United States: Rushaid v. Pictet & Cie.: New York Court of Appeals Decision Has Important Implications For Foreign Banks With New York "Correspondent" Accounts


On November 22, 2016, the New York Court of Appeals handed down a decision in Rushaid v. Pictet & Cie.1, which will have important implications for foreign banks with New York "correspondent" accounts. The plaintiffs had alleged that some of plaintiffs' faithless employees, located in Saudi Arabia, had accepted bribes and kickbacks – totaling many millions of dollars – from vendors, in exchange for paying inflated prices, and ignoring various deficiencies in the vendors' products and services.

In this action, plaintiffs sued Pictet & Cie., a private bank located in Geneva, Switzerland, and Pierre-Alain Chambaz, Pictet's Vice President, claiming that defendants aided and abetted the employees' fraud, by knowingly laundering the money paid by the vendors through Pictet's New York correspondent account with Citibank. The  complaint, which on a motion to dismiss must be assumed to be accurate, alleges that Chambaz was an active participant in the scheme, setting up an off-shore "bogus" company to receive the bribes, and setting up accounts for the miscreants in Pictet's Geneva office. The vendors – at the direction of the employees – wired the bribe money to Pictet's New York correspondent account in favor of "Pictet and Co. Bankers Geneva." Pictet then credited the funds to the off-shore company's account in Geneva, and the money was then divided up into the faithless employees' individual accounts there.

Pictet moved to dismiss the complaint, contending that the New York courts lacked personal jurisdiction over it under CPLR 302(a)(1). Supreme Court, affirmed by the Appellate Division, granted the motion to dismiss. The Appellate Division distinguished the Court of Appeals decision in Licci v. Lebanese Canadian Bank, SAL.2 There, the Court had found jurisdiction over the Lebanese Canadian Bank, which had, the complaint alleged, used its New York correspondent account to help fund Hezbollah terrorism in Israel. The Licci Court held that the bank's regular use of its New York account for that particular purpose constituted a sufficient "transaction of business" here to justify long arm jurisdiction under CPLR 302(a)(1).

Here, the Appellate Division held that:

Unlike the Lebanese Canadian Bank (LCD), however, which was alleged to have "deliberately used a New York account again and again to effect its support" of a foundation through which money was funneled to a terrorist organization [citation omitted], defendants are alleged to have been "directed" by plaintiffs' former employees "to wire the bribe/kickback money to Citibank NA, New York, in favor of Pictet & Co. Bankers Geneva, for the credit of" an account they controlled. Thus, unlike LCD, defendants merely carried out their clients' instructions and have not been shown to have "purposefully availed themselves of the privilege of conducting activities in New York."

Court of Appeals Decision in Rushaid

A closely-divided Court of Appeals has reversed. The majority concluded that "defendants' intentional and repeated use of New York correspondent bank accounts to launder their customers' illegally obtained funds constitutes purposeful transaction of business substantially related to plaintiffs' claims, thus conferring personal jurisdiction within the meaning of CPLR 302(a)(1)." 

The majority relied upon its Licci decision, and distinguished Amigo Foods Corp. v. Marine Midland Bank-NY3 – in which it held that the mere existence of a foreign bank's correspondent account in New York was, in itself, insufficient to impose jurisdiction over that bank. For,

Unintended and unapproved use of a correspondent bank account, where the non-domiciliary bank is a passive and unilateral recipient of funds later rejected – as in Amigo Foods – does not constitute purposeful availment for personal jurisdiction under CPLR 302(a)(1). Repeated, deliberate use that is approved by the foreign bank on behalf and for the benefit of a customer – as in Licci – demonstrate volitional activity constituting transaction of business. In other words, the quantity and quality of a foreign bank's contacts with the correspondent bank must demonstrate more than banking by happenstance.

The Court of Appeals noted that in this case, the complaint alleged that defendant Pictet's "Citibank, New York account was used to wire the bribes to a Pictet account in Geneva, after which point, the money was divided up and distributed amongst the 'corrupted employees' by deposit to their individual Pictet accounts. Chambaz knew the large sums of money being wired were proceeds of an illegal scheme but never questioned them, and continued to aid and abet the fraud."

Thus, the Court of Appeals concluded that "the Appellate Division erroneously concluded that plaintiffs failed to establish purposeful availment because defendants 'merely carried out their clients' instructions.' Our cases do not require that the foreign bank itself direct the deposits, only that the bank affirmatively act on them." And, "a foreign bank with a correspondent account, therefore, that repeatedly approves deposits and the movement of funds through the account for the benefit of its customer is no less 'transacting business in New York' because the customer, or a third party at the customer's direction, actually deposits or transfers the funds to New York."

The Dissenting Opinion

The dissent argued that "CPLR 302(a)(1) does not confer personal jurisdiction over a foreign bank when, as in this case, the bank's only connection to New York is the maintenance of a New York correspondent account and the passive receipt of payments into that account, at the unilateral direction of third parties." Rather, "a foreign entity must initiate purposeful contact with New York, beyond the mere maintenance of a correspondent account, in order for its relationship with a New York bank to form the basis for the exercise of personal jurisdiction."

The dissent argued that "defendants' sole connection to New York was the maintenance of a correspondent account at Citibank, N.A., into which third party vendors deposited funds that were alleged to be the proceeds of bribes and kickbacks obtained by foreign 'corrupt employees' in connection with a Saudi Arabian construction project," and "plaintiffs have not identified any volitional act on the part of defendants that was directed at New York. Indeed, the only intentional conduct alleged in the complaint that relates in any way to New York was carried out by the foreign employees – who directed the vendors to wire the bribes and kickbacks to 'Citibank, N.A., New York, in favour of "Pictet and Co. Bankers Geneva," for the credit of the employees' overseas account – and the vendors, who followed that direction."

Potential Implications

The Rushaid decision may have serious implications for foreign banks that maintain such correspondent accounts in New York. Although the Court was careful to re-affirm its holding in Amigo Foods – over a claim by the dissent that it was "upending over forty years of precedent" – that the mere existence of such an account is not enough, in and of itself, to confer in personam jurisdiction, this decision strongly suggests that when the cause of action is related to the bank's use of that account, jurisdiction will be found to exist.

The decision also seems to be an expansion of the Court's holding in Banco Ambrosiano v. Artoc Bank & Trust (in which plaintiff was successfully represented by Stroock lawyers)4. There, the parties, an Italian bank and a Bahamian bank, entered into a loan agreement using their correspondent accounts in New York to make the loan in dollars, and to agree to a re-payment in dollars. The Court found that while there was no in personam jurisdiction over defendant under CPLR 302(a)(1), there was sufficient connection between the transaction and the New York accounts to permit quasi-in rem jurisdiction.

The language of the Rushaid majority – including the statement that Banco Ambrosiano is "an example of this Court's consideration of when a party may be subject to jurisdiction based on the use of a correspondent bank account, albeit in a different context" – suggests that a foreign bank's use of a New York correspondent account in a transaction might well result in in personam long arm jurisdiction when the lawsuit relates to that transaction.

1 Rushaid v. Pictet & Cie., ___ N Y 3d ___, 2016 WL 6837930 (2016).

Licci v. Lebanese Canadian Bank, SAL, 20 N Y 3d 327 (2012).

Amigo Foods Corp. v. Marine Midland Bank-NY, 39 N Y 2d 391 (1976).

4 Banco Ambrosiano v. Artoc Bank & Trust, 62 N Y 2d 65 (1984). 

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.