Does a lawsuit brought in New York based on advice regarding investment agreements signed in Hong Kong for a Chinese company belong in a Hong Kong court? UBS AG (“UBS”) thinks so, and moved to dismiss a lawsuit brought in New York Supreme Court by Ace Decade Holdings Limited (“Ace”). Among other claims, Ace alleged fraud, breach of fiduciary duty, and negligent misrepresentation against UBS for advising Ace to invest $500 million in shares of a Chinese company through an intermediary, Haixia Huifu Asset Investment and Fund Management Co., Ltd. (“Haixia-Huifu”), which ultimately resulted in a loss of Ace’s entire investment. Ace claimed UBS concealed that Haixia-Huifu was actually controlled by UBS’s joint venture partner and was therefore not acting independently.
In arguing that the lawsuit should be venued in Hong Kong rather than in New York, UBS moved to dismiss on jurisdictional and forum non conveniens grounds. UBS claimed that, as a Swiss bank, it is not subject to personal jurisdiction in New York because the transactions occurred entirely in Hong Kong and that New York is an inconvenient forum, considering that all relevant people and documents are in China or Hong Kong. As such, litigation in New York would be a burden on the court and the parties.
In opposing UBS’s motion to dismiss, Ace argued that, although the investment agreements were signed in December, the money was not transferred until May, well after UBS’s agent handling the transaction had moved to New York. During oral argument, Judge Eileen Bransten of the Commercial Division in New York Supreme Court ordered the parties to produce copies of the actual investment agreements before she would rule on the motion. It remains to be seen whether the case will continue in New York, but Judge Bransten is interested in the exact wording of the governing contracts, specifically to the extent to which they specify where a dispute should be brought.
The case is Ace Decade Holdings Ltd. v. UBS AG, case number 653316/2015, in New York State Supreme Court.