Case Name: Motorola Credit Corporation, Appellant-Respondent, et al., Plaintiff-Counter-Defendant, et al., Counter-Defendants, v. Standard Chartered Bank, Respondent-Appellant, et al., Defendants-Counter-Claimants, et al., Defendants
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 2014-10-23
Citations: 24 N.Y.3d 149
Docket Number: 
Parties: Motorola Credit Corporation, Appellant-Respondent, et al., Plaintiff-Counter-Defendant, et al., Counter-Defendants, v Standard Chartered Bank, Respondent-Appellant, et al., Defendants-Counter-Claimants, et al., Defendants.
Judges: Chief Judge Lippman and Judges Read, Smith and Rivera concur with Judge Graffeo; Judge Abdus-Salaam dissents in an opinion in which Judge Pigott concurs.
Reporter: New York Reports
Volume: 24
Pages: 149–173

Head Matter:
[21 NE3d 223, 996 NYS2d 594]
Motorola Credit Corporation, Appellant-Respondent, et al., Plaintiff-Counter-Defendant, et al., Counter-Defendants, v Standard Chartered Bank, Respondent-Appellant, et al., Defendants-Counter-Claimants, et al., Defendants.
Argued September 16, 2014;
decided October 23, 2014
POINTS OF COUNSEL
Fried, Frank, Harris, Shriver & Jacobson LLP (Howard H. Stahl, of the District of Columbia bar, admitted pro hac vice, Jerald S. Howe, Jr., of the District of Columbia bar, admitted pro hac vice, George R. Calhoun, V, of the District of Columbia bar, admitted pro hac vice, and Douglas W. Baruch of counsel), for appellant-respondent.
I. Under the plain language of CPLR 5222 (b), the postjudgment restraint was proper. (Tire Eng’g & Distrib. L.L.C. v Bank of China Ltd., 740 F3d 108; Commonwealth of the N. Mariana Is. v Canadian Imperial Bank of Commerce, 21 NY3d 55; Koehler v Bank of Bermuda Ltd., 12 NY3d 533; Matter of Goebel, 295 NY 73; Matter of Tucker v Board of Educ., Community School Dist. No. 10, 82 NY2d 274; Bright Homes v Wright, 8 NY2d 157; Matter of Amorosi v South Colonie Ind. Cent. School Dist., 9 NY3d 367; Pultz v Economakis, 10 NY3d 542; People v Finnegan, 85 NY2d 53.) II. There is no support for postjudgment application of the “separate entity rule.” (Tire Eng’g & Distrib. L.L.C. v Bank of China Ltd., 740 F3d 108; McCloskey v Chase Manhattan Bank, 11 NY2d 936; Eitzen Bulk A/S v Bank of India, 827 F Supp 2d 234; JW Oilfield Equip., LLC v Commerzbank, AG, 764 F Supp 2d 587; Edman & Co., LLC v Z & M Media, LLC, 2012 NY Slip Op 32918[U]; Global Tech., Inc. v Royal Bank of Can., 34 Misc 3d 1209[A], 2012 NY Slip Op 50023[U]; Digitrex, Inc. v Johnson, 491 F Supp 66.)
Sullivan & Cromwell LLP, New York City (Bruce E. Clark, H. Rodgin Cohen, Sharon L. Nelles, Bradley P. Smith and Patrick B. Berarducci of counsel), for respondent-appellant.
I. As a protection against double liability, the separate entity rule is deeply rooted in New York banking law. (Koehler v Bank of Bermuda Ltd., 12 NY3d 533; Commonwealth of the N. Mariana Is. v Canadian Imperial Bank of Commerce, 21 NY3d 55; Bingham v New York City Tr. Auth., 8 NY3d 176; Chrzanowska v Corn Exch. Bank, 173 App Div 285; Bluebird Undergarment Corp. v Gomez, 139 Misc 742; Petrogradsky Mejdunarodny Kommerchesky Bank v National City Bank of N.Y., 253 NY 23; Moscow Fire Ins. Co. v Bank of N.Y. & Trust Co., 280 NY 286; Vladikavkazsky Ry. Co. v New York Trust Co., 263 NY 369; Sokoloff v National City Bank of N.Y., 239 NY 158, 250 NY 69; State of New York v Cortelle Corp., 38 NY2d 83.) II. The