G ŁUCHOWSKI SIEMIĄTKOWSKI ZWARA
Professor Tomasz Siemiątkowski
G ŁUCHOWSKI SIEMIĄTKOWSKI ZWARA
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Anti-suit injunctions as a remedy employed
especially by common law courts to prevent parallel
proceedings that are considered vexatious or
oppressive, and that present a threat to the
jurisdiction of the enjoining court.
Civil-law jurisdictions generally find anti-foreign-suit
injunctions offensive, even violative of international
law.
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Can either be granted to favor arbitration which means
to preserve the jurisdiction of the arbitral tribunal or to
prevent it.
Can be granted by arbitrators, however they have
traditionally been issued by courts.
Can be granted at the outset or at the end of the
arbitration proceedings.
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“An order of the court requiring the
injunction defendant not to commence, or to
cease to pursue, or not to advance
particular claims within, or to take steps to
terminate or suspend, court or arbitration
proceedings in a foreign country.”
(Thomas Raphael, The anti-suit injunction 4 (Oxford 2008)
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(1)
when the foreign court is highly inconvenient,
vexatious or oppressive;
(2)
when the foreign suit was filed in violation of a
prior and independent obligation not to sure (e.g.
when there is a foreign selection clause or an
arbitration agreement) and
(3)
when there exists a threat to the enjoining court`s
own jurisdiction or otherwise violates public
policy.
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(1) the parties must be the same in both matters, in
other words the United States suit and foreign suit
must involve the same parties
(2) resolution of the case before the enjoining court
must be dispositive of the action to be enjoined,
which means that the United States suit and foreign
suit must involve the same issues
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(1)
frustration of a policy in the enjoining forum;
(2)
the foreign action would be vexatious;
(3)
a threat to the issuing court`s in rem or quasi in
rem jurisdiction;
(4)
the proceedings in the other forum prejudice
other equitable considerations or
(5)
adjudications of the same issues in separate
actions would result in delay, inconvenience,
expense.
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The parties can determine in the
arbitration agreement or in the
terms of reference the jurisdictional
limits to be exercised by the
arbitrators, as well as whether they
will or not have power to grant antisuit injunctions.
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The arbitrators should look to the rules of
arbitration of the institution conducting the
arbitration proceedings
and/or into the lex arbitri.
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(1)
(2)
Neither the New York Convention nor the Inter
American Convention on International
Commercial Arbitration (“Panama Convention”)
addresses the issue of whether arbitrators
have power to grant anti - suit injunctions.
The Convention on the Settlement of Investment
Disputes Between States and Nationals of Other
States (“Washington Convention”) also does not
expressly refer to anti-suit injunctions.
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Art. 47 :
“Except as the parties otherwise agree,
the Tribunal may, if it considers that the
circumstances so require, recommend
any provisional measures which should
be taken to preserve the respective rights
of either party.”
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The Uncitral Model Law on International Commercial
Arbitration (“Uncitral”) also does not specifically address
the issue
Article 17 (2) (b) sets forth that: Power of arbitral tribunal to
order interim measures (17) an interim measure is any
temporary measure, whether in the form of an award or in
another form, by which, at any time prior to the issuance of
the award by which the dispute is finally decided, the
arbitral tribunal orders a party to (2) take action that would
prevent, or refrain from taking action that is likely to cause,
current or imminent harm or prejudice to the arbitral
process itself (b).
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The ICC Rules of Arbitration are also silent on
this matter, although they include a
Kompetenz-Kompetenz provision that states
that, “any decision as to the jurisdiction of the
Arbitral Tribunal shall be taken by the Arbitral
Tribunal itself” (Article 6.2), and a provision
allowing the Arbitral Tribunal to “order any
interim or conservatory measure it deems
appropriate” (Article 23.1).
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Similarly, under the Commercial Rules of Arbitration
of the American Arbitration Association, rule 7(a)
establishes that “The arbitrator shall have the power
to rule on his or her own jurisdiction, including any
objections with respect to the existence, scope or
validity of the arbitration agreement,” and Rule 34
(a) sets forth that “The arbitrator may take whatever
interim measures he or she deems necessary,
including injunctive relief and measures for the
protection or conservation of property and
disposition of perishable goods.”
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(1) Tokios Tokelés v. Ukraine, ICSID arbitration, 2003,
(2) Plama Consortium Limited v. Republic of Bulgaria, ICISD
arbitration 2005, although the arbitral tribunal denied the anti-suit
injunction requested by the claimant, it stated the following
regarding the possibility of ICSID tribunals issuing anti-suit
injunction:
“Provisional measures are appropriate to preserve the exclusivity of
ICSID arbitration to the exclusion of local administrative or judicial
remedies as prescribed in Art. 26 of the ICSID Convention. They
are also appropriate to prevent parties from taking measures
capable of having a prejudicial effect on the rendering or
implementation of an eventual award or which might aggravate or
extend the dispute or render its resolution more difficult”.
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In spite of the silence or of the main
sources of rules of international commercial
arbitration, majority of scholars and many
arbitration
decisions,
confirm
that
arbitrators have jurisdiction and power to
issue anti-suit injunctions.
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Primarily, it should be remembered that international
anti-suit injunctions are exceptional remedies that
should be “used sparingly” and granted only “with care
and great restraint.” This warning certainly applies not
only to courts, but also to arbitrators.
It is important that when an arbitrator issues an antisuit injunction, he is doing exactly the opposite of what
the parties expected him to do: fomenting more
litigation and, consequently, increasing the length,
cost and complexity of arbitration proceedings.
