STUART M. BERNSTEIN and MARTIN GLENN, UNITED STATES BANKRUPTCY JUDGES.
This joint opinion addresses common issues raised by the Motions to Dismiss in two separate Adversary Proceedings — one pending before Judge Bernstein and the other pending before Judge Glenn. The two Adversary Proceedings were filed in connection with two separate chapter 11 cases, one for each of two Anguilla "offshore banks" (as explained below). The two Anguilla offshore banks failed between 2013 and 2016, and each Debtor Bank is the subject of a receivership proceeding and litigations pending in the Anguilla courts. The same Foreign Representative in two separate chapter 15 cases (one for each Anguilla offshore bank) filed these chapter 11 cases after recognition of Anguilla receivership proceedings as foreign main proceedings.
The two chapter 11 cases were filed to enable the Foreign Representative to bring avoidance claims under federal and
Because of the common issues, arguments and counsel, we heard argument on the Motions to Dismiss together, and we decide the common issues together. To be clear, however, while we reach the same resolution of the Motions, this joint Opinion reflects the separate opinion of each of us in our respective Adversary Proceeding.
The Motions to Dismiss raise difficult issues of personal jurisdiction, subject matter jurisdiction, forum non conveniens, international comity, Foreign Sovereign Immunities Act defenses, extraterritorial application of federal and New York law, and the act of state doctrine. We discuss the issues below, although we find it unnecessary, at this stage of these cases, to resolve all of them.
We agree that the proper disposition of each case is a stay based on forum non conveniens and international comity, pending decisions of issues raised or that can be raised, and more appropriately should be raised and decided by the courts in Anguilla.
National Bank of Anguilla (Private Banking & Trust) Ltd. ("PBT") filed an adversary proceeding in this Court (the "PBT Adversary Proceeding," ECF Adv. Proc. No. 16-01279 (MG))
Caribbean Commercial Investment Bank Ltd. ("CCIB," and together with PBT, the "Plaintiffs," or the "Debtor Banks") filed an adversary proceeding (the "CCIB Adversary Proceeding," ECF Adv. Proc. No. 17-01058 (SMB), and together with the PBT Adversary Proceeding, the "Adversary Proceedings") by filing a complaint (the "CCIB Complaint," ECF Doc. #1, and together with the PBT Complaint, the "Complaints") on May 1, 2017 against NCBA, ECCB, and the Caribbean Commercial Bank (Anguilla) Ltd ("CCB," and together with NCBA and ECCB, the "CCIB Defendants," and together with the PBT Defendants, the "Defendants," each a "Defendant"). On July 24, 2017, the CCIB Defendants filed the pending motions to dismiss the CCIB Complaint (the "CCB Motion to Dismiss the CCIB Complaint," ECF Doc. #12; the "ECCB Motion to Dismiss the CCIB Complaint," ECF Doc. #18; and the "NCBA Motion to Dismiss the CCIB Complaint," ECF Doc. #15, and collectively, the "CCIB Motions to Dismiss," and together with the PBT Motions to Dismiss, the "Motions to Dismiss," or the "Motions"). The CCIB Motions to Dismiss are supported by memoranda of law (the "CCB Memo," ECF Doc. #13; the "ECCB (CCIB) Memo," ECF Doc. #19; and the "NCBA (CCIB) Memo," ECF Doc. #16) and the declarations of William Richard Hare (the "Hare CCIB Decl.," ECF Doc. #14) and Trevor Brathwaite (the "Brathwaite CCIB Decl.," ECF Doc. #20). CCIB filed memoranda of law in opposition to the CCIB Motions to Dismiss (the "CCIB Response to CCB," ECF Doc. #24; the "CCIB Response to NCBA," ECF Doc. #25; and the "CCIB Response to ECCB," ECF Doc. #26, and collectively, the "CCIB Opposition"). The CCIB Opposition is supported by the declaration of Eustella Fontaine (the "Fontaine CCIB Decl.," ECF Doc. #27). The CCIB Defendants filed reply briefs to the CCIB Opposition (the "CCB Reply," ECF Doc. #29; the "NCBA (CCIB) Reply," ECF Doc. #30; and the "ECCB (CCIB) Reply," ECF Doc. #33).
On October 19, 2017, the Court entered an order (the "October 19, 2017 Order) in both Adversary Proceedings authorizing the parties to file additional memoranda of law addressing (1) whether the Bankruptcy Code abrogates sovereign immunity for ECCB over bankruptcy law avoidance claims under 548 and state law avoidance claims that can be asserted under section 544, and (2) whether any authority exists under Anguillan law in support of the contention that the Debtor Banks retained an interest in funds transferred from the Debtor Banks to the Defendants (ECF Doc. #37; ECF PBT Doc. #76). The Debtor Banks filed a joint supplemental memorandum in response to the order (the "Debtor Banks Joint Supplemental Memo," ECF Doc. #42, ECF PBT Doc. #81). The Defendants also filed a joint memoranda of law (the "Defendants Joint Supplemental Memo," ECF Doc. #39, ECF PBT Doc. #78), and ECCB filed another supplemental brief in response to the order (the "ECCB Supplemental Memo," ECF Doc. #40, ECF PBT Doc. #79).
The facts surrounding these related Adversary Proceedings are taken primarily from the well-pleaded allegations in the Complaints.
CCIB and PBT were incorporated and licensed in Anguilla under the Trust Companies and Offshore Banking Act of Anguilla, (¶ 26; PBT Compl. ¶ 22), and operated as commercial offshore banks (i.e. banks that operated within Anguilla, but served only non-Anguillan customers). As offshore banks, CCIB and PBT were authorized only to accept deposits and remit withdrawals in non-Eastern Caribbean currencies to individuals who were not residents of Anguilla. (Brathwaite CCIB Decl. ¶ 12; Braithwaite PBT Decl. ¶ 12.) Approximately 120 of PBT's depositors were located in the United States, accounting for 16% of deposits made with PBT (PBT Compl. ¶ 22), and approximately 144 of CCIB's depositors were located in the United Stated, representing 43% of CCIB's deposits. (¶ 26.)
CCIB and PBT are wholly-owned subsidiaries, respectively, of CCB and NBA (collectively, the "Parent Banks"). (¶ 27; PBT Compl. ¶ 23.) NBA, which was the largest financial institution in Anguilla (Brathwaite PBT Decl. ¶ 11) and CCB are incorporated pursuant to the laws of Anguilla as private limited liability companies (¶ 27; PBT Compl. ¶ 23). NBA, as PBT's onshore parent company, managed the administrative and banking operations of PBT pursuant to an agreement dated April 1, 2005 (the "PBT Service Agreement," Braithwaite PBT Decl., Ex. D.). (Brathwaite PBT Decl. ¶ 21.) Likewise, CCB managed the day-to-day affairs of CCIB pursuant an agreement for service dated May 2010 (the "CCIB Agreement for Service," Braithwaite CCIB Decl., Ex. D.).
NCBA is a newly-formed bank created in 2016, incorporated under the laws of Anguilla, and wholly owned by the government of Anguilla. (¶¶ 28, 34; Fontaine PBT Decl. ¶ 12.) On April 22, 2016, NCBA inherited NBA's and CCB's "valuable assets" as part of a "Resolution Plan" (defined below). (PBT Compl. ¶¶ 13, 52-53.) According to William Hare, NCBA is "now the only bank providing retail and commercial banking services in Anguilla." (Hare PBT Decl. ¶ 19.)
CCB, NBA, and NCBA are regulated by ECCB. ECCB was established on October 1, 1983 under the Eastern Caribbean Central Bank Agreement Act R.S.A c. E5
(Brathwaite PBT Decl. ¶ 9 (citing ECCB Act at Art. 5B, Part IIA).) ECCB has no regulatory authority over the Debtor Banks. (¶ 40; PBT Compl. ¶ 7.) Instead, the Debtor Banks are regulated by the Anguillan Financial Services Commission (the "FSC"). (¶ 59; PBT Compl. ¶ 7.)
The 2008 global financial crisis severely stressed the Eastern Caribbean banking sector. (Brathwaite PBT Decl. ¶ 10.) The effects of the crisis were especially pronounced in Anguilla, where economic activity contracted and the country continued to experience negative growth through 2012. (Id.) Anguillan commercial banks uniformly realized significant declines in earnings and deterioration of capital levels. (Id.)
In October 2011, ECCB and others began monitoring the affairs of the Parent Banks in response to questions relating to the Parent Banks' viability. (¶ 47; PBT Compl. ¶ 43.) On August 12, 2013, concerned by escalating non-performing loans, the Parent Banks' failure to meet ECCB's capital requirements, and the likely inability of the Parent Banks to meet their obligations, ECCB placed each Parent Bank into conservatorship (the "Conservatorships") pursuant to powers conferred on ECCB under the ECCB Act. (¶ 48; PBT Compl. ¶ 43.) The stated aim of the Conservatorships was to stabilize and restructure the Debtor Banks. (¶ 50; PBT Compl. ¶ 46.) To accomplish that aim, ECCB appointed Conservator Directors (as defined below) to both CCB and NBA to prepare a rescue plan, and through the Conservator Directors, restricted access to CCB and NBA deposits. (¶¶ 51, 53; PBT Compl. ¶¶ 47, 49.)
