Bank of India, New York Branch v. Essar Steel Holdings Limited, Index No. 655315/2016 (NY Sup. Ct. Sept. 27, 2017) [click for opinion]
Plaintiff Bank of India, New York Branch ("BOI-NY"), the New York branch of an Indian bank, filed this breach of contract action against Defendant Essar Steel Holdings Limited ("Essar"), an organization incorporated in Mauritius. In order to enter into a purchase agreement with Minnesota Steel Industry LLC, Essar was required to obtain a $6 million standby letter of credit (the "SLC") in favor of the State of Minnesota. Essar thereafter executed several agreements with BOI-NY to secure the SLC.
BOI-NY was ultimately required to pay $6 million to the State of Minnesota when it demanded payment of the drawing amount under the SCL. When BOI-NY pursued this action against Essar to recover the amounts paid, Essar moved to dismiss under CPLR 3211(a)(8) for lack of personal jurisdiction. Essar argued that it was a foreign corporation with no ties to New York and did not purposefully transact any business in New York related to the letter of credit.
In determining Essar's motion, the court noted that it could exercise personal jurisdiction over a foreign defendant under New York's long-arm statute, (CPLR 302(a)(1)), if the defendant transacts business in New York and the claims arise from those transactions. A single transaction may satisfy the transacting business requirement where it gives rise to the claims at issue. While a defendant need not enter New York, physically, for personal jurisdiction to lie, it must have purposefully availed itself of the privileges of conducting business in New York to satisfy U.S. constitutional due process.
The court found that BOI-NY had successfully established that its claim arose from Essar's business transactions in New York under New York's long-arm statute. Essar had purposely reached into New York to negotiate and execute the contracts in New York, and the SLC evidenced its execution in New York, stating on the first page: "Place: New York." Essar had also maintained a $1.5 million certificate of deposit with BOI-NY, in New York, as partial security under a security and pledge agreement. Essar had also contacted BOI-NY in New York by phone and email to negotiate several extensions to the SLC. Under these facts, the court found that Essar had purposefully availed itself of the privilege of conducting activities in New York through its New York dealings with BOI-NY, and that BOI-NY's claims arose directly from those contacts.
The court denied Essar's motion to dismiss for lack of personal jurisdiction under CPLR 3211(a)(8).