On June 22, 2023, the First Department issued a decision in Haussmann v. Baumann, 2023 NY Slip Op. 03407, holding that the internal affairs doctrine barred a derivative action, explaining:
The court correctly dismissed the complaint, finding that the internal affairs doctrine mandated dismissal for lack of standing. The internal affairs doctrine is a conflict of laws principle providing that claims concerning the relationship between the corporation, its directors, and a shareholder are governed by the substantive law of the state or country of incorporation — in this case, Germany. This Court has consistently invoked the internal affairs doctrine in derivative actions to apply foreign law on substantive issues, including those affecting a party’s right to sue.
Accordingly, we agree with Supreme Court that the internal affairs doctrine applies to this shareholder derivative action on behalf of a foreign corporation to make applicable relevant substantive German laws. Furthermore, we agree with Supreme Court’s implicit finding that the German Stock Corporation Act § 148 is a substantive law rather than a procedural one and requires plaintiffs to seek leave from the German court to bring a derivative action. As plaintiffs concede, they failed to satisfy § 148; thus, they lack standing to maintain this action.
(Internal quotations and citations omitted).