Foreign Banks, Foreign Disputes, and New York Courts: The Limits of Pre‑Judgment Attachment

By: Jeffrey M. Haber

Letters of credit are designed to reduce risk in international trade by reallocating who bears the risk of nonpayment, and when. Instead of relying solely on a buyer’s willingness or ability to pay, the seller relies on the issuing bank’s independent obligation. Once a bank issues a letter of credit, it commits to pay the seller so long as the seller presents documents that comply with the credit’s terms, regardless of disputes in the underlying sales contract.

This structure is critical in cross‑border transactions, where sellers may have limited visibility into a buyer’s financial condition and limited practical recourse if payment fails. Different legal systems, currency controls, political risks, and enforcement challenges can make post‑delivery collection slow, expensive, or uncertain. A letter of credit addresses those risks by inserting into a regulated financial institution, typically subject to international banking rules and reputational constraints, between the buyer and the seller.

Functionally, the letter of credit converts commercial risk into documentary risk. The seller does not need to prove that goods were accepted or that the buyer is solvent; it needs only to prove, through specified documents, that it performed as agreed. Once conforming documents are presented, the bank’s duty to pay is meant to be automatic.

For sellers, this provides confidence to ship goods across oceans and borders before payment is received. For buyers, it allows them to source goods internationally without prepaying, while assuring the seller that payment is backed by a bank’s balance sheet. For banks, the system works because the obligation is documentary and limited; banks do not guarantee performance of the underlying transaction, only compliance with the credit’s terms.

The reliability of this system depends on a core principle: independence. The letter of credit is independent of the underlying sales contract. If banks could routinely withhold payment based on disputes between buyers and sellers, letters of credit would lose their value as risk‑reducing instruments. Trade finance relies on the expectation that a compliant presentation will lead to payment.

Ultimately, letters of credit are meant to remove uncertainty from cross‑border trade. They operate almost unnoticed when honored, but when payment fails, the resulting disputes underscore the central role certainty plays in global commerce. The dispute between Olam Global Agri Pte. Ltd. (“Olam”), a Singapore‑based global agribusiness involved in trading food, ingredients, feed, and fiber worldwide, and Social Islami Bank Limited (“SIB”), a commercial bank incorporated in Bangladesh,[1] shows how that system can break down, and how difficult enforcement can become when banking systems are in transition. Olam Global Agri Pte. Ltd. v. Social Islami Bank Ltd., 2026 N.Y. Slip Op. 31674(U) (Sup. Ct., N.Y. County Apr. 17, 2026).[2]

Olam Global Agri Pte. Ltd. v. Social Islami Bank Ltd.

In June 2024, SIB issued an irrevocable letter of credit in Olam’s favor for approximately $1.06 million. The letter of credit was issued to secure payment for two shipments of cotton sold by Olam to a Bangladeshi buyer.

According to Olam, it performed as contemplated under the letter of credit. The cotton was shipped, delivered, and cleared through Bangladeshi customs. Olam presented all required documents under the letter of credit. No discrepancies were raised. No objections were made. Under the terms of the letter of credit, payment became due in mid‑July 2024.

Olam maintained that payment was not made. As a result, from July 2024 forward, Olam demanded payment, sending reminders and formal demands via SWIFT messages and written correspondence. According to Olam, SIB did not claim the documents were deficient, did not assert any contractual defense, and did not explain why payment had not been made.

By December 2025, Olam’s U.S. counsel issued formal demand letters to SIB’s principal office. Olam’s Bangladeshi counsel also sent demands to SIB, to the bank’s court‑appointed administrator, and to the Bangladesh central bank. More than $1.06 million remained unpaid.

At or about the same time, Bangladesh’s banking sector entered a period of regulatory restructuring. In May 2025, the government enacted the Bank Resolution Ordinance, 2025, authorizing the central bank to oversee asset and liability transfers involving several banks, including SIB.

The restructuring was not a bankruptcy. There was no stay of claims, no moratorium on lawsuits, and no bar to creditors seeking judgments. Instead, the process was administrative and supervisory, designed to stabilize the financial system while transferring assets and liabilities into newly formed banking entities.

Although SIB is a Bangladeshi bank, it maintains correspondent (“Nostro”) accounts at international banks with branches in New York, including Standard Chartered Bank and Mashreqbank psc. These accounts are used for U.S.‑dollar settlements and, according to Olam, are SIB’s only known assets in the United States.

Concerned that any judgment might be difficult to collect, especially in light of the restructuring of the banking system in Bangladesh, Olam filed suit in New York state court. The company alleged breach of the letter of credit and sought a pre‑judgment attachment, asking the motion court to freeze funds in SIB’s New York correspondent accounts while the case proceeded.

Governing Standards

To obtain or confirm a pre‑judgment order of attachment under New York law, a plaintiff must meet several statutory requirements. Under CPLR 6212(a), the plaintiff must submit affidavits or other written evidence showing that: a valid cause of action exists, the plaintiff is likely to succeed on the merits, at least one statutory ground for attachment under CPLR 6201 applies, and the amount sought exceeds any counterclaims known to the plaintiff.

