UNITED STATES DISTRICT COURT SOUTHERN...

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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AMAPROP LIMITED,

Petitioner,

v.

INDIABULLS FINANCIAL

SERVICES LIMITED and ICICI BANK

LIMITED,

Respondents.

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No. 11 Civ. 2001(PGG)

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DECLARATION OF BRUCE E. CLARK

I, BRUCE E. CLARK, declare under penalty of perjury as follows:

1. I am member of the bar of this Court and a member of the law firm of

Sullivan & Cromwell LLP, counsel to The Clearing House Association L.L.C. and the Institute

of International Bankers, the proposed Amici Curiae in this action.

2. I submit this declaration in support of the Motion of The Clearing House

Association L.L.C. and the Institute of International Bankers for Leave to File a Brief as Amici

Curiae.

3. Attached hereto as Exhibit 1 is a true and correct copy of the proposed

Brief of Amici Curiae The Clearing House Association L.L.C. and the Institute of International

Bankers in Support of Respondent ICICI Bank Limited.

Case 1:11-cv-02001-PGG Document 42 Filed 02/03/12 of 2

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Dated: New York, New York

February 3, 2012

/s/ Bruce E. Clark

Bruce E. Clark

SULLIVAN & CROMWELL LLP

125 Broad Street

New York, NY 10004

Tel: (212) 558-4000

Counsel for Amici Curiae

The Clearing House Association L.L.C.

and the Institute of International Bankers

Case 1:11-cv-02001-PGG Document 42 Filed 02/03/12 of 2

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

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AMAPROP LIMITED,

Petitioner,

v.

INDIABULLS FINANCIAL

SERVICES LIMITED and ICICI BANK

LIMITED,

Respondents.

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No. 11 Civ. 2001(PGG)

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BRIEF OF AMICI CURIAE THE CLEARING HOUSE ASSOCIATION

L.L.C. AND THE INSTITUTE OF INTERNATIONAL BANKERS

IN SUPPORT OF RESPONDENT ICICI BANK LIMITED

Bruce E. Clark


125 Broad Street

New York, New York 10004

Tel: (212) 558-4000

Fax: (212) 558-3588

[email protected]




Of Counsel:

H. Rodgin Cohen

David A. Castleman

Robert A. Gomez

Case 1:11-cv-02001-PGG Document 42-1 Filed 02/03/12 Page 1 of 22

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TABLE OF CONTENTS

Page

INTRODUCTION ...........................................................................................................................1

STATEMENT OF INTEREST OF AMICI CURIAE ......................................................................1

PRELIMINARY STATEMENT .....................................................................................................4

ARGUMENT ...................................................................................................................................5

I. KOEHLER DID NOT ABROGATE THE SEPARATE ENTITY RULE...........................5

II. NEW YORK COURTS SHOULD CONTINUE TO APPLY THE SEPARATE

ENTITY RULE TO ENSURE DUE PROCESS AND PERMIT

INTERNATIONAL BANKS TO DO BUSINESS IN NEW YORK ..................................9

A. The Bank Is Potentially Exposed to the Risk of Double Liability Because

ICICI May Not Be Able to Discharge Its Liability to Indiabulls After Turning

Over Deposits to Amaprop ..........................................................................................10

1. Double Liability Exists When a Bank Is Required to Turn Over the Bank‘s

Assets to the Judgment Creditor But Is Not Allowed to Reduce Its

Corresponding Liability to the Judgment Debtor ...............................................10

2. Amaprop Fails To Show that ICICI‘s Liability to Indiabulls Would Be

Discharged, and Therefore Fails to Show that Indiabulls Has an Interest in the

Property Amaprop Seeks to Have Turned Over .................................................12

B. Extraterritorial Restraints, Transfers and Turnovers Would Disrupt Banking in

New York .....................................................................................................................14

C. New York Courts Would be Flooded with Actions Having Little or No

Connection to New York .............................................................................................17

CONCLUSION ..............................................................................................................................18


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TABLE OF AUTHORITIES

Page(s) CASES

Allied Maritime, Inc. v. Descatrade SA,

620 F.3d 70 (2d Cir. 2010).....................................................................................................5, 7

Allstate Ins. Co. v. Serio,

261 F.3d 143 (2d Cir. 2001).............................................................................................8, 9, 12

Anderson Nat’l Bank v. Luckett,

321 U.S. 233 (1944) .................................................................................................................12

Citizens Bank of Maryland v. Strumpf,

516 U.S. 16 (1995) ...................................................................................................................10

City of New York v. Venkataram,

No. 06 Civ. 6578(NRB), 2011 WL 2899092 (S.D.N.Y. July 13, 2011)..................................14

