Clifford Chance
New York Court of Appeals Holds That Separate Entity Rule Prevents Restraint of Assets Held in Foreign Banks' Branch Accounts By New York Courts
26 October 2014
On October 23, 2014, New York's highest court issued a ruling answering a question certified to it by the United States Second Circuit Court of Appeals regarding whether the "separate entity rule" precludes a judgment creditor from ordering a garnishee bank operating branches in New York to restrain a debtor's assets held in branches of the bank outside of New York. The New York Court of Appeals answered in the affirmative, holding that "a judgment creditor's service of a restraining notice on a garnishee bank's New York branch is ineffective under the separate entity rule to freeze assets held in the bank's foreign branches."