Relevant to the motion before the motion court are CPLR 6201(1) and CPLR 6201(3).

CPLR 6201(1) permits attachment when “the defendant is a non-domiciliary residing without the state, or is a foreign corporation not qualified to do business in the state.” CPLR 6201(1) “serves two independent purposes: (1) obtaining jurisdiction over a nonresident; and (2) providing adequate security for a potential judgment against a nonresident where there is an identifiable risk that the defendant will not be able to satisfy any such judgment.”[3] 

Notably, “ ‘the mere fact that [the] defendant is a non-domiciliary residing without the State of New York is not sufficient ground for granting an attachment.’ ”[4] 

A plaintiff seeking a pre-judgment attachment under 6201(1) must “present evidence that the[] defendants would conceal or convert any of their assets were it not for an attachment order, or that they would be unlikely to satisfy the potential judgment.”[5] 

CPLR 6201(3) provides for an attachment where “the defendant, with intent to defraud his creditors or frustrate the enforcement of a judgment that might be rendered in plaintiff’s favor, has assigned, disposed of, encumbered or secreted property, or removed it from the state or is about to do any of these acts.” To satisfy CPLR 6201(3), the plaintiff must show that the defendant intended to defraud or frustrate the enforcement of any judgment against it.”[6] Factual allegations “raising a suspicion of an intent to defraud [are] not enough.”[7] “ ‘[F]raud is never presumed by a mere showing of the liquidation or disposal by a debtor of its business assets.’ ”[8]

As discussed below, Olam sought a pre-judgment attachment order under CPLR 6201(1) and CPLR 6201(3). The motion court denied Olam’s application.

The Motion Court’s Decision

Addressing CPLR 6201(1), the motion court accepted that both parties were foreign entities and that neither entity was licensed to do business in New York.[9] But it found that Olam had not shown a concrete, identifiable risk that SIB would be unable or unwilling to satisfy a judgment. The motion court viewed the Bangladeshi restructuring as a government‑directed process, not evidence that SIB was hiding assets or acting with fraudulent intent.[10]

The motion court found that plaintiff’s showing amounted to little more than speculation that defendant may “lack sufficient assets” to satisfy a potential judgment.[11] The motion court explained that “[t]here [was] no evidence that defendant [would] ‘choose to hide or otherwise dispose of [its] assets.’”[12] At most, concluded the motion court, plaintiff’s affidavits suggested that recovering assets may involve administrative or bureaucratic hurdles associated with “obtaining the assets as” converted funds, an insufficiency the First Department has squarely rejected.[13]  As the motion court explained, attachment requires more than a showing that it would merely be “helpful.”[14] 

With respect to CPLR 6201(3), the motion court declined to issue a pre-judgment attachment, holding that plaintiff failed to “ ‘to show that defendant intended to defraud or frustrate the enforcement of any judgment against it.’ ”[15] The motion court found that “[p]laintiff’s submissions … [did] not raise even the suspicion of an intent to defraud.”[16] “Defendant’s failure to remit payment despite numerous demands and reminders [was] insufficient to show fraudulent intent,” explained the motion court.[17]

Finally, the motion court had “concerns about whether plaintiff [could] establish quasi in rem jurisdiction over the defendant solely based on the ‘Nostro’ (correspondent) bank account(s) located in New York” – an issue that plaintiff did not address in its affidavits or memorandum of law.[18]

The motion court found that plaintiff did not establish personal jurisdiction, finding that plaintiff contend only that “‘[j]urisdiction [was] proper . . . because Defendant [had] assets in Nostro [correspondent] bank accounts held by banks with branches in New York City.’”[19] The mere presence of correspondent bank accounts in New York, without a meaningful connection between those accounts and the underlying transaction, was not enough to justify freezing them, said the motion court.[20] As the motion court observed, New York was mentioned in the letter of credit only in a provision naming a branch of Standard Chartered Bank as the “Reimbursing Bank.”[21]

Takeaway

The motion court’s decision underscores a recurring principle of New York law: pre‑judgment attachment is an extraordinary remedy, not a collection shortcut, even when the defendant is a foreign bank and even when payment has not been made.

At first glance, CPLR 6201(1) appears to offer a powerful tool. It permits attachment when a defendant is a non‑domiciliary or a foreign corporation not qualified to do business in New York. But Olam makes clear that foreign status alone is not enough. New York courts treat that statutory ground as necessary but not sufficient by itself. Attachment is justified only where there is a real, identifiable risk that the defendant will be unable or unwilling to satisfy a judgment absent court intervention.

In practice, that means plaintiffs must do more than point to geography. The motion court emphasized that speculation does not meet the standard. Even where a defendant is undergoing a government‑supervised restructuring abroad, attachment will not issue unless there is evidence that the defendant is concealing assets, dissipating funds, or deliberately frustrating enforcement. Administrative complexity, bureaucratic delays, or uncertainty about how assets may ultimately be held do not substitute for proof of risk. As the Olam court observed, attachment cannot issue merely because it would be “helpful” or make eventual collection easier.