Cronan v. Schilling,

100 N.Y.S.2d 474 (Sup. Ct. N.Y. Cnty. 1950), aff’d, 282 A.D. 940 (1st Dep‘t 1953) ..........5, 6

Eitzen Bulk A/S v. Bank of India,

No. 09 Civ. 10118(AKH), 2011 WL 4639823 (S.D.N.Y. Oct. 5, 2011) ...................................8

Global Technology, Inc. v. Royal Bank of Canada,

34 Misc. 3d 1209(A), 2012 WL 89823 (N.Y. Sup. Ct. Jan. 11, 2012) ..............................6, 7, 8

In re Delaney,

256 N.Y. 315 (1931) ................................................................................................................10

John Wiley & Sons, Inc. v. Kirtsaeng,

No. 08 Civ. 7834(GEL), 2009 WL 3003242 (S.D.N.Y. Sept. 15, 2009) ..................................8

JW Oilfield Equip., LLC v. Commerzbank AG,

764 F. Supp. 2d 587 (S.D.N.Y. 2011)........................................................................................8

Koehler v. Bank of Bermuda Ltd.,

12 N.Y.3d 533 (2009) ...................................................................................................... passim

Levin v. Bank of New York,

No. 09 CV 5900 RPP, 2011 WL 812032 (S.D.N.Y. Mar. 4, 2011)...........................................8

Lok Prakashan Ltd. v. India Abroad Publ’ns, Inc.,

No. 00 Civ. 5852(LAP), 2002 WL 1585820 (S.D.N.Y. July 16, 2002) ....................................5


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Parbulk II AS v. Heritage Maritime, SA,

935 N.Y.S.2d 829 (N.Y. Sup. Ct. 2011) ....................................................................................7

People v. Mechanics & Traders’ Sav. Inst.,

92 N.Y. 7 (1883) ......................................................................................................................10

Samsun Logix Corp. v. Bank of China,

929 N.Y.S.2d 202 (N.Y. Sup. Ct. 2011) ................................................................................5, 7

Sanford v. Bennett,

783 N.Y.S.2d 423 (N.Y. App. Div. 2004) .........................................................................13, 14

Sec. Sav. Bank v. California,

263 U.S. 282 (1923) .................................................................................................................12

Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd.,

585 F.3d 58 (2d Cir. 2009), cert. denied, 130 S. Ct. 1896 (2010) .....................................17, 18

Steph-Leigh Assocs., LLC v. Dweck,

914 N.Y.S.2d 679 (N.Y. App. Div. 2011) ...............................................................................13

W. Union Tel. Co. v. Pennsylvania,

368 U.S. 71 (1961) .............................................................................................................11, 12

Winter Storm Shipping, Ltd. v. TPI,

310 F.3d 263 (2d Cir. 2002).................................................................................................9, 17

STATUTES

CPLR § 5209......................................................................................................................10, 13, 14

CPLR § 6204......................................................................................................................10, 13, 14


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INTRODUCTION

The Clearing House Association L.L.C. (―The Clearing House‖) and the

Institute of International Bankers (―IIB‖), each an association of major commercial

banks, submits this brief as amici curiae in support of Respondent ICICI Bank Limited

(―ICICI‖). For the reasons provided below, the Court should deny Petitioner Amaprop

Limited‘s (―Amaprop‖) request for an order compelling ICICI to restrain, transfer and

turn over non-U.S. assets to Amaprop. The prospect that an Indian bank may be forced

to turn over millions of dollars of its own assets because it has a branch in New York

would deal a devastating blow to the business of banking in this State.

STATEMENT OF INTEREST OF AMICI CURIAE

The Clearing House was established in 1853. It is the United States‘

oldest banking association and payments company. It is owned by the world‘s largest

commercial banks, which collectively employ 1.4 million people in the United States and

hold more than half of all U.S. deposits.1 The Clearing House is a nonpartisan advocacy

organization representing, through regulatory comment letters, amicus briefs and white

papers, the interests of its member banks on a variety of systemically important banking

issues. Its affiliate, The Clearing House Payments Company L.L.C., provides payment,

clearing, and settlement services to its member banks and other financial institutions,

1 The members of The Clearing House are Banco Santander, S.A.; Bank of

America, N.A.; The Bank of New York Mellon; The Bank of Tokyo-Mitsubishi

UFJ Ltd.; Branch Banking and Trust Company; Capital One, N.A.; Citibank,

N.A.; Comerica Bank; Deutsche Bank Trust Company Americas; HSBC Bank

USA, N.A.; JPMorgan Chase Bank, N.A.; PNC Bank, N.A.; Regions Bank; The

Royal Bank of Scotland N.V.; UBS AG; U.S. Bank N.A.; and Wells Fargo Bank,

N.A.


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clearing almost $2 trillion daily and representing nearly half the automated clearing-

house, funds-transfer and check-image payments made in the United States. See The

Clearing House‘s web page at www.theclearinghouse.org.