Following the implementation of the Conservatorships, ECCB removed the Parent Banks' directors and appointed Martin Dinning, Hudson Carr, Shawn Williams, and, for a short period of time, Robert Miller (each a "Conservator Director," and collectively, the "Conservator Directors") as conservators of the Parent Banks. (¶ 52; PBT Compl. ¶ 7.) Between August 12, 2013 and March 24, 2016 (the "Relevant Period"), the Parent Banks' affairs were conducted in accordance with instructions provided by the Conservator Directors (¶ 55; PBT Compl. ¶ 7), several
On or about August 15, 2013, ECCB or Dinning, as Conservator Director acting on behalf of NBA and CCB, or Miller, Conservator Director acting on behalf of CCB, dismissed the appointed directors of PBT and CCIB. (¶ 66; PBT Compl. ¶ 62.) From August 15, 2013 until February 22, 2016, the Debtor Banks had no de jure directors and allegedly acted solely under the management control of the Conservator Directors. (¶ 69; PBT Compl. ¶ 65.) According to the Plaintiffs, the Conservator Directors presumed to act as directors of the Debtor Banks and were the sole persons causing the Debtor Banks to continue conducting regular banking business. (¶ 71; PBT Compl ¶ 67.) For example, on September 10, 2013 and October 17, 2017, some of the Debtor Banks' customers received correspondence from certain Conservator Directors advising them of operational changes at the Debtor Banks due to the takeover by ECCB, but stating that the Debtor Banks' operations would remain normal. (¶ 70; PBT Complaint ¶ 66.) The Conservator Directors also determined that funds were commingled between NBA and PBT and between CCIB and CCB, and specifically determined that some funds deposited in PBT and CCIB were transferred respectively to NBA and CCB. (Brathwaite CCIB Decl. ¶ 18; Brathwaite PBT Decl. ¶ 20.)
The Conservatorships, and ECCB and the Conservator Directors' alleged control over the Debtor Banks, continued from the Conservatorships' implementation until April 22, 2016, when the Debtor Banks were placed into receivership. (¶¶ 56-57; PBT Compl. ¶¶ 50-51; see also Fontaine PBT Decl. ¶ 9.)
The Complaints, in the main, allege that during the Relevant Period, the Conservator Directors assumed control of the Debtor Banks and, as de facto director, breached their fiduciary duties to the Debtor Banks by, among other things, "procur[ing] or permit[ing]" the payment (i.e., "upstream") of each Debtor Bank's customer deposits to the respective Parent Bank's Bank of America ("BofA") accounts (collectively, the "Accounts) in New York.
Further, while the Debtor Banks allege that legal title to the Funds transferred to the Parent Banks when such Funds were deposited into the Accounts (¶ 76; PBT Compl. ¶ 72), the Debtor Banks contend that they maintained an equitable interest in the Funds in the Accounts because the Debtor Banks had no accounts in their own names and the Accounts, although in the Parent Banks' names, were also used as the Debtor Banks' operating accounts. (¶ 76; PBT Compl. ¶ 72.) According to the Debtor Banks, the Parent Banks "knowingly made no provision for repaying" the Debtor Banks and "did not provide any reasonably equivalent value or fair consideration for the Funds." (¶ 76; PBT Compl. ¶ 72.) The Debtor Banks contend that the Funds along with millions of other dollars were subsequently transferred to ECCB. (See ¶¶ 97-100; PBT Complaint ¶¶ 98-100.)
In addition, the Debtor Banks contend that the Parent Banks, prior to and while under the management of the Conservator Directors, upstreamed millions of dollars to ECCB. CCB allegedly transferred to ECCB (a) US$28,673,612.01 in the two years prior to CCIB's chapter 15 petition, (b) US$67,198,261.96 in the three years prior to CCIB's chapter 15 petition, (c) US$70,023,261.96 during the Conservatorship of CCB, and (d) US$87,933,896.76 during the period between January 3, 2013 and April 18, 2016. (¶¶ 97-100.) Likewise, PBT alleges that NBA transferred to ECCB the net amount of (a) US$12,120,348.30 in the two years prior to PBT's chapter 15 petition, (b) US$11,872,446.40 during the Conservatorship of NBA, and (c) US$27,572,446.40 in the period between January 2, 2013 and April 11, 2016, without receiving reasonably equivalent value or fair consideration in exchange. (PBT Compl. ¶¶ 98-100.)
The Plaintiffs argue that the upstreaming of the Debtor Banks' customers' deposits provided liquidity to the Parent Banks during times when the Parent Banks were insolvent on a balance sheet basis. (¶¶ 77, 80; PBT Compl. ¶¶ 74, 77.) However, the upstreaming rendered the Debtor Banks insolvent and unable to pay their depositors during the Relevant Period. (¶¶ 81-89; PBT Compl. ¶¶ 79-86.) The Debtor Banks' contemporaneous audited and unaudited financial statements showed that they were insolvent during the Relevant Period. (¶¶ 85-88; PBT Compl. ¶¶ 83-85.)
In addition, the Debtor Banks' customers were assured that any new funds deposited with the Debtor Banks after August 12, 2013 would be available for withdrawal. (¶ 91; PBT Compl ¶ 88.) But despite those assurances, on or around September 2, 2013, the Conservator Directors placed restrictions on the Debtor Banks' customers' ability to make withdrawals. (¶ 83; PBT Compl. ¶ 81.)
ECCB ultimately developed a plan in 2016 to resolve the Parent Banks' financial problems (the "Resolution Plan"). The fairness of the Resolution Plan is currently the subject of a judicial proceeding pending in Anguilla, and that proceeding is discussed in greater detail below. On April 22, 2016, ECCB appointed a receiver of
As shall be seen, the Debtor Banks contend that the Funds transferred out of the Accounts to the Parent Banks and ECCB "were held in constructive trust for the Debtor" (¶ 76; PBT Compl. ¶ 73), and that the Resolution Plan unfairly discriminated against them by failing to transfer their liabilities to NCBA because, among other reasons, the Debtor Banks' depositors were non-Anguillan residents.
Upon the FSC's application, the Supreme Court in the High Court of Anguilla (the "High Court") entered an order placing the operations of the Debtor Banks under administration pursuant to section 31(2)(b) of the FSC Act, R.S.A. c.F28 (the "Anguilla Administrations"). (¶ 60; PBT Compl. ¶ 56.) On February 22, 2016, the High Court appointed William Tacon of FTI Consulting as the administrator of the Debtor Banks (the "Administrator," or the "Foreign Representative"), granting the Administrator complete control of the management of the Debtor Banks. (¶ 61; PBT Compl. ¶ 57.) The High Court specifically authorized the Administrator, as an officer of the High Court, "to act in Anguilla or any foreign jurisdiction where he believes assets and property of the Offshore Banks may be Situate[d] ... [to] commence [or] continue ... without further order of this Honorable Court any proceeding or action ... in a foreign jurisdiction for the purpose of fulfilling his duties and obligations" under the February 22, 2016 order. (¶ 62; PBT Compl. ¶ 58.) At the close of business on April 25, 2016, the Debtor Banks ceased accepting new deposits at the Administrator's direction. (¶ 79; PBT Compl. ¶ 22.)
Several pending proceedings in the United Stated and in Anguilla are relevant to the Defendants' Motions to Dismiss. In addition to the Anguilla Administrations of the Debtor Banks pursuant to section 31(2)(b) of the FSC Act, R.S.A. c.F28, these pending proceedings include: (i) the chapter 15 and chapter 11 proceedings of the Debtor Banks before this Court (the "U.S. Proceedings"); (ii) the proceedings initiated by the Debtor Banks in Anguilla against the Parent Banks and NCBA (the "Anguilla Initial Proceedings"); (iii) the proceedings commenced by some of the Debtor Banks' depositors in Anguilla against the Conservator Directors and ECCB (the "Satay Action"); and (iv) the proceedings initiated by the Debtor Banks against ECCB and others seeking judicial review of the Defendants' conduct (the "Judicial Review," together with the Anguilla Initial Proceedings and the Satay Action, the "Anguilla Litigation").
On May 26, 2016 and October 11, 2016, pursuant to the authority granted by the Anguillan High Court, the Administrator filed chapter 15 petitions in this Court on
PBT and CCIB subsequently filed chapter 11 petitions, respectively, on June 22, 2016 (Case No. 16-11806-MG) and October 11, 2016 (Case No. 16-13311-SMB) for the ostensible purpose of filing federal avoidance actions against the Defendants. On December 16, 2016 and May 1, 2017, PBT and CCIB filed these Adversary Proceedings. With one exception, the Complaints are identical and seek identical relief. They assert claims to (a) avoid and recover intentional or constructive fraudulent transfers under applicable provisions of the Bankruptcy Code, New York law and Anguillan law; (b) recover the avoidable transfers from NCBA and ECCB as subsequent transferees; (c) disallow claims of the Parent Banks, NCBA, and ECCB under section 502(d) of the Bankruptcy Code; and (d) impose liability against ECCB for breach of fiduciary duty, gross negligence, and aiding and abetting breach of fiduciary duty.
In addition to challenging the upstreaming of funds from the Debtor Banks to the Parent Banks and NCBA, the CCIB Complaint also alleges that CCIB transferred approximately US$9 million to CCB from its Morgan Stanley account. It does not appear, however, to include this transfer in its avoidance claims which are limited to US$4,481,394.62, the net amount upstreamed transfers effectuated through the BofA accounts. (See CCIB Complaint, Counts V, VIII, XI, XIV.)
