Proskauer Rose International Practice Guide Proskauer Rose LLP |
      Proskauer on International Litigation and Arbitration:
       Managing, Resolving, and Avoiding Cross-Border Business or Regulatory Disputes
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  1. Although chapter one of the FAA does not specifically authorize courts to grant injunctive or other preliminary relief in aid of arbitration, most courts have held that the FAA does not oust the district court’s authority to grant such relief in a proper case. Ortho Pharm. Corp. v. Amgen. Inc., 882 F.2d 806, 811 (3d Cir. 1989) (joining the First, Second, Fourth, Seventh, and Ninth Circuits in holding that a district court has jurisdiction to grant injunctive relief in an arbitrable dispute); Roso-Lino Beverage Distrib., Inc. v. Coca-Cola Bottling Co., 749 F.2d 124, 125 (2d Cir. 1984) (“[t]he fact that a dispute is to be arbitrated … does not absolve the court of its obligation to consider the merits of a requested preliminary injunction; the proper course is to determine whether the dispute is ‘a proper case’ for an injunction.”); PMS Distrib. Co. v. Huber & Suhner, A.G., 863 F.2d 639, 642 (9th Cir. 1988) (“[t]he fact that a dispute is arbitrable and that the court so orders under [the FAA], does not strip it of authority to grant a writ of possession pending the outcome of the arbitration so long as the criteria for such a writ are met.”); Performance Unlimited v. Questar Publishers, Inc., 52 F.3d 1373, 1380 (6th Cir. 1995) (district court erred when it found that it could not enter preliminary injunctive relief because the dispute between the parties was the subject of mandatory arbitration).
  2. The 8th Circuit, however, is alone in holding that district courts do not have authority to grant injunctive or other preliminary relief in aid of a pending arbitration, unless the parties have specifically agreed to give the court such authority. See Manion v. Nagin, 255 F.3d 535 (8th Cir. 2001) (under the FAA, courts should not grant injunctive relief unless the arbitration agreement clearly entitles the party to such relief; a contract that merely allows a party to “request” injunctive relief is not sufficient).
  3. The circuit courts are also split with respect to the New York Convention. The Third and Fourth Circuits have held that the Convention, unlike the FAA, renders the district courts without jurisdiction to award provisional remedies when the parties have agreed to arbitration. See McCreary Tire & Rubber Co. v. Ceat S.p.A., 501 F.2d 1032, 1038 (3d Cir. 1974) (pre-award attachment “is prohibited by the Convention if one party to the agreement objects”); I.T.A.D. Assoc. v. Podar Bros., 636 F.2d 75, 77 (4th Cir. 1981) (following McCreary). However, this distinction has been heavily criticized by other courts of appeal and district courts. See, e.g., Borden, Inc. v. Meiji Milk Products Co., Ltd., 919 F.2d, 822 (2d Cir. 1990) (application for preliminary injunction in aid of arbitration is consistent with the court’s powers under the New York Convention); E.A.S.T., Inc. of Stamford v. M/V Alaia, 876 F.2d 1168 (5th Cir. 1989) (the arrest of a vessel prior to arbitration is not inconsistent with the Convention); China Nat'l Metal Prods. Import/Export Co. v. Apex Digital, Inc., 155 F. Supp. 2d 1174, 1180 (C.D. Cal. 2001) (“Article II(3) of the Convention does not deprive the court of subject matter jurisdiction … to order provisional relief, e.g., a pre-arbitral award writ of attachment pending reference to arbitration and pending the conclusion of the arbitration proceedings.”); Bahrain Telcoms. Co. v. DiscoveryTel, Inc., 476 F. Supp. 2d 176, 180 (D. Conn. 2007) (“McCreary's reasoning--that the Convention (unlike the FAA) somehow prohibits provisional remedies in international arbitration--has long been harshly criticized by courts and commentators.”).
  4. Even where the court’s authority is clearly established, the usual prerequisites for granting injunctive or other preliminary relief must still be satisfied. Danieli & C. Officine Meccaniche S.p.A. v. Morgan Construction Co., 190 F. Supp. 2d 148, 154 (D. Mass. 2002); see also Puerto Rico Hosp. Supply, Inc. v. Boston Scientific Corp., 426 F.3d 503, 506 (1st Cir. 2005) (the district judge made a permissible choice to apply federal law as the default standard for deciding a preliminary injunction request where the choice of law provision was ambiguous); American Express Fin. Advisors, Inc. v. Thorley, 147 F.3d 229, 231 (2d Cir. 1998) (“the expectation of speedy arbitration does not absolve the district court of its responsibility to decide requests for preliminary injunctions on their merits”).
  5. Moreover, courts are often reluctant to exercise their authority to award preliminary injunctive relief or attachment in advance of or concurrent with an arbitration, especially where the request for relief overlaps significantly with the ultimate issue to be decided by the arbitrator. Thomson v. Nienaber, 239 F. Supp. 2d 478, 486 (D.N.J., 2002) (refusing to grant request for declaratory judgment “given the parties' broad-based arbitration agreement”); Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 726 (9th Cir. 1999) (“[b]ecause the district court correctly concluded that all of Simula’s claims were arbitrable and the ICC arbitral tribunal is authorized to grant the equivalent of an injunction pendente lite, it would have been inappropriate for the district court to grant preliminary injunctive relief.”).

Practice Tip: Parties who wish to continue to pursue resolution of the ultimate dispute through arbitration should make sure to specifically plead that any request to the court for interim relief is not a waiver of their right to arbitrate, but is instead simply an attempt to preserve the status quo pending a final arbitral award.

Practice Tip: Despite court's authority to order preliminary relief in certain circumstances under the FAA and the New York Convention, courts will often defer to the arbitral process, especially in the face of broad arbitration and clauses, and when the arbitral process is already underway when the relief is requested.

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