In Motorola Credit Corp. v. Standard Chartered Bank, 2014 N.Y. Slip Op. 07199, 2014 WL 5368774 (Oct. 23, 2014) (“Motorola”), the highest New York state court ended five years of uncertainty and for the first time expressly endorsed the "separate entity” rule, a New York common law doctrine limiting judgment creditors' ability to reach or restrain assets held by judgment debtors in overseas branches of global banks. A previous Court of Appeals ruling, Koehler v. Bank of Bermuda, 12 N.Y.3d 533 (2009), had sparked doubt about the separate entity rule’s continued viability. Motorola gives banks with New York branches renewed confidence that service made in New York will not affect deposits on the books of foreign branches, and it places the burden squarely back on creditors to attempt to reach overseas assets through local law proceedings.

Facts -

The case involved Motorola’s attempts to enforce a $3.1 billion judgment it had obtained in the U.S. District Court for the Southern District of New York against the Turkish Uzan family related to the family’s fraudulent use of a loan. After lengthy postjudgment proceedings, the court eventually entered an order (under Article 52 of the New York Civil Procedure Law and Rules) restraining the Uzans and anyone with notice of the order from selling, assigning, or transferring their property.