On May 6, 2016, the Debtor Banks brought suit in the High Court of Anguilla against the Parent Banks and NCBA. (See Debtor Banks' Statement of Claim, Hare CCIB Decl., Ex. B.) The Debtor Banks made the same essential allegations as in the Complaints, namely, that the Conservator Directors and ECCB breached their fiduciary duties in their capacity as de facto directors of the Debtor Banks by transferring the Funds to the Parent Banks. More specifically, the Debtor Banks alleged that during their control, and while the Parent Banks were insolvent, the Conservator Directors "procured or permitted the payment to, respectively, NBA and CCB of all monies received by PBT and [CCIB] from depositors, and the proceeds of all assets of PBT and [CCIB] realized or collected during the Relevant Period" (id. ¶ 11), in the amounts of US $174,959,675.75 and US $26,983,662.05, respectively. (Id. ¶ 13.) PBT and CCIB contended
Because the Parent Banks were in receivership at the commencement of the Anguilla Initial Proceedings, a stay was in effect as to all legal proceedings against them under section 143(c) of the Banking Act 2015 (the "Banking Act").
The principal reason for the dismissal was the Debtor Banks' failure to join the Conservator Directors as parties. According to the High Court, the Debtor Banks' claims "raise[d] serious questions about the source of the powers under which the conservators of the defendants (appointed by ECCB) sought to exercise the powers they are alleged to have exercised over the claimants who are offshore banks regulated by the Anguilla Financial Services Commission ["FSC"] rather than the ECCB." (Id. ¶ 93.) Although the Debtor Banks alleged that the Conservator Directors breached their fiduciary duties to them and sought a remedy against them in the form of a declaration that they had breached their fiduciary duties, the High Court noted that the Debtor Banks did not name the Conservator Directors as parties. (Id. ¶ 95.) The High Court found that "it [did] not appear ... that the claimants [could] rightfully seek or obtain a declaration against them that they acted in breach of the fiduciary duty" (id. ¶ 99(5)), and without their presence, "the claim has very poor prospects of success." (Id. ¶ 99(6); ¶¶ 107(5)-(6).) The High Court concluded that the Conservator Directors were necessary parties. (Id. ¶ 99.)
The High Court explained that the dismissal of the Debtor Banks' application was also justified by the Conservator Directors' possible immunity. The defendants argued that the Conservator Directors were immune from suit under Article 5F of the ECCB Act.
The defendants also argued that the Conservator Directors were employees of ECCB, and therefore immune from suit under Article 50(7)(i).
On June 28, 2016, fifty-one PBT depositors and seventeen CCIB depositors (the "Satay Claimants") brought an action in the High Court against Conservator Directors Martin Dinning, Hudson Carr, Shawn Williams, Robert Miller and ECCB (the "Satay Defendants"). (Hare PBT Decl. ¶ 32.) Their statement of claim (the "Satay Statement of Claim," Hare CCIB Decl., Ex. D) alleged the same set of facts as the Complaints and the Debtors Banks' Statement of Claim, but asserted claims belonging to the Debtor Banks' depositors rather than the Debtor Banks. In the Satay Statement of Claim, the Satay Claimants asserted that they opened bank accounts with the Debtor Banks (Satay Statement of Claim ¶ 4), and that ECCB placed the Parent Banks in conservatorship on August 12, 2013 pursuant to its emergency powers under the ECCB Act, and appointed the four individual defendants as Conservator Directors of the Parent Banks. (See id. ¶ 6.) The Satay Claimants alleged that as a result of the assumption of control over Parent Banks by the Conservator Directors, the Conservator Directors became de facto directors of the Debtor Banks and breached their duties to the Satay Claimants by, inter alia, failing to ensure the safety and security of their deposits and the Debtor Banks' property. (Id. ¶¶ 24-27.). The Satay Claimants further contended that Conservator Martin Dinning misrepresented that their deposits were safe and that they could continue to trade with their accounts. (Id. ¶ 27(h).) As a result, the Satay Claimants claimed that they could not access their funds deposited with the Debtor Banks (id. ¶ 28), and under the Resolution Plan of 2016, the assets of the Debtor Banks, including the Satay Claimants' deposits, were transferred to the newly constituted NCBA in breach of the Anguillan Constitution and the European Convention on Human Rights. (Id. ¶ 29.) The Satay Claimants further alleged that the Satay Defendants knowingly assisted the Government of Anguilla in depriving the
The Satay Defendants filed an application on August 12, 2016 seeking a declaration that the High Court lacked jurisdiction based on the Satay Defendants' statutory immunity. (See Judgment, dated Feb. 22, 2017 (the "Satay Judgment"), CCIB Compl., Ex. A ¶¶ 9-10.) The Satay Defendants contended that ECCB was immune from suit under Article 50(2) of the ECCB Act
On February 22, 2017, the High Court issued the Satay Judgment and held that the Satay Defendants had acted ultra vires. Although ECCB could, under appropriate circumstances, exercise control over the financial institutions it regulated (e.g., the Parent Banks), the High Court found that it could only "investigate the affairs" of the affiliated financial institutions, here, the Debtor Banks. (Id. ¶¶ 33, 64, 66). The High Court found that ECCB and the individual defendants had exceeded their powers with respect to the Debtor Banks, including by hiring and laying off the Debtor Banks' officers and employees and replacing them with the Conservator Directors, and by sending letters to the Debtor Banks' depositors regarding the restrictions on their withdrawals and the revisions of the interest rates on their deposits. (Id. ¶¶ 61-62.).
Since the Satay Defendants did not possess the authority to act as they did with respect to the Debtor Banks, the High Court concluded that immunity under Article 50 did not apply. (Id. ¶ 67) The High Court further found that the applicability of Article 5F, which immunizes acts taken in good faith and without negligence, could only be determined "after a full ventilation of the facts of the case." (Id. ¶ 69.) The Satay Defendants' jurisdictional objection was therefore "refused," and they were directed to serve their defense. (Id. ¶ 70.) The Satay Judgment did not address whether the Parent Banks could have lawfully taken the challenged actions in their capacities as sole shareholders of the Debtor Banks. (Hare CCIB Decl. ¶ 31; Hare PBT Decl. ¶ 35.) ECCB and the Conservator Directors applied for leave to appeal from the Satay Judgment, and their
On March 10, 2017, the Debtor Banks filed an application for leave to apply for judicial review (the "Judicial Review Application," Brathwaite CCIB Decl., Ex. F) against the Chief Minister of Anguilla, the Attorney General of Anguilla in his official capacity as a legal representative of the Government of Anguilla, Gary Moving, the receiver of the Parent Banks and ECCB. The Judicial Review Application alleged that as part of the Resolution Plan, in or around April 2016, ECCB and the Receiver agreed to transfer certain of the Parent Banks' liabilities (including their liabilities for deposits up to EC$2.8 million) and an equal amount of assets to NCBA. (Id. ¶¶ 10(2)(i)-(ii).) At around the same time, the House of Assembly in Anguilla granted the Government of Anguilla money to fund two trusts (the "Trusts") to protect the Parent Banks' large depositors, defined as those depositors whose deposits exceeded EC$4 million. (Id. ¶ 10(2)(iii).) The intention was to fulfill the policy under which NCBA would assume the Parent Banks' liability to their depositors up to EC$2.8 million while the balance of the deposits would be protected by the Trusts, thereby fully protecting the Parent Banks' depositors. (Id. ¶¶ 11-12.)
The Judicial Review Application claimed, in substance, that the respondents unfairly discriminated against the Debtor Banks by guarantying repayment of deposits of all onshore depositors but not of offshore depositors, who are non-residents of Anguilla. More specifically, the Judicial Review Application alleged that based on the upstreaming of the funds, the Debtor Banks were depositors of the Parent Banks (id. ¶ 14), and that, accordingly, the Debtor Banks should have received similar protection for their deposits. Nevertheless, the liability for the Debtor Banks' deposits was not transferred to NCBA, and the Debtor Banks were excluded from eligibility for payments from the Trust. (Id. ¶¶ 15-24.) As a result, and through the Judicial Review Application, the Debtor Banks sought judicial review of various actions and decisions (collectively, the "Decisions") that resulted in this alleged discriminatory treatment (see id. 32-34), the cumulative effect of which excluded the Debtor Banks' deposits from the protection up to EC$2.8 million per deposit and eligibility for protection under the Trusts. (Id. ¶ 35.) Among other things, the Debtor Banks argued that the respondents had discriminated against similarly situated creditors of the Parent Banks notwithstanding contrary expectations based on ECCB's promises and assurances to the Debtor Banks that it would protect their deposits. The Debtor Banks also claimed that the defendants mistakenly considered the legally irrelevant fact that the Debtor Banks' depositors were non-Anguillan residents, and that they ignored the fact that the Debtor Banks, as depositors of the Parent Banks, were domestic depositors." (Id. ¶¶ 37-74.) The Debtor Banks therefore sought (1) a declaration that the Decisions were unlawful, and orders quashing the Decisions; (2) a declaration that ECCB and the Chief Minister must effect the transfer of the liability for the Debtor Banks' deposits in the sum of EC$2.8 million per deposit to NCBA; and (3) a declaration that the Debtor Banks' deposits with the Parent Banks must receive the same treatment and protections under the Trusts from the Chief Minister and the Receiver as the Parent Banks' other, similarly situated, depositors. (Id. ¶¶ 87-91.)
The Debtor Banks expressly requested ECCB's consent for a stay of the Judicial Review Application until the final determination
The Defendants seek to dismiss the Adversary Proceedings on several grounds. Some of the grounds for dismissal are asserted by all Defendants, while others are asserted independently by some Defendants only.
