Banco Ambrosiano v. Artoc Bank and Trust

Banco Ambrosiano S.p.A. (Ambrosiano) (plaintiff) was an Italian international bank with a main office in Italy and an office in New York. Artoc Bank and Trust, Ltd. (Artoc) (defendant), which also engaged in international banking, was organized under Bahamas law. Neither Ambrosiano nor Artoc were authorized to conduct banking business in New York. According to Ambrosiano, it loaned Artoc $15 million, but Artoc did not repay the money. Artoc acknowledged receiving $15 million from Ambrosiano but disputed owing any repayment. All the parties’ negotiations about the $15 million occurred in Italy, the Bahamas, and Peru; no negotiations occurred in New York. Artoc maintained a bank account with New York-based Brown Brothers Harriman and Company (Brown), which Artoc regularly used for transactions involving United States dollars. The Brown account was Artoc’s sole contact with New York. Ambrosiano provided the $15 million to Artoc by depositing the money in Artoc’s Brown account; Artoc was to return the money (if return was necessary) via Ambrosiano’s account with a New York bank. Ambrosiano sued Artoc in New York state court to recover the $15 million. The supreme court granted Ambrosiano’s ex parte request to enjoin Brown from transferring the funds in Artoc’s account. The supreme court subsequently confirmed its order, ruling that although Artoc concededly was not subject to in personam jurisdiction in New York, the court had quasi-in-rem jurisdiction because Artoc’s Brown account bore a reasonable relationship to Ambrosiano’s claim. The appellate division affirmed but granted Artoc leave to appeal.