Russia is a no-show in its suit against the Bank of New York
A weird case got weirder this morning, when the Russian Federal Customs Service failed to send any representative at all to appear in a Moscow court for the resumption of pretrial hearings in its $22.5 billion suit against the Bank of New York Mellon (BK), according to a lawyer for the bank.
According to Damien J. Marshall, a Boies Schiller & Flexner partner representing the bank at the hearing, Judge Lyodmila Pulova explained that the customs service had faxed her a petition this morning requesting a delay until Oct. 15, and explaining only that the the service’s lawyers were busy with other matters.
Overruling Russia’s request, the judge agreed to hear testimony anyway from two of the bank’s U.S. experts — including former attorney general Richard Thornburgh — who had traveled to Russia just for the hearing, according to Marshall. When the witnesses had finished (with no cross-examination, obviously), Judge Pulova put off continuation of the hearing until Nov. 13.
An email and voicemail message for Steven C. Marks of Miami’s Podhurst Orseck, the lead lawyer for Russia in the case, were not immediately returned. The voicemail was left at Marks’s Moscow hotel. (The receptionist confirmed that Marks had checked in.)
The suit stems from the conduct of a rogue Bank of New York vice president who pleaded guilty in February 2000 to having helped depositors of a Russian bank smuggle about $7.5 billion out of Russia from 1996 to 1999 through Bank of New York accounts. The bank was never charged in connection with the case, but did enter into a non-prosecution agreement on Nov. 8, 2005, in which it agreed to pay a $14 million fine, acknowledged various regulatory lapses, and accepted “responsibility” for what had happened.
The suit is unusual in that Russia has brought it under the American civil RICO statute, but has filed it in one of its own commercial courts, known as the Arbitrazh Court for the City of Moscow. There is substantial question among experts on the Russian legal system as to whether a Russian arbitrazh court has the judicial independence necessary to rule against the Russian government in a high-stakes case.
Here is a feature story I wrote about the case for Fortune’s Sept. 29 issue.
The issue at the pretrial hearings is whether the arbitrazh court — which, as a commercial court, has no jurisdiction to interpret criminal laws (even Russian criminal laws) — can adjudicate a civil RICO case, where liability of the bank hinges upon the court finding that it has violated U.S. criminal laws.
Russia had hoped to argue that the bank had already admitted criminal liability by entering into the nonprosecution agreement, and that, therefore, the Russian court would not have to interpret any criminal laws. However, in recent weeks, as explained in this update last week, the Manhattan prosecutors who investigated the bank have disputed Russia’s claim, stating in a letter that the bank never admitted “criminal culpability.”
At today’s hearing, RICO expert Gregory Joseph presented an 80-slide PowerPoint presentation to the court, explaining why he believes that the court’s task would inevitably require it to interpret U.S. criminal laws. His testimony was followed by that of former attorney general Thornburgh, who discussed the meaning of the non-prosecution agreement and the Manhattan prosecutors’ recent letter of clarification, and said that the bank had never been charged with, let alone admitted, criminal wrongdoing.
In a phone interview, the bank’s lead counsel, Jonathan Schiller of Boies Schiller & Flexner, acknowledges that he does not know the meaning of today’s events, but says they might reflect Russia’s “reconsideration of the claim and thoughtful review . . . of whether to proceed with the case. . . . The evidence presented today established the false and inaccurate assertions by the plaintiff’s U.S. attorney at the heart of the case, and made clear that the Bank of New York did not admit or engage in criminal wrongdoing as the plaintiff’s lawyer has represented in court.”
BGB–
When parties agree to submit their disputes to arbitration, they contractually agree upon a decision-maker that both can trust. That’s significantly different from being unwillingly hauled by a foreign government before one of its own courts, especially when those courts are widely suspected of lacking the necessary judicial independence to rule impartially in such cases. (The ‘Arbitrazh Court for the City of Moscow,” where the case is being tried, is not an ‘arbitration’ tribunal as we use that term. it’s a commercial court. it used to settle disputes between state-owned enterprises during the soviet era.)