Each of the Defendants asserts that these Adversary Proceedings should be dismissed on grounds of forum non conveniens because, inter alia, the parties are Anguillan entities and Anguilla is the most convenient forum for the Plaintiffs' claims. The Defendants argue that the Debtor Banks are merely forum shopping by filing their claims in this Court in order to avoid constructive fraudulent transfers under the Bankruptcy Code, a claim not recognized under Anguillan law. In response, the Plaintiffs argue that dismissal is not warranted given, among other things, that many of the transfers at issue occurred in New York and the Anguillan High Court authorized the Plaintiffs to commence actions in foreign jurisdictions and recently issued a stay on the Judicial Review Application pending the outcome of the Adversary Proceedings. In addition, the Plaintiffs urge denial of the motion to dismiss precisely because Anguillan law does not recognize a claim based on a constructive fraudulent transfer.
ECCB contends that it is immune from suit in the United States under the Foreign Sovereign Immunities Act (the "FSIA") because it is a foreign agency or instrumentality and the commercial activity exception to the FSIA does not apply. In response, the Plaintiffs allege that ECCB's activities with respect to the Debtor Banks were nothing more than ordinary banking commercial activities under the FSIA, which occurred or had a direct effect in the United States given, among other things, the transfers to and from a United States bank account and the presence of numerous injured depositors in the United States.
NCBA, NBA and CCB alternatively contend that concerns of international comity warrant staying the Adversary Proceedings pending the outcome of the proceedings in Anguilla. The Debtor Banks assert that a stay should not be granted because, among other things, the High Court has stayed the Judicial Review Application pending the outcome of these Adversary Proceedings.
NCBA, NBA and CCB further argue that the transfers that the Debtor Banks seek to avoid and recover under provisions of the Bankruptcy Code and the New York Debtor Creditor Law (the "NYDCL") are foreign, rather than domestic transfers. Because the avoidance provisions of the Bankruptcy Code and the NYDCL allegedly do not apply extraterritorially, the Plaintiffs cannot seek to avoid the foreign transfers under these provisions.
In response, the Plaintiffs assert that the focus of the Congressional concern, to which a court must look in determining whether application of a statute is extraterritorial, with regards to the avoidance and recovery provisions of the Bankruptcy Code, is on the initial transfers that deplete the bankruptcy estate, and not on the recipient of the transfers. The Plaintiffs thus assert that the focus should be on where the transfers occurred and whether, as here, title transferred in the United States. Since, as the Plaintiffs argue, the transfers are domestic, the Adversary Proceedings should not be dismissed. But the Plaintiffs further contend that should the Court find that the transfers were foreign, Congress has shown a clear intent that the Bankruptcy Code's avoidance powers apply extraterritorially, and that similar public policy reasons favor applying the provisions of the NYDCL extraterritorially. Accordingly, the Plaintiffs contend that the provisions should apply to the contested transfers.
NCBA, NBA and CCB also assert that this Court cannot reach the merits of this case because the act of state doctrine precludes the Court from adjudicating a case based on allegations that a foreign banking regulator (i.e., ECCB) violated its own laws in its own territory. The Plaintiffs, on the other hand, contend that the challenged actions occurred in the United States and are commercial in nature, and are not subject to the act of state defense.
NBA, CCB and NCBA further contend that the Plaintiffs' claims under section 550 of the Bankruptcy Code fail because there is no viable avoidance claim in these cases
In response, the Debtor Banks argue that their section 550 claims are proper because they have stated legally sufficient avoidance claims, and the section 502(d) claim is not premature because the bar date for filing claims has not passed. Indeed, it has not even been set.
NCBA contends that the Plaintiffs fail to state claims for relief under sections 548 and 544 of the Bankruptcy Code and the NYDCL because (i) the Plaintiffs fail to allege with sufficient detail pre-petition transfers from the parent defendant (i.e., NBA and CCB, respectively) to NCBA on April 22, 2016, including their amount, and the specific funds and assets at issue; and (ii) the Plaintiffs' allege that they retained their equitable interests in the Funds both before and after the alleged transfers, and hence, fail to allege a transfer of an interest in their property. The Plaintiffs counter that they have pled the requisite details for the fraudulent transfer claims, and given the broad definition of "transfer," a transfer of the Debtor Banks' legal title in the Funds occurred when the funds were deposited into the Parent Banks' BofA accounts.
Because we conclude that these Adversary Proceedings should be stayed based on forum non conveniens and international comity, we decline to decide any other issues raised by the Motions to Dismiss. See Sinochem Int'l Co. Ltd. v. Malaysia Int'l Shipping Corp., 549 U.S. 422, 425, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) (concluding that a court may dismiss an action based on forum non conveniens without first deciding other threshold objections such as subject matter jurisdiction or personal jurisdiction). If these cases return here after decisions by the courts in Anguilla, those remaining arguments can be dealt with then.
All of the Defendants in these Adversary Proceedings move to dismiss or stay these cases based on forum non conveniens. The Plaintiffs and all of the Defendants are citizens of or domiciled in Anguilla. There is litigation pending in the courts of Anguilla between all of these parties, and, indeed, the Anguilla Initial Proceedings and the Satay Action were pending before these Adversary Proceedings were filed in New York. No one disputes that the Anguilla High Court has personal and subject matter jurisdiction over the parties. One might be inclined to ask the obvious question-why did the Plaintiffs file these cases here if all of the foregoing is true? The obvious answer is that the Plaintiffs believe that certain causes of action can be asserted here that cannot be asserted in Anguilla-specifically, the constructive fraudulent transfer claims under federal and New York law that, according to the Plaintiffs, have no counterpart and cannot be asserted under Anguilla law. The Plaintiffs' counsel nevertheless acknowledged that the remedy that the Plaintiffs seek in these cases is available through their breach of fiduciary duty and actual fraudulent transfer causes of
The doctrine of forum non conveniens "is a discretionary device permitting a court in rare instances to dismiss a claim even if the court is a permissible venue with proper jurisdiction over the claim." Wiwa v. Royal Dutch Petroleum Co., 226 F.3d 88, 100 (2d Cir. 2000) (internal citation and quotation marks omitted). Whether to dismiss an action on forum non conveniens grounds is a decision that "`lies wholly within the broad discretion of the [] court' and should be reversed only if `that discretion has been clearly abused.'" Peregrine Myanmar Ltd. v. Segal, 89 F.3d 41, 46 (2d Cir. 1996) (quoting Scottish Air Int'l, Inc. v. British Caledonian Grp., PLC, 81 F.3d 1224, 1232 (2d Cir. 1996)). A court may dismiss an action under forum non conveniens "when considerations of convenience, fairness, and judicial economy so warrant." Magi XXI, Inc. v. Sato della Citta del Vaticano, 714 F.3d 714, 720 n.6 (2d Cir. 2013) (citation omitted).
In the Second Circuit, courts apply a three-step process to determine whether to dismiss an action for forum non conveniens. Iragorri v. United Techs. Corp., 274 F.3d 65, 73-74 (2d Cir. 2001). First, the court must "determine[] the degree of deference properly accorded [to] the plaintiff's choice of forum." Norex Petroleum Ltd. v. Access Indus., Inc., 416 F.3d 146, 153 (2d Cir. 2005) (citing Iragorri, 274 F.3d at 73). Second, "after determining whether the plaintiff's choice is entitled to more or less deference," the court must determine "whether an adequate alternative forum exists." Iragorri, 274 F.3d at 73. Third, the court must "then balance a series of factors involving the private interests of the parties in maintaining the litigation in the competing fora and any public interests at stake." Wiwa, 226 F.3d at 100 (citing Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508-09, 67 S.Ct. 839, 91 S.Ct. 1055 (1947)). "In considering these factors, the court is necessarily engaged in a comparison between the hardships defendant would suffer through the retention of jurisdiction and the hardships the plaintiff would suffer as the result of dismissal and the obligation to bring suit in another country." Iragorri, 274 F.3d at 74. The law presumes that the plaintiff's choice of forum is adequate, and the defense must overcome a "heavy burden" to have the case dismissed on forum non conveniens grounds. Sinochem, 549 U.S. at 430, 127 S.Ct. 1184; Wiwa, 226 F.3d at 100; see also Gilbert, 330 U.S. at 508, 67 S.Ct. 839 (stating that "unless the balance [of the factors] is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed"); Iragorri, 274 F.3d at 74-75 (explaining that "[a] defendant does not carry the day simply by showing the existence of an adequate alternative forum.
Courts measure the degree of deference owed to a plaintiff's choice of forum on a sliding scale; the more it appears that the plaintiff's choice of a United States forum was motivated by forum shopping reasons, the less deference the plaintiff's choice commands, see In re Arbitration between Monegasque De Reassurances S.A.M. v. Nak Naftogaz of Ukraine, 311 F.3d 488, 498 (2d Cir. 2002); Iragorri, 274 F.3d at 71, because "it `is much less reasonable' to presume that the choice was made for convenience." Iragorri, 274 F.3d at 71 (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 256, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981)); see also Monegasque De Reassurances, 311 F.3d at 498 (holding that "[a] domestic petitioner's choice of its home forum receives great deference, while a foreign petitioner's choice of a United States forum receives less deference"). "In such circumstances, a plausible likelihood exists that the selection was made for forum-shopping reasons ...." Iragorri, 274 F.3d at 71. Even if forum shopping reasons did not inform the foreign plaintiff's decision to file an action in a U.S. court, "there is nonetheless little reason to assume that it is convenient for a foreign plaintiff." Id.
