USA – NEW YORK Trends and Developments Contributed by: Alex Loomis and Gregg Badichek, Quinn Emanuel Urquhart & Sullivan, LLP
Veil-Piercing: Clarity On Choice-Of-Law Judgment creditors will often sue corporate affiliates under the theory that they are “alter egos” or agents of the judgment debtor. Several New York cases clarify the law that governs veil- piercing actions that are brought against foreign corporations. In Citibank, N.A. v Aralpa Holdings Limited P’ship, 714 F.Supp.3d 416 (S.D.N.Y. 2024), the court reiterated that New York will sometimes apply New York law for veil-piercing actions against foreign corporations. The defendant, a Georgia LLC, had argued that under the internal affairs doctrine, Georgia law must govern the veil-piercing claim. The district court disagreed. In New York, the internal affairs doctrine can be overcome if another state has greater con - nection to the dispute, the district court ruled. In Citibank, New York law applied because the underlying dispute had far more connections to New York than Georgia. Similarly, Cortlandt St. Recovery Corp. v Bon - derman, 215 A.D.3d 446 (1st Dep’t 2023), held that the circumstances militated in favour of applying New York law to a veil-piercing claim, even though the judgment debtors were incor - porated in Luxembourg, because the underlying action concerned the enforcement of a New York judgment and New York law has consistently applied throughout prior stages of the litigation. That was true despite the majority of the under - lying activities occurring abroad. G&A Strategic Invs. I LLC v Petróleos de Ven - ezuela, S.A., No. 23-CV-10766 (JSR), 2025 WL 588208 (S.D.N.Y. Feb. 21, 2025), involved the choice-of-law rule applicable to actions against foreign states. Forty years ago, in First Nat’l City Bank v Banco Para El Comercio Exterior de Cuba, 462 U.S. 611 (1983) ( “Bancec” ), the
US Supreme Court held that federal common law veil-piercing rules would apply in actions seeking to hold foreign instrumentalities liable for foreign states’ debts. G&A held that the same rule applied to actions to hold companies incor - porated in the United States liable for foreign states debts. In all these cases, the choice-of-law inquiry had real consequences. Citibank relied on more gen - erous New York law allowing veil-piercing when - ever LLCs are completely dominated by debtors. It also permitted veil-piercing even though the judgment debtor did not have legal ownership over the defendant but owned a separate entity that itself owned the defendant. The currency of veil-piercing in New York is control, not legal ownership. But G&A’s holding might be even more signifi - cant. The purported alter ego at issue was a Del - aware corporation, and veil-piercing is extraor - Judgment creditors in New York are entitled to extremely broad post-judgment discovery under the standard set forth in CPLR 5223 and through the tools of CPLR 5224. In light of New York’s role as a global centre of international finance, a number of important cases explain how these powerful post-judgment discovery tools can be used in support of worldwide judgment enforce - ment proceedings, as well as to suss out the judgment debtors’ alter egos. All discovery in transnational judgment enforce - ment cases takes place in the shadow of Repub - lic of Argentina v NML Capital, Ltd., 573 U.S. 134 (2014), which concerned a judgment creditor’s efforts to take post-judgment discovery from dinarily difficult under Delaware law. Post-Judgment Discovery: Global Enforcement and Veil-Piercing
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