Citing lack of standing, a state appeals court has thrown out a fraud lawsuit brought by a Belgian State-created investment vehicle that allegedly paid $4 billion above market value for a bank’s investment assets, including a flood of residential mortgage-backed securities.

A unanimous Appellate Division, First Department, panel ruled Tuesday that the issue of standing was governed by New York law—rather than Belgian law, as the plaintiffs had wrongly argued—and that under New York law “where an assignment of fraud or other tort claims is intended … with the conveyance of a contract or note, there must be some language … that evinces that intent and effectuates the transfer of such rights,” quoting Commonwealth of Pennsylvania Pub. Sch. Employees’ Retirement Sys. v. Morgan Stanley, 25 N.Y.3d 543, 550 (2015).

The panel wrote that the portfolio transfer agreement, which in 2008 had sent Fortis Bank’s and related entities’ structured credit portfolio to a “special purpose vehicle,” Royal Park Investments SA/NV, had simply not shown any intent to transfer tort-claim rights.

Therefore, under New York law, Royal Bank Investments had no standing to bring its numerous 2013 lawsuits, which it had lodged against various sellers of the RMBS to Fortis Bank. Those sellers included Morgan Stanley, Credit Suisse AG, Deutsche Bank AG and UBS AG, and the lawsuits had levied claims, including fraud, fraudulent inducement, aiding and abetting fraud, and negligent misrepresentation, the panel said.

Justices Dianne Renwick, Sallie Manzanet-Daniels, Angela Mazzarelli, Troy Webber and Anil Singh said the “threshold issue” before them was whether Royal Bank Investments’ standing was governed by New York law or Belgian law.

They wrote that while the transfer agreement had stated that “this Agreement and the legal relations among the parties shall be governed by and construed in accordance with Belgian law,” the provision applied only to a state’s “substantive law.” It did not apply to matters of procedure, such as standing.

“Courts will generally enforce choice-of-law clauses,” the panel wrote, quoting Ministers & Missionaries Benefit Bd. v. Snow, 26 N.Y.3d 466, 470 (2015).

But, the panel explained, again quoting Ministers & Missionaries, “when parties include a choice-of-law provision in a contract, they intend application of only that state’s substantive law.”

The panel added, “Unlike substantive law, ‘matters of procedure are governed by the law of the forum state,’” quoting FIA Leveraged Fund v. Grant Thornton, 150 A.D.3d 492, 496 (1st Dep’t 2017).

In its opinion, which affirmed a 2017 ruling by Manhattan Supreme Court Justice Charles Ramos, the panel explained that between 2005 and 2007, nonparties Fortis Bank, Fortis Bank SA/NV, Cayman Islands Branch (Fortis Cayman), and Scaldis had bought RMBS from various defendants named in Royal Bank Investments’ suits.

In addition, nonparty Fortis Proprietary Investment (Ireland) Limited (Fortis Ireland) bought RMBS from the Credit Suisse defendants, the panel said.

Then, on Oct. 9, 2008, the Belgian State (which owned 49.93 percent of Fortis Bank), BNP Paribas, and various Fortis entities agreed to ”set up a special purpose vehicle” to acquire Fortis’ structured credit portfolio.

Subsequently, on May 12, 2009, plaintiff Royal Bank Investments, along with Fortis Bank, Fortis Ireland, and other companies not parties to the appeal before the panel, entered into the portfolio transfer agreement. Under the agreement, Royal Bank Investments bought “all of the Sellers’ right, title and interest in and to the Portfolio Property,” the justices said in the unsigned opinion.

Lucas Olts, a partner at Robbins Geller Rudman & Dowd in San Diego, represented Royal Bank Investments. He could not be reached for comment.

James Rouhandeh, a Davis Polk & Wardwell partner in New York, represented Morgan Stanley and argued the motion to dismiss on behalf of Morgan and the other bank defendants. He declined to comment on Tuesday.