In a case of first impression in the New York state courts, the New York Supreme Court has held that maintaining a branch office in New York does not, in itself, subject a non-U.S. bank to general personal jurisdiction in New York.
In Gliklad v. Bank Hapoalim, B.M., No. 155195/2014 (N.Y. Sup. Ct. N.Y. Cnty. Aug. 11, 2014), the petitioner sought to enforce a $505,000,000 judgment obtained against a judgment debtor by serving a subpoena and restraining notice on the New York branch of Bank Hapoalim, seeking the turnover of assets purportedly held in the judgment debtor's accounts at non-U.S. branches. On behalf of Bank Hapoalim, HSF moved to dismiss the turnover petition on several grounds, including that (1) pursuant to the U.S. Supreme Court's decision in Daimler AG v. Bauman, Bank Hapoalim is not subject to general personal jurisdiction in New York, and (2) service upon Bank Hapoalim's New York branch is insufficient to require the turnover of documents or assets maintained by the bank outside of the United States under the "separate entity rule."
In granting Bank Hapoalim's motion and dismissing the petition in its entirety, the Court held that maintaining a branch in New York is not a sufficient basis to assert personal jurisdiction over the bank. Moreover, the Court ruled that Bank Hapoalim's New York branch is a separate legal entity and service of process on the branch does not mandate the turnover of documents or assets held at other branches located outside of the United States.
The Gliklad decision is important to international financial institutions for several reasons. First, it establishes that Daimler may be fatal to any effort to exercise personal jurisdiction over a foreign bank simply because it maintains offices or branches in New York. Indeed, Daimler's relatively restrictive view of jurisdiction provides considerable protection for foreign banks operating in New York against claims having no relationship to their New York activities. This principle may be applied on behalf of foreign banks in a variety of situations going forward, and this New York decision is a strong precedent for cases in other U.S. jurisdictions as well. Second, this decision confirms that international financial institutions may continue to rely on the separate entity rule and resist subpoenas and restraining notices which are served only on their New York branch, but which seek documents and assets held at non-U.S. branches.