Motorola Credit Corp. v. Standard Chartered Bank

The Uzan family (defendants) induced Motorola Credit Corporation (Motorola) (plaintiff) to loan $2 billion to a Turkish telecommunications company controlled by the Uzans. However, the Uzans ultimately committed fraud by funneling the funds to themselves and other entities they controlled. The United States District Court for the Southern District of New York entered a judgment in Motorola’s favor for compensatory and punitive damages and subsequently issued a restraining notice pursuant to New York law to prohibit the Uzans from selling or transferring their assets. Motorola served the New York branch of Standard Chartered Bank (Standard) (defendant) with the restraining notice, but that branch did not hold any of the Uzans’ assets. The Uzans did, however, have assets in Standard’s United Arab Emirates (UAE) branch, and Standard froze those assets pursuant to the restraining notice. Standard sought relief in the United States Court of Appeals for the Second Circuit. Standard argued that, because the restraining notice was served on Standard’s New York branch, the separate-entity rule—which provided that bank branches were to be treated as separate entities for certain purposes—rendered the notice was effective only with regard to assets held by the New York branch. The Second Circuit issued a certified question regarding whether the separate-entity rule precludes a judgment creditor from restraining a judgment debtor’s assets held in foreign branches of the bank.