Court of Appeals Declines to Enforce Subpoenas against Foreign Banks for Asset Information held at Branches Worldwide

The World in U.S. Courts: Spring 2017 - Personal Jurisdiction/Forum Non Conveniens

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Leibovitch v. Islamic Republic of Iran, 2017 WL 1160943, Seventh Circuit Court of Appeals, March 29, 2017

The plaintiffs, family members and estate of a deceased child, obtained a default judgment of USD67 million against the Islamic Republic of Iran and its Ministry of Information and Security in connection with Iran’s support of a terrorist organization that carried out an attack during which plaintiffs were injured. To collect on the judgment, the plaintiffs issued subpoenas to two foreign banks with branches in Chicago (Bank of Tokyo-Mitsubishi UFJ, Ltd. and BNP Paribas) seeking information about Iranian assets held at branches of the two banks worldwide. The banks agreed to comply with the subpoenas on behalf of their US branches, but moved to quash them to the extent they sought information maintained at branches outside of the US, on grounds that the Court lacked personal jurisdiction over such non-US branches to enforce compliance with the subpoenas.

The Court of Appeals in Chicago agreed that it lacked personal jurisdiction over the non-US bank branches and ruled for the non-US banks, rejecting the plaintiffs’ argument that personal jurisdiction is irrelevant to the enforcement of subpoenas. Since the non-US banks were neither incorporated nor headquartered in the US, the Court of Appeals held that there was no general personal jurisdiction. The Court of Appeals likewise found that it did not have specific personal jurisdiction over the non-US banks because the subpoenas were “not tailored to the banks’ presence or activities in the United States.” It explained, “[i]f the subpoenas sought only to discover whether, and if so what, Iranian government assets were in either or both of the two Chicago branch banks, the district court would have jurisdiction to enforce the subpoenas[.]” Because the Chicago branches maintained that they neither were holding Iranian government assets nor knew which if any of their sister branches or home offices elsewhere (either in or outside the US) were holding any such asset, the Court found no basis for jurisdiction over the parents or other branches. Interestingly, the language of the Court of Appeals’ ruling may suggest that a different decision could have attached if a branch bank had knowledge of assets or activities elsewhere.

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