IIB is the only national association devoted exclusively to representing

and protecting the interests of the international banking community in the United States.

Its membership is comprised of internationally headquartered banking and financial

institutions from over 35 countries around the world doing business in the United States.

IIB‘s mission is to help resolve the many special legislative, regulatory, tax and

compliance issues confronting internationally headquartered institutions that engage in

banking, securities and other financial activities in the United States. Through its

advocacy efforts, the IIB seeks results that are consistent with the U.S. policy of national

treatment and that appropriately limit the extraterritorial application of U.S. laws to the

global operations of its member institutions. ICICI is a member of the IIB.

The Clearing House and IIB regularly appear as amici curiae in cases that

raise significant legal issues related to banking. The Clearing House and IIB have a

substantial interest in this action because of the negative precedent it could set for their

member banks, and for all international banks with offices in New York. Specifically,

The Clearing House and IIB maintain, as they have in similar cases, that New York‘s

well-established separate entity rule was not abrogated by Koehler v. Bank of Bermuda

Ltd., 12 N.Y.3d 533 (2009).

An extraterritorial order compelling ICICI to transfer non-U.S. funds to

ICICI‘s New York branch and then requiring ICICI to turn those assets over to Amaprop

would significantly and adversely affect international banks doing business in New York


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and their affiliates outside the jurisdiction, because it would render them answerable in

New York for any bank account or property entrusted to them anywhere in the world by

their customers. Orders such as the one Amaprop seeks here would not only subject any

international bank doing business in New York to the administrative burden and cost of

searching for assets held anywhere in the world in response to a broad extraterritorial

order of restraint, but also to being ordered to deliver funds or other property held outside

New York into New York. Banks would thereby be put in the perilous position, as is the

case here, of violating the laws of other countries—e.g., those regarding privacy,

attachment, priority and a bank‘s duties to its customers—governing its non-New York

operations and establishing its legal duties to its customers who hold interests in property

held by non-New York branches. Most significantly, without any proof that India would

recognize the transfer and turnover of India-held assets as reducing ICICI‘s obligation to

Indiabulls Financial Services Limited (―Indiabulls‖) in the absence of an order from an

Indian court, there is considerable risk that the only victim here would be ICICI.

Banks and other financial institutions maintain not only deposit accounts,

but also hold property for their clients in a variety of capacities—e.g., as secured parties

on loans, as bailees, as trustees and as broker-dealers, just to name a few. In addition,

client accounts or property held by banks could be subject to security agreements, liens

and other property interests of third parties. An order such as the one Amaprop seeks

here would place all of these relationships in jeopardy. Such an order would also create

serious problems for major international banks solely because of their New York

presence and threaten New York‘s position as the world‘s preeminent financial center.


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PRELIMINARY STATEMENT

Amaprop, a Cayman Islands company, seeks to enforce a post-judgment

arbitration award against Indiabulls, an Indian company, with assets from Indiabulls‘

Indian bank, ICICI, which operates a New York branch office. The Court confirmed the

arbitration award on September 12, 2011. On the date of the judgment, the award

equaled approximately $48.9 million.

On October 4, 2011, Amaprop sought to enforce the arbitration award by

serving a restraining notice and an information subpoena against ICICI. ICICI responded

to the subpoena, but did not restrain Indiabulls‘ assets in India because doing so would

cause it to violate the laws of India. Without an order from an Indian court with proper

jurisdiction requiring it to restrain and surrender India-held assets, ICICI maintains that it

is unable to restrain or surrender such assets. To date, Amaprop has offered no proof that

ICICI or its New York branch office has ever held any Indiabulls assets in New York.

On December 22, 2011, the Court granted Amaprop‘s application for an

order to show cause as to why an order should not be issued declaring the restraining

notice ―valid and enforceable with respect to all funds and property held in India or

elsewhere belonging to or held for‖ Indiabulls‘ benefit, ―compelling ICICI to transfer all

funds held for Indiabulls to ICICI‘s New York branch‖ office, ―ordering ICICI to turn

over to Amaprop any and all of Indiabulls‘s assets up to the Judgment Amount,‖ and

holding ICICI in contempt of the restraining notice because ICICI allegedly violated the

restraining notice by allowing Indiabulls to withdraw funds from accounts in India (not in

New York) after ICICI was served with the restraining notice.


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The Clearing House and IIB respectfully submit this brief in support of

ICICI‘s position that: (1) the separate entity rule continues to apply after Koehler and

bars Amaprop‘s application for post-judgment relief; and (2) the separate entity rule is

the right policy and required as a matter of due process, particularly where the record

does not support the conclusion that Indiabulls‘ property, as opposed to ICICI‘s property,

is even at issue.

