Forum Non Conveniens

• Author: International Law Group

The following case involves the Bank of Credit and Commerce International Overseas Limited (hereinafter BCCI), one of a group of closely affiliated international banks known as the BCCI group. When the financial group collapsed in 1991, bank regulators seized the bank's assets and imposed court supervision. In 1997, the bank's court-appointed fiduciaries brought an action in the Supreme Court of New York against the State Bank of Pakistan (SBP), seeking repayment of a $50 million dollar loan made by BCCI to the SBP. The SBP first removed the case to federal district court, and then moved for dismissal under the forum non conveniens doctrine, arguing that Pakistan would be the more appropriate forum.

In opposition, BCCI argued that a nonwaivable 3-year statute of limitations would bar the action in Pakistan. Even if the case could somehow proceed, it could face a delay of up to 25 years, given the back-up in the Pakistani court system. The SBP, in turn, contended that the Pakistani Banking Companies Act of 1997 would revive the case, provide a legal claim, and permit expedited processing. Thus, the Pakistani courts could decide the case in seven to ten years. BCCI countered by arguing that the Banking Act would not revive the claim because the statute of limitations had already barred the claim at the time of the Act's enactment and because BCCI would not qualify under the Act as a "banking company."

The District Court granted the motion to dismiss on forum non conveniens grounds, subject to three conditions. First, SBP would have to agree in writing to waive any statute of limitations defense that might be available to it in the Pakistani Courts. Second, the Pakistani courts must not decline to hear the case on statute of limitation grounds. Finally, the SBP would have to consent in writing to allow BCCI to enforce any judgment received in a Pakistani Court in a country other than Pakistan. The SBP agreed to the first and third conditions.

BCCI, however, appealed. The U.S. Court of Appeals for the Second Circuit vacates and remands so that the district court can take into account certain subsequent changes in Pakistani law. The day before the appellate argument in this case, the SBP filed a letter stating that Pakistan had enacted a new banking statute that modified the Banking Act of 1997. According to the letter, the new statute would allow the Pakistani Banking Court (PBC) to entertain a case already barred by limitations if the...