Kashef v. BNP Paribas SA

Background

The plaintiffs alleged that they were victims of human-rights abuses committed by the Government of Sudan and militias operating in Sudan between 1977 and 2009. They sued BNP Paribas S.A., several of its branches and subsidiaries, and individuals working for the bank, collectively referred to as BNPP. The plaintiffs alleged that BNPP used illicit and fraudulent financial practices to help the Sudanese government evade American sanctions and thereby helped sustain the Sudanese regime and perpetuate the abuses.

The alleged conduct principally involved BNPP’s Geneva branch. According to the complaint and facts BNPP admitted in criminal proceedings, the Geneva branch served as a correspondent bank for Sudanese entities, helped structure transactions to conceal violations of American sanctions, provided letters of credit supporting Sudanese imports and exports, concealed the names of sanctioned entities from dollar-payment records, and routed transactions through unaffiliated United States banks. The plaintiffs alleged that these practices helped Sudan obtain oil revenue, weapons, and other resources used in the violence.

The plaintiffs asserted numerous state-law tort claims, including negligence per se, intentional and negligent infliction of emotional distress, commercial bad faith, unjust enrichment, aiding and abetting several torts, and conspiracy. BNPP previously obtained dismissal of the claims on several grounds, but the United States Court of Appeals for the Second Circuit reversed the rulings based on the act-of-state doctrine and timeliness and sent the case back for further proceedings. BNPP then renewed its motion to dismiss.

Choice of Law

Because the case was brought under the court’s diversity jurisdiction, the court applied New York’s choice-of-law rules. Those rules generally apply the law of the jurisdiction with the greatest interest in the particular dispute. For conduct-regulating tort rules, the court focused primarily on where the alleged wrongful conduct occurred rather than where the plaintiffs were injured.

The court concluded that Swiss law governs the plaintiffs’ claims. It found that almost all of BNPP’s relevant conduct occurred in Switzerland through the Geneva branch. Switzerland therefore had a stronger interest in regulating that conduct than New York, the federal government, or Sudan.

The court rejected the plaintiffs’ argument that New York law should apply because New York prosecutors brought criminal cases against BNPP and because transactions passed through New York. The court reasoned that later criminal prosecutions did not change where the underlying conduct occurred, and that the New York transaction-clearing activity was largely automated and ministerial. The plaintiffs did not allege that the schemes were created, or that relevant conspiracy conversations occurred, in New York.

The court also rejected BNPP’s argument that federal law should govern because the claims involved violations of international-law norms. It concluded that the federal government’s general interest in international law did not outweigh Switzerland’s specific interest in regulating conduct occurring within Switzerland. The court recognized Sudan’s interest because the plaintiffs were injured there and BNPP allegedly acted with the Sudanese government, but concluded that the applicable choice-of-law analysis focused on the location of BNPP’s conduct, which was Switzerland.

Swiss Law and the Motion to Dismiss

After selecting Swiss law, the court considered whether the complaint stated a claim under that law. It did not resolve that question. Federal Rule of Civil Procedure 44.1 permits a court to consider relevant materials, including expert testimony and foreign legal sources, when determining the content of foreign law.

The parties had provided little briefing on Swiss law and relied heavily on conflicting declarations from two Swiss-law experts. BNPP’s expert argued that a Swiss court would dismiss the claims, including because the plaintiffs could not satisfy Swiss causation requirements. The plaintiffs’ expert disagreed and argued that most of the claims should survive. The parties had not provided the court with the Swiss primary-law sources discussed in the declarations.

Because the record did not allow the court to determine whether the complaint stated a claim under Swiss law, the court ordered the parties to meet and confer about possible additional discovery, including depositions of the experts. The court also ordered supplemental briefing on whether the second amended complaint stated a claim under Swiss law and directed the parties to propose a briefing schedule and dates for a hearing. The opinion did not grant or deny BNPP’s renewed motion to dismiss.