Olam also reinforces the high bar under CPLR 6201(3). Allegations that a defendant failed to pay despite repeated demands may indicate a breach of contract, but, without more, do not demonstrate intent to defraud creditors or frustrate enforcement. Fraud is not presumed. Nor is intent inferred from silence, delay, or regulatory restructuring. Plaintiffs must show concrete conduct, demonstrating that the defendant is acting with the purpose of placing assets beyond the plaintiff’s reach. Absent such evidence, attachment is unavailable.

Perhaps most significantly, the motion court highlighted a recurring personal jurisdiction pitfall in cross‑border finance cases: New York correspondent accounts are not a jurisdictional hook where the underlying dispute lacks meaningful New York contacts. Indeed, maintaining Nostro accounts in New York, even when they hold substantial funds, does not, by itself, create sufficient minimum contacts. Where those accounts bear no meaningful relationship to the underlying dispute, and where the transaction itself is foreign in all material respects, quasi in rem jurisdiction may fail altogether.

In short, Olam reaffirms that pre‑judgment attachment is designed to prevent abusive asset flight, not to mitigate ordinary litigation risk. Plaintiffs seeking attachment must come with evidence, not assumptions; with facts, not suspicions. Where they cannot show intentional misconduct or a concrete enforcement risk, New York courts will decline to freeze assets.

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Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes only and is not intended to be, and should not be, taken as legal advice.

Unless otherwise stated, Freiberger Haber LLP’s articles are based on recently decided published opinions and not on matters handled by the firm.

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[1] SIB is not licensed to do business in New York and has no physical presence in the state, but, like many foreign banks, it maintains U.S.‑dollar correspondent accounts at international banks with New York branches.

[2] The discussion of the facts is taken from the motion court’s decision and Olam’s papers in support of its motion for pre-judgment attachment.

[3] Sylmark Holdings Ltd. v Silicone Zone Intern. Ltd., 5 Misc 3d 285, 301 (Sup. Ct., N.Y. County 2004), citing Elton Leather Corp. v. First Gen. Resources Co., 138 A.D.2d 132 (1st Dept. 1988); Cargill, Inc. v. Sabine Trading & Shipping Co., 756 F.2d 224 (2d Cir. 1985); General Textile Print. & Processing Corp. v. Expromtorg Intl. Corp., 862 F. Supp. 1070, 1073 (S.D.N.Y. 1994) (plaintiffs must show that defendants’ financial position, or past or present conduct, poses a real risk to the enforcement of a future judgment).

[4] VisionChina Media Inc. v. Shareholder Representative Services, LLC, 109 A.D.3d 49, 61-62 (1st Dept. 2013) (internal citations omitted).

[5] Id. at 301; see also Johnson v. Papagianni, 2026 WL 588705 at *7 (S.D.N.Y. Mar. 3, 2026) (“where, as here, an attachment is sought pursuant to § 6201(1), plaintiffs also ‘must show that the attachment is needed for jurisdictional or security purposes.’”).

[6] Mitchell v. Fid. Borrowing LLC, 34 A.D.3d 366, 366-67 (1st Dept. 2006).

[7] Id., citing Rosenthal v. Rochester Button Co., Inc., 148 A.D.2d 375, 376 (1st Dept. 1989).

[8] Mitchell, 34 A.D.3d at 367, quoting Rosenthal, 148 A.D.2d at 376.

[9] Slip Op. at *2.

[10] Slip Op. at *3.

[11] Id., citing VisionChina Media, 109 A.D.3d at 61–62.

[12] Id., quoting id.

[13] Id., quoting id.

[14] Id. at *4, quoting id. at 61, quoting Founders Ins. Co. Ltd. v. Everest Natl. Ins. Co., 41 A.D.3d 350, 351 (1st Dept. 2007).

[15] Id., quoting Mitchell, 34 A.D.3d at 366-67.

[16] Id.

[17] Id.

[18] Id. at *5. “Quasi in rem jurisdiction requires an analysis of whether the ‘minimum contacts’ are present. When assessing ‘minimum contacts,’ the Court must consider ‘the nature and quality of the defendants’ contacts with the State,’ which must be such as to ‘make it reasonable and just ... to require the defendant to litigate the claim in the particular forum.’ Further, ‘when the property serving as the jurisdictional basis [here, the corresponding bank accounts located in New York] have no relationship to the cause of action and there are no other ties among the defendant, the forum and the litigation, quasi-in-rem jurisdiction will be lacking.’ ” Chaar v. Arab Bank P.L.C., 220 A.D.3d 479, 480 (1st Dept. 2023], quoting Banco Ambrosiano v. Artoc Bank & Trust, 62 N.Y.2d 65, 72 (1984) (citations omitted)).

[19] Id.

[20] Id., quoting Chaar, 220 A.D.3d at 480, quoting Licci v. Lebanese Canadian Bank, 673 F.3d 50, 65 (2d Cir. 2012).

[21] Id.