New York Legislature recognized and retained the separate entity rule when it enacted the Uniform Commercial Code and the Civil Practice Law and Rules in 1962. (Arbegast v Board of Educ. of S. New Berlin Cent. School, 65 NY2d 161; Horn Waterproofing Corp. v Bushwick Iron & Steel Co., 66 NY2d 321; Chrzanowska v Corn Exch. Bank, 173 App Div 285; Cronan v Schilling, 282 App Div 940; Bluebird Undergarment Corp. v Gomez, 139 Misc 742; Matter of Goebel, 295 NY 73; ABN AMRO Bank, N.V. v MBIA Inc., 17 NY3d 208; Transit Commn. v Long Is. R.R. Co., 253 NY 345; People v Farini, 239 NY 411; Beauvais v Allegiance Sec., Inc., 942 F2d 838.) III. The separate entity rule remains important today, particularly with respect to international banking. (Det Bergenske Dampskibsselskab v Sabre Shipping Corp., 341 F2d 50; Cronan v Schilling, 282 App Div 940; McCloskey v Chase Manhattan Bank, 11 NY2d 936; Clinton Trust Co. v Compania Azucarera Cent. Ramona S.A., 172 Misc 148, 258 App Div 780; Bluebird Undergarment Corp. v Gomez, 139 Misc 742; Allied Mar., Inc. v Descatrade SA, 620 F3d 70; Therm-X-Chem. & Oil Corp. v Extebank, 84 AD2d 787; Gutekunst v Continental Ins. Co., 486 F2d 194; Matter of National Union Fire Ins. Co. of Pittsburgh, Pa. v Advanced Empl. Concepts, 269 AD2d 101; Morgenthau v Avion Resources Ltd., 49 AD3d 50.) IV Koehler v Bank of Bermuda Ltd. (12 NY3d 533 [2009]) and Commonwealth of the N. Mariana Is. v Canadian Imperial Bank of Commerce (21 NY3d 55 [2013]) did not undermine the separate entity rule, nor should they be so construed in light of the Supreme Court’s decision in Daimler AG v Bauman (571 US —, 134 S Ct 746 [2014]). (K2 Inv. Group, LLC v American Guar. & Liab. Ins. Co., 22 NY3d 578; Mashreqbank PSC v Ahmed Hamad Al Gosaibi & Bros. Co., 23 NY3d 129; Global Tech., Inc. v Royal Bank of Can., 34 Misc 3d 1209[A], 2012 NY Slip Op 50023[U]; JW Oilfield Equip., LLC v Commerzbank, AG, 764 F Supp 2d 587; Parbulk II AS v Heritage Mar., SA, 35 Misc 3d 235; Samsun Logix Corp. v Bank of China, 31 Misc 3d 1226[A], 2011 NY Slip Op 50861[U]; Eitzen Bulk A/S v Bank of India, 827 F Supp 2d 234; Flanagan v Mount Eden Gen. Hosp., 24 NY2d 427; Arbegast v Board of Educ. of S. New Berlin Cent. School, 65 NY2d 161; Bryant v Finnish Natl. Airline, 15 NY2d 426.) V. Other jurisdictions recognize the separate entity rule and the principle that garnishee banks should not be subjected to inconsistent legal obligations. (K2 Inv. Group, LLC v American Guar. & Liab. Ins. Co., 22 NY3d 578; Hilao v Estate of Marcos, 95 F3d 848; Clinton Trust Co. v Compania Azucarera Cent. Ramona S.A., 172 Misc 148; Bluebird Undergarment Corp. v Gomez, 139 Misc 742; Marisco, Ltd. v American Samoa Govt., 889 F Supp 2d 1244; Woodlands, Ltd. v Westwood Ins. Co., LTD., 965 F Supp 13.) VI. The separate entity rule prevents New York’s judgment-enforcement procedures from conflicting with federal due process protections against double liability. (Western Union Telegraph Co. v Pennsylvania, 368 US 71; Harris v Balk, 198 US 215; Burger King Corp. v Rudzewicz, 471 US 462; Lugar v Edmondson Oil Co., 457 US 922; Naoko Ohno v Yuko Yasuma, 723 F3d 984; Overstock.com, Inc. v New York State Dept. of Taxation & Fin., 20 NY3d 586.)
White & Case LLP, New York City (Dwight A. Healy, Ernest T. Patrikis, Owen C. Pell and Marika M. Lyons of counsel), for Institute of International Bankers and others, amici curiae.