In determining the degree of deference to be afforded to a foreign plaintiff's choice of a United States forum, courts consider various factors to ascertain whether the plaintiff's forum choice was motivated by convenience or instead by the desire to forum shop. See Norex, 416 F.3d at 155 (citing Iragorri, 274 F.3d at 72). These include "[1] the convenience of the plaintiff's residence in relation to the chosen forum, [2] the availability of witnesses or evidence to the forum district, [3] the defendant's amenability to suit in the forum district, [4] the availability of appropriate legal assistance, and [5] other reasons relating to convenience or expense." Iragorri, 274 F.3d at 72. Circumstances indicative of forum shopping include "[1] attempts to win a tactical advantage resulting from local laws that favor the plaintiff's case, [2] the habitual generosity of juries in the United States or in the forum district, [3] the plaintiff's popularity or the defendant's unpopularity in the region, or [4] the inconvenience and expense to the defendant resulting from litigation in that forum...." Id.
Here, the Plaintiffs' choice of forum was not motivated by convenience. The Debtor Banks were incorporated in Anguilla, do not operate in the United States (other than having accepted U.S. dollar deposits that were deposited in the Parent Banks' New York bank accounts), and their Administrator, Mr. Tacon resides in England. (Tacon PBT Decl. ¶ 4.) The Conservator Directors, the key witnesses in these cases, reside in Anguilla, the Eastern Caribbean or London, (Tr. at 56:12-20), and aside from banking documents in New York, access to which does not appear to present any difficulties even if the suits were pursued in Anguilla, all of the evidence and witnesses for these cases are located in the Eastern Caribbean or elsewhere, but not in the United States. Finally, the Defendants are amenable to suit in Anguilla — the Plaintiffs had already sued the Defendants in Anguilla as part of the Anguilla Initial Proceedings before they commenced these Adversary Proceedings,
Instead, the choice of a New York venue was an exercise in forum shopping. Despite the Plaintiffs' arguments that this forum is convenient and their lawsuits have New York connections, they initially sued these same defendants in Anguilla to impress a trust, and ultimately, recover the same Funds. The Plaintiffs commenced the Adversary Proceedings only after the Anguillan High Court issued the Leave Order, stymying their efforts to recover on substantially similar claims. The High Court refused to lift the stay to allow the Plaintiffs to proceed against the Parent Banks based on the Plaintiffs' failure to join the Conservator Directors, and the Plaintiffs then commenced these Adversary Proceedings in this venue rather than join the Conservator Directors in the Anguilla Initial Proceedings. Even giving the Plaintiffs the benefit of the doubt, they freely admit that they are pursuing these Adversary Proceedings because "Anguillan law does not recognize certain claims for which recovery is sought." (PBT Resp. to ECCB at 26.) Accordingly, the Plaintiffs' selection of New York as a forum is not entitled to any deference.
The Plaintiffs' Opposition authority is distinguishable. In Skanga Energy & Marine Ltd. v. Arevenca S.A., 875 F.Supp.2d 264, 267 (S.D.N.Y. 2012), aff'd, 522 Fed. Appx. 88 (2d Cir. 2013) (summary order), the plaintiff, a Nigerian company, agreed to buy oil from the defendants, state-owned Venezuelan entities. Their agreement provided that all payments would be made in U.S. dollars to the seller's agent's bank account in New York. Id. After the plaintiff made the payments but did not receive the oil, it sued in New York federal court for a refund. Id. at 267-68. The defendants moved to dismiss, inter alia, based on forum non conveniens. The district court concluded that the plaintiff's choice of forum was entitled to considerable (but not maximum) deference. Id. at 273. The transaction had a bona fide connection to New York based on the transfer of millions of dollars to a New York bank account where it "disappeared down the rabbit hole in New York, and Skanga wishes to follow it." In addition, the plaintiff would likely have to seek discovery from the seller's New York banks and its United States operations. Id.
In these Adversary Proceedings, while the Complaints refer to transactions between the Debtor Banks and the Defendants that have connections to New York and the United States, these connections do not overcome the Court's conclusion that the Plaintiffs' choice of a New York forum is not entitled to deference. At bottom, the New York venue was the Plaintiffs' second choice, not their first, and unlike in Skanga, the Plaintiffs were already seeking the same relief for the same wrongs in the foreign forum. In addition, and as discussed below, the Plaintiffs' detailed pleadings indicate that they know the path taken by the Funds, and the relevant evidence is primarily located in Anguilla, not New York.
"An alternative forum is ordinarily adequate if (1) the defendants are amenable to service of process there and (2) the forum permits litigation of the subject matter of the dispute." Monegasque De Reassurances, 311 F.3d at 499 (citation omitted). "[T]he availability of an adequate alternative forum does not depend on the existence of the identical cause of action in the other forum." Capital Currency Exchange, N.V. v. Nat'l Westminster Bank PLC, 155 F.3d 603, 610 (2d Cir. 1998). Furthermore, the fact that the law of the alternative forum is less favorable does not
Here, Anguilla is an adequate alternate forum. First, the parties do not contest, and this Court has previously found, that the Anguillan courts are competent to adjudicate disputes. See In re HBLS, L.P., 468 B.R. 634, 640 (Bankr. S.D.N.Y. 2012) (explaining that "the courts of Anguilla are available and competent to adjudicate these issues. There is no need for this Court to inject itself into proceedings that have already been or can be handled in Anguilla"). Further, the Plaintiffs initially sued the Parent Banks and NCBA in Anguilla in connection with the subject matter of this dispute, and cannot, therefore, contend that the Anguillan forum is inadequate. Saud v. PIA Invs. Ltd., No. 07 Civ. 5603(NRB), 2007 WL 4457441, at *3 (S.D.N.Y. Dec. 14, 2007) ("Having already commenced a lawsuit against PIA regarding the same subject matter in the High Court of Justice of the British Virgin Islands... plaintiff cannot suggest that the British Virgin Islands courts lack general competency") While it is true that ECCB had not been sued by the Plaintiffs in Anguilla before the filing of the PBT Adversary Proceeding on December 16, 2016, the Plaintiffs sought leave to do so on March 10, 2017 by filing the Judicial Review Application in Anguilla. By the time the CCIB Adversary Proceeding was filed on May 1, 2017, the Plaintiffs had brought suit against all of the Defendants in Anguilla, and thus, can hardly contend that the Anguillan forum is inadequate.
Second, although Anguillan law does not recognize a claim to avoid and recover a constructive fraudulent transfer, this does not render the Anguillan forum inadequate. Piper, 454 U.S. at 247, 102 S.Ct. 252 (explaining that "[t]he Court of Appeals erred in holding that plaintiffs may defeat a motion to dismiss on the ground of forum non conveniens merely by showing that the substantive law that would be applied in the alternative forum is less favorable to the plaintiffs than that of the present forum. The possibility of a change in substantive law should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry.")
Third, other causes of action asserted by the Plaintiffs in the Anguillan Initial Proceedings also provide the same remedy that the Plaintiffs are seeking in this Court — the recovery of the upstreamed funds and transferred property. While the Plaintiffs have not asserted in Anguilla, as they have in these Adversary Proceedings, that ECCB breached its fiduciary duties to the Debtor Banks, was grossly negligent and aided and abetted the Conservator Directors' breach of fiduciary duties, these claims will presumably be governed by Anguillan law and can be asserted in Anguilla.
In determining whether the doctrine of forum non conveniens should be applied, a court should also consider "factors of public interest" and the "private interest[s] of the litigant." Gilbert, 330 U.S. at 508, 67 S.Ct. 839. A balancing of the "private and public interest factors [must] tilt[] heavily in favor of the alternative forum." Abdullahi v. Pfizer, Inc., 562 F.3d 163, 189 (2d Cir. 2009); see also Alfadda v. Fenn, 159 F.3d 41, 45-46 (2d Cir. 1998). Here, they do.
In weighing the litigants' private interests, a court should consider
Gilbert, 330 U.S. at 508, 67 S.Ct. 839; accord Blanco v. Banco Industrial de Venezuela, S.A., 997 F.2d 974, 980 (2d Cir. 1993); Hosking v. TPG Capital Mgmt., L.P. (In re Hellas Telecommunications (Luxembourg) II SCA), 555 B.R. 323, 348 (Bankr. S.D.N.Y. 2016) ("Hellas II") (citations omitted).
As previously noted, the majority of the relevant evidence is located or accessible in Anguilla but not in New York. Difficulties in obtaining documents and witness testimony support dismissal or a stay of litigation in favor of the more convenient foreign forum. See FUNB v. Arab African Int'l Bank, 48 Fed.Appx. 801, 805 (2d Cir.
Conversely, while the testimony of the Conservator Directors and of ECCB is crucial to these Adversary Proceedings it would be difficult, if not impossible, to procure their attendance in this Court. This litigation is not simply a "document" case where the Plaintiffs will establish their prima facie case through the introduction of business records. The Plaintiffs assert that ECCB breached its fiduciary duties to the Debtor Banks, was grossly negligent and aided and abetted the Conservator Directors' breach of their own fiduciary duties to the Debtor Banks. (¶¶ 244-270; PBT Compl. ¶¶ 262-85.) In addition, the Anguillan High Court has ruled that the Defendants may be entitled to immunity if the Conservator Directors acted in good faith and without negligence. Furthermore, the Conservator Directors' business judgment may be an issue in connection with the actions they took on behalf of the Parent Banks as the sole shareholders of the Debtor Banks and as their servicers under the PBT Service Agreement and the CCIB Agreement for Service. All of the Conservator Directors and ECCB's actions took place in Anguilla or the Eastern Caribbean, and their availability, the ability to compel their attendance and the relative ease and access to proof weigh heavily in favor of the Anguillan forum.
