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BCCI HOLDINGS v. SHEIKH KHALID BIN MAHFOUZ

July 26, 1993

BCCI HOLDINGS (LUXEMBOURG), SOCIETE ANONYME, et al., Plaintiffs,
v.
SHEIKH KHALID BIN MAHFOUZ, et al., Defendants.



The opinion of the court was delivered by: JOYCE HENS GREEN

 This action was commenced on December 9, 1992 with the filing of a complaint and a motion for an ex parte temporary restraining order by the plaintiffs, BCCI Holdings (Luxembourg), Societe Anonyme, incorporated under the laws of Luxembourg; Bank of Credit and Commerce International, Societe Anonyme, incorporated under the laws of Luxembourg; Bank of Credit and Commerce International (Overseas) Limited, incorporated under the laws of the Cayman Islands; and International Credit and Investment Company (Overseas) Limited, incorporated under the laws of the Cayman Islands (collectively "BCCI"). The plaintiffs, presently involved in liquidation proceedings commenced abroad, are participating in this action through liquidators appointed by courts of England, Luxembourg, and the Cayman Islands. Named as defendants are Sheikh Khalid bin Mahfouz ("Mahfouz"), a citizen and resident of Saudi Arabia; Haroon Rashid Kahlon ("Kahlon"), a citizen and resident of Pakistan with other residences in England and Saudi Arabia; and National Commercial Bank, Saudi Arabia ("NCB"), a bank organized under the laws of Saudi Arabia. Presently pending are defendants' motions to dismiss for lack of personal and subject matter jurisdiction, forum non conveniens, and failure to state a claim for which relief can be granted. Upon consideration of the voluminous filings relating to the motions and arguments presented at the hearing held June 30, 1993, this action is conditionally dismissed on the ground of forum non conveniens.

 BACKGROUND

 The complaint alleges that from January 1986 until the worldwide shutdown of BCCI in July 1991, the defendants engaged in numerous and continuous fraudulent transactions with respect to the control of BCCI and Credit and Commerce American Holdings N.V. ("CCAH"), a Netherlands Antilles corporation, in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), codified at 18 U.S.C. ยงยง 1961 et seq., and the common law. Though the complaint asserts that the alleged scheme giving rise to plaintiffs' claims involves many complex transactions, the allegations can be categorized into three basic groups.

 First, plaintiffs contend that the defendants conspired with Agha Hasan Abedi, the founder of BCCI and its chairman from 1973 until approximately 1988, and Swaleh Naqvi, Vice President of BCCI from 1973 until 1988, to acquire for Mahfouz and NCB shares of BCCI and CCAH as well as capital notes in BCCI. The terms of the acquisitions were set out in a document dated July 24, 1986 entitled "Procurement Deed." According to plaintiffs, the defendants' acquisitions were fraudulently recorded on the books of NCB and BCCI, which consequently presented a deceitful picture of the financial position of BCCI to creditors, depositors, and regulators.

 Second, plaintiffs allege that the defendants furthered their scheme by insisting that BCCI repurchase the BCCI and CCAH shares claimed to have been illegally purchased by Mahfouz and NCB and that the repurchase was not disclosed to regulators and was effected through fraudulent accounting. In addition, the complaint asserts that the defendants knew that the repurchase was funded with money stolen from BCCI depositors.

 Third, plaintiffs allege that NCB and Mahfouz, with the assistance of Kahlon, illegally agreed to have NCB assume on its books over $ 200 million in non-performing BCCI loans. It is claimed that through their participation in these three clusters of activities, Mahfouz, Kahlon, and NCB played a significant role in creating the $ 10.5 billion loss suffered by BCCI, its creditors, and its depositors. Among other relief, the complaint seeks money damages in excess of $ 10.5 billion trebled under RICO, attorneys' fees, and costs.

 An ex parte hearing on plaintiffs' motion for a temporary restraining order was held on December 9, 1992, and the Court granted the motion the following day, enjoining Mahfouz, Kahlon, their agents and employees, and any person or entity controlled by them or acting on their behalf from withdrawing, transferring, removing, dissipating, or disposing of funds, assets or other property beneficially owned by Mahfouz or Kahlon within the United States. The temporary restraining order was extended on December 17, 1992 pursuant to Fed. R. Civ. P. 65(b).

 Plaintiffs filed an application for a preliminary injunction on December 14, 1992, and the temporary restraining order was further extended upon stipulation of the parties until the application could be resolved. A hearing on the application was held on February 1, 1993 and on February 12 the Court issued a preliminary injunction restraining Mahfouz and his agents. No preliminary injunction was issued against Kahlon, however, due in substantial part to the findings that he had no meaningful assets in the United States and that there was an insufficient showing of irreparable harm in the absence of an injunction against him. Although the Court found a substantial likelihood of success against both Mahfouz and NCB, it "candidly conceded that it [would] need further study before making a final decision regarding personal and subject matter jurisdiction." February 12, 1993 Order at 7. Mahfouz filed a notice of interlocutory appeal of the preliminary injunction on March 12, 1993 but thereafter pressed ahead to discovery and a resolution of his motion to dismiss this action.

 Mahfouz and NCB filed motions to dismiss on February 1, 1993. By an Order issued eight days later, the parties were allowed to take discovery on the issues raised in the motions to dismiss, including those relating to forum non conveniens. Due to a conflict between the parties concerning whether Kahlon had been properly served with the summons and complaint, a dispute eventually resolved by stipulation, Kahlon did not file his motion to dismiss until May 14. As with the other motions to dismiss, discovery was taken on issues raised in Kahlon's motion, and several disputes relating thereto were resolved in written Orders. The defendants were given an opportunity to supplement their motions, and plaintiffs filed oppositions based in large part on facts ascertained through depositions and interrogatories. Although the hearing on the motions to dismiss was held on June 30, 1993, the parties continued to supplement their filings until as recently as July 12, 1993.

 DISCUSSION

 The standard for resolving a motion to dismiss for forum non conveniens is well settled in this Circuit. In Pain v. United Technologies Corp., 205 U.S. App. D.C. 229, 637 F.2d 775 (D.C. Cir. 1980), cert. denied, 454 U.S. 1128, 71 L. Ed. 2d 116, 102 S. Ct. 980 (1981), the court of Appeals instructed:

 
[A] district judge's forum non conveniens inquiry should proceed in four steps. As a prerequisite, the court must establish whether an adequate alternative forum exists which possesses jurisdiction over the whole case. Next, the trial judge must consider all relevant factors of private interest, weighing in the balance a strong presumption against disturbing plaintiffs' initial forum choice. If the trial judge finds this balance of private interests to be in equipoise or near equipoise, [s]he must then determine whether or not factors of public interest tip the balance in favor of a trial in a foreign forum. If [s]he decides that the balance favors such a foreign forum, the trial judge must finally ensure that plaintiffs can reinstate their suit in the alternative forum without undue inconvenience or prejudice.

 637 F.2d at 784-85 (emphasis in the original). Forum non conveniens is a flexible doctrine, see Piper Aircraft Co. v. Reyno, 454 U.S. 235, 249, 70 L. Ed. 2d 419, 102 S. Ct. 252 (1981), and although there is ordinarily a strong presumption in favor of a plaintiff's choice of forum, the presumption is applied with less force when the plaintiff or the real parties in interest are ...


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