I. There are significant policy considerations that support the separate entity rule and those policy considerations apply with equal force in the context of postjudgment restraints. (Ayyash v Koleilat, 38 Misc 3d 916, 115 AD3d 495; Clinton Trust Co. v Compania Azucarera Cent. Ramona S.A., 172 Misc 148, 258 App Div 780; F. Hoffmann-La Roche Ltd v Empagran S. A., 542 US 155; Trade Dev. Bank v Continental Ins. Co., 469 F2d 35; Matter of Two Grand Jury Subpoenas Duces Tecum [Union Bank of Switzerland], 158 Misc 2d 222; Cronan v Schilling, 282 App Div 940; Parbulk II AS v Heritage Mar., SA, 35 Misc 3d 235; Matter of Waite, 99 NY 433; Disconto Gesellschaft v Umbreit, 208 US 570; Clarkson Co., Ltd. v Shaheen, 544 F2d 624.) II. Daimler AG v Bauman (571 US —, 134 S Ct 746 [2014]) highlights the appropriateness and importance of the separate entity rule, particularly for banks headquartered or incorporated in New York. (Barrow S. S. Co. v Kane, 170 US 100; Tauza v Susquehanna Coal Co., 220 NY 259; Hoffritz for Cutlery, Inc. v Amajac, Ltd., 763 F2d 55; Landoil Resources Corp. v Alexander & Alexander Servs., 77 NY2d 28; Tire Eng’g & Distrib. L.L.C. v Bank of China Ltd., 740 F3d 108; Licci ex rel. Licci v Lebanese Can. Bank, SAL, 673 F3d 50; Gager v White, 53 NY2d 475; Insurance Corp. of Ireland v Compagnie des Bauxites de Guinee, 456 US 694; Doubet LLC v Trustees of Columbia Univ. in the City of N.Y., 99 AD3d 433; Indosuez Intl. Fin. v National Reserve Bank, 98 NY2d 238.) III. Motorola Credit Corporation’s efforts to diminish the long-standing recognition of the separate entity rule are misplaced. (Matter of National Union Fire Ins. Co. of Pittsburgh, Pa. v Advanced Empl. Concepts, 269 AD2d 101; Therm-X-Chem. & Oil Corp. v Extebank, 84 AD2d 787; Cronan v Schilling, 282 App Div 940; Clinton Trust Co. v Compania Azucarera Cent. Ramona S.A., 172 Misc 148, 258 App Div 780; Det Bergenske Dampskibsselskab v Sabre Shipping Corp., 341 F2d 50; Fidelity Partners, Inc. v Philippine Export & Foreign Loan Guar. Corp., 921 F Supp 1113; McCloskey v Chase Manhattan Bank, 11 NY2d 936; Allied Mar., Inc. v Descatrade SA, 620 F3d 70; Bluebird Undergarment Corp. v Gomez, 139 Misc 742; Morgenthau v Avion Resources Ltd., 49 AD3d 50.)
Cravath, Swaine & Moore LLP, New York City (Timothy G. Cameron of counsel), for Government of the United Kingdom of Great Britain and Northern Ireland, amicus curiae.
I. The separate entity rule recognizes and protects the important sovereign interests of other nations, avoids subjecting banks to inconsistent laws and is consistent with comity. (Hilton v Guyot, 159 US 113; F. Hoffmann-La Roche Ltd v Empagran S. A., 542 US 155; Byblos Bank Europe, S.A. v Sekerbank Turk Anonym Syrketi, 10 NY3d 243; Ayyash v Koleilat, 38 Misc 3d 916, 115 AD3d 495.) II. The separate entity rule appropriately constrains the extraterritorial application of U.S. laws. (Morrison v National Australia Bank Ltd., 561 US 247; F Hoffmann-La Roche Ltd v Empagran S. A., 542 US 155; Global Reins. Corp.-U.S. Branch v Equitas Ltd., 18 NY3d 722.)
Jones Day, New York City (Lee M. Pollack, Lee A. Armstrong and Sevan Ogulluk of counsel), for Central Bank of Jordan, amicus curiae.
I. The separate entity rule respects the sovereignty of nations and their citizens. (Hilton v Guyot, 159 US 113.) II. The separate entity rule does not unduly burden the process of international judgment enforcement. (CIBC Mellon Trust Co. v Mora Hotel Corp., 100 NY2d 215.)
Davis Polk & Wardwell LLP, New York City {James L. Kerr, Karen E. Wagner and Margaret E. Tahyar of counsel), for Com mittee on Banking Law of the Association of the Bar of the City of New York, amicus curiae.