In Gilbert, the court identified several public interest factors that a court should consider when faced with a motion to dismiss based on forum non conveniens. These include (1) administrative difficulties relating to court congestion; (2) imposing jury duty on citizens of the forum; (3) having local disputes settled locally; and (4) avoiding problems associated with the application of foreign law. 330 U.S. at 508-09,
Here, the private factors weigh in favor of dismissal. Parallel litigations are already pending in Anguilla, although the Anguilla Initial Proceedings is currently stayed against the Parent Banks. The Plaintiffs have appealed from the Leave Order, but it seems that they can avoid the stay simply by joining the Conservator Directors. In addition, these Adversary Proceedings arise from the bailout of two Anguillan banks authorized, and according to the Complaints, directed and controlled by ECCB, an arm of the Anguillan State. The legality of the actions taken by the Conservator Directors, including the upstreaming of customer deposits and the transfer of other property owned by the Debtor Banks to the Parent Banks, and ultimately, to NCBA and possibly ECCB, must be determined in accordance with the ECCB Act and applicable Anguillan law. Although "the need to apply foreign law ... alone is not sufficient to warrant dismissal," Piper, 454 U.S. at 260 n.29, 102 S.Ct. 252; see also Boosey & Hawkes Music Publishers, Ltd. v. Walt Disney Co., 145 F.3d 481, 492 (2d Cir.1998) ("While reluctance to apply foreign law is a valid factor favoring dismissal under Gilbert, standing alone it does not justify dismissal."), it may nevertheless be considered as part of the balancing equation. See Monegasque de Reassurances S.A.M. v. NAK Naftogaz of Ukraine and State of Ukraine, 158 F.Supp.2d 377, 387 (S.D.N.Y. 2001) ("Courts have a legitimate interest in avoiding the difficulty with questions of conflicts of law and the application of foreign law."), aff'd, 311 F.3d 488 (2d Cir. 2002).
In fact, the High Court has already addressed the Defendants' claims of immunity under Anguillan law. The Satay court held that the Conservator Directors had acted ultra vires, and were not entitled to statutory immunity under Article 50 of the ECCB Act. In addition, the applicability of Article 5F immunity presented a question of fact. The Satay Judgment is on appeal. Furthermore, the Satay court did not address the Conservator Directors' right to take the challenged actions in their capacities as directors of the Parent Banks, sole shareholders of the Debtor Banks, an issue that must also be decided under Anguillan law, as is the Conservator Directors' authority under the service agreements between the Debtor Banks and the Parent Banks.
The Anguillan High Court also addressed Article 5F in the Leave Order. It ruled that the Debtor Banks' Statement of Claim failed to allege lack of immunity under that provision because the pleading did not assert that the Conservator Directors had acted negligently and in bad
The issue of the Conservator Directors' and the Defendants' immunity from suit has been a focal point of litigation in the Anguillan proceedings, the Anguillan decisions appear to be somewhat inconsistent, and the immunity issues are on appeal in Anguilla. Moreover, substantial resources have already been expended in Anguilla to litigate these issues, and the outcome of these Adversary Proceedings will depend on the overriding question of whether ECCB, Anguilla's central bank and a sovereign entity, appropriately executed a bank rescue plan (i.e., the Resolution Plan) under Anguillan law for the purpose of preserving the Anguillan banking system. Only the Anguillan courts are authorized to speak definitively on these issues, and deference to those proceedings is appropriate.
It is true that the United States has certain connections to the Anguillan rescue plan. As alleged in the Complaints, the Conservator Directors "upstreamed" the Debtor Banks' funds to the Parent Banks in New York, although the Debtor Banks' counsel indicated during oral argument that the "upstreamed" funds were never in accounts maintained by the Debtor Banks.
Finally, the Plaintiffs have demanded a jury trial. When a court has very little interest in adjudicating the claims primarily due to the removed location of events and the applicability of foreign law, this could create an unnecessary burden on jurors. Stewart v. Adidas A.G., 1997 WL 218431, at *7 (S.D.N.Y. Apr. 30, 1997).
While the most common disposition where a forum non conveniens motion is granted is dismissal of the case, a stay rather than dismissal may be more appropriate when the case may return to this Court following decisions of the foreign courts. See Hellas II, 555 B.R. at 330. The international comity analysis in the next section also clearly supports a stay rather than dismissal under the circumstances of this case.
The doctrines of forum non conveniens and international comity are animated by many of the same concerns, and are often raised together in motions to stay or dismiss. As already explained above, the Court concludes that forum non conveniens supports staying both of these Adversary Proceedings in favor of the courts in Anguilla. And as explained in this section, application of international comity leads to the same result.
The question is particularly acute here because of the circumstances revolving around these Adversary Proceedings. CCIB and PBT were placed into administration in Anguilla, the same Foreign Representative was appointed in each of the Anguilla Administrations, and after the Foreign Representative filed the chapter 15 cases in this Court, the two Anguilla Administrations were recognized as foreign main proceedings. The Foreign Representative then filed chapter 11 cases for both CCIB and PBT, followed by the filing of the two Adversary Proceedings that are the subject of the pending Motions. The Anguilla Litigation involves the same parties as these Adversary Proceedings, and the causes of action in the Adversary Proceedings and the Anguilla Initial Proceedings and the Satay Action arise from the same facts. The Anguilla Initial Proceedings and the Satay Action were filed months before the Adversary Proceedings in this Court, and the Anguilla courts have personal and subject matter jurisdiction over all of the parties. For the reasons explained below, the Court concludes that international comity principles warrant a stay of these Adversary Proceedings pending the outcome of the Anguilla Litigation. Under the present circumstances, staying these cases — rather than dismissing them — is appropriate to preserve the Plaintiffs' domestic causes of action while granting proper deference to proceedings in the Anguilla courts. Depending on the disposition of the Anguilla Litigation, it may be appropriate for the Plaintiffs to return to this Court to seek resolution of any claims in the Adversary Proceedings that are not resolved by the Anguilla courts and are not precluded by recognition and enforcement of judgments entered in Anguilla.
"Comity, in the legal sense, is neither a matter of absolute obligation, on the one hand, nor a mere courtesy and good will, upon the other. But it is the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws." Hilton v. Guyot, 159 U.S. 113, 163-64, 16 S.Ct. 139, 40 S.Ct. 95 (1895). The boundaries of the international comity doctrine have been described as "amorphous" and "fuzzy." See JP Morgan Chase Bank v. Altos Hornos de Mexico, 412 F.3d 418, 423 (2d Cir. 2005) (citation omitted); see also Official Comm. of Unsecured Creditors v. Bahrain Islamic Bank (In re Arcapita Bank B.S.C.(c)), 575 B.R. 229, 237 (Bankr. S.D.N.Y. 2017).
Second Circuit courts as well as the Supreme Court have taken great care to analyze and clarify the international comity doctrine, as well as its underlying
While a defendant's international comity defense should be assessed from the "legal sense," a court must not lose sight of the broader principles underlying the doctrine. See Altos Hornos, 412 F.3d at 423 ("Whatever its precise contours, international comity is clearly concerned with maintaining amicable working relationships between nations, a `shorthand for good neighborliness, a common courtesy and mutual respect between those who labour in adjoining judicial vineyards.'") (citation omitted)). On the other hand, even where the comity doctrine clearly applies, it "is not an imperative obligation of courts, but rather is a discretionary rule of `practice, convenience, and expediency.'" Royal and Sun Alliance Ins. Co. of Canada v. Century Int'l Arms, 466 F.3d 88, 92 (2d Cir. 2006) (citation and quotation marks omitted); see also Duff & Phelps, LLC v. Vitro S.A.B. de C.V., 18 F.Supp.3d 375, 382 (S.D.N.Y. 2014) (explaining that "[t]he decision to grant comity is a matter within a court's discretion and the burden of proof to establish its appropriateness is on the moving party") (citations omitted).
The Second Circuit has explained that international comity "may describe two distinct doctrines ...." Maxwell Comm'n Corp. v. Societe Generale (In re Maxwell Comm'n Corp.), 93 F.3d 1036, 1047 (2d Cir. 1996) ("Maxwell II"). The first doctrine — often referred to as legislative or prescriptive comity, or comity among nations — is "a canon of construction" which serves to "shorten the reach of a statute." Arcapita Bank, 575 B.R. at 238 (citing Maxwell II, 93 F.3d at 1047; Mujica v. AirScan Inc., 771 F.3d 580, 598 (9th Cir. 2014) (explaining that "legislative or `prescriptive comity' ... guides domestic courts as they decide the extraterritorial reach of federal statutes.")). "Under international comity, states normally refrain from prescribing laws that govern activities connected with another state when the exercise of such jurisdiction is unreasonable." Arcapita Bank, 575 B.R. at 237 (citations and quotation marks omitted); see also Sec. Inv'r Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC (In re Madoff), 2016 WL 6900689, at *12 (Bankr. S.D.N.Y. Nov. 21, 2016) (clarifying that "comity among nations [is] a canon of construction that limits the reach of the Bankruptcy Code's avoidance and recovery provisions") (citation omitted). It is unclear in these cases whether prescriptive comity should apply. On the one hand, to the extent that wholly domestic transfers are involved, federal and New York avoidance statutes express strong public policies protecting creditors from actual or constructive avoidable transfers. On the other hand, the alleged transfers were made exclusively between Anguillan financial institutions that were regulated by Anguillan authorities in Anguilla, which has a strong interest in regulating those institutions. If these two regulatory regimes clash, which one should give way? As explained below, this
The second doctrine — referred to as adjudicative comity, or comity among courts — is "a discretionary act of deference by a national court to decline to exercise jurisdiction in a case properly adjudicated in a foreign state." Arcapita Bank, 575 B.R. at 238 (citing Maxwell II, 93 F.3d at 1047; Mujica, 771 F.3d at 599 (stating that "adjudicatory comity involves ... the discretion of a national court to decline to exercise jurisdiction over a case before it when that case is pending in a foreign court with proper jurisdiction.") (citation and quotation marks omitted)); see also Altos Hornos, 412 F.3d at 424 (finding, where the dispute involved the ownership of property a debtor claimed as part of its estate in a foreign bankruptcy proceeding, that "[i]nternational comity, as it relates to this case, involves not the choice of law but rather the discretion of a national court to decline to exercise jurisdiction over a case before it when that case is pending in a foreign court with proper jurisdiction") (citation omitted).
