A recurring question in New York judgment enforcement is whether a creditor can reach a debtor’s foreign bank account simply by serving a restraining notice on a New York branch of that bank.
The short answer: generally, no.
Under New York’s separate entity rule, a restraining notice served on a New York branch does not reach accounts maintained at foreign branches—and often does not reach accounts maintained at out-of-state branches either.
The Separate Entity Rule — A Real Limitation on Enforcement
Under this rule, each bank branch is treated as a separate entity for purposes of post-judgment enforcement.
Practically, that means:
A restraining notice must be served on the specific branch that maintains the debtor’s account.
Serving a New York branch, standing alone, is typically ineffective to restrain funds held elsewhere.
This is not a mere technicality. It is a procedural limitation on how enforcement must be carried out.
Why the Law Became Confusing: Koehler v. Bank of Bermuda Ltd., 12 N.Y.3d 533 (2009)
Confusion arose after Koehler v. Bank of Bermuda Ltd., 12 N.Y.3d 533 (2009), where the New York Court of Appeals held that a court with personal jurisdiction over a garnishee can order it to deliver out-of-state assets into New York.
That principle—jurisdiction over the person rather than the property—led some courts and commentators to question whether the separate entity rule remained viable.
Federal and state courts diverged:
- Some decisions suggested Koehler undermined the rule.
- Others distinguished Koehler as addressing turnover orders, not restraints.
- New York state courts were generally more cautious about abandoning the doctrine.
Even before Koehler, courts had begun questioning the rule. In Digitrex, Inc. v. Johnson, 491 F. Supp. 66 (S.D.N.Y. 1980), a federal court suggested that service on a bank’s main branch could reach accounts held elsewhere, relying on the realities of centralized banking systems. That decision marked an early departure from the traditional rule and set the stage for decades of conflicting authority.
The Clarification: Global Technology, Inc. v. Royal Bank of Canada, 34 Misc. 3d 1209(A) (Sup. Ct. N.Y. Cnty. 2012)
The decision in Global Technology, Inc. v. Royal Bank of Canada, 34 Misc. 3d 1209(A) (Sup. Ct. N.Y. Cnty. 2012), attempted to reconcile these competing lines of authority.
The court reframed the separate entity rule as operating similarly to a rule governing service of post-judgment process, rather than as a strict limit on personal jurisdiction.
Key takeaways from Royal Bank:
- A restraining notice must be served on the branch that actually maintains the account.
- Service on a different branch—even within New York—is ineffective for restraint purposes.
- In the context of restraining notices, personal jurisdiction over the bank does not cure improper service.
This analysis allows Koehler and the separate entity rule to coexist: Koehler governs turnover orders (what a court can compel), while the separate entity rule governs restraints (how property is initially frozen).
The Controlling Authority: Motorola Credit Corp. v. Standard Chartered Bank, 24 N.Y.3d 149 (2014)
Any lingering uncertainty was resolved when the New York Court of Appeals reaffirmed the separate entity rule in Motorola Credit Corp. v. Standard Chartered Bank, 24 N.Y.3d 149 (2014).
The Court held that service of a restraining notice on a New York branch does not reach accounts maintained at foreign branches.
Importantly, the Court also clarified that Koehler did not abrogate the separate entity rule. Rather, the rule operates as a longstanding common-law limitation in the context of bank restraints, even where personal jurisdiction over the bank exists.
The Court emphasized several key policy considerations supporting the rule, including:
- the need to respect foreign banking laws and international comity,
- the risk of exposing banks to conflicting legal obligations and double liability across jurisdictions, and
- the practical burden of requiring banks to monitor and restrain accounts across global branch networks.
In reaffirming the doctrine, the Court recognized that—even in an era of modern banking technology—the separate entity rule continues to serve as a critical limiting principle on the reach of post-judgment restraints.
This remains controlling authority and firmly preserves the rule in modern practice.
The Due Process Foundation
The rule is grounded not just in procedure, but in fairness.
As courts have recognized, abandoning the rule could create serious due process concerns, including:
- Attempts to restrain accounts located in jurisdictions with little or no connection to New York
- Forcing defendants to litigate in New York to access funds held elsewhere
- Impacting joint account holders or third parties with no involvement in the underlying dispute
These concerns reflect the broader constitutional principle that enforcement must comport with traditional notions of fair play and substantial justice.
Practical Implications
For creditors:
You cannot shortcut enforcement by serving a convenient New York branch. You must identify and serve the branch that maintains the account.
For debtors:
A restraint served on the wrong branch may be ineffective and subject to challenge.
For practitioners:
In many restraint disputes, the key issue is not only jurisdiction—but whether service was made on the correct branch.
Bottom Line
Despite the globalization of banking, New York enforcement law remains grounded in procedural precision and territorial limits.
A New York judgment does not, by itself, provide global reach through service on a local branch.
The separate entity rule continues to operate as a meaningful constraint—ensuring that judgment enforcement remains tethered to proper service, jurisdictional discipline, and due process.
