Owens v. Turkiye Halk Bankasi A.S.

Background

The 876 plaintiffs are judgment creditors of Iran. According to the opinion, each plaintiff is either a direct victim of an overseas terrorist attack by a group linked to Iran or a surviving family member of such a victim. The plaintiffs obtained default judgments against Iran in the U.S. District Court for the District of Columbia, but Iran had not paid them. Collectively, the judgments exceeded $10 billion.

The plaintiffs alleged that Turkiye Halk Bankasi A.S., also called Halkbank, participated in a scheme with Iran and others to evade U.S. sanctions. They alleged that Iranian oil-sale proceeds were deposited at Halkbank, moved through accounts and shell companies, converted into gold in Turkey, exported to Dubai, and then deposited into Iranian accounts. They alleged that more than $900 million passed through correspondent accounts at U.S. financial institutions, including some in New York, and that Halkbank retained hundreds of millions of dollars for its role.

The Second Amended Complaint asserted four claims: two claims seeking rescission and turnover of allegedly fraudulent conveyances under New York law, a turnover claim under New York law, and a turnover claim under the Terrorism Risk Insurance Act.

Halkbank’s Motion

Halkbank moved to dismiss under several theories. It argued that it was protected by foreign sovereign immunity under the Foreign Sovereign Immunities Act, that the court lacked personal jurisdiction, that the case should be dismissed under the doctrine of forum non conveniens, and that the complaint failed to state a claim.

The court explained that forum non conveniens is a threshold ground that can allow a court to dispose of a case without deciding subject-matter jurisdiction, personal jurisdiction, or the merits. The court therefore addressed forum non conveniens and did not decide Halkbank’s other dismissal arguments or whether the plaintiffs’ underlying claims were legally valid.

Forum Non Conveniens Analysis

Forum non conveniens allows a court to dismiss when another available forum is better suited to hear the dispute. The court applied a three-part test: the amount of deference owed to the plaintiffs’ choice of forum, whether the proposed alternative forum was adequate, and whether private and public interest factors favored the alternative forum.

Deference to the Plaintiffs’ Forum Choice

The court gave the plaintiffs’ choice of New York only minimal deference. Most plaintiffs were foreign residents, and only nine of the 202 plaintiffs known to reside in the United States were known to reside in New York. The terrorist attacks underlying the judgments occurred in foreign countries, the judgments were entered in the District of Columbia, and the alleged financial scheme was conducted primarily in Turkey.

The court also found that most relevant documents were in Turkey, were written in Turkish, and were held by Halkbank. Many potentially relevant witnesses were Halkbank employees in Turkey and were outside the court’s subpoena power. The court noted that it was unclear whether Halkbank was even subject to suit in the United States because Halkbank had contested jurisdiction in both this case and a related criminal case. The plaintiffs argued that the alleged scheme moved funds through New York financial institutions, but the court concluded that this connection supported only minimal deference.

Adequacy of Turkey as an Alternative Forum

The court found that Turkey was an adequate alternative forum. Halkbank’s chief legal advisor stated that Halkbank would accept service in Turkey and submit to the personal jurisdiction of an appropriate Turkish court. The court also found, based on competing expert declarations, that the plaintiffs could potentially recover under Turkish law without first obtaining recognition of their U.S. judgments. The court found Halkbank’s experts more persuasive than the plaintiffs’ expert on the relevant issues of Turkish law.

The plaintiffs argued that Turkish courts might not recognize their U.S. judgments and that political conditions in Turkey made a fair hearing unlikely. The court concluded that Halkbank and its experts had shown several possible ways the plaintiffs could pursue recovery under Turkish law and had also shown that the U.S. judgments might be recognized in Turkey. It further concluded that the plaintiffs’ allegations about interference by Turkish law-enforcement officials did not establish that Turkey’s civil court system was inadequate.

Private and Public Interests

The court found that the private-interest factors strongly favored Turkey. The alleged scheme involved a Turkish bank and its Turkish employees, most relevant evidence was in Turkey, and most potentially relevant witnesses were in Turkey or the surrounding region and were beyond the subpoena power of the U.S. court. The court concluded that trying the case in the United States would not be easy, efficient, or inexpensive.

The court also found that the public-interest factors heavily favored Turkey. New York had almost no connection to the case, and the court found it inappropriate to burden a New York court and jury with a dispute centered elsewhere. Turkey had a greater interest because the case involved a significant Turkish financial institution. In addition, the parties disputed whether New York or Turkish law would govern the fraudulent-conveyance claims, creating a choice-of-law issue that also favored litigation in Turkey.

Disposition

The court conditionally dismissed the action on forum non conveniens grounds. The condition required Halkbank to accept service in Turkey, submit to the jurisdiction of Turkish courts, and waive any statute-of-limitations defense that may have arisen after the U.S. case was filed. The parties were ordered to submit an agreement to litigate in Turkey. The court’s conclusion states that Halkbank’s September 25, 2020 motion to dismiss was conditionally granted.