Ch. 10 Anti-Suit Injunctions: Enjoining Non-U.S. Court Proceedings in U.S. Courts

The D.C., Second, Third, and Sixth Circuits have each adopted the restrictive standard that generally follows the China Trade approach, explaining that courts should only grant anti-suit injunctions in the rarest of circumstances. See, e.g., Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909 (D.C. Cir. 1984); China Trade, supra; Stonington Partners, Inc. v. Lernout & Hauspie Speech Prod., N.V., 310 F.3d 118 (3d Cir. 2002); Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349 (6th Cir. 1992), Goss Intern. Corp v. Man Roland Druckmasschinen Akitengesellschaft, 491 F.3d 355 (8th Cir. 2007). 

1. A court should not invoke an anti-suit injunction merely because the domestic proceeding involves the same parties and issues as the non-U.S. proceeding. Gau Shan Co., 956 F.2d at 1354.
2. Although China Trade states that the two most important factors are the potential frustration of a policy in the enjoining forum and threats to the enjoining forum’s jurisdiction, see China Trade, 837 F.2d at 36, the Second Circuit decisions stress the importance of considering all five additional factors set forth in that decision. See, e.g., Mastercard Int’l Inc. v. Fed’n Internationale de Football Assoc., 2007 WL 631312 (S.D.N.Y. Feb. 28, 2007). In contrast, the Sixth Circuit has explained that courts should consider only those two factors the Second Circuit has deemed most significant and refrain from considering the other three factors. Ibeto Petrochemical Indus. Ltd. v. M/T Beffen, 475 F.3d 56, 64 (2d Cir. 2007); Gau Shan Co., 956 F.2d at 1355.
   1. In Mastercard Int’l, the defendant commenced arbitration in Switzerland regarding claims about which a domestic district court was already considering motions. Mastercard Int’l Inc. v. Fed’n Internationale de Football Assoc., 2007 WL 631312 (S.D.N.Y. Feb. 28, 2007). Soon thereafter, the district court rendered a final decision on the merits in favor of the plaintiff. The defendant appealed to the Second Circuit while continuing his Swiss arbitration proceedings. In response, the plaintiff sought injunctive relief in the district court to prevent the re-litigation of the same issues in the Swiss proceeding. In its decision to grant the anti-suit injunction, the district court focused primarily on the potential frustration of policy and the threat to its jurisdiction that the Swiss arbitration imposed. Mastercard Int’l, 2007 WL 631312, at *5. In doing so, the court emphasized that the parties and issues in both the U.S. and non-U.S. proceedings were the same, and reprimanded the defendant for pursuing a “do-over with [a] different referee.” Id.
   2. The Second Circuit most recently upheld China Trade in Karaha Bodas Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 500 F.3d 111 (2d Cir. 2007).  In Karaha Bodas Co., a judgment debtor filed a lawsuit in the Cayman Islands seeking to invalidate a foreign arbital award obtained in Switzerland and enforced in the United States pursuant to the Convention on the Recognition and Enforcement of Foreign Arbital Awards.  Id. at 112.  The district court issued an anti-suit injunction prohibiting him from filing the Cayman Island lawsuit.  Id.  The judgment debtor appealed to the Second Circuit asserting that the district court improperly failed to apply the China Trade test when determining whether to issue the anti-suit injunction, and instead applied a more lenient standard.  Id. at 118.  The Second Circuit agreed with judgment debtor that the district court should have applied the China Trade test, and explained that China Trade applies to an anti-suit injunction even where a judgment has already been rendered in the case.  Id. at 118.  However, the Second Circuit refused to vacate the district court issued injunction because China Trade's threshold requirements had nonetheless been met, as had been some of China Trade's discretionary factors. Id.
3. The Eleventh Circuit has not expressly adopted the restrictive standard, but it has affirmed without opinion the decision of one of its district courts that had applied the restrictive standard and rejected the liberal standard. Mut. Serv. Cas. Ins. v. Frit Indus., Inc., 805 F. Supp. 919, 923 (M.D. Ala. 1992), aff’d, 3 F.3d 442 (11th Cir. 1993). However, Circuit decisions without opinion are not binding because they cannot “be read as necessarily approving of the district court’s reasoning.” Canon Latin Am., Inc. v. Lantech, 453 F. Supp. 2d 1357, 1362 (S.D. Fla. 2006) (applying the liberal standard instead of Mut. Serv. Cas. Ins.’s restrictive standard), citing Diesel Mach., Inc. v. B.R. Lee Indus., Inc., 418 F.3d 820, 830 (8th Cir. 2003).
   1. In Mut. Serv. Cas. Ins., an American insurance company brought suit against six defendants under the Declaratory Judgment Act to determine the obligations and rights of the parties regarding multiple insurance policies. Three defendants filed suit abroad for declaratory and injunctive relief regarding the issues involved in the American suit. Plaintiff and another of the defendants brought a motion in an Alabama District Court to enjoin the non-U.S. proceedings. The District Court granted the injunction after rejecting “the argument that duplication of parties and issues, supplemented by some showing of judicial economy, race-to-judgment, or potentially inconsistent judgments, would justify an injunction against a parallel in personam foreign proceeding.” Mut. Serv. Cas. Ins., 805 F. Supp. at 923. Anti-suit injunctions are appropriate when the non-U.S. proceedings either threaten the jurisdiction of the American court, or when a party’s purpose for commencing proceedings abroad is to “evade or frustrate a forum’s important public policies.” Id. at 924.