The plaintiffs in the two related judgments in Licci v Lebanese Canadian Bank SAL and American Express Bank Ltd (2d Cir, 5 March 2012) were Israeli residents who had been the victims of Hezbollah rocket attacks in 2006. They alleged that Lebanese Canadian Bank (LCB) knowingly maintained bank accounts for a group allegedly affiliated with Hezbollah and that both LCB and Amex Bank had facilitated wire transfers for the affiliate. New York law does not impose a duty on a bank to protect non-customers from intentional torts committed by the bank’s customers, but was it New York or Israeli law which governed the claims? New York, said the banks (for obvious reasons).
The trial judge failed to conduct choice-of-law review and thought there was no conflict between the laws of the two jurisdictions. On appeal, the 2d Circuit did consider which law governed.
Although any tort would have occurred in Israel, all of the conduct on the part of Amex Bank that might have given rise to liability occurred in New York, which therefore had the closer connection to the claim. This led to the same result the trial judge had reached: the claim against Amex Bank was dismissed because New York law didn’t impose a duty to non-customers.
Things were less clear in respect of LCB. The 2d Circuit didn’t think New York law provided sufficient guidance on whether a New York court had the jurisdiction to hear the claims being asserted. The trial judge thought that the mere fact that LCB maintained a corresponding bank account in New York and used it to wire funds to the Hezbollah affiliate wasn’t a sufficient basis for jurisdiction, but the 2d Circuit thought the whole question ‘insufficiently developed’. It therefore certified two questions to go up to the Court of Appeals: (1) is effecting wire transfers through a correspondent account in New York the transaction of business in the state, such that it would be captured by the state’s ‘long-arm’ Civil Practice Law and Rules? and (2) if the answer to the previous question is ‘yes’, did the plaintiffs’ claims actually arise from that transaction – or was the nexus between wire transfers and rocket attacks too attenuated?