by the party’s position in the lower court, not by the party’s later change of heart leading it to wish to reverse positions. See Daniels v City of New York, 7 NY3d 825, 822 NYS2d 753 (2006) (party which did not appeal to Appellate Division is not a party aggrieved); Hecht v City of New York, 60 NY2d 57, 61, 467 NYS2d 187 (1983) (appeal is limited to the provisions of the judgment that actually aggrieve the appellant). For the same reason, Mashreq cannot be considered an aggrieved party with respect to the reinstatement of AHAB’s counterclaim. In arguing that its own complaint was properly before the New York forum that Mashreq itself had selected, Mashreq was in no position to argue that AHAB’s counterclaim should nonetheless be carved off and sent to a different forum, and, indeed, Mashreq never made such an argument. Mashreq is also not aggrieved by the Appellate Division’s ruling that Al Sanea is properly sued in New York, because the presence or absence of Al Sanea is of no import to Mashreq. Mahmood v Gutman, 81 AD3d 792, 916 NYS2d 802 (2d Dept 2011) (plaintiff was not an aggrieved party with regard to the trial court’s dismissal of the third-party complaint). In 55 short, Mashreq has no standing to be heard on any issue in the instant appeal. By the same token, Al Sanea cannot be aggrieved by any disposition of the first-party action. Duffy v Horton Mem. Hosp., 66 NY2d 473, 476 n. 3, 497 NYS2d 890, 892 n. 3 (1985) (where the third-party complaint is not affected, the third-parties “are not parties aggrieved, and their appeal should be dismissed”). Accordingly, as neither Mashreq nor Al Sanea is an aggrieved party in respect of the retention of the first-party claims, whether those claim should have been reinstated is not properly before this Court. AHAB respectfully submits that the judgment of the Appellate Division on this issue should be affirmed on this ground alone. C. Supreme Court Improperly Acted Sua Sponte in Dismissing the First-Party Claims. 1. The Procedural Record It is uncontested that no party ever requested, by formal motion or otherwise, that Supreme Court dismiss the first-party claims on forum grounds. In their breezy review of the procedural record, appellants argue that the issue was “raised” before Supreme Court, but they rather carefully avoid focusing on the fact that it was Supreme Court that raised it. They also argue that, in all events, the issue was fully and fairly briefed, but they point to nothing in those briefs that would substantiate that contention. 56 As appellants note, there were six briefs filed in Supreme Court on the issue of forum non conveniens. All of them addressed the disposition of AHAB’s third- party claim against Al Sanea. Al Sanea’s opening brief expressly was limited to the dismissal of the third-party claim. In it, he even stressed that AHAB’s counterclaims against Mashreq “have no bearing” on “whether this dispute, between AHAB and Mr. Al-Sanea, should be litigated in Saudi Arabia rather than New York.” Al Sanea Mem., Dkt. No. 44, at 6 n 6. AHAB filed an opposition brief addressed to Al Sanea’s motion, and Al Sanea filed a reply. Having no interest in the dispute over the third-party claim, Mashreq did not participate in the briefing. At a hearing on January 5, 2010, after the briefing was closed, notwithstanding the statement by Mashreq’s counsel that he had not participated in the briefing on Al Sanea’s motion because “no one has made a forum non motion against my client Mashreqbank,” the court asked to hear from Mashreq on Al Sanea’s motion. Mashreq then filed its own brief arguing that, whatever might be done with the third-party complaint, its own case should not be dismissed. Mashreq asserted that New York is the “natural forum” for resolution of its claims, arguing at length that the suit belongs here (Mashreq Mem., Dkt. No. 103, at 6-8, citations omitted): New York was and still is a natural forum for Mashreq to bring its straightforward claims against AHAB… New York courts defer to a 57 plaintiff’s choice of forum ‘absent a balance of factors strongly favoring’ dismissal... AHAB also expressly agrees that New York is a convenient forum to litigate Mashreq’s claims... Nor will Mashreq’s claims against AHAB require the translation of many documents or testimony from Arabic to English… Mashreq’s claims…do not implicate complex issues of foreign law… AHAB responded to Mashreq’s brief, noting that “[a]s Mashreq’s brief makes clear, New York is the proper forum for all aspects of this dispute” and commenting that Mashreq’s position “in no way suggest[s] that New York is an inconvenient forum for litigation of the counterclaim.” AHAB Mem., Dkt. No. 112, at 1 n. 1. In a subsequent reply, Mashreq affirmed that “New York is a proper forum” for its first-party