VISA International Service Association v. BankIslami Pakistan Limited

Background

In October 2018, unknown people used counterfeit BankIslami debit cards in a coordinated “cashout attack,” withdrawing money from automated teller machines around the world through the Visa network. Visa paid the banks connected to the affected machines and began debiting BankIslami for the losses.

The next business day, BankIslami filed an action in Pakistan’s High Court of Sindh. It sought an emergency injunction against transferring funds to Visa and a declaration that it was not liable for the cashout losses. The Pakistani court issued an order temporarily blocking the transfer, and the disputed funds had not been transferred from a JPMorgan Chase account in New York.

In March 2020, Visa filed this breach-of-contract action seeking $6.2 million in damages. BankIslami moved to dismiss the case or, alternatively, to stay the proceedings.

Court’s Analysis

The court rejected BankIslami’s argument that the Pakistani action prevented Visa’s case from proceeding. Under California law, the Pakistani proceeding did not have preclusive effect because there was no final judgment, and the Pakistani court had not decided—and could not decide—the identical question presented by Visa’s motion: whether Visa’s contract claim could proceed in California.

The court also rejected abstention based on adjudicatory comity, a doctrine allowing a federal court to decline to exercise jurisdiction when a foreign proceeding is the proper place to resolve the dispute. Although some considerations pointed toward Pakistan, BankIslami had agreed to litigate disputes arising from its relationship with Visa in California. The case concerned contractual settlement obligations, not a broad inquiry into responsibility for the international cashout attack. The court also noted that the Pakistani action was based on a different agreement and was unlikely to conclusively resolve Visa’s claim.

Dismissal under forum non conveniens, a doctrine allowing dismissal when another forum is substantially more appropriate, was also unwarranted. BankIslami had agreed to litigate in California, the parties agreed that California law governed the contract, and BankIslami had not shown that necessary witnesses were more likely to be in Pakistan. The court likewise found no basis to require two Pakistani entities that were not parties to the contract to be joined in the California case.

The court held that California’s equitable defense of laches did not bar Visa’s claim because California does not recognize laches for claims seeking legal relief, including contract damages. Finally, the court found that a stay was not warranted under the Colorado River doctrine or the court’s inherent powers because the Pakistani action was unlikely to resolve Visa’s contract claim and a stay would not promote judicial efficiency or justice.

Disposition

The court denied BankIslami Pakistan Limited’s motion to dismiss or stay. The order did not decide whether BankIslami breached its contract or whether Visa was entitled to the requested damages; it decided only that the case should not be dismissed or paused on the grounds presented.