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Laurent Lévy (Anti-suit injunctions issued by arbitrators
in: “IAI Series On International Arbitration” No.2, Antisuit injunctions in international arbitration, p.128 (E.
Gaillard ed., 2005that arbitrators may only issue antisuit injunctions in extreme circumstances, “where it
appears necessary to protect the arbitral proceedings,
namely where a party is fraudulently attempting to
undermine the arbitral tribunal’s jurisdiction”
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Reviewing an application for issuance of an anti-suit
injunction, a court must look into the constitutional
and procedural threshold requirements established in
its own legal system.
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There are two types of anti-suit injunctions:
(1) anti-suit injunctions to
prevent arbitration, so-called
“anti-arbitration injunctions”
(2) anti-suit injunctions to favor
arbitration.
One of the most famous anti-suit injunction cases in the context of
international arbitration is the so-called Pertamina case, 2007 which
involved a “battle” of anti-suit injunctions between U.S. Courts and
Indonesian Courts
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5.
However, Pertamina obtained an anti-suit injunction from the Indonesian trial court to prohibit KBC
from enforcing the award, and also an order annulling the award.
6.
The Texas court then issued another anti-suit injunction prohibiting Pertamina from enforcing the
injunction granted by the Indonesian court.
7.
The Fifth Circuit later vacated the anti-suit injunction issued by the Texas court, and the Indonesian
Supreme Court vacated the Indonesian anti-suit injunction and the decision annulling the award.
8.
Afterward, the Fifth Circuit affirmed the Texas court’s decision confirming the award, and
Pertamina appealed. Meanwhile, KBC sought registration and execution of the Texas judgment in
the Southern District of New York. After a dispute over the ownership of the assets located in New
York, the district court ordered a bank to turn over the amount of the judgment to KBC.
9.
Nevertheless, Pertamina filed a new lawsuit against KBC, this time in the Cayman Islands, alleging
fraud and seeking restitution of the amounts paid in connection with the arbitration award. In
response, KBC applied to the Southern District Court of New York for an anti-suit injunction to
prohibit Pertamina from maintaining the action in the Cayman Islands. The court granted the antisuit injunction.
10. The Second Circuit affirmed the district court’s decision, with slight modifications, ruling that “federal
courts do have inherent power to protect their own judgments from being undermined or vitiated by
vexatious litigation in other jurisdictions.” The court invoked the strong policy in favor of
international arbitration, which “would be undermined were we to permit Pertamina to proceed with
protracted and expensive litigation that is intended to vitiate an international arbitral award that
federal courts have confirmed and enforced.”
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- comity,
- public policy,
- and other equitable factors
International comity has been described by courts
as the recognition that one nation extends within its
own territory to the legislative, executive or judicial
acts of another nation and this recognition should be
withheld only when its acceptance would be
contrary or prejudicial to the interest of the nation
called upon to give it effect.
An anti-suit injunction is directed at the individual
parties, not at the court where the litigation is taking
place.
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The so called conservative standard was adopted by
the Third, Sixth, Eighth, and D.C. Circuits.
Under the “conservative standard,” comity dictates that
foreign anti-suit injunctions be issued sparingly and only
in the rarest of cases
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Courts were adopting the “conservative”
only if res judicata applies to bar the
foreign proceeding or if the foreign
litigation threatens an important public
policy or the court`s jurisdiction
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-
the General Electric Co v Deutz case, 3rd Cir.,
2001
-
and the older and famous one: Laker
AirwaysLtd
v
Sabena,
Belgian
World
Airlines, DC Cir., 1984
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The “liberal” standard – adopted by the Fifth, Seventh and
Ninth Circuits.
Emphasis on equitable considerations:
- whether the foreign action is vexatious and oppressive,
- whether the foreign litigation leads to duplicative efforts, inconvenience,
delay, expense, and harassment and
- whether the foreign litigation might lead to inconsistent results or a race to
judgment.
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- Kaepa Inc v Achilles Corp, 5th Cir
- Seattle Totems Hockey Club v NHL, 9th Cir, 1981
- Affymax Inc v Johnson & Johnson, NDist. of Illinois,
2006
- The “liberal” standard – adopted by the Fifth, Seventh
and Ninth Circuits.
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The First and Second Circuits have adopted a
third,
“middle-ground”
standard
which
combines elements of both the conservative
and liberal standards
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- Parametics Elektromedicina Comercial
Ltda v GE Med. Sys. Info.Tech.inc,
2nd Cir, 2004;
- Ibeto Petrochemical Indus. Ltd v M/T
Beffen, 2nd Cir, 2007
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A blended “totality of the circumstances”
standard :
(1) the nature of the two actions (i.e. whether they are merely parallel
or whether the foreign action is more properly classified as
interdictory);
(2) the posture of the proceedings in the two countries;
(3) the conduct of the parties (including their good faith or lack thereof)
and
(4) the extent to which the foreign action has the potential to
undermine the forum court`s ability to reach a just and speedy result.
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(1)
arbitrators have jurisdiction and power to issue anti-suit
injunctions
(2)
Anti-suit injunctions may be a remedy in the
enforcement of the international arbitration agreements
(3)
US courts have demonstrated a tendency to issue antisuit injunctions in support of arbitration,
(4)
These differing approaches to anti-suit injunctions
may be an important consideration in choosing a
situs for arbitration proceedings
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