claim but, for the first time, offered that, if the court were to dismiss the third-party complaint, “Mashreq would not object to litigating its breach-of-contract claims against AHAB and the AHAB partners in the UAE.” Reply Mem., Dkt. No. 115, at 3. In sum, Mashreq never asserted that New York is an inconvenient forum. It never moved or argued in favor of a dismissal of the first-party claims on forum non conveniens grounds. It never conceded that Al Sanea’s proposed alternative forum, Saudi Arabia, would be appropriate for Mashreq’s own complaint. Indeed, when the court sought Mashreq’s views on the propriety of the New York forum – virtually inviting a motion to dismiss – Mashreq explicitly stated that it continued to view New York as an appropriate forum. From beginning to end, it urged that New York is a proper forum for these claims. For his own part, Al Sanea himself 58 never moved to dismiss the first-party claims, despite every opportunity to do so. At most, Al Sanea, acting as a self-announced amicus, simply invited Supreme Court to act on its own initiative to dismiss the entire action. And that is precisely what Supreme Court did. 2. The Legal Effect of this Sua Sponte Action The Appellate Division ruled that, on this record, the dismissal of the Mashreq-AHAB dispute on forum grounds was reversible error, in that Supreme Court improperly acted on its on motion. In doing so, it followed this Court’s holding in VSL Corp., which instructs that a court may not invoke the doctrine of forum non conveniens except on motion of a party. VSL Corp., 70 NY2d at 949, 524 NYS2d at 671. Although lower court decisions following VSL Corp. have held that if there can be substantive compliance with its directive, even in the absence of a formal motion, this standard, too, was not satisfied here. The parties’ briefs and arguments focused on the third-party claim and paid scant attention to whether the first-party claims satisfied the Pahlavi factors. Appellants rely heavily on two cases construing VSL Corp. In Banco Do Estado De Sao Paulo, S.A. v Mendes Jr. Int’l Co., 249 AD2d 137, 138-39, 672 NYS2d 28, 28-29 (1st Dept 1998), the plaintiff styled its motion as one for summary judgment on defendant’s unrelated counterclaims but did not formally specify forum non conveniens as a ground for dismissal, although it had raised it as 59 an affirmative defense. Nonetheless, in its full briefing and argument, plaintiff clearly sought a forum-based dismissal of the counterclaims. Id. The Appellate Division found that VSL’s requirement was met because the plaintiff, not Supreme Court, had put the forum issue into dispute, framing forum non conveniens as “a clearly articulated motif of plaintiff’s arguments in the motion proceedings.” Id. at 139, 672 NYS2d at 29. Similarly, in Matter of Smith v Miller, 237 AD2d 294, 295, 654 NYS2d 167, 168 (2d Dept 1997), the Appellate Division permitted Supreme Court to consider a forum issue without a formal motion having been made, not because it had the authority to do so sua sponte, but on the ground that “the doctrine was raised before the court, and the parties contested the matter.”11 Here, by contrast, the sole “motif” of Al Sanea’s motion was the propriety of a New York forum for AHAB’s third-party claim alone, with Mashreq repeatedly insisting that New York is the proper forum for its first-party claim. While Al Sanea may have had the right to move to dismiss the entire proceeding, see, e.g., Imperial Imports Co. v Neu & Sons, 161 AD2d 411, 555 NYS2d 323 (1st Dept 1990), that did not happen here. Nor is the need for such a motion, formal or informal, obviated by the trial court affording the parties “a full and fair opportunity to litigate the issue,” which is the test that the dissenting justices proposed. R. 1819. First, that is not the test under VSL Corp., which holds 11 The half-page opinion in Smith provides little insight into how the issue was raised, so its precedential value is limited. Moreover, the Appellate Division reversed the forum dismissal. 60 unambiguously that the court may dismiss “only upon the motion of a party” and, further, that “a court does not have the authority to invoke the doctrine on its own motion,” VSL Corp., 70 NY2d at 949, 524 NYS2d at 671 (emphasis supplied). Second, the proceedings below did not satisfy even this more lenient standard in respect to whether the first-party claims should be dismissed There is no reason to modify the VSL rule here. In this case, briefing on the forum non conveniens issue as respects the third-party claim took place over a period of six months. Three briefs were filed; the court discussed the issue with counsel in open court, and the court expressed its view that perhaps the entire case could be disposed of on forum grounds; then