Key Jurisdictional and Procedural Considerations for Prejudgment Attachment
A party seeking prejudgment attachment under CPLR 7502 has two options: (1) filing a motion or (2) initiating a special proceeding. A motion seeks attachment as an ancillary remedy within ongoing litigation, while a special proceeding is a standalone action.
Special proceedings may be filed before New York federal or state courts. If filed in federal court, jurisdiction lies with the appropriate district court invoking federal question jurisdiction under the Federal Arbitration Act. If filed in state court, CPLR 7502(a) authorizes the supreme court in any county in New York to hear the petition.
New York courts can grant attachment over in-state assets even if neither party is domiciled nor registered to do business therein. In Matter of Adidas, a federal court attached a respondent’s New York bank accounts despite the respondent not being registered in the state. Similarly, in Sojitz Corp. v. Prithvi, a state court secured a Japanese creditor’s claim against an Indian debtor’s New York assets in aid of Singapore arbitration.
An application for attachment must be supported by affidavits and documentary evidence showing:
- A valid cause of action,
- A likelihood of success on the merits,
- A risk that the final award may be rendered ineffectual absent relief, and
- The amount sought exceeds any known counterclaims at the time of filing.
Practical and Strategic Considerations for Prejudgment Attachment
Practitioners who understand this remedy’s legal and practical aspects can effectively safeguard clients’ interests early in a case.
Presenting a Strong Case
Although New York courts are authorized to secure the assets of a nonresident respondent, nonresident status alone does not justify relief. Courts consider various factors, such as the respondent’s financial solvency, a history of nonpayment to creditors, and evidence suggesting an intent to dissipate assets. Some courts impose stricter standards, requiring proof of fraud or deliberate intent to evade creditors under CPLR 6201(3).
With evolving judicial approaches, staying updated on case law is crucial. Success requires identifying not only attachable assets in-state but also presenting strong financial evidence, often aided by private investigators and forensic accountants.
Securing Ex Parte Orders
Seeking ex parte attachment orders can be a potent strategy, allowing petitioners to secure assets without prior notice to the respondent. If granted, the petitioner must move to confirm the attachment within five to ten days of the levy on notice. Regardless of whether the attachment is ex parte, the petitioner must post a bond to cover potential losses if the order is later deemed improper.
Correctly navigating these requirements can determine whether assets are secured or if the attachment order is vacated.
Assessing Potential Risks and Alternatives to Prejudgment Attachment
There may be some additional serious factors to consider before jumping in feet first. Prejudgment attachment can be powerful but risky. Weak evidence can lead to the denial of the application, unnecessary legal costs, and reputational harm. Aggressive asset freezes may strain business relationships or hinder settlements.
In some cases, negotiating escrow arrangements may be preferable, especially if the parties have an ongoing commercial relationship. Weighing other options for asset preservation against the costs and procedural hurdles of seeking attachment is essential for effective case strategy.
Prejudgment attachment in aid of arbitration is a critical tool at the intersection of international arbitration and US litigation. Without it, even the strongest case may result in a pyrrhic victory if no assets remain for enforcement. A deep understanding of this remedy will enhance your expertise in arbitration and litigation while offering a competitive edge in safeguarding client interests in cross-border disputes.
