In re Abraaj Inv. Mgmt.

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In re Application of Abraaj Investment Management Limited for an Ex Parte to Conduct Discovery for Use in Foreign Proceedings Pursuant to 28 U.S.C. 1782

No. 20-MC-229 (VSB)

United States District Court, S.D. New York

March 29, 2023

Klestadt, Winters, Jureller, Southard & Stevens LLP New York, New York Counsel for Petitioner.

OPINION & ORDER

VERNON S. BRODERICK, United States District Judge.

Applicants David Soden^[1]and Stuart Sybersma (“Applicants”), acting as liquidators of ABRAAJ Investment Management Limited (“AIML”), filed this ex parte application seeking discovery in aid of a foreign proceeding pursuant to 28 U.S.C. § 1782 (the “Application”). (Docs. 1-7.) Specifically, they seek an order granting them the authority to subpoena records from eighteen banks (collectively, the “Banks”) that they intend to use in support of litigation in the Cayman Islands in which they have already, or intend to allege, fraudulent transfer claims. (Doc. 7 at 2-3.) On August 26, 2021, I denied the Application without prejudice to renew, because I found that the Applicants did not make a sufficient showing for me to determine that the Banks were “found” in this district within the meaning of § 1782. (Doc. 9.) Since then, the Applicants have filed amended papers in support of the Application. (Docs. 10-12.)

Because Applicants have made a sufficient showing that the Banks are “found” in this District within the meaning of § 1782, and the discretionary factors identified in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-65 (2004), weigh in favor of granting the request, their application is GRANTED.

I. Background^[2]

AIML is a Cayman Islands exempted company that is or was part of the “Abraaj Group of Companies,” or “Abraaj Group,” a collection of private equity funds and other investment and wealth management concerns. (See Sybersma Decl. ¶¶ 9-10.)^[3]AIML and the Abraaj Group were both founded by Arif Masood Naqvi (“Naqvi”), a citizen of Pakistan who resides in London. (Id. ¶ 11.)

Applicants aver that Naqvi used his control over AIML and the Abraaj Group to make fraudulent transfers of funds belonging to investors from AIML to entities he controls and various members of his family.^[4] (See id. ¶¶ 12-13.) Naqvi is also a defendant in a United States Securities and Exchange Commission (“SEC”) civil action and a Department of Justice (“DOJ”) criminal indictment, both of which arise from alleged improprieties with and misappropriation of Abraaj Group investor funds. (See id. ¶¶ 14-15 (citations omitted)). At the time of Applicants' last filings, Naqvi was under house arrest in London and awaiting a decision on his extradition to the United States.^[5](Id. ¶ 16.)

AIML is currently undergoing a winding-up proceeding in the Grand Court of the Cayman Islands, for which Applicants were appointed as AIML's liquidators. (Id. ¶ 17 & Ex. B.) They seek discovery to determine “what happened,” with the Naqvi Transfers “once received by the” relevant transferees, (Am. Mem. 9)^[6], and they contemplate pursuing litigation against Naqvi and his associates in the Cayman Islands for facts arising from and relating to the Naqvi Transfers, (id.).^[7]To this end, Applicants seek judicial order pursuant to § 1782 authorizing them to issue subpoenas to the Banks: (1) Bank of America, N.A. (“Bank of America”); (2) The Bank of New York Mellon (“Bank of N.Y.”); (3) Citibank, N.A. (“Citibank”); (4) Deutsche Bank AG, New York Branch (“Deutsche Bank N.Y.”); (5) Deutsche Bank Trust Company Americas (“Deutsche Bank Trust”); (6) Goldman Sachs & Co. LLC (“Goldman Sachs”); (7) HSBC Bank USA, N.A. (“HSBC”); (8) J.P. Morgan Chase Bank, N.A. (“JP Morgan”); (9) Mashreqbank PSC, New York Branch (“Mashreqbank”); (10) Standard Chartered Bank U.S. (a/k/a/ Standard Chartered Bank, New York Branch) (“Standard Chartered”); (11) Wells Fargo Bank N.A. (“Wells Fargo”); (12) Barclays Bank PLC, New York Branch (“Barclays”); (13) Societe Generale, New York (“Societe Generale”); (14) BNP Paribas USA Inc. (“BNP”); (15) Bank of Nova Scotia (“BNS”); (16) UBS AG, New York Branch (“UBS”); (17) Commerzbank AG, New York Branch (“Commerzbank”); and (18) The Clearing House Payments Company LLC (“CHPC”).

II. Discussion

A. Applicable Law

“[I]t is neither uncommon nor improper for district courts to grant applications made pursuant to § 1782 ex parte. The respondent's due process rights are not violated because he can later challenge any discovery request by moving to quash pursuant to Federal Rule of Civil Procedure 45(c)(3).” In re Hornbeam Corp., 722 Fed.Appx. 7, 11 (2d Cir. 2018) (quoting Gushlak v. Gushlak, 486 Fed.Appx. 215, 217 (2d Cir. 2012)).

