More new ground broken in Saudi US conflict of laws
Posted by Ivo Cerckel on August 22nd, 2009
Anyone who has a US bank account to which money is sent by a third party, can, in cases concerning that money, be sued by that party in the US.
In an 20 July 2009 post, I asked how the US courts could have jurisdiction in the dispute between the Saudi conglomerates Algosaibi and Saad Group. (1)
The only possible answer I could come up with was that Saad Group’s debts to Algosaibi were denominated in Saudi riyal, that the riyal is pegged to the US dollar and that, therefore, the US courts have jurisdiction. (1, again)
I said that if this was the case, then new ground was being broken in the area of the conflict of laws. (1, again)
Abu Dhabi’s The National newspaper carries the following story:
Mashreq takes Al Gosaibi to US court
Asa Fitch
Last Updated: August 20, 2009 4:42PM GMT
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20090820/BUSINESS/708209926/1005
SNIP
A judge in New York will next week hear arguments in a US$150 million (Dh550.9m) case filed by the Dubai-based Mashreqbank against Ahmad Hamad Al Gosaibi and Brothers, a Saudi conglomerate allegedly hit by a huge fraud.
The case is part of a continuing tussle between Al Gosaibi and its creditors, [...]
+
The lawsuit was filed in the US because Mashreq sent its $150m to an Al Gosaibi account in New York. UNSNIP
So Mashreqbank says that it is because Algosaibi has a bank account in New York,
bank account to which Mashreqbank sent the money,
that Algosaibi can be taken to court in new York.
More new ground is being broken in the area of the conflict of laws; the US requirements of justice or the requirements of US justice demand that anyone who has a US bank account to which money is sent by a third party, can, in cases concerning that money, be sued by that party in the US.
Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/
NOTE
(1)
FT and Reuters break new ground in conflict of laws
Posted by Ivo Cerckel on July 20th, 2009
http://bphouse.com/honest_money/2009/07/20/ft-new-ground/
[If the link does not work, try to copy it and paste it in your browser]
No related posts.
August 23rd, 2009 at 09:35
Saudi families square up over $20bn ‘fraud’
A Saudi billionaire with stakes in some of Britain’s biggest companies is at the centre of a multi-billion-dollar fraud that threatens to send financial shock-waves around the world, a New York judge will hear this week
By Louise Armitstead
Published: 9:41PM BST 22 Aug 2009
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6074549/Saudi-families-square-up-over-20bn-fraud.html
SNIP
On Tuesday, the SUPREME COURT of New York will hear arguments from both sides over the $150m default that led to the discovery of the alleged fraud. Court documents, seen by The Sunday Telegraph, show that the case is being brought by Mashreqbank, a Dubai-based bank, which claims AHAB owes it $150m as a result of a foreign exchange contract. Mashreqbank says AHAB defaulted on the payment earlier this year. AHAB argues it “was not aware of the transaction” until it received legal notice from Mashreqbank.
In the documents, AHAB said: “Upon investigation, AHAB learned that its former employee, Maan Al Sanea, organised a fraud in which he entered into certain transactions, such as the one alleged in the complaint, in order to engineer the receipt of funds into accounts in the name of AHAB which he then diverted to his own use. The transactions arranged by Al Sanea were entirely for his own benefit.”
As a result, AHAB has added Mr Al Sanea as a “third party plaintiff” in next week’s case effectively claiming that any liability to Mashreqbank is Saad’s not theirs. The court documents accuse Mr Al Sanea of “massive fraud” and allege that he “misappropriated approximately $10bn (£6bn) as a result of his frauds”.
August 24th, 2009 at 10:32
I cannot but confirm the conclusion of my 20 July 2009 post that
the US of A provides legal protection to Saudi nationals and Saudi companies
because
the Saudi dollar-peg provides monetary protection for the US dollar.
August 24th, 2009 at 14:01
http://ftalphaville.ft.com/blog/2009/08/24/68136/saudi-families-in-fr
Saudi families in fraud dispute
Posted by Gwen Robinson on Aug 24 04:45.
Maan Al Sanea, the boss of Saad Group, which owns 2.9pc of HSBC and a stake in Berkeley Group, has been accused of embezzling $9.2bn from one of Saudi Arabia’s most powerful families, the Algosaibis, in an increasingly bitter legal row between the two dynasties, reports the Daily Telegraph. The Algosaibis, who are being sued in New York by a Dubai bank for the alleged non-payment of $150m, have filed as their defence claims that Al Sanea used their name for transactions without their knowledge.
