NY Courts Defy Activist-Judge Label on Foreign Business Disputes

Give us your tired, your poor, your huddled masses—but not your grievances against foreign corporations.

That’s the message sent by judges in New York. In a state long seen as having liberal courts, they have over the past year shown a small-c conservatism on holding international companies accountable for alleged malfeasance, keeping the courthouse doors shut to plaintiffs in some cases and reversing a historic judgment compensating investors in a foreign oil giant.

It’s left open whether the Empire State, long a hub of transnational litigation, will remain a go-to forum for investors in financial disputes with non-US companies.

The message is “don’t come here thinking we’re going to be globally activist judges or will push the laws of other countries forward,” said Maggie Gardner, a Cornell Law professor, of the recent New York court ruling nixing a $16 billion judgment in favor of YPF SA’s former shareholders.

A majority of the Second Circuit panel said Argentinian law didn’t allow for that sanction even if Argentina committed an “egregious breach” when it nationalized YPF without making a tender offer to minority shareholders, as alleged.

Investors aren’t faring better in New York state courts. On Monday, Manhattan’s commercial division—which effectively specializes in cross-border business disputes—tossed an investor suit against Volkswagen over the German automaker’s long-running emissions scandal.

The court’s guidance for plaintiffs? Try the case in Germany.

Investor suits against non-US companies may seem niche, but it’s a big part of New York dockets. Given the state’s (generally well-founded) plaintiff-friendly reputation and its (somewhat more mixed) tradition of judicial activism, it’s a magnet for such lawsuits. Its location as the home of Wall Street and its role as an international port also bring international defendants to its shores.

But a key 2025 ruling from the state’s top court said none of that means it should be easy to sue foreign companies there.

Rejecting a shareholder suit against British bank Barclays, New York’s top court said it didn’t buy investors’ “dubious assumption that New York intended” to make it easier to sue foreign companies there “simply because our state occupies a privileged position ‘at the heart of the American financial system.’”

The Barclays ruling was cited in the April 6 decision nixing claims against Volkswagen—as was a 2025 New York Court of Appeals ruling tossing investor claims against German pharma giant Bayer.

Judges disagree on whether these decisions represent a shift away from plaintiffs, or simply underscore longstanding rules. The majority in the Barclays case said it was upholding a “longstanding principle,” while the dissent said “Marty McFly would be impressed” with the majority’s move to take the present back to the past.

A dissenting judge in the YPF decision suggested the circuit was breaking with a tradition of showing deference toward lower court findings on issues of foreign law.

Both sides in these cases agree something’s happening here. Sullivan & Cromwell’s Bob Giuffra, who represented Argentina and Volkswagen, said in an interview that the rulings show New York courts will not be “the Shangri-La for litigation of claims by shareholders against foreign corporations and sovereigns.”

Michael Fragoso, a lawyer for the plaintiffs who sued YPF, said “investors should be terrified” by the Second Circuit’s ruling.

A major test of New York’s willingness to rule against foreign companies is still to come. A trial court recently allowed Sudanese refugees to sue French bank BNP Paribas for allegedly aiding human rights abuses, applying Swiss law even after the Swiss ambassador to the US said the trial challenged Swiss sovereignty.

The $21 million verdict for the plaintiffs is now on appeal at the Second Circuit. What happened in the YPF case is “what BNP wants to happen here,” said Kathryn Lee Boyd, an attorney for the Sudanese plaintiffs. “God forbid, as they say, but that’s the litigation game.”