New York courts can order a party to hand over property sitting in Bermuda, London, or Hong Kong, provided the court has personal jurisdiction over the party holding it. That principle comes from a 2009 Court of Appeals decision that reshaped cross-border judgment enforcement, and it remains the most useful tool in the international collection toolkit. The attorneys at Warner & Scheuerman build offshore enforcement strategies around it, while recognizing that the jurisdictional foundation the case rests on narrowed considerably in the years after it was decided.
What did Koehler v. Bank of Bermuda hold?
In Koehler v. Bank of Bermuda Ltd., decided in 2009 on a question certified by the Second Circuit, the New York Court of Appeals held that a court sitting in New York may order a garnishee over which it has personal jurisdiction to turn over out-of-state property under CPLR 5225(b), without regard to whether the court has jurisdiction over the property itself.
The judgment debtor had pledged stock certificates of a Bermuda company as collateral, and the certificates were held by the bank in Bermuda. The bank had consented to personal jurisdiction in New York. The creditor sought turnover of the certificates.
The court’s reasoning turned on the nature of the remedy. A turnover proceeding under CPLR 5225(b) operates in personam, meaning it commands a person to act, rather than in rem, which would require the court to have power over the thing itself. Because the order directs conduct by someone the court can lawfully command, the location of the property is not the controlling question.
How is a turnover proceeding different from a levy or restraining notice?
A levy under CPLR 5232 and a restraining notice under CPLR 5222 operate against property. A turnover proceeding under CPLR 5225 operates against a person or entity and directs them to deliver property.
That distinction explains why the separate entity rule and Koehler coexist. In Motorola Credit Corp. v. Standard Chartered Bank, decided in 2014, the Court of Appeals confirmed that the separate entity rule bars restraint of deposits held at foreign branches of a bank served in New York, and declined to read Koehler as having abolished that rule. Restraint against a branch is one thing. A turnover order against an entity subject to the court’s jurisdiction is another.
Creditors who conflate the two lose time. Serving a restraining notice on a Manhattan branch to freeze a Singapore account does not work. Bringing a turnover proceeding against an entity properly before the New York court is a different posture entirely.
Has Daimler changed how Koehler works in practice?
Yes, substantially. Koehler assumed a garnishee subject to personal jurisdiction, and the bank in that case had consented. Five years later, the Supreme Court decided Daimler AG v. Bauman in 2014, holding that general jurisdiction over a corporation is ordinarily limited to its place of incorporation and principal place of business, absent exceptional circumstances.
Before Daimler, a foreign bank with a New York branch could often be sued in New York on any claim under a doing-business theory. After Daimler, that is no longer reliable. New York courts applying Daimler have found that maintaining a branch in the state does not by itself confer general jurisdiction over a foreign bank.
What remains available includes specific jurisdiction under CPLR 302 where the garnishee’s New York activities relate to the underlying transaction, consent through a forum selection clause or by registration in some contexts, and jurisdiction over garnishees actually headquartered or incorporated in New York.
When is turnover the right tool for offshore assets?
Where a person or entity subject to New York jurisdiction has possession or custody of the property, or owes a debt to the judgment debtor.
- The judgment debtor personally. CPLR 5225(a) reaches property in the debtor’s possession wherever located, and a debtor who appeared in the underlying action is already subject to the court’s power.
- A domestic parent or affiliate holding assets abroad.
- A garnishee that consented to jurisdiction, whether by contract or by appearing.
- Custodians, trustees, and transfer agents with a New York presence tied to the transaction.
Enforcement of the order rests on contempt. CPLR 5251 makes refusal to obey a turnover order punishable as contempt of court, with civil contempt remedies under Judiciary Law sections 753 and 773, including fines measured by the creditor’s loss and, where the party plainly has the ability to comply, incarceration.
How does the Warner & Scheuerman approach handle foreign law conflicts?
By anticipating the comity argument before the garnishee raises it. Respondents commonly assert that compliance would violate bank secrecy, data protection, or blocking statutes in the asset’s home jurisdiction, and courts weigh those objections under an international comity analysis.
The record that survives that challenge usually includes evidence that the foreign law does not actually prohibit compliance, that no enforcement action has followed similar disclosures, or that the debtor’s own conduct placed the assets where they are. Where genuine conflict exists, parallel proceedings abroad may be the more efficient route, with the New York judgment recognized locally and enforcement pursued under local procedure.
Assets outside the United States are reachable from a New York courtroom, but only through the right procedural door and against the right respondent. Koehler supplies the door; Daimler decides who can be made to walk through it. Warner & Scheuerman represents judgment creditors in cross-border enforcement, including CPLR 5225 turnover proceedings, jurisdictional discovery, and coordination with foreign counsel. Contact the firm through wslaw.nyc to assess whether your debtor’s offshore assets can be reached from New York.