I. The separate entity rule reflects a construction of CPLR article 52 that gives proper effect to all of its provisions. (Padula v Lilarn Props. Corp., 84 NY2d 519; Koehler v Bank of Bermuda Ltd., 12 NY3d 533; Tire Eng’g & Distrib. L.L.C. v Bank of China Ltd., 740 F3d 108; Global Reins. Corp.-U.S. Branch v Equitas Ltd., 18 NY3d 722; Ewen v Thompson-Starrett Co., 208 NY 245; Commonwealth of the N. Mariana Is. v Canadian Imperial Bank of Commerce, 21 NY3d 55; Abood v Hospital Ambulance Serv., 30 NY2d 295; Matter of Kaplan v Peyser, 273 NY 147; Matter of Beach v Shanley, 62 NY2d 241; Cook v H. R. H. Constr. Corp., 32 AD2d 806.) II. CPLR article 52 must be construed to avoid subjecting garnishees to an unconstitutional risk of double liability. (Harris v Balk, 198 US 215; Hotel 71 Mezz Lender LLC v Falor, 14 NY3d 303; Drake v De Silva, 124 App Div 95; Western Union Telegraph Co. v Pennsylvania, 368 US 71; United States v First Nat. City Bank, 379 US 378; Cities Service Co. v McGrath, 342 US 330; Diamond v Oreamuno, 24 NY2d 494; Solicitor for Affairs of His Majesty’s Treasury v Bankers Trust Co., 304 NY 282; Russian Reins. Co. v Stoddard, 240 NY 149.) III. Banking Law § 204-a (3) (a) and (1) provide statutory support for the separate entity rule. (Trinh v Citibank, N.A., 850 F2d 1164; Wells Fargo Asia Ltd. v Citibank, N.A., 936 F2d 723; Brill v Chase Manhattan Bank, 14 AD2d 852; Trujillo-M v Bank of Nova Scotia, 51 Misc 2d 689, 29 AD2d 847; Pineiro v Chase Manhattan Bank, N. A., 52 AD2d 794; Matter of Istim, Inc. v Chemical Bank, 78 NY2d 342.) IV The Uniform Foreign Country Money-Judgments Recognition Act contained in CPLR article 53 is wholly inconsistent with the extraterritorial enforcement of judgments. (Greschler v Greschler, 51 NY2d 368; Sung Hwan Co., Ltd. v Rite Aid Corp., 7 NY3d 78.) V Principles of comity are well-served by the separate entity rule. (Matter of Gotlib v Ratsutsky, 83 NY2d 696; Perez v Chase Manhattan Bank, 61 NY2d 460; Republic of Argentina v City of New York, 25 NY2d 252; Ehrlich-Bober & Co. v University of Houston, 49 NY2d 574; F. Hoffmann-La Roche Ltd v Empagran S. A., 542 US 155; Global Reins. Corp.-U.S. Branch v Equitas Ltd., 18 NY3d 722; The Paquete Habana, 175 US 677; Japan Line, Ltd. v County of Los Angeles, 441 US 434; Ehrenfeld v Bin Mahfouz, 9 NY3d 501; Matter of Holmes v Winter, 22 NY3d 300.)
Skadden, Arps, Slate, Meagher & Flom LLP, New York City (Scott D. Musoff Timothy G. Nelson and Amanda Raymond Kalantirsky of counsel), and Ira D. Hammerman, Washington, D.C., and Kevin Carroll, Washington, D.C., for Securities Industry and Financial Markets Association, amicus curiae.
I. In the interests of business certainty, the separate entity rule, a long-standing rule of law in this state, should be preserved. (J. Zeevi & Sons v Grindlays Bank [Uganda], 37 NY2d 220; IRB-Brasil Resseguros, S.A. v Inepar Invs., S.A., 20 NY3d 310; Matter of Eckart, 39 NY2d 493; Matter of Southeast Banking Corp., 93 NY2d 178; Cronan v Schilling, 282 App Div 940; Chrzanowska v Corn Exch. Bank, 173 App Div 285, 225 NY 728; Therm-X-Chem. & Oil Corp. v Extebank, 84 AD2d 787; Bluebird Undergarment Corp. v Gomez, 139 Misc 742; Clinton Trust Co. v Compania Azucarera Cent. Ramona S.A., 172 Misc 148.) II. Sound public policy reasons support continuing to treat bank branches as separate entities for purposes of CPLR article 52. (Mashreqbank PSC v Ahmed Hamad Al Gosaibi & Bros. Co., 23 NY3d 129; Shipping Corp. of India Ltd. v Jaldhi Overseas Pte Ltd., 585 F3d 58; Cala Rosa Mar. Co. Ltd. v Sucres Et Deneres Group, 613 F Supp 2d 426; Ayyash v Koleilat, 38 Misc 3d 916, 115 AD3d 495; Commonwealth of the N. Mariana Is. v Canadian Imperial Bank of Commerce, 21 NY3d 55; United States v Philadelphia Nat. Bank, 374 US 321; Samsun Logix Corp. v Bank of China, 31 Misc 3d 1226[A], 2011 NY Slip Op 50861[U]; JPMorgan Chase Bank, N.A. v Motorola, Inc., 47 AD3d 293; Western Union Telegraph Co. v Pennsylvania, 368 US 71.) III. Koehler v Bank of Bermuda Ltd. (12 NY3d 533 [2009]) did not abrogate the separate entity rule. (Global Tech., Inc. v Royal Bank of Can., 34 Misc 3d 1209[A], 2012 NY Slip Op 50023[U]; Matter of National Union Fire Ins. Co. of Pittsburgh, Pa. v Advanced Empl. Concepts, 269 AD2d 101; Edmant & Co., LLC v Z & M Media, LLC, 2012 NY Slip Op 32918[U]; Ayyash v Koleilat, 38 Misc 3d 916, 115 AD3d 495; Samsun Logix Corp. v Bank of China, 31 Misc 3d 1226[A], 2011 NY Slip Op 50861[U]; Parbulk II AS v Heritage Mar., SA, 35 Misc 3d 235; Dewar v Bangkok Bank Pub. Co. Ltd., N.Y. Branch, 37 Misc 3d 1231[A], 2012 NY Slip Op 52254[U]; Matter of International Legal Consulting Ltd. v Malabu Oil & Gas Ltd., 35 Misc 3d 1203[A], 2012 NY Slip Op 50546[U].) IV Considerations of comity, limitations on extraterritoriality and recent Supreme Court precedent all disfavor Motorola Credit Corporation’s interpretation. (Global Reins. Corp.