Lehman Bros. Commercial Corp. v. Minmetals International Non-Ferrous Metals Trading Co.
United States District Court for the Southern District of New York
179 F. Supp. 2d 118 (2000)
Lehman Brothers Commercial Corporation (LBCC) and Lehman Brothers Special Financing, Inc. (LBSF) (collectively, Lehman) (plaintiffs), financial-services companies incorporated in Delaware, had agreements with Minmetals International Non-Ferrous Metals Trading Company (Non-Ferrous) (defendant) for foreign-exchange (FX) trading. Non-Ferrous was a subsidiary of China National Metals & Minerals Import & Export Corporation (Minmetal), a Chinese company. An employee of Non-Ferrous executed a guarantee under which Minmetal allegedly agreed to cover Non-Ferrous’s losses in FX trades. The trades resulted in substantial losses. After Non-Ferrous and Minmetal refused to pay Lehman for the losses, Lehman filed suit in the United States District Court for the Southern District of New York, alleging that Non-Ferrous had breached the FX agreements and that Minmetal breached the guarantee. Non-Ferrous and Minmetal argued that the FX contracts were unauthorized and illegal under Chinese law and moved for summary judgment on their illegality defenses. Lehman opposed the motion by relying on a choice-of-law provision in the FX contracts stating that New York law governed, as well as a similar clause in the guarantee stating that Delaware law controlled.
Rule of Law
Holding and Reasoning (Keenan, J.)
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