ARGUMENT

I. KOEHLER DID NOT ABROGATE THE SEPARATE ENTITY RULE

Koehler did not mention—much less abrogate—New York‘s long

standing separate entity rule. Koehler v. Bank of Bermuda Ltd., 12 N.Y.3d 533 (2009);

see also Cronan v. Schilling, 100 N.Y.S.2d 474, 476 (Sup. Ct. N.Y. Cnty. 1950) (―The

law seems well established that a warrant of attachment served upon a branch bank does

not reach assets held for, or accounts maintained by, the defendant in other branches or in

the home office.‖), aff’d, 282 A.D. 940 (1st Dep‘t 1953). As explained by a New York

State court that explicitly preserved the separate entity rule after Koehler, ―each branch of

a bank is a separate entity, unconcerned with accounts that depositors maintain in other

branches or at the home office.‖ Samsun Logix Corp. v. Bank of China, 929 N.Y.S.2d

202 (N.Y. Sup. Ct. 2011); see also Allied Maritime, Inc. v. Descatrade SA, 620 F.3d 70,

74 (2d Cir. 2010); Lok Prakashan Ltd. v. India Abroad Publ’ns, Inc., No. 00 Civ.

5852(LAP), 2002 WL 1585820, at *1 (S.D.N.Y. July 16, 2002).

The original rationale for the separate entity rule was that a depositor‘s

account records were located only at one branch, and requiring any other branch to

handle an attachment order relating to that account would place ―an intolerable burden


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upon banking and commerce.‖ Cronan, 100 N.Y.S.2d at 476. That rationale is still valid

today, but the rule takes on even greater significance in the context of attempted

attachment of overseas assets, as opposed to domestic assets.

Although the continued vitality of the separate entity rule has come under

attack after Koehler, each New York State court to address this issue has explicitly held

that Koehler did not abrogate the separate entity rule. Each court has relied on the same

basic principle that lower courts should not assume that the Court of Appeals overruled a

well-established doctrine of New York State law without so much as mentioning the

doctrine.

In January 2012, Justice Stallman rejected a judgment creditor‘s argument

that Koehler abrogated the separate entity rule. Global Technology, Inc. v. Royal Bank of

Canada, 34 Misc. 3d 1209(A), 2012 WL 89823 (N.Y. Sup. Ct. Jan. 11, 2012). In a

lengthy exposition detailing both the development of the separate entity rule and the

Koehler litigation, the court held that

[w]ithout a clear statement from the Appellate Divisions or the Court of

Appeals, th[e] Court . . . declines to abrogate the separate entity rule so as

to hold that service of a restraining notice upon any bank branch in the

State of New York encompasses all of a bank‘s branches, including those

located outside the State of New York.

Id. at *13. Justice Stallman explained how the ―separate entity rule can be harmonized

with the modern due process framework of personal jurisdiction‖ and the Koehler

decision:

[T]he separate entity rule requires that service of a postjudgment

restraining notice upon a bank must be made upon the bank branch where

the account is maintained. Viewed as a rule for service of postjudgment

enforcement process, service of a restraining notice upon one bank branch

(other than the main branch) would be improper, if the restraining notice


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sought to restrain an account that the served bank branch did not maintain,

even if a basis for in personam jurisdiction over the bank was not in

dispute.

Id. Here, similarly, Amaprop‘s restraining notice was not served on the branch of ICICI

that maintains Indiabulls‘ account(s), and is thus improper even if the Court does have in

personam jurisdiction over ICICI.

Similarly, in Parbulk II AS v. Heritage Maritime, SA, Justice Sherwood

explained that Koehler did not ―address[] the ‗separate entity‘ rule.‖ 935 N.Y.S.2d 829

(N.Y. Sup. Ct. 2011). The question certified by the Second Circuit, the court explained,

―did not involve the separate entity rule and the New York Court of Appeals did not

address it.‖ Id. n.1. ―Until the appellate courts in New York hold otherwise,‖ the court

added, ―this court is constrained to decline the invitation to ignore established precedent

applying the separate entity rule.‖ Id. In Samsun Logix Corp. v. Bank of China, Justice

Solomon explained that ―the Court of Appeals in Koehler did not even mention the

separate entity rule, thereby strongly indicating that it had not intended to overrule that

doctrine.‖ 929 N.Y.S.2d 202 (citation omitted).