-U.S. Branch v Equitas Ltd., 18 NY3d 722; Morrison v National Australia Bank Ltd., 561 US 247; Banco Ambrosiano v Artoc Bank & Trust, 62 NY2d 65; City of Pontiac Policemen’s & Firemen’s Retirement Sys. v UBS AG, 752 F3d 173; Sonera Holding B.V. v Cukurova Holding A.S., 750 F3d 221; Matter of National Union Fire Ins. Co. of Pittsburgh, Pa. v Advanced Empl. Concepts, 269 AD2d 101; Global Tech., Inc. v Royal Bank of Can., 34 Misc 3d 1209[A], 2012 NY Slip Op 50023[U].) V The legislature intended for bank branches to be treated as separate entities. (Arbegast v Board of Educ. of S. New Berlin Cent. School, 65 NY2d 161; Hammelburger v Foursome Inn Corp., 54 NY2d 580; Easley v New York State Thruway Auth., 1 NY2d 374; Transit Commn. v Long Is. R.R. Co., 253 NY 345; Matter of Delmar Box Co. [Aetna Ins. Co.], 309 NY 60; Engle v Talarico, 33 NY2d 237; Matter of New York State Assn. of Life Underwriters v New York State Banking Dept., 83 NY2d 353; Matter of Kaplan v Peyser, 273 NY 147; Dyer v Broadway Cent. Bank, 252 NY 430.)

Opinion:
OPINION OF THE COURT
Graffeo, J.
In this case, the United States Court of Appeals for the Second Circuit asks us whether the "separate entity" rule prevents a judgment creditor from ordering a garnishee bank operating branches in New York to restrain a judgment debtor's assets held in foreign branches of the bank. We conclude that it does.
I
Between April 1998 and September 2000, several members of the Uzan family (the Uzans) induced plaintiff Motorola Credit Corporation (Motorola) to loan over $2 billion to a Turkish telecommunications company they controlled, purportedly to finance a major expansion of the company's operations. Unbeknownst to Motorola, the Uzans diverted a substantial portion of these funds to themselves and other entities they controlled. In 2003, after discovering that the Uzans had "perpetrated a huge fraud" and concealed "their scheme through an almost endless series of lies, threats, and chicanery," the United States District Court for the Southern District of New York entered a judgment in Motorola's favor for compensatory damages of about $2.1 billion (Motorola Credit Corp. v Uzan, 274 F Supp 2d 481, 490 [SD NY 2003]). Three years later, the District Court awarded Motorola an additional $1 billion in punitive damages (see Motorola Credit Corp. v Uzan, 413 F Supp 2d 346 [SD NY 2006]).
The Uzans have gone to great lengths to avoid satisfying the judgments and remain in contempt for failure to comply with the District Court's orders, subjecting them to arrest if they enter the United States. As a result of enforcement obstacles, Motorola has pursued collection of the judgments through third-party discovery and the District Court has conducted postjudgment proceedings ex parte and under seal. In February 2013, the District Court entered an order pursuant to Federal Rules of Civil Procedure rules 65 and 69 and CPLR 5222 restraining the Uzans and anyone with notice of the order from selling, assigning or transferring their property.
Motorola served the restraining order on the New York branch of defendant Standard Chartered Bank (SCB), a foreign bank incorporated and headquartered in the United Kingdom. SCB, which had no connection to Motorola's loan to the Uzans or the underlying litigation, did not locate any Uzan property at its New York branch. Two months later, a global search of its branches revealed Uzan-related assets valued at roughly $30 million in its branches in the United Arab Emirates (U.A.E.). SCB froze those assets in accordance with the restraining order, but regulatory authorities in the U.A.E. and Jordan quickly intervened. The Central Bank of Jordan sent a bank examiner to seize documents at SCB's Jordan branch, while the U.A.E. Central Bank unilaterally debited about $30 million from SCB's account with the bank.
