## Facts

- Motorola Credit Corporation became a judgment creditor after obtaining multi-billion-dollar fraud judgments against members of the Uzan family in federal court.
- To enforce those judgments, a federal court issued a post-judgment restraining order under federal rules and New York enforcement procedures, barring transfers of the debtors’ property by the debtors and others with notice.
- Motorola served the restraining order on Standard Chartered Bank’s New York branch.
- The New York branch identified no debtor assets in New York.
- A later search identified approximately $30 million in debtor-related assets held at Standard Chartered’s branches in the United Arab Emirates.
- Standard Chartered initially froze the UAE assets but sought relief, arguing that under New York’s separate entity rule, service on a New York branch does not reach assets held in foreign branches.

## Issues

1. Under New York law, does the separate entity rule bar a judgment creditor from restraining a debtor’s assets held in a bank’s foreign branches based solely on service of a restraining notice/order on the bank’s New York branch?
2. Did New York’s recognition of broad post-judgment turnover authority in other contexts eliminate the separate entity rule for multinational banks operating branches in New York?

## Decision

- The Court of Appeals answered the certified question yes: the separate entity rule precludes restraining assets held in foreign branches based solely on service on a New York branch.
- The court held that service of a CPLR 5222 restraining notice (or similar restraint) on a New York branch does not reach accounts maintained exclusively at foreign branches.
- The court rejected the argument that later enforcement cases implicitly abrogated the separate entity rule, concluding that the rule remains part of New York common law in the branch-banking context.
- A dissent would have limited or discarded the rule as outdated in modern banking and would have preferred a case-specific comity/conflicts analysis.

## Legal Principles

- Under New York’s separate entity rule, a bank branch is treated as a separate entity for purposes of restraining notices and similar judgment-enforcement process; service on one branch does not automatically bind other branches.
- The rule applies in post-judgment enforcement against banks with foreign branches; a New York branch’s receipt of restraint process does not require restraint of assets maintained at foreign branches.
- General personal jurisdiction over a garnishee does not, by itself, collapse a bank’s worldwide branch network into a single unit for restraint purposes.
- The rule is supported by concerns about operational burden on banks and the risk of conflicting legal duties under foreign banking, privacy, or blocking laws; any major change is for the legislature rather than judicial revision.

## Conclusion

New York’s highest court reaffirmed that a judgment creditor cannot restrain assets held in a bank’s foreign branches by serving restraint process only on the bank’s New York branch, preserving the separate entity rule in cross-border judgment enforcement.


Motorola Credit Corp. v. Standard Chartered Bank, 24 N.Y.3d 149, 21 N.E.3d 223 (N.Y. 2014)