2007

20 December 2007: State of New York Court of Appeals Confirms Lack of Personal Jurisdiction Over Sheikh Khalid Bin Mahfouz

On 7 December 2004, Sheikh Khalid Bin Mahfouz and his two sons obtained by default a judgment from the High Court of London enjoining Rachel Ehrenfeld, author of "Funding Evil," from further publishing certain defamatory statements regarding Sheikh Khalid contained in her book and providing for damages in an amount to be determined.

On 8 December 2004, Ehrenfeld filed a complaint in the United States District Court for the Southern District of New York seeking declarations that the default judgment obtained by Sheikh Khalid in the English High Court is unenforceable in the United States and that her statements about Sheikh Khalid in "Funding Evil" would not give rise to liability for defamation under the laws of the United States. On 25 April 2006, Judge Richard Casey dismissed Ehrenfeld's action because the U.S. District Court lacked personal jurisdiction over Sheikh Khalid under New York law.

Ehrenfeld appealed the dismissal of her action to the U.S. Court of Appeals for the Second Circuit. The Second Circuit found that Sheikh Khalid was not subject to jurisdiction under a provision of New York law relating to foreign torts because Ehrenfeld "has shown no basis for considering defendant's actions to be tortious." The Court declined to determine and referred to the State of New York Court of Appeals (New York's highest state court) whether Sheikh Khalid was subject to jurisdiction under a provision of New York law concerning claims arising from the transaction of business in New York. Specifically, the Second Circuit asked the New York Court of Appeals to determine "whether § 302(a)(1) of New York's long-arm statute confers personal jurisdiction over a person (1) who sued a New York resident in a non-U.S. jurisdiction; and (2) whose contacts with New York stemmed from the foreign lawsuit and whose success in the foreign suit resulted in acts that must be performed by the subject of the suit in New York."

On 20 December 2007, the New York Court of Appeals decided, consistent with Judge Casey's decision in the U.S. District Court, that Sheikh Khalid's actions did not constitute the transaction of business in New York and that, accordingly, he was not subject to personal jurisdiction under New York law.

The full text of the State of New York Court of Appeals' Opinion

2006

On 8 December 2004, Rachel Ehrenfeld issued proceedings in the United States District Court (South District of New York) seeking declarations that under the law of the United States, Khalid Bin Mahfouz could not prevail in a claim of libel against Ehrenfeld arising from her book "Funding Evil", and that the judgment in the English High Court obtained by Khalid Bin Mahfouz against Ms Ehrenfeld was unenforceable in the United States. Khalid bin Mahfouz moved to dismiss this new action. On 25 April 2006, Judge Richard Casey granted Khalid Bin Mahfouz's motion to dismiss in New York, bringing to an end Ehrenfeld's claim. The full text of the Court judgment.

The full text of the Court judgment of 25 April 2006

2005

The following Press Release was issued by Kendall Freeman on 15 June 2005:

English High Court awards substantial damages to Sheikh Khalid Bin Mahfouz and his sons.

US author and publisher guilty of defamation and falsehoods; English judge also rejects defendants' accusation of "forum shopping"

London 15 June 2005: In an English High Court Judgment made public on 8 June 2005 following a Court hearing on 3 May 2005, a judge found that the author Rachel Ehrenfeld and the publisher Bonus Books Inc had made defamatory statements about Sheikh Khalid Bin Mahfouz and his sons, Abdulrahman Bin Mahfouz and Sultan Bin Mahfouz. Under the terms of the English Defamation Act 1996, the Court awarded £10,000 damages to be paid to each of the claimants by the defendants, declared the allegations made by the defendants to be false, and also ordered them to pay interim costs of £30,000. It also continued an injunction preventing the defendants from repeating similar defamatory allegations about the claimants in England.

Rachel Ehrenfeld and Bonus Books Inc had alleged, amongst other things, that the claimants were funders of terrorism in a book written by Rachel Ehrenfeld and published by Bonus Books Inc and also published globally via the internet.

The judge noted in his Judgment that the "nature of the allegations which were made in the book…are of the most serious and defamatory kind." He added that it would have been a "complete defence to a libel action in this jurisdiction [England] to prove, on the balance of probabilities, that the defamatory allegations were substantially true. The claimants have indicated that they are quite prepared to meet any such defence on its merits. Unsurprisingly, no one has ever put forward such a defence or any material which would be capable of substantiating a plea of justification."

As indicated, the defendants did not attempt to defend the proceedings and the judge stated that "the defendants have had every opportunity to defend these proceedings by means of a plea of justification if they thought appropriate. All they have been able to advance, it is said, is material of a flimsy and unreliable nature, and the claimants have taken the trouble to demonstrate its lack of merit."

Rachel Ehrenfeld has commenced proceedings in the US District Court for the Southern District of New York against Sheikh Khalid Bin Mahfouz. She is seeking a judgment from the US Court that (i) the English judgment cannot be enforced in the US, and (ii) the US Court rules that the allegations about Sheikh Khalid Bin Mahfouz contained in her book are not defamatory under US law. Sheikh Khalid Bin Mahfouz is vigorously defending this action and has filed a motion to dismiss the case.

The judge also considered Rachel Ehrenfeld's US action and noted her allegations that Sheikh Khalid Bin Mahfouz was abusing the English legal process and hiding behind English libel law to hide the truth of his acts. The judge's response was that these statements were "tendentious and something of a misrepresentation of the true position. The claimants are not hiding behind anything and are perfectly willing to meet these defendants, as others, head on as to the merits of the claims made against them."

In response to Rachel Ehrenfeld's accusations of forum shopping, the judge said that the claimants have referred "to their significant connections within the United Kingdom…that their reputations here are important to them and it is not a question, as the first defendant has claimed in the past, of their "forum shopping"."

Summary of the judgment of Mr Justice Eady given on 3 May 2005

The full text of the Court judgment of 3 May 2005