Further, the Second Circuit has continued to apply the separate entity rule

after Koehler was decided. In Allied Maritime, although the Second Circuit did not

directly analyze whether Koehler altered the separate entity rule, the court applied the

rule ―because Descatrade‘s account with BNP Paribas is in Paris—and only in Paris.‖

620 F.3d at 74. Accordingly, the Second Circuit held, ―that account cannot be attached in

New York.‖ Id. The Second Circuit also expressly ―agree[d] with the District Court that

‗if Allied seeks to attach Descatrade‘s bank accounts, it may do so only at the branch

where the account exists.‘‖ Id. (citation omitted). Other decisions in the Southern


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District have continued to apply the separate entity rule after Koehler. See Levin v. Bank

of New York, No. 09 CV 5900 RPP, 2011 WL 812032, at *12 (S.D.N.Y. Mar. 4, 2011)

(―Following‖ the separate entity ―doctrine, service of a writ of attachment on the Bank of

New York‘s Maryland branch is not sufficient to attach assets residing in accounts in

New York State.‖); see also John Wiley & Sons, Inc. v. Kirtsaeng, No. 08 Civ.

7834(GEL)(DCP), 2009 WL 3003242, at *4 (S.D.N.Y. Sept. 15, 2009).

Amaprop is correct that two Southern District cases have found that

Koehler abrogated the separate entity rule. See Eitzen Bulk A/S v. Bank of India, No. 09

Civ. 10118(AKH), 2011 WL 4639823 (S.D.N.Y. Oct. 5, 2011); JW Oilfield Equip., LLC

v. Commerzbank AG, 764 F. Supp. 2d 587 (S.D.N.Y. 2011). Eitzen Bulk, however,

merely involved an information subpoena, and thus there was no need for the court to

determine whether the separate entity rule after Koehler would limit transfer of overseas

assets. See 2011 WL 4639823, at *1. In JW Oilfield, Commerzbank conceded that

―Koehler . . . preempts application of the separate entity rule.‖ See 764 F. Supp. 2d at

595. Here, by contrast, ICICI argues that Koehler did not abrogate the separate entity

rule. Both Eitzen Bulk and JW Oilfield predate Justice Stallman‘s well-reasoned

explanation harmonizing Koehler and the separate entity rule. Global Technology, 34

Misc. 3d 1209(A), 2012 WL 89823. On this issue of New York State law, The Clearing

House and IIB respectfully submit that the Court should follow the precedent set by New

York State courts and hold that the separate entity rule was not abrogated by Koehler.

See, e.g., Allstate Ins. Co. v. Serio, 261 F.3d 143, 150 (2d Cir. 2001) (―Where a decision

is to be made on the basis of state law, . . . the Supreme Court has long shown a strong


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preference that the controlling interpretation of the relevant statute be given by state,

rather than federal, courts.‖) (citations omitted).

II. NEW YORK COURTS SHOULD CONTINUE TO APPLY THE

SEPARATE ENTITY RULE TO ENSURE DUE PROCESS AND PERMIT

INTERNATIONAL BANKS TO DO BUSINESS IN NEW YORK

In addition to the recent New York decisions set forth above holding that

the separate entity rule was not abrogated by Koehler, there are compelling policy

reasons that support continuing to apply the separate entity rule in post-judgment

attachment proceedings under Article 52 of the CPLR. First, abandoning the separate

entity rule when a judgment creditor seeks to garnish a foreign bank account subjects the

bank to a significant risk of double liability because the foreign jurisdiction may not

recognize an order discharging the bank‘s liability to the judgment debtor. The risk of

double liability is amplified here by virtue of the fact that nothing in the record

demonstrates that Indiabulls ultimately would have an interest in the assets sought to be

turned over by ICICI, as opposed to ICICI itself having the only interest. Second,

subjecting banks with offices in New York to worldwide collection efforts, rather than

requiring judgment creditors to attach accounts at their situs, would seriously disrupt

banking operations in New York. Indeed, nothing prevents Amaprop, a Cayman Islands

company, from going to India to attach Indiabulls‘ ICICI accounts at their source. Third,

similar to the situation following the Winter Storm decision, allowing New York to

become the worldwide center for post-judgment attachment proceedings would expose

New York courts to a wave of collection proceedings that have nothing to do with New

York or even the United States. See Winter Storm Shipping, Ltd. v. TPI, 310 F.3d 263

(2d Cir. 2002).


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A. The Bank Is Potentially Exposed to the Risk of Double Liability

Because ICICI May Not Be Able to Discharge Its Liability to

Indiabulls After Turning Over Deposits to Amaprop

1. Double Liability Exists When a Bank Is Required to Turn Over the

Bank‘s Assets to the Judgment Creditor But Is Not Allowed to

Reduce Its Corresponding Liability to the Judgment Debtor

New York State law guarantees that a bank ―is discharged from [its]

obligation to the [depositor] to the extent of the payment or delivery‖ made pursuant to

an execution order, CPLR § 5209, or an order of attachment, CPLR § 6204. A deposit

creates a bank‘s contractual liability to the depositor; the money deposited is the property

of the bank. See In re Delaney, 256 N.Y. 315, 319 (1931) (―[T]he relation between a

bank and its depositors is that of debtor and creditor. The money deposited with the bank

belongs to the bank and is not the property of the depositor. The property of the

depositor is the indebtedness of the bank to it.‖) (citation omitted); see also Citizens Bank

of Maryland v. Strumpf, 516 U.S. 16, 21 (1995); People v. Mechanics & Traders’ Sav.

