Branches, unlike subsidiaries, are mere arms of the ompany that established them and do not have separate elgal personality
However, in some circumstances, an obligation of a branch may be treated as an obligation solely of that branch and not an obligation of the bank as a whole
Depositors had placed a lot of money in Chase’s Saigon branch. April 24, 1975, North Vietnamese marched into Saigon. Folks running branch ran to French Embassy, dropped off the keys to the branch, and got the hell out. One depositor also fled to US and knocked on the NYC door of Chase wanting its money.
Because it closed its door first, situs of debt changed from Saigon to NYC.
Situs of debt was tool the court used to determine whether to apply Vietnamese Confiscation Decree of NY law which enforces contract.
Chase also argued impossibility of performance. But court rejected argument and said that impossibility of performance in Vietnam did not relieve Chase of its obligation to perform elsewhere. By operating in Saigon through a branch rather than through a separate corporate entity, Chase accepted the risk that it would be liable elsewhere for obligations incurred by its branch.
BUT the deposit contracts used by the Saigon branch discharged the bank’s responsibility or liability due to war and other causes beyond Bank’s control.
What happened to party autonomy??
Following the Vishipco decision, NY legislature reversed decision and adopts legislation that says banks are not liable in those situations.
if govt nationalizes, seizes, etc the loans that a branch has made, so the branch cant get repayment of that loan, then a corresponding portion of the bank’s deposits are not required to be repaid
UK Court in US-Libya dispute held that “as a general rule, the contract between a bank and its customer is governed by the law of the place where the account is kept, absent agreement to the contrary.”
Choice of Law and Financial Transactions p.608
Moratorium is an illustration of a type of govt regulation called Exchange Control Regulations in a moratorium, govt prohibits companies making payments to foreigners denominated in foreign currency.