I wonder what consequences does the SCOTUS Shearson decision has of the Russian claim? In Shearson, the Court decided that claims under civil RICO may be arbitrated abroad. Just to play the devil’s advocate, it seems that the issue of RICO applicability abroad would not arise had the plaintiffs brought this case in Moscow International Arbitration Tribunal (actual name may be different).
I wonder what consequences does the SCOTUS Shearson decision has of the Russian claim? In Shearson, the Court decided that claims under civil RICO may be arbitrated abroad. Just to play the devil’s advocate, it seems that the issue of RICO applicability abroad would not arise had the plaintiffs brought this case in Moscow International Arbitration Tribunal (actual name may be different).
Greg Joseph is considered an authority on Civil RICO because of his well-regarded book, Civil RICO: The Definitive Guide.
http://books.google.com/books?hl=en&id=rudT9NAZ5U4C&dq=gregory+joseph+rico&printsec=frontcover&source=web&ots=_6DlXG8se3&sig=Kj3Y9wePMAxMxFL6W56on7hXGPE&sa=X&oi=book_result&resnum=1&ct=result
Greg Joseph is considered an authority on Civil RICO because of his well-regarded book, Civil RICO: The Definitive Guide.
http://books.google.com/books?hl=en&id=rudT9NAZ5U4C&dq=gregory+joseph+rico&printsec=frontcover&source=web&ots=_6DlXG8se3&sig=Kj3Y9wePMAxMxFL6W56on7hXGPE&sa=X&oi=book_result&resnum=1&ct=result
What you guys cant play nice? Name calling by anyone is not right and shows those folks who do so their ignorance and youth.
What you guys cant play nice? Name calling by anyone is not right and shows those folks who do so their ignorance and youth.
J. Ball, you ignoramous, what do think an experienced defense attorney is if not an expert of their chosen field? And really – “Go Russia!” – like this is some spitting contest or a certain 1980 hockey game – did you cheer for Russia then, too? You don’t understand the legal issues involved here. Go suck an egg. Or some borsche.
J. Ball, you ignoramous, what do think an experienced defense attorney is if not an expert of their chosen field? And really – “Go Russia!” – like this is some spitting contest or a certain 1980 hockey game – did you cheer for Russia then, too? You don’t understand the legal issues involved here. Go suck an egg. Or some borsche.
Gregory Joseph, supposedly playing the role of “expert witness” is in reality not a legal scholar, but just another defense attorney hired by Boise Schiller on the Bank’s behalf. Interestingly, Mr. Joseph is representing Citi in its case against Wachovia, which is being represented by none other than (Surprise!) David Boise. What a cozy, inappropriate relationship these vultures maintain. I’m no fan of Russia, but certainly not a fan of sleazy lawyers or crooked bankers. Go Russia!
Gregory Joseph, supposedly playing the role of “expert witness” is in reality not a legal scholar, but just another defense attorney hired by Boise Schiller on the Bank’s behalf. Interestingly, Mr. Joseph is representing Citi in its case against Wachovia, which is being represented by none other than (Surprise!) David Boise. What a cozy, inappropriate relationship these vultures maintain. I’m no fan of Russia, but certainly not a fan of sleazy lawyers or crooked bankers. Go Russia!
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This blog is about legal issues that matter to business people, and it's geared for nonlawyers and lawyers alike. Roger Parloff is Fortune magazine's senior editor (legal affairs). He practiced law for five years in Manhattan before becoming a full-time journalist.
BGB–
When parties agree to submit their disputes to arbitration, they contractually agree upon a decision-maker that both can trust. That’s significantly different from being unwillingly hauled by a foreign government before one of its own courts, especially when those courts are widely suspected of lacking the necessary judicial independence to rule impartially in such cases. (The ‘Arbitrazh Court for the City of Moscow,” where the case is being tried, is not an ‘arbitration’ tribunal as we use that term. it’s a commercial court. it used to settle disputes between state-owned enterprises during the soviet era.)