Section 1782 contains three statutory requirements: “(1) the person from whom discovery is sought resides (or is found) in the district of the district court to which the application is made, (2) the discovery is for use in a foreign proceeding before a foreign [or international] tribunal, and (3) the application is made by a foreign or international tribunal or any interested person.” Mangouras v. Squire Patton Boggs, 980 F.3d 88, 97 (2d Cir. 2020) (quoting Mees v. Buiter, 793 F.3d 291, 297 (2d Cir. 2015) (alteration in original)).

“Section 1782 does not define what it means for an entity to reside or be found in a district.” In re Sargeant, 278 F.Supp.3d 814, 819 (S.D.N.Y. 2017). Several courts in this District, however, have recognized that “[a]t minimum, [ ] compelling an entity to provide discovery under § 1782 must comport with constitutional due process.” Id. at 820; see also In re Fernando Celso De Aquino Chad, No. 19-MC-261 (WHP), 2019 WL 2502060, at *2 (S.D.N.Y. June 17, 2019) (quoting Matter of Fornaciari for Order to Take Discovery Pursuant to 28 U.S.C. § 1782, 2018 WL 679884, at *2 (S.D.N.Y. Jan. 29, 2018)); In re Fornaciari, 17-MC-521 (WHP), 2018 WL 679884, at *2 (S.D.N.Y. Jan 29, 2018) (quoting In re Sargeant, 278 F.Supp.3d at 820); Australia & New Zealand Banking Grp. Ltd. v. APR Energy Holding Ltd., No. 17-MC-216 (VEC), 2017 WL 3841874, at *3 (S.D.N.Y. Sept. 1, 2017) (“Regardless of what section § 1782 requires, the Constitution's due process protections apply.”). The Second Circuit agreed with this reading, holding that “the statutory scope of ‘found' extends to the limits of personal jurisdiction consistent with due process.” In re del Valle Ruiz, 939 F.3d 520, 527 (2d Cir. 2019).

“Once the statutory requirements are met, a district court may order discovery under § 1782 in its discretion, taking into consideration the twin aims of the statute, namely, providing efficient means of assistance to participants in international litigation in our federal courts and encouraging foreign countries by example to provide similar means of assistance to our courts.” Certain Funds, Accounts &/or Inv. Vehicles v. KPMG, L.L.P., 798 F.3d 113, 117 (2d Cir. 2015) (citation omitted). “The Supreme Court has identified four” additional discretionary factors relevant to this determination:

(1) whether “the person from whom discovery is sought is a participant in the foreign proceeding,” in which case “the need for § 1782(a) aid generally is not as apparent”; (2) “the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of the foreign government or the court or agency abroad to U.S. federal-court judicial assistance”; (3) “whether the request conceals an attempt to circumvent foreign proof-gathering restrictions or other policies of a foreign country or the United States”; and (4) whether the request is “unduly intrusive or burdensome.”

Mangouras, 980 F.3d at 97-98 (citing, ultimately, Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241, 264-65 (2004)) (alterations omitted).

“[I]t is far preferable for a district court to reconcile whatever misgivings it may have about the impact of its participation in the foreign litigation by issuing a closely tailored discovery order rather than by simply denying relief outright.” Mees, 793 F.3d at 302 (citation omitted).

B. Application

Here, it is clear from Applicants' filings that the second and third elements of § 1782's statutory factors are met. “[T]he discovery sought is for use in a foreign proceeding or tribunal,” In re Al-Attabi, 21-MC-207 (VSB), 2021 WL 4027021, at *2 (S.D.N.Y. Sept. 3, 2021) (internal quotation marks omitted), because Applicants contemplate “litigation in the Cayman Islands” against Naqvi and those entities and individuals to whom he allegedly wrongfully transferred money, (Am. Mem. 9). The Applicants would “be the plaintiff in the [c]ontemplated Cayman [l]itigation” against Naqvi and his associates, (see id. at 22), which renders them interested parties, Intel, 542 U.S. at 256 (“No doubt litigants are included among, and may be the most common example of, the interested person[s] who may invoke § 1782.”) (internal quotation marks omitted).

With regard to the first factor's consideration of whether the eighteen Banks are “found” in this district within the meaning of § 1782, Applicants argue that they are, because they are either subject to “general personal jurisdiction” in this District, or they are subject to “specific personal jurisdiction” in this District. (See Am. Mem. at 13-19.)

1. Whether the Banks are “Found” in this District

a. General Personal Jurisdiction

“[O]nly a limited set of affiliations with a forum will render a defendant amenable to” general jurisdiction, also called “all-purpose jurisdiction[,] there.” Daimler AG v. Bauman, 571 U.S. 117, 137 (2014). For a corporation, general jurisdiction is typically available only in the forum in which it is incorporated or the forum in which its principal place of business is located. See Gucci Am., Inc. v. Li, 768 F.3d 122, 135 (2d...