In May 2013, SCB sought relief from the restraining order, claiming in the District Court that the restraint of the $30 million in assets violated U.A.E. law and subjected it to double liability. SCB also contended that, under New York's separate entity rule, service of the restraining order on SCB's New York branch was effective only as to assets located in accounts at that branch and could not freeze funds situated in foreign branches. In opposition, Motorola asserted that the separate entity rule was no longer valid law in light of Koehler v Bank of Bermuda Ltd. (12 NY3d 533 [2009]), where we held that a judgment creditor could seek the turnover of stock certificates located outside the country so long as the court had personal jurisdiction over the garnishee. In a sealed order, the District Court agreed with SCB and concluded that the separate entity rule precluded Motorola from restraining assets at SCB's foreign branches. Nevertheless, the District Court stayed the release of the restraint pending the outcome of Motorola's appeal.
The Second Circuit, recognizing that we have never explicitly addressed the separate entity doctrine and finding that its viability was unclear in the wake of Koehler, certified the following question to us:
"[W]hether the separate entity rule precludes a judgment creditor from ordering a garnishee bank operating branches in New York to restrain a debtor's assets held in foreign branches of the bank" (740 F3d 108, 118 [2d Cir 2014]).
We accepted certification (22 NY3d 1113 [2014]).
II
Motorola, as the judgment creditor, argues that the service of a CPLR 5222 restraining notice on the New York branch of a foreign bank garnishee is sufficient to freeze the funds of the judgment debtor in any branch account with the bank, regardless of where the assets are located. Motorola questions whether the separate entity rule, which is not mentioned in CPLR article 52, was ever the law of New York and asserts that, even if it was, we necessarily abolished it in Koehler. In any event, Motorola asks us to disavow the separate entity doctrine as outmoded and unnecessary.
As the garnishee bank, SCB responds that the separate entity rule is deeply rooted in New York banking law and that foreign banks have reasonably relied on it over the years when deciding whether to open branches and conduct business in New York. Supported by several amici curiae, SCB asserts that Koehler did not discard the separate entity rule and urges that the rule remains vital in the context of international banking. Unlike our dissenting colleagues, we conclude that SCB has the better argument.
The separate entity rule, as it has been employed by lower New York courts and federal courts applying New York law, provides that even when a bank garnishee with a New York branch is subject to personal jurisdiction, its other branches are to be treated as separate entities for certain purposes, particularly with respect to CPLR article 62 prejudgment attachments and article 52 postjudgment restraining notices and turnover orders (see Matter of National Union Fire Ins. Co. of Pittsburgh, Pa. v Advanced Empl. Concepts, 269 AD2d 101 [1st Dept 2000]; Therm-X-Chem. & Oil Corp. v Extebank, 84 AD2d 787 [2d Dept 1981]; Allied Mar., Inc. v Descatrade SA, 620 F3d 70, 74 [2d Cir 2010]). In other words, a restraining notice or turnover order served on a New York branch will be effective for assets held in accounts at that branch but will have no impact on assets in other branches.
Courts and commentators traditionally have ascribed three basic rationales for the separate entity doctrine. First, courts applying the rule have emphasized the importance of international comity and the fact that "any banking operation in a foreign country is necessarily subject to the foreign sovereign's own laws and regulations" (Global Tech., Inc. v Royal Bank of Can., 34 Misc 3d 1209[A], 2012 NY Slip Op 50023[U], *3 [Sup Ct, NY County 2012] [internal quotation marks and citation omitted]). Second, it was viewed as necessary to protect banks from being "subject . to competing claims" and the possibility of double liability (Shaheen Sports, Inc. v Asia Ins. Co., Ltd., 2012 WL 919664, *5, 2012 US Dist LEXIS 36720, *14 [SD NY, Mar. 14, 2012, Nos. 98-CV-5951 (LAP), 11-CV-920 (LAP)]), a concern strenuously voiced by the amici in this case. And third, the rule has been justified based on the "intolerable burden" that would otherwise be placed on banks to monitor and ascertain the status of bank accounts in numerous other branches (Cronan v Schilling, 100 NYS2d 474, 476 [Sup Ct, NY County 1950], aff'd without op 282 App Div 940 [1st Dept 1953]; see generally Geoffrey Sant, The Rejection of the Separate Entity Rule Validates the Separate Entity Rule, 65 SMU L Rev 813, 814 [2012]).
The existence of the separate entity rule as a component of New York's common law can be traced back to a 1916 decision (see Chrzanowska v Corn Exch. Bank, 173 App Div 285, 291 [1st Dept 1916], affd without op 225 NY 728 [1919] ["With respect to the question presented for decision, the different branches were as separate and distinct from one another as from any other bank"]). It was first applied in the postjudgment context a few decades later in Walsh v Bustos, where the court concluded that a restraining order served on a New York branch of the bank garnishee did not "extend to the deposits of the judgment debtor in the Mexican branch of this foreign bank" (46 NYS2d 240, 241 [NY City Ct 1943]). By the 1950s and 1960s, the separate entity rule was described by state and federal courts as "well established" (Cronan, 100 NYS2d at 476) and supported by "a consistent line of authority" (Det Bergenske Dampskibsselskab v Sabre Shipping Corp., 341 F2d 50, 53 [2d Cir 1965]). And its endurance continues into the twenty-first century in the postjudgment context (see Gliklad v Bank Hapoalim B.M., 2014 NY Slip Op 32117[U] [Sup Ct, NY County 2014]; Parbulk II AS v Heritage Mar., SA, 35 Misc 3d 235, 238-239 [Sup Ct, NY County 2011]; Fidelity Partners, Inc. v Philippine Export & Foreign Loan Guar. Corp., 921 F Supp 1113, 1119-1120 [SD NY 1996]). Although we have not expounded on the separate entity rule, contrary to Motorola's suggestion, it is a firmly established principle of New York law, with a history of application both before and after the 1962 adoption of the CPLR.