Inst., 92 N.Y. 7, 9 (1883). Thus, when the bank account of a depositor is attached by a

judgment creditor, two steps must happen: (1) the bank must turn over the funds, which

belong to the bank, to the judgment creditor; and (2) the bank‘s liability to the depositor

must be reduced by the same amount. When both these steps happen, the bank will be in

the same position as if the judgment debtor had withdrawn the amount to be turned over

and paid the judgment creditor itself. Both these steps are necessary, however, so that it

is the judgment debtor, and not the bank, that is actually paying the judgment creditor.

The CPLR provides for both steps to occur. See CPLR §§ 5209, 6204.

But the CPLR does not necessarily have extraterritorial application.

Therefore, in cases such as this, the bank is subject to the risk that the first step will be


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completed without the second step. This would mean that the judgment creditor will

collect from the judgment debtor‘s bank, rather than the judgment debtor, but the bank‘s

corresponding liability to the judgment debtor will not be discharged. If the attachment

order were served on the branch where the account is held, that court could order both a

turnover and provide the corresponding discharge of liability. Here, however, the

accounts at issue are in India, and therefore beyond the reach of this Court. Accordingly,

if the Court orders the bank to turn over the funds, there is no assurance that a court in

India would clear the bank of its liability to its customer. Indeed, Amaprop does not even

suggest that India would do so.2 If such an order is not recognized by an Indian court,

ICICI would be required both to pay the judgment creditor and still be subject to liability

to the judgment debtor for the same amount. The possibility of such divergence exposes

ICICI to the unconstitutional risk of double liability. See W. Union Tel. Co. v.

Pennsylvania, 368 U.S. 71, 75 (1961).3 This constitutional risk can be avoided if the

2 As Dr. B.P. Saraf, Robi Isaac, Vikram Trivedi and Mamta Tiwari explain,

pursuant to Section 44A of India‘s Civil Procedure Code of 1908, only decrees

passed by courts in ―Reciprocating Territories‖ may be enforced in India as if

they had been passed by an Indian court. Saraf Decl. ¶ 10; Isaac Opp‘n Decl. ¶ 9;

Trivedi Op. at pp. 4–5; Tiwari Decl. ¶ 5; Trivedi Supp. Op. at pp. 3–5. India does

not recognize the United States as a ―Reciprocating Territory.‖ Saraf Decl. ¶ 11;

Isaac Opp‘n Decl. ¶ 10; Trivedi Op. at p. 5; Tiwari Decl. ¶ 5; Trivedi Supp. Op. at

p. 5. Accordingly, based on the current record, there is no basis for finding that

India would apply or recognize an order from this Court discharging ICICI of its

obligation to Indiabulls, in India, if ICICI were required to restrain, transfer and

turn over India-held assets to Amaprop.

3 In Western Union, the Supreme Court explained that even where a court has in

rem jurisdiction over property, exposure to multiple liability runs afoul of due

process if ―the holder of such property . . . is compelled to relinquish it without

assurance that he will not be held liable again in another jurisdiction or in a suit

brought by a claimant who is not bound by the first judgment.‖ 368 U.S. at 75


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separate entity rule continues to apply. See, e.g., Allstate Ins. Co. v. Serio, 261 F.3d 143,

149-50 (2d Cir. 2001) (―It is axiomatic that the federal courts should, where possible,

avoid reaching constitutional questions.‖) (citations omitted).

2. Amaprop Fails To Show that ICICI‘s Liability to Indiabulls Would

Be Discharged, and Therefore Fails to Show that Indiabulls Has an

Interest in the Property Amaprop Seeks to Have Turned Over

The risk of double liability is heightened here because, even though

Amaprop won an arbitration award against Indiabulls, not ICICI, nothing in the record

demonstrates that Indiabulls has an interest in the asset that Amaprop proposes be turned

over to it by ICICI. This is because the discharge of the bank‘s liability to the judgment

debtor is necessary to establish that the funds being turned over are property in which the

judgment debtor has any interest. Without that discharge, the bank is simply turning over

its own property.

In its papers to the Court, Amaprop repeatedly touts the fact that under

Indian law, as under New York State law, once a deposit is made, the funds become the

property of the bank. See Amaprop Reply Br. at 8 n.8 (Dkt. 35); see also Amaprop Ltr.

to the Court, dated Jan. 13, 2012, at ¶ 6; Merchant Decl. ¶ 7.C.(iii) & Annex. 3. Neerav

Merchant, Amaprop‘s Indian counsel, represents that ―Indian law considers the

relationship between a bank and its customer is that of a debtor and creditor. This has

long been so, as held in the landmark English decision of Foley v. Hill (1848) 9 Eng.

