New York Governor Hochul recently vetoed a bill that could have affected companies doing business in the state. The New York Legislature may revisit a similar bill in the future, so businesses should stay vigilant.
The bill focused on New York courts' jurisdiction over lawsuits involving foreign corporations, referring to the court's authority in the state to hear cases related to those companies.
Under the bill, a foreign corporation applying to do business in New York would imply consent to the jurisdiction of New York courts. New York law does not give a straightforward definition of the term, foreign corporation—i.e., “Every corporation that is not a domestic corporation is a foreign corporation.“ “A ‘domestic corporation’ is a corporation created by or under the laws of the state, or a corporation located in [New York] and created by or under the laws of the United States, or a corporation created by or pursuant to the laws in force in [New York before April 19, 1775].”
Governor Hochul's veto prevented potential costs and inconveniences for foreign corporations, as the bill would have subjected them to lawsuits in New York regardless of their connection to the state. Hochul explained the veto aimed to avoid uncertainty for businesses and prevent burdening the judicial system. (Download Veto Message)
General jurisdiction is not the sole way a New York court can have authority over a foreign company. The court can also consider a foreign company's connections with New York when determining jurisdictional issues. For foreign companies facing a New York lawsuit, consulting with an attorney is advisable to discuss jurisdictional issues.
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