Motorola argues that we abrogated the rule five years ago in Koehler v Bank of Bermuda Ltd. (12 NY3d 533 [2009]), a case in which a judgment creditor secured a CPLR 5225 turnover order directing a garnishee bank in Bermuda to deliver stock certificates belonging to the judgment debtor. The bank consented to personal jurisdiction based on the presence of a subsidiary in New York. The question certified to us by the Second Circuit was "whether a court sitting in New York may order a bank over which it has personal jurisdiction to deliver stock certificates owned by a judgment debtor (or cash equal to their value) to a judgment creditor, pursuant to CPLR article 52, when those stock certificates are located outside New York" (id. at 536). We answered that inquiry in the affirmative, concluding that "the Legislature intended CPLR article 52 to have extraterritorial reach" and that "the key to the reach of the turnover order is personal jurisdiction over a particular defendant" (id. at 539-540). Because the bank admitted that the New York courts had secured personal jurisdiction over it, the turnover order was properly directed at the stock certificates in Bermuda.
Notably absent from our decision in Koehler was any discussion of tbe separate entity rule. We discern two reasons for our silence on the subject. As an initial matter, the foreign bank did not raise the issue so we had no occasion to examine the doctrine. Second, the separate entity rule, as it has been applied by the courts, would not have aided the bank in Koehler because that case involved neither bank branches nor assets held in bank accounts. In short, we did not analyze, much less overrule, the separate entity doctrine in Koehler. Nor, as the dissent believes, is the rule irreconcilable with our holding in Koehler that the scope of CPLR article 52 is generally tied to the exercise of personal jurisdiction over a garnishee. As a long-standing common-law doctrine, the separate entity rule functions as a limiting principle in the context of international banking, particularly in situations involving attempts to restrain assets held in a garnishee bank's foreign branches. We therefore reject Motorola's view that Koehler decided the issue before us.
Motorola and the dissent further submit that the separate entity rule is incompatible with CPLR article 52 because nothing in CPLR 5222, governing postjudgment restraining notices, expressly embraces the rule. Motorola cites Commonwealth of the N. Mariana Is. v Canadian Imperial Bank of Commerce, where we stated, in determining the expanse of CPLR article 52, that the "starting point is the language itself, giving effect to the plain meaning thereof' (21 NY3d 55, 60 [2013] [internal quotation marks and citation omitted]). But Motorola's reliance on Canadian Imperial Bank is misplaced because the separate entity rule predates the CPLR by several decades and the issue is not one of statutory construction but, rather, whether to retain a common-law principle.
Finally, we decline Motorola's invitation to cast aside the separate entity rule. As discussed, the doctrine has been a part of the common law of New York for nearly a century. Courts have repeatedly used it to prevent the postjudgment restraint of assets situated in foreign branch accounts based solely on the service of a foreign bank's New York branch. Undoubtedly, international banks have considered the doctrine's benefits when deciding to open branches in New York, which in turn has played a role in shaping New York's "status as the preeminent commercial and financial nerve center of the Nation and the world" (Ehrlich-Bober & Co. v University of Houston, 49 NY2d 574, 581 [1980]).
In large measure, the underlying reasons that led to the adoption of the separate entity rule still ring true today. The risk of competing claims and the possibility of double liability in separate jurisdictions remain significant concerns, as does the reality that foreign branches are subject to a multitude of legal and regulatory regimes. By limiting the reach of a CPLR 5222 restraining notice in the foreign banking context, the separate entity rule promotes international comity and serves to avoid conflicts among competing legal systems (see generally Daimler AG v Bauman, 571 US —, —, 134 S Ct 746, 763 [2014] [recognizing the importance of considering "the risks to international comity"]). And although Motorola suggests that technological advancements and centralized banking have ameliorated the need for the doctrine, courts have continued to recognize the practical constraints and costs associated with conducting a worldwide search for a judgment debtor's assets (see Samsun Logix Corp. v Bank of China, 31 Misc 3d 1226[A], 2011 NY Slip Op 50861[U], *4 [Sup Ct, NY County 2011] [stating that "the Banks submitted numerous affidavits to the effect that the computer systems in the New York branches of the Banks do not provide access to customer account information at the head office or at branches outside of the United States"]).
