Opinion
107777/05.
December 27, 2005.
DECISION ORDER
On October 14, 2005, the Court issued an order, inter alia, granting plaintiffs application for release of the block on their funds, held in The Bank of New York ("BNY"), and directing BNY "to honor all pending and future incoming and outgoing transactions" by plaintiff, upon the condition that plaintiff post an undertaking in the amount of $30,000,000. Plaintiff, now, moves to vacate the order directing the posting of an undertaking or, in the alternative, for a reduction in the amount of the undertaking. By stipulation of the parties, the suspension and time to post the undertaking has been extended to 15 days after service of this decision/order with notice of entry.
In support of its application, plaintiff argues that the Court, by its previous decision, has found that plaintiff ("PMA") had no interest in the restrained funds. Moreover, it contends that the amount of the undertaking is unreasonable, because the damages secured by the undertaking are far less than $30,000,000. Also, it argues that it would be a hardship for PMA to post the undertaking. Specifically, PMA contends that, due to the nature of the risk involved, only two sureties were willing to extend a bond to it, that both required collateralization, and that the cost would exceed $300,000 annually.
Defendants oppose the motion. First, they point out that the Court's October findings were not dispositive but, merely, were made in determining the request for and granting of the preliminary injunction. Additionally, defendants offer to agree to the PMA's posting the undertaking in an interest-bearing escrow account. Finally, they argue that the cost of the undertaking reflects the risk the PMA poses, that the PMA has the funds to post the bond set, that the amount is required to protect BNY, the stakeholder, from a Federal civil contempt ruling in the amount of $30,000,000, and that reducing the bond would change the status quo.
The Court first notes that its prior findings of fact as to the preliminary injunction, were not preclusive, in that the matter was not finally decided. Rather, further discovery was ordered so that defendants could investigate the two questions Judge LeGueux, the Federal Court judge who issued the injunction blocking the funds, and the Court ruled were dispositive of the injunction requested by PMA to lift the block — whether PMA was the alter ego of the Palestinian Authority ("PA") and whether any of the funds belonged to the PA or the PLO ("Palistinian Liberation Organization"). Discovery might result in further proceedings and other findings.
Nor is the amount of the ordered undertaking unreasonable or beyond the resources of PMA. The hearing evidence demonstrated that approximately $18,000,000 was held by BNY in the suspense account. Two transactions amounting to $12,000,000, however, were also suspended; due to insufficient funds the money was not frozen. But, once funds in that amount are made available, something which would happen in the normal course, the $12,000,000 would be placed in the suspense account.
Moreover, plaintiff presented evidence demonstrating that PMA has nearly $40,000,000 in its capital/reserve account. It, thus, has the funds to obtain the ordered undertaking. Accordingly, it is
ORDERED that plaintiff's motion to vacate or reduce the $30,000,000 undertaking ordered by the Court, is denied; and it is further
ORDERED that the Court's October 14, 2005 decision is stayed for 15 days from service of this decision/order with notice of entry.