Appeals Court Revives Suits Against Saudi Billionaire

Saudi billionaire Maan al-Sanea and members of the kingdom’s Algosaibi family must face lawsuits in New York that a judge had dismissed in 2010, a state appeals court ruled.

Mashreqbank PSC, a bank in the United Arab Emirates, sued Ahmad Hamad Algosaibi & Bros. Co., a Saudi Arabian company whose general partners are members of the Algosaibi family, in 2009 after transferring $150 million to Algosaibi’s New York bank account. There is no dispute that Algosaibi was supposed to wire the bank the equivalent sum in Saudi currency and didn’t, according to the 2010 ruling. Algosaibi countersued the bank.

New York State Supreme Court Justice Richard Lowe threw out the lawsuits in July 2010, saying the litigation doesn’t belong in the U.S. because the people named in the suits are unable to travel to America and most of the witnesses live abroad.

An appellate panel in Manhattan today reversed Lowe’s ruling, saying that New York has a “paramount interest in protecting its own financial institutions.”

“New York has a compelling interest in adjudicating controversies that implicate its preeminent position in the international banking system,” Justice James M. Catterson wrote for the majority.

‘Inconvenient Forum’

Two justices, Angela Mazzarelli and Richard T. Andrias, disagreed with the majority.

“The motion court correctly considered and balanced the appropriate factors in finding that New York is an inconvenient forum for this dispute,” Andrias wrote.

Ahmad Hamad Algosaibi & Bros., which had appealed Lowe’s ruling, is pleased that the appeals court has “recognized the critical role of New York courts in massive international frauds that use the U.S. banking system,” said Eric Lewis, an attorney with Lewis Baach Pllc in Washington who serves as chief legal coordinator for the company.

“Foreign parties should not be allowed to use New York banks to perpetuate massive financial frauds and escape scrutiny simply by engineering the wrongdoing from outside the country,” Lewis said in a statement.

The decision is “procedural only,” said Carmine D. Boccuzzi Jr., a partner with Cleary Gottlieb Steen & Hamilton LLP who represents Mashreqbank.

“Mashreq is confident it will prevail on the merits,” Boccuzzi said in a telephone message. “Mashreq has already obtained a judgment in its favor from a UAE court on the same issues AHAB has been seeking to relitigate in New York.”

Robert F. Serio, a lawyer with Gibson Dunn & Crutcher LLP who represents al-Sanea, declined to comment on the ruling.

The cases are Mashreqbank PSC v. Ahmed Hamad Al Gosaibi & Bros. Co., 601650/2009, and Ahmed Hamad Al Gosaibi & Bros. Co. v. Al Sanea, 590643/2009, New York State Supreme Court (Manhattan).

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