Topics: Personal Jurisdiction; Forum Non Conveniens

Note: FIMBank, P.L.C. (Applicant), a Maltese company, secured two commercial LCs from Korean commercial banks, Woori Bank and Kwangju Bank, Ltd. (Issuers), in favor of a company based in Dubai, U.A.B., in connection with the sale of scrap metal to be shipped from Japan to South Korea. Issuers are wholly owned subsidiaries of Woori Financial Holdings Co. Ltd., a Korean holding company (Holding Company). Issuers dishonored the LCs in Korea.

Applicant sued Holding Company and Issuers in the New York state courts and was met with motions to dismiss for lack of jurisdiction and forum nonconveniens. The Motions Court dismissed Applicant's complaint for lack of personal jurisdiction and for forum non conveniens. On appeal, the New York Supreme Court, New York, County, Friedman, Moskowitz, DeGrasse, Richter, and Grische, JJ., affirmed.

On the issue of personal jurisdiction, the appellate court ruled that Issuer/Kwangju Bank, Ltd. And Parent Company were not "doing business" in New York and that their contacts with New York were not "so substantial and of such a nature as to justify suit against [them] on causes of action arising from dealings entirely distinct from those activities." The court further found that the Parent Company was not subject to the court's jurisdiction through its ownership of Issuer/Woori Bank because Parent Company was merely a holding company that did not exercise sufficient control to render Issuer/Woori Bank "merely a department" of Parent Company.

In dismissing Issuer/Woori Bank on the ground of forum non conveniens, the court found that the transaction lacked a "substantial nexus" with New York, that Korean law applied, and that Korea provided an adequate forum. In response to Applicant's assertion that the court would not have to apply Korean law because the LCs were subject to the UCP, the court noted that even though the LCs were subject to the terms and conditions of the UCP, "the UCP does not cover every contingency and the meaning of the [LCs'] terms will have to be determined by reference to the law governing the transaction."



The views expressed in this Case Summary are those of the Institute of International Banking Law and Practice and not necessarily those of ICC or the other partners in DC-PRO.