This entry was posted by Gwen Robinson on Monday, August 24th, 2009 at 4:45 and is filed under People. Tagged with Saad.
Comments
1. ! Report
Ivo Cerckel Aug 24 06:51
How can US courts have jurisdiction in a dispute between a Dubai bank and a Saudi conglomerate?
The only possible answer I could come up with is that
(a) the debts are denominated in US dollar
or
(b) the debts are denominated in Saudi riyal/ UAE dirham, that the riyal/dirham is pegged to the US dollar and that, therefore, the US courts have jurisdiction.
If this is the case, then new ground is being broken in the area of the conflict of laws.
(FT and Reuters break new ground in conflict of laws
Posted by Ivo Cerckel on July 20th, 2009
http://bphouse.com/honest_money/2009/07/20/ft-new-ground/ )
Indeed,
the rules of conflict of laws are that part of the private law of a country which deals with cases having a foreign element. (JHC Morris, “The Conflict of Law”, London, Stevens & Son, 1984, 3rd ed., p. 3)
The fact that the law of an enemy country is being applied in time of war demonstrates that these rules do not result from the comity between nations but from the requirements of justice. (JHC Morris, op. cit., p. 6)
Abu Dhabi’s The National newspaper carries the following story:
Mashreq takes Al Gosaibi to US court
Asa Fitch
Last Updated: August 20, 2009 4:42PM GMT
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20090820/BUSINESS/708209926/1005
SNIP
A judge in New York will next week hear arguments in a US$150 million (Dh550.9m) case filed by the Dubai-based Mashreqbank against Ahmad Hamad Al Gosaibi and Brothers, a Saudi conglomerate allegedly hit by a huge fraud.
The case is part of a continuing tussle between Al Gosaibi and its creditors, [...]
+
The lawsuit was filed in the US because Mashreq sent its $150m to an Al Gosaibi account in New York. UNSNIP
So Mashreqbank says that it is because Algosaibi has a bank account in New York,
bank account to which Mashreqbank sent the money,
that Algosaibi can be taken to court in new York.
More new ground is being broken in the area of the conflict of laws; the US requirements of justice or the requirements of US justice demand that anyone who has a US bank account to which money is sent by a third party, can, in cases concerning that money, be sued by that party in the US
(More new ground broken in Saudi US conflict of laws
Posted by Ivo Cerckel on August 22nd, 2009
http://bphouse.com/honest_money/2009/08/22/more-new-ground-broken-in-saudi-us-conflict-of-laws/ )
At the end of the day,
I cannot but confirm my conclusion of 20 July 2009 that
the US of A provides legal protection to Saudi and UAE nationals and Saudi and UAE companies
because the Saudi and UAE dollar-pegs provide monetary protection for the US dollar.
August 24th, 2009 at 17:59
How could the American taxpayer be forced to pay
for the resolution of this dispute
between a Dubai bank and a Saudi conglomerate?\
August 25th, 2009 at 08:51
Is this a joke?
Gosaibi takes Dubai’s Mashreq to U.S. court
Aug 24, 2009 at 17:01
http://business.maktoob.com/20090000367606/Gosaibi_takes_Dubai_s_Mashreq_to_U_S_court/Article.htm
SNIPS
Saudi conglomerate Al-Gosaibi on Monday said it would sue Dubai-based Mashreq bank in a New York court, alleging the lender of being “wilfully blind” to irregular deals that helped lead Al-Gosaibi into default.
+
The suit follows Mashreq’s $150 million suit filed earlier this year against Algosaibi, in a tit-for-tat case that looks increasingly likely to see the biggest corporate default ever in the Middle East battled out in U.S. courts.
August 25th, 2009 at 11:26
Mashreq and Deutsche Bank have sued Al Gosaibi in New York, while the German Commerzbank has sued the group in London.
(Al Gosaibi files counter-claim against Mashreq over swaps
Asa Fitch
Last Updated: August 24. 2009 7:52PM UAE / August 24. 2009 3:52PM GMT
http://www.thenational.ae/apps/pbcs.dll/article?AID=/20090824/BUSINESS/708249927/1005