three more briefs were filed, in which Mashreq repeatedly contended that New York was a proper forum, and Al Sanea never amended its motion to include a request to dismiss the primary action. Mashreq and Al Sanea had every opportunity to seek dismissal of the first-party claims on forum grounds but did not. Far from being an “inflexible” reading of VSL, this case demonstrates the beneficial effects of the rule. A rule directing parties to take an unequivocal position by making a motion is vastly preferable to a rule which permits counsel to hedge their bets, leaving a window open to argue later that, in hindsight, the parties had a “full and fair opportunity” to litigate. R. 1819. That sort of rule only encourages disputes about what “really” happened when the simple act of making 61 a motion would have resolved all doubt. Mashreq’s slow-motion change of position over the course of this case cannot erase its own advocacy in favor of New York as a proper forum. In all events, the proceedings before Supreme Court as respects the first- party claims did not satisfy any sort of “fall and fair opportunity to litigate” standard. AHAB was never faced with a brief from either Mashreq or Al Sanea that advocated a dismissal of the entire action. And while appellants contend here that the parties’ briefs fully addressed whether the first-party claims should be dismissed, they have not pointed to any portions of their briefs that actually discuss that issue. In fact, Mashreq’s briefs marshaled the Pahlavi factors favoring retaining its complaint in New York, and it offered no evidence concerning the ability of the UAE courts – to which Mashreq advised it would not object to being sent – to hear the various claims. As to AHAB’s counterclaim, Mashreq asserted that the UAE would not even hear it because its courts would consider it non- actionable absent a prior criminal conviction of Mashreq in that country. Mashreq Brief, Dkt. No. 103, at 5. Mashreq made no attempt to review access in the UAE courts to sources of proof, availability of witnesses and documents in that forum, the impact of choice of law issues, or any of the other Pahlavi factors as effects the UAE as a potential alternative forum. Mashreq further asserted that Saudi Arabia 62 was not an alternative forum for the first-party claims because, Mashreq maintained, it was not subject to jurisdiction of Saudi courts. R. 1468. Similarly, Al Sanea’s briefs are largely devoid of any discussion of the propriety of dismissing the first-party claims on forum grounds, not surprisingly, given that he had no interest in them. His submissions, like AHAB’s responses, dealt only with whether Saudi Arabia is an appropriate forum for the third-party claim. For the first time in this Court, Al Sanea argues that all of the parties’ claims can be heard in a single forum, either Saudi Arabia or the UAE. Yet, his assertion that Mashreq could be sued in Saudi Arabia was flatly contradicted by Mashreq’s counsel below. And his own expressed willingness to defend AHAB’s claims in the UAE, which he belatedly announced for the first time in this Court (Al Sanea Brief at 52 n. 18), cannot supply a basis for reversal of the decision below. In short, any suggestion that a “full and fair opportunity” standard should apply here is untenable. The invocation of a mere slogan, one lacking in any real substance in the circumstances of this case, is no substitute for analysis. There is no basis, procedurally or substantively, for reversing the Appellate Division’s decision to reinstate the first-party claims in this New York forum. 63 III. The Court Had Personal Jurisdiction Over Al Sanea. Al Sanea’s final argument is that the decision below should be reversed because the court lacked personal jurisdiction over him. Given the extensive allegations of his personal conduct, directly or through agents he controls, to misuse New York banks to structure his f/x fraud and to steal $191 million from one of those banks, this argument is preposterous. It was rejected by Supreme Court and the Appellate Division, both majority and dissent, and it should be rejected here. On this issue, even Al Sanea cannot argue that J. Zeevi & Sons is inapposite. CONCLUSION For the foregoing reasons, Defendant-Respondent Third-Party Plaintiff- Respondent Ahmad Hamad Al Gosaibi & Brothers Co. respectfully submits that the decision of the Appellate Division should be affirmed. Respectfully submitted, L1i:CHPL~:L Bruce R. Grace Eric L. Lewis 1899 Pennsylvania Ave., NW, Suite 600 Washington, DC 20006 (202) 833-8900 Bruce. Grace@lewisbaach.com Eric.Lewis@lewisbaach.com 405 Lexington Ave., 32nd Floor, Suite A New York, NY 10174 (212) 826-7001 Attorneysfor Defendant-Respondent/ Third-Party Plaintiff-Respondent Dated: September 12, 2013 64