Rep. 1002 (House of Lords); 2 HLC 28, which is followed in India.‖ Merchant Decl.

¶¶ 2, 7.C.(iii) & Annex. 3 (citing Shanti Prasad Jain v. Dir. of Enforcement, AIR 1962

(citing Anderson Nat’l Bank v. Luckett, 321 U.S. 233, 242-43 (1944); Sec. Sav.

Bank v. California, 263 U.S. 282, 286-90 (1923)).


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SC 1764, at 324 (―Now the law is well settled that when moneys are deposited in a Bank,

the relationship that is constituted between the banker and the customer is one of debtor

and creditor and not trustee and beneficiary. The banker is entitled to use the monies

without being called upon to account for such use[], his only liability being to return the

amount in accordance with the terms agreed between him and the customer.‖)). The

terms of the depositor‘s contract with the bank undoubtedly were agreed to in India and

are governed by Indian law.

Amaprop‘s argument totally misses the crucial legal issue. As explained

above, New York State law also provides that a bank ―is discharged from [its] obligation

to the [depositor] to the extent of the payment or delivery‖ made pursuant to an execution

order, CPLR § 5209, or an order of attachment, CPLR § 6204. Because a deposit is the

property of the bank, a deposit cannot be subject to an execution, attachment or turnover

order unless it is determined that the judgment debtor has an interest in the deposit. The

CPLR provides that the judgment debtor, not the bank, has the requisite interest by

relieving the bank of the obligation to pay the depositor. See CPLR §§ 5209, 6204. The

CPLR, however, does not necessarily apply in India.

Here, Amaprop bears the burden to demonstrate that the judgment debtor

has an interest in the asset sought to be turned over. See Steph-Leigh Assocs., LLC v.

Dweck, 914 N.Y.S.2d 679 (N.Y. App. Div. 2011) (plaintiff has ―burden of ‗show[ing]

that the judgment debtor‘‖ is ―‗in possession or custody of money or other personal

property in which‘‖ it has an interest) (citation omitted); Sanford v. Bennett, 783

N.Y.S.2d 423, 424 (N.Y. App. Div. 2004) (―Petitioner, as a judgment creditor, had the

burden to show that Bennett, the judgment debtor, is entitled to possession of the money


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received by respondents or that her rights to the money are superior to those of

respondents.‖) (citations omitted). Amaprop has not carried its burden. It has failed to

provide the Court with any proof—indeed, not even so much as to suggest—that India

has any laws that provide the same protection as CPLR §§ 5209 and 6204 or that India

would apply or recognize such an order by this Court. Without the slightest evidence

that, under Indian law, ICICI would be discharged from its obligation to Indiabulls if the

Court ordered ICICI to restrain, transfer and turn over India-held assets to Amaprop,

there is no basis for finding that ICICI would be relieved of its obligation to Indiabulls if

the Court were to grant Amaprop the relief it seeks.4 On the current record, the only

property interest the Court could find implicated by the relief Amaprop seeks is ICICI‘s.

Thus, Amaprop has failed to establish that the relief it seeks is appropriate satisfaction of

its asserted claims against Indiabulls. The fact that Amaprop has not even attempted to

do so speaks volumes.

B. Extraterritorial Restraints, Transfers and Turnovers Would Disrupt

Banking in New York

From a practical standpoint, the type of extraterritorial restraint, transfer

and turnover Amaprop seeks clearly would disrupt the banking system in New York.

4 In a footnote in its January 13, 2012 letter to the Court, Amaprop draws attention

to the fact that in City of New York v. Venkataram, the State Bank of India

(―SBI‖) honored a restraining order issued in connection with a judgment by a

Southern District court and turned over restrained funds to a judgment creditor.

No. 06 Civ. 6578(NRB), 2011 WL 2899092, at *5 (S.D.N.Y. July 13, 2011). But

Amaprop omits a crucial detail: ―‗the Indian court authorized SBI to release funds

to be applied to his credit against the outstanding judgment in favor of the City of

New York.‘‖ Id. n.7 (emphasis added) (citation omitted); see also id. at *3 (―the

City informed us that the Indian tribunal . . . authorized SBI to release the funds

in one of Venkataram‘s accounts, and that SBI in fact transferred those funds . . .

to the City‖) (emphasis added).


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Orders requiring international banks to restrain, transfer and turn over assets held outside

New York merely as a result of the bank‘s presence in New York would increase costs

and risks both to banks and their customers.

When presented with extraterritorial orders to restrain, transfer and turn

over assets, like those Amaprop seeks here, banks would be forced to devote significant

resources to the task of compliance merely as a price of having operations in New York.

