Saudi billionaire battle between Al Gosaibi and Al Sanea tossed out of New York court

Ahmed Hamad Al Gosaibi & Brothers Co claimed that Maan Al Sanea, the billionaire head of the Saad Group, used its accounts with Dubai-based Mashreq Bank to commit fraudulent foreign exchange trades in New York.

New York’s highest state court has ruled that a lawsuit by the Al Gosaibi family conglomerate, claiming that a Saudi billionaire who married into the family committed a US$150 million fraud, should be heard in Saudi Arabia.

In the lawsuit, Ahmed Hamad Al Gosaibi & Brothers Co claimed that Maan Al Sanea, the billionaire head of the Saad Group, used its accounts with Dubai-based Mashreq Bank to commit fraudulent foreign exchange trades executed in New York.

The suit is part of a global legal battle in which the Al Gosaibi family claims that Mr Al Sanea, who married into the family 30 years ago, defrauded it of billions of dollars after he was put in charge of its financial businesses.

Mr Al Sanea and the Saad Group have denied wrongdoing.

Reversing a lower court, the New York Court of Appeals on Tuesday dismissed the Mashreq claims, saying the fact that the allegedly fraudulent trades were executed in New York did not give the state’s courts jurisdiction over the case.

“New York’s interest in its banking system is not a trump to be played whenever a party to such a transaction seeks to use our courts for a lawsuit with little or no apparent contact with New York,” the judge, Robert Smith, wrote for the court.

Because the suit involved a Saudi company, a Saudi citizen and an alleged fraud committed in Saudi Arabia, he said, “the jurisdiction with the greatest interest in resolving the issues ... is clearly Saudi Arabia”.

Mr Al Sanea’s lawyer, Richard Serio of Gibson, Dunn & Crutcher, said he was pleased with the decision.

“It marks the likely end of nearly five years of burdensome and unnecessary litigation in New York,” he said.

Lawyers for Al Gosaibi & Brothers and Mashreq did not immediately return requests for comment.

In 2009, Mr Al Sanea’s Awal Bank and the Al Gosaibi family’s International Banking Corp collapsed with an estimated $22bn owed to more than 100 banks, including Deutsche Bank, HSBC and Société Générale.

Since then, the Al Gosaibi family and Mr Al Sanea have faced off in courts in New York, Saudi Arabia, Bahrain, London, the Cayman Islands and Geneva.

Mashreq sued the Al Gosaibi family in a New York court in 2009, seeking to recover $150m in foreign exchange trades executed in New York. Those funds eventually were transferred into an account controlled by Mr Al Sanea, according to the bank’s lawsuit.

The Al Gosaibis then filed a lawsuit in New York against Mr Al Sanea, claiming he and Awal Bank had used Al Gosaibi accounts as part of a massive fraud. The Al Gosaibis also asserted in court filings that Mashreq Bank aided Mr Al Sanea in the alleged scheme, according to the Tuesday’s decision.

The two lawsuits were dismissed in 2010 by a state supreme court justice, Richard Lowe, who granted Mr Al Sanea’s request to toss out the case against him, saying it did not properly belong in New York state court. As a result, he also dismissed the lawsuit brought by Mashreq, since the two cases were closely intertwined.

In a 3-2 ruling in 2012, an intermediate state appeals court reversed that decision, ruling that New York was an appropriate forum for the complaints. The Court of Appeals on Tuesday unanimously reversed the 2012 ruling.

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