New York Attorneys Use Prejudgment Attachment to Freeze Assets in Cross-Border Disputes.

Under New York Civil Practice Law and Rules (CPLR) Article 62, prejudgment attachment allows a plaintiff to obtain a judicial levy on a defendant's real or personal property. The remedy restrains or secures specified property or debts subject to the levy, providing security for any money judgment ultimately recovered in the action.

While domestic attachments involve local commercial disputes, cross-border attachments present distinct jurisdictional and procedural complexities. International cases require coordinating with global financial institutions, navigating treaty obligations like the Hague Service Convention, and managing foreign asset transfers.

Foreign corporate defendants can rapidly wire funds from New York financial institutions to overseas jurisdictions. Prejudgment attachment can restrain qualifying New York bank accounts after a valid levy, blocking transfers and preserving liquid assets before the defendant receives formal notice of the lawsuit.

Encumbering a foreign counterparty's assets provides significant leverage during pre-trial negotiations. When foreign defendants find their qualifying liquid capital restrained in New York, they may be more likely to engage in good-faith settlement discussions rather than dragging out multi-year litigation.

To qualify for an order of attachment under CPLR Section 6201, a plaintiff must demonstrate a claim for a money judgment and establish at least one statutory ground. In cross-border cases, common grounds include demonstrating that the defendant is a non-domiciliary residing outside New York or a foreign corporation not qualified to do business in New York.

Under CPLR Section 6212(a), the moving party must submit affidavits and other written evidence showing a cause of action, a probability of success on the merits, at least one statutory CPLR 6201 ground, and that the amount demanded exceeds all counterclaims known to the plaintiff.

Plaintiffs may move ex parte under CPLR 6211 to obtain an attachment order without prior notice. To obtain the order, the plaintiff must give an undertaking in an amount fixed by the court. This undertaking protects the defendant against costs, damages, and reasonable attorney's fees if the attachment is later determined to have been improper.

If an ex parte attachment order is granted, CPLR 6211(b) generally requires the plaintiff to move to confirm the order on notice within five days after levy, but provides ten days after levy when the order is granted on the CPLR 6201(1) ground. Failure to make the required motion within the applicable statutory period causes the order and levy to have no further effect and permits vacatur upon motion.

Securing an attachment order against a foreign entity requires establishing personal or quasi in rem jurisdiction in New York. Serving process on overseas defendants must comply with the Hague Service Convention, requiring careful planning alongside an experienced cross-border M&A attorney.

Executing an attachment order involves serving the attachment order through the sheriff on appropriate garnishees in New York. When dealing with complex international transactions arising from an international M&A stock purchase agreement, working with the appropriate sheriff and financial institutions helps ensure qualifying bank accounts and debts are restrained through a valid levy.

A common mistake is relying on conclusory statements or insufficient evidence in supporting affidavits. New York courts require competent evidence supporting the cause of action, probability of success, applicable statutory ground, and amount demanded. Inflating claim amounts beyond supportable damages can also result in court denial or reduced attachment coverage.

Preventing enforcement disputes begins during initial deal drafting. Reviewing dispute clauses alongside a qualified international transaction attorney ensures choice-of-law provisions facilitate provisional remedies. When structuring a foreign investment joint venture agreement, inserting clear asset covenants simplifies future CPLR Article 62 applications.