Global banks in New York would be faced with the prospect of searching their entire

international organization to determine whether property belonging to a defendant could

be found at any of their branches anywhere in the world. Such a search itself would

potentially violate foreign laws. After doing that, they would need to restrain any assets

they found. Even in an era of computer technology and electronic records, these are very

burdensome tasks. Moreover, after restraining any non-U.S. assets, global banks would

have to expend additional time and effort transferring and turning the assets over in New

York. All these operations would impose substantial additional costs and risks on global

banks merely because they have operations in New York.

In addition, international banks with New York offices would be forced to

become frequent participants in cross-border legal disputes, as this case amply

demonstrates. Not only would they be required to deal with court orders issued in New

York, they would also be forced into legal disputes in other jurisdictions where

defendants may have property. These disputes could involve the debtors‘ efforts to

restrain the banks from transferring deposits, and the banks‘ efforts to be compensated for

any loss they otherwise would suffer. In such cases, resources of both the foreign branch

and the New York branch of the international bank would be drawn into a complex cross-


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border dispute regarding, inter alia, the relationship between the branches and the

conflicting laws of the two jurisdictions.

Making matters worse, customers will become reluctant to deposit or

otherwise have property in the possession of banks that have New York branches because

of the additional risk to which they would be exposed. As a result, foreign banks will

lose business based on their decision to maintain a New York presence. International

customers may prefer to bank at U.S. institutions without a New York presence out of

fear that a bank‘s New York presence may threaten their foreign property. Foreign banks

that could avoid having a presence in New York would do so to minimize risk, expense

and loss of customers.

In the end, extraterritorial restraints and turnover orders would increase

pressure on non-U.S. banks not to operate in New York. Such pressure would come

internally—due to the increased risk and cost of doing business under such a legal

regime—and externally from foreign customers who do not want their assets exposed in

New York. This would not only harm New York‘s economy, it would also affect

customers of banking services who benefit from the choice and competition fostered by

the wide array of financial institutions presently in New York. New York courts surely

do not wish to send the message to financial institutions that their presence in New York

uniquely exposes them to double liability and to becoming embroiled in third-party,

cross-border disputes to which neither they nor New York have any connection.


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C. New York Courts Would be Flooded with Actions Having Little or No

Connection to New York

The fact that so many international banks have a New York presence,

coupled with the expansive issuance of extraterritorial asset restraints and turnover

orders, would invite, indeed strongly encourage, plaintiffs to come to New York to

restrain assets located anywhere in the world and, ultimately, collect judgments. New

York courts would be overwhelmed with proceedings that arise from controversies

having nothing to do with New York and where the core of the dispute—the assets—are

held in another country.

A recent example demonstrates the reality of this concern. In Winter

Storm Shipping, Ltd. v. TPI, a Second Circuit panel authorized New York federal courts

to order attachments in maritime cases to reach electronic fund transfers on the basis that

such transfers momentarily passed through an ―intermediary bank‖ in New York. 310

F.3d 263 (2d Cir. 2002). Due in part to the dramatic rise of cases based on Winter Storm

and filed in the Southern District, with virtually no ties to New York, the Second Circuit

overruled Winter Storm in Shipping Corp. of India Ltd. v. Jaldhi Overseas Pte Ltd., 585

F.3d 58 (2d Cir. 2009), cert. denied, 130 S. Ct. 1896 (2010).

Before being overruled, Winter Storm wreaked havoc on New York

federal courts and threatened the efficiency of New York‘s banking industry. Indeed, in

Jaldhi, the Second Circuit lamented the fact that Winter Storm caused an explosion in

maritime attachment cases in New York federal courts—at one time ―constitut[ing] 33%

of all lawsuits filed in the Southern District.‖ 585 F.3d at 62. The flood of maritime

attachment cases following Winter Storm undermined the efficiency of New York‘s


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international funds transfer business by burdening it with uncertain and unpredictable

litigation. ―[L]eft uncorrected,‖ the Second Circuit explained, ―[u]ndermining the

efficiency . . . of fund transfers in New York could . . . damage New York‘s standing as

an international financial center.‖ Id. (citations omitted). A ruling in favor of Amaprop

would have the same effect here.

CONCLUSION

For the reasons provided above, The Clearing House Association L.L.C.

and the Institute of International Bankers respectfully urge the Court to deny and dismiss

Amaprop‘s request for an order compelling ICICI to restrain, transfer and turn over non-

U.S. assets to Amaprop.

Dated: New York, New York

February 3, 2012

/s/ Bruce E. Clark

Bruce E. Clark


125 Broad Street

New York, New York 10004

Tel: (212) 558-4000

Fax: (212) 558-3588

[email protected]




Of Counsel:

H. Rodgin Cohen

David A. Castleman

Robert A. Gomez


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