Because the Court concludes that comity among courts supports a stay of these Adversary Proceedings, it is unnecessary to reach the issue whether prescriptive comity supports narrowing the reach of federal and New York State avoidance statutes.
Applying international comity among courts, courts "ha[ve] the inherent power to dismiss or stay an action based on the pendency of a related proceeding in a foreign jurisdiction." Ole Media Mgmt., L.P. v. EMI April Music, Inc., 2013 WL 2531277, at *2 (S.D.N.Y. June 10, 2013) (collecting cases). This reflects "the proper respect for litigation in and the court of a sovereign nation, fairness to litigants, and judicial efficiency." Royal and Sun Alliance, 466 F.3d at 94 (collecting cases). Nonetheless, concerns of comity must be balanced against the "virtually unflagging obligation of the federal courts to exercise the jurisdiction given to them." Colorado River Water Conservation Dist. v. U.S., 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976). In evaluating whether to defer to a foreign proceeding, "[t]he task of a [bankruptcy] court ... is not to articulate a justification for the exercise of jurisdiction, but rather to determine whether exceptional circumstances exist that justify the surrender of that jurisdiction." Royal and Sun Alliance, 466 F.3d at 93 (emphasis in original) (citing Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-26, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); Colorado River, 424 U.S. at 813, 96 S.Ct. 1236).
The Court concludes that these Adversary Proceedings should be stayed in
"[D]eference to the foreign court is appropriate so long as the foreign proceedings are procedurally fair and ... do not contravene the laws or public policy of the United States." Cozumel Caribe, 482 B.R. at 114 (citing Altos Hornos, 412 F.3d at 424). In analyzing procedural fairness, courts have looked to the following nonexclusive factors:
Finanz AG Zurich v. Banco Economico S.A., 192 F.3d 240, 249 (2d Cir. 1999).
Deference to the Anguilla Administrations is warranted here. On February 22, 2016, CCIB and PBT were placed under administration pursuant to section 31(b)(2) of the Financial Services Commission Act, R.S.A. c. F28, and the High Court appointed the Foreign Representative as administrator for PBT and CCIB. (¶¶ 60-61; PBT Compl. ¶¶ 56-57.) The Administrator subsequently filed the PBT and CCIB chapter 15 petitions in this Court on May 26, 2016 and on October 11, 2016, respectively, seeking recognition of the PBT administration and the CCIB administration in Anguilla. (¶ 64; PBT Compl. ¶ 60.) On June 17, 2016 and November 15, 2016, the orders were entered in this Court, recognizing the PBT administration (Case #16-11529 (MG), ECF Doc. #17 ("PBT Recognition Order")) and the CCIB administration as foreign main proceedings. (Case #16-12844 (SMB), ECF Doc. #16 ("CCIB Recognition Order").). Given the administration of PBT and CCIB in the Anguilla foreign main insolvency proceedings, the Anguilla courts clearly have an interest in the "equitable and orderly distribution" of the Debtors Banks' property; and deference to those proceedings is appropriate. See Royal and Sun Alliance, 466 F.3d at
NBA and CCB argue that a district court decision in Madoff supports staying these actions based on comity. See Sec. Inv'r Prot. Co. v. Bernard L. Madoff Inv. Sec. LLC (In re Madoff Sec.), 513 B.R. 222 (S.D.N.Y. 2014). In Madoff, the district court denied the SIPA trustee's claim over foreign transfers based on the presumption against extraterritoriality of section 550(a) of the Bankruptcy Code, but added that even if the presumption was rebutted, the SIPA trustee's claim would be precluded by concerns of international comity. Id. at 231. The district court noted that the British Virgin Islands courts had already determined that debtor could not reclaim transfers made to its customers under certain common-law theories, a determination that was in conflict with the trustee's claim. Id. at 232. As such, the district court ruled that by filing the action to avoid the transfers before United States courts, the SIPA trustee was "seeking to use SIPA to reach around such foreign liquidations." Id. at 231-32; see also Altos Hornos, 412 F.3d at 427 (explaining that "creditors may not use U.S. courts to circumvent foreign bankruptcy proceedings").
The Plaintiffs attempt to distinguish these cases from Madoff, arguing that a stay based on comity is inappropriate. The Plaintiffs contend that comity may be appropriate to stay the exercise of bankruptcy court jurisdiction in circumstances such as in Madoff, where a creditor seeks to "reach around" foreign insolvency proceedings, but further contend that is it not the case here: the "Administrator does not seek to compete with the Debtor's Anguillan estate," but "is asserting the Debtor's own claims — not `reaching around' — the Anguillan insolvency proceeding." (CCIB Opp'n to CCB's Mot. to Dismiss at 27-28; PBT's Opp'n to NBA's Mot. to Dismiss at 28.)
"Reaching around" can take multiple shapes and forms. That the claims in these Adversary Proceedings are not brought by or in the interest of a creditor of PBT or CCIB, but by debtors in possession, does not change the analysis. Indeed, the Plaintiffs do seek to reach around the litigation in Anguilla. Because NBA and CCB are in receivership in Anguilla, the Anguilla court has stayed the actions against those two entities in Anguilla. The Plaintiffs seek to proceed against those two entities in the Adversary Proceedings — in effect, the Plaintiffs ask this Court to disregard the stay entered by a court in Anguilla. The Plaintiffs have appealed the stay order in Anguilla, but even if the stay is lifted, it is more appropriate that the Anguilla Litigation proceed to judgment before this Court needs to address whether any issues remain to be decided under federal or New York law. See also Altos Hornos, 412 F.3d at 427 (noting that the recognition sought in the United States that lender owned the disputed funds would determine how those funds were distributed to creditors and, therefore, such determination was "precisely the sort of end-run around a parallel
The Foreign Representative freely admits that he filed the Plaintiffs' chapter 11 cases to allow him to bring the Adversary Proceedings and to assert constructive fraudulent transfer claims under federal and New York law that, according to the Plaintiffs, have no counterpart and cannot be asserted under Anguilla law. There is little doubt that by filing these Adversary Proceeding in the United States, the Plaintiffs sought to litigate these cases despite the stay imposed and the appeal pending in Anguilla. Accordingly, the Court concludes, in the exercise of its discretion, that international comity warrants staying these Adversary Proceedings in deference to the Anguilla Administrations.
While deference to the main insolvency proceedings in Anguilla warrants a stay of these Adversary Proceedings, the Court also finds, in the exercise of its discretion, that deference to the related Anguilla Litigation justifies a stay of these cases pending resolution of the Anguilla Litigation.
The Second Circuit has articulated nonexclusive factors that courts should consider in evaluating a request for dismissal based on a parallel proceeding in a foreign nation. These factors include:
Royal and Sun Alliance, 466 F.3d at 94 (citations omitted). "This list is not exhaustive, and a [bankruptcy] court should examine the `totality of the circumstances' to determine whether the specific facts before it are sufficiently exceptional to justify abstention." Id. (quoting Finova Capital Corp. v. Ryan Helicopters U.S.A., Inc., 180 F.3d 896, 900 (7th Cir. 1999)). The Supreme Court has similarly recognized that a decision to abstain from exercising jurisdiction based on the existence of parallel litigation "does not rest on a mechanical checklist, but on a careful balancing of the important factors ... as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction." Id. (quoting Moses H. Cone, 460 U.S. at 16, 103 S.Ct. 927); see also Colorado River, 424 U.S. at 818-19, 96 S.Ct. 1236 ("No one factor is necessarily determinative; a carefully considered judgment taking into account both the obligation to exercise jurisdiction and the combination of factors counselling against that exercise is required.") (citation omitted).
While Royal and Sun Alliance outlined the factors in the context of a motion to dismiss, rather than to stay the action, the analysis still applies. Tarazi v. Truehope Inc., 958 F.Supp.2d 428, 433-34 (S.D.N.Y. 2013) (collecting cases) (staying domestic actions in favor of Canadian courts). However, the factors may be weighted differently when a stay, rather than dismissal, is considered. Id. at 434 (citing Royal and Sun Alliance, 466 F.3d at 96-97 (suggesting that stay rather than dismissal might be merited); Nat'l Union Fire Ins. Co. of Pittsburgh, P.A. v. Kozeny, 115 F.Supp.2d 1243, 1248 (D. Colo. 2000) (weighting adequacy of foreign forum in light of fact that court was staying, rather than dismissing, domestic action); Goldhammer v. Dunkin' Donuts, Inc., 59 F.Supp.2d 248, 254 (D. Mass. 1999) (same)). The Court finds that the balancing of the Royal and Sun Alliance factors in these Adversary Proceedings favors a stay of the Adversary Proceedings in New York pending the outcome of the Anguilla Litigation.