Indeed, as the District Court observed, the facts of this case aptly demonstrate that the policies implicated by the separate entity rule run deeper than the ability of a bank to communicate across branches. In seeking to comply with the restraining order, SCB faced regulatory and financial repercussions abroad. Representatives of the Central Bank of Jordan compelled SCB to disclose records and directed SCB to immediately unfreeze the assets. The U.A.E. Central Bank, which possesses regulatory oversight in that nation, would not allow SCB's Uzanrelated payment obligation to remain unsatisfied. As a result, the U.A.E. Central Bank debited SCB's account with that hank for an amount equivalent to the frozen funds — approximately $30 million. In essence, SCB was placed in the difficult position of attempting to comply with the contradictory directives of multiple sovereign nations.
Consequently, in contrast to the dissent, we believe that abolition of the separate entity rule would result in serious consequences in the realm of international banking to the detriment of New York's preeminence in global financial affairs. For all of these reasons, we conclude that a judgment creditor's service of a restraining notice on a garnishee bank's New York branch is ineffective under the separate entity rule to freeze assets held in the bank's foreign branches.
Accordingly, the certified question should be answered in the affirmative.
. The Second Circuit also certified a related question in a companion case involving the application of the separate entity rule in the CPLR 5225 turnover context (see Tire Eng'g & Distrib. L.L.C. v Bank of China Ltd., 740 F3d 108 [2d Cir 2014]), but that certified question was later withdrawn (22 NY3d 1152 [2014]).
. Most cases applying the separate entity rule involved bank branches in foreign countries, but some have applied the rule to bar a restraint even where the unserved branch is located in New York (see e.g. Det Bergenske Dampskibsselskab v Sabre Shipping Corp., 341 F2d 50, 53-54 [2d Cir 1965]). In this case, we have no occasion to address whether the separate entity rule has any application to domestic bank branches in New York or elsewhere in the United States. The narrow question before us is whether the rule prevents the restraint of assets held in foreign branch accounts, and we limit our analysis to that inquiry.
. We affirmed, without opinion, in two cases involving the separate entity-rule (see McCloskey v Chase Manhattan Bank, 11 NY2d 936 [1962]; Chrzanowska v Corn Exch. Bank, 225 NY 728 [1919]).
. Similarly, in this case personal jurisdiction over SCB was predicated on the presence of its New York branch. The District Court noted that SCB did not dispute that personal jurisdiction existed on this basis. Motorola, too, asserts in its brief that SCB "has never contested personal jurisdiction." However, SCB now appears to challenge personal jurisdiction in light of the U.S. Supreme Court's nascent decision in Daimler AG v Bauman, which held that general jurisdiction over a foreign corporation may not be predicated solely on the ground that the corporation "engages in a substantial, continuous, and systematic course of business" in the state (571 US —, —, 134 S Ct 746, 761 [2014] [internal quotation marks and citation omitted]). Rather, as a matter of due process, general jurisdiction exists only if the corporation is "essentially at home in the forum State" (571 US at —, 134 S Ct at 761 [internal quotation marks and citation omitted]), typified by "the place of incorporation and principal place of business" (571 US at —, 134 S Ct at 760). Here, SCB observes that it is incorporated under the laws of the United Kingdom and headquartered there. Whether New York has personal jurisdiction over SCB— and whether SCB may still litigate the federal constitutional issue at this juncture — are questions that must be resolved by the federal courts. The sole issue before us on this certified question is whether the common-law separate entity rule prevents Motorola's restraint of assets held by SCB's foreign branches.
. It would appear that the judgment creditor in Koehler also served the bank itself in Bermuda, not only its New York subsidiary, providing yet another reason for the inapplicability of the separate entity rule in that case (see Koehler v Bank of Bermuda Ltd., 2005 WL 551115, *12, 2005 US Dist LEXIS 3760, *35 [SD NY, Mar. 9, 2005, No. M18-302 (CSH)] ["Assuming service to be proper, the separate entity rule has no role to play in this case"]).
. As the dissent highlights, one court questioned the validity of the separate entity rule in light of computerized banking (see Digitrex, Inc. v Johnson, 491 F Supp 66 [SD NY 1980]). But courts subsequently limited the so-called Digitrex exception to cases where "(1) the restraining notice is served on the bank's main office; (2) the bank's main office and branches are within the same jurisdiction; and (3) the bank branches are connected to the main office by high-speed computers and are under the centralized control of the main office" (Limonium Mar., S.A. v Mizushima Marinera, S.A., 961 F Supp 600, 607 [SD NY 1997]; see also Matter of National Union Fire Ins. Co. of Pittsburgh, Pa. v Advanced Empl. Concepts, 269 AD2d 101, 102 [1st Dept 2000]).