The similarity between the parties involved in the foreign and domestic actions favors a stay of the Adversary Proceedings. The parties to the Anguilla Initial Proceedings are PBT and CCIB as plaintiffs, and NBA, CCB and NCBA as defendants. The parties to the Judicial Review are plaintiffs PBT and CCIB, and defendant ECCB, among others. In the Satay Action, ECCB is named as defendant and is the only party in those proceedings that is also a party to the Adversary Proceedings. The Adversary Proceedings include each of those parties.
"For two actions to be considered parallel, the parties in the actions need not be the same, but they must be substantially the same, litigating substantially the same issues in both actions." Royal and Sun Alliance, 466 F.3d at 94 (emphasis added); see also Advantage Intern. Mgmt. Inc. v. Martinez, 1994 WL 482114, at *4 (S.D.N.Y. Sept. 7, 1994) ("All that is required in this Circuit is that the parties and issues be sufficiently similar so that when a judgment issues from the foreign court, res judicata will apply."); Herbstein v. Bruetman, 743 F.Supp. 184, 188 (S.D.N.Y. 1990) ("[C]omity requires that the parties and issues in both litigations
All parties in these Adversary Proceedings, other than ECCB, are parties in the Anguilla Initial Proceedings. While ECCB is a defendant in the Satay Action, neither the Debtors nor any other Defendants in these actions are parties in that proceeding. However, PBT and CCIB have sued ECCB in Anguilla as part of the Judicial Review Application. In any event, the actions pending in Anguilla revolve around the disputed issues in the present Adversary Proceedings, and even if there are minor differences in the parties in those proceedings, the judgments of the Anguilla High Court would nevertheless be instructive to this Court (or even dispositive) in resolving the issues before it, including those involving ECCB. Moreover, while ECCB's argument that it is not subject to personal jurisdiction in this Court cannot be fully resolved now, there may be no basis to keep ECCB in these Adversary Proceedings. The Foreign Representative argues that there are currently no claims pending against CCB and NBA by the Debtors in Anguilla in light of the High Court's decision to deny the application for leave to assert claims against CCB and NBA. (CCIB's Opp'n to CCB's Mot. to Dismiss at 30 n.16; PBT's Opp'n to NBA's Mot. to Dismiss at 30 n.13.) But the Plaintiffs have appealed the High Court's decision. If the Court of Appeal in Anguilla grants relief to PBT and CCIB, and the parties are allowed to litigate before the High Court, the Defendants would be faced with having to defend actions in two fora. The Court thus finds that the parties in these Adversary Proceedings and Anguilla Litigation are clearly sufficiently similar. This factor weights in favor of staying the Adversary Proceedings.
Likewise, the similarity between the issues litigated in the foreign and domestic actions favors a stay of the Adversary Proceedings. As explained in Royal and Sun Alliance, "[f]or two actions to be considered parallel, the parties in the actions need not be the same, but they must be substantially the same, litigating substantially the same issues in both actions." 466 F.3d at 94 (emphasis added) (citations omitted). In Ole Media, the court found that there was substantial similarity between the cases because the determination of the issue presented by the Canada action would have a significant bearing and res judicata effect, on the dispute in the New York action. 2013 WL 2531277, at *4 (holding that although the New York action included an issue not present in the Canadian action, the imposition of a stay would "not prevent the additional issue from being litigated before th[e] [New York] [c]ourt. Instead, it w[ould] permit an underlying dispute to be resolved first, one which is likely ... to prove either `instructive on the ultimate resolution' of th[e] [New York] action or largely dispositive.") (citation and footnote omitted). When the issues litigated in the foreign and domestic proceedings are not completely similar, dismissal of the action is inappropriate, but a stay may be warranted. See id. at *4 (citing Palm Bay Int'l v. Marchesi Di Barolo S.P.A., 659 F.Supp.2d 407, 414 (E.D.N.Y. 2009) (concluding that where domestic action included an issue not presented
The litigation of these Adversary Proceedings involves the same subject matter and revolves around the same issues as the actions currently being litigated before the courts in Anguilla: whether the Plaintiffs have a proprietary interest in the deposits that were allegedly upstreamed to the parent banks, NCBA and ECCB, and whether the Conservator Directors violated their fiduciary duties and Anguillan law by transferring the Debtor Banks' Funds to the Parent Banks. The resolution of the Anguilla Litigation will prove highly instructive, if not completely dispositive, on the ultimate resolution of these Adversary Proceedings. The Plaintiffs argue that the relief requested is not warranted because "[a]ll of the claims in this Adversary Proceeding could not be litigated in Anguilla because it does not recognize constructive fraudulent conveyance claims." (CCIB's Opp'n to CCB's Mot. to Dismiss at 30 n.16; PBT's Opp'n to NBA's Mot. to Dismiss at 30 n. 13.) Yet, both United States courts and Anguilla courts provide essentially the same remedy that the Plaintiffs seek, regardless of the underlying causes of action. If intentional fraud is proven in Anguilla, the Debtor Banks' remedy would be the same as if it proceeded under either intentional or constructive fraud provisions of the Bankruptcy Code and New York law — the money the Plaintiffs allege belonged to them would be transferred back to the bankruptcy estates. It is irrelevant that Anguilla law does not recognize constructive fraudulent transfer claims, as adequate relief is available in Anguilla. The Court accordingly finds that the issues in the Adversary Proceedings and Anguilla Litigation are similar. This factor thus weights in favor of staying the Adversary Proceedings.
Courts "have traditionally accorded great weight to the first suit filed." Tarazi, 958 F.Supp.2d at 436 (citation omitted). However, the importance of this factor is reduced when the relevant actions were filed in close temporal proximity to one another and where the first-filed action has not "reached a more advanced stage" than the later action. Id. (citation omitted). Additionally, "[t]he first-filed doctrine is considered, perhaps with less force, in the international cross-border context." MF Glob. Holdings Ltd. v. Allied World Assurance Co. (In re MF Glob. Holdings Ltd.), 561 B.R. 608, 628 (Bankr. S.D.N.Y. 2016), leave to appeal denied, No. 17 CIV. 106, 2017 WL 548219 (S.D.N.Y. Feb. 10, 2017); see also Taub v. Marchesi Di Barolo S.p.A., No. 09-CV-599, 2009 WL 4910590, at *6 (E.D.N.Y. Dec. 10, 2009) (analyzing principles and factors relating to international comity and parallel proceedings, and affording "minimal weight" to the temporal sequence of filings).
Here, the Anguilla Initial Proceedings was filed on May 6, 2016, and the Satay Action was filed on June 28, 2016, approximately seven to eight months and five months, respectively, before these Adversary Proceedings were filed on December 16, 2016 (before Judge Glenn) and on January 5, 2017 (before Judge Bernstein). The Judicial Review Application was filed on March 10, 2017, three to four months after these Adversary Proceedings. The fact that two of the proceedings in Anguilla were filed several months before these Adversary Proceedings, and that one was filed some months after, slightly supports staying the Adversary Proceedings in favor of the proceedings in Anguilla. Further, while the High Court of Anguilla already has addressed some of the parties'
The Court has already examined the adequacy of the Anguilla forum in the context of the forum non conveniens analysis above. For the reasons set forth in the forum non conveniens analysis, the Court holds that Anguilla is an adequate forum for the litigation of the subject matter of the dispute. This factor thus favors staying the Adversary Proceedings.
The inconvenience of New York courts to Anguillan parties and the relative prejudice to litigate the subject matter of the litigation in a foreign country also favor a stay of these Adversary Proceedings. The Plaintiffs, discussing forum non conveniens, contend that "the documentary evidence and witnesses necessary to follow the Debtors' money will be located in the United States, and especially in New York[,]" and that "[i]n any event, Defendants are sophisticated global institutions for whom producing documents or witnesses in any forum poses no special inconvenience." (CCIB's Mem. of Law in Opp'n to ECCB's Mot. to Dismiss at 31; PBT's Mem. of Law in Opp'n to the ECCB's Mot. to Dismiss at 27-28.) However, for the reasons set forth in the forum non conveniens analysis, the Court finds that there is little reason to find that New York is a convenient forum for the Plaintiffs.
Turning to the potential prejudice to the parties, NBA and CCB argue, in the context of the forum non convenience analysis, that "[i]t makes no sense for the parties to fly back and forth from Anguilla to New York and pay New York lawyers to litigate over Anguilla law when [the Plaintiffs'] claims can and should be resolved in Anguilla." (Mem. of Law in Supp. of CCB's Mot. to Dismiss at 21; Mem. of Law in Supp. of NBA's Mot. to Dismiss at 18.) However, the inconvenience
The facts alleged in the Complaints implicate conduct in both Anguilla and the United States. The Plaintiffs and all Defendants are based in Anguilla, and the solvency, integrity, and regulation of the Anguilla banks in a period of dire economic circumstances are of paramount interest to Anguilla. The allegations in the Complaints about the ownership and flow of funds of the alleged transfers is unclear, and will require amendments of the Complaints if these cases are reactivated here after the decisions of the Anguilla courts. It is certainly true that New York and the United States have a strong interest in the integrity of the banking system in New York and the United States. Some or most of the transfers for which recovery is sought were allegedly made between bank accounts in New York, so it appears that the alleged damages occurred in the United States.
Evaluating the Royal and Sun Alliance factors as a whole, the Court concludes
For the reasons explained above, the Court concludes, based on forum non conveniens and international comity, that the disputes between the parties should be adjudicated in the first instance in the courts of Anguilla. Therefore, both Adversary Proceedings are stayed.
Counsel for the parties shall file joint status reports with this Court in each of these Adversary Proceedings every ninety (90) days from the date of this Opinion reporting on the status of proceedings in the Anguilla courts.
